Podcast

Episode: 38 |
Sri Kaza:
Building a SaaS Company:
Episode
38

HOW TO THRIVE AS AN
INDEPENDENT PROFESSIONAL

Sri Kaza

Building a SaaS Company

Show Notes

Sri Kaza, a former McKinsey partner who specializes in sales and service, left the firm to put his sales expertise to work as the SVP of Commercial Operations at Viking Cruises, and subsequently led sales for a company offering a SaaS-based solution to obtaining tax credits.

Sri is now running his own independent consulting practice while also developing two separate SaaS startups. One of them is a tool to help companies hire the employees most likely to perform well and stick around, based on academic research and testing that looks at 70 personality traits.

The other one helps companies optimize their incoming leads by routing that lead to the right sales person.

Sri’s consulting is focusing on these areas, allowing him to better understand unmet needs.  So while he serves clients he is also doing market research for his startups.

In our discussion we explore in some detail the concept of how to optimize incoming leads, and Sri shares some initial steps that you can help your clients with. Sri also mentions that he is happy to partner with other independent consultants, so if you are serving a client with a large number of incoming leads and more than, say, 10-20 sales reps, reach out to Sri to see if he might be able to help. Or if your client hires a large number of front line service personnel every year, Sri may be able to help your client reduce training and replacement costs with his recruiting solution.

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Will Bachman: Hey there, podcast listeners. Welcome to Unleashed, the show that explores how to thrive as an independent professional. Unleashed is sponsored by Umbrex, the world’s first global community of top-tier, independent management consultants. I’m your host, Will Bachman. 

Our guest today is, Sri Kaza, a former McKinsey partner, who specializes in sales and service. Sri left McKinsey to put his sales experience to work, as a Senior Vice President of Commercial Operations at Viking Cruises, and subsequently led sales for a company offering a SaaS-based solution to obtaining tax credits. Sri is now running his own independent consulting practice, while also developing two separate SaaS startups. I should probably mention here, for those who don’t know, SaaS stands for “software as a service”. One of them is a tool to help companies hire the employees most likely to perform well and stick around, based on academic research and testing that looks at 70 personality traits. The other SaaS startup, that Sri is working on, helps companies optimize their incoming leads, by routing that lead to the right salesperson. Sri’s consulting is focused on these two areas, which allows him to better understand unmet needs. So while he serves clients, he’s also doing market research for his startups. 

In our discussion, we explore in some detail the concept of how to optimize incoming leads, and Sri shares some initial steps that you can help your clients with. Sri also mentions that he is happy to partner with other independent consultants, so if you are serving a client with a large number of incoming leads and more than, say, 10 or 20 sales reps, reach out to Sri to see if he might be able to help. You can go on umbrex.com, find Sri’s profile, click on his head, it’ll take you to his LinkedIn profile and then you can send him an email. Or if your client hires a large number of front line service personnel every year, Sri may be able to help your client reduce training and replacement costs with his recruiting solution. So, I was fascinated by my conversation with Sri, and I hope you find it helpful. 

Sri, it is great having you on the show. Thanks so much for joining. 

Sri Kaza: Thanks, Will. Thanks for having me. 

Will Bachman: So Sri, you have had some really impressive careers. You were a partner at McKinsey, and then you left to take a really cool role, leading sales at a cruise company, and I wanna hear about that, and I know you also now are doing independent consulting, and have a couple SaaS startups that you’re working on. Maybe if you give us just a quick sketch of what you were doing at McKinsey, and then what you did when you left?

Sri Kaza: Sure. So my time at McKinsey I spent time across a whole bunch of different dimensions, as a generalist, as many McKinsey associates early on did, but overtime I got really focused in on sales and sales operations, and to an extent service operations. And what that is, is treating a distributed workforce of people who don’t actually make physical widgets, but they make service widgets. You know, make revenue dollars, or make customer satisfaction, or answer questions, etc.; making those service factors work well. There’s a broad range of those types of engagements, but I was very focused in that area. I spent a lot of time in a high-tech space, but covered a lot of other industries as well. 

When I left, I was partner in this area, and I left to join Viking Cruises, the leading river cruise company in the world, at the time, to lead their sales operations. So it was going to take me everything I learned at McKinsey, and going, “Okay, now I’ve got a larger [inaudible 00:04:14] I get to run, and deliver on metrics.” Since then, after that I also landed another business unit at a company, it was a SaaS business unit. 

Just recently, I’ve started to try to startup my own SaaS startup. I got a couple ideas on that. One is in the talent acquisition space, we’ve built a product that can screen employees, test them, and match them to a company’s historical employee performance, and do intelligent machine-learning predictions on is this person going to last at your company, and how well are they going to do. And then, I’ve got another one: lead routing, and lead scoring, which allows companies who’ve got a lot of in-bound leads coming in. We can, at minimum, prioritize which ones they should go back to first, or even more so, we can recommend routing to their best converters that take the highest-value leads, for example, and send them to their best converters. 

Will Bachman: So talk to me about that first one a little bit, the talent acquisition. So you’re coming up with some kind of SaaS offering, tell me about what the objective would be for that. 

Sri Kaza: Sure. So, the service industry is kind of where we were targeting initially. It hires people at about 20 to 30 million people hired a year, huge number. Just in service industry, and there’s other industries that are already able to take us to like, 70 to 80 million hires a year, and they all turnover, almost as an annual basis. Think about folks who work at Chipotle, for example, they’re there and they’re gone within three months, in some cases. 

