‍

In this episode of ‪What Worked, Tyler interviews David Lopez, CEO of Summa, a CFO services firm specializing in manufacturing companies. David brings his unique perspective on building an efficient (and stable) supply chain.

David shares his insights about:

• The importance of understanding the other side's situation in negotiations
• Finding and using leverage without strong-arming suppliers
• Preparing contingency plans so you are not forced to make a bad deal

We'd love for you to connect with us:

• Mike Wu
• Tyler Rachal
• David Lopez

‍

Transcript edited for clarity:

Tyler Rachal

Welcome back to another fun and exciting episode of What Worked. I'm joined, you know, David Lopez, I would love to say you're a longtime friend, but really, you're like a very, very, very short, short time friend, if that makes sense. But I feel like we became fast friends. So I'm joined by David Lopez, we met very recently. David is, amongst other things, he's a procurement expert 

as well as a fractional CFO. The fractional space is very interesting to me right now because at Hireframe, we've had the honor of working with a lot of really great fractional executives. And through my work at Hireframe, I ended up getting introduced to David. 

‍

David is here today on What Worked. And David, rather than stealing your thunder, I'd love to hear it directly from you. How did you get into the riveting, exciting, I’m trying to not be too sarcastic here, the space of procurement, right? You could have been a firefighter, a professional bullfighter, but you chose procurement. How did you get into it?

‍

David Lopez

I agree. Well Tyler, first of all, thank you for having me here. And thank you for the invite too. The first chat we had was really, really fun, productive and I think we hit it off. 

‍

Tyler Rachal

Likewise.

‍

David Lopez

Well, I got into procurement because my background is in finance. And one of the things you learn really quickly when you're in manufacturing, specifically, is that there are certain things that are easy to predict and then there are certain things that are not easy to predict. And the not easy ones, especially if a company is growing, is procurement - the purchases that the company has. And so depending on what you're buying, you have a different method, a different approach, you talk to vendors at a different angle in order to get the best terms for both sides. But also you try to stabilize that boat that you're trying to navigate through some channels, some like wild waters and that's what drove me into procurement. It's challenging, it's fun, there's a lot of human factors in there but at the end of the day it's a good balance between science and art, which I really, really enjoy.

‍

Tyler Rachal

Without a doubt. And I also think what's interesting is, for myself, I have a background in building these large teams, typically for fast growing companies. And one, I'm just using this as an example to kind of relate. One example of a weird kind of expertise that I have is in things like content moderation at all these social networks. And what's just so interesting to me was that that was a space that I was deeply involved in. And then you saw, because of global events, content moderation took front center stage for a lot of people that really had no idea what those two words meant together. 

‍

And I think the same thing about procurement when it comes to the pandemic. What happens in a world where the world literally stops and suddenly you can't procure the things that you need 

as easily as you could before. I felt like procurement, I don't know if you agree, I feel like it had a real moment there in 2020, 2021.

‍

David Lopez

Yeah, the paranoid will survive. I think is the motto there. 

‍

Tyler Rachal

Yeah, totally.

‍

David Lopez

If you had that little bit of anxiety around things in procurement back in the early 2020s, you were in the right mindset because you can either secure a price ahead of time or secure the supply of something that was critical for you. Some people might call you crazy or you're paying too much. But if you are right, the payoff, it goes beyond how much money you saved, it’s how many clients you kept. And that's the part a lot of people miss, when you're securing prices or stabilizing a price for the long term. You secure not just that price that might be higher than your market price. It's actually, you are guaranteeing supply to your clients. And that is worth a lot more than a single purchase order that you miss. 

‍

Tyler Rachal

Without a doubt. And you were, I know I kind of had some fun with you there in jest about procurement not being maybe the sexiest part of business, but I will say that you were, you were also doing procurement in one of the most interesting, fastest growing, ever changing industries, which is, I mean, is it the appropriate term to call it the space industry? I'm sure there's probably a better term, but is that kind of accurate? 

‍

David Lopez

Yeah.

‍

Tyler Rachal

You were doing procurement in the space industry.

‍

David Lopez

Correct. Yes. And the challenging part there is not just, I'm not saying they're not important, it's not just the supply, it's not just the price, but it's the timing of when you make the actual payment. And if you're trying to match your cashflow schedule with someone else's, it becomes a dance. It's like two magnets pushing each other until you find an equilibrium, usually you need to pull up a different variable. That's not price, that's not time. It's like hey, if we buy two of these, how does this change? Or if we collaborate on a project that you're working on, and I know it because I saw you on TV, on Netflix, whatever documentary was there, what if I collaborated with you on that? So you have to pull out variables that are not visible in order to make things work. And match their catch flow with yours, with your available money, with your available time in order to make things work.

‍

Tyler Rachal

That all resonates a ton, as I've been mostly on the vendor side. I've had a few instances where I'm negotiating the other way, but typically I'm the vendor. And that's so interesting what you said about kind of pulling out these, always call them kind of like levers, right? Some are visible, everybody typically gets drawn to the same levers, it's price and you mentioned, payment terms, and that sort of thing. But oftentimes, there's these hidden ones.

