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The Support Automation Show: Episode 36

by | Oct 6, 2022

In this episode of The Support Automation Show, a podcast by Capacity, Brent Sanders, Co-Founder of Verne and CEO of Formulated Automation, discusses some of the best automation practices, how bringing software automation unlocks value at organizations and the advantages of cross-product integration.

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Justin Schmidt:  Brent Sanders, good morning and welcome to The Support Automation Show.

Brent Sanders: Thank you so much. Thanks for having me.

Justin: Absolutely. Where’s this podcast find you?

Brent: Cleveland, Ohio.

Justin: Cleveland rocks, fellow Midwesterner.

Brent: Yes, exactly.

Justin: Brent, you’re the co-founder at Verne, which is a private equity firm, the quite, right way to describe it, but you guys–

Brent: We call ourselves indie private equities.

Justin: Indie private equities.`

Brent: Yes. We’re punk rock private equity.

Brent: AKA, private equity without the extensive capital. We’re on the smaller side. We love buying and building great internet businesses. Our general notion is we’re trying to buy these businesses to hold forever. We’re farmers and not miners and just trying to improve these products that we pick up and doing it with some debt or some external capital but mainly our capital.

Justin: Awesome. What led you to the path of starting your own PE firm?

Brent: Great question. I was in the startup space. I started my career in software doing work for other people, consulting, building an agency, but always doing work for other people, building other people’s products for them, and so got into the venture space over the last six, seven years, or so. Built a studio model incubator. We’re building businesses from seed stage to series A and getting them out of the nest. In leaving that environment, starting our own businesses and our own startup ideas.

The main thing that echoed through that process was just how hard finding product-market fit was. What to work on, and pivoting constantly, and just the fatigue, and toll that put in. We decided why don’t we just buy product-market fit, and then grow those businesses? That just clicked immediately. That started, it’s like, oh, okay, we have revenue coming in to support the work we’re doing. That was the main driver. It was just a lot easier. We’re not great from the groups that I work with. I would say, we’re not great from zero one, but once you have something that’s at one, pretty great at growing those businesses.

Justin: Awesome. I’m looking forward to this conversation because as someone who has been an entrepreneur, has worked with entrepreneurs, has seen companies from across the spectrum, and worked with them and yourself on making sure the support for both employees and teams is such that everyone can do their best work and customers have the best relationship with the business.

I think you’ve got a good take on the discussion we’re going to have today, given some of the RPA, and automation that exist within your portfolio. I’m going to start our conversation with the same question that I start every one of these with. That is when you hear the phrase support automation, what does that mean to you?

Brent: At its core, what it tangibly means is making our CSRs, our customer sports reps superheroes. That’s what it means to me. When I think about automation, it’s just making them super powerful. When our number one thing that we’re trying to get all of our businesses through Verne, through formulated, to a point, is just empowering the rep so that they don’t have to put people on a hold.

Now, everything’s over chat and email. We do have a voice for a lot of our businesses, and we found that to be super powerful, but in a different way, but just this idea of like, “We received your message. We’re going to pass it to our tech team. We’ll get back to you.” We’re just trying to avoid that at all costs. What it means is getting people’s answers and giving power to the end rep.

Justin: That’s exactly right. We here at Capacity like to say that one of our key goals in life is to help teams do their best work and you’re exactly right, that freeing up time from getting asked, how do I reset my password or how do I log in or whatever it is 1,500 times a day has a material impact. Being able to deflect and self-serve a lot of that stuff up front is huge.

In your view and what you’ve seen with the businesses that you guys have brought in, plus all the businesses that you’ve done your diligence on or looked at or whatever it is. What are some signs of businesses who have a support operation that’s ripe for being able to embrace automation, versus some maybe red flags where you see it, and you’re like, Ooh, this is going to take some work to get there?

Brent: The biggest red flag for us, we buy software businesses. When they sometimes will have a physical or hardware component, that’s first off of like, we have to take special care with these because it’s a different category. My service is mostly on the software side of whether we’re delivering a service entirely over the internet or digitally. The biggest red flag when we do diligence on a business is the [chuckles] lack of history. If there isn’t a really long support history, that usually means there’s maybe something like, “Oh, we just changed to intercom 30 days ago, or 60 days ago.” That’s like a non-starter for us. We need to really dig into support and understand what’s going on there.

