S5E1 - What you don't know about your equity

Foreign.

What's up everybody? Welcome to the first episode of 2024, the surf and sales podcast. This is our fifth season, Richard.

Season five, episode one, season five.

Jesus. We're like, we're really getting old, dude.

Yeah.

You know, in fact, I have a very good story that's relevant to what you just said. Bod last night in the car was asking me this is youngest son who's 13. He said, dad, you should do more like social advertising and stuff. And I'm like, well, I do a little bit of stuff on Instagram, I kid you not, without missing beats like, yeah, you should do more Facebook stuff because like that's, that's like for the older people.

Smart kid maybe, I don't know, like.

From the mouths of babes.

So, yeah. Well, we're excited to, to bring you all surf and sales podcast once again this year in 2024. We will probably try to aim for 50 to 60 episodes as usual once per week. And check out surf and sales dot com. We've got the 2024 Surf and Sales summit. Dates are available there. Signups are open. There's two weeks back to back in mid November. Get a, get a little mid Q4 winter relief by heading down to Costa Rica with us. And check it out. I'm Scott Lees. Richard Harris you just heard from. And we are going to be joined today by Caleb Smith, who is the partner and revenue advisor at Broadstack. He's a co founder and president of revenue at Control Core. He's a brand ambassador. He's done a million different things in sales. So we are excited to talk to him. Welcome Caleb, to the Surface Sales podcast.

Hey, thanks, Scott. Richard, thanks for inviting me on. It's. I'm excited. I'm honestly stoked to be on here. As I mentioned, I listened to this podcast so it was exciting to be able to come chat with you all.

Awesome. Appreciate that, man. You're. You're out in Salt Lake City right now, is that right?

Yep. Just. Just outside of Salt Lake. Yep. I grew up in southern Utah down by Zion National Park, Rice Canyon, those areas. So if you've ever been at this place. And then I'm up close to Salt Lake now, so we're all excited about the new snow that's been falling for, for snowboarding and skiing.

Nice. Richard will take advantage of that. Yes, I probably will not.

Yeah, we actually were just in Tahoe and caught the, caught the, not the latest storm, but the first storm last week, which was really nice. So it's, it's Cool stuff. So Caleb, you and I chatted offline a couple of times. This is one of the reasons that I wanted to invite you on. And there's a ton of topics. There's this topic of phantom stock and choosing your own comp plan and medium base, medium equity, high base, low equity, all these different great equity things.

And so.

I'm curious as to what do you mean by this phrase phantom stock? You know, we talked about this offline but it's a really interesting thing I'd never heard of till you and I chatted about.

Yeah, yeah, it's, it's something that is not as well known as it should be. You know, just to set the precedent here. I am not like an equity.

Stock expert at all. And so this is really from what we put together and built up as startup leaders and working with individuals in our network, understanding what works, what doesn't, what has worked previously for companies and really trying to find kind of a new way to.

Incentivize and align incentives in the startup world for, for any employees, for sales quota carrying employees as well as you know, everyone else who supports and builds the team. So anyways, phantom stock essentially is.

A portion of your equity in the startup that you pay out as a bonus to your employees. It's recognized as a bonus. It is not like an equity options type format where they have to.

Basically put up funds to purchase those. It is given to them as a bonus. There's no strings attached except for that they have to be working for the company to, to receive that upside. Again.

Signing bonus, but it's an equity like if you think about signing bonuses of, of you know, athletes but it's really equity.

So it doesn't, it's, it doesn't come in at the signing. It's, it's generally paid out like you could be paid out on a, on a quarterly basis or an annual basis depending on the structure of the role. You know, if it's a quota carrying individual then you know, you could align equity incentives there. If it's an operations individual then you know their typical annual bonus timeline when that works. So it pays out on an annual basis. It's totally optional of course, same as a general bonus that's offered but it enables the, the individual get to get tied to the upside of the company. And so you know, one of the downsides is, is that you have to be working for the company to be able to experience and, and realize that the, the bonus. Right. And so people say, well you know, the challenges are like staying at A startup. Right. And so that's certainly a challenge there. But then when you look at the actual value of many, many startups, equity and the longevity of that value, if you're given options and you actually have to put hard cash dollars to purchase those options, you may be able to hang on to those after you've left the company, but it's very likely that you put hard cash down for equity that went to zero. And so it's kind of a balance that of course in the startup world it's all relatively high risk. Right. And so trying to build that culture where the equity side of compensation is not something that the employees are like leaning on for like a life changing event. Right. That this is really a bonus on top of their, their actual like well paid salaries and, and, and compensation structure. And so.

