The Brooks Brothers clothing brand is an iconic name in American business. Founded in 1818, the company has outfitted 39 US presidents and prides itself on offering white glove service to its customers.
How does a 200-year old brand translate and deliver high-end service in the digital age, especially when in a price-sensitive consumer environment?
To explore this question, we invited Brooks Brothers Executive Vice President and Chief Information Officer, Sahal Laher, to be my guest on episode 200 of the CXOTALK series of conversations with innovators shaping the world.
The short video above was taken from a lengthy, in-depth discussion that you can watch on the CXOTALK site.
As CIO, Laher is responsible for implementing technology that enables a high-touch, seamless customer experience extending across all channels including brick-and-mortar stores, e-commerce, and mobile.
During our conversation, Laher emphasized three primary goals:
Deliver a consistent customer experience across all of Brooks Brothers sales channels
Make the customer experience simple and easy
Understand every Brooks Brothers customer and personalize the consumer experience to their specific needs
In the video embedded above, Laher explains the technologies and business goals that underlie Brooks Brothers ability to achieve these customer experience goals. He describes how the company put in place a strong “digital core,” which is now central to creating a 360-degree view of the customer.
Here is a transcript of the short video embedded at the top of this post.
200 years of white glove service
Michael Krigsman:White glove service as you described it, has been a centerpiece of Brook Brothers approach for 200 years. It sounds like what you’re doing is translating that into a multi-channel, or omnichannel, approach.
Sahal Laher:
That’s exactly right. I think that manifests itself in many different ways.
It requires that we have a consistent customer experience across channels, and that doesn’t apply just to personalization, but it really applies in general, where every company now needs to break down the silos between channels. Traditionally, retailers have thought in channels, and they’ve been organized in channels and had separate business units for online versus brick and mortar, versus factory, and what is very evident is that the customer doesn’t see it that way. The customer doesn’t think of channels. They think of it as Brooks Brothers.
Most importantly, I think people are looking at retailers and companies: they’re not easy to do business with. It has to be simple; it has to be intuitive. You know, you can’t have a very complex aggregation on your website, you can’t have extremely long and tedious checkout process, because we’ve all been to those websites, and lost motivation to complete the checkout.
If it’s not simple and you’re not easy to do business with, and you don’t have a supply chain that can fulfill in a fashion that is geared to give the people the product they want, when they want it, then you’re really going to be at a big disadvantage, and you really are going to go to another site where it’s easier to do business.
Michael Krigsman: How do you maintain that customer experience, especially going across multiple channels?
Sahal Laher:
The reality of the world we live in now is that it’s just not like it used to be in that, now we travel more. We may want to go to the store, not in our hometown, but where we work, or we might be on business at a conference, and we might want to go to a store.
What we’ve really been working really hard on in the last couple years is trying to figure out: If John Smith comes to the store, and he’s never been into that store before, but he’s been a customer for 10 years, we are missing the mark if we don’t give him personalized service based on the information we already know about him.
We will have turned data that we have into actual, actionable insights that you, the store associate, can use to have a more personalized conversation, as opposed to talking to everyone who walks into the store that you don’t know about the same five products in the Fall collection.
So that’s a very important piece of who we are, and, obviously replicating that requires a lot of translation of this data into insights. Everyone talks about “big data,” everyone talks about these buzzwords of “big data” and “machine learning” and so on, but this is really a case study where it’s the differentiator, and really in all industries, I think, can be a differentiator not just for personalization but for many different parts of your supply chain and the way that you go to market.
And, the way that the machine learning works, is we can do that on the fly, and we can do that for terabytes and terabytes of data, which, in the old days obviously was just not possible, right?
Even if we took every single black book, every single store associate’s black book from the old days, where they had customer service and all of that done in paper books, that’s already a lot of data. And now, you multiply it by, you know, everything like your online clickstream, right? So every time you go online and you’re navigating the website there’s a trail of breadcrumbs that every customer leaves behind regarding what have they browsed, what have they put in their cart and not bought, how much time have they spent looking at a particular item.
All of this information, when you aggregate it together, and you have a true big data strategy, that utilizes some of these next generation tools like machine learning and in-memory databases. And, we have the ability to replicate that service, and now, you can also make that available online, and you can make more thoughtful recommendations for you online, as opposed to showing everyone the same five products that have just come out as things that the might be interested in.
Building the 360-degree customer view
Michael Krigsman: Can you talk about the relationship between service, engagement, customer experience, this machine learning project, because it’s all part of a broader perspective?
Sahal Laher:
Absolutely. So, you know, I think, again, customers don’t think in channels, right? And so, regardless of what channel they are interacting with you on, they expect that you know… So if I went onto the website and I made a purchase, and I come into the store two weeks later, and you don’t have any information on my order, or don’t even have any information on what’s in my wardrobe, then you’re missing the mark.
So, you know, one of the first things we did a couple years ago was really working on creating this 360-degree view of the customer, which sounds fairly obvious and it sounds fairly intuitive. But the reality is very few people have that all in one place, because over time, it doesn’t matter how long you’ve been in business, and obviously, the longer you’ve been in business, you’re likely to have more silos of data. But even if you haven’t been in business for decades, and you’ve only been in business for a few years, nobody has just one sales system, right?
You always have at a very minimum have a point of sale system, and then you have a website. And then you need some kind of system for customer service, you may need some kind of system for your store associate, be it clienteling or looking at alterations, or made to measure, or whatever the case may be.
So, what we try to do is all of those systems that I named was one or more different databases when we started, and what we’ve worked to do is really bring all of this into a single database.
And that single database now has John Smith’s customer record, it has all his personal preferences, it has his e-commerce transactions, it has his in-store purchases, it has his alterations and measure information, and it also has any interaction that he’s had with our call center is all logged in one central place.
What that allows us to do is obviously elevate the level of service that we can provide, because regardless, again, of what channel is your preference to interact with us on any given day, we will be able to have a consistent view of who you are as a customer, and therefore we’ll be able to better service whatever needs you have on that particular day, and they won’t be these handoffs or, “Let me transfer you to the place you ordered that, let me transfer you to the call center or the e-commerce fulfillment team to look at where your order is in the fulfillment process.” It needs to be, again, simple, right? If it’s not simple and intuitive, people are going to get frustrated and go elsewhere.
The digital core
Michael Krigsman:We have another question from Twitter, and this is from Arsalan Khan, who’s wondering, as the technologies change, and as the environment around you, the customer environment, the competitive environment is changing, how do you plan? How do you go forward and consider this ongoing change in your business strategy?
Sahal Laher:
That’s a great question, and I’m glad that it was asked because one of the things we haven’t touched on so far is the need for a strong, what I call “digital core,” right?
What that entails is, do you have a strong supply chain that can allow you to fulfill orders any time, any way? That’s the bottom line, right? The customers want their stuff. They don’t care where it’s being shipped from, they don’t care how it’s being shipped, as long as you can honor your commitment to getting that particular merchandise to the customer on a date that’s promised, then you’re meeting the customer expectations.
So, that’s obviously very difficult, and when we talk about omnichannel, right? And we talked about the 360-degree view of the customer.
But another extremely important piece that we touched on very briefly was the silos across channels coming down. And as those silos come down, you know, this digital core becomes more and more important, because in the old days it was fine for you to have a website, and a website only having inventory to your e-commerce warehouse merchandise. But now, you need to make sure that you have, you know, it’s almost another 360-degree view, it’s also a 360-degree view of product and inventory. And looking at that across all of your channels.
So, you know, there’s obviously tools that allow you to allocate product, and to come up with these assortments, but there’s always going to be times when someone comes in and we don’t have that product, and how do we get you that product? We have fifty of those units in the warehouse that are available for e-comm orders, but it’s a shame if that inventory’s not available to in the store, or vice-versa.
That’s digital core and this is kind of, a little long-winded response to the question, but it’s an important context that I think needs to be provided, and if you don’t have that supply chain that’s dynamic and nimble, and you as a company are unable to react dynamically and real-time to customer demand, then you’ve missed the mark.
This excerpt is part of episode 200 of CXOTALK, which offers in-depthconversations with people shaping technology and the world. Check out the list of upcoming episodes.
When I decided to leave SAP to take a short sabbatical I didn’t really know what to expect. Six months later I am happy to report that it was one of the best decisions I ever made. These were some of the best weeks and months of my life. After this short period of disconnecting to recharge and rejuvenate myself I am reconnecting to the professional world. I have accepted an offer with Google to lead the API Ecosystem for Google Cloud to help drive adoption and monetization of the Google Cloud portfolio of platform and products, at scale, by working with various partners as well as coordinating efforts internally at Google with product management and engineering.
As I disconnected I felt the life slowed down and I had more time on hands and a fewer things to do. I met with many people during my sabbatical to learn from them and bounce off my thoughts. We tend to postpone taking certain decisions and don’t spend a lot of time thinking about many things in life, personal as well as professional, simply because we are compressed on time and each task, activity, or a decision only gets a fraction of overall available time we have. I tried hard not to work hard. Just slowing down and soaking it all in helped clear up many things. Taking time off also helped me prioritize what I really wanted to do. I am a big believer in unstructured free time where there is nothing planned ahead of time; wake up and take each day as it goes. I enjoyed doing mundane tasks and that took my attention off a typical rapid life of a technologist in the Silicon Valley. I would highly encourage you to take a short sabbatical in your career if the circumstances allow you to do so.
To a lifelong learner and a “product” person nothing excites me more than immersing myself into breadth of possible opportunities at the intersection of technology and business to create meaningful impact at Google. I have always admired Google for its ability to take risk by going after some of the hardest problems that require massive scale, foster innovation, and embrace failure as part of its culture. I have always been impressed with the talent Google manages to hire and retain. I am looking forward to be surrounded by people much smarter than me and learn from them. It’s going to be an exciting ride!
Banking and financial services are under threat from a combination of technology innovations, a difficult economic environment, and changing consumer expectations.
During a recent CXOTALK conversation with banking technology leader, Oliver Bussmann, we explored the dynamics underlying these challenges to financial services. Oliver was Group CIO for UBS, largest private bank in the world with $1.74 trillion under management. At UBS, he was known as the firm’s “blockchain guru.”
My conversation with Oliver to explore issues such as challenges posed by FinTech startups, why blockchain matters, the CIO role, and advice to startups that want to work with established financial services companies.
A summary video of that conversation is embedded above; you can read a transcript of the short video below. You can also watch the entire 45-minute episode.
Why blockchain matters
Michael Krigsman:Now, some of the technologies you mentioned, but we all hear about blockchain. And, of course, that’s not the only technology that’s changing banking and financial services. But, tell us about blockchain, for those of us who don’t know, just give us a very brief introduction. What is blockchain, and why is it so important?
Oliver Bussmann: Yeah, for me, it’s a great experience in discovering the blockchain technology in an early stage. Remember, Michael, we’ve been through the mobile enterprise maybe 6-7 years ago, that consumer advisors in the mobile space came up, and then at that time, SAP realized that it would have a significant play in the enterprise too. So you learn over time to discover those megatrends and see in an early-stage the potential, and then put the best team on that: a small team to explore, to understand, and then become a leader in those trends. I can say that from my time at SAP, very successful, and mobile advisors tapped the early stages, and also applications.
And then also here, let me share the story that happened to me also, that I discovered, or we discovered that blockchain is simply ignored, because we got it pushed by an entrepreneur in Switzerland that […] is saying we can do FX trading, foreign exchange trading online, settle everything in real time. And usually, if you do stock trading, it takes at least 2-3 days to first settle, the exchange of cash and security takes time, and this immediately bold statement that we can do this in a few seconds, everything is settled, the cost of doing business would be low, plus the real-time execution would reduce operational risk, risk capital would come down, and we said, “Hmm, that’s hard to believe.”
Blockchain is a game-changer that will have major impact on the financial service industry.
— Oliver Bussmann
And then we discovered that you know, that the underlying technology of Bitcoin, the blockchain, is the key driver, because it’s so normal for most of the banks, and still with Bitcoin with the reputation to even discover that, and to discuss that. And then we discover that the blockchain technology, based on Bitcoin, at the end is a major simplification of our business.
