Nick Smarrelli [00:00:00]:
We needed process, we needed structure, and we needed discipline. And we just had all these things that we never had in the earlier phases that made it real. And we needed meetings. We were no longer like the fun little company that never had meetings. Like, we had meetings and we had dashboards and we had scorecards and we had. We were just, like, becoming everything I never thought we had to be. But we needed to be in order to scale correctly. That was a transition for us.
Matt Tait [00:00:30]:
I'm Matt Tait, founder of Decimal and fellow entrepreneur. Yes, I'm one of the crazy ones. I've chosen time and time again to hustle my way through that first million. Now I'm scaling to the next 50. So I know firsthand what the messy middle is really like. And I know that entrepreneurs and leaders like us need a destination for empowerment, community, and encouragement. This is our place. This is after the first million.
Matt Tait [00:00:59]:
A two time founder, recipient of the 2021 best and brightest in technology award, 40 under 40 winner, and former CEO of GadellNet, a company ranked as one of the fastest growing by Inc 5010 times over. Nick has been instrumental in shaping strategy and values and culture as the former CEO where he grew the company from ten people to over 200 employees. To say that Nick's navigated the messy middle of entrepreneurship would be an understatement. Nick, it's a pleasure to have you here today.
Nick Smarrelli [00:01:34]:
Yeah, thanks for having us.
Matt Tait [00:01:36]:
So I always joke that you have to be just a little bit crazy to start and or run a company. So I have to ask, when did you know that you were one of the crazy ones?
Nick Smarrelli [00:01:48]:
I love that you're starting the podcast with this question. I think I've always known and always had this general philosophy of kind of betting on myself. And I would say in part that was due to a bit of confidence and ability and aptitude. And I think a lot of it had a little bit of perhaps narcissism and naive ignorance as well. That kind of helped shape, I think, really what made me want to actually take the plunge into entrepreneurship. But I would say it's a few factors that really came together in realizing, like, how am I working so hard for somebody else when why don't I just be crazy enough to see if I can do this thing on our own?
Matt Tait [00:02:33]:
You know what's funny is I've talked to more and more CEO's and founders. They laugh and I can't tell you how many are. Like, I always knew there was some part of me that always knew that I could do this.
Nick Smarrelli [00:02:43]:
Yep.
Matt Tait [00:02:45]:
Tell us a little bit about your career journey before entrepreneurship and what finally got you to the it's time to jump off.
Nick Smarrelli [00:02:54]:
I've really only worked for a few companies. We're in my 21st or 22nd year of kind of a full time career. And I started off as an intern at a company called Ingersoll Rands Big, large manufacturing organization. I got that job, actually. I was in a line at a cafeteria at my university. The guy behind me was complaining he couldn't find an HR MBA candidate. And at the time, I was a sophomore, and I turned around and I said, I bet I can do it. And I think in probably those exact obnoxious words, and in the time from standing in line to by the time we ordered him and I actually had a chance to get to know each other.
Nick Smarrelli [00:03:31]:
And about four and a half weeks later, I started as an intern in the HR department. And him and I still actually, two decades later, still keep in contact. So I worked for them. I moved from HR to operations to marketing to sales, lived in St. Louis, lived in New York City, lived in Shanghai, lived in Charlotte, lived in Atlanta, and then we moved here to Indy and had that as a career. And really what set me over the edge was I was on a trip and I don't remember where I was even heading. I was sitting in first class because that's what you do when you fly all the time, is you get upgraded. And looked around, I saw people that were, I don't know, they looked sad.
Nick Smarrelli [00:04:09]:
They were carrying around their little suitcases. They looked like they were on their third trip of the week. And that was the trajectory of life that I was heading to. I'd always loved working hard. You know, you could be the CEO of a Fortune 500 company path, and. And I realized that wasn't at all the direction where I wanted to go. I was reminding my students even of this, too. So I sent a text to two guys that I knew from college, and I said, hey, I know that getting this thing off the ground, I want in.
Nick Smarrelli [00:04:36]:
And a few weeks later, lost a six figure job, the nice, sweet company car, and joined those two individuals to get the company off the ground. And I was technically employee number four. They had an Internet as well, to get the company from a small, scrappy it startup to where we ended up. And that company continues to grow and thrive even after I left.
Matt Tait [00:05:00]:
So that was Goodell net that you effectively joined the founding team to help start, correct? Yep. I would almost argue, though, that your first entrepreneurial moment was the moment that you, as that confident college student looked back and said, I bet I could do that.
Nick Smarrelli [00:05:21]:
I always believed, and I don't know where this came from, I will call it both nature and nurture. I always believed that. I think with hard work and curiosity, you could do a lot of things. And so that was always my thesis. And so I always knew I could just say yes and then I'd figure it out somehow. And that so far, is like a life attitude has served me reasonably well. I'm very willing to learn and very willing to work hard. And I think if you marry those two things together, you can get a lot done.
Matt Tait [00:05:51]:
So I wonder, though, too, when I talk to other entrepreneurs, and even when I think about myself, when you look at a challenge, you're almost like, that sounds like fun.
Nick Smarrelli [00:06:01]:
Yeah.
Matt Tait [00:06:02]:
And it sounds like even in that first kind of corporate job, I mean, not a lot of people in the short period of time that you were at that job, even over the course of years, get the opportunity to go from HR to marketing to operations. You are getting an MBA in running a company. Right?
