Scale Like a CEO

Scaling Companies with Joseph Kershenbaum: Insights from a Four-Time Founder | Scale Like a CEO

• Justin Reinert • Season 1 • Episode 17

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What happens when entrepreneurs fall in love with their products instead of their markets? According to Joseph Kershenbaum, a four-time founder who's built and scaled global companies across four different industries, it's a recipe for disaster.

Joseph brings a powerful combination of Fortune 500 legal expertise and practical entrepreneurial experience to our conversation. Having successfully guided a company from founding to public offering over eight years, he shares how constant market adaptation was key to their success. "We changed our strategy and our model many times based on how the market was changing, but it was always very market-focused," he explains.

Through practical examples, Joseph illustrates how even brilliant products need vertical focus to succeed. He recounts working with an MIT graduate with an excellent AI product but no chosen vertical market - a common mistake that limits sales potential and profit margins. This market-first mentality applies across all industries, from SaaS to AI.

Joseph's approach to scaling companies is equally insightful. When facing hiring challenges in Cambridge's competitive tech market, he pioneered outsourcing to India, increasing margins by 32%. In healthcare, he overcame nursing shortages by creating an exceptional culture with meaningful benefits. His philosophy on company culture starts with the hiring process - no stress interviews, genuine open-door policies, and hiring people smarter than himself in every position.

What truly sets Joseph apart is his willingness to take chances on promising candidates regardless of traditional credentials. He shares the remarkable story of hiring a high school graduate as finance manager who later became CFO of a venture-backed company. "I look for people that are driven, that are sharp, that work for themselves," he says, valuing these intrinsic qualities over formal education.

Ready to build a market-focused company with a culture that attracts and retains top talent? Connect with Joseph on LinkedIn to learn more about his approach to scaling businesses that thrive in changing markets.

Joseph Kershenbaum:

Well, when I consult with my clients, one of the biggest problems I see is that they fall in love with their product or service, yet they don't know how to sell it, and it may not things. The company I built that went public. We changed our strategy and our model many times between the eight years before we were founded and went public, based on how the market was changing, but it was always very market focused.

Speaker 2:

Welcome to Scale Like a CEO the podcast where we dive deep into the strategies, challenges and successes of business leaders who've mastered the art of scaling companies. Today, we're joined by Joseph Kershenbaum, a remarkable four-time founder with an impressive track record of building and scaling global companies. Joseph brings a unique perspective as a former Fortune 500 lawyer turned entrepreneur and consultant, and he's currently working on a cutting edge book about artificial intelligence. In this episode, we'll explore Joseph's journey, his insights on building successful companies and his approach to tackling some of the biggest challenges facing businesses today.

Justin Reinert:

Joseph, thank you so much for joining me on Scale Like a CEO To get us started, if you wouldn't mind, just give us a little 90 second intro to yourself and your company.

Joseph Kershenbaum:

I am a four-time founder and I was a Fortune 500 lawyer. Presently, I help SMEs and startups with strategy operations, go-to-market scaling and capital raise. My largest company scaled to hundreds of people from a couple of founders. We grew globally, we went public, so I've got a lot of experience. I'm also a generalist. My startups were in four different industries. Frankly, after a decade as a Fortune 500 lawyer, I developed some sophistication as well. I'm a lifetime learner, so I'm constantly keeping up with new technologies. I'm almost done with a book on AI. That's what I can bring to my clients is my background, my perspective, my experience.

Justin Reinert:

That's great. I'm curious what's the book?

Joseph Kershenbaum:

I'm writing a book on AI because a couple of years ago I picked up AI for Dummies and it didn't have LLMs in it, so I started writing it. It should have been out last year. You get busy with clients so you have to put your projects aside. It started as an article. It's been published in many business and legal technical publications Technical, because I started my career as an engineer. It turned into a book. Ai is really growing. This year AI agents and orchestration have suddenly become the thing everybody's pursuing. I think the biggest market we've yet to see which is going to be physical AI or robotics.

Justin Reinert:

Yeah, I would imagine. You know the shelf life on a book on AI has to be quite short right now.

Joseph Kershenbaum:

Really short, but that's where the opportunity is, because you can get it out there. Then you can do a second edition. Had to put it off. I hope to get it out before the end of the year. We'll need constant revision, but that's how I learn. I either start a company or I write an article. When I want to learn something, I've written. I have seminal articles on the internet. I wrote for Wiley chapters in their books. I love to write, except I'm slow, so I'd probably starve if that was my, my, like many writers.

