How LCPtracker Grew from $1M to $25M ARR Bootstrapped with 97% Gross Revenue Retention (Interview with CEO Mark Douglas)

Introduction and Company Overview

Mark Douglas

00:00Yeah. My name is Mark Douglas. I'm a CEO of l c p tracker. We're a labor compliance software as a service company for large construction projects across the country. We manage over $200,000,000,000 worth of projects that are active in our system now. We have over 2,000 clients. Many of them are government agencies, but also large contractors and subcontractors. Oh, there we go. So I'm sorry. I have a bad disc, so I've gotta have a little chair

00:33here to work through this. But I'm gonna talk to you about operations, how we operate as a company. And I think this is a little different than a lot of the presentations because it's gonna be about how do you build a business over twenty years, and I did it all bootstrapped. I'm gonna be talking to you about culture, strategy, and value, all with a twist around operations.

Revenue Growth and Bootstrapping Journey

Mark Douglas

01:01A little bit about us. We were $1,000,000 in 2011, and we're $25,000,000 this year. 100% bootstrapped, zero debt. We plan for profits of 1 to 2,000,000 every year, and all the rest goes into our growth plan. That's how we've done especially really well over the past six years. In fact, we've been within 1% of our annual revenue goals and annual expense targets each year for the past six years.

The Importance of Vision and Culture

Mark Douglas

01:37What I'd like to talk with you first is really your why. It's your vision. I think this is probably the most important thing you do, and it's gotta be super clear. And I'll be talking to you about the how or the way you do it. And then your cornerstone is your culture that will develop all this. Our why statement is empowering people to build better communities. And how that works out is it's really external and internal.

02:06I believe you have to have it both inward facing for your employees and external towards your clients.

02:13It's how we base the premise of all our decisions. So is it something are we helping a community? Are we helping better families? Are we helping an individual? It it it's our guidepost for everything. The risk carlton why is we are ladies and gentlemen serving ladies and gentlemen. And what they believe is the workers, the maids, everybody, they believe that there are ladies and gentlemen that are serving the people coming into their hotel as ladies and

02:43gentlemen. So it's it's an external and an internal why. It's very effective. See, our software helps our clients hire Americans into a construction career, into apprenticeship programs, into a carpentry job, into a plumber's job, and often these disenfranchised workers, they're formerly incarcerated or foster care. Our clients often have targeted work groups where they want to hire a big group of people. A project LAX is a $14,000,000,000 project we have and they're targeting about a thousand people

Destination and Five-Year Plan

Mark Douglas

03:18to be hired from formerly incarcerated or foster care or or in poverty in those areas. So that's a big part of what we do and so it's and we've we help our clients hire those folks. And so this is how we help them build a career into their life, which helps their community. So it all fits together in our in our vision and our plan.

03:43Really, what's also very important is you have to have your destination. You have to tell people where you're going. And our and our plan is we want to be the sole provider of labor compliance and workforce management solutions for all public and private construction in The United States, and that and that's our five year plan. We've got about 20% of it now.

04:07And then what goes right along with that, our core values and behaviors. And we have two simple words with that. And the reason we have that is because it also is the the core

Core Values and Behaviors

Mark Douglas

04:22balance of where your people are gonna be thinking and how you want them to embody their their work and their lives at your company. So we made it really simple, give and do it. And so each word represents a something. The g represents give with a passion and purpose. I for live with the utmost integrity. D for provide value in every engagement. E for cultivate a culture of excellence. And on the do it side is dedicate

04:50yourself to completing your tasks. O for take ownership. And I for we inspire and encourage innovation, and t for think before you react. So we everything we do is is regarded as to promote those values and those behaviors within our culture.

Strategic Planning Process

Mark Douglas

05:10So after you have that all established, you're going to be looking at strategy. The second thing is this is something I think we do most and I think this is probably the most important thing you can take away from what I would have to share with you is our strategic planning process.

05:28The first thing we do is we have a six month strategic planning process that starts in June and ends in November. And the board sets the first three top priorities in June, which are the company priorities. And then in July, each department does their SWAT, and they set their priorities aligned with the company priorities. In August, we do manpower planning with the financial model. And then in September, we lock in the KPIs. We do usually four

06:03to six top objectives that will align with the three priorities. And then we publish our first financial model, which is gonna be the model that's gonna be the resources required to deliver the top objectives that the departments are planning. And then in October, we do a financial model that's final and we publish it. And then in November, we have an execution meeting where everybody comes to the table, they present what they're gonna deliver that year, and

06:32then we all sign off on it. So we have a very systematic approach. We start in June, we end in November, one thing a month, and we get it done and it's super effective. Like I said, we've been 1% on target with expenses and revenue every year for the past six years.

