John SmallMtn (01:17)

Welcome to another episode of Founders Growth. My name is John Hill, aka SmallMountain. I’m the founder of Adapted Growth. Today we have a very cool guest on the show. We have Chris McKee on the show today. Chris McKee is the founder and board chairman of Venturity. I would love to jump in right there because we’ve had all sorts of founders on the show. You’re the first person who has been in this board chairman seat, and I would love to talk about why the board exists and how that is helping you. What was the original idea behind wanting to bring in a board?

Chris McKee (01:50)

Yeah, so it’s a great question. I founded the company back in 2001 and was, whatever you want to call the title of president or CEO, or I was managing partner at one point in time for almost 25 years. Really, about three years or so ago, I realized it was time for me to hand off the reins. Moving in, I’m always going to be founder because, unfortunately, you can’t shed that title once you’re the founder.

John SmallMtn (02:21)

Mm-hmm. I mean, if it works, yeah, you’re forever that founder, right? Some people don’t get that tier, though.

Chris McKee (02:28)

I am, I am. But I had a longtime collaborator, Deanna Walker, who’s worked with me ever since really about two, three years into the firm’s existence. She was a natural to step into the CEO role and was ready to do so as well. I was ready to step down from the CEO role, so we did about a year transition. We planned it for about six months, then rolled it out to the team and to the marketplace over about six months. In December, December 1st of 2023, almost two years ago now, I handed off the reins to her and moved into the board chair role.

That was a newly created role for us. It was something that Deanna and I worked on together, but she really wanted to have a role for me that was vital and could be a sounding board for her. Neither of us wanted me to be involved in the day-to-day with Venturity anymore. I was ready to move on to my next adventure and felt like it was the right thing for me to not be involved in the day-to-day in order to give her the space to be the CEO. We created the board chair role, and for where we’ve grown to as a company, it was the right time to do that as well.

John SmallMtn (03:49)

Cool.

Chris McKee (03:50)

You and I have talked about our employee stock ownership plan, and over time we’re going to need a formal board, a larger board. It’s starting out with just me, and then this year in ’26 we hope to add an outside director. Then I’ll work with him or her to decide how we grow the board from there, along with Deanna as well. She’ll sit on the board as the CEO.

John SmallMtn (04:04)

Whoa.

Chris McKee (04:15)

So that’s kind of how the board chair role came about. It was several things that converged at the same time. It’s a good role for me. We had a need to find a spot for me as I was making this transition, and the company needs to start putting a board together. As we’re around $14 million now, we should grow to $20 million over the next few years. As we start to grow, we need to formalize those governance structures as well.

John SmallMtn (04:43)

I think I’ve got a bajillion questions off of that response. Before I dive into those, let’s go back a little bit. I don’t want to make the assumption that everyone knows who Venturity is and knows who you are. Can you give us the 30-second commercial on Venturity and who you help real quick?

Chris McKee (04:46)

Yeah. Easy to do. We’ve been around, I guess it’ll be 25 years in January, and really started out of something I was doing around 2000, 2001. My background is I discovered accounting early in life in high school and then got a degree in accounting from Ole Miss. After graduating from Ole Miss, I came to Dallas, took a job in Dallas with one of the major accounting firms, worked there for five years, and then wanted to be more hands-on with accounting.

I went to work for several different companies in their accounting departments, working my way up through the accounting chain of command, if you will, and really enjoyed being a controller and running accounting departments. The last company I was with in ’99 ran out of funding, so I found myself on my own. While I was looking for a full-time role, I was finding a lot of opportunities to help people clean up their books and catch up their books. I realized that small and medium-sized businesses really struggled to get their accounting done well.

I was talking with clients, and some of my clients said, “Can you just keep doing our accounting rather than just clean it up? Can you hire people that work for you to do our accounting?” That evolved into accounting outsourcing. We got a few clients and hired a few people, and then got a few more clients and a few more people. Now we have almost 50 folks here in the US and over 80 folks in India, which has been an interesting part of the journey as well.

What we do at our core, if you think about a company, most companies have an accounting department or an accounting person. If you’ve got a one or two-person accounting department, it’s hard to attract and retain good, qualified people for long in that situation because they’re going to be like me—I moved from company to company so I could move up. If you’ve got a small business, even if the business doubles in size, that person is not going to go from being a staff accountant to a controller in five years or something like that. They’re still just going to be your accounting person.

Rather than struggle to attract and retain those folks in-house, and to supervise them and motivate them and all of those kinds of things, it’s so much easier to outsource that function, just like we do with our technology function at Venturity. We don’t have a technology department. We use a managed services firm to do that work because there’s no reason to own those resources in-house. We get a broad spectrum of technology expertise for less than the price it would cost us to own one person in-house. That’s similar to what we’re doing for folks on the accounting side. Hopefully that gives you an idea of what we do and what the journey was to get there.

John SmallMtn (08:02)

That’s interesting. I have some questions off of that background. You were saying that you were looking for another job, but you kept running into projects and opportunity and everything. Was there a major decision state of, “Okay, I’m going to not look for another job,” or was it kind of just falling and falling and falling, and then all of a sudden there’s some clients? How did you approach that time? Especially right now with all the layoffs and everything, a lot of people are thinking, “Do I go dabble? Do I go freelance? Do I go start a business? Do I just keep looking?” How did you parse that? How did you figure that out?

Chris McKee (08:43)

Yeah. This was ’99, and believe it or not, email was still a relatively new thing in those days. I was emailing everyone that I knew and letting them know that I was looking for some sort of senior finance position, VP of finance, or larger company controller or CFO. A lot of people just said, “Well, I don’t have one of those, but what I’ve got is a mess I need cleaned up. I’ve got a friend who’s got a mess.”

