Heroes Don’t Scale: Why AI Makes Broken Businesses Worse | Russ Reeder | EP11
Russ Reeder, a serial founder and PE advisor, argues that AI amplifies broken organizations. Before deploying AI, companies need clear mission, aligned teams, and disciplined prioritization. Without these foundations, AI just makes existing failures faster.
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1,000 days.
That's enough time to transform a company, but not enough time to waste.
Welcome to The 1,000 Day CEO, the podcast about decisive leadership, sustainable growth, and building a business that thrives beyond any one leader.
Your host is Bill Canady. Let's make every day count. Welcome everyone to The 1,000 Day CEO podcast. Today we've got Russ Reader with us. He's a founder and CEO, and he has founded over 9 different businesses working with various private equity companies, been a leader in those going all the way back to 2006 when he sold his first company. Today he focuses around strategic and advanced AI, helping companies build out the AI and then maintain those AI. And he's gonna tell us today, he's got a new book coming out. Exciting times with Russ. So Russ, over to you. Tell us what you got going on.
All right. Thanks, Bill. I appreciate it. You know, I think the, the most exciting thing we're doing right now, or we're going in as strategic advisors, helping businesses sort out really prioritize what they should be focusing on to help bring in AI to help them win and be faster at the right ROI. And so we've got some lessons there. Like you said, I'm also writing a book, Heroes Don't Scale. Hopefully maybe by the end of this year, beginning of next, we'll have that come out. So super exciting. I've always had a book on the mind through my decades of experience, but now I thought it was the right time. I've got enough scars to where I can share some really good stories and learning. So hopefully, as I was young in my career, I consumed autobiographies and business books just to learn. And so hopefully my desire there is to have a top executive that's on their way up or someone that has a lot of experience as well, read this and really gain value from it. It's good to be here and I think you're doing great things.
Well, listen, we're super excited to have you. So you're such a young looking guy to have done all these wonderful things. Maybe start out and just tell us how you got started and what led you to all this, uh, all this greatness.
You're too kind. Yeah. So in the early '90s, when I graduated in business and technology from James Madison University, I was a mainframe programmer. I built financial systems and really enjoyed it. I mean, they, I love building, but you know, the, the salespeople would come in, talk to the clients, take them to dinner and leave. And They had a little bit more control of the situation. So I was like, you know, I bet you I can do that sales thing. So trying to get out of engineering into sales, I went from sales to technical customer support to sales engineering to sales. Right time, right place. I went over to Oracle in '96 when they were really trying to win in the applications business. Within about a year and a half, I was promoted to run all app sales. in the West Coast. So by Ray Lane, the president at the time. So it was amazing. So anything west of the Mississippi on the application side reported to me. And it was when Oracle was switching from selling technology to technologists, features and functions, to selling business value to business people. And that's what people do today, but it wasn't as just the norm back in the mid-'90s. And so really loved being in Silicon Valley in the '90s and Got recruited out by Sequoia Capital in 1999 to do a B2B startup, which was amazing. We grew that up to about $12 million in sales and sold it north of about a $1.2 billion valuation 2 days before the crash. And then the crash came and we lost pretty much everything. But, you know, things happen for a reason and I took what money I did make and I started my own business. And so, Started my business in Los Angeles that handles all the rights licensing and royalties now for companies like Disney Plus and Hulu and Netflix. They keep track of all the content and grew that up and sold that in 2006. It's great to see it doing very well. And back in 2006, I said, okay, I don't really want to go back to Oracle. I kind of have learned what I thought I needed to know. being an executive at Oracle. And so I went and started working with private equity. They'd bring me in to help fix companies that they had invested in that they wanted to, you know, they were good businesses, but just maybe a little broken. And so I went right in from running my own business to dropping in and helping fix businesses. So over the past 20 years, I've dropped into about 9 different businesses. And in between those engagements, I've helped grow and advise other businesses. I've worked as an advisor for different private equity firms to do due diligence on technology companies. And after those 20 years, last year I said, look, we, to a bunch of friends of mine that are great operators, now that AI is changing everything in any company or any organization, We have all this experience. We've built some amazing tools, even some great AI tools over the past several years. How about we bring that advisory experience to these businesses, kind of that mid-market business that's really struggling, struggling, and having them solve those problems with AI, but not just use AI to replicate the, the, the, the what's happening. fix the problem, then you implement AI. Because if you just implement AI, you're going to speed up the broken process and things will break faster. So, so yeah, that's what we're doing right now, having an amazing time. And, uh, you know, it's, it's great to go out and be on the really the bleeding edge with all of these, you know, great companies.
