Ask Me Anything About Customer Success with SaaStr CEO Jason Lemkin and ChurnZero CEO You Mon Tsang

Cool.

Hey Jason, thanks for having me here. It's so exciting.

Yeah, it's a lot of fun. So we're doing an ama, right? So I will have some questions to, to start, but those of you in the audience just go ahead and put questions in, you know, big, small, controversial, non controversial, just put them into the question box and then we'll filter them and get them to Jason. But Jason. Hey, you mind if I started with just a high level look back?

For sure.

Okay. All right, so I'm gonna, I'm quote you three things that you said.

Yes.

In 2015. You said customer success is a single digit higher. Right. So that means that, you know, when should I hire the first CS person that's either employee 1 or 9. Is that what that means?

Yep. That was the idea. Right. To challenge folks to not think back then. Right. We're talking about two generations ago in SaaS or generation. To not think of customer success as a cost center. To not think of it as something you do when you have a few million in revenue to invest early in your future. Right. In decade long relationships. So that was the idea. You're only going to come out ahead if that's a single digit hire.

2018, you wrote growth is good, but retention builds empires. Yeah. And that's a good one. That was a good one.

Better refresh that one.

Yeah, it's in many, many of my slides. And then in 2020 you also said you are not doing enough customer marketing.

Yes.

So this is six years. Over six years.

Right.

2015, maybe. I'll ask you an overarching question. You know, there's a lot of CS people on the audience here.

Yeah.

You know, how has your thinking about CS and SaaS grown evolved over the, you know, since 2015?

Well, look, at some level I was fortunate, right? Is I, I was in, you know, the second generation of SaaS companies. I started Adobe Sign when Aaron Levy started Box and all these other ones. And when, when we sold a little bit too early to Adobe in 2011, you know, the sale, there was, there was challenges meshing the sales cultures and there are challenges doing other things that we sold at a million a month back then, which seemed like a lot in 2011. 12 million error, a million doubling. And we didn't quite understand how recurring revenue worked back then. We didn't quite understand how important NRR was. But it was clear that even if Adobe would struggle initially to understand our sales processes or motions, that our customers were growing so quickly, it was enough just to keep our customers. Right. That was the insight. And if you fast forward today, even though Adobe Sign has lost market share to Docusign, a lot of it, which hurts me as a founder, it's still almost a $300 million ARR business, right. A decade later. So mainly by focusing on retention, that ten $12 million business has grown to 300 million over a decade. And that's the power of customer success. And I just realized, and I was literally just talking about this with a couple of great founders this week. If you don't exactly know what to do in sales. Right. And sometimes we don't, right. If you're not sure we're planning for next year, right. Hopefully we're all planning 2022, planning it. And if you're not quite sure how to do that extra thing, where to go put the money into customer success. Because it always works, right? And that was the genesis of the single digit hire. It's always going to work to keep those core customers. But little did we know in 2015 that we could all keep our customers for decades. Right? All of us are keeping our customers for multiple decades now. And that's kind of that thread from hey, don't forget about customer success. And when I started to talk about it early almost a decade ago, you know, a lot of customer success professionals felt very much like second or third tier citizens, right? I would go speak and, and I would be like, I would talk about giving folks incentives, right? And variable comp. And that's still an open topic today in the industry, right? But when I started Talking about it 2013, 24, 2015, people thought it was crazy. There's that guy that gets us, right? And I started writing give everyone at least 20% boost if you hit an NRR goal. Because do the math, right? If your NRR goal goes from 110 to 130 and you pay a few extra bucks to your CS team, it's the best investment you could make in your company, right? So I think that's changed. And then what's happen happened is we all figured out the playbook maybe around 2018, 27, 2018, right? That was this next post. Retention builds empires. And I remember at the first Saster annual in 2015, the kickoff speaker was Aaron Levy from Box. And Box had ipoed the last week. It was so kind of him. He was exhausted. He came in 2015 and I said, does Wall street understand recurring revenue? He's like, well, a few people. Fast forward to today. That's 2015. Fast forward today. Open up a prospectus of anyone Ipoing the braze, the datadog, everyone, you know what the NRR is page one metric. Right. And everyone that has 120 plus percent NRR is touting that. And even more GRR is becoming more important than NRR. But they're touting that as one of their most important metrics. Right. And so that is the age, the age of retention, building empires. But where we're still behind is customer marketing. I still give us a C minus or a D plus in understanding customer marketing. Even though maybe at customer success we're getting to kind of the B plus A minus level today. But customer marketing is where customer success was almost a decade ago.

