Paul Stansik of ParkerGale Capital - An Operating Partner’s POV on Value Creation

Speaker A: Foreign.

Speaker B: The Cloud Returns podcast covers all types of software investing, whether seed, venture capital, growth equity, private equity, debt, and even the public markets. I'm happy to have Paul Stancic, a partner at Parker Gale, on the show today. Paul, do you want to tell everyone more about yourself and your firm?

Speaker A: Yeah. So we're a small B2B focused PE fund. Uh, we're headquartered here in the West Loop of Chicago and we buy software businesses from founders and I'm part of our in house value creation team here. That means I spend my time in what I call the Bermuda Triangle of sales, marketing, and the CEO mostly helping to create the plans, the training, the processes that help us go find the next hundred customers at each of our portfolio companies.

Speaker B: And what are your investment criteria overall as like a firm?

Speaker A: Yeah, we talked a lot about this over the last year as a team. Just how do we want to position ourselves? Which meant that we talked to a lot of our portfolio executives that work for us. And we've heard for a long time anecdotally that our approach to PE was different, but we were hunting for some clarity around, like the specific qualities that made us unique. And there's actually, uh, a page in a deck that we share with folks and I wrote down the words because I think they capture what we do and what we invest in really specifically. So I will just read that if you're cool with that.

Speaker B: Yeah, yeah.

Speaker A: Quote, we raise small funds to acquire software companies where our hands on operating expertise can unlock gaps between value and potential. End quote. So I will tell you that every word on that line line was chosen very carefully and there's a lot in there. Right. So we're software only, we're hands on, which means that we're in it with our companies and we're all about unlocks and not rebuilds. So the companies that we invest in have really solid foundations. Like typically there's a product that works, it's a market that's strong. There's a couple hundred happy customers that have stuck around for a long time, but there's still work to do to what I call finish the work that the founder started. So maybe that's pushing product forward. Maybe it's about investing in sales and marketing. Whatever the unlock is, we find it, we get the management team excited about it and committed to it, and then we help them do the work that we need to do to go make it happen. So we're looking for opportunities that look like that where we can partner with our management teams in that way.

Speaker B: Interesting. I think it's like a good transition for like the role you have. And it's surprisingly undercovered. No one really has, particularly if you're like a, um, management team or a founder looking to sell your business or you're interacting with private equity firms. Like, the role of an operating partner can be a little bit ominous and vague. Like, what does an operating partner actually do?

Speaker A: Yeah, it's cool. It does feel like we're in the first or second inning of people waking up to the value that this role can provide. But there's still so many permutations of it out there that to your point, the title can mean a lot of different things. And I will say coming into the job, you know, five plus years ago and what I do today, I think some of my hypotheses about what the gig is were right. But I've also woken up to, I don't know, some of the more nuanced responsibilities and ways to do the job well. And I've written about this. So one of my best performing articles ever is literally called what does an Operating Partner Do? So if people want the long form content version of the answer, they should definitely go check that out. But the way that I talk about it is this is the weirdest job that I've ever loved. And the reason for that is it's really like four jobs in one. Right. So first, you're kind of what I call the keeper of the standard. So you have to have a very strong perspective on what good looks like in an area that matters for the company. So for me, that's mostly sales, marketing and leadership. You have to have an ability to teach that standard to people and you need to have a willingness to translate it into the handwriting of the company. So we don't believe in one size fits all playbooks. Different teams are ready for different things at different times, and different situations dictate different priorities. So you need to balance this idea of what does good look like with an idea of what is the company ready for. And that's what being keeper the standard is all about. Second job is, I call it like the strategic diplomat. So it's all about creating agreements that move the business forward. So nothing happens inside of our portfolio if the management team doesn't first weigh in and buy into what we're doing. Nothing. So it's not enough for me or our team to know the answer. And I think in general, good PE operating partners or operating people, they're adept at both, like spotting the gap and then getting people on the same page with how you fill that gap. And if you have one without the other, you can get stuck pretty quickly. The third piece, which is probably the one that's most universal in my role, is just what I call helping to keep score. So you can't know if you're winning or losing if you can't see the scoreboard. And there are a lot of companies out there that get into a private equity ownership situation where they've never really gotten a handle on the metrics that explain what's happening inside the business. And I would say in my role, people that are good at this job, they're good at building simple, consistent reporting, something I think we're going to talk about today. And they measure things in a way that cuts through that chatter and they make it obvious when things are on track versus off track. And like this one is near and dear to my heart. And I've written a lot about this topic as well. Like, getting the reporting thing right is also a very component, very important component to building what's called psychological safety, which is just the ability to bring up when things are not going so well because I think it makes it easier to see tough problems. And the research out there would tell you that, like, the ability to see and talk about tough problems is what makes high performing teams great. So reporting, very important part of the operating partner role. And not just because now you can see the numbers. You're actually putting the team in a position to succeed by having more transparency into how the business is performing, in my opinion. And then the fourth gig is being the bar raiser. So look, PE changes things when we invest. Like a value creation plan, in my opinion is in some ways just kind of a list of the things that you're going to change. And I think PE gets a bad name when the bar gets raised without giving people the resources they need to meet it. So you need to strike the right balance between asking for more and lending a hand. And if you're going to ask the company to do things that it's never done before, in, uh, my opinion, you better be there to teach, coach and pitch in, especially when stuff gets hard. So, thought a lot about this topic. I love my job. It's the weirdest job I've ever loved. And I think part of that reason is like, it really is four different jobs in one.

