The Build #21: Development

Development refers to the process of writing the software you need to keep things moving. Like the code that manages a business, or the infrastructure that keeps a nation rolling.

But it also refers to the process of growing, learning, and adapting with a changing market — both as a business and as a professional.

Excelling at either one of those is hard enough for most companies. But when you put both of them together, you can achieve some really significant results.

That’s what Michael Rappaport learned as he led his company through fifteen years of growth — despite a recession, some geographic challenges, and pressure from competitors who wanted to steal the talent that he spent so much effort developing.

It’s the story of Chariot Solutions on The Build.

Transcript

From 2820 Radio in Philadelphia, it's The Build, conversations with entrepreneurs and innovators about their dreams, their triumphs and their challenges.

Joe Taylor Jr.:
Development, when you are working technology, that word means two important things. Development refers the process of writing the software you need to keep things moving like the code that manages the business, or the infrastructure that keeps a nation rolling but it also refers process of growing, learning, and adapting with the changing markets, both as a business and as an individual. Excelling at at either one of those is hard enough for most businesses, but when you put both of them together, you can achieve some really significant result. That is what Michael Rappaport as he led his company to 15 years of growth, despite the recession, some geographic challenges and pressure from competitors who wanted to steal the talent that he spent so much effort developing.

Joe Taylor Jr.:
It's the story of Chariot Solutions coming up next on the Build.

Announcer:
The Build is made possible with support from 2820 Press, providing business consulting, and content strategy services to customer obsessed companies nationwide. More information at 2820press.com.

Joe Taylor Jr.:
Well first I want to welcome you to the Build. We are excited to talk to you because the thing that leapt out to me in your bio is that we were both full decided 2002 will be a great year to launch companies. Tell me a little bit about the origin of Chariot and why you decided to launch a company in 2002.

Michael  R.:
That's a great question and obviously you have an understanding of why that seems like an odd time to start a new business. Sure, I will try to condense this story but prior to starting Chariot Solutions, I ran a software company. We had a software package. The company was called Skylight and we had an accounting and supply chain management suite of modules that was geared toward wholesale distributors in a variety of industries. I ran that business for 10 years, for another company, a parent company called ATD American.

Michael  R.:
In late 2001, ATD, the parent company and for a variety of reasons we decided to sell that business. I didn't chose the timing but at that company I had staff of about 40 people and I was what I consider a normal kind of company as opposed to what I'm going to tell you about Chariot which is not a normal kind of company. I had superstars, a handful of superstars and they got paid the most and I had mid level people and I had lower level people and it was just normal.

Michael  R.:
When I wanted to do something new, the first thing I thought of is something had been proven to me. In the latter part of that endeavor, the Skylight endeavor, we decided to re-engineer our software from this older fourth generation language into java and in that process we set up teams to do this and something I have been aware of forever and this is a technical thing but it's not a matter of opinion. It's a fact in our industry and I believe it's somewhat unique to our industry, is first you have to understand this part, most professional software developers are not cut out for this sport, this job.

Michael  R.:
They are just not and they are in it and I know I went to school. I majored in [inaudible 00:03:31] information systems and I worked with people developing software and taking these classes and the ones who aren't cut out for it, they maybe great students, they could get As. They had to work so hard on their projects, they had to struggle through the technology course and the people who got it, it was second nature. It was so easy but anyway, they make it out to the field.

Michael  R.:
When they are in the field, it's kind of hard to justify mid level people in software development. There is such a giant gap between them and the superstars. The problem is there aren't enough superstars out there. At my small company, Skylight Systems, my old company, the person I brought on, who is actually, Erin Molder [inaudible 00:04:06], who is my CTO at Chariot, I brought him on Skylight to lead this effort and when I did so he pitched me with three project teams.

Michael  R.:
We set out to build application framework, reporting framework, and testing framework. We built those then people could be very productive in migrating all of our software but building the platform is hard. They convinced me, they offered to do with half the team size. They cut each of the three teams at half but we are only going to use the best people. That was the offer. Since I'm a techie, that was my background and I understand the gap and I'm open minded. I pride myself on that.

Michael  R.:
I looked at the plan and I said, "Well, on the testing framework there were only two people on the team." They said, "Well, we'll do with one." I tried to yes. My kids will tell you my middle name is yes. I don't always say yes but I always try to. I want to. We tried it and Joe it was unbelievable. What happened when you put a small team of incredibly skilled people together, it's not just the technical skills, it has a lot to do with personality and professionalism, and communication, a lot of other things, not just technical.

Michael  R.:
It was incredible what happened. When they parent went to sell Skylight and I was looking at what's next, there's what's next for me, what's next for this group of about, instead of 40 people, they were a group of eight to 10, that man this people should not be separated. What they can do, what they have to offer is incredible. One plan was for me to take them and start a consulting company like Chariot. I couldn't start a software company because I didn't have the financial resources at that time and as you know 2002 was not good time [inaudible 00:05:39] money right after 9/11 and all that.

Michael  R.:
Clearly the reason we did this in that time frame was because I had no choice, that was when the company was to be sold and when I took this people and I talked to them about it and created a business plan with some help from mentors. I was very, very lucky. Now when I did this there was a gentleman named David Lipson, he has since passed away a few years ago. David, not the David Lipson from Philadelphia Magazine, it's a different David Lipson.

