Daniel Reese is my final guest on the CEO series with early career CEOs. Daniel acquired IntellaTriage in November 2019 after a military career and searching with a distinct thesis. IntellaTriage handles after-hours calls for providers, senior living businesses, and others with a remote nursing team.
Daniel and I talk about growing a business that felt very much like a startup early on, advice for new CEOs, scaling teams, and finding a balance in his life as CEO. We also talk about working on submarines, which could be an entire podcast in its own right.
Ravix Group — Ravix Group is the leading outsourced accounting, fractional CFO, advisory & orderly wind down, and HR consulting firm in Silicon Valley. Whether you are a startup, a mid-sized business, are ready to go public, or are a nonprofit, when it comes to finance, accounting and HR, Ravix will prepare you for the journey ahead. To learn more, please visit their website at https://ravixgroup.com/
Hood & Strong, LLP — Hood & Strong is a CPA firm with a long history of working with search funds and private equity firms on diligence, assurance, tax services, and more. Hood & Strong is highly skilled in working with search funds, providing quality of earnings and due diligence services during the search, along with assurance and tax services post-acquisition. They offer a unique way to approach acquisition diligence and manage costs effectively. To learn more about how Hood & Strong can help your search, acquisition, and beyond, please email one of their partners Jerry Zhou at [email protected].
Oberle Risk Strategies– Oberle is the leading specialty insurance brokerage catering to search funds and the broader ETA community, providing complimentary due diligence assessments of the target company’s commercial insurance and employee benefits programs. Over the past decade, August Felker and his team have engaged with hundreds of searchers to provide due diligence and ultimately place the most competitive insurance program at closing. Given August’s experience as a searcher himself, he and his team understand all that goes into buying a business and pride themselves on making the insurance portion of closing seamless and hassle-free.
(4:09) – Daniel’s Military career
(6:57) – What was the thesis behind your Search?
(8:49) – What was the state of the business when you took over and what did your first 6 months look like?
(10:47) – How was management structured upon acquisition and how did you adjust it?
(12:01) – How did you prioritize hiring for management positions?
(13:19) – What do you feel went well in the first 2 years of ownership and what went poorly?
(15:08) – What did you need to do to enable revenue growth?
(16:34) – What decisions were made in the first 2 years to set up this growth you’re having now?
(18:07) – Has client communication improved your customer churn?
(21:18) – Do you have any feedback mechanisms with customer communication?
(23:28) – How has your ability to focus on long-term projects changed?
(25:22) – How do you go about setting goals?
(26:45) – Has the business changed dramatically since your acquisition?
(28:04) – What needs to happen to scale the company?
(29:22) – How has your life changed since becoming CEO?
(31:31) – How do you approach the way you phrase things to your team as the CEO?
(36:35) – What advice do you offer early-career CEOs?
(38:36) – What do you consider when putting together a board?
(40:11) – What strongly held belief have you changed your mind on?
(41:38) – What’s the best business you’ve ever seen?
Alex Bridgeman: Hey, Daniel, it is good to see you. Thanks for coming on the podcast. Before the recording, we were talking about your career in the Navy on submarines. I’d love to hear a little bit about the career you’ve had up until acquiring IntellaTriage.
Daniel Reese: Yeah, absolutely. Thanks for having me. So right when I graduated from the Naval Academy, there’s not a whole lot of career options you can choose from. You’re going to either to the Navy or Marine Corps. I was fortunate in that I was actually dual enrolled in grad school during my senior year at the Naval Academy. So the first six months post graduation from the Naval Academy, I was getting a graduate degree in government and politics and then immediately went from there to nuclear power school in Charleston, South Carolina. I was designated as a submarine officer coming out of the academy, and basically what that means is you’re going to go be stationed on a submarine for four or five years and either do the nuclear deterrence mission or the kind of intel gathering mission that our two classes of submarines do, or two types of submarines, I should say. And whenever I got to Charleston, there was a little bit of a delay in the pipeline. So we have live nuclear reactors in upstate New York and Charleston, South Carolina, and if one of those have to go down for maintenance, then you have to- the whole pipeline kind of backs up. And so it took about two years to get through the nuclear power school, which part of its educational, so about a year of it’s educational and about a year of it’s hands on practical knowledge on one of those prototypes, reactors. And so I did that for a couple of years and then was assigned to my first submarine in Groton, Connecticut, the USS San Juan. And I actually met them on deployment. We were doing a Middle East deployment at the time. So I flew out to Dubai and met them there. And then actually, within the first 60, 90 days or something like that, we had a medical emergency, and we had to go back into port in Dubai, and someone had to have an appendectomy. So it was an eventful first little bit on the submarine. And then after I finished up that submarine assignment, I was actually moved over, stationed as a shore gig at a security office in Groton before. That’s when I kind of started thinking about what I wanted to do post Navy because right when you get to your short time, that’s when you start thinking about post Navy life. And I always thought I wanted to kind of be a part of my family business but decided that I should go to business school to kind of get a little bit of practical experience and went to business school. And during that time, in between business school and the Navy, I worked for my family business and realized I did not want to work for my family business. And so I really had to kind of reset when I got to business school, which is when I heard about search funds and buying and acquiring small businesses and just kind of fell in love with the idea of that. And I decided I wanted to do a search after graduation. I took a little minor detour working for a company called Garnett Station Partners, a private equity firm out in New York that specializes in doing consumer facing franchise rolls up. So I worked for them for about a year before launching my search.
