Preparing Your Organization for the Future of the Workforce

Ian Bester, General Manager @ Brainstation; Falon Fatemi, Founder & CEO @ Node; Benjamin Powers, Freelance Tech Journalist

Ascent Conference 2019

Benjamin Powers [00:00:06] I think let’s just dove right into it, and I’d be curious to hear kind of because there’s such a wide array of backgrounds that people have that bring them tech, if you could talk a little bit about what brought you all into this field and then also just give a bit of background on a Node and brain station.

Falon Fatemi [00:00:22] All in one shot. So my name is Falon Fatemi, I am the founder and CEO of Node, which is an A.I. company based in San Francisco. Before going into what Node is. I was born and raised in Silicon Valley. So it was sort of born into the tech world. Started working at Google at 19 years old. I was the youngest employee there and spent six years there, six years in the startup world, and then ended up starting my company node at Node. We have invented artificial intuition, which is a proprietary deep learning platform that analyzes people and company data and turns it into use case specific predictions that enable organizations to understand which prospects will become customers, which customers are likely to churn before they turn in, which key talent is likely to leave before they leave. Our customers use our technology as a piece of prediction infrastructure within their applications to accelerate their time to market for turning their application data into prediction about features. And then we also worked directly with Fortune five hundreds and mid-market, fast growing companies to help them with their talent and customer turn.

Ian Bester [00:01:30] Hi there, guys. My name’s Ian Bester and the general manager BrainStation, based here in New York before I get into BrainStation. My background in technology doesn’t go too far back. I come from a retail consulting background and I work for a company called Barrows that was forging the way ahead in terms of blended retail experiences. And for a company that worked in retail for 30 years historically and the physical spaces, it rapidly needed to evolve itself into the digital world. And so I was given the opportunity to lead that initiative at the company. And so I had to rapidly upscale myself in technology and also hire a team around me to be able to go and develop the products that we were building in this digital physical world that we’re moving into. And so I, in that period, learned a lot in a short period of time around technology and how to build products, both digital and physical products that worked together throughout the customer journey and and also how to empower people with the right skills needed for the future of the business. So that’s where I started to really get interested in technology for Brain Station. Brain Station is the global leader in digital skills training, supporting businesses and professionals with workforce transformation training and professionals with the skills they need to future proof themselves in the future economy. And there is no time like the present for everyone in this room as an example to start thinking about what skills they need to be able to be relevant and to add value back into their own team and into their future career. So Brain Station provides in-person online learning and online live learning, which democratizes learning for the future of work. And that is our ultimate goal. We have an aim of educating a million people by 2025 and we’re well on the way thanks to online live learning and on demand.

Benjamin Powers [00:03:19] And Falon, so talk to us a little bit about the really the business opportunity of integrating A.I. and artificial intuition into these workforce’s and workspaces more generally, what are companies kind of missing and what does it bring to the table that we really need to be thinking about in the next five years, the next 10 years?

Falon Fatemi [00:03:37] At the end of the day, I is really hard and I read an article in the paper this morning that actually stated that I was going to add 13 trillion to the global economy. But the rate of adoption is is very slow. And the reason for that is there is a ton of organizational and cultural barriers, especially in the Fortune 500, where they have legacy solutions on top of legacy solution that actually prevent them from being able to adopt these types of cutting edge technologies. And the reality is that the next wave of transformation has to come from the enterprise because we are in a situation where, you know, really these organizations have to innovate or they’re going to die. And we’re seeing that in just general stats over the last 20 years were over 50 percent of the Fortune 500 have disappeared and life expectancy has decreased even more dramatically from 75 years in 1950, five to 15 years in 2015. And we’re not even talking about A.I. playing a part in that. So I will be a wrecking ball to the enterprises that don’t adopt it. And so to your question around, what’s the potential benefit for these organizations? Well, it’s basically helping them get a real understanding of the core aspects of their business internally and be able to make better decisions as a result. So, for example, if you knew which next markets of opportunity you should tap into for, say, a new product that you release and that’s going to accelerate your time to success and revenue and profitability and competitiveness, I mean, who wouldn’t want that if, you know, which key talent or executives are going to leave before they leave, before they even know that they’re disengaged, you can actually step in and do something about that and save on four to five more costs that you’re going to spend in trying to replace that person, retrain them, and that doesn’t even count any of the cultural impact. So what we’re talking about here is leveraging this type of technology internally within organization, analyzing the data that they have all over the place in whatever shape or form it’s in, and turning that into basically a crystal ball for them to be able to make the right decisions for their business.

Benjamin Powers [00:05:39] No, thank you. And then uhm Ian in kind of zooming in on the employee workforce itself, what are some of the things that brainstation is working on to really help them engage with the feature that Fallon’s talking about and kind of these necessary changes, you know, just even kind of understand the vocabulary of some of these systems having a certain comfort level. Can you speak a bit to how you all are trying to shape workforces towards that future and get them prepared for it?

Ian Bester [00:06:01] Absolutely. So I guess let’s get a let’s get a take in this room. Who feels comfortable with the understanding of machine learning as an example? Hands up. OK, yeah, it seems like about 30, 40 percent of the room maybe, and there is no question and I don’t want to use the C word, there is a threat to our economy in the future. And I don’t think people are realizing it right now because it’s a slow burn. It’s it’s the burnout of skills that people have learned in college and traditional education that they believe is going to take them through their career. The average now in the recent Lillington study says that millennial will great recent graduates are going through one and a half jobs in their first five years of work just in the last three years. That’s doubled. Not only that, there is a workforce across the globe of one hundred and twenty million that have to be retrained in the next three years. And the undergraduate students subscribed to undergraduates in the US is only 20 million, and only half of those end up working in the field that they studied and their major. So there is a huge skills gap in the global economy that we have to tackle and as individuals we have to tackle. Companies can only do so much. They can they can invest in learning platforms and and providing their staff with development budgets. But it’s also up to the individuals to recognize this need and recognize this gap. At Brain Station, we are committed to helping businesses tackle that transformation and tackle that skills gap by helping to up skill and retrain and retool staff so that they don’t have to spend millions and restructuring people out of a business. And in addition to that, supporting professionals with taking their career into their own hands and helping them with the skills they need. We do that through a number of means. We help them in person through the five key pillars of the digital product lifecycle, data design, development, marketing and product management. And we provide them with hands on learning through expert instructors who we’ve solicited through the industry that we vet vigorously before getting them up in front of all our learners. In addition to that, we democratized learning by providing an online learning platform through Synapse, our custom-built online learning management system where they can dial into any of these courses. There are about twenty five across these five pillars that they can dial into in the evening and learn these, learn these specific disciplines that’s helping them individually and for workforces. We’re helping train teams through this transition that we’re seeing in the industry right now.

Benjamin Powers [00:08:43] And I think in conversations previously we were talking about some of the cultural barriers just within institutions to try and move these things forward and really get organizations future facing. What are some of the ones that in each of your instances you run into most commonly? And what are some people should be looking out that might seem comfortable right now, but real obstacles to really embracing the sort of future?

Falon Fatemi [00:09:02] So I’m a big believer in digital transformation has to come from the leadership. And I think the CEO hostile, not frankly, if it doesn’t come from the top and it’s not a corporate strategy imperative, it will not be successful within an organization period. End of story. And we’ve seen this time and time again, because what ends up happening is without understanding the greater picture of the greater impact and how it’s having more holistic strategy around how it’s going to be a layer within the organization internally or be integrated into the product that you’re then selling to your customers, you end up with solutions that end up maybe costing you millions and years in risky experiments, maybe providing a 10 percent kind of nominal sort of increase or improvement or whatever metric you’re trying to drive it around. And it ends up largely failing as a result. So there’s a lot of other layers as well as you start to peel back the onion in terms of why it doesn’t work. And that also includes, like a lot of these companies that do have analytics, people are data scientists within those organizations. And I’m really talking like more, you know, larger companies here. They they’re very much comfortable with the way that they have been doing things and the way that they have been evaluating things in a way that they have been analyzing things. So changing that and disrupting that is a threat in a lot of ways, especially when we’re talking about bringing in new technology that might take away some of the sexy stuff that they like doing, like building algorithms, when the reality is they’re not really building algorithms, they’re doing fancy data analysis. And, you know, cutting edge deep learning is really the right tool for the job for a lot of complex business problems. But there’s not a lot of understanding of that kind of technology proficiency with it, comfort with it, because they can’t explain it, which is just a temporal thing. And so what you basically end up with is, frankly, a lot of pushback, a lot of politics and a lot of it’s coming from fear. So the way that it needs to be positioned at a leadership level is that this is an existential threat. We need to advance and change the way that we do things. So that it leads to market domination and profitability and success, and that has to start from the top.

Ian Bester [00:11:19] Yeah, and sort of just reiterating the point, it is a huge threat ahead of us and the economy. The other thing that’s interesting about workforce transformation is that I think everyone in this room, in this conference is pretty, pretty savvy when it comes to technology. But I guarantee many of you are going to be very successful in your respective businesses. And in the next 10 years, you’re going to be looking at trying to find the talent you need to take your business from them into the next chapter. And that’s where you’re going to face that threat in terms of how you’re helping your staff actually become fluid in their intelligence. And that’s another term we need to be comfortable with. It’s fluid intelligence that we need to start leveraging in our businesses. And we can do that by providing teams with the support they need at the very, very top. And we read about it. About 50 percent of CEOs say that upskilling or retooling their staff is their number one priority. A lot of that you can read through because action, you know, you need to see the action to see the proof in that. But the challenge is actually individuals and the individuals themselves taking that leap of faith into their own hands and taking that step into the right direction. Yeah, you might not know what machine learning is now, but tonight you can go and read about it. You can sign up for a course. You can actually study it and become proficient in it within the space of three to six months. And it’s just getting off your ass and going and doing it.

Benjamin Powers [00:12:42] And I think you were telling me that you see as recently spent going to spend a lot of money educating their workforce and they likened it to something as essential as health care. You know, what sort of incentives can companies take to get their employees to go and do that extra reading? You know, people have busy lives. We only have so much time. So what are the ways that companies can really be a channel for that rather than being an outside thing that individuals have to take up on their own for fear of getting out of the future of the workforce?

Ian Bester [00:13:06] Yeah, actually, the numbers are quite staggering. I read it this morning. It was three billion dollars into retooling and reskilling their workforce globally. That was the biggest number I’ve read in recent in recent weeks. And every week, every day, there’s another article about another CEO investing into their workforce. So it’s prolific. The question itself is really important because what they can do is, is multifaceted. There’s two parts you can look at a digital transformation and look at restructuring entire business. You can you need to find a blended workforce mixed with adaptable individuals and hard skilled individuals and believing in your in your high performers and investing into them and giving them the time they need in the workday. Because, as you say, we’re busy individuals to go and invest into that skill because the payback in the in the few months after they’ve done, of course, will be immediate. They’ll be actually able to apply those skills immediately into the workforce like data. As an example, you’ll be able to understand what questions to ask in terms of trying to infer the insights you need from an incredibly large dataset and how to present that back to your stakeholders within the business, which will make you more valuable and which will put you into more interesting roles and interesting jobs going into the future.

Falon Fatemi [00:14:24] I look at that question a little bit differently, and I agree with what you’re saying, I think also, though, there is this element of organizations really, you know, looking themselves in the mirror and understanding where are their strengths and where are their weaknesses. So a lot of companies and a lot of analytics teams and smart data scientists, they want to build everything from scratch. And that’s cool. But is that your core competency as an organization? Is that really where you should be investing your time? Does it make sense for a payments company to become an A.I. and data company? I don’t think so. I don’t think that’s the right answer. And absolutely, you will need to skill your workers so they understand, you know, the latest and greatest technologies and can architect the right systems and solve the right problems. But building everything from scratch is not the answer. And that’s why that’s part of the problem that we solve in terms of coming in and helping accelerate the ability for organizations to leverage their existing resources with their existing talents to be able to solve these complex problems.

Benjamin Powers [00:15:20] Yeah, because you’re a bit more about how artificial intuition can can the portability of that and how that can really come in to an organization and help them leverage some of these skills. What are some of the techniques it uses in how is that, you know, make it work for each company differently, but in a really kind of individual way?

Falon Fatemi [00:15:36] So what we’ve done is we packaged up our technology into a rest API, meaning any developer that can make for API calls can basically create models and do machine learning at scale. And obviously that took multimillions and years in engineering and unicorn’s of talent on our team to make that a possibility. But the secret sauce underneath that simplicity is data in combination with use, case specific and proven models. So we’ve spent the millions. And so so actually, before I even go into like how it works, I think the really important piece here is the the dirty little secret in artificial intelligence. And that field in general is everyone thinks that the aizer, the algorithms are sexy. It’s not about the algorithms, it’s about the data. And most organizations lack a deep understanding about the entities, the people, the organizations, whether they are in their product or that they’re interacting with or a client or talent perspective that is actually required in combination with their own, you know, core IP in terms of data to really generate these times. If you use case specific predictions, and that’s part of a product value chain that we own. So we’ve spent the millions and years in acquiring a data layer of half a billion profiles of people and organizations. This is used to basically retrain our A.I. system to in some ways comprehend and uncover. Got it. Uh, implicit attributes which drive more precise models and require less training data so that in combination with cutting edge, deep learning packaged up in a way that any developer can plug and play without needing to be a data scientist and without needing to spend millions and years. And that entire process being reduced to a matter of seconds is how we solve that problem.

Ian Bester [00:17:24] I just want to build on that in terms of this this idea that automation and machine learning and AI is going to usurp a lot of roles going into the future. It absolutely is. And there will still be enough work for everyone out there. The only problem is the transition for people to get into that space is going to be incredibly hard. Think about the end of the industrial revolution or the agricultural revolution. It’s we’re in for a tough 20 years. And I do believe that just by putting the effort in as an individual and as a business, you will reap the rewards.

Benjamin Powers [00:18:00] And so as we start to wind down, you know, this panel in this session, I’d be really curious to hear about what are maybe the top three kind of way points that companies should be looking at in the next 20 years to both make sure that the systems they’re using get to where they need to be and they can leverage the tech that’s out there in a really productive way and not just kind of stay stuck in the current times and then also for their workforces generally and bring them into the future with them. What are what are maybe three takeaways or other areas that they really need to keep an eye on to ensure that they’re going to be there even in 20 years.

Ian Bester [00:18:33] Give that one one second to think about that one, because there’s three yeah, I would say we’ve mentioned it already. It’s it’s take your your workforce seriously, take the development seriously, invest in them and don’t look at your bottom line and think it’s all going to go to waste. I promise you, it won’t find a partner you can trust and believe in and build out a roadmap for the transformation of your workforce, no matter how small your team is or how big your team is. We work with a lot of Fortune 500 companies all the way down to teams of of 10, 20, 30. And so you’ve got to make that commitment into your workforce and find a partner you trust. And then as an individual, I’d suggest you need to take your career into your own hands. I couldn’t be more clear on that one.