Michael  R.:
He was an incredibly successful entrepreneur. He had done it for so many years and helped hundreds and hundreds of people like he helped me. He was tough though I didn't it tough and he really helped and we created a business plan. Then I took this business plan that was a business plan for a regular type of consulting company, kind of David Lipson had back in his time and I brought that in front of my 10 people that I was going to start with. They all read through it and they liked a lot of things but they felt we should be something else.

Michael  R.:
They said, "Well, do we want to be as big as we can, as fast as we can, is that part of this mission? Are we trying to be the biggest or the fastest growing?" I said, "No, I don't think so." They said, "Well, let's shoot to, if we are going be the best at something, let's be the best at the highest quality. Let's be different." The thing is Joe, this is the point they made to me. It really stuck with me. It's not my idea. These were not my ideas.

Michael  R.:
They said, "We manufacture software. We are manufacturers and in software development it's embarrassing, the track record, for failure." Success and failure, it's incredible. What other kind of industry, even in the most optimistic estimates of 75% projects success is [inaudible 00:07:06]. Can you imagine the manufacturer of some widgets that they fail, 25% are defective, they are out of business tomorrow. I understood that. I appreciated that.

Michael  R.:
They said, "We want to be held to other standards, 98, 99% like others." It's hard to be perfect, maybe impossible. These people are so professional. I had such great respect for them. I thought about it and really considered it and we looked into it. We said, "Well, it's really the similar argument they made to me at Skylight. Smaller teams, higher skilled people, except we are going to do the development for our customers instead for ourselves or for other people." We had to commit to only bringing on the best people which means we are going to sacrifice growth.

Michael  R.:
Okay, sounded good and in the beginning I brought that to my mentors and they laughed at me a little bit because they said, "Well, how are you going to make money? It sounds great. Essentially this is over simplification of a service business and the service business we try to get 90% utilization, if you assume 10% is paid time off, then you should try, accountants, lawyers, people like us, IT software, IT services, you try to get 90% utilization or as close to it as you can get.

Michael  R.:
Well, that doesn't for the top tier people in my industry. That will cost them to be stagnant in some areas. Anyway there is a lot of reasons. We as a team said, "What if we strive for 80% utilization? We take an extra 10% and we devote it to paid professional development for our [inaudible 00:08:23] for everyone here? That is in the form of being trained, going to conferences, all kinds of things, the hacking and open source projects, they spend their time how they want to but it all furthers our business. It helps our business and mainly it really helps them be happy.

Michael  R.:
It helps us create what we set out to create which is the best place to work for these kind of people.

Joe Taylor Jr.:
The interesting transition there from a typical service business doing a 9010 rule to an 801010 is in organizations that embrace professional development often that takes the form of we are going to send our folks to seminars. We are going to send them to conferences. The thing that I have observed what you do with Chariot is you actually cultivate people who are leading initiatives. A lot of Chariot folks are out there at the forefront of major technologies.

Joe Taylor Jr.:
They are running seminars. They are running conferences. How do you actually cultivate people who want to lead within their focus, their attention?

Michael  R.:
That's something I really pride myself on is my open mindedness. At Chariot we are a very flat type of company. If you are here it's a culture of peers, not someone who works for somebody. It's really isn't like that. It's a culture of mutual respect and of believing in each other. We are a consulting firm, on the surface you see we do, almost all of our revenue, so much of our revenue comes from consulting, building software for other people.

Michael  R.:
That said, many years ago, Ken Rimple just wanted to start. He was passionate about training and doing formal technical training and he had a background at that. He was patient and did some consulting while we made a plan and put a plan together and then ran that in front of my mentors and my devils advocates, and my board and all of our committees. If it survives these people, it's a good idea. It had legs and we executed on that plan and we have for another four years had a formal practice, where we train people in a lot of these subjects and technologies that we work on for our customers out there and we are passionate about it.

Michael  R.:
You mentioned a good point. Our people are out there speaking, presenting, they are very passionate about certain things, mobile, and mobile development, big data, and those concepts. There are several different variety of things and technologies under that. We are geeks in what we do. It's really work. What we are excited about is what the new technologies can do for businesses. It's really all geared toward business, very important that we are focused, how do you get the track record we have?

Michael  R.:
Well you have to deliver on time and within budget. It's a business. You don't have forever. We'd love to be perfectionists but ... and so all these things are factors in this hiring discipline and what we do. Joe and back up one step at the beginning gets you kind of feel something, so in the beginning when we created this 801010 model, my mentors said, "How are you going to make a profit?" Obviously we had to command a premium, just like my team at Skylight. I didn't have to pay double for the better people.

Michael  R.:
I had to pay more but they are half the team size so it makes financial sense. It makes every kind of sense because that is the same thing that we do here is we say, "Well, we'll have to command a premium in the industry, in the market, but we are not charging double." Well that's great, but what if you don't have reputation when you start, you have no brand, plus, it's 2002, it's a terrible time. There were so many things Joe.

