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Welcome to Growth Everywhere. Today we’re interviewing Intertech CEO Tom Salonek. Tom has been named as one of Minnesota’s top business leaders under 40 and has twice been named to Inc. 500 fastest growing companies. As a technology and consulting firm, Intertech teaches companies how to make software and also makes software for clients like the government.
Keypoint Takeaways: Two focuses, one company
Intertech was only Tom’s second job after working at a large tech firm in the Twin Cities nearly 23 years ago. I was curious about his journey, since most of the tech entrepreneurs on our show and software as a service guys go through a seven year cycle with their company or product.
Intretech essentially runs like two companies with their consulting and software divisions. One of Tom’s partners runs the consulting side and another runs the training side. Tom describes them as separate but related divisions, and doing both allows his consultants to always be up to speed on the latest technology. But instead of letting the training focus open the door to software development, Tom always intended Intertech to offer both services.
So far the dual business model is paying off. This year Intertech is scheduled to do $15 million in sales and works with a couple dozen clients at a time on the consulting arm of their business. On the training side, they work with hundreds of clients over the course of a year.
Struggling through cold calling
Tom built up his business with a lot of cold calls and rejection. He opened a phone book, looked for potential customers and just called them. He also used direct mail and speaking events addressing a mix of business adn technology to build up some credibility. Today Intertech is found organically in paid search.
Back in the early days of Intertech, Windows was just coming around and software development houses were just sarting to create Windows applications. Tom used speaking events as an opportunity to talk about the Microsoft Suite of development tools and how to use those to make Windows OS applications.
Tom took a high level approach to his talks and says it’s all about knowing your audience. He knew if he was speaking at an event for business people, they would just want the benefits of why they would want it. They didn’t want to hear about features. Meanwhile, if he was talking to technical people, they wanted a deeper understanding of the features.
I was curious about Intertech’s direct mail campaigns. Today they don’t use it, but do have newsletters, a blog and are active on social media. Although it was previously successful, Tom says direct mail stopped working for them around the time of the dot com bust in the early 2000s.
Building a Winning Business
Tom’s new book, Building a Winning Business, stemmed from a desire to create a document that really outlined how they do business at Intertech. Originally it was meant primarily for new employees when they would onboard. As he dug into the writing and organizing process, Tom realized it was a lot of work and the things he was talking about applied to organizations beyond Intertech.
Avoiding business death traps
In the first decade of building up Intretech, Tom had 18 consultants working and 6 of them were working on the same account. The company was acquired and the new CIO called a meeting and said she couldn’t find a contract with them. Tom explained they had been working on a handshake for awhile. The response? “Well, you’re done today.”
Suddenly six of the consultants didn’t have a job and Tom had to rethink the business with his partners. They scrambled to figure out if they had billable hours to give the consultants, who they knew and where they could line up new work for the six out of work. Luckily they managed to get everybody working again within a month, but Tom learned a valuable lesson about diversifying accounts. Today Intertech has no account that is more than 10% of their business.
10 Time Best Business Winner
Intertech is no stranger to accolades as a 10 time winner of the best places to work by Business Journal. Intertech is named the number one place to work as a mid-size company as well as the number one place to work for a 100 to 150 employee company.
Tom says they start to cultivate a great work culture at the front end of hiring by being very picky about who they are. They look for people with great technical skills, but also employees with similar values across attitude, commitment and excellence. They also purposefully create accountability and transparency with once a month company meetings that end with sharing financial information. Intertech follows goals that are measurable, achievable, results oriented and focused so performance definitions stay clear.
But Intertech is no stranger to celebrating like their accolades on being the best place to work. They also celebrate birthdays, client successes and anniversaries. The first Friday of the month they host a BBQ to honor all their accomplishments for the last month. And when an employee has hit a work anniversary, like 5 years, they’ll have their family come in and give flowers to their spouse and toys for the kids along with a dinner spread for the company.
Resources mentioned in this episode:
Mastering the Rockefeller Habits
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[spoiler title=’Transcript’ collapse_link=’true’]Eric: Hi everyone. Welcome to this week’s edition of Growth Everywhere where we interview entrepreneurs and bring you business and personal growth tips. Today we have Tom Salonek who runs Intertech which is a Minnesota based technology and consulting firm. He’s also been named as one of Minnesota’s top business leaders under 40 and has twice been named to Inc. 500 fastest growing companies. Tom, how are you doing today?