Alex Bridgeman: And you searched with a really distinct thesis. Can you walk through what your thesis was and how you found IntellaTriage?
Daniel Reese: Yeah, so for me, the search was very much how do you kind of optimize the chance that you’ll be able to acquire a business, and I used a lot of my family business background to kind of inform how I thought about going out and actually searching. So, everything in my mind was like my dad was the CEO of the family business. And in a lot of ways, my family business is a search fund type business. So it was would my approach appeal to someone like my dad, who was the owner looking to sell. And so, for me, I decided I needed to get really, really deep on specific industries, specific segments of the market and really understand and build some credibility in order to acquire a business in that space. And so, I kind of had two major verticals I went down. I would call it telehealth adjacent or the unsexy parts of telehealth, so not direct to consumer at base telehealth, but things that would benefit from getting care not in a traditional setting, which was very broad. So, there’s a lot of segments to get into. And then the other segment was multisite in person medical practices and looking at some of the more unsexy types of that, so like podiatry and gastroenterology, all those kinds of things that no one really wants to get into if you’re not in the medical practice. And so I really built- spent a lot of time building up my knowledge in each of the areas before approaching business owners, which I think ended up helping me stand out to Susie, who was who I ended up buying IntelliTrace from. I think whenever her and I first met, we just had a level of depth to our conversation that she said she hadn’t experienced with other people who she met that were interested in investing or purchasing the business, which helped me build a little bit of credibility there. So it worked out, at least with Susie.
Alex Bridgeman: What were the first six months of the business like, and what was the state of IntellaTriage when you arrived?
Daniel Reese: Yeah, I bought a business that was not a very traditional search fund type business. It was a very small business at the time that we acquired it. It was growing quickly. But there were some things that were- there some hair on the business, given its size. Of the three owners, none of them worked full time in the business. Susie was the closest to working full time in the business, but she had a full time other job. And so, the business was really Kathy, who was the chief nursing officer, and a bunch of nurses. And Kathy was doing all the administrative stuff, with the exception of maybe invoicing. I think Susie was taking care of invoicing. And so, really the investment thesis for IntellaTriage was, number one, figure out very quickly if this business has the market fit and market potential that we think it has by getting really close to the customers, our major customers, understanding the value prop at a deeper level than we did during diligence, and then, two, shoring up our operational processes. So again, we didn’t have a scheduling process that was documented or repeatable. It was just Kathy or Susie depending on the week making the schedule in Excel and putting it in a program called Nurse Grad, and that was what was happening, and it wasn’t on any routine. So, I remember we bought the business 11/15/2019, and on 11/30, we didn’t have a December schedule posted. And so, all the nurses were like, hey, where’s our schedule for December? Luckily, we had a group of nurses at that time, I think it was like 30 to 35 nurses who were really dedicated to the business, and they had a relatively routine schedule. So, they kind of knew where they were going to work. And they were pretty flexible, and they helped us out. But that was one thing that was just immediately like, okay, we can’t scale this type of process. We have to have deadlines and structure to put into place. So, that’s really where I spent the first six months of the business is really getting to know the basic core processes and documenting and making sure that we were executing on those day to day.
Alex Bridgeman: Can you describe the management team and structure upon acquisition and then perhaps how it shifted and how you adjusted it over the first six months?
