This transcription belongs to Episode #25: Kison Patel’s client management tale brought to us by Our Beloved Host, Morgan Friedman. You can watch the complete episode here!
Morgan (Host): Everyone, thank you for joining us on the latest episode of ‘Client Horror Stories.’ I was just chatting with Kison Patel, today’s guest, and I’m glad to have him here. And we might take this episode a bit differently than most episodes because Kison, in addition to having some horror stories, also has an interesting journey as a founder with a lot of lessons he learned from them. So let’s take it away. Kison, tell us your story!
Kison Patel (interviewee): Hey, thanks for having me, Morgan. My story starts with the startup. And startup with a pretty typical founder story. I have spent close to 10 years working in M&A as an advisor to help buy businesses and sell businesses, mostly working with hospitality, hotel assets, and small financial institutions. And in that experience, I got familiar with the problems and pain points in the industry that sewed pretty deep. At the time, when the recession was happening, and things were a mess.
Generally, I was interested in this emerging technology space, which kept popping up. It will be all tech for younger kids as they are plugged into devices. So I got myself involved in marketing technology startup that ultimately didn’t pan out the way I wanted to. But the one thing it did was expose me to the way software engineers would utilize these project management tools to manage building software. I found that intriguing and kept referencing that our industry should have that. There is so much sense in having a project management tool because we’re dealing with one of the largest transactions in the world, the largest for business owners. So it created the original inspiration for starting DealRoom in 2012.
Morgan (Host): I want to interrupt for a second to tell you that’s an interesting starting insight because there are a lot of methodologies, technologies, and processes the software developers use that are interesting when applied to the rest of the world. Like one example is bug tracking software; it just tracks to-do lists. And that gets lost all the time. How often do you send people an email, and they forget or fail to do it? However, now that Kison has these, I can use them for everything.
Kison Patel (interviewee): That’s the like formula right there. Just borrow ideas from other industries.
Morgan (Host): Exactly!
Kison Patel (interviewee): So that’s what started the inspiration. And the ideas worked well. I also noticed other industries like education and construction were also adopting project management tools, so why not M&A? Starting a startup was hard. It felt like fighting a lot of things at the same time. There’s this idea in your head, and you try to convince everyone you meet about how great your idea is, and you’re getting some almost emotional ego validation from them.
In addition, I remember having some other tech ventures I’ve worked on in the past that didn’t work out. So I was very cautious about having a good team or fundamentally building a good product. And I was fortunate enough to find a young person that was good at rapid prototyping. He could put together the initial product quickly. And I was pretty confident that there was a great partnership. We were working well together. And we were good friends. We had a great relationship and got along having fun and working together. It is a nice thing when you can enjoy the work you’re doing with the people you’re working with.
Morgan (Host): What’s interesting about that is from the eyes of client horror stories, I often see being too close to a friend as a risk factor. Occasionally, you may not want to hurt their feelings, or you may not want to criticize a good friend when they make a mistake. It is much harder to criticize a good friend if they make a mistake. And it’s almost impossible to fire them without destroying the friendship.
Kison Patel (interviewee): In my opinion, a friendship can be defined as both a personal, intimate friendship and a professional friendship.
Morgan (Host): I like the distinction!
Kison Patel (interviewee): Then you can draw a line because a business is a business, and we need to align objectively around the fact that there will be decisions we won’t agree on; we have to approach decision-making objectively. Problem-solving is its objective approach, so we need to be aligned around it. I made some mistakes too, Morgan. In prior consulting practice, I hired the buddies from college and it was a big blow-up because of those same things you described.
But we started this with a professional relationship, and keeping the professional component was probably a lesson right there. Always be objective and always keep that context no matter what. Even if you have to elaborate, we always do what’s best for the business. “I know this is affecting you personally, as well as myself, but at the same time, let’s always think, north-star, and what’s best for the business.” So it started an as good relationship. We built a product and went to market quickly in about three months. A common mistake was feature creep, which you’ve probably heard of where you think about all the ideas while building a solution. Entrepreneurs are great at ideas which is not a problem. There are still a lot of ideas about what business you want to do once you get that business and find a direction. And next, you have this outline of an app that does 20 different things.
So we thought, “Well, let’s look at the timeline, and start from the beginning, and then move forward and add on.” So we started building this product, which was essentially a marketplace. The idea was to find the deals to match buyers and sellers. And we did that. We took it out to market. And we went through building out a small team. We probably had about 5-6 people in the company. And we ran this for about 13 months when we realized that we essentially built a sophisticated dumpster for deals.
Morgan (Host): In other words, it was where people went to get bad deals that no one else wanted.
Kison Patel (interviewee): You couldn’t sell it to anybody. Go ahead and put it on the DealRoom as your last resort. We had about 1300 users and 200 deals posted on there. And when I looked at it, some of them I was like these might be scams. We didn’t have quality deals. We didn’t have anything on here that I would personally invest in. I didn’t feel right about that at all. We ended up going back to the drawing board, and I talked to other founders and learned how to take the lean startup approach to building.
Morgan (Host): Was there a particular moment when you realized this is all crap? I’m curious about the process you went through when you realized that you needed to rebuild completely because your startup is like your baby, your project.
Kison Patel (interviewee): Yeah, it’s a good point to pay attention to. A lot of times, when we talk to people, we give feedback. Sometimes, you’re stuck in your head and need to listen to what you’re thinking. One person mentioned it to me when I asked him about marketing and managing marketing expenses. One of the things he said was, “Hey, you want to check your business model and make sure the economics work otherwise you’ll waste lots of money.” And it simply opened up a gap that kept widening in terms of viewing the company from a different perspective. There might be a bigger problem here. Maybe we need to go back to the drawing board and start learning how to validate your business. And this is mainly what I talk to other entrepreneurs about. If I have the opportunity to talk to an aspiring or newer entrepreneur, this is the biggest thing.
