Live from SaaStr Europa 2022: Workshops with Payhawk, FastSpring and Zendesk

Please welcome Payhawk SVP Global Sales Paul Albert. Hello, SaaStr! Um, number one, thanks for having us here. I'm really excited to be able to speak with you guys and happy for all of you to join us. So again, my name is Paul, the guy up here. I joined Payhawk in January of of this year, just as we received our first part of our Series B and the purpose of growing, growing the company. When I joined, we had 32 people in the sales organization. In plan, we've gotta get to 240 by the end of next quarter, and that's in 5 different markets. So that presented some challenges, right? I had to think about things in different ways than I had done before. So what I'm hoping to do today is just walk you through some of the insight of the thinking that we've gone through as an organization, to build a foundation to scale as well, to be able to do that effectively, efficiently. 'Cause as everybody knows here, growth at all costs ended about 2 weeks ago on Tuesday, and now we're more, more into the efficient growth model, right? Um, thankfully, Payhawk, we always had that as, as a fundamental to our culture. Um, I'm gonna break into a, a, a part where I'm gonna ask you guys to do some work, uh, 'cause I'm interested to see what people do. So you're gonna ask people to be able to move closer together in some cases, just give you a, a heads up. Um, and other than that, let's just try to have some fun. So ultimately, from an agenda perspective, I wanna talk through, number one, you can't do this alone, right? You, you're gonna have to build partnerships. So Payhawk, if you don't know, was founded in Sofia, Bulgaria. Uh, we're the first Bulgarian unicorn, which we're super proud about, but we've had offices in London, Berlin, Barcelona as well, and have just opened up offices in Amsterdam and Paris. That creates a unique challenge in itself because there's different legal entities, there's different employment laws, there's different, different, different. So there's— it's not just one market, which would be hard enough, but when you do it in local markets, it's, it's difficult. Then we had to focus on the hiring process. So how do we partner? Then how do we actually hire people? What's our purpose? How do we do that? Then, as everybody knows, it's been a really competitive market. There's not been one job offer we've done and we've more than tripled the sales organization from 30 so far to right now, that we didn't have a competing offer in place. Everybody has had a competing offer, so we had to really compete to win. And then ultimately the, the next one is, is there's no point in hiring a whole bunch of folks if you're not setting them up for success, right? So we wanna think about that a, a little bit. Um, so starting off with, so from a partnership perspective, um, the first thing we had to do is really understand our culture. Right? If you don't know your culture, you're not gonna find good partners. It's just as simple as that. If you don't know what you value, how do your partners gonna know what they're gonna look for and value? And more importantly, what do those partners have? Because when you think of a partnership, a partnership from my perspective is having difficult conversations often, right? Making sure that they're not a vendor-client relationship with your recruitment agencies where you're just paying them cash to put bums in the seat. That you're actually getting people that genuinely want to help you find the right people that have the right approach for your organization. And at Payhawk, we're really lucky because by our definition, our culture is defined as a professional sports team. Our goal is to hire great A-level players or B-level players with a high potential to become A-level players and put them in the right position, coach them, enable them, train them, and equip them to be able to succeed. So we knew our culture, so it was easy to be able to share our culture with our partners. So they knew how to be able to articulate the value proposition, uh, the employee value proposition of Payhawk with, with prospective candidates that were looking to join us. But also we had to, we had to interview a ton of agencies, right? In each of these markets, we went across, went through a network and interviewed a ton of agencies to find the people that most aligned to our culture, to our core values. Then we started really trying to figure out prioritization. So when you look across that 240 people, that's comprised of business development representatives, junior AEs, account executives, mid-market enterprise account executives, customer success, customer support. There's a lot of roles. So you've got to figure out where you can get the biggest bang for your buck as quickly as possible that aligns to your revenue plans for the year. And supports your existing customer base to make sure that you're maintaining high net revenue retention, right? So looking through that is definitely something I think that I'd never done before in a scale like this of having to think through all these markets and prioritizing on a market level of what you want to be able to accomplish based off the individual market nuances. Sorry, is there a question there?

Yeah, yeah, I was wondering what type of local agency are you talking about?

Hiring? Yeah, recruitment agencies, right? Recruitment agencies. So you mean we're, we Payhawk was 70 people when I joined in January. We had 2 people in our people's team. There's no way 2 people could hire that many people, right? Um, plus you wanted like doing this at scale and doing it at speed, finding people that had networks. So those agencies are, are recruitment agencies to be more specific. Thank you. Um, and the, the last part is, is automating what you can, but doing it with a human element, right? There's nothing worse than giving the candidate a bad candidate experience of automated rejection emails or things like that that you can automate, but you probably shouldn't, right? So we really wanted to look at then automating triggers for myself or other execs to be able to call each and every candidate that gets accepted offer to welcome them to Payhawk. So that's what I call human automation. So we get triggered if we're not involved with the interview process, to make sure that we're then speaking to those candidates and helping them cross that boundary from their current position to the Payhawk organization. So, you know, this next part, though, I think is where I'd like to get you guys to just work. So just in the tables that you're in, if you wouldn't mind, and I'll walk around, walk with you guys. One of the things that we had to think about is from hiring is what are our core characteristics, right? What are the things that are going to make people successful for an individual role. What's different between a business development representative to a junior account executive to a customer success person, right? Each one's gonna have unique characteristics that are, are indicators of success. So we had to sit there and figure out what are those core characteristics, right? And so I'm gonna talk to you about how we did that. But what I thought would be interesting, uh, for this group is on each of your tables, if you just bunch in together and from a business development rep, Everybody familiar with a BDR, what a BDR does? Or is anybody not familiar? Probably that's a better way to ask the question. Is just within your table, what do you think are the 4 top characteristics of a successful business development representative? I'll give you 5 minutes just to run through that. I'll go to each table and just see what you guys say, 'cause I guarantee it's gonna be interesting. So if we could just group together, I'll come down and talk to you folks. I've got a microphone here. but just think about for a business development representative, a BDR, what are the 4 top traits that they're, they're gonna need to be successful? Is it gonna be persistence? Is it gonna be coachability? Those might be 2. I, I'm really interested to hear from other folks what you guys think would be the critical characteristics for someone to be successful in that type of role. Everybody game with that?

Yes.

All right, let's do it. [FOREIGN LANGUAGE] Hi folks. Hi, I'm Paul.

Hi.

Sorry to put you guys Okay. All right, so we're about 15 minutes in, and it looks like there's a lot of conversation happening. I've talked to a few tables here. I'm gonna bring this mic around, so I'm gonna ask for any volunteers who've come up with the 4 definitive characteristics for a successful BDR. Has anybody accomplished that goal? Nobody? Come on, there's gotta be someone here that's pretty close. 30 seconds? All right, 30 seconds. So we've got one over here, so you guys keep going. We've got someone over here. All right, here you go. Right, okay, so this applies to us, so it might be different for other people. Sure.

But we went for determination, we went for empathy, we went for resourcefulness, and we went for curiosity.

Solid, really solid. Awesome. Anybody else? Who's next? Well, we're not there yet, man. You gotta have some patience. Yeah, yeah, yeah. Anybody else? I think just one or two more tables would be really interesting to hear from. So here we go.

