The full transcript

Oleg

Hi everybody! Welcome to Devico Breakfast Bar! Here we speak with different people involved in the business landscape, share their expertise, delve into the latest tech trends, and explore the ins and outs of IT outsourcing. I'm Oleg Sadikov, and today I'm excited to have Chris Federspiel, founder at Blackthorn. Don't forget to subscribe and hit the notification bell so you don't miss new episodes. Hi Chris!

Chris

Hello! Thanks for having me on here, Oleg.

Oleg

Thanks for joining. Could you walk us through your journey from your early days in the business world, founding Blackthorn, and what inspired you to start this venture?

Chris

Yeah. When I was a kid, I played a lot with operating systems – 9, 10, 11, 12, 13, 14 years old – and I was always changing DOS, Windows, Linux, some kind of backend, something or other. Fast forward, I started working for a friend during high school, doing some CGI, Pearl scripting stuff, and a lot of database adminish sort of related stuff. And then in 2011, I went to work for him full-time, and that's where I learned about Salesforce. The skill and enjoyment that I had working with operating systems when I was younger was directly transferable to being an admin on the Salesforce platform. So, I worked at two companies for four years, and then I started a consulting company doing Salesforce admin-related work. I did that for a year and a half. I partnered with another guy. We scaled it to 30 people, and we did something like three and a half million in the first 18 months. And then I started Blackthorn with two other guys focusing on payment and event management on Salesforce. And I later bought them out in 2018, and I've been, you know, co-founder, CEO since then.

Oleg

Okay, great. You have been involved in co-founding several companies before launching Blackthorn. What lessons did you learn from those experiences, and how did they contribute to your success with Blackthorn?

Chris

I'd say don't get fixated on an idea. I think most of the ideas that I've had have not worked, but I've abandoned them pretty quickly. It doesn't take a long time to see if something's working or not. But I've also gravitated towards things that have come in organically and shifted focus. So, we focus on higher ed nonprofit and healthcare systems, but that wasn't the original thesis. We had listings on the AppExchange, and we waited to see what came in. And we originally like tech companies, and now we're more like a vertical SaaS company. We thought we were going to be more infrastructure, but now we're really focused on those verticals because it helps to get our go to market really driving. Like, if everybody's focused on setting meetings for one particular event, rather than working on six markets at a time and features all over the place, it doesn't work. We've got a hundred people remote. If we had a thousand people that maybe we could go after all this different stuff at one time, but focus and abandon stuff quickly, I think have really helped a lot.

Oleg

Okay. Within the field you operate, what emerging trends do you believe will have significant impacts on business in the near future?

Chris

There's a big strategy by private equity to roll up apps and concepts in vertical SaaS, for example. There's a lot of players that do form building, or donation management, or event management, or signatures, or whatever you want to call it. There's no reason to have 20 of these companies in the space. If you think about big tech, there's Google, Microsoft, Facebook, Apple, right? There aren't 500 of these. So, in space, there's just a very big roll-up strategy that's occurring. I think that's probably the biggest wave in the next few years that we'll see. From a tech perspective, I don't think AI is going to be too disruptive in this space, at least for a few years. It's not where it really needs to be to generate architectures that you need and to get to what people are trying to solve for. Eventually, I think it will turn around rather quickly, much quicker than people think, but I think it's going to take a fair bit longer to get there. All the LLMs and everything I've played with so far is so far away from being able to achieve what our customers need right now. But it's accelerating quickly. So, I think the runway until we can use it in earnest still has a few years to go, at least. But right now, it's helping us write things like unit coverage and like identifying issues in the code base. From a sales perspective, there's a lot of things that have changed.

Going outbound is not as easy as it was before. I get 15 calls a day that automatically go to spam, and I never listen to a voicemail. It's very hard to get me. Of all the cold emails I've gotten, I replied to one in the last, like, four years – something like this. It's hard to do that, but there's new strategies now where people are taking different approaches, trying to find people that are coming inbound to the site and then reaching out to them. We're having more success doing in-person events because, since we have this focus on verticals, we know where our ideal customer profile, or ICP, which events they're going to be at. And that has worked very well. So, I think the big trends in the space are more around really focusing on niche and meeting customers where they are in person. I think this was generally how business was done for hundreds of years. And then, when the internet came out, things went really, really wide. And I think people are saying, 'It just hasn't really worked.' And now I think it's becoming much more niche and focused again.

