In this episode, Bill talks with Brian Gustason, a growth-focused operator and advisor with deep experience accelerating revenue and EBITDA across lower and middle-market B2B and technology companies. Brian has built a career transforming private equity portfolio companies through disciplined leadership, integrated revenue systems, and clear go-to-market strategy.

Together, they explore how today’s private equity landscape has shifted, highlighting why capital efficiency, longer hold periods, and increased competition for higher multiples necessitate a more strategic approach to marketing, sales, and customer success. Brian outlines the patterns he sees across portfolio companies, the risks of founder-led sales, the importance of buyer clarity and differentiation, and how a strong GTM engine both fuels growth and de-risks an investment. This conversation provides practical insights for PE operators, CEOs, and those leading B2B and manufacturing organizations through value creation.

Bill: Thank you for joining the Missing Half podcast, where we're discovering what's missing in private equity and go-to-market strategies. Today, we're joined by Brian Gustason, a growth-focused operator and advisor with extensive experience driving accelerated revenue and EBITDA growth for lower to middle market B2B services and technology businesses. Brian has built a career transforming private equity portfolio companies through disciplined leadership, operational rigor, and strategic go-to-market execution. He brings a unique perspective on how private equity can capture more value by rethinking its approach to marketing. Brian, thank you for joining us today.

Brian: Thank you for having me.

Bill: So Brian, when we think about private equity, they're a great and they do an amazing job deploying capital, financial leverage, financial engineering. And I feel like we're at a moment where go-to-market strategy is really underdeveloped, it's undefined, and it's not being practiced consistently across private equity organizations. Could you maybe talk about that a little bit?

Brian: Yeah, I mean, I think that's a great point. You know, I still remember speaking with some PE deal partners and asking them about value creation, how important that was to them. And years ago, it used to be, you know, I would get a comment like, all I really care about is EBITDA and adding together EBITDA from various businesses in a roll up type strategy. And they weren't really interested in doing something with the businesses, improving them, value creation. So back then they weren't interested as much. However, yes, I agree with you. I'm seeing today a lot more interest. The average hold periods are a little bit longer. And so they recognize the need to do something with these businesses beyond just cost cutting, which is needed, but certainly not as challenging as growing a business. And so there's a lot more recognition these days in how do I grow these businesses faster in order to warrant higher multiples on exit.

Bill: Great, Brian. And I think as we talked about in the pre show, I think our message collectively is that we want to frame this as there is hope. Like if you're in that PE space and you're struggling or you're looking at the next deal and you want to do it differently than the last deal and you want growth to be a component, there are repeatable, scalable, predictable playbooks that we can bring to the market. This isn't alchemy. It's not voodoo magic, it's as scientific as the financial engineering that has occurred for a long, time, that these organizations and these operators can find professionals that can help them win in this space.

Brian: Yeah, absolutely. I know, both, I think if you, if you look for experienced operators, as well as experienced consultants like yourself, you know, these are people who certainly they have playbooks available to them, but they also can recognize patterns and pattern recognition is really critical. You know, you've seen that before, you're recognizing something, the situation and being able to sort of diagnose effectively. I think that's a big issue we see that I see is misdiagnosis of what's really causing either a growth stall or slower growth, right? And so experienced consultants or experienced operators can recognize certain situations and do a proper diagnosis and then develop a plan of attack.

Bill: I think that's so key because anyone can go out and find a marketing firm to go and do the tactics. Like that's fairly flat. It's fairly commoditized. But being able to provide that strategic layer and actually figure it out and find that predictable path to profitability, find the best use of those funds because we don't just want to benchmark against poor performance. We want to find outsized outcomes that will add to the EBIDTA and add to that exit multiple and give them more sophistication. So that story to the next acquirer is a better story. It plays out well and de-risks their investment.

Brian: Right. No, I completely agree. And I think, you you mentioned a word there that I like to emphasize, and it's outcomes. At the end of the day, what is the desired outcome, right, for the PE firm? Is it margin expansion? Is it revenue acceleration? It's understanding the outcome and then being able to do more than just provide deliverables. Deliverables… I could give you a PowerPoint deck and you might not know how to use it or use the information within. So it's less about deliverables, but doing things to positively influence or positively impact desired outcomes. And in many cases, it's multiple expansion, which is, you know, you buy a business and it's currently at a, let's say a mid-level multiple EBITDA multiple. At the end of the day, you know, at end of the hold period, you want to sell it at a high multiple. And to do that, you know, uh, in many cases having a, very strong revenue engine that includes good marketing, good sales, good customer success is a necessity. And so the outcome there is multiple expansion. You have to figure out ways. What can you do to, influence the desired exit multiple?

Bill: Well, I love the way you framed that because when we think about it, there are many problems we can work on in these firms. Maybe their biggest challenge is pricing. Maybe it's new client acquisition. Maybe it's retention and protection of the current revenue. You know, there's a lot of different things. I think the beauty of the way this space is evolving and the solutions that we're seeing brought to market is that sophisticated GTM firms can walk and chew bubble gum at the same time. So we can work on that pricing lever. We can work on new market expansion, branding, and kind of weave a lot of those together into kind of a symphony as opposed to, we're going to hire a brand firm. We're going to hire a lead gen or demand gen firm. And then you have the complexity and the overhead cost of managing those multiple plays at the same time. And that's just an inefficient deployment of capital because you're going to pay a lot and not only pay them a lot extra, but you're going to have a resource deficit with your team of managing multiple vendors who then have to onboard, do discovery and do all of those things simultaneously. So I love the way you frame that.

