How do you know what your customers need? And how do you create offerings that really address their pain points?
These questions can feel overwhelming on a good day. In times of upheaval, when your customers’ needs are shifting, these questions can feel impossible.
But leaders who have uncovered the power of data understand that by following the numbers and getting insight directly from customers, it’s possible to find success even in turbulent times.
Gabby Wong held operational leadership roles for many years before becoming a CEO for the first time in 2019. As the chief executive at FranConnect, she is responsible for creating products that serve the many needs of franchise brands.
The franchise model is an interesting one because it spans verticals, from personal services to restaurants to real estate. But for franchise brands, regardless of vertical, their challenges are the same: scaling up, qualifying franchisees, and managing the ongoing relationship between brand and franchisee.
2019 was a year of big growth for FranConnect, but as Gabby entered her second year as CEO, COVID struck. Many of FranConnect’s customers—particularly those in the restaurant and hospitality spaces—were suddenly facing major hurdles.
It was up to Gabby and her team to pivot their own offerings and plans to ensure that FranConnect was meeting its customers’ new needs.
And that’s exactly what they did. Take, for example, FranConnect’s 2020 new product launch. The product development process kicked off in 2018 with careful market segmentation and a product-fit analysis process to understand what the market needed and how FranConnect could offer the best solution.
While they learned valuable information from this up-front work, Gabby and her team still left space for change as the realities of COVID began to sink in.
That started with the product name. Originally called Optimize, the team decided to rethink the name—Optimize didn’t seem to suit the 2020 mood, which for many of FranConnect’s clients was more about survival than optimization. The product was re-named Operations as part of the 2020 launch.
While the name changed, its core focus and functionality remained the same. The product was designed to help franchise brands manage core operations. But the pandemic highlighted the need for an added spotlight on monitoring franchisee performance. That became a central feature of the product.
The product now helps franchise brands plan what success looks like alongside their franchisees. It automates and standardizes many processes, including the field audit process, which is a huge piece of managing a franchise brand and keeping things consistent.
Throughout the process, Gabby leaned on her best customers for feedback. FranConnect invited a handful of its top clients to participate in a pilot program. In exchange for free implementation, support, and access to the platform, the pilot users agreed to participate in case studies highlighting what they got out of using the Operations product.
Maintaining an open dialogue with her customers throughout the design process of the new product allowed Gabby and her team to ensure that the product they built was actually of value to FranConnect’s best customers.
The real lesson here is that data is powerful even when situations are in flux. By gathering data throughout the product development process, Gabby was able to lay a solid foundation based on knowledge about FranConnect’s ideal customers. She also had the freedom to pivot as she learned new information about customers’ changing needs. And neither the solid foundation nor the flexibility later would have been possible without data.
Rob Ristagno: If you want to become a CEO, how much of it is nature and how much is nurture? Today’s guest refers to herself as an accidental CEO, but it’s obvious from her passion and deep industry knowledge that it was not happenstance she landed the role. Tune in to learn how you can navigate your own way to a leadership position and what it takes us succeed once you get there.
Announcer: This is the CEO Campfire Chat with your host, Rob Ristagno, taped in front of a live studio audience. Join us to hear successful growth stories for middle market companies, just like yours. Sponsored by the Sterling Woods Group.
Rob Ristagno: Welcome to the CEO Campfire Chat, recorded live in front of a group of senior executives. I’m your host, Rob Ristagno, and today I have the privilege of introducing you to Gabby Wong, the CEO of FranConnect. Now, Gabby, you spent over 25 years in private equity backed portfolio companies. Some of them include Primavera Systems, Trusted Computer Solutions, Virion Systems and Clarabridge. And at FranConnect, you and your team, you’re really the backbone, the sales marketing operational backbone of over 800 different franchise brands. So we’re excited to have you here. Welcome.
Gabby Wong: Thank you. I’m excited to be here. It’s great to meet everybody.
Rob Ristagno: So, 25 years in different portfolio companies, big range of experiences. Now you’re the CEO. Tell us about the moment you realized that you wanted to be a CEO.
