Friendship, Strategy, and Growth

Mike Pinkus: Over the last 10 years at ConnectCPA, we've had the privilege of witnessing the incredible journeys of over a thousand businesses. We've been there for the thrilling highs and daunting lows of entrepreneurship. We've celebrated wild successes and monumental exits, and we've also stood by businesses as they've navigated the stormy seas, facing roadblocks and challenges that every entrepreneur encounters in their day-to-day grind.

Join us as we dive deep into the stories of these resilient individuals who dared to dream, who persevered, and who were a testament to the power of entrepreneurship. This is their journey, their lessons, and their triumphs.

Welcome to GrowthTales. I'm your host, Mike Pinkus, co-founder of ConnectCPA.

Today's guest: Shrad Rao, the CEO of Wagepoint. For those who haven't heard of Wagepoint, they're one of the fastest-growing payroll software companies in the country. With over 25,000 customers and hundreds of employees, Shrad entered what seemed like a saturated payroll market but always leaned into Wagepoint's philosophy of the product being simple and the company being backed by the world's friendliest team.

During the conversation with Shrad, we discussed the importance of friendship and community while building a business. We also chatted about bonus structures and how to align a team with hundreds of employees. Finally, we discussed how team members need to grow and challenge themselves by solving difficult problems.

As a longtime customer of Wagepoint with ConnectCPA, I can personally vouch for the friendliness and attention to customer experience. Shrad is both a friend and a partner of ours, and I hope you really enjoy this episode.

Hey, Shrad. Thank you so much for joining me today.

Shrad Rao: Hey, Mike, it's good to meet you. I don't know why I did that in a DJ voice, but yeah, it's good. Good to be here.

Mike Pinkus: That was amazing. Uh, Shrad, before we kick this off, we've known each other a long time, and I feel like we run into each other at conferences. What started off as us at ConnectCPA being your customer—and obviously we're huge fans of Wagepoint and all that you do—I think it's blossomed into a friendship over these years. I know it's only once in a while we see each other in person at all these events, but I feel like it's changed into a friendship, what started as a business relationship.

Shrad Rao: Yeah, absolutely. I mean, the love is real, right? Like, that's the thing. Like, when you wish the best for someone else and they wish the same for you—I mean, it's kind of the best friendship, right? And the kind of friendships I like are where there's not a lot of obligation. Like, we don't have to stay in touch, but when we do see each other, it's like no time has passed. So I think that's a fair characterization of our friendship.

Mike Pinkus: And I would agree with that completely. And before we kick it off and start going through a bunch of questions, I wanna just start off, uh, Shrad, by asking you: can you tell everyone what Wagepoint is and what you guys do?

Shrad Rao: Yeah, absolutely. So Wagepoint is a payroll software, uh, built just for small businesses in Canada and backed by the world's friendliest team. Um, so when we talk about friendship, we mean it—we bring it into everything, even our interactions with our customers. And, you know, our mission has always been to just make this problem go away for small businesses. 'Cause, you know, payroll's a domain. It's not just a specific action, it's not a specific feature. It's an entire body of knowledge. And, of course, most small businesses don't have any idea of what's involved in that. So our job is to make it so that that's okay—that they know they need to do some things, and of course, they have to learn along the way, on the journey. But our job is to really just simplify how they experience paying their employees and paying all the taxes and stuff associated.

Mike Pinkus: And, Shrad, um, you have—I ask that question despite the fact that I believe you have over 25,000 customers now. Is that correct?

Shrad Rao: Yeah, well, we have a couple of other products now. We bought a couple of companies, which is something I say now, um, as a CEO. So yeah, we have 22,000 payroll customers, and then we have 3,000 customers within our time and attendance and our light HR product. So yeah, that's the total—25,000 in total that we serve at the moment.

Mike Pinkus: Which is an incredible number. And I, I've always looked up to you as an entrepreneur, and the software game is not easy. So I guess, Shrad, I want to open with a question for you, which is: you entered a crowded space. Like, I remember the early days of the conferences and stuff—ADP was there, Ceridian was there, uh, yeah, PaymentEvolution, the list goes on and on. You've had a lot of competitors in what was, and still is, a pretty crowded payroll software space. How did you grow to 25,000 customers? What is the secret sauce that has made you, over these years, just accumulate so many fans joining Wagepoint?

Shrad Rao: Yeah, that's a great question. The answer is usually simple, right? For most of these things, we tend to overcomplicate it. But it's one answer: it's great positioning. We did a very good job speaking to our audience—and our audience. So, you think about most of our competitors: they serve small, medium, and large businesses.

If you're ADP and a customer of yours is TD Bank, you're not going to treat a barber the same way you're going to treat TD Bank when they come up for renewals and stuff like that, right? You're going to have the same mentality in the way that you serve a large company.

Just as an example—the existence of contracts. Why do you need a contract with a small business? Shouldn't they be able to choose when they come and leave the relationship?