Tom: I’m doing great Eric. How are you?
Eric: Doing well. Thanks for being on the show. Why don’t we kick things off by talking about your background first and we’ll continue the conversation.
Tom: Sure. I got an undergraduate degree in computer science and my first and only job outside of Intertech was at a large tech firm in the Twin Cities and thanks to a really bad manager I decided to do my own thing. That was 23 years ago.
Eric: Awesome. Why don’t we talk a little bit about Intertech as a company and then go from there.
Tom: You bet. Intertech does two things. We teach companies how to make software and we also make software, primarily for state government.
Eric: In terms of—Intertech how long has that been around for?
Tom: 23 years.
Eric: Wow! So, you’ve stuck with it for a while. Typically, one thing that sticks out to me right now, the tech entrepreneurs that watch this show, typically, software as a service guys, it’s like a seven year cycle, 23 years sounds like it’s been quite a while so can you talk about that journey a little bit?
Tom: You bet. I first started out of the back of my house and there were three of us working with the firm when I made my decision to leave the house and get our first real business location and I was able, the first half dozen or so years, it was much like a couple of accountants who go do their own thing, and I wasn’t really focused on growing a business. That changed when I hired a couple of people, one on the sales side who really had a growth minded approach, another person on a technical side who took over that part of the job so I could focus on leading the business.
Eric: Got it. Okay. Perfect. In terms of revenue and customers today can you talk to us little about that?
Tom: You bet. This year we’ll do $15 million in sales and on the consulting side of the firm we work actively with a couple dozen clients at a time. On the training side of the program we work with hundreds of clients over the course of a year.
Eric: So, you have a consulting side and then you have the training side. It sounds like two totally different businesses. Are you running both of them or do you have another general manager? I’m wondering how that process works?
Tom: You bet. One of my partners runs the consulting side of the business, another partner runs the training side of the business. While they’re separate, they are related. Doing both allows us on the consulting side, to have our consultants always spun up to speed on the latest technologies. On the training side, doing both meant that were focused on the practical application of technology, we’re not just talking about theory, we’re talking about stuff we actually do with our customers.
Eric: Okay. Did the business start out that way with these two branches or did you actually decide to add on another one?
Tom: That’s a good question Eric. It’s very common that people ask me that. They were started pretty much when I left my job. I started doing both immediately. I started offering training and then building software for customers.
Eric: 23 years ago you start going off on your own and you decide to start this business. Walk us through how you got your first 100 customers.
Tom: There were a lot of phone calls where I got hung up on, so cold calling, back in the day, that was a way to cultivate business. Today, it’s a lot more about being found organically in paid search. I literally got a phone book, opened it up to people I thought could be my customers, and started calling them. I also did direct mail as well as I would speak at events where I would talk about a mix of business and technology in hopes that people would think I was legitimate.
Eric: Okay. That’s interesting. People don’t talk too much about speaking, not direct mail either. Let’s talk about the speaking part a little bit. Do you have any rough idea of—would you go into a speaking event saying, I want to, at least, get two or three leads out of it? Do you have any conversion rate data you can share with the audience?
Tom: Sure. I think it’s a lot like social, maybe social media that you just show up and throw up, really pushing yourself, you’re not going to have people wanting to reach out to you. Whether it’s today in the social media world or back then when I was doing technical presentations, it was all about having great content and then using that content to get people to trust you and start to build a relationship to the point where they have a need and they realize that we’re a legitimate group that knows what we’re doing and then they reach out to us.
Eric: So, what’s one example of a presentation that you did maybe 20, 23 years ago?
Tom: Back in those days Windows was just coming around and so for software development houses were looking to start creating Windows applications, I would do high level talks about the Microsoft Suite of development tools and how to use those to make Windows OS applications.
Eric: Okay. You just kind of mentioned, I kind of latched on to the word, High Level. Do you have any tactic for deciding how much in detail you should go into a particular detail or talk, anything like that where, I guess when you’re going to speak, any tactics to prepare ahead?
