Founder Insights: The Power of an Executive Coach 

Five things to know about executive coaching as a startup founder

Recently, Next Coast Ventures discussed the power of an executive coach with Julia Cheek, CEO and Founder of Everly Health, and Mike Smerklo, Next Coast Ventures Co-Founder & Managing Director. This blog post summarizes the discussion and offers best practices for working with an executive coach as a startup founder.

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We all know the myriad of challenges start-up executives face – and Julia and Mike have not been exempt from this. Early in her entrepreneurial journey, Julia hired an executive coach and continues to use one today as Everly Health has grown into a multi-brand, multi-billion-dollar business. Mike is a strong believer in executive coaching, as he has used one himself as an entrepreneur and often sees some top entrepreneurs using them. Research from PwC and the Association Resource Center¹ concluded that the average ROI for companies investing in executive coaching was seven times the initial investment – a statistic that’s hard to ignore.

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There were five key points that came up throughout their discussion, which we will dig into, covering best practices when working with an executive coach as a startup founder.

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1. Get to know your coach before committing

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A diligently thorough process of getting to know each other to discover the best-matched coach for your personality and your professional journey is required when finding an executive coach. Nowadays, there are platforms that help to facilitate finding a coach, but Julia recommends asking fellow founders and board members for their executive coach recommendations.

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Meet with your coach a few times to ensure you work well together. Julia recalls that when she first met Christina (name changed for privacy), Christina made it clear that it was important for them to get to know each other first before they committed to a coaching relationship. She wanted to ensure that the relationship would be the right fit for both of them and ultimately bring high value. 

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2. If you’re a solo founder, leveraging an executive coach is even more important

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Being a solo founder has a lot of benefits, but it will also leave you facing a lot of struggles alone.  Julia recognized this early on and said that she was honest with herself about being a first-time founder and knew she needed support along her journey. Alongside coaching, she needed a sounding board and someone to help provide entrepreneurial guidance (a role that is oftentimes filled by having a co-founder). Julia was lucky to have found her executive coach, Christina, who has been a successful operator in the past and understands the entrepreneurial journey.

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The reality is that it can be difficult to be a solo founder. Leveraging an executive coach is a great way to overcome that by gaining the support you are missing from having co-founders.

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3. Feedback, reflections, and prioritizations

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Julia leverages Christina in helping her gather feedback, reflect on it, and implement new strategies going forward. Additionally, on an annual basis, Julia and Christina work together to gather 360-degree feedback from Julia’s executive team and board members. Christina and Julia work together on the feedback to prioritize the three key things that will make the biggest impact to both the business and Julia’s leadership abilities. 

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Julia shares the feedback and her key initiatives with her leadership team. This fosters a culture that is both receptive to feedback and encourages personal growth, which is one of the things that impressed Mike most about Everly Health early on. Mike has worked with dozens of executives during his time at Next Coast and is a big supporter of 360-degree feedback for every founder and executive.

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4. You may not have the same coach for each stage of your journey; matching stage to coaching expertise really matters. 

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There are two important points to keep in mind when evaluating executive coaches. One, your executive coach doesn’t necessarily need a founder background or specific-industry experience, and two, you may not have the same coach throughout your entrepreneurial journey. It’s up to you to decide what characteristics are important to you in a coach and when.

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Just like in any relationship, it’s normal that you can outgrow each other. Realizing that this can happen will save you from wasting your time in a dynamic that no longer brings value to you.

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5. Yes, your executive coaching session is always the best use of your time

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Mike and Julia both stress that no matter how busy you are, make time for your executive coaching session. It’s a bit like therapy. When you are deep in the trenches and very stressed, that is when you will benefit most from your coaching sessions. Your coach can help you work your way through and gain perspective. It may feel like the last thing you want to do, but Mike and Julia both expressed their gratitude for having coaching sessions during those moments. Don’t postpone your sessions. 

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It should be self-explanatory, but it’s a good reminder: you get value from your coaching sessions only if you are willing to put in the work. You need to be in the right mental framework, so recognize that getting into that headspace may be half the battle. Prepare adequately when needed, stay open-minded, and commit. You will see growth.

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Note: Coaching should not be seen as a replacement to therapy. There are different resources to support founder mental health.

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Speaking with Julia and Mike, you can see their passion for the subject and how big of a role it has played in shaping them as executives throughout their careers. No matter how early or far along you are in your career, hiring a coach can be game changing.

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We hope that these best practices have given you perspective for your own executive coaching journey as a founder. Follow us on social media (LinkedIn and Twitter) and sign up for our newsletter to stay updated with our latest content. 

