SaaStr Podcast #400 with Splash CEO Ben Hindman and SaaStr CEO Jason Lemkin: “The Future of Digital Events”


This post is by Amelia Ibarra from SaaStr

Ep. 400: In today’s SaaStr Insider episode SaaStr CEO and Founder Jason Lemkin catches up with Ben Hindman, Co-Founder & CEO at Splash to talk about the future of digital events.

This interview was part of Splash’s Boom, a video series about the innovation explosion in events and the tech stack.

 

This episode is sponsored by Outgrow.

 

 

 

This episode is sponsored by Secureframe.

 


 

If you would like to find out more about the show and the guests presented, you can follow us on Twitter here:

Jason Lemkin
SaaStr
Ben Hindman

Below we’ve shared the transcript of Jason’s conversation with Ben.

Announcer:

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Announcer:

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Announcer:

In today’s SaaStr insider episode, SaaStr CEO and founder Jason Lemkin catches up with Ben Hindman, co-founder and CEO at Splash, to talk about the future of digital events.

Ben Hindman:

I’m Ben, I’m the co-founder and CEO of Splash. Splash is an event marketing software for your live, virtual, and hybrid events. Today I’m talking to Jason Lemkin. He’s the CEO of SaaStr, he’s an investor, an entrepreneur, and an event planner. That’s a rare combination. The guy has a unique and sharp perspective on everything tech and everything events. SaaStr Annual has been the conference at the center of the cloud revolution. SaaStr was started in 2012 as a blog. They hosted their first conference in 2015, and now they claim the world’s largest community of SaaS executives, founders, and entrepreneurs.

Ben Hindman:

SaaStr was one of the first conferences to cancel due to the pandemic, but has bounced back with a fully online conference this December, which is set to welcome 50,000 attendees. I had a conversation with Jason Lemkin and I pulled some of the highlights of the conversation here. I think you’re going to love it. We talk about things from a perpendicular event, all the way to what is next in the collaboration suite. Let’s get into the conversation.

Ben Hindman:

Jason, great to see you. Thanks for joining us on Boom. Okay. First question, as you look towards the future, how do you expect digital events will continue to evolve?

Jason Lemkin:

I don’t think SaaStr or Dreamforce or any of these things are going to be replaced on its own by digital and we can talk about why. But what has happened as the tools have been brought forward a decade, is you can have user conferences, you can have customer conferences, you can have prospect conferences on the internet that you couldn’t have in the real world. It’s too expensive. It’s too complicated.

Jason Lemkin:

I think the big events will have a much better digital component than they ever did. It will be on steroids. And that will be all provided through software. A few folks like Web Summit will build their own and everyone else will buy. Much more functionality, not live streaming, there’s an order of magnitude, more functionally for the big events. And then digital only events will not replace IRL events like they have since COVID. They will be better, they will be richer, they will connect more people, they’ll have more content, more interactions. The truly great digital events were worth it. And so, everyone’s going to try to do that. And you’re going to need tools and software because the crappy stuff we had before March, none of it did it.

Ben Hindman:

Okay. Next question. As you look post pandemic, what’s your expectation for how event formats or event planners will need to evolve?

Jason Lemkin:

They will have perpendicular events going forward. So, they will not have a hybrid event, which is live streaming, that didn’t work. No one tuned and the engagement sucked. Instead, you will have a perpendicular product where it’s not live streaming, it’s the rest of your community. It’s the other of the 15,000 people that can attend SaaStr. We want to have truly a hundred thousand to attend digitally next year.

Ben Hindman:

Wow.

Jason Lemkin:

And it won’t be the same. They’re not going to get to bump into people in the hallways, are they? They’re not going to have the same experience with the round tables and the meetups, and the jobs board, and the parties, and the meet Zendesk in person. They’re not going to have that and that’s okay. But they’ll have a different experience that will also be rich. That’s why it’s not hybrid to me, it’s this perpendicular experience where we, it’s more work now next year, there’ll be more work because you will have to have this horizontal perpendicular content for the rest of your community. And the only way you’ll be able to keep up is with tools, with software.

Ben Hindman:

So, I’m curious as this is a show for event marketers, have you seen any new trends or evolutions in the event tech stack that are worth noting?

Jason Lemkin:

Workplace collaboration, internal is big but external is really big too. External collaborations, huge part of it, and the fact that, that would meld with events software was something no one predicted before COVID. Open up your Gmail, especially, even on your phone if you’re on an Android device, like me. Do you know what’s there? Google Meet. Zoom is getting into events, and why is Zoom getting into events? Because it wants to do session registration, and… No, it’s because digital events crossed over into collaborations software. That’s why Microsoft Teams has limited events capability now. Because we never thought of events software as collaboration software before COVID. That’s what’s powerful. And that’s, there will be M&A there, there’ll be big M&A, there’ll be activity there. I don’t know whether that really drove BlueJeans or whether that was an opportunistic attempt to compete with Zoom without doing the work, but we would have never thought of events software as collaborate–Maybe you did, but very few of us would have thought of as collaboration software before.

Ben Hindman:

Okay. Next question, Jason, as you have looked at the sponsorship game evolve in a digital first world, what have you learned? Any strategies you can share with us?

Jason Lemkin:

I did not know this until March of this year. I’ve been doing SaaStr Annual since 2015. I did not know until March of this year why sponsors sponsor. In cloud, 40% of leads come from the field, 40%. Everyone gripes, every field marketer gripes about every event from Dreamforce on down. They gripe about everything, but they need to deploy the capital because it works. It works. Does it work perfectly, does it work as elegantly as Google AdWords? No. But buyers go to events. Buyer goes to events to learn and buyers go to events to talk to someone they’ve only talked to over Zoom, and buyers go to events to make decisions. At first, we saw at SaaStr, our first two events we had no revenue. We had no sponsors at SaaStr then, because budgets were frozen. And then by our third one, they’re like digital events suck, but we’ll try it.

Jason Lemkin:

Then by the fourth one, we’re like, we can get you thousands of leads. And they’re like, well blah, blah, blah, digital. It’s like, well, where else am I going to get it? So, you’ve got to try. And then they see the different forums. So, you need to deliver depth and breadth in digital. You need to deliver the prospects and you need to deliver more of them. And you need to understand why, because even if you deliver a high quality prospects, it’s still not the same as talking to the vendor in the booth. It’s not.

Jason Lemkin:

It might be better, because I get to talk with the CEO over a Zoom instead of talking to an SDR in a booth. It might be better, but it is different. So, you need depth and breadth. Now, one thing we don’t do that everyone does that’s smaller is, they give you all the leads. We have 800 people sign up, we’ll give you all the emails. Is that worth anything? No, you want intent. So, we only give folks the leads, like a booth, that say, “Hey, I want to come to talk with this sponsor.” But they all have intent and this lack of intent is destroying the notion of a lead for digital events. People think they want the list, but they don’t want the list. They want a list that wants their product.

Ben Hindman:

Okay. So, what are the top field marketers doing to drive ROI and to get results?

Jason Lemkin:

There’s two strategies for events and you can do both, but only if you do both. You can go deep and do a couple events in your industry. And you see it at Dreamforce, at least you used to, people would invest massive amounts of money. You would see it at RSA. You would see it at, even see to some extent at Web Summit. And you see it at Shoptalk for e-commerce, people go all in on one or two events. And then you can blow a million bucks or more, including soft costs. Easily. Or you do the everywhere strategy. I’m going to be at everything because maybe I’ll only have the smallest booth at Shoptalk, but I’ll be at every e-commerce event in the industry. So, all of my prospects will see me.

Jason Lemkin:

And marketers have different strategies. You’ve got to do what you’re good at. And so I think for digital, it’s the same, but on steroids. You either got to pick a couple things and lean in deeply, but lean in even more. Get your brand all over and get in front of everybody or be everywhere and really nickel and dime it because you may see lower ROI. Like anything in an event, if you don’t put in the effort in, you don’t get the effort out. If it doesn’t provide value to CEOs or founders, we won’t take their money. It doesn’t work. Maybe it works for other people, it doesn’t work for us. We can give you the data. It doesn’t work. We don’t allow it. But one has slipped in and it was the worst performing thing we’ve done at all levels.

Ben Hindman:

Okay. So, I think I’m hearing you say that net net, you see a bright future for digital and virtual events?

Jason Lemkin:

It’s still early days. But I think, I don’t even like that, even though we’re stuck, I don’t like the term SaaS or Cloud, digital events don’t make sense either, but we’re stuck with the term. But I don’t know, I’m not convinced they’re events yet. I believe they’re gatherings. A gathering could be bigger on the internet. This is what we learned from social media, a gathering can be bigger. So, your digital event should be bigger and better than your IRL event.

Ben Hindman:

Big thanks to Jason Lemkin. We got a ton of downloads. Everything from new thoughts on the collaboration suite to perpendicular events, a term I have never heard, but I’m planning on tweeting and using seven times tomorrow. If you like what you heard today, make sure to share this with an event professional you love, like, subscribe and come check us out next time as we explore the innovation explosion in events and the tech stack.

Announcer:

If you don’t have a SOC 2 report, you aren’t going to be able to sell to major customers. Secureframe helps startups get and maintain SOC 2 compliance in as little as two weeks. Join companies like Stream, Hasura, Benepass, and unlock more sales with Secureframe. Saastr listeners get 10% off at secureframe.com/saastr!

Announcer:

Curious how you can grow your SaaS company while companies shift operations online? Show your customers how you can help them by changing your forms to tools with a personalized results page. It’s simple. Choose from over 1000 temples at outgrow.co/saas. That’s outgrow.co forward slash s a a s.

 

The post SaaStr Podcast #400 with Splash CEO Ben Hindman and SaaStr CEO Jason Lemkin: “The Future of Digital Events” appeared first on SaaStr.

Four Steps to Scaling to $250M from Stack Overflow


This post is by Amelia Ibarra from SaaStr

Prashanth Chandrasekar, CEO @ Stack Overflow recently shared with our community the four key pillars he feels are necessary to propel a company to scale upward.

The four key pillars he lays out are:

  1. Product market fit & expansion
  2. Go to market approach & expansion
  3. Competitive differentiation
  4. Building a stage-specific team
#1 Product-Market Fit and Expansion

Product. Is your product sound, and does it solve a big problem for customers, enough for you to scale? Once you figure that out, you can expand your scope. 

  • Market Fit. Deliver repeatable value early in the customer’s journey. Measure leading indicators and not lagging indicators like churn.
  • Expansion. Review your customer’s problem journey at pre and post current stages. Can your product solve more of their problems? This will create use cases you can use to expand into adjacent organizations. Figure out what your immediate target group is all about and look for expansion opportunities.
#2 Go-To-Market Approach and Expansion

What are your options, and what are the most appropriate ones to use to give your company a competitive edge?

  • Approach. Determine if your growth is product-led, sales-led, or marketing-led. Make sure you have alignment across your company. Determine if you want to offer Freemiums or free trials so customers can try your product before they buy. Determine if your company is direct vs. indirect sales-led for tech alliances, channels, and Student Information Systems. Positive unit economics must be fundamental to your company as you scale your long term fundamentals. All of this will help create value and return on investment capital.
  • Expansion. There are three main dimensions to expansion:
    • Industry verticals such as healthcare or financial present an opportunity to effectively leverage your Go-to-Market strategy, i.e., distribution, bundling of products, etc.
    • Segments. SMB to Enterprise, decide which you want to start with and toward which you want to move.
    • Geographic regions. With such worldwide growth these days and numerous opportunities, this can be a product expansion strategy.

#3 Competitive Differentiation

How do you stand out from the pack and grow despite plenty of competitors? 

  • Product is the best way to differentiate your company and includes your product’s features, quality, reliability, price, and distribution. Together, these factors enable you to distinguish your company. 
  • Brand includes your company values, Heritage/story, packaging, convenience, customer support, quality, segment focus, and positioning, all of which can differentiate your company from others with similar products.
  • Community is one of the most underestimated ways to differentiate your company and its strategy. Five tenants to building a great community include a shared identity; incentives and awards for users to provide a sense of accomplishment; building with not for the community and building from within; breaking down silos and linking one associated community to another to help get a broader perspective; and virtuous cycles as ways to create a feedback loop with favorable results.

Note: the order in which you organize this is important. It can be the product, then brand, then community, or community, then brand, then product.  

Building a Community

Over 80 percent of founders report building a community as important to their business, with 28 percent saying it is crucial to their success. In a society that’s becoming more remote, a community will become even more critical as a source of (competitive differentiation) in an increasingly virtual world.

#4 Stage-Specific Team

Each company must have different teams with different skills to achieve your desired growth.

  • Early-stage. The product team is a small, tight-knit group focused on product, architecture, and engineering. There’s a lot of focus on direct customer feedback about how your product solves enormous problems for them and any issues they might have with your product. The go-to-Market team has an Evangelist sales leader with scrappy sales and customer success members.
  • Mid-stage. This stage includes companies with sales between $25M and $75M. They have a Full Product Team, which includes product management, user research, and product design. The go-to-Market team has a Builder VP of Sales. Sales cadence, pipeline, and methodology become essential here, and there is a specialized sales organization with inbound and outbound sales development and a separate customer success organization. 
  • Late-stage. The Product team incorporates previous mid-level stage items plus the true voice of the customer, roadmaps, and reviews of processes. There is a deliberate focus on market differentiation vs. market relevance as it relates to investment. There will be more competition at this phase, so resource allocation becomes paramount. Go-to-Market’s team leader must be a forecasting machine and predictability VP of Sales. Included are all the mid-stage items plus sales enablement and operations to include sales strategy, territory planning, deal desk, and more.

The post Four Steps to Scaling to $250M from Stack Overflow appeared first on SaaStr.

Four Steps to Scaling to $250M from Stack Overflow


This post is by Amelia Ibarra from SaaStr

Prashanth Chandrasekar, CEO @ Stack Overflow recently shared with our community the four key pillars he feels are necessary to propel a company to scale upward.

The four key pillars he lays out are:

  1. Product market fit & expansion
  2. Go to market approach & expansion
  3. Competitive differentiation
  4. Building a stage-specific team
#1 Product-Market Fit and Expansion

Product. Is your product sound, and does it solve a big problem for customers, enough for you to scale? Once you figure that out, you can expand your scope. 

  • Market Fit. Deliver repeatable value early in the customer’s journey. Measure leading indicators and not lagging indicators like churn.
  • Expansion. Review your customer’s problem journey at pre and post current stages. Can your product solve more of their problems? This will create use cases you can use to expand into adjacent organizations. Figure out what your immediate target group is all about and look for expansion opportunities.
#2 Go-To-Market Approach and Expansion

What are your options, and what are the most appropriate ones to use to give your company a competitive edge?

  • Approach. Determine if your growth is product-led, sales-led, or marketing-led. Make sure you have alignment across your company. Determine if you want to offer Freemiums or free trials so customers can try your product before they buy. Determine if your company is direct vs. indirect sales-led for tech alliances, channels, and Student Information Systems. Positive unit economics must be fundamental to your company as you scale your long term fundamentals. All of this will help create value and return on investment capital.
  • Expansion. There are three main dimensions to expansion:
    • Industry verticals such as healthcare or financial present an opportunity to effectively leverage your Go-to-Market strategy, i.e., distribution, bundling of products, etc.
    • Segments. SMB to Enterprise, decide which you want to start with and toward which you want to move.
    • Geographic regions. With such worldwide growth these days and numerous opportunities, this can be a product expansion strategy.

#3 Competitive Differentiation

How do you stand out from the pack and grow despite plenty of competitors? 

  • Product is the best way to differentiate your company and includes your product’s features, quality, reliability, price, and distribution. Together, these factors enable you to distinguish your company. 
  • Brand includes your company values, Heritage/story, packaging, convenience, customer support, quality, segment focus, and positioning, all of which can differentiate your company from others with similar products.
  • Community is one of the most underestimated ways to differentiate your company and its strategy. Five tenants to building a great community include a shared identity; incentives and awards for users to provide a sense of accomplishment; building with not for the community and building from within; breaking down silos and linking one associated community to another to help get a broader perspective; and virtuous cycles as ways to create a feedback loop with favorable results.

Note: the order in which you organize this is important. It can be the product, then brand, then community, or community, then brand, then product.  

Building a Community

Over 80 percent of founders report building a community as important to their business, with 28 percent saying it is crucial to their success. In a society that’s becoming more remote, a community will become even more critical as a source of (competitive differentiation) in an increasingly virtual world.

#4 Stage-Specific Team

Each company must have different teams with different skills to achieve your desired growth.

  • Early-stage. The product team is a small, tight-knit group focused on product, architecture, and engineering. There’s a lot of focus on direct customer feedback about how your product solves enormous problems for them and any issues they might have with your product. The go-to-Market team has an Evangelist sales leader with scrappy sales and customer success members.
  • Mid-stage. This stage includes companies with sales between $25M and $75M. They have a Full Product Team, which includes product management, user research, and product design. The go-to-Market team has a Builder VP of Sales. Sales cadence, pipeline, and methodology become essential here, and there is a specialized sales organization with inbound and outbound sales development and a separate customer success organization. 
  • Late-stage. The Product team incorporates previous mid-level stage items plus the true voice of the customer, roadmaps, and reviews of processes. There is a deliberate focus on market differentiation vs. market relevance as it relates to investment. There will be more competition at this phase, so resource allocation becomes paramount. Go-to-Market’s team leader must be a forecasting machine and predictability VP of Sales. Included are all the mid-stage items plus sales enablement and operations to include sales strategy, territory planning, deal desk, and more.

The post Four Steps to Scaling to $250M from Stack Overflow appeared first on SaaStr.

SaaStr Podcast #398 with Salsify Co-Founder & CMO Rob Gonzalez


This post is by Amelia Ibarra from SaaStr

Ep. 398: Rob Gonzalez is the Co-Founder & CMO @ Salsify, empowering brand manufacturers to deliver the product experiences consumers demand at every point in their buying journey. To date, Salsify has raised over $250M in funding from the likes of Venrock, Underscore, Warburg Pincus, Matrix Partners & Greenspring to name a few. As for Rob, before founding Salsify, he was the first-ever product manager at Cambridge Semantics and before that was a Senior Product Manager @ Endeca helping grow the company to it’s $Bn exit.

In Today’s Episode We Discuss:

* How Rob made his way into the world of SaaS as a product manager and how that led to his founding Salsify over 8 years ago.
* How does Rob think about the bundled vs unbundled thesis within SaaS? When is it right for SaaS companies to turn down potential customers? How can they do that the right way? What is the right way to think about customer segmentation? How should startups decide which customer segment to focus on?
* How should startups think about implementing partnerships? When is the right time? What is the right way to onboard them? How can they be trained in implementation efficiently? What does great change management look like to Rob? What does Rob believe are the biggest misconceptions around change management?
* How does Rob think through pricing today in a way that encourages land and expand? What can you do to make the land as frictionless as possible? What does it take to expand effectively? How does Rob think about usage vs seat-based pricing in SaaS? How should sales and marketing work together on pricing?


 

If you would like to find out more about the show and the guests presented, you can follow us on Twitter here:

Jason Lemkin
SaaStr
Harry Stebbings
Rob Gonzalez

Below, we’ve shared the transcript of Harry’s interview with Rob.

Harry Stebbings:

We are back. This is the official SaaStr podcast with me, Harry Stebbings. And joining me in the hot seat today, we have Rob Gonzalez, co-founder and CMO at Salsify, empowering brand manufacturers to deliver the product experiences consumers demand at every point in their buying journey. To date, Salsify has raised over $250 million in funding from the likes of Venrock, Underscore, Warburg Pincus, Matrix Partners, and Greenspring, to name a few.

Harry Stebbings:

As for Rob, prior to founding Salsify, he was the first-ever product manager at Cambridge Semantics, and before that was a senior product manager at Endeca, helping grow the company to its billion-dollar exit. I do also want to say, huge thank you, though, to Michael Skok at Underscore. Some amazing background and question suggestions for Rob today. Michael, I really did so appreciate that. But that’s enough from me. So now it’s time to dive into the show, and I’m thrilled to welcome Rob Gonzalez, co-founder, and CMO at Salsify.

Harry Stebbings:

Rob, it is so great to have you on the show today. I’ve heard so many good things and many stories from Michael Skok. So thank you so much for joining me today, Rob.

Rob Gonzalez:

Thanks so much for having me.

Harry Stebbings:

Not at all. I do want to start it a little bit on you. So tell me, it’s a wonderful world, SaaS, but it’s also an interesting one to get into. So how did you make your way into the world of SaaS, and how did you come to found Salsify? I say most recently, but quite a few years ago, now.

Rob Gonzalez:

Yeah. Eight years ago, we founded the company, September 2012. But I had wanted to start a company for a long time before that. In 1999, I was at Williams College with my co-founder Jeremy Redburn. Williamstown at that time was sort of self-titled Silicon Village. There was a small startup scene. Tripod was a search engine there, which exited to AltaVista.

Rob Gonzalez:

And so, a lot of people that were doing computer science in Williamstown were thinking about startups back even in the late nineties. I was working on a startup that was an early mobile payment platform. It was basically using Bluetooth and an app on PalmPilots to do wireless payments in restaurants. And actually, one of the restaurants burned down and took our whole prototype with us, and that was pretty much the end of that company.

Rob Gonzalez:

So back then, we were already talking about it and it just took me and Jeremy another 14 years, almost, to get to a point where we really wanted to do a company. We felt ready from an experience perspective, we had an idea of what we wanted to do. Both of us and our third co-founder, Jason Purcell, were at a company called Endeca, which was a search engine for e-commerce, exited to Oracle for over a billion dollars in 2011. So we had a deep experience in the e-commerce space and it just, in 2012, it felt right. We had a great idea, we had a lot of experience, and we were ready to do it. But it took a lot of thinking up until that point before we ended up pulling the trigger.

Harry Stebbings:

Can I ask, you said it felt right. Do you think one’s ever ready to found a company? Do you know what I mean? I have a lot of graduates who always ask me, “Hey, should I join a startup? Should I join an incumbent? Or should I start my own company?” Do you think you’re ever ready, really, to start your own company? And actually, the only way you learn is by doing. How do you feel about that?

Rob Gonzalez:

I don’t necessarily agree that you’re never ready and all forms of never being ready are equivalent. So the statistics say that the older you are, the more likely you are for your company to succeed. All things being equal, a 20 year old versus a 30-year-old versus a 40-year-old starting a company, the 40-year-old is going to have a higher likelihood of success. So from that perspective, I think there is a lot to be said from gaining experience.

Rob Gonzalez:

Operationally, I look at, in particular, my experience at Endeca, but also another startup that sold to pharmaceutical companies and other life sciences businesses and financial services companies called Cambridge Semantics. I look at my experience through those companies, and I learned a lot about enterprise software sales, about buying patterns, about functions like product management and product marketing, and how they fit into a well functioning and operating company. It just made it a lot easier for us to scale up Salsify as we found success.

Rob Gonzalez:

I think if I had tried to do this when I was 22, I don’t know that I would have been able to do it. And not only that, I mean, I was in my early thirties when we founded Salsify. Jason’s a few years older than us and he was the GM of Endeca’s entire e-commerce business, and so had serious senior management experience. And that’s meant that, as we’ve scaled, it’s made it a lot easier to bring on seasoned executives that fit right into what we’re trying to do. So from my perspective, I think sometimes waiting can be helpful. The experience can matter.

Harry Stebbings:

I do want to ask, though, we spoke about eight years ago, founding Salsify. The SaaS industry, I mean, it’s completely changed on its head. I mean, eight years ago, a billion-dollar SaaS company was very, very rare. Now we have decacorn SaaS companies. How do you think about the most pronounced changes in SaaS over the last eight years for you?

Rob Gonzalez:

Yeah, I think there’s two. First, you hit the nail right on the head. In 2012, Wall Street didn’t really know how to value SaaS companies. You look at the forward-looking ARR multiples on the stock price, and they were a lot lower back then. They’ve been raising pretty much the entire decade. So whilst we didn’t know how to value them…

Rob Gonzalez:

And I think nobody really understood how many really big SaaS companies there could be. I mean, there was Salesforce, of course, but then you’ve got ServiceNow, you’ve got Veeva, you’ve got Workday. NetSuite exited close to a decacorn. It was just so many really great companies and so many more that are being built. And I think very few people understood that you could have really the possibility of dozens of decacorn companies existing on this model. And so that understanding has evolved a lot.

Rob Gonzalez:

The second major thing, I think, is that back in 2012, we were in what I think of as X in the cloud, as the moment of SaaS where you just take an existing software category and you put it in the cloud. So if you’re ERP, boom, Workday. If you’re CRM, boom, Salesforce. If you’re e-commerce, boom, Demandware. And there’s a lot of benefit to running a software as a service, in general. But I think that that generation of technology as being the first generation of cloud technology really misses out on benefits that you can accrue to being truly multitenant.

Rob Gonzalez:

So if you were building a commerce platform today, for example, you wouldn’t do it as single tenant, effectively, deployments. My account runs my website. You would probably do it as a way to connect data and analytics and behaviors and workflows across different companies and across different websites to make them all more effective. So I think we’re in a generation now, which is more, what is only uniquely possible in the cloud. And that’s distinct from the X in the cloud pattern that was the first generation.

Harry Stebbings:

Sorry, this is so unfair of me to go off schedule like this, but when you think back on only possible in the cloud, I think through every investment of mine is unbundling or bundling and try and very carefully be aware of which camp we’re in and why. Do you think that’s actually completely external to unbundling versus bundling? Or do you think it’s actually related? And if so, which one?

Rob Gonzalez:

Oh yeah. The old Jim Barksdale framing.

Harry Stebbings:

We’re both fans, clearly.

Rob Gonzalez:

Huge fan. Yeah. I think it’s orthogonal most of the time. Let me just give you an example. There were chat protocols that were around for a long time and there were even intercompany enterprise chat like Yammer and HipChat that existed. And Slack came out, and Slack enabled you to connect across companies. And they really built a network model on top of the chat, so instead of operating within a company, they started operating across companies.

Rob Gonzalez:

And that’s an example where it’s not really bundling or unbundling anything. It’s taking advantage of the fact that you’re a multi-tenant cloud architecture, and connecting people within one company is no different than connecting people across companies. So that type of mindset, I think, is the difference, not so much a bundle or unbundle.

Rob Gonzalez:

In Salsify’s space, in particular, we work with brand manufacturers, so customers, think Bosch, Coca-Cola, Levis, Lego, companies like that, and we help them win online. And a big part of those companies executing online is communicating their product data, their brand experiences, inventory data, things like that, to Amazon, to Walmart, to Granger, to Home Depot, to wherever their products happen to be sold.

Rob Gonzalez:

And there’s a connection across the supply chain of the brand and the retailer that didn’t really quite exist before from an experience management perspective, but is enabled by a SaaS company in a way that just wouldn’t have been possible in a non-SaaS world. And that’s another example of something where it’s not exactly a bundle or unbundle, it’s more unlocking a new type of capability that is uniquely enabled by the model.

Harry Stebbings:

Can I ask, you mentioned some of your incredible clients there. I spoke to Michael Skok, one of your investors, before the show, and he mentioned there was a time when, bluntly, there was a case where you were turning down customers. Now, talk to me about this. Why would one turn down customers? What was the reasoning, from your perspective?

Rob Gonzalez:

I mean, focus is the really short answer there. Ultimately, what we’re building is a multi-channel commerce platform. So if you are in the modern world, 2021, you are going to market, as a brand manufacturer, as a retailer, as a distributor, any of these models, in a hundred different ways. So if you think about just a manufacturer and you’re making a toy, you might sell it direct to consumer on your own website. You might sell it on Instagram, so Facebook has buy buttons on Instagram now. You might sell it through Facebook marketplace. You might sell it on Amazon as a first party seller. You might also sell it on Amazon as a third party seller, and so on and so forth.

Rob Gonzalez:

So your routes to market are extremely varied and also changing all the time. goPuff, for example, is a relatively new route to market competing with convenience, just raised a massive round at a close to $4 billion valuation. Now, they didn’t exist 10 years ago, and now it’s an important route to market for convenience products. So you’ve got this incredibly wide range of routes to market, and the challenge of a modern commerce platform is how do you actually coordinate selling motions and marketing motions through all of them centrally? That’s the problem that we’re looking to solve.

Rob Gonzalez:

Now, in terms of things going pear shaped, early on, we would sell to retailers, and we would sell to distributors, and we would sell to manufacturers. And what we found over time is that the needs of those three different business models in the market were really quite divergent. And it became pretty difficult for us from a product management and product strategy perspective to create a product that knocked it out of the park for retailers at the same time that we were creating a product that knocked it out of the park for brand manufacturers, and ultimately, had to make a choice that, for us, focusing on brand manufacturers really was going to be better off for our customers and easier for us to manage, given limited resources.

Rob Gonzalez:

So that’s what we ended up doing. And it’s meant that we’ve had to sunset some customers that were reasonably happy customers and it’s meant that when folks come into us from those business models and they want to work with us, we have to say no. But in saying no, it gives us the ability to create a truly best in class product on a lot of different axes for the core market that we serve.

Harry Stebbings:

So many different things from that there for me. Sorry for this, but you said about the multitude of the routes to market. I’m really interested. When you think about partnerships, something that’s been a core part of a lot of SaaS providers in the early days in scaling GTMs efficiently, how do you think the partnership model will play out over the next three to five years, I guess? And how did you think about it?

Rob Gonzalez:

Let me start with my philosophy here, which is that some companies, and certainly a start-up that I was working with before this, have fallen into the trap where you think that the partners are going to solve the go-to-market problem for you. They’ve got reach, they’ve got experience selling solutions that are similar to your solution, and so on and so forth.

Rob Gonzalez:

I think that’s wrong. Ultimately, partners can only sell something that you yourself have figured out how to sell and scale. So first and foremost, you want to have control of your go-to-market, and you’ve got to have the ability to sell to your customer yourself. And in gaining that ability, you will be able to bring on partners who can then accelerate your go-to-market and become part of your lead generation mix.

Rob Gonzalez:

In our case, we didn’t really spin up partners until early 2019, late 2018, early 2019 as a function, and only really a few weeks ago did we get a functional executive, a guy named Dan Herman, over the group to run it and start scaling it. So for us, it was relatively late in the game. I mean, we’re a series D company right now. We’ve been around for eight years and we only now have a partner organization that supports partners going to market.

Rob Gonzalez:

Now, because we’ve already reached scale within some of our accounts, our largest customers are multi-million ACV accounts, we can go to an Accenture, we can go to a WPP, we can go to others that are in the space that are expecting large deals with commensurately large services attached to them, and we can get their interest. Accenture literally has hundreds of people all over the world system at any given moment, and they can be good partners for us in that way. Four years ago, five years ago that wouldn’t have been the case.

Rob Gonzalez:

So the answer will vary based on company’s maturity level, and the type of product they sell, and how complicated it is, and the size of contract, and all that type of stuff. But broadly speaking, I think you’ve got to have a pretty decent scale on your own go-to-market efforts before it’s worth bringing partners in as part of the mix.

Harry Stebbings:

I love the way we’re just completely ignoring the schedule here, but I’m far too enjoying this. So you mentioned some of the incredible customers that you have around the world, and then also Accenture and the many other people engaging with it on a daily basis. My question to you is, change management is always so tough when working with some of these huge brands. What’s been your biggest lessons in what it takes to make change management efficient, effective, and streamlined?

Rob Gonzalez:

Yeah. Let me start with a mistake that we made early on. In 2012, no one took Amazon seriously, really. I mean, if you were a Johnson & Johnson, or you were any of these large manufacturers, you had one person or a tiny little team on Amazon, and that was it. They were just an additional sales channel. The gross was relatively low, even if the growth rate was relatively large. Other retailers weren’t, at that time, looking at Amazon as an existential threat, so the world of e-commerce was really quite different in 2012 compared to where it is today.