Nick Smarrelli [00:06:21]:
It's so cool. I teach in the entrepreneurial innovation department, and I think there's so much value in learning it then. But, man, it is great to pick up all those skill sets on somebody else's dime, to make all the mistakes, to be stupidly confident when I shouldn't have been on somebody else's dime. I reflect upon it. And again, I remember one of the managers that Ingersoll Rand not wanting to hire me because they said I was going to be difficult to manage. And I take that as the most ultimate compliment. Another guy that I still keep in touch with, by the way, but he said it was going to be difficult to manage, and I was, because I was, hey, how about this? Or teach me here, plot me here. And they did, to their credit, did a wonderful job of that.
Nick Smarrelli [00:06:58]:
Even when they mentioned this China opportunity, and I'm 24 years old and they're like, hey, would you move to China for a year and a half? And with enthusiasm, I raised my hand and said, I don't know anything about China. I don't speak the language. I know nothing about asian business culture. But yes, please. So, yeah, I've always been the dive in, see what happens, hope I can swim.
Matt Tait [00:07:19]:
Oh, that's awesome. So then talk to me. I can empathize with that moment of sitting on the plane and cooking around and realizing kind of that look of Christmas future and saying, boy, this is not me. But that's a scary jump going from a well paying good trajectory, career to effectively an idea or a small business.
Nick Smarrelli [00:07:43]:
Yep.
Matt Tait [00:07:44]:
What was going through your head when you did that? Were you married at the time? Did you have a family? Was it just you? What was the surrounding circumstance around you making that decision?
Nick Smarrelli [00:07:54]:
I was married. I had just gotten married. So we got married in 2009, and then I took the leap in July. I think I sent the text in May and then quit my job. I think July 1 was my first day of 2010. So we hadn't even been married for I was just shy of a year before the life when we met. And we actually met, as nerdy as it sounds, at Ingersoll Rand. So that was where we met at a leadership conference in Minneapolis.
Nick Smarrelli [00:08:20]:
So we had met there. She only knew me as Nick from Ingersoll Rands. The upside is a we had no kids. I didn't grow up with money, so there was very little standard of living pressure that I had on myself, so we could easily live off one income. The most incredible parts of many of about my wife was very much a believer in one. If I come up with an idea, I'm probably going to do it anyway, so you might as well just go with it. That's not a great quality of mine, a highly redeeming quality of hers, to tolerate me sometimes, but incredibly supportive of exploring and knowing that curiosity is such a big part of my personal value system to say, give it a try. And worst case scenario, you go back.
Nick Smarrelli [00:09:02]:
And I knew, and again, I say this from a place of recognizing privilege in the sense of, I knew that if that failed, I could get a job again. It was 2010. We were just coming out of the recession a bit. There was enough blissful ignorance at the time to say, if this doesn't work, we can figure out something else again, we didn't have kids, we didn't have a mortgage. We didn't have some of the basics just yet. There was no reason for me not to do it, frankly.
Matt Tait [00:09:28]:
Two things that stand out that you said. One is, I don't know if we talk about curiosity enough as being a great quality, but it seems to be a common quality among successful entrepreneurs.
Nick Smarrelli [00:09:41]:
Yep.
Matt Tait [00:09:42]:
As well as a quality that they look for in the people that they surround themselves with.
Nick Smarrelli [00:09:46]:
If you look at my friends, who I spend the most amount of time with, or you look at the people that I choose to spend my life with, or what we raise our kids on, is, I think curiosity is, I think, a foundational element, a, of entrepreneurship. I moved to be a teacher, so I'm kind of hopeful that I'm inspiring students to become curious, or else I'm just, you know, sitting and talking to them for 75 minutes. But I think you look at all the biggest challenges that the world has right now. Even division of the United States relative to politics and beliefs and just misunderstandings can be solved by curiosity. If everyone was just willing to say, maybe there's a different way to think about things, a great recipe for entrepreneurship. That's how innovation is born. We can just cross so many divides of humanity. If people are just willing to be more curious to say, you know what? I know with about 90% certainty that this is right, but I want to leave 10% doubt to have a real conversation with somebody to inform my decision even better.
Nick Smarrelli [00:10:43]:
And maybe you'll stick with your decision was. But having, I think, a little bit of space always to say I may be wrong is a kind of a cool way to live.
Matt Tait [00:10:51]:
No, I would agree. The other thing that you mentioned that I think is kind of funny. Blissful ignorance is a phrase you've used in a couple of different phases. Yeah. But let's talk about as a business phase, because when we talked about your journey as we prepared for this conversation, you mentioned that your initial jump, those first couple of people, that was the blissful ignorance phase.
Nick Smarrelli [00:11:15]:
Mm hmm. Yep.
Matt Tait [00:11:16]:
Talk to me about that. What was so great about it? What was terrible about it? Or was it just all great?
Nick Smarrelli [00:11:22]:
Definitely not all great. I'll clarify that point of things, but I'll start with kind of a nerdy psychological principle. Then I'll go back to an actual story, which is there's something called the Dunning Kruger effect. Are you familiar with? Yeah, it's kind of what makes imposter syndrome. But Dunning Kruger effect really best basically says, is if you're too naive, oftentimes, like in the earlier stages of things, you just don't know what you don't know yet. But as you go up the ladder of intelligence and expertise and experiences, you realize how much more you don't know. So the cruel irony is, as you become better at the job, you also know how much you don't actually know. And so for me, I call it the blissful ignorant phase, because I don't think I knew really what the implications and risks were of taking that leap.
