Jay Holstine graduated from the University of Kansas with a degree in mechanical engineering. He started his career as a manufacturing operations consultant with Accenture in New York and Deloitte Consulting as a supply chain strategy consultant. Jay quit his consulting job to work as Taylor Instruments’ plant manager close to Asheville, North Carolina. Jay founded SigmaFlow in 2001. In 2012, he successfully sold the cloud-based process management technology to a private equity firm. Jay has since served as the CEO of various software firms.
How did you get started in this business?
I’ve always enjoyed process improvement and puzzles. After completing a Mechanical Engineering degree at the University of Kansas, I accepted an opportunity to further this passion at a world-class Danish manufacturing firm. I studied and worked for a very progressive plant manager who had returned from a sabbatical in Japan, learning Japanese manufacturing techniques. This experience honed and inspired my interest in continuous improvement and operational efficiency. This was a fascinating learning exposure to Just-in-Time theories, as well as more international cultures and working environments. It was interesting to learn some of the very different Scandinavian consumer needs and product desires, and how they affected this Danish company’s approach to manufacturing.
I returned to the United States and started my consulting career with Andersen Consulting in their New York metro office. I later transitioned to Deloitte Consulting to specialize as a supply chain consultant. One of my clients asked me to manage a plant near Asheville NC, with $20M revenue and 200 resources. I said yes, and this quickly became the most impactful position of my career because the position gave me the authority to implement improvements and dramatically improve inventory, quality, and shipping metrics.
In my fifth year with the manufacturing company, it was sold, and instead of transferring to the new owner, I opted to move to Dallas and co-found, SigmaFlow, a process improvement software company. I chose a small team of experts, and we worked closely with each new client, crafting and building their solutions and helping them train their workforce. SigmaFlow was profitable the first year and was successfully sold to a private equity company after 12 years of growth.
Post-SigmaFlow, I helped incubate software startups, worked as an interim CEO for software companies like Freightflow, and provided CEO coaching and consulting. In late 2020 I was contacted by Vistage and they inquired about me becoming a Vistage Chair. I performed my due.
diligence and found that they were the oldest (80+ years) and largest (>28,000 member) and focused on driving business value. In early 2021 I joined Vistage and launched my group in June and we now have 17 very motivated and inspiring members.
My Vistage CEO peer group is very diverse by industry, gender and background. This is very important in helping leaders think outside the box. Sometimes we tend to surround ourselves with folks of a similar viewpoint and continue following stale processes. This group is continually learning, seeking new ideas and opportunities so that the group can share advice, experience, and new alternate viewpoints.
How do you make money?
My company four revenue channels.
First: Vistage compensates me to chair three groups ~
● Chief Executive group (members of this group are CEOs with companies that have revenues over $5 million), and
● Small Business group (members of this group are CEOs with companies that have revenues below $5 million), and
● Key group (members of this group report to the CEO.)
Second: I’m compensated to serve as a Board of Directors on various boards
Third: I’m compensated to provide executive coaching services.
Forth: I’m compensated to provide consulting services
How long did it take for you to become profitable?
My software businesses have always been profitable in the first year. This was intentional and accomplished by starting small, first lining up the sales channel, understanding the client’s true needs, commissioning the development of the product, and working closely with their team for a successful implementation.
Our mantra was that we solved problems and were not “a solution looking for a problem.”
We spent a lot of time learning what a client needed, what their “pain points” were, and how they envisioned the solution delivering results for their company. Many of their businesses were structured in ways and industries that could provide great economics for continuous improvement. We were able to validate for this prospect how our software would enable them to deliver more of their current yields per year, which, in many cases, enabled them to increase the enterprise value by $10 million per unit. Once your prospect realizes that you can deliver $20 million of value per year, it becomes much easier to sell your software.
We also provided software to automate the NERC audit process. (North American Electric Reliability Corporation, a regulatory authority to help reduce risks to the reliability and security of the electric grid. A good corollary is how TurboTax helps you prepare your 1040 return. The fines for an ineffective audit are in the tens of millions, which makes the value of the software that protects companies from these fines seem very affordable.
When you were starting out, was there ever a time you doubted it would work? If so, how did you handle that?
Of course, in SigmaFlow’s first year, 2001, we hit a huge speed bump of the 9/11/01 travel and economic shut down. Everything slowed down and consequently the demand for software slowed. This was a black swan that occured in our first year of business and could have easily closed the business.
At the time of the 2008 recession we had 40 employees and the economy stopped again. This was a much more difficult recession for me to navigate because we were a small company without sufficient knowledge management systems, and downsizing employees was allowing intellectual property to walk out the door. I had to dig deep to retain employees in the face of very little incoming business, so that the company to survive to weather the storm.
