October 30, 2024 • 37 mins
Dan Balcauski interviews Michael George, CEO of Syncro. Michael shares insights from over 25 years of experience leading technology companies like Continuum and Invicti Security to substantial growth. Michael describes pivotal moments, including his early business ventures and experiences with mentorship, like working with inventor Dean Kamen. He emphasizes the importance of focus and the risks associated with diverging from core objectives. Michael also discusses strategies for effectively navigating private equity partnerships, highlighting the difference between value creation and extraction. Bringing attention to leadership and company culture, he discusses successful initiatives like the Continuum Veterans Foundation. The discussion offers invaluable lessons in sustaining focus and innovation in the competitive SaaS landscape.
00:27 Meet Michael George: A Seasoned Technology Leader
02:32 Michael's Journey: From Video Game Arcades to Tech Leadership
06:56 The Importance of Focus in Leadership
17:03 Transformational Moments at Continuum
24:23 Private Equity vs. Venture Capital in SaaS
34:31 Final Thoughts and Advice for SaaS CEOs
Guest Links
Syncro website
Michael George on LinkedIn
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
dan balcauski (00:20):
Welcome to SaaS Scaling Secrets, where we dive
into the trenches with leadersof the best scale up B2B SaaS
companies.
I'm your host, Dan Balcauski,founder of Product Tranquility.
Today, I have the privilege ofinterviewing Michael George.
Michael is a seasoned technologyleader with over 25 years of
experience as the CEO ofmultiple category leading
companies.
He's the CEO of Syncro, a B2BSaaS company offering an
innovative all in one platformfor managed service providers.
(00:41):
Before Syncro, Michael ledInvicti Security and Continuum,
where he drove over 500 percentrevenue growth during his
tenure.
Let's dive in.
Welcome, Michael, to SaaSScaling Secrets.
michael george (00:50):
Dan, thank you very much.
Really a privilege to be herewith you.
dan balcauski (00:54):
Well, I'm super excited for our conversation
today.
I think you have a very uniquebackground and you are one of
the few folks I've ever seen whohas successfully led and scaled
multiple B to B SaaS companiesas a CEO.
How did you end up in thisposition where you are leading
(01:15):
multiple companies?
I imagine a lot of folks do itonce and they're happy to just
kind of sail off.
What keeps bringing you backagain and again?
michael george (01:23):
Well, look, there's lots of different kinds
of CEOs and leaders in theworld.
I am one that lives in a worldof discontent, Dan, so I'm
constantly Aspiring to do itbetter or do it right the next
time from what I learned thelast time in so many ways.
(01:45):
And frankly, I just love what Ido.
And I think it's a realprivilege to be, in this
particular time at thisparticular place and have a, a
penchant for technology inparticular I just think it's all
good fortune.
And I.
I'd hate to see it languish byby going out and trying to, have
(02:06):
a better golf game for myself oranything else.
So it's it's what I do.
dan balcauski (02:11):
started sipping the martinis on the beach.
You realize it's not at all.
It's cracked up to be, let meget back in the mess.
Uh, Awesome.
We all have those moments in ourlives that are transformational.
I sometimes refer to them as asuperhero transformation moment.
Where it's the, I'm one day, I'mPeter Parker of our normal high
school kid that I get bit by aradioactive spider, go to sleep,
wake up, and everything'sdifferent.
(02:32):
What was that moment for you andyour journey?
michael george (02:35):
Wow.
There's been so many things thathave happened that that have
really ended up Unlocking awhole nother set of
opportunities for me.
It's hard to really pick ordefine any one in particular.
I will say that the start of mycareer if I were to think back
at, that, one, if you will,pivotal moment was, I had the
(02:58):
good fortune of meeting veryearly on.
In fact, I was in college and Iwas putting myself through
school by opening up small videogame arcades.
This is back in the, earlyeighties.
And I this is a Pac Man andDefender and all the different
(03:19):
kinds of, video games that, thathad emerged and I I started,
really literally by buying a fewmachines and putting them in
pizza parlors and places in andaround town where I was going to
school and I ended up owningseven video game arcades in
Southern New Hampshire and Iowned a route on the Cape.
So I really was very fortunateto catch a tiger by the tail.
(03:42):
I was trying to sell thebusiness.
At the height of it, and I hadthe good fortune of meeting then
unknown Dean Kamen.
Dean had just sold his company,Auto Syringe, to Travonol Labs,
later to become Baxter Travonol.
He's most known for being theinventor of the Segway the two
wheel Segway.
And so, a dean met me and Ispent quite a bit of time with
(04:03):
him and he said, I'm not goingto buy your company but I want
you to quit college and come towork for me.
In my invention center, it wascalled DECA, D E K A, is I think
the banner he still operatesunder.
And I did ultimately sell mybusiness.
I did not quit college as hedid.
But I graduated a little bitearly from Suffolk University
(04:26):
and joined him in a remarkablefive year journey in the R& D
center that again, launched awhole number of things.
Dean was He's an extraordinarilybrilliant human being that
really made a lot ofcontributions to medical
technology.
He's the inventor of theArtificial infusion pump that's
used to deliver diabetic insulinfor diabetic children and
(04:50):
insulin dependent diabetics.
And much earlier he wasn't, hewas 17 years old when that
technology was patent under hismother's name.
Cause you can't even have apatent until you're 18.
And so that was really he, itopened me into uh, Extraordinary
world that I never reallyunderstood, before.
(05:12):
And so that was kind of a unlockmoment in and of itself.
But I would say throughout myjourney, it's been it's been a
series of things that I think myenthusiasm for technology and
opportunities is perhaps andmaybe combined in some way with.
(05:32):
Commercial success is bestdefined by a quote Winston
Churchill once said, which wassuccess is often stumbling from
one failure to the next withoutthe loss of enthusiasm.
And I was that I was thatenthusiastic entrepreneur, let's
say.
dan balcauski (05:50):
Well, it seems that the passive time has not
deadened your enthusiasm onebit.
There's so many threads inthere.
Actually has a lot ofsimilarities to a young Warren
Buffett.
I don't know if anyone's everrelayed that anecdote to you,
but one of Warren Buffett's veryfirst businesses, him and a
young friend when they thinkthey were like 10 years old,
started Fixing up pinballmachines and then would rent
them back to like barbershops,etc.
(06:12):
They had a whole boomingbusiness that was paying for uh,
Buffett's uh, you know, otherentrepreneurial ventures.
So, we've got a true blueentrepreneur on their heads and
then Dean Kamen, what afascinating career he's had.
And it's in some waysunfortunate how popular the
segue was because a lot of timesall he's thought about, he's
made pretty Crediblecontributions over time.
(06:33):
I could spend all the time inthat history.
that's absolutely fascinating.
As I mentioned in the intro, youhave been a CEO of several B2B
SaaS companies, just in the lastwe'll shorten it and just look
at the last, say, a decade, 15years, because your leadership,
it goes even farther back thanthat across Continuum, Invicti,
(06:54):
and now Syncro.
What do you think is the mostimportant thing that CEOs need
to get correct?
michael george (07:03):
If there were just one thing, and I wish I
could be thought of as a WarrenBuffett in any more in any more
context than you've alreadyprovided, I did not know that
story, so thank you for sharingthat.
And of course, Pinball ispredated.
Video games as Warren predatesme as old as I am.
But he and Bill Gates, I thinkhad shared a, there's a common
(07:26):
story about them being asked byBill Gates's mother, what they,
separately, what they attributedtheir success to.
