Mitch Russo has a philosophy when it comes to profits. It’s about what you earn and what you save. This entrepreneur, author, and consultant has followed that mantra in the many businesses he’s built and sold, as well as with the work he does with clients today.

One way he and his partners found to save big time on operating costs allowed one of the businesses to grow very quickly. 

He gives all the details on that business model, the other benefits that came with it, and how he overcame the technical challenges that popped up. A quick clue: his workforce was “invisible.”

Tune in to get all the details on that, as well as…

• Creating a sales force that pays you
• The first lever to pull to grow your business
• Why you shouldn’t start selling unless you know this
• The right way to work with a business coach
• The growth potential and flexibility of going virtual

Listen now…

Mentioned in this episode:

• www.mitchrusso.com

• www.mypowertribe.com

Transcript

Doug Hall: Hello, everybody. This is Doug Hall, your guest for Doug Hall’s Go for Growth Podcast. Today I have a very special guest on. Mitch Russo is the author of The Invisible Organization and the Power Tribe. And so he’s a published author. And I encourage you to look at both those books. We’re going to talk a little bit around the books. But the theme as is always the case here is about growth. 

What are the levers for growth? And my guests are all experienced folks that growing a business, and I’m really eager. I’ve known about Mitch’s work for literally for over five years. I got the first book when he published it, and I’m eager to read the second book. So today, folks, I want you to welcome Mitch Russo and I’m looking forward to hearing about his experiences with growing his businesses. Also his ideas for helping you grow your business. So Mitch, welcome to the podcast. 

Mitch Russo: Thanks, Doug. Great to be here. 

Doug: Awesome. So I love to start by hearing your origin story. What got you to become a business builder? And what triggered you to grow your business? And tell us a little bit about your positive experiences and a little scar tissue. So take a few minutes and give us that.

From Rockstar to Entrepreneur

Mitch: Sure. Now, I only have, what, two hours on the show?

Doug: Yeah, well, you know, see what you can do to cut it to the chase.

Mitch: So my core motivation was to pick up girls and that 

Doug: Oh, I love it. 

Mitch: So when I was in high school, I was not a particularly big guy. I never played on sports teams, and couldn’t get the attention of girls at all. So I thought, Well, how do I do this? Obviously, there’s an answer. And the answer is start a rock band. So I planned this out, you know. At about 13 years old, I started taking guitar lessons and practicing a lot and getting pretty good at it. And then about, when I was about 14 and a half 15 I started learning songs and then bringing in some friends and before you know it, we had a band. 

Now problem was, of course, we were just a bunch of 15-year-old kids jamming in the basement of mom’s house on a Saturday morning. And so we weren’t very well organized. So I had to step in and change things a bit. So I said, Okay, first rule is no getting high during band practice because otherwise, we sound terrible. So, and everyone agreed, and we started to practice. And I’ll cut the story short, it’s actually quite a funny story. But it turns out that in a matter of months, we became the highest-grossing high school rock band in the area, and started with $50 a gig and ended up at $500 a gig about nine months later. 

And in that journey, I had learned so many lessons that later in my life when I started a software company, I leaned heavily on the natural progress of the lessons I learned starting a rock band in high school. The most important elements of what I learned were things that today are still very important, like PR. How to get PR. How to get connected to the press. Like price testing. How do you test prices and how do you know what the right price is? You know, endorsements I used to carry a clipboard and a pencil with me every time we did a gig and asked the sweet 16 mom to write a quick testimonial. 

I mean, all this stuff played out so heavily when I built Timeslips. I started it with $5,000 we grew it, the short story is we grew it to over 10 million in sales and then sold the company. So it was a good investment. I put five in got 10 out you might say and the journey along the way was rocky as can. Be in retrospect it was the greatest nine years of my life. And then I sold, when we sold the company, I then became a, you know, a division president for another company called Sage. Sage is the largest accounting software company in the world. 

