Engineering the product mindset with 3Pillar Global's David DeWolf
Engineering the product mindset with 3Pillar Global's David DeWolf
David DeWolf:
If you're in the professional services business, you better wake up every day thinking about how do I scale culture? And that scale of culture can't be associated with a single person or three people. It has to be in the systems, has to be in the culture itself.
Peep Laja:
I'm Peep Laja. I don't do fluff, I don't do filler, I don't do emojis. What I do is study winners in B2B SaaS, because I want to know, how much is strategy, how much is luck and how do they win? This week, David DeWolf, president and CEO of 3Pillar Global, a software product development company. 3Pillar Global was founded in 2006 and now has over 2,000 employees with annual revenue over $100 million. In this episode, we discuss going beyond a great product offering, why leaders should regularly reinvent themselves, and why scaling company culture is key to growth. Let's get into it.
David DeWolf:
So I struck out as an independent consultant believing that I had the best opportunity to work with incredible people and to bring them together as a team and to truly disrupt markets. And about two and a half years in, I woke up and realized we had six employees. And what had happened was I was working with venture backed startups, and specifically software companies. And in a world that is saturated with service providers to provide kind of technical expertise, I had become known not as an expert in engineering or architecture, which was my legacy and background, but the expert in product, that is, the software that's driving revenue growth. What matters there is, it's not so much about how you're building the software, but are you building the right software? Are you building something that's going to drive revenue market share and ultimately client satisfaction? And so that was the niche that we kind of fell into that was the genesis of the business.
Peep Laja:
In the beginning, did you have a unique way to go to market or were you conscious of thinking about your positioning and where you fit in with all these other software development firms?
David DeWolf:
Right at the beginning, as an independent consultant, I was doing a lot in the open source world and I was doing a lot of speaking in the Agile circuits. And the combination of those two things really helped me to get my feet on the ground and land those first couple of contracts because I was seen as an expert there. But as we transitioned to a firm, and thinking as a business, what we realized was that this niche of product development matters. And so we defined it. We defined the category and said product development is about building the software that drives revenue growth and engages our clients' customers. And we were maniacally focused on that. We refused to build anything else. It was only about innovative software that was actually disrupting markets and helping digital companies to grow. And because of that, that became our unique differentiator, not only in what we did, but we began to develop intellectual property around how we do that and create a model that was explicitly tailored for delivering precisely that.
Peep Laja:
Doubling down on a specific focus requires guts, conviction and a good understanding of the customer's pain points. The ability to innovate in customer value at high speed must be a core capability of your company. It's impossible to do so if your company's targeting all revenues indiscriminately. Here's Tony Fadell, Nest founder and author of Build: An Unorthodox Guide to Making Things Worth Making on finding the why during his time at Apple.
Tony Fadell:
Well, marketing is the output of great product marketing or product management. And what that's all about is one, the voice of the customer, and the second thing is understanding the why. Understanding the pain points those customers have, understanding why we're building something and how it's going to solve those pain points or how it's going to be a superpower for them after they get the product. So you have to be able to tell the why story.
Peep Laja:
How long did it take you to hit 1 million in revenue and then 10 million in revenue?
David DeWolf:
It was 2006 that I struck out as an independent consultant. It was around 2008 that we hit a million in revenue. We did a couple of very small acquisitions at the end of 2009 to really expand into a global footprint. We brought together what was an unsure kind of boutique consultancy that I had started with a product engineering firm that was based in Romania at the end of 2009. And by 2010, together we did 10 million of revenue and that was really the genesis of the business.
Peep Laja:
What was the main customer segment?
David DeWolf:
That initial customer segment was all about those VC backed startups. Through 2011, 2012, we started to realize that the value proposition, while strong with those VC back startups, was even more compelling in traditional industries because the software companies we were working with should know how to be product companies. Now, oftentimes they're not and they're looking for acceleration, they're looking for help maturing, but in traditional organizations, there was a craving at this time. The buzzword back then was software is eating the world. People were trying to figure out what that meant before we even coined the word digital. And because of that, we began in about 2011, 2012 this shift specifically working with tech media companies. A lot of media companies that were going through transition at the time was our entry point into kind of more traditional services businesses.
Peep Laja:
How were you landing these customers? What kind of channels worked for customer acquisition?
