Bryan Luoma, Founder & CEO at Cadsourcing, LLC
Bryan Luoma is the founder and CEO of Cadsourcing, a computer drafting company working architects, and engineers throughout the US and Canada. Bryan was born and raised in Northern MN and received his BS in Civil Engineering from Rutgers University. After working as a professional engineer in central NJ and Philadelphia, Bryan finally scratched his entrepreneurial itch and started Cadsourcing in 2011.
The idea was born after seeing Facebook posts of a gas station by one of his cousins who is also an engineer in the Philippines and being interested in the quality of the engineering. Bryan has successfully merged a growing global business with social awareness that now employs more that 60 people in the US and the Philippines and is having a positive impact on the communities they work in through various Cadgiving efforts.
AUTOMATED EPISODE TRANSCRIPT
[00:00:01] You're listening to Scaling of Services where we speak with entrepreneurs authors business experts and thought leaders to give you the knowledge and insights we need to scale your service based business faster and easier.
[00:00:15] And now here is your host Business Coach Bruce Eckfeldt. This. Is scaling up services tigers.
[00:00:23] I'm your host and today we've got a great guest Brian Luoma. Bryan is the founder and CEO of Cadsourcing which is a computer drafting company. They were part tech engineers throughout the U.S. and Canada. And most importantly so I know Brian through the Oscar organization. But more importantly than that Ryan is also a fellow Minnesotan. So Brian grew up in northern Minnesota my home state. So it's always a pleasure to have another Minnesotan on the show.
[00:00:51] Proudman thanks for being here.
[00:00:55] And you know I like to kind of start this with just understanding a little bit more about your background. You've got actually a really interesting story in terms of how the whole business came about. So we love to hear about that and now we can talk a little bit about the business itself and sort of the challenges and fun of scaling service businesses. Give us a sense of your background.
[00:01:13] Sure. Well challenges and fun is the right way to put it. I grew up in northern Minnesota I think you might think I saw on Facebook that you kind of ran through my old neighborhood up up by the Boundary Waters and everything on the range of northern Minnesota and decided I wanted to go out east for college. Applied to a whole bunch of places out there and ended up at Rutgers University where I got my degree in civil engineering. And you know I was always had that entrepreneurial itch you know selling mailorder shoes to friends of family when I was in middle school and starting my own landscaping business and you know doing a whole bunch of that kind of stuff.
[00:01:53] But I was going to be the good guy and do the right smart thing and join the corporate world and get an engineering degree which you know I enjoyed but I didn't like being the employee.
[00:02:05] So I was climbing the corporate ladder and even had an opportunity to be part owner of a really really small part owner of a couple of different firms but I could just tell that that wasn't going to work out. And you know just that's when CAD sourcing kind of had its birth. When I was reading Four Hour Workweek enriched at Port add and all those books that people read when they're like trying to figure out how they're going to make the jump and then I saw a post from a cousin of mine in the Philippines who is also a civil engineer of a gas station that he had been working on and I was like That looks just like the gas station that I designed in central New Jersey last month. And I was really impressed by the work. And I reached out to him and said hey if I can get you some work can you can you draft it up. And he said yes probably having no idea what that meant.
[00:03:02] Put up a Web site and started getting orders almost immediately. And I told him hey you better hire some people so we hired a couple of people and you know next thing you know fast forward six years and we've got over 60 people in the Philippines and the other 10 or so here in the U.S. and then things are exciting but there is challenges and fun along the way because you sing.
[00:03:28] I'm sure I'm sure it's granulation.
[00:03:31] I think that you know that get it getting to those levels and it's not an easy feat. And I know there's been no obstacles and that's a big win.
[00:03:40] Let's talk a little bit about this kind of offshoring outsourcing model. You know people talk a lot about from a strategy point of view and what have you seen being the benefits of having this kind of you know to heart model you've got most of your demand coming out of the U.S. and Canada. You've got your talent and your sort of your capabilities face in the Philippines. What has worked about that for you. Why is why is that been the model that he's on with.
[00:04:08] Well I mean I think that people for a long time have recognized the the monetary benefits or at least the economics of it big boy like you know that really should work and especially from my standpoint in engineering specifically in architecture as well. I had experience dealing with outsourcing firms in India prior to starting my company and you know just on the face of it really. Boy you know what we're you know it's drafting and you know they're going to do the drafting work we're going to pay them. It's going to be you know a third of what we pay right now. And you know things are going to be awesome.