Nick Smarrelli [00:12:06]:
I think it was, again, I had a career of, or just even school of just diving into something, and it all just works out. And for the first few years of the company, it certainly did. We grew, we reframed the way that we did business. We hired poorly, but we always figured out a way to get through that part of things. We hired some people that are still with the company in those early phases as well. We made the right choices at the right times, but at first initial phase felt, even on the times that you hired poorly, it felt so rich with optimism that, oh, we screwed this one up, but we're going to find somebody else and it's going to be fine this time. Even when we opened up our first office in Indianapolis, that individual that we hired, who is one of our vice presidents now, we hired them on a Friday to start off with our first new big client that Monday. And it was just this terrible at the end of the day, not thoughtful decisions that just worked out at the right time, at the right place.
Nick Smarrelli [00:13:02]:
So it was just this time of chaos and this optimism of it'll work out and it'll work out just fine. The pressure wasn't there yet. I think the fear wasn't there yet. I say the knowledge base wasn't there. Out of all the things that could go wrong or the implications of every decision we were making, we just didn't have those things burdening us in those first year or two, which was again, I finally look back at those times. I was living in Indy. We started a company in St. Louis.
Nick Smarrelli [00:13:30]:
I think I was there for 48 of the 52 weeks. I was staying at the bottom bunk with one of the other founders sons. At the top bunk, I remember I'd go to Aldi and pick up deli meat, and that was my dinners. It was just like cool scrappiness. That was just fun and just totally different than as we got bigger and the scrappiness, you couldn't do that in those phases.
Matt Tait [00:13:49]:
When you kind of go through that phase, opportunity is everything. Yep. And that's one of the things that's great. And what's hard is as you continue to grow, opportunity can shrink a little bit and you go through various other things, but you start to really narrow in on where you're going. And one of the reasons why we talk about the messy middle in this podcast is that the next phase, I think, is one of the hardest ones. It's one that Decimal Mike company is going through now where you have to actually build a company. Yeah, you called it the oh fuck, this is real phase, which I find I'm going to use that from here on out.
Nick Smarrelli [00:14:28]:
That's the academic term, so I apologize to overwhelming academia of the oh fuck, this is real face.
Matt Tait [00:14:34]:
I imagine your students love it. It's the first two times I've ever used that word. So thank you for introducing it to me. But for a number three time, talk to me about the oh, fuck, this is real face. When did you know you were there? And then let's go into it.
Nick Smarrelli [00:14:49]:
The first moment is selfish, and then it becomes a lot more of this realization of the impact you have as a leader. So the first selfish phase is I have a son. We had our first son in 2012. It's our only son. We had two daughters after that. When I realized that part of this game we were playing at the time was in service of creating the financial means to take care of this human being. And it's their first kid, where you overanalyze every decision you're making and the importance of everything just feels of just massive magnitude. And certainly having a kid is a big deal, but you become a little more laid back by the third one.
Nick Smarrelli [00:15:27]:
But it was this realization that I will call it, like sociology in some capacity of that, like, I am a dad and I must provide, versus let's put the money back in the company and grow this thing, and this is fun, and, oh, that didn't work out well. And go chase down checks on Thursday nights and see what we can do about barely making payroll to. I'm relying on this money because it's just creating and feeding a human and then looking around the company and looking at some of the people that took a risk on this idea that we had. And it wasn't just me, it was the other founders, frankly. It was also some of the early employees that sold this concept of who we thought we were going to be is we created this big vision we had this, we'll call it the arrogance, but it was just like this big, bold goal of outperforming the market. The market was growing at 10%, like it was a fast growing market at the time and still is, but we were growing at two, 3400%. We outperformed the market, which came with some obviously, like kind of the chaos and ambiguity that comes along with it. But people had their kids, and those kids needed to be fed, and many of them had spouses that weren't working.
Nick Smarrelli [00:16:29]:
And so they were the sole provider of money. They were on a career, and they were expecting us to provide those moments. Many of them had physical challenges or mental health challenges, that they needed to have a great place to work so that they would thrive. Because all of a sudden I realized that this whole fun little game that we were playing is actually the space where people are spending 50 hours a week. As a business, we're taking care of technology. And it wasn't just signing a contract and making cool revenue that fed an Excel spreadsheet. It was, if we screw this up, we ruin a business. And that business is, again, I was a business owner, and we had a house at the time, and we had multiple liens on the house.
Nick Smarrelli [00:17:05]:
Every one of us had it. And serving companies with owners that had multiple liens on their houses trying to make something out of nothing, it became super real that decisions had magnitude and implications. It wasn't just me that would be affected by it. Where this ignorance that I had or confidence or narcissism or whatever the characteristic you want to assign to it, that if I screwed this up, it wasn't just me losing a job, it's other people highly affected by our choices. And that became a lot of pressure, and it became a lot of fear, it became a lot of guilt if I wasn't working enough or supporting it, or if something didn't go well, because it didn't just affect me or my small influence of stakeholders. And I think that became overwhelming at that time. It was also we needed process, we needed structure, and we needed, like, discipline. Like, we needed these things that I couldn't just walk into a room anymore and just bark out, this is what we're doing today.
