Episode 71 Ujwal Arkalgud

[00:00:00] What Are “Invisible Rules”? (Why You Can’t Unsee Them)

[00:00:00] Ujwal: So, Invisible Rules it's a book that teaches any reader to learn to see the invisible rules of the game. And it teaches them how to see it. Because once you start seeing it, you can never unsee it.

[00:00:13] ​

[00:00:19] Allan: Welcome to the Lean Marketing Podcast. I'm your host, Alan Dibb.

[00:00:23] Allan: Today, I have with me Ujwal Arkalgud and Ujwal is known as a cultural anthropologist. He's an experienced entrepreneur and he's exited a startup for multi eight figures. Very impressive. He's now an investor specializing in value engineering for founder-led firms. So, uh, it's my pleasure to welcome Ujwal How are you? So good to have you on the podcast.

[00:00:48] Ujwal: Thank you for having me a.

[00:00:50] From Corporate Marketing to Cultural Anthropology: Ujwal’s Origin Story

[00:00:50] Allan: So give us a little bit of background into your story because, you know, we were chatting prior to this. You've had tremendous success. You've had a huge exit. You've got a lot [00:01:00] of experience in private equity in building startups. So maybe just give everyone a little bit of background on your story and then we'll get into it.

[00:01:08] Ujwal: The short end of it is uh, I'm an engineer and I got myself an MBA degree because you know, speaking of invisible rules, which we'll get into because I thought that was the pathway to follow, you know, secure job, great career. I don't know, we wear a nice crisp white shirt and go to work every morning.

[00:01:25] Ujwal: But, you know, I, I, I hated it. I worked in marketing and corporate marketing. I hated it. And I realized that the, my very passion for social and cultural anthropology, because I hadn't pursued an academic degree in that. Now, I was kind of stuck. Nobody's gonna hire me as a researcher, that's what I wanted to do.

[00:01:43] Ujwal: So, you know, it was born out of necessity. I said, okay, I'm gonna hire myself. I'm gonna start a company and just hire myself as an anthropologist and we'll see how it goes.

[00:01:52] Allan: Well, what is a cultural anthropologist?

[00:01:55] Ujwal: there are many forms, but I, you know, in simple terms we study culture and [00:02:00] meaning. Uh, But my specialty is the study of language. So I'm particularly interested in how the way we use language not only communicates obvious and, you know, tangible things, but it also communicates a lot of things that are intangible.

[00:02:17] Ujwal: We inadvertently show the world about how we associate and assign meaning to the world around us. And so my entire obsession with anthropology was born out of this discovery that, Hey, we could do this with language, you could study this. And of course when you apply technology to it, and now AI, you can do it at scale, which is very exciting because it allows you to see and understand people's motivations in a way that we just couldn't before.

[00:02:43] Allan: That's awesome.

[00:02:44] Building an Anthropology Research Startup: Enterprise Clients, Deliverables & Sales Cycles

[00:02:44] Allan: We'll get into AI and startups and things in a moment, but what was the startup that you had built? Was it you who founded the startup? How did you grow? What were you selling and who were you selling into?

[00:02:54] Ujwal: Yeah. So like I said, you know, I hired myself as an anthropologist, as in I started a company that would [00:03:00] do anthropological research for large corporations like McDonald's, General Mills and so on. So what that meant was we were doing market research, but in particular helping large companies understand human beliefs and value systems.

[00:03:15] Ujwal: So, simple example, you know, a corporation might see a lot of people suddenly talking about probiotics, but they don't know why. And our job as anthropologists was to help them understand what meaning do they assign to probiotics. So, as an example, in the US there's a, you know, growing growing sort of, let's say level of disappointment or a lowering of expectation in terms of what the healthcare system can really do for us. And as a result, a lot of people will flock toward alternative foods and alternative healthcare back then alternative. I say this in quotes as a way to take some level of control back.

[00:03:53] Ujwal: So as an anthropologist, my job is to decode that and help the organization understand that. Okay. The trend [00:04:00] isn't probiotics. The trend is this growing disillusionment with the health system, which means you actually have a much broader playing field with which you can innovate and build products and solutions.

[00:04:10] Ujwal: It's not about probiotics per se, so that, that's basically the kind of work I did.

[00:04:15] Allan: And what was your like deliverable to these companies? So did you just send them trending reports, Hey guys, look out, this is trending, or did they come to you and say, Hey, we don't really understand why our clients or customers are doing this, that, or the other. Can you go look into this specific thing?

[00:04:32] Allan: What did that look?

[00:04:33] Ujwal: it started with helping them understand trends that you know, they could see the surface level of what the trend was. They didn't know why. So that's how it started. But eventually we became the in-house anthropology team so that we were not just tracking what was already top of mind, but helping them understand what should be top of mind.

[00:04:56] Ujwal: In the next, you know, 6, 12, 18 months. And the deliverable [00:05:00] was, you know, research reports and analysis that helped innovation managers and innovation leaders make decisions on where their products need to be, what kinds of investments they need to make, you know, what kind of marketing pushes needed for it and so on.

[00:05:13] Allan: And who typically engaged you? Was it the marketing side or was it the product development? Or like at CEO or like who would say, Hey we guys, we need.

[00:05:22] Ujwal: It was sort of both. We had a lot of CCMO LED initiatives, and then a lot of sort of COO and product side led initiatives. There were different initiatives on either side. Obviously marketing was more concerned about how do we remain relevant in culture, while product was more concerned about what do we launch next?

[00:05:41] Ujwal: But the, you know, the way to solve the problem was the same for us.

[00:05:45] Allan: Okay. So it sounds like a pretty valuable service. The thing that initially comes to mind is like. This sounds like it's gonna be a long sales cycle, and especially if you are unknown in the industry. Like quite honestly, I mean, I've been in marketing for a while. I'd [00:06:00] never heard of cultural anthropology.

[00:06:01] Allan: Like if someone sent me a cold pitch saying, Hey, I'll be your cultural anthropologist. I would just delete that uh, immediately. So, how did you get customer number one, customer number two, get in there, get attention of the CMO, the CEO, whoever needed to make that decision and then convince them that's something that they needed.