And let me explain a comparison: today, if you do a trade, it goes to different parties. You sell something, they have the buyer, there are different banks in place, stock exchange, clearinghouses, I would say between at least almost ten parties involved, and they have to reconcile the investment business. They have to exchange messages, raise my cash, raise my security the right way; they have to reconcile; it’s a major effort to do that. And, blockchain at the end, in a very simple way, you store information over the internet that both parties can point to. It’s almost a reference, a database reference that you can point to. And there is a mechanism in that if you do a transaction, it’s first of all locked, it’s recorded, you cannot manipulate that. Plus, there is a software at the end, making sure that this transaction only is unique, verifies it. So you don’t need a third party to verify your transaction, but the software is doing that.
So that business logic is part of that ledger, and at the end, the whole messaging goes away, you have a direct impact, a third party is not necessary anymore, and so complexity goes away.
The low speed of doing business is going away, plus the accessibility of blockchain and Bitcoin is public ledger at the end, it makes it easier to access that information from anywhere because it isn’t stored anymore behind firewalls, it’s accessible for the different marketplace, and there’s encryption in place to make sure only the relevant parties have access. So it’s a game-changer from my perspective, and game changer not only for the financial services industry, for insurance, for trade finance, you see this also for the internet of things.
You have a lot of information, send some information, and what do you do? There must be certain events to happen, and there should be like a smart contract that you can act on that. It’s like, you have sensors in your fridge and your fridge is empty, what do you do then? And, there should be a clear definition if those kind of events are happening and triggered, then you buy something online immediately, right? So that technology, this is why certain high-tech firms like IBM, for example, and other firms see this combination from dedicated business to make it happen.
So what I’m saying is, it is like the internet 20 years ago, a game-changer that has a major impact on the financial service industry, and I also believe in government, healthcare, supply chain management. Every time you have multiple projects involved and they need to be synchronized; that is the way going forward.
Michael Krigsman: Are there examples of banks or other large organizations that are using blockchain in a meaningful way today? Or is it too early yet?
Oliver Bussmann: No, I think you see the first use cases coming up. Use cases like in general, the FinTech area, the payment area; it’s a target section because of payment, the business is profitable, there’s a lot of profitability, there’s a need to simplify that from a user access perspective.
And the uses that I think will come through in all their stages is the cross-border payment. It’s complicated because you have to go through a lot of central banks to do those cross-border business for retail and institutional finance, it takes time, and it’s on average roughly you pay $25 for each additional transaction. And parts like Ripple, for example, other ledger providers, they will simplify that, and there’s a collection of six banks already working on that. They are using the technology for their cross-border business within the bank. The next step is they build a network to exchange those transactions, and the infrastructure will be simplified for that, speed is different, and then also the cost to market because the projection is that a transaction that will cost today $25 will come down to less than a dollar.
Michael Krigsman:Wow. Amazing.
Oliver Bussmann: That’s exactly what is a major change that will drive that, because if you’re an institution or corporation doing international business, and you sit on stage with your corresponding bank and say, “You know, I’m paying $25 on average, domestically I’m paying less than a dollar,” that is a clear amount to bring it down below that. But then, you understand the revenue is coming down, the banks that are able in moving earlier and adopting it will have a change to get more market share. So if you’re not part of the train, it could hurt you significantly.
Disruption in financial services
Michael Krigsman: And, what are the changes that are taking place in financial services right now?
Oliver Bussmann: Yeah, it’s multiple dimensions that the financial institute has to cope with right now. It’s after the financial crisis of 2008-2009, the amount of regulation is significant, I would say.
To protect consumers after 2008-2009, a lot of new regulations in all jurisdictions, put a lot of effort into controls, risk management, compliance, to avoid any misconduct in the future. And, to give you data points, today, usually large players invest between 50% and 60% of their IT investment change [in] the bank just to stay in line with the regulatory requirements. That is significantly higher over the last 3-4 years and a lot of the potential investments that you need for new services, new products to implement, improve certain customer services, that is now absorbed by the regulatory requirements. And, there is also then a push for certain software. If you run a global business, you have to stay in line with local requirements, regulatory requirements. So the regulation is a piece which will stay, I don’t see that amount of investment requirements will come down.
The second is consumer behaviors. Everybody has different preferences now to access information, making decisions. There’s definite patterns, the generation that is now becoming highly networked, they don’t go to the front anymore, they want to talk to their financial advisor over the phone or video, they want to have automated information. The decision-making process is different. So, the consumer preference, how they like to be served in the middle of a big change.
The third dimension is new technology. We are going to another major change even bigger than the first one, 2000-2002. There’s significant venture capital and resources coming into the whole innovation, the startup community. You know, I saw at UBS a few years ago, the VC spending was at that time $3 billion US dollars. That number is from 2013 up to 2015 up to $20 billion. And the projection for this year is going to be up maybe to $24-25 billion. And so that should be enough time, and if you compare that with the internet investments 20 years ago, there was $500 million in 1995 spent on innovation in the Internet-related companies. You see the amount of resources and capital coming into the environment.
And then, from a macroeconomic perspective, there is significant pressure on banks, especially European banks, because there are limited growth opportunities. If you cannot go because interest rates are low, and the transaction volume is also because in the market of uncertainty, is low. So, there’s a revenue pressure, the pressure even on the cost side is going up significantly. Cost side meaning your cost-income ratio is under pressure compared to US banks. US banks are at 55% of your cost vs. revenue; most European banks are at over 70%. So there is significant pressure on those banks to be very careful to reduce your operating expenses, which also has an impact on potential investments going forward. So it is a constrained and stressed environment, and the new technology is even triggering, from my perspective, even bigger, significant change.
This excerpt is part of episode 202 of CXOTALK, a video show that offers in-depthconversations with people shaping technology and the world. Check out the list of upcoming episodes.
I spoke with WHO’s Chief Information Officer, Marc Touitou as part of the CXOTALK series of interviews with innovative leaders who are shaping our modern world.
During that conversation, Marc explained his priorities as CIO inside WHO. Among his key activities are serving as a change agent, helping shape processes and expectations about how technology can support the core mission of WHO. Touitou explains:
We are a complex organization with different regions and different needs, but we have to identify the things that bring us together, When you face a Grade 3 emergency, your corporate processes have to allow you to find the right people, find the right skills, and the roster of skills. Recruit, onboard, dispatch, manage, bring back and do again. If this sounds like it’s trivial, it’s not. Same thing with managing your supplies, your vaccines, your boots, your gallons of disinfectant. You need to start there for an emergency.
WHO created a visual, global command center as an important part of its technology infrastructure. The United Nations recommends such a command center in a 2016 report called, “Protecting Humanity from Future Health Crises.” According to The Guardian:
The center “must have real command and control capacity,” says the report, and it should have the best technology available to identify, track and respond to an emerging threat.
The command center helps WHO manage disease outbreaks around the world by bringing in data feeds from what Touitou calls “natural partners.”
These partners are organizations with which WHO collaborates along with suppliers and contributors to relief efforts. Ideally, every relevant player contributes a feed into the command center:
I want to see all my warehouses worldwide. I want to see how many of that item I have left there, and superimpose all the water points here, and tell me how many medical centers I have in a radius of 25 miles, or tell me, what helmets are here. You have the streams from the media center, and you have the maps that you can superimpose, you’ve got all the infrastructure information that you need at your fingertips in near real time.
Although no one today has such a complete command center, WHO is actively working toward this goal. It’s a challenging environment because it’s ultimately centered on rapid response to outbreaks of disease such Ebola or Zika.
The video embedded above presents a rare glimpse inside the World Health Organization. You can also watch the complete 45-minute conversation and read a full transcript.
This conversation was pulled from episode 197 of CXOTALK, which offers an extensive library of executive interviews on digital disruption.
CXOTALK offers in-depth conversations with people shaping technology and the world. Please see the list of upcoming episodes.
This second post offers advice from Andi and Kim on how CIOs can add value to their organizations. Both women have years of CIO experience; Kim was CIO at Intel and Andi worked in that role at Dell. Having been in the role and then left to take on business positions, they are each highly qualified to offer advice to CIOs.
Kim is currently Chief Operating Officer for the Client, IoT and System Architecture Group at Intel and Adriana is Executive Vice President Technology, Business Solutions & Corporate Affairs at Biogen. Both women are on the boards of public companies.
Once a CIO, always a CIO.
— Kim Stevenson, Intel
Among the themes we discussed, understanding the business and being able to communicate well are primary qualifications of a modern CIO. While perhaps an obvious point, there are degrees of sophistication and subtlety regarding understanding how the business operates, why leaders make decisions, and possessing the judgment to balance trade-offs among conflicting goals and objectives.
CIOs are in a unique position to understand and collaborate with the business. Unlike colleagues in other departments, IT possesses a horizontal view that goes across virtually all areas of a company. Because all departments rely on shared resources and services, such as infrastructure and security, IT typically has relationships across every part of the company.
“Seat at the table” is code for understanding the business: objectives, mission, and enablers.
— Adriana Karaboutis, Biogen
This unique, cross-sectional view creates the opportunity for CIOs to develop a unique understanding of how all parts of the business fit together.
The video embedded above offers a view inside the minds of two successful business people who held CIO positions earlier in their careers. The have fought the battles and paid their dues.
This conversation was pulled from episode 199 of CXOTALK, which has perhaps the largest library of executive interviews on digital disruption anywhere. You can also watch the complete 45-minute conversation and read a full transcript.
Please see the list ofupcomingCXOTALK episodes. Thank you to my colleague, Lisbeth Shaw, for assistance with this post.
So you had a great December, added a great VP or two last year, won some bigger deals, and in general — you’re feeling good.
You’ve even got a decent financial plan for this year in place. Even better.
With all that behind you … let me challenge you to 10 SaaS New Years Resolutions. Pick a few that work for you:
Get That Key VP Hire Done in Q1. Period. Not in April. Not by June. Enough with the excuses for not having hired your real VP of Sales, or that VP of Engineering, or whatever. Get it Done. From now until Mar 31, make this your #1 priority. Hire a real recruiter. Force yourself to meet 30 additional candidates. Once you hit Initial Traction, nothing really matters but the team. Drop stuff. Drop almost everything else to get that one critical, missing VP hired in Q1.
Increase Pricing in January — Somehow. Pricing is a nuanced topic. It’s really all about deal size in most SaaS companies, not raw per seat or per unit pricing. But anyhow — in January, find a way. Ask for at least 20% more in your biggest deals. Add a new edition. Do it in a customer-centric way. And probably grandfather in your older customers. But it’s time for an upgrade here. And if you don’t think you can support higher pricing, that’s OK. That will force you and the team to add more value to your product.
Burn Less — But Spend More. Yes, this is possible. Burn less than the base plan you just made. But that doesn’t mean spend less. It actually means spend more — just in accretive ways. Deploy more $$$ into programs that work. Hire more sales reps in the areas where they are profitable. Once you are past $2m-$3m in ARR, you can spend more and burn less, if you are super smart about how you do it.
Get on More Jets. Do you meet with 5 customers a month? Do you get on a jet at least twice a month? No? Well, you’ll lose those customers. Or at least, they won’t buy as much from you. Get on a jet. Marc Benioff still does. What’s your excuse?
Increase your Customer Events. Events don’t have to cost $7m+ like the SaaStr Annual. You can get just as much out of a steak dinner. Do 2x the customer events you did last year. Fill them 50% with existing customers, and 50% with prospects. This works.
Top Someone. Stretch VPs are great. They’re usually the way to go. But it’s time to top someone that won’t scale all the way to December of this year. Be loyal, do it the right way. But don’t let too much time go here. You’ll know when they’ve reached their limits.
Get More Agile (in Product). Most SaaS companies get less agile over time. Feature debt, security debt, QA debt, it all adds up. Pretty soon you aren’t really pushing out as many features as you used to. Stop this in Q1. Add a new team just focused on cool features. Add a new team just focused on integrations. Upgrade the mobile team. Pick something. Pick one place you can add to dev to be more agile. Not less.
Grow As Fast or Faster Than the Competition. Period. Competition is a nuanced topic. But one thing is a constant — you should be able to grow at least as fast as your competition. If you’re not growing as quickly, do a real root cause analysis. And fix it. Competition can split markets, and capital can be an offensive weapon in hyper-competitive markets. But. If you have happy customers, if it’s working — there’s at least no excuse to grow more slowly on a relative basis than the competition.
Find a New Mentor. And Pay Up to Get Her. It’s a new year, and by the end of it, you’ll almost be a whole new company. It’s time to add a new mentor to help you scale. And pay up. The best ones don’t work for free. I don’t mean cash, I mean a fair amount of equity. The folks that helped you get to $1m, to $5m, to $10m, etc. are still great. But add to the team. Being a CEO isn’t a lonely job on a daily basis, but too many tough decisions are made without a good mentor. Add one to the team.
Drive Up Your NPS. And Set a Big Goal and Make it Everyone’s. I know you’ve heard this from me before. But in 2017, brands matter more than ever. Because there’s vendor fatigue. Too many SaaS companies selling too many products. Happy customers and second order revenue are your best secret weapon. More than ever. Most importantly, make it a company-wide goal. Make everyone in the company in charge of driving NPS up to 50, or up 10 points, or whatever goal is appropriate. Make it a goal for everyone – and magic will happen.
Ten ideas for your SaaS New Year’s Resolutions. I’m betting at least 1 or 2 are good ones to add to you list. That, and getting to the gym more often.
A room full of some of the top tech leaders in our country: Apple, Facebook, Cisco, Intel, Microsoft, IBM, Oracle, Amazon, Tesla and so forth. It’s a breath of fresh air to see that Marc Benioff, who has become a beacon for protecting the rights of our most vulnerable citizens, is not in attendance.
But I actually fall on the side of the issue that it’s good that our tech leaders are meeting with Trump for 2 reason:
Whether I like it or not (I most certainly do not like it), Donald Trump will be President of the United States and anything we can do to influence his behavior away from what was displayed on the campaign trail and towards less harmful policies the better. No, I don’t hold out much hope now that we have seen his cabinet picks, his Russia posturing, etc, but asking our best leaders to put their heads in the sand is also not a strategy.
I also think that as public-company CEOs they have a responsibility to their shareholders not to make governmental hostility a company policy until and unless Trump does enact some of the policies he has proposed by which they will face tougher choices. But a seat at the table is the responsible action if asked — as disgusting as Donald Trump was during the campaign. Being present at such a meeting is not an endorsement of Trump’s policies or Donald Trump as a person.
But.
Donald Trump’s action today are a complete farce and anybody not willing to say so publicly is extremely hypocritical for not pointing this out because I guarantee if this was an Obama or Clinton meeting this would be pointed out in spades.
I looked at this seating map published by Quartz and notice that there are 25 people in attendance. This is a group of our most senior technology leaders and our new government-elect.
25 people. 4 of them — FOUR — are the president-elect’s children. That is 16% of everybody in the room or put differently if I include Donald Trump the meeting consists of 20% family members. This is the definition of nepotism that we would condemn from the least democratic nations in the world.
Donald Trump has not legally separated himself from his businesses and to the extent that he has made statements it has been that his children will run his business for him. His children that are sitting in the effing room with him while he meets the top technology leaders in the country. If that’s not a kleptocracy I don’t know what is.
Let me point out what else is ridiculous.
Trump has been Tweeting negative comments about Boeing and Lockheed Martin and taking all too literally the colloquialism of the “bully pulpit” in a way that directly affects individual stocks and companies. Because we know nothing about Trump’s economic interests we of course can’t know whether this is market manipulation for personal benefit.
But think about this. If we live in a society where the President of the United States publicly bullies companies like Boeing, Lockheed Martin and Carrier you can imagine what’s coming for our sector when they try to stand up to Trump’s autocratic tendencies. That’s when we’ll truly know how our industry will respond to autocracy. For now, they’ve just taken a seat at the 80% of the table not occupied by Donald Trump’s family.
I’ve had this conversation many times. A friend calls me up from: Boston, New York, Chicago, San Francisco, wherever and says, “I’m thinking about moving to Los Angeles (or SF, NY, etc) and I’d love to start interviewing. Let me know if you hear of anything interesting.”
I usually slip into counsel mode and tell them it’s a lost cause unless they’re truly committed to living in that city and if they are they should move there first and job search second.
If you really are committed to moving to a new city you simply won’t find the best or right job without feet on the street — no matter what anybody else may have told you. At a minimum you need to put yourself in that city for weeks in a row and appear to be local to maximize the quality of the job you get or the probability of getting one in the first place.
Intuitively you know it’s kind of obvious that you can’t realistically search remotely but it’s hard to make a commitment to actually moving unless you’re confident you’d get a great job so you have a chicken-and-egg problem of “what if I move there and don’t find the right job!?!”
Finding the best jobs takes a lot of commitment to taking many different networking meetings with executives, recruiters, entrepreneurs, VCs, lawyers, etc. The best jobs are of course found through personal connections and in-person, eyeball-to-eyeball contact.
The best jobs are the ones that have not already been put on a job board. The best jobs are the ones that haven’t gone out to an executive recruiter. The reason these are the “best” jobs for you is that once it goes to an executive recruiter there will be a stack of 100 prospective recruits, 20 amazingly qualified resumes that will have in-person interviews with the recruiter of which the company will meet 5–6. So unless your last job is a mirror image of your next then good luck with those odds.
So it takes “on-the-ground work” to find the right job. And that ain’t gonna happen from your LinkedIn messages to buddies you haven’t spoken to in 3 years. It’s not even going to happen from your 3-day exploratory trips every 6–8 weeks. It takes a sustained effort to get the right job. Sure, you can land “a” job, just not “THE” job.
And there are other reasons.
If you really think you’re committed to Los Angeles — then just move there. Make a life decision. None of this wishy-washy hedging your bets, “Well I don’t want to move to LA only to find out that I get a job in San Fran and now I have to move twice. I mean I’d love to live in LA but what I really want is the perfect job wherever that is.” OK, great. So you’re in NY and you move to neither LA nor SF and you’re going to sub optimize your job opportunities in both LA and SF. Let’s see how that works out.
Any hiring manager at a company who has any operational experience and common sense will never want to hire somebody remotely anyways. Anybody with experience has been burned by somebody else just like you who wanted to get hired for a remote job. Here’s a few flavors:
– “I’m going to move to LA but my kids are in school. As soon as the school year ends they’re going to move out.” Code for, “I’m going to see how I like the job for 6 months. I can’t drag my family to LA and then have to drag them back again if I don’t like the job.” Fair enough. I can understand the logic. But I want people that I know are committed to living in the city I’m hiring. If a hiring manager can find an equivalent candidate already living in that city you can be sure you’re on the bottom of that candidate stack. So the odds of the best jobs are against you.
– “I’m going to move my family to NYC but I need to sell the house first. I can’t afford to take a loss on it. So I’ll commute for the first 6–12 months.” Code for, “OK, I really DO have to sell my house but I also have a great excuse to hedge my bets and see whether I really like the company before truly committing to moving.” “Yeah, I know I could probably rent the house out — but why should I do that? I don’t mind commuting.” Long distance, long-term commuting usually = unhappy family life = unhappy employee = less productive employee = unhappy you. The reality is that the “I can’t move until I sell my house” is yet another hedge and great hiring managers see right through it.
“My wife is finishing up her masters at University of Chicago. So I can’t move until she finishes.” Again, understandable. If she’s not up for transferring to Berkeley — that’s fine. Call me in 2 years when she’s graduated. But if I sign up to hiring you and you commute from Chicago I’m only signing up to problems in 9 months. So I’ll look for a better suited candidate.
So ….
If you’re deeply committed to living in a city — move there. If you really care about having the perfect job then being in-market increases your probability 100x. Choose life. Choose your location. Move there. Get settled in. Take the time to know the city. Get your partner or family bedded down and comfortable with the place without the stress of your new work hours. And then set out to shake every hand and kiss every baby in town until you’ve networked yourself into the ideal role.
And if you’re not ready to make this commitment — which is totally understandable — then better you acknowledge it to yourself and stay put into you’re really ready to move. Hunker down — enjoy your time locally until you’re ready for a move.
And if you’re a hiring manager considering hiring somebody who has to commute for a year or two — caveat emptor. I’m not saying it would never work. But unless you truly have no local candidates — why take the risk?
This election has been hard on our country. I have had numerous conversations with people who struggle to call home and speak with family or friends because the divisions are too raw. These are people who now live in Los Angeles, San Francisco or New York City but grew up in Cincinnati, Central Florida, Utah, Michigan and similar places where their parents, families or friends may have different political views.
Many friends and colleagues have reached out privately either to grieve or offer kinds words of support. I guess that must mean that my public emoting was obvious and while many prefer private ways of dealing with the world around them I have always found solace in being part of a public, real-time community.
I have personally struggled with the past year. I am aghast that as a country we could elect a person who said such terrible things about women and minorities and who seems to be intolerant to those who don’t share the same religion or sexuality as him. He even mocked a disabled person.
We all know that.
Of course labels are all too easy to throw out and simplify or stereotype the beliefs of other people. If we resort to trying to simplify what happened we are as guilty of the things we resented by some of Trump’s supporters so we need to begin to look beyond the election and understand what happened and how to make it better.
“i had breakfast with my dad this summer. he is a deeply principled man. a very good person with strong values. he is rust belt middle class. he cares deeply about people, is the kindest person i know, and doesn’t have a racist bone in his body. he coached me and my 3 siblings in basketball and soccer and more. he told me was voting for trump.
this wasn’t about democrats and republicans. it was about bringing down the establishment. and clinton embodied the establishment. he didn’t like trump, but said we needed an outsider. he thought clinton was far more flawed than trump.
This election was about a lot of people like this. Older, working-class, white and had voted for Democrats in the past. On the other side were people who feel devastated because there are not easy words to tell our children to explain how the misogyny, racism and intolerance of the past year spewed and supported and even encouraged by Trump could be awarded by electing him president. From my friend …
“my wife was crying tonight over this election. it felt like the biggest failure of america we’ve ever experienced. we talked about how to we discuss this election with our kids tomorrow. our 7-year-old is very curious.
But more than 60 million people voted for Trump and he won in the system that we have in this country and that we accept as our form of electing a president so we have no other choice but to try and turn over a new leaf and make things better.
I admit to spending most of this week with feelings of loss and despair and a sense of grieving for our country and our people. I know some will find that hard to understand — especially if you either supported Trump or just hated Hillary.
Racism and intolerance existed before this election and they would have existed with Hillary won or Trump won but the fact that the person who encouraged it at rallies and on Twitter won the election has certainly emboldened this crowd and demoralized the victims.
Labels has defined this election. We in cities are somehow reduced to “elites” even though millions of people in urban cities and even suburban cities in coastal states are struggling financially. Anybody who has had some level of career or personal success is somehow labeled as “establishment” incapable of having empathy for others or wanting change.
I am a white, middle-aged, affluent business person who lives in socially liberal Los Angeles. In an odd way I may actually benefit financially from a Trump presidency if he bends the tax regime to help more people like me.
But I am also an “other” and have felt it my whole life. I grew up Jewish in a town without many Jews where I was always the odd guy who didn’t celebrate Easter or Christmas. I had a father with a funny accent from South America who arrived legally in the late 1950’s. He became a doctor, served in the US military and applied for and received his citizenship. But we grew up with Latin music, food and friends in the house.
It’s why I felt so much resonance with The Joy Luck Club and the struggle of first-generation Americans split between loving their parents and the uniqueness of their culture yet wanting to just fit in and be American. It’s why Invisible Man touched me so much. It’s the story of a Black man growing up in the South wanting to just get along and be like everybody else and when he moves to NYC realizes that there is a Black culture and Black identity that he can be part of and proud of and doesn’t need to assimilate into a White-only world.
