Top 5 Things That Change at $50m ARR

He was Chief Marketing Officer and employee 11 at Salesforce. He left to champion the subscription economy at Zora. Please welcome the CEO of Zora, Teen Zhao. Good afternoon. Welcome back from lunch. Thanks for joining us. We've got a really exciting panel here. I was in the audience looking at the stage growing up in New York and trying to sneak into these David Letterman shows. This is my David Letterman moment. I need— I got the mug. I need a pad. I'm going to be throwing stuff, pencils out at you guys. But we've got a great panel here. Let's bring them out and let's get the talk going.

They must think we're going to be hugely thirsty.

Yeah, we got 2 cups of—

How long is this panel?

All right. Well, in picking up the theme from the panel right before the lunch and the theme of this conference, which is all about scale, right? We saw the panel before talking about, yeah, 20 million, 30 million, you know, and we want to take it up a level. In fact, This panel's supposed to be about $50 million. These guys covered a lot of stuff. We're gonna take it all the way to $100 million. And so we're gonna be talking about what happens after the companies that you heard about, when you're hitting $50, $60, $100 million. And before we do that, let's go ahead and let the panelists introduce themselves. First up, we've got Scott Dorsey, who I've known for, gosh, probably 15 years since he was one of Salesforce's early partners. But, uh, built an amazing company. Why don't you tell us a little bit about that? Um, you know, what, what size exactly? I got pretty big. And, and what are you up to now?

Great. Hi everyone. Uh, delighted to be at SaaStr and, uh, applaud all of you, uh, SaaS entrepreneurs that are out, uh, building tremendous companies. I had just a really blessed experience founding a company called ExactTarget in Indianapolis, Indiana in 2001. Go Indy. All right, pretty, pretty good, pretty good local crowd. And we built the market leader in email and digital marketing and just had an extraordinary experience going from 3 first-time founders starting in the world of SaaS to ultimately building the largest marketing software company in the space. And we just had a tremendous experience. We ended up going public in March of 2012, and then in summer of 2013, sold to Salesforce for $2.5 billion, which was, which was really tremendous. And I was fortunate to stay on board with Salesforce for about 15 months, leading the Salesforce Marketing Cloud, and felt like I learned so much from startup to the point where we sold the business. But then I learned even more being a part of Salesforce. And then about 2 years ago, along with some great partners and friends, we started a new venture called HighAlpha. In Indianapolis, and we describe High Alpha as a venture studio, and we're one part startup studio starting new enterprise SaaS companies, and one part venture fund where we're investing in early-stage SaaS entrepreneurs within our studio and outside our studio. So, feel very blessed to have an opportunity to kind of go back to my roots and work on early company formation and startups, and investing and supporting many, many great SaaS entrepreneurs all throughout North America.

Great, good, good. Let's move to Nitsa. You guys hopefully heard the amazing talk from Peter Gaster this morning. He's built an amazing company, and one of his trusted lieutenants is here today to talk about what it felt like, the inside story of how to grow. Nitsa, why don't you tell a little bit about that, and maybe a little bit about your background at Scopus and Siebel, which I think is very relevant here too.

Yeah, I've been in enterprise software for a little while, and very early in the CRM market when actually it was just call center and Salesforce automation and marketing automation actually hadn't even happened yet at a company called Scopus. And then I was at Siebel Systems for about 10 years through that very, very high growth period. So I was very fortunate with that. Um, took a little sidetrack and then, um, a number of years ago, early on at Veeva, uh, before the company, uh, went public, joined as CMO. And we are focused on building the industry cloud for life sciences. And so, you know, when the company started in 2007, this idea of industry cloud was a relatively new idea. And, um, you know, we think that it's actually one of the largest segments. Well, Gartner says it's actually the largest segment of enterprise software is industry-specific software. And many of these, um, industries are stuck on aging legacy systems because there isn't software that's specific enough to meet their needs. So we started with, life sciences-specific customer relationship management, and then expanded from there to content management, to master data management, and then industry-specific data. And so the company has, you know, experienced really remarkable growth. We're roughly approaching about a $600 million run rate. We have a path to get to a billion-dollar run rate in 2020. And so it's been —of really incredible growth story, again, that I've been very fortunate to be part of.

Been public for 3 years? Yeah. 3 years.

Just over 3 years.

Amazing success story. Good. We got a little bit of geographic diversity here—Bay Area, Indianapolis, and now Salt Lake City. Aaron's built an amazing company over the last 10-plus years. Why don't you tell us a little bit about that?