I found out I really enjoyed swooping in and helping people. I could make sense of the chaos pretty quickly and put together a plan to clean up their books. I said, “Here’s what’s messed up. Here’s what we need to do. It’s going to take me about this amount of time. While I’m here, there’s some process things that I could help you with, and we’ll get those done too. Then I’ll hand it back over to you guys and you can keep doing it.”

That was an easy decision, because once I started getting more of that work, I started out pricing it here, and then people kept calling. So I priced it here, and people kept calling. So I priced it here, and it was an easy decision because I was making more money than I’d ever made in my life doing these projects. That was easy.

It was two years later when this idea for outsourced accounting started to crystallize that I had to big-boy it and make it into a real business. I was going to have to hire people and be responsible for their care and feeding, and make sure they’re busy and find work for them. As I expected, my income went down for a period of time, because that’s typically going to happen. It’s not just me—I’ve got to find work and let them do the work, and then I’ve got to go find more work.

That was the harder part. The decision point, and I talked it over with my wife, was, “I can keep doing this by myself, but I’m not building anything of value. I’m just putting food on the table, which is fine, but it may end at some point. I think there’s this opportunity out there to really build a business around this. It will be hard for a period of time, and I don’t know how long that will be, but if we can build it to a certain point, then it’s something that may have some value to someone else. I could potentially sell that or have enough people working for me that I’m not working 80 hours a week, and I can do the accounting work that I want to do, sort of lead the firm, and have a little better balance with all that as well.”

I had a friend doing it with me at first, and we did our first proposal. After we did the proposal, I called him up and said, “Hey, I’ve changed my mind. I’m not going to do it,” because it was intimidating. It was a little scary to start a business. He talked me off the ledge. He was there for a couple of years, and then he wanted to go off and do something else, so then I took it from there.

There were two decision points: one, sticking with that project work, which was easy because it was lucrative and fun, and I was just myself. I was the guy swooping in and being the hero, and that was all great. Starting a business was a whole different basket of tricks, so that was a harder decision. It wasn’t all sunshine and rainbows. There were a lot of times where I regretted that decision over those years, but looking back, obviously it paid off financially. From a personal development standpoint, the things I learned along the way have been incredible. The people I’ve gotten to work with on the client side and the team members I’ve had reinforced that it was a good decision.

John SmallMtn (12:52)

When you think about it, I love the focus on the client work first and projects. A lot of people try to rush that step when they’ve got some good knowledge and domain expertise. I did a similar thing of putting myself out there, taking calls before this version of the business came together. It’s super helpful because you end up figuring out all the things you don’t want to do and where you’re not going to be strong.

Chris McKee (13:10)

Absolutely. You prove that there’s a market there for it. I didn’t go out on my own with the intention of starting my own business, but more and more stuff came along. I penciled out some numbers and said, “Well, if we could price it at this and hire people with this, there would be a little bit left over for me and this could be a business here.” There was a discernment process there, but it was more clients pulling me in that direction versus me trying to push a product that I had in my head on them, like, “Here’s something that I think is a good idea, you should buy this.” It was more of, “Here’s what we do,” “Gosh, I could use some of that.” I thought to myself, “There could be something here.”

John SmallMtn (13:58)

I love that you said that. What people think that they’re hiring me for is to be that bridge and force this thing that they created down the throats of other people to get to the yes. If you start with their perspective, their needs, and their desires, you don’t even have to be all that great of a salesperson; you just need to be consistent, right? It takes all the pressure off if you’re starting from a place of reality of what people are really concerned about and what they really want. Client work gives us that opportunity if we’re not getting ahead of ourselves. It’s easy to want to put yourself in this “I’m a CEO now” box. Okay, great—how many people have you worked with?

Chris McKee (14:32)

Yeah. I was the opposite. I am not an entrepreneur by any stretch of the imagination.

John SmallMtn (14:44)

You said this and you buried the lead, because I was going to bring this up. You said that in our call before this, and it shocked me to my core to hear you say that you don’t think of yourself as an entrepreneur.

Chris McKee (14:48)

Hahaha! Well, I just happened into a business. I often refer to myself as accidentally ending up starting a business because I got laid off, started helping people fix accounting, and that turned into a business. I never really said, “Hey, I’ve got this great idea for a business, and I’m going to go do this.” I think that’s what an entrepreneur does.

I started one business. I’m an accountant who started an accounting firm; that doesn’t feel very entrepreneurial to me. If I built a chain of 10 restaurants, that would feel entrepreneurial to me. But I created a great place to work for me in a sense, with the expertise I already had, so it’s worked out.

John SmallMtn (15:24)

That’s so funny. For a long time, I had the thinking that if I was not creating something like Facebook, something technical, or a piece of software, those were the entrepreneurs and everyone else was just not good enough to be at that level. That was a very limiting perspective because I’m a sales trainer. At the end of the day, a lot of people think, “Well, John, that’s not very entrepreneurial. Sales has been around for a long time.” Well, we’re doing it differently over here with intention and purpose. Making that shift for myself of, “Hey, this is entrepreneurial, this is something I’m trying to do,” was ultimately helpful for me in changing my thinking and getting out of my own way.

I also think that some people take that too far. They get so wrapped up in founder stuff and CEO stuff that they’re not doing the basics of driving this whole thing forward, because they’re playing the founder role a little too hard.

Chris McKee (16:23)

Yeah. You know, I was around in the dot-com days and saw a lot of that kind of thing. We had hard early client retention decisions around that: “Hey, does this guy really have a business, or is he going to be able to pay us? Or should we go work with some people who are in HVAC? They’ve got a real business and they need accounting.” We leaned a little more that way than we did toward a lot of the new and interesting ideas, and we were pretty selective about that.

