Unlocking the Power of the CRO-CFO Alliance with Eric Steele and Larry Earl

Hi, I'm Warren Zenna, founder and CEO of the CRO Collective, and welcome to the CRO Spotlight Podcast. This show is focused exclusively on the success of Chief Revenue Officers. Each week we have an open, frank and freeform conversation with top experts in the revenue space about the CRO role and its critical impact on B2B businesses. This podcast is the place to be for CROs, sales and marketing leaders who aspire to become CROs and founders who are looking to appoint a CRO or want to support their CRO to succeed. Thanks for listening. Now let's go mix it up. Hello and welcome to this episode of the Ciro Spotlight Podcast.

Warren.

I'm Warren Zenna. I'm the founder of the CRO Collective, and I'm excited about today's episode. Today we're going to be talking about the relationship of finance, management and the Chief Revenue Officer. This is a topic that comes up a lot in my classes, in my engagements, online, with any of the advisory roles I'm having. Who owns finance? And what's the sort of cutoff point between the Chief Revenue Officer's responsibility for finance and the cfo? This is just a. It's kind of a controversial topic. There really isn't one straight answer. But we're going to try and tackle it today. Today we're going to have. My guests are going to be Eric Steele and Larry Earle, who are both from a company called sib. Eric is the Chief Revenue Officer and Larry is the cfo. And they've sort of worked out an interesting way to discuss this. And uniquely, they also are in a business where they manage cost reduction for corporations who are looking to become acquired. So they have a really unique perspective on this because they are a financially oriented business and they also have the right structure in the organization where this particular topic is being utilized. So I'm really excited about this conversation. So definitely listen and I think you'll find it really good. Great to have you both here. Really appreciate this. We've had a lot of time to kind of go over this. So before we start this conversation, maybe both of you could just introduce not only yourselves, but also SIB and what you're doing for your customers.

You bet. I'll start. Eric Steele, Chief Revenue Officer at sib. Great to be here, Warren, and been a big fan of what you have talked about in terms of revenue alignment for many years. Simply put, SIB is in the business of ensuring that our clients never overpay. We think that we're in the age of what we call value Acceleration, meaning that gone are the days of growth at all costs. Companies have to grow, but in a smart way, and they've got to keep an eye on EBITDA and profit margin. So we come in and we help clients reduce fixed costs, indirect spend, and make them more profitable. And we do it without any upfront cost, any disruption to the operations. And so it's, I think, an exciting opportunity for clients to grow in a smart way.

Great, Larry.

All right. Yeah. Thanks, Eric. And thank you, Warren. Larry Earl, I'm the chief Financial Officer with sib. I really have nothing to add to what Eric said. He articulated that very well. I've been with the company for just about four years now and have seen a lot of changes in the company, a lot of changes in the industry. Industry. And I think we're, as you'll hear here, we're at the forefront of more changes to come.

Great. Well, there's so much, like, inside of this conversation. I want to unpack it so we can organize it. Well. So I think the first thing is, you know, the premise of this entire discussion is this interesting relationship between revenue operations and financial operations. Right. It's a topic that comes up almost all the time. Every one of my clients has this conversation. Who owns finance and if there's a CFO, what's the collision course between the CRO's role in managing the financial components of the revenue operation and the CFO's desire to want to either control that or be involved in it? And, you know, there's no one, like, answer for this. It's somewhat dependent upon the organization. And I've seen in some cases where the CRO hands the financial over oversight to the CFO completely. And I've seen opposite where, you know, the CFO kind of relinquishes that control. And you know, I think if I would say, I. I think let's unpack it by first maybe getting a perspective on. And it's interesting because, you know, your company is also involved in, you know, financial health and financial wellness companies, too. So there's a lot of ways in which you can bring a lot of value to this topic. So I guess the first thing would be what is your individual take and both your organizational take on that particular relationship? How do you two manage that right now, not just structurally, but philosophically? Where do you both land on how this sort of thing is managed for an organization?

It's a great question. I'll take it first and then, Larry, you'll have to correct me as we go, but simply Put, I view this relationship almost like I'm the offensive coordinator. I'm responsible for growth, for revenue. Larry's the defensive coordinator. It's, it's making sure that we mitigate downside risk, but also really strategically think about how we're going to grow in a profitable way. And defense wins championships. That's just the truth. Now I will say this about Larry. He is incredible. He's an amazing partner and he is the most commercially minded, strategically minded CFO that I've come across. He really thinks about how do we invest in the things that will explode our growth and how do we starve the things that are not working. And that's been a really helpful mindset and partnership. And then in terms of your question, Warren, about sort of where does it live? I love this conversation because I've seen the Trend recently about RevOps, should it roll into finance. In fact, we've got an incredible Rev Ops leader here at our company. We've got several Andy Peyser, Braden York, and Harrison Pruitt, also John Noble. We're blessed to have a good group of RevOps folks. And the common trait amongst all of them is I think they all have either deep operations or FP&A backgrounds. So their finance minds that have sort of migrated into Rev Ops. And so it's a little bit of a unique situation for us because it's kind of best of both worlds.

Yeah, yeah, yeah. I, you know, we're, we're fortunate in that I think Eric and I do have a really close relationship. If we, we talk at least once a day, you know, and there's, there's more or less constant communication. And it's not just with Eric either. You know, I have a lot of pretty much daily conversation with, with Nami, our VP of Sal, and other people in the organization as well. So, you know, for, for the company to operate effectively there, there does have to be a really a tight relationship between the, the sales side of the, the office as well as the, the administrative or finance side. And I, I think where, where the, the CFO comes into play here is just managing the business is definitely a balancing act. Right? I mean, you, we obviously have to manage for growth. I think that's one of the primary objectives of any company. But at the same time, you have to make sure that you can fund that growth and that you have the infrastructure in place to support that growth. And where our relationship comes into play and I think where Sib's product comes into play is that in terms of our relationship, a Lot of the communication where it's to. We want to make these investments to grow the company. This is what we think the return is. How do we fund it? If you manage the operations properly, you can almost always find, you know, find, you know, some funding mechanism for that. Where SIB comes into play is that it is a really, I'm not going to say easy, but it is a simple way for a company to find funding within their, their current indirect spend to help, you know, to help parts.

