145: Hide Complexity From Your User With Charles Fry

 

Charles Fry is the Founder and CEO of CODE Éxitos, a product studio that helps entrepreneurs and innovators design, build, and launch digital products. We discuss the foundational aspects of building digital products, how to develop transformational digital products, and ways to successfully become an agile business.

—

Listen to the podcast here

 

Hide Complexity From Your User With Charles Fry

In this episode, my guest is Charles Fry, a serial technology entrepreneur, Founder and CEO of CODE Éxitos, a product studio where he and his team help entrepreneurs and innovators design, build and launch digital products. Charles, welcome to the show.

Steve, I’m glad to be here. Great intro. I could use that for our sales pitch.

You can cut and paste if you like my accent. It’s a perfect version.

Your accent’s great.

Charles, you’ve been around for a few decades in the technology space and multiple companies. I wonder if you could tell us a little bit about your journey and how you end up with the “mission” of that. How did you get here?

Sometimes I ask myself the same question. How did I get here? It’s been a lot of fun. I’d like to say I’ve never had a job in my career. I grew up on a farm in Ohio, in the Midwest. Off to the University of Michigan, I studied science. My scientific training factors into my management style and management framework. The essence of the story is that in the late 1980s when I was at university, computers were becoming available. They’d just been invented.

If we were going to do anything with them in the laboratory, we had to program them to do what we wanted them to do. I found that process easy and intuitive to me to make the computer work, whether it was programming or configuring. It was a little bit like being on the farm and building things, except we were building things with software and logic, not with wood, steel or soil.

I don’t know. It seemed a natural fit to me and all of a sudden, people were willing to pay me to help them do what I thought was obvious. That launched my tech career at the dawn of the PCH in the United States. I stuck with it in the late ‘80s. In the early ‘90s, we didn’t call ourselves entrepreneurs. We were small business people somewhat embarrassed about it. Now, it’s a badge of honor to say, “You want to be an entrepreneur,” but at the time, it was like you didn’t have a real job.

For the first ten years or so, we largely made up but we had to make up how we managed our business and grew it. I enjoy the process of what I call something to nothing. My sweet spot is in the $0 to $100 million of revenue if we want to use revenue as an indicator. That’s where I like to be. Over the years, I’ve been involved in some bootstrap companies and venture capital-backed companies. Those were particularly the things we experienced.

We bought a couple and sold a couple. We flopped a couple along the way and some things were the hardest lessons to learn. I was finishing up being part of a venture-backed company out of Silicon Valley. I knew at this point in my career, I wanted to do something a little more impactful in the world than trying to do another billion-dollar ramp-up VC thing.

I started CODE Éxitos, which is a product development studio. You’re exactly right. We work with entrepreneurs and innovators. Guys like us in your audience are exactly the kind of people we help turn their idea into technical products. We’re also a certified B corp. While we do our work, we pay special attention to it. We have a pretty grand saying for this but we like to make the world a better place and that means for our employees and clients in any way we can. It’s a founding thread of the principle behind how we run our company. I crammed about 30-some years into that. I’m sorry if it took a little long but that’s the short version.

There’s a lot to unpack there. I’m very curious about a couple of things. You’ve done bootstrapped companies and VC-backed companies. What do you say is the major difference between the mindset of a bootstrapped company versus a VC-back one?

It’s one that I think about a lot. We didn’t know this the first time. I’ve been involved in three VC-backed companies. I’m not talking about friends and family or local money but West Coast, Silicon Valley, followed out by East Coast, New York, big funds. There’s no value judgment in there but they’re the epitome of the VC model.

What you have to know going in is that the game changes when you take professional venture capital money and you try to achieve professional venture capital outcomes. It’s not a value judgment of it being a better game or a worse game in my opinion but the expectations in the criteria are vastly different.

At the CODE Éxitos, I made a conscious decision. We have no outside equity in investors. We don’t even have any bank debt and that’s for a reason. I don’t want any outside stakeholders. We talk very seriously about making this company last for 100 years. I’m not going to be around for 100 years but I hope that goes through successive generations of ownership. It’s not a family business either but with venture capital, you have a different set of expectations and frankly, obligations to the equity owners and holders to go very fast and achieve steep financial outcomes.

