Getting your employees to want to do the work is very different than just getting them to do the work. You may think it is semantics, but getting your employees to want to do the work has tremendous power. Leadership is a journey of getting your employees to see their highest potential and live their best lives. I find that employees that want to do the work when they feel that that work will align with their personal goals. They also want to create value for the organization that gets them recognized. Today’s interview is with Justin Bakes, co-founder of Forward Financing. This company was #404 out of 5000 in the 2018 Inc List. They grew 1,238 percent in the previous three years. Justin shares the steps in getting your employees to want to do the work. We talk about the mistakes in this endeavor. I hope that as a leader, you can understand the power of getting employees to think for themselves.
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Justin Bakes: The Transcript
Target Audience: Justin Bakes is the Co-founder and Chief Executive Officer of Forward Financing, a fast-growing financial technology company providing working capital to small and medium-sized businesses throughout the United States.
Disclaimer: This transcript was created using YouTube’s translator tool and that may mean that some of the words, grammar, and typos come from a misinterpretation of the video.
Hi Justin, how are you?
Great. Gene, how are you doing?
I am fantastic. Excited to have you here on the podcast. A growth think tank. When I have introduced to you earlier, I talked about some of the fast growth of your company, but I didn’t give them much context on what your company actually does. So tell us, what they do and who you serve.
Sure. So Forward Financing started the business in 2012 we’re focused on providing working capital to small and medium-sized businesses throughout the US. Since 2012 we funded over $500 million to over 10,000 small businesses in the US.
That is impressive, but especially because everyone thinks that the loan process is not available to them. But I guess what you’re saying is if you’ve got the right things you can get alone.
Yeah, and I mean our, our focus specifically is, non-bank financing. So typically when businesses go to a bank, they have a two-week process, audited financial statements, all of that. What we focus on is understanding the business cash flow owner credit business credit and being able to prove in three hours or less up to $300,000.
Well, I appreciate your giving us that context just to go into some details and I wrote these things down here. So I’m looking at my notes. You were four oh four on the list. Out of you know, 5,000 that showed up on the Inc5000. You did a three-year growth rate of 1238%, which is very impressive. And did about 42 million and you have employees right now is about 190. It was less when this was done. So you’ve continued that level of growth. Is that fair to say?
Yeah, and I think the year prior, I think we were number 15 something like that we were in the top 20. So it’s, it’s hard to continue on it as the base continues to grow. It’s hard to keep it up, but yeah, we’ve been investing in and trying to grow the business.
Well, I totally get that. I’m a math nerd, of sorts. And so if you tripled again this next year we know that pace is hard. But part of the reason why you’re growing so fast is that you put some attention to, the whole work environment. And when we were talking earlier, Justin, you’ve really talked about people really like what they do there. They want to come to work. And, the phrase you used was they actually run to who so what do you mean? Do they run to work?
Is so, when I say that I have an image, right? We’re, based downtown Boston, the financial district. Most of our people are coming in on the commuter rail on the tee. And I have this image is people kind of walking up the stairwell, lollygagging into the office and for Ford financing people is I want them jumping in between people and wanting them to feel that, to get in, jump in the office. That’s our goal. That’s the culture we’re creating, we’re working to create. And then secondly, you can get that. But really what we want to do is also retain the people. So, then we want them to have as many options as possible and want to stay with us.
Retention is not something that most of the ink companies have a problem with. I would imagine you probably don’t have a problem with retention because they want to come to work. Do you know what your retention numbers are?
Yeah, it’s one of our core company goals, um, is, is less than 5% regrettable turnover and we’re at that, so at or below that. So something we’re proud of.
I have talked to a lot of people and my kind of make this up when I say it, so I’m gonna I’ll time. It seems like as proud as you are of the growth of the company, you’re more proud of your retention rate. Is that true?
Yeah, I would say I’m most proud of being able to get the best people, hire the best people and keep them by far. Growth is great. And I’ll talk about why I think we’re able to keep people in and motivate people, but I think the impact is more important.
I feel myself being a little teary-eyed and I don’t normally get emotional on these things, but like I didn’t work in that kind of work environment my first 10 years.I showed up, I did the work. I didn’t feel like anyone cared about the work environment. As a leader, they just wanted me to get my paycheck and do the work. So what do you, why is it so different now than it was back then?
Yeah, I mean, I don’t know. I’m sure there’s still, environments that have that. I’ve worked, I started my career in investment banking. I’ve worked in both in the US and Europe. I’ve worked for large publicly traded companies. I feel fortunate to be in a place where, I’ve been able to learn and see some of the good and the not so good in other environments and make a commitment that any of that not so good that I’ve seen, we want to keep that out of forwarding Financing. And so, that’s really been the focus. I don’t think if I didn’t have those experiences, that we would be able to, to make the impact or, to have the environment in the culture that we do so, I’m thankful for that.
