Interview with Pete Hayes of Chief Outsiders on fractional CMO services
Interview with Pete Hayes of Chief Outsiders on fractional CMO services
TRANSCRIPT:
Darius 0:02 Hello, welcome to the retail tech podcast. My name is Darius Vasefi and in this podcast I speak with leaders and entrepreneurs involved in all aspects of retail and commerce. This interview is being recorded and will be published on retail tech podcast.com. Today I'm speaking with Peter Hayes, from Chief Outsiders. How are you today? Pete?
Pete 0:28 Very good. Thank you, Darius v. Thank
Darius 0:30 you for joining me. So let's just start with a quick maybe bio on yourself, and what does chief outsiders do?
Pete 0:40 Okay, well, I'm kind of a serial tech marketer. Way back started with IBM did some turnarounds, some large business ended up at AMD, and most recently, before getting chief outsiders off the ground about 11 years ago.
Darius 0:56 Okay, and what's the idea behind chief outsiders,
Pete 1:01 it's a really simple concept. And it just came from a research observation that half of the middle market and lower middle market at don't have a marketing executive at the, at the management table. And as a result, it all falls on to the CEO. And at some point, it doesn't scale, and companies get stuck or they lose their way or they just get frustrated and trying to implement their vision.
Darius 1:27 Okay, and of course, marketing is such an important part of every business every So now,
Pete 1:35 what in the reality is, you know, most companies don't need a full time Chief Marketing Officer, that's just the reality. I mean, a real Chief Marketing Officer, not just somebody with a title that implements programs. So, so that anyway, that's the that's the notion, you know, you can drop one into any size company for any period of time, you can turn it on tomorrow, you can turn it off next month, or after a project's done, or, or stay in as long as needed. Sometimes that's years, and sometimes it's just a few, few weeks or months.
Darius 2:07 Okay, so now you open up another question for me, what is a real chief marketing officer?
Pete 2:14 Yeah, well, you know, if you if you go get your MBA and marketing, from a, you know, from a great business school, if you really go to study what marketing is all about? You know, if you ask a CEO, where does that graduate go to work? They're likely to say, well at an ad agency, or at a digital firm, or an e commerce company? And the answer is no, they go become a McKinsey consultant, they work for vane, they become a brand manager and consumer packaged goods, but their expertise is identifying market opportunities. And aligning a company with those opportunities and delivering products and services and the right value propositions and of course, the go to market programs and campaigns and such. But it's that heavy lifting that gets done before you get to execution that makes a marketer. And ultimately, a CMOS chops are well balanced across the spectrum of, of research and strategy and execution.
Darius 3:13 Okay, so a lot of research. So really, on the strategy side?
Pete 3:19 Well, it's, everything's driven by strategy. And, and strategy is informed from, from research from insights from a marketplace, which is, which has been incredible this past year, because everything's changed and continues to change. So it's been a marketers kind of dream, if you will.
Darius 3:35 Right. And now with, I always think that the job of a marketing people is just getting more difficult with all the online options that are just coming up,
Pete 3:47 like a when the job keeps getting bigger, because there's so much more to do digitally. You know, for, you know, in the retail space, it's, it's pretty obvious, you know, the opportunities in e commerce and omni channel kinds of things, and all the different dizzying ways you can go to market and engage with customers and build those long term relationships. And just designing those things is, as you say, it's just the challenge to keep up with entirely.
Darius 4:14 Yeah, I guess the team is getting bigger as well. So
Pete 4:19 yeah, and one of the reasons is because the, the, the sales function, and you know, in retail, that's a salesperson, you know, I mean, I think of the guys that Best Buy, and I walk in, I pick up the item that I already ordered, and there's the guy sales guys standing around in their aisles, you know, and you just go in and grab your stuff. Well, that's retail still, even though I'm making an online decision. But you're right, more and more is going into the marketing function. More and more of the sales process more and more and more, and we're just watching that needle, shift and jump, especially this last year.
Darius 4:57 Run. Yeah, and I mean, there's the new movement also, which I'm somewhat familiar with it, you know, we tried to practice it is called product led growth. And with a lot of different, especially like software as a service companies, but really you can apply to retail everywhere, where you build features into the product that actually bring growth. So, you know, I guess one of the things that I always tried to draw the difference differentiation between, like marketing and product management is marketing is that mostly on the acquisition side, and then once the customer has been acquired, then it goes into the product role. Is that make sense? For
Pete 5:46 me, it really all depends on on your background and perspective, I see product management more historically being more closely aligned with engineering and the product development. And the insights come from the marketplace in terms of what to build. And that can be part of marketing, and typically ends up being part of engineering, then there's Product Marketing, which again, now aligns that product with the go to market opportunities in terms of distribution channels and routes to market and, you know, the technologies that might get in into the marketplace. And then there's marketing communications, which is all about, you know, the message and the advertising and the PR and all that kind of thing. So I see it that way. But yeah, that's the fun thing about marketing is everybody's got a different point of view.