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ABOUT JULIA CHEEK

Julia Cheek is the Founder and CEO of Everly Health, the digital health company at the forefront of the virtual diagnostics-driven care industry. Julia founded Everlywell, the consumer brand of Everly Health, in 2015 to provide consumers access to affordable at-home lab tests that include insightful, easy-to-understand results. Everly Health and its consumer and enterprise brands have served tens of millions of people and support dozens of major health plans to close gaps in care.

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ABOUT MIKE SMERKLO

Mike Smerklo is an experienced entrepreneur, investor and business leader driven by the desire to turn ideas into reality. Having bought and scaled a small business into a publicly traded company worth nearly a billion dollars in value, he has a deep understanding of the hard work, dedication and grit that truly powers successful entrepreneurship. Today, as the co-founder and managing director of Next Coast Ventures, Smerklo is a champion for a new generation of entrepreneurs building disruptive companies in big markets. 

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SOURCES
1. “Coaching: It’s Not Just for Executives Anymore”, SHRM, April 30 2021. Author: Andrew Deichler. Access:

https://www.shrm.org/resourcesandtools/hr-topics/organizational-and-employee-development/pages/coaching-its-not-just-for-executives-anymore.aspx

At Next Coast Ventures, we are built by entrepreneurs for entrepreneurs. We continue to focus on improving the way we support our founders in their entrepreneurial journey. We heard from our portfolio that beyond day-to-day oversight, a key way to provide support is by engaging the best experts to talk about specific topics. So we are pleased to share the takeaways from our first speaker event of the summer “Customer Success: Retaining Your Customer Base in Challenging Times” with Mike Smerklo and Nick Mehta.

Our Head of Platform, Kaitlyn DeBernardo, is constantly engaging with both our portfolio companies and our expert network to surface high-impact, relevant, content. This event was invite-only to our portfolio but the insights were so strong that we wanted to share them with the entire entrepreneur community. 

We think Mike and Nick were the perfect pair to double-click on the topic. Prior to co-founding Next Coast Ventures, Mike was the CEO of ServiceSource, a leading provider of outsourced inside sales, customer success, and renewals management solutions for enterprises worldwide. Nick is the CEO of Gainsight, which provides companies with insights on scalable, durable growth through product-led, customer-led, and community-led strategies. So Mike and Nick are the OGs of Customer Success (maybe more the “O” than the “G”, but still pretty smart on the topic). With the tech market pull-back and the talk of a possible recession, now seemed like the perfect time to have this discussion - and Nick exceeded expectations!

Takeaways:

1. Customer success is critical. A decade ago, when Gainsight was in its early days, tech companies were only just beginning to invest heavily in customer success alongside sales. Now it’s something you simply can’t afford to ignore.

Fun fact: in 2013 Nick recalls customer success manager roles numbering around one thousand. Today that number has grown to over 300K. What’s more, a company’s customer success is a core topic among its C-suite, at its board meetings and with leading early and late stage investors.

“The move to SaaS and cloud shifted all the power into the customer's hands. [Customer success] went from something that was important to something that was just existential. And now, 100 percent of tech companies have customer success teams,” says Nick.

2. Customer success should be part of the sales process. Making customer success a core part of news users’ experience can make all the difference between a short-term customer testing out your product and one who sticks around over the long term. That’s because customers today are more likely to think of purchasing a SaaS product as an experiment. Unlike subscription-based models of the past (think gym memberships and cable subscriptions, where you’re either locked in for a certain time period or have little alternative choice), today’s SaaS products are typically relatively easy for customers to leave if they aren’t getting value.

Without customer success baked into the recipe, Nick says, “especially for early stage companies, you think it's a sale. [Customers] think it's a pilot. That's the bottom line.”

This reality is fueling an industry trend among early stage startups towards hiring customer success team members early – even before sales. That way, companies have the chance to integrate customer success into the user experience from the beginning. While you can fix a sales problem, it’s far more difficult to course-correct a fundamental disconnect between your product and your users’ perception of the value it’s bringing.

3. There are easy, no-brainer ways to creatively engage customers for customer success at scale. Long before it’s renewal time, keep thinking about new ways your customer success team can connect with customers, answer their questions, solve their problems and help them successfully use your product. The biggest challenge for an early stage startup? Doing this at scale – without hiring tons of new team members. 

