Ecosystems

Episode 12: Kevin Brown, Co-Founder & CEO, LeadSmart Technologies

Kevin talks about how to avoid the 'Black Hole Lead Crisis', combating power struggles when working with friends and building a partnership ecosystem.


This week on The CoSell Show we are happy to welcome Kevin Brown, Co-Founder and CEO of LeadSmart Technologies

 

Topics Covered:

    1. How to Avoid the "Black Hole Lead Crisis"
    2. Combating Power Struggles when Working with Friends 
    3. Strategically Timing the Building of a Partership Ecosystem

 

Have more questions for Kevin? Find him on:

Brought to you by our host: Taylor Baker for CoSell.io

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Follow Along With The Podcast Transcript

Taylor Baker:
Hello listeners, and welcome back to the Co-Sale Show. I'm your host, Taylor Baker, and today we will have with us Kevin Brown, the co-founder and CEO of LeadSmart Technologies. On this episode, we explore how to avoid the black hole lead crisis, how to balance personal professional relationships when working with friends, and a ton of startup tips and tricks of the trade. Thank you for taking the time, Kevin.

Kevin Brown:
Hey, I'm happy to be here. Taylor, looking forward to our discussion today.

Taylor Baker:
Wonderful. Do you get us started, can you tell our listeners a little bit about your background and your current role at LeadSmart Technologies?

Kevin Brown:
Most happy to. Yeah, so I started my career in the industrial world actually. So not in the technology world, but I spent about the last 25 years getting products to market, working with sales and marketing teams and developing distribution networks. And a lot of that's been in the industrial, industrial safety environmental markets. And then in the last 10 years or so, I've done quite a bit of work in the electronics world, both electrical electronics and consumer electronics. And I've been involved in the internet of the things world as well. But my entire career, I've kind of worked on the same type of projects, which is developing sales and marketing teams that get products into market, and selling those through distribution networks. That typically involves some type of a third party network, broker agent, manufacturer's reps, and then distributors and dealers and so forth. So my strongest suit in my background is really tied to sales, marketing and distribution. And then right now, that has led me to my role as the co-founder and CEO of LeadSmart Technologies.

Taylor Baker:
Wonderful. Thank you so much for sharing that. So, one of our favorite questions to ask here at the Co-Sale Show is, what is something fun about you that cannot be found on your LinkedIn profile?

Kevin Brown:
That's kind of funny. I'm extremely passionate about volunteer work that I do in my faith or at my church. And so I don't really reference that, but I put between 25 and 40 hours a month in. That's extremely gratifying to myself. But I also, I'm a yacht racer. I like to race sail boats, and I've spent most of my life doing that. So that's a big passion of mine that I don't know if there's any mention on that on LinkedIn, but I don't get to do it as much as I like anymore, running a company and being a dad and a husband.

But I'd say the last thing that I probably don't talk about there, in fact, I'm sure I don't talk about there at all, is I'm a kind of a wine nut. Constantly learning and reading and trying, and I wouldn't call myself a collector yet, but to some people's book, I would be a collector, but real collectors, I'd still be a neophyte. But I'm a wine guy. About this time last year, I was both in Northern Spain and in Bordeaux, France enjoying the harvest. So I've bounced around a little bit, tracking down wines.

Taylor Baker:
Wow. This time last year, I was in Greece on my honeymoon. So this time last year we were both having pretty good trips.

Kevin Brown:
Yeah, that's right.

Taylor Baker:
Well, we could definitely talk about sailing, and wine and charity all day long, and I would love to do that. But to get kind of back on the partnership track, I noticed you have a long track record with growing profitable companies with LeadSmart specifically, you are now in the process of growing your partnership program. At what point do you feel a growing company should consider building a partnership ecosystem?