Building on the former speaker, I would say processor power is one, and coachability, as well as best Business acumen or interest in business in general.

Yeah, I totally agree with those as well. And there is one other group over here.

I would have said active listener to better understand.

Well, what's that?

Sorry, active listener.

I'm joking. Sorry, that was a dad joke. Dad joke. I can't help it. All right. And there's one more over here, I think. Yeah. You ready?

You ready?

All right. Easy now.

Hello. So we come up with grit, coachability, resilience, and competitiveness.

Fantastic. Fantastic. Really good. And what I like is that there is some common themes, but there's a lot of variation, right? There's a lot of variation in between the teams. And as our team, like my head of sales, my CEO, myself, and our head of success started thinking about this, We're like, how do we figure this out? What, what makes it unique for us? What, what are the characteristics that are gonna prove successful for us? So what we did is we listed out 20 characteristics. 3 of us then graded all our BDRs based off the scores of those characteristics, did some light regression analysis, and tied that to success, quota attainment. So we then coordinated a little bit more based off data to be able to give us a steer of what's important for Payhawk. 'Cause what's important for us is not gonna be important for you all the time, right? What makes us successful isn't necessarily what's gonna make you successful. That's one of the things I learned in my second leadership job is what worked at Company A didn't exactly work at Company B, right? You had to, you had to, you had to mold it towards that organization 'cause each organization is itself. And that's why understanding your core values is super important. Then we spent a whole bunch of time figuring out the interview path. How do we interview? How do we question this? Right? How do we figure out, how do we uncover these traits? How do you uncover coachability? Mark Roberge's book, The Sales Acceleration Formula, highly recommend. That's where I learned about the regression analytics. I'm taught, for example, with coachability that you take somebody through a role play, give them critical feedback, ask them to do it again, and see how they incorporate it. Really good. My newfound way of talking about intelligence, processing power, One of the things we do with BDRs, as an example, is we give them a scenario. You've got 4 leads from 4 different verticals. How are you gonna prioritize going after those and why? See how smart they are. See how they assess it in a real-world application, right? So we're, we're testing multiple things and we, what we try to do, for example, in the role-play exercise is test how prepared they are. Do they come to that call prepared? Have they researched the persona? Do they know the company? Do they know the competitors? Right? We're testing multiple things in one small instance to be able to shorten the interview process, cover those key characteristics, and then every 6 months we go back and we do that regression analytics again. Well, we're gonna do it in another 3 months and stress test it to see if things have changed, right? So this is an always-on process and we're doing this for every role that we have at Payhawk. We've got 4 key characteristics. If you listen to our founder's, in his speech yesterday that are across every role in the company. Work ethic, intelligence or processing power as they now call it, coachability, low ego, as well as data-driven. Everybody at Payhawk needs to have those 4 characteristics present and then an additional 4 per role, right? And so the additional 4 per role, so we know people fit into Payhawk as an organization and they're gonna fit in the wider group, the us, our culture, and then 4 specific for that. And again, this is evolving based off feedback, and that feedback has gotta be data-driven because one of our core characteristics is what? Being data-driven, right? So we wanna use data because we need to put our, you know, we need to live by our ethos, drink our own champagne. Now, winning in a competitive environment, I mean, there's a couple of key things that we found here. One is, If anybody's read Simon Sinek, Start with Why, or if you haven't read it, you should read it. Uh, because 100%, why, why join Payhawk, right? Why Payhawk? Why should they do that? Why Payhawk instead of all the other great companies that are present here, right? And that's, again, back to your culture, back to your core values. Are you attracting people that align to your mission? Do they believe in what you believe? If they believe in what you believe, they're, they're gonna be a much better fit. They're gonna row a little bit harder. They're gonna push a little bit stronger, right? But also we had to really focus around, uh, principles around career development. Uh, the other part, part of this is also transparency on what good looks like, right? So at Payhawk, for example, you've gotta be enrolled for 9 months. You've gotta hit quota the last 3 months in a row to be able to apply for a new position. Doesn't mean you're gonna get it, but we're gonna fill 50% of all positions through internal promotions. So that's a principle that we have within the organization to be able to foster career development. At the same time, we say in the first 3 months you need to achieve this. In 6 months you need to achieve that. If you don't achieve that, here's what happens. Right? So everybody knows what good looks like and everybody knows what happens with underperformers. So transparency in that, I find, is one of the most crucial elements to maintaining a healthy culture in a sales organization. Making decisions behind closed doors because of, you know, without people understanding the reason why, the principles of why you're making those decisions, leads to distrust, which leads to people just not pushing as hard as they should, right? Competitive market. We wanna attract the top 1% of talent. You gotta pay for it, right? You gotta pay for it. You gotta have the right salaries. You gotta be competitive in market. And understand and constantly measure and market where your salary benchmarks are to make sure that you're offering the right rates, right? Um, but you also have to, you know, people nowadays want to work for good companies, right? They want to do good. B Corp, right? We're, we're fast on our path to becoming that. We think that's super important. We're, we're actually, we've lost a few candidates, uh, to green tech companies and we fully supported that because their values align to that. But we want to make sure what we're doing is, is helping, helping the world in a, in a better, uh, to become better. Um, the last point is just really on this one because we're— the time is starting to count down— is, um, as I talked about before, we're leveraging leadership to help drive decisions on, on individual roles. So whether it's a BDR, they're getting a call from either head of sales, myself, or the CEO to be able to welcome them to the company or help them understand if they're in a competitive offering. Because we're all in it together, right? There's no— like someone mentioned before that this is a junior position. The way I look at it is this is the most important position. This is a future life of our organization. The BDRs that come into our organization, we want to keep them for 5, 7 years. We want to grow their careers. We want them to become the future account executives that we want to have them to be the people making the most money in the company. If we do that, we're going to win big. right? And so we've gotta focus on making sure that the candidate, that the employee experience for people is, is paramount and it's not treated as a junior position. It's treated as probably one of the hardest jobs in the company is to be a BDR, right? And, and we want to help support them. Then, you know, so some of this stuff that we talked about before, um, in setting starters up for success, I talked about, but Um, in terms of number 2, the framework, but one thing that I've seen in a lot of companies that hasn't worked well, and I, I think, uh, needs to be a focus is the force multiplier through leadership sales enablement. How many people have sales enablement as, uh, as a role within your organizations? Most of you. Yeah. Anybody have leadership enablement? Anybody teach leaders to become leaders, coaches to become better coaches? Anybody? Yeah, one. Awesome, two. Fantastic. I wanna see more of that. Because if you think about it, you've got a leader that's got a team of 4 to 6 people is what we try to operate under. That person can stand on this side of the seesaw and lift that group up, right? So if you've got the right operating cadence where you're having the right learning huddles, the right enablement sessions with your team, with your leader being an effective coach, You're going to get a high, high further output. So it's a bad English. The output's going to be much better, right? So one of the things that we're really focused on is ensuring that we're putting a leadership development track in our career development plan and teaching leaders how to become great leaders or good leaders. Also teaching them on how to coach, which I think is super important and something that's often overlooked in organizations. And we want to create a culture of coaching, but they don't coach the coach. The coach doesn't know how to coach, right? And a lot of times, especially in sales organizations, you've got an account executive who's shit-hot, pardon my French, and they get promoted to a sales manager role, a sales leadership role. They don't know what they're doing. They think that they need to do what they were doing, and they're not doing close selling, right? They're not doing coaching sessions. They're not spending their time on areas where they can be the force multiplier to be able to drive more output from their sales organization. And really at the end of it is, if you really, really want to see the top takeaways, is know yourself, right? Know your culture and stick to it. And if something changes, transparently talk about it with your organization. The other thing is explain it like I'm 5, right? If you can't explain it to a 5-year-old, and I've got a 4 and a 6-year-old, so I do this a lot. You don't know it well enough, right? And it is really that. So in thinking about that through with your team, as you're growing a team so quickly, if you don't know it well enough, how can you expect them to know it, right? If you're onboarding so many people, if you, in your mind, it might be super clear, but if you can't explain it like a 5-year-old, then your people aren't gonna understand it. So my suggestion is to over-communicate expectations, Often, right? Keep, keep, keep, keep talking about it, right? Keep talking about it until you're sick of hearing it, and that's usually when the message is landing. And it might be something so simple in your mind, but in their mind it's not because they're, they're going through a lot of change. And then the last one, and this has been super difficult, um, hiring in Germany is not equal to hiring in France, which is not equal to hiring in Spain, which is not equal to hiring Amsterdam to not equal to hiring in, in Sofia in Bulgaria or to England or the US where we're going soon. We know that each of those markets are unique and we've gotta treat them uniquely, right? So what we're trying to do is keep everything at least to 70% standardization across the organization with 30% flex for localization in market. And that includes from a hiring perspective, cuz local market nuances need to be addressed, but you still wanna have the data model to be able to make sure that everything makes sense. At the end of the day. So thanks for coming to my talk. I'd love to open up for any questions if anybody's got anything. Hopefully you guys got some value from today. I had a ton of fun with you guys, and yeah, thanks. [FOREIGN LANGUAGE] Yeah, absolutely. Well, it can be, but diversity doesn't mean the characteristics don't define diversity, if that makes sense. So, so for example, the BDR function, we— one of the key things we look for is prior success. And prior success is, uh, anything from being a bartender. We hire ex-athletes, professional athletes. We hire people from recruitment agencies. We hire— people don't need to have SaaS B2B sales experience to join. So we're not hiring robots, right? We're hiring a diverse group of people from different backgrounds, but that have shown prior success in doing what they do. That could be academic success. We've hired a chess champion. So we're looking for diversity to be, to be able to make sure that that's not something you do do. But what we wanna do is make sure that we know what the core characteristics and traits of that person that need to be successful in that role. Perfect.