‍

I've always been curious as someone being on the other side, on the vendor side of the negotiation. Being really great at procurement, how much of that is being able to understand a supplier or a vendor's business? Cause on the other side of the table, you're working typically with some type of pricing model, That's what it all comes down to pricing. And then there's where you're trying to get your strategic goals as a company and how your contract terms align with that and et cetera, et cetera. But do you feel like that's important or not important really?

‍

David Lopez

I would say it's the most important thing. 

‍

Tyler Rachal

Interesting, okay.

‍

David Lopez

If you know that a car salesman needs to hit their numbers before year end, you're going to wait till December to hit that dealership. They need to hit those numbers. That gives you so much leverage versus going on January 5th, New Year’s resolution, I need a new car. No, wait it out, right? Wait it out.

‍

We're already in Q2 of 2025, right? So if you wait it out, those guys are gonna, you're gonna have to, sometimes some people measure it by quarter or by month, but let's say that the annual bonus, the annual number is the biggest part of the bonus. If you understand that part of their business, there's so much leverage you're gonna get when you go sit with them on December 15th or December 28th or whatever it is. And I'm not saying overpower them because they also have, they're offering you something that's valuable to them. It's just knowing how the game works allows you to have a better strategy. 

‍

Same thing with vendors. I read it one time, it's not related to a vendor, but I read that a company was giving this big bonus, this big prize to their best salesman. And they gave this trip to Cancun to this gentleman that had a daughter that was ill. And so an executive, when they were all clapping, man, you won. That executive picked up that the guy was not that happy. So he approached him and said, is everything all right? Are you happy with this? And he said, yes. The only thing is that I have a daughter that's ill and I'm just thinking of her. 

‍

So the guy said, let's switch those tickets and hotel and everything for the Cancun trip to pay for her medical bills, right? That was exactly what the guy needed. Not the popular trip to Cancun. Do you think that guy is going to ever not be the number one salesman in that company?

‍

Tyler Rachal

Yeah, I mean, he'll be loyal for life. Yeah, you bring up such an incredible point because in my experience, when I watch people that are really, really great negotiators, usually it comes down to it's that ability to understand where the incentives are. I think a lot of people think negotiation is like the movies and I don't want to steal any thunder because I'm sure you have some wonderful thoughts about negotiations. But when people think about negotiations, I think like a lot of things  like how it's dramatized in movies. It's like, this is my number, click. It's things like that. 

‍

David Lopez

Hahaha, yeah, yeah, that's true.

‍

Tyler Rachal

I've seen a lot of salespeople or just business owners think that negotiations are all about I got to get them to like me, I got to build that relationship and they pour so, so hard on the relationship. The most masterful negotiators that I've ever seen are singularly focused and singularly good at uncovering what are the incentives? If we can align incentives together and then figuring out that dance, it's almost like the relationship just ends up being a means for getting the conversation started. It's certainly not what gets the deal over the line. It's really just, can we figure that out? So no, that's so spot on. 

‍

Now, when we talked initially, you mentioned that primarily your ICP is manufacturing companies, at least when it comes to procurement. And I'm just curious, why manufacturing? Why is procurement so important for manufacturing? That might be to you an obvious question, but I'm just curious.

‍

David Lopez

No, sometimes you got to refresh why do I do it in manufacturing? I think manufacturing encompasses all of the areas, all of the ingredients that procurement has. Some companies just outsource everything and then they provide a service. Manufacturing outsources some services, right? Other companies buy all the raw materials and transform them and then sell them. Manufacturing also buys raw materials, but together with supplies like gas, electricity, transforms them and then sells them. Other people make decisions like I am going to buy equipment because it's gonna be more effective and then I'm gonna give a service. Manufacturing also has equipment that they buy. So it encompasses maybe not at a core level, a specific type of purchase, but it covers everything, services, supplies, materials, even labor, third party labor that you can bring in. it allows you to also do what's known as a make or buy analysis where you say like, should we make this part or should we just let these guys make it? There's a little bit of sit down, back of the napkin. I think we can make this for cheaper. Let's talk to the accountants and see if we can actually make it.

‍

So it encompasses everything that's related to procuring something. And if you pull that off, then you have rockets going to space. You have iPhones being used by billions of people. So that's what you achieve versus something that might be as core. I'm not saying they're not great products. Don't get me wrong. But it encompasses all of them in that iterative change in pace. You negotiate with a commodity broker differently than you negotiate with the only guy that has the knowledge to help you land on the moon. Totally different. And that variability is what makes it interesting to me. 

‍

Tyler Rachal

This is probably a question you get all the time. But when I think of manufacturing companies, the ones that really have the leverage, you hear these insane stories. The ones that come to mind are of course, Apple, their ability to get pricing that is probably almost at a point where, I'm sure Foxconn has figured out a way to make money, they're a large company. But I know that Apple's really grinding them, right? 

