News & Views

 

Madrona’s Investment Themes for 2020 and Beyond

Over these last months of quarantine, we at Madrona have remained very busy, first and foremost working with our portfolio companies to help them navigate the economic turmoil of a global pandemic.  Second, but also importantly, we have continued to invest, adding eight new companies to our portfolio since quarantine began in March (Fauna, VNDLY, Go1, Zeitworks and four others still unannounced).  This continued active pace of investment exemplifies both our commitment to the long-term opportunities we have identified, as well our belief that downturns can be the best time to invest.

As we have been quarantined in home offices in front of Zoom and Teams, we have also taken the opportunity to step back and revisit our investment themes and think about which trends we continue to be most excited, which are emerging, and which perhaps are being accelerated (or dampened) by the aftermath and “new normal” of COVID-19.

It has been 18 months since we last posted about the investment themes that are driving our activities at Madrona.  When we took a fresh look at our current thinking on technology trends that we believe will drive the industry in the next five, ten, or 20 years, the picture that emerged shows significant consistency with our view of the world 18 months ago, but also interesting new opportunities and trends.  The figure above illustrates the overall areas we find most compelling for new company and investment opportunities.

In this post we offer a preview of the themes and will follow this up with deeper dives on the areas outlined in the image above.  We work as a team to fully investigate and build our investment themes and you will see many from the Madrona team as authors – please reach out to us with ideas and your thoughts!

At the center of our investment themes, we continue to see a massive opportunity for companies to create businesses around intelligent applications, fueled by machine learning and modern user interfaces.  We believe that every successful application being built today should be an intelligent application, with a data strategy and continuous learning system at its core.  Intelligent applications have been the single largest area of investment for us over the previous several years, and we expect this to continue for the foreseeable future.  We will continue to invest in the next generation of line-of-business applications being reinvented by machine learning and cloud native delivery.

As the world continues to struggle through the COVID pandemic, we also see a massive acceleration in the emergence of technologies enabling the future of work.  This trend had been evolving for the last several years and the current environment has created an order of magnitude acceleration, as businesses of all sizes rush to find new intelligent applications that help them collaborate more effectively when all employees are remote, build and retain more diverse and distributed workforces, and prioritize digital-first workflows and processes that have remained largely “in-person” and workplace focused.

A major new focus area for Madrona is the intersection of innovation between machine learning, intelligent applications, and life science.  We touched on this opportunity in our investment themes 18 months ago, and subsequently invested in several exciting companies including Twinstrand, Nautilus Biotechnology, and Terray Therapeutics.  As our partner Matt wrote when we announced our recent large investment in Nautilus: “Today, these domains are coming together to transform the ways we understand and improve life and health. The biological and chemical sciences are intersecting with computer and data sciences in precision medicine, digital pathology, proteomics and more.  At Madrona, we believe these intersections of innovation will be at the forefront of major breakthroughs in research, analysis, diagnostics, clinical processes, preventions and cures.”

Next, the march to the cloud and broader adoption of the cloud computing model by enterprises continue to create myriad opportunities for next-generation software infrastructure companies — despite the increasing dominance of the hyperscale public cloud providers.  These steady improvements to software infrastructure enable and increase the pace of innovation for all the applications higher in the stack that leverage these cloud services.  Enterprise need for better usability, manageability, security, cost-savings, and performance across diverse devices, cloud platforms and environments will drive new business opportunities that provide hybrid and multi-cloud management, infrastructure automation, and new architectures that leverage serverless and event-driven architectures.

Another investment theme created by the need to move faster, increase productivity and reduce cost is in the area of low-code or no-code platforms and applications.  The next generation of workers is more tech savvy, and there are more “makers” in business teams and organizations who want to build things directly and not wait for IT, engineering or the data science team.  These range from developers who need to incorporate ML directly into the applications they are building to information workers who become citizen developers in order to quickly solve business problems.

While we have invested a somewhat higher percentage of our last several Funds in B2B companies, we continue to strongly believe in and invest in new consumer services, often where the digital and physical worlds are fused in a way that create a virtuous cycle to provide a more compelling and fully integrated experience.  This digital transformation of consumer experiences, where mobile-first applications streamline, simplify, and save consumers time and money, is a core pillar in our investment themes going forward.

We are eager to engage with all of you in the community around these updated investment themes.  Each time we have published our thoughts in the past, we have been energized and humbled with the feedback we have received – from founders whose vision hew closely to one of our themes to constructive debate on how we are too early or too late with our ideas.  In the coming weeks, we will post six deeper dives into our themes around software infrastructure, intelligent applications, the future of work, the intersections of innovation, low-code/no-code platforms, and the digital transformation of consumer experiences.  We can’t wait to further discuss, debate and learn from all of you. In the process, we look forward to investing and working alongside some of you to build the next generation of companies that address these exciting areas of innovation.

Send us an email or connect with us on Linked In (all contact info is in our bios which are linked above).

 

 

 

POSTED IN: Madrona News

Angel Investors – Standing Behind Startups

When Madrona Venture Group was founded in 1995, it did not start by raising a venture capital fund right away. In the early days, Madrona invested with funds solely from the four founders: Tom Alberg, Paul Goodrich, Gerald Grinstein and William Ruckelshaus. It was a “super” angel group, so to speak. One of those early angel investments that Tom Alberg made was in a first- time founder with a plan to sell books on the internet – Jeff Bezos and the company that became Amazon.  25 years later, Amazon has fundamentally changed retail as we know it.

It took four years of investing as angels before the founders decided to raise an outside fund.  Building on this history, we, at Madrona, have consistently had a focus on investing in the early stage of companies over the intervening years and have a deep understanding that, for founders, these investors, and other assistance such as accelerators and incubators, at the earliest stages are the most crucial.

We have a long history of collaboration with the angel community here and continue to invest alongside them. Over the past decade, Madrona has participated in 78 deals alongside angel investors, mostly in companies here in our region. In fact, some of our most recent investments have been alongside angel investors, including The Riveter, OctoML and MontyCloud.

The total capital invested by angels in the PNW has steadily increased over the last decade. Alliance of Angels, Keiretsu and Element 8 have been among the most active angel investing groups in the PNW – investing in a combined total of over 1,300 deals over the last decade.

While the individual checks an angel investor or group write may feel small in comparison to the ever-increasing later-stage rounds, that amount adds up. According to Pitchbook, there were 25 PNW angel groups that made investments in 2019, totaling $145M in capital contribution. In contrast, 2009 had 12 PNW angel groups that invested a collective $11M. As part of angels’ commitment through the long run, they participate in later-stage rounds as well. In fact, angel investors participated in over 200 deals that raised $2.8B in the PNW in 2019 alone.

