This is a messed-up edition, because we are both hosting Equity Monday on Tuesday (because that makes sense) and our normal host Alex Wilhelm is on vacation, leaving (editor’s note: poor and massively underpaid) managing editor Danny Crichton to wake up early on the first day of the workweek to talk to himself in front of a microphone.
Here’s what we (okay I) talked about this morning:
Ep. 335: David Spinks is the Founder @ CMX, the premier network for community professionals. In 2019, CMX was acquired by Bevy, where David now serves as the VP of Community. Bevy is a customer-to-customer community management platform, building products that brands use to build, grow and manage their community event programs, both virtual and IRL for companies like Slack, Twitch, Salesforce, Atlassian, and Duolingo. Prior to CMX, David founded 2 prior startups centred around different forms of community building and before that was Community Manager in the early days of LeWeb the largest tech/startup conference in Europe.
Pssst 🗣 Loving our podcast content? Listen to the start of the episode for a promo code to our upcoming events!
In Today’s Episode We Discuss:
* How David made his way into the world of SaaS and came to found CMX. Why David believes that community is so central for all SaaS companies today?
* How does David advise teams on expectation setting around virtual events? How ambitious should they be? What big mistakes does David often see in the early days of the planning? How does this differ if you have an existing cohort of users vs are starting new with no audience?
* How dependent is the success of the community on the platform it is hosted on? What is the ideal size for Slack, Telegram and Whatsapp communities? Should the host seed the discussion or allow it to be natural? How important is it to establish a handbook of expected actions and behaviors? Should you cull members who are inactive?
* What does David believe separates good from great when it comes to discussion groups? What innovative strategies has David seen work when it comes to bringing a virtual event to life? What is the right amount of people in that discussion group? What is the core role of the moderator for the group?
Ep. 336: Leveraging survey data from 66+ enterprise SaaS companies, Matt Garratt, Managing Partner of Salesforce Ventures, shares the landscape of how businesses are shifting their sales & GTM strategies to react to today’s uncertain times. Adnan Chaudhry, SVP of Sales at Salesforce, then provides actionable takeaways on how to refocus your sales teams, engage with customers, adjust your sales comp and how you can properly forecast in today’s new landscape.
Below, we’ve shared the transcript of Harry’s interview with David.
Harry Stebbings:Welcome back to the official SaaStr podcast with me, Harry Stebbings, and you can suggest both questions and guests for future shows on Instagram @Hstebbings1996, with two Bs. And I always love to see you there. But to our episode today. And there’s one question every SaaS company is asking themselves right now, “How the hell do I do virtual events, and what makes the best so good?” Well, diving into this today, I’m thrilled to welcome David Spinks, founder of CMX Media, the premier network for community professionals. In 2019, CMX was acquired by Bevy, where David now serves as the VP of Community. Bevy is the leading provider of in-person community software, powering community programs and incredible companies like Slack, Twitch, Salesforce, Atlassian, and more. And prior to CMX, David founded two other startups centered around different forms of community building, and before that was community manager in the early days of LeWeb, the largest tech startup conference in Europe.
Harry Stebbings:But enough from me, so now I’m very excited to dive into this extravaganza on what makes the best virtual events, with David Spinks, founder of CMX Media.
Harry Stebbings:David, it is so great to have you on the show today. And what you probably don’t know is I’ve been an admirer of yours from afar, mostly on Twitter, for a while. So thank you so much for joining me today, David.
David Spinks:Honored to be here.
Harry Stebbings:I would love to start, though, with some context. So tell me, how did you make your way into the wonderful world of startups, SaaS, and how did you come to found CMX?
David Spinks:Yeah, it’s a long story, but to make it as brief as possible, I’ve been building communities online since I was a kid. Started in middle school, around video games, Tony Hawk’s Pro Skater 4 was my game of choice, built a big online forum around that, and just became pretty fascinated by how technology could connect people and create community. And so I did that, I was just active on every online community platform I could. Eventually that became my career and I became community manager, joined a startup in Philly called Scribnia, at the time. And we were in an accelerator program for three months, and halfway through that accelerator program, we pivoted and started SeatGeek, which, everyone will know SeatGeek, and no-one will know Scribnia. And we kicked that off and that was my first entry into tech. And I ended up running that first company, Scribnia. I was the managing director and ran that company. And that just got me in the door and that led to more and more opportunities to work with different tech companies.
David Spinks:I ran community at a company called Zaarly for about a year, I ran community for LeWeb, which you may know was one of the biggest tech conferences in Europe for many years.
Harry Stebbings:Sure. Absolutely. Loic.
David Spinks:With Loic Le Meur. Yep. And helped Udemy kick off their first community program, and also started companies. So I started a company called Feast, which was delivering ingredients to your home, and you get this home cooking experience with videos that teach you how to cook.
David Spinks:And ultimately kicked off CMX six years ago, because throughout my career, starting companies and building community for companies, ironically, there was no community for community professionals. And so I would do everything I can to find other people who are doing this work and just get to meet up with them, ask them questions. I co-founded thecommunitymanager.com with a couple of friends, about eight or nine years ago as a place to just start writing about this stuff.
David Spinks:And eventually led to starting CMX Summit six years ago, which is our conference, as just a place to bring everyone together who’s doing this work, building community for companies. And so that grew, we bootstrapped it for five years. Last year, at the start of last year, we were acquired by a company called Bevy, which powers event programs, event communities for companies. And that’s how I’m here.
Harry Stebbings:And the rest is history. Speaking of communities today, every company in the world is thinking, “Shit, how do I move from physical to virtual events?” I want to dive into that because I think many are foundering and a lot of scratching their heads, doing it for the first time. So you’ve had a starting point, and expectations set slightly when thinking about the transition to virtual events. So when you think about maybe expectation setting for these companies, how do you advise companies to approach just how ambitious they should be when it comes to that first virtual event?
David Spinks:Yeah. It’s funny because I’ve been banging this drum of community for more than 10 years now, and all it took was a global pandemic, and all of a sudden everyone’s like, “Wait, this is important.” I’m like, “Yeah, I know.” And so there’s companies that have been doing this for a while, but even the ones who have been doing it for a while were probably still reliant on in-person events, and they’re trying to pivot. And then you have companies who weren’t really doing much in terms of community, or weren’t doing anything online and they’re kicking it off for the first time. If this is your first time doing that, I think just getting started’s really important.
David Spinks:It’s easy to overwhelm yourself and try to do too much, and launch a massive forum, and throw a huge virtual conference. But you can start in very simple ways with just simple discussion calls, kick off a Zoom call with your 10 top customers. People are craving community right now, they can’t connect with each other in person. And so they’re looking for any opportunity to connect with each other, and they’re all dealing with this epidemic. It’s affecting everyone, and so everyone has a lot of shared challenges and lot of things they want to ask each other right now. And so just start creating those spaces for them to come together, and a lot will start to happen organically.
Harry Stebbings:Can I ask, when you create these spaces for them to come together, and sorry, this is off schedule, but I’m intrigued, do you seed the discussion threads themselves, or do you let the discussions flourish naturally within the participants?
David Spinks:Ideally, it’s all happening organically, and you’re just sitting back and nudging the direction or facilitating. More realistically, you’re going to launch an online space and you’re going to have this vision of everyone showing up, and participating, and engaging. And then it’s just going to be crickets. There’s so many spaces for people to engage today, that to create a new space, you really have to put in the work and facilitate. And so in those early days, I think you really want to be creating a lot of the content yourself, be putting out discussions, be putting out conversations that you think would be interesting, and then don’t even wait for people to respond. As soon as you post it, message five people that you know, and already have a relationship with and say, “Hey, I just posted this question. I’d love to get a conversation going. Do you have a minute today to jump in and post a response?”
David Spinks:And so you’re manufacturing the example that you want others to see. So when someone new joins a group, now they see activity, they see people engaging, they see thoughtful responses in there. And now, that sets an example for them to be thoughtful in their responses and start posting. And it just puts out the message that this is an exciting place to be. It’s the same reason that a bar might only let some people in at a time, in order to create a long line, so it looks like it’s in high demand. Same kind of thing for communities, if people show up and it just looks empty and it looks dead, that’s not going to feel like an exciting place to participate, but if you start to create that experience of engagement and excitement in the community, then when people join, they’ll feel drawn into that group.
Harry Stebbings:So, as I said there, we write these schedules and then we just go completely off script, but I much prefer it that way. In terms of the platforms, I’m really intrigued. How dependent is the success on the platform choice that you make? Because you could do anything from a WhatsApp group to a Telegram group, to a Slack channel, to any of the collaboration tools that we have today. How dependent is success upon the platform choice?
David Spinks:Yeah, it’s a big question. If you already have an engaged audience, and a lot of people who are trusting the brand, aware of the brand, engaged with you, it’s going to be easier to launch your own owned platform. Maybe you kick off a Discourse forum, or you use one of the enterprise platforms, and you bring people to your site and your community, because they’re already engaged, because you already have an audience, that’s going to be easier.
David Spinks:If you’re starting from scratch and people still don’t know who you are, and they’re not fully engaged with your brand, and your team, and your product yet, maybe you don’t have a lot of users yet, it’s going to be really hard to get people to participate in a new space as well. You’re just creating a new habit, and people are so used to going to big social to interact now, that it’s hard to get people’s attention. And so in that case, it might be better to go to where they are already, which might be a Facebook group, Slack is really popular because people are already in there, Discord is really big for gaming, and use that to build the community. And then, once you have that engagement, once you have an engaged community, the community is the people, it’s not the product. And so once you have the people engaged, then it becomes easier to move them to different spaces that maybe they otherwise wouldn’t have.
Harry Stebbings:Totally get you. Can I ask, in terms of those groups and communities that you build in those initial days, how do you think about optimal size? Because you want enough where there’s enough discussion and enough content going around, to where it feels like the velocity of thought is high, but you also don’t want too much where there’s apathy and too much noise. How do you think about the optimal size in those early days?
David Spinks:Smaller is often better, right? A good quality group of 10 people is going to be much more valuable to someone than a hundred people that weren’t as curated, and in an experience that isn’t as intimate. And everyone knows that, like you go to a dinner with 10 really awesome people, this is the best experience, right? Everyone loves that kind of experience.
David Spinks:But then you go to the meetup with a hundred people just casually drinking, and it was open to anyone, that’s not nearly as valuable. It’s not as facilitated. You don’t get to talk to people as deeply. It doesn’t feel as curated. And so in general, I think smaller is better to start, and then you want to grow it incrementally. So if you’re looking at an online group, maybe ten’s a little small, unless you’re in a WhatsApp group, or a chat space that works with a small group, but let’s say you did a Slack or a Facebook group. You’re going to want more people than that, I would say maybe 50 or a hundred’s a good starting point.
David Spinks:And then you want to grow it gradually. So you don’t want to overwhelm it, right. Going back, I keep using bar examples, I don’t know why. It’s on my mind, I guess, I haven’t been to a bar in months, but you ever go to a bar, and you’re with friends, and it’s not that crowded and you’re having a great time, and you can hear each other and you have space to move, and you can get a drink quickly, and then rush hour hits. And all of a sudden it’s packed with like 500 people, and you can’t get to the bar and you can’t hear each other, and you don’t have space, and it no longer feels like it’s there for you? That’s what it feels like when someone kicks off an online community and they have a hundred people in it, and then they invite 500 people into the group. It just completely overwhelms the community dynamic that you had in there.
David Spinks:And so maybe a good rule of thumb is to keep it to like 50% growth each week, or each month, or even 25%. So if you have a hundred, then add 25 more each week, and then you can welcome those people properly. Everyone who’s in the group can contribute to welcoming them properly. And you create more of what feels like an organic growth, rather than a manufactured growth.
Harry Stebbings:Can I ask a tough one? Do you cull people who don’t engage or who don’t consistently show themselves to be a meaningful part of the community?
David Spinks:Usually, no. It depends on the format. Let’s say you did bring together 10 people in a discussion group, and it’s noticeable that someone is not participating, that they’re not showing up, that they’re not engaging. Then I might call that. And I might say to that person, “Hey, it seems like maybe this isn’t the best fit for you, so totally cool. But we want to make sure that we keep this group really focused. And so we’re going to keep rotating members out based on engagement.” You might be able to do that in that small group, just to keep it really high quality. In a larger group, it doesn’t matter. You actually want to have people, even if they’re passively engaging in these large groups, because that becomes an audience for those people who are creating, that makes them want to create.
David Spinks:So there’s the 90-9-1 rule is this old study on large online communities, and it basically said that 90% of people will passively consume in a community, 9% will be responding and engaging, and 1% will be creating. And so realistically, every community is going to have a very small percentage of people who are actively creating and contributing, and then a much larger percentage who are passively consuming. And then there are people who just go completely inactive. And at the end of the day, unless you’re paying per user, or some meaningful metric to you, you can just let those people do what they do. And you can also run campaigns to try to reengage them. So everyone plays a role in the community at all different levels of activity.
Harry Stebbings:Can I ask, we mentioned the different levels of activity and we mentioned some different behaviors there, in terms of very active, responsive, and then creating. In terms of guide books, or guidelines, when initiating people into the group, how important is it to have almost a guide book, a set of rules? “This is how the community operates.” How important is that, versus letting it be much more free flowing?
David Spinks:It’s absolutely critical. There are communities out there that prefer to just be completely free flowing. I think we’ve seen that historically devolves into some pretty bad behavior. And I think it’s really important that you have a lot of intention in any community space that you create. And so there’s a concept called setting the container. And I think that applies to anything from a small discussion group, where you’re trying to essentially explain, “Here’s how to participate in a quality way, and here are the rules that will make sure everyone feels safe and comfortable participating here,” right? So it’s not just rules, it’s not just what not to do. It’s also being explicit about, “Here’s how to contribute in a great way. Here’s the kind of behavior we encourage in this group.” That’s going to guide people to know how to participate in a quality way, that they may not have realized, or may not have been comfortable doing that before.
David Spinks:And so it’s really important to have that. That said, you should always be open to evolving and changing and learning from your community members. And so maybe someone one day recommends a different kind of guideline, or they do something within the boundaries that you’ve set, and you realize, wow, that was a great way of approaching this problem. Let’s turn that into an official guideline or rule. So you can constantly adapt and evolve your guidelines, but you always want to be intentional about how you want people to participate, and how you don’t want them to participate in the community.
Harry Stebbings:We’ve spoken quite a lot about discussion groups there, and I think a lot of companies in particular, are scratching their heads in terms of how to really encourage engagement within the community. I’d love to hear your thoughts, having seen so many different kinds of viral and vibrant communities, in terms of really, what cool methods of engagement have you seen really work well in virtual events?
David Spinks:Yeah, so the world of virtual events is evolving rapidly right now. And I honestly think everyone was sleeping on the value of virtual events before, and now that they don’t have a choice, everyone’s getting a crash course in it. The default has been the Zoom call. The Zoom webinar, the traditional webinar. Have a speaker, everyone watches that speaker. There’s a chat feed where they can respond, or ask questions, or talk to each other. And maybe there’s a Q and A at the end. It’s pretty one way, right? It’s one person broadcasting to a lot of people.
David Spinks:That’s not really going to be a virtual event in the same way that a physical event, you have the opportunity to meet people, to turn to your neighbor and talk, to network. And so the really great virtual events are incorporating more opportunities for those attendees to engage, to participate, to network with each other. And so, events that do this really well have a combination of different formats. They do have speakers that are presenting and educating, and then they have speed networking, so icebreaker.video is a really great tool for this, or if you use Hopin. A lot of these tools have speed networking built into it, where each attendee gets randomly matched up with another attendee. Icebreaker does a good job of giving discussion prompts for them as well. And you can choose the time that it rotates out. So you can do three minute talks, or five minutes talks, or seven minutes, and then it fades out then at seven minutes, and you get matched up with someone else. So our community loves that, that’s been really effective.
David Spinks:And then just a small discussion group. When you have a speaker broadcasting to everyone, no-one else is getting to meet each other or discuss the content. And so using breakout rooms, using smaller group discussions, is a really awesome way to make it feel more like a real event where they’re getting to meet people. They get to participate in the discussion, they get to bring their questions and hear from others. And so that’s a really valuable way of making your virtual event more engaging.
David Spinks:And you can combine these things, right? So we do, CMX Connect is our global event program that’s run by members of our community. We have over 60 chapters around the world. And for all of the events that we do, we combine all these different elements into one event. And so we might have 30 minutes of speed networking to start, and then we’ll have a speaker talk on a topic, like measuring your community, or running virtual events. And then we’ll break out into discussion groups, so that people can discuss that topic amongst themselves, and share their own challenges and their own lessons. And we might mix up that order, and mix and match different formats, but you can think it as modular like that, you have these different event modules, and you can combine them to make a more holistic experience for your community members.
Harry Stebbings:I’m really pleased you mentioned Hopin there, it’s one of our favorite platforms. So, really pleased to hear that. And you also mentioned discussion groups, and I’ve heard you say before that one of the key rules is, it’s under 10 and over 30. Explain this ratio and rationale to me here, David.
David Spinks:So it’s just a way of remembering how to make a discussion group really valuable. And it’s not a hard and fast rule, but more of a guideline. So under 10 means less than 10 people. We’ve all been in discussion groups with 15 people or 20 people, and there’s just no way that everyone gets an opportunity to have their voice heard, not everyone’s going to get to participate in the discussion. If you try to involve everyone, you just don’t get to go very deep. And so I think ideally discussion groups are generally six to eight people. I think 10 is about the most you want to have, so shoot to have less than 10 people per group.
David Spinks:And then over 30. So this depends, but generally, especially if the entire event is a discussion group, 30 minutes is just not going to be enough time. You want to have enough time for people to introduce themselves, for you to kick off the conversation, and then really give people opportunity to bring their challenges, bring their voice, be able to respond to each other, be able to get into conversation. And just so many discussion groups, especially virtual ones, which just take a little bit more time to really facilitate and engage, they get cut off at 30 minutes, and that’s when the conversation usually starts getting good. And so, just making sure that you have ample time for people to have that discussion, and you keep the group small enough that it can be a meaningful discussion.
Harry Stebbings:Totally with you there in terms of giving it ample time. You mentioned the facilitation, there. I’m interested, because it’s a tough role, being a facilitator. What’s the most important role for a facilitator to enforce, in your mind?
David Spinks:I think it’s about equity of voice. I think their job is to identify who hasn’t had a chance to speak, and making sure they create the space for those people to speak, and their job’s to see when somebody is taking up too much airspace, and moderate and facilitate and say, like, “Thank you so much for sharing. It’s been really great to hear from you. I’d love to hear from other members of the group. Harry, what do you think about this topic? Anything that you’d like to share?”
David Spinks:And so without that moderation, every single discussion group I’ve ever participated in has devolved into one person talking a whole lot, and everyone else is having to sit there and listen. And when people participate in a discussion group, they don’t feel like they’re in a position of power or authority to moderate themselves. And if they did, it might feel very, they’re bringing conflict to the group. And so first of all, every discussion group should have a moderator, a facilitator. You should never have an unmoderated or unfacilitated group. You always want to have someone who’s responsible for facilitating the discussion, and it’s that person’s job to make sure that everyone has an equal opportunity to share their voice
Harry Stebbings:Totally with you in terms of the voice equity. There’s one element, which is always challenging, which is that terrible, awkward silence, especially when you throw an open question out and everyone’s waiting for everyone else to answer. I’m interested, in terms of the awkward silence, what’s the right way for the facilitator to act and engage in those awkward silence moments?
David Spinks:You just got to sit with it, honestly. It’s always tempting to try to fill in empty space. You always want to take out the discomfort for everyone, but I think a good facilitator is comfortable just sitting with that silence and letting others fill it in with their voice. And sometimes it’s just people wanting to be polite, and they don’t want to be the first one to speak, and they want to give other people a chance to speak. I remember in elementary school or middle school, not wanting to be the first one to raise your hand. People just are hesitant to be the first one to volunteer, but then once one person gets going, then it opens it up, and others want to share.
David Spinks:And so just being comfortable with those uncomfortable silences, letting it sit and letting people fill it in themselves. I’ll just sit there on the Zoom call and smile, and see them start to smile as they realize that no-one’s saying anything. And then inevitably someone, within 30 seconds, which might feel like a lifetime, but it’s usually only 30 seconds, someone will be like, “All right, I’ll go.”
Harry Stebbings:That’s funny. 30 seconds, as a facilitative before, 30 seconds does feel like a lifetime, I tell you, David. I do have to ask, though, when we do Q and As, as well, the awful moment is when you say, “Does anyone have a question from the audience?” And you get the really awkward, no questions. What do you do in those situations? Do you seed people in the audience? Do you have backup questions ready? What’s the right way to approach that really awkward element?
David Spinks:Yeah. I think that you really do want to seed it ahead of time, if possible. And you want to continue to remind people to post those questions. One really fun thing you can do is ask people to send in questions ahead of time. And if you’re doing it like a webinar or Zoom call, you can actually have them send in videos of themselves asking the question, and then you can pull in the video and play it live, so it actually looks like someone came on and asks a question and then you bring it back to the speaker to answer the question. So that’s a fun way to make it work on virtual events that you couldn’t even do elsewhere and offline, but seeding things upfront is really good throughout the event.
David Spinks:Reminding people, like, “Hey, just as a reminder, we’re going to be moving to Q and A in 10 minutes. So please put in your questions now, so we can get rolling right away.” Right? So that’s the kind of thing, because sometimes you open up to Q and A and you forgot to remind anyone that it’s coming up, and then they’re not ready to ask a question. And so you want to try to seed it as much as possible. And then when you get to that Q and A point, if you realize that there are no questions in there, don’t stop and say, like, “All right, any questions?” Just keep rolling through it and say like, “All right, well, I have a few more questions that we seeded from the community ahead of time. Please keep posting your questions here in the chat, but let’s dive into the first one.” And so you don’t have that dead air time. And so that’s different, right?
David Spinks:If you’re facilitating a discussion group, uncomfortable silences are really good. If you are putting on content, you’re performing, you’re creating, it’s like doing a podcast or doing a radio show. You don’t want dead silence on a TV or on a radio. It’s the same thing in your webinar, you don’t want to be sitting there live with 200, or a thousand, people watching you and just saying like, “All right, any questions?” That’s just awkward and that just looks like people aren’t engaged, which isn’t a good look. And so I’ll just keep rolling through it, and just go right into those pre-seeded questions that you’ve already pulled in, or prepared. Or just make it up, say like, “Oh, we collected these questions ahead of time. Let’s dive into that.” Even if you literally made up those questions right before the call.
Harry Stebbings:Trust me, David, with my over-excited British way, there is never an awkward silence in my podcast, but I totally agree with you there. I do want to ask this, so we have this event, and we want to know if it’s successful, and we need to measure it. In terms of measurement, I’ve heard you say before that there were two lenses with which to really measure the success of your event. What are those two lenses and how do you break them down?
David Spinks:Yeah. So in working with any community team, we map it out that you have two, what do we call them, dual objectives. So you have a business outcome that you’re hoping to achieve, and then a community outcome that you’re hoping to achieve. And you should be able, in theory, to achieve both with any sort of experience or program that you run. So if it’s a forum, you have your engagement in the forum, your monthly active users, your daily active users, your sense of community, you can actually survey people, you can get NPS, and all these ways of measuring the health of community. And you might be looking at something like reducing support costs, or collecting feedback on your product, or retaining customers. And so you have both the community and the business objectives.
David Spinks:And it’s the same thing for events. You’ll have aspects of the event that you want to tie back to, are we building a healthy community? And in the same way as an online group or forum, you can send out surveys. “Do you feel like you belong in this community? Do you feel safe in this community?” Net Promoter Score. You can look at number of attendees. How many RSVPs did you have, and what percentage of them showed up? How many of those people were repeat attendees? So these are all kinds of things that show you, is your community happy, healthy, and engaged?
David Spinks:And then you’re going to have the business objectives. We use a really simple framework for identifying the business value of community programs. It’s called the SPACES model. So that breaks down into support, product, acquisition, contribution, engagement, and success. And so those are the six areas and you could probably figure it out from the name, but support is people supporting each other, answering questions, giving each other support with their technical problems. That tends to be more in an online forum space, but it can work in events as well.
David Spinks:Product is, you’re collecting feedback and insights on how to improve your product from your community members. So, did you collect that feedback at a booth at your event? Or did you have people fill out a survey at the event to help you improve your product?
David Spinks:Acquisition is growth. So this is actually a really key one for events, and everyone should be doing this, and every event platform should hopefully be able to help you do this. And so you should be able to say, who came to our events, how many people came, how many of them were new leads? How many of them were new prospects? How many of them were opportunities? How many of them ultimately closed to sale? How many of them were customers? And so that gives you a good idea of how your events are actually impacting pipeline.
David Spinks:Contribution is, if you have a platform, let’s say, Airbnb, you have hosts who are contributing to the platform. They run lots of events for their hosts, and they want to see that those events are helping their hosts become more successful at contributing to the platform.
David Spinks:Engagement is essentially customer attention. And so, are our customers more likely to be loyal, to stick around, customer lifetime value as a result of attending our events.
David Spinks:And then success is, customer success. It’s helping people be more successful at using your product, and growing in their career through education programs.
David Spinks:And so all of those can be powered by your events and your online communities, and you can tie any of those events back to one of those business outcomes.
David Spinks:And the last thing I’ll say there is just, we tend to think of these events as one-offs, right? We think of it as like, “This is an event and this event needs to drive this business value, this community value.” And that’s it. We look at it in that bubble, but what you should look at your events as, is touch points with your community over time. And so your goal is to build an ongoing, engaged community over years. And that event is just one single touch point amongst many touch points, that can include your forum, it can include your email, it can include events, in-person events, when those come back. It’s one touch point in an ongoing community member journey that people are having with you.
David Spinks:And so, think about holistically for your event program. Maybe you’re doing a big conference twice a year, and you’re doing regular meetups every month, and you’re doing office hours every week. Those are different kinds of events that you can create, and each one of those is going to have a different community goal, and it might even have a little bit of a business goal. Or maybe some of the events don’t have a business goal, it’s just about engaging the community, knowing that later it’s going to drive business value. And so when you think about it, now you start thinking about your entire community program holistically, and all the different events and touch points that might feed into that customer journey.
Harry Stebbings:I absolutely love that holistic perspective. And I really liked the breakdown there between the two different lenses. So I think that’s an awesome clarity to what is quite a murky, “How do I measure success?” I do, though, David, want to move into my favorite, which is the quickfire round. So, I say a short statement, and then you hit me with your immediate thoughts and I’m going to throw in a couple that aren’t in the schedule that you just mentioned because I’m too intrigued. So just roll with that. Okay. So you mentioned that RSVP to confirm in attendance, what’s a good measurement and a good success rate in terms of that RSVP to attendance of virtual events?
David Spinks:That range is going to be huge, because it depends on the size of the event, right? If you have a 10 person event, you probably want all 10, or at least nine out of 10 people to show up, because you personally invited them. If you have a big conference, it’s going to be lower and we’re seeing the range all across the board. Some people are seeing higher attendance rates than their offline programs were, some people are seeing lower rates, and so offline, historically we’d see for a free meet-up, or a free event, you’d see about 40% people show up. We just hosted CMX Global. We had 3000 people RSVP for that event and we had 2200 show up. It was about 70% showed up, which awesome. It was really cool to see that high of a turnout rate.
David Spinks:It’s hard to have a benchmark, just compare against your own events. So if you did a conference, how do you compare against the last one? If you do a meet-up, how do you compare against your previous meet-ups? And see what you can do to continue to improve that conversion rate by improving your emails, your communication flows, things like that, that might help people be reminded that the event’s coming up, and make sure they have it on their calendar, and that they’re ready to join when it kicks off.
Harry Stebbings:What a terrible question from me, I apologize for that. Benchmark- [crosstalk 00:30:08].
David Spinks:Well, it’s a terrible, “It depends,” answer, which everyone hates.
Harry Stebbings:Tell me, what’s the biggest misconception around virtual events?
David Spinks:There’s a belief that you just can’t build real community through virtual events, there’s just no way you can replace in-person experiences with virtual experiences. And that is true, that you can’t replace it, and there’s a hundred percent, many elements of in-person gatherings that we are just never going to be able to replicate virtually. Even if you got the VR experience perfect, and you have your haptic suit, and you could feel everything. And even then, it’s still not going to be the same as just being able to run into someone in the hallway of an event. It’s the serendipity that you miss out on.
David Spinks:That said, there are a lot of things that you can do to create really meaningful experiences that help people actually connect with each other, and form relationships and form legitimate bonds. And so you have to get creative, and you have to figure out ways of creating serendipity and connecting people with each other in ways that aren’t just a webinar.
David Spinks:You can replicate a good amount of things that you have in an in-person event. Will it do it a hundred percent? No, but there’s a lot of value that you couldn’t even do in an in-person event, because virtual events are just more accessible, for one. So people who may have not been able to travel, or afford a ticket, they can all come together in a virtual event in a way they couldn’t in person. So look for the unique values, or the unique opportunities that virtual events provide, rather than just trying to copy what an in-person event is.
Harry Stebbings:Totally agreed in terms of not being a copy of the in-person. Final one, but a really interesting one for me to hear is, obviously you have CMX, but of all the other virtual events you’ve been to, what has been your favorite virtual event, and what made it so good?
David Spinks:it would be the virtual Passover Seder that we hosted with our friends and family.
Harry Stebbings:Got you. And what made it so good was the bond between friends and family?
David Spinks:Yeah, it was awesome. It was a virtual Seder and, so Seder means order. And so it’s basically, you go through the order of Passover, and you read the stories and you sing the songs. And we had, everyone pulled up a virtual Seder, and they each read from it. So we rotate around. So everyone felt involved, everyone felt included, you drink a lot of wine during it. So it was fun. And so we used to host Seders at our house all the time, every year.
David Spinks:Obviously we couldn’t do that this year. So we did it virtually, but my family is in New York. I grew up in New York, I live in San Francisco now. And so they’ve never been able to be there for the Seder that we host. And this year they were able to join from New York. And we even had two other friends, from Australia, join us. It was morning for them, so they maybe had a little less wine than us, but it was really cool to be able to have our really close friends in San Francisco and our family involved. And just seeing that melding of different groups, that I think otherwise would have been really hard, because everyone would have just done it with their friends, or with their family, to be able to bring those groups together was really special.
Harry Stebbings:David, as I said, I’ve been an admirer from afar for a long time. So I can’t thank you enough for joining me today, and this has been fantastic.
David Spinks:Awesome. Well, thank you so much for having me.
Harry Stebbings:Absolutely loved that deep dive with David. And if you’d like to see more from David, you can find him on Twitter @DavidSpinks. Likewise, it’d be great to welcome you behind the scenes here. You can do so on Instagram @HStebbings1996, with two Bs.
Harry Stebbings:As always, I so appreciate all your support. And I can’t wait to bring you another fantastic episode next week.
Hello and welcome back to Equity, TechCrunch’s venture capital-focused podcast, where we unpack the numbers behind the headlines.
First, a big thanks to everyone who took part in the Equity survey, we really appreciated your notes and thoughts. The crew is chewing over what you said now, and we’ll roll up the best feedback into show tweaks in the future.
Brex’s $150 million raise: Natasha covered the latest huge round from corporate charge-card behemoth Brex. The party’s over in Silicon Valley for a little while, so Brex is turning down your favorite startup’s credit limit while it stacks cash for the dowturn.
Spruce raises a $29 million Series B: Led by Scale Venture Partners, Spruce is taking on the world of real estate transactions with digital tooling and an API. As Danny notes, it’s a huge market and one that could find a boost from the pandemic.
Masterclass raises $100 million: Somewhere between education and entertainment, Masterclass has found its niche. The startup’s $180 yearly subscription product appears to be performing well, given that the company just stacked nine-figures into its checking account. What’s it worth? The company would only tell Natasha that it was more than $800 million.
Ep. 333: Bridget Gleason is the Head of Sales and Customer Success @ Tidelift, the company providing managed open source, backed by maintainers. Tidelift has raised over $40M from some of the best in the business including Foundry Group and General Catalyst. As for Bridget, she has the most incredible track record. Before Tidelift, Bridget was VP of Sales @ Logz.io and before that was VP of Corporate Sales @ Sumo Logic where she drove ARR up by a record 237%. Prior to SumoLogic, Bridget was VP of Sales @ YesWare where she increased MRR per rep by 450%. Finally, before YesWare, she was VP of Sales @ Engine Yard, where she tripled monthly recurring revenue, over the course of her 3+ year tenure, in 3 key leadership roles.
Pssst 🗣 Loving our podcast content? Listen to the start of the episode for a promo code to our upcoming events!
In Today’s Episode We Discuss:
* How Bridget made her way into the world of SaaS and Sales and came to be Head of both Sales and Customer Success at Tidelift.
* Why does Bridget believe the best starting point for customer success is “company culture and value”? How does company culture impact the quality of customer success? In practice, what can one do to improve it? Who has done this well? How does value drive customer success forward?
