The Best of the Best: YCombinator SaaS CEOs of PlanGrid, Gusto and Amplitude

Y Combinator, PlanGrid, Aplitude, and Gusto are crushing it. Dropbox just hit $1 billion in annual revenue. Stripe is valued at almost $9 billion. What's the secret to SaaS success at Y Combinator? Let's find out from Sam Altman, president at Y Combinator, and CEOs Tracy Young, Josh Reeves, and Spencer Skates. Hi, I'm Sam. Thank you all for having me here. We're going to talk to 3 YC founders today. We have Josh, Tracy, and Spencer joining us, and we're going to talk— So we funded all 3 of these companies in our winter 2012 batch. And before we start, maybe starting with you, Josh, if you could introduce yourself and say what you do.

Yeah. My name is Josh Reeves. I'm the CEO co-founder of Gusto. We help over 40,000 companies today across the US with payroll, health insurance, HR.

Hi, my name is Tracy Young. I'm one of the co-founders and CEO of PlanGrid. PlanGrid builds beautiful, simple software for the construction industry. Since 2011, I think over 500,000 projects have been built with ClientGrid.

Hi, all.

I'm Spencer Skates. I'm CEO and co-founder of Amplitude. We do product analytics to help companies build better products. We work with brands across the industry like IBM, Disney, Intuit, Microsoft to help them build better products and understand what their users are doing.

So we're going to talk today about a lot of topics, but the general theme is What's the difference between good and great SaaS companies? And it's particularly interesting for me because these are 3 companies that when I worked with them 5 years ago, uh, didn't look that different from any of the other companies. Obviously the 3 of you have gone on to do amazing things, and, uh, I want to talk about why and what you've done, uh, that has worked really well. I think people often ask in these panels, uh, what have you done wrong? What were your biggest mistakes? And I think that is interesting, but always less informative than what you really did right. So I'd like to talk about that, and if you think back on the last 5 years, what are the 2 or 3 things that you've done that have, that have really gone well, that have really worked?

Yeah, um, and we also realized we're all in the same YC batch 5 years ago, so it's kind of a fun reunion to be here together. Um, I, I can think of 2 things. One, um, for us it was really important early on to think about why we started the company, and for us it's about fixing this problem, serving the customer well, so A very service-driven mindset, which I gave a talk on a few days ago here, has been a big part of Gusto and affected our hiring from the early days. It became a part of our interview questions. It became a part of how we judge success. Things like NPS are part of our KPIs, as important as things like ARR. And then the second is probably more around values and how we approached team building. So even as a 3-person team, we went through an exercise to figure out, like, what do we stand for as a team? What is our core philosophy? What makes us unique, different? What are some of our stakes in the ground? And then trying to maintain that as we scale is always the challenge. And we've had to refactor that over time, but it's something that I'm proud of today.

This is not my insight, but someone else says that I really do believe that the team you build is the company you build. And certainly at YC, where our version of hiring is basically choosing which founders to fund, Uh, the thing I've learned again and again is that if you pick the right people, everything else works, and if you don't, nothing else works. So, um, how have the other two of you thought about building out your, your team?

Yeah.

Founders found the company, but it takes an entire team and an entire village to build and grow it. And getting the team right is so key here. And it has to do with the type of people we are. It has to do with how we're aligned. I think what's worked for us is that We're here to build beautiful productivity tools for an industry of field workers who have never seen great software before, and we believe that they deserve it. And so because we're so aligned at such a basic level, we can actually work productively together and make the impossible happen.

Yeah, I think one of my biggest perspectives, and to build on what you said, Josh, on culture is, in my mind, culture is one of these things that you discover, and it's a function of the people that you have. And it's kind of like, you know, you could be like, "Okay, our culture is we're going to work super hard and churn out a lot of features and sell a lot of product." And say, "Hey, I'm going to be the dictator and set it top-down." But really culture is one of these things that comes from the bottom up and is set by the people. And so being really, really, really intentional about that and kind of dogmatic about who you hire, who you fire, how you set up the org in order to make everyone successful, what you celebrate. That is like, that's the one key thing. Can you hire people that are not just preserve the culture, but enhance it or build it in some ways that makes, that puts it better than wherever you could have had it?

