Leadership, Culture, and Success: Insights From Cameron Herold

0:00So you don't have to oversee the stuff that you don't like. and you need to hire people that like that stuff. And that is, again, understanding yourself. How much more successful would you be if you had lunch once a week with insanely successful entrepreneurs who shared their biggest secrets on how they think and achieve success? Grab your seat at the table because this is Business Lunch with Roland Frazier and Ryan Dice.

0:29Welcome to another episode of Business Lunch. And today's a snackable episode with Roland where he's gonna get into some more tactical strategies that you can start using to live a rich and happy life. If this is the first snackable episode you're hearing, I'd encourage you to go back and listen to some of the other episodes that Roland has put out. And if you wanna get notified every time we release a new episode, go to the new businesslunchpodcast.com website and we'll send you detailed notes along with every episode. That's businesslunchpodcast.com, www.businesslunchpodcast.com and you can sign up for the free email newsletter where you'll be able to get all the highlights and resources from the episodes.

1:04Hey everybody, Roland Frazier here and welcome to another episode of the Business Lunch Podcast. We are so happy and excited today to have a friend of mine I've known for a long time now, Cameron Herold, who is the founder and CEO of the COO Alliance. So COO as in Chief Operating Officer. And I think it's so wonderful to have him here because so many people ask me, how can I get my operators, the people that are running the business to do the things that I need them to do. And how can I separate myself from operations of the company? And Cam, welcome to the podcast. Thanks, Roland. I appreciate it.

1:43You and your team and Deanna on your team have been really great at sending over referrals over the years and even people, not even referrals, but people that need some advice and resources around that second command and happy to always help any of your kind of tribe. So thank you for doing that. You are very welcome. and a shameless plug for Cameron, which I get nothing for other than the joy of sharing great people with him. We have actually sent multiple COOs to Cameron from our business as well as others and nothing but good things to say about that. So if you guys need to train up your COO or you are a COO and you wanna level up your skills, I highly recommend that you reach out to Cam and we'll share how to get ahold of him at the end of the podcast.

2:22But right now, will you tell us a little bit about kind of what your background is and how you got into this COO Alliance thing. Yeah, well, it's funny that you're calling me Cam because the only people that ever called me Cam were my family and I was groomed as an entrepreneur. So my entire first half of my life, I went by the name Cam, switched over later in life to Cameron. So either one works, but it's funny, my family groomed us as entrepreneurs. And to this day, my brother, my sister, and myself have all really been running our own companies for between 15 and 25 years. I had my first operational company when I was 21 years old.

2:59Actually, 20 is when I started it. But I had 12 full-time employees when I was 21 years old. Really kind of cut my teeth at running businesses at very young ages. And then got involved with a couple of different friends along the way, three different friends, and helped them build three different companies effectively as their second-in-command in those stages. So built out a group called Gerber Auto Collision in the U.S. That's now the largest collision repair chain in the world. We built out a private currency company that we sold back in January of 2000. But we all know what would happen with that market crash right afterwards.

3:30So we lost a$64 million company, got$3 million at the exit, and then helped my best friend build out a company called 1-800-GOT-JUNK. And I was his CEO of that company, took them from$2 million to$106 million in six years. Left there 16 years ago, I've written six books. I've been paid to speak now to entrepreneurial audiences in 27 countries on every single continent, including getting paid to speak in Antarctica. And then six years ago, started off the COO Alliance. Then I also host a podcast called the Second Command Podcast, where we don't interview any entrepreneurs. We only interview our COOs.

4:05That's a little bit of a tour. Now I'm jealous because I've been wanting to go to Antarctica for a while now, and you've actually done a paid speaking gig in Antarctica. That is pretty daggone cool. Well, it was from a mutual friend of ours as well. It was Yannick Silver that was hosting an event there. And Yannick had me speak and handed me a check right in front of all the entrepreneurs to technically prove that I'd been paid to speak on every single continent now. That is awesome. I love that. I love that. Well, so now you have a new book that's out too, right? You want to share a little bit about that and we can talk about kind of what that covers?