Michael  R.:
The magic part of this, I have a lot of faith in these people. You have to understand these 10 people I've worked with for over 10 years one average. They might been in the organization for 17, I'd run the business for 10, and I really believe in them. As I said, I always try to say yes. It was very risky. The approach required that whenever a single people went out and did a consulting gig, the customer was blown away, blown away.

Michael  R.:
I got to tell you, this is why I love these people so much. That's what I've been dealing with for 14 years, is letters from customers and feedback from my customers and I do reviews for our people. It's unbelievable. They pay a premium and yet they can't help but tell us how great these people and the difference they are making. Even in 2009, 2010 time frame, some of our customers, Tom Case is my biggest customer by far. At that time they were not, but at that time we had a few people that canceled. I heard they canceled their outsourced projects, their outsourced IT projects.

Michael  R.:
You know what hit the fan and things got shelved. Well I didn't hear that formally. When they contacted us formally, they actually asked us for another person or two, instead of letting our people come back, so then I had to ask involved and I said, "Well, what's happening? Can you guys shed some light on this? We heard from reliable sources you are killing your projects?" These guys said, "Well, it's true. We have to shelve most of our projects for this year, for temporarily but some things have to get done."

Michael  R.:
He said, "Those things we cannot afford to fail on those things so I'm allowed to use Chariot's permission to exclusively use Chariot for that." I have a lot of pride in that, with these people. Another thing is our conference, that you are probably familiar with from our site maybe, ETE, Emerging Technologies for the Enterprise. I'm incredibly proud of that. We speak at it but we also bring, we want hear people speak from all around the world that are the creators of their intellectual property.

Michael  R.:
That's where we are going this time. We want to know who created spack and who's working on angular, who's working on these today, these popular things and let's get involved with them. That's what we want and so we have ETE originally, men, it might be over 10 years now we've had ETE and it's many years. It sells out, and the early bird, and we have new incredibly line up and I deserve credit other than approving a budget for that thing.

Michael  R.:
The team does all the work and they are amazing going out there and besides I send over 40 people to it every year. It's over two days of action packed. It's exactly what we want. It doesn't come out of their 10%. It's something we want so their conference, that's outside of ETE but people that want to present, it does a lot for our brand and our brand means so much to us. Today we have some heavy weights on Scala technology, that's it for example.

Michael  R.:
When we do, they are out there speaking in New York and speaking on different areas, even though I don't do that much business on in those areas, it's important for our brand in it's important for the people who are working on the intellectual property to know they can rely on us to do that kind of work. Now one thing I will say is, we are not willing to get in bed with anyone, any one vendor. I don't tell my team what to do.

Michael  R.:
We are a team. We talk about it. We discuss it and these other companies they would love it, if you get into bed with them, then you are trying to sell subscriptions for them, that's great but we are not. We have philosophy, we say, "Wouldn't it be worth more to our customers when we say Vanguard, we recommend Scala." Even though we are not in bed with them, we recommend it because it's the best thing for this project. That's what we believe.

Michael  R.:
Well sometimes these other companies don't care about that, they just want us to sell subscriptions and it's just not what we are going to do.

Joe Taylor Jr.:
Well, it gives you the ability to evolve your thinking overtime because if you observe another technology or another platform gaining steam, you can advice clients to start investigating that.

Michael  R.:
Exactly, which you know happens. That is going to happen. You can guarantee. If you have to make the most money, maybe you will make these other decisions. It's much easier for us because when we decide, we always weigh everything against, we have a very simple list of [inaudible 00:15:13] goals and objectives as a company that we've had established over 10 years. They are only seven names in the list and I actually can't even recite from memory four through seven because we all agreed that if we focus on the top three, the rest will take care of themselves.

Michael  R.:
The top three have nothing to do with money. Each of the top three serves as number is to sustain our near perfect client satisfaction record, that is the number one first and foremost. We make a decision sometimes with the customer you don't who is at fault or maybe we know the customer is at fault. It doesn't matter. It all about customer satisfaction. They don't know they are at fault. We just do what it takes. It's all about customer satisfaction.

Michael  R.:
Secondarily and this is our chief marketing officer's top priority, we do a brand, like I said it's very important, we invest in building our brand. That is how we get the rates we get. That's how people know we are still a steel at this rate. Her top priority is to enhance our brand as best provider of the services we provide. Then the third, and this is my top priority, is to enhance the loyalty value and happiness of our team.

Michael  R.:
It's by far the best job I ever had. The people you can tell maybe from this interview how much respect I have for these people and so it's the most incredibly natural thing to want to treat them really, really well and it's all about creating that and having them be happy. Sometimes to be happy, they want start something new. They want to be an entrepreneur. I have a gentleman right now, he was a consultant and he is interested in expansion to New York city for charity.

Michael  R.:
It's not something that was on my list necessarily but again we ran it by the team and we don't have a strong reason to say no. We can say yes. That's a proven evaluation. That's where we are right now. If that evaluation comes back with a positive, next thing you know we may have an office in New York but the question is can hire there and can we sell there?

Joe Taylor Jr.:
Well, yeah, and that sounds to me like an organic out cropping of something that a team of developers would do. The thing I'm accustomed to seeing in development is let's test it. You want to go to New York? Well let's test it out, let's see if we can get a foothold there. At worst you have one person in a satellite office or one person kind of working remotely, at best you create a new field office while it's on legs. I think that one of the other things that I've observed is we are taking about the growth and development of this team back in 2002, 2003 and you were going through processes that we didn't have words for them then but they are lean methodologies and methodologies.

