Scaling From $1M to $500M: Five Strategies To Drive Your Next Wave of Growth with Karen Peacock at Intercom

One of my very favorite quotes from Mike Tyson Everybody has a plan till they get punched in the mouth.

Love that.

Here's my corollary. Everybody has a strategy until they get handed a big check. What will you do when you get handed a big check? Don't get blinded by that. Focus on building things that are scalable and relevant for multiple customers.

I need some traction. You need some traction. Let's get some traction. Hey, what's up innovators, entrepreneurs, visionaries and disruptors. This is your Traction Podcast host Lloyd Lobo. We're a community of over a hundred thousand people just like yourself, on a mission to help you get the methods, the money and the madness to explode your business growth. Featuring stories and tactical advice straight from those who've done it before, like Shopify, Twilio, Asana, and many more, 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 B Oast. This episode is also brought to you by Launch Academy, an international tech hub that provides mentorship, resources, network and the environment for entrepreneurs to launch, fund and grow their startups. Since 2012, Launch Academy has incubated over 6,000 entrepreneurs, of which 300 have grown their startups past Seed and Series A and have collectively raised over $1.2 billion in funding. To learn more about Launch Academy's programs, check out LaunchAcademy CA. Special thanks to our Podcast partner, Content Allies From Podcast Production and Promotion content allies helps B2B companies build revenue generating podcast. We recommend them to any B2B company that's looking to launch or streamline their podcast production. Learn more@contentallies.com now, you've probably heard a.

Lot of talks over the years about the founding story. Well, what we're going to talk about right now is what happens after that. I'm Karen Peacock. Intercom is a customer messaging platform that helps businesses drive growth and today I'm going to share with you my own stories, both successes and failures and the lessons and principles that I've taken from that. So when you first start a company or join a company, you probably have a goal in mind. You might have a Thought of, I want to launch a new product, maybe I want to make a million dollars in revenue or $10 million in revenue or even start a new category. And you, and if you get a little bit lucky, you get there. But when you get there, what you realize once you hit that initial goal is that what you thought was the finish line was actually just the starting line. It's hard. How do you keep growing from there? That's what we're going to talk about today. My five best strategies to drive your next wave of growth. So let's go ahead and jump in. First strategy is to expand your market. So your initial customers are very important. You should continue to care about them and love them and know that if you only ever focus on those particular customers and other customers who look like them, you will be stunting your growth. You need to figure out how to expand your market, how to get your product to appeal to a broader and broader set of customers. Now, there are typically three ways companies go about expanding their market. First, by vertical, you might start in one vertical and expand to the next. Second, companies that start upmarket with a high end solution will often expand down market by making their product or different versions of their product less expensive and more simple. And the third way is that down market companies expand up in this third. This is classic disruption where a new entrant comes in with a more simple or less expensive one product or service and disrupts the incumbents. This is what we're gonna talk about right now in this theme. Now there are good ways to move up market and there are dangerous paths to go down. And I'm first gonna talk about a dangerous and very tempting path which is to build for one big customer. So if you have a solution and you're looking say to maybe you started in the small business space or mid market and you're looking to expand up to mid market and enterprise, it's very tempting to find a large customer and build to their needs and that's very dangerous. If you find a large customer and build out everything that they need without understanding what it is that other customers need, you are doing something that's unscalable. So investing in something that is only relevant for one customer is the definition of unscalable. Do not make that investment of your precious company time and resources. But it's very tempting. And I'll share with you a story from Intercom. We were approached by IBM a few years ago with an option, basically a big check, a proposal of many millions of dollars that they'd be willing to give us. They would have been our largest customer ever if we would build out a product that was very much customized to them. They loved our core product and they wanted to make it super, super customized to what they needed. And in fact, they had 137 specific things that they needed and they were not things that other customers were asking for. And although it was very tempting, we passed on that. So think very carefully about what you say yes to and what you say no to, because your strategy is as much what you don't do as what you do. So many of you probably know one of my very favorite quotes from Mike Tyson, Everybody has a plan till they get punched in the mouth.