A great example is working well at Gainsight, where the customer success team hosts regular office hours, something companies can easily do to engage customers and increase retention. The set up can be simple:

• Schedule a regular virtual meeting using your customers’ favorite platform of choice. 
• Invite them to join, ask questions and get the answers they need to successfully use your product. 
• You can host Office Hours with themes around specific best practices and then open the discussion up to allow customers to get tactical, technical help when they need it.

Other options for scaling customer success without hiring include building product walkthroughs, online communities for your customers or automated guided tours.

4. Customer health is all about D.E.A.R. Determining overall customer health is a key challenge for startups seeking to retain customers and reduce churn. But it can be tricky to assess. Dig in, and it’s easy to find more questions than answers: What matters more, net revenue retention rates (NRR) or net promoter scores (NPS)? How do you incorporate your business results, i.e. sales of your product and customer result from using it, into engagement metrics such as daily average visitors? Is there a recommended way to score overall customer health?  

Nick’s recommendation is D.E.A.R, which stands for deployment, engagement, adoption and ROI. Let’s break that down:

• Deployment: a measure of a customer’s use of the product suite, both in terms of the number of features and the frequency of use
• Engagement: a measure of both the frequency and quality of customer conversations
• Adoption: a measure of users adopting your product
• ROI: a measure of your customer’s return on investment and outcomes since using your product

🎧 Listen to Nick talk about D.E.A.R. and why it works 🎧

5. Staying competitive means thinking broadly and automating often. As customer success teams look to drive impact, automation is key to staying competitive. Lean into solutions that will streamline processes while encouraging engagement, including automated email sequences and reminders, product guides and walkthroughs, chat functionality and reporting tools. 

Along with that, Nick says SaaS companies need to think broadly about product, sales, and customer success together as equal drivers of success vs. operating from independent silos. On a practical level, this can look like customer success managers meeting monthly to determine common themes they’re finding in their interactions with customers, then working to uncover why those themes are present. From there, it is much easier to relay the takeaways from customer success to sales and product teams effectively. On that note, automation can come back into play using tools like recording software to share snippets of customer’s feedback directly with relevant teams. “There's no substitute to hearing it in the customer's own voice,” says Nick. 

Want insights from our team and future events like these? We’re planning them for portfolio founders all the time. The best way to get to know us better and follow along: start by subscribing to ATXnology, our quarterly newsletter focused on the pulse of Austin’s startup scene. We’re excited to continue bringing you insightful content from the resources we’re continuously building for founders. If you know an amazing founder who you think needs to know about our approach, send them our way. We’ll be here.

Many thanks to Nick Mehta and the Gainsight team for your participation in this recent portfolio event.

Every entrepreneur dreams of this day:

“We just won the Dell account! This deal is close to $500k in ARR and will bring us close to $1m in ARR. The entire team is celebrating – it is a game-changer for the entire company.” – Startup Founder

When it FINALLY happens, it is a truly levitating experience. Days, weeks, months and years of hard work lead up to this big moment. This big sales win shows that your crazy idea might not just have been so crazy after all. It kick starts your entrepreneur’s mind into imagining: 

Just how much is going to change and how much easier selling your solution will be from now on thanks to this big, early win.   

Finally…finally…finally…you’ve achieved what those lame venture capitalists kept calling “product-market fit.” 

It is all going to be downhill sledding from here.

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Time to celebrate? Absolutely. Get out the champagne, grab your team, take a group photo, kick your feet up on your desk and let it sink in. You did it!

With this big, early win, you wonder: maybe it’s time to change expectations (for the positive) about future sales, rapid growth and more big customer wins?

Entrepreneur, not so fast….

Unfortunately, once you have come back to earth, the hard cold reality is this: you (as the entrepreneur) must now consider what I call the “False Positives” of your first major sales win.  

A false positive in the science community is defined as “a test result which incorrectly indicates that a particular condition or attribute is present.” For startups trying to crack into a market and learn to sell a product or solution, the same definition can be applied to the first few major sales wins.

Yes, absolutely these early wins are tremendous accomplishments. But the real question is whether they are truly repeatable – can you and your team repeat it again and again with less effort each time – or does the win represent a false positive? This question is critical. The answer will direct your time, attention and effort in a way that can make or break your ability to scale your business.

Yes, it is really that important!

