ve BINAR How to Build for Your Winnable Addressable Market

Hi, everybody. Good morning, good afternoon, good evening, depending on where you're dialing in from. Welcome to today's Vendux Webinar. I'm Andrew Miller, one of the partners at the Vendux Group, where we focus on helping clients to grow their sales leadership capital. I am really thrilled to have Edgar Baum as our guest today and I'm going to let him introduce himself in a second. But first, let me give you a little bit of bio from what I know of Edgar. Edgar started Avasta in 2019 as the profitable growth company we're going to dive into that. And that company operates at the intersection of management consulting, end customer insights and financial data and analytics. Avasta's customers are challenged by growth or seeking growth. And Avasta's solutions are grounded in math and stats, for which he applies across finance, sales, marketing and valuation. Edgar himself is a graduate of the University of Toronto in math, art, history and philosophy. So that means he's wicked smart and he uses the entirety of his brain. Before, Edgar was the founder or executive at several valuation and business measurement and finance firms, preceded by finance and market development roles on Wall street at Merrill and Procter and Gamble. Since 2014, Edgar's been a primary author on two next generation business management standards, or, sorry, business measurement standards. One, how to measure a brand financially from the customer's point of view. And you have, I think, ISO certification and rating on this. And then number two, how to measure and report on the future value of of intellectual capital and intangible assets to a board of directors. Also, Edgar develops and teaches a graduate course on finance of brand management at the University of Toronto since 2015, and he regularly presents on strategy, measurement and valuation at conferences and business schools. You're not a busy guy. So today's webinar topic is how to build for your winnable and addressable market or winnable addressable market. We'll dive into this topic in a second, but first a couple of quick housekeeping notes. We'll keep everyone muted for the duration of the webinar and then there's a Q and A at the end. You can either use the chat function in zoom to submit your questions or just feel free to open up your mics and engage directly with Edgar at the end of the webinar. The webinar today is being recorded and it will be available later today on our site on YouTube and socials. Edgar, welcome. Great having you with us today. So tell us, you know, at the high level, highest level, tell us a little bit about your journey to starting Avasta. What does the business really do from a client's perspective and especially in the context of building for winnable, addressable markets and maybe even as a starting point. Edgar, can you explain and define right at the top what we mean here by winnable, addressable markets?

Happy to. And I think part of this is kind of triggered by journey that actually goes back to the 1990s when I had the privilege of working at the treasury and having a lot of experience on Wall Street. And a lot of the work at that time was around 10 to 30 year investment strategies. How do we allocate capital with an expectation that we're not going to touch it for a long period of time? And back then this is kind of early stages of Internet. So a lot of money market intelligence information and things like that really was slow to acquire, very difficult, very expensive. And there was kind of like a high trust quotient that existed at that time. And one of the challenges that was was how do you combine that information? And I just kind of had a natural aptitude for it, so I just kind of did it. But there was kind of like nothing systemic or anything about that. Then in the early 2000s, this concept got introduced called total addressable market. The crazy thing is, as I've been talking to people contemporarily for the past five, six, seven years about this, they feel like it's been around for a century or longer, but it really has been around for less than a quarter century as a term. But it caught a lot of attention. And then it also went and created a lot of problems because what it does is it creates an opportunity to be a lot bigger than it actually is. So if we go and say the total addressable market for video Games globally is $70 billion, you're like, oh my gosh, if I go and watch a video game, I'm going to be printing money. Or the global economy for cars is in the hundreds of billions of dollars. Like, oh my gosh, I just need to go and start a car company and naturally it's going to be successful even if I just get a small, small slice of the pie. And the origins of Avasta actually were around, how do you go and bring this data together? And I think that's kind of been my experience professionally is I've always been asked to kind of stitch different information together. So backup Procter and Gamble, I had the opportunity to work across every single function concurrently. So I was looking at marketing data, customer research data, brand data, demand data, retailer data, and we're trying to figure out how do we make better decisions if we bring this information together. So when I launched Avasta almost six years ago, that was the origins of it. But what was very interesting is that the only way to solve for it was actually just going and doing regression and analytics. So you'd go and use statistics, you'd go and take a large data set, you compare it to the other, you'd kind of come back. It's like, is there a relationship here? And you're like, oh, yeah, like there's a, you know, a 0.38 relationship, which is actually very good from a statistics point of view. But that means that 62% of the time you're going to be wrong. So the where this arose is like, okay, well, is there a different way of doing this? And I was actually pretty much in stealth mode for almost a year working on the mathematics of how do you go and combine data to make a better business decision. And when we went and started applying it, it applied very much to how do I go and allocate capital, how do I go and drive revenue, how do I go and understand what my future valuation potential is if I spend money now but reap the rewards later? So that DNA of allocating capital today to be able to understand the future value potential of it later, I think has been there for 25 years. And what we've gone and done at Avasta is to be able to make that possible for people, but then also make it operationally usable. Hence why when we're talking about the winnable addressable market versus the total addressable market, it's about going and identifying what your business value proposition can accomplish in the universe of market demand. So it is a much smaller number than the total addressable market. It's the number where you go and have what we call demand, offer, fit. There's demand for a type of offer or solution or product or service, and your organization is able to go and fulfill it. And what is interesting is the universality of its application as we've been working with clients. By having that intelligence allows product people to be able to develop products that actually have inherent demand upon launch. It enables marketing people to be able to understand what type of messaging and even what mediums to go and communicate that message through to catch attention from the people that would be interested in what you're offering in the first place. And what's been fascinating working with sales organizations is that you can have a very high degree of confidence on who's your top 10 to 20% of your prospects at any given time. And that has been fascinating to see over time because we've had clients who've been able to go and kind of reconcile large lists of thousands of leads and being able to figure out who's our top 500, who should be tackling the larger enterprises, who should be tackling the smaller enterprises. If we're a very small company today, who is a big shiny customer in the marketplace that we're actually premature in trying to approach for business today? So it's that kind of alignment that is there across the organization and pointing them to a single common data point which is informed by prospective customer demand in the marketplace, rather than internally set objectives based on a giant total addressable market opportunity. So hopefully that gives you some context.