It is important to note that angel investing’s importance extends far beyond capital. While these investments may come in different forms and sizes, a common denominator is the support they provide at a critical time in a new company’s journey. Angels invest early, sometimes alongside seed stage investments from larger funds like Madrona. These investments are personal, ones that the investors are particularly passionate about – and subsequently, angels are known for rolling up their sleeves and getting deeply involved in formative stages. Not only can they be a key factor in reaching the next stage of funding by bringing other investors and VCs to the table, but angel investors provide advice, coaching and network access that remains influential throughout the entirety of a company’s journey. As an example, the Angel Capital Association estimated in 2017 that roughly 40% of angel investors take board seats, and almost 50% have active board advisory roles. In short, when angel investors commit to fostering this growth, they are giving back to the community over the long run – and truly living up to their name.

For those who have yet to take a step into this community, angel investing can be an incredible way to get involved in the rich and vibrant startup community in the PNW. To some, it may seem risky a risky endeavor, rife with unknowns. In many ways, this is the beauty of angel investing; taking a bet on a founding team in an early stage company and helping them navigate growth challenges is an invigorating way to allocate both your capital and time.

A study of over 1,500 angel investors in the US showed that nearly 66% initially got involved in the discipline through angel groups. Participating in these larger groups and communities can create a structured approach, share risk across a variety of investments, learn from each other and alleviate some of the initial apprehension to starting angel investments.

Downturns do affect investing but if history is to be believed, not that much when it comes to angels.  Take 2008 for example where angel investing was relatively consistent through the downturn. The total early-stage venture funding raised in the PNW dropped by 13% from the prior year, and again by 9% from 2008-09. However, seed stage and angel investing only decreased by 10% from 2007-08, and actually increased by 18% the following year, bouncing back to pre-recession levels within 2 years.

If we use sentiment as a historical guidepost, we would have expected to see the venture community invest in fewer deals, at lower valuations and increase their focus on existing portfolios. We have demonstrated, however, resiliency in the face of difficulty. And now, more than ever, fostering innovation is critical.

Madrona has always been excited about the technology innovation and start-up ecosystem in the PNW, but today, we are reaffirming our commitment to invest through the downturn. We continue to remain focused on investing from Day One to the long run. As Seed stage investors, we will roll up our sleeves and partner to go the distance together. By extension, that means working closely with angel investors, other seed funds and entrepreneurs in the community.

We will continue to support Create33, TechStars, Madrona Venture Labs, AI2, FFA among other groups that help get startups ready for any kind of early stage funding. Further, we have a roundtable of start-up founders and senior technology executives working with us on our Pioneer Fund.  These experienced technology execs are also angel investors. The Pioneer Fund enables them to bring more funding to startups through partnering with Madrona in their own angel investments.

To other members of the ecosystem – angel investors and other funds alike – let’s lean in through this tough period. We have a shared responsibility to help both existing and new start-ups continue to innovate through this downturn. Washington State has led the country in COVID-19 responses in a number of ways already. Together, we have the potential to continue leading by demonstrating our commitment to the start-up ecosystem in the Pacific Northwest.

POSTED IN: Madrona News

Investing in VNDLY and the Future of Enterprise Applications – Intelligent Apps

Over the past few years and the next few years, we will see the formation of the next generation of enterprise application companies, companies applying intelligence to their applications.  Over the subsequent decade those companies will replace legacy companies such as SAP, Oracle, NetSuite [part of Oracle] and Salesforce.

This will happen for a simple reason.  It will happen because applications will become, well, intelligent.  As ML/AI becomes integrated into every element of the application stack, applications will learn on a real-time basis and they will start to take actions on our behalf.  Intelligent applications will deliver a far better customer experience, solve more of the customer problem set, and do so at far better economics than traditional or even SaaS applications.

That thesis on intelligent applications is why I am so excited about many of the companies we are working with including, Clari [Revenue Operations], a stealth corporate travel startup, a stealth financial application startup, and our most recent investment, VNDLY.

VNDLY, is a talent management solution founded by Shashank Saxena and Narayan Surabhi.  Based in Cincinnati, OH, VNDLY’s clould-native vendor management solution gives employers and contractors an AI-based platform that adapts to the changing needs of both groups.

Over the past few decades, the contract and contingent portion of the corporate workforce has grown from less than 20% to more than 40%.  My experience leading the Fieldglass team at SAP helped me to see the scale of the challenge businesses face in effectively recruiting, paying, managing and engaging with this critical part of a company.

Like every other component of the enterprise application stack, there is an opportunity to materially improve the completeness, the economic value and the ease of use, of solutions focused on the vendor and contract workforce.

There is an opportunity to serve this part of the workforce with the same fullness of solutions that companies like WorkDay, provide for full-time employees.

Shashank, who was previously an executive at Kroger, and I met a few years ago.  I knew at that time that I would enjoy working with him.  Shashank and his team are customer centric, insatiably curious, intellectually honest and continually raise the bar on themselves.

I am thrilled to have led Madrona’s investment in VNDLY and excited to work alongside Shashank and team as VNDLY’s newest board member.

Our investment in VNDLY is an Acceleration Fund investment, which is focused on companies that have found product and market fit and are scaling their businesses.

 

POSTED IN: Madrona News

Back To Work Toolkit Launched!

As businesses across the nation start thinking about the new normal and how to bring people back to work and back to the office, Madrona launched, in partnership with the Bellevue and Seattle Metropolitan Chambers of Commerce as well as the greater venture network in the region, a Back to Work Toolkit.

Created through hours of conversations with leading companies in our region such as Microsoft, Amazon, Starbucks, Alaska Airlines, Costco, JLL and CBRE, and after combing through hundreds of documents, we launched with a site that has a full webinar on our findings split into three areas.

  • How to Get Started
  • Preparing the Office
  • Preparing the People

On the site you will find documents, templates and guides that have been curated and created for your use.

Please share widely – and thanks to Katie Drucker, Shannon Anderson and Ishani Ummat for their work on this as well as everyone at Madrona who contributed to this production!

POSTED IN: Madrona News

How Sales Leaders are Meeting the Challenge of COVID19 and Work-From-Home with Snowflake, Clari and SeekOut

(Photo Clockwise, Soma, Tony, Scott and Kevin) 

In this environment, Sales and Go-to-Market (GTM) for enterprise companies has changed, sometimes drastically.  What we do know is that in the work-from-home environment, tight coordination and focus is even more important in selling and GTM.  We spoke with sales leaders representing early, mid and later stage enterprise SaaS startups late last week about how they dealt with the onset of Covid19 and what has emerged as some best practices. See the summary of this below and listen to the podcast for more details on how these companies are continuing to build their business.

