InDinero at '16 SaaStr Annual: 20 to 200 Employees in 24 Months

Matt Holler and Cloud Apps Capital Partners. It is my pleasure to introduce Jessica Ma, the founder and CEO of Indinero. I had the pleasure of knowing Jessica for a number of years and really pleased to see the business that she's building, as well as Aria Poehler, who's angel investor as well as an entrepreneur and a veteran in Silicon Valley. I'll let them take the stage. Hey, how are you?

Very nice to see you.

Good to see you. Ariel.

Hi. Thank you. Nice to see you.

Oh, yeah. Hey, guys. Hey, everyone. It's really cool to be here, actually, because I was here at Saster a year ago and it wasn't quite as cool as this.

Yeah, no, it's pretty cool. And actually, I was just remembering this is the building where I became a US citizen like 15 years ago.

Wow.

So, yeah, I mean, I figured we could start maybe with the business and the time we met and investments. You know, when I. When I first met you, I didn't like the business. Actually, I didn't like you that much either. What changed? What did you do so that a few years later when I came back then I did get involved with it.

Yeah. So we could, like, tell the short story. So I'm Jessica Ma, founder and CEO of Indinero. We do accounting and tax for businesses. So we give the software and we give the service to take care of all of the finances, all the back office for our company. And we started 2010. I was going around pitching the service to investors, and I was fresh out of college, and Ariel was on my list of investors to pitch, and he wasn't interested right away, I could tell. But we got him on board three years later. We started off as a mint.com for businesses, so we thought, all right, we'll make it really easy to show your business financials online in real time. But it wasn't actually a great idea. It was really, actually a horrible idea. I thought because business owners are. They got a lot going on. They're lazy. They don't want to look at their accounting. So that didn't work out. We shut that down, we pivoted, and now we're full service accounting and taxes. And that's when Ariel came on board.

You know, there's a really interesting point there, which is you. Here we are, it's SaaS conference, and I bet the majority of the companies are fully automated without too many people in the back end. But can you talk a little bit about how many employees you have providing for the customer standpoint? It's a computer, but what's behind that? It's not your classical SaaS business.

Yeah, so we have a really interesting business in that we have a lot of employees for being like a relatively early stage startup. And the challenge there is that when we first started the business and when we were pitching to investors, they're like, I'm not sure if I like you guys because you have such a heavy service component and I'm not sure how this is going to scale. You guys are probably no better than a consultancy. That was the big concern that everyone had. You even had this right. We talked about this in the early days and for me I didn't really have much of a choice. I thought, all right, like this is the thesis of the business, somehow we'll figure out a way to scale it by automating better over time. But that wasn't really certain up front. So yeah, of the 200 employees, maybe like 80 of them are working on directly servicing our customers. So it's a lot of people doing that work and we're happy about it. We had this kind of weird identity crisis for a while where we're like, wow, are we a software business, a service business? And for our investors sake we had to say we're a software business. Like screw the services. And I would say that out of my all hands and all my employees would be like, are you kidding me? I'm working at a software company and you guys don't even recognize my contributions. I'm making customers successful, I'm making them happy. And you guys don't even care about us as service people. But I've kind of shifted gears and now I'm trying to really say, look, actually we're happy about providing services and this is something that we're going to be proud about and this is going to be a huge differentiator for us that no other software competitor in the market will be able to have. And I think that's the shift that all of us should start making as well.

Yeah, I mean, for me one of the key takeaways was that providing a solution to the customer is needs to be the top priority. Even more important than what are the margins and the economics? Because once you have that, I think you can make other. It's easier to work around that as opposed to, you might have great economics, but if the customers are not happy, then you're not going to get very far.

That's absolutely right. Like when we first started the business, we were just software, we had no services and we were so anti services. Like I Come from a computer science background. I've been programming my entire life. Services were the last thing I wanted to do. And I went and I visited my customers. Like I went to their office and I watched them use the service and they were saying, I would pay you guys so much more money if you just fixed my accounting problem for me. Like if you not just gave me the software, but you gave me like an Indian era certified accountant to work on this and just give me what I needed, at the end of the day you would be worth like a hundred times more money.

And the beauty is your margins are pretty good. It's not like you ended up in a situation where you have a great product but a crappy business. I mean it's a healthy.