Brian: Right. Yeah, I mean, I think it's easy for people to think in terms of silos, but silos are not as effective as systems. And when I think of growth, of go to market for any type of business, it doesn't have to be a PE-backed business. I think about it in terms of a total system and it's integrated, an integrated system. like I agree, if you bring in multiple specialists, you're not going to get that, the integration that you need to see the desired impact.

Bill: So Brian, let's, we jumped right into it, which we often do, but let's take a step back and let's talk about your background and what led you to specialize in this space.

Brian: You know, that's a great question. For me, you know, I think I've always been naturally curious. I don't know if that's a good thing or a bad thing, right? Sometimes it's good. Sometimes it's bad and naturally inquisitive. And so, you know, I started off with a sort of a business emphasis. I attended the Wharton School at the University of Pennsylvania undergrad, which was a great experience, a really good business foundation, educational foundation. But from there, you know, I did the traditional, actually I did commercial banking initially because I felt like I wanted to understand data and numbers. So I started doing that, but then I did my MBA in the UK at Oxford, came back and did the traditional consulting, with Booz Allen and PWC among others, which is all good foundational advisory experience. What was interesting was a number of growth projects and I really was curious about the mechanics behind the growth, right? I think it's, can be easy at some in some cases to think at 30,000 foot level and just say, you know, this business should expand or this business should acquire complimentary service items or products. But without understanding the actual mechanics, the marketing that is involved in doing so, the sales complexity that you're introducing, the what do you do with existing customer base, customer success? I got a lot of questions. And so I actually made a career pivot into B2B sales, which I'm forever thankful for. I really enjoyed it. And I've had a series of VP of sales and marketing roles, SaaS and some other businesses, but really the last eight years have been working in private equity and, you know, doing either interim roles or growth-focused types of consulting engagements, including I'm with Craig Group based out of Houston, which is a specialist or a boutique consulting firm that focuses on growth for PE-backed lower middle market businesses or so helping them to grow organic, helping them to accelerate organic growth, marketing, sales and customer success. So that's what I'm doing now, but I will say I love the PE space. Like you said, it's very dynamic. You know, there's many aspects to it where there's a lot of pressure. It's pressure filled. And so, but it's been a great journey so far and I really enjoy helping PE-backed businesses grow faster.

Bill: So you've had a very diverse background, which I think is very, very helpful when dealing with PE. Those who have not just sat in one chair for their entire career, especially I love the fact that you have that sales background and VP of sales, because when we think about growth and marketing, we can become siloed. And, well, it's just simple. You do this and that and it works. Well, no, you have to integrate with your sales enablement, obviously your customer service so that brand promise is experienced throughout the life cycle of that customer with the product or service. As you think about your experience across those various disciplines, did you start to see patterns that you're now able to really leverage as you help companies with growth and consult with these PE-backed companies?

Brian: I definitely feel that having a diversified background is helpful because it provides different lenses through which to view businesses, right? And so having the strategy, the traditional strategy consulting background is helpful at the highest level, learning how to facilitate those sorts of brainstorming sessions, things like that. That's all very helpful. But again, at the end of the day, if the mandate in private equity is growth, it's helpful to have different perspectives, the different aspects of growth. Growth doesn't just come from sales alone, the sales team. It's, as I mentioned, integrated, right? You've got the marketing team, you know, marketing fuels the revenue engine, right? And you and I both love marketing. There's the marketing side, there's the sales side. And then again, in the lower middle market, I see it all the time where, you know, account management or customer success, which is driving revenue after the first sale, it's an afterthought. It's overlooked. You can't, some of the, some of the situations I've seen, couldn't believe the amount of revenue potential that was being left on the table. And so having the different experiences that I've had and that, you know, types of experiences you've had too, Bill, enables us to look at things from different perspectives. And like you said, the silos never win. It's gotta be systems, whether how you're looking at something or how your operating. Systems are always preferable to silos.

Bill: We're at a moment, I feel like in this, the evolution of private equity where go to market, growth marketing is earning a seat at the table. And I'd like to get your perspective on why that is. I have a couple of theories. I'd like to throw a couple at you and maybe talk about those. And then if you have some others. One, capital is not cheap anymore. So we have to be better, right? Or the limited partners are not happy. I think another thing is the fact, and this is kind of fun, we're starting to see absolute definitive examples of private equity-backed companies that have a solid GTM program, have a solid growth program, and the numbers that they're creating, the return that they are achieving is absolutely outpacing those that don't have it. Those are two that really like come to my mind as why we're seeing this like moment where we can get a seat at the table. Do you agree with that and or are there other reasons why you think this moment is arriving?

