What You Need to Change at $10M to Scale to $100M: Sameer Dholakia, Partner Bessemer (Workshop Wed)

Different. I see in the chat a bunch of different locations. Oh, wow! I have no idea what time it is in all of these places. So thank you for joining regardless of the time. All right. Well, we are going to get started again. Thank you for joining, and this week we have another really exciting session. That we are going to dive right into. But before we start with Samir, partner at Bessemer Venture Partners, we are going to ask a few questions to get to know you a little bit better. Sound good, Samir?

That sounds great. Thanks for having me. Thanks for all of you for listening in.

Of course. Okay, so what is one of your favorite investments you or the firm has made in the past year?

Well, one of them, and we have made many, even in this environment that I personally was involved with, was our investment in a generative AI company named Jasper, based at Austin, Texas. And they're using this unbelievable new technology with these large language models to enable marketers to create content and be 10x more productive with copywriting. And now they're continuing to build and evolve the solution to be able to sell to CMOs and enterprises. And it's, it's a remarkable business and company and a great team. And we've been really excited to watch them grow.

Great. Okay. And I see we have some Austin in the chat. So shout out there as well. What has most surprised you about venture capital in the past year?

Well, it's been a really fascinating time for me to join this industry. For those that are listening in that know know my background. I started the first 25 years of my career as an operator. I've been a CEO multiple times, had the privilege of serving a couple of companies, including my most recent one, which was a Bessemer-backed company. And so I'm new to this industry. It is quite different. The thing that has surprised me most in venture in this past year, candidly, has been how long it is taking the private company valuations to reset and mirror more closely what is happening in the public markets. It's sort of defying gravity, at least as of now.

Yeah, a very interesting time to join for sure. Difficult entryway, but congrats for bearing with it.

No question. I do find while it's a challenging time in the macro, I love this new platform shift that we're seeing with large language models and generative AI. I think it's just a fascinating, fascinating time.

Yeah.

Well, the last question we have for you is, who is one of your favorite co-investors?

Hmm.

We won't tell the other ones.

No, there have been so many great ones. I particularly in my most recent period of time, I would highlight Bain Capital Ventures is a great firm that we just did a recent investment with. I have some dear old friends there. And a couple of the earlier ones we worked on with Benchmark and IDP. Of the 3 deals I've led, all 3 of those participants have been— we've done them together. And there are individuals there that I think are just amazing. So I always enjoy being collaborative and working together to fund great companies.

Great. Okay. Well, I will let you get to your presentation, but one more thing I want to state. I know we get so many questions in the chat. Please put them in early. I will be messaging you, asking if you want to unmute yourself in the chat to ask those questions or if you want me to ask them on your behalf. So please put them in early. We do have a hard stop a little bit later, so we want to make sure your questions are answered. But with that, Samir, I'll hand it over to you.