Yeah, that seems very straightforward. I mean, in order to, to derive a winnable addressable market, though, you've got to start with the tam, right?

So that's where I actually the contrarian on it. Because the issue that we have gotten seen in reconciling TAM figures is how did you get to that number in the first place? And my biggest problem with TAM is that it's always a dollar figure. Nobody is figuring out how many buyers there are as individuals or as businesses. And that to me is the much closer number to reality. So if you're going and saying that The TAM is $100 billion, my question is, okay, how many companies does that represent? If you're B2B, how many consumers does it represent? If it's B2C and it's like, how did you derive that figure? I'll give you an example from one of our client situations that we had. They were communicating publicly that their TAM is $10 billion. Okay, so what did we figure out? The number was took us a bit of digging. It was their target price point for what they wanted to sell their product, at times the number of potential patients in America. So that assumed that if they got a monopoly and they got to sell everything at their ideal price, this would be a $10 billion market. But when we actually went and took a look at how much was being spent on something that provided the same type of benefits as theirs, it was about $6 billion per year across the whole health care system. So they were severely overestimating it and assuming a monopoly. So when we worked backwards with them, we actually went and figured out, okay, well, how many people even want to buy a alternative to what they're already doing? That was a much smaller population. Out of that 6 billion, how many would go and buy it in a treatment format that our client was going and delivering. There was an even smaller number from that. So you might be going and saying, well, Edgar, this is so pessimistic. Like, you know, do they even have a market to sell to? I'm like, heck, yeah. We went and identified that they had their winnable, addressable market was 100 times larger than their present revenue. So why go for $10 billion if you can go and find the credible $750 million to sell to instead? And then, you know, within a year, the revenue had gone and doubled by going and rationalizing it against that, giving their salespeople that prior. But it requires the combination of taking your strategy and identifying where does that demand fit for that strategy. And you might need to adopt your strategy or your value proposition to meet that demand.

Do you have. Do you have a framework to address the wham. The winnable, addressable market for any company? Is it. Is it kind of standard or does it vary? To what extent does it vary when you're talking to different kinds of companies? Different sizes.

Yeah.

Different places in their. In their evolution. How do you calculate effectively?