Kevin Brown:
That's a really interesting question. I'll tell you, I think it's a challenging question because there's so many different viewpoints to that. You can specifically in the SAS software world, you can find successful people in the past and/or consultants or [inaudible 00:03:30] people that are being mentors or coaches that will tell you, don't develop a partner program until you've reached, $1 million of annual recurring revenue, or $3 million or, or some targets and some milestones in place. Others might suggest that you do it right away to try and get some traction. We've kind of done something kind of in between that. And the reason we did that really ties to two reasons. And then why we kind of did it right out of the shoot was, one is my background, as I've spent my whole career either being a channel partner or working with channel partners.

And the second is, that LeadSmart, our product focuses on working with channel partners. And I'll tell you too, it's kind of funny is, when we developed the product originally, our focus was really kind of on manufacturing companies, as 70 plus percent of companies around the world go to market through some type of a channel partner. And so we kind of had a target and a kind of ideal customer profile. And what we quickly ran into as we started attending events and talking to other organizations in our space was that every one of them either were part of a channel network or used channel partners themselves. And so all of a sudden now for us it was, "Well wait a minute, we can help technology companies that use channel partners just as easily as we can help them manufacturing company." And that kind of got us started in the thinking of, "Well, maybe we should start off with developing our partner program."

And we got started with that about probably about nine months or so ago, is when we kind of really dug into it. And so we did it right up front, with a balanced program between direct selling and I can talk about that a little bit if you'd like at some point. And then our channel network. And then our channel network is kind of evolving right now.

Taylor Baker:
So as your partner program continues to grow, what has been your biggest surprise in building those relationships?

Kevin Brown:
And if you don't mind, I'm going to change the word surprise to challenge.

Taylor Baker:
Yes, do.

Kevin Brown:
We had an opportunity very early on to get involved with a handful of a very well respected and well established value added resellers. And they all liked our product right up front and thought we had some neat things to offer. But the reality of it was, they were successful selling, I don't want to say household brands, but extremely well known and well established software products that, some of which we compete against. So I think our biggest surprise/challenge that we ran across was getting mind share from them. And frankly, I think a couple of them got involved with us more from the standpoint that they liked what we do. They identified that they would probably run across some low hanging fruit that they could bring our way, but they also wanted to be in on the ground floor in case we really became something big and really hit it big.

So early on, our biggest challenge out of that was really getting mind share and attention from some of the value added resellers that we brought on. And it remains to be as we're growing, we think we're getting a little bit more mind share now, but it's still tough to compete with the people that are selling products from Sage and other very, very large organizations to get mind share. We can get time from them.

Taylor Baker:
Absolutely. And before we go any farther, you sort of referenced this a little bit, but can you go ahead and tell our listeners a little bit more about your software and what you guys do at LeadSmart?

Kevin Brown:
So LeadSmart is a, it's a three-tiered product. Our core product is called LeadSmart Pro, and LeadSmart is a CRM in marketing automation and a channel collaboration suite of products that are all brought together under a single roof. So typically what you'll find is companies are using Salesforce or Sugar CRM or Act! or some product out there for their CRM. Then their marketing department is using another product, maybe it's a HubSpot or Marketo or something like that to try and do some marketing automation. And then they're managing their channel network, literally, most often through spreadsheets. Now, when they want to try and get leads out, a typical company will go to a trade show, they'll come home with a spreadsheet full of leads, they'll sort them by state or zip code or channel and send them out to their partners and hope that something happens.

What LeadSmart does is it brings all of those items together under one roof and one single product offering, where we take our leads and our sales opportunities, we put them into our CRM, we run them through the marketing automation component, whether it's to do email campaigns or any type of blasts that somebody needs to do, we can do lots of digital type outreaches from Facebook messaging campaigns that we can track through to webinars. We can promote all of those through the marketing automation component. Then once that lead becomes a sales ready lead and it's ready to move into your channel partners, then LeadSmart manages that relationship and we use the phrase provide both visibility and accountability into what channel partners are doing with those leads.

