Live From SaaStr Annual: Stage A Masters - Wednesday

Sa.

It's. Sa.

Good morning.

Good morning, Good morning. Welcome everyone.

Hi there.

How are you?

I'm great, thank you. How are you? Great to be back at Saster.

Love Saster. Good to see you all this morning. Honored to be here with all of you and mostly an honor to be here with one of my absolute favorite CEOs in the entire world, Jennifer Tejada.

Thank you so much, Sameer. Appreciate you joining me.

I have long admired Jen's work as a SaaS CEO. Not just because she's an exceptional CEO and business leader, but I also love the way in which she leads and who she is and what she stands for. I know has been an inspiration to me and I'm, I'm very sure many others in our industry. And so when she asked me to join the PagerDuty board, which is an incredible group, a couple years ago, I jumped to the chance, just like I jumped to the chance to come join her here today to share some thoughts on this fireside. So quick intro on me. My name is Samir Dalakia. I've been fortunate to enjoy a 25 year career in this great software industry that we all get to work in. Most recently, I had the privilege of serving as the CEO of a company named SendGrid from 2014 to 2019. We took our little startup from 30 million through an IPO back in 2017, and ultimately an acquisition by Twilio in 2019 for $3 billion, which was a great outcome and a great team to then join hands with. And then we worked on scaling Twilio past well north of a billion of ARR. And that was great fun. And ever since last summer, I've been enjoying a lovely sabbatical, which has been horrific.

Very jealous.

I currently sit on the board at Pagerduty, recently joined the board of Service Titan and do a bunch of nonprofit work as well, including pagerduty.org, which we will talk about later this morning. So that's me in a nutshell. Jen.

Well, I'm just thrilled to be here. I'm Jen Tejada. This, I think is my sixth sester. Maybe I've been indoors, I've been outdoors, I've been in the city and now here in San Mateo. I'm just thrilled to see all of you and excited to talk about the PagerDuty story and what life's been like leading into our IPO and in the last two and a half years since we took the company public.

Fantastic. And that's, I mean, there's such an incredible, it's been an incredible year of IPOs already and I don't think I've ever seen in my time in this industry a pipeline as robust of IPO worthy companies. And so I'm sure there are lots of people out there listening that will learn glean lots of insights from the lessons you've had building this great company at Pagerduty. So let's start off so you joined in 2016 at PagerDuty when it was just a wee bit smaller than it is now. And then less than three years later in 2019, the company went public. So Jen, maybe talk the audience through a little bit of how did you know that was the right time? How did you think about that?

Yeah, I mean you're always making a pretty big bet when you think about the timing to go public. I think it's really important is to, to understand why, what are your reasons for taking a company public? Because the crossover into the public market is not an easy one and people tend to focus on getting ready and all of the compliance, readiness, the activities that you need to do. But at the end of the day you have to think about what is it going to mean for us to be a public company, what's going to change and will those changes be positive and will they help you to scale or will those changes get in your way? And for us, we had been working to make the transition from really winning in the SMB and the mid market in startups, in computer software, Internet segments and wanting to move into large enterprise and had a great early lead in our efforts there. But we really felt like we were quite well known with the developer community, but not so well known in Central IT and the Fortune 100 and the Fortune 500. So a big part of why we went public in 2019 was really to demonstrate to the market that we were a viable long term platform that could support largest enterprises in the world, the greatest brands around the globe in their digital transformation. And that proved to be a great thesis. Going public really has helped to put Pagerduty on the map with the executive community, with business leaders, with CIOs as well as the developer community.

Yeah, it makes sense. So a clear why driving it in PagerDuty's case for SendGrid, I remember it was we wanted to do some M and A and we needed the equity capital, but having a very clear and driving reason as to why.

And that's a really good point. I mean we did our first acquisition last year with rundeck and you know, the rundeck team is well integrated into our business. They're a phenomenal founding team. It's a phenomenal startup. But what's great is they're actually excited about the next stage of growth. And you know, going public is not always easy. You can't plan for everything. This was the morning that we went public where Paige, our mascot video bombed me on cnbc. So Paige became a meme as a part of our IPO as well. It was a lot of fun. One of the Fortune journalists actually wrote an article about pageie and Pagee now has their own reputation to manage.

Isn't that awesome?

Yeah.

And it is fun. And you want to celebrate the moment. I know you also talk a lot about team and making sure you've got the right team in place as you think about that transition. Maybe a few words on that.

Sure.

I mean, I think the IPO is a really important milestone and sometimes in Silicon Valley we treat it more like an exit, but it's only an exit for your private investors. It's a really important milestone for the company and for us, having a large team with us on the day to sort of celebrate the victory lap of, you know, being one of the small percentage of startups that ever makes it into the public market was super important. So in that crowd there in front of the banner unfurling were several customers, partners, advisors to PagerDuty who helped us succeed at that level. But we also, on that day and at the party celebrating that night, talked about our next set of milestones. Winning an enterprise and more recently, becoming a billion dollar revenue SaaS company. And that again, low percentage achievement for most startups. So it's a big goal. It's an audacious goal. But my point here is it's super important to make sure that once you get through that public crossover, that you're still setting those milestones, setting those audacious goals that get people excited, that inspire them to do their best work, to build great products and services and stay focused kind of on the long game.

Yeah, yeah, no, it makes perfect sense. And I know like right now there are a lot of people out there listening in that are dealing with the great resignation of 2021. And all the things you just described are super important. Painting that vision to make sure that you retain and keep these folks motivated. What was it like as you were going through the ipo, trying to get to re. Rally the troops in that sense?

Yeah. Well, it's interesting because it's a pretty exhausting journey. I Mean, back in the day, when we went public two and a half years ago, you actually went on the road and met with investors for two weeks. And that in and of itself is a big job. And then, you know, you had the celebration, your first day of trading, et cetera. And then we decided that it was really important to bring our entire global community into this process. So Catherine, my chief of staff, who's here today, and I and a number of executives, we went on a worldwide tour and hit every one of our offices to celebrate with our team members, but also to talk about recommitting to the next stage of growth and how important it was going to be for our leaders to help develop the culture. Because oftentimes people will ask me, well, how did you protect the culture as you scaled? And it's actually not about protecting the culture, it's about developing the culture, building the culture that you need for the future on the strong foundation that you had as a startup, as a smaller company. And you can't do that one to one. You can't meet with every of your employees. When you get into the hundreds of and the thousands, you have to be able to demonstrate that culture through everything you do. But even the effort of just making the trip around the world, falling asleep in black cabs in between customer meetings in London was worth it. Just to demonstrate to our employee base how important they were to us and how important this was as a milestone for the company. But more important, what we were looking forward to and the job that we had to do to demonstrate to our new investors and our shareholders that we were a business that was going to create a long term legacy for our customers, our partners and our investors.

Yeah. No, and I love that notion that like, for the public investors just joining you on that journey, it's day one for them. You're there with your team, celebrating usually six, seven, eight years of hard work to get there, but you're just getting started. And they're like, okay, great, what are you gonna do for me? You know?

Yeah, what are you doing for me lately?

Lately?

Let's.

How's the next quarter look?

Yeah, the next quarter. The next quarter. And that clearly, you know, we've talked before about how critical it is before you're going out. You know, the old envelope test in the drawer. Can you, can you forecast every quarter you're putting the envelopes in the drawer and pulling them out on your revenue line, your profitability line. How closely can you predict that you can't be more than a little bit off so to make sure that you're.

Ready, I remember talking to you in a bar at Re Invent in Vegas after you had gone public and you were saying, like Jen, if you're thinking about this, make sure you've got the next six quarters lined up right? Because it's not enough to meet your guidance. You have to beat your guidance and you have to raise. And you have to have not only great instrumentation on your pipeline and confidence in your leadership, but you also have to have really strong fidelity in how you think those teams are going to perform and your ability to actually over deliver, not just under deliver. You have to know your business well enough to be able to forecast with enough room. I always say sandbag appropriately. I remember another CEO, I said, so coming up on my ipo, what do I need to know about my first quarter reporting? And he said, lowest believable number. Put out the lowest believable number. That's harder than you think it is. Right, because you want it to be realistic, but your investors want you to deliver frothy growth rates. And so there's also a lot of work to do in the narrative to help your investors understand the story and understand the puts and takes and also gain and develop confidence over the long term around what your business is going to look like.

Yeah, absolutely. And you know, obviously for those of you that are looking at this, there's a huge opportunity as you're re recruiting these team members for the next leg of the journey, the next leg of the steep climb, reinforcing. There's so much more value that gets created after the ipo. And to Jen's point, it's always thought of as this end destination, this exit event. But gosh, once you start compounding revenue numbers north of 100 million in ARR at 30, 40, 50% year over year, what took you eight years to get to the first billion will take you 12 months to get to the next billion.

Absolutely. And you have to manage employee sentiment through that process. Because one of the things that you learn after an IPO is everybody's checking the stock price on a daily basis. And I remember our first all hands after ipo, I noticed that some of our employees seem to be spending more money on personal goods and personal items, jewelry, belt, shoes, than they had before. And I remember saying to them, do not watch that stock price every day because on a day when your stock's up 10%, that doesn't mean you were 10% smarter or 10% better. And the day your stock's down 10%, it doesn't mean you were 10% more stupid than the day before. And you shouldn't be writing checks that you don't know if you can cash. It's really about focusing on the long game, on long term shareholder return. And that's a hard thing for employees who have just gone through this process to grasp. So we really started to focus on the key factors that would demonstrate the durability of our growth.

Yeah, I was going to ask you to talk a little bit about that. I know in the last few earnings calls, Investor Day, we've been talking about how you anticipate the needs of customers and even of whole new markets so that we have multiple engines of growth as we scale well past ipo. Maybe a few words on that.

Yeah, well, one of the things that was really interesting is as we were going through planning for the ipo, was thinking about how do you get to know public company investors and help them get to know not only your business but your leadership team? Because public company investors are not just looking at the numbers, they're looking at who you are as a leader, how deep is your leadership bench, you know, what is your track record for success, how convicted are you around your mission and your vision, can you really be disruptive, etc. And so we did not need the cash, but we raised a Series D about, you know, six, eight months before we went public in order to test our story and our narrative and our performance out in front of a number of what we now call crossover investors. And T. Rowe Price was one of the firms that led R Series T along with Wellington. I remember sitting down with Henry, who at the time was leading the growth fund at T Rowe. He now has his own fund called Durable, actually Credible Investor.

Maybe advance to that next slide.

Yeah, phenomenal investor. And Henry took me to school on what it means to demonstrate the durability of your future growth beyond just trying to get the investor community to take your word for it. And so we really used the opportunity in working with Henry Ellenbogen to define and really articulate what were the multiple drivers for growth in our business and how and give people a picture of how they might play out long term. And for us, those drivers were making that transition from a phenomenal, popular single product to a multi product platform and demonstrating that we could do that, also demonstrating that we could be successful in launching and performing and winning in new markets. So at the time we had laid the groundwork to really build a strong presence in emea. And that has served us very well from a Growth engine standpoint. Also showing the platform esque nature of PagerDuty and the fact that not only developers, but IT organizations, security teams, increasingly customer success and customer service teams could leverage PagerDuty for use cases. They imagined where the common theme was that you're going to see more and more work that is unique, unpredictable, unstructured, time critical and mission critical, and that none of the other workflow platforms that came before PagerDuty could solve those types of problems efficiently, effectively, and in a way that users really liked and were able to use quickly. So maintaining a really intuitive user application on top of, you know, a more complex platform was gonna be really important for us. And then finally, like testing ourselves and our own metal with the largest enterprises in the world. And PagerDuty now serves more than 65 of the Fortune 100 and more than 45% of the Fortune 500. And these are the biggest and best brands in the world who over the last couple of years have gone through phenomenal digital acceleration. Right. And so in some ways that's helped the market meet us, because one of the challenges that Pedro Dede's had is we're out in front of the market kind of demonstrating a new way to do work. And not everybody transitions in their operational maturity at the same rate. And so the pandemic and the past several months in the market have really created an interesting opportunity for our customers to recognize that digital is the way business is getting done. Digital is the way consumers are engaging with their brand. Everybody is online and on demand. And that's the. That's no longer the sort of side business or the secondary business. That is the primary way that these companies, the brands that we serve, are building out their own growth and their revenue and their brands over time. And that's meant this very quick shift to how do I make sure all the digital kit in my business works? How do I build digital assets that create a delightful experience in the few seconds a consumer or a user will give me to make everything work perfectly? And that's where digital operations and more broadly, real time ops has become super important. And customers are starting to rely on us for more of a strategic partnership as opposed to simply improving the way they manage incidents and respond to incidents.

Yeah. Which is incredible, you know, that the pandemic has been such an incredible tailwind in many ways for this transformation and therefore for the usage of PagerDuty across businesses of all size. I've been as a board member, just so amazed at all the use cases out of the traditional IT use case. That is what I used it at as a customer at SendGrid. We loved PagerDuty. Our team loves PagerDuty, but we use it in our engineering teams and DevOps and so on. But then to hear about all these other use cases and security and customer service and customer support, et cetera, that those engines of growth, they just keep going. It is a real platform.

Totally.

One of the things one of my customers helped me realize is that one of the huge business value proposals for PagerDuty is it helps teams operationalize the trust they're trying to build with their own customers, as opposed to depend on a really complex ecosystem to just work perfectly all the time. Which we know that software is imperfect, we know that integrations are imperfect, even APIs are imperfect. And so if you just rely on that software to run perfectly all the time, you're going to mess up with your customers. And so that operationalization of trust really has become a mission for us in many ways. And some of the use cases that we hear about are really fun, I mean, and really interesting. We have a Nonprofit that leverages PagerDuty to manage corneal transplants and really like talk about a time sensitive, mission critical workflow. A cornea becomes available by a donor and you have less than a few days that that cornea will be viable when it can be transplanted into a new recipient. And so they use PagerDuty to manage all the organizations that are part taking that cornea, getting it to where it needs to go, transplanting it effectively in a patient and after care. And that to us is a really fulfilling way to see our platform go to work. But we only learned about it because the customer told us about it. And we certainly didn't design the software to do that. But it really speaks to the broad applicability of what we do and also the way the world is going. And one of the other lessons that I learned in this process was when you're getting ready to go public, you know, the banks help you, your advisors help you, or your investor relations people, your product team, they help you build out this narrative. And you know, one of the things you talk about in your narrative are what are the tailwinds that are going to support the durability of pager duty's growth. And the interesting thing is, you know, you share these tailwinds and wow, you sure hope that they are long term tailwinds that they continue because you're going to be around in the public market every quarter and be asked to demonstrate that those tailwinds you talked about when we took that allocation and gave you our money actually came to fruition. And it's interesting, the tailwinds we talked about then are the tailwinds we still talk about now. Cloud adoption and cloud migration, DevOps transformation, what we used to call digital transformation, which is now digital acceleration. And even more recently to your earlier point, this, the great migration of employees. Because when a pagerduty employee leaves one company and goes to another, they take pagerduty with them. Word of mouth has always been good for us. So we actually see this massive change in employee mobility as a potential tailwind for pagerduty as well. But you better be ready to stand behind those tailwinds when you come up with them.

Well, thankfully you've chosen wisely with the tailwinds. Digital transformation, real time work, those are all things that are not going anywhere anytime soon. They're just accelerating so quickly. A few other questions here on Leadership Team Evolving as you think about going through the IPO and scaling post that any quick thoughts on how you think about succession planning or things that where you spend your time versus post IPO that may be different than I once.

Had a CEO tell me that he didn't like working with people. And I remember saying to him quite directly then I think you're in the wrong job. Because your job as a CEO is to identify the talent that you need, not just today, but the talent that you're gonna need for the unforeseen challenges and opportunities in front of you over the next couple of years. And also to develop those people, to put those people in a position to succeed, to empower those people to do their jobs well. And I got feedback in a 360 degree effort with my board about three years ago. And one of the things they said is, Jen, there's a lot of things across this business that you've done before that you're able to do. You've been in that job, you can make those happen. But there's a few things that only the CEO can do and that is where you have to focus your time. So figure out what those things are, what are the things that only a CEO can do and make sure that you're investing on those things, you're investing your time in those things and you're empowering others to do their jobs really well, that you're coaching others on how they can effectively lead the organization as the organization changes and grows. And one of the challenges of being a CEO in A high growth company is every now and then you have an executive that kind of hits their sort of limit and you need something different. And you have to have that tough conversation of either leveling that person or helping that person transition to a different chapter in their career. And that's hard, but it is necessary.