Of the business that are. That bring the most tension to the company. Matter of fact, I'd say almost all of it is all financially oriented because after all, the business's objective is to increase growth. And any way in which that's being infringed is going to create friction with people. And so most of my clients who I speak to don't have the benefit of having that sort of relationship. Matter of fact, many times it's different where a CRO comes into the company and there's already been a CFO there for a while who's already grabbed a piece of pie that they're controlling. And the CRO now has to, you know, worm their way in or persuade their way in or make a case to say why the CRO needs to have some nominal control over a part of it. And there's a little bit of a push and pull. Someone's. They're both holding a purse and they're both pulling on the purse, you know, and it doesn't, doesn't really kind of work. So what I would say is what would some, your perspective be on that? Like, let's say you're speaking to a chief revenue officer who comes into an organization where there's an existing financial organization, there's a CFO who's been basically given the, you know, God's hand to run the entire financials of the organization. And the CRO knows that in order for them to be successful, I need to have some control over the way I manage revenue budgets. And what's the way in which you'd recommend from a process standpoint or even like framework standpoint of how those two things could be managed in a way that makes everybody happy and gets the best results for the business.

Such a great question. I'll start with. I think it begins even in the interview process. And Warren, you talk a lot about how critical it is for CROs to ask very specific questions throughout the interview.

Process to even understand and manage that growth.

I'm so glad Larry said this, Warren. And if I may yeah, please.

Yeah.

As a CRO, there's two data points that certainly haunt many CROs. One is a sort of a positive data point, which is that 80% of a CRO's budget is typically spent in their first 100 days. So it's a new hire, they're bringing in their playbook, they're bringing in their people, and good leaders like Larry are going to open the floodgates to a certain extent and say, hey, you're here for a reason. We want you to be successful and you're going to make some investments. Second data point is that I believe as of this week, you know, the, the average tenure for a CRO is somewhere between 17 and 19 months. Warren, you're going to know that better than me, but I think it's in that ballpark. It's about right. So the question is, what. What happens after the first 100 days to ensure that that CRO is going to stay and thrive beyond the 17 to 19 months? And I think what Larry's talking about here, this concept of funding the key investments is so vital, and this is something I was not aware of until I learned about SIP and came here. There are tools that every CRO can leverage to sit down with their CFO and say, yes, I need to make these investments in headcount, in tools in revenue intelligence. But we can offset all of those costs with reducing indirect spend and overhead and no upfront cost, no disruption to the operation. It is risk free and it doesn't take time from the team. So I wish I knew about this years ago.

It's really interesting, right? Because again, like a lot of things you're talking about are unique to your business because of the services that you provide and the sector that you live in, that you have people in your organization whom are already financially minded. So if they can do the talent stack with a rev ops competency on top of that, it makes them uniquely qualified to help you. But, you know, most organizations don't have that benefit. The other thing you also clearly articulated in this introduction here is your relationship, right? I think everyone would probably guess that the first thing you have to have is a good relationship between the CFO and the CRO. That that's key. And I think that if there's probably going to be any organizational, you know, friction point in any organization between people who both control finance, I mean, this is like an area, like it's a really emotional part of the business, right? Everyone's got like a real big emotional contact with that part of the business. Someone's trying to grow the finances, they're under pressure to grow them. Someone else is trying to save money all the time, they're under pressure to save money. And these are highly, and I'll use the word again, very emot, you know.

Understand that expectations are aligned going into the role. So I think it starts there. In meeting Larry during the interview process with sib, it was immediately apparent that first he understood what the CRO role was. And I have to give credit to Larry, to the whole executive team and SIB for understanding that this is about revenue alignment. It isn't just a sales leader. It is a leader that can help connect silos, revenue, sales, marketing, client success, integrate it through revenue operations and grow in a smart way. He knew that he was very clear eyed about that. And so our conversations, even in the interview process were around how do we identify those levers of growth? Invest in the ones that are going to give us upside to help us grow in a smart way. Starve the others that won't. And you know, having those discussions in the interview showed me that, you know, as we kick things off, it's going to be a partnership that's going to work. And then Larry said it earlier, you know, we talk at least once a day and that is so important. Just a constant open door of conversation. Larry will often email his thoughts on, hey, this last month, great job on these different areas. This is something we've noticed could be a future blinking red light. Let's look at it. I'll also come to Larry and say, hey, Larry, there's some things I think we really need to invest in. They maybe weren't budgeted, but we can offset in other areas because I think that these things we need to invest in outweigh other decisions we thought we needed to make at this time. And that's happening even right now as we're planning for next year. So it's just a constant communication, a trusted partnership. But starting that in the interview process, even before you're here.

Yeah, I mean, you raised such a good point with that, Eric. Because in the interview process, one of the key things that we look at is not just technical skill or work history or anything like that. We look really closely at the individual's ethics, you know, the type of person they are, you know, how, how well, you know, they, they would fit in with our group is, or within the team. And you know, in the case of Eric, you know, from the outset it was pretty obvious that Eric was a guy not only with tremendous background, but also Just a high quality individual, you know, and when you're working with somebody like that, it makes, it makes the entire relationship just work a lot better. You know, we were able to quickly determine right from the outset that we were all very much aligned on what the, what the goals of the company were and what success meant. And if you get the right person in place, if you have the right goals and the right alignment, you know, everything else falls into place. I mean, it's, you know, there's work obviously with it. You have to have that communication. It is really important that sales leadership understand how the company's doing financially, what the forecast looks like, what the blinking red lights are. As Eric said, if you do that, you know, if you have the right people in place, then the relationship works really well.