David DeWolf:
It was all about network and referral. And frankly, in the professional services businesses, you continue even as you scale to really stand on the merits of what you deliver and making sure that you're developing great solutions for clients and that leads to more work than anything. So it wasn't until kind of the 2014 range that we began to develop a go to market strategy around sales. We started with sellers, individual enterprise sales type approach, more coming from a client partner model where people had expertise in what we were doing but had a commercial bent, and then ultimately began to build a professional sales and marketing function over time.
Eventually then focusing in on, how do we, as we cross the 50 million threshold, look towards a hundred million. We realized we needed to go from a horizontal offering to more targeted towards industries and making sure that we take our horizontal product expertise and apply it specifically to the industries that we play in. And at that time, originally our legacy was in technology companies, media companies, information services companies. And that focus for a very long time got us to where we needed to be.
Peep Laja:
It seems like the perception is that software development is getting commoditized. How do you handle this and how are you not just yet another outsource shop?
David DeWolf:
First and foremost, you have to stare that into the face and realize it, right? That in this world it has both become a commodity to just be a developer of software and at the same time, it is a commodity in high demand. And in that world, there are a lot of people that have flooded to this market and the reality is we've never tried to compete with them. We've always stood out and said, if you are looking simply for talent, if you are looking just for a body in a location, if you're looking for offshoring, onshoring, outsourcing, we are not the partner for you.
We know very well what we're experts in. We are experts in building revenue producing, customer engaging, software products. And if that's what you're looking for, and if you don't want just to build software and have a working piece of software, but you want to drive revenue, if you want to grow your market share, if you want to drive business outcomes and you want a partner that is as invested in that as they are in actually writing the code, that's where we can really partner and add a unique value proposition to our clients.
And we do that, yes, by we have incredible engineering. But it's not about the engineering. It's about we bring to bear cross-functional teams that are steeped in driving business outcomes, work as high performing teams together to deliver and drive towards those outcomes, continually leveraging what we call the product mindset, to make sure that these teams are making judgment calls on a day in day out basis that help to move the needle on the results. And that is our take on what this world needs to truly be successful in the digital economy versus just be schlepping code and releasing software that doesn't drive any outcome.
Peep Laja:
Good product development is hard and resource intensive. And a great product team is more than just engineers implementing what product managers told them to. Great products are a result of high talent density, commitment to excellence in all fronts. Here's Marty Cagan, partner at the Silicon Valley Product Group, describing what sets high performing teams apart from everyone else.
Marty Cagan:
I have friends on both sides. The ones that work in not very good companies, a lot of them honestly don't believe me when I described how good companies work. They have this idea that a product manager does requirements in some form or another, PRDs, user stories, whatever you want. And then a designer's job is to basically make it pretty and maybe do some wire frames. And then the whole mess is taking it sprint planning to the engineers and you say, this is what you need to build next. And of course, I try to explain to them, that's really not how it works in any of your favorite products or companies. It's a very different animal. You've really got true peers. Developers aren't there to just implement your dumb ideas. They are there to help you come up with a great solution. The designer's not just there to make your thing look pretty. They're there to help create a great experience.
Peep Laja:
What do you use to communicate that messaging?
David DeWolf:
So we've gone through a few different phases. If you go back to the original maturation of the business where we started to implement sales and marketing, first and foremost, we took some of our more consultative practitioners that had a commercial bent and they began to sell. And they did that how? Through case studies, through references, through network. And it was that word of mouth and that passing on of story, right, the storytelling that really helped communicate that. That lasted for a while until we said, we're incredible. Our win rate is through the roof if we get 45 minutes with a client. But the reality is you don't always get 45 minutes. So how do you scale that? And so the next phase for us was to take that and begin to tell that story through our thought leadership. Okay? And so we had a period of time where we went very heavy into speaking engagements.
How did we make sure that we were on stage at reputable events? We also were purposeful about taking our intellectual property and how we do things differently and publishing a book, The Product Mindset. It won several awards. We were on stage at CES. That begins to show the world that you're a trusted advisor, you're an expert, you are the standard bearer, right? And that begins to shorten those cycles and give you that trust and that reputation before you have that 45 minute meeting. And now we're at the phase where we're actually building not just the brand from marketing, but the demand generation of it, of how do we make sure that we go out and systematize that we're getting in front of people and really spread that brand?
