The Transaction

You know, Matt, by the way, for the purposes of this, no, the other Matt, hold on, we're gonna have to clear this up.

Yes.

Matt H.

Oh, that's even tricky in and of itself.

Actually, that didn't help me at all.

I mean, it got us closer to make sure that we don't talk over each other.

All right, so, Matt Amundson.

Yes, Craig.

I was just talking about with Matt Harney how cool it is that I was able to, I read his stuff and then reached out to him on Twitter.

That's only, I've only tried that maybe four times and he responded and I was so excited.

It was like an SDR reaching out to a high target account and I was like, yes, awesome.

You got the meeting.

From ABM to PLG, from Meddic to Meddpicc, the world of business is constantly evolving.

We'll cover the who, what, where, when, why, and most importantly, how you get the transaction.

I'm Matt Amundson and he's Craig Rosenberg.

Let's get started.

Today on this show, I'm gonna do the rare change to the intro.

Whoa.

Just cause Matt Harney, I know, but he's got so much going on that Matt, what I know of you will just lay this out is, I read that your newsletter, I follow you on Twitter.

And so I'm taking your content all the time, but actually I'm just meeting you today.

And so I would love it for the audience and for me, frankly, if you were gonna describe you and what you're up to in five sentences, what would that be?

It can be six or four.

It can be seven.

No, no, seven max, four to seven, four to seven.

Go for it.

The best way to describe it would be someone who's just very, very passionate about the business of software, stumbled into it as an investor in private equity and uncovered some like data models and just loved the transparency and the benchmarks in this industry and kind of been in a good place to build something I want and that particularly fits me.

And that's a boutique software analyst firm and that's data, that's quadrants, that's indices, that's content like our newsletter or our podcasts, all of which just channel into my passion for the business of software.

And we like to just publish the best possible research we can, whether that's data or quadrants or a newsletter and get to have conversations like this because this is what I'm passionate about.

Perfect.

I didn't count the sentences, but that was short.

And sweet and impactful.

Your thoughts, Matt?

Yeah, I'm gonna have to go ahead and agree with your assessment there, Craig.

And for a master of Twitter, it makes sense that he's able to keep it short and sweet.

So we love it.

I am going to get to know Matt Harney before we get gone.

I'm gonna ask a couple of questions off the Colbert Questionert.

Oh yeah, we talked about that last episode.

I like it.

Yes, yes.

Do you know what that is, Matt Harney?

No idea.

Neither did we, but we had Dave Brock, he's like a sales expert, and he was talking about doing discovery and how like he had sort of taken from this thing called the Colbert Questionert.

Okay, and what that is is Stephen Colbert during his COVID shows had created this 15 question, questionnaire that he would ask his guests.

It's like, it's just, it's pretty cool.

So anyway, but I'm not gonna ask you all 15.

I'm just gonna get to know you by asking a couple.

So what is the scariest animal?

That's question number three.

Snake, maybe a hyena or I don't know.

There's all these other very powerful animals that I just don't even think of day to day.

Snake scares me.

I'm a trail runner and I hate it when I see them.

See, that was good.

The hyenas, by the way, I have nightmares of hyenas I've seen attack things on Instagram.

Yeah, have you ever asked someone for their autograph?

Oh yeah, when I was a kid, I was really into baseball cards and I remember the dream team, 1992 was in San Diego where I'm from and they were training in La Jolla and I literally was sneaking around the hotel like evading security and I got Chris Mullin's autograph.

Nice.

Are you serious?

God, see, like the Colbert Questioner doesn't disappoint.

And there, right, because they had, they trained against the college players and I was super into basketball, I still am.

And Anfernee Hardaway and Chris Webber were there, right?

But most of the people there were just looking for Scottie Pippen, Michael Jordan, and those guys were like juniors in college.

And I recognized them and I had them sign my T-shirt, right?

And Penny Hardaway was like very happy to have someone recognize him.

He's like the star of the NBA finals and the Nike lead spokesman.

Okay, that's it for the Colbert Questioner.

That was too perfect.

Yeah, yeah, I mean, that's the kind of stories we like.

Plus the sneaking around thing.

I just, my kids sneak around to try to do stuff like that.

I wish they were even more aggressive than that.

That's awesome.

And by the way, I love Penny Hardaway.

Yeah, he was awesome.

Yeah, there's a lot of people that have admiration for him, but I'm not sure he's remembered for how dynamic he was.

Yeah, you had to have been there with the commercials, with the figuring, reading Slam Magazine in 1995, because we did not have internet, right?

And so you were that age on a Friday night, you know what I mean?

You might just be flipping through a magazine again, like there was no Twitter, there was no 19 NBA podcast.

You just had a few magazines to read again and again and obsess over these people.

Also, Penny Hardaway, also the star of Blue Chips?

