Big Numbers from Small Customers: How DigitalOcean Accelerated at Scale | DigitalOcean SVP, Revenue

Thank you so much, and, you know, thank you to Jason and the team for having me broadcast here from sunny Colorado. As always, you know, privileged not only to be involved with SASTR, but always, you know, truly my honor to have such an esteemed audience as well. As was called out here, you know, I've had, I feel at least, an interesting career arc. Most recently at 3 companies that, that really do live and breathe customer accounts. I led our sales efforts globally at SendGrid, where we had about 80,000 customers. Then the go-to-market integration of SendGrid and Twilio, the acquisition, plus building out their mid-market segment where we had over 200,000 customers. And fast forward to DigitalOcean now, where I lead all of our customer-facing teams. And have the honor of serving over 600,000 customers with really, you know, the common theme and thread across all these is, you know, distribution of average revenue per customer or per unit, right, ASP, etc., but also really strong and efficient go-to-market machine. And what this does effectively across these multiple hundreds or multiple tens of thousands of customers is makes your customers have your best salespeople. So, you know, what is DigitalOcean, or what we term as DO? What do we do? To really boil it down, you know, we simplify cloud computing, computing for primarily SMB customers, you know, associated entrepreneurs and developers. That comes in the form of outcome-oriented solutions, right? So that those are built on foundational infrastructure. And these customers are all building all sorts of apps that you can see here. that you're using every day as well, right? So there's a good chance in your day-to-day life, um, that you are somehow, some way interfacing with DigitalOcean, as it was with SendGrid and Twilio in their past lives as well. So these include, you know, web apps, websites, AI/ML, you know, managed hosting services and hosting providers, as well as, you know, overall developer tools, you know, again, to advance the mission. Um, you know, the reason I love— why I love DO really we're able to empower, enable people to build their dreams on top of our company. Yeah, so what, right? Like you came here to learn about getting customers and getting lots of customers. You know, at the end, it kind of turns out that it's a math game. We all know that go-to-market tends to be very much like, hey, how many at-bats do we get? How can we get that hit rate up and then ultimately land and expand those associated customers? But if you start with a larger TAM, that math game becomes, you know, accretively and infinitely easier, just based on ratios. So as I mentioned, you know, we serve SMBs, you know, and there are millions and millions of SMBs across the globe that are underserved by many or most. And the compounding effect is that we have, you know, 14 million of new SMBs that are created globally every year. So if you kind of look at that, you know, from a perspective of, hey, there's 43 million developers out there, and that's obviously compounding every year, coupled with 100 million current SMBs globally and the 14 million of SMBs every year, the 600,000 customers I mentioned earlier, that really doesn't even sound like a lot. So we, we even at DEO, with that 600,000 customer base, even have a long way to go. And the reason they come to DEO is these customers, based on volume and velocity and kind of the way they do business, they just need different things. The Global 2000 enterprise is a very finite thing. I've sold into them and been an employee of many, or a few rather. And these, the SMBs and the smaller customers across the velocity business, You know, they, they're really longing for simplicity, pricing, and great support. And it's, it's really, in my mind, straightforward to think about, you know, especially if you put yourself and the customer at the nucleus of everything we do. So SMBs, you know, they're working with less resources, smaller teams, you know, they want to get their infrastructure and their apps and everything up and running quickly. They want to be able to focus on their business. And so when you kind of look at it internally and take an outside-in view, it's a lot easier to just say like, hey, have I made my product easy to use? And can the customer consume the way they want to buy? Do they know what their bill will be at the end of the month? Or is it a labyrinth of line items to decipher in a really frustrating manner that obviously imparts and imparts and inflects CX, customer experience, in the wrong way? Yeah. And then lastly, support, right? Like, my gosh. And yeah, SMBs don't have large developer teams. You know, they have a lot more challenges that arise every, every day, and they look for fast and personalized support. Right. So when you kind of look at the three major tenets, this is how I kind of segment for how we go to market and what are really our value prop is against, you know, again, some of the higher velocity and individual businesses that we have. So if you kind of like, you know, Jason M. Lemkin for this, but it's like if you enter Jason's favorite mantra, which is product market fit, we fit squarely in the middle, right? We fit there with our just right approach for SMBs, as I mentioned, right? Like because they don't have the need to spend and don't want the complexity of kind of enterprise-focused stuff. But we also don't have the fluff, but we don't have any monster gaps either. And that's, you know, completely dovetailed into those 3 earlier tenets that I mentioned