[00:06:22] Ujwal: Yeah. A fantastic question. You know, we were bootstrapping our business and we knew we had to get smart. So spending money isn't gonna solve the problem, just getting awareness for what we're doing exactly, to your point. So everything became about trying to understand what the hidden requirements were that granted us credibility, authority, and thereby attention. So the questions we asked were, if I am a CMO or a VP of product and I'm solving a problem, [00:07:00] like, you know, I better make sure. Really the problem is I better make sure sales of my yogurt product doesn't drop. In the next 24 months, right? That's where everything comes out of.

[00:07:09] Ujwal: Everything is born out of fear.

[00:07:11] Allan: Yeah.

[00:07:12] Ujwal: And so then the question became, okay, so if that's my goal on paper I understand what the logical side of the goal is, but what is the not so logical part? Does doing this get this person promoted? Does it get them a seat at the, you know, so-called big kids table and they get in front of, you know, the CEO and so on.

[00:07:32] Ujwal: And so we started calling up. These potential buyers and just asking them questions to learn about what's actually going on for them,

[00:07:41] Allan: Hmm.

[00:07:42] Ujwal: recorded the conversations. And I used anthropology to decode the, what was not being said, but sort of communicated implicitly, if you will. And so one of the first things we learned is that research and product people in particular, they're seen like the, [00:08:00] just to simplify, they're seen like the nerds of the organization.

[00:08:02] Ujwal: You know, they don't get to sit at the executive table. Once all the decisions are made, they're kind of communicated up the chain in five minutes by one of the leaders.

[00:08:12] Ujwal: And it's sad because the work they do is literally the thing that shapes the organization's future. And so one of the first things we did was helped shape research that would get them a seat at the big kids' table.

[00:08:26] Ujwal: And so. The way we would pitch people is to say, I know you do amazing work, but you do not get the credibility and the attention that work deserves.

[00:08:38] Ujwal: Our research will help you get in front of the right people in your organization. It'll help you tell the story of the human being behind. Your consumer and people will care.

[00:08:50] Ujwal: I'm simplifying, but that's how we got started and that's how we got General Mills. That was the first thing we worked on. And it was a turning point for the business, but that's how we got it. We got [00:09:00] it by asking about the invisible requirements, the needs, the trust signals that are not, you know, obvious.

[00:09:09] Allan: I love that. So just to dive into that, because so many people are at startup stage and they've got maybe a complex product for B2B or enterprise, what was the lead time from you being like, Hey this would be a, a really good client to target and starting to look at the who's who in the zoo.

[00:09:25] Allan: Who should we connect with, all of that to actually signing the deal? How long did that take?

[00:09:30] Ujwal: Initially it was about four months and then we eventually distilled it down to, you know, 60 days. Obviously there's still B2B enterprise deals and you know, our deal size initially in year one was 20,000, 30,000 and pop, it eventually went to half a million dollars, million dollar accounts. So obviously those take 60, 90 days easily 'cause you've got procurement involved and all that stuff.

[00:09:53] Ujwal: But yes, fundamentally we distilled it down to under 90 days by really [00:10:00] mastering these invisible rules, right? Mastering the rules of what do you need to say to gain instant credibility and get them to get on a call with you. That's half the battle, and once you're on the call, if what you're doing is really valuable, at least then you have their attention, and then you can figure out how to shape that narrative.

[00:10:22] Allan: Well, you've got my attention now.

[00:10:23] Winning Enterprise Trust: LinkedIn Outreach, Conference Intel & Instant Credibility Tactics

[00:10:25] Allan: So, um, what, what was the strategy that you used to get that person on the call? So did you just call, cold call outta the blue? How did you get your first few clients on, on that call?

[00:10:34] Ujwal: The first few clients were all on LinkedIn. Very simple, you know, LinkedIn messages. But we, we sent messages with a very specific idea, so it always began with what is the shift that is inevitable in the industry? So in the market research industry at that time, what was the shift that was inevitable?

[00:10:54] Ujwal: For us, it was, and this is 2015, 2016, technology was just starting to come into market [00:11:00] research. AI wasn't everywhere yet, and we were an AI led company. So we didn't lead with AI. We led with, hey, technology's coming and it's speeding up research and it's potentially taking away some of the work that you need to do on the ground, you know, being infield in quotes, and that's what we led with, that the shift is inevitable.

[00:11:21] Ujwal: It's already happening. Here's some data. The point is, how are you gonna navigate this shift? Are you gonna do it by resisting and being on the back half of the class? Are you gonna be one of the leaders? And here's three things that some of the leaders are doing. Simple formula. We got about 10% response rate, which is massive. The thing is, Allan, and I still find this, by the way, you know, I still get pitches every day. It's the same thing, right? Here's what I do. Here's my product. Are you interested in a 50 minute call?

[00:11:57] Allan: Yeah.

[00:11:58] Ujwal: It's lazy. right? [00:12:00]

[00:12:00] Allan: I agree.

[00:12:01] Ujwal: And the thing is, we never did any mass messages. So we would, it would sometimes take hours to research this person and figure out what is it that they really care about.

[00:12:11] Ujwal: It would take hours. And if we didn't land on something that was crystal clear, we never emailed them because to us it was, you know, you've got that one shot, you don't wanna ruin trust, so you gotta build it instantly. And so. It was all a laser sharp focus. So, you know, when we scaled our business past 5 million, past 7 million, still didn't have a salesperson.

[00:12:32] Ujwal: It was just my co-founder and I sending LinkedIn messages and speaking to people at conferences. But everything was formulaic in this way because I'm not a natural salesperson. So I had to kind of teach myself through formulas so I could memorize and sound more natural than I really was.

[00:12:50] Allan: I love that. I wanna double click on a couple of things that you said. So number one is like in B2B and enterprise, everyone from the [00:13:00] bottom right up to the CEO. Always thinking, is this gonna make me look stupid to my boss? Is this gonna make me get fired? Is this gonna be like.

