David Warschawski is the CEO & Founder of Warschawski, the #1 rated U.S. marketing communications agency. He is also the founder and managing partner of W Ventures, a VC firm that provides early-stage startups with venture capital, marketing support, office space, and mentorship. We talk about brand values, emotive branding, and the effectiveness of intent-based marketing.
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Invest from the Inside with David Warschawski
Our guest is David Warschawski, the founder of the fully integrated marketing communications agency, Warschawski. Warschawski is a Google certified agency partner and has been named the number one US agency multiple times, including for three years in a row. The company is headquartered in Baltimore with offices in New York City, Washington DC. And David also founded as in the managing partner of W Ventures, a VC firm that provides early stage startups with venture capital marketing support, office space and mentorship. Welcome to the show, David.
Thank you for having me, Steve.
It’s great to have you. So as usual, let’s start with your entrepreneurial journey. So, how did you become an agency owner and then an incubator owner, entrepreneur?
So, I was very fortunate. I grew up in a household that prized entrepreneurship and running your own business. I had a great role model in my parents. And when I finished with school, I wanted to be in a discipline that didn’t limit me to one category. I loved sports. I loved television. I loved persuasion. I loved law. And when I found marketing communications, you don’t have to pick one. It includes all of those. So I worked with two of the larger agencies in New York City straight out of college and really cut my teeth and learned a lot, both about what I wanted to do and things I wanted to do differently. And at a fairly young age, I went out and started my own agency and we’re getting close to celebrating our 25th anniversary, which is very surreal for me to think about. So it’s been a wonderful entrepreneurial journey. And the last part of that has been the W Ventures edition that you had mentioned.
That is amazing, 25 years. I wasn’t even aware that there was digital marketing 25 years ago, but obviously you evolved.
There wasn’t, there wasn’t, we had to learn.
That is exciting. So as you learned your digital marketing and evolved your agency and you got these awards, I mean, surely this was not just trial and error. And you, I’m sure you are, as all of us are standing on shoulders of giants. So any management blueprints, business frameworks that you built on and used in building your agency that you could talk about?
Sure. I would say to us, both as a marketing agency who does a lot of brand building work, but as an organizational process, being very clear and specific about your brand, what it stands for, what’s acceptable, what’s not acceptable. And that goes all the way to having very clear and distinct brand values, which we do. And brand values should never be something like integrity or honesty, but much more emotive of what do you want your own team to feel, and also how do you want your clients to feel when they work with you.
And through that framework of a clear brand, we, our senior management team, always set goals for the business, and each person then individually has goals within that. And the overarching frame of being a great brand and the goal setting has been fantastic for us, and the brand has been received incredibly well. We have a 4.9 rating on Glassdoor. We have a 5.0 on Google and on Facebook. So we’ve really created a culture that both people like to come and work for, but also a culture and an agency environment that clients are very attracted to, thankfully.Building a robust brand involves clarity, setting defined values that evoke emotions and guide not just the team but also influence the experience for clients. Click To Tweet
Okay, yes. So that’s, I agree. That’s very important to have great values, and you call them brand values. I guess it’s the marketing way of looking at it. And I love this emotive thing. So I think in a previous conversation, you mentioned about seven brand values. Is this kind of a magic number, or is it just how what you landed on as a company, or it has to be seven?
It does not need to be seven. we generally see that in order to create the true differentiation from their competitors, you’re usually somewhere between four or five on the low end to seven or eight on the high end. Once you get beyond eight, it’s just too many values for your team to really focus on. So it depends on the industry, it depends on the company, but the value should be things that actually have always been a part of the company, maybe not perfectly displayed in the past, but we’re going to clean them up to really hold them up and shine a light on them. We often make the analogy, it’s like when you go into a mine and you find a lump of coal. Well, inside that coal is a diamond. The diamond, when you get rid of the coal, has always been there, But now the trick is to clean it up, to cut it the right way to show off its best assets, and then to proudly wear and display that diamond. That’s very much what brand and a culture of brand is all about.