And both of them answeredseparately, but for very similar
reasons, they said one word,focus.
And I work hard myself.
(07:47):
We all work hard ourselves attrying to figure out what not to
do, what to say no to, and thenature of a leader, the nature
of an entrepreneur is one ofoptimism and opportunity, and
it's very alluring, verysalacious, all the other things
(08:10):
that can be done in and around.
Your primary focus or yourprimary purpose that often just
distracts people to do thingsthat hedge a little bit their
bet.
And frankly, there is anuncommon appetite for failure
(08:30):
when people decide.
That they are going to do justone thing because it's easier to
hedge that bet, Dan, by, okay,I'm going to do that thing, but
I'm also going to do this.
Or we're going to, we're goingto, we're going to add this
element to it, right though, andthey're constantly hedging.
But if you, if there was onecommon theme throughout my
(08:55):
career that I would the successI've been fortunate to achieve,
it would be singular focus andappetite to take that risk, to
know that if you fail you will,you will fail.
Absolutely fail.
It's funny.
I had the privilege of being astudent of Jim Collins, the
(09:16):
famous
dan balcauski (09:17):
Good good to great,
michael george (09:18):
good to great, and many other fabulous books.
I was a student of his, he was aprofessor before, and he had
just started up his his researchcenter in Boulder, Colorado at
the time, and he was, he's arock climber.
I'm a high altitude mountaineerperson.
There's a big difference betweenthe two.
(09:39):
One you're using, ropes and yourfingertips to pull yourself
straight up.
And the other in high altitudemountaineering, you're depending
on a different set of skillsanyway Jim and I got to know one
another at a personal level.
When I, from the time I firstmet him, and of course I've seen
him many times since he's beenon a fabulous tour of speeches
(10:00):
and everything else.
And I remember talking to himabout his affinity for rock
climbing.
And he, about his interest in myaffinity for mountaineering,
which he thinks I'm crazy.
And.
I think he's crazy and we bothagreed that we love it because
it's something that requires alevel of focus that if you lose
(10:21):
that focus, you are likely tohave the result of a fall that
will result in death.
And when you have that much atstake, it just requires this
absolutely uncommon level offocus on one simple thing, one
(10:43):
singular thing.
It's not even a simple thing,but one singular thing.
So again I, relating back tothat particular thing, between
some of these extraordinarilysuccessful people, Gates and
Buffett and Jim Collins's.
analysis and his own love forrock climbing and my affinity
(11:03):
for high altitudemountaineering.
Again, these are things thatjust require an unwavering
commitment.
And a belief, conviction.
People talk about, Oh, I'mpassionate about this.
Well, if you're reallypassionate, like bet your life
on it.
Like, are you willing to betyour company?
There have been many times in mycareer where, funding is thin,
(11:26):
we're losing customers.
The pressures on all of thesethings, but we will make a bet
the company strategy, anabsolute, a continuum.
We bet the company on cybersecurity.
Now this is back in 2016 in thesmall to medium business market
that people thought we werefoolish, like that's not a small
(11:46):
business problem.
But when I tell you we bet thecompany, if we were wrong, We
would have been bankrupt,absolutely bankrupt.
And and so there are times whereyou just have to have that kind
of.
Maniacal focus.
And when you say you'repassionate, are you so
passionate and so committed andso determinately believe in what
(12:09):
you're doing that you're willingto risk everything to make it
happen?
And if it's true, then do thatand be willing to make those
risks.
And don't get distracted.
dan balcauski (12:22):
You've opened up a bunch of threads there.
I want to pull out all of them,but I don't think we have enough
time on.
So I totally agree.
This lack of focus killscompanies.
And I think in there, you weretalking about it's so easy to
hedge because then it sort of,well, if this doesn't work out,
then we'll, at least be able tosort of keep the lights on.
If neither of these play out isthat really the fear?
(12:46):
And I guess kind of building onthat, are there things that
you've had to, Institute, eitherlike in your own psychology or
as processes in your company toenforce that.
We can look at, jobs or gates orwhatever, who talk about this
focus, focus, but it just, it'ssuch a disease throughout so
many companies.
So I'm curious, like how haveyou been successful in actually
(13:06):
driving that through?
Like, is it I learned like, I'mgoing to have to shoot some
puppies.
There's going to be pet projectsthat people are going to want to
put forward.
And I've just got to, I've gotto say no.
Cause I put the message of thecompany forward.
Like, what is it for you andyour mind?
Like, how have you been able tomaintain that over the years?
michael george (13:20):
Yeah, well, look I have fallen victim at times to
things that might slightlydeviate, although never really.
Opening it up so that we've gotdual paths, but I'm sure I have
not been perfect in thatpractice either.
I think it is very difficult todo.
(13:42):
The one thing that is superimportant for any organization
is.
And for any leader,entrepreneur, leader, whatever
it might be, is to get alignmentwith the rest of your leadership
team about what is the one thingwe're going to do better than
(14:04):
everybody else.
It's not the one thing we'regoing to do, but it's the one
thing we're Balcauski.
Where people get distracted is,Oh, but our competitor's doing
this and they're beating usbecause they have this.
Or they beat, right.
There's always some tangentialelement in there that has our
(14:27):
competitive ire, going, okay,we're going to do that too.
But I, if you really analyze ityou understand that in fact, if
you just do one thing, and thatone thing is really valuable to
the customers that you'reserving, they are willing to
(14:48):
live, right, without those otherthings or augment what you're
doing With other things bypartner, you can get there by
partnering, for instance,instead of either building or
buying and offering it yourself,or, there, there are a lot of
different ways to solve thoseproblems.
So I think it all begins againwith decide on that one thing
(15:09):
that we're going to beabsolutely better than everybody
in the world.
Get your organization completelyaligned with that.
And then everybody, somebodycomes with a pet project, as you
described, or another idea orwhatever else.
You just sit there and youlisten to it openly, as you
should, but then you ask thequestion, in what way does it
serve this mission, this singlemission?
(15:34):
In what way does it do that?
Because if it doesn't, Thendon't do it.
Like, are you willing tosacrifice being the absolutely
best at something that you havedeclared is of one of the
highest value things in thatmarket you're trying to serve?
Is that other thing worthdistracting from that, taking
away from it, diluting it?
(15:55):
And, 90 plus percent of the timeyou're going to decide, no, it
doesn't, and that's the questionyou have to ask of all those
other things.
And And again, I'm not tellingyou that it's easy, it's hard,
and that's what defines winnersfrom losers, that's what defines
successful companies from, theones that come in, second and
(16:18):
third and fourth or whateverelse it might be is to do that
one thing absolutely remarkablybetter than anybody else.
And so long as you got thefundamentals of that one thing
right, which is, it is of highvalue to the customer you're
trying to serve.
dan balcauski (16:36):
Well, I wanted to see if we, that ties into
something you mentioned earlierbecause you were talking about,
during Continuum, you scaled,the revenue of 5X as mentioned
in my intro.
And it sounded like it wasaround this key sort of bet the
company on the cybersecurity forSMB.
Can you give a little bit morecolor to kind of that sort of
(16:57):
strategic decision and how youguys sort of.
How you got to that point as itpertains to the conversation
we've been having?
michael george (17:03):
I would say there were two real breakout
moments for us that reallyunlocked the potential of the
company.
One is that, the origins of thecompany were from India.
It was founded.
In India and was actually a lineof business out of a publicly
(17:24):
traded company, publicly tradedon the Bombay Stock Exchange.
And we had a large Indianconstituent in our organization.