Darius 6:32 Well, the role of product management is really a new, relatively new in the mix. Initially, it was product marketing managers, and then engineering. But the product manager has evolved from being like, almost like the business person looking at any product or feature. And a lot of times these days, they are the ones that come up with a strategy on the product side itself. And then, you know, bring the teams from marketing and engineering and you know, other areas together to look at how to, you know, build and launch and grow the, you know, the product, it's really interesting. Again, I'm in my space, I mean, that the technology space, and that's pretty much what we we live with, I'm sure it's different in different verticals.
Pete 7:27 So the way you describe that I'm in, I'm in alignment with you.
Darius 7:31 Okay, great. So as far as the fractional cmo is like, what do you do you actually only work with large companies? Or what's the size of the company that can actually utilize the service?
Pete 7:44 Yeah, good. Good question. You know, large companies, enterprise class companies have CMOS, so we do work with them, but we augment their staff, we compliment them that they may be missing a skill set or need some leadership for an initiative. But more often than not, we're focused on smaller companies, I'll call that the lower mid market to the mid market companies that are in that even from a startup standpoint, but typically have revenue and the 10 to 20 to 50, to several 100 million dollars. And those companies tend not to have one, a CMO or two, even a VP of Marketing. And we and we always qualify that say a VP of Sales and Marketing doesn't count as a VP of Marketing, because those are all the salespeople.
Darius 8:27 Right? What about startups? Like just getting off? Is that is that a good time to engage somebody on a fractional level,
Pete 8:36 terrorists, you might you might see, especially in tech, you know, in tech is cmo, venture funded See, tech is cmo may be the third hire, right? you get you get in terms of you got an engineering team, you get things being built or being designed. But when venture gets involved, they want to make sure they have the right CEO, the right CFO, and they pretty quickly go to a CMO because they know how important that is. But so is our fractional CMOS being used in startup. Yes. And and yet it you know, kind of comes down to this question. Do you need it Do you need when you're building something you need to do you need the designer of the growth engine? Or you need the mechanic? Do you need somebody to run the engine or you need someone to actually design it. And companies that are startups may go through that phase pretty quickly. And they sometimes want both. And so they call that a growth hacker, right? They want somebody that's going to hack the growth, it's going to kind of kind of build the engine on the fly by testing and experimenting and getting things going. It's really popular in the SAS World Of course.
Darius 9:39 Yeah, yeah. All right, cool. Well, this, it's this is definitely a good, you know, something that every startup needs to think about. Even before launching, like really, you know, they need I mean, a lot of times right now there's a phase called pre launch and that's where you actually start to Build up demand. And you can even see like with clubhouse it's still invite only. So that's a marketing tactic. That gives it exclusivity. So all right. So you, the company just came out with a market insights study for the 2021. year before this year. Let's dive into this study and see some of the key points that you found.
Pete 10:34 Okay. Yeah, it's the second time we've done this, you know, our firm has about 80 CMOS right now, we've worked with about 1200 different companies on their management teams as their fractional cmo. And, you know, so last year came around, and we said, Gosh, we've got a lot to, we've got a lot of thought leadership this year. So we surveyed our CMOS. And at that, at this point, this survey this year represents the input from from working with about 150 companies at a time. So that that's our client base right now. So that's the perspectives that our CMOS represent as they answered questions to the study. I think the most interesting thing right off the top was that compared to last year, and we took this study in the middle of the first quarter, so think of like middle of February. Last year, our CMOS had a little bit of a pessimistic outlook for the economy already. So before COVID had surfaced, was before COVID was the conversation of the day, things were already slowing down. And it's actually consistent with some economic forecasts that we follow. And so in contrast to that, the CMOS are very positive about this year, especially in contrast with last year, but going into last year, not last year, because of COVID. But last year was going to be under a little bit of a headwind from an economic standpoint, anyway.
Darius 12:03 Do you think that was because of the elections or something else?
Pete 12:07 No, I think it's just the, the ebbs and flows of the economy. And just from a macro standpoint, just in terms of where GDP was going to be here in the States, and, and just the dynamics that happen, you know, things are changing all the time. And believe it or not, it has very little to do with who's and who's an office, when you look at the data on how GDP moves around and how industrial production moves, and you know, nondefense capital spending and all the all the key economic indicators that actually has very little to do with who's in office. And it's kind of surprising. But yeah, this year, people are expecting CEOs and our CMOS, they feel the tailwind. And companies are fired up. It's and there's, there's an emotional element to that, too. It's kind of like everybody's kind of anxious to get out of the house. Companies are kind of anxious to get out of the barn, you know, and go grow, and the market seems to be ripe for it.
Darius 13:03 Yeah, definitely. I think we're all looking forward to do that. So hopefully, also, with this stimulus, I've heard that that's going to drive at least some short term increase in customer consumer spending.
Pete 13:19 Yeah, you're no, you're exactly right. In fact, when you look at that, when you look at the data, you see the spike of disposable income. I mean, it's gigantic. So yeah, the actions of both both administrations plus, especially the Fed had been very important to keep things afloat. And, again, that's measured as a positive indicator in our in our study. But the data also shows that just from an economic standpoint, and you're right, eventually that catches up in terms of in terms of long term debt. And as interest rates start to normalize, and, and the Treasury has to start, you know, spending a lot of its money on paying interest rates, things, things will get a little sticky, but maybe not for almost a decade, we hope.
