How to Build a Consulting Team to Win PE Deals and Deliver What AI Cannot

What happens to your consulting business when clients believe that AI can do the work themselves? That’s one of the biggest shifts Dan Bernoske is seeing firsthand, as many other consulting business owners are, as well. As the founder of Cortado Group, Dan helps private-equity-backed companies to accelerate revenue growth, and he is watching AI fundamentally change how clients buy consulting services. You likely are too.

Well, in this episode, we explore why information alone is becoming less valuable and why clients increasingly want implementation rather than just another PowerPoint presentation or another deliverable, and how consultants can adapt their delivery to meet these changing expectations. Dan also shares why his two biggest competitors aren’t other consulting firms, but clients choosing to do nothing or do the work themselves.

If you’re thinking about how to position your expertise, evolve your services, and stay relevant as AI reshapes consulting, this episode will give you plenty to consider.

Enjoy it.

Welcome to the Consulting Success podcast. I’m your host Michael Zipursky, and in this podcast, we’re going to dive deep into the world of elite consultants where you’re going to learn the strategies, tactics and mindset to grow a highly profitable and successful consulting business.

Before we dive into today’s episode. Are you ready to grow and take your consulting business to the next level? Many of the clients that we work with started as podcast listeners just like you, and a consistent theme they have shared with us is that they wished they had reached out sooner about our Clarity Coaching Program rather than waiting for that perfect time. If you’re interested in learning more about how we help consultants just like you, we’re offering a free, no pressure growth session call. On this call, we’re going to dive deep into your goals, challenges and situation and outline a plan that is tailor made just for you. We will also help you identify where you may be making costly and time consuming mistakes to ensure you’re benefiting from the proven methods and strategies to grow your consulting business.

So don’t wait years to find clarity. If you’re committed and serious about reaching a new level of success in your consulting business, go ahead and schedule your free growth session. Get in touch today. Just visit Consulting Success – Grow to book your free call today.

Dan Bernoske is the Founder of Cortado Group, a consulting firm built on his vision to unite skilled experts to lead meaningful change. Leveraging his product management background in Fortune 500s and startups, Dan applies productization to consulting, creating a team of data-driven sales, marketing, and operations experts. A Six Sigma Green Belt and GE Crotonville alum, he previously helped launch Nextel’s mobile data services. Today, he drives GTM success for clients through Strategic Advisory, Interim Leadership, and Due Diligence.

Connect with Dan Bernoske: https://www.linkedin.com/in/danbernoske/

Discover more about the Cortado Group: https://cortadogroup.com/

00:59 The Coffee Shop “Free Billboard” Marketing Hack

Hey, Dan. Welcome.

Thank you. Good to see you.

It’s great to have you here.

Before we hit record, you told me the kind of origin story of the Cortado Group, your company. Can you just maybe share the two points that you shared with me? Because I thought they were, one, maybe expected, but the other one was not expected, and I thought was a very strategic move on your part.

Well, Cortado Group, the name ‘Cortado’ is a coffee drink, and I am a huge coffee fan. I roast my own beans. In fact, I vent all of the exhaust out a window. That’s how serious I get about it.

Your neighbors must love you.

Yeah, and from that perspective, it’s a passion of mine, so I wanted to sort of tie it to that. But the other aspect was what I’d call a marketing hack in that I knew that as I got Cortado Group some brand awareness with our current buyers and customers, that they would start seeing “cortado” everywhere they go. Everybody loves coffee. They go to coffee shops. There’s a cortado on the menu. So I have this free billboard everywhere. So there was a bit of a marketing hack aspect to it as well.

Yeah, I really like that. I haven’t necessarily heard that before, but I love that concept.

[02:10] – Growing a Consulting Business Through Private Equity Specialization

So today you have a big focus around PE-backed companies, and I’m wondering, was that the plan from, you know, the beginning, or did the market kind of pull you in that direction?

The market pulled me in that direction. One thing I’d say is I want to take advantage of my lucky breaks. So when I started Cortado Group in 2019, I had a massive lucky break. A lot of my former colleagues left another consultancy with me, and they spread out into private equity firms, and they just started naturally coming to me to help service their portfolio. So I would say it was a lucky break more than anything.

Do you think that that focus and kind of specialization around PE allowed you to see a level of success or acceleration or momentum that maybe a broader approach to, let’s say, go-to-market strategy or being a go-to-market consultancy that maybe wasn’t as focused or specializing in PE like, do you think things maybe would have turned out differently if you didn’t have that level of focus?

