Tag: the boutique

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Episode 134 – How to Capitalize on the Shifts in Labor Cost Across the Globe – Member Case by Satyam Kantamneni

Offshoring, or Nearshoring, is a proven method for founders to earn more. However, in a post pandemic world the acceptance of remote work has increased, and this has had a profound effect on labor costs across the globe. On this session, Collective 54 member Satyam Kantamneni shares how the cost per hour shifts by location, and how to take advantage of the opportunities being created.

TRANSCRIPT

Greg Alexander [00:00:10] Welcome to the Pro Serv Podcast, a podcast for leaders of thriving boutique professional services firms. If you’re not familiar with us, Collective 54 is the first mastermind community dedicated to the unique needs of founders of boutique pro serve firms. My name is Greg Alexander. I’m the founder and I’ll be your host today. On this episode, we’re going to talk about how professional services firms can improve their margins by leveraging a global workforce. And this is a topic we’ve discussed in the past. However, there’s some interesting dynamics that are happening different places across the world, and I wanted to bring an expert on and have him give us an update on what’s happening. So we do have a role model with us. His name is Satyam Catalini. I hope I got that correct. Satya, it’s good to see you. Please introduce yourself to the audience. 

Satyam Kantamneni [00:01:14] Awesome. Thanks for having me, Greg. It’s a privilege. Yeah. And I run a boutique design firm or UX design firm based out of Pleasanton, California. But we have presence in Colombia and India, so it’s kind of fascinating to have a conversation on this site. 

Greg Alexander [00:01:32] Yeah, very good. So let’s start there, if you wouldn’t mind. Maybe compare and contrast the the labor cost for those that would be employed by a professional services firm in the U.S., in India, in Colombia, since you’re operating in all three geographies. 

Satyam Kantamneni [00:01:50] So I think before I kind of come into contrast those numbers, I would probably break it down into maybe two categories. Okay. I would call it the knowledge worker category versus the back office category. 

Greg Alexander [00:02:01] Got it. 

Satyam Kantamneni [00:02:02] So the knowledge worker category is where we plan, which is people are directly engaging with clients and driving staff and are being paid as experts rated where they are in the globe. So when you look at and both of them have a very different labor structure, both in terms of cost training, grooming, everything else that goes to it. So I can at least share with you very quickly in our context, when we talk about the knowledge workforce, we actually a dollar in India, that means for labor cost translates to a dollar $0.40 and Colombia translates to about $3. In the United States. That means for the same talent, I pay $3 in the U.S., I pay a dollar in India and dollar 40 in Colombia for knowledge for workforce. That number changes significantly When you are looking at back office fare, you know, it’s basically a dollar in India, it’s a dollar in Colombia and it’s about $4 and in the United States. And just because it’s cheaper in India and Colombia, when you look at back office where there’s no direct working with any of the stakeholders. So that’s kind of what I would kind of on a high level to kind of share with you some numbers on that side. 

Greg Alexander [00:03:20] So very interesting. I’m already thrilled that you’re here because I was not distinguishing between the knowledge worker in the back office, and that was a mistake in my behalf. And I understand the distinction and it’s an important one. You know, it strikes me jumps off the page if we use your metrics here, that in the U.S., it’s three bucks for knowledge work and $4 for back office. That seems upside down to me. So if I’m understanding that correctly, the knowledge worker in the U.S. is making less than the back office worker in the U.S.. 

Satyam Kantamneni [00:03:52] To a large level just because the labor cost is much lower in India and in Colombia. Right. So that’s why the ratios are. So again, if it’s it’s $80,000 to get the Senate contract and nine states, you can get that for 20,000 in India. 

Greg Alexander [00:04:08] Okay. 

Satyam Kantamneni [00:04:09] Right. Whereas it’s much more expensive to hire knowledge workers outside the country because remember, the variables that are on language, Colombia is not always bilingual. So you got to pay a premium for that. Again, if they have to kind of be an expert so you pay a premium for knowledge workers when you’re outside, but still it is cheaper. 

Greg Alexander [00:04:30] Yeah, makes sense. Okay. Very good. And it’s nice to hear how it’s dimensionalize. Language is one of the dimensions. Now, from what I understand, the labor market, the talent market for knowledge work offshore is tightened a bit and that these costs are changing in these different geographies. I’d love to hear about that. Maybe how that’s changed over the last, I don’t know, three or five years. And then also, I’d love for you to project out, at least to the best of your knowledge, where you think that’s going. 

Satyam Kantamneni [00:05:00] So the interesting thing that I would say we are starting to notice in the post pandemic, the labor markets are actually rationalizing very fast. And I say that because and I’ll give you an example. In Colombia, for example, people are directly hiring. In Colombia, they are willing to pay a premium for that. And especially with this whole remote working by mindset, people are like, If I was just going to hire somebody who’s going to work, you know? We are in terms of time that I’m gonna be like, um, I don’t, I just cross the border and then hire somebody in Mexico and Colombia. So that just a bit changing a lot and that so when we started the process with Colombia, the ratio between India and Colombia was only one is to 1.2 and it inflation eased because of this, because people are directly willing to care about somebody in Colombia and or in any of the negotiating facilities and bring people in. So that’s changing and I continue to see that happening. It looks like, you know, even in your team you have people and to the country and that’s what’s happening. People in the United States are relocating to other parts and then they are willing to take a little cut, but not too much because they’re still being paid for their impact. So I see five years from now, this will normalize a lot more If you’re looking for finding lottery talent. And that’s another differentiation I would make as lateral talent is going to get be more and more premium, you’ll still see a variance between hiding in the United States with other just because the cost of living is different. But for a good talent, you start not to start normalizing, but for entry level talent, it’s a totally different game store system. And then I think that is where the value is, where if you kind of have a good grooming system, if you have a good way to kind of onboard people, you can continue to keep those margins pretty high. 

Greg Alexander [00:06:55] Yeah, it’s a great lead into my next question. I understand that your firm UCS Reactor has a fantastic way of hiring an entry level developer in them, grooming them over time. So please share that with the audience. How are you doing this? 

Satyam Kantamneni [00:07:09] So I come from a military background. Right. And then and so. And one thing that the military and most professional military still really well, as they groom people, they select people on aptitude and attitude. They drill them well with techniques and then better what they are at the fighting force. They all have the same language and the same structure. The same applies to us. So irrespective whether somebody is in Colombia, somebody is in India, somebody is in the United States, they all have the same vocabulary, the same structure, the same process. There’s no inconsistency between how things are done. So that is the foundational, I would say, structure to make that happen. That means you have to kind of select people on the same variables of aptitude and attitude. You kind of run them for the same variables. You drill them, you coach them in the same aspects. And the best part of this also becomes the camaraderie because everyone’s gone through the same drill and because the back office model has always been structured around the high end work is done by someone else, the low end work is done by someone. So that’s a different mindset and I think that that works well. That’s how most of the offshoring has worked and it has its own, you know, a benefits being. You can run a 24 hour cycle, especially if you’re working at halfway around the world. But I can obviously knowledge working side that is is a big factor that’s continued to kind of allow us to thrive. So when you take and for that to happen, you need to have a good relationship with that in your intake processes like with the universities. But where we are bringing up talent and how do you select them, how do you groom them? So that’s what we’ve been doing really well. And once that system is in the rhythm, the supply side of talent keeps going on. And the good thing is, you know, three years down the line you will have people are three years and then you have four years of learning for years and tenure that the pyramid of people will start and yet that attrition happens. You’ll still treat in a good model of people coming in again, very much like the military. And then everybody is a mentor and everybody’s a mentee and it just continues to be a nurturing system. 

Greg Alexander [00:09:11] Yeah. So let me ask you about the mentor mentee, and I’ll use myself as an example just because the people that are listening to this are members and they can resonate with that. So we we have partnerships with universities, two in particular, Baylor University and TCU here in Texas. We’re based in Dallas and those are schools around us and we’ve partnered with their career development office and we’re bringing young talent in and we’re screening for aptitude and attitude. It’s making me feel good to hear you say these things. And then we’re, you know, we’re growing these people over time. The strain that that does put on the system is that, you know, the quote unquote, senior people now have to, through the apprenticeship model, they’ll have to help groom the young people. And we run into some resistance there, not only inside of our firm, although that’s modest. But when I share this idea with others, the sometimes the founders of these firms say, no way, I don’t want to be running a daycare center. I just want to hire very senior people and not have to deal with all this. I think that’s a mistake. I think a talent supply chain is mission critical to scaling a boutique processor firm. But what would your response be to someone who might share that concern? 

Satyam Kantamneni [00:10:19] It’s getting. If I had. The opportunity to hire everybody who’s lateral, everybody who’s motivated, everybody’s enthusiastic. Absolutely. But as we all know, as people get more tenure, there are different things that can motivate them. And, you know, they they’re happy coaching, but they’re not happy doing. And so when you start looking at doers and there’s a lot of that that’s needed and especially outside of work and people are excited about being a new client and so on and so forth, there is a benefit of having hyper enthusiastic folks. That’s why I read General is not coach and they know holding the gun right there. So there’s also everybody has a role there. Now, to your point, you know, it’s all coming. It comes down to having a system, a system that’s in rhythm. And the system here as it and we run something called a skill based system that means and given that we work in a construct of what we do as a profession, you know, it goes all the way from an entry level, you know, a designer to a chief design officer in a company. So it’s a profession all the way. And so the skills of Chief design officer has a very different set of skills and an entry level has a different set of skills, is we teach skills and teach. And that’s the thing where we don’t need a senior to teach someone how to work. Let’s say, for example, do a competitive analysis. There’s there’s methods there. There is watching videos, there’s artifacts there. So a lot of that is already out there for them to get to 0 to 80. And and again, with people the right attitude and attitude. This is a generation where you can sit on YouTube and learn coding over the weekend and then code something. I mean, if you have the aptitude and attitude, you can do a lot of things. You just enable that. 

Greg Alexander [00:12:01] Yeah, I’ve been blown away by how capable this generation is, I think, and I might be getting this wrong, but I think they’re called Gen Z and they come after the millennials. Millennials who got a bad rap, maybe rightfully so in some cases. But the Gen Z, the the let’s call it the newly minted undergraduate up to maybe, I don’t know, 25, 26, 27 years old. It’s been miraculous of how capable they are. And for the things that you just said, I mean, they grew up, you know, this way, doing things this way, right? Instead of coming to you with every little question, their first thing is to go to YouTube and try to figure it out on their own. So and I share that with members just because I think maybe sometimes our members have a misconception as to what this really is. You’d be surprised at how self-reliant and how capable this group is. All right. Well, I’m sure we could talk about this forever. We try to keep these podcasts short. We will be having four members that are listening to this, a Friday role model session with Santa. Look for that meeting invite. This will give you an opportunity to double click into this and much greater detail and ask direct questions of Satya and he’ll share more and more of his knowledge with you on that. So that’s my call to action for members. Look for that invite. If you’re not a member, I would encourage you to become one and you can do so at collective Fifa.com fill out a form and one of our reps will call you as an inspiration to me. Just heard it’s three or 4 to 1, you know, in some of these countries. So if you’re a boutique processor firm and you’re not tapping into the global talent supply chain, that in and of itself is a reason to consider joining. And if you’re not ready to join, but you want to read more about the types of topics we discussed in addition to this one, I would point you to our book. It’s called The Boutique How to Start Scale and Sell the Professional Services Firm. You can find it on YouTube. Satyam, thank you for coming on the call today. I always enjoy our chats. Glad that they’re happening more frequently and thanks for contributing to our collective body of knowledge today. 

Satyam Kantamneni [00:14:01] Absolutely. Thank you for doing that great stuff and collect it for people. 

Greg Alexander [00:14:05] Okay, very good. Have a good day. 

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Episode 133 – From Stuck to Unstuck: How a Founder Transformed a Lifestyle Business – Member Case by Jamey Harvey

Collective 54 member Jamey Harvey has doubled revenue and tripled margins in 18 months. This session shares how he did it by implementing the Boutique Framework, in its entirety, instead of one idea at a time. Hear how this remarkable entrepreneur went for it and won.

TRANSCRIPT

Greg Alexander [00:00:10] Welcome to the Pro Serv podcast, a podcast for leaders of thriving boutique professional services firms. For those that are not familiar with us, Collective 54 is the first mastermind community focused entirely on the unique needs of founders of boutique Pro Serv firms. My name is Greg Alexander. I’m going to be your host. And on today’s show, we do something a little different. Normally for regular listeners, listeners, you know this we take a single topic and kind of dive deep on it with the objective of, you know, makes making the most of a short 15 minute show. Today we’re going to combine multiple things and we’re going to have a case study of sorts. And it’s not a case study in the sense of, you know, hey, look how great we are. I’m not a fan of those. It’s a case study in the sense of, hey, members, here’s how to get some of these ideas implemented. I hear sometimes from members that the ideas are getting from Collective 54. Great. But there’s a lot of them, you know, And how do you get them implemented? And we’ve got a great role model in Jamey Harvey. And Jamey has done, in my opinion, the exceptional job of going from idea to implementation in a nanosecond. And he’s learned a lot in the process and has gotten some great results. So that’s what I’m going to do today. So, Jamey, if you wouldn’t mind, please introduce yourself and your firm to the group. 

Jamey Harvey [00:01:35] Yeah, great. I’m Jamey Harvey. I’m the CEO of Agilian. We are a boutique consulting firm. We serve social equity enterprises and we provide digital liberation services. So basically we work with enterprises that are serving social equity populations, vulnerable populations of people that are that need housing, where jobs or health care. And we help those organizations move to 21st century open source cloud based digital platforms. Most of them are stuck on something developed in the seventies or eighties, and it’s very, very complex for them to move because of their regulatory environments. And and it’s our privilege to help them do that. 

Greg Alexander [00:02:24] Okay, very good. So I’m going to kind of tee up some statements as opposed to questions, and I’m to let you run with those to, you know, to really illustrate. And I really want you to focus on this idea of how I idea to implementation. 

Jamey Harvey [00:02:37] Okay. 

Greg Alexander [00:02:37] So the first one is you got everybody billable. And as a result of this, you saw a growth in profits and revenue. So tell us a little bit about how you did that. 

Jamey Harvey [00:02:50] Well, a little background. You know, I would say a year and a half, two years ago before I joined Collective 54, we were sort of a lifestyle business serving state and local governments, and we were kind of trapped in our locality because I used to work for the D.C. government and we were a local DC cover company. And the regulations are such that we’re very advantaged to work in D.C. and not very advantage to go to other states. So we had sort of a digital liberation problem ourself and and I was trying to I was like I was like, okay, this business is nice, is great lifestyle business, you know? And it is we love what we do and we’re really good at it. But like, if I looked at like, how I could grow the business, it was all pretty unappealing, right? Like the, the, the, the paths. I could become a federally grader like this. Well, I go to the States. I’d have to, like, recuperate to do that was it was it was not great for growth. And so I was looking for a way to have a great business and a business that’s built to last have something generational that I could pass on to other people and could make a big difference for a long time. And and like 54 reached out to me and was like, Hey, we have this with this mastermind group. This is what we do. And you couldn’t have picked a better time for that because I was I was trying to figure out how to transform this whole business to be something special. Right? And we were going we tend to win projects. I would say we kind of box above our weight class and we had won a lot of quite large projects for a company our size. And and I have sort of a machine here that, that where I can do those projects. And I was trying to figure out how to grow enough to do these big projects. At the same time I was doing the projects. So I had invested a lot in infrastructure like infrastructure in people like Ausiello and CIO, and I brought in a professional services automation system, a PSA based on your guys recommendation. And we had made all of this investment and we we had a really good year. We doubled in size, you know, last year. And but our profitability went way down, like with, like, like we had a we had doubled in size and we made the same amount of money. So our profitability was cut in half. Right. And and it was a little you know, I knew we were investing. It wasn’t that big a shock, but it was a little startling. So. Something that I had done that I didn’t know was so useful was I had hired these kind of multi potentia people that had really great skill sets that other than what I was having them do. So like my VP of program management is built, you know, three giant government data warehouses and he’s a real expert in that. And my field is used to be the past president of the D.C. Bar and my Chief medical informatics officer ran interoperability for all the hours in the mid-Atlantic region. So I basically went to them. And those were people who are mainly not billable, who are sort of central people. And I was like, Look, you’d be great consultants, you know, like our customers would love you, you know? I know I didn’t hire you for this, but are you willing to get billable? And to a person, they were all like, Of course. Oh, my gosh, we’ll do it. Do anything. Right. And so we we really, like, took oh, and then I had another person who was like, less senior who wanted to learn to be a project manager, like she wanted to get her PMP, like she was sort of interested in the consulting path. So we re-engineered everybody’s jobs and we got everybody on the senior team, with the exception of one person, at least half billable, and some people, you know, like 70 or 80% billable and with the hope that that would be kind of the best of both worlds and also give us some flex as we as we take on these large projects, we could get the billable. And then, you know, if we’re doing the next lengthy, we have the feast and famine thing going on for right. So now everybody can flex to being billable when they when, when, when there’s billable to be had. Right. And they can go back to their other jobs in between to go build the business. 

