The Go-to-Market Learning Curve at The Cloud 100 2020

Hi, I'm Karen Peacock and I'm the CEO of Intercom.

Hi, I'm Nick Mehta, CEO of Gainsight.

Hi, I'm Manny Medina. I'm the co founder and CEO of Outreach.

Well, Manny and Karen, it's so awesome having you here to have a discussion about how we all run our businesses and what we've all learned over the years. There's so much to talk about. I think one of the things that might be helpful for everyone is to start with the strategy about how we all thought about go to market. And from my own vantage point, I think we all read all the time about product market fit. It's probably the biggest buzzword in the drinking game of SaaS is if you do a shot every time you hear product market fit, you'd probably be drunk by noon. That product market fit concept, in my opinion, sometimes hides the fact that the founding team and the executive team, their own background might influence what type of product, what type of market, what type of go to market you go after. You know, some, some founders might be really into technology and products, some might be into customers. And so I'd be really interested in how you think the DNA of your team in terms of both the founding team, the current team, affected how you decided where to focus in your market.

Our founding team is a group of folks who are highly focused on building great products. And so Intercom started out as a product first company really for other startups. And that has stayed very much in our DNA of being a product first company. And then over the years we've built out our go to market motion. But we started with great products and really no specific go to market other than the word of mouth of having a great product. We started then by adding in great content and we used that to drive basically inbound demand. But in a way that content was really just another form of a product that we were delivering and giving to folks. And then it wasn't until a few years after that we really started building out our sales and marketing motion, building out a combination of inbound and outbound. So we really started with product and built up from there. And we steadily moved up market through the years as well, starting with more selling to very small businesses. And now we very much sell to mid market and enterprise companies.

I think it's super interesting because I could imagine an alternate universe, Intercom that had founders that were more about sales and meeting people that wouldn't have started the same way you did. So the team dynamic influenced the early path. Did that make it harder later on to then adopt those other motions that you had to bring in as you came in, or what was that like as the business evolved itself.

So I joined Intercom about three years ago and when I first joined, I was hearing things from the sales team like, hey, we're asking the product teams to build certain things and they're not necessarily building those things. That's kind of a classic conflict there. And the aha that we had was to connect our product teams to customers and to share with our product teams the problems to be solved, not the solution. So rather than saying like, I need a feature X, I need like ticketing, I need to be able to solve complex workflows where I can break down a customer, ask into these different pieces and get that information back to them. And, and then connecting the product teams with customers was a massive unlock for us and really, really helped us scale as a upmarket company that we are today.

That's awesome. So there's kind of like identifying where you started and who you are and focusing there and then figuring out how you get connected to the new things you want to do in a way that's authentic to your company. I think that's a really good lesson for people watching. Manny, I think you probably had a different story of kind of how you got started. So how did you, your own personality, your kind of co founders and executive team personality, influence where you decided to focus in the market and how you kind of got started?

Yeah, we are a little different in that we started, we were a pivot, so we didn't come out to the product that originally was outreach. We had a separate product that didn't do so well. So we were a little reticent to assume anything about our product or our product market fit. So we, we found product market fit by selling it. So the way we build the product. And then I would spend all day meeting people face to face in the Soma and selling door to door to startups there and making sure that whatever I had in the truck was meeting their expectation. And I would take a copious note, even if I sold you something, I would put it aside and be like, all right, why do you buy? Did the story resonate? And then I would go back to my co founders and say, we need to double down on this, we need to double down on something else and then use that relationship to continue to build the product roadmap. So a lot of our product roadmap was influenced by early customers. So I remember Scott Wong and Sahil from a company called Virule that doesn't exist anymore. That gave us all the input that we needed to create this dynamic template. And then by working with Lars Nielsen and with Kiran Singh at Cloudera, they gave us the idea of a lot of the triggering and Salesforce sync functionality that we built. So a lot of the features actually have customers behind it. You see what I mean? In our roadmap, it's just a lot of those, stringing them together. The thing that was really palpable to me was that later I found that there was a term for this, it's called sales ready product. And it was interesting when you hear about sales ready product versus MVP is that a sales ready product has managed to shorten the amount of story, the amount of product you have to show to complete a sale.