Rob Gonzalez:

And we were building a solution that enabled brands to win online, effectively. Control their brand presence, their product experience on Amazon, Walmart, Target, other places like that. And we thought that it was an enterprise problem. We thought that it would be analogous to really controlling your experience on Google. So if you’re managing a web property, you take Google SEO and SEM very seriously. There’s what, an $80-90 billion industry that focuses on just that?

Rob Gonzalez:

We felt that there would be the same type of thing for retail search. If you’re a brand manufacturer winning search on Amazon, winning search on Walmart, winning search on Home Depot should be even more valuable to you than winning search on Google. It’s closer to the purchase. And so, our view is we come to market with a solution that solves a big part of this problem, and people would be willing to pay a lot of money for it pretty quickly.

Rob Gonzalez:

And in 2012 and 2013, the early versions of the product, and frankly, even through halfway in 2014, they were hard to sell for exactly the reason that you’re talking about. It’s the change management aspect of it. These companies, even the ones that look forward in the future and say, “E-commerce is going to be a huge thing. Amazon is going to be absolutely dominant,” and so on and so forth, and there weren’t many of those people, but even those people, internally in their organizations, couldn’t get the tens of thousands of dollars to invest in robust enterprise solution for the problem.

Rob Gonzalez:

And so for us, getting in these companies, doing the education, finding the champions, and finding people that really believed in the vision was insufficient to closing out a lot of deals. And really, what helped us out along the way was in the back half of 2014, Macy’s, Walmart, Target, Home Depot, all within six to nine months of each other, started releasing content quality guidelines for their suppliers that included penalties for suppliers didn’t provide enough content that was deeper and compliant with their individual site search strategies and had images that were compliant with their site style guides and all this sort of stuff.

Rob Gonzalez:

And it really wasn’t until that time that the retailers started putting a thumb on the scale and putting pressure on the brands to become more digitally literate that we had the external compelling event needed to start pushing on the change management within these companies. So for us, having a strong vision of the future and understanding what changes the brands would have to go through over a long period of time to succeed, it wasn’t sufficient. The industry itself had to move in our direction in order to really give us the clout to push on it. Nowadays, of course, it’s a totally different situation. With COVID, in particular, everybody knows digital is everything, and it’s a much easier conversation to have.

Harry Stebbings:

Totally is. And yeah, I completely agree in terms of the shifted times. The other element that you said was about the services element. You mentioned Accenture, and services is a segment that’s bluntly shit on by VCs. Services revenue is thought of as low grade revenue. Ugh, services revenue. I’m actually a big believer in it, to an extent, if it’s a healthy ratio, given its ability for customer success and retention. How do you think about services revenue, and your willingness to have it as part of your business today, really?

Rob Gonzalez:

Yeah. We have a services arm. We want to run it about slightly gross margin positive on the business, so just, essentially, so it pays for itself. I think that services in the early days of, especially, an enterprise software company like Salsify, are extremely important. Because if you’re providing an enterprise solution and you’ve only been working on it for three, four years, it’s going to have gaps.

Rob Gonzalez:

There’s no way you can build a truly robust enterprise grade piece of software in three, four years that solve hard problems and have it be complete. Really robust services can paper over a lot of the product shortcomings and enable your customers to see success. So I think it’s an absolutely essential piece of companies getting off the ground.

Rob Gonzalez:

As you scale, we’ve made a decision at Salsify that we don’t want our services arm to be a large profitable business. I think in our space, you could certainly build a large profitable services business. There’s plenty of add-ons on top of our software, such as content creation, optimization, content optimization for things like SEO, image design, the list goes on and on, but then also the classic enterprise services work like workflow modeling, measurements and analytics on performance, and so on and so forth.

Rob Gonzalez:

So you can do tons of services on top of the solution that we offer. We’ve made the decision that most of that should go to the ecosystem. So we have just enough services, is the way that I would think about it. And for very large global deployments, the multi-million dollar SOWs, that sometimes a company, a large Salsify deployment, we want that to be done by somebody like an Accenture, somebody like a Wunderman Thompson, that has the in-house capability and experience doing it. And I think that’s best for all parties.

Rob Gonzalez:

So I think it’s a really important part of the mix. I don’t poo-poo it at all. I think it’s an essential part of the mix, and whether or not you decide to make it a big part of your revenue stream, I think just depends on, for your particular ecosystem, how important and embedded are existing services companies, and can you take advantage of that? I mean, if the answer is yes, then it enables you to be more of a software company. And if the answer is no, there’s no reason not to do the services yourself.

Harry Stebbings:

Can I ask, when you look at the services required to scale to the multi-millions of pounds of contract value that you have and other enterprise software companies have, the question that I have is, you can’t start at the multi-million pound level on a contract size basis. What have been some lessons for you in terms of entry point and how to successfully expand in as compressed a timeframe as possible, really, in terms of upsell?

Rob Gonzalez:

One of the great enduring benefits of the SaaS model is it’s just so suited to land, expand. It’s perfect for land, expand. And we’ve really followed that strategy from the beginning even to now. So, the way that we set our pricing and packaging is very intentionally to make the initial sale of Salsify for a new logo as frictionless as possible.

Rob Gonzalez:

And for us, we sell to manufacturers that are as small as 10 million a year in revenue, and then we sell to the very biggest in the world. And our contracts can go in the 10,000 a year range at the very lowest end to multi-million a year, depending on the functionality, and the geographies it’s being used, and some features, and so on. So those initial lands, our entry points that we create, are structured based on the market segment so that we can keep the average sales cycle time to about 90 days. So from that first buyer meeting until deal closed, around 90 days.

Rob Gonzalez:

So our largest customers that are in the multimillion dollar ACV range all started at about $65-70,000 initial contracts a few years ago and have just been adding to it over time. So from my perspective, SaaS enables land, expand way better than any other model that I know of. And if you focus on those initial lands as a frictionless deal that you can get wins on the board, the sky’s the limit in terms of how far you can grow with your customers together. So, that’s how we thought about it.

Harry Stebbings:

Listen, I totally agree in terms of it being the perfect model and suited. And fascinating to hear about that conversion cycle. In terms of the sales reps doing it, payback is one of my biggest passions, which is probably a sign that I need to get out more. How do you, especially as a CMO with the marketing hat on, how do you think about sales and marketing’s relationship, and what you, as the CMO, most like to engage with from the sales perspective side?

Rob Gonzalez:

Yeah. I mean, this is an evolving game for sure. I subscribe to what David Kellogg said, which is that marketing exists to make sales faster. And I think that depends on, first and foremost, that you’ve got a healthy sales team, with healthy sales leadership, and a healthy sales process. If you have that in place, there’s lots of different ways that marketing can be a great partner to sales in driving pipeline generation and helping them really hit and beat their numbers on a reliable basis.

Rob Gonzalez:

From our perspective, we’ve gone through several different, I think of as, generations of sales and marketing at Salsify. In the early days, we were selling much smaller contracts. The solution was a lot simpler than it is today and the whole selling motion was relatively transactional. So we had a more inbound-heavy marketing mix, and we had a certain type of rep that was more oriented at just banging out transactional deals. Over the years, while we still have some of our business looks like that, more and more of the business is bigger enterprise sales.

Rob Gonzalez:

The first thing that we did was we had to upgrade sales management, we had to upgrade sales reps, the folks that are really true enterprise grade experienced sellers, we brought into the company. That was a big cultural and process shift for us. I mean, talk about change management, that was a lot of work and we didn’t get it all right. It took a while to really settle into that new motion.

Rob Gonzalez:

And then after we had the sales reps, we had to do the same thing with marketing. So I brought on a new VP of revenue marketing in September of 2019, and she’s really done a tremendous amount to rebuild the entire growth engine to be much more enterprise focused from the beginning. So to get back to the original point, marketing makes effective sales more effective. In our experience, there’s been a sales change, then bleeds back through market. Sales change bleeds back through marketing. And that’s happened in several cycles so far over the course of the company.

Harry Stebbings:

Can I interrupt you? You said about a revenue marketing officer. I had Ryan Bonnici, he’s a friend, on the show recently and he said that marketing has to be tied to a number directly related to revenue. Marketing attribution is the biggest challenge for me in my flaws. How do you think about the revenue marketing role and how you think about successful marketing attribution?

Rob Gonzalez:

Yeah, I mean, it’s not a problem. That’s an easy one to solve for us. Because we’re an enterprise sale, a lot of the sales cycles are team oriented sales cycles. They take long periods of time. I mean, I say we try to keep up the average to 90 days, but there’s a long tail to that. So we often have larger sales cycles that might take nine months or 10 months and involve dozens of people on the buying side and maybe a dozen people at Salsify working on the deal.

Rob Gonzalez:

In those types of situations, there’s not a single lead source and there’s not a single marketing contribution. So you might have 15-20 touches with the company in the two months before the initial buying meeting. A couple of them are webinars, a couple of them are cold calls, a couple of them are referrals from a customer, and so on and so forth. And which of those do you give credit to for the lead? Which one of them do you give credit to for the deal?

Rob Gonzalez:

So from our perspective, what we’ve done to help simplify this is the cold calling team, the telemarketing team, the PDR team, we brought in as part of the revenue marketing function. And ultimately, that team is responsible for both handling the inbounds that come in and converting them to first buyer meetings, and then also cold calling and just doing the classic tele-prospecting to create new buyer meetings as well. We look at where the sources of all the meetings are initially, and then we look at the mix of touches that go into supporting the cycle all the way through close, including webinars that we use for the middle of the sales cycle to help educate buyers that are trying to learn more about the space.

Rob Gonzalez:

So I think there’s no silver bullet there. One of the things that we’ve done in the last couple of years is we took Jeremy Redburn, who’s one of the three co-founders, and we put him in charge of data at the company, in part to start building out more intelligence around attribution, because it’s been getting more complicated the bigger that we’ve getting. So yeah, I don’t have a hard answer to you other than it’s hard. We do the best that we can. I feel for everyone that’s trying to figure out exactly how to do this.

Harry Stebbings:

I think it’s pretty impossible. I do have to say that I do want to move into my favorite of any show, though, Rob, which is a quick fire round. This has been so much fun. I love just the natural conversation. So thank you for rolling with the punches, so to speak. But I say a short statement, and then you hit me with your immediate thoughts. Are you ready to roll?

Rob Gonzalez:

I’m ready to roll.

Harry Stebbings:

Okay. So tell me, start up life is fraught with challenges. What’s your biggest challenge with your role with Salsify today?

Rob Gonzalez:

I would say for a long time, it was all the HR related things. I mean, you get hundreds and hundreds of people in the company and there’s personnel stuff that pops up. And that’s, for me, personally, just based on my personality makeup, the most stressful part of the job.

Harry Stebbings:

What does the word company culture mean to you? It’s bandied around like nothing today. What does it mean to you?

Rob Gonzalez:

It’s the set of decisions and behaviors that happen when nobody’s looking. It’s like, what’s the default thing that you do? What’s expected of you? And what do you know that your peers are going to judge you on? That’s ultimately the heart of it.

Harry Stebbings:

Can I ask a tough one? What have you done deliberately to set the company culture with Salsify?

Rob Gonzalez:

I think one of the things that we did well is we sat down with Michael Skok in the early days and had a discussion about this. The thing that came out from that meeting was that I think most of a company’s culture is organic, is driven by especially leaders that you hire early on that shape the teams and shape the organizations of the company. And a lot of that is like, you can have control of the leader, but not exactly how the culture develops.

Rob Gonzalez:

The thing that we did well, and really, thanks to Michael for putting us in this direction, is we picked a couple of just core values that we hold ourselves accountable to. We survey our employees and just see if there’s any gaps in how we’re behaving towards those core values and we put particular effort to making sure that they’re true across the company. So while most of it can organically develop, a couple of key characteristics, we try to be very intentional about that. The most important to me being empowerment, the fact that individuals can operate as autonomously as possible, and that decision-making capability is pushed as far outward in the organization as we can make happen.

Harry Stebbings:

Tell me, what’s the hardest role to hire for today and why?

Rob Gonzalez:

Right now, I’m looking for a head of product marketing, so if you know anyone, let me know. And I think that’s a particularly hard role in a modern SaaS company because it’s not a bad version of product marketing of old. We’re creating sales decks and things like that. A modern head of product marketing is like a GM without the P and L almost, and they’ve got to be tremendously good at a huge variety of things. And in a product oriented company like Salsify, they’ve got to be technical. And so, I think that’s a little bit of a unicorn role and I really could use somebody there.

Harry Stebbings:

No, listen, I totally agree. And product marketing is every single person who I’ve ever asked hardest role to hire for. I think at least you are not alone. Tell me, which external SaaS leader do you most respect and admire today, and why?

Rob Gonzalez:

Benioff. I think Salesforce is just this operationally excellent machine. We just hired Mike Milburn, who was Salesforce’s Chief Customer Officer, and before that, he was the GM of Service Cloud, which is a multi-billion dollar ARR division of Salesforce. And especially what I’ve been learning from Mike and what I had known from people that worked at Salesforce before is that place is just a machine. And it’s hard to build something like that. And then I’ll give you a second answer. I really admire Reid Hoffman. He has said very publicly that he’s run multi-thousand person companies and teams and he just doesn’t like being in charge of teams. And he’s super self-aware of that. And I admire that. So the two of those guys really come out for me.

Harry Stebbings:

What would you most like to change about the world of SaaS? As we said, Salsify, eight year old company. What would you most like to change about the world of SaaS?

Rob Gonzalez:

Man, I would like there to be a lot more rigor around SaaS metrics so that we can more easily benchmark against other companies. Just for example, everyone calculates churn a little bit differently. David Kellogg has an outstanding series of blog posts about all the different ways that people talk about churn. David Skok, also on our board, who’s written just a really outstanding 30 page ebook on how to calculate churn effectively and LTV and CAC. And it’s just, people are pretty inconsistent about this. So when people are reporting these numbers that are non-GAAP SaaS numbers, it’s really hard to know how you would compare with those. So for me, I would just like more rigor around that so that we can more easily benchmark and talk to peers about it.

Harry Stebbings:

I totally agree. I’d also love it if we had some open source platform where we can do anonymized dataset benchmarking. That would be even better. I do want to move into my favorite, which is next five years for you and for Salsify. Paint that picture for me, Rob.

Rob Gonzalez:

Yeah. So we intend to IPO, I mean, certainly within that five years, unless we’re doing something wrong. We’ve also started creating a category called commerce experience management. And what I’d really like to see is for that category to take shape and for others to see the future that we see, in terms of how a brand executes and goes to market in this new multi-channel world of the digital shelf that we’re in now. So for us, that’s really it. Just keep the operational growth going, hit an IPO with our feet on the ground, running hard, continuing to accelerate, and make the category that we’re building a real thing that everybody’s talking about.

Harry Stebbings:

Rob, as I’ve said, I’ve heard so many great things from Michael before this episode. I’m so pleased that we got to do it, and I so appreciate your patience and really letting me go off schedule quite so much.

Rob Gonzalez:

No, absolutely. It’s been a fun conversation. Hopefully it’s valuable to the audience and thanks so much for having me on board.

Harry Stebbings:

Absolutely love that. And such exciting times ahead for Rob and Salsify. If you’d like to see more from us behind the scenes, you can on Instagram at HStebbings1996 with two Bs. I always love to see that. We have a very special show for you in the coming weeks. We have Tamar, Head of Product at Slack, and then we also have Felix, founder and CEO at Collibra on the show. Stay tuned, some very special ones to come.

 

The post SaaStr Podcast #398 with Salsify Co-Founder & CMO Rob Gonzalez appeared first on SaaStr.

SaaStr Podcast #398 with Salsify Co-Founder & CMO Rob Gonzalez


This post is by Amelia Ibarra from SaaStr

Ep. 398: Rob Gonzalez is the Co-Founder & CMO @ Salsify, empowering brand manufacturers to deliver the product experiences consumers demand at every point in their buying journey. To date, Salsify has raised over $250M in funding from the likes of Venrock, Underscore, Warburg Pincus, Matrix Partners & Greenspring to name a few. As for Rob, before founding Salsify, he was the first-ever product manager at Cambridge Semantics and before that was a Senior Product Manager @ Endeca helping grow the company to it’s $Bn exit.

In Today’s Episode We Discuss:

* How Rob made his way into the world of SaaS as a product manager and how that led to his founding Salsify over 8 years ago.
* How does Rob think about the bundled vs unbundled thesis within SaaS? When is it right for SaaS companies to turn down potential customers? How can they do that the right way? What is the right way to think about customer segmentation? How should startups decide which customer segment to focus on?
* How should startups think about implementing partnerships? When is the right time? What is the right way to onboard them? How can they be trained in implementation efficiently? What does great change management look like to Rob? What does Rob believe are the biggest misconceptions around change management?
* How does Rob think through pricing today in a way that encourages land and expand? What can you do to make the land as frictionless as possible? What does it take to expand effectively? How does Rob think about usage vs seat-based pricing in SaaS? How should sales and marketing work together on pricing?


 

If you would like to find out more about the show and the guests presented, you can follow us on Twitter here:

Jason Lemkin
SaaStr
Harry Stebbings
Rob Gonzalez

Below, we’ve shared the transcript of Harry’s interview with Rob.

Harry Stebbings:

We are back. This is the official SaaStr podcast with me, Harry Stebbings. And joining me in the hot seat today, we have Rob Gonzalez, co-founder and CMO at Salsify, empowering brand manufacturers to deliver the product experiences consumers demand at every point in their buying journey. To date, Salsify has raised over $250 million in funding from the likes of Venrock, Underscore, Warburg Pincus, Matrix Partners, and Greenspring, to name a few.

Harry Stebbings:

As for Rob, prior to founding Salsify, he was the first-ever product manager at Cambridge Semantics, and before that was a senior product manager at Endeca, helping grow the company to its billion-dollar exit. I do also want to say, huge thank you, though, to Michael Skok at Underscore. Some amazing background and question suggestions for Rob today. Michael, I really did so appreciate that. But that’s enough from me. So now it’s time to dive into the show, and I’m thrilled to welcome Rob Gonzalez, co-founder, and CMO at Salsify.

Harry Stebbings:

Rob, it is so great to have you on the show today. I’ve heard so many good things and many stories from Michael Skok. So thank you so much for joining me today, Rob.

Rob Gonzalez:

Thanks so much for having me.

Harry Stebbings:

Not at all. I do want to start it a little bit on you. So tell me, it’s a wonderful world, SaaS, but it’s also an interesting one to get into. So how did you make your way into the world of SaaS, and how did you come to found Salsify? I say most recently, but quite a few years ago, now.

Rob Gonzalez:

Yeah. Eight years ago, we founded the company, September 2012. But I had wanted to start a company for a long time before that. In 1999, I was at Williams College with my co-founder Jeremy Redburn. Williamstown at that time was sort of self-titled Silicon Village. There was a small startup scene. Tripod was a search engine there, which exited to AltaVista.

Rob Gonzalez:

And so, a lot of people that were doing computer science in Williamstown were thinking about startups back even in the late nineties. I was working on a startup that was an early mobile payment platform. It was basically using Bluetooth and an app on PalmPilots to do wireless payments in restaurants. And actually, one of the restaurants burned down and took our whole prototype with us, and that was pretty much the end of that company.

Rob Gonzalez:

So back then, we were already talking about it and it just took me and Jeremy another 14 years, almost, to get to a point where we really wanted to do a company. We felt ready from an experience perspective, we had an idea of what we wanted to do. Both of us and our third co-founder, Jason Purcell, were at a company called Endeca, which was a search engine for e-commerce, exited to Oracle for over a billion dollars in 2011. So we had a deep experience in the e-commerce space and it just, in 2012, it felt right. We had a great idea, we had a lot of experience, and we were ready to do it. But it took a lot of thinking up until that point before we ended up pulling the trigger.

Harry Stebbings:

Can I ask, you said it felt right. Do you think one’s ever ready to found a company? Do you know what I mean? I have a lot of graduates who always ask me, “Hey, should I join a startup? Should I join an incumbent? Or should I start my own company?” Do you think you’re ever ready, really, to start your own company? And actually, the only way you learn is by doing. How do you feel about that?

Rob Gonzalez:

I don’t necessarily agree that you’re never ready and all forms of never being ready are equivalent. So the statistics say that the older you are, the more likely you are for your company to succeed. All things being equal, a 20 year old versus a 30-year-old versus a 40-year-old starting a company, the 40-year-old is going to have a higher likelihood of success. So from that perspective, I think there is a lot to be said from gaining experience.

Rob Gonzalez:

Operationally, I look at, in particular, my experience at Endeca, but also another startup that sold to pharmaceutical companies and other life sciences businesses and financial services companies called Cambridge Semantics. I look at my experience through those companies, and I learned a lot about enterprise software sales, about buying patterns, about functions like product management and product marketing, and how they fit into a well functioning and operating company. It just made it a lot easier for us to scale up Salsify as we found success.

Rob Gonzalez:

I think if I had tried to do this when I was 22, I don’t know that I would have been able to do it. And not only that, I mean, I was in my early thirties when we founded Salsify. Jason’s a few years older than us and he was the GM of Endeca’s entire e-commerce business, and so had serious senior management experience. And that’s meant that, as we’ve scaled, it’s made it a lot easier to bring on seasoned executives that fit right into what we’re trying to do. So from my perspective, I think sometimes waiting can be helpful. The experience can matter.

Harry Stebbings:

I do want to ask, though, we spoke about eight years ago, founding Salsify. The SaaS industry, I mean, it’s completely changed on its head. I mean, eight years ago, a billion-dollar SaaS company was very, very rare. Now we have decacorn SaaS companies. How do you think about the most pronounced changes in SaaS over the last eight years for you?

Rob Gonzalez:

Yeah, I think there’s two. First, you hit the nail right on the head. In 2012, Wall Street didn’t really know how to value SaaS companies. You look at the forward-looking ARR multiples on the stock price, and they were a lot lower back then. They’ve been raising pretty much the entire decade. So whilst we didn’t know how to value them…

Rob Gonzalez:

And I think nobody really understood how many really big SaaS companies there could be. I mean, there was Salesforce, of course, but then you’ve got ServiceNow, you’ve got Veeva, you’ve got Workday. NetSuite exited close to a decacorn. It was just so many really great companies and so many more that are being built. And I think very few people understood that you could have really the possibility of dozens of decacorn companies existing on this model. And so that understanding has evolved a lot.

Rob Gonzalez:

The second major thing, I think, is that back in 2012, we were in what I think of as X in the cloud, as the moment of SaaS where you just take an existing software category and you put it in the cloud. So if you’re ERP, boom, Workday. If you’re CRM, boom, Salesforce. If you’re e-commerce, boom, Demandware. And there’s a lot of benefit to running a software as a service, in general. But I think that that generation of technology as being the first generation of cloud technology really misses out on benefits that you can accrue to being truly multitenant.

Rob Gonzalez:

So if you were building a commerce platform today, for example, you wouldn’t do it as single tenant, effectively, deployments. My account runs my website. You would probably do it as a way to connect data and analytics and behaviors and workflows across different companies and across different websites to make them all more effective. So I think we’re in a generation now, which is more, what is only uniquely possible in the cloud. And that’s distinct from the X in the cloud pattern that was the first generation.

Harry Stebbings:

Sorry, this is so unfair of me to go off schedule like this, but when you think back on only possible in the cloud, I think through every investment of mine is unbundling or bundling and try and very carefully be aware of which camp we’re in and why. Do you think that’s actually completely external to unbundling versus bundling? Or do you think it’s actually related? And if so, which one?

Rob Gonzalez:

Oh yeah. The old Jim Barksdale framing.

Harry Stebbings:

We’re both fans, clearly.

Rob Gonzalez:

Huge fan. Yeah. I think it’s orthogonal most of the time. Let me just give you an example. There were chat protocols that were around for a long time and there were even intercompany enterprise chat like Yammer and HipChat that existed. And Slack came out, and Slack enabled you to connect across companies. And they really built a network model on top of the chat, so instead of operating within a company, they started operating across companies.

Rob Gonzalez:

And that’s an example where it’s not really bundling or unbundling anything. It’s taking advantage of the fact that you’re a multi-tenant cloud architecture, and connecting people within one company is no different than connecting people across companies. So that type of mindset, I think, is the difference, not so much a bundle or unbundle.

Rob Gonzalez:

In Salsify’s space, in particular, we work with brand manufacturers, so customers, think Bosch, Coca-Cola, Levis, Lego, companies like that, and we help them win online. And a big part of those companies executing online is communicating their product data, their brand experiences, inventory data, things like that, to Amazon, to Walmart, to Granger, to Home Depot, to wherever their products happen to be sold.

Rob Gonzalez:

And there’s a connection across the supply chain of the brand and the retailer that didn’t really quite exist before from an experience management perspective, but is enabled by a SaaS company in a way that just wouldn’t have been possible in a non-SaaS world. And that’s another example of something where it’s not exactly a bundle or unbundle, it’s more unlocking a new type of capability that is uniquely enabled by the model.

Harry Stebbings:

Can I ask, you mentioned some of your incredible clients there. I spoke to Michael Skok, one of your investors, before the show, and he mentioned there was a time when, bluntly, there was a case where you were turning down customers. Now, talk to me about this. Why would one turn down customers? What was the reasoning, from your perspective?

Rob Gonzalez:

I mean, focus is the really short answer there. Ultimately, what we’re building is a multi-channel commerce platform. So if you are in the modern world, 2021, you are going to market, as a brand manufacturer, as a retailer, as a distributor, any of these models, in a hundred different ways. So if you think about just a manufacturer and you’re making a toy, you might sell it direct to consumer on your own website. You might sell it on Instagram, so Facebook has buy buttons on Instagram now. You might sell it through Facebook marketplace. You might sell it on Amazon as a first party seller. You might also sell it on Amazon as a third party seller, and so on and so forth.

Rob Gonzalez:

So your routes to market are extremely varied and also changing all the time. goPuff, for example, is a relatively new route to market competing with convenience, just raised a massive round at a close to $4 billion valuation. Now, they didn’t exist 10 years ago, and now it’s an important route to market for convenience products. So you’ve got this incredibly wide range of routes to market, and the challenge of a modern commerce platform is how do you actually coordinate selling motions and marketing motions through all of them centrally? That’s the problem that we’re looking to solve.

Rob Gonzalez:

Now, in terms of things going pear shaped, early on, we would sell to retailers, and we would sell to distributors, and we would sell to manufacturers. And what we found over time is that the needs of those three different business models in the market were really quite divergent. And it became pretty difficult for us from a product management and product strategy perspective to create a product that knocked it out of the park for retailers at the same time that we were creating a product that knocked it out of the park for brand manufacturers, and ultimately, had to make a choice that, for us, focusing on brand manufacturers really was going to be better off for our customers and easier for us to manage, given limited resources.

Rob Gonzalez:

So that’s what we ended up doing. And it’s meant that we’ve had to sunset some customers that were reasonably happy customers and it’s meant that when folks come into us from those business models and they want to work with us, we have to say no. But in saying no, it gives us the ability to create a truly best in class product on a lot of different axes for the core market that we serve.

Harry Stebbings:

So many different things from that there for me. Sorry for this, but you said about the multitude of the routes to market. I’m really interested. When you think about partnerships, something that’s been a core part of a lot of SaaS providers in the early days in scaling GTMs efficiently, how do you think the partnership model will play out over the next three to five years, I guess? And how did you think about it?

Rob Gonzalez:

Let me start with my philosophy here, which is that some companies, and certainly a start-up that I was working with before this, have fallen into the trap where you think that the partners are going to solve the go-to-market problem for you. They’ve got reach, they’ve got experience selling solutions that are similar to your solution, and so on and so forth.

Rob Gonzalez:

I think that’s wrong. Ultimately, partners can only sell something that you yourself have figured out how to sell and scale. So first and foremost, you want to have control of your go-to-market, and you’ve got to have the ability to sell to your customer yourself. And in gaining that ability, you will be able to bring on partners who can then accelerate your go-to-market and become part of your lead generation mix.

Rob Gonzalez:

In our case, we didn’t really spin up partners until early 2019, late 2018, early 2019 as a function, and only really a few weeks ago did we get a functional executive, a guy named Dan Herman, over the group to run it and start scaling it. So for us, it was relatively late in the game. I mean, we’re a series D company right now. We’ve been around for eight years and we only now have a partner organization that supports partners going to market.

Rob Gonzalez:

Now, because we’ve already reached scale within some of our accounts, our largest customers are multi-million ACV accounts, we can go to an Accenture, we can go to a WPP, we can go to others that are in the space that are expecting large deals with commensurately large services attached to them, and we can get their interest. Accenture literally has hundreds of people all over the world system at any given moment, and they can be good partners for us in that way. Four years ago, five years ago that wouldn’t have been the case.

Rob Gonzalez:

So the answer will vary based on company’s maturity level, and the type of product they sell, and how complicated it is, and the size of contract, and all that type of stuff. But broadly speaking, I think you’ve got to have a pretty decent scale on your own go-to-market efforts before it’s worth bringing partners in as part of the mix.

Harry Stebbings:

I love the way we’re just completely ignoring the schedule here, but I’m far too enjoying this. So you mentioned some of the incredible customers that you have around the world, and then also Accenture and the many other people engaging with it on a daily basis. My question to you is, change management is always so tough when working with some of these huge brands. What’s been your biggest lessons in what it takes to make change management efficient, effective, and streamlined?

Rob Gonzalez:

Yeah. Let me start with a mistake that we made early on. In 2012, no one took Amazon seriously, really. I mean, if you were a Johnson & Johnson, or you were any of these large manufacturers, you had one person or a tiny little team on Amazon, and that was it. They were just an additional sales channel. The gross was relatively low, even if the growth rate was relatively large. Other retailers weren’t, at that time, looking at Amazon as an existential threat, so the world of e-commerce was really quite different in 2012 compared to where it is today.

Rob Gonzalez:

And we were building a solution that enabled brands to win online, effectively. Control their brand presence, their product experience on Amazon, Walmart, Target, other places like that. And we thought that it was an enterprise problem. We thought that it would be analogous to really controlling your experience on Google. So if you’re managing a web property, you take Google SEO and SEM very seriously. There’s what, an $80-90 billion industry that focuses on just that?

Rob Gonzalez:

We felt that there would be the same type of thing for retail search. If you’re a brand manufacturer winning search on Amazon, winning search on Walmart, winning search on Home Depot should be even more valuable to you than winning search on Google. It’s closer to the purchase. And so, our view is we come to market with a solution that solves a big part of this problem, and people would be willing to pay a lot of money for it pretty quickly.

Rob Gonzalez:

And in 2012 and 2013, the early versions of the product, and frankly, even through halfway in 2014, they were hard to sell for exactly the reason that you’re talking about. It’s the change management aspect of it. These companies, even the ones that look forward in the future and say, “E-commerce is going to be a huge thing. Amazon is going to be absolutely dominant,” and so on and so forth, and there weren’t many of those people, but even those people, internally in their organizations, couldn’t get the tens of thousands of dollars to invest in robust enterprise solution for the problem.

Rob Gonzalez:

And so for us, getting in these companies, doing the education, finding the champions, and finding people that really believed in the vision was insufficient to closing out a lot of deals. And really, what helped us out along the way was in the back half of 2014, Macy’s, Walmart, Target, Home Depot, all within six to nine months of each other, started releasing content quality guidelines for their suppliers that included penalties for suppliers didn’t provide enough content that was deeper and compliant with their individual site search strategies and had images that were compliant with their site style guides and all this sort of stuff.

Rob Gonzalez:

And it really wasn’t until that time that the retailers started putting a thumb on the scale and putting pressure on the brands to become more digitally literate that we had the external compelling event needed to start pushing on the change management within these companies. So for us, having a strong vision of the future and understanding what changes the brands would have to go through over a long period of time to succeed, it wasn’t sufficient. The industry itself had to move in our direction in order to really give us the clout to push on it. Nowadays, of course, it’s a totally different situation. With COVID, in particular, everybody knows digital is everything, and it’s a much easier conversation to have.

