Episode 7 Transcript
Industry Merger Shakes Up the PS Technology Industry: Meet the Leader of the Mavenlink / Kimble Organization
John: Well, hi everyone, I'm John Ragsdale. And my role at TSIA is to build an ecosystem of technology providers that solve the biggest business challenges of our members. And we have a big focus on professional services automation or PSA and services automation in general. And I'm very excited to be the guest host for this special episode of the Professional Services Pursuit. And I'm even more excited to introduce my guest, Michael Speranza, who is the newly named CEO of the company formed by the Mavenlink and Kimble merger. Michael, I know it's gotta be crazy times for you right now. This is what day three or four?
Michael: Yes, day four of a new journey.
John: Oh my gosh. So how are you, how are things going?
Michael: Yeah, I'm sleepless right now, incredibly tired, but also incredibly excited about the future and really thankful that you took the time to talk to us today.
John: Oh, my pleasure, it's fun to be here. Tell us a little bit about yourself and your background and the career path that led you to Mavenlink and Kimble.
Michael: Sure. So I started my career as an engineer, my first job was actually working for NASA at the jet propulsion lab in California. And then quickly transitioned to an environment in management consulting, working at Deloitte. Worked at a startup doing data warehousing in the hospitality industry and then really began my journey in midcap, private equity backed software companies about 20 years ago. So for the last 20 years, I've been leading and growing mid-market software firms almost exclusively backed by private equity firms and really found my way into this opportunity. When I was out exploring, looking for new things, I came across a great firm with Excel KKR that had just re-upped and increased their investment in Kimble. Which is a company they were incredibly excited about. Learned that they were contemplating a merger and combining it with the Mavenlink company. I thought that that was just an incredible opportunity that fits incredibly well with my background, growing and scaling B2B software companies from typically a range of about a hundred million in revenue up towards a billion. And really helping through that journey of growth that those types of companies face challenges in.
John: Well I'm familiar with you from your last two roles and in your most recent CEO role, you were an expert over CRM, customer experience, e-commerce, finance, all of these are data sources and integration points for PSA. So I would think that would give you an interesting perspective on this market.
Michael: So one of the things that really excited me about this opportunity was that I had operated companies in the past where I not only felt the pain that these products are solving. In terms of running large services organizations either as a consultant or running them as part of large IT software firms. And for me, the product itself was something that I was super passionate about and had a connection to and that it provides quantifiable value to the customers. So for me, that was really one of the most exciting things about the opportunity. Knowing that I had kind of firsthand experience, not just from the companies that I've operated but the products that I was selling as you pointed out in my last experience.
John: So just for fun, we've all read your LinkedIn profile, but would you tell us something about yourself that most people don't know?
Michael: Sure. So I think a little fun fact is probably from early on in my career when I worked at NASA and the jet propulsion lab, I had the fortunate opportunity to work on one of the first successful missions to Mars which actually put the first Rover on Mars way back in the late nineties. So that was probably the most interesting fun fact about me in terms of my career.
John: Well, maybe you can get on one of these Tesla rocket ride coming up.
Michael: I'm on the list John, I'm on the list.
John: So I'm gonna put my technology analyst hat on and anytime there is a merger of competitors, there are a lot of questions, concerns and FUD from your competitors about products and the roadmaps. So I don't know how much you can say, but could you just kind of speak to what does the Mavenlink Kimble merger means for ongoing and future product development plans for the two platforms?
Michael: Yeah, so we are fortunate to have two more market-leading products coming together. And I can address this topic head-on for you and be completely transparent with you. We are 100% committed to both products. Our competitors will try and spin this as an issue and I look at it as quite the opposite. I think this is a major, major competitive advantage for us as a firm and in the space and something that quite frankly, if I were them, I'd be afraid of. You know, we've got these two market-leading products that address the broadest set of customer requirements, really of any provider in the space. We can scale across the entire spectrum of requirements, we can bring the best of both solutions to bear, to address a specific need that a particular customer segment may have. And we have solutions that span the broadest set of technology stacks that exist within the customers. So things that were built on the force.com stack as well as products where customers are using a hybrid stack of technology.
