Detailed Notes from SaaStr Annual 2018

In what is hopefully becoming an annual tradition, I went to SaaStr 2018 last week and took a lot of notes from the sessions I attended. You can find my notes from SaaStr 2017 here if you’d like to read them: https://medium.com/@BillNBing/detailed-notes-from-saastr-annual-2017-6a0862d763a3

As with last year’s notes, please be forewarned that these are long, so I organized the information by subject and session to make it easier to filter and find. Each new session or panel is in bold and questions posed are in italics. Hope you find these noteshelpful and interesting:

FOUNDER STORIES

Busting the Myths about Startup Success — Therese Tucker, CEO of Blackline — Spent her whole career in B2B software, doesn’t get enough focus. Youngest of 4 girls and raised in a farm in rural Illinois, neither of her parents went to college. Big dream for her was that she could become a secretary. Made her take typing which helped when she majored in Computer Science. Always had trouble fitting in. Died her hair pink because her marketing team was daring her and she hates to lose a game of chicken.

Serial entrepreneur, retired from Sungard systems as their CTO. Started a company because she was bored (Blackline). They were bootstrapped and she took it until 2014 as a bootstrapped company. In 2014 she sold a majority to Silverlake and other PE partners. They helped her grow and they were invaluable, then grew to IPO. Best businesses are areas that other people have overlooked because they aren’t terribly interesting. She’s been able to grow a company in the accounting space in part due to that reason.

The culture has shifted dramatically, we now have a mythmaking process where founders are deified as brilliant geniuses. Therese wants to debunk myths and share her experience.

Myth #1: There’s a playbook for success. If it was easy, everyone would do it. It’s not like that, companies are like people — they have a unique DNA and culture. What might work well for one could sink another. Those that are most likely to succeed fail, and sometimes those that are overlooked quietly succeed. When you start a company you’re betting on an idea or vision no one else has had. Why didn’t IBM do this? Either they really didn’t do it or they valued it differently than you did. So when you start a company it’s a bet that everyone else is wrong.

The truth is that there’s more than one way to the top. When you start a company it’s a mix of hard work, perseverance, and luck. Sometimes something as small as having the right person give you encouragement at the right time.

Myth #2: Being a founder makes you a rock star. She lives in LA and knows someone who says he’s in the business, working on a screenplay, Brad Pitt will be in it, etc. etc. You know he’s full of it and you’re trying to be polite and get away. Don’t be that guy with your startup. To even get to the point where you quit your day job you have to have a stupid amount of confidence. It’s almost an arrogant choice to say that I’m right and everyone else in the world is wrong because they didn’t see it. So there has to be a certain amount of confidence where you jump off that cliff, but the biggest mistakes happen when people start to believe their own hype. When that happens they lose focus on the business itself.

The reality is that you have to be committed to doing whatever it takes to make a company successful. That could be buying bagels, cleaning toilets, writing code. She did those things in order to help make her business successful. Humility pays, pivot from arrogance to humility. You can be confident in your idea but still seek out the wisdom of people who have been there before. She had a mentor early on who would help her refine her messages and think through her strategy. Humility also provides clarity. Let’s you look at your business honestly and assess what’s working and what isn’t.

After 3 years they had 1 paying customer. Customer came to them and said “We have a business problem: we have no engineers, we have money. You have engineers, you have no money, why don’t we trade?” Her big idea of optimizing accounting operations, was not HER big idea. It came from a customer, but if you’re married to your own idea even if it’s wrong, things might not work.

Myth #3: You’re founding the next Oracle/Salesforce/Amazon. The guy from #2 is all about riches, yachts and Hollywood parties. He’s not interested in putting in the work or getting the coaching he needs. But the reality is most startups fail. Blackline almost failed many times. Even after the pivot to accounting automation and optimization they still had many desperate moments. Large companies move at a glacial place. She would have 3–5 year sales cycles at times, and then would suddenly get called and say “Guess what, you’ve been selected. We’re going to invite you and 2 competitors to our procurement process.” Even if you win the deal they may take several months to pay. Even when you’re successful it’s a long road.

Truth is you must write your own story. There is no map, you don’t know where you’re going, and it’s a long slow haul. How do I scale my salesforce? How do we market? How do we handle the security of financial information? You can’t look up the answers to these problems. Particularly when you’re bootstrapped, every single dollar matters. In 2007 had to decide SaaS vs. on prem. Back in those days companies didn’t know what SaaS was and they were afraid to put information in the cloud. Blackline bit the bullet and decided that they were going to be a SaaS business. Terrifying decision, but turned out to be a very good one. Could have gone either way. You hit points like that in your journey, and you can’t call them out ahead of time, they spring up and hit you.

So if, IF, you get to be successful it will take longer than you really want it to. She thought it would take 3 years to make Blackline successful. But this is your story and what you craft for your own journey.

Myth #4: You need funding to be successful. Funding definitely helps and they considered it, they got some lowball offers from names that are well known. The habits they developed helped them to build discipline. Some people are all about the meetings they get, who they’re talking to and it’s all about fundraising. You lose the focus on the business, and you’re falling in love with the idea. The person on the other side doesn’t know your market or your business. And focusing on impressing them over building your business or getting customers is dangerous.

She got bad advice from VCs in the early days. One said, you’ve done a nice job, we’ll take it from here. We’ve got a rockstar CEO. She thought, “well, maybe this is good for the company”. She met the guy and he spent 2 hours talking about himself, his home renovation project, and his beautiful second wife. Had she taken the advice, Blackline probably wouldn’t have made it to where it is today. VCs are playing a numbers game, which is great if you’re the 1 star in their portfolio. If you’re not, there may be alignment issues. You don’t want to be the person who’s never building the business but always raising money. One of the most important predictors of success for a business is if people are willing to pay for what you’re doing. Simple, but obvious. Take the smallest amount of capital possible and retain the most control. If you keep a clean business with happy customers you’ll be able to raise as much money as you need when you want it.

People tend to spend all the money they raise. Like lottery winners — most are broke within 3 years of winning. They start throwing money around. It’s possible to manage your money intelligently when you raise a large sum, but it’s pretty rare. Many folks overextend and have to lay people off. The truth is to focus on customers.

Myth #5: Hire the best to ensure success. There’s a difference between the people who start companies and work there. The best employees, the “A” players work for big companies and make a LOT of money. She couldn’t afford it.

The truth is Good, Cheap, or Not Crazy. Pick two. Hiring people at a startup is similar to the product paradigm. If you hire cheap and not crazy people, your product will be bad. Good and not crazy, you will run out of money. She focused on Good and Cheap, so they took crazy people. The crazy in her group is fun crazy — engaging and interesting crazy. They also had some crazy-crazy. Had to let a guy go and other people came to her and said “Thank you! Every time he used the restroom no one could go in for like a week!” They had mental breakdowns, prescription drug abuse, people who would yell at each other. Not all were like that, some just needed a coach. And that’s something her team could provide, because they brought on some people who weren’t qualified for the job.

First engineer hadn’t finished training class. First salesperson had never sold software before. So with the right amount of talent development you can find people who are willing to take a chance with you for the chance to grow. They aren’t entrepreneurs, they’re just people who want an opportunity.

Myth #6: Everything you hear about women in tech. Her challenges with fundraising: Old, Female Single Mother, you can almost hear the VCs running from the room. Someone asked her if her husband was involved with the company when she was divorced. Women get 2% of VC funding. Damaging myth is that you can’t have a family and a great career. There is no reason you can’t be a mother or an evolved father, and build a successful company. You will be stronger for it.

Truth: Women are an undervalued asset in the market. Being a Mom made her a better CEO. Having crazy people, they bring you their issues and she had to be their parent at times. People had career anxiety, lots of issues, and you have to take care of them before you even start to deal with your own items. If she hadn’t been a parent she wasn’t sure how she would have handled it. You can’t leave the company alone, like a kid, and it’s a labor of love. If you want to have both you will sacrifice more. She had her company and kids. Her personal friendships withered or they joined the company. There were times she felt burnt out and alone, but at the end of the day she could go home and be Mom. Kids didn’t care if she was successful or not, that was a beautiful thing.

Starting the company made her a better parent. She gave herself the flexibility to attend games, go to events. She flexed her schedule so she could be there for her kids even if she worked long hours after they went to sleep. Very rewarding to see the company and employees grow up through the years. She doesn’t judge people so long as they get work done, and she goes out of her way to hire women. She knows she’ll be getting a collaborative problem solver, someone who can adapt to challenges life throws at them. The tech industry undervalues women across many roles, but this is an opportunity as well as a challenge. She’s had tremendous success recruiting talented women and valuing an asset that others do not. If you pay them what they’re actually worth they’re very appreciative and loyal. You can do the right thing as a company AND reap the benefits.

Advice for entrepreneurs: Don’t do it! If you take my advice you never would have made it anyway. But if you shrug it off, you might be an entrepreneur. You might have the absolute best or worst journey in front of you. But even if it’s the worst it won’t be boring, you’ll learn and learn and learn even when you’re discouraged and down. You’ll live to the fullest. It’s the ultimate American dream and you might be able to build something that’s sustainable and can exist outside of you.

Winning a Vertical Market (Service Titan) — Will Griffith (ICONIQ) and Ara Mahdessian (CEO of ServiceTitan). ICONIQ led an $8M financing in ServiceTitan. They make software for plumbers, unglamorous, unsexy, but makes a big impact. They’re the operating system for the trades, home services, all the work you have done on your home.

Why did you start this business? Roughly 90% of the vertical market plays are not founded in San Francisco. Usually someone in the particular industry who has seen firsthand the problems in an industry and decide they want to solve it through software. Ara and his partner gew up in the trades so they saw the challenges their parents had and decided they wanted to build something to help them. People were getting by on pen and paper, and obviously that needed to be upgraded. Rather than getting a job at a big company like Google they wanted to build something for their parents, before they knew it others wanted the software and it became a big company that they couldn’t abandon.