And critical and yeah, and typically good for them too.

And often good for them if you don't wait too long. There's an old saying like, I never let anyone go too early. I'd also just say that having a deep bench really matters. Oftentimes we hire these great people. We get excited about them because they're new, they're experienced. When you're a public company CEO, they're often more experienced than you at their job and you forget to remind them that it's their job to build a very deep bench. What if they get hit by the lottery bus, you know, next week? What if you need to make some changes? You want to have people lined up in the dugout ready to take on the next job. And that is so much more important in the public market because the market's not going to give you grace if you have an open role or a leadership gap that you can't manage. And as a CEO, you don't have time to do everybody else's job on the team. Right. And it's hard to ask other leaders to take up the slack because they've got their own challenges and their own opportunities that they're prosecuting.

Yeah, well, I love that theme around. And then there's probably nothing more gratifying. Well, there are a few things that are as gratifying as a CEO of developing people, working with your team, seeing those folks grow in their careers and tackle the next set of challenges. There is one that's close, which is seeing your business become a force for good.

That's great.

And I think in increasingly, you know, leaders are judged, as we see all the time, on the human centric side of leadership now in this day and age, as much as on their delivery of the business performance and the results. It's very different than it was five, 10, 20 years ago. And you have been such an incredible leader in this space. Talk a little bit about how that influences your focus on social impact to pagerduty and some of the things we've done.

Well, I like a lot of young people in my 20s, went to my CEO at the time and quit my job because I wanted to start a nonprofit. And I'm sure he had seen this like a hundred Times before because he seemed very well prepared for, you know, my big speech about how I want to change the world and have a bigger impact, et cetera. And he said, jen, that is admirable and I really appreciate that. But if you leverage the scale of our company to change the world, you have a much better shot at making a meaningful impact than if you try and do it as one person. And I thought that's actually a pretty good point.

Compelling argument.

Compelling argument. And that was a company called itwo back in the early days of supply chain automation and software. And when we went public, we built a foundation through donations from employees that allowed ITWO to invest in non for profit activities and try and build their social impact. I think Marc Benioff has done such an incredible, incredible job of setting the pace for other leaders around not just your corporate responsibility and your business responsibility, but your social responsibility as a leader. And he has a saying that all leaders should do well and do good. And that led to the 1% pledge which Salesforce initiated, where Samir and I are now on the advisory board and the CEO champions for 1%. But if you haven't thought about it, as a leader in your company, you're essentially committing 1% of your equity, 1% of your product, 1% of your people's time to serving the communities around you. And when you do that before you go public, that then funds tens of millions of dollars, in some cases hundreds of millions of dollars. For us, it was the birth of pagerduty.org which now serves time, critical global health issues and just and equitable communities around us. Because I really believe that not only that should the tech industry be more equitable and more diverse, but the world around us should. And it's our job to help drive that transformation. I think what people miss about this opportunity is how important and valuable it can be in driving your purpose and connecting your employees to a broader purpose that is bigger than just what your products and services do for your customers and for us. I mean, this is an area where we get very high engagement scores, where our employees participate actively not just in volunteering their time, but also their services and their expertise. And it's become part of the PagerDuty fabric in a way that has exceeded my expectations.

Yeah, I mean, it's incredible. I know because I work with the pagerduty.org team as well. And some of the stats they share are incredible. About the percentage of employees that volunteer time, the scale of the impact, tens of millions of dollars that they can deploy Particularly as you all know in the last 12 months to things that are happening in the world with the global pandemic with yeah, we've been really.

Focused on equitable vaccine distribution and education.

Of late, you know, and I know the employees resonance with hey, our company just wrote a seven figure check to go make sure that people that can't get vaccines, can't afford them, can get them. That makes you feel good and attached to the purpose.

Totally. And I also don't have to give away money from our P and L to do it.

That's right.

And we're not profitable. So I'm kind of thoughtful about that, like what I do with our shareholders money. So take the 1% pledge. It's a great long term commitment and I'm sure it will exceed your expectations as well.

Absolutely. Every company out there listening in. If your leadership team hasn't considered or taken the pledge yet, do it this year alone. As Jen said, we work with the pledge 1% org and the CEO is considering it. And I think we're up to about $600 million have been created in value set aside with the equity Created from the IPOs of the year alone talking billions over the last several years. And so this is a very powerful way to do for our industry and our companies to do good in the world while we build great, great businesses.

Absolutely.

So we're very fortunate. All right, we've only got a couple minutes left. Last, last question. Running a public company ain't easy. It's hard, hard work, especially I understand, in a pandemic. Turns out that just adds a degree of difficulty. How do you think about staying sane and your own wellness, your own development? Who do you turn to for support and counsel?

You?

I mean, the first thing I would say is running a public company is a very lonely job with a very big audience. You go to school, drop off and somebody notices your compensation changes or they saw that your stock was down and you're having those really interesting conversations with people who you hardly know in the pandemic. Like managing through a crisis, realizing that our employees didn't trust their government and didn't trust local authorities and were coming to us for information around how to stay safe and keep their families safe. You know, having to shut down our offices globally in a 24 hour time period and thinking we'd be back in a few weeks and finding, you know, we're never going back. I mean, we have offices that are now more like the Soho Club. They're a place to sort of collaborate and hang Out. But people are not going in there on a day to day basis. And that flexibility has been one of the great benefits of this. What I learned from people like Samir and Zach Nelson, who's on our board, Bonita Stewart, is that I have to take care of myself and my health first. So some of the things we changed. I don't take a meeting before 9am in the morning. I exercise every single day. I put my own oxygen mask on first in order to make sure that I can serve the business no matter what comes. Because there's a lot of unanticipated work in the CEO gig. There is no structured, predictable day. And so, you know, just kind of summarizing the takeaways because I know we gotta go. Know why you're gonna go public. Your investors want you to. But know what the why is for you and for your team and your customers. Make sure that in that process you're thinking about signaling the next milestone and managing employee sentiment. Design your business for durable growth. It will pay off later. If you don't, it will be a big problem earlier than you think. Build a very deep leadership bench because you can't plan when you're going to need to move some things around. Make sure that you're doing well but also doing good. You have a huge opportunity and a huge privilege to change the world around you and put your own oxygen mask on first. You're no good to anybody if you are not in good state of mind. Great mental and great physical health.

Sounds awesome. Great lessons for all of you out there, listening, thinking about taking your companies public and most importantly, how do you scale it and be successful as Pagerduty has as a publicly traded company for many, many, many years to come. Thanks Jennifer.

Taha, thank you. So great to have you. Thanks everybody. Great to see you at Saster. Hope to see you soon.

All right, take care everyone.

You.

Hi.

Sweet band. That's fun. Hi everyone. My name is Talithia. Slightly different than the voice of God pronounces, but I don't mind because it's a little bit of a tricky name. People call me tk. I'm the chief revenue officer at a company called Gusto, which is a late stage startup based in Denver, New York and San Francisco. And like the rest of us, pretty much everywhere at this point and we serve small and medium sized businesses with everything they need to take care of their teams, to hire onboard reward, take care of the best possible teams so that they can have great businesses. So I was asked to come here today to talk to you about a topic I get asked about a lot, which is how to create high performing and sustainable partnerships between your marketing leaders and your sales leaders. So prior to having the opportunity to be the Chief Revenue Officer at Gusto, I was our CMO for about four years. Most of my background is actually in marketing, which tends to be a different path for a SaaS company, CRO. But I want to talk to you today about opening your minds and thinking about how you can hire and empower great performing marketing and sales leaders. My goal in coming here today is the same goal I have when I take calls from CEOs, co founders, VCs, investors who are interested in solving the same puzzle. And I have the opportunity to be asked for my advice on that quite frequently. So of course when I got asked to do it for a group of people at once, I thought, well, that is highly efficient marketing. Let me get right on that. I have no other ulterior motive here but to help you find great marketing and sales leaders because my real motivation is to help them be seen empowered and make a difference in tech and in SaaS in particular. These opinions are mine. They're highly biased. They do come from some experience and a little bit of a track record of success. And they also come from a long, long career in which I have observed tech fumble quite a bit, if I'm honest about having great operators in the mix alongside great innovators. So with that, what is the puzzle? Why do we hire marketing leaders and they flame out in eight months to a year for our sales leaders? Why is she perpetually frustrated and in tension with her marketing counterpart? You can go online and read all about it and this puzzle is something that I definitely want to help you not be burdened by. So I apologize in advance, but I'm going to do something completely predictable. I would like a hand raising exercise which obviously doesn't work great on the stream, but thanks, I'm glad you came. And so if you wouldn't mind, raise your hand if you're somebody who currently or in the near term has to hire a marketing or sales executive for your firm.

Sweet.

Awesome. Okay, I'm gonna really try to make this relevant to you now. Put your hand up of that group if you yourself have ever been a marketing or sales executive in the past. Sweet that I didn't expect. Good job. That shows to me that SAS is maturing and you're going to be fine. And in fact this talk may be boring for you everyone who has to hire those executives and wasn't in that last group with direct experience. You should network the folks that just raised their hands. You should buy them beverages and pick their brains. So I want to try to give you tips in two chunks. First, how to hire and then how to empower. The hiring piece sucks right now. Let's be honest, the supply demand quotient's a little bit off. So 10,000 on LinkedIn in the US 10,000 open chief sales officer positions. I took this like a week ago. 433 brand new. I don't know what that means, but anyway, it's happening. I doubt that there's 10,000 good chief sales officers in the United States of America if I'm honest. And on the marketing side, just as bad. So you're trying to de risk your company's hiring decision and part of the way you do that is you tell your recruiting firm, I want someone with a solid track record. If they've been happy in their marketing career, then I don't have any data evidence that they actually can drive impact and be a strategic contributor to my business. But that just shrinks your pool further. And it doesn't honor the fact that the problem of marketing leadership, tenure and effectiveness is a two way street, maybe a three way street. When we talk about tips to better empower leaders, this is where I get really jazzed. I googled why sales and marketing don't get along. First result, Harvard, of course. I'm sure it's brilliant because it's Harvard good. But look up ahead of that 7 billion results. One article for almost every human on the planet about why we were destined to fight. Ridiculous. All right, tip number one, hiring. Don't believe the hype. Don't believe the 7 billion pages. This problem is surmountable if you start this hiring exercise and if you empower your leadership team with the premise that you're going to have to make compromises. Sometimes when we are hiring we say, well, what is the most important thing to solve for? And then we'll work around the rest. If you go into a recruiting exercise with that in mind, you will only attract candidates who expect to thrive in an environment of compromise. The whole theme of this talk, if you want a mnemonic to remember anything I've said today, is you get what you give. Your attitude going into it, your belief in being able to find the most successful and sustainable partnership leading your marketing and sales organizations is critical to your success from the get go. We can smell your fear, so don't give it to us. Number two, if you're earlier stage, you might not be ready yet. That's cool. Start networking. Look in your network. If everyone you know is in engineering or product or finance, expand your network. The trick here is not you're not looking for your future marketing or sales leader necessarily. You're not asking them how to find the right person and demand the right amount of effort and the right quality from them. You're asking your network how you need to change, how your company needs to change to attract the right talent and set them up for success. Tip 3. The recruiting environment is brutal and I know a lot of excellent recruiters. But what I'm getting every week and many of the talented candidates you want to attract are getting is a slew of mad libs in our inbox. They almost all start exactly the same way. My CEO asked me to reach out to you. Well, if you think I'm strategic CEO, you should reach out to me your damn self. He has an incredible track record of exits. I sort of am interested in that, but it's certainly not the place to start. Great marketing and sales talent. And again, we're looking for sustainability and true company value creation. They don't want to exit. That's not success. Yes. Do I like making money 100%. Do I like companies having more of their own ability to control their own destiny and not be in a fundraising rat race?

Of course.

