Why Most PE-Backed Companies Are Invisible to AI Search

In this episode, Alex Rawlings speaks with Shiv Narayanan, CEO of How to SaaS, about how private equity firms can use marketing and AI as value creation levers. They discuss why many B2B companies underinvest in marketing, how AI is changing buyer behavior, and why brand authority and content are becoming critical for growth.

Timestamps

• 00:03 – Introduction to Shiv Narayanan and How to SaaS
• 01:55 – Common marketing mistakes in PE-backed businesses
• 04:15 – Finding the right marketing strategy and spend
• 08:06 – How PE firms should assess CMOs
• 12:49 – AI as a value creation lever
• 14:40 – How AI search is changing buyer behavior
• 16:02 – Why brand authority matters more than ever
• 17:54 – AI agents and the future of marketing teams
• 20:20 – The importance of investing in content
• 22:44 – Why podcasts and video are growing in B2B marketing
• 24:22 – The risk of overusing AI-generated content
• 25:21 – Shiv’s books and final advice

Key Takeaways

• Many B2B companies rely too heavily on sales and underinvest in marketing.
• Strong CMOs focus on revenue, forecasting, and enterprise value creation.
• AI platforms like ChatGPT are reshaping how buyers research solutions.
• Businesses need strong brands and quality content to remain visible.
• Podcasts, YouTube, and thought leadership content are becoming essential.

Raw Selection partners with Private Equity firms and their portfolio companies to secure exceptional executive talent. We focus on de-risking executive recruitment through meticulous search and selection processes, ensuring top-tier performance and long-term success.

🔗 Connect with Alex Rawlings on LinkedIn https://www.linkedin.com/in/alexrawlings/
🌐 Visit Raw Selection www.raw-selection.com

Transcript

00:03
Welcome back to the Rule Selection Private Equity Podcast. Joining us today is Shiv Narayan, CEO of HowtoSAS. These guys work with private equity investors as they're buying B2B companies and help them scale from a marketing perspective. What we're going to dive in today is marketing and the understanding of that, what's coming and how AI is disrupting it, and how you guys can begin to leverage

00:29
the needs within private equity BAT companies for scale and growth from marketing lens. Let's dive in. share with us a brief insight to you, Yeah, Alex, thanks for having me on the show. I run a firm called How to SaaS. We work primarily with private equity investors as they buy technology or B2B companies, and we help them scale on the marketing side. I hope how we kind of got into this is

00:57
Previously, I was the CM of a software business. We sold it to private equity and through that, basically uncovered that a lot of B2B companies are under leveraged on the marketing front. ah Many companies grow into large businesses, 10 million, even a hundred million dollars plus based on sales. And when I say sales, I mean like a traditional sales model where you have account executives or business development reps that are setting up the calls. And you can see founders scale companies to several different levels just by following that playbook.

01:26
expanding their sales team and all the while the marketing team is  ignored or understaffed or under invested into and there's just a lot of value left on the table inside these businesses. So  that's really what we help these companies resolve and we work with the private equity investors as they buy them because they're trying to figure out where are all the value creation levers  and they come to us and they say, okay, help us build a value creation plan for these companies to help them drive more pipeline and revenue for marketing efforts.

01:55
So what is one mistake that you see private equity or portfolio companies making and what would you suggest to correct them?  Yeah, in most cases where we're coming in, there is some type of marketing happening, but it is more sales support. They're doing sales enablement work, they're doing trade shows, they're doing events. A lot of companies run this type of a playbook. And even when they are investing into more modern techniques like digital  or inbound, like paid media, paid search, paid social,  SEO content, et cetera.

02:24
There's not enough of a focus on the data side to figure out what's working and what's not working. So many times we have audited companies that are a hundred million, 200 million plus, and they don't have a clear idea on what's working or what's not working. I'll give you an example. We had one client come to us. They took a public company private and they said, we need to cut $25 million in spend without losing any revenue. Can you help us figure this out? We went and did a bunch of analysis and we found that there was way more than that in waste inside that business. So.

02:53
There's just a lot of costs that are on the income statements of these companies in the marketing budgets that aren't actually, that isn't actually making a big impact on revenue. And not enough people are taking the time to focus on the data to figure that out. And then I'd say in the last 12 to 18 months, that has become more amplified in a world with AI because some of the  even newer channels like digital channels are becoming less effective because AI platforms are usurping the effectiveness.

