Ray Kruck of Tugboat Logic

    We Spoke to Ray Kruck of Tugboat Logic on Being an Effective Leader During Turbulent Times

    As part of my series about the “Five Things You Need To Be A Highly Effective Leader During Turbulent Times,” I had the pleasure of interviewing Ray Kruck, Founder and CEO of Tugboat Logic Inc.

    Ray has a 24+ year enterprise security career with executive leadership roles in Corporate Development, Marketing and Sales at several leading firms, including Check Point Software, Proofpoint, Websense, and Voltage Security. In 2011, Ray co-founded Nexgate with a breakthrough platform to help brands discover, monitor and secure their brands social presence. Nexgate was acquired by Proofpoint (NASDAQ: PFPT) as their largest acquisition in 2014. Since Nexgate, Ray co-founded Pointgrey Partners an early stage venture investment firm focused on deep technology plays that drive competitive disruption in the enterprise and life science markets. Ray enjoys mentoring other startup ventures with his participation as an Associate in Canada’s leading technology venture mentorship program — Creative Destruction Lab. In 2017, Ray founded and became CEO of Tugboat Logic Inc, a security assurance platform that leverages advanced technology and embedded guidance to automate and simplify security management. Tugboat Logic helps clients prove compliance and transact more effectively. To date, the company has raised over $15M in venture capital and leads its market with more than 400 enterprise clients, over 20 strategic audit and solution partners worldwide.

    Thank you so much for your time! I know that you are a very busy person. Our readers would love to “get to know you” a bit better. Can you tell us a bit about your ‘backstory’ and how you got started?

    I started my career in enterprise security over 24 years ago after completing my MBA at the University of British Colombia in 1992. I began as a product planning manager at BMW, and since then have taken on executive leadership roles in corporate development, marketing and sales at several leading firms, including Check Point Software, Proofpoint, Websense, and Voltage Security. In 2011, I co-founded Nexgate with a breakthrough platform to help brands discover, monitor and secure their brands social presence. After Nexgate, I co-founded Pointgrey Partners, an early stage venture investment firm focused on deep technology plays. Then, in 2017 I founded and became CEO of Tugboat Logic Inc, a security assurance platform, which is my current role today.

    Can you share a story about the funniest mistake you made when you were first starting? Can you tell us what lessons or ‘take aways’ you learned from that?

    I was in the midst of a seed investor pitch, describing how happy our early customers were with our product and how we were seeing some short sales cycles where the customer commits at the end of the product demo. Just as I finished that story, a Slack notification popped up on the screen and it was a note from my team that the customer I just referenced wasn’t happy and might want their money back. The lesson learned? Turn off all notifications and communications during an investor pitch. The moral of the story — while I felt like an idiot, the investor thought I was being transparent about our business and invested anyway.

    None of us are able to achieve success without some help along the way. Is there a particular person who you are grateful towards who helped get you to where you are? Can you share a story?

    My wife, Jennifer Vancini, is definitely a key part of my success. I think every entrepreneur’s spouse should be listed on the cap table of the venture as an investor — both in human capital and opportunity cost for their sacrifices. They take on an unequal burden many times, especially when raising kids. I’m especially lucky that Jennifer is a venture capital investor; having a sounding board with domain knowledge, understanding and an empathetic ear has been invaluable. There is a particular wisdom that comes from your significant other’s perspective on a problem. For example, my co-founder and I were arguing over the name of the company but we both wanted a tugboat as the logo. My wife peeked over my shoulder one day and said, “just call it ‘Tugboat something’” and that was it. There have been several moments of simple clarity like that along the way that helped me reset my thinking on a problem and find a path forward.

    Extensive research suggests that “purpose driven businesses” are more successful in many areas. When your company started, what was its vision, what was its purpose?

    Every company is now regulated, cloud-enabled and dealing with privacy concerns from both their customers as well as the government. With this, I saw how valuable proving security and compliance to customers and partners can be for businesses.

    Emerging growth companies are looking to capture the fruitful demand in the SaaS economy, but often their GTM is challenged due to lack of resources and customer skepticism in their security and compliance postures — a frequent hurdle to closing new business, particularly for SMBs. This phenomenon has brought partners and customers to ask for proof of vendor trustworthiness requiring third-party security attestations such as SOC 2, ISO27001, GDPR and PCI DSS.