Entrepreneurs will naturally skip over getting an idea to market. They will hire engineers who want to build a product. They will want to start selling it out there right away. The first step is to understand who you’re trying to sell this product to and spend the time talking to them, telling them that I’m trying to solve this problem, and I’d like to talk with you a little about it and learn from your experience. One indicator is if they’ll even take the time to talk to you because they might not even care enough.
That’s the early point right there. Nobody cares about solving your problems. Secondly, when you do have those conversations, you need to approach it in a very unbiased way, which I think is both a science and an art form since you are trying to convince people with good or swayed ideas. You just want to come at it objectively. What’s the hardest part of your job Morgan? What’s the biggest challenge you’re facing? Let me learn from you what the top problems are that you’re facing.
And that takes getting into this mind frame, where you need to assume what you know is wrong or that you know nothing. So you can listen to the other person. Get that understanding of how they see the world and their challenges. Asking why enough times will help you understand some of the root causes of those challenges as well as understand the weight of those challenges. Was it a paper cut problem for them, or was it a real big boulder on their shoulders driving them insane every day? And eventually, you can even validate what they would pay to solve it. But typically, you might do that later, but you’ll get a general sense of it.
Do a series of these interviews. I challenge entrepreneurs to try to do about 40 of them. That’s something we ran around looking back on. It’s qualitative. You’re not looking at a spreadsheet, making a model for five years, but talking to people, gathering qualitative data, and trying to discover why there are some similarities. We realized there was a broader issue and it was managing those large complex deals once you had the letter of intent in place. In that case, things get intense since there are compressed timelines, a lot of people to coordinate, and a lot of stakes at stake. All parties must be managed, including your internal team, external team, and the other side of the table.
Morgan (Host): So, I want to make a few comments on what you said. I like this concept of talking to more and more people in the market. And that was interesting and applicable. Even when you have a client’s project or are in the middle of something, you’d never want to stop talking to them. And the biggest challenge I find in talking to them is empathy. Many people, especially math, science, and numbers-oriented nerds like me, want to say, “Oh, yes, the average person I spoke to rated their excitement on a 1 to 5 scale at 4.3.”
We want to quantify an average, but it’s not easy because no one wants to upset you. Everyone wants to be nice. We have to get inside their head to understand what they are feeling, and what emotions underline the words that say that, and that is the most challenging part.
Kison Patel (interviewee): It’s important to welcome the opposing view, make them feel comfortable, and ask for feedback. I will do it after this interview. I will ask you, “Hey, Morgan, how could I have done better? Give me some feedback.” People naturally have this nature of portraying themselves in good light, and they don’t want to hear the bad news. They avoid it. But for personal and professional development, it’s the opposite. You need to take in the bad news. People don’t like to hear themselves; you need to hear yourself.
Morgan (Host): I think it’s a step further than that. It’s not just for personal and professional development. For example, this is an interesting take on the whole theme of the podcast, ‘Client Horror Stories’. The most common reason relationships break down is because of not being hurt emotionally by the person you’re dating or working with. They do not want to tell you the bad news and don’t want to be the bad guy. So their anger and frustration build up with you which leads to a breakdown in the dating relationship. And that leads to these crazy client situations that we must avoid.
Kison Patel (interviewee): This is the thing our conversation is getting comfortable with uncomfortable conversations.
Morgan (Host): I like that phrase. I might steal that to put in the headline of this episode.
Kison Patel (interviewee): Sounds good! I think the big lesson is knowing when you have to validate, if you do it right away from the beginning, be very proactive about it. It doesn’t cost you money, it costs you your time, but you learn so much. You learn to better articulate it in the prospects’ or customers’ voices. You can get other people aligned around it, you can convince them to get behind you, and you can raise money if you reach that point. People ask me, “Well, how do you know this will work?” I talked to 50 to 200 people, and they said, “Hey if you build it right, I’ll buy it.” That is how you get some of that validation.
I’m a big fan of this Kickstarter and those types of platforms because if you can sell it before you build it, that’s a good way to validate. If there’s a demand, just keep going along that path. Once you start building it, I think there are even smaller steps you can take. Wireframes are common engineering, design, and communication format because many people don’t follow them very well unless they have a technical background. I remember hiring somebody on Upwork, just somebody new to the industry, to do it for a very cost-effective rate. I let them do some early mock-ups and then took those mocks to prospective customers. As we iterate, let’s ensure we’re building something that customers will want while keeping this feedback loop open. And that became an obsession. You need to be obsessed with solving the problem because the outcome is what’s important. If you look at careers, industries, and making money then you’re looking at the outcome. I think that’s where you got to think about where you want to focus in the world, career-wise, and entrepreneur-wise.
I look at the problems I’m passionate about or interested in solving, and then things get easy. And we got into it. And we did it; we went through that path. And I remember having some good moments when I met a friend whom I spoke with earlier today and spent some time with. And we got to know each other with just an introduction. When we met each other for the first time, I think I hit him cold on LinkedIn and said, “Hey, I’m trying to do this thing and solve this problem. You’re in the industry; can we talk?” And he gave me a good insight into what he was dealing with that led to a great approach and how to solve it. And it was basically taking that project management model but marrying it with the tool industry commonly used the virtual data room.
So a virtual data room is essentially like a Dropbox type of product. But it’s got a lot more compliance and granular controls, audit log, automated watermarking documents, and security built into it, like two companies sharing highly sensitive information about their employees, customer, and things of that sort of trade secrets. They want to monitor it, but they usually have a nondisclosure agreement. But if somebody breaks it, there’s a way to track it and say, “Hey, you’re supposed to destroy that document, but you didn’t.” It protects you from all that. So there’s software that wants to accommodate the nature and sensitivity of the transaction.
