How to Prevent Growth from Breaking your Business Model | MobileIron CEO Bob Tinker

And so how do you develop a profitable sales model? Well, you start with those paying reference customers. You find the sources of lift. But once you start to see that sales model start to go— and there's a key question you can ask. How much are you spending in sales and marketing to get $1 of revenue? It's a really simple question. $1. That if you spent $1 million on sales and marketing in quarter 1, and you got $1.2 million of revenue, that's a really good start. If it's the other way around, that means you have not perfected your sales model yet. So once you get going, these are my sort of core 5 philosophies on this. Start with the customer, not the technology. Go talk to customers. And make sure you take really good notes, because that becomes that sales playbook I mentioned earlier. Make sure you're building something people want to buy. Have a simple value chain. Sell stuff to people who give you money. Thank you. And have something that you can afford to sell. There's a lot to this, but it really just comes down to those 5 things. So now what? Giddy up, it's time to grow. Anybody want to guess what these numbers are? The green is a clue. This is roughly MobileIron's annual revenue from the beginning to last year. $200,000 total our first year of selling. Woohoo! Last year we reported over $140 million. Well, one of the things I want to leave you with is growth is really hard. Sometimes you get like zeitgeist in a bottle and magic happens, but it's really hard work. And it comes with a lot of really tricky decisions. And you will feel those tricky decisions in growing from $200,000 in revenue to $5 million, $5 to $25, $25 to $70. Every year you'll feel it. Yeah? How many people do you have? In the very beginning, it was 3 of us. And then now we're about 900 people. I think we probably exited the first year with about 15 people. And then we were probably about 40, something like that. And that actually gets to one of the trickiest decisions when you're growing. Which is, every time you hire somebody, it costs money. And you have cash. And you have a limited amount of cash. So growth is hard. Growth actually burns cash. So, for instance, how many salespeople are you going to hire? Because every time you hire a salesperson, you have to start paying them money. But it takes them a little while to be productive and pay back. So, interestingly, the faster you grow and hire salespeople, the more cash you burn for a little while. And you hope you come out the top end, and they become accretive. So growth is hard, and you will have a lot of tricky decisions to make about, should I hire an engineer? Should I hire a salesperson? Should I hire a customer support person or hire a finance person? And all the different parts of the organization are going to be screaming, saying they need stuff. And part of your job is to actually figure out how you balance the machine. There is— There's a really interesting book that if you hadn't read, I would recommend going to read. It has absolutely nothing to do with Silicon Valley and technology, but it's a great book about how to think about systems. It's called The Goal. The Goal. The Goal. It's actually a book I read, believe it or not, in manufacturing engineering, which sounds super boring. But it's actually a really good story, and it teaches one really important lesson, which is called chase the bottleneck. If you think about your company as a system, you have marketing people generating leads, salespeople selling stuff, turning on customers, customers create customer success problems, you have engineers— like, you sort of have this loop that happens in your company, and the bottleneck will move around. And one of the ways that I make decisions in terms of where to make that incremental resource is you sort of chase the bottlenecks. Where, if you make that resource investment, does it actually unlock other parts of the machine? Because if the bottleneck's over there and you're adding more people over here, you're just making the bottleneck worse. And the way to figure that out is you can use metrics. You can talk to your team. One of the most interesting things for me personally in terms of being a first-time CEO is you start to get a feel for your business almost like a living organism. It has inputs, outputs, emotions, antibodies, skeleton, muscles, and you start to feel like if something happens over here, what happens over there? So you'll have to mix a combination of metrics and good data and just having a good feel. for the organism that is your company. There's another thing about growth. Anybody want to guess what these numbers are? This is the number of employees where shit just breaks. Growth breaks stuff. And at 50 people, it changes. At 150 people, it changes. At 450 people, it changes. And at 750 people, it changes. And I'll give you some interesting anecdotes along the way. So, If you're fortunate enough to be part of a team that goes from like 30 people to 55 people, when you go from like 48 to 52, all of a sudden things will catastrophically start to get confusing. And I've done some reading on this, and I think the answer to it is that the human brain can roughly keep track of about 50 one-to-one social connections. But apparently at about 50, like, that catastrophically fails. So what you'll find is your team or company, at about 40 people, everybody can kind of keep track of what everybody else is doing. But then at like 52 people, all of a sudden the right hand and left hand have no idea what they're doing. And all of a sudden you'll just look around and be like, what happened? Like, we used to be able to keep track of each other, and now it's like we have no idea what's going on. So at 50 people, you have to start implementing some lightweight communications and processes. I'll give you a good example, which is that the customer support team that handles customer issues and the QA and engineering team that fix them would just sort of talk to each other. There was like 3 cubes. They could sort of yell at each other. They'd figure it out. But when you get about 50 people, suddenly you have to create little forums where you make— or you ask the customer support team, the engineering team to sit down once a week to talk about bugs. Yeah. Or your product and sales team sits down and talks about funnel, sales funnel with marketing. Or you start having your weekly exec staff meeting because you want to make sure your teams are talking. Before 50, everything kind of can stay semi-organic. But about 50 people, you have to start being structured about it. The next thing that happens is at 150 people, it breaks again. And it will happen all of a sudden. Things will be working. You guess where we're getting to. Blah. It's not working anymore. And the reason why is because at that point, you start having a second layer of management. Up until that point, you basically have sort of your functional leaders, and then you have everybody else. And that works OK. At about 150 people, you will start to have directors, senior directors, team managers that are all of a sudden running functions that were as big as some of the VP-level positions were like a year ago. At that point, all of a sudden, you have to start communicating through other people and organizing yourself through other people. And that takes a managerial mindset shift, and it also forces the company to get a lot better at communication. I'll give you an example of something we did, which is we were probably about 70 people, and we started doing an all-hands. Meeting every Thursday at noon. We'd get everybody together for lunch and just talk about what's going on in the company. What's going well, what's not going well, what's coming up this week, what's coming up the week after that. And we still do it. Every Thursday, I get up in front of the company at lunch and talk about what's going on in the company, or we have other people come in and present. It's a chance for us to stay connected. It's a great forum for communication. And it allows you to communicate through others. Other things you'll have to start doing at that point is setting goals, writing down goals for your executives, and then passing them down through your functional leaders down to the teams. At 150 people, it just requires that next level of organization. You'll feel it again at 450 and 750. So the core lesson here is growth breaks stuff. Thank you.