Streaming Live From SaaStr Annual 2021 Plaza Stage - Wednesday

You're on time. Uh, I understand a lot of people had a lot of fun. At Cash Cash last night. Um, so some people are rolling in a little later, and we might adjust our times for the future. But today we're really excited about having Founder Confidential. We've got our own CEO, Jason M. Lemkin, who you guys are probably familiar with. We also have the CEO of Coda, LaunchDarkly, and Expensify, with Lloyd Lobo as well moderating. And the format here is really for people to talk openly and authentically about what it's like to be a founder and work with the board, the highs and lows of, you know, starting and running a company and raising money. And so we've asked that the This is only a founder audience, no VCs, no sales reps, where we can have, you know, some real headliners talk openly and freely. And so that's why you're all here. We also have Brain Dates going on throughout the whole day. It's over in Area G when you look on your map, the Brain Date networking area. We worked really hard to get some top VCs, to have very, very small sessions with half the time being Q&A. People from IVP, Scale, Foundation, you name it. It's like a strong roster and there's still some slots open. Just walk over there. The Braindate staff will check you in and, you know, you'll have really, really direct access to some important people. Um, so I just want to make sure you guys take advantage of that. There is a founder lunch-in at 11:30. It'll be right here on those tables. Um, we call it the lunch-in, but it's rather informal, and there's no assigned seating, which we thought about doing for some stupid reason. And instead, you can self-select based on your ARR stage and we'll also have VCs at that lunch who, if you're a million ARR, they'll see you, and if that's their target investment criteria, they'll come sit with you. Um, so that's kind of the agenda for the morning. We've got this talk, brain dates are going on all day, um, and it's not just VCs over there. We also have a number of operators talking about growth, operations, questions, product, you name it. And then at 11:30 we have a founder VC luncheon. There's after parties hosted by some of our sponsors like G2. G2 is great. And that's what we're looking at for the day. So thank you for being early and arriving on time. And you're about a minute away from seeing the people you actually want to hear from, not just me, the guy in the purple jacket, who was told to come up here and kill a little time. And so with that, thank you guys.

And now, please welcome CEO and co-founder at Koda, Shishir Mehrotra.

CEO and co-founder at LaunchDarkly, Edith Harbaugh.

CEO at Expensify, David Barrett, CEO and co-founder at Saastr, Jason M.

Lemkin, and co-founder and president at Boast.ai, Lloyd Lobo.

You got it out there.

Woo!

Woo!

Good?

I almost fell from the chair a couple of times, but Before we get into the panel, I want all of us to give a huge round of applause for Jason and the show this time. I've been coming to SaaStr since 2015, and then in 2017, Jason was so kind to give me a free booth to launch my company, and we're doing pretty well. But this is the best SaaStr, like a big round of applause. Thank you for the outdoor vibe. We're going to do it outdoor again?

Yep, next July.

Awesome. Next July. So our panelists here have raised nearly $1 billion in funding. And that's not easy to do. That's really hard. But maybe considering the market today, that is not so hard. So let's dive right into it. The market is bonkers. Valuations are super high. I think Edith was the most recent to raise your round of funding. How should founders think about fundraising and valuations, particularly in this market?

Yeah, so we announced our Series D of $200 million at a $3 billion valuation, which is pretty fun to say, by the way.

Is it fun?

Yeah.

I mean, it's— But behind that is like 7 years of grinding and the team working incredibly hard and us getting 2,000 customers and being recognized as the category leader. So like our first round of funding, I remember our co-founder and me celebrating about a $15K check from an angel. Like we were like, okay, let's, you know, this is, you know, we were—

Some ramen.

Yeah, we ground out our first round was like a $200K friends and family round and that was it. It's excruciating.

Definitely. And then in terms of valuations right now, are they, what is it, 5x 2 years ago? Is it 10x? How should founders think about, do they even command the valuation? How did you go about it?

The thing about evaluation is that you have to grow into it. I mean, David, I think, is actually a counterexample because he's, we were talking backstage, he's about to IPO. It's no secret.

I know what you're talking about.

Yeah. But you've raised very little money and been very efficient. So I kind of don't want people to just say like valuation when you're a private company and amount raised is the measure of success. It's really about actually producing value.

Definitely. What's your viewpoint on that, Jiajie?

I mean, I think the valuations have gone up because everybody's realized the markets are a lot bigger than they thought. And so it all sort of trickles down as you see these companies get get much, much larger than people expected. So I think it's surprising to people that don't see the way technology is taking over industry after industry after industry.

Definitely. David, how about you? What do you think about it?

I just think it's all bullshit. I think the reason the valuations are high is because there's a shit ton of money in the markets and it has no place to go. We just printed, what, $3.5 trillion of stimulus money out of nowhere, and it went to a whole bunch of people that have no place to spend it, so it just goes into the bank The banks have just like, they're just flush with cash. They give it a tiny fraction of the VCs and like, I don't give a shit where it goes to. It does not matter. There's a finite number of investments. They're just getting super competitive. The money has to go somewhere. No one cares about any of this. Like, none of it makes any sense. And so I think that the idea, like, I think there's a part of like, oh, the markets are bigger than we realize. The world didn't change. It's like, it's the same fucking size. And so I think like, maybe, maybe that's part of it. I actually don't think that's most of it. I think that most of it is none of this makes any sense. And so as a result, there's just a bunch of money going around and it's just all chaos.

Can I briefly disagree?

Please.

I do think the market has gotten bigger for SaaS. Like I've been going to Saastr back when we, I dunno, we're stuffed up on Nob Hill. And my joke to Jason is we, you get a bigger venue and it fills again. But SaaS is not this new hot thing. Anymore. It's now an established category where you have people who are doing it, and the universe is much bigger in terms of like, this is a way that you could build your business, instead of it being seen as like a niche weird thing of will it last.

Yeah, but it's not like the market itself has changed. It's become, or rather hasn't grown that much. There's hundreds of millions of businesses in the world, and virtually none of them use any of our software. Um, it's like on a grand scheme of things, the entire sum of like SaaS is still like a rounding error of actually the global opportunity. But it's not that the opportunity hasn't been there all along. I think that we're just finally finding models that can acquire more of it. But I don't think the market's changed. More of the models have changed, perhaps. But even that, I still don't even think that's true. Because most of the companies raising this shit tons of money, they're not using like novel customer acquisition techniques that couldn't have worked 20 years ago. They're just willing to lose more money on it. And then the VCs are willing to allow them to lose more money on it.

I will again respectfully disagree. You know, when we started 7 years ago, it was a slog to sell SaaS.

Yeah.

Like we had our, like our initial customers would always say, do you have an on-prem version? And we would say, no, we believe in SaaS. And they'd say like, okay. And then they'd come back a year later and say, hey, we, we've actually moved out of our own data centers. We are ready to buy SaaS. So it has been this extreme uplift for us in terms of we're not arguing about cloud anymore.

But there's obviously truth to both sides of this. I mean, I know the, the markets are clearly bigger and there is a lot of money going around and they converge. I think the money also has other places to go other than SaaS. It doesn't have to come to us.

Sure.

Um, and it's choosing to come here cuz I do think it's, the markets are proving to be more open to these companies taking over business processes that they didn't used to be allowed to. Yeah.

But I think what's interesting, what's interesting is David and I, we're all actually somewhat old timers of SaaS in different generations. We've been through like the 3 generations of post-Salesforce SaaS. Yeah. It's called Salesforce 1. You and I started Salesforce 2. —Edith was maybe 2.5, and then Coda now is maybe 2.7 or third generation, but you've been doing this for a decade and a half. I'll tell you, first of all, it was interesting when I did a podcast with René LeCerte from Build.com, and his point was there's still 6 million buyers of Build.com today, and there were when we started. So the TAM, in a sense, is the same. But let me tell you the jaw-dropping statistic for us old-timers. In the BVP Cloud 100, which I think maybe LaunchDarkly was in, Jason M. Lemkin, 25% of them are growing more than 100% at $100 million ARR. That is the difference in the cloud. The top quartile, not the top 1 or 2, the top quartile is growing triple digits at $100 million. When you think about compounding, assuming those have NRRs approaching north of 100, that means they're all gonna hit a billion in revenue. That is now, as silly as it sounds, that's commonplace, right? What are the odds that any of us will do it? Well, you know, high. High, well, you know, and Coda is interesting. The bet is that it's high, right? Coda has the team and the technology, and you've taken advantage of the market to raise at attractive valuations, but it's the same bet for— so when you— when, when I tell old-timers that number, like, their jaws drop a little. What? So, but I think the top quartile grows triple digits at $100 million, because going triple digits at $10 million a generation ago was like That was the magic number. Could you actually sustain 100% growth at 10 million 5 or 8 years ago was, you're fucking gonna be a unicorn, right?