So for me, this is absolutely a competitive advantage. It's something that we are completely committed to and proud of and we plan to invest in both products going forward. And we feel that this is going to allow us to really accelerate the adoption of these types of solutions in the PSA space. The combination of these two companies creates something that really just has not existed in the space and we are just incredibly excited about it. And again, I think our competitors will try and spin this the opposite way and I'm gonna take the opportunity to kind of rotate in the other direction and be proud of it. I think we're gonna absolutely be able to provide more value to customers because of it.
John: Well that's great and yes, I am already hearing the FUD from competitors, end of lifelong platforms and forcing migration, so it's great for you to set the record straight there. So you kind of touched on this, but I'd like to dig into it just a little bit more. The PSA space has become quite a crowded market over the last couple of years. Mavenlink and Kimble were both well-known brands with a good market share. But if you look at the larger market and a lot of new entrants coming into the space, how do you see this merger creating a competitive advantage for the combined company?
Michael: Yeah, so it's very rare that accommodations and mergers are this complimentary. So if you look at these two companies coming together and these are some things that folks may not know on the outside, they just might know the outward brands of each organization. But as you dive into the details and really look at how these organizations come together, it really is a major overnight advantage. We've got increased breadth, we've got increased reach and scale, we have doubled the product portfolio in terms of the capabilities that we can address. The traditional markets that each company served are very complimentary. You know, Kimble has its roots primarily in the international markets with a strong presence in the UK and continental Europe. Mavenlink has its roots based in the United States with a strong presence there. And for me, looking at the way these two companies come together really creates a tremendous day one advantage where there isn't really a tremendous amount that we need to do to feather these organizations together.
Where it translates to the opportunity is that we are now more a demonstrable leader in the space. We've got the biggest product portfolio that I mentioned and we now have the breadth and scale and the capability and the resources to actually solve some of the challenges that the customers are facing. And that a provider in this space, like what we created did not previously exist. We are 100% focused on this base. We know that there's real pain from the customers, they continue to tell us that. We know that they're interested in solving the pain and all we have to do is look at the growth trajectory of both Kimble and Mavenlink before the merger, both companies were growing at the north of 25% per year. And in some cases, even close to 40% per year prior to the pandemic, so customers are voting with their wallets to solve these challenges.
And now you take the combination and really look at what we've created. The industry has lacked a provider with the scale, breadth and the focus to solve it. And our organization is now well-positioned to tackle that. So that's really how I see some of the evolving and how we can take what has been a relatively slow migration or adoption in the PSA space over the last five or 10 years and really start to accelerate it because we've solved for some of those issues. We can bring these solutions to bear now with customers on a global basis. We can solve a broader set portfolio of challenges. And then we can honestly help educate them a little bit with the best practice on how firms should be really solving and adjudicating and mitigating the pain that they're feeling on these organizations.
John: Yeah, definitely a lot of pain and I think some new pain, every year there are a few new wrinkles. I agree with you, there's a lot of growth opportunities. Our data shows that even though the adoption of PSA by B2B tech firms has grown quite a bit, there's still a lot of plan spending. So I wanted to dig into a couple of trends that I'm tracking that I think may be driving some of this and get your reaction or you can tell me I'm crazy. One is the role of professional services in enabling customer success. And customer success is probably the hottest topic in services right now, especially for cloud companies and subscription technology companies. And obviously if the implementation isn't done right, you're not setting the customer up to adopt the technology, get the expected outcomes from the technology as quickly as possible. So our data is showing that when we survey C-level execs and professional services execs, they now all place adoption and customer value as the number one charter of professional services. When a few years back, they would've said margin or revenue. So do you think this more visible and I would say even strategic role of professional services is forcing them to maybe more formalize their processes and invest in enabling technology?
