Building Trust at Scale: Joe Rice and the CXponent Story

Michael Burcham: Welcome to Microcap Moments, a podcast from Shore Capital Partners that highlights the stories of founders, investors, and leaders who have taken on the challenge of transforming ideas and small companies into high-growth organizations. The journey of building and scaling a business takes one down many unexpected paths. It’s a journey where we learn from our mistakes, fall down often, but have the entrepreneurial grit to pick ourselves up and persevere.  

Within this series, we will share these stories of success and failure, of the challenges and the rewards faced by those who dare to dream big. And through their lessons learned, we hope to inspire others who are on a similar journey of becoming, growing, and leading  

Anderson Williams: In this episode, I talk with Joe Rice, the CEO of CXponent. 

CXponent is a technology advisor for mid-market and lower enterprise companies, helping them navigate an increasingly crowded and noisy landscape of vendors, platforms, and AI tools to make better technology decisions. Joe shares how his interest in technology and entrepreneurship started early, growing up watching his father build and run his own business. 

He talks about his first business and its exit and why he came back to start something new again with CXponent. Joe also reflects on what he was looking for in a partner and why Shore Capital was the right fit. He wanted to stack talent, invest in organic growth, and partner with other founders who were not just looking for an exit but were excited about building the next chapter with CXponent. 

He shares insight and candor about readiness, timing, and what founders should consider before joining a platform like CXponent. Throughout our conversation, Joe makes the case that even in an industry being reshaped by AI, the most important parts of his business still come down to people, to trust, and to being present for their clients in the day-to-day details and as partners for the long haul. 

Well, Joe, welcome. And to get us started, will you just give me your name and tell me what you do and where you do it?  

Joe Rice: Yeah. Joe Rice, CEO of CXponent, based in the suburbs of Chicago in Northbrook, uh, with my three kids, nine-year-old boy, six-year-old daughter, and three-year-old daughter, and married. Yeah. And my, my wife. 

Shout out to my wife too.  

Anderson Williams: I hope all of this works out for you, Joe. That’s, that’s a lot. Uh, will you just describe what CXponent does?  

Joe Rice: Yeah. So CXponent is a technology advisor for the mid-market and low enterprise companies. Clients hire us to represent them in a technology transaction or a relationship, and we span a wide variety of technologies and vendors, and we have an entire vendor ecosystem that we take to our customers. 

I think the biggest maybe analog in our business would be, like, commercial insurance brokerage. We’re really there to bring more resources, expertise, and risk mitigation or, or certainty to a transaction or relationship. I like using the term brokerage for our core business model, but it’s actually kind of controversial in our space. 

So there’s some feeling that brokerage commoditizes or devalues what we do. I think of that term as a, one- A bridge to build for customers to understand what it is, ’cause that’s fundamentally if you have a lot of money and you’ve worked with a wealth manager, you know they have expertise and sophistication, but they’re getting paid in a brokerage model most of the time. 

Same with commercial insurance. Like commercial insurance, people who do reps and warranties insurance for M&A transactions, incredibly sophisticated people to be able to help build trust and knowledge into a transaction, right? And so if you think about a commodities or a securities broker, literally you’re building security into a transaction by having a third party there, right? 

And so I think of it as like a, if you’ve worked in a complex space, there’s a tremendous amount of upside for people to just understand, “Oh yeah, I want someone who brings security and trust and expertise and resources to this transaction.” There’s a lot of examples in the financial services industry of that. 

So that’s where I’m coming from when I use that term, uh, you know, to not intentionally alienate anyone. I also think there’s actually upside in anchoring in what may seem somewhat commoditized, and then being able to add more services that can be strategic. Because the reality is, as I mentioned before, straight business of, “Hey, I gotta go source some technology in this category. 

Go bring back three options. Tell me what market rates, what’s new, what am I missing? I haven’t done this in three years, but also I don’t need a bunch of board decks on it.” Like that’s still, we add a tremendous amount of value for our ecosystem and clients for those type of projects, and so that’s okay. 