You’re not the first person to mention that the professional experience hasn’t been all that they wanted to and they want to create a place in this cause you’re in control. Justin and Matt. I know you have an executive team, you have people that work around you, but you’re in control of that employee experience. But it is so important for you to create something that’s not available elsewhere. And I think that really shows up in the retention rate and probably their desire to want to do the work.
Yeah, I think it also shows up in our growth rate. Um, I think we’ll talk a little bit about it, but you have people that come to your company. If they don’t want to be there, if they don’t want to run to work, you’re getting 80, 90% of them right there. Their efforts are there. And for many companies that are great, but, for us in the growth is, we need 120%. We need more than a hundred percent and you get that only when people will want to be there. And so what I spend my days, what our leadership spends our day on is, what can we do to one higher and best position ourselves to hire people that have, that are passionate, and then create an environment as well so that once they’re here that you get that 120% out of it. And they frankly enjoyed doing that.
Now I’m going to poke at you a little bit. Do you think it’s as high as 80% when they don’t want to do the work?
Well, I’m saying average. If they don’t want to do the work, definitely not 80%, but I think in an
average scenario and an average company, I would say average to a high performer, you’re getting
80% out of somebody. And that’s probably great for some businesses. For use in a competitive job market, competitive industry, very high expectations, and demands, from our company, we need more than that.
When you think about creating that kind of environment that people want to go to work too and they’re running, what was, what were some of the steps you did to create that? Can you walk us back through the whole process?
So I think it starts with our hiring process. We look to hire people that have a track record of over-performing regardless of their job history. We want people, if they started at, as their first job at a restaurant, they were a bar back. We want to see that they became a waiter. And then they went from a waiter that they manage the restaurant to joining another restaurant that was a sister company of that, to manage that second one. So regardless of someone’s, resume, we want people that strive and want that overachievement. So that’s really important for us. I think so. So we start with that base and, and frankly, you’re not just getting one personality type with that. You’re getting you, it is over a wide range of personality types. So, so we’re diversified. But once it, and we like to think we have once, once you have that type of person, what, what I focus on, what we focus on is putting them in a position to have an impact. So regardless of their role, sales, technology, accounting, finance, engineering, um, everything that they do and the way we position and structure their roles is so they feel like they have impacted that I think is the secret sauce to having someone really be engaged and want to run to work in the morning.
Well, I think I know what that means, but I want to make sure our audience tunes into it. When you say a position of impact, like the break that down for us.
In terms of the salesperson, they make that sales call, they closed that deal. They onboard that partner, they know that that is going to have an impact on our top line. So, we can draw a line from what they do in their role to the overall company performance. And we’re, and we facilitate, we make sure we communicate it. So it’s not just, any position, any group, any role. They are our job as managers and structuring incentives and structuring job performance, and objectives have that in mind.
When there, you know, sales are pretty easy because it’s frontline revenue, hopefully, profitable revenue. And, when you have some of these other key roles like product management or you have marketing people, I know there are some specifics, but you know, are you challenged to come up with that direct line to company impact?
Yeah. So, we, when we start the year, when we started in two, that this year in 2019, we laid out our company objectives and we broke it down into financial objectives, operational objectives and impact objectives. So we had three over basically three categories. And then within that, we had a waterfall of different specific objectives, whether on an operational side improve the conversion rate on tech, on a foundation side to improve our technology foundation so that our engineers can be more efficient. Every one of those three categories down to each objective can effectively get tied back to each role in the company. So, someone who is managing our office, from the front desk to the general office, they’re focused on impact goals. And so they know, one, we want, we want to retain people. And so what can they do? And they know what those numbers are. What can they do to create an environment so that if there are issues that are able to raise them if there are changes we need to make. So that’s just one example of sales is an easy one. But every single role we’ll tie back or part of a role impact operational and financial.
I’m writing that down. That was the three categories. Um, why did you come up with those three categories?
Yeah, we actually start with operational. So yeah, so which is pretty funny cause it’s, I think one of our biggest headlines and successes is what’s noted is financial, which is top-line growth. We’re of the mindset that you don’t get too high performance both on the revenue and overall economics without focusing on your operational goals. And so those are the building blocks and the financial goals will come out of it. And so we really focus on operational goals. And those are, is what drives financial performance. Financial performance is the outcome impact goals I think frankly is what keeps people here is knowing what impact they’re having on our small business customer, what impact and how our partners, and so what are the numbers? What are we able to do with a small business? I think also in our community, so we’re Boston based. We talked about that we give back. Every employee gives one or two, paid days during the work year volunteering. So it’s part team building is part of giving back. We give company donation. So we want that to be part of our mold. And, and, and so, that’s how that’s why we categorize and everybody has a play. It plays a part in that.
Justin, there’s some research I’ve done in this area of fast-growth companies where they really want people to take ownership of the work that they do. And that feeling of ownership really does drive, people wanting to come to work. And I’m smiling when you say this because you’re talking about these objectives, very high level. They’re broken down into granular pieces and then everyone is able to attach themselves to one, two, or three of those, those individual things. And they know that the work they do day in and day out, it aligns to going as a total organization. Do I have that correct?