Darius 14:08 Yeah, it's like nobody wants to think about that right now.
Pete 14:13 Please get one year under our belt is what feels like normal.
Darius 14:16 Yeah, let's just, you know, I mean, we've we've had, you know, nightmare for a year. So let's just try to, I guess, relax and have some fun for a very short time. So
Pete 14:31 it's interesting. It's been hard on so many people and so many individuals. And you can't say enough about the number of folks that lost jobs, especially in retail and restaurants and hospitality. There's no question about the pain. But at the same time, in our study showed this as well. There's more positive impact from the pandemic in terms of business growth in the companies we're working with the negative, so they see more opportunity in the pandemic and coming out of the pandemic, which is stunning. Really, I mean, the numbers are, you know, they just point to that companies see opportunity, you know, left and right, even even related to the pandemic.
Darius 15:14 Yeah, so I see that your, your report, by the way, I'm going to have a link to this report in the notes on the podcast that goes on the website. So that's going to be available. It says, You've got 43% of CEOs think that pandemic has been an opportunity for companies.
Pete 15:36 Yeah. And so if you look at that chart, 43% sounds like less than half. But if you're looking at the chart, like I am, that's, you know, the, the more is better than the last because there's some in the neutral zone. And so it is actually the largest percent says, it's an opportunity. Exactly, to your point.
Darius 15:57 So this is really interesting. As far as like, the mindset, and I guess what we call is the success attitude of individuals. That's another area that I'm really interested in is. But, you know, when when, when you look at, like, you know, how should CMOS or marketing people teams look at such an unexpected and massive, disruptive event in their business?
Pete 16:28 Yeah, it's, so you have to look, that's exactly it, right? You have to look at what what's your business going through. And we, we were telling our clients back in the spring of last year, when things were just heating up, of course, we thought maybe they weren't, we thought maybe Hey, we were, we were going to come down this slope, and everything was going to be fine, even Jared, right. But as things are heating up, we were saying, This is the mindset to have, you've got to do your five year strategic planning in the next six weeks. And we're kind of still in that mode, because the markets are still shifting around. So So it's, it's, it's an it's not just kind of the market place, you know, your competitors are moving. Some of them are, you know, look at restaurants, look how many pivoted so brilliantly? And how many just closed shop? Yeah, I couldn't figure out how to get it done. Right.
Darius 17:20 Yeah, I mean, that's, I was gonna just get into that myself. The restaurant business, of course, you know, all we hear, for the most part is how bad it's been for them and how disastrous it's been. At the same time, grocery has picked up, which means I mean, people still have to eat, right? They're just not going out to eat. So there have been restaurants that pivoted so quickly saying, okay, no worries, people are not coming here. So I'm going to put these together these lunch boxes or meal boxes, and start delivering them. But why? Why is it so few people actually thought about that? What I mean, you already have the
Pete 18:00 food felt like they really didn't know how they didn't have to do it. They weren't, they just didn't feel equipped and kind of the fear factor kicked in. And you know, and that was fair for a lot of like, very upscale restaurants, you know, the ones where takeout doesn't really make sense, are you really going to take out, you know, $100 a person meal. But but some did, and they figured out how to do family packs, and they figured out how to change up their menus. I know there's one restaurant here in Austin, that, you know, we never would take out in fact, my wife and I hardly ever eat out. But we started to just to try to support the local businesses. And that would have a conversation with with, with the general manager as I'll be picking up things and, and the things that he learned, like he says, a 15% discount doesn't do it, but a 20% does. So when he and he's got all these email addresses because they were using, you know, one of the online booking services, Open Table. And so he had all these email addresses. So he immediately started, you know, pinging people and he pings them on the specials, he paints them on big meals, he paints them on for Father's Day and Mother's Day specials, he pings them when the fish of the day is the is the new thing. And all of a sudden he was and then they opened up 25% 50% But I tell you what the business he continued to do out in the parking lot with people picking up is huge. And he was he was fine. And they came that close to not making it right.
Darius 19:21 Yeah. Yeah, I think that's that's really, really a good lesson on resilience. And I guess the concept of anti fragility is I don't know if you've read that book. by Nicholas Taleb. Yeah, I don't have it, but I know of it. Anti fragile. Yes. Very interesting. So. Okay, so let's go into some other findings from the report.
Unknown Speaker 19:55 Okay.
Pete 19:58 It's probably not a surprise that The government helping out is is a good thing for a lot of companies. We think that the data here, most companies feel as though it's a good thing, that it's helped them out, some company says it hasn't had an impact. Of course, those are the companies where a PPP loan wasn't relevant, that they were still healthy. They didn't have a downturn, so they didn't qualify for a PPP loan companies that did qualify for PPP loans, especially the ones that were on the on the margin. They have a war chest, and nobody talks about it. Right. So you take the PPP money, and you pay your employees with it, because that's what you have to do with it. But as a result, in many cases, many, many businesses were able to save money that they were making through normal sales anyway, that they norm that they would have used to pay a number of their employees, and they ended up with a war chest. That's another reason why we think that a lot of companies are just dying to get out of the barn. Because they're there, they're in a really good cash position, a number of them again, I don't want to take anything away from the ones that are suffering offley. And there's there are some of those, as we talked about the different sectors. But the majority of companies we believe, are raring to go aren't good cash position, and are eager to, you know, to be 100% open for business.