Gabby Wong: It’s funny, you and I were talking about this ahead of time, because you told me about this question. I sort of describe myself as sort of the accidental CEO. I don’t think there was sort of one moment in time where I said, “This is what I want to be. This is what I want to do.” And it’s sort of interesting when I look at … When people ask me about career trajectory and how did you get there? I always tell people that I really focused on what interested me and I thought about human capital, my own human capital and how I could sort of instill, infuse the right business skillset based on what interested me. I’d never really chased promotion or a title. And so for me, if I look at in particular, in my experience the career path to get to CEO, it was really a process or a continuum.
Gabby Wong: And it wasn’t like I said, “This is what I want to be. And this is what I’m going to do.” It was sort of a process of getting deeper and deeper into various types of businesses, specifically private equity-backed software businesses. And it just sort of happened. If you look at kind of my career path initially, I started out in management consulting and then sort of got sucked into the private equity backed software world on the customer success side. And what I found interesting-
Rob Ristagno: Sucked into?
Gabby Wong: What’s that?
Rob Ristagno: Sucked into?
Gabby Wong: Meaning that I gravitated to it. And what’s interesting about customer success is that it’s really about the nexus between product, markets, and customers. And I think of it as the place in the software side of the business where you’re really taking product to market. And I found that infinitely interesting. It’s not always the role that goes to the CEO. But I loved what I did and I loved the impact that I had both for the customer, for the markets and also for the products that I worked with. The last thing I’ll say here about my path as CEO, it’s all about sponsorship. And so for those of us that are in positions where we have the ability to influence people’s careers, it’s really important to have sponsors and great coaches. And that for me personally, like I said, I’m sort of an accidental CEO, I didn’t really realize I wanted to be one. And I had a great board member who said, “Hey, maybe this is a path you should consider.”
Gabby Wong: I think you guys have heard Bob Post spoke here in the past, the late Bob Post. And he was just a tremendous sponsor and coach for me. In fact, he encouraged me to go for it and I initially said no. And he sat me down again after another month and said, “I really think you should think about this. I really think this should be your path.” And to trust the process and, his guidance and coaching along the way along with the board. So, something I will tell you is sponsorship’s really important. And I wouldn’t be here without Bob, but I wouldn’t be here without his guide.
Rob Ristagno: Yeah, it’s so critical. It sounds like two things there, do stuff you like and just be successful and it just kind of naturally evolves, but then that sponsorship, that mentorship is super important. And for people out there, what piece of advice do you have that someone can do tomorrow if they’re in a CEO position on a board seat right now? What can they do tomorrow to be a better coach or sponsor to help encourage that hidden talent or accidental CEO, as you say?
Gabby Wong: Well, I have a couple of comments and especially as a looking at nurturing female talent in the executive ranks, and also being a female myself, I think it’s really important to think about skillset, not necessarily title but the people that are right for the role, especially if you want to promote diversity are not always in the seat. And so you have to look at it in terms of who’s right for this role, not about who’s had the title in the past. I think that’s really important. And then the other thing I would encourage people to do is, if you want ultimately to grow into the CEO path you got to go for roles that are about core operations and core business. You can’t just chase the C title because it’s going to get you to the C title. I think you have to really get into the guts of the business and really understand the business in order to get that seat at the table and to have that role.
Rob Ristagno: We have a couple of questions from the audience, Rebecca then Suzanne.
Rebecca: Hey, Gabby, I’m Rebecca. It’s just a quick question for you. You had mentioned female CEOs, women CEOs, something that’s a passion for me too. So can you kind of expand on that a little bit and maybe just talk about some things that you’ve experienced in your career as you’ve been moving up and then as a CEO, woman CEO now?
Gabby Wong: I’ve had an incredibly positive experience, so it’s super interesting I’m talking to our private equity firm about how we can promote more women in leadership roles and they’re tremendously supportive. I’ve had an incredibly positive experience. I hope that’s more typical in the market. It may not be, I boil it down to three things. One of them, we talked about, sponsorship. I would encourage all of us who were in positions of leadership and have the ability to impact careers, sponsorship’s really important. Bob Post recognized something in me that I didn’t recognize it myself. And the people that might typically volunteer for the role.
Gabby Wong: There are people who might be out there typically who might self-select out naturally. So I think sponsorship’s really important, and because it takes time, it’s not just, “Okay, you go for CEO,” sponsorship also speaks to coaching. The second thing is I really believe that, and actually Wall Street Journal had a really interesting article this summer. I don’t know if anyone saw it. It was in their women in leadership section. And my husband cuts all these articles out for me all the time. But it was about how many women CEOs there are within you know NASDAQ companies and what’s the typical growth path within those companies?