Yeah, played.

Exactly.

Butch McCray, Butch McCray.

Oh, and even with the name.

All right, we're gonna get complaints about talking about sports too much, but Harney, we wanna start the conversation by laying this out and then I'm gonna ask you and then I'm just gonna be quiet and hear what you have to say, which is what's something today that the market thinks they're doing right is a standard best practice and methodology or what's even happening in the market where they're wrong and they should be thinking about it differently?

Minor things, and this comes from our research practice at Cloud Ratings, making quadrants, digital sales rooms and demo automation, right?

They seem well adopted, but when you look at the revenue figures of the vendors, which we're able to look at through our request for information process and the growth rates, those markets are still very nascent, right?

And you're still early in the cycle, but when you use those tools, we evaluate them.

They're very, very powerful from a buyer experience perspective.

On the demo automation side, this trend towards the self-educated buyer, Gartner stat, 83% of the sales cycle occurs independent of sales, right?

And people want to consume and educate themselves without being involved in sales.

And that also just generally the buyer experience of that, right?

Like the smoothness, the lack of frustration, maybe you submit a lead form and someone takes 36 hours to get back to you or you've been burned enough times that you're gonna get texts on your mobile for the next eight months.

You mean, but you just wanna see what it looks like.

So demo automation, digital sales rooms, very powerful.

And then when I look at the revenue size, the TAM right now, I would argue they're under adopted.

But my strongest point of view is the lack of value selling in the software industry, right?

It's there, but approximately 25% of companies under 100 million of ARR use value selling.

And that's so like supported by some work, Price Intelligently, Patrick Campbell's firm that's now part of Paddle did.

And it's consistent with what we see at cloud ratings.

We have a ROI practice and as we were mapping some of that out did some basic research evaluating private equity backed companies.

And only 10% of them have an ROI calculator on their website, right?

And we think of like ROI as like particularly cost effective, defend price, a best practice that private equity firms who are gonna be leaning on a different playbook than someone going go big, go home.

We're gonna be at every trade show.

We're gonna have our own media brand and podcasts and videos and this.

It's like what's the leanest meanest way to sell and it's based on ROI.

And I don't think enough people do it.

And I think there are good reasons for it.

It's hard to get to the last mile.

Everyone can get to 85 or 90% of the way there, but collaboration, single pane of glass, this or that.

But it's the last 10% and quantifying it.

And this was the biggest single learning I had in private equity.

The quick context there was worked in large cap private equity at Aries Management.

It was one of the first associates across a range of industries, energy, oil, oil and gas, construction, media, right?

And a lot of distress situations.

And with a partner decided we were gonna start our own firm.

This was before fundless sponsors and acquisition by entrepreneurship.

All that was a real industry.

Like we were some of the only people doing this.

It was 2009, right after the financial crisis.

No background in technology whatsoever.

We were just deal guys, young investment bankers.

And we ended up stumbling into software through some, you know, just basic criteria around recurring revenue, interesting businesses at a size we could acquire, you know, fundamental characteristics.

So we met with hundreds of software companies or evaluated hundreds of software companies at least.

And a consistent theme, and this was because we didn't know what we were doing.

We brought everything back to the customer unit economics.

What did the customer get from buying the software?

Because that's what we could understand.

And we needed to know that for understanding retention, pricing, just the general value proposition.

So we would walk through management teams like, oh, this has time savings.

Well, how much?

Is it 20% or is it 40%?

Who are the people who are using, what are they paid?

Right?

And you can go figure some of this out without having someone tell it to you.

But it was remarkable how few people could do that.

Just very few, they could talk, but when it came, do you have an ROI model?

And we saw this with companies we acquired, right?

And it worked remarkably effective.

When I kind of had to step in and have a bit of a sales management role, right?

I was seeing what our reps were using, right?

And this company had been there for, I think it was 12 years at the time when we acquired them, did not have anything to do with ROI.

And that question had been coming up again and again.

And there were some nuances to the product and you would have to look at the product analytics to really tease out.

You know, and it was dealing in areas like regulation and insurance, you know, well-meaning reps, but they were not gonna do this by themselves, like go build it one page ROI analysis PDF, right?

And for the marketing department, like quantification was not their skill set.

And so to weave all of this together is a really, really powerful exercise, right?

Getting really, really specific, like you can zoom in and then you can zoom out.

You can go back and talk about collaboration and single pane of glass, but it really helps to get specific.

And there's a lot of learnings in that.

Even if you don't have an ROI calculator on your site, even if you don't use value selling, go do the work because there's a lot of learnings on pricing or just what really drives things for your customers.

And you doing that work, we were working with a vendor recently on ROI.

And once we laid out the calculator and they have like the good fortune of working with some truly like global 100 type companies, but still selling them the software at the same price, a middle market company realistically uses.