Oleg

I'm curious what was the email that you replied, cold email you said you replied only once for the past four years. What was that email?

Chris

Almost all of the cold email that I get is blanket stuff. It's not something dealing with our exact business. It's very rare that I've seen someone research what we're doing. Like, someone will listen to my podcast or read stuff I wrote and like talk about my cats in an email. I don't care. This doesn't help the business if someone tells me about my cats. What's more interesting is they'll say, 'I noticed your events app doesn't have these two features, and we want to partner with you for this one feature. And here's how we can help do that.' I'll get an email almost once a day from someone wanting to do external development services, but extremely general, like they wouldn't say what specifically the issue was.

This example, I actually forget which one it was. It was very quick to figure out if it would have been a benefit to us or not. It happened to not be, but not as a reflection of the service. It was more about if we wanted to focus on that need or not, but it was the only one that ended up really getting my attention. So, I would say if you're someone doing outbound, you're just going to get a better hit rate if you send out 10 a day, rather than 500 a day, that are just extremely targeted to wherever your niches that's focused on that business. If you see the vertical or the app they're focused on, if you look at their headcount, you probably have a sense of where they're at with their expenses. Are they break-even? Are they profitable? Are they burning? Like, how can you specifically help that business? Not a business in general because no one's going to care.

Oleg

Am I right that your only outbound channel is meetups, physical meetings?

Chris

We've tried everything. We've tried paid ads. We've done it on all the different platforms, even including the Salesforce AppExchange. We've paid for stuff there. None of these things have really generated money for us. Like, they've gotten views. At the end of the day, it's just whatever influence becomes cash. And for us, the only thing we've consistently seen is when we meet our niche at conferences, we directly influence revenue.I do a lot of videos, and some of it's intangible where we get a lot of business from our partners, system integrators, or other app vendors, or from Salesforce themselves. And I think a lot of the stuff I do keeps Blackthorn top of mind, but it's not reaching our end customer. So, it's hard to see if that results in a referral downstream, but if we want to get a conversation going with our end customer, the thing that's worked the best for us is just physically meeting them where they are.

Oleg

Makes sense. As AI continues to advance, what do you believe are the most promising applications in the AI industry you operate?

Chris

I think it's going to be time-based. If AI was sufficiently advanced, none of us would have a job – it would just do everything. Somewhere in between, I want to be able to describe the use case that I'm trying to build into the app, and it will spit out the code. It'll spit out the code in a way that it understands our architecture, which is not the same as anyone's architecture. Every company's architecture is going to be different. So, while you can have a single-page web app with no backend that will do something, it won't really help you. If you have API services with a different backend, and you have some kind of caching layer, and your UI needs to interact with the caching layer so you don't have overflow issues and data collisions, these are things that like AIs are just nowhere near being able to help right now, at least the public ones. I don't know what's currently being developed. Something like that would really accelerate development. And I think at that point, there's going to be a fine line between accelerating that development and when a computer could just do it itself without asking you. I think the way that it's going to hurt businesses is that a lot of companies will end up developing applications on their own. But the issue is you need someone internally that knows what to stay as the prompt. So, you can't just generally do this. Eventually, it'll get there. So. I think sequentially, eventually, software will get handled. And if you run a plumbing or electrical company, those will probably be the last to get affected. I think wide-scale robots will come much later than some kind of AI that can help you build data models faster. So, just a feeling, I don't know, just a sense.

Oleg

Many industries are facing a shortage of skilled talent. How do you perceive the current landscape of talent scarcity in your industry?

Chris

We've seen the inverse. Whenever we have a job listing, we're flooded with people that are really talented, actually.

Oleg

Talented?