Thank you, Caitlin. Thanks for the introduction. Thanks for everybody listening in. We're gonna jump in quickly here. The, the context for this talk is about scaling. And as I've said oftentimes, the difference in how you lead and build a company from 0 to 1 in revenue or ARR is wildly different than what you need to do to be successful from 1 to 10. And what you need to do to scale from 10 to 100, what I call the teenage years, is wildly different still. And so I just wanted to highlight that from, from my 25 years on the operating side, the opportunity to lead businesses in every, each of those 3 stages, that 10 to 100 phase is quite different. And so I talk to leadership teams all the time around what, what changes when you get to that scale. And as you look forward over the next 3 to 4 years, and my, my somewhat trite answer is almost everything changes when you are entering that next chapter of your company. And whether it's from your leadership style, the planning horizon, communication styles, role definition, decision-making, customer and product complexity, we're going to talk about each of these very quickly. I would just encourage all of you that are out there listening whose companies are at that stage, trying to go from 10 to 100, or somewhere in between, I encourage you all keep an open mind. Understand that everything that got you to where you are is not what will get you to where you want to be. And so you have to be open to change in order to get there. So let's dive into some of these. The leadership model as an example. Everything changes when it's 0 to 1, and I would argue even 1 to 10. The percentage of employees that you will directly influence, that you will interact with, you'll see in the office, you'll be in a meeting with, you'll be at a whiteboard with, um, is really high. When you go from 10 to 100, you're gonna end up going from— you won't know the names of all of your employees, and that's gonna feel really weird. We're still— you won't get to interact with most of those employees by the time you have scaled to $100 million. You will probably only interact with, um, single-digit percentage of the employees of your company on any given week. And so your leadership style has to match that, has to change and evolve. Where you used to be able to lead by example in a room at a whiteboard, rally the troops over a meal. We gotta change, we gotta pivot, we gotta go here, everybody follow. You can do that in a small company, in a small organization. 10 to 100, you're scaling first leading through others, you have to have a world-class leadership team that you can entrust to drive their organizations, their functions. Ultimately, as a CEO, you're going to have to start to learn how to lead with ideas and stories and anecdotes that then enable and empower all the people in your organization to see any given situation that they are wrestling with. When there are resource contentions, when there are tough decisions to be made, you won't be in the room. So what is it that you are providing as leadership, as storytelling to help them make the right calls, give them guideposts, and that really do have to lead through ideas. I'm happy to talk more about that later. I'll just give you one example of that. During our SendGrid days, we spent a lot of time when we got to, I don't know, I'll call it 60, 70 million in ARR. And all of a sudden, the new employees coming in felt like problems that they were seeing were somebody else's job to go fix. It was my manager's job, my VP's job, the leadership exec team's job. And we wanted to talk to them about empowerment and the people that are closest to the work need to get after those problems. And so we talked to them about the Toyota Production System, and how cars were made in Japan in you know, in the late 1900s, and how more efficient they were, and how quality was so much better because their— the TPS system was entirely predicated on empowering the frontline assembly line worker. And that really— that idea, that story helped drive home the point that we wanted every grider, as we called ourselves, to be empowered to really go drive decisions. So leadership has to change. The other thing that has to change is your aperture. So when you're in 0 to 1 or 1 to 10, I'll say 0 to 1, you're thinking about what do I have to get done this week, this month to move the ball forward to make progress against my ICP? Am I validating the value proposition? Am I building a go-to-market muscle? When you scale to 1 to 10, all of a sudden now your aperture is out. It's not weeks and months. Now you're like, okay, I gotta come up with an annual plan. And I need to thinking quarters. I mean, it's usually quarters to 1 year to an annual plan. What am I gonna accomplish this year? And that feels like an eternity when you're in super startup stage and you're trying to get from 1 to 10. When you're going 10 to 100, you need to be thinking out multiple years ahead. And because if you don't, oftentimes one of the things that you'll hit is a massive growth wall. I, I put up these charts illustratively to help. This is how we help SendGrid understand when we were at $30 million in revenue, and we were trying to help the— all of our employees and teammates understand what we were going to have to do to scale to $100 million and build a great company. One of the things that's hard for employees to internalize is, but gosh, we're not getting any worse than we were before. We're doing just like we did last year. And last year was a great year. And the problem is, if you look at the chart on the left, you have to draw the picture and say, okay, if we literally just did exactly as we did last year, we got no worse. We added the same net new ARR. In this picture, it's $8 million a year, the little blue box on top of the purple. If we just did exactly as we did, look at what happens to the company growth rate. It plummets from 40s to 20s. That's just math. The denominator is getting bigger and bigger as your business grows. And you're adding the same amount in the numerator, by definition, the overall growth rate's going to slow. So, so then we said, okay, well, now imagine if we wanted to maintain a high growth rate for the next 3 years, and it was going to— of course, law of large numbers is a real thing. It's going to decelerate a little bit, but we want to stay above a certain waterline. What would we need to add 3 years from now in order to hold a growth rate that we thought was respectable and worthy of being a public company someday. And then we chose, in this illustrative example, 50%. And what you'll find is you'll need to add as much in that third year as your entire company has ever done life to date. That's what we found when we did the math for SendGrid. And it helps people kind of wake up to the reality