How to Build a Business that Scales With Your Customers | Zendesk CTO Adrian McDermott

In here. Thank you for joining us. We'd love to hear where you are tuning in from so feel free to drop in the chat. I'm very excited to welcome Adrian McDermott, he's the CTO of Zendesk. He's going to be talking about enterprise, SMB and everything in between. How to scale with your customers as they grow. So be sure to drop your questions in the chat for Adrian. He's going to be leaving plenty of time at the end to go through them. And Adrian, thanks so much for joining us. Take it away.

Thank you so much. Welcome everyone.

Good day.

Good day. My name is Adrian and I'm the CTO of Zendesk. I actually joined Zendesk about 11 years ago. I think we had 5,000 customers, no salespeople, about 5 million in ARR and around 30 people. Recently we just crossed the billion dollar revenue mark. A goal we set for ourselves at the end of 2015. I think one of the things that I want to talk about today is some of the mistakes that we made and some of the things that we learned along the way. Zendesk obviously started as a heavily focused web try by SMB company and we've moved up market along the way and a lot of our customers grew ridiculously fast and dragged us into those changes. So going to kind of attack this with. Sorry, go back on with three sections. All good presentations have three things right? Firstly, talk a little bit about the inflection points, the things that happen we have to stop and recognize what's going on. I think all startups to a certain extent are a series of small failures that can lead to great success. But mostly there are sort of moments of chaos, existential crises that you face and a series of sort of pervasive non decisions that you don't make that have a long term impact on your growth. And it is important to recognize those. The second thing, and you know, we're in changing times and I think delivering time to value all the time is becoming more important. Expectations are changing and you know, just in terms of product, market fit, how you want to show up for segments of your market, segments of your customers is incredibly important. And how they want to buy, how they want to be sold to and how you want to package and charge. These are decisions I think that you have to keep revisiting. And then finally how we should think about trust and culture, how it, you know, like goes through the organization and controls it. Those are the three sections and plenty of time for questions at the end. So let's Go first and talk a little bit about those inflection points, the moments that high growth companies have where things need to change. Right. You know, all board members will roll out a set of cliches around. You know, the thing that got you to a million won't get you to 10 million. I think they go to 10 million, that will get you to 100 million. And there's some truth to those truisms, right? And so I think the canonical tool in the toolbox to deal with this is sort of being the chaos monkey, the disruptor, and saying, well, we have to burn down the organization, that process, that ritual, the way that we do those things, and build something new to get to the next level, to go from 10 to 100, from 100 to a thousand, Whatever, whatever it is. I actually put this recommendation first because I'm assuming that you're gonna, you know, you're more likely to remember the last thing that I tell you. And I think this is almost the most overused truism in software growth, in my opinion. Right. I think too Many, too many CEOs and Alpha board members become kind of one note, chaos banjos just convinced that they're the only ones that get it, convinced of their own infallibility, you know, drinking their own urine, a billion dollars to cure cancer, whatever, you know, whatever it is. And I think there is, there is room for disruption, there is room for change, but you can't be the only thing that you do to help with growth rate. Knowing the inflection point, knowing that it's important, knowing that a different organization, process, product is necessary, that's critical, and having sort of the bravery and being resolute enough to make that change, not being sentimental about what's got you to this point, also incredibly important. But overuse this and your organization runs around cleaning up message that you've created over and over and over again, and it's distracting and it gets in the way of growth, which is the opposite of what you're looking for. I think one of the things I say to individual manager or people transitioning into management for the first time, or just people who run organizations is there are a couple of ways to show up when people bring a problem, a question or request to you. You can show up as a vending machine and you can show up as a slot machine, right? If you think about the vending machine, your employees really, this is the thing that they want. This is the thing that teams are looking for from you as a leader. They're going to come to you they're going to hit C7 and a Snickers is going to drop out. Like, I need this, I need, I need RSU for this person. I want to hire someone here. I want to do this thing. I think our customers need this. They're just looking for a series of yeses and some consistency. And I think it helps with growth, it helps to push, it helps with balance. If they come to you looking for Snickers and what they get is, you know, cherry, Lemon anchor, I think being a little more random in a way, you know, making them a little bit uncomfortable and having them think twice about what they're asking for because they don't know what they're going to get. I think that's important in leadership in companies and in management. Otherwise you're just going to keep spinning the wheel, right? You have to sort of play the slots once in a while you have to go to the casino. You know, sometimes wrong, never in doubt. These are important. I'll give you an example of an inflection point. So we go back to 2015. We have an edict from on high that we are going to be a billion dollar business by 2020. We're looking at the plans of our actual book of business and we're preparing for an all company event. Most of the company is going to Whistler in Canada for a sales kickoff, which is a company kickoff we're launching. It's a big deal. We're already a public company at this point, so we're living our lives in public. And we have an upmarket business. We have a down, we have a sort of repeatable transaction business in SMB. I think we look at the actual book of