Leveraging Product-Led Growth and Acquisitions to Become a $3B Company with Doug Winter of Seismic

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Investors sometimes get excited because they have money they want to spend. They get excited about a deal as a leadership team, as an ownership team, it's got to make a lot of sense to you. Be really clear as you if you do go forward with an acquisition, how are the incentives aligned? We've had situations in the past where not everyone on the acquired company was marching towards the same place that that we were as a company. That was just not enough clarity around what we're trying to do to be successful. Is it integration of the products? Is it moving the customers over? Is it acceleration? The growth rates? Like, what is it that you're really trying to achieve? Make sure that's super clear and make sure that people's incentives align with that.

I need some traction. You need some traction.

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I need some traction. You need some traction.

As mentioned, I'm Craig Dunham. I'm the CEO at Deep Crawl. We're website data and analytics company. I'm super excited to be on stage with my friend, my mentor, my former boss, someone I admire greatly. Doug Winter, who is the CEO at Seismic Software and for those who may not know, Seismic, it's been an incredible run. About 12 years or so. The company's been around, experienced a tremendous amount of growth from 0 to over 300 in ARR. From about 20 people when I joined, but went from about 0 to about 1500 people at this point in time. Consistently shows up on the Forbes Cloud 100 list and has just experienced a ton of tremendous growth. Some of that growth has been most of that growth has been organic, but has also been augmented or supplemented by some inorganic growth as well. And so what I thought would be a great place to start is for Doug to maybe walk us through some of that history and some of the decisions he made along the way, and we can just have a quick little dialogue around that. Doug, why don't you walk us through some of the history at Seismic.

Great. Thanks, Craig. Excited to be here. I don't know how we always draw the slot right before lunch, but I guess insert obligatory joke about being in the spot right before lunch.

It's a must be said thing here.

Must be said thing. Yeah. It's been an incredible journey for seismic going back over a decade now. And you know a lot of the story because you were on that journey with us. When we started out, we had a pretty clear vision of what we wanted to build and who we were. And I think one of the things that's so exciting about being at a conference like this one is just getting to hear all the different paths that companies have taken. And they're all unique, they're all different. None of them quite match up our path. We focused on enterprises, large enterprises. That's who we went after. That's what we knew. We went for a couple years bootstrapping the business, grew to a certain point and realized, hey, if we're gonna really capture this incredible opportunity that we have in front of us here in sales enablement, that we're gonna need to get some outside investment and go a little bit faster. 11 person in sale sales and nobody in marketing was probably not going to get it done. I remember going up to Silicon Valley and doing our Series A and going up and down Sand Hill Road from San Diego. You can do it in a nice day trip. And I remember a lot of the investors asking me two questions, basically the same two questions. They said, number one, you're not going to do it or you're going to do a freemium model, right? And we weren't. We were going after big enterprises that didn't make a lot of sense for us. And number two is you're going to move your team up to San Francisco, right? We were in San Diego. Nobody starts a company in San Diego except our previous speakers. And so I had to tap dance around that Series A. And we, we were great. We found a lucky. We found a great partner. It's worked really well with us, Jackson Square Ventures and Pete Solvik. A couple years later, we tripled in size or 5 million in revenue. And it went back up to Silicon Valley. Times had changed a little bit. And everyone asked me two Questions. They said, number one, you're not going to do a freemium model. Right. Because that had falling on hard times. And number two is you're not going to move your company up here to San Francisco.

Right.

Because can't hire anybody. There's no office space. So it's a fun journey. And you do have to realize that picking your path and the journey is the most important thing. Knowing what it is and owning it as you go is so critical if you're going to be successful. And it doesn't really matter what it is. It matters that you're committed to it and you understand it along the way, as you said, we've raised a few hundred million dollars at this point in time, and we've grown to over 300 million in ARR. Part of the journey. We did decide to accelerate some of the things we were doing through some acquisitions.

Yeah. And maybe let's go a little bit deeper there since that is what we're going to talk about today.

Oh, yeah.