* How does Bridget think Maslow’s Hierarchy of Needs drives the roadmap for customer success? What core elements does it change? Where do most teams go wrong in implementing the role out of their CS strategy? When should one hire their first CS rep? What should that hire look like from an experience perspective?
* How does Bridget advise her CS reps the best ways for them to build trust with their clients? What works? What does not work? Does Bridget believe CS teams should be involved in the upsell process? Does that endanger the element of trust?
Ep. 334: Hear from Michelle Zatlyn, co-founder and COO of Cloudflare. Michelle started the company during an economic downturn in 2009. In this talk, Michelle will share how she made her business idea come to life and some lessons learned that can help other entrepreneurs—from solving a real, meaningful problem, to communicating in a crisis, prioritizing when there’s a true lack of resources, and more.
Harry Stebbings:Hello, and welcome back to the official SaaStr podcast with me, Harry Stebbings. I always love to see behind the scenes, you can do that on Instagram at @HStebbhings1996, with two Bs.
But, time for the show today. We’ve spent a lot of time in the world of marketing lately, and so I wanted to switch it up today, and move to the sales and customer success side. So, with that, I’m delighted to welcome back to the show Bridget Gleason, Head of Sales and Customer Success at Tidelift, the company providing managed open source, backed by maintainers. Tidelift has raised over $40 million from some of the best in the business, including Foundry Group and General Catalyst.
As for Bridget, she has the most incredible track record. Before Tidelift, Bridget was VP of Sales at Logz.io, and before that was VP of Corporate Sales at Sumo Logic, where she drove ARR up by a record 237%. Before Sumo Logic, Bridget was VP of sales at Yesware, where she increased MRR per rep by 450%. And finally, before Yesware, she was VP of sales at Engine Yard, where she tripled monthly recurring revenue over the course of her three year tenure, in three key leadership roles.
But, that’s quite enough from me, so now without further ado, I’m so excited to hand over to Bridget Gleason, Head of Sales and Customer Success at Tidelift.
Harry Stebbings:Bridget, I have to say, it is such a joy to have you back on the show. Thrilled to see about your recent move to Tidelift, and such exciting times ahead there. But, thank you so much for joining me today, Bridget.
Bridget Gleason:Well, Harry, it was great. You know, the last time we did this, it was, I think, February 2019, so just a little over a year ago. Really great to connect, and get caught up.
Harry Stebbings:Absolutely it is. Listen, I loved that episode so much, when we did the first one. But, hit me, for those that maybe missed our first episode, which was so great, tell me, how did you make your way into the world of SaaS, and how did you come to be the rockstar head of sales and CS at Tidelift today?
Bridget Gleason:I love it, I love the rockstar name that you give me, whether it’s true or not. But, Harry, I like to tell people that I took the jungle gym route here, meaning that it wasn’t this straight line from rep, to manager, to VP, mine was nothing like that. I was an English business major in school, but I taught in the engineering, I was a [inaudible 00:04:08] in the engineering school.
I went into product marketing for the commercial arm of Xerox Park, which is a big computer research company here. Then, I went into sales school, Xerox sales school. Then, I started a company, which I sold in early 2000. Did a lot of consulting for high tech startups, I really love the startup space. Ended up taking VP of sales role with one of my customers, and then, gosh Harry, I did all sorts of things. I opened an office in Ireland for one of the companies, I was the first US employee for an Israeli company.
And now at Tidelift, which interestingly, the CEO reached out to me after he heard the podcast that you and I did more than a year ago.
Harry Stebbings:That is amazing to hear. I did not know that, but I’m absolutely to thrilled to hear that. He clearly has great tastes in podcasts.
Bridget Gleason:Well, he does have great taste in podcasts. And, I don’t know that I would have found Tidelift, and it’s just been a career defining role and move for me, and really, really inspiring. So, thank you, thank you Harry, for doing what you’re doing.
Harry Stebbings:I absolutely love doing it. But, I do want to start on a really interesting aspect, because when we spoke last time, you were head of sales. And now, with the new role with Tidelift, CS, customer success, has been incorporated into your purview.
With that, we have to have a starting point for the strategy and the plan, and when we spoke before you said the best starting point for customer success is company culture, and value. What did you mean by this? Maybe, is it better to take it turn by turn, and how does company culture play into the level and quality of customer success?
Bridget Gleason:There’s always been this discussion. Does customer success start after you close a sale? Should the handoff start before the customer becomes a customer? Should customer success start when reps are reaching out?
My belief, Harry, is that customer success starts with the culture of the company. I read a book, God, it was years ago, about Marriott. JW Marriott was notorious for this, and he said, “If we treat our employees right, they’ll treat the customers right.” I think Marriott started in 1927, and in the early ’30s, they were one of the earliest companies to give healthcare benefits to their employees. They really had an employee first, and by extension, a customer first orientation. I believe that 100%, that if we’re not treating each other well, and we don’t have a culture that is engaging, and respectful of the individual, it’s going to be very hard for us to extend that to the people who we’re dealing with.
When you look at, just in statistic, Harry, of it, companies that have employees who are highly engaged are 22% more profitable. So, how did we do that? You’ve got to have a culture where employees not only survive, but they have to thrive.
Harry Stebbings:Can I ask, if we take that to a practical level, because I totally agree in terms of that career development, and the thriving. We’ve seen the chastising of the foosball tables, and La Croix provisions that are deemed culture, often. What can one do, on a practical level, that you’ve seen work in terms of building that culture and company value so inherently into how we think about, also, customer orientation?
Bridget Gleason:Well, I think there’s a lot of different pieces of it.
I know, just at a manager level, one of the things that I try to do with my direct reports is, first of all, how are they doing? Just, how are they doing as humans? Especially now, around COVID-19, how we’re doing, we’re all under a lot of stress, so checking in with how people are doing. As well as their professional desires and aspirations, those are always top of mind. One thing we did as a company was … It was last Monday, our executive team said, “You know what? We need a Maintain Ourselves Monday.” Everybody just got a day off. It’s an allowing of people to bring their whole selves.
This leads to the next part, Harry, when you asked about value. I believe that values lead to value. So, values lead to more, also, value creation. Tidelift is unique in my experience, in terms of values. There is not a person in the company who couldn’t rattle off the four values, we talk about them every day, and have them integrated into their work. We don’t need to have them posted, we don’t need to have them, really, reviewed, they are so woven into our brand. So, that’s how we deal with one another internally, as well as externally.
I’ll tell you what they are really quickly, because I think they’re interesting. There’s four of them. So, optimistic, we see an amazing future. We deal in open source, we provide managed open source for large companies. We believe that open source is really awesome, and we want to be part of it. So, we’re optimistic, and as it relates to customer success, we believe that for our customers. We’re practical is value number two. We know that the words in these lofty ideals aren’t enough, so we try to be very pragmatic, and very honest, and have a really honest assessment of ourselves and our product. The third is additive. We have a growth mindset, that we’re capable of learning and doing more. Then finally, is around inclusivity and diversity, and we believe the world is a better place with diverse voices.
Those are the things that we practice internally, but also bring those to the table when we’re dealing with customers.
Harry Stebbings:I love the four values. I am really interested by one especially there, and it’s the element of open source. Now, you’ve been involved in both sales and customer success is closed source also. How does it differ, in terms of traditional enterprise software, versus open source? Specifically, when it comes to customer success, is there a core differentiator?
Bridget Gleason:Well, I’ll tell you, for us what’s a core differentiator is open source is an amazing phenomenon, of all of these people contributing with no expectation to get anything back. When we talk about additive, as it relates to open source, there’s been a history of companies harvesting the value from open source, but not, then, added back to it. So, when we think about customer success, we don’t want to just harvest the best things of open source, and not contribute back. But, we also want to be ones that are adding to the value, that’s a core, underlying mission.
So, our products and services are around how can we help companies utilize open source more effectively, more securely, more responsibly, as well as contribute. And then, it’s a two-sided marketplace, so we’ve got subscriber companies that we provide support for the open source that they use. And on the other side, we have the maintainers themselves, that we pay to keep their open source that they are responsible for secure, et cetera. We’re trying to add back in both ways, and make both parties successful.
When you have a commercial product, you don’t have this two-sided marketplace, where you’re trying to balance both. Making sure that we’re not just harvesting, but that we’re really contributing in a meaningful way back to the community, and we engage in that also with our customers, which I think is really, really powerful.
Harry Stebbings:Speaking of engaging with your customers in that way, I am really interested if we take the hat of head of sales that you have worn before, now incorporated the head of CS also. A lot of questions that I get asked from early stage founders is, “Okay, I’m always told that I need to develop a sales playbook before I can hire my first sales rep, and then I pass it onto them. With customer success, is it the same? Is there a customer success playbook that I have to develop? And, when should I hire my first rep?”
I guess, there’s three separate questions there, that are kind of integrated. How do you think about that requirement for CS playbook, and when to hire your first?
Bridget Gleason:So, I see sales and customer success as a continuum. I don’t see them as distinct, perhaps, as some might see them. When the sales team is engaging early on, what we’re trying to identify is what is the success criteria of this particular prospect, what are they trying to achieve? How might we be able to help them do that? By extension, then, that after the commercial are completed, we’re just extending what that looks like.
I think a highly functional, evolved team is one that starts the criteria really early on, and is just rolling it out, and playing it out. If you don’t do a good job on the sales side early on, and setting those expectations, it will be very difficult for you to do a good job on the customer success. So, the playbook needs to be written as you’re working this out with prospects.
In fact, Harry, I’m working right now on some big proposals. Some of the sales reps and I are working on some big proposals, and customer success is highly involved because in these proposals is the success plan. What we do is we send out, in a Google doc, a proposal. We ask that the prospect to review it with us, and tell us where we have it wrong before we submit something formal. It’s not just pricing, it goes all through the rollout, Harry, of what it’s going to look like as we rollout. Not just rollout and onboarding, but then, what does success look like? We start really, really early.
Then, to your question about when to hire, because it’s a continuum … Again, we’re an early stage company, so what we did, as you’ve probably seen before, is founder’s really involved, everybody’s involved. Founder’s really involved, then you have the sales team that’s managing it as it extends. And then, we got to a point, also … Again, we sell to very large, primarily regulated industries. Because we’re selling high, six figure deals, we just need to make sure that we’ve got enough resources on the ground to deliver a really incredible experience to them.
Harry Stebbings:How do you think about professional services, and the challenges that naturally occur in terms of delivering that in a COVID world?
Bridget Gleason:We’re all learning. We’ve had to adjust a lot of our delivery mechanisms, and these are things that we’re doing in conjunction with our customers.
It’s interesting, Harry. Because we sell a technical product to technical people, they’ve actually been distributed for quite some time because in order to get great talent, you’ve got to be distributed. You don’t have to be, but it helps if you can be, in terms of getting talent. I don’t know that we’re facing as much of a challenge, because the teams that we work with are often highly distributed anyway.
But, it’s going to continue to evolve, it’s continuing to evolve. It’s something, I think, we’re all really grappling with.
Harry Stebbings:Pulling on that thread, I’m really interested to dive in here. A lot of founders say “Hey, our professional services is growing, and it’s becoming 30, 35 percent of revenues.” At what point do you think professional services becomes too heavy weighted on the revenue front? And, how should founders think about that balance and tipping point?
Bridget Gleason:Well, I guess it’s what function is professional services performing, in terms of the sale, the implementation, and then the ongoing maintenance. And, how big a part of your business do you want that to be, do you want to be a services organization?
If delivering services is fundamental to your product, if it’s a core competency, keep it. Keep it, keep, keep, keep it. If it’s not, if it’s something that you’re delivering but it’s not really part of your core competency or differentiator, there would be an argument to bring in partners. Because there’s some benefits that you can’t achieve you’re also using partners, and letting them take on some of the professional services revenue.
I look at it, just how core is it to what you’re delivering, the value that you deliver?
Harry Stebbings:Yeah, absolutely. I love the integration there, of partnerships.
I do want to stay on CS though, so apologies for that drifting off. But, we discussed the first stating point. If we then think about enacting that, and putting a roadmap of success together, you’ve previously stated the importance of Maslow’s Hierarchy of Needs as a roadmap for customer success. A bit of a cliffhanger for me, with that one. So, talk to me about this one, Bridget. How is the Hierarchy of Needs a roadmap for customer success in your mind?
Bridget Gleason:It’s an interesting one, and our CEO Donald Fisher is the one who first started talking about this, with prospects and customers. If you think, Harry, at the very base level of the hierarchy, the basic needs, which are physiological and safety, what that translates to customer success as I look at it is implementation, onboarding, you answer my questions quickly, you handle my basic needs. And Harry, I think for too long, we’ve looked at these basic needs as, “I’m doing great customer success! They’re implemented, they’re onboarding, I answer their questions,” and we measure things by that.
If you go up a level, though, the next two levels in Maslow’s Hierarchy are belonging and esteem. Those, in the customer success world, they map to adoption and insights. Is there more that I can get? Because on the esteem side, and the belonging, and what are other people doing, that fits in there. Is there more, are a lot of people using it, do I feel good because I’ve gotten great adoption in the company? That’s better, customer success when it moves up to that, and you’re helping companies extend the adoption as well as get more insights, that’s good. I think most companies, if they get to that, they’re going to give themselves an A.
At Tidelift, we’re not stopping with those. The very tip is the self actualization, and what that looks like is a thought partner. For Tidelift specifically, how are we, together, making open source better, this community? We have an amazing community. Again, specific to Tidelift, there’s a movement, when you get to this level, of open source consumption. So, how are we, as a company, consuming open source in a way that is efficient, and secure, and responsible to an external contribution?
Harry, what is so amazing, and what’s so thrilling about being part of Tidelift is the companies who we are engaging with, they have a strong desire to move beyond the harvesting of open source, and getting whatever they can out of it because they know it’s amazing, so they want to keep using it. But, they also want to be contributors, and to give back to this community. That’s where you get this self actualization.
I think, in other companies, it’s similar, it’s not going to map in the same way that Tidelift will map. But, where do you find, at the tip of the pyramid, that you can engage with your customer to do something greater, and to be really a thought partner in whatever it is that they’re doing because they’re the star of the show.
Harry Stebbings:I totally love that positioning as the thought partner. Can I ask, in terms of check-ins, I think a lot of CS teams get this wrong. What does the right check-in structure look like to you? And, how do you think about really structuring that conversation ahead of time, without being too formulaic, and objective, and maintaining that human element of the relationship?
Bridget Gleason:I’m not a fan, Harry, of, “Hey, just calling to check in,” where there’s no structure to it.
If we go back to what we were talking about earlier, this success plan that we put in place before they become a customer, it does give you a roadmap. They often have a roadmap of what they’re trying to achieve, so we do two things. One, with good tooling, we try to understand as much as we can about what’s happening in their environment without having to ask them. Again, not being creepy, they need to know, “Hey, we’re looking at your dashboards,” or whatever it is, whatever kind of tooling makes sense. We learn as much as we can through tooling, because in SaaS you have a great opportunity for that.
Then, number two is, we really stick to and look at what they’re trying to achieve in the success roadmap, and use that as a template when we have these conversations. Has that shifted, have things changed? COVID-19 changes a lot of things for how things are going to be rolled out, how we implement things, and it’s a continual conversation.
We also let our customers guide, in terms of the frequency of check-ins, and the mode. Sometimes it’s phone, sometimes it’s Zoom, sometimes it’s Slack, sometimes it’s text, sometimes it’s email, sometimes it’s a report, sometimes it’s an in-app message. But, we work with them to develop the communication cadence and style that works for them.
Harry Stebbings:Sorry, you said there about the impact of COVID. I do just have to ask, with both hats on I’m sure you have such amazing purview, but I have so many SaaS founders who say, “Hey, Harry, so far, my sales pipe hasn’t been impacted.” I guess, how would you respond and advise that founder? How have you seen your sales pipe be impacted? And, how do you think a head of sales should be thinking now in enterprise, when looking at that pipe?
Bridget Gleason:When you’ve got founders who say the sales pipe hasn’t been impacted, that, to me, means if you think about an axis of companies that are least affected to most affected, and the financial strength, they’re selling into a quadrant that is financially strong, and not as affected. Which aren’t very many companies, by the way, not very many companies that haven’t had a supply chain disruption in some way. So, I think that’s great. I mean, that surprises me a little bit, but I think that’s great.
Harry Stebbings:But in enterprise, the contracts are long, the clients are slow moving, generally speaking.
Harry Stebbings:So with heavy enterprise, my concern is … I go, the big point here is, so far. Actually, we haven’t had the first round of renewals, and we haven’t had the first discussions on this accounting. This is going to be more painful than you think, don’t go into this thinking so far, we’ve been fine, so we can expect the same moving forward. Batten down the hatches is my advice.
Harry Stebbings:Would you agree with that?
Bridget Gleason:Yes! Yes, 100% because the plans are still evolving, the plans are still evolving. What one hears from a prospect or a customer may have been said to them with 100% integrity. “This is going to happen, in this timeframe,” 100% integrity. But, things can change because we’re not through it yet to know, nobody knows.
I agree with you, that we need to move through with a measure of caution, and realism. Again, one of our core values … Okay, I can’t get through the day without talking about one of our core values, but being practical. And just flexible, build that into the plan, that things are not going to go exactly as planned. They’re not going to.
Harry Stebbings:If we have that in mind then, a willingness to accept uncertainty, say, when we think about rollouts, the other big thing that I’m seeing is slippage, especially at the enterprise level. From the customer success perspective, what kind of core things are you seeing in terms of slippage, in terms of delayed rollouts, that you think COVID has really impacted?
Bridget Gleason:Well, COVID affects people, and people are part of these rollouts. People are getting sick, they’ve got family members who are sick, they are working in environments that they’re not used to working in. So, I think we see slippage, and time frames extended because of the very human element of what’s happening, and a lot of uncertainty.
Harry, people are more stressed, there’s more anxiety, they can handle less. Zoom fatigue is a real thing. You factor in the human element of all of it, and things are going to take a little longer. We’ve got to accommodate for the human part of the businesses that we’re selling into, that we’re not selling to robots. Again, just keeping that in mind, and having some buffer built in as we think about it. It’s a great muscle right now, that we can learn to flex as an organization, of being flexible, and resilient, and learning how to have some buffer but still keeping things going down as predictable a path as we can.
Harry Stebbings:You said there, flexible and resilient. The question that I get a lot from different founders is, “How much should we be willing to give when it comes to discounting?” When you think about discounting, and that flexibility and resilience in mind, you’ve got to meet your business objectives, but you also need to be flexible. How do you think about the right level of discounting to accept?
Bridget Gleason:God, it’s so funny, Harry, I haven’t thought about discounting at all.
Bridget Gleason:Well, I haven’t. I haven’t thought about it because we’re delivering against value. We’re really trying to look at what the value creation. I do understand how some companies would think about some discount, based on the new reality. It’s not my go-to place, it’s not my go-to place. We try to price things fairly from the outset, so we don’t get into that.
I don’t know, it’s a good question. I get it, but that’s not my go-to place.
Harry Stebbings:I mean, speaking of that pricing fairly though, it does take me something that you said to me before. Which is, the centrality of trust, for a CS team to be successful. So, I guess the biggest for me is, absolutely that makes sense, me the customer, you with Tidelift, how do we build trust in this relationship? And, what really work in building that relationship of trust?
Bridget Gleason:Well, I don’t think it’s a surprise to anyone that trust is a key factor in driving customer engagement and loyalty, it’s a key factor. Threading this pricing issue and trust, a great way to erode trust is to offer a customer a price, then when they ask for a discount, you give them one without asking for anything in return. Because what that says to them subconsciously is, “Oh, I thought you were giving me the best price, but then you give me this other one.” That sows a seed of distrust.
A way around that is a give to get. “All right, I can give you a discount, if you can close it this month because this is important for us.” Or, volume discounts are normal. Or, in exchange for a testimonial, there are things that you can do to give to get. What’s hard, also, about this give to get in this environment is if I were to tell a customer, “I’ll give you a discount if you can do it this month,” that doesn’t seem like it’s really taking into account their realities, also. I may be better off giving them extended terms, just to do it that way. Okay, that’s threading the two together.
Ways to establish this trust. I tell the team, “You have to be trustworthy in order to get trust.” Like, you have to be trustworthy, you have to tell the truth, first and foremost. Second, it’s okay, and in fact I often encourage it, Harry, to tell a prospect or a customer things that you can do and things that you can’t do, because it lets them know that you’re not just trying to sell them swampland in Florida. Also, another way to develop trust is to say, for example, “I will deliver this proposal to you by Friday at four PM,” and you put in a date and a time, and you deliver on it. That starts to say, “Oh okay, they do what they say they’re going to do.” Conversely, if you make commitments that you can’t keep, you’ll erode trust in that way.
Harry Stebbings:Totally aligned, in terms of … It sounds, I don’t mean it badly, but so people would do as you said, what they said they would do. “I’ll email you tonight,” and it comes through tomorrow. It’s like, you said tonight, build that trust in that really important way.
I guess, the biggest way that trust is often deemed to be eroded within the realm of customer success, or often a lot of people think it is, is when customer success is heavily involved in upsell processes. I’m interested to hear your thoughts here. Does being involved in an upsell process erode that element of trust? And, should customer success be involved?
Bridget Gleason:I don’t think it should erode trust at all, if a customer success person is involved in an upsell, because we shouldn’t be talking about an upsell if we don’t think that there is some value, based on that upsell. There needs to be a lot of integrity in the process. If there’s integrity in the process, I don’t see that there’s any issue with a customer success person also being involved in an upsell.
I think, sometimes where I see a separation as being helpful, is sometimes customer success people, if they’re more technical than not, they just don’t feel as comfortable, or as fluent around that process in the commercials. I don’t see that as a problem, I would rather them be clunky, and just be honest, because customers see that, and they respond well to it. But, sometimes I can see just a separation of roles, that you want one person that you just know, if it’s a highly technical product, that they just handle the technical side, and they like to have that handoff, a division of work. Because getting involved in the commercials, you’re involved in a lot of other pieces of the business.
So, I see it not as an issue of trust, as much as just a division of labor.
Harry Stebbings:Totally agreed, in terms of the division of labor. I’m glad we’re aligned on that.
I do want to dive into my favorite though, Bridget, which is a quick fire round. So, I say a short statement, and then you give me your immediate thoughts, in about 60 seconds or less. Are you ready to rock and roll?
Harry Stebbings:Okay. I love this one, actually. What motto or quote do you most frequently revert back to, and why?
Bridget Gleason:Okay. Well, I’ll tell you my most recent, and these change. So, the one that I’ve been quoting most recently is, “If you want to go fast, go alone. If you want to go far, go together.” I just finished this great book called Boys in the Boat, about this rowing team that won the 1936 Olympics in Berlin. I so believe, Harry, that we can do so much more if we do it together, I’m a big believer in teamwork. Again, at Tidelift we’ve got this opportunity to work together as a team, to work together teams within the company, to work together as teams within this larger open source community, and I just really believe that we’ve got this great opportunity if we work together. COVID-19’s another great example, let’s figure out how to do this together.
Harry Stebbings:What do you know now that you wish you’d known when you entered SaaS?
Bridget Gleason:I’m probably not giving a good answer here, but I love surprises. I love the unknowing. For me, I’m so curious, so to learn something new, so I’m glad I didn’t know any more than I knew so that I would have the privilege of discovery. Which, I think, is just a fantastic journey.
Harry Stebbings:Oh my word, it sounds wonderful. But no, I don’t enjoy the privilege of discovery, I’d much rather get to the endpoint much quicker.
Bridget Gleason:That’s funny.
Harry Stebbings:I do want to ask, biggest surprise about the move to Tidelift?
Bridget Gleason:I didn’t know that a company could be so rooted in values, and what that does to how we work together as a team and how we show up in the world, it is one of the greatest privileges of my professional career. This founding team are inspiring, they move me to tears what they’re trying to do in the world. I just feel really committed to what they’re doing, and who they are, and really wanting to bring about more diversity. Here are four individuals who don’t have to care who do, and are using their background to do it. So, just that I could be so inspired by a company.
Harry Stebbings:Building a team outside of the Bay, what’s the biggest pro, and the biggest con?
Bridget Gleason:Well, we’re 100% remote, so we’re all over the place. We’ve got a core of people in Boston, where I sit now. I think one of the pros is when you’re building all over the place, you’ve got a larger talent pool so we get great talent. Also, at this time, COVID-19, we’re all used to working remote.
The biggest con is, oh gosh, Harry, there’s nothing that can replace the in-person. We do get together as a company, several times a year. But, the camaraderie in an office, and that in-person, is probably the biggest con.
Harry Stebbings:If you could change one thing about the world of SaaS today, what would it be and why?
Bridget Gleason:It’s probably the one thing, and the one thing I hate. So, I think sometimes with SaaS, there’s the ability to leave something quickly, that you can be in and out because it’s easy to rip and replace. I think sometimes companies may not stick with a product or service long enough, and it puts a lot of pressure on quicker wins. I think we lose something if you’re not able to establish a longer term relationship, and moving to that point, like I said, of self actualization, really developing something great together.
Harry Stebbings:Do you think time to value can actually be quite an erosive, problematic principle? Essentially, you could try and gamify it to create short term value creation, to reduce the time to value pendulum. But actually, there might be more value, or an optimal situation created with just a little bit more time, and slower to value, but more value.
Bridget Gleason:Yes, plus one to that, I agree.
Harry Stebbings:Yeah, it’s something that always annoys me when people go, “Oh, it’s all about time to value.” Totally aligned there.
Final one. Who in SaaS customer success today do you think is killing it? And, why do you get inspired by them, in terms of their approach?
Bridget Gleason:A couple of companies come to mind, one is Outreach. The CEO, Manny Medina, I knew early on. What inspires me about them is they really are working with customers to try to get to that tip of Maslow’s Hierarchy, and partner to try to figure out what are sales teams trying to do. Okay, so that’s one.
Zapier, I think, is another one. I know the team there, and the woman that’s running customer success. Again, what inspires me about them is this close collaboration with their partners, and really pushing the envelope in terms of trying to help them do more, and the customers really being the star of the show.
Then finally, there’s a company, Catalyst, which is a startup. These two brothers, Edward and Kevin Chiu, that are creating a new customer success platform. I’m just really anxious to see what they’re going to come out with, but I love that they’re trying to change things up a bit.
Harry Stebbings:Totally with you, I think Catalyst are great. But Bridget, listen, as I said, I’ve wanted to do this episode for a while, since I saw about the move. Thank you so much for joining me today, and this has been so much fun.
Bridget Gleason:Likewise, Harry.
Harry Stebbings:I always so love my discussions with Bridget, and I want to say a huge thank you for her for giving up the time today to be on the show. If you’d like to see more from us, behind the scenes, then you can on Instagram at @HStebbings1996, with two Bs, it’s always so great to see you there.
As always, I so appreciate all your support, and I can’t wait to bring you a phenomenal set of episodes next week.
Transcript of Michelle’s podcast:
Announcer:This is SaaStr’s Founders Favorite series, where you can hear some of the best of the best from SaaStr speakers. This is where the cloud meets.
You know the deal. Your project is due EOD, but the stakeholder with the answers you need is MIA. Well, there’s a better way. Guru is the knowledge management solution that delivers the information you need when and where you need it. Guru lets your team capture information instantly, wherever it surfaces. Slack, Gmail, Salesforce, Microsoft Outlook coming soon, and more.
Up today, CloudFlare COO Michelle Zatlyn.
Ben Dahl:Hi everybody. We are very lucky to have Michelle Zatlyn, co-founder of CloudFlare here today, to talk about starting a business in the midst of some economic headwinds. Clearly we have a little bit of a headwind at this point, and I think Michelle’s perspective as a founder during that sort of time period will be really useful. I think it would be really helpful for Michelle to just give a little bit of an overview about CloudFlare and about herself.
Michelle Zatlyn:Sure. Thanks, Ben. Thanks so much for being here everyone. I’m Michelle Zatlyn. I’m one of the founders and CEO of a company called CloudFlare. And we started CloudFlare during the economic downturn right after the financial crisis in 2008. And so we started to work on this in 2009. And while it’s different, it’s definitely a different thing going on in the world today. I do want to say that there are a lot of companies that actually started with us, that class of companies, and many of them have turned into big great companies today. So if you’re one of those entrepreneurs who are working on your ideas and thinking, “Man, is now the time to start?” it’s definitely possible. So we started CloudFlare in 2009 and today we have about 1400 people around the world. Our customers are internet properties, so websites, apps, APIs, and those customers come to CloudFlare to be fast, safer, reliable online.
So we built a service that does cybersecurity, global performance and reliability for any intranet property. And in these last 10 years, we have 26 million internet properties that use our service on any given day. So a huge scale. We stop about 50 billion cyber attacks daily on behalf of those 26 million internet properties. And we make the internet faster, safer and more reliable for a lot of people, so we’re really proud of that and our whole team is really proud of that. And so that’s some of the things we’ve done in the last 10 years.
And one thing that’s been really cool, starting the company 10 years ago in an economic downturn to today, about six months ago, Matthew and I and our team took the company public on the New York Stock Exchange. So we went from an idea that started during the economic downturn to a company that went public about six months ago. And today we’re about a 6, $7 billion market cap company.
Ben Dahl:So Michelle, as you think about starting CloudFlare in the midst of an economic downturn and you fast forward to today, do you have a sense or major tips for entrepreneurs as they’re thinking about either starting a new business, or extending their current business?
Michelle Zatlyn:Yeah. Sometimes I think it’s easier if you’re starting than extending. So I’m going to answer your question with that frame of mind. Because I think back to 2009 and it was really hard to get a job. I was doing my MBA at grad school, and so many of my classmates couldn’t get jobs. I had done my summer internship at Google. And I remember getting the call from Google, my manager at Google saying, “Hey, we’ve decided not to extend any of our summer internships a full time offer.” Because again, it was 2008. There was this huge financial crisis and people just were not hiring. And in many ways, when it’s hard to find a job, it’s actually, out of necessity it’s actually a really good time to start a company, the right company anyhow. Because I wasn’t competing with a lot of other offers. It wasn’t like you had a choice of a hundred things to go and do and you had to say no to a hundred things to go pursue this one thing.
So if I think back to our year at business school, a lot of amazing companies came out of that. And I think part of it is because the job prospects were kind of gloomy. And so for entrepreneurs who are starting to think about starting, again, I think for the right idea that you’re really passionate about and if you really think you’re solving a big meaningful problem of a big market with tailwinds to your back, it can be a really good time. That doesn’t mean it’s easy. It’s still really hard and there’s lots of things that was hard about it. You got to be really frugal and you got to innovate your way out of problems.
But I do think the mindset of, it’s almost like your option B or your other options, it’s almost easier to walk away from it because there aren’t that many other good things going on, so let me go create this thing that I just can’t stop thinking about. And so that’s for the people who are currently… And then the second thing I will say, I remember we raised, our first round of money from Ben who was one of the partners who helped us raise our series A, and then Venrock. And we raised $2 million, which, today people laugh. That’s like nothing for a series A. But back then, that was kind of the size of rounds.
And I just remember Matthew and Lee and I, and our team of the original eight people who really worked on this idea, we spent every dollar so wisely because it was a scarce resource. And when you only have a little bit of money, you really innovate your way out of problems or engineer your way out of problems. And we had this great engineering team and we really innovated our way out a lot of problems and tried to figure out ways to do things cheaper, better than we would instead of throwing at the problem. We used to have a saying, “Don’t throw money at the problem. Let’s innovate our way out of the problem.” And again, in a downturn like today, where money is still going to be hard to come by, that’s actually I think a really good, it can take you very far when you’re building your company.
Ben Dahl:I recall in the beginning that your rule used to be that the answer when someone wanted to spend additional dollars to solve a problem, was the first answer was always no. And that in the future, to the extent that you couldn’t solve it through creative programming or what have you, that potentially you’d loosen the purse strings. But the reality is, is that smart engineering was an important part of how you approached building the business.
Michelle Zatlyn:That’s exactly right.
Ben Dahl:In terms of when you were ideating on CloudFlare, how did you get to a conviction on the scale of what you were solving and the size of the market? Because largely at that point, particularly on both the content delivery, but also the web security side, this was not a problem that people were really focused on.
Michelle Zatlyn:I’m going to answer this question, but I want to make one caveat to my answer. When Matthew and Lee and I started CloudFlare, we really wanted to build a big company. That was our desire. And so a lot of my perspective is always behind building big companies. Again, a multibillion dollar public company. That’s what we wanted to do. And so I’m going to answer your question, because that was the frame of mind of what I was looking for. I was looking for a big, meaningful, hairy problem to solve that was going to turn into a big company. But there’s lots of different ways to build businesses, and there’s lots of amazing companies that never become a multibillion dollar company that are equally great and profitable, they’re just different.
So the advice that I’m going to share is really related to this swing for the fence model, and that works for some people and less for others. And so when we think back to what was happening when we started back in 2010 when we were working on this idea in 2009, we just saw there’s this huge shift going on, where we were going from a world from hardware and software that you owned, to services in the cloud that you rented. And I remember AWS was growing really quickly. And at the time there was a big debate of, will big companies ever really use AWS? Well fast forward 10 years later, that seems like such a naive thing to say today. I mean, them and Azure, they’ve just had tremendous success. But 10 years ago that wasn’t a given.