But we're not trying to get out of something that we haven't even built yet. The other thing to be careful about is saying that this is the first hire. It might in fact be like, don't lie, obviously, but it's not necessarily the most important qualifier for a good opportunity. We are pretty flexible for the most part. Or at least the candidates you probably should be talking to are pretty flexible. If we have enough road behind us on our journey, we can adapt. And you want us to be gritty and adaptable. You might have a team. Are they the right team? Maybe, maybe not. That's okay. We don't know going in whether or not we'll have a seat at the table. So mention that. Whether or not you will give us time to build what we need to build. So mention that. But us being the first is as risky as it is interesting. We've raised a ton of money and we're worth a ton of money. Faster may be the wrong place to say this, but a lot of people can raise a lot of money. Doesn't necessarily mean that's a good job for me. What I care much more about is growth Rate, that's our DNA. We want to grow revenue, we want to grow, grow market share, we want to deepen wallet share. That's what gets us motivated. Tell me about that category. Creation is tossed around a lot. It's hard to know what we mean by that. Sometimes it sends a signal that we have no product market fit. That's not necessarily a red flag. Plenty of great marketing and sales leaders are interested in opportunities where we have to find fit. Remember, we're distribution specialists. Finding fit, reaching the market, that's what we like to do. The market is huge, billions up for grabs. I would say if you really want to hire great, ambitious operators and business people into your firms, don't talk to them about TAM too much because you don't sound like you've done the math. Actually, you're looking for us because you need help with distribution when you're early. As a startup, distribution is not tactics, it's strategy. You actually don't know necessarily, and your finance people don't know, and your investors certainly don't know how much of that TAM is serviceable, gettable, and what the economics are gonna look like. That's why you're hiring us. So cool it a little bit. On the tam, we're poised for disruption. We have these investors. One comment on Investors that's really tricky, and I mean this with a lot of love. We have somewhere north of 450,000 investors in Gusto. We start to tune it out a little bit, unless there's someone we know. And how do most of us professionals know VCs investors? From working at companies that work with them or from reading the media. It can go either way. And a lot of times investors can be super helpful. At Gusto, I have our board on speed dial. When I need help, they're there for me. They challenge us. But that isn't always the case. It might be interesting, especially if some folks on your board or some of your investors, they themselves are previous executives running sales or marketing organizations. What that sends to me is a positive signal, is that I'll have a voice of reason and a partner in helping the business understand whether or not I'm actually demonstrating progress towards results. Here are some suggestions instead. So reach out directly if you really care. Sends an immediate signal that this is important to you. Talk about what you're doing for customers. Always lead with that. Always. So far, we've been able to reach so many customers. I'm going to be able to do a quick calc of where you are on the PMF spectrum. We are doing pretty well with this type of customer. I start to feel and believe what the opportunity is, but we can't get here, we're not doing there. We don't know why we're not resonating with X. I'm starting to puzzle through whether or not I can make an impact. It's an incredible way to get me to want to know more. And this is just a general good practice. So reaching out to a candidate, what are the stats on? It is not that they actually each individual one is going to be your best long term game changer but they might know something that you don't know. So respect their time signal you get what you give signal that you don't know everything, that they may know something you don't. And you would really benefit if they would donate 30 minutes of their time to you. Of course that can lead to a referral as well. Now, tip number four in hiring, and this is the last hiring tip, is really to understand your model. So who's seen the weird animal thing here that I'm showing? Have people seen that? Right. Okay, classic. So there are some pretty standard conventional ideas that are logical and I think are pretty guiding. So you know, if you are a business where you're going to be product led growth or you have a large market and a low acv, marketing is very important. That's a strategic business leader. You should make them be responsible for revenue and you should have them really have some voting authority in how you build out your entire revenue organization including sales and sales leadership. The flip side, chief sales officers and revenue officers are vital as you are going after elephants in this case, that is a little bit of a flip. Same principles apply. But what do you do if you don't know what if you don't know where you're going to land and at gusto, for example, we've got rabbits and mice and fleas. So how do we puzzle through that? There are some signs that cross models. These are my unmathematical opinions. First, for sales leaders, without getting into stereotyping, they're excellent at relationships, typically individually and through how they lead their teams. Brilliant. Those relationship skills need to be repeatable or you are dependent on individual humans. Related to that, one of the best methods for repeatability in sales greatness is to focus on moving the middle up. There is a very lazy, sometimes effective intention folks have of putting a big egg out there and letting very competitive, very talented, very motivated sales folks chase it and get that Lambo. That to me has been debunked and outdated. You want your sales organization, just like every other team in your company, to be playing the long game in terms of your company value. So look for sales leaders that can balance their competitive nature and their interest in their own wealth creation with true company value as the mechanism by which they win those games related to that rule of 40 or something like it. The cost of revenue growth and the economics of revenue growth have to be the natural language of your sales leaders. If they're enamored by valuation, you've got the wrong leader. Now we're experts in valuation, especially in SaaS where for better or for worse, revenue growth ties directly to valuation almost 100% of the time. We are the experts. We do it every day. We know whether or not the company is creating value. I have a model that I use to estimate my retirement date. I know that's pretty nerdy, but valuation will not be increased if we don't know how to economically get there. From a revenue growth perspective, inspiration goes without saying. But look for leaders who inspire customers. Of course they have to inspire the team and sales leaders can, should, and I would argue must be experimentally solid. Of course we won't have AB stat sig in all of our enterprise sales experiments that we do. It's the mindset of hypothesis identification and the good old fashioned scientific method. How will I know what signals will I use to triangulate that we're headed in the right path? And you'll also then attract a sales leader who can speak the same language with a lot of your more technical engineering growth data science folks. Second, marketing leaders that are durable. We all know this. Everybody knows this. If they're only focused on budget, not roi, goodbye. If they're only focused on getting leads and how many leads they can get, goodbye. I suggest you look for marketing folks who talk to you consistently about LTV to cat. We're in a recurring subscription business. Our customer value and the cohort of customers we acquire is going to change over time. We all want it to increase. How is your marketing leader looking at current investment net present value as a ratio of the future revenue and profit they will create for your firm? If they don't know what you're talking about, pass. Brand awareness has been super trendy among startups, especially CEOs, and especially more technical founders and CEOs lately I get asked about it all the time. People may disagree with me, but for eight years I studied the science of brand measurement. I had the opportunity to do this in a company that was spending 100 and 200 million dollars a year on advertising against a consumer audience. And we were able to get scientific signals. We started being able to get those signals once we were spending more than $40 million consistently every year. If you're not anywhere near that scale, don't worry about it. Focus on your viral coefficients. How many of your customers are referring new business? How much business shows up at your front door that you didn't actively source? That's the volume that tells you that you're building awareness and affinity. And then for marketing leaders, same principle applies. They have to inspire customers and prospects. They also need to inspire the stakeholders within the business. You gotta get jazzed by somebody who's talking about spending a bunch of your money. And they also need to be experimentally solid. If you don't yet know what your model is gonna be, which little animal you're gonna chase, I have some potentially counterintuitive suggestions. You probably then actually need more experience in the leaders that you hire. There's this concept of a full stack marketer or an adaptable sales leader. The problem with full stack is most likely unless they're super high level, they've never gone deep on much. So be wary of that concept. Of course you want someone who's going to get their hands dirty, but of course you don't want someone who's just regurgitating playbooks. Beware of them saying we're going to implement this on an accelerated timeline. They're trying to get to motions, not impact output, not impact. Always back channel your candidates for someone who flies at multiple altitudes simultaneously. If you don't know your model, you can solve for the chemistry between your marketing and sales leaders. And this isn't a bad strategy because you actually have no idea going in where the divisions of roles and responsibilities will actually flow and pay them a lot. I know this sounds crazy, like why would you say that we are offering fractions of percentage points and equity and upside and retirement and houseboats or that's what I'm looking for. But the reality is to get a more experienced person to leave a lot of highly likely money on the table. If they're at a public company or a late stage company right now, you got to de risk it because we know the tenure is 8 to 12 months. Why would any intelligent ROI calculator want to take a risk that big? Unless you've helped me de risk it. You can make it performance based. You will attract talent that has confidence and has analyzed your business opportunity for their ability to make impact. But don't rely on equity alone. This I hope has become something that is well understood. For 10 or 15 years. We were in a period where tech companies, tech CEOs were really frustrated with the caliber of the marketing and sales talent they could get in the mix. And a lot of it honestly had to do with an environment that I will call out as consisting of several microaggressions. So I have been in situations where I have been complimented to an engineering team introduced as saying, Talithia is a marketing person, but she speaks like a finance person. If your marketing people don't speak like finance people, path we who can help you will want to be respected for the unique abilities we bring. This is logic. And yet sometimes still this gets missed. All right, so how do you empower great leaders? I'm going faster. I'm Wordy. 25 minutes went fast. Expect impact. It's okay. You can demand of us that we are showing you progress. The excuse of the sales cycle is long. The excuse from the marketing leader that it's going to take time to build all these campaigns and get awareness in the market. That is not a valid excuse for avoiding showing progress month to month to month. We have a pipeline. How are we closing more of it? How are we closing it faster? We have some leads. How are we increasing velocity or success through the funnel demand every month? Positive progress. Make both own revenue and ultimately measure to ltv. There is such a tendency for us as executives to want to simplify, to say, you know what? I'm gonna hold you accountable for that and you accountable for that. Healthy tension. Duke it out. Maximum growth. Wrong. I believe wrong. You want leaders who co own revenue, ltv, CAC performance. Both should be great pictures. Both spend time with customers. Both influence product. Both can run an excellent experiments and both can drive merchandising. And you should speak to them as a unit and hold them accountable for these things and related to that, expect them to be experts. Let us be leaders. If we have a seat at your leadership table, it's really simple. Expect greatness. Don't signal just like you didn't when you were hiring us that you have low expectations or you will find that you only have sustainable relationships with executives who can deliver against low expectations. Simple wording sometimes goes a long way. I've got an idea. Why don't we just we hear this all the time as sales leaders and marketing leaders. How else might you say that? You might just say I need us to get here. Come back to me with a plan. Be careful about benchmarks. We are marketers and sellers and when we put content on medium, we are very calculated. When we talk about how brilliant we were, be skeptical. So as I said, start with the impact you want us to deliver. Let us work back to how, not the other direction. Excluding some of you who actually have done the deed. Let us be peers. So if you have marketing and sales stacked, which works in a lot of organizations, still set the table for both of us in your leadership team. Still have both in your planning and strategy sessions. This is so important. It's mostly because then you can see the chemistry and you can hold both parties accountable for those shared outcomes. And yes, fire quickly. So the math sucks. It's so hard to hire. Tenures are short. Pretty soon into jobs, six months usually is the freak out point. We know if things are going well or not. If you wait much longer than that, you're 18 months from any ramp of the next candidate you're going to hire. You've got to be aggressive. When you're confident that there's a problem, a suggestion on how to save, or know that you can't the marriage. Have a family meeting. Classic. Smallest group possible. Say you're concerned. Give them the combined shared partner opportunity to work it out and come back to you to your satisfaction. Best solutions always come from within the relationship. Number two, let's say that doesn't work. Which function is performing better? If you have strong next line leaders, definitely keep that leader in place. They have built a high performing team that will continue to scale. And lastly, take bold action. If there are assholes, fire them full stop. Because the current marriage being bumpy is just a predictor of the next one. All right, last tip. I wrote this slide like whatever a couple weeks ago and then I thought this is not what I really. I'm trying to be nice. My comms guy said be positive. If I could give you anything, I would give you this. Stop using Go to market. It sends exactly the wrong signals. It gets you to hire and empower people who are going to wait for product to build something and then locally optimize. Go to market suggests to us that we're not part of the entire strategy of the company. That you didn't hire us because you need someone to help you figure out how to distribute. And every product team, I guarantee every product team is hungry for more feedback from those of us who spend time with customers and buyers regularly. This sounds like an activity that happens after a more important activity. Just retire it. And with that reminder, you get what you give. And I Want to say thank you very, very.

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Hey, everyone. It's so great to be here. First of all, huge thank you to Jason Lemkin and the entire Saster crew for bringing us all together in person. This is really wonderful. I'm Kathy Gow, a partner at Sapphire Ventures. We are a venture capital firm. We love B2B SaaS and we invest in companies at the series A all the way to pre ipo. We're here today to talk about a really exciting and interesting topic, which is how to scale your startup from 20 million of arrow to 100. I think this will be helpful to our panelists. So show of hands really quickly. How many people in the audience are founders? Raise your hand, please. Wow.

Okay.

We have a good number. Awesome. And how many people in the audience are focused on go to market? Sales, Marketing. Oh, wow. Okay. Keep your hands up if you're sales. I see you guys. Okay. And then marketing, kind of an even split, which is cool. Well, I am joined today by an amazing panel. We have two very, very seasoned operators who've done this before and are thrilled to share their wisdom with you, as well as my co moderator, growth investor partner at Lightspeed. And I think we've been friends for 10 years or something like that. Anoushka. But maybe I'll have my panelists all introduce themselves, tell them a little bit, tell you guys a little bit about their companies. And just for fun, tell us when you were a kid, what did you want to be when you grew up? Carlos, I'll start with you.

Okay, thank you. And by the way, by seasoned, I think you meant old. Thank you very much. So I'm CRO at a company called Trip Actions, and we are modernizing corporate travel and expense management and doing well and happy to talk more about it if it's relevant. And Previously, I was CRO of MongoDB through the journey that sort of coincides with the topic today. Grew up in Miami and have lived in Europe and New York and San Francisco. And what did I want to be when I grew up? Well, at different stages, different things. But I convinced my parents to buy me a horse at one time, and I was really into that. And so I thought I was going to be a cowboy. And as an adult, I learned how much money cowboys make. And here I am.

Hi, everyone. I am Latni Conant, chief market officer at Sixth Sense and six Sense we are the leading account engagement platform. And what that means is we actually power B2B revenue teams. We provide insights into something that we call the dark funnel. This is all the people that are in market for what you do, but you have no idea. So we uncover that dark funnel so that you know who's in market for what you do, and then we help your sales and marketing teams go and proactively engage with the accounts most likely to buy. So that's a little bit about us. I wanted to be a heart surgeon and I got to college and I had to take chemistry. Duh. And I am a huge klutz. And I was a disaster in chemistry lab. I had the highest bill of broken beakers and petri dishes. And after that, I decided maybe I should major in accounting and be a cpa. So that's what I did for a little bit.

Hi, everyone.

Pleasure to be here today with all of you. I'm a partner at Lightspeed Ventures. On our enterprise side, we've been lucky to work with a number of incredible companies including Carta, Rubrik, Nutanix and Trip Action. So it's a pleasure to have Carlos with me today. I've been in enterprise investing for over four years now, and what I wanted to be when I grew up was a veterinarian, which is, you know, bears.

Absolutely no resemblance to my day to.

Day, which seems to be a common theme among this panel.

Awesome. So we wanted to really cover two major topics in today's discussion. One is all about go to market execution. Right. This is a big topic that is very important no matter what stage a company you're really in. And then the second is all about talent and culture. How do you think about that as you're scaling companies to adapt and expand to your growing enterprise? So I'll start first and then hand it over to Anoushka to talk about talent and culture. But for go to market Playbook, you know, for this stage, 20 to 100, it can be pretty tricky because certain strategies that may have worked before in the past might now need changes or major adjustments. I know all of you guys are here very curious to hear what Carlos and Latany have seen at their respective companies. So let me jump in and maybe I'll start with Latini first. Take us back to 2018 when you started at 6 sense and then fast forward to now. What were some of the biggest changes that you had to adapt to as cmo?

Yeah, it's so funny. In preparing for this panel, I called our CFO and I went into the Wayback Machine and I was like, okay, what when exactly were we? And then I'm like, what was I doing and what was I struggling with to kind of recreate history. And I would say, you know, sub 20 million. I call beast mode. Everybody does everything and you're looking for Swiss army knives and it's a little bit like swarm ball, right? You guys seen kids play soccer, Everybody's running at the ball, everyone's trying to get something done. But you may or may not be really making plays. When you get to 20, you need to start really building a team with dedicated specialists. And so that was kind of a big aha. And I think that's important to think about is you don't want to be playing Pee Wee soccer and you don't want every day to be an act of heroics long term. But when I went back in the Wayback Machine, there are sort of three, I think, big things that collectively Mark, who's our head of sales and I did right. Maybe we lucked into it. I don't know. The first thing that we did is we really, really defined what I call as our revenue operating model. And we hired revops. We didn't hire marketing ops, we didn't hire sales ops because one of the most embarrassing moments of my career is me standing up with my revenue model that marketing ops put together and my head of sales standing up with his. And they weren't exactly the same. That doesn't work. So we hired RevOps and we created this revenue operating model. It works backward into pipeline quotas. So I have pipeline quotas, how much needs to get created every week, every month, every quarter across the business. We track our, our sales velocity formula, which is win rates, ASPs and cycle times. Critical, critical. And we look at net retention and we are always finding the red and working together across those key metrics by go to market segment. And we have a steward of that with one team that owns that for all of us. So that was a huge, huge, I think, thing that we did. Right. The second thing is we, we built an outbound motion that really, really works. And I think when you get to a certain point, you need to be out capturing demand very, very efficiently and effectively. And it's very easy to dump a lot of money into a non efficient outbound motion. And the reason I say this is one of the things that I did is I was a BDR for a day. If I go back into the Wayback Machine, we had a lot of BDRs working really hard, really inconsistent results. And I'm like, what the hell is going on? We're hiring these great people. We got a career path. They're going to be the future of our sales team. What is going on? Well, they waste a colossal amount of time is the reality. And that's on us as leaders. And so really setting your BDRs to be laser focused on behavioral based signal, the ideal customer profile and having a lot of rigor and process around that. And then, you know, the kicker is making sure that they can graduate into being AES. So that has made us really, really successful is just investing in that function and doing it right. And then the third thing is we never thought small, no matter how big you are. If you're 20 million, think you're 100 million. If you're 100 million, act and think like you're 300 million. Never, ever think small. And so we did a lot of things that most people would think were audacious and bold and wild, but we did them to really break out of the noise. And so it's better to do a few things that seem a little bit crazy that are really, really bold than do a bunch of play it safe things. And I think we did those three things right.

Thank you. By the way, Revops, I feel like it's a new kind of category. Back when I was working at gusto in 2015, we didn't have RevOps. And now I, you know, was at Sasser Yesterday. So many CEOs I spoke with, they said, oh, RevOps is one of our buyer Personas. So it does seem like a big shift. Carlos, what about you? I mean, you were at MongoDB during a very critical time and now you're at the helm leading go to market at Trip actions. Any insights you can share on how those organizations changed as they scaled?

Sure. I think getting to 20 or to 10 and then to 20 is hard for a whole bunch of reasons that have a lot to do with being in the right market and having the right product and having the right demo and the right use case and all of that. And I have strong opinions on PLG, which maybe we'll talk about later. But getting from 20 to 100, you don't get there with. You don't get there with a great product alone or a sexy demo or the ability to go do some big deals. You need a machine and you need repeatability. And that is based on having a strong foundation. And from a sales perspective, I think that foundation has sort of three pillars. The first is Recruiting, you've got to have crystal clarity on what's the profile of the AE that's going to be successful here, how do we identify that profile? What do they look like on LinkedIn before we waste time assessing them, then how do we quickly assess them? And lastly how do we keep the great talent that we have? I think I missed attract. So identify, attract, assess and retain are the sort of the sub disciplines under recruiting and you've got to really get that right and invest in in it as a thing that needs to be a core competency. The second is development and by that I mean skill development. So the enablement has to be kick ass. You don't disrupt a market by hiring the people from the legacy vendors and hoping they'll figure it out. You need fresh thinking and so really what that means is you hire sales athletes, exceptional sales talent that probably doesn't know anything about your market. So at MongoDB, the sales team, Oracle people did really poorly for the most part. We hired salespeople.

Hopefully no one is from Oracle here. Sorry.

Yeah, yeah, it's just the truth. And at Trip Actions Concur people and Amex people do poorly. So you disrupt the market by bringing in really strong sales talent, sales athletes and then just giving them amazing training. And that's, you know, the corporate enablement, sales enablement, product enablement. But then you know, strong coaching and just really being thoughtful about that learning journey from. I'm aggressive and I'm talented in sales but I don't know anything about databases or travel and expense management. So that's sort of the second pillar. You got to get that right. And then the third pillar is execution, which is sort of a catch all for everything else. It's the least important. It's important, but it's the least important of the three because if you have amazing talent and kick ass training, you could kind of like get out of their way and they'll probably do well. It's even better if you have like a strong framework for execution. And I'd say the sub disciplines in the execution pillar are going to be pipeline generation. And Lautney talked about the outbound motion. I think she was referring to bdrs. I'm a proponent, a strong proponent of having AES also responsible for outbound pipeline generation. If it's interesting, I can talk later about why. The second is champion building. So within sales there has to be a real methodology around how we identify a potential champion, how we discover their pain, how we turn them, develop them into a real champion, test Them, use them, et cetera. And then the third one is qualification, so that the sales team has a methodology that enables them to identify the opportunities that are worth pursuing and if so, what are the issues that are worth solving. But importantly, identify the opportunities that are not worth pursuing so that they don't squander their time. So you don't get from 20 to 100, in my opinion or in my experience, without having some maturity around those three pillars, the people, the development and the execution.