The phantom stock pays out it on your cap table. It's just like a, an equity pool that you can anticipate paying out but it's not realized until a cash event. So if you have a private equity firm or.

Another ownership group come in and purchase part of the company, that could be the case. Or if you have a full acquisition or sale of your startup, then, then that's when the employees would realize the financial gains from that.

So to sort of summarize it, it's something you don't have to pay for later.

That's right.

Is it, it's guaranteed as long as you're still working for the company or based on the terms of working for the company.

That's right.

And, and it sounds like it's almost always tied to a, a, what's the word? Trigger. Right. Like it has to be bought, the company has to be bought or sold. So if nothing happens, you don't really get that bonus.

Yeah, exactly. So, so for me, you know, I'm, I'm the founder of Control Core, for example and like I'm not going to realize any gains myself unless we have a cash event in the company and so that it's directly aligned with all of us in terms of no one's getting paid unless somebody's bringing cash in.

Right. And so the advantage of this is that hey, you got to really believe in the company, but the advantage is you never actually have to pay.

For that equity share.

You never have to exercise is what we're saying.

Right, right. Yep, that's right.

They're not option, they're not options. They're owned.

Yep, they're owned. Yeah. Yeah. So it's, it's your bonus that's there. So there's no financial obligation that you have that you've got to exercise that 90 days or, or a few years or whatever the policy.

Okay, so, so here's, here's, here's my multimillion dollar question then. Okay, Richard and I have been around a long time. Why do, why have we never heard of this? Why are more companies adverse to doing this? Why aren't more companies doing it? Why isn't it more popular? That's what I want to know.

Yeah, I think.

Some of the feedback that I've received is it's not the status quo. So people are afraid of what's different.

And another reason is you can't retain it after you leave the company. Right. And so. True, true. Yep. So, so, but I think that's where like the misnomer is. People think okay, I'm guaranteed success of like building a snowball of equity as I leave startups. But as we know, well, especially in this environment, like where is equity gone? Like if you actually look back, like you exercised your shares on this awesome amazing startup from 2001 that just blew up, take a look and actually dig into where their equity is now, it's probably underwater. And so you just put 50 grand of your own money.

Probably heavily weighted your investment portfolio on that equity and now it's underwater. And so I think the realities of, of hanging on to long term startup equity versus the concept of oh yeah, like once I leave a company I get to like carry that with me forever is, is not really aligned. Right. And so, so the, the, the phantom stock is, is an option that's really kind of slowly growing out there. It, it, I would say it has been more popular in more traditional based businesses, not the like high growth startups. So it provides employees an opportunity to experience growth. You know, if there's like a employee buyout of the company. Right. Or other, other liquidity options. And so to answer your question, Scott, I really don't know why it's not more known, but some of the feedback that's been been provided is one, it's not typical and so people are afraid of what's not typical. And two, you can't carry with you after you leave the company.

I think those are real. I mean I'm imagining a world where I go be a VP of sales and I get phantom stock and I'm there for three, four years, whatever, and I can't leave.

Right, yeah. And so that's really good.

And exercise my options in a sort of typical.

Stock option grant situation. But in this particular situation. If I left, I'd be walking away from what could be a life changing money.

That was my question. Is this a, is this a, in addition to a regular equity thing? Because you kept calling it a bonus. Right. Which means it's an add on. So if, you know, Scott goes In as a VP of sales, he still gets his, you know, one and a half, 2% of equity, but then there's this bonus phantom option. Or is it like either or, or, or don't you know, don't you know, Caleb?

So it's entirely up to the company how they do that. But from an accounting side, it's a bonus. So it's recognized as a bonus. It's not. So if you, if you have options.

