AI, SaaS, and the Changes Ahead | Francis Brero on BeyondSaaS Ep 008

Jason Niedle Today we’re talking with Francis Brero, the co-founder and CPO of MadKudu about how SaaS companies can increase conversion rates and retention.

Welcome to Beyond SAS, Francis. Before we jump in, do you have a golden nugget for us today?

Francis Yeah, absolutely. I guess my golden nugget is lately I’ve been using the advanced voice mode in chat GPT quite a lot to get summaries of business books. Like I find that for a lot of the business books, like good strategy, bad strategy, some of those, a lot of the core concepts could be summarized in a few seconds minutes.

And I find it super useful to chat with chat GPT about the book and ask like, what’s the main topic? What’s controversial about it? What could I use in my day to day? And then actually have a conversation about the book rather than going through the entire book or looking for cliff notes online.

Jason Niedle Sounds great. I haven’t been doing the chat version of it yet, which maybe I should, but I have been using it to do analysis of, you know, I started watching Severance the other day and I’m like, give me a breakdown of the things that I’m missing in, but with no spoilers. My golden nugget today is more pedestrian. I’m kind of loving my Amex [Business] Gold instead of the platinum because I get four times points on two categories. And so we spend a bunch of money on advertising and to get four X points on my advertising instead of whatever you get on the platinum, which is less.

Francis Yeah.

Jason Niedle It’s like 600,000 free miles per year for me. So a little bit about Francis. Francis is a math major turned AI enthusiast who started building search engines and co-founded Madkudu nearly ten years ago Madkudu captures and aggregates signals your sellers need basically AI that supercharges selling tools and I’m sure you’ll tell us more about that in a moment And I hear that you’re an adventurous sticker hoarder with a penchant for Nick Cage movies

Francis Love it.

Jason Niedle I am Jason Nidle, founder of Tethoes, and for the last 22 years we’ve been experts at accelerating tech growth through strategy branding, lead gen, and conversion. So I’m really interested in that conversion point. And I did just watch the National Treasure movies with my 10-year-old, and that was particularly fun with him. he was all about them. So it was great. Tell me little bit about MadKudu and how you see your role there.

Francis Yes.

Yeah, I mean, you did a great summary of of MadKudu. But essentially, the way we look at it is my co-founder and I are math nerds and we have a bit of a hacking background. Like we’d like to build things really quickly. And one of things we wanted to do was put our tech skills.

at the service of sellers who today have to deal with a lot of drudgery. Like I feel like as companies grow, there’s a lot of process and red tape that gets added all over the place. There’s a lot of manual work that needs to be done. And there is a better way than doing manual work. so, kind of started in that path of figuring out how do we help, go to market teams align around a revenue truth and how do we use data science to do that? And that’s kind of how we evolved into the product that we are today. And my role at MadKudu

I see myself a bit as the chief AI evangelist to some extent. I feel like it’s something that is transforming organizations pretty dramatically. It’s really important to be on the forefront of that transformation because people that aren’t are going to be left behind really, really quickly.

you know, helping every team within the organization figure out how they can use AI to be 1 % better every single day. Cause like we tend to forget the law of, you know, compound effect, right? 1 % better every day, least 37 times better by the end of the year. So it doesn’t require massive change. Just a little bit every day will make you just incredibly better by the end.

Jason Niedle I’m excited to have you here because not only are you growing your company, but your job is to help other companies grow, So Where would you say MadKudu is in the growth curve? And what’s your big goal for that?