that what took us 5 years to get to, we were going to have to do in 12 months in a few years' time. And so we had to be making decisions today and making product investments today and go-to-market investments today that we're gonna scale such that we could create the net new ARR that we were gonna need years out. This particular example is just getting at the meta point that you can no longer, when you're scaling 10 to 100, be looking at what's gonna happen, uh, for our business in weeks or months or quarters. It really has to be a multi-year view. Out into the future. And if you do that well, you and your team will start to make decisions differently and will position your company better for success over the long term. Okay, in the spirit of speed, I'm gonna keep going. The other thing that changes, lots and lots changes, your operating cadence, the operating style, the, the, what we call the rhythm of the business at SendGrid, and your communications methodology has to change what we call the operations communications architecture. Being technical, technical company. So the operating model of the business as you scale, when you get to tens of millions in revenue, you need to have a very robust annual planning cycle. By the way, your annual planning cycle when you're going 1 to 10, and you're going to present your board plan for the next year, I'm going to guess that most of you out there listening in who are in that stage, you probably start that planning cycle in November, maybe December, to get approved in January. When you're at scale, that planning cycle is going to move further and further back into the year. When we were a public company, we started next year's planning cycle in May of the preceding year. That's how long it takes to plan for the multi-year thing in the future. You'll have monthly business reviews and quarterly business reviews and board meetings, and you'll want to think about how they all flow and flow into one another at the executive level and the board level. And then you'll want to have like a weekly operating meeting cadence of the senior directors, the VPs in the company that are closest to where the work gets done in your business, who are closest to the customers, closest to the problems that you're trying to wrestle. So your operating cadence is going to change pretty meaningfully as you're scaling 10 to 100. The way you're communicating is also going to have to change a lot. You know, the pictures on the right here are to help illustrate the point that the hardest part of leadership at scale, from 10 to 100, is nothing other than how do I orchestrate the individual behaviors of what will likely be, if not dozens, probably hundreds of humans to go in a straight line, to actually go in the same direction. And that's what you need. You need the bottom picture, not the top picture. In the absence of great leadership, you'll end up with the top picture. If there isn't clarity on where you're going, what you're trying to accomplish, what goals we've set, how every function in the team, in the business needs to work together to accomplish those things, you'll end up with the top picture. But if you do, if you're clear in, uh, and then you communicate it and you communicate it over and over and over again, you'll do it. Uh, we did it at SendGrid at the beginning of the year. We did it at our monthly all hands meetings. We did it at our quarterly business review meetings. We had an, an, a semi-annual checkpoint in the summertime to say, in January we said we wanted to accomplish X. What, how are we doing against that? By the time we get to December, we maybe need to course correct. And you just have to continually reinforce those communications. So lots changes in the way that you operate and communicate to get the bottom picture, not the top. I'm gonna keep going on this in the spirit of speed. Role specialization is another big thing. This is, again, is one of the hardest things in growing a company is all about the humans. It's all about the people and the talent and how you manage your people through these big transitions. One of the things that people love about startups that I loved about like my first startup I joined when we were, you know, fewer than 10 people, we, I loved wearing multiple hats. I loved the diversity and the variety of working at a startup. You know, I remember when I joined SendGrid, I met with one of our folks in the marketing team that said, you know, one of the things I love about SendGrid in the early days of marketing was one day I got to work on a press release and the next day I got to work on product marketing for our website. And the next day I was working on our funnel for, for our SEO and SEM. And you get to do— and the next one was about an event and you get to wear all these different hats. But as you scale, what you learn is I need to move from athletes who are good at lots of things in a given domain to narrowing of the swim lanes, hence the picture, where we are getting people who are deep, deep experts, best in the world at what they do in one of those swim lanes. And so roles get more specialized and that ends up being hard for some teammates. And sometimes they're actually better off going back to an earlier stage company, because what gives them the most joy is working on wearing all those different hats and being across swim lanes. And that's great. Helping people understand the difference of what the company needs at different stages in its life is really, really important. And it's not good nor bad, it's just different. And it's incumbent on leaders to help if somebody is determined, actually, I really love the early stage, and I'm growing and scaling, and now I'm going to get to $50 million in revenue, help that person go back and find something great at the earlier stage. And then when you bring somebody in, you know, this is one of the other, I think, challenges or mistakes I often see leaders make, they'll bring somebody in for what they need in that role in that narrow swim lane right now. And that's actually, um, uh, a really bad decision because your company is typically growing so quickly that by the time you have started a search, hired somebody, got them onboarded and made them productive, 6 to 12 months have gone by. And in a high-growth company, your business is wildly different 6 to 12 months in the future. And so you need to be hiring 2 to 3 years ahead of where your company is now. Ideally, try to find somebody who's already done that job at that scale, has seen what great looks like, can bring that expertise to your company, uh, and therefore help look around the corners and bring the team along with them, bringing their wisdom, uh, to help your company, uh, grow and scale. So, uh, just a couple more words there on what changes around role