Like I’m, I’m just not scared of the idea that we are clearing and building security into transactions, and I think that actually adds a ton of value.  

Anderson Williams: Help me understand the problem that you’re solving that a, a company in the mid-market’s seeing with their technology acquisitions or otherwise.  

Joe Rice: Yeah, you know, almost all IT organizations and business leaders have full-time jobs that aren’t necessarily buying technology and keeping up with what’s real in the market. 

And so there is a lot of information and education available, but really leads to analysis paralysis and, like, too much without a filter for what’s relevant for customers. And I think our core value is being able to cast a very wide net and then bring what’s relevant to customers and more certain to them so they can get started, you know, further, faster. 

And as, you know, even before AI, there’s been an explosion of vendor choice with all of the VC funding and just momentum in- across technology in the last 15 years, especially with, you know, zero interest rates I think our distribution channel was actually born out of telecom, so originally was really for core commoditized IT infrastructure. 

And our incentive structure, though, is that we get paid a small drip, a residual, for the lifetime of a relationship, which means our incentives are really aligned for the long haul with customers. The happier, the more they expand, the better everyone is off, and that’s how we actually maximize our return. 

And so there’s a nice incentive alignment, but also, most importantly, we’re doing this all day, every day, and most of our buyers are part-time buyers but full-time operators. And so they’re going up against this market of very sophisticated deal pursuit teams and marketing and sophistication from all the vendors that are trying to create their own narratives and, you know, windows of information to help move things along. 

So we’re just an advocate on the client side for that.  

Anderson Williams: Yeah, it’s bound to be overwhelming, right? It was probably overwhelming 15, 20 years ago, and today it’s gotta just seem completely overwhelming, especially when you have no real viable tools to discern this technology- Yeah … versus that technology, from phones to AI, really, I would imagine. 

Joe Rice: That’s right. And, you know, if you go to G2 or Gartner, there’s a lot of good information on how vendors perform, but it’s really missing what’s unique to the head in business and, and often what drove the decision. And so things like core systems integrations, especially in a private equity roll-up. There might be six or seven integrations you need to validate, and that really can narrow down the field. 

Compliance requirements, global footprint. You know, who is operating the technology? A lot of these tools can be managed by the business instead of IT, and then there’s security and compliance and all these other things. And so, like our framework’s really built on technology, business needs, and then finance needs, and all of those things need to weave together to make a good decision. 

And how do you align business value to technology delivery and ensure that financial expectations you’re setting on budgets and return on investment are grounded in reality is definitely something that’s really challenging to find out in the market without someone who’s in your business, I guess. Yes. 

Anderson Williams: Well, and that raises another question for me is what you’re describing means that you and your team have to get in and know the business really well. You don’t just know the technology and how it performs otherwise, but it seems like you would have to do what you’re describing really well, have to do some work to catch up on my business to learn what my needs are, what my growth plans are, and so forth. 

How does that work?  

Joe Rice: Yeah, so it’s interesting ’cause in the journey of our industry, when you think about telco only, that’s under-the-iceberg infrastructure that no business people see unless it’s broken, right? And so I think our industry is on this journey of better understanding in how to translate between technical capability and wh- what that means for the business, and I think we’re, you know, in some ways leading our industry on, on how we can go, not only carry that conversation, but ensure that the commitments that the vendors are making and that the clients wanna make get, get realized. 

And so I think it’s one of the really important things to figure out is, like, who is the person running and owning the project and this technology long term? Who’s gonna be operating it? And so it’s very common for us to be hired by a business unit leader to create a bridge into IT, so we bless the architecture and the security and the support model what’s needed. But ultimately, the business is running this on their own.  

It’s also very common for, I think, uh, especially for IT leaders who really understand that their role is to be a service provider internally to the business units. They’re hiring us to build that bridge and be able to articulate and rationalize all of these often conflicting requirements, right? 