business and we look at the emerging products that we have. And some, you know, strategy guy, newly minted MBA from Harvard Business School comes in is like. And he runs thousand Monte Carlo. He runs a Monte Carlo analysis thousands scenarios and figures out what are the most likely ways that we get to a billion. And the clear conclusion is that we need to keep launching products and we need some of those products to grow, add on, expand the tam, increase ACV with customers. All of the things that you would expect us to do, right? What is interesting about this as I look back at this analysis is it was complete bollocks, right? It was actually, it was wildly wrong and incorrect, which is okay. It's okay because it actually taught us the discipline of portfolio management. It made us, you know, think about a problem that I think a lot of SaaS startups face is if you only have one product. If you have the monolith, it's a monolith in code, it's a monolith in attention. It's a monolith in the way that you sell. It's a monolith in all these other ways. How do you, how do you break out of that and expand the your horizons? How do you, how are you deliberate about the markets that you serve and the products that you serve in those markets? Right. And I think it, it, you know, we reached a billion, we, we reached the goal, we reached it differently by taking a series of different decisions and learnings along the way and knowing when to pivot strategy. So, you know, sometimes wrong, never in doubt, it was okay that we were wrong. The second sort of area to think about and have a conversation about is how we think about time to value and delivering here. I think exogenous factors really play in customers. They're trained by the giants of the Internet, the giants of service. I think this is true of all customers. The adage used to be that you can have good, fast, cheap, pick two, you can't have all three. But you know, we've been trained and we've learned that great, faster, tremendous value. It's available to us, it's what other companies bring to us. And so we have to, you know, you have to choose what kind of company you want to be, what are the important things. And I think as you go from SMB to a market, you have to choose how to serve those segments differently because the needs are very different. And you have to figure out if you're going to bifurcate the business, how you're going to show up for those customers and how you're going to build experiences for them. Another example from Zendesk. So Zendesk, founded in 2007, zero revenue. I think over the period, you know, I joined in 2010, over that period, got to a whole bunch of different customers. And I think in 2011, basically we hired a CRO and he came in, did a whole bunch of analysis on the business, did a whole bunch of different things and said this is we're going to go in this direction for our growth business. We had customers that had scaled significantly, primarily in the sharing economy, but social media and otherwise. And it was really interesting at that point to think about the web, try buy experience that wasn't going to work for them. What would replace it with, with. And so we hired our first salesperson at 7 million ARR. And I think a lot of people in the company were Skeptical about that, right? You know, lovely human. But I did used to tease him, you know, he would come in and be like, oh, I just closed this deal with, you know, startup, blah, blah, blah, for a thousand, you know, a thousand mrr. And we would be like, dude, a dog with a node in its mouth could have closed that deal. If you won here, they would still have bought, you know, send up this kind of thing. And that was sort of the way that we thought about it. But as the, as we move forward, what we began to see and we hired more salespeople is that the customers who were touched, where there was that sales interaction, their NPS was higher, they expanded more, we got a, you know, the ACV of the accounts was bigger. All of these, you know, benefits accrued. And then lo and behold, 18 months, 18 months after hiring the first person, we were at 70 million ARR. Like it was just this, you know, jet fuel that we put on the growth engine, right? It made the flywheel spin faster. However you want to, you know, choose your analogy, that was, that was incredibly important. But going back to that moment, it was a key moment. And I remember two things happening, right? Firstly, the new CRO, he wrote a white paper over the weekend on customer service and he put it up on the website and he gated it with a form to, you know, capture people's email and everything else. And a friend of mine from Atlassian, he pinged me, he's like, hey, you know, 2005, what year would that have been? He's like, 1995 called, they want their marketing strategy back. And at the same time I received a. Which is kind of true for the way Atlassian works, right? It's a developer led sale, it's Discover, try, buy. It's viral. Things go from person to person. At the same time, I received a empty iPad mini case from Box and it said, hey, we're Box with this document storage platform on the web, we're disrupting it. Businesses take a meeting with us and we'll give you an iPad mini to put into this case. And I was thinking about, wow, what is that? What's the cact of LTV ratio on that business? But it totally makes sense, right? One business is showing up as, you know, low cost of customer acquisition, trying to build a business through product, product selling itself first. The other is, it's a CIO sale. It's like a bigger decision to buy. And so they're, they're moving forward in different ways. And it was as I, as I looked at those Two alternatives, the red pill and the blue pill of growth. You know, it was. It was clear that there were choices to be made. And I think we eventually learned to segment the business so that we treat one class of customers with, you know, we give people the option basically to choose the navigation path that they go through, but we treat them differently in sort of an interesting way. So that if you're looking for that supported touch experience, you can find it. And that definitely grew our business. But if you're looking for the rapid. I just don't want to talk to anyone. I want to deploy that is available to you. And I think one way to attack this problem is to give people a choice and let them do it and build the business in the other way. I think the other thing that has to then match to how you show up for the customers is how the product shows up and is priced.

