March 11, 2025 • 38 mins
Dan Balcauski speaks with Jim McGinnis, the CEO of Vanco, a software and payments provider for faith groups, schools, and community organizations. Jim shares his extensive experience scaling SaaS businesses, including his success at MyCase, where he doubled the business in 18 months. They discuss challenges in convincing different customer segments to adopt new technologies, the importance of focus and operational metrics, and the necessity of employee engagement. Jim also highlights the advantages of private equity backing and his strategies for maintaining high customer satisfaction and innovation levels in a lagging market.
00:27 Guest Introduction: Jim McGinnis
02:34 Focus and Operational Changes at MyCase
04:07 Metrics and Growth Strategies
09:38 Private Equity and Enterprise Value
16:45 Aligning with Private Equity Investors
20:53 Innovations at Vanco
24:33 Employee Engagement and Its Impact
25:44 Measuring Employee Satisfaction
27:15 Effective Communication Strategies
31:09 Leadership and Team Building
33:16 Making Tough Leadership Decisions
35:19 Rapid Closeout Questions
Guest Links
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.
The podcast brings you theinside stories from the leaders
of the best scale up, B2B SaaScompanies.
I'm your host, Dan Balcauski,founder of Product Tranquility.
Today I'm excited to speak withJim McGinnis.
Jim is CEO of Vanco, a softwareand payments provider,
empowering faith groups,schools, and community
organizations.
Previously, A CEO of MyCase, Jimdoubled the business in just 18
months before successfulacquisition by Affinipay.
(00:41):
His extensive leadershipexperience spans roles at
Intuit.
Activision and global marketingpositions at PepsiCo and p and g
where he helped launch the Tidebrand in China.
Let's dive in.
Welcome Jim to SaaS ScalingSecrets.
Jim McGinnis (00:54):
Thanks for having me.
I'm glad to be here.
Dan Balcauski (00:56):
I'm very excited for our conversation today.
I think you'll have a lot ofvalue for our listeners.
As I hinted at in theintroduction, you've led
marketing sales and companiesacross all types of customers,
consumers, lawyers, now,churches and schools.
To begin with, what's harderconvincing a Chinese consumer to
(01:17):
buy Tide detergent in 1995, or achurch to adopt giving software
today?
Jim McGinnis (01:22):
That's a great opening question.
It was easy to convince Chineseconsumers in 1995 to adopt Tide
because it was fundamentally abetter product that completely
transformed their lives.
I I wish that it were as easy toconvince churches to adopt e our
e giving solutions, but they'rehappy with any donor they get.
(01:43):
So sometimes it moves moreslowly.
Dan Balcauski (01:46):
Well, hopefully this is just a temporary blip in
the road and and maybe 20 yearsfrom now you'll be like,
actually once we cracked it, itwas just as easy as selling
people tide.
So, I've full faith that you'llbe able to tell the same story
of the future.
Well look, before you pivoted tothis world of selling software
to churches and communityorganizations you were selling
(02:07):
software to another groupthat's.
Well known for loving theadoption of software, which is
attorneys your time at MyCase.
As I hinted at in myintroduction, you guys really
had an incredible run in the 18months that you were leading
that company where you doubledthe revenue there.
One of the are the topics that'scome up over and over again.
(02:30):
On this show has been theimportance of focus.
So rather than asking you whatyou did, was there anything that
you had to stop the company fromdoing in order to hit those
targets when you first joinedthat company?
Jim McGinnis (02:44):
Yeah, that, that's a wonderful question.
So it was a carve out.
It had a great team that hadbeen growing it for years as a
sort of a, an underutilizeddivision of a different company.
And so, I think, stop limitingthemselves.
Might be a way to think aboutit.
We had been freed by our newprivate equity backer to really
(03:06):
step on the pedal of growth.
And so, there was a very much ofa return on a short term return
on investment mentality that wasthere when I arrived and we were
really go, go, go get'em withgrowth and that was very
exciting.
Dan Balcauski (03:20):
As you sort of, looked at that, investment
opportunity or that ability toreally go after the opportunity
that was in front of you fromthis freeing from the chains of
your previous corporate owners.
I guess what were the first,what was the first operational
change that you looked at that,and I guess what were you
watching as a leader?
Like what metrics were youtracking as you sort of made
(03:42):
these changes?
Jim McGinnis (03:43):
Yeah, the there are two embedded questions in
there.
The first is it was a carve outand a carve out is a special
beast for those who've done it.
They know we had nothing.
We didn't have an accountingsystem.
We didn't have accountants.
We didn't even have a CFO andso, we had to stand up all the
operational capabilities of thecompany.
And I think that was anunderestimated focus area for us
(04:05):
initially.
Then you asked about metrics.
We really.
Focused on those SaaS metrics wewere looking for growing our
monthly recurring revenue.
And that was done in two waysfor MyCase.
One was standard SaaS justgetting people to sign up for
the software.
And the secondary one waspayments.
We had our own payments engine.
We were at the time one of thefew legal practice management
(04:27):
solutions with embeddedpayments.
And so we were looking forpayments adoption.
At first sale, but thenpenetration of the base, which
hadn't been terribly penetratedwhen I got.
There.
Dan Balcauski (04:38):
So I guess, so you mentioned right the carve
out is a special, it's, its ownbeast in that, it doesn't have
all the, it's not been anongoing separate entity.
So a lot of the kind of businessoperational support functions
you might think of, like,accounting or.
Finance.
Right.
They may not have had, or theydon't have at all, right?
'cause they just only have theproduct or whatever been spun
out.
I guess as you sort of lookbeyond that, like what do you
(04:59):
think was, what helped unlockthat acceleration in growth that
wasn't happening underneath, thelarger corporate umbrella before
the company was carved out.
Jim McGinnis (05:11):
Yeah I, I think it was having a team that was laser
focused on the metrics ofgrowth.
So we were investing everydollar, making sure that it grew
the business rapidly.
I think back to the marketingfunnel we rethought the entire
marketing funnel.
We rethought how we handled theleads under a new.
Rev Ops leader we thoughtrethought how quickly the sales
(05:34):
team would pick up those leadsand act on them under a new
sales leader.
So, so, accelerating every stepof the funnel with a focus on
growing business faster.
Dan Balcauski (05:46):
guess in, again, right?
It's easy to look, backwards andbe like, oh, well, like, if
only, there's.
Endless number of companies,right when they're acquired,
right?
There's all this ink spilledand, wall Street Journal, et
cetera, around all, the CEOstalk about all these, synergies,
et cetera.
They don't materialize.
I guess like why, what was itabout the company being part of
(06:07):
this large organization beforethat like.
Prevented them from looking atthat, right.
Because I could see this,there's multiple ways to un
untether this, but I see this alot, right?
Either companies become,multi-product or we have like,
tuck-in acquisitions.
You're living the reverse ofthat.
So, what were they missing?
Is it just purely the way that,larger corporations need to sort
of incentivize and structure,accountability and ownership
(06:29):
within organizations?
Or is it, is, was theresomething else there?
Jim McGinnis (06:34):
When a business is and it became non-strategic.
The previous owner their earlierthesis had been that in order to
succeed they needed to developSaaS offerings in different
verticals.
And so they acquired a smallgood but not very big legal
practice management.
Vertical.
And then three or four yearsinto it they decided that no,
(06:56):
their core vertical of realestate was real estate tech was
more than sufficient for them,but they had this nice little
business.
It was growing it wasn't losingmoney.
So why not keep it around?
And so they kept it around for anumber of years.
Meanwhile, our core competitorhad the opposite philosophy.
They were.
All in on legal tech and theywere investing heavily in
(07:17):
driving penetration of themarket.
And so we went from long beforeI was there from, first mover
and market leader to being twoor three times smaller than our
next, than our biggestcompetitor.
And it was just lack of focus.
It was lack of intent to be themarket leader in the legal tech
space.
And so, When we carved out.
(07:38):
We had three, we had a veryclear thesis that we could grow
this business faster.
The first was just focus ondriving new logos.
And that meant investment in ateam and modern SaaS practices.
The second was acquirecompanies.
And while I was there weacquired small, four smaller
SaaS businesses that wereinteresting and important
(08:00):
tuck-ins.
But it helped.
Begin to build the momentum andcross-fertilize the ideas.
And then the third was payments.
And that, that was my backer hada lot of experience in
monetizing payments.
And payments is tricky and it'shard and if you don't focus on
it, it doesn't just happen.
And so, the previous owner.
Was, didn't have the luxury tofocus on the legal tech
(08:23):
business.
MyCase, let alone the sub partof that, which is the payments
in the legal tech business.
And so, suddenly the businessjust got a ton of oxygen.
And when it did it took off.
Dan Balcauski (08:34):
Yeah.
Well, and something I picked upthere, right?
So your, it sounds like theywere sort of straddling two very
different buyers and because ofthat they weren't sort of all in
on one particular marketpersona.
And I think that a lot ofcompanies can end up in that
phase, especially as they go.
Multi-product.
And I've been part of companieswhere that can happen, where
you're like, okay, we, we sellto it.
And now we think like, oh,there's a developer, a DevOps
(08:57):
persona we can go after.
Not realizing it's like, okay,well that, that customer's
almost entirely different.
Like they, they might looksimilar.
It's like, well, real estate's,real estate transactions often
involve lawyers and, they havesimilar workflows and kind of
the firm sort of, if you squintsort of their eyes can look,
similar.
