Nahed Khairallah Podcast Transcript

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Nahed Khairallah Podcast Transcript

Nahed Khairallah joins host Brian Thomas on The Digital Executive Podcast.

Welcome to Corzuant Technologies, home of the Digital Executive Podcast.

Brian Thomas: Welcome to The Digital Executive. Today’s guest is Nahed Khairallah. Nahed Khairallah is the founder and host at Organized Chaos. Nahed is a relentless advocate for the extraordinary potential of fast growing startups. For over a decade, he has built a track record of transforming seven figure companies into nine figure powerhouses by turning HR into rocket fuel for their growth.

His journey in scaling startups has been an exhilarating global expedition, taking him across the United States, Europe, the Middle East, and Africa. This experience has enriched his perspective on what it truly means to drive hyper growth on a global scale and across cultures.

Well, good afternoon. Nahed welcome to the show.

Nahed Khairallah: Hey, Brian. Thanks for having me. Happy to be here.

Brian Thomas: Absolutely love doing this. And I love you making the time. I know we’re in the same time zone. You’re down in that Dallas area. I’m in Kansas city. You guys got some cold recently as well, which is crazy, but we had a blizzard about a week ago and it’s kind of still here, it’s like negative five.

So. But anyway, yeah, we talk about the weather on the podcast, but Nahed, I appreciate you making this time really do. And I’m just going to jump into your first question. Your career has spanned multiple continents, including the United States, Europe, the Middle East, and Africa. How have these diverse culture experiences influenced your approach to scaling startups?

Nahed Khairallah: It’s pretty interesting when you look back and think about really how that had an impact on just my career and just how I approach things in the moment, you don’t really think of it very much, but I think what I’ve learned over the years and how it’s really helped my approach is each of these markets is very different and really understanding their unique dynamics has really helped me advise companies on how to approach scaling when they want to enter those markets specifically.

I’ve worked with over a hundred nationalities over the course of my career and one of the most important things I think it’s helped me do is it helps me just broaden my horizons and learn how to influence people regardless of cultural background and really understand what it is they’re after and how do I need to position whatever it is I’m trying to recommend in terms of scaling that fits.

What they’re thinking of, what they’re used to and what they expect. There’s a funny story, which I’ll get to in a second, but you know, one of the most important things given when you’re, I’m working with startups, typically it’s with the founders and you know, CEOs and so forth, I’ve learned how to get to the core of what business leaders are trying to accomplish and just really tailor advice in a way that resonates with them to get by in a successful implementation, because at the end of the day, it’s people who drive scaling or really don’t allow it from happening.

Assuming you have product market fit and all the other dynamics working in play. It’s really down to the people. I think a funny story, which shows really how culture can play a big difference in scaling and even just doing business altogether. I was once doing a consulting gig with a large bank in Saudi Arabia.

This was around 15 years ago, almost at the start of my, I would say HR career, so to speak. I was in this meeting with a Saudi senior executive at the bank. And there was a meeting with his team, and I was pretty much walking them through a solution, and we got to a point where I was explaining a specific metric that I was interested in implementing for a period of time, and that executive did not agree with the math behind the metric as to how really I was proposing it.

So we had some discussions back and forth, and we were sort of at a standstill. And I was standing up at a, on a whiteboard with a marker. So I walk over to that individual and I tell him, I would love if you could show me on the board what you’re talking about, because I really can’t connect the dots. So just to make sure we’re on the same page.

And he really took a step back and just refused to engage and really even to, to get up there. The meeting ended like, you know, 20 minutes later, he was very silent for most of the time. I get a call like an hour after that and the client’s canceling the project with me. I essentially got kicked off the project.

I learned over time that that specific situation, right. For me to meet the cultural expectations, for me to be able to get them to where I needed them to get. Was essentially to not approach that in a challenging way and pretty much put the person on the spot to go up there and show me what they know and have a discussion that way.

But more about acknowledging their point of view and then working with them in private to reach a solution because that person pretty offended in front of their team. That was one example of how I had lost business due to cultural misunderstandings and some of the lessons like that have helped me really bridge the gap and cross cultures that way.