That is my journey and why I always feel empathy with those who grow up feeling marginalized. In college I found my sense of discovery and couldn’t believe there were so many Jews amongst us. It was ok to just be … ME. Yet in a job I had in college as a waiter to pay my bills I had a manager announce in the kitchen that he had gotten a “table full of Jews” because they were arguing with him about the food. I took off my apron, told him to “fuck off” and I walked out in the middle of my shift. Since a fellow fraternity brother had gotten me the job in the first place it made for a bit of a legendary story within our chapter.
I had hoped that an Obama presidency followed by what I had hoped would be a female presidency that our country was beginning to become more accepting of “the others.” I still believe that this is the direction that our country is heading but we are still some ways along that journey and it doesn’t offer any solace to those suffering from intolerance today.
And yet Hillary Clinton lost and we must accept that Donald Trump will be president — even those of us who find that to be outrageous. We are better to find and encourage smart people to work for him to help buffer the rest of us from his worst instincts. I put this out on Twitter …
And like anybody grieving you want to grasp for reasons WHY all this happened and WHAT IF things had gone differently:
Jimmy Fallon who patted Trump’s hair and helped normalize him. Jim Comey who weighed in to the election 11 days before voting only to announce 3 days before that there was no new evidence. 3rd-party voters. People who stayed at home. Bernie supporters. The DNC. The Facebook algorithm. Or even the imperfect candidate herself who should have known better than to have that mother forking private email server in the first place.
But why or what ifs never overturn the things you are grieving about. What if it had been diagnosed earlier, what if the doctor hadn’t missed it, what if that drunk driver had left 5 minutes earlier, what if, what if …
Hillary lost. No anger is going to bring that back.
Processing loss requires acceptance in the end. We will suffer through the next 3 months as we watch Trump pick his cabinet, take the oath and assume the White House. It will be a constant stinging on our not-yet-fully healed scars of this election.
But we must turn over a new leaf and try to make tomorrow better for ourselves and our communities.
The demographic trends of our country and indeed of the world, though, are going to continue to push issues like race and religion into the spotlight so we had better be healed in time to fight harder for our beliefs in tolerance in the next cycles.
Fareed Zakaria captured the post-election mood and summary well in his OpEd from November 10th. He argues that economic insecurity certainly tells part of the story of this US election cycle but not all of it. We must admit that part of it involves race — even amongst those who would not easily be described as racist.
“Trump is not unusual. Right-wing populism is on the rise across many Western countries. It is rising in countries in Northern Europe [like Sweden], where economic growth has been robust; in Germany, where manufacturing jobs have stayed strong; and in France, where the state provides many protections for the working class.
The one common trait everywhere is that white majority populations have faced a recent influx of immigrants.
I also strongly encourage people to read as a companion book Ta-Nehisi Coates’ book Between the World and Me describing his life growing up in poor Black neighborhoods in Baltimore and then his journey to NYC.
Neither book sugar coats their personal journeys or lays out the fabric of America as a perfect place. They both shine spotlights on communities that those of us who didn’t grow up in hardscrabble neighborhoods need to understand.
If you do want to understand a great historian’s perspective of this election cycle and why it was both predictable and had happened before you may consider watching the great Niall Ferguson’s “Five Ingredients for a Populist Backlash.”
And finally …
I am a venture capitalist and in this blog I try to cover the worlds of technology and finance and the journey of the entrepreneur. Over the past few weeks I didn’t feel like I could seriously write about these topics while so many people were anxious and afterwards when so many people were either grieving or angry.
I also felt I couldn’t just start writing about entrepreneurship again with writing a transitional post like this to turn over a new leaf. So as a writer I must move on, but not forget. As a human I must move on, but not be complacent. As an American I must acknowledge that not everybody agreed with me and my steadfast support for Hillary Clinton to be president of the United States.
I must turn over a new leaf. I want to channel my anger into something productive and that requires acceptance.
I wish all of you well in your personal journeys as well.
It seems every entrepreneur wants to start an enterprise software company. However, many of these founders do not possess a realistic understanding of what selling to the enterprise actually means.
While it is true that enterprise budgets can be large, convincing managers to buy your products is often difficult, complex, and time-consuming. Enterprise buyers tend to be risk averse and have a carefully defined process for evaluating products and vendors. Thus, enterprise selling can be a slow and expensive trap for startups that are unprepared.
On the other hand, for startups that get it right, enterprise buyers offer a great way to gain product feedback, references, and revenue.
Although CXOTALK usually highlights stories about digital transformation and innovation in large organizations, now and then a startup catches our eye. I became interested in Helpshift because they have cracked the code on enterprise selling.
Helpshift has raised $36.2 million and counts companies such as Zynga, Target, and Virgin Media among its customers. Microsoft is also a customer and Helpshift provides the chat support infrastructure for mobile apps such as Outlook and Office.
When founder, Abinash Tripathy, started the company, he envisioned a future in which software companies and app developers would need to provide direct methods to offer in-app support on mobile devices. Solving this problem required Helpshift to build an infrastructure that can handle millions of help transactions every day.
I asked Abinash to be a guest on CXOTALK and explain how Helpshift entered the enterprise and managed to build relationships that companies such as Microsoft consider mission-critical.
We spoke for 45-minutes, creating a treasure trove of information valuable to both enterprise buyers and founders. Among the key points:
Startups that want to compete in the enterprise must endure long sales cycles and an extended investment horizon
There are benefits of being an enterprise company from the start, but it requires patience and founders who have expertise in the large enterprise segment
You can see a summary of our discussion in the short video embedded above and read a transcript here. Of course, watch the entire show and read the full transcript at the CXOTALK site.
Michael Krigsman: What about the sales cycle?As a startup, how did you manage that aspect of it?
Abinash Tripathy: If you’re selling to the enterprise, and you’re consciously building an enterprise to sell to the enterprise, all of those things are a given. You have to do those things to be able to sell to an enterprise, including the long sales cycles.
If you don’t have that experience in the Valley and you’re trying to build an enterprise company, you won’t see the value of working with these companies, being patient, and investing up-front to go work with companies of that size, and you’ll always go after what’s easy. So you see a lot of these B2B companies in the Valley, they do what’s easy. They’ll go after small companies – five, ten person companies – that don’t have a lot of complex requirements and build for them. Then they find that it’s really hard to move upstream, and sell to the enterprise.
And, you know, there’s a reason why Salesforce is Salesforce, and Zendesk is Zendesk. They’re two different-sized companies, from a revenue and size standpoint, and they probably have an equal number of customers, right? The revenue difference is 5 – 10x, right? Because one sells to very large enterprises, and the other one sells to sort of, you know the long tail.
Michael Krigsman:What is the advice that you have towards startups who want to sell to the enterprise, but they look at these long sales cycles; in many cases, getting introductions is hard. But once they have an introduction and the sales cycle, the need to invest is very, very difficult. It’s just that delay, that time, is so expensive for a startup and it’s cash that they don’t necessarily have and time that they don’t necessarily have.
Abinash Tripathy: Yeah, so for companies that sell to the enterprise, the scaling and the growth is slower than those selling to the SMB, initially. So, let’s say you take two companies: one selling to the SMBs and the other selling to the enterprise-sized companies, and they start their journey at the same time. Chances are the SMB-focused company will scale much faster than the enterprise-focused company in the initial years, right?
And, so after the three-four year mark, it looks like the SMB company is ahead. But then, once that market starts to peak out, or, you know, bottom out, and it happens very rapidly in those sort of SMB segments where you run out of all the SMB that company can sell to, and then you make the decision to go up-market, and then your product is nowhere near close to being up-market at that point. Any company… I haven’t seen a single SMB-focused company become a successful enterprise company. I haven’t seen any examples of that. Nor have I seen examples in the reverse where you see enterprise-focused companies being really good at selling to SMB. I think they’re two separate markets, they’re two separate needs or requirements, and different types of companies will cater to those segments.
That’s really…So, the biggest thing, coming back to your question, which is “What do you really need to do to be an enterprise-class company?” The first thing you need to do is you need to know that you are building a long company or a long-term company. You need to find patient investors, investors who have the patience to build a longer-term, enterprise-class company and are not looking for that SMB, fast-growth kind of model. So, it starts with picking the right investor. In the Valley, there are those investors that really want the rocket ship, B2C-style, no-sales kind of companies. They basically tell a founder, “Oh, you should not have any salespeople at all; it should only be inbound marketing,” so there are investors that prefer that. And then there are investors that believe that “You should start working with large enterprises. It’s going to be slower. Build an outbound team.”
And the two types of companies are very different. If you’re looking at the SMB companies, they’re investing a lot of dollars in marketing, in digital marketing, and not as much in sales. And you look at enterprise-focused companies: fewer dollars in marketing, more dollars in BDR [business development resources], outbound, inbound, having account reps and inside sales. Very different models, right?
Now, the other thing I’d like to add is if you think about how we grew as a company before we built our sales, the BDR, SDR machinery, the first thing we invested in was customer support and customer success. Because, when you work with enterprise customers, they are big brands, and you don’t want to fail them, so you want to make sure you have the best customer support and customer success teams in place to handle these big accounts and make them successful, and they become case studies. They go around to the world telling them how good you are as a solution provider, and then companies in their class come in, inbound. And when that engine starts to work, it’s very powerful.
Abinash Tripathy: My biggest advice is if you don’t have a co-founder that has worked in the enterprise category or space, selling or in BD [business development], then get one. You need a person that understands what it takes to work with enterprise companies. That’s the first and foremost requirement.
And, the second one is to find patient money. If you want to build a long-term enterprise company, you going to want a VC that is patient and knows what you’re going to be doing, and it’s going to take some time and is willing to work with you and help build the company. And so, patient money is really important.
I think those two things, if you’ve got people who have the experience that you need for enterprise, and you have patient capital, then I think you’re on your way. It’s not that those problems can’t be overcome, it’s that those are the two things, the foundational elements.
To see the list ofupcomingCXOTALK episodes, click here. Thank you to my colleague, Lisbeth Shaw, for assistance with this post.
I know the title “I promise you one of the most meaningful days of your life” sounds grandiose but I mean it and I hope you’ll read through to the end and choose to take one small, totally free action, that will change your life and likely those of others.
On September 10th of this year I spent an entire day in California State Prison with people who had committed felonies and worked with them on business plans to help them create legal enterprise upon their release as part of Defy Ventures 6-month training program.
I hadn’t cried this much maybe since childhood. Not cries out of pity but out of joy, pride and sadness at the lost lives, broken families and a broken system but also at the hope, ambition and remorse that I witnessed. I wasn’t verklempt — I wept.
I hadn’t felt this human since the day my two sons were born. I felt a deeper connection with human beings than I have felt in many years. I gave myself to help others but it was clear that the prisoners gave me as much as I offered. They showed vulnerability and a genuine interest in learning.
I sat standing 1 foot away from somebody who’s been in prison for 15 years of his life and I had 60 seconds to open up to him about something that causes me pain in my life while he stairs into my eyes I found myself going deeper than I would with even friends or family.
How could I not? Similar men had just gotten done telling me about their own childhoods. They told me of losing fathers at 3, of moms on drugs, of uncles that asked them to hold guns to cover them at 8. Grown men, prisoners, with huge muscles and tattoos everywhere cried and told me stories. And they didn’t want pity. They wanted opportunity. They wanted to learn.
Defy Ventures is a program that aims to educate people in prison to become better humans upon graduation. They offer classes in personal responsibility and accountability, they teach men to forgive themselves and to forgive the people who perpetrated them as children because they all grew up surrounded by bad influences. Defy teaches them to love themselves and their fellow man but also to love and respect their families.
Defy teaches them personal finance like how to keep a checking account, the difference between debt and equity, what cashflow is and so forth. And then Defy encourages every member to create a business plan for a business that they can launch upon release with an emphasis on tangible businesses that can be cashflow positive in just 3 months.