So I'll play it back to you. So for you, the last few years it's just become more and more obvious the impact of retention, which means the impact of customer success and customer marketing, it's just gotten more obvious. It's no longer sort of a debatable conversation. Now it's just getting better at doing that job. Yeah. Is that.

What's the single largest SaaS company?

Salesforce.

Right, right.

No, Microsoft.

Well, okay, I'm not going to count the really oldies. Let's count Salesforce. What percent of Salesforce's new bookings come from its base? Do you know?

I'm going to guess 75%.

70%. Oh, 70%. That's the whole story. Think about that story. Now Salesforce is a $300 billion company today. If it didn't have that extra 30%, maybe it only be a $50 billion company or. But that's still pretty good.

So think about that. They're getting NRR of over 100% on that. 70 of that. On that 70%.

Yeah. Well over. Yeah. But 70 at Salesforce's scale at 20 billion in revenue. Think about this for a minute. At 20 billion north of 20 billion, 70% even at 20 billion, 70% of their new bookings are coming from the install base. Now they need multiple products, which is something we didn't understand a few years ago. The role of multiple products in expansion. Right. And in our expansion, which is a cutting edge topic too. But if Salesforce at 20 billion in AR and a 300 billion market cap can get 70% of revenue from its base, that means who? Any founder, CEO that is listening to this is under investing in customer success. Almost by definition, almost 100% are under investing in customer success.

So let me drill down on nrr. We talked about that earlier in earlier session. Nrr, I'm actually saying is it's gone from an impact metric. Well, it went from an oh, by the way metric. I'll talk about that. You know, at some point to an impact metric makes it to the board slide. I'm actually calling it a qualifying metric now.

Right.

Where it almost doesn't matter. Like if your NRR is not good, nothing else matters, you know, doesn't matter if your team is good, your technology is good, your product is good.

Yep.

Is it, is it that important a metric? You know?

Well, hold on, hold on. I hear your point. Yeah. And I think if you worked at Sequoia Capital, I would agree with you. Um, you're, you're right. And, but, but I am constantly surprised, maybe not surprised. Impressed with the ability of great founders to drive up their nrr, NPS and cset. I am constantly impressed. So look, if you go meet with a VC and let's say, let's say your enterprise, okay. And your NRR is only 100% in the enterprise. Not good enough. It's gotta be north of 120 in the Enterprise. Right. Let's say you're SMB and you're below 95%. Not good enough for SMB. Right. You're not going to get, you're not going to get, you're not going to get that check. You're not going to get that series A or B check because you're not top quartile in nrr. Okay. You've got to be top quartile to get funded. Let's be clear. Today it's known if you're not top quartile, you're not going to get funded. I'm not even sure that was true three years ago. It is true today. Like do not pass go. But. So that's depressing if you need to raise venture capital. Right. But that's just a little piece of it. The ability, if you look, and if you look at companies, HubSpot is an iconic company for larger SMBs. Right? Iconic. Right. But it took them quite a while to get to 100% NRR. Okay. It took them quite a while. And you'll see this again. And if you squint at companies going public where often in the early days, their metrics were not as good, but they made stickier products, more valuable products, better human beings, and they grew it up. So yes, it is necessary, but if you are not top quartile, have the confidence that it's possible. Like don't, don't get depressed. And this, we've talked about this on Saster so many times over the years. Just improve it each quarter. This is again, probably the top one or two most impactful things you do at your company is improve these metrics each quarter. Don't kill yourself to go from 80 to 140% NRR. And a quarter like don't and don't, don't cry in your soup. Just go from 80 to 90 to 100 to 110. It's a. It's enough. Right? That's enough.

Right? Right. So I'll. So I think you're right. It's, it's. If you want, if you want to go public, you want to raise money, then it's a qualifying metric. Otherwise, it makes your life easier. If you improve it every single day, your company becomes better. Better, stronger, healthier. You just always have to keep moving that up. All right, I'm going to take a question from the audience and I have a few questions.