4:37Yeah, it's interesting. The first four or five books that I wrote were really about building out my brand and sharing a lot of my content around general business, you know, areas of scaling up companies. I co-authored a book with Hal Elrod called The Miracle Morning for Entrepreneurs, and that went very well. But this last book that I wrote called The Second Command is really some IP and some content that really wasn't being shared. There were a couple of books that talked about very early stage companies, maybe hiring an integrator, but that kind of system and model usually breaks down at about the 50 employee mark.

5:09And I really wanted to talk about how to actually bring on a proper second-in-command, whether it's a COO or a VP of operations, typically of a 50 to 500-person company. So I walked through all the content of actually recruiting, hiring, onboarding, and then building that really strong yin and yang relationship with the COO so that the CEO can really leverage themselves and scale up the company. Okay. So let's talk about that. We are in the process of, in a couple of the companies I'm in right now involved with, we're bringing on people in different C-suite capacities. Sometimes it's through referrals.

5:46Sometimes it is through recruiting firms. Tell us a little bit about like, if somebody's listening or watching this right now, and they're like, I don't have somebody yet. I need to find somebody. What's the best way for them to go about doing that? Yeah. So there's a couple of parts to what we're talking about here. The first one is that most great employees, especially as you move into those leadership ranks, are never out looking for a job. Most great employees have a job, they're working for a pretty good company, and you need to entice them away from wherever they're working. So the starting point with that is building out a score card and a job description for that role that is really strong and really polarizes.

6:26You want a job description that pushes 50 % of the people away, and they go, no way, I don't ever want to work for that company, which really magnetizes and attracts the other 50 % in. The other thing I like doing is getting a copywriter, somebody like you, but not quite as expensive, who can take that job posting and rewrite it like a sales letter so that it pops, right? Every job posting is a sales letter, and it really needs to attract and market people into your recruiting funnel. Next thing that I like to do is put a couple of hoops in place to make them jump through a couple of hoops so I can actually see if they're really skilled, see if they really want the job?

7:00Have they read our company, Vivid Vision? Do they really kind of vibrate at the same residence as we do? And are they excited about what we're building? And then the last part is I use a recruiting firm because recruiting agencies can really go out and help us poach the best people and entice them away. I've got one firm that I've introduced a bunch of your clients to as well over the last 11 years, and they exclusively focus on COO or second-in-command searches now as well. So can you care to share that resource for us? Sure. It's called the Y Scouts. They're on the board of Conscious Capitalism.

7:32They are the CEO of Y Scouts was the president of his YPO chapter. Is that Max? Max Hanson. There you go. See? Yeah. Yeah. Where are you? Actually, they are helping us right now with somebody. So that's that's really funny. I didn't I didn't know that. I didn't know that was you. You were connected to that. I was at his wedding years ago and he was at my prior wedding years ago as well. So yeah, great guy, great company. But again, they've done, but that's my point is that really, really great firms, of course, they're working with you, right? You've been able to find the best people. And I think they are amongst the best in North America for sure in that search, in that niche.

8:08What I like about the process that, because I've been involved actively in the process in one of the current searches we're doing right now with those guys, is that they started out, and this is something that I think is really, really helpful, because a lot of times they'll say, well, give us the job description, write the job description. But what these guys did a great job of was there were two questionnaires, and one of them was really, really in-depth into what are you looking for? Who will they report to? But then into some really cool things that I hadn't seen somebody ask before. They said, if you could have your dream person that, you know, your dream COO, who would that be?

8:53And name, name. So like then I had to think about, well, who are some of the great operators that are out there? And, you know, and who would that be and what makes them great? And that was really, really cool. And then in the I think the other questionnaire was like a DNA thing where it was really, really in depth into the company and the things we want them to do. I just I just really thought that was a good process. Do you share that kind of stuff in your book or how in-depth do we get in that? I do. And it's interesting that what they're digging for in some of their research is they're looking for the cultural DNA of your company so they can find the cultural DNA of a second in command that matches that.

9:33So the starting point in looking for a really great second in command is understanding yourself as the CEO and understanding your company and really understanding all of those idiosyncrasies, almost like as if you were writing an operating manual to yourself, right, as the CEO, you would then hand that operating manual out and says, who wants to help run me? And they go, oh, yeah, you're a great fit. Because frankly, I was a great second in command for 1-800-GOT-JUNK, but I would probably be a horrible second in command for your company because I don't have the right skill set or DNA match or I'm there for the wrong stage, right?