So that's interesting. So the TAM hasn't changed, the business model also hasn't changed, but the awareness that it could scale has changed perhaps. And so people are willing to project forward further now than they were before, which can explain the higher valuations as well.

It's made it easier to buy, but this begs the question that probably everyone's asking, right? and Jason had a great post on this. You talked about just because there's so much money in the market, should you raise right now? I remember you wrote that post. You still need the metrics. So when is the right time to raise? Maybe Jason, you share your thoughts there.

I'll defer to the panel. I'll say— and David could be, again, a fun challenge to it being capital efficient because, look, every founder in the room, there's a trade-off. We'd all love to be capital efficient. Like, you look at your cap table, And you all wish, you all wish a few slices weren't gone, right? Either there was that early investor where you got ripped off, or that middle round where you needed the money and you look back, you're like, who owns 22% of my company? So we all respect capital efficient, like, because it, it, you know, you can only sell 100% of your company or 90, 80%. But, um, but there are moments these days where you're an idiot not to take the money, right? You're, you're just an idiot. And I had a, you know, I had And especially today, if you can sell less than 5% of your company for an attractive price, right? I mean, LaunchDarkly, your next round, you only sold 7% in that round, right? You could probably sell $100 million at $6 billion today to someone just because they want to get in. $100 million, $50 million at $6, you'd never even notice the extra $50 million, Will. So I think you almost have to take those crazy checks, and there's good challenges to it. —because I don't think— there's no down round drama. There's no issues. All this stuff that we used to care about, oh my god, if you raise it too high evaluation, the world will end. I mean, the world just gets a little worse, right? It just gets a little worse, especially if the dilution's modest, right?

I think Ethan said that you do have to be careful about growing in your valuation. I don't think it's a— and like you said, all of us have been around the industry long enough to have seen those things happen, and they can happen. So I don't think— there is a— that level of responsibility. But it's definitely true that every round is, you know, ours was $100 million at $1.4, it's a heavily oversubscribed. We could easily take in more at a higher price. Yeah. And there's some, you do some math on where you think the right price of the company is. My view is don't take money from people if you don't think you can hit their investment goals. If you're misaligned with your investors, that's going to be trouble at some point.

Yeah, yeah, definitely at some point. Yeah, I mean, I look at taking funding as allowing us to invest. Like, so, you know, we talk a lot about CAC payback and say hypothetically you're at 18 months. That means you have to pay for all that sales and marketing 18 months before you get that turn. Yeah. So either that means that you have to build up this bank from your own, um, non, non-VC funded business, or you can get VC and say, hey, I'm gonna take this 18 months of capital, invest in sales and marketing, get the payback in a year and a half, and also, by the way, invest in my product so that I continue to create a category and outrun competitors. So it's just a choice. They're both valid.

Yeah, I think you take money when you have a plan to spend it. Yeah. I think, 'cause I kind of, one thing we're not talking about is there is a risk of being, I think, overcapitalized, and that it just changes your entire company. You lose the idea of caring about about reality, and I think that at some point reality matters. Now, I think you can get a surprisingly long distance. In fact, your entire— most of Silicon Valley exits before reality even comes into the picture, and that's become our business model here. But I would say if you want— it's like there's kind of two business models. There's like build a viable business, which you care about things like profit margin, things like this, or you just sell to a bigger sucker. Overwhelmingly, Silicon Valley is based upon the latter of those. And like, the reality is at no point relevant in actually the cut, the entrepreneurial journey. And so I think that if you're going the classic Silicon Valley route, yeah, raise money early, stock it as much as you can. It doesn't matter the terms. They're like, doesn't matter, nothing matters because you're gonna get out before the music stops. And if you don't, you're just gonna wash your hands and do it all over again. Like, that is the entire strategy. So if your plan is to basically just take that classic strategy, raise raise as quickly and as often as you possibly can. Don't give a shit about anything else. Take as much secondary as you can, take as much primary as you can and just like whatever. On the other hand, if you're trying to actually build a business and you care about things like, I need my employees to think about, you know, the customer and like, you know, the culture and scalability and like, I'm gonna be here for a long time, then I think there's actually a risk of being overcapitalized because it causes your team to not care about the important important things until it's too late. And so I think that if you care about building a real business, you should view your equity as something that is, you should trade it for something when you have a plan to spend it. This whole idea of getting a gigantic war chest, I think that's bullshit. Like, I think that is just a big waste of money and capital, and it just like ruins your company's culture.

I mean, I think obviously raise money when— Thank you, thank you. I think the truism of like don't raise money you don't intend to spend people tend to spend. That seems fairly obvious. I think there is a big difference in categories. There are certain categories where there is a race and certain categories where there's not. And, and, you know, the way the market is moving does matter to that. You know, our category, I think there's only so many blinking cursors that people will pick and you have to be ahead of that. And we can't, you know, so you have to invest faster or as fast as the rest of the market is moving on it. And in our category, there's like obvious big competitors with both Microsoft and Google kind of owning that space. And you have to, you know, you want to be as fast out there as possible in that. There's other categories where that doesn't matter, and you can build your way up at your own pace. But I think that matters too.

I actually completely agree with David that culture is super important. I think it's a false dichotomy though to say that if you take VC money, you're going to have a terrible culture.

What were you saying behind stage just earlier, that basically you can't talk about culture because every big business sounds exactly Exactly the same.

Yes, although Edith had a good challenge there, and I'm going to defer to her learnings, but I did, I did say it.

Oh, go ahead, Jason.

Yeah, no, no, no, no, I did, I did, I did say that, um, but I think, but I do think Edith, look, Edith is, is an inspirational leader, and I think, I think that's a really important point to dig in on for a moment, is because we've all had some version of the experience that Dave brought up, which is that money or something or, you know, the fancy new outside CEO or the whatever kind of ruins the culture, right? And sometimes it's not even the round, it's someone spending tons of money. Like a VP comes in and blows $20 million on a marketing campaign. But at this point, having gone from ultra scrappy, a $200K round to a $200 million, is her challenge is, no, if as a leader you can maintain that culture even through the unicorn, right? And that's a good challenge to the, to the binary thinking here maybe, right?

Yeah, I mean, again, we're, I mean, LaunchDarkly is creating a category. We do feature management to allow people to ship software more safely. We brag about 2,000 customers, but to David's point, the vast universe has not heard of us ever. So we raised the round so that we could have marketing dollars to evangelize a way of software that we felt was a lot better. Yeah. And when we struggled to raise prior rounds, I actually, We could run our financial models and we could get to this point where we were break-even, but I was like, if we could get the money to invest in marketing, I know that it's gonna pay off and I know that we're gonna have happy customers.

Yeah, I don't really understand the money leads to bad culture point. I think there's plenty of great examples of companies that raise no money that have shitty cultures too. I don't think there's any correlation. Oh yeah, definitely. There's a lot of ways to fail, yeah. Yeah, so I mean, you have to raise money when you need it. I don't think that's rocket science. It wasn't part of my calculus that we're going to raise money and risk our culture. I didn't think about that at all.

I think the general theme here is have a plan to spend it. More people die of indigestion than starvation. But in this market then, back in the day, or when I say back in the day, I'm talking about 2 years ago, metrics were required for each stage, right? You have a validated market, you raise money, you raise a seed round, you have some unaffiliated customers, you go and raise an A, product-market fit, high retention, product-channel fit, you raise a B at scale. What are the metrics today? Or do they even matter? And I don't wanna set the audience here to think that, oh, your metrics don't matter, just go and raise a lot of money, take some secondary. But really, what are the metrics today? And Jason, you're an investor, so maybe you kick this off.

[Speaker:JASON M. LEMKIN] I think just— I wanna hear from the panel, but I think that When you, when you don't understand a venture round, when you see a crazy competitor doing worse than you that raises a ton of money, like, they're just— bear in mind, no one's stupid. I know it's easy to think stupid. Everyone's making a bet, okay? And everyone— and the people writing these checks are experienced, with a few exceptions. We could talk about some new money categories. And what's different is when Dave started Expensify and I started Adobe EchoSign, those bets were It might end up being worth $100 million, and we're hoping it might be worth $1 billion. OK, that was the general venture bet. So valuations had to be in the $20 to $30 million range for an A. That's interesting. Because you couldn't make money on a $100 million exit. Forget about the seed. If the A was much north— it was just math. If you're going to exit $100 with dilution, I only make 3 times my money, even at $30 post, right? So today, every single bet either has a bet that someone else is going to mark it up, but it's still the same bet, or that it's going to be a decacorn. So Edith raised— That's interesting. Think about this for a moment. Edith raised at $3 billion. Coda at a bill— and no one's sweating on the stage. We used to sweat. Both of them have committed to a $10 billion and maybe a $15 billion out— these are the commitments you made to a $15 billion outcome. And so what's weird in venture is sometimes people will do that at a billion ARR, or $100 million ARR. Sometimes they'll do it at a $1 million ARR, which just blows our fucking mind. Like, how can someone at a million ARR raise Is it 200, 200? But it's the same bet, isn't it? And you saw it at Coda, right? Because Coda was hot, unhot, and then hot. And so you saw people take that big bet on you, didn't you?