So a lot of it is by going and taking a look at what's the maximum buyer universe. So some of the data that we go and use in a simple state for, like, let's see, look at the US as an example. So the US Business census data goes and tells us that there's, you know, tens of millions of businesses in America. Well, that's great. Okay. But like, you know, what price point are we selling our product at? What are we trying to go and solve? So then we go and take a look at, okay, how many businesses are actually trying to go and buy this? So if you're going and selling something that could be to any business, what's actually interesting about it is, is that you're actually very hard for you to sell to any business. You actually need to figure out how you're going to be prejudiced towards your customer. So that's one of the things that we go and figure out is like, who do you provide the greatest value for? So if you're trying to go and sell enterprise software, well, there's not a lot of enterprises that are out there. There's. The number of companies that are there with over a thousand employees in America is actually not that many. It's less than 30,000. So now right there, you've just gone and said, we're going to not sell to 18 million companies. We're going to sell to 30,000 companies. Okay, so if you're going and selling to 30,000 companies, well, do they even know this problem exists? Are they looking for this solution? So we're kind of going from that high level definition of the maximum buying population and then partially through precedents or basic research in the marketplace, but eventually, depending on the size and scope of the work, actually going and anonymously engaging with these customers or prospects that are out there and getting that information for you. So we do get to gathering that market intelligence directly from the buyers that are in the category. And we have a couple of different means that are tied to that from a price point of view, life stage point of view that's there. So for example, for small companies that haven't built up a strong enough name or reputation or kind of been picked up in either business discourse or analyst discourse, we don't even bother testing for their name recognition. We go and test for their offer recognition. So do people recognize the offer as our client has gone and worded it. So we have a financial services, sorry, financial technology company that we've been working with for some time that goes and provides highly secure data transmission between the vendor ecosystem and the financial institutions involved. That is a very, very specific domain that is there in the marketplace. In fact, there isn't even a very common language around it. And it is something that it's applicable to a bank with 500 employees, as a bank with 50,000 employees. But do you know how many people inside both banks care about this topic? Less than 5. So there's 3,000 banks in America. So that means there's 15,000 people at best in America that are even interested in this topic. So by kind of understanding what's the maximum population that exists, it helps you figure out, okay, well, who are we really trying to reach? And then how are they buying? What are they involved in? And we have gone and shown organizations where, like, look, your role of marketing inside the business is to go and provide the market intelligence so that your salespeople can go and, and handle that training and the education and that dialogue to be able to go and coach them to eventually buy your product or service. We've also gone to organizations, have gone and said, is, look, the market is at such a level of recognition and maturation that your salespeople are not the first point of contact. The prospective buyer is 60, 70, 80% through the buying journey before they're willing to talk to a sales representative. So the role of your sales representative is to make sure you don't lose the Interest that was there in the first place, they're there for the last mile of the transaction. So the mentality, the role that is there for sales, marketing, product channel partners has to be understood in what you're going and selling inside a winnable, addressable market. It's not just like do people care for it, how do they bring that process to life for themselves and can they go and sell that product? And if I may add one more thing, working with both kind of high growth companies, so call them the top quartile of growth in a sector versus the industry laggards that are kind of trying to get back to growth. So typically bottom quartile in terms of growth in the sector, it's the same issue. You're trying to go and figure out how to get the customer to understand your value proposition. The only difference is one is a smaller company trying to bite at the establishment. The other is the establishment trying to remain relevant in the face of more aggressive smaller competitors. But in the end, who's common to both, it's still the customer who's going to buy. Yeah.

That covers a lot of ground from the concept of the Wham to connecting with your prospective buyer and at what point and how. So that's a good segue to the Avasta client. Where does your work begin and end from a client's point of view? So I understand, of course, starting with wham and somehow getting, you know, you're delivering something, are you delivering a set of numbers? You know, how granular do you get? And then to your point about, all right, what happens when you start to get sales and sales organization salespeople and marketing and messaging involved, you know, where does your work end at that point?