Greg Alexander [00:07:16] Otherwise, yeah, it’s a great story because sometimes that’s a mistake that members make is, you know, they invest in the future, which we advocate for, and then all of a sudden they’re like, Wait a minute, revenue looks great, but margin doesn’t. It’s because they got all this non-bailable stuff. So the lesson there for the members is to get everybody know. 

Jamey Harvey [00:07:33] And we made that mistake, right? And so this was the correction of it. Really? Yeah. 

Greg Alexander [00:07:36] Yeah. Okay, great. All right. The next thing I want to talk to you about is the seller doer model and how you moved to that. 

Jamey Harvey [00:07:45] So you at one point in one of your podcasts were like, you know, don’t just go out there and hire a salesperson. You can hire the best salesperson in the world, and if you’re not ready to do it and you don’t have your positioning right and you haven’t, you know, that’s not going to work, right? Like you’re going to just bring that person over and they’re going to been successful someplace else and they’re going to fail at your company. So I did that. You know, I, I brought in an incredible executive from Oracle and like we and he was great and he fit the like he worked really hard, but we had no presence in the market, right? Like we had no story about who we were. We had no differentiation. And so, you know, eventually we you know, we had this very sad conversation of like, you know, we love you, we think you’re great. And like, we weren’t ready for you. Right. And parted friends, you know, And but but basically the conclusion I came to and then then I, I had done all the selling before, and then I went back to doing all the selling again. But the conclusion I came to was for the kind of complex, you know, big. Digital liberation kind of engagements that we’re selling. It’s very hard for somebody to sell that that hasn’t done it right. Like if you’re in front of customers and you don’t know the regulations around the cards for interoperability, when you’re talking to people who are doing that, they smell that right away. Right. Like, they don’t really want to talk to any salespeople. Right. So all of this sort of multi potential people that I was talking about before got I hope that’s a word as I’m saying it on a podcast, but it is now. Okay. Now, right now what we do is, you know, they they all went to their rolodexes. We, they all. Went through the Rolodex, sorted through, found all the social equity enterprises where they’ve got relationships and and I’ve been coaching them in a in a consultative sales model. So they’re selling doing right And when we get leads, if they’re in the medical area, they go to Ross Is that the medical person? If they’re the legal area, they go to Anna maria, who’s my you know, so we actually have these we’ve we’ve organized by vertical and people. Yeah, right. And so what’s great about that is I actually you know and they just bring me in to close the sale sometime or make the introduction like I’m I don’t have to be that involved because when, when those customers are talking they really want to talk to those people. Yeah right. I’m, I’m the generalist compared to those folks. Right. So I’m the generalist and they’re specialist and, and they can close the deal by themselves. Yeah. 

Greg Alexander [00:10:27] Just another great example because you know, I’ll hear from members, hey my delivery people and I hate that label but that’s term this use they don’t want to sell you know I can’t get them to contribute to the growth of the company. And the answer is you can’t. I mean, this is how this is how Jamie just did it and everybody was responsible for finding opportunity. And then the selling environment, as you just heard from from Jamie, was it was a collaborative one. He was involved when needed, but not at all when not needed. And that’s how you do it. And that’s called the seller door model. So if you’ve tried investing in the high powered, you know, senior exec sales person and it hasn’t worked, this is the alternative to that and give it a try. And it’s just a proof point that it can work in the right situation. And it’s more of a mentality and a cultural thing than anything else. Just like another great example of going from idea to implementation. I mean, next question, Jamie, is talk a little bit about you personally and how your day to day life has changed as you’ve taken some of these ideas that you’ve come across and implemented them in your firm. 

Jamey Harvey [00:11:29] So, you know, I don’t know if you remember this, Greg, but when I first joined, you know, I’m a I was really hungry for this framework. Let me let me start by saying that I read the book once. I read the book twice and I took notes, second rate I went through and I ended up with like, here are the 86 things that I must be valuable. And I scheduled a session with you. And I was like, okay, what do I do first? Right? Like, I can’t possibly do this all. And you were like, They’re in order. Like what? They’re like, Yeah, start with chapter one. Do those first and then do chapter two. Right. So, so about nine months ago, we spent a lot of time on chapter one and chapter two, which are getting your target market specific. So, you know, the big thing is like we’ve and we are a very socially conscious firm, like one of our core values of social equity, right? Another one of our another one of our core values is mutual liberation, like we are we are unabashedly do gooders, right? And and my people come to work for me like they’re there because they want to help, you know, poor, disabled children. Right. Like, which is what we do right, with, you know, with one of our. Showcase clients. Right. So. So we stopped saying to people, Hey, we do state and local government work. We started to say to people, Hey, we work with social equity enterprises, you know, and if you’re in a regulated environment, we understand that better than you do, right? For for the funding streams that you got to align and we can help you fund your big projects. And that message is so specific, right, to like a particular audience of people that those people are beginning to find us. So. So that is a totally different world to live in. Right. And and it feels great for everybody because now our inward expression of who we are, which are these, you know, unabashed do gooders, is aligned with our external representation of like, hey, this is what we do for a living, right? And so there’s this pole that, you know, where you’re you’re paddling the canoe in the river, the direction the river is going. So like, that is like a very, very big, you know, game changing transformation we’ve gone through as a result of being neglected. 54. 

Greg Alexander [00:13:46] Now, I want to follow up question on your day to day. Sometimes I hear from members, hey, these are all great ideas, but I don’t have any time to do them. I’m just too busy. I can’t get to them. And I remember our early conversations, and you were pretty busy guy, but you figured out how to of got to get to these items and and you’ve made all these changes in the firm has thrived as a result. I mean literally like how did you create the time to spend the necessary time on these items because these aren’t small items. 

Jamey Harvey [00:14:11] Well, I, I hired very great, very senior talent. So I didn’t really like like on that there was a there was an investment. Right. For sure. And and I am a talent magnet, thank goodness. Right. And the way that we’ve constructed the company has created a multiplying effect for that. We’re like people who want to do what we do are finding us now. Right. Like across the country, which is, you know, amazing. An amazing privilege to write. So it’s you know, I did most of my changes before. You did the Founder Bottleneck book. Yeah. But like, by the time I read The Founder Bottleneck and I did that diagnostic, I was no longer I had replaced myself 80%. 

Greg Alexander [00:14:58] Yeah. 

Jamey Harvey [00:14:59] Already. Right. And the last and I knew the last remaining one was the sales, which is what we’re doing with the seller do or model. So a large it’s it’s it’s I didn’t. And I got a lot of work to do. Like, I can go into that, which is probably a different topic, but like on some level, like the big boulders had sort of had sort of been handled. And I, I have really been able to to focus on strategy coaching, developing high potential people. 

Greg Alexander [00:15:31] Yep. Because. Because you remove yourself as the bottleneck. You hired a great team and that freed you up to do all these things. And, you know, in in Jamie’s example, I mean, he had a great lifestyle business and he have continue on that, but he wanted more and therefore he had to make the investment and he made the investment behind the right people, gave him back the time and boom, here we are. Right? So that’s the decision that we all have to make. Do we really want to be more than a lifestyle business? If so, are we willing to make the right investment to free ourselves up? 

Jamey Harvey [00:15:58] The other big change, of course, is our gross. Our gross margins went from 17% to 35%, and our our net margins went from like 8% to 25%. So which I think is what got your attention about this story. 

Greg Alexander [00:16:12] Yeah, I mean, it jumped off the table at me because because I know the investments you made also because I mean, you could say, like, how is that even possible? You made all these investments which would depress margins if you made all these investments and the opposite happened, you know, the margins and tripled. So help the audience understand that. 

Jamey Harvey [00:16:32] Well, partially it’s phasing like the investments actually depress the margin one year. And then and then they sprung back. They sprung back and then we saw the return. Right. So our business is you know, I talked to a lot of other members of like the 54 hour businesses lumpia are deals are are big are bigger than most of the deals and they’re collective and they last longer. Right. So that stuff develops more slowly for me. My sales cycles are longer right. Like so we’re we’re doing a lot of stuff that doesn’t show up the year that we do it right. It very often if we’re we’re seeing the results the next year. And part of, you know, but, you know, on some level, like what are the changes we made? We got the people, we got people billable. That’s going to make you more profitable. Yeah, we we got rid of salespeople and we had that consultants do that. That’s going to make us more profitable. We we raised our price. It’s like I don’t we skip over that. Like because of our positioning, we were able to demand a premium and, and, you know, compared to the other alternatives market that do what we do, we’re much like we’re so much less expensive than than the biggest. Right. Who are the people that are able to do what we do so. So all of that. You know, we now know that when we’re humming, like those are the normal margins that we ought to make. And we know we’ve got weaknesses because of the lumpiness, partially because, like last quarter, our main client, which is the D.C. government contracted and a bunch of contracts went away. Right. And on and we felt that very badly. But because we were running a healthier business, we were better able to test results like that. 

Greg Alexander [00:18:19] Yeah, exactly. 

Jamey Harvey [00:18:21] Yeah. 

Greg Alexander [00:18:21] All right. Well, listen, you are the quintessential role model for the boutique framework. And it was great to have this kind of macro conversation to see how multiple things combined together produce the end result. So I want to make sure I leave a call to action for the members. When you get the meeting, invite link for the private Q&A session will have with Jamie. Please accept it and attend and you can really dive in and ask a direct questions of him as to how he pulled this this miraculous story off. There’s a lot more to it than we can cover in a short podcast, so please attend. If you’re not a member, you should consider being one. Go to collect 50 for Whatcom, fill out the contact us form and somebody will get in contact with you. And if you haven’t yet had a chance to read the books and Jamie referenced the boutique kind of start scale and sell the pro firm. And then for members, if you want to eliminate the time constraints on yourself, check out the founder bottleneck. But with that, Jamie, I want to thank you for the contribution you made. You know, we’re trying to make deposits in the collective body of knowledge and you’re constantly doing that. So on behalf and all the members, thank you so much for being part of our community. 

Jamey Harvey [00:19:31] Thank you. It’s it’s really a privilege. Thank you. 

Greg Alexander [00:19:33] Great. Okay. With that, I wish everybody the best of luck as they try to grow, scale and exit their firms And until the next episode, go get them.

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Episode 132 – How Psychometric Talent Assessments Should be Used by Boutique Professional Service Firms – Member Case by Ted Jackson and Dr. Julie Carswell

Pro serv firms are people driven businesses, therefore, getting the people decisions right is mission critical. As a result, many members are using assessment tools, or have in the past. However, the results have been mixed. In this session, learn from a PhD in organizational psychology how to improve the results you are getting from assessment tools.

TRANSCRIPT

Greg Alexander [00:00:10] Dive all in on the next chapter of your life. Welcome to the Pro Podcast, a podcast for leaders of thriving boutique professional services firms. For those that are not familiar with us, Collective 54 is the first mastermind community focused on the unique needs of boutique processor firms. My name’s Greg Alexander. I’m the founder of Collective 54, and My World Today will be your host. On in this episode, we’re going to talk about assessments. Now, why are we going to discuss assessments? Well, in professional services, it’s obvious that there are people driven businesses and therefore getting the people decisions correct is pretty important. And as a result of that, many of our members are using assessment tools or they have in the past or they’re considering them in the future. However, the results have been mixed. So my hope today is that we can help our members improve the results to getting from their assessment tools and help me with that. We have the leaders from Sigma Assessment Systems members, Ted Jackson and Dr. Julie Carswell, and they’re experts in this area and they’re going to share the wisdom with us. So as they say here in the great state of Texas, welcome. And how are you all doing today? 

Ted Jackson [00:01:36] Thanks, Greg. Doing okay? All right. 

Greg Alexander [00:01:39] Very good. Would you please. 

Dr Julie Carswell [00:01:41] Nice to be here.

Greg Alexander [00:01:42] Provide it. Provide an introduction for the. For the audience. 

Ted Jackson [00:01:47] Yeah, sure. Before I do, I just want to say I’m really inspired with what you guys have created here. 254 I’ve benefited from the podcast from the Office Hours, the expert instructions, and you guys have saved me a ton of time and money, so keep up the good work. 

Greg Alexander [00:02:02] Oh, thanks for saying that. I appreciate it. 

Ted Jackson [00:02:05] Yeah. My pleasure. My name’s Ted Jackson. I’ve been the CEO of Sigma Assessment Systems for, gosh, about 20 years now. I started off as a freelance software developer, mostly working on computerizing performance appraisal systems and then was hired by Sigma to do the same, eventually got involved with sales and business development at Sigma, was promoted to president and eventually took over ownership. And here we are one than 20 years later. 

Greg Alexander [00:02:39] And Doctor, how about yourself? 

Dr Julie Carswell [00:02:43] Yeah. I’m sorry. I’m an industrial organizational psychologist by training, which is an area of psychology that is focused on the science of human behavior in the workplace. We help organizations with selecting, developing and retaining talent, and I have specific expertise in the area of developing assessments to support organizations with those types of activities. I’ve worked with Sigma for almost as long as Ted has been the CEO of Sigma and helping to develop and optimize our assessment solutions and also using assessments as a foundation to support our other services like executive coaching and succession.

Greg Alexander [00:03:29] All right, Well, very good. Well, thank you again for being here. Let me jump into the questions. So some of our members are young growth firms and they may not even know what assessments are. So if you would humor me for a moment and just maybe give us a definition of what an assessment is. 

Dr Julie Carswell [00:03:47] Happy to. So in the context of our business assessments, refer to evaluative tools that we use to support organizations with those hiring and development decisions. These tools can take the form of either tests or assessments. And in our industry, we distinguish between those things. Tests have right and wrong answers, like measures of IQ or cognitive ability, for example, whereas assessments inquire more about preferences and people’s kind of natural tendencies. So measures of personality and career interests would be examples of assessments. 

Greg Alexander [00:04:29] Very interesting. I didn’t understand there was a difference between tests and assessments, so I’m already learning something today. All right. So. So why do leaders use assessments? 

Dr Julie Carswell [00:04:41] Yeah. So when I think about that question, I frame it up as why do organizations want to use assessments, which I think is a similar question. As I mentioned previously, organizations primarily use assessments to support hiring or promotion decisions and talent development. The use of assessments also has several applications and advantages for organizations. So there’s the efficiency factor. For instance, they can enhance the efficiency of the hiring process, particularly when dealing with positions that have large volumes of applicants. Right? So organizations with large applicant pools don’t have the resources to interview every candidate. So this can be a really helpful tool at the front end of the process. 

Greg Alexander [00:05:32] Okay. You know, our members are probably not in that category. Yes, they are quite a few people, but it’s not a large volume type situation. So in that context, like let’s say you’re, I don’t know, a 40 person consulting firm, and through growth or attrition, you might hire 8 to 10 people a year. Yeah, I would I would have to like this be leveraged in a situation like that. 