Yeah, I'm in—we're just north of Salt Lake City in Utah, and we're getting some great snow this year, which is That's awesome. We, Pluralsight is a company that's really focused on what we see as one of the world's biggest challenges right now, which is filling the tech skills gap. You know, every business in the world has technology needs to really drive their future strategies forward and really create their innovations. And so the way we see ourselves as a company is we create the creators. You know, we create the, technology skills in the professionals that our businesses need to create the creations we have for the world that improve and lift mankind. So, you know, our mission at Pluralsight is to create progress through technology that lifts the human condition. That's how we think about it. And we're really committed to that. We really believe in it, believe in the good that technology does for the world. And, you know, it started out as a small little company, focused on doing that in the classroom. And then we actually applied technology to our own business to transform it and disrupt it, to take it to the world through a digital format. And that's been the progression for us over the last 13 years. Great. We have about 550 people at Pluralsight now. And, you know, we're between $100 million and $200 million in revenue. Yeah. And growing quickly, and just have an amazing team. And ultimately, you know, have gone through a lot of transitions just over the last couple of years that we can talk about today. Good. A lot of fun.

Super exciting. Super exciting. I don't have my clicker. Can we move to the next slide? Folks, yeah, perfect. So, um, $400 million, $500 million sold to Salesforce, $600 million, going to $1 billion. We heard from Aaron, over $100— Zora here, we're about 600 employees and over $100 million run rate as well. And so what we want to focus on is there's so many entrepreneurs in the audience, and, and you guys all come here to Saastr for the community and for advice. And as entrepreneurs, we get bombarded with a lot of advice from different folks. And what we found— what I found was the context of the advice, you know, the context of who you are, is very important in terms of absorbing the advice. You got great folks, great intentions, giving you advice that maybe applies to a later-stage company, versus an earlier stage company. And so just as a visual way to think about it, it's good to break up a company into different phases, right? And to use the 3s and 1s, if you will. And you go from $0 to $1 million, $1 million to $3 million, $3 million to $10 million, $10 million to $30 million, $30 million to $100 million, and $100 million to $300 million. And hopefully, you know, you heard from, from, from Nitsa, up to a billion dollars. And you can see the conference is really, you know, arranged with that structure. So what we really wanted to talk about today was what does it feel like in that, that $50, $100 million range? And we're going to really talk about 3 areas. We're going to talk about go-to-market, right? Go-to-market and business model, if you will. We're going to talk a little bit about what do you do with the product and the technology, right? Perhaps there's a second act. And then we're going to talk about the organization. But let's start with, with the go-to-market. I mean, you wake up one day, You go through years of hard work and congratulations, right? You're $50 million, you're $60 million, you're $70 million. Then you look at the next hill and the next hill looks even bigger. How do I find the next $50 million of revenue? What big breakpoints did you guys have to come to in terms of, well, how do I now change my go-to-market? You go through this phase of really selling anybody and selling every single customer. Did you guys have to find a second act? Did you have to fire certain customers? How did you guys all think through that? Let's start with Scott.

Yeah, I'll go first. So our story's kind of an interesting one in that we filed to go public in December of '07, and then the equity markets really crumbled in '08, and we ended up having to pull our filing, and a couple years later give it another push. But what was interesting about our filing in December of '07 is we were exactly a $50 million company. So I went back and kind of refreshed my memory a little bit on ExactTarget at $50 million, And exactly as Tim described, we had great product market fit. We were growing quickly. We were really selling email marketing solutions to small and medium-sized businesses, but we hadn't developed what are the next growth levers to take us from 50 to 100 and well beyond. And we built a growth framework and we really focused on 3 areas. The first was segmentation, where we were moving up market. And I think it's a really strong path for many SaaS companies to start in the small and mid-market, getting traction, proving your value, delivering happiness to your customers, and then over time as you build more and more capabilities, and a services org, you can really stretch up market and start to serve the enterprise, which is a real game changer for your business. So growth lever 1 was really moving to the enterprise. Growth lever 2 was international expansion. At the time, we were only 2 or 3% of our revenue from outside of North America, So international expansion became a big, big growth driver for us. And the 3 was M&A and product expansion, moving from one product to a multi-product strategy. So that's really the growth framework we had. Move into the enterprise, expand internationally, and then move from a single product to a multi-product company.

Did you have to, did you have to exit any customer segments or it was all layering on top additional things?

From a product perspective?

Just from a go-to-market perspective. Did you look at your customer segments and say, hey, here's the ones that were more profitable, let's focus on that and let's, defocus on other things, or you were more across the board?

It was interesting. Later, we became very granular about customer profitability by size, by segment, by vertical. And what was really most interesting was that the mid-market were our most profitable customers. The little guys cost quite a bit to support, and the really, really large enterprises were very heavy from a pro services perspective. So our sweet spot was mid-market, but the enterprise was so important for us to drive big top line growth. And then landing the big logos kind of gave us air cover for the rest of the business.