Tom: Sure. It’s all about knowing your audience. If I would be speaking at an event where there would be business people I know that they would just care about, “Don’t tell me about the features. Tell me about the benefits of why I want to do this.” If I was talking to technical people, there I would need to go deeper because that’s where their minds are at.
Eric: Perfect. I think when anyone goes to speak I think that’s the number one thing you’ve got to know. You’ve got to know your audience. That’s perfect. In terms of, you talk about direct mail a little bit. Do you guys still do that today?
Tom: We do not. We do have two different newsletters that go out every other week and that’s our primary way of talking about promotions or upcoming presentations or pushing people to our blog as well as we’re active on all the social media channels.
Eric: Got it. Okay. When did you start see direct mailing—I know some people still do direct mail today. For you guys when did it stop “working”?
Tom: I would say around the dotcom boom and bust, so around early 2000, 2001, somewhere in there.
Eric: Yes, it’s weird. I guess it all depends on the niche because you look at some health companies that are doing $60 million a year and they’re still doing direct mail type stuff, so I guess it depends on the niche right?
Tom: I think you’re right Eric.
Eric: Let’s talk a little bit about your book, Building a Winning Business. What’s that all about?
Tom: Sure. I started to create a document that really outlined how we do stuff here at Intertech and it was meant primarily for new employees. When they would onboard and we would give it to them and say, “This is the game plan that we run the company by.” And when I got into it I realized a couple things:
The stuff that I talked about like; having a rhythm through a daily huddle, how to do effective strategic planning, and how to communicate good news. All these things would work for leaders and managers outside of Intertech. And then, I put that bit aside and decided to make a book out of it.
Eric: Creating a book like that, any time you create—it sounds like a very extended process. How long did it take you to produce that book?
Tom: It probably took about year and a half. I took a couple of different paths and didn’t really like the way it was going so I re-wound and, as you’ll note, the book in the form it’s in today is all about practical takeaways that leaders can implement in their own organizations. I’m currently working on a second edition of that book.
Eric: Got it. I’m assuming people can buy this book on Amazon right?
Tom: They can. It’s available, printed on Amazon, Kindle, as well as the Nook.
Eric: Cool. Growing your business, it’s been quite a while, so can you talk about one big struggle you faced while growing the business?
Tom: You bet. This is probably about a half dozen to eight years into starting the firm and I had at that time about 18 consultants, and six of us, because I was actively working on the technical side of the business, were working on one account. That company was acquired and the new CIO called a meeting and she said, “I looked around and I couldn’t find a contract.” I said, “Yeah, we’ve been working on a handshake for quite a while now.” And she said, this was Friday about 3, she said, “Well, you’re done today.”
Eric: Wow.
Tom: The following Monday for the eight of us that actually did build the work, six of us didn’t have a job. I called one of my partners and over the weekend we did that reline thinking; in what ways can we get our people billable, who do we know, who can we reach out to, even over the weekend to line up work for our consultants.
I think it was within about a month we had the bench cleared and everybody was working again. But I learned a valuable lesson about diversity in accounts. Today we have no account that is more than 10% of our business. It just helps me sleep better at night knowing that won’t happen again.
Eric: … Great. That’s a great story. That actually brings up an interesting question. When you started the business and you had a consultants in the beginning, did you try to strictly focus on having more contractors instead of employees, at what point did you switch over to just bringing on full-time employees?
Tom: Our model from the start was full-time employees, not contractors working under our umbrella. Now, fast forward to today, especially when we have a tight labor market like we do. It seems to be kind of a pendulum that when the labor market’s tight, people that are kind of on the fence of being independent contractors become independent contractors, and then we hit a recession and people want a job with steady benefits and a steady pay check.
So, today our model is blended. A bulk of our technical staff are W2 benefitted employees, but we do have independent contractors that work with us. In some cases it might be that it’s work that’s on the coast and we don’t have people that want to do that, so we’ll find somebody who can do work in D.C. or in L.A.
Eric: What’s the percentage break down between full-time and contractors for you guys?
Tom: For full-time employees, in the 50’s, and probably about 20 something contractors.