Structural differences between vertical and horizontal software? Horizontal means an application that any company in any industry can use (MS Office, email, Slack). Vertical is specific to an industry, workflow challenge you solve specifically for one group. Analysts predict that vertical market software is the next big opportunity. The playbook for vertical companies has to fit the specific market dynamics for that vertical. You are selling to a smaller set of customers, cutting your TAM, making it up by specifically addressing the workflows and needs of a particular group. Within the set you typically have homogenous needs, so if you solve the need for one you can scale to fill up the rest of the TAM. All the customers tend to know each other and share feedback, so you can have explosive growth.

What’s required to dominate a vertical market and what percentage can you own? Goal is 100%, not 99.9%, literally every contractor. Feel it is their responsibility to earn their business. Some companies can get to 70–80%, but he’s aiming higher. What works for them to do so is to deeply understand all aspects of their customer’s business. Want to build a solution tailored to their needs. Need to be able to earn their trust and speak their language. If a customer calls with a question and they provide bad guidance they’ll say “While you’re good at making software you don’t understand my business.”

Here’s what’s required:

1. Must be an expert in your domain. There are no shortcuts here.
2. Have to be able to leverage customer success — testimonials of people on video explaining how your product has changed their lives. Let them get home to be with their family, go on vacations, etc. That has a huge viral effect. If you do that you will get an opportunity to partner with a marquee logo/brand. Once you have a big brand name everyone wants to get on board.
3. Once you have the best customers, other partners and vendors in the industry want to integrate your product into their offering. Could be parts manufacturers, Yelp, Google, OEMs etc.
4. Once you have these partners and credibility you can start to move into other areas for that customer. You can address more workflows, build more products and upsell customers.
5. Final stage is you start thinking about adjacent markets you can move into.

Recently launched their own payments platform and in-home financing option. Enables customers to get financing for projects they can deliver when they’re working on a home.

Importance of domain expertise and satisfying a customer, when do you reach the tipping point? There’s a moment where you know you’ve reached it. When you walk into a prospect’s office they’re not sitting back and disengaged, they’re excited to see you, they pop up when you walk into the room. There’s also a lot of inbound interest. Sales cycle collapses, close rates go through the roof, enterprise deals start closing quickly and easily.

How do you see marketing for a vertical business vs. horizontal? The number one thing is to get really good at is targeting. In some markets it’s really easy to get a list of prospective customers, email addresses, etc. In other industries there is no simple list and you have to grind through to find it. Downstream you have to be really good at leveraging social proof, otherwise your CAC is too high.

Question about pricing and where to start? Top-down approach to find data that tells you how much your customers spend. Then you can try to calculate the cost and get to a number per customer. TAM evolves with successful entrepreneurs.

Speak about churn and how you handle it? You can achieve great churn numbers in a vertical market. They sell to customers in a very high churn market. Customers are on monthly contracts and their gross revenue churn is only 4% annually. The more problems you solve, the harder you are to replace.

Thoughts on moving into adjacent markets earlier? Most of the companies Ara knows they have not done that early, because they want to capture a full market with a strong playbook first.

What was it like landing your first whale client and how did you support them? You want the opportunity before you’re really ready — product, services, etc. not fully there. You have to find the customer who is willing to take that chance and who is willing to take that journey with you. They understand what will be involved, but they want to fight the battle with you and endure the pain.

Subject matter expertise — how do you scale it in an organization? When you’re at 20–50 people you can get great leverage on the expertise of the founders. Once you get to 400 people, you have to invest in enablement, document materials, leverage resources, train people, hire industry expertise, and people who used to work in plumbing and HVAC businesses.

At what point did you move to the first next vertical market? Just starting to move into the next adjacent market with 400 employees. Just went into garage door space.

Can you talk about your board structure? They want exceptional human beings who are authentic and high integrity. Second, they want people who have conviction in the company’s playbook. They need alignment around the board about how to value the business. Also what value can they bring to the company. From an investor perspective, you need to find a unique individual to understand a business and then build a company, which is hard to find.

Jason Cohen, WP Engine Founder — Post on Hacker News a month ago titled “I don’t want to be a founder anymore.” Successful CEO says he’s supremely unhappy. Asks if this is common at the end. Study by Columbia shows that 21 of 22 CEOs were depressed after the success of a $10M or more exit. Marcus Person almost committed suicide after selling Minecraft for a ton of money. So how does that happen? What should you do differently now to prevent this in the future?

Thesis: Make the emotionally tough decisions all along the way to help avoid this fate. Jason has done it wrong and right in his prior experience. The real issue isn’t that the product is too complex to hand off to someone else. That’s not true. The product is boring, and that’s why you can’t retain developers. Also not true. Holding on to employees too long is a consistent, predictable failure point. People wait until there’s a backup, they make up a reason, and they don’t just bite the bullet and terminate the person. It’s not fair to the others on the team that are thriving. Doesn’t mean the person is a bad person, just that they’re not a fit here now. The real reason is that it’s scary and you’re scared. What if they get upset, what if you get upset, what if they get depressed, what if other people get angry? There’s a reason to be scared, but also you have to do it. Making the emotionally difficult choice is scary.

Are you avoiding what needs to be done? Are you doing things only that you want to do instead of what NEEDS to be done. 2x2 matrix of want to do/don’t want to do and doesn’t need to be done/needs to be done. You know it’s happening when you can’t get something out of your head. When there’s an emotionally difficult choice like having to fire someone, you can’t decide only because you don’t want to. If the easy one was the better one, you wouldn’t be stuck.

Do it quickly, be decisive, and be kind. Delay never helps and often hurts. Flapping hurts.

If I quit I kill the company? Wow! You must be so important. Or you’ve built a brittle organization. You haven’t hired people who can run their functions, or you aren’t allowing them to do so. If you’re the smartest person in the room you’re in the wrong room. Why you end up hiring C players. If you understand the space you can hire an “A” player. If you try to learn something else and hire an A player, you’re a C player in that area and you don’t know how to identify another A player. So you hire some A players and some C players. Then you hire the wrong people and only hire in areas you understand.

You don’t hire smart people and tell THEM what to do, you hire smart people and have them tell YOU what to do. Be an editor, not a writer — hold them to a high standard. Hire someone that if the circumstances were different, you’d work for them. Pay attention to action-oriented people vs. results-oriented people. Results-oriented people solve for the problem of management, because by definition you can’t tell them how to do their job. If they already think that way and measure themselves by their results, you’ll know that that’s how they think about things. This is the right way to manage everyone.

The best thing is to have everyone in the organization be better than you, then you can create a resilient organization. It should feel like others are buoying you up and doing things you wouldn’t have thought of. There are some tricks about “Success”. The depressed founder doesn’t consider a 4th option of just keep running the company. Maybe don’t sell your company if you don’t want to. MRIs of founders, show them landscape, then kids. Brain goes crazy when you see the kids, brain is in neutral for landscape. When you show a company logo it does the same as with kids. Nevertheless, not true you should never sell.

Prior company Smart Bear sold to Frisco for $450M but he sold it to Insight in 2007 for much, much less. He was burnt out, the offer was good. He told his wife about it and she said, “you have to sell”. He said “Why?” She said “Don’t you realize how unhappy you are?” He didn’t realize it. When he left he got to be a stay-at-home Dad for a year, wouldn’t give that back for anything. Founded WP Engine in 2010, now over $100M in annual revenue, $250M investment from SilverLake. Doesn’t always work that way of course.

Things will change as your company grows and you just have to deal with it. CEO of WP Engine joined the company 4 years after it was founded and he and the CEO both won the award of Entrepreneur of the Year together. If you don’t think other people can join later and add a lot value, you’re hiring the wrong people. If he had been CEO it wouldn’t have happened, he knows from experience. Asking who are the people who can bring power to the business, and finding them and bringing them in is how they got stronger and found success.

At a bar in Austin, talking to a Board member, and intellectually getting over the idea that he shouldn’t be the CEO once they hit 80 people. It was tough emotionally. Board member says, “I know what you’re thinking. You want the credit. At some point if you ring the bell at NASDAQ you want the credit.” He said, “You’re right, that’s true I do.” He said, “You’re the founder you’ll always get the credit.” It’s obvious, but he didn’t realize that in the moment and needed to hear it. Your ego will be fine.

Everyone deserves fulfillment and he encourages people to use this framework. “Joy” is one circle, then “Skill”, then a circle of “Need”. The happy flow of Joy and Skill is a trap. You need to combine the overlay of Need as well. What are the things you like to do, that the company needs, that also align with your skills. If it’s just something you’re good at and the company needs, you will burn-out. Is that the promise of entrepreneurship? Doing stuff you hate? You need to find someone else who is also good at it and who likes it, because then they will be fulfilled. Can’t be in there all the time, but the more you’re in there, the happier you will be. Building a company with people who are happy and fulfilled is even more important than ARR and fulfilling a real job as an entrepreneur.

Leaders who show no trust will not be trusted. With the best leaders when the people’s task is completed, the people will say, we did it ourselves. Hire the right people, let them do it themselves, be a shepherd not an emperor. Set your ego aside and do the hard things that are the right things.

Funding or Bootstrapping with Medallia President Amy Pressman — What’s it like to not be funded? 10 year period of self-funding. Medallia, customer experience management space. Targeting hotels, had planned to raise funding, but 9/11 occurred on day 2 of the business. 9/11 was especially tough on the hospitality industry. Advantage of not raising capital was that they had control over how they spent their time and resources. The other benefit of starting a business after 9/11 was cheaper office space, etc.