Yeah. So I'll share a few things, like some of it kind of like from what we do at Avasta, which is really for organizations that want kind of that assurance in getting to understanding their sales opportunities or growth opportunities. But what I'm saying here is something most organizations can go and do for themselves. Like I like, yes, we have a competitive advantage, we have an aggregation of intelligence. But some of these are kind of basic principles just updated for the 21st century. So the first one that we go and take a look at is in our winnable, addressable, market intelligence approach is we first start with who's buying from you already and who's not buying from you. These are things that an organization can go and do for themselves. And I think the error that we're noticing in a lot of organizations is that only just looking at the current information. And what we forget is that people spend time buying stuff. There's no impulse purchases for enterprise software. All right? And even if like, like, like what's an impulse purchase? Oh, you know, I went and bought that chocolate bar just walking down the street. It's like, no, you didn't. You, you went and saw like the 711 or, or couchtard or something like that, and you walked in and you, you know, you wanted to go and, and just like, you know, satisfy Sweet Tooth and you went and got your favorite candy and you bought it and that was that. But like, there's not a lot of impulse purchase that happens that's there. So the first thing we figure out is like, why do people buy? And actually document that. I find a lot of organizations have stopped tracking why you buy, why their customers buy, and not why they buy your product, why they buy your type of product, and just get that understood. And what you end up getting is a series of questions that you go and ask. And all we're doing is asking those questions at scale, and then we're trying to figure out what is the same or different about the people who are answering them and the people who. And the answers that they go and give. And some of those answers already exist in your historical information that is there. So we've had a lot of people go and say, well, take a look at our current CRM and tell us who our winnable addressable market is. And we go and say, well, can you tell us what your CRM has been for the past three to five years? And they're like, what? And we're like, yeah, like, you know, can you help us understand who's been buying, who's been selling? And they're like, oh, well, we purge our CRM every two years. And I'm like, so you don't know who didn't end up buying from you two years and one day ago? They're like, no. And I'm like, well, that's a bit of a problem because you kind of want to keep track of where you have pretty reliable failures and where you have relatively consistent success. And I don't mean like guaranteed success, but I mean consistent success. So I'll give you an example for a company that we did this work without talking to any external buyers at all, just looking at their own data. We went, and this is one of our larger clients, and we identified that they won about one out of 100 agriculture businesses as customers. They were winning about one in four financial institutions as customers. Over the previous six years. So you go and take a look at it. It's like, that's pretty informative information for every. You know, a bank is 25 times as likely to go and purchase a product from you than an agricultural company. But you didn't see that looking at their current snapshot of their CRM. You only saw it as a time series over six years. Because the products that our client sells, some sales are done in five weeks, other sales are done in five years. And you need to understand that value over time. Because a salesperson's time in that organization is very expensive. It's also very valuable. So you want to be able to figure out what should the salespeople be focusing on at any time. And what we were able to articulate to them is like, look like, unless the agriculture company is coming to you and saying, we want to buy your product, how can we make it happen? Then you let them buy from you. It kind of is a good aside to what our winnable, addressable market tiers are. And it's only four. And the topmost tier is Demand Offer Fit. So we call them your tier one buyers in your category. These are people who would buy from a company such as yours because you meet their needs, or they know you and you meet their needs and you are a good vendor for them, or you have the perspective to be a good vendor for them. The second tier is you might have to give something, you might need to give on price, you might need to give on offer. You might need to kind of like, you know, beat out the number one that they're considering right now, the third. But it's still worth it for your salespeople to be involved in it and like, you know, target them as a customer base. The third tier is you can't afford to sell to them, but you can afford to let them buy from you. Meaning that don't try and pursue the sale, but if they're proactive, they're keeping themselves in the buying loop. Go and see it to the end. And then we have the fourth tier, which is don't sell to them and don't let them buy from you. And that one is very hard for a lot of organizations when we go and present that data to them. And what we've learned since starting Avasta and showing it to our clients is we know that value. We show the tiers, we show how many companies there are that would buy. We show that their approximate spend is your probability of winning it. And that fourth tier we've put it now at zero with all of our clients. And they're like, well, how much are they spending? We're like, nothing. And they're like, well, no, they must be spending something with our competition. You don't have competition, you have nothing. When nobody's willing to buy from you in a profitable way, they're not a customer. So that's that education aspect of it that we're having to kind of bring here and convey to people. So you answer these questions. And in the smaller organizations, we've been able to get it down to that. Between four and six questions that you go and answer yourself, you can figure out whether you should write that email, pick up that phone, send that LinkedIn message, and then you can very quickly identify another four to six questions that you want to get answered in that initial intake to figure out is it worth, you know, taking them to the next level or do you go and just stop the process right there? There's a company several years ago that we ran across that was doing this exceptionally well called Medallia. I don't know if you've heard of that company, but they're at the time they were like an enterprise level, kind of like employee and consumer or customer feedback platform that was there. And I remember I was kind of going and taking a look. I was like, oh, well, maybe we should go and use Medallion. And I didn't know enough about them at the time. So we go out, fill out the form and then we get into this BD intake call, business development intake call that was there. And they just asked us some Questions scheduled for 30 minutes, 8 minutes in. The lady that we were talking to, she's like, you know what? I don't think we're the vendor for you. And I was like, wait, what? I'm like. And she's like, I'd rather give you the 20 minutes back on the remainder of our call. And I was like, wow. Like that is a completely different kind of dynamic. And I occasionally run into other situations of it like there. But they had a down pat. They knew if you were too small, they knew if you weren't, you're probably not going to go and buy them because the questions that I went and answered weren't meeting it. So it was the first time I ran into an organization that had systemically gone and created that so robustly. And we're doing it themselves. So it was a wonderful validation for what we were doing on behalf of our clients.

