Brian Zielinski: Helping Business Owners Leverage AI

Craig Castelli (00:04):

Welcome to The Close M&A Podcast with Caber Hill Advisors. I’m your host, Craig Castelli. Today our guest is my good friend Brian Zielinski. Brian and I have worked together on and off over the years, including with his current company ShapeConnect. We also share an alma mater, which is why I had to wear this fancy Marquette basketball polo today. It’s also about a hundred degrees outside the day we’re recording, so very appropriate. Anyway, Brian, thanks for joining. You found a ShapeConnect [00:00:30] in 2020. Tell us what was the idea and why’d you think it would work?

Brian Zielinski (00:35):

Craig, thanks for having me. We do go back a ways and some of what we were doing before at Siemens in which we worked with medical practice owners. Oftentimes, yes, we were selling products to them, but they kept asking questions about expertise. Do you know somebody that could help with my marketing trying to grow their audiology clinic? They didn’t know who the providers were, who they could trust, they didn’t know who would do a good job. [00:01:00] So we became a liaison I felt like as field representatives. And I think much of that drove the interest for Starting ShapeConnect and recognizing if you’re running a medical practice or any type of small business, you have to wear so many hats and really trying to pinpoint experts or service providers that can do a good job for you was not easy and just another burden on top of owners. So here we are.

Craig Castelli (01:26):

Yeah, I mean you guys are definitely doing a great job. We started working with [00:01:30] you over some IT needs and you provided a lot of outsourced IT support, Chief Technology Officer support, getting into some AI, which we’ll touch on a little bit. So I know you guys are experts in that realm in helping business owners in a lot of different areas. What’s been most critical to your success so far? I

Brian Zielinski (01:51):

Think the biggest thing is just staying true to the idea and concept. I mean, when you do a startup and you build a platform, you can pivot all the time [00:02:00] and sometimes it’s necessary. And I was in an incubator with a bunch of other veteran founders at one point and I saw a lot of businesses just kind of trying to change what they do and 2020, 2021, not an easy time to start a business for anybody, but I do think we did a good job of just remembering that the environment I came out of and then my colleague Yvonne who joined up and Mark, they both own companies and recognizing the value of the trusted service provider. There’s a lot of, I call ’em the kind of [00:02:30] freelance free-for-alls out there. You can go to different websites and find people that maybe could build a website for you, but are they going to be around in a year? Are they going to be a true partner for your business? And also keeping a mindful eye on emerging technologies and new things that a business can utilize. And that’s what we’ve tried to do. And again, I just don’t think owners always have the capacity to figure out who can support my business in terms of outside [00:03:00] providers. And we’re functionally giving ’em a procurement team that they can lean on for software and service providers.

Craig Castelli (03:08):

Which is invaluable. You need a new service and you call five service providers. You’re lucky if one of ’em actually listens to you and only four just try to pitch you on what they’re offering as opposed to just giving you an honest opinion of whether or not they can help and how well you fit what they offer.

Brian Zielinski (03:26):

Correct. Yeah, it can be challenging and [00:03:30] we try to actually cultivate relationships with the providers that we invite to the platform. So we’ve made our platform now much more of an invite only environment. The goal is not to say we have 1.2 million different providers. It’s actually, hey, we have 1000 – 1500 providers that we actually have spoken with and I think that’s necessary. And then we’re categorizing ’em. We have emerging categories where they’re newer providers and we let business owners know that, but [00:04:00] they might have created something interesting new that either reduced costs might be a little more risk with that category, but again, the owner knows it. So we have emerging establishing exceptional partners. The exceptional classes are the ones that we’ve had the most projects with in terms of supporting companies on our platform. So I do think that type of vetting and onboarding process that we have with service providers does create hopefully some peace of mind for the business owners.

Craig Castelli (04:30):

[00:04:30] I would think. So if they truly have to earn their way through the ranks, it’s a true meritocracy playing out right on your platform.

Brian Zielinski (04:39):

Yeah. My father-in-law, we’ve had some fun ones where he worked with the website guy in his building and then he paid the guy a lot of money, the guy disappeared a year later and nobody’s there to manage the site. I mean, those relationships happen where you network and you do work with [00:05:00] somebody, but at the same time did you go through some sort of diagnostic evaluation of what your need actually is and then really find somebody there? There’s just so many cases. I would say half our cases are people that do come to us saying, I tried this before with somebody, it didn’t really work out. And then we kind of try to make sure they have a better experience this time around.