We had a help desk and we had aNOC, a Network Operations Center
operation as part of ourbusiness.
And when I stepped in, it was atthe end of 2011.
(17:45):
And the economy was justrecovering from the financial
crisis of 08, slowly recovering,and it was as often described a
jobless recovery, as you mayrecall.
And and so there was a backlashabout outsourcing US jobs to
(18:05):
places like India, a bigbacklash, and our competitors.
Took advantage of thatappropriately by, calling us out
and describing us as being anIndian based company and you're
going to let them outsource yourjobs and everything else.
And frankly, the unique thingthat we did there was we created
a labor arbitrage opportunityfor small businesses that only
(18:29):
large businesses had access toprior, right?
That was an enterprise strategy.
Not necessarily one that wasaddressable by the small to
medium business market.
So what we thought we were doingwas really quite extraordinary
to tap into that lower labormarket.
But despite that, we were losingcustomers at tremendous rates.
(18:51):
And.
People also didn't understandthat our help desk was actually
on U.
S.
soil.
At the same time, I'll neverforget, I was working out, and
over the series of a couple ofweeks, Tom Brokaww had been
promoting a Hire Our Heroesprogram to get the U.
S.
(19:12):
industries to hire back theseyoung men and women who were
coming back from two of thelongest wars in U.
S.
history in Iraq and Afghanistan.
And they were returning to ajobless economy.
And he had this Hire Our Heroesprogram.
And I got really inspired by it,candidly.
And I ended up, I decided tocall him and it took me about
(19:35):
two days.
And I finally, I got him on thephone and I
dan balcauski (19:38):
Tom Brokaw.
michael george (19:39):
Yeah.
Yeah.
He wrote a book called TheGreatest Generation.
You know, He
dan balcauski (19:43):
I recall.
michael george (19:44):
in this category.
And And I told him how inspiredI was and, how thoughtful I
thought the work he was doingand everything else so much so
that I was going to, initiate aprogram like that in the
company.
And I wanted him to, went on andon all the things I was going to
do about what he was promoting.
And I told him I wanted him tosupport me in that effort.
(20:05):
And he said, no.
And I said, well, why not?
This is.
He said, look, you're a forprofit in company.
You should be doing this anyway.
And he talked about all thethings and I said, Well, what
would it be that would have youwant to promote it?
He said, well, if it was a 503c,if it was a nonprofit entity, if
you were, essentially creatingfunds, not just to hire your own
(20:28):
people, but maybe to help thesemen and women.
Transition into civilian jobs.
He came up with a number ofthings that I really, I thought
that was extraordinary so much.
So I stepped away from that onemeeting with him and I outlined
what became known as theContinuum Veterans Foundation.
(20:51):
It was.
It ended up being some of mymost some of the most proudest
work that I have done in in mycareer.
And I ended up doing all thethings he said I should do if it
was something he were willing topromote it because he was right
about every bit of it.
And so we founded the VeteransFoundation and we specifically
(21:12):
earmarked profits that werebeing generated for work done to
our help desk.
Cause our help desk was a placethat we were hiring the most
number of veterans into.
And in fact, if you look at amilitary deployment today,
There's only a handful of thesepeople that really learned to
shoot guns.
Most everybody, and todaythey're flying drones and doing
(21:34):
all kinds of technical things,but even back 10 or 12 years ago
they were they were doingreconnaissance, laying cable.
I mean, a lot of it was verytechnology oriented.
So when they came back into theU.
S., they wanted jobs in thecivilian world in IT.
So we found a couple of programsand used all the money that we
(21:55):
contributed to the foundation togo out and fund organizations
that provided that kind oftraining.
Anyway, I thought about reachingback out to Brokaw and say, Hey,
I've done exactly what you toldme to do.
And I want you to support me.
But I, we had a differentopportunity at the time in the
state of Massachusetts.
We had a Republican Senator inScott Brown and a Democratic
(22:19):
Senator in John Kerry.
He was a very well and outspokenveteran and a supporter of
veteran events.
And Senator John McCain Ireached out to the three of them
and all three of them stepped upand supported our foundation and
were generous enough to they, weput together a video to launch
(22:41):
the foundation.
We had a parachute made with.
Continuum Veterans Foundation init.
Myself and my executive team, wewent up in an airplane.
We had skydivers jump out toblow open the parachute.
But anyway, McCain and Kerry andSenator Brown, these all people
that were very outspoken insupport of the Continuum
(23:03):
Veterans Foundation, and itturned what was an anti
continuum sentiment.
About us outsourcing jobs intoan incredibly positive.
Experience for everybody, wherewe were actually not outsourcing
(23:23):
help desk jobs in particular.
Our NOC operation was in India,but our help desk was in
Pittsburgh, Pennsylvania, and wewere hiring in a
disproportionate number ofVeterans into it, and we were
providing a percentage of ourown profits to fund other
organizations that wereproviding training.
It was a pivotal moment for thecompany to turn what was a very
(23:47):
negative sentiment.
into an extraordinarily positiveone.
We didn't do it for the solepurpose.
It wasn't completely altruistic,we did it for this dual purpose
of both, changing the sentimentabout us and informing people
that our help desk was actuallyin the U.
S., but also doing well by doinggood.
And anytime a competitor spokenegatively about us.
(24:09):
As being an outsourcer, themarket backlash against them and
said these people are doingreally good work.
What are you doing?
dan balcauski (24:16):
I thank you for sharing that.
And you never know where aconversation with Tom Brokaw is
gonna lead down the line.
So, what an amazing turn ofevents.
Well, I do wanna go back to,during your time as leader of
multiple companies you've workedwith multiple different kinds of
funding partners, whether it'sventure capital or private
equity.
I'm curious, kind of, how do yousee the role of specifically
(24:41):
private equity back backing inthe B to B software world,
because I think, there's a tonof ink spilled in, TechCrunch or
whatever about, venture capitalfunding rounds.
And, I think private equity is areal big player.
but they've gotten very involvedin software.
So what have you learned about,Working with private equity that
maybe other folks don't kind ofunderstand.
(25:03):
So from the outside, looking in.
michael george (25:06):
Well, I'm not sure I know any particular
secret or know anything, uniquethat other people don't
necessarily know or understand.
I would say that well, I've hadthe privilege of working with
some of the best venture capitalfirms in the world, candidly.
(25:26):
This is, Kleiner Perkins,Matrix, Greylock.
The list goes on.
And in the private equity worldI've had the privilege of
working with Summit Partners ona number of occasions, Toma
Bravo who's very much an in thenews private equity firm, and
currently with Mainsale, theseare all top tier, world class
(25:47):
private equity companies, but Iwill say that not all of them
operate in the same way.
At the most fundamental level, adistinction between growth
equity and private equity and inthe growth equity world in
particular, these are companiesthat are generally market making
they're investing in growth andthey are, very purposefully Like
(26:11):
you said, you can be on thebetter side or the funding side,
where they're actuallycontributing and funding new
initiatives, growth, expansion,international, whatever it might
be.
But then there's, so there'sthat side of the private equity
world.
The other side of it is is valueextraction.
So some of them are in the valuecreation side, but other ones
(26:34):
are in the value extractionside.
dan balcauski (26:36):
Why does it matter which side of that you're
on?
michael george (26:38):
Well, it matters a lot because depending on the
cycle of the industry, Dan,sometimes industries are new and
emerging and would benefit fromgreater contributions to
innovation and growth and thekinds of things that you're not
going to be as profitable Butyou're in a, you're in a value
(27:00):
creation mode.