03:19
of those channels as well. And the buyer journey is changing. so  companies have to almost like readapt their and reorient their businesses all over again. And the more traditional companies haven't gone even through  the more foundational steps. So they kind of have to go through two transformations at once. So you mentioned that there's costs on the  Bound Sheet that there isn't impact in the revenue. What are those? What are the typical costs that you see? Is there similarities? Is it all very unique?

03:49
It's always, it's unique, but they fall into similar buckets, if you will. So I'll just say there's like four major types of mistakes. Number one is having the wrong focus areas or the wrong strategy per se for a particular business. If as an example, you're an enterprise sales and your average deal size is over $100,000, you need to focus on more...

04:15
enterprise channels. So that might mean account based marketing. It might mean focusing on sales enablement or customer marketing or partner selling. A lot of those companies are not investing into these channels the way that they should be. So I'd say the wrong strategy is a problem. And then the flip side could also be true. Let's say you have a very low, uh low deal size or deal value. It could be that you need to focus more on inbound channels like paid search, like paid social, like content.  And those companies are not investing enough into the content or SEO side or paid media side.

04:45
to drive inbound traffic. So that's bucket number one. Number two would be  having the wrong amount of spend in  different areas. And I see this a ton in companies where they  are spending on marketing, but they're either underspending  or they're overspending. And when you kind of see this,  like  in a lot of companies, the problem is that there's not enough of a focus on trying to figure out like,  what is the...

05:13
efficient frontier for this business to actually scale its marketing efforts.  Because that's the question we're really trying to answer.  The two hardest questions to answer in marketing is how much should we spend and who do we need on our team? uh And  in order to answer that, you need to figure out like, yes, you could spend money that's like  10X what the next competitor is doing, but then you'd be wildly efficient in a lot of different markets. So in each market, in each company,

05:42
there is a number at which that is the right amount to spend and the rest of your spend should go to other activities, other departments, other types of value creation levers. And so figuring out, are we spending the right amount? Are we underspending? Are we overspending? Third would be making sure, do we have the right team? And in a lot of cases, like I mentioned, companies are understaffed or they have the wrong people on the wrong seats. Often we're asked, like, do we have the right CMO to take this

06:11
to take this company to the next level.  And  sometimes companies don't have the right leadership. Maybe they have a director of marketing, maybe they have good subject matter experts, but not someone that can kind of step back and say, okay, here's how marketing and sales connect together. Here's how we need to tie in our work to our financial projections or revenue projections. Here's how it connects to what our investors care about.  Especially if they have underwritten a thesis, they're beholden to certain covenants as part of a deal structure.

06:40
They need to hit certain revenue targets to  show growth or hit rule of 40 and all these other numbers. A lot of marketing leaders are not doing that. So having the right team with the right leadership and then  that leadership needs the right subject matter experts or team members to actually execute on the value creation levers  that are available to the business. And then finally, I would say having the wrong execution plan because day to day, a lot of marketing teams are focused on tasks or keeping the trains running on time.

07:08
But there's a bigger question of how do you actually drive enterprise value and which  items will drive the most amount of enterprise value. And we notice that all the time where teams are just focused on the wrong areas. So you could go a quarter or two quarters or even a year  and really not much has happened in terms of more pipeline or more revenue or  more retention or more growth overall. So  that's kind of, I would say the central things. then inside each business, what does that look like? It looks very different  based on whether you're an enterprise business,

07:38
in a different vertical or if you're in a different stage of cycle as a company as well. So there's lots of tackling that and there's lots of nuances that I'm sure is going to come out of it. we'll start, I want to kind of look at the value creation work that you mentioned and looking at how companies can lever that better. But firstly, let's look at the CMO stuff because my take on the Chief Marketing Officer.

08:06
is that it can be a  kind of a hidden performance role  in a lot of companies, whether that be PBAT or not. What is your take on, and when I say that's because they can kind of hide behind the magic of marketing, of it takes time, we're not able to see it, we can't quite see all of our customers pointing through and from a B2B, there's lots of influencing, et cetera.

08:31
What's your take on the kind of key metrics, and this may differ from business, but what's your take on the kind of CMO role, how private equity should be looking at their role from a measurement to prevent them hiring the wrong people, as you'd mentioned, having the wrong people in the wrong seats,  but this so they actually know what the right person looks like. Yeah, getting this person in the seat right is critical. And a lot of  marketing leaders don't completely understand how private equity thinks, right? Like some of the things I just mentioned,

09:00
What is in the investment thesis? What are our revenue projections? Are there any covenants that we're beholden to? Like all of these things affect the overall context of the business and affect how the marketing leaders should be operating or what they should be prioritizing. As an example, if you have just been acquired or you've just taken on an investment from a growth equity investor,  the behavior at that period looks very different to if, let's say, the plan is to exit the business in the next 12 months.