on the last slide, you know, keeping it simple, transparent, and, you know, having outsized and over-rotated, if you will, support for your customers. You know, at SendGrid, when we were acquired, we had just released an Act 2 when Twilio came and bought us. And then at Twilio, obviously, we had over 15+ follow-ons as far as its product suite. And what you can see here at DEO is a similar path as far as like our product roadmap. And I want to make it very clear that, you know, our customer journey has effectively inflected and/or certainly influenced this. So, you know, we've layered up quite a bit. And it's not just about like the overall product fit. You know, it's about layering them on the right time with the right return for your ideal customer profile. As I mentioned, I mean, our product roadmap here in this case, many, in many ways mirrors the customer journey. And so we're layering on the right products at the right time, but also across the right use cases. You know, we started back in 2012 with a simple virtual machine that was really designed for a developer, an individual developer, and we've moved all the way up through through our serverless functions and premium droplets, you know, with databases, et cetera. So it's kind of allowing the go-to-market team to interlock, if you will, with the product team to really influence this overall arc of the product roadmap. You know, so it's not just kind of about me talking here, right? It's just like, oh, that's all great, Cliff. But you know, at the end, you know, here's the tail of the tape, right? Focus and conviction works. You can see the growth in the ARR, you can see a lot of the, you know, just kind of overall customer growth, etc. But one, you know, one thing I would, I would really call out to the forefront is the last bullet. You know, our customers that spend over $50, just $50, right, we're not talking about any countless here, etc., a month, you know, outpace our company growth. And the reason for that is they started small. and we held their hand through their own internal and value prop journey and made them successful with, again, that simplicity and support. Right. So you see, like, they, you know, their NRR, their NDR, if you will, is a factor higher than our lower spending customers. And so it all comes down to like, how are we holding their hand through their process and making them again successful with multi-product attach, but then also filling the top of the funnel with, with net new customers each and every month, which I'll get to in a couple of slides. Yeah. So you're all saying like, great job, Cliff. All right, that all sounds good for DO, but what does that mean for me? Well, there is a what and how coming up here. And at the end, it's not rocket science, but it does require a little bit of patience, but also like a very cadenced and calculated thought. And, you know, this is kind of The what for us, and potentially you too, should be around landing your customers, in our case, developers and SMBs, mostly SMBs, you know, with outcome-oriented messaging and prescriptive journey, right? And so that might be through FTOs, or free trial offers, or basic sandbox, right, where they're just like, playing around and, and really like trying you out. And yeah, I think an important concept that oftentimes in X as a service, if you will, that we shy away from is allowing that free trial or basic packages to become a rate limiter. Do not let that happen. We've seen many, many examples, not only in my own business, in our own business here, but across corollary businesses where they've really like used the free trial offer as a springboard and as an accelerant. And so if it is a developer or an individual, we encourage them to bring Dio to work and proliferate her experience across their place of work as well. If an SMB, it's that conversion of the FTO or free trial offer to paid that creates an uplift in overall customer value. And that point is a very key inflection where we expand via sales assisted, if you will, motion with more use cases, multi-product attach. Hey, have you thought about this? You know, learning really about the business and kind of their overall roadmap and goals. In a more pictorial way, you know, yes, this is the time-tested and, and true land and expand motion. But the difference here is this is, this is with efficiency layered in. Right. It's not just a traditional sales model for us. Okay, we're going to go outbound, we're going to hunt, if you will, and prospect customer lists, etc., bring them on the platform and expand accordingly. That does in many ways work with an overall enterprise because you have a finite limit, right? You have a Global 2000, there's a list. When there's 14 million businesses, you know, consumed, created every year, you have to get creative, you have to get efficient. And, you know, bringing in volumes of customers through our self-serve channel, you know, i.e., revenue marketing, is one of the key unlocks here. We bring over 30,000 customers a month in via self-serve. You know, think about that, you know, and sometimes I think about it like portfolio companies wish they had 30,000 customers total. And this is what we're doing in a month. Now, yes, again, at that lower dollar threshold, but we're using the stickiness in order to allow— in order to bring them on the platform as well as make them success, which I'll get to in a second. The difference, though, is we enrich with data every single customer that comes through that funnel to determine propensity and if they would benefit from a human touch, right? And if you will, sales assisted. You know, the