Speaker B: And then I guess like a natural question, you know, founders or anyone putting their business up for sale is, is this operating partner going to take my job?

Speaker A: Yeah. And in our case, definitely not. That is not what we are set up to do. It's not where we think that we create impact. I think the classic version of the operating model, which is operating, um, partner, which is definitely not the Parker Gale model, is kind of like the CEO sitting on the shelf. That is a bit of a call option on the current management team. And hey, this person might be able to help out, but in a pinch we can put them in, in a fractional role or in a, in a, you know, a uh, time bound role while we figure out what to do next that can work. What we found is we prefer to have people on our operations team that can actually work alongside our management team in many cases, help them do the work that they're already doing and just go a little bit faster with the benefit of stealing from the earned secrets that we figured out from elsewhere in the portfolio.

Speaker B: Got it. I think that's always a good clarification and part of the, like, you know, natural fright people can have when interacting with private equity. And I think this next one probably teases out exactly how you work with your companies pretty well. And it's been. One of your more popular pieces of content that came my way was your weekly sales metrics playbook and slides that we'll put in the show notes, but nice. Maybe you could just expound on it. Like, what is that weekly playbook that you work with your companies on?

Speaker A: Yeah, the way I tee it up is our best portfolio. Companies have found a way to nail down something that I call their data diet. And your data diet is basically the handful of the most important metrics in my world. Most of those point to sales and marketing that tell you if you're on track or off track. And that matters a lot because most private equity investments last what, about five years? And if you do the quick math, I think that's 260 weeks. And that is not a lot of weeks. Like, it pays to know whether you had a good week or not. And it's a lot more fun when you have data that tells you if you're on a roll or you have some catching up to do. So that idea of making it a little bit more objective if you had a good week or not, especially in sales and marketing for businesses that typically sell on a revenue multiple, are we doing the things that are increasing revenue and giving us a chance to hit the number next week, next month, next quarter? So after experimenting with a lot of different approaches for the last five years, we feel like we stumbled on a few things that work for us. And we decided to share some of those, the templates and the principles that seem to work really well for our companies. And it's an approach that we've started calling less data more often. And it's about the data that the company consumes every week. And that's important because in our world, a lot of the value of reporting or the perceived value of reporting is the investor asked the management team for a report, they produce it, they chuck it over the fence. And there's never really any discussion about what's in the numbers or how things are trending. But I'm a big believer in that data is only as good as the conversation it creates. So we feel like we put ourselves in the strongest position for success when we nail a reporting template that the company can use when we're not there first and then agree that we're all just going to look at the same stuff going forward.

Speaker B: And I thought that was an interesting standard, right, that if you make your internal reporting strong enough that it's the same reporting you work with your investors, would you say that's an example of you raising the bar?