2023 Top Priorities and Objectives

Mark Douglas

06:52So what does that look like for '23 for lcptracker? Well, top three priorities that the board came up with was digital marketplace, product strategy and scalable platform. And so we drove that down into the department level and we said, okay, how do you help us do this? And so the top five objectives came out of that. And the first one being what we call project Monarch. And that's what we is a rewrite of one of our

07:18core software products, replatforming because it's, it needs it. And that aligns with, the product strategy. Under number two and number four, sales Salesforce and NetSuite, we had to do a major infrastructure upgrade to move to our scaling. We want to scale a lot faster and we had a lot of problems with Salesforce and NetSuite very I was in fact, I was a number seven hundredth customer for Salesforce back in another business and I rolled that license

07:49over. So I'm I'm like a very early adopter of Salesforce. So we have to actually rewrite a lot of that software. And that falls under scalable platform. And then we have a reporting backlog, huge reporting backlog. So we put a big effort into fixing that. And then also what we call CSO, which is our customer service offering, which is going to coincide with a whole digital marketplace offering our products that can be bought online a lot

08:17easier than we currently sell them. So those are that's how it rolled out.

08:23So what we have each department do and each top objective, we get an owner for that and we get a

08:33senior executive owner and a manager who will own those projects. And we have them develop milestones and deliverables for the year. And we manage this on a monthly basis. They come back to the whole team. The whole management team gets to see how are we doing on those objectives each month. It's an hour meeting. Everybody does it in six, seven minutes, but they report how are they doing by milestone, by objective for what they're doing. And

KPIs and Financial Model Management

Mark Douglas

08:59this is a great way to, hey, did we resource you properly to get your objectives done or are we behind? And so every month and so we're almost we almost always deliver everything unless we have some kind of contingency that happened. But this is a great way. It's very simple, very simple chart, but you can really keep your company on track with delivering your objectives.

09:22And then we take it down a step further and we have a KPI, some kind of measurement for everybody in the company. That's all directed up to the goals of the person. I know this is a bit of work sometimes, but you got to measure this either weekly or monthly. Don't so the minimum we do is a monthly KPI review of everybody, every department and it's super important that you have this involved because then that'll keep

09:48you on target for your plan as well.

09:53And then just as important is that financial model. So every department is empowered to have their own budget, their own resources, and we've aligned that into the financial model. And my CFO meets every month with the department head and they look at the budget. Are you on target with your KPIs, your objectives? Do we hire your resources? Are you on target with your expenses? And it gives you a little bit of flexibility to roll because you're

10:22able to then if you're having a bad quarter, you can go, well, let's slow down the hiring and then maybe relax on some of the objectives because that gives you the ability to still maintain your number one goal, which is your profit, right?

Developing Great Software and Avoiding Shiny Objects

Mark Douglas

10:39And then the final thing under strategy is obviously, you all know this, we have to develop great software. So I just wanted to share a few things from my experience on what I think are really important aspects to developing great software. We have this thing we call shiny objects in the company, and we really got to stay away from shiny objects. Stay focused on your goal. That's a huge thing. I'm probably the biggest culprit that has

11:04created problems for shiny objects. I've gotten a lot better at it. Be laser focused on your core offerings. Don't take shortcuts on your architecture. That's a huge one I've learned. If you do, it's gonna cost you a lot of rewrite. I I think the number one issue today and going forward, if you're if you're not aware of it, is you gotta be security, not only cybersecurity, but data security. States are passing laws for privacy and there's

11:35going to be huge lawsuits. If you're doing business in California, you have any private data, you got to follow all kinds of new rules for your privacy data. I think if you're not paying attention to that, really look deep into that privacy data is a huge thing coming. Virginia, Colorado, I think another state is just about to pass something.

11:57And then I also believe you got to properly staff your product management teams, your QA, your engineering, and dedicate them to each product line. Don't cross them over to different products. You'll get a lot more efficiency when you keep them on one single product line. And then you gotta give the development team some margin. They often don't have any margin, that's their biggest gripe. They're getting too many shiny objects, and then they can't get them what

12:22they want. So I think those are my big top things about how develop great software.

Creating Value for Customers

Mark Douglas

12:28So let's jump into number three, creating value. And I think this is a huge impact that we have with our customers and we have about a 97% return on our ARR return customer annually. Some of my customers have been with me since, you know, twelve, fifteen years.

