Gainsight CEO Nick Mehta: My Top 10 Mistakes In 10 Years (LIVE SaaStr Workshop Wednesday)

Foreign.

You want me to kick it off? Yeah, go ahead, Jason. Okay, thanks everyone. Watching on streaming, watching in zoom, watching on the YouTubes, the LinkedIns, listening on the podcast. Have one of our OG friends, Nick, meta from Gainsight here. Nick's done a lot with us over the years. Nick was one of the earliest parts of the Saster community, before we had a podcast or an event or anything, which was great. That's how I met Nick. And then he's done so much great content with us over the years around Gainsight. And for folks that don't know, obviously we'll talk quite a few of it through this presentation. Gainsight has grown during the course of Saster to be this leading enterprise platform for customer success and much more, well into the nine figures of revenue. And I wanted to do a series where we turned it around a little bit and had some of our most thoughtful CEOs and founders share their 1010 biggest mistakes. Because if you look at any of the 640 podcasts we've done, or 7,000 pieces of blog content, or 10 years of events, they're all basically the same. Here are the mistakes I made, like me asking people, Nick asking people at the first Sester annual. But I really wanted to get some of our smartest thinkers directly sharing their 10 mistakes. So Nick was the first one to not only raise his hand, but actually do the real work to come up with a thoughtful list of his 10. I found them very cathartic. It went a bit viral for us. A ton of folks read it and so I asked Nick if he would join our workshop Wednesday so we could do it interactive and go through, go through the 10. And I, I certainly got a lot of the feels reading it and I think anyone scaling their company is. So I want to. I'm going to kick it off in a minute and ask Nick mistake number one and can dive in and I might add a few questions. I will add a few questions and others can at the end. But Nick, before we get there, you set us up a little bit on Gainsight over since the start of Saster. Like not the whole time, but you've been scaling Gainsight since as long as we've been around for 10 years and cherish just a little bit of the history, the journey, how the company's changed, how big it is today from then.

Yeah, totally, Jason, I really appreciate it. Honestly, super honored to be on this stage. And, and one, one mistake I did not make is I read pretty much every Saster blog post over the many years that was incredible for me and hopefully for a lot of you as well. So I'm CEO of Gainsight. I've been doing this 10 years, which is where this 10 mistakes kind of thing came from. And you know, today we are close to 200 million of ARR, just about, almost there and we're about 1200 employees. We started out as a venture backed company with some amazing investors like Battery Ventures, Bessemer, Bain Capital Ventures, Insight, Lightspeed, Salesforce, and then a couple years ago did a deal with a private equity firm called Vista Equity Partners where we still have some of our old investors involved, but Vista is now kind of the majority shareholder. And as probably many of you know, our whole mission is help companies do a better job driving success for their customers and in that process improving net retention for their business. And we do that through a set of different products. One product about helping you scale your customer success team, one product about helping you drive better in apps adoption and experiences and one product about helping you build a customer community. One of the things we've had to do over the years, much like Saster, is really build a community ourselves because when we got started, customer success as a concept was pretty darn new. So we are I guess noted for running a big conference called Pulse, which has happened every year since 2013, actually also happens in Europe and lots of other places. And we've been fortunate to have Jason at our conference several times. And then we've written three books on customer success and actually two more coming out. So lots of stuff over 10 years.

And what. And so I, I want to get into the mistakes but now you're coming up on 200. That means if you squint, like if you really squint as crazy sounds a billions way out there, right? Way out there on the horizon, right. How far out can you, can you see? Like how far out can you see it as you're coming up on 200.

Oh my gosh. I would say that like normally I'd say oh yeah, maybe three years out or whatever. I'm just being vulnerable. I have a hard time seeing out at all right now given like the diff all the things happening in the world with you know, just the macro economy, whether it's inflation or deflation, geopolitical stuff and then obviously AI. So it's just candidly very hard to see out. So like within our little bubble I could see, oh gosh, this is, you know, every company needs to is moving to recurring revenue business model. When you do that, you got to focus on that Retention, you know, we've been fortunate to be the main player in that space. So this would naturally grow and we can add more products. And so yeah, it feels like I could see out to you know, fire $500 million or whatever, Jason, but then put this big asterisk of like what the heck is going to happen in the world in the next three or four years. So that's the only thing I don't.

That's a good insight at your. I've seen, and I think the public markets have seen, the bigger you are, the more visibility you have, the better retention. I suspect you see in your customer base.

The bigger you are.

As as many of the macro issues are, the less bad it is. It may still be tough out there, but if you can't see it at 200, that's insightful.

Well, it's interesting. It's, it's a good point. Like you know, there's seeing like the growth and like the business but then there seeing the profitability. That part does get easier. You talk about Jason a lot about how just sticking around and being persistent. One of the things that does happen as you get bigger is the SaaS model. If you have good retention is quite good, right? Like you literally can go from burning money to making money. We were a profitable company now and generating cash and things like that and just happened all of a sudden because if you have good gross retention and if you manage your costs well, you eventually become profitable. So that's hard to see when you're really small company. But that does naturally happen. What doesn't naturally happen, I'm going to talk about it is just like, you know, growth doesn't naturally happen. You got to figure out what the next growth vector is. So we'll talk about that in some of the mistakes.

So mistake number one. We could spend the whole time just talking about the state of the market. But let's get to the mistakes, right? We can do a follow up of the market a little in a few months. Mistake number one, because this is the one that I continue to learn, relearn, fail to learn, half learn. Um, mistake number one, not holding your leaders to the highest standard. So, so dig in here a little bit. What a mistake here.

