Interview with Patrick Flesner author of Fast Scaling

Today on Dawn of a New Era podcast, we have a very special guest on a very special day because we have Patrick Flesner, who has just published his new book. And today, guess what? It's launch day. So Fast Scaling is out, and we're going to be talking to Patrick today about his background.

So one of the things that I think with all entrepreneurs, you go onto LinkedIn, and we were just talking about this before, and you see someone's bio, and literally Patrick's got quite an impressive bio. Especially when you look at Patrick, it says here, is growth capital investor with more than 15 years' experience in private equity. And I think when you read this, you think, oh, you know, the book's going to be all about huge tech firms and things like that. I've been reading it, and I'm not a huge tech firm.

I think it's super accessible, I think, for all entrepreneurs, because just before we go on to my first question with Patrick, I want to share a little nugget that I was reading earlier, which was all about startups, and I thought this was quite interesting, that 70% of startups fail because of premature scaling, and startups that actually scale properly grow about 20 times faster than startups that scale prematurely. So it's really interesting because I think the perception, Patrick, is that we start a business, we need to go into this growth phase, and I suppose on LinkedIn, the perception of, you know, what big business is and successful is huge global businesses. But it's not all about that. What would you say in terms of the positioning for this book?

Like, who is going to get ideas or an understanding about business from it? So thanks a lot, Dawn, for having me today. It's a really great pleasure, thanks, and also for showing my book. It's a great day for me, an important day, incredible.

And yes, to answer your question, I think the audience, my target audience, are founders and aspiring founders and people actually who have a vision, who want to build something that can become really huge. And as I'm an investor, I meet so many founders who struggle answering the question how to actually get from this initial traction where you have some revenues to sustainable high growth. And to be honest, there is one great book out there. It's called Blitzscaling.

It's written by Reid Hoffman and Chris Yeh. It's an awesome book. But in my view, there's one problem with this book. It conveys the message that growth means you need to focus on top-line growth: revenues, revenues, revenues.

And that is, in my view, actually only the right strategy for very few companies. But this is not what every founder gets right. They think we need to grow. And this is what I want to convey in my book.

It's like, you know, actually it's really smart to create a solid high-growth foundation before you then scale fast and really invest in growth. So I hope it's a message that resonates with many founders. And as you can see, if you look at the contents, I'm talking about product-market fit, product-channel fit. You could argue this is something for early-stage companies.

It's not. This is something that you constantly talk about in board meetings, even at growth-stage companies. So hopefully I can convey a message that resonates with many founders. And that was at least the goal when I started exactly one year ago.

Yeah. See, this is it. You know, when you see someone, and this is something I always talk about in podcasts, is that it's so easy to fall in the trap. You go on LinkedIn, you look at someone's profile, and you see you're up there, you're investing, you're doing everything.

But, you know, we forget the journey, the 15 years of experience, because you were a lawyer, right, before you were in equity and investing. So how did we go from there to there? What was that bridge? Yeah, I think it's not only 15 years.

I think it has been a longer journey. If I really, before this podcast, I look back also in my childhood when I was a handball player and I was in teams, and when I now think about team composition, team dynamics, I see similarities to what I look for and found the teams today. So it has been a longer journey than 15 years. But indeed, I studied law and actually pretty fast realized that I do not really like law.

It's kind of boring. But the, let's say, the bad thing about it was I was really good at it. So I was constantly getting the best results. So I said, you know, I am not going to quit now.

I will continue. So I continued, did my first exam, did my second state exam. I focused on business law so I could actually get into business, really work with M&A, with huge companies, with venture deals. And also this, I think I achieved.

I worked for a great international business law firm. But again and again, it felt like, you know, I was in the wrong place. And there was this leading law. I've heard this theme, and I said, yeah, actually I'm on this journey for a long, long time now.

And I think my friends couldn't hear this anymore. And once they said, you know, actually you have to do something about it. So I was advising M&A, and I felt like, you know, I'm advising people who do something, but I'm not doing actually something. I'm just advising others.

And then they said, you know, you have to do something about it. And then I have come across Steve Jobs in our graduation speech at Stanford University, and he said, you know, and still, yeah, it's still amazing for me, you need to find what you love. It's true for both family life and business life. I said, yeah, I haven't found what I really love.