‍

But the average company doesn't really have that leverage. What do you say if you're meeting with a company and they're a startup and they're much lower on the market. How do you do that dance? How do you get terms? How do you think about things, how does that factor into the make or buy analysis?

‍

David Lopez

That's a great question, Tyler. It's all about framing. It's how you frame if you're small or big. If you go to your local coffee shop once a year, you're buying that $5 coffee, you're not gonna be a client. But if you're going every morning, they're going to call you by name. They're going to give you a free coffee every, let's say two weeks. They're going to give you, Hey, I know it's your birthday. So here's an extra little cream, whatever it is. Right. And it's still a $5 coffee, a very commoditized product. But it's very implicit there what's happening. Basically, if you aggregate your purchasing, you can say, well, I actually buy in a year, let's say roughly $1,800 of coffee. That's different than saying, I buy a $5 cup every day. So if you frame it in that way, even if you're small, you can get away with a lot of discounts. 

‍

And then I'm going to quote Jim Rohn, I'm a big fan of Jim Rohn. He says, just ask, right? It's a very simple thing. You can just ask. Can you give me 30 days? I'm short in cash this month. Can you give me 30 days? Just ask. People are gonna say, we don't volunteer it, but everybody has a credit automatically for 30 days.

‍

Tyler Rachal

That just ask point, I want to just underline that several times. That is a lesson in business that I have learned and it took me far too long to learn it. But your first instinct, so many times I find myself in business going into situations and I'll be like, well, I'm the much smaller company here or I'm the lesser than entity. And it is remarkable how far you can get by just saying, Hey, can we do this? Like I noticed you guys have this, but can we do this term? It's really important to me and just asking. It's just remarkable how it's pretty rare you're going to get an outright no. Usually it's some type of counter, which is better than whatever you were offered before. So it's a huge victory. That's amazing. I love that and that resonates.

‍

It's funny you said this, I want to backtrack here just to something. A funny image popped in my mind. I'm thinking of SpaceX or I'm thinking of some of these, you know, frontier cutting edge type companies. And in the way that you were talking about procurement, I'm curious your experience being at one of those companies before.

‍

Did you really feel kind of like almost like you were equal to say like the engineers? Because when I think of those companies, you kind of think of the engineers being the star. I don't want to put you in a bad spot here with any of your former colleagues. But I think it's one of those things where really if we're watching the rocket take off, procurement should be there, high fiving too.

‍

David Lopez

I gotta tell you, I've had the luck to work with very bright people. And so I would never dare to even say I'm one. But having said that,

‍

Tyler Rachal

Yeah, too much too much respect. This is me trying to stir the pot.

‍

No, it's like, I cannot even begin to tell you, I've met people that are not just bright, but they're warm, and they're funny, and they're entertaining, and some of them have hobbies of I just build a feeder for my cat over the weekend, type of thing. I have another friend that is making Arduino so the coffee machine that you buy on whatever store at the perfect moment stops heating it up. So I can never say that. What I can say is that sometimes you don't need to be in the front course of the show. 

‍

Tyler Rachal

You can be behind the scenes..

‍

David Lopez

Correct, and get as much satisfaction as anyone else, right? So yeah, that's a great question. In terms of procurement, I think that especially in engineering, what I love about engineers and scientists is that no one is fighting like it was my idea. Everybody says this is everybody's work, not just mine. Nobody said it's because of me that we're here. Dude, you didn't write the code. We all know that. And they know that you didn't build all the parts or machine all the parts. So it is a really beautiful community.

‍

Tyler Rachal

Amazing. Yeah, that makes complete sense. And yeah, behind the scenes.It’s just, you made me think of it because commonly where I'm based here in LA and I run into a lot of people from SpaceX and, when I meet them, I've met every type of person. I've met people that did accounting at SpaceX and then I've met people that were literally building the rockets. If you look at, here's a great example, the music business. You think the music business, it's, all about creativity, finding the next big artists. Well, it's also a finance business. It's a finance and marketing business, right? So much of it is managing cashflow and how do you get an artist distributed faster without totally going broke while doing it or movies to movies. I'm in LA. you're just making me think of some of that stuff. That's so cool. 

‍

And so we've touched on this a little bit, but I really want to get your two cents and more on negotiations. I will be totally honest with you. I'm in the middle of a couple of negotiations right now. So this is really me trying to get some free consulting more than anything. But I am curious...

‍

David Lopez

It's more than two cents then, Tyler.

‍

Tyler Rachal

And thus begins the dance. You got to figure out what my incentives are. As someone who's done it so much on the other side of the table, I'm curious. The question that I have for you is what is something that you understand about negotiations that most people don't?