As you think about acquisitions, what's your approach? How do you make the decision on is this a good time for an acquisition? Why am I going to do this acquisition? What is it going to bring to my business? Maybe walk us through that, that, that thought process.

Yeah. I think that you hit on the question, which is, what is the purpose of an acquisition? At today's time, fundraising is a little bit tighter. There are an awful lot of companies knocking on the door who are having a difficult time, build a great product, maybe got product market fit, maybe a little late to the market or stumbled in some way. So there's a lot of people knocking on the door saying, hey, look at our company. Maybe we, you should acquire us. And in isolation, any one of them can be pretty interesting. And so I found that you've gotta be really clear about trying to understand and articulate why does this particular acquisition make sense or not. And for us, we've done a couple and fit into different categories. Early on, we did a couple of small aqua hires where it was really particular people with a certain expertise that we were looking for. And we were able to accelerate our growth by adding that expertise. Wasn't revenue was even really intellectual, specific intellectual property that we were going to use. It was really the expertise and be able to accelerate. We did competitive takeout. One of our. Our first big acquisition, which you know super well, was our largest at the time, our largest competitor. And I think we're going to talk a little bit more about that one in a second. But a very different Dynamic. Very unique and specific. Dynamic. A company where most of the employees hated our guts the first day after the acquisition happened. Right. And then recently we acquired a company called Lessonly, which was a high flyer in a very complimentary space that allowed us to expand not only the offerings that we could sell to our customers, but also into a different segment that were down. Market motion.

Yeah. Why don't we. Why don't we go a little deeper there and maybe we'll end up with a little bit of a compare and contrast versus the two. So with the first acquisition of a competitor, a company called Tsavo, headquartered in Chicago, primary reason for that acquisition, biggest competitor was what?

Yeah, it was. To be honest, we were hesitant buyers. And they knocked on the door once, and they knocked on the door again, and they knocked on the door a fourth time. And it was. We were doing really well, taking away their customers. We had eclipsed them in size. We had a much higher growth rate, newer technology, and they were the enemy in so many ways. And trying to decide that we should do that, it had to make economic sense. I Price was really good, but we looked at it as an opportunity to consolidate the market, to really put ourselves clearly ahead of the rest of the competitors or several other competitors in the space that were a little bit behind where we were. And we suddenly were able to grow. I think we added about 50% to our ARR and a lot of customer base.

That's right. Yeah. I remember very clearly the initial time you brought that up in one of our executive sessions. You know, this is company. You guys know Salvo. Right. Where we had put a target on their back and we're going after them in the space. And it was, what do you think about acquiring that? And it was like vitriol in the room. It was like we all got really emotional about it. And it. It ended up being a really good decision for. For the business for a lot of the reasons you mentioned. Right. Just end. Ended up acquiring incredible customers, incredible talent. The customers were a great fit. Similar market, similar size. Already knew the space, the industry, the category. And it made for a great. We said 50% growth on top of our AR for that particular year. So it's exciting.

Yeah. People's a big part of every acquisition that we do. And I remember the day, and you were there. You remember it well. But the day when we actually went in to close and announced to the employees, and that was. There was one thing that kept me awake at night for literally weeks as we were debating whether to do this or not negotiating the deal and then getting ready to close it was, what am I going to say when I get up on stage in front of these people who we're now counting on to be a key part of our team going forward, who yesterday we laid off some of their best friends, and probably six months ago, some of their other best friends left because we were stealing some of their customers. And so I remember going in and putting a picture of an elephant up on the stage and saying on the screen and saying, hey, there's the elephant in the corner. Let's just talk about this. And. But a key part of our strategy. And you were. You were heavily involved with. So Craig at the time was living in New York. And I said, craig, we're going to do this. The people piece of it is going to be the most important part. Would you be willing to move to Chicago and basically spearhead that integration? Not just the part of trying to get customers moved across onto our platform, but also the people side of it?

