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An Interview with Silicon Valley Veteran Tom Mohr, Author of Scaling the Revenue Engine

29 Nov 2018 | 7 MIN READ

It is in the integrated nature of things that success resides

I was invited by Wildcat Ventures to the book launch of Scaling the Revenue Engine, hosted by Bruce Cleveland, Founding Partner.

During the Q&A portion it became evident that Tom had written a book that could materially impact a tech startups revenue growth. And since I work with many early stage venture backed startups, I know how much of a struggle it is for them to scale.

So I approached Tom after the event and he agreed to be interviewed for this LinkedIN piece. What follows are excerpts from our recorded interview.

Tom Mohr is CEO of CEO Quest, where he leads a team of tech CEO coaches in Silicon Valley, New York, and Los Angeles. CEO Quest coaches provide expert advisory support to CEOs on their journeys of company building. Prior to CEO Quest, Mohr co-founded Digital Air Strike. Over six years, he scaled the company from whiteboard concept to profitability, with 2000 auto dealer customers. Previously, he was president of Knight Ridder Digital, a Fortune 500 subsidiary, and sat on the boards of CareerBuilder, Cars.com, Apartments.com, and ShopLocal.

Scaling the Revenue Engine is Tom’s first book. It was initially released online as a series of blogs on Medium.com. It became an online success, and was published in paperback and hardback form in October of 2018.

In Scaling the Revenue Engine, Mohr argues that best practice revenue engines are built as whole systems, bounded by unit economics, with end-to-end workflows and data flows that support orchestrated prospect and customer engagement. The book strives to give CEOs and their teams the tools and frameworks they need to scale. Mohr maps out every component of a successful revenue engine and provides practical advice for making engine improvements at every stage of a company, for every variation of business model.

David Baeza, CEO of Buttered Toast sat down with Tom to chat about his new book: Why he wrote it, how we finds the writing experience, and what wisdom he wanted to share.

DB: Writing a book is no joke. There are a thousand ways that you can reach people. You’ve also published the chapters on Medium. So what actually compelled you to publish the book?

TM: It’s funny you say that. You’re completely correct, it is hard to write a book. I’m now in the midst of writing my fourth book, so I’m reminded of that every day! I never thought I’d write books, I thought I’d write blogs. But as I got into it I realized the book form gives me the opportunity to properly tackle a comprehensive topic. I made a decision early on that if I’m going to be an advisor to tech company CEOs, I want to be excellent. Not just good; excellent. If I’m going to be in a position of influencing their most important decisions, I want to make sure my advice is sound, reasonable and based on best practices.

I believe companies are built in five domains, and in every one of those domains I want to be authoritative. The five domains are Product Design, People Design, Revenue Design, System Design and (in the middle) Belief. Belief touches on not just what you believe, but who must believe– customers, investors and employees. So that led me to write books. I want to write things that really make a difference, and help others not to make some of the mistakes I’ve made. So in the act of writing, I’m forced to think more deeply about company building.

DB: That’s interesting. I books, but I prefer the audio version.

TM: I get that. With my first book, I alternated releasing each chapter with a weekly webinar. It was a lot of work, but it was really cool mixing those mediums.

DB: And in writing a book, what’s the hardest part? Is it the time and discipline? The internal fear about how it will be received?

TM: Really good question. That latter thing you mention: “Am I going to say something worthy of the reader’s time? Something that hasn’t been said a million times before, or isn’t just plain wrong?” There was certainly some of that with my first book. But now, with my fourth book, I don’t really have that fear.

It’s not like I feel all my content is perfect, but I feel more confident I am writing things that are worthy and important, based on my unique experience and having thought about this stuff deeply for a very long time.

As to the time and discipline, yes– you need a lot of both. In my new book, which will be called The Fit Systems Enterprise, I have probably iterated on the first eight chapters well over 300 times.

DB: Wow.

TM: Yeah. You have to work at it. It’s interesting, I was reading David McCullough’s book, The Wright Brothers. Why did the Wright brothers become the first to fly an engine-powered machine in the air? It was because they, on a small budget, went year after year hauling a bunch of crap down to Kitty Hawk North Carolina because the testing conditions were perfect there. They would put it all together, get into the machine, jump off of dunes and smash into the ground. Then they’d fix the equipment, and do it again. Iterating, thousands and thousands of times. Making tiny changes, and trying again. They just stuck to it, and tried harder.

Business writing is like that. If you want to say something important, you’re just going to spend an enormous amount of time and energy in order to produce something worth being read.

DB: Love that Wright Brothers example. So, how about book five?

TM: I believe there are these five domains of company building. And I’m matching that with five books. So my final book will be on product. By the end of next year, I hope to have all five books complete. I started writing four years ago, so it will be over five years of writing by then.