Okay, so Sage bought my company. I then came in, I did my earn-out and then after my earn-out, they asked me if I wanted to run all of Sage US. And I said yes. So I became the chief operating officer and ran all of Sage US for two more years. And I returned back to my place of origin here when I was living in the Boston area. As I, after Timeslips wrapped up and after my stint with Sage wrapped up, the funny part of this is I went to venture capitalists in the area, and I said, Hey, guys, I just completed what you guys want all of your clients to do. Let me help them. 

I can be an entrepreneur in residence, I could take one of your failing companies over a CEO and take it to profitability and take it public. Whatever you want to do. I got zero response. I was shocked as to why and I, I couldn’t even get anybody on the phone. So finally I got one guy on the phone, and I said, Hey, did you guys receive my resume a couple of months ago? I checked in but no one got back. And he goes, ho, yeah, yeah, we know who you are. So what’s the problem? Why isn’t anyone getting back to me? Because, you know, Mitch, we really liked your track record and all that. 

But the problem is, you’re too old. So really, I’m 44 years old. I was then of course. And why? How? I don’t understand. How can I be too old at 44? Because, you know, Mitch, all of our CEOs are 27, 26, 28. I mean, our investors would see you as kind of a fossil. I said Got it. Okay. And so what I did then instead of working for them is I started my own investment bank basically and I started to build a fund and started to invest in startups and became Assist Ventures. And I ran that for a little while, always staying in touch with my friends. 

So my dear friend of Chet Holmes, and I all through the journey of Timeslips he was my, one of my greatest supporters. He worked for a large magazine and helped me get advertising space in the magazine and a very big discount, and I became a great customer, a great client for him as well. So after I wrapped up the whole VC experience, and I get it, I’m trying to skip as much of this as possible for brevities purposes. 

Doug: Oh, it’s a great story. We need to hear it.

Mitch: Okay. Well, what ended up happening then, is that I got a phone call. Now while I was after I had sold my company to sage. I’ll tell you one funny element of the story is that I went to the CEO when I just ended up being one of the Sage product lines. And I said, What is my marketing budget? And the guy said to me, it’s unlimited. I said, Yeah, great, actually. So what do I have to do to access that? He goes, do whatever you want. I said Really? He goes, yup. long as you’re making a profit you have unlimited funding. 

I said, Okay. This is what I love to hear. So what I actually did at that point, went ahead and dropped about quarter million dollars worth of direct mail into the US postal system. Now, what this guy did was that put the last nine months leading up to that I had been testing my direct mail offer for nine months. I must have ran 19 or 20 tests, and we tested envelope size color headlines. Words size. I mean, we tend

Doug: Anything you could test.

Mitch: Anything. By the time we got the go-ahead to drop that quarter-million piece direct mail blast, we had perfected everything. We had our upgraded software ready to go, debugged and running. And we killed it. We generated triple the profits we did before. I never had the nerve to spend that kind of money when I was on my own. So we just murdered it. And then later after I sold the company, we were told that we had generated, our profits increased 500% while at Sage. 

Now, I mentioned earlier I met Chet Holmes at Sage, at Timeslips and Chet and I became very, very close friends. We spoke every week, sometimes several times a week and I had a health scare and he was with me just about every day supporting me from his offices in Los Angeles. And as he and I both developed our careers and our businesses, he came to me and said, Look, I’m having a problem here with my own little startup, Chet Holmes International. Would you join me? Help me? 

And I said, Yes. Well, once I did, I started growing his company like wildfire. And what happened as a result was that he ended up engineering a conversation with Tony Robbins. So Chet, Tony and I got on a phone call every Thursday night and talked about how we can build a company together. And that was the beginning of Business Breakthroughs International. 

Doug: Got it. And those of you who don’t know Chet Holmes who’s now departed, but when he was with us, he wrote the Ultimate Sales Machine. So pretty well-regarded book in the pantheon of sales books, I would say. One of my favorites.

Mitch :Yeah, me too. Me too. So then the journey began with Tony and Chet and the three of us together, went from about 3 million in revenue to close to 30 million in revenue, all by executing a training, coaching and consulting. 

