Seven Lessons From Starting, Scaling and Selling Two Startups with Nick Mehta, Gainsight

If you're creating a category, one of the most important things is patience. You said, Nick, did you have a go, no go decision timeline? No. Honestly, at some point I'm like, this is just what I want to do. This is my mission. So it's, you know what? I'm just going to do this. And the way I the analogy I draw there for myself is when you're creating a category, it's like you go into a giant field that's all mud and dirt, but you have a vision that, like, we put some seeds in here and we put some water and the sun helps us out. Eventually it's going to be this amazing garden. 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 100,000 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 your. 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 Boast AI. 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.

The dream of every startup and founder is to exit via an ipo. And if that's not possible, maybe an acquisition and couldn't find a better, more fashionable, better speaker than Nick Mehta here. He's been our favorite and repeat Traction speakers. He's the CEO of Gainsight, which pioneered the customer success category, built an award winning culture, and recently was acquired by vista for a billion, 1.1 billion. And his first CEO role was at Live Office, which was also acquired by Symantec in 2012 for 115 billion. So Nick knows everything about building, scaling, selling startups, creating categories, and more importantly, how to sell gracefully. You've had a super successful career in tech. Give us your backstory. How do you even get into all of this?

Thanks. Yeah, I hope like for all of you that our best success is ahead of us. But my, I've been very fortunate to be in tech most of my career. My, my dad was actually an entrepreneur in technology. He ran some really small companies. Nothing ever became big like 20, 30 person companies when I was a kid. And so I grew up around technology. I still have these memories of being in our basement and my dad, he actually was selling computers like this is back in the 80s and 90s. And so we had all these computers in our basement and he'd always bring home new computers and I was like a kid in a candy store. For me, I loved computers. And this is again, some of you might appreciate this, but back in the day you would get a computer and you'd try to put in new RAM cards and put in new video cards so you could play your video games. And I was that kid. I certainly did not have a social life at all. I was actually pretty, pretty introvert actually, surprisingly. And not nearly as into fashion, but that was my childhood and kind of growing up around tech and. And then I got into entrepreneurship. I was, I went to undergrad and studied actually biochemistry mainly just to please my mom who wanted me to be a doctor. She didn't want me to do anything in technology. So for three years I gave my mom the hope that she would actually have a son as a doctor. And then that hope was lost, which she still reminds me every day. She's. It would be so nice to have a doctor in the family. It's too bad we don't have a doctor in the family. Other people are so lucky they have a doctor in the family. But I ended up doing a master's in computer science following what I was always into. Started a company in college with some classmates. I was a co founder of a startup in the early Internet era. Company was really hot for a while and then ended up not working out. Sort of the boom and bust story. And then I worked in a big company for about five and a half years. Was a product manager, then a, eventually a VP and GM at Symantec. Some of you probably know Symantec. And then I ran a SaaS company, as you alluded to Lloyd, called Live Office, which I ran and sold. And then we launched Gainsight in 2013.

Awesome. And what do you think were the key traits en route to becoming an entrepreneur? What do you think was your most valuable job to become that founder?

Number one skill is I figured out actually, when I was at Symantec that I don't like working for anyone else. That's the number one. I don't know, probably some of you can empathize. It's like that desire to do your own thing. And very specifically, I remember I was at Symantec and I was actually a general manager and VP responsible for an acquisition of a company. We bought a startup and actually did really well. And I ran this business. It was my own little company. We had our culture, we had all hands, we had kickoffs, we had our everything. But then every now and then, I realized it wasn't my company. Like the big semantics, great company, but they would make changes, and I didn't really control them. And especially around people, that's what I care the most about, is people and values and culture. And so I would say the biggest thing was a desire to do my own thing. I think that's probably. If you really honestly talk to most entrepreneurs, sure. There's other things. There's envisioning the future and hustle, blah, blah, blah, blah, blah. I think part of it is just you want to do something on your own. Because, frankly, it's probably much more economically rational to go work for somebody else. Less risk. Lloyd, look at you, right? You've been. You put it all on the line and now you're having some success. But it's like you could have done a lot of other jobs. And so I think part of it is just you want to do it on your own.

Definitely do it on my own. And then the second thing I think is, well, you're one of the most fashionable CEOs in SaaS. How did that come about?

Lloyd, I think one of the most important things is if you aspire to do something, always start in a group that has a low bar. So if you said fashion in technology, like, if I had to show up in fashion in Hollywood or even like New York, I'd have. No, I wouldn't even. I wouldn't even reach the. Make the mark. Joking aside, I do think there's something about standing out. You. I remember reading this blog post a long time ago that said if you want to network and build a network, you wear red shoes. And the idea was basically you have something that's like a conversation starter that you go to an event and you stand out. And some people don't like standing out, which is totally fine too. But it's nice if you find something that feels authentic to you. I actually love clothes and fashion, stuff like that. And then it becomes a fun, like, you know, icebreaker, and it lets you stand out and build your own brand. And I remember I was at Saster, which many people in this community know Saster and. And I was spoke there in 2013 or 2014, I think it was 2015. That's the first Saster. And Jason Lemkin, who's the founder of Saster, as a joke, sent me a little plaque that said best dressed award at Saster. I was like, oh my gosh. Okay, I stood out. So then you kind of make your thing. So I do think that there's some value to figuring out what your thing is. Whatever. Mine isn't just fashion. It's into science and music and all kinds of stuff. And you lean into your thing and you make it your thing and it really helps.

Definitely. Fantastic advice there. So Gainsight, you pioneered a whole new industry, right? People didn't know what customer success was until you guys came around. What made you decide to start the company and what else did you consider after selling Live Office?