I'll also add that we sell to CFOs. That is our key Persona at SIB. And so this relationship with Larry has been helpful in a variety of ways, including really enabling our team across sales, marketing, client success to better understand the cfo, their unique challenges, their aspirations. You know, I remember early on one of the conversations Larry and I had was we were Yu Yang Warren, who, you know, who's just an outstanding marketing leader, he's our head of marketing and brand. We were sitting with Larry to talk about this notion of possibilities happen when you never overpay. This is sort of our brand promise at SIB that beyond the savings, we are in the business of helping clients achieve outcomes when we save them money. What can they do with that? And Larry said something to us early on about the ultimate desire for a CFO isn't to just cut costs, isn't to save money, but it's to become a profit center. CFOs want, just like a CRO does, for the company to grow profitably. And they want finance to be viewed as truly a profit center of the business, strategic part of the business. And that was an unlock for us because it, it really showed that the way that we want to communicate with our clients and, and talk to CFOs at scale might need to change a little bit. And, and very helpful to have Larry's perspective on that.

Yeah, yeah. And one, one other thing I'll, I'll touch on. I love sales. I mean, I, I find it absolutely fascinating, you know, the whole process part of it is because I could never do it myself, so I really admire people who, who have that skill. It also helps that I've been married to a salesperson for the last 25 years or so. So you Know, every night we talk about our jobs. Yeah, I hear her frustrations. And a lot of those frustrations are customer oriented, but a lot of them are internally oriented as well. And a lot of it comes down to just nobody. It's not necessarily that anybody's doing the wrong thing or that, you know, that people have different objectives. A lot of it really does come down to communication. And, you know, there are things that she. That she perceives out in the field that are completely at odds with what's really going on inside the, you know, the office. So because of that, it helps me to understand Eric and the other people's viewpoint on the team and to. To. To kind of bend over backwards to make sure that we're properly communicating and. And helping them understand what's going on in the other side of the house.

This is good. So, you know, it. It's, again, interesting because the scenarios I find myself in mostly with my clients is. It's much more antagonistic. A lot of turf wars. Controlling the finances is, you know, there's a lot of control that comes with that. And I guess I'd be interested in knowing, maybe independently or maybe even reflecting on your own model, what would, like, if you were speaking to a CFO and a CRO and they were maybe amenable to a discussion around some sort of an arrangement like this. What is the specific structure that you suggest? I mean, I asked the question like this, right? So you've got, like. I'll say it like almost like a Venn diagram. You got finances, which is like the whole bucket, everything. Then you've got revenue, finances, which is a part of it. So how would you. And I know you can't engineer this completely, but I'd love some insights into, like, a way which you'd suggest those two leaders, let's say, divvy up the, you know, the territories in a way that makes it not just one where both are amenable to each other, whether there's, you know, control issues or ego issues or whatever, but also just how that relationship would generate greater results for both of them so that there's a mutually beneficial way that the process could be generated, that neither one has to sort of give up anything. But the combination of these two forces on that one focus of the business is actually better. I'm curious to know if you can provide a little detail around that.

I'll provide just a story that's in flight right now, and I don't know that I have the definitive answer. I'm sure Larry might actually but tell you what's been really helpful as we were doing planning as an example, the structure that we sort of developed in partnering with Larry is Larry's got an outstanding team, FPA controller resources, strategic finance folks. And so what we've done is we've actually aligned individuals from his team directly to the department leaders from the revenue side. So I have a primary contact. I mean Larry and I talk constantly. I also have a team member from his team that's sort of a liaison within finance. Our head of channel Sales and partnerships has a liaison with Larry's team. So does our sales leader, so does our marketing leader, so does our client success leader. So we have these dedicated sort of liaisons that as we've been planning for 2025, become just one to one resources. The budget planning process for us has been completely collaborative. It, it was initiated by finance as a. Hey, here, here are the, the steps we have to take over the next 12 to 24 months. We're going to start this process. But the heavy lift was, was the actual analysis and discussion around what we needed from a revenue standpoint. And that became like what drove the conversation that then went back to finance for a dialogue on hey, this is great, but have you thought about this? I would describe it as collaborative, but I do think that the individual alignment with folks from Larry's team with our department leaders was really helpful and efficient.

Got it. So Larry, I knew probably some thoughts. I just want to have a question on that point because I want to make sure I don't miss, miss it is how do you report finance to the board and the CRO, cfo, CEO when you guys are both? I mean, do you do it like as a tag team or. Larry, are you really the one who brings the full financial picture? Everybody and, and, and you include Eric's in it. Like what's the way the, the sort of reporting ownership structure looks like to people whom you report up to?

Yeah, I think is specifically in terms of, you know, reporting to, to ownership and upper management. That, that really is primarily a finance function, at least with the financials obviously in some of the key metrics. You know, we have a monthly review call with, with Roark, our private equity owner, primarily centered on, on financials, but also some of the, the key KPIs that we look at for the business in terms of order intake and, and things like that. You know, we do have quarterly board meetings with Roark. During those meetings, you know, really they've seen all the financials before. So we spend a very Very limited amount of time on the financials during those meetings. The meetings are primarily focused on. On operations and sales. And I think within that, Eric and his counterpart on the operations side take the lead. And there are a number of KPIs that Eric and our COO will go through as part of that meeting as well.

Got it. So I know that the issues that I've seen come up with my clients is, okay, so in this case, let's say Eric is running his own financial analysis on the way he's going to build out his go to market strategy, how much technology he needs, the. The bodies he needs, the marketing dollars he needs, the amount of salespeople he needs to hire. And I understand that you guys are collaborating on those decisions. I'm sure it's both. It's a collaborative thing. Then. Eric, when you're doing your board presentations, are you including the financial components of it independently of Larry's? I'm asking you specifically because these are the sort of things that I get asked a lot is, what's the carve out? Like, you know, it's almost cutting up a turkey, you know, which is the piece that goes and how. I can imagine, like, if you're not on the same page as your cfo, you really want to make sure that whatever it is the CRO is saying, you can back it up. And you feel like they're saying the right thing and they're gonna, like, support your narrative that you need to be able to be on the same page with this stuff. Right. Your. Your financial perspectives need to rhyme, if I may say.