I don't think the metrics have fundamentally changed. The multiples have changed. I mean, I think what you said earlier about expectations that everybody builds the same models, they show up with the same, look at your growth, look at your NRR, so on, and build out your forecast. The only change is how long do they think sustain it. And as your point is, we're now seeing many companies sustain it for much longer. Just size of market, size of model, like all those things matter. But I don't think any— we still have to go through all the same numbers. I don't think it's that different.

Yeah, I would think the numbers are probably the same and there's just as much bullshit as before. They're basically all lies and they're the same lies because basically you go talk to a VC and they're like, you're a startup, you've got You've got a couple of customers, you like scrappy a whole bunch of different ads and stuff and like, cool. What is your cost of customer acquisition? Now, statistically, it's unfucking knowable. Like, we haven't done anything sustainably for long enough to actually have any confidence in any number, but you still get the question. What's your cost of customer acquisition? What's your lifetime value of your nonexistent random set of customers that you've only been looking at for a couple of months? It's like, it's 7 or 700. Yeah, 700. It doesn't fucking matter. None of this stuff is actually statistically relevant. They are all actually noise. All of these numbers is equally valid. And so I'd say, just say whatever they want to hear because they actually don't care. They just need to check a box and they're so excited to invest money in you because they don't make their money based upon the outcomes. Like, the vast majority of a VC's— of a typical VC's income will not come from their carry. It'll come from their management fees or some slice of that over the course of their career. They don't give a shit about the outcome or the success of your business, by and large. They hope they do. It's kind of like the house always wins in the sense that it's— they make money either way. It's like the VCs are not exactly stressing about you failing. Like, your failure actually simplifies their life in many cases. And so I think that, yeah, the numbers are the same, they're still all bullshit, but I think the valuations are higher because they're willing to convince their LPs of a stronger story, and then they get paid along the way.

I think the valuations are higher because everyone that's non-traditional in the sense like Tiger Global and everyone else is— I spoke to 10 friends of mine here, I caught up with, they're all mid-raise. They're all being chased by Tiger or some non-traditional VC at a much higher valuation, and a conversation that you couldn't have probably 2 years ago, every one of them are asking me, me, hey, how much should I take in secondary? The secondary— they're like, secondary is not even an ask from them. People used to hesitate. I need to pay my house. But the secondary is a starting point from a VC like Tiger, like, hey, how much do you want to take in secondary? What's your viewpoint on that?

Can I speak in defense of metrics for a second?

Yes. Yes. Speak in defense of metrics.

I do think VCs care about metrics. And I think you as a founder and entrepreneur should care too. Like we, like, so I was at product at TripIt. So there's some faint rivalry 'cause I worked at Concur. We had meticulous dashboards about, here's our funnels, here's what we're spending. And I took that into my own company of, and you're right at the early stage, what is your CAC? You have no idea. Yeah. But like just the in and out of like, I think a lot of startups lose track with our COGS in terms of AWS spend. It can actually go upside down. Tracking your net retention, being super meticulous and honest about your churn so that when that VC does come knocking and maybe there is a little bit of a storytelling that you have all the numbers ready to go 'cause they're gonna drop it into all their proprietary models and whatever pretty slides you make to razzle dazzle them, the truth then comes out. So, it was weird when we raised, they were like, wow, your metrics are actually far better than we thought. Expected because everybody exaggerates. Like they throw out people who churn within 3 months. We keep them in. And we're then honest about our—

Yeah, I want to direct some of that too. I mean, first off, I would not lie about your metrics. Yes. Like you can't— there's obviously some level of guesswork in every metric, but it's how you're running your business. I always— my view of it is show your investors your board deck that you use to run your own company. And if you're not willing to do that, then that's a problem because you're running a company differently. Of course, like with fast-growing cohorts and so on, there's only so much you can know. And I mean, I take your point on how well can you really know CAC and MRR if you're just— if you're growing so fast, but you're running your business based on those decisions too. If you think it's a shitty business, don't, don't keep running it and just take whatever that is and hand it to your investors. I think the cynicism on VCs making their money off management fees— I don't want to defend the VC business model. There's lots of different parts of it that work and don't work. Work, but it's absolutely not true that a VC that makes all their money off fees is going to continue to raise great funds. And, and these— I mean, all these funds are returning, you know, astronomical results. This is now— we're in a phase right now where this is all being, you know, these companies are getting bigger. This is not theoretical anymore. And, and for— I think the idea that VCs aren't looking for that is— I think that's a little cynical. Um, but, you know, I, I think it's— they're just seeing companies sustain these growth rates for so much longer, and they're just trying to spot it earlier. And then it's guesswork, and everybody's— we're all guessing too on, you know, is this thing going to work or not work? We're all making a choice to continue to run our business that way. But I think that's what we're seeing, just seeing multiples increase that way. I like not—

don't lie, just guess with conviction. Guess with your own conviction, right?

If you're going to run, just show them how you're running your business and let them make their call.

Yeah, but if you're running your business on noise that you call data, you're doing it wrong. Like, you should at least not lie to yourself. Yeah. It's like, if you know that this is not statistically relevant, don't pretend like it is. For sure. Maybe pretend to others and guess with conviction to everyone else, but like, don't guess with conviction to yourself. But it's also very stage-dependent, right?

Like, I mean, when you're raising a pre-seed or a seed, you just need validation, and maybe you have some unaffiliated customers who've agreed to a paid pilot with you in the B2B space. But when you're maybe at half a million or a million in ARR, you have high retention, maybe 100% plus NRR, customer NPS is high. So those are real metrics, right? If customers love your product and they don't leave and they're paying you for it a couple years. So what is that bar to hit, I guess, in today's market, a Series A or a Series B? You raised a Series D, right, Edith?

Yeah, and it's funny, rounds today, I feel, I'm like, I used to buy a Coke for a nickel type envy. I'm like, wow, the rounds that they're raising. But it doesn't get easier though. I have a startup I'm friends with. They did a pretty decent-sized seed of, I'm not gonna, like $4 or $5 million, which just blew my mind. And then now they're trying to do the same grind that we did. They're like, how do we get our customers? How do we get our ACV up? How do we turn this into a business? That part does not get any easier.

Yeah, that's the real work.

Yeah. Yeah. And so what is that number though? Maybe that number is arbitrary, but what is the growth rate you need and what is the revenue you need and what is the retention you need to get a B and a C in this market?

I don't have any— there's no magic formula.

A lot of people come to me for fundraising advice. And it's heartbreaking sometimes because they think they get fed into the model and a yes or a no gets spit out Magic 8 Ball style. But really it's a yes or a no. And then also, do I like your business? Did this partner, you know, have a bad lunch yesterday and they're still a little grumpy at the partner meeting?

Like, it's not, it's not, it's not automatic. Like, the seed and A are primarily just about like you and the story you tell, like, especially the seed. A, it's like you have to have some evidence that like, you know, the story has some some anecdotal evidence of some kind of traction. And then, like, B, it's like you need to, like, invent numbers that seem reasonable. And C, the numbers have to start seeming actually, like, solid. And by the D stage, like, these numbers might actually mean something. Um, but, like, your company's gonna die way before you have any meaningful numbers. Uh, and so, like, by the time, like, you're either gonna, like, succeed or fail way before you have any numbers that actually matter. And so really the key thing I think as a founder is being a powerful storyteller. is like understand where the market's going, be able to state with conviction that the market actually is going there, and express a story for how you're going to get there. And the strength of your story is like 90% of the success of your first couple of rounds.

I mean, I think that's probably the most important point is investors— I mean, if I look at the companies that succeed in raising, don't— obviously, if you're not growing and you don't have any of those indicators, it's hard to raise. But it's not— that's not the only thing. Necessarily not sufficient. Investors are making a bet on your category, on your TAM, and then your chances of acquiring it. And I think the great founders, there's a reason why they're all great storytellers, is they have a way of talking about their market that helps people dream about it. And I think that's really important. In some cases, it's obvious. I mean, there's cases where you're creating brand new categories, you have to tell a lot of stories. Cases where, like our case, our category is somewhat obvious. People spend a lot of money on productivity software. It's all a question of of can we earn our share of that or not? But other cases where you have to tell a lot of hard stories on why is this market gonna be big? And then people will use that to calculate, do I think this company can be a meaningful leader of that or not? I think that's a really important piece of it.

[Speaker] You know, I don't know if any of you have open sourced your decks, but one of the best evolution of round decks I've seen is Front. Mathilde Collin, she had a seed, Series A, Series B, Series C decks. It's on SlideShare, check it out. You'll see that evolution of deck 1 and 2, very vision-focused, and then the Series B, Series C, extremely numbers-focused. Still shares the story, but it shows that we're growing. There's a lot of other examples, but probably as we were raising, I referenced that a lot. David, you raised a while ago, you raised about, $20 million?

Something like that. Yeah, but we've been raising like, I can't remember, like 5, 6 years, something like that.

Why did you raise when you raised?

Because I was dumb. I mean, because like they're just coming like, want $1 million? And I'm like, that sounds like a lot of money. Yeah, I'd like $1 million. And I'm like, you want more? I'm like, it seems like it. I think it's, I mean, I don't know. I've been pretty cynical up here, but I think that comes down to like Silicon Valley is just such a grinder. I think that And we elevate as our heroes the whole idea of like a serial entrepreneur. The only other time we use the word serial is serial killer. And I think the— and there's a similarity to that, because it's like, you know, we talk about as founders, we're like, yes, you know, I work so hard. I built this product. I am so committed to this social network for kittens. It's all I've ever wanted to do since I was a child. I brought in my teammates— no, no, no, not my team, my family. Family. I worked with my family. I grew them. I mentored them, and then I sold them again. It's just like, what the fuck? It's like the idea that you build a company and then you just like— and that's where the secondary comes in. It's all like bribery. It's just like, hey, how many of your family will you sell me to go into this round? It's like everything about it is just so morbid if you kind of think about it from like the perspective of what you're actually trying to do. Like, it's such a rarity to actually try to build a business. That you want to work at forever. It's such a rarity. It's almost like you're laughed at. Like when I started Expensify, I'm like, yeah, I'm gonna build a company. I think I can make this insanely profitable, like the most cash-efficient cash cow business in the world. And they're like, but why? Like, because I mean, profits are good and like, I don't know, a job is nice. And they're like, yeah, whatever. And people just roll their eyes at me. The idea of trying to make a company that I wanted to let work at forever. And so I think that I did it at the start because I bought into the serial killer mythology, and then over time just realized it's like, no, that's a horrible lifestyle. It's terrible for your employees. It's not good for creating real value for your customers and so forth. And so no, I think that I did it until I got smart enough to realize actually that's just not the future that I wanted to have.

How many people here want to build a company they want to work at forever? Show of hands.

I'm so glad to see that. I'm skeptical because I would say if that were true, you would be doing a whole bunch of things that I doubt most of you are doing. Like, how many of those same people just brought in some kind of outside executive from their VCs? Yeah, you just fucked your entire company because by doing that, you just indicated to every one of your employees you cannot grow here, that we value skills that you cannot get here. And so basically you put a cap on all of your best people and they will absolutely leave. And so I'd say if you care about your employees, it means you have to do things from day one to demonstrate that. You don't take this giant fucking secondary round, it's just like, hey employees, thank you so much for grinding. I'm just gonna be over here with like this huge check. Like the Mailchimp guys, like, don't worry, we're never gonna sell, we're never gonna sell. Sorry, suckers. It's like again and again, every single big round we have, employees get fucked. And there's a whole bunch of reasons for that. It's like the VCs always win, the founders sometimes win, the employees rarely win.

I think, I mean, you asked the secondary question earlier, and I think maybe that's one of the biggest challenges with secondaries is I think we've done a secondary in every round. Employees go first, founders go last. And I think that's very important. One of the boards I sit on, Spotify—

well, let's slow down for a minute because that's Interesting. For folks that don't know, what is— what the hell is a secondary? Um, it used to be very rare in a venture round that the founders or employees could sell in that round. Yeah. Um, and then maybe— I mean, we're dating ourselves— and then maybe 5, 6 years ago when you did a bigger round, $200, $300, $400, like when you were one of the about to get big, the, the VCs would offer you a little extra money because they wanted to buy 10%. but they could only get 8. So to bridge that gap, they would say, look, I can't get my 10, but, but Edith, can I buy a couple of your shares? Right? Sure, can I buy a couple of shares? And, and, um, it would happen later, right, when you were likely at 20, 100 million in ARR. And then what's happened the last few years is it's happened earlier and earlier. And then what started to happen in hot seed and A rounds, right? Anyone— because bigger funds would come in and they'd want it. And so it would happen at valuations at 30, 40, 50, $60 million, which we could talk about, right? And then it's become hyper-aggressive, right, as a way just to get into, uh, an expensive fire. So it's changed. But that's a lot of it. What, what to be aware of is the good news for founders and the employees— employees or founders is a good topic— is you don't have to get to an exit to make a few bucks anymore, okay? And that was maybe my biggest mistake as a founder, is I sold in 2011. I sold in 2011 to Adobe and a VC offered me $10 million in secondary to not sell. I just didn't know what the— What? What do you mean by sec— How does that— I can't get— My head's hurting. I'm like, "Sounds good. That's more than I made off my last startup." It was just starting, and bear in mind, it's hard. You have to be in the elite of— These are elite companies. Don't forget that. Money's hard. No matter how it looks in TechCrunch, it's the elite companies getting LaunchDarkly didn't get $200 million until it was a top 3% startup, right? Coda didn't get it either. So you have to be elite. So don't get confused. But if you're top decile, you can cash out a little bit, like you can get millions of dollars and not have to wait 10, 20, 15 years.

I think that's, I think that's a key point. So, um, one of the, I sit on Spotify board and one of the Spotify sort of opened up the direct listing thing, not the first to do it, but the biggest. At the time, one stat about Spotify, one of the reasons it worked, 60% of employees had sold at least some stock before the IPO, and that allowed Daniel to take a longer view on it, not have to worry about lockups. The heart of what makes an IPO work is you constrain supply. And he didn't have to do that because it wasn't going to be this run for the exits. I think it's really important that right now you hire employees and many of them have an offer that they consider to be completely liquid from a large public company. An offer from yours where they think your stock is a lottery ticket. And the more you can help them understand that, no, no, I intend for your stock to be worth something, that's really important. So for me, even if it's symbolic, we have a secondary every round. It's always oversubscribed from investors. Employees almost never sell anything. And they— you give them the option, they sell as much as they want. And some people have their circumstances, they're buying a house or doing whatever, but they're making their choice at that moment. Am I investing in the company or not? And they're hearing a commitment from the founder that I intend to make your stock worth something. So I think it's actually quite important.

That's great. Yeah, I haven't really heard of that as a regular strategy. I think that's a great model. Yeah, that is indeed.

I, I want you guys to—

and I think just to summarize for founders, and tell me what your recent experiences are, I think if you can make it to $10 million ARR, and let's use a rough number just in your head, and you're able to raise north of 20, okay, don't get me wrong, statistically that's still hard to do no matter how it looks on techcrunch. But if you do it, those investors are probably going to offer you secondary. OK, so just know as a founder, if you can get to $10 million and you can get— I'm not saying take it, right? I will tell you the single best investment I've ever made, the founder refused to take secondary at $300 million, $1 billion, $3 billion, and again at $10 billion. You don't have to take it. OK, but just knowing that if you're able to slug it out to that level and one of these fancy funds wants to invest, it's par for the course today in your term sheet, right?

There's one other thing. This is a very tactical suggestion, but But I got this early on. There's a type of stock called founder's preferred stock that I don't know why more companies don't use this. But when we were starting the company, I got this advice from another founder that if you structure your stock this way, people aren't familiar with it. It's often referred to as FF stock because the Founders Fund came up with it. It works just like common stock except during a round, it can convert into that series of stock and be sold to the investor as that series. Like we had a Series D, they can buy founder's preferred stock converted into Series D. Mechanically, it makes the investors It makes secondary much more attractive to the investor because they can now take the exact same class of stock. At Coda, every employee, 20% of their stock is found as preferred. And it's a way of telling every employee, we want your equity to feel semi-liquid. I think then they think like investors, which I think is the heart of how you hire great people is you make them feel like investors in the company. And that's a signal of how it's going to work.

You should open source that playbook on It's not mine.

Yeah, actually, it's Founders Fund did it, but the— but we, we, uh, we did it, but they didn't productize it the way you're talking. They didn't productize it. Yeah, yeah. Awesome.

Would, uh, would love to get, uh, one other thing I wanted to hit, just, just to get the, the panelists' thoughts and your thought, Lloyd, because you just raised— when you talked about Front, right? I was an angel investor in Front, and it's— and, and I saw something happen in Front. I'm sometimes slow, that now in 2021 has become commonplace, which was the last round in front, which I think was at $600 or $700 million, was all founders. Okay, it was Ryan Smith from Qualtrics, I forget who else, the other billion— our friend— friends, the billionaires of SaaS. But they all, I think, led that round instead of a VC. And at first I'm like, well, that's great for the— that's great for Matilda and the company. But now this happens every week, right? So many founders have their own funds. And should you take— did you— should you take advantage of that, right? Um, and do you even need VCs for a while if you're fortunate enough to get these alternative sources of capital. These aren't crazy weird offshore sources of capital. It could be— Edith could have her own. If Edith wanted a $50 million fund, I don't know what you do in angel investing, they would give it to you, right? Your investors would give it to you if you wanted. So is it— what do you think of this trend? Is it good?