And so this huge shift was going on. There was all these software companies and then the advent of all these SAS application companies like Salesforce and Workday that were breakout successes. And we saw the same thing happening at the network layer where, yeah businesses have always wanted to be fast, safe, and reliable and I used to buy a lot of hardware boxes. And we said, can we turn that into a global service in the cloud that customers rent from us? And we knew that was a big idea. And there was just this huge shift going on. So again, kind of this idea there was a big market and there was a tailwind and there was this macroeconomic shift, which creates opportunities for new entrants. So that was the first kind of aha.
And the second thing that I was really proud of, and I think that if you’re a founder that can find both, it’s like, wow, there’s a big business here. Because the first thing you have to ask yourself, is there a business here because businesses are what sustain.
The second aha that we had was our go to market where we wanted to start with all of the startups and small businesses and nonprofits and developers out there, who today were using nothing. Because they didn’t have the budget or technical resources to buy these enterprise-grade services that existed for big companies. And so we had this big aha, like wow, we’re going to start with small businesses and small websites, and developers and startups and nonprofits who need to be fast, safe, and reliable around the world, and today they’re using nothing. So when we launched, our competitor was nothing. We were trying to get people to go from using nothing to something. And so we had to make it ridiculously easy to sign up and attractive. And if we did, it would kind of become a flywheel, knowing that our end goal is not only do we want to help startups and entrepreneurs and small businesses and developers and nonprofits, but over time, we also wanted to go help medium-sized businesses and large organizations and big enterprises and government organizations. And again, fast forward to today, we do all of that.
But early on we really started with a different go to market, and that allowed us to build our product and our technology and get momentum, so that we can then go compete more heavily with current competitors among large enterprises. And so it was those two things, it was like, “Wow, there’s a big macroeconomic shift. If we can help make the internet better for all these people around the world who currently have nothing, I’d be really proud to work on that.” And so it’s this idea of, I thought there was a big business opportunity and something that I think Matthew and Lee and I were really proud to show up every day and work really hard on.
Ben Dahl:One thing that I think it’s worth spending a brief moment on is just the distinction between good technology and a good business. And I think one thing that you and Matthew have always been focused on, is building both, really solid technology and a good business. But I think for people that are thinking about building a business in this environment, it’s not just solving a hard technological problem, but it’s also creating a real business out of it. And I think it’s worth you talking about that for a few minutes.
Michelle Zatlyn:Yeah. So again, when you start a company and then now we’ve scaled it to, in 2019 we did about we did 287 million in revenue last year. So just to give you a sense of going from 0 to 287 million in revenue last year. And some time along the way you realize as a founder, it’s all about mission and your vision, and do I have a problem here and how can I get people to come work for me? And how do I make sure that people love where they’re working? But at some point I remember having this big realization of “Wow, we’re founders and a business owner.” And it’s really hard for a company, you cannot, tech is amazing. I mean, we’re an engineering-driven company and that’s where we love and we celebrate it. But it is so hard to compare technology between one company and another. It’s way easier to compare business metrics.
And so at some point we had to keep all the great things about our technology. It is about the tech. We love that. It’s differentiation. We live that on a daily basis. But at the end of the day we also had to put our business owner hats on, and the questions we ask ourselves as business owners are different. They’re like, how fast can we acquire a customer? Do they renew our service? Do they want to adopt more of our services? How happy are they? How much does it cost us to deliver this service to them? And it turns out you really need to do both. And I think some founders forget about caring about the business metrics and I actually think that’s a real mistake. Because at the end of the day, if you have a really great business around awesome technology, that’s when magic happens.
And so I did not realize this on day one. And I wish someone had kind of come up to me in the face and told me really directly, “Michelle, at some point you got to think about the business metrics.” And for us it was around 50, 60, 70, 80 million in revenue that I really had an aha of like, “Oh wow, we are going to get compared on these KPIs and these metrics.” A, I got to know what they mean. And B, which ones are we good at today and which ones are we bad at? And the ones that we are bad at, how are we going to get better at them? And then over time we slowly moved them in a direction that we’re proud of. And even today there’s some that are better than others and we continue to work at it. But I think the faster that founders can realize that they’re also running a business, I hope that that means you’ll get to 80, 100 million in revenue faster than we did.
Ben Dahl:So as you think about that evolution as a company, how did you instill a culture that was about leveling up and continuing to evolve, and surrounding yourself with the people that you needed to build that business?
Michelle Zatlyn:Well, there’s kind of two points to that. There’s both the people you bring in to hire, to be part… Again, it doesn’t matter how great the founders are, you need a team to go really far. And I think trying to get that first team to come join you and then scaling the team. And who you need to be your first 20 teammates, who you need to be 20 to 100, who you need to go from 300 to 2000. Actually, people look different in those stages. And some things are the same, people matter. They make a huge difference. And there’s a huge difference between a great hire and a good hire at all those stages. But the types of person that we used to hire when we had 50 people in the company looked different than what we look for today.
Today it’s all about people who understand process and repetitive motion and automating things so we can do those things really efficiently so we can free up time and resources to do other things that help give us leverage in our business, versus when you’re employee number 20 or 30 or 40, you just need a lot of doers to roll up and do the actual work because you’re in build mode, build, build, build. And I think that the types of people you look for along the way are different. Once you have great people on your team, you want to make sure that they stay.
I was talking to one founder a couple of weeks ago, and they were really proud that they had 30% attrition of their team last year. And I said, “30%? That’s really high.”
And they said, “No, no, no. In a startup it’s normal for people to leave that often.”
I was like, “Well it’s true. People leave more frequently than a larger company, but 30% annual attrition, there’s something wrong. Either you’re not hiring the right people in, or you’re not a very good place to work.” I think most high-growth tech companies have annual attrition of 10 to 20%, and maybe 15 to 20% is considered average. So you want to be less than 25 and you want to be less than 20. And maybe in a nano point of time, it spikes because you’re going through some really important transition. But again, most of your peers are at 15 to 20% annually and you’re up at 25 to 30, something is wrong. Either you’re not spending enough time on the hiring side, or once they’re at your company, they feel like they can’t contribute or it’s not a good place to work, or the culture is bad or something is broken. And I really encouraged that founder to go back rethink what they thought was good there.
And at the end of the day that’s a leadership decision from founders of saying, “What kind of place do we want this to be for people to work?” And I think there’s lots of great stories. And then recently in the news, the last few years, there’s been some terrible stories. And I actually think it’s upon all of us as leaders in the tech industry to show there’s lots of ways to create a work environment, and some can be really healthy and be a place where people choose to work and want to be and have huge success stories. So that’s for the team and getting people in.
I would say one thing that we’ve done that worked really well for us that isn’t always well-appreciated or agreed upon, it just worked for us, is that hiring managers. We have a belief that people come work for their manager, and they stay if they like their manager. And so our hiring managers are heavily involved with hiring. And early on we didn’t have any managers so that meant the founders did most of the hiring. And then we hired managers and they did it. And when we were at less than 100 people, 50% of my time was hiring. So you just feel like you’re always looking for people to join. And I also had all my other things I had to do so it just meant I was working all the time.
And today of course, we have a recruiting team. We have a great recruiting team and they partner with the hiring managers. But even to this day, hiring managers are responsible for building their teams. And again, we have a much bigger organization today, and the recruiters partner with them to build great people in. And even to this day our hiring managers spends about 20% of their time hiring every week. And that might not sound like a lot, that’s like one day a week, or two hours every single day. And I just don’t believe you can outsource it. Good people, and we think there’s a big difference and a great hire and a good hire, and great people want to work for great people, and they need to know their manager.
So that’s a little bit about getting great people to come into your company. I think if you’re thinking about a founder scaling and how do you scale yourself through all these different phases, it’s slightly different. Because it’s rare to start a company and then still be running the company as a public company. And I’m really proud of that, and I know Matthew’s really proud of that. And I hope that, we have role models above us, whether it’s Marc Benioff and Parker Harris. Or whether it’s the Shopify founders or Atlassian or Jeff Lawson at Twilio. They are definitely people that we can look up to and I hope there’s a whole other class of companies coming up behind saying, “Wow, they did it. We want to do it too,” because I definitely think it’s possible.
And I guess there’s a couple of things I’d say about scaling yourself as a founder is, I remember someone said this to me once and they were totally right. They’re like, “Either you’re running your business, or your business is running you, and you got to decide which one it is.” And I mean, I’m a competitive person. Obviously I want to run the business. I don’t want the business to run me. And this is kind of going from a founder hat to a business owner hat. And so you got to do things to scale with the business because what matters at 20 million in revenue is different than a 100 million. It’s different at 300 million. And I think that if you can be a sponge, that is like, if I can only give you one piece of like advice, it’d be, be a sponge, this growth mindset, constantly learning. Read.
At SaaStr, Jason Lemkin and his team do an amazing job getting people here to help you. And if you just show up and listen for free, you will avoid making so many mistakes and grow as a leader. That’s what I did. I went to a lot of things like this and I learned from people ahead of me and we got to where we were faster. So there’s so many resources today that help you learn as a founder, way more than 10 years ago. It’s pretty phenomenal. You can read books and whatnot. I think as you hire your leadership team, sometimes people don’t want to hire people as good as them because they’re worried that they’re going to look bad. That’s rookie mistake 101. You need to hire a leadership team that’s better at you than everything you do. Because, as long as you’re confident that you’re the vision, you’re the founder, you’re going to care about this more than anyone ever does. And if you can partner with these amazing leaders who are so good, the best head of product, the best head of engineering, the best CMO and the best chief revenue officer, and you all get everyone rowing in the same direction, that’s how you build an amazing business, as a team together. And so you’ve got to really hire a leadership team better than you.
Ben Dahl:Well, Michelle, thank you for answering my questions.
Michelle Zatlyn:Yeah, likewise. And thanks to everyone who listened in and hopefully it was helpful. And I can’t wait to see everything you build and I hope you all build big companies quicker because you learned something today.
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Slice raised $43 million from KKR, making us all rather hungry — and curious. Where does Slice fit into the food-delivery market, and does its restaurant-friendly model give it enough room to grow revenue so that its new valuation makes sense?
Slice raised $43 million from KKR, making us all rather hungry — and curious. Where does Slice fit into the food-delivery market, and does its restaurant-friendly model give it enough room to grow revenue so that its new valuation makes sense?
Another weekend at home, another week’s starting from the same spot. How are you holding up? Do you miss your commute yet? Just want to get some breakfast from a kitchen other than your own? I feel you.
But it is Monday all the same and that means it’s time for Equity, so let’s get to it. You can hit play above and following along with notes:
And finally, a call to arms. TechCrunch was once a dude in his backyard writing blogs and generally being mad online. It was great! Since then, blogs have grown up, sold out, been re-sold, and generally become part of the landscape if you are being generous (or part of the furniture if you aren’t). Surely there’s room for new, kickass media companies. Who is building one? They would be a real contrarian.
Ep. 331: Jessica Lin is a Co-Founder and General Partner @ Work-Bench, one of New York’s leading early-stage enterprise funds with a portfolio including the likes of Cockroach Labs, X.ai, Dialpad, VTS and Catalyst to name a few. Prior to Work-Bench, Jessica was a Learning and Development Manager at Cisco Systems, where she worked with the Engineering organization on Agile transformation, innovation and culture. Jessica is actively involved with the education and workforce development community in New York City and as chair of the Industry Advisory Board at Opportunities for a Better Tomorrow.
Pssst 🗣 Loving our podcast content? Listen to the start of the episode for a promo code to our upcoming events!
In Today’s Episode We Discuss:
* How Jessica made her way from learning Swahili into the world of enterprise and into the world of venture with the founding of Work-Bench?
* How should founders expect to see their new business pipe be impacted by COVID? What does Jessica believe is the right way to do proper pipe reviews? What specific elements does Jessica really double click on in reviews? Where does Jessica find managers and founders do pipe reviews wrong?
* What does Jessica believe is the right way for sales reps to engage with new customers during this time? What is the right tone to adopt that achieves both empathy and a business objective? How should sales teams and CS respond to requests for discounts? What should be the compromise with discounts?
* What specific and deliberate things can startups do not just to prevent churn but also to increase usage and upsell? Does Jessica agree with the rule of thumb that in enterprise, on an annual basis, 95% of your customers should retain? What other strategies has Jessica seen work really well for retention?
Ep. 332: Prepare for the worst, hope for the best. Hear from Garry Tan, co-founder and managing partner at Initialized Capital, about how to protect your business during a crisis. He’ll cover remote work, team management, sales, marketing, product development, and more.
Below, we’ve shared the transcript of Harry’s interview with Jessica.
Harry Stebbings:Welcome back to the official SaaStr podcast with me, Harry Stebbings. And if you’d like to suggest future guests or questions for the show, you can on Instagram, @hstebbings1996 with two Bs. But to our episode today, and I’ve been such a fan of the model this team have built. They’ve also been incredible community builders and players in the New York tech ecosystem over the last few years, and I’m so very excited to welcome Jessica Lin, co-founder and general partner at Work-Bench, won new York’s leading early stage enterprise funds, with a portfolio including the likes of Cockroach Labs, X.ai, Dialpad, VTS and Catalyst, to name a few.
Harry Stebbings:Prior to Work-Bench, Jessica was a learning and development manager at Cisco Systems where she worked with the engineering organization on agile transformation, innovation and culture. Jessica is also actively involved with the education and workforce development community in New York city, and serves as chair of the Industry Advisory Board at Opportunities for a Better Tomorrow.
Harry Stebbings:But enough from me. So, now I’m very excited to hand over to Jessica Lin, co-founder and General Partner at Work-Bench. Jessica, it is such a pleasure to have you on the show today. I’ve heard so many great things from the one and only Jonathan Lehr. So, thank you so much for joining me today, Jessica.
Jessica Lin:Thank you so much, Harry, for having me.
Harry Stebbings:Not at all. I’ve actually really wanted to see this one for a long time. I love the Work-Bench model. But I do want to start today with a bit about you. So, how did you make your way into the world of SaaS, and how did you come to co-found Work-Bench? What was that aha moment?
Jessica Lin:Well, again, as you said, you may know us at Work-Bench as IT to VC with my co-founder Jonathan Lehr, who joined your podcast in 2017, John coming from Morgan Stanley corporate IT, my colleague Kelly coming from Forrester Research. But I’m actually not only IT to VC, I’m also Swahili to VC. So, I studied International Development in Swahili in undergrad, thought I was going to end up in a career in global health, but then serendipitously ended up taking an engineering class in my senior year of college that led me down a path of working with student startups.
Jessica Lin:Then, serendipitously again, took on a role at Cisco Systems, working with really great internal engineering teams. So, my story is the ultimate story of pivots, of having really lived and breathed our motto at Work-Bench as an enterprise tech VC fund, which is that great things happen at the intersection of suits and hoodies.
Harry Stebbings:Absolutely it does. I have one very pressing question. Have you ever used your Swahili in work?
Jessica Lin:I need to find more use cases for that for sure.
Harry Stebbings:It’s a burgeoning enterprise ecosystem, I’m sure.
Harry Stebbings:I do want to dive in straight though because it’s such a pressing and interesting environment right now, and I want to start on the lifeblood of any business, which is the sales. Everyone is anticipating COVID will kill the majority of pipe and new business discussions. If we get a sense of the lay of the land, when you sit down with your company’s pipe reviews, how should founders expect to see their new business pipe be impacted?
Jessica Lin:Absolutely. And how we review pipe now is actually the same as how we review any other time with our portfolio companies. I think a lot of SaaS VCs tend to look only at booked business or MRR, but where we like to spend time is actually a layer deeper, because we know just how nuanced enterprise sales can be, and most of all that they take a very long time and can be very complex. So, that means in every pipeline review, understanding, one, deal velocity. How are your meetings progressing, who are they progressing with, are the right stakeholders in the room, what’s the next action step, how fast is the next followup meeting getting scheduled, how are pilots going, and what else can we be doing to get our clients onboarded as soon as possible?
Jessica Lin:Then, most of all, really the quality of the pipeline. How can we continue experimenting to grow the top of the funnel, whether it’s content, now virtual events and more. We’re of course taking into account COVID, that there are delays, that stakeholders may be distracted, but we’re also still hearing demand from our corporate network.
Harry Stebbings:Can I ask, and this is totally off schedule, but why not? In terms of the stakeholders themselves, I always have the perception in my mind that if you’re not a top one, two, or three enterprise buy for the CIO, it’s going to be fundamentally challenging. And honestly, I don’t find it so interesting. Is that shortsighted of me given the huge amount of software that CIOs and the stakeholders have to engage with today, or do you think it is right to have that very rigid prioritization in mind?
Jessica Lin:One of the things that we talk a lot about with our companies and with our Work-Bench community is that the misconception is to go straight to the CIO. The CIO is the top dog, they have all the budget dollars to spend. But in our experience at Work-Bench, what we’re seeing is that the actual stakeholders who are evaluating and assessing your tech as a vendor is really N minus one, N minus two, N minus three. So, the titles may be MD, VP, director, and we actually advise our companies to go deeper within the org, and that’s where you’re going to find technologists who really appreciate and have the bandwidth and capacity to understand what you’re doing.
Harry Stebbings:Can I ask, how do you deepen that relationship when the CIO or the stakeholder is maybe more in the top echelons of the enterprise? How do you deepen that relationship and look to build those maybe more product champions when your key primary contact is in the higher echelons?
Jessica Lin:Yeah, and this is so much of what even we do at Work-Bench as we build up the corporate network, it really is about how do you provide value to those executives? And a lot of them really love tech. That’s the key part is that they really love learning about new tech, about what’s out there, about how these technologies will transform what they’re doing in their business. So, we really advise our companies to be able to build those relationships really authentically.
Jessica Lin:A sale may not happen within three months or even six months, but the more you can provide value to them, whether it’s connecting them with other peers, whether it’s inviting them to events, whether it’s sharing, those are the types of relationships and investment where you can see the enterprise relationship pay off, maybe sometimes even one to two years down the line, but can be very worth it.
Harry Stebbings:Totally, in terms of that sales cycle. You also mentioned pilots there, and it can be a nice onboarding into a much longer and more formal relationship. How have you seen the best engage with offering pilots, and what’s the structure of the pilots that you tend to advise when selling to enterprise?
Jessica Lin:Yeah, I think that’s the number one thing for especially the enterprise. And a big part of it is that time kills all deals, and this is more true than ever. So, how do you get people using and loving your product asap? So, you really need to speed up onboarding, especially for an enterprise customer. So, our company, Arthur, an explainable AI company, realized that the regulated industries they sell into also want their solution on prem, even during a pilot phase. So, they set up an install that now only takes 15 minutes per deployment, and also rolled out sample data sets and models so that customers can download and get models pumping into their platform in minutes.
Jessica Lin:Our company Fire Hydrant and Incident Response platform has set up what are effectively sandbox simulations where their prospective customers can actually use Fire Hydrant in the case of a simulated outage. So, it pulls the now-remote now-distributed reliability teams together and lets them collaborate on solving the problem where they can feel the power of the platform firsthand. So, I always advise our companies, it’s really accelerating the time to value.
Jessica Lin:How can you make sure your customer gets fully onboarded as soon as possible, which again, sometimes can take up to three months in the enterprise with implementation and deployment, and then make sure that there’s really high usage and active engagement within the first three months so that customers can see your ROI in value in that time, and that the next six months then can be focused on upselling and cross selling in the renewal.
Harry Stebbings:In terms of optimizing the onboarding, often for enterprise it can be a launch part, coaching, professional services, very much in-person, high touch, where the team really comes in and spends time on site. How do you think that high touch professional services onboarding changes in a COVID world?
Jessica Lin:Yeah, I think so much of that is being creatively done now, and we’re finding that there’s new ways, and a lot of it is blending. I think so much of new sales and customer success are blending together, and that’s actually for the best, but the love you show for your existing customers, you can now extend to new prospects as well. And I love that joke around VCs, “Let me know how I can help.” Well, this is true for enterprise start-ups too, instead of saying in generic, “How can I help?” go to your customers and prospects with three specific needs where you can help out the most based on other customers you’re working with.
Jessica Lin:So, for example, our company, RippleMatch, they started hosting community chats for university recruiters across their enterprise customers and prospects. These were really curated sessions where small groups of campus recruiters could have a safe space and come together and share what they’re doing around recruiting this year. Our company, Catalyst, a customer success platform, has been offering trainings, not only to customer success managers, but to so many other functions like support and product, since customer success and retention is so critical in this time cross-functionally.
Jessica Lin:So, I think it just looks and takes on a slightly different form, but being able to offer something that will truly help improve your customers and prospects lives is really what’s going to make you stand out during this time.
Harry Stebbings:You mentioned some of the companies that, in terms of Catalyst, RippleMatch, they’ve really done it well. When you look across the landscape and suite of companies, where do you think many potentially go wrong in terms of really engaging that enterprise sale, also maybe in the midst of COVID?
Jessica Lin:For many people, it’s tempting to throw out all messaging out the door and try to sell to COVID, and that may be relevant in a few industries like healthcare, but for most other enterprise software companies the principles still hold true. What is the technology, what is a unique opportunity, and what is the ROI that I can bring to my customer? We had Kelly Breslin, previously the EVP of Sales at Tableau, who led the company to over $1 billion in revenue, on one of our webinars yesterday at Work-Bench. And she said that, with Tableau in 2008 during the financial crisis, they actually didn’t change their messaging. If anything, actually reinforced their current mission, which became more important than ever.
Jessica Lin:So, if anything, it’s not just selling features, it’s not just selling functions, it’s about telling your story. So, for your customers, sharing with them user stories, how are other customers using your product. It may help illustrate new use cases that your prospects may not have known about before. Now, on the flip side, there is a chance that your messaging does have to change during this time in this new environment, and Bob Tinker, the founder and former CEO of MobileIron, shared with us that in 2008, for their smartphone security and management product, the downturn actually forced them to change their messaging.
Jessica Lin:They had previously gone out with a productivity pitch, but they realized that what was way more compelling to customers was cost savings, which honestly ended up being a huge inflection point for them, even better for them in the long run. And the hardest thing, Bob said, is for founders to let go of their founding idea. It can feel really uncomfortable. But you may need to go out and test new ideas, potentially refine or go-to-market urgency fit by validating customer’s new top pain points during this time.
Harry Stebbings:Yeah, no, absolutely. I totally agree, especially in terms of that more human narrative behind it. I guess, thinking about that human narrative, how do you advise founders and reps on the right tone to engage with potential customers in this time. It’s such a tough time, because you need to be empathetic, kind and caring, but you also have to achieve business objectives. So, what’s the right blend in terms of the tone that you adopt these discussions?
Jessica Lin:Bob said it best. During tough times like these for founders, you have to have both empathy, but also ruthlessness. And that gets talked about less. And I love that duality. And I see it in our founders. All of our enterprise companies still have sales targets. They may be adjusted, but the targets are still there, and they may just have to be more creative than ever to hit them. And I do think there is a way to strike that balance. And the best way really to do that is simple. It’s to truly care about your customers. And if you truly care about your customers in an authentic, genuine way, then you can be ruthless [inaudible 00:13:42] about solving problems for their business.
Harry Stebbings:Can I ask you, you mentioned target sales, and it’s such an interesting talking point for me, in particular. I’m really passionate about this one. And it’s, when you think about target assessing with your companies, and you were really part of that active discussion, how do you set targets that are ambitious and really stretch targets, but also you don’t want to create ones which are unachievable and will create disincentives within the team and then lack of morale if they’re not hit? How do you strike that fine balance, and what does that decision making process look like for you with the founders?
Jessica Lin:I think about that a lot, especially for sales teams who may be harder for them right now to close new sales during this time. And I think the key takeaway and lesson here is really just to over communicate. And what I mean by that is saying, “Hey look, we may have to adjust targets. This is how we may be able to make it up to you, whether it’s through spiffs, through other accelerants,” but to constantly be clear with your sales teams. Something I’ve heard from a lot of account execs right now, it’s less about the fact that they may not hit their original targets, but it’s the fact that they don’t have a clear roadmap in mind. What should I be doing with my time?
Jessica Lin:And again, sales teams tend to be very competitive. They like to have goals, they like to have metrics. So, I think as long as it’s very clear to the sales teams, “Hey look, we may have you focus less on closing new sales, but can we have you work at the top of the pipeline? Can we help you help out more with customer success?”, then I think that can be something that’s really important for sales teams and founders to be seen right now.
Harry Stebbings:Can I ask, I had Ben [inaudible 00:15:10], CR of [inaudible 00:15:11] on the show, and he denigrated the specialization of sales and said, really, you lose that natural human relationship when he was simply passed off from SDR to RAP to AE. How do you think about the specialization of sales, if that’s right, and do you lose that human relationship with the mechanical policy?
Jessica Lin:I do think, like I said earlier, that customer success and sales are blending now, and so much of what you were doing, again, for existing customers you should be doing for new prospects. So, I do think perhaps in the future that those lines will be a bit more blurred. I do think it’s still helpful to have some organizational structure, especially as teams grow bigger and bigger, but that customer success mindset coming to the center or for the organization. I actually think it’s a change for the better.
Harry Stebbings:I do agree. I think it’s better for the customer, fundamentally. I do want to ask, you mentioned customer success, that being more and more important than ever. If we dive in a bit, what specific and deliberate things can start-ups do, not just to avoid churn, but also on the upside, to expand the usage and upsell?
Jessica Lin:Yeah. So much of what I shared a bit with RippleMatch and Catalysts I think is so critical. And the key is how do you get customers using the product during this time. And there are of course products perhaps within dev ops, security, automation, that will be seen as more essential during this time, but it’s really proving that time to value that I mentioned earlier that is going to be so critical so that when renewal does come up, you can prove very clearly to them, “Hey, this is how much you’ve been able to use our product and for this ROI.”
Jessica Lin:And a great example, like I mentioned, is our company, Catalyst, the customer success platform, and what they’re seeing with their platform is more and more usage, again, not with just customer success managers, but across product, across sales, across marketing, coming in and using their platform to understand customer health, and again, what their customers need. So, it’s a bit meta, but it truly is showing that customer success is now the center of our organization.
Harry Stebbings:We love a good meta point, don’t we, on that one. But you mentioned that the renewals, and one thing I think we will see obviously a lot of, and I’m by no means that wise person for this, but I think we’ll see a huge obviously amount of discounts coming back. How would you advise, and how do you advise your founders to approach discounts, and how to think that through?
Jessica Lin:Yeah, I do believe at least at the early stage that we’re investing in, at the C2, that offering a discount to an enterprise or a larger logo can be worth it in this environment, but then you do have to write in your contract around price increases for your two, or just make it a one year deal, and then you readjust when the macro environment improves. And I do still think big contracts can still get done at the enterprise. We’re seeing this with our start-ups selling into large Fortune 500s. We just had a company close a multi-year, multi hundred thousand dollar deal with a large pharma company.
Jessica Lin:And the key is, of course, which sector and function. But if it’s a true pain point at the enterprise, it shouldn’t be a budget issue, from what we’re seeing. It tends to be a bit more black and white for large enterprises. Either there’s a budget freeze, or there’s cash to spend, and it might just get pushed back a quarter or two.
Harry Stebbings:Totally. And I always find a give and take, we give the discount, but then we’d also love for an extensive case study to be available from you guys, as a bit of a compromise. I think there’s a lot that you can negotiate with. I do want to ask, because there’s a lot of rules of thumb in enterprise around churn specifically, and that when we’re talking about customer success, often people will say logo should retain 95% on an annual basis. This is one of the core rules of thumb. Would you agree with this, and how do you think about the rules of thumb around churn, and maybe the ones you agree with versus disagree with?
Jessica Lin:Yes, I do think that’s a general good rule of thumb. What I will say is different than perhaps SMB is that, in the Fortune 500 with enterprise customers, your contracts are either churning, renewing at flat, or expanding. And it tends to be a bit more tied to the hip is what we see. And that’s why enterprise deals are of course so much more painful to close, but when you do get them they’re stickier. It’s that 12 to 18 month sales cycle versus the two to three month SMB contract. So, we do see that a bit more closely tied together, logo versus all our retention.
Harry Stebbings:Yeah, no totally, especially in the tie. I’m interested, because a lot of VCs always shirk when they hear the elements of professional services. I personally quite like it. Obviously not as good for the margin, but fundamentally, I think great for the retention and usage. How do you feel on the professional services basis, and what do you think is a healthy ratio of product to professional services rev?
Jessica Lin:At the early stage, what we’re seeing, we really advise our companies to just invest as much as possible in customer success and professional services. And especially in the early days where product is still getting built out, that’s where actually so much understanding from your customers of what needs to be built into products so it can be automated more in the future, is so important. So, the more that you can invest there in customer success, it feeds so much better into product, and that’s where staying close to your customer, customer feedback, can be such a critical part of your product roadmap and development.
Harry Stebbings:Yeah, no, I’m totally with you in terms of that, super tight communications channel. Can I ask, I want to delve into Work-Bench a bit more as an organization now, especially in terms of the current times, because Work-Bench has a specific strategy around events and community, and it’s absolutely killed in the last years. As I said, I love your model, and so many people talk to me about your events. It’s incredible. But I wanted to talk about how it’s been impacted in the recent environment. So, how have you adapted your approach and strategy in the face of COVID and the rise of virtual events?
Jessica Lin:Absolutely. Community has been such a core part of our DNA at Work-Bench since day one. We’ve, in the past, hosted up to 200 enterprise events a year in New York, and we’ve moved everything online. And in a way that surprised me. I’ve actually enjoyed it a lot more than I thought we would. It’s easier than ever to spin up events. There’s more access, more people across the country, the world can join. So, we’ve been doing at least one or two webinars and events a week with Fortune 500s, founders, sales leaders, our corporate round tables, sales leader chats. And the number one thing I always say is that, content still needs to be number one. And I think most conferences assume that speakers got it. And I actually think the opposite. I think most speakers need practice, they need feedback, they need run-throughs. So, don’t assume that can be masked on a Zoom.
Harry Stebbings:I totally agree. Can I ask, what do you find about the best speakers that makes them so good? I certainly have a lot of thoughts on this given the podcast, but what do you find makes the best so good?
Jessica Lin:I think it’s a lot of practice to be honest. We hosted a massive women in enterprise tech summit two years ago called Navigate, and the amount of time I saw our speakers put into their individual presentations, I think, has a direct correlation. The more time you put in, the more feedback you get, the more comfortable you’ll be, the more fun you’ll have. And I think that really comes through and resonates with the audience.
Harry Stebbings:Yeah, no, I’m totally with you in terms of the preparation. I guess, for you as the organizer of the event, have there been any big learnings in terms of what it takes to run a really successful online event, and I guess, why do you think many are maybe going wrong today as they make that transition?
Jessica Lin:I think even if mistakes are being made right now, they’re being made in the spirit of creativity, and we’re seeing so much creativity and personality and full throwers. I love what our company Fire Hydrant did. They actually created a video for a sponsored happy hour at a virtual developer conference on how to make an old fashioned drink. It was so well done, it had a great sense of humor, and I think it just really resonated. And we always do it. I worked [inaudible 00:22:40] at our events, it’s a tradition. And we had a presenter last week actually show a photo of herself via Zoom screen share of her sitting on an ostrich. These are things that were hard to do in person before. So, I think it’s having fun and recognizing that we’re all learning along with each other. That is so important during this time.
Harry Stebbings:Well, I mean I’ve never quite had anyone share a photo of them on an ostrich, and I’ve done over 3000 entities. So, clearly I’m missing something. I do want to move into my favorite element now, Jessica, which is the quick fire round. So, I’ll say a short statement, and then you hit me with your immediate thoughts, about 60 seconds or less. Are you ready to dive in?
Jessica Lin:Ready to go.
Harry Stebbings:Okay. So, the New York tech ecosystem, the pros and the cons.
Jessica Lin:The pros, I love our pizza, our hustle, our [inaudible 00:23:22], our geography, getting uptown and downtown in minutes, our diversity of industries, the number of suits and customers in New York, unmatched anywhere else in the country. And we’re all missing New York City so much right now, and praying for it to fight and come back during this time. What’s hard for New York, and I think specific to enterprise, is that certain enterprise roles are, of course, so harder to hire for. And it’s really just a function of not having had that long time enterprise ecosystem here. So, talent like enterprise marketing, product managers with a lot of experience, that’s still quite competitive to hire them.
Harry Stebbings:Can I ask, with the cost inefficiency of the Valley, with, I think everyone would agree, probably worsening living conditions in the Valley, are you seeing a migration of top tech talent from the Valley to New York?
Jessica Lin:We absolutely are. And we’re seeing a lot of folks say, “Hey, I’ve always wanted to live in New York,” come out. We’ve seen founders, serial founders who may have started their first company out in the Bay but have decided to start their second or third company in New York city. So, we’re so excited for that and we welcome them with big arms.
Harry Stebbings:Tell me the hardest element of your role with Work-Bench today.