Those were very well-polished soundbites, but I don't think that answers the question of how you actually hire. Like, I think if you are a founder and you are trying to hire an executive and you have never done it before.

Yeah.

This is something almost everyone gets wrong. I got it wrong many times myself. How do you actually, like, very tactically find the person? What questions are you asking in the interview? How do you get them to join? How do you make them all not fight with each other and snipe at each other once they get there?

This is something we screwed up a lot of different times. You know, the first executive hire we made did not work out. I think part of it is this is why, you know, you're in the Valley, you raise venture capital, I think. One of the things that worked for us, at least in terms of getting in front of the right folks, was retained search firms for executives. That can definitely help. But also, you have to figure out if they align with your values and your mission and your way of running things. So for example, a big thing for us is what we call ownership mindset. So are you an owner end to end? And do you say, OK, I'm going to take this problem and figure it out? Hearing about how someone— there's this great analogy of drivers versus passengers. Are you a driver of your company and are you a driver of the situation you're in versus are you just along for the ride? For us, definitely one big thing that we look for is are you a driver of the situation you're in and do you understand the why behind why you created this policy or this initiative or hired people in this way?

I can give a tactical kind of example. That'd be great. Like, I made probably the first 50, 60 offers in the company personally, and that does not scale. And so we had to create a team where every 6 months we have a peer nomination process. It's a team that's only focused on a values-type interview process. We have a set of specific questions we ask. I do a half-day training with that team. It's kind of this exciting thing to become a part of. And every single candidate coming through Gusto does what we call a watermelon interview. It's kind of an inside joke. But basically that's a way to scale something that we knew was important early on, but I was no longer able I go do myself.

Do you have your values written out?

So we have 6 core values in the company, but you'll never see them on our walls, never see them on t-shirts. To me, you either live your values or you don't. I don't think there is personal values or professional values. It really is more of an inward-facing introspective journey to figure out why did you come together as a founding team, and why did you start this business in the first place?

I think writing out your values, not too early, because they do— I agree, you discover them. But I think writing them out relatively early, 10 employees, 20 employees, and then using that as like a guide for the hiring process.

Yes, that's the point we did that.

Works phenomenally well. I don't know why most companies don't do this. Do you want to tell us what yours are, by chance? Not to put you on the spot if you don't.

Yeah, no, I definitely know them very well. Our first one is actually almost the same terminology as yours, Spencer. So we call it ownership mentality. But basically, it's a cool thing that everyone can benefit from. I mean, when you start a tech company, you give equity to your employees. And that's not just about aligning for economic outcome. It literally makes every employee on your team an owner of the business. And so it affects how we run the company, how we share information. But that's the first. Second one is don't optimize for the short term. It's about this long-term mindset, staying focused on us being around for several decades, which is going to take— it's going to take a lot of time for us to go fix this problem. We are all builders is about just taking action. I think talk is cheap. There's time and a place for it, but in a startup, the lifeblood is is getting shit done. And then we have two more ethical ones, like kind of the Boy Scout in me coming out, but it's do the right thing and go the extra mile. In our business, it's about service. We're doing this very mission-critical task for all of our customers, paying their people on time, setting up insurance. And then transparency really affects more how we operate. I was just talking with Tracy about how, like, when we make offers to people, in our offer documents, we list out our cash balance in our bank account. We do that today with 440 employees. We've done that since day one. It to us is the right way to make an offer to someone. They should understand the state of our business. And when we do all-hands meetings, we go through every KPI, every metric, ARR, margin, with every Gusty. So it affects then how we hire, because we know that someone, once they join, is going to get a lot of information, be empowered as an owner, and that's how we run the business.

