An Inside Look at the Peaks and Valleys of a Growing Start-up on the Rise

Thesis

Current day, 2015, we are considered to be in the prime of the age of information. At this point technology and startups are widely embraced all throughout America. From Silicon Valley to the innovation districts of the east coast most information needed to start a business is only a “Google” away. How is it possible to create innovation and maintain leadership in such a saturated market of startups? One company seems to have found the answer within the concept of these three words, “Velocity of data”. It’s a sunny Tuesday morning in August, I park my car outside of Lincoln Peak’s headquarters, a pristine office park in suburban Canton, MA just one hour south of Boston. I armed with my laptop, Dictaphone, and deep curiosity to understand how this one company overcomes the many challenges that face a small business—particularly one operating in the field of information technology. Today is the day I will find the understanding I have been looking for.

Scene

Walking to the third floor at one of the buildings in the office park I reach for a round brass door knob not quite knowing what the environment on the other side of the door will look like. Upon my entrance I am greeted by a friendly face whom I assume is the receptionist that seems to be my age or not too much older. He introduces himself and I mention I am here to see Steve Kelley for an interview. As the receptionist goes off to get Steven I take some time to scan the room while the receptionist. With a loose headcount of about 8 I notice the open office layout is quite spacious yet canvases are scattered about, one lying on a table still being worked on to my left. The canvases were painted by the employees themselves who are all diligently attending to their computers and some engaged in focused conversation. The mood is relaxing and productive. I turn around to be greeted by Steve, an at least 6 foot tall gown man with some tattoos peeking out on his forearms. He has a smile on and is happy to show me around briefly then takes me to a room with almost completely glass walls to begin the interview.

Introduction

With my Dictaphone armed to record and my laptop on my lap to take notes, I start off by asking Steve about his history and background working in business. Quickly I learn this is not Steve’s first time working in business management. He began to detail a 40+ year history of his work experience; from starting as a welder in the 1970s, to working in manufacturing, becoming a QA supervisor in the 80s, and developing a software company in the 90s where he grew the skills necessary to become a management consultant. Not many business owners can say they have had the experience of helping a company achieve IPO and this was only one aspect of Steve’s achievements in the workforce. In 2005 about 4 years after working at EventZero. Steve was introduced to Lincoln Peak Partners by Rob Rosen to help make the company more profitable. Steve had detailed specific examples of having increased a company’s profits before through the organizational restructuring he did with EventZero so it appeared as a ‘non-challenge’. As Steve began to describe Lincoln Peak Partner’s operations as an “eat what you kill” model (a method of technical sales people working the jobs they had closed sales on and keeping the majority of the money) it became easy to see why Steve restructured the operations into what he called a “delivery cell model”. The delivery cell model is when a company has a senior project manager, sales and account management person, and a technical lead. The three of these leaders are meant to share a resource pool of employees to work the projects they present and manage. The resource pool may even be utilized to cross matrix employees to multiple positions and projects. As the team leads bring and manage opportunities they can also begin to scale operations with greater ease when the cells begin to operate efficiently on their own. This enables the leadership team to focus on expansion and new opportunities rather than getting tied up with maintenance and technical labor.

Starting a new Business Venture

By the time Steve had set the precedent for the delivery cell model two of the founding partners had left the firm which did not seem to be a large issue. “[I am] results oriented. I run a meritocracy. I don’t care where you are from, I care what you do… [I have] no patience for someone who was born to a family. Let me see your code. Let me see and article you’ve written. Show me your profit margin. If you don’t have the numbers to back it up I do not care where you come from”. The transition of Lincoln Peak Partners going from four partners disagreeing upon the new structure to two partners Rob Rosen and Steve seemed to pave the way for the company to focus on growth and maximize efficiency while dedicating more capital investment to the business growth itself. At this time Lincoln Peak Partners was a consulting firm in IT services operating on the delivery cell model. The company began to shift into a product delivery company now operating on principles of JIT, a management overlay based on Agile. Agile is based upon rapid development and JIT provides management. “I’m the most relaxed guy in the world but it’s all about results. I don’t care what time you show up in the morning if you work 24 hours, 3 in the am or 3 in the pm. What I care about is you agreed to do something you agreed to have it done in a certain time and you either or it a certain time”.