So I'm gonna skip some of the setup sides. Cause you know, kind of talking about why I did this, talking about failure and mistakes. Jason set this up well. And one thing I'll just say up front I'm in full humility is most of the mistakes I've made, I've made Many times versus like making it once. This is a quote from somebody else on the Internet. But I was like, oh that's, that's exactly me. So one of the things that, you know, I try to do those pretty try to model vulnerability and being just really open about the mistakes. One of our kind of company mottos and purposes is to be kind of a human first business and try to be bring that humanity to what we do. So diving into the mistakes. So the number one is not holding our leaders to the highest standard. So this is something I think about a lot because like I mentioned, our company purpose is to be living proof you can win in business while being human first. And the idea like everyone around us, whether it's a customer, an employee, an executive, an investor, is a human being fundamentally. And so sometimes the, the shadow for me is sometimes giving leaders too much of a pass. That's like the thing that like I contemplate a lot and think about because we're like a super values oriented company and it's very deep in our culture. And that's all great, really, really great. But I remember a few years ago get doing our, you know, our biannual survey to our employees and it was great feedback and it was positive overall. But there's this comment that stuck out to me. I wish all of would live up to our values. I was like, oh my gosh, like that's terrible. Like that's terrible that like an employee thinks that the leaders aren't well, living up to the values. And I, and it kind of, that statement captured like honestly many of my mistakes where there were people over the years who either weren't living up to values or in some cases were just not performing because there's two different issues. And I let it hang around way too long because I was trying to be human first to them, you know, give them a shot. Maybe there's an opportunity for them to develop, you know, all those kinds of things, right? And like, but this quote really broke my heart like reading that from the employee and what they were feeling and what I figured out was I have to hold leaders to a much higher standard, right? Like there's that old expression to those who much is given, much is expected. And I tell my leaders, look gainsight, like we're great culture, it's an awesome place to work. It's really hard as a leader because I need to be unapologetically demanding to our leaders because when the leaders aren't living up to values or performing, everyone else suffers so much. And when The CEO is too weak to make a change on that. Like I've been in the past multiple times. That causes all of the people to suffer. And frankly, it causes people to just be like, well, I guess Nick is just not, is just ignoring these problems. Does he have his head in the sand? Is he, does he not even know like, what's going on? So you really lose confidence from your team. And I can think of, you know, five or six people, by the way, who are all good people in the generic sense of the term, but either weren't living up to our values or weren't performing or both. And you know, a couple of my took several years to tack on. Now I will say the last few years, I've started to move much more quickly. And so I still am not perfect at hiring, but I'm getting better at when a leader's not working out, parting ways more quickly. And one of the last things I say in this first lesson is I also am trying to get better at like really defining what I expect from my leaders in a lot of detail. I had a LinkedIn post on this recently and it seemed like it resonated where what I do is I have an onboarding document that I built with my chief of staff for our leaders. So a new leader comes in, new executive, whatever. I walk them through this document, which is actually quite long. This is just like the summary slide of it. And what that document does is it takes our five company values, right, which are kind of high level, and then actually lists out specific behaviors we're expecting to, for a leader to align to each of those values. So I'll just give you some examples to make it really tangible. Right. So, you know, success for all is whatever values it means, you know, make sure our business is driving success for our customers, our employees, our investors. And so I expect our leaders to meet at least 10 clients a quarter. It doesn't matter if you're a CFO, doesn't matter if, if you're a teammate, you know, teammate, success, HR. So as an example, another example is.

I expect 10 a quarter in person. Right?

Yeah. Well, I love your in person thing. Yeah, that's, that's the goal. I, I would say it's ten a quarter. I haven't enforced the in person, but I do love you're getting on an airplane thing. That's one of the best Saster posts ever. Another example though is bringing your personality. One of our values is childlike joy. And I expect each leader to bring their own personality to the way they Communicate and not just have it be, like, generic, you know? So, for example, Alka is our cfo. She's amazing. She does a newsletter called Alchemist A L K M I S T. And she's very deep into, like, spirituality and philosophy, and she writes from her own perspective. Our CRO is really into, like, do it yourself stuff. And he. He brings our personality. So. So really try to make it super tangible to the leaders about what I expect and what we need, because if I'm not doing this, I'm not doing my own job. Well, so that's the first one. Yeah.

And let me just. I could spend almost a whole session on this because mistake number one is maybe the. The. This and the second one are maybe the biggest mistakes of all. Right. Are when you lower the bar and hiring. Or even just. Or even just define the box the wrong way. Sometimes it's not lower in the bar, although maybe it was in 2021. The box the wrong. So let me just. Because we all make this mistake again and again. Did you. When you look back when you didn't hold leaders, I standard did, you know, and made the higher. Anyway.

Did you.

What's the rest of the package? Good. But you knew that this. This. These five columns are not going to be met.

No, no, no, no. I. I suck at interviewing. I'm. My batting average on knowing a priori is pretty low, I think. I'll tell you, there's some learnings I've had there. So most of the time, I hired somebody thinking that they're just gonna be great. Okay. I did have one time recently where I hired somebody for. For an executive role where they have a great resume and they were just okay on the culture side, like, okay. Aligning to all this stuff in the interview. And I was like, well, you know, they're really good at this thing and it's fine if they're just okay because we'll help them get better. And what I realized is I actually need our later leaders in the interview process to be great at this stuff. Kind of like priority before coming into gainsight. So that was an example, Jason, where my bar was low because I kind of was so focused on the resume. But mostly I thought they were good and I just didn't know. And then I didn't move fast enough afterwards was my bigger problem.

Yeah, that one. That's always a good one. That at least move faster when you know. Right. They never. If they don't meet those 10 clients a quarter, they're never going to the next quarter. Are they.

No, I mean, never will.

Yeah.

It's funny that first 90 days or whatever, you see so much. Right. And so, yeah, it's really. I think it's. You gotta, gotta. And it's easier, by the way, to move fast. It's actually more empathetic, frankly. Like, it's easy for somebody to join a company and leave, like, 90 days later. It's really hard if somebody leaves like, a year and three months later after joining because they've already put their imprints on the team, they've hired new people, they've reorgang, blah, blah, blah, and then all of a sudden, they're gone. It's like the worst possible time to leave is like a year and three months in or something. Right. So, okay, you go.

I got to do just one more, and then I won't take up all your time. But because you said something in the beginning, which I think is a challenge for a lot of leaders. So you're one of the highest rated CEOs in Glassdoor, right? I think. Right. And so probably gainsight is as well, correct?

Yeah. Yeah, it's good, for sure.

Yeah. So let me ask you a meta question, because you said in the beginning about how tough to be on the team. Right. I sometimes advise executives to be careful working for a nice CEO.

Yeah.