In an option pool in a startup cap table, you're going to be setting aside those, it's already being recognized, weighing against the dilution of the company, if that makes sense. Yeah. Whereas the, the, the phantom equity does not dilute the current equity pool. So it only dilutes at the very end. It's kind of like a balloon component. So right now when like, like we have the current investor and owner pool on the cap table, you have that phantom share component kind of sitting there to be aware of that, but it's not actively weighing on it. So when you're fundraising and you're bringing on new partners, it's not, it's not impacting their dilution directly. But then when the company has increased in value and that pie has increased overall, that's when it actually hits and it has a far lower impact on everyone's total dilution.

That's cool. This is fascinating. Like we could, I know we could go the whole hour on this topic, but I'll stop here, Scott, unless you have some other questions and then we can sort of shift to something else.

Yeah, no, we could, we could pivot. I want, I want Caleb to have the chance to tell everybody what he's been building, what he's working on right now. That way people have some context maybe around his background and how he thinks about things and how he, how he works in sales.

Yeah, happy to share more. So I, I think I'm kind of a story of an example of you can never really know what you want to do in life.

Coming out of college, I, I, I think a lot of people are like that, like whether you go to college or not, you know, you got to determine what, what you're going to do and you got to know who you're going to be in your future. And I just say, you know what? Pretty much every year in my life I've recognized a new opportunity to, to follow something that, that, that's a bigger and better opportunity there. And I don't know if that's a good thing or a bad thing, but that's just kind of the, the background I have, you know, in my undergrad and hotel and hospitality management, you know. And so I worked in hospitality for a long time, learned that world, which I actually think was really applicable to kind of gaining a good perspective on working with people in sales and understanding empathy, understanding what it takes to take care of them. And so I kind of pivoted out of that, recognized I wanted to move into technology. So I moved into the ed tech and publishing world. Eventually went over to work for Qualtrics in brand and market research insights division there.

Spent a lot of time as a rep and working and building a lot of solid relationships across all different stakeholders from public.

Private institutions, universities, cities, corporate governments and corporate organizations. So got a lot of different perspective on like, you know, working with different types of stakeholders all the way from like SMB mid market up into enterprise. But internally I was always the guy that like when you sat down the interview and, and your manager asked you like so where do you see yourself in five years? I was the guy who's kind of like as your boss.

That's a very Richard like answer.

Yes.

You know, and so I of course would never say that, but I was like, I would not.

And so it was, it was, I always knew that I really kind of wanted to move to a place where I was building companies and applying the things that I think.

Would benefit in a, in a successful.

Growth of a company. And so really, you know, my passion is revenue and sales. I currently am the co founder of Control Core, which is a financial technology product built to solve the financial and transaction processes for the construction industry. Moving money in construction is extremely complex and problematic across stakeholders. And so we are solving that problem. My co founding partners are general contractors and finance professionals. And so we've built a really solid product there. It is a big lift. We're taking on really big verticals. And so it's been a lot to build and so that's where we're at. We're rolling out kind of our V1 of that product now and then as part of that, while we were building this, we had a lot of individuals kind of contact us and work with us within our network saying hey, how are you building the software at the level that you are.

And so we started an idea to put together a separate software development and startup incubator. And so we broodstack, I'm a partner in that firm as a software development company. And so we build and develop additional software for other startups and, and take that to market with them. We're essentially their, their.

Technical partner. Yeah, exactly.

So how do you, so how do you, how are you even building two businesses at the same time? Like, this is, it's fascinating. First of all, you know, I think Scott and I both love it when we hear something like the word construction, you know, being disrupted or real estate or something, because we know the value there, right? Like, we know that those are the people who are the laggards in many cases, but they eventually come. And so you're, you know, it feels like you're in a sweet spot for, for that, but then to go and build this whole other thing, you know, like it's, it's hard enough building one company as a startup founder. How are you doing two side by side? Like, are you, you know, clearly you don't have a wife and kids and partner and you know all those things, right?

Yeah, don't ask my wife and kids about that. Right?

