I plan to use this blog to share my thoughts and perspective on growing SaaS businesses and on building successful organizations in general. With that in mind, I thought I’d use this inaugural post to offer a bit of background about me, beyond what can be gleaned from LinkedIn and other high-gloss media. I’ll start with just a bit of personal back-story and then fast-forward to some of what I’ve learned over the past 24 months.

Back-Story: I’ve always loved teams: playing on them, cheering them, coaching them, and always learning from them. And more recently: building, leading, and continuing to evolve through them. Over the years, I observed that the best teams consistently combine two seemingly opposing competencies: First, they clearly articulate their goals and relentlessly pursue them with unity and conviction. Great teams operate efficiently and effectively, and often simply “out-execute” their competition. They do so by leveraging shared principles, well-understood operating norms, and deep experiential understanding of the opportunities and challenges they face together. On the other hand, great teams also possess the humility, introspection, and courage to adapt and change however necessary within dynamic environments and in response to inevitable setbacks. These concepts were deeply ingrained in me by a few legendary coaches, by whom I was immensely fortunate to be mentored. These people had a profound impact on my world-view; and their ideas are foundational to Lock 8’s approach to thoughtfully and consistently building successful organizations.

Fast-Forward X Years: When BoardEffect was acquired at the end of 2016, I assumed I would take a few months to transition-out and rest-up, and then do another round somewhere as a “hired software executive.” I’d been a CEO twice and a President / Managing Director / EVP Operations twice; and I loved leading growth-stage SaaS businesses. Eighteen years had flown by, and these experiences had been transformative for me personally, professionally, and developmentally. It seemed to make complete sense just to “hit replay.”

But I didn’t end-up following that familiar path into my next operating role. Instead, I’ve been on a journey since then, exploring new ways to leverage my love of operations and organizations. This exploration has ultimately led to the founding of Lock 8 Partners, a platform for investing in and optimizing the performance of small-scale SaaS businesses. I am completely energized by this next leg of my journey; and this is a brief synopsis of how I arrived at this point.

After ninety days of amicable transition, I left employment with BoardEffect’s acquirer and promptly became immersed in a number of long-deferred pet projects. As expected, I soon missed my true passion of building teams and businesses; and by July 2017, I was itching to get back into the swing of growing companies. Without a full-time role and company for which I had the requisite level of excitement, I took on a number of part-time projects with a few private equity firms. These included strategic consulting engagements, executive coaching stints, board roles, and operating assessments in connection to prospective new investments. Although these projects were stimulating and challenging, I realized by year’s end that I wanted something with more continuity. So, I committed to spending four days a week in an Executive Chair role at one of the companies with which I had been consulting; and it was fun to be fully-engaged again. I loved helping the team think through how best to unlock the significant potential of that business; and I was completely engrossed in that effort throughout the first half of 2018 (full disclosure, I remain on a more limited basis).

It was during this time and through these collective experiences that I was struck by a number of observations; and these eventually evolved into the foundational ideas behind Lock 8 Partners. To dig into those ideas, please check out Part 2 of this post here.

As I shared in my initial post for this blog, my decision to start Lock 8 Partners was driven by some long-held views, along with a number of more recent experiences and observations. This post picks up on the latter, and attempts to lay out some of the thinking behind founding this business. Specifically, the following observations and takeaways have been central to Lock 8’s strategy and approach.

1. More Capital than Investment Candidates: Since early 2017, I helped evaluate a half dozen or so prospective investments and initially reviewed scores of others. And yet nothing I worked on resulted in an eventual investment. Deals were halted for many good reasons, but the majority came back to one central dynamic: there were many investors and vast capital pursuing a relatively small number of companies that were judged to be the most attractive investment targets. The end result was — and remains — that it is objectively very difficult to find and invest in great companies.
2. Search as Competitive Necessity: To mitigate this challenge, rational and intelligent investors have spent years and significant resources developing highly sophisticated sourcing operations. They employ accomplished people, world class systems, and finely tuned strategies, all in a concerted effort to be the first to find the very best companies as destinations for their investment capital. Being very good at finding businesses for investment is no longer a competitive advantage for exceptional investors, it is inarguably a competitive necessity.
3. The Other 9X%: With such tight filters in place, it is inevitable that investors elect to pass over the overwhelming majority of companies they see. But I found that a company failing to meet investors’ stringent search criteria didn’t necessarily mean that business was unattractive. Quite the contrary. In my consulting capacity, I looked at dozens of interesting companies that were simply early in their life-cycle, or hadn’t experienced stratospheric growth, or had some other characteristic that limited their appeal to a broad swath of more traditional investors. These are good businesses; they simply are in need of something that helps brings out their full potential. And there are many of them.
4. The Missing Operating Piece: Over the past year+, I have thoroughly enjoyed serving in an active Exec Chair role — facilitating strategic discussions / decisions and advising on operating matters, but ultimately leaving the critical execution to those with far more domain expertise and intimacy in that particular business. What was especially gratifying in this role was the sense that the specific challenges and opportunities companies were experiencing were often new versions of old themes that I had seen in past lives. I found that I possessed mental models for understanding these issues, language for explaining them, and tools to address and capitalize on them. I was struck by the thought that twenty years of operating experience could be broadly applied to many SaaS businesses. And, it occurred to me that operating expertise might just be the critical component to navigating some of the above-mentioned investing challenges that I had witnessed.
5. Over time, these thoughts took root and led to a series of questions, including:

• What if the emphasis of investing became as much about building out world-class operations in good companies as it was about focusing resources on finding and transacting with seemingly flawless ones?
• What would it look like to inject deep operating DNA into a small-scale company investment strategy and how could that expertise be injected into businesses in a seamless, additive way?
• How would expertise in addressing operating challenges increase the population of prospective companies an investor could confidently target?
• How might such a system scale over multiple businesses and how best to prove this approach?