    As a result, the vision for Tugboat Logic was to fill this gap by providing an assurance platform with integrated solutions that simplify and automate security operations. Users can develop an infosecurity program, execute risk assessment, audit IT infrastructure and build reporting channels to deliver proof of compliance.

    Can you share with our readers a story from your own experience about how you lead your team during uncertain or difficult times?

    This year has definitely been a heck of a test of leadership in uncertain times. We had a good first year of sales in 2019 but I wasn’t 100% sure whether we were lucky or smart. As we planned for 2020, I set another audacious sales goal and said we would 5x the business. I was determined to raise money quickly and needed to set a valuation benchmark based on future revenue. My sales leader balked at the massive goal increase (rightly so) as we had just finished a year that took so much effort to get to our first $1M in ARR, so how could we possibly do 5x? Thankfully my leadership team is data-driven, and our sales leader always leans on statistics and metrics for planning purposes. So, once we broke down the goal into smaller steps and focused on lead development activities, conversion rate optimization and what was working, the audacious goal didn’t seem so unachievable. We started 2020, then COVID-19 hit. We held our breath in March and April and thought for sure the year was toast. However, we accelerated A/B testing on marketing programs, messaging, sales plays and focused on just getting anyone to talk to us before we worried about closing sales. The process of trial and error, experimentation and constant measuring made all of the difference. When the macro environment is in a downward spiral, you look inward to what you can control — team tactics, intensive customer and partner listening and getting deals done in any way you can.

    Did you ever consider giving up? Where did you get the motivation to continue through your challenges? What sustains your drive?

    I’ve never given up anything I’ve started, except when I can’t see any other path forward. My motivation is savoring the moments of another customer win and the momentum that brings. I know how hard it is and what it takes to make a living “carrying a bag.” I also love watching my team grow and learn with me in our journey. Most of our executive team are first time leaders for their function and I couldn’t be prouder and more excited for their accomplishments and growth as individuals in tandem with the success of our company.

    What would you say is the most critical role of a leader during challenging times?

    Executives need to recognize and reward consistently, and proactively reach out to people regularly to maintain a sense of teamwork and community. One area that is important to maintain is having shared responsibility and sacrifice. Building personal connections and relationships from leadership down and from team up are key to a healthy corporate culture and is imperative to moving forward through challenging times. A tenet we try to embody is to acknowledge team members who are open to sacrificing their own achievements if helping another person advance will benefit the company as a whole.

    When the future seems so uncertain, what is the best way to boost morale? What can a leader do to inspire, motivate and engage their team?

    From the companies’ perspective, a couple of key activities and attributes that must be made available to support the health and happiness of the team — particularly through remote work. The first is consistency in applying performance measurement and KPI expectations. The leadership team needs to establish equal opportunities for growth and advancement regardless of location. Additionally, we emphasize the importance of making every effort to over-communicate and share expectations throughout the organization, ensuring it will reach every team member.

    What is the best way to communicate difficult news to one’s team and customers?

    First of all, clarity is key. Developing and documenting clear, agreed-upon roles and responsibilities, and a common set of procedures and policies will free you of unwanted surprises. That being said the second point of emphasis would be to communicate (whether this is expectations or bad news) with empathy and respect. Leaders owe employees honesty and respect, especially in times of difficulty. Building empathy is a daily effort, but creates a healthy work environment and can ease the process of communicating bad news.

    How can a leader make plans when the future is so unpredictable?

    In uncertain times, organizational resilience can make or break your business. As we’ve seen this year, obstacles like severe travel restrictions can make resilient infrastructure that facilitates remote teams and business continuity a lifeline for many. Leaders must build organizations that are self-sufficient with resources, support and decision-making capacity to prepare for turbulent times.

    Is there a “number one principle” that can help guide a company through the ups and downs of turbulent times?

    Apart from organizational resiliency, one key piece of advice is to implement cross-pollination. Leaders should actively develop and assign key leadership roles equally across your organization regardless of location, which will by default also feed into the strength of your resilience. Ensuring that a cross section of employees is involved in candidate reviews will reinforce confidence in team development.