Defy Ventures runs business plan competitions and has people like us who attend and give business advice and feedback. You can go. You SHOULD go. Here is how. You can make excuses — many do. But if you commit one simple day of your life I literally promise you that you will email or Tweet me a “thank you” and tell me you’ve been moved. I know because I went back a second time with 75 or so tech executives and VCs and my inbox is flooded this morning.
Catherine (Cat) Hoke founded the program in 2010 and launched the business plan competition in 2012. You can read more about her here but let me give you my take. I think my personal branding is one of not offering false praise. I don’t sugar coat and I don’t make people artificially feel nice by saying how AMAZING they are. It’s just not me. I don’t try to be mean but I value directness and integrity when I offer praise. So here it is
Catherine Hoke is the most inspirational person I’ve ever met
Why Cat?
She works as hard and is as committed as any of you founders or VCs out there and she’s absolutely crushing it on impact and results and the better she does — there is no upside for her. She runs a 501c3 (non profit).
When she talks in prison she commands the respect of every person in the room — and you’re obviously talking about some pretty hard individuals. When she stands in front of executives she doesn’t cater to us. I’m sure she appreciates us but she’s not there to kowtow. We are on a level playing field with the EITs. And I watched her get up in the grills of people who are convicted of serious crimes and get them to confront their anger, frustrations and fears. I watched her when the graduates met their family members and you can see that the “everything” to her is the bond between incarcerated men and their children and wives.
As Cat says, “the best way to keep these men from coming back to prison is to find a way for them to earn legal dollars.” And as I’m sure you know the system isn’t exactly hospitable to employing ex-felons so the best way to sustain them is to find self employment and for them to hire each other. And the results?
Defy Ventures graduates have a 3.2% recidivism rate (the rate at which they are re-incarcerated) against a national 5-year average of more than 75%. The 3-year recidivism rate in California for comparison is more than 50%.
Defy has graduated 1,100 prisoners upon release who have created 150 businesses that now employe 350 people — many of them ex Defy Graduates
And of course Defy has a post-release program to help with reentry into a society not geared towards helping with recovery. They charge alumni $100 / month to stay in the program to make sure they have real skin in the game.
I this all sounds like psycho-babble but I promise you that if you’ll commit just one day of your life to go to prison with the team at Defy Ventures you will feel profoundly moved, you will feel deeply human and you will feel the calling to do more. It will shred every perception you have about convicted felons and the penal system in the US. It’s not that these men aren’t guilty — they are — but that the system is biased towards over-incarceration and sentencing to people of color and has a byzantine set of rules that often elongate the sentencing of those who don’t have resources to fight them.
And leaving aside the penal system you probably have pre-conceived ideas of what it would be like to sit and talk with somebody who has committed armed robbery, been in a gang or even committed a violent crime. I went in feeling intimidated to be in a room with these men. By the end of the day I was eating pizza at the same table as them asking them questions about their lives and they of mine.
There is literally no way for me to describe this — you just have to experience it. You forget they are prisoners and realize they are men who have done bad things and made mistakes — many of them as teens. You forget you’re in a maximum security prison. You lose all fear and inhibition and even find yourself pushing yourself to be more open. I know this will happen because I’ve now watched it on two occasions with more than 100 tech executives.
I watched tough men melt as they made commitments to their children and wives upon their graduation ceremony.
I watched this man who has been incarcerated for 20-or-so years get down on his knees and re-propose to his wife and promised her to be a better man and stay true to the Defy mission upon graduation. No: There was not a try eye in the room — inmate, business executive or family member.
I watched a man who had a 9-year old struggle to tell her that he loved her and that she was smart to her face. He kept telling the audience but struggled to tell her directly. Cat was having none of it. She went to him, asked him to look in her eyes and tell her directly and he did. But nobody ever told him to his eyes that he was good or loved and so it literally wasn’t an experience he knew how to deal with.
Anybody who has been on a Defy trip know the drill. You get in a line with executives on one side and EITs (entrepreneurs in training) on the other. Cat hates calling them “inmates” or “prisoners” or “convicts” or any other label that emphasizes the worst things they’ve done in their lives and wants them to see possibility in their futures.
She asks you to “step to the line” when a statement made about you is true or back from the line when it’s not.
How many of you were raised with 2 parents?
How many of you had violence in the home?
How many of you lost an immediate family member before the age of 18?
How many of you finished high school?
Of course the contrasts are stark and the questions get more personal and much harder to hide from the privilege our side of the so obviously enjoys.
How many of you were suspended from school ever?
How many of you committed an act for which you could have been arrested — whether you actually were or not?
On that question nearly every person is at the line. The difference? On our side if you were truly busted for a “stupid childhood indiscretion” you simply hire lawyers to get out of situation with a hand-slap unless it was truly a heinous act. Oh, wait. Even those have a price in our society … Brock Turner raped an unconscious woman and was released in 3 months. Can you really say we wouldn’t have thrown away the key on a poor African American or Latino who wasn’t a white, Stanford swimmer?
I met Catherine several years ago at the request of my good friend and colleague Mike Su. He kept telling me how profound this prison program was and would I meet Cat. Yeah, yeah, whatever Mike. Sure, I’ll meet her.
We met. She was smart (she started her career in private equity!) and ambitious and wanted to “save the world” but who didn’t. Everybody I meet seems to say that and have some sort of angle for making the world a better place. I sounded great but it was one other to do for me “some day.”
Mike didn’t let up. He asked and asked and asked until I ran out of excuses and I met Cat again and agree to come. Honestly, Mike is a mensch and never gave me a hard time and also never gave up on me.
So I went.
And I will never be the same. It’s that simple. I got as much as a gave.
Mike — Thank you (he’s the tall guy standing next to me)
And I’m a huge believer that “a few people can make a really big difference” and start a snowball effect. So I committed to going back again and partnered with Brad Feld to bring a team of 75 entrepreneurs and VCs to do it with us.
And my hope that as Mike brought me and I brought others that we can now create a snowball effect where every person in our industry makes a trip to prison. If we can experience the system we can begin to fix the system. Until then it’s theoretical.
Brad and I had such a positive experience that we’ve committed to now leading a delegation of VC and tech executives in the Bay Area as soon as we can coordinate it. I’ve given my time and my money but I know I can do more.
I am committed to finding ways to help graduates get jobs. I have my first candidate who gets out in a few months. I was touched by his story and his family. They are Chinese immigrants and as he said directly,
“They gave me every opportunity to succeed. I wasn’t raised badly — I was well educated. I made a mistake when I was 19. I was with the wrong crowd. And I’ve paid dearly with the last 13 years of my life. I will never be back here again and Defy gave me the confidence to believe in myself.
You know what else he said? In front of the entire crowd?
A month ago I had a group of executives in here teaching interviewing skills. One guy was particularly harsh on me — but I could take it. I’m used to harsh. 30 minutes later he came up to me and told me he was thinking about our discussion and I have a couple of other ideas for you. Why don’t you try a, b and c
And then he paused and his voice quavered.
It was the first time in 13 years that anybody other than my family had actually spent 30 minutes thinking about my well being. It was the first time in 13 years that I truly felt human. Defy Ventures has given me my humanity back.
And it will do the same for you. Please take that small action. Attend. It’s free. Don’t worry whether you’re “qualified enough” — most of the ideas are about building businesses in landscaping, car detailing or graphics design — all businesses designed to cashflow. And I promise you that you’re qualified to have an opinion on these things.
And by the way — you’ll also become kindred spirits with the execs who go on your trip so there’s that benefit, too.
The winner of my first visit?
This amazingly passionate man who has been incarcerated 20+ years. He has a business that will provide sanitation services to clean your public garbage & recycling bins. He had graphic boards showing the designs of the trucks, knew his target markets and he stated goal was
To be the most successful Defy Ventures graduate in the history of the program so I can employ the most number of Defy graduates and give back to this community that has literally changed my life.
Appendix:
On our most recent tour Caroline Fairchild from LinkedIn attended. I promised her I would write about this experience for the LinkedIn platform so I didn’t write about yesterday’s trip here. I will write about that as soon as Caroline is ready.
Last month, Oracle presented OpenWorld, its annual confab of enterprise software, in San Francisco. OpenWorld gives Oracle the opportunity to showcase the latest technology, products, and future directions of this huge company. It also creates a nexus of customers, prospects, press, and analysts who converge to study the company and its plans.
As part of the CXOTALK series of interviews with leaders, I invited three important analysts to examine Oracle and read between the lines of what the company said. Part of this mandate included looking at Oracle’s position in the market relative to important competitors.
The three analysts who participated in this session are:
All three are known as astute and trustworthy observers of the enterprise software market.
The analyst conversation converged on the idea that Oracle is all-in on the cloud as a technology, product, and service platform. For this transition, the question is not Oracle’s engineering ability, but whether they have a business model to compete with native IaaS and PaaS players, in particular, Amazon Web Services. For example, can Oracle match Amazon’s cadence of price cuts to remain competitive with AWS?
We also discussed why Larry Ellison, Oracle’s founder and CTO, pushed so hard on Workday yet hardly mentioned historical competitor SAP. Louis Columbus hypothesizes it is because Workday’s potential addressable market is extremely large and Ellison wants to draw attention to growth in the cloud opportunity rather than to the large, existing on-premise business, which will inevitably decline over time.
It’s worth noting here that Oracle’s overall 2016 revenue was $37 billion while its SaaS and PaaS revenue rose 82% in Q1 to a run rate of almost $4 billion. Although cloud remains a small part of Oracle’s current revenue, it is clearly the future. [Source: Mark Hurd discussion at OpenWorld.]
At the conclusion, the analysts offer specific advice to CIOs and Oracle customers.
To summarize the in-depth conversation, we created a special short video and transcript, which are embedded above. You can also watch the entire episode and read a complete transcript.
Michael Krigsman: One of the interesting things at OpenWorld, they really leaned heavily on their competition with Workday, and pretty much just dismissed SAP as a contender at all. So what’s that about?
Louis Columbus:
I think it’s a total available market issue. I mean, to your point earlier, these are very, very sharp people and of course, Larry knows exactly what he’s doing. The total available market of Workday is 10x what our salesforce is right now. So, it’s a very attractive target, and positioning against them relative to SAP is completely understandable. I mean, SAP clearly has a strong ERP base, has done fine with a variety of its acquisitions, however, it’s not nearly as attractive as a cloud-based company making headway in a market with a 10x market-sized multiple than other competitors that have gone down the path. So really, he’s signaling, “There’s a total available market pool, this is a great profit pool and I want a part of it.” I think that’s what he’s really saying.
Michael Krigsman: They’re saying that the Workday-addressable market is better than the SAP-addressable market? I mean, is that the point or am I missing something?
Louis Columbus:
It shows potential for growth, whereas the SAP market doesn’t. I don’t think that Larry wants to take a high profile event and go into the trenches of how they win and lose deals every day against SAP on their core business, core functionality around ERP. I mean, that’s probably where they face a majority of competition. SAP’s efforts into the cloud had been sometimes strong, sometimes weak. They’re not a poster child of exceptional cloud competitiveness and strength. He’s further ahead, looking at Workday and saying, “How do I position against HCM there?” That’s a growing market. The total available market is much larger; the compound annual growth rate is greater. They’re dealing with customers who believe in the cloud at the enterprise level, to Larry’s point that the CIO believes that. And, I think, to Larry’s point, the heterogeneity of technology stacks is driven by the decision-makers: CMO, Chief of Marketing, is going to go, “That is a great analytical tool, I’m going to need that to be able to manage my pipeline or to quantify my value as a business unit,” relative to the CIO saying, “I need a business consistency.”
Yeah, and back to your point: I think that that’s what’s going on. I think that’s just a prime base. It’s an enterprise that believes in the cloud, it can go to hundreds and thousands of seeds easily, plays exactly to where he wants to go with his revenue model.