Yeah, totally. And by the way, just so the history is correct, so there are two guys who actually came up with the idea for Gainsight, Jim Eberlin and Sridhar Pettineni. And they were pitching an investor and I had a similar idea and I met aren't the battery ventures met through those investors. So that's kind of how we ended up launching Gainsight together. So they are very important part of the story. And they had started another SaaS company before gainsight, so they'd felt the pain firsthand. And. And so my story was I ran this company live office and Lloyd, I was just. And many of you, I was sitting in meetings running this cloud business and I had all this great data about marketing and all this great data about our sales pipeline and Salesforce and our billing data. And then when we talked about our customers, we just like literally brought up a spreadsheet and had to guess about are they happy? Are they going to renew? Are they going to expand? And so. And so I remember sitting there thinking, God, there's gotta be a better way to do this. And so when we launched Gainsight in 2013, we had this idea that every SaaS company would need this and specifically every SaaS company would need this new role called customer success manager. And everyone now in SaaS is like, duh, Nick. Obviously everyone knows that. But in 2013, frankly, people didn't like, there were probably about 500 CSMs in the world in 2013. And I don't know how much we charged for our software back then. Maybe a few thousand dollars a year. What, are we going to build a $2 million business, right? There was no. So what we said was the only way we'll ever be a real business is not to, like, sell software to CS teams, but to convince people to have CS teams and convince them to buy into the customer success concept and buy into doing things differently than they've always done. Which is the hardest thing in the world, is getting people to change. And so we jumped like, push that rock up the hill and said, hey, let's write a blog post about why you need to invest in customer success or how you should compensate your CSMs or where you hire CSMs for from. And that turned into three published books, thousands of blog posts, thousands of podcasts and events like this. A huge conference of 20,000 people at it, similar to what you do attraction Lloyd as Pulse, our conference is not about gainsight, it's about the CS profession. And so we basically out of necessity, had to help create a category. And like I said, we didn't create the category on our own. Many people helped. We just fan. We're like the cheerleaders for the category and we help accumulate the knowledge from all the amazing people in the community. But we did it out of necessity. Like I there's a lot of amazing businesses where you're not creating a category. You're just building a better product and more power to you. In our case, we had to create a category. There was no other option.

I came to the first Pulse conference, and that's where I actually met. I met Byron Dieter, who then got me in his other company, Speakeasy, where I ran for a few years. And I learned everything about community building from that one conference. And then we launched traction. So we built the community before we even have the product. But in a sense, you built the community before you had the product, right? Or not.

Literally the same thing in 2013 we had with, like a demoware product. I'm sure, Lloyd, you've been in enough product development where you, like, look back on what you had in the beginning. You're like, oh, my God, that wasn't really even a product. It's possible there might even be an early gainsay customer on this call who would attest to that. Like, what we did early on is so limited, but we have this vision. And the vision, by the way, wasn't from us. It was from this amazing community. And we saw that these people wanted to get together. That's the most important thing with your events. You've identified this need for people to get together. They have a common belief, a common set of experiences. And we saw that these customer success leaders were like, I need to be with people like myself. And I've done from 2013 to literally last week, I've done hundreds and hundreds of events. And very commonly, the thing that people say at the end of the event, including what somebody told me in London last week at our event, is I asked them what's the best thing about these events? And they said, I left feeling like I'm not alone. There's other people going through the same stuff. I left more confident in what I'm doing because I'm not just making it up on my own. And so what we figured out, Lloyd, was there's this community and we just need to host the community, bring them together. And then the benefit was obviously we built a relationship with them, we built trust, and they were very kind, in many cases become customers. But also we learned from them and we learned what product needs do they have very similar. I think what you're doing with your business, where you've learned starting out in where you started, and now you're learning all these other needs that R and D teams have, right? Loyalty. You're just like learning all this stuff just because you've been in there and you earn their confidence. So we earned the right to like host the community, bring them together, learn for them, and then eventually brings many of them on as customers.

So that was a phenomenal strategy. Effectively, Gainsight's the poster child for category creation and community building. And a lot of people give Gainsight as a case study. But that helped you with early customer development. Finding your first customers and getting that feedback even helped you get to product market fit, you'd say.

Exactly. That's exactly right. Yeah. And I just did a webinar actually literally just an hour ago with Jeffrey Moore, Crossing the chasm, kind of all time, legendary business person. And he summarized crossing the chasm really well, which is people below before they cross the chasm, those early adopters, all those people that you and I dealt with, deal with in the early days. The reality is what they want is they want to find people that believe in what they believe in, and then they'll give them the feedback and they'll become Customers. And so it was like, hey, Nick believes in what we believe in. By the way, we had an important person early on named Dan Steinman who was our chief customer officer then. And he co wrote the first book on customer success with me and one other gentleman. And so Dan believed in what these people believed in. They saw that like the way we, our values and our culture and it was this like shared belief and then that allowed us to do customer development. They gave us the like opportunity to go look at their spreadsheets and look at their internal systems. And I remember there's a woman named Dionne Hedgepath and she was at a company called Aptio. And I remember sitting with her in like a coffee shop in Mountain View and like her showing me her custom internal dashboard, a kind of a custom version of Gainsight. She's listen what I have. And frankly the first time she told me she's I don't even think I need third party software. And years later she became a customer. And so that I. Those people that are willing to open up the hood to you, show you what they do and then give you the permission to come back and, you know, pitch their business, that's what you get out of community, in my opinion.

You build great relationships. I have this thing that I tell people a lot is if you build a community, you will not become a commodity. Because every tool eventually. Every tool becomes a commodity eventually. But in the early days, did you have any milestones that you set? Was there a no go or no go timeframe to drop this and work on another idea because you're creating a category?

Yeah, it's funny, I wish. I probably should have had that. I will say that there's a fun anecdote which is I remember we signed our first lease from a legit office in March of 2013 and it was like a two year lease and it was like, oh my God, it was 3,000 square feet, which felt like so much space. And it was a lot of money per month in our for us. Then I don't even know what it was. $10,000 a month. And I remember thinking, I don't know if we're going to even be in business by the end of this lease two years later. Right? Like literally I was looking at this empty space. Are we going to make it? So I don't know, I should have probably had some go, no go or whatever. But frankly we didn't. It just kept like getting a little bit better and it wasn't easy. Lloyd, category creation is not easy at all this is Not Snowflake or UiPath or one of those that's just like that. But it's been a great trajectory over time. And actually frankly we're accelerating now because I think one of the things, like you said, community prevents you from being commodity. Once you have a community, in some ways you do start accelerating. You become a little bit, I hate the word unstoppable because you can always be stopped and there's always competition. But you know, you become a little more, more momentum to preserve your growth.