Harry Stebbings:

Totally is. And yeah, I completely agree in terms of the shifted times. The other element that you said was about the services element. You mentioned Accenture, and services is a segment that’s bluntly shit on by VCs. Services revenue is thought of as low grade revenue. Ugh, services revenue. I’m actually a big believer in it, to an extent, if it’s a healthy ratio, given its ability for customer success and retention. How do you think about services revenue, and your willingness to have it as part of your business today, really?

Rob Gonzalez:

Yeah. We have a services arm. We want to run it about slightly gross margin positive on the business, so just, essentially, so it pays for itself. I think that services in the early days of, especially, an enterprise software company like Salsify, are extremely important. Because if you’re providing an enterprise solution and you’ve only been working on it for three, four years, it’s going to have gaps.

Rob Gonzalez:

There’s no way you can build a truly robust enterprise grade piece of software in three, four years that solve hard problems and have it be complete. Really robust services can paper over a lot of the product shortcomings and enable your customers to see success. So I think it’s an absolutely essential piece of companies getting off the ground.

Rob Gonzalez:

As you scale, we’ve made a decision at Salsify that we don’t want our services arm to be a large profitable business. I think in our space, you could certainly build a large profitable services business. There’s plenty of add-ons on top of our software, such as content creation, optimization, content optimization for things like SEO, image design, the list goes on and on, but then also the classic enterprise services work like workflow modeling, measurements and analytics on performance, and so on and so forth.

Rob Gonzalez:

So you can do tons of services on top of the solution that we offer. We’ve made the decision that most of that should go to the ecosystem. So we have just enough services, is the way that I would think about it. And for very large global deployments, the multi-million dollar SOWs, that sometimes a company, a large Salsify deployment, we want that to be done by somebody like an Accenture, somebody like a Wunderman Thompson, that has the in-house capability and experience doing it. And I think that’s best for all parties.

Rob Gonzalez:

So I think it’s a really important part of the mix. I don’t poo-poo it at all. I think it’s an essential part of the mix, and whether or not you decide to make it a big part of your revenue stream, I think just depends on, for your particular ecosystem, how important and embedded are existing services companies, and can you take advantage of that? I mean, if the answer is yes, then it enables you to be more of a software company. And if the answer is no, there’s no reason not to do the services yourself.

Harry Stebbings:

Can I ask, when you look at the services required to scale to the multi-millions of pounds of contract value that you have and other enterprise software companies have, the question that I have is, you can’t start at the multi-million pound level on a contract size basis. What have been some lessons for you in terms of entry point and how to successfully expand in as compressed a timeframe as possible, really, in terms of upsell?

Rob Gonzalez:

One of the great enduring benefits of the SaaS model is it’s just so suited to land, expand. It’s perfect for land, expand. And we’ve really followed that strategy from the beginning even to now. So, the way that we set our pricing and packaging is very intentionally to make the initial sale of Salsify for a new logo as frictionless as possible.

Rob Gonzalez:

And for us, we sell to manufacturers that are as small as 10 million a year in revenue, and then we sell to the very biggest in the world. And our contracts can go in the 10,000 a year range at the very lowest end to multi-million a year, depending on the functionality, and the geographies it’s being used, and some features, and so on. So those initial lands, our entry points that we create, are structured based on the market segment so that we can keep the average sales cycle time to about 90 days. So from that first buyer meeting until deal closed, around 90 days.

Rob Gonzalez:

So our largest customers that are in the multimillion dollar ACV range all started at about $65-70,000 initial contracts a few years ago and have just been adding to it over time. So from my perspective, SaaS enables land, expand way better than any other model that I know of. And if you focus on those initial lands as a frictionless deal that you can get wins on the board, the sky’s the limit in terms of how far you can grow with your customers together. So, that’s how we thought about it.

Harry Stebbings:

Listen, I totally agree in terms of it being the perfect model and suited. And fascinating to hear about that conversion cycle. In terms of the sales reps doing it, payback is one of my biggest passions, which is probably a sign that I need to get out more. How do you, especially as a CMO with the marketing hat on, how do you think about sales and marketing’s relationship, and what you, as the CMO, most like to engage with from the sales perspective side?

Rob Gonzalez:

Yeah. I mean, this is an evolving game for sure. I subscribe to what David Kellogg said, which is that marketing exists to make sales faster. And I think that depends on, first and foremost, that you’ve got a healthy sales team, with healthy sales leadership, and a healthy sales process. If you have that in place, there’s lots of different ways that marketing can be a great partner to sales in driving pipeline generation and helping them really hit and beat their numbers on a reliable basis.

Rob Gonzalez:

From our perspective, we’ve gone through several different, I think of as, generations of sales and marketing at Salsify. In the early days, we were selling much smaller contracts. The solution was a lot simpler than it is today and the whole selling motion was relatively transactional. So we had a more inbound-heavy marketing mix, and we had a certain type of rep that was more oriented at just banging out transactional deals. Over the years, while we still have some of our business looks like that, more and more of the business is bigger enterprise sales.

Rob Gonzalez:

The first thing that we did was we had to upgrade sales management, we had to upgrade sales reps, the folks that are really true enterprise grade experienced sellers, we brought into the company. That was a big cultural and process shift for us. I mean, talk about change management, that was a lot of work and we didn’t get it all right. It took a while to really settle into that new motion.

Rob Gonzalez:

And then after we had the sales reps, we had to do the same thing with marketing. So I brought on a new VP of revenue marketing in September of 2019, and she’s really done a tremendous amount to rebuild the entire growth engine to be much more enterprise focused from the beginning. So to get back to the original point, marketing makes effective sales more effective. In our experience, there’s been a sales change, then bleeds back through market. Sales change bleeds back through marketing. And that’s happened in several cycles so far over the course of the company.

Harry Stebbings:

Can I interrupt you? You said about a revenue marketing officer. I had Ryan Bonnici, he’s a friend, on the show recently and he said that marketing has to be tied to a number directly related to revenue. Marketing attribution is the biggest challenge for me in my flaws. How do you think about the revenue marketing role and how you think about successful marketing attribution?

Rob Gonzalez:

Yeah, I mean, it’s not a problem. That’s an easy one to solve for us. Because we’re an enterprise sale, a lot of the sales cycles are team oriented sales cycles. They take long periods of time. I mean, I say we try to keep up the average to 90 days, but there’s a long tail to that. So we often have larger sales cycles that might take nine months or 10 months and involve dozens of people on the buying side and maybe a dozen people at Salsify working on the deal.

Rob Gonzalez:

In those types of situations, there’s not a single lead source and there’s not a single marketing contribution. So you might have 15-20 touches with the company in the two months before the initial buying meeting. A couple of them are webinars, a couple of them are cold calls, a couple of them are referrals from a customer, and so on and so forth. And which of those do you give credit to for the lead? Which one of them do you give credit to for the deal?

Rob Gonzalez:

So from our perspective, what we’ve done to help simplify this is the cold calling team, the telemarketing team, the PDR team, we brought in as part of the revenue marketing function. And ultimately, that team is responsible for both handling the inbounds that come in and converting them to first buyer meetings, and then also cold calling and just doing the classic tele-prospecting to create new buyer meetings as well. We look at where the sources of all the meetings are initially, and then we look at the mix of touches that go into supporting the cycle all the way through close, including webinars that we use for the middle of the sales cycle to help educate buyers that are trying to learn more about the space.

Rob Gonzalez:

So I think there’s no silver bullet there. One of the things that we’ve done in the last couple of years is we took Jeremy Redburn, who’s one of the three co-founders, and we put him in charge of data at the company, in part to start building out more intelligence around attribution, because it’s been getting more complicated the bigger that we’ve getting. So yeah, I don’t have a hard answer to you other than it’s hard. We do the best that we can. I feel for everyone that’s trying to figure out exactly how to do this.

Harry Stebbings:

I think it’s pretty impossible. I do have to say that I do want to move into my favorite of any show, though, Rob, which is a quick fire round. This has been so much fun. I love just the natural conversation. So thank you for rolling with the punches, so to speak. But I say a short statement, and then you hit me with your immediate thoughts. Are you ready to roll?

Rob Gonzalez:

I’m ready to roll.

Harry Stebbings:

Okay. So tell me, start up life is fraught with challenges. What’s your biggest challenge with your role with Salsify today?

Rob Gonzalez:

I would say for a long time, it was all the HR related things. I mean, you get hundreds and hundreds of people in the company and there’s personnel stuff that pops up. And that’s, for me, personally, just based on my personality makeup, the most stressful part of the job.

Harry Stebbings:

What does the word company culture mean to you? It’s bandied around like nothing today. What does it mean to you?

Rob Gonzalez:

It’s the set of decisions and behaviors that happen when nobody’s looking. It’s like, what’s the default thing that you do? What’s expected of you? And what do you know that your peers are going to judge you on? That’s ultimately the heart of it.

Harry Stebbings:

Can I ask a tough one? What have you done deliberately to set the company culture with Salsify?

Rob Gonzalez:

I think one of the things that we did well is we sat down with Michael Skok in the early days and had a discussion about this. The thing that came out from that meeting was that I think most of a company’s culture is organic, is driven by especially leaders that you hire early on that shape the teams and shape the organizations of the company. And a lot of that is like, you can have control of the leader, but not exactly how the culture develops.

Rob Gonzalez:

The thing that we did well, and really, thanks to Michael for putting us in this direction, is we picked a couple of just core values that we hold ourselves accountable to. We survey our employees and just see if there’s any gaps in how we’re behaving towards those core values and we put particular effort to making sure that they’re true across the company. So while most of it can organically develop, a couple of key characteristics, we try to be very intentional about that. The most important to me being empowerment, the fact that individuals can operate as autonomously as possible, and that decision-making capability is pushed as far outward in the organization as we can make happen.

Harry Stebbings:

Tell me, what’s the hardest role to hire for today and why?

Rob Gonzalez:

Right now, I’m looking for a head of product marketing, so if you know anyone, let me know. And I think that’s a particularly hard role in a modern SaaS company because it’s not a bad version of product marketing of old. We’re creating sales decks and things like that. A modern head of product marketing is like a GM without the P and L almost, and they’ve got to be tremendously good at a huge variety of things. And in a product oriented company like Salsify, they’ve got to be technical. And so, I think that’s a little bit of a unicorn role and I really could use somebody there.

Harry Stebbings:

No, listen, I totally agree. And product marketing is every single person who I’ve ever asked hardest role to hire for. I think at least you are not alone. Tell me, which external SaaS leader do you most respect and admire today, and why?

Rob Gonzalez:

Benioff. I think Salesforce is just this operationally excellent machine. We just hired Mike Milburn, who was Salesforce’s Chief Customer Officer, and before that, he was the GM of Service Cloud, which is a multi-billion dollar ARR division of Salesforce. And especially what I’ve been learning from Mike and what I had known from people that worked at Salesforce before is that place is just a machine. And it’s hard to build something like that. And then I’ll give you a second answer. I really admire Reid Hoffman. He has said very publicly that he’s run multi-thousand person companies and teams and he just doesn’t like being in charge of teams. And he’s super self-aware of that. And I admire that. So the two of those guys really come out for me.

Harry Stebbings:

What would you most like to change about the world of SaaS? As we said, Salsify, eight year old company. What would you most like to change about the world of SaaS?

Rob Gonzalez:

Man, I would like there to be a lot more rigor around SaaS metrics so that we can more easily benchmark against other companies. Just for example, everyone calculates churn a little bit differently. David Kellogg has an outstanding series of blog posts about all the different ways that people talk about churn. David Skok, also on our board, who’s written just a really outstanding 30 page ebook on how to calculate churn effectively and LTV and CAC. And it’s just, people are pretty inconsistent about this. So when people are reporting these numbers that are non-GAAP SaaS numbers, it’s really hard to know how you would compare with those. So for me, I would just like more rigor around that so that we can more easily benchmark and talk to peers about it.

Harry Stebbings:

I totally agree. I’d also love it if we had some open source platform where we can do anonymized dataset benchmarking. That would be even better. I do want to move into my favorite, which is next five years for you and for Salsify. Paint that picture for me, Rob.

Rob Gonzalez:

Yeah. So we intend to IPO, I mean, certainly within that five years, unless we’re doing something wrong. We’ve also started creating a category called commerce experience management. And what I’d really like to see is for that category to take shape and for others to see the future that we see, in terms of how a brand executes and goes to market in this new multi-channel world of the digital shelf that we’re in now. So for us, that’s really it. Just keep the operational growth going, hit an IPO with our feet on the ground, running hard, continuing to accelerate, and make the category that we’re building a real thing that everybody’s talking about.

Harry Stebbings:

Rob, as I’ve said, I’ve heard so many great things from Michael before this episode. I’m so pleased that we got to do it, and I so appreciate your patience and really letting me go off schedule quite so much.

Rob Gonzalez:

No, absolutely. It’s been a fun conversation. Hopefully it’s valuable to the audience and thanks so much for having me on board.

Harry Stebbings:

Absolutely love that. And such exciting times ahead for Rob and Salsify. If you’d like to see more from us behind the scenes, you can on Instagram at HStebbings1996 with two Bs. I always love to see that. We have a very special show for you in the coming weeks. We have Tamar, Head of Product at Slack, and then we also have Felix, founder and CEO at Collibra on the show. Stay tuned, some very special ones to come.

 

The post SaaStr Podcast #398 with Salsify Co-Founder & CMO Rob Gonzalez appeared first on SaaStr.

Why Aren’t There More Sci-Fi Movies About Dreams?


This post is by Geek's Guide to the Galaxy from Feed: All Latest

Classics like Inception and The Cell are at least a decade old.

Fintech unicorn Affirm has a lot of eggs in one basket


This post is by Alex Wilhelm from Fundings & Exits – TechCrunch

Hello and welcome back to Equity, TechCrunch’s venture capital-focused podcast (now on Twitter!), where we unpack the numbers behind the headlines.

This week wound up being incredibly busy. What else, with a week that included both the Airbnb and Affirm IPO filings, a host of mega-rounds for new unicorns, some fascinating smaller funding events and some new funds?

So we had a lot to get through, but with Chris and Danny and Natasha and your humble servant, we dove in headfirst:

What a week! Three episodes, some new records, and a very tired us after all the action. More on Monday!

Equity drops every Monday at 7:00 a.m. PDT and Thursday afternoon as fast as we can get it out, so subscribe to us on Apple PodcastsOvercastSpotify and all the casts.

Equity Shot: Airbnb’s IPO is finally here


This post is by Natasha Mascarenhas from Fundings & Exits – TechCrunch

Hello and welcome back to Equity, TechCrunch’s venture capital-focused podcast where we unpack the numbers behind the headlines.

Today we have an Equity Shot for you about Airbnb’s S-1 filing, as it looks to go public before the year is out.

  • First we get into Airbnb’s macro performance, which shows a stable-picture historical revenue growth. There are a ton of numbers to get to so get ready for a quick dive into net revenue, gross margins and losses.
  • Then we discuss the dramatic drop in bookings, the promising comeback and if short-term travel is Airbnb’s future.
  • There’s a weird quarter of profitability that you should all know about, and a heads-up on what to look for in Q4 numbers.
  • Finally, we talk about the bullish and bearish case on Airbnb, which poetically filed the same day that Moderna announced a promising vaccine trial. 

All that, and our trusty other host Danny Crichton was busy filing a post about the winners and losers of the Airbnb IPO. Ownership, you quiet, billionaire beast. There’s more coming from TechCrunch on the company’s IPO, and from the Equity crew on everything else we ferret out on Thursday. Stay tuned!

Equity drops every Monday at 7:00 a.m. PDT and Thursday afternoon as fast as we can get it out, so subscribe to us on Apple PodcastsOvercastSpotify and all the casts.

 

 

SaaStr Podcast #395 with UserTesting CEO Andy MacMillan


This post is by Amelia Ibarra from SaaStr

Ep. 395: Andy MacMillan is the CEO @ UserTesting, the company that provides real-time feedback, from real customers, wherever you work. To date, they have raised over $200M in funding from the likes of Accel, Greenspring, Openview and Insight to name a few. As for Andy, prior to UserTesting, he was the Chairman and CEO @ Act On Software and before that held several positions at Salesforce, including COO – Products Group. Before Salesforce Andy spent close to 5 years at Oracle as VP Product Management.

 

In Today’s Episode We Discuss:

* How did Andy make his way into the world of SaaS? How did he come to be CEO at the market leader, UserTesting?
* Why does Andy think the seat-based pricing model in SaaS will die? What are the downsides of it? Why is volume-based pricing optimal? How does one instil volume based pricing without disincentivizing usage? How does Andy think about discounting? How does Andy view the importance of offering trials?
* What does it take to scale a sales team successfully? How can one determine a closer in the interview process? Should one hire sales reps 2×2? How does Andy think about hiring sales reps from adjacent companies and industries? How does Andy think about minimizing and optimising sales ramp times? How does Andy think about payback period?
* How does Andy structure the pipeline meetings? Who is invited? How are the meetings structured? How does Andy advise on the right segmentation of pipe? How does Andy evaluate the closability of the pipe? Where do many people go wrong in pipeline meetings? What have been his biggest lessons on running them successfully?

 


 

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Jason Lemkin
SaaStr
Harry Stebbings
Andy MacMillan

 

Below, we’ve shared the transcript of Harry’s interview with Andy.

Transcript:

Harry Stebbings:

We are back for another week in the world of SaaStr and my word, what a show we have in store for you today. A much beloved product, that I’m sure we all engage with, and the CEO who runs this incredible company joins us. So with that, I’m thrilled to welcome Andy MacMillan, CEO at UserTesting, the company that provides real-time feedback from real customers, wherever you work. To date, they’ve raised over $200 million in funding from the likes of Accel, Greenspring, Openview and Insight, to name a few. As for Andy, prior to UserTesting, he was the chairman and CEO at Act-On Software. And before that, held several roles at Salesforce, including COO of the products group. Before Salesforce, Andy spent close to five years at Oracle as VP of Product Management.

Harry Stebbings:

We’ve had quite enough of these terrible British tones, so now I’m very excited to hand over to Andy MacMillan, CEO at UserTesting.

Harry Stebbings:

Andy, it is such a joy to have you on the show today. I’ve heard so many good things from Kobie, now at Upfront, and then also the team at Openview. So thank you so much for joining me today, Andy.

Andy MacMillan:

Excellent. Thanks for having me.

Harry Stebbings:

But I do want to start today with a little bit of context. So taking us off, how did you make your way into the world of startups and how did you come to be CEO in UserTesting today?

Andy MacMillan:

I started my career in tech actually as a developer. I was a Java developer back in the very early days of Java, building really big web apps for General Motors, actually in the Detroit Area and made my way through an International MBA in Scotland, and ultimately into product management, which I think is just a fascinating area early in your career to get to really influence products, influence people, make decisions. We actually put a tremendous amount of trust, I guess, in product managers. And often people are fairly early in their careers so that’s kind of how I got into the decision-making and product side of the house. I was at a little company in Minnesota called Stellent that was acquired by Oracle.

Andy MacMillan:

I spent five years at Oracle in the Fusion Middleware Group, working in Thomas Kurian’s org and ended up hopping over to Salesforce to learn the SaaS business model and ran a business inside of Salesforce for a while. And that became a pretty important skill set as people were trying to scale SaaS businesses all over Silicon Valley. So I got the opportunity to be a CEO, went over to Act-On Software for a couple of years in the marketing automation space. And then most recently now at UserTesting.

Harry Stebbings:

Before we dive into the world of UserTesting and some cool passions that we both share, I do want to touch on the Oracle and Salesforce experience there. So when you look back at that and the internal machinations that you saw, what were some of the biggest takeaways for you from that experience? Like how did it impact how you think about operating and leading today?

Andy MacMillan:

I think there’s a couple of things that people can really take away from the big company experience if they really lean into it. One is these companies do a lot of things extremely well. So it may be easy to pick at large companies if you’re in the startup game, but there’s a lot of really smart people doing things really well at massive scale in these very successful companies. So just looking around from the inside, you can learn a lot about how great companies are scaled. I’d also say, personally, you can learn a lot about how to get things done and how to get things done when you don’t just have ultimate, top-down control.

Andy MacMillan:

I think that’s something a lot of folks struggle with as they scale companies, is that you start to have to, even if you’re the overall boss, if you’re the CEO, you have to get good at driving consensus in coalition around ideas and getting people motivated to make those things happen. That’s really how things get done at big companies. They don’t lack for opportunity. What they lack for is people getting everyone excited, and motivated, and pointed in the same direction, and doing something. I think that’s a skill that you can learn that if you get good at a big company, you can be really good at that in a smaller, mid size company.

Harry Stebbings:

I’m really into … you said that about that importance of motivation and really enthusing the team around the idea. You said before, to me, it’s the believing in kind of participatory leadership over servant leadership. Can you talk to me about the relationship between the two and why you favor participatory in that?

Andy MacMillan:

Yeah. I think the way to lead people is to participate in what they’re doing and to give them a chance to participate back. I’ve had this experience time and time again, that the people that are in the room with you thinking through the problem are your most bought in supporters at the end of that process. So if you scale that out, what you’re really trying to do is have more people in the organization participate in what’s going on. But most importantly, viewing yourself as a participant in that process. I don’t subscribe to the servant leadership model. I think that frankly is a little bit upside down. I think it’s this idea that as a senior leader, what I want to do is participate in these projects, be part of the team, share my perspective, let folks know how I’m thinking about why this is important or what trade-offs we’re making.

Andy MacMillan:

When they hear how I’m thinking about it, when I participate with their team, they then embody that going forward. They’re empowered, they have agency, they understand what it is we’re looking to accomplish. They can make decisions now because they’ve been part of the process. They’ve been a participant. So I really believe much like how product management works, we talk about in product management you’re kind of responsible for everything, but in charge of nobody, engineering doesn’t work for you, sales doesn’t work for you. You sort of learn to get everybody to participate along with you in the thing you’re trying to get done. I think that’s a great way to think about leadership broadly, be a participant in the processes that you are trying to make happen and let other folks feel like they’re a participant as well. And you get great results.

Harry Stebbings:

Can I ask you a question? I didn’t mean to push back here, but I’m always told that I should push back more. So I’m trying to be more.

Andy MacMillan:

Great. Let’s do it. Yeah.

Harry Stebbings:

I think that participation and leadership is almost like a luxury of later stage companies. Where when you think about early stage startups, time is the killer of all companies in terms of runway. Actually, when we think about that, like servant leadership and having a really streamlined and effective decision making process that bluntly much more aligns to servant leadership than participatory, debating, and consensus. Do you not agree that actually, maybe it’s a luxury of later stage companies to have this participatory leadership?

Andy MacMillan:

I don’t know that it has to be consensus as much as giving people a chance to be in the room and you can still move quickly. So for example, the way I run my schedule, I do it in large chunks. It’s topic based. So I have marketing time every week and things like that. But I have my CMO, for example, bring maybe the team that’s working on our web redesign to that meeting. Maybe it’s only for 20 minutes for that topic, but they do that a couple times during the process, maybe of revamping the design of our website. They’re hearing me a couple of times along the way, again, maybe only in 10 or 20 minute increments, give them feedback directly on how I feel about it, other things I see going on, my opinions. Most importantly, when we get to the end of that process, my fingerprints are on it. I’m bought in. They know I’m bought in. They’ve heard what I care about. And very often I get to just greenlight it at the end. Say, “Yeah, this is great. Let’s do it.”

Andy MacMillan:

What it avoids is what I hate in senior leadership is when somebody brings the final 20 page PDF version of something to me and I just get to do the thumbs up or the thumbs down like Caesar. And you’re stuck with either taking this product or this project out at the knees and shutting it down, which is miserable for your team or greenlighting something that you don’t think really hits the mark. So for me, it really helps me scale my time and my decision making, because I get to have influence on these projects in little increments over time where I’m again, kind of participating in what they’re doing and in the end, I like the result.

Andy MacMillan:

I get to greenlight it. And then they get to make decisions when I’m not in the room, knowing how I feel about things. So it’s actually about scaling decision-making and giving agency to people throughout the organization and empowerment. I think even in, maybe not a 10 person company, but if you get to 40, 50 people, it’s really about how do you scale decision-making and all roads can’t lead through a senior leadership. You have to have people that that can act if you want to move quickly.

Harry Stebbings:

I mean, so many things for me to unpack there. We’re doing such a good job of sticking to the schedule. So I’m thrilled about that. In terms of the decisions that you need to influence, how do you determine what decisions you fundamentally need to influence and need to see in real time progress versus actually what you can let run in isolation with the team?

Andy MacMillan:

I think it’s really about working with your directs. So again, our scheduling model I learned largely from Thomas Kurian when I was at Oracle in his division. He would have these large chunks of time. And I knew that I could always get time. My time happened to be on Wednesday afternoons for the product areas with I could get on the schedule. So in some ways, things that are important, people will naturally bubble up to you if they know that there’s access. People love the idea of getting in front of the head of products or the CEO or whatever, to get feedback, to get visibility. So one is frankly just having an avenue where people really know that that is actually how the world works. That is how you spend your time. I think the other is working really closely with your senior leaders and making it clear to them, I don’t want to have a whole bunch of just one-on-ones where we walk through every part of the business. I want them to start bringing people on their teams, into these conversations.

Andy MacMillan:

So now again, if I’m participating in these broader conversations with more of the team on more of the projects, I just have a better pulse of what’s going on. I mean, ultimately running a business does require a lot of intuition. You have to have a sense of what’s going on, and what’s important inside the company, what’s important with your customers, what’s important with your partners. So there is no quick and easy way to do that. You have to put the time in. The thing is really how do you give yourself the opportunity to start to feel and hear those signals?

Andy MacMillan:

Frankly, our whole business is based on helping people do that with customers. I take kind of the same mindset inside the company. How do I put myself in a position where I can see and hear and feel what’s going on in the company? That can’t just be in my staff meeting. That’s got to be with working with account teams, product teams, designers, people in the marketing team. If you want to have a pulse of what’s going on, you have to get out of your office, and get down off the pedestal, and get involved in what’s happening.

Harry Stebbings:

I do have to ask [inaudible 00:09:30], we both have a common passion for something, [inaudible 00:09:32] pricing. When we think about pricing today, you said to me before something that was fascinating. You said consumption-based pricing is going to dramatically change how enterprise SaaS companies operate. So to set us some context, how do you fundamentally define consumption-based pricing? And how does that look in reality?

Andy MacMillan:

I think consumption-based pricing, and we’re seeing it with companies like Twilio or Snowflake. It’s really around modeling your pricing after driving usage or adoption of the product at scale. I think that’s fundamentally different in some ways from the traditional seat-based model where a seat-based based SaaS was incredible when I made the shift from Oracle to Salesforce. I mean, what a change where you went from, I sold you something and then I just kind of went away whether you were successful or not to a model where customer success mattered, right? It was a subscription based model. I had to care that you were successful.

Andy MacMillan:

I’m a Salesforce customer. We pay essentially the same rate for all of our seats of our SFA deployment, whether it’s somebody who uses it once a month or all day long, has it open as a tab that they’re working out of, I think the shift in consumption based pricing is this idea of what if everyone in my company had access to that and I paid based on how much value we drive out of it, how much we use it, whether we do our forecasting in it or not, we do our reporting in it or not, whether 550 people inside my company used that product all the time or whether a handful do every day. I think that aligns the interest of the buyer and the seller much like SaaS aligned deployments being done more quickly, which really mattered to buyers.

Harry Stebbings:

So my fear with kind of the consumption-based model is it fundamentally discourages usage at scale, really. How do you think about that kind of disincentive to use due to the consumption-based alignment?

Andy MacMillan:

I think it actually incentivizes consumption and scale, but it’s all about how I set up and model the usage expectation. Right? Nobody wants to be surprised. We all know this with our cellphones like, nobody wants to be surprised with your cell phone bill at the end of the month. But I do think as a buyer of lots of enterprise software, I’m fine paying for what I use. What’s frustrating to me is paying for what I don’t use. I also think there’s a real challenge with the marginal cost model of something like a seat-based pricing model. When you think about net expansion and things like that inside companies, just using my Salesforce example … again, I love Salesforce. We use tons of their products. I’m a very proud alumni of the company, but most people relate to paying for Salesforce as a seat-based SaaS product. So it’s a good example.

Andy MacMillan:

If I want to roll out Salesforce to 10 more people, they’re probably the next 10 people that might use the product in some way, right? An edge case, somebody in marketing that might want to look up customers or whatever. Should I really be paying the same rate necessarily as somebody who’s using it all day long? So there’s this marginal cost that I decide not to do, because I don’t know if they’re going to use it, or if they just had access to the platform and we’re building workflows and things like that in anywhere, I was like, “Hey, great. I could solve this workflow using some of my Salesforce data or using my Salesforce platform and folks had access to it.” I would do more and I would gladly pay them more for that. I’m more than happy to pay for things that we use and get value from.

Harry Stebbings:

Can I ask, in terms of the seat usage for you at UserTesting, when you look at the product to say it obviously oriented around product and site teams, obviously, how do you think expanding beyond that core functional area of expertise, how important is that to you and how important is it to have the cross collaboration across functions, do you think?

Andy MacMillan:

I think it’s important to us not just from a business model perspective, I think it’s important to us because that’s the mission we’re on. I really align and believe with the core goal of the company, which is that we need to be more empathetic with customers, just generally. More and more of our experiences are kind of digitized, and in some ways that’s great, but we’re kind of disintermediated from people. I went to Starbucks this morning. I didn’t even have to speak to the baristas, right? I just mobile ordered and away I went. So how do we as businesses connect with our customers? I think that’s really important. I don’t think that’s just a product, or just a design, or just a marketing problem. How many people work at companies and make decisions all day long where they don’t easily get input from their target audience, from their customer on anything, on a presentation, on a piece of content, on a strategy that they’re thinking about?

Andy MacMillan:

So I’m really passionate about the idea of connecting people with customers when they’re making decisions. We refer to that as human insights. So I think it’s really for us about how do we evangelize this idea that much like the past, I don’t know, 25 years we’ve been saying you need to make data driven decision inside companies. We have whole analytics markets on helping people have data when they make decisions. I think that’s great. I love having data when I make decisions too. It doesn’t necessarily replace speaking to somebody, right? Talking to somebody about your idea. So I think for us, we’re really trying to think about how do we empower people throughout the entire company to be able to talk to people about their ideas, get some feedback from somebody, maybe outside their perspective. I think it’s even important from a diversity and inclusion standpoint.

Andy MacMillan:

If we want to have more inclusive products, we need to include the perspectives of more people in those products. So one way to do that is talk to people and get input from people that are different than you about anything. Again, you’re right, we have generally done that around products and digital products, but why not anything else? Why not an idea that I have about what I want to do with my business? Great. Go talk to some people with some diverse perspectives and backgrounds and get their feedback. I think that matters.

Harry Stebbings:

Now I’m being deliberately controversial, so forgive me for this. It’s very unlike me, actually, so I apologize [inaudible 00:14:25]. I’m interested. You said about the empathy for the customer being such a core ethos. I always believed that actually an ethos and a brand has to be divisive. People have to be for or against it, which is why I think Zoom’s making people happy isn’t great actually as a core ethos and it’s like a mission because who doesn’t want to make people happy. And when we think about being more empathetic with customers, it’s like, isn’t that every company? I’m interested in, how do you think about kind of brand and the importance of building an army for or against?