Again, to go back to the tactics of hiring executives, you write out your values, you hire a search firm, I want to come be your VP of sales, and you're going to meet me for the first time. What are the questions you're asking? What do you try to evaluate in that first meeting?

For me, the key things for VP of sales is like, okay, tell me about your best reps. How do you hire? If they can rattle off, hey, here's my best rep, here's why they're good, here's their motivations, here's what they look like, here's their background, here's their weaknesses, And if they know that about the people that they've worked with before, that's a really, really good sign. If they don't know it super well, that's like kind of the first red flag and like the first thing that indicates that— I think the big difference in execs— so for example, we just went through a search for an engineering leader. And the big difference that I found between the person that we hired and everyone that we decided to reject was that the person we hired was a leader first. And an engineer second. A lot of the engineering leader— a lot of the VP engineering candidates that we had looked at were engineers first and would talk about engineering problems instead of talking about people or people problems first. And so that was definitely a key one for us. It's not, yeah, can they be the best engineer or the best salesperson? It's can they know how to find and motivate and really understand what makes a salesperson tick and explain that to you better than you know it yourself?

I think that past experience, like what are you trying to hire them for, and Have they done it before? It's as simple as that. I think it's a good indicator of what they can actually do here. Just more practically, when I meet an exec, 'cause it's also a two-way sell, right? We're trying to recruit someone that's way above our weight class so that we can actually scale. I like to spend 15, 20 minutes just selling. Selling Plangrid, selling the vision, getting them hooked in, and then the rest of the meeting I spend a lot of time just trying to understand why they made certain decisions. Decisions that they made, what drives them, and then also evaluating whether this is someone I want to spend the next few years with building Plangrid.

What do you do once a new executive starts to make them successful, and how do you bring them into the rest of the team?

Yeah, go ahead.

The key thing for me that I had to learn, and I screwed up with the first one that we hired, was just letting them run the team and just going totally hands-off. And obviously you want to help them and give them context and support them, But the worst is if team members can be like, "Hey, this exec is bad in this way," and go around them. 'Cause they need to establish, for sure within the first 30 to 60 days, their authority with the team to make the calls. And then you evaluate them on kind of a longer cadence. Are they driving the team and where you want, to the place that you want? Yeah, for sure. That's one of the hardest things, I think, for a lot of CEOs to let go of, is control of the team and control of everything that's going on there. 'Cause I'd hear, "Oh, the sales rep is unhappy," this person isn't happy. And I'd be like, oh, well, my instinct is to dig in if my people are unhappy. But one of the reasons that you hire an exec is to empower them to do that and have full ownership of the team.

One piece of advice I have there is I think I was given this advice. Basically, the more senior someone is— and hopefully it's the need you have in the company, not you're just hiring them for the sake of them being senior— the longer it'll take for them to onboard and ultimately have an impact on the organization. And so I think of onboarding with an exec as almost like you want to peel everything back to the raw foundation. Like have them shed whatever their previous experience might have been or whatever company they were part of. Get down to like I'm learning about a new industry. In our case, it's payroll HR. Kind of join lots of different groups, sessions, and then build up this knowledge base. And we found with senior execs, it's about 6 months before we actually expect we expect someone to be highly effective and impactful, but we plan around that. We don't expect them 1 month, 2 months, and I think that's a pitfall, to kind of be making really smart decisions and know how to navigate the organization. Like, it actually takes time to give them a chance to go then be owners of the specific function they're responsible for.

The other thing I've seen that's really good from execs is that if they will beat you up as CEO and make you better, and that takes a lot of humility as CEO to let that happen and to say, you know, If they're saying, "Hey, this thing in recruiting is really messed up. We gotta up-level it. This thing on our website is messed up. This thing in the product or how we do culture or whatever it is is messed up." And that's actually a really, really good sign, but takes a lot of humility as a CEO to say, "Hey, I hired someone who's a better manager and leader or operator or whatever it is than me." Tracy, to go back to the original question, what are the things that you've done really right?