Speaker A: Yeah, I think so. And look, every management team that we work with and every management team that we put in place, nobody doesn't want to know how they're performing and nobody wants to completely ignore the numbers. The challenge is there are choices you have to make. And it can be really complex. Like we have all this technology around sales and marketing that we didn't have 20 years ago. We have CRMs, we have ABM platforms, we have marketing automation. And the things that you can measure have grown exponentially in the last 20 years. And that's great because the power to diagnose the problem has grown along with it. But it's also challenging because the complexity of what you can look at and all the choices and options you have for which KPI to talk about, if you have 30 minutes as a management team that's also grown, and you have a little bit of the paradox of choice here, right, where when you can measure everything, it's kind of easy to just not measure anything. And so what we find is there is a hunger within the management team to simplify this really complex notion of the go to market machine. And if you can neck it down to 3, 4, 5 metrics that really matter and have a deep discussion about those every week where you can, where you can take stances. So a stance would be like, hey, everything's going great, keep going. A stance could be like, uh, we're not sure. Let's keep an eye on it. A stance could be, you know, holy crap, we got a problem on our hands. One, management teams want to have those conversations and two, they appreciate the help in nudging them in that direction, especially when simplicity is the way that you get there.

Speaker B: And one thing that stood out in the slides is that it looks like you encourage people to kind of create these from hand or into an Excel template. So you're actually like typing in the numbers. And that's pretty interesting relative to like when you think of all the Salesforce and HubSpot and all these tools and dashboards we already have. What's the perspective on doing it by hand, if you will?

Speaker A: I think it's really hard to develop a fingertip feel for how the business is performing if you're just. If it's a one way broadcast from a Salesforce dashboard or a BI tool or a slide like, you know, we've owned automation businesses in the past where the entire value proposition is like, hey, we will save you from having to hard key in data from one system to another. And there is a lot of value in that. But when it's your business and when you're trying to keep your finger on the pulse of how things are actually going and whether the trend that you are trying to improve is actually improving, I think there's benefit to actually like handling the numbers yourself and forcing yourself to create the template, not just consume the template that describes what's happening with your performance. Does that make sense? A little bit of a woo woo topic, but it's one of those weird situations where doing the work by hand actually has some nuanced but important benefits.

Speaker B: It makes sense. And there's always variances and things to normalize and you have to be close to it instead of just taking whatever Salesforce gives you.

Speaker A: Amen. Yeah.

Speaker B: And another interesting, uh, thing you had in the slides was around if you're always scrubbing the pipeline, you're never scrubbing the pipeline. Could you elaborate a bit more on that?

Speaker A: Yeah, I will say there's a footnote here. So I stole this from Dave Kellogg, who's a mentor of mine and a board member of ours. And if you don't read his stuff and you're of B2B software like Fix that and start reading his stuff today. But this gets back to the idea of operational rhythm. And I think as human beings we're a lot better at doing what we do for a while and then pulling up and tidying things up. So there's all kinds of Examples of this in the business systems that are out there. So agile methodology is basically a two week sprint followed by a retrospective or cleanup period. The Pomodoro method is out there. It's 25 minutes of work and then five minutes of rest. And I think the rhythm of the sales team is no different. Like you need some time to run and you can't expect some of the more administrative duties that are important part of good sales process to be always on. Real life is a little bit too chaotic and all consuming in my opinion. And so if you're always scrubbing the pipeline like I would agree with Dave, you really don't have those more intensive periods where you're only scrubbing the pipeline. So I like to see that happen once a month instead of the sales leader saying, hey, we're always doing it, so it's always clean. Because if you dig into the basic indicators of pipeline quality, like whether things are stuck in sales cycles or whether things are aging beyond your average sales cycle, or whether things are being pushed out, typically that's not the case.

Speaker B: Interesting. Another one that looked like it might have been the most important metric if I was reading it right was number of opportunities per week. Could you elaborate a bit more there?

Speaker A: Yeah. So again, small B2B technology companies, that's what we invest in. That's what this is looked at through the lens of. But growth for us typically comes from manufacturing more at bats, right? So the math works like this. If we keep our win rate and our average selling price and our retention levels steady and then we increase the number of qualified opportunities that we create each week, the company grows faster and the company becomes more valuable. Like that's a very oversimplified version of how it works. But if you believe that and you, you go through the thought exercise of having to pick one leading indicator of whether things are getting better or getting worse, and you can have faith that those other metrics you didn't keep a close enough eye on would degrade or those wouldn't degrade, it's kind of a no brainer that you would pick new opportunity creation as your leading indicator. Right? Because if you're getting more at bats and your win rate stays the same and there's not other stuff just completely sideswiping you, more conversations leads to more growth. And I will add, in our companies, which historically would admit that they've typically underinvested in sales and marketing, there's a lot of value in just getting the word out and creating conversations with prospects and customers. Again, these are good products with typically very high nps. And if we can find a way to expose those products to more prospects out there, it's generally a good first impression. And in my view, sales and marketing at its core, it's more than a little bit about just creating and accumulating those good first impressions.

