LIVE Workshop Wednesday: Scaling Past $10M ARR with WorkRamp CEO Ted Blosser + CMO Jack Foster

Workshop Wednesday. Welcome everyone. We'll give it a few moments as you're tuning in. Please let us know where you're tuning in from. Welcome. All right, welcome everyone. Oh hello from Detroit. Very exciting. I'm tuning in from San Francisco. Ted and Jack, where are you tuning in from?

Redwood City.

Redwood City, Louisiana, Louisiana. Okay, all California over here. Dallas, Louisiana. Atlanta. All right, well welcome everyone. Oh, lots of London too excited for that. We will be in London next week for Saster Europa. Hope to see you there. South Africa, Brussels, etc. So many different places in the chat. Always a pleasure to see where you're tuning in from. But this week we are excited to have you back. Just a note up top, we will be taking the next two weeks off for Saster Europa. So again if you have not already bought your ticket, we look forward to seeing you there. Buy it soon. This week we are going to hear from Work Ramp. We're so excited to have Ted and Jack here with us today. We are going to be discussing 1 to 10 million ARR and how to scale afterwards. So really excited to talk to both Jack and Ted on this topic. But as per usual we are going to start off with a couple questions to warm us up. So Ted, Jack, welcome.

Thanks for having us.

Yeah, of course. We're excited to see you. So Ted, a few quick questions. We're going to hit some highs and lows off the bat but hopefully the easiest question of the day, what would you define what you do in your day to day role?

That's a great question. Great way to start off and thanks everyone for joining. I would say my day to day role probably the big things I focus focus on are driving the cultural rhythm. I think Reid Hoffman talks about how do you drive the cultural rhythm of a company. And so I spent a lot of time doing that through our all hands. We have something called Wednesday lunchrooms. We have Learn Fridays and so we have a really good cultural rhythm. Another big thing I do is really drive our big initiatives. We have what we call this year our three big bets. And so I focus a lot of time on our three big bets there really, really product related bets that drive the momentum of the company. And then lastly I spent a lot of time on customer calls and so I try to fill my schedule up with customer calls and try to get my face out there in front of customers, albeit a lot virtually these days. But that's probably where I spend a good majority of my time as well. So those are three big ways I spend my days.

Okay, love that Three pronged answer. Question number two, what project are you working on today you're most excited about?

So there's one recent literally happened this morning. I had to get up at 4 in the morning. We're doing our Learn Europe event. We had to copy Saster with Learn Europa, but we just did our Learn Europe event and it's actually culminating with a big launch tomorrow around what we call our development application where you can have self serve learning. We'll get into what War Crim does in a second, but this has been a big project for Jack, our CMO who's on the call and she'll be taking a lot of Q and A as well. But it's been something we've been working on for a couple months here and we're excited to launch today. So I might be a little bit tired if you hear me stumbling on my words. I've been up for a while.

Wow. Well, congratulations. We know how much work goes into that for sure, so hope you get some good sleep after this. In the last 12 months, what's been the hardest thing you've worked on?

First thing that comes to mind is getting our money from SVB. That's probably the biggest thing. That was a crazy 72 hours for anybody in SAS to have their money stuck in SVB like we did. That was a very harrowing time. I think once you kind of go through that experience, you could basically handle anything else. And so I would say that was probably one of the hardest moments of all of War Cramp's existence was that weekend. Still remember vividly.

I have no idea what you're talking about. What was that?

No, I think Jason was stuck there too, if his tweets were correct. So probably the same boat.

It was definitely quite the week for SAS tech. The whole Bay Area, the whole world. So not surprised that that is the answer. Definitely a commonality among this question this year. All right, but with that I'm going to hand it over to your presentation. As a reminder, everyone put your questions in the chat early. Our goal is to get to as many as possible, so add those questions the chat. I will be messaging you directly to see if you want to unmute yourself and ask Ted and Jack some of these questions at the end.

