“The Missing Go-To-Market Segment: Winning Big By Serving High-Growth Startups” with @zendesk

Years old and 1.6 billion in ARR. Zendesk has gotten to a place where today 14% of our new business still comes from startups. So it's still a pretty significant part of the growth of our company. And on top of that, those companies that we bring into the startup program are quite valuable. If you look at our top accounts today, globally, 33 of the top 50 customers we have by ARR were startups. So it's a really important segment for our business as you think about going out to market. And startups, they're very used to getting discounts and perks through a variety of places, accelerator programs, VCs. So it's really important to think about how you craft an offer. And when you're thinking about that offer, a couple things that need to come to mind. First is does that align with your sales motion? You don't want to have a conflict with your sales team. The second thing is, how do you leverage that offer to develop relationships with your partners? So being able to differentiate the offer is something that's really important that we found as we were developing our offer a few different ways. We did the offer initially we had a 12 month discount, which is where we got started. But what we found is that startups weren't really adopting the product as much with just a discount and we had a lot of conflicts with our sales team. So. So then we started to look at a couple different options. Credits are very popular. AWS is a great example of a company that's always giving credits out to startups. Thought it was a really great way to be able to differentiate the offer. But ultimately it was a little bit too complex for us to implement at the time, so we went with what was a free term. So at ZenDesk, startups get six months free. And what was great about that was that it really drove adoption during those six months. And as a result, we started to see higher ads of startups coming out of the program and an incredible conversion rate of 60% of startups that joined the program graduate into paying customers. The only challenge there is, with six months free, there's not really anywhere else we can go. We can't just keep giving the software away for free. So it made it a little challenging to differentiate, but we got creative with other additional benefits and services. Andy's gonna talk a little bit about that in a bit as you think about how you go to market and where you're trying to find startups. If we look at 2020, most of our funnel came in from Organically through our website, we did some paid and we had a small percentage of our volume come in through our partnerships with accelerators, VCs and ecosystem partners. Partners such as Brex, Segment, AWS, Notion, all these different companies that also offer up startup programs. Today, 50% of that comes from the partnership. So we've really built up that partnership program and it's been an important part of our growth over the last few years. As you think about building out a partnership program, I think it's really important to remember that you need to be able to operate at scale, but also prioritize the partners that matter the most. What I found when I joined Zendesk was that we were spending a lot of time onboarding new partners, but only 30% at the time of them were actually sending startups to us. So it was a lot of wasted time. So we flipped that upside down and we said, okay, let's make it easy to onboard partners as seamless as possible. But then as they get into the program, track who's sending us startups and really understand which partners we want to prioritize. If we look at today, 15% of the active partners we have have referred 10/ startups to us. And then if we look at our overall program, 90% of the volume that we get comes from those 15% of our active partners that refer 10 or more startups. You also want to think about the different partners out there. They all have different needs and different things that they're looking for. We work with, As I mentioned, VCs, accelerators, ecosystem partners. If you think about an accelerator program, they are often packaging your offer with their benefits. So the discount is really important. Educational resources are really important for accelerator programs. When you think about VCs, they just wanna make sure their startups are getting off on the right foot. The discounts are temporary, but like getting your teams go to market your team's customer experience up and running is super important. And then the ecosystem partners, they're also trying to get out in front of your startups. What we see is that we actually get a lot of startups from the ecosystem partnerships that we have. And that's part of our winning with friends strategy. So I think that's been a nice surprise for us. But that said, the majority of the ARR does come from the VCs. They drive a disproportionate amount of ARR through the startups that come to us. Which is why I have Andy here and I want to hand it off to her to let her talk about how to work with VCs.