So let me give you an example. You might have a manufacturing company that makes what's called them widgets and they come back from a big event and they take their big lists, they put it into their CRM. If they were using LeadSmart, they would run it through our marketing automation component called LeadSmart Engage, and then once the lead was ready to go into their network, LeadSmart would automate the process of it getting out to the right channel partner, and then it would manage and automate the management of that lead throughout that whole process.

So now as a manufacturing company or a technology company that has these external partners, I'm able to track exactly what they're doing with the lead and the status of that lead. In both, I can see the leads engagement from what they're doing with marketing automation, and the timing and activity of our channel partners in managing the lead.

So there's really not been that type of product in the market before. There's a hodgepodge of products, and then some great PRM or partner relationship management type products out there that are wonderful. Those are usually tied to managing the contract and the relationship and the payment with a partner, but not what is the partner's day to day activity. And that's where LeadSmart comes in, and it covers all three of those.

The last piece that I'll mention related to that in this topic, Taylor, unless you have a further question is that we're not just, as we call it, we're not just another CRM product. We call it actually CRM re-imagined, because what we've done is we have what's called an OEM partnership with salesforce.com. So we were actually able to build LeadSmart on the same development platform that Salesforce is developed on. So it's all the same coding base, it's all the same background that they use, but we sell LeadSmart as a standalone product, not as part of the Salesforce community. It's a standalone product, but it's built on that same platform.

Taylor Baker:
Wow, you mean you're utilizing partnerships right there, that's amazing. You've developed quite the one stop shop.

Kevin Brown:
100%, yep.

Taylor Baker:
So you wrote in an article for Software Executive Magazine that companies are experiencing a black hole lead crisis. Can you explain to our listeners a little bit more about what that means and how they can avoid this issue?

Kevin Brown:
Sure. There's actually a great white paper on our website that people could see, I'll plug that a little bit right now if you don't mind. It's just leadsmarttech.com. Interesting, there's a couple sets of research out there from both Forrester and Gartner, but one of the pieces says that a less than 1% of sales leads ever turn into paying customers. That's the piece that I really, really like to target. So I mean, if you can imagine, and I'm going to use the lowest statistic that I've ever been able to find. But in North America, the trade show and event marketplace is over a $40 billion market. So that tells us that companies are out spending $40 billion a year going to shows and events. But the other statistic would suggest that of the leads that are being developed, less than 1% of them ever turned into a customer.

That's because of what we call the black hole lead crisis. It's not that anybody in a channel network or anybody even internally in the company wants to dump leads and not get anything accomplished with them. There's just never really been a great tool that makes it easy for people to do that. And that's where my background, you asked me in your first question about what my background is. I started my career in, I hate to say this, but 1989, right out of college I went to work for a very large national distribution company where we got leads all the time from companies, and they came in by fax in those days. And they never got followed up on well. Then in 1993, I started my first company where I was part of that channel network. I was a manufacturer's representative in the industrial market.

I had about a $10 million a year company, and had about five people, we covered the Western United States selling industrial related products. So we managed the distribution networks. So now, factories that we represented were sending us the leads and then we were giving them to our distribution partners, the distributors and dealers. Nine out of 10 of them got lost. And it wasn't that we didn't care or they didn't care. It was, everybody was busy. Then in 2003, I had sold that business and got involved in manufacturing myself and now I was the guy that was paying the big money to go to the trade shows, generating the leads myself and I was sending them through my own channel network and struggling to get any response out of things.

So that's kind of my background of experiencing the black hole lead crisis, and had an opportunity in 2018 to start working with two veterans from the technology world and one veteran from the software world, my partner, co-founder, Tom Burton. Tom started and exited two different technology companies or software companies themselves, so has a deep background in what we're doing. And I said, "Let's go solve this problem." Right? "Let's help companies not have to worry about this black hole lead crisis."

Taylor Baker:
I didn't realize the percentage was that low, because I myself have been to countless trade shows and I had mentioned to you earlier that I've worked in entertainment a lot, and I don't have an exact statistic, but I would say I probably get maybe one response from every hundred emails I send. So that actually sounds about right, but I didn't realize that it was quite so bleak. So thank you for building a product that's hopefully going to solve that issue.