Doug: When you think back to the growth, success of that trajectory, what do you think the one to three you know, sort of key success elements were? What key factors? Now that you’ve got perspective, looking back in time, what do you guys think, what levers did you pull that really, really made a difference?

Mitch’s Key Factors for Growth and Success

Mitch: Well, we were, as a group, the three of us Chet, Tony and I, we had an enormously diverse experience. You know, I was a product guy. Tony Robbins is a coaching guy and Chet was a training guy. So between the three of us, we had engineered some very powerful strategies. The first thing, to answer your question, if I had to name three, it would be promotion and marketing, product strategy and sales strategy. My expertise is in sales strategy and marketing strategy. So for me, this was an incredible laboratory to experiment in. Chet and I would riff on marketing ideas, sometimes for hours, and until we perfected something and then we would launch it and try it. Didn’t always work, but we got a pretty good track record. 

It worked pretty darn well most of the time. So here were the advantages that most people would not be willing to try. We started out marketing our webinar on radio. Now, most people have no idea How to use radio. Most people don’t have a clue what radio is capable of. But you do because you read my book The Invisible Organization. When we started, we were spending about $15,000 a month on radio. And we were building the company using that as our primary lead generation system. 

Later, as we scaled that, by the time we basically stopped, by the time I resigned from the company, we were spending about 125,000 a month and had perfected radio to the point where we knew we could break even at a minimum with our ad spend. And for us, what we understood very, very deeply was the value of lifetime customers. So we knew that if we signed somebody for a $199 product that they were worth $11,200 in lifetime value to the company. And that’s for every single sale we made. So that was the premise by which we could take things forward. Other people would stop if they lost a few dollars on a marketing campaign. 

We didn’t stop because we knew that we could pay up to 1200 dollars for a lead that would convert. And as it turned out, we converted a lot and for a lot less. And at that time, what one of the things that we realized very quickly, was that a buyer who buys is a buyer who will continue to buy. And what that meant is that we knew that by building a true relationship with our clients, we were able to sell that same person over and over and over again, and sell them things that in the beginning of our relationship they would never dream or even wanted. 

So it was the idea of educating them as to what tools were available, then selling them the tools and then selling them the coaching and training in order to use those tools. So that, frankly, sums up a lot of what we did successfully at BVI. And our product strategy was very clever. In fact, we took Chet’s book, which you mentioned a few minutes ago, and we broke it down chapter by chapter and created a division in the company for just about every chapter. We had a recruiting division, we had a core stories division, we had a dream 100 division. 

I mean, we had divisions for almost every concept in the book. And on top of that, we had, you know, a huge sales force. Now, the idea behind all of this is that we did it completely virtually. So we had at one point we had probably 300 staff loosely associated with us as vendors, but there was no assets. We didn’t even own a copying machine because everybody was working out of their house, basically. 

Doug: And what year was this Mitch? 

Mitch: This was from 2008 through 2012.

Doug: So the concept of virtual companies was known, but maybe not completely accepted then.

Mitch: Right. And there was a reason why we had to build a lot of the technical infrastructure in order to make that work. So it wasn’t a, what you might call a slam dunk. I mean, we had virtual call centers that in many cases you might call experimental, but we were using them because they work for us. We had to cobble together a database and CRM systems that simply at the time, would not handle what we were doing. 

We had to figure out ways to track response rate from a variety of different radio spots on a variety of different radio shows on a variety of different days and times. And that we had to build manually and build them right. So nothing was as easy as it quote-unquote, looked.

Doug: So that makes me think about something that we don’t always equate to growth, and that is you had to grow internal infrastructure and methods so that you could then grow revenue and customers externally.

Mitch: Exactly. We sure did.

Doug: And you had to do it with a business model and infrastructure model of Invisible Organization, a virtual company that there really wasn’t a lot of wisdom then for that, was there?