I think it feels like we're a broken record up here, but getting the right team is about recruiting the right people to the team, and it's also about identifying who the wrong fits are. And it's always hard, right? Because you didn't— you obviously didn't hire someone stupid to the team. They're incredibly hardworking. They're incredibly bright. But they're just the wrong fit, and it's not working out. And that decision to get that team right also includes making these hard decisions. And especially when there's negativity involved. When a— like, there's no amount of positive output that can compensate for someone who's outputting negativity, because their blast radius is so big, and it actually affects the core team that is actually getting stuff done. And so getting the team right, getting the right people on the bus, wrong people off the bus.

One thing I would add, I think, and I really respect how Plangrid's done this, we were just talking about it, but it's like when it comes to something like strategy, I always early on wondered what people meant by that word, and to me it was, you have vision, you have like your purpose, like why you exist, you know, and if you were to talk to any of us 4 or 5 years ago, we had a pretty clear at least point of view on like what we think the future looks like. And it doesn't mean any of it's guaranteed, but that is a vision. That is like the call to action for why we work our asses off every day. But the way to get there, the sequence, at what rate, at what speed, how to allocate capital, should we do it at 2, 3x per year versus 1, 2x? Being deliberate in that process, not getting caught up too much in the echo chamber. Silicon Valley is an amazing place to live. I've been here my whole life. But it's good to travel and get out of this environment too, because it can be an echo chamber at times where you actually start getting caught up in hype. So I really respect what you guys have done, and I think we've also been pretty good at this, of not trying to be distracted and just focus on serve the customer, do it in a way you're proud of, and build a sound business. And those are actually the same ingredients any business needs to be successful.

Sam, by the way, I feel really bad because you're trying to get at tactics and specific examples from us, but people are one of the hardest things to talk about, so we always have to kick it up level of abstraction.

No problem. I think people are the hardest part of this, so we'll be less abstract for the rest of this. Um, you know, I think one of the great analogies that I've learned from Elon Musk about people is that you want to evaluate them on the, uh, the, the net impact they have on the output vector of the entire organization. Mm-hmm. So there are some people that are really good at their jobs, but piss everybody else off. And so it's a little, you know, a win and a bigger loss, or their blast radius. Yeah. Um, but I think that's, ever since I've heard that, it's been a good framework. For thinking about strengths and weaknesses of different people. Um, how many people are at each of your companies now? You said 440?

430, 440.

480.

60.

So, so how do you all spend your time now? Uh, and I guess since you have the largest team, we'll start with you. What do your days look like? How do you think about time allocation?

Yeah, I mean, the— I'd say I'll go philosophy and then tactic. The goal is to be proactive, uh, not reactive. So We've created certain structures. I have a CEO team. It's not a one-person function, in my opinion. So I have someone that does more operations work, and then someone who works more as kind of a chief of staff. But my day-to-day actually depends entirely on the day. I would say, you know, I have a responsibility to my staff, the people that I directly empower and report to me. But I try to actually have at least half of my time ideally be flexible week to week to choose and focus on the most important project or priority in the business. And then there's a set of things that are always there, like PR work, fundraising, financing, investor relations work, candidates, hiring, et cetera.

I like keeping it simple. I try to only focus on 1 or 2 things every quarter. I feel like that's as much as we can tackle at this point. But at the beginning, when we're founders and we're, like, sub-50 people, we have to make ourselves into 10 people to even compete and get things done. And we're just manhandling all these problems. But by the time we get to 100, 200 people, that doesn't scale. And so for me, I mean, I look at each quarter and I think about what are the two things that I really want to happen. So Q4 of last year, I was really focused on recruiting. And like that was the only thing I did. This quarter is all about finishing up planning for the year and figuring out how hard we're gonna push and where we're gonna be lenient so we can set ourselves up with the priorities for each department. Next quarter, I would love to focus on the customers and travel and be with our sales team and meeting clients and listening to them.