Right.

And, you know, if they're not in tune with each other, it's going to be clear. And I think this is where I think the partnership is, is that you two have clearly expressed. Even just the context of the nature of this conversation is you guys trust each other. So you know you're going to speak on the same tune and you're humming to the same bars, and that's fine. But what if you're not right? And I'm bringing these things up because it just. This doesn't happen as often as you'd like. Honestly, this is a contentious thing. And I know I'm harping on this, but I know that my audiences are really clamoring to kind of figure out, like you said, one thing I, you know, I feel strongly about is you have to do the due diligence up front. I mean, I would ask this question if I'm. I'm interviewing for a CRO job. I'm going to, first thing I'm asking, tell me about your financial, you know, organization right now. Who's the cfo? I want to meet him, you know, and I want to find out what that particular person's relationship is to me and what their opinion is about my role and if we're on the same page about it. And I think those are obvious opportunities for some red flags that might have me jettisoned from the opportunity. But if they're in sync, well then what's the carve out? And I know everything's going to be unique, but I sort of, I'll leave it with that because I know we as like a three or four other things I want to talk about. But this is something I think operationally when I'm, when I'm talking to my clients about Ink Eric, you know, this increasing the scope of the CRO role, which already for a lot of people is like new news to them. It's like, hold on a second, you're not going to run sales, you're going to run the whole thing. Well, now all of a sudden, the financial conversation is very pertinent to that discussion. It's not just, I'm just running my sales budgets and forecasts, which, you know, that's a given. I'm going to do that. But now I'm running a revenue operation which has operational cost, it has staffing cost, it has technology cost, it has, you know, revenue projection numbers, and it has all other things associated with it that could in some ways supersede other financial conversations because that's the customer facing part of the business. So again, I might be rambling about it. So make sure I'm asking the question as best I can here.

This is the root of this whole conversation, right? This goes back to exactly as you said, Warren. Due diligence, identifying, uncovering some of this in the interview process. If you're a CRO or an aspiring CRO, making sure that you meet the cfo, making sure that there's alignment. I remember having a conversation with Larry early on in the interview process where I just set some expectations, saying to Larry, hey, I, I think based on what I've assessed here that we, we likely have to make some, some investments here, here and here, and we need to do those early. What are your thoughts on that? And we had a great discussion about it. And even just the, the discussion and his willingness to have it at that moment was an indicator to me that this would be a good partnership. Right. Fast forward now in the role in here and we need to do those early. What are your thoughts on that? And we had a great discussion about it. And even just the discussion and his willingness to have it at that moment was an indicator to me that this would be a good partnership.

Yep.

Right. Fast forward now in the role and I keep coming back to the, to the planning process and budgeting for next year. It's a great example because it's just real time. We're doing it right now having alignment. Larry and I talk about things like all right, percent of total revenue for, you know, marketing spend. And I keep coming back to the, to the planning process and budgeting for next year is a great example because it's just real time. We're doing it right now having alignment. Larry and I talk about things like all right, percent of total revenue for marketing spend, sales spend, compensation, cost of sale, getting aligned on some high level ranges and benchmarks as a starting point. Sales spend, compensation, cost of sale, getting aligned on some high level ranges and sort of benchmarks as like a starting place and having a discussion about that. What I've appreciated with Larry is he will say, look, he uses the term the Mendoza place and having a discussion about that. What I've appreciated with Larry is blind. We know that there's an EBITDA margin we must maintain and grow, of course, but maintain. We know what our revenue goals are and between those revenue goals and that margin there's room for some creativity and for some levers that we can pull. And I've appreciated that's how this partnership has really been working, where it's like we have clarity around where we need to be and where we must stay above. And there's flexibility in a partnership around how we're going to go get there and what levers we want to pull. Right. The headcount lever, the productivity lever, the marketing and advertisement lever, the organic growth or the M and A lever. There's a lot of discussion around all those points, but there's flexibility in terms of how we're going to get there.

And Warren, you mentioned earlier kind of the Venn diagram in terms of the responsibilities of the CRO and CFO and there is that middle section, right. You know, where they, where they intersect and I think kind of on which side of the diagram that goes to largely is driven by, you know, the experience level, you know, the skill set, the interest level, quite honestly of the, of the two people who are involved. So in Eric's case, you know, Eric's an inexperienced croat. You know, he understands numbers. He, he understands the, the RevOps function. So from my, my standpoint, logically, because Eric is ultimately responsible for, you know, driving revenue and managing his, you know, that part of the operation, it makes sense for RevOps to, to report up to him and to have a dotted line to me so he'd have primary responsibility for that. That's not, doesn't always have to be the case. You know, in other positions I've had revops report up to me and it's work, but that was with a less experienced sales VP where I had a little bit more, a little bit more understanding of how, you know, the proper role that RevOps could play within the organization. So, you know, long story short, it's somewhat dependent on the individuals.

Definitely. I'm just curious, generally speaking, philosophically, do you think that RevOps should report to the CFO or the Croat?

I would say if you have the right, if you have the right CRO in place, it should report up to the CRO, in my opinion.

Okay, and why is that? I'm just curious where, I mean, do you agree? I, I. Do you agree with that, Eric?

I, I do. I, I think it's unique here. Larry just said it based on the personnel we have. We have basically FPA folks that, that also happen to be Rev Ops folks. That's very unique. Yeah, right. Very unique. Like they, they're coming out. I mean, one of our, actually two of our Rev Ops folks are CPAs and that's different. And so I think in the absence of that, it could make sense for, for that function to report to, to the cfo. And also personnel wise, Larry said it earlier, he has a deep understanding of sales and the commercial side, so that's different. And having Rev Ops aligned to him because of his background and experience is great. That's always the case, right? That's rare.

It almost makes me think a bit. It's interesting just here right now in this discussion, like Rev Ops people having some financial background would make them really super powered Rev Ops people, you know, someone who came out of finance or came.