Joe Taylor Jr.:
We just didn't know what to call it back then.

Michael  R.:
Exactly right. I say the same things you are saying, I'm telling you, I do.

Joe Taylor Jr.:
Whoever came up with those terms made it so much easier for us to explain how small organizations can have big impact but I want to go back to the concept when you are recruiting, when you are identifying talent. This concept that talent leaps out at an order of magnitude and so compared to the kind of organizational charge or the career journey that somebody might have in a large organization, there is more of this snapping tipping point where somebody goes from, I guess the current buzz phrase is from typical engineer to that 10X engineer, that 10X developer.

Joe Taylor Jr.:
In your mind when you are looking to recruit folks, what are the competencies that you look for that would determine that someone has what it takes to be in that top 20% of talent that you look for?

Michael  R.:
Okay, so, I'm above this or outside this area a bit, meaning that I'm not doing the actual. By the time they interview with me, they are as good at that point but our process is everything to us. I believe and it's been proven to work extremely well overtime. It starts with the obvious thing, the tech part. I'm going to tell you that 14 years we had the interview 35 people for everyone that we hired.

Michael  R.:
14 years later, we have to interview 32 people for everyone we hired. That sounds terrible to me but it's not as bad as it sounds. For one thing, the interview is not as exhaustive. We are actually able to weed people out at an earlier stage in the process. We've gotten a lot better at that and when we realized that people were looking for us, so what happens is the phone screen weeds out a lot, but after our phone screen there is an exhaustive, the real magic starts with the real interview, which is multiple people on our side interviewing the candidate.

Michael  R.:
There is a coding test, a design exercise, there are so many things that are proven to show in an hour or two how well this person masters coding, the art of coding and development and understands the concepts of design, software design. That's a start because our people are designing in the beginning basically the software you build even it looks like it does what they were supposed to do on the speck, it won't scale or perform or be as stable as it should be if it's not architectured properly, and that's what we are all about, that architecture is the harder part.

Michael  R.:
Coding is very important but it's that well rounded person, that software architect we want. Once they pass that, and I will tell you one out of 10 pass that. We only hire one out 32. The rest of it is the magic. I will tell you the most important part, I know this because I read all the write up. The most important question is would you like to work with this person? I know that's very subjective but the people who are doing the interviews, they understand it, they are a team humble players.

Michael  R.:
They are technical people and consultants but they are business people too. They care about this company. I get ideas from all the place and I entrust them with that. It's this person, if it's a jerk it's not going to work out with us, maybe they are not a jerk, they are awesome at what they do but wherever they came from, they were master of disaster. They were the go to person but now two things can happen, you can need that and rely on that wherever you go, you got to be the master.

Michael  R.:
The people we end up hiring it's very simple and similar and consistent. They say, "I like to teach but I need people around me learn from. That's what I'm hungry to learn." We share that here and it doesn't matter not just the consultants, myself, my management team. We need to learn all the time and if we are not learning, that's enough of a reason to request a change, when you want something different. That happens and happens within our consulting team and so on.

Michael  R.:
We care, again if you want to be the best place to work, you make your decisions based on where are we going to happiest, plus our customers are happiest when we only take jobs that are great for us, that are a great fit for us, and anything else we would help them find somebody else. There is plenty of things we pass on. That's it in a nutshell. I can talk about Chariot for along time.

Joe Taylor Jr.:
Thinking a little bit about that development piece, to a typical client services firm is spending most of their time responding, if not reacting to customer needs. How do you curve out the bandwidth to be able to stay ahead of those requests? How do your folks actually stay abreast of what's evolving or what that next new technology or that next evolution is going to be relevant to your customers maybe not now but in six months, one year, five years?

Michael  R.:
Great question and it's a very natural thing. One of the easier things to do here because these people do it on their own. You have to understand, I don't tell them to their hackers, that is what they are. What I have to do is listen to them and what they have to do is to bring it to my attention. This started, men, about 10 years. One of my people came to me and said, "There is this thing called spring. Well I know you said we would like to send five people down to Florida for this spring experience."

Michael  R.:
I said, "Well, that sounds like a lot of fun. Who is paying for that?" He said, "No, no, spring is a framework. It seats on top of java." He said, "I think it's the future. There is so many reasons." He went through these reasons. I was convinced. Again, so we tested it out. We sent them down to this conference. Well in the years that followed, spring dominated. People didn't do java without spring. Today java is not so much the in thing but spring dominated java for a long time.

Michael  R.:
Today, there is a lot of other things. If you look at mobile, well why are we so ahead with swift. Swift is the new IOS programming language. Most of our customers and the work we have done for our clients is an objective Cc, it's existing but swift is the future. Our people have evaluated it for many, many months for a long time. They thought, yes it is going to swift and there is reasons why. Swift does things a lot better. It's much more modern in its approach.