Eric: Twenty something contractors. Got it. Okay. It’s been a while. I typically only ask for one big struggle, but since you’ve had the business for 23 years can you tell us about another big struggle you faced while running the business?
Tom: Sure. I think struggles or hiccups, without being too Pollyanna, they really do force us to turn a lemon into lemonade. After I had moved out of the house, we had our first real business location, we were there for a year or two, we moved into new space that was nice, and a lot more expensive, and we were there for about two weeks when my then business partner came to my office and said, “I just don’t want to do this anymore.” I had made this big commitment and what ended up happening was, around that same time a former student that I had reached out to me and said that he was looking for a job.
He asked me of places that he could work in the Twin Cities and I gave him a laundry list. It was that night I was talking with my wife and she said, “Well, did you mention that maybe he can work for you?” and I said, “I’m not really sure I have the work.” and she went on to tell me that there never was a time I wasn’t working overtime so why not make the commitment to start growing the organization through hiring folks as well as reaching out to this person. He just brought a great energy to the firm along with the other partner that I mentioned that had a growth minded approach to sales, and that’s when the firm really took off.
Eric: You mention the Twin Cities. Seems like you’ve been there for a while too. A lot of people talk about building a business in Silicon Valley or some big city. Can you talk about, and I know a few companies that are in the Twin Cities, what are the perks of building a business in the Twin Cities?
Tom: I think we’ve got the mid-western work ethic, the people that are here that commit do something, they’re going to follow through. In fact one of our three values as a company is commitment and we define that by saying; we’re going to demand more of ourselves than other people could ask; as well as, when you create a great home, in this market, people tend to stay. So, we’ve been a ten time winner of the best places to work by the Business Journal. We’re named the number one place to work as a mid-size company as well as the number one place to work for a 100 to 150 employee company, by the largest newspaper in the cities, that when you create a great culture, a great working environment, in this part of the country, you have great retention.
Eric: That’s certainly not something to scoff at, ten times being one of the best places to work. What are some things you guys do to create this great culture, because everyone talks about great culture, but it seems like a lot of people just get it wrong. What are some unique things that guys do?
Tom: Sure. I’d say it starts at the front end of hiring. We’re very, very picky about who we hire. One out of every twenty applicants that apply for a job here, and throughout the process we look for people who:
Then within the organization we’ve done things to create accountability and transparency. For example, every month we have an all company meeting where we do an around the horn recap of what’s going on in the firm and we finish with sharing our financial information. Another thing that we do is we have the Dale Carnegie Approach to management which is key result areas, so everybody has three to five goals that are very specific, measurable, achievable, results oriented and time focused.
So, the definition of performance is very, very clear and then another thing that we do is we celebrate a lot. These wins that we have about being the best place to work, we celebrate that. We celebrate anniversaries, we celebrate birthdays, we celebrate client successes, we celebrate that. Creating a culture where people feel good about coming to work, celebrating it has got to be part of it, in my opinion.
Eric: Can you give us some examples of these celebrations that you’re talking about?
Tom: Sure. The first Friday of every month we have a BBQ and in there we’ll have a big banner of things that have been accomplished over the past month. Or when a person has an anniversary, let’s say they’re 5 year anniversary, we have their spouse and family come in and we give flowers to the spouse, we get toys for the kids, we have a full spread for a dinner for the whole company, and then we’ll segue to our all company meeting.
Eric: That’s interesting. I’ve never heard of—I think maybe it’s a cultural booster to be celebrating these things and I think a lot of people, or a lot of companies tend to just try to save money and use those expenses for other stuff, but clearly it has it has merits here. Congrats to you on that. You talk about building a specific learning goal to each employee’s performance plan. How does that work exactly? Can you explain that?
Tom: Sure. At the start of every year, for everybody in the organization including me, we define either learning that will be done where someone will attend one of our own classes here or maybe for myself, I’m going to go do executive education at the London School of Business this coming March, or for a technical developer it might be that they’re going to go to a class and take an assessment for certification. We’ll look at things where we need to improve or grow as an individual and back that up with training and or certification.
Eric: Is there a certain amount that you budget for each employee?