Michael: Yeah, I completely subscribe to that John, I think that's a great point. And I can just tell you my own firsthand experience of when I tried to run professional services organizations and really shift the focus from a margin-led conversation to a conversation that was really about creating positive customer experiences. You know, when you look at the way these organizations are running now, the industry has moved almost to completely SaaS. The focus on being able to retain and grow those customers really is the paramount financial driver of the organization. The success of the implementation not only goes to create that positive sentiment with the customer, but it also goes to create a successful implementation of the product and customer value. And to me, those are the leading indicators of running great projects that have a positive customer sentiment at the end of that.
And I think that is the paramount metric that we should try and focus on and encourage our customers to focus on that's gonna lead to better net retention. And that if you do that, our solution is the one that can come in and help you solve for all those secondary things around utilization, margin, attainment, all those financial parameters. Which if you look at the way a traditional PS manager would focus their immediate reaction to try and solve a utilization problem is to try and produce non-billable hours. When you go and try and produce non-billable hours, the first thing you do is probably enrage your customers by trying to charge them for things that they're not expecting. And for me, I think this is just a tremendous opportunity where our product can come in and really not automate, but really facilitate the line managers, the folks running these organizations. And relinquishing cycles to solve those financial and metric-oriented issues and allowing them to focus on how to deliver great customer experiences.
John: Yeah, I agree completely. Another area that I think there's some growth opportunity, when I interview PSA users, I typically find that they buy the product to solve one particular problem. It could be forecasting or resource management or billing and I rarely find that they're leveraging the whole platform. Now I think that that means ultimately they need to start consuming more of your product, but I also know a lot of companies bought a product that may not meet their needs. And that's why we're seeing people continually shopping, even if they have a solution in place. So have you had any experience with that or heard that maybe they're not leveraging as much of the platform as they could?
Michael: Yeah, I've definitely seen that. It's day four of me in this organization, so the things that I've learned so far about how folks are using those solutions from both companies is there are customers that have kind of that rigor of change management that can really look and span across all the different constituents that touch this type of workflow. And we have a lot of customers that are in that space and are really deriving tremendous value because they've made the investment. They've invested in change management and made the requisite business process changes to use the solution they're seeing the value. And there's also customers that are saying, you know what wow, I have this burning issue, but my organization's not ready to perhaps adopt the completeness of it. And our products also have the on-ramps that allow them to adopt a point product solution. However, we have the vision to offer them kind of that day two customer journey, where as they progress, they can continue to expand the use of the product and take it further within their organization. And to me, it's offering that type of flexibility where it's not an all-in-one solution. We're creating those on-ramps for folks to have rapid time to value, to solve a solution like resource management. But that our portfolio, the vision for our company goes well beyond just delivering a point solution to do things like project management or time management or resource management. Those are all point product solutions that are gonna lead nowhere and really struggle to deliver the complete value to the customer.
John: Yeah. Ultimately to the customer, I agree. So one final thing and I apologize in advance because this is my favorite topic. But one of the shifts that we are seeing is away from the pay-as-you-go custom implementation projects to fixed price repeatable projects. Which now represents 53% of all professional services projects. And one module that I find a lot of PSA users don't use is the project management module. You know, they're still using spreadsheets or something for that. So it seems there’s a great opportunity here to really be investing more and to build these detailed project plans and even incorporate best practices and lessons learned to help the next person doing a similar project. What are your thoughts on that?