The other thing that’s an interesting heuristic is lack of macro, lack of documentation, and what I was just talking about before. It’s like, they have two people in the Philippines, or somewhere way off site that are just saying, “Thanks for reaching out, we’re going to reach out to our tech team.” There’s been a two-day lag between somebody actually getting involved. That indicates to us that both support is non-powered. I’m just going to say this. We buy, generally, everything’s broken in some state and nothing works perfectly that we buy. We’re not bottom feeders, but we are a challenge. We’re usually transacting at a level that–

Justin: Enables you to have that upside for fixing those issues.

Brent: Exactly. We see that as an opportunity, but I think the resources around self-serve or even just able to– When I say self-serve, I mean, a CSR without escalating a ticket being able to really help somebody. That’s our main metric for, what are we going to have to do to come in? By the way, we do like it when we see gaps because that gives us confidence that we can come in and improve this. We can come in and run our normal, just like basic block and tackle. I would say we try to derive a lot of the power in the products that we were purchasing, and then we’re going to change.

As an example, every product we have has to have a way, and if it doesn’t, we build a way to impersonate the user. That’s a basic thing that we always do is give the CSR the ability to just go in and try to reproduce the issue. If they can, great, we got a ticket that’s actionable by the tech team. They can accelerate everything versus there’s always this distrust like, “Oh, that person just doesn’t want to use the product.”

Impersonation is one of our key things that usually products already have when we buy it, but we’ve added it in a few cases to be able to just do things for customers is number one. Record Loom videos for them in their account, not like you have to pretend that I’m in your account and look at my numbers and look at my data. Be able to really get into somebody’s account, and see what’s going on there.

That has circumvented a lot of the automation that stepped outside of Verne into the formulated side. We don’t usually have the ability as a consultant to come in on a project and say, hey– It’s usually not a SAS product. It’s a finance company that has hundreds of support reps that are coming in. They’re looking to automate something just because there are broken processes.

Therefore, a lot of the things we do on that side of things are just working around the inability to directly interact with the product or change it so it can be powerful. Having to build these cross-platform integrations effectively. That’s really what they are. It’s like within my help desk system, how do I see more things? How do I do more things? That’s where automation RPA or things like that come in.

Justin: You touched on a few things there that I want to unpack. First off, if it makes you feel any better as a shareholder of Salesforce, I too own a broken SAS product. Shots were fired at Salesforce. The other thing that you said that I thought was really interesting was this concept of being able to see what the customer sees or reproduce the issue as a CSM, as a CSR, and that is infinitely more helpful than an email or Slack message to the product or engineering team being customary ABC said XYZ is broken. It’s okay.

That speaks to a couple of things that come up on this show every now and then, but hasn’t recently that I think is worth just putting a pin in. That is there’s a lot of power to developing a really strong feedback loop between customer success, customer support, and product, and enabling the virtuous cycle between those three, because products’ best ideas don’t always come from the founder or the product manager. They come from customers a lot.

In a world where we want to make everything as efficient and automated as possible, one of the advantages to any system that looks to automate is a human in loop. It’s a core concept of AI machine learning. In a weird way, your product feedback from customers is a human in the loop of a larger machination. It’s extremely important that CSMs are able to reproduce or have a screen recording of the issue. That’s a great bit there.

Brent: The one thing I was just going to touch on that’s central to our playbook when we first buy business, we send out emails to customers, just like, what sucks about this product? What’s the most frustrating thing? Just a one-line prompt that’s a little visceral that can get people. Generally, what’s the most annoying thing about XYZ products? We get a lot of feedback that way, but you’re right.

Every time we have these aha moments, it’s from a customer that took the time to give us this feedback and the only way that we’re able to get that level of elaboration and perspective is by having an attentive CSR or having a real conversation, not a, I’m going to ask like this it’s I see what you’re working on. We’re working on whatever like building and bridging that relationship versus this idea of I’m passing you to somebody and I’m just passing to somebody. That is vital for us.