That’s very interesting, the way you phrase this and you make it the brand. And yes, I mean, ultimately, the culture is kind of the brand of a business right it’s, they’re inseparable from one another. Yeah. So who the people are in the business they are going to be, they’re going to be the company as well to the outside world and this is how they’re going to communicate with the outside world. of this Jim Colley, you know, what Jim Colley’s also kind of articulated in his, from his earlier books, Beyond Entrepreneurship, the original book, already he talked about that you have to figure out what you behave, what the core behaviors are, what the core values are, and then you have to paint the vision and then break it down and kind of set goals. And EOS talks about company rocks, which are goals for the business as a whole, and then individual rocks, which are goals for individuals. So it kind of sounds analogous to this.
It is very similar, yes.
Now, one thing that struck my ear when we last spoke, and you talked about top-down goal-setting and bottom-up goal-setting, and you also mentioned about the circular goal-setting, or goal setting, or maybe that’s the interrelationship. Can you clarify this, what you meant by that?
Sure, So most traditional companies have set goals from the top. Senior leadership sets goals and then pushes them down the levels where the people below them are responsible for executing. Bottom up is the lower level employees are telling the senior folks what we want and what we need. In our opinion and our experience, neither of those is ideal. The ideal way to do it is everybody is a part of the brand. Everybody has a voice in the brand and everyone should be setting goals from the brand. And when we hire, it stops being a question of do they have good enough experience, but are they a cultural brand fit for us? Because that’s the number one priority. They have to really showcase and differentiate themselves in a way that aligns with how we as an agency differentiate ourselves. And it should be organic. It’s not something that should be put on or faked.
So, can you give me an example, for example, Warschawski’s brand values, what do they look like?
We don’t share them because that’s not the fun part of it. But I think if you read any of our reviews, you read anything that our clients say, you will see constant themes self-populating regularly. That’s wonderful to see because they are a sort of a pat on the back or a nod to what our brand values are. So I would say if you see anything about us, you’re going to get a pretty clear sense about what makes us stand out and what are the unique brand values.
Okay, that’s fair enough. So when we are talking about emotive and the visionary brand and articulating that, is there a process for getting that emotional, getting to that emotional level? How do you explore it? How do you mine it, so to say?
It’s a great question. And sadly, I think a lot of folks who do this type of work tend to allow clients to settle for what we call platitudinal beliefs or values. Our litmus test always is, if you say, well, we are going to be the most ethical of companies, everybody who does business with you says, I hope so. I don’t want to work with a non-ethical company. So that’s a platitude. It’s what we call it’s part of the coffee. But what’s the experience that’s being offered around the coffee is what differentiates it. So a motive has to go to a place where people go, oh my God, that’s the kind of person I love to be around. Oh, my goodness, that’s the kind of work or attitude that I love. And you know what? Maybe it’s not even me who aligns with that, but I know from past experience, that kind of personality, that kind of approach, that kind of mindset is going to create great outcomes for us as a company.
Okay, so it’s basically emotional resonance that you’re looking for.
It has to ultimately be a couple of things. It has to have an emotional, strong emotional component, number one. Number two, it has to be clearly measurable that when somebody fulfills that value, everybody goes, Steve did it. Okay, there’s nothing to talk about here. He’s doing great. But also if it’s not done, there’s no arguing, did you mean to, was it? It’s very specific, measurable, and clear. And when we help clients set brands, we always push them to go to the highest point where they can make a distinction between their competitors and also the highest point of just straight up business differentiation. Because brand ultimately is never a perfect zero sum game. It’s always an aspirational game. If I’m doing well at hitting all of my brand values 90% of the time, I’m not perfect, but I have a heck of a great brand and a heck of a great culture then.
So, give me an example. It doesn’t have to be your companies, but give me a brand value, which is measurable, and where you can hold people’s feet to the fire that they are either doing it or they’re not doing it.
So, a couple of examples is, we care for you as if you were a brother and a sister. So it goes to a bit, how did you take care of the person who’s in front of you? Did you treat them like a nice customer and you were appropriate? Well, that’s a level, which again, I hope most businesses are willing to do. But if I’m expecting of my team members that they’re going to treat, whether it’s coworkers or the people they interact with as clients or customers, as if they were a close brother and sister and pay attention to them in the same way, that’s a specific measurable and also emotive type of brand value.
On the other side, you could have the desire to constantly create thrilling results. So, what that means is a brand value that you might see is we always do the top or the most cutting edge or the best quality work. But that’s not an emotive. We want our clients, if you say you’re a thrilling organization, to go, oh my God, they blew it out of the park. They went well above and beyond. This is so super exciting. And that’s where it bridges from being you as a company, being a commodity play that’s interchangeable with anybody else who provides those services. So if you’re an accounting firm, most people see you as a commodity. You do accounting work. You do tax work.