The business, initially, is designed to help companies figure out who’s a good fit for them, and who’s going to stay. And what we’ve done is, we’ve taken a collection of about 70 different personality, cognitive traits, as well as motivations, and we use them to predict somebody’s longevity or performance at a company, based on the actual performance of individuals at that company with those traits. There’s a lot of academics behind it, that say these traits matter to longevity, etc., but the reason companies don’t really use these tests today is they’re very generic. 

There are tests now that’ll tell you if this person’s going to be a good salesperson or not be a good salesperson, but it’s different for every company. Certain companies have lots of support for sales, and lots of marketing materials, and lots of process; while other companies expect hustlers to go and “hustle”. So it really depends on your skillset, your preferences, “I like rules” or “I don’t like rules,” “I like process” or “I don’t like process,” depends on your preferences, which company you’re going to be better at. Very few companies fully understand themselves enough to be able to set their recruiting criteria to be designed around people that would fit in and do well. 

Will Bachman: And where are you at in the process with that company? Have you already developed a sort of prototype working solution, and have it in place somewhere?

Sri Kaza: Yeah, we’ve got three alpha clients. Two have got the whole system up and running, and they’re using it, and we’ve got predictions happening, we’ve got decisions being made on those predictions, and we’ve got a feedback loop that says, “Hey, we’ve predicted well. We predicted this much better than you guys used to predict, etc.” So we’ve got a functioning model. We’ve got a SaaS MVP, we have some integrations to asset tracking systems to make this all work together with their existing systems. 

So we’re now looking to add a couple more clients who have a high-volume of hiring, and who are interested in doing this. We’re also finding there’s a whole bunch of add-ons that people like, that we’re considering just adding these on. Like reference checks, because references also have a high predictive value on somebody sticking around at a company. We’ve added audio screening, because we have call centers who want to actually hear the voice of somebody. We even have audio analytics, that tell you, “Hey, is this a good call center voice or not?” So all this stuff is kind of our future, as we’re working out adding new clients. 

Will Bachman: That’s really cool. Awesome. Well, let’s turn to the second SaaS offering that you’re working on develop. Lead scoring, tell me a little bit about that one. 

Sri Kaza: So this one, I’ve had a couple of different clients in sales operations, where I got in and they wanted to say, “Hey, how’s our routing going out? How do we route our either, calls, or inquiries, etc., to the best people at the right availability?” And what I learned when I was going through a lot of this stuff with Viking, and some of my clients when I was McKinsey, is that there’s a huge value to be had by taking a higher-potential profit and moving it to your higher-potential close guy. You guys can probably understand the math behind that’s pretty simple, right? I got a $200 possible client and a $1000 possible client, I want that $1000 possible client to go the 50% conversion guy, and have the $200 client go to the 40% conversion guy, right? Expected value of that choice is pretty obvious. 

But, a lot of times, operationally it’s really, really difficult to make all that happen, because you need data, and like, three different systems, and you need to know who that person is right when you find them, etc. So, a lot of companies just didn’t do it, right? And they left all kinds of money on the table. So, today there’s a lot more technology available to allow for real-time API calls and webhooks, and other types of technology that allows somebody who either wants to bring in their phone calls that come in, and then, “Here’s a phone number. I don’t know anything else, but I’m going to bounce it off an API, and based on this phone number, who should it go to?” 

Or, if you have an in-bound email, that’s going to be a lead or an in-bound web inquiry, someone clicks something and says, “Hey, I’d like to see a demo,” and they type that into the little text box. The pretty good models, could actually look at the text, and look at the other history on the browsing, and come back and say, “This is more likely to be someone who will spend a lot of money, but take a long time to convert,” versus “This is somebody who just needs to know how to click the ‘order’ button.” So you can give it to somebody who doesn’t have to go and spend a lot of time explaining. 

So these are the types of problems that, today, and companies are just taking whatever leads they get, and spreading them evenly across whatever their team is, instead of specializing the skills. But, it’s a problem that can be solved today, that probably couldn’t have been solved a long time ago. 

Will Bachman: Wow. So with the phone call, with the incoming phone number, talk to me about that a little bit. You would do an API, and based on the phone number, you would try to figure out who is calling? And how legit, and serious they are? What sort of database would you be getting information from?

Sri Kaza: Companies have their customer database, and they have customer data. They have their history of everybody who’s called beforehand, they should have the history of what button somebody has pushed in the IVR beforehand. On top of that, you could always buy data, although buying data on phone numbers is more and more difficult these days. 

Will Bachman: Is that right?

Sri Kaza: But just knowing the area code, right? Knowing the area code helps a lot. I’m working with a client today who has a call center, on the East Coast, and they work basic business hours. And they get called late at night, which is fine, but they have a long sales process, and that call that comes in late at night, if it goes to somebody who’s not normally there late at night, and they need a followup; the customer, who’s calling late at night, likes the later at night followup, but the individual doesn’t followup until the next morning because he’s not in the office. 

So, now if you imagine, instead you just know based on their timezone, and the time of day that they call, and if it’s the first call or if it’s later calls, all that stuff; you can route them to a better person, who’s going to be a better match, for that individual who’s coming in. And the possibilities are pretty substantially big, the amount of data though is a complication in how you make this design happen. I’m learning more about it, and I’m doing consulting work in this space, so that I can come back with ways to make this an actual viable, scalable services, as opposed to building individual models every single time. Maybe the model needs to be individual every single time, but the service that will round up the data, and make the predictions doesn’t have to be. 

Will Bachman: What sort of companies can benefit from this? I mean, do you need a sales force of a certain size, and a certain number of leads to make it all worthwhile?