‍

David Lopez

Both sides should win. And if you think it's like the movies where there's an upper hand and I have the edge, that's an easy negotiation. You don't need to be good at negotiating if you have leverage. It's an art to kind of find that leverage, for sure. But you're not good if you see somebody that's oppressing the other side of the table because they can't say no because their life depends on it, that's not negotiating. There's not an equal offering or a balance, right? 

‍

It is very rare in business that negotiations happen the way you would buy a phone. Here's a phone, you get $800, that's it. In business, you say, hey, this phone is $800 and you want it. Yes. The other side will say, like, I only have $100.

‍

Tyler Rachal

Right.

‍

David Lopez

But I know you would like to go or take your kids to a Taylor Swift concert, right? Yes, I happen to have three tickets that I bought a million years ago for some or they were given to me for free. I know it's a lot more, but let's say there are 50 bucks a pop. But this is important to you so I'm gonna put on top of my hundred bucks, three tickets for your Swifty fans. Great. Okay, still not there, right?

‍

Tyler Rachal

The perceived value, real value and perceived value for those tickets should be through the moon.

‍

David Lopez

Correct. But then you can say like, your kids are gonna love you, right? And that 50 bucks becomes a little more. Maybe if you're not there yet and say, can you give me a chance like six months and I'll pay you 100 bucks more? So with 100 bucks in your pocket, you're able to take this $800 phone, you go get the tickets, here they are, and in six months you pay out 200 bucks and that's it. So you just bought everything for less than half, right? 

‍

The point is both sides can win. And that is something that nobody really wants to take the time, lower the price or lower the quantity and that's it. Price and quantity are two variables in a very broad spectrum of variables, right? So find your edge, of course. Like nobody has this phone, right? This is very special. Or nobody's gonna sell it to you this quickly. You're gonna have to wait if you don't get it. Find your edge. But then there has to be a willingness. Like you have to want whatever they're offering. I'm not gonna lie. I'm not sitting here. I didn't take two hours of my day to come here, sit with you to say, I'm better than this. No, I'm interested. And I want to let you know that. Some people think that's weakness. I think that's actually boldness. It's like, I want what you have. What do I need to do to get that? I don't have 800 bucks. How do we make it work? So that conversation starts like, yeah, it's almost fun. Two humans trying to figure out a solution. So long story short, every negotiation is an opportunity to have a win-win.

‍

Tyler Rachal

I'm nodding furiously. I'll give you anecdotally where I've seen negotiations personally go very well and where I've seen negotiations be terrible. And then I have a follow up on that. Where it's gone really well is exactly what you described. I've had instances in my career where I've talked to someone and they've just said, I love this business expression. People say open kimono or whatever it is. Like, hey, let's talk. Everybody puts their cards on the table and let's just figure it out. And I totally agree, when somebody comes to me very transparently, I think a lot of people will be like, oh, I can't believe they play their hand that way. You got to hold back and whatever it is. 

‍

This gets to my other place where I've seen it go really poorly is where I've seen it really terrible is when somebody comes in and their entire focus is for you to lose and they have to win. And that means every term. And to me, I also see it as negotiations is like our first date. And now I'm thinking about getting married to you and I'm going to have cold feet. That's how I feel is like how you're treating me right now. That's usually, I think, a pretty good indicator of how it's going to be later on or worse, when things go south, how are you going to be as a business partner.

‍

I guess just like, when I think about those situations, I always felt like I was able to take the pressure off myself by reminding myself that you could always walk away. Negotiations are more so about, can we get together? Can we collaborate to find the wins for each other in that solution? And if we can't, I can walk away. And I don't know, if you were to talk to somebody who, let's say you were trying to coach them up. They're about to go into, I'll give you an example of one of the worst experiences I had was Walmart, terrible company to negotiate with. But if you were going to try to coach somebody up, how do you frame that to someone where they can understand? Because I think very commonly people forget that. They forget that they can walk away.

‍

David Lopez

That's a great question. And it's part of the negotiating training that I do. Your best alternative has to be really damn good. And it's called a B-A-T-N-A, best alternative to a negotiated agreement. 

‍

So imagine I have this iPhone, whatever the number of this iPhone is, and I want it, it's 800 bucks, right? If I don't get it, because I only have 100 and a couple of Taylor Swift tickets, and 100 bucks coming later, maybe I can get the next, like the immediately below version of it for what I have. And that's pretty damn good, right? And if I'm not pushed socially to have the latest iPhone, I'm not gonna care. It's gonna be functional, et cetera. So my alternative to what I'm negotiating here, if it's really good or really close to what I'm negotiating here, I can walk away, right? And it's not a matter in Spanish, this expression of kicking the board game, and just everybody that stops playing because I don't wanna deal with this, right?

‍

Tyler Rachal

Game over. Or like you grab the ball and go home.