[00:13:08] Allan: Yes, they want gain. Yes, they want to improve in the organization, but they're very risk averse. They're very fearful of, you know, is this risky? Will this make me look bad? Will I get you know, told off by my boss or even fired or whatever. So I think that is a very valuable insight.

[00:13:26] Allan: The other thing that is critical is with cold outreach to be personalized. There's nothing worse than a general templated, spammy, kind of like all of our spam inboxes are full of people just doing the same copy paste thing. Now it's even worse, we've got AI slop copied and pasted. So, the fact that you spent a lot of time to personalize the outreach hours and hours of research before reaching out to the person to make sure that, hey, they know this is 100% personalized.

[00:13:56] Allan: This person is sharp. They know what motivates [00:14:00] me. They know what's gonna make me look good. And then of course, yeah, I'd, I'd upgrade her phone call with that as well.

[00:14:06] Ujwal: Yeah. Like I always use this analogy to say, let's say we want to get healthy and let's say our goal is we want our body to look a certain way. It's not gonna happen overnight, and it requires a lot of discipline.

[00:14:18] Allan: Yeah.

[00:14:19] Ujwal: And I think the challenge is, I see so many founders lacking the discipline of the back work needed.

[00:14:26] Ujwal: Before that moment of truth where you email somebody or pick up the phone or get on the phone call or you have a follow-up discovery, whatever it is. And the backend work is the hard part because it's not sexy, you know? For example, one of the things we did, and I still tell founders to do, it's such a great hack, no matter what your industry is go to the best conference, the biggest conference in the industry, and take as many colleagues as you can or your co-founders, whatever, record as many of the biggest sessions, especially the ones hosted by potential prospects. And then go [00:15:00] back and shove it into ChatGPT. Shove the transcript into ChatGPT now, which you can do, and ask it to do a linguistic analysis pattern recognition analysis.

[00:15:09] Ujwal: Ask it to identify the most common patterns of language used by clients, potential clients, you will see same systems patterns and then go integrate that. Literally memorize it, integrate it into your pitch. People love hearing their own language. Regurgitated back. It's a, you know, very simple human psychology.

[00:15:31] Ujwal: And instantly, they're more likely to trust you. They'll feel more connected to you. They feel psychologically safe. And you alluded to that earlier, Allan, people operate from such a position of fear. Our job when we're selling is to make them feel safe all the time at every single call.

[00:15:48] Allan: I tell clients all the time who are doing market research. If you haven't been a part of your target market, so if you're just entering a market that you don't understand from a personal level, [00:16:00] going to an in-person conference is just like a master class because they're gonna have the keynote speakers who are talking about the most topical stuff in that industry.

[00:16:09] Allan: They're gonna have panel discussions who are talking about whatever's going on. In between lunchtime, they're gonna be chatting about what's going on in their industry. Who's who, what are their fears? What are their hopes? What are their frustrations? In a day or half a day, you'll learn more than six months of online research, so very powerful hack.

[00:16:28] Ujwal: exactly. And I think the other thing I would add is, you know, we all have this you know, especially in the modern day and age we expect quick results, and it's a, you know, it's a terrible drug. Quick, you know, this expectation of quick results or shortcuts and there aren't any.

[00:16:44] Ujwal: So, you know, you go to that first conference, you gotta resist the urge to try to pitch your business. Just ask questions and listen. That's not the purpose of that conference, right? You're there to actually learn.

[00:16:56] Allan: Well, I've found even go there and learn and just be [00:17:00] helpful. I mean, if you are just helpful to people, I mean, it'll naturally progress to like, Hey, man, so how can we work together? Or tell me a bit more about, you know, so, it's such a, it's such a good way to do business.

[00:17:12] Allan: So you are the author of a book called Invisible Rules. And you've alluded, you've said the word the phrase invisible rules a few times. What are invisible rules? Take us through some of that. How can someone use these invisible rules to, like you said, gain credibility ahead of a call?

[00:17:28] Ujwal: Yeah, Invisible Rules was just born out of my experience of trying to scale a company with very little resources, and I realized, it was just a, a nice way to kind of capture this idea that in every game, in every industry you're playing this game, this cat and mouse game. You're trying to get interest for whatever you are selling and trying to do.

[00:17:50] Ujwal: Interesting work in every game there are a set of rules that we all know of, right? How do you show up to a meeting? How do you arrange a meeting what to wear, how to talk [00:18:00] about it, all of that. We are all aware of that same old playbook. The stuff that isn't talked about is what I call the Invisible Rules and the stuff that isn't talked about

[00:18:08] Ujwal: we don't take, usually we don't spend any time paying attention to it. So I'll give you some examples. In every industry, there are formats in which the buyer expects to see information, and it's different in every industry, sometimes even different based on who the buyer is. If it's C-suite versus somebody junior.

[00:18:29] Ujwal: We don't pay attention to what the format itself communicates in terms of perception, what perception it creates or jogs in the mind of the buyer. And the problem is, as human beings, the first 30, 90 seconds, we've already kind of made up our mind whether we like this person or not.

[00:18:46] Ujwal: So the first 90 seconds of your opening presentation, you better lead with all of those things that are invisible, that you've taken the time to understand. So I'll give you an example with my last business. We [00:19:00] were selling anthropological research, like you said, complicated to explain. I'm telling complex stories of human belief systems.

[00:19:06] Ujwal: No C-Suite wants to pay attention to all that. They're already on their phones, whatever, they're busy or pretending to be. And so our job was we have to capture all of this nuance, but we have to present it in the form of a consumer quote because they love quotes from a consumer. They'll remember it and take it with them doing their water cooler rounds, talking about what a consumer said.

[00:19:33] Ujwal: So you take all this research and you distill it down to one single quote. Sometimes we would spend hours debating what that quote should be, but when we got it right, Allan that CMO would hire us because they just remembered the quote from the consumer.

[00:19:51] Allan: What's an example of one of those quotes in an industry? I mean, you don't have to mention the name of the client or anything like that, but I'd love to hear some examples.

