LifeLong Customer 

Brad: I’m Brad Hammond and this is the LifeLong Customer Podcast. Welcome to the LifeLong customer podcast. I’m your host, Brad Hammond. And today I have Kristian from FinStrat Management. Kristian, it’s really nice to have you on. 

Kristian: Brad, thanks for having me. 

Brad: Absolutely. So to kick us off, can you tell me a bit about yourself as well as your company and what you guys are up to? 

Kristian: My pleasure. Today I am the CEO, but also founder of, on paper, Annapolis, Maryland-based, FinStrat Management. In reality, we’re a U.S.-distributed team of accounting and finance professionals.

We work predominantly with early-stage venture-backed companies who are selling B2B SaaS software as a service throughout the U.S., but frankly today, globally, as well as investors, both angels and venture capital firms. 

Brad: Love that. So what’s your story? How did you get into this space and doing this?

Kristian: My career actually started over two decades ago, after I got out of the service. I decided to pursue a career in accounting and finance. And so if you’re familiar with Chartered Financial Analyst, Charter holder does, depending on who you ask, it’s equivalent to an MBA, but a heavy emphasis on portfolio management and all of the components of what’s involved with analyzing whether it’s a stock, a bond, an option, a derivative. I ended up getting my CFA charter back in 2004 and just always felt comfortable … I had a love of numbers and so it was a good fit. But ironically, at the same time that I achieved the license, I got hired as a financial analyst at a consulting firm in Annapolis and about three years in, the CEO decided to pivot into healthcare IT. Because we were still a small firm at the time, I was employee number eight. My role changed to something that more closely resembled product development.

Over the subsequent six years, we were in the right place at the right time and took advantage of a material shift that was taking place within the payer space. So think UnitedHealthcare at now the Blues. In the two years before I left, so 2009, I had been promoted to general manager of VP over one of the company’s lines of business. Effectively, it was predictive analytics coupled with clinical interventions.

We were in the right place at the right time, capitalizing on a market opportunity related to Obamacare. And ended up creating an intra-business that I had a material hand in taking from zero to 80 million ARR during that timeframe. And there were a number of the company’s investors who knew me, were bullish on me, encouraged me to go do my own things. I ended up co-founding a telemedicine company.

In 2013, I ended up raising 2.5 million pre-revenue, did that for two and a half years, for better for worse, ended up closing the doors. I learned a whole lot of fantastic lessons during that time, but knew too that I wanted to get back to, when it was all said and done, my accounting and finance roots. So in January 2017 started FinStrat Management. Originally I thought that I would assist founders raise capital and was fortunate to have a relationship with a CEO of one of our vendors for the telemedicine company. And he basically said, yeah, I don’t necessarily need or want help raising capital, but I do need a dashboard. And oh, by the way, I’m about to lose my accountant who only knows cash and not accrual accounting. Can you help me there? And so I let the market decide my fate. And I said, yes. And hence FinStrat was born. 

Brad: Awesome. I love it. Let’s talk about growing a company.

So what are some of the things that you found that worked really well as you built this firm? What are maybe some things that you’re like, Hey, we tried a lot of stuff here there didn’t quite work. Any thoughts around all that? 

Kristian: Yeah. My sense is that whether they admitted it or not, a lot of founders do think about money and I think that’s fine. I know I do. It’s a reality of life. But that said, my sense is that the most successful founders really understand that money is just a means to keep score and really just reflects a mindset of delivering value. And so said in another way, when businesses really think about everything that’s involved with driving value, money follows as a consequence as compared to adopting a mindset where you go out to the market to make money. Because again, it sounds very, it sounds intuitive. But buyers don’t give you money because you want money. Buyers give you money because you solve their problems. And so when we adopt a mindset of, “how do I solve problems” and in the process, do it by minimizing the amount of effort that my buyers have to do and solving problems as quickly as possible, we start to position ourselves to take on more business. 

Because, Brad, I presume like yourself or like me, our time is extremely valuable. Our capital is extremely valuable. If we’re going to make a decision to hire somebody, we want to work with the best. And so I would say before anyone pursues any different solving, any type of problem with it, whatever the segment is of the market, that first and foremost, it’s just ensuring that you appreciate that when you have a mindset that a company exists to add value, then you can start thinking about what are the questions I need to ask in order to grow this business, right? Really understanding your buyers, understanding what their budgets are, understanding timeframe for delivering solutions and what impact it has. And when you know the answers to those questions, then you can better deliver on service. And the money follows.

Brad: It seems like for me, I’ve noticed at least the most impactful problem is always usually have to do with money. Saving money, make more money, all that sort of thing. 

Kristian: Yeah. I, the way I frame it is if you think about someone who has a problem, you’re right, and usually it’s going to boil down to time or spending. Then return on investment or ROI mindset becomes extremely valuable.

I would oversimplify it and say that if somebody gives me a dollar and I hand them back three, just for driving home my point, now extrapolate that into whatever problem you’re going to sell, that’s a great mindset. Because who wouldn’t want to hand you a buck and get back three? 

Brad: Yeah. 

Kristian: You know, sign me up. And so really, I think when founders understand that there are economics behind many problems, then you can better hone your messaging. You can better hone your product. You could better hone how you think about structuring your organization to deliver value. Really practically, I’ll give you an example. So we work with a lot of clients who have B2B SaaS. Most, not all, but many software programs today are sold as a subscription-based business as compared to episodic or transactional. And obviously I acknowledge there are a lot of very successful transactional-based businesses. Twiio is a great example. Multi-billion dollar companies. But by a founder structuring their offering is something that’s reoccurring. You actually not only benefit the company, the founder, but you also technically benefit your buyers. Why? Because you’re now in a position where you have predictability of your revenue that you can better resource plan. And when you can better resource plan, you can attract and retain better staff. You can, with more confidence, provide a roadmap as to what new features and functions you’re going to roll out, all of which benefit your end users. I’m sure we can devote multiple podcasts to unpacking everything that a founder can do to add value. But again, I go back, I think a lot of it’s mindset, like asking questions of, “will this yield value to someone or one of our clients in the long run?” 