We spoke with

  1. Focus on your customers. Connect personally with each and every one.  Be transparent and think outside the box in how you can help them. Being clear that a current contract might not work for the company anymore and figuring out how to work with them regardless, creates loyalty and value in the relationship.
  2. Build your internal competency. Tight sales teamwork is required, and you need the regular check-ins with your team and across teams to ensure everyone is working on the right things for customers and pipeline.  Develop a regular cadence when the whole team comes together and for lower level check-ins – don’t forget the starting or younger employees who might need more support.
  3. Create a classification system for customers and prospects, from those feeling headwinds to tailwinds and adjust your approach and message appropriately.
  4. Introduce price flexibility or financial flexibility for customers who are undergoing stress. Again, being honest and transparent about your situation and wanting to understand the customer helps move these conversations along.
  5. To continue to build the funnel, double down on direct marketing, digital events and being creative. One great example was from Clari, which holds many regional in person dinner or lunch events.  They held it digitally and offered attendees a dinner delivery.


Transcript

Soma
Good afternoon, everyone. We all know this, but we live in unprecedented times now. Whether you call it work from home or shelter in place or social distancing, the COVID-19 situation has had  a tremendous amount of impact in all facets of life, including how companies market and sell to their customers. And today, I’m excited to have a handful of sales leaders from three different companies representing early stage, mid stage and later stage startups, to talk to us about how their sales and go to market efforts, as well as teams have had to change significantly to doing business effectively in this new environment. Please join me in welcoming Kevin Knieriem, Scott Gudmundson and Tony Jackson. Before we get started, can each of you take maybe a minute to introduce yourself and briefly talk about the company that you’re a part of and what business you’re in? And let’s start with the Kevin.

Kevin
Great, thank you, Soma. And thanks for the opportunity to join this call. Kevin Knieriem, I’m the Chief Revenue Officer at Clari. For those of you that don’t know who we are what we do, we help companies provide revenue confidence, and we’re a platform that brings together all of their revenue constituents in a common place. We think of revenue truly as a process and not an outcome. And we provide the instrumentation for sales reps, sales managers, sales leaders, and any really revenue participant to run the business. Our solution quite honestly has allowed us to really navigate COVID-19, understand the impact of business understand where we need to lean in. And we’re working really hard to help our customers go through that same analysis of their business. Thank you, Soma.

Soma
Scott let’s go with you next.

Scott
Yeah, thank you for having me. So, I’m Scott Gudmundson, Head of Sales at SeekOut.io. We are a SaaS-based platform that helps recruiters and sourcers find hard to find and diverse talent. We’re really on the forefront of educating the HR space on a technology stack. And really how we can fit into that stack and help bring multiple pieces of product together to really find that diverse and hard to find talent. And today, I’m representing the small business side of the conversation. So, thank you.

Tony
Awesome. Yeah, thanks for having me, Soma. Tony Jackson, I’m a Seattle native. I spent my entire career in software sales. Half of that’s been at early stage startups. So, I have an appreciation for what’s going on there. The other half has been kind of the pre-IPO through IPO journeys at Tableau Software, MongoDB, and Snowflake. For those that aren’t familiar with snowflake, we effectively help organizations get value out of data through internal analytics, building data products, monetizing data with third parties. And we do that through a completely differentiated Cloud Data Platform. Our company has been around since 2012, products in market since 2015. And we’ve been dubbed the fastest growing enterprise SAS company in history. So really excited to talk through what some of that means in terms of navigating COVID.

Soma
Fantastic, great to have you all join us today. Just to get started, I thought it’d be great if you guys could take a couple of minutes and set some context. And when I say context, it’d be great if you can walk me through what happened in your teams and in your company. In the first few weeks of when stay at home or work from home happened. Okay, and Tony, do you want to continue with that?

Tony
Yeah, absolutely. It was a fun time, I guess we’ll say. So, context setting. I had a two-day QBR scheduled on March 16, and 17th. And it was pretty elaborate. So I had leaders from all across the company and all across the country flying in, we had a day at our office in Bellevue scheduled and we actually had a day of workshops at your office in Madrona scheduled and, the entire thing was designed to be, collaborative with a lot of hands on workshops, and team building exercises, and completely come out of this thing, you know, singing Kumbaya, and we’re ready to go March 4th for the year. March 2nd rolls around and we start, this thing’s picking up steam and we say, hey, asking, should we make travel optional? That was a hard decision, on March 2, right? We do that and, of course, and March 16th rolls around and everybody was at home by themselves. And so, when you say the word scramble, that’s exactly what it was to convert a lot of investment in terms of a two-day, well thought out agenda, and try to convert that into a one-day remote, and try to drive some of the same outcomes was an incredibly challenging. I would say, the things that worked well, I made my intentions clear in terms of what I wanted in terms of outcomes of highly collaborative and participatory. I was impressed at how my team leaned in. Katie Drucker from Madrona participated in the full day remotely, which I’m really appreciative of, and I told her after the fact, that she was the MVP of our QBR. Because she brought a lot of, I’d say, industry and market insights that really shaped the way that we were thinking about going to market in our region. And then on an account level really gave us that board executive viewpoint about how different organizations might be thinking about COVID impacting them. That was a transformational exercise and just all of the conversation around that really inspired us to say hey, how do we be on the right side of history and get out in front of this thing? So, we decided to roll out a two week program where each one of our reps would call every single one of their customers, every prospect that they had an open opportunity with, to show them that we care about them both as a person and about their company and to listen and to learn, and to try to take what we’re learning and come back. And both, at an individual account level, how do we help them outside the context of Snowflake? And then what learnings can we share among our team? I’ve just been blown away by the results of that, but for our team and the response from our customers.

Soma
Awesome. Scott or Kevin, do you guys want to add something to this?

Kevin
Yeah, happy to go next. Our board meeting was March 5th, and that was the last day I traveled. Our CEO was such a hard charger. If you know him, he actually went to London the next week, and we were just trying to get him home and thankfully got back before they shut down travel. That next week for us was really the transition week to okay, are we ready to work virtually? Fortunately, we had a couple things right. We had the right instrumentation. So, the biggest challenge area for us really wasn’t the field sellers, it was our SDR team. We’re used to working in pods, used to working together and that camaraderie and now a lot of these folks were really young folks who in some cases, were still living at home with their families. They were transitioning to TV tables next to their bed in their in their bedrooms, right? And so, we made sure that they were ready and engaged, but more importantly, still had that camaraderie and social engagement. And I’ve got to hand it to my rev dev team, is what we call our inside team, that they really brought that together quickly. What we found was with a lot of our events being canceled, that we could still drive top of funnel remotely and we’ve been trying to have a lot of fun and learnings on how do you best conduct a remote meeting. And we actually just today or this morning rolled out an internal enablement and in selling guide to help us sell and make our meetings with our customers and our prospects super impactful. We’ve also tried interesting things with our prospects and our customers. More of this format of social engagement over Zoom. So, I think, learnings for all of us, I think the hardest part of it has been the end to end Zooms that are on all day. And being able to find the one or two minutes you need to transition from one meeting to the next. So interesting times we feel like we’re taking on the challenge and quite honestly trying to learn from it and become better remote sellers.