Gabby Wong: And if you look at it, the typical growth path for CEO is on the GM, operational or sales side. And if you look at where female leadership is across the market in general, female leadership is typically in the back office functions or marketing HR, which is not a typical growth path to get to the CEO seat. So, I think it’s about sponsorship, it’s about getting to the right roles and coaching people that if that’s the path you want to take, you got to go for the right roles to get that experience. And then last but not least, I think it’s about network. And by the way, that network is not only a network of women, it’s a network of men and women who all believe that diversity is critical. Does that answer your question, Rebecca?
Rob Ristagno: Maybe I want to give a chance. I see Kate Eberle Walker’s on the line here, author of The Good Boss. Anything to add to that based on your research?
Kate Eberle Walker: Well, I mean, I wholeheartedly agree with what you said. Hi, Gabby, I’m Kate. So I wrote a whole book about exactly this, it’s called The Good Boss: 9 Ways Every Manager Can Support Women at Work. And it’s really all about how the most important difference in a woman’s career path is her boss. And that bosses need to take responsibility. Men and women need to take responsibility for elevating women and for identifying the potential in them before they might even see it for them for themselves. So, I’ll put a link in the chat. Thank you, Stephanie. And the only other thing I’d add that is just an interesting data point, is that in surveys of women who do become CEOs, the vast majority say that they did not see themselves as a CEO until their boss told them that they saw them that way.
Gabby Wong: Wow, that’s super interesting. I can’t wait to read that book, Kate. I look forward to it.
Kate Eberle Walker: Well, thank you. I’ll send you a copy. Thank you.
Rob Ristagno: So, now you are a CEO, and tell us for those aspiring CEOs and our listening audience what’s one secret about being a CEO that you didn’t realize until you actually held the position?
Gabby Wong: I don’t think there’s one secret. I probably could write a book. I think being a CEO, I got promoted in 2019, 2019 was certainly a huge growth here and then bam 2020 hits. So it’s certainly been super interesting to be a relatively new CEO in a very impactful year with a lot of downward market pressure. So, there’s not any one secret I have, I would say I learned a lot through that process. There’s been a lot of lessons in leadership, constantly learning through that process. The one thing I would tell you that I’ve learned through growing software companies is that the growth paths weren’t always linear. I think everyone here knows that it’s never up and straight. It’s really about you typically hit inflection points and in the software business, it’s really 10 million, 20 million, 50 million, 100 million.
Gabby Wong: And between there, once you get past that inflection point, then you typically have a nice growth path, but you got to get past the constraints of those inflection points. And what’s interesting is you think, “Okay, well, I solved that problem. I don’t have to solve it again,” but you typically do. And the problem that you solve at 10 million, you’re probably going to have to solve it again at 20 and the solution going to be different, rates are different. You’re a different company. The market’s different. And so I think the secret is you’re often solving similar problems, but with different solutions along that growth path, because the constraints do change.
Rob Ristagno: You won’t be successful if you keep finding the things that work in the past because too many of the constraints have changed.
Gabby Wong: You’re not going to be successful with the same solutions that worked in the past. You’ve got to be open to new solutions for sure. And I think as you get bigger, you’ve got to have a great executive team with you that can help you see around the corners because seeing around the corners is what’s going to help you think ahead and get around those inflection points. I think that’s also super critical as well. It’s funny as CEOs, CEOs were like, “Oh, it’s solved. We’re done, move on.” It’s kind of we’re all type A personalities, but that’s not typically how it works. You’re never really done.
Audience Member: I have a question about your software and the business model. Is it a subscription model and just what’s happening in that world over the last 12 months or nine months in particular?
Gabby Wong: Absolutely. So, FranConnect, I would say that we are the largest enterprise technology provider to the franchise space. We sell to the franchise brands, not necessarily to the franchise units, though our user base is within the franchise units. We are a SaaS provider and we have a series … It’s a platform. But it’s a series of applications that support the growth franchise brand. So, if you think about what franchising is all about, franchising is a business model, at the end of the day, it’s a business model that applies to many verticals specifically, and the name of the game in franchising is to grow fast and to grow fast in a low capital intensive way. That’s why people like it, franchise brands typically grow faster, then they basically out compete if you’re looking at corporate growth because it’s easier to do in terms of [inaudible 00:12:58] risk.