Justin Reinert:

Well, and so you're. You, you mentioned you're a generalist, so you you're. You're moving in a few different directions. I'm curious you know, across all the domains that you operate, what's one of the biggest problems that you see and how are you solving that?

Joseph Kershenbaum:

Well, when I consult with my clients, one of the biggest problems I see is that they fall in love with their product or service, yet they don't know how to sell it and it may not even have a market, and that can be a real problem. You should really determine your market ahead of time. We all stumble into things. The company I built that went public. We changed our strategy and our model many times between the eight years before we were founded and went public, based on how the market was changing, but it was always very market focused. Here's a good example.

Joseph Kershenbaum:

I was just an MIT graduate who, I think, has a great AI product. He hasn't chosen any verticals. He's satisfied with it, but it's clearly too complex that he needs to hire a designer to make it simpler. This gentleman has a math PhD. It's easy for him, but if he wants to sell it to insurance or healthcare applicable to a wide variety of industries, however, he should choose one or two and focus on them and customize it. Make it easy to use. Is that you really need to focus? It's easier to sell a vertical than a horizontal. Your margins are generally higher, and that happened with SaaS. It's the same thing with AI products.

Justin Reinert:

Yeah, you know, I found that in my own work the work that I do in talent development and coaching, I think can span industry right. It is how we're being effective as leaders in our organizations. But what I found is that there are a couple of specific industry areas where I have clients, and so being able to speak their language and say, hey, here's these other clients that I'm working with lends you more credibility within that specific vertical, and so being able to speak their language and say, hey, here's these other clients that I'm working with, lends you more credibility within that specific vertical, and so there is something to that. Regardless of how horizontal your product or service might be, it is really beneficial to double down in one specific area.

Joseph Kershenbaum:

That can really be true area that can really be true. I'm a generalist and I built companies in real estate, financial services, technology services and healthcare, specifically post-acute healthcare. I represented biotech companies as a lawyer, but I don't have that kind of deep science background. I have more of an IT background. I have a degree in music and audio engineering my first degree and so I don't feel I'm as beneficial to say a biosciences company other than the general propositions. You know what's your ideal client, what's the market you're serving? Are you set up legally? That's another thing that you talked about problems. Entrepreneurs I mean you have to spend money to make money. I've seen people I've given them advice say if you want to raise venture capital, you need to set up a C corporation, and they set up an LLC because they do it themselves and it's cheaper. One thing I really recommend to founders is get a good lawyer early, and I don't say that because I'm a lawyer. I say that because it's harder to correct things afterward and it's more expensive.

Justin Reinert:

That's definitely so. You founded a number of companies Curious. I'd love to hear a bit about your experience with starting as founder and then scaling the business and building a team, and what are some challenges you've encountered as you've gone through that process.

Joseph Kershenbaum:

I always start companies to build large companies other than my solo consulting practice where I have some affiliates and bring in good people when I need them. I love the first couple of years of building and growing a company. It's the most fun I've had in my life. The challenges I've encountered are in hot industries it can be hard to find people. In two of my four startups we've had that problem. When I was building a technology services company, we came in late. We had large public competitors that offered better benefits, more money, viant and Scient, and we were Cambridge Technology Enterprises. You have to come around and figure out how can I compete industry and still be successful. Well, one of the things we did is I had trouble hiring engineers in Cambridge. They were expensive and they wanted to work for big companies with larger benefits, and we were. That's Cambridge Massachusetts. I'm in the Boston area.

Joseph Kershenbaum:

So we were one of the first companies to outsource to India. First we contracted, then we opened our own offices and we got. We increased our margins 32 percent because Indian engineers, software developers, were much cheaper back then. That's not the case today. Now we had two problems with that. Number one is the time element and number two is an engineer in Cambridge back then was technically better than an engineer 20 or so years. The difference is incredible. I mean, you can get great people all over the world now in software development, from the Ukraine to Latin America, to the Philippines, to India, so that's not the case. But that's something we dealt with.