All right, thanks so much. And we'll get kicked off here again. Ted Blosser, CEO and co founder of Work Ramp. Also brought on Jack Foster. She is our cmo. She's going to be present during the Q and A too. If there's a lot of questions around how do we market and go to market in the 1 to 10 million phase and even after as well too. And so we'll be tag teaming this in the Q and A as well. But I'll jump into. I got my new fancy remote we actually bought for our Learn Europe event here if it works. All right. Not working. Just going to click my mouse here. All right. And so again the title of this section or this session is scaling past 10 million ARR while taking three slow years to hit your first million. And so those were three very difficult years. I want to set up some context before we head in, give you a little context on what work ramp is. We are all in one LMS and so if anyone knows the LMS category, learning management systems. We were founded in 2015. We primarily serve the mid market and SMB. So think of 5,000 employees and below as our primary sweet spot. We've raised close to $70 million from Salesforce. We went through YC back in the day and a bunch of other investors. We are a little over 100 people as well. Let me play a quick video. This is I want to share where we have evolved to over eight years and then I will turn back the hands in time and talk about how we got there in some of the really difficult years getting there and the learnings that we had getting there. So I will just play this. This shows you our end state of where we're at. Oh. So the reason I want to show that is if anyone's practice visualization where you visualize where you want to get to. A lot of Us are building SaaS companies here in this room today, but that was where we wanted to get the company to in the early days. Now we're at a really good spot. But what I'm going to do is focus in on that first 10 million ARR. When we reflected back on what it was like getting to that first 10 million, there are a lot of challenges along that way and we took a few principles to heart which I'll share with you all as well on this journey. So we'll talk about this chart. I'll use this chart as a backdrop as we go through this. But our first million arrows was super painful, super slow. This is from Modern Family. If anyone's a fan of Modern Family, this gift here. But it took us forever to get to a million. We just thought we weren't ever going to make it. And so the big thing I want to share with everyone is that hey, just stick with it if you feel like you actually have product market fit. Sometimes it can take longer. I know Jason, for example, has talked about UiPath as example. I think it's like 16 years to a million. And then there were a rocket ship after that. But it can happen. I'll talk about how that happened for us when we were working through that first million ARR. I want to share some experiences. I brought some pictures. You all have probably seen some of these as well. I still remember these VCs vividly. They're still on my list of people that rejected us. But here's a nice one. Hey Ted, I think the round after Seed is the one for me. So let's stay in touch and and hope we can make it work down the road. Congrats on all the great progress, which is a big thumbs down on that fundraiser round. Another one from another investor. This was another harrowing time for us. We were about eight people right around that million ARR. And we had an exodus of engineers out of the company. Basically we were at this impasse in the company. We're about to make some key decisions and we literally were down to one engineer with about a million arrows. And that's pretty scary. Like literally, if you're down to one engineer, you literally can't even do a software deploy in that realm. And so that was pretty scary at that time. And I brought up this photo. I had to white out some of the more gross looking stuff here. But this was me in a hospital during this time. This was two weeks before we started yc. I randomly got, if anyone, if anyone is in the medical industry here, I randomly got hyponatremia, which is having too much water in your system. And I got hospitalized. This was from a random stomach bug I had. And literally the doctor said, hey, if you hadn't come into the hospital, if you literally stay at home for another four hours, you might have died. And I stayed in the ICU for a couple of days, but it showed how fragile the company was. We were only two to three people at the time. And again, near, near death experiences literally during that process. This is a really fun video. If anyone has sent out investor updates, this is one that shows, hey, it's tough for all of us. So to give you some context, we're about 300k ARR at this time. And one of our months we only added 2000 bucks of new revenue is super embarrassing. And we had to send this out to investors like Joe Montana, Alexis Ohanian, Elon Gill. So these people are seeing these awesome investor updates and I'm sending these video updates. Let me play this one from 2017. Hey everybody, want to provide a short update on May? So unfortunately May was a very slow month from a revenue perspective. Only closed one upsell deal for a little less than 2k. We slipped on a few large deals. We're trying to get in for the end of the month. So hopefully they're trying to get that for June. Ultimately this taught us that one we don't really have the predictable revenue machine built yet. We actually deliberately have been exploring different segments and different buyers and we're going to rectify that by actually focusing on a mid market enterprise segment which we think has actually shown us the most gains. So we hope to kind of jumpstart revenue again on that front. So I almost cringe watching this video again just because it was so embarrassing. But it just shows you, hey, you can have a lot of tough times but you just got to power through it. And