Andy MacMillan:

Well, I think you’re right. I like the thesis on that. I think the point is who do you want to be for and against what you’re doing and do you really understand them? The challenge in so many companies is the people that build experiences now are often not the people we want or even aiming at consuming those experiences. I mean, a friend of mine works at a company that does direct to consumer hearing aids. They’re doing that through mobile apps and websites, right? Do you think his development and design teams are all folks that are in perhaps their later years and going through the experience of hearing loss? How do they understand that user and build the right experience? That matters. So even if you want your brand to be energizing to a specific audience, even if you want to make an exciting or divisive, or however you want to frame that, claim, you have to know what you’re aiming at and you have to have intuition.

Andy MacMillan:

I mean, the great product leaders of the world, what they’re known for is their intuition. So how do they do that? When you really go talk to those folks, you find out they’re just very good at listening and hearing what’s going on from people, right? They hear from a few folks about something and they kind of pull on that thread, and then they talked to a few other folks and they pull on that thread some more. So how do we build that kind of intuition at scale for whatever it is we’re trying to do?

Andy MacMillan:

So I love the idea of having big and bold branding campaigns, building an army of followers that are for what you’re doing, but you have to have that intuition, right? That’s not something you get from just compiling big data and deciding what the world wants of you. You have it from having a point of view, from understanding how people will react to that point of view. That’s what you’re going for. What you just described is people’s emotional response to a brand. So how do you develop that? How do you test that? How do you build that intuition? How do you nail that? I think you get your audience, you understand them.

Harry Stebbings:

I love that, channel it to your own intuition. I do agree with you there. I do have to ask you, and again, sorry for this, totally off-schedule, but-

Andy MacMillan:

That’s great.

Harry Stebbings:

You mentioned the product leader [inaudible 00:16:39]. Honestly, Andy, as do so many founders today and they say the biggest, biggest challenge is we cannot find great product marketers. We actually can’t find product marketers full stop. Help me out here. Why is there such a drought of good/product marketers?

Andy MacMillan:

I think product marketers are some of the most important people in tech companies. In fact, I’ve regularly said, I actually think they make, by far the best CMOs. Everybody tries to hire demand gen people to be their CMO and really as a tech company, your entire world is about how do you connect technology with the problem set, which is really what product marketing is about. I think the challenge with that is it’s not a cure all. I talk to a lot of folks that tell me, they really need a good product marketer. And then you start talking to them about what they’re trying to solve with product marketing and it’s like, well, they don’t really have product market fit. They haven’t really identified their target audience well, and they are hoping that they’re kind of one good PowerPoint deck away from solving that with product marketing.

Andy MacMillan:

And they’re kind of not. I mean, again, I would go back to they really need to double down and listening to what the market is telling them what their customers need. A great product marketer is invaluable in that process. They can help you with that, perhaps. But I think a lot of good product marketers suffer from just having too big of a gap from the product market fit and what market they’re going after. And it’s too easy I think for companies to kind of lay that at the feet of product marketing. So I would say, I think, in some ways it’s this dichotomy. I think product marketers have a great brand. To your point. people realize, I think, the value of product marketing. I think too often, we also prescribe market failure at the feet of product marketing. I’m not sure that’s always the case.

Harry Stebbings:

Sorry, to clarify, do you think of then, product marketing should be instilled before PM like product market fit to ensure a streamlined timeline to product market fit and really helping you get that, or is it a post product market fit to help scale?

Andy MacMillan:

I think it’s more post. I think you need to have some level of kind of that intuition, as I was saying, in the product organization broadly. I think that expands beyond product management. I think that your engineering team, your design team really getting the problem and the customer and how the solution fits. I think product marketing to me is really kind of in that Jeffrey Moore adoption curve model of like crossing the chasm to me, it’s the product marketing challenge, right? Early adopters have validated that this solves a problem. It meets a need. It fits what they do. Getting over that chasm is really two things. It’s making sure that the product itself is usable and applicable to a broader audience, right? It can’t just be people with PhDs in computer science find your product easy to use. It’s like, well, the rest of us have to. But it’s also then how do you tell that story. I think to me, that’s really what product marketing is about.

Andy MacMillan:

How do you talk to the majority of folks who are not your early adopters about what the problem is, why you’ve got a solution, why this meets a need, and why they should act? That to me, is where product marketing really comes into play. And then scaling a go to market organization, right? That’s the best product marketers are just as comfortable in the product meeting as they are in the sales huddle. So, again, there, I think you’re really talking about scaling more into the majority than just the early adopter part of the curve. And again, you can define that really narrowly. I’m not saying you have to get to 50 million in ARR and be going mass market. I just mean it’s not your first dozen customers. It’s really getting beyond that. I think you need good product management skills.

Harry Stebbings:

Trust me. I mean, nothing makes me happier than talking about crossing the chasm. So a big smile on my face there. I do want to ask though, because you said about kind of scaling go-to-market. So I want to talk about scaling orgs, because you’ve grown from 22% annual growth to 35% while going from 40 million to a hundred million there in ARR. And some pretty insane numbers there. Not a lot of companies actually speed up while growing. So this is a really unfair question that I’m really now going, “I can’t believe I quite raised it.” But tell me though, what’s the secret?

Andy MacMillan:

I think the secret is being deliberate, honestly. I mean, we didn’t accidentally start going faster. It wasn’t like all of a sudden the phones just started ringing. And to do that, we focus a lot on pipeline. We focus on what are we doing to build the right pipeline in the right places, and then how do we execute as a sales team behind that? So in UserTesting’s case, when I came on and I joined the company about two and a half years ago, I just universally met customers that liked the product. So I felt like there was strong product market fit. So again, if that’s not there, you’ve got different challenges. So then it was really how do we tell a broader story at scale and put a marketing engine behind that so we can generate real demand, real qualified pipeline that you can then hire salespeople behind.

Andy MacMillan:

So we really focused on two things. One was developing, and measuring, and knowing our pipeline and knowing it really well. And the second was really thinking about how do we segment and train our sales team so we could execute on that pipeline. Those were really the areas that we focused on, knowing that we had a great product that just needed a broader message.

Harry Stebbings:

So when we think about coming to the sales team, I do want to get into segmentation and training. In terms of getting the right salespeople, you’ve mentioned before just how paramount it is to get the right salespeople specifically. And this is again a tough question, but what is the right sales person like to you? And we can be specific here. So if we think about UserTesting, what is the right sales person to you and what are the leading indicators of them being right when you’re detecting it?

Andy MacMillan:

I think part of it is really knowing what works. So I’m a big believer in sales of understanding the template for what are you looking for? What has worked? The thing you have to be careful about is I think there’s a very small percentage of salespeople that are just kind of selling savant. They’re just really good at it. They could sell practically anything. You need to be careful not to try to replicate that person because that’s more of just … every sales team I’ve been on has a handful of these. And you’re just basically like, “I can’t replicate that person, but they’re really good at this.” But you look at the rest of the team and you go, “Okay, what’s really working? What is the profile of person who’s really being successful here?” And by profile, I mean like what industries they have experience in. What gets them excited about the product and the solution? What makes them engaging to customers?

Andy MacMillan:

So for us, it’s really been people that are on this mission that really seem to care about customer feedback. Our best salespeople are the people that really care that people get feedback from customers. It’s a compelling and interesting thing to talk about. So we have found when we hire from people that are in adjacent industries, the survey space, the customer experience space, we have a lot of success bringing them into our company and scaling them. That’s not always the case. Some companies don’t do well when you hire from adjacent markets. Some companies do better when you hire more technical salespeople. For us, that’s not the case. We’re really looking for people that are kind of on the mission with us.

Andy MacMillan:

And then the second thing is, I think salespeople are one of the areas where their track record really matters. There’s just something about being able to be a closer that I’ve never figured out how to teach somebody. I’m a big fan of most things are nurture versus nature, but there’s just some people are closers and some people are really good in other areas of the business. They’ll make a great supporting player in some way in a sales role. But the ability to get somebody to sign on the line is a real talent, not to be underestimated. It’s not something I’ve ever done. I’ve never carried a bag, and I think that’s something I keep in the back of my head of like really appreciate what these folks do and don’t underestimate it. I’ve had really compelling people that can get all the way through a sales cycle, but not get a deal done and that’s tough.

Harry Stebbings:

I mean, my oh my, there’s so much to unpack there. In terms of my thinking, you mentioned the importance of being a closer there. I totally agree with you. Question is, with slightly inflated LinkedIn and slightly inflated CVs and challenging attribution, how does one determine whether one is a closer pre hire? And then it’s unfair to ask two at once, but why not? How long does one give a sales rep in terms of payback period, and really providing the data to prove that there are pros there?

Andy MacMillan:

I’ll take the second one first, which is, it depends on your sales velocity and segments, so we sell in every segment. So my SMB reps, for example, are going to get many more at bats during their first quarter for maybe then one of my enterprise or global reps. So I think that’s why we have sales ramps. So I think sales ramps are a good test. You do need to, back to pipeline, understand what are you handing to these folks to go sell, right? If you drop one person into a completely barren territory and they’re having to really go develop the territory versus you drop somebody else into the middle of, I don’t know, Manhattan is their territory and there’s seven or eight in-flight deals, I’m going to measure them differently, right?

Andy MacMillan:

I want to see how they behave against the pipeline that they have. So that’s why understanding, and measuring, and managing your pipeline is so important because then you can hold people accountable to close rates at certain stages and things like that. So it can be very mathematical in how you look at sales performance, but you have to really understand the business you’re in, and the segments you’re in, and the speed that they should sell. So I think that’s definitely true.

Andy MacMillan:

I think on the first bit, I think it’s really about how do you measure the ability for somebody to go in and be compelling, right? How do you really understand what their pitch looks like? You can do some of that in an interview, but it’s also how do they talk about the deals that they’ve been in? I really want to understand the deals where they were understaffed, under resourced. My favorite interview question in general anywhere is when have you been wildly successful when you’ve been substantially under resourced? I want to know when you win when it’s tough. So you lean on that a lot when interviewing salespeople. I also am a big believer that reaching out into networks and finding out how people have really done is an immeasurable feedback. In many ways, I think interviews can be misleading, especially with salespeople. Most salespeople, if they’re any good are at least quite charming. Being charmed in an interview by a salesperson is a very easy way to hire the wrong salesperson. So you really need to dig in and see what’s their track record been.

Harry Stebbings:

Totally with you in terms of the digging in there. I think the other element there, it’s like, okay, say you hire a brilliant sales rep and they are absolutely killing it. Again, it’s [inaudible 00:25:39]. And they want to make the move from individual contributor to manager, and you’re going, “Well, hang on a minute, Sam or Jessica, you’re doing fantastic as an individual contributor. Do you want to move to management?” And it’s something that I’m struggling with at the moment with an investment of mine. It’s like, you don’t want to lose that individual contributor to management, bluntly. And you don’t actually know if there’ll be a good manager. How do you think about that kind of promotion and dilemma when you do have a very talented contributor wanting to make the move to management?

Andy MacMillan:

I’m a big believer that you do have to support people in the path they want to be on, but you can definitely give them guidance. I had somebody recently get promoted to CMO of a public company. And when they were working for me, they were adamant that they wanted to be in the product organization. We had to have a long talk about, “Hey, look, I really think you’re a marketer. Let me tell you why.” And they either agree with you or they don’t. I think it’s tough to hold somebody in a position that they don’t agree with. So if this person’s career path from their perspective is into management, I think you need to find a way to support them if you think they’re going to be successful.

Andy MacMillan:

One of the best ways to do that with sales in particular is I’ve connected people before with really amazing individual contributor salespeople who have been through their career as an individual contributor of salespeople, who have been wildly successful, have made millions of dollars to say, “Hey, go talk to this person about what that path looks like.” So they can have an exciting path of being an individual sales contributor, if that’s what they want to do. And then also really assess their management skillset. I think the biggest thing for salespeople is, are they willing to give up the thrill of closing a deal? I mean, that is a unique euphoric moment. As I said, I’ve never carried a bag, but I do remember the day that we sold Stellent to Oracle and the moment they’re like, “The deal is done.” That is a special feeling when you close something like that. Then yes, you still have some of that in sales management, but it’s not the same when it’s not your deal.

Andy MacMillan:

So I think it’s really having conversations with someone like that about this is the trade-off, this is what you’re giving up, this is what you get, this is the thing that you’ll have to do. Here are two people you should talk to from different perspectives in their careers. And then really aligning with that person, what do they want to go do. And if they’re your best sales person, but you think they’d be a good manager and they’ve talked through it and they think about it, then figure out how to make them your best sales manager.

Harry Stebbings:

Yep. No, I agree. I think it’s very helpful in terms of providing the references and differentiated references to see what it’s like. I totally love that sort of the sale. So I think it’s a challenging one to give up. I do want to ask, you mentioned sales training before. Before we touch on pipeline, how you think about the foundations to successful sales training? And I guess, how do you structure yours? I guess it’s a little bit different view dependent on the segmentation within the sales team, SMB, mid-market, or enterprise, but what are the foundations and how do you think about optimizing it?

Andy MacMillan:

That’s a good question. I really break sales training down into three pieces, maybe the fourth being have a world-class sales enablement person. I’m lucky to have one here at UserTesting and it is such an important part of a company and one I don’t think we talk enough about. So first off, have an incredible sales enablement function, helping you ramp, wrap. It helps with close times. I mean, it is one of the best investments when you get to any level of scale is really having good sales enablement. Beyond that, I really think of three things. One is there is some element of core value selling that you can train people on. I mean, there are great schools of thought, different things. Our company is going through MEDDIC training right now, which is a sales value selling philosophy. It’s very good.

Andy MacMillan:

So I think there is a skill to sales and training on the craft is important. I think the second bit really has less to do with pure sales training and more back to our product marketing question, which is how do you have great solution messaging that you’re arming your sales team with and training them around that? Right? So they’re not selling features and functions in tech, they’re selling a solution. And that really is not something you want your salespeople making up in the room on their own. You need to hand that to them, train them on that.

Andy MacMillan:

And then the last one, again, a little bit is we talked about it, it’s hiring closers. And if I had a secret recipe for converting people to being better closers, I would love to share it with everybody. I don’t. I’ve had great people I thought were incredible salespeople who just can’t at the end of the quarter, get deals done. And I’ve never figured out the right thing to say to them to make that change. And I’ve had other people that, they just get deals done. So I think part of it is just being honest about, do you have a team of closers?

Harry Stebbings:

Totally with you in terms of the honesty element to yourself. You mentioned the sales enablement element. And it’s really interesting because I agree, I think it’s barely ever touched on in this industry. So when you think about the right time and the triggers to hire sales enablement, but both in terms of hands on moving the team, what is the right time and then associated to it, how does one measure success of sales enablement?

Andy MacMillan:

I measure success of sales enablement on our ability to move things through the pipeline and then close rates, right? So are those trending in the right directions? It may be ramp time as well. I think as far as the right time, I think everything about scaling a company when you get to a certain size is thinking about what are the investments in things that remove constraints, right? I’m a big believer in the book, The Goal, which is actually a manufacturing book, which is all about constraint and theory of constraints. So as soon as hiring and making the investment in sales enablement allows you to remove constraints on your sales team overall that let them go faster. So if close rates can go up, if ramp times can go down. That’s math now. You can put that in a spreadsheet and say, “Okay, well, if I can improve my close rates by 10% across 10 sellers, I’m guessing that pays for your sales enablement person pretty quickly.”

Andy MacMillan:

So that’s the way to think about it. Everything about scaling a company is about where do you create the points of leverage? Where do you create the ability to stop having things be one-to-one manual efforts and start to generate lift. And sales enablement is one of those levers, marketing is another one of those levers, right? What are the things I can do in marketing that help have leads be more qualified, better qualified, things like that. Those will help with my time to close and ultimately with closed rates as well. So I’ve put sales enablement in kind of that same bucket. I tend to think as soon as you think about hiring some sales management, maybe getting to two sales teams to probably get into the size where a sales enablement person, if they’re good, is going to pay for themselves pretty quickly.

Harry Stebbings:

Yeah, no, I agree with you in terms of that payback period with that of scaling sales team. You mentioned like marketing, you mentioned sales, you mentioned obviously kind of conversion with pipe there. I have to touch in the pipeline itself because you said before, my pipeline meeting is the most important meeting of the week. Such a good cliffhanger for me. So when is it, how long is it, and how do you structure it? Let’s start there.

Andy MacMillan:

Sure. So I do a Monday pipeline meeting. I do it every week. It’s an hour long, but I also think pipeline is one of these words in some ways that we could just get rid of it, we should. It means two entirely different things to your sales team versus your marketing team. So companies constantly fight about pipeline. I think it’s largely because they’re talking about different things. So what we do is we have this pipeline meeting, both sales and marketing are invited and come to the meeting. And it’s my meeting. I’m literally the host of the meeting. We have my sales management team and most of my marketing leadership. We alternate every other week, what I call the marketing view of pipeline or the sales view of pipeline, and what the marketing view of pipeline is, what are we generating right now and what are we moving through the pipeline?

Andy MacMillan:

So think of it like, “Hey, we had our big event this week, our annual event, HiWorld. So how did that do, how many leads do we generate? How qualified were they? How many leads did we help advance the pipeline? That’s a marketing view of the pipeline. So when we do that, sales gets to see all the things that marketing is doing, the impact that it’s having, the pipeline it’s generating, things like that. The following week, we have the sales view of the pipeline. Sales doesn’t particularly care right now what we did at that event if they’re trying to close their two Ford deals, because nobody came to our event this week, that’s going to close an enterprise deal with us by the end of December. So the sales view of pipeline essentially walks through every one of my regions and territories. We look at every team’s pipeline by stage, by revenue.

Andy MacMillan:

We even get down to a look we have in the dashboard where I can see. So we’ll say, “Okay, enterprise west.” We bring up a slide. It’s got every rep’s name, how they’re doing against quota, all their pipeline, the stages of those pipeline. That I can look at that chart and go, “Wow, Steve is low on pipeline in wherever.” So now we’re all trying to figure like, “How do we fix that?” So it’s really about understanding the difference between what marketing’s doing and what sales is doing, and what pipeline means to them, and how do you get them both in a room talking about where do we need to pull levers to fix things. And I think that’s the indicator, when you talked about how do we speed up the company, it’s about pipeline.

Andy MacMillan:

The secret to growing a company is being able to hire and feed salespeople. I think where a lot of folks screw up is they take a big slug of venture capital, they go, “This is awesome. I’m just going to double my sales team and hope they feed themselves.” And half of them starve, then you fire half the sales team. And now it’s a terrible company to work at because salespeople aren’t making numbers. A bunch of people are getting fired. That’s miserable. So all of that gets fixed if you think of pipeline as being that leading indicator, right?

Andy MacMillan:

Fund the growth of the pipeline, measure the pipeline, understand from both a sales and marketing perspective what that pipeline looks like, see the pipeline coming, hire the sales capacity behind it, ramp them quickly, and then grow like crazy. That’s the way to do it. And it’s all based on that pipeline meeting. That’s the meeting that tells me I can hire five more salespeople. Where can I hire those salespeople? Where do I have pipeline? I think that’s what people get wrong. Hiring salespeople isn’t about hoping they’re successful. It’s about knowing you can feed them.

Harry Stebbings:

How do you measure the health and success of a pipeline? And what I mean by that is like, I see a lot of misattribution within pipeline in terms of convention tagging, whereas like, higher hope, decent hope’s questionable. And actually it’s always overly optimistic and it’s not actually attributed in the right way. How do you think about pipeline attribution and that measuring that effectively?

Andy MacMillan:

Yeah. I think pipeline attribution’s a bit of an ugly game. We don’t rely on it too much. I do want to know that marketing activities are generating pipeline. We do think about AE generated pipeline, marketing pipeline, partner pipeline, things like that. So I do think that matters, but ultimately what we’re really looking at is what are the things that are qualifying through our sales stages. So I think everything kind of marketing qualified, lead and up, is a bit of a like, “Ah, maybe it’s great. Maybe it’s not.” What I really want to see is what comes through and become sales qualified pipeline. Right? That’s really what I hold my marketing team accountable to. My CMO’s amazing. She actually talks to her team about like, “Our goal isn’t pipeline. Our goal is deals, like closed, won deals.”

Andy MacMillan:

So they’re very much goaled and incented, not just on generating activity, but generating real pipeline. And then you’re measuring in every one of those stages, what do my conversions look like? How do I get involved to help the sales team move things from stage zero to stage closed? I think that, again, gets down to kind of the brass tacks of what everybody cares about in pipeline. It’s not 10,000 people came to a webinar that we did that really had nothing to do with our business, but we put 10,000 leads into the pipeline. That doesn’t matter. What matters is how many of those people became sales qualified leads. And then we measure, how did they do going through the pipeline? And I think that’s really the way to look at it. And what’s interesting about that as you start to get away from attribution data, you start to look at things like when was the lead created? How long’s the lead been in the pipeline? How’s it moving through the stages? What’s the size of the deal? These are real data points. They’re not things that are debatable.

Harry Stebbings:

And this is totally again off schedule, maybe unfair of me, as a board member to say, do you think this is something that board members, we should actively play a role in. Do you think board members should be part of pipeline reviews? And do you think boards should be very involved in terms of communicating with head of sales on the health of the pipeline? Or is that too granular from your perspective?

Andy MacMillan:

It’s probably too granulated in my stage, but I would certainly think earlier on, I would imagine board members in earlier stage companies should be very concerned about product market fit and then the pipeline, if you’re really trying to think about how to fund the growth, right? If you can’t get well quality pipeline that your sales team can go sell, then you’re wasting money hiring salespeople, and you should really be focusing on building that pipeline. So I think earlier stage for sure, if you’re my size and your CEO and head of sales and CMO can’t manage their pipeline, I would solve that problem differently than getting involved in the pipeline. I’d probably get involved in your management hiring, but at some point earlier on, I think that makes tons of sense.

Andy MacMillan:

And for later stage companies, I just think this is where when you start to see the friction between sales and marketing, maybe that as a board member is where I’d start to say, “Hey, your sales and marketing team don’t seem aligned.” To me that always seems to come back to, they’re each talking about pipeline, but they’re not talking about the same thing.

Harry Stebbings:

I’m so enjoying this discussion. I have to ask, all natural kind of deals and the opportunities in pipe, do you do post-mortems of a sort? And what I mean by that is, when you win a big one, do you do a post-mortem on why you won, when you lose, what you lost. How do you think about postmortems and a hindsight review?

Andy MacMillan:

We do some of that. I actually find the deals we lose to be more interesting than the ones we win, in some ways. So we definitely do. We do it in QBR. Every segment does QBRs in our business. We bring together the entire account team structure inside those regional teams, every one of the reps goes through. They talk about what they’re seeing in the market. Again, this is where I believe getting really involved in getting that sense of what’s happening. I do a Q and A that I joined in each one of those small regional teams where I join them for 45 minutes. I get summaries of what they’re doing and what they’re seeing, what they’re finding from competitive. I answer questions about the business and we talk about what deals they won and lost. Like what was the most painful loss that the team had? Why did that happen?

Andy MacMillan:

I would say it is challenging. I mean, on some level, when you ask the sales team, why did we not win a deal? There’s really only three reasons you don’t win a deal. It could be the pricing, it could be the way your sales execution happened, or it could be the product. Very few sales teams at the end of a bad deal are in the mood to say, “Yeah, it was really us. We didn’t execute this deal well.” So I think you can end up with a lot of signals of pricing is wrong, back to our first conversation, or the product’s not right. You kind of really have to dig in and go like, “Did we just not win this one? What happened?” Especially when you look at it compared to the rest of your pipeline, if you want a whole bunch of other deals that looked similar to that one, it may very well just be that customer, the personality set, whatever happened there. So I would just be careful not to over-rotate on losses either.

Harry Stebbings:

And last one before the quick fire because I could chat to you all day, but it’s like a lot of the reasons that I hear nos or delays is, “Listen, honestly, Andy, we’re super interested. It’s the end of the quarter. And it’s just not a priority for us right now.” Which bucket would you say that goes into? Because it is a no, really, and it is a delay in, and it is a pushback. How do you think about that as the reason for no?

Andy MacMillan:

I think that’s a sales execution issue. A big part of the sales training that we do is how are you conveying urgency in the problem that we’re solving. And I think that’s true. I mean, we are trying to solve a problem of how do you connect with customers and understand their needs. I don’t think for most companies that’s a next quarter problem. So it is on the shoulders of my broader account team, not just the sales person, but maybe the SC she’s working with, the customer success manager, whoever to go in there find projects, initiatives, executive sponsors, whoever who see the urgency of understanding customers, make the case, and get deals done. So I don’t think there’s a lot of great excuses for push deals.

Harry Stebbings:

What have you found most effective in terms of creating urgency? It’s the biggest thing that I find actually reps struggle with in terms of just how to convey the why now on the urgency.

Andy MacMillan:

Our whole product is built on this idea of building empathy with your customer. The more time I’ve spent at UserTesting, the more I’ve realized that that is the key to solving so many problems. It’s one of the big leadership levers that we should all understand. I think the same is true in sales cycles. The deal doesn’t close quickly because it’s important to us. It closes quickly because it’s important to the customer. So if we don’t understand their pain, their urgency, their needs, entire solution to that, then shame on us. So that’s the secret I find, is the best reps, the best teams are very good at understanding our customer’s pain points and selling on that. Right now, here’s how I’m going to help you solve this problem that’s yours.

Andy MacMillan:

The worst salespeople are the ones who are telling customers, “It’s my end of quarter. I really need to get this deal done.” It’s like, “Well, that’s lovely for you, but that’s not really my problem.” Right? So I think the more we can put ourselves honestly and earnestly in the shoes of our customers, and understand what they’re trying to do, and be genuinely helpful, right? The best sales deals are the ones where we’re hand in hand with the customer. We understand their problem. We honestly believe we can help them. We see the urgency, they see the urgency. We’re all aligned in helping them get to that answer quickly. Those are the best deals. So the best salespeople are the ones who can really put themselves in the shoes of that customer and understand that need.

Harry Stebbings:

I promise this is the last one. How do you feel about discounting as a way to get deals closed pre quarter end?

Andy MacMillan:

I think it depends on the process you’ve gone through. Everybody also has a budget, so if you’re discounting to try to really … you understand the problem, you’re trying to help get something done, your champion’s trying to get maybe something through their procurement team, every procurement team likes to put a scalpel on the deal. Great. Okay, fine. Maybe there’s a little bit of a discount that’s applied. I don’t think for the best deals that the discount is the reason the customer acted. It might be the reason you help to get it through procurement. It might be a good faith thing you’re doing to try to push something through, but we actually don’t discount super heavily because I think we do a very good job aligning with our customers, and having a fair pricing model, and kind of standing by that.

Andy MacMillan:

So to say that I don’t support discounting would be a lie. In an enterprise software company, certainly discounting occurs, but again, if it’s not urgent to me, it doesn’t really matter. And all of a sudden I can just save 10 or 15% on the software. Does that really move the needle for me? I just don’t think so.

Harry Stebbings:

Yeah. No, I agree with you in terms of that kind of realism and rationale. I do want to move into my favorite, being the quick fire round. We want to do a round two, because I still have so many questions, but I do want to move into the quick fire. So I say a short statement, Andy, and you give me your immediate thought. So you’re ready to roll?

Andy MacMillan:

Sure. Let’s do it.

Harry Stebbings:

What’s the biggest challenge for you today in your role at UserTesting?

Andy MacMillan:

I think it’s the biggest challenge for every CEO, is the uncertainty of every day, like who knows? Everything comes up to your desk or the buck stops here. So it’s the randomness of what happens.

Harry Stebbings:

Do you ever question one’s abilities as a CEO? I question often my ability as a VC and I often feel the imposter syndrome. Do you ever feel that?

Andy MacMillan:

Sure. Yeah. All the time. Stuff lands on your desk and it’s almost like you want to pick it up and turn around and go like, “Who do I hand this to?” And you’re like, “Oh, it’s me.” And that’s just part of the job.

Harry Stebbings:

That’s funny. Tell me what’s the hardest role to hire for today?

Andy MacMillan:

Maybe an unfair answer, but I think it’s anywhere you don’t have a really good Lieutenant. I make the worst hires when I haven’t done a good job having bench strength and then there’s urgency and risk in not getting the role hired. So I think anywhere I’ve got a good Lieutenant, I make a good hire and anywhere I don’t, I get nervous.

Harry Stebbings:

I’m a Brit, and this isn’t in the schedule, but I’m too intrigued. You said something about not having good lieutenants. I’m a Brit and I’m so awkward, especially when it comes to things like letting someone go. What’s the right way to let someone go?

Andy MacMillan:

I think the right way to let someone go is to have a very honest conversation with them about why it’s not working, to do it as soon as you realize it’s not working. I think the whole like, “Hey, I’ve hired somebody. They’re taking your job. They’ll be here tomorrow.” Is the wrong approach. So I’m pretty upfront with people. I don’t think people are surprised when I have a conversation with them, and it’s usually pretty early in the process. And then I’m very upfront about how to help them find the thing that’s right for them. If you’re hiring decent people, you do want to see them be successful even when they land somewhere else. So I think having that kind of conversation early and honestly, it’s the right way to do it.

Harry Stebbings:

Which external SaaS leader do you most respect and admire today and why?

Andy MacMillan:

If I don’t do the ones I’ve worked with, which would be folks like Thomas Kurian or Marc Benioff at Salesforce, who I think they’re both amazing, I’m really impressed with Scott Dorsey. I mean, I worked with him very briefly when Salesforce acquired ExactTarget, but I think Scott’s just the real deal. I mean, I’m a Midwestern guy. he’s amazing. He’s just so upfront, so honest, so true to who he is. I think he’s just great.

Harry Stebbings:

What moments in your life changed the way you think?

Andy MacMillan:

I think sports was a big change for me in general. I grew up playing lots of very competitive sports and I think that mattered a lot to me. I also think when I first joined Salesforce, just the customer centricity of what Salesforce was doing, how every customer mattered, even if they’re only spending 10K with us and a bunch of executives would rally to solve a problem for a really small customer, that really changed my view on what it meant to be in business and how we could really help people.

Harry Stebbings:

Tell me, what would you decide to change about the world of Saas?

Andy MacMillan:

It’s going to feel almost maybe oversaid at this point, but I really do buy into the diversity efforts being so important. We are just too, too white, too male, too San Francisco as an industry. And I would love to see the opportunity that I think is the SaaS business model just available to many more people.

Harry Stebbings:

Totally with you in terms of that availability. And then let’s finish on the next five years for you and for UserTesting, paint that vision for me, Andy.

Andy MacMillan:

We’re on this mission. I mean, we want businesses to talk to customers again, and I think that is a more than five year time period for us. We were kind of going department by department, knocking on doors, showing people that they can talk to real customers and get feedback. I think that’s our strategy for next couple of years, just keep leaning into this need to bridge this empathy gap so folks that are inside companies, sitting behind technology can really understand what customers and consumers want.

Harry Stebbings:

Andy, thank you so much for this. As you can tell from the complete wavering from the schedule, but also the excited voice, I so enjoyed this. So thank you so much for joining me today.

Andy MacMillan:

I enjoyed it a ton as well. Thanks for having me.

Harry Stebbings:

I really shouldn’t say this because I know I’m not allowed to have favorites, but that was probably one of the most fun episodes I’ve had to record. It was just fascinating for me. I love the discussion. None of the questions were on schedule, but it was just incredible. So huge thank you to Andy for that. And if you’d like to see more from us, you can on Twitter @harrystebbings. Likewise, it’d be great to welcome you behind the scenes here on Instagram @hstebbings1996.

Harry Stebbings:

As always, I so appreciate all your support and I can’t wait to bring you another set of incredible episodes next week.

 

The post SaaStr Podcast #395 with UserTesting CEO Andy MacMillan appeared first on SaaStr.

SaaStr Podcast #395 with UserTesting CEO Andy MacMillan


This post is by Amelia Ibarra from SaaStr

Ep. 395: Andy MacMillan is the CEO @ UserTesting, the company that provides real-time feedback, from real customers, wherever you work. To date, they have raised over $200M in funding from the likes of Accel, Greenspring, Openview and Insight to name a few. As for Andy, prior to UserTesting, he was the Chairman and CEO @ Act On Software and before that held several positions at Salesforce, including COO – Products Group. Before Salesforce Andy spent close to 5 years at Oracle as VP Product Management.