Scott
Yeah, I would echo what Kevin said there a little bit, I think the first couple of weeks right as this unfolded was just a frantic pace for everybody. You’re just constantly on back to back, Zoom meetings, not a lot of time to get to the things you really need to do attend to. And so, it’s been nice to see our team particularly, and we’re a smaller group of just 30 in the whole company so, it’s a little different than some of the others, but it’s been nice for us to settle into a nice pace. Similar to Kevin, we had a technology stack, we did 90% of our selling remote already. So, we’ve seen fairly little impact from that standpoint. I think the area that we really needed to double down, and focus was the team, and really making sure that the team was connecting regularly. We started off just being so frantic that some of the people kind of got left off on their own little island. And it became clear really quick that we needed to get the teams together. So I think one of the biggest changes we’ve seen, is both at a company level getting together on a weekly basis, but then individual teams making sure that they’re meeting even two or three times a week sharing best practices, because the one thing that seems to be evolving in this is that what we thought two weeks ago isn’t even the same now. And so, it’s this constant evolution of trying to stay on top of what is the latest moves, what’s happening and how do we adjust to that. But I will say our CEO did a great job when this rolled out of really focusing us on a growth mindset and saying, okay, as opposed to being victims in the situation, how do we go take advantage of what presents itself? And how can we continue to be successful even though times are going to be challenging for the next while?

Soma
Great, I thought I want to take a few minutes and talk about, what are you doing in this environment with your current customer base? Tony just mentioned that he instituted a two-week program, where every account rep reached out to both existing customers, as well as customers in the pipeline to show that, hey, we are here to support you through this. We care about you. I thought that was a great best practice that Tony and his team followed. But in general, how are you thinking about taking care of your existing customers because that, to me, looks like priority number one. And that means, what does your customer success team need to do differently in this current environment? And as a sales leader, how are you thinking about success for your team and for your customer success team in this regard? And have you changed what you’re expecting out of your customer success team in the process? Sort of a bunch of questions but all related to how you are working with your customer success team and your sales team in taking care of your current customers and keeping them happy and successful through this tough time.

Kevin
Our number one goal as a company right now is protect the base right and to rally around our customers. And one of the things that myself and my CEO have been doing is reaching out to our peers, whether you’re a CEO, CFO, or  Head of Sales, and actually walking them through how we are using our own solution not to turn this into a Clari commercial, but using our own solution to navigate COVID-19 and as part of that, we actually come out with a lot of learnings that we’ve been able to help our customers implement. We’ve also been doing things like revenue assessments and health checks for our customers and getting much more focused on them. We have a pretty big rev dev team or inside sales team as well. And as we did this analysis of our installed base and our prospects, we kind of categorize them into headwind or tailwind companies those that are either flourishing, surviving, or are in a challenge. And based on that, we’ve sort of reoriented our focus in our message into those three buckets and so we’ve redeployed some of our rev dev team against our customers to help them better utilize Clari so at the sales rep level, at the manager level, and so trying to get the entire company around this customer first, when you don’t need your full gamut of SDR’s out there just prospecting.

Tony
Yeah, I think I can piggyback on that, I think I’m seeing the same where I think there’re some clear winners and losers in terms of impact in at least the short term, and certainly probably beyond. But being able to identify and categorize which companies fall into which bucket, I think that informs your strategy on how you can help them, our expectations haven’t really changed. And for us, just for context, we don’t have a customer success team, all of that falls into the field sales organization. And, based on the way our business works, which is a utilization and consumption-based service, we’re always very closely aligned with our customers, but I would say the nuances and emphasis on things like overcoming what’s going to happen in every organization is scrutiny on spend, right? And so, we’re being even more proactive about having value engineering, business value realization type conversations and documentation and framework for our customers. One of the things that we’re seeing on both sides is the companies that are being impacted from a personnel perspective and having to undergo layoffs. We’re helpful to them by figuring out, can we help plug gaps for them, while they’re, being short staffed and trying to operate more efficiently? And can we help some of their people land within some of the customer base that is growing and is hiring. And so, we’re adding value to the customers that are growing by connecting them with top talent that now is available that that probably wouldn’t have otherwise been. So those are some of the things again, I think, from our perspective, that we’re just people first, I think, is kind of the way that we’re approaching those situations.

Scott
For us being in the hiring space, obviously, directly impacted pretty quick. We’ve had an opportunity to be able to work with customers on individual basis to put them on pause from their subscription standpoint, work with them around just payment options, and do all of those things that are the right thing to do right now. And we’ve had the luxury of having very deep relationships with our customers. And so, they’ve appreciated being able to come to us and just have very, fact-based conversations and outcomes that are working for both of us. So that’s one thing that I say has helped us. The other thing is, we’ve been fortunate enough to have a really solid customer advisory board. So, we’ve been able to rally them A. check in on them and how they’re doing but B. get their feedback on things that we can be doing to help their businesses. And that’s been pretty valuable for us and just knowing how to move forward.

Soma
Switching focus from protecting the base like you said, Kevin, to starting to think about, hey, how do you move customers through the pipeline? You’ve got each of you have a pipeline of customers in varying stages. What are you doing to be able to move your customers through the pipeline and getting them to be a paid customer and close a deal? How are you thinking about the mechanics of sort of closing a customer? And one important question in that regard is, how are you thinking about price? Or in other words, are you thinking about price as a lever? Because everybody is sort of thinking about budgets every is cost conscious today. Are you sort of saying, hey, let’s use price as the lever for the first year, or at least in the short term, and maybe worry about not the right phrase a year from now, but let’s focus on closing the customer and getting the deal done? I would love to hear some thoughts on that.