If a business– If you have ten or twelve business units, you can’t serve everyone and stack rank each priority the right way. And so I would say, you know, it’s the long answer to that is just every organization’s different. Change management is critical for success in any of these projects, and it needs to start right away when we start talking about requirements and engagement. 

And frankly, even if we’re not gonna prioritize a couple business units’ needs due to their size, if they have loud and important voices, they need to be a part of the conversation and be heard as we go through that. So it’s really has to start from day one on understanding what those dynamics are, who matters, and who’s gonna pay for it and operate it. 

Anderson Williams: Yeah, it seems like you’re kind of in the process of de-risking on multiple fronts. You’re de-risking the investment in the technology, but you’re also helping de-risk the decision-making for- Yes … internal conflicting, you know, interests or otherwise for your actual partner.  

Joe Rice: Our final deliverable in almost every engagement ends up being a proof of work, a proof of diligence, right? 

And it’s like, we did, this is what we heard, this is what we prioritized and weighted, and the vendor decision or the technology decision we made fits into that. And ultimately, how does that tie to the bigger picture? Whatever it is, we wanna bring as much certainty and eliminate that risk as we can along the way.

Anderson Williams: So I wanna take a step back to your backstory. You’re an entrepreneur. Were you always in technology? How did you get into this position and this world?  

Joe Rice: So I’ll go pretty far back to just growing up in my household. My dad was an entrepreneur, was an insurance broker, and very much ran a very healthy lifestyle business balancing work and family, and I very much aspired to have the freedom and autonomy. 

But I wasn’t dead set on being an entrepreneur necessarily as a, like, lifelong goal of mine, but I was also always interested in technology. And so, you know, as I’ve gotten into the workforce, I started in telecom, you know, just out of a, like a pretty good job at AT&T and thought I, I wa- knew I wanted to be in sales. 

And so I ended up paving a path into being an entrepreneur in two thousand twelve and two thousand thirteen. I worked for a startup in our space named Avant Communications. They’re now one of the largest TSDs in our space. Early employee there and got a window into, like, what it takes to build a business. 

And so I didn’t have any skin in the game, or I wasn’t necessarily an entrepreneur or a founder in any way in that business, but I really got a window in what it took to build something from scratch. And I ended up spinning out of there with a partner and to start my first business in this space and took a little time off after getting bought out in twenty twenty and then launched CXponent, uh, five years ago. 

I’d say once I got a taste of doing and building and realizing, like, I get a tremendous amount of fulfillment on creating opportunity and space for other people, and so, yeah, I’m probably forever addicted at this point. 

Anderson Williams: So you had exited a previous company. How would you describe CXponent’s approach in partnership with Shore and the way that Shore invests? 

How would you describe what you’re doing as being different than maybe some of the expectations people might have?  

Joe Rice: Yeah. I think one is we’re primarily looking for builders and founders who want to keep going and expanding and building on what they already have, right? And so I think to some extent, there have been great options for people who wanna take a big check and, you know, sell their book and go on. 

And I think that maybe less options for this creative autonomy go build together for people who are, like, in some ways maybe just getting started with their business, right? And so I think that’s one key piece that was really important to me. I think another thing that, you know, when I was working with Matt Sweeney and got to know Shore, because they raise smaller fund sizes, I really didn’t wanna be in a position where we have to acquire fifty companies for this to work. 

I really wanted to find somewhere we could go stack the talent for six to eight to ten of the best people in the first couple years and then really go double down on organic growth and kinda build together, which was a really good fit for Shore. So– And I think to expand on that, by definition in this kinda microcap or buying small businesses, we have to create value through investment and development. 

There is no way to create value through destruction and synergies. And so that’s like, I don’t know, it’s just a philosophical great alignment for us in that way.  

Anderson Williams: And it sounds like when you’re thinking about the right partner for CXponent, they still need to have that entrepreneurial hustle, and they still need to have that builder mindset. 