Yeah, it's interesting. AI today, I remember back, it wasn't that long ago, maybe it was 20 years ago. If you put .com behind anything, it was worth like a bill. You could put, you could be like delivering cats to someone. It was cats.com that was worth a ton of money. Today it's that way with AI and your insight that, you know, it just, it takes a bad situation and makes it worse. It amplifies the, the, the, you know, the, the kind of the downside. So how are you guys addressing that today? So you've got some great stories. You know, we were talking about 'em backstage earlier. Tell me some of the things that you're helping people maybe avoid those traps, maybe go a little faster.
Yeah. I mean, so I, first I'll take it back to the, what I'm writing about in my book, and then I can bring it all the way up to really what's happening in companies right now. All right. And so when I look to write this book, the number one thing I thought about was what's the one problem I've got? I feel very blessed in my career. I have amazing family and friends and just a great network that I would go back and work with most of them again in any opportunity. And so when I looked at what was the first, what's the biggest issue that I see across not only the businesses I went to go help run, but my friends' businesses as well, businesses that, you know, pain that I've heard about. And I'd say number one, most businesses, Probably have an alignment issue, right? So if you talk to the CEO and you ask the CEO, what's your mission, vision, values? Like, where are you going and why? And what does success mean? And then you ask every person underneath them, go down the food chain. It gets more unclear and fuzzier the farther you get away from the CEO. So number one, it's the alignment and definition of success. There's 1,000 books on vision. So I don't want, I didn't want to write another vision book, but what, then I said, okay, what's the hardest problem to solve? I love listening to Audible. I love listening to autobiographies. I read when I can and I just consume content and learnings. But the thing you don't really learn a lot about, right? I mean, the people side is really hard. And The one thing that I've seen is that you, all companies have those people in the company that have the hero syndrome where they have tried to make themselves indispensable. So much so, some of them by not even fixing the things that break so that they get pulled back in, whether it's that salesperson that is the only person with the relationship with some companies, That engineer that is the only person that knows how to fix it and stays up all night and is the hero versus making sure it doesn't break in the first time, first place. Or that executive that really trades in information and uses knowledge as currency and wants to be the only person that receives information so that they can disseminate information. So, and those people are called heroes. And so the title of the book is Heroes Don't Scale. And so in order to make sure that you can have a company that scales is you have to learn how to take those heroes and create systems around them so the entire company can grow.
That is so true. I mean, I cannot tell you the amount of times when I've been working, I come in, Uh, and there's one per— and they're making it all happen, you know, they're— and we all kind of walk on eggshells with them. And at the first, you're so grateful to have it, and then it becomes kind of a blocker for you. You're not sure what to go do next, and you don't wanna upset the person. A lot of times, which is kind of interesting, and you were pointing this out, they make sure they're the point, right?
Yeah.
And the other thing that's kind of interesting, they're not always the one that makes the most, uh, money for the company. You know, there, there's a lot of downsides, uh, uh, to it. How do you address that? How does AI help you to address it? And today in your business, KeyDelta, you know, what's that piece that, that maybe, maybe we don't need to kill our heroes, but we do need to set up a structure that we can grow around them?
No, I mean, every company has them and every company, I would say, needs them. Um, but you also need systems to ensure that everyone can grow, right? I'm not saying you need to go in and fire. Some CEOs have gone in and fired all their heroes and, and they've done pretty well and Probably doesn't work out very well with some companies.
Sometimes the CEO becomes the hero.