Shrad Rao: Um, that would be an example of, like, all the decisions that you make. You don't think about the small business when you are, you know, trying to do everything for everyone. So we picked a lane. We said we're gonna stick with the small business owner. The reason is because I like them. They are actually fun to talk to. They're good people, generally. They tend to do, you know, good, honest work, right? They show up for their families. Like, these are real people that you get to help. Why wouldn't we serve them?

It's not that large companies suck, it's just that a lot of people, you know, they are jobs for them, and they—okay, yeah—some of them, like, their souls die. You know, when you work for a large company, you just don't have the same impact. So you start to feel unhappy, all that other stuff. Just dealing with that is just not interesting.

So we wanted to serve the small business market, and when I looked at the market, you know, I kind of describe it sometimes like, you know, the Pirates of the Caribbean movie—you know, like where you have a pirate ship, then you have jagged rocks sticking out from every direction, and then you have to take your ship and kind of navigate that course without essentially dying in the process.

And so our path was: can we obsess over the small business experience? What would that look like? How do we think about pricing in relation to that?

So, for example, all of our competitors had, like, nickel-and-dime pricing. We were like, "F… that." Is that okay on this podcast?

Mike Pinkus: It's completely encouraged.

Shrad Rao: It's encouraged. Excellent. Yeah. So that would be an example of where we have an all-in-one pricing versus a nickel-and-dime pricing. It sounds small, but actually, to figure out all the costs of the business that would then go into the right price point—that's actually hard to do.

So all of these decisions together always serve the small business. And when we did that, what ends up happening is, when a small business comes to our website, for example, and everything is tailored to that audience, and every decision we make is tailored to that audience, they know that you are thinking about them. They know you are taking care of them in the process, and then they start taking care of you.

That's how this works. This business thing is actually a symbiotic relationship, right? It's like the egret and the buffalo or whatever in the African plains, right? That's what it is. It's like we're taking care of each other.

And what tends to happen in business is it becomes like a military operation, which is f….g weird. What it really is, is a community, right? We are building things for you. You are taking care of us by, you know, helping us bring customers. You're giving us advice. You care about us.

One of the things that I love about our company is the amount of love notes that we get from customers and even partners, right? Like, people write things like, "We love you," "We want to marry you," "Can I name my first child after you?" And I was like, "Please don't." That would be a terrible name, right? And of course, it's all in jest, but it's because we are so approachable in the way that we interact with the customer.

Shrad Rao: We like to think of ourselves as their friend. Like, imagine if they were calling a friend and they were having a problem—how does a friend react or respond when you call? That's how we’ve got to take care of them. And so that just continues.

So the answer is never about the business strategies. It's about the feelings that you evoke in somebody. We need to create a sense of safety around this problem. Great friendships do that. That’s essentially how we did it.

And this is why—it’s, you know, I could tell you, there’s obviously business strategies that are underneath what I just said. You need to follow it up. You need to put your money where your mouth is, right? So you've got to do all of those things. But the overall experience of interacting with us—that’s what we needed to get right first. And then every decision follows that principle.

Does that see what I'm saying?

Mike Pinkus: Uh, that is—that’s an amazing description of how to do it. And Shrad, I guess, looking at a team now that you're bigger—like, when you're explaining this to me, I’m like, this makes a lot of sense in terms of, you put it right on your website: “Simple” and “Helpful.” Yeah. And those two words, they mean a lot, because payroll is normally complicated. And support—or getting help with payroll—is normally the opposite of helpful. Like, typically.

But now, how did you invoke that when you become a bigger organization into your culture? Because I know Shrad is helpful, there is no doubt. But now you've got a team—every personality is different. As you go through hiring people, how do you hold that standard—that your customers feel the way they feel when they speak to you—when your team, who's an extension of that vision, is now branched out with a lot of people? So like, how do you maintain that culture?

Shrad Rao: Yeah. That's also a great question. The thing is that most people are wired to behave this way. Okay? It's companies that basically stamp it out. Okay? What happens in companies typically is that most people are—so you just say, "Be yourself," and then as soon as they do that, they hand the slap and say, "No, no, no, I didn't mean that." Okay?

The first thing is to agree on accepting each other. All of us have to agree that by accepting each other, we're gonna accept the good, bad, and problematic sides that all of us have. All of us come with that. There's no point in pretending that we're, we're perfect, okay? That's the actual issue. It's the minute that we start focusing on the idea of being perfect, we kind of ruin the—the illusion essentially is, is lost. You know, like the, the plot is lost. That's—so one of the things that I do with every single person that joins the company, and before they're about to sign the contract, I have something called a culture call with them, where all I do is explain how we think about culture in this company.

Mike Pinkus: And you do that. Shrad, sorry to interrupt you. You do that?

Shrad Rao: Yes, I do it.

Mike Pinkus: Wow.

Shrad Rao: Every single—and so over the last 12 years, this is like a doctorate for me. I actually, I can write a PhD thesis on this. This is how—this is how crazy it is. So maybe I've done about 350 of these, um, and I have actual insights from this. One of these days, on some stage somewhere, I'm going to share some of these insights because it's actually mind-blowing stuff.

