[Fully Managed] Kyle David from KDG Ep. 65 – Transcript

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All right, everyone. Welcome to the Fully Managed by Penji Podcast, the podcast where we discuss marketing and business tips to help assist you on your business journey. I’m your host Shannon, Penji’s partnership coordinator, and I’m joined here today with a very special guest, Kyle David from the Kyle David Group.

I’m very excited to have you on today. Thank you so much for coming on with me today.

Kyle: Thanks having me, Shannon.

Shannon: Of course, and I am happy that you talked with me through the technical issues that we had at the beginning of this call. That’s also new. Well, fantastic.

Getting to Know Kyle David

Shannon: So, could you please, just for everyone to get to know you a little better, could you tell me a little bit about yourself, your work, and kind of how you got to this point?

Kyle: Sure. My name is Kyle David. I’m CEO of KDG. We’re a professional services firm. We’re based out of Allentown, Pennsylvania, and we cover areas of technology, strategy, and accounting.

Shannon: Awesome. That was very concise and perfect. You were ready for that. Okay. So could you tell me about how your agency is in the cycle? Like where you kind of are in terms of customer base, like how large, kind of like how you’ve gotten to this point in customers and everything like that.

KDG’s Growth and Services

Kyle: Sure. So we’ve been around for about 23-ish years, 24 years now. And we’re based in downtown Pennsylvania. We’re about 50, between 50 and 60 folks out here. And we have customers that are all around the world. So mostly in the United States, but also a decent presence in Canada and the UK.

And our services span the range of technology supports, your typical MSP type services, to, we do a ton of business strategies surrounding technology development, data integration, AI enablement for businesses. And then the third leg of the stool is financial support. So we provide a lot of outsourced CFO type work, tax strategy, and all of the tools that really help businesses go from what we say, making it work to making it happen.

And it’s a really gratifying job because we get to see organizations of all different stripes go from a level of suboptimal sophistication to really firing on all cylinders, using the tax code to their advantage, using technology to make people not only happy at their jobs, but happy to serve their customers and of course, make their customers happy. They’re easier to interface with, they’re more transparent. It’s easier to work with them.

And that’s one of the keys that we always focus on is, is our client, or we call them partners, is our client partner easy to do business with? And if they’re not, we help them get there. And that isn’t just easy to do business with from their customer’s perspective, but it’s also members of the community. It’s their employees. How do we bring all those things together and also make the organization sustainable so that for-profit organization that usually means profit, in a nonprofit organization that means their mission is tangible and quantifiable.

Shannon: That’s amazing. I think a lot of people do need help with organization, first and foremost, with making their business not only happy, but efficient. And that’s incredible to be able to give that to them and also see it from the beginning to end. Because I think that kind of being able to see your work in that way is really lovely. And seeing everything kind of implement exactly how you’re looking for is really lovely.

Kyle: And we always, like I said, we use the term making it work. So anytime you’re in your organization, you’re going, “ugh, we’re just sort of making this work.” We’re using spreadsheets or some arcane process that’s stuck in somebody’s head or we’re making stuff up on the fly. That’s really where we thrive, entering the “we’re just making it work” scenarios and then really make those business drivers and create a lot of operating leverage for businesses.

When you really either automate or make those processes better, technology enable them, look for ways that they can widen their margins and defend those wide margins from a financial standpoint, it all sort of comes together as the key components of the business.

Making Clients Happy

Shannon: So you talked about that your big goal is to be able to make your clients’ clients happy, and their work environment as well. How do you make your clients happy? What’s your strategy for doing that?

Kyle: So I think that we’re a very values-based organization, and to the point where newcomers to KDG often have the feeling like, “oh my gosh, this is a cult.” Because we quite literally, every morning, nine o’clock, we recite our values and we have a company all hands meeting.

And our first and foremost value is we communicate thoroughly and transparently. And that really is something that I think our clients are not used to. So we have money conversations with clients. We’ll ask them, are you getting more than you’re paying for on a regular basis? Almost to ad nauseum, to make sure that we’re delivering an exceptional experience to our clients.

Our second is that we sweat the details. And this is something that people just aren’t typically used to. Having somebody go the extra mile and make sure that not only is the objective accomplished, but it’s accomplished and then some.