Right.

All software innovation is a brave act of either bundling or unbundling things. And, you know, the pendulum swings and you go through bundles and you go through individual products and you do things differently in different ways.

Right.

You know, this image is interesting for me because someone has spent significant time collecting massive amounts of trash and recycling from around and turned it actually into a livelihood. Right. I think about the, you know, the Microsoft PowerPoint example. I think it was bundled with Excel in Office in, I don't know, 1999. Who used PowerPoint before that? No one. Like, would we be using. Would it be ubiquitous or as ubiquitous as it is now if it hadn't been bundled? No. So bundling can bring you kind of this great experience. And we've gone back and forth on this. If I go into Zuora, our billing system, I see that there are seven pricing models. And the reason that there are seven pricing models is because we set our stall out early for how we were going to treat existing customers and what we were going to do. The reason for that is documented on TechCrunch and elsewhere. We had a pricing debacle where we did raise prices and changed the game for customers, and they were really upset we'd broken the bond of trust with them. We hadn't been empathetic towards the way that they wanted to buy and the way that they wanted to use Zendesk and had a very negative outcome. It actually precipitated the genesis of one of our competitors, funnily enough. And so after that, we've always used legacy pricing techniques to say, you can stay where you are and you can move. And, you know, new executives come into the company and they're like, I think customers are gaming the system because we give this choice, give them this choice and they do what's best for them. And we're all like, yeah, I know, isn't that awesome? You know, they pay us, it's fine. It's great that they have choice and it's great that they can buy the product the way that they want to buy it. But there is something to be said for bundling. There's also it's hard to do because you know, you're always chasing this theoretical tam. There's always an expansion that you could make by increasing share of wallet with customers, by, you know, adding the next product and the next product. And it's a, it's a vector for growth. It's one that you can't ignore. So it's a difficult choice whether you simplify for customers or whether you pull things out. Right now for us, we just launched a new bundle. We're definitely the pendulum is swinging in that direction. I don't know if it's going to swing back again if ala carte is going to become more important again because of the nature of our business and the nature of sales and the way it works. Third and final section is about trust. And it's not so much about trust really that there's just some ideas I have around choosing a posture for yourself, choosing a culture and thinking about how you want to bring forth that culture. You will, you know, you will hire people, who will hire people you will never meet, who will hire more people you will never meet, who will represent you, you know, and your, your message, the way that you think about the company, all these things will, will become progressively diluted as you move through that. We often talk about responsiveness, transparency and trust has been these characteristics of a great customer service business, right? It's the, we've been taught to expect this by the best brands and it's the way that we like to be, to be served, to be communicated, right? You want, you want the brands that you deal with, the companies that you deal with to be sort of open and honest and share things in that way. And I think consistency in the way that you show up, you know, tamping down behavior that you don't like internally, you know, these things are really important, but most important is, you know, choosing what your posture is, right? Listening and having the dialogue and it's, you know, it's, it's sort of easy to overestimate your importance in your customers lives. You're probably not that Important and that's okay. But then it's also weird, right, that you know, through, through consistency, through brand growth and everything else. You know, like I'm a huge dork. I mean this, I'm the CTO of an uncool customer service software company. But you know, when