Kevin
Yeah, happy having to go again on this one. So obviously, like other companies, we’ve experienced headwinds, right, we’ve had customers budgets freeze, or be put on hold for a while in deals slipped from our Q1 into our Q2. I’m assuming we’re all seeing very similar things. And what I’ve noticed, as well as a lot of companies are still going through their replanning process, which means they’re kind of in this pause mode. And so, as we’ve talked about earlier, as we started to categorize companies based on where they fit and the things that they’re experiencing. From there, we’ve looked at flexibility in some cases, we just want to help and so we’ve done what we consider revenue assessments where we’ve hooked up our solution to their Salesforce instance and have been able to drive insights right away so that they can inform the changes to their operating plan. In others we’ve done, let’s just call it financial flexibility, to allow them to start with us and flexibility through the first year, not necessarily price reductions, if you will, but more just sort of flexibility based on constraints that they have from a budget and an OpEx spend scenario. So, we’re, we’re treating them each uniquely because every company is different. We don’t have a, let’s say, a cookie cutter COVID-19 offer, but we are really trying to lead with that revenue confidence and help these companies navigate.

Tony
Yeah, I would, I would echo those sentiments, I think especially the piece that every customer is in a unique circumstance. And so being really flexible around, what does this customer need and putting first how do we add value for them is kind of the approach that we’ve taken. I’ll take a different lens on the question, Soma, which is the thing that I’ve noticed is it forces really tight sales execution. It reinforces all the discipline around doing the right things around qualification and really being dialed in on understanding, what are the challenges that this customer is going through? What is the business impact that’s available to them? And how can our solution help them and then being really proactive about articulating that, demonstrating that, getting hands on with the product. There’s no room for laziness during these times from a Field Sales execution perspective,

Scott
I would just say you both you both talked at this, being able to classify your pipeline into the heavily impacted, the lightly impacted, and being able to really get down on the deal by deal level for us has been very important. There’s always a lot of deals in the pipeline, but every quarter comes down to a handful of deals that are going to make it or break it. And we found, classifying those deals and really focusing on the ones that have potential is where we’ve seen success. I would also say that a lot of the early prospecting and selling couple weeks back was, hey, people now have time to look at technology. And that quickly burned out, right? That message, if I see that again, I think I might scream. But people do have time right now to evaluate their technology stacks, in whatever vertical, whatever space you’re playing in. And I think that’s a really strong message to go to executives with is to say, hey, while people have a little time to breathe right now evaluating your technology stack and, and how it’s being used is a strong conversation to have with folks to get their attention to get some mindshare and then to potentially see if then you can apply what Tony said and strong sales discipline to actually get a deal closed.

Soma
And we all know that, hey, sales techniques and sales approaches can vary depending on who are target customer bases. Sometimes we are targeting small and medium businesses, mid-market customers, enterprise customers, sometimes we are dealing with inbound leads, sometimes we are looking at outbound leads. And each of these things are has a unique flavor and unique nuance for how we think about go to market, or sales approach kind of thing. To the extent that this kind of thinking applies to your business or to the customers that you target, are there any best practices for how you deal with, say, SMB customer versus an enterprise customer in this situation, any sort of best practices or learnings to be had here?

Scott
I think I’ll take that here, just right out of the gate. The SMB space right now is really tough. They’re definitely tightened up on budgets and everything else. So, in that instance, you’ve really got to be looking for what is their use case and their need and if there’s a fit, then continuing the conversation, if not putting things on pause, I think is the right thing to do. And particularly prospecting thing into that group right now is tough. But in the enterprise, people are still buying people are still needing to do business. And there’s a lot of opportunity there. And what we’re seeing work is we’re having conversations in sales right now, which are much more genuine than they’ve ever been with customers. we’re much more open and transparent in our conversations. And people are seeing that. And it’s resonating, because we’re just having honest dialogue back and forth about what people’s needs are and how we can serve them. And I found that that that’s been a big help for our sales team is just being very genuine and open and building deep relationships. That’s leading to success.

Tony
Yeah, I would add that I’m seeing the same thing. And I think if that if that genuine approach, and that transparency is being reciprocated. And then I think the key is, at more of an organizational level, how quickly can we iterate and share feedback across the team. So, I think that’s the internal aspect, how do you create that collaborative environment is really important. We’ve moved to a cadence of Monday morning calls focused on topics around,  some of the things that we’re learning in dealings with customers. And then bringing in the right subject matter experts potentially, to present to us on how we might be able to help our customers. And then we’ve moved to a cadence in terms of our one on one meetings where every alternate week we do one on ones on Monday, from an AE perspective, and then on the sales engineering side, our counterparts. And then on the alternating weeks, we actually come together two on two where it’s a sales engineering manager and myself with the AE and their sales engineering counterpart. And that’s actually been really helpful at keeping people focused on the right things. And then on Fridays, we actually get together and we just spend probably two or three minutes on each person. What did you accomplish this week? What’s something that you learned and what’s something you either want to learn, focus on, or get better at in the following week, and just creating that framework or foundation to allow for the team to operate as a team, versus a bunch of individuals operating out of their houses has been really, really helpful. And I’ve seen a ton of benefit from it.

Soma
Right? Hey Kevin, you guys, like pretty much every other company on the planet now has gone through a recent process of replanning and reforecasting for the rest of the year, given everything that’s changing around us kind of thing, right? In that context, how do you think about changing compensation targets for your sales people, whether you’re adjusting the sales quota, whether it’s up or down kind of thing, so that you’ve had the right balance between doing what you think is right for the sales teams to keep them motivated and performing well, while still keeping the right business outcome in mind so that you are not on one end of the spectrum or the other. Can you share some of your thinking on that?

Kevin
Yeah, a couple of things on that.  One of the things we did was we really kind of focused our sellers, those that are purely acquisition and those that are taking care of the customer. We didn’t have that model before. Obviously, with growth and complexity, you kind of go to that model. And so, we’ve just implemented that. I’ll  look at it from two areas, for those that are account managers, one of the things we’re focusing on, is there an opportunity to renew customers early. And as part of renewing early, can you expand? Can you understand their business scenario, maybe get creative? So, we spent on early renewals, right, to try and get a quarter plus out ahead of those, right, to secure the business, right. And so, we can focus on driving value versus negotiating the different point in time,  For our sellers and their quota, yes, we’ve made a reduction, not a drastic one. Some of you have seen some of the studies that are floating out around there, I assume what revenue collective put out, quota adjustments have been from zero to 50% or 60%. So, we didn’t ones across the board based on territories that were in line with some of the top line adjustments we made to our targets for the year. We used our own solutions to try and figure out what that should be based on where we were seeing those opportunities that were pushing where they were going to within the year. What we wanted to do most importantly, was to continue to motivate our sellers, to get to feel like they had a fighting chance. And quite honestly, some of the additional things we added in their plans were new logo, right? It is just as important as protecting and surrounding and bear hugging your customers is making sure that you continue to grow me continue to bring new logos into the family.

