 Thank you for joining us in adventures of commercialization this week we have Ron Higgs will be interviewing and yeah welcome run. Thank you really glad to be here I appreciate you inviting me. Yeah, it's great to see you again. So tell us a little bit about what you're up to these days. Well, I am a fractional chief operating officer. I'm also a consultant in general I've done some consulting on leadership leadership development and some executive coaching. In today's environment and a fractional COO is just what it sounds like fractional executive so as a chief operating officer, I would come in on a part time basis and help companies out who aren't quite ready to establish that position full time yet. Wow, that's awesome very interesting. And so a fractional COO so if a company is starting like an entrepreneur starting a business, and they have a CEO. When is it time to really think about getting a seat. Well, as you know, you have to have a garage to start a business these days right or a startup so that seems to be the case so when the two or three founders are working in the garage on their product and or service. They're using a whole bunch of skills they're fundraising they're using technical skills they may be reaching out to manufacturers, things like that if they're building a physical product. The ultimate goal is to raise money so that they can build a company. So when they do that, while they're doing that. That's a completely different set of skills. So the skills that they use to build the company fund the company and everything else are not the skills that they need to run a large company. So, once they get all of their money, and they actually start hiring a team and building a real company. That's the time to think about bringing in a CEO. Okay, very, very great insight. Yeah, because I know that company or entrepreneurs will start a company with like their three best friends. And, you know, they have a great concept. I think in the first episodes we talked about art and how to how to own your, your art of your business. And then we talked last week or two weeks ago about how to raise money from angel investors but this time we're talking about when is it time to bring somebody in to start raising that money. So when do you what do you start looking for and like a consultant for a, you know, a fractional executive what what do we look for in somebody like that. I think the first thing to do is to figure out what your specific problems are. Okay, are we having challenges in finding supply chain, are we having challenges in leadership and just growing teams. And the thing is to find someone that has expertise in your specific problem. And that person does not have to come from the industry that you're in. So if you're trying to do a fintech, for example, you can find someone from healthcare, you know, who has a background in healthcare, or someone who has a background in aerospace and defense such as myself, who has an expertise in solving the specific problem that you're having. So if I would say one thing just don't be so focused on that person coming from your specific industry. Great, great insight. But what kind of stages do we start looking for a consultant or somebody to come in I think you mentioned, you know, when we start seeing that we have problems that we can't solve. But what, you know, what stages of the production do we start looking for for outside help. So that's a difficult question to answer but it's because it varies because every company goes through their issues right in every company has a specific area of expertise so say you're three founders have some expertise, but there could be some gaps in their expertise, and typically they'll fill that gaps, those gaps with members of the board. So they'll have a board that maybe compliments some of the skills that they, that they specifically have but again, every company is unique in that as they grow they may start having some problems with let's say HR. My goodness we don't know what to do with HR we don't know how to hire people. We don't know the first thing about interviewing people and or building a team. So in that case the first hire that you would make would be to go out and outsource some HR, go find some HR experts that can help you with the recruiting, you know, find the right people onboarding and so forth. Now say you have some expertise in that area and that's not, that's not your problem. You may have some problems with supply chain management and finding a supply chain if you're, if you're developing a product. In that case you would bring in someone who has some manufacturing experience that has some experience in that area. So it's really dependent upon the specific problem that that company is having as to where they should look and who they should bring in first. I love that you bring up HR there's so many startup companies who start hiring like crazy who don't realize that you know HR and people management is something that it definitely needs to be accounted for. So, and so, when we look at like bringing on a COO or bringing on leadership, what kind of things do we look for in in bringing on or networking where where where do we find these people. Well, so if you've heard the term your network is your net worth, I am, I am a believer in that term, pardon me. You have to look at your network and see where the folks in your network can help you and don't be ashamed. I mean linked in the world is a lot smaller than it was. One of the things that I think the pandemic brought us is it brought us closer together just like this you I am in Seattle, not sure where you are. And we've got folks in Hawaii. And so the world has gotten smaller just be a zoom. And so the networking and looking in the right places and and I'm a big proponent of like that. You know I'm not. I don't have any stock in