So I attended the INSEAD MBA program, focused there really on the business side of private equity, of venture, strongly focused on entrepreneurship. And then it took still some time to get really into the investing ecosystem. I was advising venture deals as a lawyer after INSEAD again, looking for the right time to go on the other side. And I managed to do so in 2015 when I advised Metro Group, the big wholesaler, in connection with corporate venturing activities.

And I think I once said, you know, actually, maybe it's not my job as a lawyer, but I think you are not doing it the right way. If you do it that way, you will invest probably only in bad companies over the long run. And they asked me whether I wanted to help establish LeadX, our firm. Yeah, and I said, yeah, let's do it.

And it has been a journey, a lot of learnings along the way, but this is how I got here. A lot of persistence, strong will. I want to be an investor. Yeah, Tina, well, I think so many people will resonate with it because so many people, you know, have come into their true journey or their true position or their true self at all different ages and stages.

And I started life as a programmer. Thankfully, I'm not doing that now. I realized quite quickly that it wasn't for me. I mean, I was good at it, but there was something more to it, another dynamic that just felt more comfortable.

So what was it like for you growing up? So you live in Germany now. Were you born in Germany? Yeah, in the north of Germany, yeah.

And what was your childhood like? Really at the ocean, could go for a swim before school. Well, that was nice. That sounds lovely.

And did you like school? Did I like school? I think until I got into puberty, yes. Then I had a lot of other thoughts in my mind.

It was okayish, and I think I was struggling with... Learning about so many topics I was not really interested in. Yeah. And now I regretted some somehow because I admire people who can tell me why it makes a difference whether you have first put milk into the coffee or after the coffee.

I don't know why, but people know these kind of things and I admire them. I don't know this, so school was okay. But did you have a nickname at school? It's still Patty.

Ah, okay. And growing up, obviously, we hear loads of entrepreneurial stories where they kind of think that they didn't quite fit. Did you feel like you kind of knew where you were heading, or did you always feel kind of like there was something else for you? Was it like a natural progression for you into law?

Not at all. I think it was like I was interested in studying psychology and law. Still don't know why. It was not like business administration at that time.

So, and as I said, I think I felt I was on the wrong track rather than pursuing the right career. But yeah, a big learning. I should have followed my heart earlier. When we think about it, you know, there's a saying, isn't there, that you're the average of the five people that you spend your time with.

Do you think that's true? Absolutely. I think absolutely, yeah. I think my friends have a huge influence on me, and maybe we pick each other also because it works.

We have similar interests. We love about the same stuff. Certainly my family is around me all the time. So yeah, I think that I never thought about this, but it's probably true, yeah.

So obviously it's been a pretty tough year, and you decided to write a book during that time. How was your journey doing your first book? Because obviously it's quite a chunky book, and what I like about it is that each section at the end of the chapter is really digestible. You've got all...

Your key founder takeaways. How easy was this process? Yeah, not easy, I can tell you. It was, yeah, I mean, it was at the very beginning of the pandemic.

I was one of the early adopters who decided to work from home. I was pretty scared already. And then, yeah, one year ago, on 15th March, I thought, you know, how can I actually use this pandemic maybe also in a value-creating way? And I thought, you know, there's always these discussions I have with founders, but I can only help a few founders I work with.

So why not? And I started a blog a year before, so that was already, I think, it resonated well. So I thought, you know, why don't I write about how to actually grow these businesses in a book? But I had no clue how to write a book.

I mean, I wrote a PhD, but I wouldn't call this a book. And, yeah, so I started reading about how to write a book, and I came up with these kind of mind maps. What do I actually want to convey, in which order? And that was still pretty easy.

And then I had to write. I think that's the point in writing a book: you have to write at a certain point in time. And the first draft took me probably two to three months, and it was crap. But the good thing is there was a book.

It felt like it was not two or three chapters who were really well written. I didn't edit the chapters. I just wrote the book, and then there was a book in my hands. Okay, it's probably, maybe it's crap, but I think I see how it can end and can become a really good book.

And then it took more time and efforts I could have ever imagined. And I think my wife is happier than I am that today is a launch day. Yeah, I think that this process is tough, isn't it? And unfortunately, family members get taken along for the ride, whether they like it or not, because we need them.

We need them as our support. What do you think the future holds? I mean, obviously, I think one of the things we see in the market a lot at the moment is you turn on the news, it just feels so negative. I mean, I feel like a little bit of positivity that we're coming out of it, but where do you think businesses are going to go?

I mean, the pandemic at a certain point in time, hopefully it will be somewhat over and people can go to restaurants again, can meet and hug each other. So I think I'm so tired of that pandemic. I can't wait. I always say I can't wait.