Michael: I think I completely agree with you based on what I've learned so far. The project management piece of our solutions is the one where customers derive the most value from. If they successfully implement it and use it, it is the element that creates kind of that flywheel of value for them, in terms of resources coming in, managing all the finances and understanding how dates move. And it requires really a commitment of that particular customer to leverage the capabilities that are their product to compel that person outside of a spreadsheet or outside of another project management tool. Because the linkage of all of that data of who the people are, what their skills are, what their availability is, is invaluable and goes to create that flywheel of value for the customer. Now, with all that said, I do think there are ways that we need to continue to invest in the product from a UI perspective at UX to make that a more seamless experience for all of the customers. It is one of probably the most data-heavy, data-intensive pieces of running a professional services organization. And for us, it's really trying to continue to invest in the UI and make sure that we're making that simple and easy for them. So that's a definite paramount focus of ours when we look at the product and we've got data that tells us that when customers use that capability, that it goes to create a force multiplier value for them.
John: Let's go ahead a little bit, I know it's just day four, but could I ask what some of your top priorities are just starting out? What can all of us in the industry expect to hear about the strategy of the new company in the weeks to come?
Michael: So my priorities are really to integrate these companies as quickly and as efficiently as possible and that we're acting as one organization as soon as we can. And my goal is to complete that before the end of the first quarter. Typically these things will take much longer and I'm very confident just based on the compliments or in nature and all respects in terms of things like office locations, staff and customers that we're gonna complete this within a quarter. And that we are very quickly gonna go out with a strong force on the product side and get close with the customers and really convince them that we've got the broadest set of capabilities that is right for them. That we've got the best long-term vision in terms of being able to address all of their long-term needs beyond just a point product solution and that we can create and tailor a journey that matches with their requirements. Whether that be on the force.com stack, a hybrid, or a multi-product stack, we will have the best capabilities for them. So those are my near-term priorities.
The second is obviously really making sure that we establish a brand for this organization. That is a big part of really galvanizing the staff, the people, our customers behind the brand. I don't know what that is yet John, I know you're gonna ask, but I don’t know what that is, but we will have a unifying brand for the company. And to me, that's gonna be part and parcel to making sure that we operate as one organization and that our sales teams are working together, our product teams are working together. Our engineering teams are working together to bring the best solution to the marketplace and all of that work has already started. On day one, our sales teams are already collaborating about how to put the best solution forward to our customers that make them as successful as possible.
John: Yeah, I think that's the first question we all think of when you take two brands like Kimble and Mavenlink that are both so established and have such recognition and figure out what will the next phase be. So we all look forward to hearing that and I'm sure the employees are too.
Michael: Yes, it's an important element that goes to define the brand, the culture, or the values of the organization. It's something that we're hoping to reach a conclusion on within the next 30 or 45 days.
John: Well, I know you've got a lot going on and I don't want to take too much of your time, so let me just ask for any final thoughts. Anything I should've asked that I didn't and what's the main thing you really want the industry to take away from this conversation?
Michael: So and John, thank you for the time and the opportunity. The main thing for me, when I look at the combination of these two companies and actually what it changes for customers in the industry is that we now have an organization of formidable scale. And we have formidable resources, geographic breadth and reach that have the capacity, the resources to actually develop and deliver on the original vision for the PSA space. That is really, I think, what’s changed. And you can go into the specific bits and bites of a particular product, but really the force multiplier that's gonna be created by combining these organizations, to me is the most exciting piece of this journey. And for customers that are considering the evolution into this space, there's now a provider that's got the broadest set of products, the best vision, from my perspective and is set up for success. We've got the resources, the capacity we've got the funding. We've got a great partner in Excel KKR, which was an original investor in Kimble and has doubled down on their investment in this space with the acquisition and merger with Mavenlink. And for me, those are all things that don't happen very often in the B2B technology space. So it really is a positive, perfect storm of these things coming together. And for customers that were sitting on the sidelines, hesitant to adopt or not knowing how to adopt, this is a new age in this space. And please reach out to us and we'll be reaching out to you to make sure that we can take you on the journey so that you can realize the value that our now thousand plus customers are realizing today.
John: Fantastic. Well Michael Speranza, thank you so much for sitting down with me today and having this discussion. I wish you and the new combined company much luck. And thanks to all of you for listening, this is John Ragsdale. Thanks everybody. Have a great day!