But you know, there's all thosenitty gritty differences that,
take your eye off the ball.
And especially if that's notkinda their primary focus I
(09:17):
could see how that'd beproblematic.
So, we were talking before aboutleading as you were underneath
this new private equity ownerthey were unleash you and like
really said, Hey, let you know,let's hit the gas.
I think that might come as asurprise to some folks because
private equity doesn't alwayshave that doesn't always carry
that connotation of, grow, grow,grow.
Let's go after this market.
(09:38):
I guess that seemscounterintuitive to me, but I
guess what have been your sortof biggest realizations or
surprises sort of leading SaaSbusinesses with underneath,
private equity ownership?
Jim McGinnis (09:49):
Yeah.
Well, I know private equity canget a bad name, but I've had
nothing but very positiveexperiences.
If you think about what privateequity is they are, taking money
from folks and being asked tomanage it and get returns that
are higher than that.
Their partners can get in othervenues, public venues, et
cetera.
So what are they looking for?
(10:10):
They're looking for returns.
And where does return come from?
Return fundamentally comes from.
Rapid expansion of theenterprise value of the company
and the enterprise Value of thecompany can be different
depending on its stage.
And sometimes in growth orientedbusinesses, it's someday gonna
trade on a multiple of a RR.
(10:30):
And so, obviously you don't wantto lose so much money so rapidly
that there's no hope for everturning it profitable.
But as long as you can grow thetop line in those kinds of
businesses rapidly you'regrowing enterprise value and
your private equity backersshould be very, very happy.
There are other businesses thatare more mature and there it's
less about driving the top linegrowth and more about.
(10:53):
Managing to the bottom linegrowth.
And so that's where you canstart looking for synergies and
efficiencies and other ways todrive enterprise value.
But working with private equityfirst it's a realization that at
the core it's driving enterprisevalue and that there should be a
very clear thesis on how thatenterprise value is driven.
And then the third is what I'veloved about it is they unleash a
(11:15):
leader and a team.
To execute against that agreedthesis and as long as you
execute against agreed thesis.
The relationship with privateequity is fabulous.
It's wonderful to be given thekeys to, to really make the
engine hum.
Dan Balcauski (11:30):
Yeah and make.
Make no mistake to any of myprivate equity friends who may
be listening.
I was not trying to insinuatethat there was not, it was a
negative connotation behindprivate equity back, but more
so, that in terms of the levelof investment to really sort of
go after a market, becausethere's definitely different
types of, we, we hear.
Different types of privateequity investment.
Right.
And I think this is more sort ofon the we might term like sort
(11:51):
of the growth equity side of thefence, right?
Versus the what used to betermed the kind of the RGR de
Bisco corporate Raiders versusbarbarian at the gate type
private equity back in the day,right?
The, they think they operate,very differently.
I guess as you've sort of.
Gotten, more accustomed to, thisrole of leading in as a CEO at a
(12:12):
private equity backedorganization.
You've mentioned things like,enterprise value.
I.
And I think, some people if youhave an MBA right or have spent
a bunch of time runningcorporate financial models,
right?
You just might sort of reallyget like, okay what's, what does
that compose of, what does thateven mean?
Help break that down.
Are there ways that you thinkabout like.
(12:34):
As you're looking at growthinitiatives like these things,
is there a test that you use oflike, yes, these are the things
that are really gonna driveenterprise value versus
otherwise, versus else?
Because I think, a certainpoint, there's a lot of
discussion in the market around,okay there's revenue, and then
they have like, revenuemultiples, right?
And you just sort of assume thatmultiple is a given.
(12:54):
Right?
To a certain extent.
Maybe some companies have,faster growth rates, so maybe
they get a little bit better ofa multiple.
Are there more nuanced ways thatyou're thinking about it as
you're sort of leading one ofthese firms in terms of how
you're thinking about specificinvestments and what's actually
gonna drive that enterprisevalue?
Yeah.
Jim McGinnis (13:09):
Yeah, that, that's a wonderful question.
The first thing to reallyunderstand.
Is what the multiple is beingdriven off of.
So if you're a growth companyand it's being driven off of
your a RR or your revenue thatleads to a certain set of
things.
And if it's in a later stage andit's being driven on, off of
ebitda, that leads to adifferent set of things.
So you you know that you'redriving enterprise value because
(13:32):
it's some, multiple times eitherrevenue or ebitda.
And so you can think about everydecision.
If you're on a revenue basis aswhat how much it's likely to
drive revenue, and then by somemultiple, and you don't have to
think about the multiple.
You just focus on driving therevenue.
And the same with goes withebitda.
If you're focused on EBITDAmultiple there are two ways to
(13:54):
drive ebitda.
One is to reduce costs improveyour margin but the other is top
line growth that flows throughto ebitda.
So you're always looking atevery decision in terms of how
much will it grow ebitda overthe period of time that I'm
likely to have a multipleapplied to me, and then the
multiple is the one that I enjoymost teaching and talking to my
team about, because the multiplefundamentally is a measure of
(14:17):
confidence in the sustainabilityof whatever it is you're
presenting.
And so, if you're growingquickly, your multiple will be
higher.
But it will only be high ifpeople are convinced that the
growth that you've delivered notonly is there, but it's
sustainable into the future.
And so lots of innovation.
One of the things we didwonderfully, in MyCase, to
support the innovation case orthe multiple was we had some
(14:40):
fabulous innovation and some.
Upstream demonstration of thingsthat we could continue to sell
to our existing base and beyond.
So an example is we launched anaccounting module for MyCase.
Well, that's fabulous becauseyou show the growth of adding
logos, but you can also showthat the wallet share will go up
over time.
And so the confidence that thegrowth rate will be sustained is
(15:02):
quite high and that drivesmultiples.
The other is all the things youdo to run a great company.
I'm you and I talked a littlebit and I'm passionate about.
I love serving the investors,but the only sustainable way to
serve the investors is to have agreat product and really delight
customers because at the end ofthe day, you're only sharing the
value you create from thecustomers with the investors.
(15:23):
And then to serve and delightcustomers, you have to have a
wonderful team and an engagedemployee base.
And so.
I've always worked on employeeengagement that shows that over
time I can consistently delightcustomers, and then that shows
that you can consistently growthe grow the business.
And that combination leads to apretty believable set of
(15:45):
circumstances that supports anattractive multiple and
ultimately the enterprise value.
Dan Balcauski (15:51):
Man, I wish I had a whiteboard here'cause you just
laid out a bunch of gold and I,I wanna try to make sure that
we, I don't know if we get toall of it, but I wanna at least
help the audience sort outeverything you just laid out
there.
So, so, okay, you've got your,sort of, your, your revenue
growth.
Like those could be a bigdriver, but then, the other
things you laid out is like,what are those components that
actually.
(16:11):
Underpin that revenue and thatrevenue growth, right?
Customers are sticking around,they're delighted.
You've got employees that arecontinuing to help drive the
success.
You've got an innovationpipeline that's gonna, continue
to deliver those results intothe future.
So those are all great.
And then you mentioned, right,things like, making sure you
have employee engagement.
those are a beautiful array ofbreadcrumbs and I want to take a
(16:32):
piece of the time if we can, Iguess, help me understand, going
back to what you said evenbefore that last response you
were talking about, if you andthe.
Private equity investors canalign on sort of a direction
forward, right?
Then it's then they're there tosupport the team and you're off
(16:53):
to the races.
I guess let's start there.
Like how do you think aboutgetting that alignment sort of
off the bat and sort of buildingthat trust and then like, how do
you think about thatrelationship such that you can
effectively sort of manage theteam?
Does that make
Jim McGinnis (17:09):
Yeah, it does.
And, often the communicationwith a backer because they're
interested in the enterprisevalue growth and therefore
they're interested in therevenue growth and the
multiples.
That comes down to agreeing onfundamentally a set of
financials.
I mean, at the end of the dayit's numbers one of my favorite
things that I'm not sure theyadvertise that anymore, but
(17:30):
TurboTax for a lot of time.
Talked about your income tax wasthe story of your year.
In numbers.
Did you get married?
Did you buy a house?
And so, your company, the storyof your company appears in
numbers.
So you can see how it's grownover time.
You can see whether you'readding customers or losing
customers.
You can see whether forinstance, churn is going up or
(17:50):
going down.
All those things projected orlooking backwards and projecting
in the future is the story ofyour company.
And then you fill in the, youput the meat on those bones
with, explanation for, and a lotof times we do waterfall charts
and bridges that shows that Ibelieve that revenue is gonna go
up this much because of thesefour building blocks that we're
(18:12):
working on.
And then beneath that, there'sconfidence that those building
blocks have a high degree ofconfidence that they'll play out
the way that you play them out.
So you start with in yourcommunication, you start with a
set of numbers that tells thestory of your company, and then
you unpack it and put meat onthe bones with the.
The specifics of how and whythey should have confidence that
(18:32):
you're gonna deliver againstthose things.
And then the next piece iscommunicate, communicate,
communicate.
So you want to put that forwardclearly.
You want to make sure that it'sbeen heard you want to agree
that it's reasonable going backand forth.
And then when things inevitablydon't work out the way that
they, that you expected that youwill.
It's important that you come tothem with.
(18:53):
Clear understanding of thebusiness and why things aren't
working exactly as you said theywould, but what changes what
action you're taking to makethings put things back on track
or accelerate things further.