Lincoln Peak Business Practices and Challenges

As our conversation progresses the company culture and ethics begin to divulge themselves. Honor, respect, and hard work. Steve cites these as virtues his father raised him with. “Honor, you do the right thing or not whether I am watching you or not”, “Respect, you treat people the way you want to be treated. We can disagree the. You don’t like the color of cane or my chair you don’t like my idea that is fine it’s not personal. We can disagree on anything. You are a good person I am a good person you treat with respect. Emotional arguments don’t carry weight”, and “Hard work, nothing is accomplished without hard work”. From human resources, labor, and company growth going further into the interview it becomes clear that these principles are deeply engrained in all of the business operations and practices. To take a deeper look into understanding how this company deals with facing and overcoming the many challenges that face many other small business I will expand upon each of the areas following areas; human resources, management, and business growth.

Human Resources

Lincoln Peak Partners, once turning into a product company changed to just Lincoln Peak. Steve Kelley and Rob Rosen facing the challenge of working in a company which heavily relies upon having a team of skilled workers have developed quite the game plan for their human resource operations. Human resource operations can be broken down into three fundamental components; Hiring, Training and Development, and Firing.

Aside from honor, respect, and hard work a fourth principle is monitored in their hiring which is “intellectual curiosity”. Steve mentioned earlier that it doesn’t matter what someone’s background is or what school they went to, if they have intellectual curiosity there is a large potential for success. Focusing on that aspect on of Lincoln Peak a 24 years old employee was able to solve a difficult math problem and get her name on her first patent. Steve goes on to further explain intellectual curiosity by referencing another employee, Paul Graham, who got a degree in organizational phycology and see’s he has a strong desire to make organizations run better and figure out how to get millennials to fit in traditional office environments.

The second component of human resources, training and development, is handled at Lincoln Peak with a continual process of management practices that are based upon the four foundations outlined during our conversation about recruiting reliable talent. “People don’t join start-ups just because they want jobs, they want to accomplish something“. “The early stage of start-up employees, they are here to learn how we build this business, solve problems, build and run company. 5 and 10 years from now they will be me. It’s not hard to motivate at this stage”.

At this point to my surprise Lincoln Peak is now established as a start-up. Upon asking why a company that has existed for many years would still be considered a startup, Steve replies, “I will say we are not a startup when people start calling us to place orders and we are not out there pushing orders.” He further asserts that when Lincoln Peak stops relying upon their existing contacts and relationships to get customers that is when he would consider the company to not be a start-up. “It doesn’t matter if you have been open for 30 years the minute you stop outbound sales you are ticking to your death”. It is easy to see that is why Lincoln Peak takes pride in its company culture of honor, respect, and hard work.

“We outsourced for an employee handbook. We lie the expectations out in the handbook. Everyone reads when they are hired. I am fair, I run a meritocracy. I measure you. Mentoring is more important than a job description. You have to have leaders.” Steve says and continues on to say “We’re laid back but it’s all about getting the job done. Ethics are about how you behave and respond to problems. Morals are what you say you believe are ethics are what you say when the shit hits the fan. That creates the culture. We represent the culture of the company which is instilled.”

Every business has to deal with understanding sometimes employees must be let go. Though Steve did not cite any examples of having to have let an employee go this may speaks to his great success and experience in business management. He points out to me there are two main reasons a business has to let an employee go; one reason being behavioral problems and the other being performance issues. Steve outlines aspects of these issues and how he would face them.

“If all of a sudden performance is bad. There is a reason… sit down with HR, talk, and figure out what is going on”. Steve mentions and it is clear t­­­­o see there is much value in understanding if an employee’s performance begins to decline there is a reason and usually that reason is a temporary challenge which can be resolved with a 90 day PIP (Performance Improvement Plan). Another factor that must be considered when performance declines is to ponder on whether the failure could have been prevented with stronger mentoring and leadership. Sometimes managers promote employees in a position that is beyond their initial capability. It takes a good manager to recognize this a great leader to ensure success, this is the idea I took away most when listening to Steve extrapolate further.

When it comes to behavior issues Steve is adamant to suggest ‘That is never a problem. Just fire them. Someone that shows up to work intoxicated or violent-- any of those are easy-- just fire and deal with it. Honor, respect, and hard work. You must defend that if you cross those lines you are fired. We have a culture of a company we must defend that’. The act of hiring is 10,000 dollars Steve says attributing these factors to that number; taking the time to search, placing the ads, paying the associate, as well as, orientation and training which takes about three months. I began to understand that if an employee’s behavior is threatening the culture and production the cost could potentially be much more than it is worth to keep the employee on board.

