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Becker Business
AI Business Use Cases, Trends for CFO’s, and Building Great Businesses 4-11-26
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space80@talk space.com this is Scott Becker with the Becker Business and the Becker Private Equity Podcast. Today's discussion or podcast is really an hour and a half webinar that we recorded with three different panels. The first panel was on Trends in Artificial Intelligence. The second panel was on CFO Leadership and and finally the third panel was on Building Great Businesses. The three sponsors for this event were Panther Capital, a company called go FIG and comAdvisors. So we're really thankful to those three sponsors for sponsoring this webinar. We hope you enjoy the webinar. You'll have again three sections, Artificial Intelligence, Practical Business Use Cases, CFO Leadership and then Building Great Businesses where Molly Gamble interviews myself. Thank you so much for listening to the Becker Business and the Becker Private Equity Podcast. So with that let's kick this off and this is our first section on Artificial Intelligence Practical Business Use cases. Amanda, let me ask you to take a moment and introduce yourself.
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C
Great.
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D
Thank you Scott. I'm Amanda Verner Thompson, Founder and CEO of Madison Advisory AI. I've spent about two decades of my life as a healthcare services investment banker helping organizations and M and A transactions, a capital raising as well as strategic advisory. More recently I founded Madison Advisory AI which really sits at the intersection of that advisory experience and AI enabled execution. The thesis really being that AI is most powerful when paired with seasoned judgment, not substituting for it. And that's the lens I'll bring to this conversation.
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A
Amanda, thank you so much. Brett, can you take a second and introduce yourself and tell the audience what
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C
you do, of course. My name is Brett Jansen. I've, I've spent about 16 years in healthcare, primarily enterprise sales and marketing. I was an individual, contributed Cerner, did two rounds at Optum, and then also was a part of the team that took Butterfly Network public. Since then I run Brett Jansen AI as well as Health Tech House, which is a go to market agency for startups. But my work very complimentary to what Amanda said, AI is much best use when you have Exper in the loop. So I'm excited to dig into these topics today and share how I'm helping clients as well as quite a few of the private equity firms that I'm working with to apply AI into their sales, marketing and product teams.
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A
Thank you so much. And, and David, you're the founder of Panther Capital. I've known you for a long time. You've been in AI in the technology space before anybody was in it. Talk to us a little bit about yourself and, and what you do and what you're doing with Panther Capital.
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E
Yeah, sure.
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F
So Banter's a venture firm. We started in early stage tech way back in the early 2000s. Still continue to invest in early stage tech through OCA Ventures, which is a firm here in Chicago. About 15 years ago we got involved in the cannabis industry, but we stayed within the technology space. As a venture investor, I've dropped into, I don't know, 40, 50 different companies over the last 30 years as an interim C suite executive, primarily CFO, CIO and the last five to seven years I've been heavily involved in technology and automation and AI. About three weeks ago I retired from my last operating role and I continue to consult with my portfolio companies on AI strategy as well as some select non portfolio companies. But generally speaking, kind of semi retired.
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A
No. Congratulations. I've watched your career and fantastic. And I appreciate the support very much. Amanda, let me start with you and we'll go around the horn on the first question, sort of where are you starting to see people practically deploy AI? Where they're actually seeing real value, what's working. And then I'm going to ask each of you how a mid sized company, a smaller company or a large company can get started in really implementing AI and what they should be thinking about. But Amanda, let me start with you. Where do you see practical use cases? And then Brett and David will ask you to comment on that too.
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C
Sure.
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D
And I'm going to take this from a advisory perspective and healthcare perspective because that's where I spend most of my time. But I think one of the most practical real world use cases is research and synthesis of information. What takes an analyst, and I can speak to this because I was an analyst about two decades ago, days of work pulling together comps or industry context or overviews of targets and summaries can now be done in merely hours, which gives the senior advisor much more context and more time to really develop their thought process against or with that. And then when it comes to M and A healthcare transactions, they are so document intensive. So a lot of the due diligence, review, compliance documentation and the like has really been condensed using a lot of AI strategies. And then the last portion I'll speak to, which I think a lot of us are using, maybe it's underrated, is client facing communication. A lot of times senior advisors spend a lot of hours diluting complex situations into easily understandable text and that the first draft of that can now be done with AI, which leaves a lot of extra time for the senior advisor to dive into the nuanced details of their specific work. I think really the common thread of practical use cases for AI is where there's high volume structured work that's very well defined. And I think all the panelists will likely speak to this. The more defined the work is, the better use case for AI. And when it comes to nuanced judgment and that over layer of human interaction, that's where the human is needed most.
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A
And let me ask you a question, because you mentioned something about analyst work and was recently speaking to an investment banker who said at their investment bank and a large, large bank thought that maybe a third of analyst roles or more wouldn't be needed within five years because so much of the early analysis, the early breaking down of stuff would be done instead of by a junior analyst, by AI. But you'd still need a lot of bright analysts, but not as many. Is that something that you think is coming or how do you see that?
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D
Well, I've had a lot of conversations surrounding this lately and I don't want to be a fear monger because I do think AI augments people and it's not taking away a lot. But when it comes to investment banking, I think that our analysts entering the workforce will have a much greater experience than those that were doing it 20 years ago because you'll have more time to really think about the whys behind your work. That being said, so I think you can grow into a senior banker much more quickly. However, I do think less analysts will be needed as a whole for firms to develop because the workflow will be quicker and it will be more streamlined, so you won't need quite as many.
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A
And Brett, you're working with a ton of firms, help them implement AI strategies. Where are you seeing the practical use cases that people at small mid sized companies and larger can put to work and sort of a bigger level versus just somebody going into ChatGPT for a quick something. Where are people putting AI to work?
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C
Yeah, I mean I would put it into three categories. I think Amanda spoke to it already in terms of using it to time compress knowledge work and just synthesize multiple data and you know, dumb it down or simplify it in a way that's easier to digest. But from a practical perspective, you know, I'm working with a lot of organizations and instead of me coming in and saying, you know, let's deploy, you know, cloud across the organization, I first start with where are the bottlenecks in the organization, Whether it's sales or marketing, where you're spending a lot of manual time that is taking away from revenue generating activity. So you know, right now Obviously we're entering Q2 and these enterprise deal specifically in health care, but outside of health care, whether where the sales cycles anywhere from, you know, six months to a year, it would be impossible for an individual human being or even a team of sales leaders to ingest all the information. You know, call notes, you know, what have you presented to the client, what was their feedback? So what I do is I come in to help organizations and I say let's pull all your call transcripts, all your email communication with this client, what have you pitched to them, you know, what has been the communication with them. Let's tie that in with market intel competitive intelligence and synthesize it to help the deal accelerate because we, we uncover a lot of really insightful things. You know, hey, nine months ago, you know, CFO said this, you guys haven't addressed this again, you address it at that point in time. But now that the deal is stalled and perhaps we're stuck in procurement, it's an opportunity for us to elevate something that would be a win for the cfo. Based on all the data that we've curated and synthesized using AI, we start to surface some really great intelligence to help sales leaders and you know, CEOs, to be honest, to move deals forward. I would also say for the private equity groups that I'm working with, they're looking to figure out how can we help our portfolio companies to have some quick wins. Everyone's wanting to deploy AI all at once. But instead of, like I said, coming in and saying let's just do it, let's find very specific use cases within each team, let's deploy it there, make sure that the teams understand how to use it, how to prompt effectively and then you expand versus just. Yeah, versus just stacking it on.
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But, but talk about that. Exactly. Because you know, I was on a call today with somebody who's raising money for a fund where the fund is involved in trying to across the portfolio of private equity funded companies to make sure that they're utilizing AI. And that's part of the thesis that they're going to make a difference in the investments by making sure they're applying AI. And you talk about something that's near and dear to all of our hearts is where do you find those easy wins? Because you have so many people talking about it. There's a huge difference of people using it one off versus a bigger enterprise level. But where can you start to get wins that feel meaningful so, so that somebody, you know, gets more excited about using it more? Where do you see some of those early wins?