So, you never wanna surprise.
Well, it's probably true in any,every relationship.
Surprises are not usuallywelcome and you certainly don't
want to surprise your privateequity backer.
Dan Balcauski (19:12):
Probably good for the long term survival of
everyone in their roles.
Everyone has a boss.
Even the CEO so, and youprobably have be, you have many
bosses, right?
Customers, employees.
You, you're responsible toeveryone for better or worse.
Well, I guess.
So, so you're laid out sort ofthis operating plan, your or the
high level sort of goals youhave, sort of your rationale
(19:34):
for, the story that's gonna betold.
Talk to me a little bit.
One of the other breadcrumbs youlaid out there was around this
idea of investing to make surethat you're delighting
customers, that they're stickingaround.
And I'm curious because this isoften an area where, you know,
especially as it pertains toprivate equity backed companies,
it's like, one of the cliches,and you could tell me, please
(19:57):
tell me if I'm absolutelyincorrect here.
One of the cliches of, the.
The founder led, maybe VC backedfirm is the missionaries.
We don't care like about the,the p and l.
We're gonna, we're gonna, we'rebringing, we're gonna change the
world.
We're gonna be the ultimatedisruptors versus the
mercenaries or with, we've gotthe spreadsheets and we're gonna
make sure this business has highenterprise value.
(20:20):
Talk to me about like, within,first of all, you could agree or
disagree with that framing, butthen also like, how do you think
about within a private equitybased firm.
Investing in innovation,investing in r and d, and and
especially where you're at, likeVanco, like do, does that, is
that you maybe are in a laggardtype market where your customers
are not, they're not I doubtthey're aggressively adopting AI
(20:42):
and all their workflows.
Like maybe some of the other,some of the, some, business
customers might.
How do how, if at all, does thataffect the way you think about
investing in innovation in aprivate equity backed firm?
Jim McGinnis (20:52):
Yeah.
Oh.
I am very, very proud of myteam's increased pace of
innovation at Vanco.
Just as an example, e eventhough our our market isn't
broadly growing, double ortriple digits or something like
that.
I mean, there's still enormousopportunity to innovate and grow
the business.
Some of the things that we havedetermined working with our
(21:13):
customers and some of ourpartners is the importance of
donor engagement.
Believe it or not, less thanhalf of the total donations
given at a church.
Are likely to be e given sopeople are still putting cash
and checks into into the basketas it gets passed along.
So that's an opportunity for usto continue to grow and it's
(21:35):
really important for thechurches as well because just
think that through that basket'sfull of.
Cash and checks.
And where does it go?
It goes back probably to achurch volunteer in the back who
has to count it and credit tothe donors make sure it gets to
the, bank on time.
And they can't, they don't havea ton of visibility as to who
came to church and who didn'tcome to church who's giving.
(21:56):
More who's giving less.
All that is lost when it's justcash.
But when it's a, when it's a egiving solution like ours a
whole bunch of visibility andsecurity comes to the church.
And we know another thing thathappens is that when their
donors give.
In a recurring way.
If they Ms.
Church on Sunday as an example,they still give because it's
(22:16):
deducted from their checkingaccount or run on their credit
card on a weekly basis.
That's the intent of the donor.
They would've given money hadthey gone to church.
They just got busy that week.
So the church is able to fundtheir mission more reliably and
the donor better able to delivertheir intent.
Back to the innovation a littlebit, the donor engagement's
really important.
So we work on a seamless mobileexperience and.
(22:37):
We want people to spend moretime in the mobile experience.
And so we've added content thatincludes AI generated
devotionals.
So there's a good reason to lookat our app other than just to
give you can actually findinspiration.
Another thing that we've donerecently is as people moved
online because of Covid, manychurches including my
(22:57):
brother-in-law who's a, aminister.
They continue to put theirsermons up on YouTube, and they
have a decent following ofpeople that go.
But if you go to YouTube,there's no mechanism to give
directly.
So we've created an overlay, astreaming service where we have
embedded giving opportunitiesinto the sermons.
So if people go through thechurch site they can see the
(23:17):
sermon and give.
So, it's getting very close toyour customers and looking for
other opportunities to continueto drive.
The business through innovation,and that leads to customer
delight and the customer delightmakes your business stickier and
ultimately leads to positiveoutcomes for the employee, for
the customer and the investorsas well.
Dan Balcauski (23:36):
I love that because you know that the story
of the, hey, there'sdevotionals, there's other
content as it pertains to theparticular religious
organization, right.
That may you may go to outsideof the context of actually the
donation, we've seen similarplaybooks, right?
There's a reason why Zillowsends you weekly updates about
(23:58):
the home price.
Your estimate of your home haschanged.
'cause you only engage in a homesale, once every five, 10 years
on average for Americanconsumer.
But you're really interested inyour home value changing much,
similar, like LinkedIn didsomething very similar with
like, oh, like I only go toLinkedIn, update my profile once
I'm in a job search every threeyears.
But, otherwise, now they havethe.
Things like the newsfeed toincrease that stickiness.
(24:21):
And so yeah, it, in innovationdoesn't have to be the sort of I
guess, the hard scienceinnovation.
We often accompany with it inorder to drive those meaningful
outcomes.
And I can see how those wouldall drive ultimate that bottom
line.
You did talk before about sortof employee engagement and I
guess.
I can under, and you talkedabout it in the concept of its
(24:41):
importance to, enterprise value.
I guess I've struggled a littlebit with something like employee
engagement.
'cause enterprise value, verytactical, very spreadsheet.
I could put it in Excel and Icould calculate it.
Employee engagement feels veryfluffy.
Like how do you square those twothings together?
(25:01):
How do you sort of think aboutthe investments that you make
there against those very hardsort of metrics that you're
being measured against.
Jim McGinnis (25:09):
Yeah you first have to remember that the only
thing you have to sell are thetalents of your employees
because it's the employees thatwrite the software who sell the
software who.
Work with the customers whoimplement the software and who
make sure everything iscompliant and stays on track in
the back office.
So, every employee has aimportant share of the task and
(25:31):
delivering the customer delightand multiply and ultimately.
The investor happiness andenterprise value.
So if you start there and youremember that that's all you
have are the employees, theyquickly become the most
important thing that you've got.
We do measure it.
We measure it with a quarterlyemployee, net promoter score.
And it's quite simple.
I'm a huge fan of net promoterscore.
(25:51):
If I would presume thateverybody who listens to this is
probably on that, but and youhave to do it very.
Correctly and very simply andvery consistently, but it's
quite straightforward from ascale of zero to 10, and you
always start with zero becauseif you start with one, people
aren't sure whether one's goodor bad, but zero's never good.
So on a scale of zero to 10, howlikely do you recommend.
Vanco is a place to work to afriend or colleague.
(26:13):
And by asking that of theemployees, we only we get a net
promoter, which is the peoplewho say nines and tens.
Those are promoters, less,anybody less than a seven.
And the net of that, if you'reabove a 30, if known, to be
highly consistent with agrowing, successful, happy
workforce.
And so, there's one other trick,which is you say.
(26:35):
What's the main reason for yougiving us that score?
And that gives them a chance totype in a brief answer.
And we talk a lot aboutconservation of comments.
People might have 15 things ontheir mind, but the most
important one will pop up inthat one.
We run that survey everyquarter.
I read it, I read every singleone of the comments from every
single employee.
(26:56):
And that gives us a lot ofdirection as to what we can do
to make sure that we areimproving our employee
engagement over time.
The themes change.
We go through a lot of change.
Things that weren't important tothe employee base become
important, and then they becomeless important.
And we are work hard to stay infront of that all the time.
Dan Balcauski (27:15):
Well, and you mentioned before your sort of,
reliance on communication as itpertains.
I, within that context, youmentioned before to the to the
investors making sure youcommunicate the state of the
business over and over.
How do you think about sort ofyour communication back to the,
sort of employee base as itpertains to maintaining this
employee engagement?
Jim McGinnis (27:35):
Yeah, that's another one, and I've learned
this from some of the greatleaders that I've worked for
before, but.
One of the things I did inMyCase, I carried out here is a
consistent all hands.
I've always done it weekly 30minutes on Thursday, not 27
minutes, not 31, but we alwayskept it to 30.
We always focused on theemployees celebrating successes,
promotions, new hires, focusedon the customer, talking about
(27:56):
customer of the week, and then abrief section on the investor.
Just letting people know how thebusiness is going.
A frequent interaction like thatcan go a long way towards making
sure that.
My leadership team and I stayconnected to the broad employee
group.
The second is absolutely an opendoor policy.
We live in the best of times.
I can't imagine when I was juststarting out PG walking into the
(28:18):
CEO's office with a cup ofcoffee sitting down and having a
chat.
But I'm available all the timeon teams email.
Even text and phone.
And so, I have nearly continuousinteraction with all levels of
employees which is a greatthing, right?
This, that just wasn't really athing when I started out in my
career, but now it is.
So you have that.
And then I'm a big believer ingoing the other way.
(28:40):
Sometimes people won't reach outto me, but I'll do consistent
skip levels is something that anold boss used to call it.
So I just let somebody whoreports to me.
Or somebody who reports to themknow, Hey, don't get scared, but
I'm gonna reach out to youremployees next week.
I'm just gonna have a quickconversation with'em.