    Can you share 3 or 4 of the most common mistakes you have seen other businesses make during difficult times? What should one keep in mind to avoid that?

    1. Not shedding cost fast enough. A smart operator should always know who the A players are that you can’t live without or what your core customer value is and how you deliver it. That is your core. In a rapid downturn, you need to determine what your decision triggers are (revenue falls by xx% month over month for example) and what you can live without and still sustain revenue. You should know where your strategic vulnerabilities and where your most critical assets are in your organization (data, people, install base, whatever). Protect your critical assets and cut everything else that isn’t helping you sustain your revenue, or keep clients — such as marketing, administration, sales development, executive pay or executives themselves. To save money in our early lean days, I slept in a cot in our Calgary office when visiting the team. It wasn’t the most comfortable sleep, but I needed everyone to understand that sacrifice was being shared by everyone.

    2. Not changing the business model fast enough. During COVID-19, we had to rapidly evolve our deal structures, pricing policy, renewals pricing to ensure we could meet the customer and their ability to pay. We took the long view with our clients and sacrificed some revenue retention in favor of keeping the revenue at all and investing in our clients’ success with more service and feature development. For us, it costs about three times as much to win a new customer than it does to keep an existing customer.

    3. Not listening to your team. When a company is in crisis, the gravitational pull can often be to the center of decision-making, where the CEO can often feel alone in making critical decisions. Since the inception of the company, we’ve faced several difficult milestones and needed to place bets on our future. In many cases, the genesis of the moves we made were initiated by leaders across the company who had the confidence to speak up and advocate for an idea.

    Generating new business, increasing your profits, or at least maintaining your financial stability can be challenging during good times, even more so during turbulent times. Can you share some of the strategies you use to keep forging ahead and not lose growth traction during a difficult economy?

    As aforementioned, shedding costs and changing your business model are two key action items to maintaining financial stability. Recognizing and protecting your critical assets is crucial when encountering financial difficulty, along with the ability to shift your business model to meet rapidly changing needs of customers and clients.

    Here is the primary question of our discussion. Based on your experience and success, what are the five most important things a business leader should do to lead effectively during uncertain and turbulent times? Please share a story or an example for each.

    1. Over communicate. During a crisis, the CEO and their leadership team need to be aligned on purpose and resolute on execution focus. Repeat your goals for the team, often and ad nauseum. Let everyone know what the path forward is, how you’re doing against those goals and encourage, support and encourage again.

    2. Lead by example. If required, the CEO should be the first to sacrifice salary, put in the most hours and take on as much of the admin burden while the frontline teams are focused on delivering results. Too many CEOs feel like they can’t show weakness or concern for fear it will freak out the team. I think you need to be honest about a situation, face it head on together and show you are willing to be authentic about your intentions for the business.

    3. Trust your team. I work hard to earn the trust of my team by being honest and humble. I think teams only reciprocate trust when they feel and see that you have their best interest at heart.

    4. Connect with every employee. When times are tough or uncertain, employees will naturally be concerned and anxious. They need to hear from the CEO and often times they need to see the CEO, one-on-one and in an intimate setting to foster sharing, openness and a direct connection.

    5. Show empathy and respect. Employees deserve honesty and clarity from their leaders, particularly when things are not going well or if you’re in crises. You will get the best out of people when you give them the space to step forward with confidence and address their concerns about the future and discuss why you are optimistic that things will get better. The best time to build empathy is not when times are bad but when the business is doing well. I work on building empathy capital in my organization every day.

    Can you please give us your favorite “Life Lesson Quote”? Can you share how that was relevant to you in your life?

    Maya Angelou said, “Life is pure adventure, and the sooner we realize that, the quicker we can treat life as art.”

    I come from an artistic family and have come to appreciate the creative process of being highly aware of the world around you. My steady-state is to be a wanderer and explorer. My wife and I love to travel, as we are both curious by nature and want to learn about other places and people. Being a CEO is definitely an adventure and “treating life as art” means to me that you listen to your heart, trust your instinct and share your journey with others.

    How can our readers further follow your work?

    Readers can follow by work through my blog here: