Using Technology To Build Enterprise Value, With Brian Thibault

VC-backed companies can often afford to invest heavily in technology, but how can bootstrapped or private equity-backed companies do the same, with a relative lack of capital?

Brian Thibault, co-founder at DevRefactory, joins Andy Hagans to discuss how privately-financed businesses can leverage technology to build enterprise value.

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Episode Highlights

  • Background on Brian’s career, and his skillset as a technologist.
  • How Brian’s company DevRefactory serves enterprise-level clients by solving hard technology problems.
  • Why VC-funded companies can afford to approach technology from a unique angle (and why this angle may be very different for a PE-backed or privately-owned business).
  • The single technology trap that many entrepreneurs fall into.
  • Why Brian approaches every problem from a business standpoint first, before involving technology.

Today’s Guest: Brian Thibault, DevRefactory

Brian Thibault On The Alternative Investment Podcast

About The Alternative Investment Podcast

Hosted by WealthChannel co-founder Andy Hagans, The The Alternative Investment Podcast is the #1 alts podcast reaching RIAs, family offices, and High Net Worth investors.

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Show Transcript

Andy: Welcome to “The Alternative Investment Podcast.” I am your host, Andy Hagans. And today, we’re talking about technology, how privately-financed, privately-owned businesses can leverage technology to build enterprise value. Very excited that joining me today is Brian Thibault, my longtime friend, and also co-founder at DevRefactory. And he is himself a technology expert in his own right. Brian, welcome to the show.

Brian: Hey, thanks, Andy.

Andy: So, to set the table, tell us about DevRefactory and where you’re working now, your current project.

Brian: Sure, yeah. So, we started DevRefactory, me and a couple partners, actually, started DevRefactory in 2020. And basically, we had, from a prior life, you know, known some people at some enterprise companies, right, and were able to kind of sell our services there as smart guys, right? And those services are web applications, just consulting more or less, business solutions to problems.

And as that kind of grew, we decided to start to shift into the staff augmentation model, right? Meaning I wanna place people at these large companies, to deliver value, right? Because there’s only one of me, there’s only one of the other guys, and our time is limited. So, trying to move kind of into that staff augmentation model, up-charge on that staff, and then deliver projects. And when I say projects, I mean applications, right. Web-based application technology.

Andy: Understood. And so, you know, you’re talking about really enterprise-level software, enterprise-level development, enterprise-level technology. And what’s interesting to me, and we’re gonna kind of get into private equity and, you know, bootstrapped companies, privately-owned companies. But whether we’re talking about a publicly-traded corporation or a tiny little bootstrapped company, everything in between, and I know you work more with that enterprise level, but outside of literally Google, or maybe one or two other companies, I feel like everyone’s technology is a mess, everyone’s technology situation. It’s just the impression I have.

Maybe it’s a sign of the different startups I’ve been involved with, but it just seems like everybody has such problems getting the team in place, and it’s more, like, a headache almost, or a problem. Like, it’s an opportunity, but most companies I interface with, it’s like, there’s always a technology problem. Do you think that’s fair from the business standpoint to describe it that way?

Brian: Yeah. Not only fair, I think that’s more than accurate, right? So, yeah, what we see is, everywhere technology is traditionally in today looked at like a cost center or a money pit, right? It’s something that I have to do to keep the trains running on time, so I dump a bunch of money into this. Which is really not the right way to look at it. I mean, you see what happened with…you know, as of today, February 21st, I think two months ago, a month ago, Southwest’s systems crashed for one day, and they’ve lost billions and billions of dollars because of it, right?

So, it just can’t be an afterthought anymore. But unfortunately, you’re right. It is mostly an afterthought. And, you know, CEOs, particularly that aren’t tech-savvy, just look at it like they’re dumping money into it. And, to your point, everybody has a problem, right? And that’s probably because it’s, like, custom…you know, the best probably analogy is custom home-building, right? There’s just not kind of a cookie-cutter approach.

Technology isn’t a hard-and-fast engineering discipline like, maybe, mechanical engineering, building a car. That’s pretty well-defined, right? This input produces this output. This is a lot more art than it is science, and because of that, it takes good artists, right, and there’s only so many of those to be had, so…

Andy: Well, it’s funny, Brian, you mentioned custom home-builder, and I’m thinking, okay if someone’s building me a custom home, whether they’re designing it or physically nailing it together, and there’s probably analogies for both of those things in technology, but either way, I’m like, well, obviously I wanna hire the best talent to be designing my home, and the best talent to be building my home.

The last thing I wanna do is use the cut-rate architect and the cut-rate general contractor and the cut-rate guy who, you know, puts the ceiling on. Is the ceiling gonna cave in while I’m asleep? But with technology, kinda to your point, to that analogy, with technology, if you look at it a cost center, well, we’re just gonna build to a cost. What’s the cheapest possible building, you know, that we can build, to use this metaphor? And then, don’t be surprised when the roof starts leaking, right?

Brian: Yeah, that’s, you know, unfortunately, that’s just par for the course, right? You know, I think what I’ve seen is people view it as throw more bodies at it, right? Throw more guys at it that can swing a hammer and pound a nail. And that’s not really what this is, right? And you just end up, you know, kind of the term of art is technical debt, right? You make poor decisions in the short term that ultimately, down the road, creates you 10 times as much problems that you have to clean up later.

Andy: Well, let’s actually define that really quick. And I think you actually brought me on to this concept, Brian. I don’t know that you invented it, but you introduced it to me. And I’ve heard it other places since then, this concept of technical debt. And then it’s like, every company incurs debt, right? It could be financial debt, administrative debt, technical debt.

So, we’re gonna talk about VC-funded versus private equity-funded versus bootstrapped. But for instance, you know, a VC-backed company or a company that raises a ton of capital, maybe they don’t have much technical debt because they’re able to go essentially hire, you know, the best, the top 5%-type software architects or developers or what have you.

But then there’s trade-offs for that. That’s literally very expensive, right? So, it’s like they’re incurring maybe financial debt or other…you know, or they’re giving up a huge chunk of equity in their company to do that. Versus we’re gonna do this on the cheap, but we’re gonna incur technical debt. And at some point, that debt comes due, right?

Brian: It does. And you used the magic word, which is trade-off. Everything that, you know, we do in this industry, as well I’m sure as your industry, is a trade-off, right? It’s a decision that is made to favor one particular route, right?

And in the technical debt route, we say that it should be a joint decision. Whether it’s skilled guys or non-skilled guys is sort of irrelevant in this discussion because, you know, when you’re taking on technical debt, it should be a business decision that hey, we wanna move faster, we wanna prototype something, we need to get this working now, with the understanding that we have to fix it later, right? With a joint understanding that we have to fix it later.

Oftentimes, the business organization is lied to, you know, and not clearly aware of that trade-off, right? So they think they’re getting something really fast, and then, you know, find out 1, 5, 10 years later that, you know, they have security problems, they have quality problems, they have maintenance problems, etc., so…

Andy: Yeah, Brian, that reminds me, a saying I first heard from your dad, I believe, back when I worked for him as a marketing intern. You know, fast, cheap, and good, pick two out of three, right? And I think that certainly applies with technology.

So, your point is, if you’re doing things on the cheap with technology, you’re incurring technical debt. That can actually be totally okay. That can be a strategic decision, as long as the CEO, as long as the business owner understands that’s what they’re doing, and why, that can be a perfectly valid decision?

Brian: Absolutely. Yeah, we see…you know, again, to your point, it is a strategic decision sometimes. You know, to a large extent, as a technologist, I feel like this is kind of a dig at me, but a lot of technology is just throw-away. I mean, let’s be real with ourselves, right? You know, there’s only one Google, there’s only one Netflix. A lot of technology just either doesn’t make it, or is so outdated in 10 years that, start over, or do something else anyway. So…

Andy: So you mean, like, kinda the winner-take-all, power-law type of thing, where it’s like, the truly best software, that achieves the truly best product-market fit or whatever, these Google-type brands, or Salesforce, or whatever, they tend to win, and the 3rd, 4th, 12th, 13th through 1000th best thing in the category tends to die. Is that what you see?

Brian: Yeah. Correct. Or something that’s just so outdated, right? Like, maybe I created some inventory system on a Windows desktop, right, 10 years ago, and then, you know, now everything moves to the web. I mean, technology shifts so fast, it’s completely different this year than it was last year.

Andy: Well, so that would vindicate taking on technical debt, in a way, right?

Brian: For sure. For sure. Unless maybe you’re a bank, you’re a, I don’t know, enterprise kind of solution company that…

Andy: The ambulance software, that routes ambulances to the correct place, like, that needs to be pretty solid, right?

Brian: Sure. NASA’s spaceship stuff, you know, needs to be solid, secure, all that, right, and maintained over the long term. Bank mainframes are still around. It needs to be maintained over the long term. You know, a startup that I’m trying out, that’s gym software, right, that may not make it over a 12-month period, yeah, let’s roll the dice, right? Let’s move as fast as possible and get something out there, so…

Andy: Understood. Okay. So, we talked a little bit about the technical debt, you know, doing things leanly. That’s a strategic decision. But before we even get, like, best practices on the private side, privately-owned businesses, why don’t we kinda go to, like, an extreme here? Because, like, let’s say we have a VC-backed company, and let’s even say that, you know, they do a seed round, they do a series A. Like, they get fully capitalized, with tons of money.

I mean, essentially, let’s say you essentially have an unlimited budget, and you’re saying, “We’re gonna build this the right way the first time,” to the degree… I don’t even know if that’s possible. But we’re gonna build this as best as we can possibly build it from the get-go. What does that look like?

Brian: Yeah, I think that… So, yeah. That’s a great question. I mean, first of all, yeah, you’re right. There probably is no doing it the right way. Again, it’s more art than science, so I just… You know, and another analogy, right. I have this all the time. The cable guy comes to my house and, you know, maybe he’s gonna hook up a new TV, right? The first thing he does is says, “Who was the last guy that was here? They did a terrible job,” right? I hear that almost every day. A lot of it’s a matter of style on how you would do something or build it.

Andy: But I am thinking, fair, you’re gonna make mistakes. But if I just raised 20 million bucks for my VC-backed company, I can at least go out, I would think, and afford to hire the best people, or at least top 10%. So, I don’t know what the going rate is for a software developer or whatever, but presuming the range is six figures to seven figures, or whatever that range is, is it best practice to have fewer people at the very top end? Is that better ROI?

Brian: Yeah, great question. From my angle, it is, because bad people can end up costing you more than they make you in this scenario. From, like, somebody that raised just $20 million, probably not, because they are gonna try to deploy as much as that capital as they can, and most likely, it’s gonna be in talent, right. Talent acquisition.

And yeah, I mean, that’s a different scenario, right, because their whole mission is to spend all that money, burn through it, get traction, maybe at a loss, right. Probably at a loss until their next round. So, to some degree, it doesn’t matter as much for them, as far as, you know, hey, I need just three guys that are awesome.

Everybody has this idea of, like, a 10x developer, right? Again, I have yet to see that. But, you know, I guess maybe that’s the difference of the VC versus the bootstrapped guy. I would opt for three guys that are just unbelievable, versus, you know, 100 guys that 10 of them are good and [crosstalk 00:14:00]

Andy: Well, it sounds like you do… Brian, it sounds like you do kind of believe in the 10x, you know, developer, in a way. But also, just kinda step back and talk to me like I’m a technology dummy, you know, like that’s a big leap of faith. Talk to me like I’m a tech dummy. What are those really key hires? Like, kind of top-down conceptually… Maybe I’m not even a software company, but there’s gonna be internal software, internal technology used in whatever it is that I’m building. What are those, like, really key hires that, like, this person needs to be sharp, they need to be top, you know, the best in the business?

Brian: Right. And I think a lot of people make a mistake here, right. They try to find one person to kind of fit all these roles, right? And, again, I hear this a lot. “Well, that guy is a unicorn.” We’re not gonna find that guy, right? An artist and a scientist, or whatever.

And my immediate thought whenever I hear that, or whenever I’m like, man, this role is really hard to fill, it’s often two or three roles, right, combined into one, so two to three people. The first thing I think you need is somebody that really understands the business, the business problems, and can solution it, right? Whether they are technical or not, right?

And then, secondly, you probably need kind of a good architect, that can outline, you know, okay, here’s the solution. Here’s how we’re gonna design it, right? And then thirdly, project management’s also key, right? Because, again, let’s go back to the custom homebuilding analogy. If I don’t have somebody with a checklist, saying, “This material’s gonna be in on this date, this is gonna be done this date, these guys are coming here, there, where, wherever, whenever,” we’re just gonna be in bad shape, right?

So, now, today, what you see, if you’ve ever heard the term “agile,” kind of, for the last 20 years, people have been using agile. That means a lot of different things to a lot of different people. But kind of the…

Andy: Well, I kinda wanna start a competing philosophy that’s called clunky, that I’m like, we do clunky development, right? Like, who wants to raise their hand and say, “No, I do development, but I’m not agile?” So, is it just something that everybody uses now?

Brian: Yeah, they say they use it, right? And a lot of times, you know, especially the bigger the organization, the processes just get in the way. Fill out the form to get the form. You know, I mentioned kind of the staff augmentation piece. I’ve been waiting at least six weeks to get even some kind of paperwork and an email addressed and signed for, like, five different people, right? So, it’s just part of a big organization, right? [crosstalk 00:16:57]

Andy: To be clear, so, you’re…what DevRefactory does, you’re consulting for enterprise-level clients, you know, publicly-traded companies or big companies?

Brian: Correct.

Andy: Some of that bureaucracy you’re dealing with, that doesn’t really relate to the technology. That’s kind of just normal, big-company… So, are they paying, like, a big-company tax? Are they paying, like, a corporate debt? Like, to get anything done? Can you look at that and be like, “Hey, as an entrepreneur, I think that’s a million-dollar project, but it’s gonna take them $10 million because they’re a big, slow, clunky corporation?”

Brian: That’s pretty much the sales pitch, right? At least as far as I’m concerned. You know, a McKinsey or Accenture that comes in is gonna have, like, a much higher price. But kind of my angle is that’s gonna take you $10 million and probably 10 years. I can do it for $1 million in one year, right, or whatever. Just because I’m on the outside looking in, I can kinda move around some of the internal bureaucracy, right? From a project base.

Now, when you’re talking to actually placing people as contractors for the company, that’s a different story. Now you’re in the deep water with the red tape, so…

Andy: Now you’re in sourcing. So, I guess that, at the enterprise level, that’s also a strategic decision, right? Do you wanna hire within, build it within? It’s probably gonna be slower. It’s gonna take longer. But then you have internal team members who kind of understand the project and know how to manage it. Versus I can hire this outside gun, they can come in and, you know, boom, it’s done in six months, but we don’t necessarily understand it. Is that…

Brian: Correct. Yeah, it’s usually an internal battle, right? IT says, “We don’t need anybody. We can build that internally,” right? And not realizing that, yeah, for a lot more money and a lot slower, right? And then usually, the business side of the organization will say, yeah, but we need, you know, a real, kind of partner-level consultant to drive, let’s say, a $10 million project, right? We need to drive that home, not just throw it in the queue somewhere and have it done. And we need to be able to move fast.

So, yeah, it’s generally an internal political battle, right, from what I’ve seen, on who’s doing what. And just, you know, again, February 21st here, just in the last four weeks, we’ve seen huge amounts of tech layoffs, right? And everybody, across the board, I think every kind of company’s budget is getting slashed. And, you know, new hires have stopped, right? But what that leaves is…

And it’s so slow to bring anybody on as a W-2 employee, but that does leave budgeting room for contractors, right, because they still need people. So, they’ve just shifted it to kind of an OpEx type of a model, right, where they can hire contractors, feed them in and out, and kind of move the ball forward. It still takes a long time to get them onboarded, as I said, but, you know, it’s an approach, right? So…

Andy: It’s so interesting, because I’m thinking back to news headlines of literally two years ago, less than two years ago, of bidding wars, and, you know, it’s interesting. It’s, the tech sector, it’s such a roller coaster. But I guess I have the sense that if you’re a good developer, good technologist, you pretty much land on your feet, because there’s a structural, generational, secular shortage of technologists, of good people.

So, we’ve kind of talked about this enterprise level, the corporate level. Now I wanna go to the private equity side. I mean, maybe we could even go all the way to the other end of the spectrum, right? You have the corporate enterprise level, and then, maybe in the middle ground, you have private equity, you know, privately-owned companies in that small to mid-size, you know, technical…the $5 million to $50 million revenue range. And maybe even, you know, private equity towards the smaller end of that, micro private equity, companies with, you know, $2 million, $3 million, $4 million, $5 million gross revenue, all the way to your bootstrapped startup.

So, how does this whole picture, how does it change? You know, in broad strokes, how does it change once you move to the middle end of the spectrum, and then once you move to that bootstrapped end of the spectrum?

Brian: Sure. Yeah. I mean, let’s start at kind of the bootstrapped end, because that’s…I’m pretty familiar in that area. And a lot of the podcasts that we hear today just really cover kinda…at least from a technical angle, you know, the latest and greatest startup out of Silicon Valley, the 27-year-old guy that raised $100 million, or whatever.

And that’s never really been my experience. And, you know, I’ve avoided that, right? I’ve always liked cash in hand rather than, you know, taking somebody else’s money and then, you know, having a lottery ticket on whether that succeeds or not.

Not that that model’s bad. That is for some people. It works for some people, you know. But, you know, I’ve never done that. So, you know, just kind of my previous background, a little, but I have started probably…I mean, you know, I can’t even count the number of businesses. Let’s say, 15, 20. You know, you’ve been involved in some of them, Andy, as you mentioned. We’ve been friends for a long time, and kinda think the same.

You know, honestly, most of those have failed, right? And I think that’s what a lot of people will not admit to. They, you know, it’s like the guy that’s the professional gambler. “Oh, I’ve made all this money. I made all this money.” “Yeah. Tell us about your losses,” right? “Oh, okay,” right?

Andy: But on that, I would say this is a little different from gambling, though, because, in gambling, you’re probably about equally likely to lose 100 bucks or gain 100 bucks at blackjack. But what you’re talking about with the bootstrapped startup, you could put $10k in five different startups, and the first four lose the $10k, but then the fifth one scales to a million or $5 million.

So, I do think it’s a little different, where you say, yeah, it’s that power law, right, with VC, but it’s on a different scale. A lot of these startups have failed, but you’ve also been involved with a couple incredible successes in your career, Brian. And those have more than made up for the other, I guess we can call them failures, right?

Brian: Yeah, for sure. Yeah, it’s, you know, learning opportunities. I’ve learned more in those ones that didn’t succeed than anything else, right? And one thing I’ve discovered is that, you know, you’re right. As opposed to gambling, your best investment is in yourself, right? Whether that’s in your education, whether that’s betting on your idea, versus just throwing it in the stock market, or a retirement plan, or going to the casino. You’re better off taking that money and betting on yourself.

So, yeah. So, generally, kind of the bootstrapped situation, it is your own money, right? Or, you know, if you have some rich friends or some doctor friends, or family, right, it’s their money, so you just can’t run for two years at a loss and be okay, right. You kind of have to start generating revenue now.

So, generally, what I recommend in that angle is, you know, starting small, right. The lean approach. Lean is a whole system, if you’re not familiar with it. But basically, do some small iterations, test it, validate it, come back. So, in our scenario here, what we would do is we would get a designer, start with some designs, right?

Maybe it’s a website that lists properties, right? So, we get a designer, we mock out everything that happens, the, you know, if I click on this, it goes to this page, here’s how it looks, here’s the branding, you know. And we go through a basic business analysis. How is this different? What’s the differentiator? How are we gonna drive traffic to this? How are we gonna market it? How are we gonna make money? All of it. Who’s the team, right? And then we validate that idea.

So, you know, I heard one story that was great. These guys were trying to sell wine, right, or they had an idea for a wine website. Well, they made a fake, photoshopped page, with a buy button, posted it on Twitter, and then were able to track how many clicks the buy button got, right?

They went to somebody that took a picture of the wine, and then they sent them this link and said, “Buy this here,” you know. And each one got five clicks or whatever. Okay. So, that cost them literally less than $100 to do, right? And now they’ve validated their idea. So, now they go to the next step, is let’s make a basic website that actually does this, right?

So, one of the mistakes, unfortunately, that I’ve made several times, and that I advise everybody against, is don’t go and get a million dollars, $500,000 from your family, friends, build something over a two-year timeline, release it as a big-bang release, and hope for the best. You know, you’re in for a world of hurt if you do that. Get traction, customers each step of the way. Keep growing, right?