Love that.

Here's my corollary. Everybody has a strategy until they get handed a big check. What will you do when you get handed a big check? Don't get blinded by that focus on building things that are scalable and relevant for multiple customers. I just talked about what not to do. Here's my best advice on how to move upmarket successfully, and that is to expand upmarket one step at a time. What I mean by that is find customers who are one step larger than your current sweet spot, your current product market fit, figure out what it is that they really need. They're going to tell you a lot of things that they want. Figure out how to separate the needs versus the wants and think about which of those things do you need to build versus Could a partner of yours build now? Be really ruthless here. For many of you, including myself, at times it's very tempting to say, great, we're going to build it all. Be ruthless. Figure out what are just the one or two things that are most important to build out and build and test with those first and strike up the right partnerships to build the rest of the ecosystem to meet their needs. Let me share with you a specific example. So when I First joined Intuit, QuickBooks was a great accounting product for companies with up to about 20 employees. And when you got to 50 employees and certainly by 100 employees, you'd really outgrown the product. QuickBooks was about $300 a year. And those customers that outgrew QuickBooks had to move to a product like NetSuite or others that cost $3,000 a year. So 300 to 3,000. And they really wanted to stay on QuickBooks. So we spent time with those customers and understood exactly what they needed versus what they wanted. Built out, opened up APIs, built out a partner ecosystem and launched a QuickBooks Enterprise product within a few years, that became $100 million business. That was a product that we originally sold for 300. When we launched the new product, we launched it for $1,000, three times the price of our existing product. So it felt huge. Right. But it was still a third the price of what the incumbents were that our customers were comparing against. That's how we built $100 million business there in just a few years. And that's how you can expand upmarket one step at a time. Now, when you expand upmarket, it isn't just about product. So think about your own experiences. When you go out to dinner and you spend $10, you have probably a certain set of expectations about the food that you're gonna have and the whole experience. Now when you go out and you spend $100, you've got a different set of expectations and it is not just about the food. Right? Same is true for your enterprise customers and your larger customers. You need to really think about the right way to market to those customers, to sell to them, to support them, and set them up for ongoing success. My advice here is when you're expanding up market, hire somebody who has successfully served those upmarket customers that you're going after before and can help you define the blueprint for your company to figure out how to provide the right end to end experience for those companies. All right, so we just talked about taking your existing product in the problem space you're going after and expanding your market to serve more types of customers. Next big way you can drive growth is by launching new products. Let's talk about that for a second. Building your next big product, where does that big idea come from? I'll start here with a story as well. Intercom, when we launched, was a product very much focused on live chat to help you build your relationships with your customers. And as a part of that, a lot of people use Intercom to support their customers, get to know them better, learn about them, build new products based on their needs. But then what we also saw is a lot of people started installing the Intercom messaging on their website to interact with prospects and to engage those prospects and help turn them in from leads into paying customers. Because live chat is a great way to engage prospects on your website, but it was not a use case that we had built for or optimized for. So we spent time deeply understanding the needs there and created a purpose built solution for sales. And what we learned out of that and the general principle I would say for you is your next big product is probably right in front you of. Watch how your customers are actually using your products today and you will likely find your next big product. When we focused and built out a product that was focused on helping companies drive sales through their website, we were able to come up with something that became our fastest growing product ever. And now when companies install Intercom on their website and they use it to engage with prospects, our customers on average speed, see an 82% increase in conversion rate. So it's a product that works incredibly well. That's why it's been our fastest growing product ever. And now our sales and marketing products are our most used products across Intercom. So the general theme here is watch what customers do, not what they say as an important principle. There was not a set of customers saying, hey Intercom, can you create a purpose built solution for sales with integrated data enrichment and automated lead routing? No, no. Customers were asking for that. They're asking for improvements, incremental improvements to your existing product. The way we found this opportunity though was by watching how our customers were actually using our products. So watch what they do, not