‍

David Lopez

Yeah, exactly. That same sentiment. A lot of people overuse it though. I’m willing to walk away. All right. I mean, I just met you, we haven't even talked, but if you have done your homework and said, I think I can offer this person a hundred bucks, Taylor Swift tickets, whatever. And if they say no, maybe I can downgrade to the next version. You have a very good alternative to not getting the latest iPhone brand new in that brand new box. And you have the power to say, okay, I'm not gonna get away with everything in my life, right? Everybody wishes they were like an inch higher and like a couple of pounds lighter. 

‍

Tyler Rachal

Yeah. 5’ 9”.

‍

David Lopez

That's pretty good, man. Yeah.

‍

Tyler Rachal

I'm perfectly average, is I guess it is 5’ 10”, 5’ 9”. 

‍

David Lopez

I don't think you're average, Tyler. You're far from average. 

‍

Tyler Rachal

Thank you. I appreciate it.

‍

David Lopez

The point of that being is if you work towards improving your alternative, it's not going to hurt to walk away. And again, it's not an oppression, like we're better than this type of attitude. It's, I'm sorry, we cannot work it out. I only have these things to offer for the latest iPhone. I'm going to have to go somewhere else and get a lesser version, but it's going to be exactly what I want.

‍

Tyler Rachal

And I think that is so powerful what you just said. That is always where it's that candor. Can you have effective candor? Can you be transparent? You don't want to say, hey, look, here's the deal. Here's exactly many dollars in my bank account. But that ability to just kind of give the why. Hey, I really want this thing. Here's why I can't pay $800 for it. Maybe I don't have the money, whatever it is. But if I can't do this, I'm probably going to go over here. Unless let's work together, it goes back to that sort of collaboration, that teamwork. 

‍

When I would mentor people about negotiations on the vendor side, I would always say, take the thing that is the boundary for you, the do not pass go for you. But instead of saying, I can't do that, you say, listen, I can't do that, here's why. Can you help me figure out some sort of solution? Because I want to work with you. This is my challenge, net 30 payment terms is really hard for my company. Our customers pay us net 90. And so that cash flow is super important for me. So let's talk about it. Let's talk about how can we do this together to get there? Can you meet me in the middle? Can you do net 60? It'll be a little bit tough for me, but it's a lot better than net 30, those types of things. 

‍

So I have peppered you with a lot of questions about procurement and your business. I'm curious, as I've been sort of sharing my own war stories. Do you have any war stories from negotiations? I mean, you must have been in a bunch, so I'm just curious if you have any good ones?

‍

David Lopez

One time I got the mandate to get the 10-year lease of a box in an arena for a CEO, next to another CEO's box in the arena. Which he didn't have by then. None of them had the boxes.

‍

Tyler Rachal

So the CEO that you're working for wanted to be next to another CEO, a specific CEO. Dare I ask why just looking to be buddies or privileged information?

‍

David Lopez

He wanted to do business with this person. And he thought, because this was an arena with a lot of energy and everybody loved what was going to happen there, it was a national stadium. A lot of energy was going to be poured into that thing. It was an auction, right?

‍

Tyler Rachal

Yikes.

‍

David Lopez

So it was like three dimensional chest, right? You don't know the location yet of that guy and you need to buy a location next to him. And by the way, you're gonna be the one bidding first.

‍

Tyler Rachal

And bidding, I'm thinking auction room? Online? What's the setting?

‍

David Lopez (35:21.059)

So first of all, those auctions, you go with several envelopes. So you go one with, I'm gonna say three. Low bid, middle bid, high bid, right? Once you're in the floor, these are companies, so at least you know that. If you see a big company, you take out your big bid, right? If you don't see any big one, you're going to take maybe the middle one, right? The only reason I would take the small one if there was no one there, but just in case. We needed luck, but we also were prepared to say, okay, we don't see any big players here. But there's a couple of, you know, middle sized. 

‍

And so when they called the bid for the box that we technically wanted, we didn't know that was gonna be it. We waited, because you don't wanna go with the top bid. We waited, nobody bid, so we went with that half one, the middle size one. We won it. And so the other side who had the same problem now, we told him  we want to be next to you. He said, what do you guys just do? So in five minutes, we had to get him to get three different bids so that he could win that. But we told him, more likely or not, you can pull it off like we just did. But you're going to need, in case somebody wants to be next to us instead of you getting that.

‍

Tyler Rachal

Crazy. So you started advising them. That is so funny.

‍

David Lopez

Yes. In five minutes, it was like dude, get a piece of paper and put your bid into separate envelopes. We opened up ours, gave them our envelopes that had to be closed and we pulled it off. Two CEOs in two boxes next to each other, not knowing if they're going to get theirs, not knowing if we're going to get ours, we pulled it off.

‍

Tyler Rachal

Do you find yourself losing your mind because you're in these settings with business people and, not to say they're not business people, but you've used the example earlier of buying a car, right? I personally have found buying a car to be extremely frustrating because I want to use my normal business negotiating style and approach. And it's just you are doing a totally different dance. It's just like with people that aren't given that type of leeway, I feel like. And it's such a restrictive, I don't know how to describe it, just the worst. Do you find you find the same experience? My wife constantly says, Tyler, these are not the people you work with, you have to stop approaching it the same way that you do with Hireframe. You're in a Toyota dealership. She's like this guy has no issue if you walk away, he wants to sale, but it's okay if you walk away because there's like 100 people that will come in the door after you.