But the purpose of the culture call is to get people to opt in. Opt in. Choose to behave in this manner—not to do it for me, not to do it because they need the job—but for them to actually choose to act, to remember that we're embracing friendship with the customer, with each other. I don't use those words, but I guide them to this, uh, to this understanding.

Shrad Rao: And the reason I do this call is very simple. One of the things I've realized in my life is I cannot make anyone do anything. I cannot genuinely, literally make anyone do anything.

Mike Pinkus: Mm-hmm.

Shrad Rao: I can ask them to do it, but then it's their choice as to whether they do it or not. So by putting that power in their hands, that puts responsibility in their hands for the culture. So the entire company maintains the culture. This is a completely decentralized culture. I'm not the bastion of the culture, if you will. I'm not the epicenter of it. I'm just another participant in it. And I deliberately do not create guardrails or safety nets.

Mike Pinkus: Mm-hmm.

Shrad Rao: So that whatever it becomes is a result of all of us. And it's, it's a very, um, it's—again, most of the practices that I follow are very human-centric. Like, I'm actually thinking about how people behave. I'm not thinking, "What is the best management practice here?" I'm thinking, "How do people typically operate in this condition, in this situation?" And then I'm doing that.

And that's the big difference. Most people are like, "Let me see what Elon Musk is doing, and let me try to dissect his principles." That probably works for him. But for me, you gotta look inside for the problem, not external to you.

Mike Pinkus: That's an amazing way to look at it. And I think most companies would love to emulate that in terms of making sure that their team feels like it's a friendly environment and an inclusive culture, that the culture also allows individuality, as you mentioned.

But then I think one of the questions that a lot of startups and—even scaled-out entrepreneurs—are thinking as they're hearing you say that, Shrad, is: as companies scale, as Wagepoint has—yeah—how do big companies end up the way they are? I always ask that question. And so I'm gonna bring up a word: standards. Which is, obviously in business, speed matters. And there's something called Parkinson's Law that says people will fill the time that you allot to them to get something done.

Yeah. How do you balance that culture of giving that individuality and that freedom and the ability to be yourself within a company, but also invoking the standard that you probably want your team to be obsessed with—your customers—and helpful, and going above and beyond, and living by additional attributes that might not be the most comfortable?

Mike Pinkus: How do you balance those two things?

Shrad Rao: It's very difficult. That's the problem to solve in scale. That's the problem to solve. Like, people think scaling is about the revenue side, but actually what it is, is that it's about getting people to—well—cooperate, collaborate, and coordinate in a way that will get you the revenue. Those three Cs are a pain in the ass to get right. They're hard to do. Right?

So my answer to that question is: you don't tell them what to do. You try to teach them how to think. So if you teach them how to think, and you are focused on mindset work regularly, you will find yourself, I believe, like an Amazon or a Shopify.

If you kind of see how those companies grow—let's use Shopify as an example, right? Shopify is the most valuable company in Canada.

Mike Pinkus: Mm-hmm.

Shrad Rao: The most valuable company in Canada, right? How do they do that? How is that possible? The answer tends to be mindset work. So an example of that is—one of the things that has happened in our company, and this is very common, is that people are working on things that don't actually matter. Right? So it looks like work, but it doesn't actually do anything for the company.

And so then they get upset because they're like, "Aren't I doing the work? Why are you unhappy with me?" And in return, we're saying, "Well, what's the impact of the work that you're doing?"

So now, how do we teach them that? How do we actually take someone through those steps? One of the answers is, for example, one of the themes that I said—"This is what we're gonna focus on fixing this year"—is: how do we identify and work on the right problems?

Shrad Rao: Okay? So, problem reframing is a very, very big part of what we're focused on right now. And underneath that, there are many root behaviors that allow you to reframe problems better. So, I'll give you a very simple example of something that we did at our town hall recently.

So, one of our very talented senior folks—who actually came from Shopify—ran an exercise for the company. And the exercise was essentially: imagine there was an older building that had two elevators, and people in the building were frustrated because the elevators are slow.

Mike Pinkus: Mm-hmm.

Shrad Rao: Then we went through a five whys exercise of, you know, why is that happening? And in the five whys exercise, most people focused on the fact that the elevators were slow. So what ended up happening is, you have a—eventually—the answer is you have to demolish the building and build a better building with more elevators. Okay? That’s typically what happens when you start to focus on the fact that the elevators are slow.

But when you focus on the fact that people are frustrated instead—so you reframe the problem—you could get away with putting mirrors in the lobby. Because people are, obviously, all of us are obsessed with the way we look and constantly checking ourselves out, you can actually change the perception of time in their mind so that the slow elevator is now not a problem.

That's an example of problem reframing. And this is how powerful it is. When you get this right and you focus on the right part of the problem, you can actually have exponential—so incremental effort, exponential gains. So, the objective is to do less, but to have the same outcome.