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Honestly, it's a lot of investigative work. I come in and do an audit with the leadership team. I'll spend a lot of time with the individual department heads and I'll do almost like an interview like this and say walk me through a day in the life of what your reps do or walk me through a day in the life of what your product marketing team does. And we literally map out the responsibilities, the tasks and we identify things that are just really dragging the team down, such as, you know, putting together materials for a board presentation. Like everyone knows that that takes a lot of time and effort. How can we cut that down so you can get a good ROI that's tangible using AI versus just adding it to your tech stack without any sort of use case to tie the ROI back to.
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Let me ask you a question on that. Because people put in together board presentation decks or pitch decks, you know, at one point and still people spend a ton of time. You know, in some companies the cadence of board meetings is insane. And then they're spending a ton of time revising and revising decks. Often you get an 80 page deck that nobody really reads or very few people do. How do you turn that into an AI driven exercise versus so much people time? And then how do you cut down to the, the top seven issues that somebody has to talk about? Can that be done by AI or do you still need a person to use their judgment to combine sort of the.
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C
Yeah, two very, just very simple. And I want to give David an opportunity to, to respond. But set up a project in Claude and make sure it's compliant with your IT department and all the things. Upload your latest board deck. Upload anything that your board members are asking you for. Market intel, you know, what is your revenue target, anything that's material to the board and use it to help you drive what the next board deck needs to look like. CLAUDE has the ability now to create and generate PowerPoints as long as you are prompting it effectively. So you know, my clients come to me because they're like, we spent two weeks building this deck out, can you clean it up? I'm turning it back around in an hour because I've just gotten really good at fine tuning the prompt within Claude. But I keep it within the context of the project along with many other materials that my clients give me. So the LLM has the right information to pull out the right insights that would be applicable to an audience of board members, investors, whether it's private equity or vc, because they those two channels are looking for different things in their board materials. So I think just making sure that you're confined it within a project is incredibly important and an opportunity that's missed by a lot of leaders that I start to work with.
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A
And David, let me ask you to switch to you practical use cases that you're seeing and then I'll also ask you to prompt on the second question, which is companies that deploy technology effectively versus those that don't. And similarly with artificial intelligence, you've done this across the 30 to 50 companies. What do you see in terms of people utilizing AI effectively? And then what do you see as differentiators in companies that actually deploy technology effectively versus those that get stuck sort of experimenting or messing around but don't really get the benefit of better uses of technology?
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F
Yeah, I think I have a pretty similar approach to Brett. I tend to know my CEOs a little bit better. Although as I move outside of my portfolio companies, I'm experiencing some very similar, you know, sort of processes as Brett is. But I start at the top. You know, what, what is slowing you down? Obviously sales is always the number one goal in an organization. But generally speaking, if you talk to a sales team, they don't ever complain about the rest of the salespeople. They complain about operations, they complain about, you know, finance not approving credit quickly enough. Right. You what are the real bottlenecks within the organization? What are the things that are Keeping the CEO up at night, who are the key people within the organization that are the gatekeepers around this information, and then get a sort of an overall picture for how all of this stuff is really potentially impacting the organization. But then I go back to, you know, I think the combination of the first and second question here. It comes down to really understanding what is AI. Most people don't even understand what AI is in reality. Most of us, you know, say, I don't know who's on this call. Right. But unless you're really advanced, most of us are just using AI as an automation tool. All it's doing is allowing us to, to complete our work faster. It's allowing us to use a computer to execute tasks that humans used to execute. It takes a while to get to actual artificial intelligence where the machine is acting autonomously. And so, you know, when I first started out and I just compiled this, you know, I went to ChatGPT and I said, give me the top 100 terms that I need to know to understand what AI is. And you know, I just posted that on my website. And then I went and I said, give me the top 50 tools that are, you know, the AI tools and how do I use them? And then, then I work with the people that are within my group to try to get them to understand what are the resources that you have available within the organization? What are the resources that you personally have available? How do you learn? Are you a visual learner? Are you somebody who needs to sit in a classroom? Are you somebody who likes to listen to audio? Right? And as you can start to learn and understand what the terms are within AI and what the tools are within AI, then you can start to apply it to your daily use cases. You know, very simple use cases. You know, I, last week I took, I signed up for about eight or nine AI newsletters because I really want to understand what's going on. Stuff is changing so fast. Cloud comes out with this. And then, then my inbox was just inundated with newsletters. So I went to chat GPT and I said, okay, you know, use the, the, the color tone of my website. Take all of these newsletters and compile them into a newsfeed for me. And I want you to send it to me at 6am every morning. So when I get up while I'm drinking my coffee, I can read all of the headlines. And the headlines tell me whether or not want to dig into something. And it tells me, hey, this headline was seen on five different newsletters. This headline was seen only here. Right. And it differentiates the national News, Reuters and TechCrunch from Shelly Palmer and some of the other, you know, prognosticators out there. And that's just one real simple use case. It probably saved me four hours this week over last week. Right. So what are the things that I can do that I can treat the, the machine the way that I treat a human being? What's nice is if I don't answer them, they don't complain. When I come back, they know exactly where we left off. All I have to do is re prompt it and tell it I want to start again or if I've changed my mind, it doesn't get mad. If I ask it to repeat itself, it doesn't get mad. Those types of things really make an impact on your day to day life. And if you can utilize AI in that way, then you can start to move to some more advanced techniques. I've seen we built. One of my companies is a flavor company and we have flavorists on staff. These are PhDs with, you know, multiple hundred thousand dollar a year salaries. We started building an agent that replicates the knowledge that the flavorists have and all of the FDA regulations. And so when you go in and you want to create a flavor for a cannabis vape pen versus a beer or for something else, it knows what you can and can't use in terms of ingredients. Now is it commercially viable just now? No. Has it replaced the entire flavor staff? No, and it never will. But significantly cut down on the amount of time that my high value flavorists are spending answering basic questions. That's a, you know, an advanced use case. It took us three months to build that and to train it and have the human in the loop until you got to a point where we trusted it to step back and say, okay, we're not going to verify every question that comes in, but that's a more advanced. But it took us many months to just learn how to understand how to use AI and the AI tools that were out there before we could get there.
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A
Thank you. Let me ask you this question in terms of the. Somebody had asked the question about sales and business development. Developing leads for sales, developing leads for business development. And what is the experience there? Let me ask you each of that question, David, let me start there. Sales, business development. Where do you see AI business use cases? Is it still like a lot of things with that final mile, like logistics, that final mile is going to still be very, very human in terms of closing or really getting to the Right person and really making things happen. Where are you starting to see AI with sales and business development? And let me ask Amanda and Madison and Brett, same question.
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F
Yeah, I mean, I think it depends on the product and the service that you're selling. Right. But on both sides, outbound as well as inbound, I've seen AI make significant advancements. So, you know, one example is we subscribe to a, you know, a market research, you know, product and we're able to pull the data from that market research product into our data lake. And on a, on a weekly basis, we go into that research database and using, you know, the agent, we're able to determine 10 qualified leads per salesperson. And then we're able to go out to the Internet, we're able to grab the information from their website, and we're able to grab information from Zoom Info or whatever other tools are out there to help identify, okay, here's the right person, here's the right organization, here's how they're using our product, here's who, you know, whatever competitive intelligence we can gather and that posts it right in HubSpot and the leads sitting in the HubSpot inbox when they come in on Monday morning and they have to get through those 10 leads and then they tell us how the quality of those leads were and we go back and, you know, we help the agent sort of figure that out. But on the flip side, when we have inbound leads coming in, we have a workflow that routes it through a customer service agent. That customer service agent answers the questions and can take it all the way through the order process. If it doesn't require human in the loop at some point in time, 60% still require human in the loop, right, to close a deal. You're not closing a $200,000 software deal with, with an AI agent today I think you will in five years, but today I don't think you will. But selling products over the Internet, closing small dollar software application platform, you know, onboarding, we're seeing that stuff get done,
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but that' the smaller transaction stuff may get done now automatically with AI help and so forth. Amanda, let me ask you that question. Sales and business development, where are you seeing AI? And then secondly, which business functions are most likely to transform with AI over the next two to five years?