Then over time, that’s what we eventually started building. And I remember the first big challenge was getting customers because even though I knew this person, he worked at a reputable bank. They were not going to be the first customer. They were not going to put 100 plus million dollars on a transaction on this platform. And that was tough. It took a lot to get that meet and management, the transactions and the data security component. I had to go on LinkedIn and knock on doors. I remember hundreds of people I would knock and pitch and try to look for an opportunity. Felix was an investment banker who I briefly spoke with and shared my ideas. The model was currently in the prototype stage, and we were pivoting to focus on the diligence management component. And he ended up coming to town that day to meet us. I talked to him. Often I try to get into people by getting noses everywhere, and he had a client who was going IPO on the Toronto Stock Exchange. And he agreed to arrange a meeting.
We started maybe on one tiny thing there, but we wanted a real deal. And it was an IPO. I think it was like a $400 million IPO. Pretty significant, I remember. We went out when he was in town visiting. I had my first sales rep. We went out and had dinner with him. We couldn’t get at Gibson’s as it was too busy, our staple Steakhouse in Chicago. So we had to go next door to Hugo’s Frog, which was a similar restaurant with a similar menu. I remember there was a time when he called because he left a voicemail for his client, and the lawyer, and he called back and said, “Hey, I have a solution for the middle data management.” And he was like, “send him a contract as they’re interested.” And they were ready to pay whatever amount we agreed to. And that was it. We went to dinner, but it just turned into a deal closed right there.
Morgan (Host): A celebratory dinner!
Kison Patel (interviewee): I was so happy. He was nice and knew that we were a startup. He felt for us. He’s been through different career journeys and started his investment bank. So I think there was some empathy there as he was able to relate to our situation. It got us a foot in the door, which was the IPO. I think things went pretty smooth on that transaction. It was my first time learning things in terms of working with a professional company. And the deal happened. As I recall, shortly after that we had a couple of other things brewing, like other small deals.
And then, we had another client reach out and told us they use our software. There was one advisor. They said I worked in this new role, and we needed this software, so we went through the whole sales process. They liked our project management virtual data room together in one environment. And then we signed up. Things started well. She was handling her first transaction. It was a large billion-dollar fund that bought these private companies in food and beverage and they were also buying craft breweries and were either consolidating them or making them public.
And it was a big plan; we’re excited. It was potentially going to be a big client for us. When it came to pricing, we were quite incremental back then. We also discussed a variety of topics, such as validating your target market because that was a later-learned lesson. However, we were happy to close the first deal. Then, as soon as that happened, we received an email saying, “Hey, my permissions just changed. They seemed to change on their own.” And we thought, “Oh, that’s weird.” What are we talking about? Then we looked it over. It was a bug. So we worked with the developers to fix it, declared it to be good, and moved on. “Do I need to be worried about this happening again?” she asked. “No, no, no, no. We fixed it.”
Morgan (Host): The interesting thing about this situation is I’m a former software developer, and from the software developers’ eyes, bugs happen, and you can fix them. And it’s a part of the normal day. The world explodes when you work with natural resolvers of the counter. “Is my data getting laws? That’s what’s happening?” This flippant behavior on the other person accentuates the pressure of the situation.
Kison Patel (interviewee): It was a big time because it was high stakes for them, especially on a large deal. The people who were more hands-on in managing the transaction were already under the gun. They were the ones working the hardest, working on many critical, tactical tasks, late nights, grinding it out, and carrying the burden of what was at stake. They knew it was a massive deal. Their reputation was at stake. When they bring in this technology provider, they handle the deal differently, especially when the technology crashes; it creates this experience or perception with these parties that they’re dealing with. If one of them gets the bad enough impression, they won’t move forward, then that’s a huge problem. So there’s a lot at stake. You’re just spending time on it, so you don’t want these things to hold you back.
Morgan (Host): Okay, so a bug happened. The client was flipping out on the new product, and you fixed the bug, but the client says, “Well will this happen again?”
Kison Patel (interviewee): Well, she wasn’t flipping out at that point. She was just confused more than anything. We told her that it was a bug, and we fixed it. So she asked, “Do I have to worry about happening again?” And we said, “No! bugs are dead. We threw them in the garbage. I don’t think it was more than two or three days after it happened again.
Morgan (Host): Oh…
Kison Patel (interviewee): Yeah, it just got worse. The bug came back, and our team scrambled to fix it. Our team was majority out in the Philippines. Because of the big time difference, if a customer talks to you during the day, nothing gets done until the morning, so they know to get up early just in case. So this started happening. I remember it was during this transaction too, but I ended up meeting a technical resource. And it was by accident. I knew we needed to find somebody who could help to solve this, and we were in search of more expert technical resources.
Morgan (Host): So, the bug kept on coming back more and more frequently?
Kison Patel (interviewee): In a different way! It was like a thing broke, you fixed it, and something else was breaking next time. We realized we need to get an expert to come to help us. So I was running around. I had three different recruiters out looking for me to get a senior engineer, maybe a potential CTO or a lead developer. The more these events kept happening, the more I realized that we had some bigger issues there.
Our staff wasn’t built for scale, and after getting some users, the client’s situation was getting worse and worse. So this confusion and concern were turning into upset and irate behavior, but I don’t think she got to the point of yelling, but you could sense it. And this probably was after the fourth or fifth incident when I took an envelope and wrote a note, “I’m sorry about the experience you’re having. I, at the very least, owe you a night out.” And I put $200 into the envelope and mailed it off to her. That’s how bad I felt about the situation. And I know it’s creating additional work, but it was tough.
Morgan (Host): So this is the story. It is getting exciting. I like your storytelling style of building this slow crescendo to the exciting point.