Daniel Reese: So again, the business was small enough at that point where Susie came on full time, and we had one of the other owners, David, who came on full time. So Susie came in as kind of the jack of all trades, David came on leading the sales function, and then we had Kathy. So it was really myself, Kathy, Susie, and David in the very first stages after acquisition. And that was three more full time people than it ever had before and in a leadership position. And so, we were able to say, hey, here’s who’s responsible for what just to keep the day to day going. And we don’t need to hire anyone right away because us three are coming on board. And let’s us three really start mapping out these processes and seeing what the organization could look like once we start scaling. Where do we want to hire someone first? Is it a training manager? Is it a Director of Quality Assurance? Is it more nursing leaders? And it allowed us in the first call it six to nine months to really fill that out by doing it ourselves. And then once we had a little bit better feel for where we needed the support, we started focusing on building the team in those areas.
Alex Bridgeman: It sounds like there were steps you took or specific roles that you hired in a certain order. How did you prioritize management hires and the order in which you made them?
Daniel Reese: Susie would probably argue we didn’t do it based on where we needed the most help. So as an example, Susie did scheduling for a long time. And that was something she oversaw until we got a few more people on the operations team. But to me, it was like where’s this going to drive the most impact for the business going forward. And so, one of the decisions that I made early on was training has to be addressed. Like when we bring on a new nurse, a core piece of what we do is bring on nurses and teach them to be telephone nurses instead of in the home nurses. And so that training process was one that was like, hey, we have to shore this up immediately. And we need someone to lead this, oversee it, and really drive it forward. And so, that was kind of the thought process is not necessarily where we needed the most help, but it was what was going to have the most lasting impact, even if that meant that that person wasn’t working as long hours as me, Susie, Kathy, and David were. So that’s how we prioritized. And then over time, we started saying, okay, now what can we roll under different other people in the organization to start scaling the org chart?
Alex Bridgeman: In reviewing your first two years in the business, year one and year two, what do you feel like went well, and what do you feel like you could have improved on?
Daniel Reese: Great question. I think what went well, and maybe this is not necessarily what went well, but what I think was very eye opening was how needed our service was in the market, like even more than we thought at time of acquisition of the after hours telephone triage for hospice and home health is a very needed service because it reduces the burden on the nurses in the field. And those nurses in the field are getting really burnt out really quickly. And there’s a nursing shortage that’s even worse in the post acute care space. And so, there was a true need for the service. We were adding more value than I even thought when we acquired the business. And so that was the best thing we could find out, was the actual core service was really needed and adding a bunch of value. I would say what didn’t go as well was our sales process. I think that was- I really thought we had a firm sales process going into it. And then once I got into it, it really was, I’m not going to say completely winged, but it was we didn’t have a sales presentation that we used. We kind of made them up as we went along. And the first few sales calls I was on, there was literally no presentation, it was just us talking. And so, we had to really shore that up much quicker than I was hoping we would have to shore that up just because we knew that growth was one of the keys, if not the key piece, in the investment thesis. We needed to be growing quickly which meant we needed to be closing customers quickly and then bigger and better customers. So that’s took a lot of time of my time early on that I didn’t think it would, really focusing on the sales process and the team there.
Alex Bridgeman: So building out a salesforce is obviously important for growing revenue. But what else had to happen to enable revenue growth?
Daniel Reese: I mean, I think it just goes back to making sure we’re delivering on the day to day operations. Like that was the key piece of- that was phase one of year one was ensuring we could deliver the service with high quality and it was repeatable. And so, all the processes that went into that was step one, just very basic stuff. I mentioned scheduling already, reviewing people’s work, quality audits, doing quality assurance audits, that was something that just didn’t happen, focusing on availability times for nurses, whenever they were taking calls, like how long are patients waiting on the phone. There was no reporting function, so we had no idea what our average wait time was or how we did the night before. So it was really just making sure we understood kind of the key operating processes, had those in place, and then had a way to make sure we were measuring that they were going well on a day to day, and early on, it was week to week, month to month basis versus day to day, and making sure those were going well, so we can address our customers’ needs. That, once we had some of those, started getting some of those basics in place, it made me much more comfortable with going and selling the service, that we are high quality, we are delivering value. I think that needed to happen a bit before we could really put the gas on the sales process.
Alex Bridgeman: So it sounds like you’re starting to grow pretty well in year three. What decisions and changes did you make in that first two years, year one and year two, that set the foundation for the growth you’re having now?
Daniel Reese: Yeah, I would say getting closer to the customers, our current customers. That was one of the big things that I think was just missing. Every relationship was managed by Kathy. She knew every customer, that was the only person that customers talked to. And so just introducing different people to manage both strategic accounts and then segment the customers out so everyone was responsible for X number of customers was a big part of what we did pretty early. I’d say within the first three months, we had, Susie, myself, Kathy, and David all had, hey, here are the four accounts that you’re responsible for managing on a day to day basis. And here are the other six accounts that you need to make sure they’re not always going to Kathy; your their account manager, even if you’re not doing their reviews. We also implemented the monthly reviews. So we weren’t basically meeting with our customers at all. We were just if they had an issue, that’s when we talked to them. And so it just set the tone of like, oh, we’re always talking to you when you’re doing poorly. And in reality, we were doing poorly like .1% of the calls we were answering, but we weren’t communicating any of that to the customer. So, we had to implement regular reviews with the customers. Now we call them client engagement meetings that we do monthly or quarterly, depending on the client. And so, we implemented those in the first four or five months. And that was a big part of what we did.
Alex Bridgeman: Yeah, having that regular touch point with customer sounds really valuable. Do you feel like that cadence has improved your customer churn to some degree?
Daniel Reese: Anecdotally, yes, but we haven’t gotten real scientific about it. Some customers never show up to their monthly meetings. Like we have it on the books every month, they never show up. And those customers have been here for seven years. And they’re happy, they don’t- they are just like okay, keep doing what you’re doing. We don’t need to talk. So there’s like some other anecdotes of just like out of sight, out of mind. But what I would say is our churn rate reduced pretty dramatically from 2018, 2019, and then call it the first six months of 2020. If you compare those periods to the second six months of 2020, 2021 and 2022 were meaningfully lower. We went from call it 13 to 20% churn to less than 5% churn. And so, yes, we’re doing better at delivering the service, but I think we’re doing much better at communicating the value that we’re adding. And I think that’s been a big factor of that. I wish I could say that was just like my thinking that we needed to do that, but we lost a big customer at month one and a half. And so, it kind of was like, oh, wait a minute, we need to address this immediately.
Alex Bridgeman: What else do you think has led to that churn decline over time?
Daniel Reese: Yeah, I would say two big things that our customers really care about is, one, quality. So we have to make sure we’re delivering really quality triage. So, we tightened up our hiring practices, we tightened up our training processes, and we monitor quality very closely. And so, I think that has been a big factor. Nurses that maybe would have been allowed to stay here six months or nine months or maybe even a year who were just really low quality nurses, sometimes aren’t even making it out of training. And if they do make it out of training, they’re not making it more than a couple of weeks because they just don’t meet the quality standards that we have for being on the team. So that’s one of the big ones. I would say the second piece is really just the communication of the value to the customer. It’s easy when your only touch point is, hey, Jane Smith did this wrong for my patient. And that’s the only interaction you have, the perception from the client is IntellaTriage is always doing poorly. And so, we’ve shifted that to say, hey, we know we make mistakes. We’re never going to be perfect. However, 99.8% of calls we do great on, and it’s just these .2. And we’ve even gone as far as like, hey, what is an acceptable error rate? What would you allow your nurses, how often would you allow them to make an error? And most were like, well, I expect them to be 90, 95% accurate. And like, we’re meaningfully better than that. And so, let us send you calls, we record every call, so let us send you calls that are just normal calls, like we’ll pick random calls and send them to you, and you can listen to them. And that helps just highlight, hey, yes, we’re always going to have areas of opportunity, we always need to be working and trying to get better. But for the vast, vast majority of the time, we’re really serving your patients and your nurses really well. So that communication helped change the paradigm of the relationship for many of our clients.
Alex Bridgeman: Do you have any feedback mechanisms, so after a call with a nurse, the customer or the person on the other line can give some sort of feedback, like a thumbs down, thumbs up on how the call went so you can start tracking that over time?
Daniel Reese: So no, so we don’t have anything like that. A couple of like real world challenges with our team and the rating system – number one, you would love for- our nurses are talking to our customers’ patients. And so our nurses are- the most common example is we have hospice nurses doing telephone triage. We’re serving a hospice provider’s- an agency, and then they have customers that call in, our nurses answer. So our nurses are generally talking to the caregiver or maybe the patient whenever they’re calling in after hours for some issue. Well, with hospice in particular, about 15% of the calls are death calls. So hey, my loved one passed away. And our customers are very sensitive to having patients or caregivers rate phone interactions because their loved one could have just passed away. So from that, that’s kind of a real world limitation for us. And most of the time, our nurses don’t realize that it’s not the call that’s bad. It’s not the customer service. We very rarely get like a customer service or a clinical type of incident. It’s some kind of procedural or documentation issue. And so the nurse doesn’t realize that they’ve made the procedural issue or procedural mistake or documentation mistake. And so, they have no way of rating that. So what we are doing today is there’s a couple of different AI software’s that monitor VoIP systems now, voice over internet protocol, that we are starting to layer into our phone system that listens to every call and starts tracking things like sentiment of the call and will flag certain words for us or our QA team to monitor. So we did a test to that. And it was actually really, really cool. I didn’t have high hopes because I way like oh, the sentiment is always going to be negative when you have a patient dying. But it was actually really cool. So we’re looking at that, implementing that across our entire organization right now.
Alex Bridgeman: So it sounds like in that first year, you’re very focused on short term things, losing a customer and building process. How do you feel like your ability to focus on longer term projects and initiatives in the business has changed now that you’re in year three?
Daniel Reese: It’s actually really interesting. It’s kind of done a little bit of a slinky, like, the initial stages was like hourly or daily. Like it was very much what do we have to do right this second. And so the very early stages were really short time periods that was my focus on like, hey, what do we need to get done today, what do we need to get done by the end of the week, that kind of thing. Over the first couple of years, I would say that started shifting out to we hired a VP of Ops who’s been great and he’s been helping me drive a lot of the operational changes. We now have a bunch of directors under the operations team that’s making sure that we’re kind of keeping their departments up to speed and making sure their teams are doing what they’re supposed to do. So it’s allowed me to kind of take a step back and think a quarter or two ahead. We’re still growing really quickly, so it’s really hard to think more than a year ahead. We do an annual planning session every year and what we planned for 2021 when we did the 2022 review, we were like this was done in April of ’21. Like, four months into the year we had accomplished our yearly things that we needed to achieve. And so it’s really hard to think really far out, but I try to stay a year ahead big picture and then a couple of quarters ahead from like a priorities perspective. But now I think we’re even taking a little bit of a shift of saying, yes, we have these quarterly and annual priorities that we’re focused on. But how do we execute on those daily. So it’s almost like we’re trying to shrink the time scale, not for me or my VP of Ops, whose name is Rob, not for me or Rob, but for our teams so that when they have their daily huddles, they’re focused on very specific metrics that they should be reviewing. And so it’s like kind of taking a step back and saying how do we execute better daily to meet our quarterly and annual goals?
Alex Bridgeman: How do you go about setting goals? And how do you think through the breaking down of goals into monthly or quarterly or annual semi smaller goals?
Daniel Reese: Yeah, so we used a couple of different frameworks. So we’ve had two annual strategy plannings, 2021 and 2022. 2021, the whole leadership team read the Scaling Up book, The Entrepreneurial Operating System, and then in- or sorry, Traction, that’s what is, 2021, the EOS system. And then in 2022, we read Scaling Up, which is the Rockefeller habits book. I’m not a big fan of subscribing really strictly to either one of those frameworks, but we’ve pulled things from those frameworks to help build our annual, quarterly, monthly, weekly, daily cadence. And I think it’s one of the things that we’re obviously, as a leadership team, are still working on. We are a relatively new leadership team. We’re all working together. So it’s still something we work on. But we make time to make sure we do the annual off site to plan, quarterly reviews to make sure we’re on track for our goals and set the next quarter’s goals. And then we do every- in December and June, we do our kind of two different like larger touch points where we get together and say, where are we at? Where do we want to be? Where do we want to go in the next six months or a year?
Alex Bridgeman: Yeah, speaking of goal setting, it feels like the business has shifted quite a bit over the years since you’ve acquired it. How do you feel like the business has changed? Do you feel like you’re running the same business that you acquired? Or has it changed dramatically since then?
Daniel Reese: Yeah, it feels like we’ve changed like three times since we’ve purchased it, honestly. Going back, I felt like we bought a startup. We didn’t really buy a small business, we bought a startup. And so we’ve been changing- I’d say there’s been noticeable phases of the business. And I would say we’re kind of on our fourth iteration of what the evolution of the business looks like. And I think every time you essentially double in size, you have to kind of reevaluate the business. And so we just doubled this past year. And so we’re kind of in a new phase of the business where you say, alright, are these the right people for this size business, are we doing the right things, do we have the right structure for this type of business. Very much has changed since we initially acquired it. I think the biggest change, though, was having a leader for each department or each function of the organization. For the longest time, we didn’t have those seats filled. And so at least one or two people were doing multiple people’s jobs. And so, I think that’s been the biggest change in the past, I’ll call it 18 months, like having everyone in the right seat, or having someone in the seat, even if they weren’t the long term fit, having someone in that seat for driving that forward.
Alex Bridgeman: You’ve talked a lot about building a scalable team and infrastructure. What else has to happen for the company to scale in the way you want it to?