Let me just throw one thing that's slightly adjacent in though. Just relate we. Customer marketing is super important. The other one that I think is almost a quality that people don't talk enough about is activation rates and time to deployment. That is one of your best cheats here to improve things is to get your customers to deploy as instantly as possible. I'm glad that when I meet with more and more startups, they know this number. How quickly do you deploy? What percent of your companies, what percent of your customers go into production within an hour, a week, a month? Right. And that's a big cheat that I think is one of the best ways to make rapid improvement. If you're mediocre. Right. And a lot of folks with mediocre NRR GRR metrics. I dig in. What percent of your customers have deployed? 78%. Well, of course, 22% are going to. Not all of them, but they're going to leave if they don't deploy. Right. And I'll ask them, how long does it take your average customer to go live? And even with SMBs, I'll often hear 20 days on average. I'm like, it should be tomorrow if you can't self deploy. If you're an app that can't self deploy, the answer should be tomorrow. Why can't it be tomorrow? We don't have enough people. Not my problem. Right. Build better software, hire more people.

Yeah. Retention rates, they're the outcome. They're downstream. You got to go upstream to solve it. So I agree with you.

Yeah. If they don't deploy, they're tough to renew. Right.

You don't implement, you don't deploy whatever it is. Yeah, Interesting question. Well, what mistake did you make early on that you glad you made? Like in hindsight because you learned from it? Top mistake. I think I know what it is, but go ahead.

Top mistake I made early on that.

I'm glad as a SaaS professional or.

In customer, boy, maybe because it's the morning, I can't. Top mistake that I made that relates to customers and customer retention, whatever.

In SaaS in general.

The top mistake I made that I'm not. That I'm not glad I made. And going into this sort of world we're in today, like at the tail end of COVID the top mistake I made was not visiting enough customers in person by far. And I've written about this, I wrote this post years ago. I lost a lot of customers after I sold my company, but I never lost a customer I met. Still 10 years on when I watch some of the logos at Adobe, a lot of those are ones I visited, right? And the ones I never visited, we lost. Now, of course, we're all doing more zooms now, and we're not going back to that, right? That's a better thing.

Right?

And you should be doing as. I think as a CEO, you've got to be doing 10 Zooms a week. And as a CS professional, you should be doing three to four day. Right. If you can. But a mistake I met, I remember in the early days, if we're talking about me as a founder, I lost a top logo customer, right? I lost the top. And I'm like, what happened? Like, the numbers are great, the usage is huge. Everything we pulled, your team, we have a. We have 80% NPS. He's like, yeah, but DocuSign came. Oh, they're here. They were here last week. Like, well, I got. I got. I got 12 people. I can't be everywhere. And that moment when he said, well, they were here, and I'm like, okay, I can't be ever, but I gotta be. I gotta be more places, right? Okay. It was actually not long after that I hired my VP of Customer success and my VP of Customer Success, my VP of Product, and my VP of Sales all got helped, helped us all get on the road more often. And I think it's important. And now when I meet with CEOs, and now that we're in this weird phase, right, this Covid phase, look, if you're not comfortable meeting in person, don't meet in person. I'm not telling you to do anything you're not comfortable with, but it's time. Right. It is time. And those bonds, we don't play golf with customers anymore. Right. Those days I think are mostly gone. But boy, that is, that's, that's the number one mistake I made was not getting in front of and I, and I continue to make it in many ways to this day.

Sure, sure. All right, so this is another question from the perspective of someone who sees the whole SaaS organization.

Yes.

So how do you, and I'll ask it a different way, how do you convince sales to help with nrr? Right. And this of course is, you know, about the, you know, good fit deals, you know, not selling to the wrong folks. I mean it's really hard to have that conversation with the VP of Sales, much less, you know, and as well as the CEO. Any, any strategies to sort of have the whole organization get behind nrr. And of course that means not selling bad deals as well.

Well, look, as in the scaling phase, right, There are a few things that are more frustrating to see as professionals than churn and burn deals. Right. There's not a deal is closed, a sales rep lied, a sales rep claimed a future worked and they, and it just doesn't work or it barely works or they exaggerated the functionality and not only did they kind of lie to the customer, but you know, you're going to lose the customer like it. They're so frustrating. I'll give this strategic answer which maybe is a little challenges your question a little bit. I don't think once you get to the next phase, whether it's 20 million or 30 more, the next, whatever your next phase is, I don't see the great VPs of sales wanting churn and burn deals. I think you work through this. I think there may always be incentives for reps to do them. Okay. Which we could chat about next. But as you scale and the VP of sales in a, in a, in a higher NRR space sees how much is tied to retention, I don't see them getting as excited about turn and burn deals. It's not that it totally solves it, but I do see like a lot of issues like stress around pilots goes away as your brand gets established. It doesn't, it doesn't disappear. But the stresses around compliance pilots turn and burn as you scale, everyone starts to get more aligned because everyone starts to have an ARR number and no one really wants the crap that doesn't help them achieve their goal. Right. So that's just to have faith that alignment happens. Right. Until then, the only thing that I just don't see enough folks do is do weekly deal reviews for both prospects and existing customers. And you've got to force the CEO and the VP of sales and the VP of CS to both be at the deal review. Like CS should be, should be involved in reviewing the top deals in the pipeline so they know what is going to be forced down their throat. Right. And VP of sales and CEO should talk about the top customer issues each week. Right. And you should see it. And when and if a churn and burn deal is important enough that it creates stress among that triumvirate, you're going to see gradual improvement. You're going to get more resources. But you got to have these, you got to have these, these meetings and you got to once, at least once a month talk about loss deals too and have all three. You need CEOs, sales and customer says all to come to all these meetings. Right. And if, if they won't, then the CEO has to drive it.