Now, if you're teaching this continuously in different ways—in visual ways, in verbal ways, inside of a specific activity, like a specific work task—over time, the entire body that is your community, essentially, the organism that is the business, starts to ingest that. And then the mindset changes, and then there’s an elevation, there’s an uplift.

This is actually how you build sustainable, durable businesses—is that you actually work on the thinking, not on the doing. So, yeah, I see you're very quiet, Mike.

Mike Pinkus: I'm listening because—I'll tell you what's going through my head. I'm just gonna spread it out. I'm gonna say, how do you find out—so, your analogy to the mirrors—how do you find out what that is? Because you've got all these smart people in a room, but who is the brilliant person who's like, "It's the mirrors that will solve the slow elevator problem"?

But let's reframe that for Wagepoint or any business that's growing. How do you discover the quote-unquote "mirrors"? How do you—

Shrad Rao: Know what that is? That, and like I said, that is the problem to solve. That is the actual problem to solve.

It's so interesting that what tends to happen in businesses is that we tend to think that it's external factors, generally, that are the problem.

Mike Pinkus: Mm-hmm.

Shrad Rao: But most of it are internal factors. So the way that you work on this problem is that, first of all, you bring everyone's attention to the fact that they have to be looking for these things.

Like, just as an example—when I tell people in the company, "I want you to do less work"—that sounds crazy, right?

Mike Pinkus: Yes.

Shrad Rao: But what I'm really saying is, I don’t actually want you to work; I want you to solve problems. That’s different, right?

Mike Pinkus: Mm-hmm.

Shrad Rao: So what I’m really looking for is—like, if you could do the same thing, you could solve the problem, but do a lot less to solve the problem—that's what I’m looking for.

Mike Pinkus: Mm-hmm.

Shrad Rao: So now what you do is—so our bonuses, for example. I just had a very—uh—I presented to the company super transparently how we are doing bonuses. Like, what is the approach to bonuses, essentially, right?

So I picked a time when I knew that everyone was gonna be paying a lot of attention, right? Because it's about them. And then I told them what I wanted. And what I did is I created a small chart that basically says—and I mean, of course, I'm happy to share this chart, like it’s a tiny little thing—but it's basically four colors, okay?

And it starts with: if you've met expectations at your job, you're gonna get the lowest bonus.

Mike Pinkus: Mm-hmm.

Shrad Rao: Because the impact is as expected.

Mike Pinkus: Mm-hmm.

Shrad Rao: Then the next layer up is that you've put effort to find the right problem. But maybe you haven’t found it yet. But just the effort is something we’re gonna reward, because you’re going in the right direction.

Shrad Rao: So that's a different color.

Mike Pinkus: Mm-hmm.

Shrad Rao: Then, the one above that is: you've found the right problem, and you are working actively to solve it with a group of people. Now you're moving even further in the right direction, and that's a different color. So now that gets an even higher bonus.

And the final one is a disco ball. And that is when—

Mike Pinkus: That means good things.

Shrad Rao: That means amazing. Yes. That's basically when you have both—when you've actually solved the problem at hand, and the impact has been felt. Everything has been fit. And now you get the highest bonus, and that's called the Disco Ball Club. That's when you're in the Disco Ball Club.

So now I presented this to the company. Now, of course, anything that I do is going to be fun. Okay? There's at least going to be an element of it.

I can't help with it. There's no point in life otherwise, right?

So what happens is, when you do that inside of that structure, and then you make sure people understand what you're rewarding, what ends up happening is—now I actually have people writing to me saying, "Is this the right problem that I'm solving? Am I thinking about this the right way?" Or they're talking to each other like that.

So now you're creating a common way of starting to understand how to think about it. It is stupidly hard, this stuff.

Mike Pinkus: Of course. Yeah.

Shrad Rao: So hard. It's ridiculous.

Mike Pinkus: Yes.

Shrad Rao: Whatever people think company building is—multiply that by ten.

Mike Pinkus: Mm-hmm.

Shrad Rao: Or a hundred on some days. That's how difficult it is, because the problem is not the company. The problem is changing human behavior. The problem is helping people think—and then do. But what we do today—what happens today—is people do and then think. Along the way, the thinking is a lost art.

So just as an example—to do that job, to do this presentation—I thought about the problem for two months. And I wrote the presentation in an hour before I had to deliver it. Because I spent so much time thinking about it.

And I talked to some folks about what I was thinking about doing. Like, I did work the entire time to move myself in that direction. But I wanted to give my—it's such an impactful thing. It's so important that I wanted to make sure that even at the last minute, I had thought. I had thinking time.

And I'll just give you one analogy that’s very, very similar to what I'm saying. Actually, it’s not an analogy—a story.

So, I watched Charlie Rose talk to Warren Buffett and Bill Gates on—well, Charlie Rose’s show—

Mike Pinkus: Yep.

Shrad Rao: A few years ago. And this was very impactful for me.

So, I've always been the kind of CEO where I try to have as much unstructured time as I have structured time. So I really try to give myself unstructured time. And a lot of times, my calendar is the least busy in the company.