Yeah, no, I don't think I've determined that answer yet, Richard. So why we decided this, I, I don't know. But actually it, it's, it actually works pretty well in a symbiotic relationship because as a startup founder, you have, you kind of have two different worlds. You have your, your customers world, which is the pain points that you're pro and you're solving for them, which in the case of Control Core, it's all their financial processes, it's what's going on in construction industry, et cetera. So we're actively talking there. And then you have this, the, the founder world, which is all, you know, in, in our case like SaaS and fintech and everything, software development and everything. And the conversations are constantly, you know, it's agnostic to what you're working on. All founders, I mean, you, you guys are founders, you know, the problems, small business owners and the challenges that we all face. And so the conversations kind of become the same. And so then it's, then it directly aligns where, you know, I'm talking to many founders consistently and it becomes a natural progression to talk to them about what they're working on from a software development side. And then many, many times we can really provide value at that level. So fortunately we've been able to kind of align.

A lot of the building efforts of both companies together to support each other. And then, of course, Broodstack, you know, the core goal of it was to be able to offset our fundraising requirements for Control Core through the, the profits that we, we generate and the software development projects. So that's, that's, that's how we kind of built that ecosystem.

What, what have you found? I mean, I.

I think I know how I would answer this, but, you know, you've been in selling arenas where you're talking about government and schools and things like this that you've talked about. I mean, these are like some of the most painful potentially selling environments there are because it takes ages to get things done. And on the flip side, now you're in construction and, you know, general contractors and all that kind of stuff that have historically, in my experience, had a really, a really fast sales cycle. So you're kind of going from like turning the Titanic around to, you know, a little Zodiac boat just scooting around the bay. Richard, that you, that you see all, all the time. Like, those are, that's a big difference. It's a big change.

Absolutely.

What's the hardest adjustment from people from. For somebody who's coming from a slower sales cycle to a faster one that doesn't get talked about enough? I think we hear a lot about people who come from.

Faster sales cycles, and they always say, well, I want to move up and do big enterprise sales and that type of thing. And they think it's like a, you know, big feather in their cap or whatever. We don't hear as much about people who do the opposite in terms of the sales cycle. So that's kind of interesting and fascinating to me. What's that experience been like?

Yeah, I'll admit it's, it's been transformational as far as my perspective on.

Deal and stakeholders understanding how to move those deals through.

In, say, the university state where you're. You've got exactly the Titanic that you tried to move in order to get a decision made.

It's relatable to the construction industry in that both fields require previous trust and they are laggards, as you said, for early adoption. But from moving to a quick transaction purchase, it's. It's actually been really helpful that I kind of was trained up into this point in the enterprise space, because then I've been able to understand very quickly how to accumulate and collaborate across stakeholders, what their needs are and to multi thread through that. But I would say one of the biggest challenges is.

Basically.

Bringing like a cannon to, to A.

You know, a knife fight. Right. Like you just, just to be being too much and coming in with a perspective that is over complicated, over technical, etc, and I've gotten a lot of feedback recently in my career that said, Caleb, you talk too much. You need to. To become more direct and simple in how you work with your clients and just meet them where they're at. Don't try to.

Just be super technical and academic about everything. Right. And so that's been a challenge. I've kind of had to learn. Okay. How do I not be such a mouthful all the time of. Of what I'm saying? So.

So let it out, Richard. Let it out. You could see there's something. Some burning question.

Yeah, the burning qu. The burning question is, how's that feedback going? Because I, I could still give you that same feedback today. Well, yeah, says the guy who says, I'll come take your job.

But that, but that. Actually, I'm gonna ask a personal question. How do you take feedback that you see you see as valid and then work on that within yourself? Because I think we all have that challenge. Like, I'm definitely known for being long winded. What are the things you do to try to remind yourself?

Yeah, I, I try to remind myself that the feedback that's being provided is to help me succeed. And I oftentimes forget all the time.

Like me.

But when I do remember, I say, you know what? This person wants me to be better.

And it's not out of spite. And so most people truly do care. And so.

Then, then it's just a repetition thing, being reminded, saying, you know what I'm talking about too much, too many things here, need to simplify and be direct. And I found for me personally, just practice. So practicing that feedback, applying that feedback.

Yeah, I have the same thing. I have to, you know, I've got a couple of posts on my mouth, on my mouth, on my screen to say, shut up, you know.

And I'll even say, okay, I've been talking too much. Caleb, what do you want to say? What questions do you like? I'll just sort of say it out loud, throw myself under the bus. I want to shift back to a different conversation you had this again goes back to compensation. And I don't mean to keep harping on this, but you and I have had such vibrant conversations around this that the phantom stock one, I was like, oh, that's interesting. This is a different one. You know, you know where it's, where it's.