The advantage of fundraising is that if you close a big name VC, you get credibility with customers. Also can help open some doors. They had to get really creative about how to get talent in Sales and Engineering. They opened offices in other countries (large engineering team in Buenos Aires). They had inbound investment interest once they got traction from customers. They were thoughtful about would they miss something without the capital. In 2011 they decided to take money.

Should other companies raise capital from investors? Depends on your goal and the market. They saw a huge opportunity and weren’t worried about giving up equity. Had heard horror stories from some friends who had investors.

Many bootstrapped companies are outside the Valley — was it weird to not raise capital in Palo Alto? It’s expensive to start a business in this area. When you’re in an expensive area you have to really focus on Sales and making money. When you have more resources it’s easier to get disconnected from that and you have a runway. If payroll depends on your products and services, things get a bit more intense.

What changed in 2011? They had term sheets from 5 of the top investors. They put very little effort into fundraising, so they had all the leverage in negotiations. They felt that with organic growth only, they would miss out on the market opportunity because Social Media was driving demand for their solutions. That was less important prior to that. Didn’t want another company to steal some of their thunder.

Did the money change your business at all? Would have built out the Finance team a bit faster and put in place controls sooner after raising capital. When you have the money in the bank and you’re growing quickly there is an erosion of some discipline. Spent too much money on travel. Took money to level up their Sales team and product. Just needed more controls on spending.

All money was from Sequoia in 4 rounds — why? Will let Sequoia speak for themselves. Believed there was a huge growth opportunity, and that bore out, so as needs arose they were happy to put money in. Last round was in 2015. Forget about a better valuation. Make sure the terms are clean, the investor is reputable and that you get fair treatment.

The definition of an entrepreneur is someone who gets motivated when they hear the word “No”. If you think starting a company is about getting funding you need to reorient. The purpose of starting a company is create products and services that customers want to buy. So don’t be afraid to get creative about a different way to accomplish this.

CEO INTERVIEWS & ADVICE

Tales of a Modern CEO (Trello and Atlassian) — Collaboration applications for teams (Atlassian). Job is 3 things (has changed a lot over 15 years).

1. People. Recruiting, managing people issues and culture.
2. Storytelling. Going around to offices globally and explaining the company in a human manner.
3. Strategy. Set the North Star and let people fill in the detail.

You said you’re totally unqualified for your job — what do you mean? Impostor syndrome is very common. You don’t know what you’re going to do every day, and would never be hired to do the job if there was an interview process and he was applying. Can make it a positive if you use it as motivation to work harder. Test your own ideas and take more feedback as long as you don’t get paralyzed by it.

What do you think about how work is changing today? Riding a wave on teams — it’s increasingly about smaller distributed teams, less hierarchical organizations, different set of management and coordination challenges. The command and control approach doesn’t really work anymore. Collaboration is more important, goal setting, autonomy in a somewhat controlled fashion. Used to say his job was to run a nuclear reactor. You can either push the cooling rods in and slow things down, or you can pull them out and have an explosion. Need to balance things. Remote teams are also a challenge.

Trello is a tool for distributed workforces, so they have to operate with remote employees. They had a data center that got messed up during Hurricane Sandy. They bribed a truck driver to cyphen fuel to keep a generator for 3 days. Decided to move to AWS right away. Developer said it would take 6 months to migrate, he ended up doing it in 3 hours. Other issues with the office occurred but also not a problem because people are used to working from home. Ironically, that experience of carrying fuel up the stairs was a great bonding experience.

1 year since closing the acquisition (Trello acquired by Atlassian). They spoke about people, values, for a lot of folks that’s something people put on the website. For Atlassian it’s much more real and tangible than that. Value of Atlassian, “Be the change you seek”, Trello has “Don’t do nothing”. Very similar. Company challenge of building is much more interesting than product challenge of building. Difference is management team doesn’t scale.

They use values as a way to get leverage on the management team. Don’t make them aspirational, make them what you are. Don’t use basic human values either (honesty, integrity, etc.) “Build with heart and balance” is another value. Don’t use values as a weapon. His job is making tough decisions all the time, and he needs to take a balanced approach and with passion, excitement, and caring. These decisions have impact on people, customers, employees, so think through the impact of that.

Time when it was difficult to make hard decisions? Any time you have to let someone go. Need to do it in a constructive and caring way, but have to think about all employees. Had to move a product to a different team, had to think through how to do that. Try to be really clear and transparent about why they do what they do.

What have you learned about acquisitions? Hard to do successfully, most fail. You have to think about both sides of the table and be very open about how it’s going to work. Culture alignment is key, regardless of other benefits. Also need a shared vision and end goal, and to to be on the same page about what a good deal is for everyone. Otherwise you’ll hit a rocky period down the road. Explain how you see things going post-transaction. A lot fail because there’s an internal agenda and plan, and then a deal plan, etc. and things get confusing. Other than that, challenges are people. Trying to get people to meet and build rapport. There’s an “us” and “them” phenomenon but you have to get to a “we”. Need people to see the organization as one entity rather than “our way” and “their way”.

Back and forth on Twitter with Elon Musk? Elon made some comment about battery in South Australia and now it’s the biggest in the world. Elon said he’d do it in 100 days or it would be free. He started working before the clock started ticking but got it done in 30 days. A journalist called him an activist CEO. Another value “Open company, no bullshit.” Worst thing you can do as a CEO is sit back and do nothing. Have to be able to have conversations with others and hear their perspective. Activism feels different than sticking up for people.

How do you deal with questions and concerns when you get to a certain number of employees? At 20–30 people, they talk to you. Once you get to 70 or 100 it’s hard to maintain that dialogue. How do you stay connected when get to 2,000 people? Try to model good behavior. Communication is hard and critical. Can’t communicate too often, weekly town hall, try to gather people (15–20) when he travels and tell them to ask you questions. In a group of 15, people will ask questions. Part of his job is to go meet with smaller groups of people and have those conversations. The distance to the customer is also important. As you grow you have to constantly find ways to reduce the distance of every employee to every customer. Bringing that internally through telling customer stories and meetings and bringing that in to product teams is hard, but really important. Have to find a way to make it a daily part of things and get the information to the Product Manager and the Engineer.

Also do some angel investing — any advice for founders? Cliched but true. Treat it as a marathon not a sprint, founder mental health is a big concern. People sprint too hard, too fast, in an unsustainable way for too long. Can’t really build a business that way. Remember that these are the good old days. It’s too easy to look back and remember the fun parts later, but at every phase the company is different and appreciating where you are now is a really important aspect.

Making Moz: 3 Highs 3 Lows and 3 Don’t Knows with Sarah Bird

Sarah continually reinvents herself and is super authentic. Has had a diverse background in lots of different roles, including lawyer. Moz is up to almost $50M in revenue now.

1st low: The first time she thought about quitting and Rand thought about firing her. Challenge working with mother/son founding team. Realized no one knows what they’re doing. Trying to serve as middle person between them was tough.

1st high: TAGFEE. So many core values had to make up a word to remember them. Transparent, Authentic, Generous, Fun, Empathetic and Exceptional. Created values was a virtuous cycle and got them away from a lot of other debates. They set time aside to remind them what they have in common and what gives meaning to their work. For example: “What’s the generous thing to do in this case?”

2nd high: Moz is a community that means a lot to people and it’s a responsibility to maintain it.

2nd low: Thought about quitting when things were going well. Kept thinking it’s time for a specialist, and she should move on when they closing the round. She was filled with self-doubt and felt like an impostor. She joined a peer group for how to be a great leader and talk through issues. She felt like she was the least qualified person in the group, but her perception changed over time and she realized they have the exact same issues she has. There’s no shortcut to fire a friend, or make a really important expensive strategic decision without data, to deal with a sudden loss, or other major issues. Easy to say that this is hard, I must be unqualified. Harder to say, it’s not about me, it’s a hard situation but that’s why I get paid and why I get to enjoy it. Now she views those challenges as the reason she has a job.

Leading is like mountain climbing. You can do everything right and still fail. You have to like things that suck to have a happy life. Mountain climbing is really hard. She gets her joy from the effort of trying to do things instead of the accomplishment. Some days she climbs the mountain, some days the mountain wins. It’s a tough job but go for it.

3rd high: Becoming CEO. Rand joked a lot about her being CEO. Then it started to come out from others that he was serious. He was depressed and wanted her to take the CEO gig. She said yes, took the job, but still didn’t feel it in her gut. People shared their feelings with her and she realized it was an impossible job to do perfectly. There’s too many variables and things out of your control. She said I just don’t want to be in the bottom quartile of CEOs instead of saying I have to be the best in the universe.

3rd low: Hurting people you love. Needed to make some big bets to try to grow the business. Added social media, content marketing, etc. Tragically 2 big bets of the 5 failed badly and lost millions of dollars. Had to call it quits on some of those projects, and the executive team thought we will need to let people go, but let’s do it all at once. They went through every project that wasn’t working as well as it should have, and did a holistic review of the company. They ended up laying off 30% of the company. Worst day of her professional life — not harder on her than them of course, but still super tough. The hangover for the next 6 months is super hard after firing a lot of people. It’s hard to motivate the team again and get them fired up.

You gotta blow up a lot of rockets. Elon Musk analogy. Need to be both serious and light at the same time. Moz is profitable and doing well today.

1st don’t know: Compensation policy. Money is a de-motivator in creative fields. Still have a culture around using bonuses and rewards for incentives though.

2nd don’t know: Adding enterprise. They’ve been focused on SMBs, but now going after enterprise customers and not sure how this will work out.

3rd don’t know: Co-founder’s evolving role. Trying to determine what Rand’s role will be going forward and what it will mean and feel like and impact to community etc. That’s a big question mark.