And so these are private equityfirms, main sale that I'm
involved with today.
They are, I mean, we're makingmajor investments in our
business because our marketrequires a level of innovation
that has been stagnated by thethree major leaders.
(27:23):
Although that word is going tobe, that is a tenuous one at the
moment.
But the three largest providersin our ca in our space today are
all owned by companies that arein the value extraction mode.
So they are really, they'reheavily burdened with debt.
They were acquired using debt atmain sale.
(27:45):
They didn't use a penny for ofdebt.
So we're not basically clippinga coupon and paying off a big
note.
And that's one of the things youneed to, people need to look at
and understand, like that's awonderful instrument for growth
when it's proportioned right andused right.
But many times.
You have a company and its soleexistence is to increase its
(28:08):
EBITDA so that it can basicallypay off the debt that was used
to fund the acquisition of thebusiness.
Those are companies that are inthe value extraction level.
And so there are companies thatare really left To lacking
innovation and lacking the kindsof things, particularly in a
(28:28):
SaaS business.
I mean, one of the things that Ilove about the SaaS business is,
even if you have contracts andall these other things, we make
that available to our customersthat you don't even have to have
a contract with us because wewant to earn your business every
day.
And because you have theability, you have the right to
leave us.
If we are not delivering a levelof quality product service for
(28:52):
you, for the cost, you have, youcan leave.
And and so, so it, it creates arequirement for us.
To deliver super high qualityproducts and high quality of
service, or people will walk outthe door and you have nothing
(29:12):
you have nothing when you dothat, and these larger companies
they have gone and createdeconomic incentives for people
to sign up for three yearcontracts.
So you can't get out of them.
And then they kind of justsqueeze the nickels till the
Buffalo screen, not putting apenny back into the business and
(29:32):
into innovation and everythingelse so that by the time those
contracts come up, if theprivate equity firm hasn't sold
that business by then, they'rein trouble.
And we are in an industry todaywhere, the companies that are in
our space, they're in troublebecause they have operated under
this value extraction dynamic.
(29:53):
And I don't think anybodypredicted sort of this post
COVID fallout, the April, 2012,decline of the stock market and
everything else.
And these are all companies thatthought that they.
Would have, been able to exitthose companies by then and by
now, and they haven't been ableto, so
dan balcauski (30:11):
Yeah.
Yeah.
Rising interest rates and highvaluations four or five years
ago has has not helped theircause.
Best wishes to everyone in thatsituation.
It's not a pleasant place to beeither side of that transaction.
Well, so, so it sounds like,understand what side of the
Private equity market you'replaying in, value extraction
versus value creationunderstanding the downsides of
(30:31):
debt.
Given your experience with PEBACcompanies, any other advice that
you would give SaaS CEOs who areconsidering taking in private
equity investment?
michael george (30:40):
There's lots of, lots of, lots of advice.
It's a complicated world.
I happen to love it.
I, I love my time in the ventureworld.
The thing I welcome aboutprivate equity very differently
is, in the venture world whereyou have two or three or four
venture firms that have fundedyou if everything's going
(31:01):
swimmingly, you'll do great.
What is that 6%?
I mean, for the other 94 percentof us mere mortals, when things
don't go well and you have animpedance mismatch between.
The firm, the individual fromthe firm, the cycle of the fund,
all that other stuff.
It wreaks havoc with yourbusiness.
And these are things that havenothing to do with your
(31:23):
business, right?
They have to do with sort ofthis weird marriage of three or
four or five different venturefirms that again, have an
impedance mismatch.
In the private equity world,you're typically dealing with
just one.
And if it's more than one, youhave a senior majority and a
minority, and the minority istypically pretty silent.
(31:46):
So, it's easier to be the slaveto, one master than, being
pulled apart by multiple ones.
So I love that singular.
Focus in the private equityworld.
Number one, number two, in termsof advice and guidance, I, as I
shared this with someone who wasentering the private equity
(32:06):
world, I said, make no mistakeabout it.
There's only one CEO in thiscompany.
And that's you.
And you own every decision, goodand bad, and own it.
Like, do not for even a second,make a single excuse for any of
(32:27):
the failings, the slowness, The,turnover, the churn or anything
like you own everything top tobottom.
And if you don't go to bed atnight thinking that way and wake
up that way in the morning,you'll be in trouble.
I, they, these, the, these aresmart people, they don't suffer
fools.
And and and so, be wise and takea level of ownership.
(32:50):
That candidly, in, again, in theventure world, you can parlay
your capital with, let's say bybefriending or having a
particular relationship with oneof the venture firms so that
person is your defense, on the,in the screen.
But when you have one funder,one financial partner Pay
(33:13):
attention.
And in the venture world, I usedto say your venture partner, all
partners are equal.
It's just some are more equalthan others.
I, I used to side up, I used toteam up with the larger
investors, I Kleiner Perkins andMatrix were two, I had a, I ran
(33:33):
a company, we had literally 23institutional investors, but
Matrix and Kleiner Perkins weretwo of the largest ones.
Guess where I spent 90 percentof my board time with, right?
And I kind of didn't care abouteverybody else.
In the private equity world,again you have a singular
partner and you own everything.
(33:56):
Good and bad that happens, from
dan balcauski (33:58):
That's a great compare and contrast between the
VC, this impedance mismatchversus, having sort of one maybe
one eye of Sauron or whateveryour appropriate metaphor is
sort of, looking at you but alsoI heard perhaps a irrational,
excessive level of ownershiprequired to every decision that
the company is yours.
And if you go in eyes wide openas a new CEO, like, Making sure
(34:21):
that you're committing to whatyou're committing to going
forward.
So, look, I could talk to youall day, Michael.
This has been fabulous, to berespectful of your and the
audience's time, I do want tostart wrapping it up.
Look we've talked about, covereda lot of ground today.
If I had to give you a, I gaveyou a billboard and you put any
advice on there for other B to BSaaS CEOs trying to scale their
companies, what would you, whatwould it say?
michael george (34:42):
Focus.
Wow.
dan balcauski (34:44):
Love it.
What do you think about all thespectacular people you've had a
chance to work with?
Is there anyone who just pops tomind that's had a
disproportionate effect on theway you think about building
companies?
michael george (34:54):
That's so hard.
There is a gentleman thatremains in that position in my
life.
He's 81 years old now.
He was one of the co founders ofData General which is a company
that's long forgotten by many,unfortunately.
And this was a company that Ifounded and funded myself called
(35:14):
Interlinks.
And I heard him speak at aconference.
And I say, over the five yearsof running that company, I made
about 5, 000 mistakes, but Imade one really great decision
and that was I dogged him downFor almost a year to get him to
join my board.
(35:35):
And his name is Steve Gall, G AL and he's perhaps had one of
the most profound impacts on mylife in my, in the professional
sense of the world, I would saythe one person that's had by far
the most profound impact.
On my life has been my father.
I feel really fortunate whenpeople talk about being a CEO,
(35:59):
being a successful CEO, I remindthem to make no mistake about
it.
I have two brothers and they areboth CEOs as well.
I grew up on the right knee andI have my parents in, in, in
general, and my father inparticular to thank for that.
So
dan balcauski (36:16):
Thank you for sharing that both for Touching
Story on your father, as well aswith Steve.
If folks want to learn moreabout what you're up to or
Syncro Where could they do that?
michael george (36:26):
our website is Syncromsp.
com and it's it certainly it's awebsite that's going to be
completely transformed beforethe end of this year, we're
relaunching the entire companyaround some initiatives.