You.

You brought up this idea of a choose Your own compensation plan, right? Like, okay, you want a higher base, then you can get less here, you want a lower base and you want a bigger payout. Is that just something that came to you? Had you heard from that? Like, do you see it implemented? What do, what do you see? What does it tell you when someone chooses their own comp plan too?

Yeah, great question. I appreciate you bringing that up. So there's been some people on LinkedIn and in the industry that have kind of chatted about this, but again, it's not gotten a lot of traction.

And, and then continually, like I always felt uncomfortable as I got a new job, like basically being handed this like.

Cookie cutter. Like, this is what we're bringing to you and this is what you need to accept.

When like, I'm like, you guys don't know my personal life, you don't know my risk threshold, you don't know what motivates me, you don't know what incentivizes me, you don't know what my family life is like, expenses, etc. Right. And so.

I was like, you know, how do we, in working with my partners, like how do we align those incentives to enable individuals to feel like it aligns with where they're at in, in their life? And so we, we put together a plan where you can kind of trying to keep things simple, not, not just taking it all over the place, but basically have three different compensation options. When, when you're hiring a new employee, you can put in front of them basically a low risk tolerance.

Medium and high. Right. And so the, the, the low risk one would be a high base salary, lowest phantom stock or basically equity payout option. Then of course the medium ones balanced in the middle. And then the, the high one would be, hey, you know what? I, I have a high risk threshold. I believe in the, the future of this company, I want to take a high equity standpoint and, and then I'll have a lower base. You know, there's actually benefits for both of those. Right? So like the, I think Richard, you asked like, well, what if somebody says like, oh, I'm going to take the low risk one? What does that tell them about their commitment to my startup? Right? Do they not believe in it? Well, potentially, but maybe that's an inflection on us and what we need to do as far as like, you know, our product market fit and all of that. But then also it actually is a, a benefit for us, especially as, as startup owners where that removes the, the, the costliness of that equity. Right? So so, you know, we absolutely want to incentivize individuals to come and work for us and, and experience the upside. But the equity we deal out, that is the most expensive capital that we're giving out. And so cash, even though it's expensive right now, later down the road, is much less costlier. And so there's a big benefit to paying a startup employee, you know, higher base and having them choose to reduce their equity. Now, on the opposite side, a high equity standpoint, it tells us, wow, this person's like all in with us. From a belief in our startup, we don't have to have as much cash bleed for their salary. So it's really like they both have benefits. Right. And so we want to kind of align with what works for, for the individual and, and what would work for them.

But again, let's test, let's test Richard real quick on this. So this is. You're gonna, if you were gonna go back into the W2 world, Richard, you're hired as a VP of Sales CRO. Whatever you, whatever you wanna do with your life, and you have this choose your own adventure strategy for compensation. Which path, which direction are you taking and why?

Well, it's funny because, Scott, I want to ask you the same question too.

It depends on which me is going back, right? If.

I'm, Yeah. If I'm single and younger, that higher, that higher equity piece plays a lot more interesting at this stage of the game. I, I could not to, to Caleb's point, my lifestyle, and I don't mean like supporting me going on vacation, but just like having two kids and a house and you know, my wife, it's just like that matters a little bit more towards, for me presently.

Plus again, you know, at my stage and age of life, like, I think I can do decently with the money I could make with present value of money over the long haul, knowing that the stock is a risk and I might try to leverage Caleb, you know, appropriately to say, okay, well, let's do more of this phantom thing, right, so that I'll stick around, right? Like, that's the thing I like about this idea of like, I could have this higher base, lower equity, but maybe there's a phantom thing that keeps me sticking around for three or four years, you know, beforehand. So that's, you know, for the long haul. So that, that's my answer. What about you though, Scott?

Well, I'll give my answer and then I want to do two things.

Okay.

I want some clarity around the delta between these different options. Because when somebody Says lower base. What does that actually mean? If my normal base is 200 and you're offering me 190, okay, that's not that much lower. If, if my normal base is 200 and you're suddenly offering me a hundred, that's way lower and maybe like a non starter. So a definition of those things is potentially needed. I'm actually the opposite.