I say be careful. And I say be careful not only because sometimes you don't know where you stand with an ico. I also say be careful because you may be thinking it's an easier job than it is because they seem nice to. Working for Nick would be so great. Ten clients a quarter.

I don't.

Maybe I can't do that, but, boy, this seems like my dream job. How do you balance being kind and arguably nice and hitting these goals? I don't think it's that simple.

No, it's so true, Jason. And I think, first of all, I think we all have to look at the last few years of the bubble and be like, hey, there's things we could get away with then. And, like, you know, we felt really good at our jobs. And I don't know about you, but I feel like, you know, a lot of that was just, like, inflated by the last few years. And so we all have to get much better. I need to be a much better CEO to even achieve the same results, let alone.

Right.

And so we are having a conversation actively, internally about how do we get clearer with people, about what do we expect from them, not just leaders, but all employees. And I think. I think it's totally Possible to be kind and demanding.

Like.

Like, you did not have to be a driver. I was talking to somebody yesterday and he was talking about this famous CEO and how they would just like, be completely mean to people on email and things like that. You don't have to do that. But I think you can tell people like, you know, I like, I'm disappointed with the progress we've had on this. And by the way, if you talk to my leaders who are all my direct reports, I'm. They're amazing. I love them. They're so great. I think most of them will be like, oh my gosh, Nick is very demanding. Nick is not. You know, but the. By the way, I think this is true for a lot of CEOs, like, especially as they get bigger brands, like external is. Is all very shiny and stuff, but the closer you get, the more it's like, oh, it's hard to work for them. Not in a bad way. It's just like my expectations are really high because we want to do great things, you know, and so I, I think we have to figure out how. What that means for the average employee in a company now. Because even the expectations for the employees has got to be higher. Because the expectation for the CEO has got to be higher. Like, we all have to raise our bar because we've all been kind of getting the past the last few years and it's gone.

And how many employees does Gainsight have today?

About 1200.

That's a lot. Do you find? I don't want to. So I don't want you to quantify this, but are all. Are most folks really up for that? I find, to be honest, they're not. Because this. These good times lasted too long. They lasted two years. And everyone intellectually gets that we have to be a better CEO, a better VP of sales, VP of cs, VP of market. They all get it. But I don't find that the majority of people are actually willing to do. Lasted too long.

I think it's one of the real dangers of, you know, all the stuff that led to this point where people get used to a certain way of working and lifestyle and everything else.

Right?

All of us on me, everyone. Right. And I think you're totally right, Jason. Like, it's. You find that, you know, new people coming in, like, they come in with a little bit more fresh expectations. So you can define it. And what I find is actually there's a little bit of a barbell. You know, Gainsight, we have some people that work, a lot of people that worked here 5, 6, 7, 8, 9, 10 years. And they actually have been here so long that they're here just because they believe in it and they're like willing to do whatever, you know.

Yeah.

And then you have some brand new.

They bounce and they bounce back or bounce left or right really quickly. Right. Whatever changes.

Right. And then you have some new people that are like, like tabula raza, like just okay, they'll do whatever you define. And I think it's the people that joined tech companies last three or four years where you know, they were hired under really different presumptions and environment. Right. That's where it's nothing wrong with them. I mean it's wrong with like the system. It's not their fault. But I think there's a reset that they're gonna have to go through either ins company or maybe switching jobs or switching industries or whatever. But yeah, definitely, definitely a big reset happening.

Okay, so mistake number two, I keep make. I've learned a lot this one too over the years. The so, so good this is.

It's so funny because it feels like I shared this with my team. They're like, are one and two kind of contradictory. So number two is basically like, you know, not betting sometimes on the team that got you there. And this ties to what I was just saying about some of the longtime people and especially in these like more challenging times, you know, grit is kind of like one of the most valuable, you know, skills out there. And so the, the thing that kind of inspired me here is like so many CEOs, including me, have had this feeling at some point where like, it'll all be fine once we get a new head of X. In fact, you know, investor in some startups and very fortunate to be investor with Jason some startups. And like I remember some entrepreneur like years ago being like telling me, hey, you know, you know, we're, we're great. All we need is ahead of sales and everything is going to go great. And I'm like, it's possible that that's. I really hope for your sake that that's true. And it's possible. There's a lot of other things you need to work on.

Right.

And so there's this like danger that the shiny experienced person with this certain background is going to fix everything in my company. This is not to say people with experience don't add a lot of value. In fact, you know, we've had some people come into gainsight that real experience have had a big impact, which is really great. But you Know, honestly, I've also found a lot of swing and misses, you know, and we all have this. If you do this long enough, you have so many stories of swings and misses of like had a great resume, everything looked awesome. It turned out maybe they weren't as great as they seem, but also turned out Gainsight was more complicated than we thought and it wasn't a quick fix. And so for me, one of the things that I'm taking away is you can start thinking, God, I got to hire the person I'm going to need four, five, six years from now. So they need to be some big scale, blah, blah, blah. And maybe if you were growing 300% a year, you need that. But in this new world, I think more most is like the peop. We need the people we need now. And many of those people you need now might be in your company. So in my company as an example, Kelly Capote is our CCO chief customer officer now. Obviously very important job at Gainsight. You know, she started Gainsight as a CSM five years ago. Olka Thunder is our cfo. She start, she started as our head of fpa and these people are just crushing it. Our chief, chief people officer started as my chief of staff. You know, and I think one of the other things that happens as you get bigger is there's a lot of knowledge about just how your company works and it's harder for somebody on the outside to attain that. This is why when you get to really big companies and really storied companies, there's very little senior hiring. Most of the people in these huge companies grew up in the companies and moved around. And so creating that ability in your company for people to try new things I think is a great opportunity.

Yeah, this whole concept of topping people was something in the older days we were kind of taught you had to do, right. That there were certain inflection points. There were the one to 10 people, the 10 to four, and you would always have to top them. Not fire them, but top them. And now that I watch, now that we've been doing this, I watched my old team from Adobe Sign, Echo Sign, none of them needed to be topped. I look at Jameson, SVP of sales all the way running 200 plus million dollar company, Sisense, all these folks, Brax, I'm not saying that some of them will finish everything on the way to a billion.

