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Unchurned is presented by UpdateAI.

Kris Sundberg:
You know, what if the QBR is such a waste of time? But if I came to that QBR and I was like, hey. Like, here’s how everyone all the other pizza shops in metro areas in Texas are doing with their like, here’s their overtime and their gross margins on food, and and here’s, like, why we think you guys are, like, in 5th place. Wouldn’t you like to be in 1st place? Like, let let’s help you get there. Here’s exactly what they’re doing that you’re not doing. Now that is powerful.

Josh Schachter:
Wow. So COVID came. There was a free for all for free fall, I should say, in the restaurant industry. Clearly, it impacts you in very negative ways. And desperate times call for creative measures. You guys took laid off workers that you had to lay off, and you created this new role in this new ecosystem, this new operating model that’s now helping you with predictable costs and Mhmm. Better hands on customer success of your portfolio.

Kris Sundberg:
Yes. Yes. And it’s really exciting because there’s an there’s a whole

Josh Schachter:
new And yet you’ve never been named a top 25 CS influencer, and I wanna know why. Welcome to this episode of Unchurned, everybody. My team around me is going to crucify me.

Jon Johnson:
They are 20 minutes.

Josh Schachter:
Badgers in their eyes right now. Josh, they’re gonna record. It’s been 8 minutes. No. It’s been, like, 6 minutes now.

Kristi Faltorusso:
Purpose because he didn’t want any of my J Lo content.

Josh Schachter:
Yeah. But but remember now, Chrissy and and Chris and John, like, people have zero context for the last 8 minutes.

Jon Johnson:
So That’s

Josh Schachter:
the way

Jon Johnson:
these podcasts

Josh Schachter:
my goodness. The way it works when you don’t hit the record button. Can somebody mute Josh? Yes. So we’re just gonna cut the intro. I’m Josh. That’s Chrissy. That’s John. And we have the spectacular Chris Sonberg, who is the senior vice president

Kris Sundberg:
That’s right.

Josh Schachter:
Of customer success at restaurant 365. Not restaurant

Kristi Faltorusso:
you’re chasing yeah. There you go.

Josh Schachter:
I was gonna use my other that joke.

Kristi Faltorusso:
Yeah. But I yeah.

Kris Sundberg:
I was just wondering if it

Josh Schachter:
worked the first time. 65. Yeah. If it worked last time

Kristi Faltorusso:
because that’s the content we wanted to bring back from the past 8 minutes since.

Josh Schachter:
Well, that was a memorable moment for me, Christie. And, Chris was just in the process of telling us how fun his organization is and, and other stuff and

Kris Sundberg:
what Hey, Chris. I hear

Kristi Faltorusso:
you had a recent new hire. Who’s your new hire?

Kris Sundberg:
Talk about the new hire. New hire.

Kristi Faltorusso:
On your

Jon Johnson:
team. Gosh. Surprise announcement.

Kris Sundberg:
Yeah. I don’t know. This guy, named Mickey. Says he knows you guys.

Kristi Faltorusso:
Mickey Powell? You hired Mikey? That’s so great.

Kris Sundberg:
Yep. Started last Monday. No. Mickey Powell. But yeah. So, anyways, I’ll I’ll, real quick. Yeah. We just have a a record of doing things that are a little less normal, maybe not so HR friendly.

Kris Sundberg:
And, so one of the traditions we’ve gotten into is what we call our our murder barn summit. So so every year, we get our we get a a number of leaders. So we had, like, 20 leaders last year go to this beautiful cabin in Utah, like Park City area, for Murder Barn. And you can guess what we do there. We

Kristi Faltorusso:
Who do we murder? Yeah. I mean, I wanted

Jon Johnson:
like, like, summer.

Josh Schachter:
And then who do we marry and fuck? Yes.

Kris Sundberg:
I hope that that’s not the case.

Josh Schachter:
That’s how that

Jon Johnson:
works. Oh god. Interesting.

Josh Schachter:
It’s not just a combination of why I’d marry, fuck, kill? Okay.

Kristi Faltorusso:
I think the murder was bad enough, Josh.

Josh Schachter:
No. But you don’t marry.

Kris Sundberg:
Right? You’re gonna do the sex love with your friend. I’m not married.

Kristi Faltorusso:
Yes. Yes.

Josh Schachter:
Yes. Yes. Oh, what?

Kristi Faltorusso:
Okay.

Kris Sundberg:
Anyway So, anyway, so so Mickey was, yeah, he was at this competition that we, that where I where I met you guys all last year. You wanna introduce that again too?

Josh Schachter:
Yeah. Yeah. Shout out to the show.

Kris Sundberg:
This is the ATL club. We’ve evolved. Yeah. Okay. Yeah. That’s fine. Yeah. So this one is the worst so far.

Kris Sundberg:
So, yeah, so Mickey comes out. I invite Mickey to come be a guest speaker. How are we gonna use AI to help improve gross margins, all that kind of stuff? And he did a phenomenal job, and he hung out with us for, like, 3 days. And at the end of this thing, I had a surprise, murder mystery, of course. Dinner. Right? And and I just I have a picture. I probably can’t share it with you guys, but it’s Mickey with fishnet stockings on his arms and a wig. And I don’t know if you put lipstick on, but he crushed his character so well that we had to hire him.