Yes, of you. I know you are.

Yeah.

I would err on the side of taking a big swing and being far more risky right now for a few reasons. Number one, I would not stop doing that much of what I already do on the side. Therefore, I don't need the base salary as much because I'm able to supplement my income by continuing to do consulting, continuing to do some coaching, continuing to run events, things like this. I can make plenty of money doing that stuff in addition to this salary. What I can't really make with these other jobs of mine on the side is I'm not going to get 5 to 15 million in one fell swoop coming my way as a VP of Sales, a CRO, if we have a billion dollar exit kind of company. So that's what I would be, I would be optimizing for that. Not the safety kind of area that Richard was talking about earlier in my career. Interestingly, I would argue Richard optimized for the riskier stuff and I optimized for safer stuff earlier in our careers and now we've flip flopped. So there's your answer. So maybe Caleb, you could elaborate a little bit on the delta between like high, medium and low base or high, medium and low equity. Because I, I think that actually matters quite a bit. And then I want to know based on our answers only, not our background or personality, based only on our answers, who you hire? Which person are you hiring?

All right. Yeah. So the delta is, is absolutely going to be a reasonable delta. So we're not talking Your base is 200.

At the, @ the high. And, and Your base is 100 at the low. Right. We're talking more of a delta swing in, in more of a percentage basis of the actual salary. And so we're looking at like between 10 and 20, the 5%. And so if, if you're, if.

You'Re like, okay, does that change your answer at all, Richard? Because that, definitely. Because that means now your salary is like 175, let's just.

Say. Right, yeah, that, that, that becomes a different.

Conversation. Yeah, yeah. And, and you know, like we're all about a B testing this. Right. And so if, if Somebody really pushed us enough as well as like, like, hey, you know, I really want to go like all in on, on this, this equity side. I'm willing to, to lower my base even further than that. Of course we'd be open to that conversation. But the like the cookie cutter, like what will produce to get the conversation started to provide. I mean, I think you both just provided a perfect example of why like I can't come to you both with the same employment offer and expect that you feel the same both because of your, your personal situation. Right. And so, you know, if I say, hey, you're, you're a new account executive for Control Corp. I'd like to hire you at a hundred thousand dollar base salary and you're expected to, you know, probably do another 50% of that in commissions and your equity will be.

You can choose either to reduce your equity by 25,000 or increase your base by 25,000. Right. And so just, you know, find, find that middle ground there. Of course we'd create that custom plan, you know, 1, 2, 3, but not have this like really big delta between each one. So it's not making people like sweat as far as, you know, is this the right decision that I made? But more align. Okay. This is how I feel in my life right now. This is what I need. And we are exploring the option of doing like an annual refresh of this to, to enable the employee to decide they'd have to commit for a year. So we're not doing this like every quarter or whatever, but they'd have to commit for a year and say, you know what? I'm anticipating having to buy a new house this year. I think I'll need a higher base salary to be able to secure the loan and you know, feel a little bit more stable with the cash that I need. I'm gonna bump up to the high salary and reduce my equity. Oh, hey, you know, Control Core might be going for an exit in the next year. I think I'm gonna go all in and, and reduce my, my base salary as much as I can. Right. Like give them the choice of that opportunity. Cool.

Cool. So who you.

Hire?

So I mean, I would, I, I really would hire either one of you dependent on, just based on the.

Answer, based on the stage you're at right now with your.

Company. Yeah, yeah, the stage that we're at with my company, you know, we, I would, I would lean towards the, the, the higher equity and the lower base. That, that's.

That'S. I always want to hear that. Richard the founders always want to hear that. You got to give them what they want. You got to learn to give them what they.

Want. I agree. However. However, I will fully provide the context that I will have no problem hiring somebody if they wanted to, to make all, all salary and come to work with us. Because I also, as a founder, like, managing our cap table is a huge challenge and everything as far as the equity that we can hang on to from the founder side and our current partner pool enables us to continue to raise funds and have different options as we go on. So, so I'm serious, there are the both options and we and you just kind of have to decide, okay, this employee, they want and are at this place in life. Great, that sounds good to us. But it's certainly not a determining factor of whether we're going to hire them or not, if they go for high equity or low or higher.