That's awesome. It's so cool to hear two really different stories of kind of how Intercom got started, how outreach got started, which I think are both equally valid. You know, a very product kind of internal focus and then kind of building it with the customers and making it sales ready. You know, when you're in that fork, because I think some people watching might be at that fork. You know, you did this incredible, you know, one to one selling that's truly inspirational. And then now you're seeing these company level deals. Did you worry that hey, there's going to be opportunity for somebody else to sell the bottoms up user by user model?

It is and it has. We're very exposed in the lower end of the market and we're now up to a point in which we almost look like, we look like we have two businesses. We have a mid market and sort of corporate and above business and then we have a corporate and below business and they have vastly distinct characteristics. You know, one has, you know, you know, relatively high churn. The, the expansion is a lot more beta, you know, has a much higher beta. The other one is a lot more repeatable and, and you have to optimize each of them separately.

And it's interesting because we went, we've gone through the same dynamic and, but with a, maybe a slightly different shape of the market. Like in my opinion, all markets have a shape and some markets tend to be more top heavy, meaning more of the profit and revenues in the top companies and some tend to be more of a long tail where a lot of the profits in the long tail. I think our value prop, which obviously helps companies with their customers, keep their customers, grow them by definition it's more valuable the more customers and revenue you have. And so when you're a young company you want to sell a lot, you want to market a lot, but you don't actually have that many customers. So honestly solution Gainsight is moderately useful but what we find is it's existential for these mid to large size companies. So for us we actually pretty early on we're like we're going to make our money off the mid market and enterprise and that's kind of what happening and shaping us. Which as you said has pros and cons to it. Karen, you know I think Intercom story is pretty different in terms of sort of the bottoms up versus top down. You want to click into what you've seen there.

Yeah, absolutely. And I see themes from what both of you have talked about with conversations we've had at Intercom as well. As you might imagine, one of the things that, that I am most focused on period is delivering value to customers and very much being clear to customers on tell them what you're going to do, do it and show them that you did it. And that is kind of the way that we've moved really from the bottom up market. And what we found is not dissimilar to what you talked about at Gainsight larger companies because they have many, many customers that they deal with and large, large volumes there that get so much value from Intercom that it does drive up ACVs in a pretty big way. And so we' massive traction in that mid market and enterprise at Intercom. In fact over the last eight quarters we beat every single one of our upmarket goals on the sales side including even beating all of our goals there from pre Covid. So we're seeing like we're generating a ton of value up there and at the same time we are very much dedicated to also continuing a self serve business for the right very small businesses. So one of the things that has worked well for us there is we have an early stage program where we work with different incubators and others who work with early stage companies and help them get started using Intercom, get value early and then we have much lower price points there and we really try to align our price to the value that our customers get and also try to then align the sales motion to that value. You obviously can't spend thousands and thousands of dollars acquiring a customer who's going to pay you $100 a month. So it has to be a very different motion that you use for the high end. And in fact a mid market enterprise customer almost will never want to buy on a Self serve, put my credit card in type of contract. So having the really the right sales motion that's aligned to the customer segment that you're going after is really important. And then aligning that price to value, it's great advice.

I think that either you do that or you have Manny sell every user one by one. Which I would, I would, I would take that. I think Manny, if you could sell all the Gainsight users one by one, I'll sign you up. The last thing I have. We'll just do a super quick lightning. Just one tip for getting outside of Silicon Valley in terms of customer base, because all of us, I think many, many startups gainsight, probably Outreach and Intercom, you start with other tech people and all that and you expand outside of Silicon Valley. And what's something that you think might be helpful? I'll share one to start, which is, you know, I think a lot of people either read Crossing the Chasm or know the concept, Geoffrey Moore's seminal book, and he's actually spent some time with us as an advisor and one of the things he's always emphasized is those people on the left side of the chasm buy because they want to be innovative, they want to be different, they want to be leaning forward. And as you get further along, people buy based on fear, based on what other people are doing. And so really learning to tweak the marketing message, I think is an interesting one. As you think about going outside of tech, Karen, how about from your vantage point?