Craig Castelli (05:19):

Yeah, well that was me and I certainly did. So you talked about the incubator there just briefly being with other veterans. So for those who don’t know, you made [00:05:30] an interesting decision, what, 10, 12, 14 years ago, you were doing very well in a career with one of the best companies to work for out there and you decided to join the Army. So first of all, thank you for your service. Wonderful what you did, including a deployment overseas. I’m sure that’s impacted your life in every way imaginable, but what specifically has that experience done to shape your thinking about business and how you managed ShapeConnect today?

Brian Zielinski (06:00):

[00:06:00] Well, I knew one, I was just kind of ready. I wanted try something new and they put you through the tests. I mean, you go through Officer Candidate school, do basic training, all of it ultimately became a signal officer. So I did have the, I thought that would be a great area to get into because of where the world was going. So managing communication networks, information systems, cybersecurity for the Army. I just felt like it was another test. And then, yeah, could the entrepreneurialship journey be [00:06:30] easier having gone through all the other stuff you go through? I think a hundred percent the Army helps with first the mindset. You kind of realize so many things you can live without, which is great. You learn that if I don’t make as much money for a little while, that’s okay. I’ve lived outside and you do some unpleasant things.

(06:52):

Or you live in a place that’s not so nice for a deployment. So coming back and then starting a business gets a little bit more [00:07:00] plausible from a mental standpoint. And then obviously the structure, I mean people, there’s all kinds of books out there, but I would say even the one thing we’ve really started to do is publish an operation order. And so most officers spend their time actually writing operation orders. And so even with the business, and I think still as a younger, within 5-year-old company, quarter by quarter, what is the operation order for us? So what’s the situation we’re in the mission, the tasks [00:07:30] that need to be done, what are the objectives we’re trying to achieve? And we’re doing that. We could be doing it a little better of course, but quarter by quarter. I think that’s a really good discipline that you never do a mission in the Army, even if it’s a local field exercise where you’re moving the battalion from Fort Sheridan in Illinois to Joliet Training Center to conduct small arms training or whatever you’re going to do, [00:08:00] go to the range.

(08:01):

You still need to write an operation order to make sure you move a hundred soldiers successfully. They’re fed all of that. So I think that mentality is something that we sometimes shelve in business because time, day-to-day tasks eat up so many things. But I am trying to be very disciplined about putting that together and ensuring that you’re tasking the other leaders in the business to write up their component of the operation order. So usually one officer in the military doesn’t write up the whole order. There’s a communications component [00:08:30] in an operation order within the military. The signal officer is responsible for writing up that aspect of the op order. It’s the same thing here. We have specialists on our team and leaders on our team that need to contribute to that. And I think instilling that across our team and knowing that it’s going to be a quarterly exercise is something that has definitely started to pay dividends.

Craig Castelli (08:51):

Yeah, I think you found your next career, whenever you move on from ShapeConnect, you could write books and give speeches, I’m sure to a large audience about [00:09:00] how to apply those principles to the business world. Because while you certainly can’t run a company exactly like the Army, I mean, you’re right that a lot of business owners don’t put any thought or planning into some decisions that they ultimately wish they would’ve.

Brian Zielinski (09:17):

Yeah, no, it’s just trying to find the time is the key. You trying to carve it out and make it a discipline. Yeah,

Craig Castelli (09:25):

Yeah, exactly. So you guys have made a noticeable shift [00:09:30] in the business toward AI. Tell us what you’re doing in that realm.

Brian Zielinski (09:35):

We had to make a shift. We have two service lines. We have a thing called Service Connect that helps you connect with experts, right? Human beings that can take care of work for you in IT. And accounting marketing. We also had Software Connect, which is our colleague Mark’s domain. It was about picking the right software tools. Well, increasingly in Software Connect, we’re seeing the opportunity for AI solutions to [00:10:00] automate, and people used to lean exclusively on software. So we know most companies are at the individual level. People are using ChatGPT, they’re asking AI questions. I would say the next threshold for most companies now is are you looking at workflows, actual your sales process and determining where AI can take care of a whole workflow for you? [00:10:30] So we have a great company we’re working with, Ordify, that they integrate with 200 applications.

(10:38):

The idea now is having a multi-agent system. So in our case, when we’re helping a company understand their business needs, we used to go through some diagnostic surveys, some interviews, all of that onboarding we’re going to put into our platform and we’re going to have an agent that asks the right questions. Essentially from there, we can have an agent that prescribes solutions for the customer and then lastly, an agent that [00:11:00] can follow up and make sure you’re kind of executing the next step on your roadmap. So just think about any process in your business. You can now have agents working together almost in the way that people are to complete full workflows within the organization. So I think that’s the next step we’re all looking to take and there’s a people component to, or an expertise that I think you need a human being to help define within your business. What are the workflows that are ripe for [00:11:30] AI agents to come in and streamline your operations?