Sri Kaza: I think so. You usually need a certain number of leads, or a sales force where there’s enough varied ability and performance that it’s going to matter. So I would argue anybody who’s got a problem getting back to leads fast enough, so if you’ve got more leads than you have guys to handle the moment you get them; that means you could benefit from prioritizing which leads go to first. On the flip side, if you’ve got maybe 20 guys, there’s very likely a top half and a bottom half, and if you could do anything to go figure out what the value of that lead was before you handed it off; you’d want to give the high-value leads to the better closers than not. 

So, you don’t have to be that big to make a difference. A company I’m working with gets 100000, the one I was just describing earlier, where we’re sorting out what time of day, and all that stuff, they get 100000 leads a year, and they’ve got about 40 people to handle them all. So they’ve got a big enough team that there’s lots of minutia that we can make it better. But for a smaller business, or somebody who is doing a B2B, or even a B2C type of business, even if they’ve just got web forms, right? [inaudible 00:15:01] forms. You’ve got spammed text now, so you can stop some spammers, but can you imagine if you were getting, maybe, 15-20 web forms completed a day, and you had something actually saying which one you need to job on right away, it makes a big difference. 

Will Bachman: And then, how do you get their previous browser history? If someone has just filled out a web form?

Sri Kaza: It all depends on the code on the site. So, if you’re basically using WordPress, maybe you only have the last page they were on, how long they’ve been browsing; this data just exists, right? Maybe a tweak to the form, the web form that you’ve gotta click, but essentially you’re going to post everything you know about that person up to the API, and the API will come back and say, “Okay, well let me process it, and tell you where to send the relevant data.”  

Will Bachman: Yeah. So I guess I’m just a little bit naïve. You read about your browser history tracking you and stuff, but like, if I’m filling out a form on a website, to what degree can that company know all the other websites that I’ve visited?

Sri Kaza: No, it’s not so much the other websites that you’ve visited, I mean it could be. It’s not so much the websites you’ve already visited, although if you don’t know that Google’s got all kinds of remarketing tracking going on. So if Google were to share their data with the company, and I think you can buy some amount of data from Google off this. No, but don’t even worry about that. It’s there, much more complicated, and expensive. But, even if you’re going to just a super simple site, like even a WordPress site, that company knows which pages you’ve clicked before you got to the contact mean. 

So, I’ll give you a simple example, we worked on this when I was at Viking actually. We had people who were in our database from marketing; we knew who they were. We’d married them to an actual person, an address, and a phone number, because we had a lot of great data stuff. And then, when we’d send out emails, they might click one and go to the website, and then they’d visit different pages, like, “Oh, they visited the Paris page,” right? Even though most of the business at Viking was going through the Rhine, or up to Amsterdam or whatever, there’s a subset of people who are more interested France, or Russia. So just knowing that somebody’s more interested in France or Russia, means that when they pick up the phone and call, if I can take that phone number and match it to that person, I’d route them to agents who knew Russia better, or who knew France better because they would be able to close the deal. 

But that data is there for the use, it’s just a matter of putting in the software, or putting in the intelligence to do something about it. 

Will Bachman: Yeah, no. I can imagine there’s all sorts of operational complexities that start building into that, where now you have to have a different queue for just the French experts, and the Russian experts, and-

Sri Kaza: No, you can solve for this, we did it just with skills. So, look, this person is highly skilled at France, so anytime there’s a person who might be interested in France; I want to give it to this person, if the highly skilled person is available. Your backup is, “Look, if the guy’s not available, I’d rather still answer the phone, or go to the general population, or go to the next set of routing logic.” This stuff, you can solve most of these problems in a technology, without even having to worry about the impact on the individuals. 

Will Bachman: Wow, that is fascinating to me about how you can sort of fine-tune and optimize these sorts of decisions. So, you mentioned that you’re working to develop a SaaS solution. And you’re also doing consulting to these organizations to really understand the needs, it’s almost like a market research for you. What’s it going to take for you to build the SaaS solution, once you really understand the market needs, and how would you think about putting that startup, or that organization together, in terms of getting programmers, and all that? 

Sri Kaza: Yeah, for the first one, it wasn’t hard. Building the SaaS solution’s actually pretty straight-forward. It doesn’t take a lot of money. It took a little bit of time to understand the problem, and then structure what the solution should do and what it should look like. My strategy is kind of also, in terms of, like I mentioned earlier, I’m really a sales and sales operations person; I spend a lot of time thinking about sales and sales operations. So when I’m thinking about either one of my two ideas in SaaS today, or [inaudible 00:19:52] wise, it’s really about how I’m going to go sell this thing. 

Building the product, you can easily call up a development shop, and get something built pretty quick for pretty cheap, especially if you’ve got a client lined up. So the first one, I got a couple clients lined up, built a thing, it works, they’re happy with it, they’re paying to go use it. It’s not enough to go and say, “Hey, this is now a business,” right? Took a lot of time and effort on my end. But, flipping it around, if I can get others who use exactly the same thing that we’ve built for these guys, that would be great. I’m not there yet, I gotta find more people who want the same kind of use. 

So, I think that’s a challenge for me, in designing and building a SaaS product to solve unique business problems. You gotta be careful of going and taking on something that’s unique and different, and then of course building something that fits that particular problem, and not having it matching anybody else’s problem. So, the sales and leads manager is a bigger challenge. So I’ve got a couple of clients who are working on the problem. I haven’t come close to figuring out exactly how I would turn it into a SaaS, other than the endpoints and the technical bits, but not the creating the model. 