And the level of value that they were giving that size of customer was absurd, right?

And that's something they had not thought of, right?

They knew, okay, of course, these big companies get a bit more value, but when you map it out, it was extreme.

And that they should start thinking about how do we segment?

How do we price at this level?

And so there's a lot of learnings too, like that just come out of this, right?

So you can better do your go to market.

And then there's things you can do from messaging in your cold outbound, right?

There's, give you an example, there's a lot of supply chain or purchasing type software, right?

If we help your tailspend, cut your tailspend 15%, what have you.

Well, in today's world with Zoom info and all these estimates around employees or revenue estimates, you can create cold outbound saying like, hey, based on our benchmarks, we think we can save you XYZ lumber supply, 8.23 million dollars, right?

Specifically.

And here's the math.

Do you want to talk about it?

Right.

That is the compelling piece for me because what just for our audience, Matt's talking about, so first of all, let me actually, let me back up.

When you're talking about value selling, you mean against quantitative value or value selling in general?

Both.

I'm less of a practitioner.

And so I think like my unique insight is the quantification.

Yes.

There's, you know, value and negotiation and that's best left for like true sales, enterprise sales experts who've been in that seat.

My unique insight is lean heavily on the quantification or at least do the work to help frame all these other activities.

Yes.

Perfect.

Okay.

So I have a whole bunch of things I want to recap and then have you re-comment on.

You got me right there.

I love what you just said, cause honestly like a lot of times, so blind ROI in my opinion, general ROI, like the thing on your website, like 20% doesn't work.

But what you described does, right?

Which is like, can we have a rubric where I could write to the lumber company and say, based on what I know about your business, I think I could drive 8% higher revenue for you or so, you know, whatever that is.

That's personalized and it's a challenge.

We just had, we just talked about Dave Brock a minute ago, but like he had this story.

It's very similar to yours.

He was working with a company, a big old Fortune 500 company.

They couldn't make any ground.

They were going to lose the deal.

And he said, let me take a shot.

And he went in there and he walked in and said, based on what I knew about your business, you're losing $1.8 billion a year.

And the guy said, you don't know my business.

You're wrong.

Let me show you.

And he went on the board.

He said, we're actually losing double that.

And they got the deal.

But the main point is, is like, as we try to find ways to engage what Matt Harney's talking about here, that's brilliant.

That is like, can I look at your, do I understand my business enough and how you can quantify the wins and understand what it is about the customer that they have that would allow us to quantify it?

And can I use that as the basis for us even bringing it forward and having, that's a personalized outreach that basically what I see from you, I can do this for you.

That was, I just had to stop and just point that out, Matt.

So that was brilliant.

First of all, before I go back even further into what you just said, any comments on what I just said about what you just said?

I appreciate it.

And I think having those conversations early are also helpful.

Ebsta, Guy Rubin's firm, Revenue Intelligence, just had this great benchmark study of 50 billion of revenue, right?

And the difference between the top performers and the average performers, so much of it was discussing ROI up front, right?

And actually the top performers regularly qualify out prospects that do not have sufficient pain or would not have sufficient ROI.

Whereas the under performers, right?

You see all of these deals break down in the negotiation stage.

And one of the biggest breakdown points is ROI, right?

Because they delay this quantification because it's hard, it's hard.

It takes work, right?

Where to go figure that out for the lumber company or just the level of expertise you need to know, you know, the drivers and the benchmarks and getting that, you know, is hard.

And so it can be deferred to, you know, after the buying committee has gone through work and you've gone through various discussions and at the final stage, it's insufficient pain or what have you.

I would encourage you to look at, you know, the EBSDA report pavilion, it's on my newsletter, but I think the biggest thing that stood out to me was emphasizing, you know, the ROI and pain points early.

And relative to what we were just discussing involving that, like quantification in your sales, I would imagine, again, not a practitioner, imagine that really helps.

Yeah, you're leading with quantifiable value.

But before we go back to that, because this is a go-to-market show, so that was a great go-to-market insight from a guy who's not a practitioner, I love it.

You actually said something that I think is healthy company-wide, because when you were telling the story, so just to be clear, back then, you were just a banker and P, not just, you were a banker and P, and you went out and analyzed hundreds of software companies or had that, you know, you went through and had the conversations with them and maybe looked deeply at them as a potential investment.

And you realized that the vast majority of them hadn't figured out their own quantifiable value to the customer.

And that actually, I think, is, you know, take go to market aside.

That's a really great insight for every company.

It's like, that's an exercise you should do and should be able to think about in the right way.

If I go back to the Dave Brock story, you know, he does this thing too, like, you know, like you're recommending, where he figures out all the factors that drive quantifiable value and always uses that.