09:28
which is different than if you're integrating multiple companies together as part of a platform.  And so  the best marketers do their, think the first step that they do is they try to understand this context.  And as they understand the context, as they understand the financials, the thing that they're bringing back to the board, and I often talk about what is a great board meeting look like that is led by the CMO when they're giving an update, there's like eight or nine things that they need to focus on. Number one, they need to give  a status update on the overall performance.

09:57
How much do we have in terms of pipeline, bookings, revenue? What's our cost of acquisition? What were our close rates? Which deals did we win? What did we lose? And what did we learn from that? Number two, you want to talk about overall funnel metrics, like your leads, MQLs, opportunities, and looking at conversion rates throughout that and what mechanisms may be improved, what got worse, what the reasons are for that. Then you want to go into channel and campaign performance and really be able to understand these three channels are performing better and these...

10:25
two or three channels are performing worse. And here's why, and here's the overall contribution to revenue from each channel. Then you want to talk about adjustments you want to make.  How is budget being reallocated? What's being scaled up? What's being scaled down and why? Using data to back that up. You want to update your forecast so that you can tell the board like, here's our revenue projections. Here's what we expected to contribute from marketing. Here's what we actually contributed. And so here's how we're adjusting the forecast going forward. And then finally,

10:53
what are the people and org changes that need to be made in order to be able to reach those adjustments and be able to scale going forward as well. And so if we follow that type of a structure in a board meeting, there's no way that marketing would not have a successful conversation with the board. And there's no way that marketing wouldn't get more budget. But what ends up happening is that marketers kind of hide behind these vanity metrics, which is very frustrating for CEOs  and revenue leaders and for  board members, because what they're trying to figure out is like,

11:21
I have X amount of dollars to allocate. Should it go to product? Should it go to sales? Should it go to marketing? Should it go to CS? And being able to answer some of these questions brings transparency and helps everybody make the best possible  allocation of resources. And that's how marketing solely over time should get more budget. Last thing we're saying here is that no matter what vertical or industry that you're in, marketing needs to have a seat at the table to drive more revenue. But because marketers can't tell this story,

11:50
Inevitably over time, the board member goes, well, I'd rather give my limited budget to sales to hire more sales reps because at least I know they're going to dial for dollars and each rep is going to bring in this much revenue. So it's kind of easier to plan that. But because marketers don't tell the story over time, marketing doesn't have enough budget. And you can have a sales team of like 50 people and still three marketers on the team. Sorry to interrupt. Just a quick mention of a longstanding partnership with Grata. As you all probably know, the private equity scene is constantly evolving.

12:20
And Deal Flow is moving now to proprietary and data-driven processes. Grata provides you with the data and information of over 7 million private companies. So if you're looking to improve your proprietary Deal Flow and improve the data access, then reach out to Grata today. Now back to the podcast. Okay. So pivoting from uh marketing to artificial intelligence,  how can

12:49
private equity portfolio companies use AI as a value creation labor? Yeah, there's two different ways to think about this. There is the actual buyer perspective, and then there's what we can do organizationally. So I want to start with the buyer side. I just came up with a book. It's called AI Marketing Blueprint, and it talks a lot about this. And the idea is that historically, if we look at buyer journeys, there is

13:17
places where buyers learn or educate themselves before making a decision, especially in an environment where they're making  B2B decisions  or enterprise level decisions. uh They are engaging or talking to people  inside companies in the form of demos, talking to sales reps, visiting websites, reading review websites, being at conferences. Like there's all these different ways in which buyers are

13:45
self-educating and figuring out is this the right solution for me? Like as an example, if you were looking for CRM software, you would likely do a ton of research on Salesforce or HubSpot or all the other options that are available to you. What's changed in the last 18 to 24 months is now that AI platforms are emerging, where people do this self-education has shifted. So 18 months ago, you may have done a full Google search

14:13
on CRM software or best CRM tools, and you would have gone to the individual websites of all the different tools, signed up for all the demos, maybe read a bunch of reviews on sites like Keptera and G2 Crowd, uh maybe even  looked at the reviews on certain  software recommendation websites. And then at some point you would have made a decision or at least like  built an internal business case and then decided how much budget you have and made a decision.