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D
So in terms of sales and business development, I am seeing a lot of AI in terms of lead generation and I think that's really sector specific because it does depend on what who's receiving that email. And that's outbound and there's quite effective AI SDRs or sales development representatives that can reply to emails and get someone on the phone. But like David said, I don't think that they're closing the transaction for larger transactions yet. But there's a lot of outbound and communication via AI in terms of sales that can be effective. Now I think when it comes to certain subsectors, for example healthcare services, AI hasn't proven to be very successful in that arena. But in other areas it really can be.
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It's really that. Amanda, over the next few years, what business functions you think will transform the most? Because for example in healthcare there's been a lot of transformation of administrative stuff, less of clinical but cascading use cases on the clinical side. But in terms of businesses, not in healthcare, where do you see sort of the, you know, and it's similar to what we were just talking about here. A lot of administrative things versus sales and business development. Where do you see the biggest trend changes?
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D
I think healthcare has already captured some of this, but a lot of it will be revenue cycle management. A lot of where there is, there's a high amount of data and traditional processes that are already well defined and margins are, margins are compressing and you really need to implement AI. And I think that's moving along as it should be. There'll be more movement there when it comes to advisory services or investment banking. A lot of the financial analysis and deal execution I think will be more AI generated. And we spoke to that a little bit in the beginning in terms of the need for analysts and whether that will dampen. But a lot of that can be done more effect, not more effectively, more quickly now with the use of AI. And I think that will change dramatically. But what will not change is the senior level input and negotiation portion of financial analysts and deal execution and then strategic planning. I think the will morph because as we were talking about board presentations and spending so much time just developing board material, the more quickly that's able to be implemented with AI, the more time that can be spent on the analysis or the overarching decisions themselves. So I don't think that AI will transform the ultimate decision, but I think the organizations that will be most transformed by it will be those that use it to get to the quality and speed of that decision more quickly.
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A
Right. I mean, to your point, there's nothing worse than sitting through a board deck for two hours and not being able to get to the point of what are the three or four things we really need to discuss and if you get there and then at some point for those three to four things that really need to be discussed, the AI tools will actually hone that down too to really give you pros and cons and get you as close as you can to truly using and I think
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D
AI can really help simplify the pros and cons of each each aspect. And I do, I do want to hop back on to one thing David said, which I think is really important for the listeners here that are just getting started with AI. That AI can help you learn AI and what the benefits are and what are tools that you can use and that can be really, from the individual level, really effective to start implementing.
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A
No. Truly remarkable. And Brett, some of your thoughts there. The places where you'll see either on the sales and marketing side, business development side, or just where you think AI will have the biggest transformative effects the
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C
next few years, I would before I give you a good answer on how to use it more effectively within business development, I wanted to give some caution on what not to use it for because oftentimes I'm approached by, you know, chief revenue officers that have been asked to pull an AI and their interpretation of how to use it is, in my opinion, wrong. So I kind of have to educate them first before we move into an engagement. I would advise people not to use AI for fully automated outreach without a rep involved. Involved. I'm seeing a lot more of that. And with content and for those that are using AI for content creation a lot, whether it's a blog post or your emails people, your, your email marketing campaigns, the content is becoming very easily detectable that it's AI. And I think we all know the M dashes and all the things, but I'm just seeing people just push it out so quickly without having someone to review it first before it goes out. The other caution to that being if you have, let's say Claude or ChatGPT, write your email copy or write your content for LinkedIn or write your content for your blog post and you just take it as is copy and drop it into will recognize the source code being Claude and it will pick up as spam. So just word to the wise, try not to do that if you're doing any sort of outbound with Claude because it's the, the back end of a lot of these email marketing tools is recognizing that it's scraping from Claude. Therefore it will come through a spam and you won't actually reach the people that you're trying to access. My second piece but Brett, that's some
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A
of the limits on this, isn't it? That at the end of the day to really work with other people on the other side of things. And we're seeing this great growth in, in live person conferences again because people really want it. You actually deal with people and if you deal with, with information overload, billions of spam automated messages, that doesn't really move the needle on business development. It sounds good, you're sending out thousands of messages but nobody really responds to them without direct hand to hand involvement.
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C
Right. And you know, I think that if you use a tool like Perplexity, it can get really great in terms of fine tuning the message and make it almost super personalized for each email. But if you're still not, if you're still just copying and pasting it, it's still going to be recognized on the back end source code that it's spam. For me, because I primarily work with organizations where they have a sales cycle anywhere from 12 to 18 months. I think the best use case right now is better discovery call prep. Because enterprise buyers, if you get on a call with them to do an initial discovery call prior to a demo, they're very suspicious if you get on and your reps don't know who they are, they don't know how their business functions, they don't know maybe a recent press release where they've announced some new initiatives. So I encourage any sales leader that I'm working with, even if they just pay to do a discovery call with me. How do we create a better prep process for your reps where you're pulling in information on that particular prospect on the leadership team on their technology stack as much information as we can possibly gather on that organization and distill it down into 5 to 10 validating questions on the discovery call. So when you get on a call with a prospect, you're almost kind of leading the witness to get them to identify the problem that you solve for using AI to curate those insights for you and generate very specific discovery call documents versus doing like a very scripted, you know, call, which I think a lot of organizations have fallen back to because by the end of a discovery call, if you have very curious curated questions for that organization and you've gotten the responses that you want, you can take that call transcript and when you do your follow up or you send your proposal, it's going to feel like you are identifying and addressing all of their problems without them telling that to you. And it helps to accelerate the deal and get you an Advocate to help with procurement and move the deal faster through the process because they feel like you're personally helping them with a win within their enterprise organization.
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A
And if done right, you're talking with somebody with the help of the artificial intelligence prompts and thoughts and questions so that you really are talking with them about their business versus what you're selling to them. So you could connect a lot deeper by using that kind of prep. And I think that's fantastic. David Panther Capital, let me wrap up with you. Where do you see business functions being the most transformed over the next couple years?
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F
Yeah, I mean, I think the, the thing I'm most excited about is what? I don't know. I. I mean, literally every day, you know, products are coming out, there's computer side AI now, I mean, it's only a few weeks old, but you can actually hand your computer over to Claude or, you know, one of these others and it'll go in and it'll send your emails for you. I'm personally not ready to give agency to my computer to log into my bank accounts and wire money to one of its agent friends that it finds on the Internet, which it will. So I think that, you know, the stuff that excites me the most is the stuff that I haven't seen. It's the advanced stuff. But I think what I'm most tuned into is data governance, data sharing, corporate governance. How are we going to manage all this stuff? What limitations are we going to put on employees, users to access and share their data, the company's data? Because you can't put the genie back in the bottle. And AI is a data first issue. If you're using publicly available data to implement AI, you may be more efficient than you were, you know, a week ago. But unless you have proprietary data, and every business owner does, right, your financials are proprietary, your operations are proprietary. If you're not using proprietary data, that you're not creating a moat and you're not really creating an AI advantage. And so in conjunction with that, you've got to be really careful about what you feed into. You know, OpenAI, Claude, Gemini, all of these features. You've got to decide whether or not you want to set up, you know, MCP servers and vector databases to house all this information, whether you're going to use, you know, retrieval, augmented, you know, generation and stuff like that. To me, that's kind of what I'm most excited about really, is putting the frameworks and the guardrails around this stuff, because I do feel like getting you know there's so much opportunity to use it that I'm worried about the abuse.
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A
No. Thank you so much. And like you, not ready to turn over the iPad or the computer to AI to, to what have you. Fascinating. Fascinating. I want to thank the three of you and I also want to take a moment to thank our three sponsors today, thank each of you for joining this panel. David Friedman, Panther Capital. Brett Jansen, always brilliant. Amanda Verner Thompson, also always brilliant. Thank you all three for joining us in the AI panel. Just fantastic. I want to thank our three sponsors today. Panther Capital, you've heard from David Friedman, Comm Advisors and Craig Levy, who who has traditionally done interim CFO work and just done a brilliant job. And Nathan Fredder, brilliant founder of Go Fig. And we'll hear from Nathan and Craig in our next panel. I want to thank all of you for being sponsors today. Thank you so much. I want to thank the three of you for joining us. Amanda, Brett, David, thank you so much for joining us.