I don’t know that I’m a great entrepreneur—I don’t have all these crazy ideas—but I think I am good at running a business. There are some people that are entrepreneurs, and there are some people that are guys that run a business. I’m pretty decent at running a business. I understand the financials, obviously, but I’m also good at learning technology and understanding people issues. I guess I’m also good at learning and absorbing. I’ve learned enough about sales to understand a little bit about how we need to position ourselves. I’m good at drawing on the expertise of others, being the hub of that, and saying, “Okay, from what I hear you saying, I think we need to do this.”

I’m not that entrepreneur with that clear vision for “this is what we’re going to go do and we’re going to go kill it.” I’m like, “Yeah, this is a business that we can have, and I can be pretty good at running this business.” That’s sort of who I see myself as, for what it’s worth.

John SmallMtn (18:03)

I love that. I’m going to zoom in here a little bit because I’m curious as to your thinking on this. I love how you said that you’re good at running a business, but you don’t see yourself as an entrepreneur. Then there’s the whole thinking of visionaries and integrators and things like that. Some people take that a little too far—they’re just like, “I can’t even show up two days in a row, but I got a great idea once every six years.” Do you think that the entrepreneur should try to be the good business owner? Do you think that they should be together, or is it just more important to know who you are, hire intentionally, and build your business around your weaknesses and your strengths? What would you tell someone else to do?

Chris McKee (18:40)

Wow, that’s a super interesting question. I’ve had a lot of peers that had businesses similar size to mine because I’ve been in a couple of peer groups. I think the answer is a little bit different based on the bag of tricks that you bring to the table. Both pieces are necessary.

This visionary/integrator terminology is grounded in that Entrepreneurial Operating System, the EOS model. While we don’t use it at Venturity, I do think that framework gives you a great language to talk about these things. I would say I’m probably 80% integrator, 20% visionary. But for the type of firm that I was creating, that’s probably enough. Most of my fellow accountants—I put myself in this bucket—are probably 100% integrators, 0% visionary.

Rather than have all these ideas but only show up two hours a week, I’m the other way around. I’m there every hour of the week, but I have two ideas a month or two ideas a year. I like to say I’ve had probably like two more good ideas out of the hundreds of ideas I’ve had and we’ve implemented. I’ve probably had maybe two more good ideas than all of the bad ideas I’ve had, and that’s why we’ve been successful. I’ve made more good decisions than bad ones by about this much, because I’ve made a lot of bad ones along the way as well.

Your question is good. I think it’s a different answer for everyone. For someone who is maybe 70-30, not 80-20—I may not be giving myself enough credit—but someone who has too much of one or the other, it’s often good to find a partner or hire a right-hand person who you partner with that can complement you in that way. It really is going to be different for everybody.

People starting a business that can operate in both of those places can say, “Okay, I’ve got this idea, and here’s some other ideas around it. Let me take this and run with it.” Then when it gets to a certain point, “Okay, I’ve got another idea that builds on that,” versus, “My gosh, I’m going to start this, and then we could do this, this, and this too, and we could do this and this.” Okay, but let’s take the first couple of things and let me get those.

I think somebody who has a good balance of those things, it makes it easier for them because they can do it a little bit on their own. But if you’re too far one way or the other, it’s oftentimes good to have another collaborator with you. I was really glad that Deanna Walker came on board with me after two or three years because she’s a little more visionary than integrator, so we had some healthy tension between us. I couldn’t have brought her on the first day because there wasn’t enough work there to do it, so I had to deal with the bag of tricks I had, and I happened to use those to get to a point. Then I brought her on to be our first salesperson, and it sort of went from there.

John SmallMtn (00:21:39)

Yeah. I love the thing that you said in there that I think most people would miss around the idea that you didn’t need someone to be more of an integrator than you are, right? The awareness that you’re good at the day-to-day, you enjoy the day-to-day, right? And so then that leads to bringing on someone who can bring more of that visionary thing. I think that awareness is kind of flooring. Were you looking at her to be more?

Chris McKee (00:22:00)

No, it was much simpler in those days because we had like eight employees or something. I was just trying to stay in business. But I was at that point—there’s a book called The E-Myth out there that’s really good about it. Someone who’s a technician and really good technically at something, good at a certain skill, and they go out on their own and they’re really good at that skill. Then the business gets to a point where they have to start making some decisions about, “Where am I going to spend my time?”

In my case, my skill is accounting, and I had to make some decisions. We were to the point that I couldn’t go out and sell the accounting, and then also help do the accounting back in the office. We didn’t have enough people to where I could—I had to pick one or the other. I either needed to hire somebody to be the person that ran the accounting shop while I went off and did sales, or I had to hire a good salesperson and I would run the shop. It was as simple as that.

I looked at myself and said, “Look, I’m going to be much better and our clients are going to be much better served if I’m the inside guy and I hire somebody else.” Because my background’s not sales, I should hire a salesperson, someone who has that. Through friends and referrals, I got referred to Deanna, and she was really interested in what we were doing because nobody else was really doing it, and she wanted to be the salesperson for it. She had a sales background, so she was more dynamic and more of the visionary type, obviously, than I was as the doer guy. I got lucky. I was just trying to hire someone to do the thing that I wasn’t as good at, but she also brought an additional bag of tricks with her in addition to selling.

John SmallMtn (00:23:57)

That is very, very interesting. Going back a second, you were talking about running the projects and then there was the decision to make it bigger, to build the team, to do the bigger thing. Was there any resistance to that? Coming from accounting and looking for efficiency, small is tight, right? Great margins, a lot of control, not a whole lot of things. Did you have any resistance of, “Well, maybe I should keep this small,” or was it like, once you saw it, you were like, “Let’s go”?