14:40
Now a lot of that education can actually happen  on the platforms themselves. So instead of, for example, doing a Google search, you would just ask Chachi PT like, Hey, I have a 25 person company. I have five sales reps. I need a CRM system to manage this many contacts. need these features,  which solution is best for me. And if Chachi PT or Gemini or Claude don't recommend your solution, you are kind of invisible to the customer because

15:07
Previously, they would have been doing a Google search and going to all individual websites and reading their solutions pages or pricing pages and building this  education for themselves. Now, ChatGBT does it for them. And so there's like this gap in the market where over time, more and more customers are going to be educating themselves.  And right now, it's like ChatGBT has like  20 to 25 % of the share for certain types of queries. They're called...

15:35
And there's four types of queries. There's navigational queries. If you're looking for a link, there's informational queries. If you're actually trying to learn something, there's transactional queries. If you're trying to buy something and there's generative queries, if you're actually trying to create something and the informational queries is where a ton of value is sitting inside the AI search platforms because previously we would do all of this in the form of Google searches, now chat GPT is basically doing the research for us and coming back.

16:02
with the answers. And so over time, percentage of informational queries that happen on Google versus AI platforms is going to shift dramatically. So if you're invisible on these platforms, your business is basically at risk in terms of continuity and relevance. And I think more and more companies are experiencing this. Like we have a ton of clients and private equity firms that we've engaged with in the last year that have come to us and seen a 30 % decline in paid search volumes or an increase in terms of how much

16:31
paid traffic has cost or their organic traffic has fallen off a cliff. Like even when you do a Google search, there's firstly AI overviews that you see, then you have the paid media links and then you have organic links. And most of the time there's no  click on a search.  So people are coming, doing the search, reading the AI overview and bouncing off. They don't even go to a website. So in a world like this, what's really important is brand. The  stronger your brand is,

17:00
the more you're viewed as like an authority in a space or as an expert or the go-to solution, the more visible you will be to the AI platforms and the more you'll be recommended. And then over time, as a business, you're gonna start to see more branded traffic to particular businesses  and that direct traffic will convert into customers eventually.  It's worth noting like if six years ago we did an audit of a business and most of their traffic was branded traffic.

17:26
you would look at that as a negative thing because that would mean that they're not investing enough into marketing and all these other channels and campaigns, but that's going to change going forward because  more people are going to self-educate on AI platforms and then just directly come to your website when they're ready to kind of buy something or  to transact with you.  So that's the first piece is P firms, their portcodes and just companies in general need to make sure that they're visible  on these platforms. And the way to be visible is to invest a ton into brand and into content and

17:54
and just showcasing your expertise because AI platforms are trying to answer  one key question, which is what is the best answer to this query and who has the best answer to this query? And that's who they cite in their answers. The second part of it is how can companies  leverage AI to become more efficient? And here there's a ton of agentic work that can be done to almost reimagine the modern marketing team. So  let's say five years ago,

18:24
uh the atomic unit of a marketing team was a CMO, a demand gen leader, a content leader, maybe a data leader of some kind. Let's just say four people.  Now, theoretically, you could have one exceptional marketer and a couple of agents and maybe one  mid-level marketer, and they could kind run the same level marketing organization with automations and agents using Claude and a bunch of other skills that you can develop to improve your data tracking, run paid media projects.

18:54
or campaigns and be able to  create a feedback loop to improve those campaigns. So it almost causes,  it's caused companies and PE firms that we've worked with to say, what is the right size team now? And we talked about this earlier, like the key question is what's the right size budget and the right size team. So what is the right size team in a world where AI platforms and agents can help you rethink that how the modern marketing team should be structured. So I think this is something that all PE firms should be thinking about because

19:23
a lot of teams are at the same time bloated where there's one person doing one task over here, but it's repetitive and there's another person doing a different task over here. And if you have like an exceptional  AI powered marketer, they can kind of manage a bunch of this through agents. And then you have core marketers on the team that bring  creative skillsets and additional value on top of that repetitive work that is currently being executed on by junior marketers.

19:51
might have been in that. if we just think about, every company listening at the moment is thinking brand, yeah, I've heard it all before. Marketing, yeah, we need to invest more in that. No surprises, nothing new  from that perspective. AI, yeah, we've got a problem. Our SEO is coming down and now we've got  kind of SEO considerations within ChatGPT and Claude and appearing in all these things and the old content game.  What's...