That's, yeah, right. Very much so. Right. So, so, you know, every situation is unique and different. I think with, with AI, the number one mistake I see people doing is just trying to move faster with AI. And if there's a 15-step workflow process that you're automating, it's, and it's still 15 steps, but now it goes very quick. quickly, you're just going to run into the wall that much faster if that's the direction you were going to begin with. You can drive around town with your tire very low on air. You get on the highway, you're going to crash and burn. Same thing with systems. And so number one is making sure whatever you're working on, you take the time to analyze that process to ensure that it's good enough. Number one, to be automated, and that it's where you want to go, not where you are, right? So build where you're going. And I think the most drastic thing that I'm seeing right now in businesses is that now everyone's a builder. So you have these companies that have always focused, and SaaS applications have allowed executives to focus on their business and makes it cheaper to license in. We don't build our own financial systems or CRM systems anymore, right? We use Excel for faster processing of large complex calculations, and that hasn't always been the case. So now we have these businesses focused on business, but now they're starting to build all these applications. And when you build an application, you put it into production, it's immediately called Tech debt, it's immediately old, right? It's like driving a new car off the lot. Depreciation starts immediately. And the reason why in technology is look at, there's a new foundation model every month. There's different pricing every month. There's different security issues, could be every hour, right? You have to watch that. And businesses are moving so quickly, the business side is changing as well. So what you have to now, this company that always licensed software now has, is they've launched software, but how are they going to maintain that software? They don't know how to do pragmatic product management. They don't have a PMO office that's developed with an engineering team that's constantly monitoring based on a product roadmap and security. And point releases for the different applications. And so what you're going to see, let's, we can get together in 6 months and then a year, you are going to see all these companies that have built all these applications that are now struggling to maintain all the applications because now they've made them, they've built all this great productive software, but Just like anything, you put it out, it needs to be modified. Well, who's going to modify it?
It's interesting. So I experienced this in my own business. So I've imagined myself to be quite the AI tech. So when I'm late at night sitting there with Claude or Anthropic or ChatGPT or Perplexity, I can build a website in 5 minutes and then I can't remember which AI I built it in because they're in different things. And then I'm not sure where in the chat stack, and then something breaks. And so somebody will call me and say, well, you know, that, uh, that tool you built, which was really cool, that thing's not working. I'm like, where did I build it? And did I shove it in GitHub or did I run it in its own computer? And then I can't remember. So your tech deck thing just resonates with me. And then if I hire someone to do it, then I gotta go find them and it's all, you know, custom coded and on and on it goes. So how do you deal with all that? I bet you got some great stories.
I've always loved technology because it moves so quickly, right? And I always said that the best thing about technology is if you're out of touch for a little while, all you have to do is start learning and within 6 months you're caught up. Now it's 6 weeks. Like you, all you have to do is consume 6 weeks of like the latest news and you're up to speed on everything.
I think you're right.
Right? I mean, it is amazing. And so, you know, just use an example. One of our clients, They are leaning into AI and they're allowing all of their business units to become builders. They have over 75, I'd say solutions that they're, that are on the list to be built out. It's replacing budget systems, CRM systems, media systems, you name it. I mean, like these are real software solutions that they're working on. All right. And so we, we, we can talk again about the downfall of SaaS companies, 'cause that's going to happen without a doubt.
I think it's happening already. We are on, we're both in private equity. The sponsor owns a bunch of them. The values, you know, you, you gotta pick carefully because the values can get crazy both up and down all of a sudden.
Yeah. So number one, what you have to do kind of goes back to what we talked about before. Where is the business going? What's, what, what is important for the business? Because you can't prioritize those 100 different applications you're going to build unless you know why. Like, what's your why and where, like, where are you going? And, and once you prioritize them, you have to, the hardest thing is saying no. How do you say no to these applications? How do you say no to features? The best thing that companies have been able to do when you bring in a new ERP system, CRM system, Budgeting system, whatever technology you're licensing in a SaaS, it's been a curated, pragmatic product to make it with a design-first approach to make it easy to use.
Mm-hmm.
All right. And so then you, your users come in and they have to learn a new system, which no one likes. Technology has never been the problem. Right? Even when I was a mainframe programmer 30 years ago, technology wasn't the problem. Adoption is the problem. People like to do the way things the way they used to do it. So getting people, even if it's, you provide them this great application, they, it's the still, am I going to use it tomorrow? Like this was cool today. Am I going to use it tomorrow? And then the next day and get real value from it?
How do you, how do you drive that? So how do you deal with the founder, you know, creating it in the evening, the people not adopting it, it ages out, it breaks. So how are you doing? Because this stuff is moving fast today.
Right.
There's real money going into it. You can burn tokens like crazy. I was looking at the Journal the other day and the AI companies are starting to limit their own employees from burning tokens. You know, I think it's all Meta was, Was that they laid off, I don't know, a billion people. I'm exaggerating, of course. But so how are you dealing with all that in real time? Because we think we're talking to the same people, but it's really a parade. People are marching in and marching out and they get hung up in certain spots, but we've got these businesses to run. What's your approach?
So just like you said, you have businesses to run. You have to focus on running your business and that's where you have to pick pick your path. Are you going to go hire product managers, product engineers, project managers that know how to develop and build and maintain software? Or are you going to then partner with someone to help you? Because you can use AI, you can build the applications, your engineers, everyone's having fun building them.