so the good news is if you look at after we got to a million bucks of ARR, we actually start to see this hockey stick up from that 1st million ARR. If you look at the next milestones, we had our first million dollar year Shortly after in 2019, then we had our first million dollar quarter in 2021 and then from there we had our first million dollar month just a little while later after that too. And so we saw this nice hockey stick growth afterwards and we got through all the tough times and then we're able to actually start accelerating from there. And so what I wanted to do was talk about four things that we did differently to scale to 10 million plus ARR in those years. And so the way I like to frame this backdrop is that we essentially ignored four pieces of traditional startup advice. And so I like to give this meme here where if you think about war, cramp and traditional startup advice, we ignored that. And you know what we did was we said, you know what, let's focus on what the market is telling us, let's focus on what customers are telling us. And we were buying too much into investor hype, the VC hype and trying to follow that advice. And so I'll talk about those four big things one by one here. The first big thing, you should always move more upstream. And so this is advice you might hear from a lot of advisors or people in the market that hey, you always want to go upstream. And this is actually one of our email notifications. I remember working a deal with HubSpot, 10,000 users LND and enablement. So this is from our actual salesforce integration here to email. And this showed us that we had no business in moving upstream. We actually tried to push hard upstream, but it wasn't working. And what we did during this time, between 1 to 10 million, is we actually started working more downstream. So it's counterintuitive because when we looked at our data, we saw that we had much more success with opportunities of 5,000 employees. So what we did was we introduced a high velocity playbook. We refocused the company downstream. We had a lot of reps who were trying to just do whale hunting upstream. And 12 months later we literally, when we decided to do this, we went from 18 new logos in a quarter to 87 new logos in a quarter. And that was because we focused downstream explicitly. And again we were still getting some inbound from larger clients. So we would let it come in. But for all of our efforts or if that did come in, we would be like, hey, that's a nice to have, maybe go demo them, but really focus on our sub 5000 category. And this gave us much better product market fit with the SMB and mid market category. Second big piece of advice we ignored was that in SaaS that you need to have 80% gross margins. Now 80% gross margins are great, but they're great when you have to share your gross margins when you're public. So yes, when you get to ipo, when people are analyzing your gross margins, those are super critical and you should have a path to get there. But in the early days it's not as critical as you think, right? In our early days our gross margins were low 70s, even high 60s at some points. And what we did, the reason we had it so low compared to traditional SaaS companies is because we over invested in our customer success team. So we originally started with just, let's call it superstar CSMs who basically did everything. And then we broke that team out into implementation and implementation team in our category, Instructional Design team and a client Outcomes team, which is kind of a hybrid CSM AM team. And so we took one team, broke it into three, which essentially pretty much tripled our cost on the CS side. But what really helped was that in one year we improved gross retention by 11%. And when we went to go raise our series B and our series C, that was a critical part of what the investors were looking at. So I'm so happy that we did that earlier on. And so again, you might take a hit on the gross margin side. That doesn't really matter until later on when you're hitting real large scale early on. Think about over investing in cs. And that was a big piece of advice that we ignored was the gross margin side of the business. Third piece of advice, stay focused, don't add a second product until 100 million ARR. That was something we ignored, I think. And sorry, Jason, if you ever see this, his advice was actually do this a little bit later. We actually did it pretty early on in the company. I believe Atlassian did this that early on with both Jira and Confluence roughly around the same time, if I. If I have that correct. But what we did was we added our second product at about 3 million ARR. And I'll tell you why we did this. So we're in this category where you have internal learning, so that's training your employees and you have external learning, that's training your customers and partners. And our second product was training customers and partners. And every deal we had this pesky competitor at the time. Their name is lessonleaf. Every deal was a knife fight with them. And so when we introduced the second product, really changed the whole game. It felt like we were playing chess when everyone else was playing checkers. And so that was really helpful. And I'll share the last piece of advice and we'll go into the Q and A. Here is that great startups create their own categories. We ignored this. I have a strong belief in what I call category redefinition, not category creation. So I had advisor tell me once, Ted, it is so expensive and hard to create categories. It's much cheaper. The CAC is going to be much better if you redefine the category. So I like to frame ourselves like the New Kids on the Block. If anyone remembers that band where we are the new kids on the existing block, that is category redefinition. We did that in a much different way in our category. So I will stop there, jump into the Q and A from here and see what questions you all have.