Joseph Kershenbaum:

But our margins absorbed it. We survived. We constantly scanned our environment to watch our markets. In other words, we had a problem we couldn't hire. I had the same problem with my healthcare company Couldn't get enough nurses. So one of the things we did for that is offer a lot of voluntary benefits and have a great culture. It can be tougher working for a larger organization and if you're competing against them, one of your advantages is you offer flexibility and culture. I always try to have an open door environment. I want people to tell me I'm wrong so I can make the company better, and I try to encourage that in all my companies. That's the way that you overcome those sort of challenges. In other words, how do you compete? You figure out ways to compete based on that particular industry.

Justin Reinert:

So I want to dig in a little bit to that culture piece. So you know, it can be challenging to build a culture where people are genuinely open to speaking up, giving feedback. How do you, what are things that you've done specifically to build that environment where people are comfortable?

Joseph Kershenbaum:

It starts right at the hiring process. I always hated stress interviews where they sit you on a low couch. That's uncomfortable and they tower over you and they pepper you with questions. It reflects on the organization. I think so. In our interviews we keep it simple. People are nervous during interviews. I don't judge them on the organization. I think so. In our interviews we keep it simple. People are nervous during interviews. I don't judge them on the interview. At the same time, I tell them we have an open door policy and I mean it.

Joseph Kershenbaum:

I make mistakes every day. Tell me if I'm wrong and I'll try to improve it. I'm not all seeing in the people that we hire. I always try to put my ego aside. You know I've been successful. I have a law degree, which means you know I think I'm above average, like a lot of lawyers. I'm making a joke about that because you've got to put your ego aside.

Joseph Kershenbaum:

Try to hire people smarter than me in every position and then I just spot issues, take care of their problems and let them do their work and it's amazing and give flexibility. I've never been into FaceTime. I had one employee 25 years ago who said hey, can we come in from seven to three because we have to pick up our kids and this way we avoid the Boston traffic. I said, no problem, I don't need to see you, you get your work done, that's fine. And that same employee, by offering them flexibility, came up with a remote solution. Before they were common, we found remote software that would allow her on Saturday to do our weekly financials. So we would have them on Monday morning and I encourage that.

Joseph Kershenbaum:

In our healthcare company we had a suggestion box and you know, somebody had a great suggestion Once. I gave him a $50 gift card right off there and that gets around the company. Once you develop that culture, it's not only better for you because it's easier to manage people, but it's better for the company. The company will succeed. You come in on a Sunday when you're the COO or the CEO and your people are there on their own because you try to hire people that work to their standard, not to yours. It's not just a job for them. And that surprised me when I was an early manager. When you set up that kind of culture and give people that flexibility, it really can improve your ability to succeed as a company.

Justin Reinert:

Yeah, you know you mentioned the stress interviews and I can think of. There was a leader that I worked with a number of years ago who he would. He would say like he wanted his candidates to cry. Or he'd go into an interview and he'd say, man, I feel bad for this candidate, Like I've had a bad day and they're going to feel it, and I was like why do you think that those people would want to work with you if you are treating them like that in your very first interaction? So I really appreciate it.

Joseph Kershenbaum:

That's so true, Justin. That is so true. I have had interviews when I got out of law school and I didn't want to be a partner in a big law firm, but I wanted the knowledge. It's why I went to law school and I went to Wall Street at some huge, prominent American firms, where I went into one partner's office and he had me sit in his chair for 20 minutes while he worked, while I sat next to him, or you know, as I mentioned, peppering you with questions, that cutting you off before you can respond, and standing over you and everything. I mean it's hard enough to interview. You want the job over you and everything. I mean it's hard enough to interview. You want the job.

Joseph Kershenbaum:

And it's reflective of if you're treating me like this before I'm hired, how are you going to treat me when I'm hired, when I'm part of your team? So I just think that a lot of people don't have the training and the kind of training that you provide to. They just don't know they may rise up in a law firm. They may rise up because they're politically good in an organization, but you know, for example, they micromanage, which why add stress to a job? Our lives are stressful already. I always tell my employees this is just your job. It is not your family, it's not your life. You know it doesn't mean you're not going to have stress, but I don't want it coming from me.

Justin Reinert:

Yeah, Well, speaking of hiring, I'm curious you know, when you are interviewing, what are some of the key qualities that you're looking for when you're hiring?