20:20
Just keep things simple for people. What's one thing that every business should be taking from an actionable perspective to increase their brand? Yeah, I think investing heavily into content.  Like coming back to this idea that AI platforms, no matter what, will usurp search, more and more people will self-educate. And so  in  almost every market, you are going to see  a flight to AI platforms

20:49
for people to make decisions in terms of what is the right solution they should buy or how they perceive you.  so,  and even as something as simple as, let's say you  have, you  already picked the solution, you're gonna go with Salesforce. There are people that are gonna ask, chat to you, you'll a direct question like, hey, what type of success are other people having with Salesforce?  How long does Salesforce take to implement? How much additional expenses should I encounter if I decide to implement Salesforce?

21:18
how much annual maintenance will there be for Salesforce? I can create an entire library of queries that previously you may have checked Google, but there wasn't enough in terms of content for queries like this because there wasn't enough SEO search volume here. And because people are self-educating, they're asking questions like this.  So whatever your vertical, whatever your market is, thinking about the buyer, and even if we think about ourselves, like how many searches we make today on an AI platform versus Google,

21:47
It shifted dramatically in the last 18 months.  And so for companies investing into those types of assets  so that you can  answer some of those core questions that your ICP or your customer or your buyer might have, that is going to pay dividends long-term for whatever  industry you're in or whatever vertical you're in. And what's some of the things that people should talk about? mean, obviously I'm preaching to the converted here. We have the podcast, we have a YouTube channel. We have

22:16
Blogs that go out all the time, salary reports, market reports, the things that we know people click on are interested in when we're from an executive search perspective.  what's,  or simply what's the one thing that's providing the most amount of ROI? Cause every industry is different. Every business is different. What is the one thing you're doing that's working for you guys?  I think it's different in every industry. Like I can just speak for our own business. We have a podcast where we interview

22:44
private equity investors.  have a book or three books now that I've published that are on Amazon and you can consume it. We publish industry leading reports. We publish best practices on things like how to hire a CMO.  And so we're investing a ton in the content. I think what you're going to see in the next 12 to 24 months is more and more B2B companies will have podcasts. More and more B2B companies will have YouTube channels.  This is inevitable. And if you're not doing this for your company, there's a huge missed opportunity because there's only so much you can answer.

23:13
through blog posts and a podcast or a video, you can answer multiple types  of queries at the same time in a short period of time. And I think the other thing just to highlight is just, I think investing in the product in a way that it enables the ability to answer some of these types of queries because some queries require probably, like if you need certain types of generative queries answered, like let's say you're trying to build an image, that's why Canva has a plugin for ChatGPT that kind of works. uh

23:42
inside the native platform. So I think thinking about all of these avenues, whatever they are for each business, like the answer will be different. But I think you're going to see more and more companies doing this in the next 18 to 24 months.

23:56
And what do you watch, what do you read, what you listen to that you recommend others should check out? Shiv.  I mean, for me, it's just staying on top of  all the different releases that are happening with the different technologies that are constantly emerging and trying to contextualize it into how does this apply to a particular business?  And coming back to some of those core questions, it's so easy to get distracted. um And I think

24:22
Discernment is very important right now. Like we have some clients that come to us and say,  hey, why can't we just use chat GPT to create all this content for us? And we're always advising them not to do that. You can use AI platforms to speed up the process, but really in this market, one of the huge things that's important is authenticity and originality.  And  standing out from the crowd, like if you go on platforms like LinkedIn right now, it's a bunch of regurgitated content that is built on these AI platforms. And  I think what you're going to see more and more of

24:52
is a rise or a need or desire from the market for people that are authentic and there's an actual person that they follow uh and they kind of consume content from.  And  that will be ahead or have an advantage rather over companies that are maybe almost over indexing on this stuff.  And at the same time, just making sure like as capabilities emerge, coming back to these four questions of how do we set the right size budget or what does the right size team look like?

25:21
for whatever business that we're  working on. Makes a lot of sense.  And you mentioned three books you've written. If you can share with us the titles of those, you mentioned getting them on Amazon. And then also, if anybody wishes to reach out to you post this podcast, how best they do so, Yeah, my latest book is called the AI Marketing Blueprint. The last two were exit ready marketing and post acquisition marketing.  Very hyper focused on the private equity space and transactions and how marketing can be used as an enterprise value driver.

25:49
And then the best way to get in touch with us is through our website or to me by email. It's shiv at howtosass.com. And if there's a firm that's interested in learning more and how we do work with other PE firms, we'd love to chat with them about that as well. Well, thank you very much for coming on to the podcast. Appreciate it, Alex. Thanks for having me. And as always, thank you very much to all our listeners. Until the next time, keep smashing it.