Makes a lot of sense. And I want to pull on a thread that Carlos brought up, which is plg.

Right.

That seems to be the acronym du jour. I think. There was a panel on Monday about plg and I've heard multiple people talk about PLG and their panels over the past couple of days. Maybe I'll start with Carlos, Share with our group what your take is on all this hoopla around these three letters today and if there's any PLG elements that are that currently exist at Trip Actions.

So I'll get to the second part in a second. But I was thinking about this. I knew this would come up given this audience and this event.

Well, given the Prep call and the.

Prep call and I've heard that there's been several sessions on PLG and David Sacks, who I think highly of, presented yesterday. So I know PLG is a thing. I was thinking about it and I think I'm speaking now to the founders. If your investors and your mentors are telling you, go do plg, go be plg, I feel like that's right, but not particularly useful. It's like telling your kids, go be great at school. Well, yeah, of course I'm going to do better in life if I'm great at school. But maybe I'm not smart enough. Maybe I'm dyslexic, maybe I don't go to a good school. And even if I do get straight A's, that doesn't ensure that I'm going to be. There's so much more to it. So plg, you know, having a product that has this crazy hook that goes viral, this amazing demo that makes people want to buy. It's amazing. If you have it, enjoy it. MongoDB had it. You could download this database, the free version, and the first 30 minutes were incredible. And then our salespeople ran around and found those people and monetized it. And so that was great. And at Trip Actions, it's great. People who have used Concur or Agencia or something else, and they see Trip Actions they're like holy shit, it looks like Instagram, but it does all this, you know, it handles all this complexity that I need to handle to get from point A to point B. Or they see our expense tool and they're like, wait a minute, I don't have to keep a, you know, a box full of receipts. I don't have to do ever expense reports. So it is great to have the hook. But you don't get from 20 to 100 on PLG because you know to get from 20 to 100 you're probably doing bigger deals and you're doing bigger deals at bigger companies. And so PLG makes for a great meeting. And I think if you're selling to a hundred person company, especially a tech company where they're really smart and they connect the dots quickly, sure, a great demo, a great use case will do it. If you're trying to scale, you're going to be selling to companies where there are lots of people in the involved in the decision. Some of the people involved in the decision will never even see the product. And so you need to have a sales team that can discover pain and build real value and can do top down in conjunction with bottom up. And so that's what we did at MongoDB and that was critical to going from 20 to 100 and then 200 and same at Trip Actions. It's been the key to going up market. We've quadrupled the number of Fortune 500 customers we have during COVID and that just doesn't happen. It happens bottom up but over 20 years. And your investors aren't that patient.

I was chuckling a little bit because as a vc I'm sure Anoushka can understand too. We're definitely guilty of saying try PLG like the magic bullet to help good.

Grades get a 4.0. Be smart.

Fair enough. Latin, Any thoughts on that?

So I obsess over experience. I think that's a huge part of being a CMO and a go to market leader. And it's not just the product experience, it's everything experience, right? How a salesperson shows up to a meeting, how someone interacts on your website. And to me bringing forward a product experience is a really smart thing to do. Like if you've got a cool. But it's not to me and that's a good demand signal. I think that there's like this purist notion of PLG that I guess maybe I reject the purist that it's you put your product out there. Everyone you know they upsell themselves. You don't even have sales reps. If you can do it, God bless. I just. I haven't seen that play out in my real life and my adult life. But I love the notion of bringing a product experience forward. And, you know, I'm part of a CMO community. And one of the most brilliant cmos is someone named Kevin Marasco. And he brought it home to me. He calls it a snack. And I'm like, that's brilliant. Everyone loves snacks. And it doesn't have to be a free trial. I think the other thing is, like, everyone's like, it has to be a free trial. It has to be a free trial. It can just be a product snack because your buying team is very diverse and there's going to be people on your buying team that want to get in and see the snack and test that it works. But you're right, the executive on your buying team is never going to snack out. They're just not. They might have a drink, I don't know.

But.

But.

So I feel like that's a very realistic way to approach it. And we've seen that work tremendously by bringing aspects of our product forward. And then the other thing that I think is really important about adopting PLG in your demand motion is before we would, as marketers put out content, and that was a hook, right? People would sign up for our content or exchange their email for content that just. Just doesn't work anymore. No one is filling out your forms for your content. And so you have to have something richer and more interesting to engage folks. And I think having some sort of experience or calculator or something more meaty is a really important part of a modern go to market motion today.

And the last topic I want to cover on go to market execution, I think will be kind of a fun one because we have half sales folks in the audience and half marketers in the audience. You know, Latani representing the marketers and Carlos representing the sales. Oftentimes there's some friction, some conflict between marketing and sales, especially as companies scale. So talk to us a little bit about what potential frictions you've seen in your career either. Carlos Rolatny.

Well, I'm cheating a little bit because I'm a recovering software salesperson who's now in marketing. But I think there's two. I'm going to approach this from two angles. I think marketers need to understand that the only asset that Carlos and his team have is their time, and they have to choose every single second. Of every single day wisely, not just if they want to make their number, if they want to have a job. And so I think about marketing led sales, meaning how do I put, how do I think about my sales team as the most precious, the most expensive channel? Just like I wouldn't go and send champagne to everybody who came to my website, why would I expect Carlos to follow up and call everyone who came to my website if that's not a good demand signal? There are other ways to follow up. So my job is to separate the most winnable demand signals, the most winnable and, and obsess over that sales velocity model so that I can put Carlos and his team in a position to win. And I think that if more marketing folks thought that way, it would help ease a lot of the friction and a lot of the passing bullshit MQLs to sales. So that's that side of it. The other side of it though, and my, I guess ask of someone like Carlos is when you create your plan, the worst thing that you can do to me is go off, you do your quota builds with finance, you come up with some territories and you do not involve me. And then I am stuck trying to feed all of these AES that there's no market LED lens on how these territories were created, how were these accounts selected? Why are we going after this? Is this an ideal customer profile? You know, and I think that. And so the more I think sales and marketing can work together to triangulate on a plan that isn't just quota builds, isn't just, well, you did this last year, times it by xyz. It's really market driven. Where are we going in the market? How many accounts look like that? How many are winnable? The better shape we are all in at the end of the day. So that's my ask of CROs.

Great.

I think there's, as you were talking about it, I think there's maybe a meta point which is high functioning exec teams are highly empathetic of each other and more so than they are of their own group. Meaning as CRO, if I'm part of a high functioning team, I have a stronger relationship with the CFO and the head of product and the head of marketing that I do with my team and I understand their challenges. And if you have that, I've been in organizations where sales and marketing couldn't stand each other and I've had the good fortune for two companies in a row now. I've worked with Megan Eisenberg who's a fabulous CMO at both MongoDB and now at Trip Actions. And we're completely aligned. She doesn't care really whether in a given month we hit our meeting conversion metrics or not. She cares did we make the number? And so we are completely aligned to what the company cares about versus what each team cares about. And I think that's really the, the core of when, when there's tension. Marketing is looking for a metric and sales is externalizing the responsibility for pipeline. And so I mentioned earlier, AES doing outbound pipeline generation themselves at Trip actions and at MongoDB. Tuesdays are special PG Tuesdays. So there's this entire cadence where AES select focus accounts on Thursdays, they do prep over the weekend, they present their prep on Mondays. Tuesdays are sacred. No meetings. It's all outbound prep. And we do PG wrap ups on Fridays when you have AES feeling that it's their responsibility to generate pipeline. Now, number one, there's more pipeline, that's great. But number two, whatever pipeline they get from their SDRs or inbound from marketing is a gift from the heavens and they treat it with the respect that it merits versus that lead's not good enough. They get like Morris the cat get all finicky. So I think that's what I think one of.

I worked for a CEO at Appirio, Chris Barbin, and we were having some dysfunctions across the team and it was funny. He sat us all down, I'll never forget this. And he said, this is your first.

Team.

End of story. Like, this is your first team and you're not the marketing team. You're not the head of the marketing team. Like, you're not the head of the product team and you're not the, you know, the head of the finance team. You guys are all first team. And to me, that I don't know, I'll never forget it. And it's created a real aha and a shift in mindset that I love what you were saying. I think you have to think about your executive peers as your first team.

So we talked a lot about go to market execution, which is no doubt a super core component of scaling your business. But just as important, maybe even more important, is the talent, the talent around your organization. So let me pass it over to Anoushka to ask some questions on talent and culture.

You know, maybe just to kick it off. Carlos and Latny, you've been part of organizations that have not just scaled, but scaled incredibly quickly.

How have you guys thought about maintaining culture during this period of rapid growth, maybe Latini kicking it off with you. So I learned a lot about building great culture at Appirio because it was a, it was a professional services firm. Our people were our product, end of story. And so I think having that mentality, even though you're a product company, because people make products. And so one of the things that I have embraced is something that I call the fun factor. So I think work should be fun. I don't think it should be a grind. I think that if you believe in what you're doing and you think it's cool and you're working with cool people and you're changing the world, that's fun. And it's not about foosball or snacks except product snacks, because I talked about those and they're cool. And so I ask people, what is your fun factor? And now we do a poll. Every all hands meeting, we do a pulse poll of the team. Out of the last 10 working days, how many days were fun? And our goal as a company is that 8 out of 10 working days are fun. You're inspired, you like who you're working with. And we say, if you're not like, let's talk about it, and if you can't talk to your manager, call me. And that's what we've striven for. And that's really worked well for us to embrace the mentality of it's okay, you should be enjoying this. And if you're not, let's talk about it.

I like that. We can call it Net Fund Score nfs.

Yeah.

Carlos would love your thoughts.

So I think on the topic of talent and culture, maybe talk about those separately. But with talent, I think it is, as I mentioned before, really important to get to crystallize who do we want? And that changes obviously per role. But as you're, as you're scaling a sales organization, you know, the things that I've thought about and have found to be, you know, super impactful is, let's just talk about the quota carrying sales rep, sort of the core unit of production. In the sales organization. We have intangibles and we have tangibles. And so the intangibles are intelligence. They've got to be smart enough to connect the dots, put the value prop in front of the customer, do discovery, et cetera. They've got to have drive or grit, which is really a combination of they want to win really badly. And importantly, they're willing to persevere through the obstacles to get there. So the combination is what I call drive coachability. They're not set in their ways, but they're not so coachable that the customer is going to push them around. So coachability is like there's an ideal range and then values. They're honest, we can trust them, we can feel confident that they're representing the company appropriately. So those are the intangibles. We want as much of those as possible, especially drive. Drive is the one that's most linearly correlated with results. Intelligence is more of a threshold value. If they're smart enough, they're smart enough. And sure, more is better, but really it's drive that scales. And then in terms of the intangibles, it's pipeline as I mentioned, it's pipeline, generation, champion building and qualification. And so if you get your profile right and you know what companies are likely to have that profile and you sort of go after people that have that profile, then what you end up building is a team with high talent density. And then so that's one element. I don't think you can have a great culture if you don't have highly talented people. And talent define the way, the way that makes sense for the role. And then in terms of culture, I think one of the things that I have found to be super impactful is having lots of two way or peer to peer communication. So it's been really hard during COVID with everyone over zoom. But having quarterly business reviews QBRS is critical. Every, you know, every level in the organization has a QBR where they come in and they say, hey, this we're going to do some training. The the leader is going to identify here's some things we need to get better at and we'll spend some time on it. But then every single person gets up and presents. This is what I accomplished in the last 90 days. This is what you can expect from me in the next 90 days. This is what I need from the organization. These are my challenges, these are my tailwinds and having that sort of moment in time where we get everything on the table. If you have a talented team with open communication, that can be a really important event to promote culture.

So just to pile on to that moment in time because many of you I would assume are preparing for next year and maybe even have started planning your sales or field kickoff. And one of the biggest mistakes that I see is like people don't take it seriously. And, and to me, field kickoff and invite your entire go to market team. Not just sales, entire go to market team is one of the most important Weeks of the year and you should do a mid year and it should be amazing. As good as a customer focused event. The content should be reviewed, you should have stingers. It should be high energy. That meeting sets the tone for the entire year. And I say never waste a deadline. So if you need to get your strategy done, get it done. If you need a new pitch done, if you need a new cert done, you need the website updated like that is showtime and such a critical event. It's not just a meeting in a bad Hilton ballroom. Like make it really impactful for people. So somewhat tactical but I found to be tremendously important.

I agree completely. And just one thing I'll add to that one thing I've seen work well, you can only do it up till a certain size is actually have the entire company at day one. You know, day one is typically all about inspiring and that benefits the entire company. And typically days two and three are more about education. But that day one, if you can get the whole company there, do it right and then get the whole company there, pays dividends.

Yeah.

One question. You know, we've been having a lot of discussions with CEOs on and you know, some of you might be experiencing.

On your teams is this feeling of.

Burnout and there being kind of a great resignation where a lot of people are, you know, opting to leave companies.

How have you guys combated burnout and maintain morale on your teams? I think if Carlos and I had the answer to that, we would be like doing a TED talk right now because there's no answer. I mean, I think every single one of us are dealing with this. We talk about it every week in our executive team meeting.

It's very real.

And I think for some of us Gen Xers it's a head start scratcher because we're just used to grinding. Right. But and so the way that we've approached it and the way that I have approached it with my team is my father in law has a saying that everyone's going through something all the time and this is challenging for us because we want rules. We want to say, well, if you know what, people are just working too hard and if we just give everyone Friday off, this will go away and we won't have to deal with it.

Right.

Well, maybe that makes it more stressful because they don't want to be at home because there's some situation going on there. And so that's the challenging nature of it is you really have to look at what is going on with that person. And try to make accommodations at the individual level, which I think as organizations especially scaling organization that want rules and want categories, this is not fitting into that. And so we just have to maintain flexibility. And I think we talk about it every week and it just has to be a topic and a number one priority.

Yeah, I'll piggyback on. I'll second the thought that I the notion that I don't know the answer, but I've definitely made some mistakes during COVID At the beginning of COVID you know, we were only. It's only going to be two weeks. So how do we maintain productivity during these two weeks of working at home? Well, I know we're going to have two standups a day. 7:45 to 8:30 and another one at the end of the day. Keep everyone. About six days into it, people are like, we have nothing to talk about and we're meeting twice a day. And so I discovered zoom fatigue before it was a term, but so I did that. So don't do that. And hopefully no one is. But you know, I think people are most engaged when they're growing and learning and winning, feel like they're winning. And so one of the things that we had to do at Trip Actions is adjust what is the definition of success in this environment. And we introduced new metrics into the sales team that were real but that were also achievable in this environment. And so if people feel like they're winning, that's a lot. And really getting more creative around how to deliver that enablement so that they feel when they put their head on the pillow, I'm better today than I was yesterday or a week ago. If people feel like they're winning and they feel like they're growing, that goes a long way. I will also say that Covid has had, you know, has provoked existential crises for a lot of us. And many people have decided, hey, this is not for me, whether they were a server in Manhattan or an SDR in Palo Alto. And I think that's okay. And some people have decided to go change careers. And what that means is that there's pressure on the leadership to really always be recruiting the right caliber. So I don't believe in like coercing people to stay. It has caused people to re examine their careers and their lives and that's okay.

So one of the things that we talk about weekly at the executive team level, but also on every single team is recruiting. Everybody recruits. And when you're trying to double every single year, the only thing standing in your way is hiring great people. Like, that's it. And what I think a lot of functions outside of sales don't understand is that if you don't hire to plan, like that's a fireable offense. Like when you're a sales leader, if you don't hire to plan, you can get fired for that. But when you go outside of sales, they're like, oh well, oh yeah, that interview. And so injecting a mindset of no, no, hiring is your number one priority. And so on my team meetings now, the first thing we talk about is who's your open hiring pipeline? Why are you getting behind on your hires? And it's, people are like drowning and they don't understand. I'm like, I'm giving you budget, here's a lifeboat. You got us one stroke to get in. And so I think that's a really important thing to think about outside of just sales because it's more commonly accepted in sales. But looking across all your teams, let.