Speaker B: And since we're talking a bit about on the marketing side, some of those at bats can come through outbound and the like. But how does Parker Gale, uh, and yourself work with companies from a marketing perspective?

Speaker A: Like, to me, the divide between sales and marketing is kind of artificial. Like it's, it's kind of the same thing in my opinion, just with different channels that have somehow migrated to different people's responsibilities. So we do a lot of it. And to me, I can't help a head of sales increase the rate of bookings or the win rate if I haven't already done some foundational work on the marketing side. So a lot of that is positioning. So if folks haven't read April Dunford's book, obviously, awesome, it's a favorite. I've got a dog eared copy right there that's highlighted and stolen from constantly. But a big part of what we do is we help make the magic in the product obvious. So what is the value that we bring? What is the feature that nobody else has when a customer raves about us, what is the thing inside the product that they're raving about? And why is that so much better than what they were doing before? Like clarifying that and getting that out of people's heads and getting it onto paper and on the website and everywhere else. That is a big part of what we do because most of the time it's there, but it's not necessarily clear. And when you have that, then it becomes much easier to start writing content that reinforces that magic in the product, but also answers questions that buyers have. Right, so like, what is this thing? What are my options? Why would I pick this over something else? You know, how much work is it going to be? Like, all that stuff should be showing up in a place where the buyer can discover it without having to interact with a salesperson if they don't want to. And then the last piece that we do is like, just encourage our companies to talk to customers. Uh, I think, Matt, you had. I can't remember if it was Claire or Georgina.

Speaker B: Uh, Claire. Claire.

Speaker A: Yeah, Claire's awesome. Forget the Funnel is maybe my favorite read of last year. So give her a shout out. But if you talk to 10 or 20 customers and you ask them about just the work that they did to find you and choose you and get you up and running. If you're a Software product, after 20 of those conversations, you kind of know what to do from a marketing perspective. But most companies need a little bit of prodding and encouraging and a template that you can use to have those conversations. And if you're looking for one, I think their book is fantastic. But you can't go wrong from just talking to customers and then asking yourself, how do we take what we learn and make that show up really obviously on the website, in our digital channels and anytime that a salesperson talks to

Speaker B: a customer and when you're in due diligence and you guys are evaluating investment opportunities, like how do you assess the sales machine and I guess to a lesser extent the marketing machine of any of these prospects?

Speaker A: Yeah, I would say the first thing that we do is we get curious before we get critical. Right. So the number one thing I'm trying to get a handle on early in diligence is what is our target market, what is the size of that target market? And if we were going to pick a segment in that market to go focus on, what does that look like? So that's basic segmentation and kind of a hypothesis about ideal customer profile. But I also, I also want to know, like, how does the sales process and marketing process work today? So the first slide that I put up in a diligence call with a prospective platform investment is a simple. It's three chunks of a Gantt chart. Like you guys create opportunities, you work opportunities, and you close opportunities every single week you're open for business. Just talk to me about how that works. Like what questions do people have early on? How do you find your prospects when you're taking them through the evaluation process? What do they want to know? What do you show them? What does the demo look like? And then when you close somebody, what gets them over the hump and what is the value that you're promising and how do you deliver on that value? And typically the first hour of a diligence call is on that one three part Gantt chart slide where I just want to know how it works. And then from there I'd say the first thing that we look at in diligence is what is the opportunity to go find growth within the existing customer base. Because most of the time our companies haven't done an amazing job of saying here's everything that's on the menu. How else can we be helpful for you So I typically like to get to a very simple spreadsheet in the first three or six months that has all of our customers on the left hand side and all of the products or modules that we sell across the top. That's a very simple spreadsheet. It's usually hard work to get there. But the white space that you find and what you can prioritize from then on out, the growth opportunities are typically very powerful and it's always easier to sell stuff to people that have already bought stuff from you versus going out into the market and warming up new prospects from scratch.

Speaker B: That's fascinating. And to have you know, under optimized multi product companies is a pretty interesting pathway.