Yeah.

It might be a side question, but as you grew your team, you might have to— Thanks. As you grew the teams, you might have to also expand the support function to be able to scale in these teams.

Yep.

How did you coordinate, or how did you plan this side recruiting to make sure that they could support your teams?

So if I understand the question correctly, is it our internal teams to be able to support that, or is it like—

because we're talking about sales people, but maybe marketing or Biz Ops or these kind of things?

Yeah, I mean, we're hiring across the board. So there's definitely from our ex-CEO staff is aligned on hiring plans and supporting roles that are needed to dependencies. For the different departments that have ownership over that to be able to ensure that we're scaling at pace. So we do that through cross-functional workshops where we align initiatives that are detailed and documented that we read first and then we debate a lot of times very aggressively to find what the right answer is for the business and then figure out what the headcount needs to be and then again, prioritize roles based off what we need to do. So there's, it's, It's not always smooth seas, right? There's been a lot of mess, right? It's a messy thing, right? But we're constantly tracking towards, and the trajectory I think is in the right direction. So building out our enablement function to be able to help support and rebuild our onboarding program, training people on certifying on product, on how we do our sales motion, on all that kind of stuff. We're doing everything at once. So there's a lot of people running. But because we're aligned through OKRs, everybody's running in the same direction.

And if I ask a second question, so in terms of span of control of your manager, did this evolve over time?

The span of control over a manager?

Your manager, your sales manager?

Yeah, 100%. I mean, in early days, there were player coaches, right? They had a quota and they had a team quota. And that's a really hard place for someone to be because it's hard to do two things well. So we've really moved that towards being pure leadership and provide the leadership training through external coaches and trainers, as well as, you know, the whole operating cadence of how we work to make sure that we're trying to track towards the right outcome.

Thank you.

I think we've got a minute left, so if there's any other questions, otherwise we can— oh, there's another one, another two.

Thank you. I have a question around the BDRs.

On one hand, you want good BDRs to be in the role for a while and produce results.

At the same time, you want to probably promote them to the next step if they're really good. How do you balance those two needs?

Yeah, good question. So the first thing is we're over-indexing our BDRs heavily depending on the sales motion. So we've got 3 sales motions, you know, small business, mid-market, enterprise. Um, and, and so within that, depending on what we're organizing through sales pods, which are many sports teams basically of BDRs, account executives, and customer success. So what that means is, uh, there's some efficiency baked into this. So if based off our headcount and quota attainment, we can spin up new pods, which means that we've got new positions that open up. And that's where the people need to be in a role for 9 months, achieve quota for the last 3 to apply for a promotion, of which 50% of new roles we look to hire from within. So there, there is a combination in that and it, but there's the expectation's been set that just because you've hit quota last 3 months, there might not be a position open, right? But you've gotta be in a role at least 9 months before you can apply to something with the last 3 months showing success, right? So there's, we're trying to really counterbalance this to have the underpinnings of efficient growth based off attainment and not just throw a whole bunch of bodies at the problem, but really systematically trying to attack it.

I was just curious in regards to the PDR role, how much do you value previous experience in that specific role?

For our enterprise BDRs, 100%, they need prior experience. Otherwise, we're looking around 40% to 50% of all roles from hiring from adjacent industries or straight out of school.

Okay, thanks.

No problem. Excellent. Well, we're a little bit over, so I think I'm getting the plug pulled on me. Everybody, thank you very much. I appreciate it. Enjoy. Cheers, guys.

Please welcome FastSpring VP Product, Kurt Smith.