Joseph Kershenbaum:

Well, I take chances on people. I hired someone for a manager of finance who had a finance background. She didn't have a college degree, she was a high school graduate. I made her a manager of finance and the quality is if somebody is and again, we're all looking for this working for themselves, not working for you, as I previously mentioned, self-driven sharp. I like to hire on merit, but that doesn't mean you've had to do it. By the way, that manager of finance when our company merged and she later left it because I went through several mergers she ended up without a college degree of being the CFO of a venture backed company. Which company which is very unusual that woman used to take my MBA finance books and take them home to study off my shelf.

Joseph Kershenbaum:

So I look for people that are driven, that are sharp, that work for themselves. You can brag a little bit, but you don't want inflated egos. I mean, one of the things you see on LinkedIn is many people that inflate their resumes and can be an issue. I just work with a company. They hired the wrong CEO. He didn't know how to lead. He blamed people instead of trying to solve the problem. If something goes wrong, you shouldn't blame anybody. They know if they've done something wrong, but what you should do is say, okay, this didn't work out. How do we solve it? What do we do to fix it so it doesn't occur again? What I look for in terms of employees or consultants flexible people that may have some experience, but if they don't and they're the right person, I'll take a chance on them, and I've done it numerous times and it really works.

Justin Reinert:

Yeah, what is what you're talking about are things that are you can, they're hard to teach, or you can't teach. You know, having that, that internal drive to self-start, to go, you know, grab a book and just start reading to self-teach yourself. Those things, absolutely that's. I always hire for, things like growth, mindset, resiliency, because that's what's going to help drive someone through, like the technical knowledge that can be acquired fairly easily typically, but it's that those internal drive, things that are so much harder to teach or instill in people.

Joseph Kershenbaum:

I'm sorry, I didn't mean to interrupt you. But clearly, when you say technical knowledge, I mean if I'm hiring a general counsel for my company, I want them to have the legal background and I've done that. I'm generally been the first lawyer in. But once I get to a certain size I hire I want specific expertise. I mean if you're hiring a software developer, you don't want to train them unless you're so big that you can for a particular type. But normally they have training already.

Joseph Kershenbaum:

They know software development, you know, be it a particular language or what you're looking for or just generally, for you know, if you're looking for a designer, you might want to see some of their work, so they may need some background. But for example, the woman I mentioned, she'd done everything in a finance department but she'd never been a manager. So I said, ok, this is somebody that's you know, started a bookkeeper and and worked her way up and boy, she was a great hire. And here's another thing that I've seen your some of your best hires are going to come from referrals. I've always set up referral programs because nobody's going to refer someone that it's going to reflect on them. So I've gotten great referrals from my current employees and they get paid the referral, not right away, the person's got to stay around. That's part of the program I set up, but some of the best referrals I've ever had have come from satisfied employees. Again, if you have a good culture, your employees are going to recommend people to work there.

Justin Reinert:

Hey, I love working here I think you could fit in. We've got these job openings and that's really worked out well. So I'd love to hear, before we close out, I'd love to hear you know what's what's the future for for you, for your business? I know you're you're working on your on your book, but what's, what's the future for you, for your business? I know you're working on your book, but what's the future look?

Joseph Kershenbaum:

like. Well, the future for me is continue to consult. I ultimately would love to join a company as a fractional person and then join them full time. I don't want to start another company at this point. I'm too busy and it takes. You want to succeed, you've got to put in the time. As a founder, some of it's not just smarts, it's just put your time in. I guess my goal, other than getting the book published, is find a great company, join it, help them grow probably a startup or an SME. Join it, help them grow probably a startup or an sme and, you know, build another global entity. Just tremendous fun. It's almost like it's like a child when you're a founder or an early executive and I look at each of the companies that I built and those early days, those first few years. Just really. For me it's better than a vacation.

Joseph Kershenbaum:

And I know that sounds strange, because most people aren't like that, but that's really. I love the ability to create and that's how I do it.

Justin Reinert:

That's great Well, joseph. If people want to reach out to you, what's the best way for them to contact you?

Joseph Kershenbaum:

They can find me on LinkedIn. That's the best way way. I am constantly getting business via LinkedIn. I don't even have a website set up yet, so I use LinkedIn as my website, and I'm the only person with my name that's currently alive in the world among our eight billion people, so it's Joseph Kershenbaum, k-e-r-s-h-e-n. That'll it up and you can find me and message me or book a meeting.

Justin Reinert:

Great Well, Joseph, thank you so much for your time today. I really appreciate the conversation.

Joseph Kershenbaum:

Justin, it was my pleasure. Thank you for having me on.