Nick Smarrelli [00:17:59]:
And everyone's. Yes. Like, we had people working remotely and we had people working on site, and we had company cars, and we had loans to pay, and we just had all these things that we never had in the earlier phases that made it real. And we needed meetings. We're no longer like the fun little company that never had meetings. Like, we had meetings and we had dashboards and we had scorecards and we had. We were just like, becoming everything I never thought we had to be, but we needed to be in order to scale correctly. And that was a transition for us.
Matt Tait [00:18:30]:
So I hear that a lot where it's that founding team, the blissful ignorance phase, is there's really no hierarchy. It's really everybody is just leaning together and pushing forward. But then at some point, there's that flex point in the company and it changes. Yep. You've hit on a lot of the reasons, whether it's process, those of us that start companies, we have a tendency to rebel against process, but then we also have a tendency once the process is really good, to light, the process becomes like a safety blanket sometimes.
Nick Smarrelli [00:19:04]:
Great point. Yeah.
Matt Tait [00:19:06]:
So talk about as you went through the oh, fuck phase.
Nick Smarrelli [00:19:11]:
Yeah.
Matt Tait [00:19:12]:
And your pressure is ramping up. How are you dealing with that in the other aspects of your life? All the pressures of every aspect of your life are building up during this messy middle of building a business phase, how did you balance all that?
Nick Smarrelli [00:19:32]:
Poorly, I would say. And then with kind of fake grace all at the exact same time. At the time, I was also getting into, I would say, very much related to where I was in my, like, mental fitness journey at work, was getting into endurance racing. So I did Ironman length triathlons, moved into long distance endurance running as a mechanism for control. I would say I'd put these few years in this, like, sphere of how do I get control of something that I don't feel like I am totally in control of, in the way that I used to be when it was a small company, I went from a not the cleanest human being in the world to, like, compulsively clean. Like, I needed the island clean, I needed, like, the house clean. I needed, like, certain things done the right way in this right order. It was kind of my brain, I think, just seeking control of something with this business that felt, oh, my gosh, we're doubling in size every year.
Nick Smarrelli [00:20:27]:
This feels out of control. I need to figure out a way to control something and whether it's controlling kind of that fear, which I think I managed through sport, through fitness, through taking lots of steps to the way that I treated my house. And I'm parented with probably a far too degree of too much control there to just, for the first time in my life, acknowledging, I would say that I had, like, moderate degrees of anxiety and I had moderate degrees of just, I would say, a lack of mental fitness in the way that I always thought I had. And it was just these, like, minor breaks in this facade of perfection that was hard for me. Nothing bad was happening. The business was doing its thing. It was growing, it was profitable. All these, like, pleasantries.
Nick Smarrelli [00:21:07]:
It started to challenge this assumption that all I had to do is be curious and work hard and I could figure this out. There was a lot more complexity here. And there was this realization that probably the biggest thing that came out of that was, I am not qualified solely to do this. I need to find other people to augment or complement the effort.
Matt Tait [00:21:31]:
Thinking a lot about lately in my personal life is we all, and I think, particularly as entrepreneurs, we start with this vision of who we are. And I feel like as you grow as a leader, you chip away at that piece by piece. And one of the things that comes with that, and you're highlighting it, I think, exceptionally well, in a really cool way, is you start to learn that vulnerability is okay. Like, you're talking about things that a lot of people don't. And to be fair, we grew up in an era where vulnerability or feelings were things other people had, maybe. Yeah.
Nick Smarrelli [00:22:10]:
Yeah.
Matt Tait [00:22:11]:
When did you start to embrace and think about vulnerability, or at least being able to be vulnerable? And you started with it from a. I realize I need other people.
Nick Smarrelli [00:22:25]:
It started here, let's say. If this phase was, let's say, six, seven years ago, I am still very much on that journey of feeling truly comfortable with admitting imperfection or I'm not good enough for this. I think there's still a bit of, as a leader, you need to be good at everything. Again, going through COVID or tough times or growth, there's always this constant pressure as a leader, as your mood sets the tone. And so I struggled all the time with, if I'm being vulnerable, am I setting a tone of weakness or a lack of confidence in me as a leader, which would put the vision and momentum that we had building at risk. And so I would say I became much better about it as every year progressed. But it was just the beginnings of that journey. Where I started was not admitting emotions that took me more years to do.
Nick Smarrelli [00:23:27]:
It was easier to tell myself or tell out loud of, I am good at this skill or good or not. I wasn't good at the emotional part of the vulnerability, like, skill set to me. I was good at the. If I say out loud that I'm not good at details or I'm not good at, like, operational discipline, that's okay, because it was just acknowledging something that pretty much I knew about myself and other people knew about me. I think one of the most critical skill sets that a leader has in this phase is hiring people that are arguably smarter than them. I think I've seen, and I still see in my coaching practice, people self sabotaging their companies because they are afraid of hiring people that are far more talented than them, that they always hire just a little bit less than to keep and preserve that image that I am the leader and I'm going to be the best. I was okay with that. That was my first part of this vulnerability, of being okay with hiring people that were smarter than me.