It’s not a bad thing. It’s just radically different from the way you run the business. To summarize all that and answer your question most directly, what’s different is you need to understand that the script you’re following is significantly different when you say yes to venture capital money than when you’re running a more privately held and controlled enterprise.

It’s going to be a lot more stressful, I reckon when you are with big VCs.

It is funny that we’re talking about this because one of my friends announced a $21 million round of funding and they’re excited about their business. I had coffee with him and we were having these conversations. It’s different stress for many entrepreneurs. Every entrepreneur is self-motivated and driven to some level. Usually, the levels that our families don’t understand but with venture capital, that stress is also externalized because your board of directors and investors want to see results and performance. I don’t know if it’s more stressful but it’s a different flavor of stress that you’re signing up for.

Every entrepreneur is self-motivated and driven to some degree, but venture capital has a different flavor of stress that you're signing up for. Click To Tweet

When you are risking your money, that’s also stressful. You’re trying to bootstrap. You don’t have the funding. You are faking food off the table to put the money into the company. That also can be super stressful. With the VC, when you’re a young person, what’s the worst thing that can happen? You lose the money of the investors and take a job. What about later in life? What about a middle-aged person with a family? Do you see people like that? You start with a bad company when you are a diverse, seasoned entrepreneur. How does that pan out? What happens to family life? Does it take a back seat for a few years?

Anytime you start a company, almost everything takes a backseat for a few years. I started CODE Éxitos years ago. I knew what I was getting into. I was in good physical shape and had a pretty stress-free life. I was enjoying things. My kids and grandkids are grown. I knew all of that was going to maybe not go on hold but get less time and erode those relationships. Those are some of the personal costs associated with it.

On the VC deals, it’s 110% in. I don’t know if that’s healthy. It may be changing a little bit but certainly, the model is from the late ‘90s until the 2010s, which was the last time I did a VC back deal. The assumption is that you’re in 110% and it’s the only thing you think about. There may be some trend changes that I’m seeing but you’re right about our clients. This is why I have the greatest non-job in the world.

Our clients fall into those two categories. They’re either investing their personal money and they want to build a company that they believe in. Maybe more than half want to build something that they can attract venture capital with to scale it very rapidly. We get involved very early in their journey and spend a lot of time with the founders talking about these things. “Should I take the money? Do I need the money? Can I get by with this?” Everyone I’ve met and all the people I’ve had the privilege of working with sacrifice a lot on the personal side.

Let’s switch gears here and talk about managing blueprints. The theme on the show is business frameworks that you picked up along the way that helped you think about your business differently and perhaps understand it at a deeper level. We talked about a couple of concepts. What do you feel like one of the frameworks that you have found useful on your journey?

First of all, I love the Pinnacle Model, the main points that are there behind you on the wall. I stumbled my way into having the same main points. I never had the time or took the time to be as thoughtful as you’ve been with your team to categorize it. That’s what makes it a framework and what makes it valuable.

My interest is I’m going to keep studying more about playbooks but we can talk about that later. Your question is, what have I found valuable? In software engineering, the concept of agile software development became popular. It’s an engineering approach that I didn’t want to be like, “This is the framework we use to deliver our product. We have a different framework to manage.”

The principle of agile is to take small incremental steps and move rapidly through a continuous improvement or build cycle. We found that it was useful if we could describe our management behavior in our management expectations in the same language that the engineering teams were using to explain their daily deliverable work. Most frameworks that are successful grow into their industry, get corrupted and had a lot of different perspectives on what agile means.

To us, what agile means is to define small increments of work, take a reasonably short interval of time to deliver that piece of work and decide what the next increment is. It doesn’t mean you’re wandering without a final goal. It means like the adage, “Don’t try to eat the elephant all at one time.” We continue to use that agile increment rapid evolution process as our framework.

How do you prioritize what should be the next increment in your development? Is there a process for that?

Yes, there is. The other piece we should talk about is how agile can mean that you stop and say, “We’re not doing this anymore and there’s no regret over failure.” The idea is to get your level of work down to a small enough piece that if you say, “This was a bad idea. Let’s stop it,” it doesn’t feel like you’re out of a year’s worth of training or work. In agile, you maintain this idea of a backlog.