Craig Castelli (11:35):

Yeah, I mean the opportunity’s massive. I think everybody realizes that we’re talking before we hit record a bit about Ordify because you just connect me to Roger and first impression, I was very impressed. We’re looking at ways to incorporate what they do into our business and how to bridge the gap between leveraging these tools and making everybody more efficient while [00:12:00] maintaining the right levels of confidentiality and security and protection around everything we do, which I think they have a pretty good tool for. And this really plays into some of the other clients that you guys have. I know you’re working with some PE firms as well on incorporating AI into their business processes. Where exactly are you or they seeing the biggest opportunity on the PE [00:12:30] front? Is it deal sourcing? Is it deal execution, is it all the above? Talk to us about that.

Brian Zielinski (12:37):

I would say much of our work with the private equity groups are once they’re acquiring companies and ensuring they’re running the right way and ensuring there’s some standardization now across, for example, their technology stack. So we just, were working with a group right now. They keep acquiring roofing [00:13:00] companies. So we have three new roofing companies, large commercial roofing companies. And when you acquire a company and they’re all running on different systems, it becomes difficult to really measure results and get the proper reporting by standardizing the tech stack. As an example with that group, I think we’ve used Acumatica as the ERP, Lumber for the payroll because it’s very construction driven, Ramp for expense management. And all of those tools being connected does also [00:13:30] start to enable you have better data and with better data, you can start to apply AI for a lot of reporting in particular financial reporting and really assessing and benchmarking the health of the businesses with one another. So we’ve come in at that. I would say that the tactical execution level, we have a new company, make it hum, make it really streamlined. And that’s been a good round for us and we enjoy doing that process and it’s [00:14:00] something that just keeps recurring every time they make an acquisition.

Craig Castelli (14:04):

So it is really more focused on the integration and the scale of that platform than the deal side. We should talk offline a little more about what you’re doing there because we have an interesting roofing business that we’re working with not yet ready to go to market but may have some opportunity there. But shifting back to the topic at hand on the M&A process itself, if we’re looking at deals, [00:14:30] do you see areas where AI can accelerate the process? And I guess the other side of the coin there, I ask you a two-party question. Where do the humans still win?

Brian Zielinski (14:45):

A hundred percent. The AI opportunity is to get rid of the mundane work and obviously conduct research at a deeper level too. Finding target lists. We did work with a company more recently, [00:15:00] they have a platform for, it’s a trending stock space platform, and they’re kind of hit that point where they’re ready to move on. And even the ability to, they were reached out to by a potential buyer and the ability to just find lookalike buyers in case that deal didn’t make it much, much easier than it ever has been. The valuation piece, I think there’s a lot of work that can be done there. I mean, AI is good at looking up all the legal [00:15:30] on the company. That’s all open information. And AI can pull that really quickly if they have any issues from a legal standpoint. And so the bottom line I think is just in the way of research, targeting.

(15:42):

All of those things can be done much more efficiently to focus people like you and your teams meeting more people and deepening the relationship with owners instead of being in the back office building decks and conducting research. And [00:16:00] all of that can be streamlined those processes so that your team can actually be out in the field or teams like you to. I think that’s where the opportunity is. You would have a better relationship with the owners because you’d have more time with them and to grow your lead pool of new owners as well. You can attend more events and do more things that probably are more fun anyways than the due diligence piece. So

Craig Castelli (16:27):

Who doesn’t love sifting through [00:16:30] 30 different operating agreements to figure out which terms are standardized across all of ’em and which are one-offs? But I mean that’s where we see a lot of opportunity too, is on the due diligence side of things. We were, and this is one thing we’re talking with Ordify about, we have a client, let’s just say this client has 25 different facilities, they’re all leased. So they have 25 different leases, multiple states, different laws at play in due diligence. At some point somebody needs to read all those, summarize all of those. [00:17:00] That’s easily five plus hours of a first and second year attorney’s work, time, and effort right there. And at big law firms, that’s no small figure. If you can have an AI agent that just does all that for you, I think it makes everybody’s work a lot easier and you get to the conclusion much more quickly.

Brian Zielinski (17:24):

Yeah, I think the personalization of companies, the brands now, if [00:17:30] you can open up time for that exercise being more present online and being more engaged with the customers we just talked about, I think there’s actually more human connection you can get out of this opportunity with AI than previously.

Craig Castelli (17:48):

Yeah, no kidding. So you’re coming up on your five-year anniversary of starting the business, which is no small feat, but clearly you’re in the early stages of growth [00:18:00] mode. You think at all about your eventual exit.