So last week my 5-year-old graduated from preschool. To celebrate, yeah, yeah, give it up, Maisie. To celebrate, I took her to a toy store. We walked in and I said, you can pick out anything in the store that you want. I think it was both the most exciting moment of her life and the most terrifying. I think this is a pretty decent analogy to pricing. Why is pricing so hard in SaaS? Today I'm gonna talk about a few things that I've learned along the way, and hopefully leave you with at least one thing you can learn and go and implement in your businesses. But ultimately, the reason SaaS pricing is so hard is because there are an unlimited amount of opportunities in the way that we do these things, right? There's PLG, there's freemium, there's free trials. Ultimately, we're selling a product that has very low marginal cost, which makes pricing opportunities almost limitless. It really is confounding that pricing can be such a massive opportunity for us as businesses, but it's so complicated that it quickly becomes very, very overwhelming. Simon Kucher did a survey a couple years ago of private equity firms that had looked at different value-creating initiatives. and I've seen other surveys that have similar outcomes, pricing is generally considered one of the most impactful things that we can be doing, but we're consistently not spending a lot of time on it. ProfitWell a few years ago had a study that showed that over the lifetime of a business, they— people generally spend only 6 hours researching and, and understanding their pricing. So we really live in this world where there's this massive opportunity, But we don't spend a lot of time on it, which leads me to my first takeaway, which is, you know, I truly believe that pricing's the most routinely under-optimized lever in SaaS. And so today we're gonna talk about two ways to think about pricing. There's strategic and there's tactical. Let's jump into the strategic. So first of all, I think that there are four different types of SaaS companies. If you think about the price point or the deal size, relative to your TAM, there's kind of these 4 different dimensions. If you're selling something in a low velocity cycle at a low price point, and you're in a relatively constrained market, this is not a good place to be, right? You need to be investing in moving up or to the right. But if you're in a large horizontal market with a huge TAM, and you have a relatively low price point, you need to be investing in lowering your CAC. You need to increase your velocity. So as you think about strategically positioning your pricing model, it needs to prioritize velocity and reducing friction. So high price point with a small vertical market. Think of this like enterprise SaaS, generally speaking. Here you've gotta demonstrate a high ROI. These are mostly ROI-based decisions. So as you optimize your pricing model, around demonstrating how the price that's being paid is coming back in the, in the form of business value or ROI. And then lastly, large horizontal markets where you are primarily selling large deal sizes. This is about innovation, right? These are really, generally speaking, rapid growing businesses. And as you think about your pricing model, it has to prioritize kind of growing through innovation. And accelerating kind of the reinvestment cycle back into your business. So as you think about these unlimited opportunities in pricing for your SaaS, you know, one of the most common models that we see is kind of the good, better, best, or pricing with tiers. So I like this example because I think it articulates why SaaS can be so compelling. So why do tiers work so well? Why does the good, better, best model, generally speaking, work so well? Works so well for SaaS? Well, it's because you can very specifically do your pricing and packaging to target a needs-based segment. So when you're doing tiered pricing model really effectively, each tier is targeting a specific segment or a persona in your market. And those segments should be needs-based. So the way to think about it is you map your tiers to your personas. And you map your personas to needs. And so if you haven't done a needs-based analysis, that's the first place to start. But ultimately, I want you to take away the fact that there are unique benefits to selling SaaS, right? These low marginal costs that we all live in is really unique and special. So make it work for you and how you think about pricing. So what about things that don't fit into tiers? Right, or add-ons. I saw this quote recently that really kinda encapsulated my thoughts on the matter, which is, you know, "Everything I need is in one tier except for that one thing in a second tier, but it's not really worth upgrading to that next tier." Wow, that's a really poorly designed segmentation if this is the problem that you're seeing over and over again. So there's really two rules of thumb when you think about add-ons. The first, in order for you to charge for an add-on, customers have to understand that there is business value in that specific feature. If it is a commodity or a table stakes feature, that should not be sold as an add-on, right? The second is it has to be interesting or compelling to multiple personas. If you design your tiers targeting a specific persona or user segment, and an add-on or a feature can kind of apply in different use cases across those tiers, that's usually a really good indicator that you should charge it as an add-on, uh, into your pricing model. Let's move on to usage-based billing, right? A very hot topic. I have a bit of a, um, contrarian take here. Which is usage-based is just a new flavor of the day, right? What we're really talking about when we think about usage-based billing is how you define your value metric, right? The units by which you price your product. And, you know, the most common value metric is seats or users. And I would argue that is in essence a version of usage-based billing, right? So why is your value metric so critical? Ultimately, it's what helps your customers or your prospects link value to your price, right? We all know that intuitively. But if we think about value-based pricing, the value metric is absolutely key. It ultimately determines how much you can monetize, right? So how do you do it right? The first thing you have to do is you have to link the pricing metric to customer success. So this notion of value has to be defined by the concept of your customer's success, the outcomes that they generate from using your product. The second is you have to make it simple. So what does that mean, right? It has to be easy to understand, easy to estimate, and easy to forecast. If you're pricing off of a value metric, that can fluctuate wildly, how do you expect your customers to budget and forecast? At the end of that budget cycle, you're probably in for an unpleasant surprise. So when to start thinking about usage-based billing or usage-based pricing? Well, my view is, you know, right now. But here's the thing, you might already be doing it, right? So you might already be using this concept of usage-based billing in a per-seat model. Ultimately, if the success of the usage of your product is linked or correlates with the number of people using the product, in effect, you might have the right usage-based metric. This study done by KeyBank, uh, I guess last year, shows, you know, seat-based pricing or use— uh, user-based pricing is still the most common. Uh, and my view is that this is probably the right model for most businesses. Again, it's because the number of users or seats is generally very well correlated to the value that's being delivered. So last takeaway on the strategic piece here is that your value metric is the single most important decision of your pricing model. If you're having second thoughts, or if it's hard for your customers to link the value they get from the product to how much they're paying, take another look at this. Let's jump into some tactical things that you can be doing to improve the way that you're pricing. So when you look out into the landscape of kind of pricing thought leadership or advice, I think there's a bunch of different schools of thought. I always like kind of doing some Google searches to see the newest flavors of the day. This one, somehow I had not seen this one until recently, but Sequoia, and I'll call this the VC approach, you know, this is a very academic approach to pricing, which I think can be really effective. A couple things about this that I really like. You know, first of all, the most academic framework for understanding how you should price is that it's gotta be in between the cost to serve and deliver the product and below the willingness to pay, or the perceived value of the product, right? Pretty intuitive, pretty obvious, but if your business doesn't understand where those bookends are, that's something that's really helpful to understand, so you at least understand the range that you can play in. The second is this distinction between horizontal and vertical, right? And you can see in the horizontal segment, that would be where you would apply a needs-based segment. Segmentation analysis, and you would say, "Hey, I sell to, you know, these different types of segments or personas, and so I'm gonna design a package and a pricing model specific to that segment," versus a vertical solution, right? So if you're selling into the oil and gas industry, you might be better off going to a pricing model where people can grow and expand with you. Maybe there's a basic version of the product that can get them hooked, and then you can upsell them to more premium features and functionality that you introduce at a later date. One of my favorite thought leaders on pricing, Patrick Campbell, has a different approach. This spreadsheet is online for free. I love it that he gives away a lot of his stuff for free. Effectively, what he's doing here is a version of needs-based segmentation in a lot of ways. So thinking about the specific, uh, customer segments that you're targeting, and just being very methodical. I think a lot of times people assume everyone is on the same page with regards to what these segments are and what they look like, the technographic information, et cetera. Putting this down on paper, aligning as a business, is really one of the most powerful things you can do as you go into a pricing model design. And then you've got the consultant's answer. So I will say, I do have a very strong affinity for both of these tools. Tools, which if you have the time and you've got the budget, there's not many things that are gonna help you understand how you should be pricing than doing a Van Westendorp survey effectively. That ultimately is gonna help you understand where the sweet spot is for the price point that you wanna sell at. And then a conjoint survey or a study that can also be really effective in helping you think about the trade-offs when you're doing your pricing and packaging or designing tiers or things like that. But all of this to say, right, there's a lot of models that you can apply. There's great resources that are online. Ultimately, though, across all of these, there's one single truth, and that is the best path to pricing excellence is repeated testing, right? It doesn't matter what approach you apply or what framework you deploy. Ultimately, the best businesses that are monetizing to their fullest potential are doing so by testing repeatedly. Every single quarter they're running one small test. And there's a lot of ways to do that. And we'll talk about a few more here as we go on. One of my favorite thought starters when exploring pricing is, you know, what would happen if we increase price price 10%, 20%, 50%, 100%? Jason M. Lemkin yesterday was talking about, I think it was 60% of the respondents in the survey cited that they had raised price in the last year, which was