Hey. Okay. Thank you for that, Ted. The New Kids on the Block. Redefining the block. Love it. We already have some questions rolling in, but first question, when scaling past 10 million ARR, what changes did you make to your leadership team?

Ooh, well, Jack's part of that too. And we could talk about recruiting as well, but I'll talk at a really high level. So we essentially, we're still in our, I would call it Bench one of our leadership team. And so we essentially went from me and my co founder and a handful of directors and we brought in Bench one. Jack was Actually part of bench one. She's still on bench one. And we filled out the whole team there. We have not kind of gone to bench two yet. And we did that roughly around Jack. When did you come in? What error did you come in at? Do you remember?

Yeah, probably around seven. Eight.

Around seven, yes. And. And she was I think our second big time hire. Second big time hire. First hire a CRO and then we went CMO or Jack came as VP of marketing and then promoted to CMO shortly after.

Got it. Okay. Our second question. How does culture play into scaling?

Ooh, that's a great question. It's actually huge in the what you do in the early days truly does set you up for success later on. And I probably did even more in culture in the early days than I do now, even though I do a lot now. I'll give you an example. In the early days before I had my third kid. So I stopped after I had my third kid because I had more time. Literally stopped I think the day he was born. But I did this literally every weekend before my third kid as I wrote a weekly email to the company to define the culture. And that coupled with our cadence of we essentially always had three meetings every week that were company sponsor. We had the all hands every Monday. We haven't literally missed the all hands on a Monday. And then we had what we called, we renamed this, but it was called Boba Friday. It was a 30 minute session at the end of the week to celebrate. And then Wednesdays were essentially a lunch room. And we did this both when we were in person and now we're 100% remote. That's where we spend a lot of our time. And so I would recommend if you're in the early days, be super deliberate in the culture because it really defines who comes in the company. And if you kind of mess that up in the early days and we're a little past 100 now, like it could really f up the company if you don't focus on it early on.

Great. Yeah, we have definitely heard that over and over. So next question comes from Reynold, but connection's not good. I'm going to ask it on their behalf. Would what were the key customer acquisition channels?

Jack. Do you actually want to talk about Jack, by the way? Jack is a wizard of demand gen and that was her background and so she knows this very well. So Jack, why don't you take this one away?

Yeah. So before I joined work, ramp was like basically almost 100% outbound. Right. All of the pipeline and customers are coming from the outbound team. And so of course the, the bat was that could we start to invest in marketing to see if we could generate pipeline and revenue from that. And we, you know, early on, I mean you got to think about kind of your holistic strategy. And so early on we looked at where are the key ways that we can both generate and capture demand and started investing and are continuing to invest very, very heavily on the capture side. Looking at things like optimizing our website, you know, is it, are we answering people's questions about how we can help them when they get to our website? Are we showcasing how we are uniquely positioned to do that differently and just continuing to optimize, optimize, optimize SEO. All of that. It's been a huge, you know, and, and that, that is our most efficient channel is organic. So highly recommend, you know, making sure you're putting that investment in for, for long term. On the short term side though, one of the easy things that we did right away have a person on my team. She's an incredible demand and marketer herself. Her name is Michelle. We just started to test into paid channels. So we started to see could we generate ROI efficient pipeline from paid search, could we start to get engagement on LinkedIn? And we looked at it kind of from an overarching point of view, but within a quarter it was very apparent that we were going to be able to generate pipeline from paid channels. And you know, so that kind of balancing act of like short term levers in paid, but then also investing in longer term things like going out and telling our bigger story. SEO, organic, that's definitely been the name of the game for us. And then the last thing I'll say is customers also, right? We have a really strong customer base, big advocates for us and continuing to invest in strengthening those relationships. Word of mouth is a huge, you know, huge channel for us. And so continuing to invest in customer relationships and creating advocates is also a big part of our strategy.

Thank you for that, Jack. I'm sure we're going to have a bunch more questions in your direction, but our next question is from Jason. If you want to unmute yourself and ask.

Hi, thanks. So Ted, I just wanted to ask, you mentioned you guys are 100% remote and I was just curious how that was going. Like even all your dev team and everything is 100% remote. Just curious about how, what your thoughts are about that and if you would do that over again.

Yeah, for sure. So we were a company that was 100% local in SF up to the pandemic. We kept our office for two years, paid all the fees, and then they kicked us out two years later. So waste of money there. But then after the pandemic when we ran the numbers, we were about 80% out of the Bay Area, so it was almost impossible for us to shift back into in person. And so we just embraced that once we looked at the numbers and we said, look, this is probably not going to be feasible. Come back in person. We said we want to be a top tier remote first company. We are all primarily US based. I think we're about 95% US based on a few engineers in terms of like QA outside of the US as an example. But we're all in the US across essentially the three time zones. And it's been going pretty well. I would say we look at the industry best companies like the gitlabs of the world, we study them. We know we're not at the forefront of remote work like the zapiers of the world as well, but we are trying to get there. And the biggest thing we've realized in this whole process and while we were interviewing during the pandemic time is we explicitly ask people, hey, are you comfortable? And do you prefer being remote first? And the lucky thing we had is that people opted in to want to go remote first. I would say we have very few people in the company now that actually prefer in person first too. That might change over time. People's preferences change. I know sometimes I get stir crazy in my office here in Redwood City at home, but for now it's working pretty well. But that's because we have a large group that has opted in, but we have not really played around with extreme time zone differences yet. That will probably be our next big hurdle.

Thanks. Yeah, it sounds like you have same. You don't have a lot of cultural divides between countries and like you said, similar time zone. But yeah, that's very interesting. Thank you.

And we've made that explicit of, hey, we're still recruiting primarily us three time zones minus a few roles.

Thank you.

Great. Our next question comes from Emre.

Hi.