As I said, we buy businesses that need to be fixed. Their products generally need some improvement. They may be growing. They may be doing well, but there’s generally a gap where rather than investing in this product and rebuilding it, they’re going to sell it to us. Then we’re faced with, how do we do this? We have a fresh perspective, which is valuable, but coming in and hearing from the customers, all of the aha moments have been driven by these support conversations where somebody finally just lets loose and it’s like you’re doing this, this and this wrong. This doesn’t make sense. I’ve been using this product for three and I’m still frustrated. That’s where our gold comes from.

Justin: Speaking of gold, another thing you said in your prior answer that I wanted to double-click on. I think this is where your combination of seeing a bunch of businesses, but then also the formulated piece of what you guys do is going to come into play. That is the passing of data or the baton between applications inside of a larger process that is being automated.

You have the Zapiers and a level higher than that, MuleSoft, Mercado, or whatever it is in the world. Then you also have the dictionary definition on-prem RPA of UiPath or automation anywhere or whatever it is. Also within tools, within product suites, they have automation and workflow capability to ferret things from one place to another.

The question I have for you is, this is a somewhat automation nerd question, but it’s really important. I think in the overall conversation and I’m very interested to hear how you look at this considering the formulated piece of the business is something that gets used with the companies you ultimately end up buying and stuff. That is when you look at a process that looks like it can be automated. It’s something inefficient and you’re like there’s got to be a way to do this better. Can you help us understand your approach and Verne’s approach to breaking that down? What are the steps to go from that looks inefficient to as software-enabled and automated as it can possibly get?

Brent: I would say, this is the exercise we go through on formulated. On the Verne side of things, these businesses are nimble enough that, generally, we don’t find a lot of automation opportunities. There’s all the low-hanging fruits gone but when we go into a financial services firm that’s been around since 1970. One of the things that we see are businesses that were, I use this analogy all the time, there are businesses that were mail cart businesses for 20 years, 30 years when processes were designed and then they digitized in the ’90s or so, but it’s the same thing. It’s the same process just put on digital. There’s literally an email just being shuttled and passed along the chain.

Email is the biggest driver for everything. Email is the bus that information is guiding and I’m sure there are other systems but they act like and work like email. It’s just tickets moving down a chain and people working with them. The biggest ones that I touch on first is whenever there’s a physical component, that’s usually a good giveaway. For example, when I see a physical, going back to the virtual mail cart, there’s a file that somebody gets that they need to then digest. That’s always a good place to start.

Again they’ll scream out to you. I’m trying to put myself in the shoes of somebody that doesn’t do this for a living or doesn’t have the experience I do, sharing information. We see a surprisingly large number of instances where people have a shared email inbox and there are these book or ad hoc systems where it’s like, “What do we do?” We color code these blue.

Justin: I was going to say once color-coding gets to be some stage definition, it’s time to get out your process flow diagram and start looking at ways to fix this.

Brent: They’re usually ones at the very first level, it’s the stuff that screams out to you. It’s like, “I have to go parse human parse and read the unformatted or unstructured text and put it into a system.” The one that I always start with I ask people is there any situation where you have one screen here and one screen, two separate systems and you’re doing this thing where it’s like, oh, I’m going to bring the information from this system over to this system? Those are the split-screen dilemma, that’s easy to find.

There’s also a suite of software that once you get into certain industries if you understand are you using accounting and fulfillment or warehouse management? These are more categorical for industries, but like, for folks that are in 3PL or logistics, like we have a warehouse management system, but we also have a separate accounting system.

Those are always areas where you’ll know there’s a playbook of things. Just like you have the category of going into even job roles of like, how are you guys doing invoice matching? These are really simple from the RPA. I shouldn’t say they’re really simple. It’s not necessarily they’re simple to fix and do, but those are always like, yes, you need a human to do that and most companies do have an accounting department that has a group that’s doing that can slice off 20 to 30% of the work easily on first pass, sometimes 80% depending on what they’re doing.