Management

Working in a management position myself I was excited to hear Steve Kelley share his experience facing and overcoming challenges in management now knowing he is a truly seasoned management professional. We began to tackle five aspects of challenges in business management and how that relates to Lincoln Peak’s operations; production, sales, clients, cash flow management, and balancing everything. When the conversation was done I was left with an understanding that with a proper research, planning, and leadership most managers can come out successful in the face of adversity.

Production Challenges

When it comes to production, “Inventing a product or service. The idea and concepts are easy. The customer acquisition, building of a brand, and getting repeat business is hard” Steve said and proceeded to reference how Mickey Rooney and Judy Garland had a TV show where they put on plays for folks in their neighborhood because they were full of ideas and mentioning that is how some people approach starting a business. Elaborating by stating that ideas are easy but when you go out to start a business you must do research, have a solid plan, and really understand the needs of your customers to ensure your ideas have “legs”. “The purpose of a company is not to get a job but create value” and “Start companies for the liquidity event for the terminal event”. These were two quotes I felt were significant nuggets of wisdom in running a business by creating and working towards tangible goals outside of the standard satisfy the consumer model and what would really give an idea “legs”. The model of working only to maintain a satisfied client base was something I had read in Forbes in an article about motivating employees. These pieces of information have lead me to believe if I were to ever start a business that is what I would set forth to do as well.

Challenges in Sales

Many businesses face challenges around sales. Working in sales is something I have much personal experience with from retail, insurance, and working in the service industry I have always understood the biggest challenge in sales to be believing in the product. Lincoln Peak being a Clinical Research Organization (CRO) health information company it is easy to remain positive your product will be beneficial. Steven described his experience researching the market and mentioned the clinical research health care was estimated to be a 30 billion dollar market. At this point I had just discovered that collecting market research before starting a business venture could be a detrimental aspect of growing sales. “Good marketing beats good technology any day”.

Maintaining and Developing Clients

On the challenge of maintaining and acquiring new clients ­the first thing to understand is that every business’s competitors wants their clientele. “We created a high energy team. Set people up in hotels in Boston taking 8 hours a day, 5 days a week, to talk to customers and figure out their needs” Steve said. It’s clear that focusing on deliverables using JIT management, understanding their client needs, and managing relationships using Lincoln Peak’s unique brand of company culture are some of their strongest assets in maintaining and acquiring new clients. It seems to be a clear formula for maintaining business while creating the possibility of referrals needed to boost company reputation.

Cash Flow Management

The biggest challenge that a small company in constant growth relying on the capital of its leadership can easily be identified as cash flow management. It doesn’t matter your skill of accounting when the business model revolves around growing through contract work. This creates a disruption in the possibility of a business-as-usual routine of balancing a budget. Steve mentioned ‘[I may] close a deal one day and need to hire someone. Even though service won’t be delivered for 3 months, I have to hire someone now by searching for them and pay them’. This is a constant challenge. However, as the business develops Steve cited several examples on how to increase profit by keeping revenue the same. For product development, as the product goes through a maturation cycle where it no longer needs to exist in R&D but rather a maintenance cycle the bulk of the labor can be passed down to less skilled workers requiring less pay.

Balancing Business Operations

I live in a family that is primarily comprised of business owners and managers. I have worked with managers. Never had I had much of an interest in being a manager because I know with great responsibility comes the ever increasing value of time which is always counting down and pleasing clients, customers, and/or consumers can become difficult when their demands go beyond your initial expectation(s). I asked Steve when the last time he took a vacation was and he mentioned that time off doesn’t exist for him and that he probably hasn’t taken a vacation in 4 years but his family are able to go on trips without him. This did not sour our conversation as it is clear he believes in what he is doing and is working towards the “liquidity event” where he will one day retire. After the interview I learned that this may be a challenge some cannot overcome but it doesn’t have to be a negative aspect of business management.