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C
Thank you.
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D
Thank you, Scott.
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A
Our next panel is our CFO Leadership panel and we've got four great panelists and I'll ask each of them to take a moment and introduce themselves. Nathan Craig, Chris Lacy and Joe Calvinico. Nathan, could you take a second to introduce yourself and tell us what you do and what Go Fig is doing?
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G
Hello, nice to be here. Scott, thank you for the invite. So I am a financial analyst and data scientist and have been working in Fortune 500 for most of my career up until 12 months ago where I went into consulting on my own for data and analytics as well as AI engineering, specifically for CFOs and financial leaders. And over the last 12 months I had the privilege to talk to dozens and dozens of financial leaders in mid market and SMB space. And I'm excited to share some of the things that we are seeing and the trends we're seeing over the last 12 months, which has changed. It's changed a lot and I'm excited to go into that.
- [36:49]
A
No, congratulations. And we'll start to talk in a second. We'll come to you first in a moment about the top issues you hear CFOs talking about and the excitement of founding your own business. Congratulations. Just fantastic. Chris, I'll go around the horn here. Chris Lacy, can you take a moment and tell us what you do?
- [37:07]
D
Sure.
- [37:07]
H
Been in Executive Search for the last 20 years. The last eight years I've owned my own organization and I would say that the majority of those 20 years has been Executive search and private equity across a Few different sectors. So that could be in industrial, consumer products and healthcare. Over the last few years what we've done is the leaders that we would place would come to us and have us start to fill in roles for their teams. And so the last couple of years has been a big push in really just focusing on that missing middle. So the leadership layers below the C suite, building out the teams that are driving the execution and the strategy. So that is all we're doing and really putting a big emphasis. Even though it's private equity, we still have a few other sectors we focus and it's really been driving more in
- [38:04]
A
healthcare and a lot of it around the controller, that area, that level of person.
- [38:11]
H
Correct. So it could be like within the finance function, it could be controller, we could even do accounting managers. But it goes to revenue cycle compliance, operations, quality, all of that, all of those functions. But really just focused on the missing.
- [38:27]
A
Thank you so much. And Craig, you've had this phenomenal career as an interim CFO and you started doing this a long time ago and have just had this incredible track record. Tell us a little about yourself and about Commadvisors and also about the new firm that you've founded or co founded.
- [38:44]
I
Thank you, Scott. So Yeah, I've got 35 plus years in finance and operational experience and 12 years ago I started Kom Advisors as a guy hanging out a shingle doing interim CFO work for middle, lower middle market private equity companies through all stages of the hold from acquire, professionalize, grow, restructure and exit. And one of the things I saw in a lot of these cases where there were a lot of independent sponsor backed deals and a lot of independent sponsors are showing up saying we're operators. And really they're showing up with really smart folks who can operate a spreadsheet and financial engineering tools. And I had an exit with a group of guys and we said we think we have a better mousetrap. We're actually operators. We've actually sat in the seat and face down, you know, challenging clients or lenders or vendors. And so that's going to be our value proposition. So we started three BG strategic partners looking for businesses in the two to $10 million EBITDA range, not only to invest in but potentially to fine tune along the way. So now I sit on both sides of the table, Scott, as a financial operator and as somebody that's making investments and capital allocation decisions.
- [40:12]
A
Well, congratulations and how exciting. And I've watched your career and just fantastic. Joe, let me ask you to take a second founder of J2C Valuation to introduce yourself.
- [40:24]
E
Thank you very much Guy. Thanks for having me here today. I have a full service valuation practice. I spent most of my career in public accounting. I was a partner at kpmg. So many, many years of business valuation, real estate valuation and machinery, equipment and other assorted personal property for a variety of purposes. Financing trust in the states, bankruptcy, you name it. We've done a property tax appeals and we've run the gamut on those kind of things.
- [40:58]
A
Fantastic Joe, there you go. We see your veto now. You look fantastic. Thank you so much. Nathan, let me tee it up to you. You've had this incredible last 12 months of talking every day to CFO. What are you hearing most from CFOs? What are the big issues they're talking about and what do you hear in your conversations?
- [41:19]
G
What we've seen in the last five years is this increasing trend and velocity of instability. Things are changing so fast and I'm not just talking about AI, I'm talking about for a lot of companies who make physical products, especially like manufacturing industrials, the cost of goods and supply chains have, have been so volatile over the last five years since COVID Even recently with tariffs and with supply chain interruptions. With the global war now we have oil and energy going up, stock market is driving everyone on the edge of their seat. And so there's just a lot of volatility and a lot of uncertainty. And because of that volatility there is a greater need to understand what is the current state of the business business. And a lot of how a lot of finance teams operate is on a monthly cadence where their analysis and reporting happens at after the end of the month, part of the month end process. Close the books and see the P L and look at the numbers and financials. But the problem is that now you have this four to five week lag before you're seeing how you performed in that month. You might not know how you did in March until April, April 21st. Right. And to be able to react to that in this high, high paced world where things are changing so fast, it's. It causes problems.
- [42:46]
A
Thank you. And that, that lag in financial reporting is a disaster for companies, isn't it? Particularly in a time of volatility. Talk about that. If you can't get your numbers quickly and know your business well, it's very hard to operate in a rapid environment. Nathan, any thoughts? There's.
- [43:00]
G
Yeah, yeah, exactly. So the biggest thing is when costs are going up and you don't really Understand what your margins are until five weeks later. For that five week period, you're making decisions on continuing to increase production without accounting for the higher costs. So you might be budgeting that your cash flows for the next three months might be at a certain level and then when you get there and by the time you react to the higher costs, your cash flows are lower. So any investment plans or hiring plans, decisions you made to grow the company now has to be modified to account for the things that are driving margin compression, that are driving down your profitability and your cash flows.
- [43:47]
A
And Craig, let me ask you to comment on the top issues that you're hearing about from CFOs currently. And as you look at investing in companies, what are the top issues you're thinking about?
- [43:57]
I
Sure. So three things, Scott, and some of these we've talked about before. Cash management now followed by capital allocation and then as we were talking about earlier, AI adoption. So in cash management we're still in uncertain times between tariffs, inflation, et cetera. And so we need to be running tighter cash models than we have in years. A 5 day swing in DSO day sales outstanding or DPO can unlock more liquidity than a 2% cost cut. But you really got to monitor that and keep your finger on that. The second is capital allocation discipline. My job, as I tell my CEOs and boards, is to find a way to get to yes. But a lot of cases the business propositions that land on my desk aren't fully formed, the risks aren't assessed, the growth assumptions are, are way too optimistic. And so my initial response is often no, but let's look at these things first. And so we really got to do a better job in understanding sort of the risks opportunities that are being put in front of us because capital is finite. And then lastly in that capital allocation area is in Matt and you know, I'm already getting a lot of sims and a lot of looks at companies and companies that look attractive on the surface but can't grow their business past the transaction cost once you dig in. Companies that are run like hobbies, businesses that are boxed in by their own ceilings unless they have some real growth potential or costs that can be taken out beyond the owner segueing out, those get filtered out. So you got to be able to say no before you can say yes. And then lastly is AI adoption and we've talked about that with Amanda and Brett and especially outside of tech and SaaS, there's no universal playbook for how this is going to work out. And companies are still sort of figuring it out as they go. You know, I've sat in board processes just recently for 2026 and the boards are always asking so how much AI savings is baked into the number. And I've yet to figure out a good way to answer that question and be confident about it. So I too am learning about what the upsides and the risks are.
- [46:26]
A
Thank you. When you see a company that's sort of stuck in their growth and doesn't real Elliot or Lane to sort of move to bicker level, what is usually the challenge? Is it it motivation? Is it limited markets is not enough talent on the team? Where do you see some of that? Those companies being boxed in?