Andy: So, you know, if you are… A lot of our audience, you know, in financial services, asset management, fund managers, financial advisors, all kinds of business owners, that are not technologists, right? I’m not a technologist, even though my degree is MIS, trust me, I’m not… I got that degree to learn that I wasn’t a technologist, I guess.

So, how does a non-technologist, conceptually… You know, we’re not talking about the corporate world. We’re talking more in the private equity to micro private equity, privately-owned business, bootstrapped startup, that world. How does a non-technologist then leverage technology? You know, if you have relatively small budget, which for a lean, bootstrapped startup might be $10k a year. For a private equity firm, their technology budget might be, you know, $800,000 a year, or whatever, and on up.

But that still isn’t at the level where I’m gonna have a tech team with, you know, 20 seats in it or whatever. It’s gonna be kind of a micro team. So, how do you even approach that if you’re not a subject matter expert, you know? Are there ways to do that and do it right? Or are you just, you know, are you just totally hosed if you don’t have a Brian Thibault that you can call to get their advice?

Brian: Yeah, I mean, you need to find good people, right, across kind of the board, across the spectrum of whatever you’re trying to do, you know. Just as I wouldn’t go try to build my own house in the woods, I highly discourage anybody from just kinda taking this on, right? There are people that can guide you. You know, everybody probably has a friend that built an app or something like that, I don’t know, but at least give you some pointers.

So, back to your question, how can somebody kinda utilize technology? Maybe they’re a small, kind of, two-person, three-person PE firm? You know, I guess, kind of the first thing I would look at, if it were me, something now that I realize now that I’m 40, and I think everybody starts to realize as they get older, and younger people tend to not put enough value on, is your time, right? Your time is just so, so valuable and rare. Rare is not the right word, but…

Andy: No, it is rare. It’s a scarce…

Brian: Yeah, scarce.

Andy: It’s a finite…yeah.

Brian: Yeah. So, you know, I think I, first step is I would look at technology to kind of automate some tasks that are manual and repetitive right? That’s kind of the nature of technology. You could look at something like ChatGPT, just to answer some emails or, you know, write a quick outline of a marketing post, right?

A lot of guys, you know, you hear, kinda get off on saying, “I’m the guy, I take out the trash, I do all this.” Don’t, right? I mean, that’s terrible. Your time is much more valuable than that, so you have to start outsourcing
the smaller tasks. Sometimes, you know, you don’t have the money or the personnel to do that, but, you know, you gotta move your.

Andy: But, you know, on that note, though, I mean, I feel like with most business tasks, there’s software at almost every price point, right, enterprise level versus lean startup. One thought that I kind of had, though, because, Brian, what you’re talking about is leveraging technology to get process wins and operational wins.

But I also talk with a lot of asset managers who they have some sort of investment strategy, and they’re using technology to enhance that strategy, or, you know, maybe to uncover opportunities. Whether it’s in the, you know, publicly-traded markets, or maybe it’s in MSAs. If it’s, like, a multifamily fund, they’re doing, you know, machine learning to look at different variables where ground-up development might be profitable.

But my guess, and I want you to tell me if my hunch is right or wrong, as an entrepreneur myself, one thing that I’ve kinda learned is the best way to do it lean, that has worked for me at least, has been, if I can get as much cookie-cutter software as I can, that already exists, it may not do the job perfectly. If it gets me 95% of the way there and it’s an existing product, I’m much better served by taking that product, and maybe if I do something custom, you know, adding that little 5% customization on top of that existing product, versus saying, “Well, this all needs to all be proprietary.”

You know, I don’t know what to call that. Is it the duct tape method? You know, it’s just rearranging existing pieces and maybe just a little bit of customization, versus trying to build the whole stack yourself from scratch.

Brian: I mean, you’re absolutely right, and that’s a common mistake people make is, right, “Our accounting is so different. We can’t use QuickBooks. We gotta use something else,” right? And now they’re down a rabbit hole. You’re right. Use the off-the-shelf stuff if you can. Pay the $19 a month. And again, if you’re that tight on cash, where, “Oh, man, that’s really expensive,” well, in my mind, it’s really not the cost. It’s always the value it provides, and the, you know, time is, what’s the word? Fungible, right? You can trade it for money, right? And your time is just so much more valuable than that. So that’s kind of the first step down the technology path, is automate what you can, right. Get those process wins out of the way.