Jessica Lin:I think it’s the hardest, but it’s also the best, which is just constant context switching and so much learning. So, constantly learning, constantly having to teach myself new things, new technologies, companies, peoples, deals, events, content, customer insights, our own fundraising, hustling alongside our start-ups. And it’s the best part of the job, but also by Friday my head actually hurts from just so much stuff in it. And we always joke at Work-Bench that on Fridays, “Did that happen this week?” because whatever happened on a Monday usually feels like two weeks ago by then.
Harry Stebbings:I totally agree, and I think in some ways magical thing about founding your own firm, knowing that I … It’s such a start-up, and I don’t think people quite realize how much of an operator founder fund managers are.
Harry Stebbings:Tell me, what would you most like to change in the world of SaaS and enterprise SaaS today?
Jessica Lin:I would say this about enterprise, which is, at Work-Bench, honestly, we’ve tried to just make enterprise more fun and more accessible. It’s historically been a white man’s game, and I think that’s why enterprise tech faces more diversity challenges than perhaps consumer tech or other verticals. But we’re making inroads, and that’s why we do so much to grow the New York tech community. Tons of events, think a lot about how to make it welcoming, and do a lot in supporting women enterprise across our women and enterprise founders database, our workshops, our lunches or conferences, and more.
Harry Stebbings:Jessica, hit me. Final one. What’s the most recent publicly announced investment, and why did you say yes and get so excited?
Jessica Lin:This is great timing because again, our company, Catalyst, a customer success platform, just announced their $25 million series B led by Spark Capital yesterday, and we actually met the founders back in 2016 through our New York city community when the founders were at Digital Ocean, and Ed, the CEO, led customer success there. And given our community with the VP customer success dinners, and [inaudible 00:26:21] we hosted, we saw this tremendous demand for truly unified customer success platform, and how Ed and Kevin [inaudible 00:26:28] really stood out.
Jessica Lin:So, they started Catalyst in 2017. We’ve led their C2 back in 2018, and we’ve been honored to be a part of their ride in New York City ever since. And as we’ve talked about so much, customer success is now being moved to the center of the org. And for us to have met them as a part of our Work-Bench community so many years ago, it just feels very full circle.
Harry Stebbings:Jessica, as I said, been a huge fan of the model for a long time. I loved having Jonathan on. I’ve wanted to make this happen for quite a while, so, thank you so much for joining me today, and it’s been a lot of fun.
Jessica Lin:Thanks, Harry, it’s been such a blast.
Harry Stebbings:As I said at the beginning, huge fan of that model and such exciting times ahead with Work-Bench. And if you’d like to see more from us behind the scenes, you can do so on Instagram at hstebbings1996 with two Bs. I always love to see that.
Ep. 327: John Mellor is Chief Strategy Officer @ Domo, the company that allows you to leverage BI at scale to empower your team with data. Prior to their IPO, Domo raised funding from the likes of Benchmark, Founders Fund, a16, Greylock and IVP to name a few. As for John, prior to Domo he served as vice president for strategy and business operations for Adobe’s Digital Experience business, driving more than $3 billion in annual revenue. John joined Adobe through the company’s acquisition of Omniture in 2009, where he served as executive vice president of marketing, driving all marketing efforts to strategically advance the industry’s largest standalone web analytics business.
Pssst 🗣 Loving our podcast content? Listen to the start of the episode for a promo code to our upcoming events!
In Today’s Episode We Discuss:
* How did John make his way into the world of SaaS over 2 decades ago and how did that lead to his running a $3Bn ARR business line at Adobe and lead to his joining Domo? What were John’s biggest takeaways from his decade at Adobe?
* Why does John believe that COVID will be a bigger accelerant than any other C-level led initiative? For vendors going through that digital transformation with their customers, what is the right tone to adopt that is both empathetic and achieves business objectives? Is digital transformation a technology challenge or a behavioral challenge?
* How will a 100% virtual event environment impact physical events when and if they do come back? What were John’s biggest takeaways from running Domo’s annual event virtually? What worked? What did not work? On a conversion basis, how did it compare to in-person events? How should we structure content for these virtual events?
* How does John think about the role of leadership in a crisis such as this? What is the right tone for the leader to adopt? Where does John believe many leadership teams go wrong in times such as this? How can leadership teams ensure that a crisis is not self-fulfilling and how can one prevent that mindset?
Ep. 328: Romain Lapeyre is CEO of Gorgias. Gorgias is the leading help center on the Shopify platform, and that gives them a pulse into a large segment of SMBs in particular. They have almost 2,500 customers in segments both struggling (fashion, luxury), and growing (electronics, etc.). They are coming up on $10m ARR but aren’t there quite yet, so a lot like a lot of you, or where you’ll be soon enough.
Below, we’ve shared the transcript of Harry’s interview with John.
Harry Stebbings:We are back in the world of SaaS. This is SaaStr with me, Harry Stebbings, and we’re diving straight into the show today with a first for the podcast, the first ever chief strategy officer we’ve had on the show. And they do not come more respected and experienced than our guest today, John Mellor. John Mellor is the Chief Strategy Officer at Domo, the company that allows you to leverage business intelligence at scale to empower your team with data. And prior to their IPO, Domo raised funding from some of the best in the business including Benchmark, Founders Fund, Andreessen Horowitz, Greylock, and IVP, to name a few.
Harry Stebbings:As for John, prior to Domo, he served as Vice President for Strategy and Business Operations for Adobe’s digital experience business, driving more than $3 billion in annual revenue. John joined Adobe through the company’s acquisition of Omniture in 2009, where he served as the executive vice president of marketing, driving all marketing efforts.
Harry Stebbings:However, that’s quite enough from me. So now, I’m very excited to hand over to Domo’s chief strategy officer, John Mellor.
Harry Stebbings:John, it is such a pleasure to have you on the show today. I’ve heard so many great things from many prior guests, so thank you so much for joining me today, John.
John Mellor:Oh, it’s a pleasure. Thanks for the opportunity.
Harry Stebbings:Not at all, but I would love to kick off today with it a little bit of background on you. So tell me, John, how did you make your way into what I call the wonderful world of SaaS, and how did you come to be Chief Strategy Officer at Domo today?
John Mellor:I got into SaaS before I knew I was getting into SaaS. It started back in 2003, when I joined Omniture, which was an analytics company founded here in Utah. And they were trying to do the very best that they could for customers in helping them understand what was the traffic like on their website, who was coming, how often did they come back, what did they look like, et cetera. And the most natural way to deliver that information to customers was through an online interface, where we would capture all the traffic, all the information, synthesize it, and just deliver it to those customers via a web UI. And little did we know, we were part of the SaaS movement. It was back when you used different words for it, things like managed software or application service provider. And that was kind of my entree into SaaS.
John Mellor:And that year, when I joined in 2003, Omniture did $8 million in revenue. And we later took our first round of VC money. Then, we took the company public and did a secondary, and eventually, sold it in 2009, to Adobe for $1.8 billion. And at that point, the company was doing a little over $300 million in revenue. And then, I stuck around Adobe for nine years. Adobe was a fantastic experience, and we did about $10 billion in acquisitions and grew that business to $3.5 billion in annual revenue. And that kind of gets us to today.
Harry Stebbings:I have to ask, close to 10 years at Adobe at the forefront of really such a transformational time for the company, John. What were your biggest takeaways from the time at Adobe, and how do you think that time impacted your operating mentality today with Domo?
John Mellor:Adobe was a great experience. That company is just phenomenal. The leadership team there is amazing, and we saw them go through a couple of pretty big transformations. Number one is they didn’t really have an enterprise software selling group when they bought Omniture, so that route to market was something they were very interested in creating. So, we saw them and worked with them to develop that enterprise route to market.
John Mellor:But then probably the biggest transition was watching Adobe transition into the subscription business model with its Creative Cloud product as it’s known today. And going through the process of selling boxed software in stores to selling online delivery of the application, it’s crazy. I think it was 2011 when they did the annual analyst meeting, and they dropped their revenue forecast by $100 million. And the stock popped. We thought, “What in the world just happened?” Clearly, Wall Street and the Adobe team knew the benefit of a subscription business model and the transition into SaaS. So, it was great.
John Mellor:I think in terms of the takeaway that I got from Adobe personally was I’ve always been a strategy person. I’m very interested in the big picture, what’s the context in which we’re operating, how is that driven by macro trends, et cetera. And I would build these nice strategic presentations and go in to the CEO and the leadership team and present these. And the CEO would kind of lean back and say, “Well, John, that looks great. That makes a lot of sense. So, what are you going to do about it?”
John Mellor:And that was a takeaway for me because it taught me that strategy that’s not connected to operations is just not as useful, nearly as useful, as it should be to an organization. So, I think my takeaway was strategy is incredibly important, but until you connect it to what the business is actually doing and the operations, then you haven’t created real change in an organization.
Harry Stebbings:Can I dive in and ask, in terms of kind of the connection of that strategy, how do you create that connection cross-functionally across the company? So effectively, what works, I guess, in terms of your experience in connecting with the individual heads of function to imbue the strategic thoughts that you have to them?
John Mellor:There are two ends of it that I found. One is bringing people along when you’re building the strategy. So, you do your best to win the hearts and minds of the folks that are really going to be involved in executing the strategy once it’s baked. And I’m a firm believer that no single person owns strategy. If they do, then it’s probably going to start and stop with them. So, it’s a little bit of a herding cats kind of situation, where you have to bring people along with strategy, and bring the best ideas from various groups, and do your best to synthesize those concepts into a strategy that people buy into. So, that’s on the front end.
John Mellor:On the back end, the way that we structured the team was that I also ran the business operations team. So effectively, my team controlled the weekly agendas for executive staff meetings. We controlled a lot of how the pieces came together and what were the operational metrics that we built to report up to the CEO. And that drove this cadence of alignment on a weekly, quarterly basis that helped us operationalize what we had bought off on on strategy. And we did that on a rolling annual basis. So each quarter, we would reevaluate strategy and hopefully not change it too significantly and keep it for at least a year. But that process seemed to work pretty well for us.
Harry Stebbings:Can I ask another question related to the connection of strategy to the operations? How do you think about and how do you advise founders on when’s the right time to hire a chief strategy officer and how they know that it’s right for their company?
John Mellor:I look at the evolution of how I got the strategy role at Omniture. I certainly didn’t start that way. I started out running marketing, and then I was running the partner ecosystem. And what happened was you started to see all of the value add that partners were delivering or certain technologies were delivering to our platform at Omniture. And that started to inform our roadmap, things that we would work with partners to build, and things that we wanted to go buy.
John Mellor:So, it evolved into the acquisition roadmap. So, we would go buy companies that had been partners for a couple of years, and we had seen proven value. And it became this connection with the CEO where he and I just had a rapport. We were kind of finishing each other’s sentences, but not in a too much of drinking each other’s Kool-Aid way because that tension has got to exist or you don’t move forward. So, I think the strategic role for a founder has got to be an organic evolution.
John Mellor:And a founder just can’t turn over strategies. Founders are where they are because they’re good at strategy and they have great vision. The strategic role has to be an amplification or a way to put structure around the strategy and tie it down to operations.
Harry Stebbings:Yeah, no, no, I definitely agree with you in terms of being an extension and kind of aligned with the CEO. I do want to dive into kind of the macro environment today though, and the Twittersphere is alight with the sectors that will be most impacted by COVID. Largely pronounced by VCs, I have to admit, but when we chatted before,, you said to me that when it comes to COVID, it will do more for digital transformation than any other C-level led initiative. First, why do you think COVID is such an accelerant?
John Mellor:Well, I saw a meme on the internet a few weeks ago that said, “What will drive your digital transformation strategy the most? Is it the CDO? Is it the CIO, or is it COVID?” And that kind of puts a fine point on it, but digital transformation, in my mind, has been inevitable. And it’s a journey that organizations have been on for decades. And the technology simply just catches up and then some kind of forcing function happens to accelerate adoption of that technology. And I think that’s one of the situations we’re in now.
John Mellor:I mean, it’s not dissimilar to a Y2K moment. You think back in the late ’90s, ERP was a bold, if not a risky, proposition for companies. But then as you got closer to Y2K, the imminence of that event and the potential impact of that event drove a massive acceleration in ERP companies. That market grew four, five fold in five years from ’95 to 2000 because you got people out of the intellectualizing of what technology could do to them or for them into the sheer business environment need to compete or to survive.
John Mellor:And that’s where we are now. We’re in a different world. It’s a couple of decades later. But digital transformation is inevitable, and there’s either a carrot or a stick. And you’ve seen a lot of early adopters and companies that are leaders in their markets go through the digital transformation process and get closer to customers through digital interactions, become more personal, do this sort of mass personalization with individuals, or make data more available inside their companies. And that has happened with leaders in their industries because they’ve been ahead of the curve.
John Mellor:Well now, you have this crashing wave of change that it is incredibly clear that if companies don’t change and drive more agility into their business, understand things very, very rapidly, and make changes very rapidly, that survival is a real question, not just thriving, but survival.
Harry Stebbings:So, what core ways do you think we’ll see them drive agility into that business operations into the differing functions within that business? I’m super intrigued by that.
John Mellor:So, I think the first is just the speed with which you have to make decisions, right? And as a CEO or any kind of line of business leader, decision making is a function of information. You have to understand, how is your business working, what are the drivers of your business, what is the operational health of your business? And that is primarily driven a data exercise. And if you think of the simple questions you need to answer as a line of business person, those questions have to be informed by different parts of the organization, different operational systems.
John Mellor:Let me give you an example. So, Pep Boys is a customer that we deal with a lot at Domo. And they are a retail company, have big retail spaces, and they try and drive promotions through the retail. But if you don’t understand inventory and the inventory turns and availability at the store level and then have those store managers be able to report at a regional level, if you can’t then see that at a CEO level, then you’re just blind. You can’t really understand performance of a store in the context in which you need to understand it. And so, I think that the access to information and putting it in the hands of people who can make decisions quickly is one of the key transformations that’s underway right now. And COVID is absolutely driving that.
Harry Stebbings:Yeah. No, listen, I totally agree with you in terms of it being the catalyst for change. I guess with that in mind though and with COVID being the core accelerant, the question being there is, is digital transformation and change management a technology challenge, or is it actually a cultural challenge given the realization that we have with COVID?
John Mellor:It’s probably equal parts. I would say it is 50/50 because the technology is so key to just making the systems work. But it’s a lead to horse to water kind of situation where the technology can make the system available or make the actions available, the information, the decision, support available. But what it can’t do is get the end user to actually adopt it.
John Mellor:So, you see things in companies. We’ve got a large retailer that uses our system to actually gamify the process of unloading trucks at the loading dock. So, you wouldn’t think about that as a business intelligence process or even a data-driven process because the individuals on the loading dock don’t feel like they’re logging into a BI tool. They’re using an app that’s helping them log boxes offloaded off of the truck and comparing their performance against the team that’s coming right after them or before them. And that is a great example of using technology in the right way to drive a behavioral change and a usability change amongst the frontline people who need access to data.
John Mellor:I mean, executives in the boardroom have been pushing transformation for a decade or so. What they haven’t successfully yet done is help the people on the front lines, the employees that are behind the counters or at the loading docks, or driving the trucks around, or restock shelves at convenience stores. They haven’t put the information in their hands in a way that they can actually make a decision that makes their life better.
Harry Stebbings:I mean, I’ve got so many things to unpack from that. I guess my question is, in terms of really getting into the hands of the core consumers, how do you think about the mistakes that people often make when selling to CIOs and then that crucial adoption intersection between the CIO and the end consumer? Where do you think the mistakes that the core vendors make when trying to make that bridge and transition?
John Mellor:I think it’s easy to stay in the boardroom or in the corner office when you think about digital transformation. And the hurdle that people need to get over is that while that is where key decisions and direction need to be set, it’s not really how the business grows. The business grows when employees can make decisions, the big decisions or the small decisions, with data at their fingertips and in a form that doesn’t just look like, “Okay, I’ve logged into a spreadsheet. I can see that margin of product X is better than margin of product Y,” but it’s… Let me give you an example.
John Mellor:So, we have a customer that is responsible for restocking shelves in convenience stores, and the people who do that restocking drive the trucks around with all the chips and soda and thing on the truck. And they have to make the decision of whether to put product A ahead of product B. And the real impact of that decision for that individual is how much commission are they going to make? And the top level office, the corner office, can set commission structures.
John Mellor:But what you really want to do is change behavior and give the tools so that the behavior change is obvious and easy for the individual needing to make the behavior change. So, it’s not just about information, it’s about the apps that you can put on the device, the phone, the tablet, whatever device that individual is using at the moment of time when they’re making a decision. And that’s where you start to infuse the digital transformation as fertilizer, deep, deep into the organizational roots.
Harry Stebbings:Can I ask you, how do you think by the effectiveness of professional services and training days when vendors come in and really spend time with the teams on the ground? How do you think about the effectiveness of those in driving that core kind of bottoms-up adoption, and then I guess, subsequently, should that be charged for, or should that be part of the core offering?
John Mellor:This, I think, gets to a key point about what customers want to buy. Customers want to buy outcomes. In a very real sense, they kind of don’t care how much the software costs versus the services. They just need the outcomes and the technology change and the behavioral change that comes along with it.
John Mellor:The challenge from a vendor standpoint, and just being realistic, is that every customer is a snowflake. And you end up with a situation where professional services may be a very heavy part of one implementation and configuration, and it may be very light in other cases. So, I don’t know that there’s a easy answer from a vendor side other than to say, recognize that customers want to buy outcomes. And don’t make it too difficult to buy the outcomes when you’re trying to price or configure these systems.
Harry Stebbings:Speaking of kind of the customers that want those outcomes, we have to acquire those customers first. In B2B and often in enterprise they’re mostly acquired often by events, and events have been so effective over the last few years. But with COVID, that’s obviously now a real challenge. So I guess from the more macro perspective is, how will a 100% virtual event environment impact physical events when and maybe if they return?
John Mellor:Yeah, I think we’ve learned a lot with digital events. And Domo specifically, gosh, our Domopalooza event, our annual user conference, was March 18th, so we were right in the eye of the storm. We decided to make Domopalooza a 100% online event on February 28th. So, we had 12 business days to make that transition, which was very painful, so I understand the pain of people having to make that transition.
John Mellor:But you learn a lot, and there’s great things that come out of a 100% online event. For example, reach can be extraordinary. You can reach people with these marquee events, multiples of the people that would be able to buy a ticket and take three or four days off of work and fly to the location you’re going. So, that’s one big benefit.
John Mellor:The flip side, the con of it, is you really sacrifice a lot of intimacy, and events give you an opportunity to hang out with people, to go to the bar and have a drink, to have breakfast, to enjoy the entertainment, a concert, or whatever. And in enterprise software, relationships are such a key part of the selling environment that we need a way to maintain those.
John Mellor:And I think we’ve probably got a six to nine month window where things will be a 100% online, and you’ll see the enterprise software companies that have built, have invested, in really great relationships with customers because I think they’ll have the staying power to keep those relationships alive over that six to nine month period without face-to-face contact. But I think after that, we will hopefully be able to return to a physical in-person event environment.
John Mellor:But I think we’ll be able to manage a blend because it won’t be a light switch where you turn it on, and all of a sudden, your attendance goes back to 100% of what it was in the previous year at these events. We will have to have a mix, and I think that mix will be an art that we’ve got to navigate where you try and blend the intimacy with the reach, and you don’t make the distinction of it’s an either/or.
Harry Stebbings:Can I ask, in terms of performance wise, what were your takeaways from the palooza in terms of how virtual events compare to physical events in terms of performance and conversion wise?
John Mellor:We made this decision with 12 business days to go, and so we were faced with a lot of key decisions about how to execute this. And those decisions ranged from, how long do we make the event? Domopalooza had been a three-day event, and we certainly knew we couldn’t have three days of online material. So, you have to make decisions about how long it’s going to be at the basic end of the spectrum.
John Mellor:But then you have decisions around, what personas do I really need to satisfy? And I think most every physical event has a broad range of these personas. You’ve got executive people who want thought leadership. They want vision. They want to see roadmap. And you have the practitioners or the users who want to dive deep into the product. And so, we made a lot of decisions trying to balance those two audiences.
John Mellor:And we felt like, from a performance standpoint, we felt really good about it. We typically have 2,500 to 3,000 people physically show up to Domopalooza, and we had over 12,000 people watch our event. And they didn’t watch all of it. But to have a 4X reach is pretty amazing the day of the event.
John Mellor:And another aspect of these physical events is they tend to be forcing functions from the vendor standpoint. They drive strategic decisions. They drive product to get things done and shipped. They drive big messaging decisions and partner ecosystem decisions and events and things like that.
John Mellor:So, you still want to use them to drive that forcing function and then kind of ring the value out of all that effort in an amplified way where you might have 3,000 people at an event if it’s live. You’re going to have 12,000 if it’s virtual, and you can reach so many more people. And your downstream nurture of that audience can really be tailored based on, what were they interested in when they came to the event, what breakout sessions did they attend, what parts of the keynote did they watch? So, it gives you a chance for a lot of downstream intimacy. The jury’s still out on close rates and ACV creation, those sorts of things. The enterprise sales cycle will take a while, but we’re pretty happy with it.
Harry Stebbings:Can I ask, speaking of that move from physical to virtual, how are you thinking about… I spoke to PagerDuty last week, and they mentioned their shift in marketing spend from physical to virtual. And I guess my question too is, how are you thinking of shifting spend and the strategy around it in light of the pandemic?
John Mellor:It’s a decision that has a little bit of strategy involved, but it’s become kind of a forced strategy. I don’t really have a strategic decision to make about how much I spend on events in the next four months because that decision has been made for me. There just aren’t any physical events to attend. So, you’ve got this balance of the strategy comes into play with, how do you redeploy those funds? So, how do you create the online equivalent of that reach and that intimacy in a completely digital environment?
John Mellor:So, we have shifted significant amounts of the event spend to digital programs. Some of those are webinars, where you’re trying to replicate that in-person, that live experience. But some of it is just in increased ad spend, where you’re doing more search and more display, more syndicated content, et cetera, more email. And so, we’re absolutely doing everything we can to keep lead volume up, to keep the pipeline acceleration where we need it to be because we don’t want to make decisions that would make this crisis sort of a foregone conclusion or predestined.
Harry Stebbings:Yeah, I mean, it’s interesting you said there about predestined. How do you think about avoiding making the crisis self-fulfilling?
John Mellor:It’s such an interesting topic because I lived through the recession. I was working at Omniture when we went through the recession. Our CEO, of course, was there. Our CFO went through the recession at his company. And so, you’ve got this tendency to evaluate scenarios in your head, and some of those scenarios are pretty awful. And the challenge is to not let those scenarios dictate action prematurely.
John Mellor:So, you want to really let the data talk. And so, you start to look at early indicators. You start to dial in your magnifying glass on anything that would be a very early indicator, early, early indicator on your business. What’s your web traffic? What is your lead rate, your rate of generated leads from that traffic? How are those leads turning into opportunities? How are those opportunities progressing through the pipeline? And you don’t have a nine month full sales cycle to watch these. You just do not have that much time. And so, you’ve got to make decisions on early, early indication very quickly.
Harry Stebbings:Totally agree in terms of the speed there. I guess, my question to you is, I speak to a lot of SaaS companies, and they’re going, “Hey, we’re actually not affected by this. Our revenues are looking the same. Our customers are happy.” And I kind of think you will find out most how your business is impacted when it comes to renewals, when it comes to churn and discounting that comes with those renewals. How would you advise founders who aren’t seeing changes as of yet and are kind of unsure because they’re expecting to see negative changes, but the data doesn’t show it yet? How would you advise them?
John Mellor:When I sit with my marketing team several times a week, they read out a lot of data. And one of the questions I ask them at the end is, “Okay, so if you were living under a rock, if you had no access to news, how would you say the business was doing?” And that’s one of the factors that we use in determining whether or not we’re going to increase or decrease spend.
John Mellor:These sorts of situations are so historic because they have no playbook. And the danger, I think, is to apply an old playbook to a new situation that is 100% unique. You can apply some judgment, but to think you can just cookie-cutter a situation from the past and apply it to this situation, I believe, is incorrect.
John Mellor:So, the advice that we’re following is plan for the worst. Get those preparations in place in detail and know what steps you’re going to take when you see the indications that you should take those steps. But don’t take the steps too soon because I think you can predestine your situation in a very self-fulfilling way.
Harry Stebbings:Yeah, no, listen, I totally agree with you in terms of predestiny, and yeah, I think it’s a very negative, cyclical mindset to get into. I do want to dive there into my favorite element of any episode, John. So, I say a short statement, and you give me your immediate thoughts. It’s called the quick fire round. Are you ready to rock and roll?
Harry Stebbings:Okay, so what do you know now that you wish you’d known at the beginning of your time at Domo?
John Mellor:I wish I had known better the complexity of the offering.
Harry Stebbings:Can I ask, what makes Josh the special leader that he is?
John Mellor:I’ve worked with a few founders in my career, and I think founders are just different humans. They’re wired different. Their ability to have a vision to be doggedly attached to that vision is what makes them unique. And that is certainly the characteristic that I would say Josh has got, is he can see things as they should be, have a complete irreverence for reality about why that’s hard, and just keep persistently going after that.
Harry Stebbings:What’s the hardest element of your role with Domo today, John?
John Mellor:The hardest element is simplifying the offering into consumable chunks. There was so much resource put into building the Domo platform, and it’s so broad and so deep that the challenge is it can do so many things. And that’s not what a buyer wants to hear. A buyer wants to hear, how does it solve my pain today, make me revenue, give me business impact? So, distilling that broad, deep functionality into consumable chunks for personas is the process that we are really focused on because that’s where the transformation is.
Harry Stebbings:Can I ask, what’s the optimal relationship between chief strategy officer and CEO?
John Mellor:I think the right CEO-chief strategic officer relationship has a lot of constructive tension in it. At least speaking from my experience, you have to realize that the founder is in their position because they are extremely talented and unique in the ways that create businesses and create ideas and vision. The role of strategy is to try and distill that vision into an operational framework that the business can act on and grow over the long term and do it efficiently. And that tension is a powerful accelerant, so there’s a lot of chemistry that’s got to exist, for sure.
Harry Stebbings:I love that constructive tension. I do want to finish it on my favorite, which is, if you could change one thing about the world of SaaS today, what would it be?
John Mellor:I think from an enterprise software SaaS standpoint, we just got to make it more usable for the end users. It’s got to be simple, simple, simple.
Harry Stebbings:Totally agree with you in terms of the simplicity. But John, as I said, I have heard so many great things, both about you and Josh from many different people on the show. So, thank you so much for joining me today, and this has been so much fun.
John Mellor:Thank you, Harry. It’s been a pleasure.
Harry Stebbings:Such a pleasure to have John on the show there and absolutely loved that discussion on the accelerant of change management. If you’d like to see more from John, you can find him on Twitter, @MellorTime. Likewise, it’d be great to welcome you behind the scenes here. You can do so on Instagram @hstebbings1996 with two Bs. It would be great to see you there.
Harry Stebbings:As always, I so appreciate all your support, and I can’t wait to bring you a fantastic episode next week.
Ep. 325: Carolyn Guss is VP of Corporate Marketing @ PagerDuty, the company keeping your digital operations running perfectly with their real-time operations platform. Prior to their IPO in April 2019, PagerDuty had raised funding from some of the best in the business including a16, Bessemer, Meritech, Harrison Metal and Elad Gil to name a few. As for Carolyn, prior to joining PagerDuty she spent 5 years as the GM of Method Communications San Francisco Office and before that spent time on the other side of the pond with a close to 7-year stint at Orange as Head of Corporate PR and Head of US Communications.
Pssst 🗣 Loving our podcast content? Listen to the start of the episode for a promo code to our upcoming events!
In Today’s Episode We Discuss:
* How Carolyn made her way across the pond from Head of US Communications at Orange to GM of Method in SF to then playing a key role in the marketing team at PagerDuty?
* How does Carolyn think startups and larger companies can replace the leads that are lost from having no events in a COVID-19 world? How are PagerDuty shifting their strategy? How does PagerDuty think about brand marketing? Does it have to be tied to a number directly tied to revenue? What are the challenges with brand marketing?
* What does Carolyn believe is the right tone to approach customers within this time? How can one be supportive but also drive towards business objectives? In terms of tone, what is the right tone to approach the broader team with? How does PagerDuty gain a sense of company morale at scale? What tools do they use?
* How does Carolyn think about the benefits of transparency both with employees and with customers? Is there an extent to the benefits of transparency? Can one ever been too transparent? How does one think about this in a very corporate perspective with PagerDuty now being a public company?
Ep. 326: Gusto’s Lexi Reese walks you through scaling high performance teams. Is trust earned or given? How do you communicate for impact?
Below, we’ve shared the transcript of Harry’s interview with Carolyn.
Harry Stebbings:Welcome back to the official SaaStr Podcast with me, Harry Stebbings. And if you’d like to leave feedback or suggestions for future episodes, I always love to hear your thoughts. And you can do so on Instagram at HStebbings1996 with two Bs. But time for the show today and I’m thrilled to welcome Carolyn Guss to the hot seat today.
Harry Stebbings:Now, Carolyn is VP of Corporate Marketing at PagerDuty, the company keeping your digital operations running perfectly with their realtime operations platform. Prior to their IPO in April 2019, PagerDuty had raised funding from some of the best in the business, including: Andreessen Horowitz, Bessemer, Meritech, Harrison Metal, and Elad Gil to name a few.
Harry Stebbings:As for Carolyn, prior to joining PagerDuty, she spent five years as the GM of Method Communications in the San Francisco office, and before that, spent time on the other side of the pond with close to a seven-year stint at Orange as Head of Corporate PR and Head of U.S. Communications.
Harry Stebbings:But now I’m delighted to hand over to Carolyn Guss, VP of Corporate Marketing at PagerDuty.
Harry Stebbings:Carolyn, it is such a pleasure to have you on the show today. I’ve heard so many great things from the one and only Jen, and so thank you so much for joining me today.
Carolyn Guss:Thanks, Harry, for having me here. It’s a pleasure to talk to you. We’ve obviously worked with SaaStr for a long time. Really enjoyed the relationship. Jennifer Tejada, our CEO, has always enjoyed speaking at SaaStr, so it’s great to be chatting to you in an unusual time for all of us.
Harry Stebbings:It is indeed an unusual time, but we so appreciate that. But I would love to start with a little bit on you, Carolyn. So tell me, how did you make your way into what I call the wonderful world of SaaS and come to be VP of Corporate Marketing of PagerDuty today?
Carolyn Guss:So like you, and as you can probably tell from my accent, I started out my career in London. I was running corporate comms for Orange, the large French mobile operator. We had 200,000 employees and were part owned by the government. So it was about as far away from SaaS startup land as you can possibly get. But it was a great experience, grounding me in tech. We launched a lot of products in emerging markets. Mobile was really booming at that time. We were getting into digital TV. But as time went on, I could really see the level of innovation that was coming out of Silicon Valley, in particular, but SaaS companies more broadly, so managed to find my way to the West Coast of the U.S. in about 2008. But my startup experience was actually a PR firm called Method Communications, where I worked with some of the most exciting companies. So Domo, Nutanix, Qualtrics, PagerDuty, of course, Robinhood. So many of the really exciting tech companies were really broken out by Method. And I ran the San Francisco office for the agency.
Carolyn Guss:So during that time I met Jennifer Tejada and the team at PagerDuty, worked with them through their IPO. What I really learned in that time was that PagerDuty was a pretty unique experience for me. It’s a complex technology, but it touches all of us every day. PagerDuty is used by the likes of Netflix, Zoom, Nordstrom, Gap. And many of us don’t realize that the digital experiences that we’re having and the apps and the websites that we’re visiting are working great because PagerDuty is there, used by the teams behind them. So I got excited about the mission of the company and the opportunity to really up level the marketing story because it is a complex technology. And so started talking to the team about the opportunities to work together and about six months ago came over from being an agency partner to PagerDuty to running the corporate marketing team.
Harry Stebbings:Can I ask, because it’s a very interesting transition. Because obviously at Method you work across a very broad landscape of clients and customers, and then obviously with PagerDuty, much more of a focus purview. How was the transition for you and how did you find that going from quite broad to quite focused?
Carolyn Guss:Absolutely. There was a real transition. I’d been working with PagerDuty for 18 months and I felt I really understood the business, but actually I didn’t. I was one step removed. So coming away from knowing lots and lots of companies a little bit to knowing one company really deeply, I think it’s helped me deepen my impact. What’s broad for me now is my remit. So I’m looking after internal comms, so really helping with the culture of PagerDuty. I’m looking after marketing, so events, brand marketing. And I’m looking after PR and communications as well. So how are we showing up in social media? Opportunities like this, talking to you, getting our voice out there in the media and making sure we’re well differentiated. So the breadth of my activities has grown and I think that’s kept me really engaged and excited to learn.
Harry Stebbings:Totally. And I think the breadth is what’s so fascinating. I do want to dive into a couple of those specific elements you mentioned there, and particularly placed in the context that we’re in, obviously the rise of COVID has meant a lot of marketing plans are quite simply out of the window in many cases. So I’d love to discuss how you think about changing strategies and pivots in the face of COVID. And you mentioned events there. Always a huge source of leads for B2B companies. How do you think about a lead replacement with such a large marketing activity now really gone?