For automation.
But please feel free to do thator to reach out to me directly
(36:49):
on LinkedIn.
If somebody feels that I couldbe particularly helpful to them
I'm happy to, I'm happy to helpwhere I can.
dan balcauski (36:56):
Michael, I will put those links in the show
notes for our listeners.
Everyone, that wraps up thisepisode of SaaS Scaling Secrets.
Thank you to Michael for sharinghis journey insights and
valuable tips for our listeners.
If you found this conversationas enlightening as I did,
remember to subscribe so youdon't miss out on future
episodes
Welcome to SaaS Scaling Secrets, where we dive
into the trenches with leadersof the best scale up B2B SaaS
companies.
I'm your host, Dan Balcauski,founder of Product Tranquility.
Today, I have the privilege ofinterviewing Michael George.
Michael is a seasoned technologyleader with over 25 years of
experience as the CEO ofmultiple category leading
companies.
He's the CEO of Syncro, a B2BSaaS company offering an
innovative all in one platformfor managed service providers.
(00:41):
Before Syncro, Michael ledInvicti Security and Continuum,
where he drove over 500 percentrevenue growth during his
tenure.
Let's dive in.
Welcome, Michael, to SaaSScaling Secrets.
michael george (00:50):
Dan, thank you very much.
Really a privilege to be herewith you.
dan balcauski (00:54):
Well, I'm super excited for our conversation
today.
I think you have a very uniquebackground and you are one of
the few folks I've ever seen whohas successfully led and scaled
multiple B to B SaaS companiesas a CEO.
How did you end up in thisposition where you are leading
(01:15):
multiple companies?
I imagine a lot of folks do itonce and they're happy to just
kind of sail off.
What keeps bringing you backagain and again?
michael george (01:23):
Well, look, there's lots of different kinds
of CEOs and leaders in theworld.
I am one that lives in a worldof discontent, Dan, so I'm
constantly Aspiring to do itbetter or do it right the next
time from what I learned thelast time in so many ways.
(01:45):
And frankly, I just love what Ido.
And I think it's a realprivilege to be, in this
particular time at thisparticular place and have a, a
penchant for technology inparticular I just think it's all
good fortune.
And I.
I'd hate to see it languish byby going out and trying to, have
(02:06):
a better golf game for myself oranything else.
So it's it's what I do.
dan balcauski (02:11):
started sipping the martinis on the beach.
You realize it's not at all.
It's cracked up to be, let meget back in the mess.
Uh, Awesome.
We all have those moments in ourlives that are transformational.
I sometimes refer to them as asuperhero transformation moment.
Where it's the, I'm one day, I'mPeter Parker of our normal high
school kid that I get bit by aradioactive spider, go to sleep,
wake up, and everything'sdifferent.
(02:32):
What was that moment for you andyour journey?
michael george (02:35):
Wow.
There's been so many things thathave happened that that have
really ended up Unlocking awhole nother set of
opportunities for me.
It's hard to really pick ordefine any one in particular.
I will say that the start of mycareer if I were to think back
at, that, one, if you will,pivotal moment was, I had the
(02:58):
good fortune of meeting veryearly on.
In fact, I was in college and Iwas putting myself through
school by opening up small videogame arcades.
This is back in the, earlyeighties.
And I this is a Pac Man andDefender and all the different
(03:19):
kinds of, video games that, thathad emerged and I I started,
really literally by buying a fewmachines and putting them in
pizza parlors and places in andaround town where I was going to
school and I ended up owningseven video game arcades in
Southern New Hampshire and Iowned a route on the Cape.
So I really was very fortunateto catch a tiger by the tail.
(03:42):
I was trying to sell thebusiness.
At the height of it, and I hadthe good fortune of meeting then
unknown Dean Kamen.
Dean had just sold his company,Auto Syringe, to Travonol Labs,
later to become Baxter Travonol.
He's most known for being theinventor of the Segway the two
wheel Segway.
And so, a dean met me and Ispent quite a bit of time with
(04:03):
him and he said, I'm not goingto buy your company but I want
you to quit college and come towork for me.
In my invention center, it wascalled DECA, D E K A, is I think
the banner he still operatesunder.
And I did ultimately sell mybusiness.
I did not quit college as hedid.
But I graduated a little bitearly from Suffolk University
(04:26):
and joined him in a remarkablefive year journey in the R& D
center that again, launched awhole number of things.
Dean was He's an extraordinarilybrilliant human being that
really made a lot ofcontributions to medical
technology.
He's the inventor of theArtificial infusion pump that's
used to deliver diabetic insulinfor diabetic children and
(04:50):
insulin dependent diabetics.
And much earlier he wasn't, hewas 17 years old when that
technology was patent under hismother's name.
Cause you can't even have apatent until you're 18.
And so that was really he, itopened me into uh, Extraordinary
world that I never reallyunderstood, before.
(05:12):
And so that was kind of a unlockmoment in and of itself.
But I would say throughout myjourney, it's been it's been a
series of things that I think myenthusiasm for technology and
opportunities is perhaps andmaybe combined in some way with.
(05:32):
Commercial success is bestdefined by a quote Winston
Churchill once said, which wassuccess is often stumbling from
one failure to the next withoutthe loss of enthusiasm.
And I was that I was thatenthusiastic entrepreneur, let's
say.
dan balcauski (05:50):
Well, it seems that the passive time has not
deadened your enthusiasm onebit.
There's so many threads inthere.
Actually has a lot ofsimilarities to a young Warren
Buffett.
I don't know if anyone's everrelayed that anecdote to you,
but one of Warren Buffett's veryfirst businesses, him and a
young friend when they thinkthey were like 10 years old,
started Fixing up pinballmachines and then would rent
them back to like barbershops,etc.
(06:12):
They had a whole boomingbusiness that was paying for uh,
Buffett's uh, you know, otherentrepreneurial ventures.
So, we've got a true blueentrepreneur on their heads and
then Dean Kamen, what afascinating career he's had.
And it's in some waysunfortunate how popular the
segue was because a lot of timesall he's thought about, he's
made pretty Crediblecontributions over time.
(06:33):
I could spend all the time inthat history.
that's absolutely fascinating.
As I mentioned in the intro, youhave been a CEO of several B2B
SaaS companies, just in the lastwe'll shorten it and just look
at the last, say, a decade, 15years, because your leadership,
it goes even farther back thanthat across Continuum, Invicti,
(06:54):
and now Syncro.
What do you think is the mostimportant thing that CEOs need
to get correct?
michael george (07:03):
If there were just one thing, and I wish I
could be thought of as a WarrenBuffett in any more in any more
context than you've alreadyprovided, I did not know that
story, so thank you for sharingthat.
And of course, Pinball ispredated.
Video games as Warren predatesme as old as I am.
But he and Bill Gates, I thinkhad shared a, there's a common
(07:26):
story about them being asked byBill Gates's mother, what they,
separately, what they attributedtheir success to.
And both of them answeredseparately, but for very similar
reasons, they said one word,focus.
And I work hard myself.
(07:47):
We all work hard ourselves attrying to figure out what not to
do, what to say no to, and thenature of a leader, the nature
of an entrepreneur is one ofoptimism and opportunity, and
it's very alluring, verysalacious, all the other things
(08:10):
that can be done in and around.
Your primary focus or yourprimary purpose that often just
distracts people to do thingsthat hedge a little bit their
bet.
And frankly, there is anuncommon appetite for failure
(08:30):
when people decide.