On the talent side, you can actually create a model, right? Exact same test, everybody takes this test, once you’re done, I can customize the test, have a custom-model for you, and it’s SaaS from there, right? It’s a simpler setup. With sales, you’ve got to do a lot of analysis to understand where the value is going to be, by lead routing, lead scoring, all that stuff. 

Will Bachman: With sales leads, a lot of listeners of the show might be serving clients, working with clients where they have some kind of leads coming in, and are there some intro steps that you think might be wildly applicable for people to think about? As what’s the first step to optimizing that, in terms of understanding the leads, and prioritizing them?

Sri Kaza: Oh yeah, for sure. I mentioned two things. So, the first one is if you’re not getting back to every lead within seconds of seeing it, then think about lead prioritization. The two potential things to think about from your clients’ perspective, what you could do to be helpful to them, you could tell them which leads to get back to right away. That’s huge, no matter what. Time and closing are highly inversely correlated; the longer you take to respond, the less likely you’re going to close. On any, including business-to-business, etc.

Now, flip it around, and I mentioned if you’ve got a bigger sales force, like if you’ve got even 20, maybe smaller than 20 is doable. But, if you’ve got 20 sales people at a company who have conversion rates that you guys measure, and pay attention to, that’s another place where if I can come up with something that gives me any indication that this particular lead will have more value than that particular lead; again, huge value. 

So those are the value drivers. How do you go and say to a client, “What can I offer? What kind of conversation can we have?” What I’m doing now, I’ve got my data science team who’s ready to do this. Any client who would want to go see what is the potential, what can we predict from the data we have, all we would need to do is get a big dump of all of the raw data from their leads, stuff like sales force that they keep all their leads in, or their in-bound emails or something, that stuff. We can actually go and suck in that data, or they can generate a report and put up, and then we meed outcomes. So what happened with this lead? And we can build our first model saying, “Okay, here’s what the model would say about all these leads, etc.,” and then pretty easy presentation to say, “Look, if you simulated, and actually had that prioritization in advance, and assume people still convert at the same rate, and they do this and that, etc. You would have this much more either dollars, or this many more leads responded to on time, or whatever.” 

All of that, that doesn’t take very long. Maybe a one our conversation to set it up, another one or two hours of conversation to get the data right, and then since I’m doing this to start up a business, we do the data analytics for free, right? We just do it. And then, in the end for the folks who are listening who want to offer this to a client, just the diagnostic piece, just do it all for free.

Will Bachman: Wow, that’s great. So, let me just pause there to ask, if someone is listening did want to partner with you on one of these, what is the best way to contact you? Do you want to give a website or email, how should people contact you?

Sri Kaza: Yeah, I guess so. You can just send an email to me, I’m on the Umbrex website. My name is Sri Kaza, you’d probably just find me, I think my email is posted there. If not, my phone number is, so you can just give me a call, I’m happy to chat. I don’t mind brand new phone calls here and there. So, yeah, just reach out to me anytime, and I can help out, or help you at least you think through what you might say to your client about that opportunity. 

Will Bachman: Cool. 

Sri Kaza: It’s going to definitely be work to make it actually work, right? On the one side, there’s me getting data, and coming up with [inaudible 00:25:12], on the other side it’s you going to work with your client to make it actually happen, and get them excited about it. 

Will Bachman: What are some of the most common clues that would alert you that one lead is going to be more valuable, or more likely to convert than another? Especially, if it’s one of these, “Contact us, and we’ll get back to you,” and you’re putting in short, little… Usually they give a place for a short summary, they ask for your name, and your email address. From that, how would you determine if one is more valuable than another?

Sri Kaza: So, let’s assume you’ve got no other data, right? All I know is what came on that form. Even in those situations, when somebody types something, what they type like, the individual words that they type, will make a big difference. When you get into the data modeling and predictive science, it sounds like hand-wavey magic, because you’re going to grab words, phrases, word counts, tone, and sentiment. You grab all of these really interesting pieces of data, right? They’re completely irrelevant to reality for the time being. Those cues end up driving the predictive model, if you’re going to build a model that’s kind of a boosted decision tree. It could be any number of words that help or hurt potential value. 

But, now I’m going to give you some real examples. Just the average length of the word in a request from a consumer to a B2C company is an indication of how affluent that person is. So, now can you match, and these models aren’t this simple, right? So, pause; it’s not going to be this simple. But, just imagine if I had the average word length, and the average word length has predictive value on the deal size that you would get, right? Just having one piece of extra data, I can nudge 50% of my leads up higher, and 50% of my leads down lower. If I’m wrong, right? Less often than random, because your current routing logic is random. So, if I’m wrong less often than random, that’s an uptick in your conversion rate, and your revenue. 

Now, what exactly those numbers are, and how detailed, that’s the thing that you gotta go through this process. Go do some of the analytics and say, “Yeah. We looked at it, our machine-learning says they can predict 60-70%, or it’s routing will be 60-70% accurate, compared to the 50/50 accuracy of random.” So all of a sudden, what does that mean? Well, it means if I’ve got the average value of these deals are $10 higher than those other deals, and I’m moving them to a five percent higher conversion rate, all of a sudden you can see how the math would add up, and it would be there. That’s why it’s a pretty exciting field, if you’ve got numbers, and those of you who are ex-consultants, you just need a couple of numbers to multiply against each other for this thing to work. 