Jon Johnson:
You had to hire him.

Kris Sundberg:
So Yeah. Oh, wow. Yeah.

Josh Schachter:
This never made it quits way back.

Kristi Faltorusso:
I never get interviews like this. Like, that’s what’s wrong with the whole hiring process.

Kris Sundberg:
That’s right. Everyone’s doing it wrong. No. We we all we vibe really well with Mickey. And so then, yeah, this last, I don’t know, couple of months ago, we had lunch since he lives down the street from me. And he’s just like, hey. Yeah. I’m, I’m old.

Kris Sundberg:
We’re looking for a CS operations analyst, and he’s like, dude, that’s, like, right up my alley. And, yeah, made it happen.

Josh Schachter:
That’s great. And I know Mickey has a a true passion for CS operations. That’s what he’s been doing in the past before he was up with UpdateAI. And Exactly. Yeah. So yeah. So I know he’s got a a whirlwind of awesome experience, and it’s something that lights him up. Christie, let’s I I what I what I was gonna go around the room and do was, like, you know, to Mickey’s new boss, say something amazing about Mickey.

Josh Schachter:
So, Christy, over to you, and then John.

Kristi Faltorusso:
You’ll never have a shortage of ideas. I think Mickey, his his mind is working 247. And unlike most people’s, he just thinks so creatively. And, Chris, you got a sample of this, right, when we were at the before it was the CCO club, but the first event that the hack the hack of future that Josh and Update led where Mickey’s group, right, they talked about, like, VR, and they had, like I mean, like, I was sitting there and, like, I loved our group. I think that we should have won. But, like, if we got a sample of, like, how that group was thinking, and I know that was spearheaded a lot by Mickey, and I think what you guys will come to find is that, like, listen. They’re not all gonna be $1,000,000 ideas, and you’re not gonna implement or want to implement all of them, but you’ll never have a shortage of them. And I think the ones that you do implement will be very fruitful for the business.

Jon Johnson:
Totally love it. That that Love it. Mine. I agree completely with that. I also I will say, like, from a personality standpoint, I think you’re gonna find just a lot of what you were talking about before is just out of the box thinking. Like, you you say we do not traditional events. Like, the way that he thinks, the way that he supports people, the way that he loves people, is is very human centric and very human forward. And, I love to hear that you have a little bit of a, like, a nontraditional environment.

Jon Johnson:
And I know that he’s absolutely gonna thrive and continue to push the boundaries on on what you guys do and how you define success.

Kris Sundberg:
Man, this is getting, like, emotional. This this is great, man. Yeah. No. You see people who are this. So

Josh Schachter:
Oh, yeah. We’re gonna force you

Kris Sundberg:
to do that. Yeah.

Josh Schachter:
And and, like, you’re gonna

Jon Johnson:
send us the fishnet pictures for the for the, for the next cover.

Kris Sundberg:
Yeah. You know,

Josh Schachter:
next cover. So, Chris, tell us tell us about tell us about what you got going on at restaurant 360 5, a little bit about the company, and then, you know, more importantly for this conversation, about what your org looks like.

Kris Sundberg:
Yeah. Yeah. It’s I mean, for anyone that loves restaurants, you guys like to eat. Right? It is, it is it’s nice to be in that field. And, you know, I just had breakfast at some local cafe and got to talk to the owner about what we do and how we, how we help restaurants really control their costs. Right? Like, labor costs, food costs, manage everything. Help them scale up from a few locations to, you know, 1,000 if they ever get there. But, yeah, I’ve been there for 8 years.

Kris Sundberg:
So I am, yeah, it’s it’s been a long, long journey, but an amazing journey. Started when maybe we were 2,000,000 in revenue, and we’re just breaking, like, a 130,000,000. So it’s it’s been it’s been, like, a journey.

Josh Schachter:
What was your what was your first role there 8 years ago?

Kris Sundberg:
A director of customer success. So really exciting journey. Yeah. Senior director. Yeah. Anyways, yeah. Yeah. Oh, go through it.

Kris Sundberg:
Go through it.

Josh Schachter:
So director because this is for aspiring CCOs, this episode. This is the program. Right? So how did

Kris Sundberg:
it work? And and I’ve I was all I’m always been over support, the CSM team, and onboarding. Right? So all post sales activities. Right? So, yeah, came in as a director. It’s a very small team, very nimble, and, senior director and then went to a VP of customer success and then a senior VP of customer success. And, I’ve been reporting to the CEO the entire time until actually just this year, we decided that we were big enough that we needed to change up a little bit, and now I report to

Josh Schachter:
Don’t say CRO.

Kris Sundberg:
Don’t say CRO. Incredible yes. And I actually I actually you know, it was it was a bit of a you know, it wasn’t an exciting announcement or exciting decision at first, but I do see it has been good for us. Like, I I do genuinely believe that it has helped align sales, marketing, and not that we need to be aligned to marketing, but sales and CS even closer. And I I think it’s I think it’s it was the right move. But

Josh Schachter:
Get like, go go deeper into that. Like, how has it helped align sales and and and CS and support?