Nick Smarrelli [00:24:19]:
And I'm thankful for that because one of the people I hired during this phase became our current CEO. Thankful that I was willing to do that. But that was the beginnings of it. It wasn't showing emotional vulnerability, as you mentioned, but it was showing a little bit more vulnerability on, like, skill sets. So very objective, I would say very academic, less so than the emotional part of vulnerability that took me a lot longer to come to grips with.
Matt Tait [00:24:40]:
Thank you for the nice segue into the scale, I can't do everything phase.
Nick Smarrelli [00:24:44]:
Yes, yes.
Matt Tait [00:24:46]:
Was it size that made you first realize that you were there, or what was your first recognition point of, I need to start looking for people that are smarter than me or more skilled at specific aspects of the business that I am.
Nick Smarrelli [00:25:00]:
I would say size helped, but what size created that was a root cause for the symptom, which was sheer overwork. Like, I couldnt be in every meeting at the time. I was still primary salesperson, primary finance person. I think I was in charge of operations at the time. I was in charge of procurement. I think I was doing invoicing at the time. If were only talking 2015, I was in charge of finding the next bit of software that we were using for the company. I was clearly out of my element, and I think it also manifested itself in a bit of just dislike for the job.
Nick Smarrelli [00:25:35]:
And so there were certain symptoms that were happening of, like, this is not as fun as it used to be. I don't like, I'm not really focused on the stuff that I'm naturally good at. I'm doing way too much. And so we started parsing off of what could we afford to do, and then what could we not afford to do, and using that as a mechanism for determining what the next key hires were going to be. And so some of the operational, like, administrative roles were the easiest ones to fill. We struggled for about a year and a half, two years to settle in and find two lead salesperson people that are at each one of our respective offices. And we have one in St. Louis and we have one in Indy.
Nick Smarrelli [00:26:12]:
We currently have one in Denver. Now that took us about two years to be good at that, and, and I'm thankful we got there. We actually use, had to use outside support. Another, like, vulnerability aspect of we clearly can't hire. One of my struggles, especially as it relates to salespeople, is being a salesperson. I wanted to hire people like me and thinking that if I hired people like me, they would be really good at sales. Cause I'm really good at sales. And we found that was not the case.
Nick Smarrelli [00:26:38]:
There's, like, a CEO cache that I was good at sales because I'm okay at, like, the rapport building and all the sales skills, but having the title helped, and so we needed people that had different skill sets. And so recognizing that not only can I not do it myself, but that I shouldn't hire people like me to do the jobs as well was part of that, like, learning journey. As well as I think it's so easy to hire people like you because we're just naturally inclined to be biased towards people that are similar to you, but to find individuals that really met the job requirements. So we had, I would say it was few and far between in those key hires that we ever hired it correctly the first time, but by about two or three, we really nailed it. That was our current playbook from about 2015 to 2017.
Matt Tait [00:27:23]:
It's an expensive process.
Nick Smarrelli [00:27:25]:
It's a very expensive process. Growth is expensive. From a net profit EBITDA maximization perspective, we were focused on growth and being a great company and serving our clients and our employees, sometimes at the expense of profit. Perfect profitability. That was a lesson learned for later in the company.
Matt Tait [00:27:42]:
Yeah, but you're right, growth does eat cash. So as you started to hire during this scale phase, and it sounds like that phase lasted for a few years for you guys, and your company is still growing, talk about the difference between like true scale from that beginning phase to growth and what the difference is.
Nick Smarrelli [00:28:02]:
So for us, it was finding the point, so like, the tipping point of us of leaving that phase and going into the next phase of like true growth was the ability with which to take a foundation with small alterations and pivots. And when we're just able to layer on, add a new client, add some employees, add a new client, add some, like we were able to just do it like we were at one point. I remember employees who thankfully suck through it like it was to the point of a few years because we were growing. I mean, we're going 200 some percent every year that people would have a different manager every six months. I remember like typing out yet another, like restructuring email and yet another restructuring email and yet another restructuring email. It was chaos. I was growing, certainly, but that was not scalable, thoughtful, sustainable growth. But that was needed because we needed to flex ourselves.
Nick Smarrelli [00:28:54]:
And we finally hit a point in the last few years of, on balance, we had to do a bigger organizational overhaul as we got to about 200 employees. But up until about, probably about 80 employees, about 200, we figured out a great structure that didn't require this continuous reshuffling of the entire organizational structure where we created good teams, which as we grew, created new opportunities for people to get promoted or get into new jobs or to switch roles, which is the best part of watching people that came in and these individual contributors growing and doing that stuff. That's when we knew it was working because it was easy to add a functional team, it was easy to add scale there. It's easy out of like a manager here or a team here. That's when we knew we had gotten it right. But there was a difference. It was a very marked difference between just continuous needs for restructuring to when we just literally just layer on revenue and figure out ways to operationally execute on that revenue with a structure that was scalable.
Matt Tait [00:29:56]:
That's a great way to put it. I mean, this true scale phase is constant chaos. You're searching for that and you just talked about you guys reached it, that kind of formula for growth. Yep. Where you realize that it's just a set of inputs and outputs, but it's exceptionally messy to get there and exceptionally expensive to get there. True.