[00:19:59] Ujwal: [00:20:00] Yeah. A great example is there was a client that had there was a food product where there was some pesticide discovered and the client was freaking out and we found all this research that showed that there's nothing they need to do.

[00:20:14] Ujwal: It was trace amounts. It happens. They were freaking out. But we found that the consumer could not care less. And so we captured the essence of this in a quote that said was when something like this

[00:20:30] Ujwal: "If I can make it through a morning school, drop off, wake up and school drop off routine, where my kids are happy, they're not fighting with each other, I'm not stressed out, and my heart rate isn't bumping. With my, you know, whatever my fitness device is and I get to work and I'm actually relaxed. That's a huge win."

[00:20:51] Ujwal: And this product is critical in making that happen. 'cause that's the one thing the kids don't fight about [00:21:00] is the bloody breakfast, right? And so it was something to that effect. It was worded a little better than that, but I remember the CMO looking at that and going, ah.

[00:21:10] Ujwal: Oh my god. That's it. So that's why people don't care that there's trace amounts of whatever, glypho, whatever it was. And it was in a couple of products, out of million units, whatever. So that's an example of an invisible rule that we understood by actually attending these conferences. 'cause in these conferences we'd see all these executives putting up quotes on their slides like.

[00:21:31] Ujwal: It was the thing, and we would scratch our heads going, okay, they've just studied a thousand people and they're obsessed with what one person said somewhere. But that's 'cause we like to tell stories around the water cooler in organizations. So if you don't pay attention to these things, that's what I call an invisible rule.

[00:21:47] Ujwal: And there are many of them. So it's about the formats, it's about how you present your credentials, your background. And how you relate that to what the project is at hand. You know, we all tell the stories of our [00:22:00] backgrounds and we tell it the same way in every meeting. No, it's gotta be personalized to the specific meeting.

[00:22:07] Ujwal: What about your background or maybe your obsession with Rush, or whatever band it was growing up connects to this particular context? So, Invisible Rules it's a book that teaches any reader to learn to see the invisible rules of the game. And it teaches them how to see it.

[00:22:27] Ujwal: Because once you start seeing it, you can never unsee it. And it allows you to, and I think you posted this recently on LinkedIn. It was something about, I wrote it down something about, you know, the difference between collecting ideas and installing systems to me in invisible rules is a system you install in your brain.

[00:22:42] Ujwal: Because once you start seeing it, you just become so much more astute about how to manage these different scenarios, how to present what you have in a way that creates the perception of credibility, authority, and gets you moving on those deals.

[00:22:57] Allan: So, obviously there's [00:23:00] preparation, obviously there's understanding our target market. Well, what are some ways that you can present instant credibility or instant authority, let's say I'm going to an important networking meeting. I know there's gonna be important people who are intelligent, who, people who you know, I wanna get their attention.

[00:23:17] Allan: Obviously I'm gonna do my research. I'm obviously, I'm gonna understand what projects they're working on, what's motivating them at the time. How else would you prepare someone with something like that?

[00:23:26] Ujwal: Yeah, one of the simplest hack um, we used all the time was what I call, you know, just presenting a counterintuitive insight. So you take one industry assumption that everybody. You know, understands really well because you, and you open with that assumption because the moment you open with it, the other person's interested.

[00:23:46] Ujwal: You don't open with something they don't know. So you open with something, they know they're interested and then you tell them that actually what they think is right may not necessarily be right.

[00:23:56] Allan: Okay.

[00:23:57] Ujwal: And the moment it's counterintuitive and obviously you need to [00:24:00] back it up with some research you've done.

[00:24:01] Ujwal: Maybe it's a case study, some work you've done with another client. So you have to figure out how to back that up. But it's a great conversation opener because it allows you to create a little bit of scarcity of ideas in the other person's mind. The moment they see a bit of scarcity, they lean in, they want to know, 'cause obviously people don't like risk, and I'm revealing a potential risk.

[00:24:25] Ujwal: And then it engages them in the conversation and then it unfolds and you let it unfold. And then as you let it unfold, one of the key things I find is, you know, if you've already studied some of the invisible rules of the game, you will know uh, what kinds of words to not use in this conversation, right?

[00:24:42] Ujwal: And I focus more on what not to use than what to use. 'cause sometimes not all of us are good at memorizing stuff and figuring it out or thinking on our feet. So it's better to think about it as in terms of what not to say oftentimes. Yeah. So you know right now if you're selling [00:25:00] anything, right, if you throw out ai, a lot of enterprise buyers will just start ignoring you.

[00:25:05] Ujwal: 'cause it's, people are just sick and tired of it. So you can be an AI company, but you don't lead with AI anymore. You can't, 'cause you know, there's no credibility associated with it. So you have to lead with what actually helps you solve a unique problem. So, I was recently talking to a company that does cybersecurity work and they're leveraging AI for it.

[00:25:28] Ujwal: And one of the things that they do really, really well, is they do some predictive work. Now, I told her she was going to a conference the founder and I told her just as an experiment in this conference, when you introduce yourself, don't say anything about AI. Talk about how you do predictive work and the algorithms that you're building in order to predict where potential centers of risk are.

[00:25:51] Ujwal: And how that's so powerful. And she came back to me after and said, you know, it's amazing. I didn't even have to mention AI. Everybody [00:26:00] knew I was talking about AI, but they were engaged because we were having a real engaging discussion on predictive algorithms and where it's going. And she ended up picking up a client from that conference as well because of that.

[00:26:13] Ujwal: So I think that's the other thing is you have to understand, what are some of the words, terms, ideas that now have negative connotations in your industry, and just avoid them. It's so easy now, you know, put it into ChatGPT, come up with synonyms, other ways to say the same thing.

[00:26:29] Ujwal: But all those little things, Allan, it's, it all goes back to, you know, the discipline of studying this stuff, taking the time to research it, and then preparing yourself so that when you're finally at that cocktail event, you know exactly how to open.