So after the champagne is gone, the team has gone home and you have given yourself some time to relax and unwind, you must ask a few questions about the big win. The answers will help determine your next best course of future action: 

1. How many people in the company were involved in the sales process? (Typical start-up answer: “just about everyone”)
2. How involved was the Founder/CEO? (Typical start-up answer: “involved in every part of the sales process”)‍
3. If there was a salesperson involved in the big win, how many resources did she utilize to close the big deal? (Typical start-up answer: “all of them”)‍
4. For the team involved in the deal, how many of them were deeply involved in founding the company and therefore did NOT need training? (Typical start-up answer: “all of them”)‍
5. Did the customer buy a standard off-the-shelf version of your software, or were they promised lots of custom enhancements? (Typical start-up answer: “lots of custom enhancements”)

If you answered the “typical start-up answer” to any of the questions above, you should be concerned about a false positive. 

But here’s the good news: just about every startup experiences similar false positives. The even better news is that, unlike a scientific test, there is a clear playbook to reduce the impact of the false positive. The key is to evaluate your big, early win ASAP. 

Here’s how the early sales win story typically goes:

In the early days of attempting to establish product/market fit (a fancy way to say someone wants to buy what you are selling), a startup must do everything possible to get that first big win. The entire company (even if only a few people) will do whatever it takes to make that happen and bring every resource possible to the fight. 

Great founders are heavily involved in early wins. They call upon Board members, friends, network connections or anybody anywhere who can help make the win happen.  

Sales professionals are granted unlimited access to company resources and the entire team works tirelessly to help. 

Last but not least, because the team is small, just about everyone involved knows the solution or offering cold. In short, all hands on deck do whatever they have to get the “big first win.”

In many cases, this win is a false positive. But why? Because every aspect listed above is really, really hard (maybe impossible) to replicate at scale. 

The company will grow, resources will get constrained, new team members will join and the “all hands on deck” will turn to “the sales team needs to close more deals” or “sales doesn’t understand the product” or maybe even “sales doesn’t know how to sell the product.”

Instead of that outcome, here’s what you want:

You want to continue to grow your startup, but you need to grow differently as you scale. You simply can’t afford to have every big sales win happen the way the first few happened. It is imperative to think quickly about your big, early wins as false positives and then, just as quickly, figure out what to do about it.

This is not bad news. Actually, it’s quite the opposite. You may have false positives hiding out in your early sales wins, but you’ve got proof that someone wants your solution. You are no longer that crazy person with that silly idea. You have achieved the first evidence of product-market fit.

Looking ahead, you’re also learning invaluable information that will help you avoid becoming the next one-it wonder. 

In fact, the false positive might just hold the secret to your success….if you take the time to see it for what it is (and isn’t).

Here are some questions to ask:

1. Which custom features would serve other customers in the market? Customer-specific features aren’t all bad – that’s how you learn what capabilities customers really need.  But it’s critical to determine which ones should become part of the core product and which ones are one-offs that should be avoided in the future.
2. What part of the big win can be replicated without a lot of effort? Things like the solution offering, pitch materials, pricing tools, contracts or clear evidence of your value proposition are easy to scale and replicate.
3. What relationships were critical in the sales process? This is a hard one, but figuring out who the critical decision-makers were and what relationship was required will help you think about future sales relationships and resources to construct. This will help you determine key go-to-market aspects such as buyer personas, ideal customer profile and other scalable processes.
4. What critical knowledge was required for your team to possess? Make a long list of key requirements. This repository of knowledge can start to serve as your training materials for current and future team members.
5. What aspects of the Founder’s persona were essential for the sale? Was it expertise, relationship, industry experience, connections or even the CEO/ Founder title? Break this down and start to consider how this can be scaled by hiring, training, knowledge sharing or sales pipeline and buyers journey processes.
6. What customer gates were critical to advancing the sale? A “gate” is some customer checkpoint you have to pass before the deal can close. An example would be a technology audit by the IT organization, a review of your privacy policy by the legal department, or a presentation to an executive committee. Often these gates will be common across customers and therefore can be proactively added to your sales and marketing processes.

Next, after you do this exercise, take a break. Remember the big win (and don’t forget to make sure the customer actually gets all those things you promised them in the sales process). Take a moment to recognize that you have some time to figure this out.

The first step is to analyze the process clinically and recognize the risk of the false positive. If you do that, you’re already ahead. Too many startups sputter out after one or two big wins and never really figure out why they couldn’t scale the business or repeat that big win. Take the time to examine the process and recognize where false positives (or non-scalable) factors were at play in your big, early wins. Then start to build a plan that takes into account what needs to be replicated – team, knowledge, relationships, processes – you will be well on your way to the next phase of growth.

Author’s Note: A very special thank you to CPO and Co-founder of First Dollar Colin Anawaty and Scott Abel from NCV's Expert Network for their insights and input in this blog post!