Okay, how about, you know, because waiting for a company to naturally get better at that can be, you know, can be frustrating. How about things like, and I've heard this a few times, I've never done it, which is to change the commission where maybe you don't get paid. You get paid a smaller amount up front. No. So don't miss.

You seen.

It doesn't help.

I think that it doesn't help. I've tried all these things myself. I've watched them in action. Great sales professionals have a particular version of add. They need to close and move on. You do not want to hire. You want to hire the great sales professionals. Especially as you get more enterprise solution experts. They're product experts. They guide you. They're your ally. If you haven't done enterprise sales before, you don't realize how much an enterprise buyer relies on a sales professional to help them make decisions. They're their agent. Because that person, I don't have that person at my own company. I don't have that person at Qualcomm or Google or someone working for me. So the sales rep does my work for you. They're almost your minion in many ways. Right? And, but you can't expect. You want your closers closing. You want your closers closing. What we've learned in sales and CS is we want to specialize. We want deployment specialists doing deployments. We want sales engineers supporting sales. Right. We want solution architects architecting. And we want ideally the classic CS person managing longitudinal relationships, but not doing engineering and product tweaking upfront like we want to specialize both functions. So you got to have your sellers. I really don't know the answer to that. Other than that, I think deal reviews with the VP of sales. And if you have enough trust. Okay, this is what I have seen work much better. If you have enough trust with your head of customer success, have them have to accept the customer. This is the only hack I've seen. Not that the commission is delayed until deployment or renewal, but CS has to accept it. And if you can, if you can talk to the sales team, you can say, look, we got two choices. Either we're gonna have to hold back some of your commission until we're in purchase production or until risk, or we're just asking for a CS accepted customer. Right. It's a post. It's. It's after closed one. And folks that have implemented that. And in fact, even on our little team today at Saster, we implemented that in the last year and it was magical on our little team. Magical.

Okay, so, so implementing basically that's the.

Same as every SaaS company. But we. I literally tried this experiment myself. Right, Right. And anything, anything non standard that a salesperson on my team closed with the sponsor. There was no commission until it was accepted by the post sales team. No commission. And I can tell you it radically changed our sales team's behavior. It radically changed it. Like there was bitching and whining, but we didn't. We tried the experiment of breaking up the comp. It didn't really work. Like, people were okay, but they grumbled. But we immediately just said, look, you are not getting paid on anything remotely nonstandard until it's accepted and the sales behavior improved. It was night and day how much our sales team's attitude and improvement changed night and day radically.

You're making friends on this, you know, seminar here, webinar here. But quick question. Did. What happened? Did fewer deals, more higher quality deals come through? Or was there sort of a period where you rejected a bunch of deals and then it took some time for sales to learn with our. Did it happen immediately?

Yeah, it took. It took. It took about two cycles to work through it.

Okay.

And it helped. And again, we're just. I could. It's more help for me maybe to talk about companies I've invested in, but. But you've gotten to know Brian, our head of sales. It's important. It's interesting case though. It's interesting to have our head. Our head of sales. When Brian joined, he was a partner in this exercise. So before there was no, like, we had A great team, but there was no partner here. No one. No one had interest. And we came in, I said, Brian, Brian joined. And I said, I gotta tell you, the top three stressors we have on our team, right? You know, and this one of these rogue deals, right, which are our version of Churn and Burn, are destroying our team. They're just destroying our team. Right? And we almost don't even want to do sales for these deals. Like, it's how CS feels like. I'm, like, I'm the fucking CEO of this little team. I don't even want to do these sponsors anymore, right? I don't want to do them. And it did create a little bit of. Of it at the same time for us. For what it's worth for Medicine, we switch sales commissions to payment upon signature instead of receipt, which is a natural thing you do as you grow as a company, because there's no point in waiting when cash doesn't matter. But that was a little bit of a tweak. Right? And at the same time, we actually increased sales commissions. But it created some gripes. But if you. The lesson learned, which is true of any company, if your VP isn't bought in on it, your VP of sales, it isn't going to work, is it? Right.