we go have conferences for our customers, like we have super fans that follow us and they're into everything that we do. It's, it's bizarre. But that's because I think you build the bond of trust and you are consistent and you do what you say you're going to do. And if you're not going to, you share with them the ideas that you're not going to make it or it is going to be different. Super important I think to build in that way and to think about things in that way. And as you make those changes, right, you have to decide how disruptive you are going to be. Right. So I remember we hired our first head of, I think he was running Southern Europe in Paris and I was talking to him and we were talking about the self service business versus the other assisted business. How we know what the motions were going to be and the business as it stood at that moment in France or in Paris in general. He's like, Adrian, you cannot sell a paperclip in Paris without lunch, right? You have to touch customers. You have to honor the ritual of connection, of building trust in that way versus I think the preference in other parts of the world, certainly in the US for less meetings is better. Some things I just like to have taken care of without necessarily having that connection. I think as businesses what we have to choose is which of the rituals are we going to respect and which do we think we have agency to disrupt. And these are difficult choices, right, because you may not know that market so well, you may not know what you're able to do. There's probably a reason, if you think about the way a lot of companies run their businesses that we have sort of very similar organizations around. You know, you know the North America, uk, Ireland, Australia, New Zealand and these kind of things. But then wildly different business for Japan, it runs in a different way. And that's because people tend to respect those rituals more. At the same time you have, you know, you can disrupt, you can do things differently. You have this choice to run a different kind of business, right? It's, you know, you can look at what other people do. It's important not to confuse someone else's website with your own reality. It may not be as easy to see that it may be deceptive, but take inspiration from those around you is a thing that you can do. And then I think it's also important, especially as you move from SMB to upmarket, to hire leaders at the right scale.

Right.

It's, you know, most founders, most company leaders are temporarily embarrassed billionaires, they know they're going to get there in the end and they want to hire people who have seen the movie before of running at that billion, of running at that scale. The challenge is those people might not be doers on the level that you need. Right. You know, it's great to have a king, but a king needs a court. And do you really want to hire a jester right now? These are questions that you have to ask so you can get the right level of person for your expansion. You know, good enough or practical enough that they can build that business, but not too out of touch that they don't actually serve a useful function yet until you add another hundred people. I think everyone has a range. Still trying to find mine, but I'm pretty sure, sure everyone has a range, especially in sales, which leads to thinking about differentiation of message. It's as you, you know, as you differentiate between SMB and upmarket, it's important to think about how you show up and the way that you speak to your customers. Right. As I've said, you know, you need to really understand your importance in their lives. Right. You're probably unimportant until the moment that your site goes down or you have an outage or you're hacked or that's fraud or some other terrible thing happens, right. And at that, you know, I often Zendesk, that's the point at which I come in, right. Is to go speak to accounts in moments of disaster. As the cto, you know, I think of myself as the grim reaper of Zendesk in some ways because that's, you know, I'm going and collecting the churn notice in the worst case scenario. But you know, that's how you, that's showing up digitally or showing up in person. That's the authenticity that you want to bring. And then differentiation of message between the legion, the group, the few and the individual is extremely important.

Right.