Michael  R.:
We are not necessarily convinced that swift will be used for android or some other things that are out there but the point is that we pay attention to this. People are hacking at it and then they bring it to either our CTO through, we have regular meeting called Technical Directions. We have a technical directing committee. Here the technical direction committee has to include consultant, not in every meeting but let me tell you, these people are masters. You really need to. You don't know who will be expert and even though [inaudible 00:23:41] we don't really get involved in the like the Microsoft side of the world.

Michael  R.:
Even on our side there is fun and technologies like angular and react and amber and so many other ones and of course there is java and there is Scala and there is the mobile technologies, objective C and so on and there is big data. The is Spack and all these things around that. It's still broader than it may seem even without touching the Microsoft of things. We are involved today in the Internet of Things devices.

Michael  R.:
I'm learning, myself, I'm learning about this and how life can come from these devices that are measuring temperature. I sat through one of our demos. We put together a demo. There is all these sensors and one is pressure, one is heat and light, and you see graphs on the screen that are digesting this information real time and sending it back. I can see practical applications for this in many different industries, although today I'm not doing much work in that space, that's the future but I'm supporting them in doing that.

Michael  R.:
I'm supporting them in Another thing I didn't mention is we love to build software. We build great software is what we do, is we do really, really well because of the people we have. Well, we don't always have to it for someone else. We can do it for ourselves. I'm not against being in the software business now Chariot, we've been around along time and we are very stable and strong and no we never win awards for being the fastest growing or for being the wealthiest but we do great.

Michael  R.:
We have made profit every year. Some of my metrics may go up very very thin but we are very stable and confident enough, constantly revisit our approach. Software came up, one of my people was very passionate about a product, and I needed two product ideas, brought them to the devil's advocate crew and one of them was sort of knocked down but one of them made it through. There is a product out in the market today called Haydle, H-A-Y-D-L-E, that's to do with finding a needle in a hay stack how that name came about.

Michael  R.:
Joel Confino, he was the one who worked for me. He became CEO of Haydle. He built the product. He put it out there. We have a small number of customer. Vanguard is by far my largest customer using it. We use it here. It's an amazing product, it's a question and answer system. You want a question, I'll give you an example. I have a team out there, we are doing Scala work and I have my number one Scala on the team. He is not learning very much these days because he is just teaching people. He is just answering questions. He is just a little bored.

Michael  R.:
I'm going to move him but when I move him, I don't want to move his knowledge. I don't his to be moved. They use haydle. He is not the only, I have a lot of Scala experts that aren't at this particular [inaudible 00:26:05]. They answer the questions, they can answer it so fast and I can't answer unfortunately because I'm not qualified but I look at them. I follow them. I want to see how effective is this product. It's made such a big believer in the product and how awesome it is.

Michael  R.:
Are we going to be able to sell it and is the world going to use haydle? I have no idea. I'm proud of it and what it's become and the fact that we keep this open mind. It takes a lot of guts to be entrepreneur. You can be very confident in your code and in your software you are developing, dealing with clients is another thing. You have to then try to sell and create a business plan and it's tough. I'm sure you know.

Joe Taylor Jr.:
Oh sure and what our listeners do, well most of our listeners are entrepreneurs or folks that interested in launching their own businesses. It seems like competition for your talent is not necessarily other firms, it's more of the individual passions of folks whose development paths might take them into growing a business of their own. It seems like you've got a little bit of a path to graduating somebody out of the organization into potentially becoming a client.

Michael  R.:
True, very true, that's extremely true and it could be that again this organization that they start could be a subsidiary or could be part Chariot or not but what are they passionate about? That is the kind of people and if you met these people you'd understand. You'd want to do the same thing I'm compelled every day and we make our mistakes and nobody is perfect. We are human but it's incredible what a team like this and they are so dedicated.

Michael  R.:
Every once in a while we don't have a good year. Yeah, we made a profit every year but let me tell you 2010 was tough and I will never forget March 11th, you mentioned about entrepreneurs and your listeners being entrepreneurs. This was a real experience for me. I have been an entrepreneur since I was six years old, long stories from the old days but this was new, it was new to me. I had a major struggle at the beginning of 2010.

Michael  R.:
We were hemorrhaging money and at that time we didn't have a lot of accumulated wealth and stability and all that. Fortunately like I said, I like to listen, one of my consultants is also an expert, experts is a lot of different things, an expert in financial matters, and finance, and financial planning, and contingency planning, and all these things. He came to me and he said, well he loses me sometimes with global finance but when he talked to me about Chariot, he said, "Do you do contingency planning?" This is back in 2008.

Michael  R.:
I said, "No." He says, "Really?" He said, "I'm surprised you guys are so organized." He said, "You should." I said, "I know what you mean." His name is Jamie. I said, "Jamie, I know what you mean. I believe you are right." I said, "I struggle with that. I'm such a positive person, I'm so optimistic to a fault and it's hard to deal with it. What if the, you know, hits the fan?"

Joe Taylor Jr.:
A lot of folks are worried that if they think about that stuff they going to attract disaster, right?

Michael  R.:
I was right about something. The point was I respect him. His response was, "You should do it for the group, the team, you should do it for us, for the company." That is all you have to say to me and thank goodness we did that because I did that with him a couple of years before the stuff hit the fan and because he sat down with me, taught me things I had no idea about. He said, "Hold on." He said, "Relax. Take a breath."