Right.

But none of them needed to be topped or even if sometimes they were topped. And you know what happened? The top left. Yeah, that was just as common. The person that was brought in to be the CE CCRO or the CCCO left and that person is. Is running the place today still. Right?

It's. It's crazy. I mean, so many times it seems like there's an instant fix and that top person's gonna do it. And the truth is, honestly, it's just there's a lot more work you need to do as a founder, as a CEO. Maybe it's on your strategy, maybe it's in your product. Maybe it's on literally getting, you know, the people that are get the business to be in the right position, you know, to have the responsibility, you know, so it's hard to abdicate the responsibility. And this is probably the mega learning is. It's all just a lot of it comes back to you. You're looking for the quick fix from the outside, but a lot of it's about you. So I don't know if that's good or bad lesson for anyone. I think it's good.

I just love this point. It's just a reminder that leader, at least there's a 50% chance that leader already works for you. Right?

That's exactly right.

That's at least. At least source the best internal candidate you possibly can. If they know Gainsight for four years, an outsider will never learn what they learn. There's not enough time. They will never catch up, will they? In terms of domain expertise 100% and.

And culture x, understanding how the company works and things like that.

Right.

So totally right. Okay, so let's go to. Should go to three.

Let's go to three.

Okay. This is getting more like, I guess practical. Right? So you know this. I think a lot of companies have this. We definitely did, which is, you know, scaling up, meaning, you know, hiring people and hiring salespeople, whatever, but not doing it based on like true leading indicators. So you kind of get over your skis and you know, the truth is like this happened many times a Gainsight, but probably three like significant times. So I remember the first time we got like a seven figure deal like early in Gainsight's history, right? And it was like, oh my gosh, there's going to be so many more of these. And we're like, let's hire this strategic enterprise team and salespeople. We literally didn't get like another one of those deals for like five years.

I mean, look at the guest three.

It's crazy. It was like a. And by the way, the people we hired were great. They're super nice, but they're just like we the market wasn't there and what product wasn't ready. And another example is, you know, we bought this awesome technology, our in product app technology, but it was basically raw technology. We were like, hey, this is a market. Let's take this raw technology. And I said, I made this mistake of I set a big target for year one. Let's hire a whole bunch of salespeople. You put the salespeople into a model, you say here's a quota and here's the attainment. And we completely flubbed on that first year. Now that business is doing really well years later. But like that idea that you can somehow just launch something and immediately be at, you know, 10 million of ARR without anything, it just doesn't work.

And then how much longer did it, did it, did it take two years longer than you thought for the whole product side to take off?

Three years longer?

Three years, okay, now it's great.

But yeah, definitely three years. And then the third one is like, you know, which I think maybe a lot of people made, which is, you know, we have that like 2021, like early 2022 total like, like everything went off the charts for us and probably everyone. And you know, of course that meant we hired a lot of people. We luckily we didn't go as over our skis as some companies did, so we didn't have to do any big downsizing or anything but, but still like we got over our skis. And so each one of these, the common thing was we just did not have well thought out leading indicators to know if there was really a trend here or not, you know, and so, and obviously this is like every business has to figure it out whether it's like it. I don't think it's just as simple as pipeline, by the way. I think it's really looking at like, like what are the high quality customer engagement activities that really correlate to sales that are going to happen. The expression, I love if you ever read Jim Collins books, he says fire bullets on cannonballs. Which basically means you start with like small experiments. So for example, with that acquisition we did, you know, we should have started with a small tiger team and of like three people and figured out how what we could sell we would have figured out it wasn't really ready for the main market yet. You know, instead we literally went to like 0 to 40 people and go to market in like 2 quarters. Right. Like that was the level of mistake we made there.

So this is going just for catharsis, for folks listening, watching et cetera, looking back 20, 21, things are crazy. Everyone needs a success in product tools, everyone's throwing money at growth. But, but, but what did you miss? Objectively, what did you miss? Obviously things were, the multiples were crazy, right? But, but you have to also play the cards you're dealt. It's not like you weren't going to close deals.

Right.

So what is, what was the real mistake? Looking back at it?

Yeah, the specific in our case was like, yeah, we, we, you know, in sales you can hire ahead and you kind of have to. Right?

You have to hire to. Right, you have to.

And, but one of the, I think one of the mistakes sometimes people make is they think that like their ideal customer profile will naturally expand. And so for example, like in our case, right. Gainsight's like the standard and pretty much every SaaS company out there, which is great. We're really fortunate for that. And, but we're like, well, this is the time where it's going to go to every company in the world, in every industry. And so you hire the people in financial and telco and healthcare or whatever to go after them.

Right.

But with very limited proof points. And so that's, that's where this idea. I think what's one big thing people miss is like the ideal customer profile is like truly an important thing. And it doesn't naturally just grow. You can grow it by improving your product or changing your marketing, but it doesn't just naturally expand. The other thing, by the way, is it's very natural also when you're thinking about scaling to then say we need to add a lot of overhead, so we're going to add, you know, and by the way, these are all awesome things, but enablement, business development, product marketing, et cetera, which are all great like. And we have great people in all the functions. But like it's all presumed upon all those new salespeople being productive. And if they're not productive, all those extra overhead investments are also a huge waste. Right?

Yeah.

It's not just the cost of the salespeople, it's all the infrastructure you put in to make those salespeople successful.

Good, good insights. Yeah. Expanding your ICP too quickly. In good times, you got to be care know exactly what you're doing. Right. When you expand outside of your sweet spot.

That's exactly right. I'll try to hit some of these quite quickly because I know we're gonna run time. So, you know, fourth one is kind of again, getting pretty tactical, which is.

No, that's a good One.

Yeah, it's funny when you have like, if you have an online PLG type business, like, I love it. Like that's so amazing because, you know, the pricing is the pricing of the website. But if you have an enterprise business, a lot of these kind of businesses, early on it's like, well, how much do you want to pay for the software and do you want to do.

A, do you want to pay based.