actually quite a bit higher than I would have expected, and I'll share some more data on what I've seen in FastSpring's customer base in a minute. But this thought starter can be really compelling to start to unlock the possibilities that people are just naturally blocked to explore, right? So if you have a senior team to sit down and say, you know, what would happen if we did this? And even better yet, let's go test it, right? Let's go test it with a couple of reps or a couple of deals. Let's really understand the price elasticity in our market and how compelling our product market fit is. You are not gonna understand this in any better way than to go and test it. and ultimately, you know, to get people over the hump to exploring more creative ways of pricing. Because the truth is, the right answers are not in the executive team, right? The right answers are with your customer base and with your prospects and what they're willing to sign up for. So we recently did a survey— or a study, rather, uh, with FastSpring customers. FastSpring is a, a billing and subscription management solution that powers about 3,000 software companies around the world. We have some really interesting data on what's been happening over the past few years, especially with regards to the inflation that we've seen, and now the more recent market turmoil. And so one thing I wanna share with you is, we looked back and we said, hey, over the last year, how many customers of ours, or software companies in general have raised price more than 10%. And it was 37%. So interesting that Jason M. Lemkin's data showed 60%, but in general, there's a lot of companies raising price. So I think one thing to kind of give people a little bit of a kick in the butt here is, you know, be a little bit more aggressive than you think you need to be, right? 'Cause a lot of your peers are already doing it, and people understand and are used to having price increases. They see it every day with all of their vendors. So what happened to these 37, or rather, how much did they increase price? So it does seem to correlate a little bit with the average price point across these customers. So this is about 270 global software companies, and you can see the average price increase over the last year year, you know, grows from 18% for smaller ticket items up to 35% for larger items. The other way that we looked about— looked at this is by B2B and B2C products. So similar to the AOV analysis, B2B companies are more likely to have increased price over the last year. But really interesting, the impact was relatively the same. right? So what we looked at is the average year-over-year revenue growth of the customers that increased price. And probably not too surprising, but the companies that increased price have grown a lot faster over the last year. And the impact across B2B and B2C is pretty similar. A live case study that I'm tracking, and I encourage all of you to keep an eye on, is Baremetrics. Baremetrics is a subscription analytics tool, a really solid product. Recently rolled out a large pricing increase. So what they did was, and by the way, this is all public, they have a transparent dashboard where they show all of their information. Effectively increasing their ARPU, basically doubling their price points across the board. So what we saw on the average revenue per user is basically a doubling. And not surprisingly, but the MRR sort of followed suit, right? So in the near term, it appears to have been highly effective, but we're all asking this question, how is this gonna net out in terms of churn? Obviously a, or what you would expect was a one-time uptick, and I think it's gonna be really interesting to see where this normalizes to understand the total impact that they see. But the indications are really positive. That the increase, the pretty massive increase that they rolled out, is gonna be accretive to that business. You know, one of the other thought leaders that I think is really smart in the pricing space, a guy named Patrick McKenzie, I think he sums it up the best for me, which is acquisition, conversion, and churn often require significant cross-functional effort to improve. Pricing typically requires replacing a smaller number with a bigger one. It's not quite that simple, but sometimes it is. So generally speaking, I've seen this time and time again, there is a strong bias, there's a natural disposition to be risk-averse as we do not want to disappoint our sales teams and our customers in raising price. And generally what we are doing there is we're underestimating willingness to pay. It's a pretty systemic bias. And so I'd encourage you all to consider if you have some of that in your business and should you be revisiting. So what's going on with inflation, right? How should we be thinking about pricing with regards to inflation? You know, there's a really interesting interactive dashboard that can help you understand inflation by geography. It's a Financial Times on their website. I think they pull it from Refinitiv, but I encourage you to go look at it if you're curious. But the point here is inflation is not consistent across the world, right? And it's an obvious point, but we all need to understand it and internalize it because it has some pretty meaningful implications to how we price. And you can see here how they vary across some of these major markets. Not only by geography, but also by industry. We're seeing this in our daily lives in gas prices versus food, et cetera. So the rates of inflation are not consistent. It's not one size fits all. So a few things you should be thinking about or might be able to do to combat the effects of inflation that I'll go through pretty quickly here. So first is make sure you're regularly assessing in some way, ideally through a live test, the true willingness to pay either by geography or by industry or whatever the segmentation that makes sense for your business. The second, can you make inflation adjustments automatic, right? So if you're in a B2B enterprise SaaS business model and you're doing multi-year agreements, do you have inflation baked into the contracts? If you have them baked in, you'd be surprised at how often people are not enforcing those. So it's worth doing a spot check audit if you do have inflation-based increases in your contracts to go back and make sure that they're being upheld. Consider pricing positioning for specific verticals. Again, inflation is varying across different industries. One of the things that I think is really smart and effective is thinking about your value metric and if it can be linked in a more clear way to an inflation metric. Metric, right? So for example, can you price on a percentage of revenue? And then the other thing that you'll see pretty common is types of surcharge. This is highly dependent on the industry and the expectations of your customer base, but it can work. And the example here is something like Uber, right, where they're going to have a fuel surcharge in response to the pace of inflation. A couple of other kind of tactical tips here to give you some evidence-based impact numbers. You know, are you accepting the right payment methods? So in our research, we generally see 5 to 10% lift just on ensuring you're offering the right preferred payment methods. Payment methods vary around the world. I think I have a bit of a US bias, understanding that that is such a large market, and obviously a more European-centric crowd here, you probably appreciate this more than I do, but it was surprising to me to see that the numbers can jump 5 to 10% by being more explicit and expansive in the product payment methods that you offer. Localizing price. So you can double, and this is in a B2C context, cost, right, so a lower AOV, but you can double your conversion rates pretty consistently if you're localizing the price that you're displaying and billing your customers in. The other thing that's really interesting is there's some, some new research. It's not yet conclusive, but billing is the most frequent touchpoint we have with our customers. So making sure that you're making that as customer-friendly and efficient as possible is starting to indicate or become a driver of NPS. So do you have a really customer-friendly billing process to make it easy for folks to pay? Because if you are, you're probably going to incur— you're going to increase your NPS, and you're also going to get paid faster. So there's kind of two benefits there. So this takeaway here is I think there's too many— companies out there that are really making it hard for your prospects to become customers and for your customers to pay you. So reduce the friction if and when you can. All right, so let's wrap it up with some takeaways. And I think if I leave you with anything, try to capture something on this page that you can take away and help improve your business. So the first is, Pricing is a lot of things. It's more important than you probably realize. It's more complicated, but it's also more solvable, right? Second, SaaS gives you an infinite degree of freedom in how you do your pricing and packaging. It's really valuable to use this to your advantage. There's some really creative ways. We're seeing this with some really creative and exciting new usage-based billing models. Billing models that are emerging, revisit the assumptions, you know, across SaaS. We want to leverage all these benefits in how we go to market and reduce the friction in adding customers and retaining customers. You know, fundamentally speaking, pricing is about fairness, right? It's an exchange of value. And so ultimately our jobs when we design a pricing model is to make sure that this value and price relationship is on par. Pricing and fairness cuts both ways, right? If you're giving too much value away in your product and ultimately your customers are getting it for a really cheap bargain or inflation, right, is hitting you, you're having to increase salary of your employees, et cetera, your costs are increasing, and you're not able to sort of pass that through to your customer base in the form of pricing, ultimately that's not fair on your side as well. So really think about this, and the fairness point needs to cut both ways. You know, the fourth thing, you know, start the habit of asking these questions continually. None of our markets are static. They're constantly evolving. Our pricing models and our pricing and packaging models, they need to consistently evolve. Test one thing at a time, right? A great habit to get into is develop one hypothesis. Stack rank all the hypotheses you have every quarter. Pick one thing that you want to test. One thing a year even. And that'll really help you kind of get into this habit and start your evolution to a better pricing model. So you can monetize your business in a more compelling way. And then the last thing is, you know, there is this trend that I believe is starting to really accelerate, which is B2B buyers, right? SaaS buyers are bringing B2C expectations to work. And what I mean by that is, you know, in our personal lives, we're used to, you know, one-click checkout. So to speak, the seamlessness with which we buy online, order dinner, whatever it may be, we're the same people when we show up to work. We don't automatically transform into different people. So how can you make it easy for your customers to understand your pricing model and buy from you? How can you make it easy for them to pay you every single month? We're gonna continue to see this conversion. Of B2B and B2C, I think the meaning of those terms is gonna continue to lose kind of relevance. And so think about how you can make a more B2C-like experience. You see this in creative PLG models all the time. And good leaders and good companies are gonna be ahead of the curve in this way as we continue to grow. So thanks so much for listening to me. Appreciate it.