Those are just common finance departments full of. That’s where we found out. We didn’t know this because that’s where RPA felt like it really took hold in the finance departments doing things like invoice matching, accounts, payable accounts receivable tasks. Those are generally the places we start. In the context of Verne, none of our businesses even have AP departments or AR departments.

Justin: Got it. From an automation perspective, do you see the category– I’m specifically talking about a software perspective. Do you see the category going more in the Zappier direction where you have a bunch of basically a rules engine and that relies on the app owners, so to speak, to get their endpoints into that system going more that direction? Or do you see it going more in the direction of individual apps building in more either entry points from other applications, and then making their own APIs more accessible to do this stuff with the neighboring applications? As a quick example, Marketo, for example, is a marketing automation platform. Tons of API flexibility and what you can do with it. Whereas something like, I don’t know, an HRIS, the API is very closed off because there’s potential personally identifiable information or sensitive information, whatever it is. The intermediary there is more important. I love to know your thoughts on where you think this ends up long term?

Brent: I think API platform like the Zapier or Zapier-like products, to your point, that’s the main rub that we– Once you start digging into like, “This is on-prem data, it cannot leave our cloud,” then these services like Zapier get a little tricky. However, Microsoft’s all over this space like Power Automate. These tools are getting into– I’m going to say Zapier, but what I really mean are just the general integration platforms.

I think they’ve already been taking off and I think that’s where the future of all this stuff’s heading. The thing with disparate applications and my hope– I’m going to say this with the caveat that legacy software is not going away. That’s why we started the formula. That’s why we got into this space is that like, “Oh, there’s the legacy problem is going to be coming home to roots in the next 10–“

It already did with COVID and just the constraints that are put on organizations are only getting greater and the demand and the mainframe systems, these older systems that some banks, government institutions really suffer when they’re put under strain because nobody knows how to work it, and as long as you don’t touch it, it works, but if you try to do something different, it breaks. That means that employment checks aren’t going out. That means something dire can result from that.

With that aside, that’s the big thing that weighs on us as we talk to our clients. That’s what we’re focused on. That being said, RPA has its place, these apps, so to speak, like automation, these distinct little things that you’ll build to, “We just need to get this information out of the database, out of our access database that no one touches,” but those things still have value and will continue to rebuild.

Then they get swept into this legacy code dilemma where you’re basically pouring concrete on top of it and saying, “Now, we’ve connected these other things. Now, we really can’t change it.” Pushing that little corner of the world aside, I really think the more modern platforms, the more– Even being on Microsoft, on a team system like– you then now are opening yourself up to the world of these integration platforms, which I think is where you can really ignite some innovation with–

We talk about the citizen developer fallacy, but this is where you really can enable people to set up their own plumbing is what we call it. You’re just letting them connect the pipes themselves. They understand the work and they’re doing it in things like Excel, they’re doing it in things like Access. They’re doing your typical Microsoft stack, but now, you’re able to do it in a way that otherwise couldn’t.

The reason I’m talking about Microsoft is that we always tend to start with that when we come into an organization because it’s safe, it’s what people know, there’s no big license fees. It’s our gateway drug to automation to come into organizations that they haven’t reached or maybe they tried it, but they didn’t– “We don’t want to pay some. $20,000 , $30,000, $40,000 licensing fee to a company.”

For something that’s not really tried, we think we’ll get the ROI, but how do we start incrementally? That’s the way that we like it. Once you start those things, you need to maintain them. That’s where the integration platforms are wonderful. They really protect you against– When things fail, you get notifications. They’re easier to fix. It’s not custom code and whatnot.

I’m a big believer in that. On the Verne side, on the SAS side of things, we’re trying to make all of our products integrable by those platforms because we see our clients that are small businesses, largely like we are B2B software so we want to be in niches so whatever like Harbor software, whatever it is, they are surprisingly savvy and they want to also automate.

That’s where we’re seeing this interesting divide where it’s formulated has dealt with larger companies but that influences now trickling into these small companies, 3 to 5 to 10 to 20 person companies that run $1 million in revenue that they’re on Zapier. They’re wanting to automate their invoice and estimate delivery. They have the same constraints and demands on their time, and so that’s what we’re trying to bring a lot of this stuff down the market.