Brian Thomas: That’s awesome. And I love those stories. People is that’s how we connect. Yes. You mentioned the different cultures and nationalities, just like this podcast. I’ve traversed over 50 countries now and just love this connecting with people in different cultures. I love the story. People resonate with that.

And obviously it’s a, probably an expensive lesson that you learned.

Nahed Khairallah: Oh yeah. Oh yeah.

Brian Thomas: But, uh, I appreciate the share. Nahed, as the founder and host of the Organized Chaos podcast, what motivated you to start this platform and how do you envision it helping founders scale their businesses?

Nahed Khairallah: Yeah, I mean, that’s a question I thought about before starting for a while.

It’s like, why am I doing this and why do I want to do this? So there’s a few reasons here that got me to where I am today and actually to start Organized Chaos as a podcast. 70 to 80 percent of startups generally fail due to three things. You know, the first marquee one is product market fit. You know, when you look at data, it’s anywhere from 35 to 50 percent of companies failed due to that reason.

Then second in line comes financial mismanagement, cashflow management, and so forth. That’s another 15, 25%. But a quarter of companies fail because of people decisions and people decisions, meaning having the right team in place, having the right corporate design and structure in place, how work is done and different decisions around those really lead to detriments of some companies.

I actually, early on in my career, worked at a company. This was an it services organization, you know, small regional company that had triple digit growth. And all the cash you can imagine, and over three years, they managed to tank that company to the ground and eventually sell to a competitor. And when I dug deeper into it, it was mostly people problems, really, because they had the product market fit and they had the financial management in check.

So that’s one of the reasons I think there shouldn’t be any company that can have product market fit and they have the financials to grow their company. And managed to crash and burn because they made bad people decisions. I think it’s really unfortunate. It does the founders, the employees of the service, not reaching their potential.

And also I think a lot of times from my experience, uh, throughout, you know, my consulting career from, you know, that’s been more than a decade, founders and leaders generally have very good intent. But there are not people who are generally trained to be CEOs and people leaders, especially first time founders, you know, let alone HR leaders at an early stage.

So my goal really with the podcast is to help founders, leaders of startups really to eliminate that 25 percent chance of failing due to people issues. And really giving founders tried and true advice that is easy to implement, practical, and that I’ve personally implemented and seen success with, with more than 150 companies I’ve worked with worldwide.

So in essence, I just want to give them a shortcut to accelerate their growth. And the final reason I would say that really pushed me over the edge into creating organized chaos was when I started personally podcasts around sort of the area I’m in, I noticed that there was a lack that is targeted specifically to early stage startups.

But also there was a lot of advice, which was lacking, vague and unactionable. And the thing I think which really bothered me a lot is that I heard a lot of advice from people who’ve never done or implemented what they were preaching. And I thought that was a disservice to, you know, the entrepreneurship community to make sure that at least if they’re listening to advice and getting advice, that it’s at least coming from a place where these things have been tried, they have been proven to work and just help them out really with, with that kind of approach.

Brian Thomas: I really love that. And you taking the people approach here, it’s so important having the right team and nurturing that right team and growing the team. But the podcast, like you, I started the podcast to really get in there and learn more for myself, but also these amazing stories of entrepreneurship and technology and emerging tech and just sharing that with the world is really inspiring for me and exciting.

So thank you. Nahed, you emphasize turning HR into rocket fuel for startup growth. In your experience, what are the most critical HR practices that contribute to transforming seven figure companies into nine figure powerhouses?

Nahed Khairallah: Yeah, I love that question. I get a lot of questions sometimes, like why do I use the term rocket fuel, which is kind of interesting.

I believe HR is an enabler to growth and to scaling. It is not the thing that is going to make you scale. There needs to be other things in place. You know, some of the things I mentioned earlier, but it is a catalyst. It helps you get there. That’s why I like using the term rocket fuel, right? Because, you know, if, if you have a rocket and you just go fill it up with diesel.