Mike Pinkus: I was gonna ask you that.

Shrad Rao: Now, that's not always true. Sorry.

Mike Pinkus: I was gonna ask you that. That was one of my questions—is how you're spending your time. So you do have blank time in your calendar.

Shrad Rao: I—I've—it's important. Like, I need it, right? So that's the thing. So I watched these two folks talk, and I still always wonder, like, am I the one who's making a mistake here? Should I count, like, be like a full, like super busy? 'Cause I've always known why I've kept it free. I—so—so when I watched the show, I heard—so Bill Gates was talking about Warren Buffet, okay? And Bill Gates said, you know, I used to think that every—every minute of my day had to be blocked with somebody. I had to be—I had to be unblocking some—like, doing something every minute of my day. So my calendar used to be jam-packed, right? He would have whatever, like two assistants managing. Like, that's how crazy it was.

And then—and then while he was sitting with Warren Buffet, and Warren Buffet said, "What are you so busy doing?" And Bill Gates was like, "Don't you have a similar schedule?" He's like, "No." And he pulled out his book and he showed him his calendar, and there were like two meetings in the day and stuff like that. So Bill Gates was like, "How are you doing this?" And Warren Buffet was like, "If you are in meetings all the time, when do you have time to think?"

Mike Pinkus: Yeah. Warren Buffet is—I think I've seen this actual podcast you're talking about, and how he—like, first of all, I don't even think he has a computer.

Mike Pinkus: So ignore the Coca-Cola every day and the McDonald's for breakfast and an empty calendar. Like, wow, they got easy unicorn in itself. But, uh, yes.

Shrad Rao: But the point is about thinking, right? That's the thing. Like, thinking about what you're doing is gonna make the execution much easier because you've thought about it. But what happens today is the other way around. So execution happens first, and then the thinking happens during the execution. Does that make any sense?

No. That's—that's a behavior in companies that needs to change, right? So then what happens is now you have to teach people how to think. Now, thinking does not involve just you—you have to understand the problem space, right? So you may have to involve other people. So how do you get them to involve the right people so that they're not wasting other people's time, right? All of these things are actually what you have to work on in the company. And so what ends up happening is most companies kind of fall back to like OKRs and like performance goals and all this other stuff.

And you do need some of that. But what happens is then you become over structured, right? And as soon as you become over structured, you become bureaucracies, and then you basically become like many governments, which is where shit gets very hard to do. And it's because most of how we do this is we don't honor the human experience. We're doing something else. We're trying to pretend to be sort of a machine—a machine system. But what we are is messy and difficult and problematic. And if we build to those problems, we will actually get further along.

So do I believe that our company will become like a—whatever we call it—automaton?

Mike Pinkus: Yeah, I know.

Shrad Rao: Yeah. Automation, I dunno, whatever. Do I believe that it's gonna eventually come to a place where, you know, we are all like acting like robots? Maybe. I don't know. But what I do know is that as long as I'm around, I'm gonna try to resist, because I'm gonna try to remember that this is a human experience. At the end of the day, it is not a standard operating process or procedure. And as soon as you give into that belief that, you know, we should try to like, create as much, uh, machine behavior—well, what's the point then?

So that's—that's essentially, like, all the things I'm telling you is all of the things that I see are actual problems in the way that we run businesses. And if we address these at the root level, which is inside of the human experience within thought first and action second, and how to think—so listen, Mike, here's the reality, right? All of us are dealing with—all of us, including myself—we're all children of the society that we're brought up in, right?

Mike Pinkus: Right.

Shrad Rao: We are children of the society where trophy participation—participation for, you know—

Mike Pinkus: Showing up.

Shrad Rao: Yeah. For showing up was a thing.

Mike Pinkus: Just for showing up.

Shrad Rao: People who, you know, were not—whose parents didn't engage them in critical thinking or proper socialization, and some things bad have happened to people. And all of that stuff—that entire society—is in your company.

Mike Pinkus: There's a curious with them.

Shrad Rao: That's the thing. If those are—if those are ignored—if that is ignored, that's when you have trouble. And so my point is, let's not ignore it. Let's build a company where people actually grow and challenge themselves. And I don't mean that in like a career development standpoint. I mean that as people, right? This is just—a company is just a safe space for where you can actually work on your own shit.

Mike Pinkus: Mm-hmm.

Shrad Rao: So why don't we build a company that does that for people? So that's essentially kind of how I think about it.

Mike Pinkus: That's an amazing way to think about it. And before—well, I've got two more things I wanna ask you quickly, Shrad. I know we're running out of time. But I guess the first one I want to ask you is, um, the leadership side. A lot of these principles you're bringing up, I think, go back to leadership.

And you've obviously changed as a CEO from your early days to now in terms of your thinking, 'cause your team's bigger. And what I'd love to understand is—you explain that bonus framework that you have right now, and at the size of company you are, there's obviously a mix of objectivity and subjectivity and figuring out—does someone really deserve a disco ball? That seems like a really, really high standard. Does someone deserve this color versus that color?