We all see tone deaf product launches at the wrong time. We all see tone deaf notices that customers don't want to hear when they're deep dealing with a problem with you or they have some other thing that is going on. Like hyper personalization is a thing that you need to do in communication. And I think it is Very, very hard to maintain authenticity in mass communication that is true to brand and true to the way you think. I think it's one of the things that we struggle with the most. I often find it interesting, a little bit inspiring to go out with new kind of real enterprise salespeople that we hire. Right. You see them adapting the language and the goals and the KPIs of the customers that they're talking to.

Right.

It's never about us or our technology or anything else. It's always about their problems and what they need, how they need it, when they need it, how we're going to help them with that. I think that pivot around understanding the importance in messaging is a key part in some ways of, of growing up to deal with ever larger companies and understanding the complexity of their use case and the complexity of their problems.

So from a takeaways point of view.

I think there are sort of three key things, growth from SMB to upmarket that need to be thought about and need to be, you know, you need to challenge yourself on. Firstly, like disruption. Like how much disruption do you want to put into your business? Right. I believe it's an overused tool, but I also believe it's an incredibly important tool. And those big choices that you make about new org, new process, new ritual, destroying the old God, those are critical. And so you have to be alert to the moments when you would use that tool. You have to think carefully about how you would do it. And I think as I've said, a little bit of unpredictability, even if you're not at an inflection point, is a good way to flex the organization and put it under some stress and have the organization really challenge itself and not just keep on rolling.

Right.

An SMB business can be this wonderful flywheel that just keeps on turning, that just keeps on moving, that just keeps on growing. But if you get into a comfort state with that, it will be a slight, a flywheel that spins progressively slower. You have to figure out how to put new energy into the business. Second thing is be deliberate, right. How do you balance the effect efficient SMB business where it's about mass touch, mass communication, great experiences driven by product virality, driven by product against, you know, the high stakes, high calorie, really solid upmarket motion that can just being, you know, incredibly valuable to the business and incredibly valuable to growth. You have to be honest about the cost of customer acquisition and you have to understand and make sure that you're applying the right tool to the right customer segment. And making each customer segment successful. And then finally, I think honesty is important, right? You have to make hard choices. You have to be resolute and disciplined in those choices as you make them. And you have to think carefully about who you want to be as a company, how you want to communicate with people, how you want to sell to them, how you want to price, what the culture of the organization is going to be and how you're going to maintain that culture. When you get to 5,000 people.

The.

Culture dilution could be a real problem. The behavior dilution could be a real problem problem. And so you need the reinforcing mechanism to own that because you probably have a really strong good idea at 50 people, at 100 people of how you want to be when you are at 5,000 people. It's just making sure that that is constantly reinforced in the messaging, in the design of product, in the design of all of your materials, like how you own the voice and the tone and how you know what you, what you do in that moment where you see something that someone's prepared for customers and you just face palm because you're like, oh my God, I can't believe we are that company now. We have a web form, gated white paper, we have whatever, like you have to internalize how you have to externalize actually how you're going to deal with that and really believe about, really believe you, your culture, the way that you show up and the things that you do for customers will take you all the way to 1, 3, 5, 10 billion, whatever your ultimate goal is. So with that, my top takeaways, I think I'm gonna stop sharing and we're gonna switch over to questions. Please put your questions in the chat and I'll begin. I can answer some of those hopefully because before we end up. So let me stop the share there.

Wonderful, Adrienne, thank you so much. We've got plenty of time for questions and they're just starting to come through. So I am going to read as they come in. So please drop your questions in the chat. We've got plenty of time, so let's get started. First, how can you balance decisiveness with realism? Any tips for course correcting for decisions that have a less than desired outcome?

Well, I think, you know, all businesses, SaaS, businesses in particular run on a regular cadence of measurement and the measurement that they run, you know, the quarterly annual planning, long range planning, these kind of things, the rituals that you go through for yourselves and for the board and for budgeting and ultimately for the street and those, those moments, inflection, moments of cadence of the business as your business grows especially become really useful when you want to think about how, how you want to change the business or do something. Right. The way we, you know, success is measured in growth. Growth is the crack that we're talking about. It's the, you know, that's the thing that everyone wants to smoke. They're interested in growing companies, the actual revenue numbers in some ways or they're almost immaterial. And I think identifying is it people, is it processes, is it product, is it pricing? You know, which of those need to change at this inflection point to move us forward? And you know, the, the thing that we always want to move forward is growth. You know, growth was here, growth was X, now it's Y. Growth was Y, now it's Z. How do you want to change that and affect that? I think taking a moment as a whole team, as a whole company team and deciding that is super important.