And, and I see…
Break those down quarter. So we have an annual and then we have quarterly that make up each one of us.
That makes sense. Especially when you’re a fast-growing cause it’s changing very quickly and a lot of organizations that aren’t growing as fast as you think that that’s nice to have but they feel like people need more guidance. They feel like they need to tell people how to do the work. And I share with them the kind of insight by it. It’s like you don’t, you don’t, if you have smart people, you don’t tell them how to do it. You tell them this is the overall objective. You give them the end goal and let them figure out how because that gives them a sense of ownership. Is that something you can say works with you guys?
Most of the, I think there’s nothing more demotivating for someone that wants to be told how to do something right. Is, if you give the objective, educate them, teach them, have a conversation on how to get there. Is much more effective. I think though if I think back to since 2012 to where we are today, there is no way we would be where we, if we had the tell people frankly anyone how to do their job and the fast-growing company, everything is going on at the same time, all different places. If you’re attempting to tell people how to do things, you’re not going to get there.
I appreciate you saying that because fast-growing companies, take a different approach. Like they don’t, they don’t tell people how they give that, they trust them enough to empower them with this is where we’re going. Your job is to figure out how we do that and the theory behind it for me and when I’ve seen it happening in place, and tell me if this is true, they’re able to not only figure out maybe even a better way to do it, but if as things change as they do, they’re able to refine that and they’re able to keep pushing beyond normal plateaus. Do you find that kind of work with your team?
Yeah, I would love to say in 2013, 14, 15 we were in a position to lay out exactly where we thought the company would go in. This is, you know, these are our objectives. You put those and you blow past them when you’re growing so quickly, you almost, and we’re an entrepreneur. So, I’m a co-founder, I started the business. We’re not, financially back. We bootstrapped the company. So we did not come at it with a Virtual CPE firm saying, here is your objective. This is what you have to go when you’re growing so fast, it’s a mix of putting out fires and looking at opportunities and sprinting towards them. So in our early years, I would have loved to say is, we were so deliberate, and outlining these objectives and hitting them.
We were, chasing down opportunities and putting out fires and having fun doing it. I would say the transition that we’ve seen now, and maybe that’s because we’re going from 15 to four oh four. And, the Inc rating is, we’re much more deliberate about that. So over the last two years, we’ve been much more here’s objective and frankly, we have a more predictable business. I think in the early years where people are experiencing thousands of percent growth, you have a much less predictable business. I think we have a much more predictable business. And so with that, we’ve been able to outline those goals and objectives and work towards them.
What would you tell other founders and leaders that are really wanting to be, create teams that are faster growing, create this sense of work? What would you tell them that you had to let go of as you’ve evolved as a leader?
I would say for us and it continues to differentiate. Okay. I let go of a lot, it is still difficult for me on some things. What I didn’t let go of was an experience. So experience that our customer feels the experience that our team, our employees feel, the overall experience of, the business. No one wants to compete on price and have it be a race to the bottom is what I haven’t let go of. And what I think and breathe in and wake up in the middle of the night is, is how can we improve the experience, which is the differentiators is, how do small businesses experience working with us so that they want to continue doing that. That goes back to the people, right? Getting, having employees, having a team that has a terrific experience, gets them to run to work in the morning and, ideally gets them to stay, which is why we focused on such and are proud of such a low, a regrettable turnover rate.
I don’t know if I’ve asked you this, but I’ve asked hundreds of fast-growing company leaders this one question. And as you think about growing the company, what’s more important? The employees or customers?
I think, for me, no, I mean I, it sounds like it has a tagging but if you take care of your employees, you don’t have to worry about your customers. They, if your employees are happy, if your employees are empowered and trusted, they will no doubt take care of the customers better than you could ever tell them and tell them, expect them to. And, and so our focus is granted we’re, monitoring and we’re constantly evaluating our customers, but as is 100% on the employee experience because what we’ve seen in it and it works is your customers get taken care of with great, happy, motivated, employees.
Well, I really appreciate you saying that. Not that it backs up my research, but just because a lot of people will argue that it’s chicken and egg. Like it’s a balance of both. And I get it, it’s a hard question because it takes both of these team members and, happy customers, but you gotta put one first and the problem takes care of the customers. So the way I describe it is we’re employee first, but we’re customer-centric.
Right? That’s perfectly said. Your costs will get taken care of.
Well, Justin, thank you for being here. Sharing these insights on, you know, really, what does it take to create a place where people want to go to work? And I think that really is the difference because when they want to go to work, they will bring more creativity, innovation, more resilience to whatever they encounter and you sharing some of the insights of how they, you tie it to the impact that the company makes from the day to day work that they do is just spot on. So thank you for being here on the podcast.
Great. Thanks for having me talk to.
Disclaimer: This transcript was created using YouTube’s translator tool and that may mean that some of the words, grammar, and typos come from a misinterpretation of the video.
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