Absolutely.

Not going to work. Right.

Absolutely. CEOs got to buy into. Of course.

But here's the fascinating thing. It. So it probably took two months. Maybe it took more. It might have taken. It probably took two months to fully implement and then a bunch of mistakes after that. Right. And there were a couple deals we did not pay any commissions on at all.

Okay.

And that. That you almost need to have a couple to feel it. Right. But what ended up happening after that, this is interesting, is when you got that real alignment between post sales and sales on these deals, we sold more.

Right? Right.

Because then everyone knows the box. Because it doesn't matter. Like, don't sell a Churn and Burn deal. Instead, if you understand the parameters of it, you'll just get better at selling what you can deliver successfully, and you'll sell the same or more revenue.

That's great. That's great. That's a great story.

You won't lose any revenue. You won't lose any revenue. Right.

All right, I got a true AMA question here for you.

Yes.

You're an investor. You're stranded on an island. You have three businesses to evaluate, and you're blind. You know, they're generic businesses. You get to invest in only one and you know, nothing else except for three Metrics. What three metrics are you asking for?

Well, look, I mean Obviously revenue growth, NRR and burn rate. Any, any B2B company can be reduced to, you know, top line growth, NRR and burn. If I know the three of those, I know the physics of your business. If I had a four, I'll tell you what, the more interesting answer if I had a fourth. Right. Which is, which is what's your next product? What's your next offering? I think the most, even for your.

Seed and a round folks, you can.

Ask that what we've. No, but maybe because if you look at what's happened, and the most visceral example is the addition of FinTech. So Shopify as a SaaS company has okay growth. When you add in merchant services. It's insane. Bill.com, which is what, worth $30 billion today, one of my favorite CEOs and products ever. We run SAS, run build.com. i love Rene, really good company when it IPO'd at a couple billion. But when it added fintech and payments as its second product line, now it's got a third, now it's a $30 billion company. Datadog has 20 products today, right. Twilio has 10. So it's not that when a company at a million or 2 million in AR, you want to see 40 products. That's probably recipe for.

That's right. That's right.

But I would love if I, if I was blind, right. Because things are so big today in SaaS and Cloud. Right. I would love to know what's the hint, what's the hint of your second, second product? Right. And I'll flip it around. I met with a great founding team this week. I love them. Okay, great, great early traction. Coming up on a million in revenue. Cool product, really slick, really beautiful. Their initial products, tams a little bit too small. Okay. But it's okay because, because they're crushing it in that growth. But the next, the next thing they want to do to build the tam, they haven't started and it doesn't quite make sense. Like it almost makes sense, but it doesn't quite make sense. Right. And you know, and so that's a step too far. But if there was a little progress made on that next error, just a little progress, then I would be like super. I'd be like, I'm so excited. Right. So it's connecting these smaller tams so you can see how you can build something huge. And that's where we're seeing the explosion. If you look at, I Know it sounds like a lot, but if you look at every SaaS company that billion and ARR today, two interesting things. One, they're growing fast at a billion. You know, we used to think that was almost impossible, that you could grow 70% at a billion in a year. But it's almost becoming commonplace, which is insane. Right? But the related point is they've all got these suites of products, right? They may be very, very tightly related, they may be only two or three, like Aviva, if it's enterprise. But we've all realized you need this, this multi product approach. So I hints of it I think can fuel you to infinity. Right? They can fuel you to infinity.

So the three metrics, growth, overall growth, NRR and margin, you know, that's just.

I don't even know margin. Just burn rate.

Just burn rate. Burn rate.

Okay.

Whether or not you're healthy.

Margin can be names, margin can change. Right margin, shitty finance, just the burn rate tells me.

Okay, got it. Right, that's interesting. And then, and then, and then, and.

For what it's worth, when I see a high burn rate. But the other two are good. Something's like off often.

Okay, right.

The margins, I mean software margins essentially are 100% in the early days, aren't they?

That's true.

Gross margins at least. Right? Gross margins are 100%.