Kison Patel (interviewee): I don’t think it reaches a good end though. It doesn’t come back to this big happy ending in the story. You know, I told you a nightmare story. I remember this is the most epic one. This is the one that where we screw up after screw-up kept happening. I didn’t have control over it. I got an engineering team and I was getting frustrated with them. They were doing the best they could, but they just didn’t have enough skill set. I got the recruiters running around looking for me. I was interviewing folks but they did not match the quality I was looking for. In addition, how can I have these people help with this since they are just there and you know they won’t be the right people for the job?
Morgan (Host): So before, we continue to the exciting, nervous part about what happened next. There are a few things I want to say about. I know since you’ll have lessons learned dealing with clients, managers, and bosses in a broader sense, which is you throughout your time zone issue. I want to bring this up because I think that’s an important issue that isn’t discussed, which is working, especially after the fifth time, when clients are getting nervous and excited. And it’s just a matter of how long it takes before anyone can even look at it. You can hear the silence while waiting for them to wake up and start working. It’s nice to hire developers from countries that have much more affordable developers. In doing so, however, there are costs, including the pain time that arises from stressful situations.
Kison Patel (interviewee): Big time, that was a factor. And we were reliant on it. In today’s world, we look at everything from a global perspective, but we want people with the customer, people who operate at the right time for the customer. I wouldn’t say it was all a failure. But the way the world is moving, there’s talent everywhere. And if you can be objective about it, that’s great. But, then a time difference challenge is difficult to handle. And I feel like if you have a mixed approach, you can end up with some benefits because now you can run a 24-hour production cycle. But, I agree at the time, it was a big handicap because I think even for us just handling the situation. Some things just took time to fix. However, even today, we can get things done within minutes if something is detected automatically, and boom, someone is on it. But it is also a day delay.
Morgan (Host): Totally! And I want to make another observation before we see what happens next in the story. Throughout this situation, I like that you also realized the software wasn’t built to scale and had a more serious underlying issue. This is a powerful point because often problems are detected by revealing deeper problems, regardless of whether they are bugs or features. It’s like I’m feeling dizzy, and it won’t go away. So I just go to the doctor to get some medicine, but it turns out I have some brain disease and that’s as depressing as that metaphor is. No one has any brain diseases. It’s powerful and accurate enough that problems serve this important role in helping you uncover the deeper ones so you can solve them.
Kison Patel (interviewee): Completely agree! That’s what we’re doing at that time. We were scrambling, and particularly I was scrambling because it was myself. And we probably had about 6-7 people at that time. I think we were bigger than that; we might have been closer to 10, but I only remember scrambling. I came back to the condo I had at the time that I was using as an office because we moved from the little incubator in 1871 In Chicago.
Morgan (Host): I’ve heard of that one.
Kison Patel (interviewee): It’s probably it’s the biggest and most known here. During the first six months, I bounced around here and there, then I was there about a year, maybe a year and a quarter or a half. It’s at this point that you realize that we need to adjust our environment to evolve the culture of our own company otherwise you’ll be influenced by those larger incubators. And then you make too many friends and probably get distracted too, which is another thing. I had this condo that I’ve moved out of and thought, why not use that as a small office?
And at the time, I didn’t have too many people. I think I had one person working there that worked with me to develop the marketing and then a couple of interns. We tried to leverage the interns, and we’re trying to figure this problem out. I was distressed. I was coming back to go to the office of the condo. I got in the elevator. And a guy asked me, “Hey, what floor?” And I was like, “Oh 30.” And he already had picked 30. So we were neighbors, and we just started talking. I told him I run a tech company, and as I was getting off the elevator, I asked him if he knew any developer who knew AWS. At that time we were trying to solve our system admin problems which were the crux of the problem. And he looked at me and gave me the one eyebrow raise and said, “I happen to do that.”
Morgan (Host): Wow, that’s quite a coincidence!
Kison Patel (interviewee): So I said, “I got work for you, I can hire you on contract, and you can start with a small contract gig to help some of the immediate problems.” So he did that and helped us to solve some of those problems. And he explained that all of this stuff needs to be reworked because of our spaghetti code. We had been iterating and building on top of each other, and a normal programmer couldn’t follow. So even if we try to grow, we can’t even add people that could help grow this because it was just so confusing for them to learn. And essentially, we needed to rebuild this application with proper micro services architecture. So that, as we grow, we can add different capabilities to your product for them to work modularly. This way one thing won’t break the other thing.
We then looked for different talents to help develop, we added an engineer, we ended up hiring different resources with a higher skill set, and we transitioned from a team of junior to intermediate level engineers to almost all senior level engineers. And they knew how to write code for scale. We had all this QA testing going on, and we got to decrease the amount of QA testers we had at the time who were three part-timers. We eventually reduced it to one part-time employee and then shifted and evolved this team. I let a lot of people go, folks with whom I had good relationships. I had great camaraderie with this team that was mostly based in the Philippines. While I was there, I spent a month doing some team building. We had an annual dive trip, chartered a boat, let people invite friends to bring a guest, and snorkeled. We had some team building at the beach, and they came up with a great idea to play games and picnic and made it a full day trip. It was a great team with a great culture, and it was fun, and we had our own office there.
But the business shifted from finding the market fit to the need to build for scale. It was almost like building your dream house where you first look for the location and then build it. We iterated our way to where we knew we needed to be. Then we needed to work with the engineers who could build this to grow into a large sky rise that could hold many people with a good structure and design it for a good experience.
Morgan (Host): So that was a powerful plan. And I think people often think about firing people because of competence issues like they suck, but one of the interesting things about this is that it’s not, particularly that they sucked. As a result of the terrible spaghetti code, different skill sets were needed for different points, but they were affordable, fast, and helped you out quickly. So you could figure out exactly what the market wanted. So they fulfill that purpose for the business, but scaling is a very different skill set.