Chris

Yeah, we had a job listing for a customer success manager, and we had 800 applications in like two weeks. Most of them were really quite good. Like, the starting salary for a Salesforce administrator has come very far down because there's so many people that are now very talented and skilled from this because everybody has flocked to it. When there's very early industries, it's hard to find extremely talented people, someone that has to train an LLM or even develop one from scratch. These are harder to do. But if we need someone that's going to be a JavaScript dev that we want to turn into writing Ionic, or React, or Angular, or whatever, it's almost commoditized. The thing that's hard to assess is the depth of someone's thinking. Like, when you go to do a PR review, are they going to be able to understand that the code is attributed to a different class in your code base, that's going to have an issue? I mean, this is where AI will help, but it's hard to find something uncorrelated to if you've written code for 2 years or 10 years. Obviously, if you've done it for 10 years, you've seen more things, but that doesn't necessarily mean that you're going to be a lot better. Some of the best people we have have no certifications in anything. They just happen to be really good.So, there's a lot of talent out there. I think the problem that's still really hard to discern is how do you find the best talent that's out there. And that, I think, has gotten even harder than ever because the baseline of talent has gotten much better.

Oleg

Okay. Do you think it will stay the same for the next two, three years? I'm especially talking about some of the types of JavaScript, customer success, those kinds of roles.

Chris

I think so. I saw an article on LinkedIn that – I forget the title of it – but it was like, you know, The Jobless Claims Are A Bit Up, But Unemployment Is Still Not Really That High Up. I think this is the first time in a long time that skilled labor is more unemployed than unskilled labor, where there's a lot more people that have made a bunch of money in the past that are just sitting on money looking for a job. I think that's why we're getting so many applications. In my parking garage, they were having issues of getting enough people to work in the parking garage, just parking cars, because everyone's employed, actually. So, there's a very high degree of people that are doing non-multi-year educational based fields than there are people that are many years educated. That's why we get flooded for our skilled jobs. But if we have something that's less skilled, you know, it might take you a year or two to get pretty skilled as a customer success manager. And effectively, you need to be good with people, find opportunities, be a good project manager. These skills take less time to learn than being like a full-stack developer. That's really excellent in like five different fields. And because of what's happened with interest rates, tech is hiring a bit less, and because capital is expensive, there've been a lot of layoffs. That pool of talent is just sitting there, and companies can't hire them back until capital gets a bit cheaper. I think that's what's happened in the labor market.

Oleg

Yeah, definitely. I have the same feeling, but my question – when the Fed starts to pivot, what do you think will happen then? If interest rates go to, I don't know, let's say 2%, probably, what will happen then? I don't know if it's, if it's realistic.

Chris

I don't think we're gonna see 2% again for the next decade, but that would be awesome. I don't think so, but you know, who knows. I can tell you about our business. I know that if interest rates went down, access for us to get capital through a debt facility gets more affordable. And when capital is cheaper, we will staff up. So, because we found some niches where we want to double down, it would be easier for us to staff up in those areas if capital was less expensive. And if we have cheaper access to capital, we then have more money and can hire more people. So, I think if interest rates do come down a bit, the skilled labor market will get scooped up. If it comes down to a quarter point, I don't think that...

Oleg

No, quarter doesn't change anything.

Chris

Yeah. If it starts to move a good bit, then it's going to get picked up again. But I think they need to be careful because I think inflation will very quickly attack that. I think the speed at which interest rates come down will actually be very slow. So, I think it'll be a slow build of what happens with the labor market. It'll look again, like 2011 to 2017. I think it's a new slow build. It’s my guess.

Oleg

Okay. Interesting. As far as I understand, you have negative IT outsourcing experience. Would you be willing to elaborate on what went wrong exactly then and the lessons you learned from that experience?

Chris

What we've seen happen with outsourcing anything with code, I would say. Outsourcing our support team, or QA, has worked decently for us. But outsourcing people that write code has been hard because we never figured out how to crack the problem of having outsourced devs follow our code patterns without us having to have our devs be involved in the projects throughout. It takes a very long time to train on that. And we saw not a complete rotating door, but a bit of a rotating door with the devs that were on the projects. Like, if the company got a more expensive client, then they're going to shift their best person. That's what I saw. Or for example, we built an entire application with an outsource team, and when our internal team got it, the patterns didn't match the rest of our code base, and there were also a lot of issues with different types of app sizing. So, based upon different widths, like certain things were breaking, dynamic nature of certain things were breaking. Like, from Salesforce to our UIs, when you were controlling the dynamic nature of certain things, they didn't work. There were a number of things missed. Now, this could get put on our ability to do requirements gathering, or ticket writing, or something with our QA, for sure.