How have you as a leader tried to—to, I guess, train—I don't know if train's the right word—but to give this critical thinking to your leadership team? 'Cause you can't be everywhere, and these are things that you probably want to be quite precise—meaning these are people's lives, their incomes, bonuses—a sensitive type of thing. How do you go about managing that, at least as you as a leader and with your leadership team?

Shrad Rao: Yeah, that's also a great question. So what I do is I ask them to provide the ratings first. So actually, my first thing was to do an A, B, C and an A++ rate.

Mike Pinkus: Mm-hmm.

Shrad Rao: Okay. But then I got feedback that it would feel like a report card and people would remember their high school days at that time.

Mike Pinkus: Yes.

Shrad Rao: So they would—would cut differently, you know? So then I switched it to colors, because colors are a lot more neutral, right? They have less—you know, people have less relationships with them, or at least negative relationships. So I get the managers to first rate the folks, and then I challenge the ratings.

Mike Pinkus: Yeah.

Shrad Rao: Yeah. Like sometimes I upgrade people after I've talked to some people. Sometimes I downgrade people. So I just challenge the rating and I give them an opportunity to explain to me why that is—why they think something.

So somebody, for example, is rated an A, and then I found out why. And I found out that they were like working on a project essentially that was going to take care of the whole company in, you know, in—let's call it—productive ways. But they worked on it on their own. And I'm like, that's a waste of time because—

Mike Pinkus: Mm-hmm.

Shrad Rao: If you don't involve the people who are going to be impacted in a positive way by the thing you're doing, that's like a zero essentially, right? You know, now it's a negative because you're taking time and money and energy from the company, right?

Mike Pinkus: Yes.

Shrad Rao: So it's kind of like—you have to keep challenging the way people think, and you can't be afraid of that.

And that's one of the big leadership lessons for me growing up—is that I've learned that, you know—we—I was just telling you earlier that I was watching Gordon Ramsey on Kitchen Nightmares, and typically I don't love Ramsey.

Mike Pinkus: You asked if you can swear—love Ramsey.

Shrad Rao: Well, I mean, he's—yeah, he's made a trademark from the whole thing. But, um, you know, typically I don't like watching it because I don't eat animals, and I don't like to see all of the preparation around it. But I started to just try to watch it, just to watch how he leads—leads people through the problem.

And I started to get a lot of lessons from that. For example, he's not actually egoistical about it. He's there to open their eyes, and he has only like a week or whatever that he spends time with those folks. He can't build relationships and then ease them into it. He has to just tell them to their face. Right? And they're usually calling him when the situation is dire, right?

So the point I'm making is that there is a place for that kind of truth.

Shrad Rao: You can call it radical candor, you can call it whatever, but there is a place for that kind of truth in leadership where it's so indisputable that there's nothing left to say—there's only action that can be taken. And that is the—it is a—I've always been very straightforward, but I've tried to be, like, gentle in my approach. Recently, I have decided that if I cannot get someone's attention, I have to switch to more of a Gordon Ramsey style, if you'll—

Mike Pinkus: Mm-hmm.

Shrad Rao: And it's—it's not very comfortable for me because it's not my natural nature, and I don't like the feeling. But I also think that part of my job is to get over it sometimes for myself and just say, leadership—it's not about one style at all times. It's about changing your style as the situation requires it.

And that's a very significant—like, I'm usually the kind of leader that, you know, I'm like a—typically a buddy, you know?

Mike Pinkus: Yeah.

Shrad Rao: I'm like—you know, just using my dog training as an analogy—I have a German shepherd, and the trainer told me, "If you ask him to sit five times, he has to sit five times. He can't sit three out of those five times." Right? And I was always like, "Ah, he sat three out of five times."

Mike Pinkus: Such a good point.

Shrad Rao: Right? That's the kind of leader I've typically been. But then I've realized that if I am here to bring out the most potential—the best potential—in people, that is my only job. I have no other job. That is the job: bring the best out of everyone. Then I have to get them to do whatever I'm asking in the way that I'm asking it.

And—and it's rather not what to do, but understand what I mean.

Mike Pinkus: Mm-hmm.

Shrad Rao: They have to walk away from a conversation, from an interaction, understanding what I mean, so that they can go and actually do that in the framing that I just explained. So the point I'm trying to make is that I have—becoming—in order to take care of a German shepherd, I have to become my best self. I have to rise to my full potential. And that was what I have been learning recently in my leadership, um, thing.

And it's a pain in the ass also, because it requires me to do—

Mike Pinkus: Yes.

Shrad Rao: I gotta be better than I was, right? So—but it's all just acknowledgement that I get to be—I have to be—I have to lead by example by getting better as a leader and recognizing that not all conversations can be, you know, sunshine and puppies. Some of them have to create some amount of—let's call it—angst. But it cannot be sustained, right? Like, I need to urge, I need to create urgency and action and all of that stuff. But my point is that that's—that's how I've been thinking about leadership a little bit more recently. So yeah, it's been quite an interesting ride.