Please welcome Zendesk Director of Engineering and MD Pierre-Alain Bouchard. Hello everyone. Thank you very much for joining. In today's session, we're going to be talking about the challenges of scaling engineering teams, especially during fast growth periods. So I've been— for some background, I've been with Zendesk for about a couple of years looking after mobile and analytics. And today what I'm going to be sharing is some of the milestones that engineering groups are going through. I've called these milestones 20, 40, 80, 160. The numbers doesn't matter really. What matters is that every time you will be doubling the size of the group providing— like, building the product. So the first one, the first milestone that we're going to be talking about today is 20. And 20, you know, getting to 20 should have been easy. So this is actually the first thing you have to think about is what's your experience taking your engineering group from 0 to 20? Do you feel it was easy, or do you think you've been struggling with it? Because building the product shouldn't be hard up to 20 engineers. Or per— actually, building a product should— could be hard depending on the product you're building. But operating your engineering group, that should be pretty straightforward. And the reason why it should be pretty straightforward is that you are gonna be— your team has to be all over the place, focused to deliver best value to sales team, building feature, listening to customer feedback. So supporting customer support, and they should really just be jumping on any initiative, any opportunity they have to improve the product, to improve satisfaction. They should demonstrate a lot of empathy. 20, that's also, you know, 2, 3 teams. It shouldn't be too much. Like if you think about, if you got to 20 and let's say you have 4 or 5 teams, you have to think about, you'll have to think about whether you haven't over-optimized your organization, 'cause really what you want, that's flexibility. And, and I haven't said agile or agility. I'm gonna just stay away from that. I don't want, you know, people to be jumping on the agile train for that. You want flexibility up, you get to 20, because that's what the business needs and that's what the engineering groups are here for. They're here to help the business, you know, figuring out the go-to-market, figuring out the way of engaging with customers. Now, of course— oop, yeah. Now, of course, when you get to 20, you're gonna start having some of the first challenges. The challenges you're gonna get, they're very normal. The reason why you get them is you have to think about it as your engineering group is 20. That means the rest of the company is significantly more. And in the previous model where the engineering group was here to serve the rest of the company, now they are not able to continue serving the same way, so being as flexible, while doing all the other things that they have to do. Um, so the impact that you have is that you're gonna start seeing the team struggling delivering on plan. So up to 20, you don't do plans, or you should— frankly, you should keep the planning very light, coordination very light, and be super reactive. When you get to 20, you're going to want to plan. And you're going to make plans, and it's, you know, it's not going to work. And you're going to wonder why it doesn't work. And it's not going to work often because there'll be so many priorities that the team needs to deal with. And they're gonna be struggling with it. There's another symptom often that you're gonna start seeing is quality problems. This is gonna come because not only are you building very— with a lot of flexibility, a product to customers, you're gonna be adding more and more and more features on top of the product. And adding these features at this stage You're gonna try to roll out very quickly, and you're gonna start seeing issues. You start seeing issues because not— at that stage, not everyone knows the product very well. You know, it's— so it's easier to introduce regressions. And with that, it's gonna feel— the product's gonna feel more complex. One additional challenge you have is around hiring talent. And this is a— this hasn't to do necessarily with the size of the engineering group. It has to do with the company, the stage of the company is in. Your brand is probably not that strong to hire in an extremely competitive market. But the challenge you have is you're trying to get, you know, you've hired 20 people. Likely you've hired the jack of all trades, master of none, because they are the one you need at that stage. But now you need to add masters. You need to add people that actually know the trade, the one that knows how to increase the quality. And the last thing, the last reason why you're gonna start being struggling is that, you know, in the history of building that product up to that moment in time, you know, it's normal the team will have taken shortcuts. They would have tried to build, they tried to fulfill the needs of the business. And by doing that, sometimes they will have made good choice, sometimes wrong choices. So how— when you get to that stage, how do you address that? Process often isn't necessarily the solution. The one thing you have to start looking at is, okay, at Team, they were— these teams were very flexible. They were, you know, reacting to the business. But now they have to move to another stage, which is a stage where they own pieces of the mission. So you have to start organizing. You have to start thinking about the organization in a way that you're starting to build autonomy, ownership into pieces of the product. You could have done it before, by the way. You know, so a lot of the companies that have been for which I've been mentioning engineering leaders have done that very early. They just defined very well the missions and, you know, they put 1 people, 2 people here, and they've— you have other issues doing that. But when you get to 20, missions becomes very important. I mentioned hiring at that stage is probably your biggest challenge. It's probably the one thing you have to do. It's hiring the right people. And it's— a challenge. And there's no— I'm sorry, there's no magic recipe to hiring talents except, you know, talking to people, talking about your product, talking about the company, talking about why they should really join, and make it really personal. This is the only way of, at that stage, of hiring, because your brand, you know, your brand is not going to be enough. Sometimes your, you know, how much money you've raised could help, but You have to wonder whether it's the right profile for you at that stage. There's another element is that you also have to think about now your group of engineers, or even include product managers and all missions design product managers in there. You have to think about them as an entity. Before, you could actually afford to have 3 people just going around and then, you know, creating code, but now you have to think about them as an organization. So you have, as part of an organization, you need to put in place all the leadership frameworks. So communication, super important, up and down. So not only telling the team what's, you know, what is the company doing, but also having the team understand that everything they're now doing, the choices they're making around priorities, this is gonna be impacting the rest of the business. There's a very, very difficult thing to do at that stage in terms of leadership that's establishing the culture. You know, in textbook, you do the culture from the beginning. The reality is the culture builds up. It builds up off the people you're hiring. It builds up off the message as a leader you're sending to to your teams. Blameless, a blameless culture. You have, I think John Doerr in one of the presentations mentioned that you have two types. You have the mercenaries and you have the missionaries. Blameless culture really is a missionary type of culture. They're here to serve. The value of the blameless culture is that as a leader of this group, you're gonna start getting away from the day-to-day. 'Cause you know, you go from 20 to the next one being 40, it's gonna get harder and harder to know what's going on, a bit. So what you want to establish is this culture where people can bring back up the information, they know they can take risk, they can even demonstrate a lot of maturity by taking risk, explaining the risk, assuming the risk, knowing that nothing wrong is going to happen to them if they do that. You know, they'll do the right choices, they'll demonstrate ownership, but they won't be blamed, you know, as soon as something goes wrong. And this is, this is really important for the future. Like, this is one of the very important foundations for the future is that as the organization is going to grow, you need that culture to be in place. To help. The next one is 40. The next one is probably, I think, the hardest one of all of them. I think it's probably one of the hardest ones to crack. And I'll mention this 40 isn't 2 times 20, and I'm gonna repeat that a lot, because as you're adding people, 40 is gonna feel like 24. 