President, Chief Executive Officer & Chairwoman, PARSONS CORP
Carey Smith on sales, leadership and business
Carey Smith of Big Ass Fans speaks about sales, leadership and investing @inquisitorpodcast5450 #sales #sdr #bdr #business
About Carey Smith
Carey Smith, president, CEO and chairwoman of Parsons, said in a December 2024 interview that the company’s portfolio is “well aligned with the Trump administration.” She described Parsons’ federal business as a “purpose-built national security company” focused on cyber, electronic warfare, space and missile defense. Smith said the Department of Government Efficiency’s objectives of reducing cost, eliminating unnecessary regulations and improving government efficiency represent an opportunity for the company. She stated that removing regulations would allow Parsons to “move very fast” and get technology to market more quickly, and that the company could propose cost-reduction ideas such as using different business models “as a service.” Smith also discussed the company’s counter-unmanned air systems work, including capabilities to detect, identify, track and defeat drones, and noted that Parsons has been doing business in the Middle East for six decades, including a 50-50 joint venture partnership in Saudi Arabia. In a 2018 appearance, Smith argued that digital transformation requires integrating people, processes and technologies to deliver a secure environment, and that organizations that do not embrace digital technology risk being left behind. She said the federal government should adopt commercial business models such as licensing and subscriptions, and use shared services so agencies pay only for what they use. Smith also predicted that autonomous vehicles would significantly change infrastructure and services within a decade.
Transcript (27 segments)
✨ AI-enhanced transcript with speaker attribution
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Marcus Cowkey0:00
Hello and welcome back to The Inquisitor podcast with me, Marcus Cowkey. Today, it's a genuine delight to have Terry Smith. Would you mind giving us 90 seconds on your history and, in particular, why you can speak both as a sales leader and an investor?
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Carey Smith0:27
Well, when I got out of graduate school, I started working for a large insurance organization, which was disappointing. I realized I couldn't take orders from people with low IQs, so I started a business. Unfortunately, I didn't understand the product or the market. I started it in partnership with my father, which I don't recommend. I was very persistent, like a pit bull, and it took about 12 years to fail completely. During that time, I was forced to sell and wrote educational articles. I came across some guys in Southern California making fans for cooling cows and warehouses. They had sold only 17 fans. I suggested I could do a better job, and after a deal, I got the IP rights. From 2001-2002, we grew from 140 fans a year to tens of thousands. After 19-20 years, someone bought the business for half a billion dollars, which was fine by me.
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Marcus Cowkey5:25
Okay, so tell me this: when you got your check for half a billion, was that a life-changing moment? Or did it feel like a passing, sad loss?
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Carey Smith5:42
Yeah, to some extent, you imagine it's life-changing, but it gets very ordinary much quicker than you might imagine. There's nothing that I do that really changes, except perhaps flying first class or staying at the best hotels. But other than that, it's not like you threw out all your clothes and bought new ones. Even if you did, you'd be right back there. It's a discreet amount of money and doesn't make that much difference day-to-day.
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Marcus Cowkey6:39
What were the qualities that allowed you to build a business from essentially scratch to half a billion, because most founders don't make it through that journey?
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Carey Smith6:53
Well, part of it was that I was a little older and knew a bit about business from a previous venture. I tried to be very honest about how customers and employees felt. I saw myself in a fortunate situation and made sure to share it. I was a stickler for doing things right and fairly. If a customer didn't like a fan, I took it back and gave a refund. When we had problems, we solved them regardless of cost. I didn't worry about money; I figured if we did it right, it would work out.
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Marcus Cowkey10:10
I will, and thank you, but there's something deeper here because that's built on a set of principles and values. I'm really curious how you imbue that into the recruitment process and hiring people who share those values, and how quickly you can identify whether you've made a mishire.
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Carey Smith10:32
The hardest thing in business is hiring; it's a crapshoot. You can almost tell by someone's demeanor in the first few minutes. Even then, you make mistakes. I think allowing other people to hire for you is the beginning of your first mistake because alphas hire alphas, betas hire gammas, and so on. People hire their own image, only weaker.
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Marcus Cowkey15:29
Tell me this, because I'm really curious about this: as you are scaling, did you lead with growing your arts team, or did you let sales run ahead of itself and then find that you had to play catch-up?