Yeah, for me, I won't talk about now because it's a little different, but the last 2 years has just been recruiting execs. So it's like most recently hiring an engineering leader.

Like what percentage of your time?

More than 50%. More than 50%.

And can you talk about how that splits out? Is that like reviewing candidates? Is that one-on-one meetings?

Like, that's a huge amount of time. I don't know. I mean, it's a sales funnel like any other. And so It's a lot of— so it's spending some time internally within the company first to understand what the needs are, who you're trying to hire, and why, and what you want them to do. Then it's spending a lot of time just meeting candidates. Like, probably met upwards of 30 candidates over the course of 6 to 9 months for the search. And then, you know, if I like them, you know, and there's a mutual fit and connection, then we bring them on for 2 sets of on-site interviews. Which are 4 hours each, you know, with both me and various members of the engineering and leadership team. And so that's like— and then, you know, obviously there's kind of the offer process and closing process. And we actually had— there were, before we hired the engineering leader that we did, there were 4 other engineering leaders that I thought we were going to hire after the process, but 2 we ended up declining on at the last minute, and 2 ended up declining on us at the last minute. So it was just like going through that again and again and again.

Um, actually, I, I think time allocation, uh, as the company scales is the most important, uh, it's the highest payoff relative to effort to think about it up front. And I think, uh, almost no one allocates their time right. Actually, if we have a minute left at the end, I will answer it for myself because I think, like, my own observation has been that it is the highest leverage thing to do and almost everybody gets it wrong.

You, you mean, Sam, you mean to spend time on figuring out your own allocation?

Well, just, yeah, figuring out your own time allocation, I think is the, It doesn't— it's an incredibly high-leverage thing to do. And people are almost never proactive enough about how they do it. I want to talk about how you think about growth and how important is it to manage the company towards growth. How— what have you found to be the best ways to generate growth for each of your companies? And we start with you, Tracy.

Well, there's lots of ways to grow a company. I think that— In the beginning, when you raise VC funding, it's very natural for investors to be like, "Just spend more money," especially last few years, because so much money was flowing around. And I feel that when you know, like, the right time to spend money is when you feel it in every cell in your body, that you just want to feel growth. And before that, you have to keep— we kept it really scrappy. We kept the ship tight. And we ended up— just so totally nailing product-market fit because we were laser-focused on the customer. And I think this is key here for the growth of PlanGrid. We, we knew we wanted to build software for the field workers in construction, and so we spent most of our time talking to them, understanding their pain points to a point where we pitied them. We felt so bad for their workflows that we couldn't help but want to build software for them. And so for us, it was customers and product. Versus playing this capital game of just like having as many steak dinners and 3-martini lunches with the sales team.

Yeah, Tracy, I totally agree. I think my rule for that is, you know, I think there's a lot of examples both publicly and non-public of companies where the VCs or the founders were just like, grow, grow, grow at all costs, and that ended up, you know, having to go through layoffs or whatever. My big rule is that if you feel solid about the state the company is in today, whether it's people or whether it's your customers are having a good experience, then you invest in growth. But until you feel good about that, for example, if your customers are not having a good experience in your product and they're churning out, do not spend time on growth until you fix that. Or if your team isn't operating well, don't grow it, because you're just going to compound the problem. So my rule is that if I feel good at the way things are operating and I see, OK, hey, this is working, and you know, I feel good about the people and everything happening, then you can grow, but not before then.

And the beauty in this room, because we're at a SaaS conference, is that you have data to support that. So looking at cohorts, looking at basically historical behaviors, you can actually track and say, hey, if I put $1 in, where does that take me over time? So I think it's about figuring out when are you at that stage where you feel— never guarantee that you can deploy capital in a cost-effective way, but things like unit economics, never go away. Um, you should always try to build a sound business.

Retention is a bigger— is the— a better long-term predictor of success than growth.