10:06So it's all about understanding yourself and also the stage of the company you're at. the current COO at 1-800-GOT-JUNK. So I took them from 2 million to 106 million. Their current, they then dipped down to about 70 during the global financial crisis. The current COO has taken them from 70 million to 450 million in the last nine years. He would have been a horrible COO for the six years I was there. Yeah. Because he was the wrong match for the size of the company, right? The season that he was in. So there's all these little idiosyncrasies you have to look for in finding that right second command.

10:38So it's interesting that you bring that up. How do you deal with like, like if you're a person who is looking for the right second in command and you've got people who have been there, like, you know, they were there, they were, they were the initial people and maybe they're not founders, but they came on early. They kind of feel like their founders, but they've gotten, the company has kind of outgrown their core skill set. How do you know when that's happened? And then how do you deal with that and treat them well, but also not constrain your company from the growth it needs? Yeah, it's a really insightful question.

11:17So what you're talking about there, and this is where Clayton Mask, the founder of Infusionsoft, He and I had a discussion one day over lunch, and we both agreed that most senior level people can only grow the company twice, right? Two doubles before the third double is just too complicated for them. So if you're a$3 million company, maybe your second in command can get you to six and then they can get you to 12. But it's really hard for them to run the company at 24. Yeah. So what you need to do is keep growing their skills at the same pace as the company is growing, or you have to start preparing for that delicate conversation of you either need to exit, right?

11:54That person needs to leave and go somewhere else to continue to grow their skills, or they get to report to the new COO that's coming in, right? Maybe they're going to get to run an area and report to that new person, usually because the CEO doesn't have the skills or the time to really keep growing the people. they need to bring in those external people. That typically happens in the 100 employees to 300 employees stage when you're actually forming your first solid leadership team. And when you're in the 30 to 100 stage, you used to have a management team. Yeah. Now, what we've experienced is it's hard ego-wise, and I guess it's all ego, but it's hard ego-wise for somebody that's been the COO to effectively be demoted or to move into a role that's under somebody, even if that person that's coming in is more experienced and you get some kind of friction about that, how do you know if it's maybe going to work or maybe not?

12:55Yeah, it most often doesn't work. It really can work if the person, usually if they're a shareholder in the company and they know that they have these other intrinsic kind of benefits of actually sucking it up, right? It's kind of like suck it up, buttercup. If they can suck it up and get through that ego stage, it can often work. But I find it's often better for that person to exit and go and do it again at their next prison. How do you know if the person that you're talking about, like you say, I'm at 10 million now and we want to get to 100 million. And if you bring in somebody that's done too big a thing, maybe even somebody that's done the a hundred million thing, how do you know that they, uh, that, that they, like, they're not going to come in and expect to have all these resources that you just don't have maybe as a bootstrapped company at 10 million that they did have say at a funded company with a hundred.

13:50Oh, I've lived it. I hired the former head of marketing for McDonald's and dairy queen and brought them into one 800 got junk. And the first thing he said was who fills out our FedEx slips. I'm like, what, where this entrepreneurial company you're filling them out, dude. Um, Well, and it's interesting that when I left 1-800-GOT-JUNK at the 106 million mark, it took them a year to find my replacement. They brought the former president of Starbucks USA in to replace me. I'm leaving going, oh, my God, it's so big. And she comes in and says, what a cute little company. She was too corporate. She lasted 12 months and was let go after 12 months because she was very corporate, very bureaucratic, all about hiring consultants.

14:26Didn't embrace the entrepreneurial culture. Didn't embrace the kind of guerrilla marketing tactics. didn't like the franchisees ideas. So she was a mismatch on culture, which is really what's interesting about YSCOUTS is they won't bring in someone into your organization for an interview until they know if the cultural fit is strong. They don't even tell the candidates what company they're applying to work for. That's how important the culture fit is first with the CEO, the culture of the organization. They make sure the match is there on skills and the DNA, and then they'll bring them in to start meeting the team.