Dr Julie Carswell [00:05:56] Yeah. Okay. So in addition to that efficiency factor, which may not be as applicable for your audience, assessments can also enhance fairness in the hiring process by adding objective metrics and helping to minimize the role of, you know, those built in cognitive biases that can influence hiring decisions. Right? For instance, we tend to more positively evaluate others who are similar to us, right, in terms of gender, age or background. That’s known as the similar similarity attraction, bias. I like that. So again, yeah, similarity, attraction, bias. And there’s a number of other biases too. But again, the use of assessments to inform hiring decisions can help to minimize the impact of those biases on our decisions. 

Greg Alexander [00:06:46] Yeah, I mean, it’s a great answer. I’ve seen several of our members make that mistake. We tend to like we tend to hire in our own image because we’re projecting ourselves on them. That’s interesting. And and tools like this. Guard against that, how? 

Dr Julie Carswell [00:07:04] Yeah, but as I as I was saying. So these tools have been developed to more bring more objectivity to the assessment process. Right. So when we’re looking at developing assessments, we’re very focused on making sure that the assessment, whether it be a personality or a cognitive assessment, is accurately measuring what it’s intended to measure. Right. And doing so in a consistent manner. Okay. So making sure that you have what we call a really psychometric, rigorous assessment that’s both valid and reliable means that, you know, those scores are accurate indicators of. The underlying constructor concept you’re trying to measure in. In our case, that’s often job performance, right? So just having these more objective metrics to help support decisions rather than, Oh, I really like that person. Yeah, you know, I have good gut feel about them. So yeah, I’m going to. 

Greg Alexander [00:08:03] Yeah, I mean that. But that. 

Ted Jackson [00:08:05] Strong handshake. Yeah, right. 

Greg Alexander [00:08:07] Like a nine handicap, right. I mean that, that bias alone. That’s right. Yeah. Yeah. All right. So there’s a lot of them in the market and our members have been experimenting with a ton of them, and I have a hunch, and I can’t back this up, but I have a hunch that maybe they don’t know the differences between them or which one to pick or should they build their own. So can you help our members think through that a bit? 

Dr Julie Carswell [00:08:32] Yeah, I would say don’t build your own. You can start there. Okay. Not only because that would obviate the need for my job, but because it’s not a good idea from a, you know, an accuracy and rigor perspective. So let me just talk about context first. So different assessments are designed for different purposes. So you need to make sure that the tool you’re using is aligned with the purpose for what you’re using it. Okay. For example, an assessment intended to help with coaching and development or support were designed to support more self awareness or personal insight might not be suitable for making selection decisions. And this is great on this website. So I’m I’m comfortable saying this, but many of your listeners might be familiar with the risk assessment, and that could be helpful in terms of better understanding different styles of communication or behavior within a team. But it has not been specifically designed and developed to help inform hiring decisions. So if you’re not using a tool that’s been developed for that purpose and it’s not an effective predictor of job performance, hasn’t been validated for that purpose, that can expose you to litigation risk. And we don’t want that. Okay. 

Greg Alexander [00:09:57] So you start with what’s the purpose of the tool? And then there’s certain tools that are designed for certain purposes. 

Dr Julie Carswell [00:10:04] Right? Yeah. 

Ted Jackson [00:10:06] I would I would even maybe take it a step backwards and consider what is important for the individual, what is important for the war, How does one need to perform in order to excel in the role? And what traits, knowledge, skills and abilities are important? And then go backwards from there and choose the assessment battery based on that. 

Dr Julie Carswell [00:10:28] Steve Austin Yeah, I agree. I mean, I think if you’re, you know, looking at various tools in the market, you know, that makes, that makes perfect sense to better understand, you know, what are the critical competencies required for effectiveness in this position or what are the critical knowledge, skills, abilities and other aspects of a of individuals like personality are related to success in their role, and then use that as your lens through which you’re making your assessment purchases and decisions. 

Greg Alexander [00:11:08] Okay. And then I guess my last question would be let’s make the leap that we understand the purpose of the tool. We understand the mission critical traits and attributes of the person that would thrive in that position, who in the organization should be using them? 

Dr Julie Carswell [00:11:29] Yeah. And that’s an important question. So some assessments require certain levels of training, experience or or education before they can be purchased and administered. Those are what we refer to as qualifications in our industry just to ensure that the assessment is being used and interpreted appropriately. Right. So be sure to check the qualification levels for various tests and assessments. You know, as you’re looking through offerings from various publishers or solutions for various from various publishers and just making sure that you have an appropriate, appropriately qualified user or someone who can undertake the training that’s required to properly interpret the assessment results. 

Greg Alexander [00:12:21] Yeah, and that is really important. I our membership consists of entrepreneurs and they kind of have a ready fire aim approach. And it’s one thing to use an assessment, spend the money on it, It’s quite another thing to use it correctly and make sure that you’re trained on how to interpret their results. I think that’s great advice. All right. Well, this is all the time we have today. But I want to remind the members that are listening that we will have a private Q&A session with Ted and Dr. Julie. Look for that meeting, invite that comes up and we’ll go into much more depth than we were able to cover in a short podcast, and you’ll be able to ask your questions directly to them. So take a look at that. And then if you’re not a member, but you find this interesting and other topics like this are intriguing to you, consider joining. You can find us at Collective 54 icon fill out the contact us form and someone will get in contact with you. And then lastly, check out our book, The Boutique How to Start Scale and Sell a professional services firm. You can find it on Amazon. But Ted and Julie, I want to thank you on behalf of all of all of the members for contributing today. This is a hot topic and we look forward to your Q&A session. So thanks for being here today. 

Dr Julie Carswell [00:13:39] My pleasure. 

Ted Jackson [00:13:39] Thanks again. Good seeing you. 

Greg Alexander [00:13:41] Okay. Take care, everybody.

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Episode 131 – Why a Merger of Equals Might Be Your Best Exit Strategy – Member Case by Jonathan Wilson

Some members want to exit, but they cannot. The reasons are many. For example, insufficient EBITDA, high client concentration, over-dependence on a founder, and many others. The journey to fix these issues is clear but can take many years and millions of dollars. And for some, this is unattractive. An alternative is a merger of equals. Attend this session and learn from the discussion with Collective 54 member Jonathan Wilson, President & Chief Value Creator at Dubb Value Creation, on how a merger of equals can convert an unsellable boutique into an attractive firm for many acquirers.

TRANSCRIPT

Greg Alexander [00:00:10] Dive all in on the next chapter of your life. Welcome to the Preserve podcast, a podcast for leaders of thriving boutique professional services firms. If you’re not familiar with us, Collective 54 is the first mastermind community dedicated on the niche that we define as boutique producer firms and founders of those firms who tend to have very unique needs. My name is Greg Alexander. I’m the founder and I’m going to be your host. And we’ve got an interesting topic today. Today, we’re going to talk about how a merger of equals is a potential path to exit. Now, let me shape this a little bit before we introduce our role model this week. So let’s suggest that maybe two firms operating independent of each other are led by founders who want to sell their firms, and they’ve tried to sell their firms and have been unable to do so. And there’s a whole variety of reasons for that. For example, maybe the EBITDA dollar amount isn’t large enough, or maybe there is a high client concentration risk or several other reasons which we’ll get into. But if you brought those two firms together, so instead of being two separate firms, they became one firm. These problems go away. For example, all of a sudden the EBIDTA number is big enough. All of a sudden client concentration issue goes away because when you bring the two firms client rosters together, now presto, you have client diversification and on and on we go. So that’s what we’re going to kick around today. It’s something that I think represents a big opportunity for our community, and it’s also something that I don’t think has been explored enough. So to help me explore it, we have the man, the myth, the legend. Jonathan Wilson, he’s the founder of Double Value Creation. Got a chance to get to know him. And let me tell you how best to think about Jonathan. He a unique combination of the CEO whisperer and someone who has great knowledge on M&A transactions because of his journey in his career. So with that, Jonathan, why don’t you please introduce yourself to the audience and maybe tell the team a little bit about your firm. 

Jonathan Wilson [00:02:42] Thank you for saying that. Thank you for the great introduction, Greg. We are focused. So just you know, this Jonathan Wilson here, CEO of Discovery Creation, also chief value creator. We are focused on two elements of our of professional services. One is mergers and acquisitions, and the other is strategy and analytics. When it comes to M&A, otherwise known as merger and all our mergers, acquisitions, sorry. When it comes to M&A, we are focused on three things one being a bull by side services so that anything from M&A strategy to M&A, target assessment to due diligence and then also to integration planning or the first 90 days of integration. We are also focused on full scale side services. So meaning that a company that wants to engage with a full whole transaction, we will engage with them. And then also we are focused on this program called Grow before you sell, and that is where we put together a strategy for you to grow your EBITDA over the course of a 2 to 3 year period. What that may look like, that could be a capital injection, be an investor, that that could be a merger of equals, as you mentioned, but also may be buying small, small acquisitions so that you can accelerate your growth. But that really we focus on from a merger and acquisition perspective. 

Greg Alexander [00:04:22] Okay, great. 

Jonathan Wilson [00:04:23] A strategy. From a strategy perspective, we focus on three things simply planning, execution and strategic governance. 

Greg Alexander [00:04:33] Okay. So maybe just briefly explain to the audience all the stops you’ve had along the way with some of the world’s top professional services firms. 

Jonathan Wilson [00:04:44] Yeah. Thank you for asking that. So background includes Accenture, Bank of America, Deloitte and Grant Thornton. Yeah, my first exposure really was with Countrywide Financial, which became America. 

Greg Alexander [00:04:59] Okay, got it. I wanted to get that out there because, I mean, your resume is unbelievable. So you’re very credible on this topic. All right. Thank you. So let’s dive into it. Right. So I’m going to tee up a few things for you. So let’s say I’m Joe Blow and I’m running X, Y, Z firm, and I’ve been doing it for 20 years and I want to sell. I’ve been trying to sell it. I can’t sell it or I’ve been getting these lowball offers with ridiculous terms. And the first thing they hit me with is you got subscale EBIDTA subscale, limited as defined as EBIDTA less than $3 million. It’s tough to sell a firm when you’re subscale ebidta because it’s just riskier for the potential acquirer. And now I find myself presented an opportunity potentially of a firm who looks just like me. But maybe is another region. Like maybe I’m in Minnesota and this firm is in Philadelphia as an example. And in theory we can slam these two firms together and next thing you know, I go from a non sellable asset because a subscale bidder to an asset that everyone’s going to want because my EBIDTA dollars are big enough. So is that real in your minds and what are some of the maybe the obstacles associated with that that are not obvious? Because on paper duh, that looks like we can go do that, but it can’t be that easy. So help us think through that. 

Jonathan Wilson [00:06:14] It’s actually not easy in a merger of equals. You know, that’s an interesting term in itself. It really does show that you’re willing to collaborate with another organization and together that you’re willing to build something that’s going to be more powerful than either one of you can achieve alone. So, you know, with that said, you want to focus on some of the benefits around doing that, and especially for a company that is in that situation currently today, founders do get tired. I respect that. And you’re ready to move on at certain points. Right. And there’s a few things you want to focus on, one being the synergies, Right. So what can you do together to increase your revenue And then what can you do together to minimize costs? So some of that might be accessing the new are accessing the new market if somebody already has a complementary, complementary service offering and they are in markets that you are not, that seems like a no brainer. Right? And in addition to that, you want to think about that might help. Also with the increased market share. It might also help out with with with kind of a risk diversification, if you will. Keep in mind that if you’re concentrated all in one part of the country, there is a little bit of a risk that to write something happens from now. We have we do have something called micro economic challenges, right? So there are challenges that North East might have at a certain point. There are challenges that the Southwest might have a certain point. So you want to make sure that you are diverse spread across the US. Yeah. The other piece also taking a look at expanded your expanded skills and knowledge base, right? So it’s a nice complementary skills and maybe some people you have to worry about acquiring but you can actually leverage from the complementary firm. Yeah. And those are some of the, those are some of the great things that you could get together. 

Greg Alexander [00:08:07] Very good. So let me I want to follow up question here, because you mentioned the word risk, and I want to talk about something that often sinks boutiques when they try to sell. And it’s the nature of the business. It’s not anyone’s fault. It’s just the way that these things evolve. We tend to have high client and revenue concentration, and that’s defined by if the top five clients are generating more than, let’s say, 30 or 40% of your revenue and profits, then the way that investor looks at that is your risk is risky because of the client and revenue concentration, meaning one or two clients goes away and the whole PNL falls apart. Now the great thing about a merger of equals here would be if you have that problem and you merge with another firm that also has that problem, but they’re not the same clients, then it goes away. But when I present that to people, Jonathan, what I hear is, well, I own 100% of my firm right now and if I merge with someone, I’m going own 50% of my firm. So I don’t want to do that. That’s dilutive. What would your response be to somebody who would share that with you? 

Jonathan Wilson [00:09:05] That’s crazy. That would be my initial response. But, you know, when you when you really think about it, everybody understands the idea of giving out some earnings and some element of control. There’s a reason why people became founders to begin with, right? However, if your ultimate goal is to be sold, you have to think about what you have to give up. Right. And yes, you’re giving out some of that share, but you’re also working together as somebody who has a shared mindset and shared goal. They probably have a background similar to yours. Any other thinking founder for the same reason. The other pieces too, is that their clients actually might be clients, but you might want to also work with. Yeah. So you guys can double down together and and really grow that client and make them happy in a larger way. And also you can actually increase not only your increase in customer satisfaction, but then that one plus one equals three is a real scenario for the company. Yeah. 

Greg Alexander [00:10:05] Yeah. I mean, the well said much better than the way I would have said it. What I say to those people tends to be a little too blunt, which is, Listen, 100% is zero zero. So right now you have a non sellable asset, so you’ve got nowhere to go. So 50% of something is much better in that scenario. So let’s consider it. Now, there’s cultural issues here. Right. You know, you’re all of a sudden you’re this fiercely independent founder. You 100% of your firm and what you say goes. And now you got partners. So in your experience, when all the years you’ve done this with big companies and now your own firm, you know, how how should two strong willed, independent founders think about working together and how might you help them consider that as an alternative? 

Jonathan Wilson [00:10:51] You know, that’s so key. And that is not outside of a merger of equals. That’s really with every single M&A transaction. When you think about culture that’s behind everything that is going to be coming out of a merger of any kind. Right. Because the people are what helps you gain your revenue. They’re also the people that can sink your ship. So those are things you think about from a cold perspective. You want to lead with having them as part of the diligence process. So you want to think about what exactly what are similarities of the cultures, how do you operate, what kind of systems you use, what kind of processes you use? Is it is it a culture of meetings, a culture, ad hoc conversations that matters? You know, there are there are there series is a credit culture that also matters to you. Is one willing to take out more loans than the other? That that also is a big that can also sink our ship senior seat or help partnerships as well. But you want to go through any. You want to go through it like any other judge over the process and think about culture as a unique workstream and combine that with your H.R. element and your communication plan, Strong communication plan. Yeah. 

Greg Alexander [00:12:11] That’s why I would suggest to members who might want to consider this idea, to pick up the phone and call Jonathan and consider having him be your facilitator here. And the reason for that is that, you know, sometimes you need a facilitator and just the presence of an independent third party who can facilitate these conversations makes it easier to do. And that’s why this unique blend of the CEO whisperer through the lens of M&A transactions would be really helpful. And Jonathan is adhering to his code of conduct. And thank you for that. It is. And why make this a sales pitch? But I want to put that out there on his behalf. That’s why somebody like him, you know, a consultant that specializes in M&A transactions, is particularly useful in the use case of a merger of equals. One more thing I want to discuss with you, and we’ll talk at much greater length on this when we have the Friday role model session and we have an hour as opposed to 15 minutes is is I have a situation with some members who want to sell. They go through diligence, which you just brought up, which made me think about this part of diligence as the management meetings and potential acquirer says, You’re a brilliant founder, but you have no depth beyond you. And it’s too risky because if I buy your firm and something happens to you, the firm goes poof overnight. So can a merger of equals solve that problem? That problem defined as founder risk? 

Jonathan Wilson [00:13:38] Well, that’s a good question because, you know, I hate to do it in the answer. 