Kison Patel (interviewee): Completely different! And you need to be objective about it. That’s where I was. Because looking back, talking to others that knew me back then, we wouldn’t have made it, we wouldn’t have made it even if we hired the engineers, we went because some people do that. They’ll say, “I need to hire the best.” And they’ll go to one of those expensive dev shops, or they just start hiring the top level in from big companies. You’re leaving a big salary behind, so they’re expecting a lot from you. We would have run out of fuel a long time ago, and we probably would have lasted a maximum of one year if we had done that.
And at that point, we were still losing money even though we had some initial customers. We went negative in tax returns for a long time before we started turning around. So we needed to sort that out. So, even getting the market fit was just an indication that we were heading in the right direction. Building the building and getting tenants in there was a whole different journey, a different chapter if you will ask. But that’s what we ended up doing. Oftentimes, people look at firing as a bad thing; they’re hesitant about it, avoiding it, wondering who will fire them. I think some founders won’t do it. And they tend to let people linger until they voluntarily decide to leave. All of a sudden, there’s tension and eventually, they feel it. They decide, “Alright, I’m out, I’m moving on.” But the founder and CEO’s job is to be proactive about having the right person in the right role.
Morgan (Host): And by the way, this goes back to your awesome summary of what’s turned out to be the theme of today’s conversation of getting comfortable with having uncovered conversations. Sometimes CEOs will not fire people who they know need to be fired because they do not want to have that uncommon discussion. It’s worth it for them to keep on paying their salary for a few more months just to avoid that awkwardness.
Kison Patel (interviewee): Or keep trying to turn them around. Here’s a turnaround plan. Here’s where we go through performance but peppier. It’s the same thing as giving feedback. I think early on you have to have a tight feedback loop with your customers as well. Understanding their problems, developing a solution, understanding what they need, and keeping a tight feedback loop, you will succeed, and, with your team, it’s the same.
You should keep that tight feedback loop on their performance by saying, “Hey, this is good, this is bad,” but keep it ongoing. You don’t need a startup or quarterly or annual reviews. You need this to be comfortable and create that as part of the culture, say, “Hey, I know sometimes we fuse a personal and business, and I don’t have time to give you the good stuff because it won’t make a difference or change you know, what we need. I’m going to give you the bad stuff, but separate them because it’s just business periodically,” so it’s good to remind people of that, but the culture you want to develop has to be one where you’re comfortable giving criticism to identify areas to improve, so then we can improve as a team.
Morgan (Host): So it is going in an interesting, fun, and surprising direction. I agree that the feedback loop always strikes me. Like quarterly and annual reviews are ridiculous. You talk with your manager once a year. Ten months ago, you did this thing and it’s like you should talk about it when it happens since we barely remember what happened a month ago so you don’t feel that feedback loops are ridiculous. At the same time, I might agree in theory about the separation of personal and business in real life. You become friendly with the people you work with, and often you care about them as people. Even people with the toughest hearts of stone find these tough conversations challenging sometimes. It’s hard to criticize someone when they make completely over-the-top, wrong ends on something important when they’ve also contributed so much to the community because it gets hard when they fuck up big.
Kison Patel (interviewee): It does! That’s why I like the idea of openly reminding the team, about the criticism. We should be comfortable doing it, and let’s make this part of our culture. In our case, it was initially a challenge because I brought in a leader who had a very unique personality, similar to Steve Jobs. He would give direct feedback, but there was some emotional anger that came with it. And that was something that wasn’t controlling. Part of it was, you know, this feedback comes off as, oh, man, I’m working with some real assholes. However, he meant well, right? I asked him about it like, this is how I grew up, and it was very much direct objective feedback. Eventually, with our team, he created a standard, and it was very blunt. If you didn’t meet the standard, send it back, and if you did enough, it’ll either get better, or they’ll leave or quit. They’ll get tired of it and do something else.
Morgan (Host): I’m from New York, and I know the New York finance role and the blunt direct feedback approach very well, so people do have different levels of sensitivity. I guess that sounds like everyone, especially my friends in New York, in finance, had that experience. One of its benefits is that it forces rapid improvement, but at the same time, it creates misery. And by the way, I’ve lived in the Bay Area a long time, and in my experience is the exact opposite extreme where no one wants to say no to a company that could be the next Facebook.
They hide any constructive criticism or suggestion behind euphemisms, which makes it hard for you to decipher what they’re saying, so I have found that the New York site is incredibly brutal, which helps improve but causes people to feel crushed. Californian fashion is quite euphemistic. Although it’s nice, you can sense what they are saying. Funny enough, I was telling a good friend of mine named Sarah about this notion because she lives in Chicago. Sarah is a fantastic person, by the way. She was like “Morgan, this year’s analysis proves clearly that you’ve never lived in the Midwest.” She argued that the Midwest approach is the best of all worlds since it is blunt enough with the New York side yet euphemistic and pleasant enough from the California side.
Kison Patel (interviewee): I was thinking to myself machine versus people, there’s this sort of, be objective. It’s a nice way to put it. And there are people empathizing and connecting with someone to understand their perspective.
Morgan (Host): Agreed! Working with humans is challenging, and a part of the challenge is to know when to be a machine and when to be an empathic human, and to know when to be the human and when to be the machine.
Kison Patel (interviewee): That’s it; the application for the right formula. It’s a mix if you can make that a part of your culture where you treat people like you want to help you or you want that camaraderie you want everyone to be united around the goal and the mission but to work actively and truly as a team. So always ensure your people that you got their back if they need assistance following an unexpected incident. As such, the human aspect must be present. However, if you take a close look at Netflix’s culture statement, you’ll see that they talk about letting folks go. In reality, they do so because they constantly want to progress their talent. So they declare that even if we’re not being very clear, we will still get rid of people who aren’t on that level that we want to develop the firm. You can go to either side, but finding a middle ground that works is crucial. There is a good balance to build and it’s specific to the culture you want to create. That’s how you shape business culture, which is a completely different topic we can discuss. Yet it does evolve.