Brian: No, I absolutely agree with those. I mean, what I would add is that, you know, what I'm seeing in the lower middle market, for example, businesses that are very successful, that are, you know, getting their first institutional capital, but they in many cases are founder-led. And so that can be a challenge, right? Because in many cases, the founder was responsible for sales as well. And so sales and marketing and everything else. And the result is when they leave or when they get their big payday and they sort of disengage, what happens? Well, they don't have the foundations available to them to continue that growth or to, to accelerate it. They don't have the playbooks. They don't have the sales process, you know, there may be no sales process. In some cases, they don't even use CRMs. And yet they've done well enough to attract PE capital and you know, kudos to them, but now the PE firm needs to take the business to the next level. And so you need that foundation. And at the end of the day, we talked about margin expansion, well, not only margin, but multiple expansion. So that's, that is an outcome. That is a desirable PE outcome is multiple expansion. But in order to do that, you have to have a revenue engine that operates on its own and is efficient and repeatable, et cetera. So for the next buyer. And so yes, is absolutely, should be, you know, growth and EBITDA should be the, some of the two main, you know, stars that there are two North stars. I guess you can't have two North stars, but you know what I mean? It should be growth. It should be profitable growth really at the end of the day, right? And so yes, that's absolutely a top focus these days in PE.

Bill: So I believe you can have two North stars like that because they're so closely aligned. But it's a new multi-dimension. It's quantum, right?

Brian: That's right.

Bill: They had a whole movie series about that. Any plot twist that no one can understand, they just said quantum and we're all just supposed to. Exactly. Love it. Brian, when you think about the companies you've worked with, the PE firms you've worked with and successfully moved them from lack of awareness to awareness of this problem and then the opportunity and the solution and systems that you guys can execute, what are those aha moments that a PE firm has that where they finally get it and they're able to really see this path to profitable growth? What is that moment? Is it driven out of crisis? We're at five years and there's no end in sight. The hold period looks like we're going to be married to this deal forever. Is it driven by more opportunistic thinking? Where do you feel PE organizations that aren't involved in a good GTM process really move into that space?

Brian: Well, that's a great question, Bill. And what I would say, a couple things. One is there's some hurdles that we have to overcome in order to get them to think in some cases that way. The first is that there is, again, legacy thinking in terms of just adding up EBIDTA streams. And expecting that to be, you know, I had someone tell me, you know, just explain it to their way of thinking was that they would buy $10 million in EBITDA. And obviously there's an arbitrage there when you start adding those up, you end up getting higher multiples. And so they were more interested. So there's that legacy thinking that you have to say, well, look, you know, if we can develop a more effective, you know, go to market or revenue engine that impresses the next buyer, you're going to see a greater multiple. So that's one thing. Number two, I have seen, unfortunately situations where people delay their investments in go to market by a year or two. And the, you know, the way that I describe it is that it's like you're an airplane at the end of a runway. If you keep on using up more and more of the runway, you're going to run out of runway.

Bill: Sure.

Brian: And make those changes. And you know, some marketing and sales and customer success initiatives require a certain amount of time to bear fruit. And so if you keep on using up runway by in delays and just by not, you know, out of your five to seven year hold, you spend the first two years doing very little or just focusing on cost cutting. You're doing yourself a disservice because you're not getting to that scalable point where you've, you've made the go-to-market, you know, investments upfront. And now you can focus more on scaling. Yes, you might have to make some, you know, changes along the way, but for the most part, you're doing more scaling than fixing. And so you got to get to that, you know, what is it? The hyper velocity point where you can really, it's like, you know, the fighter jets, scram jet, when you get into scram jet mode, that's where you're at high efficiency and flying fast. That's what the PE firm wants is to get into scram jet mode. And then just for the remaining four years of the hold, focus more on scaling to maximize profitable revenue and then get the best multiple possible. So delaying does not do you any favors. That's why in a lot of my, you've probably seen my LinkedIn posts, I talk a lot about time is a precious asset in PE. Let's get to the go-to-market fixes early so that we can scale for the remainder of the time.

Bill: Well, and doesn't marketing, the knife of marketing cuts both ways because not only does it provide growth and lift, but it also simultaneously is a strategic de-risker. I mean, it reduces the risk in that hold period because we have another bet that we place that has a lot of data behind it, right? We're not just at the craps table. There's a lot of data behind it and we can pivot. We can test and fail and learn and redeploy very quickly in today's day and age. Maybe talk about marketing as a strategic de-risker because that's the flip side of that coin of growth and lift. It also helps us on the de-risk side.

