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Lunch With: DevFacto CEO Chris Izquierdo helps Shant Chakmakian grow his business

Izquierdo says there are two things Chakmakian needs to focus on: sales, and the resources to fulfill them

Lunch with … is a column for Alberta Venture. Every month, we ask a young executive to pick a person with whom he or she would like to talk business. The senior executive, if willing to act as mentor for an hour or so, gets to pick the place to eat. If you would like to participate, email Michael

Apr 4, 2014

by Michael Ganley

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Left: Chris Izquierdo, Right: Shant Chakmakian

THE DINERS

Young Exec: Shant Chakmakian, 29, owner of SC Systems
History: SC Systems is a three-year-old “managed IT service provider.” In brief, it helps companies set up and maintain computer systems, whether on site or in the cloud
Employees: Four
Lunch: Cobb salad, water

Senior Exec: Chris Izquierdo, 39, CEO and co-owner of DevFacto Technologies
History: Izquierdo immigrated to Canada from Cuba 15 years ago with a BSc in computer science. He co-founded DevFacto in 2007, and was named an Ernst & Young entrepreneur of the year in 2013
Employees: 110
Lunch: Lux burger with fries, diet Coke

Chris Izquierdo and Shant Chakmakian first met about a year ago, when Izquierdo was a guest speaker at a networking event. Their businesses are different – Izquierdo builds custom software, Chakmakian manages computer systems – but they hit it off, and have gotten together a few times over the past year, with Izquierdo acting as a mentor to the younger entrepreneur.

“ A lot of entrepreneurs believe processes constrain them. It has nothing to do with that. There are plenty of examples of companies becoming billion-dollar companies with few processes.” – Chris Izquierdo, CEO and co-owner, DevFacto

Clearly, however, there is still much to discuss. Soon after the two settle in for dinner at Lux in downtown Edmonton, Chakmakian pulls several sheets of paper out of his briefcase. On them is a tightly-spaced list of goals he’s made for himself and his company, everything from living a healthier life to smoothing out corporate processes to, ultimately, growing the business. “It’s just a delusion if it’s not written down,” he explains, as Izquierdo expresses some surprise at the detail contained in the list. “I remember earlier in my career I was guilty of keeping it all in my head. Now, I realize that if I don’t have a good idea or strategy then it’s just not real.”

Izquierdo is impressed, but wonders if Chakmakian is missing the forest for the trees. “I certainly didn’t have a long list of goals written down when I was in my third year running DevFacto,” he says, explaining that he was focused on making sales and, when a sale was made, ensuring that the company had the resources to back it up.

But Chakmakian is undeterred, explaining that he’s expanding his list. “One of the goals I’m adding this year is to take a more in-depth look at the future of managed services. What are your thoughts beyond the shift to the cloud?”

Izquierdo concedes that right now most companies are moving their computing services – both hardware and software – to the cloud, but says that will affect Chakmakian’s business much more than his own. “I can build software for the cloud, or for in house,” he says. “You’re managing infrastructure, and if infrastructure is moving to the data centres, companies may not have as much need for your services. You have to figure out what layer you can build on to add value for the customer so they pay you money.” He says he suspects Chakmakian will be able to differentiate himself through customer service. “You have to be there for them when they have an issue,” he says. “You’re there to take away their pain, and you have to figure out what that is.”

Shant agrees. He sees his role as that of trusted advisor. When he signs up a new client – something he does at a rate of about three per month right now, he goes through their entire infrastructure with them and settles on a plan to make upgrades, with a budget stretching over several years. He tries to get clients to settle on a certain “stack” of technology – be it Microsoft or Linux or whatever – and build on it. “We have a vision for each client,” he says. “We might start working with them a year or two into their cycle, and we have to ride that out because you can’t get them to replace everything right away.”

Izquierdo also cautions that most things in their industry are cyclical. “The pendulum is swinging toward using managed services, which is good for a company like yours,” he says. “But that pendulum is eventually going to swing back. There is no promised land.” He says that evolution is going to continue to happen, and Chakmakian will need to develop a business model that can withstand the changes.

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But for now, Izquierdo wants to get a handle on the constraints on Chakmakian’s business. “What’s stopping you from getting 20 new clients every month?” Izquierdo asks. “Are you bound by internal resources?”

“It’s resources,” Chakmakian says. “It’s adding some depth to our existing processes and making sure we scale properly, that the techs are acting in a consistent fashion.” He talks about developing internal software to help, and putting in place systems and work flows between administration, sales and service departments. “Once they’re in place, they’ll easily allow us to grow by 1,000 per cent,” he says.

“But are you at the size that you require that?”

“No, but we’re putting in that base foundation that will be good until we get to one or two million. Then when we’re there we’ll have to re-evaluate those processes. I’m focused on ensuring we have consistent service.”

“I hear that, but let’s assume you solve that problem,” Izquierdo says. “Do you have the capacity to sell to 20 or 30 clients per month?”

Chakmakian, who does all the sales himself, concedes that he does not. “Lead generation is my biggest problem,” he says.

“A lot of entrepreneurs believe processes constrain them,” Izquierdo says, getting to the rub of his line of enquiry. “It has nothing to do with that. There are plenty of examples of companies becoming billion-dollar companies with few processes, because there are always solutions for the process side. For us, I’d say we were at 80 or 90 employees before it became a priority.”

Izquierdo says that for consulting companies like DevFacto and SC Systems, there are two primary concerns: sales and resources. And the first among those is sales. You have to find sales talent, train that team and generate leads. “Once the business comes in the door, the constraint becomes marshalling the resources to get it done,” Izquierdo says. “Processes? They develop along the way. They’re never the primary focus.”

The discussion turns to leadership, and to setting a vision for the company, something employees can get behind. Izquierdo says an important part of his leadership has been handling what he calls “the frontier,” referring to a place that is largely unknown and unseen. “There’s what you know and are committed to,” he says. “For instance I can tell you my company will do this much business this year with a certain amount of certainty. But the frontier is stretching that out by 40 or 50 per cent.”

Finally, Izquierdo suggests that Chakmakian find a peer group: He’s a member of a TEC Canada group with 13 other business owners. Their companies range in size from $5 million to $300 million in annual revenues. They meet once a month. “You get to know their businesses, and they know yours,” says Izquierdo. “So rather than random advice, it can be framed in the business. I’ve found a lot of value in that.”

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