That's very interesting. It's a perfect segue to just, just Another level or two down into the world of sales because that's, as you know, our ecosystem is sales leadership on the one side with our 900 plus professional roster of sales leaders and then our client base from low million 2 million in revenue to 50, 60 million in revenue. So I've heard you espouse that sales needs to be more strategic in early stage companies, more strategic than executional. So what do you really mean by that? What's an example? And an adjacent question is the risks in the sales role in today's environment. I mean, you're touching on these. How are sales leaders adapting or how do they need to adapt?

There's a couple of questions you asked in there that are really good. I'll address the strategic from three different standpoints. One standpoint from a strategic element is how do you prejudice your customer? And what that means is how do you very quickly eliminate being the vendor for them? So early stage companies, you want to figure out why they're not your customer, which is almost, it is contrarian, but it seems to kind of go against common sense of trying to figure out if they are your customer. And the reason for it is early stage companies have a much higher relative cost of failure if they don't get the customer versus a much larger one. So you want to reduce your failure incidents dramatically and that means you have to be much more prejudiced. So that's one. The second element of being strategic in sales has to be with who or what are you really competing against? And that would be like one of the types of questions that you'd want to be asking. Why are you here? So you're their $13 million, I don't know, services firm or $13 million technology firm or something like that. Why are you even on this call with this company? Why are they interested with you? And if you're like, well, we reached out to them, it's like, well, okay, great, why did they take the call? And you really want to get to that understanding right off the bat. And you need to understand, are you the first purchase or are you the replacement purchase? And I think that is not sufficiently understood in a lot of organization. Are you selling because they've never bought the category, or are you selling because they need to switch from what they already have? Severely understated understanding. We have a company that I was working with a number of years ago when we went and worked with them and we finished kind of like their whole market intelligence. And we went and learned that out of their target market, which is about 200 some thousand companies that kind of fit their profile, over 90% had already gone and bought that type of a solution. So that means that every single time that their salespeople went out there trying to sell, they were trying to sell to switchers. But the falsehood that was there, this was not a sales strategy issue. This was a business strategy issue. The business leadership thought, well, we only have like 6,7000 customers, so. And there's 200,000 companies like, my God, we have over 190,000 businesses to win. It's like, no, you have 190,000 businesses to convince that they bought from the wrong guy. And the third one in terms of strategically is what I call time value of money. And you got to figure out how long it will take that company to buy from you. And not enough consideration is being taken to how long it will take for them to buy before you get to revenue. And they might be a completely wonderful candidate, but they are 18 months away from being able to make a purchase. So it doesn't mean you ignore them, but you need to maybe go and consider. I don't think I can push them to go and meet year end. Right. And, and this is where you kind of get into the trap of trade offs, of like, well you know what, I really want to get this, I want to hit my quota. Etc. Well listen Andrew, I'm going to give you a 40% discount if you sign by the end of the year. And you'd be like, that's fantastic. I don't even know how I could go and ignore the fact that we're in December right now. But I mean, you know what I'm saying, right? Like it's like they may not be able to buy under any circumstance. And I think if you kind of hit those three, you will get to a lot of those fundamentals that is there. But I think that first one is like, why am I here? And it's a very big question. Look, we went and ran this on ourselves. We were one of our first customers. We ran our winnable addressable market exercise on ourselves and we very, very quickly learned when like we shouldn't even be getting certain types of phone calls or whatever the modern equivalent is. Like if we get a purchasing request for a company that fits this profile, there's something really weird going on and we've entered bizarro land.