[00:04:45] And then you try it and you find out all these hassles of you know the time zone differences you know the Philippines' 12 hours time zone difference than the U.S. time zones culture communication. Just having control over the work product all those hassles that everyone encounters makes it so that you're like you know what. It just isn't going to work. But what we've found is that if you can utilize the talent where it's most appropriate and to leverage that so that you get the best product that works best so we have like I said we've got it but 10 people here in the U.S. that project managers account managers other executive staff dealing with the clients on a day to day basis so they're there they're handling the day to day calls they're making sure that the scheduling is right they're making sure that the files are passed off properly they're being that that conduit between the drafting teams and the client so that most if not all of those hassles go away and then you get the best of both worlds you get the the local knowledge and the expertise of a U.S. project manager with the ability to scale the ability to work 24 hours a day. The ability to really just increase your topline now that you have with the overseas drafting team. So we've tried to combine both so that people get the product that they were expecting right in the beginning with the fouth and overseas.
[00:06:17] Yeah. And I think that you know what you kind of outlined in the beginning is a pretty classic I think first move a lot of people go into this kind of offshore outsource model say I'm basically going to a labor arbitrage.
[00:06:30] I'm going to I'm going to take you know sort of assume that I can get the same labor the same work done at a third of the rate and I'm just gonna make all this money. And yet I forget the time the logistical differences the cultural differences communication issues and all those things the infrastructure that you need to put in place.
[00:06:47] And I think that idea I think what I've seen kind of more and more is this idea that there's actually some strategic differences like being able to move quickly the whole thing that you know you can bring it to the team or you know a team that's ready to go quickly to a project to reduce my ramp up my spin on time can be a huge factor for a lot of companies just capacity to find certain talent. I think these days is a huge issue. And being able to go to an offshore outsourcing model is big and then the 24 hour turnaround or the 24 hour work period like you can actually have create a continuous work cycle for these projects really are time sensitive and I'm not familiar with the kind of construction architecture space that you know the deadlines are money and structure tighter and tighter.
[00:07:34] Turner I hate when I first started it. You know I'm not quite. It was only letters when I started there was fax machines.
[00:07:42] It was a fax machine you'd send a fax it get over there sit in some secretary's desk for a while. In fact when I first started we didn't even type written letters we would dictate a letter you'd put the letter in the pool. The secretary would type it up. You did it it type it up Sabbar then you'd say OK fax. So I mean that's crazy now. Now time is money. You've got to send things immediately. You want to. I mean one of our core values is hassle free communication and the idea is that we're going to respond you know within a couple hours we're going to over communicate. So if you send something even if we don't have the right answer because they were going to respond to that communication is so key and we realize that you know working with the team that at least partially is on the other side of the world there's a little bit of a concern about that. So we really focus on communication time he said. Time is money. You got to turn things around. We really try and focus on that.
[00:08:35] And my my guess is you probably have to over deliver on that communication because people are kind of coming into this with a concern Oh look I'm not going to you know this is going to be an issue and I have complete occasion entries. You actually have to perform you know 50 or 100 percent better than your local local based competitor. Just because people are coming into it with a bit of an issue.
[00:08:56] Yeah. They send you a file. They're like hey I need this tomorrow. They want to know like within a half hour or an hour.
[00:09:02] Like OK it's going to come tomorrow. Otherwise they're like you know four hours later like do I need to jump on this do I need that open help.
[00:09:09] What's going on so that you know you need to be over communicating on stuff like that. And we really try and focus on that and overdelivered like you said more than you would typically if that guy was like just down the hall at the office.
[00:09:23] Exactly. So curious about the model in terms of having the local project manager as a local kind of client facing folks. My guess is that that's pretty key in terms of delivering your service. Is that something you always had. Is that something you kind of learned over time. How is that role adjusted or overall.
[00:09:41] It's it's something we always had obviously in the beginning I was that guy was the project manager I was the account manager. I was the owner I was the accounting department. So I was always that but I recognized it right away.
[00:09:54] I mean I think that I'm a big fan of the Traction book by Gina Whitman a couple of copies of it right behind me there. And what are the early steps in that book is to identify the key differences. I can't remember the exact phrase that he uses but the key differences that's going to differentiate you between yourself and the competitors. And when I'm looking at my competitor overseas that's you know identified those hassles the communication the time zones the culture the the language. And so being that client facing Go-Between was was a key indicator a key differentiator that I had right from the beginning. Of course it was me in the beginning yeah but I actually I realized very quickly as we started to grow that I wasn't providing enough of that communication and I was pushing stuff off my my team leaders.
