Recently, Human Element Managing Partner, Ben Lorenz, and Shopware President and GM, Jason Nyhus, got together to chat about the state of tech talent in today’s market. We recorded their conversation which outlines an exciting opportunity for manufacturers who are ready to commit to building out their own tech teams and opens up new opportunities for those who are looking for tech jobs.
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Full Transcript
Ben Lorenz: Hi, everybody. Ben Lorenz here with Human Element. I’ve got a great opportunity today to have a conversation with my friend Jason Ny hus from Shopware. Hello. How are you doing today?
Jason Nyhus: I am doing wonderful. Thank you so much for including me.
Ben Lorenz: Yeah. Awesome. We’ve been doing a sort of podcast series about things that affect our industry lately. One of those things is tech layoffs. And, you know, we build, you know, e-commerce applications for companies. We also build on the Shopware platform. We are partners with your company, Shopware, and we talk to a lot of manufacturers in the industry. And so as I’ve been sitting at a couple roundtables with manufacturers, I’ve been thinking of these two concepts of where did all the tech jobs go and how can I get a new one, right? And then another concept of I’m a manufacturer and I’m looking for tech talent and where the heck is it? And so I thought, who better to have helped me answer some of these questions than you? Because you also interact with all of these manufacturing companies on a daily basis. You know, you’re talking to hundreds or thousands, if not, you know, throughout the years. And so I thought this would be a good opportunity for us to explore these two topics. And so maybe let’s just start off with like, where did all the tech jobs go? We’ve had a bunch of layoffs that we’re seeing happen in software development. What’s happening?
Jason Nyhus: Yeah, well, first of all, Ben, thank you so much for having me on. And you’re exactly right. You know, we live in the world where we’re in boardrooms and with meeting with these manufacturers and they’re all trying to figure out what’s next, how they’re going to reinvent themselves, how they’re going to go more digital. And so this is top of mind for these non-tech companies to become more tech center. And you’re exactly right. The tech market globally is down about 65 percent from peak a couple of years ago. So the tech jobs have been slower to be effectively opened. And there’s been a lot of layoffs by big corporations for a variety of reasons. Obviously, AI is playing a big role in this, but also there’s a lot of uncertainty in the economy. So I think it’s a multifactorial reason. But I think the net effect of it could be really, really positive for manufacturers.
Ben Lorenz: Yeah. On the note of that sort of as layoffs have occurred, one of those sort of pressure points I’ve seen is the investment organizations that have invested heavily in companies like, say, big commerce or, you know, software companies where they’re expecting a return. What we’ve seen from a systems integrator standpoint is that pressure from those investment organizations on the software company has forced them to become more efficient and start thinking about profit margins in ways that they hadn’t been thinking about previous. You know, they were thinking about market share, capturing, you know, things, you know, quickly and really getting traction on their platforms. And now they’re in sort of like streamlined mode.
Jason Nyhus: You couldn’t be more right. In fact, a lot of this goes back down to interest rates. I mean, United States
Ben Lorenz: specifically
Jason Nyhus: came out of a zero interest rate environment for an extended period of time. And now interest rates are, I’m not an expert, but six, five, six, seven percent depending. And what that basically means is the room for error is gone. And so anybody who is borrowing money to invest in growth, well, it’s expected to now see a better return to get a return on that invested capital. So the net effect for software companies is find ways to do more with less. And again, the big positive here is the people that are in dire need of more tech now have access for the first time in my working career to really have a strong right to win, to win that talent. So this is kind of the manufacturer’s moment.
Ben Lorenz: Yeah. So let’s dig into that piece a little bit. So let’s pretend that I’m an ex-software employee. And I know all the lingo, right? I know what an ERP system is. I know what a CRM system is. I know how they work. I know the basics of software development. I might not be a software engineer, but I have a lot of technical skill and acumen and awareness. I’ve just never thought about working for a manufacturer or a distributor or something like that. Yet my skills really translate. I just don’t know it. Do you know what I mean?