LinkedIn or anything but I think it's great. You can join groups on LinkedIn of like minded people based on industry based on interest based on every anything really you can listen to podcasts such as this. You can reach out to your entire network because most of us are growing our networks doing LinkedIn to and ask, ask where you can find those expertise and expertise that you need specifically as a consultant I started off, you know as a consultant I wanted to be able to find any problem that my client had, even if it was outside of my area of expertise. So one of the things that I focused on was creating relationships and building relationships with your strategic partners in every other discipline. You can walk into a company and see that they have an issue, let's say with HR, and be able to have three or four different HR experts that I can refer just about anything so the bigger your network is the easier time you're going to have finding someone to help you solve your problem. And so are you are you a fractional CEO currently for any businesses or are you coming in at any stages for any any startups happening right now. No right now I do not currently have any clients because I am working on a certification that I believe is going to take my business in a different in a different direction so the, the, the program that I'm going is based on a book called predictable success. And once I get the certification, I will be able to use that certification to enhance my list of services. With that, though, I need to redo my LinkedIn profile redo my webpage redo a bunch of my copy, everything at marketing and advertising and I'm spending the next month or so working on that. So probably at the beginning of April I'll be ready to start looking for clients again and taken off. Okay, and at what stages do you come into each of these companies do you have like a phases that they're going through that you specifically look at and coming in to help with them. Well I'll tell you, I'll just give you a little preview of this predictable success model. So I think everybody can, or all the business owners out there can sort of identify with company goes companies go through a bunch of different stages, right and there are a lot of programs out there and a lot of books that you can read to tell you what stage you're in. So let's just say let's just agree that there's an early stage in a transition from sort of having a small company with a bunch of friends to, oh man, we're running a real business now. Right. And so I help right there in that case so with companies developing an org chart, role clarity looking at the org chart and being very specific about the roles, making sure we get the right people in the right roles, and then starting to develop processes that the company uses to move forward and grow so I would say to help CEOs build a foundation for a scalable company. So for instance you can't scale if you're still still using Excel spreadsheets and all the sorts of things like that right. So we're going in and using and developing processes that will endure as the company grows. The second part is that very large companies go through a stage to where and I think we have some companies here in Seattle, that are in those stages, I would say they're so large, they're driven by process and everybody works towards completing the process and there's not necessarily any innovation or room for individual thought individual initiative everybody's just sort of turning the crank and doing their job. So how do you take company like that and move them a little bit backwards so that they're not so dependent on the processes so that people can begin to innovate again. So those are the two areas that where my expertise is. Yeah, that's great. I think I have seen where everybody kind of works towards just making the wheels turn but looking for some new innovation is always great and trying to bring somebody in that looks from the outside perspective, and can come in and really see some innovative ways to turn turn the wheels differently or make them go a little bit faster grease the wheels a little bit there. Yeah, I will say another advantage of fractionals are that fractionals come from different areas of expertise and different industries that have seen quite a few different problems in different industries and one of the things that you'll discover is that a lot of the problems are the same agnostic of the industry. And then you could also use you know lessons learned from one industry to help smooth things along or help solve problems that in another industry. So just based on the fact that fractionals have this experience coming from a, you know, quite a few different industries. They can, they have a different perspective and can help. So for instance, for me I was CEO of a creative agents, and I have a background in systems engineering and aerospace. But I was able to use some lessons learned from from both of those disciplines engineering disciplines to really help solve some problems that the creative. I think that's great. I think that's a great collaboration that you can bring in. So now CEO coming in and asking somebody to have a label like that or like a big piece of the puzzle to come in. Do you think that can be a little bit say threatening for a CEO CEO to bring in somebody from the outside or I know you mentioned that having a great network and a great group of leadership is always important. And raising money is not always what the scientists who created the company is the best at. So what kind of advice do you have for for bringing in an outside person and giving them a label like that. Well, again, I just have to say, you know, check, check your ego at the door. And I think that CEOs and founders in general should be open, open to learning. I think you can learn anything from anyone. No matter