Falon Fatemi [00:19:21] I’ll give it one or two things. Only build and house, it is central to your core competency is No. One. If not, then partner for that type of technology. And then my second piece of advice is make sure you bring in the right talent and are really understanding the impact of the technology from an ROIC perspective. So hiring tons of bodies that are really expensive and that taking millions in years, a longer time horizon to then get to an ROIC increase of 10 percent, not worth it. So really, really understand what’s the right tool for the job and how long it will take to get you there. And if you’re spending more more money on the actual bodies versus the technology, then that’s one answer.

Benjamin Powers [00:20:15] Well, great, thank you all so much for joining us and thank you so much for sharing your insights. And I’m going to hand it off.

Speakers

Lessons Learned in the Digital Transformation of the Frontline Workforce

Christina Bechhold Russ, Director Ventures @ Samsung Next; Daniel Sztutwojner, Chief Customer Officer @ Beekeeper

Ascent Conference 2019

Christina Bechhold Russ [00:00:07] So quick show of hands, how many people would say that their job is desk based, so to sit in front of a computer, take meetings, phone calls most of the day. Most people, OK, so believe it or not, we’re actually in the minority, 80 percent of the world’s workforce does not sit at a desk during the day. And what’s interesting is that when you look at some of the most successful enterprise software companies in the world, Microsoft, Salesforce, Slack, they’re actually going after that 20 percent. And so what we’re gonna talk about today is the opportunity for that 80 percent of the world, the majority of workers that are a little bit forgotten by technology, actually, and beekeeper’s doing some really interesting work, focusing on those so we can start with how we should sort of define a frontline worker and why this market should be exciting for for tech entrepreneurs.

Daniel Sztutwojner [00:01:02] So the definition for frontline workers actually is if you’re looking at coverage, is any employee that is working in a service related functions or servicing a customer, for example, an employee in a restaurant, in a retail store, or also an employee that is helping build a product that will be an employee in a manufacturing plant. So that’s our scope of frontline employees. And why this market is so interesting, as you mentioned before, is because actually they are 600 million workers. They’re still workers in the world, but there are almost two billion front line employees in the entire world as means almost 80 percent of the population are frontline that don’t have access to a computer, you know, daily basis or don’t have access to a corporate e-mail address. So the question is, how can companies communicate and interact with these employees? And for us, this represents a multibillion dollar market. And we know that, for example, in the United States, almost 84 percent of all workers own a mobile device and more than 75 percent of them use it daily for work related communication.

Christina Bechhold Russ [00:02:10] And do you think there’s any particular reason why these verticals or maybe a little further behind on digital transformation or why they’re particularly interested in these kinds of solutions now?

Daniel Sztutwojner [00:02:20] I mean, I think behind it’s it’s something rather new. There were they never have access to technology. Many of these employees, they don’t even have a computer at home or Internet, but many of them today own a mobile device. So this is actually opening a new market for companies to leverage that and connect with their employees.

Christina Bechhold Russ [00:02:39] And so could you talk us through what are some of the key problems that these these frontline sort of frontline workforce needs solving are more maybe unique to these verticals?

Daniel Sztutwojner [00:02:50] I mean, the way we help these companies be better is mainly allow their employees to work better together. I mean, there are very disconnected. So there are two areas that we see that are very important for these type of organizations. The first one is align their employees with our companies on the second one is driving operational efficiency. How can they be more efficient? So for the first one, aligning their employees to their companies? It’s very important on both sides for the employers is very important to be able to share the strategy of the company. What’s their core values, what’s their mission, so the employees can identify themselves with that. Also, employees today are people in general are used to have a voice. I mean, thanks to social media, if you think of Twitter or Facebook, that gives us a voice. People are used to share their opinions and they’re also expecting this today in their companies. So it’s very important for them to really feel engaged within their organizations that they have a voice, that they can share ideas around innovation, around sustainability, that they can have an impact. And this is one of the areas that we help them solve. And these type of organizations need the alignment with their employees, especially today with a tight labor market driving. Engagement among the employees is very important because the cost of finding new talent, training them, develop them, that’s very expensive. And on the other side, on driving operational efficiency, that’s key because they can achieve more with less if the employees. And so we keep our employees can access the information directly from their mobile devices when they have to work with whom they have to work, what type of tasks they need to do, do they know what’s their team that they are going to be working with? What are they policies, health and safety or procedures that they need to follow in order to work as efficiently as possible. So those are these two main areas that we see these type of organizations need help with.

Christina Bechhold Russ [00:04:41] And and I think, you know, right now a lot of there are a lot of sort of consumer tools that people are employing in enterprise environments that aren’t really built for that. Is that is that right? That’s what you see.

Daniel Sztutwojner [00:04:52] I mean, for example, in Europe, we see what’s up widely use. So employees are actually sharing their personal phone numbers because they have a need to connect with each other. In the U.S., we see more either Facebook groups being created or just a message, text messaging groups, because they have the need to coordinate something natural and they connect with their peers for where their manager is to find out when do I have to work, what do I. To do so, it’s something very common that actually the consumer space to open these market and now we see organizations looking for more specific enterprise ready tools.

Christina Bechhold Russ [00:05:26] And is that do you think that’s why mobile space is is most appropriate for these kinds of use cases versus maybe adopting a desktop solution and just making it mobile friendly?

Daniel Sztutwojner [00:05:38] Definitely. I mean, we when we develop our solution, we interview thousands of front line employees. The way they use technology is different. So just adopting a desktop technology won’t be sufficient and mobile is the only way to reach them. As I mentioned before, 84 percent of the workers own a mobile device on more than 75 percent. You see it for work related communication. So mobile is key. Definitely unassessed gives the flexibility that SaaS offers. I mean, it’s easy to implement, easy to rollout. As the company scales, they can scale with us. So that makes it very efficient. For example, and we’ve been working for the past five years with Mandarin Oriental Hotel Group, and they wanted Starlene when we presented the idea of people to they loved it. They thought, wow, we really need to connect our front line in hotel. Just to give you an idea, 80 percent of the employees don’t have a corporate email address. It’s either housekeeping, food and beverage. So how can I reach them, connect them? They still communicate with bulletin boards and daily briefings. So the seemed like the past hundred years.

Christina Bechhold Russ [00:06:38] And like getting your your ship schedule.

Daniel Sztutwojner [00:06:41] Exactly.

Christina Bechhold Russ [00:06:42] I think there was a story that someone told me about. There was like a woman in San Francisco who worked in a hotel and she had to drive like an hour and a half every week to go and look at the just check posters for the next week.

Daniel Sztutwojner [00:06:52] Exactly. Yeah. And those are things that that that would help solve. But the interesting thing is for for these type of organizations, since they never roll out technology to the front line or the majority, they have never done it. They are very cautious at the beginning. So they might start with a smaller population. In this case. We started with two properties in London and Geneva. They saw how efficient it was actually in a very short period. We were able to show our way and then we scaled to the entire company in a very quick period of time. So that’s the advantage of SAaS.

Christina Bechhold Russ [00:07:27] And how does that land and expand strategy differ for you guys versus more traditional desktop SAaS? Because it’s it is different. It’s not. You know, when you look at the way like Slack was able to grow so quickly, a lot of times it was going into a small engineering team and then they were able to share that with other teams and then sort of push it up from the from the from the bottom up to management. And that doesn’t necessarily work in these verticals.

Daniel Sztutwojner [00:07:48] Exactly. No, because we see that the nature of these organizations, the decision power is much more concentrated. So a frontline wouldn’t be able to introduce a technology like that and get the Buy-In. So the approach is different. Even if we started with a smaller, let’s say, business unit or location, we need to have the buy in from the beginning from the headquarter corporate. They need to approve it. So even the expansion of such a of such an account already involves from very early the approval from headquarters who said different way of growing within organizations.

Christina Bechhold Russ [00:08:23] And do you find that that differs between verticals as well? So that hospitality is is is maybe a slightly different strategy or adoption profile than manufacturing?

Daniel Sztutwojner [00:08:34] It does, actually, that’s a very good point, because hotels, usually the GMs, the general managers of each property, they have this decision power in most of the cases so they can decide for their own property. But when we look at manufacturing, even if they have different locations, it’s much more concentrated, the decision power. So we’ve seen some sense hospitalities, a bit more advanced on how they shared this type of decision power than manufacturing companies, which is much more concentrated.

Christina Bechhold Russ [00:09:03] And given that you to have different verticals that you’re going after within those verticals, how are you prioritizing which customers to go after when?

Daniel Sztutwojner [00:09:14] That’s a very good question. So, I mean, we we we identified already three main verticals that we go after. So that’s hospitality, retail and manufacturing. And we see that needs they have directly to align. And that actually mobile is being used already. So that’s how we started. We actually the proof concepts more than six years ago in these three verticals and expanding today, we have more than twenty six different industries working with us a lot.

Christina Bechhold Russ [00:09:43] And how important, given that you have so many different industries and you’re the chief customer officer, how important is feedback to you and how do you weigh, I guess, the validity of feedback that you’re getting from such a wide variety of customers to figure out what you should use to improve or change the product and what you shouldn’t?

Daniel Sztutwojner [00:10:03] And for us, the feedback is extremely important. I mean, how we continue developing our products, of course, incorporating the feedback from the customers and also thinking what is innovation so we can also define the market going forward. So we have constant feedback loops directly with we we work with product board so our customers can already look the feedback directly to our engineers and we can assess that. Also, we have a customer success team that is in constant dialog with our customers. And the way we prioritize is mainly there are two ways of communicating with organizations. And this was also defined by Gartner a couple of months ago. In their one of their latest reports, there is something called organizational communication. And then operational communication on an organizational communication is mainly relevant for the headquarter. So Headquarter wants to again align all their employees, share their mission, their values, their strategy, and then the each of the locations or business units. They want to have more of the operational communication. How can they work more efficiently? And we’re focusing a lot on the operational piece. So this actually doesn’t defer so much from a vertical to vertical because getting access to their shift are important policies, procedures, task and checklist that is relevant across different industries. And the way we can then verticals more is through a marketplace. So we also build a marketplace where then customers can add ons to make it even more specific to their needs.

Christina Bechhold Russ [00:11:34] And would you say the marketplaces are important in mobile SAS in the way they have been in desktop? Like a lot of sales forces, successes can be credited to the way they’ve built their their their marketplace of partners and the ability to add things on to customers.

Daniel Sztutwojner [00:11:48] I think it’s important to mobile SaaS in general. I don’t know if it’s specific, relevant for for front line or employee organizations, but definitely for for mobile SaaS. And I think it will depend more on the type of technology you’re building and what’s your strategy and your technology for us, that’s something we’ve been working for the past couple of years. Thankfully, we build the great relationships with the companies like AVP Workday ASAP to make sure that we can offer much more to to our customers than what we have in our core.

Christina Bechhold Russ [00:12:18] And you guys recently closed your series B, congratulations. So you’re officially accredited? Very much. I imagine that means there is a shift for you towards focusing on more enterprise level contracts as just as opposed to maybe the sort of small and medium business ones. How is that sort of change the way that you’re approaching these kind of big fish opportunities?

Daniel Sztutwojner [00:12:42] Yeah, I mean, as we develop our enterprise, focus forward and the entire company needs to adjust every function needs to adjust some marketing needs to address the needs of enterprise, the sales process differently. So our sales team needs to deal with different stakeholders from different departments. And we involved early on our tech team, our product team or the customer success team. So we kind of early on build a relationship with our customers and their Sunderer specific needs and make sure that we can walk them through the sales process very smoothly and efficiently. That’s very important to us. And to show them that we also understand what they need from from the beginning. So it requires an adjustment and for us is very important on these customer experience that we have a team early on focusing on these smaller enterprise accounts to be friends with me, that a small and medium market needs that in most of the cases that, say, 90, 95 percent of the cases, sales can handle that directly and it’s much more efficient. So there is an adjustment that we’re doing already for a couple of years on how to address enterprise efficiently.

Christina Bechhold Russ [00:13:46] And how are you guys thinking about Upsell? Because in the SAaS space, that’s a really critically sort of important part of the business model is, is expansion within existing accounts. And Opsahl, so are you guys thinking about that across users, across subsets of users or geographies? How do you guys think about that and for the front line workforce?

Daniel Sztutwojner [00:14:06] So there are two ways of of, um, upselling an account either is expanding in terms of number of users or adding more either locations, business units, or just adding more functionalities to their subscription. And so far, the first one is if we start only in the case of going back to my example, before Mandarin Oriental Citigroup, we started with two properties. It will be then adding the additional properties until we roll out to the entire organization. Some cases we have hotel groups or manufacturing companies. They just purchased Baykeeper for their entire and a number of employees. So that will be one. A very interesting case we had was for with Lafarge whole team. That’s the largest segment producer, cement producer in the world. And there we went through a merger and acquisition process and it was very helpful for them to have something like Baykeeper because they could very quickly roll it out to the new employees from the new organization that were merging with. And that actually was in in one week. They could connect with everyone and share with everyone their new mission, their new strategy with all the employees, especially when you go through such a complicated procedure, such a merger, you might have a lot of this engagement coming from the employees because of the uncertainty. They don’t know if their job will still be there after the merger is done. So that was another type of expansion because the company grew and we can grow with them. And when it comes to adding additional functionalities, that’s, for example, what I was mentioning before with a marketplace that they can actually either move to a better subscription, a higher subscription with more functionalities or just a take add ons from our marketplace. So these will be the two ways of upsetting and I can’t explain the new service or adding functionalities.

Christina Bechhold Russ [00:15:54] You guys are also a very distributed organization and the company is based in Zurich. Your Argentinean, you were you guys have a big office in Oakland, California. You have customers in Asia. Do you have any tips for people who may be, you know, building out these sort of distributed teams and, you know, how how best to to manage those?

Daniel Sztutwojner [00:16:16] I think I mean, today is very important to have that flexibility to be able to to bring them for me. I think the most mornings bring the best talent you can to to your organization and from the sales and marketing side. We like to be closer to our focus markets, so we will look for talent that is closer to them so we can serve them the best. Also, customer success when it comes to their product, what we call their product on value delivery engine. And within our company there, we really bring talent from whatever we can. So it’s really being flexible on finding the right talent. And there are so many technologies out there. I mean, we work with the Zoom. A Google allows us really to to have these three work for us and work like if we will be all together in the same office. So, I mean, my suggestion to find the best talent you can bring into the company, that’s the most important thing. Independent on our location. They are. That’s that’s key. Especially when we started early on as a startup. The most important asset we have is our team. Everyone makes the difference. So especially I mean, we’re right now 150 people, but we still feel and it’s still the case that everyone helps to make the company the success it is. So just focus on finding the right talent, whatever they are.