Francis Yeah, That’s a, it’s it’s a really interesting question. And to some extent, it’s a moving target. So we are, still early stage. I would say we’re kind of like post a product market fit where like we have traction and we have demand. you know, we have a hundred customers. But from a company growth perspective, we are reevaluating how we build the company in part because of the,

the AI space that we’re in, I’m a true believer in the fact that we are gonna get in the next few years to the point where we see billion dollar companies that are from solo employees. And it begs the question of where do we actually need humans and where can we have a lot of agents that assist a

particular human. I think it’s it’s reshaping how we think about like growth from a like people perspective within the organization. I think it doesn’t necessarily change how we’re thinking about growing the business from a revenue perspective, but even how we’re thinking about distribution has changed where I believe we’re entering an era where technical moats are eroding at a faster pace than ever. so distribution becomes a really critical moat. And so you have to rethink

how you’re going to do distribution without necessarily owning all of that distribution if you’re not big enough, right? How do you leverage the incumbents to actually help you grow faster? So that’s like a big change in how we think about growing. It’s a big change of like, who do we hire? What kind of jobs do we hire them for? Like how many, you know, what head counts are we going to look like? It is very possible that at the end of the year, we double our revenue and we haven’t increased head counts.

So I think that’s a really interesting change that we’re seeing in the organization.

Jason Niedle So, MadKudu is, correct me if I’m wrong, almost 10 years old, but AI, when did that come in and how is that supercharging your growth?

Francis So I think what’s been interesting is that we’ve been doing machine learning for a very long time, which is like a form of AI, which was very applied to, to sales. what has changed lately is the emergence of all these frameworks and tools that allow deploying AI and teaching AI to do things

at scale while being very specific to your use case. So for example, we have moved all of our engineers to a tool called Cursor, which essentially is a code editor that’s supercharged by AI. And what’s incredible is that we can feed our internal documentation, our external documentation about the product. We can feed it our code base. We can feed it our product requirement documents. And from there, the code editor is able to

give superpowers to our engineers because now it has all of the latent context of Madkudu and then a lot of the time that we spend is, you know, think about how do we provide documentation to the machine rather than how do we, you know, provide documentation to an engineer who will then like share it with his peers and build something. So it’s this, this kind of ability to process more unstructured data that

is kind of core to the LLMs has been a dramatic change. So the LLMs, think, were a big change. But then all of the tooling that’s being built on top of it, like the frameworks to integrate this data, proprietary and external, into development environments is something that is catapulting our ability to ship.

Jason Niedle That’s amazing. What challenges do you see to growth then with all of this?

Francis I think One of the biggest challenges is that we’re dramatically changing how we think about hiring, how we think about building companies. And we are exploring uncharted territories, right? This idea that we’re going to have agents

help and give superpowers to every single employee within the company and that your performance, even as a manager is not going to be managed, you know, measured by how many direct reports you have that are performing a certain amount of work, but it’s almost how many agents have you created and configured and like, what is like the total output?

of your team, it’s almost more of a P &L approach. Like what is the P &L of your team? And, you know, where do we need humans? Because humans are inherently expensive. And like, where do we need to deploy humans? Because they’re the best leverage of capital. Whereas where do we need agents? It’s a very different way of thinking about it. It also means that then managers are, it’s a different type of manager that will…

work well in this kind of format. Same thing for the engineers. Engineers who tend to think, no, I don’t need AI, I’m better than AI, I can do this myself. They’re going to be left behind at MadKuru for sure, but then even within the industry, I think two years from now. So that kind of radical change is always difficult. People don’t like change, especially when it’s that dramatic. So I would say that’s the biggest challenge.

Jason Niedle How does all this affect your sales and marketing?

Francis I think on the, sales and marketing, goes back to this idea that, we need to change the way we do distribution. That’s been one of the biggest changes and it has been a great enabler on the cell side of saying, well, we need to hire people that can build automation to help our AEs so that one AE can manage way more deal cycles because they’re not being sucked into updating fields and Salesforce, know, taking notes and meetings or doing followups, knowing which account to go after all these kinds of.

things that are kind of back office, we’re able to automate all of it so that we can deploy our rep on to the thing that they do best, which is talking to customers, asking the right questions and leveraging all the insight that they have to put together a helpful proposal and really projecting how the company can help our customers.

Like our reps are now really, really focused on the conversation they’re having with the prospect, not on Am I taking the right notes and then, did I forget to update this field in Salesforce or did I do this? Or did I forget to send this? Like just focus on the moment and feel confident that there’s automation to catch all the things that need to be caught in the background.

Jason Niedle How does your product, how does MadKudu help feed that?