specialization. Decision making, you know, this is like the, you know, the, the age-old cliché of the giant company that moves at the speed of, of a battleship versus the speedboat that is the startup. And one of the things that is so important for you as a company as you're scaling 10 to 100 is being maniacally focused on staying nimble. How do we not get in our own way, How do we not make it so that oftentimes employees will leave as companies are scaling because they not only miss the being able to wear multiple hats, but sometimes they just get tired of, God, I used to be able to do, make this decision and move forward in a matter of hours. And now it takes me weeks because I have so many people to go orchestrate that have to get aligned to make a decision so that we can move forward and they get frustrated with the bureaucracy. Keep things nimble. You have to be able to scale by making quick decisions throughout the business. You need to be able to distinguish for your people what we call in Amazon, Jeff Bezos speak, what are one-way door decisions and two-way door decisions? Meaning if I make a one-way door decision, it's really, really hard to unwind it. Most decisions are two-way door decisions. Make a call, make it quickly. And if I made it the wrong call, I can undo it. I can unwind it and go back the other way. If it's a two-way door decision, give your teams the latitude to make the call and make it quickly and move forward. We used a particular decision-making framework. This is the RAPID. It doesn't matter which framework you use. There are lots of them out there. I would just pick one and move forward with that. The last thing I'll say on what changes complexity, likely as you're going 10 to 100, when you were beginning, you had usually one product being sold to one ICP into one segment. Pretty straightforward, simple business. When you're scaling 10 to 100, I assure you, you will have multiple value propositions, multiple products, you'll start selling to multiple customers and customer segments. This is one example of one of our great Bessemer investments, Procore. Bessemer's made an extraordinary number of vertical SaaS investments in great companies like Procore. I'm on the board at ServiceTitan, has gone through this journey. One of the public company boards I sit on, PagerDuty, has gone through this journey. Many companies go through this. When you add more products and more customers and more segments, your business just gets more complicated. And that's harder and harder for the leadership team to evolve. And you have to make sure you're asking yourself on a regular basis, is this leadership team still capable of managing and running and growing this more complex business? You're gonna have a very different business when you have this picture versus the 0 to 1 or 1 to 10 business. I will say this in closing before I take questions. The one thing that doesn't change— there's one thing I talked about, all the things that change as you scale from 0 to 1, 1 to 10, 10 to 100. Everything is different, except for culture. Let culture be the one thing that you scale that doesn't change. And put enough— as a leader listening in on this, please, please, please invest the time, invest your energy behind scaling your culture, I promise you, it will be rewarded. I promise you, it is one of the most competitive differentiators you have, if you do it right. And if you don't, culture can get away from you so quickly, as in a high-growth company going from 10 to 100. Because if you just do the math, and you think about, if I'm at $10 million, or tens of millions, and I'm trying to get to $100 million, I probably had 50 to 100 humans helping me get to 10. It's pretty easy to stay consistent with culture. But you're probably going to be hiring dozens, if not hundreds of people in the years ahead. So just think about the numerator and denominator again, what percentage of your employees in a high growth company from 10 to 100 have been at your company for more than 12 months, or more than 24 months, that percentage is going to keep shrinking, it's going to be, it's going to be a smaller and smaller group. Sorry, is going to be growing, the percentage who have been around long enough to really be the culture carriers, that percentage is going to keep getting smaller. And so if you're not super intentional about the culture I want to scale, the values we want to hold, the behaviors that we find ex— not just acceptable, but illustrative of who we are as a company, you'll lose it. Because the one thing I can tell you for sure, is if a group of humans is in a room, and they see a behavior of one of the people in the room that is incongruous with the values of your company, and nobody calls them out on it, it is tacit approval. Everybody will believe, oh, I guess at this company, it's okay to behave that way. That doesn't seem to be what's written on the walls with our values. It doesn't seem to be what I heard at the all hands. But in the room, the way people are acting every day, that seems to be okay. And so the only way that this scales is if you as leaders are driving home to every single teammate that joins. And I used to do this, every new employee that came into the company, I would go to the onboarding session, and I would spend 30 minutes of a 45-minute talk talking about culture, imploring every new employee to be a steward of the culture, to be responsible for reinforcing it, to celebrate when they saw great instances of people living our values, and frankly, to call out deviations from it. Because if you don't, that's the quickest way to destroy your culture. I'm a huge believer that if you get a picture like you see on the right here of a bunch of humans who care about each other, that's the quote that you'll see there, who care about each other, who want to work in a company in a particular way with certain kinds of behaviors, and they know where they're going and what the mission is and what the goals for the year are and the what we wanna serve, et cetera. And you're going in a straight line, you're gonna just fly through the water and your oars, as I used to say, it's engrid, will be hitting the water at the same time. And if you have any of you have ever been in a crew boat, it just glides like over glass on the water. If you have folks whose oars are hitting the water at different times because they don't understand the mission, they don't understand the goals, they don't understand the culture, the behaviors you want as a leader, I promise you your boat's going to either be spinning in circles or zigzagging in the least efficient way towards your goals. And so please don't ever forget how critically important this is— culture— to building and scaling your business. So with that, let me pause and see if anybody has any questions.