Christina Bechhold Russ [00:17:35] It’s good advice maybe with our last few minutes, if there’s any questions anybody has.

Daniel Sztutwojner [00:17:43] I to repeat the question otherwise.

Audience [00:17:47] You mentioned about having your team close by, especially with sales and marketing, but does that mean they still work remotely? And if they do, then how do you manage them to ensure that they’re doing everything that you want them to do?

Daniel Sztutwojner [00:17:59] So sales and marketing, they’d I mean, would work remotely, I guess. You mean outside of one of our offices? Yeah, that’s fine. And we have also sales and marketing, remote and customer success, and we look for the talent ideally closest to our focus market. So, for example, our office, Christina was mentioning this in Oakland, California. But we also serve, of course, the East Coast. So we have remote people in Atlanta and Boston, in New York, in Orlando to be close to our customers so we can serve them the best. How we manage them, I mean, it’s pretty standard for ourselves, will be pipeline reviews every week. We have each of the regions we call them swarms. It goes we’re called beekeeper. So each of our swarms, they have a weekly meetings to really define. Look at the KPIs from the previous weeks, what we have achieved, define the goals for that particular week. So that happens on a weekly cadence. Then they have five on review where their sales managers for marketing, they also have their own meetings, either weekly or monthly, to define the campaigns we’re working this through and work. As long as you define a very clear objectives and you have check points in between, you’re going to have a successful remote organization. But it’s very important to clearly define the objectives and have those checkpoints.

Speakers

Moving Crunchbase From a Freemium to Subscription-Based Model

Jager McConnell, Chief Executive Officer @ Crunchbase; Jordan French, Executive Editor & Co-Founder @ Grit Daily

Ascent Conference 2019

Jordan French [00:00:04] For the uninitiated, Jager, now they’ve heard your name a few times. There are few, though, who don’t fully know Crunchbase in its present form. What’s in most of our minds is what it used to be, which is just a database, but it’s a lot more than that.

Jager McConnell [00:00:19] Yeah, that’s right. Actually, I was just curious. Just show of hands. How many of you don’t know what Crunchbase is, just so I know. Awesome. Well, thank you for coming. Listen, I’ve got a few. I like that so much. Crunchbase is we try to be the best private company database in the world and we are building applications on top of that. So we think of ourselves actually as an application company and not as a data company as we’re trying to figure out how do prospector’s like maybe you’re a entrepreneur trying to find your next investor, maybe you’re a salesperson trying to find your next prospect or investor try to buy your investment. All of those are prospective use cases. So we’re trying to build prospective applications on top of what we would argue is the world’s best data platform to build applications on top of.

Jordan French [00:01:04] And especially for some of the crew who are uninitiated, don’t don’t really even know the name. Let’s let’s if we could just establish size and even some of the volume, like how many people are visiting.

Jager McConnell [00:01:17] So we’ve got about 60 million people using Crunchbase today. About 55 percent of them are international. About half of our companies in space are international. So it’s a it’s a global thing. And then if you look at, like, the percentages of used cases, you’ll see about a quarter sales people and BD people about a quarter are entrepreneurs, about a quarter of our market researchers, and they’re sort of everyone else. And then there are like investors, job seekers, because, of course, you’d want to find companies to work at. So there’s like a job seeker use case. It’s very it gets the slices get smaller and smaller within that remaining 25 percent.

Jordan French [00:01:54] And we’ll definitely talk about those slices Jager and set them aside for a bit because they specially relate to your move from free to premium to to the to the freemium model. I want I want to go back in history in time a little bit because a lot of people recognize the crunch part of the name, and no one ever gets to ask this question. But if you could sort of dispel or explain some of the history in the relationship The Crunchbase that might help the audience, too.

Jager McConnell [00:02:23] Yeah. So it’s it’s I’m Crunchbase CEO. I joined in September 2015. But Crunchbase has been around since 2007. So how is that possible? What was part of TechCrunch? And so TechCrunch is a journal sort of news source and they are using crunchbase as a sourcing tool to help find companies to write about. So as 100 or so countries was 100 percent user generated content, people would go and say, oh, I want to be written about every public company in the country, sorry, TechCrunch. And that was how it was for years and years. And then eventually TechCrunch got bought by AOL, which got by Vermont, by Verizon, and then they had this thing called Crunch Base. So they valued at zero dollars and they said, we don’t know what to do with this thing. Should we shut it down? Or maybe there’s value here. Maybe we should spin it out. So they started talking about spinning out. I heard about it. Just heard about it, which is what the VC did it and we spun out as a company. So ever since then, we transitioned from an ad based model, which is what we were when we spun out trying to make money from ads. And now I’m an application guy. I used to work at Salesforce, like, let’s make it an application company and build subscription businesses on top of it. That seems to be working a lot better.

Jordan French [00:03:38] Yeah, definitely. So interpret that back to you. Is it was either shut it down, throw it away or let’s just let’s just give it to Jager.

Jager McConnell [00:03:45] Well our give is a strong word. Its its emergence invested capital. They bought a large part of the company Verizon stepped back to, had a much smaller percentage of the company. Then they were able to connect with me and convinced me to be the CEO.

Jordan French [00:04:03] Certainly. And I promise we’ll still get to the premium funnel. But there’s one interesting, almost ironic tacit and that is also that crunch base also does news and is in some way in competition with its former culpably, its former sort of a sister company.

Jager McConnell [00:04:22] Yeah, I mean, it’s something more of a partnership like we with crosspost content. We we are definitely friends. Not even in front of me is like we’re definitely friends. We share they give links back to us. We give links right to them. We’re still on TechCrunch as navigation. So it’s a very it’s a very mutually beneficial relationship, not at all competitive like which is why we do podcasts with them together in harmony, sweet harmony, you know.

Jordan French [00:04:52] A rarity among among perhaps companies these days in a way. But in its evolution, I think it’s obviously quite fascinating for a lot of the audience. Is part of that evolution, though, is a shift also in your. Business model, and it in our minds, countries used to be free. It hasn’t always been that case. But before we even unpack that, why even why move away from the ad stack that you had in the first place? If if that seemed to be working as a revenue model.

Jager McConnell [00:05:20] It wasn’t working. That’s that was the problem. If it was working, they would have wouldn’t have spread it out. So I shouldn’t disclose this, but circle of trust in the Internet and so on. So we were burning about a half million dollars a month when I when we spun out just paying the salaries of the people and making the service go. And we are making a million dollars a year so that math doesn’t really work out really well. So companies go out of business really fast with that sort of model. So so we it was kind of scary, obviously will be spun out. We had about a year and a quarter of runway, so I was like in a year and a quarter, can you build a tool, does application and keep talking about this prospect to launch it, sell enough of it to to raise a Series B before you run out of money and you’ve got to like you’ve got a year and a quarter to do that. And I wanted or it was a little sketchy touch and go because it wasn’t clear we were going to be able to do. And as we building it, of course, naturally, you discover a lot of the things that you didn’t expect that you have to also fix before you launch that it was it was a good time.

Jordan French [00:06:29] And we’re we’re all already sweating. I’m thinking about four hundred and maybe twenty days, maybe a year and a quarter. We we can empathize. It doesn’t seem like necessarily a natural fit for a user base that an audience that was just accessing adding data, making it more valuable to then sort of throw up what seemed like a paywall went into that thought process.

Jager McConnell [00:06:54] Sure. So the the way we think about it is, yes, everything about Crunchbase was free. And you could just you could use it, crawl it, take advantage of it. You could try to do a denial service. There’s a lot of things you could do before we spun out. We had to protect the service. We had to protect the data. So we have now a Ridgewell and a paywall. The the paywall came up first and the paywall was if you want any of the new things that we have built and that’s really these Prostratin towards the monitoring tools, the things that help you find the companies that you need to do your job. That’s a new thing that didn’t exist before we spun out. So we’re going to charge you for that. And that seems like a fair deal. And then with the Ridgewell, which is actually more of a recent thing, honestly, it’s if you are clicking around and browsing, a bunch of the service were to ask you to tell us who you are. And there’s reasons to do that, both from a marketing and selling standpoint for sure, but also user experience. And probably most importantly is it helps us protect our service, because as we get bigger, people call us like crazy, like 300 gigabytes a day of people trying to pull down our data by putting up walls. It helps us identify those abusive users and stop them.

Jordan French [00:08:09] Certainly. And it’s, you know, indisputable. There’s a lot of valuable data in there, especially that, you know, the traffic itself, our user base, you know, speaks to that, you know, look at the scoreboard. But but certainly when you consider when you consider the the the user base Jager and. Apologies, apologies, I was rather.

Jager McConnell [00:08:44] Sort of so good, just just slow you down. I love that.

Jordan French [00:08:48] Yeah, I had a I had a train. I thought, well, let’s let’s let’s turn back to the funnel really quickly. So just to establish the trenches, because in the audience’s mind, when you say Reigel, what you mean is registrational. Yeah. And that’s not necessarily something that people have to pay for, is that right?

Jager McConnell [00:09:05] This is something that so we we track sort of user sentiment and a lot of ways some of that is just through engagement and bounce rate. So how many people come to the site? Are they clicking? Do they leave the site right away? Another thing that we look at as scores US net promoter score for those folks who don’t know. And that’s just a methodology to essentially survey our users and say, is this something that you enjoy? Is would you recommend it to someone else? So we track those things. And as we put up walls and paywalls, we see how people’s sentiment changes. And certainly as the CEO, a lot of people come up to me and say, oh, you put a paywall up. So now I can’t see profiles past the second or third profile. And then I have to explain to them. And this means that we have to we have to do a better job with the product. Hey, that’s actually a free login thing. We’re just asking you to go and register. And we’re like, if you don’t want the marketing email that you’re definitely going to get after that click unsubscribe. Right. You still have a log in and now you’re able to go and use the site almost like it was when we spun out. And that that’s like we need to do that and we just we have to do a better job, communicate. But from our perspective, it’s still 70, which is like ridiculously high salesforce. It was much, much, much lower than that. So we feel pretty good about that. And our engagement is actually going up. So we have many, many when a user comes to country, stood there for a long time, which is great.

Jordan French [00:10:32] Certainly. And I’ll pull on one little thread there, Jäger and that is you mention you could do a better job on something specific. It sounds like that was articulating to the audience when they go to space that that. Right. Well it’s really just an email, a login that’s free. Is that specifically what you’re referring to?

Jager McConnell [00:10:49] This is a I’ve seen screenshots on Twitter, like ohh Crunchbase , has a paywall now. And it’s like, no, not really. It’s actually what you took a screenshot of. If you read it, it says it’s free. Just we need an email address. And again, without it, it’s very hard for us to do a lot of things that make the user experience better. But also it helps us make people not like pulled out our entire site.

Jordan French [00:11:13] Certainly. And and for those in the audience also who you know, media, for example, grittily, we consider a paywall. I think there’s others with various models are starting businesses that are considering paywalls to how do you sort of decide where that that perimeter is jagga on, you know, how much you want to give away and then what should be paid for after.

Jager McConnell [00:11:33] Yeah. So and this is like if you are yourself evaluating if you should do for freemium or paywalls, a critical part of that is experimentation. And we use we have an AB testing framework. It’s actually a service because it’s called split. I oh check it out. It’s pretty cool and allows you to go and do a B testing across your entire application in our case, our site. So another problem that I have with the complaints is it really depends on what cohort you’re in. So there’s different cohorts based on let’s say it’s 20 percent of our traffic is seeing a like it’s the second profile view where you have a Ridgewell for another 12 percent. They don’t have a register at all because that’s how our control group there’s another twenty percent that has it at five, you know, so so by doing that, we can go and try different things and see how the user engagement, a user experience changes based on science since he like what’s what’s going on in each of those different scenarios. We do that on the Ridgewell. We’re doing that with the paywall. We do that with changes of features. We will move things around. All of that are those are all experiments that we’re doing and we’re using the same testing framework so that we can scientifically say this is actually decreasing engagement. Users are unhappy with this in a material way. Roll it back and to roll back. It’s just a switch. So some of the stuff like there’s there’s the most aggressive cohort like where we’re like, will they do this? You know, like that’s like maybe at five percent of our traffic and we have enough traffic where we can have that, but still be a meaningful amount where you might have the price go up really dramatically because we want to go and see if the if there’s a for certain types of users, if they’re willing to pay more and what happens. And there’s another cohort where it’s even less where we can go and see would we be better served having even a lower price. So there’s all sorts of different AB testing splits that we’re doing right now.

Jordan French [00:13:29] Certainly I think we don’t impact that all day. It’s always fascinating, especially the data wonks in the audience. You mentioned pricing.

Jager McConnell [00:13:35] Datawonk’s.

Jordan French [00:13:36] Data wonk’s. This is a real.

Jager McConnell [00:13:38] I’ve never heard of that. Okay.

Jordan French [00:13:39] We can.

Jager McConnell [00:13:40] How many people have heard the term data wonk?

Jordan French [00:13:42] Well, how many are you? That’s a good number. How many are data ones? How many of you are data wonks know?

Jager McConnell [00:13:49] And I saw one coffee cup go up.

Jordan French [00:13:52] So there’s the rare breed like ENTJ personality to learn something new. Awesome. So that’s especially useful advice for those who have the traffic had this go up. You mentioned a cost structure, though, earlier in the conversation when you spun out. There’s people doing things we in our minds can imagine relates to quality of data. But it seems like you’re at an interesting intersection all the time where you have to figure out what the data is worth and the quality of that goes up with the more that you spend. So since you mentioned pricing, how do you figure out what you should charge at a given time for a certain subset for what they’re after?

Jager McConnell [00:14:31] Sure. I mean, it’s there’s a lot of ways of doing that. One is we did we did a lot of focus group testing to sort of see what is of our of our power users in particular, what is the sort of how how OK, are they spending a large amount? And what’s interesting is, you know, there’s users that will pay nothing, you know, in the focus group. And there are some users that were willing to pay a thousand dollars a month because that’s really what if you look at a lot of our competitors, that’s what they’re charging. It’s like, oh, cool. You’re like this other person. I would pay the same as what I pay them if you had these extra features or you have this data. So we had to sort of pick something in between. We actually went on the lower end. It’s three hundred forty dollars a year compared to like ten thousand dollars a year for some of our competitors because again, we were trying to democratize the access. Right. We want to be able to make it available to the people that like maybe can’t afford the ten thousand dollars a year one. So. So you have to sort of balance that. And so that was a big part of it. And then, of course, there was actual experimentation where we go and see how people react to different prices. And then there’s also just the math of the business. Right. It took like people to know this. We spent something like eighteen will spend something like seventeen million dollars to make crunch base be the data set that it is for our users. That’s a lot of money. We need to have a business model that can support that. So if it was a dollar, a user a month, we couldn’t do what we’re doing. So the data quality would decrease. In the end, when I’m looking to 2020, we’re looking to double that investment. And that’s a lot of money. And most of it a lot of it is to go and push into the data and go and make the data even better and do better insights and deeper insights. And we were talking about 30 million dollars plus in costs. Hopefully we can do a good job.