And so I think in the absence of that, it could make sense for that function to report to the cfo. And also personnel wise, Larry said it earlier, he has a deep understanding of sales and the commercial side, so that's different. And having Rev Ops aligned to him because of his background and experience is great. That's always the case, right?

That's rare. It almost makes me think a bit. It's interesting just here right now in this discussion, Rev Ops people having some Financial background would make them really super primitive out of like accounting. And, and they're, they're very complementary skills. The same part of your brain that's being utilized in a rev ops role as that is too. It's just, it's the same type of thing. Our rev ops people, you know, someone who came out of finance or came so I could see they're complimentary. It's not like someone's like a sculptor and a rev ops person. You know, it's like two different types of the brain. But, but I, I think that that would be an interesting way if I'm, if I'm, if I'm a hiring manager on a CRO, you know, CRO or a revenue team looking for CR revit ops. People that have that competency would make them really powerful. Just an interesting insight. So I want to switch gears because, you know, you, you talk about your organizational focus, which is on revenue, I mean growth acceleration and profitability, et cetera. And you're, my understanding, is your target. Not all, not exclusively. You're one of your big targets is PE firms. Correct?

Correct.

Yep. Okay, let's talk about that a bit. I mean, I want to get a better understanding of like, contextually, like what the PE firm perspective would be in unlocking the power of CRO and the CFO and the companies that they manage and like, why that's a benefit. I think that's. I don't know if that's something that is being thought of in that way. If I were to call a bunch of PE folks I knew and I were to say, hey, when you evaluate companies you're managing, how do you view the relationship between your revenue operation and your finance operation? I'd be curious to know what they say. I think that you may have a unique perspective on this.

Yeah, I think this is a golden question because we know right now in private equity that, that there's a couple different forces at play. Number one, I mentioned earlier the growth at all cost sort of mantra.

Your finance operation. I'd be curious to know what they say. I think that you may have a unique perspective on this.

Yeah, I think this is a golden question because it's gone. The mandate for PE firms and their portcos is smart, profitable growth, value acceleration, not just value creation. It's no longer marginal EBITDA growth annually. It's quarter over quarter EBITDA growth that is aggressive, that is difficult, that would require total alignment between finance and the revenue Org, which I imagine is very rare. We were with a large PE event earlier this week and talked to deal teams and operating partners. And one of the operating partners said that they anticipate 70% of the time they'll replace leadership after an acquisition. If you think about that, you, you acquire a company, you 70% of the time you were cleaning house and building a new leadership team. And while that's happening, you have to grow quarter over quarter. Ebitda, as we know right now in private equity that, that there's a couple different forces at play. Number one, I mentioned earlier the growth at all costs sort of mantra. It's extremely difficult. That's why I think SIB has just organically become a favored partner of private equity firms for this reason. When they acquire a company, they can pull us in and do an immediate spend optimization map. We look at, you know, trailing 12 is gone. Yep. The mandate for, for PE firms and their port cos is month spend across, you know, 20 different categories. And we can at least present to the operating partner, to the managing partner, to the, to the portco cfo. Hey, here's the lay of the land. One of our clients described it as a flashlight in a dark room on their spend. And that at least becomes a baseline to start thinking about smart profitable growth, value acceleration profitable growth. And to answer your question directly related to that CFO CRO relationship, I would estimate that by and large, it is not what it should be. It is not.

It's an unlocked opportunity. There's no doubt about it. I think that if I was a founder or CEO of a company listening to this conversation, I think it's a big aha moment is to say, all right, so what's the way that I could better leverage those two people, those key executives on my team, so I can unlock the power of that relationship better?

Instead of not just value creation, it's no longer marginal EBITDA growth annually, it's quarter over quarter EBITDA growth. That is aggressive.

Playing the parent to two people who are fighting with each other all the time because it's just a very. I mean, aside from that being just a drain on the company, you know, you never want that sort of thing. It also diminishes this unbelievably unlocked value of. Imagine if those two were cooperating in a way that you could.

Clearly, that is difficult. That would require total alignment between finance.

See, if you think about it this way, the. As we've discussed, I see there's like three buck. There's three parts of the bucket, right? There's the part of the bucket, the top where New growth is occurring, customers are coming in, and growth opportunities are being acquired through the revenue engine. Then you've got the savings part, which is making the buckets and the revenue.

Org, which I imagine is very rare. We were with a bigger so that.

You know, you're getting more value out of that bucket. And then there are the leaks in the bucket, which is the part of the revenue operation that you can't see that there's money leaking out the door because of operational inefficiencies and, you know, handoff problems and all the misalignment stuff. So if the CFO and CRO are in lockstep, they're going to cover all three of those things. They're going to stop the leaks, they're going to increase the size of the bucket, and they're going to improve the quality of the growth. And I mean, you know, that's a core thing. So I'm almost saying in a way here to CEOs and founders, if you're looking for a chief Revenue officer, I'd be not just thinking about the person's qualifications, but also how large.

PE event earlier this week and talk to deal teams and operating partners. And one of the operating partners said that they anticipate 70% of the time they'll replace leadership.

You can be the change agent in ensuring that the relationship is between the CFO and the CRO is optimized. And that's a key thing. And I think I could see if I'm a PE firm and I'm managing a portfolio of companies, this just makes perfect sense for me to look at it from that perspective. And you guys seem to, interestingly, have a very unique ability to do that because of the way that you go.

To business with people after an acquisition, if you think about that, you acquire a company.

So it's a really, really very potent opportunity. I've been thinking about this quite a bit since you and I started talking about this this hour.

I'm sorry. Yeah, that, that is a great point, Warren. You know, when, when a private equity firm buys a portfolio company, they, they know they're not buying a finished product. Right? You know, they, they actually prefer to buy an unfinished product. And what I found is that they, they don't necessarily expect spectacular results right away. They know it'll take a little bit of time to, you know, to fix some of the problems and to get where we want to go. But what they do expect is really rapid identification of those issues and progress towards fixing those issues. And you put it really well you know, the CRO and CFO having a tight relationship. Excel will accelerate.