Where do you draw the line between category redefinition and creation? Would you still use the same name as the existing category or would you use a slightly different name? How do you approach that?

So I ignore the naming a little bit more and focus more on the way I would characterize it. Is, is it a defined line item in a customer's budget or not? If it's not defined, or if you can't point your way to say, actually that is our line item, then that's, I think, category creation. If it's, if it exists, then it's category redefinition. I'll give you a simple example. You all saw that video if you were here in the beginning of the presentation. We call ourselves the learning cloud now. And so we've evolved and we have enough presence where we can give ourselves our own name. And Jack's been the brainchild behind that. But we don't call ourselves an LMS on the market. But when we go into deals, we literally, on our pitch slides, we literally say, we are a next gen lms. But we frame ourselves as a learning cloud because we want to redefine how people think about the lms. But we are bonafide trying to take over the LMS line item in a budget.

Thank you.

Great. I think that's a great example. Our next question comes from Alina.

Thank you so much. I was actually taking notes in the last one, redefining the positioning. Thank you. My question is. So imagine you were doing your 0 to 1 million ARR all over again. What would you keep in your strategy tool set? What would you do differently?

You know, I did so many things wrong in that zero to 1 million. Oh, geez, I try not to die. That's the first, first thing in that. In that hospital. But beyond that, probably, probably the biggest thing actually. I'll talk about, you know, that point in time when I said we were having that mass exodus of people and we were down to one engineer. We had a lot of internal conflict in that zero to 1 million years. And I see that with a lot of other founders. And I actually didn't have confidence as a leader at that time. And I'll give you a great example. So I would almost go with the flavor of the day or the week in terms of how our employees were feeling or how our customers were feeling. And I didn't have the confidence as a leader to say, hey, this is our direction. This is where we want to go. And right around that time when we had the exodus, I think we were close, like 700, 800k or something. Something close to that. We had a lot of employees pulling the company into doing basically new product ideas, new directions. And it was causing a lot of internal drama and conflict. I remember we would walk around the block in SOMA just like, just like debating these things with internal employees. I think Jason Lemkin had a quote. It's like, hey, if you're spending all of your time internally, you're probably not going to make it because you need to spend most of your time externally. And so to answer your question specifically, the thing I would do over again is be more confident as a leader and stick with your beliefs and what you want to do with the business because it is your company. If you're a founder and you want to actually push that onto the team members and get them to buy in, don't let the flavor of the week or flavor of the month or what's hot in the market pull your team apart. And so that almost killed the company and we essentially had to churn employees to get that back on track.

Any follow up to that or are we good to move on?

Thank you so much.

Okay, great. Our next question comes from Vishal.

Hi. My question for Ted is for enterprise sales. How do you actually get into these, some of these named accounts or enterprise accounts and get yourself, you know, connected or get attention from the VP of whatever division or you know, business function that you're trying to, that your product fits in? What are the avenues? Is it just, you know, and to what extent do you personalize or what does a playbook really look like at that level?

Let me answer this from a sales perspective and then Jack, maybe I'll toss it over to you to talk about programmatically how we do this as well from a sales perspective. And we call it our strategic segment that's 1500 and above employees. The way we had done that early on was really from referrals, VC network and targeted outbound. And so that was really how we got into those clients. For example, one of our early clients, PayPal, that was actually through referrals of our investor network as well. And so those larger accounts, especially in the early days, you need some type of edge. And referrals are probably one of the biggest edge edges in that segment. And so that was how was in the early days. Jack, maybe I'll hand it over to you. Talk about how you're. Because you're doing this more at scale for anybody thinking about doing this at scale.

Yeah. So when we're going for our strategic and enterprise segments, we are running really in partnership with the sales team, full go to market motion around like target accounts. Right. So we have agreed on what's our icp. We have that very clearly defined what are the attributes of, you know, customers that are going to be a good fit, that are going to want to buy work ramp. And we are messaging and positioning to those segments specifically Highlighting customer proof points to those segments specifically and running, you know, account based, an account based motion, which means, you know, surrounding them in places like, more tactically speaking, LinkedIn, but also going to places like events, right. Where we can have a speech seeking engagement to go tell our story and really looking at, you know, where are our customers in those segments going to be and how can we reach them. And then sales is of course doing their part in, you know, starting to build relationships, doing outbound. And so it's really, it's really a combined motion when we're going after some of those larger segments. But I think it comes, it's really important to think about the messaging and positioning like that's something we're very focused on. What are the messages and the proof points that are going to resonate with those segment specifically?

Gotcha.