Kris Sundberg:
Yeah. So our our CRO, you know, traditional head of sales, very passionate, fiery. Like, we are gonna win at all costs. Right? Like and he does. He delivers, and his team is amazing. But there was there was increasing friction. Right? Because it was a at at the cost of retention. Right? Mhmm.

Kris Sundberg:
And Mhmm. Kind of his butting heads. And so rather than us having to, like, try to be friends and and not butt heads as much, now as one team, he is responsible as well for retention. And so he’s him and the team have taken much more thought into how can we how can we help CS? How can we make sure that we’re also achieving these other goals? And and then having my back too when things maybe aren’t going well where it’s like another department where we kinda need to come together and strategize on how to better align with product or dev or whatever it might be.

Jon Johnson:
Has that has that alignment changed what you track as a CS leader? Are you kinda changing metrics and KPIs, or, is it still kinda the same, experience from And incentives. And incentives. Yeah.

Kris Sundberg:
Yeah. No. We haven’t changed any incentives or no. And and, honestly, like, if retention suffers, it’s still gonna be, like, all fingers pointing at me. Right. So but,

Jon Johnson:
we’re and are you guys I guess, just to get, like, deep into it, we we transition from NRR over to GRR, CSMs within our organization, and are seeing revenue kind of being taken away Mhmm. Mostly from the CS org, which is a trend, but we’re also the more people that we talk to, the more we’re seeing that that pendulum is swinging right back to CROs, where growth and retention, and opportunity is also coming back under the c CS organization. Have you guys kind of been stable with NRR, or is there conversations around, you know, rethinking that?

Kris Sundberg:
Yeah. So so we’re very gross retention focused. Like, most I have most of my leaders are are compensated for retention.

Jon Johnson:
Yep.

Kris Sundberg:
On the on the net side, we did have CSMs for a while. Like, post COVID, before the CRO came in, we were doing all growth and commissioning CSMs for all that growth. And we were doing really well, but as we started as you know, just putting some gas on it, we didn’t want to hold our CSMs accountable to such a high goal and and be so overly focused on that growth. So we did bring in a sales growth team. They are now responsible. They’ve been responsible. And they have honestly done much better than our CSMs have done as far as, like, rise you know, raising the bar and and hitting those goals. But we have an interesting model where our CSMs are also commissioned for upsells, and they share they don’t split a commission, but they’re, like, commissioned on top of the sales growth team.

Kris Sundberg:
So So they’re motivated to work with sales to help make sure that those deals are getting closed. And that seems to be working well. They’re also commissioned for retention. Mhmm. So, you know, they have something like team, motivation as well as working with different AEs and helping them grow.

Josh Schachter:
It’s like the shared tip model in restaurants.

Kris Sundberg:
Yeah. Except we’re not taking anything away from the pie. I don’t know. And that’s that’s why it was a little as long as they get their whole pie, we can get a little extra on top.

Josh Schachter:
Yeah. Christy, what do you got? You got, yeah, a look on your face like you had something

Kristi Faltorusso:
So is it more like they’re getting spiffed on top of it, or is it part of like

Kris Sundberg:
It’s a percentage. It’s like a a full on commission of what is sold that they had a part of. At the end of the quarter, they get commissioned on that. Now there are other little spiffs you might do, you know, for, like, a new product or something like whatever. Maybe new thing that we need them to kinda help that’s in addition to their responsibilities. But yeah. And they also get a commission for selling professional services.

Jon Johnson:
Yep.

Josh Schachter:
Why’d you bring Mickey in? What was the what was the need for an ops analyst at underneath your group?

Kris Sundberg:
Honestly, I was tired of doing it myself.

Josh Schachter:
Yeah. And doing what? Doing what yourself? Yeah. It’s a good answer.

Kris Sundberg:
Just like retention. Like, it’s the first like, you know, I have to report every month to the the executive team and and the board every quarter on retention and why and and really analyze it and go deep. And it’s getting harder and harder as we are purchasing other companies and bringing all this crappy data into, like, the Salesforce that, you know, trust the data. And the amount of manual effort it takes me today to to really dig deep and say, this is a trend that we’re seeing or here’s, like, how we might need to pivot a bit. Just that alone, like, I I’m desperate for someone in that role. Because we’ve we’ve had people in the past do it, but then they’ve always kinda moved on to other departments eventually. And we just don’t we just haven’t had someone really supporting all of CS at that capacity. And it’s been each individual manager supporting their respective teams and building KPIs that maybe aren’t, you know, apples to apples.

Kris Sundberg:
Like, you know, we have different product lines, and so one director is giving me their time difference value, but they’re calculating a little bit different than my next director for a different product. So Mickey’s gonna tell me does

Josh Schachter:
what does success look like for Mickey’s joining now in x number of months? Like, there’s 2 questions around unlocking. The second one is gonna be, what will you do with extra time that he unlocks for you? The first question is, what what insight, you know, depth of insight would you like him to unlock because he can be fully focused on it, areas where, you know, you were just tied a little you you were just stretched a little thin. Where do you want him to go? What’s, like, the art of the possible for you?