These are great questions, great topics. I mean they resonate so much. I mean when I'm on calls in the back of my head I'm thinking, how do we get to A no. As quickly as possible.

Yes.

I know there's some, I think I saw some questions in the chat. It's just given the time, I think let's open up mics because I think there's questions here and I think perhaps a number of people want to ask you directly and engage for sure. So. So let's do that. Any, any hands up questions comments for Edgar?

I saw one in here. But how would we phrase these questions to kind of get to that short list that's there?

Yes, please.

You definitely want to go and put them into almost interactive language that is there. And the easiest way that I've kind of gone and seen it and I recall I covered twofold. One is before you pick up the phone or send the email and the other one is after. So that first set of questions really needs to be through a deep diagnostic of what you're already doing inside the business. So I'll give you an example for one of our clients that was selling to SMBs, small and medium sized businesses. What we were able to go and work with them to identify was that a very small percentage of businesses below a million dollars were ultimately able to buy what they were selling and they weren't selling anything prohibitively expensive. The issue was, is that there wasn't enough occasions in a business of that size to use and get the full value out of the product. So people would buy and then they wouldn't renew. So the whole. And, and if you really looked at it like, you know, it took more than a year to kind of recover the total cost of trying to acquire a customer. So you really wanted people to reliably sign up for a year, two years, three years if you could. So one of the things that we went and figured out was like, well, if they don't have a headcount of at least X and they don't have a revenue of at least Y, don't bother reaching out to them. And it just seems like so common sense, so simple. But again, if you looked at the CRM as it was, you couldn't tell it because the CRM is the current live state. You have to look at the overtime data. Another question that we went and checked in advance was this was very helpful and kind of was not in their inherent wheelhouse of data, but you could get it publicly, which was how many competitors were around your customer. Right. So they're selling to SMBs which are typically serving local or regional end businesses or consumers in that case. And we just went and show them. It's like like how many competitors do your customers, your prospective customers have around them? And what we were able to identify is that the more competitors they had, the more likely the sale went through because they were looking for differentiation. And that's what our client was able to give to them. So they're not a standard list of questions, but it's a standard grouping of questions, which is like minimum viable business size. How would they be able to differentiate themselves by being able to buy your product or service? And these are all just questions to go and ask in advance. That was there. And then on the other side of the question, it was as simple as, hey, have you dealt with this type of problem or situation before? And if they're like, nope, it's like, are you experiencing things like X, Y or Z? It's like, nope, it's like, all right, highly unlikely that they are looking for a solution. They're just not experiencing this type of situation at all. And just rapid fire questions. Typically the sales reps are able to kind of get it, or business development reps are able to figure out in less than 10 minutes. And it was just a. Just a crisp, clean set of questions. They didn't sell anything. They were just going and asking if the customer would need to buy.

You. You clearly distinguish between helping a customer or a prospect buy and selling.

Yeah, but selling has evolved. We use the same term, but it doesn't mean what it did, what it meant in the 50s, 60s, 70s, or 80s. Heck, it's not even what it was in the 90s when we went and enshrined it in a bunch of movies. Sensationalizing great sellers and stuff like that, like ABC always be closing. That's not really 2024, 2025.

Tell me this pencil.

Exactly. I think we have another question here from Bruce.

Hey, Edgar.

Hey.

You know, this was very insightful, but let me ask you a question, please. If you've got a sales force that has a good marketing force, most of this is already done for you, and it's just a matter of calculating the future values, Is that correct? Because, you know the questions here, we're talking about sales and so forth. It seems like it's a new company that's stumbling around trying to figure out how to sell because it doesn't sound like there's much thought or experience in that. Right.

Bruce, you're being very generous to older clients of ours that have forgotten how to sell.

Oh my gosh, that's scary.