Kevin Brown:
Yeah, well I tell people all the time, Taylor, I say, let's say that that 1% is not correct. Let's say it's 10%. Doesn't your company deserve more than 10%? But when I talk to companies who have this problem, nobody's shocked about the 1%. and if they were to push back and say, okay, let's say you're three times better than that number, you're 3%. What would it mean to your company if you could take 3% closure rate on show and event leads, and let's say that even if you said that 30% to 50% of the leads were bad leads or just people that went by because they wanted a pen or there was a pretty girl in the booth. Let's say that half of those were, even half of your leads were bad leads.

Wouldn't you want to get those people into a nurturing sequence? Because you could have had a person come to your booth, let their card get scanned, and they're really not the right buyer or the right person in their company. But when do we want to take advantage of an opportunity to get that information into a community development marketing program where you're trying to do outreaches where they could share information about your product internally and become a champion for you in their company. So I always say there's no such thing as a bad lead. They might just not be the optimal lead for your sales cycle, but that doesn't mean they can't be an on trade to an organization.

Taylor Baker:
So in that article, you go on to say, "The best products come from being built to solve a problem the builder has experienced, not one that they think people might buy." I personally love this advice, because I have often found myself in a situation with friends where we invent a product that would solve a random woe we might be currently experiencing. But how can you tell the difference between a random idea shared amongst friends, and a tangible, worthwhile startup idea?

Kevin Brown:
What I look at is, I've been, related to lead scoring is, I've been in this business and this marketplace for 25 plus years, and don't know a soul in the business, and I've had experience in this market internationally as well as in North America, that's not struggling with the same problem. I think when I said that, made that comment is, it shocks me when I will be on TechCrunch or reading Crunchbase or one of the different, one of the different websites out there for founders and startups.

And I'll literally read somebody that's putting a message out there that they have this idea and they're looking for co-founders. And I'm not saying that's bad, it just shocks me. It's like, why didn't you just put an add on Craigslist and see who comes out of the woodwork? I think there's people that come up often times with ideas that that might be a good idea, and there might be an addressable market, but they've not really done a lot of digging and a lot of market research as opposed to looking at, "Did we really, really try and solve a deep problem that's bothering people day in and day out?" Or "Did we find some random idea that might turn into a company?"

Taylor Baker:
In that same article you go on to say, "We've all read those stories that failed because of a power struggle or misalignment." And you go on to say that you and your co-founder Tom, who you've referenced several times already, have been best friends since kindergarten and worked on multiple projects together. How do you avoid that power struggle and manage a personal professional balance when you're working with your friends or family?

Kevin Brown:
Yeah, well Tom would just say it's easy because he's smarter than I am. But no, so Tom and I would both tell you that we're very good friends. Last month in September when the new school year started, Tom and I have now been friends for 50 years.

Taylor Baker:
Wow.

Kevin Brown:
So pretty crazy. And that in itself puts us in a different space than the typical startup founders, right? We're in our mid-fifties, and it's taken us our career to identify how to solve this business problem that we solve with the product that we've developed. We had been doing some consulting work together a few years ago and ran across with a client that we were doing some work with. They were struggling worse than anybody probably I'd seen with this, what we call the black hole lead crisis again. And we said, you know what? It's finally time to go solve this problem, and let's get started on it. At which time we quickly got on the phone with our third co-founder, Steve Snap. Steve has as good or better experience than anybody that I've ever met in the CRM world. I have known Steve for about 15 years now, and in 2018 we started LeadSmart.

Taylor Baker:
Wow. A lot of my guests have mentioned the secret sauce to a successful business is building a community, and who better to build that community with than someone that you've known for 50-

Kevin Brown:
Yeah, yeah.

Taylor Baker:
Years.