Right. Good, good. Listen, how, how about—

and then I think, um, uh, picking up on where you left off around multi-product. So what do you do if you find yourself in a situation where you've typically sold one product to one line of business buyer through a lot of founder heroics, you know, and what you really need to start thinking about is a sales capability first and foremost to be able to sell multiple products, you know, have a broader value proposition and sell higher. And sometimes you can take those salespeople that you have and you can bring them up to that level, and sometimes you need to look for new talent. And then also we, we don't look at each of our individual markets in one homogeneous way. We have a phased approach where we look at those products that are, let's say, in phase zero. And the question you know, that the market has for you at that point is, does it work? Because you haven't sold it to anyone, you don't have any referenceable customers willing to stand up. So the things that we do there, now again, we're an enterprise software, is we make sure we get a few early adopters live, happy, wildly referenceable, and we focus on thought leadership, aligning ourselves with people who will make us, we call it standing on the shoulders of giants, give us credibility in that segment. And then once we have that referenceable base, we go into the second phase, which is, okay, now you have a few reference customers willing to say, yeah, it works. So the biggest question the market has for you at that point is, yeah, I know it works, but is it important? And so you go and scale out your demand gen, your sales effort. You're still attaching to shows and other things, but you really are trying to get yourself still in every RFP. Then you move to a leadership phase. You have most bellwether accounts. You're the default on every RFP. You're not gonna get— you're not gonna miss out of there. So you don't really need to do as much of that. You are the market. You make the market. You tend to be the show. You don't have to attach to so many things. And at that point, yeah, it works. You know, I know it's important, but it's not new. And so what do you do? Certainly, I know in SaaS we say we're rewriting that story. Story, but I think it's really, really important to think about then leadership and where you're taking the market. And so I wouldn't fall into the trap of, as you're starting each of these new product areas, if they really are in and of themselves major new markets, to treat every single one the same. And make sure that you have a clear understanding internally of that. So sales knows what to expect, so marketing knows what they need to do, so market owners know what they need to do at each phase, because it's very easy to get confused when you're in phase zero, just trying to sell to early adopters, that you need to do all of this, let's say, demand gen. Well, you can't even support that demand because you can't, you can't provide sales references.

I mean, so many companies— I was talking to a CEO the other day, right, but did a bunch of acquisitions to find that second product and never really clicked, because by the time you get to $50, $60 million, you forget almost what it was like to sell that initial product and having a formal language around this to understand, oh, this is a phase zero product. Think like a startup, don't think like a $50 million, that's critical.

And that's a really interesting thing because in our growth plan, literally where we have each of these markets, we have what phase it's in and we have what priority it is. So you're not confused if you're a priority two or you're a priority one, and if you're in phase zero, one, two, or three.

Yeah, and I think when you're at that, when you're smaller, you're not even really thinking about those things at that level. Yeah. Like, you're not really stopping to like write it down and actually get your corporate strategy in a format that the whole company can digest and understand simply, so that as you're working through the business and making those decisions, like, you have a framework through which you can make those decisions. That for us came later when we were well beyond $50 million in revenue. And I want to say something else to enterprise, because I think Scott laid out a great framework that how the 3 big areas that you think about, and we had a very similar experience, or having it right now. And the enterprise move into that adjacency, we're in the middle of that right now, and I just want to say it's harder than any of you currently can see. If you haven't gone through it yet, and you're about to go through it, Like I remember how I felt when I saw it and I thought, oh, that can't be that hard. We have an amazing product. It was land and expand. You know, we were getting into mid-market pretty successfully. And I thought, how hard can it be to just go upmarket to the enterprise? Well, I'm here to tell you that it's guaranteed to be harder than you currently think it is.

And, um— Any lessons?

Any interesting quotes? Yeah, the lessons that I learned was I didn't know what growth what good looked like. I didn't know what success looked like at that moment in time because I was living in this land and expand model. We had an amazing product and people wanted our product, but we were not going in and selling in the enterprise way, like really truly selling in a consultative— Challenger sale. Yeah, in a consultative way where you're really selling value, you're really changing your messaging, and there's a lot around that that as a founder, as a CEO, I didn't see. See at the time. I really didn't know what good looked like. It wasn't until I really committed to that pivot and really went out and found people, and especially leaders that could come into my business and knew what it looked like, and could come in and actually teach the rest of the organization that, that things really started to change.

Gosh, I mean, what you talk about is you look at some of these public SaaS companies now that are trying to go upmarket as a public company. and they're showing a lot of doubt with the street about their ability to do that. So, but being able to put that DNA and inject that into your organization.