Chris McKee (00:24:29)

I definitely went through that thought process. There wasn’t much hesitancy about continuing to grow, but I did have a gut check where I said, “Well, I could just keep this thing small, not hire a salesperson, just do both, and we’ll have five or eight people and a few clients, and that will be something. It’ll pay the bills for me, and that’s manageable for me.” I said, “Is that what I really want?” I said, “No, I think there’s really a market opportunity here, and there’s an opportunity for me.”

A big piece of starting the business too was creating a place where people would enjoy coming to work. I brought on a lot of people who were not the public accounting people like I was when I got out of school. There were tons of accounting people out there that got an accounting degree and just went to work for small companies, and they were sort of the lone ranger. I created this place where people could come in, we could all be accountants together, and we could put training programs in place. I said, “No, we’ve got something here that can not only serve more clients, but be a great place for more people to work. There’s not anything like this.” People are either working at a big public accounting firm or they’re working inside accounting departments. I could bring them in, invest in their career, have a career path for them, and we could all do this together and it would be fun.

It was pulling me in that direction. I did have a moment where I was like, “Do I really want to do this?” But I didn’t have a whole lot of hesitancy around that. I thought for the clients and for the people, to create opportunities for the people, I can do this. I’m at a point in my life where I can invest my energies around this. I can see a path to where this will be a really cool thing. I probably should have thought about it more, but you know.

John SmallMtn (00:26:19)

An interesting question here that I’m curious to get your take on: talking about the idea that you don’t really see yourself as an entrepreneur, right? You just did the thing at a bigger scale. That’s how you talked about it in our previous call. Knowing that accounting is a thing and knowing that there’s a need for it, I imagine it’s probably not as crazy as starting something completely that’s never happened before. Okay, but I’m curious: was there a tier to where it’s like, “Okay, this is working for us,” not just because—if it’s a known thing, right, attorneys, dentists, things like that, there is pattern and precedent of people being in this space. I’m curious if there was still a moment where you hit a plane where you’re like, “Okay, this, like I thought it would work, we’re good”?

Chris McKee (00:27:14)

Yeah. Wow, that’s another interesting question. I would say the market has developed in an interesting way. When we first started in the early 2000s, there were people who, when I explained it to them, were interested in potentially outsourcing their accounting, but we had to do a lot of education. Technology had really just gotten to the point where you could remote into people’s accounting software and do the accounting remotely, and truly have it be an outsourced solution.

There was a lot of education that had to happen. Some people said, “No, I need my John Hill sitting next to me doing my accounting for me. I can’t let that go.” So it was a—yeah, how does that feel? A little icky?

John SmallMtn (00:28:01)

No one’s ever said that about me, though, Chris, so thank you for being the first. I appreciate it. I’ve never been here before. I might have to journal for a little bit after this interview.

Chris McKee (00:28:11)

Yeah, I hear you. It was a slow burn during the first decade. Then when we got to 2009 and ’10, it started to be more widely accepted. Accounting firms were having departments that did what we did, but we were still the only kind of pure-play outsourced accounting group. Then we started getting phone calls that said, “Hey, I want to outsource my accounting. I’m just trying to figure out who’s going to do it, and I heard you guys are good.”

That was a relief more than anything. It was like, “Jeez, it’s not an uphill battle with every client.” Then in post-COVID—and that momentum continued to pick up—post-COVID, once everybody had to work from home, suddenly the CEOs had their John Hill, and then John Hill’s at home doing the accounting. They suddenly realized, “Well, maybe I don’t need John sitting next to me. What’s John doing? Do I need IT people and accounting people sitting in my office, really?”

As we were in COVID and coming out of COVID, there was really little resistance to the idea of outsourcing your accounting because people are like, “Well, I don’t really care. My accounting person is sitting at their house anyway, so why don’t I just professionalize it with you guys and you can do it out of your office? I can have a firm do this rather than a person that I’m beholden to, and if they decide they want to go work from home for somebody else, they’re just going to go do that.” That really is how the market has turned 180 degrees over the course of our existence.

I would say the moment I sort of knew: Deanna came on board as our salesperson in late 2003, and 2004 was slow. It took us—in fact, we got out over our skis, and I had to borrow some money. We kind of got to the point where it was like, “All right, if we don’t close two or three clients here in the next 60 days, I don’t know if there’s a business here.” Then we got those two or three clients closed, so that was good. But I was really close to, “All right, the line of credit’s maxed out, I’m kind of done.”

Then in early 2005, in March 2005, we closed five clients in one month. That was the moment I was like, “Oh, okay, all right, we’re over the hump.” We’re making money, paid the line of credit back, and then it was one to two clients a month, steady after that. We just started growing nicely, which was really good. There was some real engagement with it. That was probably the moment where I said, “Okay, we’re over the hump.”

John SmallMtn (00:31:02)

Whoa. That is fascinating. Going back to that time that Deanna’s on board: there’s always a sales slump when you bring on someone and you take the founder out of the sales seat, even if they’re not great at it, because they’re the founder. That’s just normal for how that happens.

When you’re talking about the education, I’m a big believer that it makes sense to educate people before you try to sell them so that way they can make a discerning decision. Were those deals just on that kind of educational tip, or were they new deals where something changed in how you were talking about it—your sales process, your outreach, labels, or anything?

Chris McKee (00:31:56)

No, I don’t think so. I think this would be a good question for Deanna if she were here, because she was the one that was actually out there more in the marketplace. I was still doing a lot of networking. She and I were doing the sales together because it helped to have the founder there sometimes, but she was the one that was really building her network. I think a lot of those things started to really pay off.

