Accelerate Value: Interview with Insight Partners’ Matthew May and Pablo Dominguez
I recently spoke to Matthew May and Pablo Dominguez. Matt and Pablo lead the Lean ScaleUp program and Sales and Customer Success Center of Excellence at Insight Partners, a leading global venture capital and private equity firm with over $100 billion under management. They are the co-authors of the new book What a Unicorn Knows: How Leading Entrepreneurs Use Lean Principles to Drive Sustainable Growth.
Adam: Thanks again for taking the time to share your advice. First things first, though, I am sure readers would love to learn more about you. How did you get here? What experiences, failures, setbacks, or challenges have been most instrumental to your growth?
Matt: The relevant part of my background as it pertains to our book is the nearly ten years I spent as a fully retained advisor with Toyota. It’s relevant because the philosophies and principles collectively known as “lean” are attributed to that organization. However, conventional treatments of lean focus on the world of manufacturing, and to some extent product development, but my experience was in the marketing and sales world, fairly far removed from the production environment. My job at Toyota was helping their corporate university translate and apply the tenets of lean management to the knowledge side of the business, namely the go-to-market organization. That challenge took a very long time to get right, through many fits and starts, and in the end became a formative, worldview-changing experience that not only introduced me to a new way of thinking but also brought me into contact with leaders like my coauthor and colleague, Pablo Dominguez.
Pablo: I began my career in consulting, but have been in a revenue operating role for over fifteen years in a wide variety of companies, from running global revenue operations for a Fortune-level public company, moving to a late-stage startup where I led global business operations and sales effectiveness, and now leading the Sales and Customer Success Center of Excellence for Insight Partners, where we work with founders and CEOs of over 500 software companies in our portfolio to help them grow, scale, and have successful exits. Had I stayed in consulting, I would not be able to perform my job today. It really takes operating experiences and an operator’s perspective – the successes but more importantly the missteps along the way as you take on more and more responsibility – to really understand at an empathic level what entrepreneurial leaders are going through well enough to guide them through the rather treacherous terrain of scaling up in today’s challenging business environment. Too, I know what to look for when building out an advisory team: I only have former operators who’ve been in the trenches leading teams responsible for business performance on the team, like my colleague and co-author.
Adam: What do you hope readers take away from your new book?
Matt: The central question we wanted to answer is, why do some young companies become “unicorns” — defined as U.S.-based software companies started after 2003 and valued at over $1 billion by private or public investors — while others don’t? We have of a portfolio of over 500 companies, most in the business-to-business, software-as-a-service space, but only a small fraction make the good-to-great leap of becoming a member of the unicorn class. With the exception of 2021 when all the world moved online due to the Covid pandemic and the cost of capital was at an all-time low, the overall birthrate of unicorns is on average well under 200 annually, making the unicorn class quite elite — t takes a special kind of company to attract investment worthy of a $1 billion valuation.
What we have discovered over the past five years is that there is no magic elixir and that the primary differential between unicorns and also-rans is having a solid principle-based operational approach focused on achieving the maximum effect with and through minimum means. This is the “lean” mindset.
In our book we liken a would-be unicorn to a Formula 1 racecar, for several reasons: both have amazingly advanced technology, both need speed, acceleration, aerodynamic efficiency, and maneuverability to succeed. Competition aside, both face opposing physical forces that must be overcome to win. These naturally occurring forces have business corollaries that can determine whether a company realizes its long-term potential.
Pablo: Here's the thing: unicorn-worthy businesses do a much better job at responding to and managing four primary restraining forces that face any object in motion: drag, inertia, friction, and waste.
Drag is the resistance of air against a moving object. Drag in the business context often manifests itself at the strategic level and can be experienced by such adverse indicators as sluggish market moves, inability to change direction with agility, and companywide misalignment of strategies and objectives.
Inertia is the resistance to any change in the current state of motion. The now common metaphor of a flywheel is often used to illustrate the power of inertia in business. Inertia gets the blame for waning product performance and competitiveness, feature fatigue, and poor innovation pipeline throughput. But it is also inertia that can keep the flywheel of growth spinning.
Friction occurs when moving parts rub against each other. It’s a common cause of slow adoption speed, poor customer experience, retention/renewal difficulty (aka “churn”), and undelivered customer outcomes. Of course, not all friction is bad. Without the friction between the tires and the tarmac, a Formula 1 race car would be uncontrollable.
Waste is performing work that not only adds no value, but detracts from it. It is perhaps the most prevalent impediment to value, not because the work being performed is inefficient, but rather because it is ineffective, defined as doing the wrong work.
The effects of these forces are anything but metaphorical. Those who have ever struggled to understand their company strategy, been frustrated by their inability to implement new ideas, scratched their heads wondering why things are done the way they are, or had a bad experience as a customer, has felt the impact of these forces. They are real. They are the archenemies of efficient scale and sustainable growth.
