Big Numbers from Small Customers: How DigitalOcean Accelerated at Scale | DigitalOcean SVP, Revenue

Thank you so much and you know, thank you to Jason and the team for having me broadcast here from sunny Colorado. As always, you know, privilege not only to be involved with Saster, but always, you know, truly my honor to have such an esteemed audience as well as was called out here. You know I've had I feel at least an interesting career arc most recently at three companies that really do live and breathe customer count. I led our sales efforts globally at SendGrid where we had about 80,000 customers. Then the go to market integration of Sendgrid and Natulio the acquisition plus building out their mid market segment where we had over 200,000 customers. And fast forward to DigitalOcean now where I lead all of our customer facing teams and have the honor of serving over 600,000 customers with really, you know, the common theme and thread across all these is you know, distribution of average revenue per customer or per unit, right, asp, et cetera, but also a really strong and efficient go to market machine. And what this does effectively across these multiple hundreds or multiple tens thousands of customers is makes your customers have your best salespeople. So what is DigitalOcean or what we term as do? What do we do? To really boil it down, we simplify cloud computing for primarily SMB customers, associated entrepreneurs and developers that comes in the form of outcome oriented solutions. So that those are built on foundational infrastructure and these customers are building all sorts of apps that you can see here that you're using every day as well. Right? So there's a good chance in your day to day life that you are somehow some way interfacing with DigitalOcean as it was with Sendgrid and Twilio in their past lives as well. So these include web apps, websites, aiml, managed hosting services and hosting providers as well as overall developer tools. Again to advance the mission. The reason why I love do really we're able to empower, enable people to build their dreams on top of our, on top of our company. Yeah, so what, right? Like you came here to learn about getting customers and getting a lot of customers. You know, at the end it kind of turns out that that it's the math game. We all know that go to market tends to be very much like hey, how many at bats do we get? How can we get that hit rate up and then ultimately land and expand those associated customers. But if you start with a larger tam, that math game becomes accretively and infinitely easier just based on ratios. So as I mentioned, we serve SMBs and there are millions and billions of SMBs across the globe that are underserved by many or most. And the compounding effect is that we have 14 million of new SMBs that are created globally every year. So if you kind of look at that from a perspective of hey, there's 43 million developers out there and that's obviously compounding every year, coupled with 100 million current SMBs globally and the 14 million of SMBs every year, the 600,000 customers I mentioned earlier really doesn't even sound like a lot. So we even at deo with that 600,000 customer base even have a long way to go. And you know, the reason they come to do is, you know, these customers, you know, based on volume, velocity and kind of the way they do business, they just need different things. You know, The Global, Global 2000 enterprise is a very finite thing. I've sold into them and been an employee of many or a few rather. And these, the SMBs and the smaller customers across the velocity business, you know, they're really long for simplicity, pricing and great support. And it's really in my mind straightforward to think about, especially if you put yourself and the customer at the nucleus of everything we do. So SMBs, they're working with less resources, smaller teams, they want to get their infrastructure and their apps and everything up and running quickly. They want to be able to focus on their business. And so when you kind of look at it internally and take an outside in view, it's a lot easier to just say like, hey, have I made my product easy to use? Can the customer consume the way they want to buy? Do they know what their bill will be at the end of the month? Or is it a labyrinth of line items to decipher in a really frustrating manner that it obviously imparts and departs and inflects CX customer experience in the wrong way. Yeah. And then lastly support, right. Like my gosh. And yeah, SMD SMBs don't have large developer teams. You know, they have a lot more challenges that arise on every, every day and they look for fast and personalized support. Right. So when you kind of look at the three major tenants, this is how I kind of segment for how we go to market and what are really our value prop is against, you know, again some of the higher velocity and individual businesses that we have. So if you kind of like, you know, Jason and vanity for this. But it's like if you, if you enter Jason's favorite mantra which is product market fit, we fit squarely in the middle, right? We, we fit there with our Just right approach for SMBs as I mentioned. Right, like because they don't have, they don't need to spend and don't want the complexity of kind of enterprise focused stuff. But we also don't have the fluff, but we don't have any monster gaps either. And that's completely dovetailed into those