Gabby Wong: And so yes, we are a SaaS provider. Our series of applications and platform supports the process of qualifying potential franchisees, closing franchisees, and going through that franchisee unit growth process. We also have a series of applications on our platform that support, how do you get the units open? We talk about reducing days to dollars, a successful franchise brand cares about royalty and fees, and that’s how they grow and support the system. And so getting that unit up and running as fast as possible and getting that franchisee enabled and successful and as fast as possible is I think also really important. And we have a series of applications that support that. And then there’s this whole piece in the middle about how do you support the system in a series of our applications, support that, how do you support the system?
Gabby Wong: How do you engage with the franchisee to make sure that they are successful, that their performance, that they’re profitable how do you help them market and get down in their local territory? How do you help them goal plan? How do you get them trained up on new products that you’re offering to launch in the market? So, we support that whole end to end process of not only qualifying new franchisees, but supporting those new franchisees so that they’re successful and then thus growing the whole franchise system faster than anybody else in the market. 2020 was definitely hard for sure. I would definitely say that franchising was an impacted market for sure, but because it’s a business model and it stands the vertical goals some verticals played out better than others in 2020.
Gabby Wong: Surprisingly, QSR did really well. Certainly, full service table restaurants did not, they struggled a little bit in 2020. A lot of our QSR customers did very well. I mean, people aren’t going to eat in every single night. And so a lot of the QSRs already had their delivery models in place to support that remote eating out model. The QSR said, “Well, home services, we’re all sitting around the houses, with all the work we have to do.” I for one took on a lot of projects this year at home. And so the home service brands did really well as well.
Rob Ristagno: We had a two month delay on permits here in my town.
Gabby Wong: Crazy, right? You couldn’t find contractors to do work. And so there was a lot of growth for the home service brands as well. So, there were some winners and some losers in our market in terms of how it played out for ’21. But I do think franchising as a business model in general, is going to continue to grow and it has been growing over the last five years.
Rob Ristagno: Suzanne, do you have a question there?
Suzanne: Yeah, this is relative to not only what you’re seeing in franchises, but in how you serve them. It strikes me, you had a little bit of conversation about this, but I think about the pendulum and in my career, seeing the pendulum swing toward and away from specialization and more narrow niches versus generic or more global service or product development, do you have any thoughts about that during this particular time?
Gabby Wong: Yeah, actually, that’s an excellent point because FranConnect started as a niche company. And if you look at, we’re a 20 year old company, we’re not a new company. Serent Capital’s investment is more recent. It’s been five and a half, six years. And if you look at how we grew, we grew as a niche company as a specialist company within the franchise market. And we grew basically early on based on a series of applications that we saw were needed to support the business model, the market. A lot of our recent product development investment has been, how do we create a platform investment, or how do we create a platform for our customers? Because when you’re growing a successful franchise brand, it’s not about how do I sell more units.
Gabby Wong: And then I wanted them manage those units separately. It’s how do you create a platform that people can grow into? And their needs are going to grow over time, especially because franchisee is all about high growth. So, they may be 100 unit enterprise now, but they’re very quickly going to be 1,000 unit enterprise within a couple of years. And so you have to provide a platform that can grow with them. And so I would definitely tell you that as we have looked at our growth over the last couple of years and where we took our product, we took it more into kind of a global platform strategy rather than a niche strategy. I don’t know if that answers your question, Suzanne.
Suzanne: Yeah. Thanks, Gabby. That platform that you came back to, I mean, could you see a next iteration going to more verticals or getting more specialized for ad-ons to that platform or plugins?
Gabby Wong: We look at it as how do we expand the total addressable market? I mean, if we’re looking at value that we’re a private equity backed company, so it’s all about valuation. And that’s what our shareholders are in for. And that makes sense. So we look about how do we expand the total addressable market. And so we look at how do we define ourselves then within a bigger total addressable market. And if I look at it, I look at it in a couple of different ways. There’s some verticalization, but there’s really some expansion, a global expansion as well. So, I look at it as we’re not really just about franchising. If you look at what franchising actually is, it’s about location, it’s a location growth business model. And so when I look at our potential TAM expansion opportunities off of the investments we’ve made into more of a global platform, we very easily can support corporate customers who are growing based on location.
