Growing Your Business With Relevant Feedback

Speaker 1: Welcome to the Process Breakdown Podcast, where we talk about streamlining and scaling operations of your company, getting rid of bottlenecks and giving your employees all the information they need to be successful at their jobs. Now let’s get started with the show.

Chad Franzen: Chad Franzen here co-host of the Process Breakdown Podcast, where we talk about streamlining and scaling operations of your company, getting rid of bottlenecks and giving your staff everything they need to be successful at their job. Past guests include David Allen of Getting Things Done, and Michael Gerber of the E-Myth, and many more.

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Chad Franzen: Drew DeWalt is Co-founder and COO at Rhumbix, which builds software for infrastructure developers and construction contractors. When Drew was a U.S Navy nuclear submarine officer, he ran multiple divisions, both technical and operational. After leaving the Navy, he broadened into the development of oil, gas, and renewables. Drew graduated from Stanford Business School and then started a renewable development company in Chile before starting Rhumbix. Drew, thanks so much for joining me today, how are you?

Drew DeWalt: I’m good. Good to be here, Chad.

Chad Franzen: Hey, yeah. Tell me a little bit more about Rhumbix and what you guys do.

Drew DeWalt: Yeah. Exactly. Rhumbix started really in the trenches of some large infrastructure projects overseas, really seeing some pretty high inefficiencies in process. You really look at $1 billion plus projects from some of the best contractors and owners in the world and you assume that things are pretty buttoned up. Generally from a safety standpoint and best in class by many of today’s standards process, they absolutely were. But compared to what the opportunity could be with more modern tools and understanding and things like that, we felt like it fell short. That’s really the experience that came out of Rhumbix when most major projects, especially, but really, as we peeled back the onion into… Actually if you’ve ever done anything on the residential side, you experience the same thing.

Drew DeWalt: It’s a totally different market, but you’ve experienced some version of the same thing of lack of information, leading to poor decisions and therefore breaking project budgets and timelines. I think there’s a stat something, mega projects which are over a billion dollars, something like 80% of them are over budget, break their timeline or both. We feel like there had to be a better way and it’s not due to a lack of knowledge. Some of the smartest engineers and managers in the world work in this industry and not for a lack of trying, but we felt like it was a lack of information to make good decisions from it. That’s really why we built Rhumbix and figured out that it’s because the raw data collection and construction was so manual, paper-based, Excel spreadsheet hosted on somebody’s laptop and it took weeks and sometimes months to get all the stuff you needed in one spot to make a coherent decision.

Drew DeWalt: The reason you break budgets and timelines is because you’re actually making well informed decisions based on past experience and gut instinct to make big decisions and it’s better to understand where you are now and solving problems that you’re facing now rather than solving problems from two months ago, based on experience from a project three years ago.

Chad Franzen: If you could maybe describe some of the software that most people use a little bit and maybe what separates it from what you described had been used previously.

Drew DeWalt: It’s been an evolution. I think construction has been one of the slower industries to digitize, granted it’s the second largest industry in the world, but it’s been slow. I think candidly for good reason, but nonetheless slow. What you’ve seen is the transition that most other industries have gone through over time. Software wasn’t the standard really even 30 years ago, 20 years ago on some level, at least in the sense that we think about it today. Most large organizations had one piece of software and essentially to do accounting, right? That’s the tale of construction. Not to take you too far down memory lane, but accounting software and construction got stress tested to do more and more for these contractors and then essentially grew into ERP systems for resource planning.

Drew DeWalt: That was a standard for at least the last 20 years in construction. That’s most of the only software that construction companies had outside of some small things and email. And then when you look at it, construction contractors are really a somewhat loose affiliation of individual projects that shares of GNA, right? Enterprise software is bad at managing projects and so there gave rise to the second wave of software, I think construction of project management software, which is great. It’s good at managing projects, but it’s not good at managing the enterprise, so now you have these companies using these two different types of software to do what should be fundamentally the same thing, but they don’t speak to each other. Most of them aren’t what I would call data-centric, they’re very document-centric and sort of let’s archive this stuff and try to pull some insights from it, but it’s usually a single division mining old data or documents and so it’s not very accessible.

Drew DeWalt: I think Rhumbix has led the way in the third piece, which is how do we actually structure all the raw data at inception on project performance? Because that helps you understand unit rates and performance of how you actually do things with current technology with just ERP and project management software, you understand generally how you do things and you hope that your unit rates are similar and you tweak them based on experience, but there’s not that deep seated knowledge of the nuance of it. Rhumbix does that and I think we send a lot of data to project management systems, a lot of data to ERP systems, but there’s a lot of data that we contain that doesn’t have endpoints in other systems. I see it as a third leg of a really strong stool that props up a modern construction company.

