Kathryn Korostoff 00:11:23
So one of my problems is sometimes I see the future, but I see it too soon. And so at that point, I was looking to sell my research agency, because I could see that the research agency industry was starting to become more commoditized as new software and tools were coming in that made it easier for anybody to do online surveys or different types of statistical analysis. It really created just, you know, the barriers to entry were low. Yeah, we suddenly had all these competitors. The price competition was getting fierce, and I found myself competing with much larger companies for $20,000 contracts. And I’m like, This is not fun anymore.
You know, this is, you know, this industry, the market research agency business, is really becoming commoditized. And it was true, it was happening, although it took several more years before it really happened, yeah, statically, yeah. At least I got out early, and it was, it actually was a really great learning experience going through a transaction, and, you know, talking to different potential buyers and going through the valuation and, you know, due diligence, negotiations and processes. But ultimately, it turned out to be a really the company that I did end up selling to. It ended up being a really great fit. In fact, all these years later, four of my key employees from back then are still at that company.
John Corcoran 00:12:46
Wow, wow. And you actually, you’d become a member of EO Entrepreneurs Organization, and your forum was really helpful. As you went through that process, you’ve said.
Kathryn Korostoff 00:12:57
Yeah, you know, the EO forum experiences have always been amazing, both in my first round of being an EO back then and coming back more recently, my forum back then was just perfect, like we just had people from different industries, but a lot, you know, some of them had already had some transactions, and so there was just so much candid knowledge sharing and sometimes, and John, maybe you’ve had this experience too, like in your own life, your personal life, you know, other people own businesses, but sometimes the scale of the businesses are different.
The processes are different. I found that with my forum, and I think because of the EO requirements for joining EO, you know, everybody was of a minimum scale, so that they could really, you know, you know, have experiences to share with me that were really relevant and applicable and real world, as opposed to somebody who’s maybe read an article about negotiating transactions, which is great, but that’s not what I’m looking for, right?
John Corcoran 00:13:57
And then what? How is it going from running your own company to being an employee again?
Kathryn Korostoff 00:14:03
Well, I did have an earn out as part of it . About a third of my valuation was in an earn out.
John Corcoran 00:14:13
And I’m sure that you’ve heard this many times probably know what’s coming. I did not enjoy it.
Kathryn Korostoff 00:14:17
It was really hard for me to come to an organization where really awesome people like I’m still friends with some of the people there, and a really good organization, but it was really hard for me to give up control of some basic sales and marketing decisions. And I I will say one thing that when I have a transaction again, I now will know to be way more precise about what kinds of sales and marketing investments need to be made for me to be able to meet my goals, right?
John Corcoran 00:14:52
Because what often happens is you’re kind of hamstrung like you are. The company can dictate the company that acquires you. Update the way you do sales and marketing, but then you have to hit a certain number in order to earn an earn out. And it’s like, well, if I can’t control this, then how am I going to hit my earn out?
Kathryn Korostoff 00:15:08
Yep, and I, and basically I went from having, I, you know, I’d had two sales people and so to basically go to a situation where now I’m sharing sales people and their expectations of their work are very different than my expectations. I ended up having to do a lot of my own sales. Now, ultimately, I did. I beat my earn out goals. So I, in fact, was the owner of the company that bought it, where one of the owners had actually complained at one point about, you know, writing me all these big checks, you know. So, you know, it wasn’t that it ended up hurting me. It’s just that it made it unhappy.
John Corcoran 00:15:43
Period wasn’t a happy period for you? Yeah, yeah. So a couple years later, you end up starting another company. This is your company today. Research, Rockstar, what motivated that? And how did you decide to do it differently?
Kathryn Korostoff 00:15:55
When I was doing I did the ernet for a couple of years, and when I realized I was just like, I was done, I really needed to move, to move on, one of the things that I was really, really aware of was that I had developed, I was very fortunate. I had developed a very high end network within my profession. I knew a lot of the leaders of market research and customer insights and, you know, customer analytics functions at really big companies, both consulting companies and also at big brands.
And so I really knew, like, I have this amazing network in a very specific niche, you know, it’s a very niche space, but I really know people here, and I always had people who really appreciated my helping them understand how to do things best. I was always very eager to explain to people why we were doing a certain methodology, why, you know, if you do the methodology, if you have these steps in your methodology, you’re gonna get much better quality data. And I was always really passionate about that. And at the same time, when I had my previous company, anytime I wanted to send any of my employees for professional development.