On this or that? And oh yeah, we'll add this feature and we'll charge for this, but this other customer won't charge for. And so you end up with this, just this kind of hodgepodge where like every deal feels like, oh, you know, we'll just do this deal. It's a little different pricing or different structure. They want to do it on their paper, not ours. But it becomes really, really hard to scale. And so the end result is like gainsight, you know, 1200 people, a couple hundred million of ar. Like, you know, we've got great systems for customer success and things like that, but for actual, like, like literally knowing the entitlements and the contracts and all that, you know, it's a mess and we're trying to work on it now, but it's actually really hard to fix once you're far in, you know. And so to me there's like, like, it creates complexity. The customers are like, wait, I can't read your quote. You know, the teams are like, it takes like 10 minutes to enter a, you know, five, $500 order and it's hard for like us to analyze our business. And so kind of the, the learning to me here is, you know, custom deals seem great at the time, but make sure they're really worth it. They have to be big enough to worth it and be worth it and then invest in back office systems early. So you're counting your cpq. All that stuff is pretty good. I'm not talking about when you're a little startup up, but if you're 100, 200 employees, start getting that stuff right. Because when you're a thousand employees, it's really hard to fix it.

I think, I think I. You actually want to get this right before you have eight to ten reps. Otherwise. Yeah, yeah, like I'm, I'm a fan of CPQ as early as you can. Even the most basic version. Yeah, it haunts you. Let me ask you one related question on this. There's an early Saster post I've updated and like 80% of the sales community hates me for it, including our Current little saster sales team hates me for it. Which is that however you do price in the enterprise, it should be as if you should be comfortable. Every other customer knowing what every customer is paying. Then it simplifies your life. Sure. You're going to do a custom deal for, for, for SAP or Cisco. Great. Right. But, but Cisco, so specific. It's okay if everybody knows. Or SAP. Right. What do you think of this idea that you should be able to share every customer's deal with every other customer?

Oh my gosh. It's such a good point because yeah, totally. When you start out, you're like, well, this one customer and then this other customer and what you forget. And I think, Jason, you're alluding to this is over time, people move around and they're like, they go from company A to company B and they're like, wait, how come I was paying this for Gainsight here and this for Gainsight here? We have this problem big time.

And then you know it's fair.

Yeah, exactly.

Unfair pricing also is exhausting. It's kind of like lying. Like it works, but it's tiring. You got to remember every deal so you don't get caught in a web of discounting.

That's a good point. Easiest thing to remember is the truth. Yeah, it's. And so we have not been great at this and we're trying to simplify it and clean it up, but it's harder as you get bigger. So, so great, great lesson. Okay, go. I'll go on to five. This is a total gainsite Homer one. But actually interesting enough, it's something even we didn't do as well as we should have early on, which is basically like part of customer success is of course there's humans working with customers and like going out to see customers. I love that. That's amazing. Right? But I think you can kind of like if all you have is csms, it's kind of like that old analogy. If all you have is a. A hammer, everything looks like nails. If all you have is csms and like a kind of a people driven approach, then it looks like everything requires a csm. And so kind of what I would say here is just early on, get a lot of the basic stuff in place. Like, you know, people should be able to open a ticket online, have a great documentation site, maybe consider a community, have like in app guides. These are cheap, simple things to do. You know, Gainsight offers some of it, but you can. Other companies do too. But doing some of that early really, really sets you up so you don't just have to throw people infinitely at this problem. And just some specific examples would put here like, like definitely have like an onboarding guide in your app or you know have a really good knowledge base and really good videos on it. You know, figure out some ways to do like one to many communications to your customers. Some of the stuff can do super cheap. You don't even need third party tech. I would just really get some of this going early so it doesn't become an infinitely scaling people problem them and.

Nick this one, I. This is, this, I think this is actually a very fascinating topic we could spend a whole session on because of course I agree like there should be a checklist. It's like if you want to acquire customers you should do it all. You should do webinars, you should do contact me. You should do a demo. You should do like don't pick one. Let buyers buy the way they want to buy. Right. Let them onboard and learn and succeed the way they like. Right. Do they like, do they like a community? Do they like a wiki? Do they like whatever. So I think you got to do all of it. Which is part of your point. Right? Exactly. Right. Give up and so do. And I like this checklist idea. They're literally. You should do all of it. Right. Not some of it. But what my anxiety, I have my anxiety is I see and this is not new but I see it accelerating more and more folks don't want to do anything for their smaller customers.

Yeah.

They think that automation and even worse they're these new AI products. I don't know if you've heard about them but, but they, people are excited. They can talk to their customers even less. Because, because my chat API is going to solve all my. And you laugh but no, I hear this all the time that we're going to stop supporting our smaller customers with our, with our 360 onboarding portal.

Right, Right. I was talking to actually a high profile simb tech company and they went through this exact same thing thing. They you know, 2,300 million of AR and they're like yeah, we don't need any people talking to our customers. And so they basically parted ways with their entire CS team and then the person that like ended up owning that he's like, like that was a huge mistake and they had a huge churn. And so it's not like they need to have a total enterprise approach to those customers. But you know, ideally you've got some of this digital stuff and then you've got a way to intervene with customers and yeah, I totally agree. It's gotta be a hybrid, Jason.

Yeah, especially the SMB ones. It's just where I hear this and I just worry. Right.

And actually, ironically, SMBs sometimes need more handholding because they have less internal capability and they're like more distracted. So it's kind of weird. Like, you know, the smallest customers sometimes need those more help.

So I'll tell you a quick metric and I go on, what I've learned is that SMB SaaS now that does true onboarding, that's like, it's not insta deploy. Right. You can't deploy in 60 seconds. I find typically speaking, their total onboarding plus success plus sales headcount equals their sales headcount. It's one to one.

Yeah, I can totally do that.

And I think that that's not what we are used to in the traditional enterprise sales. I don't know what the ratio is. It's probably two to one, two and a half, Right. Maybe pushing to three to one when you want to get profitable. Right. But I'm shocked that the leaders in SMB that I work with have this one to one ratio. Right. If there's humans involved, you got to get enough of them. Right?

Totally. No, I totally see that. So, okay, so number six is, you know, kind of switching gears. One of the things that, you know, happens in business.

This is such a good one, Nick. Let's slow this one down.

Yeah, okay.

Slow this one down. This is one of the top life mistakes.

Oh my gosh.