Nick Smarrelli [00:30:18]:
We learned a lot around how to hire, what we needed to hire for, how to analyze teams better, how we spend time writing really sharp job descriptions and interview frameworks to say what key skills, what knowledge is there, what values are required, who's going to do well in our type of organization. That was all part of that failure part. So it was expensive, but it's. It was a cost that had a huge return in the year subsequent to that. So it was enough pain to force us to make a change. So again, if you have to reflect upon those painful moments of the company, I try to reframe those as, yeah, we just paid to learn how to do this better in the future. And so we had a lot of those painful learning moments in those times.
Matt Tait [00:31:07]:
Oh, that's awesome. Now what during this phase gave you the most joy and fulfillment?
Nick Smarrelli [00:31:15]:
This is the phase of watching people that took the leap or were loyal or put the work in to give them opportunities to like, we could start doing bonuses at this phase is the one we did was slightly earlier than this phase, but I'd say when we started offering medical insurance and, like, kind of the basics of PTO, that they could actually take some of the early performers, we took vacations, as you should, but everyone was tied to their phones, like, you really weren't leaving. And we could finally pay people market rate, maybe even over market. If they were outperforming, they could take vacations with their families. They were protected from an insurance perspective. They were getting promoted. It was a manifestation of the promises made that took sometimes a few years to come along. And that was always the hardest part. As we got bigger and new employees would come in and they would just expect us to be this organization.
Nick Smarrelli [00:32:14]:
And I'm like, man, if you only knew who we were a few years ago. You have no idea how good it is. People had to wait to get to the privileges that are what feels so normal now. And it's not a wrong way to look at it by any extent, but it was just a very funny way of having seen the struggle and all these things that were seen as normal. But when people traveled, they could stay in hotels. I was very thankful to see and experience people being able to give back to their families more and take care of themselves better and get promoted and be more impactful. And that the space of growth wasn't just impressing the InC 5000 stack, it was impacting people's lives in the way that we said it was going to. And that was really neat.
Matt Tait [00:33:00]:
No, that's cool. We always joke that you think it's crazy now just look. Last month, let alone last year. Yep. So you and I are talking at a unique time. We just celebrated a birthday for our first full time employee at Decimal. And we laughed that four years ago today. Well, four years ago, a couple of days ago, we took her out to lunch.
Matt Tait [00:33:25]:
She was two weeks into her job and we were watching the news at lunch and we said, wow, there's something crazy going on in New York and it seems like it might be coming here. Why don't we test out working remote for two weeks? We haven't had an office since. So I lied. It was definitely not two weeks. Yeah. But I think you and I and a lot of people in our class of entrepreneur will look at COVID as a defining moment in our lives, probably in our kids lives, definitely in our company life. You guys were in your scale up phase and probably close to kind of emerging towards that equation of growth.
Nick Smarrelli [00:34:10]:
Yep.
Matt Tait [00:34:12]:
Talk to me about that COVID phase. Cause that changed everything.
Nick Smarrelli [00:34:16]:
The time where you see Nick's joy of the job changed very much. Me and a lot of us, I think, really struggled through COVID. COVID was unique, I remember. And again, credit to Joe Goodell, who made our name. He saw this coming even before I think I was willing to. To really make it a thing. I think there's some cool, like, psychological biases that were. Our brains sometimes just tend to ignore certain things.
Nick Smarrelli [00:34:43]:
And I think perhaps my brain was doing that as COVID was becoming more and more of a. This could be an actual real threat to the business. But the first phase of COVID was actually very interesting in the sense that we were an IT services company. And every company March 20 and beyond was going remote, which means we had this unique requirement to help every customer that we were working with figure out a way to keep operating. And so we had this, like, really big charge. Everything else in the world was falling apart, and it's. There's people were dying. It was just such a source of stress and despair.
Nick Smarrelli [00:35:22]:
We were enabling businesses to succeed. I have never rallied to the cause in the way that I did there. Ive never seen a team that came together. You talk about, did we hire the right people? Like, people that gave a shit. Like, it was unreal. Like people were working any bit of the day to help make sure that Suzy could work from home so she could be with her kids, so that she could keep the business running, so that the business kept on running, she could pay bills again. We weren't getting paid from our clients at the time because they were afraid of their cash flow circumstances, but we didn't care because we took care of them. And it was powerful.
Nick Smarrelli [00:35:55]:
Like, it was palpable of where the company was going, and we shined. And that lasted for a little bit, and I think the world did. We all came together, and this was the thing that was going to bring America together at long last. We were all going to break down these barriers, and we're all in together against this virus. And then I think it became, wow, this is still going on. And coming back to the office was spotty where we tried coming back and then we couldn't come back. And then people would get sick and they were like, okay, maybe we won't come back. And this, like, purpose driven thing that kind of overrode how hard it was for our clients, our employees.
Nick Smarrelli [00:36:33]:
For me, that kind of tempered off six or nine months afterwards. The things that brought me so much joy as a leader was interacting with my employees and seeing and talking to clients and being in the space with others. And all of a sudden now I'm therapist and I'm doctor at home for my sick kids. And my dad went into the hospital for five months and had a stroke because he got COVID really bad, which was a fascinating exercise of trying to balance all those things. People close to us died. And I talked a little bit about earlier about this, like, lack of ability to show real emotional vulnerability that was starting to crack for me. It was hard to lose the thing that gave me the most joy while still balancing this really hard trajectory of growth. Everyone was really going through some hard times, so it was just a lot of emotions and being in the services industry, you're a collector of emotions.