what the case may be and no matter where they come from there's somebody out there that knows a lot more than me about everything. Right. And so I always approach it from what can I learn from this person. So let's go back to my answer to an earlier question is that does that person have the expertise to solve your specific problem. And are they passionate about because there are some people that are passionate about going in and helping with HR issues. Diversity and equity and inclusion is is another I have a colleague that focuses specifically on diversity, equity and inclusion when it comes to women. And so, and women in the workplace and female executives, very, very passionate about it. And so if their passion aligns with your problem then you're going to find a great advocate and a great partner from whom to learn and to help you solve your problem. And that's great. And I think just the value of relationships is so important here, especially when you're trying to build a baby or create a baby and build a business. Where, where do you see I we talked last episode a little bit about angel investing and seeking out these types of relationships do you have any advice for these entrepreneurs on where they can find these, you know, fractional executives or, or advisors, just leadership in general. Well, I'll go back to the network answer but I'll also, I'll also say this. I think self awareness, to me, is the number one thing for leadership. You have to know sort of what you're good at and what you're not good at. Spending some time focusing on being a better leader. I have been, I'm a graduate of a military academy. I spent 24 years in the Navy leading people and quite a few years in the civilian world leading large teams. And I still have a lot to learn about leadership. So again, no matter where you are, I think you have a lot to learn. So leadership, if, if you're in that position take a look and the better you leader you can become the more it's going to serve you. So for instance when I started off as a consultant I was a leadership consultant and I wanted to help startups, and I wanted to help startup founders become better leaders and convince them that that was a good place to invest some time as they start to grow because as I mentioned before, the skills that they're using to raise money and do all the things that you do to start a company are not the skills that they need to run a large company successfully. So one of the things I did is I went out and interviewed several people who are who write large checks to startups. So angel investors, and I asked those angel investors what qualities they look for in a startup founder startup before they would go ahead and fund them and provide them and be a donor because essentially you know their donors until they get a return on their investment. And every one of them so I wrote down this list of requirements and guess what they were. They were they perfectly aligned with all these leadership qualities there are things like you know being open to learn being a good team player, having integrity, being honest, things like that. So the sooner that the founders and entrepreneurs invest in learning to be leaders, the better off they're going to be. And one of those things is generating relationships. I think that as a leader, every person responds to leadership differently every person needs to be led and or motivated a little bit differently. You don't know what that is until you can create a relationship with that person. So your ability to create relationships is a leadership trait, and it's also something that helps you with your funding because I believe that the funding and the is a is not about money, but about generating relationships and again that is a fantastic leadership quality. So the better you are at generating relationships and maintaining relationships I think that better you're going to be a leadership. Well what did we say when I was doing the event management for the angel investment network, we would say everybody likes to spend money when they're having fun, right. Not only, you know, I think also to we're not only investing in a company and a great idea we're investing in the person as well. It's not only a check that's written over to, you know, fund a great idea but these things also are just ideas a lot of the time like they're not even really built into a profit, a profit return company. And so to hand over a $250,000 check to a new company is not just in okay I think your idea is great but do I like you. Do I like you do I believe in you do I feel like what you're telling me is genuine and and really cultivating that relationship because it's it's a gamble a little bit here isn't it. Well, as I said they're a donor until they get a return on that investment. So you're going to find somebody to donate your cousin you're 100% correct. I think that angel investors and investors in general I think are looking at maybe, you know, 49% and your idea and 51% in you. And I don't think they're going to write a very large check to someone they think is a knucklehead. I mean, what do you think the success rate is for some of these companies I mean companies that come in say at your first stage at that kind of idea stage looking to bring in consultants or do we see a lot of success rate in the in this category. I think so but it also depends on your definition of success right because some companies you can get to a point where your stagnant say you're generating 5 million a year and income and you know somewhere between a million and a half a million and profit, and you don't want to stay that way. Right so are you successful. You know it all depends on your definition. If now if you're looking to take that and continue to grow and continue to grow where you get to 10 million 25 million 50 million 100 million, then that