Brand can be thought of in two different aspects. One is the brand awareness, which a lot of people focus on. We focus first and foremost on the brand equity. What does it actually mean building the value behind the brand, and then, now that we have that and we have a couple staples like being on the speaking circuit, like having the book, now we're actually taking that out to market versus just add copy.
Peep Laja:
You don't need to invent new go to market models. Start by looking around and seeing what the other leaders are doing. When I started my agency Speero more than 10 years ago, I looked out into the market and I asked myself, what are other leaders in this space doing? Oh, they're putting on a conference? I'm going to have a conference. They wrote a book? I'm going to write a book. They have original frameworks? I'm going to do that too. And it's exactly what I did. And what I did on top of that was that I was using what I was naturally good at, which is content. I set the goal to build the best blog in the industry and we did. People asked me, "Why are you sharing all this stuff for free?" Well, it's because being generous with your knowledge leads to new opportunities. It's something we heard about from Brandon Bornancin, CEO of Seamless.ai, on a previous episode of How to Win.
Brandon Bornancin:
It's a lot of, how do I give everything I've got to our audience of salespeople, marketers, and entrepreneurs to help them get to the next level without any expectation of anything in return? I should refer Seamless or I love Seamless even if I don't even use the product, because they help me win. They help me succeed in business, in sales, in life. And that's our philosophy. All the things that we do on social, all the things that we do with our blogs, podcast, whatever. If we can help you connect opportunity, create opportunity, we know eventually something will come back around.
Peep Laja:
How often are you guys looking at the competition or thinking about competitive strategy?
David DeWolf:
When I think about business, I think about it on four different altitudes and very, very simply. The very first one is what I call ideology. This is your purpose, your values, your beliefs, your vision for where you're going. It's the aspirational part of business and it's essential. It's a bedrock that to scale past 100 people, you have to have. That's how you scale culture. That's where your culture comes from is communicating that over and over. The second piece is what you just talked about, which is strategy, which is, if vision is part of ideology, that's where are we going? Strategy is how are we going to get there? And very specifically, it is how do we compete? What is our value proposition and how are we different from our competition? Not better, but different from our competition. And then, building the entire value chain to follow that value proposition.
We have, since 2011 and '12 is when we developed the first version of both our ideology and our strategy. We iterate on that. I personally iterate on that at least twice a year. We're now on our third version of both of them, third major version, and we have minor versions that are always going on. It's probably one of the strengths of the organization is that foundation. We're very concrete about how we take in market and client intelligence and bake that into our strategy and making those trade off decisions that are part of strategy of what are we going to do, what aren't we going to do? To us, that has been the bedrock of our growth is those two aspects. The last two aspects of business are operations. How do you do that efficiently? How do you run the business? And then, execution, just getting it done. Those are the four aspects. I think the first two are probably where 3Pillar's strength is and that we've been focused on literally for over a decade, refining that it's been consistent that whole time, but always evolving and getting stronger.
Peep Laja:
So what are some of the strategic trade offs decisions you've made?
David DeWolf:
So the very first fundamental trade off decision that we made was that even though we had the capabilities to build any type of software, we're going to focus exclusively on product. We define that as helping our clients build the software that they're using to drive revenue and engage their customers. All the products and platforms we build fall within that category. Then, you take that, if that's the foundation, what is unique about product that makes it different? One of the aspects that is very unique about digital product is that time to value really, really, really matters. You have to beat your competition. And so, how do you build a value chain that allows you to go faster and to deliver value to customers faster than your competition does? Now, you can do this in a delivery sense when you're a service provider, really prioritizing time to value.
But it's also about, how do you build a value chain to be able to do that? So here's an example of what falls out from that. As a service provider, when a prospect comes to us, they're typically ready to start yesterday. How do we have a supply chain, a recruiting engine, a bench strategy that allows us to execute very, very quickly and start almost immediately versus what a lot of providers do, especially when they're smaller and younger, is just in time hiring strategy. That's the type of execution and operations that falls out of strategy when you say, hey, we're going to prioritize time to value because it matters to product. Naturally, you have to figure out how to operate in that world.