Francis So one of the big things that we look at is first off, like these past few years, a lot of companies have been investing a lot into outbound. Outbound is hard. Outbound requires a lot of research. It requires, you know, being targeted and understanding if I’m reaching out to this company, what is the value proposition do I have? Like, how am I going to make it resonate with them? What happened at that company recently that could be a good hook for me to use? All of this is essentially processing unstructured data.

going online and looking through what are people talking about on Reddit, on LinkedIn, in the news, aggregating all of this and then making sense of it to understand is now the right time. If it is, why and why would they need us and formulating a message around the value prop to help the customer and to get a response. A lot of that work today, the top reps do it. Many people talk about…

reading the 10K reports on public filings and all that kind of stuff. Probably like a hundred reps in the US actually do that. A lot of people talk about it. Very few actually do it. But doing that work to then get all the information summarized and knowing, is it the right time to go talk to MongoDB or should we go talk to Couchbase or should we go talk to Cockroach or Yugabyte? Like which of the databases companies are the best to go target today and why is that the case?

Answering that question is actually fairly easy for a machine and incredibly complicated for a human. The amount of data points that you need to manage to get to the answer is just completely overwhelming for a human. So that’s essentially what we do. And I think that’s the biggest challenge that we solve for reps is helping them navigate complex cell cycle in an ever-growing sea of data.

Jason Niedle So if you could advise your younger self on how to grow this company better, what would you tell yourself?

Francis One of the biggest things I think is not hiring leaders too soon. And in particular, making sure that any leader you hire within the organization is very, very aligned with your way of operating. I think We tend to over index on, leaders that have been successful at a

company that is maybe one stage ahead of where we are and we want to accumulate a lot of the learnings. But what I think is more important is have they been at a company that operates in a similar manner? I think we have made some hiring mistakes I’ve made them at MadKudu. I’ve made them at previous companies where you hire people because they have the right pedigree. They’ve been in the space. They take all the boxes. But the one box that you don’t maybe tick

is “Do they operate the same way I do?” And in particular, I mentioned, you know, Good Strategy, Bad Strategy in some one of the books that I keep reverting back to on chat. That’s because the most fundamental idea of that book is that everything starts with a diagnostic and the deeper you go into the diagnostic, like the better your strategy is going to be. And the absence of a diagnostic is actually what leads to bad strategy. And I’ve seen a lot of leaders that

Jason Niedle Mmm.

Francis Countries want to apply their recipes. They want to apply the thing that has worked. But the problem is like, that’s exactly what the absence of diagnostic looks like. Trying to apply a recipe. Like First start with a clear understanding of what’s going on in the organization. What are the problems? What are the things that are working well? And from that diagnostic, get it challenged by your leaders and then slowly put together a plan.

That’s probably the biggest mistake that I’ve made and that I see most leaders make frankly is just not being willing or not challenging the initial diagnostic enough when new leaders come in. And I think this whole idea that the 90 day plan of a leader that joins a company, think a lot of it stems from that where we have a bias for action. I think in…

In this particular case, the bias for diagnostic is a better thing than the bias for action. The action will be easy once we have the diagnostic.

Jason Niedle It’s interesting several years back. I wrote a goal-setting book and the premise was essentially If you’re looking at a map, you might know where you want to go But if you don’t know where you are, you’re still screwed right and the diagnostic and getting really deep on that I hadn’t put it in the context of strategy before and being ultra clear on Where exactly are we and what is the real problem, right? So you still might have your goal, but if you’re not in depth on that problem, how’s your strategy gonna get you there?

these days what seems to be blocking you from reaching your goal?

Francis I think, nothing’s preventing us from getting there. A lot of it has been shifting the organization. think like shifting from a very direct sales motion to thinking about this, like indirect distribution is a big change. It just, it also requires getting into agreements with like the, the incumbents to be able to, to resell or co-sell your product.