Oh yeah, we have like Salesforce and HubSpot level margins so we're like actually quite efficient. But it wasn't that way when we first started. So the thesis was, all right, we're just going to bite the bullet. We're going to have to be heavy services for a while. We're going to fake it till you make it and just tell investors and our customers, look, we'll just have to get better at automation along the way. And we're still not perfect. We've still got such a far way to go. But yeah, from a business perspective we're able to scale. So we're capped on sales ability, not service capacity right now. And our gross margins are at the Salesforce and HubSpot level.

So we were talking before about things you would do, different mistakes, et cetera. One of the areas that came up was quality of execution versus speed versus how fast you grow. And I don't know if you can talk a little bit about that, particularly in Silicon Valley. This grow, grow, grow mentality and to what extent you've been riding that wave or not.

I mean, as a first time founder, I've definitely made a lot of mistakes on this at Saster too. I had a lot of stress when I came to Saster last year because everyone here is trying to grow like 5x a year, right? Like all of you guys are talking each other and you're thinking how do I grow faster? And I remember feeling like really incompetent. I felt like I was not going fast enough after the last Saster. That's how I felt. Because everyone else was killing it, right? And crushing it. Everyone was crushing it and I certainly wasn't. I'm like 2x3x. I'd be happy with that. And we talked recently at our last Board meeting. And the feedback that they gave was, well, why do you have to grow that much? Is it about the business or is it about your ego? And I really thought about that over Christmas holiday and a lot of that was around what I wanted. And that's something that I think I still struggle with and I think all of us probably struggle with here. There's just a lot of pressure to grow and that's actually not great for the business because I was thinking only about sales and marketing. I wasn't as focused on improving my customer success, on improving my culture. I mean, 200 people, right? We really have to care about training and culture more than any of our SaaS peers because we're bringing on dozens of people every single month to the company. And so now I've got a full time professor. All he does is facilitate training at my company and I've got like a small group of people who have to make sure that we have a great culture. And that's stuff that I wasn't thinking about as much even three months ago.

So, yeah, I mean, yeah, the recruiting and culture, that's one of the areas that you've mentioned has been where you've evolved the most. So I don't know, maybe you can talk about in the recruiting front. I mean, how has that changed, say from a couple of years?

Yeah, I feel like I've gotten way better at recruiting. I mean, when you hire so many people, I feel like our experience is better. Right. So we could look at candidates and just pick out the better people right away. And we have seven full time internal recruiters now. And that's something that I didn't do early on enough. Like we had like one full time recruiter, but we are still always capped on how many people we could hire. Right. That takes up all of our time as founders. That's the. I mean, I've heard some people here say it takes up 50% of their time or more. And when we have good recruiters in place, they're doing a lot of the interviewing, they're doing all the sourcing. And what I started doing just in the past two quarters is now we're listing out here are the top criteria for the people we want, here are the questions that we're going to use to evaluate them against. And then here are the projects we're going to make every sales rep go through. Like, we don't just interview a sales rep, we make them do mock phone calls. I've had them call like low quality leads to evaluate them. Same with Customer success people. I mean we interview our engineers this way. Why don't we do this for salespeople and for customer success people? So we're a lot more methodical about that now than we were six months ago even.

I mean the other related point you were telling me about is in terms of when you need to bring like upgrade the team. I don't know if that's the right word. But when somebody's not scaling or you need to bring additional experience and making sure that people get enough of a heads up that there's planning around that as opposed to people being surprised.

Yeah, we've been like just way too reactive over the past two years. Like when we were at two people, like just me and my co founder in our bedroom, we could say, all right, we're going to hire these five people and then everything will be okay. Like who here is thought all right, once I hire these five people, I'll be so much happier. You fill those five roles and then you're still unhappy. Right. Because now you're worried about the next hires. That's where we were. And I actually read my diary, I keep a diary every day and I would write this and I went back and I read the past five years and I always wrote, oh man, I'll be so much happier next quarter once I fill these three positions. And that's never the case. So now what we do is I've got a. Like this, we call it the hiring model and it maps out all the sales hires we're making, all the revenue growth in the company and based on how many sales reps we have that are up ramped, that will inform how many customer service people we need, how many account managers we need, how many accountants we need, how many tax people we need, et cetera. So it just pops it out in the model. And I could give that to my recruiting team 90 days in advance because that's how long it takes to fill a role with a really high quality person. So we need to make recruiting a lot more numbers based. We need to forecast the hell out of our recruiting goals. And that's something that you're not forced to do unless you're hiring like dozens of people a month.

The other aspect that becomes really important when you're hiring so many people and when you have like in the case of Indiana, distributed workforce is culture. So can you touch on maybe some of the things that you do to define, nurture and keep the culture?