70% of the time you were cleaning house and building a new leadership team. And while that's happening, you have to grow quarter over quarter. Ebitda, it's extremely difficult. That's why I think SIB has just.

Right the company's ability to execute on that. And that is absolutely critical.

And I'll flip it just quickly on the perspective of the Portco leadership team. Right. And both Larry and I have been a part of a few different private equity backed engagements in our career. Organically become a favored partner of private equity. I think what happens when you're acquired as a Portco executive team is particularly as a CFO you often think, all right, great, the Calvary is going to arrive. You know, we're now going to have additional resources, we've got additional investment. This is great. Well, the reality is, especially in finance that the Calvary doesn't always arrive. And most private equity companies that are not huge, that are not, you know, your top five PE firms who have entire armies of value creation experts within their operating teams. Most PE firms don't have those resources. You'll have an operating partner that's maybe spread across five port cos and they have different levels of experience and backgrounds. How can that individual really bring deep value from a value creation value acceleration perspective? If they have to be an expert in parcel shipping and telecom expense management and waste management and wireless and SaaS, it's impossible. And so I think that's, that's where we've really seen within both on the private equity operating partner side but also on the port co leadership side. Firms for this reason when they acquire a company, they can pull us in and do an immediate spend optimization map. We look at trailing twelve month spend across twenty different categories and we can at least present to the operating partner, to the managing partner, to the, to the Portco CFO that we can be that Calvary in a way. And I tell the story a lot. It's just fascinating to me because my brain doesn't work this way. But I'm so thankful that we work with people whose brains do work this way. One of our divisions focuses on small parcel shipping contract optimization like shipping freight ltl, helping optimize those costs. One of these individuals wakes up every morning and they read GRI data. So the 30 page document that looks at like 250 line items that affect a client's shipping agreement, hey, here is the lay of the land. One of our clients described it as a flashlight in a dark room on their spend. And that at least becomes a baseline to start thinking about. Like that's how they start their day. And just little things like large carriers use jet fuel prices as the benchmark for domestic air fuel surcharge. Who would know that? These individuals know that. Now imagine an individual like that, but with that depth of expertise across all of these spin categories and having access to them without paying anything up front and without disrupting your operations. That's the calvary. And I think that's profitable growth. And it's where we've seen this private equity and Portco alignment be really powerful.

It's really interesting. So I guess then the other question.

There, to answer your question directly related to that CFO CRO relationship then, is.

So if you're an organization, right, you're not part of equity, or you're a independent organization, you're at, let's say, 25, 30, 40 million in revenues and you're gearing yourself up for either a seed round or maybe a B round, or maybe you're being entertained by some PE firms. What might be a way to sort of prepare yourself to be more attractive to a PfP?

I would estimate that by large, it is. It is not.

Or so that you become on the radar for some company like that that sees that there's potential there that maybe they wouldn't normally see because you haven't set yourself up in a way that.

Makes what it should be. It is not.

It's an, it's an unlocked opportunity. There's no doubt about it. If you're attractive for that sort of partnership.

My immediate reaction, and Larry, I'm sure you'll have thoughts, but my immediate reaction is to go really aggressive.

I, I think that if I was, if I was a founder or CEO of a company listening to this on.

Cost takeout and to look at areas where you're overpaying, where you're maybe auditing contracts, where you're just not even getting the service that you thought you were paying for, or you're leaving a tip on a service that you shouldn't be, and just take those, remove those out, obviously. Focus on the things that aren't strategic and, and aren't going to propel you to grow. But really the things that are fixed and are indirect, that can be removed.

Conversation. I think it's a big aha moment is to say, all right, so what's the way that I could, you know.

Because recently I was mentioning that the shipping example, we helped a client recently save 10% of their EBITDA just in helping optimize their parcel shipping contract. And so that's something that instantly puts them in a better light. Right. If they were to go to market for a transaction and doing that across those different categories.

Yeah. What Eric described will help you out in two ways. One obviously is you take out costs, you improve EBITDA better.

Leverage those two people, those key executives on my team, so I can unlock the power of that relationship better.

Instead of you help your, your sale price immediately, you know, call it 10 times, you know, for every, every dollar that you take out. The second way is playing the parent.

To two people who are fighting with each other all the time.

Because it's just, you know, if, if I'm going to put myself in the buyer's perspective here, if I'm looking at, at acquisition candidates, I'm not only looking at their, you know, their financials or you know, their, their sales pipeline.

Very. I mean aside from that being just a drain on the company, you know.

You never want that line and things like that. One of the things that, that we look at is just the, the quality of their management team. You know, how well, how well are they managing the business, you know, and how well will that translate to. Into our business once we acquire them? And we're going to be more apt to pay up a little bit, you know, if we think that we're, we're bringing in a good management team. And one way to show that you're a good management team is to show that you're, you're, you're watching the store in terms of your, your operations and your spend.

I'm curious if you could be a little forward looking here because you perspective on this. You know, we're way beyond zirp. You know, it's a, it's behind us. Right. I think we just saw a little bit of a drop sort of thing. It also diminishes this unbelievably unlocked value of. Imagine if those two were cooperating in a way that you could clearly see. If you think about it this way, the. As we've discussed up in interest rates, what do you think next year is going to look like? Like what's your thoughts on the. Okay, I, I get it that you know, we. Because of a lot of issues. I think Covid being one interest rate growth has been another. I think also just maybe some. I think trends and market exhaustion around certain models have sort of. I see there's like three buck. There's three parts of the bucket Right. There's the part of the bucket, the top, where new outlive their usefulness or maybe hopefully moved into a really, truly new way of going to business. I don't know. I'm somewhat skeptical. I always think of things go back to zero, things go back idiots again. But, you know, you never know. But I'm curious to know what your thoughts are next year and how are you playing against that when you look at the financial situation for, I mean, we have what, 23 or four days until an election comes up and then, you know, you've got other, other factors. How do you plan against those things? And how are you advising your clients to do the same if they're, if they're asking you that fact from your delivery perspective or does that play a role in the way that you manage their costs? How do you, how do you manage those things?