Greg Alexander [00:13:43] But it does. 

Jonathan Wilson [00:13:45] But it really does. The idea is that sometimes things revolve around a founder, and it wasn’t in that way. Does it mean that there wasn’t open to other ways of working? It just became that that fair number two left at the wrong time or something else happened. So that doesn’t necessarily have to be a big game changer or showstopper, but you do have to make sure that founders open to other ways of thinking, because if if they’re not, then that’s going to be a hard case for managing others, in which case, you know, if you become a larger part of a larger organization, it’s going to be somebody rejecting his way of working. Right. 

Greg Alexander [00:14:26] Yeah, exactly. Exactly. And one of the items that would be discussed during the diligence phase of a merger of equals would be the chart. And you’d say, okay, here’s my org chart and here’s your org chart. We put these things on top of each other. Yes, there are redundancies and there’s also holes. So so for example, maybe, maybe I’ve got a great firm and what I’m really great at as my donor, my domain and I have outstanding client delivery, but I’m weak on sales. Well, then I would want to merge with with a firm who their strength is sales, because that’s what I’m getting in the transaction and maybe their weaknesses client delivery. So in that scenario, one plus one equals three because there’s complementary skills. So you’re looking for how you lay these two orchards together and the organization, the team gets strengthened as a result of that. Now that does two things for you. One, it makes you a lot more attractive to potential acquirer, which is what we’re talking about today. But number two, in the event that you can’t transact after the merger, things happen, economic cycles, etc., the firm’s going to be a lot better off because you’re going to have a stronger team and you might be able to scale to to new heights. So with that, we’re at our our time window here, but I want to point the audience in a couple of directions. So first, if you’re a member and you’re listening, please watch out for the invite that you’ll get from us to attend Jonathan’s role model session. That’s a private Q&A, and you’ll have an opportunity to double click on this idea. And most importantly, ask Jonathan direct questions about, you know, how you might consider this and your firm if you’re not a member and you might think you want to be to learn about things like this and others go to collective 54 Ecom can fill out a form and one of our reps will get in contact with you. And if you just want to further educate yourself on growing, scaling and exiting a firm which would include this topic, but others. I’m going to point you to two books. One’s called The Boutique How to Start Scale and Sell a Professional services Firm, and that’s for everybody, members and nonmembers. If you are a member, there’s a book that’s only available to you. It’s called The Founder Bottleneck How to Scale Yourself and a Merger of Equals is one way to do that. I would encourage you to dive back into that book and really devour its concepts and principles. But listen, the way this works is we’re a collective. The name was chosen for a reason, and that requires members like Jonathan to make deposits in the Knowledge bank, because if we all do that, we all get smarter and that is that knowledge base grows. You’re able to also make withdrawals of that knowledge. So, Jonathan, on behalf of the community, you’re a fantastic member. We’re so lucky to have you. And thanks for sharing your wisdom with us today. 

Jonathan Wilson [00:17:17] You Greg, It’s fantastic to be part of your organization, so I really appreciate you. 

Greg Alexander [00:17:22] Okay, Very good. All right. Well, with that, I wish everybody the best of luck as they try to grow, scale and exit their firms. And until next time, we’ll talk to you then and go get them. 

Jonathan Wilson [00:17:35] Thank you for having me.

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Episode  128 – How to Begin Building a Sales Team with Fractional Sales Talent – Member Case by Dan Morris

Scaling boutiques need to build a sales team yet delay doing so because of the perceived risk and expense. In this session, member Dan Morris shows us how to reduce the risk and ease into it by leveraging fractional sales leadership. Most boutiques use fractional finance, HR, IT, and Legal executives and it may be time for you to deploy the same approach to sales. 

TRANSCRIPT

Greg Alexander [00:00:10] Welcome to the Pro Serv podcast, the podcast for leaders of thriving boutique professional services firms. If you’re not familiar with us, we are Collective 54, and what we are what is known as a mastermind community. And we are different than other communities in that we focus on a single industry, the pro serv industry, and a certain type of firm within that industry, what we call a boutique, which is kind of post-startup at pre-scale. And we have a weekly podcast that we put on where we profile a role model, and that’s what today’s show is about. And we’ll talk on today’s episode about fractional sales leadership and sales teams. But before we do that, let’s do a couple of intros. So my name’s Greg Alexander. I’m the founder of Collective 54, and I’m going to be your host. We also have with us today Dan Morris, and Dan runs one of these fractional sales outsourcing companies. And I’m probably not doing it justice so we’ll give him a chance to introduce himself in his company. So, Dan, it’s good to see you. Please, please give us an intro.

Dan Morris [00:01:22] Hey, Greg. Great to be here. Yeah. My name is Dan Morris. I’m Managing Partner at Mindray, a consulting. We’re a boutique management consulting firm. We focus on growth, efficiency, and in our case, what that means is we support our clients by helping them to develop effective growth strategies. And then when it’s required, we implement those strategies by leveraging fractional executives and fractional teams.

Greg Alexander [00:01:47] Okay, sounds great. So because you are a member, you’re familiar with our membership, the profile of a member and many of our boutiques know that in order to reach their full potential, they have to make an investment in sales. They get to a point in their journey where, you know, referral generation and kind of word of mouth is not enough. They have to invest in convincing people to hire their firms. And those folks of those folks, many of them don’t know who they are, but they’re gun shy to make the investment in this nonbillable asset. So they’re curious about fractional sales leadership. So let’s start there. So define it for us. What is it?

Dan Morris [00:02:30] Fractional leader. Or in our case, specifically a fractional sales leader, a highly experienced individual normally north of 15 years of experience. They bill and they run sales teams and sales organizations before in the industry using the business model that the clients have. So they’re very familiar with both the industry jargon and the ways of doing the types of deals that the client is doing. That means that they’ve committed themselves to share their experience with multiple clients who are non-competing at the same time, which means that they can give the client access to their experience at less than the full rate for bringing that person in. And their scope could be from carrying a bag themselves to actually help win a couple of deals to help refine the process before they’re then able to start bringing people in around them and building out that commercial sales team. And they can look at new business, they can look at upsell and cross-sell to the existing client portfolio, as well as exploring potential for partnerships and channel business as well, depending on the opportunity. And so their engagements would range from supporting a founder who needs some help building their confidence to get some complex deals done all the way out. So implementing and managing a commercial sales team and developing an in-house leader. So it runs a very broad scope, but it’s about role and then walk and then run in order to get things right. You might go from one fractional leader to another. Well, in the next stage and all the while not investing the full amount that you’d have to invest for a full person to be full-time.

Greg Alexander [00:04:28] Very good. And I’m assuming that there’s a natural point in a firm’s evolution where it makes sense to engage in this model. When is that point?

Dan Morris [00:04:41] Though there’s two points that we most often get hired, and one is where you’ve got a CEO that does not identify as a salesperson who is committed to figuring out how to grow in a scale. They’ve got some initial clients and often that’s somewhere between $1,000,000 and $3 million in top-line revenue. The second use case is where they brought in a fractional CFO or even a full-time CFO, and that person has somehow inherited the responsibility for driving revenues and reporting on revenue growth. And they bring in a fractional because they need to be able to deliver in that period of time.

Greg Alexander [00:05:26] Okay. And then is there a point in time when they graduate out, you know, above this approach where fractional is no longer enough and they want full time? Is that a natural evolution or no?

Dan Morris [00:05:38] Yes, it is. So we’ve actually built a whole service offering review, refine, roll out, and then replace. And in between roll out and replace is a lot of repeat will go round that cycle several times to get an organization to where they want to be. And it might be three months and it might be three years to get them to the place where they want to replace most often. And then a fractional person would develop somebody from internally within the team to take over and lead that team using all of the best practices and processes that have been developed in that business.

Greg Alexander [00:06:16] Okay. And then as I’ve gotten to know you, I’ve learned that it’s not just leadership that can be fractionalized, but it can be a sales team as well. So please describe that to us.

Dan Morris [00:06:27] That’s right. So we’ve developed over we’ve done over 300 advisory and engagements with clients now since 2014. So we’ve been around this for a while, since before it was called fractional. And so recently we’ve been developing more and more things around the clients the way that they want them. And so we were doing business just with sales leaders, revenue leaders and supporting a lot of founders. We found that there are really natural partnerships with other people in the fractional ecosystem, such as Chief Finance Officers or Chief Operations Officers but within our pillar which is revenue, we are able to provide the sales leader, the marketing leader, the revenue operations leader, which is the sales and marketing technology implementation and process management and actually a turnkey sales team to get a client from where they are to where they want to be. So having access to that in a very flexible way is what the market told us that they wanted to do. And so we’re supporting more and more businesses to get there until they feel confident enough to bring in the full-time leader and begin to either rebuild that internally or take over some of the resources.

Greg Alexander [00:07:42] So I’m very bullish on this idea because. You as a firm goes through its evolution and they need to make this investment in sales. They’ve reached that point where in order to hit their growth targets, the law of large numbers says they’re not going to get there by kind of shaking the tree of their personal network anymore. They’ve got to do more than that. But sometimes if you go full-time, especially if you hire leadership in a team, they don’t have the capital to do it and they don’t want to go into debt. They don’t want to raise the equity because of the dilutive effects of that. So they end up not doing it. But by doing it this way, they can grow into it because fractionalizing would suggest it’s more cost-effective to do it. So. Why are more firms not doing this? What’s standing in the way of pulling the trigger on this? Because it seems to make such great common sense.

Dan Morris [00:08:35] You’re right. And part of that is that they don’t know that it’s an option. It’s becoming much, much more talked about now. And I think the most common fractional engagement today is still in the finance department because bookkeeping is one of the most natural first things to outsource then the Chief Financial officer involved in a lot of the CPA’s offices around that. And so that’s where it started. And then operations followed because getting things organized in the back of the business affects that profitability very immediately. And then after that, people look at this other pillar, which is a lot scarier to a lot of founders. You know, the reason they haven’t built out the commercial sales team is because they don’t identify as salespeople. They don’t really feel confident in building that sales engine right away. They want to make sure that everything is going to land properly first before they go and get a lot of new clients. And so that we think that there’s definitely a trend in the market right now with people talking about fractional, them becoming feeling more relaxed about bringing in people on that basis. But also there’s a lot of businesses out there that just restructured significantly, right? They leaned out back or W2 based and are now looking to invest in businesses that can give them that level of flexibility. And so there’s been a lot of businesses transitioning to partner with us over that last few months for that reason as well. So one is more education and one is market timing.

Greg Alexander [00:10:05] So for those that are listening to this, that might still be afraid to do it after 300 engagements. I’m sure you’ve seen mistakes. What are maybe two or three things to think about before they jump on this fractional sales leadership concept?

Dan Morris [00:10:20] Well, it’s an experiment until it’s not. Right. So you’re getting on board with somebody who can come in and give you a 5000 or 10,000 foot view of your business in 30 days. That’s the first thing that you’re doing with the fractional executive. Is not like making a higher W-2, where you have to figure out you’re going to give this person a year. You’re going to get the sales number. You’re going to try and work it out. The first 30 days of this is figuring out where the priority should and should not be working with that person. And that’s something that’s very bite-sized that a lot of founders and CEOs don’t think they can do but they can. And so, you know what we see one of the problems is when founders or CEOs try and buy a tactic that they’re not sure about, that we know we should be doing outbound sales. Okay. Well, is that the right thing for you to do first? They haven’t thought that through and they try and buy a vendor who will do that for them and they set fire to a bunch of money. What we often find is that they’re already trying to do too many things with the resources that they’ve got. And in that first 30 days, often we’ve identified businesses. There was one who were trying to do 17 growth strategies with four people on their team.

Greg Alexander [00:11:37] Oh my Lord.

Dan Morris [00:11:38] We help them focus on five of those growth strategies and they 5x that business in the next 12 months. Mm hmm. Do less with more, but the right things. And so a good way of protecting themselves is to get really clear with that front workshop, get the strategies aligned for what they’re going to do, what they’re already good at, and, you know, go with an individual who has less experience as a fractional or may not give them that straight away. And the risk is where a CEO is not familiar with hiring a sales group and brings in an experienced fractional or who just is being a really strong individual contributor. There’s room there for missed expectations, and that’s the biggest risk I think, out there in the world of fractional. Oh, we had this fractional when we tried out and it didn’t work. Yeah, well. There’s a better way. Yeah.

Greg Alexander [00:12:30] What do you say to the member who believes, in my view, incorrectly, but still very strongly held belief that what they do requires so much industry and domain knowledge that outsourcing it to a fractional sales team is just impossible?

Dan Morris [00:12:49] Well, we do run into a lot of business owners and CEOs who struggle with overcoming that, and they come back to us a year later in the same place. They haven’t grown. They’re still stuck there, they’re more upset about it. It’s a natural barrier for us to be overcome with a crawl and then walk and then run approach. And a simple way of looking at this is to say that one day if you want to exit your business, you have to solve this problem anyway. And getting the right support to do that in a fractional basis to help you along the way is one way of doing it. And I’ll give you an example. We’ve been working with a founder on and off for eight years. A super nice guy, really brilliant at what he does, and finally came to us in January and said, okay, let’s look at this a bit differently. And what we helped him to do was a Done with You program, which helped him to do the activities he needed to do to get out of his own way. And now he’s doing massive projects with his ideal clients. Four months later, he’s in that procurement process is where he’s never been before. Now we can show him what the roadmap is to have somebody else do those activities and gently begin to walk him backwards outside of that process so he can focus on the other parts of his business. Just one example, but it’s got to be crawl and then walk and then run with people who are really holding onto that mindset. Otherwise, they just never get down to that.

Greg Alexander [00:14:18] Yeah, you know what I would offer the audience is that, you know, we’re all comfortable now with fractional CFOs. Most of us are using fractional I.T. departments. We might call them something different, like a managed service provider. Pretty much most of our members use some type of outsourced fractional HR Leadership. A growing number of our members are using fractionalized chief technology officers as they attempt to productize their service offering. So I don’t think it’s a stretch to now expand that philosophy into the revenue growth engine, the sales team. And if you take the approach that Dan recommends today, which is the crawl, walk, run approach, it’s actually very little risk. There might even be more risk not doing it than there is to do it. So that’s what I would kind of conclude with. So Dan, we’re really happy that you’re in the group. Our community really needs what you do, so you’re adding a lot of value to us. So on behalf of all the members, thanks for being here today and we look forward to the Q&A session with the members and having them give them an opportunity to talk to you directly about this.

Dan Morris [00:15:22] Thanks, Greg. There’s been enormous value for us being part of this community, and so we’re really happy we’re here as well. And thanks for making the time to talk today.

Greg Alexander [00:15:29] Okay. Very good. All right. A few calls, action for listeners. So first, if you’re not a member of Collective 54 and you want to be, check out the website, Collective54.com and fill out the form. One of our representatives will get in contact with you. If you are a member, be sure to attend the session that we’ll have with Dan, the Q&A session. And if you’re not ready to join just yet, but you like content like this, I would point you in two directions. First. Subscribe to our newsletter that’s Collective 54 insights. You get three things a week, you get a blog, you get a video, you get a chart of the week, or you can check out our book, How to Start I’m sorry, The Boutique: How to Start, Scale, and Sell a Professional Services Firm, which you can get on Amazon. But until next time, I wish you the best of luck. Audience members. And as you try to grow, scale, and someday exit your pro serv firm. Take care.

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Episode  127 – Alternative Fee Structures: How and Why to Move Away from Hourly Billing – Member Case by Sonia Miller-Van Oort

Moving away from hourly billing leads to better margins, higher client satisfaction, and happier employees. Yet, many boutique founders are afraid to do it, and do not know how. In this session, member Sonia Miller-Van Oort shares how she built her 12-person law firm using alternative fee structures.