- [46:47]
I
Certainly. So there's a couple different ways to attack that. One is the desire for growth. We're looking at a lot of companies that quite frankly, and these aren't million dollar companies, they're quite big that are run as lifestyle businesses. A founder became an owner operator and is taking out enough cash to pay for what they need to pay for. And so now it's creating the confidence that we can actually go build something else now in the area where I want to grow. But I'm stuck. I think we, we heard a little earlier on what, what is your go to market strategy. And that really requires understanding who you're calling what your value proposition is, how your value proposition is being received. And quite frankly, if you're going to develop a new product, I'm sure you know my other CFOs on the call, can this resonates with them? They've never met an engineer that couldn't build something better. Well, can I get paid to build something better is really the question that needs to be asked first.
- [47:54]
A
Well, and that's really so, so true. It's that Venn diagram of what you're great at doing plus what the market will pay for. And you got to really have that Venn diagram. And Chris, you're working in this world of a changing artificial intelligence world. You're in the hiring world, the filling out lots of positions world. Where are you seeing our CFO starting to think about do they need just as large a team as they used to have or are they starting to think will AI take over some of those roles or is it still that the fact that there's just so much need for and there's such a shortage of controllers, CPAs and all these people that you don't really have AI changing that business very much yet. Where do you see some of that?
- [48:37]
H
Yeah, I think going Back to Brett's comment from the, the first panel is they're still learning how to implement it. So they're, they're not just bringing it in and deploying it enterprise wide. They're still trying to figure out, and it's not one size fits all. Each organization is trying to figure out which AI model and how to use that model to, to best help them make decisions. Over the last 20 years, the CFO role has gone from scorekeeper to strategist. And they are more involved, I think, in all of the functions than other functions are because the numbers are the language of the business. But it's not replacing their team at this point. It's helping them make better decisions. And then going back to Craig and Nathan's point is they're trying to make their businesses more durable. They don't just want to grow. They don't want to implement processes. They won't want to throw things against the wall and see if they stick. They really want to try to create enterprise value and make those businesses durable as they grow and sustainable.
- [49:48]
A
And how important is this, that hiring role and trying to fit the right people in to a system, but having the right people to do that. Chris, because you live in that world. Talk about that. Because being durable means consistent, good people, doesn't it? I mean, that's part of it.
- [50:05]
H
Yeah, absolutely. We've talked about this before. Is, and, and this is another thing that I'm seeing with CFOs that we're working with is they're very interested not just in the finance numbers, but just numbers across the board. So in a lot of our partners, where we are doing a lot of work every month for the same company across all functions, they want to know what those numbers are producing. So they, they don't care necessarily about the volume, let's call it, of candidates, but they do want to know of what we're presenting. What is that quality of hire? Do they stick? And then what, what is that? How is that helping us carry our strategy forward? And then going back to the point of building a durable business, is that somebody who's going to grow deep roots and help us grow the organization? So it's critically important to put, I mean, Jim Collins said this 25 years ago, but not just to have the right people on the bus, but in the right seats. And I think CFOs are also helping with that.
- [51:05]
A
No, Chris, I think that that's right on. And Joe, let me turn to you. You've seen so much in your business career, real Estate businesses, sort of across the board. What do you see right now when you look at the financial managers, the CFOs, the people that you work with? You work with a lot of banks as well. What are sort of the top pieces that you're watching currently and you're interacting with people on?
- [51:27]
E
So the, the biggest things that I'm seeing right now is that certainly is the, the availability and source and cost of money and, and, and that's driving a lot of decisions these days. And one of the clients I'm working with right now is that all of a sudden they were able to pull together a deal which they hadn't been able to pull together for quite a long time because they found a good source of money through a private source that hadn't been available before. So things in terms of the traditional sources of money aren't as available as now, basically singular sources of money that I'm finding and that they're being very creative about what they're putting together in the term sheet.
- [52:12]
A
And let me ask you a question about that. Because the whole world of private credit grew exponentially the last decade plus and a lot of it grew out of the Great Recession, different regulations and so forth. Now private credit's starting to have its first sort of hiccup. What are you sort of seeing in the finance market? As you see, some of the private credit starts to really struggle right now. What are you seeing in the finance market long term and capital availability? For a while there was so much money chasing deals, there was so much availability. What are you seeing in terms of banks and capital availability for companies that are looking to grow?
- [52:49]
E
Yeah, I mean, I think Craig talked about it the best in terms of that kind of thing is that, but overall, is that in terms of growth, to be sustainable with that kind of thing is that overall you have to have a solid, you really have to have a solid pipeline as far as that kind of thing goes. Otherwise you're absolutely not going to be able to get done what you have to get done. In your prior, in your prior section before us, David said, hey, what is slowing you down? And I think you're starting to see that that use of AI in that area is probably going to help us out quite a bit too.
- [53:28]
A
Thank you very, very much. And Nathan, let me come back to you. What are you seeing in terms of deals, capital availability and the place where CFOs need your guidance the most? Where are you working the closest with CFOs and where are you able to expedite what they're doing or help them the most.
- [53:49]
G
The biggest thing where I'm expediting them is on some of the data work that a CFO is doing. To Chris's point, where a CFO is a scorekeeper instead of structure strategist, where they're spending 40 to 60 hours manually updating a spreadsheet to get the numbers right. And you know, in companies that are backed by private equity, private equity is demanding more financial gear than they've ever had before. Right. And, and they, they want more frequent updates, they want more granular reporting and, and being able to explain why things are happening the way they are at a granular level. That, that takes a level of, of acumen on the data and reporting side. That was something that was not really available to middle market companies in the past. And now with implementing AI and building AI data systems, we can literally hand off the financial agent that a CFO can use to automate all those data systems and then ask the questions that they need to be that strategist. Ask questions like how can we improve our margins? How can we improve profitability? What are the opportunities here? And that's where AI really starts to open the door to start doing things that they would have to wait historically a week or two weeks for an FP to an analyst to do the deep dive for them.
- [55:08]
A
And let me ask this question about the CFO or strategist. In my career, many of us want to think as a cfo, as a strategist. And what I've seen over the course of my career is there's some percentage of CFOs that are really strategist beyond scorekeepers. And I've always looked at that number as, and this is not to insult my CFO colleagues as 25 to 30% are really deeply involved as leaders of the C suite. Others are deeply involved as scorekeepers, but very, very important scorekeepers. Not to understate that. Is that going to have to change in the world going forward? And do you disagree with that assessment? And I'll just give my own perspective in working with a ton of CFOs over the years, some are really, really numbers great. So important to the executive team. Some are truly strategist, but they're often very distinct. Any thoughts on the evolution of the CFO over the next decade in our CFO is going to have to change, if they haven't already. Nathan?
- [56:11]
G
I'd say yes. Yes, I'd say yes. So first of all, this might be a hot take, but CFOs who are only scorekeepers, are not CFOs. They are the controller. And what the CFO role, what it really has always been and what will continue to be true is that the CFO is the strategist because they are approving their budgets, they are saying what investments we make and don't make. And so by default they, they have to be looking forward to be able to have the confidence to make those decisions. And, and you, you can't, you can't be looking forward if you, if you're only looking at the past, you're only looking at reports and putting the P and L together.
- [56:56]
A
No. Thank you so much. And, and, and Craig, what do you see out there in terms of the evolution of CFOs? How do they have to evolve? And, and you've made a living, quite frankly, for the last decade, plus 12, 15 years of stepping into the shoes of CFO that either had left for whatever reason, had been asked leave for whatever reason, or a company needed a growth oriented CFO. How do you see that evolution of CFOs out there?
- [57:22]
I
That's right, Scott. My career for the past decade and a half has been filling in where a CFO either thought the curve they were on wasn't the right curve or they weren't successful. And in every case where they weren't successful, they couldn't tell a story. They may have been a scorekeeper, but the CFO has to be the chief architect and storyteller. The CEO is the visionary and the CFO is coming right back behind that CEO to get all of the stakeholders, whether that be capital lenders, employees, behind the vision to create followership. That's done through a lot of, how should we say, battles, but it can be done now much easier, as Amanda had said, through the use of tools. To literally start with your ERP system, go to Insight. And from Insight to deck, whether that's board deck or you know, the all employee quarterly update deck.
- [58:34]
A
It is fascinating to watch this evolution, isn't it? And let me ask Chris and Joe if you're advising CFOs today, sort of where's the focus of the advice and what CFOs should be looking at in terms of opportunities and what priorities do you think about when you talk to CFOs today? Chris, and then Joe asked you the same question them.