Yeah, I'll share two pieces of advice. First of all, if you want to have a global business, have a global team. If you've got 100% of your team sitting in Silicon Valley, you're probably going to have a very Silicon Valley based business. So just think about that. Intercom from the start has been about 50% of our team outside the US and not surprisingly, half of our revenue is also outside of the US that's interesting. Second thing I'd say is really think about the verticals that you go after. So think about what the core vertical is that you're starting with and for Intercom and probably for both of your companies as well. You started very much with tech companies. And then think about what are the other verticals, what are additional verticals that have that same set of problems that you could solve uniquely well, and then go after them vertical by vertical, come up with tailored demos for those customers. Once you win one, that's a case study for you and land and expand from there. So Vertical by vertical really Focusing on where is there an important unmet customer problem that you can solve?

Well, that's great. Manny, any quick advice?

Yeah, from my end, the first thing that we fix is make sure that your value delivery has a very short timeline. Meaning to go from zero to ROI is measuring weeks, not in months. And then once you have that nailed and it's very repeatable and you can point to it at all times, then you do what Karen just said, which is looking for adjacent verticals in your space where you can deliver value as opposed to just going nilly Willy. I spent incredible amounts of time thinking about this crossing the chasm problem. And what I found is that each sort of industry and even each country has its own crossing the chasm moment in which there are people who are inspired by what you have delivered for others that they want to try it.

That's very well said, Karen.

I'm really interested in hearing, given that you are in the conversation space, what are the different strategies around these conversations and around meeting customers where they are that you have seen succeed at Intercom?

Yeah, absolutely. I'm happy to talk maybe about two different areas, conversational marketing and conversational support. And maybe just to step back for a second. Why is this important now? Why is it coming up now? And you've seen a real trend toward real time, personalized, one to one interactions. We all see and expect it in our lives as consumers. Like when you're going to reach out to a friend or a family member, odds are you're going to text them, you're not going to send them an email, you probably won't even send them a phone call, you certainly won't send them a letter. You're expecting something like real time and conversational. And the same thing is happening on the business side. And so customers are increasingly expecting those same kind of real time, personalized conversational relationships with businesses as they do with other consumers. Conversational support is probably exactly what you would expect as well. And that is a fundamentally new way of delivering customer support. And if you think about the traditional ways that companies deliver support today, it's using something like an email based tool or a form based tool where you submit something in and you're like, I'm not really sure when I'll hear back on this. And maybe you do hear back a day or two later and it's a question followed by another question and you're like, okay, well that didn't actually answer my thing. And there's this really laggy, asynchronous, like pretty bad Process when you deliver a.

Better in the moment, meet you where you are experience as a customer, what does the change the pre post like what happens after you start delivering more in time, more personalized support and how does that tie to success and then how does that tie to the the long term value of that customer over time?

Intercom's got about 30,000 customers and for all of our customers that use conversational marketing to engage prospects on their websites, when they do it increases their conversion rates by 82%. So massive increase in conversion by meeting customers where they are, which makes perfect sense. On the support side, we see huge increases in customer support satisfaction and efficiency as well. One of our utilities companies saw a 70% increase in customer support efficiency. So basically a 70% decrease in costs from using a conversational support solution. So both is higher conversion rates, higher satisfaction and higher efficiency.

And then Nick, what does that do to ltv if you bring in that kind of support in stepping up your gain in customer success, what does it do to your economics?

Yeah, it's interesting because when we, a lot of these terms can feel a little confusing. Customer success, customer support, customer experience, all these things, I think to an outsider that's not super nerdy about it like me and Karen, it might be a little confusing. So the way we like to describe it is we draw this equation to continue the nerdiness and we say CS equals customer success equals CO plus cx. The CEO is getting the customer to the outcomes they're looking for because Nobody buys a B2B product just to have fun. They're trying to do something. Outreach helps them grow sales and the conversational support helps them make their customers happier. What's the outcome? And then CX is what's the experience? And so fundamentally customer success about getting your customers the outcomes they're looking for with a good experience. And that then as you know very well, Manny drives that lifetime value for the customer. Like one of our customers is Splunk and they basically, I think a lot of people know Splunk and you know, they, they there's a lot of ways you can use Splunk, a lot of different use cases, security operations at the end. And they get paid based on the amount of data that's in Splunk. And so they want to accelerate that flywheel by customer buys for a use case. They deliver that use case, customer buys for more use case, just like you talked about with your time, about time to value and outreach. And so in Splunk's case, you can check out the stock, they've done incredibly well by just accelerating that flywheel through a good experience and through good outcomes.