Chad Franzen: You’re not only the founder, you’re also the COO. Tell me about what goes into your data workday role as COO.

Drew DeWalt: Yeah. It’s interesting learning the role. I’ve essentially always been an operator, but I think the role of a COO is slightly different, right? You’re a leader of operators in many ways. From a day-to-day standpoint, it is keeping your thumb on the pulse of the business, the health of individual departments, making sure that they’re planning and executing against plans and budgets, but also a lot of other stuff around engagement, morale, company culture. That’s what I spend a lot of my time in. It’s a weekly to biweekly one-on-ones with managers, it’s setting up skip level meetings so that individual contributors can have a little more access to myself and my co-founder.

Drew DeWalt: It’s running quarterly OKR planning and preparation processes and things along those lines. I think honestly gets into what we probably are going to talk a bit about today, just the overall operating cadence and how I think that’s been my development as an operator is realizing that you can have all these different departments and pieces running as optimally as they can on an individual basis, but unless you stitch those together, there’s actually potentially compounding inefficiencies even with every individual unit ostensibly operating at their most effective levels.

Chad Franzen: Yeah. Take me through your process regarding product decisions and then maybe how that applies to marketing and sales execution.

Drew DeWalt: Yeah. I think a lot of times, and a lot of this stuff it might sound of like, duh, right, I get that. But until you say it out loud to yourself and others, you don’t realize some… At least I didn’t realize some of the assumptions I was making. Right. I think operationally, if you’re honest with yourself, a lot of times you can really see your operational process as a conveyor belt, a bit of a chronological conveyor belt, inputs go through a process and then outputs are we sell it to somebody. Right. We want to keep putting really cool inputs in so that people want to buy it and we grow revenue by feeding the conveyor belt, but that’s the definition of an organization that doesn’t really learn, because a lot of that conveyor belt will end at a brick wall. Right.

Drew DeWalt: The market doesn’t want it or at least doesn’t want to pay what you want them to pay for it. Understanding that it is really a loop. The military talks about the OODA loop quite a bit. I’m sure you got talked about this on our podcast Observe, Orient, Decide and Act, and then you Observe, Orient again. Right. Understanding that loop such that if you take the linear conveyor belt and just roll it into a circle, understanding those frontline decisions of delivering product to a customer, activating them, engaging them, getting their feedback and feeding that back into project product decisions so that you continue to make, not just the most compelling product you think, but making the most compelling product for the market based on their expectations with a mix of your own experience is the way to really get the flywheel going.

Chad Franzen: Let me make sure I understand, you would develop a prototype and then present that to people in the market and then they give you their feedback and then you go from there?

Drew DeWalt: A bit, right. It’s like when you’re starting a business, Rhumbix has been around for… Actually just celebrated our eighth birthday last month.

Chad Franzen: Happy birthday.

Drew DeWalt: Thanks. Thanks. Yeah. It’s actually a really fun time, we give out birthday awards based on our core values and we actually have this Lieutenant Rowan Award because one of our core values is an old Navy story. It’s pretty fun to recognize people who over the course of the year have embodied those different core values, so good time of the year for sure. But I think to your question on that, it’s exactly when you’re starting the business and you have nothing, right. You are actually running that linear conveyor belt that I talked about. Right. You don’t really know, you can talk to people, but you have to introduce something to the market to get a real response. That initial product and candidly the initial set of products and this doesn’t even hold for just SaaS software like mine, it’s very real, tangible products as well. You have to introduce something and that’s almost entirely based on the conviction under which you started the business.

Drew DeWalt: I believe that the world should operate in this slightly different or drastically different way than it does now and I believe there’s value there. I’m going to build for that value and then I’m going to validate it with the market. Early on, you have to do that. Yeah, you talk to the market, you prototype, but you push it out there. I think one thing I’ve done as a business leader is really lean on much more experienced folks. My stable of advisors has been healthy and growing and I don’t really hesitate to allow people to come, small owners in my business if I think they can help at different times. Really understanding, listening advice, if you wait until it’s perfect, it’s too long and so a lot of those prototypes, just get it out there and get the reaction. We went through, everybody in my company knows I hate the word pivot because I think it is overused too many times.