Kris Sundberg:
Yeah. Just speaking about retention itself, because we’re very retention focused like I’ve shared, doing the cohort analysis on a regular basis, and then break slicing that up a lot more granular than we have in the past, that alone would be huge for me. To really be able to say, like, these are the segments we need to, you know, change how we’re sit so, you know, figure out, like, why these cohorts are suffering. Right? And then second to that is, well, we have all this great usage data. Right? And we we do a level of health score and all that kind of stuff. But to take it back to and I think we all kinda dream about this in the CS world. It’s like being able to really look at usage data and predict retention or growth and correlate it to what aspects of the usage can we really, like, really make the biggest difference. And no one’s we’ve gotten close here and there, but it’s been, again, so manual.

Kris Sundberg:
And for someone like Mickey to be able to come in and maybe automate that whole process and keep that keep keep feeding us that data as we we change, you know, the what we’re training, how we’re onboarding, our different adoption programs. Right? Like, that that could really make a difference long term.

Josh Schachter:
What what, what’s CSP? Are you guys on c CSP right now?

Kris Sundberg:
CSP? Platform. CS platform. Oh, we’re using Gainsight.

Josh Schachter:
Gainsight. So, so we’ll be using Gainsight and their p x in some ways to correlate product usage to the different cohorts.

Kris Sundberg:
Yeah. We we actually use Pendo. Yeah. We’re using Pendo with Gainsight. But, yeah, using that data, maybe leveraging AI a bit to be able to help, you know, do some of that prediction and then automate.

Josh Schachter:
Mickey’s gonna turn your whole team into AI bots. Just wait

Kris Sundberg:
to watch.

Josh Schachter:
Just wait for it for years. Yeah. It’s all gonna be AI.

Kris Sundberg:
Yeah. And we’re struggling, and it sounds like no one’s really doing a lot. I mean, I know what what you guys are doing, but there’s still I think there’s a lot of opportunity to leverage AI in in the CS world. Support, we’re we’re implementing, like, the chat bots and all that kind of stuff, but we’re not leveraging AI well anywhere else in CS.

Josh Schachter:
Yeah. Well, I wanna I wanna ask that question because that’s a leading question for my business. So I wanna ask that question in a moment. But, Gotta be careful how

Kris Sundberg:
to answer that. Yeah.

Josh Schachter:
Yeah. But, but the other question that I already asked you is what, like, what is that unlock gonna give you as the SVP of customer success? Man. This what are

Kris Sundberg:
you gonna do? There is just this never end list of things I would like to be doing. What do yeah. I know. Yeah. I mean, I certainly would love to be out visiting the team. It’s it’s something I used to do a lot more that I’m that I feel like was very valuable is going out and actually, like, having more individual summits with different teams geographically. You know, more more per you know, face to face time with with everybody within the the CS org. There’s there’s 260 people in CS today, and it is just like Wow.

Kris Sundberg:
Being aware of who they are is such a challenge right now.

Josh Schachter:
You have a team of 260 in your CS group?

Kris Sundberg:
260 people. Yeah. It’s and it’s Wow. Growing rapidly. Right? We are still acquiring companies and bringing on their CS folks and and, like, I I need more time to do that right, I feel like, and not be in the weeds looking at, you know, doing analysis and make sure that, like, you’re saying buried the lead, Chris.

Josh Schachter:
You buried the lead, man.

Jon Johnson:
Like, yeah, what what roles make up that 260?

Kris Sundberg:
So, I mean, all of onboarding is a pretty healthy sized team. We have a very complicated onboarding process. I mean, it does it’s like 3 months per project, and we have hundreds of projects going at one given time. And and then, you know, like 7 different products that people are implementing. Support our our CSM team, our professional services team, which is separate from onboarding. It’s like post onboarding professional services. And then we have we’ve carved out a very special enterprise team because as we are going upmarket, we are now working with, like, big brands like Jack on the Box, Burger King. Right? And that just takes that’s like a whole different business in itself of how we support and manage and meet their needs.

Kris Sundberg:
I mean, think about their needs versus, like, the mom and pop cafe I went to this morning. It’s just it’s totally different business. So we have a special team that oversees the entire customer life cycle for those clients. And then finally, AT talking to oh,

Josh Schachter:
I’m sorry. I’m Oh, it’s

Kris Sundberg:
far one more team that is is kind of unique for us, but it’s our partner channel. It’s our resellers. It’s we have a lot of bookkeeping firms who resell our product and support it, manage it. So we have a team that helps them be successful.

Josh Schachter:
So you kind of answered it for me. So when you’re going to Jack in the Box, you’re talking to the your your your decision maker, your buyer is the VP of of operations or something along those lines. Right?

Kris Sundberg:
Yep.

Josh Schachter:
Yep. When you’re going to right. When you’re going to Christy’s parents’ Italian, sub shop, something like that. Right, Christy?

Kristi Faltorusso:
They it was like that. Yes. My parents are retired my my parents are retired now, but they owned a deli for, like, 48 years.

Jon Johnson:
Wow. 48 years. Is that the one that J. Lo went to in the documentary with the

Kristi Faltorusso:
no. But my parents did have a deli in the Bronx when my dad lived in the Bronx when he came here from Puerto Rico, but J Lo will not claim to have ever attended or

Kris Sundberg:
let me know. I’ve been to that deli. I grew up in Jersey, by the way, Christy. So Oh, so we’re East Coast love. Neighbors.