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Carey Smith15:44
Probably the latter. I don't know how you do it otherwise. Sales is the sharp end of the stick; if you can't sell, it shouldn't exist. Marketing is simply sales writ large. We sold fans at a rapid clip, growing about 30 percent top line a year. When that slowed, we looked for other products. We were an engineering company, working on product iterations. This fed the machine we had built, which was a direct sales machine I was very proud of. We controlled everything. After 19 years, we had 85% market share and products twice the cost of competitors. We stayed on top by running the company well, with quality people and keeping our eyes on everything.
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Marcus Cowkey18:42
About 40 years ago, Milton Friedman came up with the great lie, which is that companies were there to serve speculators in the form of serving shareholder value, and that came first and above everything. As a result, companies have taken a deep and dark turn in the wrong direction, putting the customer at the end of a long chain of abuse as a forgotten afterthought.
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Carey Smith19:11
I really don't think Friedman thought that way. I studied at Chicago; it's not speculators, it's investors. From a business perspective, I know where you're going, but it mares the memory of Friedman to say that. What he was trying to say is that you have to have a target and a measurable trajectory. Serving employees alone is different. The best way to serve employees is by serving customers. By serving suppliers within a 40-mile radius for quality control, you benefit the community. Generating $300 million top line, the vast majority goes to the community. The easiest solution is to benefit customers; everything flows from that.
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Marcus Cowkey22:10
I couldn't agree more. I love the way you think. So let me bounce some ideas off you: I think compensation in the traditional sales operation is far too geared towards front-loading, so you pay a lot for winning an account and the salesperson keeps it for three months or a year. Most alphas who implemented predictable revenue models never read the end where Adam Smith says it's dehumanizing. And I suspect it's the same with me and Friedman.
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Carey Smith23:05
Thank you for schooling me on that. The real issue is that the customer needs to be at the heart of what you do, and employees need to be engaged. A study showed that high employee engagement leads to higher share price growth. How you created that culture with a flywheel effect moving decision-making down the chain: it's like kindergarten—share, play together. A leader must lead by example. I think of Boeing as an example where engineers no longer run it; finance does, and they have no feel for the product or customer. It's a byproduct of the economic system with the unholy rush for revenue. But this isn't true; it doesn't have to stay this way. I did it differently and was successful. If you're laying off people for the bottom line, that's what you get. When you, as a consumer, only care about price, you drive things to China. Chinese make products conforming to what finance guys care about, which is ridiculous. You don't have to do it that way; you can start a company and run it how you want.
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Marcus Cowkey28:26
I couldn't agree more. I'm not sure whether you were briefed—I'm a fractional Chief Revenue Officer primarily, working in strategic alliances management, enablement, and sales optimization. What I'm doing all the time is trying to work out how we can make sales a force for good, and we've established a community to discuss difficult questions, which is what this podcast is feeding.
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Carey Smith29:03
Oh yes, we were very collaborative. The whole bit about people working from home is complete bullshit if you're not just coding or writing. Teams can't work if they're not together. In engineering reviews, I had people from all over the company—IT, production line—to get diverse perspectives. In terms of diversity, we hired the absolute best people from all over the world: Ukrainians, Africans, Australians. Imagine hiring an Australian—that shows how diverse we really were.
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Marcus Cowkey31:14
This has been a really fascinating conversation, and unfortunately, we're coming close to the end. I'm really curious about the blind spots that your team helped you to identify.
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Carey Smith31:21
I think my blind spot is that I have a tendency to defer not, but I have a bias towards people that are intellectually aggressive, and sometimes that's the salesman selling the salesman. I have to be very careful of that, and that's where a great team helps because they're not as susceptible. In terms of investing, I'll be taken by the approach of a specific entrepreneur who grasps the problem, approach, and market. But it doesn't necessarily mean they know how to run a company. Being a business starter and an entrepreneur are two different things. When investing, you have to look at who's running the company and how they're running it. If they're overly concerned with the bottom line, it doesn't get far with our worldview.
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Marcus Cowkey34:29
So how important is it to have friction between the investors and the investees in order to come up with better outcomes?