Daniel Reese: Yeah, I think now it’s all about reducing span of control and kind of building out what I’ll call our middle management. I tell- we do quarterly company updates, and every quarterly update, I say, hey, this role, it’s called the team lead role, and the supervisor role, these two roles are going to be the most important roles for our business going forward. So now that we have kind of all the department heads in place, it’s about reducing the span of control for the 200 or so nurses that we have, so that they’re not, 30 or 40 of them aren’t reporting to one person. It’s 10 or 15 reporting to a team lead, that team lead reporting up to someone else, and that person reporting up to the VP of Ops and then trying to build a scalable organization. It’s really, really hard to get 200 different nurses to implement change across the organization when a process changes, and our processes change not infrequently because we’re still evolving. And so that change management has been a big challenge. And I think that’s where we see the next piece of the business of being able to really scale is going to be able to manage those teams on a much smaller level or more direct, intimate level. That way we can impact that change more quickly and more efficiently.
Alex Bridgeman: How do you feel like your life as CEO both on the professional side and the personal side, how do you feel like it’s changed?
Daniel Reese: So I’ll start on the personal side. I think that one’s a little easier. I really thought that I was going to be working kind of nonstop. And like I do work a lot. I don’t want to downplay that for people who are thinking about doing search and running a business. Like you do work quite a bit. But just not what I expected. I think it’s not what I saw my dad doing. My dad, running a small business, would go to work at six, be home at six, would have dinner basically as he was answering other emails and doing things, going out to dinner with customers. He just worked nonstop. And I think that was kind of my impression. And that’s not at all what it’s been. I think I’ve been able to achieve much better balance than I thought I would. And I think it’s all just, for me, it’s all about just prioritizing when I’m working versus how much I’m working. So, I tend to get in the office pretty early, but I leave at a decent time. That way, I can be home and see my daughter and all that. So, I think that’s been something that’s been a little different in a really good way. On the work side, professional side, I think it’s probably just the fact that like the buck stops with you. Like, you know that, but you have to be really thoughtful about the decisions you make, and how, and maybe even more important than the decisions you make, how you communicate those decisions. Something that I think I’ve learned a few lessons over the past few years of like we’ll discuss something on the leadership team, hey, this is an obvious decision, do this, go. And then you get just a ton of pushback, whether it’s from your nurses or your customers, or whatever it is. You’re like, whoa, I did not see that coming. That seemed like such an obvious answer to this question. And you realize, well, it’s not the answer. It’s the way that you communicated it. It was kind of an afterthought, the communication, instead of helping build consensus or talking through the thought process. And so I think that’s been a piece that has been just really eye opening is that pressure to make sure that you’re being really thoughtful about decisions and then having really good change management and not just having it as an afterthought.
Alex Bridgeman: The communication piece is really interesting. We did an episode with Carl Streck who’s the CEO of MountainSeed. And he was talking about how when he as the CEO talks, his whisper often sounds like a yell to his team and that it’s the statement, the law of land for the company. How do you think about phrasing with your own team, such that you can ask questions and be more open to feedback, and give your team permission to kind of push back here and there as they see fit or if they see something different than you do?
Daniel Reese: Yeah, so I think there’s three facets of it or three segments of like where that communication takes place that require different approaches, at least from my point of view. So, if it’s customer communication, number one, like the only time I will send something blanket out to customers is like we have really thought about it, we’ve communicated through, we’ve got a comms plan on how we’re going to roll it out, and giving time for reactions to happen. And if there’s key clients that could be upset about it, we test that with them first. And so with customers, it’s just being really intentional whenever I’m the one saying something or whenever I’m the one sending something out. Otherwise, I’ve tried to remove myself from the customer communication. So, if a customer is having an issue, and they’re saying, hey, I’m worried about quality, I’m worried about the timeliness of the phone being answered, that’s okay, account manager, you need to go, where previously, I would just hop on the call, no, account manager, you need to go have the discussion with the customer and allow room for escalation. So that way, we can be more thoughtful about a response. Because if I say a response on the call, or if I don’t have a response on the call, both of those could be perceived negatively. So, let’s be thoughtful about that. And let’s leave room for- what I always tell my team is leave room for escalation. There’s power in leaving room for escalation. So on the customer side, that’s how we handle it as an organization. Then there’s the internal side of not my direct reports. So kind of the middle management and actual triage nurses. We handle that similarly. Whenever I send something out, or whenever we have those quarterly wide updates, I have to be pretty thoughtful about why we came to this decision. Or ideally, what we try to do is say, hey, we’re thinking about this, we would love your feedback before we roll out any changes. So trying to get them to provide feedback for two reasons, one, to build some consensus, but also help us with any blind spots we may have as a leadership team. Like maybe we didn’t think about it this way. And I think having that in place has helped us be a bit more successful about communication to middle management and triage nurses. And then the third bucket is like my direct reports. And I think what I, to your point you just made, what is a tough time is oftentimes, I say something just wanting to understand people’s opinions on it, not as like this is what we need to do. But it’s like, okay, what if we did this? And when I say what if we did this, I hear that as pushback or give me some feedback or something like that. And what other people sometimes hear is we’re doing this. And so for my direct reports, I think I’ve had to be intentional about trying to be a bit more vulnerable about it. But like my VP of Ops, I don’t know, a year ago was like you never make mistakes, so it’s really hard to like present ideas to you. And it’s like I make mistakes, literally probably more than you do, all the time. Like that’s my fault for not showing you that I’m making these mistakes on a daily basis. And so I’m trying to be a bit more vulnerable about we’re going to make mistakes. We’re doing a lot. We’re moving quickly. We’re changing a lot. We’re all going to make mistakes. That’s not something that we need to be afraid of. That means we need to work together as a team to be able to implement those and minimize the mistakes that we make and try to build like the culture of my direct reports of a bit more collaborative versus telling you to do this, go do it.
