Leader Must Know the Numbers Better Than Anyone Else in the Company

with Diana Lee

Larry Weidel: I’m here talking with my new friend in the One World Trade Center in New York, Diana Lee from Constellation Agency.   

She’s had the momentum and 370% growth in the last two years. When we had this interview, they were on track to make over $40 million this year, but according to all reports that target had sky rocked since then. 

Starting with just her as the front end and Matt Woodruff, as the back end. He was the computer guy that followed through to make everything happen.  

They had $4 million in revenue the first year because they worked 15 to 18 hour days prospecting and seeing people. Now revenue is up to $40 million.

Inc. magazine has noticed and has certified them as the number 10 fastest growing company in the United States being led by a female.

Getting Started

Let’s talk about organic growth.

There’s no way you would’ve done $4 million in the first year had you not had some kind of connection or tie in with the people that you were going to see.  It’s not like they said, okay, Diana, we know you, you got our business.  You had to earn it even though it was still organic growth.

Diana Lee: I didn’t put more than $22,000 into Constellation for the first year and a half of launch.

We had no money. I couldn’t get a loan from a bank. Nobody would give me a credit line.

It was pretty difficult.

There were days I had sleepless nights because I wasn’t sure if I could make payroll or not. I never ever missed payroll.

Matt and I don’t have a lot in common, but we both cared about the business enough that when things really bothered me, he was always there to listen to me. And I know that it is such a gift to have a partner that is supportive.

So one day I came back from work and I said, “I sold a photoshoot.” Matt is a technologist.

He said “I don’t wanna really do shoots because, in the end, we are really going to pitch this marketing technology that we invented. So I really don’t wanna do these shoots.”

I said, “What do you mean you’re not going to do the shoot?”

He said, “Yeah, the deal is way too far away. We’re not going to get in a car and drive all the way there. It’s like two hours away.”

I literally snapped and said, “Are you kidding me? I drive 9 to 15 hours every single day, rain or shine, hot doesn’t matter. I’m going from location to location and you are complaining that you have to be in a car for two hours to go to a photoshoot?”

Of course, in the end, everybody agreed to do it.

If we're going to do this, we're going to do this no matter what. We're never going to turn around and say, 'I don't really want to do this.' That's not who we are. Click To Tweet

From that point forward, we realized we needed to survive. We needed to make money. We were going to do the things that we don’t actually want to do.

 

 

The Steps She Took from Survival Mode to Expanding Mode

LW: How far along were you to where your operational knowledge kicked in? 

DL:  We really needed to decide who we were and then stay with the core of what we actually did.

We got there, but in the very beginning when we actually had to make money, we did what we needed to do in order to stay alive for everybody.

LW: So as that happened you added on more people.  When and where did you feel like that operational insight and experience gave you an advantage?

DL: Operationally I definitely had an advantage because I had 15 years of being a consultant. So for me, the two areas that I was the strongest in were operations and sales.

The strength that Matt had was strategy and creativity.

We had a third partner, Nauman Hafiz, who really understood development. And he came from the development world.

We really stayed in our swim lanes as we all knew our own strengths.

LW:  How would you describe development?

DL: Development is working with the developers, the codes, and making sure that the machine works.   Also, making sure that we can develop product design is what Matt actually does.

We developed Alexia which is our own marketing technology.  We developed it because Constellation was going to fail. We didn’t develop it because we wanted to, we developed it because we couldn’t scale what we were doing.

We wanted to do thousands of ad units based on different types of people that lived here in this country. And because of that, we had to hyper-localize the audience.

In order to do hyper localization, you can’t do three to five ads. You need to do hundreds of ads.

We just kept having to hire people to do it.

They would keep making mistakes, and it would just get worse and worse.

That’s when we decided that we have to go into development.  We had to find somebody that could lead the development area and that’s when we found Nauman.

Operating a Successful Business

LW: Can you think of a disaster that you avoided because you did have operational knowledge and maybe one that you wish you would’ve avoided?

DL: One of the biggest things that I always tell everybody that I’ve learned in this journey is you must understand the numbers better than your controller and better than anybody in your finance department because nobody cares about the numbers as much as you because you’re the owner.

I’m saying that because you care about it more than everybody else financially, you’re going to actually know when there’s a mistake.

And one of the things that I’ll tell you is throughout the years, I’ve noticed mistake after mistake.

One of the things that I noticed when I was in the consulting world is that there was fraud happening where somebody would actually enter that it was a vendor in their systems and the vendor was actually the employee that set up an LLC and was making payments to their LLC.