So many people make CEOs, executives, SDRs, all across the spectrum. Let's slow six down.

I love it. All right, so I made this LinkedIn post, you know, actually, I don't know, five, six months ago. And that's actually literally the most engaged thing I've ever done on LinkedIn. And it was literally I wrote this thing that says, why are so many companies weird to teammates when they leave? Businesses have a strange expectation. They can fire people at any time, but if teammate leads, they think of it as some kind of betrayal. I posted this and there were like, like, like a thousand comments from people about their stories about like, like, you know, a company like them saying that being at a company for six years and then them resigning and then the company, the CEO, like never talking to them again or like, like walking them out the door. And so I just never understood why people need to be so weird about this. And because like, first of all, they're human beings. So, like treated well and Then also, these relationships will constantly come back to you because those people could be clients or they could come back to your company and. Right. And I think this is true both for your employees leaving, but it's also true for Churn. You've written about this too, Jason. Like, when people are churning, treat them well on the way out. You know, assume that they're making a decision that makes sense for their business. And by the way, if you have a good product, you stick around, they'll be back like a couple years later. And so just this idea of ending relationships well is something I constantly tell myself.

Yeah, I just. I just think this one, if for anyone in the front, middle or back at any level, and for CEOs, be gracious to anyone that helped at all.

Totally.

I mean, of course, be gracious to those that help. Not at all. But we get most frustrated, we feel, especially when folks leave in a position of trust, in a senior position without someone to replace them. We do feel betrayed. No matter what we say, all CEOs feel betrayed. Right. We all can't help it. Right. But be gracious. And people, the LA people since 2020, quit on 60 seconds of notice is what's.

Yeah, exactly.

It used to be 30 days. I quit. I quit my first job. When I resigned my first job, I gave them 70 days of notice. I did another job where I gave him 100 days notice. Now it's nanoseconds. Right. It's not worth it to leave that way either, is it? Spend the time. It's just these things reverberate. And it's just the biggest unforced error, I think, in your career on either side. Right. It's the biggest unforced error stories like.

1, and 1 ended up okay and one ended up not great. So one. You know, I've. I've tried to practice this my whole career and. But I'm a human, like you said, Jason. Like, you have that initial. Like when an employee. Key employee is leaving or a customer's turning, it sucks. It sucks. And especially if you're surprised, frankly, you feel embarrassed and things like that. So the two stories. I remember one of our leaders, you know, like, was leaving and, you know, told me about it and it was like, kind of very. I should have known. But it's very sudden and. And I thought things were going great. And I was like, I can't believe you're leaving. Like, you're leaving the whole team in a lurch. And I try to make them feel guilty. And I. And then I, I'M like why did I say all that by the way? The good news is that person is I'm still super close to and I like I kind of changed the way I thought about it it and then then I had a customer early on a gain site you probably some if folks watching your early stage startup you'll have some customers turn early and super frustrating especially if you put a lot of work into them and with this high profile company churn and we did a bad like we, they they were not fair to us but we could have been the bigger person and just like been nice to them and like been like okay, whatever but we didn't and honestly like it means that like we'll probably never work at that company ever again again. And it sucks. It's like a pretty big company, you know.

But I don't think.

Yeah. And so you just don't want to burn these bridges.

Right.

And so like ending relationships in human first way. And honestly I'll show you maybe a positive example or like I've got a point where like on LinkedIn or whatever I just like celebrate all our alumni all the time. Like this is like Brian Hamlin, one of my dearest friends. You know one of our old sales leaders did an amazing job at Gainsight as CRO at this company called Muckrack. Now it's just awesome to see people thriving and hopefully you get some joy out of it. It that like you know they're off somewhere else but like they're doing a great job.

Right?

Yeah. I mean you have the best alumni network ever from Echo Sign Jason and I can see how proud you are. Right.

So let me just ask you on a tip, I hadn't I thought a lot of this about your careers. Right. Both at the, at the, at the CEO and the sub VP and the IC level for customers. I see so much lashing out in 2023. I mean vendors lashing out at customers are leaving.

It's evil.

But do you from a best practice perspective from Gainsight, have you learned a rule to put in place so that to mitigate this to have is there, is there a magic idea for offboarding? Is there something so that you can stop the frustration the team might have. Right. And not accidentally vent on customers?

Yeah, I think there's a few things. So like, you know, obviously you want to train your team to like when it happens, you don't want your team to feel like bad themselves because lots of times sometimes it's not just like that CSM or salesperson's fault, like it's just a systemic issue and you know, things like that. So I think one issue is if you come down too hard on your team, it's going to show up to the customer. So be careful about that. So for example, whenever we have a churn, a gain site, you know, I always start the meeting, be like, look, we're just here to like, we'll do a retro meeting and we're here to learn like because all of us can learn and get better. This is not about like who did what or whose fault it was, right. So I think there's some element of how you react as a co to your team team which will percolate to the customer. That's one thing. Second thing is I think you can create some nice materials. Like we have that. I think like we have a guide. It's, I think it's called like Life After Gainsight.

Right.

And it just talks about getting your data back and stuff. But it's just nice to like put some thought into that because it'll happen, you know. And by the way, so many of those people come back later on if you treat them well. And I think, you know, then realizing like listening to the story of the customer, you know, if they're like in real financial hardship, you know, do you need to collect that last three months of payment? Like, like you don't, you don't, you don't, you don't, right?

Like it doesn't matter if it's not going to occur. You don't, you, you don't like, like.

Be like the bigger person, then later on they'll come back and you be a customer again. And, and so, but if you are, do the opposite, you're really tough on your team and the team's mean to the client and you take that last, you know, you know, that last dollar out of them, they're never going to deal with you again, right? And so people's memories last long when you treat them badly, you know. So this is such a, such an easy one in my opinion to do.