Journey to the Billion Dollar Exit with ServiceMax — Dave Yarnold (CEO)’s second time building a billion dollar SaaS company. First SuccessFactors, now ServiceMax.

What does a billion dollars feel like? Relief. The pot of gold at the end of the rainbow. Indicative of what we were trying to build at ServiceMax. Even from the early days when they were less than $1M of ARR, Dave and his brother would text back and forth “$1B”. Delivered a lot of goodness to employees, customers, and shareholders.

Seems easy in retrospect, but it was actually not a linear growth story. The Board started recruiting Dave before they even closed the deal in March of 2009. S&P was at a 20 year low. Dave was just coming off SuccessFactors.

Why did you join a tiny little startup? Dave wanted to recruit a bunch of folks he had worked with and create something they could all be proud of. He was hell-bent to do that, and had told the Emergence team this was his goal. They looked at the portfolio and tried to determine where he could add value. They had several founders at the time, two of them made the transition and stayed through the end.

How did you manage the transition into CEO role? Amazing team that knew the domain so well, and needed to retain some of the founders. Core value is respect. He applied that to his relationship with them and the risk they had taken, work they had done. Made sure that throughout the history of the company that they were the founders and he never tried to take that title as well. Every significant decision they made over 9 years was worked on together. They had an informal strategic council to solicit their input and take it seriously.

Great leaders develop and attract other great leaders — never seen someone do that as well as you did at ServiceMax. How? Wherever you are in your career, follow the golden rule, respect people, don’t burn bridges. Down the road when you look for people to recruit, that will pay dividends. He had a dream team he wanted to pull together, so he had a vision of creating a great company, culture, place to work, and mission. You have to have a market that you believe in and that you can get collaborators to believe in.

Field service applications might not be the thing people want to believe in — how’d you do that? Every conversation started with a question along those lines: “I respect you, but why should I care about field service and what the hell is it?” No way you can eat your own dog food in an industry like this, but needed to embrace the domain. Any SaaS business needs to capture the hearts and minds of their core market. Hard to do without having experience, so they hired people who did understand it. One person they hired was an employee of one of their customers. Key hire.

Turned the entire company into a Fantasy Football league after a vacation. Biggest challenge as you get bigger and bigger is getting people aligned on the things that matter and focusing on customers. They had 8 captains from across the company, had a draft, hats for all the teams, drafted Salespeople onto different teams. The whole company was allocated across the teams, prizes for closing deals, so everyone on the team focused on that. Got points for different things, NPS feedback, sign-ups for a conference. At the end of the year there was a big prize (a car).

Dave’s first month or so in the office. One employee said “you need to start communicating like a CEO — when are we going to have a company meeting?” He put together a deck and one slide said, how are we going to behave, interact with customers, treat each other, etc. He explained what winning on a big scale meant for the company, customers and individuals. About a month later they had another company meeting, and he decided to throw the slide in again. He used that same slide in every presentation at every company meeting for 8 years. He thought it started to feel a little hokie over time, and the team said “No, no no no. You need to do more of this, this is what people believe in.”

Stood behind the values early on, they had a great engineer and Sales executive who were disrespectful, and they terminated them. If you walk the walk on your culture it empowers the entire organization. This sets the guard rails on how to behave and what to do. Consistency is crucial.

How did you know when you need to make changes on the exec team and do it in a way to avoid negative ripples? Sometimes you can see it and sometimes you can’t. The tell is when you’re struggling as an organization and you can see where certain departments are falling behind. Sometimes you can still get the team there if you coach them up. The Board’s input is painful at times, when they recommend a change, but it’s helpful and important. Focus on the right areas and you can get 10x results. Dave joined a rigorous peer group where they would work through these items together. There was a lot of feedback which was almost like a second board.

How did the GE relationship build over time? Started with a small pilot that took a year to close, maybe $25K. Felt like ServiceMax could do something to help them with their business. Dave got involved, built relationships across the company. Trying to do great things across their business and were just really transparent and flawed and human in their interactions with them. This developed trust. Later when other competitors came in and tried to submarine them, GE ignored them. The CFO approached him with the idea of helping them grow together, and then they became investors. GE was building a software business, and the fact that they had software to help support what GE was doing resulted in tremendous overlap in their views.

Thoughts or words of wisdom post-transaction on the integration process? It’s easy to assume that your acquirer knows exactly what they will do with you after the deal. Some companies do, but plenty don’t. You can let whatever happens happen, but Dave had pride in what they had built and wanted to have influence on the business. They had two stages — prior to acquisition they explained their strategy around product and culture, maintain the good things but respect the culture they’re joining. They went in with a point of view. Once you’re in the process and you work with integration teams you find yourself allowing that to happen. Dave felt it was going down the wrong path and reaffirmed that their goal was growth with GE’s leadership. He said, “If that’s the objective you need to let me do this and we will hit those goals. We need to strip out this integration activity.” They got it accomplished and grew 85% in their first year with GE.

Was it worth all the sacrifice over 20 years of SuccessFactors and ServiceMax to get here? Yes. So much pride in building something that everyone feels proud of. He’d talk about the mall test. If we run into each other in the mall, is your family going to turn away and avoid me, or will you embrace me because this was a great experience in your career. The feedback he’s received over the past year is so rewarding and a great rush. Just being focused on building something that’s going to be great for your investors, employees and customers. If you stick to that it will lead you down the right path.

Conversation with Ajay Agarwal and Marcus Ryo: 0-$6B, the biggest SaaS Success Story You’ve Never Heard of — Marcus is CEO of Guidewire and Ajay is a Managing Director of Bain Capital Ventures. Founded in 2001, >$500M of revenue, $600M in 2018, 20% profit margin, 27 straight quarters of meeting or beating expectations. $6B market cap, 11x multiple. 1/3rd of revenue is services related.

Property and casualty insurance space. Started post-McKinsey. Started post-9/11. Saw the confusion of the business and VC markets as a positive in many ways. Took conventional wisdom and tried to do the opposite. Instead of doing something glamorous, do something boring. Instead of CEO-focused business, have a team-focused flat organization. Industry-specific vertical approach is very attractive because it will be ignored by the bigger players. Property and casualty transactional software. $2T industry, 60–70% paid out each year in claims. Asymmetry between the amounts paid to the claims worker and the tools they use, and the amount of the claims they’re processing. Preventing errors would create a lot of value.

Go to market was incredibly arduous. Not enough to persuade their prospects with the idea, but also that the company would survive, that it was a sensible career risk for them to take. Sales cycle was so hard and long that they had to figure out how to incentivize Salespeople on work that led to deals. 6 founders originally, founding CEO was the hardest worker, said he wasn’t going to be the smartest, etc. but he would be the hardest working. Founding team said “we may fail, but it won’t be for a lack of effort for X period of time” and that commitment kept them going, although they were also highly rational and used metrics. Helped drive the company forward through a lot of tough challenges and obstacles. This represented a barrier to entry, because it was so hard to get into that space.

Chinese parable about a farmer and his son, they were very poor but they had a horse. The horse ran away, and the neighbor says “what a calamity” farmer says “maybe so, we’ll see”. Horse comes back with a bunch of wild horses, neighbor says “you’re rich” farmer says “maybe so we’ll see”. Goes on like this through multiple scenarios. Point is, sometimes things that look bad end up being good, and vice versa — you must trust the process and be patient.

If you’re solving a mission critical enough problem for a customer, you almost become the center of gravity for other systems they use and get others to integrate in with your solution. Profound dissatisfaction with the software they were replacing made it clear there was opportunity.

Are there other market/company opportunities like Guidewire out there? No question that there are a number of very deep vertical opportunities. You must get deep into the area to understand it, you can’t just think of these ideas in the shower. First 18 months just learning about the problems and talking to the customer, which they did unpaid. Very specific to industry and there is no substitute for the work. Things are always harder than they seem.

Thoughts on the good and the bad of the Valley? Proud to be a SV company, and thinks this is the place where the smartest developers come. Has come to believe there are lots of smart people everywhere and they have offices in multiple continents now. No overwhelmingly compelling reason why the best software companies must come from SV.

Lessons Learned Redefining a Really Big Category — Conversation with CEO of Coupa (Rob Bernshteyn) and Jason Lemkin. Coupa IPO’d a little over a year ago. They were growing like 70% year-over-year. 600 customers, 1,000 employees around the world, market opportunity was interesting because most folks are on the sell-side. Coupa is focused on the spend-side where they help people get the right price points and find the best vendors. Coupa is ~10 years old.

Competition is SAP, Oracle, and other big guys for the most part. Rob believes the biggest competition is themselves however because they’re doing things that go above and beyond the others. Focus on their ability to execute, drive value for customers.

What did Coupa really get right that was 10x better? It has evolved over time. The company and the culture and the spirit of execution, the passion and energy to do things for customers to go above and beyond. The competitive differentiation comes from the spirit of his colleagues wanting to find solutions to customer problems.

What was the secret sauce of Coupa? The letters in Coupa stand for items that provide differentiation. U stands for user-centricity. O stands for open. C is comprehensive, covering all aspects of sourcing. A is accelerate, driving value quickly. P is for prescriptive, using AI/ML and community intelligence on what to buy.

Sitting on a huge amount of data — what does ML/AI do and mean for you? In 90% of the cases it is buzzwords. If you can find really interesting use cases you can get an accelerator for your business. You can replace the need for data entry, understand the categories of spend customers have, for Coupa it’s mostly about community intelligence to see what people buy at what prices, etc. Very passionate about using this data to help customers make better decisions.

Came from SuccessFactors, what did you learn from there and take with you? The biggest learning was to take it one customer at a time. Change to SaaS or value-as-a-service model is once in a lifetime and he wants to keep customers forever. He wants to not lose sight of each individual customer and the value he delivers for them. It’s not about the incremental new customers added, it’s also about giving value to the customers you already have and making them advocates for you.