But if you can't figure out those factors and what they mean, because that process actually allows you to deeply understand who your customers are and how that translated into quantifiable value and everyone knows that the product engineering, HR, I don't care, that it was a help.

Like, I know you were just going through your contextual story there, but that was a really healthy recommendation, which you're basically saying, look, I went out there and if you moat the vast majority of people couldn't talk about that, that actually from a building a company perspective was a great insight as well.

So just wanted to back up on that.

And just kind of at a broader thing, I think this is very important for the software industry.

It's remarkably transparent.

We talk about, you know, NRR, PLG, customer success, all these things.

To me, it's surprising how little there is on ROI.

And I think it should be like a point of pride, right?

You get, you know, 6X back when you use our product.

There's two month payback, right?

People, and you know, that would be great, right?

If that were more of this industry, because it also reflects, like, all of these things exist for a reason, right?

And it's to serve customers, right?

You have to earn your way.

And it all comes back to like, what do customers get from the software?

And the good news is software has strong ROI.

If you map it out and do studies, right, it should be 3 to 4X, even for mature, fully priced products, right?

And that's why, you know, it works.

Automation works, right?

Cutting labor expense works.

Increasing revenue, all of this works.

And there's a reason software continues to grow and grow, is it has positive ROI.

But I think as an industry, people would benefit and companies would benefit from really making that, you know, as Craig was saying, like a point of pride, right?

And something that across the organization, you know, engineering, success, HR, communication, like we're a two month payback type of company, right?

Where it just get like, you know, you buy us two months, you've covered your costs because we're that good.

Matt, let me ask you a question because I think a lot of software companies have fallen into the trap of solution selling, right?

Because people come to them looking to solve a use case.

And so oftentimes they don't go the extra mile of thinking about ROI for a few reasons.

One, I suspect mostly it's hard to quantify ROI when you're talking about efficiency gain within a department or an organization.

Like, hey, I'm gonna solve, you know, I'm gonna save your engineering team, you know, 30 hours a month or whatnot.

And like maybe quantified in those terms, it doesn't sound great, right?

Because you're like, eh, 30 hours a month, like, you know, whatever, unless you then go and say, well, the average cost of an engineer is this, quantified across 30 hours in a month, like that's pretty significant saving over a 12 month period.

But I think some people feel like that's maybe too big of a stretch.

And so buyers are like, eh, I don't know, but like your data seems to suggest otherwise.

So I'd love to hear your thoughts on people who are reticent to create ROI calculators around things like time back and efficiency gain.

But, you know, as you were saying it, I was thinking you've effectively spelled out the ROI.

Just tell me the cost of the software, but like, you know, 30 hours a month of an engineer at 200,000 a year, and these businesses, you know, across their budget used to adding 130% load factor.

So it's the guy's closer to 250 or gal is closer, 30 hour.

Right, that's powerful by itself, right?

And it doesn't need to be 300X ROI, right?

It can be far, far more modest, but it's still powerful when you think of, you know, someone who owns a budget, owns a function, right?

You know, incremental gains, that stuff adds up.

And the bigger point is you just did it, right?

Anyone can do that, as long as they orient as this is something I should do.

And then secondary question, a lot of people will wait to have some kind of third party validation around this, like the classic Forrester total economic impact report.

Do you think it's as important now, or maybe it never was important to have it validated by a third party?

Or do you think buyers are willing to accept, especially if you have the capacity to walk them through how you got to that ROI model, or ROI results, that you do it just internally?

We're a bit biased because we do have that product offering, and we call it true ROI.

And the reason we created it is simply because it doesn't exist in the market.

There are a handful of batiks, nucleus research, which you might or might not have heard of, as kind of established, built the 10, 15 person firm around it, and a few other things.

But by and large, right, there are no third party analyst reports in the market other than Total Economic Impact.

And if you look at the universe who buys those, it literally is Microsoft, CrowdStrike, Oracle, that level of company, right?

And the price point is commensurate with that.

And I think for a lot of middle market or companies that just aren't in kind of forester's universe, right, are underserved by that.

But I think buyers would benefit from it.

And there are just some research out there in terms of how buyers perceive vendor content.

And also just the incentives, right?

Everything we produce, right?

Like my name is on it, my email is on it.

I'm not just going to rubber stamp whatever product marketing tells me.

Like we go speak with customers.

And I think there's real value in that.

And there's a bit of blindness too.

Like through our quadrant practice, we're on a lot of vendor websites.

And everything blends together.

Everyone follows your brand guidelines and it looks beautiful.

But a lot of these vendor case studies blend in and having some third party content, you know, proper analysts for our, can stand out and can be helpful.

The Transaction is presented by Ringmaster, the go-to branded podcast team.

You know, when Craig and I were thinking of starting this podcast, we had all the ideas in the world.

But you know, all the ideas in the world won't get you a great podcast.