Wonderful. How do you know when to pivot from chasing sales to focusing on product or vice versa?

I think that. From a pivot point of view, I think you should always be chasing sales and you're always focusing on product. Right. The emphasis. It's a good question of when do you need to build up that sales motion more? When is that the focus of investment? I really like the tool, haven't always applied it evenly, but the tool of deliberate portfolio management, sector investing, where you can look at the business of a pie chart and it's like, how much is going into products? Eventually you report to the street, what is the percentage of revenue that goes in R and D? How much is going into sales and marketing? And then internally you break that down, right? How much is going into SMB and what's the return on that investment? How much is going into upmarket? And then product investments are harder, right? Because yes, some features are clearly targeted towards upmarket, but a lot of features make the world better for all of your customers. And how you do those return on investment calculations, how you balance those competing forces is really hard. One thing I do see as an anti pattern is that it's really easy to show a CFO the number in a spreadsheet, which is if you add two more salespeople here, you'll get X coverage. We generate X pipeline, it will generate Y revenue. Right? There's a really easy straight line versus. I think if we redesign the product, people will be happier, we'll sell more and we'll get more new customers and everyone's like really? But I think the latter. And so I'm a product guy, but I think the latter is often more valuable versus the easy morphine drip of add more boots on the street and we'll get more sales.

Yeah. Kind of that scripted model. What are best practices for clearly communicating bundling and or unbundling products to customers?

I think honesty and transparency are the ultimate best practices. And then I think you do have to figure out, are you going to support legacy pricing? If so, how long are you going to support it for? Are you going to give them a good experience? Right. Ultimately, sometimes you do have to cancel product. Right. Or you do have to change the licensing for various reasons and that's okay. Then I think it's just about clear communication and people will be salty with you. And these are the moments where I'm like, okay, I'm going to talk to you one on one and we're going to have a conversation and you're going to yell at me and that's okay because that's what I'm here for. But communicate, own it and have empathy for the customer experience. Especially in small business where every, you know, literally, you know, every penny really does count and they really care about the money. In particular they spend on recurring services.

Very true. Perfect. And this goes into Next question, is more SMB focused? How can teams make sure SMB customers still feel the love when there are other demands from a growing base of enterprise customers?

I think that is. That is a challenge. Right. And I suppose the challenge is how do you make your mass communication or group communication as effective and regular as your individual communication? Right. More of your budget is going to.

Shift into sales enablement, like talking to.

Your own people versus talking out to your customers. Right. It's just a natural part of progress. As you hire more salespeople, you know, be spending money on gong and analyzing the conversations and running all this training at the same time. There'll be some sort of like, oh yeah, we can probably do three in product messages and two campaigns to our customers. What do we want to sell them this quarter? I think that's how they begin to feel. If they're just, you know, cattle to be milked in some ways for revenue, then they begin to feel disconnected.

Right.

And I think one of the things I love to see is at the moment digitally, but ultimately previously in person is the building of community, even for SMBs.

Right.

I think if you run a meetup for customers where someone from the company, someone from products is going to show up, it's super powerful that the two person business feels like they don't have imposter syndrome in the room. It's okay that they're there along with the person running the thousand person call center. Right. And you know the. Yeah, the economics of that don't totally make sense, but that's absolutely okay. Right. You're building a brand and you're building culture and SMB wise word of mouth. Word of mouth and price are the two things you've got really, that are incredibly important along with a great product experience.

Yeah, goes a long way. Question from Susie. What are some of the top challenges that the Zendesk team is prioritizing for this year in each of the customer segments?