Speaker A: Yeah. And it's, it's not always at the outset. We've got a history of doing, you know, smaller platform investments where we have an eye to do M and A and we've done three, four or five add ons to smaller platforms and grown them um, in that regard. But when you do that, you get a gift and a curse. Like the gift is you now have more to sell, but the curse is you got to figure out how to go sell it. And so as the, as you grow the number of products in your bag, it becomes important to refresh that white space analysis and then to make choices about okay, which sales play do we want to go build next? So in our companies we believe, yeah, you should have a sales playbook that describes how your sales process works in general and most importantly like how you keep the CRM clean. But it's way more important to have a couple of sales plays that help you go fill in the white space that either is out there in the market in terms of new logo expansion or expanding within your existing customer base.

Speaker B: Interesting and kind of related I guess is, you know, we've seen across the industry with repview, you know, quota attainment in the 40 to 45% range for, for about a year now. And that's always striking how low it is. Do you have any viewpoints on like root causes or if you're seeing that in your segment of uh, software.

Speaker A: Yeah, I took some notes on this topic because I, I think it's, it's a pretty interesting historical time. Like the software thing is still pretty new and private equity's involvement in software is still pretty new. This has not been going on for a hundred years. Right. And if you think about the economic cycle that I think we just got out of, I'm not an economist in case you can't tell, like what, what Just happened. Well, we over hired sales reps almost everywhere. When you talk about the big public software companies, not our companies, but I think people had a bias towards throwing capacity at the growth problem without a great view into efficiency because the prevailing view was like, hey, you want a few more sales reps? Sure, money's free, go ahead. Right. So the bar for quality in terms of who you were hiring and how much attention you gave those people in terms of onboarding and getting them uh, acclimated to the market and the product was probably not what it should be because again, money was cheap. I also think we are getting out of a period where there was some serious over reliance on inbound. And inbound digital marketing is still a relatively new thing. I think the HubSpot guys, Brian and Dharmesh, Inbound Marketing, their book that was written in 2009, that's like 15 years ago. It's not that old. So you have this whole generation of sellers that grew up fat and happy on inbound. And inbound is harder now because everybody's doing it and you know, once everyone does something starts to get less effective and there's this whole generation of sellers having this harsh wake up call that sounds a little bit like, wait a second, you want me to prospect? You want me to go into an account and figure out how else we can help? Yeah, I'm not so sure. So that's as much like, I don't know, like a cyclical thing as it is an attitudinal thing. And then this has been true forever. But I think maybe the biggest driver is underinvestment in training. There's lots of companies out there that don't train their reps enough. And I think there's more companies out there that don't train their reps at all. You know, invoking Dave stuff, I think he made the point in a blog post a while back that the average Disney World parking lot attendant gets more training than the average enterprise sales rep. And I think that's true. I think that's crazy. And if people are having problems where they're anywhere close to that 40% quota attainment, I think that would be the first place that I would look.

Speaker B: And at your portfolio companies, do you guys have in house training or do you, you know, engage like third party, you know, Sandler style, uh, sales coaching?

Speaker A: Typically it's coming from a combination of a sales leader, myself and some outside in kind of third party resources. So again our typical company is maybe 100, 200 people, maybe 10 quota carrying reps maybe a few more. And in a lot of cases we haven't evolved to the point where we've added a standalone training person enablement person. And I think that's a feature more than a bug because I want to hire sales leaders that have really strong opinions on what that sales process looks like, what the moments that matter the most in that process should feel like and sound like. And they're constantly training and coaching and reinforcing their team to make sure that's happening. We work with the closed loop guys a lot. Shout out to Corey and Hillman. They do an amazing job of creating a lot of rigor while also creating flexibility with a training regimen that can fit into whatever you're doing, whether that's medic or anything else. And then I do a lot of training. So I've, I've written a lot of stuff on, you know, what good looks like within sales, both for individual seller execution as well as kind of the broader sales process. And, and I like that because one, it gets me in front of the reps, which is like the unit of growth inside of our companies. And two, again I think our teams are hungry for that attention, that training and that opportunity to practice the stuff that really matters when you get in front of a customer.

Speaker B: Interesting, interesting. And then tying it back to the quota. And now that we have some context on the sizing, you know, 10, 10 quota bearing reps, are your companies less prone to this type of overcapacity that leads to those low quota attainments? And same thing with the training. In a 10 person team, someone not being trained stands out a lot more than a 500 person sales org.