Mike Pinkus: It's, uh, it's an amazing way to explain it. And Shrad, it's funny—I’ve had a mentor that has explained to me like a sports team versus a family. And sports teams—people have different compensation structures, right? And it’s not that that makes you a bad person or me a bad person, but you have to have maybe more increasingly higher standards by level within an organization, no different than a sports team would.

And I just—it comes to mind, I'm in Toronto right now, we're watching the Leafs. Come on, Leafs, please—one time. But like, the expectations on our superstar, Auston Matthews, are different than other players. And so, absolutely.

But hearing you say that—as in a big company that you're managing—how to communicate, while deep down you want to be that family-like person to everyone, but unfortunately, you aren't in the game of working with family where you'll let things go with a brother, sister, parent. You unfortunately have to have high standards in order for your customers to win. Right? And—

Shrad Rao: Kind of. I take a slightly different angle to that. I don't view them as family at all.

Mike Pinkus: Mm-hmm.

Shrad Rao: I view them—I view all of this—as friends. We're all friends. I said, we should be able to do anything together. If we chose to work together on something, if we wanted to start a band together, that should be possible. Or stand up a barn in mid-century England—that should be possible, right? Like, any of this stuff, we have to figure out how to make that happen.

The point is, when you think about great friendships—like the best friendships that you have—they are usually the people who don't hold back.

Mike Pinkus: Right.

Shrad Rao: They tell you the truth. Authentic. And that—that is what I'm after. At the end of the day, I want—I want us to do this like friends, but like good friends.

Shrad Rao: Mm-hmm. The kinds that actually know when to show up, and you know, when to come to your house and help you, and also when to leave, right?

Mike Pinkus: Mm-hmm.

Shrad Rao: Like, all of those things are part of great friendships. You don't—your friend—if you really are, like, very good friends with someone, you don't want them to pick up the bill all the time, right?

Mike Pinkus: Mm-hmm.

Shrad Rao: You want to make sure that it's equitable. Those friendships can be made with your employees or with your customers. All of this—this whole thing—is an illusion. At the end of the day, we are actually just all friends. We are all trying to cooperate with each other.

You guys, for example, at ConnectCPA—you've been amazing leaders in the space that you're in. You were the first cloud—one of the first cloud accounting firms that we ever worked with. Okay? So you guys actually built that category in Canada alongside LiveCA and ZenAccounting.

Mike Pinkus: Mm-hmm.

Shrad Rao: You were the three first folks that we worked with in this process. And all three of you were way more forward-looking than most of the folks that we had talked to at that time. You literally built the category, Mike.

Mike Pinkus: Oh, we appreciate—I appreciate you saying that. I mean, it feels like so long ago, but yes, it's—

Shrad Rao: A fact. It's a reality, right? So that's what I'm trying to tell you. Like, that's why we became friends—because you guys were forward-thinking. We are forward-thinking. We are like, how do we break this stalemate in the way that business is run?

Recently, you know, why does it have to be our parents' companies? Why? What would our companies and our generation look like? And they are companies where things like friendship—like, you know, in our parents' companies, they would say, "Don't become friends with your employees."

Mike Pinkus: Right.

Shrad Rao: But we don't even listen to that. Why? Because what else would we do? Why would we deny ourselves that?

Mike Pinkus: And you spend so much time together.

Shrad Rao: You spend so much time with them. That's the thing. And you like them. Why wouldn't you? Why would you—why would you try to keep distance? Wouldn't you try to bring each other closer? Right? But that means that in that closeness, the truth has to show up too.

Mike Pinkus: Mm-hmm.

Shrad Rao: If something isn't working, you have to be able to talk about it. And then finally, the reason I don't call it a family is because you have to choose each other in this relationship. Both sides can walk away. That is not a family.

Yeah. So—and I don't call it a sports team either, because in the sports team, you have—I mean, look, sports teams these days are all like—they're not playing for the love of sport all the time, right?

Mike Pinkus: Mm-hmm.

Shrad Rao: It's now become, you know, how big is the Raptors franchise and the Leafs franchise, right? I mean, it's—it’s just kind of ruined the point of sports. Maybe—

Mike Pinkus: The teams that win, though—maybe the teams that win. I don't know what that says about my hometown, 'cause we’ve won in like—in a century, but yeah.

Shrad Rao: Yeah, I know. But I’m just saying—and I'm not saying those things are bad. I'm just saying it's just not the point, right? To keep the point on the problem. I'm saying that this is how we—we need to—we need to remember that we have a friendship because the business is extra, you know?

Mike Pinkus: Mm-hmm.

Shrad Rao: The fact is that we see the world similarly. Not that that's important—it just means that we get to build businesses together and help each other in the process. That's what friends do. So that's kind of how I view the situation.

Mike Pinkus: That's amazing, Shrad. Last question for you—and I know we've run out of time. I appreciate you spending so much time.