For me, I decided I couldn't go public until I figured that out. That to me became a showstopper. It's a great point. Because I wanted to make sure we had the foundation because that lever was so important for us in the long-term growth strategy that we had to get it nailed first. Yeah.

That was part of our story also. It was actually a huge blessing that we couldn't go public in that '07-'08 timeframe because we were just starting to test the waters in the enterprise. and we really didn't know what was ahead of us. And it, it turned out to be a much better strategy to stay private, be able to kind of turbo invest in the business to get that enterprise capability, and then go public a couple years later. For us, the enterprise surprises were just not only on the product scale side of the equation, but all kinds of areas you don't expect. Yeah. Professional services, security audits, uh, inspection of your, uh, HR and hiring practices. Just everything from top to bottom of what you built is really required to get to the next level to serve the very large, very demanding enterprise. So there's a level of organizational maturity that becomes really important.

Exactly, and then your cost model is shifting out underneath you as you're going, 'cause in the land and expand mode it's actually pretty efficient, and then to actually move in that space and deal with all those things you're referencing, you bring in all this additional cost. And you have to be really aware of what that's actually doing to the economics behind the business. Absolutely.

Two quick follow-up questions to that, and you can maybe, in the interest of time, pick one or the other. So growth levers. You hit $50 million. It's not a one-trick pony anymore. You got to find your next growth levers. International, going upmarket. You know, there's some companies that are already upmarket that want to go downmarket. We certainly hear that too. Additional products, right? Perhaps some acquisitions. I know at Pluralsight, how many acquisitions did you—

We did 8 in a 3-year window.

8 acquisitions in a 3-year window, right, to find new revenue streams. Any advice on either how do you restructure your sales force, right, or your go-to-market, if you will, your field organization, or how you have to think about pricing and packaging, right? Was it easy to kind of get through that, or no, that was actually a lot of learning, a lot of experimentation to get those 2 things right? Why don't we start with you, Aaron?

So, okay, so one more, so pricing, packaging, and the other one was? Salesforce. Salesforce, yeah. So, you know, we've been spending a lot of time on segmentation just over the last 12 months to really understand how to get the right coverage model in place, and that's been one of the big challenges around moving from kind of a more SME-focused, land and expand model, into this enterprise motion. And so I would say, again, back to the experience set, you know, I needed to make sure we had a leader in place who had done it before at scale, you know, who had seen a billion dollars in revenue, and what kind of coverage model would really work to get us from where we were today to that point. And so we had to think about customer segmentation a little bit differently than most companies would, 'cause we're selling to developers and IT professionals primarily. It's the tech people. right? And our product is an online product of courses. We have over 5,500 courses today. It's a subscription model. You sign up, you get access to all of them, you can learn. And so, you know, in the beginning it was just the same, you know, the same product for the individual as it was for the big enterprise. And that's how we were selling it. And so when you think about coverage in that case as you're going to the enterprise, like we didn't really know what the right figuring out what the right framework was to think about segmentation. Was it total number of employees in these companies?

Right.

Or is it really more of like, you know, the, the tech landscape within those companies, which is ultimately where we landed. Right. So we, we did some math and some research to understand, okay, if we look at all the different industries and we look at the number of tech professionals that would exist within each of those companies, within those industries, that's what we should segment on.

So you went more vertical.

So we went more vertical, and it helped us understand how to get the right people in the right places. And we're still going through that to a large degree, and the more the coverage model matches, the more success we're seeing. We're actually seeing big increases in retention rates in the places where we see the right coverage setting in.

[Speaker:JASON M. LEMKIN] Right. How about— that's fantastic. So coverage model. How about pricing? Examples of— a lot of companies start talking about multiple editions. I've got a big company that I think can pay me a lot more per deal, but my pricing model is not scaling up to that necessarily. And so how do you have 3 different editions and introduce new concepts like platform fees or for additional products? I remember a conversation I had with Brian Halligan and he was like, I have my sales product bundled in right now and I really wanna break it out 'cause people don't see value in it. And so as I move to a multi-product world, I've gotta re— basically break down my bundles and rethink how I go to market So I have additional upsells. Any, any, you know, Scott or Nissa, any tackling of that?

Yeah, so we actually, so we had a little bit of a different situation actually, also to touch on what we started in large, fairly large enterprise and then went downmarket and then added additional products. And so, so I can talk about how you incubate and start those and, and put in a sales model that maybe you're selling to the same organization, but two entirely different things.

So with your Phase Zero products, was it a different sales organization selling those?