what they say. That was where our insight was. The most important question you can ask yourself is what are other important problems that your customers have and which of those can you solve? So we just talked about expanding your market, creating new products. You need to keep finding your product market fit again and again. For every new market that you enter, for every new product that you create, and for every one of your existing products, you need to keep refining that product market fit. Think about your very favorite products from three years ago. Are they still your favorite? It's probably just the ones that have successfully reinvented themselves. So let me share with you a myth, and that is there's this concept of product market fit. And if you work really hard and are really smart, do a lot of the right things and get a little bit lucky, you can enter the beautiful and magical world of product market fit and all is good and you're done. Yeah, unfortunately you're not done. Let me give you an example of reinventing and refining product market fit and a failure story along the way. So I promised I'd share both successes and failures. When I first took over leading product for QuickBooks, I wanted to make the product better. And so I and my team went out and spent a bunch of time with customers and we asked them, what is it that you most want from QuickBooks? What would make it even more amazing for you? And the number one thing that they asked for was budgeting. And we said, great we can build a great budgeting product. And so we created prototypes, we iterated with customers, got to the point where our customers said, yep, that's a great budgeting product. We built it and launched it. And you know what happened? Nobody used it. How did that happen? Where did we go wrong? And so we went back and we watched customers to try and figure it out. And what we realized was that nobody, no small business owner actually ever sat down to do budgeting. It was something that they thought that they needed to do. It was an aspirational need, but not something that they actually spent time doing. So why were they asking for budgeting? What they did do is they would spend hours going through all of their bills that they needed to pay their bank account balances, all the customers that owed them money, and then try to figure out how to fit that web together. Because fundamentally the problem that they had was, I can't pay my bills. And so my best advice here on finding product market fit is to fall in love with the problem, not the solution. Where we went wrong is we fell in love with the solution. Budgeting is a solution, not a problem. When we fell in love with the problem, which is I can't pay my bills, we developed a simple cash flow management product feature, actually, which within a few years was used by hundreds of thousands of small businesses. So my best advice here, fall in love with the problem, not the solution. Okay, this is a lot of work. Don't go it alone. Your customers don't want you to go it alone. They want your products and services to integrate and work well with all of the other products and services that they have. So you need to figure out your platform play, figure out what products you want to integrate with, what platforms you might want to build on top of. And for some companies, it makes sense to think about becoming a platform yourself. About two years ago at Intercom, we decided it was time to become a platform. We made that decision because we saw lots of companies building integrations on top of Intercom and even building apps on top of Intercom. So we knew there was a need. So we made that decision. And the first thing we did is start to watch what our customers were doing, learning from all the things. And what we saw our customers were doing is they were using the Intercom messenger, the chat bubble, to interact with their customers. And they were often embedding links in there, links to websites or app to do things like schedule an appointment or check order status. That worked fine, but it was a bit of a kludgy Experience, you're going from one place to the next. And we realized that we could really make that amazing by building the concept of apps right into the messenger. And we also realized that there were so many different things that our customers were using Intercom to do, it wouldn't make sense for us to limit that to only the apps that we could build. And so we opened up interviews and started building a platform. And within three months of launch, we had 100 apps live in our app store. Now we have almost 200. And what I'm actually more proud of is that today 70% of our customers use one or more third party app. So our platform has become a core part of the Intercom product and what we offer. And our platform's also become a key reason why customers choose Intercom over competitors. It's become a successful platform. So I want to share with you my single biggest principle for successful platforms that you can use as well. And that is you need to focus first on delivering value to your customers, second on delivering value to your partners, and third, on delivering value for yourself. If you start by focusing on how you can deliver value to yourself, you, you will lose. Start by thinking about your customers. The best way to get that flywheel of your platform going is to think about the killer apps. What are the key things that your customers are wanting to do on your product today that they can't do, or that they're kludging together and crawling over broken glass to make