But by operating with a handful of lean-infused principles they are manageable…and that is the primary takeaway from this book.
Adam: In your experience, what are the key steps to growing and scaling your business?
Matt: We tend to think of the key steps to scale and growth more as primary maturity phases: startup, scale-up, and grownup. We call a growing startup that has found what is commonly referred to as “product/market fit” as well as a viable, repeatable business model a “scale-up.” A scale-up is still an adolescent company, but one generally characterized by rapid annual growth of over 20 percent for at least three years.
Scale-ups are unique in that they face the next-level challenge of growing revenue at scale; that is, exponentially relative to expenditures in capital, people, and technology. Where startups search for product/market fit and consistency in customer retention, scale-ups search for scalable product/ market fit, or what we call go-to-market fit. At the same time, they must search for people/culture fit. Answering that double challenge is no easy feat.
Pablo: Jeff Horing, co-founder and managing director of the firm we work for (Insight Partners), believes that the task of scaling up a rapidly growing technology company is so difficult and complex that it may require two CEOs. Major players have indeed tried this model out; most notably, Netflix and Salesforce.
Adam: What do you believe are the defining qualities of an effective leader?
Matt: We subscribe to what NASA’s Jet Propulsion Lab leader Brian Muirhead refers to as a “grease and glue” model of leadership. Muirhead’s team built and landed the Pathfinder rover on Mars more quickly and for less than it cost Hollywood to produce the blockbuster movie Titanic.
Grease-and-glue leaders understand that establishing a people/culture fit is every bit as important as a product/market fit when it comes to scaling for growth. Your star product requires a team of star players to advance it to market and capture maximum value . . . so much so that Netflix is happy to advertise to all job seekers that they will pay an ill-fitting employee an industry-leading severance of four months’ pay while they search for a star replacement.
Pablo: The Grease role is all about removing the restraining forces of drag, inertia, friction, and waste that we alluded to earlier. (In Brian Muirhead’s case, quite literally.) The Glue role is all about developing the connective tissue needed to build unity among individuals and keep them working as a high-performing team able to meet the pressing challenge of scaling for growth. In other words, the Glue role holds everything together.
Adam: How can leaders and aspiring leaders take their leadership skills to the next level?
Matt: The basic leadership principle embedded in the grease-and-glue model of leadership is the notion of esprit de corps. French for “team spirit” and the last of Henri Fayol’s fourteen principles of management, esprit de corps figures centrally in military and paramilitary organizations, which are notorious for being results-oriented when it comes to leadership. “Mission first, people always” is the mantra.
Pablo: Here's what is interesting though: Research by UCLA social psychologist Matthew Lieberman supports this view. In a study examining social skills and leadership behaviors, those viewed as having a predominant results focus have only a one in seven chance of being viewed as great leaders, while those viewed as having a predominant social or empathic focus have about the same or slightly less chance. But for those strong in both results and social skills, the likelihood of being seen as a great leader is five times greater.
So, up-leveling your leadership skills gets down to balancing your results focus with your empathic focus, bolstering whichever one lags the other.
Adam: What are your three best tips applicable to entrepreneurs, executives, and civic leaders?
Matt: We will give you four!
Establish your strategic speed, defined as the optimal speed for swift strategy deployment and decision-making. Fighter pilots, professional cyclists, and race car drivers know what geese flying in a V formation know: you can travel faster and farther with half the effort by “drafting” in the slipstreams created by those in front of you. The faster you go, the more energy you save. It’s a virtuous cycle. And the more people in alignment, the bigger the slipstream, so you can go even faster. You can apply the concept to your company’s strategies.
Embed constant experimentation into your culture. This is the engine of continuous innovation, which goes without saying is a survival need and competitive must. Without innovation, inertia will govern speed. The goal is to make simple, fast, and frugal experimentation the operating norm before what we call “big-company syndrome” sets in. Toyota runs over one million experiments annually, the vast majority of which are tiny, nested tests conducted under local autonomy. Meaning, employees don’t need more than their immediate supervisor’s sanction to run a test.
Pablo:
Accelerate value to customers. Accelerated value is all about enabling customers to achieve their desired business outcomes as quickly and as effortlessly as possible. Doing so promotes product adoption and positively impacts community spread and customer retention, renewal, and expansion. Ensuring that everyone in your company is aware of how to enable that value quickly, in a unified fashion, helps to accelerate your growth. In the business-to-business (B2B) software-as-a-service (SAAS) world, the measure of Time-to-Value is an all-important leading indicator.
Adopt a lean process approach. Companies in the scale-up stage are often fraught with waste simply because growth has outpaced development of standardized operational processes needed to sustain the business. Our work with dozens of scale-ups reveals that waste most often takes the form of performing work that no one, especially a customer, is asking for or needs. Lean processes encourage simplicity as the path to speed. It starts with clearly defined value, then systematically removing everything blocking the path to delivering it. It’s a relentless endeavor, a different way of thinking, and it requires a mind shift.