Darius 21:19 Okay, yeah, yeah. I mean, there's definitely a lot of people that are going through a really hard time, and we don't want to take away from that. I don't for sure. So now, what about this idea of coming from even like, surviving into even growth?
Pete 21:44 And well, again, we hear about the companies that are struggling a lot more than the ones that are that are that are killing it. I mean, you mentioned some, you mentioned that grocery has done well. But think of the companies think of home improvement, I mean, they're going completely crazy. Think of Home Services, people getting things fixed up or getting people to come to their house and so forth. And, and the government has helped with some stimulus, again, the people, the people that are just, you know, relying on that, to eat is really, really important. But there's a lot of people that are still employed, that still gets stimulus And to your point, that becomes disposable income, and they're out buying things. So its intention is to go out and stimulate the economy, especially retail, because retail drives the whole economic engine, right? Yeah. Yeah.
Darius 22:41 So the another part of your report talks about organic search and like online tactics. Let's Let's touch it touch up on that.
Pete 22:55 Yeah, it's kind of not a surprise, right, we, you know, 94% of businesses are going to spend more in digital advertising. You know, the whole digital thing, which now doesn't even make sense to use the word because it's such a broad spectrum of stuff. But there's so much more buying research decisions that are made in online without having to hit people don't think about it. But think of think of the menu decisions that you never made online that now you make online, right? You used to make you used to make what you're going to eat decision at a restaurant by talking to the waiter and what was the special now You don't? Now that's done digitally, too. So all sorts of decisions are being made online. So advertising, spending, spending money in those channels, makes complete sense. So our CMOS see that they see that they're, they're able to get more accountability from their spend. And so that's, that's where their clients are headed.
Darius 23:57 Just a side question, as we talk about this is, so you have like access to CMOS who specialize in like e commerce.
Pete 24:09 Yeah, so our, our, our, our group, the CMOS is as broad as industry and skill sets, as you can imagine. I can honestly say that with the 80 plus folks we have right now, there's no to that look alike. They do have, there's maybe getting close to a dozen folks that are really strong in e commerce. There's another, you know, 30 or 40, folks that are really strong across digital channel and digital promotion, and so forth. And, and there's folks that are relatively strong in industries that are maybe more nascent and digital such as industrials. But there's been a lot of movement there. I mean, even in the you know, the big the big economy. This opportunity is, is not what we're experiencing. It's not in the it's not in the consumer side, it's in the b2b side. And, and that's starting to light up. I mean, it'll dwarf what goes on in consumer ecommerce. And that's starting to happen because it had to, you know, you're you're a manufacturer of something and you rely on trade shows and such. We'll talk about pivoting, you know, their sales, people can't get out, they can't meet with clients, they can't have people to the plant. And they're having to really overhaul how they go to market. And I don't want to go off down a rat hole that may not be relevant to our audience here today. But the changes are phenomenal.
Darius 25:42 No, that's actually very interesting. I mean, b2b is is also part of retail. So yeah, retail is not just consumer. So.
Pete 25:51 Okay, good. So I wasn't quite sure when my research and how far we go. But you're obviously at retail, requires product requires manufacturing, distribution, and so forth. So it's the whole chain.
Darius 26:02 Right. And that's the part that like, you know, as you said, it is not really that much in the news as much as the consumer side. is, so what it is. So that's a very interesting part. How do I mean, okay, so companies that have always been online, they know this, they know how to acquire customers online, if they're software companies, whatever, but how are people actually switching because like going to trade shows and in person meetings are so important for especially for like larger accounts, right, like enterprise accounts, how are CMOS handling that change?
Pete 26:43 So it does change? Maybe I want to, I want to go back to your comment about online companies know how to do online, because they're having to reinvent the filters as well, because the competition, but yeah, so if you've been doing trade shows, you know, how do you get it done. And so they're inventing things right there. They're using, they're using zoom to do to bring prospective client engineers into their development labs to share. They're doing things that they that was difficult to do, they used to think they had to get their clients engineers on a plane to visit the plant and, and now they're doing it off virtually. And they're actually accelerating a lot of the things that were hard to do before. But in terms of getting out any trade shows, there's hybrid shows, it's things are going to get back to normal, not more than normal, things are going to get back to more normal, and certainly hybrid, and pretty quick fashion. We're participating in a trade show that is usually 3000 people in Houston, and now it's 1000 people in person, this is next month, 1000 people in person instead of a couple of 1000. Online, they'll have five to 6000 online, because now people are getting more used to participating this way. And so they'll actually have a much larger audience that they'll serve. So people are finding ways to get it done.