Absolutely. This is the biggest benefit of moving within the private equity space is it is a natural sales channel. It’s a double-edged sword, of course – if you don’t do well, you get thrown out and they never ask you back. So it’s risk. However, within private equity, if you become part of their standard toolkit, they start bringing you problems. As long as you do a really good job, they start introducing you to more and more portcos within their portfolio. So from that aspect, it’s been incredibly successful as a strategic approach.

I was going to ask you, you know, how you were able to get into private equity and kind of building that credibility, because for many they find it challenging to get within the walls of PE. What I heard you say was that you had the relationships already from people that you had worked with in the past. So that makes sense, and feel free to add any additional context to that.

But I guess my follow-on would be for those that are joining us right now and listening to this, who might have the desire to start working with PE firms or PE-backed firms and getting into that space, what advice might you offer them? Or what would you tell them – “Hey, like this is really important,” or “Pay attention to this,” or “This is how I would approach it if I was at your place right now.” What are your thoughts?

[04:36] – Winning Consulting Clients Through Referrals and Relationships

Well, first of all, it is not a fast-growth strategy, and the reason why is because it is primarily referral-driven. All the private equity leaders, they talk to each other. If they have a problem, let’s say pricing – which is one of the things that we do for people, or RevOps, we can install things like Salesforce, HubSpot, et cetera.- what will happen is an operating partner at one PE company will run into that problem and they’ll call their friend, call their network, they’ll reach out to the network and say, “Hey, I’ve got a pricing or I’ve got this HubSpot problem. Who would you recommend that I talk to in order to solve this?”

That’s how the lead gen happens. And for that reason, obviously, you have to deliver great work, but it also moves at the pace of that referral network.

That makes sense. Okay, so what I’m hearing you say, again, correct me if I’m wrong on this, is that from your experience doing cold outreach or LinkedIn messages, emails, just trying to kind of pierce through the veil of the private equity ecosystem is very challenging. And so you need to find a way to build relationships or get referrals into it if you really want to see some traction.

Yeah. In fact, you run the risk of burning your territory if you start doing cold outreach, cold calling, you’ll get on a spam blocklist really, really quick, and you’ll never be able to talk to them again. So there’s this real delicate balance. Now, I’m not saying it’s never worked. There have been times where we have reached out, not completely cold, but we have reached out to folks that we don’t necessarily know in our network. And as you would expect, the return is quite minimal.

Was there a point in Cortado Group’s history where, or a time, I should say, where referrals weren’t enough anymore and you wanted to drive growth to either a higher level or at a faster pace, and just kind of waiting for the referrals to come in wasn’t enough? And I’m wondering if that has happened, when did it happen and kind of what did you do about it?

[06:43] – How to Scale Your Consulting Business Beyond Referrals

That definitely has happened. Cortado Group is seven and a half years old. I would say about halfway through that point, your own natural network starts to run out. You can only tap into your own personal network or those of your employees to a certain extent. And then of course it sort of leveled off, and there was always, always, always still a referral aspect. But I would say about halfway through our life here at Cortado, that started to slow down.

And so what we started to do is pursue partnerships. And so you start to pursue partnerships, adjacent services, for example, with HubSpot or others, and then they can help give you referrals directly out of their network. Start to get yourself on a bigger stage. For example, third-party podcasts are a great way to do it, where you’re starting to get exposure to a broader total addressable market that you otherwise wouldn’t have tapped. And as long as you’re providing some sort of value in the conversation, that is enough to at least pique the interest of these new prospects. So I found that that strategy has worked pretty well.

Yeah. Is there anything that you’ve learned about marketing, especially in your kind of universe of working, I mean, what maybe from an outside perspective might feel like a small universe in terms of PE companies and so forth or PE-backed companies- And I guess my question is, what have you found works best from a marketing perspective?

Because we are such a referral-based business and it requires true, true relationship building, our most potent form of marketing is going to be in-person, face-to-face meetings. So a great strategy is to go up to New York, for example, which is a very target-rich environment for private equity, or Boston or San Francisco. But let’s just take New York, go into New York and be able to set out an entire slate of meetings with your clients primarily, and then with a couple of prospects. That face-to-face interaction is hands down the most important piece of marketing that we do now.

I’ll make two comments on that. One, you can’t just show up and say, “Hey, great to see you, how have you been?” You have to bring value. So some sort of research that’s happening, or involve them in research, there has to be value add because their day is very busy. And then the second thing I would say is that it isn’t always about business. I mean, just being able to connect over dinner or lunch and just talk about personal things is a great way to build that trust. So you can only get there through that real personal, one-on-one interaction. And that’s where we spend a lot of our investment in marketing.

[09:26] – AI’s Impact on Consulting Services and Client Expectations

What have you seen, or what changes have you made in terms of how you deliver your services? My sense is that a lot of the work that you do, your delivery is productized. Could you talk about maybe the evolution of what you deliver today and how that’s maybe changed over the years?

Well, certainly the biggest disruptor right now is going to be AI. That is disrupting a couple of things. One, our speed of delivery. And then, what is the final format of our deliverable? I would say overall our speed of delivery has certainly improved. The final deliverables are starting to evolve. Clients are less inclined to see a PowerPoint and a raw Excel spreadsheet these days. And they want to see maybe an HTML file, or they want to see things implemented and integrated into Salesforce or HubSpot, wherever that might be.

Those are the areas that have changed. We’re an execution-based firm, and there are fundamentals of sales and marketing. So we help companies grow their revenue. There are fundamentals that have remained unchanged, though. Aligning with the buyer has nothing to do with AI; it has everything to do with empathy, et cetera. so we try to focus on those things as well.

Would you agree or disagree that information is now a commodity?

Yes, I would agree with that, with the caveat that not all information is good or accurate. So we just have to make sure.

So, I mean, I bring this up because one thing that we’ve seen in terms of a shift or trend in the marketplace that has just maybe accelerated due to AI and what’s happening in the world is it appears to be that a lot of buyers of consulting or professional services are less interested initially, and especially around the initial sale, but they’re less interested initially around kind of advisory information and a lot more interested in implementation or implementation support.

The sense, and from the conversations we’re having with clients and others in the industry, is it’s really because AI can now give you a lot of information. And to your point, which I completely agree with, more information doesn’t mean good information, right? It just means more. But from a buyer’s perspective, they see more, they see, well, I can get information, I can ask questions and get answers. But what they can’t do with a lot of this AI so far, unless they’re very savvy with it, is it’s not going to implement for them or it’s not going to guide them step by step to actually get the outcome and result. And I’m wondering what’s your take or your perspective on that?

You’re 100 percent right. It is the fact that AI still can’t execute. Because, and I’ll give you an example, because we serve sales and marketing teams, we’re often tasked with getting better performance out of the sales team. So what does that mean? On the front line that means better coaching, better hands-on enablement so that they could improve their win rate or increase the deal size or shorten the sales cycle length. It’s kind of the three biggest KPIs. You have to do that on the front line from an execution point of view. I agree with that a hundred percent.

[12:27] – Lessons From Scaling a Consulting Firm and Avoiding Costly Mistakes

Okay. I was going to ask you as well. In growing the business, you know, the last seven and a half years or so, is there a decision that you made internally around the growth of the business, or, you know, there was a decision that was made inside of the company, but ultimately you as a leader, right, take responsibility for this, but one where maybe it looked like the right decision at that time, but then it created more problems than it actually solved.

First of all, it’s always tough to admit mistakes, but the reality is if you’re not failing, then you’re not succeeding. So I firmly believe that. And there are a couple of big bets that we’ve made. One of them was during the COVID situation, where, post-COVID, when the interest rates went through the roof, the knock-on effect was that private equity, they were affected by this greatly because their debt covenants overnight became saddled with more and more debt obligations. So they went from very low interest to high interest rate because they’re variable. I mean they adjust in real time.

So what happened was all that spending pretty much stopped, came to a screeching halt, which affected us. So we had to look for ways to diversify revenue. And one of the areas we looked was moving heavily into Europe. That didn’t work so well. Mainly because back to the relationships, we just didn’t have the relationships there. We don’t have the feet on the street. It’s a very competitive rich environment. And that was a lesson learned that you’ve got to pick your revenue diversification lane, but you do have to be careful how you do it. You’ve got to make sure that you still have a right to win within your space. And we just simply didn’t have a right to win in Europe. That was, I would say, one of the bigger lessons of many. We could do another episode on lessons learned if you want.

I’m sure there’s always lots to go over in that department.

When you started the business, it was just you?

It was just me.

[14:20] – Building a High-Performing Consulting Team

Give me the timeline. Like when did you make your first hire? What did that look like? Just kind of, if you were to give a, almost a very quick snapshot of the chapters of the business from start to now, we are seven and a half years into it- I think you’re twenty-something people-ish today if I’m not mistaken. Give or take.

That’s right. Yep.

Walk me through, like the initial decisions of how soon did you hire somebody and then how quickly after that did you make the next hire, the next few hires?

Well, it was me as a W-2 employee of my LLC. I held it that way for about a year and a half, maybe two years. But very, very quickly I brought in 1099 independent contractors year one. So I went from me to about five additional independent contractors, and we went from one PE firm to four. Very, very high growth. And the beauty of sticking with that strategy was that I could really, really manage my cash flow and my margin, which is absolutely critical in a professional services firm.

About a year and a half, two years later, I brought in two very capable partners who really then at that point helped me take off. And it was that point where I realized that if I really want to scale and eventually one day exit or glide this into a healthy lifestyle business, there’s just no way I can do it on my own. I am an innovator at heart, so I’m very product-focused. I needed to bring someone in that could sell, which I did. I brought in another partner who was maniacal around operations and could make sure our delivery was solid. So if you think about those three legs of the stool for me to scale, I needed those in place, and that was about the right time.

That’s great. I was going to ask you a follow-on to that. You mentioned that when you brought on these partners, that’s when the business really took off. What did they do that allowed the business to take off?

They did what they do best, and that is sell and that is deliver. That was probably the biggest aspect, because what happened was up to that point, I was doing fine. But just before this decision to bring in these partners, I started reaching my limits. My quality of delivery started to really show… Like it started to dwindle. I was doing like eighty-hour weeks. I mean, my lifestyle was terrible. Like you could start to see that I pushed it to the edge and the fray, it was starting to fray.

You weren’t probably enjoying a lot of time towards coffee grinding and posting and all that good stuff.

No, definitely not. Definitely not. And so what they did was I brought someone who is super, super passionate about selling, and someone super, super passionate about delivery. That allowed me to refocus on what I love to do, and that is productize our services and do business development.

Initially, were those people brought on as, were you hiring them as W-2 employees or were they buying into the business? Can you just share whatever you’re able to share in terms of how you brought on those kind of senior-level people early on?

One of them had been with me for quite some time as a 1099. Another one was a client. But we all knew each other from a past life. But what I did was I made them a part of the operating agreement. So it’s really, it’s very important that partners buy in, that there’s a little bit of skin in the game. There has to be a shared risk model. And in that process of bringing them into the operating agreement, you naturally make them a W-2 employee. So that was really the sequence.

[18:02] – How to Overcome the Founder Bottleneck

One thing that you just mentioned right now that I think a lot of people struggle with is there’s this concept or belief that the founder is the best salesperson and that it’s very hard to bring on other people into a sales capacity because they don’t have the same knowledge or the passion, the relationships. It sounds like you found somebody who was able to do all that and maybe even better than you could. I don’t know, I’m just guessing based on what you said. I’m wondering, can you share kind of how you found that person or what do you think they possessed or still possess that allowed them to operate so successfully in actually selling even though they weren’t the original founder?

Yeah, I mean, sales skills, this is our business, we help companies in their sales and marketing. And one thing for sure is that true sellers, they’re a specific skill set. They just have a natural inclination toward problem-solving and uncovering the needs of the client. And that takes a lot of patience, a lot of consistency, a lot of persistent follow-up. There’s a ton of attributes that come along with those salespeople, and that is what both of my partners brought to the table.

I do agree that in the early days, and maybe throughout the entire life cycle of your business, the founder is going to be able to sell it better than anyone. However, that’s a huge bottleneck. The founder bottleneck is if all sales, all delivery, everything comes through the founder, you’re just simply never going to get out of your own way.

Yeah, a hundred percent. We do a lot of work to support our clients in that regard and helping them to figure out where they create the most value, where they really want to focus, and then what else needs to happen in terms of systems or people to work past that.

Is there anything that you found, Dan, kind of challenging looking back when you started to bring on people, like maybe certain things that you used to hold on to and then you had to let go in terms of delegation or changing how you operated as you built the team?

Just a tremendous amount of trust. If you go into hiring people and then empowering them, you have to trust and to a certain extent surrender your way of doing things and be open-minded to ‘this person who came to me with more experience, they may have a better way of doing it’. So there’s a lot of that openness and trust that has to come along with it.

I will say this, especially a small firm, the stakes are high in bringing in those early employees. So lessons learned for me are: hire slow, fire fast. That’s been a struggle of mine, for sure. But that’s the ideal. And if you can achieve that, then I think things move forward pretty well.

Is there any kind of models or benchmarks or metrics that you use when you thought, or even today still think about hiring, growing your team in terms of- there’s a common kind of understanding of if you’re going to be making a hire, you want that person to be able to either contribute or support at least three to four times their salary, if not more. Anything like that that you use as kind of a principle for thinking about the hiring growth in your business?