Yes. And, and we, and, and that's what I would say is kind of like the common theme that we've discovered in the bottom quartile of growth in a sector. We've worked with a lot of technology firms, industrial firms, tech enabled services firms like R and D led manufacturers that are there. One of our earlier clients was, was fascinatingly cool R and D driven company. They had had their best eight year stretch in the history in the four decade plus history of the company. They were giving bonuses out every year to salespeople. All the employees they were doing really, really good. And then all of a sudden in a span of about 6 months, it all dried up and we got referred in and we went and started figuring out what was going on. And to keep the story short, in eight years they had lost 40% market share. The sector had been growing at almost double the rate that our client had. Our client relative to its own metrics was performing fantastic relative to industry metrics was doing horrible. And why did the well dry up? Because there was two major M and as that happened in their space and all of a sudden there was major vendor consolidation and both companies just came in and said hey, we just went and bought our competitors. You know, why are you buying from eight, nine different vendors just buy from us, right? They did a roll up, they did a roll up and our client was an independent and boom, they failed. Now were we able to help them for sure because we helped them identify who was in their winnable addressable market and their winnable addressable market. It was actually very funny. How we did it is we helped identify that they still had buyers in their data set but they started bypassing procurement. And what they did is they just priced everything instead of pricing on buy. 3 months of supply by subscription and they ate the shipment cost and then the subscription could be afforded by the individual site engineer. So he would just go and buy these. They're durables, but they were kind of consumables in terms of equipment that was there. And this is a very, very cool company. And two, three years later they kind of got back onto the growth curve and sold themselves for twice as much as what they were worth when we started working with them. So but again it's kind of, I'm going to that point that's there.

Yeah, it's important to keep an eye on the market regardless of who you are, how you're doing. It reminds me of the death of a salesman upgraded to a company. Right. Because the company lost the way instead of a salesman.

Yeah, yeah, yeah. No it's, it's. You pointed to it so it's, this does apply for a lot of organizations. And like I gotta emphasize that companies that, who are struggling to meet demand, they don't need to worry about the winnable addressable market. Right. They've caught lightning in a bottle. Yeah, okay. But that is very few companies that are out there. A lot of our work ties into strategic valuation in identifying the future growth potential that is there. Which is kind of like your original question here, Bruce, is understanding how much of the market is at play at any given rolling cycle. So we do measure what is the industry buying cycle, which is separate from your sales cycle. So it might take you on average four months to sell, but it might take on average 10 to 12 months to buy. But we also go and measure how long does it take to consume or replace. One of the companies we were working with for quite some time here at Avasta, they had a 15 year replacement cycle. Oh my gosh. Right. So once you bought something, you didn't need to replace the underlying equipment for 15 years, but the services side, the parts side, the maintenance side, so the role of sales, customer success enablement, that all shifted. Right. And what they missed out on was how far in advance of that 15 year life cycle they needed to start marketing to those existing customers or competitors customers. And it was a lot further in advance than the salesperson checking things out. You had to be three, four years out on a 15 year replacement cycle.

But that's where you have to, you have to look at the life of your product and the, and the product parts and service and find that balance where you don't make it so good that you price yourself out of the market and the repeat is too far down the road.

Yeah. And Bruce, what you're pointing to is it's just that lack of systemicness. Not enough people are asking these questions. There's a lot of like, look, I ask a lot of executives that we work with, like, do you know why your customers buy? And many of them are unable to go and answer that question.

You're kidding.

Yeah. They don't know.

Well, well, that tells you a few things that none of them are good. There's a few messages in there.

There's a lot of inertia that is there. Founder led companies are typically a lot better. But even in smaller companies that are there, like, you know, people that you fall into the trap of abstraction of the business. You go and take a look at the financial statements, like, oh, look at this good $8 million in revenue, $1.5 million bottom line. Oh my Gosh, it's a fantastic business. Let's go and buy it and run it. And then you get in, you start running it. It's like so, so why do we make money? So it's all tied, right? Whether you're the business owner, the president, the head of sales, the sales rep, the marketer, the customer success person, the person who goes and mops the floors. Like you kind of need to know why you make like why do you make money that goes and pays your compensation? And, and we're losing it. And look like this is not like something that I've had like some kind of an epiphany for 25 years. I had to go and lear lesson myself as a, as a business founder and owner. So I've experienced many of the things running my own company that I've kind of gotten espoused. The difference is we've systematized it, right?

Yeah, you systematized and you understand it and you've got a system that matches your business that may not match the next business because it's different.

That's, that's exactly it. And that's I think is the big falsehood that is there. People go into case based business management, they're like, oh, I look at, well, look at this other company and you know how they succeeded? Let's go and emulate that. It's like, yeah, but they don't have the same customer base, they didn't sell the same product.