Tom: That varies. Obviously for training for an employee’s coming to a class that we have, it’s just books and how many donuts you eat that week. For other people it’s probably $2,000-$5,000 a year is what we’re spending.
Eric: Got it. I’m just trying to wrap my head around this more, if I’m a new employee am I eligible to do that $2,000-$5,000 training or do I need to be a little more senior?
Tom: We do look for new employees, we look at their background and say, if you look across the classes that we offer that are in the area where you have your skill set, if you come in and you’re that senior and that [INAUDIBLE 00:18:35] of our classes would work for you, then we look at outside learning. So, yes. If that was the case for an employee that just joined us, they would be eligible, but most employees, because we offer pretty deep classes on IOS development and Android development, Java, and Dotnet, when they look at the classes that we offer they’ll say, “I need to learn more about MBC”, and we’ve got an MBC class.
Eric: Okay. How do you keep them accountable? I know you shell out $5000 and you say, here’s the course, and they take it and like, “Yes, I now IOS now.” but how do you hold them accountable, especially considering you have 50 full-time employees?
Tom: Sure. Certification is usually part of it. So we’ll say, that if somebody wants to go outside training, certification needs to be something they’re going to do once they complete the class. That’s one way of creating accountability. We’ll also ask the employee if they’re going to a conference, when they come back, to do a debrief[ing] of what they learned, with their fellow consultants after attending that conference.
Eric: Okay. Got it. What if, and let’s say this is a new employee, they’ve made it past—they’ve beaten those 20, or 19 other applicants and they fail a certification or they don’t really show you anything meaningful from the conference, what happens there?
Tom: I think, we have a board member who likes to say, seek first to understand before you’re understood. We’ve asked lots of questions, did you never leave your hotel room? What happened, you came back and it was a bust? Usually it’s not the case, and when it comes to, let’s say, a certification exam, we pay for the materials, we pay for the test, whether they pass or fail, and I think employees knowing that we’re not going to hold them up and tell the whole company that they didn’t pass the exam, that combined with us just saying, give it your best shot, and if it doesn’t go the first time, we’ve still got your back.
Eric: Okay. That’s great. Wrapping up here, a few more questions from my side. What’s one piece of advice you’d give to your 25 year old self?
Tom: I was too careful with my money and I would’ve told my 25 year old self, get out of the house a lot sooner than what you did. My wife, God bless her, we were three of us, as I mentioned in an 800 square foot house, and it was typical that we would work six days a week. So she would wake up on Saturday morning, look in one bedroom and see me working, and look in the other bedroom and see another bedroom, and look at the couch in the living room and see the other person working there. It didn’t create much work-life balance. I would have told myself, spend extra money and move out of the house.
Eric: That’s another interesting point there. Your wife seems like she’s a very supportive person, very understanding. So a key takeaway for the audience; you’ve got to find someone that also understands what you do, right?
Tom: I agree.
Eric: What’s one productivity hack you can share with the audience? Just to give you an example, it could be putting my phone away where when the alarm goes off in the morning I need to actually get up to physically turn it off. Anything you can share on that front?
Tom: I do think that dedicated time with the phone on “Do not disturb”, email notification turned off, that when I have a task that’s important, I’ll shut my door and do those things so I can really hone my mind in and not be interrupted by the cell phone or someone knocking on my door.
Eric: Okay. That’s perfect. Do you turn all your phone notifications off, just all push notifications off?
Tom: When I’m holed up to get serious work done, you bet.
Eric: Got it. Final question from my side. What’s one must read book you would recommend to the audience?
Tom: This one’s easy Eric. I’d have to say my own book, Building a Winning Business. Another book that I like a lot is called Mastering the Rockefeller Habits by Verne Harnish. That’s a good take away, and like my book, a lot of practical things that people can use.
Eric: I think you’re book is, from the sound of it, sounds like I need to buy right after this call. But Mastering the Rockefeller Habits is one of the best business books I’ve ever read too. Great recommendation. Everyone, this is Tom Salonek. Definitely want to have you on the show again sometime soon. Thanks so much for joining us.
Tom: Alright. Thank you Eric.
Eric: Bye. Take care.
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