so how many companies get to those millions, not many. I think more companies get to the point where they're small and then they don't grow they're not generating a lot of income but you know they're all but they're they're successful. Again I think the average small business owner pulls in $60,000 a year or something like that and very few businesses make more than a million dollars a year I think it's less than 10% or something like that. So, again, it depends on your definition of success. And now you as a fractional executive or a fractional CEO are there specific types of companies that you specifically seek out or that you are particularly interested in. I know that there's a lot of, you know there's consumer products there's technology there's real estate are there are there specific industries that you may, you may be particularly interested. I have a significant background in aerospace and defense so so I do, I lean towards those but as I mentioned before, a lot of fractionals have experience in a lot of different industries. I jumped at the opportunity to be CEO of a creative agency because I didn't know anything about that now I do, after doing that, after being CEO of that company. So, part of me personally, one of my passions is learning. I love to be exposed to different industries and learn how they do business in different industries so I'm open to almost anything you know so healthcare. You name it, however, you know, it has to be a problem that I'm passionate about solving. I really like going in and review and mission statements, vision statements, setting up or charts for the first time or some companies that have been around for years, don't have org charts, right, and then you know, defining roles role, making the roles clear, and then helping companies move packs past some smaller companies move past some robots that they have. And a lot of those I think one of the primary advantages of a fractional is fractionals have the dispassionate view of the company, which means that they're coming up in any of the, any of the emotions because involved in the company because there are a lot of things that go on that if you're coming in as a fractional, and you're coming in from the outside to groups that has been around for a while, where you have no idea, right, you have no idea what's going on so you could take more of a logical view of the company and not be encumbered by any of any of the emotional issues that are involved and that's an advantage to because you know in one of the companies where where I was CEO, we had to, we had to get rid of one of the founders because that founder wasn't growing with the company. Right, that's difficult and that's a decision that I'm not sure they would have been able to make had they not had someone like me. There's a misconduct with COO's and I have heard this rumor in the past that they come in and they clean house. And that's something that some of these entrepreneurs should be scared of when they look at. No, I don't think so because I think the COO is looking out for the company as a whole so for me personally, you know you look at the company and I look at all the operating functions of the business and so my, my job is to move the business forward right the entire business and if one person isn't good for the entire business again, then that role we have to find a different role for that particular person so it's not specifically cleaning house, but it does and small companies roles tend to be defined by the skills get of the person in that job. As the company gets larger the job, you need to have a definition of the job specifically. As your director of finance these that needs to have these specific skills. Does the individual in that role have those specific skills and if that individual does not we need to find someone that does. Yeah, and that makes so much sense, especially when I've seen a lot of startup companies. As the company grows, people get moved into positions that they weren't necessarily either ready for or just taking on a position that maybe they needed to expertise in. Like you said we have a finance person who has no idea how to use quick quick books or something like that so I think it's great I think that you, what you're doing is absolutely amazing run coming in and being a liaison and bridge you know, new and old and just bringing in this new perspective of a third party that has unbiased perspectives is is really great and I think that that's the most important thing that we can take away from this. I know that we're coming up at time, but I just have one more question for you if you had one more piece of advice for these young entrepreneurs these, you know, over coven we've had people lose their jobs and start to create companies that are now becoming their livelihoods and they're not going back to this nine to five they're going to actually pursue this if you had any piece of advice for them what would you give them. I handed out it before but two words be open, be open to learning, be open to your ideas being, you know, questioned, and be open to the folks that asked those questions of your ideas. But personally I don't think I've ever had an idea that someone else didn't make better. So, again, just be open. I am passionate about learning, I can learn anything from anyone. And I love it when people ask well why do you do it this way, why did you decide to do that. Right. And so, just be open in general, I think will help you along the way. Yeah, I think that that's great always challenging and pushing, you know, sometimes people ask you that question and you're like, Why did I think of it that way. And so then it makes you really challenged in your own idea. I think that's great. Thank you so much Ron for coming on the show today adventures of commercialization and we'll see everybody back in two weeks.