For sure, we definitely have some questions. If you want to stop sharing your screen so we can see faces while we chat, feel free to do so. All right. Well, thank you again for that presentation. Bunch of questions coming in the chat. As a reminder, I'll be individually messaging you to ask if you want to ask these questions out loud. So check back in, in the chat once you've asked the question to make sure you catch my message back to you. All right. Our first question will come— actually, our first two questions will come from Lydia.

Oh my goodness, thank you so much. Fantastic presentation. Um, two questions, which is, first, I'm at a teenage company right now. We're just about to hit $100 million. Awesome. I think now I'm seeing future far less conversations about late-stage raises, a Series D, a Series E, and going public can be kind of a risky bet, um, given how some of the IPOs have performed. Is there anything that you can say from the capital side that would have been a really attractive investment in 2021, but no longer is in terms of a company situation? And anything that you can say is still an attractive bet, it's going to get your partners excited and it's probably going to get approved regardless?

Yeah, I mean, I think the fundamentals of— and I've been in software for 28 years now and doing the venture thing for a shorter period, but I've been in this industry for a long, long time. Time. And it's been such a privilege to see all the generations of it. There are things that don't change about a great company. It's in a great market. It has a great leadership team that has a strong culture, that has great unit economics, that is growing fast and has deep customer love. If you have those characteristics, I just named off 6. Maybe there are a few others, If you had those 6, that company is going to get invested in, I promise. Now, I will say in 2021, I was on— that was during my sabbatical. After I finished integrating SendGrid into Twilio, I took 2 years off. And in the 2 years that I was off, the valuations, because of the combination of interest rates being free and COVID tailwind while everybody else flight to capital into tech, created valuations in an asset bubble that was beyond stupid. And so the valuations raised in '21, I'd be super candid, I think we're— are just, they're so devoid of any basis in fact or reality that I do think it's going to be hard for just resets relative to the numbers that were in '21. Thankfully, I have seen a lot of great companies that are starting to grow into those numbers. Some of them still have a ways to go to grow into them. And I would just encourage the founders and CEOs and leaders of those companies And this is not a self-serving comment as a current VC. This is a comment as a former CEO of a publicly traded company. The market reality is the market reality. Get the funding that your business needs to win in the market over the— think about it for the next 5 to 10 years. It doesn't matter if you need to take a reset. You take the reset, we can manage through that. I'm happy to talk to any founder CEO about how you do it. But if you have those characteristics that I described earlier, you're gonna get a great venture capitalist and a great partner on your board to help you navigate the journey ahead.

So what I hear is there are worse things in life than a down round.

For sure. Absolutely. Absolutely. It's— and I just, I will say this, I will say, I think that leaders don't give employees enough credit. They're just like, oh, I'm so nervous about doing a down round. I'm like, Your employees can look at the public stock market. They know that all SAFs companies are down 50%. They don't believe that the valuation from 2 years ago is what the worth of the company is today. Why are you trying to falsely protect them as if they can't see what has happened in the world around them? That is, I just think you need to— we all need to give these folks more credit. And by the way, and if it's— if you've grown into the valuation, and you've unlocked new products and new markets and whatever, then it doesn't need to be a down round. It can be a flat round. It can be an up round. I don't mean to convey we're only interested in down rounds. By no means. If you have those 6 characteristics, it's entirely plausible that we're investing at a premium to even what was done in '21. But I would just say, seeing what I've seen of the best SaaS companies on the planet and the raises they made in '21, Yeah, there's a lot of growth into those valuations.

I can't help myself. I just want to ask a follow-up question. Would you say the barometer for growth, like what a high-growth company is, has changed post-pandemic? Like maybe if you're growing at 40% a year and you're at $90 million, that's going to be much more attractive than it was in 2021 where you saw people still doubling at $90 million.

Yeah, I do think that is true, Lydia. It's a great question. If the burn rate has commensurately changed. So usually the 100%— [FOREIGN LANGUAGE] The 100% growth company was usually burning a boatload of cash. The 40% growth company in today's world hopefully is burning a lot less cash because they're growing slower. They don't need to. If you're saying, would a 40% growth company that is still burning a boatload of cash be worth the same as the 100% grower that was burning a lot of cash in the old days? No, I don't think that's true. But I think that what I've seen, most companies have gotten a lot more efficient in the last 12 to 24 months. They've gotten religion, they've heard that mantra. And so yeah, I think a 40% grower at scale that is not incinerating cash is going to be really, really attractive to a lot of venture investors. It would be to me.

This was my second question. I know I had to dig in there, but—

Go ahead, Lydia. A bunch of upvotes on that second question.

So, oh, thank you. Which is, um, I was recently on the market and, um, there are a lot of companies that want somebody who's been there and done that, but seeing the instability in the market, seeing that growth isn't so crazy and, you know, the likelihood they're gonna get their $200 million Series D round is slim. Um, any tips you have for attracting experienced talent who have been there and done that? Without paying them exorbitantly or giving them the farm.