That they are going to do justone thing because it's easier to
hedge that bet, Dan, by, okay,I'm going to do that thing, but
I'm also going to do this.
Or we're going to, we're goingto, we're going to add this
element to it, right though, andthey're constantly hedging.
But if you, if there was onecommon theme throughout my
(08:55):
career that I would the successI've been fortunate to achieve,
it would be singular focus andappetite to take that risk, to
know that if you fail you will,you will fail.
Absolutely fail.
It's funny.
I had the privilege of being astudent of Jim Collins, the
(09:16):
famous
dan balcauski (09:17):
Good good to great,
michael george (09:18):
good to great, and many other fabulous books.
I was a student of his, he was aprofessor before, and he had
just started up his his researchcenter in Boulder, Colorado at
the time, and he was, he's arock climber.
I'm a high altitude mountaineerperson.
There's a big difference betweenthe two.
(09:39):
One you're using, ropes and yourfingertips to pull yourself
straight up.
And the other in high altitudemountaineering, you're depending
on a different set of skillsanyway Jim and I got to know one
another at a personal level.
When I, from the time I firstmet him, and of course I've seen
him many times since he's beenon a fabulous tour of speeches
(10:00):
and everything else.
And I remember talking to himabout his affinity for rock
climbing.
And he, about his interest in myaffinity for mountaineering,
which he thinks I'm crazy.
And.
I think he's crazy and we bothagreed that we love it because
it's something that requires alevel of focus that if you lose
(10:21):
that focus, you are likely tohave the result of a fall that
will result in death.
And when you have that much atstake, it just requires this
absolutely uncommon level offocus on one simple thing, one
(10:43):
singular thing.
It's not even a simple thing,but one singular thing.
So again I, relating back tothat particular thing, between
some of these extraordinarilysuccessful people, Gates and
Buffett and Jim Collins's.
analysis and his own love forrock climbing and my affinity
(11:03):
for high altitudemountaineering.
Again, these are things thatjust require an unwavering
commitment.
And a belief, conviction.
People talk about, Oh, I'mpassionate about this.
Well, if you're reallypassionate, like bet your life
on it.
Like, are you willing to betyour company?
There have been many times in mycareer where, funding is thin,
(11:26):
we're losing customers.
The pressures on all of thesethings, but we will make a bet
the company strategy, anabsolute, a continuum.
We bet the company on cybersecurity.
Now this is back in 2016 in thesmall to medium business market
that people thought we werefoolish, like that's not a small
(11:46):
business problem.
But when I tell you we bet thecompany, if we were wrong, We
would have been bankrupt,absolutely bankrupt.
And and so there are times whereyou just have to have that kind
of.
Maniacal focus.
And when you say you'repassionate, are you so
passionate and so committed andso determinately believe in what
(12:09):
you're doing that you're willingto risk everything to make it
happen?
And if it's true, then do thatand be willing to make those
risks.
And don't get distracted.
dan balcauski (12:22):
You've opened up a bunch of threads there.
I want to pull out all of them,but I don't think we have enough
time on.
So I totally agree.
This lack of focus killscompanies.
And I think in there, you weretalking about it's so easy to
hedge because then it sort of,well, if this doesn't work out,
then we'll, at least be able tosort of keep the lights on.
If neither of these play out isthat really the fear?
(12:46):
And I guess kind of building onthat, are there things that
you've had to, Institute, eitherlike in your own psychology or
as processes in your company toenforce that.
We can look at, jobs or gates orwhatever, who talk about this
focus, focus, but it just, it'ssuch a disease throughout so
many companies.
So I'm curious, like how haveyou been successful in actually
(13:06):
driving that through?
Like, is it I learned like, I'mgoing to have to shoot some
puppies.
There's going to be pet projectsthat people are going to want to
put forward.
And I've just got to, I've gotto say no.
Cause I put the message of thecompany forward.
Like, what is it for you andyour mind?
Like, how have you been able tomaintain that over the years?
michael george (13:20):
Yeah, well, look I have fallen victim at times to
things that might slightlydeviate, although never really.
Opening it up so that we've gotdual paths, but I'm sure I have
not been perfect in thatpractice either.
I think it is very difficult todo.
(13:42):
The one thing that is superimportant for any organization
is.
And for any leader,entrepreneur, leader, whatever
it might be, is to get alignmentwith the rest of your leadership
team about what is the one thingwe're going to do better than
(14:04):
everybody else.
It's not the one thing we'regoing to do, but it's the one
thing we're Balcauski.
Where people get distracted is,Oh, but our competitor's doing
this and they're beating usbecause they have this.
Or they beat, right.
There's always some tangentialelement in there that has our
(14:27):
competitive ire, going, okay,we're going to do that too.
But I, if you really analyze ityou understand that in fact, if
you just do one thing, and thatone thing is really valuable to
the customers that you'reserving, they are willing to
(14:48):
live, right, without those otherthings or augment what you're
doing With other things bypartner, you can get there by
partnering, for instance,instead of either building or
buying and offering it yourself,or, there, there are a lot of
different ways to solve thoseproblems.
So I think it all begins againwith decide on that one thing
(15:09):
that we're going to beabsolutely better than everybody
in the world.
Get your organization completelyaligned with that.
And then everybody, somebodycomes with a pet project, as you
described, or another idea orwhatever else.
You just sit there and youlisten to it openly, as you
should, but then you ask thequestion, in what way does it
serve this mission, this singlemission?
(15:34):
In what way does it do that?
Because if it doesn't, Thendon't do it.
Like, are you willing tosacrifice being the absolutely
best at something that you havedeclared is of one of the
highest value things in thatmarket you're trying to serve?
Is that other thing worthdistracting from that, taking
away from it, diluting it?
(15:55):
And, 90 plus percent of the timeyou're going to decide, no, it
doesn't, and that's the questionyou have to ask of all those
other things.
And And again, I'm not tellingyou that it's easy, it's hard,
and that's what defines winnersfrom losers, that's what defines
successful companies from, theones that come in, second and
(16:18):
third and fourth or whateverelse it might be is to do that
one thing absolutely remarkablybetter than anybody else.
And so long as you got thefundamentals of that one thing
right, which is, it is of highvalue to the customer you're
trying to serve.
dan balcauski (16:36):
Well, I wanted to see if we, that ties into
something you mentioned earlierbecause you were talking about,
during Continuum, you scaled,the revenue of 5X as mentioned
in my intro.
And it sounded like it wasaround this key sort of bet the
company on the cybersecurity forSMB.
Can you give a little bit morecolor to kind of that sort of
(16:57):
strategic decision and how youguys sort of.
How you got to that point as itpertains to the conversation
we've been having?
michael george (17:03):
I would say there were two real breakout
moments for us that reallyunlocked the potential of the
company.
One is that, the origins of thecompany were from India.
It was founded.
In India and was actually a lineof business out of a publicly
(17:24):
traded company, publicly tradedon the Bombay Stock Exchange.
And we had a large Indianconstituent in our organization.
We had a help desk and we had aNOC, a Network Operations Center
operation as part of ourbusiness.
And when I stepped in, it was atthe end of 2011.
(17:45):
And the economy was justrecovering from the financial
crisis of 08, slowly recovering,and it was as often described a
jobless recovery, as you mayrecall.
And and so there was a backlashabout outsourcing US jobs to
(18:05):
places like India, a bigbacklash, and our competitors.
Took advantage of thatappropriately by, calling us out
and describing us as being anIndian based company and you're
going to let them outsource yourjobs and everything else.