Gabby Wong: And how do you track all the performance across those disparate locations within that model? And so that to me is a broad play. I do think that when you take it to market though, you do need some verticalization specialists because communicating that to a C-level is one thing, but when you get to deploy it and sell it and deliver it at you’re going to have specific needs and specific verticals. So we’re looking at both at growing the TAM through kind of a global more broader message. And we’re also looking at getting deeper into verticals with verticalized expertise. We’re doing both.
Suzanne: Location means something different than it used to, when franchising used to be a real estate business, but now it’s-
Gabby Wong: It’s a person. It’s a real estate agent in some cases. I mean, if you look at franchising, it’s a licensing model at the end of the day. It’s really just the licensing model. So people think of franchising as a traditional brick and mortar McDonald’s or Pizza Hut, that is one component of it. But as the business model has expanded, it really has become a licensee model. If you look at a lot of franchise enterprises now they’re service space businesses, they’re territory based businesses, we call it a man in a van. I guess I should call it a person in a van. But it’s appeal of Amanda Van rhymes. There’s some alliteration, if you look at the service-based businesses, it’s a territory and a van as well that serves those territories. So, it’s really diverse in franchising.
Rob Ristagno: Dave, did you have a question?
Dave: I did, yeah. Hi, Gabby. My question is about, can you talk about expanding the TAM and you used the expression global platform. I’m wondering where actual expansion outside of the US falls into your plans. I don’t know too much about franchising IN other countries. I mean, you see a lot of US brands around the world, but I know it certainly exist. Do you guys actively sell and market in other geographies? What does that look like? How different is it? Do you have a footprint outside the US?
Gabby Wong: Yeah. So, let me break down kind of the franchisee market a little bit, because I’m so into it now after I’ve been almost business now for five years, it’s like the back of my hand. So, North America is primarily really saw the growth in promotion of franchising and that largely has to do with our regulatory environment. And I think that’s just kind of the fact, I mean, we’re very pro small business in North America. And so if you look at the number of brands in North America, it’s roughly 4,000 brands now, those 4,000 brands in North America, their units, I mean, many of them, their units or global. So, you could think about Hyatt, but Hyatt is a franchise brand, a lot of the agreements between Hyatt and their property manager companies, it’s a franchise agreement.
Gabby Wong: If you look at Orange Theory, they are a global company. If you look at Little Caesars, they’re 5,000 units globally. So, they are North America based brands, but they have a really significant presence internationally. That’s one way to think about international. And then when you get into international franchising, you get into some substructures of ownership structures. So, the ownership structures in franchising are really complex. You have a lot of investors who are coming together to do ventures, where they invest in a group of multi-brand franchise units, and that could be international, or it could be North America. And then that investor may go off and form another group that may invest in another series, a franchise unit. So, the ownership structures are really complex. So, we look at international, both in terms of North America brands where franchising prominent that are obviously expanding internationally.
Gabby Wong: And we also look at brands that are international brands that are looking to expand outside their country, and also that are trying to get a presence in North America. So, we look at both, because I would say we have roughly between 20 to 25% of the market in North America brands. That’s we definitely have a large market share here in terms of the brands we support. Many of our brands are global brands that have a global footprint and a global presence. We serve about 180,000 units worldwide in the franchising market. I think when you get into international brands we are looking at that. I do think that requires a little bit different model from a scalability perspective. I believe, there’s enough growth for us to take and just focusing on our core capabilities where we are. But we are certainly looking at potential for international expansion with international brands. We are certainly looking at that. It’s not active in our cycle right now, though.
Dave: So it sounds like is North American brands are really your focus. And if they have units all over the world, that’s great, That’s more seats and more revenue for your company, but you’re not necessarily looking for a Brazilian franchise based business that might only operate in South America for example as a client?
Gabby Wong: We have some, and we do support them, I would say that the opportunistic for us.
Dave: You don’t have salespeople all over the world.
Gabby Wong: No, we don’t.
Rob Ristagno: Go with your gut, follow your heart, trust your intuition. We’ve heard this kind of advice before. And sometimes it works like when you’re trying to decide what movie to binge tonight, or you’re on the fence about asking her out for that second date, or you have a sneaking suspicion about which neighborhood dog keeps digging up your lawn, but it’s not the way to make major business decisions. When you’re facing challenges with growing your revenue, it’s not enough to rely on instinct. That’s why we’ve developed a data-driven solution to help you easily unearth your best opportunities for growth. No guesswork required. To learn more about our system, go to sterlingwoods.com.