Peep Laja:
Many companies become data driven only to realize that quant and qual data still doesn't tell you what your strategy should be and it's still no replacement for creativity and imagination. You start by establishing your winning aspiration, a shared understanding of success. Once you know where you want to go, you need an honest assessment of where you are now and what's the gap. What is the obstacle in your way? If you're not clear on the obstacle, your strategy is likely going to be wrong. Every initiative you take on needs to take a step towards closing the gap. Growth is the outcome of a successful strategy. If you start with the growth goal first, like we're going to grow 50%, you're doing it wrong. Instead, start with the strategy to deal with your specific challenges. And remember, every strategy is a hypothesis and you need to give it time. If you don't pursue a direction for at least a year, it's meaningless. You guys are now over 2,000 people. So what's your perspective on growing past 100 people and what gets harder and how have you guys managed it?
David DeWolf:
The leader has to be willing to reinvent themselves. I've often said that what I've enjoyed the most about this journey is that every year and a half I have to reinvent myself to be a new kind of leader. And there's a journey you can go through, right? At the beginning of a services company, you are the producer, you're actually doing the work. Then you have to figure out how to manage the work. Then you have to figure out how to sell the work. Then you have to figure out how to lead a team that is managing and selling the work. Then you have to turn yourself into a real executive. And this goes on and on and you get further and further and further away from the work itself. But it's critical that you stay close to the clients and understand what's going on. Okay?
And so that journey is natural, and first and foremost, you have to have a leader that's willing to let go and really reinvent themselves for the next phase. But secondly, you also have to have an organization that's willing to do that as well. I've been really intentional about bringing in leaders throughout the journey of 3Pillar that are better, smarter, stronger than myself, that I can learn from that provide expertise. One of the secrets to letting go as a leader is making sure you have somebody that you trust more than yourself in the job that you're backfilling yourself in. But then those leaders can't just be heroes in and of themselves. As you grow, you have to mature into a business. You have to put into place the infrastructure, the systems, the KPIs to manage the business. And there's multiple iterations that you have to go through in maturing that. You can't be at the destination at the beginning.
You have to iterate your way through it, but it's essential. And I find that in services businesses especially, the reason organizations struggle to get past 100 is because the leaders that start them typically love the client work, and they get stuck in the client work, not in the business building. They're working in the business, not on the business. And so that's the key, I think, is to make sure that, as an agency, as a services business, you are shifting and you really find the way to extract yourself over time from that in the business working client work to business building, building the infrastructure, building the team and those types of things.
Peep Laja:
Each company relies on figuring out a bunch of stuff, usually hard problems. Your business success will largely depend on your ability to hire people that can figure those things out. Founder alone can only do so much. If you're putting the right leaders as team leads, these self-governing teams can be the key to staying efficient as you grow. No matter how large your organization becomes, however, bigger isn't necessarily better when it comes to team size. Verne Harnish, author of Scaling Up, explains.
Verne Harnish:
Jeff Bezos often kids about the two pizza team. But you really don't want a team get any bigger than what two pizzas can feed. We've learned that the ideal team size is about four to five people. And, if you start to have that fifth, sixth, seventh, all it does is drive productivity down and cost up. And so those are the kind of things in organizational design and others that you want to be cognizant of. And what's interesting is, most folks haven't been educated around just these kind of fundamentals and that's what you end up learning the hard way. Staff size is the size, and the number of people really is a key driver when you need to make certain changes.
Peep Laja:
Everybody and their mother are trying to hire developers. And I'm guessing most of your workforce is developers. So given that you guys are like 2,300 employees, and how are you getting that talent? The war for talent is real. And now with everybody going remote, companies are hiring from wherever.
David DeWolf:
So this goes back to strategy again. Because we have prioritized both time to value, we've also prioritized being the preeminent provider. We want to be the most respected, we want to deliver every time, so quality is another thing. We have been specific about not building an offshore model with high leverage. We've been specific about going to the three richest regions of the world with exceptional talent. We've gone to central and eastern Europe, we've gone to Latin America, and we've gone to India, and we've set up regional hubs where we cluster locations and draw from regional talent pools in each of those areas. And we've said, that's where the exceptional product talent in the world is. We're not going to prioritize economies of scale and having one center of 10,000 people, right? We're going to prioritize access to talent throughout the three hottest regions of the global economy to be able to pool talent to help us to build these exceptional digital products.