One thing that I coach entrepreneurs is I talk about the backlog, Steve. I’m sure you’ve seen this in your consulting work. No one ever runs out of ideas. No team ever got together in the conference room and said, “We can’t think of anything else we should do in this company. I guess we’re done. Let’s go home.” If you imagine that yellow pad where someone keeps the perpetual list of, “We should do this marketing thing, talent thing and training thing,” those in agile speak are your backlog.

They’re not bad ideas. You’re just not going to do them yet. You establish this process of keeping the backlog and then periodically, for us in a management setting, it’s usually about every month when our executive team meets, we revisit that and say, “We finished doing something that we’re satisfied with that we feel like we should pick something out of the backlog and move it into an active piece.”

If your readers want to go off and read about agile backlogs and prioritization, they’ll find it a very easy step to say, “We could do that with all of the ideas our management team has.” I know one of my worst management habits. I never run out of ideas. We get too many things started and not enough things finished. There’s even a saying that we use in agile which is, “It’s time to start finishing and stop starting.”

It reminds me of a quote from Bill Hewlett of Hewlett Packard who said, “More companies die of indigestion than starvation.” It’s the same idea.

I’m going to remember that. I tell our clients and entrepreneurs that I coach even at the university level that one of the problems that entrepreneurs have to face is that they’re too smart for their own good. What I mean by that is when you’re starting a company, you have far more ideas, all of which probably are good ideas but they exceed your ability to implement so you get that indigestion problem that you’re talking about.

With my clients, we also do a backlog. We didn’t call it that but I like that expression. What happens over time is the backlog keeps growing. The ideas keep coming and the implementation’s not going to accelerate. We filter the backlog. What I found was a couple of filters. First, if we don’t see ourselves implementing that particular idea in the next twelve months, we should take it off the backlog because it’s not powerful enough to reasonably become a priority in the foreseeable future. It’s just noise.

Second, I have a list every day that I’m looking at in this app. If I keep pushing something back for 30 to 60 days and it never emerges, then I take it off. Maybe I put it on another list for my mental piece so that I don’t lose it but I never again look at it. Ideas come back anyway so it’s not a shortage of ideas.

That’s interesting that you believe that ideas come back. We tend to keep our backlog perpetually rolling. The concept is, are we doing something active? It’s an agile term. It’s called grooming the backlog. That means someone has the responsibility to go back through that backlog periodically, let’s say every month, look at it and into the filtering that you described but we tend to prioritize the backlog. If something stays at the top for a successive number of cycles, we’re like, “We all agree and we consistently surface this thing as a good idea that we’re not getting to. Let’s look at what we’re actively doing. Is there something that we’re doing that’s of potentially lower value that we can stop doing?”

My experience in entrepreneurship is frustrating for perfectionists, which most entrepreneurs tend to be. You never get anything finished. You have to learn when you’ve got a list that you’re like, “This is as far as I can take this process. I got to stop messing with it for now. It’s good enough. I’m going to pick something else up off the backlog that has a sense of urgency that I need to get to.” You do that because you can’t have everything active all at once. If you have 5, 10, 20 or 200 people, you still don’t have enough people usually to get everything done.

I like that you create value by eliminating. I’m working on a new book and one of the chapters is about reinvention, how companies reinvented themselves. It’s interesting how many companies there that have a product, fail at it and then find one small piece which is useful and then they scale that. Slack started a gaming product but it didn’t go anywhere. Their check function was pretty good. They started growing that and that grew into this multibillion-dollar company. Also, YouTube. It started as a dating service. It didn’t go anywhere but the actual uploading of videos was a good idea, which was a small part of it. That became a business.

I can add one to your list here, Steve. You could go research eBay. eBay started as an effort to digitize classified advertising in newspapers. That was the original vision of that. Every newspaper they took it to said, “No, we don’t want to do that. Our classified ad section is very profitable. We’re not going to digitize it.” They finally shrugged and said, “What if we do it ourselves?” All of the Beanie Babies in the world that get sold on eBay are a derivative of the idea starting to be targeted at the newspaper industry. We all know how that went.