Then we like say our third value is that we’re predictable. So it is assured, even from an employee standpoint, the culture around here is you make promises and you deliver on them. The reality is that we’re not perfect. Sometimes we goof, we over promise, or we get ourselves into a pickle from one reason or another. But then we go back to value number one. We communicate thoroughly and transparently. “Hey Shannon, I know I told you I was gonna get this by five, but it’s looking like six.” And being proactive about those things.

And then our last two values are that we honor and respect everyone we work with. And you talk about making clients happy. I think there’s a general lack of respect for clients in the work that we do, particularly in the tax business. I mean, most people are just used to being treated like peons compared to their CPA or their accounting or auditors. And it is just the exact opposite here. We wanna honor the work that people have done. We wanna honor all of the time they’ve struggled to make it work. And make sure that we’re not telling them they’re idiots and they should really be doing it this way.

But in reality, we’re taking all the learnings that they have picked up from all the bumps and the bruises and the pain of making it work and smoothing those things out for really elegant client experience. And so I think it’s really important that we respect the journey that our clients have had, because we wanna take them further on that journey and show them ways that they can do it with perhaps a little less friction. But you can’t do that if you’re just dismissing everything a client brings to the table.

And then the last is that we strive for excellence and humility. And those two things go hand in hand because you can’t strive if you’re not willing to fail. And if you fail humbly, that’s success in our mind. And so like I said, we recite those values every morning. You have to sort of imbibe in them in order to be part of this organization.

But when we work with our partners, they feel those, they constantly give us feedback that they feel those values working in the ways that we interact. And that gives me as the CEO a lot of gratification because the organization, even if we don’t know what to do, we know what to do. The values guide us and it’s been a great experience growing the organization with such a strong set of values because someone that doesn’t believe in them or buy into them or abide by them, we call it, we release them to the competition very quickly. Nobody wants to work with them. And that’s just the fact of the matter. We wanna work with people who can live those values effectively so that we can continue to provide for our partners.

Shannon: It’s nice to not only be able to make sure that your clients are happy, but also that you are happy working with those clients. You don’t wanna be working with someone that isn’t gonna be happy with anything you produce because that’s not worth it to you or the people that you work with. That’s not gonna make your environment very easy to be in and I think that it’s very important.

I think a lot of agencies, they look at this like a money-based business and of course it is. We need to make money and everything needs to make money. But it’s also important to be able to set boundaries of what you can and can’t do and who the type of person that you wanna work with.

I was just talking to an agency before this of a guy who puts a lot of humor in his marketing, and he said he is like, “I don’t wanna work with someone that doesn’t have a sense of humor. I show them what I make and I want them to be able to, if they don’t respond to that, well, that’s totally okay. That’s just not the client for me.” And I think that’s okay. It’s okay to be able to set those boundaries, especially when you wanna be able to maintain a gratifying work environment.

Kyle: Yep. And that’s exactly it. And we always say, look, we want a partner who is going to be as respectful of us as we’re gonna be of them. And even in disagreements, as long as we lead with respect, it’s always a win. Both parties come away from it better people as a result.

And including voices in the equation too. In our organization, it’s not a huge organization, but 50, 60 people, we include associates in client conversations because if we’re gonna be inclusive, we have to give them the experience in front of clients. We can’t just say, “well, you’re relatively new to the professional world. We’re gonna stuff you in a closet somewhere.” That value has to be applied everywhere.

Handling Mistakes and Challenges

Shannon: So you mentioned earlier that sometimes we’re all not perfect, sometimes we make mistakes. What’s your strategy for damage control after, say something doesn’t go the way that you expected? Maybe it’s not technically a mistake. You did everything right, but it just didn’t work out in the way that you wanted it to. How do you go about that?

Kyle: I think it comes down to radical honesty and transparency. And so the lawyer in me – I went to law school, but I never practiced – says, “oh, it’s damage control and choose your language carefully.” And the reality is that that’s not how humans operate. And the minute you get choosy about language and try and skirt blame even if you’re really not the one to do it.

We sort of live under the principle of, even if it’s not our fault, it’s our problem to deal with. And radical transparency and an abundance of communication usually smooths out those things. Pointing fingers never is received well, even if it’s a legitimate point.

So what we are all internally trained to do is let’s jump on the grenade. Doesn’t matter who threw it, doesn’t matter what the response. Let’s jump on. Let’s take care of the issue. We can sort out who’s at fault, if that’s really an important factor later, but let’s solve the problem first and let’s do that by living our values.