- [58:57]
H
Sure. I'm a fundamentals guy, so I'm not going to have any hot takes here. I think that deals don't create value on their own. It's really all the work that goes into it. Right. Just like appearance wise, we would all love to have six pack abs, but that's not the workout, that's an outcome. But that starts in the kitchen. Better nutrition, water, sleep. Same thing goes for CFOs and just businesses in general is that growth is really exciting. But it's the integration work, it's the deep work that makes it real and keep those companies durable. So I'll just end it with this phrase as I think they should continue to focus on those fundamentals. I think that they can help lead strategy, they can help deploy AI. Not everybody has a CISO in their organization. They can be the leaders of that. I just think it's a long obedience in the same direction. Just keep, keep, keep being an integral part of that leadership team, being a consistent part in being a strategist.
- [60:02]
A
Thank you very, very much. And, and Joe, let me, let me turn to you. Biggest priority for CFOs going forward the next several months.
- [60:10]
B
Yeah.
- [60:10]
E
And you know the, exactly what Chris said. I, I have, I agree. Everything that he has that he had to say in terms of the overall fundamentals, Interestingly enough, you alluded to this earlier, Scott. You talked a little bit about in person, you know, a lot more events and things like that, becoming a person. I, I see that as, as the, as actually the, the next step in getting back into the real world is that the CFOs are spending more time going out, networking and finding out either deals or they're finding people just out in the open and talking to people live. You know, we can't, we can't underestimate or underestimate the power of actually being together in a room and talking, talking, going to, going to seminars and that type of thing. And of course, like yourself, you know, there are great podcasts that are out there that are great business intelligence, even competitor intelligence that are out there. And I, I think that those are things that are, that are important for CFOs as well.
- [61:04]
A
But I think the point somebody had mentioned earlier, I'm not sure if it was Nathan or Craig that that mentioned or maybe it was Chris that mentioned that the CFO is also going to be the chief storyteller. And in this world of artificial intelligence, I'm going to ask Nathan and Craig this question. The ability to communicate what somebody's doing and communicate with the C suite team and with the sales team and with the product team and with the chief operating officer. How important is that today, Nathan as a cfo? This ability to communicate with your team. Yes. Crunching numbers and get everything together, but then being able to explain where it meets and how it impacts things. How important are those analytical and communication skills, Nathan?
- [61:49]
G
I mean, the answer is kind of in the question, like, of course it's very important. And being on the same page, I mean, that's ultimately what, what is the requirement, right, for people to all in different organization, in the same organization, different departments to be on the same page in order to be aligned on the same strategy. And the only way you get there is having the foundational infrastructure where all the data you're getting from sales and operations is aligned with the CFO's data sets. Instead of having different spreadsheets where numbers are people pulling reports and getting different numbers and nothing's validating, this creates a lot of frustration and friction inside an organization and there starts to create distrust. And then it becomes hard for the CFO to mobilize their team to move towards the vision that the CEO set out for the company. So it all starts with the fundamentals to what Chris is saying of let's create that single source of truth first and get all the teams on the same page and now guide and steer the organization towards the CEO's vision.
- [62:57]
A
And that ability, that ability to communicate all this, even with you work with your CFO clients in the financial teams you're working with, if everybody's just throwing data at each other, nobody really gets any place. There's still this need to really communicate and work with each other. You got to make sure the data is right. But then communicating with and working with each other to sort of align people and teams is really critical, isn't it?
- [63:26]
G
Yeah. I mean, that's why we have so many board meetings and monthly meetings to get people in the same room and align in those things. And I think to your point, by being able to streamline the data wrangling side, you give yourself more time to be able to put the message together and communicate with your team on why this matters, why does this meeting matter? Why does this report matter? Why are these numbers? What do they represent from how it impacts organization, what we need to do about it.
- [64:00]
A
Thank you. And Craig, let me ask you a similar question. The biggest priority for CFOs currently and what do you see as the biggest priorities? Because we're in a world of information overload, it seems like. And I think to Nathan's point, getting that data right. Chris has talked a lot about having the right team. Joe does this tremendous job of sort of this mix of making sure that CFOs have the right analytical skills to go with communication skills. But where do you see the biggest priority for CFOs today in this incredibly information overload world?
- [64:32]
I
Sure. So right now in my career, we're probably in some of the most turbulent business economic conditions that I've ever been in. You know, there's, there's a lot of reasons for it. We won't go into that. And so in order to be able to win, you have to be able to do robust scenario planning quickly. And that means you have to understand your business. But then as the CFO and in private equity, in almost all the cases, right. It's the CFO and the CEO that are running the company. Why? Because those are going to be the two that are going to have the lead to exit the company and get the returns that the investors are looking for. And so whether the CEO delegates it or not, the CFO is usually the provocative thought leader to push the well, what happens if discussions with the rest of the executive leadership team and you need to have those discussions so that you can do the scenario planning to say here's what we would do if we have a 5 or 10% EBITDA miss and just as important, here's what we would invest in if we had a 5 or 10% EBITDA gain. And then to tie that in with your last question on communications, you have to get to what I'll call the so what quickly, right? Why is the CEO and the board caring about this? What is the so what about what you just did?
- [66:02]
A
And that's so important, isn't it, that people actually know what they're trying to accomplish in that you've got, you could have all the information you want, but you better have a team that can go after it with that information and implement what you're trying to do, right? I mean, because everybody's going to be information overloaded and a big difference is going to be those that can understand what they're trying to do, align their teams and actually get it done.
- [66:25]
I
Absolutely. Scott. I learned quickly I could bury a leader, whether they're in sales or tech, with data. And I had a CEO challenge me, Craig, develop the vision for your process. And I'd be interested to hear if the other the folks on the call are thinking the same way. But I thought about it for a few days and I said the vision for my team and this was 25 years ago and it's still true today to provide timely, accurate, relevant, actionable business intelligence. Because without all those legs and the Multi legged stool. It's useless.
- [66:58]
A
One of the things that I'll comment on very quickly is that in Chris's world, which is search and helping to fill out teams for CFOs and teams, this ability to sort of condense down so they're not seeing 100 different candidates and seeing five that might be the right fit is so important because everybody's, they don't want to talk to you. As a search firm, if you're sending them 50 different candidates, they could do that themselves on the site. So you've got to be really good at ferreting out the right people for people. I mean, that's that mix of judgment and really taking what you do seriously, which I know you really do. It's fantastic to watch. And Joe, I think it's the same thing. I mean, what you bring to this more than anything else, a lot of valuation firms, what you bring to it is that mix of really personal touch and judgment and understanding what the customer is looking for is a fair statement. And Nathan, the same thing. You've got this incredibly sharp mind and that ability to work closely with organizations to get them what they need so they could do their job better is so, so important and just fantastic. And Craig, the same with you. It's incredible the career you've had as an interim CFO and now as an investor too. Fantastic. I want to thank all four of you. I want to particularly thank all of you for support and particularly on this webinar. Thank Craig and Nathan and your companies for being sponsors today. Thank you so much. We greatly appreciate what keeps the lights on. So thank you very, very much, all four of you for joining us. Just fantastic.
- [68:27]
G
Fantastic.
- [68:28]
A
We'll move to the final session of this webinar. Again, thank you to Chris Lacy, Priorit Services Group. Joe Calvinico, J2C valuation. Nathan Fraistetter, Go Fig. And Craig Levy, who's now wearing a couple different hats. CommAdvisors in 3 BG.
- [68:45]
I
3 BG strategic partners.
- [68:47]
A
Thank you so much. Thank you all. We'll move to our next section where Molly Gamble, our editor in chief, leader of the editorial team, will spend 20 minutes or so interviewing me about building businesses and some of the things we talk about in our book. Molly, let me turn it to you. Molly Gamble's been one of my partners at Becker's Healthcare for a very long time, is a fantastic leader and she's the co author of the book with me. Molly, I know I've set up a bunch of questions for us to go through. Let me ask you to start interviewing me and hopefully won't put people to sleep too much.