What’s different? If I’m a founder listening to this, and maybe I’m considering the, the idea of joining CXponent, what does that look like on the other side? I’ve built my business. It’s my baby. It’s my team. What does it look like to join this for that founder?  

Joe Rice: So as we look at the pieces we have today and what we’re looking for, we wanna continue to stack people who have focus and competency and expertise. 

You know, clients’ attention span is as short as it’s ever been, and it’s probably only getting worse. And so the relationship-only sell is not enough anymore. And, and so as a lead-in to answer your question, I think w-we know we’ve built really great practice groups that can overlay and support deal pursuit as well as implementation and delivery. 

Currently, our deepest is in CX, and you see in AI as a technology category. But we also have really great expertise around cloud security, hosting, managed services, and, uh, network security as well. There’s a reality here of, like, deep expertise and focused people who have a really high bar of quality, and we just wanna continue to push that because there’s a very broad spectrum of what people have chosen to do to differentiate their businesses. 

And we feel if we can put a lot of those pieces together, we can keep people at their highest and best use, but also use those relationships that they’ve built over five, 10, 20 years that have a lot of trust, and then bring in other competency and expertise, so there’s an ability to really expand kind of that relationship and trust. 

Anderson Williams: You’ve been there yourself, and with CXponent and with this partnership, you’ve also talked to a lot of founders in this process. One of the things we’ve talked about before is this idea of not just have you built a great business, not just are you considering perhaps a, a partnership like CXponent, but being ready for that and thinking about the timing for your business. 

Joe Rice: Yeah.  

Anderson Williams: Do you have any thoughts on readiness and how to think about that timing?  

Joe Rice: So I think there’s one that is like requires just self-reflection on, on the founder or the business owners. Do you really wanna be a smaller piece in a much bigger pie and contribute with partners and peers in a way that will be different than kinda being the king or queen of the smaller business? 

And so that is something that I think is worth… There’s nothing wrong with not wanting that, but I think that’s a really important thing. And no matter when you enter a platform, growth is inevitable. And so being a part of that and being positive some and wanting everyone else to grow at the same time, ’cause our incentives will be aligned, is really important. 

And so if you’re not willing or wanting to give up control to enter that type of relationship, there’s gonna be some misaligned incentives and, and attitudes here, right, in a really meaningful way. And so that’s one.  

The next piece is around growth. I think the people that we wanna partner with always plan on growing, right? And if we can expect continued growth, there is this reality of, like, getting to scale. I always was guilty of feeling we’re, like, one or two hires. I don’t wanna say guilty, but you know, maybe naive to think one or two hires away from getting scale or turning a corner. And I think the reality is it’s probably 15 to 20 when you really think about all of the corporate infrastructure required on top of the go-to-market infrastructure that’s client-facing to support a lot of these businesses. 

And then I’d say the other component of timing here is because we think people who partner with us will go faster, will go further, and should make a lot more money with us than without us. And so if the timeline to exit, which I’ve heard from a lot of people, is like, “I’m ready to hang it up in four or five years,” now could actually be a really great time to keep building, join something new, enter early in a platform and get tremendous upside where there’s a little more flexibility. 

‘Cause if you sell in five years, there’s probably still some tail to stick around. And so those are all some of those elements of timing.  

Anderson Williams: So as you think about that, aside from growth and aside from the financial upside, as a founder, help me understand what the opportunity is for me. Like, what do I get from this? 

Less from the financial perspective, more from the leader, entrepreneur, head of a team.  

Help me see that other kind of human side of this if I were to join a platform like this.  

Joe Rice: Yeah. I think, you know, our industry, to generalize, was built on alpha salespeople, you know, men and women who’ve started a business often because they didn’t wanna report to someone, and then have built companies literally out of their ability to convince others to work with them and, and build trust, and that’s, like, something I have a ton of admiration for. 

And so I think that there’s an element of the highest and best use for a lot of the founders in our space is putting more time in front of clients and developing their own teams and mentoring their teams and coaching. And often it’s not building corporate infrastructure and hiring roles that they’ve never done or looked at, right? 