Brian: Absolutely. I 100% agree with you. I do view marketing as a de-risker. You know, first, I think we need to acknowledge that not everyone views it that way. In many cases, right, think about it in PE, cost cutting and, you know, margin expansion. So margin expansion is one of the first things that happens. And if you don't understand marketing, it might be one of the things that's cut or reduced, right? And in many cases, the legacy thinking certainly on the from the financial perspective, and I know because I started my career in finance, right? I know how they think. So and part of that is due to the fact so marketing isn't appreciated in some cases. And sometimes it used to be that it was difficult to attribute results to certain types of marketing, you could say, well, was it our website? Was it the branding? Was it the events that we attended? So it was confusing, but nowadays you can absolutely make a better, you better understand the impact of your marketing dollars. So there's, there are fewer excuses now. There's a lot of technology and like you said, there's data that's available that, so that you can do the testing and you can identify what's working and discard what's not working and double down on the things that are working. So that's number one, there's a lot more that you can do to really understand the benefits of certain types of marketing spend. Number two, I am a big believer in really understanding two things. One would be your buyers and number two is how you're differentiated. And that's both marketing, it's marketing strategy. And so the buyer side is where should we aim? If we're gonna aim, we just work with anybody? Right, just anybody who walks in the door, probably not, but you'd be surprised. I mean, that's lower middle market businesses sometimes will do that to their detriment. So there's the aiming side and really understanding and that's, you we talk about ideal customer profiles and the personas within those. So how can you ensure that you're aiming at your, we call them best fit buyers? The best fit buyers who will actually value your offer and value, you know, and will not flinch at your pricing. So that's one side of that. And then the differentiation, you know, Bill, you and I both know everyone sounds the same today. Everyone. I mean, you look at any website, we're the best at this, we're at the best at that, best customer service. Everyone, right? Am I right though? Everyone, everyone.

Bill: Well, I mean, no one says mediocre or poor customer service.

Brian: We're the third best, right? They don't say that. But so the challenge is our audience is jaded.

Bill: Sure.

Brian: And so so that means that if we spend a little more time up front, understanding our aiming, understanding the ideal customer profiles. I just worked on one project and we isolated four ICPs. So they had, they were taking any business and then we we nailed it down to four separate verticals. And so imagine if you do that, imagine if you really clarify your unique differentiation, imagine if you prioritize the buying criteria for those ICPs, meaning what do they really care about? Is it pricing? Is it speed? Is it, you know, those sorts of things. And imagine if you craft messaging that will resonate with the best fit buyers in those ICPs, that's called de-risking. If you can do those things and then you evaluate your lead gen channels and determine where are those best fit buyers, where are they hanging out? Where are their eyeballs? Where can I catch them? How can I influence them? And you discard, we talk about 80-20, I mean, that's a framework that I love, but I mean, what are the 20% of the lead gen channels that are really hitting the bullseye? And can I stop spending money on the 80% that aren't? So this is de-risking a business through better marketing strategy and thinking upfront.

Bill: Well and isn't, especially when we're looking at lower middle market, a legacy cultural issue for growth strategy led by that founder is take all dollars that come. And we get it. They were the ones who bootstrapped it, who reached in the couch cushions during the early days. So they remember those hard times and they've been successful. They've reached the moment where they're dealing with private equity and there has to be a complete shift of philosophy because we can't continue with that. And I love your like your scalable growth framework here of looking at those ICPs and dialing them in because the other issue I think that is so important about that philosophy is if we want our brand promise to be differentiated and experienced at the attraction phase and marketing the whole way through to the sales phase, the whole way through to customer service. And then if it is involved with aftermarket or whatever the life cycle is, right? If that's going to be experienced the entire way through that process, we cannot be all things to all people. We have to dial it in.

Brian: I completely agree, Bill. And another thing I would say, think about this. I'm trying to integrate the three aspects of go-to-market, right? Marketing, sales, and customer success. Think about this, because we talk about marketing and de-risking. If you look at market segments, right? And I know that sounds like complicated, but that's enterprise, mid-market, or small business, and then very small business. If you think about the customer expectations for each one of those market segments, an enterprise customer is going to expect you to be on the phone available 24/7, have all of these additional expectations in terms of resources, et cetera. Whereas a very small business or a small business will won't expect that degree of support. So if you market to various different market segments, think about how that might impact your sales and then the after sales. You need to think through it. Maybe you just focus on the market segment that you can properly support. If you're a small, lower middle market business, you might not have the resources to support enterprise customers that have higher expectations. So that is an example of you need to be aligned in terms of how you market the sales and the expectations that your sales team is providing that customer. And then can you actually provide

the support that is promised in customer success and customer service, right? So it's all aligned, but it starts with marketing is deciding which of the market segments will I target and which of those can I scale in faster? I would say, I would argue if you're in all of those market segments simultaneously, you will not scale quickly. You will have problems because you have customers with different expectations and each one of those. But if you just focus on small businesses and provide the same product or solution, you can scale that much faster. So staying in one or two lanes versus all four lanes is a key thing you have to decide in marketing upfront.

Bill: And whenever we're looking at like the financial side of this, which is where the PE firms are much more fluent and much more sophisticated, this aligns perfectly with their deal thesis because we're talking about fastest, most profitable growth. So like the other thing, and I think this is also this message of hope and solution is that these initiatives can be aligned mathematically with their models. This isn't just out here, you know, alchemy and voodoo or whatever. I mean we can dial this right back into the deal thesis and the financial projections and quantify each of these items so that when you think about de-risk, that's not feeling good. That's proving out on paper like beyond napkin math that this is going to work or that we can try to make this work, test, fail, optimize, repeat, and then find that path. I love that conversation. I'm working with a client that has a B2B SaaS that we went from trying to be a custom provider to enterprise. And they found that they just didn't have the bandwidth and resources to do it. They found a narrow niche that they are knocking out of the park, that is easier to onboard and execute. And they are, it's like a hockey stick. And not only is there growth, on the flip side, so on the de-risk side, it's much more profitable growth. So win for everybody.