“Customers for life” — how much do you spend with customers? Looks at his job as supporting customers and prospects — about a third of his time. Coupa colleagues are also customers in a sense, so he spends time with them, and then 1/3rd with investors, board members, etc.

Better to spend your time with prospects or customers? If you spend too much time with customers, they could be the only group that influences what you develop. If you spend too much time with prospects you’ll forget about what matters on the ground. It’s nice to have that interplay. You’re hearing about challenges and successes from customers and then sharing them with prospects, and then you’re having a real conversation, and can talk to them about joining the platform. Historically renewal rate has been ~95% by account and over 100% by revenue (when you include add-ons, upsells etc.)

What’s changed in “customers for life” — we’re all figuring out how important this is and is it hard to think in decades? One thing Coupa is doing that’s near and dear for Rob. He did implementations of large scale enterprise software earlier in his career, with customers paying millions of dollars for software and $400 per hour for project time, and the customer is really not getting value. For every customer they define measurable success criteria at each stage of the process and they make sure that they’re getting what was promised. They track measurable success criteria in Salesforce, give mousepads to the implementation team with that on there. Employees ask themselves: “does this matter to the customer?” Customer success is not an afterthought, it is how do we continue to grow and evolve to keep adding value.

Nuances on migrating customers from old platforms? Remove any friction and barrier possible. Can I help you move from your old way of doing something to the new way? That’s the focus and something they’ve had to learn to do well. Make sure you have vision lock with the prospect. If customers are evaluating them purely because they’re a lower-cost solution that might not be the right customer for Coupa. What is the business impact this initiative is going to have in your organization? If there is vision lock on that point then let’s have a deep discussion, but if not, then it may be better to move on.

When do you know when to walk away from a deal that’s not a good fit? You have to ask the question: “100–200 days from now, how will you know if this product is right for you and that we will be successful together?” The sale is just a step in the relationship and without alignment, this will be a bad relationship. Customers may not know the answer and you may have to work with them on it, but if you can’t get aligned, that’s a problem. Be careful with RFPs to make sure that there is conversation before the RFP comes out and that the decision maker hasn’t already gone down a different path.

Coupa is high growth and cash flow positive — some folks think that’s impossible in SaaS. Any learnings? The investor sentiment on these things changes all the time. As a CEO you just have to focus on what makes the most sense for your business. As you get enough revenue from renewals and upsells you can do both and grow but also become profitable. Think about your own business, all of the different factors that play in and make decisions that way.

When did you feel like you were becoming the incumbent and not the upstart? When does that switch happen? Awareness is massive, that’s an advantage of being an incumbent. Huge marketing budget to build awareness. Coupa is well past the early adopter phase, but still need to gain awareness and scale. Some customers they’ve been pursuing for 7 years before they eventually close.

Advice for the audience? Always thought going to conferences like this that other people had all the answers, but now believe a lot of the answers are internal and inside you.

Conversation with Stewart Butterfield — Slack may be looking to IPO. Didn’t consider IPO vs. acquisition in general. Also, not really focused on platform vs. not platform but it applies logically to his vertical. [I only caught the last 5 minutes of this talk, so the additional notes below are copied from @JohnGleeson10 on Twitter… thanks John and hope you don’t mind]:

• 80 people in 2015, 320 by end of 2016, currently 1000 people
• “The most important part is the people”
• Is it a challenge that you have so many different types of customers, 150 enterprise customers? YES!
• “The nut we haven’t cracked yet is explaining what Slack is.”
• The most important thing is explaining what Slack is. The understanding of what it’s for is easier in an early adopter crowd.
• Does Slack make everyone’s life better? Slack makes people more of who they already were. Slack will manifest good and bad habits.
• Slack has so many advantages over email, replacing email as an internal communication channel will be inevitable.
• Time in App is not a vanity metric — communicating with people is real work. Everything significant is done by a team.
• When you switch to Slack you have a bigger window into what is going on in your company in a way that you don’t with email.
• Large enterprises now buy from 1000 different vendors. No one company captures more than 10% of the software spend.
• Slack is a great hub for collaboration but doesn’t replace anything. This will be true of other apps like Salesforce, Slack can be the pointer.
• It’s almost impossible to do everything well, let alone one thing.
• “Performance of the team is way more important than the performance of the individual.”
• “Luck and timing — it’s so hard to know any of this in advance, the main thing is figuring out how you can deliver real value to people.”
• Customer success is plowing into change management in large scale companies.
• IPO is a necessary step if you want to grow past a certain point.
• If the money is cheap enough you should take it, factor in more than dilution, reflect on the degree of control you’re giving up.
• Having cash available when the shit hits the fan is an incredible position to be in.

TACTICAL ADVICE

Mastering SaaS Pricing — Blake Barlett and Kyle Poyar partners at OpenView, VC firm that focuses on SaaS companies. Assist companies with pricing and assistance on that front. Not as much talk about SaaS pricing, but lots of talk about other metrics. How do you use pricing as a growth lever and competitive advantage. Why does pricing matter? Ballmer: the only difference between companies that succeed and fail is that the winners figured out how to make money. Winners thought through revenue, price and business model.

Published “The State of SaaS Pricing” article based on the data they collected from 1,000 companies in a survey. Kyle wrote a book on it. Pricing is relevant and needs to be assessed throughout the growth of your company. Founders who struggle to raise capital are 3x more likely to say they monetized too late, 2x more likely to say they picked the wrong business model, 40% more likely to say their burn rate was too high. Top 5 pricing mistakes:

1. You’re too cheap. Companies reduce price to try to avoid friction in selling. Most B2B buyers aren’t that price sensitive though. StatusPage offered free and $49 per month at launch. Really hard to build a large and enduring business on that price point. The other thing is that people loved their product and they were delivering value. Then they raised prices — no free version, top price point went to $249 per month. No churn, no issues with adoption, all signs up and to the right. Then they did it again in 2015 and 2016. Their top price point increased 30x from where they started without harming conversion or churn. Pricing is a powerful growth lever. 4x more powerful than customer acquisition and also retention.
2. You picked the wrong value metric. Seat-based, user-based pricing is the approach used commonly today. Question if it should be usage-based or based on total employees, instead of seat-based. Horizontal companies are mostly seat-based, but verticals are increasingly usage-based or total-employee based. The right value metric can increase revenue and sales. Expensify uses “active-user” pricing. Whole organization downloads it and then you only pay for the people who use the application in a given month. VTS priced the same per building and per size of building. It was simple, but they were leaving money on the table. Now they are pricing per square foot instead of per building. Aligned value and price point, and grew revenue by 75% with no negative impact.
3. You make it hard to buy. What makes the fastest growing companies different from others? They are extremely efficient at landing new customers with low CAC payback (7 months). Slower growers are going against the tide, selling to buyers in a way that is unnatural for the buyer. Example of Spectrum as a complicated purchase page and terrible use case. SaaS companies don’t have the luxury of a cable monopoly. Slack page is a lot simpler. Value prop is front and center, then they simply explain the price per seat and show the discount when paid annually to make it clear. They also explain what the plans do and why you’d choose each one as opposed to listing features, jargon and math. They also address objections on the pricing page with an FAQ. Logikcull sold through subscriptions at first, but customers had unpredictable use cases and heard objections about the subscription pricing model. Instead they tried to sell on a pay-as-you-go model that’s purely usage based. They signed more customers in weeks than they had in the years before that because they sold to customers the way they wanted to buy.
4. Your upsell path is broken. Once you have a customer, pricing can mess up your upsell path. Fastest growing companies have net negative churn. Need a great product that people use and customer success, but pricing is a huge lever. NewRelic reported that they have 123% net retention. If they charged per seat they’d grow a little bit. Because they’re charging people based on usage, they’re growing a lot faster. As your service grows you pay more, but it’s aligned with value. Trello uses Good/Better/Best packaging approach. They focus on features that you get access to when you upgrade packages.
5. Your pricing is static, not dynamic. As your business evolves, it’s important that you reassess your pricing. StatusPage is a good example of adjusting pricing over time. As you move into the growth stage, you add features or go up-market, so your pricing should adjust with it. Salesforce in 1999 had one plan that was $50 per user per month. Every few years they added features, created higher tiers, and increased pricing at each level. As they became more important to your business they knew you would pay more, so it’s not necessarily gouging — in other words, it’s connected to value. Successful companies think about pricing the same way they think about product, it’s always evolving and in a constant state of development.

45% of companies say they do no pricing research. Only 8% say in-depth research. Price-testing, 64% say they haven’t done it and only 22% have done 2 or more rounds of testing. A VTS customers said “the price is not material enough to be a factor in the decision. It is not even a blip on the radar.” Great nugget. Who should own pricing? Pricing department? LinkedIn has a 25 person pricing team. If you’re starting out it could live in Marketing, to Product, to Sales, to Finance. What matters most is that someone owns it, not who. If you’re just starting, should involve the CEO or a senior team member.

6 Concrete Steps to Help you Build High Performing, Diverse Teams Now (panel) — Daniel Chait (CEO @ Greenhouse), Mallun Yen (CCO @ SaaStr), Tariq Meyers (Inclusion & Diversity @ Lyft), Laura Bilazarian (CEO @ Teamable). Studies are clear that diverse teams enable creativity and high performance. Key design decisions require a broad understanding of your customers, because your customers will likely be diverse. If you don’t do it right initially, you may have to redo a lot of things.

Tariq was hired 18 months ago to help make sure the teams reflect the changing face of the world and the US. This helps Lyft make better products and smarter decisions. Having teams with backgrounds that reflect your customer base is important.