She came from a larger investment banking background, very different client. She had been a stay-at-home mom for three years before coming back into the workplace to work with me, and she was part-time as well. It was really a six-to-nine-month process of building her sales process and her network. To her credit, she was very intentional about all those things, and I think what happened in early 2005 is those things started to pay off.

Sometimes deals just come in bunches. You’ve talked to a salesperson—suddenly deals come and then it dries up. After that, sales were sort of one to two a month, and that’s very digestible, but that’s not the way sales usually works. It’s like nothing happens for three months, and then five clients show up and you’re like, “Hey!” It was a good education at that time as well.

John SmallMtn (00:33:17)

Interesting, okay. I have some questions for you because I’ve noticed a couple of things. You’ve not mentioned the word “fractional” at all. You’ve said “outsourced accounting” a couple of times. What’s the difference in your opinion? Is it an intentional split? Do you see them as different modes?

Chris McKee (00:33:57)

No, I really don’t. “Outsourced” was the term that people used in the early days with us that seemed to—they were able to get their head around it. The lightbulb seemed to come on more with that word than with “fractional.”

At that time, the idea of fractional CFOs and fractional C-level resources—Tatum was really growing quickly during that same time that we were coming online, so they tended to use more of that fractional deal. Here’s where I would say they’re different: when I think of fractional—and someone listening to this may scream at the screen later, but this is the way I see it for what it’s worth—we also offer CFO services, and it is a little bit different. They really do get sort of one person, and they get a piece of that one person in our CFO practice. A lot of times they go on-site and they’re there Monday for this client, Tuesday and Wednesday for this client, and Thursday and Friday for this client. You are buying a certain amount of that person’s time.

With outsourcing, we really became the accounting department for our clients, effectively 24/7/365. We’re their accounting department, but they don’t have an accounting department. Not all of our clients get a controller, assistant controller, and a staff accountant. They get how we mix up that work, and they obviously get a portion of that person’s time, but that department is there every business day, every day of the year. If they have a problem, they just shoot an email or pick up the phone, and we’re their accounting department.

“Fractional” feels more like I’m available a fraction of the time, but we’re available 100% of the time. My team is working on five, six, or eight different clients all at the same time. Three of us are on a team together, and I’m working on this, you’re working on this, and you’re working on this for different clients. But if a client calls, we can drop what we’re doing and work on that thing we need to work on for them. That would be how I’d draw the distinction. I don’t feel like we’re a fractional accounting department, because you’re getting a whole department the whole time. It doesn’t feel fractional to me, but I’ve never thought about that before. That’s a good question, and that would be how I’d answer it.

If you would like me to answer more questions with yes or no, because I feel like I’m giving you all this information… does he really care about it?

John SmallMtn (00:36:22)

I respect that. Thank you, I appreciate it. The reason why you made it through the vetting process is because you’re not just telling me yes or no. This is exactly what I’m looking for.

I’m changing topics here just a little bit: Do you think that there is a difference between sales and business development?

Chris McKee (00:36:54)

No, I’m just kidding.

John SmallMtn (00:36:54)

Thank you. I was so worried that you were going to be like, “Well, John, they’re very different,” because I find that most people want the business development role and title because they’re looking for that mark, and they’re looking for unclear goals and unclear things. What it leads to, at least in my experience and talking with lots of people about it, is it leads to more anxiety because of how loose it is.

Chris McKee (00:37:24)

We have always used the terms interchangeably internally, but positioned our team members as business development people because we’re selling professional services, and that’s the more typical term. We try not to get too balled up in some of those terms, because whatever makes the lightbulb go off with people helps them understand it a little bit better. We found that our sales team got more leads when we called them business development people than when we called them salespeople, but there was never any confusion on their part. They just knew they needed to go get deals done. Whatever we called them or they called themselves, we didn’t really care about that very much.

I do think there’s a distinction between sales and marketing, and that’s probably an obvious thing that everyone listening to this knows, but I don’t know that when I started a business I necessarily knew that. They are two different expertises, and they should complement each other really well and work together very closely. We had to start out with sales because that’s all we could afford to do, and now we have some marketing to go along with that. We’re really starting to do more of that, but I have respect for both roles because I have been responsible for those things over the course of our existence.

I was never as good at it as other people. I was serviceable at it, but I was always excited when I could bring people in that were really good at it, turn that over to them, and we could work together to figure out how they could be successful.

John SmallMtn (00:38:57)

Absolutely. I appreciate that distinction. I think of marketing as a different skillset with a big overlap of sales, but fundamentally different in the craft and what leads to high performance in that craft.

A lot of people struggle with bringing on sales—it’s a very well-known thing—and even in professional services, a lot of people struggle with this. A little bit of backstory for people who don’t know me or know you: we’re actually in the same metroplex. We’re in DFW. I’m on the Fort Worth side, and you’re on the Dallas side. When I hit the small business scene and started doing networking, I kept hearing this one name of this person I needed to meet: Abby Fuqua, Abby Fuqua, Abby Fuqua. She was coming up in all of my conversations. I was trying to spend most of my time in Fort Worth because I’m trying to be efficient—I don’t want to drive all the way to Dallas if I don’t have to.

What was flooring to me is that after I met her and finally was able to have a conversation with her, it was like, “My gosh, this person is everywhere, but she’s good at this.” It’s not just that outward, gregarious, “I’m friends with everybody” kind of thing. She’s able to do that, but there’s some drive behind that person. You feel it if you’re savvied up around sales and marketing and growth and doing some of these things.