Scott
So, I take a bit of a different approach just because we’re smaller, right, but for us, going back and analyzing the assumptions we put into the comp plan to begin with and saying do those assumptions still hold or do we need to evaluate a changing landscape. And luckily for us, those assumptions are for the most part holding. So, we’re in a wait and see mode right now on quotas and we’re going to assess at the half year, take a look and kind of see how things are coming along. But I think the most important thing from my perspective is analyzing your assumptions. And if there’s major changes, then you’ve got to address it, or you will have morale trouble real quick.

Tony
Yeah, I think adversity is such a, it just reveals what your culture is, right? And for us, we were in a unique circumstance, in part based on the performance of the company. But the message from us has been, we think we can hit our plan, and we’re still marching towards that. But it hasn’t swung so far on the pendulum such there are a lot of companies that are saying that it appears tone deaf, right, Snowflake I think the history here is that we actually last year revised our plan mid-year, from a quota perspective, not the corporate perspective. And so, knowing that as the company was overachieving, but based on the fact that we resegmented our business mid-year last year, and the company did the right thing, has built a foundation of trust where people all feel really good about, hey, we can march forward. And we know that if this turns out to not be attainable, based on circumstances outside of our control, we have a belief that the company will do the right thing.

Soma
Got it. I want to switch to one question that came in from the audience. This is a question from Gabriel, for Scott. Scott, as you were talking about this is an opportunity or there’s a good opportunity where companies, particularly SMBs, or enterprise, or whoever you are starting to think about no technology stacks. As a way to sort of say, hey, things are changing, some things work. Some things don’t work. Let me sort of take a step back and think about what technology stack I have, or I don’t have an What do I need to do kind of thing. The question specifically is the following. Do you think that people are already evaluating their tech stacks because they want to find ways to cut costs, or what do you think is the reason why this is happening?

Scott
I think, just based on my experience in the limited number of customers I’ve spoken with, and there’s two camps, or people who are doing well, and now is a time for them to evaluate, how can we continue? And how do we shore that up? And then there’s the second camp, which is definitely. there are a lot of reactive companies that have instantly said we need to reduce spend by 40%. And so, we’re seeing people come back and say, okay, who are our more expensive vendors? What is our usage looking like? And they’re starting to make decisions based on those things. And so, we’ve talked about that a little bit as a group here today, but you got to shore up your customer base, for sure. And make sure usage is there, but more importantly, when you’re going after and having these conversations depending on your product and where you’re set in the marketplace there’s at least for us a great advantage to go get share from some of the bigger players that for years have been it price increases. And the value has gone down a bit. And so, we see it as an opportunity as people are evaluating tech stacks to really get in and display share from some of the bigger players in the space.

Soma
Got it! Thanks, Scott. Here’s another question from the audience. The question is this. We are getting a lot of sales email responses such as, let’s revisit post forward. How are you navigating those situations without pushing everything out? Kevin or Tony, do one of you want to start and try to answer this?

Kevin
Part of it depends on the persona of the person. So, for instance, if the persona is a Head of Sales, or CRO which is our typical, executive buyer, or CFO, we might come back with something creative says let us realize your budget frozen, realize you see value in our solution. Let us get you on it now in a creative way. If the persona is a sales manager or an operations director who is just starting to look, we’ll keep them engaged, we’ll keep them educated. But we’ll come back and revisit when we can actually start a real process with them. I think we were finding in this world we’re all working at home. At least on our side, it’s much easier for us to set meetings and get time with people. And we continue to actually overachieve on our goals in setting what we call our RS zeros. So, we’re still doing really well in creating demand, and setting meetings and having those meetings happen. And then it’s sort of a way of qualifying is this an opportunity or is this something that we just want to continue to nurture?

Soma
Okay, Kevin, I have a sub question that is there a way where you got to think about changing your positioning or the value proposition to make it more resonating with people and They say they’re going to either wait for six months or whatever it is kind of thing, as opposed to, let’s engage now and continue the conversation. That kind of thing.

Kevin
Yeah, I think, obviously our offering is actually vital instrumentation now. So, we do, we have sort of pivoted our messaging to confidence, revenue, confidence and instrumentation and being able to help a company navigate, what is the impact this is having on the business? And how to, especially in a mobile world, where everyone is working virtually, how do you help kind of drive a consistent sales methodology and process across your entire sales organization? We really help companies do that. And so, our teams have really been enabled to continue to drive that. And obviously, we leverage challenger as part of our selling methodology and to challenge the status quo and to end in a way that we’re teaching so we’ve pivoted from what would be considered a pitch deck to a teach deck and trying to help educate our potential customers that we can help them through this environment, and it’s resonating.

Soma
That’s great. So, let me go to the next question. And this is a question that I also had, so I’m going to sort of frame my question and then sort of go to the specific question from the audience. Prior to a month ago, or a month and a half ago we were always looking at, conferences and events and other kinds of sort of physical, get togethers  as a way to reach out to customers to get leads to increase our leads to get more people to the top of the funnel, and all that fun stuff, right? That’s not happening now. So, to me, this feels like a phenomenal opportunity to say, how do I double down on what I call digital marketing? How are you thinking about doubling down on digital marketing in this current environment? And the specific question is, can you give some specific examples of how you are successfully generating leads, especially now with physical boundaries?

Tony
Yeah, I’ll take that one because one of the characteristics I would say about Snowflake in the past Soma, was that world class field marketing and that is that is central to our strategy with respect to top of funnel and influencing existing pipeline. Kevin mentioned earlier, his company being well set up and I think Scott agreed, well set up to support remote and we’re the same way, we practice what we preach as a company at Snowflake. So, we’re all in the cloud, we’re a data-oriented company. So, the pivot for us was really, really quick. And I’m just so appreciative, our entire field marketing effort. It probably took about a week to do a 180 and pivot to a virtual marketing team, and the amount of webinars that we’re doing and the thought that’s being put to behind those webinars and the ability to take our partner ecosystem and them in and let them draft off us and then attach to some of the things that they’re doing has been nothing short of remarkable from  our perspective and all of the statements that were made earlier in terms of people being at home, being able to look at things like this, there’s more time people are in less meetings, all of our digital footprint is going up every single week, and is already at record highs.