And just a quick follow up question. How do you, to what extent do you personalize to your messaging? Depending on the icp and if it's a big enterprise, how do you locate the right person? Because many times you just don't know who is the decision maker or who is the influencer. Influencer because the hierarchy is so big and it's kind of, it could get hard to even find out who the, you know, who would be the person that the solution would matter to. Does that ring a bell for us?

We sell into primarily people, teams, L and D leaders, we sell into customer success, customer education leaders, and we sell into revenue enablement and revenue leaders. And so we will look at, from a marketing standpoint, what are the biggest problems we can solve for those different audiences and then tailor our messaging to those audiences. And then again, an enterprise company really cares a lot about, for example like security and compliance. So you might lead with more of that type of messaging for that type of an organization, even within those different groups. But it also, that's where I think the partnership with sales comes in. Right. So we have our sales AES that are looking at, okay, who are like multi threading right into accounts, who are all of the different people that we want to be reaching with the right messages. And that's where that partnership between sales and marketing I think needs to be really, really strong. Does that answer your question?

Yeah, yeah, it does. But I wanted to also find out to what extent you personalize. Is this just based on ICP and titles and the problems that ICP would typically face or is that like, hey, let me go through the quarterly earnings of this account because you only have so many shots, you know, you can't Just keep spamming somebody or hitting somebody on LinkedIn or calling somebody and leaving messages.

That's.

I'm sure that's not the right way to, you know. So any ideas on that? To what extent you personalize it per account or how do you go about that?

Yeah, for marketing I would say we are doing more of air cover. So these are the problems we solve for these different audiences. But I think for sale, that's where they are doing the very personalized. Okay, you know I saw this in your earnings report. I saw you're hiring this many people and so that's kind of the combined effort. So yeah, that more blanket or you know, more air cover from a marketing perspective and then more specific when sales is reaching into the account.

Thank you.

Thanks Vishal.

Our next question comes from Srivatsa. You can correct me on the name pronunciation if I got it wrong.

Yeah, yeah, that's the correct name. Thanks for that. Hey Ted. So one of the frequent issues or call outs with targeting SMBs is that there is a high churn rate with SMB customers. So how did you tackle this especially early on, you know, from that 0 to 1 and up to 3 million journey where probably investments in CSM will be limited. How did you tackle that?

Yeah, yeah, it's really interesting. So for fun I like to listen to earnings calls. I think Nick Meta turned me on to this, this app, this earnings call app. And it's funny as listening ServiceNow earnings, their earnings call, they're a 98% gross retention which is crazy. Basically 100%. I bet you that 2% is people going out of business. And when you listen to the hubspots of the world and I don't even think HubSpot publishes gross retention, they publish net dollar retention and they're kind of canonical example of SMB mid market. And you can imagine SMB mid market you're ranging in the 80, 80 percentile plus for gross retention. And so it's just something you kind of have to live with. You're essentially sacrificing higher velocity with higher churn rates. That's essentially what you're going to have to get used to. Unless you're like ServiceNow, that is heavy enterprise, you're going to have to live with the higher churn rate. Now that doesn't mean like when I do board meetings, it's not a cop out to live with bad churn rates. You basically try to do your best job that you can and make your product to stay in. My rule of thumb is you want to stay above 80% gross. Now, the benefit, though, for the hubspots of the world, as an example, and if you listen to Monday.com, if you listen to Asana, they're all going after SMB Mid Market as well, is you really make that up on the NDR side, net dollar retention side. And again, you want to push that above 1 10% depending on your category, but you make it up there with multiple products, and that's why they have multiple products there. But you kind of have to go into Eyes Wide Open knowing, hey, here are my benchmarks, doesn't mean it's an excuse. I could get Churn. I don't care about Churn, but keep it above a benchmark, but go Eyes Wide Open knowing that the Churn will be higher in those categories, but you're sacrificing Velocity brand getting your name out there for that higher Churn rate.

Got it. Thank you.

Yeah, Great question. Our next question comes from Garrett.

Hi there.