‍

David Lopez

Yeah, you don't always negotiate everything, right? There are certain things that we have all agreed, yeah, it's published, prized out there. Even though I once won a bet with my cousin who said, I know that you negotiate everything, but you can't negotiate in a franchise. I actually negotiated at Burger King and got a discount. 

‍

Tyler Rachal

I was about to ask. Yeah, you have to ask, right? That's so funny. Yeah. 

‍

David Lopez

I just asked. And it's hilarious how he tells the story. But the point is, there are certain things that we've all agreed, it's published price. If you're close to the end of the year, you have leverage. For sure.

‍

Tyler Rachal

Yeah, and at end of the day, cold, stale coffee, you might have a little leverage. I was joking. Yeah, that makes complete sense. I appreciate that war story. Do have any questions? Obviously, I'm on the other side. I'm on the vendor side. Any questions for me about about Hireframe or anything whatsoever?

‍

David Lopez

Yes, this is the part where I was warming up my hands. 

‍

Tyler Rachal

Let's dig in.

‍

David Lopez

So, I know that you've built teams of like up to a thousand people, right? For labeling and, dude, hats off for that. How do you see those folks working with AI because they're feeding a system that might take a lot of jobs out from the labor supply.

‍

Tyler Rachal

It's an amazing question. And of course, I think every business owner right now has to be thinking about AI no matter what you do. Because it's the biggest, this is our internet, right? That's what people have been saying. So it's like, whoever back in the day when the internet was starting to become a thing, if you're sitting there being like, this pesky little internet thing is not going to be a real thing. People are going to love filing cabinets for forever. Paper is here to stay, right? Dunder Mifflin is what I think of, right? 

‍

So yes, I think about this a lot and I think about it in a couple of different ways. So before starting Hireframe, you mentioned the example of building a thousand person team to do this data image labeling for autonomous vehicle technology companies. What I have found is in the call center space, you've already seen this. Customer service and it's, and it's not just AI. Before AI, there was AI light in terms of chat bots, that was the buzz back when I was working at the startup that I was working at, chat bots were the big buzz. Should every business have a chat bot? That was the question everybody was talking about. 

‍

And I would say even before that, if you look at the singular thing that has probably taken, jobs. And in the call center space, you refer to it as really volume, volume of work. The singular thing that has had, I think, the biggest impact. AI will have it. But before AI, it was just the knowledge base. It was the ability to go and, as a consumer, get an answer to your question without talking to anyone and ticket labeling and all that sort of stuff. Like the classic example is password resets, right? There was a time when you'd have to contact a company to do a password reset. Now, if you have that experience, you should ask yourself, what company are you working with? Because it really should be automated unless something has gone horribly wrong.

‍

And so what I've seen is, in the call center space, and I believe it applies to Hireframe too, is you're seeing AI as it gets better, inevitably, those jobs will change. There will be a reduction in volume. Now, what I also saw though, if I go back to the image labeling example, is that as new businesses come to be, there's new opportunities and new volume. I gave the example of content moderation. There was a time and place where there were social media upstarts. Now it's what, like two, three, four companies tops, right? And it's really Meta and maybe TikTok, right? And then distance would be like LinkedIn, Twitter, or X or whatever it is, right? But if you look at the example of content moderation, there has been so much automation in content moderation, which has dramatically changed it. There was a time where every single image at a believe it or not, at a Meta or a Snap or whatever it was, did typically have some type of human intervention. Any image that was flagged. But now so much of that is automated. But still, if you look at that entire pie, because of the insane growth of social media, even if I tell you that of the entire content moderation volume, let's say 98 % of it is completely automated, the 2 % is still responsible for literally hundreds of thousands of jobs. Facebook, I believe, employs a couple hundred thousand people globally for this content moderation piece. And we've seen various news stories in our own country and in other places where content moderation has swayed elections, resulted in tremendous fraud, death, all these types of things. So as a society, we've agreed it is important and it therefore has become a source of job creation, if that makes sense, but it's very different.