15:01That's that I think I think that's so important. And I've seen that happen a few times to like the filling out the slips thing. It's like, who's who's the person that writes the copy? Who's the person that does email? It's like, you do. And it's like, no, I don't. I because they've they've really would you say that what that is, is that they never had that or that they've kind of lost touch with it? Or I mean, it definitely seems like it's not the highest and best use of them because they've maybe evolved just to more management? Give me some insight on that. It's usually more the leadership team that's hiring them.

15:33It's usually more their fault than the candidate's fault. It's usually that the job posting wasn't clear and polarizing enough to make sure that they understood they were going to be rolling up their sleeves and getting dirty and doing work. It's often because we put a title in place that's too big for the role. Maybe it's really more of a director of operations or a VP of operations. But we go, oh, titles don't matter. Let's call it a COO. And we start attracting COO candidates who think they're going to be leading teams and running teams versus getting in there and doing the work, right? If you're the head of marketing, you could be a marketing manager or a director of marketing or a VP of marketing or a CMO.

16:11So it's often I look at the cause of the leadership team to say, what are we putting out there and how are we attracting some of these wrong people? And then how do we not have the right, and I talk about this in the book, The Second Command, how do we not then screen for these people to know they're the cultural fit first, and the skill set second? Years ago, back in kind of the 70s, 80s, 90s, we used to say hire for attitude, train for skills. That's like, that's kind of a phrase for frontline first job employees. That is not for leadership team. You don't hire culture and train skills of a leadership person.

16:46You need to hire and recruit for both. Okay. So now we've been talking about recruiting. Let's talk about that you have somebody there now. And we understand that maybe that doubling is a good way or that that doubling is a good way. Double twice is a good way to kind of say whether they can stay or not longer or how sophisticated they might be. Yeah. How do you support the COO or the head of ops that you've got right now and maybe train them up, get them education, prepare them for what's coming? And it's interesting. That's even why I called the book the second in command is it could be a head of ops, VP ops, COO, right?

17:26So for that second in command, the first part is to remember that our job is to support them, right? So flip the org chart upside down like an inverted pyramid with the CEO at the bottom, supporting the leadership team, supporting the frontline employees, supporting the customers. Everyone can see the vivid vision of where we're going. And you build your company inside your core values and your core purpose. So that's kind of the vision that the CEO should have is their job is to support them. One of the ways you're going to support them is to make sure you give them and continue giving them the skills to scale.

17:56Ben Horowitz in the book, The Hard Thing About Hard Things, said a senior leader can only go through one triple and it's too hard to do the next triple. So if we know that coming in, keep growing their skills. Plug them into the COO Alliance. Get them coaching. Push them through the Invest in Your Leaders course. Say yes to any book or any podcast they want to be learning from or any mentor they want to get. Encourage them to keep growing like we do, right? CEOs join mastermind communities and get coaching because we know we can learn from those tribes. That's number one. Secondly, is to make sure that you have time in your calendar, one hour a week, for the CEO and COO to sit and connect.

18:35And talk about strategy. Talk about plans. Talk about culture. Talk about people. And really stay in sync. I remember years ago when we were building out what's now called Gerber Auto Collision in the United States,$2 billion top line company now. I joined we had seven locations left when we had 65 and the ceo and I were talking and I said I need a one-hour meeting with you every week he goes Cameron you know what you're doing run with this I don't even need to be involved you know how to scale this I'm like no no this is for me not for you I'm not asking for you to manage me I need time for me to fucking get stay and he goes oh shit I never even thought of that I'm like no this is my hour so that so you need that second thing is, is have that date night.

19:16I often think of the CEO and the COO like a married couple. You need time away from the kids. You need time away from the rest of the management team where you can stay in sync, get to like each other, have some hobbies or commonalities, even if it's breakfast or lunch or a glass of wine or a bottle of wine. Maybe it's play game of golf or going for a hike or going for a run, but have some time away from the rest of the team. So at 1-800-GOT-JUNK, I keep talking about this company like it was yesterday. It was still 16 years ago. Brian and I would leave the office every Thursday for three hours just to work off-site at one of our clubs, either his tennis club or mine.