Yes, actually. And so, you know, we, we went around a bit on trying to get the right model because at the end of the day, we're selling to, let's say, you know, Eli Lilly, but we're selling on the R&D side something very specific for clinical, and we're selling something for the commercial side for their sales force. And they have separate CIOs. But at the end of the day, it goes up to a global CIO and a leader that thinks about— So that was a trick. And I think one of the things that we did was we didn't just focus on the sales force and this classic sales overlay model, which I had seen before. We thought about market owners. So we think about— and I referenced this earlier— we think about, yes, product lines, but we think about markets. And so these are people who come from those markets, who have that expertise. They essentially are responsible for driving the product in the market, but they're not in the sales organization. They're strategy people. So we think about those people well aligned with sales, marketing, and with certainly the product organization. And, and then we thought about each of the different products. We have a per-seat product. We also have, in the case of clinical trials, a per-site site, you know. So we were very flexible with the model. We didn't just stick with, you know, everything looking like a nail. So we were trying to be pretty flexible there. And then we went from, like I said, fairly large enterprise down to mid-market. And, you know, it's interesting, some of what you said I think is really important to keep in mind before you decide to change your pricing. And Peter touched on this a little bit this morning, you know, understand what value you think it's delivering delivering, and maybe the price is the right price, and you just have to develop a capability within your organization to be able to quantify and communicate the value. And that is the gift that keeps on giving. If you can do that within the sales cycle, you can then come back and do that later. Make sure you're keeping these customers on track on that plan where you thought they should be. And so from an enterprise software sale, I think that value modeling and then Keeping that as part of the relationship and checkpoints, it could be a really potential—

You've got customers, just to put this in context, that give you millions of dollars a year, right? If not 8 digits. And so to have a pricing model that really scales out so that companies like that are giving you tens of millions of dollars a year, that's pretty cool. Yeah.

Yeah, Scott. I was just going to add pricing and packaging is just enormously important for every stage of the SaaS company. It's just extraordinarily important. I used to always like to say half our customers thought half thought we were expensive and half thought we were really inexpensive, you know, and you've got to find your sweet spot around price, and it all comes down to the value you're able to describe and ultimately prove from an ROI perspective to your customer. It's the absolute beauty of SaaS is we're all building software, and the marginal cost of bringing an additional client on board is almost zero. So pricing really has nothing to do with what it costs to build our product. It has everything to do with the vision and the value that you're able to, uh, describe and, and hopefully make your customers believers of because they can really kind of live into that ROI. If you can find early on folks in the product management org that are really excellent at pricing and packaging, hire them. That's it. There's a scarcity of, of real experts in pricing and packaging, and it's so imperative to your company. I also find early stage, many early stage SaaS companies, limit their flexibility by posting pricing on their, on their site, and there's certainly models where that works extraordinarily well. I think when you have high velocity of new customers coming on board and using your platform, having published pricing can work very effectively. If you're selling more into the mid-market and the enterprise, and you're just getting your start, sometimes posting pricing can really limit your flexibility, 'cause you need to be learning, experimenting, trying lots of new things, so, I like our early-stage companies to not post pricing until they've, they're a little further down the path and they've done a lot of experimentation, a lot of learning of what works, what works for each customer segment for different vertical industries because pricing and packaging really can be the key to having a business that's not economically feasible or having one that's a runaway success.

[Speaker:JASON M. LEMKIN] I want to say a few things about pricing. The one thing we've learned here is that Huge lesson. As we moved into the enterprise and built out this enterprise, started building out this enterprise sales force, the sales executives started to teach us about the value. Right. Like that, like you have a theory around pricing, you know, and you have a strategy and you're kind of, you do research and we've done studies with companies. Right. And you have that, and then once you get those people out there actually talking to big customers in the right way, They actually teach you about the value you really have.

And it could be, I'm not sure how to talk about this value, or it could be, hey, these guys are willing to pay us 3 times more than we're charging. That's right. Oh, exactly. Why are we priced like this?

We had lots of experiences where our best enterprise reps would go way beyond our rate card. The negative discounts. They'd find a new ceiling. They'd find a new ceiling for pricing, and then we're able to have that inform us of where we take our pricing and packaging going forward.

And then you iterate.

Absolutely, absolutely.

And then you figure out, okay, you figure out that sweet spot that you're referring to. And the second lesson I wanted to highlight was, you know, we, for the land and expanders out there, like we saw that we had to diverge the pricing between like our B2C model and the B2B model in a very fundamental way. Like we always thought that, hey, B2B at the enterprise is just 1,000 times B2C. You know, it's like number of seats times that price and that's the value and we want to to pay that value at the enterprise, but actually in reality, they're willing to pay a lot more than the B2C price. And we actually didn't see that early on. We thought that was a great thing in the end, and then as we started to do the studies, as we started listening to our account executives, we saw that actually we're not charging enough in the enterprise. And so we had to diverge the pricing to bring B2C down, enterprise up on a per-seat basis.