What do you look for in a salesperson? Because you talked about your new CEO and how she came on and was able to help you out, and Abby’s a force of nature. Anyone who’s networking inside of DFW knows who Abby Fuqua is, or else you’re not serious. What have you found? What have you learned? What tricks have you discovered? Because you’re batting a thousand right now compared to most people that have never been able to do it at all. How do you think about it? What makes you different? How do you approach this differently than everyone else who is endlessly struggling with it?

Chris McKee (00:40:57)

Look, I haven’t always gotten it right. We’ve probably had four really good salespeople of the caliber of Abby over the course of our existence. Certain Abby is—I agree with you—is amazing. What makes Abby successful is she’s a really good person underneath it all, and she enjoys helping other people out. That help could be helping prospective clients find their way out of the accounting woods and craft a solution that helps them. Or it could be helping John meet the right client for him, or meet somebody else that can refer him to the right client for him. She does it in a very selfless way because she’s just a nice person.

John SmallMtn (00:41:37)

Mm-hmm.

Chris McKee (00:41:52)

I think all of our best salespeople have really been that way. It’s paired with her, with our best salespeople, and with Deanna. Deanna is an incredibly compassionate, intelligent, insightful person, and a really nice person as well. Underneath it all, they’re competitive, driven people, and they want to close deals. They want to help the company grow. They want to help people find an accounting solution.

It’s that drive paired with just being a nice person and a good person. In 20/20 hindsight, I’ve looked at how our culture has developed. At some point along the way, I said, “Look, if you’re a nice person and you know how to do accounting—you’re good at accounting—we’re probably going to hire you.” That’s how we’ve built our culture: people that are really good at accounting and are really nice people. It’s hard to find those people, believe it or not.

That’s been a theme for anybody that works for us, from our office manager to our sales team to our person who’s the head of recruiting. They’re good at what they do, and they’re also just nice people. They don’t come at it with an ego need to get it done. We’ve probably had four really good ones over the years, and then we’ve probably had five or six that didn’t work out. So we’re not batting 1,000—probably batting .400, which is still pretty good.

John SmallMtn (00:43:26)

Still pretty good. You’d still be in the pros.

Chris McKee (00:43:34)

We’ve tried to put some tools in place. We have a really thorough hiring process for everybody that comes on board with Venturity. We use a Topgrading model, so that’s true of everybody. We also use a tool called Culture Index, so it gives us a real window into whether this is the kind of person that likes to do the type of work it takes to be a good salesperson.

On the sales side, we use the Sandler training method, so they’ve got some testing they can do around the alignment of people across 30-something characteristics. We’ve used all those data points to try to get a composite of somebody. Sometimes you get it right, sometimes you don’t.

We found people through people that we knew. Deanna came because a friend of mine said, “Hey, I told this person about what you do, and she thinks she could sell that.” I’m like, “Good, because I’m your salesperson.” For Abby, we had a headhunter that we worked with for a few years, and she was a one-person recruiting operation. She was very focused and really good at finding that gem.

That’s my brain dump on it. It hasn’t all worked, but as we’ve gotten better with some of the testing—and Deanna was lucky as we got more intentional and were able to put more structured things in place—the good ones have been great, and the ones that didn’t work out were not as much of a disaster as the early ones that didn’t work out. We’ve gotten better, for what it’s worth.

John SmallMtn (00:45:30)

Weighing in on something you were talking about there: you’re talking about people who were good people, people who care about their work. But you’re also looking for people that’ll go out and take action, remember the goals, be goal-oriented, and not wear rejection too heavily. If you were still in the CEO seat and interviewing for another sales spot on your team, what’s more important in the order of operations here? I’m on the same page with you that they’re both important—drive, care, concern, good person. Which one are you picking?

Chris McKee (00:46:10)

They’ve got to be a good person, or they won’t fit in our culture. Both have to be there. They’ve got to have the drive in order to be successful, but to align with our culture, they’re not going to enjoy being a part of it if they’re not a good person underneath all of that.

I’ve heard a lot of people talk about culture. If you have an intentional culture—whether that culture is good or bad—the people that fit that culture will make their way to you, and the people you hire that don’t fit that culture will make their way out. It’s important to be intentional about your culture, whatever that is.

Our culture—I oversimplified it, but that’s not too far from the truth. People who are not necessarily mean, but not super nice, are just not going to feel comfortable in our culture. Not because we’re bad people, but they’re just going to be like, “Yeah, these people are just too much for me.”

John SmallMtn (00:47:35)

First of all, I love when people are very intentional in how they communicate, and I love how you said, “You’re just not going to like it.” A lot of people will say, “You’re not the right fit.” That small change matters in my world.

Chris McKee (00:47:55)

Gotcha. I hadn’t thought about that, but yeah.

John SmallMtn (00:47:56)

It’s kind of like “have to” versus “get to.” “I have to go to work.” No, “I get to go to work. I get to do this hard thing that I signed up for.” There’s a big difference between “You’re going to think I’m expensive” versus “You’re not going to like my pricing because we’re doing a lot more than you think we should be doing,” and having that conversation the right way.

If I’m hearing you correctly—and this is for people who are listening—it sounds like you’re an advocate of hiring for the culture first and the skillset second.

Chris McKee (00:48:27)

I hope I’m speaking on behalf of Chris McKee! I may or may not be speaking on behalf of Deanna Walker and the rest of the organization, but I really think so. The skills are table stakes, and we actually do skills testing for all of our accountants. But before we do the skills testing, we do a Culture Index on them.

John SmallMtn (00:48:35)

We’ll roll the ticker tape underneath this thing whenever it runs! So it shows up in your process and how it’s built.