Mitch: No, and we were learning as doing and we blew up stuff all the time. I mean, so I mean, I want to tell you some of the mistakes. I mean, we had invested in radio campaigns that never ran and didn’t know it, because we just were still building our infrastructure. So it was treacherous back then. And luckily, we were so profitable. 

You know, a lot, I’ll tell you a lot of mistakes are covered up by great profits. So it’s good to know how to stay profitable as the organization scales, and that’s really the challenge for many people as your company scales, how do you stay profitable? And that’s really where it took some finesse. And we were able to do it the cause mainly, we were a paid for performance company. So we had very, very, very low overheads. 

Yes, we had some, you know, admins that were on salaries. Part of my compensation was a salary as well. So but the real, real money came from what we saved, versus what we earned. So we saved the fortune when sales were down. And we made a fortune when sales were up.

Doug: So that was with your virtual company structure. You didn’t have an office building. You didn’t have copiers didn’t know Secretary sitting around, Right? 

Mitch: You got it. 

Doug: So what was the, if that’s the upside, what was the challenge? What was the downside of doing that? Apart from there not being a lot of wisdom, but what practically, what did you struggle with, in creating the invisible company, if you will? 

Mitch: Well, you know, I struggled with management. I love the science of management. And I learned so much during those years because managing an invisible workforce is not easy and comes with enormous challenges. So that’s where I screwed up and made mistakes. And that’s where I was able to understand and learn the type of personality and the type of behavior it takes to lead hundreds and hundreds of people completely virtual.

Doug: So if any of our listeners are in that position where they’re not tied to a physical location, I mean, obviously a retail store, gas station or auto mechanic business you can’t do that as, quite as handily. But what if you’re in that kind of business model where you’re thinking of my our lease is going to expire at the end of December or sometime next year? Should we go virtual or not? What’s your advice?

Should Your Business Go Virtual?

Mitch: Well, first of all, I think every company can go partially virtual. What I mean by that is I’ll give an example. I was working with one of my consulting clients, and he was implementing my power tribe certification model. And in casual conversation, he said, oh, we’re just about to sign some big leases here. And so I’m gonna have to leave the office early, and I said, Wait a minute, what do you mean? What are you going to sign leases for? He says, Well, you know, we’ve expanded quite a bit. 

And so well I get that, but why are you signing leases and committing yourself to possibly a million dollars in debt over the course of the next 10 years? And he said, Well, my salesforce is expanding. So I said, did you read my book, The Invisible Organization? And he said, No. I said, and he just turned to the secretary says, Give me that book, The Invisible Organization have it delivered tomorrow. And I said, Look, let me make this really simple for you. If you simply set your salespeople up with the same software that they’re using right now but to operate remotely from their homes, they can take sales calls from a spare bedroom. 

They will be happier, they will work harder and longer and have less sick time, attrition will drop to zero and you will never need to expand again. So think of the divisions of your company that could work from home. Listen, if you’re a dentist, you can’t have a dentist office from home. But you can send your admin staff home. Even a restaurant can do this. I’ve seen that happen as well.

Doug: Good point, good point. There’s always backroom stuff that’s not customer-facing that could probably be done better in a quiet, organized environment than of a chaotic retail environment.

Mitch: Yeah, that’s true. You know, in the book is a story of a New York City meatpacking company, whose real estate is very, very expensive there on the lower west side. And they were you know, they’ve been in the same location for 50 years. And it was, they have just been bursting at the seams, and they needed more production space. 

So, in a short conversation, basically we chatted about the fact that, you know, you could send your salesforce, your marketing team, and you’re admin home and take all that office space and turn it into production space. And the president of the company said to me, You have no idea how much money you just saved me. You might have saved my company. And that was just with a casual conversation.

Doug: All right, that’s great food for thought. So, folks, the reference on that is Mitch’s book, The Invisible Organization. Find it as Kindle audible everywhere. Bookstores. I want to pivot a little bit because you shared an intriguing idea with me and made me think about the power of a certification program and what that did for you at Timeslips and Sage, and how you help folks understand that through your book and through your teaching and coaching. So give us the concept and help us think about how it might apply to our businesses.