Brad: Absolutely. Let’s talk about marketing, positioning, strategy there. I know we talked about your kind of thinking around your car offer and there’s a book by Alex Formozzi and these different guys that are coming out with great content. How have you thought about your offering and your marketing and your positioning? What are some things that you’re thinking about when it comes to that? 

Kristian: I think there’s just some fundamental questions that any business really needs to ask itself if it’s going to make good on this value proposition. Number one, it’s simply being around on day two. So someone buys from you, but businesses go out of business all the time. It’s all for the same reason, they run out of cash. And so I think as any founder should be answering the question as well, what is the profile of a business that succeeds and does consistently provide value?

And one of the things that I found is market matters. You can, if demand is real, supply is real, timing is real, and understanding what you’re selling, who you’re selling and when you’re selling it, are all very valuable. But also understanding how do you make money? Are you volume-based or are you price-based? And in my experience, there are a lot of successful volume-based businesses. Amazon’s retail business is a great example.

But my sense is that they’re in a unique category where, on the contrary, I would argue that the majority of successful businesses in this country are because they are premium providers, the right way to say it, but because they maintain healthy margins, probably the best way to say it. And in order to maintain a healthy margin, you have to be able to justify what it is you’re charging.

And so it comes back to what we were talking about a moment ago. And that’s, Hey, you have to drive value. Because why otherwise, why would you expect anyone to give you money for what you have? And so you start thinking about, well, okay, when how does marketing fit into all of this? There’s a part of me that likes Elon Musk’s mindset of I’m not going to market Tesla. I’m just going to build the absolute best possible car and let word of mouth do my selling for me. Now there’s a tremendous amount of logic and value in that approach. I like it. But that said, not everybody’s Elon Musk. Not everyone has Tesla and there’s also stages within a business, especially when you’re getting started. So I’ve always been a fan of, or I should say I’ve always, I have not always been, but most recently in my career, I’ve been a fan of founder-led sales. Nobody knows the product or offering better. There are going to be very few people who are as motivated to sell and close deals as a founder.

I do think there are stages and in the beginning, the founder rolling up their sleeves and being the chief hustle officer is good. It helps you better understand your clients, better hone your marketing pitch, or your pitch. And then when it comes time to start expanding the breadth and scope of how you sell, then you can take what you’ve learned and apply it. As compared to what I see, what I often see CEOs doing thinking, Oh, I’m going to go out and hire a VPS sales and they’re going to solve all my problems. It just doesn’t work like that. VP of sales are generally closers, managing teams, but to think that they’re going to, they’re going to nurture a pipeline — I’m not saying that there aren’t VPs of sales who won’t, I’m sure there are — but definitely in the beginning, it’s a combination of value and just founders pressing hard individually before they achieve a critical mass of starting to put those people in place who can start to take that over. 

Brad: Absolutely. If you could go back in time and give your younger self a piece of advice, even before you’re CEO or founder, what would that advice be? 

Kristian: Yeah, I find myself when I’m having these conversations that there’s a desire for a lot of people to know the answers or the outcome and not necessarily really appreciate that. Nobody does. I’ve been exposed to billionaires before they were billionaires and very eye opening because they don’t know everything. But what they do have in common is that there is a relentless push forward. Enthusiasm is real. And an appreciation that the downs are a natural part of the ups. And so if you understand all of these things and really the, I think the best common denominator is action.

There’s no substitute for action. Action creates opportunity. And first and foremost, it would be this mindset of don’t have to have everything figured out. The nature of the problem you solve can change. It’s acceptable. And, but find a problem and solve it and do your absolute best. And because the reality of it is like a normal distribution. Exceptional people for whatever the reason are in the minority. And generally speaking, buyers want to work with exceptional people. So if you put your heart and soul into solving something, odds are those people will come back to you and then say, “hey Brad, you do this really well. I got this other problem here.” And you’re like, “oh, never thought about that before. Yes, I can do it.” 

And next thing you know, your business is growing and you’re attracting more buyers. And the brilliant part of it is you don’t have to convince anyone that you have a problem of theirs that they can solve. They’re telling you what they want solved, which is always a great starting point because you’re using less energy you have to devote to convincing anyone to buy what you have. 

Brad: Absolutely. Well, this has been a great chat. Any closing remarks as we end the episode here today? 

Kristian: I’m an optimist by nature. I know right now there are probably a lot of people who would agree when they look around that things are, I don’t know what’s the right way to characterize them, I don’t know, off … crazy in the world.

But I would say, I think it’s on us to remain upbeat, positive, and believe that the future is bright. I genuinely believe it does. I think it’s really easy to get sucked in and allow our mindsets to change. And I would encourage anyone who’s listening to that to acknowledge it, but push it to the side and say, no, we’re going to create a better place for our kids or grandchildren. Nothing’s ever going to be perfect. That place exists. It’s called Heaven, but it’s not here. And so I think when we do that, we benefit our community and our society as a whole when we just keep an optimistic outlook and say no matter what happens, we’re gonna push forward. 

Brad: Absolutely, I love that. Optimism’s important. Well, it’s been amazing to have you on. Thanks so much for joining here today and sharing all your wisdom and insights. 

Kristian: My pleasure, thank you, Brad.