TRANSCRIPT

Greg Alexander [00:00:15] Welcome to the Pro Serv podcast, a podcast for leaders of thriving boutique professional services firms. For those that are not familiar with us, Collective 54 is the first mastermind community focused entirely on the unique needs of boutique professional services firms. My name is Greg Alexander. I’m the founder and I’ll be your host today. On this episode, we’re going to discuss moving away from the billable hour. This is a hotly contested issue. Some might even say religious battle in certain sectors. And it’s important for us to have a point-counterpoint discussion around this, because sometimes making this move can increase profitability and client satisfaction quite a bit. And we’ve got a great role model with us today. Her name is Sonia Miller Van-Oort, and she is in the legal sector, which is rather married to the billable hour, and she’s got quite a story to share with us. So we’re very lucky to have her. Sonia, if you wouldn’t mind, please introduce yourself and tell us a little bit about your firm.

Sonia Miller-Van Oort [00:01:25] Sure. My name is Sonia Miller Van-Oort. I am the President and Principal Founder of a law firm called Sapientia Law Group. We’re located in Minneapolis, and we are a 12-attorney law firm that does a variety of work, mostly litigation, about 70% litigation and about 30% transactional work.

Greg Alexander [00:01:45] Okay. And where are you based?

Sonia Miller-Van Oort [00:01:47] In Minneapolis, Minnesota.

Greg Alexander [00:01:48] Okay, very good. So tell us a little bit about how you’ve moved away from the billable hour.

Sonia Miller-Van Oort [00:01:55] Yeah. So we started our firm 12 years ago, and prior to that I was a partner at another firm and this topic of billable hours. This is 2009, 2010 timeframe, clients, really not happy with ever-increasing billable hour rates. At that point, I was a more junior partner and there are a couple of things that I was seeing. One, clients weren’t happy with that system of billing they really wanted more budget certainty. And as a practicing litigator, what I what I observed as well was that the cost and the uncertainty of the cost to the clients became an impediment to them getting to the merits of their case. And as a litigator and advocate, that was a frustrating thing for me, trying to get the best result for them. So it was kind of a combination of those things. I participated in this about with my law school, which was kind of a big think tank about the traditional law firm model. And this issue came up and I started I heard about alternative fees, and it wasn’t so much that it was a new concept at that point people had been talking about for decades. But really very few law firms had really adopted it and were able to be successful in it. And kind of what I perceived was law firms would sometimes reluctantly do an alternative fee structure if the clients came and approached them about it, but they kind of did it kicking and screaming. And so when I was creating a new law firm model to start Sapientia Law Group, that was central to the concept of how could we deliver services differently to our clients, and trying to think how we could, instead of it being a reactionary and reluctant response, how could we lead with that as a something proactively always offered to clients, always giving them the option whether they wanted to do hourly or an alternative fee structure, but presenting it without clients having to kind of ask the question but to be upfront and say, here’s another way we can do this, which works best for your business. So that’s how it got there and how we really focused on that as a key core concept of Sapientia Law Group.

Greg Alexander [00:04:37] Okay, very good. You’ve mentioned alternative fee structure a few times, so if not the hourly or billable hour excuse me, what is the alternative?

Sonia Miller-Van Oort [00:04:47] Yeah, well, I always say the alternative is only limited by your own creativity. So we’ve developed quite a list of options. And so those can range from you can do, and I’ll just, to be clear, I’m a litigator, so that’s the world I live in. And people for years have said, well, you might be able to do alternative fees in law, but really you can’t do them in litigation. Is that way possible because there are just too many unknown factors? And I don’t believe that to be true. And so what we’ve developed are different flat fees, four phases of litigation. We’ve developed subscription fees, which would be more of a kind of that model I always liken it to your cell phone plan and paying for so many minutes a month and you can have rollovers. We do risk collars, which is another way to create some budget certainty that has a collar of risk around the price that you’re studying. And it allows some extra payment if you go beyond it, but it’s reduced and a greater payment if you come below the budget. We’ve done pullbacks, which is another way of saying we’re going to agree upfront. What are the key, key performance factors? And we’re going to hold so much back from what you’re paying us until we reach those milestones. And then one that I often use in complex litigation is the combination of a hybrid of flat fees for certain pieces of the work with success bonuses, again, around milestones or what the client defines as success at the beginning of the engagement. 

Greg Alexander [00:06:28] Hmm. Very creative. Thank you for walking us through those alternatives. And when we have our member Q&A on Friday, they’re going to ask a lot of questions about those, particularly the risk collar. That’s one of great interest to me. So if this is better for the client, better for the law firm, and maybe a way for a smaller firm to differentiate, why are founders of firms reluctant to go off of the billable hour?

Sonia Miller-Van Oort [00:06:58] Yeah, I think there’s a couple of reasons. I think the biggest impediment is the traditional law firm mindset, which is how we do business is billable hours and we’re going to, those are our metrics and that’s how we’re going to value our people and we’re going to set goals around how many hours people build. And when you get into that mindset, I will say that it is potentially contrary or conflicting with an alternative fee structure model. And the reason why is because the way I approach alternative fee structures is it’s a shared risk and a shared reward. And what we want to do is the professional services team is to be efficient in getting the results desired. That means you hopefully are using less time and working smarter to get the results. But if you’re in a firm that is going to measure and reward employees by how many hours they put in instead of the results they’re obtaining for clients, those two things get heads. And I think that is just the traditional way of law firms. And so I’ll tell you, when we first started our firm, I wondered, you know, people wanted to talk about the firm. And I was concerned about, do I really want to talk about alternative fees? You know, isn’t that the competitive advantage I’m trying to have and do I really want to be talking about so somebody else can do that. And what I finally came to is I can talk about it all day because as long as law firms won’t change their core structure and the metrics that they value people, how they value them, they can never effectively do alternative fees. And that’s effectively why I want to start a new firm, because I think it’s the whole infrastructure of how you run your business that can make alternative fees work really well. But if you got to look at what you’re compensating, how are you rewarding, how are you value your people, what are they being motivated by, all of those things. And if you don’t have that culture and model, alternative is not going to work. 

Greg Alexander [00:09:09] Yeah. And I agree with you. I mean. Talking about it and doing it. A very true two very different things for sure. So I think that’s a good explanation as to why law firms might do it. When you approach clients with this, I’m assuming maybe incorrectly, it requires quite a bit of education. Is that accurate? And if so, how do you handle that?

Sonia Miller-Van Oort [00:09:32] Yes, it does require some. So, you know, as I said, we are potentially going to be retained. We explain to our client there’s two ways we can do this. And for me to come up with an alternative fee structure, I want to talk about what’s going to be success to you. And I want to talk about what my strategy might be and how I see that playing out. The other challenge, going back to your last question, I think that attorneys and many other professional service organizations have answered the question, how much is something going to cost really when you get my bill, you’ll know approach as opposed to on the front side giving that client budget certainty. And so when you explain to the client what it is you’re trying to do, but you’re also saying but it’s up to you, you know, you decide what’s best for your business right now. Clients really appreciate that. And where I find that they’re more likely to try the alternative fee because there’s some skepticism at times if they’ve not done one before as well what’s the catch? What are they trying to do? Are they trying to get more money out of me? That kind of thing. So where it really works the best is where you have a trusting relationship. You’ve done work with the client before. You explain. Here’s how you’re still going to see. You’re going to get my bills. You’re going to see everyone who’s doing the work. You’re going to see what the work, what’s being done. So I want you to have that data. I want us to both have the data so that at the end of the day, you can look at it and decide, did you get value for it? And I can look at it and make the same determination. So there definitely is an educational process. But I will tell you that, you know, I’m not going to say ten times out of ten that might be too strong, but nine times out of ten, if a client has tried the alternative fee structure, they will do it again because they can see the real value of it.

Greg Alexander [00:11:30] And how about when you’re recruiting attorneys to your law firm, especially those that might have worked in other law firms where this is, you know, completely unconventional, do you have to sell them on why this is good for them or how does that go?

Sonia Miller-Van Oort [00:11:46] I don’t know, but I have to sell them on it necessarily. It’s always a point of interest for them when they want to understand how that works. And as I kind of alluded to before. I only think alternative fee structures work for our firm because of how we’ve built the firm. And so let me just give you an example. I’ve not practiced. I practiced in two other firms. I met a partner and other one before creating this firm, but not working environment that was as collaborative as our firm is. And the reason that is, is because that’s how you get alternative views to work. You’re able to identify your team. You can figure out where people’s strengths and you maximize where people strengths are. So on traditional firms, you might have, you know, a partner and an associate, and the clients don’t want to see more than two people on the bill because they’re afraid they’re going to be getting charged too much. But when I explain to them, what you get is a whole team and this is what it’s going to cost you. It doesn’t matter if there’s two or there’s five people. Okay. So your question is, so when I explain that to people about how we really work together, like we do a lot of roundtable brainstorms on the whiteboard, we’re coming up with our ideas and our strategy and how are we doing this? And you got this and I got this. And it’s a much different way to practice law than I’ve seen with other law firms. And so actually, when we’re trying to recruit people and we talk about that, I think they get excited about that.

Greg Alexander [00:13:11] And to a member who is inspired by your story and wants to give it a shot. What would be the first couple of steps you would recommend?

Sonia Miller-Van Oort [00:13:21] So I think, you know, it’s hugely important that you have data that you understand. What your costs are for what you’re going to provide and what the scope of work is. I mean, really for any potential representation, the question is what’s the scope of work? And in some ways, it’s not any different than a contractor who’s building a house for somebody. What is it we’re trying to do here? Yeah, and that’s the first piece that we always start with. What is it that’s going to need to happen? So when I talked about that strategy on the front side, that really is super important in communicating with the client. All right, here’s what I, this is what I see. These are the people who I can envision as witnesses in the case they’re going to get to close. Seems like this is the case with hundreds of thousands of documents or this seems like a case of like, you know, probably less than 500. You’ve got to kind of be able to know how you’re going to approach it. But listen, if you’re an experienced person in whatever industry it is, you do know that.

Greg Alexander [00:14:22] Right.

Sonia Miller-Van Oort [00:14:23] And if you have data, like if you have past matters that you’ve worked on, for me, it’s cases. But, you know, past deals, you’ve done whatever your industry, you glean from that. And that’s, I think, what should take away the fear of the unknown. Because you’re not just you’re just throwing it out like willy nilly and let’s see what happens. It should be based on data one and two, I think a really important thing and I think this really addresses fear, too, is defining the scope of work. And so attorneys are. That’s what they’re afraid of. But here’s the deal. These are my assumptions. So when I present the alternative to the client, I tell them what my material assumptions are. And if we go outside those material assumptions, that’s extra. Yeah, right. So I can take a package of what I can reasonably figure out my costs, what I want, who’s going to work on this, what I want my margins to be, and come up with that. I don’t have to feel like I’m going to dive off a cliff if all of a sudden we end up with twice as much because I provided for that in the agreement. 

Greg Alexander [00:15:32] Great advice. You know, I might add that when we look at our benchmarking data and you cross-reference firm profitability and client satisfaction, our power members that use alternative fee structures as opposed to billable hours tend to be more profitable and they have higher clients. And so that might be something to help people get over their fear as well. Yeah, well, listen, we’re at our time window here. We try to keep these podcasts short, but I’m so excited about the upcoming Friday session. We’re talking about this for an hour and our members will have the opportunity to ask you questions directly. So on behalf of the membership, thanks for coming today and sharing your wisdom with us.

Sonia Miller-Van Oort [00:16:11] Thanks so much. It was fun.

Greg Alexander [00:16:12] All right.  And for those that want to learn a little bit more about this, I’d give you a few calls to action. You can pick up our book called The Boutique: How to Start, Scale, and Sell a professional services firm. You can find that on Amazon. If reading is not your thing, consider joining Collective 54 Insights. And there you’ll get podcasts and videos and charts and things of that nature. You can find that also at the website. And if you want to join and meet fantastic people like our guest today, go to the Contact Us section on our website and fill out that information and then a representative will get back to you. But thanks for listening today and until next time. Best of luck as you try to grow, scale, and exit your firm.

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Episode  126 – Syndicated Research: A Unique Way to Productize a Service and Generate Recurring Revenue – Member Case by Michael Ellison

Selling and delivering insight is at the heart of what professional service firms do. Some pro serv firms have packaged their expertise into research and sell it as a “product” via subscription. Attend this session and hear how member Mike Ellison has done this and built a 95-person firm in the process.

TRANSCRIPT

Greg Alexander [00:00:10] Welcome to the ProServe podcast, a podcast for leaders of thriving boutique professional services firms. For those that are not familiar with us, Collective 54 is the first mastermind community focused entirely on the unique needs of the boutique proserv firm. My name is Greg Alexander, I’m the Founder, and I will be your host today. On this episode, we’re going to discuss syndicated research and why I believe it’s an effective way to package expertise and thus scale a professional services firm. And we’ve got a great role model with us today. We have a member by the name of Michael Ellison, and he’s in the syndicated research business, and he’s going to share his journey with us. So, Michael, we appreciate you being here today. Would you please introduce yourself and your firm to the audience?

Michael Ellison [00:01:06] Sure. Greg, thanks. Happy to be here. Thanks for having me. My name is Mike Ellison. I am the President and CEO of Corporate Insight. We do competitive analysis research on the digital customer experience for financial services and health care industry. So we help our clients who are large banks and insurers to understand how their websites, their mobile platforms and the whole customer journey online compares to the competition, what they need to do to improve.

Greg Alexander [00:01:32] Okay, very good. So let’s start with the very basics, the term syndicated research. Please define that for us.

Michael Ellison [00:01:40] Sure. So I think in prior purest form syndicated research, it comes out, I think really the marketing profession and it’s it differs from customer research in that it’s often put together by not just one client, but perhaps multiple clients. So you might have a study that gets done and rather than say, you know, just Company A being the sole sponsor of the of the research and thus own all the data, a research company might form a syndicate, so it might be half a dozen or so companies that get together have similar objectives that they want to get out of it. And then collectively, they own all of the data and the findings.

Greg Alexander [00:02:23] Okay, very good. There are some very large firms that have that business model at their core. The one that obviously comes to mind is Gartner Group, just because they’re large and public. Why do you believe that putting a syndicate together as an approach to generating research is such a scalable activity?

Michael Ellison [00:02:47] Well, I think the economics are just such that, you know, you kind of do the work once and you sell it multiple times. You know, I know with us, we we probably are, it’s more productized, too. So, you know, we well you can we call our research syndicated, really what we have as a product. So we don’t necessarily put the work together. And Gartner’s the same force has got a similar model. You know, it’s not we don’t have a bunch of companies that come to us as they do the study. We actually do the research. It’s a subscription-based, it’s annual-based research, and then we sell it to multiple people in multiple firms. So it’s it’s a lot more scalable, obviously, than just having one company come and do the study and then they own the data. You know, we own the data. We can do a lot with it. And and the our clients don’t subscribe to it and they get access to it.

Greg Alexander [00:03:37] Yeah. So I was so excited to have you on the call today because your starting point was scale was built right into it per the description you just gave us. Many of our members are the opposite. They’re starting off as, let’s say, consulting companies and they have, you know, they get hired to do a project for a client. Many times it’s a custom project. And then the way they scale their firms is they just try to do multiple custom projects over time and eventually that hits a ceiling, right? If everything’s a snowflake, it’s kind of tough to really scale that you’re going the other way. You know, you started with this syndicated research concept, and in a moment, we’re going to talk about how you’re also doing consulting and the pros and cons of that. But for somebody who started, let’s say, as a consulting company and wants to, quote unquote productize to use your term, that’s the buzzword these days, what advice would you give them as to moving from point A to point B?

Michael Ellison [00:04:29] Yeah, I think it is hard to say because we to your point, we kind of started at point B. Yeah. But I’d say find the common ground, you know, what are you solving that’s common to the industry? What are the problems that are common amongst all the players in the industry and how can you take that problem, that solution, and and just make it applicable to everybody? You know, what can you do that enables you to do the work once and then sell it multiple times? You know, it’s it’s it’s I think that’s kind of the key to it.

Greg Alexander [00:05:05] Yeah. So the way it works for you, let’s say there’s a new research report you guys want to produce. Do you go and get multiple sponsors for it, then go do the research and then sell it to the broader public? Or do you make the investment, do the research yourself with no sponsors and then sell it as a subscription, so to speak?