Having a great time. Right?
And so then you put it into production, just like you said, and then it And then that engineer leaves or works on another project. And 3 months later, the business user's like, hey, we bought this company, or no, I need to access another database. Or, and everyone's like, yeah, I don't, I don't really remember how we built that. I don't even remember where.
Even where we built it at.
Where we built it. Like what, like, and so where the prompts were, where's the, where are the notes? Where's the pragmatic, where's the PRD, the product requirements document? Where are the, where's the technical requirements document? Where, Where's all of our documentation to this? And so the way to do it is either to turn your, have a software division that knows how to do this or partner. This is where you have to be careful. There's everyone will go build AI for you. There, every consulting company now is now an AI builder, right? Everybody wants to build because it's easy for them too. And their margins are going through the roof because they're doing it much faster, right? So costs will come down, which is a good thing. And so where we, we're, we really wanted to help our clients and partner with our clients are on the top of the build and the bottom of the build. And the top is that strategic operational advisory. Let's make sure we do it right. Let's just not build for build's sake. Like, let's build this the right way. And then how do we run it? So, so with KeyDelta, it's like really being your partner, running it for much less. So kind of that Like an evergreen platform where these clients for much less than doing it in-house can use our platform and then go in and it's a ticketing system as well. They can use it as a pragmatic product manager and send in requests and change their application. It's a new way to thinking of evergreen software. It's never been, we've never had that before.
How do you deal with, uh, you know, the 2 issues? So in my business, uh, you know, we're, we'll use like Microsoft Copilot, which is not considered on the cutting edge, I don't think, at least you don't hear about it that way. But from the sense of it works with all the programs we use. So our first thing is we are, uh, we don't want all our information scattered out into the internet. So how do you deal with not only the integrity, but data security? Uh, you know, our biggest challenge, one of our biggest challenges, we have threat actors, call it whatever you want, who are attacking us every day, sometimes hundreds of times a day. Every once in a while it works and they get through. How do you deal with that side of it? So you got the integrity issue, you got the capability issue, then you don't, you, you, you, your data security, and then keeping people from coming in and taking it from you. How, how do you deal with that?
Well, so you're right. The, the bad actors, I think, are using AI much better than most businesses are, right?
Absolutely. And they, I am in meetings with my team somewhere in the world. Everyone's phone will go off at the same time. It'll be from me. It will say, send gift cards. I mean, that's really what it is, right?
Right.
Or there's an invoice to be paid and now they've cloned my voice and they'll get a call from me and it'll say, you know, hey Russ. Uh, in fact, one of my businesses in Italy, Got that call recently. Now, thankfully they followed protocol and nothing happened, but, you know, they're, they're constantly trying to, to, to, to deal with that. How does AI, how does what you're doing, how does that help the, the business owner today?
So, so 2 ways, right? Number one, if you just give access to AI, just like you said, there, your data's also gonna go into those foundation models. But so you, I do recommend you building the solutions so that they can link through the foundation models. Through an API so you can build your own internal data repository versus dumping everything into a foundation model. So when you build an application with API access to the foundation model, you can control what information goes into the ether of all knowledge. That's number one. So I would say there's governance and compliance of telling people how to use it. 'Cause they're going to use it. And then the second are actually building those applications so you can control what is maintained in the AI. And then from a cybersecurity side, that's a very serious threat, right? I mean, and so there's, it's not only just like you said, they can do spear phishing and identify who your employees are, What's the right message? You know, when they watch, if you post, I'm on vacation or if I'm in San Francisco and they'll use that time to then call the employees and also video as well, right? So I have to tell all my employees all the time, I will never call you, video call, voice call, or text you and ask you to do anything. I'm not going to ask you for money. I'm not going to anything to go transfer money, to change bank accounts. It's just not going to happen.
100%. I tell mine the same thing. I go, I, it's not my job. That's gonna come outta finance. There's a whole policy and procedures and everything else. But do you have any great stories that you can share with us? You got all the scars, as you said earlier.
I think there are a lot of fun stories that when you come into companies where people had those heroes, that you kind of remove the cap, right? You remove those people that used information as power. You remove the people that were trying to make themselves indispensable. And it's so great to see people rise to the occasion. I think that's my, you know, the best is you provide a great work environment and people do more. I'm not worried about our job market. People are going to do more with more. You always have those people that are the victims and things are happening to them. You know, my advice is always be a victor, like lean in, leverage these tools. And, you know, there's things happen bad all the time, but you can also take advantage of the opportunity, right? Never miss the opportunity to take advantage of a crisis. Companies can move much faster, but there are these gating people that you really, and that's where I go through in my book, chapters of stories that I get into detail about. And I think that most things are the most Hairy a situation gets, and the worst examples I have of failures are when the people in power get greedy.