Alex Bridgeman: Yeah, that’s probably not something you can just switch on. It probably takes a while to build that kind of trust with your team. Like on average, how long do you think it took before members of your team were comfortable enough with you giving open and honest feedback and could trust that you would respond in a consistent and predictable and open way?
Daniel Reese: I really think it’s dependent on the person. Some people come in and are like, hey, we should think about this. And then others are, especially ones that have come from larger organizations, I think they’re just used to if you have a boss, and your boss says something, that’s just the end of the conversation. So I think those people tend to take a little bit more time to draw out of that mindset of like, hey, we’re a small business. We’re all learning here. Please provide feedback. So I think it is very dependent on the person. What was great early on was Kathy was not afraid to give feedback. She always gave feedback, which was great because she was the voice of the nurses. But I think that helped when people would come on board to see you can disagree and be constructive and give feedback. And you don’t have to worry about being shut down or being fired or something like that. So, I think that helped early on. But now we have a different management team that’s in place that we’ve had to try to build that with.
Alex Bridgeman: What advice do you offer to early career CEOs thinking about the first couple years in their new business?
Daniel Reese: Yeah, a couple of things. I think number one is like everyone has advice, and it’s not worth anything. Like, take what works and disregard the rest. No one’s going to have a perfect answer. But there’s two things that I have been surprised by that I think if you’re intentional about can be addressed. One is pre CEO, when you’re in the search process, is being smart and intentional about who you let invest in your search and, more importantly, in your business. I think that relationship drives a lot of learning whether it’s quick learning or really a lot of pain. And that relationship can be either really beneficial or just not helpful at all, and you end up spending a lot of energy doing something that’s not super beneficial. So be intentional about who you’re letting invest, don’t just take money because it’s available, take money from the people who want to partner with you. Because at the end of the day, if you have a good deal, or if you’re a searcher who is really intent on doing this and been thoughtful about it, you’re going to raise the money. And so be intentional about who you allow to do that. And then kind of taking that a little bit, one step further is to be really intentional about your board makeup. I think the biggest thing I have seen from some close friends of mine, who I respect a ton, is the relationship with their board is, it’s just a little- it’s maybe not adversarial, but it’s not open and transparent. One of the big things that I was just very aware of is like I’m a first time running a business, first time CEO, like I’m going to make a ton of mistakes. I need someone to help me who has seen, who has some pattern recognition, to help me at least prevent from making any big mistakes. But the only way they can prevent you from doing that and help coach you along is if you’re really open and transparent with them, which means being a little bit vulnerable and not worrying about your job. So I think that comes with the relationship piece. I think the less guarded you can be about your relationship with the board, the better, the more likely you are for them to be really helpful instead of just something that you have to deal with.
Alex Bridgeman: What other aspects do you consider when putting together a board? You mentioned pattern recognition. Are you looking for people who have had certain roles before, like CEO, CFO, investor, or whatnot? What goes in, in your mind, to building a board?