- [69:21]
B
Absolutely. Scott, thank you so much. So building Great Businesses Create Momentum, Overcome Setbacks and Scale of confidence out in June. Scott, it was a privilege to write this with you. You unpack a lot in this book. We're going to go through some of the big takeaways for people who are with us. The first is the stages of being a founder. You talk about founders going through these three distinct stages of evolution. Can you walk us through those three stages and which, if any, might be the most tricky in your experience?
- [69:51]
A
Sure. No, we will. Yeah, absolutely. So the three stages of business. In the middle stage, I think is the trickiest. The first stage of a business is you're often the chief cook, bottle washer, you're sort of doing everything. You're both bringing in business, you're executing on business, you're trying to make sure business gets done. So that would be stage one where you're sort of doing everything. At some point you decide are you staying in that category, you're trying to grow further. The next stage in building a business is the first part of building a team around you. And when I look at the second stage of growing a business, that team doesn't necessarily do everything better than you do, but they do help leverage the founder, the CEO, so that the CEO, the founder has more time to spend on what they're best at or on taking care of customers or growing the business or whatever it is. So it's sort of a 2, 2x difference. You could leverage yourself, but you haven't really built the next level business. It's almost like using AI versus agentic AI where it could take things further without you being the limiting step. The third stage in building a business is when you've hired leaders around you and a team around you and all those leaders can do the job better than you could do that job yourself. So if early stages of Becker's Healthcare, which grew into really nice successful media company, I would do a ton of the writing, a ton of running the editorial team. At some point we had to hire an editor in chief that could do that and run an editorial team. I think we've got 30 or 35 full time writers today that could do it in a way that I could never do it, that could do it in a better way. So no longer my the limiting stuff on the editorial team. Similar. At some point we brought in the CEO partner of mine, has been with us for 20 plus years and I could never do her job as well as she does it. And now things become self operating. It's not reliant on the founder to push every ball forward. There's a lot of other people pushing balls forward and really growing the business because you've now got people in all the key seats that are better at it than you are or were or could be. And I think that's the, the, the, the third stage of a business is when it's no longer, you know, the unfortunate reality for great founders is, or good founders is you're a great founder when the business no longer needs you. In the same way. That's, that's when you've really, that's that third stage of an evolution of a business is, is when you've hired enough people around you that they move the business forward without, without you being the limiting step. And, and that's sort of when businesses can grow 10x versus 2x versus 1x. Molly, let me turn it back to you.
- [72:35]
B
Yeah, it's a big paradox and it sounds like the last, the third stage will be determined by how well you do the second. Similarly Scott, you've outlined in the book these five stages in a company's development. Let's walk through those, what they are and then also where you see founders typically get stuck or tripped up most often.
- [72:55]
A
Sure. We view business development as a big funnel. You start with ideas. You know, we talk about this and I'll go through it very quickly. Then I'll talk about the specifics. Idea, product, revenue, profit, scale. And in venture funded business, the fourth and fifth profit and scale might be reversed. And we could talk about that as well. But we talk about the five stages of development of a company. Everybody has an idea. Having an idea is meaningless. It's why the information overload of the AI. Everything else, that in itself is nothing until you could do something with it. The next concept is you've actually developed a product or service that you're selling. Whether it's, you know, Joe Calvinico selling valuations or taking your valuations for people, whatever it is your product or service that you're actually now doing something, that you've actually got a product. You've gone from idea to an actual product or service that you're selling. The third thing is that you've got something that people actually pay for. And I heard a great comment earlier, it might have been from Craig about people having advanced hobbies versus real businesses, but you've actually got a product that people want. It's not just that people pay for that you've got revenues. You know, I always hasten the person who's talked to all their friends about their great business idea that they better actually talk to somebody who's actually going to buy their product, not just give them a pat on the back for a great idea. But the first three stages idea, huge amount of people to product or service, a much smaller amount of people to revenue. That's the next stage. Then you get to the fourth stage which is can you have revenues and actually make money from it? That's where you start to get the profit. And finally, do you have something that's repeatable, that you could scale, that's wanted, it's some level of mass that you could scale. And the only thing I'll say again on 4 versus 5 prop versus scale, a lot of venture capital funded companies are built to scale. First figuring how big they can get at what point their growth rate slows and then work towards getting headcount to where they're profitable. That's not right or wrong. It's a different way of doing business. But typically we think of five stages is idea to product or service, to revenues, to profits, to scale. Molly, let me turn it back to you.
- [75:19]
B
A lot of companies, you see them hit this, they'll hit a revenue milestone, but they never quite break through to real profitability and scale. Scott, those final stages you outlined there, in your experience, what do you see as the biggest difference between the companies that make that leap and then the ones that kind of stall out?
- [75:38]
A
Yeah, no, I think a lot of it is discipline and finding product market fit that people really pay for and they'll pay enough for that it makes sense to run a business. I mean, in a services business. Let me start with the first thing. One of the things I see often in startups that start to develop revenue is they keep on doing what we call moving the goalpost. So before they get to regular consistent profit, they keep on adding to their expense line and we call it moving the Gold Coast. And we, we find that to be a debacle. And you know, some people could do it because they can afford to do it, but we often find that to be a debacle. So one problem is, is moving the goal post. Second problem is we, we often see people, we talk about niches all the time. Is are you in a niche that you could win in and is it worth winning it? And you have people that are hitting this fine line of they want to sell to enough customers, but they also have to sell at a high enough price in the niche that they're in to be able to pay and support the team they're trying to build. And so we see that as well where people get sort of uncomfortable charging the right price and they've got to charge the right price if they want to keep the right talent and build the right team and do the right thing thing. You know, the third thing is there could be false positives in finding a market that you're looking at. Any market you get into, you're going to have some wins. And some entrepreneurs get fooled by some of the early easy wins where there's not really depth in that market to win at any size or scale that will allow you to build the type of company that you really want to build. So I, I'd start with those three sort of errors or challenges where, you know, people are constantly moving the goal post. They've got sort of false positives, some easy wins, but not big enough wins. Or third, the pricing to get sales. But that pricing doesn't work for actually building a business and building a team. And we found that, you know, different companies have been involved in. At some point you've got to have enough price discipline to be able to build the type of company you want to build. Take another margin that you can keep on growing and that you could serve clients how you want to serve them. Because if you don't have the right pricing, you end up hiring sub tier people having sub tier resources and you can't serve clients in the way that you want to serve them either. Or develop products as you want to build to build them too. So. So those are at least a few of the reasons where we see companies that don't get to that next level. And the companies that do get the next level have clarity about product fit. Something customers really want want. They've got clarity of who they're trying to serve. Like the best customers have great clarity. This is our ideal customer who is, here's who we're going after. And then to go back to something Chris Lacy said, they're building the right team. You know, I'm a huge believer that in business you can't do anything without building the right team. It just doesn't. There's all this talk of solopreneurs. There's always talk about AI enabled businesses. I just don't, you know, yes, very important, all those things. But I do think you need a great team to do anything significant.
- [78:52]
B
We're going to jump back to product market fit in just a second. But let's get into the zones of centricity you talk about in the book team centric, being customer centric, being niche centric. First and foremost, niche centric. Can we start there Scott, and then hear your thoughts on customer centricity and then team centric too.