Thank you so much for allowing me to ask this question. How did the marketing strategy change once you guys added that. That subcategory? The subcategory for customer service? Yeah, for sure. This actually before Jack's time, so I can comment on this a little bit more. So to give you some context, in that point in time, we were about 3 million ARR when we added our second product. And it was a big jump for our reps because they had to go from essentially selling to two Personas. They were essentially selling to the sales enablement icp, ideal customer profile, or the target customer and the LND buyer. So someone that sat in HR and then all of a sudden they had to go jump across into a new department and sell to customer education, which sat in cs. And so that was a big jump for them. And so the first thing we had to tackle was a sales approach. And at that time, we were primarily outbound. Anyways, when Jack came on, around 7 million was our big shift at the board level to go outbound to inbound. But at that time, we were still very outbound. And so what we did was we trained the sales reps first to get really comfortable around asking for intros into those other departments. And then we were doing all the standard marketing things like having a website page dedicated to them, having materials dedicated to that new buyer, and doing webinars and events just to get our brand known in that category. And. But again, it's still Outbound Motion heavily focused on the sales reps to get them to jump the pond over into this new buyer. Segment. Now, the next hard part was the reps naturally did not want to go over there because they were so used to selling the original product. And so that was our biggest challenge internally. And we essentially accomplished that through Spiffs and competitions. And so what we did was we had just a big cultural move internally to say, hey, go sell this second product. We could have marketed the hell out of it, but the reps were still kind of selling the first product. And we basically set up a bunch of systemic programs to get them to want to go sell that second product. And then when Jack came on board, when we were roughly around 7 million ARR, she really just amplified the messaging across the board and then started to drive in the inbound. And so our trajectory kind of post 8,9 million start to really shift from primarily outbound into inbound across all those core audiences.

Great. Any follow up on that, Garrett?

I think I got most of my question answered.

Okay, great. Our next question is what are your pain points now versus two years ago?

Oh, that's a great question.

So.

This might be specific to the current macroeconomic environment, but when you're post 100 employees, you basically have a whole new set of pain points internally. And your scale, you need to think at a larger scale as well too. So those are probably our two big pain points. I'll break them up into two parts. One is kind of a market problem pain point, and then one is kind of running the company and how you run the company. So from a market side, I remember Jack Altman from Lattice. So he's on our board and he talks a lot about like, hey, you could do these things at a smaller scale, kind of 1 to 20 million. But when you're kind of talking post 20 million, you need to make bigger bets with your product. If you just look at Lattice, for example, you can see all the new products, they're rolling out. And so you can't think as small as you were before. So you actually have to take bigger swings if you want to move the needle, especially in this market. And so you actually kind of have to be bolder if you want to drive venture level growth. Now if you're trying to drive private equity growth or bootstrap growth, you can think a little more incrementally. But if you're going for venture backed growth, you kind of have to take bigger swings on the market at this phase. And so for us internally, that that made us rethink, we talked about those three big bets at the top of the call. Had to rethink hey, what are those big bets that will actually move the needle? We don't need just an incremental couple hundred K, we need an incremental couple million right now. That's like building new startups within your startup, right? And then the other part of it is internally the hurdles really are communication hurdles. And again, that kind of comes back to the cultural rhythm. When you get past 100, stuff starts to break down. You feel like you're doing a game of telephone. Like just yesterday we were talking about additional headcount in departments and. But there was like five different stakeholders involved and I literally had to make five calls to get everyone aligned versus in the early days, it's like one call or a quick huddle in a room and you solve that problem in five minutes. This problem took like an hour to solve now. And so you need to be very deliberate on your modes of communication, how you like to communicate. And there's a lot of challenges with communication and collaboration. Post 100 and then you amplify that with being 100% remote. You have to be really thoughtful about how you drive cultural communication change internally. So that's probably the second big thing from a company standpoint.

Great. You have been like the perfect advertisement. Also for workshop Wednesday, we've had Jack Altman, we've had Nick Mehta, everyone you're mentioning. I'm like, wait, go watch the recordings, everyone. They are on YouTube. So thank you for all those plugs. Our next question is how did you decide enterprise versus mid market and SMB? What was the revenue split when you made this decision?

Ooh, that's a great question. So the revenue split. Okay, actually, let me give you a better answer to this. We actually. So I didn't give this nuanced detail, but when I talked about the four learnings we actually put, I personally pushed hard into the enterprise for a little bit and it just wasn't working. And what was happening was I was looking at trailing indicators. We actually had a lot of revenue in enterprise, which made me think we could keep going into the enterprise. But what I was ignoring at the time was where was the leading indicators and where was the momentum? And what was happening was the last three quarters before we made that decision to go down more downstream, the momentum essentially screeched a halt on the enterprise side and the momentum was clearly much faster on the SMB mid market side. And so the advice I would give, and I even sometimes make this mistake now, is people will come in and say, hey, take a snapshot of your total ARR. And say, hey, what's in each segment? And then let's go allocate resources like that and what you have to do. Like we just did this yesterday, we did a big churn and NDR analysis. And what I recommended to the team is screw all the data from more than two years ago, just look at the last two years and the forecast and go off of the momentum. So the big piece of advice I would give to answer this question is don't look at snapshots, look at momentum. So the most recent quarter momentums. So I would momentum. So I would say three to four quarters worth of momentum and then look at your forecast. So look at your three to four quarter forecasts from your sales reps. They'll probably only give you one to two accurate quarters. But look at that forecast and that's how you should make the decisions on what part of the market. Because the market in even our eight years of existence has shifted so many times, you actually want to go with where the market's headed. Otherwise you'll be swimming upstream.