Darius 28:02 Yeah, well, and this is like, I don't own stock in clubhouse. I wish I did. But clubhouse is really an interesting concept. It's almost like a non stop tradeshow. So you haven't, you haven't, I would recommend spending some time and going and listening into some rooms, but the type of conversations and, you know, marketing, acquisition opportunities are really interesting.
Pete 28:33 Yeah, that's great knowledge sharing is the key to so much. You know, I wanted to if I can darious make a comment. So is an example here, there's a there's a direct to consumer, ecommerce only product company here in Austin, or I am, and you know, they've done pretty well. They grew to $20 million or so over, over maybe 15 years. They have a product that's that's relevant in the in the pandemic space. But they were kind of naturally going from, you know, augmenting their direct to consumer ecommerce stuff, and using Amazon as an obvious channel because people were looking for this product, especially during the pandemic. And and all of a sudden, Amazon became their biggest channel. So their margins were hurt by police. They were shipping everything they could build, but in the process, because their product is is applicable not just to consumers, but to businesses, restaurants, hospitals, Senior Living schools, they found that they would get a sale of a product through Amazon if somebody buy one or two and then they call them up and say we need 1000. And so now business to business is their largest growth engine. And this is just this year. Business events business. As their largest growth engine, they grow from 25,000 to say almost over 75,000, from 20 million to over 75 million in revenue a year. And now they have this mix, right? their direct to consumer channel, ecommerce, their Amazon channel and their b2b sector, which is their fastest growing engine. And so that's what companies end up doing. Right? They find how their markets are shifting how customers are buying the relevance of their product and new markets. And they have to, you know, pivot their distribution strategies and so forth to to meet those changes.
Darius 30:37 Yeah, that's a very interesting point. So what what do you think? I know, it's really hard to expect or try to predict what Amazon is going to do. But do you think Amazon might actually do something to get on more into the b2b side?
Pete 30:56 Oh, for sure. And I think they are. Yeah, absolutely. I would expect that. But you know, I mean, to that point of, you know, how did our CMOS view what was going on with Amazon. And that's a, that's a change year over year, the big threat of Amazon, you know, it started to crack as certain brands began to pull out, and, and signal to the rest of the world, you don't have to count on Amazon. If you're a major brand, or even some minor brands, if you can create, you know, become top of find for your category, or at least in the in the mix, maybe I don't have to give up my margins to Amazon and I can, I can find the growth and I need another way. So it's going to be a mixture. But yeah, Amazon's got definitely going to turn up the b2b commerce side. But again, direct to business. And business, e commerce is not going to have to depend upon Amazon. But Amazon will certainly be a major player, the major player, right?
Darius 32:06 Yeah, I mean, there are even like, really smart people, using Amazon as a customer acquisition strategy and sending people to the website, which is interesting.
Pete 32:20 Or that, yeah, you fall in love with the brand and that the brand is packaged well, and you can create a customer experience that brings them to you then, just like this other company, I mentioned they, they sell the one through Amazon and sell the 1000 direct in their b2b side.
Darius 32:35 Yeah. I mean, the whole marketplace strategy is something that every cmo
Pete 32:44 really should pay attention to right? Which marketplaces to engage in, it's all about the markets. And that's, you know, getting back to the original question on what makes up a good cmo or what really is a CMO? I mean, you know, there are a lot of people with the title. And there are a lot of good folks that are really good at executing, especially in the digital and SAS direct to consumer space. And they know all that they know, the tools and other technologies, and they're working hard to keep up there. And they're specialists there. That's fantastic. But that may not be the same person that you want. With an ear to the ground on how markets are shifting and and how you might respond. relationally with other channels, right?
Darius 33:29 Yeah, yeah. I mean, I know that Alibaba is also trying to get into the US market. Walmart has its own marketplace now. So the Yeah, this is this is just another avenue, that marketing really needs to address is how to handle the marketplaces. Now, there is another interesting part to the in the findings, about growth minded CEOs being a growth challenge. I'm interested to hear what what the findings were on that.
Pete 34:11 Well, I'm trying to think of what part of the study you're referring to.
Darius 34:15 It's right above the it says a thriving growth minded CEOs a key growth challenge facing
Pete 34:24 Tango private. Yeah. So private equity has an amazing challenge. And any edits. It gets, it gets missed. So if you're in the enterprise space, you don't think about private equity very much. I mean, private equity has participate, they, they'll buy divisions of companies and carve them out and so forth. And startup, you know, in the startup space, which are now you'd like to spend a lot of time with your audience, their startups think about venture capital and venture funding and in In many respects, there's a there's a ton of venture money out there looking for things to invest in where they're going to get a return. Although the return is often on paper, because they don't necessarily have to make profit to get a return, look at companies like HubSpot, for example, that are just turned into massive companies without, you know, without any profit, Amazon for forever, didn't make any profit till they lit up their cloud business. But so, so venture money doesn't necessarily for private equity is kind of in the middle of private equity is looking for established companies. And they, they may find a company that's $30 million company that's taken 25 years to get there. And now they expect it to double in the next three years. And the one reason they do that is because they're trying to get a quick turn on their investments, but the challenge that they're facing, and with this comes back to the growth minded talent that they're looking for, it used to be the private equity, his mission in life was to acquire a company and engineer more profit out of it, and really was the business and people that are in private equity or financial wizards. And they'll acquire a company, sometimes they'll do some things with debt. And, you know, I hate to say loaded up, but sometimes that's the strategy in order to get the financials to look a certain way and to drop more profit. And, and it was all about engineering, more EBITDA, right, more profit. Today, there's, there's an estimated $2 trillion globally of uninvested, private equity capital, they're looking for companies there, it's surprisingly hard to find companies for sale, they're competing for those companies, and they're having to pay a premium for the companies they acquire. Which means they can't just engineer more EBITDA, they're actually they're going to have to grow the top line. So it's a different game for private equity, and they need growth minded CEOs, they need to have the right kind of marketing. Folks, people that are going to build an engine that's going to grow the company that know how to do that. It's just a little bit of a different game than it has been historically. And this is this has panned over the past maybe two to three years.