Yeah. So I mean we take so much inspiration from Sappos and From HubSpot and all those other companies. From a cultural perspective, like core values are number one for us. I don't know if you guys have well defined core values at, but that's a big deal for us. We interview based on the core values. We do a lot of training up front for it and actually have a lot of our employees, actually all of our new employees, they spend a lot of time watching our online training videos before their first day of work. So they're all up ramped on what the culture's going to be like and how the company's going to function ahead of time. But I mean, yeah, we could talk for hours about culture and that's something we're still working on. Like we've had a lot of people who weren't fitting in with our culture and there are some things that like we just added a new core value, like radical candor. That's a big deal for us now and we didn't care about that earlier in the company. Also, KPI focus, that's a big part of our culture now. Like all of our sales reps, all of our account managers, all of our customer service reps, they have a personal dashboard that they look at every single day that tells them how well they're doing and whether or not they're in the red, yellow or green. And that's something that they swear by and absolutely love. But that only came into our culture in the past quarter or two because it's been getting impossible to manage all these people.

You were telling me how KPIs is something you wish you would have done sooner. So which, I mean, any particular ones that you think are really key to do? Like if you could pick a few, I wish I was doing this or that KPI from day one, what would they be?

I think it's easy to pick KPIs. Like we want salespeople to close deals. We want customer success, people to retain customers and upsell customers. I think the harder part isn't picking the KPIs, it's having the habits in place to make sure that all of our people are looking at these KPIs every single day to make sure that they're motivated to make them better by tying their compensation to those KPIs and, and making that part of the team culture where we review that as a team every single week, every single month. And that's just those habits and rituals only came into the company when we crossed the 130 employee mark. So it's more of the Rituals that.

Matter, by the way. We'll have a little bit of time at the end for questions, but in the meantime, if anybody wants to chime in a question, a comment, I'll try to. It's hard because the lights are. But don't necessarily wait till the end. What about, you know, as an investor? I guess one thing I'm always interested in is working with investors for you. Oh, wait, is that a question there? Yeah, go for it. Although I think maybe somebody can get a. It's always great when the audience participates and give us time.

By the way, if any of you guys are raising money, call Ariel, who's one of my favorite investors ever, and you could tell him any of your dirty laundry and he won't throw you out of the room.

Go ahead, go for it.

How did you know when to bring in your first in house recruiter, and what were the key skills you were looking for in that first person?

I think I actually misfired on my first recruiter. So the question is when to bring in your first recruiter and what to look for in the first recruiter? For us, we looked for just someone who had a lot of hustle and they were too junior. I wish I hired someone with corporate recruiting experience, not just someone who worked at a recruiting agency. Because people, these recruiters go from agency to corporate, and you want someone who's already been in the corporate atmosphere for a while. So now all of our recruiters come from corporate recruiting environments. I brought that person in as employee number seven. I could have. I mean, next time I start a company, if I ever start another company again, I'm gonna hire like an assistant and a recruiter. Those are like my first two hires.

Yeah. No, I second that. Yeah, There you go.

Hey, how you doing?

Hey.

Your employee base, are they all together.

Or are they dispersed around?

No, they're. So the question is, are our employees all together or are they dispersed around. And they're dispersed around five different offices. So that means that it's way harder to get everyone to communicate effectively together.

So what are the challenges that you've been. The communication challenges that you've had with.

Dispersed teams and what have you.

What techniques have you adopted to help enhance that experience between the teams?

Yeah, that's a good question. So, like, again, like, how are we enhancing the communication across multiple offices? I think that there are a few things. One, like, we do the conference calls where everyone's on the gotomeeting and you see each other on the webcam, and we do that team by team every week. So they all have that team feel. The slack group channels or hipchat group channels help a lot with that. So we don't have too much difficulty now. People are actually pretty happy with the collaboration. But we had multiple locations from a very early phase of our company and we had people working from home early on too. So we were used to that and that was baked into our DNA.

I mean, one thing I've seen is that when organizations have distributed people in multiple places and a significant enough percentage of the team is distributed, it's a lot easier than when almost the whole organization is in one place and then you have very few people remote because then they feel more left out. So I tend to say go one extreme or the other, but be careful about just having very few people because technology helps, but that, that makes it a little harder. Yeah, go ahead.