Nick Smarrelli [00:37:28]:
That was a tough one for me as a leader. It was tough for the business. We continue to grow, we continue to thrive. We continue to create a space that I think was really accepting of the fact that everyone was really having to deal with a lot of stuff on their personal level. And it was the most, like, human moment of the organization itself. And later on, you had the Black Lives Matter movement. At the time, you had these just, like, really big moments. So it was a very emotional time for the company.
Nick Smarrelli [00:37:56]:
While we were still continuing to grow, it was an interesting challenge to lead through the tools and the resources that we had that worked before, didn't. We moved to a lot of video, we moved to a lot of email. We had to change the way we did communications, state of the company, addresses weren't live. And it was just kind of this very interesting, just shift in operating ethos as an organization.
Matt Tait [00:38:17]:
What I think is tough is we all went through it, but it doesn't minimize the fact that it was hard for each of us. Certainly one of the things that stands out to me is it almost sounds like you had a peak of joy right at the beginning when you guys are crucial to helping the rest of the world continue to operate. Yep. It's almost like you can only sprint for so long in a long distance race. And one of the things that's always struck me about you, Nick, is you're a very high energy, happy person. You bring energy wherever you go, even at 07:00 a.m. At breakfast. Did you always feel that way, though, during this period?
Nick Smarrelli [00:39:02]:
No. This is the I wish I could tell myself how to do things differently moment of the podcast, which was I felt like my responsibility was to pretend like I was happy and energetic and fine because everyone was going through something hard. And it felt this, like, onus or requirement as a leader to show strength and visibility and show up. For my parents to show up, for my family to show up as a business leader is I don't want to be a burden to anybody. So I never really shared, like, how much my dad getting sick just completely crushed me for most of 2021 and didn't want to share how hard it was to not get the people again, I drive. That energy is sourced from within the context of the company is like the people that I interacted with, and you're not interacting with people because it's Omicron, and 10% of your organization is sick at the exact same time. And no one's working in that full capacity. And I did nothing to take care of myself because I refused to acknowledge that there was something to take care of.
Nick Smarrelli [00:40:11]:
And I think that was the hardest part for me, was just that lack of ability to not be happy, strong, confident Nick. And that's what I had to be because that is what worked in the past. And I can't show any other, like, side of myself at the time. And I think that was really much more taxing than I realized until I started noticing the body keeps score. The body knows what's going on. And if you're living that, like, purely, like, dissonant life, or you're acting one emotion but feeling another, that dissonance that consumes you. And that, for me, was really what kind of took a lot of, like, more mental equity than I realized.
Matt Tait [00:40:49]:
Are you able to turn that off at home, or do you have some of the similar problems during that period at home?
Nick Smarrelli [00:40:56]:
I could be mostly myself at home. Not always. I still have a little bit of lingering, I'd say baggage or demons that don't allow me to be perfectly confident with showing if I'm completely overwhelmed or I really need a night, or I can't be a good dad right now because I'm processing a lot of other big things. Still working on that part, that is a work in process. I spent a lot of time trying to sort through that. I was a little bit more emotionally vulnerable at home than I was certainly in the workplace.
Matt Tait [00:41:23]:
That period of time was just for everybody, was balancing a lot, and you mentioned it, of absorbing emotions. I always joke that in the service industry, we're like sin eaters in our job. Yeah. We get to eat our own, we get to eat our teams, we get to eat our clients. And that's a lot.
Nick Smarrelli [00:41:42]:
It's a lot, yeah.
Matt Tait [00:41:45]:
The next phase, you've hit that peak of pure enjoyment for that short period of time at the very beginning of the pandemic where you've built a company that is essential to the rest of the world operating. Yes, and that's awesome. But then you talked about how that kind of degraded. What did that do to you and how did that lead to the next phase, which I jokingly say is retirement?
Nick Smarrelli [00:42:10]:
I think what comes with this journey is the necessity. And again, going back to the last question, which was being open with my wife, is she asked, can you continue this? And one of the things that I had known as well, like, layer this onto the COVID part, is I was building something to pass down to the rest of the team. That was always the vision. You can tell with my energy. I loved building and getting something off the ground. There are people that are better suited for operational discipline and structure and that pure, I would say, smart, thoughtful growth versus the woo, fun, chaotic growth. And I love navigating, finding our go to market strategy and figuring out who we were, who are we from a values perspective and what do we want to build. And I loved that even now, two years later, that my fingerprint is on a lot of who we are as we've scaled.
Nick Smarrelli [00:43:05]:
But I also love that I created space for other people to, I don't know, take the risk on themselves in the way that I did in 2010. We just had a really good team, and I looked at where I was mentally and realized, like, this is eye opening and I didn't have the tools that I have two years later. I looked at where I was skill wise, what does the organization need right now? And I put the two of those together and said, I wonder if the organization would be better suited with others moving and shining in their leadership roles and give them a shot in the way that others gave me a shot years before. And it sounds like I can sum it up in three sentences, and it took months to get there. But conversations with my wife, conversations with other leaders, conversations with the leaders of the company, conversation with the two other owners, that really led us to a place of the ultimate vulnerability of saying, I am not the best leader for this company long term. I want to put somebody in there that can set the company up with where we are in this season. And saying that out loud was so hard. It was just this, like, unbelievable journey of, it wasn't relief at all, which I was nervous.