Yeah. Me personally, I would say, I do think, and as a CEO, I cared a great deal about who the individual partners were from great firms that were going to join my board. Like, these are the people in my trenches with me arm in arm for the next 5 to 10 years on this journey. I care a lot about that. I would simply say, you know, do your homework on the individual investors, partners, and reach out. And if there's anybody here that's interested in somebody who's been in their seat for a long time in their career, please reach out. I'd love to talk to you. I feel like there are— and there, I think there are a growing number of people like me that have been operators that are in this venture business. And I would humbly— I hope that my having been a CEO versus a head of a function or et cetera, et cetera, could be useful to other CEOs that are trying to navigate that period.

Samir, your LinkedIn messages are going to be a scary place after this, I'm sure. No, but thank you for the questions, Lydia. Our next question comes from John Williams.

Hi, Samir.

Thank you.

For bringing this to us and dangerously make an assumption that Lydia could survive a down round now and not get quite the stigma that it would have been 2 years ago. The thing that I wanted to ask about, and, you know, it seems like this has been pretty universal, is how do you as a growing company, say you're at $10 million or $15 million, you know, you're reaching into your next a goal of $30 or $50 million, how do you know to get in touch with the right people to help you get to that next level? In other words, I'm trying to develop a 3 and 5-year plan. Yeah, but I can't— in my universe, I don't have all the answers yet that I need to get from those people. So I know at Bessemer, it's probably pretty easy to go round a couple of those folks up. But I mean, just in general, you know, what advice would you give yourself given that you were just in that position not that long ago?

Yeah. And, and is your question about getting the people around your table to work with you from a, a board and investor perspective or from an executive leadership team, you know, other functional people in the, in the business?

I was thinking more of just the expertise itself. In other words, as we're developing the 3-year plan, what should we be considering here? I mean, we have our own thoughts as what that should be, but then there's the reality that would be presented by someone who had that experience? And how do you find that experience so that you have a solid 3 to 5-year plan?

Yeah, I think, you know, I would just say a few things, John. One, having a really strong CFO, head of FP&A, is going to be a requisite to getting to building a great multi-year plan. And by the way, at $10 million, I would tell you, don't bother with a 5-year plan. I would do a 3-year plan. At— and that, that number grows as your company grows in terms of aperture opening. But having a strong finance partner in Prime that can be your thought partner is gonna be super important. Obviously, people around the table who have been on this journey before. It's great to have a leadership team that has a complement of some that have been there and done that and seen the journey. And some that are so deeply in touch with the problem domain and the customer and the whatever. Like, I always found that mix to be magical. And then finally, obviously, the board and the investors who can pattern match, just not on the couple that they have done personally, but have seen across dozens of companies over a long period of time. And so I think that would be my, my counsel is those are probably the three constituents. And for what it's worth, I would just say, the expertise to get the answer right to build a great plan, you want to pressure test it, it often is going to have in a SaaS business in particular, I would say, a handful of key variables around what's your net dollar retention? How much net new ARR do you need to generate? And how efficient is the go-to-market model to go capture that? And do I believe the assumptions? Do I believe the underlying assumptions of How many quota-carrying reps would I need? Can my marketing team actually generate that kind of a pipeline? You know, those kinds of inputs will help you sanity check. Is this a reasonable plan? Do I need multiple, you know, the product that I have today, I already have on the roadmap these two others, and they're gonna hit the market. I know they're gonna hit in these times. Oftentimes a multi-year plan for at your stage will literally have a hole. Like we at SendGrid had a hole. Like we've got, In 3 years' time, I can identify how of the whatever blank tens of millions we're going to need to add in 3 years. I can see where I'm going to find 15 or 20 of it. But I got a gap, I got a $15 million hole. Leadership team, let's get thinking. Let's go start talking to our teams. Let's talk to customers. What else can we be investing in? What could we be innovating in now that's going to bear fruit in 2 or 3 years and close that gap?

That's a key takeaway. Thank you so much. I appreciate that.

You bet.

We love Caitlin.

Can I steal a question for Samir? It's Jason M. Lemkin.

Oh my God, who are you? No, go ahead.

Of course, Jason.

What's up? Thank you so much for doing this. It's, uh, it's, uh, tons of— so many folks are great here. Hey, one, your, your, your, your comment on being out for 2 years and coming back and, and observing the craziness of 2021. Question for you and Bessemer today.

Yeah.