Dave: I have a question you talked a little bit about I think you sell primarily to the franchisor, but you also have in terms of probably numbers of users, right? The franchisees make up a large base. You have a purchase triangle there. So, I’m kind of curious how you navigate that, how much time you spend listening to the franchisees versus the people who write the checks and kind of how that plays out.
Gabby Wong: So, our go to market is with the franchise brands, because that’s just pivotal to what we do is we support their brand growth. And so that’s our primary go-to-market, that’s who we primarily sell to. Our users can be corporate users within the franchise brand, but we have a lot of users at the location level. And so how we navigate that is it depends on the product set that you’re using. If you’re primarily focused on franchise sales, we’re primarily working with the franchise brand and the head of development. If they bought and they’re leveraging our franchisee engagement package, so that’s typically how do you crowdsource new ideas, how do you deploy learning on products that are being released?
Gabby Wong: How do you create a portal where lots of ideas are shared across the system? Franchisee advisory boards is a common thing, and we can help automate that process through our, whatever applications called Hub. We typically get a lot of franchisee usage in that case. And so the way that we look at selling and deploying is supporting the growth of the brand. And we typically work with a set of franchisee through something like the franchisee advisory board in sponsorship with the brand. And we almost never sell directly to the unit independent of the brand, because our mission is to help the brand growth.
Dave: Sure. And how does that play out with your operations module? Where you mentioned that a lot of it is the franchisor, but the franchisee is providing all the data and the input, right? So, does that flow in automatically, or do they have to kind of feed the beast?
Gabby Wong: Well, successful brands are sponsoring systems across the enterprise. So, very little data is inputted, there’s there’s a lot of interaction data in the franchisee market that you can grab from the POS system, from the customer loyalty system, from social analytics, for instance, to name a few and there’s probably a lot more in there. And so we try not to do a lot of manual input. We try try to actually grab that data off of all that interaction data across the system. So, we can make that data relevant for both the franchise brand and also the franchise owners, the unit owner. So they understand what success looks like. And I think so far the feedback’s been great, and it’s really that providing transparency about success on both sides, on both sides of the equation.
Audience Member: How do you address the security exposure when you have that kind of information, obviously there’s IP associated with their business model, whatever else, how do you protect the franchise brand? And cyber security is becoming a big topic. Seems like it’s a vulnerability.
Gabby Wong: I mean, we’re hosted on AWS. We are SOC compliant. We are compliant against all of the European privacy regulations, the California privacy regulations. We have a very robust engineering organization about 150 people worldwide. And we certify against all the standards and ensure that we meet all those standards. And I think hasn’t been really a huge issue for us.
Audience Member: And have good insurance.
Gabby Wong: Yeah, we have that.
Audience Member: I got you.
Gabby Wong: It’s something we focus on, but it’s not a barrier to entry for us.
Audience Member: That’s good.
Rob Ristagno: One thing I like to go back to, Gabby, is you mentioned you have this global platform, but you’re also looking to pick off a few niches potentially. How do you think about which niches to pick? How do you think about that?
Gabby Wong: Oh, gosh. That’s a tough question. And 2020 was tough, I would say. We serve the entire market, but I also think my advice to growing companies is, it’s not just about thinking it, you have to think ahead from an innovation perspective, but also to follow the money. You got to follow the revenue and follow the market. We certainly look at there’s growing opportunities that go deep in terms of QSR restaurants. I think personal services is a growing category in franchising, there’s a number of large personal service brands that are consolidating as well in the market from a private equity side.
Gabby Wong: So, I think that’s a really interesting category that I think personal services certainly struggle in 2020. And then we think hospitality definitely, like I said, there’s actually a lot of franchising in hospitality. And hospitality is its kind of own sort of vertical with a lot of verticalized expertise there as well. So, I think what’s super interesting for us focused only on franchise sales, I would say that verticalization was less important, but as we got into operations performance management and platform around some of our new innovations, verticalization can becomes more important.
Suzanne: Let me selfishly ask you about urgent care.
Gabby Wong: So, health services?
Gabby Wong: We do have a few in the category. We actually support more the home health service brands. We have a lot of large home health service brands in our network.