Michael  R.:
He said, "What's most important to you?" I said what's important to me is keep every single person we've worked so hard to get because really our struggle four out of five years is just how do we get more people? How do we attract and find more of our kind of people? And when we find them, we don't want them to go anywhere." He said, "Okay, that's good." We went down this list. He said, "There is a lot of options that you may think about right now that you could do when financial and things go wrong."

Michael  R.:
Fortunately a couple of years later when things went wrong, at least I had that but I'll tell I still was physically sick. I did not feel good. I went in and I called the entire in on March 11th 2010 for a meeting. We do company meetings. We do them now bimonthly and we talk about everything. We share financial information. Everyone cares and good ideas can come from anywhere, so that's how we choose to do it. In that meeting I shared everything. I even shared how I sick I was to my stomach.

Michael  R.:
I presented to them our challenge. Our challenge was not to make a profit. I didn't that was realistic but our challenge was to keep our business going and not to lose a single person and be set up for the following year. I will tell you that however many people we had then, maybe 40 people or so, I think all 40 did their part. I'll tell you they didn't go to so many conferences and they didn't their extra 10% not because we said it and we didn't change any policy.

Michael  R.:
I didn't force them to go do it that year and somehow we made a profit and that somehow is because of 40 people caring, not a couple of people, not a management team, everybody made a difference and it's the kind of people we have here. I will never forget it for the rest of my life. Whenever I get ups and downs, when I encounter a down, I remember that. Don't get sick, you have a great team and that the key thing. This is what I'm surrounded by.

Michael  R.:
The main thing is I have to listen all the time. It's the thing I've done best here and prior to this I'd tell you different stories. In prior entrepreneurial ventures, I knew the most. I could develop the software the best. I could sell it the best but you know what? That's limiting and is that really what I'm best at? I don't think so. These days I think I'm best at something different. I think I'm best at team, at the coaching.

Michael  R.:
What I'm great at is keep my word for things and following through. I'll do it even if it's not good for me personally, that's how we are. We are team players. People get here when you work here for a while and it's a very addicting place. You are attracted to it and something Joe that I'm most proud. We've won some awards, since this is being recorded I don't want to say negative about them but maybe I didn't earn them but I knew some or wherever.

Michael  R.:
I don't feel great about those things. I'm not a phony kind of person. I'm not dumb and I won't say, "No, I won't accept this award." But the funny thing is the top award for top work place, for rating number one work top place. We entered this competition in 2010 and I said to the team, "I'm happy to do it. They are going to share the top 25 in the newspaper and online and all that in our category, 50 to 150 employees. I'm confident we'll be in the top 25. I'm even more confident that we won't be number one."

Michael  R.:
They said, "Why?" I said, "Because I'm from Philadelphia. I've lived my whole life in Philadelphia and you don't get number one unless you know somebody or something like this and we know nobody." Well, we finished number one. Shocked me, I was shocked. Then we didn't enter for another four years. We entered in 2014, we finished number one again. I was shocked. The company that runs that top workplaces is a company called Workplace Dynamic and I was speaking on a panel about company culture and the moderator introduced himself and he said he was Workplace Dynamics.

Michael  R.:
I said, "I have to talk to you after this session. I really have some questions for you." I spoke to him, you know what? I love those people. He said, "We have our own secret source." He said, "If you see that everybody has perfect scores and the comments don't support it and you know, because companies will tell their people it's in your best interest to rate us highly." Well he says, "They are gone. They are thrown out. They are not even considered."

Michael  R.:
He said, "I will tell you another thing. We had a problem with Chariot. Yours was almost too good in 2014. You almost got thrown out because this particular gentleman knows some of our people." Workplace Dynamics asked him to recuse himself from the judging. He told me all this stuff. I love that organization, just how they do those little things that I just heard means they take what they do very seriously.

Joe Taylor Jr.:
Well I think that comes back to your definition of brand that they carry it so far that an organization like that that would normally be scanning for what they would define as fraud, they see your application and they go, "Oh, those guys, yeah they are like that." brand for them.

Michael  R.:
Absolutely and that to me I'm incredibly spoiled and incredibly proud of that award that actually really didn't come from them, it mostly come our people. They digest the input from these 50 people after they respond from your company. I don't know who said what, all I know that it's confirmation that I'm doing pretty well at my top priority, which is their happiness.

Joe Taylor Jr.:
We are almost out of time but I do want to touch on the idea that when you are recruiting and you said earlier that it's necessarily just about money because we are both in Philadelphia. We talk a lot with folks who are thinking about locating business in Philadelphia versus Silicon Valley. I spent six years working with business development for Apple, so I spent a lot of time out in the Valley and you can have a quality of life, I think in Philadelphia that is significantly better for half the [crosstalk 00:34:15] because not many people that I know that are, six store bedroom in San Jose, compare to folks that I know who are living in the corridor either between Philadelphia and Lancaster.

Joe Taylor Jr.:
I know one developer that just bought a farm house because they've always wanted to live in a farm house, just did it because they could do it and still have a good quality of life and work from home. The things that you find your people tell you that they are looking for, what are they saying that they are coming to Chariot to get? What are the things that attract them to a place where as opposed to just going to another organization?