That was in the days where professional development meant, you know, going to some, you know, hotel in Illinois, middle of nowhere, Illinois, for three days, and getting a binder this big. And, you know, being in a hot, stuffy room with 50 other people. And you know, there’s a fluff and the best experience, no, it was horrible. And so when I was getting ready to figure out what I wanted to do next, e-learning had already started to come to a lot of professions. It just hadn’t come to market research and customer insights yet, and I decided I was going to do it, even though I knew nothing. I had no direct experience with E-learning at all.
But back then, it was in the early days, and I was always fairly technical and into trying platforms. And even back then, there was some cool software. So that’s why I decided to take my network, take my expert, my subject matter expertise, and use it to solve the problem of boring training for people who are looking to advance their career and even.
John Corcoran 00:17:54
And digitally, right or online the pandemic so you look like a wizard, right?
Kathryn Korostoff 00:18:00
Because then the pandemic comes and all. So I was the only one. And to this day, actually, we still have the largest catalog of E-learning courses for the market research and customer insights profession. But back then, we were the only ones doing E-learning. And then there was one other company that started doing E-learning, but it was literally they had you read a textbook and then come online and do online quizzes. It wasn’t the video content, online interactive content and these and, you know, instructor interactions that were online, you know, all the cool stuff that you can do with e-learning.
John Corcoran 00:18:32
And also, for this company, you eventually figured out how to develop two sides of the coin, so to speak. I actually love your analogy for it. You said we want to sell umbrellas and sunscreen, so that if it’s a rainy day, I’ll sell you an umbrella. If it’s a sunny day, I’ve sold you sunscreen. So explain a little bit how you structured the company so it has two sides and one coin.
Kathryn Korostoff 00:18:56
Yeah. So, we started in the E-learning business, and that was going really well. And I was very, you know, again, I had a good network. So we had some really amazing early clients that were, you know, basically running their market research and insights teams through our training to upskill. And then I started to get clues from some of my clients that even though they were training their team members to do certain things through us, sometimes they just needed somebody to come and do that one task. So it wasn’t that they necessarily wanted to outsource their market research, but they might want to out task a specific aspect of it for a short period of time.
And so I ended up getting into the staffing business, and not permanent placement so much, but really like temporary staffing, like you need somebody for you know your one of your market research managers is going to be on maternity leave for three months, or you’ve got some big projects coming in, and you don’t need, you don’t want to hire more full time staff, but you definitely need extra hands on deck who can do certain specific things at a very high level. And so we started the staffing business, and it turned out to be that sunscreen.
And sometimes the staffing business is going really great and the training business is not going as great, quite candidly. And then sometimes it flips. So even though there have been some challenging economic times between the two sides of the business, and also, frankly, again, being just somebody who’s naturally frugal, we haven’t suffered?
John Corcoran 00:20:20
Yeah, I think maybe I was talking with someone about this, actually, last night. I think maybe part of the reason that more companies don’t develop in this way, having kind of two sides that will thrive in different market conditions, is because the market rewards us for doing a thing, right? So it might be, it rewards us for developing an E-learning catalog, and we’re selling, you know, courses and licenses, and it’s doing really well. So we do more of that, more of that. We don’t want to invest any time into the staffing piece, but then the market changes, and then we have to catch up, and we have to build that other side of the business. And so I think maybe that’s part of the reason that more companies don’t have a balance between the types of services that they provide or the offerings that they have.
Kathryn Korostoff 00:21:07
Yeah, I totally agree with you, and some of it is also just the practical logistics. Because sometimes, you know, it can be painful. Frankly, you know, until you get to, you know, maybe 20 million a year or more in revenue. You know, it can be very painful to have two divisions that actually have different, you know, cash flow realities and different cost realities.
John Corcoran 00:21:32
And you’re only naturally thinking like this division is not paying for itself. I’m subsidizing it, you know.
Kathryn Korostoff 00:21:38
And that there have been times where that has happened, you know, in some extreme periods of time, you know, over the years, where one part of the business was kind of subsidizing the other part of the business, but, but, but again, sometimes it has flipped. And I will say, you know, it’s not, you know, there’s the benefit of, you know, when one business is up, the other business is down. But the other thing that’s really good, of course, is the cross selling. You know, anytime you run a business and you’re looking to make more money, and of course, you know, revenue growth is always wonderful. You know, we’ve all heard the saying, right? There’s only two ways to make more money. Have you heard this?
John Corcoran 00:22:19
One more or increased prices, right?
Kathryn Korostoff 00:22:21
So you sell, it’s okay if I use foul slightly foul.
John Corcoran 00:22:24
Go for it.
Kathryn Korostoff 00:22:27
You can either sell new shit to the people you’re already selling to, where you take the shit you’re selling and sell it to new people.