Well, I can go to about 1,000 other companies in my region who do exactly the same. What is it about you when I work with you that makes me feel different? And I want that feeling over and over again. And every great brand that exists, whether in the B2B space or in the B2C space is doing that today. So we mentioned coffee. Starbucks made people from a brand standpoint completely change their behavior. What did we do before Starbucks existed in the United States? We had this crazy idea. We bought coffee in the store. We made it at home. So it was cheaper, it was faster, and I could have exactly the taste that I wanted.
But Starbucks convinced us from a brand emotional standpoint that I need to go somewhere, I need to wait in line longer, I have to pay way more for a cup of coffee that in every blind consumer taste test ranks below McDonald’s and Dunkin’ Donuts. So it wasn’t the quality of the coffee, it wasn’t that they’re making the best coffee, it was the fact that they surrounded it with an emotional experience. And that’s what we always tell clients, it’s also important for us. You don’t have to be amazing with your product or service. You have to be good enough, just like Starbucks coffee was. But all of the emotive brand work around it is where you truly make the differentiation and you win or lose customers in the long term.Treating everyone as if they were a close brother or sister brings an empathetic, tangible aspect to brand values. It's not merely about doing quality work, it's about creating an experience that extends beyond the commodity service. Click To Tweet
And that all comes back to identifying what those core emotive values are and how do you express them?
Exactly. And you can look at some of the greatest companies. One example that’s for us a no-brainer is Southwest is over the last 20 years, how many airlines have gone in and out of bankruptcy or disappeared from the scene? Now, on the commodity level, they’re all offering exactly the same thing. It’s a mode of conveyance that I pay for to get a seat on a plane that takes me to a specific destination that I’ve asked for. There’s nothing different that any of the airlines from a commodity standpoint are offering.
So how is it possible that Southwest is the only continuously profitable business, ranked one of the top 10 companies to work for on a regular basis in the United States, and has never been in the red? They’re always in the black. What did they figure out about this commodity that others couldn’t? And the answer is, is the brand. When you get on a Southwest flight, even before you get on a Southwest flight, you have a very specific experience that people either really love or really hate. And by the way, we always tell people, if you don’t have people who hate you, then you do not have a strong brand because not everybody is supposed to love you. The moment you try and be everything to everyone, as your mother would say, then you’re nothing to anyone. So great brands, even sometimes only carve out three or 4% of a market, but those people truly love them and will go to the ends of the earth for that brand.
Southwest is a big, big topic and I agree that the brand is a part of it. There are other parts as well. But let’s talk about the branding and building a great digital agency. And you guys have won multiple awards. What are the state-of-the-art techniques that high-end digital agencies are using? And how is a high-end agency different from your run-of-the-mill agency? Other than the branding piece, or maybe it’s the same thing.
So I’ll take a step back. Digital, especially the sophisticated digital work, has come on the scene in the, let’s call it the last five, seven years. And as a result, just like when websites became popular and everybody in the agency world said, sure, I can build you a website when asked, but they had had zero experience or very little depth of experience, they were doing it. There were very few agencies at that point that really understood how to create a website that created the best ROI. Same position today, we’re in that same sort of timeframe. It’s so young that there isn’t enough talent who has the breadth and depth of experience doing sophisticated digital marketing. There are many out there.
Thankfully, we have a team full of them, but it’s very hard for the late person to be able to tell who really knows what they’re doing and who doesn’t. So the most important thing is, number one, you have to have great people leading it who truly are expert. The second part, what makes something very cutting edge today is it’s such a laser focus on either your pack, what’s your customer acquisition cost, or what is the metric by which you’re measuring all your digital work. So doing great creative is only half of the equation. Testing and optimizing based on spend, the number side of the game are equally as important.
Now for most people in marketing communications, this has been a, oh my goodness, I know creative, I know how to create a feeling, but I don’t know how to do the brick and mortar work of the financial CAC performance. So that’s the first thing is you really need to be laser focused on that. The second is there are all kinds of tricks today that enable us to laser point, we call it, it used to be in marketing, you had a machine gun and you shot in the general direction and hope that two out of the hundred people you hit were actually people who would be interested in what you’re doing. Today, we call it a scoped rifle approach.