That's where Ringmaster comes in.

They handle the creative, book guests, and do all the production for the podcast so we can focus on what we do best, talk to one another and our amazing guests.

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I wanted to actually just, if you guys don't mind, because I did not pick up what you were talking about when we kicked off before you jumped into the value selling.

So on this, we asked the question on something surprising that you were talking about deal rooms and demo automation.

Was your point there that the market thinks those are hot markets and they're really not, or what was your point around that tech?

Sorry about that, I just wanna make sure.

And it was more of a recommendation of something I think is underused.

I'm not enough of a practitioner to have a viewpoint on what's hot and is not working.

I guess just from my own experience here would say, if you're gonna do a podcast, don't count on it generating leads and deal flow or whatever metric or KPI for at least 12 or 18 months.

Like because it sounds like this is something you should be doing and it's great, but if you look at downloads and conversions and everything, like I was telling a friend who's a board and a couple of private equity companies, like what his portfolio should be doing.

And I was like, if they ever come to you with a podcast, it's gonna be two years before it does anything.

Yeah, so okay, good to know.

Except for this podcast, because now that we have you, to the moon, baby.

Hey, we'll just have to look at the ROI of the good data later.

I wanted to ask you this, just like, I'm actually, I may or may not be moving off the go-to-market side, but like, with all the data that you have about the SaaS market in general, what's the most, like, what data point could you share with the audience that would surprise them the most across anything?

See, this is a tough, tough question.

I know, I asked the tough, I'm the Walter Cronkite of B2B Sales and Marketing Podcast.

What surprised you the most, Matt?

How much everyone's gotten used to these high revenue multiples, right?

It's been fascinating to me to watch, you know, as everything came out of that 2021 cycle, 2022, right?

And now, like, this whole stream of investors are willing to go, like, on the internet and complain about six and seven times revenue multiples, right, which are actually quite high, right?

If you look at the ultimate cashflow generation profile of most of these software companies, and many of them won't realize that cashflow potential, what that implies relative to the, you know, they're high quality businesses, but are they, you know, generational franchise quality businesses?

In a lot of cases, no, that, you know, six, seven times revenue is pretty powerful.

And I think, like, just like ROI is, like, you gotta frame, like, what everyone's doing here, right?

And then, you know, if you're paid in stock or you have to deliver a certain plan, just valuation really matters.

And, you know, you shouldn't take it for granted that you're gonna be able to raise capital at these just phenomenal valuations to go deliver.

Because also another thing, like stepping outside of software, I'm, you know, a generalist investor and a big investor for a long time, is that these are fundamentally small businesses, right?

In the software world, everyone can be, oh, they're crushing, they're killing it.

You know, there's 20 million of ARR, like 50 million ARR.

To the public markets, that's irrelevant.

You know, you might need to be more efficient or more disciplined.

You know, with your studying of the SaaS market, that was a good one in terms of a surprising sort of, that was actually a surprising reaction to data, which I think is a great way to answer that question.

If you had to sum up sort of three things that positive, negative, whatever, that are happening today in SaaS based on you watching the market the way you do, what would be those like big takeaways?

On the AI side, the level of interest has been underwhelming from incumbents.

And we track that data very closely across like 340 incumbent SaaS companies.

And it had a kind of feature related spike in 2023.

And just broadly speaking, even across AI natives, the results just from a buyer interest have been a bit disappointing relative to all of these expectations.

Because if you had really, really strong positive word of mouth, you would see these trends accelerating.

There's like health in all of these metrics.

But again, it's relative to the enthusiasm and what we're seeing in the public equity markets around how large AI will be.

So we're arriving at a bit of an air pocket.

If you look at the public companies, what's been disclosed financially in terms of the quantifiable dollar impact and revenue that will be generated from AI, like Zoom info, even like ServiceNow, right?

It's just, there's some of the few who are even hinting at it, but it's relatively limited.

That said, I'm incredibly excited about AI.

What it means for, I recently had my newsletter, some slides, my view of the state of the industry.

I talk about SaaS as a maturing growth industry, and things getting more crowded, and all the challenges we're familiar with.

And absent AI, I would be relatively concerned, but it's still a growth industry.

Like SaaS is gonna grow 19% this year according to Gartner.

That's incredibly healthy, but it's maturing.

It's not 35%.

Having said that, AI presents this incredible second leg of a journey, right?

And it opens up all of these vectors for growth and use cases and abilities to create value for customers, which creates revenue.

And so like long-term, right?

Because the gains from like automation, right?

And taking on more of the work and capturing some of that value or sharing that value with the customer is just incredible, right?

As you know, models are gonna evolve, some incumbents are gonna be disrupted.

Some incumbents will actually like accelerate their leads, right?

And it's exciting.

And I think it's, but you know, you have to watch it carefully, right?