Me piggyback on that. I think there's a, there's a dangerous dynamic that exists sometimes, which is recruiting is the recruiting team's problem. It's my job to like interview and qualify. But it's their job.

Yeah, I don't have any candidates. Well, have you gone on LinkedIn?

That's right.

Have you asked your network? Are you. This, this is your problem, not theirs.

It's the analog, it's leader recruiting is the analog to aepg. It's their responsibility. And anything the talent team does is gravy on top. And so I think that's a really healthy sort of way to operate.

On the topic of recruiting, I know one thing many individuals on various teams struggle with, founders struggle with, is how do you think about the decision to externally hire vs promote from intern? And you know, would be curious for both of you how you've thought about that decision on your teams. Carlos?

Yeah, sure.

I think it's, it's, it's just a, it's a mathematical equation. So first principle is promote if possible. It's healthy for the organization. They already, we know who they are. And so if, and so really the only reason not to promote from within is if we look at the individual and we say, okay, for the new job, that they would be in the skill gap between what they have today and what they need to be high functioning in that new role is greater than what they can fill in the time that we can wait. So in a high growth company, it will happen that there are amazing people whose career is doing this, but the company's doing this. And so they do need to get layered and you need to bring leaders from the outside, but it's only if there aren't people inside that we believe can close the skill gap in a reasonable period of time.

I think also thinking of lateral moves, sometimes you have someone who isn't ready now or you don't have a role. But gosh, if they got excited experience as a customer success leader when they came back, how much richer and more educated and more experienced would they have? So I think about it more as back to my father in law, everyone's going through something all the time. So looking at the individual and saying, where do you want to be? Where can you be? And how do we get you the most rich experience here to get you where you want to be? And always ask people where they want to be two or three jobs from now, because a lot of times they only see one move and we need to be helping them make that second or third move. And I think that helps you fill in gaps organizationally, retain people, and then you see where you don't have chess pieces and that's when you hire and.

You know, maybe as we're kind of wrapping up, you know, Latini, Carlos, you've.

Both been at organizations that have gone.

From, you know, zero to over 100, which is pretty remarkable.

Any summary or final thoughts for the audience?

Latini?

Giddy up.

I love it.

Giddy up. Yeah, I mean, I think you have to always be learning and growing and challenging yourself like the second you feel like, you know it all, like, I hate being here actually, because I'm like, I don't, I don't, I don't know, I'm learning, I'm growing. And so I think the second that you stop doing that as, as a leadership team is a very, very dangerous place to be. And then the other thing is, you know, 100 million, I'm thinking 300 million.

Right.

So you again, back to being bigger, thinking bigger. Always be thinking much bigger than you are today.

I guess I agree with all that. I think slope matters more than scale. And so when you're hiring, thinking, oh, I want to get to 100 million, I need someone who has overseen 100 million. Well, if they oversaw something that went from 80 to 120, they might not be very good at building. And so someone who went from 10 to 40 is likely a lot better than someone that went from 80 to 100. And so it's the slope. Yeah, exactly. So the slope of the curve that they oversaw matters more than the scale of the team that they that they oversaw.

Awesome. I think we're just wrapping up. Can everyone give a round of applause to our two amazing panelists and go out there and build 100 million ARR plus businesses.

Thank you.

Thank you, everyone.

Thanks, guys.

It.

Sa.

You. It. Sa.

Sam.

Sa. Sam. Sa. It's awesome to be here. Thank you so much for having us.

Hello.

Hello.

It is awesome to be back and with this group in particular. Because it was February 2020 when we were working hard on our state of the cloud at that point and were shut down, we ended up doing that virtually. But a huge shout out to the Saster community for pulling this together. And we were just with Jason and the team in the speaker's lounge before this. And what I would love is if we could give a round of applause so loud that they can hear it as a thank you for pulling this off. It is totally fitting that I Our first event back in person is this community with all of you unveiling an updated 2021 State of the cloud for this group.

As Byron said, we are thrilled to be here live in person with you all on the Sasser stage. For many of you in the crowd, myself included, this is my first WeOutside moment in the tech community in almost 18 months. But when we take a step back and we think about all the change that's happened in the market, we are just awe inspired by all the innovation, the growth and the resilience that we've seen in the face of uncertain times.

The unicorn birth rate has accelerated beyond our wildest dreams. So as we were putting together today's presentation, we asked ourselves, how exactly do you build a unicorn in today's State of the Cloud 2021 update? We have those answers.

All right, so we'll dive in. And in traditional fashion, we're going to try to hit it on at least three key areas. The first is to talk a little bit about the state of the industry, what's happening in cloud now and where we're at. The second is we're going to do a deep dive. And as Mary previewed, for those of you out there in the middle of building your unicorn or about to launch on this endeavor, we're going to try to give you a little bit of a how to guide from our lessons learned over the last two and a half decades in this industry. And then the third is some predictions where we think we're going ahead and we're going to talk about the mega trends within cloud that we think will propel us to for this next great horizon in front of us. So to start, we'll paint the picture for where we were at this 2020 State of the cloud. In February, as the world was going through this volatility, we were just passing a major milestone which was the one trillion dollar mark. And if you looked at the pure play public cloud companies that comprise this index, and this is the BVP NASDAQ Emerging Cloud Index, we had just crossed $1 trillion of combined total market cap. And at the time we made a prediction, we said that we see a clear line of sight to a doubling of that to a $2 trillion mark within the coming years. Now we consider ourselves fairly bullish on cloud. We've been the largest early investor in the entire segment. The vast majority of what we as a firm do is cloud investing. And yet even we massively underestimated how far fast this next milestone would be passed. In fact, in just over a year the industry Lew past the 2 trillion mark and saw this massive acceleration. As many people said, this pull forward of cloud adoption driven certainly by Covid and the distributed work imperative as well as the realization of this re platforming of software and how that trend was happening at a rapid rate. And so if we now play forward to where we are today, we're about to pass another trillion dollar milestone. We are within a rounding error and mind you, yesterday didn't help. So we've lost a little bit of ground and a few percentage points. But we're within a rounding error of a 3 trillion dollar milestone which is the market cap of just the public cloud companies comprising this megatrend. And we'll dive in in a second to the private companies and that's where we'll spend most of our time. But let's look at this over the index and really what's happened over the last eight years. 12x is the return profile if you'd bought just the average public cloud company. And as I mentioned we worked with Nasdaq to actually form a formal tracker on this in a basket that's under this ticker EMCLD and then WisdomTree actually licensed that into an ETF and it has continued to perform at a staggering rate over the last year. It was actually the top performing ETF on all of Nasdaq which is a statement to the power of this community and what is happening in cloud, in SaaS and in this broad based tech phenomenon. And then if you look just at the top basket and mind you, these include some Companies that have blended business models. But what we tried to show is what's happening in cloud relative to some of the other mega tech trends. And you hear a lot about this Fang Basket and really the drivers of mobile and the Internet, which were the catalysts of a lot of tech adoption over the last several decades. But our thesis internally is that those horizons and the growth rates of those markets are starting to pull back and that you see a changing of the guard and it's really the cloud basket. And we pulled out six names in particular with Microsoft, Twilio, Shopify, Adobe, Amazon and Salesforce as the six new guard flag carriers. And if you look at the relative performance, you see that separation of how they've pulled ahead. And then as you look even over the last year and a half, what you see is this further separation and we benchmark this relative to also our own index. You see the Fang Index and really what you see is this next mountain of SaaS businesses being created that we believe will be the story of the next decade. You're all living it. This is your day to day, you've been part of this for years. To you this seems standard and obvious. It is just becoming that for the rest of the world, corporate America still has a minority of their software storage spend going into cloud. Globally this is still a new phenomenon. Western Europe is just in catch up mode. China is in the early days. What we see in Latam, what we see in India, what we see in Japan, this trend is rolling through and that's the excitement and why we're all here today. And part of this ecosystem is because this explosive force is starting to become more and more obvious to the mainstream economy. Now I told you that we were going to talk about the private side and dive into that. And so probably no better start than in unicorn land. And each year we work with Forbes magazine and we put together the Cloud 100, which you can think of as the companion offering. So the cloud index is the basket of the public stocks. The Cloud 100 is the basket of the top 100 private cloud companies. That group, for the first time in history was comprised of only unicorns. This year, not only that, but we had to leave 50 companies off the list that were also unicorns but couldn't make the cut from our judges. And so in just a one year time period, there was a 74% increase in cloud unicorns. And almost a new unicorn in the industry is being created per day right now. And in the cloud industry it was at a rate of more than one per week. And so ladies and gentlemen, this is the current class of the industry at large. There are over 800 across all sectors, geographies and industries in the Cloud100 as I told you, there are 150 in the Cloud100 alone. That group comprised on their own, not included in that public market cap graph, almost or over another half trillion in market cap. And these are the names that are leading that cause these are companies in their own right that include Decacorns. Some of these are cash flow positive. These are the IPOs that the public investors are tracking most closely. And this is a sign of what's possible and what inspires all of us to be in this industry and to be part of this transformation. And if you step back and think about what will 2021 be in the arc of this tech curve in this adoption cycle, the numbers are staggering. In fact, we are about to set records on just about every metric that the financial folks track. If you look at IPOs, which may be a starting point as it's this bridge from the public, from the private to the public, we're about to break records there already we have exceeded prior numbers and if you roll forward to projections for the end of this year, we may cross 2000 in terms of total tech and venture backed IPOs including Toast, which I'm proud to say is a Bessemer portfolio company that was the largest vertical SaaS IPO in history last week and one of the largest software IPOs in history, as well as Procore, another Bessemer company and a number of others that are steadily setting records and setting new milestones for the industry. Now if you look forward to venture dollars and probably why a lot of you are here that have either raised early rounds and are in hyperscale mode or considering jumping out of your cushy employment to start a business, we want to talk to all of you or that maybe are about to raise your first rounds. This is the stat that you probably see all the time. There is a flood of venture dollars coming into tech at large. But in software and cloud specifically, the numbers have never been larger. We will break all records this year in terms of dollars in then if you look at it in terms of globalization, that trend is continuing, massive jump year over year. And then if you look at dollar outflows which are leading indicator to recycled capital, record number of exits again, record number of IPOs, record amount of MA dollars and the stat that's not on here is that there is a record amount of dry powder still waiting to be deployed with all of you. Literally. There has never been more money that have been raised in venture funds and closed, but not yet allocated or spent. And so while we're breaking deployment records, there's still these piles of money waiting to find the next great companies to continue these trends. And this is why there's so much excitement for the entrepreneurs and for the investors. The outcomes have never been larger and the path to scale has never been faster. One of my first venture investments years ago was Cornerstone On Demand, which went public at, you know, half a billion dollars and 60 million of run rate ARR. That's a series B these days for a lot of companies. And as you look at the timescale here, and these are all Bessemer companies that we drew from some of their private data in that evolution to near public, you see that the time scale is accelerated. Hashicorp is still a private company, one of the Cloud 10 on that Cloud 100 list. They've blown through the hundred million ARR mark again setting a new curve. And then as was announced last week, Canva is now may become the fastest growing cloud company to hit the billion dollar milestone. And these are the milestones that are now possible by private companies. It's not the unicorn mark for valuation, but it's the unicorn mark for ARR. There are private cloud companies that now have Line of Sight or in Canvas Case and a few others will be crossing the billion dollar ARR mark while still private. And I'll tell you, I was a founder at the start of this cloud wave within six months of when Salesforce was founded and 2/3 of my venture capital meetings would end essentially on the first slide where I would talk about cloud and at the time it was ASP and then became SaaS. But essentially why we were so excited about our business model. And venture firms fundamentally said like I don't get it. Why would you do, why would you select this business model where they pay you over, you know, monthly rates and yet you have all the costs front loaded like that's the stupidest thing both ways. And one of the meetings at the end, one of the partners said, you know, I will bet you that Salesforce will never cross a billion dollars in, in revenue and will never make a penny of profit. I should have taken that bet. I made the bet with my life and starting the company instead. But I just love the fact that fundamentally you have all fought that conventional wisdom. You have all proven that not only is it possible, but increasingly in many cases it's probable. When you get the flywheel spinning that the inevitability of cloud adoption is upon us. And that's why we're going to have some fun today talking about how do you build your unicorn? First on valuation typically, but hopefully also in terms of ARR. And we're going to turn it over to my partner Elliot to talk you through some of the 10 laws lessons that we've pulled from the companies we've had the privilege of working with on their journeys to this point.

Thank you, Byron. So, as Byron mentioned, here at the firm, we kind of do this cloud thing a lot. We been doing it for a long time. Over the last 20 years, we've had the privilege to work alongside some of the greatest cloud founders to ever do it and they've worked with us to synthesize our best practices for how you can turn your cloud soonicorn into the next great cloud unicorn. I have to be honest, I just want to give a shout out to whoever brought the life size unicorn with them sitting next to them in about six rows back. I absolutely love that energy. So what we're going to do do today is talk to you about what we call the Bessemer Venture Partners 10 Laws of Cloud. Now, while we don't have time to walk you through each and every law, we're going to identify the three and walk you through those that if you get these right, you'll be well on your way to scaling the next great cloud giant.

Let's see.