Because of digital techniques, we can find the perfect customer and only target them, which does a couple of things. Number one, it doesn’t dilute your brand. Number two, it makes your spend that much more valuable because now instead of paying to speak to 100 people, I’m only paying to speak directly to the two people who I know are predisposed. So one of the cutting edge approaches is called retargeting against intent. So based on behaviors online or in social media, we know what in general is the intent or the desire of the person on the other end.One of the cutting edge approaches is called retargeting against intent. So based on behaviors online or in social media, we know what in general is the intent or the desire of the person on the other end. Click To Tweet
And if they match our criteria, let’s say we’re looking specifically for 35 to 45-year-old females in the greater New York City metro area with $100,000 or more in income, we can, like a laser, focus in only on that demographic. And then once that lens has been applied, on top of it, we’re applying the lens of where have they gone? What purchases have they made? Did they go look at something that’s relevant to our client? And we’re going to retarget that. And that’s just one of many ways that today you can be so much more sophisticated.
And I say this all the time. if you would have told me when I first got into this business, we could get such a measurable ROI on marketing spend, and it could be this laser focused, I think I, along with most of my peers 30 years ago, would have laughed and said, not possible. But today it is, and it’s really changing the face of how good marketing communications is done.
And when you say against intent, what does it mean against intent?
So, for example, let’s say I’m selling a tennis product, okay? Let’s say I have a specific tennis racket I’d like for you to use. If you fit my demo in the region I’m trying to reach, but you’ve never gone and looked at a tennis magazine or never liked a tennis post, I know right away you’re not right for us. But I can set up mechanisms. The moment you go and read a publication about tennis, you look at a picture about tennis, you read an article in the Wall Street Journal about the best tennis rackets, I got you. I know that your intent and interest is tennis. And in fact, I can be as specific as what I just said is maybe you went to one of my competitors and looked at a racket of theirs. And the moment you’ve done that, I want to know. And then I want to present my option to you and show you why it’s a better choice.
So, it’s based on the intent. It’s OK. I misunderstood the against. Yeah, that’s very, very cool. So let’s let’s talk about the last piece I want to ask you about here is you talk about digital monitoring. What does it mean digital? Is it the same thing that you’re monitoring people’s intents and then you retarget them based on that or there are other pieces to this?
So there’s when people say digital monitoring, it usually means one of two things. The first is, and we do a lot of this is we’re monitoring and social media for anything that’s being said about the brand that we represent. So, it might not be a site we follow, it might not be a person we’re accustomed to, but we need to be able to do digital listening to be able to see if there are problems coming up and how do we address them. And then obviously, there’s also the positive.
You want to be able to monitor when things are going really well and try and amplify them or recreate them again. So, that’s one type of digital monitoring. The other digital monitoring, which goes more in line with what we just spoke about, is the digital monitoring where literally someone is sitting in front of a screen looking at every bid, spread, ask, and the performance of it, and constantly optimizing based on what’s performing the best.
So almost every digital campaign we begin today begins with at least an A, a B, and a C version of that ad that’s focused at the target audience that we want. And we’re testing to see which ad performs the best, and the ads will have a different image and maybe a different call to action. And once we learn in a very short amount of time that C is performing the best with our target audience and you only know that by constantly monitoring, you can quickly pull A and B and recreate more ads that look and sound like C and optimize the ROI on your spend.
Got it. That sounds pretty cutting edge indeed. I remember 10 years or 15 years ago, it was all about sending a piece of direct mail and people who were interested would call you and maybe you would pick, I mean, I would do that based on the company, you know, company owners profile in terms of the business and their age and maybe the revenue of their business, but now you can be much more granular. So that’s very interesting.
Just Steve, because what you said is really what’s changed in the marketing world today. There’s still nothing wrong with sending out a direct flyer to someone who meets some of your demographic criteria, but it’s a spray and pray approach. Again, if you get 2% or 3% who respond to that, that’s a home run from a marketing standpoint.
That’s amazing. That’s 10 years ago.