And it might not appear in all industries, right?

It might turn out AI is actually, you know, seems great, but when you go do the work, it's underwhelming.

But in others, it will be incredibly powerful.

And so it should be exciting.

And I think I stopped answering your question at some point in that.

That's okay.

Yeah, well, good.

But just going back to, cause I wasn't, so the incumbent software vendors are not generating the type of growth because of AI, or you're saying that they aren't even investing enough in AI.

What would you say?

How are you describing that?

I would say we track that through our B2B AI interest index, and that's based on Google search data for 340 companies.

And what I would see is that incumbent vendors like Zoom or Asana or Workday or what have you had a spike in 2023 and it's dissipated.

And a lot of that spike has been around feature releases or announcements, right, but from a word of mouth perspective, you should see those things accelerating and they're actually slightly declining month over month, right, and some of the growth has been more at the thematic category level, like supply chain AI or office of the CFO AI is growing well, but it's actually like for the incumbent vendors, it's been underwhelming.

It's still early and people are rolling out the features and I think my handful of experiences with products we use is it's generally still early and a lot of these things are kind of experimental features that they're definitely not compound features.

It's something we talk about is that a lot of AI right now is at the individual user productivity level and calendly like gains, right, like how much does calendly help you?

It's kind of in the background saves you this or that, but in terms of like what B2B software really is, is stacking workflows and use cases and reporting and automations all together into like a truly value added solution.

And it's too early for that because those things just have not been built with a few exceptions where like AI fits really, really well amongst some natives.

But broadly speaking, it's hard for, you know, a large B2B vendor to implement that on the fly.

Got it.

Okay, that's a big takeaway.

It doesn't, it doesn't feel like, but even at the street level, Craig, like it feels like what he's saying is true.

You know what I mean?

It's like, we get really excited about AI features as they come out, they get a lot of attention, they get a lot of clicks and eyeballs.

But I think like, as I chat to many of my peers, it's still, we're still a ways away from it being truly incorporated and having it not necessarily feel like a magic trick, which is like the way I think a lot of people are consuming AI today is like, they're looking at it and they're saying, yes, this is interesting and they'll use it occasionally, but it has not become like the anchor to their workflow, the way I think a lot of people have expected it.

That's not to say it's not going to happen.

I just don't think that we've gotten all the way there yet.

I do think that there are some really cool sales productivity tools where people are incorporating that into their day-to-day today.

And I think like that is a place where maybe there's more average daily usage than in other places, but I'm still waiting for like really slick AI interface, things that can cut down the amount of time that it takes to build workflow, where you can speak to things in simple English and then it just performs a task.

And I haven't seen a solid proliferation of that just yet.

I think that there are some niche industries where that's playing, but it hasn't gotten to the point where I think like a person like me who's like already starting to be kind of a quote unquote old dog in the industry is like, yeah, I don't, it's just not existing in the places that I exist in today in a way that's been transformational for me just yet, but I do think it'll get there.

But are you talking in general or are you talking about the incumbents?

I'm talking about, yeah, I mean, I'm talking about the incumbents, right?

Like, when will I just be able to go to Salesforce and say, build me a report that looks like this and write that in a simple English sentence, and then it spits out a report that looks like that.

I still have to go in there and pick, like, accounts with contacts or contacts with accounts or opportunities with contacts.

You know what I mean?

I've got to go through the whole workflow of still building a lot of this stuff in order to get the value from it.

And that, to me, is the place where it makes so much sense to have AI there and then have it build the workflow for you or a report.

Right.

Because, like, so if you take, in my opinion, what Matt Harney described was the rush of customer conference announcements with PR around AI feature enhancements, but if you're an incumbent software, please, the AI has to be better than the way you work now.

Yeah.

Right.

So, like, and that hasn't, I mean, we don't know for sure, but there's definitely, there's, like, people tell me all the time that, like, product built the AI version of a particular feature in big company X and they just wasn't better than what they had today.

It probably has to be exponentially better.

Now, you just gave an example of something that they should just solve yesterday.

You're talking about Salesforce in particular.

Like, that's at least that app I know, that AI would save a lot of time because there's so much digging and building.

That's a feature that makes you better.

We haven't seen a ton of that out of the incumbents.

But if you're talking overall, I think a lot of the innovation on being able to give, take someone's workflow or something that they're doing today and make it better, it's going to come from the bottom.

I agree.

I agree.

Yeah, it's going to be a startup world, in my opinion, just because you have to rethink.

It's like it'll take time.

I mean, I think ultimately the incumbents are going to be beasts in this market.

But like, they're just they're they they have these people that like I've been using office products for 30 years, man.

Like I have a way that I like to do things.

It just has to be a ton better or I'm just not going to take to it.