And even great sales reps often struggle at hiring salespeople, you know, which is, I think, well, probably a universal experience so there is, I think, a tremendous opportunity to step into people’s highest and best use to get deeper and have just less of the headache of finance, HR, admin, and then to be able to tap into other technology and geographic and industry level resources there. 

I’d say the other thing that we know we’re ahead on and will be a constant evolution is just using technology to support our client-facing teams. And so one of the things that as our explosion of ecosystem has broadened, we are an information company in so many ways. And so just like any consultant, we intake a bunch of information and questions and concerns and needs from a customer. 

We then validate it or put it through our filter of what’s real and what’s not, and we provide recommendations and a proof of work on how to move forward. And so the reality is we’re not dealing with, like, there’s r- always unique business information, but this is not– we’re not creating some new thing from scratch on every project, right? 

We’re really here to be an expert in these categories and industries and what it takes to operate them. And so we have already gotten great benefits out of building tools to help our sellers create deliverables and automate requirements gathering and have a much better understanding of our vendor ecosystem. 

In reality, we have, like, seven hundred plus vendors that we could source for a customer. In practice, our target market lends itself to a much smaller group, but as long as we have an understanding of what a customer needs, and this is where the name CXponent comes from, client exponent, is like as long as we understand what they need, we can go expound and advocate on their behalf to get solutions. 

And if the people who’ve been great at that often just start a business. And bringing others along who might not have that natural skill set or motivation to go do it, we’re really building tools to allow people so they can spend more time in front of clients and less time behind a computer researching and just filtering through what’s noise and what’s not  

Anderson Williams: So as you think about the next, let’s just say, 18 months for Cxponent, give a sense of what that looks like and what you’re excited about that’s on the horizon. 

Joe Rice: Yeah. So, you know, we’re, we’re definitely very active in finding potential partnerships to partner and acquire and bring on board. And also, there’s a lot of organic hiring we’re gonna be doing adjacent to that. So I think the last, you know, we’re going on ten months in to a partnership with Shore. We have done a great job stacking talent so far, and that’s my consistent focus on how do we find some of the best founders to partner with here that have great teams and talent so we can accelerate and build around them? 

And same thing with organic hires, right? And so, like, stacking talent is one of the most important things ’cause I know we have a chance to separate from a lot of the folks in our space to be able to do that. I think the other portion is becoming more and more technology and AI native for our firms. And so even though we have a lot of tools, I’ve even put myself in this bucket, there are some weeks I’m very, very AI forward and efficient, and then some weeks that I’m not. 

And, you know, and some of that’s mindset, some of that’s the context of being in person or other things. But as an org, change management around that is absolutely top of mind. And I do believe the old school top-down change management for this is not gonna work. We are building and empowering people to build their own tools so they can see the benefits and have some autonomy and creativity in that. 

And I think probably the only way this is really– we’re really gonna change culture. So that’s something that is really, really important, ’cause I think the reality is our industry is entering this, like, massive opportunity. So in terms of a couple stats to ground in that, of all the technology categories that we can help customers with, about eight percent of that spend goes through a partner like us within the market. 

And so there is a massive awareness issue or opportunity for buyers out there. At the same time, I think there’s never been a greater need for our business model to help customers through that and have this aligned incentives to create more resources and skill and build more certainty into projects. 

But the bar to keep clients’ attention, as we’ve talked about, is higher than it’s ever been. And there’s also competition coming in from everywhere, right? Now, they’re not yet getting their hands dirty on the meat of execution unless there’s a ton of development work and bodies to sell to people, which I think is a huge advantage for us. 

But our polish and communication and how we show up, we’re in that sphere of building decks for CEOs to take to their board, and that is a massive, massive opportunity that was never true in the old telco days and selling commodity infrastructure. But it also means, like, I think there’s an opportunity to kinda get passed or left behind, I think, without continuing to evolve focus and expertise. 