Jordan French [00:16:18] And you mentioned a really specific number of those. Three hundred forty eight dollars. Why not? Why not 347, Jager, 349?

Jager McConnell [00:16:26] Its worthy of an experiment because for some reason we’ve always done this this math this way. And it’s twenty nine dollars for 12 months. So twelve times twenty nine is three hundred forty eight. There’s probably something to be said like should we try four ninety nine or three ninety nine and to ninety nine. I don’t even know when the last time the study was done on the night is better than the zero. I feels like something in the 1920s but that’s what we, that’s why it’s that number.

Jordan French [00:16:53] Yeah. It certainly works as long as it doesn’t. And I want to challenge maybe the point, the underlying assumption of all the cost base also, at least in some of the audiences minds, is our other sort of maybe in more encyclopedic databases like Wikipedia, they have all volunteers. Why why have all this 17 million cost structure at all? Why not have a volunteer user base jagga that moderates that that vets’ that verifies each of the edits so that the integrity of the data remains or stays high.

Jager McConnell [00:17:27] And Wikipedia’s case, I think they have something like 300 or 400 million users. If I’m ever going to have 60 million in a world where we had that that number, maybe it would work. But the reality is that most people who come to crunchbase simply want to consume. They don’t want to contribute. They don’t necessarily even have anything to contribute. Nine times out of ten. You need more data wonks. I need the world’s more data wonks. Really? So so that’s part of it is is we have a consumption based model rather than a sort of contribution model. Again, it used to be one hundred percent user generated content back five years ago, but that seventy million dollars, of course, I was talking about that’s doing things like we have 4000 partnerships. Right. Who’s managing those partnerships? How are you finding more partnerships? That’s with governments. That’s with events, that’s with investors, that’s with accelerators. And that’s going on giving us direct primary source data that no one else has. So that’s an example of costs. We’ve got the five minute warning in the back there. We also have things like data science and engineering going on, doing, crawling and finding the data and absorbing and all of the news that’s in crunch basis. Automatically, Poplin gets all the companies. It makes like that’s hard stuff and that stuff that keeps the date alive, that’s what keeps our users happy. That’s why when they’re prospecting, they know that our data is pretty close up to date. No date is perfect, but ours is pretty damn good compared to some of the competitors. Then, of course, I’ve got our own data team. So that’s, you know, all in 60, 70 people who manually are going and updating that data where the machines can’t do it automatically. All those things add up to cost. And that’s why the price.

Jordan French [00:19:06] Yeah, certainly we could pick that apart probably for a few hours. One more question and I’ll go definitely go Q and A and I’ll drop down and and come to commandeer the mic, get it to some people to ask you questions directly. Jagat I know the ad questions before we started. I want to finish on this though, and that is 60 60 million uniques in that audience every month. You mentioned international these twice earlier in the conversation. Is there a cohort that might even be here in part that’s missing from countries that you’d like to to to be part of that you haven’t quite been able to touch enough yet?

Jager McConnell [00:19:41] No, not from a use case standpoint. So so when you like, we obviously there’s competitors all over the world and we don’t look at all of them. And usually they’ll say that our data is better than ours when we go and actually evaluate our data, they like crushes them. There’s a competitor over in Europe, for instance, that says we have more funding around than anyone else, like we’ve got actually twice as many as they do in Europe.

Jordan French [00:20:02] Or crunches them, Jager.

Jager McConnell [00:20:03] Thank you. So so not really all the use case. Pye’s, if you like, look at a specific country. The use case of of who’s using us now is actually pretty similar globally. However, where we want to improve is the breadth of companies. So in China, for instance, there’s millions of companies that we don’t have in countries that probably should be in countries. The challenge is not just how do you get them, though, but it’s also how do you not completely destroy the user experience for everyone else if there is a lot of Chinese companies. And there so you search you just got all these like Chinese characters and things that just don’t make sense, or the Chinese and then the English blending together, all that stuff is our thing, things that we’re working on that next year.

Jordan French [00:20:46] So it is certainly a blend, but it sounds like you’re more than well, open and welcome to that to that data. I’m going to talk to Mike down. If you could just raise your hand. We can definitely get at least one, perhaps two questions into Jager real quick and just say your name.

Audience 1 [00:21:03] I’m Ivan from generic photos. The question is, how do you divide your time and energy into your team’s resources between actually creating the product, generating the data in developing the website and your efforts to monetize it?

Jager McConnell [00:21:20] Yeah, it’s a really, really good question and it’s a hard one to answer just a few minutes. But fundamentally, it’s if you if you think about our total company, it’s about a third on go to market. So that’s salespeople, marketing people trying to figure out how to talk about it. And it includes like onboarding, experience, retention, all that kind of falls into that some of that bucket. Then there’s a third is the data. So that’s where we’re going and spending a lot of time on just making the data better place to be. So that’s our data platform. APIs are involved there that day to clean up all of that hides and then that other third and then the final third is the application. So that’s why we’re building that’s where you find certainly the monetization piece for us. The blend between the monetization piece and the free stuff is actually it’s the same teams working on it that will change over time. But that’s how it is today.

Jordan French [00:22:13] Certainly. And we’ve time for one more question. I’ll Walkertown, just raise your hand and you can pop one to Jager. There we go. Thanks. And just say your name.

Audinece 2 [00:22:24] Julia McAllister from Def Method. I’m curious about we talked a lot about the monetization of the platform. I’m looking forward to the future. Do you see there being more revenue potential from just providing the raw data and having the data be accurate and correct? Or do you see there being more value in analyzing that data for the end user, kind of the model of don’t make me think and then providing them the insights that they’re looking for is that they don’t have to do the number crunching themselves.

Jager McConnell [00:22:52] Yeah, it’s definitely the former or sorry, the insights of the latter. I think you just said that’s where the the applications are. That’s where our users are. That’s what our users are looking for. When you think about the prospecting use case of I can tell you, hey, entrepeneur, these are the investors you should talk to next, because they’re the ones that should invest in your company or hey, salesperson. These are the companies that you probably care about because they look like to you typically sell to and they just raise money. That’s why we play very, very well. There is still the raw data play is about 40 percent of our revenue today, and that’s the TAM there. The total addressable market is a little too small for us to sort of bet the whole business on how many. Yes, we have about 500 applications using Country Day today in their own applications. I mentioned some like Yahoo! Finance, LinkedIn market. Watch Business Insider, there’s a number of those folks if but there’s only so many of those out there in the world and I wouldn’t want to bet the business model on that. So let’s focus on on adding value to the 60 million people coming Crunchbase.

Jordan French [00:23:52] That’s a great question. Do that’s all the time we have. If you could just join me. Big round of applause for Jager McConnell. Busy man.

Speakers

Fireside Chat: The Story of Building Bloomberg’s Marketing Team

Deirdre Bigley, Chief Marketing Officer @ Bloomberg; Martine Paris, Freelance Tech Journalist
Ascent Conference 2019

Martine Paris [00:00:05] My name is Martine Paris and I’m based in San Francisco, but this is my hometown, so it’s always so wonderful to be in New York and especially with Bloomberg and I write for Fast Company and VentureBeat, and I’m also a contributor at Forbes. I cover tech. I also cover FinTech. So I write for some other outlets that are based here in New York, Queens, ask in the Block. And I’m really excited to be talking with Deirdre Bigley today, who is the Chief Marketing Officer at Bloomberg. And he just got an amazing story because you already had a storied career at IBM before coming over to Bloomberg. So can you share with us what it was like to have a full career at IBM, who I understand like not many people ever leave IBM, but again, it’s Bloomberg. So tell us how they wound up recruiting you.

Deirdre Bigley [00:01:01] Um, yeah, it’s been 13 years at IBM and I’d had a lot of different jobs. And that’s the wonderful thing about IBM, is that they keep moving you and they keep giving you new experiences. So it was a great ride. But, you know, 13 years in, you kind of go, OK, am I ever going to get another job or am I going to stay here forever? And I was approached by Bloomberg because they had no marketing organization. They were a twenty five year old company, kind of a startup, still feeling very entrepreneurial and never really felt like they had a need for marketing until that point. So it was this like insane challenge to go into, you know, a company that was still growing and start from zero and build it into what we could.

Martine Paris [00:01:47] Yeah, that’s pretty remarkable. I mean, an eight billion dollar company with no marketing and the job of marketing, of course, is to do lead generation and user acquisition. So what was it like coming in? You know, what was your marketing budget? What were the resources you were given? Yeah. What was your task? What was your vision for them?

Deirdre Bigley [00:02:09] You know, it would be like I’m sure like any startup, none. We came in and, you know, there was a I think there was like two events. People there was a creative person. And there was I mean, it really was just like two cats and a dog. And then some people doing like random acts of marketing around the company. So there really wasn’t any kind of cohesive marketing group. The one thing that was made clear to me at the beginning was that the only way that we were going to be allowed to grow as an organization is if the business units chose to actually give us resources. So the way my organization works is that we are all consolidated from a marketing perspective. We’re on one team, but the business units pay for us. So in order for us to do work for business unit, we develop a scope of work with them. We tell them how many people we need in order to get that scope of work done and then they fund us out of their PNL. So there’s no way I could grow unless right off the bat we were showing some kind of benefit to each of the businesses.

Martine Paris [00:03:11] Yeah. So how I mean, I guess, first of all, Bloomberg has several business businesses that you support, right? Yeah. So and many of them, I’m sure, are competing for attention. You know, how do you go about divvying up? The business units. Yeah, what are the business units that you are serving?

Deirdre Bigley [00:03:31] Yeah, so I mean, if you think of it, it’s like three or four pieces. So basically there’s financial products and that’s that’s the side of the house that makes all the money and gets most of our attention. And then there’s the media team. So, you know, Bloomberg Dotcom, Bloomberg TV, Bloomberg Radio, BusinessWeek markets, and then there’s Mike’s Foundation. So we also do all the work for Mike’s Foundation, you know, but then we also like work in recruitment. We work in, you know, tech, we work in, you know, diversity, H.R. So those are kind of the other little pieces that we have very all very different.

Martine Paris [00:04:06] And then what are the KPIs, you know, your brand new marketing organization. How are you measuring success for these particular business units? How is it hitting their PNL?

Deirdre Bigley [00:04:14] Yeah, I mean, like in the early days when we first started out and we were really struggling, you know, we were really just trying to figure out one. You know, we did some research to figure out, OK, what is this brand all mean? And which, of course, we found out it means the man and everything flows from there. So it was very clear to us that the brand had to be kind of a direct reflection, which was which was kind of unusual. I mean, at least for me to know that a brand was going to be led by a famous person at the top and then everything else kind of falls from him and how he is. So for for us, you know, when we first got there, it was like, OK, understand the brand, you know, understand build a brand style guide because there wasn’t any there was you put it all up on the wall and it was like, oh, my God, you know, was 20 different companies. So pulling it all together into one thing, they didn’t have any websites. I mean, we had Bloomberg Dotcom, which was a news site, but there was no corporate websites. It was building the websites. And then gradually, you know, you kind of you start building out your capabilities in design and video and content and social. But that all came kind of gradually as we were able to add more people. But you kind of you kind of pick your battles to begin with.And then as far as, you know, how you actually got people to pay for it, you know, you really had to show them you found that like one week person who was willing to give you a shot because they didn’t want to necessarily want us there. They didn’t feel like they needed us. So, I mean, it was one person who hired us. And the rest of the company is kind of like, what? Why do we need these guys? So you found that one person that you could connect with that maybe was having a problem with sales or something. And they said, OK, if you can come in and do something, come in and do it and you go in and you build an integrated campaign for them, which they’d never seen before. They had no idea how something like that would work. And you start showing some results and then the guy sitting next to them, the lady sitting next to them would go, oh, well, wait a minute, what did they do for you? Maybe they could do some of that for me. So it took us a lot longer to be accepted by the company and to prove what we could do than I had ever expected it would. But we really had to chip away at kind of what was the thinking of the company.

Martine Paris [00:06:32] So you find your champion and then build the use case study around them and show metrics, 30 percent growth, user acquisition comes from marketing. And then you just kind of take a path. You’re two hundred and thirty employees later.

Deirdre Bigley [00:06:49] I’m pretty pleased that you.

Martine Paris [00:06:51] And your massive marketing organization the past decade right?

Deirdre Bigley [00:06:54] We were global then either, you know, to is a global number now.

Martine Paris [00:06:57] Tell them the story of how you have been establishing presence in marketplaces that Bloomberg is not a known brand. I’m talking about China. We were talking about Mexico. That sounds like a really important service that you provide to the business units.

Deirdre Bigley [00:07:12] Yeah, I mean, one of the things that, you know, as I said, we always say, you know, our KPIs would go where they’re not right. So going where they’re not means like, you know, Bloomberg has, you know, a hundred salespeople covering, you know, Goldman Sachs or Merrill Lynch. That’s not where they need our help. Where they need our help is where they’re not. So it could be an emerging market where they don’t really know who we are. And we have a brand issue and we have like a sales issue. So that’s and there’s probably not a lot of salespeople there. So we have huge opportunity in those. If it’s a you know, if Bloomberg is getting into a new asset class or new roles, I mean, that’s actually where we can play. We also, you know, look at the sales pipeline and we don’t play in things that are going to close within 90 days. We go out and we like, you know, dumpster diving, like just go out and just start marketing to people that, you know, sells is probably not working at all. And those are the ones that when I go back to the management committee of Bloomberg, those are the ones that they’re the most interested in. When I can say that, you know, marketing contributed to the sale of X amount because these are people you had no idea existed or these are people that were in our pipeline. But we’re not being currently worked by sales. Those are the ones where they like their heads come up and they’re like, oh, all right, so this is really neat new stuff to us, right?

Martine Paris [00:08:33] So marketing is providing major business development opportunities for the company. And then so we like to think so. Yeah, right. In terms of identifying large enterprise clients that weren’t even on the radar doing this long lead pitching, I guess in addition to building prospects, databases, also creating decks for them and that that level of support. But you’re doing all of this without an agency. Is is that correct?