And frankly, the unique thingthat we did there was we created
a labor arbitrage opportunityfor small businesses that only
(18:29):
large businesses had access toprior, right?
That was an enterprise strategy.
Not necessarily one that wasaddressable by the small to
medium business market.
So what we thought we were doingwas really quite extraordinary
to tap into that lower labormarket.
But despite that, we were losingcustomers at tremendous rates.
(18:51):
And.
People also didn't understandthat our help desk was actually
on U.
S.
soil.
At the same time, I'll neverforget, I was working out, and
over the series of a couple ofweeks, Tom Brokaww had been
promoting a Hire Our Heroesprogram to get the U.
S.
(19:12):
industries to hire back theseyoung men and women who were
coming back from two of thelongest wars in U.
S.
history in Iraq and Afghanistan.
And they were returning to ajobless economy.
And he had this Hire Our Heroesprogram.
And I got really inspired by it,candidly.
And I ended up, I decided tocall him and it took me about
(19:35):
two days.
And I finally, I got him on thephone and I
dan balcauski (19:38):
Tom Brokaw.
michael george (19:39):
Yeah.
Yeah.
He wrote a book called TheGreatest Generation.
You know, He
dan balcauski (19:43):
I recall.
michael george (19:44):
in this category.
And And I told him how inspiredI was and, how thoughtful I
thought the work he was doingand everything else so much so
that I was going to, initiate aprogram like that in the
company.
And I wanted him to, went on andon all the things I was going to
do about what he was promoting.
And I told him I wanted him tosupport me in that effort.
(20:05):
And he said, no.
And I said, well, why not?
This is.
He said, look, you're a forprofit in company.
You should be doing this anyway.
And he talked about all thethings and I said, Well, what
would it be that would have youwant to promote it?
He said, well, if it was a 503c,if it was a nonprofit entity, if
you were, essentially creatingfunds, not just to hire your own
(20:28):
people, but maybe to help thesemen and women.
Transition into civilian jobs.
He came up with a number ofthings that I really, I thought
that was extraordinary so much.
So I stepped away from that onemeeting with him and I outlined
what became known as theContinuum Veterans Foundation.
(20:51):
It was.
It ended up being some of mymost some of the most proudest
work that I have done in in mycareer.
And I ended up doing all thethings he said I should do if it
was something he were willing topromote it because he was right
about every bit of it.
And so we founded the VeteransFoundation and we specifically
(21:12):
earmarked profits that werebeing generated for work done to
our help desk.
Cause our help desk was a placethat we were hiring the most
number of veterans into.
And in fact, if you look at amilitary deployment today,
There's only a handful of thesepeople that really learned to
shoot guns.
Most everybody, and todaythey're flying drones and doing
(21:34):
all kinds of technical things,but even back 10 or 12 years ago
they were they were doingreconnaissance, laying cable.
I mean, a lot of it was verytechnology oriented.
So when they came back into theU.
S., they wanted jobs in thecivilian world in IT.
So we found a couple of programsand used all the money that we
(21:55):
contributed to the foundation togo out and fund organizations
that provided that kind oftraining.
Anyway, I thought about reachingback out to Brokaw and say, Hey,
I've done exactly what you toldme to do.
And I want you to support me.
But I, we had a differentopportunity at the time in the
state of Massachusetts.
We had a Republican Senator inScott Brown and a Democratic
(22:19):
Senator in John Kerry.
He was a very well and outspokenveteran and a supporter of
veteran events.
And Senator John McCain Ireached out to the three of them
and all three of them stepped upand supported our foundation and
were generous enough to they, weput together a video to launch
(22:41):
the foundation.
We had a parachute made with.
Continuum Veterans Foundation init.
Myself and my executive team, wewent up in an airplane.
We had skydivers jump out toblow open the parachute.
But anyway, McCain and Kerry andSenator Brown, these all people
that were very outspoken insupport of the Continuum
(23:03):
Veterans Foundation, and itturned what was an anti
continuum sentiment.
About us outsourcing jobs intoan incredibly positive.
Experience for everybody, wherewe were actually not outsourcing
(23:23):
help desk jobs in particular.
Our NOC operation was in India,but our help desk was in
Pittsburgh, Pennsylvania, and wewere hiring in a
disproportionate number ofVeterans into it, and we were
providing a percentage of ourown profits to fund other
organizations that wereproviding training.
It was a pivotal moment for thecompany to turn what was a very
(23:47):
negative sentiment.
into an extraordinarily positiveone.
We didn't do it for the solepurpose.
It wasn't completely altruistic,we did it for this dual purpose
of both, changing the sentimentabout us and informing people
that our help desk was actuallyin the U.
S., but also doing well by doinggood.
And anytime a competitor spokenegatively about us.
(24:09):
As being an outsourcer, themarket backlash against them and
said these people are doingreally good work.
What are you doing?
dan balcauski (24:16):
I thank you for sharing that.
And you never know where aconversation with Tom Brokaw is
gonna lead down the line.
So, what an amazing turn ofevents.
Well, I do wanna go back to,during your time as leader of
multiple companies you've workedwith multiple different kinds of
funding partners, whether it'sventure capital or private
equity.
I'm curious, kind of, how do yousee the role of specifically
(24:41):
private equity back backing inthe B to B software world,
because I think, there's a tonof ink spilled in, TechCrunch or
whatever about, venture capitalfunding rounds.
And, I think private equity is areal big player.
but they've gotten very involvedin software.
So what have you learned about,Working with private equity that
maybe other folks don't kind ofunderstand.
(25:03):
So from the outside, looking in.
michael george (25:06):
Well, I'm not sure I know any particular
secret or know anything, uniquethat other people don't
necessarily know or understand.
I would say that well, I've hadthe privilege of working with
some of the best venture capitalfirms in the world, candidly.
(25:26):
This is, Kleiner Perkins,Matrix, Greylock.
The list goes on.
And in the private equity worldI've had the privilege of
working with Summit Partners ona number of occasions, Toma
Bravo who's very much an in thenews private equity firm, and
currently with Mainsale, theseare all top tier, world class
(25:47):
private equity companies, but Iwill say that not all of them
operate in the same way.
At the most fundamental level, adistinction between growth
equity and private equity and inthe growth equity world in
particular, these are companiesthat are generally market making
they're investing in growth andthey are, very purposefully Like
(26:11):
you said, you can be on thebetter side or the funding side,
where they're actuallycontributing and funding new
initiatives, growth, expansion,international, whatever it might
be.
But then there's, so there'sthat side of the private equity
world.
The other side of it is is valueextraction.
So some of them are in the valuecreation side, but other ones
(26:34):
are in the value extractionside.
dan balcauski (26:36):
Why does it matter which side of that you're
on?
michael george (26:38):
Well, it matters a lot because depending on the
cycle of the industry, Dan,sometimes industries are new and
emerging and would benefit fromgreater contributions to
innovation and growth and thekinds of things that you're not
going to be as profitable Butyou're in a, you're in a value
(27:00):
creation mode.
And so these are private equityfirms, main sale that I'm
involved with today.
They are, I mean, we're makingmajor investments in our
business because our marketrequires a level of innovation
that has been stagnated by thethree major leaders.
(27:23):
Although that word is going tobe, that is a tenuous one at the
moment.
But the three largest providersin our ca in our space today are
all owned by companies that arein the value extraction mode.
So they are really, they'reheavily burdened with debt.
They were acquired using debt atmain sale.
(27:45):
They didn't use a penny for ofdebt.
So we're not basically clippinga coupon and paying off a big
note.