Larry Dignan:
Don’t forget the narrative, right? These conferences are about a narrative. They always are. So, you know, the narrative for Oracle, “It’s cloud,” they’re innovating. Two words, that’s what they’re tryin g to project. So, if you come out and you start yappin’ about SAP, well, it’s like reading a sports story from ten years ago. We’ve all heard it over and over again, right? You know how it’s turned out, how it will turn out, whatever. But it’s an old story. And that’s why you see Larry Ellison going off about AWS, right? Because Workday arguments get a little tired, right? I mean, I see Workday, Oracle, I’m thinking apples and oranges. I mean, they compete in the same space in HCM, and ultimately financials, but it’s a different kind of company that they go after.
Michael Fauscette:
But I think that supports the idea of its position as much as it is anything else. It is in fact the right opponent at the right time, and the story against SAP, you’re right. It’s over. So I want to tell an exciting new story that sets me in the markets, in the focus, in the way I want to be seen. And that perception shapes a lot of people’s reality.
Michael Krigsman: So the narrative, as Larry Dignan was saying.
Louis, do you want to share some thoughts on this infrastructure strategy, which was so prevalent, so powerful at OpenWorld?
Louis Columbus:
I think there’s two really critical pivot points for them on this whole infrastructure strategy. First of all, can they innovate at the speed of Amazon? Arguably, yes. Oracle is a powerhouse Silicon engineering center company. So yeah, could they match them on pure patent production? Sure. And there are plenty of engineers there who would love to rack up a hundred patents in their career by going after Amazon. So that’s a pretty compelling value proposition.
The issue is, can the culture of Oracle engineering sustain the kind of culture that Amazon has right now in terms of a market leadership position and the way that engineers get their work at Amazon. So, can they pace on innovation? Sure. I mean, they’ve got to win a patent war somewhere, they’ve got to rack up a couple hundred patents really fast, and Oracle has the ability to do that.
Can they match the cadence of price cuts of Amazon? That’s a completely different story because while they do have that great revenue stream coming off their database business, matching the cadence of the price cuts of Amazon? Really hard to do, and stay profitable and still grow; and balance that, balance that with building apps that make money. So you’ve got this triad of factors that they have to keep in balance: drive a profitable applications business as they transition to cloud, be able to deal with the cadence of innovation of a competitor that has attracted world class engineers daily, and then third, being able to deal with the touring pace of price reduction. So yeah, it can be done. But will it be done in the short term? Probably not.
Michael Krigsman: Larry Dignan, what about the question that Louis raised of the ability of Oracle to keep undercutting Amazon? They’re both very large companies, so what about that?
Larry Dignan:
There are some things with Oracle’s AWS fascination that kind of boggle the mind a bit. A. just on margin, that Infrastructure as a Service business? It’s challenging, right? So my guess is, you know if you read Clay Christensen, you kind of see that slide where Toyota started down here, and the established players, in this case Detroit, kept moving up and up the stack, and then eventually the players at the bottom were also there too. I think that’s what this is about, because the biggest takeaway I had watching Ellison’s keynote is that yes, AWS must be taking database workloads from Oracle, otherwise Oracle will not be trying to punch them in the face. So, when they talk about their databases, their AWS databases not being as open, AWS being harder to move from, there may be some element of truth in that, but the bottom line is AWS made that stuff very easy to consume. And, that’s a hurdle.
So, I think from Oracle’s strategic point of view, they need the infrastructure piece because they need to sell you on the platforms and ultimately the applications, because that’s where the money is.
Michael Krigsman: So it’s the fuller scope, so it’s the infrastructure that’s the fuller scope of the suite.
Larry Dignan:
Right. And Oracle can’t lose infrastructure because once you’re in AWS, you’re probably going to buy higher level services. And, there’s not question that AWS is moving up that stack, they’re moving up that value prop, and that’s showing up in database workloads. So, if all these databases run around and they have this server-less infrastructure, and all that, then … So the real race is, you’re going to be buying business functions in the future.
Mike Fauscette:
But, we’re not moving to a world where one vendor’s going to own everything. It’s a world in the cloud where you’re going to have to see a lot of peaceful coexistence, you’re going to see a lot of openness. And it’s something they’re not quite… and no vendor from the old world to the new wants to accept that, but that’s just the world that the cloud is leading to.
Michael Krigsman: And, Larry Dignan, your final thoughts and advice for CIOs.
Larry Dignan:
I mean, I think any tech buyer is going to play ball with Oracle. And if you’re an existing customer, trading up in the cloud might totally work well for you. You’re going to get bundled deals, and yeah, a CIOs got to look at Oracle just as they would any other vendor.
Michael Krigsman: And Louis Columbus, you’re going to get the final word here.
Louis Columbus:
Ok, well I appreciate it. Well, my advice to CIOs is: use this ambition from Oracle to your advantage and push them to bundle in everything you possibly can. If you’re looking at a suite refresh, push for that. If you’re in an audit, threaten to leave and move your database loads to AWS and watch the audit probably drop. But you know, play hardball, because the ball’s in your court as a buyer now. Competition’s a beautiful thing, and competition brings out the best there is to offer, I think, from all these people. And I think you can look at beginning to reduce even maintenance fees, if you’re a CIO. And, in other words, Oracle’s hungry to build out this stack on the cloud, and use AWS pricing as a barometer in your negotiations with them. So, you’re in a buyer’s market. You’re in a great position, so make the most of it. And go cut a great deal with them.
Oracle is a client and paid my expenses to attend OpenWorld. Thank you to my CXOTALK colleague, Lisbeth Shaw, for assistance with this post.
There’s a little bit of death-by-a-hundred cuts that many SaaS companies box themselves into.
As they scale, they get out of the hackey way they do contracts, NDAs, proposals, and other documents. They have their controller, then their VP of Finance, then their CFO review things, then hand off to the General Counsel. Which takes a week or more. Then legal sends over an internal “issue” list. That takes a week or two to discuss. Which then leads to a redline, often a very red one. That takes another week. That you finally send over to the customer. Where it lands, weeks after the soft handshake, with a thud.
Now we’re into a 3-4 week turn around. On a deal you want to close this month?
Are you laughing? You shouldn’t be. This is probably a more common timeline than not. Many great companies box themselves into this process as they scale.
And it truly drives sales teams nuts.
However, the answer isn’t to “sign anything”. That’s bad, too. At least after the earliest days. As you scale, risks also can scale. And importantly, risks start to sneak into things. Risks you could take with 5 employees and $500,000 in the bank — frankly, you can take a lot of risk at this stage — don’t make as much sense at 250 employees and $25m in VC capital, let alone $25m in ARR.
So what’s to do? Just some tips from experience:
Build in a organization-wide turn-around SLA for all contracts and NDAs. Almost no one does this. Do this. Force your finance+legal team to sign up to a very tight turn-around time on contracts — and measure it. They will hate it. But do this from the top. For example, I promised our salesteam a 48-hour turn around in general, and 24-hours toward the end of the month. That was my commitment to them. It was tough to meet. But everything is tough.
Understand the trade-offs in the Different Types of General Counsels (and Controllers/CFOs). Broadly speaking, from a sales/deal perspective, you can break GCs and CFOs into two groups — those that have directly supported sales & sales ops, and those that have only indirectly done so. I’ve found that 95%+ of GCs that have at some point in their career directly worked with and supported a sales team end up being one of the sales team’s greatest assets. And 85% of the rest will drive your sales team nuts, and drag deals on forever. If you decide to hire a General Counsel or head of legal that hasn’t supported sales before, understand the risks you are adding to your internal processes here. At least impose the SLAs from the prior point in that case. Mostly the same for CFOs and controllers, too.
Don’t allow any meetings to end without a full issue list, ideally resolved. Internal or external. You know the call, with 20 folks on it, everyone “contributes”. And everyone pats themselves on the back for doing the call. But no one ever really went through an issue list. So that means all the issues weren’t addressed. That deal is going to take 5x longer to close that it should. End every internal and external deal meeting should end with an issue list, and make sure everyone agrees the list is complete, and as to the status of each issue. Do this. Almost no one does this. Instead, they send over the 43d redline. I’ve been on the sidelines of 2 M&A deals that fell apart because issues were left hanging even though people thought they had a deal, or at least, almost a deal. Don’t let it happen.
Revise your form contract twice a year. And make it better for your customers. No one does this systematically. But you should. Over time, it should emcompass most of the issues, and not push them all off onto “the other side”. In a win-win deal, there is no other side. It’s not a zero-sum battle. Your form contracts shouldn’t create one. They should get simpler, and more and more customer-centric, as time goes on. Not the opposite. I know others will tell you this is impossible. They are wrong.
Become a General Counsel yourself (sort of). Don’t view contractual issues as a black box. This is a strategy more folks should employ. I don’t mean this literally. But a decent percent of great VPs of Sales are pretty darn good at legal and contractual issues. Because no issues are new. They repeat themselves. Whatever your role in the company, become a mini-GC. Do not see legal and contracts as a black box. Become an expert. Not a lawyer. But a student of contracts. After 5 or 10, all the issues will repeat. You can start to learn all the objections, and how to manage the process on both sides. You can remain ignorant. But if you become a semi-contract lawyer yourself … your deals will close faster.
There’s no great answer to how to truly streamline deals and contracts. The idea that let’s use a “neutral” form works, but only in trivial transactions.
But Time Kills Deals. I know you know this, but many non-stakeholders in deals don’t, or don’t care enough. When you are architecting your team to scale, investing the time to make sure everyone is accountable in the dealmaking process will pay big dividends.
For the first 5 years or so after I became a VC I didn’t talk much about what I thought a VC should be excellent at since frankly I wasn’t sure. I was mostly doing my job and trying to figure out how to be better every day.
After a decade on the job I’ve started to speak more openly when newer industry colleagues now ask me what I’ve learned.
The number one advice I give is “stop trying to be too smart”. Most VCs did well academically and had enough career success that a venture firm was willing to give them an investment role or they were able to raise their own fund. It’s easy to think the role of a VC is to have strong opinions about markets, trends, tech dynamics and so forth. We think we’re supposed to act smart and have insights that others don’t possess.
I don’t think this is the job.
Entrepreneurs are supposed to have insights that others don’t have and we’re supposed to be good judges about which entrepreneurs and executives have both the most clever ideas and the right skill sets to do transformational things against all odds.
So I tell people we’re fundamentally in the people business. Our core skill is being able to identify talent and how to persuade the most talented people with whom we have access that we would be valuable to work with. We then help surround founders with other talent who want to join important causes but don’t have the startup idea themselves. We help founders through difficult moments, we help coach, we act as sparring partners, we help them resolve conflicts when they’re fighting with co-founders and we help them deal with adversity as well as successes.
That’s why I often say
The role of VC is “chief psychologist.”
We might help a management team deal with a vexing strategic question or a thorny negotiation but these are mostly tactical. The biggest difference we can make is helping support talented teams with complementary talent. Think about how profound a difference adding Sheryl Sandberg early at Facebook was to Mark Zuckerberg and knowing that he should stay in charge of product and strategy while she ran operations.
Fundamentally venture capital is about human capital.
The role of VC is sparring partner. The role is to challenge the thinking precisely because we get a bird’s eye view across many situations and many of us have been in the driver’s seat ourselves in our younger days.
And as a VC I often cultivate relationships with the most talented people with whom I’ve worked over the years and look for opportunities to work with them again. It’s rare to find extraordinarily talented individuals who are natural leaders and who are driven to succeed and who have a passion for startups so when you do you work hard to find opportunities for them.
Gregg and I worked together at Salesforce more than a decade ago. Gregg was a graduate of Stanford and a Wharton MBA and had worked at the consulting firm BCG so I knew he was smart and capable. But what I noticed about my time with Gregg was how quickly he turned thoughts into actions. I noticed that team members naturally gravitated to him because he was a doer more than a pontificator. And in an industry of sharp-elbows he is amongst the most likable people I know.
So when I left and became a VC I stayed in close touch with Gregg and he was on my very short list to hopefully work with again one day. The rest of our team included the founding CTO of Maker Studios (Ryan Lissack) and the CEO of DataSift (Tim Barker) so we seemed to all be in good company of ex Salesforce execs looking to make a difference.