So definitely that's fantastic advice. Was there. At what point did you feel that you had product market fit?

Yeah, it's funny, I see a lot of people who are like, oh, product market fit is this magical thing. You cross this line and all of a sudden you had it. For me, like all business, I've never felt like all of a sudden something happens. But I think that there's some memories you have that feel like, okay, something different has happened. First time we got a marquee customer, UBox was our first customer and they incredible partner to us over the years and early SaaS pioneer. And so the fact that they were willing to work with us, that was a marquee. Another one that I'm sure, Lloyd, you can appreciate. The first time we closed a 6 figure ARR customer that I had not spoken to and I didn't even know who they were, that was a big deal that was like, okay, it's not really product market fit, it's probably go to market fit. But something is happening where you're actually able to do this without you having to go for. When we got Box, I remember I probably went to the lobby of Box's office in Los Altos, California like 50 times. Literally. Like I knew the receptionist, I knew exactly their, I knew their wi fi password. But then you get that customer that you didn't talk to at all. And like this last week we closed a customer for 1.3 million that I like met once. So it starts. Those milestones to me are really big. Another milestone, by the way, that it's not like a one time thing, but I think that you can start feeling it if you're in a new category. One of the hardest things is you're not trying to just defend the need for your solution in particular, but you're trying to defend the need for a solution. So why do we even need a customer success technology? Why do we need a customer success team? And so one of the things that happens early on is those when your advocate who really believed in what you're doing and they brought you in. And when they leave, it's a really dicey situation because a new person comes in, they're like, I don't even know if we need customer success, let alone Gainsight or software. And so one of the big changes to me, product market fit wise, is when on average, sponsor changes actually either help you or are neutral. So now when new people come into customers, they're using Gainsight. Honestly, the vast majority of them are like, obviously we need Gainsight. Like, maybe we want to use it a little differently or whatever. Right. Very few sales leaders come into an organization and are like, why do we use a CRM system? Why do we use Salesforce? Like, honestly, you wouldn't. You would get fired. And nowadays, actually, a lot of our customers say that, like the hire, the CEO wants to hire somebody who knows how to use Gainsay. So it's the opposite way. Right? It shows up. Actually, Gainsight often shows up in job descriptions. And so that's another sign of product market fit. You could probably say, okay, how often is a company vendor solution showing up in job descriptions? And very fortunate for us, very often now it shows up in job specs, definitely.

And that's where you go from creating a category to becoming a preferred brand.

Yeah, that's exactly right. You nailed it.

Awesome. What were the key learnings from your category creation? Playbook. You must have a playbook.

Number one is, okay, it's very helpful category creation to have a face of that. And ideally, it's a face with some credibility, like a personal story that says why they're doing it. I think you've done a great job of this in your business, Lloyd. So it's for Gainsight early on, Dan Steinman, actually, who's the. He was the head of customer success at Marketo. We brought him on as chief customer officer. And he had all this credibility because he'd walked in the shoes of, you know, people in the community. And then over time, I became definitely the face of the company. And we have others, too. Kelly Capote, our chief customer officer, many others. And so number one is, who are those people? They're going to put their, like, their face out. It's not Gainsight. It's Nick Mata, it's Kelly Capote, it's Dan Steinman, it's Allison Pickens, our first CCO after Dan Steinman and people like that. So that's number one is who are those people that are willing to put themselves out there? Number two is how do you find Scalable ways to get your message out in authentic fashion. And so that's where it's. You're not just talking about your company's products. You're talking about the problem and the job. And you're talking about, in your case, entrepreneurship. Right. So it's talking about something bigger than you in an authentic way. And so for us, that showed up in books and conferences and blog posts, but that were never about Gainsight, they're just about the feel. So that's. Number two is authentically scaling the content to be about them, not about you. Number three is really, I think there's a lot of value to bringing your vulnerable, authentic self to this community into this category. And that's why I talk about fashion or we do selling music videos or whatever we're well known for. It's like authentic. It's like literally at night, I like, I'm listening to a song and I'm like, this would be great to rewrite about customer success. Something wrong with me, but I share that with the world. And we have our values. At Gainsight, we talk about what we call human first business, the idea that, like, business about human beings first. And we have five values in the company, and all of our customers, our community, know our values. So we're very transparent about who we are. So that transparency, vulnerability, authenticity, about your culture and who you are, that's the third thing. And then the fourth one, which I, again, I think you can empathize with. If you're creating a category, one of the most important things is patience. You said, nick, did you have a go, no go decision timeline? No. Honestly, at some point I'm like, this is just what I want to do. This is my mission. So it's, you know what? I'm just going to do this. And the way I. The analogy I draw there for myself is when you're creating a category, it's like you go into a giant field that's all mud and dirt, but you have a vision that, like, we put some seeds in here and we put some water and the sun helps us out. Eventually it's going to be this amazing garden. And so early on we were in the dirt, like in the mud, putting seeds in the ground and, like, getting dirt. Not even good at gardening, but I always had this vision that, like, one day it was going to be a garden, and I'm not going to leave and have somebody else get to see the garden. I want to be there for the garden. So you have to have that patience. Like many of the Mistakes I made, Lloyd, were like forcing things before their time. Whether it was like new products or spending too much money or trying to close a customer, it was patience. So I wouldn't do category creation. Just to be honest. If you don't believe that the category needs to happen, because that's what I believe. I believe what we do needs to happen. Right. Not that they're changing the world or whatever, but just in the giant architecture of business, customer success is needed. And if you don't believe in that category in your soul, you won't have the fortitude to stick it out. And then somebody else will get to take advantage of what you did.