Okay, law number one. And the cloud economy scale wins. I think most of you recognize this face. It's Toby Luckey at Shopify, and he thinks about scale and defines it the same way that we do. There's really two vectors there. Typically in a category leader in the cloud, you're going to amass somewhere around 66% or 2/3 of the market share. But scale is also defined by executing a product strategy that allows you to set the pace of innovation not just for yourself and your company, but for your customers, for your market and ultimately, ultimately your competition. You know, we've seen this play out in a number of different categories in the video conferencing space. I think many of us have probably heard Eric talk about his days at WebEx when he was leading engineering and he woke up one day and he said, I don't have a lot of happy customers anymore. He realized he was no longer setting the pace of innovation, or maybe his company was no longer. We saw the same dynamic play out with Skype and shout out to then Zoom team because they've obviously built an incredible product that we all use and throughout the pandemic they've helped this community stay connected as well as our colleagues and our loved ones. And they've now achieved more than 64% of market share and it continues to grow. As you scale and you think about setting the pace of innovation in your product, we talk about something, you know, successfully finding your second act. These are some of my favorite examples. I happened to bump into Edith Harbaugh, a rock star cloud founder of LaunchDarkly and we were talking about their scaled story because we were there pretty early and they found their roots in feature flag management and then found their second act and experimentation. Twilio for example, voice, video and chat. We all kind of know that cloud giant story, you know. Another way to sometimes find your second act is through acquisition. Now they had already played in the email space, but they went much further through their acquisition of Sendgrid and then cloud infrastructure, soon to be giant Hashicorp. They focused on security to start with their vault product and then they moved into provisioning and networking. And what I want to do for the next couple of minutes is talk about one second act that we've seen pervade a bunch of vertical SaaS, companies that have just killed it. And that's the power of payments. So if we go back to the Shopify case, you know, in 2012 I believe it was they launched Shopify Payments. This was all about really at its roots, the product experience. How do you make your customer's customer have a great e commerce experience. It was around reliability, how fast were the transactions and security. But as you can see on the chart, as the company scaled, the percentage of payment volume and payment revenue helped the company amass humongous scale and maintain a top line growth rate. We've seen the same thing play out with a great cloud soon to be public company hopefully and service site. They are the leader in field service and contract work. They launched their payment solution product a couple years back which allows when a contractor comes to your home or your business and they finish their work, they can accept your payments over credit card, mobile phone, online and even over traditional phone as you see also on the chart. While they're earlier in their phase of growth on the second act in payments, it's definitely going to play a big role in their future growth. Then lastly, the granddaddy of them all, tope now Byron talked about their record setting ipo. It's a little unfair to talk about payments as a second act with Toast because It was always integral to their product strategy. However, if you look at their recent kind of ipo, in their recent years, the payments has totally exploded. But they've also written the book on product innovation. When it comes to the second act, they found their second act, their third act, their fourth act. They could basically write like a Hamilton style script to cloud product innovation. You know, if you think about it, we've all probably engaged with Toast, whether it's at a point of sale terminal or when, you know, maybe a server or waiter asks you to pay your bill at your table. And that was them thinking about, you know, the front of the house. And then they said, well, how can we innovate and find a second act in the back of the house? They did kitchen display management so people in the back of the house could understand how they were interacting with the front of the house. Then they innovated and found another second act. They started thinking about the top of the house. And for the restaurant owner, how can I do multi restaurant management solutions? How can I do things like payroll, labor, supply chain? And then they even have something called Toast Capital, which is a loan product which allows restaurant owners to renovate their space, bring in new equipment and increase the experience for just not only their workers, but their customers as well. I just want to give another special shout out to Toast Chris and the team have totally crushed it and they're just scratching the service even though they have 40,000 customers to date. The next law, investing in the sales and marketing learning curve. So our friend Tui at Procore, he's done this extraordinarily well. And just like Toby, he thinks about it similarly. To us, it's all about iterating, it's about failing fast, it's about testing things on sales and marketing. The market always changes. The strategy that you have on day one is going to be even more or less valuable by day two and beyond. So as you go across the curve, we're going to start in, you know, for the founders in the room, what we call the initiation phase. This is founder led sales. Now as founders, you have superpowers in go to market that I guarantee you none of your other employees have. Now why is that? It's because you're basically the head of everything. In the early days, you're the VP of marketing, the VP of product, the VP of finance, hr, and you're certainly probably the head of sales. As you mature through this phase, you want to test, right? You want to bring in your first batch of sales reps. Let's Call it two or three, but you do not want to even think about moving to the next phase until those reps based on their booking and sales yield are covering the fully board cost of the sales org. Then you're ready to move. You can finally take one of your mini hats off as head of sales and hand it over to sales led sales, what we call the transition phase. You've got some reps that are working, but you've got to scale a professional org. This is all about building the sales playbook, a repeatable motion, building out some segmentation, maybe even some geographies and some territories. And then the rule of thumb is you want to see kind of 2-4x coverage on the fully board cost that's evidenced in your bookings and sales yield. And when you do that and you're starting to think about customer success and account management, then you can move into what we call the economic execution phase. This is really about finding coin operated reps who can move into your repeatable sales org and scale it as fast as possible. You know, as Tui was talking about, you know, he started to see things after the testing phase that he knew he could scale. But the mantra that we tell our best cloud founders is you gotta nail it before you scale it. Thinking about Tui a little bit, you know, he's an interesting founder. You know, probably like many of you in the crowd, he lived the experience. He was in construction management and the solutions that were there today. He hated the experience. So he went out and custom built a solution to solve the very problems that he had experienced himself. He was the de facto head of sales in the early days and he tested and brought people in to help him scale the org. And after that was successful, he moved into sales, led sales and brought in Dennis to scale the org again. It's about process hygiene. It's about a repeatable playbook. It's about finding these reps that can help your org scale. And as they start to build the channel, build inside sales, kind of separate farmers from Netlieu logo sales executives, they moved into the execution phase. Now one thing we're gonna talk about in a couple slides from here that we see with the best companies, as you succeed, your customers succeed. And with Procore they were able to turn some of the small builders and construction managers. And as the product evolved and the sales and marketing or got better, they expanded to be even bigger companies and ultimately champions for Procore's business where they were selling the product on behalf of the company. There's three Other kind of strategies that we've seen in the pandemic or I don't know if we're post pandemic mid pandemic, I'm not sure where we are. But these are three strategies that we all know about that we saw really take hold. First up, product led growth. This is all about how to you retool and rethink the product experience and ultimately the user experience that brings time to value forward, but also presents new opportunities and easy opportunities for people to buy while your sales team isn't there. Usage based pricing, you know, there was this world where, you know, maybe two, three years ago you could take your customers and your prospects to that juicy steak dinner to get them over the line. That's really hard to do. So what that means is if you.

Use.

Usage based pricing, you lower the barrier of entry for new customers and can also attract your existing customers to use the platform even more because pricing is transparent. In this model, NDR opportunities are big, expansion opportunities are really, really big. And we're seeing this trend more and more. And lastly, we'll talk a little bit about cloud marketplaces. These are the marketplaces that are kind of used in conjunction and with the big guys. Azure, gcp, aws, gotta give a special shout out to tackle IO. They're the best startup that we've come across that will help you as an early stage cloud founder, get your product prominently placed, marketed and priced in these cloud marketplaces. They ran a survey recently and they found that 74% of B2B SaaS, software buyers, have either already bought in the cloud marketplace or plan to do so in the next 12 months. And that represents billions of dollars of transaction in a marketplace where your buyers already are. And the last trend that we saw happen in this new normal is that the traditional sales funnel, that's gone. It's no longer static, it's no longer straight line. Companies and customers and users come in the funnel at different, various points in the traditional funnel. So what we've started to advise companies to do is think about how do you build a flywheel that creates champions? It's about how do you captivate them, how do you catalyze their usage and engagement, how do you cultivate them and ultimately create more champions that again, like in Procore's case, end up selling the business on your behalf. One of the best examples that we saw is a company that Mary and I are lucky enough to be partnered with and that's Hyperscience, an enterprise automation company out of New York City. When the Pandemic happened. They just snapped into the new normal better than just about anyone and started to figure out how do we get this flywheel going. It started with content marketing and their approach of telling their story. They moved really quickly to putting their customer out there because again that juicy steak dinner or dropping by the office, that was no longer an option. They launched this thing called things our customers say and they launched a pandemic survey to figure out how does usage changed, how has engagement changed and how can we market to you better in order to catalyze they slash time to market and these big kind of machine learning enterprise tools. A lot of it has to do with customer readiness. And they said how can we give more bite sized pieces of the platform and get time to value there quicker because again we can't be on site doing implementation the same way. Then they rethought the way that they go into kind of their culture of bringing the customer into the product innovation experience in terms of cultivating. They overnight developed a remote first playbook for their customers that really focused on scalability, ease of use and self service. And then at the same time they put in new automated flags for themselves that when a company was about to get or a customer was about to get to a point where they went into a new usage tier or upgraded the service, they had a dedicated swap team to make sure that that experience was stellar. And then lastly they really invigorated how to create champions. They invested heavily in their customer advisory board, more than doubling it. But what we found most exciting was the team said, well we should really because we can't go on site in the same way and speak to executives. We should give people proprietary custom reports, analytics and dashboards so our existing champions and our emerging champions can talk about optimal usage, best use cases and ultimately articulate ROI inside of their org which helped expansion and net new logos in their respective industries. The results were astounding. While a lot of companies, particularly in kind of this enterprise automation space, were trying to figure out what do we do, how do we do this? The product value prop is still there, but selling it and implementing it is much harder. Peter Brodsky and the team, they saw 250% year over year ARR growth, 10x increase in platform usage. Again this self sufficiency, how do we drive higher user engagement? 140% overall account growth and 170% net dollar retention from an ARR basis. You know, kudos to this team. They snapped in, they got the flywheel going and the results kind of speak for themselves. So what we've talked about so far in this section is, you know best in practice go to market strategies that can help you increase user metrics and user engagement engagement. And my partner Mary, who is a SaaS metrics guru, she's going to tie it all together so you can scale your startup as efficiently as humanly possible. Thank you.

Now the go to market and scaling insights that Elliot shared in Cloud Laws 1 and 3 will inform Cloud Law Number 5 the 5 C's of Cloud after tracking and growing with many cloud companies over time, and even founding some, we at Bessemer identified five key metrics that we suggest that you use to track and to scale your cloud company. And we call these the five Cs of cloud. They include Carr, or committed annual recurring revenue, CAC, payback, customer acquisition Cost Payback, Customer Lifetime Value Churn, and Cash Flow. But in recent years, as we've continued to evaluate the growth of cloud companies, we realized that there's another metric, another C that we can add to the equation and we introduce here the Cash Conversion Score. It is carr, or Committed Annual Recurring Revenue divided by total capital to raise to date minus cash and as such, it calculates the return on invested capital of $1 ever invested into a cloud company. If a company has a cash conversion score of 1x, $1 of investment yields $1 of top line recurring revenue. Given how closely it measures return on invested capital, it's therefore no surprise that it's a powerful proxy for returns across the Bessemer portfolio. Companies that had a cash conversion score of 1x at the time of financing actually yielded an internal rate of return of 100. We developed one of our famous Good Better Best metrics, Good Better Best frameworks that you can use as you scale your cloud company while leveraging the cash conversion score. 0.25 to 0.5x is good, 0.5 to 1x is better, and 1x or more is great. We therefore would like to reintroduce cloud law number five as the six Cs of cloud and we encourage you to go to be to review and learn more about these metrics. And now that we've explored a little bit about the six Cs of cloud that you should use to track your cloud business. We'd love to share some insights about the environment in which you would be building your cloud business in today's age of unicorns. Or should we say decacorns? If we look at the top 10 Cloud 100 companies from 2021, they're actually the average to be a decacorn with an average of a $20 billion valuation and an aggregate equity value of 200 billion 2x increase year over year, which shows the power of the cloud today. Toast and freshworks, as you'll see here, have already gone public. Looking at the entire Cloud 100 list as a whole, as Byron mentioned, it's at $518 billion, up 94% year over year from 2020 when it was worth $267 billion. This increase in valuation we credit to tailwinds for cloud adoption, investor understanding and appreciation of the cloud business model. And two things that we're going to explore more here. Revenue growth rates expanding and multiples expanding as well. Using the Cloud 100 as a heuristic, you see that cloud multiples are expanding dramatically over time. The average Cloud 100 company so the top cloud companies in the world at any one Moment had a 9x ARR multiple in 2016, increasing 270% until 2021 where it earned a 34x multiple. Absolutely incredible. And it's not just that multiples are expanding, growth rates are increasing as well. Again, out of the best cloud companies in the world, they were growing an average of 60% in 2017, increasing to 90% in 2021. And what you'll see is that the top quartile cloud companies actually accelerated in growth rates to 110%. We found at Bessemer that Covid really opened up some TAM expansion opportunities that cloud companies were able to take advantage of. In particular, beneficiaries were in collaboration, productivity and data infrastructure software segments. Tying these together, though, we note that investors are actually willing to pay more today than they ever have for the same growth rate. It's the best time in history to build a cloud company. Between increasing growth rates, expanding multiples and investor sentiment, we're seeing today the rise of unicorns. And in the next couple of slides, we'd like to discuss a few of the other key trends that we're seeing in the private cloud market today. First of all, the growth of cloud is not unique to Silicon Valley. It really is global. At Bessemer, we're lucky to be invested in Mambu in Germany, Canva in Australia, Contract Book in Denmark. And what we've seen is that that trend is only going to continue, especially with the growth of technical talent internationally and beyond. Just expanding in geography, we're finding that cloud has expanded dramatically in subsector as well. Between BI and analytics, HR security, vertical software, we're seeing cloud impact absolutely every single industry segment and subsector 2 for which cloud has had an outsized impact of late are data infrastructure and fintech. With companies like Hashicorp and Stripe. What we've seen in the last 12 months is that these two segments have grown dramatically thanks to Covid tailwinds and the broader trends towards cloud adoption. And these two segments actually represented the highest total valuation of subsectors on this year's Cloud 100 list. And now that we've discussed the state of the private cloud market today and the trends of the unicorns being built today, I'd like to invite Elliot back up to share what we will be seeing from the unicorns of tomorrow.

Thank you, Mary.

Okay, so let's have some fun, right? It's predictions. Who knows if all of these are right, but we do our absolute best. One of the best annual traditions we have at Bessemer is we put the partnership together, our investment team, marketing team, everyone gets together, we sit down and we try to figure out where are going to be the biggest trends and opportunities for the early stage cloud founders and unicorns of tomorrow. We're going to walk you through all seven of them. I'm going to take the first three and then I'll pass it off to my colleagues here. Prediction number one, the continued unbundling of the virtual office. So when Covid hit, what happened? We all had to go work from home. While many of us spend hours and hours, maybe even more hours in the pandemic working out of some of the traditional and legacy office suites like the Microsoft Office suite or maybe even the G Suite, what we saw is the emergence and the superpowering in the remote work environment of some purpose built, dedicated solutions that have really achieved scale and the kind of meeting and calendaring space everyone's kind of heard a little bit about Calendly and their story. One of the best bootstrapped and now VC backed stories to ever happen in SaaS. Undoc, another really interesting yet earlier stage company in that space. I'll shout out two more. You know everyone went remote. All of you are probably hiring more remote work from anywhere. Mural and Miro are two of the biggest, best collaborative tools out there to make sure that you keep the trains running and people are working just as effectively as they were when everyone was together in the office. And then lastly, I have to give a hat tip to Hopin. You know, two years ago when we were trying to figure out, well, what do we do with faster? What do we do with our Cloud 100 we were able to use tools like Hopin to do virtual events and now hybrid events. And I think the hybrid new normal is what we're gonna see from events in the future. Prediction number two, we're bringing SMB back with fast. Of course we've talked a lot about Toast because the restaurant industry was just ravaged in the pandemic. But also in the vertical SaaS play, we've seen a ton of new emerging players. I have to give a shout out to Dave and Song, two of my good friends over at Squire who have revolutionized how people think about kind of the barbershop and salon industry. Some other great examples there, Service Monkey and the car and automotive repair space. One of my favorite emerging companies since they are in the coin operated laundry space where, you know, it's a legacy business and we're digitizing it and taking it to the cloud. We've talked a lot about remote work. You know, you're probably again hiring people all over the place, but PIA Global, a great company in the HR space for international payroll and all the tax things you need to think about. And then lastly, I'll give a shout to my second home, Toronto, Canada. ADA support will help you manage the problems that your customers have on your behalf in a remote fashion. And then lastly, diversity equity inclusion tools, they kind of take their rightful place. I'm going to take a little bit of time. This one's personal for me. I've been a venture capitalist for 16 years. It shouldn't shock anyone in this room that I don't look like your average venture capitalist still today. So a lot of these tools, there's this new discussion about what can we do as a community, as companies and as leaders to help DNI efforts inside of places like Bessemer and the cloud companies that you manage as well. So I'm gonna shout out a couple of these. I'm gonna start with Cindio Maria, incredible cloud founder and her team. They're focused on pay equity. They've got the best platform out there in an analytics suite to make sure that people are getting equal pay for equal work. In the training space. There is a dynamic founder over at Unpacking. Just Google it and the moment you see her you'll say, I need to learn more about this business. And I'll also shout out Diversio, another Toronto based business that even Bessemer has partnered with to help us understand where our DNI challenges are, but also chart a path for solutions so we can make sure that everyone inside of our company and they work with our portfolio, companies are having equitable experiences.

Awesome. I'd love to now talk about prediction number four, which is that data and machine learning infrastructure accelerates to new heights as more data is being created and is available than ever before. We're seeing trends emerge in the enterprise data stack as well. From moving data to storing it, querying it, visualizing it, monitoring it. The opportunities here are endless. We've partnered with Imply Data and Real Time analytics and Firebolt and Data Warehousing. But the opportunities here are vast. Prediction number five the Rise of the Citizen Developer and Creator we are fully in the age of the democratization of software development and we're seeing tools like Zapier and Webflow completely democratize the ability to do technical software development in enabling non technical users with technical skill sets. But we're seeing a very similar trend emerge with the use of creator economy tools. Users can develop, manage and distribute unique content without dedicated technologies, design resources and tools like this include the likes of Canva, which is a Bessemer portfolio company. I'd love to invite Byron to share the rest of our predictions and to close us out.