If I see one, I jump into the next possible injection, vaccination. It will be over, and I think already businesses prepare for that time. And it will take maybe another six months. Hopefully we are over then and get to a kind of normal back.

What I realized is that many businesses used the pandemic also to streamline their businesses, operations, developed interesting products, focused even more on customer success in terms of when the customers are back, how can we actually delight them even better? So remote work is really important going forward. People— businesses can... We're going to come out leaner, more effective, more efficient.

You know, they've really looked at the processes and structure of the business, so I don't think it's a bad thing. I mean, I think we simplified the goal somewhat. I think most people were just kind of thinking, if I save money every day and I earn money every day, then, you know, that's a starting point, because some people's businesses, as strong as they probably will be hopefully when they come out, they've not been able to operate during that time. In terms of, obviously, when you talk about you're writing your book, you're really passionate about, obviously, the stakeholders, the founders, the people involved in it, and I like the way that you convey this in the book.

What do you feel in terms of, you know, leaving a lasting legacy? What would you want to be remembered for? So hopefully, first of all, as a good husband and a caring father, I think that is important. And also hopefully as a person who helped my children succeed in life, some messages hopefully stick, at least some.

I think that is important. And I rather think about enjoying my life going forward as long as I can and try to be healthy and have a healthy family, hopefully, rather than thinking about what is after that. I'm not yet scared by the fact that someday I will be not there anymore, but maybe I get scared sometime, I don't know. I think it's an interesting topic because when you're busy doing things, I think one of the things the pandemic has done is it's slowed us down a little bit, and I think it's made us more considered about what's important.

And definitely by talking to entrepreneurs now compared to a year ago, the priorities have changed. If you think about all the resources, I mean, you talk a lot about entrepreneurs and books you've read in your journey. Is there any resources or books or people that you felt particularly inspired by that others may go and have a look at and that they can help them on their journey? Yeah.

Yeah. So, I mean, for me, an inflection point was certainly when I watched the inauguration speech of Steve Jobs. Maybe 80% of the people haven't meanwhile watched it. If not, I strongly recommend to watch it.

It just changed my life. So I never met Steve Jobs in person, but has certainly had a huge influence. And then, yeah, business books, I mean, they resonate. With me, I like to read business books.

Maybe Marshall Goldsmith is also someone I read books of. I think he's an incredible author, also I can highly recommend. Yeah, but I think there are so many resources out there. If you want to know something, you will find it, and you just need to read, watch whatever the medium is, go for it.

And that's the way I do it. I read about writing books. I read about investing. I still follow the investors, famous investors.

Mark Suster is a great investor. I read a lot of his blog posts. So whatever the goal is, find a strategy. Yeah, I see, very pragmatic way.

If the listeners had to take away kind of one aspect or one motivation of why to read your book, what would be a key learning that you think would be super helpful to most entrepreneurs out there? Yeah, I think the key message is if you first build a solid foundation and then scale your business, you will be better off. It will take a bit longer, but the probability that you succeed is way higher. And funny enough, it takes longer, but you will also hold more stake in your own company, the company that you have built.

So unless market dynamics really require you to only focus on revenues, revenue, revenues, focus on the customer instead. Make the customer happy, the rest will follow magically. Yeah, I see. I think that's really good advice because so many times I literally, I feel like on social media, I mean, you're very proactive on LinkedIn, same as me.

I think it's our kind of favorite network. Anyone can connect with Patrick on here, but— I think sometimes we get exhausted about seeing the whole money aspect of it, and you rightly say that structure is so important. So delighting customers and exceeding expectations has got to be the driving force. And I think with digital marketing now, driving that digital experience and improving customer experience has got to be a big one.

What would you say has been your kind of biggest regret? If you think back of your entrepreneurial journey, is there anything you just think, Oh, you know, I wish I'd done something differently? Yes, I think I should have followed my heart earlier. If you know that you are on the wrong track, why keep running?

So I think that is certainly something I really have, this regret. I mean, on the other side now, I can still use all what I've learned as a lawyer, all the deal structuring, the deals. I mean, that certainly helps me today as well. So maybe it's kind of, that was my way.

Maybe there is nothing to regret, but I think that would be one. And then if I think about all my life, personal and private life, every time I made decisions, short-term decisions, it was probably the wrong decision. And it felt as if it was the right decision for a short-term period, but long-term I should have gone a different way. So maybe the two.