I actually was gonna— I think it's weird, to be honest. Weird? Like, I am— I have a full-time job. Yeah, like I'm CEO and founder of LaunchDarkly. That's, let's, that's a full-time 100-hour-a-week job right there. Yeah, I mean, um, I have a very small, um, angel fund just because sometimes I was talking to somebody who wanted advice, I was like, you don't need advice, you actually need money. Like, you need to get that first angel in. And like, it's just, it was so inspiring. There's somebody I invested in that I'd only counseled over the phone and I met her in person and she said, "You were the first person that ever invested, and when you wrote me that email," she just started getting extremely emotional that somebody believed in her, like, on this entrepreneurial journey. Yeah. So I think entrepreneurship is really valuable, and the ability to help people with that, it feels so good, but it's not a full-time job if you're a founder.

Yeah, absolutely not.

Is that, is that your question? Should you take it or should you give it? Is that the—

I think there's a lot of interesting questions, but even in the last 12 months, there's all these new sources of capital, and you can raise a seed or even an A today without ever needing a traditional VC, but still from folks you would look up to and respect. It— this wasn't even possible, I don't think, fully a year ago, right?

I, I think the risk with that is that the pro rata and a lot of risks in subsequent rounds just gets bigger and bigger and bigger.

Yeah.

So I wanted to get into the process, right? Like, you raised a $200 million round. Everyone here— or how many people have raised a round of funding here? And how many people want to— are looking to raise their next round? Okay, a whole bunch. Yeah. What is the process you guys followed? Maybe starting with David, because you raised $20 million.

What was the process? To Jason's point, the world's changed so much, and I don't know anything about this world anymore.

You're feeling it? It really has changed.

Let's take this survey. It really has changed.

We'll get you up to speed. Yeah, yeah.

Did you have a— It got better.

It's better. Isn't it better? It's better.

I wonder. I think the early rounds are entirely different than the later rounds.

But let's say an A or a B, right? Like, Edith raised a D, but I don't know if it's that much dissimilar than a C or a B.

For the early rounds, The early rounds, the process is weird. I mean, you're meeting people, you're, you know, everybody is not quite sure what the business is. There's no metrics to look at. It's how well you tell your story. So on later rounds, it's a little bit more standard. This is the set of people you can talk to. These set of people are too early. These set are too late. They require this type of model of doing it. I mean, the biggest thing I tell people is compress the process. You can, you know, I think one thing we can all agree on, you should spend most of your time not fundraising. So do whatever you can to take that process, and when you start it, finish it as fast as possible. Turns out that's actually very helpful for the process because there is an incredible amount of FOMO in these processes. And so, you know, make sure— I had one founder that he's raised money for 5 different companies, and I guess he's a serial entrepreneur. And his rule of thumb is no process over a week. So he'll start on Monday. Days, tell everybody, here's, here's, here's what I'm raising. I'm taking the best offer at the end of the week, and if I don't have a great offer, then it is what it is. Um, but I'm not letting it expand out. I think, I think compressing the process is very important that way, but it's very different early and late.

Yeah, I mean, um, early, again, it's been a while for me, but early you're just trying to scrap money together. Yeah, like I literally had a spreadsheet of everybody I knew that had money, like, because I'd I'd been early at TripIt, I'd been at Vignette, I'd been at Concur, and I was like, do they have money? Can I ask them for some? And I just worked my way through the list and scrapped together the money. But late stage, it is much more about running it more like an enterprise sales process because your own time is valuable.

Yeah. Yeah. 4 to 6 week sales cycle. Bring people along at the same time. And it's also a very stressful process, right? When you got a lot of VCs in the mix, everyone wants you to meet somebody that— let me show you what I can do for you. Let me introduce you to this partner, that partner, everyone else. It's a huge time suck. So we actually— and I can speak about this— we were pulled into the Series B preemptively with 21 VCs. And I was having a kid, and we had all these new execs that had just been for 2, 2 months, and we ran this, I mean, we got pulled into the process, but the following Friday when everyone wanted to dive in the data room, like 21 people, I punted the raise. We just got together with board and said, the timing is not right. Execs have not been at bats for even 2 quarters. How do we know even this model they're putting together is gonna even play out? So we just punted it and we said, let's talk in Q1, but that created a whole bunch of FOMO them reaching out to a board saying, do they want in secondary, make sure, like, can we preempt all of this stuff, right? It's just, as a founder, you wanna run your company and you should spend all your time running the company. So compress the process.

I completely agree. [Speaker] Yeah, I think those early days, it's like, yeah, I think there's so much hustle. So I'd say some specific advice would be one, make your slide deck full of pictures, but no numbers. And two, when they say, and then when you reach out to a VC, to say like, I'm not sure if I'm gonna raise, but I'm thinking about it, and I really like you, so I'd love your advice. Because it's kind of like, if you want money, ask for advice, because if you ask for money, you're just gonna get advice.

That was in a song by Pitbull as well.

I'd say that the converse though is if it's an angel, just ask for the money, 'cause otherwise they don't know.

No, no, no, everyone likes to feel like they're super smart. You're like, you're so smart, I love your advice, I read your shit, and so I just, but I'm thinking about raising, what do you think? And of course they're venture capitalists, their answer is always going to be yes. Um, and so, uh, don't— never mail your deck ahead of time because then they'll make their decision before they see you. Um, show up, gesticulate, speak very loudly, swear a little bit, you know, be edgy. Um, and then say like, hey, it's really great. Um, and, uh, I think, and just say whatever number they want to hear because it doesn't matter anyway. Um, and Yeah, and just like, oh, and then, but even then, before that, I would probably do a Kickstarter. Free money, something like that. As much as I can get. I'd do an ICO. Is that a thing anymore? I'd try it anyway because why not? David, I don't know if you're just trolling us at this point or not. There's all sorts of great options out there. Like, as the early days, you gotta fucking hustle. And so yeah, I would do all these things. I would scrape together all of this, and I would avoid the VCs as long as possible. Possible because they're the devil. Now don't get me wrong, sometimes you need to do a deal with the devil, but you're probably gonna get fucked in the process. Um, and so, and that's okay. Maybe that's just acceptable for the path you're gonna take.

So Dave and I agree on one thing. Uh, don't have a deck.

Um, don't what? Send the deck? Don't have a deck.

Yeah. Out of all that, that was one truth. I actually, I'll go one step further. The, the deck is actually, I, I agree. Tell your story whichever way you can. I, I, I like to use my, whatever I presented to the board last as my, as my, starting point. But the one thing I would encourage writing is write the investment memo that you think they should write to their partners. One of the things I think founders often miss is you're pitching a person who's going to become your advocate. And then think about it in enterprise sales terms. This is your sponsor. That person cannot say yes. That person can only say no. So help that person turn around to their partners and pitch their story on your behalf. So that's the one thing I would encourage writing.

—Or even at the end of your meeting with them, say, "Well, how would you pitch my company?" —Yeah, yeah. —And then you can see if you've just like—

—Oh, that's also a great one. If you're asking for advice, then if they ever catch you in something, you say like, "Man, thank you so much for finding that. How would you recommend I answer that question that you just caught me on?" Because it puts them into a collaborative mindset rather than an antagonistic one.

—Can I just add one, like, quantitative piece on this? I know we're out of time. So, did you— you guys know Mark Roberge? He spoke on Tuesday. He was CRO of HubSpot. So he's at Harvard Business School now, and he started investing a couple years ago. I think he raised an $8 million initial fund for operators in revenue, and he just raised $80. And I was talking with him in the green room, and I'm like, how's the investing going? And he's like, you gave me some great advice. He's like, yeah, when we started, you know, 2 or 3 years ago, we'd get 3 to 4 interesting inbounds a week. He said, now we get 100. Not random, not randos, not weird in-mails, 100 Good company. So all— there's all this advice on the internet, but remember, you have to actually break out so much more than you used to. This, this coffee advice, I will tell you, I didn't— during our digital events, I did one called, uh, it was called SaaS or Money, and I asked Keith Rabois, David Sachs, Eileen Lee, Christophe Jantz, and, um, Sachin Patel from Homebrew, all sitting on massive gains. Every single one of them said they read every single cold email they get and every single one of them invests in one week. So that's the way the world changed. Now that sounds interesting, but even if Mark, who I love but is new to venture, gets 100— there are so many SaaS companies today— if he gets 100, how are you gonna break through that 100? Do you want coffee? Do you want to not send the deck? Do you want to just talk about your theory of collaboration software or feature flags? I don't think any of that works anymore when there's a— when Mark's getting— and he I mean, he's got a brand, don't get me wrong, he's a magnet, but 100 a week, and then he flies out to Saastr, he's another 100 behind, 'cause it came out from Boston. So just think about how the odds have changed, and don't get all the headline things confused, 'cause statistically, in a way, odds might be harder, but once you break through, it's easier. I mean, LaunchDarkly, fuck, 200K from Concur people, but now 200 million in a week. Week, right? I mean, it's just such— but you had to break through to the obvious category, right? So just don't forget those 100 a week. But that's— that's— nobody can process 100. Even with the team, it's too many, isn't it? No matter what anybody says, you could do like 3, right? If you really want to have a conversation— as CEOs, how many deep conversations can you have a week? A couple, right? A couple. So just think about the odds.