25. You're going to be adding people. Your organization is not going to go as fast. It's going to be frustrating for the engineers. It's going to be frustrating for the group. It's actually going to be even more frustrating for the other part of the business, because the other part of the business also is growing. And the— I said the need for product engineering to fill the gap is going to increase. The struggle's gonna become bigger. So think about it as, you know, linear growth, right? You're— we're saying 40— when you have 40 people, you're delivering less, significantly less than when you only have 20. Well, actually, you're not linearly delivering the same way. But as an engineering leader, your challenge, it's actually to go above that line. And there's a couple of ways to go above that line, but the first thing is you have to understand why we stay below that line very naturally as we are growing organically. Symptoms, again, we're talking about, you know, we've put in plan, you've put planning in place, your planning period becomes super long, and And again, teams fail to deliver on time, on a committed date. And then, you know, you can feel the recurring pattern here. That's concerning. That's concerning for the business because you're starting to lose trust to the other part of the business. I'm going to repeat, you know, sales, customer support. I think you're also— it's also difficult because you're going to start losing trust from your own, so from the people from the long-term employees you've had that are gonna start leaving. And this is, this is a really strong sign. When you have early joiners, the jack of all trades, that are super knowledgeable, that are leaving, usually it's a signal that the organization didn't evolve in a way where they're not being frustrated enough. Why? Because they were able to go fast before, and they're no longer able to go fast. And that's, for me, it's always one of these signals that says you have to do something. Of course, I know I mentioned we're creating missions, so you know, have these teams and these teams have, they're responsible for their area. So now as opposed to have everyone in the room, old school, everyone on Zoom, you have the knowledge doesn't spread anymore. So the knowledge becomes very restricted to these silos. Bigger problem, people are leaving with the knowledge. So now you end up with product that, you know, the new people that join don't really know very well, so we have more quality issues. But you're also losing a lot of your talent. And often— I've heard this one. Couple of times in different companies. The question you have is, what is engineering doing? And it's not a nice one, especially if you're a leader, engineering leader, you, you know, gonna hear about this one. And this is one of the things you shouldn't be doing. You shouldn't go on Google, and you shouldn't type for org— engineering organization, 'cause you're gonna end up on the Spotify model. And this looks amazing. The video is, you know, the video is walking you through how Spotify have organized their team and how everything works great. And, and truly the model is impressive. The model feeds your engineering mind. The problem is this model only works for Spotify later in a different setup and, and this is probably the most common cases for failures I've seen in organizations is where trying to solve a problem, organizations are, are being put in place are more complex, and they're actually not solving, they're actually just doing worse. So instead of 24, you get to like 16 or even less than that. So instead, you're gonna do something strange, is you're actually gonna be thinking about people management. And this is really, really bizarre because often we think process while the solution often has to do with people management. First thing is, you're a startup. You've been growing super fast. You probably missed a lot of things. You probably missed your career ladders, how you keep people in the company, how you work their plan, the development plan with them, how do they understand where they feel Where— what's their skill set? How their contribution— how do they get promoted? How fair is this? This has nothing to do with building product. It has to do with managing people. But it's probably your best asset because this is something you want to be very careful of. The second one is my preferred topic. It's you have to focus on diversity. And I'm not talking just male/female. I'm talking skill set, I'm talking mindset, I'm talking background. The reason why you want to think about diversity at this stage is that, you know, you've tried, you've tried the linear, you've tried to be above, but the reality is you've hired the same kind of people. We all do that, by the way, in early startups. It's kind of a normal bias, so it's okay. Let's just take responsibility for it and then change it whenever it's at that time it's the right time. So you hired the same people and you didn't get much impact. The reason for it is because you have to think about the spectrum. So literally, if you're a visual person, you just draw the spectrum of all the responsibility of the group. And for all of these, you have different dimensions. If you take the same type of people, you're only gonna cover the same area. If you're diversifying the folks you are, you're bringing in, you're gonna magically— but that's a bit of magic— you're gonna start seeing that you have the people fitting the right places, in the right places for the needs you have. You also at the time where you need to invest in productivity. Again, it's just trying to defy the mathematics. You're trying to do more with less. So if you're trying to do more with less, you have to do less. So you have to automate as much as you can. You have to be as productive as you can. And human being isn't great at doing 28 times— 28 things at a time. We're rather good at doing one thing, getting deeper into it, rather than plenty of things. The plenty of things can be done by computers, so let's give it to computers. So productivity, very important. Again, well-being. Well-being is that one thing that retains people. It's the one thing that shows that you care. It's the one thing that will magically make people care about what they're working on. So again, it's very people. And the last thing is, you know, you're at the stage where the product gets complicated. As I said, your— if your organization is 40, The company is much bigger. The number of features you're covering, everything gets bigger. Try to reduce dependencies because dependencies are frustrations. Frustrations makes people leave as much as you can. Again, there's no silver bullet. Sometimes organization helps you reducing, but be careful that if, if you're isolating too much by trying to reduce dependencies, you're actually going to have more problems. Sometimes it's okay to accept dependencies. 80. So somehow you've managed to keep it together, um, and, you know, from 40, and you've kept hiring, and you've put more people, and your teams, you have plenty of teams going together. Now, this is the challenge you get now is how you keep everything, you continue to keep everything together. 'Cause your product, your teams don't work together, your product is significantly bigger. People do things on their own, you know, you give them a lot of autonomy so they're gonna start building things on their own and doing things on their own. And the symptom is— the symptoms you're gonna see is planning. The one thing which is, to me, a very good indication on how well you're doing is how long does it take to do quarterly planning? Let's say you're doing quarterly planning. How long does it take? Often, you're gonna— if you take more than, say, 2 or 3 weeks before the beginning of the quarter to do the planning, if you do quarterly planning, then you have a problem, because it means you have an organization which is so complicated, and you have to do plenty of back and forth, and then prioritization, and debate on what is the highest priority. And what that tells you is that it's not clear to everyone where is the priority, and it's spending— you're wasting a lot of time. Like, you're wasting a lot of people's time in meeting trying to do planning. So planning becomes complicated. When you get to 80, we're talking about, you know, we said— I said fast growth. Depends. You can get to 80 in, what, 3, 4 years? Depends. You can take longer. For some companies, it will go faster. You know, you've accumulated a lot. Like, you've built a product, and the product grew, and everything. So the maintenance of your product is at that stage your maintenance of your product is taking a big chunk of your time. I didn't mention technical debt up until now. Hopefully you've done some work to make sure you were doing technical debt constantly since the beginning. Of course you did not. Of course you did not. The first 3 years hardly everyone is touching technical debt. The problem is Experience tells me from, you know, between 3 years and 7 years, you're gonna have to rewrite your product. So if you haven't done it constantly, consistently from the beginning, now you're at the 3-year mark, you're gonna feel the rush to rebuild a lot of it, because you need to keep going, and your foundations are unstable. The symptom is maintenance. The symptom is pretty simple. You look at, how much time your teams are spending on new feature, maintenance, technical debt. Technical debt gets swallowed by maintenance, so, you know, if you have more than 30, 40% of maintenance, you know, be very mindful. It is problematic, and it's a problem that doesn't go away on its own. And from a customer experience perspective, your product's gonna feel disconnected. 'Cause you have many groups, right? And these many groups are building things a certain way, and it may not quite feel— you know, and then putting everything together in a magic integration sprint or whatever, and the product just— anyone just using the product is gonna feel like this— you can see how it was made, and this is not a good experience. And at that stage, if you've— frankly, if you've managed to go up to 80 and not having a direction of product, your mindset, then frankly, you've managed to do pretty well to survive through all of that. Leadership is important. At that stage, leadership is critical. You have to hire the right leaders. You have to hire— And when I say leaders, by the way, I'm talking technical leaders, I'm talking managers, I'm talking directors. It doesn't matter the level. It's the mindset for the leaders that matters. But if you're VP, Director of Engineering, your obsession has to be around communication, strategic alignment, right? You're no longer into any of these verticals inside your teams or the pieces of the product. So you have to keep everyone together. This is why you're building accountable leadership group.