You need to make those objective decisions with the people you have in early on. If you do not have those who fit correctly or if it feels you have been going in the wrong direction culturally, move on. Before we talk about handling the firing, I’d like to add that the feedback loop is not one way. Even as a leader, you must challenge yourself to establish a communication platform to drive a happy work environment.
There are three elements to drive a happy work environment; one is communication. Design a communication platform where everyone feels comfortable sharing ideas they have. And point out problems, the cracks that are emerging in the organization. Communicating openly improves the work environment because you’ll get information, about opportunities and upcoming risks. Secondly, I think acknowledging achievements is very important too because it can’t all be brutal, you know, cutthroat. We need to be able to acknowledge our strides. We’re in this for some sense of purpose. And we need to have these milestones when we make that progress and achieve it. So we need to celebrate that together. At our company, we celebrate the success of engineers, sales, marketing, etc. And then last but not least, what was the last one?
Morgan (Host): Two secrets that you need to know,
Kison Patel (interviewee): To create a work environment where you feel like you’re among friends, you need to create a company culture that fosters friendship. It’s the key element of keeping that tight-knit culture that creates this unique bond. That’s why, for me, team-building activities are really important, as I mentioned in the example from the Philippines, if they are part of the company culture. Can we still do a flying event even in a more distributed environment? Let’s spend some time together, let’s have some side conversations, let’s share something personal, and let’s get to know one another. I think that’s also an important part to create the environment. In trying to achieve that, as a leader, you need to be vulnerable because it’s a journey, especially as a founder, and you’re going through these new challenges, you get more and more headcount in your organization.
You need to redefine yourself as a leader, and you need to constantly challenge yourself to get better at finding your blind spots, and you need to move that to the areas where you know what you don’t know so that you can be proactive about that. But to have that feedback cycle, where your team is comfortable criticizing you as a leader, I think helps to keep neutrality. So it’s not just top-down but can we get this bottom-up feedback? Can I get your ideas? I’m trying my best here, and I’m committed to this team and our mission. Let me know how I can get better. Give me some feedback that will help me.
Morgan (Host): So one of the challenges I found is every leader under the sun says that they want feedback. But in reality, they don’t listen like you mentioned the Steve Jobs characteristic before. He was known for his famous bubble, the invisible shield, whatever you want to call it, where he was obsessed with these things and didn’t listen to anyone else. It turned out well for him. For almost all human beings, it doesn’t work that well. Wanting feedback does not inspire and encourage your employees, clients, or anyone to give you heartfelt feedback. Instead, it encourages them to give you the simplest and most euphemistic feedback possible, and it’s one of the challenges how do you create that culture where they feel comfortable being direct with you?
Kison Patel (interviewee): Based on the feedback from whom it’s coming from and where it’s coming from, I think there are some unique characteristics in terms of how susceptible they are to that. To me, the more information the better because whether I agree with it or not, I can get as much information as I can and then weigh it in myself. You have another point, and yes, people tend not to want to do it when we ask for it, but they don’t get it. So there’s a passive way of asking for it also.
Morgan (Host): I want to emphasize my last point, there’s this unspoken power dynamic between my boss and employees, and most humans are hesitant to be critical of the person right above them in the power dynamic especially when they can be fired. I can share some techniques I used to encourage people to criticize me, which is possible because my self-confidence was up to the sun.
I frequently declare to myself, “I’m comfortable.” To communicate with others, I work verbally in front of my clients, workers, and everyone else. I believe that being so harshly critical of oneself creates a culture in which people think, “Wow, he likes it.” They have seen me criticize myself which promotes them in turn. It’s also interesting to me since I believe I know a lot of people who are constantly trying to be flawless and who never offer constructive criticism to themselves in the presence of everyone. You’re a human, everyone knows that. So even if you don’t say it, they will still know that.
Kison Patel (interviewee): You can facilitate that as part of your culture by criticizing yourself and opening up by saying, “Hey, here is what I think is a general weakness.”
Morgan (Host): Exactly!
Kison Patel (interviewee): For Morgan, I would suggest having a conversation and being genuine about how you are framing it. You want feedback, and mean that this is important. I know I went through this interview with you. I’ve recently started picking up on guests podcasting. I’m still learning my ways because it is different from the podcast I host because I got to play to a variety of situations. So, for me to get a little bit of feedback from you at the end of this interview will help improve my skills as a guest podcaster. So if you wouldn’t mind if you could share one or two things that you think I could do better?
Morgan (Host): Should I be Californian euphemistic or New York through it?
Kison Patel (interviewee): This is like when I teach my kids of answering the why, if you frame things, there’s a real purpose behind them. Thank you, sorry, but tell me why. Thank you for what? Sorry, for what? Because these are transactional words that have no meaning. Take kids to the grocery store and say, thank you for bagging my groceries! Thank you for being so fast! Thank you for the conversation, and build it in! Thank you for the great service! And it needs to be there. Like we need to have that sense of why. And when we get to that real tough conversation. You know, asking the feedback, I have a good purpose for it. There’s a good reason to ask for feedback to improve? Like, I want to get as good as you. You’re doing a great job, I want to be like you. Would you mind helping me out from what you’ve seen or your perspective? I think that’s important, and then you can do a lot because you get into those really hard conversations. The same approach applies where you have to let people go, “Hey, unfortunately, we need to make this hard decision that will impact your role, Morgan, that our organization is undergoing this change that will change the skill set that is needed for your current position, and it will impact you. However, we are here to support you. And likewise, I want you to find an opportunity that fits your skill set and get you in a spot that you’re really happy with. And that’s where I want to support you. We want you to make it a smooth transition, and we want to give you some time to make that change. I’m happy to write a recommendation letter.”