Speaker A: I think it's easier for us to keep an eye on it. So one of the things that's, I believe it's in the metric playbook, it's not one of the kind of two big templates that I put out. But uh, we try to look at rep attainment and rep performance and rep ramping every single month. And if you're in an organization where you can put every quota carrying sales rep and every quota carrying account manager on one page and look at the history and look at how things are stacking up for them in the current quarter, it gets a lot easier to spot problems more quickly. I think if you're a uh, sales organization of 100, 200, 300 quota carrying sellers, like it's easier to hide, uh, and it's easier to explain away if someone isn't ramping like they should, if someone isn't performing like they should. And it's easier to kind of forgive some of those blips. But for us like that is an area where I think smaller companies it's easier if you have the right template and the right reporting in place because there's no excuse for not looking at how are the reps performing every single month. I think the trick is just keeping that reporting simple and making the template consistent over time.

Speaker B: Interesting. It's kind of the big topic of the day is AI and I know like battery ventures on the sales and marketing side kind of came out with a forecast of long term 30 to 50% headcount reduction in GTM. What's your view on the AI impact in sales and marketing?

Speaker A: Whether today, I don't know man.

Speaker B: Future.

Speaker A: If you wanted me to come up with a reduction uh, in sales and marketing spend and how much to attribute that to AI, I could guess, but that's all it's going to be is a guess. I'm actually talking to as many kind of small company sales and marketing leaders as I can and I'm way less focused on where do you think AI is going? And I'm way more focused on how are you using it today. And from what I've been able to tell, again, very small and very limited sample size. It's only getting started. Like it's really tough to see where it's going to go. But the use cases that people are actually adopting today are very basic and they're useful, but very basic. It's things like summarizing call notes into follow up communications. It's things like organizing what goes into a gong recording into a medic framework. It's things like, you know, taking the notes from customer interviews and putting it into a table that makes it easier to see what your product marketing looks like. So to me what I see at least today and in the very short term is much more of a tool than it is a replacement. And I think there's a lot of benefits to learning how to use that tool. But if you're a CEO and you're asking your head of sales like how are you going to do, you know, your job with two fewer people that are replaced by AI, I think it's going to be a while before we get there. Now look, different things are happening every day. Like I think OpenAI's Sora model just came out this week and you know, we went from a, uh, a world where you could type things into GPT and it would talk back to you and now we're in A world where you can type things into GPT and a video comes back at you, who knows what's going to happen next? I do believe that one of the knock on implications here is look what just happened. Content just got a lot easier to manufacture. So if your throughput as a marketing team or a sales team was, you know, this many characters or this many white papers or this many pieces of content, maybe that's 2 or 3 or 4x. A side effect of that is like the world just got noisier. And to me in a noisier world, quality stands out even more. So yeah, AI is going to change things. Yeah, you can probably do more with less. Maybe that eventually translates into needing fewer people to do the same amount of work. I don't think we're there yet. To me the most important imperative is you have to get good at making stuff that people actually want to consume and that impacts the person you are trying to reach. Because there's going to be a lot more static out there in your marketplace, no matter which marketplace that you're in because of the new technology that just showed up.

Speaker B: For sure it is early. And are you encouraging your portfolio to allocate some time to just experimentation, kicking the tires on tools?

Speaker A: Yeah, for sure. Again, we're a small team so we don't have any, you know, AI, uh, professor in residence. But us on the operations team, we're definitely experimenting. We had our first AI summit in our office this past fall with our engineering teams. That was fascinating. I'm encouraging our sales and marketing teams to experiment with it, especially in service of doing prospecting. That doesn't suck. So writing better email copy, writing better landing page copy, you know, just translating again the product positioning stuff into different formats that can end up in front of a customer. But again, it's early days. I think we're, we're in the stage where we're trying a lot of stuff. We're noticing a few things that seem to work and sharing that across the portfolio. But I'll probably call you next week with something new that I uncovered from talking to one of my leaders and I'm excited to see what those will be.

Speaker B: Yeah, it is fascinating playing with some tools. I should share some of the with you guys, uh, behind the scenes. And then another huge thing you guys do is around hiring and talent and again you have playbooks and frameworks and maybe just give everyone your viewpoint here on, on what you advocate for.