Carolyn Guss:Absolutely. Events were a huge part of generating marketing qualified leads for PagerDuty and we had two different types of events. One is large scale customer events and the other is community events. It’s more focused on developers that use the platform. Obviously none of those events can take place at the moment. So what we did first was we mapped all the different events that we host and we mapped the value of leads that we expect to get from those events. And then we looked at how we can replace these with different digital channels. It was really a cross-functional effort with sales and marketing and product and a growth team that’s responsible for all our digital and web presence. And we’ve broken it out into a few areas.
Carolyn Guss:So most immediately we’ve pivoted to replace events themselves with virtual events. So we had an event in London, customer event, and we took that virtual. Required a lot of communication and fast action. And then the other thing that we’ve done is to create a series of webinars. So one of the things about PagerDuty where we really excel with events is that we provide a lot of community resources and information and best practice sharing. So it’s really easy to just take that and deliver it over a webinar. These webinars aren’t particularly about product push, they’re about the things that you can do to improve your own incident response and make sure that your own digital operations run well. So we had a ton of these resources already available in written form, so it’s just about having some of our execs or our experts take them out as webinars and promoting those to our customers.
Carolyn Guss:And then the next thing we’re doing is really doubling down on our digital media spending. We haven’t been really focused on above the line ever. We’ve done one or two brand campaigns, but it hasn’t been something that’s at the heart of PagerDuty marketing. We’ve been almost quite scrappy in our marketing, I’d say. So we’re taking some of that budget that was used for events and we’re moving over to things like sponsored content, web page takeovers, radio advertising. And the reason that we feel like that’s a good pivot for us right now versus the direct nature of events is because fundamentally PagerDuty keeps the Internet up and running and the whole world has just gone offline and online with shelter in place. So more than ever, companies need our services. So we are looking to cast a much wider net right now and get that message out there. So we definitely have brand awareness goals as well as marketing qualified lead goals with this shift that we’re making.
Harry Stebbings:You’re teeing me up so nicely because there’s so many things I just want to unpack from that. My first is if you take it in order, you mentioned the shift to virtual events there. A big one for me is how does it compare from a results basis in terms of MQLs, and what have been your initial takeaways from the first few that you’ve done now?
Carolyn Guss:It’s early to answer that. We have a certain number of MQLs that we expect to get from an event based on how that event performed in the past. We’ve been running our major user event, for example, PagerDuty Summit, for four years. So we’re preparing dashboards to figure out what we can expect to get from webinars and what we can expect to get. But I wouldn’t say that we have the answer just yet, Harry. I think that it’s possible we’re going to see that, but then equally PagerDuty’s really built on land and expand. That’s been the best sales motion, or the biggest sales motion that we’ve experienced as a company.
Carolyn Guss:So right now what we’re seeing is a ton of extra usage on our platform from existing customers. So what we want to do there is make sure that we’re offering resources and being really, really supportive to those customers. So I don’t actually think that we’re going to be able to say if we’ve got this number of leads from an event, the virtual equivalent of that event will get the exact same number of leads. I think it’s about taking a different approach and really leading with supporting our existing customers for that land and expand motion and then getting the broader awareness out there with bigger digital media spend so that we can be adding new logos.
Harry Stebbings:Totally agreed with you there, especially on the awareness. The awareness is an interesting one because brand marketing, there’s different views on brand marketing and awareness. And I guess my question to you is how do you think about and assess brand marketing and how do you respond to often people’s thoughts that it’s untraceable, it’s untrackable, and it’s therefore challenging as a core strategy in itself?
Carolyn Guss:So brand marketing, we ran our first brand campaign in the fall of last year. We rebranded and we ran campaigns for the first time ever. And I would agree that for a company with our culture, it’s not as obviously trackable. With our land and expand model, what we’ve always done is just really look to drive people to trial through our website. And that’s obviously extremely tangible. We know exactly how many people are coming through to trial and then how many people are becoming customers. So the brand marketing campaign, we looked at it differently. We weren’t expecting a brand campaign to generate leads in the same way that we see from our website. We were really looking at it as a way of building value in the PagerDuty brand and helping us to differentiate from other companies that are in our market or in adjacent markets that sometimes people will confuse with us.
Carolyn Guss:So we’re not necessarily expecting brand marketing to drive to very hard metrics. That said, we will be tracking those metrics and we will be running the exact same dashboards on marketing qualified leads to understand how it’s performing because there’s always the opportunity to improve and iterate. So right now, what we’ve done is created a plan for April for digital marketing spend. We’ll be benchmarking that and then we’ll iterate on our plan for May.
Harry Stebbings:Totally get you. Can I ask, you said that about using the same framework and I like that. It makes me think of something that CMO at Pendo, Joe Chernov, once said on the show. He said that all marketing activities have to be tied and held accountable to a number directly tied to revenue. Would you agree with him in terms of having to be tied directly to revenue, or is there a broader purview and a nuance to that?
Carolyn Guss:At the high level I do agree. And we use Pendo ourselves to understand exactly how we’re driving to revenue. There’s nuance within it, though. So if I think about my team, I have customer marketing in my team right now and we absolutely tie to revenue of customer marketing. We create a number of assets, we push them out through webinars, through other types of digital campaigns, and we track MQLs. If I take public relations, we don’t track to MQLs of public relations. That’s really for building brand.
Carolyn Guss:So ultimately, as a VP of Corporate Marketing, I am tied to a number, but I take my nuance within that as to which vehicles I’m using to reach that number. So my spend may be greater in one area than another depending on how I’m tracking against that number. So I think it’s about being able to pull different levers and I do think there’s some nuance in there.
Harry Stebbings:Absolutely. You mentioned the customer marketing team and it makes me think to the time that we’re in today because it’s a time where tone is something that you have to think a lot about. So I’m intrigued, given the time and actually moving to the conversations themselves with the customer, how do you think about adopting a tone of support and care, which is obviously very necessary in an uncertain time right now, but also a need to impact revenue and business objectives with the tone as well?
Carolyn Guss:This has been a really big conversation for us. So back in February, we started to see on our platform that our customers were labeling the types of incidents that they use PagerDuty for with pandemic or coronavirus or COVID-19. So we could understand then that our customers were experiencing some kind of business impact as a result of the situation. And so we began to think through, how do we support them in that situation? We were seeing some customers having really surging demand for their product. And you can imagine it’s companies in online learning, video conferencing, collaboration tools.
Carolyn Guss:And what that means is their teams are working around the clock and are working really hard to keep things running. And so it is not helpful for us to say buy more PagerDuty licenses. It’s really about showing them supports that if they’re spinning up an incident response team fast or they’re really scaling their ability to fix incidents on their networks, then it’s about us showing them with webinars, with videos, with white papers, how do you do that fast. So we have something called Incident Commander Training, which is how you train people to run major incidents. And as you can imagine with growing demand on networks, there’s going to be more people required to step into that job and help the core team keep the systems running perfectly.
Carolyn Guss:We have something called Virtual NOC Training because everyone’s just gone home. Companies were used to having a NOC in their office and they could all have a sense of the health of their systems and suddenly everyone’s gone home. So we’ve provided training on how to create a virtual NOC. So we’re already leading with a message of here’s best practices and support that we can provide to you. And we believe that that will lead to growth for us down the line. But it doesn’t feel right at the moment to be pushing product and license messages.
Harry Stebbings:I totally agree with you in terms of not feeling right there. I guess my question is it’s almost customer success, but it’s also definitely marketing. And I think more and more today we’re seeing marketing being pushed further and further down the funnel with the creation of that content being used to support and make their clients as successful as possible. Do you agree with this almost merging of the roles of marketing, especially around content, with customer success?
Carolyn Guss:Absolutely. We’re very much hand in hand with customer success now and I think account based marketing is something that’s growing within PagerDuty. Because we began with the land and expand motion, but we really, as we move up into larger companies, need to help with that expansion and that’s where customer success and marketing are hand in hand. We’re generating a lot of materials and then customer success are really personalizing them and having those conversations. But then we’re looking to amplify that, I guess, by having the same messaging show up in different kinds of channels where these customers are going to turn up. So yeah, very much cross-functional effort for us. It already was and it is so now more than ever.
Harry Stebbings:You mentioned the cross-functionality there between the different teams. It’s an incredibly hard thing to achieve. I guess my question to you, subsequently, is what do you think you do to allow yourself to do that, A, efficiently, but also with speed being cross-functional, and also being remote now too?
Carolyn Guss:We had actually just had, before all of the coronavirus changes began, we had gone off site with all of our leadership team to talk about how do we improve cross-functional working in PagerDuty and eliminate silos. And there was areas where it was working really well, but we needed to challenge ourselves to be better and more agile cross-functionally. And then of course this situation arose and it forced it to happen immediately and it forced it to happen in the most challenging way, which is with everybody going remote. So the way that we kicked it off was that we created a framework, crisis management framework, and it has four functional teams and those teams are all made up of people from different functions. One of them is about really protecting and promoting the welfare of our employees. One of them is about supporting and engaging our customers. Another one is about the resiliency of our platform. Because we like to say we are always on. When you’re down, we’re up and we’re helping you. And that promise is so important right now. And then the last one is about financial preparedness in our business.
Carolyn Guss:And so those work streams are not run individually by product or individually by finance or individually by sales and marketing. They have cross-functional team members across all of them. So that’s a new way of working for us. So it’s really accelerated a way of working that we were trying to accomplish. And I think that’s something I bet other companies are experiencing too, is that in times of crisis, it allows you to focus on what matters the most and you can work cross-functionally because people talk straight to each other and they just go and figure out who the person is and find them immediately. They don’t wait or put it on their to do list or hold back better opinion. So I think we’re going to see a huge improvement in cross-functional behavior and we’re kind of excited about it. It’s one of the real benefits of this situation that we keep talking about inside PagerDuty.
Harry Stebbings:I totally agree with you there, especially in terms of the massive transition overnight and forcing things that maybe would have taken slightly longer. I guess my question is, diving slightly more deeper into the granulars of navigating team morale, team culture in the shift, got to have this tone of empathy and support. So how do you think about the comms strategy around showing that empathy and support to the team in these very challenging and uncertain times?
Carolyn Guss:We’ve always had an internal comm strategy of ultra transparency. And when I joined PagerDuty it made me a little nervous because I was thinking, well, if we’re being this transparent to the employees, what if this gets outside of the business? But it’s really what we believe in in our culture. So that’s interesting now because we’re having AMAs every week, sometimes twice a week, with our executives. And anybody can submit a question that’s publicly seen by all of the employees. And people really want to understand what does this mean for me? So we’re being really honest. As a business we’re in a really strong cash position, but as I told you earlier, we’re still trying to figure out what this is going to mean for our pipeline. So we’re being really honest and transparent, but we’re really striking a balance there with a lot of support and empathy and also with celebrating the wins that we have.
Carolyn Guss:We are landing great deals still. There’s wins across the business with product teams, with sales teams, with marketing. So we’re really celebrating that more than we ever would. But in going back to the AMAs, what we believe is just a really, really strong cadence of communication right now. So Jennifer, our CEO, gets on video frequently. Other members of our executive leadership team do and they post that to the company. The AMA is run twice a week. We have updates to policies and FAQs that run twice a week. So it’s been sort of hyper communication.
Carolyn Guss:But we’ve also been polling the employees. So we use the survey tool called Culture Amp. We’re polling the employees weekly because the situation is so fluid, to understand are we’re getting it right, are we striking the right tone with you? Do you feel connected? Do you feel like you can carry on working in this way? Do you feel like you can carry on in this remote situation? So we’ve really been able to get a good pulse from the employees on how they’re feeling. And I think for many people their job is a highlight for them right now. We’re busy, we’re leaning into this, but it’s stressful. You’re at home, you feel heightened levels of anxiety. So we’re also trying to think ahead about what the needs will be. If we’re all going to be working from home for a long period of time, which is a possibility, what are people’s needs that we need to be able to predict? What about mental health issues, what about burnout issues and how can we support our employees there?
Harry Stebbings:Listen, I totally agree with you and I’d just highly recommend espresso martinis continuously throughout the day, on that note. And I do want to ask you, transparency is fantastic as a core ethos. My question to you is does one ever have to be careful about being too transparent? And if you were advising other comms strategists and professionals thinking about us within that companies, are there any limits to transparency?
Carolyn Guss:Yes, absolutely. Responsible transparency, I think, is the key. We need to make sure that anything that we want to talk about quite transparently today, we can see that through. We’ll lose trust of our employees if we end up having to go back on a commitment that we made. So we want to be transparent, we want to answer all questions and we do have that as a core part of our culture, but we don’t make big promises or make big commitments about the future. And I think part of that is being a new publicly traded company, as well. It’s part of the muscle that we’ve developed.
Harry Stebbings:No, I totally agree. I think that’s a real muscle that’s developed when you go public. And transparency is also tied to being real and being very authentic. In terms of authenticity and real, how do you think about being both transparent and real? And I guess on the real side, how do you think about that? If it potentially disincentivizes the team, say… A lot of founders that I work with say, hey, we lost a key client. I don’t know whether to communicate that back to the team. It’s yes, it’s not transparent, but I’m thinking about morale and I’m thinking about culture in a difficult time. What should I do? How would you advise them in those cases? You want it to be real and transparent, but you also have to think about wider morale and morale maintenance. How do you think about that?
Carolyn Guss:We think about it through the lens of vulnerability as a leader. So when we have a miss as a business, we talk about it with our senior leadership team and we talk about the learnings. We have a big culture of postmortems inside PagerDuty. It comes from the DevOps methodology that we were really built on. So anytime we feel that we’ve failed, lost, or could have done better, we host a postmortem and we really talk honestly and vulnerably with each other. So people are quite used to that. So then when is this a bigger deal that has more impact we’ll talk about it with our senior leadership team and we’ll be vulnerable there. And then we’ll ask them if it’s appropriate for you when you’re leading your teams, if you’re having a quarterly business review or just a stand up, bring vulnerability because it helps other people feel, it helps your employees feel that if they’re experiencing a challenge right now and they don’t know what to do about the challenge, they know that they’re safe with you, that you can relate to that.
Carolyn Guss:Because I think as much as we want to celebrate the positives now more than ever, if all we do is talk about the positives, it’s going to feel kind of disingenuous and we’re going to make employees, I think, disengage. So we look at it through the lens of vulnerability. It’s not that we’re specifically trying to share bad news so that everybody can level set. We’re looking to use it in a very intentional way.
Harry Stebbings:No, I totally agree. And I think absolutely vulnerability, actually, in many ways inspires a lot of strength in the team. But I do want to dive into my favorite element of any episode, being the 60 Second SaaStr, Carolyn. So I say a short statement and then you hit me with your immediate thoughts. Are you ready to dive in?
Carolyn Guss:I’m ready.
Harry Stebbings:So it’s been an incredible career in the marketing world for you, but what do you know now that you wish you’d known at the beginning of your time in marketing?
Carolyn Guss:Truncate. I used to be rather long winded, still am a bit, and not really be able to influence and land my points and couldn’t understand why I’d have to repeat something three times and it still felt like people didn’t get it. So I do a lot of media training with executives, preparing them for short soundbites. That’s actually a crucial skill in all parts of marketing because you need to influence and you need to sell a message. So thinking about the three points that you want to land and truncating the way that you land them.
Harry Stebbings:I think I could clearly do with some of your media training. I have that wonderful British bumblingness. But I do want to ask, what’s the hardest element of your role with PagerDuty today?
Carolyn Guss:Devising for good versus perfect. PagerDuty sets a really high bar, and yet we have to be very agile and move fast. So there’s the balance of being okay to ship something that’s not yet perfect, but it’s good enough when we always want better and we always hold ourselves to a higher bar and strive for more.
Harry Stebbings:ABM, is it a buzzword that’s just used too much these days, or is it a new, innovative and fundamental shift in the way we market?
Carolyn Guss:I think it’s a pretty fundamental shift in the way that we market. We were talking earlier about the relationship between marketing and customer success. One of the things that we’ve experienced in PagerDuty is we have many, many customer contacts. It is not a top down model in PagerDuty, it’s a bottom up model. Developers come in, they buy the product. It really expands through the business as a viral growth. Many teams and executives start using PagerDuty. We have to have an account based marketing approach. We have to have an account based marketing approach where we touch all of those different contacts with the right type of messaging for their need. So we feel that marketing is getting more personal than ever and that is a fundamental shift.
Harry Stebbings:If you could change one thing in the world of SaaS today, what would it be and why?
Carolyn Guss:Oh, we’re so inside in Silicon Valley we forget about the world at large. We forget about the fact that they don’t know what SaaS means, that they don’t use our tools, although they may be impacted by our tools. SaaS companies are used by traditional businesses across the world, but we tend to forget that and live in our Silicon Valley bubble. So I would love for all of us to get a broader mindset and just challenge ourselves every day on the assumptions that we make.
Harry Stebbings:Final one, but who in SaaS marketing do you think is killing it today and why do you think so?
Carolyn Guss:Zoom is killing it today. And this may be an obvious answer or a timely answer, but I feel Zoom’s always been killing it because they really put their ethos and their belief first. The narrative is that they want to make people happier. I mean, who doesn’t buy into that? And this is a B2B company, predominantly. And then I think they also really live through that values. They’ve given the product away for K through 12 educators and that’s a hard thing to do. That’s causing massive scaling for their business. But it’s living by their values that they should do good in the world. So I think they’re absolutely killing it in SaaS marketing right now.
Harry Stebbings:That’s awesome to hear and I couldn’t agree with you more there. But Carolyn, this has been so fun. I’ve absolutely loved doing it. So thank you so much for joining me today.
Carolyn Guss:Thank you, Harry. It’s been a real pleasure to talk to you.
Harry Stebbings:Absolutely loved having Carolyn on the show there. And such exciting times ahead for PagerDuty. And if you’d like to see more from us behind the scenes, you can do so on Instagram at HStebbings1996 with two Bs. I always love to see you there.
Harry Stebbings:As always, I so appreciate all your support and I can’t wait to bring you another fantastic episode next week.
Ep. 323: Bhavin Shah is the Founder & CEO @ Moveworks, the cloud-based AI platform, purpose-built for large enterprises, that resolves employees’ IT support issues—instantly and automatically. To date Bhavin has raised over $108M with Moveworks from the likes of Mamoon Hamid @ Kleiner Perkins, Arij Janmohamed @ Lightspeed, Bain Capital, Sapphire Ventures and ICONIQ. Prior to Moveworks, Bhavin was the Founder and CEO @ Refresh which was later acquired by LinkedIn and then before that founded Gazillion Entertainment, a company he scaled to over 200 employees.
Pssst 🗣 Loving our podcast content? Listen to the start of the episode for a promo code to our upcoming events!
In Today’s Episode We Discuss:
* How Bhavin made his way into the wonderful world of SaaS and came to found Moveworks.
* What are the core challenges IT teams are facing as a result of the move to remote work? Where do many make mistakes here? What can one do from a structural perspective to set them up for success when moving to remote?
* What does great change management look like in Bhavin’s mind today? Where do so many go wrong here? How does this change in the world of remote? Who should be involved in executing on the change management plan?
* How does Bhavin think about the role of customer success today? Why does Bhavin believe that customer success and product should be in one org? How does Bhavin think about the interplay of marketing and customer success? Is marketing moving closer and closer to customer success with their content?
Ep. 324: Join SaaStr CEO Jason Lemkin and Bessemer Venture Partners Partner Byron Deeter for a deep dive on what’s going on in Venture Capital and Cloud.
Below, we’ve shared the transcript of Harry’s interview with Bhavin.
Harry Stebbings:Welcome back to the official SaaStr podcast with me, Harry Stebbings. I’d love to see you behind the scenes here at the show on Instagram @HStebbings1996 with two Bs. I always love to see you there. But to our episode today, and we welcome an incredible three time entrepreneur now rocking the world of enterprise SaaS, and so with that I’m thrilled to welcome Bhavin Shah, founder and CEO of Moveworks, the cloud-based AI platform, purpose built for large enterprises that resolves employees’ IT support issues instantly and automatically. Today, Bhavin has raised over $108 million with Moveworks from the likes of Mamoon Hamid at Kleiner Perkins, Arif Janmohamed at Lightspeed, Bain Capital, Sapphire Ventures, and ICONIQ, to name a few.
Harry Stebbings:Prior to Moveworks, Bhavin was the founder and CEO at Refresh, which was later acquired by LinkedIn, and then before that, founded Gazillion Entertainment, a company he scaled to over 300 employees.
Harry Stebbings:Now I’m very excited to hand it over to Bhavin Shah, founder and CEO at Moveworks.
Harry Stebbings:Bhavin, it is so awesome to have you on the show today. As I said, I’ve heard so many good things from pretty much every board member of yours and investor, but especially Mamoon at Kleiner and Arif at Lightspeed. So thank you so much for joining me today.
Bhavin Shah:Thanks, Harry. First time caller, long time listener. Excited to be on the show today.
Harry Stebbings:I mean, my word, that is so good for my ego. But I do want to start today with some context. So tell me, Bhavin, how did you make your way into what I definitely think is the wonderful world of SaaS, but also what was that founding ah-ha moment for you with Moveworks?
Bhavin Shah:So I grew up in Silicon Valley here in the Bay Area, and my parents immigrated in the late ’60s, was exposed to technology from a very early age. This endeavor with Moveworks is my third company. My last company was in the mobile productivity space called Refresh.io. We were acquired by LinkedIn about five years ago. Moveworks came about through a very deliberate process, a process by the four of us founders to understand where we could use machine learning in a very useful and impactful way in the enterprise. And the journey took us to a conversation with over 30 CIOs and IT leaders and analyzing a bunch of their IT tickets before taking our first bit of capital.
Bhavin Shah:The discovery was that there’s now about a billion knowledge workers worldwide, and each of those knowledge workers submits about one ticket a month. But those tickets still take three days to get resolved, and so we saw billions of dollars being spent on better ticketing systems, better automation tools, which the world definitely needed. But these tickets were still relatively slow, and when we dug into the details, what we realized is that they’re still written in natural language, and so no one had taken the approach of trying to solve the tickets directly by understanding and building machine learning frameworks to read these tickets and then solve them completely autonomously. And so that’s been our journey. How do we go from three days to three seconds?
Harry Stebbings:Absolutely, and it’s been an incredible journey to see those since then. I do, sorry, I’m too intrigued not to ask, you mentioned the two prior companies there. How did that experience with those two prior companies impact your operating mindset today with Moveworks?
Bhavin Shah:My career has involved a variety of different industries. I started off in the toy business. I went into the gaming world and it went into mobile productivity, and then now into enterprise SaaS, and if I could do it all over again, I would have done enterprise SaaS from the get-go. It’s a domain that I really enjoy, and I think I thrive in. But along the way of company building, I think you learn a lot about yourself. You learn a lot about what matters, how you build culture, how you build teams, how you listen to customers, how you don’t listen to customers. A lot of different factors went into this. But when it came down to Moveworks, there was a variety of different viewpoints that each of us founders were bringing to the table. I had spent a bunch of years thinking about how to make people productive on mobile, how to leverage that platform.
Bhavin Shah:Varun, my co-founder, was at Facebook building machine learning tools with specifically chat bot tools that were being used to optimize and improve the interview process for hiring managers. They could talk to a bot about who they were interviewing, etc. Jiang, my other co-founder, was at Google and was one of the founding engineers of the question-answer system that shows those paragraphs at the top of the Google search results, basically doing NLP on the fly and then figuring out what to show you, which is very important to our product today, and then Vaibhav, who had also been a serial entrepreneur like myself, building large enterprise scale systems.
Bhavin Shah:So I think a lot of these perspectives came together in a way that allowed us to all build from there and build this company.
Harry Stebbings:I mean, it’s such a unique blend of both backgrounds and skills associated, and so just [inaudible 00:06:23] teams. I do want to ask, though, because if we start on the most important topic that’s actually the front of every single portfolio a founder of ours has mind is the obvious move to remote work and the rise of work from home. You were on the front lines of this movement, and as you said there about speaking CIOs, you speak CIOs across all verticals really, making the switch to work from home. So I guess the first question is what are the core challenges IT teams face as a result of having to move to fully remote pretty much overnight?
Bhavin Shah:There’s so many challenges, and I think as the weeks go by, some of these challenges are getting solved, but initially connectivity, VPN issues, bandwidth, access, policies, procedures, related to all this is support, and that’s our world here at Moveworks. Now what’s interesting if you read the news, which everyone is doing right now, you hear a lot about bars closing, schools closing, gyms closing, but one thing that you don’t hear about is the fact that every walk up bar in the enterprise is now shuttered. It’s closed. We’re not able to go into the office anymore and walk up to someone in IT and say, “Hey, can you fix this for me?” And so overnight, IT teams have had to shift their strategies and deploy things like messaging platforms, remote conf and webinar tools, digital channels for IT support, a lot of other systems to ensure that workers working from home are staying productive.
Bhavin Shah:And the data, as part of the challenges that we’re seeing them face, we’re seeing a 500% gain in requests that employees are making for video conferencing apps like Zoom. We’re seeing the demand for IT support services double. We’re seeing two to three X the number of troubleshooting tickets come into the help desk. And so the good news is there’s lots of good solutions, there’s a lot of companies that want to help here, but the real test that’s going on right now is whether IT teams can put these systems in place in a matter of days and weeks, not months or years.
Harry Stebbings:You’ve seen a variety of different rollout, so to speak, from the IT teams themselves. When you think about perfecting the infrastructure stack and process of these rollouts, where do you see many maybe make mistakes and go wrong in really transitioning to work from home effectively?
Bhavin Shah:Yeah, I think what we’re seeing is it’s mostly about speed. I think a lot of IT teams were thinking that they would make these changes over the course of several years, and manage change management accordingly. I think the ones that are moving quickly now to pick up best of breed best practices and roll it out are finding that employees are quite receptive. Employees are able to make switches very quickly. I think we’re all seeing this. I’ve got kids, and overnight they’re all switched to now doing classes over Zoom. Even my kid’s TaeKwonDo and gymnastics classes are doing them over Zoom.
Bhavin Shah:So I think that where people believe that people can’t change, I think ends up getting them stuck in deliberation and where they know that if they make the change, people will adjust, those groups are winning. One thing I’ll say though is you are seeing kind of a shift in terms of the economy. While many businesses are shuttering and slowing down or weakening, there is a new type of economy, a new type of business that is starting to see more traction and/or thrive in this environment, and that is for businesses that are helping employees and individuals get work done anywhere and anytime. And I think that’s something that we’re seeing play into our business, and in general, the world of SaaS.
Harry Stebbings:One thing I’m really intrigued by is is this a flash in the pan momentary realization from traditional large incumbents and enterprise that obviously fundamentally by law, they have to be work from home? And then more of back to their traditional standards of practice and work? Or do you think this is actually fundamentally a shift in how society operates with regards to its relationship to work?
Bhavin Shah:Yeah, I think it’s the latter, and here’s our experience. So when we started the company, about 20% of CIOs that we talked to had an enterprise-wide collaboration/chat strategy. They’d be going with Slack or Microsoft Teams or Glip or GChat, etc. Last year, that percentage was about 50/50. 50 had adopted something, 50 were still figuring out when to deploy a new tool and how to go about doing that. That debate is over. Basically the next two months, every company in America is going to have decided and implemented one of these tools, and if you’ve used these tools in enterprise, once you start using them, it’s very, very hard to go back. And I think for us, we made an early bet in this world of enterprise chat being a big deal and being something that would overtake traditional means of communication like email.
Bhavin Shah:And so we see that happening in our personal lives with WhatsApp and SMS and everything else. Why not in the enterprise? And so this is actually causing that shift to occur very rapidly, and people will start to see the utility of this. I think through chat, the UI is very intuitive for everyone. It’s not one that we have to learn. We’re all familiar with writing, we’re all familiar with communicating. And so it allows us to have more interactivity, it allows us to simplify work streams, and basically work at real-time. So I think this is a permanent shift, even when we do go back to the office building.
Harry Stebbings:You mentioned an early bet that you placed in terms of the market itself and its transition. I have to ask, because now it seems inherently obvious, but it wasn’t at the time, and it was early. Why did you gain such conviction as opposed to other channels of support, like email and voice? And what led that decision making conviction?
Bhavin Shah:Yeah, it’s a good question. We are a conversational AI company, and there’s a variety of ways that you can obviously engage in conversation. I think that enterprise messaging for us provided a lot of affordances that just made sense if we wanted to provide support to employees. So just going back to the behavior, employees submit on average about one IT ticket a month, and it takes about three days for them to get a result. Now there are portals, there are self-service catalogs and things that people can use, but when you only have an issue every few weeks to a month, you don’t really know how to navigate those. Those UIs are wrought with friction, and email obviously had its inherent delays as well and it’s not real-time.
Bhavin Shah:And so what we wanted to do was find a way that employees could just do what’s intuitive, which is shoot off a quick note and send it off to IT through a chat and have that picked up and have that resolved, but more importantly, by doing it in the enterprise collab tool, we could get their attention, because they’re already checking that tool 100 times a day, collaborating with team members on projects, checking updates, etc. So we wanted to find an interface that allowed for that high volume, high frequency, and we just didn’t necessarily see that with voice, and of course, email has been clogged for years, and you can very effectively find people on their mobile devices, on their tablets, on their laptops, with these new messaging platforms, which really does a lot to help improve our engagement and overall resolve more tickets for those employees.
Harry Stebbings:You said that about engagement, and you also said that about the three day ticket resolution being the standard. I’m really interested, because I always think the definition of what success looks like is crucial, and metrics are often fundamentally quite uniform across industries and verticals. What metrics do you use to define success today? And I guess why do you focus on those specific metrics over others?
Bhavin Shah:Yeah, so until recently, I think SaaS has been mostly focused on the delivery model of the software, to go from your data center to a cloud, which that itself led to some new metrics that have been used for the greater part of a decade, which is to measure active users. And it’s pretty logical, but the problem with active users is it doesn’t really tell you how much value you’re getting. And so I think for us, we’ve been charging forward in a new way of energizing SaaS insomuch as we’re taking ownership of the actual end to end results. We’re doing the implementation and configuring overall, so looking at how many tickets did we resolve for each customer? And so that is the metric that we picked. It’s got perfect alignment between us and the customer. How many tickets did Moveworks resolve yesterday at Broadcom? How many tickets did Moveworks resolve yesterday at Nutanix?
Bhavin Shah:And we measure that, our customers measure that, and it allows us to focus on whatever might be the case to make those metrics better. Sometimes that’s engagement, sometimes that’s an additional integration that we need to do, sometimes that is triggering some other automation that the customer might already have. But the goal ultimately is to provide more workload relief for the IT teams by having a system like this resolve more and more tickets. So for us, the alignment is at a higher order around what was our output, what was the results of our system each day, each hour?
Harry Stebbings:Can I ask you, I’m on the board of many companies that face the challenge of change management. In a normal world where services, revenue, and in-person visits, meetings, seminars are possible, change management is still fundamentally a challenge. In a remote world, how does change management change, and does it get inherently more difficult given the lack of physical services that one can provide in terms of coaching, training seminars to really allow for a smooth transition?
Bhavin Shah:Well, I think that’s absolutely right. What I see a lot of, especially in our own experience of using other SaaS tools, there’s a heavy burden placed on the customer to learn the tool, to implement the tool, to train the employees on how to use the tool, and only then do you actually see the full value of what was created. With our product, and something that we strive for, is how do we take more and more of that work off the plates of our customers and how do we give them more value right out of the box? And so sometimes, it’s not just us delivering a set of tools. I always think of this analogy like Home Depot. A lot of enterprise SaaS mindset is, “Hey, let’s just give someone a tool and have them go figure this out or extract value from it.”
Bhavin Shah:At Home Depot, you go buy your tools to go do whatever home improvement project you want. Maybe you’re building a birdhouse. Maybe you’re building an extension to your living room. It doesn’t matter to them as long as you bought their tools. For us, we actually want to provide you with the end result of what you’re looking for. If you want that living room extension, let’s go build that and give you the keys when it’s ready so you can walk in and enjoy it. And so from our standpoint, the customer success motion, the engagement that we have with customers, is not just about improving our machine learning to understand yet another type of ticket utterance or language pattern, but it’s sometimes us adding a new integration into a back end system.
Bhavin Shah:Sometimes it’s us showing those customers how to clean up an old process or to change a system or record. All of that is so that we can track and show that progress with each customer, and that metric gives us the ability to know where we stand, and that’s something that’s very intrinsic with what we do. Really it’s about customer success being company success as we build this out.
Harry Stebbings:Can I ask, in terms of both customer success, I guess also marketing, but in terms of horizontal application, this is not a vertically specific tool and it’s so horizontal across so many different industries. How do you think about effective marketing in customer success, given the inherently different use cases, applications, and some challenges the different verticals will face with it.