Deirdre Bigley [00:08:59] Yeah, yeah. You know, I came from IBM and we had had you know, I had Ogilvy and IBM were like synonymous with each other. So when I got to Bloomberg, the first thing was like, we need an agency. So we hired an agency and six months into it and it was six months into my job, too. It was very obvious that this was not how Bloomberg was going to be. Bloomberg was not going to do the big brand campaign. It is not Mike Bloomberg. It’s not our brand to do that. We are always going to work kind of from the bottom up. We don’t we do do a lot of awareness campaigns in emerging markets, but for the most part, it was not going to be about that. And, you know, for those of us here who have worked with agencies that, you know, they want to do the big brand campaign, they want to, you know, that’s how they make big money. So for us, it was like, no, we’re not going to be doing that kind of stuff. We’re going to be doing like the down and dirty stuff, like content that’s got to get out the door, like, really, really fast. We need designers sitting next to engineers sitting next to, you know, content people, and they’ve got to pull together and get it out the door really fast. That kind of speed that Bloomberg works and that we had to be able to work in, it just wasn’t something that was going to work with a large agency. So we we went back to the management committee and we said, you know, we had spent X amount of dollars with this agency. We’ll give you back a million dollars the company, if you let us keep the rest and build our own agency. And they agreed to do that. And that agency is is now because it still has to be paid for, for the most part by the businesses. You know, it’s of the two hundred thirty it’s one hundred people. That’s a that’s you know, globally, it’s one hundred people. Just this year, though, when you talk about, like, having to move things around and where the opportunity is, you know, we’ve taken, you know, 20 people out of New York and we’ve hired twenty people in Asia because that’s where huge growth is coming from for us. So you got to be able to kind of move them around.

Martine Paris [00:11:02] That’s fantastic. Well, in talking about your business units, one that you keep going back to is the foundation. Yeah. And I think a lot of people don’t realize that a lot of the stuff that Michael Bloomberg does and correct me if this is wrong, the like. So, for instance, when the United States pulls out of the Paris accord, Bloomberg wrote a check for the amount of the United States. Yes. That he paid are unbelievable. He paid our Jews to the Paris Accords, make sure that we still have a planet in 2050. So tell us about, like, the line between what Michael Bloomberg is doing and the foundation and then how how your organization supports the messaging of that.

Deirdre Bigley [00:11:43] Yeah. So it yeah, it’s you know, Mike is the foundation. Right. So he you know, this past year, he gave away over a hundred million dollars to 800 million, almost a billion dollars, almost a billion dollars and for all sorts of causes so.

Martine Paris [00:12:01] I’m really happy I watch Bloomberg.

Deirdre Bigley [00:12:04] Well, I mean, and that’s part of being an employee at Bloomberg. It and it’s part of the brand. Right? It’s about giving back. Mike is huge, obviously, about giving back. So it’s something that is in our DNA. It’s something that we are really encouraged to do. But the other thing from a marketing perspective is to make sure that, like every employee understands, you know, why he’s giving, what he’s giving and and the importance of being a Bloomberg employee, because you’re working for a company that all of the profits of the company go to the foundatin.

Martine Paris [00:12:35] all of the profits, I don’t think.

Deirdre Bigley [00:12:37] Profits.

Martine Paris [00:12:38] I didn’t know that. Yeah.

Deirdre Bigley [00:12:39] Go to the foundation. So that’s what fuels the foundation. And, you know, and you’re working for a company that is about, you know, climate, that is about oceans and, you know, you know, education and gun control. And, you know, and if you believe in those things, then you have a pride in working for a company like that.

Martine Paris [00:13:01] So if all of the proceeds, the profits go to these amazing charitable organizations, when you’re messaging your product to enterprise clients, is that a factor in your in your marketing messaging that that when they do business with you, they are helping to save the planet?

Deirdre Bigley [00:13:22] What we have found is that that’s not necessarily the best. Message to use for clients? I think it’s great in the sense that we try to we try to pull all those things together and, you know, it’s not something we’re ashamed to talk about. But, you know, you’re also charging these people a lot of money and then a lot of their money is going to the foundation. So, you know, I think you have to kind of use it in, you know, properly because you don’t want to make it sound like Mike is, you know, making all this money off of you and you’re giving it away. So, yeah. So we use it to kind of like help our causes. There’s a lot of clients that are into a lot of the same causes as Mike. So we bring them in. You know what Mike is doing? Events and things like that are happening.

Martine Paris [00:14:06] Wow. Fantastic. And so let’s just talk very quickly about diversity and then we might have time for some questions from the audience. And Bloomberg is incredibly diverse. I know when I watch it, I notice I notice that there’s more women than men for anchors on the shows and that they’re not just racially diverse, but they’re also diverse across ages and they’re diverse across sizes. And it looks like something that Bloomberg takes very seriously. I wanted to ask you is, as a senior executive within this very large corporation, you know, what has your experience of diversity been? And then how do you execute diversity through your your very you are the size of startup 230 people. That’s a lot of series. These startups are two hundred thirty people. So tell us a little bit about the perspective of diversity at Bloomberg and then how you message that.

Deirdre Bigley [00:14:57] Yeah, um, I think, you know, just bringing up news. I mean, it has been a concerted effort among our news organization. There’s a great article out last week that this wonderful reporter had done a study on the number of women female photojournalists that had bylines or credits with the major newspapers. And the average was 17 percent of all of those credited photojournalists were women. Bloomberg is at 48 percent of Ford photojournalists. So that doesn’t happen by accident. That has to be like a concerted like idea that is done at the very highest, you know, ranks of Bloomberg News to make sure Bloomberg also, as you said, makes sure that our on air talent is equal, but are a big push lately, is making sure that the quotable people, the people in our news who are being quoted, we’re getting more women to be quoted because, you know, when you’re in especially in financial news, it’s a lot of men. So that’s taken a really long time. We actually have a program where we, you know, go into companies and we teach these women how to be, you know, the the spokesperson for their company.

Martine Paris [00:16:14] So you media train their Assamese. They’re called you media train.

Deirdre Bigley [00:16:18] Yes, we do.

Martine Paris [00:16:19] Wow.

Deirdre Bigley [00:16:20] Yeah. Just so we can go back to them and get quotes so there’s more women that have a voice in the news.

Martine Paris [00:16:28] That’s fantastic, yeah, because it is very noticeable and it’s not just for us, it’s for Asian when I watch Bloomberg all day long. So, you know, it’s after hours, too. And then, of course, San Francisco time.

Deirdre Bigley [00:16:38] I think it was interesting to about my organization is that, you know, I actually really look at pay equality and gender equality within my organization. And I learned this like. Heartfelt lesson last year that was pretty painful, you know, no one can ask anybody what they make right when you’re switching jobs anymore, right. So, you know, people come in and they have to tell you what they want. And you’re not allowed to say what would you make your last job? You’re not allowed to do that anymore. So what I found when I was looking at all the compensation of all my employees, like I had this all of a sudden staggering, like inequity with women. And I was like, wait a minute, how is this possible that we have inequity with women? Like, we work so hard at this to make sure that this doesn’t happen? And what it turns out is that women were coming in and asking for less.

Martine Paris [00:17:28] So because we don’t have perspective, because we haven’t paid substantially less. Most companies don’t have transparency. So if you have a history, that’s why that’s why employers can’t ask for salary history anymore, because it was it was, you know, built in discrimination, discrimination.

Deirdre Bigley [00:17:43] But women weren’t understanding their worth.

Martine Paris [00:17:45] It’s really hard to check your value. I mean, I guess there’s Glassdoor, but if you’re making what you’re making, I work for an organization. When they they had asked me, how much do you want? And I told them and then they wound up giving me a lot more. It was like 50 percent more than what I had asked for. And I said, sure, yes, of course I accept. Why why are you I have to ask you, why are you why did you give me so much more than I asked for? And they said it’s even legal to pay you what you were asking for. So, you know, we have pay transparency and we have levels. And this is your level and that’s what you know.

Deirdre Bigley [00:18:14] Well, that’s what we wound up doing. We wound up putting in bans so that, you know, if you come in and you’re at this level, we will pay you between those two things, whether you ask for it or not, just because you’re never going to get equality when you know the women are not coming in. And like, I hope like women start really recognizing what they’re worth because it was astonishing to me.

Martine Paris [00:18:38] Yeah. Pay parity and just a non discriminatory practices are unconscious, conscious effort. Now, while ago there were quotas and we don’t have quotas anymore. But there was a time in America’s history where there were quotas, where they were women were universities were forced to push 50 percent through and make sure they were women and then large companies had to push 50 percent through this. Bloomberg have stated metrics of hiring practices like were you told you need like 50 percent hit these numbers, or is it just a conscientious effort on the part of all employees to strive for equality?

Deirdre Bigley [00:19:16] I mean, my organization Sixty six percent women that I’m marketing and that tends to be more of a female dominated, you know, career path. So for me, it’s super important. Right. All of the women’s issues, equality issues it is. But even from a Bloomberg perspective, you know, are there quotas? No, no. And we’re a privately held company, so we wouldn’t report them anyway. But it’s very difficult when, you know, Bloomberg doesn’t outsource any of their engineering. I know that’s insane that we have thousands of engineers that sit on Lexington Avenue, you know, every day. But we do. And, you know, and again, those tend to be there’s a lot of men like, you know, the whole STEM thing hasn’t quite like. You know, gotten through all the the ranks, so, you know, it’s still very male dominated. So I think engineering probably throws Bloomberg off in their weighting of of men and women. But it’s you know, it. But then you go to other departments and it’s really female.

Martine Paris [00:20:17] You know, I have my own I am a tech reporter and I do report on Silicon Valley. And I have my own theory about the STEM pipeline. You know, there are a lot of millennial female engineers, but the problem is that such they found like blind coding test that the women are just great harsher. When they when it’s blind, the women are graded higher. But when it’s not being degraded, graded harsher. And what happens is a lot of them come out of school and they go into engineering jobs and then they’re not supported, they’re not mentored, they’re not coach. They’re graded harsher and they don’t see well. So they drop out, you know. Does Bloomberg have internally what you can share with us mentoring programs to make sure that the women are asserting for themselves? I mean, obviously to New York, women know how to assert themselves here. But I’m just saying, you know, is there like a specific training program to help them that.

Deirdre Bigley [00:21:05] There’s definitely groups that come together and, you know, led by more senior female engineers and. Yeah, and they come together and they give them training. And yeah, I mean, Bloomberg is is very big on on training. And it’s it’s important. It’s important even my own department that has so many women. But, you know, what I found is that, you know, a lot of the women I was working with, like were great presenters. They were not you know, they didn’t have great voices when they were with these senior people at Bloomberg. So we had to start training like that was a big part of the initial stages, its men and women. Now it’s like, you know, just let’s hone it, you know, get good at it.

Martine Paris [00:21:50] I guess this is why Bloomberg is considered one of the best employers in the world. I mean, it’s such a thrill to have you here. I, I wonder if anybody in the audience has questions I don’t want to dominate the whole time period. Yes, please. Yeah.

Audience [00:22:08] You mentioned your effort in Mexico into Asia. Could you please talk more about. Working on the markets, you don’t know in the languages you don’t speak, especially in the first orderly stages when you don’t have a well-established theme.

Deirdre Bigley [00:22:26] Yeah, um, you you do rely on local people. So, you know, we have a major push right now in China. Um, you know, the markets are going to open up very soon in China, which means that, you know, you’re going to be able to trade in China and China. You know, we’ll be able to trade with the rest of the world. That will happen eventually pretty soon. So it’s a huge opportunity for us, you know, but, you know, my team certainly doesn’t understand the Asian culture being in New York. And that’s why we had to we had to, like, push to actually eliminate work in New York and get a really solid team in China. And it’s like for people, it’s like I’m like that’s what we’re talking about. But it was also a brand campaign. And we had to make sure we actually did hire an agency to check us on the brand campaign to make sure that we were actually doing it appropriately. So, yeah. So I think that you if you don’t have people on the ground that are marketers in that country that truly understand it, it’s really, really difficult. So we built up China this year. We’re building up India right now, you know, so those are the two biggest for me right now as like getting getting those, you know. Correct. But if you don’t have people there, you can’t you can’t fake it. Thank you.

Martine Paris [00:23:48] So, Deirdre, it looks like we’re out of time and I just wanted to let you close with, is there anything you’d like to share with the people in the audience on lessons learned and best practices in terms of growing an organization where one has some previously existed?

Deirdre Bigley [00:24:05] Yeah, I think the only thing I’d say is that, you know, if you can’t measure it, then nothing’s going to happen. And I think if you if you if you know, that has been my bread and butter is being able to go and sit in front of Mike in the management committee and explain exactly what I what I do. I mean, I could show him pieces of content. I could show on websites. I could show him pretty creative, you know, pictures. But it’s not till I show him the data that they actually care. So I think that that’s insanely important if you’re trying to build something up, is to be able to completely express, you know, what you’re contributing to the company.

Martine Paris [00:24:46] Well, thank you so much for joining us.

Deirdre Bigley [00:24:48] Thank you.

Speakers

Developing and Articulating a Clear and Compelling Growth Strategy to the Board

Katie Bullard, President & Chief Growth Officer @ DiscoverOrg; Nate Grossman, Co-Founder @ Growth Street Partners

Ascent 2019

Nate Grossman [00:00:05] I’m Nate Grossman, as it says up there, co-founder of Growth Street Partners, where growth equity firm based out in San Francisco, where typically partnering with founder, owned and led companies when they’re around 15 to 40 employees and helping them scale to 100, 150 plus whatever their goals are together. And so this topic is near and dear to our hearts at Growth Street, and there’s no better person to be talking about it than with Katie Bullard. And I’ll let her give her intro.

Katie Bullard [00:00:35] Hi, guys. I’m the president and chief growth officer at Discover or now also Zoominfo. We just went through a recent merger. How many of you guys are using zoominfo or any system like that yet for your sales and marketing? Great. So we have a new combined platform coming. If you haven’t already taken a look at it, definitely do. So this is my third VCP back to business that I’ve been at and all three of those we’ve been fortunate enough to go through an exit. And so here to share some of my lessons learned around building a good growth strategy, both with the board that I have at the time, but then also positioning us for the next next round of funding.

Nate Grossman [00:01:19] Awesome. So, yeah, yeah, we have 20 minutes, so it will be quick, but we’re going to talk a little bit about when, uh, is the right time to be thinking about this and developing a growth strategy, how and who the board’s role in the process. And then a few quick examples. But we’ll start with with when. And so maybe, you know what moment. Yeah. Throughout the different experiences you’ve had, uh, led you to realize you needed a growth strategy.

Katie Bullard [00:01:47] Also, what I would say is, first of all, if you guys are in, you know, really early start, I’m the number one thing you need to focus on is product market fit. So do you have a market that’s willing to not only is not only seeing value in the product that you’re building, but is willing to pay for the products that you’re building. So that’s number one. Once you feel like you have a really strong, good product market fit, what any investor, whether it’s an existing board or somebody that you want to get investing from, wants to know is how will you keep that growth going. So that’s great. This product that you have now, take it to market. What are your next vectors of growth for? For us? We were a little bit past the startup stage at each of the businesses I’ve I’ve been at, but we were at that point where our core product, we had done a good job of capturing a strong market. And that was the question which was great. What are the next growth factors for that business? And I always thank you. You don’t want to wait to figure that out until you’re ready to go pitch to a new investor. You want to actually have figured that out as an executive team, you know, really early on and used that to kind of guide everything that you’re doing, whether it’s your go to market strategy or product strategy or your M&A strategy.