[FOREIGN LANGUAGE] And you guys probably saw this, we see this, when you present customers with the value model, Many times they're like, "Oh yeah, it's that and more." Yeah, right. And so—

Yeah, and it wasn't obvious to us, and once we started, and then that kind of requires the sellers who can actually go in and sell the value. And there's a lot more value there.

Yeah. Let's just quick plug, we're actually doing a pricing and packaging seminar with a partner, Simon Kucher, later this month. So if you go to our website or email me, I can send more about that, but it's a topic that we're fairly deep into. But let's switch to the last topic around organization. Right? Like, as a lot of you guys were there in the early stages of the company, you wake up one day and you look around and you're like, "We're kind of a large company." Right? You're, you know, $50 million, $100 million, you're talking 250, 500 people. And what are the organizational breakpoints? Right? What are the new issues that you have to tackle at that phase? Phase of a company's growth, right? Then you have the set of employees that carried you to this place that have so much institutional knowledge that you're incredibly loyal to. Then how do you know whether they're going to be able to carry you to the next phase, and what do you guys do about that?

That's a big one. Over the last couple of years, we've gone through a lot of transition in this exact area. It goes back to what I said earlier about not knowing what good looks like at a different scale. I just had a phenomenal team that took us from zero to $100 million without any breakpoints along the way. We were growing really fast, like triple digits year over year for 5, 6 years. Then we did reach a point where things did start to break a little bit.

How do you know?

What are the signs? It was basically you start to see growth decelerate a little bit, you start to see I started to see signs of not being able to make decisions quickly enough, not knowing, not being able to see around the corner. As I'm talking to my team and asking them the hard questions around, okay, what do we do next? And not hearing through the lens of experience the ability to see around the corner of what's coming next was when I started to realize, hey, every single person in the room here, with me, including me, is in the biggest job of their life. Right. Right. You know, and that, I think that's a sign. That's that moment, yeah. That's one of those kind of milestones where you're like, if every person in the room is in the biggest job of their careers right now, you're probably going to have a problem. You know, and so that's when we started to handle it and look at it and realize we need some people here who have seen 100 to a billion. You know, and that was the start of the transition.

And I think, I think there's a couple things there. I think one, with that core team, first you're gonna see some really hidden gems. You know, make sure that you know who those people are. But I think secondly, if you have a culture of, certainly you want a culture of achievement, but if you have a culture of improvement, and that comes from the top down, I think a lot of those people can push through. And then as you, you know, you will need as you bring other people in, especially if you're in a situation where it was a strong co-founder relationship, or you guys worked together before, or you were in college together before and started this company. You got to really be mindful of making sure it doesn't feel like it's a club and there isn't room at the table for these new people. And you have to be very, very prescriptive that it's the leadership's team's responsibility to make those people people successful. And that's easy for the first 2 weeks, but 6 months into it when the body wants to reject the organ, I think you need to look around the table and ask what you're doing to make those people successful. Because it is a foreign, you know, it is a really different thing.

How do you balance the new group of folks and the existing groups of folks and create some harmony?

Yeah, exactly. And I think you, every person on the leadership team needs to feel really deep responsibility for that because it's very easy to say, oh, that person didn't work out because they're not like us. Oh, they just didn't get it. I think it's your responsibility for them to get it, which is also around alignment. So you have this thing going. You understand the framework in which and how you make decisions. You have the cultural, you know, context for it. You know, making sure that you have that really good alignment is critically important because you're giving up some amount of control, and with that, that's gonna be really uncomfortable. And so making sure that you feel like that person is very well aligned with how you wanna think about making decisions, 'cause you can't make every decision for them, I think is also critically important. Funny story, Peter and I literally sat together in the same little cube bullpen for I think probably about the first year of the, that I was at the company. And so we got a very good, really good alignment, really good rhythm. Going as a result of that. Yeah.

Just maybe two things I would add to Aaron and Itza's comments. One is make sure you give all of your employees a chance to learn and grow and develop in their roles. As Aaron said, as a founder CEO, first-time founder CEO, you're always kind of in the biggest job of your life. And if you surround yourself with the right investors and board members, you're gonna grow and develop and probably take the business to much much greater heights than you ever imagined, make sure you give that same opportunity to those across your leadership team and across your company, 'cause I think you'll be surprised at the capacity and ability to grow and contribute throughout the business. Second thing I would say is when you reach the $50 or $100 million size, all of a sudden your job really changes as CEO. You're managing managers who are managing managers who might be managing managers, and it's very easy to get out of touch, and you have to build systematic ways to communicate with your executive team, your broader leadership team, and all of your employees, but you also need informal lines of communication where you're staying close to the vibe and the ebb and flow of the business, and often if there's an executive not working out or an area of the business not working out, people start to see it and feel it, maybe even before you do as the CEO, so, Keeping all lines of communication open and making sure the informal lines of communication are open and flowing is really imperative.