Jason Nyhus: A hundred percent. And in fact, I used to run this agency at my previous company. And it was really interesting when you see employees at a digital marketing agency go client side. They call that going the dark side. And that was fairly common in agency and system integrators to go to the dark side or go to the client side. but we have never really seen it in tech at the same level as we did in those other categories. So I think this is probably that moment that enables that shift because you’re right, if you know what an ERP and a CRM and an e-com platform and a CPQ and all of the alphabet soup, you immediately can walk in, help assess the situation and really recommend paths forward for manufacturers. And I’ll say this is one of the biggest challenges, is a lot of times people manufacturers know they need to adopt digital they just can’t see a clear path through the alphabet soup to do so
Ben Lorenz: and so this this access to talent might be the great unlock for the u.s manufacturing i agree and and given recent um political maneuverings we could be in a situation where the u.s is becoming you know very focused on building out manufacturing you know within the borders and this only bodes well for employees in my opinion if we can pick up on this sort of relationship yeah
Jason Nyhus: regardless of what you think about political the political aspects of this i think the most important thing is there’s going to be a change and how do the manufacturers take advantage of the change and and the nationalistic things that are happening now in the united states and other countries it is a change of the way the rules of the game are played and so by having access to this tech talent now we’re going to talk in a minute about how manufacturers can be attractive to recruit and on board and kind of win some of this tech talent but just the opportunity itself i think we can agree upon is kind of now for a variety of reasons and then we can talk about how do they get them
Ben Lorenz: yeah um i want to share one story with you that happened to me recently. So we’re a part of the Michigan Manufacturers Association and we get together with them several times a year and talk about like these types of issues. And so I’m in a room with several Michigan manufacturers and they, you know, there’s some of them that are sort of up north in Michigan where, you know, there’s lots of trees and hunting and, you know, it’s a very different atmosphere than it is downstate where we’ve got Detroit, for example. When I talk to those manufacturing companies, and they’re really amazing, they’re doing amazing things. They’re building boats. They’re building log cabins. They’re doing all sorts of stuff. And they’re exporting these type of manufacturer-built products outside of Michigan. But the one thing that is very consistent about their message is I want to expand. I want to be on a digital transformation. It’s very hard for me to do that with the talent I have available to me right now. And so their mindset is, you know, this person that I’m going to hire needs to live in my particular area. And I think that’s another area where we can, you know, educate them on, say, like fractional employment or remote work or or something like that, that the tech people who have been laid off are very accustomed to.
Jason Nyhus: it is true it is i think i think manufacturers will have to wrestle with that concept of having almost a dual class employee base where some can work remote and others are manufacturing products and have to be in five days a week so it’s not something that is uh lost on us in this conversation but it is a reality of potential that could be unlocked.
Ben Lorenz: Yeah. So let’s shift gears a little bit and let’s talk about this talent pool that’s out there. How can they start to interact with manufacturers or how can they begin to reach out and sort of sell this value to manufacturers? Where can they look?
Jason Nyhus: Well, that’s a really good question. I mean, you’ve got the former tech people who need to look at manufacturers, but then you also have the manufacturers kind of putting themselves up and expanding their recruiting pool to look for these kind of companies. I think both are the problem or both are kind of how you solve the problem is by solving both parts of the equation. Boy, that is a good question. I’ll let you take the first one. I’ll take the second.
Ben Lorenz: All right. So I have an idea only because I’m in, you know, I live in Ann Arbor, Michigan, which is sort of in between like, you know, Detroit, where we’ve had the industrial revolution and the rest of the state where there’s a ton of manufacturing north of us. Right. And we have a manufacturers association here that meets, but it’s generally only the manufacturers that get together. They do one thing a year where they have a big convention and invite people to it and they show their wares, right? And so it’s sort of an outbound type marketing activity. They’re not thinking about recruitment. If I were an employee looking or a potential employee or somebody that wants to take a manufacturer on a digital transformation, I would start attending those types of things and talking to those groups about digital transformation, what we’re able to do as an individual within an organization like that. And trying to make friends at, you know, manufacturers association conventions. giving out, shaking hands, you know? I mean, the, and I’m not saying this is true for all manufacturers, but I find we talk about digital IQ sometimes. The digital IQ in manufacturing can sometimes be relatively low for a very high revenue organization. You know, they just want to send out emails to their customers and they’re not sure, you know, they’re still sending them from Outlook, you know what i mean they don’t like that’s the level sometimes we’re at but this could be like a 100 million dollar 200 million dollar company um and so that’s a that’s an opportunity there for a tech person to step in and say hey you know that really makes sense to me and that’s a an easy lift
Jason Nyhus: well i’ll take the other side of the of the of the equation and talk about the manufacturer and how they position themselves to attract tech talent. And what I mean by this is, you know, when the example you just gave is really perfect, like, when a manufacturer describes what their needs are, they kind of describe them in a very simple, non strategic way.