other channel, of course, is like your full-blown sales channel, you know, because in a more complex world, your prospect needs the handling, and in some ways they're expecting it. So it makes sense to have sales layered in, in either, you know, for higher, higher complex technical aspects, you know, or bigger ticket potential and propensity over time. So, you know, those are two ways to get the customers in the tent. There's the highly efficient self-serve, if you will, revenue marketing, which should be highly interlocked into your sales plays and campaigns and value prop. But then, you know, once we get them in the tent, so to speak, you know, it's our job to make them successful. That's our job to grow their business. But it's also our job and go-to-market to grow the revenue. And this is a very discreet and deliberate motion. And that requires focus, that requires intent, you know, for retention and expansion. And so success, you know, here in this case, is to help the multi-product attach and adoption, you know, and overall success in the platform, right? We have a very finite team there to make sure that they are successful. We pour more and more customers on top of that bucket every single month. Then we have account management, of course, across the entire spectrum of the customer. And then support, right? I mean, do not sleep on support and the importance of it. It kind of goes without saying, but the flip side to that, or I would say maybe the dovetail to that, is support as a lead source is incredibly valuable. Our support function talks to more customers than anyone in our business. So why wouldn't we believe that, hey, this customer is looking to do X, Y, and Z. It's not necessarily a problem with the platform. It's actually like they're looking for help in order to grow with DigitalOcean. So if you kind of look at this in a real-life example, we had a customer that came in, and I have arrows pointing here accordingly, with $100, or in this case, $276 to spend, to be exact. And they came in and said, OK, I'll try out DigitalOcean. And we spun up a bunch of droplets, which are virtual machines, and said, OK, we'll dabble around. We insert a little bit of triggers with our revenue marketing team to say, hey, this is a real customer that could benefit over time with adding load balancers. Forget the technical jargon. These are just additional products to help the value and help streamline their business. So add, you know, so, oh, that looks cool. We'll add load balancers. This is without any human interaction, by the way. And it's like, okay, this is, you know, through digital nurturing. This is through the efficiency funnel that I mentioned earlier. Then, oh yeah, we need a database. Cool. And that also came in through digital nurturing. And then it became very, very clear, you know, this is a customer that we can help inflect their journey. We can help become more efficient and optimized and layer in a sales-assisted touch. And the rest is history. All right. So then we had Kubernetes, we had both, both aspects of storage and then our container product a year later. I'm sorry, just about a year later. Over, over time. And when you look at it from how that increased the MRR, this customer went from $276 to spend to over to about $200,000 a month over the course of about a year and a half, or maybe 2 years. And so the idea here is you don't have to layer on sales on every single customer, but you should layer on sales where it makes sense. And if we're doing the right work or doing the right enrichment from a perspective of propensity, you know, it will become highly efficient. And there's a continuum, or if you will, an end-to-end view of how the customer perceives the platform and comes in via either self-serve or inbound to their overall customer experience, you know, into support. And then round and round we go, right? I mean, you know, support tickets, yes. And this customer is looking to do XYZ. Can we do that? We bring in technical knowledge. And then, you know, increase credibility and trust in order to, to grow them on the platform. So the net-net, you know, is lots of customers in, keep the customers, grow the customers via, via a very deliberate success motion. Yeah, so to kind of boil it down, and then we'll open up to questions here. You know, don't be afraid to look beyond enterprise. As you saw, or, you know, in my past, I've worked across, across many segments. And SMB is, you know, again, that high velocity, but also is expecting a different value prop. And, you know, when you look at kind of your customer segmentation and/or how you go to market, you know, don't typecast ourselves into, you know, what we feel our go-to-market structure should be. Take an outside-in look to your customer's journey on how they want to consume. And then, you know, that'll be an eye-opening eye-opening experience, I believe, as it was for us. And then lastly, you know, just, just a friendly reminder here, like, empowering and enabling your customers' success will just help grow them over time. It's a fairly obvious statement, but, you know, the sale starts after the, you know, after the pen is— the ink is dry, if you will, right? That's where the real sale starts. We've landed them, we've done the hard work, And, you know, I kind of always impart my team, like, we've done the hard work to land them on our platform. They've trusted us. And now the real work begins to, to make sure that they stay and that they're successful and continue to build credibility with our overall teams. So with that, that's what I have to impart today. And, you know, certainly open here to Q&A.