Definitely. I think one of the other things you have in your DNA is giving before you receive. You got to fall in love with that customer, make them successful beyond, beyond the product or service. A lot of what you did was educate the market, educate the industry on being, becoming better customer success professionals.

That's right.

And then someday they needed software and they would buy you. You weren't forcing it.

It's interesting, Lloyd. I think that's such a good point. I should add it to my list because it's really not, don't be transactional. It's about the long term and it's just trying to help people out. One of the examples there, Lloyd, is I think most categories, part of it is like there's people in jobs that you're serving and for us it was a new job. And so I'm very proud that for myself and for many of my colleagues, we've spent huge amounts of time helping people in the career. And it's not just writing blog posts or creating webinars. It's literally like one to one. I, on average, I probably do five calls a week with people helping them in the CS career, like thinking about jobs and either breaking into the job or what their next job is or finding a job. So you add that up five calls a week. My goss is my guess is at least a thousand, fifteen hundred calls over my time in game site, I probably helped a few hundred people specifically introduce them to the job that they took, including some whose companies went public. And it feels great. Don't make any money off that. We're not a recruiting firm, but it's sort of part of that like long term orientation. That's. Yeah.

And you post jobs on LinkedIn all the time.

Exactly, yeah.

But the music videos are amazing. I had a few customer success leaders like Meenu Agarwal.

I mean, yeah, totally.

And they were all in that music video, which was fantastic.

Oh great. Totally. I saw the panel you did with her, it was awesome.

Yeah. So at some point your category creation became this community. Then it became massive. It turned into a community of evangelists. How did you do that? It happened over time. But what were some key markers that took it there?

Yeah, a few things that I think really helped us. Number one was doing an event early. Right. Just like you've done. And number there's so many events now, so I don't want to like when in 2013, honestly doing events wasn't as like fashionable and tech using the term fashionable as it is now. And so our first Pulse conference we did, you know, we were like, oh, let's get 50 people there. And we had like 300 show up and 300 turned into 900 to 2,000. We did a virtual this year, about 21,000 people. So I think events definitely allow you to bring people together, but you have to have a novel audience, like some audience that doesn't have tons of things to go to and a novel story. So don't just come throw an event. But if there's some community that's underserved, that was one thing clearly. And when we do events, we bring our personality. We always music videos and I bring my kind of self to this keynote and all that stuff. So that's one thing that we've really done. A second thing though is not just the big events, but just connecting people together one to one, hey, you should meet this person. But also like tons and tons of like round tables. So one thing we do particularly actually gotten better at post Covid is we do every month many virtual happy hours with chief customer officers getting together and connecting people together. And if you just host it, do an icebreaker question at the beginning, it'll get out of the way. People love it. So those peer to peer roundtables, not just the big events. Third thing that has worked really well for us, obviously content in general, right. Blog posts and all that. But everyone does that. But specifically not everyone can write a book or should write a book. But in the case of our space, it was like so needed. And that customer success, the first book we wrote has like sold more than a hundred thousand copies and translated into Japanese, Portuguese, Spanish, Mandarin, German, French. It's amazing, right? And people like everywhere they ask us to sign the book and so the book actually Hebrew apparently as well. There you go. And so I love that. And that's really, I think that idea of creating content and scaling it, that's something that jumped out for us big time creating like initiatives to help people in the profession. Like I talked about helping them one on one. But also we created this online university to teach people customer success. Like a class. We created actually more recently a couple of years ago, a year and a half ago, a program to bring under people from underrepresented backgrounds, underrepresented minorities, stay at home parents, military veterans, people with disabilities, into the CS profession because it's hard for them to break into tech. And we give them an internship in one of our clients and we train them and so on. So I think investing in the profession, that's a huge one for almost everyone that's out there. As an example. Lloyd one thing we're doing right now is the next frontier in customer success is customer success operations. Right? So just like sales has sales ops or revenue ops, customer success now has a big field called the customer success operations. It's really important. We're investing in it. So we've created a whole new kind of conference focused on that just last week on Thursday with 2,300 people for our customer success ops unplugged event. And we had community building and peer to peer roundtables and everything else.

That's awesome. I get asked this a lot because effectively Boast has been a community led company. Traction is of 15,000 people. We were able to bootstrap before our series A because of this community. But everyone asked me this, how do you ensure your efforts in community building is also generating sales? And I want to throw that question to you.

Yeah, it's funny, sometimes the most common and most important questions are like the hardest to answer. How do you. Another similar one would be what's the ROI of having values? Right. It'd be things like that, right? I don't know. But it's everything. And so for me, community is the thing that prevents us from being commodity. Actually, I never had a good statement like that. You just said it's so smart what you said there. And so I knew that long term, this is it. And I, and frankly, I spend more time on the community than like almost anyone else in gainsight. Like I think about it all the time. It's very hard to quantify. It's almost something like the CEO or founders or whatever, you almost have to force it to happen. Like even if other people aren't into it and there's not an ROI model, you find money for it, you scrape it together and so on. And so you just defend it. Now later on you can do cohort analysis and you can, I'm sure you've done this Lloyd. People that come to pulse the likelihood of them to buy later on and, and so on, it's. That stuff is almost just to justify it to other people. But I would say that it's very unlikely that you're going to be able to do community well if you just don't inherently believe in it a hundred percent.

And I say that because for me, I effectively now have become head of community. Yeah.

More than anything else, I'm like the chief Community Officer. Yeah, totally.

And if you think about the transaction and try to squeeze every dollar, then people will see all your actions as contrived. They won't buy from you. But now that you're at scale, what, how did you evolve? You started with the community, it's become a movement. It's beyond a community now. Customer success is a movement because there's so many people attaching on that same mission. What are some things to think about going changing a customer acquisition from early stages to scale.