John Corcoran 00:22:34
Yeah, I like your way of putting it better.
Kathryn Korostoff 00:22:39
You know, because, you know, and for when you have the two divisions like the cross selling opportunities are honestly be very, very powerful, and I’m not even leveraging it as much as I should, honestly, but the cross like I’ve absolutely had some of my biggest staffing clients came in initially as a training client became a staffing client, and then also vice-versa.
John Corcoran 00:23:02
Yeah, you’re more likely to keep the clients for a longer term than if you serve their needs in that moment, because then those companies, even larger companies, evolve and change over time.
Kathryn Korostoff 00:23:12
Yeah, but they know that we’re the experts in market research and customer insights, no matter if they need training or staffing or whatever, you know. And sometimes people just call to kind of pick my brain about something, and I’m, you know, I’m always happy to do that with my clients. I enjoy those kinds of conversations where we’re really brainstorming about a real problem that they’re having, whether or not it maps neatly to selling them service, you know, training or staffing. You know, it helps them, and it helps me to actually just think through the problems.
John Corcoran 00:23:41
Now, when you went into E-learning, I’m sure you weren’t envisioning one day there’ll be a global, global pandemic, and I’ll be perfectly positioned for all this. But what was your mindset like, you know, in March of 2020, as things started to unfold, as the world started to shut down, you know, were you thinking, Okay, I’m prepared for this, or Were there moments where you’re like, Oh crap, maybe I’m going to lose everything that I built.
Kathryn Korostoff 00:24:07
It started off amazing.
John Corcoran 00:24:11
Like, it started off amazing, interesting.
Kathryn Korostoff 00:24:11
Started off amazing because suddenly people were at home, and we werE-learning. And so a lot of employers were telling their team like, you might remember this, but when the pandemic happened, a lot of employers really became very concerned with measuring employee engagement. It became a really big thing, making sure that employees were engaged, even though they were working from home. And that’s a huge topic we could talk about for hours. But a lot of that work was, you know, happening. And so the interesting thing was that then they were part of keeping their employees happy, and giving them more opportunities to learn.
And so a lot of our, you know, training clients actually amped up how much training they were doing, because our training could be done 24/7 no matter where they were located. So that really helped a lot. Thought that we were already in that position. A funny thing though, that did happen was, after about six to eight months, we actually saw, like a burnout, negative trend where it seemed like people were getting zoom burnout. And so, like, the first six to eight months of the pandemic are the E-learning. Business was amazing. Was booming. I felt guilty. Honestly, I felt guilty.
John Corcoran 00:25:25
Yeah, you probably knew other business owners that were really suffering during this time period. Yeah, yeah.
Kathryn Korostoff 00:25:30
I mean, I have friends who had business services, not in my sector, but in other areas, who literally closed, yeah? And it was I felt guilty, like I’m doing incredibly well. But then, after about six or eight months, a weird thing happened, where people did start to get burnt out on actually participating in some of the real time events, because our E-learning is can be there’s mostly on demand components, but there’s also some real time components, because we do, I myself and the other instructors, we really believe that real Time interaction between the expert instructor and the students is a great way to really enhance E-learning. And after about six or eight months, we started seeing the attendance of those real time events just dropped off. People were still our students, but they started to rely solely on the on demand content and not attending the Live Events anymore.
John Corcoran 00:26:21
Interesting and so did you have any adjustments after that? There are a lot of companies that had like a, you know, there’s all these different curves for companies as a result of the pandemic. Some companies, you know, got, you know, went down in the months following, and then it shot up. And then other companies like you shut up, and then it went down. What was the you know, 2122 23 What was that like for you?
Kathryn Korostoff 00:26:45
Yeah, so I would say that the first, you know, while we saw some changes in our customers behavior, our revenue was actually very strong. Weirdly enough, since we’re all among friends here, I will say last year, oddly, was a rough year. It was our lowest growth year that we’ve had.
John Corcoran 00:27:03
And why do you think that was?
Kathryn Korostoff 00:27:05
Well, from the analysis that I’ve done, some of our clients are big brands that have market research and insights teams or customer analytics teams that work with us, and some are market research agencies. And in the United States, there’s over 100 market research agencies. You all have heard of the, like, the really big ones, like, you know, Ipsos.
John Corcoran 00:27:24
And forester, I guess, yeah, yeah.
Kathryn Korostoff 00:27:26
There’s the really big guys, but there’s, you know, 950.
John Corcoran 00:27:32
Smaller ones.