Our time is running out so I want to get to the question that intrigues me. On your website, you talk about making digital products transformational. I was wondering about the essence of that. What makes a product transformational? Is it possible to predict whether it’s going to be an order of some criteria that gives them a chance to become transformational? What are these?

I’m going to answer your second question first. Is there a way to predict? Not that I know of. If I knew that, I’d be very wealthy. When we think about the transformational aspects of a product, is this something that hasn’t existed before in some form? Is there some fundamental change that’s going to occur because of this product? We talked about several of them but eBay doesn’t get enough talk time anymore. It’s an old grizzled tech company but no one had ever thought about that before.

The idea of me selling my used motorcycle and you buy it without any intermediary was pretty novel. Normally, I would list it in the newspaper and you’d see it in the newspaper. You’d call me up and we’d do all this stuff. The classic model and we use this a lot when we discuss it with entrepreneurs is if you’re old enough to remember when Uber first came, Uber was transformational because the only option you had was to call a taxi. It was a horrible experience. You were willing to try anything, including getting into the car of some stranger that showed up that said they would take you to your place.

The second thing that was transformational about Uber is there was only one button. It only did one thing. You set up your account, u put your credit card in there and then push the button. Now, you have the Uber app, Uber Eats and Uber deliveries. It’s almost like you need a user manual to use, which is weird because it’s an app. It has so many things that it does and they try to do. There are Uber bikes and all those stuff.

The novelty was this was something I could never imagine doing before. I had one button that delivered on the core promise, which was someone will show up in a clean car, take you to where you were going and you get out and leave. You don’t even have to pay. You don’t have to talk to the person, make a change or worry about it. It was unbelievable. I remember when I started using it in San Francisco.

The funny thing is the behavior changed so much for users in cities like San Francisco that when you did get it, taxi drivers were complaining because people were getting out of their taxis without paying them. Remember, with Uber, you don’t pay them. I was one of those people and it wasn’t because I was trying to shaft the taxi driver but I was used to, “Here’s your stop. You get out.” That’s the essence of the transformational thing that we try to dig around in those ideas and say, “What can we do that makes this a step function different than radically different?”

The simpler, the better. Make it a clean, simple idea that people can wrap their minds around, which is an important value-add thing. We don’t want complexity in our lives. We want everything to be intuitive. We don’t want to read the user manuals. We want to press a button, make it happen, go live our lives, do what we want to do and not worry about the services around us. Just service.

The complexity of the solution is the job of the engineering and product team to hide from the user. I’m not saying that Uber was a simple thing to implement. There was a lot going on behind that one button. We have a client who’s getting ready to release a product that has a lot of complexity in the background with blockchain and a lot of other things but it’s all hidden. No one knows that it relies on distributed architectures, blockchain technology and all that other stuff because people don’t care. They just wanted to do what it does and it does it very well.

They don’t want the burdens. They just want the benefits. CODE Éxitos creates these transformational products. If our readers would like to find out more and maybe talk to you, where should they go? How can they connect?

People don't want the burdens. They only want the benefits. Click To Tweet

I appreciate you asking. I’m on LinkedIn under Charles Fry. I’m pretty easy to find on LinkedIn. If you want to connect with me on LinkedIn, put a little note telling me that you heard me on the show and you want to connect because I get a lot of random LinkedIn requests from people I don’t know. My email address is Carlos@CodeExitos.com. You’ll do a good job of publishing all that information. Send me a note and one of the team or I will talk to you. We’d love to talk to entrepreneurs. It’s a lot of fun. We enjoy getting to know people that are on this journey.

It’s been fun talking to you, Carlos or Charles. You go by both names. Charles Carlos Fry, Founder and CEO of CODE Éxitos, do check him out. Stay tuned because every week, I bring another exciting entrepreneur to the show. Thank you for reading. Thanks for showing up, Charles.

Thanks, Steve.

 

Important Links

• CODE Éxitos
• eBay
• Charles Fry – LinkedIn
• Carlos@CodeExitos.com
• Pinnacle: Five Principles that Take Your Business to the Top of the Mountain
• StevePreda.com