All right, let's see about hiring. Okay. You know, so there's a lot of new SaaS companies being born and so finding someone, this is really about a senior person. So you're bringing someone senior into your organization. How critical is previous SaaS experience compared to just sort of overall, just tech software experience? Like, you know, how much, how much are you placing on experience and previous experience SaaS. For a SaaS executive today, for customer.

Success or for any role, I think.

This seems to be anyone.

Well, I'm going to answer for customer success because I think it's different.

Okay.

For sales, marketing, product and engineering, I would not take, I would not. If I'm scaling, hire someone that does not have a pure SaaS broker and say there's too many, there's too many folks that do.

Okay.

There's no point in hiring a salesperson that hasn't sold SaaS. I ain't gonna take that risk if you're below 4 or 5 million in revenue. So customer success is still hands on. It's not all systems and process and tools. Right. It's not all, it's not all instrumentation. I can take more risk in cs. I can take someone that's Smart. I could take someone that has done account management, that has done client services, that has worked in a hardware industry, that has worked in different industry. If they're smart and maybe somewhat techy or technical, I see that work all the time and. Or even in B2C. Right. Or in E commerce come into B2B. I can see that work in CS. So I would take more risk in CS if you're earlyish than I would in other functional areas. Because a brain, a little bit of technical expertise and empathy for the customer can take you really, really far. Right, right, right.

Oh, that's interesting. Okay, I like that answer. Okay, so here's one. This is someone who's earlier in their development. So it may be focused on getting the product market fit and you've talked about doing things that don't scale. But in terms of onboarding their sort of earlier customers, should they over invest? Really bum rush, you know, the customer to make sure they have a great first experience, you know, is that the right thing to do early on it just over.

As founders. As founders we all know the answer is yes.

Yes, absolutely.

In fact, as founders the biggest frustration sometimes can be working with folks on your team. Sometimes it's true in engineering that really don't want to interface with customers, they don't get this bombardment of attention. Right. I think that the one mistake they make we started this was not having customer success be a single digit hire. Do you have someone great in customer success and do you have someone in support? Like it's not the same role. Right. Beyond that, I think the other mistake I constantly see made is when you close your first enterprise customer and maybe that's 50k to start, maybe it's 100k later it's a million or 10 million or 100 million. If you're Salesforce that first 50k, maybe it's 20k. If your products $200 a year and you close at 200k like you know, it's a lot with it. That person should have their own person. This is the mistake I see founders, they should have their own person. You've been struggling for a year or two and you finally close $100,000. Your customer, it's your first logo, okay? It turns zero wherever it is. That person should have their own person, hire that person. Now if that person needs to be quirky, if that person happens to be your sister in law, if that person is whatever, I don't care. This is someone that has a brain, okay. And will pick up the chat, the email, the phone all the time. And they don't have to know everything if they're stupid. It's not going to work. Okay. But it's fine to say I'm going to find out the answer to your question and I'm going to get back to you now. Your biggest customers deserve that person. Okay? And I remember a fun story, I think I wrote about it. But years ago, one of our biggest customers was Groupon. When Groupon was huge, right? When it was adding a thousand sales reps a month. Right. And at the time it was Salesforce's biggest tech customer. This is, this is a deck over a decade ago, right. And two learnings from that. That first, maybe the second trip to Groupon. The first one was Marc Benioff had personally been there the day before. So that says a lot. Right. There was also Salesforce put a prop phone there, okay. And it was a real phone. And when you picked up that phone, someone from Salesforce always answered. Okay. And back then it was a big deal for Salesforce. Maybe it was 20 or 30 or $40 million a year, which today actually is not a huge deal for them, but whatever. It was double digit millions. And that phone, I think it was red or green or something, but Salesforce put it in with great Salesforce branding and you picked up the phone 24 hours and someone solved your problem.

That's amazing, right? Amazing.

All right. So as a startup, because you don't have a thousand, you can have that person. Think about the power of. No, think about that magical experience when you, when you sign up and you're the biggest. And remember, customers are not stupid. They know if they're your biggest customer and they're expect. It's a social contract. If you're a biggest customer, you're expecting, you're not expecting. The software does everything. You're not expecting that it's perfect or that it's feature rich. You're expecting that relationship and innovation. And so when that, you're expecting that experience. So that's where you should have that person like make sure. And again and again I'm like, oh, we just closed a million dollar deal. Hooray. Who's their dedicated rep? Well, we don't have it, but.

It.

Was so close, that deal.

I think scalability is, you know, if you think about scalability too early, you just don't get the thing done. Right. I mean then you know, you kind of back into it. You make it to process or you just send that person on it, bum rush the problem. And then at some point if you actually fix the problem. Let's go ahead and think about scaling.