Yeah, totally. One of the things is, so I saw a question in the comments about how do you quantify the opportunity? So I think it's very important to have some metric that's a leading indicator of your opportunity. For us it might. One of the metrics could be the early on is the number of CSMs in the world and that's grown a lot. Like I said now it's a few hundred thousand in the world from 500 when we got started. And actually for us now the real metric is like how big SaaS is and how many SaaS companies there are. And so having that North Star to me is extremely important. So you can use that to be the thing you're striving for. But then, and so, and one of the things you have to do I think is you scale is really build out your data set of what is your addressable market and understanding how that's growing over time. So that's one area that is quite important as you scale. I think a second thing is if you're scaling community, it starts out with people like you and me being really passionate about it. So how do you get everyone else to be able to do it? So give you an example there we did an, we do an event called CXO Summit and it's for like the senior executives. It's an intimate like fifty, a hundred person event and we do a couple in the US every year, east coast, west coast. We do one in London and I was in London for our MIA one Last week. And what I was just blown away by was how they did it. Our team did it so well, a hundred percent self sufficient, without any involvement for me, except like flying in just at the very end, talking, whatever. And so that's where your values and your culture come in big time. If you want to scale your community, you're going to have other people talking to your community besides you. And so if you don't have well defined values and culture, they're not going to be able to represent you and your company the way you want to be represented. And so it's important to have really well defined values and culture. And kind of playbooks. We have kind of playbooks for how to do a virtual happy hour, how to do an event, how to do a roundtable. One of the things we're doing right now, Lloyd, which I wish I had done sooner, is we're in the process of trying to document all of our processes in Gainsight. We have a thousand people in the company. We're trying to grow and move to that next phase in terms of financial investors and all that. And it can't just be a Nick's head or even a small number of people's heads. So one company we really admire is GitLab. I'm sure GitLab, one thing they do really well is they put every one of their processes online in a repository actually using GitLab, kind of an employee handbook. And the team at GitLab has been inspiration to us. They're a big customer of ours and we're basically building that handbook for Gainsight but capturing everything about it. We're doing a virtual happy hour. How do we do it? Like, how do we do the introductions, how do we make people feel good? A lot of that's in your head. So I think that's a big part as you scale is getting that knowledge down and communicating it through values, but also communicating through written documentation so that other people can get up to speed quickly. Obviously onboarding new employees becomes so important. We've gotten much, much better at onboarding, really good onboarding process. Now things like that become important. But I think one other thing that's important is that's really challenging not losing sight of the people that got you there. And I think that's something so important and I have a lot of that in my head. Like all those early community members, I'm sure you have them for traction and yeah, it's like those people that got you there, how do you actually remember them and make sure your new employees Knew know who these people are. I think that's very important as well.

Definitely. That's fantastic advice. Now, none of this, as you closed off with here, is possible without the people.

Right.

As a founder, how do you ensure you have the right talent as you go from like 0 to 10 million and 10 to 100 million? Who did you hire and in what order?

Yeah, it's by the way, we made tons of mistakes. And by the way, the mistakes were never. Because the people weren't good. It was like Gainsight wasn't the right fit for them, et cetera. It was. I believe all people have greatness in them. It's just like finding the way to bring it out of them. And so I can't say we are experts at this question, but a few things I think have happened over time. One is because our culture and values are very external. Right. People know, the music videos, all that. Like, you wouldn't apply to Gainsight if you weren't into that stuff. And so I think that's one thing that is very. And we're doubling down on that, like, really creating a lot of assets on your website and stuff so that people know who you are, truly who you are, not like the fake version, like the real version of who you are. And so therefore, you hire the people apply to your company are the ones that actually are the right ones to work at. I think having some structured processes around assessing values, to me, that's very important. What is the. What are the values of the company? How do we assess this person in that process? Yeah, I think that's a really important area. I think understanding that the needs of the company change and the type of people you might want to hire change as you evolve to. Early on. One of the things we had at Gainsight was actually a number of people that came out of management consulting because those types of people actually really get to learning new things. Whether it's like a Bean or BCG or McKinsey, they're really good at learning new things. One of our best salespeople, like, ever, but especially in the early days, enterprise sales, she came from bcg. Our coo, Alison Pickett's, came from bcg. Our number of our customer success people came from Bain, you know, in McKinsey. And so hiring those people with, like, early on with the ability to learn quickly, be really creative, et cetera, and then. But then over time, you start getting, oh, no, we actually have to have more specialized functional experts. When I hire people that are really functional, functionally good at a certain Domain, you're going to hire people from certain kinds of companies. One thing I learned Lloyd, is because we're like we've been, you know, very fortunate to be very successful and all that, but this is not one of those autopilot, 0 to 10 billion in five years kind of companies. One thing I learned is I also appreciate hiring people that come from businesses that have done well but weren't easy. So I have insane respect for Google, Facebook, Amazon, Stripe, et cetera. But those businesses have incredible tailwinds behind them. When you find somebody that joined a business got it to 100 million of ARR, it was a little bit of a struggle. They figured it out. Those people did real like hard stuff. And so a lot of our most successful executives at Gainsight have had some challenging, not like bad, right? Not like failure, but not easy stints before Gainsight which has been great.

That is pain is the precondition for growth.

That's right. Oh, that's a good way to say it. Look at you, you got all these tweet worthy aspirations.

I'm actually taking after you. I'm working on a book called the Art of Community and you're going to be a case study on it.

Oh my God, that's amazing. I'm excited to read the book Community. So big man. Awesome.

So in what order did you hire build out your team? Like who did you, who are the first people you hired to get you to 10 and then from 10 to 100?