As Molière said “The greater the obstacle, the more glory in overcoming it”, to me this means achieving the success of managing a business until retirement makes vacationing all the more fulfilling. The secondary challenge of balancing business operations is dealing with difficult customers. When I brought this up to Steve his reply was simple and well put: “That’s life you shouldn’t be in business if you can’t deal with demanding customers. You don’t get to judge them if you took their money. Customers are demanding that is a fact of business”. Sometimes balancing business operations means understanding that your role is something more significant than making money and sacrifices must be made.

Leadership

Management is only one aspect of running a business. The second phase is leadership, which in my MGT 1001 class I learned is an important aspect of running a business. Managers specialize in making sure things get done. A leader will be the one who can define the projection of the company, create business goals, and pave the way for those goals to be accomplished. Steve says “A manager can give action items list can start at the bottom and make sure everything is done. Gets it done. A leader looks at and says no if I do this task first then it’s easier. 10 hours of work gets done in 6. A good leader figures out how to get 1 + 1 = 3. I like to create leaders. I am a leader.” Although a great manager is not always a great leader, a great leader still needs a strong foundation of management skills to foster a successful team. I have identified three areas of Lincoln Peak’s success in leadership which could be used in similar business operations to further develop and overcome leadership challenges. These three areas are; predicting the market, changing the market, and understanding your strongest competitors.

Predicting the Market

Predicting the market is something I slightly referred to earlier when touching upon cash-flow management and managing sales and marketing. However there is so much more to that. “We should never be against the government funding colleges and university for research. This is how startups happen, create jobs, turn large, and develops future of America. Research creates student entrepreneurs or creates businesses when entrepreneurs buy the research”. This is a powerful statement and that of its contents had never held any weight in my prior education of management or leadership.

Bill Gates (of Microsoft), Jerry Yang and David Filo (of Yahoo!), and Mark Zuckerberg (of Facebook) were all famous examples of students creating a business amidst focused research and development. It became clear after taking to Steve that buying research from colleges and universities, as well as, doing your own research is critical to ensuring you have a competitive edge to present the possibility of innovation to your development team. That is precisely one of the things that Lincoln Peak did as a product development company. This enables them to have the advantage of knowledge in trends to predict and develop their commercialized CRO software product.

Changing the Way the Market Operates

Having knowledge that competitors lack is something that only gives an edge temporarily. To solidify your position of leadership against your competitors it became clear holding a patent can present to be another crucial aspect of leadership. Luckily, Lincoln Peak being a small startup maintains its current positon as a leader in the development of CRO software by creating a patent. Once the patent was created, approved and funded by the FDA, and initial code was written it was determined this was a product that would change the CRO (Clinical Research Organization) industry. The FDA now uses the product Lincoln Peak patented called POPMEDNET to increase efficiency in their (5 phase) process of researching, approving, and releasing a drug to market. POPMEDNET assists in determining statistical probability of adverse effects by increasing the velocity of data which can be translated as: ‘getting more information to researchers faster’. This outline of Lincoln Peak’s foundation of innovation and securing rights to intellectual property displays a clear example of how small companies “can create innovation and maintain leadership in such a saturated market of startups”. The real challenge that comes with this as Steve says is “Now we have to tell people there is a new way of doing things”. That is where Lincoln Peak’s marketing department and reputation will be crucial in removing this obstacle.

Competitors with more Capital

One common challenge is knowing your strongest competitors. The quickest way to identify a competitor is one whose capital is larger than yours. Steve referenced I2B2 a company that created a tool for facilitating online research. I2B2 was acquired by Deloitte a much larger company who now uses I2B2’s tool to solve problems for people. Although I2B2’s tool wasn’t built for CROs and couldn’t duplicate the patented technology Lincoln Peak has exactly Deloitte’s competitive edge is capital. They have the ability to heavily invest in marketing. Steve told the story about how IBM was looking to partner with an operating system developer to increase efficiency commercial offices financial departments and how good marketing won over good technology. The story goes that Bill Gates of Microsoft had a weaker operating system but with the promises of working on features and maintaining a relationship DOS (Disc Operating System) became the initial OS (operating system) released to the commercial market. In summary Lincoln Peak has years of experience working in health information systems, holds a number of compliance standards, is approved by the FDA, and maintains a great company culture based around strengthening relationships. There are somethings money cannot buy. However, there may be a point that those pillars of strength are not enough and Steve and Rob cannot run the company forever. It may be a viable option one day for the success of Lincoln Peak develop into merging, acquiring, or being acquired by another company.

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