 

In Today’s Episode We Discuss:

* How did Andy make his way into the world of SaaS? How did he come to be CEO at the market leader, UserTesting?
* Why does Andy think the seat-based pricing model in SaaS will die? What are the downsides of it? Why is volume-based pricing optimal? How does one instil volume based pricing without disincentivizing usage? How does Andy think about discounting? How does Andy view the importance of offering trials?
* What does it take to scale a sales team successfully? How can one determine a closer in the interview process? Should one hire sales reps 2×2? How does Andy think about hiring sales reps from adjacent companies and industries? How does Andy think about minimizing and optimising sales ramp times? How does Andy think about payback period?
* How does Andy structure the pipeline meetings? Who is invited? How are the meetings structured? How does Andy advise on the right segmentation of pipe? How does Andy evaluate the closability of the pipe? Where do many people go wrong in pipeline meetings? What have been his biggest lessons on running them successfully?

 


 

If you would like to find out more about the show and the guests presented, you can follow us on Twitter here:

Jason Lemkin
SaaStr
Harry Stebbings
Andy MacMillan

 

Below, we’ve shared the transcript of Harry’s interview with Andy.

Transcript:

Harry Stebbings:

We are back for another week in the world of SaaStr and my word, what a show we have in store for you today. A much beloved product, that I’m sure we all engage with, and the CEO who runs this incredible company joins us. So with that, I’m thrilled to welcome Andy MacMillan, CEO at UserTesting, the company that provides real-time feedback from real customers, wherever you work. To date, they’ve raised over $200 million in funding from the likes of Accel, Greenspring, Openview and Insight, to name a few. As for Andy, prior to UserTesting, he was the chairman and CEO at Act-On Software. And before that, held several roles at Salesforce, including COO of the products group. Before Salesforce, Andy spent close to five years at Oracle as VP of Product Management.

Harry Stebbings:

We’ve had quite enough of these terrible British tones, so now I’m very excited to hand over to Andy MacMillan, CEO at UserTesting.

Harry Stebbings:

Andy, it is such a joy to have you on the show today. I’ve heard so many good things from Kobie, now at Upfront, and then also the team at Openview. So thank you so much for joining me today, Andy.

Andy MacMillan:

Excellent. Thanks for having me.

Harry Stebbings:

But I do want to start today with a little bit of context. So taking us off, how did you make your way into the world of startups and how did you come to be CEO in UserTesting today?

Andy MacMillan:

I started my career in tech actually as a developer. I was a Java developer back in the very early days of Java, building really big web apps for General Motors, actually in the Detroit Area and made my way through an International MBA in Scotland, and ultimately into product management, which I think is just a fascinating area early in your career to get to really influence products, influence people, make decisions. We actually put a tremendous amount of trust, I guess, in product managers. And often people are fairly early in their careers so that’s kind of how I got into the decision-making and product side of the house. I was at a little company in Minnesota called Stellent that was acquired by Oracle.

Andy MacMillan:

I spent five years at Oracle in the Fusion Middleware Group, working in Thomas Kurian’s org and ended up hopping over to Salesforce to learn the SaaS business model and ran a business inside of Salesforce for a while. And that became a pretty important skill set as people were trying to scale SaaS businesses all over Silicon Valley. So I got the opportunity to be a CEO, went over to Act-On Software for a couple of years in the marketing automation space. And then most recently now at UserTesting.

Harry Stebbings:

Before we dive into the world of UserTesting and some cool passions that we both share, I do want to touch on the Oracle and Salesforce experience there. So when you look back at that and the internal machinations that you saw, what were some of the biggest takeaways for you from that experience? Like how did it impact how you think about operating and leading today?

Andy MacMillan:

I think there’s a couple of things that people can really take away from the big company experience if they really lean into it. One is these companies do a lot of things extremely well. So it may be easy to pick at large companies if you’re in the startup game, but there’s a lot of really smart people doing things really well at massive scale in these very successful companies. So just looking around from the inside, you can learn a lot about how great companies are scaled. I’d also say, personally, you can learn a lot about how to get things done and how to get things done when you don’t just have ultimate, top-down control.

Andy MacMillan:

I think that’s something a lot of folks struggle with as they scale companies, is that you start to have to, even if you’re the overall boss, if you’re the CEO, you have to get good at driving consensus in coalition around ideas and getting people motivated to make those things happen. That’s really how things get done at big companies. They don’t lack for opportunity. What they lack for is people getting everyone excited, and motivated, and pointed in the same direction, and doing something. I think that’s a skill that you can learn that if you get good at a big company, you can be really good at that in a smaller, mid size company.

Harry Stebbings:

I’m really into … you said that about that importance of motivation and really enthusing the team around the idea. You said before, to me, it’s the believing in kind of participatory leadership over servant leadership. Can you talk to me about the relationship between the two and why you favor participatory in that?

Andy MacMillan:

Yeah. I think the way to lead people is to participate in what they’re doing and to give them a chance to participate back. I’ve had this experience time and time again, that the people that are in the room with you thinking through the problem are your most bought in supporters at the end of that process. So if you scale that out, what you’re really trying to do is have more people in the organization participate in what’s going on. But most importantly, viewing yourself as a participant in that process. I don’t subscribe to the servant leadership model. I think that frankly is a little bit upside down. I think it’s this idea that as a senior leader, what I want to do is participate in these projects, be part of the team, share my perspective, let folks know how I’m thinking about why this is important or what trade-offs we’re making.

Andy MacMillan:

When they hear how I’m thinking about it, when I participate with their team, they then embody that going forward. They’re empowered, they have agency, they understand what it is we’re looking to accomplish. They can make decisions now because they’ve been part of the process. They’ve been a participant. So I really believe much like how product management works, we talk about in product management you’re kind of responsible for everything, but in charge of nobody, engineering doesn’t work for you, sales doesn’t work for you. You sort of learn to get everybody to participate along with you in the thing you’re trying to get done. I think that’s a great way to think about leadership broadly, be a participant in the processes that you are trying to make happen and let other folks feel like they’re a participant as well. And you get great results.

Harry Stebbings:

Can I ask you a question? I didn’t mean to push back here, but I’m always told that I should push back more. So I’m trying to be more.

Andy MacMillan:

Great. Let’s do it. Yeah.

Harry Stebbings:

I think that participation and leadership is almost like a luxury of later stage companies. Where when you think about early stage startups, time is the killer of all companies in terms of runway. Actually, when we think about that, like servant leadership and having a really streamlined and effective decision making process that bluntly much more aligns to servant leadership than participatory, debating, and consensus. Do you not agree that actually, maybe it’s a luxury of later stage companies to have this participatory leadership?

Andy MacMillan:

I don’t know that it has to be consensus as much as giving people a chance to be in the room and you can still move quickly. So for example, the way I run my schedule, I do it in large chunks. It’s topic based. So I have marketing time every week and things like that. But I have my CMO, for example, bring maybe the team that’s working on our web redesign to that meeting. Maybe it’s only for 20 minutes for that topic, but they do that a couple times during the process, maybe of revamping the design of our website. They’re hearing me a couple of times along the way, again, maybe only in 10 or 20 minute increments, give them feedback directly on how I feel about it, other things I see going on, my opinions. Most importantly, when we get to the end of that process, my fingerprints are on it. I’m bought in. They know I’m bought in. They’ve heard what I care about. And very often I get to just greenlight it at the end. Say, “Yeah, this is great. Let’s do it.”

Andy MacMillan:

What it avoids is what I hate in senior leadership is when somebody brings the final 20 page PDF version of something to me and I just get to do the thumbs up or the thumbs down like Caesar. And you’re stuck with either taking this product or this project out at the knees and shutting it down, which is miserable for your team or greenlighting something that you don’t think really hits the mark. So for me, it really helps me scale my time and my decision making, because I get to have influence on these projects in little increments over time where I’m again, kind of participating in what they’re doing and in the end, I like the result.

Andy MacMillan:

I get to greenlight it. And then they get to make decisions when I’m not in the room, knowing how I feel about things. So it’s actually about scaling decision-making and giving agency to people throughout the organization and empowerment. I think even in, maybe not a 10 person company, but if you get to 40, 50 people, it’s really about how do you scale decision-making and all roads can’t lead through a senior leadership. You have to have people that that can act if you want to move quickly.

Harry Stebbings:

I mean, so many things for me to unpack there. We’re doing such a good job of sticking to the schedule. So I’m thrilled about that. In terms of the decisions that you need to influence, how do you determine what decisions you fundamentally need to influence and need to see in real time progress versus actually what you can let run in isolation with the team?

Andy MacMillan:

I think it’s really about working with your directs. So again, our scheduling model I learned largely from Thomas Kurian when I was at Oracle in his division. He would have these large chunks of time. And I knew that I could always get time. My time happened to be on Wednesday afternoons for the product areas with I could get on the schedule. So in some ways, things that are important, people will naturally bubble up to you if they know that there’s access. People love the idea of getting in front of the head of products or the CEO or whatever, to get feedback, to get visibility. So one is frankly just having an avenue where people really know that that is actually how the world works. That is how you spend your time. I think the other is working really closely with your senior leaders and making it clear to them, I don’t want to have a whole bunch of just one-on-ones where we walk through every part of the business. I want them to start bringing people on their teams, into these conversations.

Andy MacMillan:

So now again, if I’m participating in these broader conversations with more of the team on more of the projects, I just have a better pulse of what’s going on. I mean, ultimately running a business does require a lot of intuition. You have to have a sense of what’s going on, and what’s important inside the company, what’s important with your customers, what’s important with your partners. So there is no quick and easy way to do that. You have to put the time in. The thing is really how do you give yourself the opportunity to start to feel and hear those signals?

Andy MacMillan:

Frankly, our whole business is based on helping people do that with customers. I take kind of the same mindset inside the company. How do I put myself in a position where I can see and hear and feel what’s going on in the company? That can’t just be in my staff meeting. That’s got to be with working with account teams, product teams, designers, people in the marketing team. If you want to have a pulse of what’s going on, you have to get out of your office, and get down off the pedestal, and get involved in what’s happening.

Harry Stebbings:

I do have to ask [inaudible 00:09:30], we both have a common passion for something, [inaudible 00:09:32] pricing. When we think about pricing today, you said to me before something that was fascinating. You said consumption-based pricing is going to dramatically change how enterprise SaaS companies operate. So to set us some context, how do you fundamentally define consumption-based pricing? And how does that look in reality?

Andy MacMillan:

I think consumption-based pricing, and we’re seeing it with companies like Twilio or Snowflake. It’s really around modeling your pricing after driving usage or adoption of the product at scale. I think that’s fundamentally different in some ways from the traditional seat-based model where a seat-based based SaaS was incredible when I made the shift from Oracle to Salesforce. I mean, what a change where you went from, I sold you something and then I just kind of went away whether you were successful or not to a model where customer success mattered, right? It was a subscription based model. I had to care that you were successful.

Andy MacMillan:

I’m a Salesforce customer. We pay essentially the same rate for all of our seats of our SFA deployment, whether it’s somebody who uses it once a month or all day long, has it open as a tab that they’re working out of, I think the shift in consumption based pricing is this idea of what if everyone in my company had access to that and I paid based on how much value we drive out of it, how much we use it, whether we do our forecasting in it or not, we do our reporting in it or not, whether 550 people inside my company used that product all the time or whether a handful do every day. I think that aligns the interest of the buyer and the seller much like SaaS aligned deployments being done more quickly, which really mattered to buyers.

Harry Stebbings:

So my fear with kind of the consumption-based model is it fundamentally discourages usage at scale, really. How do you think about that kind of disincentive to use due to the consumption-based alignment?

Andy MacMillan:

I think it actually incentivizes consumption and scale, but it’s all about how I set up and model the usage expectation. Right? Nobody wants to be surprised. We all know this with our cellphones like, nobody wants to be surprised with your cell phone bill at the end of the month. But I do think as a buyer of lots of enterprise software, I’m fine paying for what I use. What’s frustrating to me is paying for what I don’t use. I also think there’s a real challenge with the marginal cost model of something like a seat-based pricing model. When you think about net expansion and things like that inside companies, just using my Salesforce example … again, I love Salesforce. We use tons of their products. I’m a very proud alumni of the company, but most people relate to paying for Salesforce as a seat-based SaaS product. So it’s a good example.

Andy MacMillan:

If I want to roll out Salesforce to 10 more people, they’re probably the next 10 people that might use the product in some way, right? An edge case, somebody in marketing that might want to look up customers or whatever. Should I really be paying the same rate necessarily as somebody who’s using it all day long? So there’s this marginal cost that I decide not to do, because I don’t know if they’re going to use it, or if they just had access to the platform and we’re building workflows and things like that in anywhere, I was like, “Hey, great. I could solve this workflow using some of my Salesforce data or using my Salesforce platform and folks had access to it.” I would do more and I would gladly pay them more for that. I’m more than happy to pay for things that we use and get value from.

Harry Stebbings:

Can I ask, in terms of the seat usage for you at UserTesting, when you look at the product to say it obviously oriented around product and site teams, obviously, how do you think expanding beyond that core functional area of expertise, how important is that to you and how important is it to have the cross collaboration across functions, do you think?

Andy MacMillan:

I think it’s important to us not just from a business model perspective, I think it’s important to us because that’s the mission we’re on. I really align and believe with the core goal of the company, which is that we need to be more empathetic with customers, just generally. More and more of our experiences are kind of digitized, and in some ways that’s great, but we’re kind of disintermediated from people. I went to Starbucks this morning. I didn’t even have to speak to the baristas, right? I just mobile ordered and away I went. So how do we as businesses connect with our customers? I think that’s really important. I don’t think that’s just a product, or just a design, or just a marketing problem. How many people work at companies and make decisions all day long where they don’t easily get input from their target audience, from their customer on anything, on a presentation, on a piece of content, on a strategy that they’re thinking about?

Andy MacMillan:

So I’m really passionate about the idea of connecting people with customers when they’re making decisions. We refer to that as human insights. So I think it’s really for us about how do we evangelize this idea that much like the past, I don’t know, 25 years we’ve been saying you need to make data driven decision inside companies. We have whole analytics markets on helping people have data when they make decisions. I think that’s great. I love having data when I make decisions too. It doesn’t necessarily replace speaking to somebody, right? Talking to somebody about your idea. So I think for us, we’re really trying to think about how do we empower people throughout the entire company to be able to talk to people about their ideas, get some feedback from somebody, maybe outside their perspective. I think it’s even important from a diversity and inclusion standpoint.

Andy MacMillan:

If we want to have more inclusive products, we need to include the perspectives of more people in those products. So one way to do that is talk to people and get input from people that are different than you about anything. Again, you’re right, we have generally done that around products and digital products, but why not anything else? Why not an idea that I have about what I want to do with my business? Great. Go talk to some people with some diverse perspectives and backgrounds and get their feedback. I think that matters.

Harry Stebbings:

Now I’m being deliberately controversial, so forgive me for this. It’s very unlike me, actually, so I apologize [inaudible 00:14:25]. I’m interested. You said about the empathy for the customer being such a core ethos. I always believed that actually an ethos and a brand has to be divisive. People have to be for or against it, which is why I think Zoom’s making people happy isn’t great actually as a core ethos and it’s like a mission because who doesn’t want to make people happy. And when we think about being more empathetic with customers, it’s like, isn’t that every company? I’m interested in, how do you think about kind of brand and the importance of building an army for or against?

Andy MacMillan:

Well, I think you’re right. I like the thesis on that. I think the point is who do you want to be for and against what you’re doing and do you really understand them? The challenge in so many companies is the people that build experiences now are often not the people we want or even aiming at consuming those experiences. I mean, a friend of mine works at a company that does direct to consumer hearing aids. They’re doing that through mobile apps and websites, right? Do you think his development and design teams are all folks that are in perhaps their later years and going through the experience of hearing loss? How do they understand that user and build the right experience? That matters. So even if you want your brand to be energizing to a specific audience, even if you want to make an exciting or divisive, or however you want to frame that, claim, you have to know what you’re aiming at and you have to have intuition.

Andy MacMillan:

I mean, the great product leaders of the world, what they’re known for is their intuition. So how do they do that? When you really go talk to those folks, you find out they’re just very good at listening and hearing what’s going on from people, right? They hear from a few folks about something and they kind of pull on that thread, and then they talked to a few other folks and they pull on that thread some more. So how do we build that kind of intuition at scale for whatever it is we’re trying to do?

Andy MacMillan:

So I love the idea of having big and bold branding campaigns, building an army of followers that are for what you’re doing, but you have to have that intuition, right? That’s not something you get from just compiling big data and deciding what the world wants of you. You have it from having a point of view, from understanding how people will react to that point of view. That’s what you’re going for. What you just described is people’s emotional response to a brand. So how do you develop that? How do you test that? How do you build that intuition? How do you nail that? I think you get your audience, you understand them.

Harry Stebbings:

I love that, channel it to your own intuition. I do agree with you there. I do have to ask you, and again, sorry for this, totally off-schedule, but-

Andy MacMillan:

That’s great.

Harry Stebbings:

You mentioned the product leader [inaudible 00:16:39]. Honestly, Andy, as do so many founders today and they say the biggest, biggest challenge is we cannot find great product marketers. We actually can’t find product marketers full stop. Help me out here. Why is there such a drought of good/product marketers?

Andy MacMillan:

I think product marketers are some of the most important people in tech companies. In fact, I’ve regularly said, I actually think they make, by far the best CMOs. Everybody tries to hire demand gen people to be their CMO and really as a tech company, your entire world is about how do you connect technology with the problem set, which is really what product marketing is about. I think the challenge with that is it’s not a cure all. I talk to a lot of folks that tell me, they really need a good product marketer. And then you start talking to them about what they’re trying to solve with product marketing and it’s like, well, they don’t really have product market fit. They haven’t really identified their target audience well, and they are hoping that they’re kind of one good PowerPoint deck away from solving that with product marketing.

Andy MacMillan:

And they’re kind of not. I mean, again, I would go back to they really need to double down and listening to what the market is telling them what their customers need. A great product marketer is invaluable in that process. They can help you with that, perhaps. But I think a lot of good product marketers suffer from just having too big of a gap from the product market fit and what market they’re going after. And it’s too easy I think for companies to kind of lay that at the feet of product marketing. So I would say, I think, in some ways it’s this dichotomy. I think product marketers have a great brand. To your point. people realize, I think, the value of product marketing. I think too often, we also prescribe market failure at the feet of product marketing. I’m not sure that’s always the case.

Harry Stebbings:

Sorry, to clarify, do you think of then, product marketing should be instilled before PM like product market fit to ensure a streamlined timeline to product market fit and really helping you get that, or is it a post product market fit to help scale?

Andy MacMillan:

I think it’s more post. I think you need to have some level of kind of that intuition, as I was saying, in the product organization broadly. I think that expands beyond product management. I think that your engineering team, your design team really getting the problem and the customer and how the solution fits. I think product marketing to me is really kind of in that Jeffrey Moore adoption curve model of like crossing the chasm to me, it’s the product marketing challenge, right? Early adopters have validated that this solves a problem. It meets a need. It fits what they do. Getting over that chasm is really two things. It’s making sure that the product itself is usable and applicable to a broader audience, right? It can’t just be people with PhDs in computer science find your product easy to use. It’s like, well, the rest of us have to. But it’s also then how do you tell that story. I think to me, that’s really what product marketing is about.

Andy MacMillan:

How do you talk to the majority of folks who are not your early adopters about what the problem is, why you’ve got a solution, why this meets a need, and why they should act? That to me, is where product marketing really comes into play. And then scaling a go to market organization, right? That’s the best product marketers are just as comfortable in the product meeting as they are in the sales huddle. So, again, there, I think you’re really talking about scaling more into the majority than just the early adopter part of the curve. And again, you can define that really narrowly. I’m not saying you have to get to 50 million in ARR and be going mass market. I just mean it’s not your first dozen customers. It’s really getting beyond that. I think you need good product management skills.

Harry Stebbings:

Trust me. I mean, nothing makes me happier than talking about crossing the chasm. So a big smile on my face there. I do want to ask though, because you said about kind of scaling go-to-market. So I want to talk about scaling orgs, because you’ve grown from 22% annual growth to 35% while going from 40 million to a hundred million there in ARR. And some pretty insane numbers there. Not a lot of companies actually speed up while growing. So this is a really unfair question that I’m really now going, “I can’t believe I quite raised it.” But tell me though, what’s the secret?

Andy MacMillan:

I think the secret is being deliberate, honestly. I mean, we didn’t accidentally start going faster. It wasn’t like all of a sudden the phones just started ringing. And to do that, we focus a lot on pipeline. We focus on what are we doing to build the right pipeline in the right places, and then how do we execute as a sales team behind that? So in UserTesting’s case, when I came on and I joined the company about two and a half years ago, I just universally met customers that liked the product. So I felt like there was strong product market fit. So again, if that’s not there, you’ve got different challenges. So then it was really how do we tell a broader story at scale and put a marketing engine behind that so we can generate real demand, real qualified pipeline that you can then hire salespeople behind.

Andy MacMillan:

So we really focused on two things. One was developing, and measuring, and knowing our pipeline and knowing it really well. And the second was really thinking about how do we segment and train our sales team so we could execute on that pipeline. Those were really the areas that we focused on, knowing that we had a great product that just needed a broader message.

Harry Stebbings:

So when we think about coming to the sales team, I do want to get into segmentation and training. In terms of getting the right salespeople, you’ve mentioned before just how paramount it is to get the right salespeople specifically. And this is again a tough question, but what is the right sales person like to you? And we can be specific here. So if we think about UserTesting, what is the right sales person to you and what are the leading indicators of them being right when you’re detecting it?

Andy MacMillan:

I think part of it is really knowing what works. So I’m a big believer in sales of understanding the template for what are you looking for? What has worked? The thing you have to be careful about is I think there’s a very small percentage of salespeople that are just kind of selling savant. They’re just really good at it. They could sell practically anything. You need to be careful not to try to replicate that person because that’s more of just … every sales team I’ve been on has a handful of these. And you’re just basically like, “I can’t replicate that person, but they’re really good at this.” But you look at the rest of the team and you go, “Okay, what’s really working? What is the profile of person who’s really being successful here?” And by profile, I mean like what industries they have experience in. What gets them excited about the product and the solution? What makes them engaging to customers?

Andy MacMillan:

So for us, it’s really been people that are on this mission that really seem to care about customer feedback. Our best salespeople are the people that really care that people get feedback from customers. It’s a compelling and interesting thing to talk about. So we have found when we hire from people that are in adjacent industries, the survey space, the customer experience space, we have a lot of success bringing them into our company and scaling them. That’s not always the case. Some companies don’t do well when you hire from adjacent markets. Some companies do better when you hire more technical salespeople. For us, that’s not the case. We’re really looking for people that are kind of on the mission with us.

Andy MacMillan:

And then the second thing is, I think salespeople are one of the areas where their track record really matters. There’s just something about being able to be a closer that I’ve never figured out how to teach somebody. I’m a big fan of most things are nurture versus nature, but there’s just some people are closers and some people are really good in other areas of the business. They’ll make a great supporting player in some way in a sales role. But the ability to get somebody to sign on the line is a real talent, not to be underestimated. It’s not something I’ve ever done. I’ve never carried a bag, and I think that’s something I keep in the back of my head of like really appreciate what these folks do and don’t underestimate it. I’ve had really compelling people that can get all the way through a sales cycle, but not get a deal done and that’s tough.

Harry Stebbings:

I mean, my oh my, there’s so much to unpack there. In terms of my thinking, you mentioned the importance of being a closer there. I totally agree with you. Question is, with slightly inflated LinkedIn and slightly inflated CVs and challenging attribution, how does one determine whether one is a closer pre hire? And then it’s unfair to ask two at once, but why not? How long does one give a sales rep in terms of payback period, and really providing the data to prove that there are pros there?

Andy MacMillan:

I’ll take the second one first, which is, it depends on your sales velocity and segments, so we sell in every segment. So my SMB reps, for example, are going to get many more at bats during their first quarter for maybe then one of my enterprise or global reps. So I think that’s why we have sales ramps. So I think sales ramps are a good test. You do need to, back to pipeline, understand what are you handing to these folks to go sell, right? If you drop one person into a completely barren territory and they’re having to really go develop the territory versus you drop somebody else into the middle of, I don’t know, Manhattan is their territory and there’s seven or eight in-flight deals, I’m going to measure them differently, right?

Andy MacMillan:

I want to see how they behave against the pipeline that they have. So that’s why understanding, and measuring, and managing your pipeline is so important because then you can hold people accountable to close rates at certain stages and things like that. So it can be very mathematical in how you look at sales performance, but you have to really understand the business you’re in, and the segments you’re in, and the speed that they should sell. So I think that’s definitely true.

Andy MacMillan:

I think on the first bit, I think it’s really about how do you measure the ability for somebody to go in and be compelling, right? How do you really understand what their pitch looks like? You can do some of that in an interview, but it’s also how do they talk about the deals that they’ve been in? I really want to understand the deals where they were understaffed, under resourced. My favorite interview question in general anywhere is when have you been wildly successful when you’ve been substantially under resourced? I want to know when you win when it’s tough. So you lean on that a lot when interviewing salespeople. I also am a big believer that reaching out into networks and finding out how people have really done is an immeasurable feedback. In many ways, I think interviews can be misleading, especially with salespeople. Most salespeople, if they’re any good are at least quite charming. Being charmed in an interview by a salesperson is a very easy way to hire the wrong salesperson. So you really need to dig in and see what’s their track record been.

Harry Stebbings:

Totally with you in terms of the digging in there. I think the other element there, it’s like, okay, say you hire a brilliant sales rep and they are absolutely killing it. Again, it’s [inaudible 00:25:39]. And they want to make the move from individual contributor to manager, and you’re going, “Well, hang on a minute, Sam or Jessica, you’re doing fantastic as an individual contributor. Do you want to move to management?” And it’s something that I’m struggling with at the moment with an investment of mine. It’s like, you don’t want to lose that individual contributor to management, bluntly. And you don’t actually know if there’ll be a good manager. How do you think about that kind of promotion and dilemma when you do have a very talented contributor wanting to make the move to management?

Andy MacMillan:

I’m a big believer that you do have to support people in the path they want to be on, but you can definitely give them guidance. I had somebody recently get promoted to CMO of a public company. And when they were working for me, they were adamant that they wanted to be in the product organization. We had to have a long talk about, “Hey, look, I really think you’re a marketer. Let me tell you why.” And they either agree with you or they don’t. I think it’s tough to hold somebody in a position that they don’t agree with. So if this person’s career path from their perspective is into management, I think you need to find a way to support them if you think they’re going to be successful.

Andy MacMillan:

One of the best ways to do that with sales in particular is I’ve connected people before with really amazing individual contributor salespeople who have been through their career as an individual contributor of salespeople, who have been wildly successful, have made millions of dollars to say, “Hey, go talk to this person about what that path looks like.” So they can have an exciting path of being an individual sales contributor, if that’s what they want to do. And then also really assess their management skillset. I think the biggest thing for salespeople is, are they willing to give up the thrill of closing a deal? I mean, that is a unique euphoric moment. As I said, I’ve never carried a bag, but I do remember the day that we sold Stellent to Oracle and the moment they’re like, “The deal is done.” That is a special feeling when you close something like that. Then yes, you still have some of that in sales management, but it’s not the same when it’s not your deal.

Andy MacMillan:

So I think it’s really having conversations with someone like that about this is the trade-off, this is what you’re giving up, this is what you get, this is the thing that you’ll have to do. Here are two people you should talk to from different perspectives in their careers. And then really aligning with that person, what do they want to go do. And if they’re your best sales person, but you think they’d be a good manager and they’ve talked through it and they think about it, then figure out how to make them your best sales manager.

Harry Stebbings:

Yep. No, I agree. I think it’s very helpful in terms of providing the references and differentiated references to see what it’s like. I totally love that sort of the sale. So I think it’s a challenging one to give up. I do want to ask, you mentioned sales training before. Before we touch on pipeline, how you think about the foundations to successful sales training? And I guess, how do you structure yours? I guess it’s a little bit different view dependent on the segmentation within the sales team, SMB, mid-market, or enterprise, but what are the foundations and how do you think about optimizing it?

Andy MacMillan:

That’s a good question. I really break sales training down into three pieces, maybe the fourth being have a world-class sales enablement person. I’m lucky to have one here at UserTesting and it is such an important part of a company and one I don’t think we talk enough about. So first off, have an incredible sales enablement function, helping you ramp, wrap. It helps with close times. I mean, it is one of the best investments when you get to any level of scale is really having good sales enablement. Beyond that, I really think of three things. One is there is some element of core value selling that you can train people on. I mean, there are great schools of thought, different things. Our company is going through MEDDIC training right now, which is a sales value selling philosophy. It’s very good.

Andy MacMillan:

So I think there is a skill to sales and training on the craft is important. I think the second bit really has less to do with pure sales training and more back to our product marketing question, which is how do you have great solution messaging that you’re arming your sales team with and training them around that? Right? So they’re not selling features and functions in tech, they’re selling a solution. And that really is not something you want your salespeople making up in the room on their own. You need to hand that to them, train them on that.

Andy MacMillan:

And then the last one, again, a little bit is we talked about it, it’s hiring closers. And if I had a secret recipe for converting people to being better closers, I would love to share it with everybody. I don’t. I’ve had great people I thought were incredible salespeople who just can’t at the end of the quarter, get deals done. And I’ve never figured out the right thing to say to them to make that change. And I’ve had other people that, they just get deals done. So I think part of it is just being honest about, do you have a team of closers?

Harry Stebbings:

Totally with you in terms of the honesty element to yourself. You mentioned the sales enablement element. And it’s really interesting because I agree, I think it’s barely ever touched on in this industry. So when you think about the right time and the triggers to hire sales enablement, but both in terms of hands on moving the team, what is the right time and then associated to it, how does one measure success of sales enablement?

Andy MacMillan:

I measure success of sales enablement on our ability to move things through the pipeline and then close rates, right? So are those trending in the right directions? It may be ramp time as well. I think as far as the right time, I think everything about scaling a company when you get to a certain size is thinking about what are the investments in things that remove constraints, right? I’m a big believer in the book, The Goal, which is actually a manufacturing book, which is all about constraint and theory of constraints. So as soon as hiring and making the investment in sales enablement allows you to remove constraints on your sales team overall that let them go faster. So if close rates can go up, if ramp times can go down. That’s math now. You can put that in a spreadsheet and say, “Okay, well, if I can improve my close rates by 10% across 10 sellers, I’m guessing that pays for your sales enablement person pretty quickly.”

Andy MacMillan:

So that’s the way to think about it. Everything about scaling a company is about where do you create the points of leverage? Where do you create the ability to stop having things be one-to-one manual efforts and start to generate lift. And sales enablement is one of those levers, marketing is another one of those levers, right? What are the things I can do in marketing that help have leads be more qualified, better qualified, things like that. Those will help with my time to close and ultimately with closed rates as well. So I’ve put sales enablement in kind of that same bucket. I tend to think as soon as you think about hiring some sales management, maybe getting to two sales teams to probably get into the size where a sales enablement person, if they’re good, is going to pay for themselves pretty quickly.

Harry Stebbings:

Yeah, no, I agree with you in terms of that payback period with that of scaling sales team. You mentioned like marketing, you mentioned sales, you mentioned obviously kind of conversion with pipe there. I have to touch in the pipeline itself because you said before, my pipeline meeting is the most important meeting of the week. Such a good cliffhanger for me. So when is it, how long is it, and how do you structure it? Let’s start there.