Sometimes individually,sometimes as a group and ask'em
what's working, what's notworking?
(29:00):
What can I do better?
And any feedback for me or thecompany.
And then often questions like,are we missing any obvious ways
to improve?
Our growth or our outcomes.
And I've got just a little under300 people in my company.
I've been here two yearsprobably been around twice, I
think where I've talked toeverybody like that.
And working on my third timearound.
Dan Balcauski (29:19):
Is there any, is, let me ask you a question.
'cause I've always been probablypainfully upfront and direct
with my superiors to the pointwhere like, if I've got a
problem, like they know I have aproblem but with it but I
definitely have friends who arelike, oh man, like.
My my CMO did a skip level andlike I was just like terrified
(29:41):
and I just like didn't wanna getin trouble and didn't say
anything.
I guess When you have thoseconversations with folks who are
maybe a little bit lower in theorganization is there, are there
ways that you've learned toapproach it such that you can
help, like, help have a moreactually authentic and
productive conversation versusthem just maybe being like, I
hope I don't say somethingstupid in front of the big boss.
Jim McGinnis (30:04):
Yeah usually humor obviously lets the guard down.
Those interactions are the mostpositive when the employee's
intent is to improve thecompany.
And then it's just a, it's afabulous gift to me.
And so I work to tease out asmuch as I can, the why behind
the why behind the why.
That really is about improvingthe company as a whole.
(30:27):
And if you look at it that way,sometimes something that seems a
little bit shy you can digdeeper and understand more of
what's really going on.
Sometimes something that soundslike a whine or a complaint if
you just leave it there, it canbe a little annoying, I guess I
might say.
But if you push further and yousay no, why are they how are
they trying to improve thecompany by sharing that with me?
(30:48):
And then ask questions thatdirect them in that.
Way you get some really niceinsights around ways you can
make the company better, eitherfor the employees or the
customers, and sometimes for theinvestor.
But usually the employees aremost helpful with employees and
customers.
Dan Balcauski (31:02):
Well, so, so you've got multiple levels of
employees.
So I wanna pivot slightly thelens here, right?
So you've be talking about thebroader employee base, but look
you as a.
You're not the founder.
You haven't been the founder ofa couple of companies.
You've been CEO in, you've gotprivate equity investors who
just spent a lot of money tomake a big stake in a company.
They've got dreams of, the,where this company can go.
(31:24):
So you've gotta come in as CEOand make some really hard quick
assessments of your leadershipteam.
I guess, are there specific kindof non-negotiable traits that
you're looking for from yourthose executives to know that
they're gonna be successful inthis private.
Private equity backedenvironment when you take over.
Jim McGinnis (31:42):
Yeah.
Absolutely some of the thingsthat I look for I, I look for
been there, done that.
I had a old boss who used totalk about at the senior level,
we usually don't have time in aprivate equity backed company
for people to quote unquotelearn on our dime.
So you need to know that theyknow how to do what you're
hiring them to do.
So been there, done that is a,is an important thing.
(32:03):
And I certainly recognize thateverybody does something for the
first time.
And in fact, when I was hiredfor MyCase, it was my first
time, CEO.
So there are exceptions andsometimes the exceptions make
the rule, but been there, done.
That's the first.
The other is I look for peoplethat are builders.
And what I mean by that is theyleave a place, a function, a, a.
An offering, whatever it is thatthey do, they leave it better
(32:26):
than they found it.
So they're they're up for that.
And then there are differentways to say it.
The least probably politicallycorrect is GSD get stuff done.
The other is people that dowindows.
You're looking for people wholike to solve problems
themselves and are willing toroll up their sleeves and they
don't delegate complexity down,but they embrace the complexity
(32:46):
and learn themselves.
So, when I talk to leaders, Ilook for those three things.
I look for somebody who's beenthere and done it.
I look for somebody who'sclearly a builder and has
stories of leaving things betterthan before.
And then you want to ask lots ofdetailed questions to make sure
that they actually did it andthen they weren't just a
passenger or present when it washappening.
Dan Balcauski (33:06):
All right.
Well, I'm gonna give you a toughfollow up to this because,
that's all right.
I'm selecting this person for arole.
I'm looking for builders.
I'm looking for people who getshit done.
That's, that would be ideal.
But maybe you take over a teamand you've got a leader and
maybe they're not getting itdone.
I, and a lot of leaders strugglewith.
It was like, okay, do I do wecoach them through this?
How do we, how do I figure thisout?
(33:27):
Like to make it work?
I guess what signs tell you, youreally gotta part ways with one
of your leaders.
Jim McGinnis (33:34):
Yeah, if if you're very clear on what you're trying
to accomplish and it's notgetting done you gotta go a
different direction.
There's not a, there's not afit.
And so it's important to movequickly.
I always remind myself that it'sa fit issue and sometimes
somebody was a fabulous fit.
Maybe they've been with thecompany for a long time and they
(33:55):
were instrumental and, captainof leading us to where we are.
But as I'm leading in adifferent direction or we're
pivoting they're not the rightperson for the next phase of
growth.
You just have to remind yourselfthat that's okay and that those
people are gonna be unhappy.
Because they're used to a highlevel of success and all the
good things that come with it,and they're not succeeding.
(34:17):
So they're gonna get frustrated.
You're gonna get frustrated.
And the quicker you can move toa new situation, the better for
everybody.
And so, it's no fun to disruptsomebody's life.
I've been terminated twice in mylife, so I know what it feels
like to be on the other side ofthe desk.
It isn't fun.
It takes a while to get over.
But I certainly wouldn't bewhere I am now if I hadn't been
(34:38):
released by people whorecognized before I did that I
wasn't a good fit in theprevious the previous
organization.
So, and then the other thingI'll add to it is a couple times
I've made mistakes where I wasabsolutely sure that I had a
great new leader in a role and Iran with them for a period of
time.
And it turned out they weren't agreat fit.
And you have to accept that.
(34:59):
You're far from perfect and atthe end of the day you're still
guessing whether somebody'sgonna work out and if they don't
work out, that's okay too.
Again, free'em up to go dosomething where they can be
their very best.
And you can bring in somebodywho can take you to that, that
next phase of grade.
Dan Balcauski (35:13):
Oh man, what a fantastic answer.
And Jim, like I could talk toyou all day, but like, we're
almost out of time.
So I do wanna pivot finish outwith a couple of rapid closeout
questions.
Is that okay with you?
Jim McGinnis (35:23):
Absolutely.
Let's do it.
Dan Balcauski (35:24):
Well, Jim, I am, I'm proud that we are both
Kellogg MBAs.
If you could go back to Kelloggand add a SaaS CEO 1 0 1 course
to Kellogg's program, what wouldbe the most important topic
you'd include?
I.
Jim McGinnis (35:37):
Oh my goodness.
That's a great question.
I gotta go to that.
I gotta go to that team buildingthing again.
One of my favorite stories is I,recognized not too long ago that
I graduated.
I'm gonna date myself fromKellogg in 1991 and since 2008,
I haven't worked on anythingthat existed when I graduated
(35:58):
from Kellogg in 91.
So, you people need to I thinklearn the fundamentals of
growing a company and beingsuccessful knowing that whatever
it is they're working on.
Or think they're gonna work onoutta school is likely to change
many times over before they endtheir careers.
Dan Balcauski (36:14):
Yes, we are in a rapidly changing environment,
whether you like it or not.
So, so, so embrace it.
What's something you believethat most people disagree with?
I.
Jim McGinnis (36:22):
I, I.
I believe it's not thatcomplicated, I guess.
And I've gotten myself introuble a couple a couple of
times as I've tried to showpeople that I think it's simple.
Usually it's the fundamentals.
It's just the fundamentals.
And we try to make itcomplicated and tell ourselves
lots of stories on why thefundamentals don't matter this
time but it usually is verysimple.
Dan Balcauski (36:43):
It's not that complicated.
You told us to communicate,communicate, communicate.
What's one comms habit?
Every sas EO should steal fromyou.
Jim McGinnis (36:53):
I, I really like that.
Weekly, all hands.
I I.
It's just been a, it's been agreat success and, some people
some people think it's toofrequent.
We're, to be honest, we'reactually trying it every other
week.
I'm not sure how it's going'cause I feel a little
disconnected, not doing it everysingle week but that was very
successful at MyCase and it wasvery, has been very successful
here as well.
Dan Balcauski (37:11):
Weekly, all hands or every other week?
All hands.
I think, I could see either oneworking.
Well, you'll have to, you haveto keep us updated on, on how
Jim McGinnis (37:17):
I will, I
Dan Balcauski (37:17):
unfolds.
If I gave you a billboard, youcould put any advice on there.
For other CEOs trying to scaletheir B2B SaaS companies, what
would it say?
Jim McGinnis (37:24):
A billboard.
Okay.
So I've had experience inmarketing, and the problem with
billboards usually is thatthey're too small, they're fonts
too small.
So in order to have a billboardbe effective, it has to be very
straightforward.
I'll give you two words.
Be curious.
I think if I, if you drove by abillboard that said, be curious.
That might lead you to do allthe right things, leading a
(37:45):
company.
Dan Balcauski (37:46):
Be curious.
I absolutely love that.
Jim I've loved thisconversation.
If our listeners wanna connectwith you, learn more about
Vanco, how can they do that?
Jim McGinnis (37:54):
LinkedIn is the way.
I once did a lot of Facebook andTwitter and who knows what else.