Michael Ellison [00:05:24] Yeah, it’s a great question. And when we were smaller, just for context, we have about 95 employees now and when we were smaller and had less bandwidth I guess we would try to pre-sell it. We had the idea. Or usually what happened. A client would come to us and say, Here’s here’s what I need. And we say, Actually, that’s a really interesting idea. We’ve had a couple other clients, you know, let’s take this on and let’s, you know, let’s see if we can build a product. And so we’d say we’d want to sell it to maybe three or four other clients before we actually agree to do the work. And that obviously, you know, it’s made all the costs paid for it kind of the you know, the initial group would sponsor it. Often we would have a charter membership or a charter subscription rate for that, and then you would get those for kind of backed it. We do it and then we’d launch to regular people might add another 20% to whatever the price would be. Now and we actually just launched a subscription service this in January focused on the home auto and home lending space. So we had a couple of clients talk to us. We did a couple of projects in that space over the past couple of years, so we pretty much knew it was going to be well-received by our clients and that we would do it. We, we pre, I think marketed it. But we got some buy in and said, yeah, the concepts right now we’d be interested, but it was never a firm commitment. And so this time we actually started out just we underwrite it on ourselves and we just did the research and we knew that it would happen so. 

Greg Alexander [00:07:02] Okay. And the way you monetize it is it’s a monthly subscription all-you-can-eat or is it they buy an individual piece of research?

Michael Ellison [00:07:11] So the way we do our work, it’s it’s a social it’s kind of an all-you-can-eat subscription. There’s a number of different deliverables into the work that we do. We have monthly reports, quarterly reports. We’ve got sometimes depending on it, we might have a bi-weekly readout. So there’s, you know, there’s some data components like Excel matrices or dashboards that we sell. So there’s usually probably 3 to 4 different deliverables and then, you know, content delivered throughout the year. So it’s an annual subscription.

Greg Alexander [00:07:42] Okay. And is it just reports or are you doing things like webinars and things of that nature?

Michael Ellison [00:07:47] Well, we use webinars from a marketing standpoint, so we’ll we’ll do that as part of sort of industry awareness, but we will often package it like they’ll have as part of the subscription, they’ll have access to our analysts and it’s not metered necessarily. You know, if it starts getting abused, we’ll push back a little bit, but they’ll have access to analysts. We might do quarterly readouts for certain clients, things like that. It’s sort of a way because quite honestly, we now use those things to then land some custom work. So once you’ve got them hooked on on the subscription, on the syndicated work, you know, they start having a wait, we’ll actually want to take this. And do you know, can we look into this issue that’s not directly covered? And we use that as an opportunity to then add custom opportunities to it.

Greg Alexander [00:08:35] Okay. And you mentioned access to an analyst. So our members are going to ask you this question on the Friday Q&A when we get it scheduled. How do you staff something like this? Is it are you hiring consultants? It doesn’t sound like it. It sounds like you’re hiring analysts. So describe the role for me.

Michael Ellison [00:08:51] Yeah. So we have. And you’re right, it’s analysts and, you know, I’d say our consulting works probably not your traditional management consulting. We are not looking at the problem, finding the solution and telling it, telling the C-suite what direction to take their business. Right. It’s custom research offering and there’s consultative elements to it. Like we’ll make recommendations and things we need to do, but we’re not really concerning ourselves with actually how to go about doing it. Mm hmm. So the people that we tend to hire, it’s you might say it’s kind of that traditional pyramid, though, right? We hire a lot of people right out of school. We teach in the industry that that we cover. And we’ve got certain methodologies around how we gather our research. And and some of the more fundamental, key elements to it are what you start out with. And then as you get a little more experience within each industry or a vertical that you’re in, you write a little more research, you do a little more thinking, you do some blog posts, you do your own client calls and things like that. So our average age from our analyst team is probably in that late twenties. Mm hmm.

Greg Alexander [00:10:00] And average salary ballpark.

Michael Ellison [00:10:03] I think we start people in the 60 to 70 range and then, you know, they’re probably in their, you know, high nineties, low hundreds as you get. Okay. And it just for context we’re New York City based.

Greg Alexander [00:10:16] Okay. So the model there, the labor model, the expense model is lots of people, 95 people younger, less expensive, but lots of them. Whereas in a traditional consulting world, it’s a little bit more top heavy than that, you know. In fact, at the top of the pyramid, you might have million dollar earners and they’re keeping an army of juniors busy. So it’s a different it’s a different labor model because the work they’re doing is different. That makes sense, I would imagine, based on the way you’ve described it, almost all or a high percentage of your revenue is recurring.

Michael Ellison [00:10:53] Yeah, it’s in the 65 to 75% range is recurring. Yeah.

Greg Alexander [00:11:00] Which is the reason why most of our folks that have not productized want to productize because some of them, unfortunately, 0% of their businesses recurring every year. They start the year January 1st at zero. And you know, at some point when you get to a certain size, that’s really hard. So having some recurring revenue is really nice. And that’s the whole idea of today’s show, which is this is this is one way to productize expertise. And maybe it’s not the only way, but if you can start doing this, given Mike’s advice today, you can start building some recurring revenue into your model though. Mike, you’re also doing some consulting work and most syndicated research shops offer that, but it’s a certain type of consulting which you hinted about earlier. Can you describe for us what that looks like?

Michael Ellison [00:11:46] Sure. So let’s say in the syndicate a report that looks at the banking space, we might do one of our monthly reports might be on the online bill payment capability, and we’ll compare and contrast. And within each vertical, we have, you know, 20 to 25 industry players that we routinely track our coverage set. And we’ll compare and contrast how each firm offers that know, in this case online bill pay. And we’ll look at, you know, strengths and weaknesses and so forth. And we give some high level recommendations about usability and things like that. But one of our clients might be like, you know, this is really interesting and we’re actually planning to build out this capability for our customers next year. But, you know, we also want to see not just what you guys did here, but how does it compare to firms that you might not cover on a regular basis? Or we want to add in some UX actual UX testing based on some of the work that we’re we’ve done to date. So they would hire us to really build out really on that topic, or it could be something else entirely that they can do, but it’ll be like, here’s kind of what we’re trying to understand. How does our feature, our service compare to this particular set of customers that you may or may not track on a routine basis? And we’re really looking for recommendations in improving the overall UX experience, maybe not just functionality.

Greg Alexander [00:13:06] Okay. So it’s very, very so it’s related to the research that you’re doing. It’s building off of that. So it sounds like everything everything comes back to the research, whether it’s custom work off the research or consulting work of the research. Is that correct?

Michael Ellison [00:13:20] Correct. Yeah.

Greg Alexander [00:13:21] Okay. Got it. And how do how does somebody take a service like this to market?

Michael Ellison [00:13:30] Well. That’s a good question. And we the way we do it, we actually have a sales team. I mean, we have and it’s grown over the years when it was my dad who actually started the business and I joined him as employee number one. And, you know, I did the work and he sold it. Then I hired an analyst and I started selling. So it was very much, I think, a product-oriented sale. And as we’ve grown, you know, now we have, I think, five, eight years to customer success. So we’ve kind of built a sales organization within it. And I think that’s probably one of the benefits of selling a product, if you will, versus selling a consulting thing, because we can teach our salespeople what the value propositions are and who we know, who we want to speak to and everything like that. It’s the sale isn’t predicated on their own internal industry expertise.

Greg Alexander [00:14:23] Yeah. My last question for you, Mike, would be, if somebody wants to go down this path, any landmines to stay away from?

Michael Ellison [00:14:32] Yeah. With us. You know, one of the things that it can, you know, data ownership I think is one big one, right? You want to make sure that you can sell what you’re selling from a you know, in that you’re protecting your own business and. It’s also like your clients are going to see everything, like they’re going to see the same thing. So, you know, what Merrill Lynch sees is the same thing that Citibank sees or what have you. So I think your message has got to be consistent. And one of the problems this was a growing pain for us is particularly if you’ve got kind of a hybrid product versus custom, you got to make sure everybody’s playing from the same set of rules and expertise. We had something where we had our our analyst in and one of our syndicated packages were making recommendations that contradicted what the analysts on the consulting side of things. So we had to do some reorg after that. So I think it’s make sure you’re all you’re all preaching from the same pew. Yeah.

Greg Alexander [00:15:35] Awesome. Well, listen, on behalf of the community, it was great to talk to you today. This is your you’re different than most of our members in the sense that you’ve started off with a productized service, if you will, and our members are trying to get there. So your your story was really illuminating today. Thanks for being here.

Michael Ellison [00:15:52] Thank you. Glad to be here. Thanks, Greg.

Greg Alexander [00:15:53] Okay, So some takeaways for the audience. So if you’re a member, be sure to attend Mike’s Q&A session when we get it scheduled. If you’re not a member and you want to become one, go to Collective54.com and fill out the contact us form and one of our reps will get in contact with you. If you want to consume additional content, two things to try to do. So first would be Collective54 Insights, which is our weekly newsletter. If you subscribe to that, which you can do on the website, you get three things every week. You get a blog on Monday, a video on Wednesday, and a chart of the week on Friday. If you don’t want to do that and you want depth, you know, meaty stuff, spend a few hours with something, check out a book. It’s called The Boutique: How to Start, Scale, and Sell a Professional Services Firm. Take about three or 4 hours to get through that. Alright. Great episode today. Thank you all for listening. And until next time, we wish you the best of luck as you try to grow, scale, and exit your boutique professional services firm.

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Episode  125 – How a Founder of a Consulting Firm Added Equity Partners to Scale Beyond a Lifestyle Firm – Member Case by Mike Braun

Mike Braun started Pivotal Advisors with his brother to get off an airplane and make a living with less stress. One day he realized he wanted more than a lifestyle business. This required the recruitment of the next generation of leaders who wanted a piece of the pie. Mike masterfully created a plan to allow for equity to be shared with the new team. And in the process, he built a legacy, a firm that would last long after he and his brother were gone.

TRANSCRIPT

Greg Alexander [00:00:10] Welcome to the Pro Serv podcast, a podcast where leaders of thriving boutique professional services firms. For those that are not familiar with us, Collective 54 is the first mastermind community focused entirely in exclusively on the very unique needs of the boutique professional services sector. My name is Greg Alexander. I’m the founder and I’m going to be your host today. And on this episode we’re going to talk about how ownership structures in boutiques change over time. For example, sometimes we start our firms and we own all of it, or maybe we start it with another partner. And then over time, you know, key employees start to contribute. The firm gets bigger and you need to maybe include others in the ownership structure, and doing that correctly can be tricky. So we’re going to talk about that today and hopefully you can learn something. We have a great role model with us today. His name is Mike Braun. And Mike’s been through this and he’s going to share a little bit with us how he has been able to make this happen. So, Mike, it’s good to see you. Thanks for being here. Please introduce yourself and tell us a little bit about your firm. 

Michael Braun [00:01:29] Thanks very much for that. Glad to be here. So our firm is a sales effectiveness firm, which you may be familiar with. And although a little smaller markets were probably down market from when you played before, and we think of it as working with the small to midsize market for people that have an underdeveloped sales team and they’re trying to get more out of it, which is we find to be a large majority of CEOs are trying to get more out of their sales teams. 

Greg Alexander [00:02:00] Yeah, very good. Okay. And as I understand it, you started the firm and it was an equal partnership between yourself and another person. And then over time, it became four owners. Is that correct? 

Michael Braun [00:02:15] That is correct. And the the first 5050 not only was another person, the other person was my brother. 

Greg Alexander [00:02:20] Oh. 

Michael Braun [00:02:21] So so we have the family component here as well. So we we we ran around in other businesses and both grew up through the sales side, learned a lot and decided that we were going to share all of our knowledge and start a business that we knew something about. And our goal and this is a funny part, our goal was. We’re not going to get on airplanes because we were both road warriors. And we’re going to make a living and we’re never going to have partners. 

Greg Alexander [00:02:52] Okay. 

Michael Braun [00:02:53] So that was the original movie, right? 

Greg Alexander [00:02:57] COVID certainly helped with the airplane thing, but it went from two partners to four partners. So what happened? 

Michael Braun [00:03:06] Well, as we went on and you know, we started this back in 2008 and the other, you know, bad part of life and recession was hitting. So we’ve been through a couple of them now. As time went on, I think we we decided probably very late in the game for me, but we decided it was a great lifestyle business for us and a few other people. But now we wanted more and to get more we needed to move on and we actually needed to make it a business. We could scale and grow. And to do that, we needed to bring in some other highly talented people. And we brought those people in. We needed a way to retain them. And then, of course, these smart young people started asking questions like, Well, if we grow this thing and knock it out of the park, what’s in it for me? 

Greg Alexander [00:03:50] Those damn smart people.

Michael Braun [00:03:52] And I think what happened is we said we’re not going to get to where we want to fast by ourselves. 

Greg Alexander [00:04:02] Okay. So let me ask some tactical questions. So that’s good context for us. So, you know, the first thing you got to get right when you’re cutting new partners into the partnership is the valuation. So how did you get everybody to agree on what the firm was worth? 

Michael Braun [00:04:18] Great question. And I did I didn’t take your advice for the chapter as I hadn’t read it yet. You know, go go get a good investment banker and no, go get really smart people to help you. So I did some work, created a valuation formula, took it up cheap to some accounting friends of mine. Not that they’re cheap. They’re professional accounting valuation people, but I got them to do it sort of on the gratis take a peek kind of thing. We came up with a financial formula that said, you know, I think cleanly said, here’s how much we’re earning here and here’s what our cash flow is and that kind of stuff. Then you have to pick your multiple, right? And it’s it’s how do you pick a multiple when you’re when you don’t you’re not really selling, you’re not really in the market. You don’t have good comparables. So we just went and found a study that said, here’s what the average management consulting comparable is. And I think it was 2012. And we all said, is that a good benchmark for us internally to put a number on it and through some discussion on the matter? Everybody said, yeah, as an internal number, it’s probably not the maximum we would get if we sold the business. But for us, that says a metric that we can use. 

Greg Alexander [00:05:37] Yeah, perfect. I mean, the most important thing is to get agreement from all the parties, which is sound like you were able to do is, which is great. Which takes me to my next question because it’s one thing to say this is how we’re going to value the firm. And then there’s another thing to say, you know, here’s who, here’s who has the rights to do X, Y, and Z. Because once once people become partners, they have rights. So how did you handle governance? 

Michael Braun [00:05:59] Great question. And it took a pretty big evolution in our myself because I had one between my brother and I, which was relatively easy to put together. But now you start to bring in other people in and you’ve got the whole control issue. So so the way we did it is we said we still have to make sure that we keep controlling interest. So that kind of divided very quickly how many shares were available. And then we even set it up so that there’s. Sort of different levels of membership, if you will. So he and I still have what I would call company control. And there are really minority partners that share in the income. Producing distributions as well as if we ever did sell the company, they would obviously get their share of that, but they had less. If we disagreed, they would have less say and. What we’re going to do or what process moving forward. And that took some work because, you know, being a minority shareholder, everybody wants equity. So they realize what being a minority shareholder is really about. 

Greg Alexander [00:07:08] Right. You know, everybody wants equity until they have to pay for it. So did you guys grant the equity or did you sell it? 

Michael Braun [00:07:15] Great question. I am one of those people that never bring up equity. I don’t I don’t believe in that. Right. It’s like I worked for this. I’m not going to give it to you because you work hard. So they paid in in in each of them did differently. One, save money for a period of time, although we did it kind of like a stock option locked in a price. Instead, you can buy in at this price. And then, you know, it took a couple of years to save that money and, you know, physically wrote a check. The other person said. I want to get in faster. And so we basically did a seller financed who said, okay, you’re bought in today, but we’ll do an installment purchase over a period of time and you can buy it. But either way, they are buying shares to become owners of the company. 

Greg Alexander [00:08:04] And are they still doing that? And how long does it take to buy the shares? Is there a schedule? 

Michael Braun [00:08:10] There’s a schedule, but one is, you know, wrote the check upfront. So they saved for about two years and bought in. The second one will have bought in after about two and a half years. 