It’s not going to lift off. You need rocket fuel for it to lift off and grow. That’s the premise I start with. Some of the critical HR practices that I’ve seen work, you know, why I have advised companies and seen that trajectory with them is first and foremost. And again, I’m going to give you a probably four or five that I’ve seen work without fail, regardless of industry and size, and I would say maturity level and scaling first and foremost is the founder building the right leadership team around them and just letting go what I mean by that.

A lot of times, and I see this a lot specifically with first time founders, where they get so used to having their hands in everything, especially when they’re very early on. And as they grow, they just don’t let go of trying to do everything and just simply focusing on what they’re great at. What that ends up doing is that.

It’s pretty much handstraps the organization from growing and it bottlenecks the entire operation and it requires some sort of, you know, self reflection and being honest with themselves that founder isn’t going to be excellent at everything. There is going to be an area to which they excel in, and those are the ones that they need to focus on.

But also surrounding themselves with the right people who are able to really have that same level of care, attention, and commitment to the organization. That’s one of the first things that I think really contributes to really enabling company to succeed, but it’s not always obvious in the, in the heat of the moment with founders.

And, um, it’s one of the first things I kind of highlight when I, when I’m looking at this, uh, with other companies. The second thing, which really piggybacks off the right leadership team is really hiring the best talent possible. It’s not a numbers game. And sometimes companies fall into the trap of trying to hire just as many people as they can in the beginning, especially if you know, they come up on, you know, some investment capital or something of that sort, especially, and I usually focus on this a lot, like in your first 50 to a hundred hires, if you’re reaching that point, it’s always quality over quantity, just to share some data on this point.

There was a study by McKinsey in 2017, which studied really the impact of high performers versus average performers in an organization. And the numbers just blew my mind away. And I like using this stat a lot, high performers, they tend to produce up to 400 percent more than an average performer. If you want to go to the elite A players.

Their productivity can reach up to 800 times more than an average employee. If you take a step back and just digest those numbers, essentially, if you hire one superstar, you’re probably replacing eight other average employees, that’s a lot cheaper for you produces a lot more. And those are some of the starting elements you need to really scale, right?

You have overachievers, people who produce a lot more, but also they don’t break the bank. They’re probably paid higher than an average person, which they should be justifiably, but you get a lot of bang for your buck. A few last things I’ll round up with is invest in the core business capabilities of the organization.

That is very critical. And what I mean by that, it’s very important to focus all resources on the things that the company does best and not try to do too much. And again, that’s probably not an HR thing, but because I like saying, Hey, HR is the enabler. HR needs to understand and be tapped to the entire business operation.

So if you’re great at building software in a specific industry, focus and double down on that up until you grow to a point where you can diversify. Sometimes what I see a lot of companies do in their early stages, they find success early on with something and they decide to quickly diversify into other areas and stretch themselves thin and really just dilute their growth, especially if that diversification doesn’t work out and it ends up bleeding their company’s cash and then just really hampering their entire growth.

And finally, I would say is think scalability from day one. A lot of times when founders are starting out, it’s really more about survival and you try to get by and make do with whatever is available at your, you know, at your fingertips, your budget and so forth. And sometimes that leads to taking the easy route when it comes to building your teams, building your processes, uh, the way you do things.

So for example, instead of having someone do payroll manually, why don’t I invest in a Payroll software that is going to help me from day one, not worry about this. Give me the time back so I can focus on more important things. And as I grow, I don’t need to make any changes to it. So just, just a very trivial example.

And along those lines, knowing when it’s time to scale is pretty important because there’s a lot of things. That can happen, a company goes on, you know, a demand spike, they get a big customer and so forth and they decide just to throw everything at it and hire more people, grow sooner than they need to and really just crash themselves down.

Again, I usually say this a lot because when we look at the news. And we read about entrepreneurship and founders and so forth. We usually see the VC backed big name unicorns for the most part, but most companies are not VC backed. They’re not venture backed. A lot of times they are playing with house money, essentially, when they’re trying to scale and grow.