How are you guys thinking about multiples a couple years out? Like, as founders, I don't know what it was like for you in the old days. I never thought about multiples in the old days. I never looked, I never even knew. But now I think as founders, we have to obsess about multiples, right? If capital raising is part of our plan. So, and we're at, we're at between 5 and 6 and 8-year all-time lows, depending on what numbers you look at, right? So for growth investors, are you planning they're going to remain at these lows? Are you hoping for some reflation? How are you thinking about multiples?

Yeah, I mean, we do, you know, we're students of history and we do look at those long-term averages and we know where they are today. And I would agree with you, Jason. I think they are below the long-term 5 and 10-year averages. And I believe, and I think Bessemer believes that the SaaS business model in particular, and I appreciate not everybody on the call necessarily is SaaS, we're at Saastr, I'm gonna assume most are. I think SaaS is the best business model in the history of business. Recurring revenue. I could— so many amazing things about our business model. So I believe, and I think most of my partners at Bessemer believe that we will see a return to that long-term median, that long-term average. I do think that there— I don't think interest rates are going to go back to zero. So I don't think we're going to see anything like the craziness that I missed in 2020, 2021. But I do think that we're below long-term average. I think it'll come up a little bit. And, you know, you know, my numbers may be different than everybody else's numbers, but if you were to ask me on average, I think a 7 to 8x multiple has been in my whatever long period of time view of the world has been a pretty good proxy for, for that long-term multiple. For great companies, it was always higher. For not so great companies that were working on it, it was lower. And that roughly was the median. And so then you got to ask yourself as a founder CEO, Can I prove on paper, it's not up to judgment, that my company deserves a higher than median? And oftentimes you can if you have all those characteristics I named earlier. Yeah. And you get a better multiple. And if your multiples, when you compare it to everybody else, looks worse, then you might get a lower one. But yes, I agree. That would be my long answer to your short question.

No, thanks.

Great answer.

Great. Thanks, Jason, for that. Our next question comes from Fred L.

Thanks, Caitlin. So yeah, how would you suggest organizing around complexity with more products and more customers? That's a good problem to have. That's a problem I think we should all aspire to. So what are some examples of what has worked well that you've seen? Well, let me start with all the mistakes I made. I will say this, when you get to more products and more segments that you're pursuing. I have seen companies scale the functional model really well. I personally saw that when you're adding, particularly in a single product company, the next two product, two and three of significant size, require what I call disproportionate energy to launch like a rocket ship into space, it takes more energy to get it off the ground and through the atmosphere. And then it's a lot easier once it's out there, right? Same is true with products and businesses. And so if you leave it in that, in that purely functional model, what happens is every function in your company will have a great, the great sucking sound of all resources going to the first product. Because it's the core thing. It's where most of your customers are. It's where most of your revenue comes from. It's where the customers are screaming at support or product managers or whatever. And that— and so you over-bias and you over-index to the first. And it was my experience that sometimes you need different org structures. They don't have to be hard lines. They could be virtual teams. They could be dotted lines. There are lots of ways. I'm happy to talk about it offline. But, but getting people back into that mode of, hey, this— we're going to run like a startup on this second product. And we need to organize ourselves in that way and do all the same things that we did to launch the first product. And, and, and anyway, so I think that helps a lot as you introduce more and more complexity, accountability and ownership of the performance by segment, by product matters a ton. Who is my, who am I looking to as the CEO for that product line? Is it really clear who wakes up every day thinking, I am responsible for this business, this product line being great, and all the performance characteristics related to it, or this segment in this geo, whatever. I just— more and more accountability and ownership is important as you scale. When accountability and ownership diffuses, bad things happen. Results simply go down. They really do. It is remarkable in my experience, in my humble experience. It makes a ton of sense. I've seen that. Yeah, thank you. One, one last recommendation for you. There's a great book called Working Backwards about the story of Amazon and how Amazon has scaled their extraordinary business. And it talks a lot about how they built the GM model and what was required for that GM model to work at Amazon. And I think it's a terrific read and gets after the core essence, I think, of your question. Great.

Thanks for the rec, Samir. Our next question comes from Mark Malone. If you do want to unmute yourself and ask, feel free to. If not, I can hop in.

Thanks, Caitlin. Samir, great presentation, and thank you for taking time to share this. Question for you, and it comes down to culture. Yeah, I, um, I once had a wise person tell me that if you don't define a culture, it will define itself. And, and in many cases, it may not be what you would be intentional about. Since you made a point of saying, hey, I, I made time for X number of employees whenever, you know, until we scale to X, Y, yeah, to sit down with them and implore them to really live these, breathe these, and enforce them. What did, what did you land on as the centerpieces for your culture? And what did, and did you ever have to modify those as you grew?