Great. Thank you for the answer. Our next question actually comes from LinkedIn. As a reminder, we do live stream. So this one is for Jackson. How do you rate the effectiveness of bulk email set emails sending in pre sales?

Bulk email sending and pre sales are just what is the effectiveness of our email marketing strategy? I'm understanding it correctly. So we definitely look at email as a strategic channel for us. You know, it's definitely a way that you can be creating relationships with prospects and customers and helping to get, you know, get your, get your story out there. How are you helping customers solve their problems? What's your unique point of view? We definitely use it as a channel from more of a content perspective than anything. So on. Again, more tactically speaking, you know, we'll have different email communications that are set up for those ICPs that I talked about. So nurture programs, right? Set up for revenue enablement, set up for customer success, set up for L and D as people are coming into our system. You know, get like. So let's say someone lands on our website, we only pass demo requests off to our sales team. Everyone else goes into our email marketing and retargeting campaign so that we can warm them up so if they become ready for a sales conversation. Email is a big channel that we do that through. We also though, in addition to kind of the personalized nurture programs that we have, we also have our broader email communication strategy. So this past quarter we launched our Learn newsletter and this is more of A, you know, what's happening in kind of corporate learning? What is it, you know, going back to how are we redefining the space? It's a little bit more of like bigger kind of storytelling that happens in that newsletter. But yeah, I think email is an underrated channel. I think it's definitely a way to build relationships with your prospects and customers and you should be using it strategically. We also use it to invite people to our big events like the one Ted was talking about, Learn Europe. It's a big driver for our virtual event strategy as well.

Great question, kind of for both of you. We've been talking a lot at Saster about hiring marketing. Exact, slightly. So, Ted, what is one question that was most important for you to ask when you were hiring your head of marketing? And then Jack, what is one question you asked during the interviews now for your marketing team?

I'll. I'll actually maybe give one tactic in the interviewing that was really helpful. Jack will laugh about this. I actually do this. I actually believe in performance based interviewing versus like just credentials. I like to see how people think and how they interact and it's not really about the right answers. And we actually do a spreadsheet exercise for Jack specifically, I just gave her, I said, hey, can you open up a spreadsheet, share your screen and walk me through how you would build a marketing funnel. That was just the question. And it wasn't to see her excel skills or anything like that. It was to see like how she interacted as an individual, how we would collaborate, how she thought through a problem. And so I really highly recommend, when you're interviewing, even I did this with all of our E staff members is do an exercise like that because they can say anything in interview, especially in marketing, like they can market themselves really well. But when you get to brass tacks of how would you work together, I love exercise based interview questions like that. And then Jack, maybe I'll hand it over to you to also answer too. Hopefully you didn't hate that question.

Yeah, it was. No, it was fun. It was good learning for me too, how I would interact with Ted? Well, so as a marketing leader interviewing for a leadership position, one thing I highly recommend marketing leaders to think about is what does the CEO think of marketing? Are you looked at as a strategic function within the organization or. Or is it like kind of a cost center? So I think that's actually really important thing to get alignment around because it will help define kind of what marketing means to the company. So that's coming in interviewing like your CEO for that. In terms of interviewing for my team, honestly, I think one of the biggest. Two of the biggest things to interview for are we have a six person marketing team right now. One was curiosity. You know, are people very curious, like, asking why? Asking, you know, is this the right thing? Can we do this? I think that's a big skill set to have on a smaller and early stage marketing team. And then second, kind of like, don't let perfect be the enemy of good. Like, how fast, like speed is the name of the game, right? How quickly you can you get things out the door. You can always refine and evolve. But how comfortable are people with kind of moving quickly and iterating versus, you know, making sure that things are perfect? I think those are definitely two things I look for in my team.

So, Ted, you had her share her screen during the interview. The panic I would have had, oh, my goodness, open up a Google spreadsheet.

You're like, okay, here we go. So that was. It was fun. It was definitely fun.

I would have had notes on my laptop, like, you're doing great. Like, keep going. Like, all positive affirmations you would have saw. So funny. But what a great way to see someone's skillsets fast. All right, well, I think that's a good note to end on. Thank you so much for joining us, everyone. As a reminder, again, we unfortunately will not be here the next two weeks because we are in Europe. I love the chat. Caitlin, you are doing great. Thank you so much. But we will see you soon. Thank you so much again, Ted and Jack. This is wonderful. So many great questions in the chat. So many questions answered. And hopefully we will see you all in Sastor Europa in London.

Thank you all.