The more I investigated these and other questions, the more urgency and energy I felt around answering them. As I have sought to do so over recent months, I have gained ever-increasing conviction about this as an investment model; and I believe a unique value-generating opportunity exists at this moment and juncture.

I plan to dedicate many future posts to further outlining these ideas, describing my efforts to understand them, relating their practical application, documenting my experiences in this pursuit, and sharing lessons learned along the way. I hope these will be helpful to all readers, but most specifically for operators who are working tirelessly to build successful SaaS businesses.

Thanks for reading and please come back for future posts.

At Lock 8, we think and talk a lot about operations. Which raises a valid question: what do we actually mean when we use that word “operations?”

Like most words, operations can mean a lot of things to a lot of people. The Miriam-Webster Dictionary defines it as: “performance of a practical work or of something involving the practical application of principles or processes.” I like the pragmatism of this, although it’s a bit sterile and lacks the necessary business context for use here. Separately, BusinessDictionary.com offers the following: “Operations transform resource or data inputs into desired goods, services, or results, and create and deliver value to the customers.” Again, really helpful, but a bit too theoretical to be really valuable.

Before going any further, allow me to inject what we DO NOT intend when we talk about operations (or, at least, we do not intend in any exclusive, strict, or limiting way):

• Operations is not (just) LOGISTICS stuff
• Operations is not (just) BACK-OFFICE stuff
• Operations is not (just) PROCESS stuff
• And Operations is definitely not (just) COO stuff

Rather, when we use “operations” in the context of small-scale B2B SaaS businesses, it encompasses all of the above, and more. In fact, it represents virtually all of the complex and interrelated activities necessary to build and grow a sustainable business. Which raises another legitimate question: how can you wrap your arms and brain around something so vast and impactful? While I think that is a great question to discuss over a coffee or beer, I’ll take a crack, by offering a framework centered around a company’s stakeholders.

Very broadly speaking, many SaaS company’s stakeholders can be broken into four categories, as follows:

1. Market: This is a broad swath and is comprised of any business or entity that is a prospective (but not yet current) customer. Said another way, this is the total addressable market, excluding a company’s existing client base.
2. Customers: These are current, paying members of a company’s client / partner community. These are the lifeblood of a SaaS business, in that they make repeated purchase decisions (often annually or monthly) as to whether they wish to remain a paying subscriber to (and funder of) the company’s software / service.
3. Team: This one is simple. It’s the team of staff-members, contractors, volunteers, and anyone else who works hard to move the needle on fulfilling a company’s mission and realizing its vision (more on those things in a future post).
4. Owners / Financial Stakeholders: This certainly includes investors, but also extends to lenders, management, suppliers, customers, and virtually anyone with a vested interest in the financial health of the business.

For me, operations encompasses all strategies / tactics / initiatives / projects / tasks that are focused on, and fall within, any of these stakeholder buckets (Market, Client, Team, and Owners…with a few caveats and qualifiers around the last group). Before the objections rain down, I’ll try to explain:

Under this model, operations would include: identifying a company’s target customer segment, articulating its value proposition, codifying its competitive positioning, establishing its packaging and pricing, defining its go-to-market strategy, scaling its selling motion, and much, much more (Bucket 1: Market).

Operations would also include: deeply studying the problems target clients are trying to solve, designing and developing a solution to address those needs, defining and delivering against a roadmap that fulfills that solution vision, mapping the journey organizations travel as they endeavor to resolve business challenges, provisioning a set of experiences that enable and augment a given solution, and much, much more (Bucket 2: Clients).

And operations would cover all of the necessary people-related needs associated with getting the right people on the bus, into the right seats, headed in the right direction, excited for the journey, and helping to power that vehicle toward a shared destination (Bucket 3: Team).

And finally, this definition would cover establishing appropriate company goals, implementing systems to monitor performance, and fostering processes to inspect and adapt to environmental changes…all in support of reaching financial milestones (Bucket 4: Owners). That being said, I consider the Owner Bucket to be different from the others in two material ways: (1) Far more so than any of the others, this group of stakeholders is focused on outputs (results, outcomes, retrospective measurements) versus inputs (sales pipeline, product backlog, key hires, etc.). (2) The owners are arguably secondarily impacted by an organization’s operations, whereas the other stakeholders are either the producers or the immediate recipients of every operating action. More on this interrelationship in a future post.

Clearly this post only begins to scratch the surface on the Grand Canyon-esque topic of company operations. But hopefully it has provided at least enough background to demystify the general scope and scale of what we are referring to when we use the term “operations” in connection to growing SaaS businesses.

(1) https://www.merriam-webster.com/dictionary/operation

(2) http://www.businessdictionary.com/definition/operations.html