Michael  R.:
There are several things and they are not consistent but the one consistent thing I would say more than anything else is they have a need to see the fruits of their labor, a little different, a lot of places you are not going to see that but they actually need to move the needle. Like in this needle they have to move the needle for our client but there is a reason I know my specialty is not large companies like Comcast and Vanguard.

Michael  R.:
Yes Comcast is my biggest customer. We succeed there but mostly it's hard to move the needle. How do you see what you have done? I'll tell, like Vanguard is an example, I'm not sure which companies names I'm allowed to use officially for something like this, that's the thing. These people have been my customers forever, so I'm not exactly sure what I can say but at a big company there, we had two or three people and a friend of mine runs that project or that customer for a different consulting company in the area, much larger than we are.

Michael  R.:
They had two to 300 people. We didn't want any of those roles. We didn't feel that was roles we could move the needle. What we were is next generation software architectures, still hard to see the ultimate results but at least you can see the teams and what they are building with the technologies you are sending down and you can see this company whose been in the dark ages and some of this technology is really modernized and you can feel great about it.

Michael  R.:
Okay, Comcast is even better, companies like that where you can help with big data. You move the needle and you change response rate by a 10th of a percent for Comcast, you are talking about millions and millions of dollars. They see the difference. Our people see, a few years ago they couldn't even track some of this on-demand behavior and data because technologies were limiting to them, relational database were the closest things they could do, these data, it's awesome.

Michael  R.:
We do thrive there because of the teams we are on and the impact we can see but people will not be happy here if they are just getting paid to write code and do their job. Just do your thing and have your limited role, they all have other passions. They all have other desires and what we had to specialize here is understanding who is in to what. Who is an expert and they are software developer but they are big on cloud and they are totally are passionate about the cloud and it's impact.

Michael  R.:
I have people like that. I have people who isn't an expert today in mobile but they are passionate about it, that is where they want to be. We have all of these. It goes on all the time here, is our director of consulting, Dan Coleman, has an entire matrix for everybody here so that we don't lose track. We don't to ignore what they want. They are patient. We'll get them where they want if we can build a business there but we have to listen to them all the time.

Michael  R.:
They have to know we are listening. Personality has a lot to do with these things. You can tell in their personality how professional are they, how much of a team player are they, are they humble or are they over confident, this team of interviews does such an incredible. After the interview, they get sent to Aaron Motors, my CTO. Aaron is tough animal. He is just a brilliant, brilliant, smartest person I have ever met, too smart for me to really evaluate but they are coming to him and he almost never rejects anyone.

Michael  R.:
Aaron was the master of this plan, not by himself but with the team. He really was the author of this approach that we've taken from the beginning. The stats of his rejects are very rare and when does, sometimes he looks at something and he says, "Well, they have been doing this for 20 years or 15 years." His is a little different of an assessment. He loves to see where they are and maybe a lack of passion. Here is the deal, I accept this, I'm a numbers person but I like statistics and other things.

Michael  R.:
I get technical sometimes but we agreed at the beginning to only hire the top tier people and take no risks with that, you have to understand scientifically that that means you will reject some people who would have been superstars because right whenever you are in doubt, and we run into them, our clients, I hear it, we should have hired this guys, he is killing it. I know that and I accept that. That's our approach, then you have to accept that, so we do accept that. Occasionally Aaron sees something or has another angle and when in doubt, we reject.

Michael  R.:
Now someone has worked with someone before and can vouch for them and how they are and speaks to Aaron's concern, that different. We are looking for people. We are not as dead set on what try resume says and exactly how many years and all these things, it's not that, it's their attitude, their passion really for this space and what we do. We would take a junior person or a less experienced person if that's the kind of person that belongs here.

Joe Taylor Jr.:
I think that speaks to the way that you've chosen to evolve the company very organically as opposed to startups where I think we've both seen where suddenly they get a VC check and the next thing is go hire 20 devs and the goal is fill the room with devs not fill the room with the right devs. An organization like yours that may already have cultivated this expert culture and this teaching culture where maybe you only need four people on a team or opposed to 20 people who are banging on type wretters.

Michael  R.:
Yes, absolutely, well fortunately we have the support, everyone is aligned including our board. I have a board, it's a board of advisors but we listen. It's like a board, it's has more power. They support this back from when we initially came up with these set of goals and objectives, it was different than what they did. It really was. It took a little bit of an adjustment period but they have support us all the way through. As a matter of fact Joe, when we first started the company, I did raise a little bit of money.

Michael  R.:
It was like a friends and family, it's the best you could do back then. It's like an angel now I will call it of people that actually were partly my mentors, David Lipmon, there is a gentleman named Buck Bell who also passed away. Buck was one of the co-founders of Safeguard in the '50s. He was much older, Dave and many others that are still on my board, that I did raise some money from them and I did have a plan when we first started the business that had we'll have a liquidity event at some point, because that's what I thought you do when you start a business.

Michael  R.:
I learned from this group because 2010 we had a clause in there that said, as of January 1st 2010, any investor can, because it's not a liquid type of investment right now, but any investor can cash out at an annual rate of return of 10% which is great from 2002, that's a pretty high number.

Joe Taylor Jr.:
Eight solid years, yeah.