Yeah, it’s very hard to tie it back to revenue because not everybody is a rainmaker. You certainly hire for the role and the skill set. A great delivery person has to be really good at solving problems really well, and the seller has to generate the revenue. But there’s a term one of my mentors says a lot, and that is they have to be a ‘10x-er’. And what that means is they have to improve your firm by 10 times in whatever their role is. And that’s really what you want to look for and monitor for very early on in their employment with you is are they a 10x-er? That’s what I look like. I mean, the attributes can obviously vary, but that’s it in a nutshell.

Yeah. Is there a sign that you look for, like early on in either the hiring process or even in the first, like 30, 60, 90 days to know and to feel confident that a person has the actual ability to add that 10x value? Because it sounds great, right? But how do you actually monitor and how do you stay on top of that and feel confident that, like, yeah, this person really does have the ability to add that level of value?

Yeah, it does kind of sound theoretical. There are a couple of attributes I really look for. One is, do they simply have a natural curiosity or empathy, if you will, to put themselves in the shoes of others so that they can truly understand. So that’s kind of number one. Number two, be comfortable being uncomfortable. So get out of your comfort zone. Try new things. There’s that.

And then the other one is, don’t be afraid of failure. If I have anyone who has not failed in one way or another, either mildly or spectacularly, in the first six months, then they’re probably not trying hard enough. Now, obviously there’s good failure, bad failure, but if it’s failure through trying something new or moving fast, there are certain acceptable things that come with risk. And if they’re willing to take that risk because they are a self-starter, they’re not sitting around asking for permission, that is one of the biggest attributes you can look for. So those are the three that I would point out.

Yeah, that’s great.

I want to ask you about- I know we talked briefly about AI, but beyond AI, and I mean this could include AI. I’m wondering, like what shifts have you seen in the industry or just the market in general over the last three to six months or so? It might be in terms of the economy, how buyers are buying, how decisions are being made, budgets, capital being allocated. Is there anything that you’ve talked with your team about in terms of like, “Hey, this is a real change that has already been having an impact or likely will have an impact on us, you know, now or in the future?”

[23:53] – Competing With AI and DIY Consulting

Man, where to start? There are a couple that I’ll point out. For everyone, their top two biggest competitors – who do you think they are? Who’s your top two biggest competitors, Michael?

I’d have to think about that.

Well, you know what it is, it’s the same for everybody. It’s “do nothing” and “do it yourself.” Do nothing, do it yourself. In fact, we lose about 50 percent of our opportunities to one of those two. Those are your biggest competitors.

You mean from the perspective of the client buying? Meaning the client either does it themselves or they don’t do anything at all?

That’s right. Sure, I’ve got other consultancies that I’ve lost to. That list goes on. But those are the two biggest culprits. What I’m seeing right now, what we’re seeing more than anything is “do it yourself” because of AI. Everybody thinks that they’re a go-to-market expert now, and they could very well have those experts on their team and now they just have this fabulous tool, but a lot of movement toward “do it yourself.” So I’d say that piece of the pie is expanding quite a bit. So that’s been a big change that started about a year and a half ago, two years ago.

What’s happening is this boomerang effect where a lot of those do-it-yourselfers are coming back and realizing that, “I’ve just been generating a ton of slop in the market. It’s whatever- my comp plan isn’t working because we don’t know what we’re doing.” So that’s been kind of this boomerang effect that’s this sort of yin and yang happening now.

And then the other one is that because we play in private equity – I could dedicate a whole other podcast episode with you – but just the market dynamics in PE right now are such that hold periods, they are getting longer. So three to five years was kind of the norm. Now it’s kind of stretched out to five to seven. That’s happening. However, the pressure from the investors or limited partners in these private equity firms is getting greater, and therefore there’s a heightened urgency to execute a lot faster. So it used to be three months – they want it in a month and a half. That’s a huge trend.

Yeah, we’re definitely seeing those play out. I mean, the former, I should say the first one. I’ve been having a lot of conversations with others about this, so that makes sense.

Dan, I know we’re kind of on the clock here. I want to thank you for coming on. We’ve just really started to skim the surface. So we’ll have to maybe look at another conversation. And I’d love to do that over a cortado as well sometime.

I would love it. That’d be great.

No pun intended, because I do like a good cortado from time to time. But where should everyone go to learn more about you, the work that you and your company are doing?

Sure. I mean, go to cortadogroup.com. That’s probably the best place to start. Or check me out on LinkedIn, Dan Bernoske on LinkedIn, and I’ll be there.

There you go. Thanks again, Dan.

Yeah, thank you. Thanks for hosting me. I appreciate it.

Important Links:

Dan Bernoske: https://www.linkedin.com/in/danbernoske/

Cortado Group: https://cortadogroup.com/

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