Suzanne: Following urgent care, see that they have some of those same needs and that they are kind of lend themselves to a franchise model.
Gabby Wong: That’s right. We are seeing that as a growing category, we do. There’s a lot of health services in the market. Again, more around home health, but we’ve got a few customers that are a brick and mortar, not around urgent care, but some other categories, dental care, certainly, one, chiropractic care is another that we’ve seen.
Rob Ristagno: One thing you told me about before the interview here, Gabby, was you launched a new product at the beginning of 2020. You alluded to it a second ago about getting into the Operations, I think you call it Optimize. Tell us a little bit about your philosophy toward launching new products and how you helped them evolve over time.
Gabby Wong: Yeah. It’s interesting to launch a new product during COVID. And so we called it Optimize and we suddenly realized that people weren’t necessarily going to optimize. You know what I mean. That wasn’t a great name for 2020. So, we relaunched it as Operations. Your question, Rob, was how we came about with the idea?
Rob Ristagno: Mm-hmm (affirmative).
Gabby Wong: We started in 2018, we did what I would call … We’re a 20 year old company. And so we said, “We really need to evaluate who we are at this point and did a classic product market, fit analysis, market segmentation analysis, and looked really hard at all the different segments that we serve within franchising and classically, what they need and what we did well and what we need to do better. And so we went down that path, we recognized that Core Operations was critical and while the market wasn’t necessarily hyper-focused on it during high growth periods, that there would be recessionary environments, there was a lot of consolidation in the industry, a lot of private equity roll-ups in the industry where getting more information to drive successful performance at the franchisee level was going to be critical for a growing franchise system.
Gabby Wong: You can’t just focus on unit growth, you have to focus on performance. And so we made the determination out of that exercise in late 2018, invested in a platform concept called Optimize that we’ve changed the Operations and it essentially enables a franchise brand to plan with their franchisees what success looks like, it helps them figure out how to automate and standardize engagement and engagement processes to drive success. It automates the audit process. There’s a lot of field audits that happen. And then it helps them essentially drive visibility and transparency for performance so they can drive continuous improvement.
Rob Ristagno: And so are you more of the school of thought of, “Hey, we’ve done our homework. Here’s the product. Maybe we have to rebrand it because of the times, but we’re going to launch it and let it go, because we’ve done a homework.” Are you more of the, “Hey, let’s get something out there. We know it’s imperfect and we’re going to keep iterating.” Which of those camps do you fall in?
Gabby Wong: A little of both. We had a pretty clear product management process. We got beta customers involved. We did pretty significant product mapping with our current product and what the needs were and what it was going to take to fill out the market need. We then launched a minimum viable product, and then we iterated on that. And then at that point, which was in early 2020, we said, “We have a good product that we’ll launch and will play well in the market.” It was 90% baked, if you will. And then over the course of 2020, we did a series of live pilots with current customers to take it to market.
Gabby Wong: And I think we had a couple of live customers that signed on in early 2020, and it was actually a helpful product for them during COVID, drove a lot of visibility and transparency when they needed it across the system. And then we signed on a couple of new large customers this year onto the Operations platform. So, it worked out well, and we did a little bit of both classic. The minimum viable product needed to be enough. It can’t be small. It’s got to be enough to make a difference in the market. It’s that people understand the value of it.
Rob Ristagno: Got you. Now, I imagine your background in customer success, that’s where it all started, right? That probably makes you a very good product innovator. What’s an example of a surprise. You did all your homework. You thought X, Y, Z was going to happen, but when you actually had it in the hands of the customers, they wanted something slightly different. Any examples come to mind from this launch or others?
Gabby Wong: Yeah, I mean, for me, because I understand what I want to see when I look at how do I drive business success? I thought that like, “I really want analytics and metrics and goals,” that assumed that my customers would want the same thing and they do. But also, I think when we took it to market, we recognize that a lot of people weren’t necessarily ready for that and that we needed to drive kind of a better path to get them to the point where they could ask those questions and start to drive to the metrics, drive to the data. And so I think lessons learned is I think it takes time, especially with a product that’s as big as an Operations platform product with analytics and workflows and lots of different roles and data. And so I think the lessons on my hat is more standardization, more consulting, more packaging, on that path to do in that.