Yeah, that, uh, that's the thing I was going to make.

The—

you know, YC has now funded a lot of SaaS companies. We have seen a few, uh, do incredibly well. We've seen a few really blow up. And, and the thing that is predictive of both success and failure is really great retention. And a high NPS and users that love a product or the lack of that. And it is— you can definitely fake growth, um, for a while, uh, by just buying more users at the top of the funnel, and it is guaranteed to fail eventually, and it usually fails spectacularly badly. Um, in fact, I was going to ask a question about the— where you think you've gotten most aligned with your investors. Um, but I— the way— the place I've seen it the most in aggregate is is investors push a company to grow, um, and spend money to grow before the product is good enough, and then you get into this, like, terrible cycle where you keep having to spend more and more money to get users, uh, who think the product is worse and worse. But on that note, uh, where have you gotten misaligned with your investors, if at all? Or where do you feel—

The least alignment or most alignment?

Um, no, no, where— I guess where have your investors given you the worst advice, or where have their interests diverged from you the most? Most?

I'll take a stab. I think, I mean, I'll answer both questions, I guess. One, like, we have a pretty unique approach. I like to go hiking with investors, get to know them. I think the average length of time I've known an investor before we started working together is over 3 years. So things like values are very aligned. I think the important thing for any CEO or operator to realize when they're working with their investors is that the investors have an input, but it's your decision on how you run the business. And so understand what's driving their motivation, right? I mean, in a fast-growth industry, VC model is very clear. Whenever I talk to an investor, I ask, what's your ideal return profile? Right? And if you're early stage, late stage, like, what is success? Do you want, you know, a 3x return, no downside risk? Do you want 2 out of your 10 portfolio companies to work out? Like, what is the way your firm is structured? Because there's many ways to invest. And so we've gotten feedback from folks at Times on, should be growing faster or slower. I think we have tried to take that as input, but not just say, hey, someone told us to do it. Ultimately, you have to be the one running your business.

I quite like my board directors, but we do have a lot of investors. I'd say that I get a lot of emails where they're trying to introduce me to other investors, and it's like, I don't need to fundraise right now. And then I still get these incoming emails of like, you should meet this person, and you should about fundraising. It's like, "We actually don't need to fundraise right now. I need to build the company." So I'd say that's probably the worst, although it's easy enough to ignore.

Here's like the meta thing I'll say. I think, you know, I love our board members. I'm not just saying that. I actually love you guys.

The—

seriously, my biggest mistakes have actually come from not listening to them too much, and that might be dangerous advice for a lot of CEOs and companies, but, you know, I think we picked the investors we did at lower prices because we felt really good about their advice and their alignment with what we were trying to do. I think that the high-level thing is you just have to really qualify and know who to listen to. Because honestly, a lot of investors and a lot of advice is just a total waste of time. So you have to just figure out, OK, what's the signal that you really listen to? For me, I think I go through life and I've seen— You kind of have different coaches, so to speak, at different points, and people who give you advice. Investors and board members can be one form of that for you, if you build a good relationship and if you find the right ones. But yeah, a lot of it otherwise is just noise.

Is it always— one of the things that amazes me most about the startup ecosystem is how much terrible advice is out there.

There's really bad advice, Sam.

It's astonishing. And I think one of the first skills of a new CEO is to be will— like, learn to evaluate advice, and learn to listen to a lot of advice, but then make your own decision, and not just do whatever the last thing someone told you was. And I think the sooner you can get through that, and the sooner you decide to listen to a lot of advice, but then make your own decision, and get pretty good about saying, you know what, that actually sounds wrong to me, I'm not going to do it, I think that's really important. Speaking of usually good but sometimes bad advice, how have you all let customers drive your businesses, and how do you all keep a focus on customers in all the decisions you make?

You want to go first, Josh?