Ben Lorenz: And tech
Jason Nyhus: people love to solve big, crazy hard problems that use a lot of three letter acronyms. And so there’s a little bit of a of a language barrier between the two things. Like I’m an expert in CRM and segmentation and math dynamic personalization. I don’t, I work for a platform. I don’t work for a manufacturer. And so I think part of this is manufacturers have to be very mindful about the way they describe the problem they’re trying to solve and make sure it is described in a way that attracts some of this tech talent who like the bigger problems. And I’ll tell you what I mean a little bit more. if you’re talking to a manufacturer, one of my favorite things to do at Shopware, when we’re talking to or meeting these manufacturers, walking the floor, these manufacturers are willing and able to invest in robotics and warehouse automation and all these unbelievable things. And then you go to the other side and it’s like technology has been left at that door.
Ben Lorenz: Yeah. The sale guys are getting faxes still.
Jason Nyhus: Exactly. And so how do manufacturers describe the problem with the front of the house and the elegance and automation and kind of next gen capabilities that they want to get to in the same way, in the same passion, they attack the back part of the house where they manufacture they have all of this automation. So I feel like that’s the language barrier and the way they attract more talent is by positioning it in a way that’s attractive to that segment. Yeah, I to
Ben Lorenz: build on that a little bit, I would also point out that I think there is a level of fear in manufacturers in in how they dive into technical or technological transformation. One, you know, if somebody is not necessarily familiar with something or understands it completely, they have a tendency to shy away from it or will say, yeah, we got that covered and they don’t. Right. And in the tech world, it’s like. We’re risk takers, right? It’s the power of possibility. We’re willing to take that leap in the manufacturing world. It’s a lot safer because they’re like, a big move on my part means cash. And generally, those manufacturing organizations are, you know, very close to being the entrepreneur. Right. And so they’re very safe about how they approach these types of things. And so I think finding a level of safety for them to do this and a shared language with, you know, potential people that would want to work there is important.
Jason Nyhus: Yeah. I do think, totally agree with you. And I do think that we should talk about why this hasn’t happened. I mean, we talked a little bit about, and by the way, there are some unbelievably good tech people that are working inside of manufacturing, just to make it clear. we work with them every day. There’s just not the volume and amount that I think is potential for these businesses. Now, we should talk about the why, because I think listing out the why will help manufacturers really think about, does it make sense? The first one is having remote workers with a different kind of onsite schedule compared to those manufacturing. That’s a big cultural gap you’ve got to solve for, and it doesn’t come for free. The second, in a lot of ways, is the technology talent has a different expectation for comp.
Ben Lorenz: Yes.
Jason Nyhus: Have you seen that as well?