Drew DeWalt: I see it as a wholesale change. Actually there’s a company we know the founders and they’ve been wildly successful. Their initial product was actually helping people turn their iPhone photos into photo albums that would send to them and now they do deep linking within apps and it’s crazy. But they learned that use case from their initial use case, that to me, I just think is a really great pivot. Rhumbix has always been for better data and insights in the construction industry from a workers’ first perspective and that has never changed. But a long way to say if I’m a little more forgiving in the term of pivot, we’ve probably done it two times. Initially in effort to meet that goal, we actually had a wearable device for construction workers that checked GPS locations. We have a patent for mapping general by motion to specific construction activities and it was essentially one to take it from a highly inefficient process to a fully automated process, which sounds great.

Drew DeWalt: But I think we learned and such a large difference as to almost between night and day, the difference between a good idea and a good product and a good business. I think the first one was a really good idea, but a bad product and a bad business. Our second iteration that got rid of some of the hardware and the deep tracking stuff was a good product, but not a great business. And then the third pivot was really turning into a great product with a great business that can grow. But a long way to answer your question of… Yeah, you build a prototype, put it out to market, but then at some point it becomes this, it’s really that loop of which there’s big customer feedback and you continue to feed in your own unique conviction about the future state of the world, but you don’t do it in a vacuum, you do it in conjunction with feedback from the market.

Chad Franzen: When you’re doing marketing and sales, you’re always paying attention to how you can change the product later.

Drew DeWalt: Exactly. Right. I think most good sales people naturally do that, “Hey, my customer wants this, or I think the market wants this.” But I know a lot of businesses don’t think about that as deep product intelligence, it’s noise versus signal and Chad, there’s a lot of noise. Trust me. I think especially in our industry, but I think in most industries, once a customer sees you as a competent, trusted supplier, vendor, partner, whatever you want to call it, they want you to solve more and more problems for them, even if it’s not a problem that you would naturally solve. If I’m cynical, I think some of our customers are like, “Oh, you guys are software guys and software could solve this, so do you want it?” We’re like, “No. You know what we do, you know our mission, you know our goal, you know where we fit and so that wouldn’t even make sense for us to do.”

Drew DeWalt: And then they’re like, “Yeah. But you’re software guys.” I think that’s where that loop, you have to maintain that internal conviction about what you’re doing otherwise the tail will wag the dog and you start just chasing shiny objects in the market based on the customer who has largest potential to write a check says this, so we’re going to do that. It’s a hard thing to do to say, “I’m not going to chase those dollars because that’s not what we do.” Right. That’s exactly it. But I think a lot of businesses don’t instrument themselves to accept feedback from a market in a way that is thoughtful, compiled, that you can make decisions from it. It’s just you throw it in a Wiki and nobody ever looks at it. Right. How do you take the noise from the market, turn it into signal, and then put that signal through your own filter to get a great product decision out the other end?

Chad Franzen: You have these product decisions, you have marketing and sales execution, and you mentioned the word cadence earlier. What does it look like to build an operating cadence around that?

Drew DeWalt: It’s interesting. It’s just realizing the concert at which everything needs to work together. I think it’s natural and we’ve known some folks who have spent some time at companies like Oracle, right, who have it, they’re bohemus and they’re dialed, and they’re great at what they do. But basically a salesperson is not even allowed to talk to an engineer and vice versa, pretty strong firewalls of sorts. I think at scale, and at some point when you’re not… And if anybody from Oracle is listening, this is not meant specifically against anybody. But generally as a business, you’re not really in growth mode, right. You’re growing acquisition and some other stuff, you’re still growing revenues, but you’re not growing your product capabilities, you’re more an optimization mode is what I would put it. You can start to do that. But when you’re in growth mode and hyper growth mode, every piece of business has to be in lockstep and you need to create that shared conscious of what’s going on.

Drew DeWalt: I need my engineers, my most junior engineer to appreciate the struggles that my salesperson has gone through and to appreciate the struggles that my proser consultants are going through, because that diffusion of knowledge, there’s better decisions at a lower level happening versus the ivory tower of a few talking heads, making everything. That cadence is so important in the early stage, I think stays important. Candidly, I think the businesses that are going to be successful in the future, even at the scale of the Oracles and SAPs in the world are actually going to figure out a better way to maintain that concert of operating cadence across all parts of the business versus the firewall approach, because it allows you to be much more agile, whereas business in the past didn’t move as fast.

Drew DeWalt: It wasn’t as global, and it didn’t require the same level of agility. You actually wanted high quality and standardization at all costs and now I’ll take good quality and agility over the former and so that’s where I think you want to instrument your business. If you can instill that stuff in an earlier stage, we are still eight years in, it can make you even more wildly successful in the future.