Interesting.
Without a doubt, like deals didn't happen. Too many employees were let go. They cut too deep to try to make money all around greed. The way I'd use that for advice for anyone is just make sure, you know, past predicts the future. And so are the people you're working with, are they, you know, are they kind? Are they giving? Like, what's the, what's their purpose? Is their purpose just to make money or is it purpose to grow something?
Interesting.
And that's, that's really has helped me over, over my career. Of course, you know, especially working with private equity, you run into people that will tell you what you want to hear, but it's just really about making money. And that's not how you grow a company. Companies are bought, They're not sold. So you have to create value. You can't just go in and do financial gymnastics and then sell the company for more. That's not how it works.
I couldn't agree more with you. Yeah, I don't think you have to go to private equity to find people who are driven by nefarious means. I think private equity can be great. I think it can be bad. I think it'd be the same way with it. I agree with it. The thing I really like about, so the 3 models, you got public companies, You got private and you got private equity. Public companies live quarter to quarter and they'll have a tough time over a penny, missing earnings by a penny. Private companies are values-driven. It's whatever the value of the owner is. So the value, it may be he wants a bigger boat. That's his value. So that's great. There's nothing wrong with it. Most private companies are driven by the dividend because that's what the family lives on with it. And then private equity, I just like the purity of the model. We know we're here to make money in a short period of time. And it turns out today that in order to make money, maybe in the past you could do it by the old proverbial buy low and sell high. Interest rates were going down. And so it was just really kind of buying a good company, hanging onto it and waiting. Today you have to add real value. You have to find something That you're gonna make that company better. You're gonna make that team better. And AI is one of those tools. It's just one. You know, you, you need to watch out for your working capital. You need to, are you taking care of your best customers? All these things are important. AI is an enabler of those. And it's like, in many ways we're like a kid, right? We got this mag— you know, magnet. It's like we pulled the, we got the Rosetta Stone or we got the, you know, Excalibur. We got some of these great, We don't really know what to do with it. And people are building chatbots and all the way up to launching rockets with it. And so there's all this stuff in between, and this has created a real opportunity for people like you and me to come in and help people and say, no, it's just a tool. Let me help you with it. It can be used for good or bad. You can spend a whole lot of money and get nothing. It does come back to the central foundation of why does that business exist? And then how is AI the enabler of that today? Right? And, and what does that look and feel like? So, so when you're out there today, you know, what do you find are those key points that, with your business, that you can use AI or whatever tool to help them go faster and achieve their mission?
Yeah, I mean, you're totally right. I think that Just using AI to go to do more is, it's a strategy, right? But it's kind of like a hope as well. Like the old saying, work smarter, not harder. And just because you use AI to do more, that's kind of like working harder.
Yeah, you can do more bad things. You can do more wasting time. You can do more things like that.
But just doing more isn't a strategy, right? It, I mean, it's more of a tactic. But so being smart about what you're doing more of and having it move the company in a strategic direction and solving real problems. And it all comes down to, I don't care what business you're in, whether it's in government or higher education, state and local, and definitely commercial, everything should be about 2 groups. Your customers and your employees. And if you can't show how you are rolling out things that help your customers, because without customers you can't have employees.
That's true.
Right? If you help your employees and they're great and they're not helping the customers, then you're not going to have customers. You won't have employees, right? So it's like the top of the food chain. You've got to take care of your customers. And your most valuable asset obviously are your employees. So, and so you have to provide solutions to make sure your employees are not burnt out, that they're working on the right things, and that they understand what success means in their role. And that kind of goes back to the beginning of our conversation. If your employee doesn't know Like the number one issue that I've seen is that there's lack of alignment of understanding of what the goals are for the company and what success means in their role. And now you give that person a tool to do more faster. They're going to do more faster in the wrong direction.
Oh yeah. Yeah. They can dig a deeper hole.
Yeah.
Faster. Just get to the, get to the crash site early. For sure. Do you think PE is embracing it faster, slower, differently? I know you're involved in a lot of private equity companies. What's your sense about how they are looking at it?