So missteps. In trying to scale too soon can lead to financial ruin and just really just toppling the company down to the ground, but also scaling too late becomes a slog and stagnate. So there’s a good balance there. So those are really some of the, the, some of the main practices that from my experience have really contributed to taking, you know, those seven figure companies that are starting to reach success and really just explode that into the nine figure mark.

These are some, I would say the main principles that I’ve seen work.

Brian Thomas: Thank you. I appreciate that. You’ve kind of covered a lot. Talked about obviously the CEO, the founder sometimes gets in the way and, and we understand sometimes they need to focus on what they do best and let the people part of it up to the experts.

Right. You talked about investing in the company, talked about high performers and of course scaling, which is great stuff here on the podcast today. Nahed conformity is no place in the fast lane of hyper growth. As you mentioned. Can you provide examples of unconventional strategies you’ve employed that led to exceptional results in scaling startups?

Nahed Khairallah: Yeah, that’s, that’s a good question. Again, something that I say a lot and it’s sometimes, uh, really irksome people that I work with when I hear the word, let’s say, Hey, what is the best practice for doing this? Or what’s the best practice for tackling this problem? My answer is usually. There is none for your company.

We will design the best practice for you because the best practice at company X isn’t necessarily the best for you. It’s good to know what’s going on and what’s worked and what hasn’t and the circumstances around it, but you need to design what works for your company. It sometimes takes a minute. Folks to really just digest that as we’re going through, but a lot of times it’s, it’s not about just being unconventional and being nonconformance just for the sake of it, it’s really about tailoring what you need to do for a company to be successful, but to give you some examples of a few things, most importantly, I think, and I’m talking from the HR lens here, cause you know, that’s, that’s kind of where I come from.

Understanding the ins and outs of the business and understanding how scaling is aligned across the entire operation, not just in HR, is I think the starting point of any HR professional or any person who is looking to help a company scale. Again, this is not the typical HR answer. It’s not the typical HR thing you would expect.

Because if you and HR don’t understand how everything’s put together in the organization, the dependencies, if you pull one lever in one department, what does it impact the other? You’re not going to be able to do a good job and help the company expand. So, that means understanding every single part of the operation.

What is the value chain? How do the financials work? What drives cost up? Causes efficiencies and really audit and understand the entire operation to be able to really provide advice as a starting point. The second thing, which I think is unconventional from an HR standpoint is auditing the entire business for tech enhancement potential.

And this is probably going to sound like the most un HR thing I’m going to say, but when you’re scaling, your goal is to do more with less people over time. Your goal is to produce more and hence the term scale, you want to be able to produce more at an accelerated pace without having to invest an equal amount of people as you grow.

So what does tech enhancement potential have to do with this? It’s about really auditing the entire operation and flagging any areas that have potential for automation. Replacing any redundancies and really redeploying people in the areas they are better at in doing intellectually driven work, creative work, work that no machine, not even AI or anything can replace with right now.

So that’s the second thing, which is typically considered a bit unconventional. That, Hey, this isn’t the HR function is, is here to tell us that we need to see how we can get more less people and do more with less, but that’s really an agreement for proper scaling and an efficient way. Something that I also do, which is kind of unconventional, especially in a scaling environment, typically when, when you think scaling.

The thing that comes to most people’s minds is we’re producing more, we’re hiring much more people. It’s about how fast you can get people in the door to really meet the demand and growth that you’re expected to meet or you have planned for. I kind of do something a little unintuitive sometimes, where even though when you’re in scaling, I like to work with companies to build an evaluation framework to validate every single hire request that is being made, regardless of the urgency of it.

The reason for that is. If you don’t nail down exactly and specify, what is the gap this hire is filling? What is the business case for it? How do they fit into your company’s existing operations? Do they have transferable skills and the longevity of the role? Then, it is highly likely if something doesn’t go according to plan, you’re in layoff territory.