Greg Alexander [00:08:22] Okay. Very good. You know, I’m glad to hear you say this because you and I are similar in the sense I don’t believe in giving equity away. I think you got to earn it and it should be paid for, otherwise it’s really not worth anything. So but, you know, sometimes people struggle with that, but you learn real quick who really wants to be a partner. I mean, if they’re willing to save up for two years and buy the stock, then they’re all in. You know, if they’re not, then maybe they’re not. So the advice to the listeners would be is to is to follow that. It’s a good screening tool. Tell me a little bit about how you and your brother, over time as you decided you wanted more than a lifestyle business and you’re going to grow it? You know, it’s one thing for the equity to change in the minority rights to come into play, but what about the day to day job and responsibilities? How did that change over time? 

Michael Braun [00:09:09] Yeah, it was it was really interesting because one of the things we said is, you know, we have to. We’re going to have to migrate. And then, of course, if you do that, if you do, I’ll give you a general idea. So. I’m in my early sixties. My brother’s four years younger than I am. His other two partners are 15 years younger than we are. So now you got four partners with completely different time horizons that have completely different ideas of the time frame to grow this business or move to the next step. Right. Yep. So we started putting things in place pretty quickly Where? I started giving away. Responsibilities on finance and product development and giving away responsibilities on managing the delivery team, if you will. And my brother ran the BD in the marketing side of things largely, so I was building myself out of it and continue to do that, which is a weird spot to be. That’s probably another podcast. And but we. We really started getting clear about who’s doing what and who owns what. In that process, with a much more focused goal on how do we how do we drive enterprise value, not just not just matches EBITA, but enterprise value, and how are we going to grow this thing? And in course, some of the group just call us the younger part of the group was let’s take every dollar reinvested in the business and grow this thing over the next 15 years. And as the eldest partner and the we don’t want to, we would keep some of them on the right. So we were in that mode and continue to be. But I think the happy medium, you know, if I think about when, when one of the other members talking about the rule of 40 when it comes to sort of profit and valuation that was super helpful around let’s be in 2020, let’s have real cash flow, let’s have real money, let’s have a real firm in in let’s grow at 20%. And some years we were pretty close. So many years were just off that. But, but that’s the model where we’re chasing after, you know. 

Greg Alexander [00:11:28] And Mike, after having a successful family lifestyle business, life’s pretty good. Everybody’s making money, you’re not on an airplane, etc., etc.. I mean, what caused you to wake up one day and say, you know, I want to do something more than a lifestyle business? 

Michael Braun [00:11:45] You know, really, we always said we wanted a company, not just our own little practices, because we could have done that. We did build the company and we brought other people in right away. But I think it really changed. And this is probably something for everybody to think about. When we said we want this thing to live beyond us, there’s going to be a day where we and I and that wasn’t even really that close when we started having these conversations. We are still probably half a decade. And yet if it’s going to live on, it’s got to live beyond us. And how do we make something that continues to provide value to our clients, continues to provide, solve the problems for them, and gives people great careers? You know, when I’m off doing something else, yeah, I’m never going to get there. Otherwise, you know, this is going to look like I’m going to work till I’m done working. And then this thing goes, Yeah, which was going to be a problem for my brother, who had four years left. Right. Like. Like, Sorry, dude, I’m out. And that just wasn’t feasible. And then we said, maybe. Maybe we have to build a real growing company here. And to do that, we need some other people. 

Greg Alexander [00:12:56] Now, sometimes founders. Aren’t as idealistic as that. Maybe there are two. Capitalistic, meaning they sell their firm, they get a bunch of cash they don’t really want. They don’t care what happens to the firm after that. They’ve been validated, so to speak, and they look at their bank balance and it puts a smile on their face and they ride off into the sunset. Others say, You know, I really care about my clients and want them to be treated well afterwards. I really care about my employees. I want them to have good-paying jobs and career opportunities afterwards. You know, there’s people that fall, you know, in the middle between those two things. So obviously, you know, you made substantial changes because you care what happens to your firm after you leave. Was there a particular influence that made you think that way? 

Michael Braun [00:13:47] Oh, my. That’s a that’s a really good question. And I will also say it’s as much as it sounds like I did that perfectly. There are days where you think about the bank account. 

Greg Alexander [00:13:56] Yeah, sure. Always. Right. 

Michael Braun [00:13:57] Right. And so if I’m honest about it, there are days where it was like, well, how do we maximize this? And then there are other days where it’s no, we got to do the right thing by the employees. And then there are other days where it’s like, Hey, these clients deserve the best. And so you do run around that triangle a little bit. But but from an influence perspective. This is going to sound really, really weird, but I’m going to go back to my mother with tell us, as kids, you know, if you do the right thing by people and hold your head high, you don’t have to be the richest person in the room. Yeah, maybe without even thinking about that. That was buried in there at age six, right? Yeah. 

Greg Alexander [00:14:42] Yeah. Great advice. You know, I think we all need role models. Parents obviously can play that role. You know, for me, you know, I studied entrepreneurship. That’s what I’m passionate about. And the most successful entrepreneurs that there’s always somebody who has more money than you. 

Michael Braun [00:14:59] Oh. 

Greg Alexander [00:15:00] Oh, I mean, I don’t care who you are. It could be Elon Musk. And now he’s no longer the richest person in the world. But the really successful entrepreneurs measure their life’s work around impact. And that’s not to say that you shouldn’t make a profit. You should. However, impact is greater than that. And I think what you’re doing is fantastic. And it sounds like you guys have given a lot of thought to this. And as a result of that, you’ve built a great company and you’re in your early sixties and you know the next chapter, your life might start here relatively soon. And it sounds like the firm’s in good hands afterwards. So I really appreciate you coming on the on the podcast. I’m really excited for the private member Q&A that we’ll have with you where members can ask you questions directly, but on behalf of the membership, appreciate you making a contribution today. 

Michael Braun [00:15:48] Thanks for the time today and again, thanks for your input into it. You were part of all that thinking. Great. 

Greg Alexander [00:15:52] I’m glad to hear that. Okay, so a few takeaways for the listeners. So if you are a member, look for the invite to Mike’s Q&A and be sure to attend that so you can ask your questions to him directly. If you’re not a member, I encourage you to think about joining. You can go to Collective 54 dot com and fill out a contact us form and we’ll get in contact with you if you want to consume some more content. A couple of ideas for you. One is subscribe to our newsletter collected 54 insights that comes out every week. You get a blog on Monday, a video on Wednesday and a chart on Friday, a little bit more digestible. And then we’ve got a couple of great books. We have the boutique How to Start Scale and Sell a professional services firm. You can find that on Amazon. And then we have a member-only book available to members only, I should say, called The Founder Bottleneck How to Scale Yourself. And it talks about some of the things we discussed today, which is legacy succession, etc. So I’d point you in those directions, but thanks for listening. And until next time, I wish you all the best of luck as you try to grow a scale and sell your firm someday. Take care. 

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Episode  123 – How a Pioneer from the SaaS Era is Jumping on the AI Wave to Re-invent his Firm – Member Case by Jeff Pedowitz

Jeff Pedowitz, CEO of The Pedowitz Group, was one of the pioneers of the SaaS era by driving adoption of marketing automation technology from Eloqua, Marketo and others. This allowed his firm, The Pedowitz Group, to dominate his niche for almost two decades. Now, Jeff sees the next big wave, AI, and he shares with Collective 54 how to ride it all the way to the bank.

TRANSCRIPT

Greg Alexander [00:00:10] Welcome to the ProServe Podcast, a podcast with leaders of thriving boutique professional services firms. For those that are not familiar with us, Collective 54 is the first mastermind community focused entirely on the unique needs of ProServe firms. My name is Greg Alexander. I’m the Founder and I’ll be your host today. On this episode, we’re going to talk about A.I. artificial intelligence and its impact, in particular around B2B sales and marketing and overall revenue generation. And we have a fantastic role model today, and his name is Jeff Pedowitz and he’s fantastic for a reason, and are many reasons, I should say. But the one that is relevant to today’s topic is the last time we had a major tech wave was the SaaS wave, and Jeff was a pioneer in that space. He and a very small number of people I believe, can claim attribution for the mass adoption of marketing automation. And having gone through that entire journey all the way from a nascent industry to maturity, which it is today, his perspective is profound, and I think he can take those lessons and apply them to AI because it’s early, early days there, and he maybe more than most, can probably share with us where this might be headed. And what we hope to accomplish today is by listening to that story and applying past lessons to new tech, maybe we can get ahead of the curve, learn to learn a few things, and maybe profit from them. So, Jeff, it’s great to see you. Would you mind introducing yourself and your firm to the broader audience, please?

Jeff Pedowitz [00:01:59] Sure thing. Greg, good to see you too and thank you for having me back. So I own the Pedowitz Group and we are a sales and marketing consulting company. We work with sales and marketing leaders who want to drive more revenue and we specialize in digital channels. And of course, AI is probably the best emerging digital channel we’ve seen in quite some time.

Greg Alexander [00:02:21] Yeah. And I understand that you just did a bunch of homework on a new book that you got coming out in just a couple of weeks. What’s the title of the book?

Jeff Pedowitz [00:02:27] It’s called The AI Revenue Architect. Great.

Greg Alexander [00:02:33] So why don’t you kind of give us the outline of what’s in the book and maybe we can use that as a framework for our talk today?

Jeff Pedowitz [00:02:39] Yeah, absolutely. So. Well, my job, my company’s job is to follow technology because that’s what our customers want us to do, is to implement technology so they can scale their sales and marketing engine. So AI and various components of AI have been around for several years now. It’s just this whole emergence now generated by AI and what that Open AI platform are doing are bringing it into the mainstream and really starting to help a lot more people visualize the tremendous possibilities. As I start to think about this and the problems that my company and I have been solving for the last 16 years. There are still systems are still siloed. There’s data that’s everywhere. And people spend more and more and more on technology and data, but they still can’t run sales and marketing any more effectively than they could 15 years ago. They just have a lot more tech now to deal with it. So as I started thinking about the potential of AI, the first thing I wanted to do was really just help companies solve their problems better. And so the book introduces a concept called Rain, and that name was chosen intentionally because in sales, of course, we’re always trying to make it rain. But in this case I took Matt and it really stands for a Revenue Artificial Intelligence Network. And what it does is it connects all your systems and processes both inside and outside through AI. So you can actually, through one single interface, actually start to direct and manage your revenue engine. So it controls scale.

Greg Alexander [00:04:15] Mm hmm. I love the acronym. So let me make sure I understand that. So Revenue Artificial Intelligence Network.

Jeff Pedowitz [00:04:23] Yes.

Greg Alexander [00:04:24] Okay. And the way that you just described it to me, I find myself wanting to apply past frameworks to it. So is it is it middleware in your perspective or is that an incorrect analogy?

Jeff Pedowitz [00:04:39] Well, in some ways, yes. Right. So it’s it could be taken into something like a Boomi or Mule Sox or automatic or any of these integration in all areas. But combining it with AI so that you can train the systems that you have. So even some of the routine, mundane tasks can be done quickly. But as that starts to supplant, you can actually be a lot more productive. So just some typical use cases we scoring, which is something that we had Eloqua pioneer back in 2004 for the first time, largely has not changed dramatically. Most of the input for sales marketing is made, scoring is manually derived. Well, I think we should get ten points for a website, visit it five points about an email or 17 points of view or a demo. And then the models are relatively rigid, and then we send over what I suppose to be qualified ways to scale sales based on this framework, grade spec and prioritize. But with A.I., you don’t actually need an artificial or an arbitrary model. It can actually analyze the real activities, the demographic data that customers really did to come up with a scientific data, factual-based model that will continue to sell, learn, and even more importantly, become more predictive. Wow. So that’s just one example of where AI can play a major role. There isn’t a sales and marketing person I know that loves cleaning up data. We love getting more data, but we don’t actually like going in and cleaning out fields and systems and building new segments and doing all that well. That’s another way that AI can actually do that, because once you train it on what data standards you want for your company, you can start doing that automatically. Content creation and response. No matter what sales methodology is in today’s modern B2B selling environment, our customers are 90% and 95% of the way through the sales cycle. This is not like what, Greg, when you and I are personally, I wish we could control everything. So that inherently puts us at a disadvantage. So if you can use AI to do more informed research on your prospect customer, write better correspondence, look at their content, come up with unique differentiators, anticipate possible objections your buyer might have, and be ready with response to be more proactive. You’re now starting to get ahead of the game.

Greg Alexander [00:07:09] Those are fantastic use cases. It’s causing me to creatively think about how to get them implemented. What I want I would like to do speak to you about a question I have here in my notepad is, you know, selfishly, I’m trying to help the members of collective 54. I know what you’re doing is much bigger than that. But in this particular case, about 85% of a proserve income statement. The expenses are labor. And so if you can replace labor with tech in theory anyways, you can significantly increase profit margins. Now, some people view that as a negative, you know, and a lot of the stuff you read about AI right now is all these scare tactics. But as a capitalist, I view that as a huge plus. I mean, if my members could take their workforce from 110 and keep the revenue the same, I mean they’re going to make a lot more money and scale a lot faster. So is that hype? Is that real? I mean, do you see the tech replacing humans?

Jeff Pedowitz [00:08:05] Well, it’s a little bit of both. I mean, it doesn’t outright replace humans. And it should be noted that we talk about AI as a general category. AI in its truest sense, means artificial intelligence, sentience, self-awareness, emotional awareness, what we’re all talking about, this general of AI, ChatGPT. It’s not that, it’s machine learning. Now it can take large amounts of data and it can learn quickly in a process to make decisions. But it’s not self-aware and has no emotional understanding. It doesn’t understand context. It doesn’t understand nuance. It is still just a tool in the hands of a skilled practitioner. So I view this as the third major generational change since I’ve been in the workforce. The first, of course, being the rise of the Internet. The second, the introduction of the smartphone. And now this. Now, when the Internet first came out and I got my first marketing job in college, I did catalog marketing the bank. There was no email. There was no Internet. There was no nothing. Did catalog marketing go away? No. Did two new digital channels come into play? Yes. Some people that were very skilled in direct mail moved over into email, digital channels and developed new skill sets. When the smartphone came out, it also introduced the whole new apps and mobile advertising and all new ways of doing things. So I think if you’re just doing simple, repetitive tasks and you’re not willing to adapt like any other moment in human history, if you don’t evolve, sure you will get left behind by an unknown space. AI doesn’t replace the human. It can’t because it’s not a human. It can make us a lot more productive. It can make us a lot smarter. And it can process things faster. So sure, it will introduce new margin providing that professional service owners can really think about how to apply it in the best way for their business. So let’s talk about some immediate practicalities. Almost all of us in professional services are doing research with our clients. We’re doing interviews, we have transcripts, We provide some kind of report or presentation that, well, today that takes a lot of manual activity. It requires our senior and junior people to crunch data and do that. Those tasks can be replaced by AI and done in seconds, which will free up more value added time for those professional people to add more quality insights based upon that data back to the client. Mm hmm. And you use AI. to automate the data gathering. So if you’re doing a subjective in-person interview today with your client and you have them, just go to a site, they fill out a survey,  AI processes all that information in real-time, speeds up that discovery period, adds more value. Yes. So there are a lot of different ways that AI can enhance it, but I think it gets a little overhyped to say that it will replace.

Greg Alexander [00:10:55] Okay. So if I’m listening to this, my first thought is I need an AI strategy for my firm. I’m intimidated by that because it’s evolving. I mean, just just in the last 10 minutes, you’ve dropped more things on me that I knew were possible and that I’m imagining that pace of change is going to continue. So what do I do? I mean, how do I develop a strategy for myself and how do I keep it up to date?