You—

the typical one will be you take a director of engineering, director of product, director of designs. I just used the title for simplicity. They're responsible for an area of the product. They work together. They define the success. They talk to their leaders about success. They align on what are the KPIs or the OKRs or whatever framework you want to use of the success. And leadership let them run their business. 80 people, you know, it starts to be a big thing, but it's easier to operate at 30, 40 or smaller groups under a local leadership rather than recentralized leadership. But as a leader, you also have to think that inside each of these groups, there's efficiency pieces that you're gonna need to go after. So not only do you kind of make your teams, make your groups accountable and responsible and free in many ways to operate the business, but also you have to provide them with the tooling that they need so that The effort is simple. Everything is a bit simple. And this is, you know, we're gonna start talking about simple because the business gets super complicated. Like, you're growing again. You know, at that stage, it's pretty simple. You're adding one more product, or you're just subdivising, and you're adding a new entity that is looking after a piece of the business, and you put the leadership that goes with it with the right mindset, and you can copy over the models from others, and that kind of works. But now you're doubling— you're doubling your ad count again, and you get to 160. And then when you look at it as a leader, this is the— this is exactly what it looks like, that kind of train tracks. The magic with this is it works very well, but if you look at it, it's super complicated. But one, I said 160, but this kind of organization where it's your engineering group is no longer just about building product. It's about serving, as I said, the sales before, customer service, service, professional service. You know, the company has grew significantly. You're, if you're, I'd say, 160 in engineering, you're probably 600 in the company. Big lies. Depends on your business. But it's big. And now, again, you have to think about planning. You have to think about the time that it takes. You have to think about the prioritization. How do you make the right decision? And this is basically one of your big problems. And you see that as the operating complexity is skyrocketing, because if you look at it and you're like, nothing's moving anymore, it's pretty hard. The way you see it is because everyone's gonna come at you as a leader and like, "I have this top X priority and I need these teams to do it for me." It's not, not just gonna be one, it's gonna be everyone. Everyone's gonna come. And at 160, you may feel like you have, let's say, a lot of people, but the reality is you don't have that many people to serve the business, so you have to be super strong around prioritization. And this is where you want to become super obsessive about keeping everything simple, stupid, right? At that stage, you have to do some major changes in your engineering groups. Most of the time you're going to have to do transformational cultural change, because it's no longer about velocity. It's going to be really about consistency. It's going to be about The efficiency is going to be about the productivity. In each of the team, you have to provide foundations. So now you have to put in place more complex models, organizational models. You have to think about really what is critical and strategic to the business. So at any time in your business, you truly need to know, you know, what is the core of the business? What is the nice-to-have of the business? And you don't have to just focus on the core. Depends on the situations. But in general, you want to know where the core— because you're gonna need to make tough choices on where you, you know, gonna put your energy. You're gonna have to talk about people about the priorities. You know, which one are your priorities, and which one you want to go for. And you're going to need— I say more than ever— you're going to need to continue empowering your groups. So this is where, from my experience, a very interesting part of the cultural changes can happen is when you're starting to have groups of engineers, engineering leadership, that talks about money. Many companies that I've seen don't quite like to mix product and money. You know how many— the cost, the operating cost, we know these. But the budgeting, the operating, all of this, sometimes in companies it stays up, it stays in finance, and it's kind of really at the C staff level, and maybe sometimes slightly at the VP level. But that's the time where you need to bring down to your leadership, or group product leadership, all the tools they need, all the information they need, so they can make the right choices. My key takeaways of all of this, of these different milestones, and it's a bit— I wish I had more time to get way more in details in each of the steps, so you'll be welcome after to talk about it, but my key takeaways are you're always going to be late when it comes to organizational change, and that's okay. It's not a big deal. Going for complex organization to solve problem that don't exist cost way more because you have to try it, fail it, revert it. And if you're growing fast, you can't quite, you know, do that. So instead, you look at the business, you look at how you're doing, then you just notice the signs, and when you're ready, you do the change. The other thing, too, is your business, you know, there's no model that's gonna work out of the box for your business. I mentioned the Spotify model, but it's true for everything I said, almost. You really have to tune to how fast you're doubling or how fast you're going, and you have to trial and error on small elements of it. And from 40, you have to be— leadership has to be obsessive about Efficiency, consistency, just as I said, remove velocity from your mindset and instead just try to remove anything that slows down your team, 'cause they're gonna want giving you the velocity, but you have to remove all the pain and the friction. So keep it simple, stupid. The bigger it gets, the simpler it needs to feel. The harder it's gonna be, but again, to take that line, you know, you've— every step, you have to— it's gonna be harder at every step to actually remain above this line. So every step, you have to make more than double the investment to make sure that you can continue doing, um, better than just linearly growing. Thank you very much.

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