But Gregg stayed and grew and took on more responsibilities and became a senior member of Salesforce’s Marketing Cloud team. I think he wanted a meaty role if he was going to leave and finally we had something compelling.
Invoca has grown its enterprise customer base 550% in the past three years including major customers like Microsoft, Allstate and SunTrust. It has grown recurring revenue by more than 500% and deal-size by 276%. Importantly, we recently announced a $30 million financing that gives us the resources we need to build a global enterprise software company.
The explosion of mobile phones has led to a boom in inbound click-to-call traffic that has proven to convert at a higher close rate and increase average-order-value over web-only sales & marketing. For some of my more skeptical portfolio companies I simply asked them to run a trial of inbound sales calls and they were shocked. For some companies it is now > 70% of the deals they’re closing and they’ve seen it as their secret weapon.
Marketing departments, software partners and investors have now woken up to this opportunity.
The existing Invoca team has been in place and functioning incredibly well the last few years and I’m so honored that Gregg has decided to come on board and help lead us to the next level.
I have often said that “a few key people make all the difference in any company — no matter how big or small” and that is my core principle as a VC. I can try to be as smart as possible on market trends, industry dynamics and so forth.
In the end I know the only true differentiator in venture capital is the company you keep. It’s the people who want to work with you. It’s the founders who are willing to let you join their boards. It’s the executives who trust you to join the early-stage startups you’ve funded. It’s the executives at bigger companies who trust you and are willing to partner with the startups you’ve backed because they know your word is good.
Venture Capital is a people business. Nothing fancier. And the real talent are the teams on the field.
As a partner at Draper Fisher Jurvetson, Josh Stein has invested in some of the most well-known SaaS companies in the world like Box and Yammer and spent plenty of time with truly remarkable SaaS CEOs. In this session he and Jason Lemkin sit down and dive into what really makes a great CEO, and how that differs one that’s just “good”.
Josh shares insights into both the external challenges, like promoting a vision that goes beyond the company, to the internal challenges like a finding ways to stop doing everything yourself. When planning growth from $5m ARR to $10m ARR, great CEOs are simultaneously laying the groundwork for reaching $20m, where the good ones will fall “short” at only $12m or $14m. Most importantly, if you’re doubting your ability as a CEO, don’t internalize it. No one is born a CEO. Reach out to folks you respect and trust who’ve been there.
Thanks for coming back. How was the party? Was it good? Let’s have a show of hands? Was it fun? I thought it was pretty cool.
Thanks for staying for day three. Hold on, let me find my clicker. Did anyone see it? Did it disappear? Here it is.
As you can see, we changed up the stage again. The theme today is zen learnings. It’s the journey that we’re on. Tuesday, in theory, was about scaling. Yesterday was clearly about unicorns and money, to a large extent. Today’s about the journey. It’s a journey, right?
We’ve talked a lot on SaaStr and other places, that it’s 7 to 10 years in SaaS often to get to something real, and even longer. We’re going to explore that, in many cases with folks that have been on the journey for a while.
I want to start it up briefly, and I won’t read all of it, but I want to highlight a few things. My good friend, Josh Stein, from DFJ, who’s done some amazing early SaaS investments, will help talk about what makes a great SaaS CEO. I want to have a little bit of one on one because we have a hole there.
We’ll have amazing long term stories from Marketo and Cornerstone after that. I want to talk with Keith Rabois about building amazing teams. We’ll have a fun break. When Keith and I are done, stay here for five minutes for the Academy of Villains. Don’t leave.
We’ll have two sessions in the afternoon about that next five years, how to really scale, and how to take it to that next level. I think this is one of the most important topics.
One of the things I learned when I transitioned from founder to observer of founder, an angel and investor, and otherwise, is year five is where it gets tough. You get tired. The best CEOs and VPs in teams push through to that sixth year.
The other ones, it’s tough. You see a lot of transition in five years. You see a lot of folks handing the reins to other folks. I want to hear three great stories, which we’ll have, on that second five years.
We’ll end up with a fun session on founder and VP focused PR, what it really means. We’ll have an amazing session on a fun topic. “Should we even get PR? Why are people even here today on stage? How do you get it? What does it mean?” We’ll have a really fun wrap up, which I want you to stay after that.
Briefly, downstairs, it says it’s all about sales. We’ve had a lot of sales this week, but it’s really all about revenue. We added some fun things. In the morning, we’ll have another session like we did last year, but you get to see it live, of a great CEO and VP of sales together.
Someone from a B2D background that learned to love sales, and then watched not loving sales, and then learning to love it, and watch the impact of that, of going from nothing to millions and millions of revenue in one year, which will be fun.
We’ll talk about something that’s au courant, which is account based sales development, how to really target big guys. We all need to learn this. These two sessions I added because we were a little bit light on marketing. We’ll add more next year. These are amazing.
We’ll have Jeff Yoshimura, who’s gone from Salesforce to Zuora, to now, Elastic, on building an epic brand. I can’t think of anyone I’d want to learn more about corporate marketing and brand building than Jeff, this mysterious thing of building the brand.
Come hear Jeff. The dude’s awesome. A lot of us know him that have been in the industry for a long time. Then Megan Eisenberg, who’s now at MongoDB, and was at DocuSign before that. I competed with them and watched what she did from a distance. In terms of demand generation and lead generation, she’s bad arse. Go see the session. It’s going to be crazy.
We’ll have a few more sessions, selling to the enterprise, a real session, and two sessions on customer success, which as we know, in some ways, once you have something, nothing matters but customer success. It’s getting that net negative churn in, and building on the customer.
The downstairs stuff, the tactical theater was an experiment. It’s performed much better than we expected, so go see that stuff. It’ll be awesome. Some fun things that the team added, I’m not that fun, I’m intense, but we added some fun things.
At 11 AM, we’ll have a pretty cool surprise mystery guest. You may be able to guess who it is. We’ll make this session super fun, on the Box PlayBook. We’ll have the Academy of Villains, which I know nothing about, but should be super fun.
In the afternoon, I’m sure none of you are tired, but I might be a little bit tired, so in addition to the bars opening at 8:00, we’ll actually serve beer in the stands here, like at a ballgame, to make the afternoon more fun.
I want to bring Josh out in just a second, but I do want to acknowledge one thing. This whole event is about founders to founders, founders to VPs, and folks on the journey. That’s what we’re about.
We did lose one speaker from the agenda today, which I’m bummed about. I don’t want to go into too much detail, but I want to say I have the utmost respect for any founder that’s killed it, that’s done better than me, that’s blown it out of the water in a couple of years, and also that treats people incredibly well, that has high ethics and morals. That’s who we lost today. I’m bummed.
Man, this shit’s hard, and it’s not perfect, but to have accomplished any of this stuff, this is the fellowship of the founders here. I have the utmost respect for the one speaker we lost, who was one of the first to commit, and would have done anything to be here.
With that, let me bring out Josh Stein, and let’s talk a little bit about great CEOs.
Josh Stein: Hey, man, thanks for having me.
Jason: Thanks for coming.
Josh: Yeah. Absolutely.
Jason: Josh is fairly stylish, so I DM’d him and said, “Let’s match the velour.” He said, “I’m totally into that.”
Josh: I’m totally into that.
Jason: That’s pretty good. Let me bring this up. A couple things on Josh. He’s done a ton of amazing SaaS and enterprise investments. He invested in Box at a, I think, early TechCrunch party, right? First institutional investor after Mark Cuban.
Josh: Yeah. First institutional investor. We met him at Mike Arrington’s house.
Jason: Mike. I remember those days, at Mike Arrington’s house. You know how to take a little bit of risk, right?
Josh: Yeah.
Jason: You’ve done other great ones, like Twilio and other amazing companies. We’ll talk a little bit about, but a few other things. I think it was E&Y, you were the VC of the year, right?
Josh: Deloitte.
Jason: Deloitte, sorry.
Josh: Yeah, E&Y’s no good. You’ve got to stick to Deloitte.
Jason: Sorry to my Deloitte friends in the audience.
Josh: The Deloitte guys know what they’re doing.
Jason: Deloitte, so cheers to that.
Josh: Thank you.
Jason: For the VC of the year, right?
Josh: I love you, man. Appreciate that.
Jason: A lot of sake and free beer, so that’s great.
There’s been a tiny bit of turbulence in the market, but you closed your new fund recently, right?
Josh: Yeah, we announced it on Tuesday, 350 million bucks.
Jason: No matter what anyone else, Goldman Sachs, or the markets say, life is good, right?
Josh: Yeah. I think that’s right.
I’m a believer. I think the long term trends in SaaS are super solid. The market’s going to move up and down. It’s going to affect things, but stick with it. I don’t see anything changing fundamentally.
Jason: Yeah. A couple of things I want to talk about on this theme of great CEOs, because when you and I met, when I was a founder, I didn’t know what a great CEO was. But then I got to watch some of my cohorts. I got to watch Peter Gassner, from Veeva. I met him, and I’m like, “I don’t know what this Veeva thing is, but this dude’s bad ass.”
I met David Sacks, who you invested in, and I’m like, “This guy’s pretty good. I met Aaron Levie, probably before you did, and I was like, “I know this cloud content thing’s supported, but there’s something in this guy,” but I didn’t know what it meant until I got a chance to do some angel institutional investing and see it.
What’s the difference between great and good? What do you see in Jeff, at Twilio, or Aaron? Just to help people calibrate, because it’s so hard to see early from the outside, what’s great? What makes them great?
Josh: I think the greatness often becomes apparent later. You were talking about those guys when they were running big companies, so it’s sort of like….
Jason: How do you go all the way back in time and see it early when you invest capital?
Josh: The role of the CEO/founder through the whole company history is going to be to be a magnet. You’re setting a vision. You’re communicating a vision. You’re attracting talent. You’re attracting capital. You’re rallying people to the flag.
It’s like this pulling together initially, and then as the company scales it’s like this North Star that pulls everything back together when things start to fray.
I think what’s really interesting from our perspective because we tend to invest mostly Series A, Series B, and what you’d now call C. When I invested in Box, it was three people in a garage, literally.
We’re getting involved with these guys super, super early. I think that sometimes people who are great early can scale all the way through, and sometimes they can’t. I think it’s because the role typically changes over time.
When I was a student at Stanford, Tom Seabolt, who I don’t know if people remember Seabolt anymore, was the fastest growing company in history at the time. He came in and he told us, “You know, when I was here I thought accounting and finance were the only things that mattered, and all the touchy, feely psychology stuff was just bullshit. I’m here to tell you, I had it completely backwards.”
He’s like, “I have people that do the accounting and the finance for me now. I spend all my time dealing with people issues.”
I think that’s probably the hardest single thing is for founders who are often technical, who are often young, realizing that if you have a thousand people, a big part of your job is making sure you’ve got the right leaders in the right chairs, and making sure that you’ve got strong processes.
All those thousand people have hopes, and dreams, and career aspirations, and how you manage that. The leadership part is relatively constant throughout, communicating the vision, but the people stuff really tends to trip people up.
I think that’s one thing. The other thing I think with a great CEO versus a good CEO is on the vision part, being able to make the vision something that transcends the company and captures the imagination.
This isn’t a SaaS example, but I think Elon Musk is, for example, the best at this. SpaceX isn’t about launching satellites into space. It’s about going to Mars. Tesla’s trying to save the world by killing the car.
Aaron, if I look at Aaron, I think that’s one of his great gifts, is I think that Aaron is incredibly compelling at painting a vision of Box, beyond boxes and storing files, Box is reinventing collaboration and changing how business is going to be done. Right?
Jason: Yeah.
Josh: That’s the part I don’t think you can necessarily teach. I actually think the other stuff can be learned.
Jason: Fair enough. Let’s have a little fun with Aaron. You invested in Aaron when he was 21, or something like that probably?
Josh: Yeah.
Jason: 22.
Josh: 21, I think.
Jason: That’s mid pack today for a lot of SaaS founders, but back in the day that was considered young, right?