Chris McKee (00:48:56)

They’ve got to pass the Culture Index before they even get to come in and do the skills testing. We found that if we do the skills testing first and they can do a bank reconciliation, but then they fail the Culture Index, why didn’t we give them the Culture Index first? They’re obviously not a fit for this place. So yes, that’s probably an accurate depiction.

John SmallMtn (00:49:17)

What happens in my world sometimes as a salesperson: first of all, I’m an introverted salesperson. I’m way more strategic than trying to just win everybody over, and sometimes this doesn’t play well because I don’t give off that hungry, super urgent vibe of “I’m going to go take over the world.”

Was there a period of time, maybe before Abby, where you thought that was required—that Don Draper “I’m going to win at all costs” attitude? I have not found that to be true; people who are driven to do great work will find ways of doing great work. Did you have a season where you thought they have to be a savage or a killer, or were you able to sidestep that?

Chris McKee (00:50:09)

No, because that’s not who I am, and I’m a super patient dude. I’ve enjoyed the journey with Venturity, and I never felt that we needed to be a $100 million company in five years. The money thing will take care of itself.

I naively felt like if we create a great place for people to work and enjoy the time that we spend at work—and hire people that have good accounting skills and invest in them—they’re going to create a great experience for our clients. If they create a great experience for our clients, the clients are going to stay, they’re going to refer other clients to us, and then we’ll grow and be able to hire more good people. That becomes a virtuous cycle, and it’s worked out that way, thank goodness.

The few times before we had a lot of tools in place that we hired people that were not nice people, I was like, “Wow.” They’re willing to run through walls, but they’re also willing to run over everybody around here, and I don’t want to come to work with this person every day. I’m the CEO, and I get to decide that. I don’t care if we never get any bigger because we didn’t keep this person around. They always say your values aren’t your values until they cost you money. One of our values is an engaging environment. If we’ve got jerks, it’s not a very engaging place to work.

John SmallMtn (00:51:35)

What a line.

Chris McKee (00:51:54)

I have learned that lesson, but I’ve never intentionally compromised on whether this person is a nice person because I thought the ends justify the means. I’ve made enough hiring mistakes and hired people that I thought were nice who turned out not to be, and I know how that feels. I’m never going to bring somebody in here intentionally that we have to put up with just because they can do some great thing.

John SmallMtn (00:52:19)

Epic. Great response. One last little topic before we get into the rapid-fire questions: Can we talk about the ESOP thing for just a bit? Can you give a bit of background on what an ESOP is, when to use it, and your journey to deciding that was the way you wanted to go?

Chris McKee (00:53:25)

When I started this thing, I thought, “We’ll grow to $5 million in five years, and then I’ll sell it and go do something else.”

John SmallMtn (00:53:41)

Were you thinking you were an entrepreneur then? Like, “Hey, I’m just going to spin this thing up and make a bunch of money.” That feels very entrepreneur-ish.

Chris McKee (00:53:47)

It was the late ’90s—everybody was an entrepreneur! It ended up taking us 16 years to get to $5 million, that’s the funny thing about it.

I was going to just grow it and sell it, and somewhere along the way, I fell in love with the clients, the people, and the work. I thought, “Gosh, we’ve built this thing.” It’s a firm that does accounting for people, but I’ve got these nice people I work with, our clients seem really appreciative of what we’re doing, and there seems to be something here. Five or six years in, as time went by, I really enjoyed it more and more.

In 2010, ten years in, we articulated our values and decided to finally articulate what we were going to stand for. That was a real watershed moment.

John SmallMtn (00:54:47)

Better late than never, by the way! A whole lot of people have not done values and mission, or they’ve done it on a perfunctory basis and it’s not tied to them.

Chris McKee (00:55:01)

It got to the point where we were getting big enough that we needed to be more intentional about deciding who we are. All of our values—we call them passions, because they’re things we’re super passionate about—grew out of things like great accounting and having a fun, engaging place to work. Are we doing cool work? Are we working with people that we enjoy? Do we want to come to work every day?

Once we articulated those in our mission, it allowed us to hire against those and brought clarity to a lot of our decision processes.

Around 2015 or 2016, as I was approaching my 50s, I realized that even if my kids were interested in accounting, they weren’t going to be old enough in time to take over the company. But they’re not interested in accounting—fortunately for them, the world is a bigger place than just accounting! I was thinking, “Before you start a business, people tell you to figure out your exit plan.”

John SmallMtn (00:56:41)

I needed an entrance plan half the time!

Chris McKee (00:56:42)

My entrance plan was I woke up and I had a business! I had no intention to do my exit plan. I was approaching my 50s, and I needed to figure out what was going to happen with this thing long-term. Private equity in the middle part of the last decade was continuing to grow and expand, even getting into the accounting market. I started talking to people about what that looked like.

I was meeting with other accounting firms we might merge with or private equity people that might invest in us. The accounting firms said, “You can come merge with us, but I’m not going to give you any money. You can just be part of our firm, and when you’re 65, we’ll buy your shares back at whatever we say they’re worth.” A strategic acquirer was not really a path I could go, so I started talking to financial acquirers.

If you’ve ever seen the movie It’s a Wonderful Life—George Bailey trying to save five cents on a length of pipe at the Building and Loan—there’s a point where Mr. Potter calls him in and offers him a job with a huge salary and trips to Europe. George shakes Mr. Potter’s hand, pauses, pulls his hand back, and says, “No, no, no.” That was how I felt walking out of every private equity meeting. I was getting a Mr. Potter feel out of it.

I set all that aside and decided I would have to figure it out later. The day I sell is the day I have to leave, because I’m a terrible employee and can’t work for anybody else. Am I really ready to do that? There were a lot of complex emotions.