Whereas like what you described, there's tons of there are great sales and marketing startups coming up.

They're not there yet, but that promise is is clear, right?

That it's going to make a process a lot better.

Sorry, Matt.

And and I have a take on everything you're saying.

And it really relates to what you just said with your 30 years experience or, you know, your accumulated knowledge of working in sales forces is to build these things properly.

You really, really need to understand the workflows in a different level, right?

I think of a lot of software as framing the work.

Like you think of a project management tool or a CRM.

It helps you organize contacts or the last time somebody was contacted or industry.

But the actual work of selling or managing the project is still done by the human, right?

And each company can have their own way of doing it or their own way of selling, right?

And Salesforce is not involved in the selling in any way really.

It's just organizing your sales efforts, right?

But increasingly, a lot of these AI products will be actually involved in the work, right?

Writing the email or sending up the project follow-ups, right?

In a way that's different and to configure that correctly, to build that product in the right way that works for a large proportion of sellers, right?

You need to know how that work is really, really, really done in a way that works for Craig, who's been doing it for 30 years, and for somebody who's been doing it for six years, right?

And know all of these new, and so it's a real challenge and it takes time and you need to be really, really close to your customers and really opinionated and really knowledgeable, because it's in many ways a fundamentally different problem because you're not organizing the work you're doing to work.

I think that's a really good topic.

And I feel like I'm just going back to my comment as being a startup wonk.

I don't mean that, but like what you just described is this opportunity that young companies have.

So, you know, I often think about outreach and sales lofts, you know, they took this piece of what you do and really understood it and tried to master it.

If you're a big company, that's really hard to focus in on something that seemingly if you're a multi, multi trillion dollar company, that was an exaggeration, everyone, I understand.

It's hard for you to go, well, let's just look at the the touch patterns of a prospector.

It had huge value, but it required someone who was willing to spend a ton of time in that very specific piece.

It's really understand how they work.

So anyway, that, you know, based on what you guys are talking about in the real promise of AI., that that there, you know, you do have to dig in and really understand that workflow on an individual level, group level or whatever that is.

And when you do, there is incredible opportunity there.

So, I mean, I that the data point that you just brought up in the way your time out, Matt, that I would agree with Matt Amundson.

I think that feels right intuitively.

So any other big ones you got for us before we jump off?

You guys with these hard questions, like what's the single most like insightful statistic in all of software?

It's not easy.

I would say the other insightful statistic, I'll give you a few, like I'll give you guys a quiz.

What's the single biggest predictor of NPS?

Net promoter score, like product direction, ease of doing business, quality support, pricing, ROI, meets requirements.

Like these are a few factors that we were able to research across 4,000 companies.

This is fun.

Yeah, I'd want to say like customer success, you know, good, like support the support.

I feel like you had just just was it multiple choice?

I'll give you like a few of the parameters that we ran.

I had to answer it blank.

No, I'll give you I'll give you guys the parameters right from memory that the kind of parameters would be meets requirements, product direction, ease of use, ease of administration, ease of doing business with, quality of support, ROI.

Those are the factors.

Which one do you think has the highest correlation with NPS?

Well, I'm worried because I know after our conversation for 40 minutes that you might be leading me down the path of ROI.

So if I were a betting man, based on with the context, I would say ROI.

But I always felt like ease of ease of use, ease of like the customer experience with the product was like one of the big sort of swinging factors in, you know, an NPS.

So I will make that my the guess for my heart, the guess for my brain that's figuring out odds and where I want to lay my money will be ROI.

Matt, based on those choices, would you change what you said?

No, I'm going to stick with my answer, even though I think it's incorrect, because that wouldn't that wouldn't make it surprising.

And Matt was correct.

The clear number one driver is quality of support.

Yes, and this was based on a study of, I believe, 4200 companies we conducted in partnership with our friends at G2.

And ROI was actually relatively low.

And part of that is there's a disconnect between user users and buyers, right?

If you're in a marketing role and there's some tool that makes your email formatting much faster and easier, you don't particularly care if your employer pays $20,000 a year or $50,000.

But that 20 to 50 makes a massive difference in ROI.

So ROI was not actually that significant towards NPS.

That is, yeah.

I'm on a one game win streak, baby.

All right.

You got one more for us.

That was really good, actually.

Really helpful.

I wish I was.

I missed on both.

So I'm a little, I'm a little hurt, but the insight was powerful.

You got anything else?

Yeah, we have another one.

We did a study with RepVue and G2 around like correlations to quota attainment and lead flow and lots of factors basically with RepVue.

And we even did it by category.

And we also did it by like customer size.

What do you guys think are like, you know, relative to product satisfaction, review scores, NPS, right?

Using that as the baseline, because the theory was if you're a seller and you're trying to determine like what type of company should I go work for and, you know, you do your research, right?