Nate Grossman [00:03:09] And what does that look like internally at the company, the the process of developing the strategy and who’s involved in that process? Do you have frameworks for it?

Katie Bullard [00:03:18] Yeah. So let me talk high level. When I talk about a growth strategy, what I tend to think about is three years from now, you know, who are we going to be as an organization? What is it what are the products we’re building to go capture that market? What are the financial plans look like three years from now? How will we. What is the North Star that we’re aiming for as a as a company and so for any company, there are a lot of different ways to grow. There’s all kinds of different levers that you can pull. And so when this first came to to kind of our realization that we were, you know, we were getting ready to go in front of a bunch of investors and quite frankly, like we didn’t have a really clear growth strategy. We sat down as a team and put together a framework to to really help us evaluate what all of our different growth opportunities were. So we put together a really brief little animation that I thought would be helpful, and then we can use that to kind of go through the rest of the discussion. So let’s see if this will work. There’s no sound. OK, there you go. And I’m going to let it go through and then it’ll all come back to it all. So essentially, what we did as an organization was we built out this this vector model and we took the core business today first and we said, you know, is there a way to accelerate growth just from new pricing and packaging? Is there a way to accelerate accelerate growth just from putting additional investment, for instance, into our sales and marketing strategy? And we put together kind of on I’m going to call this a very many business case for each one of those things. So pricing and packaging, customer whitespace, you know, go to market optimization. And then we built out each of these other vectors and we said, what are the next adjacent products that are same buyer. Right. But something new that they could buy from us. And we mapped out white, just white, boarded out what all those different opportunities were. Then we did the same thing for new channels where the new channels could we build out a different partnership program? Could we, you know, use a channel to go you to go internationally, which gets to new geographies where what are the geographies that we’re strong in today, where the geographies that we aren’t and what are those opportunities for us? And then new buyers there actually could. And I’ll use the Discover, for example, as an example, we were selling really well to sales and marketing teams, but we knew that account management teams could actually use our data to help identify like churn risks. Right. So when it leaves, most of you guys know when a point of contact leaves an organization that’s actually a really high churn risk. Not only is it a great indicator for a sales guy to come in and sell, but the flip side is true to so account managers might be a new buyer for us. So we literally just mapped each of these out, sort of mapped out the vectors, and we did a one page market overview of each of those opportunities. So what would it take for us to go after that, that new growth opportunity? What was the competitive landscape look like? Were there any headwinds or tailwinds that existed in each of those? And we went into a strategy session as a leadership team with a one pager on each of those. I think we ended up with something like 10 or 15 different growth opportunities based on this framework right here, and had a discussion as an executive team. We did some, you know, market opportunity, fit rankings, gave everybody the opportunity to kind of come in and say, where do we think the biggest opportunity is? And the key thing is we left that that session with three things. And this happens every time I’ve done this. You leave those sessions with three to five things you want to double down on. And you also leave that session with ten things that you say I’m not going to focus on now. But you you leave the session with a with with enough understanding of the growth opportunity that it feels credible. Right. And so when you go to the board at the next board meeting and you say, hey, here’s where we’re going to focus, here’s where you want investment, we want to go international, we want to go down market. Here’s what we’re not going to do. It really it is very credible to the board.

Nate Grossman [00:08:04] Yeah, absolutely. And moving to that now, when do you feel like is the right time to get your board involved and make sure that there is alignment there? Because ultimately that is really what it’s about.

Katie Bullard [00:08:17] I think it totally depends on each of, you know, your boards or if you if you know you know them really well. So I’ll give you two examples. We had one example. So I was working for a small company that was part of the Vista Equity Partners portfolio, but we were like their small company portfolio and we wanted to come in. This is Vista is great, but like you got to be buttoned up. So when you come into the Vista board. So we wanted to do this ourselves, feel really, really good about everything that all the analysis that we had done. And so we did it ourselves. And then we brought it to the board at Discover. Org. We were actually really kind of struggling with two or three different avenues to go down like we came out of that session. I’m not entirely sure what we were going to do from a buyable perspective. And so we actually wanted to get the board involved as we were thinking through that strategy. So we actually did a session with the board and we made them actually go through this with us so that we all left. That all in alignment, by the way, ended up driving. The acquisition is some info, but we wanted to all get on the same page and feel totally aligned on that. And so for that board and for that situation, we actually did this together with the board.

Nate Grossman [00:09:40] And then I see you in those different scenarios, engage the board in different ways. Coming out of the engagement with the board. How do you feel like? How do you know it went well or didn’t go well?

Katie Bullard [00:09:53] Yeah. So I think the thing that was most compelling for us and I’ll use an example when I was that I was at a legal tax software company that was part of the Vista portfolio at the time. We had gotten some interest from other investors up until that, but nothing that had really stuck. And part of it was I think we had not clearly articulated this ourselves internally, which then meant we couldn’t articulate it to the next group. So when we went through this process and actually sat down, mapped this all out, put it together, this actually was like, you know what, I think it’s time to start potentially a process and bring bring in some additional investors, which to us was a signal of their confidence in us. And what they told us, though, was what you need to do for the next investors. You need to show some early traction in one or two of these so you can go out and say, these are the five ways we want to grow in the next three years. One’s a new product. One’s a new buyer, one’s a new geography. But you need to be able to show at least one of those already on your your PNL that you’re starting to see that momentum. So let’s pick one. Let’s go after it. For us, it was actually international. We wanted to we decided to show a little bit of growth in international and then that will give the next investor confidence that that these are these are real. And so actually, the fact that they. Got to that point, is what signal to us that they were confident in the strategy?

Nate Grossman [00:11:30] Yeah, yeah, definitely. And what what things do you need to show the board? What do you say to, um, uh, give them the confidence or help them help you like. Yeah. As an example, um, with our companies, we really want to make sure they’re being data driven. And so we want to make sure that a lot of that has happened before. We’re having the conversation with them.

Katie Bullard [00:11:55] Yes. Yeah, great point. So I think doing those little mini business cases and coming in with some hypothesis of how big this market opportunity is, how fast it’s growing, where we would need investment instead of just coming and saying, hey, we want to grow internationally or we want to go down market, or we think this next product is the next thing, I think coming in with with some data that we had already done ourselves without honestly, without going and spending a bunch of money on market research, we used our a couple of product managers to go gather some of this data and put it together, I think is really, really important. And I think especially, you know, when you’re in a startup phase like you don’t you don’t have the money to go, do, you know, hire Bain to do a deep dove on all of these different opportunities. But having a little bit of data behind it is important.

Nate Grossman [00:12:51] Yeah, for sure. Um, maybe moving on to examples. So examples of when this has worked really well and examples of when it didn’t work.

Katie Bullard [00:13:01] Well, yeah. So, you know, we all we are all in really dynamic markets. I feel like we think we know what the market’s going to be two to three years from now. And it never actually is that they change so, so fast. And so I I think my biggest cautionary tale is I was at one company and we put out, you know, we developed our three year growth strategy. We felt like we put a lot of research into it. We knew the products we were going to put onto the roadmap. We knew, you know, which companies we wanted to go buy versus build. We knew which channels we wanted to go after. And we were we were also really we wanted to stay focused. Right. We didn’t want to be focused. We don’t want to change priorities all the time. That was really important to us. It’s important to any business to grow, but you can take that to an extreme. And so I think we didn’t check back in on that growth strategy enough and. What that that meant we missed some opportunities or we we ended up going down a path that if we had taken a step back, you know, every quarter and relooked at that strategy, we probably would have pivoted more quickly. And so that was one advices use that north that guiding North Star like, you know, use that growth strategy as you’re guiding North Star. But check in on it every one to two quarters and make sure that the dynamics of the market haven’t changed to a point that you need to shift your priorities and be OK, saying it’s we need to shift the priority. And if you again, if you have this clearly outline and you’ve communicated it to to a board, then when you come back and say, here’s why we’re going to shift priorities, then it’s it’s easier for them to to buy into as well. So that was that was a cautionary tale. I think, you know, where it has worked really well. I there’s been a lot of places where it’s worked really well. But I think the example that I gave earlier where, you know, we said, hey, these are the three growth factors. We want to we have a good core product. We have good retention on this product. We want to take it internationally. We want to scale down markets. And we have this like adjacent interesting space. We’re not really sure what we want to do in there, but we we know that’s where we want to go, that we we went after each of those in very small chunks and we said we’re going to first focus on international. We’re going to prove it out. We’re, you know, and we’re going to show some traction there. And then once we feel good about that, we’re going to do the next one that actually worked really, really well. And in the case of that particular company we had had in an investor that had been interested in us previously, had come to us, was not really sure about the legal tech space. They didn’t they weren’t they weren’t entirely sold on the growth story of the business. And because we put this in place and because we built out this, you know, this international and honestly, we had more momentum internationally than we ever thought we were we were going to have. They then came back to us nine months later and paid double what they would have paid when they came prior to that, because we we had this story and we had, you know, shown some movement on it. Yeah.

Nate Grossman [00:16:31] Yeah, absolutely. Yeah. Um, and bringing it full circle, I guess this goes back to your cautionary tale a little bit. Yeah. Um, but what what’s the right cadence for this process of developing and reevaluating your growth strategy, both internally and communicating it back to the board?

Katie Bullard [00:16:51] So we go through the whole process once a year. We actually usually do it in the summer time. And the reason is that we use the growth strategy to then drive the product roadmap, to drive the investments we want to put in the next year’s plan. And so then that way we’re not like having to double back on things. So we go through the full process once a year relooking and re really validating the three year strategy. And then every quarter at our leadership offsite, we we check in on it. Are they still the right priorities? And so that we’re actually really well for us, I think that the biggest thing was lining up developing this three year growth strategy and then using that to feed the roadmap, the financial plan for the next year, the budget requests that we wanted to put in, that was what was most important.

Nate Grossman [00:17:38] Yeah, awesome.

Katie Bullard [00:17:41] I think we’re getting the one minute signal back there, too, to.

Nate Grossman [00:17:44] Oh, perfect. OK, um, I think that, uh, uh, we can finish there. Um, but again, I really appreciate you taking time to do this.

Katie Bullard [00:17:56] Yeah. Hopefully that was helpful. I’ll be here around in the back for a couple of minutes afterwards if you guys have any questions. I think this framework works, whether you’re just starting out, you know, whether you’re a ten million dollar company or whether you’re approaching the hundred million dollars states to hopefully you guys all get to that point soon.

Nate Grossman [00:18:15] Awesome. Thank you, everyone.

Speakers

Building and Leading Remote Teams

Nora Peterson, Co-Founder @ Halo Incubator

Startup Grad School Stage
Ascent Conference 2020

[00:00:04] Alright, I will get started here. You’re nice, too, nice to meet you virtually. I’m really excited to be part of Ascent this year. My name is Nora Peterson, and I’ll give a brief introduction on myself before I just dove into the topic, which is building and hiring remote teams. And this is applicable for really early stage startups or any stage startups as well as big corporations. My background is in both, so I like to think it’s applicable to my advice is going to be able to both. All right, so just a quick background on myself, I currently work at Dixie Technology, which is a 20 million dollar outsourcing company, and we recently took our hundred and thirty thousand employees virtual. I also run a incubator for early stage women entrepreneurs, which I started in New York City. It’s since gone virtual and we’re nationwide now. We’ve been around for about two years and we’re actually in the middle of our fifth cohort right now. And then in addition, I also teach an entrepreneurship class at NYU that’s this fall. We just began a month ago and then that as well. I started teaching there right when it hit. So had to take that virtual as well. So a lot of what I’m going to be talking about today is just my experience and taking of working at three different companies and going virtual all at once with them. Different learnings from all of them. And just I want to I got my MBA from University of Chicago, where I studied entrepreneurship, spent some years at Aon, including leading their incubator, internal incubator in Singapore for three years and moved to New York to go work at Wall Street Journal, Dow Jones.

[00:01:44] All right, so agenda today. Just a few stats on future of work, which I’m sure a lot of you have been reading about this, not a whole lot of change in the last six months, but I think a lot of people’s attitudes towards it have and then to managing, building and empowering teams, which is important in nurturing a virtual culture, which is a bit difficult to do. And I saw this tweet. I actually don’t know any idea who that is or if even if it’s a real person. But I like what this person had to say. And that was a work from home, at work, from work, which I think we can all relate to between the endless breaks that we would take with our coworkers and just shopping online from our cubicles. But now we’re kind of doing the same from home. But I think the key to really strive in this environment now is to really manage your time well, manage your team’s time well. And that’s what I’ll be talking about. If you stats, 90 percent of employers say working remotely hasn’t hurt productivity. I think that’s true. But I think there are some in some areas like sales, where it’s becoming increasingly difficult. I think salespeople are starting to realize that not getting that face to face time with their prospects or clients is it’s really difficult to nurture those virtual relationships. That’s why how you show up on Zoome and how you interact with people on video as well as the phone is just very, very important. Right now I’m in a lot of offices are seeing remote until next year, some permanently. And a lot of companies are also realizing this is a huge cost savings to them, and especially with a lot of their employees already having moved out of the city that their offices in.

[00:03:34] And expanding on that, just a few, I’ll read off a few of these, you can see them on the screen here. About eighty two percent of business leaders plan to let employees work from home, at least some of the time, which is the current state. Now, even the offices that are starting to open up the stores are rotating between employees coming in and out so that there’s less people in the office. But as far as companies have to become more competitive, hiring talent, one of the things that people are asking for employees or asking for is having that remote option. And that’s that’s I think many of us see that as a trend moving forward. And just having a less rigid nine to five schedule, I don’t know about all of you, but at least the thing I hated least about going into the office, which I enjoy being in every now and then, but just the commute depends where you are. But it’s no fun crawling out of bed, still like coffee in your hand, running down the streets of Manhattan, at least for me, that was just it was awful. So I’m I’m frankly enjoying this, but I do miss the interaction I used to get from people in person.

[00:04:44] All right.

[00:04:46] So some of the challenges, though, that I think is key for people to start really addressing because it’s becoming it’s it’s not going to get any easier, and that’s one and the topic I’ll focus on today, and that’s onboarding and training new employees.