We scoured the market and sought out new opportunities. During this period we changed our mantra to becoming “Services lead, software enabled.” This change supported the idea that our clients needed immediate results, and wanted solutions that would deliver profit day one. No one woke up in the morning and said I want to buy software. They wanted a result, and it was our job to provide the results enabled by using our software. For example, we performed value stream mapping workshops for a company with divisions in Louisiana, Brazil, Singapore and Norway using our value stream mapping software and our portfolio project management software. We went where the customer needed us to be, and delivered more than we promised.
How did you get your first customer?
We discovered that one of the secrets was to first line up your channel partner and they would bring you their customers. Our channel partner was Six Sigma Academy (SSA). SSA were the pioneers of the six sigma industry, developing the methodology at Motorola, and then selling the methodology to Allied Signal and then General Electric.
Our initial software was designed for the individual contributor and was like Visio with a backend database that powered Excel outputs and analysis. This provided a single source of truth for six sigma projects and provided a step-function improvement in project cycle time and delivery value.
Our first customers were all Fortune 100 customers: Merrill Lynch, Tyco, ConocoPhillips. The good news was that they are huge companies. The bad news is that we were selling into the quality department of very successful companies and they didn’t suffer fools. This forced SigmaFlow to be a very serious and successful results-driven company, very fast.
What is one marketing strategy (other than referrals) that you’re using that works really well to generate new business?
A channel sales relationship was vital to our initial success, and it strengthens a company’s reach into many more markets than they could target or approach as one company alone. The channel sales relationship enables a start-up software company to serve new needs out there, by tapping into another firm’s executive relationships. The difficult challenge this brings is that, as a small new company, you have a double sales cycle, first selling yourself to the channel partner, and then secondly assisting them with selling your services to their customer. We were selling a multi-million dollar software solution and our shortest path to value was to sell through firms like Accenture, Booz Allen, and Wipro.
What is the toughest decision you’ve had to make in the last few months?
The toughest decision is always what you are willing to say no to. I am thankful for my current success in Vistage, but I am managing my time between several time-consuming endeavors. I love business puzzles, and I hate to decline an exciting offer to lead another interesting project. My recent tough decision was having to say no to chairing another inspiring Vistage group. It’s important for me to deliver all that I can to the projects I have already committed to, and it’s never wise to let yourself commit to more things than you can manage to do well, and not be able to provide the value you want to your group, and overall commitments.
What do you think it is that makes you successful?
Several factors: My unique experience early in my career, as a consultant with large consulting firms, gave me a great foundation: I learned how to explore business needs, and how to ask the right questions that would help determine customer needs. As a software company founder, I realized the critical value of hiring the right people, enabling them to succeed in their positions, and remaining open to pivoting your company to seek new business opportunities.
As a consultant, I trained myself to learn key products, the infrastructure workings, and business landscape of each client company. I learned the value of precise listening, and of confirming specific expectations for each project, in order to deliver the and know as an executive coach. This is a unique combination that enables me to ask precise / relevant questions in my coaching sessions to
quickly get to the heart of the issue. Everyone in thriving businesses wants to make the most of their short blocks of time, and I’ve worked hard to try to be able to quickly get to the critical issues and help my group members solve the issues efficiently and successfully.
What has been your most satisfying moment in business?
One of my Vistage CEO group members had 6 employees a year ago, and was working “in the business,” a bit overwhelmed by daily tasks. We uncovered some important factors that led to some more effective strategies, and better enabled him to shift more to working “on the business.” Now 12 months later, he is feeling more confident and comfortable about his leadership. He feels more optimistic about his management of his own time, and his team’s focus. His company now has 20 employees, and he has hired a president to run the business. He says he is nearly 100% focused working “on the business.” I really enjoy helping good people solve complex problems. I enjoy the mental challenges and individual gradual successes along the way of solving these puzzles. Whenever one of my Vistage group members reports this kind of progress, it brings me a lot of happiness.
What does the future hold for your business? What are you most excited about?
My exits from my software companies have left me comfortable. My focus from this point is giving back. The Vistage CEO peer group provides an opportunity to work with new CEO’s via our one-to-one sessions and during the meetings. I’m also investigating creating a scholarship opportunity for challenged students who have overcome adversity and are persevering in their education to advance into a chosen career.
What business books have inspired you?
I enjoy learning more about what I am working on and helping people with, so my reading list is more focused on business productivity, and leadership growth. A lot of these kinds of books are written by inspiring business leaders who have gained an understanding of people, markets, economic structures, and business strategy.
● Traction – Gino Wickman
● The Advantage – Patrick Lencioni
● The Coaching Habit – Michael Bungay Stanier
● Good To Great – Jim Collins
● The Road Less Stupid – Kieth Cunningham
Are you willing to be a mentor? If so, how should someone contact you?
New technology. I just bought a new laptop with some features that will help me, among many things, with note-taking when I am in my one-to-one conversations with group members. It goes without saying that our computers are about the most integral factor to doing our work. Correspondingly, business software keeps evolving.