Will Bachman: So it’s not even about some smart person looking at the incoming lead, and saying, “Well, this one looks like they’re just kind of fishing for some quote, and they’re not that serious. And this person looks much more detailed, and we are now doing an R&P, and we liked product XYZ that we saw on this page,” you know, getting super specific. So it’s not even about a smart person looking at it. It sounds like you take it, and you really do this machine-learning to do a bunch of analytics on some stuff that an intelligent person might not even pick up on. Like the length of the words, and-

Sri Kaza: That’s right. No, no, don’t get me wrong. Consulting, I have to do that. That has been my job for years. When I had the luxury of being a partner at McKinsey, those analysts and associates do this, right? Sit in, listen to 100 calls, go and hand-write out what it was, what did you learn? Go and read 100 in-bound leads, in-bound emails, come back, give me all the things that you learned, right? That’s what we had to do. We had really smart people that came up with really cool things that way, but now I can go have a machine, not look at 100 point sample, but look at 100000 leads, and do all the analysis. And, do a prediction for me. And, tell me how good you are at it, so that I can calculate.

This is a really, really powerful tool, and there’s so many cool places to put it. Historically, it’s been done by smart humans, right? But, those smart humans have time limitations, they make mistakes, all that. There’s a handful of these problems we can replace with machine-learning and AI. 

Will Bachman: Wow, that’s really, really cool, that this kind of stuff is going on, to think about how do you route it. And then, I imagine it might not even just be ranking high to low, the different sales reps, but some of them might be better at closing certain types of deals than others of equivalent size, right? So they might have different styles, and some people are better at Product A versus Product B.

Sri Kaza: Yeah, and it allows you to have segmentation. Now, many of you guys have an operational background, you understand that segmentation comes at a cost, right? That means you have smaller pools of talent to route things to, but keep in mind that you can use skilled, [inaudible 00:30:52] other algorithms to figure out, “Okay, look. I don’t have my best closer, but this a best closer type of lead. So give me whoever I can get because when I do my Expected Value calculation, waiting two minutes for the best closer has a lower expected value than giving it immediately to the next best closer.” It’s all of this stuff that we talk about, there’s all these challenges, but this is what we can do today to overcome a ton of it, and give you so much more value than you’re gaining today. 

Will Bachman: You have deep, deep experience and expertise around sales. How are you thinking about applying all that to your own practice, both your consulting practice as well as the SaaS businesses that you have?

Sri Kaza: My beliefs, I’m not a really good sales guy, I don’t think I am anyway. There’s people who can sell better than me. But, what I learned when I was at McKinsey, and what I’ve learned as an independent, is you need to have a trusted relationship to get somebody to make a commitment. And, the bigger the commitment, the more trust is needed, and the longer it usually takes. And for me, I have very little patience, so I don’t want to go and take a lot of time to build trust, and do it over and over again. 

So, my preferred model is to go through channel partners. Umbrex is great, great channel partner. I’m happy to work with a group, because when you do the math, and you ask yourself how much time do I spend, if I was trying to get out, get deals myself, right? Which I’m not, but if I was trying to do things on my own, I’d have to go spend a lot of time developing relationships, right? I’d have to go spend time on projects that may never happen. I may spend time on people who may never even actually want to have a project. You know, all kinds of different time lost, and that’s much more than 20% of my time. So, to have a channel bring me stuff that’s real, gives me the opportunity to go focus my time really only on the impact-oriented stuff. I don’t believe it costs me anything, because in the grand scheme of things I’m taking my time back to go use in any other way I wanted to. 

So, this channel idea for the consulting stuff, is, for me, the easiest and best way to do it. But, flipping it around, I think it’s also the way I want to do it for both of these other two businesses I’ve been talking about, because I have this really cool tool that routes leads better. Well, how many people buying software, like Pipedrive or Salesforce, that actually helps to manage all of their leads, and information, etc.? So, I can build plug-ins, I can build a fast product that’s really doesn’t have user portal. It’s just purely a plug-in, “Hey, turn this switch on in Pipedrive. It’s going to bounce stuff off of us, and it’s going to come back and give you the right answer, and we’ll spend two weeks setting it up, telling you what it’s worth. You guys can then just pay an annual service or monthly service for it.” 

That’s the kind of idea that then means I don’t have to go out there and knock on a lot of doors. I gotta go bother folks who are already buying Pipedrive, and I gotta go bother people who are already buying Salesforce, and some of these other CRN tools that help lead management. 

Will Bachman: And then would you then need to partner with third party sellers, that are selling Salesforce, and convince them of your offering? So they’re kind of acting as re-sellers of it, or how would you get the end user to be aware of it? What you offer? 

Sri Kaza: Start with the App Store. You get your stuff from the App Store. You get clicks and views that way. I’ve got friends at Salesforce who I’ve reach out to, and I’ve got friends at all these different applicant tracking systems that I’m reaching out to on the talent side too. In all those cases, what I need to do is I need to get on a cool case study, or two or three case studies, have them circulate it with their own sales team, right? And if my product does what it’s supposed to do, their sales team will mention it to their users. Or their account service team will say, “Hey look. You know what? There’s this cool plug-in into our software that does this for you, and it’s going to increase your revenue or create lift or do whatever. You can talk to these guys, blah, blah, blah,” right?

So you can drive leads in that way. Some software companies will take a cut, other companies will just do it because it’s the right thing for them as a business to do. So that starts out as kind of like a business development, right? You gotta reach out to all of the players, go figure out what the process is to get integrated, be in their store, etc. Everybody’s got a different model, but I don’t have to do the work of hunting for individuals who are looking. I can do it through more mass marketing or through targeted channel marketing. 