Andy MacMillan:

Sure. So I do a Monday pipeline meeting. I do it every week. It’s an hour long, but I also think pipeline is one of these words in some ways that we could just get rid of it, we should. It means two entirely different things to your sales team versus your marketing team. So companies constantly fight about pipeline. I think it’s largely because they’re talking about different things. So what we do is we have this pipeline meeting, both sales and marketing are invited and come to the meeting. And it’s my meeting. I’m literally the host of the meeting. We have my sales management team and most of my marketing leadership. We alternate every other week, what I call the marketing view of pipeline or the sales view of pipeline, and what the marketing view of pipeline is, what are we generating right now and what are we moving through the pipeline?

Andy MacMillan:

So think of it like, “Hey, we had our big event this week, our annual event, HiWorld. So how did that do, how many leads do we generate? How qualified were they? How many leads did we help advance the pipeline? That’s a marketing view of the pipeline. So when we do that, sales gets to see all the things that marketing is doing, the impact that it’s having, the pipeline it’s generating, things like that. The following week, we have the sales view of the pipeline. Sales doesn’t particularly care right now what we did at that event if they’re trying to close their two Ford deals, because nobody came to our event this week, that’s going to close an enterprise deal with us by the end of December. So the sales view of pipeline essentially walks through every one of my regions and territories. We look at every team’s pipeline by stage, by revenue.

Andy MacMillan:

We even get down to a look we have in the dashboard where I can see. So we’ll say, “Okay, enterprise west.” We bring up a slide. It’s got every rep’s name, how they’re doing against quota, all their pipeline, the stages of those pipeline. That I can look at that chart and go, “Wow, Steve is low on pipeline in wherever.” So now we’re all trying to figure like, “How do we fix that?” So it’s really about understanding the difference between what marketing’s doing and what sales is doing, and what pipeline means to them, and how do you get them both in a room talking about where do we need to pull levers to fix things. And I think that’s the indicator, when you talked about how do we speed up the company, it’s about pipeline.

Andy MacMillan:

The secret to growing a company is being able to hire and feed salespeople. I think where a lot of folks screw up is they take a big slug of venture capital, they go, “This is awesome. I’m just going to double my sales team and hope they feed themselves.” And half of them starve, then you fire half the sales team. And now it’s a terrible company to work at because salespeople aren’t making numbers. A bunch of people are getting fired. That’s miserable. So all of that gets fixed if you think of pipeline as being that leading indicator, right?

Andy MacMillan:

Fund the growth of the pipeline, measure the pipeline, understand from both a sales and marketing perspective what that pipeline looks like, see the pipeline coming, hire the sales capacity behind it, ramp them quickly, and then grow like crazy. That’s the way to do it. And it’s all based on that pipeline meeting. That’s the meeting that tells me I can hire five more salespeople. Where can I hire those salespeople? Where do I have pipeline? I think that’s what people get wrong. Hiring salespeople isn’t about hoping they’re successful. It’s about knowing you can feed them.

Harry Stebbings:

How do you measure the health and success of a pipeline? And what I mean by that is like, I see a lot of misattribution within pipeline in terms of convention tagging, whereas like, higher hope, decent hope’s questionable. And actually it’s always overly optimistic and it’s not actually attributed in the right way. How do you think about pipeline attribution and that measuring that effectively?

Andy MacMillan:

Yeah. I think pipeline attribution’s a bit of an ugly game. We don’t rely on it too much. I do want to know that marketing activities are generating pipeline. We do think about AE generated pipeline, marketing pipeline, partner pipeline, things like that. So I do think that matters, but ultimately what we’re really looking at is what are the things that are qualifying through our sales stages. So I think everything kind of marketing qualified, lead and up, is a bit of a like, “Ah, maybe it’s great. Maybe it’s not.” What I really want to see is what comes through and become sales qualified pipeline. Right? That’s really what I hold my marketing team accountable to. My CMO’s amazing. She actually talks to her team about like, “Our goal isn’t pipeline. Our goal is deals, like closed, won deals.”

Andy MacMillan:

So they’re very much goaled and incented, not just on generating activity, but generating real pipeline. And then you’re measuring in every one of those stages, what do my conversions look like? How do I get involved to help the sales team move things from stage zero to stage closed? I think that, again, gets down to kind of the brass tacks of what everybody cares about in pipeline. It’s not 10,000 people came to a webinar that we did that really had nothing to do with our business, but we put 10,000 leads into the pipeline. That doesn’t matter. What matters is how many of those people became sales qualified leads. And then we measure, how did they do going through the pipeline? And I think that’s really the way to look at it. And what’s interesting about that as you start to get away from attribution data, you start to look at things like when was the lead created? How long’s the lead been in the pipeline? How’s it moving through the stages? What’s the size of the deal? These are real data points. They’re not things that are debatable.

Harry Stebbings:

And this is totally again off schedule, maybe unfair of me, as a board member to say, do you think this is something that board members, we should actively play a role in. Do you think board members should be part of pipeline reviews? And do you think boards should be very involved in terms of communicating with head of sales on the health of the pipeline? Or is that too granular from your perspective?

Andy MacMillan:

It’s probably too granulated in my stage, but I would certainly think earlier on, I would imagine board members in earlier stage companies should be very concerned about product market fit and then the pipeline, if you’re really trying to think about how to fund the growth, right? If you can’t get well quality pipeline that your sales team can go sell, then you’re wasting money hiring salespeople, and you should really be focusing on building that pipeline. So I think earlier stage for sure, if you’re my size and your CEO and head of sales and CMO can’t manage their pipeline, I would solve that problem differently than getting involved in the pipeline. I’d probably get involved in your management hiring, but at some point earlier on, I think that makes tons of sense.

Andy MacMillan:

And for later stage companies, I just think this is where when you start to see the friction between sales and marketing, maybe that as a board member is where I’d start to say, “Hey, your sales and marketing team don’t seem aligned.” To me that always seems to come back to, they’re each talking about pipeline, but they’re not talking about the same thing.

Harry Stebbings:

I’m so enjoying this discussion. I have to ask, all natural kind of deals and the opportunities in pipe, do you do post-mortems of a sort? And what I mean by that is, when you win a big one, do you do a post-mortem on why you won, when you lose, what you lost. How do you think about postmortems and a hindsight review?

Andy MacMillan:

We do some of that. I actually find the deals we lose to be more interesting than the ones we win, in some ways. So we definitely do. We do it in QBR. Every segment does QBRs in our business. We bring together the entire account team structure inside those regional teams, every one of the reps goes through. They talk about what they’re seeing in the market. Again, this is where I believe getting really involved in getting that sense of what’s happening. I do a Q and A that I joined in each one of those small regional teams where I join them for 45 minutes. I get summaries of what they’re doing and what they’re seeing, what they’re finding from competitive. I answer questions about the business and we talk about what deals they won and lost. Like what was the most painful loss that the team had? Why did that happen?

Andy MacMillan:

I would say it is challenging. I mean, on some level, when you ask the sales team, why did we not win a deal? There’s really only three reasons you don’t win a deal. It could be the pricing, it could be the way your sales execution happened, or it could be the product. Very few sales teams at the end of a bad deal are in the mood to say, “Yeah, it was really us. We didn’t execute this deal well.” So I think you can end up with a lot of signals of pricing is wrong, back to our first conversation, or the product’s not right. You kind of really have to dig in and go like, “Did we just not win this one? What happened?” Especially when you look at it compared to the rest of your pipeline, if you want a whole bunch of other deals that looked similar to that one, it may very well just be that customer, the personality set, whatever happened there. So I would just be careful not to over-rotate on losses either.

Harry Stebbings:

And last one before the quick fire because I could chat to you all day, but it’s like a lot of the reasons that I hear nos or delays is, “Listen, honestly, Andy, we’re super interested. It’s the end of the quarter. And it’s just not a priority for us right now.” Which bucket would you say that goes into? Because it is a no, really, and it is a delay in, and it is a pushback. How do you think about that as the reason for no?

Andy MacMillan:

I think that’s a sales execution issue. A big part of the sales training that we do is how are you conveying urgency in the problem that we’re solving. And I think that’s true. I mean, we are trying to solve a problem of how do you connect with customers and understand their needs. I don’t think for most companies that’s a next quarter problem. So it is on the shoulders of my broader account team, not just the sales person, but maybe the SC she’s working with, the customer success manager, whoever to go in there find projects, initiatives, executive sponsors, whoever who see the urgency of understanding customers, make the case, and get deals done. So I don’t think there’s a lot of great excuses for push deals.

Harry Stebbings:

What have you found most effective in terms of creating urgency? It’s the biggest thing that I find actually reps struggle with in terms of just how to convey the why now on the urgency.

Andy MacMillan:

Our whole product is built on this idea of building empathy with your customer. The more time I’ve spent at UserTesting, the more I’ve realized that that is the key to solving so many problems. It’s one of the big leadership levers that we should all understand. I think the same is true in sales cycles. The deal doesn’t close quickly because it’s important to us. It closes quickly because it’s important to the customer. So if we don’t understand their pain, their urgency, their needs, entire solution to that, then shame on us. So that’s the secret I find, is the best reps, the best teams are very good at understanding our customer’s pain points and selling on that. Right now, here’s how I’m going to help you solve this problem that’s yours.

Andy MacMillan:

The worst salespeople are the ones who are telling customers, “It’s my end of quarter. I really need to get this deal done.” It’s like, “Well, that’s lovely for you, but that’s not really my problem.” Right? So I think the more we can put ourselves honestly and earnestly in the shoes of our customers, and understand what they’re trying to do, and be genuinely helpful, right? The best sales deals are the ones where we’re hand in hand with the customer. We understand their problem. We honestly believe we can help them. We see the urgency, they see the urgency. We’re all aligned in helping them get to that answer quickly. Those are the best deals. So the best salespeople are the ones who can really put themselves in the shoes of that customer and understand that need.

Harry Stebbings:

I promise this is the last one. How do you feel about discounting as a way to get deals closed pre quarter end?

Andy MacMillan:

I think it depends on the process you’ve gone through. Everybody also has a budget, so if you’re discounting to try to really … you understand the problem, you’re trying to help get something done, your champion’s trying to get maybe something through their procurement team, every procurement team likes to put a scalpel on the deal. Great. Okay, fine. Maybe there’s a little bit of a discount that’s applied. I don’t think for the best deals that the discount is the reason the customer acted. It might be the reason you help to get it through procurement. It might be a good faith thing you’re doing to try to push something through, but we actually don’t discount super heavily because I think we do a very good job aligning with our customers, and having a fair pricing model, and kind of standing by that.

Andy MacMillan:

So to say that I don’t support discounting would be a lie. In an enterprise software company, certainly discounting occurs, but again, if it’s not urgent to me, it doesn’t really matter. And all of a sudden I can just save 10 or 15% on the software. Does that really move the needle for me? I just don’t think so.

Harry Stebbings:

Yeah. No, I agree with you in terms of that kind of realism and rationale. I do want to move into my favorite, being the quick fire round. We want to do a round two, because I still have so many questions, but I do want to move into the quick fire. So I say a short statement, Andy, and you give me your immediate thought. So you’re ready to roll?

Andy MacMillan:

Sure. Let’s do it.

Harry Stebbings:

What’s the biggest challenge for you today in your role at UserTesting?

Andy MacMillan:

I think it’s the biggest challenge for every CEO, is the uncertainty of every day, like who knows? Everything comes up to your desk or the buck stops here. So it’s the randomness of what happens.

Harry Stebbings:

Do you ever question one’s abilities as a CEO? I question often my ability as a VC and I often feel the imposter syndrome. Do you ever feel that?

Andy MacMillan:

Sure. Yeah. All the time. Stuff lands on your desk and it’s almost like you want to pick it up and turn around and go like, “Who do I hand this to?” And you’re like, “Oh, it’s me.” And that’s just part of the job.

Harry Stebbings:

That’s funny. Tell me what’s the hardest role to hire for today?

Andy MacMillan:

Maybe an unfair answer, but I think it’s anywhere you don’t have a really good Lieutenant. I make the worst hires when I haven’t done a good job having bench strength and then there’s urgency and risk in not getting the role hired. So I think anywhere I’ve got a good Lieutenant, I make a good hire and anywhere I don’t, I get nervous.

Harry Stebbings:

I’m a Brit, and this isn’t in the schedule, but I’m too intrigued. You said something about not having good lieutenants. I’m a Brit and I’m so awkward, especially when it comes to things like letting someone go. What’s the right way to let someone go?

Andy MacMillan:

I think the right way to let someone go is to have a very honest conversation with them about why it’s not working, to do it as soon as you realize it’s not working. I think the whole like, “Hey, I’ve hired somebody. They’re taking your job. They’ll be here tomorrow.” Is the wrong approach. So I’m pretty upfront with people. I don’t think people are surprised when I have a conversation with them, and it’s usually pretty early in the process. And then I’m very upfront about how to help them find the thing that’s right for them. If you’re hiring decent people, you do want to see them be successful even when they land somewhere else. So I think having that kind of conversation early and honestly, it’s the right way to do it.

Harry Stebbings:

Which external SaaS leader do you most respect and admire today and why?

Andy MacMillan:

If I don’t do the ones I’ve worked with, which would be folks like Thomas Kurian or Marc Benioff at Salesforce, who I think they’re both amazing, I’m really impressed with Scott Dorsey. I mean, I worked with him very briefly when Salesforce acquired ExactTarget, but I think Scott’s just the real deal. I mean, I’m a Midwestern guy. he’s amazing. He’s just so upfront, so honest, so true to who he is. I think he’s just great.

Harry Stebbings:

What moments in your life changed the way you think?

Andy MacMillan:

I think sports was a big change for me in general. I grew up playing lots of very competitive sports and I think that mattered a lot to me. I also think when I first joined Salesforce, just the customer centricity of what Salesforce was doing, how every customer mattered, even if they’re only spending 10K with us and a bunch of executives would rally to solve a problem for a really small customer, that really changed my view on what it meant to be in business and how we could really help people.

Harry Stebbings:

Tell me, what would you decide to change about the world of Saas?

Andy MacMillan:

It’s going to feel almost maybe oversaid at this point, but I really do buy into the diversity efforts being so important. We are just too, too white, too male, too San Francisco as an industry. And I would love to see the opportunity that I think is the SaaS business model just available to many more people.

Harry Stebbings:

Totally with you in terms of that availability. And then let’s finish on the next five years for you and for UserTesting, paint that vision for me, Andy.

Andy MacMillan:

We’re on this mission. I mean, we want businesses to talk to customers again, and I think that is a more than five year time period for us. We were kind of going department by department, knocking on doors, showing people that they can talk to real customers and get feedback. I think that’s our strategy for next couple of years, just keep leaning into this need to bridge this empathy gap so folks that are inside companies, sitting behind technology can really understand what customers and consumers want.

Harry Stebbings:

Andy, thank you so much for this. As you can tell from the complete wavering from the schedule, but also the excited voice, I so enjoyed this. So thank you so much for joining me today.

Andy MacMillan:

I enjoyed it a ton as well. Thanks for having me.

Harry Stebbings:

I really shouldn’t say this because I know I’m not allowed to have favorites, but that was probably one of the most fun episodes I’ve had to record. It was just fascinating for me. I love the discussion. None of the questions were on schedule, but it was just incredible. So huge thank you to Andy for that. And if you’d like to see more from us, you can on Twitter @harrystebbings. Likewise, it’d be great to welcome you behind the scenes here on Instagram @hstebbings1996.

Harry Stebbings:

As always, I so appreciate all your support and I can’t wait to bring you another set of incredible episodes next week.

 

The post SaaStr Podcast #395 with UserTesting CEO Andy MacMillan appeared first on SaaStr.

Buying Patterns in the Enterprise: Who’s Really Buying and Why?


This post is by Amelia Ibarra from SaaStr

As digital business and collaboration models have been permanently accelerated by the events of 2020, our panel of SaaS experts discusses who’s buying in the Enterprise, and how to drive conversions across multiple business functions.

Godard Abel, Co-Founder & CEO @ G2, Mike Weir, Chief Revenue Officer @ G2, and Samantha Destefano, VP Enterprise Sales @ Upwork explore who’s really buying and why in today’s changing market. 

As G2 currently has 5 million buyers, 40% of which is from Enterprise accounts, Godard started off by sharing a few trends he’s seen, including: 

  1. COVID is accelerating buying trends because companies have shifted more rapidly to using digital channels to do their work. These channels include webinars, virtual classrooms, video conferencing, HIPAA Compliant messaging, virtual reality platforms, virtual desktop infrastructure, and more.
  2. Online shopping has markedly increased. Ecommerce revenue is up 30 percent for the first half of this year and that only accounts for 18.6 percent of all retail, which means there’s an excellent opportunity for more growth.
  3. Enterprise companies are reviewing existing tech to find savings and address security and privacy risks. It was noted the average cost of a data breach is $7.9M. Checking risks will become easier for teams if they have one digital platform to work with and consolidate spending. 

What’s been the most surprising impact of COVID on enterprise buyers?

Our panel shared that accessibility and increased involvement of executives have been refreshing. Buying decisions are now being made more at the executive level. By leveraging middle-level ground, you can include entire leadership teams in decisions. Representation at those meetings by CEOs, VPs, and Directors can help with new initiatives, such as the digital channels previously discussed. 

More access to the c-suite means more senior stakeholders are coming to the table, and they want others affected by solutions they are purchasing also at the table. Having different types of personas to engage with may or may not have been part of a former legacy core, but now they want to learn about everyone’s needs at the table.

How has Enterprise buyers’ decision-making process changed? 

When more people are involved there is more committee buying and that trend isn’t going anywhere after COVID. Companies will need more flexible skills to sell to different people because the days of single-client sales are now gone. Being able to sell to multiple personas means more people are involved, and the hierarchy gets flattened a bit. 

By now, all companies have had to adjust their 5-year plan post COVID. New initiatives have shifted and sped up, and capital is needed faster than initially planned. There is more co-development selling to co-deliver clients’ ideas, and money is scrutinized like never before.

You must show your enterprise buyer that your product can immediately add value and ROI potential. 

Keep in mind that Enterprise buyers were all about growth before COVID, but now they don’t need to have as many “nice to haves.” They want to slim down their budgets and increase sales faster than initially penned in those 5-year plans. 

How should you adapt, lead, and enable your enterprise teams?

Leans on tools for leveraging, coaching, and developing your sales teams. Focus on the opportunity and delivering the right message. Use social proofing and social selling to inform which personas get which message. 

And finally, consider adapting a conscious leadership model that’s  “we,” not “me.” Work to understand each team member and help them. Remember that digital relationships need to be initiated and fostered by creating time and space to connect.

The post Buying Patterns in the Enterprise: Who’s Really Buying and Why? appeared first on SaaStr.

SaaStr Podcast #394 with Sunil Dhaliwal and Jason Lemkin


This post is by Amelia Ibarra from SaaStr

Ep. 394: Where is Venture Capital today? And how do you hack it? SaaStr CEO and Founder, Jason Lemkin, sits down with Sunil Dhaliwal, General Partner at Amplify Partners to discuss.

 

 

This episode is sponsored by Outgrow.

 

 

 

This episode is sponsored by Secureframe.

 

 

You can also watch the video or read the transcript below.

 


 

If you would like to find out more about the show and the guests presented, you can follow us on Twitter here:

Jason Lemkin
SaaStr
Sunil Dhaliwal

Transcript:

Jason Lemkin:

Hey everybody at SaaStr. I wanted to have another fun, informal conversation with, one of, I think, the most insightful and smartest cloud investors, Sunil Dhaliwal. GP and founder of Amplify Partners. Interesting for a couple reasons, but Sunil’s been investing in cloud internet since before almost anybody. You’ve spent almost your entire career in venture, back when an $800 million exit might be exciting, before any of this stuff was hot. Is that fair to say?

Sunil Dhaliwal:

$800 million exit would be insane.

Jason Lemkin:

Would be insane.

Sunil Dhaliwal:

I was at one of the biggest firms around and I think we had a $200 million fund and people were like, I can’t believe we’re running $200 million in venture capital.

Jason Lemkin:

Crazy. So, not that many people have started so early in the career, so long in the space, and great investments that we know like Datadog and Fastly, and good at it. Beezer Clarkson just tweeted out that at least one of the Amplify funds was one of the top performing in the Sapphire portfolio, so that’s a good thing. But, even more interestingly, I got to know Sunil a bit informally, and I loved his somewhat skepticism of things in the industry and his founder centric view of things, which aligns with my values. So, his insights I find very helpful. As an insider that’s also founder centric, that’s a way that I think we all can learn. So, I want to dig in on a few topics. He did just raise a $375 million fund. I don’t want to do too much inside baseball, but it’s a lot of money when back in the day at bat or whatever, 200 seemed a lot.

Jason Lemkin:

So, we’ll talk about that. We’ll talk about fundraising during a pandemic. I want to talk a little bit about how ventures change and then I want to talk about investing in the competitive space, because we love Datadog. As one example, I want to use the BitQuick quick case study, but with 20, 100 vendors in this space, how can founders compete in general and with VCs in a crowded space, but maybe let’s kick it off, talk about 375 million, is that a lot of money? What does it mean to a founder? I read the press release, you guys have raised your fourth fund. As a founder, what should I take away from that headline number? What does it mean to me?

Sunil Dhaliwal:

Yeah. I think the headline numbers are confusing. I think you always want to put a little bit of context around them and then they’ll probably give you some actual data, as opposed to just looking at headline numbers. For us, the thing that’s always mattered has been: How much money is each investing partner managing? And, you go in the wayback machine to 2012, when I started Amplify, Amplify one was me and $49.1 million, call it 50. One person, 50. Over the course of that fund, I recruited in, who is effectively my co-founder, he runs Amplify with me, is Mike Dauber. Mike and I together raised fund two, and that was 125 million, so call that 60-ish and change, 62. Then, over the course of that fund, we had promoted up David Byer to partner and recruited Lenny Pruss away from Redpoint to join us.

Sunil Dhaliwal:

We’d known Lenny from long way back. So, when fund three went out, we were four people and 200 million bucks, and magically we were back at $50 million. Our current fund is actually 275, we’ll come back to the [inaudible 00:03:26] a second, but 275 is now divided amongst five of us, with Sarah Catanzaro also joining, or being promoted up to partner. So magically, we have stayed right around 50, it’s 55 million this time around, so we’ve stayed 50 to 60 per person. What you asked was: What should a founder think about that? I don’t know if they should think anything of it.

Jason Lemkin:

Yeah. That’s the question. It may mean less than you think.

Sunil Dhaliwal:

Yeah. I guess, if my strategy was to show up and to try and lead an $80 million round and write a $50 million check to do that, and you’re like, “Wait a second, 275 divided by five people, your piece of that’s probably 55. This is the only deal you’re going to do the whole fund?” [crosstalk 00:04:09] to go do that round. But, what we always wanted to do is say, “We’re a series seed and series A firm. When we’re going to show up and write these checks, that over time, are going to be 2 million, 10 million, whatever.” Then you start to think about having 50-ish million dollars to deploy over the course of two and a half, three years as probably a more rational number. When you’re talking about seed and A investors, for us, that felt right, for other people that are maybe micro funds, that seems like a ton of money to manage for a human, and for people that are maybe more A, B, C investors, they might go like, “I could go through 55 million bucks in a year.” So, depends on the strategy.

Jason Lemkin:

Yep. Let’s just press on one thing on that. Let’s say I’m a founder, let’s say I want to raise a million or 2 million or $3 million, and those are more different than they sound. They could be stage dependent. So, now let’s just break this down for a minute. Your first fund was 50 million, 49.9, for one to 3 million, is a $30 million fund too small? Is 375 too big? So the interesting learning for founders is 375 is not too big, and why. How do I know how to do those boundary conditions when a fund’s too small or too big to raise X millions?

Sunil Dhaliwal:

I’ll do the quick fact clarification just to make sure we have [inaudible 00:05:28] and I’ll jump back. So, our fourth fund is 275, and then we raised a separate vehicle alongside of it, that’s another hundred million. But, we only use that to do growth investments in our existing portfolio.

Jason Lemkin:

Yeah. But, as a founder, I don’t care. 375… But, I’m with you. For inside baseball, it’s a big difference, it’s 275 and a hundred’s extra money for the winners, for the next Datadog.

Sunil Dhaliwal:

To that end, you could say, “Look, if I got a billion or a hundred or 50, why do I care as a founder?” The thing [crosstalk 00:05:58] about as a founder is two things: One is, how meaningful is this check going to be to that firm? And I always tell people to be really skeptical of the $2 billion, $5 billion pool of capital that’s like, “We can give you a million bucks.” They can. And if what you’re looking for is money to literally write you a check and get out of your way, that’s a really good setup. Friction could be low, they might not give a shit. They’re not going to spend any time paying attention to you. But if you’re looking for engagement, that might not be the right strategy. In most cases, our experience, it is absolutely not the right strategy. So, I think there’s this engagement continuum where you have to understand how material a check is going to be to that firm you’re taking money from. If it’s not that material, you should think carefully.

Sunil Dhaliwal:

You also should think carefully if like, hey, is this the biggest thing you’ve ever done? If we hit a single hiccup, are you all going to freak out? Because, the entire outcome of your firm is riding on our one investment? There’s a balance. So, I’d say that whole thing is one continuum to look at, is the how well sized am I from a criticality. The other thing to think about, and this is inside baseball, that’s really important is: You should understand what that investor’s posture is on following on. Because, if I’m just doing $275 million fund for seed round and A round deals, you might go like, “Man, if you’re only writing $3 million checks or $4 million checks on average, does that mean you’re really going to do 90 deals out of this fund?” And the answer is: Absolutely not. That’s not how we do it. Because, we reserve really aggressively and want to drive in more money and Bs, and Cs, and Ds and whatever. We put a lot of money into our companies over time, as is our design, and that changes the math too, and you got to know that about your investor to think about how you should or shouldn’t be counting on them for the future.

Jason Lemkin:

Let me ask you one follow up on that, because I think it’s an interesting thing for founders to think about. You talked about, in essence, how much risk a fund would be taking on your investment. If it’s a token amount of the fund, they’re going to leave you alone, but they’re not going to help. That’s true. If it’s too much, it also can create some stress. What about, as someone who’s gone from your own solo GP fund in 2012 to a team, how does a founder think about a new partner? Because, on the one hand it’s exciting, and what I see a lot today is founders often bond with a new partner. I just came out of Stripe, I just came out of Datadog, I came out of Fastly, I’m an engineer, I love the guy that was the CTO of Fastly who [inaudible 00:08:34] making it up. I want him or her. Yet, what if it’s their biggest check? There’s pros, but there’s: How do I decide? If I get picked, do I want the more experienced partner, the new partner? What are the trade-offs there? The honest trade-offs.

Sunil Dhaliwal:

I think that’s going to be very firm specific, and I don’t want to hedge too much, I think you are right. One of the issues you’re pointing out is: People who are maybe newer in their career, don’t get all the latitude that people who are more senior in their career, or maybe more senior in a firm, have when things are going not as great as they should. There may be a shorter rope, so to speak, and that’s very reasonable and it’s real. I think there’s a lot of great investors that are learning what they’re doing, but they don’t have the full trust and credibility to do everything on their own. To some people, that can be a risk to manage.

Sunil Dhaliwal:

As you pointed out, sometimes, and we believe this deeply, I believe Amplify’s single greatest asset is that Sunil and Mike have zero monopoly on the truth and we actually believe that our younger people are far better at spotting new stuff and avoiding the perils of pattern recognition that will make me a dinosaur sometime relatively soon, and by that, that’s like 10 years, not two years. But, that matters, so there’s a balance there. The people who are going to be believers and see around corners, they may not have all the scar tissue from 20 years of doing this and that’s valuable, that can be your best friend as a founder. But there is this trade-off.

Sunil Dhaliwal:

The thing where I’d say it’s firm specific, though is: There are certain firms that run things different ways. Amplify doesn’t have attribution for deals. We refuse to focus individual track records out to our LPs. A hundred percent of our economics are shared, meaning: Not that every person has the same compensation in the fund, but it’s not that if your deal does better than my deal in given fund, that you’re going to get juiced up and I’m going to get juiced down. We create a lot of incentives so that we have to win or lose together. People that do that really well, I think what you’re going to find is: You get the support of the organization, rather than the support of an individual. I think founders can figure this out when they’re going through deal processes.

Sunil Dhaliwal:

If you ever have a partner, who’s like, “Okay, great. I really like this. I’m going to take you in to meet my partnership. I need two hours with you before that meeting, and I’m going to tell you who’s who and which person is going to fall asleep and which person isn’t going to get it and how you’re going to stage manage all these individuals.” I always walk away from that going like, “This is really clear you’re on your own and these people are just obstacles to be overcome. You will never talk to them again in your life. They will never know who you are. They might not even recognize you at the holiday party.” That’s a good signal that you really need to be focused on: Who’s my sponsor and how much do I trust them? Other organizations, you’re like, “Yeah, I’ve had four meetings and I’ve met literally everybody and I get random interests from this person and this person is telling me [inaudible 00:12:04]” better signal that you’re not solely putting your chips on an individual, but it is hard to figure that out without a little bit of effort as a founder.

Jason Lemkin:

Yep. Let me just summarize it, and let’s talk about what fundraising is like in COVID. Forget about Amplify, but industry-wide, because you deal with this with your portfolio, would you rather have a seasoned partner that can lose the money? Listen, you’ve got a pretty good track record. You don’t want to, but you could write off a $10 million investment, it’s not going to sink you personally. You’re up. I think once a partner is up nine figures or more, you can write off 5%, 10% and maybe they’re cross funds, but it’s okay. Would you rather have that person, not you, but that maybe his [inaudible 00:12:54] a little bit, or used to be [inaudible 00:12:55] before COVID or is less available, would you rather have the up and comer that maybe will leave and found their own Amplify? It’s possible these days. Which one would you, just for fun, binary, which one would you pick today?

Sunil Dhaliwal:

Yeah. I’ll give you the answer and then I’ll give you the rationale. I would always take column B. I really would.

Jason Lemkin:

The up and comer.

Sunil Dhaliwal:

But it’s not because they’re the up and comer. I think that’s a little bit of the false choice. What I think is inherent in what you’re asking is: Would I take the person that I love and really want to work with, because I believe in them and they believe in me, or would I take the safe choice that I think: I’m going to manage some risk and I’m going to align with what I believe to be the most powerful individual. I think that’s a losing game.

Jason Lemkin:

That’s a good insight. Take the believer over the power center.

Sunil Dhaliwal:

If you’re an early stage company, at the end of the day, you need someone who will work their ass off and irrationally believe at the same time, and I don’t think there’s a more powerful combo when you get that individual on your side. A good investor will be there to buck you up personally when things look horrible. They will remind you why they put their ass on the line and their money at risk to believe in you. They will fall asleep thinking about your company and wake up thinking about your company, and hopefully not in a bad way, in a good way. That all comes with someone who is a passionate believer. So, I would strike up and comer, but I would replace it with like: Would I rather have that person who’s just all in on me and my company? I personally would take that every time, because I think that at the early stages of a company, that is literally what matters.

Jason Lemkin:

Yeah. Maybe even later, because when capital comes more fungible, maybe I do want the one that wants it the most, but that’s a good insight.

Sunil Dhaliwal:

I actually [inaudible 00:14:42] I think when, and this is maybe a broader conversation in how one raises capital and what’s the value of different capital at different stages, obviously, if you can get the whole package, they’re the most senior person with the biggest stick and they’ve got like 8 billion Twitter followers and a cult following around the industry, and they are absolutely irrational believers in what you’re doing and want to make you successful, that’s a great combo to have. But, if you’re making trade-offs, I think the place where you make trade offs away from irrational belief and into some of those other things, it’s easier at the later stages of a company when you’re like, I got my business, I know what I’m doing, and we need to focus on scaling and executing in ways that it’s going to take my team doing it, not you doing it, what I really need is the capital.