Jeff Pedowitz [00:11:24] Well. Try not to make it bigger than it is. Right, because it’s going to keep evolving and changing. So if you can appreciate that this is a way of streamlining and take improving analytical capability processing. Make a list of your business today. Look at your operational things that you do, your sales things, your marketing, and then look at whatever your professional service on or whether you’re on an architecture firm or a law firm or you are on a consulting firm. What are the things that you’re delivering to your clients? Go back and look at your recipes, your statements of work, and say, okay, if I was going to just add AI to my things, what would that look like? How can I just improve my offering? If I was just to AI enable. Many of us have some type of maturity level, some type of tiered offering with our clients, could you take your top tier and introduce AI to it bigger and more advanced? Or conversely, could you introduce AI to your basic tier and make it more palatable for your prospects and clients and thereby lowering your cost of delivery and acquisition? And I would just start there. So build a simple spreadsheet and go through and that’s how you start to frame out a strategy. Don’t sweat about whether or not you got the right tools or not. Start off with something simple like ChatGPT or Bard, which are conversational and generational. Don’t get some. I mean, there are literally since the time you and I talked about doing this podcast, there’s been 500 applications that have hit the market, but only in the last month or so. But a lot of them are crap, you know, and a lot of them are just small little widgets. Don’t get to fall into that trap of getting consumed. Like you’ve got to go out and buy all this stuff. That’s not necessary. Use the free stuff.

Greg Alexander [00:13:15] If you think back to the two previous key changes of your career, the Internet, the smartphone, and now this. What did you with retrospection now, what did you learn from those two previous major moments that you think you can apply to this moment and allow you therefore to take advantage of this moment, maybe more than you did the previous two?

Jeff Pedowitz [00:13:36] Well, as an investor, I definitely wish I would have added that on some of those .coms, not the ones that last, but the ones that I really I, you know I think that I would have gotten involved sooner and incorporated it even much faster in the business. Well, the benefit of hindsight, I think, always makes us all more prescient. But in light of that. I reflect back on the earliest part of my career, I did not understand truly what the Internet was going to become. I had no. I mean, again, this is we’re talking early nineties, mid nineties here. There was no Google, no SEO. We had dialing with AOL and.

Greg Alexander [00:14:18] No one had any.

Jeff Pedowitz [00:14:19] I decided to hear that we got mail. So I’m certainly not going to claim I mean, certainly with the revision I could be a futurist, but at the time, no, I didn’t know. But I think I would have embraced it more and seen seeing where it’s gone. Same thing with a smartphone. I mean, when I first came out, I was I love my BlackBerry like everybody else. I was just like I was reluctant to switch over and what actually got me to do it is a good friend of mine, Dave Lewis, owned a rival firm. We were at some conference up in Toronto and he was showing me all the stock prices of his clients, his public clients that he was helping since he got involved on his smartphone. And I thought that was just the coolest thing, you know what I mean? Basically saying, Hey, what’s going on? Since we got involved this is what my clients are doing. So I went out and got the phone the next day, haven’t looked back. Yeah, but even then, you know, this first couple of years, you think about us here in the States, we would not even think about using it for banking. I know. And working out. I’m not going to have my information out there. I still got to go to the bank like everybody else and deposit my checks. But today, do any of us think twice about just aiming our phone somewhere? Those of you that are listening, I’m like aiming my virtual phone here. Now. I mean, so it’s changed, you know, we get it and it’s proven over and over again that as consumers, we will trade privacy for convenience. Yeah. So at first, what we’re reluctant to until we realize what we’re ever afraid of. So, yes, I mean, the concerns out there right now are real. And I don’t mean and I don’t want to minimize it in any way. I mean, there are definitely ethical concerns. There’s definitely a built in bias to some of these systems and tools. But that doesn’t mean that they still can’t be highly productive. And you just you know, you exercise with some common sense and some caution but today’s fears will be abated by tomorrow’s gains and productivity and the things that we’re going to be able to do because of AI are going to be mind-blowing. In fact, just like I mean, even though I’ve thought about a lot of things, there are so many things that we haven’t even possibly contemplated yet that are going to happen in the next 2 to 5 years because of this change in technology. And that’s the great thing about the human race, is our endless ability to create and to innovate.

Greg Alexander [00:16:33] Yeah, I agree. I mean, if you just think about the health implications of what we’re going to be able to do medically because of these tools, I mean, it’s amazing. And I’m with you. I think the the pros outweigh the cons tremendously. Okay. Well, we’re out of time here. So, Jeff, thanks for being here. Give us the name of the book again, because by the time this airs, we should be able to buy it. And I’m assuming you’re going to sell it on Amazon.

Jeff Pedowitz [00:16:55] You got it. The AI Revenue Architect.

Greg Alexander [00:16:58] Okay, very good. So I encourage everybody that’s listening to this to pick up a copy of that. Jeff is a qualified author, to say the least, so I’m sure it’s well-researched and well-written. Couple other things for you. Obviously, members, you should make sure you attend the Q&A session we’ll have with Jeff when that gets scheduled. You can ask your AI-specific questions to him at that point. If you’re not a member, of course I encourage you to do so. Go to Collective 54.com and apply and one of our reps will get in contact with you. If you want some more content, check out our newsletter Collected 54 Insights. You can find that on the website. And of course our book is called The Boutique: How to Start Scale and Sell a Professional Services Firm. You can find that on Amazon. But until next time, I wish you the best of luck as you try to grow, scale and exit your firm. Take care.

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Episode  122 – How to Discover Why You Are Losing Deals, and What to Do About It – Member Case by Brady Jensen 

Win/Loss reviews are a powerful way to improve your sales results. Yet, most members are not doing them because they incorrectly think they are hard to do and require lots of time.

On this episode, Brady Jensen, Chief Executive Officer at Aggregate Insights, an expert in win/loss reviews will give members the method, tools, and templates to allow them to do this correctly, quickly, and cheaply.

TRANSCRIPT

Greg Alexander [00:00:15] Welcome to the Pro Serv podcast, a podcast for leaders of thriving boutique professional services firms. For those that are not familiar with us, Collective 54 is the first mastermind community dedicated entirely to serving the needs, the unique needs of boutique pro serv firms. My name’s Greg Alexander. I’m the founder and I’ll be your host today. And on today’s episode, we’re going to talk about win-loss reviews, what they are, why you should do them, how to do them, how to systematize them, etc. And we’ve got a great guest with us today. His name is Brady Jensen. And Brady really is an expert. And that’s, in fact, this is what his firm does for a living. And he’s going to share a bit of his wisdom with us. So, Brady, welcome to the show. It’s good to see you. Would you please introduce yourself to the audience? 

Brady Jensen [00:01:10] Sure. And thanks for having me, Greg. Yeah. So my name is Brady Jensen. I’m the founder of a company called Aggregate Insights. The way that we think about what we do for companies is we help them look before they leap. Folks oftentimes make decisions about how they’re going to operate, their strategies, their tactics, without considering what they don’t know about their market. So we help companies get a window into their market by helping them understand what their buyers want, what folks who have decided to either purchase or not purchase their solution. I think as well as generally understanding the market, the players, the positions, and messages taken by others in the market as well. 

Greg Alexander [00:02:03] Okay, fantastic. So we’ll talk about win-loss reviews, a subject I know is near and dear to your heart. So let’s start with the basics. So what is a win-loss review? 

Brady Jensen [00:02:14] A win-loss review, from my perspective, is all about taking count on what has actually transpired in your sales processes. So you may be a singular person selling at a firm. Maybe you’ve got a sales team no matter how small or large you are. There’s information that prospects want you to know, and there’s information that they don’t want you to know. And that really perpetuates all the way up to the decision that’s being made. And in many cases, also any sort of postmortem calls you may have with these folks that you’ve built or you build a relationship and reputation with them over time. And people also just don’t like to deliver bad news. So this is all about. Thinking about why you win. Why you lose. What the decisions that go your way look like. What the decisions that don’t go your way look like. To help you understand everything from what’s happening competitively in your market to “Is my message landing with my ICP?”.

Greg Alexander [00:03:19] Okay. And since you’re a member of Collective 54, you know about our membership. So why should a member of Collective 54 care about win-loss reviews and invest the time and effort in conducting them? 

Brady Jensen [00:03:35] I think it’s one of those things where. You can fool yourself into thinking that you’re really busy because you’re taking actions in ways that you think will move the business forward. And it’s often very hard in a fast-growth environment to take stock of what’s happening. Are you actually investing the resources, energy, time into putting yourself out there in the market in the right way? Or are you encountering all these headwinds when they when they’re completely unnecessary? If you do make the conscious decision to look back and understand why you’re either winning or losing and the direct result of that should be if you’re doing it right, is a direct lift in your overall win rate as well as shortening sales cycles. 

Greg Alexander [00:04:32] Yeah. Okay. Very good. And let’s talk about the how, how do you do them? So one thing you’ve educated me on is there’s a certain way to ask questions that make these things productive. Tell us a little bit about, you know, how win-loss interviews take place. 

Brady Jensen [00:04:49] Yeah. So there are a number of theories on how to conduct these best from my perspective after a lot of. Attempts at-bat to do these. We’ve landed on a process that looks somewhat like a jobs to be done. Interview. Clayton Christiansen Harvard, I believe, came up with this way to really think about what the jobs are that an individual or an organization are trying to do that they’ve hired any product to do for them. So we actually use that a modified version of that to talk to our customer because we think it’s just as important to understand what is that first thought that made you think we need to solve some problem? How did you go about evaluating when you were actively looking and considering options? The purchase decision? Obviously you get down to the brass tacks of everything from – Why did you decide to look now? Was there a point that it was clear to you that this solution was either for you or not for you? Understanding everything from outside parties like like references that may also play a part in whether a decision happens or not. So the front part of our guides on this really focus on that type of information. Then we start to understand more around product perception, the competition, and ending with some open-ended questions that allow folks to sharea advice or feedback to the team on items that we didn’t even ask a question about. 

Greg Alexander [00:06:45] And when is it best to conduct a win-loss interview or interviews, and how often should they be done? 

Brady Jensen [00:06:53] Yeah. So from my perspective, you’ve the, the, the sooner the better. Right. People’s memories tend to fail them over time. And even the way they remember certain events may shift over time. I tell clients all the time that what we are seeking is not the truth, but the perception of the truth from your buyer. 

Greg Alexander [00:07:19] Yeah. 

Brady Jensen [00:07:20] It’s very hard to one man’s truth isn’t all that helpful, especially when you’re using your internal truth to decide what it means and the perception of your buyer. Perception is what buyers have to go off of when they make decisions that they make. So how often we tend to do them from a client perspective, we have clients who are doing them every, every quarter. That’s what our recommended recommendation is as far as cadence is concerned. If you have the deal flow to be able to do it ten, 15, 20 interviews a quarter if you can, if you don’t have that deal flow, I think a good number to shoot for is a best case. If you go after three losses, you’ll probably get one out of every three that’s willing to have that conversation with you. So sometimes you’re restricted just by the number of overall deals that you’re going through in a given quarter. But that’s normally what we recommend is a quarterly cadence where each quarter we do an analysis on what we’ve seen as well. Combine that with the information that we have learned over time about them to be able to create some historical context as well. So yeah, every quarter up to, you know, we have even larger clients that are probably up 15 to 20 a quarter. There’s some time or cost constraints to doing these, but that tends to give you a pretty good view. 

Greg Alexander [00:09:02] Yeah, okay. Sometimes our members, when I advise this and I think it’s a best practice, I’m not sure how somebody can run the firm without it, to be honest. They say, well, we have a really hard time getting people to talk to us because we haven’t lost a deal per se. It’s just been delayed. It’s the project that went away. But the reality is a project never happens many, many times. So. So what’s your response to that? Maybe not a loss, but something that just kind of is in perpetual delay? 

Brady Jensen [00:09:34] Yeah, I mean, it’s interesting. We actually catch oftentimes catch prospects in this environment where all of a sudden a conversation with us actually causes them to reengage. Right. It’s delayed. There’s not a whole lot of clarity as to what the next step is. Recognizing that a deal that is near zero at the moment is not going to automatically spring back to life. A lot of times, having that conversation with them may modify it slightly to be a little less direct about the ultimate decision versus where their head is at. But it is surprising how many folks who will tell us, yeah, we’re still considering it’s still a great opportunity to engage with those folks. And surprisingly, they’re there. They’re quite willing to have those conversations, even if you think, “Oh, well, they think we’re still in the sales cycle”. First off, they probably don’t think you’re still on the sales cycle. They’ve pushed you off for six months or whatever. But even if they have, we’ve had real success getting those folks to engage with us. 

Greg Alexander [00:10:45] You know, and sometimes I hear from members that they don’t do this because they tried and they couldn’t get anybody on the phone. And normally that’s because that’s not what they do for a living and they don’t know how to get somebody on the phone. But the people that are attempting to do this and they’re getting stuck around responses. What recommendations do you have for them? 

Brady Jensen [00:11:06] Well, I would say treat it like a continuation of your sale. Right. Like when we reach out to folks, you’re probably not going to get a great response from that first message or response rate from that first message. It’s all about having some consistency. Continuing to follow up with them. I will say first, we spent a lot of time trying to get these done for no cost at all. You will spend more time and effort trying to get these folks on the on the line for a free call as it would cost you to give them some sort of minor compensation. In many cases, that’s a donation to their favorite charity. In some cases, their favorite charity might be themselves. That’s fine. But as far as that goes, we’ve found that some especially for the losses, the wins, the wins in most cases don’t require any. Right. They have a relationship with you now, but the other folks have decided not to have the relationship. And in most cases, you’ll burn through a lot of time and effort trying to do it the cheap way versus saying, you know what, let’s find an opportunity to provide them some sort of honorarium or donation to charity. Yeah. 

Greg Alexander [00:12:29] And let’s say somebody is going to do it and they get to these, you know, five, ten, 15, whatever it is, a quarter, what do they do with the output? 

Brady Jensen [00:12:38] I think it’s all about what can you actually bring to life. So there are different schools of thought when it comes to win-loss. I think a lot of programs that I’ve seen sort of end at the here’s the data stage. From my perspective, whether your internal external to the organization, your goal is to connect the dots across these different experiences and find the combinations of data that start to tell a clear story. That is true. All right. We’re not trying to come up with things out of thin air, but it is about connecting those dots and formulating a clear point of view of. Here are the things that are spiking that we’ve never really heard before. Here’s the things that we continue to hear. What does all of this mean? Right. Establish a point of view and then it clear why it matters or those sorts of things. And then it becomes pretty clear at that point, just understanding from a strategic level to then assign out work to responsible parties and win lost. In many cases, it’s going to touch product leaders. It’s going to touch sales leaders, can touch marketing leaders, and making sure that you have all of those folks on your side and playing ball with you is important because ultimately getting anything done in this stuff, I don’t think it’s all that helpful to say, okay, here’s the sales reps, here’s all we learned about why you won or lost last quarter. Right? They’re not at the, they’re not at the pay grade to make the types of sweeping changes that would really move the needle in any significant way. So it’s all about sort of that buy-in as well. 

Greg Alexander [00:14:30] Awesome. All right. Well, listen, we’re at a time window here, but I’m really looking forward to the private Q&A session We’ll have with the members one of our upcoming member sessions on Friday. And I’m sure they’re going to have a million questions for you, because I think this is something that people need to do. There’s a perception that it’s a ton of work. You’re going to share some templates and tools and things like that to make it easier. So really grateful for you sharing your wisdom with us today. Thank you so much. 

Brady Jensen [00:14:59] Sure thing. Thanks for having me. 

Greg Alexander [00:15:01] All right. So for those that are listening here, let me give you a few calls to action. Some members attend this session with Brady. Will get those invites out to you. If you’re not a member and you’re listening right now and you want to meet cool people like Brady, think about joining. You can fill out a contact us form on the website and one of our reps will get in contact with you if you want some more information, more content. I should say two things I pointed to. First is our book, The Boutique How to Start Scale and Sell a Pro Search firm can find that on Amazon. Or if you’re if reading isn’t your thing and you like videos and podcasts and charts and things like that, consider subscribing to Collective 54 Insights. And that is our weekly newsletter. And we push out three pieces of fresh content every week. Okay, Thanks for listening. And until next time, we wish you the best of luck as you try to grow a scale and someday exit your professional services firm. 

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