And I'd say one thing on the board. Oh, I'm sorry. No, go ahead. You know, look way ahead, way ahead to see when you're going to have to, or when you think you might need to, or want to make changes to the board. Don't get caught in a pinch and trying to do that too quickly. I think you should be very, very selective about, you know, who you you put on the board. And, you know, be realistic. If you're not the best person to sell that, if it's another board member, if it's somebody else on the executive team, that's fine, but I think you should aim really, really high when it comes to the board and look out pretty far.

Yeah, so reinvention of the board, the CEO's job starts to change, and I'm gonna put Aaron on the spot a little bit. I was on Aaron's LinkedIn yesterday, and I read his LinkedIn profile, and, you know, we all go through this, And I went through the same thing where at one point in the company, 200, 300 employees, I realized that my job had to change. And I wound up listing out what is the minimal set of things I needed to own. I wound up with 4 things: evangelist, you know, lead in the line, something around functional architecture of the product, something around chief people officer. And I said, I can't— one, I can't do anything else. And two, I've got to go whittle that list hopefully down to one thing, right? Or two things. And I looked at Aaron's LinkedIn profile, and it says, hey, as president and CEO of Pluralsight, I focus on core business strategy, future direction, product development, and strategic partnership, and that's it, right? And then he says, everything else, I work closely with the rest of the Pluralsight management team, and so it just resonated so much, 'cause it just felt like the same journey. Talk a little bit about that.

And I'm trying to whittle it down even further. Whittle it down even further. Yeah, like, I mean, that's the goal. I really feel like my role as a founder a founder is to be really connected to the future of the company from a strategy perspective as it aligns to our mission. I see myself as the gatekeeper, like the protector of our mission as a company. And it's really important to me. It's in my soul and why I created this thing. And so that's fundamentally the only thing I'm never going to give up. As long as I'm still alive, I intend to protect that, and then everything else can be delegated. Right now, based on the leadership that we have in place, those are the only areas that I still spend a lot of time in, but it's also still fairly minimal, 'cause I have strong leaders in each of those places.

Was it hard to get to that?

Yeah, it is hard, and I would say that learning to let go and really empower those leaders is one of those transferable skills informational things that takes your company to the next scale. I want to add to this board comment real quick. To the VC-backed companies out here, it's never too early to add independent directors to your board. I always thought that, "Oh, that comes later once I IPO, and I shouldn't do that now. It'll just be more complicated or add more stress to my life." It couldn't be further from the truth.

Not that there's anything wrong with the VCs in the room. Yeah.

You know, and there is some stuff wrong with them sometimes. You know, and if you, you know, the way they think about the business won't be as long-term or as focused on your mission as an independent. There's just a clear difference between that just based on the way they show up to the situation. And so my recommendation would be, you know, to find those independent directors that really believe in what you're doing, you know, can really partner with you, align with you, and then that gets you more of those people who have seen bigger things, right, who can really help your team, which is great advice. Like, you want to give that to your executive team. I didn't do that to that team that I had before early enough. I didn't have those independent directors that had that experience, and that's the role that they can play, and it really changes the dialogue in the boardroom and in your strategic conversations. And all of that is kind of connected back to this. Like, in the end, if you have a strong board, you have a strong team with counterparts that can really help them. As the CEO, I can really focus on—

focus on what you like to do, the core. Yeah, the core, which is the mission. Good. Um, for the entrepreneurs in the room, never let up an opportunity to poke fun at the VCs. So, so just a general rule of entrepreneurship. So, um, we're almost out of time. Maybe it's a pretty diverse crowd. There's certainly people in the room that have seen $50, seen $100. There's people that have seen a billion. There's also a lot of folks at an earlier stage. One thing for the crowd, the entrepreneurs out there, in terms of what they have to look forward to once they get to this $50, $75, $100 million, inspire them, to cheer them on. Then maybe one thing, if there's anything in terms of, you know what, focus on this right now. If people are telling you to worry about this, don't worry about it until you get to $50 million. You got enough stress, you got enough focus. One thing that I would say, just hold off on it and you'll get to worry about that when you get to this size. What would it be? Who wants to start? Scott.