But I find that with my limitedtime I'm trying to cut down on
my channels.
And so really LinkedIn is agreat way to connect.
Dan Balcauski (38:04):
I will put the link to your LinkedIn in the
show notes for listeners so theyhave that as well as to the Vaco
website.
Thank you so much, Jim.
That wraps up this episode ofSask Gallic Secrets.
Thank you for sharing yourjourney and insights.
For our listeners who found JimInsights valuable, please leave
a review and share this episodewith your network.
It really helps us out.
Welcome to SaaS Scaling Secrets.
The podcast brings you theinside stories from the leaders
of the best scale up, B2B SaaScompanies.
I'm your host, Dan Balcauski,founder of Product Tranquility.
Today I'm excited to speak withJim McGinnis.
Jim is CEO of Vanco, a softwareand payments provider,
empowering faith groups,schools, and community
organizations.
Previously, A CEO of MyCase, Jimdoubled the business in just 18
months before successfulacquisition by Affinipay.
(00:41):
His extensive leadershipexperience spans roles at
Intuit.
Activision and global marketingpositions at PepsiCo and p and g
where he helped launch the Tidebrand in China.
Let's dive in.
Welcome Jim to SaaS ScalingSecrets.
Jim McGinnis (00:54):
Thanks for having me.
I'm glad to be here.
Dan Balcauski (00:56):
I'm very excited for our conversation today.
I think you'll have a lot ofvalue for our listeners.
As I hinted at in theintroduction, you've led
marketing sales and companiesacross all types of customers,
consumers, lawyers, now,churches and schools.
To begin with, what's harderconvincing a Chinese consumer to
(01:17):
buy Tide detergent in 1995, or achurch to adopt giving software
today?
Jim McGinnis (01:22):
That's a great opening question.
It was easy to convince Chineseconsumers in 1995 to adopt Tide
because it was fundamentally abetter product that completely
transformed their lives.
I I wish that it were as easy toconvince churches to adopt e our
e giving solutions, but they'rehappy with any donor they get.
(01:43):
So sometimes it moves moreslowly.
Dan Balcauski (01:46):
Well, hopefully this is just a temporary blip in
the road and and maybe 20 yearsfrom now you'll be like,
actually once we cracked it, itwas just as easy as selling
people tide.
So, I've full faith that you'llbe able to tell the same story
of the future.
Well look, before you pivoted tothis world of selling software
to churches and communityorganizations you were selling
(02:07):
software to another groupthat's.
Well known for loving theadoption of software, which is
attorneys your time at MyCase.
As I hinted at in myintroduction, you guys really
had an incredible run in the 18months that you were leading
that company where you doubledthe revenue there.
One of the are the topics that'scome up over and over again.
(02:30):
On this show has been theimportance of focus.
So rather than asking you whatyou did, was there anything that
you had to stop the company fromdoing in order to hit those
targets when you first joinedthat company?
Jim McGinnis (02:44):
Yeah, that, that's a wonderful question.
So it was a carve out.
It had a great team that hadbeen growing it for years as a
sort of a, an underutilizeddivision of a different company.
And so, I think, stop limitingthemselves.
Might be a way to think aboutit.
We had been freed by our newprivate equity backer to really
(03:06):
step on the pedal of growth.
And so, there was a very much ofa return on a short term return
on investment mentality that wasthere when I arrived and we were
really go, go, go get'em withgrowth and that was very
exciting.
Dan Balcauski (03:20):
As you sort of, looked at that, investment
opportunity or that ability toreally go after the opportunity
that was in front of you fromthis freeing from the chains of
your previous corporate owners.
I guess what were the first,what was the first operational
change that you looked at that,and I guess what were you
watching as a leader?
Like what metrics were youtracking as you sort of made
(03:42):
these changes?
Jim McGinnis (03:43):
Yeah, the there are two embedded questions in
there.
The first is it was a carve outand a carve out is a special
beast for those who've done it.
They know we had nothing.
We didn't have an accountingsystem.
We didn't have accountants.
We didn't even have a CFO andso, we had to stand up all the
operational capabilities of thecompany.
And I think that was anunderestimated focus area for us
(04:05):
initially.
Then you asked about metrics.
We really.
Focused on those SaaS metrics wewere looking for growing our
monthly recurring revenue.
And that was done in two waysfor MyCase.
One was standard SaaS justgetting people to sign up for
the software.
And the secondary one waspayments.
We had our own payments engine.
We were at the time one of thefew legal practice management
(04:27):
solutions with embeddedpayments.
And so we were looking forpayments adoption.
At first sale, but thenpenetration of the base, which
hadn't been terribly penetratedwhen I got.
There.
Dan Balcauski (04:38):
So I guess, so you mentioned right the carve
out is a special, it's, its ownbeast in that, it doesn't have
all the, it's not been anongoing separate entity.
So a lot of the kind of businessoperational support functions
you might think of, like,accounting or.
Finance.
Right.
They may not have had, or theydon't have at all, right?
'cause they just only have theproduct or whatever been spun
out.
I guess as you sort of lookbeyond that, like what do you
(04:59):
think was, what helped unlockthat acceleration in growth that
wasn't happening underneath, thelarger corporate umbrella before
the company was carved out.
Jim McGinnis (05:11):
Yeah I, I think it was having a team that was laser
focused on the metrics ofgrowth.
So we were investing everydollar, making sure that it grew
the business rapidly.
I think back to the marketingfunnel we rethought the entire
marketing funnel.
We rethought how we handled theleads under a new.
Rev Ops leader we thoughtrethought how quickly the sales
(05:34):
team would pick up those leadsand act on them under a new
sales leader.
So, so, accelerating every stepof the funnel with a focus on
growing business faster.
Dan Balcauski (05:46):
guess in, again, right?
It's easy to look, backwards andbe like, oh, well, like, if
only, there's.
Endless number of companies,right when they're acquired,
right?
There's all this ink spilledand, wall Street Journal, et
cetera, around all, the CEOstalk about all these, synergies,
et cetera.
They don't materialize.
I guess like why, what was itabout the company being part of
(06:07):
this large organization beforethat like.
Prevented them from looking atthat, right.
Because I could see this,there's multiple ways to un
untether this, but I see this alot, right?
Either companies become,multi-product or we have like,
tuck-in acquisitions.
You're living the reverse ofthat.
So, what were they missing?
Is it just purely the way that,larger corporations need to sort
of incentivize and structure,accountability and ownership
(06:29):
within organizations?
Or is it, is, was theresomething else there?
Jim McGinnis (06:34):
When a business is and it became non-strategic.
The previous owner their earlierthesis had been that in order to
succeed they needed to developSaaS offerings in different
verticals.
And so they acquired a smallgood but not very big legal
practice management.
Vertical.
And then three or four yearsinto it they decided that no,
(06:56):
their core vertical of realestate was real estate tech was
more than sufficient for them,but they had this nice little
business.
It was growing it wasn't losingmoney.
So why not keep it around?
And so they kept it around for anumber of years.
Meanwhile, our core competitorhad the opposite philosophy.
They were.
All in on legal tech and theywere investing heavily in
(07:17):
driving penetration of themarket.
And so we went from long beforeI was there from, first mover
and market leader to being twoor three times smaller than our
next, than our biggestcompetitor.
And it was just lack of focus.
It was lack of intent to be themarket leader in the legal tech
space.
And so, When we carved out.
(07:38):
We had three, we had a veryclear thesis that we could grow
this business faster.
The first was just focus ondriving new logos.
And that meant investment in ateam and modern SaaS practices.
The second was acquirecompanies.
And while I was there weacquired small, four smaller
SaaS businesses that wereinteresting and important
(08:00):
tuck-ins.
But it helped.
Begin to build the momentum andcross-fertilize the ideas.
And then the third was payments.
And that, that was my backer hada lot of experience in
monetizing payments.
And payments is tricky and it'shard and if you don't focus on
it, it doesn't just happen.
And so, the previous owner.
Was, didn't have the luxury tofocus on the legal tech
(08:23):
business.
MyCase, let alone the sub partof that, which is the payments
in the legal tech business.
And so, suddenly the businessjust got a ton of oxygen.
And when it did it took off.
Dan Balcauski (08:34):
Yeah.
Well, and something I picked upthere, right?
So your, it sounds like theywere sort of straddling two very
different buyers and because ofthat they weren't sort of all in
on one particular marketpersona.
And I think that a lot ofcompanies can end up in that
phase, especially as they go.
Multi-product.
And I've been part of companieswhere that can happen, where
you're like, okay, we, we sellto it.
And now we think like, oh,there's a developer, a DevOps
(08:57):
persona we can go after.
Not realizing it's like, okay,well that, that customer's
almost entirely different.
Like they, they might looksimilar.
It's like, well, real estate's,real estate transactions often
involve lawyers and, they havesimilar workflows and kind of
the firm sort of, if you squintsort of their eyes can look,
similar.
But you know, there's all thosenitty gritty differences that,
take your eye off the ball.
And especially if that's notkinda their primary focus I
(09:17):
could see how that'd beproblematic.
So, we were talking before aboutleading as you were underneath
this new private equity ownerthey were unleash you and like
really said, Hey, let you know,let's hit the gas.
I think that might come as asurprise to some folks because
private equity doesn't alwayshave that doesn't always carry
that connotation of, grow, grow,grow.
Let's go after this market.