Chad Franzen: Okay. Great. Hey, I have one final question for you, but first, how can people find out more about Rhumbix?

Drew DeWalt: Yeah. Best way, just reach out. Multiple ways to reach out via website, www.rhumbix.com. Rhumbix is spelled R-H-U-M-B-I-X, Romeo, Hotel, Uniform, Mike, Bravo, India, X-ray. It’s actually from a Navy navigational term, it’s right behind my head here. Without the IX, a rhumb line is a Navy navigational term. Yeah, check it out on the website, a lot of good information, reach out directly, anybody, be happy to talk to you. But at the end of the day, if you know anybody that works for a big contractor, chances are they’re either using Rhumbix or they’re looking at it, so that’s another good way to find out about what we do.

Chad Franzen: Hey, my final question, you’re the COO, but you’re also the founder. You mentioned as part of your responsibilities as COO was to impact the culture as you want it. Where do you like to maintain the culture and how do you keep it positive while maintaining high expectations?

Drew DeWalt: It’s tough. What’s interesting is that there’s a difference between a positive culture and everybody being happy all the time. Which I think gets confounded, but I think my co-founder and I are equal in actually every respect the reason, the titles are a bit different just based on where we focus our relative energy. We’re both equal stewards of things like culture and things like that, for sure. But I think that the way we run the company of our [inaudible 00:23:13], right, you build, you hire people that you can trust, you feel like you can trust. A, they’re talented professionals, you do your resume look, you can do the job. You hire people you think you can trust, and then you trust them and find ways to build trust.

Drew DeWalt: If you have those two foundational pieces and then us as leaders we have a Monday morning what we call an O&I operations and intelligence meeting, 15 minutes, top priority is the business every week, updating on certain things that are important for the business. It’s one of the ways we build this shared consciousness of all of the different challenges of our business, such that not just me and my co-founder are thinking about these things, our whole organization is trying to solve for these challenges. If you have smart people you can trust with the context of what are the business challenges? What are our goals? What are we trying to do? Then you can empower execution at lower and lower levels. That just puts wind in everybody’s sails.

Drew DeWalt: I think, honestly, that’s the way you build a great culture is everybody in my business knows that they’re helping build the business, they’re not just serving a boss and an outcome that I can’t tie my own efforts to. If you can do that, it’s absolutely amazing. I still remember though, to my point earlier about, it’s not about happiness. Our business was going through a really tough time. I’m thinking of the timing, it was probably candidly around some COVID stuff and we do, we some tools to measure engagement and things like that, of our business. We were like, “We were at a low point as a business, people weren’t feeling great about what we were doing.” I remember my instinct was to go into an all hands meeting and say, “Guys, everything’s fine. It’s fine. Don’t worry. We got this.”

Drew DeWalt: And then I realized, no, and I challenge people. I’m like, “Hey, we’re in a tough time right now. The reason you’re stressed out is because it’s tough. But the reason it’s tough and you’re feeling this is because it’s real and we share with you, what’s going on with the business and you’re helping build this. If you were super stoked and happy right now, it would mean that you’re like, its ignorant bliss, and nobody wants that. They want to be a part of building this business, so there’s actually this good side to the fact that you’re feeling the stress and all this stuff, and we’re going to get out of this together.” We did, and we are, and so that is a small anecdote of why that’s so important.

Chad Franzen: Great. That’s great. Hey, Drew, it’s been great to talk to you. I really appreciate your time and your thoughts and your insights.

Drew DeWalt: No problem.

Chad Franzen: Thanks so much.

Drew DeWalt: Yeah. Thanks for reaching out. Good to chat and looking forward to hearing the [inaudible 00:25:58].

Chad Franzen: So long, everybody.

Speaker 1: Thanks for listening to the Process Breakdown Podcast. Before you go, quick question, do you want a tool that makes it easy to document processes, procedures, and or policies for your company, so that your employees have all the information they need to be successful at their job? If yes, sign up for a free 14 day trial of SweetProcess. No credit card is required to sign up. Go to sweetprocess.com, sweet like candy and process like process.com. Go now to sweetprocess.com and sign up for your risk free 14 day trial.

Owen Enaohwo: Hi. This is Owen, the CEO and Co-founder at SweetProcess. If you’ve enjoyed listening to this podcast interview, actually, you know what I want you to do? Go ahead and leave us a five star review on iTunes, that way we get more people aware of the good stuff that you get here on this podcast. Again, go on to iTunes and leave us a five star review. We look forward to reading your review. Have a good day.