Three Questions Business Owners Need to Ask Themselves

Mitch: Okay, so before I lay it out, I have to say that it’s not for everybody. And if you hear me say that you say, Well, great Mitch, how do I know if it’s for me? And I’m going to give you three questions to ask yourself, and that will tell you the answer. So here’s the first question. Do you have a product or service that causes a major transformation in people or companies? And this can be software, this could be coaching, this could be training, this could be a medical device, this could be anything that fits that description. 

The second question is if I taught somebody else how to do what it is my voodoo magic that I do with the client, could they do it too? You know, at first, some people will say, Oh, no, only I can do this because I, you know, I get beamed in information from zombies or something. I mean, clearly you’re the only one. But if you can teach somebody your process, then and say yes, then that’s yes to question two. Question three is a little different. The question, the third question is really about the size. 

So have you already achieved some form of scale? Do you already have several hundred clients? Are you really not there yet? And if the answer is no, I’m really not there yet. And this is not a concept for you. But if the answer is yes, then here’s why that question is so important. And it’s based on a very simple concept. The simple concept is the idea of the early adopters. Now, I don’t know about you, Doug, but I’m an early adopter. I bought the first flat-screen TV for 4400 dollars. Imagine how silly I must feel today when I can get a TV 10 times as good for about $149.

Doug: That’s Yeah, but you felt great when you bought that first flat screen 15, 20 years ago or whatever it was.

Mitch: Exactly, exactly. So the idea here is that any group, there’s early adopters. And if your group is let’s just use a round number, 1000 people. So if you have 1000 people, and it could be 500, it doesn’t matter. Just pick a number. I’m just making it easy for the math. Then about two to 5% of any group are early adopters. 

Doug: Okay, I’ll buy that. 

Mitch: So now if you were to make an offer to your early adopters to your whole group and say, Look, I just want to let you know that we’re building a new program called a certification program, and it’s going to cost a lot of money. But the reason you’ll spend a lot of money is because you will make between three times and 10 times what you spend back in your first year. And here are the details. 

Now, the details will be a logical explanation of how you will do this, that will, for the most part, convince an early adopter that this is worth jumping in on. And that premise comes from the fact that you are actually creating a new profession for these folks Now, the reason I say your clients is because we call the pilot class usually starts with your own clients. And the reason is, is because they already love you. They already know your stuff. They already want to do what you do at some level.

Doug: Right. They’re invested in whatever your stuff is.

Mitch: Exactly. And if we can get just 10 or 20 of those early adopters to say yes, then our only job is to graduate them from our program, hold their hand while they go through two or three client engagements, make them successful, harvest those testimonials, and then open it up to the world. So what certification does, and the reason that it’s so powerful is because it’s changes businesses radically. So here’s an example, when I was selling semiconductors when I was a young man, I went on the road to sell semiconductors. The guy who hired me had to pay me. I mean, I got paid a salary, I got paid benefits, and of course I received the commission. 

Well, imagine if you could put a salesforce in place that paid you. Well, that’s what certification does. When I created Typeslips Corporation, we were growing at a very nice rate. But we had hit a milestone and a roadblock because we could not handle all the tech support that we were generating from the number of products that we were selling so rapidly. So I had an idea that maybe I can enroll some of my best customers to add this tech support by going and visiting my clients and fixing their, you know, their systems or training them. Well that mushroomed into a major, major program called the Timeslip Certified Consultant Program. 

And in a matter of 18 months, I had amassed 350 certified consultants, which became my third largest salesforce right under my retail sales and my wholesale sales, and also dropped an extra million dollars in profits to my bottom line, all while reducing my tech support costs by about 20%. Simply from asking my best customers, Hey, would you like to take a test see if you qualify and then enroll in our program? And if you enroll in this program, we’re going to reward you with a lot of great benefits. One of them, and this is the key, this is the difference between most certified consultants. 