It’s just that the objective part is clear, but “I just want you to know we’re human and that we understand that this is not something you expected. I caught you off guard, it’s probably not even the best timing for you personally. You may have some personal things going on. And I know, but this is just one of those changes that are happening because of the objective that our company is trying to fit in. I know it’s something you don’t want to hear, but I want to make this the best as I can and try to support you through this change.”
So It’s objective, but also empathy, trying to understand because it sucks for the other person, and you got to see it from their side and just help. If they have questions or concerns, address them.
Morgan (Host): I feel like I was just fired.
Kison Patel (interviewee): Was it that bad?
Morgan (Host): Going to commit suicide now! One of the interesting things about putting myself in the shoes of the person being fired is that people are smart, and even the people we think are stupid aren’t as stupid as we think they are. And as a result, people are rarely fired by surprise. They know it because they see everything changing in the business. They have seen how their bugs caused those issues. Therefore, I believe that many difficulties and issues arise when terrible, major things happen. As is a shock, but when you approach them unprepared. it is Not quite as terrible as that.
Take your time to consider COVID. You know, when I was a kid, I remember hearing that bunker-like nuclear bombs may drop so you had to, go to the basement of the primary school. COVID would not be a surprise if the government of the world had been informing everyone that would happen for 10 years. If they had been training us to put on a face mask so when it does happen that wouldn’t be nearly as bad because everyone’s psychologically and emotionally ready. Approaching it like that, and knowing the employees will see all the signs, leads up to lessons that have an impact on them.
Kison Patel (interviewee): They know, usually 80-90 % of the time, they’ll come out and mention it. Or they would tell me that they were unhappy here, too. In the beginning, I was terrible at doing this. But talk through it as a human and say, I don’t want to make this awkward. I don’t want to treat you like a number on paper. You’ve been good to me, and I genuinely respect you. And that’s why I want to do my best here. So even if there are ways you think I can help better support this transition, let me know I’m committed.” A lot of people have returned and thanked me and kept in touch. We let them go but kept good professional relationships.
Morgan (Host): That’s a positive sign. Too many people have the instinct to blow up their intimate relationships, and it doesn’t have to be that way.
Kison Patel (interviewee): We have to make decisions to solve our issues. And these decisions have nothing to do with them.
Morgan (Host): You let go of these Filipinos because you needed a more experienced team. 10 years ago, you were also less experienced; how did that process go?
Kison Patel (interviewee): I had at least some experience prior where it wasn’t terrible at the time. And they were folks that already started developing that culture of giving that feedback and tacking on the reason why. So that approach was happening on those. It was tough. Some of them came easy because it was like, “Here’s what you can’t do. And we need somebody that can do it.” I didn’t mind that at all, but when I worked with them early on, they were really hard to work with. But ultimately, it was a respectful thing. And even the person that I started the business with, I still talked to him. He moved on to build an agency that specializes in rapid prototyping. And it was funny because I got to support him with some referrals and just watched him grow that business to be successful.
Morgan (Host): That’s great!
Kison Patel (interviewee): So, I think one of the guys we let go wasn’t the one that I mentioned because it was obvious when I said he wasn’t a performer. He had the reputation of being the lazy one. He ended up starting an agency editing porno videos. And apparently, he has a big successful business doing that. So I don’t know either I was a part of that journey that led to his success.
Morgan (Host): What’s hysterical about that is I can see someone being lazy, like a video editor, and not wanting to edit the videos. Because if you’re a lazy person, you do not want to do it, but if it’s porn, then it’s a lot of fun. So re-watch it over and over. So it’s a way to turn your bug into a feature to take something you don’t want to do, but you know how to do. It’s like a mental trick to convince yourself to do it.
Kison Patel (interviewee): Yeah. As a final note, since our business is about 10 years old, a lot of those incidents I mentioned happened in the second year of our business. It’s always been that feedback loop. When you solve a customer service problem, it tends to lead to adjacencies, and we continue to do that next thing when we find we’re working with these larger corporations. The process of combining companies was a big pain point and even more complex than the first problem we solved. And we started developing solutions around that. During the early stages of the deal, we built solutions around CRM prospecting and pipeline management.
And when I got into podcasting about five years ago, the idea was to leverage the platform and to be able to do these interviews with practitioners in the industry and learn from them. So we’re taking the same feedback loop that drove our business. But we’re at this point where we realize there is a bigger problem in the industry which is the industry itself. The industry itself is very siloed off and disconnected. Everybody’s disconnected from their peers. And they’ve had their way of thinking about M&A. There’s a lack of standardization and best practices. So we essentially use the podcast as a platform to create qualitative interviews. Again, the same feedback model. Build frameworks by gathering insights, identifying patterns, documenting best practices, and identifying proven techniques. By combining these best practices with technology, we have developed a very unique capability today to help large corporations build a world-class M&A function.
As one feeds into the other, so we noticed software companies that use OKRs are starting to use OKRs for their M&A transaction when they acquire a company. After that, they begin adopting agile techniques, creating cross-functional teams around those OKRs. As part of our agile M&A framework, we have the ability to keep tight iterations, priority backlogs, and all of these things in place. So we built OKRs into the software platform so we can support it. And you can have OKRs, right built into it. In terms of problem-solving and stacking, today, it’s a really neat capability for these corporations to build a world-class function.
Morgan (Host): Oh, that was super interesting! I want to point out on this podcast that it tends to be not promotional. But it’s fine, I’m going to leave it in, and we won’t edit it out. Because at the very end, if anyone has made it this far, they deserve to do the self-promotion. You can promote yourself at the very end for those who listen,
Kison Patel (interviewee): So yeah, keep continuous improvement, drive on your feedback loop, and it allows you to build a badass company.
Morgan (Host): Love it! It was better than I expected. I’m happy so to have this interview. As soon as I turn it off, I’ll give you some feedback. But it was a fun hour and 15 minutes, and Kison, thank you for your time and anyone who made it to the end. I hope you enjoyed it and got some good lessons.