‍

So I apply that same level of thinking to Hireframe. Whereas for Hireframe, I think that fundamentally, many of the positions that we do today, they will be automated. That's just a fact, as you look at some of these things. And if I could give you an example of a way that I see a lot of companies using Hireframe, and speaking of negotiations, I lead with this. I always talk to them, a lot of times it'll be like a tech company. And I describe it as this. If you look at a tech website, a tech startup, almost always, it's going to say, our process is as easy as one, two, three, or one, two, three, four. And you're chuckling because you know that behind the scenes between steps one and two and two and three and three and four, there's a lot of little things that have to happen to make a beautiful seamless experience because it's just impossible to build the tech that's going to really allow you to automate that from beginning to end. So a lot of times I'll talk to companies where we'll be the kind of duct tape in between those steps. And I'll just lead with transparency. I'll say, hey, what's your intention here? And they'll say, well, we intend to automate this. And I say, well, that's great. I think that we can be an awesome bridge for you because that could take you three months. It could take you six months. It could take you six years. But in the interim, I'm going to supply the people. And I think that, what you just have from there is that there's going to be those things where you're just the bridge to whatever happens tomorrow. But what my firm belief is, is that at the same time that all of that is happening, what you're seeing is AI is I think going to really shorten the gap between the talent level. If you have talent here in the United States and you say, hey, the talent here in the United States for this role is this far. The folks in these other countries like the Philippines or Mexico, wherever it might be, there's this level of gap. I think that AI is going to make it shorter and shorter and shorter and shorter. And that presents a really, really interesting opportunity where you can think fundamentally differently about how you build your company.

‍

I'll give you a very specific example. If you were to ask me three years ago, if you were to say, Tyler, there's going to be companies that are asking you to hire controllers out of the Philippines. I'd say you're crazy. I could never see a company taking a strategic position like that and wanting to have that person be based in the Philippines or a near shore location or whatever it might be. I now run into that more than you think. And it's because there will be this shift in technology. There's more access to information, systems, everything. And so just the way people think about building businesses is really different. I love that you made the reference of the dance, as a founder at a staffing company, I am, I'm in a dance. I'm dancing in a tornado, right? And it's like, Hey, somebody is going to come out of this and they're going to be really, really successful. And I hope that's me. 

‍

And I think the best thing that I can possibly do is I try to understand what I can affect and what I cannot affect. And the global AI revolution that is going to happen, regardless of what Hireframe does, the focus that I have, this is our bet. Our bet is that.companies will more and more think globally about how they build their teams. It used to be you would build your teams globally for basically all the work that you didn't want to do. But I think now companies will more and more say, I can hire a controller in Austin, Texas. I could also hire one in the Philippines or wherever, right? Wherever the best return is on investment. But what I know is that controller in the Philippines that can work for a great company in the US, if it's on me to provide the best possible employment experience to that person because I think they'll be in demand. And that's the part that I think I can control. So thanks for letting me get on my soapbox. I think about this all the time.

‍

David Lopez

I do have a follow-up question to that because it is very clear. I do see that path, the way you mentioned it. Now, in terms of soft skills, because you're gonna have that sort of, I don't know if the word is loss or rearrangement of soft skills because that's not going to come and play if let's say AI is providing you the answers, right? 

‍

Tyler Rachal

Totally, yes.

‍

David Lopez

Or how do you lead a team in a way that motivates them, that's not written or expressed in a way that might like, know you're a robot. So how do you see soft skills, leadership, empathy jumping in, in this new era where people are starting to see how my skillset needs to be either enhanced or I'm going to be washed off with everything else.

‍

Tyler Rachal

Yeah, I love that question. And it's something that I think about for everyone is the number one thing that I think about is I think that the role of an employee is going to fundamentally change in the next five to 10 years where it's not going to be enough to just do your job, which means like, just follow instructions, get trained on something, basically go through the motions. I think that as an employee, you're going to be responsible at every level, employees are going to be responsible for creating value at a company. And I think the way that you do that is I think that the availability of these AI tools is going to allow people to, you know, before it would be like, if you wanted to do something technical, you better learn how to code. And it's just remarkable how you look at companies like Cursor and these other things where you're going to be able to code with a prompt. I know somewhere there's an engineer listening to this and shaking their fist like, dude, you know nothing, you know what I mean? and I get it. I'll take the heat on that. 

‍

But I do think that there's just going to be this availability of tools. And so this is something that we think a lot about with Hireframers. When we have a job and it's truly very basic work, call it data entry. My thought is always, if you're doing this job, you better know that a time is coming where it will be washed away. And so the best thing you can do for yourself is try to learn how to think differently, where instead of just doing the task at hand, can you get really good, this is what I think is one of going to be a new soft skill. A new soft skill is going to be taking that task, mapping it out and trying to uncover where are the opportunities for process improvement and implementing that yourself. 

‍

We see that with our own team and with Hireframers. A great example I'll give you is we had a team member, a big, unicorn, billion dollar valuation logistics company. And we had someone doing entry level accounts payable at that company and they noticed a problem and they took it on themselves. They coded some sort of Excel formula worksheet. This is where I'm really showing my lack of technical abilities, but they built something. And it saved the company. I mean, it was huge. It was in the hundreds of thousands that they saved them on this. And it was just because this person noticed a repetitive task they were doing time and time again. And they said, this can't be the only way to do this. And they took it on themselves to solve it. I think that is today the outlier. In the future, I think it's going to be what's required of you as every employee. It's because all that rote work, that data entry, that's the first thing to go. That's the low hanging fruit. 