Darius 37:17 That's very interesting. brings up another question that I am interested in is a What do you think makes the best CEO? What kind of a background is it finance, marketing technology, or something else?
Pete 37:38 The best CEO is the one with the best fit. I mean, you know, some companies are completely culture driven, even so regardless of the background, you know, our CEO, my partner, and he founded our business, he has a finance background, but then he got into marketing. So he's got kind of that, that dualism, I have an engineering background, but I got into marketing. So we've got an engineer, they got into marketing with the finance guy that got into marketing, which ends up being a nice combination. For for the leadership of our company, we believe, you know, you know, look at look at, let's go to an extreme example, you take a company that was so vision driven, and so market aware driven as Apple, and the genius of all time, Stephen leaves his company to a guy that looks so much not like him, a guy that's a supply chain guy, right? And you in the market, discounted Apple for how many years until, until, you know, the new guy could could prove that he could continue innovation, and continue growth even and not just deliver the manufacturing side. So, you know, I hate to, I hate to say it depends, but it absolutely depends. I mean, if I'm going to, I think if I'm going to engineer a great product, if if I if I'm the engineer visionary then and I'm that CEO, well, then that's exactly what my company needs. If I'm buying a company, and I'm going to drop a new person in, I would look for the gaps in the holes. You know, the challenge a lot of companies have is engineering firms tend to have everybody in the company and as an engineer, and sometimes that's not the best thing. You need some more diversity.
Darius 39:26 Yeah, yeah. Well, so this is like, for example, especially in retail. You know, I've had a lot of conversations with retailers and people that are in the business about the lack of understanding of technology by the majority of CEOs and how that has actually attributed to really falling behind. So so that's like a part that is really interesting is that like you could have a CEO that is really good in it. In supply chain or, you know, finance or even marketing, but if they don't know about technology, they are totally so dependent on other people telling them what it is that they can't put their own judgment on it.
Pete 40:19 Yeah, that would seem to be a handicap for that company. And that's when boards get involved in big changes, right.
Darius 40:28 But it's so so that's the question is that is there any company in today's world that really doesn't need a CEO that understands technology? I mean, any I mean, even restaurants, like the restaurant owner that didn't understand technology is the one that really suffered the most, as opposed to one that probably did. Yeah. And I'm not talking about like coding and development. Yeah, they don't have to be like a developer or anything, but they need to have some understanding of technology.
Pete 41:06 They certainly have to be able to assess opportunities, you know, so I couldn't be more critical of, of the management team. I mean, if the CEO is that is, you know, I'll just call say, dictator, if the CEO is running the show, and it's every idea comes from him or her. They're exposed if they if they have these gaps, right. But if they have a highly functional management team, somebody else can have those insights and can bring those things to bear. You know, they may have a head of operations that is all over it. And but you're right, the ones the ones that were already dabbling, as well, the ones that the ones that were caught, caught flat footed, like, Well, we've got a restaurant, we open our doors at 430, every day, what you're toast, right? Oh, we don't need this Open Table thing, because we don't want to pay a percentage.
Darius 41:58 And yeah, I mean, I want to clarify technology, he has said, it doesn't mean that it's like, you know, they have to be developers, but they have to understand how technology is changing their customers lives. And that part of it is, again, you know, like, yes, of course, the management team has to be the guiding point and, you know, help the CEO or the board. But when when somebody really has that background, like you know, yourself being an engineer, that's where the CEO can actually shape the vision of the company really focus around that instead of other people telling him or informing him to do that, you know, like, it's like, when you believe in something yourself, it's going to be top of mind for you, and you're going to just, you know, rattle the cage and get the, you know, the team to look into that more focus. I think that's really what what I'm talking about, but I mean, I definitely see the other side of it, too.
Pete 43:01 Yeah, you know, in our, in our small firm, we, you know, initially thought like any other professional services, you know, management consulting kind of practice, you'd say, well, this business is going to be built on relationships and referrals. And that's a reasonable thing to assume. And, and when I engaged, which was just nine months after the company had launched, and I said, Gosh, actually, we're going to get a lot of our business online. And my partner said, I don't think so. Because why would somebody go looking for a CMO online? And so I said, well, let's go see. And so we start getting leads and closing business online. And so he became a believer. So he wasn't initially and now we, now he has a good, we have a good understanding and is open to how we deploy technology in all sorts of ways.