Thank you Mary. So number six, double clicks on the fintech trend that we saw in the late stage private space of the Cloud 100. The fastest growing segment within our Cloud 100 list this year was FinTech and we're seeing that roll through through to the wider end of the funnel for company creation as well. And certainly that is around the unbundling and the Neobank mindset with the B2B overlay to that as well. And the enabling tech. We're also seeing increasingly our vertical SaaS and our SMB SaaS solutions are embedding fintech products into them. As Elliot talked a lot about in the second act, how it's become a powerful driver for companies like Toast and Service Titan for their second acts as you get the payments flow as part of the business interaction. And for those of you building apps out there, we encourage you to think about this much earlier in your company's life cycle because there are so many enabling technologies now available. Certainly when you get into security, identity fraud and then obviously crypto in and of itself its own category, but increasingly has a place in the B2B world as well. And that brings us to number seven, which is really a deep dive on one of the themes that you saw in the SMB world as well, which is the verticalization of software. Again, one of the largest IPOs in software history last week was vertical SaaS for restaurants with Toast in the Bessemer portfolio alone earlier this year. Procore and construction, ACV auctions and automotive, cs, disco and legal. We're just seeing this rip through the market as increasingly the convergence of cloud and mobile are the unlock for these businesses to replatform. The technology wave is behind us and supporting us. And for those of you out there with domain experience and or interest, the time is now, the tools are there and the opportunity is bright. We see this in Auto with our portfolio company Shop Monkey. Elliot mentioned Squire in the Barbershop World Guild in edtech. And these are just a handful of the names that are all, you know, at massive scale already and rolling through this next wave of innovation. And so for those of you who want to sit to think about yourself in these shoes and really to tackle this topic of how to build a unicorn, we want to highlight some of the key themes and then point you to some of the resources that we have online. And so from the takeaway side, first, the scale of the opportunities. Staggering. And that unlocks all sorts of things. It unlocks hiring for you when you're recruiting talent away from these cushy corporate jobs. It unlocks funding for you. It unlocks partnerships and opportunities in a massive scalable way. The 10 laws are a resource that we have online. There's much deeper materials there. You can look at references and guides and templates and things. But we called out three specifically for you today, which is the scale economy and how scale wins. And the second act, how that can become an increasing part of your strategy, the go to market strategies behind those and talked about three go to market models, including the scale it before you nail it overlay that applies frankly to all three of them. And then we talked about the five now the six Cs of cloud finance that we really think of as the dashboards for you as founders and executives and for us as investors. Those, those are the dashboards that we talk about in board meetings. Those are probably the things you should be talking about in your estaff and team meetings. And they're the leading indicators of business health in the years ahead. And then in terms of the resources that are available for you, I would steer you frankly to our website, where we have links not just to our own materials, but a lot of awesome industry resources out there that the cloud community and the investment bank and the analyst world and even other venture firms have created that we think can be helpful for all of you. And then three specific thought pieces that we've referenced. Mary put out a really thoughtful metrics and template set of materials on the scale to 100 million that I'd encourage you download and look at. Today's presentation of building a cloud unicorn is now live on the website. And so you can go back through these materials and then when you're looking for comps and data sets and things, we've referenced this cloud index and the public cloud companies. We went through a full update on our website where we've got a lot of drill downs and analytics that you can look at. You can figure out your comp set, you can pull down your metrics, you can look at their target numbers and their forward projections and how analysts are valuing them. And that's available also in the cloud section of our site under the cloud Index. And so on behalf of the group, you can follow us also individually, Twitter hashtags and all that. But more than anything, thank you. And even in this new normal, we're living in an age of unicorns. Thank you for your time and interest.

Sa.

So it's almost Halloween. Quick show of hands. Who's dressing up this year? Nice. I am too. I'm going as Bigfoot, but I'm gonna wear a sign on my chest that says subscription billing because I'm gonna be a sasquatch.

Get it?

Sasquatch.

All right.

Anyway, let's talk about something even more fun than that. Your financial stack. So another quick show of hands. Who here works at a startup and who here is familiar with Stripe?

Great.

I'm keeping my hands up for both because Stripe still feels like a startup to me. Seems like we're talking to the right audience here. So if you're familiar with Stripe, which it looks like most of you are, you're probably aware that Stripe has really expanded its product suite recently. And we're specifically building for SaaS companies, and hundreds of thousands of them are using our different products. Everything from billing and invoicing to revenue recognition, tax card issuing and even verifying identity and obviously payments. But before Stripe, I was also a founder and most recently with a SaaS company. So I'm really excited to be here today to share more about my journey and what I've learned in the last year at Stripe. So after a decade of my own startup experience and the last year at Stripe, I wanted to talk about three main things today. First, overcoming the pain points of growing a SaaS business, but specifically with your financial stack. Second, second, some great trends that we're seeing in the market today. And third, ways to unlock growth in the Internet economy. If the Talk title didn't give it away. So it's 2021. It's been a crazy year. And while tech has enabled us to do so many things that weren't possible five years ago, SaaS is still really difficult to automate. It's hard to build a SaaS business. Why is this? And it's a simple reason. We see it all the time. It's your financial stack. SaaS is notoriously complex to build. Things like setting up billing systems, getting enterprise sales up and running, automating your revenue. These are all very difficult pain points as you're scaling company. So let me start by sharing a little bit more about my own journey as running, growing my startup. And also hopefully you'll see that there's some similarities with either what you're experiencing today or what you may experience as you grow. So more than 10 years ago now, I started my first startup. That's me on the left with our startup, Corgi. Her name is Ro. She still likes to sit on people's laps when they're working. It's not very efficient. And on the left is where it all started with a purple panda. Her name was Pandora and she was the main hero and inspiration for us to build light well software, which Twitter acquired in 2019. So we started off by building interactive story apps for kids, and they were all around Pandora's epic adventure. We had an entire design, engineering, art team building these apps from the ground up. We even had voiceover actors, and that was actually just us and the engineering team doing the voices. But it took months for us to build these apps from scratch. And pretty soon we realized we needed to invest in our own internal tooling to make this app development faster. We ended up building a tool to create interactive apps without code so the design team could create animations, interactions and export them directly to native iOS code that our engineers could use. The first app took us nine months to build, and pretty soon, once we had developed the tool and launched our last app, it took one week of engineering time. That was a pretty big aha moment for us. We realized we should just invest in this software and make it easier for other mobile app developers to build apps. And this trend towards no code tooling and faster production maps really well to what we're seeing in setting up SaaS companies. But taking a step back, even though it was easier for us to creatively develop these apps, building our business and financial stack still wasn't. Let's take a look at why that was. So you have a lot of startups in the audience, and as A startup, you're focused on so many things. You're talking to users, you're raising money, you're selling to customers, you're building great products, and the last thing you want to spend time on is setting up your financial stack. So when we started selling Lightwell software first it was hard to even set up a billing system where we could explore accept simple monthly subscriptions on our website. Took a lot of engineering time. Then we started to sell to some one off enterprise customers, which is great for the business, but it required a ton of manual work, things like custom contracts, manually invoicing, following up on payments manually. And ultimately it led to what we call a patchwork billing solution, which some of you probably have as well. And accounting for revenue as you grow doesn't get any easier. It's really easy with a few customers, but as soon as you have hundreds, it becomes much more difficult. So we were not a favorite client of our accountants. And this squiggly line really only shows the operational side of your financial stack. There's also things like managing churn for completely solvable reasons like credit cards expiring. So when scaling our own software, setting up the commercial infrastructure was really the hardest part. And I really did think I was crazy. I thought it couldn't be this hard and it shouldn't be. It's been sort of comforting being at Stripe and seeing that this is pretty common. We see the same things time and again from founders. The complexity of running a business actually compounds as you grow and your financial stack sort of looks like this line. And many of you are bogged down with your infrastructure, which takes away from your core product development. So payments, something as simple as payments, like accepting and booking revenue, still remains a hard challenge for Internet businesses to solve. We see this every day at Stripe and it's what we like to solve for. If we look at B2C or consumer payments, it's gotten a lot better. It's pretty easy. Once you set up a web checkout, it's two steps, you get paid. But as soon as you look at B2B payments, where you have two sides of the equation with two different workflows, two different processes, a ton of different tools, it becomes a very different set of problems. So this gap between B2B payments and B2C payments are becoming increasingly stark. Making money really shouldn't be this hard. And then if we look at SaaS, businesses that are smaller as you're getting started, self built billing and invoicing systems tend to be incredibly hard to scale. We Talked a little bit about this already, but if you're starting off with regular subscription billing and then you're switching to usage based billing, if you have an inflexible system, it's hard to make that change. Or if we'd mentioned collecting unpaid invoices, that's very easy with one customer, but much harder with hundreds. So if we look at large legacy enterprise companies, they tend to have entire teams that are just focused on collecting money. They'll have an AR or accounts receivable team that's focused on generating and sending invoices and then collecting on that payment. You have accounts payable teams or AP teams that are matching those payments to invoices. So for all startups here, likely you don't have either of those. You probably have a co founder or a biz ops person who's doing all of those jobs at once. But as soon as you start to scale, this can cost millions of dollars a year. Many businesses have even told us they spend upwards of 2 to 300 hours a month just making their books compliant with accrual based accounting rules. You could say it's a cruel manual process. A few founders have recently even shared their spreadsheet of shame with us, which has the manual tabs, imports and rules in Excel spreadsheets that manage their revenue. And by the way, if anyone out here also has a spreadsheet of shame, come talk to us. We really do want to help. So now that I've talked about all the pain points and difficulties, let's talk about some exciting trends that we're seeing in the market that are promising for Internet businesses. So SaaS, companies, all of you, are leading the way in making it faster and easier to grow a business than ever. Now. It's no surprise the Internet economy has exploded in the last year or the last few decades. But also the last year e commerce spending in the US alone is expanded, expected to double from 2019 to 2023. That's 600 billion to 1.2 trillion. And if we look at these logos, which most of us are very familiar with, clearly there's an abundance of new tools and technology to enable businesses that didn't even exist five years ago. Our research has suggested that the cost of software tools needed to run these businesses on the back end has completely collapsed in the last decade. That's gone from roughly $4 million in 2011, which is insane, to $4,000 today, which still sounds a little expensive. And at stripe, we have access to a lot of data and we've seen hundreds of thousands of SaaS companies scale on our platform, and we've also seen in the last decade that it's cheaper and faster for them to build as well. Now, I've been keeping an eye on three trends that help explain why this is possible. First, no surprise, my favorite the explosion of low and no code tools. You can now outsource pretty much every business function you have. You've got Shopify for e commerce operations, Wix for no code, website building, Xero for automating and counting, Webflow for web development, and Stripe for automating. Revenue and financial operations. Things that used to take months and tons of manual work can now be done so much more quickly. And this is all possible thanks to the increasing power and sophistication of no code software. Basically, things are easy and cheap to build. Second, we're at Saster, so we all know this, but we're moving away from license based software to subscription and usage based business models, which is great for customers and for companies. Not to date myself, but I remember buying Adobe software on CDs in school and it's much easier now at the click of a button. In fact, at Stripe we've seen that subscription businesses have grown 50% in just the last year and the overall subscription economy has grown six times in the last nine years. And these businesses are reporting growing up to eight times faster than traditional business businesses. So it looks like we're all in the right business. Third, many of these software businesses are evolving into platforms which enables access to software that's even more integrated and easy to use. Software companies have woken up to the fact that they can provide a more valuable service and higher valuations by serving more horizontal use cases with vertical functionality like payments and financial services services. Substack, as an example, started out offering subscription management services for newsletter writers, but now they've expanded into podcast monetization and revenue sharing. Lightspeed started offering Point of Sale, but they've expanded into enhanced online and in store merchant capabilities. This all makes it easier for you as a startup to find an integrated all in one solution that just works. And it's also hopefully really inspiring to see that SaaS is taking on a new shape. Ultimately, business functions are being commoditized and made available as automated services. You can build on APIs to run many more specialist business and revenue operations entirely online. You can deploy subscriptions as a service, tax collection as a service, billing as a service, fraud prevention as a service. You get a service, you get a service, you get a service. Everything is a service now and all this to say it's never been easier to build a product and business than it is today. So I talked a little bit before about how we're going to go through some tips and principles on how to build great SaaS companies, how to take these products to market. First, it's really about designing and deploying that killer product. It requires a rapid iterative loop with the right customers. We're going to talk a little bit more about that in a little bit. Second is helping to run your business as it grows. You have to digitize processes from the start. Now, this might sound counterintuitive for those of you who heard the startup advice like do things that don't scale. Do manual processes. But what they mean to say is to do things that don't scale. Scale for your core business competency. When it comes to things that aren't your core, you should digitize. It's like trying to build your own servers instead of using aws. These two principles have guided how we build products at Stripe as well as my own experience of company building. So first, let's start with software design. You have a killer idea and you want to ship an amazing product. First, you have to be incredibly, incredibly specific with who your customers are. At Lightwell, we were our own customers. We built for interactive story app developers and we solved a really hard problem for them, which we'd already solved for ourselves. And even though we were our own users, we still talked to what we called our canonical app developers on a daily basis. That meant calling them up in the morning, showing them a new feature, fixing a bug, and getting their feet feedback. Y Combinator is famous for telling their startups it's better to make a few people really happy than to make a lot of people semi happy. So my guidance to you would be really similar. Find the most discerning customers you can and build to their spec. Start with a product that's really useful for a few users, then build a relationship with them and really understand and develop a mental model of what they want and why, then iterate intensively with them with that small number of discerning users. Almost like you're a professional services firm building to a spec. And if you don't know specific people in your target audience, I'd suggest going and trying to find them and talking to them today. Second, so you know who your users are. Go deep to understand your customers and users problems. You should be asking and re asking yourself, what are your users really trying to do here? It's like the Henry Ford Saying that we all are aware of, if I asked people what they wanted, they would have said faster horses. So a recent example from Stripe Atlas. We have a form on our website where we actually ask users what should Stripe do next? And we get a lot of engagement. So a lot of customers started asking for help and getting started in other countries that Stripe wasn't in yet. So we thought this sounded like we should add payment methods in other countries. We were wrong. We clearly wanted other payments methods in other countries. But what they really meant to say was that they wanted Stripe's infrastructure. They wanted a way to set up their business from other countries. So we launched Atlas to do just this. We let founders incorporate and start taking payments in days, helping them launch thousands of new businesses from 140 new countries. So here, by digging in with questions, we got to the real problem that they were trying to solve and we came up with a somewhat unexpected solution. Third, build a product that aligns you with your customers. So what does this mean? You know who your customers are, you know what they need. You want to design the best product that is good for your customers and for you. So we saw this with Stripe invoicing recently. So cash flow is super important for SaaS businesses, right? Well, traditionally invoices have 30 day due dates, but we wanted to help our users get paid faster and improve their cash flow here. The more the business collects, the better it is for them and for Stripe. So we added a feature where they could mark invoices as due today. Very small, simple improvement and even we were surprised by the results. In a few weeks we had tens of thousands of businesses using this feature to mark 50,000 invoices as paid as due today, increasing how quickly they were able to collect. So going back to the model for the example that we just talked about in building great products, we designed do today a simple feature for SaaS businesses. We knew they wanted better cash flow and predictability and that 30 day due dates could be improved. We built a simple feature that aligned us with our users on top of an end product in order to improve their cash flow. And while it's still early, we've seen tons of good adoption and most importantly, user satisfaction. Alright, let's shift over to running your business. And the first thing that I'm sure all of us want to talk about is costs. So I talked a little bit before about how it's still too difficult but really too expensive for founders to get their financial stack up and running. In fact, one founder had shared their old models with Us and we ran the numbers and the rough math came out to 10 cents on the dollar of overhead on just manual billing, manual collections, revenue recognition and analytics. This founder had what they called AR days for when their accounts receivable line grew too large and they called on the entire team, that's the product, the sales, the support team to actually pick up the phone and dial for dollars in order to collect on these age receivables and invoices. Can you imagine? That's a full team dedicated to collecting on unpaid invoices when it could have been fully automated by software. Another example is subscription based tools which should be getting better all the time. So at Stripe we use machine learning across our network to make our products more effective with no work required from our users. Things like smart retries or radar fraud protection software is and should be getting better all of the time. So last year at Stripe we deployed our core production API thousands of times. That's our core API to manage payments and money movement. And here, without any work from our customers, the platform was getting better all the time. So second, actually our favorite thing to talk about revenue software is making it easier than ever to experiment with pricing and packaging. So last week I spoke with a founder who was building software to help companies scale their support teams. It's a new SaaS business, but they had some pretty big customers already. They were using Stripe invoicing in the dashboard to send invoices and they were adamant about not wiring up or writing any code because they wanted to understand every single conversation and get feedback on that pricing model. He was actually such a fan of price testing himself that when I asked about their billing system multiple times or plans for a billing system, he just said I am the billing engine. I think he really did believe it. So a good pricing strategy does a few things. First, it aligns your product with your users needs. Really similar to aligning your product. Like we talked about before, how do they derive value from the product? This is really where usage based pricing is important to test. Second, it optimizes value capture by reflecting your user's willingness to pay. So are you charging them for the things that they want to pay for? And third, it's simplifies your first time to sale things like free trials and discounted annual plans. But ultimately no matter what pricing model or plan you choose, testing is key. Third, let's talk about more revenue, but specifically optimizing what's recurring. So you have to understand your key stats. These might be mrr, ARR, arpu, churn, or ltv. And like I said before, it's so expensive to acquire these new customers that once you have them, you have to do everything you possibly can to keep them. And price testing can really help with this. For example, we're seeing businesses increase renewals by offering discounted annual plans or the ability to pause subscriptions instead of cancel them. It's also worth looking at ways to eliminate involuntary churn. So for instance, at Stripe we automatically update expired or replaced cards. And we have a smart retries feature like I mentioned before, which uses machine learning to retry cards at the exact time that they're most likely to succeed. Twilio is an example. They deployed this recently and increased their authorization rates by a full 2%. All of this to say it's another argument for outsourcing your financial operations and providers like Stripe can help afford to make those optimizations for your recurring revenue much more likely and likely things that you would invest in yourself. Fourth and last tip, plan for the regulatory implications of your growth. Now this is probably the gnarliest one to consider. As you scale, expanding to different countries and markets can have huge compliance implications. I'm sure you've heard the saying the Internet may be borderless, but money is not and the cost of compliance is increasing year on year and many businesses are struggling to keep up. So a few examples that come to mind that we think about. In Italy there is an E invoicing regulation where business to business invoices have to be sent to the Italian government in order for them to be compliant. If you're selling SAs, SaaS is taxed in 138 countries and you have to collect and file in every country. If you're doing business in Europe, you have to make sure your payments are compliant with SCA or strong Customer Authentication. These are just three small examples. There's a lot more. So if you think about it, it's a little bonkers that as a startup you have to think about all of these things. So really going back to my first tip, think about the ways that you can use software to manage compliance for you. So back to you as a startup. What does this mean? Just this. Your time is valuable. Stay focused on where your competitive advantage is. Your killer product. Leverage software to grow, try out new pricing models, optimize your revenue and keep in check the things that aren't core to your business. So we talked a lot, talked about a lot today and to wrap up we have some big trends in software for SaaS. Building killer products by staying close to your customers and leveraging software in order to scale your SaaS business. And the key takeaway that hopefully resonates with all of you in the audience because you're driving this change with your SaaS businesses, is that it's never been easier to use software to set up, scale and run your business. So last time we were at Saster, this number was 3%. That was in 2019. Now, 5 to 8% of global GDP is currently being run online. It's growing fast, but it's still so small and there's so much opportunity ahead. And it's really exciting to think that software is still in its early days. Think about how many trillion dollar businesses are still yet to be built to take advantage of this. Imagine what the economy will look like when that number is 50% SAS. And all of you building SaaS in the audience will get us there. So use it in your business today and enable the companies of tomorrow. Thank you for your time.