I'll answer this.

New growth is occurring, customers are coming in and growth opportunities are being acquired through the revenue engine. Then you've got the savings part, which.

Is making the buckets, maybe in a counterintuitive way, but my belief is that this will be a return to basics. There will be a renewed focus on real discipline across optimizing spend and profitable.

Growth bigger so that you're getting more value out of that bucket. And then there are the leaks in the bucket, which is the part, I.

Think that that will permeate through all parts of the organization. I think there'll be a return to basics in terms of sales. Warren, you've seen this as close as anyone. A reliance on cadences and automated messages.

And AI of the revenue operation that you can't see that there's money leaking.

Out the door because of bots that are prospecting. It is just destroyed outbound. But there will be a new birth of outbound that will be personalized, targeted, human to human. You know this as well as I, that the phone is in a renaissance right now. Imagine that going back to early 2000s or the 90s, like making a phone call, right? Is I heard Rippling's CRO talk about how their most effective channel right now is outbound. And within that, it's the phone.

So operational inefficiencies and, you know, handoff problems and all the misalignment stuff. So if the CFO and CRO are in lockstep, they're going to cover all three of them.

I think it's a. It's a return to basics across finance, across marketing, across sales. It's going to be hard work. We've used the football analogy once already and I guess we'll use it again.

Those things, they're going to stop the leaks, they're going to increase the size of the bucket and they're going to improve.

Offensive coordinator, defensive coordinator. Well, you've got to have discipline. You gotta block, you gotta tackle. And I think that we've in general over the past five plus years probably moved away from that and have relied on maybe tricks. And I think that there's a reckoning and I think there's going to be a return to basics and simplicity and blocking and tackling. This is where the quality of the.

Growth and I mean, you know, that's a core thing.

So an SIB will thrive, we believe, helping companies fully understand their, their spend across all categories. As one of our clients said, if you're not aggressive on cost, you go backwards on cost by default. And so I think there'll be a renewed look at making sure that companies are aggressive on that and are growing in a smart way.

It's also fertile ground for chief revenue officers. I do, I believe it's a perfect timing for the more fully strategic revenue leader. You know, now that look, sales is always going to be critical. Obviously there's no question, oh I'm almost saying in a way here to CEOs and founders. If you're looking for a Chief revenue officer, I'd be not just thinking about the person's qualifications but also how you can be the change agent in ensuring that the relationship between the CFO and the CRO is option. I think even for the first 2030 million in business you have to be very focused on top line revenues. But there's a point at which misalignment is going to be an inevitable reality. And if you could plan against it with a good Chief revenue officer and now in my view, coupled with a good chief Financial officer, you have a winning formula for covering all three bases which is leaks, growth and cost reduction. And I, I do think that this is like this is a perfect one, two punch right here in terms of how I'm going to be advising chief Revenue officer to be thinking about running their businesses. Because I think even moving even further away from the growth at all cost model, which is almost all top line stuff, Chief revenue officers and optimized and that's a key thing. And I think I could see if I'm a PE firm and a MATIC context that we've been talking about are responsible for fiscal responsibility, but now it's even more about even savings and operational Efficiencies. And I. I don't think that's thought about a lot. Like, even just the stuff you and I talk about is, you know, hiring less salespeople because you want to get more out of the ones you have. I. I am amazed that they. Adding more bodies to the organization because the ones you have are not at capacity seems to make. It's a superficial decision that I think satisfies people's need to feel like, okay, good, we have more army, more soldiers in the field. Good. That means we're gonna. That's not true. Particularly if the soldiers are not well equipped, not well trained, and they're only doing 30% of the job. So I think this is like a CFO mindset, frankly, that CROs need to have and if they have the right partner at work. So just before we close up, because this has been amazing, a little bit more about your organization, a portfolio of companies. This just makes perfect sense for me to look at it from that perspective. And you guys seem to interestingly, have a very unique ability to do that because of the way that you go to business with people. So it's a really, really very potent opportunity. I. I've been thinking about this quite a bit, Station. So now you've made, like, a number of acquisitions. Like, you're. You're on the growth spread. I'm just curious to get a little bit sense of, like, what that track looks like for you guys.

Yeah, we've. We've been fairly aggressive in that respect. You know, we were acquired by our initial private equity partner in early 2020. I believe it was within a week of. Of things really falling apart with COVID.

So since you and I started talking about this. Eric.

I'm sorry. Yeah, that. Auspicious timing, for sure. And under. Under that partner and under our new partner there, we're looking at multiple ways to grow the business, you know, organically, certainly. And that's. That's one of the big reasons why Eric is here, is to. Is to really rev that up and along with the investments that we've made in that organization. But realistically, that is a great point, Warren. You know, when. When a private equity firm buys a portfolio company, they. They know they're not buying a finished product. Right. You know, they actually prefer to buy an unfinished product. There are gaps in our portfolio. Portfolio. We started from a fairly small base. We've grown rapidly. There are still gaps, and there's just massive opportunity for us as we go forward.

Yeah. And, Warren, the approach, as Larry indicated, around building out the portfolio. So the brand promise and what I.

Found is that they don't necessarily to.

Make sure our clients never overpay. And we believe that possibilities happen when they never overpay. They can hire more, they can invest in R and D, they can avoid layoffs, they can be more profitable. And as we think about all the spin categories that we help with, that's where we really are going to be bolstering. So today we can help a client optimize the route of a trash truck and save them money with Getita, who is the category leader in FBA or fulfilled by Amazon reimbursement. Amazon is always changing different language for sellers and Getida is helping basically track that in real time.

Spectacular results right away. They know it'll take a little bit of time to, you know, to fix some of the problems and to get where we want to go. But what they do expect is really.

Rapid identify time and make sure that, that whatever is lost in transit is captured and can be reimbursed. One of our business units focuses on just reconciling like every line of a utility bill to find errors. One of our business units, they, they're obsessed with like bank treasury fees and.

Making sure of those issues and progress to, towards fixing those issues for the.