And there’s always irrationality that can get involved there. And when clients and partners see that we are super transparent, transparent almost to the point of detriment to our own organization, they realize that we are partners. It’s not just corporate speak. We feel like we’re working together instead of working at odds or it’s a transactional relationship.

Shannon: I think that’s really good. I think transparency, I say this in multiple episodes because I just think it’s so incredibly important for agencies, but your client, you need trust with the client. Without having that trust, like maybe you might be able to create this end result that they may or may not be happy with, but if they’re not happy during the process or they feel uncomfortable at any time during it, they’re not gonna give you a good review. They’re not gonna refer you to their friends. They’re just gonna move on and have that, and that’s not what you want.

Trust and Transparency in Client Relationships

Kyle: No, and I think you’re right. And it’s not just the review, and it’s not just the referral. I mean, those are great commercial objectives and we set them as KPIs and that’s all good and well. But we also as a service provider, our inventory is our minds and cognitive abilities and skill sets. And so if we can’t form a trusting relationship with our partner, oftentimes they’re not giving us information that may be embarrassing to them, but if we knew it, we could help them so much more.

And so we just had a case this other morning, it was brought to my attention. We are relatively new clients that we were doing some tax strategy work with, and throughout a couple months of working together, it was revealed that there were certain parts of their business they were not giving us exposure to, largely because they’re embarrassed. They were running losses, they weren’t running particularly well. And turns out they hadn’t given it to their previous accountant either.

And once we formed that relationship with them, we looked at them and said, “There’s a whole new tax strategy here, and oh by the way, we’re gonna go back and refile a bunch of returns because you can get money back as a result of some of these losses you were showing over here and not accurately reporting.”

And so it’s not just “Hey, we can get more business. We’re nice, trustworthy folks.” It’s, we can do our jobs materially better for our client if we’re both willing to admit we’re not perfect. We’re never gonna be perfect, but we’re gonna work like dogs to make sure that we’re delivering our best work to our clients. And in doing that, that in and of itself is a trust builder.

Shannon: Yeah, I think there’s definitely something to say about transparency on both sides of the equation because you can just, you can do your best work, but if you don’t know a lot of things about the business, then you can’t do your best work for them.

Kyle: Exactly. You need to know all of the pieces of the puzzle in order to be able to do the work that they’re looking for. And it’s interesting that people don’t give all the information because like, what are you going to do? Slander them in the media?

We always say building trust is not having a partner share information with you. Building trust is what you do with that information. Are you casting doubt as to their ability to run an organization? Are you judging in some subtle way? All of that needs to be thrown out the door. And it just has to be what it is in dialogue with our partners to make sure that we’re doing the right things.

And everybody always uses the phrase, “oh, I tell it like it is.” Somebody who tells you a lot of their opinions, “well, and I’m gonna say something you probably don’t like,” that’s not trust building, that’s not being an honest person to us. That’s masquerading as such. And so the spirit of how we use that information is incredibly important. And that has to materialize in all of our business processes.

So, for example, it’s very common in our industry to do value billing, which is you go to a client and you say, “well, if I save you a million dollars, my fee will be 30% of that.” Because hey, it’s a great deal for you and for me. “Hey, it’s a great deal for me because I brought you this wonderful magic knowledge.” And “it’s a win-win” and that’s always how it’s posed.

The reality is that we find that to be incredibly disingenuous, especially if the key to doing that took me five minutes. And so at KDG, one of the things that is a hallmark of our organization is we bill you for our expertise, not for how much our expertise can help you in your organization. You’ve built the organization, you built the structure. If we come in with some magic tax rebate or we find an error in your data that saves X, Y, and Z. We don’t need to be compensated for anything other than the time we put into finding that solution for you.

And I think those are the foundational elements that, particularly when we have a client come from a larger firm that’s very accustomed to value billing and sending these draconian agreements that allow them to charge anything they want, whatever time they want. And then they see how we operate. The foundation gets set early and it’s very satisfying because we have very few clients that don’t either refer another client and/or start another engagement with us, largely because they’ve seen that trust. They feel that trust, and they realize that it’s not misplaced in not just words but deeds.

Shannon: I think that is a really great sentiment. I don’t think that clients can tell when you’re judging them. It’s an uncomfortable environment and it just doesn’t make sense that you would want to, you’re here to help them. If you provide a service, you are here to help your client and maybe a reason why they’re going to you is because they’re embarrassed of something that they don’t know how to do, or that they’re not doing something well. And that’s what you’re here to fix. Why would you be looking down on them when they’re being humble enough to ask for help or look for something better?