And I think we’re seeing way too much of this today. From COVID era. And companies just overhiring and then not knowing what to do with those folks. Just to give you also a stat, I’ve experimented with this specific, you know, this specific approach with many companies over the years and less than 10 percent of them have laid off any employees within five years of starting to scale because it was so deliberate.

And typically when we think of scaling, we think of, you know, go, go, go, as opposed to take a step back and see the forest for the trees. A few other quick ones I’ll give you also is, uh, we touched upon this a little bit earlier, but really stripping down the founder’s duties to just what they excel at.

One example I’m going to give, and this is probably going to sound radical to some people, but I was once working with a manufacturing company who was in the luxury goods business. And it was, it was a very fast growing company. I started working with them when they were, you know, at seven figures and I worked with them for almost seven to eight years up until they reached the nine figure mark.

Early on in their tenure, the founder and CEO at the time had a chat with me and said that he was having some issues. He was trying to scale, but it was just never working. Every time he tried to scale, invest more, go to different markets, things would fail. He would scale back. So it was always a yo yo operation.

So I was referred to this individual by a previous client that I’d worked with. So I go in and out of the operation. I speak to folks and all that. And I come to him with one recommendation only. And my recommendation was that he should step down as CEO. Hire a CEO who understands the operation and move into the product design sphere, which is what he excelled at.

As you can imagine, it wasn’t met with, it wasn’t met in a good way. So I was yelled at. The CEO refused to talk to me for a couple of months, but then he decided to give it a shot and helped him hire a CEO after like six months from that incident. And that was the turning point that helped the company reach the nine figures.

It’s just an example, you know, like, Hey, it’s, it’s, if you’re the founder and CEO doesn’t mean you always have to be there and that’s where you excel at. So kind of an unconventional thing. The last thing I’ll mention here is when I’m usually looking at a scaling organization. And again, this is something that ties into hiring and growing head count.

I always take a microscope to the hiring operation altogether and more cases than not. I revamped the whole thing. What I mean by that, generally speaking, I see a lot of unnecessary stages of interviews in effective interviewers. Ineffective ways of assessing behavioral and cultural fit, as well as technical skills and having a very closed microscopic look at the job as it is designed today without looking for the future and potential expansion.

So a lot of times I take a microscope and just break things down and just build it up again to, to help companies see a lot of success. Well, one example I have around that is I was working, this was around, I think seven years ago, maybe, or six or seven years ago, just. Really before the pandemic. So this was a B2B SaaS company based in France, and they were having a lot of issues with attracting quality software engineers.

And that was the really key reason why they couldn’t scale. They had the business, they had the finances, but they just couldn’t grow fast enough to meet the demand and sell to more clients and build better software. It was a 12 person company. They were making high seven figures and 22 percent of all interviewed applicants.

Made it past the first round. So they were attracting really the wrong type of people and wrong talent. Almost half of their new hires also left within the first six months or were let go. So you can see that this was a very, you know, inefficient operation within six months in a breaking down, building back up and trying to get people out of some bad habits and, and, and building new habits in the metrics really shifted.

They started getting 62 percent of candidates making it past the first round of which 30 percent would actually make it to the final round, which was just pretty good given where they were and interviews were reduced from six to four, which made it faster to hire, but also maintaining the quality. And they had zero attrition in the first six months of implementation.

Like people who joined with that new operation after the first six months. Zero turnover, whereas the number was pretty astronomical for that. So these are some examples of some things that regardless of company size and stage, these are really like four to five areas that without fail typically result in a lot of growth, you know, that hyper growth operation, some of them not so conventional, some of them, which are okay, but, uh, that’s kind of how I look at things for the most part.

Brian Thomas: Thanks Nahed, I appreciate that. Uh, you shared several examples around being unconventionable and how to scale and what you need to do to scale and be successful. Really appreciate that. Nahed, it was such a pleasure having you on today and I look forward to speaking with you real soon.

Nahed Khairallah: Yeah, likewise Brian. So this was great. Thank you for the time and for hosting me.

Brian Thomas: Bye for now.

Nahed Khairallah Podcast Transcript. Listen to the audio on the guest’s Podcast Page.

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