Yeah, I do remember it quite well. And he tugged on my emotional heartstrings initially. I have a daughter who lived in Chicago. I was living in New York. And he's. You got a daughter in Chicago, don't you? I was like, yeah, he's. So what do you think about. And then he. I was like, yeah, of course I'm sold. It's right. And I think the thing that we did that was really important was one, we had to go and embrace the people, wrap our arms around them, so to speak, and really create space for them to blend in and mix in with the culture that we had established, which was fun and hardworking and rapidly growing. And the idea of inclusivity has taken on a slightly different term than the context I'm using it in now. But it's. We wanted them to feel included in what we're doing and how we were doing. And. And they were right. We were in a space that was fairly nascent. Right. We were creating a category in a lot of ways. The folks from Tsavo had created that category. We had a pretty aggressive hiring plan that year. And so all of a sudden, the idea that we could bring in 80 people who knew the space, generally knew the tech, we were solving the same problem in slightly different ways, but that was really important for us. And so we set hurdle rates on the number of people that we wanted to bring in and how many we wanted to retain. And then we also set hurdle rates on the number of customers and ARR. We had to attain for the acquisition to be successful. And the customer side of it is a different thing we can get into as well. But in terms of the people, it really was about making them feel included. And Doug may have bribed me to go charm some people, but I'm okay with that.

You're pretty good at that. Yeah. You mentioned the customer side too, right. When we went into it, probably naively thinking, oh, it'll be, we'll move these customers over, we knew that our platform was a great fit because we'd already taken some customers off that and there were roughly 100 customers. We had them all scoped out. We figured we'll just give them papa in a contract and they'll move over. It's not quite what happened, is it?

That is not what happened at all. It's one of the things you think is we love our technology so much. Everybody's got to love our technology exactly in the same way. And that's not always the case. And so what we had thought would be 100 migration projects ended up becoming 100 sales cycles in which we were the largest player in the space, they were the second largest player, and all of a sudden the third player in the space was suddenly invited into all these RFPs and we were competing in a hundred deals. Right. And doing so with a team that just three weeks prior was in those same customers offices telling them that Savo was the greatest product in the world. You shouldn't leave and go to seismic. And now they're coming back and saying, actually, maybe you should think about leaving Tsavo and going to seismic. Right. That's a really difficult story to tell. And so the messaging around why it was important and the value to the customers and the. The additional innovation and the additional people and all those things that we can do for the customer became really important in that messaging. And then we also had to counter some pretty nasty things that other competitors will do in the market and writing and saying some nasty things about us about the acquisition as well. And so we had to counter some of those things also.

Yeah, definitely. The big change to the competitive dynamics and landscape was something that I think was a lesson that I learned as we went through it. You did elevate the other competitors in the space by taking out number two. You suddenly elevated everyone else, because into all the RFPs and all the major sales cycles that were happening before, we were. As we were preparing for this, I was actually having a hard time remembering what year was it that we did that acquisition. I hate to admit that. So I went out And I Googled it and the first thing that came up was a competitor's landing page. Talking about how seismic is going to do such a terrible job taking care of you. Four years old, pretty much abandoned at this point. But it just reminded me of how it had changed drastically. The competitive landscape also had some pretty interesting impact. Something else that you need to consider on the metrics. You're 100% growth company, which we were at that point in time organically. Then we added a whole bunch of revenue. We didn't add a bunch of salespeople, we didn't add a bunch of pipeline overnight. We added a bunch of revenue. Suddenly a lot of your growth metrics and your retention metrics and all these things you worked so hard to build, suddenly there were like two versions of those. There was the organic version and then there was the version with the overlay of the acquisition. And it's another thing that, again, really beneficial to the business in a lot of ways. But that was one of the ones that you had to really think through and be prepared to talk to the future investors about.

Yeah, that's right. So as you think about that acquisition of a company that again, Doug said it very politely, but we were like, we were beating them pretty bad. And so they were on the decline when we acquired them, versus Lessonle, which is a company that was aggressively on the upswing, growing really fast. This all happened after I was there. And so I'm really curious to hear how you compare and contrast the two maybe a little bit in the last few minutes about the Lessonle acquisition.