Hi. Assuming the same product mix and the same market you're going after now, how many employees will you have in 24 months from now? That's a really good question. Probably north of 500. And I really don't want that. We're really trying to trim down our need for more people and to make things more efficient. And there are so many ways to do that. I look at my model and I'm thinking, and it pops out how many people I'm going to have at the end of each quarter order. And we talk about it and we think, ah, this is really not great because more people, more problems. Yeah. So how could we make it so that salespeople could sell to fewer customers and get the same numbers? How could we make it so that customer service people could service more people, but it's still the same small team? That's something. How could software automate more of these problems that customer service has to jump in on? And I think we're getting a lot better at that. So at the rate we're going, it won't be 500, it'll be far less. But, but if you don't fix anything, we're going to have way too many people and I'm not going to know what to do with myself.

I tell you, managing a large organization well is a competitive advantage. I mean, one of the reasons I was comfortable with the Indian era model is I'm on the board of company called Freedom Financial, which already has 1,000 employees, but they're well managed. And replicating that, it's not easy. So I don't think it's necessarily a bad thing if they're efficiently run and there's A good reason. It's not. They are there for a bad reason. Is there someone there?

Great question though.

Yeah.

Hey, for an individual dashboard for customer.

Success, what's the number one metric that you track on a daily basis? And for an engineer or developer, what's the number one metric they track every day? Okay, so what are the numbers that customer success tracks and then what are the numbers that product slash engineering team track? So on customer success team, we track, we care about customer satisfaction. So if you've got green, yellow, red, and then what I think is the worst color, which is blue, Blue just means we don't know how happy a customer is. And that number resets every 35 days. So if you don't touch the customer in 35 days as a customer success manager, then it's going to turn blue. And that's something that we didn't do early on enough. We really sucked at that. But then also account management, we pay 25% of their overall pay is commission. And that's based on the premise that they're upselling more customers than they're churning out. So if we don't have 100% net revenue retention, account management gets none of their bonus, none of their commission. And I think that really aligns everyone really well. And on the product team, it's just like product engagement and how well people are using a certain feature that engineer is building.

So I was going to ask you, you have a lot of investors and what has worked well for you to get value out of investors? For those in the audience who have investors?

Yeah. So we have probably over 100 different investors. We did the massive party round and I Remember back in 2010 and 11, all the advice given was no party ramps, just pick two VCs and call it the day. Right. That was the advice. But for us or for me, I don't really care what the prevailing wisdom is. I like to just kind of think about it myself and decide what's best for me. And for Indinero, we kind of thought that we wanted to have a wide variety of mentors because I couldn't tell who would be the most helpful. Like when we started working together, I had no idea if you'd be the most helpful person or someone I wouldn't talk to more than once a year. And so by having the party model, that helps a first time entrepreneur better understand what they want. So how do we get value from it? Right.

And at the end of the day, out of those large number of investors, you end up leveraging a small Percentage. But that's okay because you found the ones that work. Is that part of the.

Yeah, that's completely right. I think we only really talk closely with five of those hundred plus people. And then those people I might text or call, depending on what kind of problem I have. So, you know, with Ariel, sometimes I'll just text him randomly. Hey, do you have 10 minutes today to talk about a problem? And so that's kind of my way of working with people.

Yeah, no, that makes sense. I don't know. Oh, yeah, go ahead.

Hey, so I want to say, first of all, you do a fantastic job of targeting me on your advertising, so.

All right, that's good.

Yeah.

Why haven't you signed up, though?

That's a great question. One of the things that. Okay, I don't really understand how your organization structured because I'm not inside your organization, obviously. The conversation started off earlier about, you know, kind of professional services revenue and the scalability of that and how does that affect margins, which, you know, I think traditionally people think about professional services revenue as supporting, you know, higher margin part of the business. Now Thomas Tongs talks about, and I think he's going to be speaking at this conference, but what he talks about on his blog is this idea of POD scaling, kind of reducing that exponential growth to sort of linear growth where you think about what fractional number of sales, client success, implementation, et cetera, does it take to stand up a new client. I'm kind of wondering, how have you scaled and kind of do you think in terms of that? Do you have a different framework for thinking? How do you scale your organization and make sure that it stays balanced? Because that's an incredibly challenging problem.