Will Bachman: And then I suppose, what would you need to build beyond the tool itself? Will you need to build a customer service force to answer questions, and that consulting, and walk-

Sri Kaza: Exactly. Exactly right. So when you build a SaaS, what you’re gonna have, the economic model is you gotta pay upfront for customer acquisition. Then you have to pay upfront for customer setup, and then over time, you collect money at a ridiculously high margin, and only spend a small portion of it on ongoing customer service. 

So if you think about that as an overall financial model, the first challenge of finding customers and getting them through the channel is quite helpful, because then you don’t have to invest in a sales force, you don’t have to spend a whole bunch of cash upfront. You do give up revenue share often, right? Or you go slower? But you can solve that first problem, and the second problem is: setup. That’s one I haven’t solved with either of these, of how you do it in a cost-effective way that still fits the value, and the budget, of your target. But I believe there’s ways, so I’m working on that. And then, once setup is done, service ought to be pretty close to automated. 

My view is, you get somebody to turn on the service, they’ll only turn it off if they don’t know the values, right? And, or, if they have some other beliefs that it’s not working. So if you design it right, you basically are going to remind them of all the value that you’ve created every single month, or at least every single billing period. So they can see, “Here’s how much value we’ve created and we’re only charging you like, $100 a month or $500 a month, and you’re getting $50000 of value every month.” Who knows what that equation’s going to be, but service shouldn’t be too much of a challenge. 

Will Bachman: So it’s an interesting business where you kind of need to fund the setup, and the customer acquisition upfront, and then you have a long stream? 

Sri Kaza: That’s what any SaaS business looks like, is a lot of money going in upfront, and my view is if you find the right place, the numbers will work out that you can go do it. And if you can kind of variablize a number of those expenses, or recoup them via consulting services, right? You can get the business of the ground, safely and successfully. 

Will Bachman: So you’re saying if you’re actually able to charge a consulting fee for that upfront piece, then it pays for itself?

Sri Kaza: It keeps the lights on, let me put it that way. You have to, I mean, each one is going to be independent, right? And most of you guys know, your rates are a certain number, but there’s certain companies where the problem is more valuable that they would pay your rates or more. And there’s other companies, or other problems where the value of that problem isn’t closer to your rate. So when you’re doing one of these things where there’s no service that’ll do it for them, you can charge consulting pricing, but eventually when it gets down to being mostly automated, setup fees should be a lot smaller than when you charge as a consulting service. 

Will Bachman: Awesome. So sounds like your tool is about getting the right lead to the right person. I’m curious to hear about some of your work that might be about how do we improve the performance of the individual sales folks? So given that the lead is getting to one person, what are some of the most common ways to help salespeople improve their performance?

Sri Kaza: You know it’s interesting, how many operations I’ve been in that don’t have basic coaching and huddling, peer-to-peer learning, soft skills focus. Maybe I spend too much time in high-tech companies where the leadership is pretty smart, they’re very analytical. I’ll give you an example of a client that I worked with recently who had done their own routing, this phenomenal design of routing, and had everything down to the T the way they wanted it to, routing-wise. But they weren’t investing in their agents, and they didn’t have the incentives. Well, they did a really good job designing their compensation plan, etc., but what they missed were a lot of the operational elements that drive incentives. 

So, one example was, the people were getting both phone calls and in-bound email inquiries for their leads, and salespeople were converting them, working on them hard. But, then what I discovered by just going in and spending some time with sales, sitting down side-by-side, saying “Okay, how are things going, etc.?” I’d watch them handle a lead and then their phone would ring, which presumably was an in-bound lead, and then they’d ignore it. I didn’t ask then and there, “Why would a salesperson ignore an in-bound lead?”, but what I found out later was the routing process. So their system for routing made sense for the electronic stuff but they had to do it manually when the phone call came in, right? Because it didn’t have the data. So, that would mean the salesperson would have to answer the phone, and seven times out of 10, it wouldn’t be a lead at all, and the other three times, two out of those three they’d have to route it to somebody else. 

So what ended up happening was nobody wanted a phone call, right? It was just a waste of their time. They weren’t answering it. Then I looked at the overall lead routing impact, looking at from a couple other angles, and it looked like when they’re routing the leads to the right people it was totally making sense, so the reports they were looking at told them it made sense. But, it turns out they weren’t staffing their best people at all hours, because while the best people got to the pick their schedules, and the best people all took the kind of easy, morning to afternoon schedule, and all of the not-so-good people were in the weekends and evenings. Well, guess what? Right, half of your leads come out of the weekends and the evenings, and if your best people aren’t there, your routing algorithm’s not even doing anything, because it’s gotta go to the next guy. 

So, even though they did a lot of really good designs, there was just really a lot more investigation into the actual mindsets of people, and putting them in the right place, and creating incentives for good people to show up at the right times. And then, additionally to that, the best people weren’t spending time with the more junior people, because they weren’t doing any huddling, right? One thing is just simple training and huddling. Every coach is supposed to be focused on coaching on core skills, but if your supervisors don’t know what the core skills are, or they haven’t drawn up a call flow that says this is what you’re supposed to do when a call comes in, saying you need to ask questions, find out details, etc.; you end up with some people who know how to do it, and other people who don’t, and you don’t have a process to train and coach and manage new people. 

I think this is the biggest problem I’ve seen in fast-growth companies, where they bring in smart people who can do everything, and they succeed, and then they don’t know how to translate that intuition down to the next round of people as they scale up. 