But that's a good question to perhaps close out with, or maybe we'll do another one What is the best way to build relationships with VCs and break out? You're getting 100 in your inbox. Jason's a proponent of cold email, some VCs are not, but like what is the best way to build relationships? What is the best way to get that coffee meeting when Mark Roberge's or Jason M. Lemkin's inbox is thousands of emails?

I think you deliver results first and then wait for them to come to you. Focus all your time on building a product that customers care about and then the VCs companies will care about you. Doing the reverse, I think, is very, very hard. And also, quick pitch, I'm doing a panel, or I'm doing another session at 11:30. Please stop by. It's called Conan Economics.

And so it's going to be exciting. This is surprising, but I actually agree with David again. Great. What? How is this possible? You know, focus on your business. You know, focus on your business. Build up your customer base. Your customers will start talking. And they're the ones who will tell the VC what they're using in-house or what the new tools are. And that will build your brand for you. To build the actual relationship, I do really like, it sounds stereotypical, but like a coffee or a lunch and just slotting that into your schedule every month. So that way you can meet 12 different VCs in a year. And so that when it is time to actually run a fundraising process, you're not starting from a cold start of like— clever. Do I even like this person at all? Do they like me?

Do they get me? I think, I think the, um, obviously agreed on the focus on your business first. I'd give two suggestions. One is when you're pitching, um, take advice from people one stage, investors that are one stage forward or back from wherever you're pitching. Just go, you know, you're pitching people for a normal B, go, go talk to a few people that would normally be C and D raisers Show them this is the investment memo I'm pre-writing, what do you think? And they'll know they're not in the market for it and they'll give you real advice. And they all know they're kind of, I want to be involved in this raise, I'm getting an early peek, it's something that might come later. You can do that early too, is like go have the seed investor guide you on your A. That's one thing. The other thing is just find, I mean, they're all people, just find a way to connect with them that doesn't have anything to do with raising money. And I always tell candidates ask me, me that question all the time. How do I get a job at Google? I said, number one thing, don't show up in the recruiting folder. Show up in some other folder of why you're reaching out. And everybody has different ways of doing it. For me, I have a lot of other— because of the way Coda works and the way we like to promote ourselves, I'll generally reach out to people about how they run their companies, how their other companies run. That turns out to be a very good way for me to stay connected with people. Everybody has their own way of doing it. Some people do it with with sports or events or whatever, but I think just don't show up in their fundraising folder until you actually want to be in the fundraising folder.

I think we're just about over, Lloyd.

Yeah, yeah, just, I want to take one last question. It's gonna be fun. But for you, if you got 3 intros, like if Mark Roberge introduces you to somebody and maybe 2 other VCs you really respect saying, "Hey, you got to talk to this portfolio company," you're gonna take that intro, right? Or no?

I just want to say 2 things and maybe let's wrap up because this panel's gonna go forever. One is don't fall into the trap that you have to have a warm intro to meet an investor. Cold emails work. I did this thing online. I asked 5 of the top investors, including Aileen, Keith. They all read the cold. Now, no one at the Series C level reads the cold email, OK? Because they all assume— they all assume that companies at this stage know everybody. It don't work. But don't assume you have to. It sucks if you're not privileged. It sucks if you didn't come out of Google or Y Combinator. It does suck. But you can break through it. This is our job as founders. Don't feel like cold emails don't work. They do work. And the one thing I just want to— all the advice you hear, it's back and forth. Edith said something which distills all of it, like fundraising is sales, and fundraising has pre-brand sales and post-brand sales, just like SaaS does. And once you have a brand, it's all different. They will come to you. It doesn't mean you'll close all the deals, but the leads start coming in in venture. But don't confuse the two stages until you have a brand, right? Until you're maybe even at $10 million ARR, It's sales hustle, and if you think hiding stuff is good in sales, fucking go hide the deck, OK? If you think coffee enterprise sales works for you, go do it. But remember, it's sales. And I say in sales, put your best foot forward. Do it the way you know how to do. And it's selling stock. And founders get really, really good at it. You're hearing almost too good of advice. Because by the time you've sold stock 5 times, you've met with 500 investors, and founders get fucking good at this. I don't know what it is, right? But it's sales, and if you're not good at it, be thoughtful and take the risk to do whatever it takes to close the deal.

That's great advice.

Everything in business is sales, right? From employees to PR to everything else. Awesome, this has been a great panel. I actually have one question, maybe you could—

I think we're gonna get killed if we take one more question, right? We gotta break, Lloyd.

All right, cool. Awesome. Thanks everybody.

Thank you, Lloyd. That was a great chat.

Aah!

And now please welcome CMO at ActiveCampaign, Feria Pergolino.