Kevin Brown:
Well I think, Taylor, I think I didn't necessarily fully answer your question. You were asking me about power struggles and how do you manage that balance. And it's kind of funny you should address that is that, I think what comes of it at this stage in our lives that Steve and Tom and I are at, is that we've all had an opportunity to do many other companies, involved in many other companies. And we've seen a lot of what doesn't work. And in fact, I tell people all the time, it's not that I'm so smart, it's just that I've made lots of mistakes in the past and I know which ones not to make again. And so, I think for all of us, we've seen what doesn't work in the past in organizations, and we have a very, very high level of respect for each other, both as business people and his friends.

And we find the balance right? And we don't always agree. We regularly disagree, frankly. We just tend to look for what's best for the company. And I can tell you a number of instances, even when we were just developing our articles of incorporationship and our partnership agreements, just some things that both of my partners did, and I hope that I did some similar things, where we were looking out for each other's best interest, sometimes before our own. For us, we love what we're doing, we believe in the problems the product solves. And so everybody's looking to how do we make one, a better product, and two, a better company.

Taylor Baker:
I'm so happy that you guys have figured out how to manage that balance. And hopefully it won't take all of us 50 years to learn that wisdom. But that is sometimes what it takes. Because I think people are really the root of relationships and what makes things work. And if you can't have good relationships, then what matters? So way to go. Really good to hear that from you guys, it's really rare. I mean, to have a friendship last that long and to also on top of that have been successful business partners. So seriously-

Kevin Brown:
Yeah.

Taylor Baker:
Congratulations.

Kevin Brown:

Thank you. Yeah, we feel really special about it

Taylor Baker:
As you should. So as a long time mentor for 500 Startups, what are some of the biggest mistakes you have seen startups make early on?

Kevin Brown:
Well, I'll tell you just if I can, just a brief bit about 500 Startups. 500 Startups is a seed stage capital link incubator in Silicon Valley. There's offices both in Mountain View and in San Francisco. And then they've got projects going on all over the world where they're bringing early startups in. They do a seed stage investment in them to get them started. And then they incubate them at their facilities. I got involved with 500 Startups a number of years ago when a good personal friend of mine was one of their venture partners at the time. And everybody, I don't want to say everybody, but the vast majority of people related to 500 Startups were all technology people, and at the time that I got involved, I was still a physical product guy. But they had startups that they were investing in that were subscription models of clothing and different types of physical products that had warehousing issues and distribution issues and channel partner issues and so forth.

So I got involved with them for that originally, and now I do some work with them as a mentor with some of the startups, both on the technology side and the physical product side. So to of your question, one of the biggest mistakes that we see people make, and in this business in general is, people dream maybe a little bit too much. And I'm a dreamer of myself. My wife would suggest maybe too much. But I certainly respect and appreciate that. But one of the biggest things I see is that people really fail to do a lot of planning. So I'm a proponent of getting out there and figuring out if you have a product that fits the marketplace, and that you have done some homework and some research and you've got the right product fit for the market.

But many people get really deep involved and don't think about the future and don't plan for the future. So they'd not done a lot of work on their partnership agreements, their pricing models, they don't understand what the market needs for their pricing. So, and anytime somebody can take advantage of a mentor network or go out and get some help from people before they get too deep down the road and have started borrowing money and spending money, it becomes critical. And literally, I've had some involvement in the not too distant past with a company that raised millions and millions of dollars before they have even proved their product could work in the marketplace. So there's kind of a double edged sword as you've got to figure market fit. And then you have to have a really well prepared company so you can go execute to grow, because without a good base you can't grow.

Taylor Baker:
Absolutely. How do people get involved with 500 Startups? Do you have an annual application go on, or is it by referral?

Kevin Brown:
Yep, so a little bit of both. So anybody can go to the 500 Startups website and I mean you may have heard of Y Combinator, or some of the other very large incubator groups that are growing. 500 Startups is very well known as well. And 500 Startups works with what they call batches. So they do multiple batches a year, and now they've got, in fact, I think right now I just got some feedback recently. We have a batch going in Brazil right now as well. And so those batches have done a fast pitch, then they've gone through another pitch series, then they've been accepted, received a small investment, and then they go into the incubator.