Ben Lorenz: Absolutely. Yes. Yeah. Well, I mean, and I’m referring to maybe like a smaller manufacturing organization, but generally the technology direction is led by maybe a single IT person. And that’s literally the title, right? It’s the IT director and they’ve been sourced locally and they go in to that place every day and like they handle everything from desktop support to maintaining the ERP system. Right. The difference is once you start segmenting out these roles and you get specialized knowledge in particular areas, like a lot of the tech pool that’s out there, those that talent is. It’s very capable and demands a salary that is probably in a different range than the manufacturing organizations are used to. To pay would be my guess. I think getting used to that, but also understanding the ROI of it. This is the one. So Human Element is a consulting firm, and we’re also a systems integrator. And so we’ll come in at different points of the purchase process for a customer. Sometimes we’ll come in for platform selection, and we’ll be advising them on what type of platform should be put into place to address their goals. And when we’re doing that, we’re sort of saying, these are the types of talent and things that are going to be required to get this implemented properly within your organization and identifying whether or not they can do it. Right. As a part of that process, we’re also saying, hey, this e-commerce implementation that you’re investing in, you need to look at that like you’re building another factory or you’re building a brick and mortar store. Right? This is a technology platform that isn’t set it and forget it. You, you know, you build it and then you revise and you, you, you know, you improve upon it and it delivers return on investment. If, say, let’s for conversation purposes, they spend a half a million dollars to put a e-commerce system in place, and that system then generates 50% of their revenue over time. All of a sudden, you’re in a new sort of understanding about how you need to support that investment. And that is through labor. And labor for that means something. You need to have skilled resources to do it.
Jason Nyhus: You’re exactly right. It’s taking a similar, do I build another factory mindset around capital expenditure and operating expenditures to really optimize and grow. And that obviously takes talent.
Ben Lorenz: Yeah. I like your words better than my words.
Jason Nyhus: I’m not that smart. I have to summarize for my own benefit.
Ben Lorenz: Oh, please.
Jason Nyhus: You know, one of the things I’ve also seen is obviously we both are firm believers that there’s this opportunity for manufacturers to go recruit some really good tech talent to help these businesses transform and frankly take share in what will be a very competitive market. But I think the cautions are just as important. And what I mean by that is I’ve seen far too many companies when money was cheap or free, try to play tech company, as opposed to there’s a reason you’re the company you are. And it’s because you’re unbelievable at making these widgets, marketing these widgets, distributing or selling these widgets. And it’s not because you’ve got a huge tech team. And so kind of focusing on where, where what makes you special is probably a little bit of an art and a science as it relates to recruiting tech talent. Love to hear your take on that.
Ben Lorenz: Yeah, well, I completely agree, because we run into this often where we’ll come in as the systems integrator. And the organization where we’re starting to work with, will start to fancy themselves a software developer and they want to make a lot of customizations or they want to be able to support something that’s highly complex. And so our approach in balancing that return on investment is, hey, you make widgets. We will make the software. We’ve got to balance how custom you want to be with your return on investment. And I think in that same sort of vein, I would caution anybody who is on, you know, the side that’s looking for a job in manufacturing. If you come from software yourself, your tendency will want to be to create a software company, you know, do what you know. Once you get inside of an organization, like just maybe tuck this piece of advice down in there and remember that you are now client side and you’re with a manufacturer. You’re not going to build a software company inside of this manufacturing organization. That’s a really important piece for you to remember.
Jason Nyhus: Yes. And frankly, this is where manufacturers really get the benefit or the network effect of these really great tech people joining, as long as you can keep them in a box, not to rebuild your own kingdoms of technology people. But rather, they now know the industry jargon. They know who the players are, and they know how much things should cost and how fast they should go. So you still lean on systems of record like commerce platforms, ERP, CRMs, and you still lean on agencies to do a lot of the heavy lifting where you get enormous economic benefits of using a service like that as opposed to hiring out a team that you now have to pay for forever. So I think all of this is really about finding that balance. You know, nature likes to find equilibrium. I think the thing that’s out of equilibrium is there’s not enough tech people in manufacturers. We just don’t want the equilibrium to go out of balance the other way. So it’s about finding that middle ground.
Ben Lorenz: Well, I appreciate you taking some time with me today, Jason. I know you’re a busy, busy guy. We have had the opportunity to work on several deals together, and you are always professional and wonderful and just a joy to speak with. And I look forward to doing it more in the future.
Jason Nyhus: Amazing. And like you already know, Human Element is just world class at serving these B2B manufacturers and can’t say enough about you and your company. It’s just been awesome. So thank you for including me in this.
Ben Lorenz: Yeah, thank you.
Jason Nyhus: Thank you.