They also say, though, that a lot of people go the path of least resistance, and I think it is kind of true. Sometimes, you know, when we feel a bit tired in business, all entrepreneurs go through this. Sometimes it's easier to go with what's quicker, least kind of impactful on your day-to-day. But sometimes making that kind of longer decision and going for the tougher would be the right decision.

I think I'm also an entrepreneur, a venture fund or investment fund. We are actually more later-stage private equity fund, but we also have to raise money. There are certain tasks that come naturally. It's easy for me to do them, but I could spend whole days doing what I'm really good at, which will not lead to anything.

So really getting...

That, you know, obstacle and just doing what is really required, although it hurts, I think that is also something, yeah, and constantly every day need to be aware of. I need to do something towards a certain goal and not just because I'm good at something. Yeah, and it's so true. It's very easy, isn't it, to kind of fall into that to-do list and pick all the things you like off of it.

I mean, it's the Pareto law principle, isn't it, where 20% of activities actually will be the impactful ones, and it's about really focusing day to day, you know, what's going to have impact on your business, you know, what's going to grow you, and where is it going to take you? How are you going to reach those goals? So, yeah. So I think that the final question has got to be, obviously, is that, you know, today is the day.

It's available on Amazon. I'm reading my way through it, and yeah, I mean, I'm not a big tech firm, as I said, but each step that I'm going through, it kind of makes sense. And I think one of the things that I took from it was when you talk about, obviously, this whole customer-centric attitude, and I think every business needs to just refocus that because as we come out of, hopefully, the pandemic, and we come out hopefully leaner, and we come out stronger, more aware of what we need, you know, this customer focus is going to be in place. And I think we will hopefully be in a different place in a year's time.

If you could give one piece of advice about what makes a difference for a customer in your experience, what would it be? It depends on so many different factors: business models, customer groups, target groups. I think if I talk about customer success, I always have two things in mind. It's the return on investment, and not for the founder, not for the company, but for the customer.

So what is, you know, is there really a value in what the founders provide, the company provides, the return on investment? And the second aspect is definitely the customer experience. If it's easy for them, if the customer journey is seamless, it's fun for the customer, they will spread the word: I get a great value out of these products. It's easy to work with this company.

And you know what? And this leads to business success for the company then in turn. People talk about it. Customer acquisition costs go down.

People are happy. They will not churn. They will stick to this company. Longer customer lifetime value and more money.

And then you can grow again. And I think what you—it's exactly my point. People think about growth by thinking about marketing and sales. They should think about customer success.

The other stuff comes. Because that leads to your sales and marketing, right? Doesn't it? You know, at the end of the day, if someone can see the ROI, you don't have to sell.

If someone is absolutely delighted, what do they do? They go and tell the next person. It's word of mouth. It's marketing, and it's the best marketing you could ever have.

So I'm just going to wish you the best of luck on your amazing book, and guys can connect with Patrick on there. Patrick's always posting on LinkedIn, and there'll be lots of other things that obviously I'm sure he'll be sharing that will help you on that journey. Is there any final quote or saying that you would like to leave our listeners to enjoy? Well, there are two quotes.

Maybe the first relates to customer success: Chase the vision, not the money. Tony Hsieh, former CEO of Zappos. And then again, Steve Jobs: You need to find what you love. It's true for both business and private life.

So I think that is amazing advice, and it's something that I absolutely 100% believe. I think it's so important to wake up every day feeling energized about what you want to do, and I think that energy then translates for your customers. So Patrick, it has been amazing. Thank you very much.

If there's any questions, guys, please feel free to ask away either if you're listening to the podcast. So Patrick, if you can say goodbye to everyone, and we will catch up offline. Yeah, thanks, Dawn, for having me. It was a pleasure, really a pleasure.

Yeah, and as Dawn said, please connect with me on LinkedIn. This is my favorite medium. And yeah, hopefully, if you buy my book, please let me know whether you like it. Spread the word, I think.

I did not write this book in order to earn money. Unfortunately, I'm not Ken Follett, not Stephen King. It's about creating awareness among founders, and you can help me create awareness. So thanks a lot.

Oh, thank you, Patrick. Thanks. I hope you enjoyed this week's episode, and don't forget, I'm going to be with you each and every week. So download and listen on DawnMcGruer.

com or on iTunes, and come and join us in our Facebook community too. All the details are on the website, and I'll see you next week.