Sa. It. Sa.

It's great. Oh, it's great to be here. Forgive me and Felipe. We have been talking to a computer for 18 months and so be in front of an audience. Forgive the nervousness. My name is Justin Bedekaray. I'm CEO and co founder of Raise.

Hi, I'm Felipe, president of Raise.

So we've built a technology powered brokerage to help companies find, build and manage workplaces they love. And we're here today to talk about how to actually build the hybrid workplace. But before we go into that, I'm going to ask you all to close your eyes, take yourself back to 2019. It's the end of the quarter, your whole team's there in person. The music's playing, you're closing deals, you hit your stretch goal and everyone's hugging and giving high fives and drinking cocktails. Take yourself back to those late night product sessions where you're jamming on the whiteboard with your team, solving complex problems, debating issues all in person. We're not too far off from having those same experiences again. The task at hand is how can we take those great experiences and pair them with what we've learned about working remotely for the last 18 months.

You know, as Justin said, we're on a mission to help companies, the best companies in the world, find, build and manage workplaces that they love as a commitment to their people, as a commitment to their customers, as an expression of their company culture. As you can imagine, a company like ours was impacted by Covid. But I can say that in our six years, we've never had a Busier nine months than we just came out of. We've helped more companies and generated more revenue as a result of this emergence. We're emerging from a decades long top down mandate of how, when and where work happened. I would venture a guess that just about everybody in this audience has over the last 18 months been asked to be a part of a survey or has been forced to create an opinion about how, when and where you'll do your best work. Times are changing.

We just did an analysis of the top YC companies that they publish every year. The largest market cap coming out of YC in the history. 95% of those companies are going to have offices post pandemic and most of them will be hybrid. So the future is hybrid. Most of the iconic brands in technology that we all know are building hybrid workplaces. And remember, even whether you're office centric or remote first, the similarity is that all of these companies have office space.

So what is workplace? I mean it's this very sort of amorphous word that is assigned to the built environment, that expression of a company's culture and commitment to their people and the programming that makes these places come to life for their employees that brings people back. Once you've distilled out the why, that's where the word workplace comes to play. We're working with a large cross section of companies, from early stage startups to Fortune 100 companies. And in helping them with their RTO return to office planning, we've come to find that it's essentially these four strategies that are being employed in some form or another across size ranges.

So let's walk you through some definitions. So hybrid office centric, also known as synchronized hybrid. This is what companies like Asana and Front are doing where most of the hiring is done around hubs in certain locations and they synchronize when you come into the office two to three days a week and then you can work from anywhere two to three days a week. So remote first is what Coinbase and Shopify and Brex are doing where they run the entire company remotely from asynchronization to all hands done remotely. But they have hubs where you can almost like a cafe where you can go in and visit colleagues or even do heads down work.

It's not one size fits all as evidenced by hybrid flex, which is essentially a mix of the first two. Where a percentage of the company is office centric based on team on work type. There is an ability for by team work type or individual to be remote and the workplace is there to complement both of those. Some of the largest companies in the world, like Facebook and Microsoft and Twitter, are employing this strategy. And then, of course, Office Centric, there are meaningful employers out there who are looking for as similar a return to the way that things were in 2019. As you could imagine, for better or for worse, all of these that are employing any of these four strategies, or a mix of them, are committed to the test and retest.

All right, so we got the definitions down, but we always have to return to the question of why. Why return to the Office when for most of us, we've been able to remain productive? Microsoft just did a study of 60,000 of their employees, and what they found was while some productivity maintained, silos were created around teams in which they didn't collaborate. And so, you know, people were on islands during these last 18 months. And fundamentally, a lot of what we're missing is the joy from work, the joy from having relationships with our colleagues that aren't just in front of a computer screen.

Microsoft gets to do it with a very large sample set, but at any size range. If we're doing our jobs and building great companies, then the teams will grow, the geographies will grow, and the mission of each of those will grow. And if we can't get them to work together actively, then so much of the joy goes away. In addition to our ability as employers to deliver on our commitments. Besides, who the hell wants to work with a bunch of strangers?

So we've talked a lot about theory, but let's ground it in a workshop around how to actually build the hybrid workplace. And we thought no better way than to eat our own dog food and talk about how we at Raise returned to the workplace. But first we wanted to kind of give a sense of state of the union for us. Like many of you, we hired over 50% of our team in the last 18 months fully remotely. Prior to the pandemic, we had two offices. We let both of those leases expire in San Francisco and LA. At the start of the pandemic, 20% of our team was remote, fully distributed. 20% of our team worked in LA, in our hub, and 60% of our team worked at HQ. So after the pandemic hit, we launched our third market, Palo Alto. More of our team from San Francisco, as many of you have probably experienced, moved to the suburbs, like, you know, the South Bay or the North Bay, and then some moved out of state and we hired a more distributed team. We have folks in London and Chicago and the east coast, and The West Coast. So we were already a hybrid company. Like I said, 40% of our team was outside of HQ. But we knew that once the pandemic hit, we would never go back to the way things were. We didn't want to. And so we've all gone through this journey in our individual ways. And I thought it would be helpful to talk about my own journey as CEO. I was in the office five to six days a week pre pandemic. And to go fully remotely was a huge shock to the way I worked, to the way I developed relationships. There would be people I saw every day in the office that I wouldn't talk to for months in a fully remote world. And so I had to develop a lot of empathy. We all went through this journey not only figuring out how best we work, but also just going through the struggles of the pandemic in our own personal ways. And then the last thing I wanted to talk about was balancing my wants with how everyone else wanted to work. There wasn't one prescription that I could give to say how everyone else on the team should work. And so we had to adapt to everyone's individual needs by individual, by team and by location.

Well, empathy is really that word that we keep coming back to. We ask ourselves all the time at raise, why? Why would you have a workplace? Why would you commit to the human experience? And what role does the workplace play in that? And you know, this shared trauma that we all went through, it drove empathy and it forced us as leaders for our own company and the clients that we serve, to meet their employees where they are, to have an empathetic view of how everybody was processing what was happening and to be able to reduce friction, increase trust, and over communicate through that process. So part of Justin's journey, which I always believe me alongside for every step of it, we were always empathetic leaders. But the empathy of understanding that it didn't have to happen in a workplace on every single day for us to meet our employees and our team members where they were was a really key role.

Yeah. So let's talk about the key factors in actually returning to the workplace now that we're on the cusp, but many of us are on the cusp of doing some form or fashion of that.

Yeah. Well, again, you begin with the why. What does a return to workplace mean in terms of our business? Achieving our goals with our business through our people means that we have to start there. We serve our employees, and they in turn are the life's blood of our business. Lisa Picard From EQ Office said it best. Culture is the software of the organization and the workplace is the hardware. The war for talent is raging. People in this room are competing with each other for market share and for talent. Right. Ultimately, if you begin with the people, the people today have a voice like never before. And that's where we started in terms of the key factors for our return to office. From there, you got to get the data, come back when you've got the data. Right. Starting with surveys early and often. I'm guessing that just about everybody here has participated in a survey. But the most important part of the survey process was to embrace the fact that they would change over time. Facebook surveyed their employees every six months and the swing went from 80% in June wanting to work remotely at the start of the pandemic to only six months later. 80% of people wanting to come in two to three days a week. So early and often. But what do you do when you've got the information? I talked about the decades long top down mandate which was really quite tone deaf to the needs of people. People didn't have a choice, they didn't have a voice, they didn't have a vote. Right. If you're going to survey your people, you've got to show them you're listening and then go do something about it. For us, that meant the concerns that our team had were based in health and safety risk, the ability to get to and from the workplace when they wanted to and could when there was a specific reason for it. And how could we do our best to increase communications. So we adopted a tier minus one policy. Right. Which is in any of the locations that we operate in office, we'll take the local regulation and be one step more conservative. By a show of hands, how many were a part of a whipsaw that was, something's open, something's closed, masks are on, masks are off. I see some nods and some smiles. Right, there you go. That whipsaw, it's added to the collective burden when all we're trying to do is do our best work and then be the best person we can when we show up. So tier minus one was very important. That led us to two. We've got to open places and meet our employees where they are. Everybody from an empathetic viewpoint has different constraints in the home or their other place of work. And so our ability to understand where our employees wanted to be and meet them there became a key factor for us. You know, one of the key tenets in this is that we don't really know if we're in the fourth inning, fifth inning. Other sports ball analogies insert here. But an office access plan is a step towards letting your team members know and for us was incredibly important that there was a place when they needed and that they could find it, understand how to utilize it and interact with it. And it was there for them as part of our commitment to their experience.

Yeah, the key here is that it was totally voluntary. And so we never, we have yet to, and perhaps never will force people to come back. We always want to incentivize them through the carrot, not the stick. So let's look at the results. So in la, we're going to talk through our LA office, our Palo Alto office and our San Francisco office. So for la, we had a fast growing team, but we knew we needed to get them back really quickly and so we went with a WeWork. You know, the key thing with WeWork is one that it's a month to month, you know, contract, so we have the flexibility to get out and grow into our new space. During the pandemic we moved in there, it was almost fully empty. It's now at 73% occupancy and growing.

And as Justin mentioned earlier, we allowed that lease to lapse originally in LA during the pandemic. One of the things that we're helping so many of our clients understand is that making long term choices with short term data is not what we should be doing. The ability to stay flexible and nimble, to gather that data and act and react to it was most important. And so wework played a big part in that for us. The same is true in Silicon Valley. We started with a flex provider, Regis, which was part of our office access plan, as we had team members there that really just didn't have the right situation at home. And we were able to use that until we had visibility into finding a space that was going to work for us from a culture and brand standpoint. But again, it was a short term commitment. We were able to use all used furniture, which saved us over a hundred thousand dollars. And then in the layout of the space, it's over 75% communal as opposed, as opposed to one to one desking. Remember, we're in the very lucky position that we get to serve all of the greatest employers out there and the best practices of some of these best companies that we are able to advise, we get to eat our own dog food and do it for ourselves.

So the biggest concentration of our team is in San Francisco and we had a Much bigger office pre pandemic. And we let that lease expire and we moved in with a friend of ours so that we could analyze for nine months how we actually used the space, how often people came in. And the things that we learned were one that people were really craving that social environment. And so we put together some events once a week for the team that came in. Pretty obvious. Phone booths were heavily utilized. A dynamic space where there was just different environments, where it wasn't just a sea of desks and a sea of conference rooms around it. And then we also wanted an indoor outdoor feel. And so what we were able to do, we used to be in a one to one. Every single person had a desk pre pandemic. Now we're three to one hot desking. And so there's a lot less desk and a lot more room to have couches and high tables and ways for our team to come together that's not just sitting with their headphones on at their desk. Yeah. All of the conference rooms have zoom rooms and the, you know, noise canceling types of rooms where you could have conversations, where you can either jump on a zoom or have a private conversation with a colleague were super important.

And how did we get here? I mean, we build a suite of technologies that help our clients find, build and manage workplaces that they love. But the number of tools that are out there to gather, synthesize and act on what our employees are telling us in this test retest model like Envoy, Eden, Verge, Sense, Salt Mine. I mean there are some incredible tools out there that really allow us to read the tea leaves in being non prescriptive on how we're bringing people back to the office with programming. Right. What about the workplace is supposed to be fun and engaging. How are we getting people back and then how are we watching them utilize these spaces? You'll notice that for all of these we had a step one and step two.

Yep.

And it was through tools like that that we were able to create spaces that we're now seeing that our employees and team members are really engaged with.

Right.

The important thing here is to learn that there's no end with this. Right. This is going to be evolving over the next 10 years to figure out what the right equilibrium is between remote and hybrid, workplace and office centric. And the key thing is to find that harmony between the two to give your team flexibility, but also not miss that in person energy that we all love. And so right now more than ever, folks are ready to return. It's obviously going to look different on individual levels. But the survey data is really compelling for people that want to get back to that in person interaction with their team.

I think you bring up a great point in the fact that there's no end to this. In the 40 years preceding today, the workplace was already evolving. Technology being put into the workplace allowed for, you know, additional communication and the sense of remote teams being able to work together. The way that an office at arm's length looked in 2019 was so drastically different from the way that it looked in 2000 and 1990 and before that has to continue to be the case. The very important part that we're in right now in this hybrid model is are we as employers ready to bring people back as sentiment changes? What are we doing to gather information from our team members? What are the strategies that we're putting in place? What are the technology tools that we're embracing in order to gather that information and create a strategy? I took a guess that just about everybody here has been a part of a survey in terms of the return to office. By a show of hands, who's been a part of a survey for a hybrid office return fair number? Remember those change over time. It is so important to cast your vote and cast with your employee base a periodic resurvey because times are changing.

So a few months ago, one of our investors initialized the partner, Kim Mai, and I wrote an article that was titled Office is Dead, Long live the Office. And it really captures the sentiment. We all have really strong opinions about where this is going. Remote forever or office forever. We really do believe that they can live in harmony. The things that we have to remember when we're bringing people back. It will have been two years, two fucking years of this pandemic. And we've built so many habits from that that we have to either take with us or unlearn. And so just have some empathy for your team that there's going to be social anxiety around being in person. There's going to be the change of, like waking up in your sweats, getting coffee, going to your computer, talking to your computer for 10 hours. It's kind of insane, but, you know, it has worked for a lot of us. And note that companies like Loom and Chime, Coinbase, Benchling, Gem Fair, afterpay, all of these companies, many of which are our clients, have leased office spaces in the last six months. And so companies are getting ready to get back. But don't force your employees back yet. Get through the winter. Do the open office access plan that we've talked about, but use the carrot, not the stick. Create amazing incentives. Reduce friction for how to get back. Whether it's commuting, stipends, or just making sure that your office location is really accessible. And then for your remote employees. Now, about 30% of our company is remote, and they're amazing people that we want to keep and keep engaged. We bring them to the office once a quarter, and we basically those, those are, you know, on sites, are the new off sites for those remote employees. And then the last thing we'll leave you with is just help people remember what is special about being together. And that's what the workplace is all about. Thank you very much.

Thanks, everybody. If you have any questions, we'll be around, help you strategize.

Appreciate it.