From a recruiting perspective, companies make bad hiring decisions all the time, but they’re not unpredictable. They make the same bad decisions over and over again. Instead of looking for a certain pattern, or degree, or corporate experience which many cause someone to be overlooked, you can focus on other factors and qualities.

Diverse teams vs. homogenous teams — diverse teams were able to come up with the right answer significantly more often than homogenous teams, although homogenous teams were more confident they had the right answers.

Here are the 6 things people should do to start building more diverse and inclusive teams:

1. Unconscious bias training. A lot of people do it to check a box but don’t have a next step. Need to add a next step such as guidance on what to do after the training.
2. Cast a wider net. Stop hiring your personal networks and friends and instead look more broadly to different groups of people. Change up your job advertisements, etc. Look for candidates with a very specific description or vector. Define diversity clearly up front. Teamable is a product that provides this solution. Lyft thought about diversity at the team level — what perspectives are missing? Grow diversity from the top-down as well as bottom-up. Job descriptions can skew people from applying — women tend to hold themselves to a higher standard for the requirements where as men are more likely to gloss over them.
3. Be more intentional about structured interviews. Use a standard approach. Study shows that in the first 11 seconds you make a decision on whether or not to hire someone. The rest is mostly confirmation bias. Have focused questions to assess competencies and then ask each candidate the exact same questions. Also have diverse interviewers. Some groups of people have historically been left out of the tech space. You need to recognize that as a fact, not fiction, and accept it as you go into the interview process.
4. Measurement. It wasn’t until SaaStr set a specific measurable goal that they really made progress on its diversity of speakers, etc. Measure and iterate on your employee happiness and engagement, culture, etc.
5. Belonging. How do your diverse employees feel about your company? What about people who interview and you don’t hire (or they don’t accept)? What will they say about your company?
6. It’s never too early to start.

State of the SaaS Market (Tom Tunguz and Jason Lemkin) — Tom is with Redpoint Ventures. ICOs and their impact on SaaS. $1.5B raised in December. Almost as much as startups globally. More than $4B raised in 2017. Median raise by ICO is $15M vs. $7M for VC rounds. 1/3rd raised VC before they ICO’d to finance writing the whitepaper. People think of ICOs and crypto of being a phenomenon around bitcoin, but there is a good amount of focus on blockchain as well. Important trend that they’re paying attention to and that they think will have a lot of impact on the market overall. If you’re looking to create a marketplace, ICO’s can be a great way to build up that market. 220 startups in 2017 ICO’d. Tom’s estimate is 100 ICOs for 2018. If you need the capital to grow and you want to take advantage of decentralization, you may as well try the market.

PE Data: $343.5B raised in 2017, 25 funds over $1B and a median fund size of $379M. SaaS companies are great PE targets. Tom sees PE as investing in companies with “no fail risk”. Vista raised ~$8B to invest in SaaS and is very active in the market. Sometimes they already have a team together and will just pay you cash to take over your company. 100–200 deals next year in PE for SaaS is Tom’s estimate. 60–70% of acquisitions last year were non-tech buyers. Constellation is a publicly traded Canadian company that buys $10-$15M ARR companies and run DCF to determine what the return will be.

PE provides founders with liquidity options. Typically PE buys at lower multiples, but currently paying market prices of 6–8x forward revenues. Market cap of public SaaS companies has increased 28x to over $250B in 2017. Decline in M&A activity in 2017. Tom more bullish on M&A, Jason is more bullish on PE. Tom thinks the low return in other markets is encouraging companies to put more money to work on M&A to get better ROI.

$6M at ARR and 100 companies in your space, will you get bought? No, really more of a situation where the top 3–4 players will get bought. Think you need to be substantially bigger than $5-$10M ARR to get bought. ZenDesk and Zuora need to get a deal that will impact their perceived value on the street to justify the deal. Less folks fishing in smaller deal market than in past.

Price change since IPO, many have gone up (OKTA, SNAP, CLDR, MULE, AYX, YEXT, ELVT) but a couple down (NETS, CVNA). Many up 20%+. B2B performing better than B2C overall. Jason thinks IPO is easier than it used to be, Tom agrees the window is open. 20x increase in SaaS dollars raised in 20 years. Approximately $5B in 2017, 2016 and 2014, ~$7B in 2015. SaaS is still only half-way through the early majority, half the market or more sill to adopt software. Tom thinks that we are only in inning 3–4 of SaaS.

Lessons Learned from Enterprise Leaders on Growing from $1M to $100M ARR — A lot doesn’t go well along the way so how do you learn from the process and continue to grow. Yvonne Wassenaar has 25 years working in technology scaling companies, worked at VMWare, NewRelic, now CEO of a new startup that’s early on. Mark Diouane, 25 years of experience in management. Worked at Zuora for last 6 years. Godard Abel, 20 years building SaaS enterprise companies. The tail end of the bubble was first one, took 14 years to get to $100M. Also running a company called G2Crowd.

Hardest challenges to get through on growth? Yvonne: Always hard at every stage. The biggest challenges are when you have to let go of something that you love and you’re good at. At Airware they’re a commercial drone analytics company, founder was an aerospace engineer, much of team was as well. It was hard to make the pivot away from hardware because of that background. NewRelic — founder was a developer, sold to developers, realized they had to sell to enterprise to go public. Had to learn how to do that in order to get to the next level. That was a tough shift for the organization when they already had 400 people. Took them from something they loved and knew to a new space.

Mark: Zuora has 1,000 people now and he has a tendency to say that every day you have to think about reinventing yourself and do an iteration on processes within the organization. Mark likes complex problems and solutions, because when you solve them you build competitive moats. They have had multiple plateaus where you have to think about things differently to get to the next level. When he joined the company he had to roll up his sleeves and they started strong, but then they hit a wall the next year. They had to go up-market in order to sustain growth. Two plateaus a year to try to understand where the gaps are and figure out how to keep growing.

Godard: Most of the challenge was emotional. 2004 was probably the bottom, almost bankrupt, took on $20M and only got to $1M in revenue. Moved to Chicago, closer to their biggest customer. Went to do a $300K add-on to the contract, the contact at the company wasn’t even there for the meeting. Twins were born 9 weeks premature, went to ICU, felt like everything was at a low point. Going bankrupt, blowing his Dad’s money and his kids are in the hospital. Then realized things can only get better. Eventually sold company to Oracle. Became a spiritual journey, felt like he had a cloud of anxiety at all times and didn’t know how to manage it.

Most companies have to make a couple of hard pivots on their path — have to do something meaningfully different to succeed — did you do that? Yvonne: People talk about pivots like they’re black or white. There are pivots like that (HW or SW) — when in that situation just make the decision, don’t drag it out and move on. Rip off the band-aid. They were still mourning 6 months later when she joined Airware. The second type of pivot was like the one at NewRelic, where they were going to continue to sell to developers, but were also going to sell to enterprise. Learning how to balance that and expand the company over time was key.

Mark: You always add new people who come in with new ideas and you have to figure out how to bring those ideas in but not mess up what’s working. Understand your sweet spot and why customers are buying your product. Don’t try to go everywhere, stay focused on the value creation. 5 years ago Zuora was the same size of a lot of other startups, but they stayed focused on customers and delivering the most value to them. This focus comes from leadership, and then the team can execute on it.

Godard: Tried to create a market place for buyers of machinery. Gave up on marketplace, then e-buy, then direct to customer. Then finally they focused on helping company’s sales reps sell their products better. The more narrowly you define your market the more likely you become a monopoly and not a commodity. Eventually they went to enterprise and billing. The narrower and smaller you start the better — more fun to expand than to shrink focus.

As you ramp a company that’s doing well from $1-$10M and then figure out how to go $10-$30 and $30-$100, is it natural for things to break and is that a good thing? Mark: It’s all good. You have those “Oh shit” moments, but those are the best moments of the company. The more difficult the problem is, the bigger the opportunity to fix something and they are the most rewarding moments of your professional life. Today he’s extremely paranoid when he hears everything is fine. Something will break, so he searches more deeply for issues to identify. Everything can’t be fine, and you have to keep searching for failure points and figure out how to fix them before you move to the next area.

Yvonne: Pretty much everything breaks. The hardest thing is getting product-market fit and getting your product to sell. The next big problem is that you’re successful, but then things break. If you’re writing code and you decide not to comment the code, and it takes off and people love it, and then one person leaves and the product breaks, no one can figure out how to fix it. This is the standard experience, you have immature products and then as you mature you make them more robust. Her frustration at NewRelic was that nothing was written down. That’s fine at 20 people, but not at 400. You need to write decisions down. Someone came in and said “You’re right, I have to start write things down. But I did the math and it’s going to cost me a lot of productivity.” She had to explain you don’t write everything down, but that discipline and maturity is something that comes with growth.

Godard: The organization breaks down as you get larger. You need to find a first Sales leader, then as you get to $10M you need more regional reps and VPs and you have to go to a higher level. You have to find people who can scale with the business. Some people can’t do that and you have to have tough conversations since they were at the company early, and they can feel entitled to roles. As you continually grow you have to keep doing this organizational breaking and repairing.

What would you tell yourself 5–10 years ago with what you know today? Yvonne: I have this conversation with myself all the time. The smaller the company, the more extreme the emotions, highs and lows. Whenever you hit that low you have to remind yourself that everyone goes through it. It helps you focus and be agile in your thinking. One takeaway is calmness. A lot of things feel like life and death but they’re really not. Surround yourself with smart people. Go full on and have conviction in your decisions. If you’re wishy-washy you’re doomed, but be open-minded if things don’t pan out as expected.

Mark: People management. People will make our break your business. He learned it a hard way. At 31 he was promoted to run the Japanese operation and went from 50 people to 260 reports. No one trained or coached him. That experience taught him to read body language and learn what people mean. He can make decisions quickly, but whenever there are problems or successes, it comes back to people. The smaller the company the more the problems are people. As the company gets bigger it can be about process too, but mostly people, people, people.