Yes.

Okay. So since you think about SaaS all day, there's still folks who are plenty of industries that are not subscription based, not SaaS based. If you're moving from on prem to trying to be SaaS, top few things you got to think about in order to make that jump successfully.

I mean it's a, it's a, it's a for, for the vendor from the perspective of the vendor or the.

Right.

Yeah.

So like I sell maybe an on prem solution and you know, or I sell a hosted solution, but that is one offs, you know, and I want to go to SaaS and sell subscription based. What are the few? I mean Adobe did it recently, right? Like they kind of like flipped.

Yeah, I was there when it started.

Yeah.

I just think, first of all, I think soft there are elements of software is software and great software is great software. And in fact, on prem software is better than cloud software. Do you know why?

Tell me why.

Because it's really hard to patch. If we do a release tonight for turn zero and there's a, there's a bug, it sucks. But we could roll out a patch before most of our customers have ever noticed. Right. Do you know how hard have you ever patched? I mean, I don't know your whole career. But patching on prem software can be from hard to in some cases, depending on how secure the environment is, it can be close to impossible.

Oh, rushing out a floppy disk, I was there.

Impossible. So cloud software is worse than on prem software is worse in terms of quality, right. I don't literally, but the trade off is you're making a commitment for continuous innovation. Right. And people forget this. People pay. There is an element of subscription software that's a ripoff, right. That, hey, look, as a vendor I'm going to go, I'm going to make more money at month, at year 2.64 versus a perpetual license. Right. That's, that's the CFO's version of SAS. Right. And, but, but the customer actually is expecting something different. They're expecting substantial innovation and that is sometimes the biggest thing to get your arms around of when you go like we're expecting, you really do need to do. I mean we could talk about doing, you know, hourly releases and all that junk, but really people want quarterly innovation in their vendor and they're expecting it for that check. And you have the idea that you have to re earn your customer. Right. Which is part of retention sometimes is a little alien to on prem folks, the idea of re earning your customer and you know, it doesn't mean that they're going to turn in an hour if you don't keep innovating and adding more functionality, but they will leave you.

I think, you know, it's really about the model of customer service and success. Maybe, maybe they're asking about the finances and you know, dealing with, you know, the jump to, to a monthly or annual recurring revenue model. Those, those things are always hard. But you know, people have solved that before. Right. You just have to be ready for it.

It just that's more simple that you just. That that usually has a two year transition phase and then you come out ahead on the other side like Adobe and intuit that that part is pretty well understood today. It's a little stressful, but. But frankly, investors in Wall street don't care. They're, they're happy for it. Everyone that's thought spot just finished it. Right. And they raised it 6 billion. Right. So all the analytics players relate to it too. Right. I mean, when Salesforce bought Tableau, it wasn't really even a SaaS company.

That's right. That's true. That's true.

Right. I mean, GitLab just IPO to 16 billion. It's not really a SaaS company. Right.

The good news is that we don't have any. No one's first. You're not going to be first anymore. There's a playbook ahead of you. All right. Hey, there's been a lot of talk about product LED growth, business models. Where does customer success fit into that model? That's one of the questions I have right here.

Well, I think that, I don't know. I think that the key is fortunately there's so many vendors today now, but, you know, you can't have. Product led Growth isn't actionable unless you have instrumentation around it. Right. What is actionable? Right. What is the difference between product LED growth and classic freemium self service viral word of mouth which we've been doing for as long as we had collaboration software, Internet software. Right. What is the difference between that. Right. What is the difference between Dropbox giving you more storage if you invite 10 of your friends? Right. What is the difference between Salesforce launched with the free trial in 1999. Right. Is that product led growth? Right. But our ability to in real time understand the journey of a customer. Right. How they use the product and how they collaborate with third parties. Right. And other folks, if you don't have that instrumentation, if you don't have actionable data. I don't think it really matters much. Right. So step one is to truly instrument it. And we're getting there. We're getting there. But I think that's where you know, is product LED growth. Because if you don't have instrumentation, the product LED growth are just, are just little things on your product roadmap that sort of product team is going to work on and you hope that they work out.

Yeah, I agree. And there's. By the way, there's no reason not to do it now. There's plenty of technology. It's actually easy. Plug it right in and get going. Because the CS team, if you're going to have one, needs. They need the signals to figure out what to do next.