And then, when we talk about, you know, what else can we do with technology? Now we’re talking about value-add, right? And so, this is kind of what I was saying earlier. The first thing is generally what the CEO sees as a cost center, at the enterprise level, is those automation-type stuff. “They cost me a lot of money. I write big checks every month for that.”

Number two is the revenue driver, and that’s just what a lot of people miss. And it’s hard to come up with, right? Is that an app? Maybe it’s a website that lists properties?

Andy: Well, and back to, like, the private equity funds that I’m thinking of, and there’s a couple of them, they’re using technology in both those way… You know, kind of, I might call it almost defense, like, the process wins. Like, I’m sure they’re using, you know, accounting software and this software, that package software, but then they’re also using machine learning or some sort of algorithm to help them uncover investment opportunities.

And to me, that’s offense, because not only, number one, I’m gonna achieve higher returns for my fund because I’m leveraging technology with machine learning to uncover these opportunities. Number two, now that’s a point of differentiation for me in my marketing, that I can talk about how our fund is leveraging technology. So, to your point, now it’s enhancing revenue. Right? It’s not just a cost center.

Brian: Yeah, correct. You know, and I think, again, just a trap here, or pitfalls. A lot of people will try to…you know, and specifically kind of the algorithmic stuff, again, very few people do it well, right? And it is competitive, like you said, right? And, you know, people try to automate things that they can’t do manually, and then you end up with a bigger mess, right?

So, maybe that’s a scenario where, hey, I have this great idea to help uncover these investment opportunities, right? We’ll do it manually, right. First. See if it works. You know, find three that are winners, and now I have the recipe. Versus just throwing 100 different algorithms out there, having machine learning run through it, and maybe it’s a win, right?

You know, people have been doing that in the algorithmic trading and the options world and the stock market world for years at this point, and, you know, they’re just playing against other algorithmic traders, so, like I said, it’s competitive, and people will tell you their wins, but it’s easy to dump a lot of money there too. So, again, if you have a manual system that works, and uncovers all these opportunities, great. Now let’s throw some automation at it, right? Maybe that’s machine learning. Maybe that’s just simple if-then logic, right? But, yeah [crosstalk 00:35:34.066].

Andy: It almost sounds to me like you’re… I mean, you’re a technologist, right? And you know how to develop software. But it almost sounds to me like you’re saying there needs to be a really high hurdle to develop custom software. So, number one, use technology to get the easy wins, you know, to automate things.

Number two, if you have an idea, do that idea manually, to your point about testing and iterating. Do that idea manually, prove out the story that that idea actually created value, even if it’s you clicking on a Google spreadsheet for seven hours or a day for a month, do it manually, prove out the story. Did it work? You know, if you were reviewing data to make some sort of private equity investment, did that data pay off?

Only when it’s very clear, like, yeah, this actually did create value, are you developing software. Because, I mean, if I can read between the lines, the implication is, like, look, developing custom software is really hard, it’s really expensive, and it’s really time-intensive. So make sure you have a darn good reason before you go down that path. Is that fair?

Brian: That’s fair. It is really expensive. People underestimate that a lot, too, right? Especially kind of in that AI/ML world. But, you know, again, I see this all the time. People will spend 700 hours, 1000 man-hours building a piece of software when, well, how often do you actually do that? Well, you know, 10 hours a year, right? So, what are we even doing here, right? You know, it’s just, you gotta think it through, right?

And again, the worst thing that you could possibly do is automate a bad manual process. Then you have a bad automated process, so…

Andy: But Brian, it seems to me like a passion for you, or, like, a theme I’m hearing over and over and over, is looking at those processes. It’s not really about the technology, that, to you, the technology is your tool belt. But the goal is really building value and operational efficiency, using technology like a surgeon would stitch something, not just firing technology in every direction as much as possible.

Brian: You nailed it. Yeah, technology is a tool. That’s all. There’s no easy button. There’s no…like, a lot of people think it’s magically gonna solve some problem. No. There’s a process behind that, right? And then we automate and apply technology on top of it, so, there’s no magic there, right? Yeah, you nailed it.