Josh Schachter:
Yeah. Yeah. You’re both you’re both

Kris Sundberg:
beautiful. Deli.

Josh Schachter:
So

Kris Sundberg:
all my meats there. Yeah.

Josh Schachter:
So, Chris, so, like, Christy’s parents’ deli slash the version of it that has 3 or 4 locations, maybe. Right? Are you, who’s your buyer there? Is it the is it the bookkeeping company that’s your partner channel?

Kris Sundberg:
If they use a bookkeeper, but 50% of these, like, SMB or the you know, whether it’s like an, you know, VP of account or whatever. Like, whoever’s running their account, their finance, if they’re that big where they even have someone doing that. But a lot of these small shops, they have, like, Aunt Sally using QuickBooks part time.

Kristi Faltorusso:
Yeah. My my mom did bookkeeping for the deli for 48 years in a ledger with pen and

Kris Sundberg:
paper. On paper. She did bookkeeping,

Kristi Faltorusso:
like, in a book.

Kris Sundberg:
Yeah. Yeah. So talk about ideal clients. Like, who’s That’s not

Josh Schachter:
poor soul that’s who’s the poor soul that’s assigned missus Falter Russo as the It’s

Kristi Faltorusso:
a Serrano. That’s my name.

Kris Sundberg:
Yeah. It’s Serrano.

Josh Schachter:
I’m sorry. It’s a Serrano That because I can only imagine, like, on a feistiness level Nobody

Kristi Faltorusso:
wants to work with my mother.

Josh Schachter:
No. But I’m serious but but there’s a real question behind this, Chris. Like, how do you how do you do that? Right? Like, my friend, one of my best friend in Connecticut owns 4 bakeries, and, like, he it’s a mess because he’s successful, but he’s all over the place. And he doesn’t sleep, and it’s this and that. And you’re gonna get him to sit down, and you’re gonna get him to attend a QBR? Fuck you. Right? Like so, like, you know, it’s okay for the jack in the box, correct,

Kris Sundberg:
like, duty of operations. But how

Josh Schachter:
do you how do you manage that? It is incredible to me.

Kris Sundberg:
No. That is a great question and has had been, like, the biggest pain for the first 4 years of my life at this company. Because, yeah, like, these are, like, big celebrity chefs and, like, all these yeah. They just don’t have the time or the discipline to maintain, like, a legit solution to manage their company. Right? This doesn’t work.

Jon Johnson:
So Well, so so that actually gets into, like, some of my questions, Specifically around, like, we’re talking about customer success. What how are you how are your CSMs tracking the success of those folks when it I mean, working in this industry, it’s probably like Josh has said. Get on a QBR. No. Absolutely not. Like these folks Yeah.

Kris Sundberg:
No. They don’t wanna go to the enterprise.

Jon Johnson:
They’re not sitting they’re not sitting in an office in front of a laptop all day, like, they’re grinding out donuts and, like, you know, all the stuff that they need to do for whatever spacing on Foodwords. But, you know, how do you how do you actually ensure enablement and engagement and usage and the the traditional side of customer success in a very nontraditional market?

Kris Sundberg:
Yeah. I mean, you can only do so much. Like, we haven’t Yeah. Cracked the code of, like, this is, like, how we get them all to engage. However, we we did stumble across a a really awesome, strategy through COVID, kind of a a product of necessity. But, you know, COVID, obviously, if you if you owned a restaurant I’m not sure if you guys if your mom retired before COVID with the deli. But

Kristi Faltorusso:
No. They got, like, at the end of COVID. They actually survived pretty well during COVID.

Kris Sundberg:
So Good for them.

Kristi Faltorusso:
Yeah. Good for them. Yeah.

Kris Sundberg:
That well, that sucked. For anyone out on a restaurant, like, I am sorry. Like, that just sucked. And I had to lay off half the team. 50% of the team, you know, was told, alright. What do we do? Right? Most of our like, 70% of our clients were getting credits, and we we did everything we could to keep our clients. And I think we actually weathered that storm as better than anyone expected. And the restaurant industry is so resilient.

Kris Sundberg:
But as part of this, you know, I we were still selling, and I wanted to bring people that we had laid off back in as contractors. But that’s a no that’s illegal. And so to get around that, I was like, well, what if what if these people kinda, like, made a little company and joined forces or something? Then we could just outsource to this company now. And that’s what we did. And we were able to, like, create a couple different we call them our service partners where they’re very knowledgeable of the software. We trust them. We so we started giving them all of our, you know, small one to 4 location projects. And what was beautiful about this is they were able to offer those little services.

Kris Sundberg:
Like, they can identify, oh, you guys don’t have time to do bank reconciliation. You don’t have time to enter new items as they come in or whatever it is. They could offer these, like, little ancillary services and then and charge them for their own business as part of their small little shop. Right? So they would start these bookkeeping firms. We would assign them projects they would implement as if they were us, and then they would try to upsell their services after they’ve identified what they need. And this is the

Josh Schachter:
How many how many folks was this, Chris?

Kris Sundberg:
That we actually, created. I mean, it was maybe 5 folks that initially, like, kind of created these little companies. And then those have grown into, like, pretty legit businesses.