[00:04:59] It is really easy for to hire right now because there’s a lot more talent on there’s a lot more talent in the marketplace because there’s been a lot of furloughs and layoffs. But you’re the onboarding process isn’t great, virtually. I don’t know if anyone’s that great at it yet, except for the companies have been virtual for a long time. But the key to remember is really you need to put in a time upfront. You need to figure out ways to bond with your employees and get that virtual Face-To-Face time, because otherwise you’re not going to be that committed to you. The company that the team there on the second day get another opportunity, which might be two months down the line. There’s an easy for them to just leave unless they really feel that there’s some connection. So I would focus on if you’re a manager or a founder of an early stage company, make sure you’re getting some sort of one on one time with your employees, and you’re going to have to schedule that a lot more than you used to in person. Just just also just a remote collaboration, I’ve seen this big companies as well as the startups, the collaboration can cause a lot of friction and communication issues. I tend to be very direct person, so when I communicate, it might just be in a sentence or two. I have to tweak that a little bit and make sure that my message is coming across authentically and and in a kind of matter where people aren’t misinterpreting what I’m saying. So I think taking the time to write out emails is taking a little bit longer. And that’s why a lot of people are. What I’m advising people to do is just to jump on a call, on a phone call a lot more now than you used to have to, just because everyone’s just emailing back and forth all day long and not seeing each other. There’s just a tone changes and there’s a lot more friction. And negativity can can bubble up. And I’ll touch on one more thing here, and that’s there’s a lot of unclear work compadres, as as we all know, whether that’s not really getting dressed up properly to show up to work each day, having your kids in the background of your dog like my dog, my puppy. Right now, I have a 10 week old. He’s playing with your squeaky toys in case you hear that in the background. So there’s a lot of interruptions. And I really need to figure out your schedule and your team’s schedule in term to make it work and to make it productive. I’m not saying to micromanage anyone and but to give them the leeway to incorporate these activities into their day, which might be taking care of the kids, taking care of their animals, doing what they need to do to feel healthy and productive. And that might mean taking more walk meetings that are when they’re walking.

[00:07:42] So just having that understanding of they’re not going to be at their desk all day long throughout the clock, which throughout the day, which which I think some managers still have that impression that that’s how the new world is. And that’s that’s not the case. Still developing that understanding, if that’s that has been your management style in the past.

[00:08:05] All right, so a little bit more managing our team. You really need to shift your management strategy if you are if you have been a manager for a long time, things are a lot different now, especially with the new generation GenZE and millennials. You really need to manage their performance, not their presence. And there’s a few ways to do that. It’s really focusing on communicating the projects clearly that you sign them. This is especially important as you’re getting to know new employees. A lot of what I’m talking about is really relevant when you’re hiring new employees, when you’re giving them their first few projects. Clearly state the objective of the project expected results and the quality that you expect, whether that’s taking the time to write out examples of exactly what you’re looking to get out of the project that you’re signing. Don’t just send off a few sentences like, hey, can you do this? That’s usually not going to produce greatest results. They might also just spinning their wheels for a day and not really understand what what you want. And then you’re in a situation where they’re just at home, not really being productive, don’t know what to do. They’re too intimidated to reach out to to ask you for advice because, again, they haven’t even had that face time with you. They don’t really know you. So the key is always just to be very, very clear on everything and making sure to take the time to get to know them in the beginning. And this has to be obvious, because if you’re not able to meet them in person and if you’re in the same city.

[00:09:31] You know, with masks and social distancing, of course. And then just be patient.

[00:09:37] I’m not the most patient person, so that’s something I always preach to myself, I, I anticipate that just just going to be more time spent communicating with with your team members, your colleagues or your peers or your your bosses just takes a lot longer now because there’s a lot more activity happening. There’s less again, there’s just less that one on one time. So a lot, lot more of the communication is being misconstrued.

[00:10:03] So if you’re building a new team, attracting qualified staff candidates has always been a struggle and it might seem people might think it’s a lot easier to hire now because there’s just a lot more supply in the market versus demand and jobs.

[00:10:20] But once new jobs start to pop up, if you don’t really take the time to screen for candidates that believe in your culture, that want to be part of your team, they’re just going to be turned over. And you just want to make sure that also expectations are aligned on both sides. And in order to attract candidates that are going to stay with you long term, you do want to talk about your company culture, because I’m assuming most companies will stay remote your school to some degree. So and the candidates on the marketplace, most of them do want to stay remote to some degree. So making sure that you’re talking about what your company culture is like when it comes to remote work, when it comes to a management style. Talk about this on your social channels. When you’re when you’re recruiting for candidates, you could have a blog on your website just talking about companies opportunities for a long time, having a blog post on the culture, but really highlighting examples of what remote culture really looks like, whether that’s videos or actual meetings, screenshots, whatever it is to kind of showcase. That is a fun culture and that you are very real friendly, even if you are an office part of the time. And then just offer Putin benefits, part of the job description, make sure you’re offering flexible work options and perks and all know is the network offer that it’s a very competitive market. So you want to show how you’re differentiated as a company and then invest in upskilling and training opportunities.

[00:11:48] The world is changing very quickly. There’s a lot of jobs being displaced. Most candidates, especially younger ones, they are looking for ways to to learn more and to continue their growth path. So that’s something that they’re looking for, often more so than just money alone.

[00:12:08] And when you’re interviewing, make sure you’re asking them more specific questions. This could be anything like, hey, describe your your working style when, you know, for the past six months when you’ve been remote and what you like about it, what don’t you like about it? How do you best manager projects, time management, et cetera. So those open ended questions can tell you a lot about a candidate.

[00:12:32] Keeping track of time here. All right, I think I have about 10 more minutes and just a few notes on writing a compelling job description, you do want to include key words about flexibility and remote work. Again, this hasn’t really been showcased in job descriptions to date or maybe just one sentence on it. But I would expand on that a lot more. And what that actually means, specific and specific terms, not just, hey, we’re real friendly. Great. So is everyone right now. What does that actually mean for your company? And then emphasize commitment to remote and flexible work in any post covid office safety plans, people want to know that some people aren’t ready or willing to come to the office and have quit their jobs over over there. So if you do plan to keep a flexible arrangement, make sure that you’re also alone outlining what twenty, twenty one will look like, especially as we’re nearing your end.

[00:13:24] People are very they’re very hesitant on what will happen in the next year.

[00:13:31] And any benefits, perks that you’re offering? Make sure you include those that could just be that would just mean, hey, we’re we’re going to buy you a nice chair or monitor that that stuff doesn’t matter to people.

[00:13:42] And it’s a nice just a nice addition to a job description. Things I would stay away from is anything around micromanagement. No one likes to be micromanaged, though. That needs to happen at times for sure and depending on a role. But people generally aren’t drawn to that sort of leadership style. So especially remote workers if you’re hiring seasonal workers. So I would they want to they want to work in a trusted environment. So stay away from those those keywords for sure. And then. Do not include activities or skills that are not actually needed for the jobs. Everyone has a laundry list of skills that they’re looking for that actually I don’t even need additional to be fun. This is that would be fun to have a perfect person that doesn’t exist, that weeds out a lot of candidates. It’s also shown to weed out a lot more women candidates and studies in the past because women tend to be a little bit more perfectionist. And I forgot the stats. But women, I think, tend to apply for like. Seventy percent of the jobs or something along those lines that if they don’t meet all that, if they don’t meet all the qualifications versus men will just apply for. So that will just give you a larger job, job pool if you if you just keep it very specific to what the job is.

[00:15:08] All right, onboarding and this is super, super, super important, I’ve been on boarding a lot of people over the past few months and just just getting to getting to know even the students at my NYU class and make sure that you are spending time in the first few weeks with them on camera, even if they don’t offer. I don’t ever like to force or ask anyone to be on camera necessarily because know a one camera all day long, like, I get I get some fatigue. I don’t always want to be on camera, so I don’t like to put I don’t like to make it mandatory because that’s just that’s also not a fun working work environment. It becomes very tiring. But for meetings where I need to kind of lead a team or get to know someone, I’ll go on camera, even if they’re not just so they can at least look me nice, get to know me better, and we can start to establish a rapport.

[00:16:01] So make sure that’s what you are doing that and have a good work home set up that that includes your Wi-Fi, obviously, but things like Web cam. And if you can offer some sort of stipend to your employees, they’re taking on a lot, lot more costs right now in some ways working from home. So any sort of small stipend you can provide them is really helpful and shows that you care.

[00:16:25] And then, as you umba, new employees just make sure that you’re studying not strategic, but very purposeful about setting the agenda for the next week, the next month, it’s really hard to get on board new employees virtually, especially if you don’t have a lot of time to spend with them. So let’s say you only get to spend about an hour a week with them. That’s really hard if you’re not able to actually in writing put like, oh, here’s kind of here’s what I want to work on for the next week or the next two days. Here are some resources. Here’s another person on my team that will meet with you every day. So make sure that they have an action plan. Otherwise they’re going to get lost and kind of get it is easy for employees to get very disengaged in the first month unless they’re on board improperly. And this is one of the and no one ever takes the time to truly on board, even though this has been talked about for years on employees complain at the onboarding process for both companies. So small, little things you can do. And it really just requires your your time up front and getting set up with with a buddy or another employee to help them. That already shows a lot. And then I would a few a few other things I would do is if you can send some sort of welcome, welcome package to them, even if it’s just kind of your lame, like, company logo pens or something, it is still something that they receive in the mail, like, OK, I’m remote, but they know where I live. And actually they sent this to me that that does also speak volumes. And then last I would I would focus on I would figure out a schedule where you can do a monthly virtual happy hour, whatever kind of format you want to do. But we’re bringing in a bigger group. If it’s your media team, must have a team of five do that once a week, really get the team to bond and make it. I always declare that we are not talking about work for the next hour. You can bring your pet, you can see your cute puppy, we can talk about your vacation plans, anything. But we’re not talking about work. And I’ve been very strict to to hold to that. And I and I think that’s important because otherwise you’re just it’s just another work meeting that is disguised as a happy hour. And then talking a little bit more communication cadence, which I can’t emphasize how important it is, it’s when I haven’t spent time on this or focus on this, it’s always gotten me in trouble.

[00:18:54] So when in doubt, just over communicate, it helps reiterate the messages and resolve challenges from any miscommunications that might come. Also, people are just flooded with emails and content that they’re getting every day. So I would focus on being able to write very clear, distinct emails and making sure they’re over communicating your messages. When you talk to them, you’re going to get a lot more a lot better results from your team that way and from your other employees at your company. And then I would I would get another besides the happy hours that I talked to, another cadence type of meeting I was set up this morning. Check if you have if you have a team that is working on critical projects, I would even do a morning every morning check in, just making sure everyone’s on track, kind of like you being a project manager like it was was it on last week? What’s up next? What’s going on for later on a day was in charge of that. So I think that really helps to rhythm and keeps people also motivated on task. And then if you are less, find out a company or a manager at or a business unit or at a larger company, whatever it is, setting these larger team meetings or town halls is always key that that really brings the wider company together and helps helps gives you an avenue to talk more about that to longer term goals and vision versus those weekly meetings that you might be hosting and then just spend time one on one that’s scheduling one on ones in advance with your team members, making sure that you’re taking notes just to get feedback from them, just to listen to what they’re going through. And not that you just talking at them on whatever’s going on with the business, but actually taking the time to listen to them. That’s super, super important. I try to do that with the people I work for, the people that work for me, at least I’d say once a month.

[00:21:00] And on that note, I will end there, but we don’t have time for Q&A, but I think one of the questions I get a lot is just kind of like, oh, what kind of fun things could I be doing with my team? People have all sorts of costume parties that they show off for these happy hours. Frankly, I haven’t I haven’t done that, but I don’t know how much I think it’s for me it’s all about, you know, what my team actually likes and is motivated by and that the only way to know that is by getting to know them and talking to them. So I’m more focused on just making sure that whenever the meetings that we do have are productive, that they’re positive in tone, that we’re getting things done. And everyone’s everyone’s leading a balanced life at home as well. So they’re not working until midnight all around the clock. So I’m more focused on people being happy in that matter versus having these fun experiences for them. That said, if you’re at a startup where things tend to be a little bit more on a fun side in terms of activities, I would then I would then look to have more of these virtual happy hours, maybe do something costume related for Halloween. And there’s other ideas out there like that. But that’s that’s not usually something I personally focus on.

[00:22:19] But and then another question I think I get a lot is just.

[00:22:28] It’s more so around, you know, if you’re a first time manager, how do you how do you figure out the best way to to hire remotely? And how do you how do you find the candidates that are that are ready for remote work and are good, good quality, have the right qualifications? I would actually look at job postings for similar companies as yours are for start up look at like kind of look at what others are posting an angel list or on LinkedIn. I get a lot of inspiration from those and then make it your own, make it make it your own voice to make sure it speaks to who you are and your company is. You don’t want to be lying in a job description. Someone gets there and it’s completely wrong image. So don’t don’t in any way pretend something you’re not be very, very authentic. People figure out very quickly, you know, what what the culture is like. And if it’s completely misaligned from what was advertised, it’s you know, it’s not going to end well and then you’re going to end up with employees that are very disheartened. So I would you know, I would just take some time. I know it’s not fun just taking the time to write out the job description that really speaks to to your leadership style in your company.

[00:23:43] And on that note, we are at that time and hope to see you all in person one day. Thank you.

Speakers

SaaS or Partner? Value Share In The Era of SaaS

Steve Sarracino @ Activant Capital and Alyssa Newcomb @ Technology Reporter/Media Consultant
Main Stage
Ascent Conference 2020

Alyssa Newcomb [00:00:04] All right. Hi, everyone, thank you for joining us. My name is Alyssa Newcomb. I’m a business and technology contributor at NBC News and we’re joined by Steve Sarasin from Accident Capital. Hey, Steve, how are you?

Steve Sarracino [00:00:20] Hi Alyssa, it’s great to be here. It’s good to see you.

Alyssa Newcomb [00:00:23] Yeah, good to see you. Real quick, can you just give us a quick rundown for people who aren’t familiar about what you do at accident?

Steve Sarracino [00:00:32] So I found it active in capital. We are a growth equity firm focused on B2B software, primarily enabling and commerce. So that’s everything from the manufacturing, physical or digital, the moving inventory management supply chain and the cell phone tech elements and everything in between. We’re based in Greenwich, Connecticut. Typical check size for us starting is 20 to 40 and we can build from there, but not a lot of B2C, but we enable the B2C so you can think about it as B2B to see.

Alyssa Newcomb [00:01:13] Cool. So today we’re going to talk a bit about value share in the era of SAS. Want to start out by asking you what’s so attractive about a partnership model?