Kyle: Absolutely. And the more that we see that behavior from our partners in terms of coming to us humbly with information about their organizations that they may not be incredibly proud of, the more we know we’ve got the right partner. Because it’s somebody that we can work with.

And conversely, we’re not a perfect company either by any means. And so if we have a screw up or if there’s an area of our organization that is under construction, we’re always gonna be transparent with our client. “Hey, this part of our organization is under construction right now. We’re welcome to go down this avenue, but just know we may hit some potholes. We’ll always live our values through those potholes, but we’re not gonna lead somebody down a path that isn’t gonna have almost guaranteed success for them.”

Proposal Process and Long-Term Relationships

Shannon: Yeah, I definitely agree. Is there are there any situations that you have where you have to kind of write proposals for someone, a client that’s coming to you and looking for other places?

Kyle: Yeah, we write proposals all the time. And the reality of it is that most folks that come to us and they say, “here’s our RFP, we’d like you to respond to it.” Two thirds of those, if not more, as I’m sure anybody in our business can attest, are already in the bag for somebody else. They just need to collect the requisite amount of proposals in order to satisfy the fair and balanced decision making process.

But we don’t look at those as futile opportunities, even though they take us a lot of time, they cost us a lot of money to prepare. And I’ll tell you why. Because when somebody is soliciting proposals and everybody knows the game, it’s the unspoken, like, “listen, I already have my provider in the bag, but I’m really entertaining hiring somebody new.”

We know they’re not gonna hire us, but that gives us an opportunity to show who we are in the proposal. It shows that we’re gonna sweat the details. We’re gonna read the RFP, we’re gonna ask good questions. We’re gonna make a solid and worthy and honest proposal back to them.

I’ll tell you what happens. More often than not, they don’t select us. A year later, we get a phone call, “Hey, I was really impressed with your proposal.” Or somebody switches jobs and reaches out to us and says, “we were using service provider A, but I remember reading that KDG proposal and I really think you guys have something there.”

We sort of have an internal motto. It’s, “we are best second date.” The reality is that it is very commonly a second date on which we’re selected. But the reality is that, again, our customer retention is through the roof. Our NPS is better than Apple’s. So we’re very confident that we can deliver what we say we can deliver when we say we can deliver it. But the reality is that the proposal game, it’s a tough one. Every now and again, we’ll get to go out on the first date.

Shannon: I really like that idea. And it’s still a testament to the fact that you always wanna show your best work. And that’s really important because even if it’s just a proposal and maybe they’re not gonna share that with anyone or talk to anyone else about it, except internally, it’s still a testament to what you can do as a company at all times.

And I think that it’s really important that you spend time on that, even if you know that it’s a losing battle. Because exactly what you said, not only maybe they come back, but it’s also maybe they recommend you to their friend or they get a good taste in their mouth and that’s something that’s really important. It’s still somewhat advertising yourself well.

Kyle: How else can we get in front of key decision makers that buy our services on a regular basis and give them a great impression of KDG? They may have never heard of us before, particularly if they’re from out of the area. It’s wonderful for us and being around for as long as we have been, it’s always amazing to me how many people we talked to in 2010 that reach out to us 14 years later and say, “I read your proposal. I never forgot about you. I’m now in a different position or a different role,” and we do business together. It’s really gratifying.

Shannon: That’s so funny. That’s like going back to your high school sweetheart.

Kyle: It happens more than you’d think. I don’t bring that up as an edge case. It happens quite a couple times a year is common. But it doesn’t need to happen.

Shannon: That’s actually really funny. But that’s really great. I mean, of course, you said like it would be nice to go on some first dates sometimes, and you do, but I think it’s great to know, especially because your retention rate is great, that people are coming back to you with what they’re saying. And that’s what’s the most important is that’s why you have to give a good first impression because people will think about you down the line when maybe someone else doesn’t work out well.

Long-term Business Stability

Kyle: And indeed it. And a couple other things that we add to that is, one of our values is we are predictable. We have a fortress balance sheet. We’re gonna be here 20 years from now. So if you do work with us today, you can be assured we’re going to be around 20 years from now to follow up on that work. And that’s part of being predictable.

If we were private equity backed and we had 25 investors and a board, we just wouldn’t be able to make those assurances to clients. But we’re a benevolent dictatorship with a great succession plan. We can make promises that a lot of other organizations can’t make. Like, “Hey, we’re gonna be around, Hey, we’re always gonna do business this way.”