Perfect. Thank you so much for sharing that. We do have some questions in the chat. DigitalOcean has successfully moved globally. What do you determine has been the largest factor in this growth?

Yeah, well, in our business, you know, there's a, there's a couple things. We have a follow-the-sun model with regards to our support, right? Then that is not inconsistent with, um, kind of a few, a few mentions of support not only being a lead source, but, you know, uh, paramount to the overall customer experience. So they understand, their customers and prospects understand, you know, the support in real time and not just a, if you will, North American-centric 9-to-5 view. The second piece is, you know, we have face-in-the-place go-to-market, we have our regional marketing teams that are really, really driving brand awareness, but also like the value and use cases as they pertain to different regions. right? What, what, what works in San Francisco, you know, does not work in Bangalore, right? And so we're, we're really layering value there. And then thirdly, you know, there is a level of infrastructure, there is a level of expertise and expectation that we want, you know, data residency and latency to be as close as possible to, to where a particular customer is headquartered. So we say those are maybe the 3 major, major tenets there.

Thank you. That was a super clear way to lay that out. We have a question about sales. How is it determined when sales gets involved? What triggers sales-assisted? I'm trying to understand what tips or frameworks you have for others going through the same thought process of when sales or human should get involved.

Yeah, it's a good question. I mean, every company struggles with this. Every company that has a self-serve engine, if you will, or do-it-yourself type model, sign up, et cetera. What we've done, and by the way, there was another SaaS webinar. Gosh, it was with Asana, but around layering sales on top of sales, sorry, sales on top of self-service. And at the end, you know, what we do is we really look at that data piece and what I mentioned across that 30,000. If it's 30,000 or 3, it does not— the number does not matter. It's every customer that comes into your funnel, no matter what the source, we should be applying data enrichment to. And by data enrichment too, I don't necessarily mean AI/ML. It can be human, it can be by any means, but taking even something as simple as a Gmail email domain can give you a lot of information. There are a ton of tools out there to allow you to understand if this is a business, where's their market and what are they doing? So at that point, when we do that data enrichment, we capture all the firmographic information, if you will, That's where we make a decision on if you will sales assistant or not. That's the human way. The automated way is, okay, this customer is growing, right? Like this customer has bought one product. They've been $5 or $50 for 3 months and now there's $100, $120. It's a very simple and easy trigger to say this person and this customer warrants a phone call. And they're probably not going to be $55 or $50 per month. There's obviously some, some inflection point that they're going through. Reach out, find out what's going on with their business. It's not a sales call. It's, it's discovery. And in order to grab some data around, okay, what, what's going on, what, why they increased value.