[00:10:50] And that's when I knew that I had to hire somebody else because I realized that by hiring somebody else they're going to do a better job of project management and being that client facing and communicating like I wanted to then I could when I'm also trying to do the sales and also trying to do the accounting and trying to do the the you know all the project management. It just was impossible and that's what led me to make my first hire of a project manager and then that's kind of been the build up from there as well. Even then you know hiring salespeople later on it's like I'm not responding to these proposed requests.
[00:11:28] Yes. Well no I think that that is that is one of the big challenges along the journey of growing scaling your businesses realizing when you become the bottleneck. And then how do you find a role that needs to get created. How do you hire that role. How do you then interface with that role. Any any man learning say that in terms of defining those roles how do you sort of set them out. Any in terms of structure in terms of responsibilities terms of finding talent what what have you learned around as you sort of built your team and capabilities around you that that's come up for me.
[00:12:05] I think that I've always tried to hire fast and hire people that are better than me. So when I heard somebody I wanted to hire somebody that could teach me that they're better at whatever I'm hiring for that they're able to teach me. I never wanted to hire somebody that I would have to teach in because I was like You know I might as we'll bring somebody that's better than me at doing this so I bring in project managers especially we have a pretty strong Neish in telecom drafting working doing cell towers antennas fiber optics and we kind of stumbled into that space. But I have no experience in that that industry. I learned a lot along the way and had some buzzwords and could stumble my way through a set of plans. But I don't necessarily have 15 years of experience in that. So when I was hiring my project manager my project manager I need to make sure I had that skill. So hiring people that are better than you. I like to hire fast especially if you've got a business that you're that's growing that's expanding. You expect to be twice as big a year or two down the road. Higher faster that you can continue that momentum. And then one of my partners has a phrase we're too small to be cheap. So in other words we can't afford to make mistakes because they're costly. So I'd rather spend 10 percent more and get it right the first time than to pay the penalties of hiring the wrong person that spent time training them and then spending time deciding that oh you know what I really did screw up all this. All that costs money and we're too small to make those kind of mistakes. You know GM can make those kind of mistakes people sit around not doing anything. We need people to be rock stars from day one and you know if we do make a mistake which I'll admit that it's got you got it decide quickly that you made a mistake.
[00:13:53] So that's that's what I've learned.
[00:13:55] It's worked out pretty good but I'm sure I've got lots more to learn from you.
[00:13:59] Yeah it's always a challenge. How do you how do you paved the road you're driving on at the same time. It's like you need to be one step ahead of the business. You think it's about hiring because I think that's that for me that comes up again and again.
[00:14:12] And you know companies that are in this kind of growth high growth mode are moving quickly growing quickly to find that people how to interview the people onboard the people. Any other kind of insights that you've had that you'd be willing to share around your talent.
[00:14:27] Yeah I mean I'm a huge fan of The Who method. Yeah. That to me really upped my interviewing and hiring game.
[00:14:36] So utilizing their interviewing methods and and also what I did is I I hired a H.R. recruiter if you will that was on an hourly basis as opposed to as opposed to a commission retainer commission basis so that they're focused on just getting you the best applicants getting as many of them as they can. Finding the right person in it and I was hooked up through Ijo with a great H.R. person or a recruiter that's worked great has worked wonders for me in fact helped me hire the last I think six people I've hired here in the U.S. but having somebody actually spend the time to go through the go through the their resumes sure they meet the qualifications that they want asked doing the initial interviews making sure that that again it's the same thing. I want to hire somebody that's better than me. Like I realized that I was just hiring the first person that was average.
[00:15:31] That's not a bad that's not a good strategy.
[00:15:34] It doesn't work out. So hiring somebody than implementing a process and having them stick to that process that you know is good actually works better than just being like you know what I don't want to interview six more people. This person is pretty good. The resume looks great. I can teach him that. And you know what.
[00:15:49] That little red flag I'm sure it's not that big because that red orange yellow. That old boss sounded like a real jerk. I can imagine why they were pissed off at him all the time. You know I can make excuses all the time.
[00:16:04] So learning to pull myself out of that part of the process so that when it does get to me we've got a pretty good feeling about who they are and that you know they've gone through a process that we're comfortable with that. That to me is a winning winning formula.
[00:16:18] Yeah I think the one in general patterns or think things that I certainly try to focus on is figuring out where are the natural kind of biases sort of bad tendencies bad habits things that you know are not going to serve you well.