Josh Schachter:
And so so it’s, like, out of those 5, I’m sure 1 or 2 of them has dropped out. They found a new job, something like that. But but some of them have actually flourished and become their own proper business and grown?

Kris Sundberg:
Yeah. Like, the 3 original companies we worked with are have all flourished and have, you know, maybe 20 people now on their staff, and we just outsource projects to them. And they they do a great job, and they’ve they have their own training, and we support them. And they do it for at or under cost. And that’s, like, the real beauty is they were able to reduce the cost of onboarding for this segment that was really hard for us. That was, like, just barnacles. You can never get them out of onboarding. And they were able to do it at a cost that was consistent.

Kris Sundberg:
It’s a flat fee, and drastically improve our gross margins and drastically increase our re our retention for this segment.

Josh Schachter:
It’s a flat fee because they’re charging you a retainer or something, so it’s just a fixed cost for that for you

Kris Sundberg:
and for them. Yeah. We just identified here’s the fixed cost. Yeah. And every project will be at this cost. And and now, actually, when we sell it, we for we ask for our clients pay them directly. So it doesn’t even pass through us because that revenue would be zero margin. You know?

Josh Schachter:
Did you have that reseller partner network before COVID?

Kris Sundberg:
Not in this method. Not like this way. It was we we had a reseller network that was them on their own, you know, as bookkeepers signing up their own customers and then doing what they want with the software. But this is now, like, an extension of our onboarding team.

Josh Schachter:
Wow. So COVID came. There was a free for all for free fall, I should say, in the restaurant industry. Clearly, it impacts you in very negative ways, and desperate times call for creative measures. You guys took laid off workers that you had to lay off, and you created this new role in this new ecosystem, this new operating model that’s now helping you with predictable costs and Mhmm. Better hands on customer success of your portfolio.

Kris Sundberg:
Yes. Yes. And it’s really exciting because there’s an there’s a whole

Josh Schachter:
new record of tickets. Named the top 25 CS influencer, and I wanna know why.

Kris Sundberg:
Well, maybe we’re waiting for this next piece.

Kristi Faltorusso:
Well, we’re here to make Chris famous with this episode. So That’s right.

Josh Schachter:
That’s right. Or won a a CS leadership of excellent award. That’s a whole separate conversation. These are the heroes, folks. These are the heroes of customer success right here. I love it. So yeah. So so so sorry, Chris.

Josh Schachter:
I cut you off. Keep going.

Kris Sundberg:
No. No. No. Good. So there’s there’s one more piece to this that, like, has has always been the dream, like, for the service partner direction. And that is instead of us selling these SMBs, you know, these these, little deli shops on our paper, and then knowing that there’s a much higher likelihood of them churning if they don’t adopt. I want to sell them on that partner’s paper, whether it’s they have their own sales team that does it, but consolidate customers that are sold onto their paper so that they’re their customers. Right? And now we treat that service partner as one client of ours.

Kris Sundberg:
And then as they lose clients and grow and gain clients each month, we take the net at the end of the month. We don’t take every client that gets lost as churn, just the net. So then all of a sudden our gross retention for that segment might go from, like, an 85% to, like, an, you know, like, a 90% or more.

Kristi Faltorusso:
And you’re not tracking the logo No. Churn. You’re just tracking the revenue churn. Right? Because you’re counting partner as the customer.

Kris Sundberg:
Exactly. Exactly. Because it’s hard. Right now, like, every restaurant that that fails or they someone closes is churned for us today. And that’s our so if you take all that out so so our retention is 92% right now, which I’m really proud of. But if you take out all, like, the just the nature of the beast of being in the restaurant industry, we’re more like 95%.

Josh Schachter:
Yeah. But that’s not fair. Does I don’t know. Christy, John, is that how churn is, like, calculated? Isn’t there, like, a an exception to churn if, like, the company goes under and it’s not your fault?

Kristi Faltorusso:
No.

Kris Sundberg:
No. It should be. Why?

Kristi Faltorusso:
Are you kidding

Jon Johnson:
me? Like, I’m sorry.

Josh Schachter:
I didn’t

Kristi Faltorusso:
And most of the churn that I ever see is through m and a. Like, I don’t have any control over that. That’s

Kris Sundberg:
still churn.

Kristi Faltorusso:
Christy, I

Kris Sundberg:
don’t ever have any organic churn.

Josh Schachter:
I’m all I please all my customers. They never leave unless they go out of business. Like, really? That’s that seems unfair, especially in the restaurant industry.

Kristi Faltorusso:
Yes. Every day, we’re sad.

Kris Sundberg:
Yeah.

Jon Johnson:
Yeah. It is unfair, but that’s the life that we lead.

Kristi Faltorusso:
The business.

Josh Schachter:
Yeah. Yeah. What what’s, what’s your top priority right now, Chris? You may have already mentioned it, but, like, we’re half we’re well, we’re just entering q 2 2024. What’s your top priority? Well,

Kris Sundberg:
we are and there’s a lot of priorities. But as a company, we’ve we’ve launched payroll. Right? So now on top of accounting and then all, like, the operation side of a restaurant, we are now offering this real all in one solution, and payroll is a beast. So working all the kinks out of that and figuring out, oh, to support a payroll client is very different than supporting an accounting client who can wait till tomorrow. Right? Payroll is like, you’ve gotta nail it. So that is definitely a top priority is how do we really how do we get seen as leveled with all of the ADPs and, you know, the the the big players out there.