Great. A follow-up question. What is your tech stack to enrich those leads data points?

Yeah, it's a fair question. We use a number of different things. I would say the, the 3 major ones are LinkedIn Sales Nav, ZoomInfo, Crunchbase. So those are really the 3 major, yeah, 3 major tech and tools. You know, I always anchor on people, process, tools, technology. Tools is one of those that can really make a difference across how you look at that. You know, and by the way, it's not just for your own business, it's for your customer's sake as well. Um, you know, especially if you're in the rich of data and you feel as though, okay, this is not necessarily— they, they will appreciate you not wasting their time by, by picking up the phone. Um, as opposed—

and, you know, in addition to obviously becoming efficient, this leads really nicely into the next question. How are your customer service and support teams customized to to support SMBs?

Yeah, they go through a rigorous training on an outside-in 360 view of what it means to be an SMB. And, you know, so a lot of where we look at, you know, kind of our individual success and support, they are different. But, you know, for the sake of the question, I'll lump them together. Success and support is, and it's very simple, pretend you own a business and you want to do business with DigitalOcean, you've run into an issue or whatever. What does that mean? How do you want to be treated? And then what are expectations as far as SLAs, SLOs? Believe it or not, the SMB just needs an answer faster. Because in many cases, being, if you will, a utility "infrastructure," we always take the viewpoint that we are the utility. We have to stay up. If things go awry, either by our own doing or customers or miscoding or whatever, we have to support because their business is reliant upon this infrastructure. Much like, you know, this phone call, this Zoom call is not, you know, possible without power. And so it's the same sort of attitude. So we take a very customer-centric, empathetic approach.

Yeah, that sounds like quite a great training. We have a question. Which team does the non-sales discovery call when growth trips the wire?

We, we have, it's interesting, you know, we, we do a couple of things. The, we do it either via our onboarding team, right? So they're already a customer, right? I mean, it's not like this is a net new prospect, if you will. So their customer and this onboarding team, they're really charged with finding out the why. And so it's not necessarily— we have a team of 30 or so, you know, again, they're also doing that data enrichment, by the way. So there's continuum there. So they're empowered to say, hey, like, tell me why, tell me why this product and why this multi-product attach, etc. And customers are very open about it. Yeah, because you're not— again, you're not trying to sell anything, you're trying to understand. And they understand that, you know, you're capturing value. In order to inflect, again, as I mentioned earlier, interlocked product roadmap. And that's a very important distinction. It's like, hey, I noticed you're growing, what else can I sell you? Versus, I noticed you're growing, tell me why and tell me how that's inflecting your business. And there's a mutual understanding and appreciation for caring about their business and why they're growing as opposed to, you know, the next Swiss bank.

Agreed. People just want to be heard. Lots of companies, including DigitalOcean, struggle initially with adding sales to their self-serve motion. What are the most common mistakes you've seen?

Yeah, I mean, I've been through 3 of them, right? With SendGrid, Twilio, and DigitalOcean. Unequivocally, it's the The biggest mistake is just a lack of orchestration and communication around the customer journey. And that starts as simple as, okay, we brought a customer in and sales globs themselves onto it or whatever, using somewhat dramatic term there, and takes it, quote unquote, takes the credit to something as simple as a campaign orchestration. Yeah, we might run a campaign on X, and the salesperson's talking about Y, and the customer opted out, but we call them something else. And so that's that kind of orchestration coordination layer that can be lacking. Thankfully, I've worked for 3 companies where we've shored that up very, very quickly, and excellent partners in our, in our revenue marketing stream across that. But it is a, it is a very real thing. So I would say overall coordination and orchestration and making sure that the end-to-end experience is shored up. You know, in my world, you know, our SVP of Rev Marketing is, is, you know, we talk 5 times a day, right? And we're making sure that we're, again, coordinated at the 10,000-foot level so that our teams can execute and execute with efficiency, but then also execute without confusion.