Okay. So we, one of our founders, Sri there was our head of engineering and so we already had that set. So obviously it's so important, product, engineering, et cetera. And then early on I hired who initially had a product management and now as our chief product officer runs engineering and product. He came a very early Carl Rumerhart and he was one of those people. He had worked at some big companies. He was actually a VMware very early through being a huge company and then he'd done some startups that didn't work out. He did some startups that were like moderately successful. So he'd seen the gamut what we're talking about and he's just incredibly strategic and creative and still my right hand partner eight years later. So having my product person, my engineering person, we had this for us. We had to have our chief customer officer very early because that was not only like the CS job but like being the voice of the community like we talked about at this sort of two way street to Dan Steinman. So critical early on having this person who can be more of a general business person. Allison Pickens came in as our kind of biz ops person, but then eventually became our coo. And she was extremely versatile. Having this like really like incredibly creative, but also just like insane hunger. Enterprise salesperson. Her name is Rebecca Olson. Early on, I'm sure I'm missing like many, but like they're having this kind of mix of different people and different backgrounds was really fortunate for us early on. So it wasn't like we obviously built out of companies where people in pretty much every role. But having, you know, a great enterprise salesperson, having a great product in engineering, having a good biz ops person, there's some foundational roles that are important. Yeah.

And what I, what I heard here is in the early days, Swiss army knives and then specialization.

And specialization. That's right, exactly. Yeah.

As you go to sale. So as a leader right now, post acquisition, what are some goals that you've set for yourself and your companies? Like, how do you define success?

Yeah, so we want to run, want this business to be around a long time and Vista is just a stage in that journey. Who are new investors? And a lot of Vista companies after this go public. And so this is hopefully just a stage in the process. The way I talk about our company is we've been doing this about almost eight, nine years now. So I talk about the company being in chapters. Each chapter is about two years. I call the chapters kind of G1, G2, G3, G4 and G5, like gainsight 1, 2, 3, 4, 5. And so I tell the story about the company in the early days, creating the cat, helping to create the category, and then building out our product and getting early customers. And so when we actually commencerate with us announcing our partnership with new investors at Vista, we basically announced what we call G5, phase five of our company. And we said, okay, what do we want to be in phase five? And we set this set of goals. We always had this purpose statement that never changes through all the chapters. And our purpose of our company, which has nothing to do with customer success, it's actually just about how we run our business. We say we want to be living proof you can win in business while being human first. So the idea is some people think that, oh, okay, if you really want to be successful, you got to forget about all the people and the emotions and the values and just focus on the bottom line. And by the way, that probably works too. But we want to really show you can win while thinking about your customers as human beings, your employees as human beings, your community as human beings. So that's always our purpose through all the phases. But for G5 then we set a kind of a set of goals which are where we've publicly said that we a while back past 100 million in AR and we want to get to get past 200 million of AR and our business is accelerating. So we set a certain growth target and we set a certain retention and all that metrics. You set all that stuff. But then what you do is say, okay, what's the vision of your product strategy to get there? And what we figured out is hey, customer success is part of this larger thing companies are dealing with, which is how do I improve my net retention in my business? So much of my value as a SaaS company comes from how you're able to keep and grow your customers. Net retention is about customer success, but it's also about how you build your product. It's about how you sell, it's about your customer, it's about your community, it's everything else. And so we're building kind of a suite of products and we have now a product that's all about product analytics and engagement and adoption called Gains ipx. We have our gains. I see as product. We have a product that's about renewal and expansion, more stuff that we'll launch in the future. And so we accept that vision of the net retention platform as the North Star, of where we're trying to go to as a company so we can get to those financial metrics so we can live up to our purpose and then we always have our values as our foundation. And we actually turn this all into a diagram. So this turns into a one page diagram and it's like a mountain peak. So we're climbing G5 and at the very top is our purpose and then our metrics and then our vision and then here, then we've got goals and metrics and all the other stuff.

What are your values?

So we have five values of gainsight. They fit into this term human first concept. They've really been there almost since the very beginning. So one of the foundational ones we call success for all. It means we want to. Success for us is not just making money or having a quote unquote exit or whatever. It's driving success for our clients, driving success for our community as human beings tied to what you're talking about, driving success for our employees and their families, driving success for our shareholders, but all of those together, not just the shareholders. So success for all, what we call a Golden rule, right? Everyone knows golden rule. Treat people the way you want to be treated. Childlike joy, which means bring the kid in you to work every day. That's why we make the music videos and all that stuff. And that's how you do tons of things that are about being human. Shoshin, which is a Japanese word for beginner's mind. Always approaching things as a beginner. Always being open to new ideas and new feedback. And stay thirsty, my friend. Some people may see the reference. There's a commercial. The most interesting man in the world is thirsty and doesn't always drink beer. But what he does. And so we have the same tagline of that ambition and drive to do something big. So those are our five values.

Great. But like now, at scale, how many people is gainsight?

About a thousand.

About a thousand. As a CEO, what is your biggest worry?

Definitely long term, that we don't live up to our purpose and values. That's the thing that I vigilantly fight every single day. And that's I talked to, I do onboard all our new employees and I talk about our values every day and I send an email to the company every week and I talk about our values. I talk about our values here and everywhere else. I want people to hold me accountable to them. That's the number one. Then outside that, obviously, like the other one would be, hey, we created this category. We didn't really get to take advantage of it. Like we built a garden, but somebody else is taking the flowers from it. So that would be the second one. But the biggest one is values and purpose, living up to them.

So then how do you train the organization to make better decisions when you're.

Not in the room? Yeah. So I think a lot of that is coming up scalable management processes. So some of that is okay. Great onboarding with really well thought out onboarding. Now for first few weeks in somebody's job, I speak to everyone about our values. We have this management tool. I was alluding to that one page with our goals and our strategy and our purpose. It's called the one page strategic plan. There's a good book called Scaling Up. I don't know if you've read it, but it actually talks about that whole process. And we use that internally to drive our process. Obviously then that turns into kind of okrs by department and things like that. Yeah, Scaling Up, a good read. And we started using is like 2015. We still use the core primitives of that every day. And then we one thing over. We're a thousand people So a lot of infrastructure and people. I'm like, I have an incredible chief of staff, Robin Merritt, and she does an amazing job of then helping to make sure all of our communications cadence. Like we have a really organized cadence which basically after every quarter we do a quarterly business review with the management team, extended management team to talk about what happened. Then we do a board meeting to talk about with our board and then we do an all hands meeting to talk about with the company. And so we're really organized about how we run the company. And I think that makes a big difference. Like everything from our weekly exec meeting to all that stuff, it's just very organized. And I'd say that's not something that like it's not like my biggest passion is like metrics and process. But once you do that then you can feel confident that the company's running and then you can do everything that you're really passionate about. Creativity strategy. In my case also communities.