Darius 43:58 Well, I can say that he made the right decision in getting your help so. So yeah, that actually brings up another question is that, you know, typically, you would have one cmo in a company and in your company, which is built of all CMOS, it would be a really interesting dynamic and how we strategize with so many CMOS is
Pete 44:26 a really easy way to look at that I have the most sophisticated marketing Advisory Board of any company in the world.
Darius 44:32 Yeah.
Pete 44:34 Because, and I have to entertain really good suggestions every day. So we're not we're never short on great ideas. But we're also a relatively small company and about 20 25 million in sales, so can't do everything.
Darius 44:51 Great. So let's see. Another point that I find really interesting is the companies are more prepared to pivot 90 over 90% say that they're much more prepared to strategically pivot in 2021. What does that mean?
Pete 45:11 You know, there's some interesting fallout from last year, companies had to learn, they had to learn how to adapt or die, right. And some muscles were built, we, we believe there's some really valuable marketing muscle built last year, because you're required if, you know, most companies aren't very market oriented, that's, that's just the reality. They may be customer oriented. So they want to serve their customer, they want to have smooth operations, they want to be profitable, but they're very internal focus. Most companies are that way. That's what our research shows, they were forced to look outside the business to see what was going on whether it was the pandemic itself or the economy, but more inclusive of how their customers buying habits completely changed. Because they're not going to come in or they're going to come in differently, or your message better, I'll be about the cleanliness and health risks being gone, and so forth. So everything changed, and they were forced to look outside. So we and then they and then they made some decisions. They learned some things, they made some other decisions. They tried some other things. And they and our observation is that we've seen these companies now come into 2021, having developed some muscles that they may not have had before. And that's really, really valuable, because markets are always shifting, and they're certainly continuing to shift right now.
Darius 46:34 Yeah, that's I think that's probably one of the, like you said, you know, one of the things that people really need to get good at is that, you know, shifting and changing being open to really change quickly. I think that's very interesting.
Well,
this is, this is a really great conversation. Pete, I want to open up I mean, if anybody has questions, oh, I see one hand up. Let's see, I'll bring up the quota. And we'll ask have him see what question Yes. All right.
Unknown Speaker 47:17 Going. Good morning.
Darius 47:19 Hi, Dakota.
Unknown Speaker 47:21 Hey, I was just listening. It's a small intimate room and wanted to introduce myself. I am a, what I would consider my biggest talent is marketing. I graduated in 2016, Colorado State and started an e commerce business. And now I just recently sold it and I'm trying to figure out how I can keep utilizing that marketing talent, you know, I'm gonna build some more products, I'm gonna build some more communities. But my question was, is I was interested to hear what your guy's company is and how it got started.
Pete 47:57 It Well, yeah, we got started with the observation that most midsize companies don't have a chief marketing officer. And they actually don't need a full time one. So we can perform that on a, you know, most often about a 25% basis, where we can work with the company for six months, nine months to a year more and kind of get their growth engine figured out. And sometimes, that'll be an e commerce thing. Usually, the e commerce companies we work with are not starting from scratch, though. Usually they've got something going but they just may not have the right disciplines may not even know how to use the engines they've acquired
Unknown Speaker 48:35 are oftentimes your new CMOS, you're bringing on revamping their e commerce site? Is that one of your guys's biggest strengths?
Pete 48:43 Yeah, and even just developing the disciplines to how do you how do you campaign? How do you how do you increase margin by you know, a lot of our e commerce customers aren't they're not struggling with sales, they're struggling with profit. And so how do you you know, charge properly for shipping? How do you how do you engineer upselling? How do you increase the total shopping cart? size and so forth?
Unknown Speaker 49:10 ao v i love it. Yeah. Yeah, that's all stuff that I keep finding so important. You know, not to give the horse the sob story. I started with 300 bucks. And it was always kind of like I was confused. When I when I was turning 21 when people were putting $200 on black, you know, for the first time Yeah, gamble. And I was like, This is exactly what I'm doing with meme pages. This is exactly what I'm doing with influencer pages. Yeah, I'm spending $200 and I'm making 450 back. Why would I ever think about going to put 200 on black? And, you know, I just love that. So anyways, nice to meet you guys. I hope to hang out for a second. But
Pete 49:48 yeah, company companies will be lucky to find you to Kota and deploy you in any number of ways and keep your learning up. And so thanks for checking in.
Unknown Speaker 49:57 Yeah, that's perfect. I'd love to love to earn Stand and be a part of your community as well and add value where I can.
Darius 50:03 Well, we're trying I'm trying to get people more active on clubhouse. So
Unknown Speaker 50:09 I just followed I'll tap in I got I was kind of a early adapter to it. I'm definitely not don't have the repertoire just yet. But I have some friends on here that if you have some cool stories, we can put it in front of a lot of people and blow your your clubhouse up.