Sunil Dhaliwal:

I always say: The capital you care the least about is the person who buys all your shares the day you sell your company. You don’t really care who that human is, you care about the price. When you’re doing a follow-on offering in the public market, you care a little bit, you don’t want them to be someone who’s going to stick their nose into your business and screw it up. Maybe when you allocate IPO shares, you care a teeny bit more, because presumably they’re longer. You keep tracing that continuum back to the earliest stages. At the earliest stages, you’ve got to care the most. They’re going to be closest to you, they will have an outside [crosstalk 00:16:09] influence over the life of the thing. So, yeah, I would always be going, “Man, really go for the believer early. Really get that person who’s just all in on you and your idea and is just going to go for it with you.” Whereas, in the later stage, capital will look just more like capital. The further out you go, that becomes more true, and there’s certainly a continuum, but I do believe that and that’s been informed by a lot of experience.

Jason Lemkin:

Yep. Let’s transition for a minute about a topic that I’m confused about, even though I’ve seen it, is: What is fundraising really like during COVID? We were chatting before, certainly it’s hyperactive. Deals are getting done faster than ever. They’re getting done [inaudible 00:16:53] Zoom. I actually think they’re getting done with less diligence, not no diligence, but you don’t have the four weeks of in-person meetings, they’re getting done in days. We have a joint investment that was a sleepy company before that got four term sheets in days and it’s happened again and again. But I also, and I want to hear your thoughts, but what I also see when I look at the hyper investment in my portfolio, which is smaller than yours, I also don’t see a lot happening with folks they never met before, with companies they haven’t heard of, unless they’re tiny checks. Tiny checks at demo days, fine, throw the money in, but is it easier for the well-known and the hot, and harder for the rest? How do you break in to funding today in a global pandemic? What do you think on these topics?

Sunil Dhaliwal:

I’ll give you some observations about what I’ve seen and then maybe we can circle back and talk about what I would do if I was a founder in [crosstalk 00:17:44] environment.

Sunil Dhaliwal:

What have I seen? Right out of the gate, everybody stopped. Everything just stopped. I think every one of us that had lived through 2001 and 2002 or 2000, 2001, and then again, lived through ’08, ’09, we immediately pulled out our playbooks and we’re like, “Here it is, this is the downturn we’ve been waiting for.”

Jason Lemkin:

This is how you do it, cut everything, the world’s over.

Sunil Dhaliwal:

Like always, I think what we learned is: Every adjustment, correction, problem, is different than the last one. There are some lessons to learn, but for the first few weeks, nobody did anything. Everyone was just like, “Prices are going to come down and things are going to get difficult, reign our cash in, focus on the portfolio.” And that happened.

Sunil Dhaliwal:

Then there was this next phase, where a bunch of people, and Amplify was included, we raised a very small, opportunistic vehicle. It was big enough to go do five or six deals, where we looked at our existing portfolio and said, “These are all great companies. All of these companies probably have management teams that are a little bit more defensive and want to have more runway, and we normally wouldn’t have opportunities to give them capital in any normal environment, because it would be outside investors pushing in and they don’t want to take the dilution.” And we just showed up to five or six companies and said, “If you can take more, we got it for you.” And we closed five or six inside deals in a very short period of time. That speaks to what you’re talking about, which is: If you know them, if you have that relationship and you have that belief and you have that trust, both direction, deals got done.

Sunil Dhaliwal:

People in the market [inaudible 00:19:25] wanted capital, and people who were [inaudible 00:19:27] capital [inaudible 00:19:28] like, “I want to go focus on the best assets that are out there.” I think you saw this all the way up to Silver Lake Partners writing a huge check into Airbnb saying-

Jason Lemkin:

Exactly, that’s the canonical example. As long as I got a great deal, I’m in.

Sunil Dhaliwal:

Yeah. It wasn’t even a great deal, well, they got a great deal, but I think a lot of people looked at it, and we talked about this too, was: When I remember past downturns, past downturns didn’t create fire sale prices for amazing companies. Amazing companies went from being horrendously impossible nosebleed valuations to like, all right, I guess I could live with that.

Sunil Dhaliwal:

Getting into a great company with an, I guess I could live with that-

Jason Lemkin:

Still a win, it’s a win. Yeah.

Sunil Dhaliwal:

I think a lot of people started behaving that way. We did this big survey of all the growth investors, the C round, D round investors, thinking about this for our own portfolio saying, “What are you going to do?” and it very quickly came down, this dynamic you described, which is: For management teams that we’ve met before, we’ve had that face to face, we’ve seen the business over some period of time, those are the companies that we’re going to feel comfortable running a virtual process. Then we asked a question like, “Could you ever do something entirely over Zoom, from first meeting to close?”

Sunil Dhaliwal:

Everyone was like, “Oh, hell no.” Even the ones that were like, “Oh yeah, we would do that.” We asked the question like, “Okay. Has that happened in your own portfolio? Any new investors showed up for your companies?” And they’re like, “Oh, no, it hasn’t happened to us yet, but maybe we would do it.” That was maybe April, May, we’re talking about, I was certainly surprised by the fact that even that has gone even more liberal than that point of view in July, August, September, where it feels like, when the public markets rebounded and [inaudible 00:21:18] activity took off and the capital interest in the innovation economy was as strong as it ever been, I think all those same dynamics came back.

Sunil Dhaliwal:

I do think it’s still harder to raise capital with people you haven’t met before. No doubt about that. Whereas, at the beginning of COVID, the answer was: No chance in hell. I think it very quickly changed over the summer to: If you’ve got a good business, your business will speak for itself. And people are getting more comfortable with the idea of writing those checks to people where processes are virtual than they ever have. Just like a whole bunch of people said, “I’ll never hire remote.” And all of a sudden they’re like, “I guess, I could hire remote.” I think you’re seeing the same thing in some investor behavior. The takeaway for founders, maybe the most salient piece here is: Never worry about getting to know folks too early. Getting to know folks doesn’t mean you got to walk them through slide deck after slide deck, and turnover pipeline and customers. There’s a different way to get to know people where they want to know who you are too.

Sunil Dhaliwal:

They want to stay in touch. They want to know that you think you’re going to add four customers the next quarter. Then, when you come back to them N number of months later and you didn’t add four customers, you actually added six, there’s nothing that inspires more confidence in a prospective investor than you telling them where you are and what you’re going to do and then seeing you go do it. That is more valuable than it’s ever been, because you can’t rely on: I’ll get a whole bunch of people in a room really quickly and we’ll all just decide on something.

Jason Lemkin:

It’s a good insight. No one likes to get spammed, but I love getting that monthly investor update from a founder I met, whether virtual or not. That great investor update, and you see it. That was always a winner before COVID, but you’re right, everyone should do that. If your post-metric and you meet whoever, Sunil or Jason or Eileen or Hunter, whoever, send that monthly investor update. They can unsubscribe. Maybe don’t do it in MailChimp, I love MailChimp, do it yourself and send it, but they’ll tell you if they don’t want it, but they want it. They’re going to open that email, send it in Mixmax, they’re going to see it. It’s wonderful. Even over three or four months, it does build a relationship, even if you didn’t see them in person. That is the best hack of all. And send that monthly update the first of each month with confidence, and it’s going to get opened.

Sunil Dhaliwal:

I think there’s another piece to just sending metrics, which is: Don’t be shy about setting some expectations, making some claims about where you’re going to go. [crosstalk 00:23:57] really you’re going to say, “In the next such period of time, we confidently feel like we’re going to get these things knocked down.” Just the simple act of telling someone what you plan to do, and then actually, in hindsight, having delivered it, there’s no greater credibility builder, to me, than when somebody actually is willing to put those stakes in the ground and then delivers what they say they’re going to do. Because, it’s very easy to have a bunch of arrows against the wall and then go, “Oh yeah, that was our target.” Paint some bulls eyes around all those arrows hit. But, when you actually go out there and say, “This is our plan.” and then you deliver 90% on this metric and 120% of that metric and are right on target on this other metric, as an investor, you get a lot of confidence that what you’re telling me is not a story just meant to get me excited and show up, but you’re actually showing me that the business is doing what I said it was going to do. That’s a huge deal.

Jason Lemkin:

Yeah. That’s a good insight. A related point, and then I want to spend our last couple of minutes talking about Datadog in crowded spaces, but the other reminder, based on what you said, and why I love that monthly email, we, before I had invested, when I was a founder, sometimes I feared I was almost wasting VCs’ time. I took my time seriously, but you’d roll up to Sand Hill and you’d wait for the receptionist, and he would get you a Perrier, then you’d wait 20 minutes in the conference room and plug in your laptop, it wouldn’t work. I felt like I was wasting, a little bit, wasting Battery’s or Sequoia’s time, but that’s wrong.

Jason Lemkin:

If an investor that has been doing this more than one week takes their time out to spend an hour with you, even a half an hour, they give a shit, they care. They’re going to remember that meeting, probably. If you send that monthly update, there’s going to be a connection. No one’s wasting their time out there. The VCs do care. They may only care about you as an object to make money, but remember they care. No one’s wasting their time out there. That meeting never happened, that Zoom is going to end in five minutes if they don’t care. So, take advantage of that. Show that you hit the goals you set out and the interest will remain.

Sunil Dhaliwal:

I completely agree with that. One of the great tools in the entrepreneur’s favor is: The update is asymmetrically in your favor from a time invested point of view. I can write the update once, I can deliver that to 25 people rather than taking 25 meetings, and of those 25 people, if 10 of them never open it, god bless, you just figured out 10 people not to spend a minute with.

Sunil Dhaliwal:

But for the 15 that do, and the five that write you back, and the two that are like, “This is really cool. Let’s catch up in email.” What a fantastic way to optimize your own time and your own outreach to really think about who gives a shit. Because, I always tell people, this is a truism I throw around a ton and I believe it’s true of all sorts of early stage fundraising is: It is a search problem, it is not a sales problem. You rarely are going to go in and pitch your heart out and overcome objection over a projection to get someone who doesn’t fundamentally believe, or isn’t fundamentally primed to be excited about you to overcome that inherent bias to the negative. But, what you’re really trying to do is identify the people that gravitate to what you said, who are like, “Oh, that really makes sense. I really love that idea. Tell me more about this.”

Sunil Dhaliwal:

You know those interactions, you’ve been in them. As an investor and as a founder, I’m sure you’ve been in these meetings where you get this dialogue. There is nothing more important, I think, in a fundraising process than getting to that moment. [crosstalk 00:27:38] engagement. If you think about how you get to engagement, man, it sucks if you’ve got to do 25 one-hour meetings with, in pre-COVID days, the travel time and the laptop set up time. But, right now, if you’re keeping a whole bunch of people drip-fed and updated on your company, you get way more efficiency in your time to figure out the three or five or seven that actually give a darn. That’s way in your favor as a founder, and people should not be afraid of using that as a tool.

Jason Lemkin:

[inaudible 00:28:09] it’s way in your favor. In this digital world, you can… There’s so many signals, if these investors you keep warm, are interested. Even just opening that email. So, you’re right. It’s so much better than schlepping up and down or flying to the Bay Area. Losing a week. I may meet some customers, but boy, I’m going to fly out from Belgium to meet a bunch of [inaudible 00:28:28], you blow 10 days doing that.

Sunil Dhaliwal:

[inaudible 00:28:30] do you do with a week of your time? I had seven VC meetings. That’s insane. You killed a week.

Jason Lemkin:

Yeah. I couldn’t meet with my customers because I had to do… Oh my, I want to cry when I hear that. All right, last one. Let’s talk just for a minute about Datadog. The reason I want to talk about Datadog is you invested early, and there’s a lot of great things about Datadog. The reason I find it interesting as a case study and we highlighted it at our first SaaStr Europe in Paris we did it, with Olivia, but it’s such a beloved product. Obviously it’s done incredibly well in the public, and better than we thought.

Jason Lemkin:

I remember talking with some folks right before Zoom went public and they were thinking it would be worth 4 billion and it’s worth a little bit more today. We can check right now. I don’t know what the expectations were on Datadog. The growth is top 3%. This one is another one that outperformed. But, what’s fun about both of those is they’re iconic. If you talk to developers, especially we talked to folks that have put significant products into production. That are stressed about. The next generation loves Datadog. Don’t they? They just love it. All the founders, all the CTOs, they love it, but yet it’s a crowded space. It is a crowded space. Certainly, probably when you invested. So, what are the learnings for founders, in both winning in crowded spaces, and why did you invest in a crowded space?

Sunil Dhaliwal:

Yeah. I think what’s a crowded space or not, is going to shift based on your perceptions at the moment and the perceptions in hindsight and who do you define as your [crosstalk 00:30:05] and all that stuff. So, let’s continue down the path to answer the meta question, but in a lot of ways, and maybe this is the right answer for the meta question: I didn’t look at Datadog as the most crowded space in the world. What I looked at Datadog as was: These are founders who deeply understand their domain. They have lived this problem, Olivier and Alexi ran engineering teams, and in their context of running engineering teams, they knew the tools that they wished they had, or they had to build for themselves as this emerging thing called the cloud was showing up.

Sunil Dhaliwal:

There was no systems management tools. Basic stuff that they had relied on in the client server world or the end tier world, you just didn’t have those tools. So, they found themselves making them, or at least really understanding what the gaps were. So, it’s a thing that we believe deeply in, which is this founder market fit, this idea that you, as a founder, are in a prime position to understand what the customer needs, maybe because you’ve been the customer, maybe because you’ve worked on similar solutions. That was number one. It really was a bet on individuals that we thought got the problem better than others.

Sunil Dhaliwal:

The other thing was: There was a catalyst. They just didn’t go out and say, “Zoom sucks.” Making this up, the 2020 version. “Zoom sucks. Zoom would be better if it had these three features.” That can be a successful company, but it can’t be as big of a company. What would have been, I’ll make this up: If all of a sudden in 2020, Zoom magically only worked on a desktop. And somebody was like, “I think this video conferencing thing can go way beyond that.” And the catalyst here is like: We think mobile is going to take off. And what if there was no product for mobile, we could go make it for mobile. There was a catalyst there. In the early days of Datadog, the catalyst was really clearly: If you go to the cloud, as soon as you decide to stand up your first cloud instance, all that old tooling, the monitoring, and the performance management, and ultimately the logging and other things [inaudible 00:32:28], it’s gone.

Sunil Dhaliwal:

That entire stack, forget it. If your new world is going to be built off of cloud, you’re going to replatform all of these key building blocks to support you as an ops and infrastructure person. So, not only do we feel like these people have the right answer for what the product should be, but the belief was: There was going to be this poll, that if they got it right, that at that moment people were going to show up, they’re going to flip on their cloud instance, they’re going to go, this Amazon thing’s really cool. What’s the first thing I need to do to make my life easier? Well, I got to have a monitoring solution.” In hindsight, when you think about why it’s bigger than anyone ever has expected, I think there’s two or three reasons. The first is: It’s the best proxy for AWS growth in the private markets.

Jason Lemkin:

That’s a fair insight. It is a proxy. Yeah.

Sunil Dhaliwal:

It is a very good proxy for that. So, they already got so much pull. The second thing, and you highlighted this when we were talking offline about how excited your team was about something like New Relic: They were very smart in understanding a very consistent product experience and having a very good relationship with a buyer that allowed them to extend into a few other product categories [inaudible 00:33:39] natural extensions. So, monitoring went to APM. So, when they launched and went after New Relic, it’s been a huge hit to the New Relic market cap and a big opportunity for Datadog. Then they went after logging with Splunk. Another reason why they’ve grown is not just because the market size is so big, and the market growth is so big in cloud, but because they have found really nice ways to extend into adjacencies. This is a big company move, this is not a small founder move. Small founders should not be thinking about this in the first couple of years of their company-

Jason Lemkin:

Sure. But everyone gets there to build a billion [inaudible 00:34:16], everyone has multiple products, we’ve learned. So, you’ve got to do it.

Sunil Dhaliwal:

Then, I’d say the third thing, which was absolutely unclear at the time, or unknown, is: You just have founders who turn out to be execution animals. They are just really, really good executors and hires and product thinkers. They wake up and they fight to win every single day. Datadog is a very execution oriented culture and they have taken the hand of cards that they were dealt and did every single thing right, not everything, but they’ve made the right call, made many more times than they have made the wrong one, and that’s… I don’t know what their market cap is now, 30 something billion dollars, it’s an insane amount of money, especially for guys that probably raised their seed round at something like a four or five cap. They did every single thing right along the way in building a really efficient, scalable business.

Jason Lemkin:

Yeah. And maybe we could break on this, this is good… I forget what term you… That insane commitment, it just turns out that’s what builds the decacorn and the unicorn. It’s not enough, but it’s next level. If you want to go join a CEO or a company, look for that insane commitment. It really is true. It’s not a trope. And you talk about, I think your term was founder product fit, or what’s the term that you use?

Sunil Dhaliwal:

Founder market fit.

Jason Lemkin:

I like it. But on the other hand, I almost feel like it’s table stakes. Like I just know. If you don’t deeply understand your market, even if you weren’t an engineer in the space, if you don’t deeply understand the market, at least after 10 customers, it’s a no. So, I’m with you. But, if you have to combine that with this insane level, next level commitment. It is so hard.

Sunil Dhaliwal:

I think there’s a difference there between when you’re writing a pre-product, pre-customer check, and when you can actually talk to customers. Because you’re right. Our mutual investment in [inaudible 00:36:25] is not a place where [inaudible 00:36:27] and Alex we’re like, “We have lived the customer support problems so deeply and insanely.” But once they got to the point where they had enough interactions with customers, they understood it as well as anybody.

Sunil Dhaliwal:

Before then, I would say there was a question as to how perfect they were for that domain, and they’ve really built that experience. But, I think a lot of times when you’re looking at particularly really technical products, putting yourself in my shoes, particularly really technical products, and very early, before you even have a beta product built, you do have to have a really deep level of confidence that those founders really have an understanding of the customer they’re going after and the problem they’re trying to solve, for certain domains. At least for us, that has been a big recipe for why some of these companies have worked extremely well, and in some of the ones in the portfolio that are still growing, why we think they’ve got this unfair edge. That is our approach, it’s not everyone’s approach. There’s no monopoly on ways that you can be a successful [inaudible 00:37:32] one learning over 20 something years [inaudible 00:37:35]. So yeah, for whatever it’s worth.

Jason Lemkin:

Well, Sunil, this was great. We went really long, but I learned a lot. Congratulations on the new fund, no pressure. You only have to turn the 275, plus the hundred, let’s see, let’s do some quick math. If you want a top decile fund, how many unicorns did you… We don’t even want to think about how many unicorns do you need in that fund.

Sunil Dhaliwal:

We got to return a billion, if we’re owning 15%, so here’s to creating somewhere like eight plus billion dollars of market value.

Jason Lemkin:

Eight in one fund alone. You have to have eight unicorns to really hit the top decile performance. [inaudible 00:38:11] it’s so much easier to be an investor than a founder, but eight unicorns per fund is not easy. It is not easy. All right, with that, we’ll break. Thanks for taking the COVID break, Sunil. We’ll chat soon.

Sunil Dhaliwal:

Awesome talking with you, Jason.

Jason Lemkin:

Bye.

 

 

The post SaaStr Podcast #394 with Sunil Dhaliwal and Jason Lemkin appeared first on SaaStr.

Terry Gilliam Movies Are All About Imagination


This post is by Geek's Guide to the Galaxy from Feed: All Latest

During his 50-year career, the director has made a series of films that are wonderfully quixotic—even when they go off the rails.

Th O’s r ptinal, th dllrs r mndtry


This post is by Alex Wilhelm from Fundings & Exits – TechCrunch

Hello and welcome back to Equity, TechCrunch’s venture capital-focused podcast (now on Twitter!), where we unpack the numbers behind the headlines.

The full Equity crew was on hand to debate the current venture capital market, curious about how risk-on, or risk-off things really are today. Danny, Natasha and I framed the conversation around a number of news items from the week, including:

  • Wrkfrce has launched, and we wanted to chat more about the future of niche media, bringing The Juggernaut’s own recent round and the Quartz shakeup into the conversation.
  • And on the media front — always a risky venture capital investing domain — Spotify has snapped up another podcasting company, this time paying $235 for Megaphone. Our take? A string of small exits probably won’t encourage VCs to take on more risk in the space (Hunter Walk said the same thing here.)
  • Turning to risk more generally, I asked Natasha to weigh in on the earlier stages of the venture market, and Danny on its later tranches. There’s still lots of money, but it appears more focused on chasing winners than bolstering or supporting less-obvious startups.
  • That market is not slowing a risk-on move toward more venture capital players, as the Spearhead news showed a new focus for the firm to invest in emerging fund managers.
  • And there’s still plenty of risk tolerance in remote-work solutions like Hopin, which just raised $125 million at a $2+ billion valuation. We’re torn on the round, but Danny likes it and he’s a former VC.
  • And we wrapped with a chat about upcoming IPOs, and the recent SoftBank results. If DoorDash, Airbnb and others are going to go this year, they need to go soon. So far, no dice.

It was a busy week, despite the month. Expect more of the same next week.

Finally, don’t forget that our own Chris Gates is cutting Equity videos out of every episode that you can find over on YouTube. He does a great job and it’s great to be on video, as well as audio platforms.

Equity drops every Monday at 7:00 a.m. PDT and Thursday afternoon as fast as we can get it out, so subscribe to us on Apple PodcastsOvercastSpotify and all the casts.

3 Secrets to Help You Sell Upmarket Faster


This post is by Amelia Ibarra from SaaStr

We recently brought together a powerhouse panel of ladies in revenue to discuss when, why, and how a company should consider going upmarket. 

Kelly Del Curto, Senior Director of Sales @ Lever, joined with Tammy Aguillar, Area VP, Commercial Sales @ DocuSign, Kate Earle Jensen, Head of Platform Sales @ Stripe, and Lauren Schwartz, VP of Enterprise Sales @ Fivetran share the following suggestions about how to move your sales organization into larger markets.

# 1 Build

Regardless of the size or stage of your company, the “Why” of turning upmarket must be understood and communicated throughout the company. Our panel said it’s crucial to define an initial Ideal Customer Profile (ICP) before building a team for an upmarket effort. Keeping the marketing team aligned with the sales team and product team is imperative before going upstream. 

Your ICP will help your org know who they’re selling to and why. When determining if a prospect is considered ‘upmarket’ or not, you can measure this in a couple of ways. Usually either by the number of employees or company revenue. But keep in mind that employee count isn’t always indicative of company size, ARR or funding, and so typically revenue is the more important metric. 

But how do you know if you’re ready to go upmarket? Well, it depends on your company’s stage and overall readiness. Are your customers, investors, or the board asking for it?

Selling to larger businesses can mean more revenue, faster growth, and expansion, but it also brings the need for planning, increased expenses, and heightened exposure.

Differentiating between Small and Medium Businesses (SMB) and Enterprise, or larger companies, is vital. You’ll need to find and hire different types of sales reps, specifically to sell into the Enterprise since enterprise sales are more challenging and typically take longer than selling into an SMB. Selling to SMBs, by contrast, is fast-paced, and a single rep can typically handle several deals at once. There are higher stakes with Enterprise; selling can be done internally and externally, but sales cycles are longer, and reps can’t balance as many deals as SMB reps. 

# 2 Adapt

When moving from SMB to Enterprise, shifts in strategy can be stressful. It requires commitment on all levels, and you have to stay agile because investments for higher-end companies can cause downstream changes to smaller teams, often resulting in a more extensive customer base. Larger accounts will require uplevel customer service, and some companies have a team dedicated to just that. As your company moves upmarket, your once ‘flat’ org will divide into different teams, i.e., customer success, new sales, technical sales, and account planning — all of which are critical for expanding into the Enterprise. Also, keep in mind that Enterprise sales are done as a team where SMB can be accomplished with a single salesperson.

#3 – Sustain

Renewals and ongoing success is achieved by conducting critical checkpoints as the relationship progresses. Coordinating cross-functional support where everyone agrees on the value drivers behind the product offered is essential for sustaining the relationships when choosing to go upmarket. You’ll have to prove to your prospects that you’re Enterprise-ready, even after making a name for yourself with SMBs. 

For long term growth, be ready to build a reliable pipeline to “land and expand.” Set up an enterprise-facing outbound team and see which teams within larger companies you can work with as a way to get your foot in the door and lay the path for a long term customer. 

As you begin to move upmarket, it’s essential to hold debriefings to learn what went well and what didn’t work, internally and externally. While the first few cycles won’t be definitive, they can help for both closed-won and closed-lost deals. Enterprise-proof your business by listening to their customers. Know how they buy and what they need out of your product so that you can tie your roadmap into what they need most.

Key Takeaways

1) Define and differentiate “why” 

2) Ruthlessly prioritize and coordinate

3) Develop consistent, reliable practices – sustainability depends on it

Design a product roadmap and invest in support, building, investing, and scaling. Develop account plans, coordinate, communicate, and teach your people what direction to run in. Over time, as you win more Enterprise logos, you will have built a robust business. Now, go sell upmarket! 

The post 3 Secrets to Help You Sell Upmarket Faster appeared first on SaaStr.

Keep Mars Weird Is a Hilarious Satire of Austin


This post is by Geek's Guide to the Galaxy from Feed: All Latest

In Neal Pollack’s sci-fi novel, young people voyage out in search of the ultimate party—only to find the Red Planet is ruled by a real estate developer.

How to Bootstrap to $5M ARR in Less Than a Year


This post is curated by Keith Teare. It was written by Amelia Ibarra. The original is [linked here]

Building a new business in a crowded space with already established competitors can be quite nerve-wracking, to say the least. Market fluctuations, rather than stability, are often the norm, and it’s hard to feel like your brand will have a place in it all.

If you’re starting out in an already crowded market, this next case study should give all founders some confidence. Flodesk, an email marketing platform, bootstrapped to $5M ARR in less than one year. And we all know the world could really use another email marketing software, right? So how did they do it?

Their CEO, Martha Bitar, shared a few secrets to their success with us. 

Secret # 1: Choose your customers

Bitar stresses you must first know for whom you are building your product, whatever it may be. To validate your customer-related assumptions, you must first understand their needs and their pain. Flodesk “picked” customers they understood and did a deep dive.

Secret #2: Develop a workout routine 

We’re not talking hot yoga here. Bitar said Flodesk’s ability to develop a system of customer interactions was primary to what propelled them forward at such a fast rate. Here are some of the actions they took :

* Talking to current and potential customers one-on-one all the time. And asking, “Why?” 

* Scheduling weekly calls with churred customers. And asking, “Why?” 

* Hanging out where email marketer types spend time — i.e., Facebook groups and other forums, for a sense of what they were thinking and discussing. Bitar said they took this so seriously they made their own Facebook group part of the company’s R&D.

Secret #3: Focus your team around the customer experience

After your workout routine is established and you’re cultivating group and forum-type research, you will be better able to focus your team around customer goals. Bitar said they like to talk with customers who recently joined Flodesk and those who recently left and ask both, “Why?” 

What a customer thinks they need versus what they need might align, or not. Bitar said Flodesk found a lot of their customers were feeling stuck in the age of COVID-19. Some were brick and mortar but had to move online once the pandemic hit. Flodesk developed COVID-specific templates that became some of the company’s most requested.

Secret # 4: Aim for customer-led growth

How you capture customers’ attention and convert them from customers to fans will be crucial to your growth. Bitar said the business world in the past offered mostly sales-led growth. Currently, it’s product-led, and the future will be customer-led. Customers will no longer want to be “sold” but rather be “shown by others like themselves.” She said the Flodesk team focused on the ideal experience of their ideal customer, knowing those people would go out and tell others, i.e., Instagram, and the result would be customer-led company growth. 

Secret #5: Realize customer and company goals can be aligned to serve both

For Flodesk, it started simply. Customers wanted a tool to send emails. Flodesk wanted new customers but knew there were several other options around. Customers desired the ability to edit templates to make them on-brand. Flodesk wanted to provide customers with that, but they also focused on giving them an “aha” moment, something they wanted, but in such a way they had not seen before.

Consider what happens when you experience such a phenomenon with a company. You rush to tell others. By choosing Flodesk for their email marketing plan – to send emails to their audience – Flodesk’s customers initiated a viral loop for the company. As customers grew their lists, Flodesk grew its viral loop. The customers made money, became fans, sent out videos proclaiming their satisfaction, and Flodesk was able to retain more customers and drive up revenue. 

Secret # 6: Don’t underestimate the power of small voices

For Flodesk, small voices have been the core customers. Secure them by including them, Bitar said. Facebook groups can help by allowing customers to share problems and solutions about your product with others. You can strengthen your relationship with satisfied customers and avoid churning by putting the two groups together to share their experiences. 

If your company aspires to see the kind of rocketed growth Flodesk has enjoyed, stay patient and focused. You will sometimes miscalculate. You may lose customers along the way. But if you keep looking to the horizon, you may see yourselves out there one day.

The post How to Bootstrap to $5M ARR in Less Than a Year appeared first on SaaStr.

How to Bootstrap to $5M ARR in Less Than a Year


This post is by Amelia Ibarra from SaaStr

Building a new business in a crowded space with already established competitors can be quite nerve-wracking, to say the least. Market fluctuations, rather than stability, are often the norm, and it’s hard to feel like your brand will have a place in it all.

If you’re starting out in an already crowded market, this next case study should give all founders some confidence. Flodesk, an email marketing platform, bootstrapped to $5M ARR in less than one year. And we all know the world could really use another email marketing software, right? So how did they do it?

Their CEO, Martha Bitar, shared a few secrets to their success with us. 

Secret # 1: Choose your customers

Bitar stresses you must first know for whom you are building your product, whatever it may be. To validate your customer-related assumptions, you must first understand their needs and their pain. Flodesk “picked” customers they understood and did a deep dive.

Secret #2: Develop a workout routine 

We’re not talking hot yoga here. Bitar said Flodesk’s ability to develop a system of customer interactions was primary to what propelled them forward at such a fast rate. Here are some of the actions they took :

* Talking to current and potential customers one-on -ne all the time. And asking, “Why?” 

* Scheduling weekly calls with churred customers. And asking, “Why?” 

* Hanging out where email marketer types spend time — i.e., Facebook groups and other forums, for a sense of what they were thinking and discussing. Bitar said they took this so seriously they made their own Facebook group part of the company’s R&D.

Secret #3: Focus your team around the customer experience

After your workout routine is established and you’re cultivating group and forum-type research, you will be better able to focus your team around customer goals. Bitar said they like to talk with customers who recently joined Flodesk and those who recently left and ask both, “Why?” 

What a customer thinks they need versus what they need might align, or not. Bitar said Flodesk found a lot of their customers were feeling stuck in the age of COVID-19. Some were brick and mortar but had to move online once the pandemic hit. Flodesk developed COVID-specific templates that became one of the company’s most requested.

Secret # 4: Aim for customer-led growth

How you capture customers’ attention and convert them from customers to fans will be crucial to your growth. Bitar said the business world in the past offered mostly sales-led growth. Currently, it’s product-led, and the future will be customer-led. Customers will no longer want to be “sold” but rather be “shown by others like themselves.” She said the Flodesk team focused on the ideal experience of their ideal customer, knowing those people would go out and tell others, i.e., Instagram, and the result would be customer-led company growth. 

Secret #5: Realize customer and company goals can be aligned to serve both

For Flodesk, it started simply. Customers wanted a tool to send emails. Flodesk wanted new customers but knew there were several other options around. Customers desired the ability to edit templates to make them on-brand. Flodesk wanted to provide customers with that, but they also focused on giving them an “aha” moment, something they wanted, but in such a way they had not been seen before.