19:51And we'd just sit with our laptop and work away. And sometimes we'd talk, sometimes we were just right beside each other, but it was being away with each other. And then we'd go for a run every Tuesday morning and every Thursday morning as well and often have a drink together at some point during the week. But that was a way for the others to stay in love with each other, right? To really stay in like with each other. Brian was the best man at my wedding three months before I started working with him. We had a bit of an unfair advantage. Yeah, that's great. What do you do in terms of, in thinking about comp?

20:25Because you get lots of schools of thought there should be performance-based and variable and fixed and equity and everything else. Talk to me or talk to us a little bit about that. This is great, great, great. There's like three or four questions in here. So the first part is compensation for a role has to match the title, the job description and scorecard, what they're responsible for doing, the metrics and KPIs they're responsible for delivering, the amount of P &L responsibility that they have, and the level of strategic insight they can bring into your organization. So based on that, that's when you're going to decide, are we calling this person a director of ops or a VP of ops or a general manager or a COO, based on what they're doing, their strategy, right, P &L responsibility, the title might get bigger.

21:13Based on that title, that determines how much to be paying them. So I'll actually share a link with you later that we can share with everybody. It's about 200 different COOs that have entered their comp into a spreadsheet and they can see all the rows. And it's whether you're male or female, what state you're from, the size of your company and revenue, the size of your company with number of employees, what your title is, their base pay, any long-term incentive, any bonuses, any equity, really, really cool data points around what people are really getting paid. That's really great. I appreciate that.

21:45And we'll put that in the show notes too. Thank you. Yeah. Well, and the reason it's important is if you go on Indeed or Glassdoor or Google, what a COO gets paid, those numbers are skewed about 15 % higher to entice people away from their jobs so that these job boards and you know have have more clients right interesting it's really not clean data so that's number one number two is around equity yep you remember this as well as i do 30 years ago right let's go back to 1993 which is crazy that was 30 years ago in 1993 to get equity in a company you had to go and buy stock from that publicly traded company because nobody was giving it.

22:251995 to 2000 is when we started giving away equity in lieu of compensation. That's really when it started. We were giving away equity instead of compensation or instead of a lot of compensation because these startup companies in the Bay Area didn't have it. So they would pay an executive 70 grand a year. And here's some stock options. When the dot-com bubble blew up, March of 2000, Steve Ballmer said there was an internet bubble. The NASDAQ crashed over the next six months by 78%. We then started to have to pay people salaries, and we kept giving them stock. But nobody then wanted just stock because it was all imploding.

23:03So then we started having to pay them well and give them equity, and the slippery slope continued. Then what happened is Gen Y started getting very lazy at saying no. You and I are baby boomers. We're able to say no. Or we're Gen X. Baby boomers are good at saying no. Gen X is pretty good at saying no. Gen Y, oh, I don't want to hurt anybody's feelings, so we'll keep giving away equity. So most companies don't give out equity in their company. And most good executives don't need equity or bonuses. They're always going to work as hard as they're always going to work. So I'm more in favor of actually paying them very, very well to do their job with no bonuses, no long-term incentive, no equity, because the reality is they're going to do a really good job for that pay.

23:49to to give a broad guideline if if you can sure what what should entrepreneurs and the coo or the seconds and commands that are that are listening and watching what would be a reasonable expectation around a couple of brackets like maybe yeah i'll do so if you're a true coo well here's here's a I left 1-800-GOT-JUNK 16 years ago, and I was getting paid$306 ,000 back in 2007. So I think a real true COO today is$300 to$450 plus is a true COO. If you're a VP of operations, you're probably more$150 to$300. If you're a director of operations, you're in the$120 to$180. My executive assistants, and I'm sure yours, is we pay them well.

24:40My EA is in the mid-90s. So if you're paying somebody$95 ,000 a year and you're calling them a VP operations, they're not a VP operations. They're at best a director of operations. What's the difference between those three positions, do you think? It's the amount of P &L responsibility they have is number one. So how much they actually can run the business like a business without you needing to decide everything for them. It's the amount of strategic insight they can bring in. They've built companies. They've built teams. They have the wisdom of time. Like we've got a great CEO Alliance member who's very strong on the tech stack, but really, really horrible on all of the leadership stuff.