Base. This has been a really cool discussion around options and equity and different selling arenas and stuff like that. We really appreciate you spending some time with us today on the surf and sales podcast. This is how we end every show, which, you know, since you're a listener of the show, how can we be helpful to you? Is there a question or two that you want to ask us? You're in the driver's seat.

Now. Yeah, well, I'd love to ask you guys, like.

Where is.

Prospecting headed.

With the changes in AI technology, with the changes in the go to market playbooks that are basically all being thrown in the trash right now and everyone's having to figure out what the heck they're doing? What are your opinions on like, where is prospecting.

Headed? I'm gonna let Scott answer that because he talks about this all the.

Time. Yeah, I spent a lot of time talking about it in the last year. I mean, I am of the belief that sometime in the not so distant future, you will not be able to cold call total strangers and prospect and open and create opportunities. And I think not long after that, you will not be able to do much with email either. We just simply do not behave and experience the world in the same way. A telephone call is no longer a positive event. It's an absolute disruption and distraction that you actively seek to avoid. You don't spend all your time in email and prioritize responding to all these things. You're inundated with messages from people you don't know. So much so that every time we get an email, our immediate sort of suspicion or guttural instinct is, oh, I just got spammed again, like I'm on somebody's list. This is all trash. So I don't think that you're going to be able to open opportunities unless you have networked your way in. And that is this concept of network led growth and near bound that I've talked so much about. So if Caleb wants to prospect into Richard, Caleb has to come to Scott who's he's buddies with because Scott is buddies with Richard. And Caleb says to Scott, hey, can you get me an intro to Richard? I'm happy to comp you on this if we close the deal. Do you know him well.

Enough? Blah blah blah.

Blah. I go to Richard and I say, hey, I got this friend Caleb who does this thing that can help you. Do you want to take the meeting? And Richard says, yeah, actually I would, that would, that would be helpful. And then I make the intro because I'm only, the only chance you have of getting me on the phone or responding to your email is if I know you already or somebody I know is vouching for you and making an introduction and I trust that person. And I'm now kind of under obligation in some way to at least reply even if I don't want to.

Take the meeting with.

You. So there's that element and then there's the sort of even more maybe in the maybe more near term thing, maybe more long term, I don't know. And that's the whole like, how are we going to automate out all of these roles? Because every founder and super growth venture firm in the world is like, can we build AI tools to get rid of salespeople? Can we build AI tools to get rid of customer service and success people? Do we need SDRs? Do we need content for folks anymore? Do we even need writers and people who do marketing content, stuff like that? No, you could argue that you that you don't. And it's not going to be very long before there are AI versions running demos, effectively acting as like avatar of Richard with Richard's voice and his sales methodology, his neat selling methodology built into the AI script where there's an AI version of Richard who's doing the actual selling of control core all the way through closing deals. And we as buyers and humans will no longer require a human to human experience in order to make a purchase because it will become normal. That's where I think we're going. And those people don't like to hear that, hate to hear that, are afraid of hearing that. Maybe they're intrigued by that. But that's that's my feeling on it. You want to add anything, Richard, or, or disagree with.

Me? I would love to disagree with you just for the sake of disagreeing.

With you, but can you, Will.

You. No, there, I mean there, there are a couple.

Thoughts.

So.

So one is that I think in the short term the, everything's going to just accelerate the suck. The, the problem still exists in the startup world of, you know, be first, be fast. Right. And, and people are going to abuse the machine even further than they already do.

And so I think that's going to be an interesting piece. I think what Scott's also talking about is that that human element, right, like how do we, how are we going to maintain this humanity piece, right, which is this sort of near. This, this whole near bound. It's not even a sort of. This is what nearbound is and it's been around forever. Referral selling's been around forever.

It's. But now we have machines to help us do that, which is also very good. So that, that is helpful. The challenge is, is that everybody's going to reach out to the same people who are going to reach out to the same people they know. And at some point even that well runs dry. And because we're trying to go fast and be first, that becomes a problem. I don't know the answer to that beyond that solution. Right.