Consider what happens when you experience such a phenomenon with a company. You rush to tell others. By choosing Flodesk for their email marketing plan – to send emails to their audience – Flodesk’s customers initiated a viral loop for the company. As customers grew their lists, Flodesk grew its viral loop. The customers made money, became fans, sent out videos proclaiming their satisfaction, and Flodesk was able to retain more customers and drive up revenue. 

Secret # 6: Don’t underestimate the power of small voices

For Flodesk, small voices have been the core customers. Secure them by including them, Bitar said. Facebook groups can help by allowing customers to share problems and solutions about your product with others. You can strengthen your relationship with satisfied customers and avoid churning by putting the two groups together to share their experiences. 

If your company aspires to see the kind of rocketed growth Flodesk has enjoyed, stay patient and focused. You will sometimes miscalculate. You may lose customers along the way. But if you keep looking to the horizon, you may see yourselves out there one day.

The post How to Bootstrap to $5M ARR in Less Than a Year appeared first on SaaStr.

SaaStr Podcast #390 with Outgrow Co-founder Randy Rayess


This post is by Amelia Ibarra from SaaStr

Ep. 390: Randy Rayess is the Co-Founder @ Outgrow, a growth marketing platform that enables marketers to build interactive content/tools to increase customer engagement and boost demand generation. Prior to founding Outgrow, Randy co-founded VenturePact, an invite-only marketplace that connects companies with trusted software development firms. Before VenturePact Randy held roles at Ampush and then on the investor side at Silver Lake. If that was not enough, Randy is also an investor having invested in the likes of SmartyPal, Nooch, Alie and AirCare Labs, to name a few.

 

In Today’s Episode We Discuss:

* How Randy made his way from the world of PE with Silver Lake to changing the game of digital marketing with Outgrow?
* What does interactive content mean? What are the most common forms? When should one start to use interactive content? What resources and team does one need to engage with an interactive content strategy? Where do many people make mistakes with using interactive content?
* How should one think about idea generation for interactive content? How does one know what interactive content works best? How should we test it’s effectiveness? How should interactive content be promoted? Where should it be placed? How many text inputs is it optimal to request for?
* How does it convert more leads? How does Randy think about using interactive content to maximize sales rep efficiency? How should customer success engage with interactive content? What can be done to make the sales and customer success teamwork so well together?

 


 

If you would like to find out more about the show and the guests presented, you can follow us on Twitter here:

Jason Lemkin
SaaStr
Harry Stebbings
Randy Rayess

 

Below, we’ve shared the transcript of Harry’s interview with Randy.

 

Harry Stebbings:

We are back for another week in the world of SaaStr with me, Harry Stebbings, and following from our episode with Ryan at Okta, I wanted to dive deeper into the mechanics of SaaS marketing today. I’m so thrilled to welcome Randy Rayess to the hot seat. Randy is the co-founder at Outgrow, a growth marketing platform that enables marketers to build interactive content and tools to increase customer engagement and boost demand gen. Prior to founding Outgrow, Randy co-founded VenturePact, an invite-only marketplace that connects companies with trusted software development firms. Before VenturePact, Randy held roles at Ampush and then on the investor side at Silver Lake. If that wasn’t enough, Randy is also an investor, having invested in the likes of SmartyPAL, Nooch, ALICE, and AirCare Labs. To name a few.

Harry Stebbings:

But that’s quite enough for me, so now I’m very excited to hand over to Randy Rayess, co-founder at Outgrow. Randy, it is so great to have you on the show. I’ve heard so many good things from many prior guests, so thank you so much for joining me today.

Randy Rayess:

Thanks for having me.

Harry Stebbings:

Not at all. I’m excited for this, but I’d love to start with a little bit of context. So tell me, how did you make your way into what I call the wonderful world of SaaS, but come to found Outgrow most recently.

Randy Rayess:

Sure. As you probably remember in the early 2010s, their mobile app store launched and kind of started to scale out. What we realized was that there was a lot of uncertainty and there was a lot of information that people wanted to gather around building mobile apps. As you remember, very few people had mobile apps because it had just launched. But, it became pretty clear that nearly everyone is going to have a mobile app and so that required an insane amount of mobile app developers and understanding and explanation of what are the things involved in building a mobile app.

Randy Rayess:

And so we built a mobile app cost calculator to help people understand all the moving pieces. We made it just 10 questions, and on the results page, we’d show you how the price varies by the features you listed in the 10 questions, and how the price varies kind of by the geography of the tech talent. So, it was really informative, really useful, and it turned out to be such a great marketing strategy that we said, “Hey, every marketer should be able to build this without requiring their own tech talent to build it. And so that’s when we got into world of SaaS. It’s like, “Hey, let’s create a SaaS tool for marketers to build this without any tech talent,” And that’s how we got into Outgrow and we got into SaaS.

Harry Stebbings:

I absolutely love it and I think it’s such a great lead gen with so many more should do it lovely, but I would love to center the discussion today really around the funnel itself, I guess we saw the very beginning in the majority of cases, we need the hook to fundamentally acquire that customer. And before we dive in, I guess into the hook, the question that I went with a little [inaudible] on is the ideation process. And so if we start on that and like first, what does interactive content mean in your eyes?

Randy Rayess:

So I just think of it as a way to communicate with customers. So it’s a dialogue, it’s an interaction. For example, right now, what we’re doing is we’re having a conversation. My responses are personalized to your questions and vice versa and that’s great in human to human interactions. But from a marketing standpoint, it’s a one way kind of communication. And what we’re trying to do is we’re trying to enable marketers to build this two way communication. So an example would be like, if I have a chat bot, I’m personalizing my answers based on your inputs, right? If I have a recommendation engine or a calculator or a greater I’m personalized information, I’m giving you based on the information you’re giving me. And so that’s basically interactive content. It’s just a way for you to communicate in an interactive way. And there’s so many different examples of it, like chatbots and assessments are calculators are common examples of [inaudible 00:03:35]`

Harry Stebbings:

No, totally. I love the calculator is [inaudible]. In terms of like what stages [inaudible]. Often we hear that SaaS founders have to be the ones onboarding, selling the first customers and asked me to kind of boutique almost kind of handheld process. So I guess my question is why don’t you want to start to think about interactive content in your eyes?

Randy Rayess:

It’s kind of like a blog. Most companies will start a blog very early on in their process and then the way they execute on the blog will change over time. And so I think it’s very similar to interactive content. So if you’re in the early stage, you’re going to build something to help maybe an assessment, or if these a content is going to help build some awareness and help build some trust because you’re a very new brand, but then the way you launch and promote it will change as the company evolves and grows. So once you have an ad budget, you’re going to send ad traffic to it. Whereas if you’re a small company, you kind of create one and you just have it maybe as an exit intent when someone’s leaving your page or you have the link to it on the homepage. And so I think it’s kind of relevant across the whole spectrum, but the way you launch promote and the types of content you create will vary as you grow.

Harry Stebbings:

Totally get you in terms of kind of resourcing up. I think resource allocation is the most important thing. And we think about resource allocation and tracking content and founders thinking about implementing it as a strategy, what resources both in terms of structuring of teams for teams themselves, do they need to put in place, do you think to be effective when starting interactive content as a strategy.

Randy Rayess:

From a cost standpoint, it’s pretty cost-effective if you’re using a SaaS tool. Obviously if you’re using developers, it’s a bit more time consuming and a bit more expensive, but if you’re using SaaS, the cost is relatively low. So it’s really just about the time investment. And so when it comes to time, one thing we’ve seen is sometimes content marketing department, the same content marketing team that’s building out your blogs will come and build the content on Outgrow. And we’ve seen people do that, but then we also see companies coming to like, say, Hey, we’re overwhelmed. Can you guys build it for us? And so we had added the custom build option, or you can go to agencies and freelancers to build it for you.

Randy Rayess:

So the key thing though, regardless of who’s building it is to make sure that it’s useful. And so you want to make sure that people from the content marketing team or the people from your sales or CS or product team kind of really understand the product and the value of deriving and making sure that’s some key, valuable insights are being given in the content piece. So that is very useful. So that’s the most important thing. And that time is critical, then it’s not that long, but you want to make sure you have a few hours to really think it through and make sure you’re driving that. And then the actual design and building out that can be done by company like us or by agencies or freelancers. So that’s less of an issue.

Harry Stebbings:

I’m interested, in terms of building it out. I’m sorry, this is off schedule, a lot of VCs shit on services revenue, claiming that it’s not such a high quality revenue of SaaS revenue. I fundamentally believe that’s a brilliant retention to a one thing it’s a brilliant engagement tool and I’m a big clash you thought a healthy amount of services revenue. How do you think about services revenue today driving Outgrow?

Randy Rayess:

So this is a very, very good question. And it’s Funny because we have, I didn’t give you the backstory, but basically we didn’t have a custom build option at all. And we got it a lot, actually like, Hey, can you build this for us? And we rejected it because as you said, like services, revenue services, and it’s not easy to do because we have all these change requests after you’re done, because they might be like, Hey, can you change this design? Or can you do this in like five other languages? And so like a small, simple request can quickly become much larger. And so you kind of, how do you make sure you kind of deal with all the issues that are standard in services? But what we realized was sometimes people are trying to build very complex advanced math calculators, right? If a lot of our financial services customers have advanced calculates our recommendation engines, if you’re in automotive or in many industries, the recommendation engines can get really complicated quickly.

Randy Rayess:

And so we need to be there to help them. And we realized this pretty early on it’s like, why are we making it harder for people who want to build things? So we added it and now we’ve obviously made the product better and easier to use and in the early days, but we’ve kept it and it’s worked out well for us. So I think it just depends on your business and your use case, but in our case, it makes a lot of sense. So I think it’s fine. I think we shouldn’t get over concerned with this mentality that, Oh, someone told me at a conference that you shouldn’t have services revenue, if you’re SaaS, because then you’re not SaaS. I disagree with that.

Harry Stebbings:

I’m thrilled to hear it. And I’m totally aligned to you. Okay. So now we know that kind of, we need to interact with content. We know that we can do it across the life cycle of the business. A lot of companies that I work with just struggle bluntly on the ideation of ideas and great ideas to put into content. How do you think about what it takes to come up with great ideas for useful content from a first standpoint?

Randy Rayess:

This is a great question. Because we get that question a lot, as you can imagine, but what we usually say is your sales people, support people, and success people already have the ideas, right? So we ask them to send a list of questions. These kind of three departments will already see regularly, right? So let’s go through those frequently asked questions. And as you go through the frequently asked questions, you’re going to see many questions where your answer is, “It depends.” So for example, it’s like, where should I spend my ad dollars? Well, it depends. It depends on your business. It depends on who you’re targeting, depends on your audience. So there’s so many things it depends on, and those are the types of questions where it’s great for interactive content. And so that’s where we start. And we tell them like, look, if you only have one plan and it’s a $20 per user per month plan, then you don’t need an interactive content tool to tell people what plan they should get.

Randy Rayess:

Or what’s the price because it’s just $20 per user per month is the same for everyone. But you might want to compare your tool to other tools in that case, most companies will have multiple plans. And so maybe trying to help people understand which plan and which features are relevant to them. So there’s so many moving pieces, but what we usually start with is an assessment. So companies will start with an assessment. So let’s say you’re a sales software or an email marketing tool, look for an assessment to help people evaluate the way they currently run their sales processes, or assessment to evaluate the way they currently run their email marketing processes. And you can highlight your value through that assessment. And that’s a really good way to start.

Harry Stebbings:

I totally agree with you in terms of that being a great way. Can I ask, you’ve see multiple companies implement this from zero to one. What are the main reasons that they go wrong?

Randy Rayess:

The biggest mistake we see is people not understanding that the value of the interactive content is making it useful to your end user, whoever you’re targeting. And so what we’ll see people come in and do is they’ll say, Hey, we want to acquire name, email, company size, function, or department, and then the consent and all these fields, right? And so they’re saying, okay, we want to acquire this information. Let’s add a few questions here and put a basic result. You want to make sure that the result is valuable and you’re building trust to be honest. So that’s the first biggest mistake people make is they don’t understand that the number of fields you have in the lead form, it’s not just lead capture. It’s also value generation from the end user. It’s an understanding that balance of saying, actually, maybe we should only ask for an email because this is a basic content piece and for the more advanced ones, which you’d usually charge for and you’re giving for free, then you might be able to add a few more lead fields.

Randy Rayess:

And so kind of understanding that difference is important. And then the other thing is when you’re A/B testing, there’s so many variables you can AB test, you can have the same content piece and just A/B test the way you embed it or the way you run it. So you cannot change six items in your content piece and change the way you embed it and then say, this is an A/B test because then you don’t have signal in terms of what’s driving the change. You have to be careful with the way you run your tests so you’re able to actually find signal in terms of which specific change is driving the value.

Harry Stebbings:

I’m so interested. You said that about kind of the amount of input fields. What’s the data around conversions on input field amount? And if you have four, is it 50% less likely to convert than two? What are your suggestions of actually just the number of input fields. Cause it’s easy to get like, Oh, name, Oh, email, oh company is necessary. Oh, whatever else is. And suddenly you’ve got five or six. What do you see in terms of conversion and drop off rate with the number of input fields?

Randy Rayess:

So first you have to look at number of input fields. And second thing is to look at is words, and the question, right? Those are two things. So let’s assume you’re asking for name and email on the welcome page and you ask them four questions. And then you ask for phone number and then you have the results page.That model generally works really well if your results page is useful. So people are more likely to give you the phone number. If the results page is not as useful, you want to put the phone number field on the results page after you showed them the results. You already got the name and email, the phone number is a nice to have. You put it on the results page so people can kind of drive value. And then if they really interested, they see the results, then they’re like, Oh, now I want to give you my phone number.

Randy Rayess:

There’s a lot of nuance here in terms of how to execute on it. But you know, usually what people will do is they’ll put name and email before the result page. But you only ask for those two before the results page. And then on the results page, you can ask for a phone number as well, but that is in general, the best conversion rate that we’ve seen, the drop off rate is actually very significant. If you have name, email, phone number, if you have four or more fields on the welcome page. And so basically in terms of start rate, if you usually have a 70% start rate, it’s going to drop to below 50%. If you go from two to four or more fields and that’s a big drop off. And so you generally, there are a few caveats, obviously for people who are sharing their content, you’ve done say you have a really, really powerful assessment of security assessment.

Randy Rayess:

Okay, if it’s really powerful and people usually charge for it and people are start to share it, then you can get by. But with asking for fields, you can get by with asking, even on the welcome page, because so many people are validating and seeing it’s useful. And so you are going to find use case examples of companies doing something and it working really well for them, but you have to understand the quality of their assessment and the results page is so high that this is something people are used to paying for. And so that is why they’re able to have so many fields and even put it early on. But in general would say, be careful with that and focus on good value you’re giving to end users because we’ve seen a lot of customers where they just focus so much on all this qualification data. And they forget that the goal of this is to actually build trust with the audience and give them value. So you have to balance these two forces,

Harry Stebbings:

That’s fascinating to hear the drop in start by raising two to four. I didn’t know that. That was pretty huge. In terms of the location you mentioned as the second, what’s important to understand about the location in particular of the fields.

Randy Rayess:

Yeah. Well, so the key thing, when you want to think about location is what value are you giving the user? And when are you giving the value? And so in general, if you’re giving a lot of feedback, it’s eight questions or 10 questions. And so you can say, okay, well, I’m going to ask five questions, give them feedback throughout it. Then I want to ask for email. Then I ask for five more questions. And then I asked for phone and company size before the results, if you’re going to do it, something like that. So as you can see, I like dividing things. There’s simple ones that are easy to get and then the hard to get. And I really like to think about, it’s like a relationship, like I’m not going to ask you for your phone number or your home address or things like that when you first meet someone in a personal relationship.

Randy Rayess:

You want to say, okay, when is the right time to ask something? And it might not be at all, like, it might be like this content piece, like five fun things you should know about email,subject lines. Take this test and see if, you know, like these five fun things. There. you’re probably just asking for name and email and you might put it on the results page. So after they’ve completed the whole thing there’s showing the result, then you ask for name and email. And so, because it’s the fun one, it’s more for engagement. It’s not really a lead–It’s not focused only on lead acquisition. And so you get the brand exposure there. So I really like to think about first, how to divide it second, which fields you actually need. And third for this specific content type and this specific content piece, does it make sense for me to ask for function and company size and phone number, etc. If it’s more of a fun one, then a really value driven one.

Harry Stebbings:

Can I ask you, you mentioned the testing on them before, but when I think about kind of A/B testing, the question is always like how long is it enough to gather enough data to build conclusions on whether it’s effective or not, and how you think about the right amount of time to gather enough data versus too short. And what do you advise on like A/B testing?

Randy Rayess:

Sure, Okay. So it depends on traffic. So let’s say some companies are able to generate a thousand visits in a few hours. And so you’re able to get data very quickly on what’s working and what’s not working, but in general, you have about 300 visits at about a 100 leads. You are able to get some insights into, is this working? What’s my start rate? Where’s the drop-off, but what we like to look at is the whole funnel. There’s the question funnel. And so you see traffic coming in and so you want to make sure that you don’t have traffic coming in from an ad or from your homepage. And then you have the visit to the welcome page and then you have start rate and then you have all the questions. Then there’s the separation, depending on how you’ve divided the lead form, how that converts, and then you have on the results page, is there some CTA or some other field capture?

Randy Rayess:

So you want to look at that whole funnel and across the whole funnel, you want to look at kind of drop off rates and see how that compares. When you go from a 10 question to a six question assessment, and usually you’ll see that unless it’s a really powerful assessment, people would rather go from 10 to 6 and you give a range instead of giving a more accurate number at the bottom. Like your conversion rates are going to be better in general, if you go from 10 questions to six questions to actually drive that result. Again, these are in general. So you’re going to see some people with 12 questions and they’re hitting it out of the park, but the results page and the value they’re driving is going to be much higher. So that’s the first thing/ is that when you’re looking at the A/B testing, understand what things you’re optimizing for, is it email conversion rate?

Randy Rayess:

Is that your number one thing? Okay. So then we’re going to look at that and make that the key focus. So that’s number one. And then what are the changes you’re making? What’s your core metric? If it’s email capture or is it all four fields that you want to capture and then it’s, what are the variables we want to test? Is it the number of questions and embed location as exit intent, pop up and chat bot? Or is it just on the homepage? Doesn’t like, you kind of play with that. Now what we’ll do is you’ll say we’re going to do an ABC test or UCD test. And there’s always a version there’s only one change between the two versions. So then when I evaluate these two content pieces, I’m evaluating them based on the thing we talked about, which is, let’s say email capture rate, we evaluate them based on email capture, and we’ve only made this one change.

Randy Rayess:

Now I know that once it’s significant and significant just means that your confidence in that variation is in general over 95%. I’m over 95% confident that the difference between these two content pieces is not chance. It’s actual because of this change, right? Obviously you’re never a 100% certain that it’s not a chance. So you just say, okay, well, if I’m over 90% confident, it’s not a chance. It’s not a random difference. Then it’s basically considered to be statistically significant or whatever you want to call it. But it’s basically like this version is better. So I’m going to kill the other version and invest more in that version that’s winning. And so that’s usually how we think about it.

Harry Stebbings:

Got it. No, and I love that. I guess the question for me is when I hear about kind of the effectiveness of driving through the A/B testing and the data that you accumulate, my question is, yes, I completely see it’s an incredible lead gen tool. I completely see it as an incredible qualification tool, but I think about an actual conversion, honestly, I don’t understand how it helps with conversions. So help me out here. How does it convert more, from your perspective and does it not just lead to more leads being handed to reps?

Randy Rayess:

Okay. So when we look at conversion rate, we look at a few things. We look at traffic to email capture, how that rate changes, then from email capture to activation or purchase or acquisition. So we kind of look at these two things. So let’s look at the first one: traffic to lead. So usually if you have traffic, your blog or your homepage, you want to capture leads. Having just a contact us form is just saying, give me your email. And I tell you, thank you, right? So that’s like a survey or just a regular form, but now I’m saying, Hey, you’re on our legal page. And we have some law software that helps you better manage all your legal docs. I’m going to tell you how much time you’re going to spend on your legal docs. And I’m going to tell you how much I’m going to save by using us.

Randy Rayess:

And so you’re going to put information around how many paralegals you have, et cetera, et cetera. And then I can tell you how much time you’re saving. So it’s much more valuable. So the likelihood that someone goes through that versus just give me your email, maybe schedule a call in two weeks. That’s much more valuable. So usually what we see from traffic to lead, that conversion rates goes up from a , say, usually at 20, it goes up to around 40. So you get that big jump in traffic to lead conversion rates. But you’re right. The question is how does that lead improve traffic to lead? How does it improve your lead [inaudible] From that standpoint, think about it from the standpoint of the sales person who’s getting this lead. And so we do a couple of things here. The first is, once you acquire the lead, you’re going to know all the information about the lead.

Randy Rayess:

You’re not just getting their name and email, right? Cause you to provide that recommendation on the results page, they’ve given you, maybe let’s say six questions of answers. So let’s say you had an ad allocation calculator. You ask some questions of marketing budget, audience targeting, and you ask them questions about industry and B2C versus B2B, etc, demographics, and current budget allocation. Then you give them a recommendation for, okay, well, you should actually spend more on Snapchat and less on Facebook and more on Instagram and less on TikTok, et cetera, et cetera. You give them these recommendations based on the information they gave you. The salesperson now isn’t just getting a name and email and this guy or girl wants to talk at X time. They are now getting your current marketing budget. They’re getting your current allocation of spend across these channels. And you might ask them a question on strategy.

Randy Rayess:

Like if there’s specific keywords or specific audiences, they target within Facebook, within Instagram, etc. And then they get to see the results you have to give them. And the person that opted into this call. So you’re getting so much more qualified lead, and it’s not going to the salesperson unless the budget is relevant to that salesperson. Like the salesperson might usually work with marketing companies that have 50K a month in budget. So they know that this person’s qualified relevant to them. And you can segment the person coming through to say, if they have less than 10K budget, then I’m going to put them on this specific email list. And maybe in a one or two years, they’ll be ready. Their budget will match our requirements, but if they have XYZ budget, then I’m going to auto send them to my CRM and assign them to a sales person within that budget range.

Randy Rayess:

Sales people love it because imagine for they’re getting onto a call, they know your budget, they know your allocation. They know everything. The ability to pitch and talk to you is much more personalized because they already know everything before the call. And so their ability to prep. So if we see this activation rates actually go up a lot because of that. And of course, if you’re selling a million dollar contract versus a thousand dollar contract, your activation rates are going to vary, but in general, that boost is significant. So those two things, traffic to lead and then lead to activation are amazing.

Randy Rayess:

And then the last thing is, does it increase the actual traffic you get to your site? And I would say in general, the traffic increase happens when you have for your signature content piece, right so if you have a signature assessment, it’s amazing. People are going to start to share it for you. And so you get free organic referrals, organic traffic from it that you might not have done otherwise. So you also get a boost in traffic as well. So from all three standpoints, which is increasing traffic, traffic to lead and lead to activation, it’s better, but obviously the increase in traffic, that first one is really only relevant for your top three content pieces, which are amazing that people are actually going to share on your behalf.

Harry Stebbings:

Can I ask? When you look at the sales team. I love that in terms of kind of what it does to sales rep efficiency. When you think about kind of sales training and sales playbooks, does one need to alter sales training and sales playbooks. When you incorporate interactive content into your core strategy.

Randy Rayess:

A little bit. I do think you need to do that. And we have the companies that have been using us for the longest and the most successful do incorporate this added information, because the thing is most companies, the way they do lead scoring is they look at certain information they generate from a tool like Zoom and for there better things like this, which are useful. And you can do these scoring based on this. But the thing now is that you’re getting a lot more information. And so you’re going to have to update the way you do lead scoring with all this added information, because you’re not used to getting all these fields. And so what happens is we usually recommend, and we’ve kind of built this in Outgrow. We built our segmentation feature, such that you can run the whole lead scoring and lead routing, right? Within Outgrow because we want you to run a more powerful lead segmentation and lead scoring system than just based on location, company, size, title, and things like that.

Randy Rayess:

Because now I can add marketing budget, current allocation of spend, let’s say you’re focused on Facebook marketing and you know they’re spending 50K total budget and they’re only spending 20K of their 50K on Facebook, etc. You want to say if they’re in this level of spend on Facebook, this level of total marketing spend, I’m going to give them this much of a boost on my lead score. And then I want to send them to my reps that usually work on this type of, let’s say, enterprise deal in this territory. And so I think both lead scoring and lead routing should incorporate the added information.

Harry Stebbings:

Yeah, no, listen, I totally agree in terms of being incorporated. Can I ask? The other big thing was going to content that always comes up for me. It’s like ROI and payback periods on content. And when you have blogs and much more kind of native organic content, payback periods are long. As everyone knows, six to nine months is not completely unexpected. How do you think and advise on payback periods for interactive content and how does that differ?

Randy Rayess:

It took a long time for people to get used to these very long payback periods on blogs. And that’s a challenge because blogs are mainly going to be SEO based and the lead conversion rate on blogs, it’s hard. So I think the advantage that we have is that people are used to long payback periods on blogs. And what we do is we kind of say, you’re going to have a few of your main content pieces. Your assessment, your key ROI calculator, your key recommendation engine or chatbox. And then you’re going to take your top 10 blog posts and create maybe a knowledge test out of them. And so if you’re kind of doing the all encompassing strategy, or you want to look at the actual individual content piece ROI, it’s a bit different in terms of how you look at it. But in general, you want to look at obviously how much time you’re taking to build it, how much you’re spending on the SaaS tool or software, and then how much you’re spending on promotion and you see kind of assess the ROI on it.

Randy Rayess:

And so usually what we say is that let’s say you’re taking a week to finalize the idea and really iron it out, a week to build it and make sure you’re happy with it, and then the first two weeks you are in this kind of implementation phase of really kind of like starting to get a sense of what’s working with your audience. So that’s one month. And then after the first month, you’re starting to see, these are things that kind of work. And then from month one to three, you’re running a wide range of different tests, right? So it’s going be fields. It could be questions. It could be promotion channels. And usually within that second or third month, you start to find that all this is generating positive ROI, and this is working. So usually it’s within that second or third month.

Randy Rayess:

And obviously companies with a lot of traffic, it could be by the end of the first month. And then they’ve really identified, okay, this is working and the ROI is going to be way higher than my spend relative to profits. There’s going to be a big difference there. So you can kind of get a sense of that pretty early on. If you have a lot of traffic. If you don’t have a lot of traffic and you don’t have a lot of ad budget, then it’s going to dive in towards the end of the second month or into the third month to get the data around the costs versus potential sales that’s driving.

Randy Rayess:

Because you also have to look at, if you’re looking at it from a sales standpoint, you also have to look at your own sales cycle, but people can look at MQLs, marketing qualified leads, and things like that, to get a sense of it earlier on. And then if you have a really long sales cycle, then you might take even longer to really make sure that you are getting more, your dollars in versus dollars out is positive. But I think you can kind of get a sense of that pretty early on.

Harry Stebbings:

Totally. No, and I think it is dependent on sales cycle, but as you said there, I think that the litmus test is clear pretty early on. I do want to move into my favorite around here, which is a quickfire. I say short statement, and then you give me your immediate thoughts. How does that sound?

Randy Rayess:

All right. Let’s do it.

Harry Stebbings:

Okay. So what’s the biggest challenge for you of your role with Outgrow?

Randy Rayess:

I think it’s kind of balancing all the feature requests from like our power users, who’ve been using us forever, and then the new customers who want the product to be accessible, to kind of balancing that out as a challenge,

Harry Stebbings:

Always adding to the team, what was the hardest role to hire for today?

Randy Rayess:

In our customer success team. We have a lot of math related questions. And so we try to find great mathematicians who also want to be in customer success and customer facing roles and kind of finding those two components in one person can be a bit of a challenge.

Harry Stebbings:

Yeah, no, I totally see that as challenge. What angel investor’s been most impactful to you?

Randy Rayess:

Oh, there’s so many great angel investors. I think Paul Graham is great.

Harry Stebbings:

Totally Paul is the best. And it was actually his blogs in the early days that inspired a lot of my thinking. Tell me, what would you most like to change about the world of SaaS today?

Randy Rayess:

I think when we think of success, we think a lot about activity and product. So like these other customer success, how much time this time is people spending on a product and let’s see if 10 users and they’re spending X hours in Outgrow. That’s great, but I think we should look a bit deeper. So for us, specifically, at least for people to be successful, they need to have an idea. They need to build it to launch it. They need to promote it. They need to generate leads from it and they need to activate those leads and make sure those leads are successful with their product. And that’s a lot, right? But that’s the right way to look at success. Obviously it’s hard to do and because activities are easy, like I know how much time this person spends on the product.

Randy Rayess:

And so you can say, okay, well, I guess we’re successful. But then the question is their goal is not to spend time on your product. Their goal is to actually like, what’s their goal. So you want to understand from their perspective. And I think it’s a bit harder to do. It’s harder to quantify. It’s harder to fully internalize this value in customer success, but we think that customer success should be more focused on the entire value chain for the end customer than just activity.

Harry Stebbings:

Penultimate one here. But what moment in your life has maybe served to change the way you think?

Randy Rayess:

I mean, when we launched that mobile app cost calculator, it really changed the way I thought about marketing. And it helped me realize that the intersection of marketing and software in that case, like marketing and kind of software development skillset, that intersection is really interesting because most marketers don’t have that easily accessible. And so you don’t see a lot of marketers using that. And so obviously we’re trying to democratize that right now, but I think in general, this intersection between certain fields, it’s pretty interesting.

Harry Stebbings:

Totally with you in terms of that. Tell me the final one. I’m probably the most exciting of all. What do the next five years hold for you and for Outgrow? Paint that picture for me.

Randy Rayess:

Sure. Well, so at a high level, I think we want to continue to improve how successful our existing and how successful our new customers are with Outgrow. So that’s kind of like the high level goal, which is basically the same goal we’ve always pledges how can we make the marketers using our product more successful? And so that breaks down into many things. Like obviously number one would be like hiring, find the right people, bring them on board, training them with our processes and our methods. So that’s number one. The second is our performance tab, like within Outgrow, we have a performance tab. And so where we give personalized recommendations based on your content. Handling the questions that you’ve been asking me, right about location, number, fields, all these things. And so we already have a version of that. How do we continue to improve our personalized recommendations so that you’re not making a mistake that our previous customer has made or that we’ve seen other people make in the past.

Randy Rayess:

And so you can have learning from best practices from all the data we have. So continue to grow our performance tab and then continuing to maintain like a very good reply rate. So right now our average reply rate to questions is under two minutes. So anyone who asks a question can go to the bottom right of their chat and ask us a question and we’re usually averages less than two minutes. How do we maintain that as we grow? And that’s a big challenge. And then the final thing I would say is continuing to increase kind of the power and value that marketers generate from using Outgrow and making sure that they’re able to continue to types of things they want to build and content pieces they want to create that can’t do that with Outgrow, so.

Harry Stebbings:

Some very exciting times ahead, Randy, as I said, I’ve wanted to do this for a while and I so appreciate you putting up with me going so far off schedule, but thank you so much for joining me today.

Randy Rayess:

Thank you. This was great. I loved the questions and it was very thorough.

Harry Stebbings:

I mean, my word, what a strategic and tactical episode that was with Randy. And if you haven’t got your notebook out with multiple lines of incredible notes, then I will be very surprised. If you’d like to see more from us behind the scenes, you can on Instagram at HStebbings1996 with two Bs. I always love to see you there. As always, I so appreciate all your support and I can’t wait to bring you a fantastic episode next week.

 

The post SaaStr Podcast #390 with Outgrow Co-founder Randy Rayess appeared first on SaaStr.

Dinosaurs Are Even Scarier When They’re Zombies


This post is by Geek's Guide to the Galaxy from Feed: All Latest

In his short story “Hell Creek,” horror author Robert Cargill tackles one of the scariest ideas ever: an undead dino apocalypse.