We’re giving away some immediate return with potential immediate growth today for the promise of long lasting growth. Like last year, especially Q3, Q4, we invested a lot of time and energy into partnerships and that indirect sales motion, which could have been seen as a distraction because it took time away from direct sales. But today it’s actually starting to pay dividends.

that’s one of those taking a step back to jump further. so I would say that’s, that’s number one. and number two is just that there’s, there’s still a lot of things that we’re, figuring out, but that’s part of a startup, right? Like if we, had all the answers, then, um, it wouldn’t be as much fun.

Jason Niedle Mm.

Well, and the world’s rapidly changing on top of it. Are there any specific lead gen or marketing tools that are especially successful for you right now?

Francis On our side, would say, I mean, LinkedIn has been helpful, with, thought leadership. Then other than that, I will be honest and say that I think a lot of the tools that we saw work well in the heydays of B2B SaaS are kind of crumbling. Like I’m not seeing ads deliver the same level of returns.

Jason Niedle for sure.

Francis Like people that do cold outbound, like the cold outbound agencies really not working that well. think there has been a lot of hype around AI SDRs. The idea is like basically an outbound agency, but just have AI send emails and then we go from, I mean, it’s a new form of spray and pray. that is also not generating huge returns. Unfortunately for a lot of people listening, there isn’t a miracle solution. I think hard work and.

brand, spending time on establishing your brand, educating your potential buyers to give air cover to the outbound process your reps are running is really the one thing that I’ve seen work. It’s just unfortunate that it isn’t kind of a growth hack. It’s, you know, meet your customers where they are, speak the language that they speak. And I mean, the basics of, sales and marketing are, are back in.

Jason Niedle with all this chaos in the world right now, what trends do you see coming up this year?

Francis Wow. think three months ago, I would have given a very different answer. as we’re recording this today, we’re seeing like the, uh, like the market is like completely tanking where everyone expected three months ago that the market would be booming in 2025. I was starting to see a lot less CFO scrutiny, a lot less worry in deal cycles, with what’s going on and probably we’re going to see,

enterprise value multiples going down once again. so I think that’s going to bring a lot of fear in, in cycles. I think unfortunately, we are still going to see a lot of, buyers that are operating in what I call a FOFU “Fear of F*cking Up” instead of FOMO, like fear of missing out. and that’s going to be something that reps are going to have to learn to navigate and even marketing, right? Like how do we give the right collateral to help?

sellers close deals that are going to have a CFO involved potentially even a CEO even at something like a $30k or $50k Range which isn’t that expensive, but we’re still seeing multiple C levels Looking over all these deals, and I think that’s going to continue being the case for the foreseeable future

Jason Niedle So needing to show even more value than you’ve been showing.

Francis Show value and educate them around like, what is the value that we’re delivering? what is the thing you’re gonna get from this purchase? It isn’t necessarily like direct, you know, ROI, it could be productivity, like whatever it is that you’re pitching, understand how to pitch it to a CFO, how to pitch it to a CEO, how to pitch it to your buyer, how to pitch it to the user, it might be different, but having that ready, because you acknowledge the fact that there are gonna be multiple people involved in the sell cycle, I think is critical.

Otherwise we’re going to see late stage deals just stay open for a while until time kills all deals. until the deal just dies.

Jason Niedle Absolutely.

Absolutely. All right… Last question. what’s your favorite Nick Cage movie this

Francis I just watched Long Legs with him. It’s a pretty good movie, but I would say my all-time favorite is Vampire Kiss.

Jason Niedle I have not seen that, so I will check it out. Francis, this has been super informative and interesting. Where can our audience find you?

Francis Great movie.

Typically I’m on LinkedIn primarily. I post very frequently, so happy to engage with anyone out there. And yeah, if they have questions around AI, what they can roll out at their company, may it be for single user productivity or even interested in MadKudu they can DM me. I’m usually pretty active there.

Jason Niedle Perfect, and madkudu is M-A-D-K-U-D-U dot com, madkudu.com, just like it sounds. Thank you so much for being on Beyond SaaS. To the audience out there, if you’re a leader in mid-stage tech looking to grow, please feel free to drop any questions or comments, or look me up at tethos.com, T-E-T-H-O-S.com. And of course, we love those likes and subscribes. Until next time, this is Beyond SaaS