But I haven't seen the model of having an outsourced team execute on something without significant oversight. So, there would have to be an internal product person – one or two internal devs – that would be both working on the code and doing all the PR reviews all the way through. It has ended up being like not as efficient. And from a cost perspective, it's been actually less cost and more efficient for us with time to hire out of South America because we can pay well above market, and it ends up being either just as or a bit more affordable than working with an outsource team. Now, this is not to say outsourcing wouldn't work, right? Like, let's say we had two devs and a product person put alongside five outsourced people, and we wanted to really get moving. So, we're a hundred people. I think if we were a thousand people, and we had some extra cash to accelerate development of something, or if we were sitting on 30 million of VC money, which we've never had, then I think it could certainly help. But the intent of why we originally hired outsourced devs was to sort of act as our R&D, and take a new uncorrelated project, and run with it. And this could have been a fault of ours that we weren't involved enough throughout, that we didn't have enough oversight of the patterns and doing the PR reviews.

Oleg

But QA works, right?

Chris

Yeah. We still have one or two QA and two or three support people on our team that are outsourced.

Oleg

Do you do any kind of test automation? I'm asking because you talked about patterns. Do you have any patterns within test automation scope of work? And if so, do those QA follow this pattern?

Chris

The way our QA has been set up is not so traditional, which we're actually changing a bit. Our QA, they don't write any code, nor can they read code. So, we're actually looking for a QA manager now that can do both read and write code. For software, we've used around QA, we test them end to end. We're using SonarCloud to help us review some things with pattern detection. We also have a Clayton, which helps us to identify cross-class issues that we can tidy up. One thing we struggle with is writing adequate unit tests to get enough coverage across the Salesforce world. There's different namespaces, and when we have to do cross-namespace interactions with a single process, that kind of thing has been pretty hard to QA and write unit tests around. So, this thing has been helpful in us being able to do that. So, with our QA, that's somewhat of what they've been around. But we are looking for someone that can write code because there's some JavaScript work we have to do around certain tools.

Oleg

Okay. As we wrap up our conversation, what advice would you offer to other executives who are considering IT outsourcing for their organization, especially those who may vary due to negative experiences like yours?

Chris

You know, this doesn't just deal with outsourcing, just deals with managing anyone. Don't just give a project and disappear. Make sure that there's consistent check-ins within the weed's oversight. So, at least once a week, have at least a few hours for someone to review the work that's occurring. Don't wait to land to see it. Because it's much easier to make adjustments in something evolving rather than at the very end. That's where we went wrong. If you're hiring outsourced people to do development, then it's going to significantly help if you have one or two of your seasoned devs going through and looking at the code patterns or whatever's important to you with writing code to make sure that it's following the same principles. That would help significantly.

Oleg

Or integrate an outsourcing team into your team.

Chris

Yeah. I mean, that would be great too. We did have one issue. We tried to do that, and there was a cultural issue. There were like two or three people that we integrated into the team, and there ended up being some clashes between the two different teams, between the outsourced team and our internal team. Now, that could have been an issue with management where we didn't step in and make sure that that was better. And I don't actually know why it happened, but I know it did, which ended up with us splitting out the two teams. So, I think it is just as important as assessing on the tech, and doing reference checks, or whatever, to see if there's a cultural fit because that will really help the teams work together.

Oleg

Usually, if you're hiring from a country that matches with your culture, then it shouldn’t be an issue. Usually, it works that way.

Chris

Yeah. In this case, yeah, I'll just say yes. I agree.

Oleg

Chris, thanks for your time. Thanks for joining and sharing your thoughts. I find them very useful, especially your opinion on outreach. I do agree with you. And I would add: cold outreach – the easiest way to approach massive auditory, right? And everyone does the same. And when everyone does the same, you should do the opposite. You should do something that is not easy to do. Otherwise, if you follow the crowd, you cannot be rich.

Chris

Yeah, exactly. I mean, you could outreach to me if I wanted to be on here, and I was like, 'Oh, sure. Sounds good.'

Oleg

Yeah. But it's not the same cold outreach, right? So, like everyone else does.

Chris

It was different. Yeah.

Oleg

So, it was a little bit different. Yeah. But in general, I totally agree with everything you said. And yeah, again, thanks for your time and thanks for joining me.

Chris

Cool. Same here. Thanks for having me on, Oleg.

Oleg

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