Let me just share a quick story for folks listening watching. Nick and I are both investors in a company of a super kind of driven CEO. And they just a couple months ago they lost one of their earliest logo customers, 400k a year. But the customers one, the customer struggling, right? The big public company but to a new VP came in and brought in their new vendor, right? And immediately got rid of them. Immediately. And they would have done it anyway. But I, I said to the CEO just Go fly there, thank them and see if you can keep the smallest amount of the business. 4,000 of them. 400,000 and I think they kept 10,000. Okay. Some residual use and sometimes this is pretty easy to do. Hey, I'm churning out, I mean it happens. I'm leaving gainsight but I have a small team that loves it. Let this team keep using it. Yeah, right. And any for this story. This was just a couple months ago. This new VP immediately got fired and they're bringing the app back. That's.

Yeah.

Usually that takes a few years, but in today's world it could take a couple months. They're literally going to boomerang back in single digit months because the new VP didn't take day in the game.

I think that's such a, that's a good. Keep a little bit of the bit.

Like not do whatever. Imagine you're re earning a fraction of the deal. That always works, doesn't it? To keep. Keep to kid. It never doesn't work.

Totally, totally agree. Keep the relationship going. Keep driving value.

So this one not this would resonate.

I think a lot with the people that deal with customers. A lot. So the basic idea in, in this kind of. This one is like you get started with a company and you know, you're, you, you sell some kind of software and, and then you know, you go to a customer, you, you demo it and then you're implementing and the customer's like okay, so how should we implement this? You know, how should we configure it? And you're like, like I don't know because I just started this company like a few months ago, so I don't know how to use it. And the customer's like, well, but you guys are the experts. I'm like no, we're not the experts yet. And but so you get early on, it's very natural that you kind of like figure it out with the customer. Maybe they know how to do it. But you know, a few years in, you know, you could still be in that same situation where the customer says how should we implement it? You say I don't know, how do you want to implement it? Right. And that's a real problem. And we made a mistake on that. Went too long with gainsight of like implementing it in too many different ways based on like not having a prescriptive methodology. And so the, the issue with this is first of all a huge chunk of time to value problems in software are because the vendor is not prescriptive. There's too many different choices instead of saying this is the best practice way to do it.

Yeah.

Second of all, every client uses you differently, so it's hard to actually make the software better because like one client's using it this way, one client's using this way. Now you introduce a new enhancement. You have to make it work with this scenario and this scenario scenario. And then third is you bring new people in. How do they learn? Because they need to learn like a thousand different ways to use your software.

Right.

So it's a real.

I don't even know how you do the third point.

That's. And so, so this is like the people have to learn like through apprenticeship over years and years basically. Right. And this was gainsight for many years. And like honestly our time to value literally went from like, you know, months and months and months to now it's like average four weeks. And a big chunk of it was this of being more prescriptive. Now it's hard to do it. So what you need to do is you have to get one together. Product, marketing, sales, cs. And you need to kind of figure out, okay, what are the like, here's the different things people are trying to achieve with our Software, like the 5, 6 goals, here's the different stakeholders we've got and then here's the like way to kind of like configure the software to meet those goals. Here's our best practice recommendation. You have to keep it updated as you do new releases. And then the big thing is you have to coach your teammates to be like, hey, we have a methodology. So you know, the clients can do whatever they want, but you should really be brave and like show them like what our recommendation is here. And so just to make this real tangible, like we literally have a websites online we'll eventually put on our core website. It's on coda right now that basically, you know, we have all of our best practice on customer success. So if you want to do a best practice on optimizing your CS workflows or building a value realization plan or mobilizing advocates, you like click into this and it goes through every little detail of, of like how to configure gainsight but also how to run the processes and your weekly meetings. And so then our new, our team, new person comes in. They can learn through this. They use this with the clients. It is a total game changer.

Yeah. One quick question I've done. I've worked with a lot of startups where we religiously get our onboarding timing down, right? Yes. But Is time to value your core KPI here? That. That's a new one to me, but I do love it if it is the core KPI.

Well, I think time. It's funny. I think it's time. People use the term time to value so loosely. Right. So what is value versus onboarding? We're talking primarily about first value, which is often what onboarding is, which is time till you can do something in gainsight. Right. So in our case, it might be time till you can, you know, see a view of your customers and see customer health.

And that might be before you're fully onboarded. Time to value. You come before you.

And you know how software works. Like, there's always new things. So fully onboarded is almost like a perennial thing thing. But are they getting enough value that they feel like, okay, I'm getting something out of this software that's kind of like what first value is all about?

And do you have folks sign off on it so everyone can track that metric so you can turn into a metric?

Really good point. One of our best practices embedded in this little thing here, value realization, is then that you define what's called a verified outcome with the client, and you actually capture that. And then you, in this case, you store it in game site. And then later on, you're talking to procurement. And procurement's like, hey, we never got any value out of the software. Like, well, oh, your stakeholder said that they generated, you know, 30% more leads because of, you know, gainsight or whatever. So absolutely track the value.

Yep.

Okay. Number eight is. Oh, sorry, this is a prescriptive. When we talked about this, number eight is not okay. This is so big. I can't believe I buried this till the end. Not starting Act 2 fast enough.

This one's so big.

Oh, my gosh. It's like basic. The basic idea going back to our ICP conversation is that, you know, you, you, you have a natural kind of TAM for a given icp, and it maybe grows over time. So, for example, ours was like SaaS companies and, you know, they have customer success and now other other needs, and that. That grows naturally, which is great. But, you know, eventually you can. You can kind of exhaust your TAM and kind of get over your skis. Gravity eventually kind of gets to everyone, right? Where you're like, okay, I'm hitting the walls of my tam. And the basic problem is that, like, a growth business is valued on its growth, and your ability to raise capital and get people excited is on your growth. And if you wait till you Start slowing down a lot and then need to go launch something new. But you have to create it and you have to raise money for it. And that might take three, four years. You're in a trap. And so kind of, that really, really can hurt the business because you're basically slowing down and your company's getting less valuable, which means you have less resources to invest to speed up again. And so what you need to do is really start act two early. We didn't do this well so early on. So just some. I wrote a whole blog post on this. At some point, you know, we started seeing a slowdown in our business. When we're about 50 million of AR, we just kind of. We literally were the whole market. So it was like, you know, there weren't any more companies to sell to. I drive up and down, down 101 in the bay Area. Be like that one.

We.