Speaker A: Yeah, sometimes we talk about ourselves as a talent agency with a, uh, private equity fund attached to it. So, uh, I would say most of what we do, whether it's finding an executive who knows an industry that we want to invest in, or backing that executive to run a company that we found, or filling out a management team, you know, once we're in a new platform, it's mostly about picking the right people. So if you can get really good at hiring and if you can miss less often, this job gets a lot easier. And we've invested a lot of time into just thinking about how we can do that, practicing how we can do that, getting trained on how we can do that. And our batting average isn't perfect, but we think we've stumbled on some immutable principles that lead to better hiring results. So I won't get into those in detail, but if you Google Parker Gale Hiring Handbook, we've put everything that we've learned and the same exact curriculum that we train our portfolio companies on out there on the Internet for anybody to see. And I think all of it starts with just getting a lot more clear with what you're actually looking for. So if you go to any job board or any company's website and look at the current openings, most job descriptions are pretty terrible. They're kind of this dog's breakfast of things that you might be asked to do someday, combined with all the qualifications and like unicorn criteria that you would love to see in a new hire. They don't describe what your CEO is going to ask you for on your first day of the work. They don't describe if you got to the the end of your first year on the job and you crushed it, what did you accomplish or finish? And they certainly don't paint those things in a way that a really high performing person who's never heard of your company is going to get excited about. So I would say I spend most of my calories and most of my attention on the hiring process and just defining what the heck we're looking for up front. Because if you do that, well, one, you stand out in a crowded hiring market. Two, you can convince really talented people to at least give you a shot, even if they've never heard of your company. And three, it makes a lot easier to think about and nail down what do you actually want to ask people in an interview process to make it fair, to make it structured, to make it consistent, and to actually test for the things that you want that person to do once they're on the job. And I've been pretty surprised just seeing other hiring processes. Again, how unclear the Job descriptions are, how unstructured the hiring processes are and just the lack of clarity and alignment going in on what people are actually looking for both in terms of the person and what they're going to accomplish.

Speaker B: And you know, using an example here, like what would be something unique about your process and you know, defining this for you're hiring a chief, uh, revenue officer or VP of sales. Like what is unique and what does that job description difference look like in your framework?

Speaker A: Yeah. So you're, you're sneak previewing something. I'm writing right now because I'm writing

Speaker B: an article and I did not know that by the way.

Speaker A: No, that's good. This is your, your checks in the mail. Uh, it's called CEOs. Like this is what you should expect from your head of sales because a lot of CEOs don't know and I think a lot of CEOs sit down for interviews and they don't know what they should be testing for going in. I would say there's a few things. One is focus. Like most of our companies, even if they're a vertical SaaS product, they've never really nailed down a target account list or you know, the, they've never taken their TAM and turned that into a territory for their salespeople. What we've found is that is a big time performance enhancer. Both just in terms of, hey, when your salespeople know who they should be focused on and who they should be calling, they spend their time a lot more wisely. But it also has knock on effects for product, for marketing and engineering. Like when you know who you're should be getting in front of, it gets a lot easier to know what to build for those people next. So in pretty much all of our job descriptions, whether it's for a CRO or a head of sales, there's some element of focus and list building and taking the market segment that we already know we should be attacking and operationalizing that by building a target account list. So that's number one. Comfort with metrics is a big part of it. So I want someone that looks at that weekly sales metrics handbook and gets excited about it. Not someone who rolls their eyes and says, yeah, yeah, yeah, like the numbers are over there. But what I'm doing is the most important thing. Like I want people who recognize that the numbers are the business. They're not adjacent to the business, it's just the business expressed in a different language. So that's number two, like someone who's excited to be a little Bit of the, the seller, but also the scientist behind revenue and tuning that machine using numbers over time. And then just like a willingness to try stuff. And that's tough to test for, but in most organizations I think the cycle times are way too long. Like if you and I were working at a software company, I would want us to have an idea about what we could say to a customer or a landing page that we could pick up or uh, you know, an outbound campaign that we would do and get it out in the market by it's Wednesday today, let's get it out Friday. Like what's it going to take to turn that around in 48 hours? So I want to see evidence that someone can go from a customer driven idea that's going to help us scare up meetings or pipeline or both and launch it quickly and imperfectly and tweak it over time. Because this is not a Fortune 100 company where the next marketing campaign takes six months to spin up and launch. Like, if we can measure our progress in days or weeks instead of months or years, we can make more mistakes more quickly and tune things up. So moving fast really matters. And a willingness to just try stuff is highly undervalued in my opinion.

Speaker B: And what are the real challenges of hiring and recruiting in a middle market? Like inherently less of a brand, inherently less resources than like the largest enterprises. Like what are some learnings you've had in overcoming that?