Darius 50:25 Yeah. Yeah. Thank you, Dakota. Great. Great point, guys. Thank you. So June.
Unknown Speaker 50:34 It Nigeria's I wanted to ask a couple of questions. First one is how do you figure out the fit of the CMO to match the client that you're engaging with?
Pete 50:44 Yeah, it's it's, it's obvious. And then it's surprising, right? So the obvious thing would be well, you have anybody that is a perfect fit for my industry. You have anybody that has sold shoes to transvestites. I'm serious. I mean, you can finally find somebody This is your who's who's experienced in some very specific industry. And then, so there's industry fit, then the other less obvious fit is what's the problem. So that gets more like Dakota is talking about, you know, somebody has an e commerce problem or somebody has a margin problem. But more often than not, they have a competitive problem. But that's not the symptom. So you've got to kind of unwrap, you know, the symptom might be, it's costing too much money to acquire customers. And you appeal that. So they'll say, Well, I want more customers, and I want the cost to go down. But what you'll find out is maybe the reason is, is because their value proposition isn't aligned with what the buyers are looking for. And that a competitor has entered the marketplace, and there might be undercutting on price, or they might be over delivering on a feature set. So sometimes you're trying to solve the problem, you find the right cmo that knows how to solve that problem. And sometimes it's the most important thing, because you know, good marketers are often good marketers across any industry and any problems that so sometimes it comes down to, you know, who's going to fit into our culture here, we had one client, a $50 million company, and where they wanted to start was taking a culture index survey. And they wanted any number of her CMOS, and I think about 12 engaged. And the person that was trying to help this company find the right cmo with us. They didn't even expose the industry. They just said this customers, this company is going to hire on culture. If you want to play take the culture index it, sir. Then sometimes its location, you know, I'm you know, here in Austin, and I want to be I want my cmo to be able to show up face to face at our management team meetings. Guess what changed last year? A lot of people learned that, hey, you know, actually, I found out my executives can work from anywhere. So those are the four dimensions, if that makes sense.
Unknown Speaker 52:58 That does
Unknown Speaker 53:00 it. My second question is it sounds like you know us because you mentioned visionary before. And so under us, people tend to have a management team that consists of a CMO, a CFO and a CEO, or an ops manager, actually.
Pete 53:20 That is not what our data shows, by the way.
Unknown Speaker 53:22 Oh, okay. What does your data
Pete 53:24 that less than half will have a CMO or even a VP of marketing? And if they have a director of marketing and reports to the head of sales?
Unknown Speaker 53:33 That's not so do they use agencies mostly,
Pete 53:37 although use agencies to do things, but they'll? And you know, Jen didn't get to finish your question, but she's talking about EOS, the entrepreneurial operating system. And so maybe you still needed to set up your questions and margin. Yeah, that sounds great.
Unknown Speaker 53:51 And I think that part of the challenge is finding the right talent, though. So I think that but do you know of other firms that are similar to yours that focus on the other roles, like a fractional CFO or opsin is that common?
Pete 54:06 It is very common, fractional CFOs came on the scene about 25 years ago. And there's a number of national firms. The one that made it prevalent was Tatum, another one called Virtual CFO. And then there's regional firms all over the place, almost every Metro will have a shop of, you know, six to 12. And then some of the big guys have, you know, maybe 1000 paid them got to be maybe 1400 worldwide. But that was on the CFO side. So and then and then there's fractional CIO firms, and there's fractional CEOs, and there's fractional anything x Oh, when we came on, just over 11 years ago, nobody, as far as we could tell, had heard of a fractional cmo. And in fact, the people that we talked to didn't like the word fractional and wanted us to not use it. That's what our market research showed. But we we thought it would eventually blossom and we really wanted to own it. Now, there's 1000s of people calling themselves fractional CMOS. There is not a firm of our size, and there's nobody that has a roster of the strength of our company. So we've really tried to build it distinctively, and deliberately. And at the end of the day, though, it's all about our culture. So I tossed that out there, which didn't have to do with your question. But yeah, there are in all in all the other spaces.
Darius 55:33 Yeah, great, great questions. Thank you, Joe. Anything else? Dude?
Unknown Speaker 55:40 I was just gonna do a follow on question and just ask how do you gather these people with these different skill sets, especially with marketing changing so much right now? I mean, omni channel marketing is changing. privacy laws are changing. Data solutions are changing. There's this whole push on first party data as well. Where are you finding these people? And how are you upskilling them over time? So that that kind of flows across your whole organization? So they bring that to the companies that they're working with?
Pete 56:14 That? That is? That is a fantastic question. And it starts with this realization, there is no such thing as a full stack cmo. There's nobody that has it all. And if they say they do, there'll be wrong by this afternoon, right? So and they probably are so full of themselves there, they're going to miss out anyway. So you're right, it's more than any one person can can know it all. And it's actually one of the, it's turned out to be one of the benefits of having a firm. So you know, we don't have a collection of resumes that people are CMOS work full time for us in our firm. And they're in our clients. And when they're in the firm, what happens is, everybody's supporting each other. So on client engagements on what technologies to use, we put together our own kind of internal Rolodex, we call it