Brian: Absolutely. Absolutely. It's the path to the least resistance. And so you think about friction, right? Where is the friction? There's a lot of friction if I'm deciding to move into other market segments, if I'm not prepared to move into other market segments. You know, I look at a lot of these deal theses and some of them are predicated on these types of jumps. And you know, in some cases I have to remind them that that's one, a good way to fumble the football. If you're not ready and to understand the expectations of those buyers in those different market segments. And again, that's why I love marketing, Bill, marketing is more like strategy. And again, started my career early on in strategy. I think that's why I like marketing so much is that there's a lot of strategic thinking in marketing about what is the path of least resistance where I can scale fastest in five to seven years? I only have five to seven years. How can I get the most out of it? So yeah, there's a lot of thinking that goes on upfront.

Bill: And when we look at that market segmentation, we're not limiting the future expansion of that organization into those other segments. It just might be at this point in time, in the life cycle of the organization, for this financial deal thesis to work. We need to dial in on this segment and then maybe the next buyer sees that other segment as the opportunity for additional expansion or maybe it's a strategic and they already have that segment covered and they're just like backfilling a segment that this new organization is covered. So I think there are so many ways that we can grow and de-risk simultaneously and really impact the results that these organizations are achieving.

Brian: Absolutely. Like you said, it could very well be an add-on acquisition where we bring someone who already has the enterprise capability. And so we can just view them as, in a way, integrated, but still separate revenue streams and separate lanes that are set up to effectively address those expectations, but at the same time continue to scale in their lanes. So yeah, there's many different ways you can do it, but marketing is key to de-risking any acquisition. Agreed.

Bill: So Brian, another thing, and I'm going to pull on this thread because we hadn't talked about this in the pre-show, but I think this is just an amazing, maybe what's missing in some strategy is if professionals like you and I and your organization are brought into the marketing strategy and have a little bit higher seat on the table, right? We're up at… that if we understand and are looking at information, we can inform potential sales strategy. I I know that in a lot of cases, PE firms will say, well, we always had this idea that we were going to find a financial buyer when they look in the rear view mirror. But a lot of them have no idea who the buyer is going to be or have some ideas, but they don't have it proven until someone strokes the check. So if we're involved and we can see those market opportunities, we can also see how pulling on those levers to grow that aspect of the business would maybe change the positioning of who the buyer is going to be and then allow us to really focus on a more narrow path that in some ways you should be able to achieve a higher exit multiple because it's a better fit.

Brian: Completely agree. I mean, you know, if you are, if the goal is to build a better revenue engine, right? One that is repeatable, one that is, can operate on its own, doesn't require the founder to be involved per se, right? And you have a clear growth trajectory, you know, growth rates are increasing, the trend is positive. You are going to be appealing to someone. And whether it's someone larger in the industry or a complimentary business, right? That can use your solution to provide more sort of a total package type thing to another end user. The faster you grow, especially if it's profitable growth, right? The revenue engine is generating profitable growth. Of course, you're going to open up the number of possible buyers for the business, definitely.

Bill: One of the things we're seeing with a number of clients we've worked with, specifically in SaaS and kind of digital products, is there are a number of acquirers that they have not traditionally probably identified in the outset of traditional longstanding 50, 70, 100 year old businesses that operate in that space that have no digital capability or platform and or have failed to internally generate a digital platform. Are you seeing that shift where it's not really SaaS compounding SaaS or digital products compounding on other digital products in a strategic way, but they're being married with traditional supply companies and manufacturing companies to kind of reinvent those old manufacturing companies into a forward-facing manufacturing plus digital product?

Brian: That's a great question. I am seeing that trend. And you know, in some cases, it is, I think it all goes back to understanding your best-fit buyer. You know, we talked about that, you the aspect of the aiming part of marketing, which I think is so critical and really understanding, you know, what they need to, you know, to achieve their desired outcomes. We talked about that word. What is the outcome that they are seeking to achieve? And so at the end, you know, marketing is all about wallet share, right? And we want to increase our average order values. And so we are starting to see some of these interesting groupings. I call them, they're sort of like peanut butter and jelly, right? Peanut butter and jelly, they don't taste, they taste great together, but separately, maybe not so much, right? But together, they taste really good. And so where you are seeing like, you know, that marriage between a digital and non-digital in order to better support their best-fit buyers. And so, yes, it makes sense, right? And I do feel like as, you know, we're on a growth or on a technology trajectory where a lot of non-tech businesses are expected to have some aspect of technology in their offerings going forward. So I think there's a lot more receptivity to those sorts of combinations. I definitely, there's one example of a vertically integrated supplier that we work with that just acquired a SaaS solution. And it's the same situation. And in that case, they wanted to be able to offer a total package and be able to support. And also from the PE firm perspective, they were looking at generating more recurring revenue from the SaaS side. So there's different motivations, but it's going to be very successful, this combination. So yeah, definitely a trend that I'm seeing.