Kathryn Korostoff 00:27:34
Yes, you know that are like, five people to 50 people, a lot of them. And there was a lot of consolidation there. Kind of like the trend that had started way back when I got out of being a full service agency actually started to hit, for some companies, worse in the last year, you know. So that trend had been happening over all of these years, but last year was really tough, and a lot of the market research agency clients that we’d been working with either, you know, there were mergers and acquisitions. Some of them are just operating on a shoestring now, bare bones, just, you know, barely surviving. And so we were a little over reliant on a few of those clients. Business, 101, right. Don’t let the customer base become too concentrated. Because, if you’re really, you know, that just puts you at risk.
John Corcoran 00:28:19
Oh, your eggs in one basket. Yeah, and then, so now we had mentioned earlier about AI and that affecting your industry, and I see you light up. You’re excited about it. There’s a lot of business owners that are really fearful of it. Why are you excited about it and not fearful?
Kathryn Korostoff 00:28:36
I don’t know. I guess I love change and I love technology. You know, as a kid, I was a big reader of science fiction too, right?
John Corcoran 00:28:45
Science fiction is here now, yeah, yeah, yeah.
Kathryn Korostoff 00:28:48
Arthur C Clarke, I’m sure is, you know, is watching, yep. So there’s, you know, to me, the potential is just enormous. And one of the things that’s so exciting is that AI makes it easy to learn about AI, you know. So I have, like, used different, you know, chat, GPT and some related tools to basically, say, write me an article. Explain to me specifically, how does one train a large language model with your subject matter expertise? Whatever it is that I’m thinking about that might be useful, and I get an article, I and that gets me started. So it’s kind of an ironic sort of situation, that it’s the technology that is helping to advance the technology. But one of the things that you know, as soon as you get past chat gpt, I think a lot of people get stuck on chat gpt because it’s sort of in your face all the time, yeah, certainly.
John Corcoran 00:29:42
The one that’s gotten the most attention. Yeah, kick everything off.
Kathryn Korostoff 00:29:46
Yeah. I totally love it. But I think that sometimes before people learn enough about AI and generative AI and LLMs, it’s very easy to have chat GPT sort of give you sort of blinders, because you think that. Oh, my applications of what I can use AI for are like chatgpt, but it’s so much more than that. And so just with, and I’m no AI expert, but just even with, you know, reading and attending a handful of webinars and stuff, I quickly identified some opportunities. And I think that, you know, what I find is that a lot of people are in that position of, you know, well, you have some organizations that are like, we’re banning it. We’re too concerned about privacy, we’re too concerned about our employees maybe using it in ways that actually could degrade the quality of what we’re doing.
So you have some companies who are just not in the game right now. And then you have this continuum of companies that are either doing really basic things that are really about individual productivity with AI, so maybe the company that does allow their employees to use chat gpt or Hemingway or Grammarly for writing and editing and that sort of thing. And then you’ve got the visionaries over at the other end of the continuum, you know, the organizations that are really thinking about, Okay, well, what if I had my own LLM, what could it do? Or what is even better is, you know, what are the problems?
You know that we do think we could potentially automate. What would that look like? And so the other cool thing out there is that there are so many companies out there now that are doing AI based products that just even go onto a handful of websites. I pretty quickly learned that it would be very, very feasible, almost shockingly feasible, to develop a custom LLM based on training. It is basically on our training content.
John Corcoran 00:31:41
So we’ve got, you know, when you get fed it in all of your E-learning courses, and it can be trained on that, and then you can ask it a question, yeah, it’s amazing, and it becomes an instructional asset.
Kathryn Korostoff 00:31:48
So the proof of concept we’re currently testing is basically role playing. So one of the skills if you’re going to go into market research and customer insights has to do with research interviewing. Just like you’re an excellent interviewer of guests, people have to learn how to be an excellent interviewer of consumers to get their feedback on products or brands and things like that. Behaviors and training people to be great research interviewers is hard, because currently there’s some certain amount of book training, but then they have to actually start interviewing human beings and having that experience. That is a huge jump from reading a book and doing some online quizzes about what are the best practices for research interviewing to being with a real human being, right?
John Corcoran 00:32:32
But being able to train using an AI that’s pretending to be a fictional market participant, consumers would allow them to kind of role play before they get into an actual experience, exactly.
Kathryn Korostoff 00:32:48
So now we’ve got an AI tool that has a few different personas. We’ve got different names for them, and some, some of the personas are chatty and friendly, and some are more difficult to interview. And so this, we’re actually beta testing it right now, and people are into, you know, they’re conducting an interview with the AI consumer, and then not and then having that real, pretty realistic experience. The conversation is very, very high quality. And then they also get instant feedback.