In 2017, we implemented Open-Book Management, which has been transformative in terms of having our team members understand how our company fits together financially. In 2017, we hit $5 million for the first time. Next year we’ll probably hit $15 million, about eight years later. It took 16 years to get to $5 million, six years to get to $10 million, and four or five years to get to $15 million. That’s really all Open-Book Management.

Through that community, we learned about companies that had implemented an Employee Stock Ownership Plan (ESOP). When you open the financials to everyone and teach them about the business, you get 45 people running the business, not just me, and they have a real stake in the outcome. Under Open-Book Management, they get 50 cents of every dollar over a certain level of profitability that we hit. That was super powerful and started our growth.

An ESOP is an Employee Stock Ownership Plan, and it’s a way to transition ownership from the founder or a small group of owners to the employees. A separate entity is formed that borrows money from a bank or the shareholders to buy the stock. As that debt gets paid off, those shares get allocated to team members. When they leave the company—hopefully through retirement—they sell their shares back in the same way that I’m selling my shares to the ESOP. The free cash flow of the organization goes into the ESOP to repurchase shares. We do a valuation every year, and as the share price goes up, their shares go up, creating wealth for their families in the same way it has for mine.

It allowed me to put in place a 10-year process of selling my shares of Venturity to my employees. It allowed me to take care of the people who helped me build this thing, rather than taking a big wheelbarrow full of cash and leaving them stuck with new owners. It allows them to truly own the company and benefit from their hard work so they can have a liquidity event for their family.

We sold the first 20% tranche, and the debt from that is almost paid off—we’ll be down to about 20% of the initial debt after a payment in December. We’re starting to work on the next transaction for the next 20% to 30% of the company. Once that debt is paid off, I’ll sell the rest, and they can go be happy.

John SmallMtn (01:03:05)

That’s crazy. I love the story, and thank you for the depth in how you got there and how it’s going.

Chris McKee (01:03:12)

It was an emotional journey. The other nice thing is that I realized I could sell the company to my employees, do what I needed to do for my family, but also stay as the leader. My ownership and my leadership could take two different paths. I didn’t know which one would terminate first—whether I’d sell everything to the ESOP and still be CEO, or not be CEO but still be the owner. We didn’t have to solve both of those problems at once.

It worked out great because we sold the first 20%, and a couple of years later, I realized I didn’t have it in my heart to be the CEO anymore, and it wasn’t fair to the team for me to stay in that role. I thought that might happen around 2028 or 2030, but in 2022 I realized it was time, and we made the transition in 2023. Now I’m onto my teaching career, which I’m really enjoying. I could not be happier.

John SmallMtn (01:04:27)

I love that. All right, Chris, rapid-fire time! When it comes to accounting and finance inside of a business, what advice would you give a founder starting today on their own? What do they need to know?

Chris McKee (01:04:36)

You’ve got to do it yourself or have a relative or someone with financial expertise do it for you for a period of time. When you’re starting a business, if you’ve got “free” available to you, take free. If you don’t, there are inexpensive ways to get it done through individual bookkeepers or firms for a few hundred dollars a month. They can be there as a partner.

At no point do you really need to hire an internal accounting department. Firms like mine will continue to grow, and you don’t need to own that resource in-house.

John SmallMtn (01:05:49)

In the world of social media and everyone having hard opinions, is there a business lesson or statement that you appreciate now, but couldn’t appreciate until you had to go through it the hard way?

Chris McKee (01:06:09)

The idea of lifelong learning is what has served me well. I spent too much time in my early years running the company feeling like I needed to pretend I knew everything. It didn’t create a positive environment for some of the key people that worked for me. As I continued to humble myself, be open to learning from others, and realize I didn’t need to be fabulous all the time, I could admit, “I really have no idea what that’s about, so let’s go figure it out because I’m just an accountant.” The phrase “I’m just an accountant” really helped me.

John SmallMtn (01:07:22)

Is there one that comes to mind around business specifically?

Chris McKee (01:07:30)

It always takes twice as long as you think it will, and costs twice as much as you think it will!

John SmallMtn (01:07:36)

I love that one too. We’re so bad at estimating that as humans!

Last question, Chris: If an accountant who does not see themselves as an entrepreneur goes out on their own today in the current environment, what advice would you give them on Day 1?

Chris McKee (01:08:21)

Invest a lot of time upfront figuring out whether it’s going to work. Spend time being intentional about understanding whether there is a profit margin between what you can sell it at and what you can do it for.

One thing I learned from my dad that has served me well is seeing things for what they are, not what I wish them to be. Try to look at things objectively—not pessimistically, not optimistically. Be honest with yourself and try to see things for what they are rather than what you wish them to be in people, clients, and decisions.

John SmallMtn (01:11:12)

That is awesome. I’m going to have to sit with that one too.

Chris, if people want to catch up with you or learn about Venturity, where would you like to send them?

Chris McKee (01:11:34)

You can find us at Venturity.com. You can email me at chris@venturity.com. We offer outsourced accounting, fractional CFO services, and offshoring for larger departments.

If you want to talk about ESOPs, The Great Game of Business, Open-Book Management, or making the transition from the corporate world to the classroom, you can text me at 214-435-8473. If I’m covered up by people wanting to pick my brain, that’s a good problem to have. It’s all in my head now, so I might as well give it to other people.

John SmallMtn (01:13:27)

Chris, I want to thank you for coming on and having this very open conversation. I think it’s going to help a lot of people, and I’m very thankful that you did. I hope you enjoy the rest of your day.

Chris McKee (01:13:50)

Thank you for the opportunity, I really appreciate it.