Bill: Well and I think kudos to the manufacturing and supply company executives who are recognizing that they do a really, really good job at that function, but that if it's probably cheaper for them to go out and spend 20, 30, $40 million, $100 million for a digital product that is proven as opposed to trying in-source that because they are probably not good at that. Right. Know what you're good at. Stay in your swim lane and then bolt on. So I think that trend is being recognized by those leaders. And while it feels expensive, it's probably less expensive than them spending similar money and having a very risky and unpredictable outcome by doing it themselves.

Brian: Right, and in this case, it was understanding that their primary buyers needed additional support that they currently couldn't provide. So they acquired a SaaS product that was requested by their buyer. So it all goes back to really understanding the needs and the desired outcomes of your best-fit buyers. And so they did that, they bought this SaaS business and they're incorporating it now into a total package. It also provides a stepping stone situation. Imagine buying the software first, but then stepping into the hardware. And that's what, that was the situation. So it's an, it's an entry point for more sales and cross-selling. And so that's how, you know, it's all marketing, right? It's looking at it's, it's, it's, it's another revenue opportunity and an opportunity to increase average contract values or average order values and getting a new entry point with a customer and then upselling or cross-selling from there. So you need to be able to have those things and digital solutions are an easy way to do that because again, once you have a digital solution, the marginal cost of adding a new customer is nothing. It's digital. So it's a great entry point for anyone that's providing a physical product is to have something that's digital as well. So it works.

Bill: That's great and we're seeing the same type of trends.

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Bill: I want to take, I want to pivot a little bit here and talk about due diligence. I think you're very passionate about it. I'm very passionate about marketing, product market fit, go to market strategy needs to be day zero or negative, right? Way ahead of implementation. I mean, certainly your team and my team can help if you're at the three to five year stage and you're in trouble. We can come in and help address those solutions. But in the ideal situation, let's talk about a model that could be adopted by firms with their diligence process and maybe what's missing in some diligence processes today that you think would assist organizations in doing a better job.

Brian: Yeah, no, I definitely think and you know, that commercial due diligence is in many cases ineffective and the result is that you and I get a lot of work, right? You know, we're,I guess you could say we're beneficiaries of that, right? Because if they don't really get a good sense, you know, for where the gaps might be and they, you know, start their value creation efforts in you know, areas that are not fruitful for revenue growth, they can have, they could be behind. So that's been the idea. But certainly, and you know, I think you have to look at a couple things. One is when we think about go to market and commercial due diligence, a lot of it is backwards looking. At least, you what I've seen is that, you know, they look at things, a lot of the data is backwards looking and not really forward looking. And so that's the number one potential issue. I think just because you see the maintenance records of a car doesn't mean that the car is gonna operate well once you buy it. You need to look at the engine and determine whether you can actually drive it off the lot. And so, but when you think about the way we look at it is that due diligence is challenging at best. It's always challenging because it's a finite amount of time. Typically, access to the data room or to key personnel or even customers can be quite limited. So the idea is if you want to better understand go to market and growth and so forth, you've got to use your time wisely and look at the right things. It can't just be, I'm going to look at their website and determine from just the website, is that a good website or am I going to need to change it in the first 90 days? That's not good. We have, at Craig Group, we have a very sophisticated process. We have, you know, we look at all aspects. We look at marketing, sales, and customer success. But again, we look at it from a forward-looking. Yes, it's helpful to look at past results. But I think the PE sponsors are interested in understanding risks as well as upside, so potential improvement areas for early value creation efforts. So that's what they're interested in. What are the risks that could torpedo this investment potentially or set us back time wise? Or what should we be working on? What are your recommendations? What would you have us work on first to get to scale, the scaling mode faster? So we look at things in terms of maturity as well as sophistication. Just a couple of the lenses, we have a variety of different things that we look at for marketing, sales and customer success. We also look at, of course we look at TAM, we look at the market, is there a runway for growth, and we we do a competitor analysis. You have to be able to look at competitors to determine relative positioning. You know, is it all commoditized messaging? We talked about that, everyone sounds the same. Or are there unique, different differentiators or value props that we can discuss? And then lastly, it's really as quickly as possible coming up to speed on best fit buyers and what they really want. And we can do relatively quick in two to three weeks. From our experience, we can give you a very good sense for where the risks are, go-to-market risks, as well as early value creation efforts along marketing, sales, and customer success.

Bill: No, that's great. I love that approach. One of the things I think that should be more concerning from a risk profile position is if we have in the lower middle market founder-led sales and we need to… as you know, one of our propositions is that we're going to fix that and we're going to scale that as a PE firm. That to me is one of the things that needs to be identified and picked apart really, really quickly and we need to have a good plan and diligence, not, we'll just figure it out. Because like you said, there is not a lot of differentiation in the market often. Like if our go-to-market strategy is we're second or third best in customer service or whatever, if that's your proposition, call Brian right immediately, pause the episode and call us right now because we need to deal with it. That is a four alarm fire. But de-risking that founder-led growth engine that exists in a lot of these lower middle market, that seems to me like one of the highest priorities that should be on the table. Do you see that as a way forward looking due diligence could really have an impact day one?