(09:38):
I guess that seemscounterintuitive to me, but I
guess what have been your sortof biggest realizations or
surprises sort of leading SaaSbusinesses with underneath,
private equity ownership?
Jim McGinnis (09:49):
Yeah.
Well, I know private equity canget a bad name, but I've had
nothing but very positiveexperiences.
If you think about what privateequity is they are, taking money
from folks and being asked tomanage it and get returns that
are higher than that.
Their partners can get in othervenues, public venues, et
cetera.
So what are they looking for?
(10:10):
They're looking for returns.
And where does return come from?
Return fundamentally comes from.
Rapid expansion of theenterprise value of the company
and the enterprise Value of thecompany can be different
depending on its stage.
And sometimes in growth orientedbusinesses, it's someday gonna
trade on a multiple of a RR.
(10:30):
And so, obviously you don't wantto lose so much money so rapidly
that there's no hope for everturning it profitable.
But as long as you can grow thetop line in those kinds of
businesses rapidly you'regrowing enterprise value and
your private equity backersshould be very, very happy.
There are other businesses thatare more mature and there it's
less about driving the top linegrowth and more about.
(10:53):
Managing to the bottom linegrowth.
And so that's where you canstart looking for synergies and
efficiencies and other ways todrive enterprise value.
But working with private equityfirst it's a realization that at
the core it's driving enterprisevalue and that there should be a
very clear thesis on how thatenterprise value is driven.
And then the third is what I'veloved about it is they unleash a
(11:15):
leader and a team.
To execute against that agreedthesis and as long as you
execute against agreed thesis.
The relationship with privateequity is fabulous.
It's wonderful to be given thekeys to, to really make the
engine hum.
Dan Balcauski (11:30):
Yeah and make.
Make no mistake to any of myprivate equity friends who may
be listening.
I was not trying to insinuatethat there was not, it was a
negative connotation behindprivate equity back, but more
so, that in terms of the levelof investment to really sort of
go after a market, becausethere's definitely different
types of, we, we hear.
Different types of privateequity investment.
Right.
And I think this is more sort ofon the we might term like sort
(11:51):
of the growth equity side of thefence, right?
Versus the what used to betermed the kind of the RGR de
Bisco corporate Raiders versusbarbarian at the gate type
private equity back in the day,right?
The, they think they operate,very differently.
I guess as you've sort of.
Gotten, more accustomed to, thisrole of leading in as a CEO at a
(12:12):
private equity backedorganization.
You've mentioned things like,enterprise value.
I.
And I think, some people if youhave an MBA right or have spent
a bunch of time runningcorporate financial models,
right?
You just might sort of reallyget like, okay what's, what does
that compose of, what does thateven mean?
Help break that down.
Are there ways that you thinkabout like.
(12:34):
As you're looking at growthinitiatives like these things,
is there a test that you use oflike, yes, these are the things
that are really gonna driveenterprise value versus
otherwise, versus else?
Because I think, a certainpoint, there's a lot of
discussion in the market around,okay there's revenue, and then
they have like, revenuemultiples, right?
And you just sort of assume thatmultiple is a given.
(12:54):
Right?
To a certain extent.
Maybe some companies have,faster growth rates, so maybe
they get a little bit better ofa multiple.
Are there more nuanced ways thatyou're thinking about it as
you're sort of leading one ofthese firms in terms of how
you're thinking about specificinvestments and what's actually
gonna drive that enterprisevalue?
Yeah.
Jim McGinnis (13:09):
Yeah, that, that's a wonderful question.
The first thing to reallyunderstand.
Is what the multiple is beingdriven off of.
So if you're a growth companyand it's being driven off of
your a RR or your revenue thatleads to a certain set of
things.
And if it's in a later stage andit's being driven on, off of
ebitda, that leads to adifferent set of things.
So you you know that you'redriving enterprise value because
(13:32):
it's some, multiple times eitherrevenue or ebitda.
And so you can think about everydecision.
If you're on a revenue basis aswhat how much it's likely to
drive revenue, and then by somemultiple, and you don't have to
think about the multiple.
You just focus on driving therevenue.
And the same with goes withebitda.
If you're focused on EBITDAmultiple there are two ways to
(13:54):
drive ebitda.
One is to reduce costs improveyour margin but the other is top
line growth that flows throughto ebitda.
So you're always looking atevery decision in terms of how
much will it grow ebitda overthe period of time that I'm
likely to have a multipleapplied to me, and then the
multiple is the one that I enjoymost teaching and talking to my
team about, because the multiplefundamentally is a measure of
(14:17):
confidence in the sustainabilityof whatever it is you're
presenting.
And so, if you're growingquickly, your multiple will be
higher.
But it will only be high ifpeople are convinced that the
growth that you've delivered notonly is there, but it's
sustainable into the future.
And so lots of innovation.
One of the things we didwonderfully, in MyCase, to
support the innovation case orthe multiple was we had some
(14:40):
fabulous innovation and some.
Upstream demonstration of thingsthat we could continue to sell
to our existing base and beyond.
So an example is we launched anaccounting module for MyCase.
Well, that's fabulous becauseyou show the growth of adding
logos, but you can also showthat the wallet share will go up
over time.
And so the confidence that thegrowth rate will be sustained is
(15:02):
quite high and that drivesmultiples.
The other is all the things youdo to run a great company.
I'm you and I talked a littlebit and I'm passionate about.
I love serving the investors,but the only sustainable way to
serve the investors is to have agreat product and really delight
customers because at the end ofthe day, you're only sharing the
value you create from thecustomers with the investors.
(15:23):
And then to serve and delightcustomers, you have to have a
wonderful team and an engagedemployee base.
And so.
I've always worked on employeeengagement that shows that over
time I can consistently delightcustomers, and then that shows
that you can consistently growthe grow the business.
And that combination leads to apretty believable set of
(15:45):
circumstances that supports anattractive multiple and
ultimately the enterprise value.
Dan Balcauski (15:51):
Man, I wish I had a whiteboard here'cause you just
laid out a bunch of gold and I,I wanna try to make sure that
we, I don't know if we get toall of it, but I wanna at least
help the audience sort outeverything you just laid out
there.
So, so, okay, you've got your,sort of, your, your revenue
growth.
Like those could be a bigdriver, but then, the other
things you laid out is like,what are those components that
actually.
(16:11):
Underpin that revenue and thatrevenue growth, right?
Customers are sticking around,they're delighted.
You've got employees that arecontinuing to help drive the
success.
You've got an innovationpipeline that's gonna, continue
to deliver those results intothe future.
So those are all great.
And then you mentioned, right,things like, making sure you
have employee engagement.
those are a beautiful array ofbreadcrumbs and I want to take a
(16:32):
piece of the time if we can, Iguess, help me understand, going
back to what you said evenbefore that last response you
were talking about, if you andthe.
Private equity investors canalign on sort of a direction
forward, right?
Then it's then they're there tosupport the team and you're off
(16:53):
to the races.
I guess let's start there.
Like how do you think aboutgetting that alignment sort of
off the bat and sort of buildingthat trust and then like, how do
you think about thatrelationship such that you can
effectively sort of manage theteam?
Does that make
Jim McGinnis (17:09):
Yeah, it does.
And, often the communicationwith a backer because they're
interested in the enterprisevalue growth and therefore
they're interested in therevenue growth and the
multiples.
That comes down to agreeing onfundamentally a set of
financials.
I mean, at the end of the dayit's numbers one of my favorite
things that I'm not sure theyadvertise that anymore, but
(17:30):
TurboTax for a lot of time.
Talked about your income tax wasthe story of your year.
In numbers.
Did you get married?
Did you buy a house?
And so, your company, the storyof your company appears in
numbers.
So you can see how it's grownover time.
You can see whether you'readding customers or losing
customers.
You can see whether forinstance, churn is going up or
(17:50):
going down.
All those things projected orlooking backwards and projecting
in the future is the story ofyour company.
And then you fill in the, youput the meat on those bones
with, explanation for, and a lotof times we do waterfall charts
and bridges that shows that Ibelieve that revenue is gonna go
up this much because of thesefour building blocks that we're
(18:12):
working on.
And then beneath that, there'sconfidence that those building
blocks have a high degree ofconfidence that they'll play out
the way that you play them out.
So you start with in yourcommunication, you start with a
set of numbers that tells thestory of your company, and then
you unpack it and put meat onthe bones with the.
The specifics of how and whythey should have confidence that
(18:32):
you're gonna deliver againstthose things.
And then the next piece iscommunicate, communicate,
communicate.
So you want to put that forwardclearly.
You want to make sure that it'sbeen heard you want to agree
that it's reasonable going backand forth.
And then when things inevitablydon't work out the way that
they, that you expected that youwill.
It's important that you come tothem with.
(18:53):
Clear understanding of thebusiness and why things aren't
working exactly as you said theywould, but what changes what
action you're taking to makethings put things back on track
or accelerate things further.
So, you never wanna surprise.
Well, it's probably true in any,every relationship.
Surprises are not usuallywelcome and you certainly don't
want to surprise your privateequity backer.
Dan Balcauski (19:12):
Probably good for the long term survival of
everyone in their roles.
Everyone has a boss.
Even the CEO so, and youprobably have be, you have many
bosses, right?
Customers, employees.
You, you're responsible toeveryone for better or worse.
Well, I guess.