Bhavin Shah:So one of the premises that we had when we founded the company, and this was insight that we derived by looking at IT ticket data, was that IT was homogenizing globally. What does that mean? That means that, and largely due to SaaS products, people had the same tickets that they were solving every morning about Zoom, GoToMeeting, WebEx, or BlueJeans about MacBook, Dells, Lenovos, or HPs. And so as a result, we found ourselves really excited about the opportunity to solve this problem because everyone was experiencing the same problems. So we could build machine learning models at scale that could resolve it out of the box up front for our customers.
Bhavin Shah:And so while we have customers in pharma and semi-conductor and other high tech and retail and services, we have the same types of tickets. And so as a result, our customer success team works broadly across all customers, but we’re solving the same issues. Organizationally, we put customer success and product into one org, because it’s not just important to build a feature and then deliver it to the customer. It’s about building that feature, delivering it, and then seeing how much value it delivers and figuring out what needs to happen on our side, on the customer side, to maximize that value.
Bhavin Shah:So there’s a variety of metrics that we track from a customer success standpoint, but in this sense, it goes back to this core drumbeat heartbeat that we have at the company, which is everyone in the company gets a daily report. And every morning, we all look at it and it tells us how many tickets we resolved yesterday at Broadcom, how many tickets yesterday did we resolve at AppDynamics, at Nutanix, at Freedom Financial. And for me, I get that report every morning, but others in the company are looking at that every hour, every few minutes, to understand really what is the impact that we’re having and what can change and evolve as a result of knowing that?
Harry Stebbings:Can I ask, you said there about CS, like sitting actually with product? Do you engage with a product postmortem, and what do you do to weave that very tight fabric between product and CS strategically other than sitting together?
Bhavin Shah:The journey of building a product or a feature inside of our company is perhaps different than others. So instead of it being a top down motion of the market saying, “Build this use case,” and then the product marketers figuring out the details of that going down to a product manager, going down to an engineer. It’s actually quite the opposite. The engineers are looking at ticket data every day, and they’re saying, “Hey, there’s these tickets, these 300 tickets we skipped at this customer today. What could we build? What kind of machine learning models? What kind of integrations can we build to solve that?” And that leads to further research, further discovery, customer conversations, and ultimately ties into well, what’s the impact going to be? Are we going to increase overall customer resolution by 5%, by 2%? Great. Let’s go do that. Let’s put that in the next quarter’s product plan.”
Bhavin Shah:So today, we’re resolving between 30 and 40% of all tickets on average across customers, and it didn’t just happen overnight. We were two years ago bragging about three to 5%, and over time, the analysis of ticket data, the understanding of how customers perceive that value but ultimately building these features, it’s not a black box. It’s not one of these things where we build them, then we market them, and then we sell them, and then we all pray that people will buy it. It’s something that’s a lot more fluid and a lot more certain before we even start writing the first line of code.
Harry Stebbings:Gosh, the joy of doing the show is I can take the conversation in any way I want. You said there about the improving efficiency of the resolutions there. It made me think we chatted before the show about information network effects with regards to podcasting. When you think about network effects with Moveworks, is there not data network effects where every subsequent ticket actually improves the efficiency of the subsequent thousand tickets, building higher efficiency and resolution speeds.
Bhavin Shah:100%, and I think that’s something that we haven’t seen a ton of in the enterprise world. In traditional settings, if I buy a database and you buy a database, the same database, the database doesn’t get smarter because we’re both using it. For us, we are absolutely benefiting from that, and our customers are, too. Think of different forms of AI. You hear about in the academic circles, weak forms of AI, which are basically making a prediction or a suggestion or better ranking things. Then you have strong forms of AI that are trying to take entire problems and solve them end to end. A level five self-driving car is a strong form of AI.
Bhavin Shah:We’re sort of like that in the IT world. You want a self-driving car that’s been driven a million miles before you get into it, or a billion miles. With us, similarly, our product is seeing now over 70 million tickets and we keep processing them. We keep getting better, we keep understanding, okay, what actions need to be taken for this kind of language pattern? What actually needs to be taken for this other? And so we are getting better. What that means is a variety of things. One is customers who become new customers of ours, and which today we’re doing almost one customer launch every day, a large enterprise, they’re seeing immediate time to value, like the first day we might resolve 20% of their tickets. The first week we might resolve 30% of their tickets. So they don’t have to wait around for six months, a year.
Bhavin Shah:And that’s where I think we’re breaking from the traditional SaaS model where you have a toolkit, have a lot of professional services, they get attached to it, and then you configure it, that’s custom, and then you see the results. You can’t get to the same results that we have with machine learning because we’re able to aggregate, but also we’re able to learn very quickly and to your point, have this true network effect, which ties into the homogeneity and ties into a lot of the other factors, which really gets down into how did we and why did we start this company? This is exactly why. We thought of all these things, these things were somewhat still hard to figure out how we were going to achieve, but the concepts were there, and that got us very excited.
Harry Stebbings:Can I ask, thinking large enterprise and some of their challenging requests, do you ever get pushback on the data sharing between companies in terms of allowing you to provide better efficiency across the client base because of the knowledge sharing and data sharing that allows you to do so?
Bhavin Shah:Yeah, so security’s super important to us from the get-go, very early on we made investments to ensure that we could keep customer data separate and not commingle data, but at the same time, build machine learning understanding across ticket data so that when we learned something in one environment, we can leverage it in the next. So we do a lot of abstraction tokenization, things that keep what’s proprietary proprietary, but also allow us to more generically learn from that. Our customers review that with us. We go through extensive discussions around how we handle that, and for the most part, I think people are starting to come around to the fact that they want an AI system that has been trained, that has learned, that delivers value out of the box, because if you’ve been tracking a lot of this AI space, there’s a lot of AI initiatives that crash and burn six months later, a year later.
Bhavin Shah:And it’s because these things are very hard to stand up on your own. They’re very hard to maintain. They’re very hard to make smarter and evolve. And so the real benefits of going SaaS with AI is that you get all that benefit right up front and you get that continuous improvement over time. So that’s how we’re seeing it and our customers are excited about getting those results without the kind of effort that they would normally have to put into it.
Harry Stebbings:We may be diving a little bit into the ML world here, but I am just interested, have you noticed this kind of asymptotic moment of data ingestion really where there’s decreasing efficiency with every additional dataset? Because once you hit 70 million, there must be some moment of asymptote. Does that make sense? And how do you think about that?
Bhavin Shah:Yeah, so instead of thinking about it as one machine learning model and a monolithic concept of 70 million tickets going to one model, think of it as thousands of models. Think about it as hundreds of techniques. Think about it as different capabilities, and so today, we’ve seen so many tickets, but we’re not solving 100% of tickets. In fact, we think the asymptote of tickets that can be resolved rises up to about 85 to 90%. There’s still some tickets that will always have to use people to better understand… Sometimes people are very vague in their tickets. It’s like, “Hey, I just got back from Hawaii, and everything’s broke. Can you help?”
Bhavin Shah:Well, in that case they really just want a hug from IT or they want someone to give them support, so it’s not intended for a machine to solve. But if you think about it from how we’ve gone about this is we’ve stitched together a framework of looking at all the intents in IT, all of the entities that we see in IT, and we’re building machine learning models to understand every intent entity pairing that’s out there. But as a result, it isn’t just a singular effort. We have to constantly review these things. We have to have human annotators that look at thousands of tickets a day and see are our models drifting? Are our models getting over fit? Do we have to inject noise into the training data? There’s a lot of other factors that go into this that we work on to ensure that this stuff works.
Bhavin Shah:But to your point, absolutely, models, techniques, are evolving very rapidly, and we see models peak in performance all the time, and so this idea that there’s one model and you just train it once and it’s modeling as a service, then you bring it back and you use it, forget about it. We’re changing stuff so often that sometimes we’ll remove entire sets of models and retrain them, some get retrained on a continuous basis, some on a weekly basis, some on a monthly basis, some don’t get retrained until we have a committee meeting, but it’s all towards the goal of what I’ve been saying this whole time, which is one metric. How many tickets did we resolve across all customers? How many tickets did we resolve across these customers? And that drives our behavior.
Harry Stebbings:Well, I can clearly chat to you all day about data asymptotes and the machine learning model. So I think it’s best we move onto the 60 second quick fire round, Bhavin. I say a short statement and you hit me with your immediate thoughts. Does that work well for you?
Harry Stebbings:So it’s a war for talent, as we always hear. What’s the hardest role to hire for today and why?
Bhavin Shah:That’s easy. Machine learning infrastructure. I think with machine learning systems, they’re both computationally and memory intensive, and so the challenges are just intense, and finding people with that experience is really hard.
Harry Stebbings:What’s the biggest challenge about your role today with the company and with Moveworks?
Bhavin Shah:We’re going through fast growth and I think nailing forecasting is still an art, still figuring that out. Sometimes we overshoot, sometimes we under call, and I think that’s something that we’re all focused on now, especially as we’re seeing everyone work from home and how to right size our investments accordingly.
Harry Stebbings:Sorry, this is kind of off schedule, but how do you think about transparency within the org, especially with regards to goals? Because you want people to drive towards something. You want to set ambitious goals. But you also don’t want to set too ambitious goals so people will be discouraged by it if they don’t hit them. How do you think that balance of ambitious but not discouraging if not hit?
Bhavin Shah:One of the folks that I had a chance to recently meet is Rob, the CEO of Coupa, and he has hit his target as a company I think for something like 44 quarters. It’s some larger than 40 quarters in a row. That is a hero. That is someone who has really figured out the right balance of making sure that you set a goal and that you hit it, even through good times and bad times. And I think that is super important. I don’t have a specific answer other than you do want to strike that balance, and the transparency is key, and so the good news is for us, a lot of our stuff is inherently transparent just given our product, and even today, later today I’m going to be reviewing the operating plan for the year with the team based on what we’re seeing now change in the market. And I think it’s just keeping everyone updated and keeping everyone tuned into the same channel.
Harry Stebbings:What’s the biggest area where investors have actively helped you and really moved the needle for the company?
Bhavin Shah:CIO introductions. Investors seem to know every CIO out there and their help with prospecting is huge.
Harry Stebbings:If you could change one thing about the world of SaaS today, what would it be?
Bhavin Shah:I think increase expectations from SaaS products. It’s like, let’s hold ourselves more accountable for the outcomes and deliver real results. Instead of just being a tools provider and making customers do the heavy lifting, let’s give them solutions. I think that’s something that I’d love to see the world of SaaS talk more about.
Harry Stebbings:Hit me. What’s the next five years for you and for Moveworks? Can you paint that vision for us?
Bhavin Shah:Yeah, so we’re doing IT today, but our goal is to go into many other domains and departments. I think ultimately, if knowledge workers need help, we want to be the company that solves it for them, and I think we’re on that journey and we’re super excited by the reception so far. So we’ll keep plowing ahead.
Harry Stebbings:Bhavin, as I said, I heard so many good things, as I said, from Mamoon, from Arif, so thank you so much for joining me today, and I’ve so enjoyed chatting.
Bhavin Shah:My pleasure, Harry, and these are obviously challenging times, but it’s been fascinating to see how SaaS apps and other products like that or like Moveworks are allowing folks to stay connected from afar.
Harry Stebbings:I have to say, I really could not be more excited for the time I had with Moveworks, and if you’d like to see more from Bhavin, you can find him on Twitter @Bhavinator. I do love that username. Likewise, it’d be great to see you behind the scenes here. You can do that on Instagram @HStebbings1996 with two Bs.
Harry Stebbings:As always, I so appreciate all your support and I can’t wait to bring you another fantastic episode next week.
Ep. 321: Anthony Kennada is the CMO @ Front, the startup that provides your team with better email so they can treat every customer like your only customer. To date, Front have raised over $138M from some leading names including Sequoia, Eric Yuan @ Zoom, Ryan and Jared Smith @ Qualtrics, Michael Cannon-Brookes and Jay Simmons @ Atlassian and Frederic Kerrest @ Okta to name a few. As for Anthony, prior to Front Anthony was the founding CMO at Gainsight where he and his team are credited with creating the Customer Success category. At Gainsight Anthony and the team developed a new playbook for B2B marketing that fueled the company’s growth from $0 to over $100M of ARR. If that was not enough, Anthony is also the author of Category Creation: How to Build a Brand that Customers, Employees, and Investors Will Love. The book debuted as a number one new release on Amazon.
Pssst 🗣 Loving our podcast content? Listen to the start of the episode for a promo code to our upcoming events!
In Today’s Episode We Discuss:
* How Anthony made his way into the world of SaaS starting in the sales team at Box and how that led to his entering the world of marketing and creating the customer success category.
* How does Anthony’s marketing playbook change when making the move from Gainsight with higher ACVs and longer sales cycles to Front with lowers ACVs and much higher volume? How does Anthony think about ABM today with Front given the lower ACVs? At what ticket size does ABM make sense?
* How does Anthony feel about brand marketing? Why did Anthony and Front decide now was the right time to engage with billboards? How does Anthony think about data and tracking for brand marketing? Does Anthony believe that all marketing has to be tied to a number directly related to revenue?
* How does Anthony see a changing relationship between customer success and marketing? How is marketing being pushed further into the realms of CS? What is the optimal relationship between CS and marketing? How does this compare to the relationship of sales and marketing more traditionally?
Ep. 322: Many people make the false assumption that the path for a highly successful SaaS company is straight “up and to the right”. Of course, for those involved, the reality of the journey is characterized by a series of obstacles that must be navigated. Fmr. Shasta Ventures Doug Pepper will share the key challenges that were overcome to allow Marketo to become a $5B SaaS Category Leader in Marketing Automation.
Below, we’ve shared the transcript of Harry’s interview with Anthony.
Harry Stebbings:Welcome back to the official SaaStr podcast with me, Harry Stebbings, @hstebbings1996 with two Bs on Instagram. But to the show today, and I’ve been very excited for this one. He’s a friend, a marketing leader and in a way creating much of what we know as customer success today. So without further ado, I’m thrilled to welcome back Anthony Kennada, back to the hot seat today.
Harry Stebbings:Anthony is the CMO at Front, the startup that provides your team with better email so they can treat every customer like your only customer. To date, Front have raised over $138 million from some leading names, including Sequoia, Eric Yuan at Zoom, Ryan and Jared Smith at Qualtrics, Michael Cannon-Brookes and Jay Simmons at Atlassian, and Frederic Kerrest at Okta, to name a few.
Harry Stebbings:As for Anthony, prior to Front, Anthony was the founding CMO at Gainsight, where he and his team are credited with creating the customer success category. At Gainsight, Anthony and the team developed a new playbook for B2B marketing that fueled the company’s growth from nought to over a hundred million dollars of ARR.
Harry Stebbings:And if that was not enough, Anthony is also the author of Category Creation, How to Build a Brand That Customers, Employees and Investors Will Love. The book debuted as the number one new release on Amazon and is a must read in my eyes.
Harry Stebbings:But you’ve heard quite enough from me. So now I’m very excited to hand over to Anthony Kennada, CMO at Front.
Harry Stebbings:Anthony, I have to say it’s such a joy to have you back on the show. Thrilled to see about your recent move to Front and such exciting times ahead there. So thank you so much for rejoining my very dulcet British tones, Anthony.
Anthony Kennada:Thanks for having me back, Harry.
Harry Stebbings:Not at all, but I do want to start with some context and maybe for those that missed our first episode, tell me, how did you make your way into the world of SaaS and come to be the rockstar of marketing that you are today at Front?
Anthony Kennada:Oh gosh, you’re too kind. Well, growing up, I had no idea that I would find myself in marketing, but looking back now, I think there were actually some signals that might have been hiding in plain sight. My job in college was to produce concerts on campus, which got me really interested in events.
Anthony Kennada:I was actually part of a fraternity in which I was the one coming up with the witty t-shirt ideas and working on our website. But my first real job out of college was as a technical recruiter. Basically I was recruiting engineers for Bay area based startups and the problem with it was that the year was 2008, and it was a really tough time for hiring, but an even worse time for recruiters.
Anthony Kennada:So the company ultimately met its fate, but I was successful in placing one engineer with a small file sharing company in Palo Alto, called Box. So I reached out to the hiring manager, I asked them for a shot on their sales floor and eventually they offered me a role as an SDR and I became the 37th employee at Box. And so that’s what really started, I think my journey overall in SaaS at Box.
Anthony Kennada:That’s where I fell in love with startup life in general and for the next few years to bounce around from sales roles to business development roles, to product roles, effectively everything but marketing until I landed at Gainsight.
Anthony Kennada:And I was the first marketing hire at Gainsight, I think the 19th employee. It’s there that really cut my teeth in marketing and mostly because I had to. We were about to create this new category, this movement in customer success. And there really wasn’t a ton of best practices on how to do that. And so my team and I spent six and a half years really writing our own playbook.
Anthony Kennada:Then we took the company from about a 100K or so of ARR to just about a hundred million of ARR before I moved on in June of this past year. So now I’m at Front, super excited to partner with Mathilde and the team and really take on a problem of really massive scale.
Harry Stebbings:I mean you guys did such amazing work in terms of creating that playbook at Gainsight, so totally credit to you for that. But I do want to discuss because you mentioned there, moving from Gainsight obviously to Front. And at Gainsight, you fundamentally created the market of customer success in many ways since day one.
Harry Stebbings:It’s different in the way that it’s much more of a case of kind of capturing a much larger existing market, being email in the future of work, big shift. So how does your marketing playbook and tactics really change when making this transition?
Anthony Kennada:Yeah, well you know what’s interesting is that the companies do represent two completely different go to markets. At Gainsight, we were hyper-focused from a TAM perspective on customer success and product leaders. And we spent years working hard to really try to expand that TAM, which now, it actually continually will show up in LinkedIn’s emerging jobs report as one of the fastest growing professions in the world.
Anthony Kennada:So we know some of that effort is starting to pay off. We took a lot of pride in really championing the role and in doing so, we ended up fueling our growth by selling it to that community that we were fostering.
Anthony Kennada:Front, on the other hand, represents an existing massive TAM, literally over a billion knowledge workers in the world use email at work. I think it’s hard to identify a bigger TAM in enterprise software. So our challenge on the marketing side is effectively, how do you take an otherwise horizontal TAM and deploy the right messaging, the right campaigns, to intentionally capture segments of that market at a time?
Anthony Kennada:And a big learning for me now, I’m only four months into the job, is honestly how incredible the Front product is and the value that customers are already getting from it. And so my sense is our challenge is effectively building that awareness engine. So I don’t think we’re product constrained. I don’t think we’re market constrained surely. And thankfully, I think we were able to do that really well at Gainsight. So I’m bullish on the future of the business.
Harry Stebbings:So do you think, sorry, off schedule, but I’m intrigued. Given the horizontal play that you have with Front, being available to so many different types of knowledge workers, do you think about segmentation within the marketing team and going vertical by vertical? How do you approach that,, because you can’t literally market to everyone from financial services to shipping brokers. So how do you think about marketing vertically and what the right play is there?
Anthony Kennada:Totally. So I view that as a function of our product marketing effort. And so we have a person on our team, we’re still small growing, but one person who’s dedicated basically industries and segments, marketing. And so his focus is actually, I think we’ll cover some of this stuff, is what are the verticals that have a high fit today that are dealing with the complexity of customer communications and for them, the difference between actually getting back to the customer quickly with the right context is the difference between success and failure.
Anthony Kennada:And so that person is effectively responsible for owning the business plan for each of the verticals and then aligning with the different go to market partners, be it the SDR organization, the sales organization, the web team, whatever it is to ensure that we’re building digital and experiential kind of components that are able to drive demand within those independent verticals.
Anthony Kennada:So for sure, I think that’s an incremental strategy for us to grow. You need some more of the flywheel type stuff to get it going at scale, but I think you need both when you’re attacking a market just this wide.
Harry Stebbings:And you said about the flywheel stuff there and Front is a very different play to Gainsight in many other ways, so much larger ACVs, generally speaking at Gainsight, also means you had a lot more freedom when it comes to re-budgeting around things like account based marketing, specifically. I’m interested, how do you think about an approach ABM today with Front, given the higher velocity but smaller ACV model?
Anthony Kennada:So we do have at Front, a self-serve business that to your point, drives a high volume of lower ACV deals. But actually we do have several deals that are in the mid to high six figure ACV range. So it’s definitely something that we’re thinking about, ABM and overall, how do we keep this machine producing but also go out and find some of those bigger deals.
Anthony Kennada:And so this actually is what we were just talking about, at the very top of the funnel, what we’ve done is adapt ABM where we’re not looking at specific accounts but rather industries or verticals that we can deploy some of those tactics into. Some of these are non-obvious verticals, but we’ve seen a cluster of customers who are incredibly successful with us and they’re used to the product, logistics industry, for example, financial services, and we’ll do then what honestly tens of thousands of other SaaS businesses have done before.
Anthony Kennada:We’ll build a target account list of accounts within that industry, or create a set of messaging that’s appropriate for that audience. We’ll deploy those personalized paid media programs and outbound cadences, we’ll show up at the random trade shows, the whole thing. It’s just important that we choose what the right industries, the right use cases are, or we’ve already seen success.
Anthony Kennada:But this, it doesn’t come at the expense of that product led kind of growth motion. We’re still doing a number of things to keep that self-serve business productive, but we have to do both in order to really control more of our destiny on the pipeline creation at scale. So to answer your question, I think every company needs to think about ABM regardless of where they are in their maturity or if they sell big deals or small deals. The question just becomes, are you doing it at the account level or at the industry level?
Harry Stebbings:It’s interesting, actually. I saw the other day, Mathilde posted a picture of Front’s first billboard ever, which was great to see. But my question there was like, it’s a very different form of marketing. Why did you decide now was the right time for that and how do you think about people who say, “Oh, I would never do that because you never have an anchor around conversion and there’s no trackability of it?”
Anthony Kennada:I love billboard questions because it’s definitely one of the most controversial things and maybe it’s this Bay area bias that we have about billboards. But we did it for a couple of reasons. We were coming off of the deals of our series C announcement and so for us, that announcement campaign drove a ton of new trials of the product and so we wanted to sustain that momentum in the weeks and months coming out of that campaign.
Anthony Kennada:And so we had never done a billboard as a business. I think the company from maybe a recruiting perspective or culture perspective had an appetite for one and what we thought is, can we see an increase in San Francisco Metro traffic to the site and ultimately lead signups if we’re able to do this out of home experience with the billboard.
Anthony Kennada:So we did it and it’s still early days on data. I think we’re seeing that there is momentum still, which is really exciting. Your point is valid, very hard to directly attribute that to the billboard, but there is something, I think from the brand side, from the employee sentiment side and I think a little bit in the data that we’re seeing in terms of increased visibility in the region in which we’re putting the billboard up.
Harry Stebbings:Yeah, no, and as I said, I love seeing it, but I was interested by that. Going back to the different velocity sales models, I am really interested in it, especially in terms of the relationship between sales and marketing. How does that change when you compare the time at Gainsight and the time at Front now and what kind of that relationship and interplay looks like between sales and marketing?
Anthony Kennada:Yeah, I think it’s just as important at Front as it is at Gainsight or any other company, frankly. At Front, our sellers today, they spend a lot of time engaging with trial leads that are from high potential, high intent accounts, right? And marketing, we have a role to play to enable our sales team with the right messaging, the right collateral, whatever it takes to help get those deals across the finish line.
Anthony Kennada:So it’s similar to what a lower volume sales model would look like. We signed up for a pipeline coverage number at Front to basically show that we’re in this with the sales team. Our success is dependent on their success. So this idea of very tight interlock between these two organizations is just as important as more of the higher ACV, lower volume type environments. But for trials that have this no human touch whatsoever, completely self-serve, we’re on the hook to partner with the product and the growth teams to build an onboarding experience that can lead to value delivery and ultimately activation.
Anthony Kennada:So it’s not just this relationship with sales that we have to work on now, but also with products, also with customer success and that’s where I think the best way it’s going to debug these kind of relationships between marketing and other orgs is to have marketing sign up for some type of number, to align incentives, to align accountability, and it has this way of shining a light on where in the process are there gaps today that need to be discussed and need to be improved on.
Harry Stebbings:I’m so pleased you said that about the horizontal layer of marketing across the company and all the different functions there from sales to product to customer success and picking up on the customer success one, I’m very much a believer. I think marketing really is being pushed down the funnel with so much of marketing as content now being used as a form of customer success and product engagement.
Harry Stebbings:Would you agree with me that it’s always kind of seeing the integration of marketing and customer success and how do you see that relationship playing out, optimally?
Anthony Kennada:Yeah. No, it’s 1000% true. The model I mentioned in the last question is one example. If your business doesn’t have a concept of sales and emotion just goes from awareness to product to success, in that world, marketing has an incredible relationship dependency with the customer success team. We need to create kind of the scale of education content and the programs to drive adoption, drive expansion motions.
Anthony Kennada:I think some people are developing this new role called either life cycle marketing or customer success programs or I’ve heard tech touch, regardless of whether that lives within marketing or within customer success, this is a point of intersection between these two groups that’s really important.
Anthony Kennada:It’s important to have them collaborate on visualizing what the customer journey looks like and create all of the one to many content and programs they’re going to move customers across their journey. But it’s not just if you don’t have a sales team. So an example of how marketing can support customer success in more of the traditional model is facilitating community, whether that’s user groups or admin communities, developing programmatic ways like advisory boards or user groups, anything that can really enable the customer success teams to have meaningful conversations with their customers.
Harry Stebbings:Would you not say events are almost a core customer success strategy as well in terms of engagement?
Anthony Kennada:Yeah, absolutely. Nothing can replace this in-person experience that we get when we get in front of a customer. So totally. I think they ought to be tied at the hip just as much as marketing and sales. And I think we’ve just been so obsessed with the new business as a community for so long that we’re only now starting to take notice of this.
Harry Stebbings:Yeah, no, listen, I totally agree with you. I do want to touch on, because we mentioned the billboards there and we mentioned a couple of the different channels, one being ABM, but when we look at the brand you’re trying to build today, it’s very much in the theme of upending the traditional large incumbents, your Microsofts and Googles of the world. And so with a marketing hat on, how do you think brand plays a role in upending these huge incumbents and what do the challenger brands look like at their best, so to speak?
Anthony Kennada:I have a lot of respect for companies like Microsoft and Google. Clearly they’ve obviously done a lot of things right to get to where they are today. But these are two examples of companies that are born in a completely different era. They didn’t need to compete by leading with purpose or by winning the hearts and the minds of the market. Instead they developed near monopolies, basically, in their respective categories and they ran away with the market.
Anthony Kennada:And now they’re totally locked into this go to market strategy of yesteryear. They lead with their what. Their what being their products or their how, their massive sales organizations, their entrenched channel partners. They don’t lead with the why and if they did, they would come across potentially more like a campaign than it would this kind of authentic expression of who they are as a brand.
Anthony Kennada:So I think that the best challenger brands being developed today fundamentally understand that in order to have a shot at beating the incumbents, you have to lead with why. These are brands that are purpose-driven, they’re community led and they’re investing in the success of their customers and the stakeholders that surround them.
Anthony Kennada:Since we know that customers ultimately buy products emotionally, even in B2B, building this emotive, authentic brand in enterprise SaaS, can really help accelerate growth. Frankly, unlike any other vector that I’m aware of in the marketing stack.
Harry Stebbings:Can I ask, in terms of building that why for the community that you serve, as we said, going back to the horizontal element of just how many different functions that Front can be applied to. For financial services, it could be the why is around secure and efficient compliance. For other industries, it could be a ton of other things in terms of collaboration and transparency. How do you think about converting the why across so many different verticals?
Anthony Kennada:We’re working on this now, actually, this idea, that higher level why, that higher level emotive positioning has to eventually connect to the product level messaging, otherwise it just comes across as marketing speak. I’ve concluded that it’s effectively the difference between brand and a product marketing exercise. The messaging has to be developed obviously collaboratively between these two groups, but in a hierarchy where everything cascades down from the highest level, that has to work for everyone.
Anthony Kennada:The highest level has to work for everyone regardless of what industry or vertical you’re in. But once you go down a layer or two, you can assign specific sets of messaging to relevant industries and relevant use cases that’s informed by that higher level story, but it’s contextually relevant for that intended audience. So I’ll give you an example. In our case at Front, we’re exploring, at the highest level, the human experience with work.
Anthony Kennada:And that’s a topic that’s loaded for all of us, regardless of what role we’re in or what industry. And it’s a very culturally relevant conversation today, this notion of hustle culture and working extremely long hours that inevitably will lead to burn out and decrease productivity and all these sorts of things. At our core, what we really seek is unlocking meaning in our work, whatever that means to you. And that meaning can come from number one, being in control of your workload versus having your work overwhelming you.
Anthony Kennada:And second is your ability to make an impact on your business, on your teammates, and honestly the world around us. And so that’s the sort of inspirational why. But if you zoom down to the product brand and the product messaging, we believe that our inboxes are the window into our work. And if we’ve ever felt like email overload has contributed to our stress, then that’s exactly what we’re talking about.
Anthony Kennada:But for some professions, getting back to a customer quickly, I mentioned this, with the right context, is really the difference between hitting the number and not hitting the number or having several tabs open to keep in check all of these various productivity apps and the notifications that are just popping up at us and also managing our inbox is extremely overwhelming.
Anthony Kennada:So our challenge of how we’re thinking about this is to come up with product level positioning that can appeal to those various use cases and it’s not easy, but I think if a brand can unlock it, it’s a very powerful story that can pull really the masses into this movement behind what you’re trying to create.
Harry Stebbings:Can I ask you a potentially controversial one? When you say a lot of what you do there, it does resonate in terms of what I hear from Superhuman. How do you feel about Superhuman? Is that a competitor, or is that a personal email versus a professional email? How do you think about the interplay?
Anthony Kennada:I think about it as the latter. I think we’re trying to solve a problem that’s less around the organization of your email and the visual layer that sits on top of email. We’re really building some complex workflows on how businesses work that sit beneath the front end, if you will. So I think Superhuman’s great from a personal productivity perspective, but when it comes to really the complexity of work, that’s really where we’re pouring in a lot of our innovation.
Harry Stebbings:Yeah, no, that totally makes sense. And I’m sorry for such a controversial question.
Anthony Kennada:No, not at all.
Harry Stebbings:I do want to ask though, because when you look at the people you’ve worked with, in terms of the CEOs you’ve worked with, you’ve worked with Nick Mehta, you’ve worked with Aaron Levie, you work with now Mathilde, some incredible CEOs and the CFO, CEO relationship’s an interesting one. How do their styles differ, first?
Anthony Kennada:I’m the luckiest CMO and SaaS I think for this reason. Each of them are super, super different. Aaron’s this high energy product centric type leader. Nick is an incredible people and culture centric CEO. Mathilde is really thoughtful and cares deeply about culture and mission, and she also gets a ton of energy from working on the product.
Anthony Kennada:I believe something that actually Jason Lemkin shared in a tweet a few years ago, that the CEO is actually the real CMO. Our job as marketers is to go and bring that vision to life. And I think that’s true. I think that’s true regardless of the market or the product or the style. What matters most is us unlocking what’s authentic to that individual CEO. So in the case of Nick, for example, we were able to come up with a number of campaigns and executive comms plays that showcased his childlike joy or his appreciation for music and pop culture.
Anthony Kennada:And we brought those elements into his personal brand that we showed the world. With Mathilde, she’s got this incredible following on Medium and social media around her leadership and startup culture knowledge. And she cares really deeply about the happiness of her employees and the professionals around her.
Anthony Kennada:That’s a story that we can help tell and as marketers, because at the end of the day, the only currency that a CEO has is time. So marketing, we have a role to play to really scale this authentic connection that they can make with customers out to the world and if we can do this right, it becomes a superpower and I think Aaron and Nick and Mathilde all appreciate that and have figured that out.
Harry Stebbings:Can I ask, when you look at the relationships that you’ve had with them, what in your mind makes the ideal CEO, CMO relationship if one is thinking optimally with the idealistic hat on?
Anthony Kennada:I think the heart of it is trust. It has to be this foundation from which everything else can develop and as trust is developed, I think an open line of communication for feedback, bi-directional feedback, is really critical for maintaining it over time. CMOs want to work for a company that has a big market opportunity, has a great product, has an inspiring team.
Anthony Kennada:They want to know that they’re going to be given some resources to effectively tackle the opportunity ahead of the company or maybe if not altogether resources, certainly the tailwind to go out and tell a big story. CEOs, they want to find CMOs that can be stewards of the brand and can help shepherd the company into this next chapter of growth.
Anthony Kennada:Not to mention someone who could be equal parts, creative storyteller, quantitative demand gen expert, cultural leader. So finding the right person really isn’t easy, but once you do, I think investing in that, the relationship with trust and feedback and getting obviously the success stories on the board are really a key.
Harry Stebbings:Can I ask, you’re in the epicenter and you have an incredible community of CMOs around you. Where do you think many find it tough in terms of the CMO to CEO relationship?
Anthony Kennada:First of all, there’s the risk of mis-hire and it’s this idea that a CMO will usually feel more comfortable either in demand gen or the storytelling components of the job. I like to say with their own free time, they’ll either think more in Excel or PowerPoint. And so it’s important to understand which qualities are going to matter most at the leadership level and then what qualities can be hired in a lieutenant down the line.