If you treat your customers like, like this community built. I'm sure you're, I'm hearing many of the same principles applied to internally scaling.

That's exactly right. Yeah. I think that's the core idea here is break the walls. That's the line between your, you, your company or your customers, your employees. Like they're kind of artificial lines. They're just human beings. Right. That's the core principle because I'm hearing.

QBR and weekly reviews. You talked about onboarding every employee or you're part of that. How do you make that work? What does that look like?

Luckily virtual makes it so easy now Lloyd and we're, we've always been very much distributed, remote first kind of company. And so we do, we have an amazing team that designed this awesome onboarding plan is basically a partnership between our teammate success team which is what people call HR typically and our kind of enablement teams and they basically get together in all new gate. We're hiring a ton this year. I mean we started the year at 700 people. When the year like 1250 people or something. So we're hiring a ton of people. Right. If you include attrition, it's like we're hiring 700 people this year or something. And so what we do is we have this kind of program for the first week and people are broken up into cohorts. So there's 40, 50 people time we actually let them name their group. So they almost have this identity of being like a class. They have a slack channel, they make videos about what they're most Passionate about a gain site. We introduce them at all hands, all that type of stuff. I'm sure many of you do. But then we have different trainings and my training is 30 minutes every time. Just about the value, the history of the company and then the values and purpose. That's what I talk about. I don't talk about our products or our business. There's many other people, but then other people come in and talk about the products and talk about the business and yeah, it's pretty structured, but we actually measure net promoter score coming out of that onboarding and actually we've been doing this new onboarding since call it, I don't know, April. And our NNPS is about 95 or something like that. It's insane. It's like literally like almost perfect. People really appreciate the onboarding and that's enps.

That's not just customer nps, that's an.

Employee and I, we do customer obviously.

Separately, but the most, some of the fastest growing companies or the top blue chip companies are like in the 50, 60%. So 95 is humongous. You've not only built a culture and a community and a company, you've built a movement and that's testimony to that. I want to get into selling the company here a little bit. When do you decide or how do you decide whether to keep fundraising to grow or to sell effectively? You sold Live Office, but then with Gainsight, although the press says it's an acquisition by Vista, it's really. You're operating it like it was a large fundraiser.

That's right, exactly. And for us it was. We really, like I said, this community, I think we're just getting started in customer success and net retention and all that. The best days are in front of us. So we did not want to end this amazing movie. And when you sell to a strategic, it's great. And by the way, that's what I did in my last company. I sold to sold our company to another tech company. That's great. And nothing wrong with that, but we wanted to keep going. And when you sell to a strategic, you don't get to keep going. You're part of something else. When you sell to investor, it's just like new investors and they're going to give you some feedback. And in this case, they've actually given us tons of investment to grow even faster and all that. And for us it was like, how do we double down and keep going but also respect that. Our employees had been at this, some of them seven years. So we give them some liquidity, which is obviously very nice, right. To help them take care of their kids, school or houses or whatever they need to do. They work so hard and then give our investors a chance for some liquidity. But actually many of our investors actually kept their stake in Gainsight, so they actually, it's called rolling their equity going forward and then get some new investors. And then one of the things that was really attractive was Vista is really good at this kind of growth stage and they're very aggressive on growth and like just doubling down. And so we were psyched about that and so we were. The other thing that's nice about Vista is like, it's actually this gets into the nuance of startups. It's all like common stock. There's no preferred stock in gameside anymore. So we're all on the same footing and we're all in it together. And like now we just want to triple, quadruple, quintuple the valuation of the company. And maybe that means going public or whatever it means, but we want to go to that next phase. And they've been amazing partners actually A lot. The way I got to know Vista was a lot of our customers were in the vista portfolio, like 30 about at the time. About half of the companies in the Vista portfolio use Gainsight. And so I know all the CEOs and they're like, yeah, they're great partners. They're great people. It actually turns out they're super passionate about diversity, inclusion, equity. They're really passionate about like environment and sustainability and governance and yeah, very excited about that definitely.

I think I am very bullish on Gainsight. I think you guys are going to be a giant public company. If you look at it, Salesforce, the system of record for CRM here, right? For customer, for sales. And HubSpot has effectively become the system of record for marketing. Also created a category. Gainsight is the system of record for customer success.

I'll take that. I'll take that. That's our goal.

How did you build this relationship with Vista? Like, how do you build relationships with potential acquirers? How did this come about?

It was, it's funny, it was 100% nothing that we proactively did ever. We what happened was Vista reached out to us like five, six years ago and we were like a tiny company. We're like, they don't even know how small we are. Like, why are they talking to us? But I was like, God, they have a great portfolio. I'd love to get them as customers. So I was like, yeah, well, probably not the right time to talk about investment, but I'd love to talk about your portfolio. And very fortunately, there was a guy who is responsible for giving recommendations on technology to their portfolio. And we met with him and they already had a few companies using Gainsight. And then one thing led to another and it's been awesome. And they became almost like a partner, a channel for us, so to speak. But in that process, they got to know us better and they heard great things from their portfolio and our business did well. And so they were just like staying on top of us. They did a great job. They're super professional, great people. And we were always impressed by them. They would invite me to events and. And so it was very much like them nurturing us. And then what happened was to the end of 2019, right before pandemic. No, sorry, 2020. In 2020, we. We had gotten through like the early part of the pandemic and our business ended up actually, we, like, basically we hit our plan for 2020, like despite all the ups and downs. And so in late 2020, we were trying to figure out, do we start a path of trying to go public eventually or do we you do something now and maybe do a future equity event down the road. And we opted for the latter. We wanted to build a business for the long term. We didn't want to rush anything. And Vista basically inbounded in. They said, hey, we've been talking for a long time, here's a price, here's a deal. And then they're great to work with. And so that's what happened. So unfortunately it wasn't like us courting anyone. But I would say that the transferable learning is the truth is you're always relationship building, right? So every interaction you have with any investor, you're building relationship. And I think one thing that it wasn't so much in the Vista era, But with our VCs, one thing that actually helped a lot was we had our VCs come to our events and talk about community and investors. So you're like, they come to your event, they see how fervent and how rabid your fans, your customers are in terms of just being excited and then they get excited and then they want to do something. So that was something that was. Vista probably is influenced a little bit by that, but our venture investors definitely were.