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Carey Smith34:45
I don't know. Without friction, you've got nothing. Nothing happens with no friction. But it would be amazing if you could find someone who takes your advice. I'm pretty sure I wouldn't take my own advice if I was 30 years younger, so I can't blame others. Friction has its place, but conflict on a personal level is never good. It's difficult because you're talking about another set of people who are basically autonomous, and they're young, confident, and don't roll over easily. What it takes for success is exactly what holds them back, like it did for me. It's a yin and yang.
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Marcus Cowkey37:03
So help me understand this then: it must be really important as you're starting to build a business that's in the hundreds of millions to have a good, reliable number two. How long did it take you to find a good CEO or a CFO or whoever your number two was?
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Carey Smith37:18
Actually, I think one of my feelings was I didn't, and I recognized that at some point you have to recognize that you need a number two. I didn't fully recognize that until about 15 years. Because of the way we ran the business, I hired a lot of very young people that I trained. Hiring older people is hard because they can't change. Younger people you can train because they're indoctrinated. This kept us live in terms of products and approach, but it meant we didn't have middle management. For a partner in the business, I worked with several people, but they weren't the right people. There were people in various departments that I had more respect for in terms of their thoughts on the business, and I worked with them more closely. So I did a terrible job at that.
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Marcus Cowkey39:32
All that, there are two things that came through my mind that I want to finish on. The first one is that in terms of when you face a problem, it sounds to me like your natural instinct is to lean into it rather than lean out. That's business, right? So again, in terms of the people that you surrounded yourself with, presumably that's a critical quality that all of them would have to have at the senior leadership level.
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Carey Smith40:06
Agreed. Because what do you need people for? You don't need yes men; that's not doing you any good. If you can't tell me something I'm doing wrong, I don't need you. That takes a leader who is willing to be vulnerable. I think if you're honest with yourself and your business endeavor, you recognize there's no way you could get it right. The times you thought you always had the right answer fall away quickly. You have to recognize that other people have ideas that are sometimes much better than yours. You have to probe and make sure they understand you want to hear that, and if it's wrong, so what? You can make a mistake. I think that was helpful for us: the recognition by most people in the company that making mistakes didn't count against you. What counted against you was not collaborating. If you made a mistake on your own, you were in trouble. If you made a mistake and talked about it with others, and everyone was on board, then it's not a mistake; it's just something we know better.
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Marcus Cowkey41:39
Okay, this has been really fascinating, so I'm gonna end on the crescendo question, and I'm really curious to learn your answer to this one: what's the best you've ever seen when it came to sales when you were the buyer? What was the experience like, and why were they so stand apart?
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Carey Smith42:02
When I was the buyer, I don't know. I think when you feel that the seller is at the same level as you in terms of understanding the problem, if they don't understand your problem, they can't offer a solution, and you're piecing things together on your own. With a good salesman, that shouldn't be the customer's job; the salesman should present the analysis of the customer's problem and solve it. From a customer's perspective, when I feel that's happened, I feel good about it. I can think of several things: we bought a 3D printer at the company long before they were popular, and I felt good about that and the salesperson. We bought gearboxes from a supplier that charged three times what others charged, but I knew the German family, and they built a plant 30 miles away from us. We designed a gearbox with them because they put all their engineering at our disposal. That gearbox never failed; it was the best, saving maintenance and engineering costs. The suppliers are incredibly important; they know their product better than you. If you treat them like real people, they can do wonderful things. It comes back to treating everyone the way you'd like to be treated.
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Marcus Cowkey47:06
Carrie Smith, thank you. This has been really eye-opening and very, very informative. Thank you. Well, thank you, Marcus. I appreciate your time. How can people get hold of you? The email is the easiest way, and that would be Carey at unorthodoxventures.com. Excellent, Carrie Smith, thank you very much. Thank you. So this is Marcus Cowkey signing off once again from The Inquisitor podcast. If you've enjoyed this, then please like, comment, share, and subscribe, and also tag somebody who would benefit from listening to Carrie's story. There's a lot to unpack here, and if you're a leader or a founder, there's a hell of a lot of value here in paying attention to what Carrie values the most. And if you want to get in touch with either him or me, then my email is [email protected]. In the meantime, stay safe and happy selling. Bye.