To a certain extent, you know the, there's a meta challenge above that, which is the one that we've been talking about, which is like how do you balance priorities between the two and figure out, you know, return on investment and where to invest and what is the most important? And I think that is always each year that is the ritual that we go through that ends in a wrist tied knife fight. In some cases in fmb, I think that we're looking at removing friction, standing down the rough edges of the product, making sure that the onboarding experience is there. And I think a lot of the time in SMB, one of the things that you bring to the table as a SaaS vendor is an opinion on how software should be implemented and how it should be done. People are buying your experience in a box, right in a software box. And I think you need to put more and more time into that over time. It pays off in upmarket as well. But thinking about the prescribed experience and the real way that you want to show up for those customers continues to be important from an investment point of view. I think for upmarket there's a tax that has to be paid to generate trust with enterprise customers around the reliability, scalability, stability, security, these kind of things and certifications. I think it's important not to let that drain the bucket of investment in.

That portion of the business.

It's also important there are table sticks, things that you just have to have in place if you're going to be able to have a conversation. But at the same time there's a set of different challenges that they have, which are the challenges usually in my opinion of human scale, when you're running a large organization with a bunch of humans, how do you manage those humans, get them to communicate, optimize them, measure the quality, etc. Etc. And I think the Balance in upmarket for me is often making sure you get enough investment in product. You don't put it all in sales.

And enablement which is.

It's a hard, it's hard to do because one has a clear straight line to return. The other is more of a business case. And then secondly, how do you balance between sort of Ility's scale and infrastructure versus building, building the right product experiences for the, for the buyer, for the champion.

Similar kind of follow up question to that in that respect. Can you share insights regarding the change management, change management aspects involved?

Change management, sorry, change management of customer segments.

So the challenges that you're having through each customer segment.

I think I don't totally understand the question, sorry, but I'm just going to talk anyway. I think that from a change management point of view, customers, you know, it's good to over communicate with your customers but sometimes you can annoy them, right? And it's good to manage their experience in product like they want the features that they want. But all of the other changes that come that bring the features that they want are seen often as a disturbance and annoyance. I struggle a lot as a SaaS company with this old school idea like Salesforce has two releases a year or three releases a year that are very disciplined, right. You can continuously deploy, but that's when you make changes for customers. I think we definitely think about how to make sure that the introduction of new process pricing software or even people into an account, we're not bombarding customers with too many changes all at once. And it's something where they can a certain extent opt in, we will push, but they can opt in and make changes as they need. And we do that with pricing, we try and do that with features, we try and do that with environments. Your economies of scale as a SaaS company, you know founded upon having one product, right? Zendesk has one product, you know, Zendesk superpowers, we have one product that serves people from 1 to 20,000 users. Also the weakness of Zendesk sometimes is that we have one product that has to serve everyone from 1 to 20,000 users, right? But that's the beauty of SaaS economics and having slowly managing the change for customers and giving them optionality sometimes can leave you with what is effectively a fake two version deployment which you can't sustain or should not sustain for too long. And you have to do whatever you can to get customers to move because your economics are based on having one version for everybody.

Awesome. Next question. Paulo, on the quote, everyone has a Range. If you're entering a new market or geographic region, would you hire sales head, slash GM type of person or more of a sales head? Only if you could expand your thoughts on that.

I think that your first region employee needs to be, what is it they say in baseball? A five tool player. I think you need someone who can, even if they can't do everything, they can fake it. Because people often say that product managers are mini CEOs, but they're not, they're just product managers. But I do think a GM in a region is really the distance. They have this distance. The distance of time is really the biggest distance in the digital world, right? The distance of time zones. And they have this, as we said, you're going to charge them with choosing the rituals to respect and the rituals to destroy with building a culturally appropriate business. And so they need, they need a sense for product, for marketing and obviously for sales and for team building. And they're going to establish the culture in that office. Our regional sales offices do have, well I think, I think 50% of our engineers are also outside of the US and so we've set up regional offices and had cultural challenges also within the product that we built. You know, it's like 500 humans distributed around the world. And we bought companies in Montpellier, Singapore and Krakow. But I think that they will establish this beachhead that will be how you want to be. And so you need a really close connection to that person and they need to kind of be able to understand, do it all. So the challenge, you know, eventually then you need a true straight up kind of head of enterprise sales deep in that market. But that comes later. The person who establishes is a utility player, is an athlete with a go to market focus.