Well, I think it's a pendulum. You've got the venture side that's adopting it too fast, and you've got the private equity that aren't adopting it fast enough. I don't know if you've heard the saying that 1,000 startups go out of business, with every Dev Day from OpenAI, which is true, right? When they launched this new feature about how to have, let's say, legal feedback, or it has a better legal library, all those startups that were creating legal AI functionality, they're done.
I saw that. Like, even the big guys like Kirkland Ellis, like, lost 20% of their value in a day. I think it's Recovered, but these things are real.
And healthcare, right? I mean, and so that's the startup side. On the venture side, I think that, you know, with a board yelling, do more AI, that's not the question. The question is, I want clarity on where the company's going. How are we going to get there? And I want clarity of every role in the organization. And I want priority. I want a prioritized list of What you're going to do to get there. It's amazing how many CEOs don't have clear roles and responsibilities with prioritized goals, right? Then go build AI. Executives, when everyone knows what's going on, that candor takes away a little bit of the, you know, behind the curtain. So I think, you know, boards should be really focused on taking away the curtain, making sure companies are operating better. And then bringing in AI. And like we said, I don't think they're moving fast enough because they're organizationally not focused. And once they're focused, then they can bring in AI and prioritize the work. So that's the reason why I don't think they're bringing AI is because they really don't know what the priorities are and where the ROI would come from.
I think that's true. We see it. You know, today it's prevalent. It comes right with your packages and you use it to help build an Excel sheet faster or PowerPoint. It's really good at it, by the way. And I can always tell because the slides are prettier when versus the squares and circles that we would normally put up there. You know, so when you come in, it's day one for you. The PE firm has hired you to look at this company or the company's hired you. What are the metrics you're looking at to go, okay, they're in pretty good shape. And this is where we should be looking at. What are the key, you know, the KPIs that you, A, know they're well, or maybe B, they're not so well? What do you focus on?
I think the biggest secret I have, Bill, is I listen. I ask a lot of questions at every level from the CEO. I start at the top and I just go through every manager. Right. That I can get my hands on, any teams that I, team meetings I can go to. I go on listening tours and I am a sponge. I just consume knowledge of what is going on. And pretty quickly you get a clarity on what's broken and where there's misalignment, that chafing that stops companies from being good operators. Right.
What are some of the flags or mile markers that you look for that are good or bad?
Yeah, so we can start at the top. What's their purpose? Where are they going? Now let's look at how are they tracking where they're going? Okay. So there's 2 groups. I'd say one group would be on the, have the dashboard that is just, they've got 30 KPIs on it. When you track everything, you track nothing, right? I mean, so—
It's all theater. They look good.
It looks good, but they're all like, so what, tell me if this goes from green to yellow to red, what are you going to change in your business? That's the secret question. Every KPI you're tracking. So when this number moves, what are you going to do to make a change? And if they can't answer that, you shouldn't be, don't track it. Like, let other people in the organization track it. Maybe if they can answer that question. And then the other side, there are obviously people not tracking enough. And from a, I'd say the biggest issues I see on the go-to-market side are the sales teams not tracking enough detail in a sales process. Sales process is hard. It's deflating, right? Most of the time you come into a company and it's all of this inflated numbers going from the salespeople to the sales managers, to the executives. This deal, it's happening. It's going to happen next quarter. Here's the amount. And then all of a sudden you get to the next quarter and it doesn't happen. And so when, what ha— you have to be careful because running, you know, everyone wants to manage to outcomes, right? And not micromanage. But if you, all you do are manage outcomes, it's like driving your car in the rearview mirror, right? And so you don't drive your car in the rearview mirror. You look at your window, you look at your, you look at your gas gauge and your speedometer and RPMs. Like you, there's other things. And so though in sales, what deals are the salespeople working on? What are their next steps in each deal? Who is the owner of that next step and what is the next step due date? And then, and the managers of the sales teams can track everything. And then when they can see that someone missed a date, they can manage to that. It's not micromanaging, it's coaching. And it's about managing the process versus just waiting for your monthly sales report. To see how you're doing in sales. Like with go-to-market is a mess in most companies.
So true. Really, really well said. How do you help them get through that?
So for, on the sales example is, you know, going through, making sure everyone understands what their goals are. You'd be surprised on kind of quotas and quota attainments. Like, what am I supposed to do? How do I get paid? Right. Making sure there's clarity. Salespeople like to know how they get paid. Making sure that there's a process. It's actually not that difficult to go through and, and create a new process. What's hard is implementing a new process, right? That's, is very complicated is coming up with the right compensation plan, right? To make sure that you're—
Any insights on the comp plan? Do you find it drives people?