Josh Schachter:
That’s that’s, like, really strategic launching launching a payroll company. Why not, like, leave it to ADP?

Kristi Faltorusso:
Right.

Kris Sundberg:
Well, the TAM is huge. So payroll doubles the TAM for every client that we have. Wow. So the growth opportune and everybody hates their payroll provider.

Jon Johnson:
They do. Like Yep.

Kristi Faltorusso:
I mean, which just means that they’ll hate you guys in the future too. Right? So we’re okay with that. Paid.

Kris Sundberg:
I’m okay with that. Yeah. Maybe that’s way after my time. Hope for now. But no. It’s a it’s a really exciting opportunity, and we do I mean, the fact that now we can integrate scheduling and their point of sale and all the different onboarding for a new employee with payroll in, like, one fell swoop, like, that is that is really gonna be a game changer for the industry. Because no one else

Josh Schachter:
And and that sorry. That that did launch or that will launch?

Kris Sundberg:
It did launch. Yes. When did it launch? In, like, a year and a half ago.

Josh Schachter:
Oh, okay. So you’re

Kris Sundberg:
into it now? Phases. Different phases. Yeah. We’re, you know, we’re early adopters, and and now we’re really starting to push into maturing the product and maturing the onboarding and the and having our service partners able to implement payroll and accounting and operations. Like, it’s, it’s a big lift. It’ll take years to come still to get it to this the place where everything else is. But yeah. So that’s that’s one of my big priorities, I’ll say.

Josh Schachter:
What you you hired, you know, the you hired the AI Maven, the the foremost AI thought Maven. I don’t know. The foremost, leader, thought leader in AI, mister Mickey Powell. How are you thinking of AI within your organization, Chris?

Kris Sundberg:
Well, it is asked every board meeting still. What is your doing with AI?

Josh Schachter:
Who asks it? Who asks it?

Kris Sundberg:
Which board members? I mean

Josh Schachter:
Yeah. Like, what’s the profile of the board members? Are these, like, the the young ones or these are, like, the

Kris Sundberg:
No. No. These are the these are, like, the the the leaders, the the the the chairs, like, Bessemer Capital, KKR, iconic. Like, they are they are asking and Those are just for admitting that they’re also admitting that they’re not seeing a lot of exciting things happening from their portfolio. So any news is kinda good news. Right? Other than, I think, the support side, which is easier. But the but our challenge is that our products are very tier 2, tier 3 heavy. We don’t have a lot of tier 1 support.

Kris Sundberg:
Mhmm. But, you know, that might change

Josh Schachter:
So sorry. So what’s your response to them?

Kris Sundberg:
So, I just try to buy some time and no. Yeah. We hired Mickey. Like, game over.

Kristi Faltorusso:
Yeah. I was gonna say, like, that’s their answer. They’re like, don’t you know who Mickey is?

Jon Johnson:
Yeah. Well, I I heard I heard some guys say on LinkedIn, which means it’s absolutely true that, everybody is rushing to generate AI created content and nobody is consuming AI generated content. And and I do feel like we are in this space where, yeah, we absolutely need to think about AI, but I still think we’re in the early stage of application. And I think there’s a lot of generative stuff happening, but I don’t think there’s a lot of solutions. I don’t think there’s a lot of, like, end games. Like, Josh, what you’re doing solves a very real problem. Right? There is this summary need. And what I am really excited about, even like if if you can crack the code on.

Jon Johnson:
The problem that your customers have with their data lake when it comes to the the data that they have. Right? I mean, you have all of this data that you’re connected to through integrations and do x with it. Like, that gets you kind of into that next stage. Right? And and that’s Mickey’s incredible at kind of those thoughts those thought experiences too. And it’s funny because there was, like, oh, we have a chatbot. Like, great. We’ve had that for 20 years. Like, whatever.

Kris Sundberg:
Yeah.

Jon Johnson:
This one now has an accent. I don’t know.

Josh Schachter:
No. You know, we should bring Mickey on at some point again because, outside of the good banter, Mickey I know Mickey is going to start using AI if he’s allowed, but, to run analysis on your data because I’ve seen him do that really massively like nobody else that I’ve ever seen. He’s gonna look for correlations, and he’s gonna ask, you know, whatever it is, whether it’s chat gbt or whatever. He’s gonna he’s gonna come up with deep insights and correlations, regression analysis type of things based on AI, if I can predict how Mickey will leverage AI for your organization.

Kris Sundberg:
I’d be very happy. And then from there Well,

Kristi Faltorusso:
that’s the thing. Everyone’s got tons of data, but no insights.

Kris Sundberg:
Yeah. Yeah. Yeah. And then take those insights and create the pop up campaigns because I think that is valuable for clients to be, hey, idiot. Like, you need to do this every day, and you haven’t done it for 5 days. Like, you’re wasting the you know, you’re paying for the solution. You’re not getting any value. Like, we need that kind of, like, shake shake these operators and and, wake them up to get the value from the software.