happen? Make that as one of your first apps. Find the right partners to build out the things that your customers are already needing and kludging together, those will be your first killer apps and will drive people to use your platform. Second, for your partners, they really care about two things. One, they want the products, they want your platform to be easy to work with and work on and build things on. You need to invest in the right developer tools, the right APIs, the right app frameworks, developer support. This is an area at Intercom we've invested a lot in. The second thing partners want is they want access to customers. They want to grow their business. So, so you need to invest in the right kind of partner programs to help your partners do that. So invest in that order, focusing first on your customers, then on your partners, then on yourself, and you'll be successful. Now, with platforms, there are a lot of big, fancy, large numbers out there. And my advice here is don't get fooled by those vanity metrics. And by vanity metrics, I mean things like the number of app store Visits or even things like the the number of apps. Because that's really going back to the old days of the web where people used to brag about the number of visitors to their website. That's cool and all, but what do you really care about? What you really care about in a product or a service is active use. How many customers are actively engaged with your product and getting value? How much value are they getting? And so in the same way that you would for your product or service, care about that active use. That is the single most important metric for your platform too. And that's why I'm most proud of that number that I shared on our platform for intercom, that 70% of our customers use one or more third party app. So focus on the metric that matters and that is active use number five here. These are a lot of things to do. You cannot possibly do these just yourself or just your founding team. You need to build out your team. And as you get a little bit bigger and start to build out your team, you'll probably end up needing to hire for some roles that you don't really know that much about, or jobs you've never done before. Whether that's hiring your first head of sales, your first head of legal, the first person to manage your website and drive conversion rate optimization. In fact, at Intercom, we just hired our first head of legal. And so I use this myself, my advice here, and I think the best thing always to do, is to find three people who are considered to be best in class in that particular field. You can get recommendations of great people from your investors, from your friends, and from colleagues at events like this. Ask for the names of three people who are excellent at this and what you want to do is pick their brain. Learn a little bit more about how they do that job, what the job is, what a good head of legal does, what a bad head of legal does, what they would look for if they were hiring a new head of sales or whatever their role is. Learn from those people and then use that to pattern match and define what it is that you're looking for as well. And importantly, ask those folks for referrals of other people who they think are great. Then when you're actually talking to those candidates, how do you assess whether someone's going to be a good fit for your company and do a great job in that role? My best advice here is to apply lean startup principles to hiring. And what I mean by that is put people in the job, dry test it. If you are trying to hire somebody to lead your website and optimize and drive up your conversion rate. Have them do that job for a day. Give them all the stats about your website and then have them come up with what they think a good first test to run is. And then ideally even run that test. Put people in the job. You will immediately be able to see what it will be like to actually work with them in that job. You'll see how they approach people problems and how they do the job better than any kind of theoretical interview question. So it's good for you and it's also good for them because they get to see what it is that you'd actually want them to be doing day to day and they get to experience what it's like to work with you in doing that. So it's good for both of you. So put people in the job. I'm going to wrap it all up here. One slide to rule them all five key themes that we talked about. Number one Expand your market. If you're going to expand up market, do it one step at a time. Number two build your next big product. Watch what your customers do, not what they say. Number three find product market fit again and again. Fall in love with the problem, not the solution. Fourth, decide your platform play. Focus on providing value to customers, partners and yourself. In that order. Focus on active use. And number five, build your team. Apply Lean Startup principles to hiring five key ways to drive your next wave of growth. Want to thank you all for your time today. You can find more on our Intercom site Intercom blog as well and we publish books at Intercom. They're all free. One of the best ones to go check out next is the Growth Handbook in a Sales Handbook. You can also follow me on Twitter. Thank you and I wish you all the best.

Thank you for listening and we hope you enjoyed this week's episode of the Traction podcast. If you enjoyed the show, please leave us a five star review and you can find more information and all the resources mentioned in today's episode at Boast AI that's B O A S T AI Blog.