So, so you're laid out sort ofthis operating plan, your or the
high level sort of goals youhave, sort of your rationale
(19:34):
for, the story that's gonna betold.
Talk to me a little bit.
One of the other breadcrumbs youlaid out there was around this
idea of investing to make surethat you're delighting
customers, that they're stickingaround.
And I'm curious because this isoften an area where, you know,
especially as it pertains toprivate equity backed companies,
it's like, one of the cliches,and you could tell me, please
(19:57):
tell me if I'm absolutelyincorrect here.
One of the cliches of, the.
The founder led, maybe VC backedfirm is the missionaries.
We don't care like about the,the p and l.
We're gonna, we're gonna, we'rebringing, we're gonna change the
world.
We're gonna be the ultimatedisruptors versus the
mercenaries or with, we've gotthe spreadsheets and we're gonna
make sure this business has highenterprise value.
(20:20):
Talk to me about like, within,first of all, you could agree or
disagree with that framing, butthen also like, how do you think
about within a private equitybased firm.
Investing in innovation,investing in r and d, and and
especially where you're at, likeVanco, like do, does that, is
that you maybe are in a laggardtype market where your customers
are not, they're not I doubtthey're aggressively adopting AI
(20:42):
and all their workflows.
Like maybe some of the other,some of the, some, business
customers might.
How do how, if at all, does thataffect the way you think about
investing in innovation in aprivate equity backed firm?
Jim McGinnis (20:52):
Yeah.
Oh.
I am very, very proud of myteam's increased pace of
innovation at Vanco.
Just as an example, e eventhough our our market isn't
broadly growing, double ortriple digits or something like
that.
I mean, there's still enormousopportunity to innovate and grow
the business.
Some of the things that we havedetermined working with our
(21:13):
customers and some of ourpartners is the importance of
donor engagement.
Believe it or not, less thanhalf of the total donations
given at a church.
Are likely to be e given sopeople are still putting cash
and checks into into the basketas it gets passed along.
So that's an opportunity for usto continue to grow and it's
(21:35):
really important for thechurches as well because just
think that through that basket'sfull of.
Cash and checks.
And where does it go?
It goes back probably to achurch volunteer in the back who
has to count it and credit tothe donors make sure it gets to
the, bank on time.
And they can't, they don't havea ton of visibility as to who
came to church and who didn'tcome to church who's giving.
(21:56):
More who's giving less.
All that is lost when it's justcash.
But when it's a, when it's a egiving solution like ours a
whole bunch of visibility andsecurity comes to the church.
And we know another thing thathappens is that when their
donors give.
In a recurring way.
If they Ms.
Church on Sunday as an example,they still give because it's
(22:16):
deducted from their checkingaccount or run on their credit
card on a weekly basis.
That's the intent of the donor.
They would've given money hadthey gone to church.
They just got busy that week.
So the church is able to fundtheir mission more reliably and
the donor better able to delivertheir intent.
Back to the innovation a littlebit, the donor engagement's
really important.
So we work on a seamless mobileexperience and.
(22:37):
We want people to spend moretime in the mobile experience.
And so we've added content thatincludes AI generated
devotionals.
So there's a good reason to lookat our app other than just to
give you can actually findinspiration.
Another thing that we've donerecently is as people moved
online because of Covid, manychurches including my
(22:57):
brother-in-law who's a, aminister.
They continue to put theirsermons up on YouTube, and they
have a decent following ofpeople that go.
But if you go to YouTube,there's no mechanism to give
directly.
So we've created an overlay, astreaming service where we have
embedded giving opportunitiesinto the sermons.
So if people go through thechurch site they can see the
(23:17):
sermon and give.
So, it's getting very close toyour customers and looking for
other opportunities to continueto drive.
The business through innovation,and that leads to customer
delight and the customer delightmakes your business stickier and
ultimately leads to positiveoutcomes for the employee, for
the customer and the investorsas well.
Dan Balcauski (23:36):
I love that because you know that the story
of the, hey, there'sdevotionals, there's other
content as it pertains to theparticular religious
organization, right.
That may you may go to outsideof the context of actually the
donation, we've seen similarplaybooks, right?
There's a reason why Zillowsends you weekly updates about
(23:58):
the home price.
Your estimate of your home haschanged.
'cause you only engage in a homesale, once every five, 10 years
on average for Americanconsumer.
But you're really interested inyour home value changing much,
similar, like LinkedIn didsomething very similar with
like, oh, like I only go toLinkedIn, update my profile once
I'm in a job search every threeyears.
But, otherwise, now they havethe.
Things like the newsfeed toincrease that stickiness.
(24:21):
And so yeah, it, in innovationdoesn't have to be the sort of I
guess, the hard scienceinnovation.
We often accompany with it inorder to drive those meaningful
outcomes.
And I can see how those wouldall drive ultimate that bottom
line.
You did talk before about sortof employee engagement and I
guess.
I can under, and you talkedabout it in the concept of its
(24:41):
importance to, enterprise value.
I guess I've struggled a littlebit with something like employee
engagement.
'cause enterprise value, verytactical, very spreadsheet.
I could put it in Excel and Icould calculate it.
Employee engagement feels veryfluffy.
Like how do you square those twothings together?
(25:01):
How do you sort of think aboutthe investments that you make
there against those very hardsort of metrics that you're
being measured against.
Jim McGinnis (25:09):
Yeah you first have to remember that the only
thing you have to sell are thetalents of your employees
because it's the employees thatwrite the software who sell the
software who.
Work with the customers whoimplement the software and who
make sure everything iscompliant and stays on track in
the back office.
So, every employee has aimportant share of the task and
(25:31):
delivering the customer delightand multiply and ultimately.
The investor happiness andenterprise value.
So if you start there and youremember that that's all you
have are the employees, theyquickly become the most
important thing that you've got.
We do measure it.
We measure it with a quarterlyemployee, net promoter score.
And it's quite simple.
I'm a huge fan of net promoterscore.
(25:51):
If I would presume thateverybody who listens to this is
probably on that, but and youhave to do it very.
Correctly and very simply andvery consistently, but it's
quite straightforward from ascale of zero to 10, and you
always start with zero becauseif you start with one, people
aren't sure whether one's goodor bad, but zero's never good.
So on a scale of zero to 10, howlikely do you recommend.
Vanco is a place to work to afriend or colleague.
(26:13):
And by asking that of theemployees, we only we get a net
promoter, which is the peoplewho say nines and tens.
Those are promoters, less,anybody less than a seven.
And the net of that, if you'reabove a 30, if known, to be
highly consistent with agrowing, successful, happy
workforce.
And so, there's one other trick,which is you say.
(26:35):
What's the main reason for yougiving us that score?
And that gives them a chance totype in a brief answer.
And we talk a lot aboutconservation of comments.
People might have 15 things ontheir mind, but the most
important one will pop up inthat one.
We run that survey everyquarter.
I read it, I read every singleone of the comments from every
single employee.
(26:56):
And that gives us a lot ofdirection as to what we can do
to make sure that we areimproving our employee
engagement over time.
The themes change.
We go through a lot of change.
Things that weren't important tothe employee base become
important, and then they becomeless important.
And we are work hard to stay infront of that all the time.
Dan Balcauski (27:15):
Well, and you mentioned before your sort of,
reliance on communication as itpertains.
I, within that context, youmentioned before to the to the
investors making sure youcommunicate the state of the
business over and over.
How do you think about sort ofyour communication back to the,
sort of employee base as itpertains to maintaining this
employee engagement?
Jim McGinnis (27:35):
Yeah, that's another one, and I've learned
this from some of the greatleaders that I've worked for
before, but.
One of the things I did inMyCase, I carried out here is a
consistent all hands.
I've always done it weekly 30minutes on Thursday, not 27
minutes, not 31, but we alwayskept it to 30.
We always focused on theemployees celebrating successes,
promotions, new hires, focusedon the customer, talking about
(27:56):
customer of the week, and then abrief section on the investor.
Just letting people know how thebusiness is going.
A frequent interaction like thatcan go a long way towards making
sure that.
My leadership team and I stayconnected to the broad employee
group.
The second is absolutely an opendoor policy.
We live in the best of times.
I can't imagine when I was juststarting out PG walking into the
(28:18):
CEO's office with a cup ofcoffee sitting down and having a
chat.
But I'm available all the timeon teams email.
Even text and phone.
And so, I have nearly continuousinteraction with all levels of
employees which is a greatthing, right?
This, that just wasn't really athing when I started out in my
career, but now it is.
So you have that.
And then I'm a big believer ingoing the other way.
(28:40):
Sometimes people won't reach outto me, but I'll do consistent
skip levels is something that anold boss used to call it.
So I just let somebody whoreports to me.
Or somebody who reports to themknow, Hey, don't get scared, but
I'm gonna reach out to youremployees next week.
I'm just gonna have a quickconversation with'em.
Sometimes individually,sometimes as a group and ask'em
what's working, what's notworking?
(29:00):
What can I do better?
And any feedback for me or thecompany.
And then often questions like,are we missing any obvious ways
to improve?
Our growth or our outcomes.
And I've got just a little under300 people in my company.
I've been here two yearsprobably been around twice, I
think where I've talked toeverybody like that.
And working on my third timearound.
Dan Balcauski (29:19):
Is there any, is, let me ask you a question.