So they’re getting that sort of, you know, oh, you know, these are the things you did well to establish trust. This is something you could have done better on here. You should have probed more, because the answer that you got from the consumer was too superficial. So really enhancing the E-learning experience, and it’s honestly John, it’s gonna change. Everything is not only how powerful that experience is, but how easy and inexpensive it was to develop.
John Corcoran 00:33:52
And It’s hard to foresee the future. But do you see humans always being the one doing the interviews, or do you see it ever getting to the point where the AI will be interviewing the consumer. Oh, it’s definitely.
Kathryn Korostoff 00:34:03
Gonna be both for the foreseeable future, and some AI or AI, like, really more sort of Boolean logic driven based automatic interviewers have been around for years. They weren’t, I think, interactive enough to be used and really adopted widely. But clearly that’s going to be happening more. And definitely some of the online qualitative platform companies are already now, they’re, you know, developing along those lines. There are some concerns, though, because it’s going to vary a lot by who you’re going to be doing the interviews with, you know, generationally, you know, some people, some groups, some cohorts, are going to be very comfortable being interviewed by an AI persona. Some won’t.
John Corcoran 00:34:49
Some might be, might be more open to it, so others will get shut off from it, just like any, any human you’re talking to. Yeah,
Kathryn Korostoff 00:34:56
I gotta tell you that the young adults I know these days, I bet a lot of them would. Rather talk to an AI persona than a human being?
John Corcoran 00:35:03
Yeah? I mean, rightly or wrongly, I know people that have used AI as a kind of quasi therapy like to help them talk through or think through challenges they’re going through.
Kathryn Korostoff 00:35:12
Yeah, I’ve never done that, but I did find myself saying thank you to Siri the other day.
John Corcoran 00:35:20
Our overlord.
Kathryn Korostoff 00:35:23
I don’t know. I just said, thank you. I was like, Wait a minute.
John Corcoran 00:35:26
Why am I doing that?
Kathryn Korostoff 00:35:27
Come out of my mouth?
John Corcoran 00:35:29
That’s funny. Well, this has been great, Kathryn, I love hearing your story and your journey in this industry. And I didn’t warn you. I usually wear my guests beforehand, but I didn’t warn you beforehand about my last question, but I think you can handle it. So I’m big fan of gratitude. I’m a big fan of expressing gratitude, especially to those who helped you along the way. Especially love it when people mention peers and contemporaries. That could be others in your industry, it could be other EO members. You mentioned that as being having a big impact on on your life. And I love to hear stories about that sort of thing. So there any particular peers or contemporaries that you’d want to shout out and thank for helping you in your journey?
Kathryn Korostoff 00:36:12
There are many. But for some reason, the one that’s jumping right into my mind is actually a mentor I had about, oh oh, gosh. A long, long time ago, it was before I started my first company. I was doing market research at Motorola, and the division was Codex. It was C, O, D, E, X, here in Massachusetts, and the vice president of marketing was a gentleman named Bob Stearns , who was just brilliant, and he was a great mentor to me, and he was one of those people who had a way of tricking you into realizing things for yourself.
John Corcoran 00:36:53
If you know, what did he do? Yeah, how did he do that? I’d love to hear that.
Kathryn Korostoff 00:36:57
So one of the things he did once was just, it’s going to sound really silly, but it really was amazing. I had to make a very important decision, and he and I wanted me to make the decision. He was giving me this opportunity to make a big decision. And I was very young, and it was really kind of him to give me this opportunity. And so I told him, Well, it’s either going to be A or B. I narrowed it down to A or B, and so he pulled out a coin, and he goes, then if you don’t have a decision, we’re just going to flip the coin. He flips the coin, he peeks at it, and he says, Which one do you hope it is? And he was right, because as soon as I flipped in the air, I was like, oh, B, A, B, A, B, interesting.
John Corcoran 00:37:37
That’s great. That’s great. I love that. That’s a great tip. Kathryn, where can people go to learn more about you and Research Rockstar first of all.
Kathryn Korostoff 00:37:48
I’m always happy to network with people, other entrepreneurs, other people in market research and customer insights. So you can find me on LinkedIn. I also have a video podcast series called Conversations for Research Rockstars on YouTube. It’s the longest running podcast series for market research, and we have several videos now that have had over 15,000 views. It’s also available as audio podcasts on your favorite audio podcasting platform. And then the company is researchrockstar.com
John Corcoran 00:38:17
Awesome. Kathryn, thanks so much.
Kathryn Korostoff 00:38:18
Thanks, John.
Outro 00:38:22
Thanks. For listening to the Smart Business Revolution Podcast. We’ll see you again next time, and be sure to click Subscribe to get future episodes.