I've never seen you this pumped. You're the most pumped I've seen you over the years. I thought you'd come in and say, yeah, you know what? I'm investing. I'm writing checks. I'm on to the next thing. You're super energized. What is different this time than the Live Office exit? Because you sold that for 150 million.

There's a great question. There's a few things. So I've done Gainsight basically from the beginning, and Live Office actually came into a company that already around a great company, but you don't get to put your fingerprints on it as much. Number two, this just feels like it could be a huge category in a huge area. And I was like, I think this has legs to it. And number three, it is true. Lloyd. I've honestly never been more excited about gainsight. It's nine years in. It's weird. I should be tired or trying to do something different. And by the way, there's a lot of other opportunities out there, and I'm sure there's all kinds of money people can make and so many different things. I could care less. This is my thing. This is the one that I want to do as forever, as long as I can. And part of it is actually starting to get really good. Like, it's getting, like, the core business and the customer success community is becoming real. Like, it's real. It's not pure evangelism anymore. And we have all these new things that we're doing, which are exciting challenges for me. I think part of it's like some people reinvent their job by getting a new job or doing a new company, and that's fine. Some people reinvent their job by reinventing their job in the job that's. We did an acquisition three years ago that gave me a whole new challenge, and how do I learn how to do that? And so I'm excited that there's just, like, new challenges. I'm very lucky that I have a job that I just. I love every Sunday night. I'm just, like, fired up for work.

When passion becomes profession, you can become Michael Jackson or Michael Jordan.

Jacket. The wardrobe that you're speaking there.

Yeah, yeah, definitely. So looking back, what was the toughest, lowest point of your journey and how did you navigate it?

Oh, yeah, there's a lot. But I'll give you one which is like, we were. And I know we're getting close to the end, so I'll make this a good kind of one to wrap on. We were this, like, really hot, pretty hot company early on, raised a lot of money. Bessemer Battery bank have amazing investors. And we were growing off small numbers, and frankly, just like, off of, like, belief. Like, we talked about those early adopters and the community, and then we had a hard time crossing that chasm. So our AR went from, like, the first year was like 1 million and then 5 million and then 16 million and then 32 million is pretty good growth, and even for today's era, but definitely for that era. And then we. We started slowing down and. But we ramped up a lot on our team, so we hired all these salespeople. We hired this great CRO, very experienced person. And. And our. What happened was we were still growing our revenue, but our new bookings were slowing down or were flat. And so our AR growth was slowing down. And it was because we got ahead of the market. There just weren't enough companies, there weren't enough CSMs. We were like the whole. If you did the math, like, we were the whole tam. Like there was nothing else to get, and we'd be calling customers that just that we're just not ready for gainsight yet. And so that was a tough time because what happened was our sales slowing down and we missed a couple years of missing our numbers, burning a lot of money. Our CRO quit. Really nice guy, just. But he wasn't into the whole evangelical thing. And frankly, it was like, the wrong time. Few other people quit, tried to raise money. Like, our failed. I guess it would have been series F, six round. And we got an F on our series F. We literally, like, I know so many investors, and they all, like me or whatever, we'd love to work with you. And we got rejected by all of them. Every single one, every single investor that you could imagine, you could name, we got rejected by. So everyone said, no people quit. Now. The company wasn't going out of business. We had money in the balance sheet. There was no, like, this wasn't some, like, dramatic tale. But what we did was we figured out we were ahead of our skis. So what did we do? We did a couple things. Number one, I was like, look, I want to ride this thing into when the market's ready, when the garden's ready to bloom. So we didn't cut any staff. Luckily, we're very fortunate that we figured this out before then. But we basically stopped hiring people. So, like, at the end of 20, I don't know, 17 or so end of 2018, we were 700 people. And beginning of this year, we were 700 people. But our business, like, more than doubled, probably 150% growth since then. So our business grew a ton. So we went from burning, I don't know. 40 million bucks that year to literally this year, basically being break even in last year too. And so our business got really good and then it started accelerating. And by the way, we couldn't raise money, so we did a debt round, which I know you're probably familiar with too. And so all that stuff ended up being great in hindsight, like the business, like where we are now is only because of all those decisions we made. But it was freaking hard while it happened. It sucked.

You have a lot of karma points from the community, so that's gonna. That's always gonna go far. And there's a little bit of karma that touches everything. But you also made a great focus on health. I've never seen you happier. And also, like you, you look great. Was that. Was some of those mental health hacks or working out hacks part of getting you here?

Yeah. So it's funny that I can only thank or blame the pandemic for this. Just at the beginning of the 2020, I think everyone went one of two ways. Either your health either got better or got worse. I've been very fortunate. Mine got way, way better. And I walk a ton every day and I work out a lot and I eat well. And intermittent fasting. I do every single thing that you can imagine. But what it's done for me, Lloyd, exactly right. Is I'm just in this great headspace every day. Like I worked out this morning. I feel so excited. The energy just comes from that. So whatever way you take care of yourself, whether it's music or dance or meditation, and my case it is health and fitness, it pays off, particularly if you want to do category creation. Community. Because you need stamina. Right? Just like running a marathon. Community is a marathon of the mind. There you go. That's a good tweet for you.

Community is a marathon of the mind. And you need a lot of energy. You bring a lot of energy.

I need some traction. You need some traction.

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