Godard: A lot of what Yvonne said, but in a single word, breathe. Greater consciousness and self-awareness was critical for him. He didn’t grow up until he was 40, so that is what he would like to give to his prior self. Take better care of himself which allows him to deal with challenges that come along.

Demystifying the role of the CFO — Kelly Battles is the CFO of Quora and self-described generalist with a very expensive education. Engineering undergrad, JP Morgan banker, MBA, McKinney consultant. Trained to be a data hound and the importance of rigorous fact-based decision making. Her passion is operational finance. Beliefs: Let the data set you free; Finance is in unique role as keeper of the data; The ongoing finance challenge is to evolve and make the most of our role. Finance has the keys to the kingdom and needs to get a seat at the table and use this information to help companies improve and use it.

The evolution of the role of CFO. Historically viewed on the left side of the spectrum — bean counter, rigid, data, uncreative. Over time the role has shifted to be more about being flexible, a business partner, bring data and information to help solve challenges.

The science of the job includes Accounting, Finance and Other. Accounting includes month-end close, financial statement prep, policies, audit, tax, etc. Finance includes FP&A, reporting, treasury, budgeting, modeling, reports, debt, equity and banking. Other includes Legal, CorpDev, Sales Ops, HR, allocation depts and other items. Other is more at smaller companies where you can provide additional assistance and wear multiple hats. Sales Ops should report to Finance in Kelly’s opinion. CEOs can expect more than the basics, but it’s all important.

CFO is good at setting the cadence of the organization. Daily is operating the business, dashboard; Monthly is recons, financial statements, variance reports; Quarterly is more detailed analysis plus the monthly items; Annually is strategic plan, long range model, budget, audit and the Quarterly items. CFOs can help with goal-setting and accountability. Easy for a company to have a long term mission but lose sight of how to get there with regular progress and accountability. Simple goal setting can really help, and CFOs can drive that.

The art of the job and what to look for in a CFO. Kelly sees 4 axes, and you can choose where you want to be on the balance. No one right answer, and different skills work in different companies:

Strategic VS. Operational. Thinker, unafraid of complexity, curious, analytical, VS. are you a doer, build a process and team and grounded in reality. Good CEOs can do both, but what does your company need?

Live Efficiently in the Past VS. Stretch Boldly to the Future. 5–6 day close and clear and succinct MRP, accurate, timely numbers VS. drive better decisions through analytics, robust and efficient budget and forecasts, business partner role.

Heart of a Customer Servant VS. Mind of a Police Officer. Enablers versus blockers, roll up your sleeves, policy and process only when needed, transparency VS. everyone stays out of jail, compliance confidentiality.

Frugality vs. Scalability. Watch burn closely, business case for material decisions, execs understand finances and team impact VS. don’t get behind the 8-ball, automate where possible, effective planning and fundraising, think like a public company. Felt like she’s holding on to the back of a rocket ship at one fast growing company. She wasn’t investing time and energy in the finance resources staying up to scale.

When to hire a CFO? When you have product-market fit. Meaning you know what your sales people will book in the next few quarters. Predictable sales engine. If you hire too soon they’ll be bored.

MBA vs. CPA? Kelly is an MBA for full-disclosure. If your business model is hardcore manufacturing maybe you need a CPA. If your business model is more dependent on fundraising or FP&A and analysis then steer towards MBA. This is less important than finding the right person and match with your company.

Banking vs. operational finance experience? Similar to MBA vs. CPA. If she were to hire a finance person you don’t need banking experience as much as operational finance. If raising capital is a strategic element to growing your company.

IPO experience? Not ideal to prioritize because what happens if the window closes and you decide not to go public.

CEO wants a CFO who is a true business partner who can tee up strategic choice points, enable accountability, use data and join them in the future. Pitfalls are being too stuck in the past or risk-averse.

Other execs want visibility and partnership, responsiveness. Pitfalls are too much process and poor communication.

Finance teams/reports want leadership, a seat at the table, to be masters of their own destiny. Good soldier syndrome and not spending time with people are pitfalls.

Board wants accuracy, objectivity and communication. Pitfalls are if you’re out of step with the CEO or surrender to group think with the team. Both ends of the spectrum are tough.

What Kelly looks for in a role? Team and culture, market opportunity, product/market fit achieved, role specifics and duties. CEO/CFO relationship is incredibly important. CEO has to walk the talk, be consistent, have high ethics, and believe in teamwork.

The role of the CFO is evolving. Rise to the challenge!

Developer Go-to-Market Shippo and Bitmovin — Laura Behrens Wu (CEO of Shippo), API that connects ecommerce to shipping providers. Learning to sell how to developers, which can be tough. Stefan Lederer (CEO of Bitmovin), infrastructure API. Helps developers to move faster and build better applications. It’s less about selling hard and more about helping solve a problem.

Ecommerce software is readily available, so Laura decided to move into that as a hobby. She then realized that shipping companies are excellent at moving packages, but are bad at providing good technology and APIs. Every single ecommerce store needs to ship and Amazon is setting higher standards, so why is there no easy to use software to help companies figure it out? That’s why she started Shippo.

Stefan started a PHD program, learned about standardization and one that he helped create is used by Netflix and Youtube and Hulu. 50% of the infrastructure the internet uses today they co-created and they got to see how these startups work. Then it was a no-brainer to start a company and provide it to a larger audience.

How do you reach a developer since you can’t call them or email them and get a reply? It’s not about a hard sale, it’s about a clear value prop. APIs are hard to use and have poor documentation, so creating clear documentation and an obvious and clear problem you address is critical. Developers want to avoid having to talk to a human so you want to build a process that eliminates that need for interaction.

Similar for Bitmovin. If you go to a big customer you have to go through an enterprise sales process. Several weeks of review, a list of questions and meetings. Bitmovin wants to let Developers get a free trial, documentation, tutorials, API clients, valuable content, things like that. This develops trust and a good reputation, not the optics of just trying to sell you something. If you solve the problem, the sales should follow.

That makes sense for small companies and individual users, but how do you get a big deal signed? Was all inbound initially at Shippo and people found them through Github. Mostly if it’s a developer making a decision it’s a small company. As they go after larger customers, the developer is no longer the only person involved — may include a finance person looking to reduce shipping cost. They want the engineer to be an advocate, but they understand they will also need to explain the business value Shippo creates.

Exact same for Bitmovin. Inbound interest leads to opportunities from larger companies, and then they have to go through a more detailed and involved Sales process. Developer is the tip of the spear. They move to senior executives who want to understand the partnership and value. Go to nice dinners, tradeshows, meetings to close those deals. Shippo made a simple tracking tool to help get their foot in the door and get developers using their products for free and circumventing the process to build trust. The inside sales people talk to the store owners and tries to get to a point where the developer is looped in as soon as possible, because they need a technical discussion. It’s easy to alienate developers if your sales people aren’t trained on how to speak with them.

What are the challenges you face — is it hard for a typical salesperson to succeed in this role? Developer evangelist role used to come up a lot but not as much lately. They try to screen for sales people who have some level of technical background and can at least speak the language. If they’re looking for someone to walk through the integration process they use a Sales Engineer, as it’s difficult to find a super technical account exec. Bitmovin does the same thing. Everyone in their company needs to be pretty interested in technology at a company like theirs. They need to understand the product, customer problem, and that requires some depth of understanding.

Do you have credibility issues since you aren’t a big company? No one gets fired for buying IBM. Shippo is facing that issue as they’ve only been around 4 years and shipping so crucial that they deal with a lot of skepticism. Developer credibility helps, but they need to do more PR and do superficial things like point out they’ve been featured in Forbes, Fortune, etc. Nobody wants to be the first one to buy from a startup, so you have to gain trust, get customer logos, tried to onboard customers with some small part of their product even if free, to build up credibility. If you’re providing core infrastructure as they are, it’s really important that they are trusted.

Tips for companies trying to acquire developer customers? Hackathons are a strategy some people use (like Twilio), but it wasn’t right for Shippo because of the use case for their product. May be something you can use if it works for your product, but it depends on what you’re doing. The best leads for Bitmovin come in over the weekend, because that’s when their users have time to do something outside of working their backlog.

B2B Scale and Growth with Y-Combinator — Anu Hariharan, partner at Y-combinator. Merci Grace was Head of Growth at Slack, scaled from 500K to 5M DAU in 2 years. ChenLi Wang was Head of Growth at Dropbox.

Concept of Growth team pioneered by Facebook ~10 years ago, mostly in B2C world. What types of B2B companies should have a Growth team? Especially applicable to companies that have Product-Market fit. Otherwise your spending money in the wrong areas. Other than that, useful if you have a freemium product or something that lends itself to a SW-enabled funnel. On some levels everyone is working on Growth from the CEO down. Need to be thoughtful about what your existing teams aren’t doing and then you can fill in gaps with additional firepower. Social networks have high return on growth as it’s a necessary ingredient. Dropbox is useful even without a network of users.

You say you need to have product-market fit — how do you measure it? If customers are emailing your support demanding you have a paid version because they’re running out of space that’s a good sign and what happened at Dropbox. Slack had great retention and thought that was a good sign that the product is sticky and being used.

What types of B2B companies make sense for Growth — enterprise Sales? Really comes down to 2 things — check size. If it’s a bigger sale it requires approval for more people, which involves more steps and stakeholders, so you’ll need enterprise sales people to manage the process. The other factor is the type of buyer. An HR system is a pretty big, top-down decision that includes PII so it’ll be an enterprise sale. If it’s a tool for front-line workers then self-serve is much more attractive. Merci says that the number is around $800-$1K per month. Beyond that people aren’t comfortable putting it on their credit card.