Yeah, happy to. And actually, the talk I gave 2 days ago was all about this too. So I think for us, I'll come up with a couple examples, like metrics. Again, there's so many data points out there. Spencer knows this in his business. Part of what they do to help you is actually focus on which metrics matter most, and it's highly tied to your company. But definitely have something tied to customer satisfaction, customer experience, revenue retention. We've had that as a key metric for us pretty much from the early days. Two is the way you hire. So we think about three things in hiring. It's values, motivation, skill set. But when you find someone who actually really cares about the problem you're fixing, you can tell, right? It's when someone is going to talk to their family and this is what they're proud of. It's like the way they helped this person, this business, this customer today. And you can scale that as long as it becomes a big part of your hiring philosophy. So those would be two things I would spotlight.

So every company says they care about their customers, but I think the ones who actually really care are fewer. I think Plangrid's one of them, along with these guys here. We're actually Plangrid— we're users of both softwares. But it comes down to 3 things for us. One, we listen to them to a point where we so fully empathize with their day, their pain points. Two, we speak their language, and I think it helps that something like 25% of Plangrid comes from an architectural engineering or construction background, so we literally understand their jargon, we understand their workflows, we know what time they're waking up, what time they're hitting the job sites, what their biggest fears are, what their fears are, and what success looks like for their work, so that we can so fully be in their shoes that we can build product that they actually want to use. And that helps them. And then 3, we really love the construction industry. We deeply care about our customers. And I think that you can fake it. It's just a lot easier when you— when it comes from, like, a genuine, authentic place. And this job is just way too hard. To not be passionate about who you're developing software for. And I like to remind the team of, like, the best music you've ever heard, your favorite dish. You can literally smell and taste the love and care that went into the ingredients and how it was cooked. And it should be that way with software as well. Every button is in the right place. There's no more or no less. It does exactly what you want it to do because some— a team cared enough to make that happen. And I think it's true for the software that we're building.

I think one of the things— I absolutely agree with what the two of you said. One of the things that we have actually is I think of— so our head of product is actually a former customer of ours. And so he understands— this is going to sound crazy for me as CEO to say this. But he understands our product and our product story better than I do. And so his job is not actually to decide what we're going to build next in product. His job is to make the rest of the organization understand the customer and the customer story and how our product helps them in order so that all of engineering and all of product and design and sales and the rest of the company can figure out what the right things are to do to help that customer have success with Amplitude as a product.

Great. So we have about 5 minutes left. We're going to do a little lightning round, because I still have a lot of questions. So if we can do like 30-second answers to these, they're shorter ones. You don't have to answer. How do you think about setting pricing?

You have to hire someone who is an expert at it in product marketing. We are horrible at it. So yeah.

How do you find the expert for that?

Ooh, that's a whole other thing about how to hire someone in product marketing. Yeah, I don't know. We're figuring it out right now.

Did you learn anything from your product marketing person about how to set pricing?

So we're trying to hire, we don't have any product marketing. We're trying to hire that person right now. I think, yeah.

What about you two?

I mean, this is something we're trying to get right right now. I think if I could turn back time, just because we've added so much value over the last 5 years and we haven't really charged for it yet, I would probably set the price higher and then discount more and try to find the right price that way. It's harder to go the other way around.

Yeah, I think most folks are hearing it here. Hiring someone who knows pricing and packaging really well, usually everyone makes that decision too late. And then hiring a recruiter would be the other one for me that I wish we had done earlier. So we now have gotten better at it. We have folks that have more of that background skill set, but would have liked to spend more time on it.

Sam, one tactical thought on that. I think what we did from 0 to 1 was really good. 0 to $1 million in ARR. You just quote a super high price and then you just discount to whatever the deal closes the deal, because you're just trying to get in customers super fast. That, like, worked really well for us.

I guess one other takeaway is it doesn't matter that much because you all seemed to be fine and not have a perfect answer to this. That's right. What do you think of the funding markets for SaaS companies right now?

What was the question?

The fundraising markets.

I was going to ask you that question.

OK, I'll answer last. You first.