You want me to go first? Okay, I'll go first. Running a larger company can just be a blast and tremendous amount of fun and really rewarding. I had a conversation recently with a young entrepreneur that I just love to pieces and really enjoy working with him and we had a dialogue around whether he thought he would enjoy the later stages as much as the startup. He really viewed himself as more of a startup CEO. And through that dialogue, what I shared, and I really believe in my heart, is as you get bigger and larger as an organization, it just gets to be more fun. You have more resources, you can make bigger bets, you can make a bigger difference in your employees' lives, you can make a bigger difference in the community in which you live. And for those of you that are kind of in the early stages of, building products and building your company and building your culture, you know, dream big and know that you can grow and expand into CEO of a larger enterprise and it just continues to be rewarding and a tremendous amount of fun and you can just make a bigger difference in every aspect. So that's maybe one bit of advice I would just share. On the what not to worry about early on, I wouldn't worry about M&A, I wouldn't worry about international expansion. I would try to avoid the temptation of spreading your development team across too many products. You know, stay focused on the big problem you're solving and delivering extraordinary value to your customers. Turn those customers into evangelists and really focus on building an amazing team and building that culture. And really, as Aaron indicated and also Teen, you know, culture and values really come from the top, from the CEO or from the leadership team, and it's so important to build that infrastructure right in the early days so you can take the company a long, long way. And I'll throw in one other item too. Um, Nitsa made a comment about building your company on the shoulders of giants. When you're an early-stage company, look for opportunities to punch above your weight class, either with big customers who are really big advocates and evangelists of yours, or partners that you can integrate with that'll give you access to their customers, and a bigger brand. I find small companies often kind of think and operate small, and you have to find partners and customers that really help you elevate your game and tell a bigger story, 'cause ultimately you wanna develop into that category leader.

And I think just amplifying one thing Scott said, which, you know, we sort of net out as focus on your own horse. And so, yeah, you can spend a lot of time worrying about what competitors are doing, or, you know, you know, what else you should be doing. I think if you, you know, really focus and make sure that you're committed to doing the few things— like we didn't go out and we didn't expand into Europe to— at the time, the chagrin of the board— until later, because we wanted to make sure that we had our early customers wildly successful first. So I think, I think there's, you know, the people within the company, etc., but there's also the temptation temptation to spend too much time and too many cycles on competition. I think then also to your question, but I'll twist it a little bit because you had said, you know, before you went public, you know, you had in your mind the idea that you wanted to make sure, and you stumbled upon it as well, you went from SMB to enterprise. For us, it was, you know, making sure that we were really operating, not just had multiple products, but operating well as a multi-product company. I would say also, just understand what that thing is for you and have real conviction around it. I would say build to that.

Aaron, these guys are a little bit ahead of us. We're more of the same size. That day, month, quarter you crossed $100 million, how did it feel? Give that feeling to the entrepreneurs that are pursuing that dream.

It felt amazing, man. It was a major milestone for the business. and, you know, it's pretty surreal. I think it's one of those milestones where as an entrepreneur you kind of look back and you see, like, you know, you see that so much has changed since the beginning. And, you know, although we always believed we could get there, like, the fact that it actually happened is just like— just kind of just makes it— it's one of those amazing moments, I would say, in the journey. Do you want me to give my two? Yeah, absolutely. Yeah, okay. My one thing to look forward to is the amazing people you're going to surround yourself with after $100 million. Like at $100 million, you know, you have the ability to just attract amazing people to the company that you don't have when you're only $1 million. You know, and that continues to grow the bigger the company gets, and I've just noticed that, like just the talent you can recruit, the people you would have on your board, The partnerships you're able to establish, the CEO relationships I'm able to cultivate now, like those things are just wonderful and they make me a better CEO. You'll get that at $100 million. The thing I would counsel to not worry about is the little stuff. Like the stuff that, like don't worry about doing it the right way. We never did anything the right way at Pearlsight. We didn't even have an HR team for the first 10 years of the company. Wow. Everyone was telling us, "You need HR, you need HR." We're like, "Well, we'll just figure it out. It's okay." We didn't do HR for the first 10 years of the company and here we are. There's a lot of things that may or may not be important to you. Figure out what the little stuff is for you and don't sweat it. Focus on the product, focus on growth, focus on that product market fit, and the rest will take care of itself at the right time.

Good. Fantastic. It's amazing panelists, amazing companies, amazing executives, amazing people. Just the last word is, is, is the zero to $100 million, what SaaS is all about. I can think of no greater vehicle for personal development in this life for fun. And I, I, um, congratulate everybody in the audience for what they're doing. So thank you very much. Thanks guys. Thank you. And I am outta here.