And that adds to it when somebody calls because they read a proposal five, seven years ago and they get the same impression that they did five or seven years ago. That’s what we’re looking for.

Shannon: And you’re pandemic proof because you do e-commerce and tech generally. So that’s like a whole kind of covid proof. But e-commerce is the big ticket.

Kyle: We always say we’re in all the businesses that people can’t live without. You gotta file your taxes, you gotta have accounting if you run an organization, and you can’t live without technology. So yeah, we’re pretty recession proof.

Shannon: So that’s great too. It’s always good to ensure all of that because a lot of people didn’t prepare for the pandemic, rightfully so, because no one knew it was going to happen and then a lot of agencies had to pivot. So it’s good that you’re kind of adaptable as well.

AI Implementation in Business

Shannon: Speaking of adaptable, you did mention AI earlier. Is that something that you have been involved in for a long period of time? Is it something more recently? Because I know AI is like this whole thing now.

Kyle: So we’ve been involved in AI for a long time now and using it practically. So we all know what you can do in ChatGPT and DALL-E and all the other flavors, Gemini and others. But putting it to true context specific business use has been something that we’ve just thrived on over the past couple of years.

Because it’s entered the lexicon in the business and organizational level dictionary as this is not a neat thing anymore. This is a must have. And it’s a must have productivity tool just as much as a calculator became a must have productivity tool.

And so we’ve really looked at very specific, again, context specific implementations of artificial intelligence and machine learning inside of organizations to do things that people, in most cases people can do them, they just can’t do them at the scale that we can do them.

So everything from large data sets, finding billing anomalies in the healthcare space, to contract management in the real estate arena where it may be a real estate management organization or a REIT that has huge portfolios of companies. They got all these different leases, when do they expire? And amendments to amendments to amendments. And we can use AI to process all of that information and just serve up what needs to be done every day.

And again, from a context specificity, it makes people more satisfied in their jobs. They can do the high value tasks and the AI gets thrown into the background. It’s not something you really think about anymore. And it has been incredibly powerful to see how particularly mid-sized organizations have leveraged AI to really gain significant competitive advantages. Either being able to outprice their competition, outwork their competition, and/or just build better mousetraps.

And while some of those gains are transitory, in a lot of the spaces that we see, the companies that are really leveraging AI well are really snuffing out a lot of their typical competitors because the throughput’s faster. They’re able to move more widgets on the assembly line. They’re able to put more service workers out in the field doing the right things, and they can charge less for it. It costs them less to do. It’s a very huge deflationary force. And so you combine those factors. It’s really tough to compete.

Shannon: Yeah, it is a very, very useful tool. I think that in certain cases, maybe you shouldn’t use it in place of a person because it’s not that advanced yet. I’d say at least for our access. But it’s a very helpful, I agree, kind of doing the grunt work things that may be tedious for you to do.

And it’s just so incredibly helpful and I think in almost every field now to be able to just, even sometimes in the podcast I read a description for the podcast, I submit video. “Can you write a 3 sentence summary about this?” It’s beautiful. I don’t have to go back in and find these three points, or my memory’s not the best. I am too young for my memory to be this bad.

But yeah, it’s an incredible thing and I love seeing it in different agencies specifically because it’s really important adapting to that and just being able to learn more and more when you’re in your field. And that’s like a tool that I thought would take longer to be implemented into different spaces, but I’m happy that I’m seeing it.

Actually just literally just in the past week started to use ChatGPT. I was very, I wasn’t like opposed to it. I just was wary about it. I don’t know why. I just see a lot of things about like sometimes it’s not always accurate and all these things and I’m like, “well, why do I need to use it? I have my own brain, I can just look up things.”

But it’s really helpful. It is incredibly helpful. Just me using it in the last week, I’m like, “oh, okay, I see how everyone likes this. This is nice.” But there’s so many other AI tools that are similar or adjacent that are extremely helpful in these spaces as well.

Kyle: Absolutely.

Conclusion

Shannon: But, so this is unfortunately all the time we have for today. I mean, it’s nice to end on a futuristic note. AI is always a great conversation, but I really appreciate you coming on with me today. Thank you so much.

Kyle: Likewise Shannon. Thanks so much for having me.

Shannon: Thank you and everyone at home watching or listening, please don’t forget to like and subscribe. See more professionals like Kyle and get more tips about your business. Thank you so much.

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