Anthony Kennada:And sometimes getting that wrong, I think, can lead to a lot of challenges. And I think the second one is when do you bring someone on. My belief, maybe I’m biased as a marketing leader, but I think you can save a lot of time by making a marketing leader, whether it’s a CMO or otherwise, a single digit hire.
Anthony Kennada:Because a lot of the positioning work, a lot of the operational work to start generating demand, Marketo or HubSpot, these types of things can really benefit from being built right the first time rather than being appended and being revisited later on in the journey. So I think it’s a matter of clarity on the role and the profile, and then timing of when you bring that person in.
Harry Stebbings:See I totally agree with you in terms of the timing there being single digit. And final question before the quick fire, what do you think they should look for? Because it’s such an interesting kind of Jack of all trades marketing position when you are a single digit first marketing hire, but also I guess the CMO in many respects too. Do you just want the pure analytical customer acquisition channel optimizer, or do you want the vision storyteller to set it?
Harry Stebbings:How do you think about the optimal blend of art and science in that first hire?
Anthony Kennada:I think answering that question depends on what the makeup of the executive team looks like. If you’re a CEO that’s more of the product driven type person, maybe more of a bent towards the quantitative, maybe you need a creative storyteller to be on stage helping tell the story, helping tend to find it, in which case that might be the right profile.
Anthony Kennada:But typically earlier days and obviously, Harry, you know this really well, even better than I do. It’s about hitting the right kind of success metrics to build the business and build a foundation of a growth engine. And so I think what you’ll typically see are more folks looking to bring in maybe a head of marketing that has more of the demand gen expertise.
Anthony Kennada:Maybe it’s like a stretch VP type of role and someone that’s about to step into owning it for the first time. That typically is more of what I see. But I think it does depend on who else is in the room.
Harry Stebbings:No listen, I totally agree with you and incredibly tough question to answer, so I’m sorry for such a shit question.
Anthony Kennada:Not at all.
Harry Stebbings:But the best interviewer is going to admit when they ask a shit question. I wanted to dive into my favorite, being the quick fire, Anthony. So I say a short a statement. You know how this goes, 60 second to fire an answer. Ready?
Anthony Kennada:Yep. Let’s go.
Harry Stebbings:So what do you know now about the process which you wish you’d known at the beginning of your time in marketing?
Anthony Kennada:I wish I knew that the work that we do in marketing has to translate to sales or to some type of revenue outcome. Otherwise it doesn’t actually really matter. And I know that sounds super, super dark, maybe controversial, but there’s actually, I think quite a lot of freedom in that constraint.
Anthony Kennada:And deeply understanding that has helped my teams take this servant leadership posture when working with sales that things pay dividends for us both on the relationship but also the business outcomes.
Harry Stebbings:What about brand marketing, what about employee incentivization, employee confidence, like, say billboards or like, say a lot of that fucks me off. A lot of people think podcast advertising is brand marketing. And you can get real data, but do you know what I mean?
Harry Stebbings:What about the softer ones, which isn’t directly traceable but it’s an ecosystem play as well?
Anthony Kennada:I think it’s super important, but I do think you can tie affinity type things back to some type of outcome. Be it the sales team’s engaged, we’re starting to hit the number, the product teams building the right things. In general, our ENPS tends to be a leading indicator for our NPS overall as a business, so I think there’s somewhere in a spreadsheet, somewhere down the line, all of those efforts do show up in some type of business outcome.
Harry Stebbings:Hit me. What’s the biggest surprise about the move to Front?
Anthony Kennada:This is the first time that I’ve worked at a business that it’s this high velocity. We send out this thing called a daily weather report on business metrics that go out to our leadership team and our board every single day, it automatically triggers and seeing a no touch 50K ARR expansion come through on a Sunday, is something I’ve never seen before in B2B.
Harry Stebbings:Wow. I dream of that as a VC. Tell me, you’re building a team outside of the Bay. Biggest pro and biggest con.
Anthony Kennada:It’s the only way to stay competitive in 2020, so Front is actually the second company now that I’ve brought to Phoenix, Arizona. Biggest pro, the energy, the excitement of our teammates outside the Bay area. I think it translates to higher talent retention, higher engagement. Biggest con, honestly, it takes time to really figure out how to recruit well in these new markets.
Harry Stebbings:If you could change one thing about the world of SaaS today, what would it be?
Anthony Kennada:Honestly, that companies would choose to invest in helping their employees find real meaning in their work. I think that there’s not enough being written about the emotional wellbeing of teammates and how that translates to productivity. Hopefully that’s something that we can help play a part of, but my hope is that together as an industry we can start being proactive about this conversation.
Harry Stebbings:Tell me, who in SaaS marketing do you think is killing it today and why do you think so?
Anthony Kennada:Yeah. I’m a huge fan of Joe Chernov, newly minted CMO at Pendo, by the way, and I know you sat down with Joe, but if folks get a chance to know him, you’ll appreciate just how wise and thoughtful he is. I think David Gerhardt at Privy, he continues to be this high energy young CMO that’s really pushing the boundaries of B2B marketing.
Anthony Kennada:And the third one, I’ve been working closely with the team at 21st Century Brand. They’re a brand strategy agency that was born out of Airbnb and this is a group of marketers that care really deeply about expressing purpose and community leadership in SaaS marketing. And that’s a spirit that I think we need more of overall in our industry.
Harry Stebbings:I did indeed see that about Joe and that made me very happy, but listen, Anthony, as I said that, it’s been a while since we did our last one. I was so thrilled to see the move to Front, such exciting times ahead. Thank you so much for joining me today.
Anthony Kennada:Yeah, thanks so much, Harry. It was really fun.
Harry Stebbings:As always, I just love chatting to Anthony in such exciting times ahead for Anthony. If you’d like to see more from him, you can find him on Twitter @AKennada. Likewise, it’d be great to welcome you behind the scenes here. You can do so on Instagram @Hstebbings1996 with two Bs.
Harry Stebbings:As always, I so appreciate all your support and I can’t wait to bring you a fantastic episode next week.
Ep. 319: May Habib is the Founder & CEO @ Qordoba, the platform that helps everyone at your company write with the same style, terminology and voice. To date, May has raised over $21M in funding with Qordoba from the likes of Upfront Ventures, Aspect Ventures, Bonfire Ventures and Michael Stoppelman to name a few. Before entering the world of SaaS, May was a vice president at one of the world’s largest sovereign wealth funds, where she was the first employee on the technology investment team, building a portfolio now worth over $20B. Before that, May started her career in the New York Office of Lehman Brothers raising capital for software companies.
Pssst 🗣 Loving our podcast content? Listen to the start of the episode for a promo code to our upcoming events!
In Today’s Episode We Discuss:
* How May made her way into the world of startups and SaaS from being a VP at one of the world’s largest sovereign wealth funds in the Middle East?
* How does May think about and assess operational survival in times of such uncertainty? Why does this downturn feel so different to prior downturns? Operationally, what needs to fundamentally change about your processes?
* How does May think about when is the right time to engage with preemptive burn cuts? Where does one look first in the organization when making these cuts? How does one structure those discussions? What is the right way to do it? What is the right way to communicate the cuts to the team, customers, and investors?
* How does one keep the existing team’s spirits high when they have just seen many of their friends be released? What is the right way to manage those discussions? What can founders do to build unity in their team now everyone is WFH? What has worked well for the Qordoba team? Where do many go wrong here?
Ep. 320: We’re obviously in a very unique situation today. The pace at which Corona is impacting us all right now is so fast, it’s hard to keep up.
Today is different from other times but in SaaS. It will probably be like ’08-’09 downturn — just faster.
Join Jason Lemkin, CEO and Founder of SaaStr, and Nick Mehta, CEO of Gainsight, as they take a look back at what happened to them as a SaaS vendor in ’08-’09, and what learnings you can leverage.
Below, we’ve shared the transcript of Harry’s interview with May.
Harry Stebbings:We are back on the official SaaS to podcast with me, Harry Stebbings. And, now I’m in self isolation,. I’m getting up some weird and wonderful stuff on Instagram, so do check it out at HStebbings1996 with two Bs. It’d be great to see you there.
Harry Stebbings:But, to the show today and I’m thrilled to welcome back an old friend and incredible founder to the hot seat today in the form of May Habib. May is the founder and CEO of Qordoba, the platform that helps everyone at your company, write with the same style, terminology, and voice. And, to date, May has raised over $21 million in funding with Qordoba from the likes of Upfront Ventures, Aspect Ventures, Bonfire Ventures, and Michael Stoppelman, to name a few. Before entering the world of SaaS, May was a vice president at one of the world’s largest sovereign wealth funds, where she was the first employee on the technology investment team, building a portfolio now worth over $20 billion. Before that, May started her career in the New York office of Lehman Brothers, raising capital for software companies.
Harry Stebbings:However, you’ve heard quite enough of me. So, now I’m very excited to hand over to a dear friend, May Habib, founder and CEO at Qordoba.
Harry Stebbings:May, it is such a pleasure to have you on the show today for a very special round two. Now for those that missed our first episode, I do want to kick off today with a little on you, so tell me, how did you make your way into the wonderful world of SaaS, and how did you come to found Qordoba?
May Habib:Well, I started my career in banking and then I moved over to the investing side. I worked for a super large sovereign wealth fund in the middle East and it was a great adventure. I loved that, but I always knew I wanted to start my own company and once I had the seeds of an idea, I tried to kick myself out of corporate life before it got too comfortable. I moved to San Francisco in 2015, and I started Qordoba. Today we are a team of 28 based here in San Francisco and our product is an AI writing assistant for businesses.
May Habib:If you are a company of a reasonable size now, you’ve got people in marketing, customer success, of course sales, all talking to your market, all talking to your prospect, and making sure they all say the same things is a really tough job. So, Qordoba provides an editorial style guide. We are a single source of truth for those writing and messaging guidelines. We’ve got a browser extension that sits in the browser and it helps correct and align writing to that style guide. And, our customers are folks like Twitter, Intuit, Braintree. We use Qordoba to help the writers write well, write on brand, adjust things like terminology, messaging, writing style, getting the voice and tone right. And, I was a college journalist, a high school journalist, and so there is a lot of founder market fit right now and helping people write well.
Harry Stebbings:I do want to ask though, because you mentioned there, the time in banking and you also mentioned about the time that the sovereign wealth fund, when we look at the landscape today, it’s a challenging landscape, that has to be very clear. I have to ask, when you think back to that time in 08 at Lehman’s and then 09 in the middle East, how does today compare and how do you think about that as a comparison standpoint, in terms of landscapes?
May Habib:Well, it was an incredibly scary time. I have been here before in terms of this being a very scary time too. I was at Lehman during the financial crisis and I was one of those people, Harry, you saw on TV, walking out of the building in Times Square with my life in a box, and then your countryman, Larry Diamond, saved us the following week. So, I went back into that building with the same box. But, it was certainly months of anxiety leading up to and after the bankruptcy. And what’s crazy about this time is those months of anxiety have actually been compressed into days. And, so it’s an incredibly high amount of stress in a very short period of time for everybody.
May Habib:Then when I was in the UAE, a couple of years later, I was working for the government when Abu Dhabi bailed out Dubai and I was in the heart of the region a couple of years later, when oil prices fell from a hundred bucks a barrel, which is what they were when I moved, to $50 a barrel when I left to move to San Francisco. So, even though this is my first recession in tech, I am no stranger to scary times and it is absolutely scary. I think the suddenness really differentiates this particular economic crisis from previous ones that I’ve had a front seat to, and it’s going to be about survival.
Harry Stebbings:I mean I totally agree with you. When we chatted about it a little bit beforehand in terms of VCs speaking to their portfolio founders, I mentioned to you about mastering it in terms of speaking to portfolio founders about, as we said, their survival, operational survival, so I’d love to ask, how do you think about operational survival in times of such uncertainty?
May Habib:It’s about a few things. Number one is do you have the cash to make it out to the other side? We’ve all just blown our Q1. If you have a listener who’s made their Q1, I would love to hear it because it is a frigging impossibility right now and super impressive if they made their numbers. So, not only have most of us come in under on Q1, we have no idea what Q2 and Q3 hold. I’ve had customers who are incredible fast growing tech companies to prospects who are enterprise and mid market companies, household names, who have said, “I can’t buy software this month. I don’t know what next month will be. Let’s stay close.” And, these are deals that you know we had gotten really close to the finish line. It feels like this may be over by end of Q2 from a health crisis perspective, but it certainly does not mean back to normal.
May Habib:There is going to be a ramp up and that means a ramp up in your prospects going back to normal and your industry going back to normal, so operational survival is going to be about making your revenue projections zero for Q1, making them zero for Q2, having them in Q3 and Q4. And, on that basis, figuring out what it’s going to take for you to survive long enough to be able to see the other side. I just don’t see outside capital being a realistic possibility for most companies. So, that’s one. Do you have the cash to survive?
May Habib:I think number two is what’s happening in the minds of your team. Who is anxious? Who is worried? Who do you really need to talk to, to make sure they’re not freaking out? Now, you know that managing our own psychology as a founders part time job that during society-wide crises, having been through them before, you really need to make sure you know what your team is thinking.
May Habib:If you’re a team of 30-ish like us, then you as a founder, those are one-on-ones with everyone on your team to figure out where their minds are at. If it’s a larger team, focus on your leadership, but focus on your core folks, how are they doing at home? How is it like having their kids at home? Do they still believe in what you’re trying to do? Those are just going to be really important things to make sure the team survives to the other side, because you could have the cash stockpile you need, but if you’ve got people really not able to hit the ground running once you’re out on the other side, then you are going to have to have the team reset as well.
May Habib:And, then I think survival is also going to be about staying really close to your buyer and staying close to the market in a very empathetic way. Not in a way where you’re trying to sell them things, but really understand how their position has changed, how their jobs are changing. Most of us, most of your prospects are going to have VPs of finance and CFOs putting a pause on budgets until they can figure out what the markets are doing. Do you have a good handle of how your prospects lives have changed? It could be a permanent change. So, talking to them without trying to sell them anything, I think it’s going to be important for this period that we’re going into.
Harry Stebbings:I mean I have so many things to unpack from those. I mean if we take it kind of one by one, you mentioned there about kind of what to expect in Q1 being totally blown in terms of the first instance. Do you think there’s anything you can do to mitigate that in terms of discounts? In terms of much, much cheaper pricing for the first year and then second year where it ramps up so you preserve their cashflow and then it gets to normal pricing the next year. Is that anything you can structure a deal as to eek them out, quite frankly?
May Habib:The kinds of discounts that you provide are going to be dependent on the stage of the company, so we are absolutely doing things like that because adoption is just very important for us. The initial land is really important. There are still going to be lots of folks who say, “I just can’t roll anything out right now, whether it’s free or not.” And, so I think it’s going to be hard for people to commit to things that work when they’re trying to stock toilet paper in their bathrooms. It’s just the psychology of it and they could be there, but then the decision maker may not be, the budget holder may not be. So, just so much has to line up for somebody to make a decision right now. My advice would be try to be as high IQ as possible when talking to prospects and really back off if folks can’t do anything because it could be damaging to the long term relationship if you press, even if you’re giving things away.
Harry Stebbings:No, absolutely. I do agree. You said also about kind of being really close to the hoop and being really close to the buyer in that non-transactional way. If you think about the questions to ask to really gather as much information as possible, what questions should we be asking?
May Habib:I think working from home when companies are not used to that can really fundamentally change what organizations are able to get done. We’re lucky, I think in tech and startups in particular, that we really have a years long headstart on the rest of the global economy. We have built entire software stacks that make this possible. There are an incredible number of companies who are just being introduced to Zoom right now.
May Habib:So, I think having empathy for that and really just trying to dig in on how people are staying in touch. How are they talking to their boss? What’s happening to their direct reports? What about all those contractors they used to have? We are a cross functional product, so those questions are pretty natural for us to be curious about. But, I think that gives you a really good sense of how anxious somebody may be even if they’re not necessarily letting it on.
Harry Stebbings:You mentioned their team there in terms of the customer’s team, in terms of your team, when the customer does provide that feedback that ,”Hey, we just can’t roll it out, free or not,” or the pipe goes to zero or whatever kind of negative unexpected consequence comes from this. My question to you is what do you do kind of deliberately to keep morale high and to ensure that the team members are as empowered and as happy as possible in this time?
May Habib:We have really tried to ramp up the amount of good news sharing. So, customer success has got their cadence of calls, and if anything, people want human contact. And, so customer success has had just a busy calendar as ever. So, really being able to share those nuggets to the rest of the team is important. We had our first virtual happy hour last Friday and very lightheartedly someone came up with the idea of a toilet paper finding service and while on the call over beers, the team launched, findmytoiletpaper.com. It’s live, you could actually go to that site.
May Habib:So, trying to focus on the people versus the business because taking care of that people will take care of the business is what we’ve tried to do and checking in on each other. We’ve got a couple survivalists on our team who would be okay in their homes if all of electricity and water were to be shut off. And, so we’re making fun of them. They may have 15 people show up at their house at any given time. So, really getting to know each other as people, making a real effort to turn on our videos when we’re talking to them, turning any social activities to virtual ones. That’s what we’ve been trying to do these past couple of weeks
Harry Stebbings:And, I think findmytoiletpaper.com will soon be a viral sensation, by the way, I love that in terms of an output. I do have to ask though, because in these extended periods also, a lot of people are considering cuts in certain ways, especially if it’s potentially more prolonged than one expects. These are actions that often preemptive burn cuts. How do you think about when’s the right time to think about and then to do preemptive burn cuts?
May Habib:Well, we did one when we looked at our operating plan for 2020 at the start of this crisis a few weeks ago. We saw that it would be pretty difficult for us to make the numbers work if Coronavirus was going to be more than just a blip. And, we took the extraordinary decision to reduce the size of our team by a third. And, we did that very quickly. So, it was days from making the decision to announcing it to the people impacted. And, we did that the first week of March and literally two days later we went to work from home.
May Habib:I mean I can’t underscore the speed at which this entire crisis has come on. If we really think about where all of our heads were at 10 days ago, and that day was the hardest day of my professional life. The day that we did that, a third of the company is 17 people and it was 17 people who had become close friends to me, close friends to each other, who we had recruited painstakingly. So, that was a really tough day and I am grateful that we got to the other side of that because it makes the likelihood that we will survive what comes all that much higher and that is a win for the team that remains. That’s a win for our product existing in the world. It’s a win for our customers.
Harry Stebbings:I mean, there’s a couple of questions that I have to ask your advice on. One is that I hate conflict, honestly, and as you said, they’re friends, you have relationships with them. I never know the right way to do it and the right way to approach it. Advise me, what is the right way to do it and how do you think about structuring that conversation?
May Habib:Yeah, structuring the entire day was my number one job from when we made the decision to when we did it. I literally didn’t do anything else but prepare for that day and I talked to other CEOs who have done it. Lynn Perkins from Urbansitter was an incredible resource. I talked to former CEOs who have done it. Tony Levitan from Leaders in Tech was an incredible resource there too, talking to me through this. And, we ended up planning for the day that we did it and literally 15 minute increments starting from 6:00 AM to 5:00 PM exactly who we were going to talk to, in what order, what we were going to say, who was going to be doing what in kind of the core people that knew about it. Then who was going to be told in what order in terms of the folks who needed to know because there was people on their teams who are impacted.
May Habib:So, we decided on a Sunday, we did it on a Thursday and my life from that Sunday to the Thursday was only this. And, we had to speak very candidly to those departing. I had to take full responsibility. I let the company grow a little too fast and we were coming into a really incredible economic period that none of us had seen before. I mean, the vast majority of folks that were on our team were people who had never been through any economic crisis in their career. At mid thirties, I am one of the oldest people on the team and so that was really tough. And, I did see a range of outcomes. Folks for whom this was their first job out of college were impacted to a degree. Folks who went through the previous downturn were not. And, so just speaking really candidly about what happened to those folks, taking responsibility for it, rallying the team that remains is just as important.
May Habib:Now, rallying is difficult when two days later you move to work from home. And, so I really feel for the companies that are going to have to do these kinds of workforce adjustments in the next few months because they’re not going to have kind of the benefit that we had benefit in air quotes because it was a really shit day, but we were all together at the office. And, I do think there’s nothing like being able to put that whole office in a room after something like this happens to have those frank conversations about the health of the company, the health of the balance sheet, and the fact that we’re all together to run as fast as we ever have towards these goals.
May Habib:So, yeah, there’s a lot there, but I guess that’d be my advice in a nutshell.
Harry Stebbings:When you think about keeping the morale high there, for you, what do you think works in those situations? And, if you were to advise people that you now have to do it in a remote situation, what would you advise them given your experience having done it in person and kind of now being worked from home, how would you advise?
May Habib:I think being as high EQ as possible. People are going to want to grieve and so moving to a “rah rah, we’re going to get shit done” mode too quickly is not the right thing to do. In your mind, you’re already on the other side because you’re the one who had been planning for days for this and the folks that will be doing it over the next few months, I can’t tell you how many startup founders have told me that they’re going to have to do something like this soon. Not trying to be too positive, honestly, about where shit is going. And, what I have tried to do for myself is really hold lightly to the outcome.
May Habib:The best I can do is lead with my mind, with my heart, create a place where we love and enjoy the journey and that we all feel like we’re playing a fun, challenging game with people that we like and if we win, that’s frigging awesome. And, sharing that and really giving people the room they need to grieve. People that they loved who aren’t working with the company anymore and kind of go through their own cycle of emotions versus being kind of so focused on getting them to a good place really quickly. If you are able to be authentic and open, they will get to a good place on their own and they’ll meet you there. But, you have to meet them where they are emotionally right now.
Harry Stebbings:In terms of being authentic and open, it’s, as you said, it was the hardest day of your career. It’s a horrible and shit situation. And, so in terms of the psychology, I am really intrigued, how do you fundamentally manage the psychology of being CEO and how do you handle these really pretty shit situations?
May Habib:My friend Nick Flanders is a CEO also, and he told me a phrase a few weeks ago that just really encapsulates how I get through the tough times. And, it’s one that I just said, “holding lightly to the outcome.” You can be really obsessed with the process, really focused on the process. If you can hold lightly to what that process gets you to, you are able to be so much more present or able to connect much more deeply and show up more authentically and openly. And, I think it leads to better outcomes for your own psychology and the psychology of others around you.
May Habib:You are leading from a place of joy and love versus fear and anxiety and I think that makes all of the difference in leading. And, our own psychology’s important so that we can show up every day and get out of bed every day, but it’s also important because if we’re not managing our own psychology, there’s a transference that happens whether we like it or not, whether if we feel it’s happening or not. And, people know when you’re leading from a place of security and love versus fear and anxiety and especially in this period that we’re going through right now and I think it’s going to last a couple of quarters. Leading from a place of true peace, it’s going to be more important than ever.
Harry Stebbings:Can I ask you a really weird, quite deep question and I hope it’s okay for me to ask. Where do you find true peace and security in what you do today, in terms of now being also work from home? What is it that gives you that kind of mental secure place?
May Habib:I feel mentally secure knowing that no matter what happens, me and the team will have left it all out on the field. We don’t leave a stone unturned and knowing that you’re giving it your best and they’re going to be all sorts of things that are outside of your control, I think gives me a lot of peace and truly trying to do good things for people. Whether that is your customer, whether that is a person on your team, whether that is contractor who you’re working or no longer working with. I mean trying to do it peacefully is what gives me security that I’m not wronging anybody.
May Habib:Nobody on my team is wronging anybody and we are all just trying to do our best. If we take care of the people, I really believe this, it will take care of the business, and I believe we are going to win and make it through the other side, but these are challenging times. These are unchartered waters, for sure. There is no playbook for this.
Harry Stebbings:Can I ask, how do you communicate the team changes to kind of two very important and specific segments being one, your customer base and two your investor base. Do you need to really convey the changes to the customer base one, and the investor base, two?
May Habib:Definitely to both, for sure, and there are different communications strategies on the customer and the prospect side and we went customer by customer, prospect by prospect. They don’t need to know the ins and outs of everything that happened. They do need to know that somebody that they worked closely with is no longer with the company. Depending on how big that relationship was, it involved me also getting on the phone to just let them know that the company’s in really, really strong position, stronger than ever. And, we wanted to make sure that we were in a position to weather what may, and have our own future in our own hands. And, those conversations went very well. Certainly with investors, they’re part of your initial decision and so the investors have got, for the most part, a head in advance view on what’s coming. In our case it was pretty specific.
May Habib:What’s nice about investors is they’ve got a portfolio. And, so they’ve seen, especially if they’ve got decades of experience and we’re very lucky with our very experienced investors. They’ve seen this dozens and dozens of times. And, so who is impacted and how you do it, they are so well positioned to give you advice on that. So, we brought them in very early and then they’re also there to help you get folks back on their feet and so we created a list of folks who were impacted that was shared with the portfolio companies who are hiring and hire mode of our investors and so investors are very empathetic. They’re very supportive. If anything, they’re asking you to cut even more than you think you need to, because they’ve seen this story before and they’re really incredible and also trying to help us get people back on their feet.
Harry Stebbings:Every investor is calling every portfolio founder they have right now and telling them to cut everything they can in terms of burn and really just maximize runway as long as possible. Are founders a little bit annoyed by this when they have every investor they have calling them for the very same call? And, then how do you think about that? Because, it’s something that I’ve been concerned about it as I’ve been making these calls.
May Habib:So, much advice is really hard to internalize and action until it’s lived experience. Every time I’m annoyed by a question or frustrated by somebody asking me something, that’s a moment for self reflection, and we don’t want to do the hard things. It’s just human nature and no matter how annoyed they are at you, Harry, still make the call, still give the advice. I also resisted making our cuts as big as they ended up being and I am now grateful that I took that hard advice and a lot of it is just the founder coming to terms with what they need to do and I think they will thank you for it.
Harry Stebbings:No, I agree. Are you worried about the psychology of your team in this time? A lot of founders I speak to are very worried, especially if they don’t have a remote first team initially. Are you and have you been worried about the psychology of individual team members, loneliness, isolation, fatigue? Is that a concern for you or do you feel that given the infrastructure set up already, it’s a storm that can be weathered quite easily?
May Habib:It’s my number one concern is making sure the team is okay at home, isn’t feeling anxiety. I mean we have had our fundamental needs challenged when people go to the supermarket and the shelves are empty. When people are afraid for the lives of their parents. I think that the psychological impact of this goes deeper than we even think right now and you have to be empathetic to that as the leader of a company. It’s going to impact productivity. It’s going to impact the way folks show up and the only thing you can do, I think, is make yourself available and have these kinds of candid conversations with people very early, very frequently. We try to stay in touch as much as possible on a daily and weekly basis through Zoom and I think it’s going to get a little worse before it starts to get better. But, yeah, I have so much empathy for everybody who hasn’t had a remote first team until now.
Harry Stebbings:Can I ask you, the other thing that we’re seeing is obviously school closures. It also just causes a huge, not burden, but time responsibility, on working professionals who had previously had their days unencumbered when children were at school. How do you think about being a leader when many employees or employees suddenly have children that they need to homeschool and look after all day?
May Habib:Oh, so much empathy for that. I have an 11 month old at home who is being pushed around in a trolley outside right now because I am doing this call. So, I think we’ve had really, from the beginning, a culture where there’s not a really a stark line that divides home and family. I had my newborn at the office at 10 days old and then at three weeks old and that’s same for other folks in the company. I have done calls with candidates with my baby in my lap or you can hear him in the background and it’s just part of life at Qordoba. We’ve got a lot of parents on the team and I think we are all going to have to be okay with kids coming in and out of the frame.
May Habib:Everybody knows this CNN clip from a couple of years ago. I think that’s just normal. I was literally just on a call with a great contractor that we work with and his wife walked into the frame and said hello, the baby ran in and she joined him on his lap for a little while and it was just really lovely and there is a lot of silver lining,, I think in this phase that all of our economies are going through and if it is a bit of the blurring of the line between home life and work life, I think that’s going to be a very positive thing.
Harry Stebbings:Can I ask you a weird one and a slightly messy question, but I’m too intrigued and I’ve been thinking about it a lot over the last few days and it’s, do you think it we’ll be fundamentally so much more appreciative of human connection and human relationships after this period of isolation? Or do you think that the health concerns and the virality of the virus itself will just actually lead people to be more skeptical, more germaphobic than ever. And, that might be the wrong word, but do you know what I mean? More isolatory than ever. Which way do you think it will go?
May Habib:Oh, I think we’re going to become so much more connected. I leaned my head out the window today and told my neighbor that the Walgreens had restocked toilet paper and his dog barked up to my baby and it was just moments like this happening now throughout our day that just didn’t happen before. I think one of the benefits of working from home is going to be feeling much more present in our communities and especially in San Francisco. We’ve got such a transitory population and being able to just breathe in to the physical place where you’re at because, I mean right now San Francisco is on lockdown and we are not supposed to leave our house for non-essential anything for the next three weeks till April 7th, and that is a forced step back. It’s a forced reckoning in a way and that I think is going to have really positive impacts in the kinds of bonds we all make and just the physical communities where we live.
Harry Stebbings:That makes me super happy to hear. No, I’m very pleased to hear that. And, I do hope for the same. I do want to move though into my favorite element of any episode though, May, being the 60 Seconds SaaStr. So, I say a short statement and then you hit me with your amazing immediate thoughts. Are you ready to dive in?
May Habib:Okay, great. Let’s do it.
Harry Stebbings:Okay, so let’s hit with what do you know now about the process which you wish you’d known at the beginning of your time with Qordoba?
May Habib:That advice would be useless. And, what I mean by that is once you’ve learned the lesson yourself with your own lived experience, you can kind of look back and say, “Ah yes, that’s what that advice was about.” But, nothing I would say would be as helpful as if you want to start a SaaS company, please just get started and get all your mistakes over with.
May Habib:It’s like when you start a company, there should be a syllabus of all the mistakes you’re going to make, some of the multiple times in different flavors. And, just pick yourself up, check it off the list, take the lesson with you and move on. I wish I had known that that’s what it was going to be like.
Harry Stebbings:If you could change one thing about the world of SaaS today, May, what would it be and why?
May Habib:I think they would do an industry founded nonprofit whose purpose was an education effort for the mid market enterprise on just what SaaS can do. It’s not just about CRM and ERP and accounting software. There’s a whole software stack that makes us startups super efficient and innovative and if non startups could really understand that flow, I think it would change the speed at which they bought and adopted software.
Harry Stebbings:What’s the hardest element of your role with Qordoba today, May?
May Habib:I think on the work front, I would say the hardest part is going back to build that inbound and organic engine. We just got so good at outbound that we never did that and now we have to because the buying journey is changing and it’s a fun and it’s an interesting skill set for sure, but it’s just a different one than the one we had been developing and I would say that it’s been challenging, fun but challenging.
May Habib:And, then I think from a leadership perspective, the hardest part today is really just trying to keep the team together, keep us positive and get us to the other side.
Harry Stebbings:Tell me, when you’re stuck, who do you turn to for advice and what’s been your big takeaways from that relationship?
May Habib:I turn to books, and I have lots of great conversations with people in the industry and investors, but I kind of have this like three-part Bible that really helps me when I’m stuck, stuck now, because I feel like when I’m stuck I just have to go into my own mind for a minute and in the rereading of this canon and with the new lived experience, it’s where I think my insights happen for me and my three go-tos are the 15 Commandments of Conscious Leadership by Diana Chapman. That really changed my life. It was recommended to me by Karen Norman.
May Habib:And, then you had him on your show last week, Matt Mocharyi, The Great CEO Within. Loved the episode and I’ve been rereading chapters of that book for months now. And, then Disciplined Entrepreneurship by Bill Aulet for those of us who are gut driven, it’s just, it’s a great balanced, very data-driven approach to building product. Those are sort of my Old Testament and New Testament and Koran, I love those three books.
Harry Stebbings:Listen, I loved doing the episode with Matt and it’s been such a pleasure to have you on the show today so thank you so much for joining me today and I really do so appreciate it, May.
May Habib:Thanks so much, Harry.
Harry Stebbings:My word, I absolutely love May and such exciting times ahead for Qordoba. And if you’d like to see more from me you can find her on Twitter at May_Habib. Likewise, it’d be great to welcome you behind the scenes here. As I said, self isolation and so doing some very weird and wonderful shit. You can find that on Instagram at HStebbings1996 with two Bs. I would love to see you there.
Harry Stebbings:As always, I so appreciate all your support and I can’t wait to bring you a fantastic episode next Monday with Anthony at Front.
Ep. 317: Rachel Hepworth is VP of Marketing @ Pilot, the startup that offers the best bookkeeping, tax and CFO services for growing businesses. To date they have raised over $58M from some of the best in the business including Index Ventures, John Collison, Paul English, Drew Houston, Frederic Kerrest, Diane Greene and more incredible names. As for Rachel, prior to joining Pilot, she saw the hyper-growth of Slack firsthand enjoying a couple of different roles including Head of Growth Marketing and then also Head of Self Service and Platform Marketing. Before Slack, Rachel spent 4 years at LinkedIn where she led the product marketing team for content experiences. Finally, before LinkedIn, Rachel spent close to 3 years at Climate Corporation, prior to their $1Bn exit to Monsanto.