three earlier tenants that I mentioned on the last slide. Keeping it simple, transparent and having outsized and over rotated if you will support for your customers. At SendGrid when we were acquired, we had just released an Act 2 when Twilio came and bought us. And then at Twilio obviously we had over 15 plus follow ons as far as its product suite. And what you can see here at DO is a similar path as far as like our product roadmap. And I want to make it very clear that our customer journey has effectively inflected and, or certainly influenced this. So we've layered on quite a bit and it's not just about the overall product fit, you know, it's about layering them on at the right time with the right return for your, for your ideal customer profile. As I mentioned, I mean our product, our product roadmap here in this case many, in many ways mirrors the customer journey. And so we're layering on the right products at the right time, but also across the right use cases. You know, we started back in 2012 with a simple virtual machine that was really designed for a developer, an individual developer. We've moved all the way up through our serverless functions and premium droplets with databases, et cetera. So it's kind of allowing the go to market team to interlock, if you will, with the product team to really influence this overall arc of the product roadmap. So it's not just about me talking here. It's just like, oh, that's all great Cliff, but at the end, you know, here's the tail of tape, right? Focus and conviction works. You can see the growth in the ARR. You can see a lot of the, you know, just kind of overall customer growth, et cetera. But one, you know, one thing I would, I would really call out to the forefront is the last but bullet, you know, our customers that spend over $50, just $50. Right. We're not talking about any columns here, et cetera, a month, you know, outpace our company growth. And the reason for that is they started small and we held their hand through their own internal and value prop journey and made them successful with again that simplicity and support. So you see their NRR their ndr, if you will, is a factor higher than our lower spending customers. And so it all comes down to how are we holding their hand through their process and making them again successful with multi product attached, but then also filling the top of the funnel with net new customers each and every month, which I'll get to in a couple slides. You're all saying great job Cliff. All right, that all sounds good for do, but what does that mean for me? Well, there is a what and how coming up here and at the end it's not rocket science, but it does require a little bit of patience but also a very cadenced and calculated thought. And this is kind of the what for us. And potentially you too should be around landing your customers. In our case developers and SMBs mostly SMBs with outcome oriented messaging and prescriptive journey. And so that might be through ftos or free trial offers or basic sandbox, right, where they're just like playing around and, and really like trying you out. And yeah, I think an important concept that oftentimes and X as a service if you will, that we shy away from is, is allowing that free trial or, or basic packages become a rate limiter. You know, do not let that happen. We've seen many, many wells, not only in my own business, in our own business here, but you know, across corollary businesses where you know they've really like use the free trial offer as, as, as a springboard and as an accelerant. So if it is a developer or an individual, you know, we encourage them to bring do to work and you know, proliferate her experience across, you know, their place of work as well. If an SMB, it's that conversion of the FTO or free trial offer to paid that creates an uplift in overall customer value. And that, that point is a very key inflection where we expand via sales assisted, if you will motion with more use cases multi product attach. Hey, have you thought about this? You know, learning really about the business and kind of their overall roadmap and goals in a more pictorial way. You know, yes, this is the time tested and through land and expand motion. But the difference here is this is with efficiency layered in. It's not just the traditional sales model across okay, we're going to go outbound, we're going to hunt if you will and prospect customer list, et cetera, bring them on the platform and expand accordingly. That does in many ways work with an overall enterprise because you have a finite limit. You have a global 2000, there's a list when there's 14 million businesses consumed created every year. You have to get creative, you have to get it efficient and bringing in volumes of customers through our self serve channel, I. E. Revenue marketing is one of the key unlocks here. We bring over 30,000 customers a month via self serve. Think about that. And sometimes I think about it like portfolio companies which they had 30,000 customers total and this is what we're doing in a month now. Yes, again at that lower dollar threshold. But we're using the stickiness in order to allow, in order to bring them on the platform as well as make them success, which I'll get to in a second. The difference though is we enrich with data every single customer that comes through that funnel to determine propensity and if they would benefit from a human touch. Right. And