[00:26:44] Allan: It is such an underutilized skill, like preparation for even basic sales meeting. Anything else? You know, I've got a friend uh, Michael Pollard. He's well known as a sales trainer and [00:27:00] whenever someone gets him on a sales call you know, most sales calls kind of start with a bit of small talk, and then they're like, all right, well, tell me a little bit about your business.

[00:27:10] Allan: And his response is, well, after having looked at my LinkedIn and my website, what questions do you have? And, you know, most sales people won't have even bothered to look at your LinkedIn or your website to really understand your business. And so they waste half of the sales call you explaining, Hey, well, we're in this industry, we do this.

[00:27:28] Allan: This is our client, and so on and so forth. So massive, wasted opportunities.

[00:27:33] Ujwal: Yeah, exactly. And I think, you know, going back to invisible rules of credibility and authority, nobody's gonna consider you credible if you open the conversation with why don't you do, introduce yourself and tell me about your business.

[00:27:47] Stop Pitching Yourself: Build Trust with Insightful Messaging (Websites & GTM)

[00:27:47] Ujwal: When I'm the one who's asked you for a meeting straight away.

[00:27:50] Ujwal: I'm telling you that I don't value your time enough. And you instantly know that, you know, this person's useless. Like they're not gonna give me anything that I don't already know, or they're not gonna [00:28:00] potentially, you know, help me avoid future risks or whatever else it is. And it, you know, it the problem is that I see this not just in sales.

[00:28:09] Ujwal: I also see this across the broader go-to market function. So, for example, you know, the way a website is constructed, all the websites, you land on the website and it's like, here's our product and here's all the certifications we have.

[00:28:23] Ujwal: Right? As opposed to saying, here's where the industry's headed. This shift is inevitable.

[00:28:29] Ujwal: Here's how it's affecting your business, and this is why we're leading that change. What a different feeling it creates for somebody reading your website. They're like, oh, that's interesting. They have something to say that's of value.

[00:28:42] Allan: Totally.

[00:28:42] Outreach That Wins: Pain-Point Copy + The “Junior Employee Intel” Hack

[00:28:43] Allan: And um, you can tell an amateur marketer a sort of middle of the road and then an advanced marketer, so amateur marketer is we are awesome. This is our staff we've been in business for this long. Middle of the road is talks about outcomes. Hey, buy our stuff and you'll get this amazing outcome.[00:29:00]

[00:29:00] Allan: Advanced marketers will talk to the pain point that somebody is experiencing and they'll describe that pain in better detail than even the prospect could put it themselves. So they're like, they get straight to the, what is the pain point right now? What are they, you know, waking up at 3:00 AM worrying about.

[00:29:18] Ujwal: Yeah. And you know, one hack that I'll mention that I still do is if I want to reach the VP, I would first reach out to the most junior employee on their team. 'Cause nobody reaches out to them and they'll take a call and I ask them, what is the VP like? What do they really care about?

[00:29:36] Ujwal: What's going on? What are the politics in the organiz? Make some jokes. This, that build some rapport and you get all this intel. About, oh yeah. You know, CEO is creating a lot of stress about this division in particular. You know, we don't know where this is gonna go, blah, blah, blah. And so when you get on the call with the VP, the VP's impressed. How the hell do you know all this stuff? Turns out I just spoke to some guy who's worked there for six [00:30:00] months, but you know, people don't do this stuff and it just separates you from the crowd so quickly.

[00:30:07] Allan: I love that.

[00:30:08] Allan: Hey, it's Allan here, ready to dive deeper into today's marketing insights? Head over to lean marketing.com/podcast. To get a full summary of today's episode, including all of the resources mentioned, go to lean marketing.com/podcast. Now, back to the show.

[00:30:24] Engineering an 8-Figure Exit: Sales Efficiency, Trust Touchpoints & SaaS Pivot

[00:30:24] Allan: I'd love to talk a little bit about how you build value in a business that's so valuable that somebody would pay multiple eight figures for it. Because it goes beyond just, okay, creating revenue and you know, adding clients, obviously that's a hugely important part.

[00:30:42] Allan: But enterprise value varies dramatically between businesses that are making the same amount of revenue or even the same amount of profits. So how do you build an incredibly valuable business?

[00:30:54] Ujwal: I would say the biggest thing is you know what private equity refers to as the sales [00:31:00] efficiency magic number. So if you simply think of it as if you spend X dollars this quarter, how many dollars are you gonna get in return? The next four quarters divided by four.

[00:31:13] Allan: Mm-hmm.

[00:31:13] Ujwal: and it's basically asking how.

[00:31:17] Ujwal: Effective is the effort you put into market to acquire new customers and to acquire new revenue. But what's interesting about that metric is it's not just about sales even though it's called sales efficiency, it actually captures how strong your brand is, what you stand for, because if what you stand for isn't that relevant, you're gonna spend a lot more money to get a lot less attention and a lot less revenue in return.

[00:31:42] Allan: Hmm.

[00:31:43] Ujwal: Allan, the majority of businesses. So I talked to a, a bunch of business 'cause you know, my business now is I help companies who are on the cusp of exit. I help them engineer their value to exit. 'Cause there's so many companies that hit a bit of a ceiling and then they flatline. And then [00:32:00] when you flatline, nobody wants to buy you and your enterprise value goes down.

[00:32:04] Ujwal: And what I find is, you know, every business initially grows and we had the same thing you initially grow because you get a hyper niche customer who's kind of self-selecting because they already like what you do, they're innovative, they're empowered within their organizations to buy from you, and so it works.

[00:32:22] Ujwal: And then, you hit a ceiling because they're no more of these innovative empowered B2B buyers left in your niche. That means, at this crisis point, you have no other option but to make your product and your business and your brand relevant to a slightly more mainstream audience, IE you gotta sell to people who buy based on fear.

[00:32:44] Ujwal: And that's the thing you didn't have to do in the initial stages of building the business.