Hi, good afternoon. I know it's the last day. So, um, amazing for the people that are hanging through and continuing to think about their growth. We assume that's why you're here. We're going to talk about hypergrowth today, uh, and with that, um, how to tie customer experience to it. We hear a lot about demand gen. We're going to go into some of that, but we're going to highlight some of the customer side as well, um, and try to get into some tips that are special to us. I feel Very proud to talk about this topic. I am, this is the fourth unicorn. ActiveCampaign is the fourth unicorn I'm a part of. I help lead a good chunk of the marketing at Marketo until IPO. I then was with Aptus until about a $1.5 billion acquisition. I then brought Anaplan as the marketing leader through their IPO, and now we're seeing tremendous growth at ActiveCampaign. ActiveCampaign. We are the leader in what we call customer experience automation. So we think a lot about customer experience. This will not be a pitch for ActiveCampaign. We're gonna really highlight some of the things that have worked for our company or that I've worked through multiple companies. The, but to tell you about us, we do marketing automation, email marketing, CRM, some customer service. Often to growing, emerging, growing businesses. So we're thinking about this, bringing those things together for the ideal customer experience, right? Not just going out and blasting emails and annoying our prospects or our customers, but how do you bring this all together to create a great customer experience? And we're using that ourselves to create hypergrowth. So, uh, that's what we're gonna talk about. Our growth is pretty interesting, and I wanted to highlight this because everybody here is working for a company that you're trying to grow, and the path, the one we want, looks kind of like what's in the chart here, which is always exactly up and to the right, but it's an interesting path for ActiveCampaign. You see that we started in 2003, but the platform that we have, so you think that's not hypergrowth, Maria, that's a long time, but the platform that we're on was built in 2016. So during that whole time, the company, that 2003 to 2016, it was an on-premise company. It was focused in the same area, but it was figuring it out. It was learning the market, trying to figure out product fit, and then building a platform, a next-generation platform, one that we feel like leads the market, but taking the time to build the right thing. And then the growth since then has been tremendous. So I think one of the things, and this isn't a tip, but to really highlight is whatever your path is, it doesn't mean that that is the right way or wrong way. This company has had a very interesting path in that growth, but everything through that 2003 to 2016 is making what has happened from 2016 to today possible. What that is, is we're now over $150 million in revenue. We're about to, you can be the first to hear here, but we're very close to announcing our 1,000th employee. You can see our funding here. Um, as we think about customers, we have over 150,000 customers. That is, to give some context, around the same size as customers that Salesforce has. It's more than most of the— if you were to add up all the marketing automation players, that's more than all of them together. And so it has been some pretty explosive growth over the past year, and we're going to highlight highlight some of what fueled that outside of just the creation of the right platform. So, this slide is to kind of like, let's put aside some of the stuff that like, it does not have to be Silicon Valley-based. It does not have to be that hustle culture. It does not have to be the, like if you are not doing like every single marketing tactic, like I think about it as checklist marketing where you have to do account-based marketing, and you have to do this whatever with email, and you have to do these like, you know, thousand other things. And I think it isn't just about each like checking every box. I think there are some special things and we're gonna run through that. We good? So good. So what have we learned? So one, the market itself, and I know this is obvious, especially if you're a founder, CEO, a marketer, salesperson in the room. You have to find that way to differentiate. I often think we, we think we've checked that box when we haven't. That underserved market for us, people are always telling us the one that we're going after is the wrong one. We really, you know, I mentioned that 150,000 customers, but they are often smaller businesses. There is huge pressure in SaaS to focus upstream, to have that enterprise business. Business. People like the security of that, that repeatability, the multi-year contracts. The reality is, though, that left a whole part of the market completely underserved for us. And so we've been really able to take a pie with nobody challenging it and create something different. Our largest competitor is right now moving upstream. They're like handing us the market as we move forward. But it is staying strong in what that market is. It's allowed for viral growth. Growth. People are excited to share, hey, no, no, there is a solution for us, there is a way to go. Uh, and so that— we mentioned, um, the ability to innovate. We're not following somebody else's roadmap, we're creating what we think is right for our market. And so I would give more pause. I'm sure everybody here took lots of notes about what they want to do, but really thinking about what market you want to serve and looking at the whole market and looking at the one most underserved is, I think, a an important way to focus. Vision. I think a lot, I make every day, I think about our vision, our mission, our values, and I make my decisions through them. It is not the vision or values that I created, but it is the one that is creating the success for the company. And I, even though I did not create them, I live and breathe them every day. The, this is, I just mentioned in the last slide, like not then doing what your competitors do. I think this goes into differentiation too. We spend a lot of time thinking about what our vision is, and then we get this perfect doc and move past it, but making sure we're always delivering to it. I always cite this book, I think it was called, it was called Momentum something. It's like 15 years old or 10 years old, but it looked at companies at that time like Cisco and Salesforce that were starting to grow quickly, and we're getting close close to big scale in tech, and what was different about them compared to others that weren't able to break out. It had things in common, like staying true to the mission, having founders that were still with the company because they held them close to that vision. So making sure we don't lose touch with that or that we're changing it all the time, that you're not rewriting it every year, so that the team has a way to to move forward. And then sustainability. So another thing that happened, so you saw that 2003 to 2016, the company was not huge. It did not have the rapid growth, but it was able to put some money in the bank and create a foundation for that platform. And then it was able to take investment in a sustainable way. We were $20 million in revenue when we took $20 million in funding. We were $100 million in revenue when we took $100 million in funding. We think about that as sustainable investment as opposed to going kind of handing it all away right in the front because it gives you more control over who you're gonna be. It allows you to question, hey, do we have to move upstream? It gives us ownership of that roadmap. You'll see later, it allows us to not just solve for that one customer that we have to deliver for because we have to hit some number. And I'm gonna talk about optionality in a little bit, but I think that's giving us lots of options is a key part of that. One thing I didn't mention about this company is that we are, you may even be thinking yourself, how do they have as many customers as Salesforce? But maybe I, I, you don't know about them. Our most tech, a lot of the people that we've heard in this room, their first customers are other tech companies. And so you go and you sell to every tech company, and then you have this, like, to make this huge leap over into other industries. Tech can be very incestuous that way. So your first deals are like, okay, I'll buy you, you buy me. But then it's really hard to get good product feedback to really know how you're going to serve that next market. For us, we, we built the product that we thought was the right product, and then we encouraged our customers to share about it. There's some things that are very special about us, the value we're able to deliver for our customers, the services we deliver. I'm gonna talk a little bit about that as well as what we call trust, making sure that our customers don't have to think about, is our data safe on our platform? And those things came together to create this network of customers that are excited and share. And that's resulted in over half of our business being outside of the US. For a company our size, sitting in that kind of, we have a post-billion, above billion, 3 billion, $1.2 billion valuation, it would be— it's very rare to have such global diversity. One of the things we love to share is that we have customers in 170 different countries. And to context that, that's like more countries than McDonald's has locations in. And so really encouraging that viral growth and not overlooking those global markets. Now, that did require some thoughtfulness when we did create that platform. Platform in 2016, having some translation, making sure that we were thinking global first from the beginning. But, uh, as you're thinking about how to differentiate or get to an untapped market, it does not have to be the same path as every person sitting next to you right now. So I mentioned I was going to revisit optionality. Um, I love this company because of the diversity in our go-to-market. We have 5 different lead sources that sell through 3 different channels. When we looked at the potential impact of COVID we didn't go, is the business viable? What's going to happen here? We said, which one of these channels are we going to have to lean into? And so for us, we have affiliates as a channel. We have agencies. We sell direct through sales reps. We sell directly through our website. And so being able to lean on those as being able to play with pricing and packaging to make sure that we can continue our growth have been true assets to us and have allowed that growth even through a pandemic. And then now as we shift again post-pandemic, this is something that has been exciting for us because it's something that we've also been able to share with our customers and we've seen them do very similar. I'm going to talk about one story in a little bit, but where they're changing their model. We did a survey earlier this year and almost over half our customers talked about a changing business model during this time. And so if you haven't changed your business model, if COVID has not impacted your business, it's definitely something you should be thinking about. Or you should you be doing the same job today that you were doing a year ago? Beyond that diversity in the go-to-market, optionality hits in the way that we serve our customers. We don't have a single customer that represents more than half a percent of revenue. That gives us control over our roadmap. I talk every day to marketers who are like, hey, if we could get some type of POC or free trial out, or if we could do this other thing, but we can't because the product team's busy developing whatever for these two big contracts. We haven't been weighed down by that. We have been able to grow go towards the market or add in things for demand gen. Actually, sitting in the front row is Shay, who heads up our product innovation. I get his title wrong all the time, so he'll tell me where I'm wrong on that later. But we're right now working on a project together where we're gonna find a new channel, a new way to do acquisition. And we can do that because we can pull some of the development resources because we aren't stuck serving just a few customers. And so that optionality, that ability ability to change, to rotate into the things that are working has truly been a benefit to our business. And it starts with, you know, whether you're CEO or a leader in the room, really thinking about that from the start. Investing in your community. So I mentioned that we often serve smaller growing businesses, and that has— that's created a virality for us, which is amazing. But what we see is that a lot of other companies that are serving smaller businesses try to bring something that is all-in-one and say, hey, like, this is— you can do it all with us. But what we found is like growing businesses, and we can define that lots of different ways, it is technology has advanced. Like somebody does not want the same thing that the person next to them has. And you want to build the technology, you want to make the investments in your technology that are going work for you. And for our customers, like, we're not trying to build everything. We're trying to build an amazing platform, and we can connect to the things that are going to help them grow or do what they're trying to do. And so breaking away from trying to solve every problem really has been focusing in on our vision and then leveraging our community, both from that virality and getting customers to share, but also from leveraging the amazing technology of people that are developing in this room and focusing on those APIs, those connections, making sure that people can create the growth that they want instead of locking them into a specific cloud or a specific ecosystem has been very powerful for our customers. So this is my favorite one, which is like, what doesn't make sense? I had a CEO that I worked for, not the current one, but used to say this in a different way. He would say, I know if somebody tells me no 3 times that it is the right thing. And that used to annoy me to death because it would mean, like, as a leadership team, if we all disagreed, he'd be like, let's talk about this more. And that would sometimes be hard. But people go to the easy places, right? Like, to differentiate your business, going and doing