Awesome. Thanks Brad. Okay, so you want to reach startups through venture capital firms. It really starts with understanding the structure of the firm. You need to understand the role. So just baseline understanding here. You guys are all familiar with the investing roles. These are your partners, your principals. These are folks that are primarily focused on finding new investments for the firm. I'd suggest that you don't spend your time here. These could be champions and influencers down the road. But when you're starting a net new relationship with a venture capital firm, I think you want to focus on the non investing roles. So it could be a few things, right? Your, your LP relations, your CFO and then there's platform. Okay, so 90% of VC firms have some kind of platform function. If they've got a billion under management or more. This is, these are going to be your friends. Okay? And platform folks can have lots of different titles. It can be BD like me, growth, portfolio, development, talent. But we all have the same focus. We're all trying to add value to the portfolio to help them overcome obstacles, move faster, connect them to support and resources. We're going to be the folks that are most receptive to companies that have an offer for our portfolio companies. So start with platform. So having spent time on all three sides of this ecosystem, this is my advice. These are the three areas you should focus in terms of building. Go to market with VCs to their startups. So number one, focus, focus, focus. I see too many startups that come to us, they're not clear about who their ideal customer is. They want to spray and pray and it doesn't work that way. So focus on who is your ideal customer? What is the size of the company? What does this company look like? Do they have a CRO in place, a Chief Product Officer in place? How much funding do they generally have by the point that they start working with your company sectors, geos, et cetera. You have so many tools available at your disposal with Pitchbook, with Crunchbase, to go find this information. So there's no excuse. Go run a report on PitchBook, find all the companies that have those attributes of your ideal customer and then use that to see exactly which VC firms invest there, which investment thesis matches these companies and follow those VCs. Focus on those VCs in terms of your partnerships. That's where you're gonna get the most bang for your buck. Next, align it with what is happening in the ecosystem right now. Okay, so everybody sees what's happening in the macro Think about what every VC and startup is experiencing right now.

Right?

We got riffs. So we all have to do more with less people. We have to extend our Runway, cut costs, consolidate the tools that we're using. Right? We have to retain our customers. We need to grow faster. So if your benefits are not lining up with these priorities of the ecosystem, you're a nice to have and you don't want to be a nice to have at this time. So that's number two. Number three is back it up with stories so people aren't going to remember the attributes about your product, your features. We remember the anecdotes and the stories and I promise you those travel so fast from our venture team in our Monday meetings, straight to our founders to boards to other VC funds. A couple examples of anecdotes that I've used I've said recently with venture teams that have been super effective. I had a vendor extend my company, one of our company's Runway by eight months with their solution. Eight months that traveled super quickly outside of that meeting through emails really fast. Another one that consolidated three tools down to one. They ripped and replaced three tools to one. So think about what your stories are. Come up with powerful testimonials and logos that are going to back up what your product is doing for others. So getting more tactical here. Just learn the VC tech stack. We all have like a unique stack we use to get in touch with our portfolio companies. At Crosslink we use Proven. It's a marketplace for folks to host offers and discounts for our portfolio. And then we use Notion. We have proprietary resources for our portfolio companies in there. We use Slack email, find out what that is and then create a go to market package that's tailored to each firm. You have to make it easy for us. So Again, we have 100 companies in our portfolio. My focus is working on them. So if you're asking me to share your tool, your solution with them, you have to make it as easy as possible. So I'm not trying to have to write the emails and explain who you are and why you're such a great tool. So focus on that. Choose three to five companies. Again, focus three to five companies in the portfolio. I'm not going to spray and pray. I'm not going to send the entire portfolio messaging about your company. So focus on a few asks and the sector size, exactly who you want to talk to and then give me the email, give me the whole package that can send to the portfolio companies. And last. Okay, so the bad news is that There are a lot of other companies that are developing VC partnerships functions. The good news is a lot of them aren't doing much to stand out. This is where you can really be effective, is just come up with a unique value proposition to make your solution stand out to others. Zendesk does a great job of this. Zendesk has a slack community with the largest concentration of customer experience leaders at top startups. I want all of our companies to have access to that. So that's unique. That goes way beyond what they're offering in terms of their solution. Think about what your company can do to sort of give back, create community and that's going to make us a lot more likely to share your solution with some of our portfolio companies. I'll turn it over to Brad for key takeaways.

So I'll wrap up with some key takeaways here. So obviously I think the point we want to make here is you want to invest in your GTM approach to startups. It's a really important segment. Be creative. It's not just an offer. A lot of the benefits, the value you provide are beyond the discounts. Make it Easy for your VCs to work with you and then of course, results take time with anything else. This is an investment Zendesk has been making since 2017. It's really starting to pay off dividends for us today and just keep that in mind. So thank you for having us, really appreciate it.

Thank you.