Be careful what you incent because people will do it, right? So people do what you incentivize. them to do. And so when you're creating a new incentivization commission structure, incent them to, if you want them to work together as a team, you have to incent them to work as a team. If you don't want them to work together as a team, you have to set up the comp structure that way. Not just have all or nothing as well. Like how do you have different incentives along the way? So everything you have to incentivize The activities that create productive outcomes. If all you do are incentivize outcomes, you're just hoping that every sales rep is smart enough and experienced enough to do the proper activities. So go deeper in an incentive and incentivize how many leads do you need? Who's responsible for that? Incentivize that, like a sales qualified lead. incentivize that to a marketing qualified lead, and then they turn into a prospect. Like, so, so go a little deeper to make sure that the right activities are happening that produce the right outcomes. So many times management's just looking at outcomes when the salespeople don't even, they're, they're not coached correctly. They're just, they say they're experienced, but are they experienced? So, so making sure you have better coaching and what you're trying to do is make every salesperson successful. That's the goal you have, right? Everyone's aligned. You want to pay salespeople a lot of money when you incentivize them the right way and they're doing things to grow the company.
That makes a lot of sense. How does AI help you in this?
AI is changing the sales world faster than, than most divisions.
I think so too.
Yeah. I mean, it's a, the data analysis, like this is one of the best things that AI can do is the data crunching of all the metrics of quotas and delivery of the product, whether it's enterprise or direct-to-consumer, the analysis of your ICP, your ideal customer profile, the access to data intelligence from competitive to no one should ever go into any meeting anymore without a full understanding of not only the company, their problems, their, all of the public information about it, the, and the information about the executives they're going to meet with. I mean, the knowledge, just crunching all of that knowledge to give to a sales rep, they should, they could probably churn through 5 times the amount of meetings because they don't have to go in and do all that heavy research. If they were good, the good salespeople would do, spend a lot of time on Research, not just have meetings, blind meetings, which would just waste time.
No, I agree. Now, do you set up, so it sounds like you're using it to pull data, put it together for some type of dashboard tracking KPIs and then customer research. Do you set up special tools for this or are you just, is it, you know, using off-the-shelf stuff? And, uh, we have great CRMs. I don't know if they're great. I don't know anyone has a great one, but the reason they're not great, by the way, is 'cause people don't use 'em. They don't put the Stuff in there.
That's right.
But, uh, but, uh, uh, are you thinking they're just going to pull up on their phone ChatGPT? Like heck, today you can just talk to it, right? Any of these things you can walk along, it'll just, it becomes your friend.
We overestimate where technology is short-term and underestimate long-term, right? Everyone, uh, that's the saying. And it's true. And so we're overestimating right now what we can do with AI in our CRM solutions. When it's a human that has to input all that information, right? It's not gonna—
That's what it's garbage in, garbage out.
Garbage in, garbage out.
The hardest thing to do is get that salesperson to put that information in. What happened? What didn't happen? Most won't do it. I think sometimes you were talking before about heroes being blockers. The less you know about my account, the more secure my job is. And is that, is that—
Yeah, that's, that's a great example. Because you, the, there are people that think this is my relationship. I'm not gonna put it all in information so you can fire me and call the same person. Well, guess what? It's a self-fulfilling prophecy because if, if you're the salesperson that doesn't keep track of all of this information, you're limited on how much knowledge, no matter how smart you are, how you can follow up with everyone. And so you're not going to be as good as you can be, right? You'd be able to close more deals if you had a process.
Absolutely.
And that kind of goes to systems help you scale, processes help you scale. But the greed of this is, I don't want anyone else to know what I'm doing because I'll be indispensable. That moat I'm trying to create, it's just, it's the opposite effect.
I agree. I started my career out as a sales guy running a territory and we had 3 by 5 cards and, you know, we'd take all their business cards and stick in a binder, 3-ring binder and all these things. And it worked. I mean, I sold a lot then and, you know, today our systems are really sophisticated. And I think the real art is making sophisticated systems so bulletproof that they're pokey, right? And the idiot could do it. Because if you have to train people on how to do it and they have to do it, it seems to fall apart on it. So how, how do you see today when you, when you look at where we are, where are we going with this? Like, like I, I didn't mean you're gonna say don't even project out a year 'cause it's moving so fast, but, but what do you see as best practices today? The companies that are making this work and staying ahead of it without, without going broke.