I think that’s where the automation world is going. It starts at enterprise and works its way down, and a lot of the tools are becoming more and more affordable and prevalent. I don’t want to say it’s a race to the bottom. In the industry, it’s a race to the bottom on the licensing and software packages, everything’s getting cheaper. I think that’s good.

Justin: Absolutely. There’s also a thing happening that I don’t know how true this is, but I feel like it’s happening so therefore I’m going to say that it is and that is proliferation of things like HomeKit, Google Home, or even Alexa blueprints, whatever the hell they call it, that is an automation platform that exists for just the average consumer. You can make those as simple or as complicated.

I don’t know if you see it, there’s a blinking light back there, that’s a raspberry pie that I have, an environment sensor connected to that runs into an instance of Homebridge. I have on my NAS upstairs that if the temperature here gets below a certain point, it kicks on the oil heater that’s next to me. Most homeowners aren’t going to go through that. I get that but I can very simply with a few taps automate lights turning on or off or the thermostat changing or whatever.

If we’re getting to the point where orchestration is possible on consumer devices in a mass-market way, that means there is this installation of the automating mindset that people are then going to take to work, hopefully, or even the other way down. We just got to this point where it’s just a universal language for all of us who want to automate as much as we possibly can and we have these orchestration platforms to do so.

The next question I have for you is the relationship between automation and some of these platforms, whether it’s an RPA or even just like a Zapier or whatever it is. Between IT and CS, unlike the ownership of those things in a support world, curious just to what your thoughts are like, should that live in IT? Should that live in support? Is there a shared ownership model that works? Have you seen that done effectively?

Brent: It’s a snowflake for each business. In our case, we see a lot of businesses that are tech– The CSRs are part of the IT team. They’re L1, IT is L2 or L3, depending– They’re part of that team. We structure it definitely on the IT side. That being said, we don’t have businesses that have an account management perspective in the sense that you don’t have a rep, you don’t sign up for one of our products. Then so and so reaches out saying, “Oh, I’m going to be your point of contact and I’ll help enterprise software.”

It stays very much nestled within tech and we see our CSRs as an extension of the tech team. We’ve had CSRs move up the ranks in the sense that they learn the software, they start learning the tricks, and they start becoming coders in essence. They can really debug our applications, provide really careful pinpoint feedback if there are bugs and you are able to know where to look, how to look for things. We think of it as very technical.

Then there is a sales element to this where it’s like, “Are we talking about an upsell opportunity?” My perspective is though, yes, these are technical products, they’re technical focus. They’re an extension. They’re definitely there to bridge the gap to the non-technical customer. I think the best value is that the way we try to structure the teams is really to deliver the most efficient feedback to the tech team to get something done or get something fixed. To me, the result of that is just shortening the time it takes to open, quicker resolutions because it’s clear to the tech team what’s going on and therefore, we’re able to continuously release things and delay our customers when they see something.

Like I said, we sometimes buy businesses that are a little broken and when we show quick action, we engender the client or customer on our side. I know this sounds messed up because it’s like, you’re offering a product that’s broken. If we show that we’re committed to it, that’s how we end up with really loyal customers. We’re willing to improve it quickly. I’m not saying we’re pushing changes in the middle of the night, but shorting our release cycles with customer feedback in mind delights our customers. They love seeing something they ask for on the product and making their lives easier.

Justin: It’s amazing how much the lines are going to continue to blur on this because within your help desk, there are tons of different automations you can do. Then within your CRM, there’s a ton of different automations you can do. There’s this no man’s land between the two that is either easily navigable or not easily navigable, depending on the automations on either side of that chasm and then whatever you have in place in that chasm. This is part of the value proposition that we’d like to put forward that having one platform is meant to do all this stuff is preferable.

This has been a great conversation. I could talk to you all day about this stuff, but I want to be respectful of your time. Let’s wind down with my question that I end all these conversations with and we’ll go to our quick-fire around. That is what excites you the most about the future of support automation?