Brian: Absolutely. And, you know, I like to say, you know, this old saying, you can't scale a Rolodex, right? I mean, you know, so we look at that, we look at, you know, we look clearly there's, you know, worst case scenarios where a founder leaves for some reason, you know, will, is the business sustainable? Right. So looking at it from a, from a marketing, sales, customer success aspects. Is it sustainable? You you look at customer concentration risk. You look at, I mean, there's a variety of macro factors impacting those specific verticals. But yes, these are all things that you would be looking at. You also look at data. You know, for me, sort of a red flag will be how does the business look at data? How does it use data? How does it collect data? Is the data fresh data? Is it old data? How does it use data? mean, you and I, Bill, we know that marketing, a lot of it is data. And so how quickly will we be able to come up to speed where we can start making some decisions early in early value creation efforts? I mean, is it just a series of old or outdated spreadsheets? I mean, what sort of data do they have? So quality of data is a big thing. Obviously there's a data room in most cases, but if it's lackluster or not sophisticated, it says a lot. Keep in mind though that PE teams look at things a little bit differently. Yes, they acknowledge risk, but they also look at the flip side of that coin, which is opportunity. So there's the risk. Is it risky or is it an opportunity for me to add value and generate a better multiple at the end of the hold? So they will be looking at things differently. It's risky, but not so risky that it's going to risk this deal. And so they look at it terms of grade gradients, you know, grades. And so that's how we would look at it too and determine, you know, is this a deal breaker or is it just an opportunity for improvement?

Bill: No I love that. When we look at data and we think about the coming or ever-present AI revolution, I feel like that's going to become a bigger conversation because AI is great. It can do a lot of things and a lot of things very quickly. But if the underlying data is not organized or in some cases available, the opportunity to implement AI and really get those quantum leaps does not exist. Are you seeing, I mean, certainly we deal with a lot of data in the marketing function. So how much does that impact your assessment or like future outlook as you start to think about AI, marketing, and due diligence and then executing?

Brian: You know, that's a great question and everyone's thinking about it in terms of how will AI evolve in terms of how it's used in private equity or in any business for that matter. I think, you know, when we are looking initially, you know, in lower middle market, the question is, do they let's look at the quality of their data. We're looking go to market. We're looking at CRM. Do they have HubSpot, you know? A lot of the lower middle market businesses don't use Salesforce. Maybe they're not there yet. Some do, but a lot of them use HubSpot and some other competing vendors. We work with all different types of CRMs, but the question is just having a CRM isn't good enough. It's how do you organize the data? Is the data fresh? Is it, you know, the hygiene? Is it, it updated? Is your sales team, if the founder is the only salesperson, is that, has the founder really updated the data effectively? Maybe, maybe not. If there is a sales team, are they incentivized to use it? In some cases, we're seeing situations where they don't get their commissions if they don't update their data, which I recommend. That's a great way to make sure that the data is least more up to date. But the question is, what are you doing with the data? Can you segment the data? Can you use it to prioritize outreach? Are you identifying quality? Are you able to now, using the data, qualify new opportunities based on win-loss analysis? We keep on losing in this vertical. So you know, chances are we're not going to work with anyone. We don't have the value proposition or the product marketing fit in that vertical. So what is the data telling you? And so both on the due diligence side, as well as the, you know, you've signed the deal and you're starting the value creation or the go-to-market plan side of things, the data is critical. And so for me, it's all about understanding it and validating it before, you know, validating it before I can really develop a plan of attack. And so it's critical. As far as AI, yes, AI will enable us to do a lot more. And the teams that are using AI should do better than the teams who don't use it. It's just that now we're seeing people are more or less dipping their toes in the water. They're using it. The good thing is though, a lot of the ways that we automate, whether it's CRM or things, they're incorporating AI themselves. So there's so many, you know, Microsoft has Copilot. There's so many different ways for you to, you know, start testing your use of AI, whether it's for revenue generation or cost reduction, many different ways to use it.

Bill: Absolutely. Let's, so Brian, let's talk about some maybe some fast fire questions as we kind of close this out. If you and I keep going, we're already at an hour. How did that happen? We could be here for six hours. No one will watch that long. Right. Like you and I'll play it back and enjoy it, but nobody else will watch it. So some closing reflections like when you look across the PE landscape, what's the single biggest shift you'd like to see in how firms think about marketing?

Brian: I think that the PE firms need to see it as a very worthwhile investment. If marketing is the fuel for the revenue engine, then they should be looking at marketing differently. And again, it's a de-risking function as well in terms of aiming better, generating better leads, generating content that helps your buyers understand you better so that when they ultimately get to sales, it becomes a much easier thing to do. I I always say effective marketing makes selling easier, right?

Bill: Yes.

Brian: So let's generate the content along the buyer journey so that the buyer is well-informed and understands your value proposition by the time they reach out to sales. They're already 80% of the way there. Then the selling part is much easier and you're gonna have higher sales conversions, which leads to higher revenue, which leads to a higher exit multiple. So it's all connected. Marketing is the tip of the spear. It needs to be respected. There needs to be good investment. Doing it better means selling will be easier and you'll have happier customers who will stick around longer. It's all connected. That's what basically I'm trying to say. And the end result is a revenue engine that is efficient and effective and is worth a lot more to the next buyer.