What does the Growth team actually do? Slack focused on working the top of the funnel because they knew the conversion and retention rates further down. Then they added things later that would help increase conversion to paid. Merci is a product person so her team was driving traffic to the site and working on acquisition through usability changes to invite flow, etc. Dropbox had multiple incarnations of growth teams. The symmetric referral approach with rewards for both sides was very powerful. Need to draw clear boundaries of who is responsible for what, so that Marketing/Product/Growth aren’t all stepping on each other’s toes. Later on there was a more B2B growth tactic that was SEO/SEM focused.

If your product has an intrinsic currency that you can award users, symmetric rewards is a good idea. In Dropbox it was space for storage, so you get more of that for referring people. For Uber and Lyft, you get free rides, etc. Don’t want to use cash due to fraud though.

How do you think about channels to experiment with? Merci comes from a Product perspective, and believes that if you enjoy a tool at one company you’re likely to use it at the next company. Once a Slack user, always a Slack user. Can assess channels by thinking about your customer’s point of view. Who are your customers and what are the media and events they use? That’s very informative on how best to reach them. Could be offline or online, or other sites, etc. The easy thing to do is experiment with paid ads, determine ROI and then eventually you hit a wall. Think about how you engage and retain them. How do you create a longer relationship with customers, and a lot of that comes from being a thought leader in the area, writing blog posts, content, etc. which takes a while.

Is it that all B2B companies should invest in content marketing or only for developers? Developer evangelism may be the better term for that approach. Brand and customer service are incredibly important as well. Need to treat customers as they intelligent people they are which makes your company approachable.

Who should you hire for your growth team? First hire on Growth team should be someone who probably already works at your company. Someone who is in the mindset of your customers is going to be able to understand their perspective. Your Product Marketing Manager who is most connected to your customer is probably a great place to start. Then you can go through and make sure you’re doing really great tracking on all aspects of your Product. One item for Dropbox was to spend a week doing Support tickets. Years later people said how valuable that was. To scale the time it’s important to recognize that it’s a mixture of art and science. Quantitative skills but don’t forget the creative part. Need to try out a bunch of good ideas. People who are stubborn and curious are great traits. Whoever your PM is who is the last person to leave the building.

“Scariest day is when the numbers go down. Second scariest day is when the numbers go up and you don’t know why.”

When to invest in content marketing? After you have product-market fit. Then you can start to explore different channels like content marketing and paid advertising. Depending on who is most qualified within the company, get those people to write content.

Other creative ideas like Space Race for Dropbox? Hire great people. Ideas are cheap. Need to bring people together with different backgrounds to cross-pollinate. Another company was offering employee perks if you go to a movie with a co-worker or something. That led Dropbox to think about group-buying and figure out how to have teams and schools competing to see who can get the most space. The result came from hiring diverse and creative people.

Intacct’s Journey to an $850M Exit: Retaining Employees, Defining Sales Processes and the Metrics to Make it Happen — Greg Sands (Constanoa Ventures) and Kathy Lord (SVP Sales & Customer Success). Sage acquired them for 9.8x revenue. What it takes to make a great company — inputs:

• Leadership, hiring & developing talent
• Product value & differentiation
• Designing, testing & building efficient sales and marketing engines
• Building models, platforms & ecosystems
• Disciplined execution

Outputs:

• Revenue growth
• EBITDA/profitability
• Low churn, high net retention
• Good unit economics (CAC/LTV)
• Capital efficient growth

Returned $120M to LPs. Did a recap in 2007 and hired a new CEO. Many/most companies go through near death experiences and have lots of challenges. Intacct was at about $2M in ARR with moderate growth and lots of difficulty. Focus on the inputs and the process to achieve great outcomes.

How do you retain great employees and keep them motivated? Never too early to define the culture and purpose for the business. Answer the whys — why is the company in existence, why do you do what you do? Customers stay because of the great service you provide them, employees stay because you provide them with great opportunities and mission. Define the whys to entice people.

Growing Sales from $0 up? Track MQL and build funnels to understand what conversion rates would be and how much revenue that would relate to. Didn’t have the money to gain awareness through marketing, so they had to come up with techniques to fill the funnel. They realized earlier than others to extend funnel all the way through growing lifetime value of customers post-sale. Product is pretty sticky by its nature, but they were having some degree of churn. Discovered it was related to failing to properly onboard customers — not necessarily product issues.

Scaling prematurely is the leading cause of death for startups, second is not finding product-market fit. “Nail it before you scale it”. All the different SaaS metrics that people needed weren’t yet created. They had to build them for themselves and also then provide to customers and build into product. Definitely focused on understanding all their numbers at a deep level — by vertical, by size, by product type, etc.

What would you have done differently? Would have been more aggressive in terms of pushing the organization to hire and scale. Was concerned about having enough demand to feed the Sales team. Would have pursued other verticals earlier, probably needed to raise more funding since the market opportunity was so big. Should have stepped on the gas a bit more considering the strong team, market size, etc.

Catch them Standing Still: How to Outmaneuver the Giants in a Mature Market (Highfive) — Sam Parr (CEO of The Hustle), Shan Sinha (CEO of Highfive). Highfive is a video-conferencing system, hardware and software. Just raised $75M. The Hustle is 25 people. Was at Microsoft, then started a company to share documents, got bought by Google in 2010, turned into Google Drive. Shan got a chance to run Google enterprise apps. Question about why move my stuff to the cloud in late 2000’s, then the question became when should I move my stuff to the cloud. Interesting to see emergence of more sophisticated and mature cloud businesses that are now the norm. Saw a massive opportunity to solve a problem that everyone deals with — the first 15 minutes of a meeting where the video-conference doesn’t work and you scramble to try to fix it. Started in 2013.

How do you think about competing with Cisco and other big companies? Whenever you think about entering a market there’s a question that you have to be very honest with yourself about: What sort of market are you actually in? Meaning, is it an established category that’s well understood, or are you giving someone the ability to do something they haven’t been able to do before. Video conferencing is a well understood category that others have been in for many years. Your approach will be very different depending on the answer to that question.

In a market that’s well understood people have certain expectations and there are big vendors in the space. You have to figure out how are you going to build a product that’s unique and get people to notice and listen. For a new market, the job is to disproportionately delight your end users. In the earlier stages of a new market you spend a lot of your time obsessing over the product you’re building, but if you’re tackling a more entrenched market, you need to think about differentiation.

He likes to imagine he’s at a cocktail party and wants to tell someone about something he bought. What is he going to say and tell that person? As a founder that’s what you want to think about when you build your product. They won’t list off all the features, but they will explain some key aspects of it. Hired a product marketing person early to test the value props with customers before they built anything. Spent 20–30% of their first year or two trying to understand the value prop and how customers would react to the overall message while building the technology itself.

Can big companies use these tactics? The reason these companies are large is because they took something that worked and scaled it. Often times you find that there’s a bias that comes with that, and there’s an organizational disincentive to not build new things or break your own products. If you’re risk averse or don’t see a reason to replace something that’s working, there’s a lack of impetus to innovate. Speed matters, iteration matters.

Typically you have a bunch of old technology and you’re converting it into some new technology. The way they built their businesses made sense 20 years ago. At some point they tried to partner with distributors, resellers, etc. and an ecosystem evolved around it.

Highfive took a different approach — they decided to take a product that had both HW and SW components and sell directly to customers. All the complexity of legacy technology that required distribution partners and resellers was no longer needed. You can buy their product online, they ship it, you plug it in and it works. No reason to complicate the ecosystem.

Would this strategy work across other industries? Yes, Shan thinks going direct to customers is incredibly valuable unless there’s a strong reason not to. You learn a lot more quickly working directly with them. Now to grow and scale, they can layer on more complex models and indirect distribution strategies.

The Fundamentals of User Adoption: What Changes and What Doesn’t As you Scale — Rachel Orston, CEO of UserIQ. 4th Startup, last one (Silverpop) sold to IBM in 2014. Atlanta resident. User adoption is the theme because people are starting to realize that customer happiness and success is the key to growth, not just adding more deals while having churn. Data point: If a SW company grows at 20% annually it has a 92% chance of ceasing to exist within a few years. Hate that when we think about customer success we think about churn. Retention is a long term strategy, not just about avoiding a worst case scenario. True growth comes from advocacy. Go from adoption, to retention, to expansion and finally advocacy.

Do you focus on adoption and why customer’s come to you, the value you’re delivering to them and so on, or do you just focus on retention and expansion? Entering into a golden age of freemium or trials. If you’re going to convert free trials into paid, you need to understand user adoption. She asks companies “Tell me who your best customers are” and they can’t answer. They say I can tell you who’s paying the most, but they don’t know the best customers.

Start with why. Why do people come to my platform and use my product? What problems do we solve for customers? Get clear on that with the entire management team. Find Wow moments and measure time to Wow — this is critical in why people buy. Could you go through your product and ask questions in the voice of your customer to understand where they see value in your offering? If it’s not obvious, then maybe reassess the value of the product.

Then get to the What. Identify the top 10–20 behaviors and user flows that are used by retained users. Focus on the behaviors of people that are loyal. Compare them to your churned users and see if there is correlation or not. Don’t solely focus on people who leave, make sure you look at retained users too. Ask customers what they are doing in your product and why.

Customer Success + Product Management combined is the marriage of why and what. Product team understands what and is very steeped in that. Customer success is focused on why — they drive value, onboard customers, etc. but the problem is these groups aren’t talking to each other. Teams only get together when the shit hits the fan, the customer is unhappy and they are dealing with workout situations, not when they’re trying to align on customers. Product and Customer Success have very different milestones and user flows. If you can merge the flows then you will have better alignment.

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