Steve Sarracino [00:01:25] Sure. So a few things and just just a step back. When we when we talk about value share, what we mean is your your technology is aligning with your customers business. So the easiest way to think about it is in payments. You charge a percentage of revenue. Revenue is the most aligned aspect of someone’s business and you’re not charging a monthly subscription or annual subscription. There’s a lot of ways to do that. So when there are transactions, you can charge transactionally. The business is based on a commodity or price of an asset. You can charge based on the commodity or the price of the asset. And what we found is companies that can charge with the value share model tend to be a lot more sticky and tend to be very broad platforms rather than tools. And so when you look at particularly in the age of covid, companies that have and the has fallen four buckets and will get that minute. But companies that are doing well, the charge on SACE, right. You’re making a one zero decision and some of the companies that you’re enabling are doing particularly well in this market and are continuing to pay that SACE fee is not that you have to. It’s every year you have the chance to upgrade or increase price versus we have the partnership model. You can grow and shrink with your customer. It’s not a one zero decision. And so there are some businesses as businesses that have performed very well, obviously Zoome as one page or do the others. But there’s there’s there’s other categories maybe like employee engagement, where if you’re not performing as well, you may look to trim those SAS relationships. And so that’s why we have to look into the value share model. We obviously do SaaS as well. That value share has been performing extremely well through the current environment.

Alyssa Newcomb [00:03:19] Yeah. Are there any other companies that you’d want to shout out that you think are doing this particularly well right now? I mean, obviously, Zoome is a big one, but are there any smaller companies out there?

Steve Sarracino [00:03:31] Yeah, I mean, in FinTech, there’s a lot of them, you know, one in particular is better dotcom, which is performing extremely well, obviously charges based on a on per mortgage to its B2B customers. But it’s you know, this business model has been pushed so hard for so long now. And if you go back to 2000 and prior to the dotcom bust, there’s something called ASP application service providers. So Citrix and others. And it was essentially SAS. And when you had the dotcom bust, we we as a or as a group of technology investors renamed it so that people would invest in it because they stopped investing as we renamed it. And it’s a pricing towards super effective. It’s recurring and makes a lot of sense. But we’re starting to see the beginning of push back on just a flat tax pricing and figuring out how to price that something in a way that’s more aligned with your customer base. It’s not in every category. There are some categories that are very natural for SAS, but there are a lot of categories that aren’t and even see that the pursuit model, because you see that coming back a little bit. And that used to be big ten years ago. It went away. It’s coming back.

Alyssa Newcomb [00:04:43] And I want to ask, we’ve talked about how there are a bunch of companies just absolutely killing it right now with the partnership model, but are there any challenges that that model presents that people should be aware of?

Steve Sarracino [00:04:56] Yeah, so generally, great question. The bar for sale tends to be much higher because if you’re charging on a percent of someone’s revenue, just to take the simplest partnership model, that bar versus charging them a five hundred thousand dollar AKB is very high. And so the sales cycles tend to be longer. But once you’re Analisa, it tends to be much stickier. So the churn or net retention on the partnership model, it blows away anything we’ve seen in past. Obviously exceptions, particularly in this market, but it blows away the average and SACE. And, you know, you can’t be it can’t be a tool or simple endpoint solution. To have the partnership model, you really have to be a full platform for your end customer, whether you’re selling into, you know, distribution and consumer goods, retail, whatever it is, it’s got to be a pretty broad platform. And what we’re seeing also that’s been interesting and covid is these companies have really fallen for Buckett. So the first one are companies that are struggling. And when I say companies, I mean B2B tech, not the end market companies are struggling and may not make it. The second bucket is those that are are bouncing around. They’ll be fine. They’ll get it through the other end of this, but they’re not growing at the same pace. The third bucket is, is the companies that are ripping. And what we’ve seen, interestingly, in the last six months is valuation multiples have gone up. And if you have a partnership model versus model, they were actually able to increase the second. Second derivative on growth is positive because they are growing with their customers and those valuation multiples have gone up even more. That’s that’s that’s probably been the highest multiple sector that we’ve seen. And then there’s the fourth bucket, which is pretty interesting, which is the companies that are struggling, they’re going to make it through. But the market dynamics are going to change so much when we get through covid that they’re going to be in the lead in a very different position. And for those that that’s a very interesting place for us to look as investors. But also it’s a good time to rethink your your your pricing model if you fall in that bucket.

Alyssa Newcomb [00:07:03] Yeah. So while we’re on the topic of covid, I mean, you can’t escape it. It’s everywhere, but it’s rapidly increased demand. And as a result, some companies are having to scale much faster. Do you have any recommendations or insights into just responsible scalability?

Steve Sarracino [00:07:22] Yeah, so there are two key KPIs we look at as investors, obviously, when we invest, it’s all about team. The only mistakes we’ve made as investors is has been it’s been team the past, that it’s growth and runway. And those two aspects drive valuation more than anything. If you’ve got runway and growth, your value is going to be very high. If you’re running out of runway and you’ve got growth, you’ll do OK if you don’t have growth and runway. Obviously, it’s very important to raise capital. And so depending on which of the four buckets you’ve fallen, particularly bucket one and two, where we encourage companies to go out and try to raise money. The other interesting thing, what’s happened in our market is that you’ve had entire sectors where capital is pulling out of Iraq. And this is a generalization again. But if you look at hospitality, real estate, parts of retail and the capital is looking for other places to go. And we’re seeing a lot more capital enter the tech market. And you know what, for instance, like this conference is all about like this. This is a very early innings of capital flows into tech. And when you say tech now, it means a lot of things. You know, 20 years ago, it was ones and zeros and semiconductors. Today, you can define tech pretty broadly because they’re vertically integrated companies that are using technology to drive better outcomes for their customers. And so if you have a better business or B2C tech business, it is a good time to fundraise. There is a lot of capital out there. And so that’s my my number one advice. If you’re in Buckett one or two struggling or bouncing, you’re going to make it through. But it’s going to be difficult and there will be receptive audiences to your to your pitch if you’ve got a broad enough platform.

Alyssa Newcomb [00:09:12] So we’ve talked about the flow of capital into these tech companies, and can you talk to me also a bit about how dealmaking has changed on your end during covid?

Steve Sarracino [00:09:22] It’s a great question. So we just did our first deal over Zoome. I guess Zoome is now going to be a it’s a verb I guess resume to deal like Googling or Kleenex. It was a little scary. I think. Look, on our end as an investor, if you’re raising capital from an investor to understand that the comfort level, it’s going to take more time to get the comfort level. Because you know what I said earlier about team, most investors know that it’s all about team. It’s a relationship with most of our investments last longer than than the average marriage. And to not be able to meet that that CEO, founding team, senior team, junior team in person is a scary prospect. So on this investment, we probably spent two and a half the amount of time that we would have normally, but over Zoome just to get to know, just to get to know the company. So I think that’s one big difference. I think the other that’s really exciting is that it’s becoming a lot easier to see who’s doing well and who isn’t in this environment. Like a list of the winners and losers are becoming very clear and what we call as a leader laggard. Multiple separation is increasing, meaning the number one in the space is trading at multiples. Their multiple is a multiple of the number two player. And and we’re seeing that spread widen. And that that’s happened before. It definitely happened after the dotcom bust. So no two or three or four, that leader laggards spread, widened, and it narrowed and narrowed into it. So, you know, the good companies are going to trade at much higher level. It’s highest I’ve seen since ninety nine. Two thousand, which is interesting. And then the third the third interesting thing about about investing in this in this environment is that, you know, just the level of uncertainty because we don’t know if this will end in the spring. We don’t know how long it will end. And so that’s got to inform not only your product build, right, as a as a manager of a business, as you’re building your product out, but also your go to market. Like we’ve got to make changes now and our and our go to market approach and assume that we can be in this for for quite some time. And so we do look for that. We look for how the teams have reacted quickly in this environment rather than delaying it.

Alyssa Newcomb [00:11:53] So I’m going to ask you, is it a problem if you’re only revenue line, is Stass, is there something entrepeneur should be doing to build a winner take all companies?

Steve Sarracino [00:12:04] No, look, no, absolutely not. Look at Salesforce. Look at these big companies that have done very well. It’s not surprising. It is. You know, unless you’re going B2C and there’s some great companies that have they have monthly pricing, annual pricing or they are SMB. If you’re going to Enterprise, it is really hard to start out just pure SaaS without services. And the reason you need services, it’s obviously for implementation, but that early feedback from your customer you need to be very attuned to because in the early days you’ve got to be able to adjust your product roadmap quickly. You’ve got to be able to just feature and functionality quickly. And the only way you’re going to be able to do that is you’ve got a phenomenal customer success and services team on the ground with your customer. So services revenues, you know, I think they’re coming back. It’s OK. It happens. I mean, look at Pelletiere just went public. They obviously have a huge amount of services revenue, but it’s it’s expected in the early days and then longer term, you can make the decision. Elyssa, if these companies want to partner with the systems integrator or continue to do it on their own, I think if you can make it if if the business can make a run it what we call the valuation model. They should definitely explore and be tested with some customers because being able to agree with your customer is amazing because you can’t always increase your voice at the same rate your customer is growing. And if you’re in a good and market and you know that and or you’re digitally transforming their business in a way where there is Arawa in the table, you’re able to capture that.

Alyssa Newcomb [00:13:40] So let’s talk about that value share model, though, are there any challenges with it?

Steve Sarracino [00:13:46] Yes, yes. And one example comes to mind. I was talking to someone that built it. I mean, really machine learning, as most of the audience does around pricing for airlines. And what they did and this was a couple of years ago, they they looked at Treasury markets. And so, for instance, like if you find a flight to Pittsburgh, they knew that there is no Carnegie Mellon or University of Pittsburgh was having their graduation. And so rates went up long before long before graduation was to occur. So they generated something like three or four hundred million for the airline. And this airline, major, one of the major airlines was piloting it. They came back and they said, look, we can use ASML in different ways, but we should be able to charge like 30 or 40 million for this. And, you know, they were going sort of Arawa model value share model for the challenge was, you know, that tack is it was more of a pricing tool versus a complete platform. And that airline could not easily by go hire their own people for a lot less money and build it themselves. And so if you want to go that route, we need to be realistic about how easy or hard it is to replicate what we built. And so that’s why if you do get to value share pricing model Elyssa, you have built a very powerful business. It’s hard to replicate both from a customer standpoint, but also competitors.

Alyssa Newcomb [00:15:17] Definitely, and I want to ask you, we don’t know when covid is going to end, of course, but are there any particular sectors you see exploding or you see potential for growth in the next few months? Short term.

Steve Sarracino [00:15:31] yeah. So we’ve seen fintech broadly has been very hot, and I think that trend will continue for a long time. We’re in early innings there. There’s still we’re still paying interchange fees, which are set up a long time ago. And now that we’ve moved more digital. So mindsets have shifted. This is a structural change. Technology hasn’t changed as fast as mindsets. And as we move online and digital, you’re going to see you’re going to see payments and financial technology change quite a bit. I think the other broad area is we look for digital transformation and we talk about that in two ways. So one is digitally transforming the whole industry. So you build a company from the ground up to do whatever function it is, whether it’s a product, a good or service digitally. An invention like BET.com is one where just reimagine the mortgage from top to bottom. The other way to digitally transform is actually to enable tools for that, for that industry to digitally transform, like uncorks a great example of how they are digitally transforming the insurance industry. And so, you know, when we need when you can do one model or the other model, that is a very powerful business right now. And a lot of those businesses can charge relative to our higher value share because they are so powerful either for their customer or their end customer if you’re if you’re building a top to bottom vertically integrated business. So, yeah, I think anything you can do to digitally transform right now is super interesting. And you can attack any industry. Any industry is up for grabs, health care, banking, insurance, retail supply chain. And so this is actually like. I know we’ve got a lot going on. We’ve got covid going on, we had the debates last night. I don’t know what you call that. It’s a little scary, but also there’s going to be more money flowing attack. There’s going to be more innovation. And a lot of it’s frankly going to come from the US and even see Europe catching up now. France has had its first unicorn price. We’re going to see more exciting things, I think, in the next three or four years. And our market could generally rep for for for quite some time. So, again, it goes back for those companies that are struggling during covid. There is a liquid capital market system on the private side like there are. There is capital available. And those of us that are deploying it can see the performance across our portfolio are going to continue to deploy and are excited about the market.

Alyssa Newcomb [00:18:16] Definitely, and just I know you’re great with predictions, so I’m looking maybe 10 years, 20 years into the future. No pressure. You can’t there’s you can’t be wrong here. Any sectors or opportunities for SACE that you’re thinking about right now.

Steve Sarracino [00:18:40] So. I’m going on the fly here, I should have been prepared for this question. I think. I think being able to digitizer tokenized information, payment and personal information and transact with it outside of the normal means, meaning Eddi Interchange, SWIFT, what have you is super, super interesting. And there are phenomenal network effects with those types of businesses. We’re looking at a number of them and it could start with like from virtual credit cards all the way to tokenized in my personal information, be able to use that to transact. And it doesn’t mean I’m just buying something. It could be a financial product. It could be renting an apartment or or joining a a country club or any sort of major life transaction. So we think that that’s pretty, pretty interesting. We’re also B2B marketplaces, which have been very difficult to build for a variety of technical reasons and go to market reasons, I think are going to start getting very interesting. So you’re going to see an agriculture like just rethinking hundred multi hundred year old businesses like Dreyfus and Cargill and how we manage the supply chain and crop identity from from beginning to end. And that applies with a lot of goods. That’s not just agriculture, but I think, you know, reimagining that’s going to be really interesting and putting on a marketplace, again, tokenization and identifying assets like penology, asset identification and super interesting. So we like all of that. I think banking is going to be up and they’re going to be continue to be upended. That’s an obvious one. I wish I had better predictions of less of it. That’s what I got on short notice.

Alyssa Newcomb [00:20:38] That’s enough to be excited about the future. And then finally, I want to ask you, I think we’ve established here it’s a great time to start a company. It’s a great time to go out and fundraise. Any advice for people on how to do it in a digital world or special things you might be looking for?

Steve Sarracino [00:20:57] Yeah, I mean, I think, look, be prepared. It depends on what stage you are. So later stage, it’s easier, but let’s go earlier stage. You know, I think having those interesting stories of how you got there and I’ll give you an example, we met with an entrepreneur and they they made money in college to get this business started. And we said, well, how do you make that money? And they sold snakes. And I don’t like snakes who sell. How do you even do that in your dorm room? Like what is the logistics behind that and the fact that this person was willing to do that to get this business started with super interesting. So, you know, things that you’ve done in your life that you may think are not important or interesting or really part of the whole picture, because ultimately we’re investing in you, right? Like the team is building the business and most tech businesses, most can be recruited into ones and zeros, even semiconductors. I mean, you get a patent, but there it’s gates and they’re certain sizes and they do certain things. And so just be prepared to tell that why you’re special and then, of course, why the business is special.

Alyssa Newcomb [00:22:06] Great advice. Well, thank you for taking the time, Steve.

Steve Sarracino [00:22:10] It’s great to see you again.

Alyssa Newcomb [00:22:11] Take care

Speakers