something harder gives you something different. And so we've done some things here that people told us, investors, people within the company, sometimes myself to the CEO have said, hey, this is impossible. This is gonna be too hard. It's gonna be too costly. It doesn't make sense. We give free implementation and migration. So if you have bought any of our competitors, competitors would be HubSpot or any of the marketing automation players, some of the CRM players, you are forced to pay an implementation fee upfront as part of the package. And our customers didn't wanna have that upfront investment. They wanted, we wanted them to try it. We wanted to reduce the barriers for them. And everybody said like, it's just gonna be too much cost. And especially because you're serving smaller organizations, often you're going to have, there's gonna be higher churn, it's gonna be too costly, it's gonna like sink your model. But we knew this would be a huge differentiator for us. We understood that like getting people successful was like a magical thing. Like, why wouldn't we wanna do more of that? Why wouldn't we wanna have that success? And ultimately that is what has led to the virality. That is what has led to this massive customer base across the world because we are reducing the friction upfront. We can say like, when you think about what your salespeople have to say on a sales call, like our salespeople can say, hey, like, there's no risk in trying us. We offer a monthly contract, which is another one of those things that often don't make sense. We're gonna help, like, we're gonna cover the cost of migrating and implementing. If you don't like it, you can go to that other one later. You're gonna have very little into this. And removing that barrier for them and taking it onto ourself has been part of the amazingness of this company. And I, So this presentation was called Hypergrowth for Customer Experience. That's customer experience. It's not an advocacy program. It's not having a great support team. It is thinking about the entire funnel and making sure that you're removing those things that are gonna cause friction for those customers. We mentioned here we did 200 small business events. For a company, this was in 2019, for a company in 2019, we were probably fine. 500 people saying you're gonna do like, you know, an event for every 2 people in the company was like massive, but it got us out there, it got us talking to our customers. We were able to activate them. We mentioned then turning that virtual, and I think a lot of us did that. One of the things that was a big lesson for me when we realized, hey, we're not gonna be able to do these in-person events that were wildly successful for us anymore, and we're going to switch them virtually. I think the first thing was like, we can't stop, we have to keep them going, we need to keep our business going, let's just take the whole thing and we'll put it online, we'll put our presenters on Zoom. And instead, we paused and we rethought the whole program. We took 3 months off. We said, hey, we're gonna, we're gonna have instead of a bye week, like a bye couple of months, and we're gonna really rethink this program and we're gonna make a great digital experience, and that pause did not make sense. It was at the time that we thought we were going to need these things the most, but getting it wrong wasn't going to help us. Like, it just wasn't going to be the thing that, that was going to create longevity. And so taking that pause, doing that thing that didn't make sense, and then making the right digital activation was, was very valuable for us. This— I mentioned that we're proud to do the this because we see our customers do this and we'd like to be an example for them. Hip Cooks is one of our customers and they have like 13 locations across the, I think, West Coast. I could be getting the exact numbers wrong, but they deliver. If all of us wanted to go into a cooking class to like bond together to talk about growth after this, or maybe Shay and I wanna go out as like, BFFs and do a cooking class. Actually, one of my closest friends in the audience, Tony. So we want to go to do a cooking class and COVID hit. And this is a company that is a physical, that has a physical location. They were devastated by COVID. They turned their model into a digital one. They started hosting all of the virtual events that we have now been to. Lots of times, but they also started serving kids and doing kids camp, which was new to them. It was a different model. And now they're thinking about like, how do we retrofit our stores to now accommodate kids? Because this has become who we are. And I think that goes to like the things that don't always make sense, being open to that change of model, having a different approach, and then being a company that serves as an example for your customers and helping them through, I think is all part of that hypergrowth with customer experience and growing with your customers, which we love. I've mentioned advocacy. I mentioned earlier how it was important to us was value, service, trust. These are all for us part of what we call our customer success commitment. If you were to ask me, I think, what is the best thing that I've worked on at ActiveCampaign? What's the most impactful thing I've done? It was work with the team to create what we call our customer success commitment. And this commitment I could have described in a number of slides, but ultimately what it did was add to more virality and give us more of a differentiation. When I first got to ActiveCampaign, we took an inventory of everything we thought was special about the company. And there were some wild things, and I promise there's some amazing things in your company that you don't talk about. For us, we had never increased the price for a customer, and a lot of our competitors do every month. There's just like every year at your contract renewal, it's just more. If somebody wants to downgrade, if somebody says, hey, I, I don't— I have too much product, I want to take less, we, we allow them to. A number of our competitors, you can't like change to a lower tier. Um, again, that free service and migration. We took all those things and we packaged it up and said, hey, this is why we're special. But by packaging it for our customers and letting them know, not only did it help us on the sales side, our customers are now able to articulate why what we're doing is so special. Why, like, virality— I don't think virality isn't about like a cool video you do. Virality isn't about the gift box you mail them. If you think success is like them posting the t-shirt that they got in the mail, that's not virality about your brand. It's like delivering something special and it's so obvious to people they can go share it to somebody else that may need it. And so that advocacy has led to that growth for us that has tied to customer experience. And then this is— I mentioned the project that I'm proud of, but, and our CEO who is the driver behind so much of this, Jason M. Lemkin, is an amazing leader and a lot of the innovation is from his side. But we try to really create innovation across the company. We have hackathons, we are empowering the organization. The other project Shay and I are working on right now is about how do we take some of the things the teams are currently what we're working on and bringing it out to market as part of our demand funnel. And so we're trying to create innovation. In the image here, the team came and brought new templates, and it was happening during a time where, and I think all of us know, we're really focusing on diversity. So making sure that the templates that we had were not only representing who we wanted to be as a company, but also was giving some assets to our customers. One thing that's, super cool here is our templates you could take and use with a competitive brand. Like, so also opening that up and, and allowing that innovation to not just be behind a paywall, but to make sure that people could take advantage of that. And we can use it just as a way to, again, improve customer experience, even if you're not yet a customer. And then, um, here we, we have a platform. Do you— a lot— I talk to a lot I am friends with lots of CMOs, some that are in the audience to hear. My closest friend, Matt Abenson, he's a CMO. We are always talking about the things we're doing for demand. How are we going to grow? But I think one thing that we don't talk about enough is how are we going to be the customer that uses our product best? It's another one of those things like the first slide I talked about where we think we do that well, But when you really take pause, do you do that well? We have a whole team right now working on how do we make sure we're the best customer and that we take the learnings from that and bring that into the product. And I don't think that happens accidentally. And in fact, in lots of companies I've been at, we've realized that we weren't doing that well and had to create a group to do that. If you don't have specific people focused on looking at that, you're probably not doing that well enough. And then you're, you're not gonna be bringing that back back to your customers and you're not gonna get the benefit from that. We have like 6 minutes. I have like 2 more, so we're doing good here. Does anybody here, like we stole this too, so like you don't have to create all of this on your own. This next one we kind of snuck from Grammarly. Have you, do you guys use Grammarly? Great tool. It like makes sure that your emails or your, Word docs or whatever it is, wherever you're writing, that it's doing like a better than whatever tool has built-in spell check and grammar and things like that. They have this amazing email they send out that says like, hey, you know, you're, you do 10% less errors than the average person and you have, you've expanded your vocabulary by 20%, whatever it is they share. And it's super fun and it feels relevant and we love those emails. And we said, how do we do that for our customers? How do we let them see what they could do next? How do we tell them how to improve? And so within the product and through some communications, we tell them how they're doing with our product. We tell them what they could do next. We give them that path. Again, I think customer experience, we sometimes think as like marketing or gimmicky things, but this is a real way to say, hey, this is how you can improve your experience with us. This is the next thing you can do. This is what other people are doing. We try to share benchmarks with that. That as a path to growth. And then this one. So we essentially are an automation company. So like me talking up here about automation is a little bit self-serving, but I wanna talk about how to do this a little bit different. So, and this again was a learning for me. When I look at growing businesses, why we love, We love bespoke, small batch craft, right? Like all these things. I know when I say some of these words, we think of like what's on Etsy or the beer we're gonna order. The reason we go to them is because of how personal it is, because it is that handcrafted. But what we do is ultimately that success, what you even as a growing business can bring that is so personal, you grow out of, right? You try to like automate everything. Doesn't feel personal, and then that customer goes back to that person that's gonna give them that. We grow ourselves out of success, and we see that over and over. It happens in tech. We can pretend that just happens when you're a physical good and where you're gonna buy your beer from, but it happens to all our brands. What you don't wanna have is start having that growth and then grow yourself out of that success. You have to find a way to keep those things that are special and personal. And so I hate— my whole team knows— I hate the word like personalized because nobody cares about like Dear Steve or, um, you know, XYZ company name, whatever that is that we've grown to think of as personal. What we need is to use technology to create unique experiences for every single person, not that we have thrown somebody's name or company name into the same thing for everyone. Unless we can do that right, your hypergrowth in the beginning doesn't matter because somebody else will take it with delivering that more personalized. One of the things in that customer success commitment that's an example of that is I hate— Do you hate the emails that you get and you're like, "Oh, I have a question about this." You respond and you get an email back that's like, like, hey, this box isn't monitored. You can go to our site, sign up through support or whatever it is, or that you just get a— it just says, hey, the email address coming to you is from no-reply@whatever the company name is. We have in our customer success commitment said, we're not even going to have those. We promise that if you email us, you will get an actual person that will look at this because that one-to-one is so important. and you think to yourself, well, like, I hear you, but like, and here's the thing. I said, mentioned we had 150,000 customers. Our database is millions of people. So that means when we send out an email, even if each one is different, that's so many things that could be coming back to us. How can we handle, uh, responding to all of those? How do we make sure that we can get that? How do we even just clear out the autoresponders that come through that? And the reality is you have to automate in lots of places, and anything that does not have to be personal, you have to do some type of automation so that you can have that time to have that personal. And so if you don't build that in, somebody else will take your business from you because they will. And ultimately, whatever we're selling, if it's not solving the problem that somebody has, it doesn't, it doesn't do them any good. And so those are, my tips that we're ending like right on time. I really appreciate everybody coming out. This is also something where we as a team put together what is successful for us. We're very excited about how we are growing and what we're delivering for our customers. If there is anybody that wants to talk about what we do, we're happy to. But if you have tips or if you heard something and you're like, hey, I do this a little bit differently, we'd love to hear that as well. Thank you.