[00:32:49] Ujwal: And this is the turning point for me. I see so many businesses struggle here and it's because they don't think about the intangibles. And what I've found over the years is the number [00:33:00] one thing that will drive up your sales efficiency is not, you know, AI tactics and AI slop and scale and you know, throwing money at stuff, none of that typical playbook bs. The number one thing is if you can figure out what builds trust and how do I master that across every single touch point? Because you know, 80% of a B2B buyer's mind is already made up before the first call, right?

[00:33:31] Ujwal: They've already seen your website, they've read your content on LinkedIn, they've done some Google searching, whatever. That's what you need to focus on. And when you focus on that, you have to really pay attention to language. What are you saying? Such that it initially, it instantly instills confidence and credibility in the buyer's mind.

[00:33:51] Ujwal: Nobody's focusing on that. To me, that's the number one thing. And it will drive, and I've seen this firsthand. It will take a business from a 1x [00:34:00] sales efficiency to a 4x and suddenly their enterprise value goes from, you know, they might get, I don't know, two x of EBITDA or 3x of EBITDA to 10x plus of EBITDA because of that. And that's, that's the thing.

[00:34:15] Allan: So the two metrics that I think of above all, when it comes to marketing, I mean when it comes to marketing, there are a ton of metrics, right? But it's cost of customer acquisition, and then there's lifetime value of the customer. They're the two at the top of the tree. And it sounds to me like sales efficiency is a mix of those two.

[00:34:35] Allan: So it's like, what's a customer worth over their lifetime? And then you probably divide by what does a cost us to acquire a customer? Is

[00:34:42] Ujwal: Yeah it's kind of an in-between number. Yeah, exactly. But when your sales efficiency ratio goes up, your cac, your cost of customer acquisition goes down.

[00:34:51]

[00:34:51] Ujwal: So it is directly inversely related, but directly related. And your're absolutely right. You know, customer acquisition cost is so [00:35:00] critical because you know, you have to put yourself in the shoes of the buyer.

[00:35:04] Ujwal: The buyer is going what will happen if I throw another million dollars at this company,

[00:35:10] Allan: Yeah.

[00:35:11] Ujwal: Or $10 million at this company? And they don't have the time to run detailed scenario plans, so they will look at one or two key metrics to answer that question in 30 seconds. And so, if you don't master those metrics for your business. You can't build a really successful exit. That's the challenge.

[00:35:30] Allan: Yeah. The other thing that I've had a lot of success with in some of my previous exits is mapping the uplift that they're gonna have in their business because of the intellectual property that they apply to ours. So if they've got a customer base of whatever, 10,000 clients or whatever, you take our technology, or you take our intellectual property, you apply it to that base, then there's gonna be this huge uplift.

[00:35:53] Allan: So yes, you're gonna get our revenue, yes, you're gonna get our profit. And yes, if you inject more capital you'll get [00:36:00] that result. But them seeing, painting that blue sky picture of, hey, you're gonna get this uplift to your existing customer base because one plus one equals three in this scenario.

[00:36:11] Allan: I found that to be a very compelling story.

[00:36:14] Ujwal: Yeah, absolutely. Completely agree. And, And you know, I think, um. there are a lot of little things that go into some of this stuff. But what I've found by and large is when founders start looking at these metrics in their own business, it does create a bit of a wake up call.

[00:36:33] Ujwal: Because, you know, the challenge with the VC hypergrowth model is that it rewards you to throw money at the dartboard and see what sticks.

[00:36:48] Ujwal: But guess what happens when you do that? Your CAC keeps going up, sales efficiency keeps going down. And even if the lifetime value of a customer is high, you're just spending way too long and too much time [00:37:00] and too much money in acquiring them, and so your enterprise value keeps going down.

[00:37:04] Ujwal: And I think this is sort of the um, paradox of taking other people's money to build your business. So I'm not saying don't take other people's money. They're businesses that need investment. But I think how you spend the money is where the magic is.

[00:37:19] Allan: I kind of think of outside capital as like jet fuel. You know, some businesses really need that jet fuel to really get them launched. And not every business needs the jet fuel, right? So,

[00:37:31] Allan: With the business that you exited, it sounds like it wa wasn't necessarily a recurring revenue business, that it was mainly like one-off research reports or one-off projects and things like that. So is that true to say or?

[00:37:42] Ujwal: No. So we started as a services consulting business, productized the service because we didn't have any cash to invest in building technology. So for the first four years, we scaled our business to 5 million in revenue. And then on year five, because our technology was [00:38:00] ready, we killed the cash cow 'cause it was operating at 85% problem profit margin.

[00:38:06] Ujwal: So we killed it and we launched a SaaS business doing the same work, but as a technology teaching a research industry that was not used to buying SaaS, that now they need to buy SaaS. And so we basically went from 5 million to under a million the following year and then rebuilt it all the way back past 7 million and so on.

[00:38:26] Ujwal: So, that was kind of the trajectory we went on because that was, there was no other way to do it. But yeah, the intention was always to eventually get to a SaaS business.

[00:38:35] Allan: And with it being a SaaS business, was it that the tool would go and whatever crawl the web, find things relevant in the industry, put together a report with those that sort of thing, or.

[00:38:45] Ujwal: Yeah, exactly. 'cause the enterprise would buy an annualized license and that meant they could do any kind of analysis whenever they wanted at their fingertips and get really in depth research in seconds rather than, you know, weeks and months like [00:39:00] before. But they could also then deploy the tool proactively so it would find them trends and emerging you know, points of stress and opportunity that they need to focus on for their business. So it kind of did both for them. And that allowed us to also introduce a set of peripheral products and expand our, you know, average deal value from, let's say $120,000 to a million dollars over time with each of these customers.

[00:39:28] Ujwal: So that's where the magic really started to unfold.

[00:39:31] Allan: Because presumably, I mean, the business would not have been as valuable. Even if you were doing the same revenue, if it was just a consulting business. Right. So,

[00:39:39] Allan: Yeah.

[00:39:40] Allan: So talk me through that transition. I mean, that sounds like a very scary transition to say, Hey, like we're at 5 million, we're making 85% margins.