Right now, it’s usually more like one maybe two percent. The problem with that is it’s only part of the way. They have not expressed their intent to me. They didn’t tell me that yes they meet all my criteria but they love to play tennis and they’re constantly checking out sites that are tennis oriented. And that’s the difference between the old sort of spray and pray, and there’s still nothing wrong with that. There are appropriate times and uses for that. And the new rifle-scoped approach to really just hitting the perfect target audience. And by the way, if you’re doing good digital monitoring of this, you will learn more and more about your customer and who is the most likely. So you may have had thoughts going in as to who would be your best customer. But sometimes through learning, we see, oh, we’re slightly off, we have to redirect it. This is actually a better performing demographic and psychographic for us.
So I’d like to also spend a few minutes about the venture, the venture company that you are running, W Ventures. What is the best way to grow an early stage company? What is your experience?
So that’s a very loaded question. I don’t think there is one way or another, but the things that we’ve seen over the life and agency and working with early stage companies and also W Ventures is if you don’t have people who are true visionary entrepreneurs and know what the time commitment is for that, you’re already off on the wrong foot. If you don’t have something that has the ability to create emotional preference or hit a target audience and it’s just a commodity, you’re in a heap load of trouble and going to spend a ton of money in order to be successful.
But great companies have a great founding team, have a great emotive benefit to what it is that they’re doing. And then the most important part from our experience early on is building credibility for that because it’s early. So I’ve never heard of this brand. The first time I buy, it has to be credible to me for one reason or another. And number two is building the brand that people know what this is and why it’s different and why I should be interested compared to what’s traditionally been out on the market.
And then over the long term, obviously you need to execute your business appropriately and you need to be really good and aggressive in doing that. But the sophisticated digital marketing and PR are overwhelmingly the ways that early stage companies today, certainly that we’re involved with on the agency side and W Ventures are being built. It’s really focused primarily on PR, social media and the digital marketing. And in general, we use digital marketing first as the entree point in order to test personas and to test what is the creative and the call to action that works. And then once we have those learnings, then we move them into PR, into advertising, into social media.Early-stage success in companies pivots on three pillars: a visionary founding team, a compelling emotive benefit, and credibility. Click To Tweet
So, what I’m hearing is that the secret to growing a company is to pick the right teams with the right idea and then apply marketing to it, the right kind of marketing to it.
Correct, I would say in a nutshell, that is right. The only distinction I would make is that many early stage companies, when they say we’re doing good marketing, sadly have very little depth of experience and they don’t understand where they’re falling short on marketing and how you go about doing that. And the most easy example is many startups that we see already have ingrained in their head, who’s my target audience? How are they gonna respond? This is the look and feel I should be hitting them with. And they spend huge amounts of investor money chasing that down.
And the first question we often will ask is, well, do you know that that’s your best ROI path? And say, yeah, it’s working great. We say, did you test anything else? Did you see if there are other options that could be better? No, we didn’t think about it, it was working so well. That’s just one minor example. And by the way, when we do the testing, almost always there is a better way and a way to optimize almost always. And I say this with a bit of humility, is I’ve been in the industry for a long time and before digital marketing, guys like me always said, well, I’ve been doing this so long, I know what image, I know what call to action, I know this target audience, I’ve researched it, this is gonna work the best and we have our own opinions.
I will submit to you that roughly a third of the time today, I and our team are wrong in what we think is going to perform the best. And you only realize that through testing and then through optimizing. So it’s a little bit of a humble pie. We actually internally will often, when we launch a new program with an A, B, C variable, some people will say, I think A is going to work the best. No, I think B is going to work the best. No, C. And at this point, I’ve learned that one of the best gifts digital gives you is it’s a crowd source of information and feedback loop that tells you directly, yes, that’s what we want. Yes, that’s what works for me. Yes, I’m your right target audience. So it’s been a blessing, but at the same time, for people who’ve been in the industry for a long time, it takes a little bit of humility to let go and say, well, let my target audience tell me as opposed to me telling my target audience.
You know, this reminds me, you’re talking about the tennis. I’m a tennis fan and I listen to a podcast on tennis where the podcast hosts regularly predict who’s going to win which tournament and 90% of the time they completely got it wrong. Even though they are foremost experts. They really understand every part of the game. They know these people, but they still get it wrong. And maybe not the perfect analogy, but that’s what it is.