Most certified consultant programs like Infusionsoft, and the ones that I built in our programs, we assume that our certified consultants don’t really want to sell, don’t really like selling, and so we do all the prospecting and work for them and deliver to them qualified prospects that they can close, in some cases, closed clients that they can assist. Now, they really like that, you know? And so when, when Scott Cook, who is the founder of Intuit, who was a casual friend of mine through various channels, he saw what I was doing, and he rang me up and said, Hey, Mitch, good job on building that Timeslip Certified Consultant Program. 

You think you could help my team understand what you did, so we can do the same thing? So I said, Absolutely. And I sent him my Bible, which was the book that I had built that contained all of my intelligence, all of my communications, all of my information, and I sent it to him for free. Because he was a trusted friend. And in turn, he built what’s now called the Intuit Certified Advisor Program, which are thousands of CPAs who have built and scaled Intuit the same way they did for Timeslips, and other companies as well.

Doug: Yeah, I’m familiar with that program. And you’re right. That’s exactly what happened. And it’s cool to know that you are the guy that helped them get the idea. He looked at you. He looked at Timeslips.

Mitch: He did. He did, and he was bigger than me. I was about a, at the time I was about a $4 million company his Intuit it was about a $6 million company.

Doug: Right. I met Scott Cook back in the day when he hadn’t, they were in beta. Kind of interesting. I was in the PC industry. I am dating myself. I was in the personal computer industry back in the beginning and I met Scott when he came into headquarters of a company I worked at. Really interesting guy and what a story. You know, QuickBooks, Quicken and later now QuickBooks amazing.

Mitch: Yeah, exactly, exactly.

Doug; So you’ve given us a couple of cool ideas. And so what I’d like to ask you is if folks are curious, obviously, the books are out there, but what’s their first easy step to learn more about what you’re talking about?

Mitch: Well, you know, I have some websites that tell the story. You know, they can go to mypowertribe.com. And that will show them the three questions and give them some testimonials about other people who I’ve worked with and all the incredible people that I, you know, that I’ve helped, as well. 

And that will tell the Power Tribe story, the certification story, they can go to invisibleorganization.com, and if they want, they can buy the Amazon book through my site and get access to the resource center, which are a bunch of articles and resources that I’ve built from readers of the book. Or they can just go to Mitch Russo, MITCHRUSSO dot com and read more about me and all my adventures.

Doug: Terrific. We’ll do that. So if you had to think about the number one piece of advice you’d give somebody who’s sitting there listening, and they’re like, yeah, you know, what’s the number one lever that most of us should pull to be able to grow our business? What comes to mind?

Stop Working “In” and Start Working “On”

Mitch: Well, assuming you already have a business, 

Doug: Yes, they already have an existing business, and they want to get it to the next level.

Mitch: So one of them is conceptual, and what I mean by conceptual is stop working in your business, start working on your business. And what that means is instead of spending all of your days and evenings doing things or people in the company or your customers spend time thinking about, and working potentially with a business coach, as to what comes next. For example, simple concept, never sell anything unless you know what you’re going to sell next. 

We work with carpet cleaning companies, we’ve worked with dental chains, offices filled with dentists. I mean, we’ve done we’ve worked with so many different companies, and this one single concept of selling the next thing while you’re closing the sale of the one that you’re selling first has made fortunes for us and for our clients. So that would be the, you know, and by the way, you know, as you know, Doug, a coach can vastly accelerate your progress, because you hired someone who’s already done what you’re trying to do. And if the person you go to hire isn’t or hasn’t that don’t hire them.

Doug: Good point. That’s kind of three, work on your business, not just in it, think about the next sale to increase customer client lifetime value, And consider getting an advisor outside. Get somebody that’s been there and done that to help coach you. Those are three great pieces of advice. Thank you.

Mitch: You’re very welcome. 

Doug: So folks, Mitch, I appreciate your time. The folks out there appreciate it. They know how to find you now. You’ll see show notes, everybody the transcript and the links that Mitch mentioned, and go check it out, check out his books and check out his website. So Mitch, thanks again. It’s been a blessing to have you on the show, and have a great weekend.