Bill: With that being said, if there's a portfolio company CEO listening, what do you think is like the first next practical step? They're listening to what we're saying. They feel that we're somewhat credible. We have some authority on this space. We have some idea what we're talking about. And that's great. And we're inspiring activity. What would be that activity that you would recommend to them as that first next step for them as they go on this journey of prioritizing marketing and focusing on that growth engine.

Brian: Well, I I think everyone should appreciate an objective viewpoint. An objective viewpoint keeps us on the right path. And so I would always recommend, you know, a quick go to market diagnostic and where you're able to look and evaluate, you know, your marketing, sales and customer success. And that also includes data, the data side of things and determine where maybe some of the gaps are and then once we identify the gaps, it's prioritizing which gaps we should fix and in which order. I mean you don't have to fix everything, but you should probably fix some things. Some things need to be fixed. And so I would start with that go-to-market diagnostic from someone who's objective, who can give you some really good feedback. And then from there, you can develop a plan of attack that is prioritized in nature, focused on the right things to generate the highest revenue growth and exit value.

Bill: And Brian, I think that's an excellent point. And that's something that most likely differentiates us from a lot of marketing practitioners who are just running agencies that aren't working with P.E. Our answer is not going to always be more. We're not going to say you need to spend more. You need to do more. You need to do it all. You need to fix everything. You need to fight every battle. You need to take every hill. Our approach is going to be let's pick that efficient path to profitability with the least amount of friction that's going to act quickly. So we hit the speed button and we get you to the goal you're looking for. And let's not chase anything that is outside of speed and achieving that goal. And I feel like when I've talked to operating company CEOs who have just worked with agencies who are in their own right, very skilled and can execute in verticals for a lot of traditional companies, they cannot make the pivot to working with PE because it is a different game. Do you see that not always more answer is something that we steer our clients away from as opposed to that traditional marketing agency?

Brian: Well, definitely. I think if you have PE experience, you understand that PE is a different animal. There's a… I talk about time compression. I mean, you really don't have a lot of time. And so you have to be, if you're working with PE firms, you have to understand how they think and what they're looking for. I agree 100 percent to you. You almost never need a full scale transformation. No way. It's really about focusing on the right growth levers. Growth enabling initiatives, including a lot of marketing and sales and customer success that influences your growth levers to generate that high growth rate and the multiple. So, you definitely don't need to do full scale. It's about focusing on the right things quickly in a way that, and again, you get that through experience, through pattern recognition, as well as understanding, again, how things work. If you do one thing, you invest in marketing, you should see indications in your, you know, your critical performance indicators of certain bumps, right? If you do one thing, you should see a bump. And so it's knowing what to look for and adjusting if you're not seeing it. So having, you know, firms that have worked with PE who understand the urgency, the timing, the frame of time that you have to actually achieve certain outcomes, it's a different, you know, different type of experience. It's not for the faint-hearted, right? But if you can do it successfully, you can excel and PE firms will recognize your ability to help them in those tight timeframes.

Bill: Yeah, it's not for the faint of heart. I mean, you and I are both like 27 and we look like this, right? Yeah, it's all good. But it's, I think the thing that's interesting about this line of work, it is very rewarding. It's very challenging. And if I go back to your original statement about you being curious, we're always trying to figure it out and it's a puzzle and it's always fun. We're not selling the same thing to everybody every day. It's not that productized, but we can take productized playbooks and then we can extrapolate what's going to work and apply a custom approach to these ventures and really develop those outsized results.

Brian: Absolutely, no, I agree. I really enjoy the work, find it challenging, but also very rewarding like you do when you're able to achieve the results that the PE firm, the sponsor wanted in a certain timeframe and they're able to achieve their desired multiple. It's a great thing. So I definitely enjoy this work.

Bill: Brian, where can, this is our shameless plug section. We're completely unapologetic about this. Where can listeners connect with you? And this will all be in the show notes, everywhere we post it will be all of these references, but just a quick verbal where listeners can connect.

Brian: Yes, they can reach me on LinkedIn. So Brian Gustason, have a, as you know, I have a series PE Growth, Headwinds and Tailwinds. So I write provide a PE related or just growth tips and steps for people. So they can find me on LinkedIn or I work at the Craig Group and that, their website is www.craigroup.io. So it's not .com, it's .io. And Craig Group is one word. So you can reach me either there or on LinkedIn. Look forward to connecting.

Bill: Brian, I have thoroughly enjoyed your headwinds series. I think there's tremendous insight there and anybody in this space should be following Brian and what he's sharing there because there are some powerful punches that are packed in that content. Every time I read it, I walk away with something. And that's what led to this podcast because I've been following, enjoying that content. I was like, I have to get Brian on. There's a lot of knowledge he can share with our listeners and just help the community of those in PE understand the value of marketing and how we move it forward.

Brian: Definitely, no, I appreciate it. And I enjoy your content too.

Bill: Thank you. Well, if you found value in this conversation, follow the Missing Half for more insights on where strategy and marketing intersect. Connect with Brian on LinkedIn to follow his work with portfolio companies. And you can visit us at 50marketing.com forward slash podcast for more episodes exploring what most companies overlook in their marketing strategy. Brian, thank you for joining us today. We really appreciate it.

Brian: Thank you, my pleasure.