Scott
I think I throw out a couple learnings just on the smaller end, we really quick realize we weren’t spending enough on digital. And as the landscape has changed, some parts of digital have come down in cost. Others have gone up 5x. If you’re not paying attention to on the digital side, what your costs are looking like and what the rest of the market is doing. You may be spending the same amount of dollars and not getting any return right now and wondering why and those are all things you’ve got to be on top of. The other thing I just throw out real quick is just I think companies that are going to succeed through this, at least in the short term, have good outbound emotions. It’s taking that control of your own destiny and being able to know who your ideal customer profiles are, and sitting back and saying, Hey, have those ideal customer profiles changed in the last two weeks, three weeks, and then being able to. proactively go get in front of those folks. And obviously, that’s more for the enterprise sale, but I just throw that out there that digital is important, but I think success comes without bounding.

Kevin
Yeah, I think as a company, we really spent the last eight months before COVID-19 getting our top of funnel in order. We weren’t great at it before that. A lot of it was the right leadership, the right instrumentation. And so when this happened, obviously, like everyone else, we canceled all of our paid events, but we also had to cancel the events that we were doing and we do a lot of in city networking events where we bring sales operations and revenue leaders together in an online sessions like this where we share best practices and we talk. So, we continued that process virtually, where we have these regional virtual dinners. And we’ll actually send to those that are attending a way for them to either get food delivered or wine if it’s at night. And what we found is there great networking sessions and usually on them, I’ll have a couple customers who will comment, and I’ll have prospects and they’ll start actually selling and I’ll just take a backseat, those have been really effective for us. Our SDRs have gotten amazingly creative. They will share a rejection email with the team and that team will craft the response email together and that typically will get a person to react. So, I’m just I’m seeing unbelievable creativity coming out of our inside sales machine, which has been super important. I think one of the most important things that I think all of us can do as leaders for our sellers is, we’re now in a remote world and in a moment remote world, you now become more transparent. Right? We all now in front of each other on zoom, and having sellers, quite honestly who are open to being critiqued or open to being transparent on how effective they are. Are they making the calls? Are they having the meetings? I know I was one of those people, when I came to Starbucks, I had to transform I couldn’t hide. just behind the phone anymore. And so, if you can get your sellers to transform where they can now use data, and this, they’re going to become much better in this environment. The SDRs are now going through that process on our side.

Soma
Great. Thank you. And for the for the last question before we get into rapid mode. This is a question from Brad. Are you seeing projects that were classified as priority in normal times needing to be repositioned as lifeboat projects in COVID-19 times to achieve funding?

Soma
Do you want to take a crack at this?

Tony
Yeah, I would say pretty commonly, I’d say that’s a that’s a, maybe a daily occurrence in our world. So, yeah, absolutely, I think there’s everything is being reprioritized. So, things that were at the top of the list are now getting shuffled to, the middle or the bottom or uncertain. And then there are some things that were not even on the list that are now the top priority issue for our customers. And I think that just goes back to the key theme of being able to be intimate enough with your customers and your prospects to be able to have those conversations and stay close in terms of cadence and communication and understand where are things today versus yesterday or this week versus last week is the key there.

Scott
Well, I would just say that the one of the things that I think that we’ve seen important and I don’t know if this is going to directly answer the question or not, but getting close with the customer, both where they’re at so going to the communities that they’re in and listening to them, talk to their peers about what they’re experiencing, working with the channel partners to understand what they’re experiencing and what they’re going through, and taking all of these different data points into your decision making. And really getting frontline, I think that’s become much more imperative, at least for us than it was three, four weeks ago.

Soma
As part of wrapping this up, we’ve got about a minute or so to go. I thought I would summarize some of the key things that I heard in this conversation. And one of the things that you guys all have said consistently is, this is the time to strengthen your relationships with customers, or with existing customers to protect the base with pipeline customers and inside your own sales and customer relationship teams. My phrase is, you cannot overcommunicate in this environment. So please think about communicating whether to the customers or with your teams, as much as you can and need to. The second thing is customers appreciate transparency, honesty and going above and beyond to help them through this time, it’s all about engendering customer loyalty. And the more you learn, and the more customers love what you do for them, and that they will be with you for the long term. Third thing is, every customer and company has individual challenges. So, you have to be flexible, somebody mentioned, hey, it’s not a price reduction, but price flexibility. And I thought that was a fantastic way to think about, hey, what, what kind of things that we can be doing, or we should be doing to work with our customers in this tough situation. The other thing is be creative in how you work with customers, from helping them with internal insights, to helping laid-off employees land somewhere, and anything else that you think they’re facing as key challenges. And I think both Kevin and Tony mentioned this, one of the things that we do is, particularly for customers that are both existing customers, and also customers in the pipeline, categorizing them as customers who’re having tailwind and customers are having headwinds. And being able to both flexibly and creatively work with the customers depending on what situation they’re in. I thought that was a fantastic sort of piece of wisdom to keep in mind as we navigate through this. And finally, from an internal perspective, use this time to tighten teamwork, analyze internal sales assumptions. And as they are changing, because things are still changing and fluid, be ready to adjust them as and when you see changes as opposed to waiting until after the fact. These are what I thought were some of the key pieces of information that came out of this conversation. So, thank you all again. Thanks, Kevin. Thanks to Tony. And Thanks, Scott, for taking time out, and I know you guys are all busy, but. taking time out to be able to share your journey, your experiences and your learnings in terms of how go to market teams and sales teams are navigating through this tough situation. All of you be safe and take care.

Erika

Thank you for joining Founded and Funded. If you enjoyed this podcast, please like and share it with your friends. Please stay tuned for more podcasts to come your way and send us your ideas. We’re always looking for new content ideas, especially during this work from home and transition, we hope, back to the office and back to work period of time.

POSTED IN: Madrona News

Helping to Build a Platform Connecting Candidates and Companies in a COVID-9 World – Silver Linings

Plan C Is a Silver Lining in Cloud City

A few months ago we all had a pretty good Plan A, and those of us feeling extra clever had a good Plan B in our collective back pockets.

And then COVID-19 hit. Things are crazy right now for companies and all the good people that make up those companies. Nothing could have prepared us for the fall-out, and all of our Plan A’s and B’s are suddenly woefully inadequate.

Here at Madrona we’ve been working non-stop to support our portfolio company CEOs and HR leaders as they deal with the landfall of new challenges COVID-19 is causing. But it’s not enough, and I’ve been exploring what our greater role can be.

As an HR and TA leader in tech, I’m familiar with the typical open source google sheets typically passed around to communicate talent availabilities and vacancies. We are seeing the start of a mass global talent layoff, coupled with companies that are hiring like crazy. The current system for sharing this is not COVID 19-scalable.

A week ago I created a small task force, and we set out to build a platform to replace the google sheets (like this one https://bit.ly/3dOR6k6) that would be 100% free to the global tech community.

Our mission: To help those affected get back to work as soon as possible.