Kris Sundberg:
Alright. And then I love to well, anyways, where was I going? I had a I had a different thought. It’s gone. But certainly

Josh Schachter:
So we’ll wait.

Kris Sundberg:
Certainly. We yeah. Having AI create those pop ups or, you know, just just set those up and manage that would be would be huge. We are we are doing the summary calls and following up and oh, yeah. Yeah. Here’s what it was. The next level We

Jon Johnson:
got you.

Kris Sundberg:
Beyond that yeah. It always comes back. I think there is tremendous value in being able to help our clients or any for any SaaS, you know, for any any, industry, helping them benchmark against their peers. Like, if I could

Josh Schachter:
Yeah.

Kris Sundberg:
You know? Maybe not like a you know, what is a QBR such a waste of time? But if I came to that QBR and I was like, hey. Like, here’s how everyone all the other pizza shops in metro areas in Texas are doing with their like, here’s their overtime and their gross margins on food. And and here’s, like, why we think you guys are, like, in 5th place. Wouldn’t you like to be in 1st place? Like, let let’s help you get there. Here’s exactly what they’re doing that you’re not doing. Now that is powerful. Right? And that’s sticky. Like, I think it’s gonna be really hard to get the data clean enough to do that.

Kris Sundberg:
Yeah. But in a couple years, like, we gotta be doing that. Right? Or we’re just doing the same old thing. And that that to me is, like, how we level up our game at least.

Jon Johnson:
Yeah. That’s something that we actually have. So I work at a company called user testing, and we do, UX research and insights. And one of the big projects that we’ve been focused on over the last 2 years is this idea of benchmarking of of, you know, you say you’re doing this because we have all these insights. We have all of these customers and it’s, you know, it’s generalized, so it’s not like you’re saying customer specific whatever. It’s like, in general, this industry should have these levels of success based on whatever categories we give. Right? And here’s your score. Right? And it really gets that to your point, that stickiness of of deep insights that is not just I’m looking at myself and I’m looking in the mirror.

Jon Johnson:
I’m saying, hey. I’m pretty. It’s actually, like, here’s what everything looks like outside so that we can start really competing. Right? Everything’s so insular. Right? I mean, I was gonna ask you about the competitive landscape. Right? Like, what does it look like for you out there in the market when you’re you know, you said everybody that uses payroll sucks. Right? So it’s it’s one of those things where you have to kinda pay attention to the competitive landscape. But if you have the ability to benchmark, that’s your that’s your hole in 1 when it comes to somebody maybe leaving.

Jon Johnson:
It’s like, well, yeah, but they’re using this other software, and, you know, here’s their score, whatever that looks like.

Kris Sundberg:
Yeah. Benchmarking it with competitors stuff, that that that’s interesting as well. I mean, we’d only be losing our own data, but, for our own clients. But, yeah, like, our competitors is really just a very fragmented space. Like, it’s QuickBooks. Right? It’s intact. It’s and it’s different for every segment. And and that’s the biggest challenge with doing this benchmarking is that you do not you don’t care how you benchmark against fast casual if you’re a fine sit down diner.

Kris Sundberg:
You know? Mhmm. So really being able to we gotta get enough data to get super narrow to compare you to the other sandwich shops in your type of demographic area.

Jon Johnson:
I love that.

Kris Sundberg:
And then, like, you guys are paying twice as much for your tomatoes as the guy down the street. You know, there’s all that kind of fun stuff

Kristi Faltorusso:
you could do too. Right?

Jon Johnson:
Grow your own tomatoes. Yep. That’s

Kris Sundberg:
safe. Farm to table. Grow your

Josh Schachter:
own tomatoes. Yeah. Yeah. That’s not gonna help your marginal cost. Cool. Chris, this was great. You buried a few leads there. You buried the lead of how big your team is.

Josh Schachter:
You buried the lead of the fact that you were heroic during COVID and repurposing and finding new employment and in a way that benefit both those people and the company and your customers. Yeah. And, thanks for thanks for being on the show. Sorry for the rocky start. Yeah.

Jon Johnson:
We’re gonna make sure Josh hits record next time.

Kris Sundberg:
Yep. Yeah. All good. All good.

Josh Schachter:
And I came in a little hot.

Kris Sundberg:
Yep. Are you getting a better mood now? Did did we cheer you up a little? You seem You missed the

Jon Johnson:
whole Josh’s grumpy conversation. So

Kris Sundberg:
Yeah. It was a rough it’s probably good that we didn’t record that first session that first minute.

Kristi Faltorusso:
Oh, I love grumpy Josh.

Jon Johnson:
I know. Grumpy Josh is my favorite.

Josh Schachter:
Chris, thanks so much for being on. Awesome. We’ve actually wanted to have you on for a while, and wishing you and Mickey and Restaurant 365 the best success through

Kris Sundberg:
the rest of

Josh Schachter:
the year.

Kris Sundberg:
Let’s get them back on here once we accomplish something with them.

Jon Johnson:
I love them.

Kris Sundberg:
Give them 2 more weeks. Yeah.

Josh Schachter:
Perfect.

Jon Johnson:
More weeks. Yeah.