Yeah, that's a really good question. So Tom is a VC at Redpoint and he's got a phenomenal blog. You should all read it. And I've been following his stuff for the past five years. I love his material. And we basically copied that. We said, all right, Here is a pod, a bucket of, say, 200 of our customers. And for 200 customers, how many account managers and customer service people and other onboarding implementation specialists are we going to need in order to provide work for those clients? And that also gets popped out of our hiring model. I know how many sales reps I'm going to hire based on that. I'm going to get X customers, which means Y number of employees. So that's exactly how we do it. There are ratios. And the goal for a company like us, where we have high headcount needs is how do we reduce that requirement to have so many people? And we're looking at that basically every single month. Like, we have, like, after tomorrow, like, we're just going to talk for an hour and a half on how we're going to be able to trim down our efficiency better. So it's still an ongoing challenge. Great question, though.

I think there's a question right there.

Jessica, when you were going from 2010 to. I started reading about you, I think in late 2013, 2014, when you started blowing up. Like, I read about your friend having problems with co founders and all these issues. What do you think, like, attributed, like, your PR to your PR success? Because, I mean, the problem that you're solving isn't exactly, like, the most exciting problem to solve, really. Why do you think you saw so much success in the media? Yeah, well, first of all, I actually think of accounting and tax and financial management as being really compelling. Like, I think it's actually really interesting stuff. So I think that's the first part. And all of us could look at our businesses and think, oh, man, this is so boring and dull. But it's actually way cooler than that to, I have a great PR guy who helps me out. So a lot of props to him. And when looking for PR firms, I looked at a bunch of PR firms where you pay a lot of money. And then I evaluated a lot of PR freelancers and contractors. So, like, a solo person who had worked basically only for me, and they weren't working for some big PR corporation. So I think that's the key difference. So I talked to my PR guy. I talked to him every week for over a year. And that's what led up to some of our biggest hit stories, like the Ink magazine cover. That was. He and I were working on that story for a year, and no reporter would pick up that story. Like, we pitched Inc Magazine on it. None of the reporters liked it. And then one day, the president of Inc. Magazine calls and says, we want you on the COVID So, like, how do you go from that, from no results to cover? Like, that's just a lot of persistence in talking to your PR guy every single week to come up with refining your story. So for that story, you mentioned co founder problems. My co founder and I actually don't have problems. We're really best friends, and we live together. We're not romantic, but we live together. We're really good friends. And the story talked about marriage counseling, and we'd been to marriage counseling, like, once or twice, but then they loved the story. So much. So we went and got more marriage counseling so we had more substance.

So, Jessica, I'm curious. So the great pr, what has it helped with the most? Is it about customers? Is it about recruiting? Is it about fundraising? Because in Silicon Valley it's often not about the customers. What has it been the case for Enginero?

For us, PR is really good for recruiting and hiring. Like I thought it helped with customers a lot in the early days and it still is helpful. Helpful from a sales perspective, but it just brings talent in. That's really the best thing, I think.

Yeah, that's been my experience as well. Is that a question there? Yeah, no, go ahead, go ahead. Oh, hi, Jessica, you spoke about recruiting. Can you give some tips on how to load the questions when you're looking for a sales rep or SDR account executive?

So what kind of questions are you putting in there or.

Yeah, how do you go about qualifying sales reps and hiring a good one?

Okay, that's a good question. So actually what we looked for in a sales rep day one is completely different from what we look for today and same with any role. Like, I think we're just better at attracting better talent today than ever before. And I think the key thing for us when we interview sales reps, it's called the yoga pitch. So basically I want a prospective sales rep to pitch me on signing up for yoga. So they cold call me and then while they cold call my sales leadership and tries to sell them on yoga. And we picked that because we want to test their sales skills and something that everyone has equal knowledge about. I don't want them to pitch me on in an arrow because I know where they're going wrong. I don't want them to pitch me on their own product because anyone could pitch me on what they already know. So that's the key thing. And then we have a long list. I can send it to you if you ask me later.

So I think we're out of time, but I'm wondering if there's any last thing. We've spoken about a lot of things in the past, but forward looking, what are you most excited about going forward?

Yeah, sure. I'll stay around in case you guys have more questions. But I'm really excited about just learning how to continue growing in the company. And as we like double and triple and quadruple our headcount, there are just so many more problems that come up that I'm forced to deal with now that I think it's actually kind of exciting. So, yeah, it looks like it's a pain in the ass, and it is a pain in the ass, but I love it anyway.

I mean, that's the thing that I really enjoy about working with you. I mean, this is a challenging business, lots of. But you. You seem to enjoy it.

Yeah.

That's the way to do it.

Thank you.

All right, I think we're out of time, so thank you all. Thanks for the questions.

Thanks.

All right.