'cause I've always been probablypainfully upfront and direct
with my superiors to the pointwhere like, if I've got a
problem, like they know I have aproblem but with it but I
definitely have friends who arelike, oh man, like.
My my CMO did a skip level andlike I was just like terrified
(29:41):
and I just like didn't wanna getin trouble and didn't say
anything.
I guess When you have thoseconversations with folks who are
maybe a little bit lower in theorganization is there, are there
ways that you've learned toapproach it such that you can
help, like, help have a moreactually authentic and
productive conversation versusthem just maybe being like, I
hope I don't say somethingstupid in front of the big boss.
Jim McGinnis (30:04):
Yeah usually humor obviously lets the guard down.
Those interactions are the mostpositive when the employee's
intent is to improve thecompany.
And then it's just a, it's afabulous gift to me.
And so I work to tease out asmuch as I can, the why behind
the why behind the why.
That really is about improvingthe company as a whole.
(30:27):
And if you look at it that way,sometimes something that seems a
little bit shy you can digdeeper and understand more of
what's really going on.
Sometimes something that soundslike a whine or a complaint if
you just leave it there, it canbe a little annoying, I guess I
might say.
But if you push further and yousay no, why are they how are
they trying to improve thecompany by sharing that with me?
(30:48):
And then ask questions thatdirect them in that.
Way you get some really niceinsights around ways you can
make the company better, eitherfor the employees or the
customers, and sometimes for theinvestor.
But usually the employees aremost helpful with employees and
customers.
Dan Balcauski (31:02):
Well, so, so you've got multiple levels of
employees.
So I wanna pivot slightly thelens here, right?
So you've be talking about thebroader employee base, but look
you as a.
You're not the founder.
You haven't been the founder ofa couple of companies.
You've been CEO in, you've gotprivate equity investors who
just spent a lot of money tomake a big stake in a company.
They've got dreams of, the,where this company can go.
(31:24):
So you've gotta come in as CEOand make some really hard quick
assessments of your leadershipteam.
I guess, are there specific kindof non-negotiable traits that
you're looking for from yourthose executives to know that
they're gonna be successful inthis private.
Private equity backedenvironment when you take over.
Jim McGinnis (31:42):
Yeah.
Absolutely some of the thingsthat I look for I, I look for
been there, done that.
I had a old boss who used totalk about at the senior level,
we usually don't have time in aprivate equity backed company
for people to quote unquotelearn on our dime.
So you need to know that theyknow how to do what you're
hiring them to do.
So been there, done that is a,is an important thing.
(32:03):
And I certainly recognize thateverybody does something for the
first time.
And in fact, when I was hiredfor MyCase, it was my first
time, CEO.
So there are exceptions andsometimes the exceptions make
the rule, but been there, done.
That's the first.
The other is I look for peoplethat are builders.
And what I mean by that is theyleave a place, a function, a, a.
An offering, whatever it is thatthey do, they leave it better
(32:26):
than they found it.
So they're they're up for that.
And then there are differentways to say it.
The least probably politicallycorrect is GSD get stuff done.
The other is people that dowindows.
You're looking for people wholike to solve problems
themselves and are willing toroll up their sleeves and they
don't delegate complexity down,but they embrace the complexity
(32:46):
and learn themselves.
So, when I talk to leaders, Ilook for those three things.
I look for somebody who's beenthere and done it.
I look for somebody who'sclearly a builder and has
stories of leaving things betterthan before.
And then you want to ask lots ofdetailed questions to make sure
that they actually did it andthen they weren't just a
passenger or present when it washappening.
Dan Balcauski (33:06):
All right.
Well, I'm gonna give you a toughfollow up to this because,
that's all right.
I'm selecting this person for arole.
I'm looking for builders.
I'm looking for people who getshit done.
That's, that would be ideal.
But maybe you take over a teamand you've got a leader and
maybe they're not getting itdone.
I, and a lot of leaders strugglewith.
It was like, okay, do I do wecoach them through this?
How do we, how do I figure thisout?
(33:27):
Like to make it work?
I guess what signs tell you, youreally gotta part ways with one
of your leaders.
Jim McGinnis (33:34):
Yeah, if if you're very clear on what you're trying
to accomplish and it's notgetting done you gotta go a
different direction.
There's not a, there's not afit.
And so it's important to movequickly.
I always remind myself that it'sa fit issue and sometimes
somebody was a fabulous fit.
Maybe they've been with thecompany for a long time and they
(33:55):
were instrumental and, captainof leading us to where we are.
But as I'm leading in adifferent direction or we're
pivoting they're not the rightperson for the next phase of
growth.
You just have to remind yourselfthat that's okay and that those
people are gonna be unhappy.
Because they're used to a highlevel of success and all the
good things that come with it,and they're not succeeding.
(34:17):
So they're gonna get frustrated.
You're gonna get frustrated.
And the quicker you can move toa new situation, the better for
everybody.
And so, it's no fun to disruptsomebody's life.
I've been terminated twice in mylife, so I know what it feels
like to be on the other side ofthe desk.
It isn't fun.
It takes a while to get over.
But I certainly wouldn't bewhere I am now if I hadn't been
(34:38):
released by people whorecognized before I did that I
wasn't a good fit in theprevious the previous
organization.
So, and then the other thingI'll add to it is a couple times
I've made mistakes where I wasabsolutely sure that I had a
great new leader in a role and Iran with them for a period of
time.
And it turned out they weren't agreat fit.
And you have to accept that.
(34:59):
You're far from perfect and atthe end of the day you're still
guessing whether somebody'sgonna work out and if they don't
work out, that's okay too.
Again, free'em up to go dosomething where they can be
their very best.
And you can bring in somebodywho can take you to that, that
next phase of grade.
Dan Balcauski (35:13):
Oh man, what a fantastic answer.
And Jim, like I could talk toyou all day, but like, we're
almost out of time.
So I do wanna pivot finish outwith a couple of rapid closeout
questions.
Is that okay with you?
Jim McGinnis (35:23):
Absolutely.
Let's do it.
Dan Balcauski (35:24):
Well, Jim, I am, I'm proud that we are both
Kellogg MBAs.
If you could go back to Kelloggand add a SaaS CEO 1 0 1 course
to Kellogg's program, what wouldbe the most important topic
you'd include?
I.
Jim McGinnis (35:37):
Oh my goodness.
That's a great question.
I gotta go to that.
I gotta go to that team buildingthing again.
One of my favorite stories is I,recognized not too long ago that
I graduated.
I'm gonna date myself fromKellogg in 1991 and since 2008,
I haven't worked on anythingthat existed when I graduated
(35:58):
from Kellogg in 91.
So, you people need to I thinklearn the fundamentals of
growing a company and beingsuccessful knowing that whatever
it is they're working on.
Or think they're gonna work onoutta school is likely to change
many times over before they endtheir careers.
Dan Balcauski (36:14):
Yes, we are in a rapidly changing environment,
whether you like it or not.
So, so, so embrace it.
What's something you believethat most people disagree with?
I.
Jim McGinnis (36:22):
I, I.
I believe it's not thatcomplicated, I guess.
And I've gotten myself introuble a couple a couple of
times as I've tried to showpeople that I think it's simple.
Usually it's the fundamentals.
It's just the fundamentals.
And we try to make itcomplicated and tell ourselves
lots of stories on why thefundamentals don't matter this
time but it usually is verysimple.
Dan Balcauski (36:43):
It's not that complicated.
You told us to communicate,communicate, communicate.
What's one comms habit?
Every sas EO should steal fromyou.
Jim McGinnis (36:53):
I, I really like that.
Weekly, all hands.
I I.
It's just been a, it's been agreat success and, some people
some people think it's toofrequent.
We're, to be honest, we'reactually trying it every other
week.
I'm not sure how it's going'cause I feel a little
disconnected, not doing it everysingle week but that was very
successful at MyCase and it wasvery, has been very successful
here as well.
Dan Balcauski (37:11):
Weekly, all hands or every other week?
All hands.
I think, I could see either oneworking.
Well, you'll have to, you haveto keep us updated on, on how
Jim McGinnis (37:17):
I will, I
Dan Balcauski (37:17):
unfolds.
If I gave you a billboard, youcould put any advice on there.
For other CEOs trying to scaletheir B2B SaaS companies, what
would it say?
Jim McGinnis (37:24):
A billboard.
Okay.
So I've had experience inmarketing, and the problem with
billboards usually is thatthey're too small, they're fonts
too small.
So in order to have a billboardbe effective, it has to be very
straightforward.
I'll give you two words.
Be curious.
I think if I, if you drove by abillboard that said, be curious.
That might lead you to do allthe right things, leading a
(37:45):
company.
Dan Balcauski (37:46):
Be curious.
I absolutely love that.
Jim I've loved thisconversation.
If our listeners wanna connectwith you, learn more about
Vanco, how can they do that?
Jim McGinnis (37:54):
LinkedIn is the way.
I once did a lot of Facebook andTwitter and who knows what else.
But I find that with my limitedtime I'm trying to cut down on
my channels.
And so really LinkedIn is agreat way to connect.
Dan Balcauski (38:04):
I will put the link to your LinkedIn in the
show notes for listeners so theyhave that as well as to the Vaco
website.
Thank you so much, Jim.
That wraps up this episode ofSask Gallic Secrets.
Thank you for sharing yourjourney and insights.
For our listeners who found JimInsights valuable, please leave
a review and share this episodewith your network.
It really helps us out.
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