Brian Zielinski (18:05):

Our partner, Yvonne makes us think about it. So

Craig Castelli (18:10):

I knew I liked her.

Brian Zielinski (18:11):

Yeah, no, she was a market research analyst with Euromonitor, so she’s always on top of things. She then started her own skincare company and ran it over 10 years and then had a successful exit. So I think she comes in with a lens even for our business and we were very lucky to find her. [00:18:30] I think we have an exercise as a platform now to go through and use AI. We are actively in the process of really transforming our system to be, it’s going to be AI powered, everything from our customer interactions and how we intake information to understand them well, and now we’ll understand them better through being able to onboard more [00:19:00] providers we like and make not just recommendations for what they feel is the initial need at hand, but also proactively if we can be that proactive recommender, you see it with platforms all the time, I mean match.com, right?

(19:13):

They’ll source you things that are a good fit and there’s a million tools like that. And so that is the next step for us. And I think if we get through that process successfully and find that perfect hybrid of the AI engine underneath us, combined with, we still like [00:19:30] the human touch. We don’t feel like we want to take our team of solution experts out of the process. We think there’s value there, but your business, there’s opportunity to get certain aspects of the work into the platform and to move faster for customers while becoming also pro AI is going to give us an opportunity to be very, very proactive with their business and build them their roadmap. You want to grow. It’s usually not one provider or one step that’s going to do it. It’s going to be a few steps. And [00:20:00] I think people will appreciate the way that we’re going to lay out a journey for the business goals that they have. So after we get, I think some of the AI implemented and we find really good fit for everything with the customers, who knows what comes there. But I think you have to have, I think any business, and maybe you can speak to it as well, has to think about how they’re running from an operational standpoint where the AI needs to be in place [00:20:30] to increase their value.

Craig Castelli (20:33):

Yeah, well if you become that go-to platform for thousands of businesses out there, you’ll have created a tremendous amount of value. And then it’s just about what’s the right time for you? What’s the right way to move the business into his next chapter? And are you continuing to do that in the current form or in another form? But if you set the right course, [00:21:00] I feel like I say this all the time, good exit strategy at the end of the day is really just good business strategy and preparing the business to be sold will allow you to run it more efficiently, most likely, more profitably. Probably have a lot more fun doing it because you’re not beating your head against the wall dealing with frustration after frustration.

Brian Zielinski (21:21):

And we’re working the tech stack piece. I mean, I think the biggest piece we want to be, that’s a thing we advise companies on and now it’s [00:21:30] a faster moving environment. So I think when we feel like we’re up level to the right point and then we can look at those options, but it’ll be a few years we like what we’re doing. It’s fun to work with all different types of businesses and I think we’ll enjoy that for a while.

Craig Castelli (21:49):

Well keep working that tech angle because if you can get a tech company valuation instead of a service provider valuation, the differences is pretty massive. So alright, last [00:22:00] question here that we can wrap up. Give us a piece of advice for a business owner that they might not hear somewhere else.

Brian Zielinski (22:09):

I’m not sure they won’t hear it anywhere else, but I do think there’s a need for speed now. I feel like we all have to work a little faster and we work with, I would say companies, sometimes healthcare and construction that can be a little bit on the laggard side. Is their brand modern, are their systems [00:22:30] modern and all that? I do think this is the time and moment to take care of those things. And I do see the appetite. I mean I feel like we’ve had a really good increase in new leads and companies understanding that there are macro economic trends right now that are going to impact them and they have to plant a flag and running off of different Excel files across their company, not having a modern online presence. Those are things that [00:23:00] maybe just used to reduce your valuation, but now might mean extinction. And I just think we have to take stock of those things, all of us, and again, start the journey to be modern, to be in this era that we’re in right now.

Craig Castelli (23:21):

Yeah, you’re right. And I can’t tell you how many times we still see companies with paper records, whether [00:23:30] it’s patient files or it’s inventory in a distribution business inventory counted once a year and otherwise manually tracked on paper. It’s a nightmare for the business owners to actually know what’s going on in their business. And it’s even more of a nightmare when it comes to actually selling the company. So technology’s here, it’s not going anywhere. We all have to adapt and AI is the next generation of that for sure. [00:24:00] Well Brian, it’s been a lot of fun. If anybody wants to get ahold of you or connect with ShapeConnect, where should they go?

Brian Zielinski (24:08):

They can go to the shapeconnect.com/contact-us page. And yeah, we’ve got some areas they can tag anything they might be interested in and then we can have a conversation with them. Happy to talk to people.

Craig Castelli (24:21):

Well great. Thanks for spending some time with us today here and thanks all of you for listening to The Close.