But the humanity piece I think matters. I think the humans will stick around a little bit more for a little bit longer than, than we think. You know, there's, there's still a reason why, you know, this is. I hate bringing up this topic, but I will. There's still a reason why there's a pilot in the fighter jet. There's still a reason why there's a human maneuvering the drone in a lot of ways. The technology is doing a lot of things, but there's still this last moment human concept that still has to be applied. And suppose, you know, again, statistically, sure, we could probably get rid of the pilot. I don't know that we will for a while. And I feel the same thing about sales, that somewhere the human has to be there. And to Scott's point, it's going to be more addressed on when the buyer is ready to buy that way than when we, the seller, we could be all ready with the AI from now till tomorrow, but if the buyer doesn't like it, that doesn't matter, right? We're good at it at the B2C World, right? We're good at it in the, you know, business to Consumer world, Amazon, those things where I don't need to talk to somebody. But even in that world we still all go read the reviews. Most people, not everybody, but a lot of people read the.

Negative reviews first before they read the positive reviews or they quickly read the negatives just to make sure based on the positives. So there's still this human element that's got to be applied somewhere in the process. How and where we do that as, as AI replaces the human piece, I don't know. Right there will probably be the review of the purchasing. Scott that's what we need to be to build is we need to build the G2 version of reviewing the AI salesperson. Would you buy from, you know, from Control Core based on the AI experience you had as a buyer? Like someone's going to want to look at that. So anyway that's, that's a long answer.

Too. But what do you think? What do you think about our answers?

Caleb? Well actually I, you know I really like that idea especially.

Well the concept of one improving the data behind what the buying experience is just that last thing you said Richard, that's actually you know, I don't think enough focus has been on put on companies to have an onus on their buying experience and to improve that and to make sure that they're aligning with how the buyers want to purchase their products and services. But then from an AI scalability standpoint I think exactly right Scott, like how do you scale that near bound.

Cadence, right? Like when you, when you've got these pretty intense revenue goals etc. Like how do you do a slow as fast approach? Right. Um, and how do you change that behavior in to be honest boardrooms that needs to, to trickle down all the way through leadership into the reps. Because I, I don't think any rep would have a problem in believing that and knowing it. It's when their managers are saying no, ain't nobody got time for that. Go spray, you know, make a hundred phone calls right now that that's, that's work today. Like you need to go do that.

And you know when it just and then blows up to be nothing. Right. And so I think that the behavior of where AI is taking us like the leadership of the organization will have to change in terms of the perspective of how that works because I think the boots on the ground believe it and they know it and they know what needs to happen. But leaders are still lagging as far as understanding like the consequences of, of poor action in related to scale there.

Yep. That's great. That's. That's really solid. Scott, anything to.

Add? No, man. We went way over time this time. That's a good indication that we were all enjoying ourselves. So. Yeah, once again, appreciate the. The time. Caleb, any thing you want to say as a parting. Parting shot? Where can people find you and get in touch with.

You? Yeah, you guys can. Can find me on LinkedIn. That's definitely the best place, Caleb. M as in Matthew Smith. There's a lot of Caleb Smiths out there, so be sure to put the M in there. Yeah, feel free. Reach out to me. I like to. To help anybody who needs to get a new job or something like that as far as especially trying to break into tech. So if you're a salesperson trying to break into technology, I know it can kind of be a cliche or a niche world out there, and so once you've got into tech, you can. You can be there. So I like to help people formulate their path into technology. But hey, if you're also a salesperson and you've been thinking about building a product or company or something and you don't. You don't know how to do the software, let me know. Send me a dm. We can. We can help you out there, too.

Cool. Well, thank you, Kayla. We appreciate it. And I'll be DMing you about the reviewing of the AI sales world software so we can partner on that.

One. Yeah, let's do.

It. And by partner, I mean it's my idea. And you put in all the money and the sweat equity to build it, and then I reap the rewards.

Of. Sounds good.

Richard. That is what he.

Means. That is what he means. Yeah. And you, you do the 90% equity percentage.

Right? Right, right, right.

Right.

Okay. Yeah, I'll take. I'll take a very low salary, by the way. It's like a super low salary.

So. Sounds good. I think we're aligned. All right, well, thanks, guys. It's been a pleasure. Really awesome to meet both of you over over Zoom and looking forward to listening to future podcast.

Episodes. Yeah, we'd love to have you come down to surf and sales. So come check us out with.

Us. Yeah, love.

That. See.

You. Thank you.