Peep Laja:
In software business, they like to buy the leader. There's some safety there. How is this helping your cause being perceived as a leader?
David DeWolf:
First and foremost, you have to, to be the most respected, you have to put your money where your mouth is. You got to show me the results. And so we want to be known as the business builder, the company that has helped to make sure we drive revenue outcomes for our clients more than any other and equity value. And we actually measure those things. So we can tell you we've helped organizations create tens of billions of dollars of equity value over our lifetime. Number two, we want to be known as the standard bearer that is the thought leader putting out the thoughts and driving the industry forward on how do we do this better. And then finally, we want to be the employer of choice. We should be the culture, we should be the destination where people say the value of my career goes up the day I start to work for 3Pillar because I'm working with the best of the best.
I have the ability to innovate with those thought leaders that are actually doing it and making it happen. In a world where that's all of our marketing, that's all of our messaging, where that's where we invest, we invest in building those standards and pushing the envelope, we invest in creating a culture that attracts the best of the best, those types of things. I think that bleeds out into being the leader, being recognized. And I'll give you an example of where we see that play out. For the last three years, we have not had our NPS score go below a 69. We're currently executing at a 72. That's in a professional services world that typically a 30 NPS is phenomenal, right? And so we really invest heavily in those three things of every client should be able to say, yes, they're delivering the business results, they are the business builder.
Yes, they are bringing methodologies, insights, standards to the table that I'm not hearing from others. And they absolutely are able to attract, retain exceptional talent to do that. And I think we're known as that. And what that prevents us from having to do is, sometimes leader gets associated with the individual and people buy bodies versus buying the company. And we are building a business where 3Pillar means something. You buy 3Pillar, you don't buy a location, a body of this or that. We have an exceptional system that pulls together the best of the best and delivers more than the sum of the parts.
Peep Laja:
You've been in this business for 20 years or so. What are some pieces of advice you would have for fellow professional services founders?
David DeWolf:
First and foremost, if you're in the professional services business, you better wake up every day thinking about how do I scale culture. Culture is absolutely essential in a people driven business. And all businesses are people driven, but professional services even more so. And so, scaling that in a world where you scale one person at a time, really, really matters. And so, no matter how well I'm doing, no matter how well the business is doing, I'm always thinking about that. How do we take it one step further, one step further? And that scale of culture can't be associated with a single person or three people.
It has to be in the systems. It has to be in the culture itself. It has to be in how you reinforce it, how you reward, how you recognize and those types of things. So I'd always start there. And then, what comes with scaling culture is how do you attract, retain exceptional talent that lives that culture? It's not just about the best engineer in the world, it's not just about the most creative thinker in the world. It's about finding those individuals that share that passion for your culture, for your values, for your ideology that want to achieve the same thing that, yes, are incredibly talented, but also fit together and create a team that can deliver more than just a couple of individuals.
Peep Laja:
So, what three key strategies keeps 3Pillar Global winning? One, they carved out their niche and continued to define it.
David DeWolf:
What we realized was that this niche of product development matters. And so we defined it. We defined the category and said, product development is about building the software that drives revenue growth and engages our client's customers. And we were maniacally focused on that. We refused to build anything else.
Peep Laja:
Two, they consistently positioned themselves as leaders.
David DeWolf:
We're purposeful about taking our intellectual property and how we do things differently and publishing a book, The Product Mindset, that we published. It won several awards. We were on stage at CES. That begins to show the world that you're a trusted advisor, you're an expert, you are the standard bearer.
Peep Laja:
Three, they developed product mindset.
David DeWolf:
We bring to bear cross functional teams that are steeped in driving business outcomes, work as high performing teams together to deliver and drive towards those outcomes, continually leveraging what we call the product mindset to make sure that these teams are making judgment calls on a day in, day out basis that help to move the needle on the results.
Peep Laja:
One last takeaway from David.
David DeWolf:
We are building a business where 3Pillar means something. You buy 3Pillar, you don't buy a location, a body of this or that. We have an exceptional system that pulls together the best of the best and delivers more than the sum of the parts.
Peep Laja:
And that's how you win. I'm Peep Laja. For more tips on how to win, follow me on LinkedIn or Twitter. Thanks for listening.