‍

David Lopez

Interesting. Very cool.

‍

Tyler Rachal

Yeah, but I love this question. It's a cheesy term, but future of work is basically the industry that I've lived in. And I love it. I love the way you ask me this question, people will say, they almost feel bad about it. They'll be like, hey, man, how do you think about like… and I understand. I'm reading your mind. You're saying I'm operating a ghost ship. Like my company is like headed to certain peril. And I'm like, Hey, it is what it is. And also what I'll say too, is that guess what, if my company becomes obsolete, we got more problems than just Hireframe going out of business. That means the world of work, we might all be out of a job. So we got it, we got some stuff to figure out, but that's a tremendous question to ask. So I appreciate that. 

‍

I do want to wrap things up with a couple of things. One, was just going to ask for you. I love asking this question. You are a highly effective person. What do you think contributes to that? What would you say if you were to give yourself a superpower? What would that be?

‍

David Lopez

I think I lucked out with this. I have Asperger's syndrome and I thrive in structured environments, which you might say, well, how do you deal with all this chaos? I actually use it, I need to have structure. So I make the structure in place. I put things on the table that people are avoiding and say, we need to talk about this. Let's bring calm and structure to the conversation. Now it sometimes drives my wife crazy, of course. In a business environment, I've found that it can bring a lot of stability, not just to the business, but also to leadership, like peace of mind. Okay, this guy's gonna take care of that, okay, it's a mess, by the way, and by the time it's done, it's a little bit more structured and clear and actionable that it was before. So I would say that it was just a stroke of luck that comes with its quirks. I'm not gonna deny, but that's what I think would be the superpower.

‍

Tyler Rachal

I love that you call it a superpower. That's amazing. And I think what incredible clarity to kind of understand that I think about, by the way, you're not alone in driving your wife nuts. My wife, laundry list of things, probably and many of them are not diagnosed. But my wife will be the first person to tell you like, what is this guy's deal with some of this stuff? But I also recognize and I have those conversations with her all the time. I say, Hey, this thing that drives you crazy, just know that it's also like the thing that allows me to execute and I'm sorry. But I hope it helps you in some ways. No, that's tremendous. And then the last two bits here are I just want to give you the opportunity for anybody who listens to this, maybe just a quick little infomercial about your business, you provide procurement services as well as fractional CFO, which is a huge growing space. Just describe exactly what it is you guys do and then who you do it for. And if there's somebody out there, if there's a timing component, I'd love for you to kind of put that out there to the gods. Hopefully it comes back in the form of leads for your business.

‍

David Lopez

Thank you, Tyler. I appreciate that. Well, again, focus on manufacturing companies. What we do is basically drive value that's in the pipeline that nobody's looking at. And sometimes that translates into, hey, you already unclogged the pipeline. We got all this money or value in some way or another. Can you run this forward? We need that efficiency and that's where we switch gears to a fractional CFO type service where we have standards and review things on a monthly basis. But it only happens after people see, Hey, you unplugged this pipe, brought in X amount of dollars, turned this around, whatever it is. And people want to have that sort of confidence in their finance and that's where we just extend our service.

‍

Tyler Rachal

I do want to really emphasize something that I know about your business that I love is that you do have a component of it. This is not maybe the fractional CFO piece, but for the procurement piece is that you get paid based off of good outcomes for your clients. And so I really want to emphasize that point. If anybody's considering working with David, just know that that's a great way to start.

‍

It's one of the trickier things I think about as a business owner. I'm always thinking about how can I really remove the barriers to entry for someone to really work with us and get that value. And you just do it. So, highly recommend anybody reach out to David and you're in a great town. He's based in Austin, which leads me to my last question. You don't have to give out your home address here, but if someone's looking to find you digitally, where can they find you and what do you want people to hit you up about? Not sales propositions, I'm sure other stuff. So what do you want?

‍

David Lopez

Well, they can look us up on our website, summa.consulting. Or they can send an email to contact at summa.consulting and we'll be happy to schedule some time. There's also a link in the website to schedule time with me. It's a 30 minute discovery call. And yes, like you mentioned, we only get paid if we bring value. And usually we target that to be a strong ROI, so 8 to 10x to the client. And if we don't find any value and everything's running well, we'll tell them and congratulate them. But if there's opportunity, we only engage with clients that have the potential to get a 10x return from our services.

‍

Tyler Rachal

Very cool. Well, thank you so much, David. Again, David is the founder of Summa, which I lovingly mispronounced as Sum-ma, which just tells you everything about my experience in academics. I was never anywhere close to Summa Cum Laude. But I would just say hit up David if you want some of them savings and or ROI and value in the pipeline. David's your guy. 

‍

Thanks so much, David, for being on what works. I really enjoyed it. And I hope to bump into you the next time I'm in Austin.

‍

David Lopez

Thank you Tyler. Of course, please do. Total pleasure chatting with you, Tyler. This has been fantastic.

‍