Nick Smarrelli [00:44:27]:
I'm like, am I running from something or am I running to this next phase of my life? And I really fear this. Am I running away from just because it got cut hard? And I'm like, no, that's not, because it was hard for a few months, it wasn't that hard. We could get through it. We were coming back to the office after Omicron. It was all the things were shaping up. But I knew that my responsibility was not that dumb confidence anymore. It wasn't that hubris, it wasn't that narcissism that I can figure this out. Like, it was a responsibility to the just shy of 200 people that said, you're going to make the best decision for everyone.
Nick Smarrelli [00:45:04]:
And to me, that was not me. And so we had to go through this phase of, how do we do that? How do we structure this again. We had a great executive team that could help step up. We had a great next level that was just craving the opportunity to step up and so thoughtfully over a six month period. We really thought through, how could we do this? And I had always wanted to teach. In fact, in 2020, I started getting my masters solely for the point of becoming a professor. I didn't know it was going to happen in 2022 that I was going to depart. But thanks to the old brain really screaming at me and saying, maybe this is not right right now, we jumped on the journey to being a professor.
Nick Smarrelli [00:45:43]:
But I always knew that I was in a slow transition from being the guy doing the thing to wanting to be the person that helped others do the thing. And I could feel that it was part of the decision making process. And I knew the source of joy was shifting. I didn't need to be the person winning the awards or the leader at the top running the fast growing company that people like to work for. I didn't need that anymore. That didn't appeal to me in the way that it did before. What appealed to me was, how can I share 20 years of dumb mistakes and successes and triumphs and failures? So I knew I wanted to do that. The chess pieces were already in motion in 2020 to start my master's degree.
Nick Smarrelli [00:46:27]:
Had a great opportunity with Butler. At the same time, I had a leadership team that was ready. And we made the call in July of 2022 to officially hand the reins over to our current CEO, promoted a few people into bigger roles, and I began the slow process of exiting an organization that was a fourth child for me. Like, you just think about the amount of equity and time you put in there. I spent more time with that company than I did with my own kids. And not in a sad way, but that's the necessity of growing a business.
Matt Tait [00:47:00]:
It's taking on the role. Yeah. I think it's really cool how your transition to this next phase of life is all about helping other people do big things, using your own words. But being a professor isn't the only part of that. You have a lot of other things. We joke that you're bad at retirement. Tell us how bad.
Nick Smarrelli [00:47:25]:
I think it lasts about a week and a half doing nothing. That was never. I think I was never straight away from hard work. I like doing things. I'm a full time professor now, so I teach five courses at Butler University and absolutely adore the time that I get to spend with just some incredible humans, both at the administrative level and the students as well, and then I do executive coaching work. I do mental performance coaching. All the things that I and tool sets that I didn't have, that I have now. How do I share that with others so that they can continue a journey that I didn't? So I do.
Nick Smarrelli [00:47:59]:
Basically, I spend my time with the future leaders of America and then existing leaders, mostly in the small and mid sized business space, helping them found organizations, grow organizations, scale companies, really helping them along their journey and taking kind of that academic knowledge that I've learned through my schooling and then marry that with the two or so decades of both enterprise level and small business experience to share that knowledge with other individuals. That's my why, that's my purpose. That's a source of joy. That's why I sit on this call right now of sharing some of my failures along the way. And your audience base is because I like that part of investing in other people.
Matt Tait [00:48:41]:
I have to say thank you. Thanks for sharing.
Nick Smarrelli [00:48:46]:
It's fun conversations.
Matt Tait [00:48:47]:
I do have a question, one last one. You've already hit this enough, so I think we've got tons of answers to this question already. But before we wrap up, if you could go back and give yourself one piece of advice, knowing what you know now, today, before you started, what would it be?
Nick Smarrelli [00:49:05]:
Ah, maybe share before you're ready. That would be my off the cuff comment now, in the sense of I often felt like I had to perfectly have the feeling described or the thought ready or the thing perfect before I was ready to share it with other people. And because of that, oftentimes it remained unsaid. And as I learned in my last few years, is the things that remained unsaid still in some way, like, wreaked havoc on me. And I wish I would have spoken up earlier. It manifests itself in that story in almost like anything along the way of, I think, just being more willing to show a space between I've got this figured out and I'm completely helpless, and to live a little bit more flexibly in between the two of those. To say, I bet if we work together on this, we can figure out this better than me trying to do this on my own. I think it's so much of what we learn early in our, like, just schooling is if you do it or if you're gritty or if you're disciplined or if you're whatever, you can figure this out.
Nick Smarrelli [00:50:21]:
And we're all about this kind of, like, individual side of things. And I think one of my biggest regrets is I had built up this confidence of me as an individual, and that precluded me from sharing early enough for when I needed to not do it on my own.
Matt Tait [00:50:41]:
That's awesome. Thank you.
Nick Smarrelli [00:50:42]:
This is great.
Matt Tait [00:50:44]:
Thanks so much for listening. After the first million is presented by Decimal. To listen to more episodes and find tips to help make running a business easier, visit Decimal.com afm. Want to join the conversation? Reach out to me on LinkedIn and let's explore the messy middle.
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