Michael  R.:
None did, none of them did but it was important that they had an opportunity. The reason I brought that up was I don't want to sell the company. I had changed my mind. I had a different option. That doesn't mean I wouldn't sell Haydle or we won't sell a subsidiary. Those are investments and kind of seen as that. This company is a service business, it's only worth so much when you are a service business anyway and it's too beautiful and great and special for me to let someone ruin it.

Michael  R.:
Everyone has to be big. Everyone cares too much about money quite frankly. We need to make profit, don't get me wrong because if you don't make a profit you may not have this special but that's as far as we are really willing to go with how much we want to put the importance how profitable we need to be. If you are out to maximize, as I was trained as a CEO, my job is to maximize shareholder wealth. I admit to you I'm not executing on that in this job.

Joe Taylor Jr.:
By design-

Michael  R.:
By design and my shareholders know it.

Joe Taylor Jr.:
You are putting constrains on yourself and so to wrap up our conversation, you are entering the 15th year of operating this business. Tell me what your dream is for your 25? When we talk about your 25th anniversary, what are some of the accomplishments, what are some of the things you want to see the team have executed on when we talk about 25 of Chariot Solution?

Michael  R.:
We add another 10 years, my main aspirations or hopes for us are I do want to spread out. I want our impact to affect a lot more than just the Philadelphia area. Today 80 plus percent of my business is literally in the Philadelphia area. We have a lot of love we can give outside of here to many many other people. My purpose or intent is to again support the individual businesses, like I expect 10 years from now, I want to be one of the leading mobile development firms in the country. That is specific and specific about mobile.

Michael  R.:
I wouldn't that about Scala. I wouldn't tell you that about one language or one technology, it involves service but it's a different animal and it's right into a sweet spot. Today I'm not really known for mobile. I don't think Chariot is known as much for mobile as many of these other java of course, enterprise development, yes of course, but I role with the punches. The main thing is I would want it to be bigger, not a lot bigger. Today we are 60 people, I can go as big as 100, I think, and still be happy.

Michael  R.:
That may sound like not aggressive goals but for me it is. I need to be happy. I have a very close relationship with everybody. That's hard. It's already hard for me to do, a lot hard than it was when we were 25. It's crucial to me to maintain that here and be even more special. Again if I can affect more than just the Philadelphia area, I could have much more to offer my people. People want to be practice leads. The New York thing is a great example, I need an entrepreneur.

Michael  R.:
It can start like I was. I was developer but I knew I was an entrepreneur. I had things I needed. I had a disease. From the beginning my brother because I had it, I had to it. Some are going to have that and they want it. I want to support that even if it means [inaudible 00:43:33] like you said, it's fine. It maybe be a logical way to branch out and go somewhere, so what?

Joe Taylor Jr.:
[crosstalk 00:43:38] to imagine the concept that you would have clones of your unit now but spread out to New York, DC, Boston, that operate the way that you do now but addressing those geographic needs.

Michael  R.:
That's exactly what I want and the reason I say that is I know and some of my board they always bring up the argument when we are discussing it because we are successful doing remote work today, it's not the same. It's not the same as being able to be on site. Even if the customer says you can be on site as needed it's up to you but in many cases we are on site every day for certain periods of time because I asked them, "Why are you there?" "Well we need to be there." Great, okay.

Michael  R.:
Well it's harder to do that in Madison, Wisconsin or in [inaudible 00:44:15] now Boston is pretty easy, DC area pretty easy for us. New York pretty easy. We did [inaudible 00:44:21], some other business in New York, it right wasn't too bad.

Joe Taylor Jr.:
Can we [crosstalk 00:44:26].

Michael  R.:
Yeah that side of that and still a lot easier though to be there. If you have a place that is closer, we spend so much time on site and sometimes we bring other people. There is a problem, our customer is our customer, whenever they need help with, we will help them. They can ask us and sometimes we need to bring Aaron in or Dan or some of our master minds in other areas for a brain storm, whatever it may be, we are open to it.

Michael  R.:
We are not experts in the cable industry. We use cable TV but once we gave them certain other capabilities to store this data, then this is the fun part, what decisions do you make that will increase revenue, that will change your business? We had a brain storm here. What we do is we come up with ideas and send over to them, I know they at least appreciated that we did it. It doesn't cost them anything but we want them to be successful.

Joe Taylor Jr.:
I think that shows the added value that you provide when it's contract renewal time. Are they folks that add value and come up with great ideas? Or are they folks that just show up to type in the keywords?

Michael  R.:
What you are saying or implying is exactly what happens. That's what great about our business and that's what we do. The people we work for, they fight for us, that's what they want and there is obvious reasons why they want that and these has a lot to do with it.

Joe Taylor Jr.:
Great, Michael Rappaport, founder and CEO Chariots Solutions, thanks for joining us on The Build.

Michael  R.:
Thank you very much. It's was a pleasure.

Joe Taylor Jr.:
The Build is a production of 2820 Radio in Philadelphia, Pennsylvania. Our producer is Lori Taylor. Our associate producer is Katie Cohen Zahniser. Our talent coordinators are [inaudible 00:45:56] and our post production team is led by Evan Wilder. My name is Joe Taylor Junior, thanks for listening to The Build.

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