It doesn't work.

Yeah, yeah, that's exactly it. So thank you.

Thank you, Edgar.

You're welcome.

I have another 25 questions but we don't have time for that. This is really, really interesting. You just touch on founder led sales for a second, Edgar. And you know, custom larger companies on the flip side who have forgotten how to sell. Right. That was in your, that fourth.

Yeah.

Lower. Right. Quartile.

Yeah.

I mean we, we within Vendex, we're talking to prospect prospective customers in early stage companies, founder led situations. Everybody has built a better mousetrap but they don't know how to sell, they don't know how to communicate that value proposition. What problems out there in the world is that mousetrap fixing and why should customers buy from them? So it's in a way it's the same problem on the other side of the coin.

Yeah, I would say probably in the earlier stage companies, the most critical one to understand is are people buying for the first time so they're buying organically or are they buying to replace something that isn't Meeting their wants or needs or requirements. And I think that's often overlooked. People are very passionate about what they've gone and developed and why they're there. Like, like we're very clear at Avasta. We are in an older, like the slow growth companies. We are pretty much never the first phone call, usually another management consultancy or change management or business transformation organization goes in there and they bungle things up and then they're like, okay, we clearly didn't have a good enough understanding. We get a phone call in earlier stage companies. We are typically working with organizations that have leadership that is responsible and conscious of their day to day requirements. But what they are wanting to know is like, what do I need to do today or start in motion today to reap the rewards two to five years from now. And you know, one of my favorite Jeff Bezos quotes, it's over a decade old now, but he was on a, on a third quarter earnings call and Amazon had just completely blown every single Wall street analyst out of the water. They had had a record, record quarter and there's one analyst, and I'm paraphrasing and probably butchering it, but gets on the call and says, Jeff, what did you guys do in the past quarter to get these results? And Jeff said nothing. Everything was put in motion a year and a half ago. And this is, I would say it just hit me so hard because I was on Wall street when Amazon IPO'd. I went and put it into my little Yahoo portfolio at that time and things like that. And so I've always kind of kept track of the mentality and model that's there. I'd say the second one that I'd kind of go and put forth that I think is just paying its dividends week in, week out is a quote from Charlie Munger. Rest in peace. Show me the incentive and I will show you the outcome. And if you can figure out, and I apply that to kind of like, you know, why are they buying? Show me the incentive for you being on the call with this company who might buy from you. Like, what's their incentive in talking to you? What will they get? They're going to get a boss off their backs because they finally fixed the problem that's been there for three years or, you know, whatever the heck it may be. So if you kind of, kind of get those first steps of the whys and doing it in a systemic way, and it's not always one why, which I think is also the trap that we have is there's sometimes Multiple whys and you just kind of figure out how to kind of bring them all together. So that's what I kind of look at it from. A strategic understanding of your customer.

Wonderful. There are so many quotes also on asking the right questions. Right. If you want certain information, ask the questions to get that information. So sometimes we, we forget about asking the right questions. It only takes a couple. So in the interest of time, Edgar. So here we have a number of people live, they're listening and then people will be listening into the recording. If folks want to follow up with you, connect, you know, how do people connect with you and any parting words of wisdom and then we'll wrap up.

Perfect. Probably two best ways. One is just email me, it's Edgar edgarvasta co not.comco. you can also just add me on LinkedIn. And if you really want to be bold and I encourage it, press the book an appointment button and just, you know, send the COVID note saying you, you heard the Vendax webinar and you're interested in what we were talking about and want to have a longer conversation. And I'm happy to offer, you know, a complimentary, you know, 30 minute intake and a 10 minute assessment that'll be sent back via video about what you're kind of dealing with or how to tackle this problem that's there. All we've done is built a business that systemically and robustly solves these questions that many can in part answer themselves. We just, we're proud of how good we're at what we do.

That's very generous of you. Thank you very, very much, Edgar. I thoroughly enjoyed this conversation and I look Forward to around 2 at some point in the new year. In the meantime, very, very happy holiday wishes to you, your family team. Very much appreciate your time and insights. I certainly have light bulbs that have gone off in my head and we'll see you again in 2025. Thank you so much and thank everybody for being here and your participation. Happy holiday wishes to you and, and all of our extended Vendu family. All the best.

Take care.

Thank you.

Thank you.