That's a great question, Mark. Thank you for asking it. When I joined, I'll just take SendGrid as the last example. I thought my predecessor, the founder and my predecessor had defined an amazing set of values. We call them the 4 H's: happy, hungry, humble, and honest. And each of those 4 resonated with me deeply, particularly the humble. I thought was a defining characteristic of the company. And when I met the team and the people, they actually embodied that humility, which actually was different than, than many companies that I had interviewed with or talked to. And, and I do think the culture has to have some edge to it. It has to be— your culture can't be good for everyone. If it is good for everybody, It doesn't have enough uniqueness to it. What I would say is when I arrived, and if any of my gritters were to listen to this, I think they would agree and would remember when I first arrived and I would ask them, so what do you all mean by the Hungry H? What do you mean by the Happy H? Because it was literally just 4 letters and I would get lots of different answers. And so we literally spent some time and effort and wrote down sentences that described what we meant by each of those things, what behaviors. And then as we continued to scale, we then added to this document that said, here are behaviors of examples that embody the sentences that we wrote to describe the happy— like we just kept elaborating. This is what we mean by those things. And, and I would say by the time I left, I really do believe that our 4-H culture was one of the most remarkable things about Semperit.

Thank you, appreciate the time.

You bet. Thanks, Mark.

Of course. Thanks, Mark. That's so funny. My, um, first internship, I remember their core values were also included hungry and humble, and they stuck with me for like forever. So agree that words like that can be really strong in a career path and easy to remember, which is also very important when defining a culture.

If you have 12 of them and nobody can actually name them, it might be too many.

Totally agree. We have time for just one more question. So Sonny, if you're still on the line, feel free to unmute yourself and ask.

Thank you so much. Hi Samir. Uh, so everyone, I'm an executive recruiter and I hire product and tech executives for growth stage companies. So this is super relevant. Awesome. You, Samir, is what is that inflection point you look for when you need to hire these people? And what are some of the things you need to get right, like as a CEO or as an investor, you advise, you know, the companies that you invest in?

Yeah. So two different questions there. How do you know first on when is the right time? Right. I will say this, I would ask, start with yourself as a CEO of this, of a growth stage company. And start with yourself at the beginning of every year. Am I still the right person for this job? And I will tell you that my job at SendGrid was radically different as a CEO in '14, '15, every single year it changed what the company needed of me. And I have a service orientation, like I believe the CEO and the executive team serve the company and serve the needs of the company. And, uh, and what they needed of me and of us was different every year. And it's not a given that the answer was yes in 2014 and '15. It was frankly about a turnaround. In 2016, it was about scaling. And in 2017, it was about taking a company public. In 2018, it was being public. In 2019, it was managing a multibillion-dollar acquisition. Each of those journeys, I mean, they, they required a very, very different skill set. The CEO first has to ask themselves that question, am I still the right person for this job? And then number two, should be asking that same question of every person on their team. Because if you believe in the service orientation, that VP, SVP that's on your exec team is serving an entire function of people. And as you scale, will be dozens and ultimately hundreds of humans that they are serving. And you are doing those hundreds of humans a disservice if you have a functional executive who is no longer able to serve the needs of the company in that period of time. And you'll know, you'll just know, like, is this person able to serve step up to these challenges. Some people will say, oh, Samir, that's unfair. You don't always know, you know, can this person make it to the next level? Can they continue to scale? Fair enough. And I will say, I am the first to say, you know, bet on somebody, invest in them, work your ass off to help the person that has helped build this company with you to make it to the next year, to make it to the next chapter or the next stage. But have that honest conversation with them and say, we are now out over your skis. We are now in a territory that you have never been, and I'm gonna do everything I can. I'm gonna get you mentors. We're gonna go network. We're gonna get people who have been there and done that to help you. But please understand, I gotta serve this company. And if I, if I no longer believe and you no longer believe you're the best person to do that, then we gotta go put, we gotta bring somebody in who can.

Thank you.

So I would, as you know, it's sort of that— I can't remember which book it was that had the ruinous empathy and being direct, but direct with love, where they know that you care about them and you care about the company. And then you give them really direct and honest feedback. Thank you.

Great. OK, thank you so much, Samir. This has been a great session. I know we have so many questions still in the chat. Um, but Samir has been kind enough to say to reach out to him. It's his LinkedIn, not mine, so he can do what he wants with it. But thank you so much for joining us. And thank you all for joining us. This was actually our 25th Workshop Wednesday. Um, so thank you for coming Wednesday after Wednesday after Wednesday. We really appreciate it.

Thanks so much, Caitlin. Thanks, Saster and Jason and the team. Thanks, Samir.

This was great.

Hope it was helpful. All right, Jace, good to see you, man. Take care.

Great.