12:52The first thing you got to do is you got to create value with your customers. You gotta give that customer experience. But I don't mean just with your software. I mean with your people. Every single touch point that you have with a customer has to be creating value. So when the accountant talks to them, when the support person talks to them, they can't just be like, get them done. They they gotta feel value. They're they're not

13:18gonna remember what you did for them. They're gonna remember how you made them feel. We have a thing at the company we call fanatical support. We have no rules on the amount of time a support person will take with a customer. They will talk to them about their kids and you know, we don't completely encourage that, but they literally there is no rules. We don't judge them by the amount of time or the number of calls.

Fanatical Support and Customer Happiness

Mark Douglas

13:43We do surveys on them all the time and we judge them by the happiness factor. How happy are our customers? And that has paid huge dividends. We have a great reputation with all of our users and they just love our company because they feel I mean, you know, frankly, we have a lot of things that don't work that great in our software. I mean, our software is great, but there's things that bug our customers and we

14:05can't fix them all at once. So but they don't ever complain about us because they love how we treat them. And I think that's one of the most important things you can do is treat your customers with extreme value.

14:18I I mentioned the Ritz Carlton. The Ritz Carlton gives $2,000 to even the maid, and they're authorized to spend that on any customer that's in their hotel to make sure they're happy.

14:31That just shows you that, you go to a rich, you know you're gonna feel good about being in that place, right? That's the attitude we try to give our employees and our customers.

14:45And engagement, being with your people and in person is the I found that to be our biggest success. We go to seminars, we show up on-site at their client's site, we drive You can't do it for a lot of the small customer I understand, but if you got major customers, you gotta go meet them. You gotta meet them where they're going. You go to their trade shows, you you have dinner with them, whatever you can do

15:09to build relationships.

Taking Care of Employees

Mark Douglas

15:13And the second thing is taking care of your employees.

15:18You know, I'm sure you all take good care of your employees, but we have Phantom Stock Program. We have a four zero one k. One of the things we do on our four zero one k is we have instant matching. We don't have vesting period. What I'm trying to do is do the same thing, empower communities to build people to build better communities, which includes my own people. So I want to enrich them as quickly as

15:42possible. The faster they're financially healthy, the faster I'm going to grow because they're more settled there, you know, I don't lose them. We do staff retreats. We have an annual staff retreat where we bring everybody in the company to a hotel for three days and we network and we enjoy each other. I every department does their own retreat. We get together. We make sure there's bonding and relationships and holidays. We have a 3.6% churn rate. The

16:12average SaaS company is 14%. So it's if you do right and you empower, you build and take care of your employees, you're gonna keep them a lot longer. It's a lot cheaper to keep employees.

16:25And then empower your people. And

Empowering Decision Making

Mark Douglas

16:30the talk yesterday about transformational management is you've got to let your employees run the business. You've got to have them keep it's really about the KPIs and measurement and planning and getting them that plan and then letting them run with it. You got to have a really flat structure, so that you don't have a lot of decision making at one level and then everybody just follow suit. The Navy SEALs are arguably the best run organization in

16:58the world. They almost always win And they have no more than six people reporting to any one person and every seal in field can make decisions as needed. So you have to have decision making all the way down the level as low as you can in the in the chart. And then and then one final thing I think I give you the c I call it the CEO warning label, talked about the shining objects. I don't

17:24know about you guys, anytime I come up with an idea and I talk to people about it, they start to go off and run like they I wanna build it. And I'm like, oh, no. No. I didn't say I didn't say go build it. So I just say be careful about how you approach your staff, especially as you're getting bigger. Now that I'm, you know, bigger and bigger now, it's it's harder because they really think everything

17:48I say they want I want done. And so I'm a little bit more careful about that. So I call that the warning label.

CEO Warning Label and Key Takeaways

Mark Douglas

17:57So the three three key takeaways I just like to leave you with is start with your why, be really, really focused to have a purpose and a vision and a passion on your why, and then talk about how you're gonna do it, how you're gonna build your software to do that, and then talk about the destination. Where are you going? Elon Musk is going to what is he gonna do? He's gonna make the world on renewable

18:20energy. Right? And he's gonna also land people on the moon. I mean, he's got this he's got this destination where all his people are like focused on it. And he's kind of making it happen to some degree.

18:33Strategic planning, I gave you a really good outline. Six months, that is super powerful. Do do do some kind of six month plan. It's really easy to accomplish because it's once a month. I I I love that. And then again, create the value for your clients, for your employees, and everybody you touch. So thank you.