Brent: I think it’s just going to make it easier for us to– This is selfish, but make it easier for us to deploy our customers, make it easier to come off as amazing to just add more gratification to the end-user. That’s the short answer. It’s like making it a less frustrating experience on the internet.

Justin: Less frustration’s always preferable to more frustration. Brent, this has been a great conversation. Let’s end with our quick-fire round.

Brent: Sure.

Justin: I’m just going to bark some quick questions at you and let me know what the first thing comes to mind. What’s the book you most often recommend to people?

Brent: Lately, it’s the Untethered Soul by Michael Singer. Big fan.

Justin: I’ve heard good things about that one. I haven’t read it myself yet. What’s the best productivity tip, tool, tactic, hack that you have folded into your practice that you think everybody should do or that has worked for you anyway?

Brent: Sure. Goal setting, really clear goals that have a why on them and then get it in your calendar. Abide by the calendar, keep your calendar sacred. Don’t fill it with any noise, and then stick to it. That’s the number one thing for me right now is just sticking to the calendar, don’t deviate, and be really thoughtful about what’s in there.

Justin: If you could recommend one website, blog, Slack community, LinkedIn group, In-person meetup. If we’re doing that these days, for someone who wants to learn more about the benefits of automation or how to approach some of these topics we talked about today, what would you recommend?

Brent: Oh, that’s a tough one. I don’t have a great– My answer would be very developer-oriented. In that sense, if you are interested in the open-source or open-source-ish RPA community, I think the Robocorp Slack channel is really great. They put a lot into opening the team up there. We use Robocorp for some of our projects. Just in general, you want to shoot some ideas around it. Again, it’s a little more technical focus, but still use cases, they have their team on there. They’re willing to help you out, willing to point you in the right direction, help you find solutions. It’s great.

Justin: That’s a great shout-out. They do a great job with that thing relative to others in their space and part of that’s the open-source nature of it. That is a really good call out.

Brent: There’s a lot of love there.

Justin: Finally, if there was one person you would want to take out for coffee or a cocktail, depending on the time of day and the vibe, to pick their brain on this stuff, who would it be?

Brent: Alive or dead?

Justin: Either.

Brent: Either. Probably somebody in the ’90s tech world, Steve Ballmer, or Woz. Going back to that age, I feel like maybe this is just me being nostalgic about growing up with an Apple II. I think talking to– I don’t think much has changed since then, by the way. I don’t think much is– I know–

Justin: It’s a good hot take. I like that.

Brent: The computing era has– The personal computing era has we’re beyond there we’re in the internet age, or even beyond that we’re in web three, but I don’t think much has changed from the fundamentals of that thinking. Because that was the biggest paradigm shift going from no computers to computers in every home. Sure, now, we have computers in our pockets and things like that. My three-year-old wants to borrow my phone all the time, but I think that is the freshest thinking. I think they’d have an interesting perspective.

Maybe not, I don’t know if Ballmer gets a vote, maybe somebody who was an innovator in that thought I probably don’t know name, but anybody from that era of fresh thinking, I think that’s still one of the best eras of computing and automation.

Justin: That’s an interesting answer and not one that I hear often, but you’re right. Fundamentally, we’re still solving the same problems. We’ve managed to move a lot of the applications that Ballmer was dealing with that were on-prem are now in the Cloud. The community of operating systems was pretty monolithic in his day.

At the end of the day, you still have humans doing paperwork. You still have customers asking questions. You still have logistics that need to be done. It’s the same hamburger, just we’ve diversified some of the sources of ingredients, so to speak. Brent, this has been a wonderful conversation. Thank you so much for coming on and chatting with me today. Where can people find out more about you and Verne and what you guys are up to?

Brent: Yes, you can find more about me. I’m on LinkedIn and looked up my name, Brent Sanders. You can find me at brentsanders.io. If you were curious about me specifically, then Verne is vernehq.com. If you are interested in selling your SAS business or know anybody who is, reach out to us where we’re easy to work with and we’ll be [music] right there to farm it, not to mine it. Thank you so much for having me, Justin. This has been a delight.

Justin: Absolutely. Thanks for coming on The Support Automation Show, have a wonderful day.