Andy: And given your, you know, what DevRefactory does, you know, you’re helping these, a lot of times, very large clients. Even these larger companies, with huge budgets, they’re facing challenges, they’re facing complex things that they’re saying, you know, “We can’t even necessarily address this internally. We need to bring in the outside help.”

So there’s just… It’s interesting to me that, you know, you’re really the first pure technologist that I’ve had on the show, but I wanted to have somebody who was a technologist on the show, because this is a huge part of investing, a huge part of the private equity landscape. But I almost hear you, like, steering people away from it. Like, it’s powerful, but you need to understand what you’re getting into, and I’m thinking, well, that makes sense that that would be Brian’s perspective because people pay you huge amounts of money to clean up their technology messes, right? And you’re always probably kinda coming in when there’s a mess, right? Otherwise, they…

Brian: Absolutely.

Andy: …wouldn’t be calling you?

Brian: Or there’s a problem to solve, right. Again, let’s go back to the custom homebuilder, right. The client says, “Hey, I want a house.” What? Like, you know, what do you want? I don’t know. Do you think you’re gonna get a great house in that case? No. You’re gonna have a mess, right? So, it’s there. It just needs to be thought out, right? And that’s why you see Accenture, McKinsey, Thoughtworks come in, because it’s not just throwing programmers at something, right. It’s the business solution, and that’s what’s important.

And that’s why companies hire… You know, again, younger, I always used to think, well, why would you pay Accenture millions of dollars a month for this? And it’s really because they’ve identified, a business has identified a $10 million to $100 million business problem, and they don’t have any kind of internal stakeholder that has the capacity to handle it, right?

So they bring in an Accenture. They say, “Hey, here’s this $100 million business problem. Figure it out,” right? And, “Here’s,” you know, “bring in resources to get it done,” and that’s kinda their line of business or whatever. So, yeah, to your point, you can’t just start hacking away and expect to get good results, so…

Andy: I love that. I love that we finally had a technologist on the show. And he’s telling us, “Guys, business first, then technology.” You know, business first. I just, that’s a really good message. And, you know, Brian, I can’t thank you enough for sharing your insights. I mean, there’s just so many pitfalls with this. And I think it really, what I appreciate about you and about the way you approach this is the top-down thinking, right?

Like, you’ll notice, this whole conversation, we haven’t talked about a single programming language, or even a single specific technology, because, for you, it’s not about the programming language, or the specific technology, or this kind of server, or that kind of database, or whatever. It’s that top-down, you know, CEO-level, business problem, business strategy, revenue opportunity. That’s the thinking that should drive all of this.

Brian: That’s the thinking that should drive, you know, and in a startup, right, I have some new app that I wanna do. Okay. You know, what is the process? What problem are we solving? Who are the people behind it? You know, how do we make money? Again, all of that, right? And then, you know, we’ll figure out is it Ruby or Python or JavaScript or whatever later, right. That’s inconsequential to the business problem at hand. So, yeah, man, I appreciate it. And yeah, we could have gone deep on really any of those topics, but yeah, I’m hoping…

Andy: Well, Brian, let’s save that for a future episode. There’s no reason we can’t have you back on the show. But before I let you go, I have to ask, where can our audience go to learn more about DevRefactory and your services for enterprise clients?

Brian: Yeah, sure. You can go to We have a website up there. I believe there’s a contact form on there. Email it. You’ll be hooked up with a sales guy. You know, I’m happy to chat with whoever. If you have a WordPress site or, you know, you’re a Fortune 100 company, let’s talk. And, yeah. So…

Andy: Absolutely. I’ll be sure to link to that website in our show notes, which are always available at Brian, thanks again for coming on the show today.

Brian: All right. Thanks for having me, Andy.

Andy Hagans
Andy Hagans

Andy is a co-founder of WealthChannel, which provides education to help investors achieve financial independence and a worry-free retirement.

He also hosts "WealthChannel With Andy Hagans," a podcast featuring deep dive interviews with the world’s top investing experts, reaching thousands of monthly listeners.

Andy graduated from the University of Notre Dame, and resides in Michigan with his wife and five children.