[00:39:49] Allan: Guess what guys, we're gonna stop doing that. We're now just gonna launch the software. How did that look like? Both from a customer point of view, but also from team? Because [00:40:00] if you are someone working in your team, that would presumably be scary as well.

[00:40:04] Ujwal: Yeah, I think there were a couple of foundational things that we were really good at, which is we had spent so much time and effort really building a deep sense of credibility within a niche market that when we made the transition people were willing to talk to us and engage with us even if the new product felt like, you know, something out of an alien planet for them.

[00:40:26] Ujwal: And that was really important. And I think, you know, again, goes back to a lot of founders don't take the time to do that. And the only reason we did that was, you know, instead of trying to immediately scale our business, we spent a lot of time getting really deeply embedded into these organizations.

[00:40:42] Ujwal: And so when we got to 5 million as a services business. We had a lot of really powerful relationships, and so when we killed it and started a you know, a SaaS business, we were able to go back to each one of these relationships and slowly bring them back into the fold. We [00:41:00] lost a couple of customers, obviously along the way, but they all came back eventually, 12, 18 months later.

[00:41:05] Ujwal: But that was critical. So you need to have a level of credibility in the marketplace. Again, you know, really playing into understanding what are those rules of credibility and how do you hammer that with every piece of thought leadership that you do. You know, every piece of content you produce, your website, the way you talk in conferences, everything.

[00:41:25] Ujwal: So that was one thing. I think the second part of it was I mean, I'm not gonna lie our team was obviously freaked out that my business partner and I were gonna do that. But I think it was the same thing. Our team saw the level of trust the market had in what we did because they were interacting with these customers every day.

[00:41:41] Ujwal: And so I think everybody had the confidence that this would stick and this transition would workbecause of just how powerful our relationships were with these customers. So in hindsight, was it scary? A hundred percent. And that first year, you know, going from 5 million to under a million you. You feel like, [00:42:00] you know, we've made the worst decision of our lives,

[00:42:02] Allan: Mm.

[00:42:03] Ujwal: but you know,

[00:42:04] Allan: W was that expected? W did you expect to go from 5 million to 1 million, or did you think that, hey, we'll make this transition and we'll maintain or increase revenue?

[00:42:14] Ujwal: No, we knew that already because we knew, you know, speaking, going back to invisible rules we had done our research, we knew that people liked to buy research in projects. That's an invisible rule. They may not tell you that. They'll say, oh yeah, we're willing to have annual relationships. But no, and the reason is that even though they have an annualized budget, people hold onto this budget like it's their pocket money and that they might get a better candy down the line that they might wanna spend their pocket money on.

[00:42:44] Ujwal: Right?

[00:42:44] Ujwal: And so it's like you're penny pinching. All the way through until you come to November and then suddenly you're spraying the money everywhere. And this was standard practice, right? And so we understood the psychology of the market, so we knew it was going to be a rough ride because we're going up against that [00:43:00] psychology.

[00:43:01] Ujwal: And so, in order to go up against that, we had to kind of change that rule, change that invisible rule. And the only way to do that was to show people why they needed to change their approach to how they spent money. And you know, how the industry was changing and if they didn't do that, you know, they would identify opportunities two months after their competitors and therefore would miss out on that next promotion, would miss out on that next, you know, big launch that, you know, they could do months before their competitors did and so on.

[00:43:32] Ujwal: So that was kind of the way we navigated that whole transition.

[00:43:36] Allan: And I mean, presumably you need different people to run a SaaS company than a consulting company. So I mean, there would've been probably a people transition, there's a technology transition, then there's a different discussion with your clients. So a whole lot of change and a whole lot of complexity in the business.

[00:43:53] Allan: And this was in what year? Three. Year four?

[00:43:56] Ujwal: Year five year, yeah. Year four or five. Yeah. And we [00:44:00] sold in year seven, so it was like uh, yeah. And so absolutely. The interesting thing is yes, we lost a couple of people in year four when we made that transition. But we retained the majority, especially the team that had kind of been on the ride with us from year one, all of them stayed.

[00:44:18] Ujwal: And we had to retrain them on how to operate within a SaaS environment. And, you know, my business partner and I, we were first time founders. It's not like we knew what to do, so we were learning as we went along. Then trying to teach others. And then obviously, you know, you try to talk to as many other founders as you can to get some wisdom, but it's tough. We couldn't find another example of another founder that had gone through this transition successfully. We found many examples of failed attempts. We couldn't find a successful one. So yeah, it was uncharted territory.

[00:44:51] Allan: Wow.

[00:44:52] Standing Out in Saturated Inboxes: Framing, Credentials, Effort + Video Outreach (Wrap-Up)

[00:44:53] Allan: So, A lot of times I hear from business owners that now LinkedIn is saturated, email inboxes are saturated. [00:45:00] What would be your advice to somebody who's wanting to essentially start something like what you're doing, let's say not even in SaaS, in consulting. So like if you were restarting this business today, would you do the same thing? Would you do outreach on LinkedIn? Would you do something different? How would you stand out in a crowded marketplace and crowded inboxes?

[00:45:19] Ujwal: I still use email I still use LinkedIn. And it's still very effective. I don't do any AI automated stuff, don't get me wrong. I use AI to help me write, but I don't automate anything. Because you have to let. Your humanity shine through. So that's critical.

[00:45:37] Ujwal: So I think the tool itself doesn't really matter. LinkedIn still works very much works. I think the first thing I just wanna say is there are no shortcuts. So there's so many LinkedIn tools that will say, oh, you don't have to do anything. It will automatically prospect for you, find leads for you.

[00:45:50] Ujwal: Add them to your contact list and book a call. It doesn't work. So you can't, you just can't shortcut it. So I would say ask three [00:46:00] questions. And this is something I would do if I was starting as I'm starting my next business now. The first is, okay, you have your product. Imagine two scenarios. One where your product has framing a, the other, where the product has framing B, and try to imagine.