Will Bachman: You know, it’s interesting the amount of variability that you see out there. I just did a project this past month, where one of the things I did was I wanted to get some prices and understand the equipment out there in the market, as my client was thinking about getting into this particular line of business. So I reached out to about 10 or 12 vendors, and mostly via their web forms or by emailing them, and the rate of response was dramatically variable. Some never got back to me, some got back to me in five minutes, and then the collateral that I received really varied quite a bit. So, some would only send me one or two cut sheets for two pieces of equipment, and some would have this really nice 40 page document walking through the economics of a typical operation, and the cost of the equipment plus a full quote for a typical turnkey operation including all the other equipment that you need. Some were just with ROI calculators. So having probably all that collateral as well, can make a big amount difference. 

Sri Kaza: Yeah. Absolutely. Getting guys the right tools, and teaching them how to sell, even though they may have the right intuition and they’re good hustlers; that’s a big deal. In fact, you know what’s interesting? I see a lot of companies when they bring on salespeople and they give them commission, commission and the monetary incentive plus the basic grit, I know we talk about grit a lot, but the basic grit and hustle of a sales guy, can overcome a lot of problems. We still have to train them, we have poor systems, you can’t look up the data, there’s no real clean messaging on why we’re better, etc. All of that stuff, people who can overcome challenges, right? Who are motivated by money, and have a lot of grit and hustle, they overcome it. So guess what? You get a bunch of good salespeople, you’re going to be blind to this problem. 

And then, when it turns out there really aren’t that many good salespeople out there, and you’re struggling to get the talent that you need that’s going to fit; now you need to go get people who have all this grit, and have to go learn a whole bunch more data that’s not available in your systems because you never actually made the search, and the TRIOS systems that you wanted to. Then you’ll just be upset that you can’t find good talent, and you’ll just churn the low-end people over, and over, and over again. I mean that’s a vicious cycle that I see a lot. 

Will Bachman: I wanted to change the topic for a second to some of your personal practices. So, you’ve been incredibly successful, became a partner at McKinsey, had some great executive roles since, and are now doing a lot of exciting stuff. I’d love to hear the practices that you’ve found work for you around either health and wellness, or physical fitness, or any daily routines, mindfulness. Just curious what are some of the things that have become core to your kin of operating system, if you will? 

Sri Kaza: Yeah, you know, I just had a conversation with my wife about this. One of the things I think has really helped me a lot, is how I think about stress and challenges. When I look at when I was at McKinsey, and there’s a lot of different times where I had ups and downs, right? In a tough career, and you’re working hard, many of you who’ve been in consulting know that you may be six months away from getting fired, even though you are awesome. Right? Today you’re awesome; six months from now, you don’t know. 

There’s some stress associated with that, and there’s a lot of uncertainty and things that are not in your control. So, for me, there were a lot of different times, in my career, where I was doing well, and still a bit stressed out. I was really worried about what these people thought, or what was going to happen in my next review, or were they going to elect me partner or not? All these things came up. What I discovered was actually at a point and time where I re-evaluated what I had going for me, and what I was worried about; I realized that, actually I had a safety net, right? Because if I ever actually left, I know what I can do. I can do this, I can do that, I can do these things. 

And then, it dawned on me that if I go work on the things I want to work on, and they’re aligned with what I’m excited about, in or out of that firm, or in or out of that success of the things that were immediately in front of me; I actually had a lot more freedom. And it actually increased my chances of getting fired, if I was going to go do something. My specific example was I was working in a space where our firm wasn’t really too excited about working with small companies, and I say small companies, back then like, a billion dollars revenue was still kind of small for my firm. 

Will Bachman: Small, little [inaudible 00:48:20] company.

Sri Kaza: Right. But, I really and truly feel like talking to CEOs, and CFOs, and having really interesting strategy discussions with guys like that. And, in the end, sometimes that turned out into an actual engagement, but it wasn’t really a sustainable thing in the eyes of the firm. Well, I thought to myself, “If I want to make partner, I’ve got to stop doing this,” that was actually stressful, but if I said, “Hey look. I’m going to do this, and I’m going to succeed despite all the warnings.” And the worst thing that could happen is I’m going to enjoy myself for the next year, year and a half. Maybe not make partner, get fired, or whatever, but then I’ve developed a whole bunch of great relationships with CEOs and CFOs, and these businesses, I could get a job anywhere, and be super happy with any of these guys. 

So, I just flipped the thinking, it doesn’t matter if I get fired, or it doesn’t matter if I lose that thing there, because I have something that I value anyway. So for me, my thought process around management just for myself was, “Look. I’ve got a lot of great things, so I can take a risk here, and do something I’m excited about. And if it fails, I still have the backup.” Or, I still have another plan, or not only that, my attempt at this, and failure at this, will actually make me more successful in my backup. So you see it in some Silicon Valley leaders, right? People who wear failure as a badge of honor, right? Thinking, “Wow, this guy didn’t know how to run business, but now people want him to go run their business,” how is that? 

Well, you weren’t a punk, when you actually take risks. So for me, I got very comfortable any time I’m seeing something I’m stressed out about or worried that it’s not going to happen the way it needs to in the near term, I also try to remind myself of the muscles it’s building for me. The things that I’m learning, or the things that I’m going to be able to gain, or the things that I’ll be able to use on the next round, because I know that there’s going to be next round. So, that’s really helped me be very mindful about taking more risk, and doing cooler things, which makes me really happy, to do all these things and then still handle the fact that, yeah, I’m taking risks, leads to sale. 