So you can apply to 500 Startups anytime, there is all the information is available right there online. And then when somebody is accepted, then they get this invitation. I don't know how many the mentors there are now, there's well over a hundred, I'm sure. They have different backgrounds and different specialties that they have access to for free. So-

Taylor Baker:
Wow.

Kevin Brown:
And then what the mentors do is they regularly schedule what they call office hours. So we're available and can post to the teams that are going through the incubator on what we can help them with and then they can choose to schedule time with us.

Taylor Baker:
Wow. What an amazing resource.

Kevin Brown:
Yep.

Taylor Baker:
So my last question was sort of on the negative as far as mistakes you've seen, but I'm sure on the other hand, having worked with so many startups, you've seen a lot of best practices and a lot of successes come from the choices people have made. What would you say are the best practices and the better, more positive advice you've seen come out of some of these young startups?

Kevin Brown:
I'm going to make a comment that I make regularly. And it literally came from a quote from Marc Benioff, the founder of salesforce.com. He made this comment on, I think it was the third quarter 2018 Salesforce earnings call for their investors. And it's so, so profound to me when we talk about technology. And he said that people want to buy outcomes, not more software. And so it just resonated with me so deep within to my entire career. People are looking for solutions and solving problems that they're going to get outcomes from, they're not looking for more consultants. They're not looking for more software, they're looking for outcomes.

So for startups to grow, I think the single biggest thing they could be doing is really identifying how solid is their product in solving problems for people and making people's lives better? And then when you take that to the best practices is then okay, then go develop the product, make it easy for people to get to and use, and then develop a good company behind it. And put those things in a priority so that you're always trying to serve the customer so the customer gets outcomes.

Taylor Baker:
Wonderful advice. Thank you so much for sharing that. So we're kind of wrapping things up now. Do you maybe have anything exciting coming up with LeadSmart or any events or anything you want to share?

Kevin Brown:
Yeah, we've got some product updates planned. The third leg of our stool of our three product suite in LeadSmart Pro is, as I've talked about earlier, is our channel collaboration suite. So we're doing some kind of neat things with some new reports, and a little bit of user experience should be improving and we're hoping to see that in November. And so we'll do an announcement about that as that comes out on, I think it's the 4th of November, Wednesday, it's either the fourth or the sixth. I'm speaking on a panel with Software Executive Magazine at a channel partner event that they're putting on. And this one happens to be here in Southern California. So I'm looking forward to that and being part of that. And then we're just, to continue to grow our channel partner network. So those are kind of the things that I've got my focus on right now as we're growing our company.

Taylor Baker:
Great. Kevin, you've had a lot of really wonderful insights. I'm sure our listeners are going to have some followup questions for you.

Kevin Brown:
Sure.

Taylor Baker:
If they are interested, how would they be able to reach you?

Kevin Brown:
So, I'm extremely active on both Twitter, and LinkedIn even more so. So Twitter is, LeadSmartCEO is my handle there, @LeadSmartCEO. I'm one of a hundred probably Kevin L. Brown's on LinkedIn, but I'm extremely active on LinkedIn, so I'd welcome anybody to reach out to me there and certainly you could reach me at my email address, which is kBrown@leadsmarttech.com.

Taylor Baker:
And worry not listeners, no need to sort through all the Kevin Browns. I will link to Kevin's profile-

Kevin Brown:
Very good.

Taylor Baker:
In the notes here, as well as his Twitter. Thank you so much Kevin, for taking the time. You've had some really interesting insights and I'm sure our listeners really appreciated them.

Kevin Brown:
Great. Thanks Taylor. It was fun to be with you today.

Taylor Baker:
And to all of our listeners out there, thank you for listening, and be sure to tune in next week for even more exciting co-selling content. Now go get your partnership on.

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