Well, like, let's approach it from the categories.

What are the most favorable categories?

You know, security or collaboration or data?

Like what are the most attractive categories to go sell for relative to their product satisfaction?

Security.

Security.

It was all things like security and HR.

Okay, that's scary.

I mean, that's different.

Yeah, but I mean, look at Rippling's growth, right?

Like Rippling is crushing it.

And so we'll include all this in the show notes.

And the big standout, too, it was the collaboration and productivity tools that were horrible for sellers, right?

Where it's these popular sexy tools, and I'm not going to name names, but in terms of like where, you know, they're cool and they're fun, but when it comes to actually getting out there and selling and hitting your quota, they were horrible, right?

And it was actually the things like HR that, if you go look on G2 or Gartner Peer Insights, like people are not passionate raving fans of HR software, right?

But from a seller's perspective, they performed incredibly well in that study we did.

But the number one for sellers to hit their quota was security.

Yeah, like relative to the product level scores.

Just emphasizing it since I got it right.

Okay, good.

That's all that matters.

Actually, that makes that, I mean, so we both guess security because we know how well reps can do there.

HR, okay, you guys made some good points.

I'll take that.

And then you were saying some of the most difficult was collaboration, productivity tools.

Yeah, that was the true outlier on the adverse side.

Yeah, but they need your ROI work there because we might not be, for example, if a sales rep is talking about how cool it is, then they're in trouble.

People are attracted to learn more about cool, but they're not buying for cool.

And that makes, there's some interest.

There's probably, we could probably dig in on that too, but.

And just the thing there, and that's a, you know, here I am telling everyone we go do ROIs, you know, ROIs easier and harder depending on the product and the use case, right?

Like if I had to go, I could make a pretty compelling case for air table or notion, right?

You know, you'd be, okay, but actually having that go work in the market might be really tough, right?

Just because of the ability to kind of tune something like that.

Is notion really transforming my business, right?

And hammering that via an ROI calculator, like it would have to be, you know, more of a PLG motion or just, you know, an inevitable feeling.

But like that analysis, right?

Okay, it's going to save you 30 seconds.

Might not work, right?

So ROI doesn't lend itself to every company to be incredibly effective.

And I do want to tamp down some expectations.

So if you're listening to this and feeling like it might be a challenge for you or you think ROI is going to take, you know, your reps from hitting 20%, 20% of your team is getting quota, you get a calculator, you're almost going to be at 70, it might not happen.

Gotcha.

But it's something that clearly people aren't doing and it's something that they could walk away and start building immediately.

Yeah, that's right.

It's an actionable piece of advice.

The two things on this is as a company, as you tell the story of the value you drive for your customers, have you looked at, because the formula tells the story too, how you figure it out and what it would look like.

Could you eyeball a prospect and be like, I could probably save that guy X amount.

That was one thing I got early.

The second one was, I love the personalization.

I don't like, just to be clear, I don't love ROI calculators if they're not developed with a story.

I don't love blind ROI.

I don't like generic ROI.

I love personalized ROI because it is so powerful.

And I love that when he brought it up on the second one.

Sorry, go ahead, Harney.

And the like last insight, it was a bit of a learning for me just doing some hiring here at Cloud Ratings.

And we just were bringing on a person who has a background as a former CFO.

But in your companies, your audience's companies, you have people in FP&A functions, you have people in procurement functions, you have a CFO.

And many, many vendors, not just in software, but across other products come, present business cases and ROIs to them.

And these people have quantification skills that maybe your marketing team or your sales reps do not have.

And bring them into the conversation and kind of pitch them what you think the ROI is and help explain the productivity or the single pane of glass or time savings, what have you, and have them help you build the ROI.

You have those resources internally, or you have friends who are CFOs or FP&A people.

And you can get there.

It was a learning I've had when we've been out recruiting, is I thought we might be looking for certain IT professionals for our true ROI practice area.

And the best people I've found are actually former practitioners on the finance side, who have the best ability to digest and also make it credible.

Because they're not just prone to high, they actually tend to be cautious and rigorous and analytical.

And it could be fascinating, also just the way they look at it, might uncover an insight that you hadn't thought about.

Like, what does my procurement team say?

What does my VP of finance say about our own product?

Yeah, that's a great, great, great, great way to end.

So, Harney, Matt Harney, I know, but Harney was easier.

Thank you very much.

I appreciate you coming on and we will basically put so much in the show notes after you orders.

It'll be a world record, but we'll do that for everyone on the show.

But thanks for coming on The Transaction, man.

Great job.

Look, I really enjoy it.

You guys, hard questions, but good questions.

So I appreciate the time.

We'll talk soon.

Yeah.

Thanks for joining us for another episode of The Transaction.

Craig and I really appreciate the fact that you've listened all the way to the end.

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