I’m at a place, I’d take a risk on trying to start my own business. I left some really good jobs, and there’s not nearly as much cash running in, but at the same time, if I ever wanted to go back to something I could do it. But, in the mean time, I’m going to try these businesses, and if I fail then I’m still learning the whole time, and I’m still meeting a lot of talented, good people that I can work with in the future. 

Will Bachman: That’s really a inspiring way of putting it. It reminds me of an exercise that Tim Ferriss recommends, which I think he calls “Fear-Setting”, of periodically sitting down and saying, “Okay, what am I most afraid of?” And going through an exercise he walks you through of, if that worst case thing happens, how could I recover, how could I limit the damage, and what would the worst thing be that would happen to me? And often, if you do that, you realize, “Oh, okay. I could recover from that. I’ll survive.” So even the worst thing that can happen, I’ll live through it, and then when you take those risks that you’re taking, it often ends up making you more likely to be successful in the end. 

Sri Kaza: Yeah, absolutely. In fact, you should be conscious of what you’re building for yourself. So I just add to that guidance that he gives, which is great guidance, think about what you’re afraid of and recognize that the outcomes not that bad. I would say, not only that, look for the things that actually are good, even if it’s a failure, because then you know that you should be concentrating on them no matter what, right? 

So for me, it was great. I’ll go back to the example on going and spending time with CEOs. It dawned on me, “No, I can’t just go and chat with these CEOs about whatever they want. I actually need to position myself to get a job, in case I get fired,” right? Oh, yeah, so that’s good. And then, all of a sudden, these guys could have thought about it ahead of time, and instead of trying to sell them on a McKinsey thing, I cared a lot more about their minutia. The problems that they had every day, other things, and it really helped me become a better counselor because I actually cared about them, instead of trying to sell them, right? 

So, just doing the things that will improve your future, regardless of the near-term outcome, it can be good for you. 

Will Bachman: I love that. Talk to me a little bit more about that piece about building relationships, and really making that transition from transactional to long-term counselor, and even friend. How do you think about that?

Sri Kaza: Well, in the end, it’s really tough to do all of these things, especially an independent consultant. When your job is very much designed, divined, as something transactional, and if you don’t deliver on that transaction, there’s nothing. So, you have to deliver on the transaction. Now, if you focus only on the transaction, that’s when you fail to become a counselor, or have a real relationship with somebody. There’s a book called “Trusted Advisor”, and in many other places I believe they have this formula on trust that I’ve seen. 

Will Bachman: Yeah, it’s by David Maister, yeah, it’s fantastic. 

Sri Kaza: Yeah. So there’s a thing on trust that says you gotta put your credibility and all that stuff, the stuff that we kind of typically work on, you know, on credible, right? But you also have to a have a lot more of these other things, interest, relatability, all these other things as well, and you have to be not self interested. 

So, to me, I get math, I get equations, to me, it comes down to even simpler. If you actually care about a person, you’ll be much better at helping them, and become an advisor. So one of the things that I advise anybody who’s having conversations with executives that they want to work with, is think about their life; put yourself in their shoes. What matters to them? Think about it, just try and figure it out, it’s going to make you curious. Once you’re curious about them, ask them. Ask them, not because you’re trying to sell them something, but because you care. 

Now, all of a sudden- I’m working with a guy, he was a banker for a really long time, now it’s his first time really back in the executive world, and he’s really, really smart, but his biggest issues are all over the place. Can’t really get a handle on it because nobody around him has the level of talent that he was surrounded with when he was in the bank. Well, instead of me going in and saying, “Hey, you need to hire some people. You need to solve this problem, that problem.” I said, “Hey, how’s it going?”, right? “Must be very different, tell me about it. I’m curious how you’re thinking about these things.” I don’t have an answer for him, I don’t even try go give an answer, I don’t try to solve any of his problems; I just wanna learn about him, right? 

Once I learn about him, and he tells me these things, now all of a sudden I have something to say. Maybe I don’t have anything to say. But, then overtime, he knows that he can just tell me how he’s feeling, and what he cares about. That’s a conversation that you can have with anybody, and become an advisor to them, if by the way, you’re also all the things that you are working hard to be. You know, credible, reliable, and interesting, right? All of these things are important, but you probably all are, but the big one is just care about what’s going with these people, and you’ll be able to get there. 

Will Bachman: Fantastic. Now, “Trusted Advisor” by David Maister, great, great book. I try to re-read that myself once a year, so love the fact that you’re recommending it. So, we talked about sales and how to use consulting to think about helping to build a SaaS offering, which is really cool. And folks, if they wanted to find you, can go to your LinkedIn profile, or find you on the Umbrex website, and click through. 

Sri Kaza: Yep, yep. 

Will Bachman: So Sri, it was fantastic having you on the show, thanks so much for joining. 

Sri Kaza: Right, thanks a lot, Will. I had fun. 

Will Bachman: Thanks for listening to this episode of Unleashed. The show that explores how to thrive as independent professional. Unleashed is sponsored by Umbrex, the world’s first global community of top-tier, independent management consultants. The mission of Umbrex is to create opportunities for independent management consultants to meet, share lessons learned, and collaborate. 

I’d love to get your feedback, and hear any questions that you’d like to see us answer on this show. You can email me at unleashed@umbrex.com. That’s U-M-B-R-E-X.com. 

If you found anything on the show helpful, it would be a real gift if you would let a friend know about the show, and take a minute to leave a review on iTunes, Google Play, or Stitcher. And if you subscribe, our show will get deliver to your device every Monday. Our audio engineer is Dave Nelson, our theme song was composed by Gary Negbaur, and I’m your host, Will Bachman. Thanks for listening. 

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