[00:46:18] Ujwal: Or think about why the perception of each product, even though the core product is the same, might be totally different. Simple example, I'm at a farmer's market recently, and I went to buy honey, and the honey was packaged in the same jar, Allan as the honey I buy in the grocery store. I didn't buy it even though it was from the farmer.

[00:46:38] Allan: Yeah.

[00:46:39] Ujwal: Then the next day I was at a different farmer's market and the honey was packaged in this rustic jar twice the price, probably not as good and I bought it,

[00:46:48] Allan: Yeah.

[00:46:49] Ujwal: right? So same product, different framing and it works. So you need to figure out what is the framing that makes your product compelling, [00:47:00] credible.

[00:47:00] Ujwal: So you have to answer that question. And again, we've talked about all the hacks. You know, go to conferences, research these companies, figure out the language they use. You gotta do that. So answer that question. Second is, think about your own credentials. So why are you interesting? Why are you valuable?

[00:47:14] Ujwal: Why should you be somebody who should talk to this person? Do the same exercise. Present your credentials one way and present them another way, and think about why it might be perceived totally differently.

[00:47:25] Ujwal: So again, great example. You know, I was recently at a conference where, you know, it was a lot of environmental scientists and researchers and entrepreneurs at that conference.

[00:47:38] Ujwal: If I introduced myself as, oh, I had this, you know, big high eight figure exit, blah, blah, blah, nobody could care less.

[00:47:47] Ujwal: Instead, if I introduce myself as, Hey, you know, when I was running my last business, I helped launch a really interesting and powerful environmental tech company that was one of my clients.

[00:47:59] Ujwal: [00:48:00] Everybody's interested, they want to talk to you, right? Same credentials, just slightly different part of the story that's relevant. And then, the last is think about your effort and think about what effort will lead to the best interpretation of your effort. So you know, if you ever find yourself getting lazy and writing an email and you're about to send it, just ask yourself, okay, given the effort I've put in here, how will this email be interpreted?

[00:48:28] Ujwal: And I think it'll answer your question and you're not gonna hit send. You're gonna go, okay, I'm just gonna parking lot this. I'll come back tomorrow with a fresh mind, do some more research and actually write this better. That's kind of my three step process, I would say, is if you did those things, that simple exercise.

[00:48:42] Ujwal: A hundred percent. It will change your approach to outreach and it will have an impact.

[00:48:48] Allan: Totally, and I mean, it's usually blindingly obvious someone who's done their research, someone who's taken a lot of time to be thoughtful because we get so much slop, we get so much [00:49:00] spam, and I mean, you'll stand out like a sore thumb amongst it. By the way, what do you think of like videoin a cold outreach, like a Loom video or something like that?

[00:49:09] Allan: How have you found that?

[00:49:11] Ujwal: I like the video. I still find that at least in B2B I still find that I have to give the user a reason to hit play. They don't hit play on their own. They don't necessarily just wanna see a stranger talk. So it's contextual. So you still have to lead with, here's why I want you to watch this.

[00:49:32] Ujwal: So then, you know, I often think, okay, then what's the. Is it really serving a purpose? I think it serves a great purpose, maybe for follow ups but to get, initially to get their attention. I find people are much happier scrolling through text because we tend to scroll through text pretty quickly and get a sense of, okay, yeah, okay, this Allan guy seems interesting.

[00:49:54] Ujwal: All right, let me take a look and respond. And then maybe there's a video and it makes more sense. [00:50:00] In that sense, I, that would be, that's just my, my. Gut feeling. I don't have data to back me up on this, but that's just my gut feeling on using video without reach.

[00:50:07] Allan: Yeah. I think more and more we need to show like kind of proof of life, especially with some of the AI and all the

[00:50:15] Ujwal: That is true.

[00:50:16] Allan: like that. And it's, it's getting harder and harder because, I mean, AI even video now is really good. I mean, it's still probably not, not a hundred percent or you know, but it's getting there.

[00:50:26] Allan: So. I'm always thinking of about ways that I can show proof of life, you know? So, um, that's

[00:50:33] Ujwal: No it's, it's true. You know, even, even in the process of, you know, because I'm a first time author and I, I've written this book and now I have to, you know, try to get some attention for this book and I, it feels like starting a company all over again,

[00:50:47] Ujwal: you know, because, 'cause nobody cares about what you've done.

[00:50:51] Ujwal: Because you're not known as an author, and so everything is contextual, right? So I'm all over again, I'm trying to get people's attention, trying to reach out to Allan to [00:51:00] see if you'll have me on your pod. And it's the same principles, right? And so that first paragraph has to read. Human has to read like, oh, this person has something to say.

[00:51:10] Allan: Yeah,

[00:51:11] Ujwal: Where, and that's the last thing I'll just add. Don't just start by just saying, oh my God, I'm such a fan of yours, or You're so amazing. That's not helpful, right? Nobody is, doesn't engage people. Instead, you can reference their work and have a point of view and give them a reason to continue reading and give them something really unique and interesting.

[00:51:31] Ujwal: And suddenly you're in.

[00:51:33] Allan: Totally. Well, it worked. Great work as well. I'm really excited to go through your book in more detail. So the book is called Invisible Rules, how to Outsmart The Entrepreneurial Game. We'll of course link to the book in the show description. It's been a real pleasure speaking to you Ujwal.

[00:51:49] Allan: You've got a really fascinating story. I love the concept of Invisible Rules and I think your work will be really valuable in the entrepreneurial community.

[00:51:58] Ujwal: Thank you very much for having [00:52:00] me. A real pleasure. Thank

[00:52:01] Ujwal: you.

[00:52:01] Allan: ladies, thanks man. Thanks for tuning in to the Lean Marketing Podcast. This podcast is sponsored by the Lean Marketing Accelerator. Wanna take control of your marketing and see real results with the Accelerator. You get proven strategies, tools, and personalized support to scale your business. Visit lean marketing.com/accelerator to learn how we can help you get bigger results with less marketing.

[00:52:26] Allan: And if you enjoyed this episode, please leave a review or share it with someone who would find it helpful. See you next time.

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