- [79:11]
A
In terms of niche centric, we've had the chance to study a billion different businesses. I've been on the boards of several businesses. I've been an investor in lots of businesses. Some of those have gone very poorly, some of those gone very well. Plenty of them have gone very poorly. So it's not, you know, and one of the things we've learned is from some of the setbacks, but in, in niches I always find that the best companies really know who their customer is and they're really serving a niche and they get better, better at serving that niche versus trying to serve everybody. When you're trying to serve everybody, it's almost like when you see a dashboard or a confidential information memorandum that talks about, you know, our market is China, our market is this mega market, really broad market. It's almost meaningless to me. I mean much more important to somebody that's really in a niche, they really specifically know who their ideal customer is. You know, I always know that in businesses where we are struggling, we've not done a good enough job identifying who are true customer is who we're trying to really focus on. And then the concepts of niche centric, we always think about a niches. Can you win it? Is it worth winning customer centric? This is a lesson, age old lesson. The least important thing for our most important customers is very important. And I could say that again, the least important thing for your most important customers is very important. So we've seen over the course of, of either in building a legal practice or in them building a media company or being involved in several different businesses. We've had people that have spent countless hours on the least important, smallest customer in the firm. And that might feel good because you're very connected to that customer, but far more important that you're really taking care of holistically your most important customers and doesn't matter what it is if they're the customers that keep the bills on. You better be focused and have your best people taking your best customers and ultimately not get distracted by customers that don't really pay the bills. And so that's a customer centric being very focused on taking care of your customers. Really know who your best customers are, whose customers are that, you know, you tear out your customers T I E R Not T E A R to make sure that you really understand, okay, these 20 customers are what really keeps the lights on. These 20 customers are important. These 10 customers we should get rid of because they're spending this amount of money per year with us and I can't resource them well enough. I can't take care of them well enough as they need to be taken care of. So we really view it as really understanding your customer base and really taking care of your core customers. The third concept we talk about is team centric. At the end of the day, the best business people that I know really know where the revenues and profits come from. They really know who their best people are. They really know their best customers are. And, and it to me again, in businesses that I've seen be really successful, they've built great teams with depth. In others I've seen supernova founders, incredibly talented founders that have not built out great teams. And at some point those businesses often flame out. So there's only so far you can go, you know, without, without building a great team and having people that are sort of like this agentic AI type thing. People talk about they could take the business further than you could by plugging in your own inputs. But, but that really growing great teams and great people and supporting the heck out of great people.
- [82:50]
B
Least important thing for your most important customer is very important. It's such a, such a succinct and great rule. Going back to product market fit. Everyone wants it, everyone sometimes thinks they're have it and there probably are a lot of false positives or signs for people who are eagerly looking for it. What are the telltale signs of product market fit? When do you know something's really clicked versus just you're, you're really hopeful that it has.
- [83:15]
A
Yeah, I think what happens is when you start to get repetitive business in an area, you start to understand that people have an interest in what your business is doing there. And, and it's sort of like, you know, you could, you know, it's somewhat telling. If you're killing yourself to pick up business and no business is coming in or very small businesses coming in, you have to sort of follow those signals. In contrast, if you start to see growth in an area, you ultimately double and triple down on that growth. When I first started a healthcare legal practice, I started in three different areas, healthcare niches. And it was, you know, anybody that's my generation remembers the scoreboards at sports stadiums, but they used to have three different M&M's running like a red, green and yellow M and M running. And one of them would be winning, one would be losing, one would be last. And then building a healthcare legal practice to begin with, working in three different areas. One of them was like the M and M that was winning. And so rather than trying to, to chase the other two, we kept on doubling down in the area that was going great and built a great practice in that and similarly in building a media company. When we expanded from our original area to the two next areas, we thought Area 1 would be our winner. Area 2 ended up being 90% of the company today and it's become a really valuable company. But the concept was we were, you know, we kept on watching what people wanted and where the business was, and then we kept on allocating resources to those areas versus fighting that. So you, you sort of get told by the market, you know, this is growing like crazy. You know, one of our meetings, which is one of our original meetings, is 32 years now, is in, in its 32nd year. And it's basically been pretty static for a long time. A couple of other meetings that were started 5, 10, 15 years ago, you know, not just quadrupled that meeting, but are 10 times the size of that meeting. And it's listening to the audience, listen to your market, where is their interest, where is there not? And not being so stubborn to keep on focusing on the area that you loved as a legacy area, but not where your growth is, and then trying to develop sustainable businesses in the areas that you grow. But a lot of it's, you know, really keenly following the signals and watching what's, you know, where's the audience, where is the growth, where is the money coming from, where your best customers coming from and growing with and around and around them versus stubbornly, you know, I, when I first started, when we first started growing into new areas at Becker's Healthcare, again, I thought one area was going to be our extra base hip because it was so closely aligned with our original area. And it turned out another area ended up being 90% of everything. And we just had to be smart enough and not stubborn enough to really keep on doubling down and tripling down on that area that really ended up paying the bills and growing. And it's just constantly watching and knowing your business. I think it goes back to something said earlier. It's the combination of AI and information and everything and really paying close enough attention to know your business and grow your business around the areas where the customers want it, not just where you want it.
- [86:48]
B
Last couple minutes we have Scott, this book, there's. You talk a lot about the spark to be an entrepreneur, but also there is a great spirit of pushing through setbacks, pushing through challenges. For entrepreneurs and founders who are going to walk away from the conversation today, we what's one lesson about keeping momentum and pushing through tough times that you think they should take with them?
- [87:13]
A
Yeah, no, I think it's a great, it's a great question and I think it's just really challenging. You started it takes a lot of commitment to build a business because you have to decide that you really want to build it. You got to really follow the patterns in it. You have to put money into building teams. You got to take care of your teams. But I do think we used to always use the phrase that you have to dig 10 ditches before they dig themselves, meaning you have to put enough momentum getting going and really getting something going until it starts to create momentum on itself to where, you know, people start to come to you for stuff where you're starting to recognize as the company that takes care of this or does that whatever you're doing, you know, it takes a while. And I think it's. We always think of things as a think is conjunctive and conjunctive. What I mean by this is if you got one great person, you never want to lose that person to replace it with another person. Reminded me of the Cubs a couple years ago getting rid of Cody Bellinger to replace him with Kyle Tucker. Well, that doesn't really take you any further. You need two great people. And the same thing with great customers. You don't want to be overly reliant on one great customer, but you want to be conjunctive, which is really to try and grow in addition to that customer. So you've got lots of great customers. And we think of everything as it takes a lot of determination to really grow something. And then you've got to get to that next stage where you're, you know, people and customers where it's conjunctive. You're constantly, you've got ride or die people and you want more ride or die people. You've got got too much customer concentration. You don't want to get rid of that customer. You want to add more great customers. And we view everything as very conjunctive.
- [89:00]
F
Mal.
- [89:01]
A
Let me stop there. We've got a couple audience questions too. I just assume. Take that and take a couple of those questions. One question is how do you control your AI agents, especially taking actions in regulated environments like healthcare finance, and how do you Just assure that those decisions are defensible. I think this is like a lot of things going to be an evolving situation of not getting too far caught behind on AI and at the same time being careful what you implement and try and grow it. I don't have a perfect answer to this. I don't think that anybody does. But I do think it's going to be a constant evolution of watching what your AI is spitting out and having some judgment too. Like, if we look at, you know, who are 20 great possible sponsors for this next thing we're doing and AI post me out a list of 20, you know, I could immediately tell one of our salespeople, well, that those might be great names, but you know, there's not a fit with this small company in Alaska where there's probably not a fit at this moment for this, for McKinsey either. It's probably somewhere in between. And it takes a lot of that judgment. And I think in whatever you're doing, healthcare, finance, anything, sales, business development, there's going to be a lot of judgment attached to the AI as well to get to the right spot. Another question is some businesses plateau without reinventing themselves as the current structure doesn't work at scale. Oh, this is a reality. This is a really challenging issue. And you know, you're trying to build things where there's enough margin, where you can grow it at scale, where you can build the team that you need. And we ended up expanding Becker's Healthcare 25 years ago, not because I wanted to, because we needed to build more areas to be able to maintain and grow the type of team that we wanted to build because it was too vulnerable having a very small team. And we ended up growing a serious business because we had to, not because it wasn't for money. It was because we had no choice if we wanted to maintain the type of team and talent that we wanted to have. And the money did come God blessed less, but, but I think you constantly have to be like really deep in areas. Well, experimenting in other areas. We've always thought about this in terms of business development and business growth and additional lines is 80% focusing on your core business, doing the business great. 20% on growing and expanding business and trying to grow into other areas. We, we've always sort of viewed it that way. I hope that's helpful for some people that have, that have asked the that question. We're extremely thankful to our three sponsors today and to all of our speakers. The three sponsors go Fig Commadvisors and Panther Capital. Thank you so much. We're so thankful to all of our speakers. Just fantastic. Thank you so much for listening to the Becker Business and the Becker Private Equity Podcast. We hope you enjoyed this.
- [92:04]
C
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