So I, I'd say they are starting with more analysis, better analysis, top down. Right. So of the data, we have a better clarity on who's hitting their numbers in a micro, right? So, so rather than a month now, maybe we're tracking by the week, then you can track, you know, deal status relative to that sales rep, you know, success rate by sales rep. You can, there's more kind of a 3-dimensional, multidimensional view of each sales rep, the deals, the margins on deals. That analysis capability is where most companies are starting. So unless you're going to go in and this is the hard thing, is to implement a new process where people have to change their behavior, that's the hardest. You can start with analyzing the data and what's the best data, what's the worst data. So you can actually use AI to find the worst data. Where are we? Where do we have holes?
Mm-hmm.
Who's not entering their information? And I would go and prioritize the people that are not entering your information. You, it, look, it's different if they don't get paid a base salary, right? If, if the, if you have any sales rep that is getting paid a base salary, you're paying them to enter all that information. It's the company data.
That's right.
Right? They're not a third-party contractor. That is just bringing a deal based on their relationship. So, so this is part of their job description that they have to enter. They get paid commissions on closed deals. They get paid a salary to enter the information that will make them successful. We're not doing it. We don't ask any sales rep, and I was a sales rep. And the reason why I was very successful is because I was meticulous about tracking everything. Right? Every next step, who, all these moving parts at Oracle. Holy cow. Like the metrics and everyone was cutthroat and like, man, it was insane. But I was successful because I tracked everything. And so people are trying, sales reps go in, they don't want to track it because it saves them time not to. They don't want to track it because they think that it's going to make them more indispensable because they have all the knowledge and they don't want to track it because they think they have it all in their head and they've got it all under control when that's not the— so AI's going to help uncover who's trying to hoard information and who's leaning in because everyone When it is going to succeed when, when they, they follow the right process and not treat it as just more corporate, you know, overhead.
I think you're right. BASF used to say, we, we don't make anything, we just make it better. I think that's kind of AI where we're at today. Who knows where it takes? I think it's gonna be driving our cars and cooking our dinners and, you know, who knows? But, uh, but, uh, today you, as you said, you're gonna go see a prospect, plug the name in. Whatever your favorite tool is or whatever your company gives you, you can know everything, uh, or everything that's public. Uh, you're looking at data, you can run this through, you know, it used to take an analyst hours, if not days to get through a data room. I can dump all of that into, uh, you know, a, uh, an LLM and within seconds, like it'll go through it. Now it's not perfect, you know, it's garbage in, garbage out. And sometimes I think it hallucinates.
Yeah.
So you do have to read it all. But it is a game changer. The amount I can do today is extraordinary. I mean, it used to take an army of people, which maybe I got an army of chatbots or something running around.
So, well, that's what's so exciting, Bill, is people that are curious, that have an open mindset, and that they check their work, right? They go in and they own their work. They can do so much more. With AI. It's the people that are defensive, that have a closed mindset, that they're like, this isn't for me. They're like, there's more and more people that are more optimistic about it. And people, companies will be able to do more with AI and they're going to, their companies are going to grow. Yeah, maybe they're going to change where they invest and where they hire, but if a company can do more in the back office, And maybe doesn't need an extra attorney or, or an accountant somewhere, or maybe even a sales analyst or sales engineer, whatever, what's going to get replaced. But yet they're, the business is growing. They're going to hire more employees. They're going to open more offices. They're going to have more retail locations. They're like, business is going to grow.
I agree. Every major technology leap forward, people always say it's putting people out of work and it does sometimes. We used to have to have an operator before my time, but you had to pull out the switchboard and you talk to someone in party lines. And today I can use my cell phone to talk from almost anywhere on the, on the face of the earth. So times change, but it enables us to do more and be faster, have more rewarding and enjoyable lives. So I know we're kind of coming to the end here. Maybe a couple things to how, if people wanna reach out to you, Russ, how would they contact you and? feel free to tell us about your book and when that's coming out and what you got going on.
Yeah, thanks, Bill. So definitely reach out to me on LinkedIn. So Russ Reader on LinkedIn and about the book, I have my Substack. So if you're on Substack, look for me on Substack and follow me on LinkedIn. And as I am writing about the different chapters and I've got a draft of the book right now, and hopefully by the end of the year we get this thing published and And hopes it helps all those CEOs focus on the things that really can make a difference with strong ROI in their companies.
Outstanding. Well, everyone, Russ Reader, founder and CEO of KeyDelta. Great track record making AI work in the modern-day business. So thanks, Russ. It was great being with you today.
Thanks, Bill. Take care.
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