Yeah, that's great, thank you. Next question, Bernard. How do you ensure you hire the right sales person? How do you ensure you hire the right salesperson at 7 million ARR? We're not there yet. We're around 2 million ARR and looking at our first sales hire. We're in Asia.

So we hired a chief revenue officer who had managed salespeople and was running marketing and sort of that commercial side of the business. And he hired the first salesperson and subsequent team. And I think that we hired an early salesperson who was, because it was at that point we were, you know, we were web try buy. We were a product driven company. So we needed that first person to be junior enough to be sitting on the phone and trying to close deals all day, but technical enough to be able to at that point they have to build their own demos and be able to speak to the customer and solution for a customer, they get on the phone with questions and solve those questions right up to that point. We use customer advocacy, our support organization to do sales. Right. So you would start a Zendesk trial. We would say, hey, I'm Adrian, can I help you? I work in customer support for Zendesk. Love to help you get your Zendesk set up. Post that the salesperson kind of took that over, which meant that they had to be sort of for us, they had to be closer to that process. And so I think for Bernard, I'm interested. His challenge is given how he sells today or how they sell today, what do they think that sale will be when it becomes human assisted? I think it's probably not going to be jarringly different. So you want someone who can build the relationship and take the existing go to market motion and sit there and do it eight, ten hours a day, every day and drive it with, you know, some skill and alacrity and some, you know, hopefully bringing joy to customers, but probably not too different from the way it's done online.

Awesome. Very interesting. Bernard said that was really helpful. One more question we've got here. Let's see any changes in the GTM playbooks from what the team has learned over the past year. What's working well and what's not.

I would say I'll go to market.

Playbooks really.

Change when I revisited. I don't want to say constantly, but regularly, like really regularly.

How often is regular?

I think annually at least. So, you know, in terms of business cadence, right. You tend to have an annual sales kickoff event where basically, you know, used to always traditionally, physically, maybe it will be physically again. But currently digitally, you bring that team together and you reinvigorate them with stories of products, with how to sell. You take them through training. You know, maybe you run some kind of fight club where they all have to get off and pitch against each other. You know, there's all these, all these things that happen which are a little bit mysterious to me. As you go through that motion, as you go through and do things, I think there's. You should be thinking about a lot of preparation for those events, in my opinion where how we want to sell next year. Like if you're opening up a new target branch of customers, if you're thinking about new markets, I think how you want to show up and sell should be written down and should be propagated. Right. Going to remote work has helped. I think a lot of us understand the importance of the discipline of writing shit down, to use the vernacular. And I think that that is important as so important as you're scaling your organization. And I think in sales, go to market playbooks the way that you, whether it's running, the way that you turn sequences into leads into other things, right. I think someone should be kind of working on all the time. You don't want to push change constantly into the sales organization you want them selling. But when you do take that moment to plan and change, you should use that moment. So for us lately, just Zendesk wise, right, we think there's an inflection point in the industry around the transition to conversational business. The messaging experiences being the first point of entry into customer service and the way that works, right. That requires a different selling motion in a way. Like it's more important to have a proof point for that to get some kind of deployment either on the Web or mobile SDKs and build for that versus dropping a contact center into someone and saying, all right, just put the phone number on the web and there you go. I think that transition we're taking our sales teams through, right? We have transitions that we're going through in motions to sell our Salesforce automation tool and do other things. And so.

I.

Like that.

We can really take those moments to touch the people that are going to be speaking to our customers and really having sort of those fulfilled conversations.

Love it. Getting some very, a lot of thank yous. It's really helpful, so appreciate it. We have time for one more question if anyone wants to drop it in. But we are going to drop in a link to the Zendesk booth. So they are giving away a hundred dollar Amazon gift cards and there are 10 up for grab. So make sure you stop by their th, enter in the raffle, check it out and that's it. Last question. Just people saying thank you so much. Love it. Superb dialogue. So we really appreciate.

I was going to say the $100Amazon gift card is the iPad Mini of 2021, clearly.

That's right. Love it.