if you will, sales assisted, you know, the other channel of course is like your full blown sales channel, you know, because in a more complex world your, your prospect needs the handling and in some ways they're expecting it. So it makes sense to have sales layered in and either you know, for higher, higher complex technical aspects, you know, or bigger ticket potential and propensity over time. So you know, those are two ways to get the customers in the tent. There's the highly efficient self serve if you will revenue marketing which should be highly interlocked into your sales plays and campaigns and value prop. But then once we get them in the tent, so to speak, it's our job to make them successful. It's our job to grow their business, but it's also our job and go to market to grow their revenue. And this is a very discreet and deliberate motion. And that requires focus, that requires intent for retention and expansion. And so success, you know, here in this case is to help the multi product attach and adoption, you know, an overall success in the platform. Right. We have a very finite team there to make sure that they are successful. We pour more and more customers on top of that bucket every single month. Then we have account management of course across the entire spectrum of the customer and then support. Right. I mean do not sleep on support and the importance of it. You know, it kind of goes without saying. But the flip side to that, I would say maybe the dovetail to that is support as a lead source is incredibly value valuable. Our support function talks to more customers than anyone in our business. So why wouldn't we believe that hey, this customer is looking to do X, Y and Z. It's not necessarily a problem with the platform. It's actually like they're looking for help in order to grow with DigitalOcean. If you look at this in a real life example, we had a customer that came in and I have arrows pointing here accordingly with 100 bucks in this case, $276 to spend to be exact. They came in and said okay, I'll try out digital auction. And we spun up a bunch of droplets which are virtual machines and said okay, you know, we'll dabble around. We insert a little bit of triggers with our revenue marketing team to say hey, this is a real customer that could benefit over time with adding load balancers. Forget the technical jargon. These are just additional products to help the value and help streamline their business. So add, you know, so oh, that looks cool. We'll add load balancers. This is without any human interaction by the way. It's like okay, this is through digital nurturing. This is through the efficiency funnel that I mentioned earlier. Then oh yeah, we need a database. Cool. That also came in through digital nurturing. Then it became very, very clear this is a customer that we can help inflect their journey. We can help become more efficient and optimized and layer in a sales assisted touch and the rest is history. So then we had kubernetes, we had both aspects of storage and then our container product a year later. I'm sorry, just about a year later over time and when you look at it from how that increased the MRR, this customer went from $276 a spend to about 200,000amonth over the course of about a year and a half or maybe two years. And so the idea here is you don't have to layer on sales on every single customer, but you should layer on sales where it makes sense. And if we're doing the right work or doing the right enrichment from a perspective of propensity, you know, it will become highly efficient. And there's a, there's a continuum or if you will, an end to end view of how the customer perceives the platform and comes in via either self server inbound to their overall customer experience into support. And then round and round we go, right? I mean support tickets, CS and hey, this customer is looking to do xyz. Can we do that? We bring in technical knowledge and then increase credibility and trust in order to grow them on the platform. So the net net is lots of customers in keep the customers, grow the customers via a very deliberate success motion. Yeah. So to kind of boil it down and then we'll open up to questions here, you know, don't be afraid to look beyond enterprise as you saw or you know in my past I've worked across, across many segments and SMB is you know again that 5 velocity but also is expecting a different value prop and you know when you look at kind of your customer segmentation and or how you go to market, you know don't typecast ourselves into you know what we feel our go to market structure should be. Take an outside in look to your customer's journey on how they want to consume and then you know that'll be an eye opening experience I believe as it was for us. And then lastly you know just, just a friendly reminder here like empowering and enabling your customers success will just help grow them over time. That's a fairly obvious statement but the sale starts after the pen is, the ink is dry if you will. That's where the real sale starts. We've landed them, we've done the hard work and I kind of always part my team. We've done the hard work to land them on our platform. They've trusted us and now the real work begins to make sure that they stay and that they're successful and continue to build credibility with our overall teams. So with that that's what I have to impart today and certainly open here to Q and A.