[00:16:37] And how do you create kind of process and structure around you to avoid those from manifesting. So like you said you know hiring you know bringing in someone from the outside that you know that can do that work and have an unbiased view of those things. Having a process in place that kind of forces you to continue to look at candidates defining what your criteria really are so you don't get stuck in terms of convincing yourself that this time won't matter.
[00:17:06] Yeah I've I've realized that having me do the account management or having me do the project management is horrible because I make excuses all the time. I cut corners like I say like all this Clydes different. I really like it and you kind of deal. Oh yeah I'll do that. You don't worry. You know exactly. He's going to work you know and being the boss I can get away with it.
[00:17:28] But when it's an other account manager we had this conversation during my team my weekly team meeting this week because it is one client I've been letting get away with some for a while.
[00:17:38] And you know I think it's going to work out. The Ed but I just too long. And that's what I told us. See this why should not be managing any of the accounts because it is what you guys I would say take care of this kid. But while it's months that I've been letting this person drag on. Yeah I should really not be involved in
[00:17:57] That or neither after the Ranger. So we talked about the people stuff a little bit. I'm curious on one of the things that always challenges serviceman's companies is pricing and managing cash in that kind of cash flow.
[00:18:13] How do you describe for me your kind of cash cycle like how do you how do you contract how do you do the work how do you get paid for the work how do you what does that process look like for you.
[00:18:25] Well you're getting into a sore subject.
[00:18:28] I know I know you do. You do.
[00:18:31] I mean we're a service based industry right. And we're a drafting company so we're the bottom of the totem pole right. And a lot of our a lot of our clients were working for the engineer who works for the property manager who was hired by the Yoder. And you know we sent our invoice it goes all the way up the ladder and then it's got to come all the way down the ladder. And you know sometimes you know we're working on pretty big projects but each individual projects you know pretty small hundred dollars 200 dollars now in dollars aside even though the whole contract might be 100000 dollars. So it's each individual project isn't that much and then you're submitting that you've got to wait for it to get paid and our terms we try and get 30 days but sometimes it's more than that and sometimes you know what we think are great clients take a long time to pay. And we've been really bad about holding our clients feet to the fire about hey you know it's been 30 days 60 days. We're not doing any more work or whatever. We've been really bad about that. And so you know our accounts receivable has gone up. Luckily we've got a line of credit. The banks have been kind of nice to us. But you know we've gone into our line of credit at times. And so that's something that we're really looking to tighten up going forward especially once you get over seven figures in that Alar number starts to get into the hundreds of thousands of dollars. You know it's painful. So that's something we're really looking to improve moving forward tightening up our terms also we've got a little bit of reputation now.
[00:20:00] We've gotten better so we can be a little bit pickier on our on our on our clients and be a little bit more firm in our pricing when we were you know when you're the first client to come to us. One hundred thousand dollar job. You know we're like we're going to do what we can to get this. Now you know they're not as rare. And so we can be like listen we'll walk away. We have much more confidence to be able to say you know we don't need there's going to be another hundred thousand dollar job or another 200000 dollar job. We don't have to bend over backwards for this one. So that's that's improvement. And what we've found just like you know when we increased our prices as we've done that we've gotten better clients. The jobs have been better and paid on time. Life is better. You know it's just like when I started the company starting at 8 dollars an hour just because the Indian firms were seven dollars or so and then the next year we raised it to ten and then we raised it to 20 and now we're you know 30 35 dollars an hour. And every time we raise our prices the Clydes are better than the job better we're happier doing the work. We can assign better people to the work. Clients are happier it just better all around. And you read out the single family home owner that wants to put a deck on the back of his house. No it's going to send you a paper napkin sketch. So it's my tip is raise your rates but have strong solid terms.
[00:21:25] You know I think you know honestly I think that that is not an uncommon story that you know when you start a business you very much try to compete on price. You're trying to either undercut or match some other competitors price that you can get traction get and deal flow. But at some point you start to make some of those strategic choices and those strategic realizations that if I really want to create a solid viable profitable customer base I'm going to have to focus on price and actually increasing prices improves the situation. The challenge is always you have to have the deal flow like you have to be able to generate enough leads that you can start to be picking it. And that's oftentimes why early stage warranties. It's just it's sales and we it's like I just need to get more in leads and so I can be more choosy about the ones that actually turn into clients.
[00:22:14] So I think that I think that makes a lot of sense and I think you know me being on that totem pole when there are no matter where you are and you're kind of faced with that process what does that cycle look like and and how to why you know how to manage that cash conversion cycle from you know from sales on to actually cash that they don't get me wrong I love being at the bottom of the totem pole.