Those are two terrific areas to be talking about there, Nick and Manny. The third area on my mind is around expansion, and this is basically building on all of the relationships of the customers that you brought in in the past. One of my very favorite SaaS metrics is net dollar retention and thinking about the inherent growth of your existing customer base that you get through retention to driving great upsell and cross sell and I think is a measure of a great SaaS business. So we'd love to switch over a little bit and talk more about both growth and expansion.

It's a really interesting topic right now in the moment of COVID because as you know, with the economy being a little uncertain, existing customers is your new new logo. Meaning you're not going to be hunting for new customers all that much as much as you are expanding on the customers that you have that are either getting tailwinds because of COVID or at least got a strong balance sheet and they can continue to invest. So from an outreach perspective, the customer engagement is about maintaining that relationship with the customer in a way that you're listening to their needs, you're listening to where they're growing, you are anticipating where the next problem is going to be. And I think there is here at outreach, we have an entire customer maturity model where we track their activities. So we look at what are they doing on the platform and we anticipate when are they going to hit a plateau in terms of production and productivity. And then we intervene to teach them the new parts of outreach that can give into the next level of productivity, into the next level of production by continuously monitoring the customer and continuously driving the conversation as to how do you get better today? And continuous to challenge yourself to say, what have you done for me lately? You continue to put yourself in front of the customer and driving that next new value, next new expansion for us, but next new value generation for them. The ROI is a continuously moving curve, which is not just what you deliver after you deploy, but it's what you continue to deliver every year for them. I think also for companies like yours as well and Nick's is you also have a product pipeline, and that product pipeline continues to build into your customer relationship. So as long as you're developing and deploying products that the customer is seeing quick ROI out of, then you not only get ROI out of original deployment, you continue to get ROI out of the innovations that you're bringing out to market. And then you deliver on your conversational intelligence and on your conversational support, and then you continue to deliver on the what's next after that and the different channels of communication, et cetera. So for us, it's the ability to see the customer not only where they are right now, but by where they're going to be and anticipating those needs and continue to deliver against that. In my mind, that's, that's great. Customer engagement.

In the old world, we could divide the world into like pre sales and post sales. And you could say it's something's a lead and then an opportunity. And then it's adopting, it's renewing, expanding in the new world that's also blurry together. You know, the customer's thought process on renewing starts when they, before they buy. You know, it's, it's this kind of continuous thing. And so I think it's harder because things are a lot blurrier in this SaaS world than they were in the old world. You know, obviously I think about customer success a lot, just maybe a little too much, given what I do. And, you know, I think there's just like a kind of a maturity curve for thinking about what customer success is. You know, in the, in the very tactical days when you're kind of reactive, customer success is literally customers not being mad at you. Right. Like, it's like, I just don't want them to be mad. And then eventually you're like, I want them to be actually happy, not just not mad. Right. That's a little bit better. And then, you know, then SaaS companies started saying, well, I want them to actually use my products. Novel idea. And then, then. But then what Manny said is true. Like, it's not just using our products. It's getting mature at the usage, it's seeing the value, it's getting sticky. It's adopting new use cases. And when you evolve as a company and a customer success team from the defensive, which is avoiding the problems, making sure they're not unhappy, avoiding churn to the offense, which is, I'm going to make them more mature, I'm going to make them more sticky. I'm going to have them see value. That's when you go from customer success driving renewal to customer success accelerating expansion. That's how you have a high net retention rate.

I love that. I always think about, how can I delight customers? One of the things that I think about most every day is like, how can we deliver more and more value to our customers so that our customers love every minute of getting to work with us, and we really, really delight them. And to me, that's the kind of deep customer relationships that you both described, is what drives both strong relationships from a customer perspective and also a strong business and things like strong expansion and retention over time. So thank you both really, very much. This was a terrific conversation. Lots of great ideas, great stories. Nick, Manny, hope you have a great day. Really great to hang out.

Thank you so much.

Thank you, Karen. Thank you, Nick.