Perfect. Thank you so much for sharing that. We do have some questions in the chat. Digital Ocean has successfully moved globally. What do you determine has been the largest factor in this growth?

Yeah, well in our business, you know there's a, there's a couple of things. We have a follow the sun model with regards to our support. Right then that is not inconsistent with kind of a few, few mentions of support not only being a lead source but you know, paramount to the overall customer experience. So they understand our customers and prospects understand, you know, the support in real time and not just a, if you will, North American centric nine to five view. The second piece is we have face in the place go to market. We have our regional marketing teams that are really driving brand, driving brand awareness but also the value and use cases as they pertain to different regions. What works in San Francisco does not work in Bangalore. And so we're really layering value there. And then thirdly, you know, there is a level of infrastructure, there is a level of expertise and expectation that we want, you know, data residency and latency to be as close as possible to where a particular customer is headquartered. So I would say those are maybe the three major major tenets there.

Thank you. That was a super clear Way to lay that out. We have a question about sales. How is it determined when sales gets involved? What triggers sales assisted? I'm trying to understand what tips or frameworks you have for others going through the same thought process of when sales or human should get involved.

Yeah, it's a good question. I mean every company struggles with this. Every company that has, you know, a self serve engine, if you will, or do it yourself, type model, right sign up, etc. What we've done. And by the way, there was another disaster webinar, gosh, it was with Asana, but you know, round layer on top, on top of sales, sorry, sales on top of self service. And at the end, you know, what we do is we really look at that data piece and what I mentioned across that 30,000. If it's 30,000 or three, it does not. The number does not matter. It's every customer that comes into your funnel, no matter what the source. We should be applying data enrichment to. And by data enrichment too, I don't necessarily mean AI ML. It can be human, it can be by any means. But taking even something as simple as a Gmail email domain can give you a lot of information. There are a ton of tools out there to allow you to understand if this is a business, you know, where, where's their, you know, where's their market and what are they doing. So at that point, you know, when we do that data enrichment, we capture all the thermographic information, if you will. That's where we make a decision, if you will, sales assisted or not. That's the human way. The automated way is okay, this customer is growing, right? Like this customer has bought one product, they've been $5 or $50 for three months and now there's $100, $120. It's a very simple and easy trigger to say this person and this customer warrants a phone call and they're probably not going to be five or fifty dollars per month. There's obviously some, some inflection point that they're going through. Reach out, find out what's going on with their business. Not a sales call, it's discovery in order to grab some data around. Okay, what's going on, why they increase value.

Great. A follow up question. What is your tech stack to enrich those leads? Data points.

Yeah, it's a fair question. We use a number of different things. I would say the three major ones are LinkedIn, Sales, Navigation, Zoom info, Crunchbase. So those are really the three major. Yeah, three major tech and tools. You Know, I always anchor on people process tools, technology tools is one of those that can really make a difference across how you look at that, you know, and by the way, it's not just for your own business, it's for your customer's sake as well. You know, especially if you're in the rich of data and you feel as though, okay, this is not necessarily they, they will appreciate you not wasting their time by picking up the phone. In addition to obviously becoming highly efficient.

This leads really nicely into the next question. How are your customer service and support teams customized to support SMBs?

Yeah, they go through a rigorous training on an outside in 360 view of what it means to be an SMB. And you know, so a lot of where we look at, you know, kind of our individual success and support, they are different but you know, for the sake of the question, I'll lump them together. Success and support is, you know, and it's very simple. Pretend you own a business and you want to do, you want to do business with DigitalOcean, you run into an issue or whatever. How does it, what does that mean? How do you want to be treated? And then what are expectations as far as SLA SLOs? Believe it or not, you know, the, the, the SMB just needs an answer faster. And you know, because in, in many cases, you know, being it being, if you will, a utility, quote unquote infrastructure, we always kind of, we always take the, the viewpoint that we are the utility, we have to stay up and if things go awry, either by our undoing our customers or miscoding or whatever, we have to support because their business is reliant upon this infrastructure. Much like this phone call, this zoom call is not possible without power. And so it's the same sort of attitude. So we take a very customer centric, empathetic approach.

Yeah, that sounds like quite a great training. We have a question. Which team does the non sales discovery call when growth trips the wire?

We, we have, it's interesting, you know, we, we do a couple of things that we do it either via our onboarding team. Right. So they're already a customer. Right. I mean it's not like this is a net new prospect if you will. So their customer and this onboarding team, they're really charged with finding out the why. And so it's not necessarily we have a team of 30 or so. Again they're also doing that data enrichment by the way. So there's continuum there. So they're empowered to say hey, like tell me why, Tell Me why this product and why this multi product attached, et cetera and customer are very open about it. You know, because you're not again you're not trying to sell anything. You're trying to understand and, and they understand that, you know, you're, you're capturing value in order to inflect. Again as I mentioned earlier, interlocked product roadmap. And that's a very important distinction. It's like hey, I noticed you're growing. What else can I sell you versus I noticed you're growing. Tell me why and tell me how that's inflecting your business. And there's a mutual understanding and appreciation for caring about their business and why they're growing as opposed to the next goosebag.

Agreed. People just want to be heard. Lots of companies including DigitalOcean struggle initially with adding sales to their self serve motion. What are the most common mistakes you've seen?

Yeah, I mean I've been through three of them. Right. With SendGrid, Solio and DigitalOcean. Unequivocally the biggest mistake is just a lack of orchestration and communication around the customer journey. And that starts as simple as okay, we brought a customer in and sales globs themselves onto it or whatever, you know, using somewhat dramatic term there. But and, and takes it quote unquote takes the credit to something as simple as a campaign orchestration. You know, we might run a campaign on X and the salesperson's talking about Y and the customer opted out but we call them something else. And so that's that kind of orchestration coordination layer that can be lacking. Thankfully I've worked for three companies where we've shored that up very, very and excellent partners in our, in our revenue marketing stream across that. But it is a, it is a very real thing. So I would say overall coordination and orchestration and making sure that the end to end experience is shored up. You know, in my world, you know our CP of rev marketing is, is, you know we, we talk five times a day, right. And we're making sure that we're again coordinated at the 10,000 foot level so that our teams can execute and execute with efficiency, but then also execute with lack, without confusion.