Pssst 🗣 Loving our podcast content? Listen to the start of the episode for a promo code to our upcoming events!
In Today’s Episode We Discuss:
* How Rachel made her way from marketing manager at Climate Corporation to VP of marketing at Pilot today? What were Rachel’s biggest takeaways from her time seeing the hyper-growth at Slack?
* How does Rachel think about organic growth and inciting word of mouth today? How does Rachel think they can be more accurately tracked and measured? How does Rachel think about the optimal ratio of paid to organic in growth? Would Rachel agree in paid, your payback period doubles every $5M you spend?
* With the rise of product-led growth, are we seeing a fundamental shift in the structure of sales and marketing? How does Rachel see marketing move ever close to the function of customer success today? What is the optimal way for customer success and marketing to work together?
* How does Rachel think about the importance of getting in front of your customers? Why does Rachel believe that data tells you the what and customer conversations tell you the why? What is the right way to structure your customer conversations? Where do so many people go wrong here?
Ep. 318: The first step in success with SMB clients is to recognize that it’s not a one size fits all scenario. Companies need a specialized approach for SMB accounts, different than the tactics used for Enterprise. Accel Partner Andrei Brasoveanu will sit down for a conversation with Agnes Bazin Doctolib on how to create a targeted and effective sales process tailor-made for SMB.
Below, we’ve shared the transcript of Harry’s interview with Rachel.
Harry Stebbings:This is the official SaaStr podcast with me, Harry Stebbings at HStebbings1996 with two Bs on Instagram. And there you can both suggest guests and questions for future episodes and I really do love to see you there. But in the show today, and it’s been a while since we really delved into the world of SaaS marketing and I’m thrilled to say that all changes today and I’m very excited to welcome Rachel Hepworth, VP of Marketing at Pilot, the startup that offers the best bookkeeping, tax, and CFO services for growing businesses. To date, they’ve raised over $58 million from some of the very best in the business including Index Ventures, John Collison at Stripe, Paul English at Lola and Kayak, Drew Houston at Dropbox, Frederic Kerrest at Okta, Diane Greene, and many more incredible names.
Harry Stebbings:As for Rachel, prior to joining Pilot, she saw the hypergrowth of Slack firsthand, enjoying a couple of different roles including Head of Growth Marketing and then also Head of Self Service and Platform Marketing. Before Slack, Rachel spent four years at LinkedIn, where she led the product marketing team for content experiences. And finally, before LinkedIn, Rachel spent close to three years at Climate Corp, prior to their $1 billion exit to Monsanto. I do also want to say huge thank you to Waseem of Pilot and to Mark at Index for some fantastic question suggestions today. I really do so appreciate that.
Harry Stebbings:That’s quite enough for me though. I’m very excited to hand over to Rachel Hepworth, VP of Marketing at Pilot.
Harry Stebbings:Rachel, it is such a pleasure to have you on the show today. As I said, I heard so many great things from your wonderful founder Waseem and then also from Mark at Index. Thank you so much for joining me today.
Rachel Hepworth:Thanks, Harry. Happy to be here.
Harry Stebbings:I would love to kick off though with a little bit about you, Rachel. Tell me, how did you make your way into what I call the wonderful world of SaaS, but come to me the killer head of marketing at Pilot today?
Rachel Hepworth:Well, the beginnings of it are somewhat of a long and winding story and I’ll spare you most of it. But basically about 15 years ago, I was out of school. I’d had a variety of truly random but slightly interesting jobs, including selling cheese. And I decided that I wanted to join a startup because I was young, I had no responsibilities, risk meant nothing. And I joined this company called Weatherbill, which was basically a market for weather derivatives, which hadn’t existed before. And this was a slightly strange but really large opportunity because it turns out that almost every business has economic impact from the weather. The idea is you want to be able to mitigate that risk like you would any other type of insurance risk. But if I’m really honest, what drew me to the company was their logo. They had this cute little umbrella and I just thought that was really friendly at the time.
Rachel Hepworth:And so the company took a chance on me, I took a chance on them. And then I spent the next year sort of learning about tech marketing, making every mistake in the book. And basically not really helping the company at all. And this was right around the time of 2006 to seven. After a year, decided that the definition of insanity was continuing to do what you’d always done hoping for different results. And so went back and started to actually focus much more on customer development and product marketing rather than demand gen. And I didn’t even have words for these functions at the time. It’s just the type of work I was doing. And I realized that Weatherbill actually didn’t have product market fit when I joined, and it’s never good to be a marketer at a company without product market fit. And so I spent quite a while figuring out who actually was our target audience. Turns out it’s not every business in the world.
Rachel Hepworth:What do they like? What was missing from the product that prevented them from buying? How did we need to change how we went to market? And eventually Weatherbill rebranded to become The Climate Corp and it sold to Monsanto for about a billion dollars. So we did figure it out, but in the middle was the financial crisis, looked like the company was going to go out of business. We weren’t selling anything and it was a pretty incredible learning experience, but probably not one that I’d really want to repeat anytime soon. Through great stress comes great lessons, but I feel like I’ve had those lessons and I don’t need to kind of repeat that experience.
Rachel Hepworth:But then after Climate Corp, I joined LinkedIn, which was a totally different experience because LinkedIn had just gone public at the time. This was 2012, and that was really where I learned how to market and operate at scale and use data and test really rigorously and learn about a lot of the fundamental best in class practices of marketing. Because at a startup, you figure out how to be scrappy and get things done. You don’t necessarily figure out the optimal way to get things done. At LinkedIn I started out on the prosumer subscription side of the business and then eventually I switched over to the consumer side, which is more about the LinkedIn feed and video and SlideShare and kind of managed PMMs that were driving all of these features that contributed to the daily engagement metrics of LinkedIn.
Rachel Hepworth:And that was a really great experience,, but after four years, I had this urge to go back to something smaller. LinkedIn grew from 2,000 to 12,000 employees while I was at the company. And that growth was really exciting, but 12,000 there’s a lot of people, communication gets harder and I just wanted to be able to build something. And so that’s when I went to Slack to start their growth marketing team. And Slack had about 500 employees at the time. It was a really nice size of company. They clearly had product market fit, they were growing like crazy, but they were still small. People forget how small Slack was back in that time. And they still had a lot of things to work out.
Rachel Hepworth:On the growth marketing team, we worked really closely with the growth product team, the analytics team, engineering team, and it was really, how do you optimize that really strong Slack funnel? We had so many people who had heard about Slack, they wanted to try Slack, but they really didn’t know what it was, nor did we know how to describe it. And so it made it more difficult for people to get value out of it quickly because they’d land in Slack and they’d say, “Okay, I send a message to somebody, but where’s the bigger so what?”
Rachel Hepworth:And so that was really a lot of what we focused on is how do you deliver value to all of those users who are trying your product? But because there’s so little friction, it’s so easy to start. That means the intent is not quite as high. There is no lock in effect. And you can see a lot of churn in those first couple of days. Really focusing on not just acquiring customers, but acquiring healthy, active customers was where I spent most of my time. And then after a couple years I ended up managing most of the Slack product marketing team as well. Really figuring out how to take new features to market. And then as Slack transitioned up market, how do you sell a product that had been so focused on bottoms up user growth and sell it into the enterprise? Because it really is a very different muscle.
Rachel Hepworth:And then I got excited by Pilot because of a couple different things. One is that Pilot is a company that automates bookkeeping and eventually the larger financial back office for SMBs. And it’s a really, really large market. The things I learned from Climate Corp and LinkedIn and Slack is, market size is really important. If you have an amazing product with a $10 million total market size, you can kill it. But it’s only ever going to be a nice little business. And so the size of the opportunity is so important. And for bookkeeping, which is this service that is almost mandated and certainly needed by just about every small business out there, you’re talking about a $60 billion TAM in the US alone. Really legitimately huge market. Everyone needs it. No one likes it. It’s a pretty ripe industry for disruption because there’s no big player who’s really killing it in this space.
Harry Stebbings:And also no one bloody loves bookkeeping.
Rachel Hepworth:Yes, that is another challenge that we can talk about, but exactly. Yeah. No one likes it. At best, everybody says it’s okay. I pay for books, I get some books, I guess. The government forces me to, ho hum. And then the second challenge is that when you’re dealing with an SMB business, it’s really about acquiring customers at scale. And that is fundamentally a marketing challenge. And so this is not a freemium product. There are costs to delivering books to customers. We can’t just give it away. And we’re not targeting $100,000 deals or million dollar deals where you can have a sales team who goes out and hunts for the appropriate customer. You really need to find a way to drive the growth in a format that’s scalable and repeatable and profitable for this very, very large audience. And that fundamentally will come down to a marketing challenge, which was really interesting and exciting for me.
Harry Stebbings:Let’s dig in on that marketing challenge because kind of speaking of that growth as you said there, it’s different ACVs and it’s different kind of styles. And so if we talk about kind organic growth and word of mouth, a lot of people say today, it’s untrackable, it’s immeasurable, and almost kind of denigrated to a certain extent. I guess my first question is, would you agree with the statement on word of mouth and organic being this untrackable, immeasurable avenue?
Rachel Hepworth:It’s certainly harder to track than a Facebook ad. What’s not? But that doesn’t mean that it’s impossible. And it’s something I’ve thought a lot about because at Slack in particular, organic growth and word of mouth, were such powerful levers. And if you feel like you have no control over them, you don’t feel really good about your fate because you’re basically just at the whim of whatever happens in the marketplace. It’s not a total black box. I look at the growth of our organic acquisitions. I look at the growth of our acquisitions coming through referrals, just natural referrals where a customer calls up and says, “So-and-so told me about this product,” which is actually a pretty high percentage. And in that way you can track it pretty specifically. But another more indirect way I think about it is I track it through NPS because you’re not going to get referrals without a high NPS. And then thinking through how to create a environment where you’re going to grow word of mouth and organic more strongly. And it’s not just sitting back and saying, “I hope it’s happens.”
Harry Stebbings:Is that focusing on hyper-local geocentric areas where you know that there’s a community of small businesses and actually if you target one and penetrate it, there’s a higher likelihood of virality through word of mouth if you’re within that tight community, is that the sort of kind of strategic thing that you do to in the site word of mouth?
Rachel Hepworth:That’s part of it and that’s certainly at Pilot one of the things we’ve done is we’ve initially focused on startups because they are such a tight knit community who are constantly asking for recommendations. And so one founder will ask another founder for advice about how to set up their company. And so that creates a very natural environment for word of mouth to flourish. But first more fundamentally, is you have to have a product or service that’s worth talking about. Because even if you’re in that tight community, if nobody likes what you’re selling or they think it’s mediocre, the recommendations aren’t going to happen. And so I actually explicitly think about measuring your word of mouth potential as it’s really what happens when the experience of a product or service sort of vastly exceeds the expectations of the person buying it. And I think about that in terms of Pilot in that you buy bookkeeping from us, let’s say, and every month we deliver you accurate books and that’s great. You bought something, we gave it to you, we did what you paid us to do.
Rachel Hepworth:But not many people are going to run out to their friend and say, “Guess what? I found this bookkeeper and I paid them for our P and L statement and then they gave it to me and it was awesome and you should go try it.” That’s just not going to happen. But if we delivered books to you and we said, “Hey, here are your statements and we noticed that you’re paying twice as much for your Salesforce subscription as startup industry standard, you can negotiate that and save $30,000 a year.” That’s something that people aren’t expecting. That’s an extra piece of value. And that’s something where they will go out and say, “Hey, this company I use just told me about this thing. You should go try them because they’re going to give you other valuable information that can help your company be more successful or grow.”
Rachel Hepworth:It’s about really over delivering upon what the expectations were, whatever you set them to be. And that’s setting up, how do you measure that? And how do you understand if you are doing that? And that just providing people what they pay for is really not enough, I think, is key to finding levers to really boost word of mouth and organic growth to a much higher degree.
Harry Stebbings:No absolutely. It actually reminds me of Gusto, the employee payroll company, who realized that actually no notifications are sent when traditional payroll companies pay people and so they send a fun email saying, “Hey, you just got paid, go celebrate,” essentially. It’s not actually really additional value but it is an additional incremental thing that incites word of mouth, which I liked.
Rachel Hepworth:It’s a moment of delight for people and so that’s what gets them talking.
Harry Stebbings:Totally. Absolutely. I guess I think, though, when we look at kind of the marketing split and often founders ask, “Okay, so I obviously desperately want word of mouth and organic,” but the right ratio between organic and paid and how that relationship looks is a tough one. How do you think about the optimal ratio for you of paid to organic?
Rachel Hepworth:I think it’s always going to depend on the company and the particular market and model you’re in. And so one thing I’m always hesitant about is I don’t think there are any hard and fast rules. Except for that for me, I’ve never seen a particularly successful B2B company thrive with paid as its dominant channel. And so I have a strong perspective that if organic in some way or shape or form isn’t driving the majority of your purchases and it doesn’t have to be 90%, but still the majority, particularly in the early days when you’re attracting those early adopters who tend to be the biggest advocates, if you haven’t achieved that, I think you have a problem with product market fit and you need to step away from the paid ad spend and sort of forcing people through the funnel and think about how you create a better experience or you’re solving a more important problem for your customers.
Rachel Hepworth:Because for most SaaS companies, you’re not selling toothpaste and so thinking that you’re going to get all your growth through Facebook or Instagram or LinkedIn through an ad, of we offer this thing, go buy it, is not very realistic. I think of paid as useful for targeting very specific high value audiences, for promoting certain events that can nurture people down a path. It’s an ingredient in the mix, but it can’t be your base.
Harry Stebbings:I do agree with you there. Thinking of just accountability within the org, I am interested, kind of going back to the organic growth element, where do you think organic growth and kind of accountability with it lies? Is it marketing? Or is it actually customer success who really should be the ones encouraging product engagement, creating that community? Where do you think that accountability lies actually? With marketing or customer success?
Rachel Hepworth:I actually, in most of the companies I’ve been, would question whether it lied between product or marketing versus marketing and customer success. I think customer success is really important. Retention for upsell, for expansion, and certainly the more up market you go, the larger the role customer success plays because they tend to be a little bit more bespoke in their interactions with customers, a little bit more one-on-one. They’re really, really crucial for those big deals. But in the beginning, particularly the freemium model or an SMB model, if you want to get a lot of people and you need to get a lot of people in the door and you need to have them see some initial signs of value before they deeply engaged, you have to have them prepped and educated and understand what they are supposed to be getting out of the product before they even start engaging with the product. And then the product has to actually deliver on those experiences.
Rachel Hepworth:I think of it as a partnership between those two functions and after they’ve kind of gotten that very initial traction is where customer success tends to come in to say, “Hey, you’ve gotten some value here. We can help you get even more.” But if you don’t get that initial value, customer success never gets that chance to engage.
Harry Stebbings:No, it’s super interesting to hear the emphasis on product there. It takes me to kind of probably one of the buzziest words in SaaS at the moment, which is kind of product growth and a strategy that’s star struck in the minds of so many people in our ecosystem. I am interested with this fundamentally new way to approach both kind of the distribution and engagement with the products that we create, do you think we’re seeing the fundamental shift in the role of sales and marketing?
Rachel Hepworth:I think for product led growth companies we are, because the volume you’re dealing with for product led growth, which typically is a freemium model, by its nature of being freemium, it has to be a very, very large volume of users coming in at the top of the funnel because they’re lower intent, there’s less friction. You haven’t, in my mind necessarily acquired them just because they sign up to your product. There’s still a lot left to go in terms of actually capturing them and capturing that value. And so marketing shifts from trying to initially attract these users, to trying to help them understand the value, and at Slack, we called it activated users, but actually engage in the product in a way that implies that they’ll have success, they’ll have health, and they have some potential of paying you down the line. Versus just we signed up tons of users and then they all churned one day later, so the value was really zero.
Rachel Hepworth:Those initial signups almost become what marketing typically has thought of as the leads. And so marketing turns much more to, it’s about education. It’s about understanding how the features relate to value versus kind of the more brand building or extremely top of funnel activities that it would focus on in other types of companies.
Harry Stebbings:You mentioned brand building there and it’s one that I often hear a little bit of reductionism towards, which is kind of brand marketing and the lack of kind of attribution that it delivers. How do you think about brand marketing today given the challenge of attribution with it, but actually in many positive externalities it can have in terms of ecosystem building, employee incentivization, how do you think brand marketing?
Rachel Hepworth:It depends on the stage of company you’re at. I think brand marketing when done correctly can be immensely powerful, but even when it’s done correctly and is powerful, it’s extremely difficult to track. Again, not everything that you can track has value and vice versa. You can track Facebook ads very easily, but they often end up being not particularly interesting drivers of growth. Just because you track it doesn’t mean that you should spend all your time on it. If you’re a startup or an earlier stage company, it’s you don’t really have a brand to market. It feels too early for me. But once you become a little bit more established, there’s a lot of power in brand marketing. But if you want to be able to attribute every dollar you spend to the dollar impact, you’re going to be unhappy and fail. My first rule of thumb at companies is if your executive team wants to see the ROI in very strict terms from brand marketing, I’ve never seen that successfully happen.
Rachel Hepworth:And so you’re just going to fail and be really dissatisfied. But that doesn’t mean that there wasn’t an enormous amount of value delivered. You just have to understand that a lot of it is indirect. A lot of it you are not going to be able to put a tracking pixel on and you have to have a certain amount of faith. And that’s really unsatisfying to people in tech marketing. But I also strongly believe that it’s the truth. And so I wouldn’t engage in brand marketing until my company had some amount of brand to market. If people have never heard of you before, there are quicker and simpler things to do. But Slack certainly engaged in quite a bit of brand marketing. And at this point it’s about extending and defending the brand more than it is about generating tons of new users. But Slack is a very valuable brand to extend and defend so that’s extremely important.
Harry Stebbings:Oh it does indeed. I guess my question though, is you mentioned kind of the challenge of attribution there and kind of communicating that to maybe the other members of the team. Can I ask, in terms of kind of creating a pipeline goal for you as the head of marketing, how do you think about creating a goal that’s a stretch goal for you and the team and it’s an ambitious target to hit, but also not a stretch too far, which will kind of create a dampening of the team if it’s not hit. How do you think about the right goal to set in terms of pipeline?
Rachel Hepworth:It’s a big challenge and the one thing I’ll say is that at most of the companies I’ve been at, we have not actually been able to particularly accurately set or hit goals both too low and too high, almost any quarter, which just tells you, and these are very successful companies, so this tells you how hard it is. Part of what I start with is just looking at the current funnel and what’s happening with it and what you think you can realistically change with it. And this could be as high up as we’re going after the wrong audience so we’re fundamentally going to shift that very top of funnel of even who is our addressable audience down to, is sales picking up the qualified leads quickly enough? Or is our messaging correct? Are we converting people at a rate that we think is healthy?
Rachel Hepworth:Every different business and industry has different kind of standard ratios and metrics for each of these. And so I’d also caution against looking at the company to your left or right and saying our funnel should look like theirs because unless they’re in the same business you are, that’s almost certainly not true. But for me it’s about having an actual plan for how you’re going to move the numbers and not just saying, “Next quarter we’re going to double it and we have no idea how, but we want to be aggressive, so we’ll double it.” If you don’t have a plan, you’re never going to make it.
Rachel Hepworth:And so this goes back in some ways to very classic growth teams. You form a hypothesis and then you do an experiment and then you learn from it. If you don’t have a hypothesis of how you’re going to achieve the goals you’re setting, then you’ll never figure out why you either blew them out of the water or failed to come close to them. And so that’s my rule of thumb with setting goals is I need to be able to see how we’re going to get there. And if I can’t, then we need to have a conversation about if the goal is realistic or not.
Harry Stebbings:Totally. And I guess in terms of that conversation that then ensues, what’s the ideal relationship, do you think, between the head of marketing and the CEO? And what does that interplay look like with the C-suite itself?
Rachel Hepworth:I think as much honesty and real talk as possible is important because you’re not helping the business by not providing all the information. And that’s actually one of the reasons that I was really drawn to Pilot is I felt that the executive team were people who I could have that sort of conversation with. Where if you had bad news or a point of view that wasn’t exactly the same as their point of view, you could have a vibrant discussion about that and it wasn’t going to be a problem. And so one of the first things I did when I came in at Pilot is I did some 2020 planning and kind of looked at our funnel and what’s our growth numbers? And the conversation I had here was we’ve been focusing exclusively on startups. That’s a relatively small TAM in terms of all SMBs in the US, shouldn’t we expand that and go after some other industries?
Rachel Hepworth:And this doesn’t just have impact on marketing, it has impact on how the sales team will pitch and message. It has impact on if the product team has built all the features that will fit some other industries that may have different requirements. It has impact literally on our bookkeepers and how they do the books. There’s a lot of spillover effect of expanding who your focus is. Obviously Pilot is a horizontal product. Eventually we want to go after all SMBs, but you can’t do it all at once. How do you stage it? What’s that timing? And so we had a very rigorous discussion literally in the first one to two weeks that I joined about whether this made sense, should we do it now? What’s the sense of urgency? And they ended up agreeing. And so we’ve been expanding into eCommerce and professional services over this first quarter as a way to increase that top of funnel and provide a larger audience for Pilot.
Rachel Hepworth:But that was, the company was a 100% focused on startups before this and really hadn’t considered doing a really strong push at this point into other ancillary industries. And so we had to have some real talk about how large the actual startup market was and if that made sense. And so I think being able to have that conversation and then back it up with some numbers, not just, I feel startups are a small industry, we should go after a different industry is really, really, really important. But if you don’t, you’re just going to be working at cross purposes and ultimately we all, startups are hard, everybody has to work together for any company to have any chance of succeeding. And so if you’re not all on the same page, you’re just totally doomed to failure.
Harry Stebbings:I totally agree and I think that transparency is key. You mentioned the secondary expansion there though for the business and I do want to touch on the customer base before we move into the quick fire. I know you are a strong believer in the power of really getting in front of your customers. I guess why is this necessary today with the incredible data profiling tools we have on our customers and the data that we have without being in front of them. Why is it important?
Rachel Hepworth:I think there’s so many subtleties that you miss that prevent you from really killing it on your marketing and sales if you just use data because data will tell you the what, but it never tells you the why. Again, a lot of that data, if you are a freemium product that can watch how people interact, you do have more robust data than maybe a more typical product where you have to engage with sales and actually purchase it before using it. But either way, you don’t really know why things are happening.
Rachel Hepworth:And so I’ll give you an example way back from the Climate Corp days where we didn’t fully have product market fit and we thought we understood what was going on, but we really didn’t. One of the ways that we priced our product was, and again this is a weather insurance product, so you buy a million dollars worth of coverage and we’ll charge you $500. It seemed really straightforward. This is how insurance works. Who wouldn’t get it? Well, it turns out that if you focus on agriculture, which is what we ended up doing because who has more weather risk than farmers? Farmers don’t budget like that. They budget by acre. And so if you tell them something costs $500 they have no idea if that fits into their working model. But if you tell them that it costs $7 per acre of corn, they instantly know if they can afford that and they know that you are a service or business that sort of understands their industries because you’re speaking their language.
Rachel Hepworth:But we never would have known that from the data. All we would see is that nobody completed the purchase funnel. And so kind of getting out there and talking to people and understanding their world and how they speak and the language they use in how they run their business was really crucial to being able to take that company from essentially zero sales to being acquired for a billion dollars. And that happens, every company I’ve been at, there are stories like that where you don’t know what you don’t know until you go out there and get close to people and kind of have those conversations. And you’ll miss out on all of that just by looking at data. I love data, but it can’t be used in isolation.
Harry Stebbings:No, I agree. And I think it’s fascinating, especially in terms of kind of the granularities around how they think about pricing there by acre, as you said. I guess my question to you is, that’s fantastic. Especially when we look at the startup market, but customers change. They get smaller, they get bigger often in many cases, and they just become very different. I guess first is, how do you watch for this and stay ahead of the change in customer base?
Rachel Hepworth:Yeah, we had this at Slack for sure where it started out so strongly in the engine dev community. And then in order to really grow, you need to be useful to all functions within a company. And so one thing is that you can just look at the typical customer segmentation information, either demographic, firmographic or the actions they’re taking within the product and see how it’s shifting over time and how that seems to change their engagement with your company or product and the value they’re getting. And so that tells you that your customers are shifting. And so at Slack we segmented our customers. When I first came in, that was one of my first projects and what we saw is that, this kind of startupy engineering centric company was less than 5% of our TAM but 30% of our users. And so you can see who you’re killing it with, who’s getting all your value and you can also predict that as you expand and more and more people use your product, that’s going to shift because it can’t stay at that same ratio.
Rachel Hepworth:And so you need to understand how to provide value to different types of people. And that has been true at every company I’ve been at. You start out with this group of early adopters who are just attitudinally, they’re very different from who your larger audience is and over time you have to figure out how to make your product more approachable and usable by people who are less interested in spending enormous amounts of time understanding a new tool or being kind of the first to market. The requirements for the customer experience actually get higher I think as you become more mature because you have less and less engaged, eager users who are willing to bend over backwards to make your product or service work for them. And so you have to refine it more and more and be more and more self serve and simple to use and obvious in the value that it’s delivering.
Rachel Hepworth:At Slack we had to figure out, well if we want people in sales to use it, what is the value for people in sales? We don’t have Jira integrations for sales folks. People in sales speak a lot to folks outside of their company. Having this only internal communication is not a particularly big value prop. And that was a really big focus of the marketing and product teams and customer success, all the teams over time of how do we speak to each individual function and understand the value they’re going to get out of Slack? And then oftentimes build new features to actually deliver enough value because the features didn’t innately exist in the original product.
Harry Stebbings:Can I ask, is it super hard when you have a product like Slack or like Pilot though, it works across many different industries, is it not challenging in terms of speaking horizontally to so many industries with one message? How do you think about resonating with so many when you are so horizontal?
Rachel Hepworth:I think the first challenge is one, figure out the axis that you’re going to segment on. How are you going to cluster your different customers? At Pilot, our theory is is that we’re going to segment on industry because different industries have different financial integrations that are important to them and they have different ways that they use their books. An example is eCommerce lives and dies by inventory and cashflow. You talk about how bookkeeping helps you grow your business by managing that inventory and cashflow. Startups, bookkeeping is important because investors require that you keep good books, they want to see where their money’s going. And really high quality books can actually help you raise money faster. That’s very compelling for startups, but generally doesn’t speak to eCommerce at all. And so figuring out not just everybody needs bookkeeping, but what is that deeper value that they would get out of it is really important.
Rachel Hepworth:At Slack we segmented by function, it wasn’t so much by industry except for a couple of regulated industries. That was about understanding that Slack spread function to function. An engineer would bring it in and it would spread to the engineering team. And then how did it spread to other teams? Well who works with engineering? Product. And so if product wanted to work well with engineering, they needed to be on Slack. What’s the value to product beyond just you can speak to your engineers? And then who works with product? Well marketing and product marketing. And so understanding how people adopt the tool and then understanding how to message it to that specific group of people becomes really important. But I think the key that differs for different companies that are horizontal is they might all segment on a slightly different axis. Understanding what that is is really key.
Harry Stebbings:Yeah, no, no, I totally agree with you. And fascinating in terms of that kind of internal expansion within the org there for the Slack products. I do want to move into my favorite element, Rachel, being the quick fire round. I say a short statement and you hit me with your immediate thoughts. Are you ready to roll? About 60 seconds per one.
Rachel Hepworth:I’m ready.
Harry Stebbings:Okay. What do you know now about the process that you wish you’d known at the beginning of your time in marketing?
Rachel Hepworth:It’s really that you never know enough about your customer and that a lot of people, particularly in Silicon Valley, have really brilliant ideas that sounds so amazing and are just totally irrelevant for the market they are trying to go after. You cannot believe other people’s hype or your own hype. You got to get out there and talk to people and it will cut short a lot of pain and banging your head against the wall when things are not working out.
Harry Stebbings:What’s the hardest element of your role with Pilot today?
Rachel Hepworth:It’s what we talked about before. How do we smartly approach this really big TAM? Because SMBs are not homogenous. And so how do we segment them? How do we find them? And how do we communicate the value of what Pilot does in a way that’s relevant? Because everybody needs bookkeeping, but bookkeeping is not sexy or exciting. So how do you capture their attention and create that sense of urgency of I need to switch or I need to buy this service today?
Harry Stebbings:If you could change one thing about the world of SaaS today, what would you change?
Rachel Hepworth:I think it’s actually that a lot of SaaS companies have become very addicted to getting people onto their subscriptions and then hoping that they don’t notice how much they are spending. This is true on the B2B and the consumer side and so you see this actually marketing strategy, people can refer to it as don’t poke the bear ,where you don’t want to remind people that they’re paying for your service because then it will cause them to cancel because they realize they’re not getting enough value on it. And that’s always really bothered me and I wish there was less of a tendency to use that as a churn reduction strategy than actually figuring out how to help people get more out of the product.
Harry Stebbings:Yeah, no, I totally agree with you there. Buffer actually have a brilliant email. It says, “Thank you for making Buffer possible.” And it’s got pictures of the team and it’s just, it’s integrating a moment of delight into something that’s traditionally painful, being your invoice. Yeah, it’s our final one. Who in SaaS marketing today do you think is killing it? And why?
Rachel Hepworth:This might be because of the function I’m in, but I spend a lot of time thinking about SaaS companies that are targeted at marketers and who does a really great job. And the companies that come to mind are, HubSpot is obviously killing it with content marketing and understanding their customer. And I think what’s been interesting about them in the last year or two is they really expanded their share of wallet. They’re not a young company, but they’re accelerating their growth. And because that’s because they know how to combine a bunch of different products and deliver more and more value over time to this SMB base that they’re serving. And then I think Drift has done a pretty amazing job, specifically in marketing. They are trying to name and own a category that has existed for a while and they did not by any means create but still seek to sort of dominate it through their marketing. And I think they really understand their target audience and what people care about and they’ve done a great job there.
Harry Stebbings:Rachel, as I said at the beginning, I’ve been looking forward to this one since I interviewed Waseem. He said, “You’ve got to have Rachel on.” And then obviously Mark from Index said many great things, so thank you so much for joining me today and I’ve absolutely loved doing this.
Rachel Hepworth:Thank you so much, Harry.
Harry Stebbings:So much fun having Rachel on the show there, and as I said, could not be more excited for the future with Pilot. And if you’d like to see more from us then you can find us on Instagram at HStebbings1996 with two Bs. I really do love to see you there.
Harry Stebbings:As always, I so appreciate all your support and I can’t wait to bring you a fantastic episode next week with Anthony Kennada at Front.
Ep. 315: Harry Hurst is the Co-Founder & Co-CEO @ Pipe, the startup that gives you control of your cash flow by giving you access to the full annual value of your monthly subscriptions, upfront. This month they announced their $6M seed round led by David Saks @ Craft and joined by Fika, Weekend Fund, Naval Ravikant and WorkLife Ventures to name a few. Prior to Pipe, Harry co-founded Skurt raising over $11M in the process before being acquired by Fair.com. Harry has also angel invested in the likes of BreathePod and Try.com.
Pssst 🗣 Loving our podcast content? Listen to the start of the episode for a promo code to our upcoming events!
In Today’s Episode We Discuss:
* How Harry made his way from the UK to founding one of Silicon Valley’s hottest SaaS startups with the founding of Pipe.
* How does Harry think about when is the right time for a startup to raise VC funding? How does Harry stress test the alignment between the founder and the VC? Alternatively, when is the right time for a founder to take non-dilutive capital from Pipe instead?
* Pipe’s lending model is so centered around churn prediction, what does their churn analysis look like at Pipe? How does Harry think about the right way to structure churn postmortems? Why does Harry believe investing in customer success is far more important than customer acquisition?
* How does Harry think about the importance of brand for enterprise startups today? Do you have to invest in it from Day 1? What mistakes does Harry see many founders make when it comes to investing in their early brand?
Ep. 316: The startup journey moves in waves—whether you’re ready or not. After finding funding and product/market fit, your next steps as a founder in the hypergrowth phase can determine the future of your company. Harry Stebbings of Stride.VC and Robert Vis of MessageBird will walk through lessons learned to survive hypergrowth and what will make a difference when it comes to scaling. Hear how to navigate fast growth and how to look ahead as you travel forward.
Good morning friends, and welcome back to TechCrunch’s Equity Monday, a short-form audio hit to kickstart your week. Regular Equity episodes still drop Friday morning, so if you’ve listened to the show over the years, don’t worry — we’re not changing the main show. (Here’s last week’s episode with Danny Crichton, in which we took a look at the new Kleiner fund.)
For us this morning what matters is that COVID-19 is still spreading, the global stock markets are still falling and domestic equities are about to get hit hard, if pre-market trading is any indication. Currently stocks are flashing about 5% losses as we write to you.
Skipping the show’s order, here’s what’s on our minds this morning:
What happens to private market valuations now as the public market continues to reprice? When does sentiment shift?
What happens when startups pull back spend and hunt for slower, but more efficient growth?