Yeah, I don't know. I think they're good, but they could always change up or down. Who knows? I don't know. I think back in, you know, this time last year there was like a big dip, which kind of sucked because that was literally when we ran out to do a B. But yeah, I don't know. I think they're good now.

And I would just say, again, born and raised here, it operates in cycles. You know, LinkedIn dropped 40% in like one day, I think, last year. That's crazy. It's a good business. So like, understand the cycle. There's pitfalls in both parts of the cycle. You can get caught up in the froth. In the high part of it, or you can actually in the trough of it kind of be overly fearful. Right now I think it's good for great companies. There's lots of capital, interest rates are low, people want to put dollars at work. I'm personally really happy and excited that there's always been a lot of excitement and focus on seed investing, YC being a part of that, because to me, like, you can't overinvest in seed. It's a chance for folks to try ideas, iterate, perhaps fail, and that's a lot of good innovation. I would get more worried if there was a lot more froth in the Series A, B, and I think it stayed pretty good over the last few years.

You don't have to. I think— I always try and think about where people are misaligned with me, or us, and where people are going to consciously or unconsciously try to deceive me. I think one of the things that is very weird is that mostly people ask this question to investors investors are always inclined to say, "Oh, it's really bad, and it's tough, and, you know, you better take my money, and you other investors better not come into the industry." So I think, uh, you know, most of the noise that we've heard about how bad the fundraising market is in the last year or 2 years has come from investors. Um, founders generally have said, "You know what? It's kind of better than I heard." And I think that continues to be the case. Um, I am very worried about a global destabilization, which I think would have a catastrophic effect on fundraising markets and a lot of other bigger problems, but for now it seems pretty good. Um, okay, new founder, uh, you know, founder from the Winter '16 batch comes to you, has just gotten to $1 million in ARR, tries to get to $10 million.

Grats.

Um, over the next few years, uh, what are, what are your kind of, what's your best piece of advice about how to scale from $1 to $10 million?

I can start. Um, Be creative about the problem you're solving. Be creative about what you're building for your customers. Don't be creative about all the business stuff. There is lots of companies that have done it before. Just talk to them. There's a reason there's a sales operations team. There's a reason why there's a corporate controller. Just copy that playbook and keep your creativity to where you're innovating.

[Speaker:JASON M. LEMKIN] I would say get even more focused. I think, again, it's easy to, as you start getting some degree of success, feel like you can now hedge a bit, do more. And actually, as you get bigger, it's even more important to get focused. Probably in that period you're going to an OKR structure. There's lots of documentation out there. Have some way to go do budgeting, forecasting, planning. I use the metaphor of a ski trip. You can kind of wing it and go to Tahoe or skiing anywhere with 3 people. If you're bringing 50 people or have millions of dollars at play, you need to actually think about what you want to do on that trip, who's going to do what, what's the responsibility. Liabilities. So start building that muscle earlier, otherwise your planning process itself can become a liability.

Yeah, I'd say the big thing is you have to— on the advice thing, you probably have to pick someone new again to talk to, because the pricing advice I just gave of cut your price a lot, that only works from 0 to 1. To help to get from 1 to 10, you want to increase it along with a million other things.

So, all right, um, we're about out of time. As a closing thought, uh, I just wanted to say that I know immigration has been on everyone's mind the last few days. I think the thing that has made the tech industry work and the US do as well as we have is that we have been able to get the best and the brightest people around the world. I know that immigration is complicated. I don't obviously support, you know, totally unregulated immigration, but I do think for the industry that we all care about and that we're all part of, I think anything we can all do to bring the most talented people here and continue to be a welcoming place and a welcoming industry is super important. And I think this is going to come from all of us. I think the big tech companies will do a lot of work, but it is— I think the stories that are the most effective and really the work that eventually drives the economy is startup founders. So please keep fighting this fight. I think it's the right thing for the country and for everybody else as well. Thank you very much for coming.

Thanks, Tom.

Thank you.