And that's one of the things youneed to, people need to look at
and understand, like that's awonderful instrument for growth
when it's proportioned right andused right.
But many times.
You have a company and its soleexistence is to increase its
(28:08):
EBITDA so that it can basicallypay off the debt that was used
to fund the acquisition of thebusiness.
Those are companies that are inthe value extraction level.
And so there are companies thatare really left To lacking
innovation and lacking the kindsof things, particularly in a
(28:28):
SaaS business.
I mean, one of the things that Ilove about the SaaS business is,
even if you have contracts andall these other things, we make
that available to our customersthat you don't even have to have
a contract with us because wewant to earn your business every
day.
And because you have theability, you have the right to
leave us.
If we are not delivering a levelof quality product service for
(28:52):
you, for the cost, you have, youcan leave.
And and so, so it, it creates arequirement for us.
To deliver super high qualityproducts and high quality of
service, or people will walk outthe door and you have nothing
(29:12):
you have nothing when you dothat, and these larger companies
they have gone and createdeconomic incentives for people
to sign up for three yearcontracts.
So you can't get out of them.
And then they kind of justsqueeze the nickels till the
Buffalo screen, not putting apenny back into the business and
(29:32):
into innovation and everythingelse so that by the time those
contracts come up, if theprivate equity firm hasn't sold
that business by then, they'rein trouble.
And we are in an industry todaywhere, the companies that are in
our space, they're in troublebecause they have operated under
this value extraction dynamic.
(29:53):
And I don't think anybodypredicted sort of this post
COVID fallout, the April, 2012,decline of the stock market and
everything else.
And these are all companies thatthought that they.
Would have, been able to exitthose companies by then and by
now, and they haven't been ableto, so
dan balcauski (30:11):
Yeah.
Yeah.
Rising interest rates and highvaluations four or five years
ago has has not helped theircause.
Best wishes to everyone in thatsituation.
It's not a pleasant place to beeither side of that transaction.
Well, so, so it sounds like,understand what side of the
Private equity market you'replaying in, value extraction
versus value creationunderstanding the downsides of
(30:31):
debt.
Given your experience with PEBACcompanies, any other advice that
you would give SaaS CEOs who areconsidering taking in private
equity investment?
michael george (30:40):
There's lots of, lots of, lots of advice.
It's a complicated world.
I happen to love it.
I, I love my time in the ventureworld.
The thing I welcome aboutprivate equity very differently
is, in the venture world whereyou have two or three or four
venture firms that have fundedyou if everything's going
(31:01):
swimmingly, you'll do great.
What is that 6%?
I mean, for the other 94 percentof us mere mortals, when things
don't go well and you have animpedance mismatch between.
The firm, the individual fromthe firm, the cycle of the fund,
all that other stuff.
It wreaks havoc with yourbusiness.
And these are things that havenothing to do with your
(31:23):
business, right?
They have to do with sort ofthis weird marriage of three or
four or five different venturefirms that again, have an
impedance mismatch.
In the private equity world,you're typically dealing with
just one.
And if it's more than one, youhave a senior majority and a
minority, and the minority istypically pretty silent.
(31:46):
So, it's easier to be the slaveto, one master than, being
pulled apart by multiple ones.
So I love that singular.
Focus in the private equityworld.
Number one, number two, in termsof advice and guidance, I, as I
shared this with someone who wasentering the private equity
(32:06):
world, I said, make no mistakeabout it.
There's only one CEO in thiscompany.
And that's you.
And you own every decision, goodand bad, and own it.
Like, do not for even a second,make a single excuse for any of
(32:27):
the failings, the slowness, The,turnover, the churn or anything
like you own everything top tobottom.
And if you don't go to bed atnight thinking that way and wake
up that way in the morning,you'll be in trouble.
I, they, these, the, these aresmart people, they don't suffer
fools.
And and and so, be wise and takea level of ownership.
(32:50):
That candidly, in, again, in theventure world, you can parlay
your capital with, let's say bybefriending or having a
particular relationship with oneof the venture firms so that
person is your defense, on the,in the screen.
But when you have one funder,one financial partner Pay
(33:13):
attention.
And in the venture world, I usedto say your venture partner, all
partners are equal.
It's just some are more equalthan others.
I, I used to side up, I used toteam up with the larger
investors, I Kleiner Perkins andMatrix were two, I had a, I ran
(33:33):
a company, we had literally 23institutional investors, but
Matrix and Kleiner Perkins weretwo of the largest ones.
Guess where I spent 90 percentof my board time with, right?
And I kind of didn't care abouteverybody else.
In the private equity world,again you have a singular
partner and you own everything.
(33:56):
Good and bad that happens, from
dan balcauski (33:58):
That's a great compare and contrast between the
VC, this impedance mismatchversus, having sort of one maybe
one eye of Sauron or whateveryour appropriate metaphor is
sort of, looking at you but alsoI heard perhaps a irrational,
excessive level of ownershiprequired to every decision that
the company is yours.
And if you go in eyes wide openas a new CEO, like, Making sure
(34:21):
that you're committing to whatyou're committing to going
forward.
So, look, I could talk to youall day, Michael.
This has been fabulous, to berespectful of your and the
audience's time, I do want tostart wrapping it up.
Look we've talked about, covereda lot of ground today.
If I had to give you a, I gaveyou a billboard and you put any
advice on there for other B to BSaaS CEOs trying to scale their
companies, what would you, whatwould it say?
michael george (34:42):
Focus.
Wow.
dan balcauski (34:44):
Love it.
What do you think about all thespectacular people you've had a
chance to work with?
Is there anyone who just pops tomind that's had a
disproportionate effect on theway you think about building
companies?
michael george (34:54):
That's so hard.
There is a gentleman thatremains in that position in my
life.
He's 81 years old now.
He was one of the co founders ofData General which is a company
that's long forgotten by many,unfortunately.
And this was a company that Ifounded and funded myself called
(35:14):
Interlinks.
And I heard him speak at aconference.
And I say, over the five yearsof running that company, I made
about 5, 000 mistakes, but Imade one really great decision
and that was I dogged him downFor almost a year to get him to
join my board.
(35:35):
And his name is Steve Gall, G AL and he's perhaps had one of
the most profound impacts on mylife in my, in the professional
sense of the world, I would saythe one person that's had by far
the most profound impact.
On my life has been my father.
I feel really fortunate whenpeople talk about being a CEO,
(35:59):
being a successful CEO, I remindthem to make no mistake about
it.
I have two brothers and they areboth CEOs as well.
I grew up on the right knee andI have my parents in, in, in
general, and my father inparticular to thank for that.
So
dan balcauski (36:16):
Thank you for sharing that both for Touching
Story on your father, as well aswith Steve.
If folks want to learn moreabout what you're up to or
Syncro Where could they do that?
michael george (36:26):
our website is Syncromsp.
com and it's it certainly it's awebsite that's going to be
completely transformed beforethe end of this year, we're
relaunching the entire companyaround some initiatives.
For automation.
But please feel free to do thator to reach out to me directly
(36:49):
on LinkedIn.
If somebody feels that I couldbe particularly helpful to them
I'm happy to, I'm happy to helpwhere I can.
dan balcauski (36:56):
Michael, I will put those links in the show
notes for our listeners.
Everyone, that wraps up thisepisode of SaaS Scaling Secrets.
Thank you to Michael for sharinghis journey insights and
valuable tips for our listeners.
If you found this conversationas enlightening as I did,
remember to subscribe so youdon't miss out on future
episodes
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