Sure. Yeah. So very different situation. Again, being really clear going in point. I can't emphasize enough when you're thinking about doing an acquisition, why? What is the goal? What are the objectives? In the case of Lessonly, it was a complimentary space to ours. Something that we had a lot of partnerships in place. A lot of our customers had the same. The same buyer. And a lot of our customers were really asking us to bring these things together. So we made a strategic decision that we were going to do this. So this wasn't them knocking on our door. This was us knocking on their door. We talked to Lesley, we talked to all the others in the space, and we had partnerships in place. We took alert, long, hard look at the partnerships and said, what's working, what's not? Let's double down and try to see how they respond. And we did that across all the different partners. And so we were very thoughtful about deciding which company that we wanted. We wanted to make the Acquisition of and the goals that we had were quite different when we approached Savo, it was how many, how much of that revenue can we save and move over onto our platform. In this case it was how can we accelerate our growth and their growth by having a more efficient sales cycle by cross selling into our customer bases. And so we went in with a very different approach of how we arm the go to market engines and how we approached our customers and the story. And in the first six months we tracked it very carefully. We were able to generate $5 million of deals that we could say these deals would not have happened if it weren't for the two companies coming together. So it really accelerated both of our growth in a way that was really complementary because they were growing like crazy. It was much more expensive because it. But it added to our metrics in ways that were far beyond the revenue.

So as we think about this room and some of the folks in this room and there's a number of earlier stage companies, early stage founders in the room as well. Any thoughts or advice around like when is it a good time to start thinking about maybe we should consider an acquisition or a merger or bringing some tech together? Like how do you go about that thought process of when the timing is right?

Yeah, I think it's, it's a timely question because of the market and the fact that it is a more difficult, more challenging time to raise money and combining forces or consolidate consolidating spaces where there's four or five players is something that a lot of people are putting more thought and energy into. I don't know if there's a right time. There isn't a right time. It's always a distraction. It's always harder than you think it is going to be. But being very thoughtful would be my biggest piece of advice is just don't let it happen because someone knocks on your door in isolation. It's really easy to have happy years and to see the benefit that's going to happen. But being very thoughtful, why do I want to do this? Does this make sense? Being proactive about the companies having a map? One of the things that we've done is we've created sort of an ecosystem map so we know who the players are in different parts of the ecosystem. But we've also objectively tried to say what would be most interesting for us if someone were to knock on the door that we would get excited about and how it would fit into our strategy.

Yeah, I think that's really interesting. So maybe in the last minute Here we're coming up on time. Just some final, final thoughts or takeaways about, about this. And I, I think as we thought about this again, did some, some preparation coming in. It was the people part matters, the competitive dynamics as well as the broader reason as to why you do it. But just maybe final takeaways.

Yeah, I think pick the path that makes the most sense for you. Don't pick the path that someone else has dropped into your lap. Investors sometimes get excited because they have money they want to spend. They get excited about a deal as a leadership team, as an ownership team. It's got to make a lot of sense to you. Be really clear as you, if you do go forward with an acquisition, how are the incentives aligned? We, we've had situations in the past where not everyone on the acquired company was marching towards the same place that we were as a company and there was just not enough clarity around what we're trying to do to be successful. Is it integration of the products? Is it moving the customers over? Is it acceleration? The growth rates? Like, what is it that you're really trying to achieve? Make sure that's super clear and make sure that people's incentives align with that. Yeah, but it can be really, it can be a very good and strong accelerant to your business. It can help position you and strengthen a leadership position, can help you expand into new market segments. There are a lot of different reasons. It can certainly add to your technology stack and accelerate that. But be really thoughtful about it.

Great. We are ending right on time. Thank you all for listening to us today.

All right, this episode is brought to you by Boast AI. Each year, the US And Canadian governments give out billions of dollars in R and D tax credits and innovation incentives to fund businesses like yours. But the application process is cumbersome, prone to frustrating audits, and receiving the money can take up to 16 months. Boast AI gets you access to research and development tax credits and innovation funding opportunities without the headache and red tape. Join thousands of North American Companies leveraging boast AI software to maximize cashback. Check out www.boast.AI.

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