Adam: What is your best advice on building, leading, and managing teams?
Matt: We would add a fifth, bonus tip to those just mentioned:
Build esprit de corps into your company culture. “Mission first, people always” may be the mantra, but if you look closely at how military organizations actually build leadership skills you’ll see that establishing a culture of esprit de corps is done by taking a “people first, mission always” approach. The goal is to find the cultural equivalent of product/market fit: people/culture fit, which we alluded to earlier.
To find people/culture fit, focus on core, collective values. If that sounds like conventional wisdom to you, you’re right. But it’s not as easy as it sounds. It’s not a simple matter of cherry-picking a few aspirational ideals. Indeed, most companies have some statement of guiding values on the wall or on a website visible to all. The concern isn’t just about not having collective core values, it’s about dynamically applying them to all company activities. The truth is, beyond the initial exercise of wordsmithing lofty platitudes and the occasional executive mention in company communiques, true values-based action is rare. Imagine if semper fi wasn’t something every Marine lives and breathes!
Pablo: Given that values can be one of the most powerful ways to elevate the work of both the individual and collective, the question simply becomes: Why?
Two reasons seem evident based on our work and research.
First, values are not well understood—we’re told we need them, but we’re not sure why or how they actually work to elevate us. Individuals do not spend enough time clarifying what matters most to them.
Second, we don’t know how to align and leverage the power of values— beyond corporate values, little attention is spent on individual and team values. Our experience has shown that overall employee commitment and engagement are highest when there is clarity around personal values, and those personal values are aligned with those of the team and broader organization.
Clarity around company values alone sounds great, but in reality, yields little. Take the case of Toyota, with a monumental goal of becoming the most respected and successful car company in the world. Toyota’s executive leadership knows that unless every employee comes to work ready to engage fully, that kind of marketplace primacy will remain elusive. They know that when individual values are in play, their employees have access to their best personal resources strengths, and abilities and can make choices based on principles, in turn elevating the status of their work. They also move beyond narrow self-interest to instead serve the collective good, and to establish a wide range of productive and meaningful relationships.
Adam: What are your best tips on the topics of sales, marketing, and branding?
Pablo: The S.C.A.L.E. framework we’ve shared here is agnostic to any specific function, and thus can be pointed in any direction. Sales, marketing, and branding are simply supporting yet subordinate elements of any go-to-market effort, which is the central focus of the model.
Adam: What is the single best piece of advice you have ever received?
Matt: We spent time Reshma Saujani, the founder and CEO of Girls Who Code and The Marshall Plan for Moms, and asked her a similar question. The very last line of our book is from our interview with her, and we found it eerily prescient and uncannily appropriate for today’s business climate: “Always operate from a sense of deficit. It’ll speed your decision-making, it’ll preserve your scale, and in the end, you’ll keep growing.”
Adam: Is there anything else you would like to share?
Matt: Only that It’s important to realize that what we’ve shared here is not about implementing any one principle; it’s about finding the right blend of them for your company that drives enduring growth. The challenge is not unlike that of a close-knit Formula 1 race team searching for the perfect balance among the elements of performance, innovation, and control.
Pablo: We believe a better approach may be to ask, “Where do I begin?” It is best to answer this question with five others:
Do you make decisive strategic moves swiftly?
Is your product pipeline robust and continually refreshed?
Is value to customers compelling enough to maintain revenue growth and retention?
Are processes disciplined enough to enable control over productivity and profit?
Is leadership of the ilk that can carry the company into the future?
Like any set of traits purporting to describe the differentiating attributes of star players—athletes, artists, unicorns—one does not need all five S.C.A.L.E. principles in equal measure, nor can having all of them guarantee ultimate success. But we believe that having some degree of each trait, tailored to your specific situation, can certainly help your odds.
Matt: Just how to find the right mix is what a unicorn knows.
Adam Mendler is an entrepreneur, writer, speaker, educator, and nationally-recognized authority on leadership. Adam is the creator and host of the business and leadership podcast Thirty Minute Mentors, where he goes one on one with America's most successful people - Fortune 500 CEOs, founders of household name companies, Hall of Fame and Olympic gold medal-winning athletes, political and military leaders - for intimate half-hour conversations each week. A top leadership speaker, Adam draws upon his insights building and leading businesses and interviewing hundreds of America's top leaders as a top keynote speaker to businesses, universities, and non-profit organizations. Adam has written extensively on leadership and related topics, having authored over 70 articles published in major media outlets including Forbes, Inc. and HuffPost, and has conducted more than 500 one on one interviews with America’s top leaders through his collective media projects. Adam teaches graduate-level courses on leadership at UCLA and is an advisor to numerous companies and leaders. A Los Angeles native, Adam is a lifelong Angels fan and an avid backgammon player.
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