Daniel Reese: If you can find someone with good industry experience, that’s very helpful. I’m fortunate to have two people on my board that have really deep industry experience. So Kent Weaver runs a home health company. Our customers are home health customers. That’s great. Chris Hendrickson ran VRI, which was a remote patient monitoring and outsource for an outside call center that was staffed by nurses. So he’s run a very similar business to mine before. And those two people on the board have been very helpful from an industry experience perspective. So I think that’s, when you’re thinking through tactical things as you go through, that type of feedback is really helpful and that experience is helpful. The other piece is availability. So Jay Davis is also on our board. He’s local in Nashville. And that’s very helpful just to be able to like text Jay or call Jay, grab coffee with Jay. Like when I first started, we would have coffee together. He’d introduce me to people in the area that worked in adjacent spaces. And so just availability is very helpful. Sometimes it can be tough getting a hold of if you have a really busy board member, and if you need something quick or need some feedback, if you’re looking for an answer quickly, it’s just tough. So availability is helpful. And then I do think a good mix of operator investor is important to make sure that, again, you’re being efficient with capital, but also that your board is understanding of the real world things that you’re going through.
Alex Bridgeman: What’s a strongly held belief you’ve changed your mind on?
Daniel Reese: Probably that I need to be able to do everything. I think coming from the military, and seeing my family business and my early stages at IntellaTriage were very much like nothing is below me, I need to be able to do everything, I should be the expert in everything, how can I ask someone to do something if I haven’t done it myself. And I felt very, very strongly about that early on. As we’ve grown and needed to scale, it’s just very impractical for me to be able to do that. Like I do need to have a good understanding of all the aspects of the business so I can provide meaningful input. But I don’t necessarily need to be able to put the schedule together in two hours, or I don’t necessarily need to be able to go in and fix some IT issue on a laptop. That’s what you have the team for. So I think that required a conscious shift in my mind, and I think it’s also helped with the shift of my direct reports, especially on the nursing side, of just saying it’s okay that some things aren’t worth your attention. Like, that’s why you have a team, and your team needs to be able to do that. You have almost infinite amount of things that you could be doing on the business day to day. You have to focus on the most impactful and highest priority, not something just because someone’s screaming the loudest. So I think that was something that I was pretty sure I would never change my opinion on that I think I have.
Alex Bridgeman: Excellent. What’s the best business you’ve ever seen?
Daniel Reese: I can’t remember the name of it. But it’s a dog poop business. So, I looked, I just like got introduced, it’s based out of Knoxville. I got introduced through like a family friend to the owners. It’s essentially a recurring revenue service business. They contract with homeowners’ associations, apartment complexes. And what happens, let’s say, you’re renting an apartment at an apartment complex. If you have a dog, you have to register your dog. And when you do that, you also have to provide a fecal sample, so that way, they have a DNA match for the dog. And then if you leave the- so if you don’t pick up your dog’s poop whenever you’re walking your dog, someone can pick it up, take it to the office, the office will send it to this lab, they’ll do the DNA testing, they’ll match the dog, and then the apartment complex will do a fine for the owner of the dog for not picking it up. And it was like 99.4% retention. It was growing crazy quick. The margins were insane because they very rarely got actual samples. It was just wild how sticky the business was, and they were just like printing money. Again, I can’t remember the name of the business. I tried to buy it. I really tried to buy it. And he was just like, I’m not selling this business. So, it was a hilarious business that I was like, what is this? Why would this be a thing? But it just happened to be- it may not be the best business by some standards, but it was just one of those hilarious businesses that was probably worth $80 million and just growing like crazy. And it was really interesting.
Alex Bridgeman: That’s fascinating. Do they have any statistics or data on compliance after implementation with an HOA? I can imagine after a few folks start getting caught with dog poop in the yard that compliance improves from there. Is there any data on that?
Daniel Reese: So basically what they said, I didn’t get super deep on them because they wouldn’t sell the business, but basically, what the owner was saying to me was, after the first month, we almost never get a sample. So you get like the first month where you get a lot, and then you do the testing. And it pays for itself because then the apartment building would fine the owner 200 bucks. And it’s not that much per dog or per user or whatever they pay every month for the- So they fine the person 200 bucks, and they cover a bunch of costs. And then as soon as a couple of people get fined 200 bucks, no one leaves dog poop anywhere. So they’re just this business that’s just insanely sticky. It’s a low cost to the customer but provides a ton of value for the overall apartment complex. It’s pretty funny.
Alex Bridgeman: That’s fantastic. What a cool business. I have a dog myself and would love businesses like that to be around our apartment or others too. That’s pretty wild. Thank you, Daniel, so much for coming on the podcast and rounding out our CEO series. I really appreciate it. It’s been really fun to chat with you today.
Daniel Reese: Yeah, I appreciate it, Alex. It’s great talking to you.
Join small company investors, search funds, private equity firms, business owners, and entrepreneurs in reading the Think Like An Owner Newsletter.