Kison Patel (interviewee): Hey, thanks Morgan, I enjoyed the conversation. You can let it keep recording so we can share the feedback with the audience. I don’t care!
Morgan (Host): Why not? It makes me make everything much better!
Kison Patel (interviewee): I’m all about lessons learned. And if there’s an opportunity to share those lessons that benefit others by all means then why not?
Morgan (Host): So, for the audience listening, everyone who wants to be on the podcast, I do a 30-minute call with them to prepare. And on our 30-minute call about two weeks ago, I gave you pretty strong criticism. You wanted to make some points, it’s important to turn to the form of a narrative and a story, and that’s the heart of it. That’s our style. And you even told me that you were afraid and you wished more people were this direct. I used my New York strong criticism side to guide you. And that’s when I was critical. And I’m happy to report that you’re a good student, you probably got straight A’s. I think you internalized this just by the story I gave you.
I like how you took the story as the heart, built yourself up, and then we got all sorts of ancillary lessons. So in general, I don’t have any criticisms. And I thought it was great, but because there always are criticisms, it was just the one that I gave you in our rehearsal call.
Kison Patel (interviewee): Oh, I don’t remember those. I just remembered you took the time to let me know this was a serious podcast, and I did the same thing. I wanted to do some prep calls to make sure we got a good production. And I was a little scared when this came up for the calendar. We had a fortune 500 pitch last week, and we have one next week. So you became a sandwich to our two major projects. So, I hope you got some good lessons. I was looking for much harder criticism, whether it was the language, the voice filler, or the words. Give me something. I need something to push on. You’ve interviewed a lot of people, Morgan, and you’ve seen it. And you know what a stellar interviewee looks like. If you were to critique me on my one area, what would that be?
Morgan (Host): So, the major criticism I gave you last time was about telling the story. This time, I think you did a pretty good job. And so let’s say it as a secondary criticism, but I’m a firm believer that you can always improve. So with that frame of mind, I always think lessons and details are the strongest especially when there’s a specific story. And I think the core story you gave is good. But I think there was some play failure about the tight feedback loop. It is great advice, but I think we have a four-sentence, 90-second summary of the story.
Here’s employee management, it’s great to have tight feedback loops. There was once a time when I was delivering their annual feedback, and we got into a huge fight about something that had happened nine months earlier, and no one remembered it. So this is the whole 90-second summary. With those four sentences, the abstract point of making feedback loose type comes alive in vivid colors and it becomes very memorable.
Kison Patel (interviewee): I like that because there’s a story, but there’s an opportunity to build stories within stories like mini-stories.
Morgan (Host): Exactly! Similar to what I just told you in four sentences, I want to give someone I know the annual review, and we got into an argument about what happened two months ago, and you don’t get the details. Even at that level of generality, it is specific enough to resonate, so you don’t even need the specifics.
Kison Patel (interviewee): I like that a lot. That’s one I can work on. That’s good feedback. I was curious about I didn’t name the client like I don’t want to put the name of the client or the firm, so I will give her the name Monica, but I wonder if that would add more visualization of the person
Morgan (Host): Interestingly, I recommend against that. Because in the beginning, a couple of people did. But every time someone did that, they would get so into telling the story, they would forget the name that like, oh, and then John, oh, it was a Jack. They forget the name. And it’s happened enough where it’s just hard to stay consistent with the name that you make up. Is it worth all the confusion of actually being hard to remember and keep consistent with the name?
Kison Patel (interviewee): Interesting. That’s great feedback. I like it. Ladies and gentlemen, this is how you give feedback. You did not give me this one when I first asked for it. Do you live in California, Morgan?
Morgan (Host): I lived at Stanford for a very long time. It is Argentina, where I am now.
Kison Patel (interviewee): You are in Argentina, but you still kept the California spirit. It took a while to get you to show your little bit of that New York side I had to dig in there a little bit and said.
Morgan (Host): I did that on purpose because this is another part of how I am! I only give criticism if it’s clear to me that they want it. Maybe it’s different for employees in professional contexts. I know friends who are married, and they always criticize each other. I know friends who are always insulting each other. I don’t know if it’s me, but I live in a world where everyone is needlessly so genuine. And something I’ve learned over the years is people don’t change. They don’t internalize the prism.
So in a non-professional context, when you criticize people they won’t change. It’s going to make them think you’re an asshole. So as a result, I have the general personal style of waiting until it’s clear to me that the other person wants it. And that’s when I open up. So this is why I was strong in my criticism in the last call. And this time, once you are clear to me that you wanted more, I did it. But until it reached that point, I was being Californian; smiling and happy.
Kison Patel (interviewee): I had to push a little more and give you a good reason why.
Morgan (Host): Yeah, totally! But I am happy. I’m happy you like it. And I’ll end with two sentence story and then we will say goodbye. Perhaps it’s my longest recording yet, which indicates that I’m inviting it to talk about how to compress stories so that you can give many stories in just three sentences.
I wanted to tell you about Ernest Hemingway, a classic American writer for non-American writing when he was given the challenge to write a story in six words, and he succeeded. And here’s Hemingway’s six words story; “Baby shoes for sale, never used.” And it’s powerful. Even with those six words, he already inspires you to think, fill in the gaps and figure out what’s going on. Six words can get you a great story.
Kison Patel (interviewee): That’s awesome. I like that example. I’ve never heard that one.
Morgan (Host): And I love obscure literary philosophical trivia. And it’s surprisingly applicable to everything. And I am not going to press record and head. It was fun. To be continued! And thank you to everyone who made it to this point.
Kison Patel (interviewee): Thanks, Morgan!
Morgan (Host): Okay, bye, everyone!
Kison Patel (interviewee): Bye!
This transcription belongs to episode #25, you can watch the complete episode here!