We’re absolutely building for where is this market going and where is future customer demand, and maybe where is their demand with customers that they don’t know about yet, so we can step into that space. And that kinda goes back to the what does it take to get there? Unfortunately, I don’t think it’s one or two hires away. You, you know, that’s where the foundation’s really important.  

To be able to confidently go into those relations and say, “Yeah, we got a team. We got an army.” You might not need an army, but whatever it is, we’re gonna have people internally that are- fully aligned to your outcome  

Anderson Williams: Yeah, and I’m struck, Joe, by even your language choice of going into those relationships. 

When you think about eight percent of the market and then the overwhelm of options and the customer demand and expectations, your model and what you’re describing, I mean, even you gave an example of building a slide deck for someone to present to their board, that’s a different kind of partnership. 

That’s not a transactional brokerage.  

Joe Rice: Right.  

Anderson Williams: And I think that’s a really important message, and in being a critical message, it defines your business model differently.  

Joe Rice: Clients don’t wanna bring in a third party unless they trust them, right? And so there has to be some foundational level of trust. And I think about it all the time, how do we shorten the path to that? 

And referrals, expertise, and content is a part of that. But in the grand scheme of things, you can’t really fake trust, right? And so I think to be able to say yes to the more complex strategic projects is a really great signal for trust, and that is absolutely what we’re building on. It also does mean that it is easier for us to actually be in the middle. 

Like, there is, clients need, in some ways, the more commoditized and less strategic something is, the more they just wanna outsource the pain of it, right? And I think in our business model, telco and lifecycle management of telco spend is a really good example. That matters. It’s still a huge part of spend. 

You need a bunch of bandwidth at all these locations for a fast user experience. That probably isn’t making the C-level suite, but they know if we need to be in that room, that we can. Or if all of a sudden there’s a security element, and governance and compliance is, uh, closely associated with that project, we can go put those teams together to make it more strategic if it needs to be, right, as, as part of a larger project. 

So I think that’s like, yeah, I just wanna make sure we draw this distinction. The core building security around a bunch of your IT spend still matters if C-suite visibility isn’t there, but, like, there are always gonna be times where our clients need air cover right? Or are gonna want a very quick response to make them look good, and that’s really, really something that is, uh, critical, I think, for us to continue to succeed there. 

Anderson Williams: Yeah, I just think that probably it runs counter to what people assume as we’ve talked about AI and your own use as a consumer and builder of technology for your own practice. You’re saying yes, and it’s still people, it’s still trust- Yeah … it’s still relationships. That’s the only way we build the business we wanna build. 

Joe Rice: Yeah, I don’t think we’re anywhere near fully automated purchasing as a marketplace model, and tech eliminate people at all. I think these decisions have too much risk, too much upside, too much political internal capital and opportunity to lay on the line to trust a generative, a, a large language model to create outputs. 

But there is an opportunity to self-serve and deliver information in a much different way. And right now, we’re actually, and I think most advisors are burdened by this more information that we need to- jockey through, and it creates more work that’s not in front of customers understanding what they need ’cause there’s always more going on there that they might need help with. 

So it’s an interesting tension that, you know, I think we gotta figure out how to do at scale 

Anderson Williams: If you enjoyed this episode, check out our other Microcap Moments episodes at www.shorecp.university/podcasts or anywhere you get your podcasts. Here, you will also find our Bigger, Stronger, Faster and Everyday Heroes series, each highlighting the people and stories that make investing in the lower middle market unique. 

There, you will also find our latest video podcast series, Raw Talent. This podcast was produced by Shore Capital Partners with story and narration by Anderson Williams, story editing and recording by Austin Johnson, editing by Reel Audiobooks, sound design, mixing, and mastering by Mark Galup of Reel Audiobooks. 

Special thanks to Joe Rice.  

This podcast is the Property of Shore Capital Partners LLC. None of the content herein is investment advice, an offer of investment advisory services, nor a recommendation or offer relating to any security. See the Terms of Use page on the Shore Capital website for other important information