That’s just one small, tiny example that I made sure operationally everybody at the leadership team level knows every subscription, every vendor that we use on a monthly basis.

I am responsible for the numbers and the numbers tell you whether or not you have a well-run company or not. Decay and sloppiness start gradually. Click To Tweet

LW:  Whatever opinion you have of Donald Trump, at the end of the day he’s a businessman.  

I remember one time the head golf pro did a booklet promoting the golf course. He had pictures of every hole. 

As members, we don’t need a yardage book with pretty pictures, but he thought that by putting Donald Trump at the front of it welcoming you that he was going to get a big pat on the back.

When Trump saw that he went absolutely purple. He said “$15,000?? Do you know what the electricity is in this place every month? It’s $33,176.16.”  

He had it off the top of his head. The point is no one cares about those numbers more than the leader.

What are things that will happen if you don’t know the numbers?

You can guarantee if you do not know those revenues, if you do not know what’s coming in, you’re going to have a slump.

What are other things that you’ve seen sneak in your business that proves the fact you’ve have to keep up with the numbers?

 

DL: One of the things that I always do is watch the numbers every single day.

I know, month to month, day to day, every single day in terms of every single thing that gets sold down to the penny. And so not just myself, but I also make sure that my sales, my account team, and anybody that works on the accounts and sales side sees the numbers on a daily basis.

They need to know whether they’re winning or they’re losing.

You can’t ask them to play a game unless you show them the rules of the game and how they could win or lose that game.

So the numbers automatically go out there to them every day. It even has their sales and accounts people’s name and their contributions.

You have to make it visible to everybody, whether they’re winning or they’re losing.

The third thing that the VP of Accounts does is send an email out to every single employee in terms of where we are for the month, as well as where we are year to date and how close we are to hitting the goal.

In the end, we can’t get there unless everybody’s aware of whether we’re doing well or not.

Measuring the Numbers

LW:  You have shown exactly why it’s not just what you say.

It’s what you emphasize.

It’s not just enough to talk about this stuff.  You have to make it visible. You have to emphasize it.

The numbers show you whether are not you are growing. They help you zero in on what areas need fixing and what areas you can improve Click To Tweet

DL: A lot of times measurement is not always done in real-time. You have to look at the lag measurement because it’s after the fact that’s actually happened.

You also have measurements that are leading measurements.

You have to measure what’s in the pipeline because there’s nothing that actually happens in sales if you don’t actually have enough of a pipeline.

You have to know that you have enough customers going into the upper funnel.

Eventually, you go into mid-funnel and then they fall out at the lower end of the funnel.

Not everybody’s going to make it, but you have to measure everything at those stages too.

LW: You have to know who your next customers are going to be. You have to know where’s your next revenue going to come from.  So you have to have the pipeline or you’re going to have interruptions.  

DL: The bigger you get the less contact you have one on one with some of the employees, just because just time is not always our side to have genuine conversations with every single person as you grow.

For whatever reason, I ended up speaking to a young person who was 22 years old and having his first year-end review. I have no reason why I happen to be a part of his first review because typically I’m not a part of any of them.

I asked him what are some of the things that we could be doing better here?

He answered and said that the biggest thing is sometimes he felt like he doesn’t have the purpose as to why he’s doing what he’s doing.

He comes in and does the day-to-day task but in the end, he doesn’t know the vision of the company.

He doesn’t know where it’s all going or what the future mission is. He doesn’t know where I want it to be.

I realized that as we grew, we forgot to continue to talk about that vision.

I believe that companies go under because leaders stop talking to their newer people.

People are afraid and don’t actually tell corporate what’s wrong with the company so they start covering it up. When you start covering up bad stuff that’s when everything goes south.

As a CEO the greatest gift is when you can actually have your employees come into your office and tell you what’s wrong and demand that you fix it for them. That at least is giving you a chance to fix it for yourself and for the company.

LW: That’s a lesson for all of us in leadership.  Feedback is so important. We’re all learning. 

DL:   We are every day. I’m evolving and trying and there’s still so much to learn.

LW: One of the things that’ll teach us is to know the numbers. The numbers will tell you what is right, what’s run its course, and when it’s like time for something new.

So it all comes from knowing where you are in your numbers.

 

Click here to listen to the Million Dollar Mastermind Podcast episode 319 with Entrepreneur Diana Lee

Click here to listen to the Million Dollar Mastermind Podcast episode 320 with Entrepreneur Diana Lee

Click here to listen to the Million Dollar Mastermind Podcast episode 330 with Entrepreneur Diana Lee

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