But the net thing is like, what are signals? In the old days, usage, that's all we had. That's all we had a generation ago. Right. So for cs, if you have the right instrumentation, you have to decide what are the couple other signals that we can act on that will accelerate deployment both internally. Right. For now, you're defined by. And if you can, if you're a collaborative product externally, where the magic is. Right.

So we have five minutes left. I'm gonna ask you a couple of different kinds of questions. So someone says, hey, you do great interviews. What's the. And I'm just gonna keep the word. The coolest interview you've ever had that I've.

I've done as an interviewer.

Have you ever done? Yeah, yeah. Greatest, coolest, funnest boy.

Funnest is, I think, my favorites. There's so many great ones. I mean, certainly doing Stuart Butterfield at Slack in 2015, when Slack was just exploding, telling me we'd never have salespeople that was fun at the first Astro Annual. I think the ones though, that stay with me, probably the one that stays with me the most was Therese Tucker from Blackline after she just moved on to chairman and, and ultimately founders that can put, you know, this as almost a single parent, a solo founder, a woman when it was harder, an engineer that had to throw away the product that she built for the first two years and start from scratch with no investors and no money. Here, folks that like Therese putting that in context. And for other that that was maybe my number one favorite of all that I can think of. Not goofiest. The Stuart might have been the funniest one. I didn't know him. But, but, but I think the best communicators, right, can put things in context for you. Right. And help you See something different. And I would say, I think in her own way, Therese was my favorite for that. That's your job. Right. And that's why as a, as. As an executive or as an executive, don't. I know you might think, oh my God, I got to tell the story 100 times. I got to tell the churn zero story 100 times. But you get good at it.

Oh, yeah.

It's okay. That's part of being a leader. That's part of being a leader and getting better and better at telling that story and the pieces of it. And that's an art and not making it trite. Right? That's the art.

So I'm going to ask you one last question. It's around Covid. And the reason I'm asking you this is because Saster Annual was the first major tech conference that got impacted by Covid. I remember I was checking my phone right before I got on the plane to see if I was going to go to San Francisco for Saster Annual 2021. And then I went to Saastner Annual 2022. So you've been thinking about this. You're on the front line of this, so maybe I'll generalize it a little bit. What major sort of systemic changes. Maybe some non obvious ones. Sorry to put you on the spot around Covid and the impact on the way we do business. Something that we ought to invest in, right? Like, you know, or take advantage of now that we're in this brave new world.

I think that. Well, look, what was clear is when Covid hit. Yeah, we lost 10 million. We had to cancel Sassaniel. That was all terrible, right. We could chat about that if you wanted to, for cathartic reasons, but. But then there was a first wave. Everyone needed Zoom, right? I mean, Zoom Zoom completely changed, right? It went from a niche app to an operating system, didn't it? Right. Zoom Slack Notion. This became our versions of those, became our stacks, right. Almost overnight as we all moved in a distributed world. So we all saw that. I think what it took me a while to realize until I met with more enterprise CEOs is that's just starting in the enterprise because there's two waves. Wave one was, we can't function as a company without these tools, right? And it wasn't just Zoom. Companies like Talk Desk and Five9 and all others that did call centers, they all had to move to the cloud. And those were all on Prem systems. Right. The legacy systems. Right. That was another. So there are whole areas of where, God, we just can't work as a company distributed without these tools. But now CIOs and CXOs and others now they're planning for the next five years, right? And there's a whole wave of buying decisions. And you can see it in the Gartner numbers. Like the Gartner numbers keep going up, right? Gartner has to keep revising every quarter up the amount going into SaaS because the changes that the organizations wanted to make post Covid but didn't weren't forced to make in a week. Those are now being played out in 2022 and late 2021 and into 2023. So if you're in the engine of enterprise change and you're the right vendor, strap it on because next year is going to than this year, right? Zoom may have, we love Zoom. Zoom may have peaked in the sense that Zoom adoption already happened. Right. I mean it's still growing, but growing. 40% is not the same as 400. But in the enterprise, the best ones, it's the next two years that are going to be crazy.

That's amazing. All right, so we'll end on that optimistic note, which is, you know.

We.

Actually talked about this earlier where, you know, it's, it's prompting extreme digital transformation, right? Extreme, extreme. And so we'll end there. Well, hey Jason, thank you for sharing, you know, years, years, years of experience and thanks for being early on the customer success train and really leading all of us. And I Hope everyone follow JasonLK at Twitter. I know I do. And then make sure you go to Sasner Annual. So. All right, thanks everyone and thanks Jason.

Thanks everyone for joining.

Sam.