Josh: Yeah.
Jason: You’ve had a chance to observe him over 10 years, how did he scale? What were the things that he did to be able to…How many Box employees do we have today?
Josh: A little under 1,400.
Jason: 1,400, right?
Josh: Yeah.
Jason: So he scaled, right?
Josh: Yep.
Jason: He scaled. He’s one of the most articulate, poised…
Josh: Yep.
Jason: He’s almost an elder statesman of SaaS for many of us today, right?
Josh: He really is.
Jason: At 30.
Josh: Which is great. I think he’s 31 or 32.
Jason: How did he address some of those challenges, and how was he able to scale as a CEO?
Josh: It’s funny, you were saying when we first met Aaron, I sometimes tell people, I feel like I really met Aaron for the first time about a year and a half or two years into our investment, when I first started working there.
Box was actually more of the consumer idea when we originally backed it. He was your classic consumer founder. He was wearing t-shirts and shorts, and he’d have hair rumpled and the whole thing. That kind of works when you’re dealing with credit card signups and $10 stuff.
Then we stumbled on this idea of, “Wow, maybe the bigger opportunity here might be for businesses.” It was this realization that the best customers, the ones who were paying us the most that churned the least, that actually were interestingly consuming the least resources from a cost of goods standpoint were the businesses.
I’ve never seen anyone make such a complete 180. He spent about a week, went from, “We’re a consumer company to an enterprise company,” and he burned the boats. He said, “We’re going full enterprise, total commitment,” and then I think he realized that to be successful in that, he would have to transform himself into this enterprise leader.
This is when I knew, when I say, “I think it can be learned,” there are resources out there, there’s books, there’s all the stuff that Jason has done on SaaStr, which we didn’t have back then, just an incredible corpus of information. There’s people that you can learn from.
I think a lot of it is just force of will. Aaron basically worked 24 hours a day, read every book he could get his hands on, tried to network and mentor with every enterprise leader he could find and if you look at him today, he is a legitimate thought leader in the space.
He walks with CIOs that are controlling $5 billion budgets, and they look at him as somebody that they’re looking to for guidance about their strategy, and that is just pure force of will. He didn’t pop out of the womb knowing about the enterprise transformation. I think having both the discipline, the desire, and the lack of ego to say, “I’m going to go learn this stuff,” is incredible.
I think just the amount of written material that’s available out there is staggering. I think one of the questions we sometimes get asked is, “Hey, can you make a great CEO?” I believe you can. I think the people who often fail, not always, but often fail, to make the transition to being a bigger company CEO, past that initial founder stage, is they don’t want to change.
They say, “This is me,” like, “I’m not a good public speaker. I don’t want to sit down and give people one on one reviews.” That’s a choice that you’re making. You’re saying that you’re not good at that. You’re saying that you don’t want to do it, but you have to recognize, that’s a choice.
I can sit down and teach anybody how to do a one on one review. It’s not that hard, but you’ve got to want to do it, and you’ve got to suck it up and say it. If you’re afraid of public speaking, get out there and do it. Practice makes perfect, but you need the commitment and you need the openness to change.
Jason: Let’s dig in a little bit on that. “I’m here. I’m a driven founder. I’m in a million in revenue, or whatever, and I don’t want to get burned out at year five. I want to go the distance, right? I’m hardcore. I see all of this.”
Those are some good anecdotes, but what are the best couple of things I might be able to do today to ensure that I don’t burn out, and I at least have a shot at being the next Jeff Lawson or Aaron Levie. What can I do?
Josh: Jeff, I think, is a great example of this, actually, somebody who’s maintained that incredible growth, incredible scaling, and maintained this constant thing. I think one thing that helps a lot is to realize that it’s not about being the hero leader, where, “I’m going to do it all myself.”
If you look at a leader like Marc Benioff today, he’s mostly external. His job is really dealing with 7, 8, 10 senior leaders, all of whom could run large public companies themselves, so they’re in a sense almost like peers to him, and making sure that they have clearly defined roles and responsibilities and the resources they need.
What Jeff has done at Twilio that I think is so remarkable is he’s hired an incredible team around him, and he’s built an incredible culture and set of values. Twilio has this really neat…
You can check it out at the Twilio website. It’s these Nine Values of Twilio, and they’re these very clarifying principles, that, “This is what Twilio stands for. This is what we’re going to do. This is what we’re not going to do.”
It makes everything so much easier, because a lot of the stress in the CEO role comes when you have two executives or two people who are really both trying to solve the problem, but they have this conflict?
Jason: Yeah, it’s a tough one.
Josh: If you have clarifying culture and vision, it sometimes helps to resolve that. One of the Twilio values I really love is “No shenanigans.” There’s a lot of nonsense and shenanigans in enterprise pricing.
It’s like hidden upcharges. Jeff’s favorite bugaboo is the “Call us for the enterprise version.” It’s like 100 bucks a month, 1,000 bucks a month. “Call us,” which is basically code for, “We’re going to see how much we can get out of you.”
Twilio is just transparent, simple pricing, and we have had talks, like, “Hey, are we leaving money on the table?”, and he’s like, “Nope, no shenanigans.” Boom. That makes it a very short conversation.
Jason: It at least makes the alignment very simple, right?
Josh: Yeah, and it saves him a lot of stress. He’s built a tremendous team around him, so it’s like as the company gets bigger, you should be moving up in the organization. You should be less involved with the day to-day work, more involved in the strategy, and usually getting pulled more external to the company, not internal. It’s not always, but that’s generally the thing.
I always tell people, we see three distinct break points for CEOs. The first is around 40 or 50 people, and that’s usually where communications break down. You can’t just rely on osmosis to get information out in the company anymore. You’ve got to actually write things down and have meetings.
200 people is usually the next one. That’s where you start having span of control issues, where it’s not, “I have a report,” and then they have the report, and that’s the engineer, or that’s the salesperson, but there’s maybe two or three layers, and so…
Jason: Almost none of us have dealt with managers and managers before, right? It’s just on founders…
[crosstalk]
Josh: Managers and managers, exactly, and so understanding, and that’s you’ll start bringing in people who are executives, and executives start grabbing power and resources, and understanding how to deal with that.
1,000 is really interesting, because at 1,000, if you’re interacting, from a reporting relationship, with more than, I’d say, 6 to 10 people, you’re really probably doing something wrong.
You’re spending most of your time externally, and then most of your time, you probably have not met most of your employees in person, but you are known to them. You’re a beacon to them, and so you’re setting that vision, clarity, and purpose, but it’s really much more about being a figure as opposed to a person that’s interacting with them directly.
Jason: Let me ask one question, and sometimes people make mistakes on it. You’ve got to stop owning everything yourself early, right?
Josh: Yep.
Jason: That’s a mistake we all, most of us that can multitask, we own too much choice, so bring in the right management team. A lot of times we try to bring in someone early that can do it all as COO, sometimes, right?
Josh: Mm hmm.
Jason: It worked great at Box, right?
Josh: Yeah, it really did.
Jason: We talked with Aaron up here last year. When should I bring in, whether it’s literally a COO or a deep number two, and when is that a crutch and too early, and something that…I meet more and more founders that are a million in revenue. “What’s your next plan?” “I’m going to hire a COO,” and I get nervous when I hear that, right?
Josh: Yeah, I think they think it’s going to be a magic bullet. It’s like when a technical founder says, “I’m going to hire the VP of Sales, and they’re going to start selling stuff,” right?
Jason: A magic bullet. Yes, this is the VP of Sales 2.0, is, “My COO is going to handle all the operational stuff at a million in revenue.”
Josh: Ben Horowitz wrote a great post on this, on the dangers that…I forget what he called it. It was like “shared…” Anyway, look up the Ben Horowitz post. He talks about why Workday works and other ones don’t.
I think the most important thing, if you’re going to bring in a COO, is having very clearly defined responsibilities and roles. What does not work is two in a box, where people feel like they have to ask you and this other person to decide, and if you can’t find both, or they disagree what happens, everyone gets really confused. Their people have to be clearly defined.
For example, at Box, Dan basically had the vast majority of the entire go to market function rolling up in to him, and Aaron has product, and has the CFO, and has the entire external vision part of the company. They have a trust relationship that’s very clear.
If you’re going to have a COO, you have to say, “I’m not going to overrule you, even if I disagree with you,” so you are empowered to make decisions, people know you’re empowered to make decisions.
“We’re going to have our one-on-ones to make sure we’re aligned.” You’ve got to watch out for the two in the box thing. I’d say a million in ARR’s too early. I think 40, 50 people is probably where it might become relevant, something like that.
Jason: I’d love to do a half an hour on this, but let me do one last question on this whole thing, because another thing, I hear a lot the COO too early. The other one that I don’t like to hear as a founder, is when I meet a founder, and they’re not sure if they’re the right guy at 20 million or 30 million, right?
Josh: Yep.
Jason: As the VC of the year, you have to think about these issues when you make an institutional investment. The question I have to you is if you’re a founder here, and you’re doing well, but I’m not sure I can go the distance, what’s your advice to me? How should I be self critical?
I’m confident, I’m at 1.3 million ARR. I’m growing at 11 percent a month. I don’t even have any venture backing.” That’s hard to do in the grand scheme of things. What’s the advice if I don’t know?
Josh: Two things. I would encourage people to not internalize the question. It’s not, “Are you capable, or are you good enough to do it?” I think most people with sufficient commitment can make it happen. The question is, “Do you want to it? Are you willing to make the commitment to do it?” Think of it as you basically have to go to school on the side to learn how to do that job.
Jason: The Aaron school story’s a great one.
Josh: Yeah. You can learn everything that Jason’s written on Quora. You want to read every business book that you can find. You’re going to have to really commit to developing that. Some people might say, “I just don’t want to do that,” and then you know, then you know the answer.
Jason: If you don’t want to do it, you know.
Josh: If you don’t want to do it, it’s you. That’s the answer. I think that’s really the key thing, is do you want to make it happen or not?
I think self awareness is good. It’s so hard as a founder and CEO. You bear all these burdens and the doubt, and it can eat away at you, and you can’t always share it. That’s what I always tell people.
Jason: It’s hard.
Josh: That can be a role of a venture board member. The companies I work with, I only win if they win, I lose if they lose. I’m completely aligned with the founders, so have that conversation openly.
We’re not going to judge you. we’re not going to say, “You know, she’s feeling inadequate, therefore must be time to go.” We’re going to say, “Hey, let’s figure out how we either fix this together, or if not, let’s move on.
One things companies always forget is, let’s say you’re going from 5 to 10 million in revenue. It’s not just going from 5 to 10, it’s going from 5 to 10, and in that year, you’re laying the groundwork to go from 10 to 20. If you’re not, you’re going to go from 10 to 12, or 10 to 14.
It’s the same thing with being a CEO. If you’re going from 50 to 100 people, you want to to be developing the skills to go from 100 to 400. It’s like you’ve always got to be thinking 6 to 12 months ahead in terms of those skills you’re building.
Jason: I think that’s right. I think that’s great advice. When any of us, every once in a while, have these doubts as founders, don’t internalize it too much. Get external feedback on this. When I went through it, I asked a lot of my peers and mentors, and everyone said, “Go for it man. You have something good, just keep going for it.”
Josh: Nobody’s born a CEO.
Jason: What’s that? Nobody’s born a CEO.
Josh: Nobody’s born as an executive. Everyone learned it, so the question…if you got to a million in ARR, you’re clearly smart enough that you can learn this if you want.
Jason: That’s a good way to end it. Thanks Josh, this was amazing. I really appreciate it. It’s a good way to kick it off.
As they scale, they get out of the hackey way they do contracts, NDAs, proposals, and other documents. They have their controller, then their VP of Finance, then their CFO review things, then hand off to the General Counsel. Which takes a week or more. Then legal sends over an internal “issue” list. That takes a week or two to discuss. Which then leads to a redline, often a very red one. That takes another week. That you finally send over to the customer. Where it lands, weeks after the soft handshake, with a thud.