They identify those and can negotiate better fees. And so you can imagine, I think from a MA perspective just continuing to broaden that portfolio as a single platform, as a one stop shop so that a CFO can sit back with their team and say we don't need to be experts in 35 spin categories. We can bring these guys in, look at the spend, optimize it and we can focus on being a profit center and be more strategic. As Larry said, kind of is that goal, that aspirational goal for CFOs.

Well, again I want to thank both of you for being here. It's a great conversation really critically and.

You put it really well. You know, the CRO and CFO having a tight relationship. Excel will accelerate the company's ability to execute on that. And that is absolutely correct.

Important conversation right now, I think on many fronts, right Aside from some of the revelatory components of the CFO and CRO relationship. But also as you move into next year and kind of get ourselves fully immersed in a full year of this kind of new way of going to market, this is certainly a really fresh perspective. So I want to thank both of you for being here. Again, it's Eric Steele and I'll flip.

It just quickly on the perspective of.

The And Larry Earl from SIB and that's about SIB.com and thank you again. Thank you guys for being here.

Warren, thank you and I'm a big fan and I've learned a lot from you over the years and really appreciate all you're doing and I want to wish you also a happy early birthday.

Thank you very much.

Yeah, thank you. Didn't realize it was your birthday.

Yeah, it's coming up, coming up. I, I really appreciate it. Thank you so much. And we'll obviously we'll be talking soon. Thank you for listening to this.

The Portco leadership team. Right. And and both Larry and I have.

Been been a part of a few different Spotlight podcast. The CRO Collective's mission is to help.

CRO succeed private equity backed engagements and and in our career. I think what happens when you're acquired as a Portco executive team and help.

Founders and CEOs build CRO Ready organizations. You can find out more information about our services@the crocollective.com that's the crocollective.com and we look forward to having you join us next time.

Is particularly as a cfo you, you often think all right, great, the Calvary is going to arrive now. We're now going to have additional resources, we've got additional investment. This is great. Well the reality is especially in finance that the Calvary doesn't always arrive. And most private equity companies that are not huge, that are not your top five PE firms who have entire armies of value creation experts within their operating teams. Most PE firms don't have those resources. You'll have an operating partner that's maybe spread across five Port Cos and they have different levels of experience and backgrounds. How can that individual really bring deep value from a value creation value acceleration perspective? If they have to be an expert in parcel shipping and telecom expense management and waste management and wireless and SaaS, it's impossible. And so I think that's where we've really seen within both on the private equity operating partner side but also on the Port Co leadership side that we can be that Calvary in a way. And I tell the story a lot. It's just fascinating to me because my brain doesn't work this way. But I'm so thankful that we work with people whose brains do work this way. One of our divisions focuses on small parcel shipping contract optimization like shipping freight ltl helping optimize those costs. One of these individuals wakes up every morning and they read GRI data. So the 30 page document that looks at like 250 line items that affect a client's shipping agreements, like that's how they start their day. And just little things like large carriers use jet fuel prices as the benchmark for domestic air fuel surcharge. Who would know that? These individuals know that. Now imagine an individual like that, but with that depth of expertise across all of these spin categories and having access to them without paying anything upfront and without disrupting your operations. That's the calvary. And I think that's where we've seen this private equity and Portco alignment be really powerful.

So I guess then the other question there then is so if, if you're an organization, right, you're, you're, you're not part of equity or you're a independent organization, you're at, let's say 25, 30, 40 million in revenues and you're gearing yourself up for either a seed round or maybe a B round, or maybe you're, you're being entertained by some PE firms. What might be a way to sort of prepare yourself to be more attractive to a P firm so that you become on the radar for some company like that that sees that there's potential there that maybe they wouldn't normally see because you haven't set yourself up in a way that makes you attractive for that sort of a partnership.

My immediate reaction, and Larry, I'm sure you'll have thoughts, but my immediate reaction is to go really aggressive on cost takeout and to look at areas where you're overpaying, where you're maybe auditing contracts, where you're just not even getting the service that you thought you were paying for or you're leaving a tip on a service that you shouldn't be. And just take those, remove those out, obviously. Focus on the things that aren't strategic and aren't going to propel you to grow, but really the things that are fixed and are indirect that can be removed. You know, because recently I was mentioning that the shipping example, we helped a client recently save 10% of their EBITDA just in, in helping optimize their, their parcel shipping contract. And, and so that, that's something that instantly puts them in a, in a better light. Right. If they were to go to market for a transaction and, and doing that across those different categories.

Yeah. What, what Eric described will, will help you out in, in two ways. You, you take out costs, you improve ebitda. You help your, your sale price immediately, you know, call it 10 times, you know, for every, every dollar that you take out. The second way is, you know, if I'm going to put myself in the buyer's perspective here. If I'm looking at acquisition candidates, I'm not only looking at their, you know, their financials or you know, their, their sales pipeline and things like that. One of the things that we look at is just the, the quality of their management team, you know, how well, how well are they managing the business, you know, and how well will that translate to, into our business once we acquire them? And we're going to be more apt to pay up a little bit, you know, if we think that we're, we're bringing in a good management team. And one way to show that you're a good management team is to show that you're, you're, you're watching the store in terms of your, your operations and your spend.

I'm curious if you could be a little forward looking here because you've all perspective on this. You know, we're way beyond zerp. You know, it's a, it's behind us. Right. I think we just saw a little bit of a drop in interest rates. What do you think next year is going to look like? Like, what's your thoughts on the. Okay, I, I get it that you know, we, because of a lot of issues. I think Covid being one, interest rate growth has been another. I think also just maybe some, I think trends and market exhaustion around certain models have sort of outlived their usefulness or maybe hopefully moved into a really, truly new way of going to business. I don't know. I'm somewhat skeptical. I always think of things go back to zero, things go back idiots again. But you know, you never know. But I'm curious to know what your thoughts are on next year and how are you playing against that when you look at the financial situation for, I mean we have what, 23 or four days until an election comes up and then, you know, you've got other, other factors. How do you plan against those things and how are you advising your clients?