DB: That sounds fast! It can take me three weeks to write a blog post.

TM: Well, a big part of that is how you choose to spend your weekends.

DB: Gotcha. Well, turning to Scaling the Revenue Engine now. Who is this book intended for? Is it only CEOs and founders of venture-backed companies who are basically at product-market fit? Or is there something else?

TM: Yeah, so in all the books I write, I use the word you. “You” means the tech company CEO. Now, I’m aware that the principles and concepts in this book are relevant for companies of all shapes, sizes and stages. But first and foremost I’m serving tech CEOs.

DB: Let’s stick with that for a minute. Let me just read an excerpt from the book: “The revenue engine strategy must start with the math of the business. Customer LTV is the grand arbiter. In order to scale, it is generally recognized that the ratio of LTV/CAC should be 3 or greater, with CAC payback less than 18 months. This boundary condition establishes the revenue generation options available, given your business model.”

My question for you is: What would you propose for a company that is still struggling with product-market fit?

TM: A couple of points I would make. One, every company starts with a hypothesis. But a hypothesis does not constitute truth. So over time, CEOs, as they iterate on product, bend towards truth. That’s a phrase I’ve used. Your first hypothesis is unlikely to be a bullseye hit on truth. You need to let it evolve. So, you shouldn’t be working hard on your revenue engine until you’ve found a hypothesis that is validated in product-market fit.

Because if you expend your cash on acquiring customers, or trying, but the product isn’t adding value, you’re wasting money. Put that money to work on the continuous optimization of the product. Attack a true problem that the market needs to be solved. The revenue engine shouldn’t be your primary priority until you’re at MVP (minimum viable product).

DB: There’s so much here. When you’re talking about product-market fit, in my experience, you have an iteration of revenue that has been replicated, over more than one cycle. You have repeatability.

TM: Yeah. My definition of the viable product is five or six paying customers. And repeatability means repeat purchase patterns from your first customers.

DB: And so often, people who have proof of concept but no revenue think they have MVP.

TM: Right. You need beta customers, at least. Even if they’re paying half price. You need to have shown that people are willing to open the wallet in order to qualify for MVP.

DB: Agreed. Let’s switch to messaging. In the book, you say that “to make your revenue engine perform like a Porsche, you first need to attend to the engine’s foundational layers.” These layers are Messaging, Tools/Information Architecture, Unit Economics, Mission/Strategy. Of these layers, which do early stage companies tend to get wrong? Is it messaging? Is that why you listed this first?

TM: Well, once you have a product and know your Ideal Customer Profile (ICP), there are two things left: engagement and messaging. You need to figure out the type and frequency of engagement, and what you say when you engage. You will touch people digitally, at trade shows and through other means of distribution. That’s engagement. But engagement is only half the battle. The other half is what do you say.

I believe messaging goes through the same variation cycle as product-market fit. So you have “message-market fit,” where you have hypotheses, try lots of things, and then go down a narrowing path towards truth.

DB: Totally agree. I do a lot of persona-based messaging. And I have to say this all the time. A messaging framework is directional, not prescriptive. The customer evolves, and so does the market.

TM: Right. There’s a phrase I have for this: “Where is truth at rest, and where is truth in motion?” And with market-facing things, and with messaging, truth is in motion. No given approach, that works at one time, will work forever. Because truth is in motion, both in product and messaging, you have to devise a revenue engine that is constantly testing and checking and optimizing. Your brand identity will be stable, and guide you to your messaging schema. But the details of the schema will be constantly evolving as you engage the market.

DB: I love that. “Truth is in motion.” That should be on a t-shirt.

TM: Right?

DB: Okay, last question. I know writers hate summarizing long books, but: With business books, people want one or two things they can actually implement. That’s what makes a business book a success. If you had to distill Scaling the Revenue Engine down to two key actionable points, what would they be?

TM: If I had to distill it down to two points, the first would be: Think holistically about the revenue engine as a whole system. Don’t think functionally. So don’t think sales, and then marketing. Think about how it all connects; success lies in the integrated of nature of things.

The second point would be: Sweat your segmentation scheme. Really put work into making sure you deeply understand the unique value your product creates for very tightly defined segments inside the market you seek to serve, and rank those, and work out the personas sitting under each of them. If you do that, all of your messaging will be much, much better.

DB: Awesome. Tom, it’s been great.

TM: Lots of fun.

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It was a really fun and interesting conversation with Tom. The recorded version of the interview is even better, but I’m not thrilled with the audio quality. I need to invest in some better equipment so I can publish these types of interviews as podcasts. Stay tuned for that.

To purchase the book and to follow Tom and CEO Quest, click the links below.

Amazon link

ceoquest.com

Medium.com/ceoquest

Follow Tom on LinkedIn

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