Last question is: what advice would you give to either entrepreneurs that maybe have scaled to the level of Wagepoint? Also, ones that haven't quite gone to that level yet? If you were to give one piece of advice—I know you probably have like a hundred things that you could give, and we could—we could talk until the end of the year on all the things you've probably learned over these years. But if you were to give one or two, what are some of the advice you'd give to entrepreneurs?

Shrad Rao: Um, wow. Yeah. I think—I think that if you haven't scaled your businesses yet, don't fall into the trap of overbuilding your product. That's a very common problem. I hear it all the time. Anytime somebody has missed on the go-to-market with their product—

Mike Pinkus: Mm-hmm.

Shrad Rao: —the next thing you have to do is find out where you missed, not build more product. And most people—that's what they do. They just kind of go like, "Well, what is the thing in my control? Well, the product's in my control. Let me just continue to build that up." Right? So they look more—I guess they—they don’t think about the problem they're actually solving.

And this is what I was saying to you. This is very common. And then in all cases: spend more time thinking about what you're doing. Spend more time making sure that you are actually involving people who can help you think.

This whole game is a thinking game. It's a strategy game. It is not—actions flow from the strategy. It's literally like playing—you know, like in, I think in chess, after like three moves or something, there’s like a million opportunities or a million possibilities.

Mike Pinkus: Oh, yeah.

Shrad Rao: Or in Go. It's like after one move, there's something like 10 million or something crazy.

That—that’s the thing. If you're an entrepreneur, this is a strategy game. If you spend more time on your strategy—and strategy simply means what is the approach? Like I talked about the Pirates of the Caribbean, you know?

Mike Pinkus: Mm-hmm.

Shrad Rao: Thing. That’s all it is. It’s just a strategy. You are winding your way through this world to the set of things that you have to essentially navigate, and you have to find the best navigation through that.

So that's—that's actually this. Very often, people get confused about what this game is, and it is a strategy game. It is like playing Catan or Risk or whatever. It's not like playing Uno.

Mike Pinkus: Maybe that's what we should be doing for our next company retreat—playing some strategy games, like board games.

Shrad Rao: I’ll give you one last thing here, just before we wrap up. Our Chief Experience Officer, when she was—she wanted to—we were changing the structure of our CS team.

Mike Pinkus: Mm-hmm.

Shrad Rao: And we were getting people who’d done that job for a long time to move to a different position, and other people to come in and take over from them. But we still wanted them all to work together. So this is a very complicated human behavior and human experience situation, right? There’s a lot of—like, you know, there’s some territoriality that is natural as part of that, for sure.

Instead of getting upset with that—we leaned into that and worked through that problem. So what she did was she took the game of Risk and adapted that game with Wagepoint content, and then she made them play it.

Mike Pinkus: That's amazing.

Shrad Rao: So when you ask me how we do it—it’s through puzzles, through teaching. The company is a school. The more you can see it like that, the better your outcomes are gonna be. That's what we are betting on, at least.

Mike Pinkus: Well, Shrad, like I said to start this podcast, I have huge respect for you as an entrepreneur and a CEO. And at ConnectCPA, obviously, we've been customers for many years, but we're also fans of Wagepoint. You've made payroll simple—which is a loaded statement—but you’ve made payroll simple. And like I said, I think we've built a friendship, and I know your time is really valuable. So part of that friendship is—I do appreciate you spending—I know we've gone a little bit over here today, but I really appreciate you spending the time with me.

Shrad Rao: Absolutely. Same way. We are also fans. We love you guys. We want you to be super successful. And it’s true for pretty much all of the people that, you know, work with us. Our intention is always to help and to be there for each other. That’s why I go back to the idea of friendship. So thank you for having me and I—I can’t wait to see where you guys head next. And we’re super fans ourselves.

Mike Pinkus: Well, we’ll always be in touch along the way, right?

Shrad Rao: Yes. All right, my man.

Mike Pinkus: Thanks, Shrad.

Mike Pinkus: That was Shrad Rao, the CEO of Wagepoint. Scaling a software company to product-market fit is rare in itself, but growing to over 25,000 customers is a special achievement. Shrad shared some incredible business lessons that all of us could learn from when scaling our companies.

Here are my biggest takeaways from the conversation:

Number one: In order to be a leader, you have to adopt frameworks that your company lives by. One of those frameworks for Wagepoint is that there has to be collaboration on major projects. Shrad shared an example where a team member built out an innovative solution on their own, but they were not rewarded for it because they didn’t include other team members in the process. The frameworks established by the leadership team must be followed, and they help the company achieve new levels of success.

Number two: Friendship is at the heart of everything we do in successful businesses. How you treat a friend is very similar to how you treat a team member, a partner, or a supplier. The point is, friendships sometimes involve tough conversations, happy times, sad times, and everything in between. If you show the world surrounding your business and the people you interact with that you care, they will reciprocate—just like real friends.

That’s it for today. As always, keep scaling up and breaking barriers.