That's a customer, that's a customer. That's a customer, that's a customer. Who do I sell to next? And so, but we hadn't started something else. And so it turned out some. The next thing for us was some of these other products. But we were basically like late. And so just being totally honest, what happened was we slowed down and this is pre, you know, this is pre Covid. It's like 2018 or 17 or something. And then we went out to raise money and I was like, wait, you guys are slowing down? I'm like, no, but we're going to invest money and speed up again. And that's not a very good investor pitch. Right? Tough sell. We couldn't raise any money. We did actually end up doing a debt round, which worked out great because we actually end up, you know, make becoming profitable doing the deal with Vista. But like, that wasn't a good strategy. Like the whole thing was we should have started some of those things earlier and seen kind of that slowdown earlier. So I would just say in this one, like tracking the tam, extremely vigilant, vigilantly, like not just the TAM side you build for your investors. Like, who cares about that? That your ideal customer profile, how many accounts there are, how many you penetrated and be really like tough. Like, are these really your ideal customers or not? And then for the stuff that's not in your icp, what are these experiments we're running? Could be organic, could be M and A to go get more, but don't let you hit the wall and then try to figure out how to grow because you're, you're in trouble at that.

Point, do you remember roughly how many customers you had at 50 million ARR?

Yeah, I mean it's 400, something like that. Yeah. In that range.

Well, I kind of tried to back into this, this. I think your ARR numbers are the right, but I've roughly said by 500 to a thousand at the latest. If you're enterprise, you got to have a second act.

Exactly.

It turns out as you're approaching 5,000 to 10,000 for SMB, you just start hitting. It's just kind of the nats once in a while there's exceptions as you say. Right. But even usually when you peel back the exception, usually the footprint of the products expanded a lot. Right?

That's exactly right. Yeah. Everyone has to do something, expand. So nine. Nine is kind of relevant to this, which is, you know, not being patient. It's kind of. Again, all my lessons are kind of semi contradictory, but they sort of fit together. I think there's an element also though of realizing whatever market you're in, putting aside like you've launched Act 2 in the market you're in, you just sometimes can't force it. And I, I mean God, there was so much fomo. I'm like, I'm extremely susceptible to fomo. Like if anyone, if there's any, anyone party going on anywhere, I want to be there right now.

Right.

And so I'm very susceptible to it. So like FOMO was the all time high in you know, 20, 19, 2021. Like all those times, how come we're not snowflake? How come we're not data bricks? How come we're not growing that fast? Right. And so one of the things I learned like to with the Great Hamilton and Aaron Burr is sometimes you got to wait for it. And like, you know, this case, you got a couple hundred million dollar business now and it's not the biggest business in the world, it's not the fastest business. I'm proud of what we've done and a lot of times the things that the mistakes we made were like rushing, you know, for example, trying to close a deal that wasn't really ready and that, that inevitably doesn't turn into a good customer success story. Shipping a product before it's ready, you know, hiring up people before we really are ready for them, all that kind of stuff. So you kind of have to wait for, for it would be my view.

And then the last tough one though, I know I don't want to. It's just so interesting because it turns out when you look back, it didn't really matter whether you grew 71% or 78% that year. Right. And you got to strive for it. But, but that, that's. It's weird paradox of recurring revenue, right? It really matters how much you're growing going forward and not exactly the, The. The. The little details behind you.

That's exactly right. And yeah, one deal doesn't matter that. But in the short term, it feels like every quarter matters so much. Actually, I remember, like, what, you know, early on, you know, we had great investors. Like, one of them, you know, Algeria Agarwal at Bain Capital Ventures. I remember, like, you know, he just invested, and we were a tiny company, like maybe 3 million a bear. And, you know, we. Our board plan was 600 grand of new ACV in the quarter, and we did 300 and something. And I was so embarrassed because we came from, like, 50% of plan. And I remember going to this board meetings, our tiny little conference room, this crappy office, and Ajay's like, look, man, years from now, like, nobody's gonna care at all whether you did 300 or 600. It's really about, like, do you have a plan to get the company to a hundred million of era? 200, whatever, right? And so there's some element of, like, really thinking long term and the short term doesn't matter. But it's very hard when you're in the moment, so.

Very hard.

Easier said than done. Last one is, I guess, maybe good summary of everything, which is just like, not, you know, realizing, like, a lot of leadership success is just, like, figuring out who you are and trying to, like, be more of yourself. Like, lean into whatever you're really good at, not trying to be somebody else. And so that's the danger of watching a presentation on mistakes from other people or danger of. All advice is like, you can't take it too far because it's about being yourself. I'll just tell you a funny story to close. So I. We, you know, we have this Pulse conference every year. Pulse 2313 was our first one. Jason was there. And, you know, the first one was a great conference. It went really well. And so I remember getting, like, we're going to be a professional company. I'm gonna get, like a speaking coach hired. This person who's actually. I think she's really good at her job job.

And you look like a professional speaker in this. In this picture. You could be the next Tony Robbins or something else.

But it's funny.

Forget the software. Just be a motivational speaker.

There you go. But but listen to the story. So 2013, I do my normal. If you see me speak normal, Nick main of thing. Right. 2014, I. I go to this speaking coach and she's like, nick, you talk too fast, you have too much energy, you're too enthusiastic. You should write your speech down, read it in a much more measured pace case. And, and that's your. You'll be a great presenter and don't move around so much. And so I did it. Now I'd encourage you to go to Google and watch the Pulse 2014 keynote. It is literally the worst keynote I've ever done in my life. And it's. It's a joke in the company. And actually, Anthony, my old cmo, we always joke about it. It's like cringy because it was me trying to be somebody else. I am never going to be anyone but the ridiculously high energy, super positive. I'm just. That's just me. Right? Right. And I'm not gonna be anyone else. And so what I, over time kind of learned is like, it's boring not being me. And so that's why I became the guy that does the carpool karaoke videos and the rap video on stage and the Ted Lasso spoof and things like that. If you've seen any of this, it's me. Like, that's the only version that works. So that was kind of like, I guess, the mega learning maybe a good way to sum it all up.

That is a good learning. We're all acting as CEOs. The meta question is, how much are we acting and how are we act? Right.

That's exactly.

You know, I think we're acting as just a better version of ourselves.

That's exactly. You're 100% right.