Speaker A: Yeah, I'd say the biggest one is we are recruiting people for a company they have never heard of before in almost every case. And thankfully the private equity backed executive thing is kind of a badge of honor these days. I think for us it's for good reasons, but it's necessary to frame the role in a way that gets people's attention. So that importance of writing a good job profile and describing not only what you're going to accomplish, but the mission that the company is on and how you fit into that mission at this time. And then giving people the clarity around, like, this is what you're going to own, this is what you're going to be accountable for and this is what you will be able to brag about 12 to 24 months from now. Like you need to make that attractive to a high performing person who maybe before you talk to them or reached out to them, wasn't considering working inside of a company that is in this emergent stage. So I help sales and marketing people inside of our companies every day. But sometimes the most interesting marketing exercises are taking a role that really matters. For a CEO and really matters for us, and positioning it, uh, in a way that someone who wouldn't have taken notice of it before now gets really excited about it. And the good news is like, that kind of acquisition. So going out and finding someone who punches above their weight and who can be a bar raiser of their own kind inside of our companies. One, the benefit of that lasts for years. And two, like, it makes my job a hell of a lot easier when we can hire an a player who can really shake things up and make an impact inside of our businesses. So, you know, I'm the growth guy, but I spend a lot of time on our, uh, hiring process, our actual interviews, and thinking about like, okay, there's an empty spot in our organizational chart. How do we frame that role in a way where we can get the best possible person into it and probably a person who's never heard of us before. I think that's a super interesting question. And thankfully, the rewards of doing it well pay off for a long time.

Speaker B: That's a great answer. And, you know, we're coming to the end of the show, but one interesting thing about your role is you get to work and actually work with a lot of different people, a lot of different executives. What's an interesting habit and a high quality habit, um, you've picked up from somebody in your portfolio?

Speaker A: Yeah, like, be a coach is the thing that comes to mind. So it's really easy in my role to delude yourself into thinking you have the answer or, you know, the next right move with very limited data. And I will say I gave one of my CEOs a call last week, a guy named Todd Dowshi who runs a business called SMA Technologies. And I wanted some coaching from him on how to approach another business of ours with an issue that I'm trying to untangle, surface, figure out. And going into that call, I expected Todd, the CEO, someone who's run this business for a long time and someone who's fantastic at what he does to just like, give me the answer.

Speaker B: Right.

Speaker A: And I was, you know, I even scheduled the call for like 15 minutes because I thought it was just going to be a quick touch. And Todd asked me like 15 questions about what the context was, what I had already tried, where I thought the real challenge was, you know, whether this was an opportunity, what else was influencing it. And I stopped him like 10 minutes in the conversation and I said, todd, uh, like, you are totally executive coaching me right now. And he just laughed because I think he knew exactly what he was doing. But it was the best reminder ever for me. Someone whose job is to, like, solve problems and someone who has to solve problems across right now, five different companies at once. And the inclination can just be to, like, hit the problem with the answer and move on. But my job is also to influence and arm people to solve the problem for themselves. Right. And if I don't do that questioning exercise, that curiosity exercise, like asking the fifth, sixth, tenth question about what's actually going on, how they've responded to it, what they think the options are, like, the answer is never going to stick. And so I think I've known that for a long time. Really been into the idea of the power of executive coaching for a long time. But I got a really good reminder of it by somebody who runs one of our businesses last week and seems, uh, like a little thing, but it was exactly the reminder that I needed at that time.

Speaker B: Well, look, that's like a perfect example. Incredibly helpful. Look, this has been a good show. We're going to have a lot in the show notes because you produce a lot of excellent resources at your firm.

Speaker A: Thank you.

Speaker B: Really appreciate all the time.

Speaker A: This is awesome, Matt, thanks for having me.

Speaker B: And speaking of which, is there anything you want to promote? How can people work with Parker Gale? Where can they find you? Where do you write all of that good stuff? You've given us a lot of value. Here's your chance to promote yourself.

Speaker A: Yeah, parkergale.com is the best place to learn about what we do, what we invest in, and what some of our companies look like today. I do a lot of writing on LinkedIn, so if you look for me on LinkedIn, I promise you, you won't be able to get out of the way. And most of that writing is on my blog called hello, Operator. Uh, which I think is hello, operator.substack.com and I'll be coming out with something this week around that topic of, uh, hey, if you're a CEO, this is what you should be expecting from your head of sales and what you should be looking for if you're out in the market interviewing for a new one.

Speaker B: Perfect. All right, well, thank you so much, Paul.

Speaker A: Thanks, Ben.