I think it’s 100% correct. Experts are never as good as actually getting first-hand data from the people who are doing it. And until they do it, you don’t know. It’s a guess. It’s an informed guess based on experience. But until you test it, it’s very hard to know. That’s what’s significantly changed today in the marketing world, is we can do a tremendous amount of research before we launch a brand to figure out, is there a there there? And if there is, where and how and to whom does it need to be positioned?
Okay, so before we wrap up, I want to ask you one more question, because in our previous conversation, you mentioned that you actually invest sweat equity in some of the companies that are the W Ventures incubated businesses. And I was thinking about that, because the typical venture fund, they make 10 investments, and they want typically they hit, if they are good, they hit one other park, they break even on three, and then they lose money on the rest of them. So when the success statistics is 10 to 30% successful, how do you decide where to invest your sweat equity and marketing support, which companies you should?
It’s a great question. The first is, thankfully we’re blessed because we offer this hybrid model and are very unusual from a VC perspective where we’re not only writing a check, but we’re going to do the marketing communications in exchange for equity. So we are a hundred percent aligned with the company we’re investing in. We’re not making any money doing the marketing communications until they actually have an exit. So they know we’re going to bend over backwards in order to get them to that point.
But one of the things that allows us to be more successful than the average numbers is number one, most early stage companies fail because they have really poor approaches to marketing and finding customers and optimizing how much it costs to convert a customer. Either they’re not getting enough customers or it’s costing them too much to acquire customers so they’re not making enough margin, so when we can be involved early stage and we’ve done this, you know, God knows how many times with how many different companies, we can make sure that that’s getting done early on, that already increases our chances for success existentially.
The second part is, listen, thankfully I have a lot of experience in the marketing communications world, but I’ve been an angel investor. I have other businesses. I understand business also. So not only are we then helping them with the marketing communications, not only are we introducing them to VCs and other funders, but we’re also giving them advice and connections that help them be successful. And again, we’re very motivated because we’ve gotten into bed with these companies. Now, the last part of this answer is many VCs invest, they put in a check and it’s sort of blind faith money, and maybe they do a follow on investment because things seem to be going well. I’ve had that experience many times as an angel investor and I learned.
And the main learning was, unless you’re in there, it’s very hard to know if something sounds good or actually is really good. And also, unless you’re working with the team day in and day out, you’re not sure, are they really great entrepreneurs who I want to continue to invest in? So one of the big advantages is, we’re in bed and working on a daily basis with the portfolio companies of W Ventures, I see right away who’s doing a great job, who’s doing a good job, and who we probably are no longer interested in investing and we can move away from them.
So all of those things fit into giving us, we believe, a better shot at getting a good return on our investment. But at the end of the day, you’re 100% right, Steve. If we’re right and we’re successful three or four times out of 10 times with the companies we’re investing in, any good VC will throw a party for that kind of result.
So basically, by being inside, you can be overweight in the good ones and you can underweight in the bad ones. Essentially you’re increasing your success ratio. That’s very interesting. So we are coming to the end of our show. And I’d like to ask you that if someone would like to learn more about your state-of-the-art techniques, or maybe they are a startup entrepreneur and they are interested to be incubated by W Ventures, or would like to communicate with you, where can they find you?
So, I love being connected to through social media channels, especially LinkedIn for business. So just put in my name, David Warschawski, send me a friend, a connection request. More than likely I will connect and we can communicate that way. If you’re an early stage company and you think you have a great business idea, you can fill out an online form and submit your deck and any other relevant information and if we think it’s something we’re interested in, we’ll be in touch. But you can do that through LinkedIn as well and one of the things that we prize the most is we all had lots of people who helped us be successful. We like to give back, so if there are ways we can provide information, insight, some learnings to folks who are beginning this process, we’re happy to do so. And obviously, if there’s a great company and a great idea, we love to learn about them. And hopefully, they can become part of our portfolio as well.
Thank you. That’s great, so David Warschawski, the founder of the Warschawski Digital Agency and WVentures. He, I did mention earlier, but he is also a professor at Johns Hopkins, where he teaches digital marketing certification course. So thank you for coming on the show and to our listeners, if you like the show, please rate and review us on Apple Podcasts and subscribe on YouTube. And stay tuned because next week I’m going to bring another exciting entrepreneur and stay tuned because next week I’m going to bring another exciting entrepreneur targets with you. Have a nice day.
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