[00:22:34] I was a civil engineer for 15 years and ran really big projects and you know dealt with the subs underneath me. I like being the guy that says you tell us what the draft will drafted all day long do you want us to change it. Fine just pay for it.
[00:22:47] I don't know but that's OK with me. But it does hurt to the cashflow cycle.
[00:22:52] Yeah sure. So one more event on conversation here. Let's talk a little bit about culture because I think that's I mean it's really important for any company but particularly for companies that have this kind of outsourced you know to office where you're actually dealing with different not only different countries but different culture as you know timezone differences and stuff. Tell me a little bit about some of the challenges you've had and how you've kind of approached not what of the some of the things that you've been doing that you think have helped build a strong culture and how has that kind of impact that business.
[00:23:25] Sure. I mean I am a huge proponent of culture and the feeling about how that proves the workplace and retention and the quality of the work.
[00:23:35] So what we do is we have first of all every calls a video conference so you get that face to face interaction. We've got a lot of meetings weekly meetings you the manager of Team sales team operations team says lots of opportunities for interaction even though we are a remote team. Also you know we have core values honesty service communication and we do a lot of stuff service for the communities we work in. So it's not just service to our clients and service to our fellow Ploy's service to the communities we work in so we try to create a culture around that culture around giving. For example I was just in the Philippines for a couple of weeks opening our brand new office in Sebou and we took the entire office to a facility that caters to abandoned and orphaned street children rescuing them off the streets and providing them food and a place to live obviously and we went there and brought some food and played with them and basically spent the day trying to bring some joy in their lives and we've also obviously the team gets to experience that you know we've got 50 some people there all you know playing with these kids.
[00:24:53] And the team bonds around that sees how this is an important thing in the culture of our company. And I think that really helps with morale and you know the work ethic of the team and when we do other things with scholarships for universities and microloans to female entrepreneurs that are starting or expanding. So we try and do a lot of stuff that that I think promotes the culture that we want to promote it within the company and also to the outside world as well. It's also we try to be very positive so we start all of our car all of our meetings with the you know what's your positive look you want to share with you what's your best news from the past week. We always try and start with positivity. I mean we we don't back away from negative events. We try and have honest conversations honesty is one of our core values but we try and address them properly and try and do it in a positive manner and address the facts as opposed to maybe the personalities that might be around it.
[00:25:59] So yeah I think it is one of the things I kind of you know Coach CEOs honor or you know any any kind of leader inside the business really is just helping them understand how much impact and influence they had over the energy and the tone of the organization. And I think some of the people some people don't realize it. You mentioned coming into a situation with a positive constructive attitude consciously has a huge impact on the outcome and the results that you're going to get. I think the other one you know just realizing that every business operates inside some kind of community and understanding how your business impacts a community either positively or negatively and how you know taking a conscious deliberate effort to connect with the communities that you serve is really important.
[00:26:47] It's one of the things I put on my checklist for growth is we're not we're not just looking at revenues not just looking at profits but we're looking at how are we impacting our people. What's our attrition. You know what's our work life balance what's our integration with the communities that we serve. How do we give back and be in the ecosystem that supporting them and fueling us from a business point of view. So you know there is a focus and you know kudos for putting those those practices in place. Sure. We're out of time here but if people want to find out more about you about the company you know asking the questions things like that. What's the best way to get a hold of you and learn more about the Bezos.
[00:27:21] Sure well we have a Web site KHAD sourcing dot com CD. So you are seeing G dot com and you can see some of the some of the CAD giving activities that we've done. They're kind of proud of that. But if you want to shoot me an email Brian at KhAD sourcing dot com PR wise and I don't hide from anyone. So shoot me an email I'd love to talk to anyone about you know maybe both the CAD giving activities the tour or anything else. I'm always open to that or if they want to talk about business I could talk about cat sourcing all day so careful what you wish for.
[00:27:54] Yeah exactly. Now I know that I mean is this the model that you have.
[00:27:58] It's a pretty exciting and I think a model a lot of people are looking for so I'm sure there are people that want to connect. I'll make sure that your Web site your e-mail address run the show out so that people have that and click on that and get a hold of you. And this is a pleasure. Thank you so much for taking the time Brian I appreciate it.
[00:28:12] Awesome. Thanks Bruce. It's always a pleasure talking. No like I said we'll do it again soon I'm sure
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