Rob Ristagno: That sounds like some market education as part of pulling your customers along. You’ve seen a little bit ahead of them, and now you have to get them to follow along.
Gabby Wong: I think it’s more making it more chewable. You’re putting it in more palatable biteable chunks as opposed to pitching big, because when we built the product, we had big thoughts around what the product should be and we built it that way. We built it to scale. But when you package it and take it to market, I think it needs to be in more palatable chunks so that people understand it. I think they do have it, but I think early on, maybe we scared a few people off in terms of how big the product was and how big it could be.
Rob Ristagno: Got you. I think that’s a good theme. I know we’ve talked about this a little bit before the call, but you have a theory or philosophy about innovation through a series of changes. But sometimes, Hey, let’s be honest, we’re human and we get excited about the big ideas. How do you make these trade-offs between not going big, bet big for big ideas, you believe in just go for it versus winning incrementally, but consistently over time. How do you make those trade-offs as a CEO?
Gabby Wong: I think it depends on your investors and your market. I don’t think there’s a one size fits all. We’re private equity backed and so betting big, we’re not going to … We can bet big, and it can be a big innovation, but we’re going to return money to the shareholders and grow the company and that’s our fiduciary obligation to the company. I think it depends on, if you’re more early stage or investors are more early stage, they have more appetite for more risk and for a longer term investment. I think it depends on your capital partners. I think it depends on the market. If your market is a tight market. I think incremental is probably a good thing unless you’re looking to go outside your addressable market. I think if you’ve got a huge market then I think you have a little bit more room to make a gamble on bigger changes. But my philosophy is some of the best changes come from small innovations that are incremental small innovations that seem easy, but they return a lot of value to the business.
Rob Ristagno: Yeah. Sometimes that last mile, it goes a long way.
Gabby Wong: Absolutely.
Rob Ristagno: Tell us a little bit, looking for the future of FranConnect, what are your most excited about for the future?
Gabby Wong: I’m excited about franchising. I really am. I think franchising is going to continue to grow. I’m very excited about what our product does and how we’ve supported our customers, not only through the growth period in ’19, but also through a pretty tough time. I think our product was highly relevant and I’m excited about the future of franchising and where I think it’s going to go for the market.
Rob Ristagno: I see the chat, Suzanne, you have some questions?
Suzanne: Yes. I was wondering about when you talk about product rollout and launch and getting some of those first among your customers, do you have any kind of deals or discounts, arrangements, terms, whatever, for those early adopters?
Gabby Wong: Yeah.
Suzanne: How do you move from early adoption phase to, “Okay, now, this is the real thing.”
Gabby Wong: Yeah, we did, the beta customers certainly got first access to the product and then once we went live, and then as I said before, we trialed it with a couple of pilot customers that were large customers. We did it all for free. Basically, we implemented it for free. We engaged with them for free. We did all this data integration for free. And then as a result of a successful pilot, we asked for a series of case studies and to help us market in the market, the success of the product. And then also as a result, it moved to production and they got access to that product for free for a year. So, you do have to do that, especially with the brand new product, we did pick customers that we had great relationships with, that we knew that [inaudible 00:41:02] be successful and they would advocate for us and that the product would play well in their organization, it was very valuable for their organization. So, I think picking the right pilot customers is important too.
Rob Ristagno: Excellent. Gabby, this has been so helpful. We’ve learned a lot and really enjoyed hearing your stories.
Gabby Wong: Of course.
Rob Ristagno: What can we do to be helpful to you?
Gabby Wong: I love meeting with you guys and certainly getting the word out there that FranConnect is a great platform. Any help you can get to get the word out, would love ideas about where we can take our product in additional areas, now you know a little bit more about it, so that’s my ask.
Rob Ristagno: All right. Well, thanks again. And this has been the CEO Campfire Chat. I’m Rob Ristagno. To listen to more episodes, sign up for bonus content or take a two minute growth assessment, visit us at ceocampfirechat.com. See you next time around the fire.
Rob Ristagno: This episode of the CEO Campfire Chat Podcast is brought to you by the Sterling Woods Group. Middle market executives and private equity investors lead to achieve rapid revenue growth, but face limited resources and time. We’ve developed a proven system to quickly and confidently uncover your best opportunities for growth so that you can scale up and maximize exit value. To learn more about our proprietary data-driven approach check out sterlingwoods.com.