The team:

  • Madrona Venture Group (myself, Shannon Anderson and Matt Witt)—Seattle’s largest technology startup investor and the producers of the Founded and Funded podcast.
  • Chris Brownridge—who’s been providentially working on exactly the platform we need as a passion project. His Silver Lining platform is like the ultimate matchmaking app between employees and employers and was ready for scaling up to global proportions.
  • Jennie Ellis at Bandwidth (www.bandwidth.team)—Seattle’s most popular recruiting and workforce planning partner for startups. Jennie and Jill (see below) have expertize building and scaling massive teams and have worked through corporate layoffs as HR leaders.
  • Jill Domanico at Skytap—which provides businesses with the capability to run traditional workloads in the public cloud.

Our Plan:

Scale the Silver Lining platform as a not-for-profit, targeted solution that connects candidates and companies. 100% free to everyone. It’s designed so everyone can contribute and benefit. Whether that’s a company forced into layoffs, laid-off employees with great skills, or companies that are hiring and desperately need talent right now.

Why a New Platform Now?

Those of us on our task force are really busy right now. COVID-19 has created more work for us, not less. But we’ve all built careers by focusing on integrity, compassion, and teamwork. And we couldn’t just look away while our friends, neighbors, and casual connections risk losing everything.

We’ve experienced the powerful impact of positive collaboration. We’re curious and persistent learners. And we all believe that Silver Lining is not only a great solution to today’s challenges, but the right thing to do for the sake of our colleagues, entrepreneurs, and country.

How Does it Work?

Companies Who Are Hiring: Use Silver Lining for free. Create a profile and source/contact candidates. Create free unlimited postings and perhaps donate a few dollars to support the effort. (Any extra proceeds will be donated to the WHO Covid-19 Response Fund.) The updated talent dashboard allows for candidate searches by last employee, last job title, location, and job function.

Companies Who Are Laying Off: Use Silver Lining to confidentially submit names and emails of those affected by lay-offs. Once the names are submitted, each candidate will receive an email inviting them to opt in or out. Free of charge. We also have a sample email you can access to forward on to candidates so they know someone has submitted their name.

Companies in Both Scenarios: Use Silver Lining to source/contact candidates and submit names of those being laid off.

Candidates Seeking Work: Submit your profile and preference and then search for jobs. Share your resume, LinkedIn profile, experience level, ideal company size, and desired industry all for free.

Is It Working?

Yes. Candidates are already being approached for work they otherwise wouldn’t have heard of. Employers are discovering incredible talent with immediate availability and are actively interviewing.

We are initially focusing on the Seattle area, with expansions to all US based technology hubs and globally over the next week. Here’s where we’re at:

  • Nearly 2,000 active profiles from companies such as Sonder, Zipcar, Expedia, Bird, and Lyric, and these numbers are growing substantially by the day
  • Companies forced to lay off are submitting their employees to the platform and making a donation to support the service. (Remember, employees opt in before any information is shared on the site)
  • 140 companies have signed on to sourced and reach out to candidates
  • Over 500 live job posts from companies hiring

Are We Done?

No way! As we continue to develop Silver Lining, we are looking at other supportive initiatives for the community, in particular around career coaching, resume writing, and emotional support.

If you are interested in helping out, please contact chris(Replace this parenthesis with the @ sign)getsilverlining.com.

If you’ve been affected by a layoff (as an employee or a company), check Silver Lining out here. Silver Lining will remain 100% free to use for candidates and employers.

 

 

 

 

 

 

 

POSTED IN: Madrona News

Founded and Funded – Building a Distributed Workforce with Those Who Have Done It

What a change we have all experienced in these last few weeks.  Everything has been shifting at an incredibly rapid pace and we have all had to adjust both our personal and professional lives.  For those of us that can, we are primarily working at home, amongst our dogs, children and family.  We have become very familiar with Zoom, Google Hangouts, Microsoft Teams, Bluejeans, etc as we toggle between them.  But is it working?  Most likely, some things are and something aren’t, as we adjust to this new cadence

Recently, we were able to get a great group together to talk best practices in working and managing remotely.  We had Carlos Vega, CEO of Tesorio, Barry Wark, CEO of Ovation and Kara Hamilton, Chief People and Cultural officer of Smartsheet.  Together they talked about the challenges of keeping things on track  in a remote environment.   With big company goals, how do we ensure we are all marching towards them during this disruptive time?  How do we help our teams be productive and effective?  What tools have been most helpful?  We turned this conversation into a pubic podcast which you can listen to below my summary of the recommendations.

The conversation was kicked off with the topic of the cadence of meetings and work – have they changed as we have transitioned from being physically together verses in our remote locations?  Overall, the need for schedule and ‘showing up’ was emphasized, but this was combined with the understanding that this is an unusual time.  Due to kids being home and schedules being disrupted, the group emphasized the need to have great trust in your team – not to micro-manage.  But some specific tips that seem to help the day be more effective were:

  1. In the morning, act as if you are going to the office. Wear office appropriate attire, shower, get  your coffee, etc.  Have a concrete start to the day.
  2. For meetings turn your video on. It is important to see facial expressions and be present when a meeting is happening.
  3. Have a coffee or lunch virtually with a team member. By not being together in the office there are casual interactions that are missed.
  4. As a leader, have a standing time where you are on your video conferencing for a few hours and folks can ‘drop’ in.
  5. At the end of the day, have a transition. It used to be a commute – now maybe it is a walk outside.
  6. Create time in your calendar for thinking time. Block out time with no video meetings or other digital distractions

We also discussed the importance of tools that have been effective. What came out the most was regardless of the tool, the need for documentation was critically important.  It is easier to have misunderstandings when virtual, so writing down everything from process to a decision is imperative.  In regards to tools to enable all of that:

  1. Video Conferencing – Zoom, Microsoft Teams, Google hangouts
  2. Collaboration – Slack, Smartsheet, Confluence, Notion
  3. Fun! – Donut (nudges different employees to meet each other)

Culture and Hiring is more challenging when working remotely.  While we all work on culture even when we are together, much of it happens just through be present with each other and modeling it.  This is much tougher in a digital environment.  Some suggestions were

  1. Again – write it down! The values and goals to help communicate culture
  2. Remember you are still leading and living them by example even virtually.
  3. When not in a Covid crisis, bringing the company together multiple times a year is critical.
  4. If you feel you should get on a plane (not in this crisis period!) don’t hesitate – do it!
  5. Hiring – the job spec really to be written down and fully agreed to. Then in the virtual interview be more specific about what each person is interviewing for.
  6. OnBoarding – ensure that the new hires first day and week are full of intro meetings, virtual lunches. Also, sending swag or a care package that first week to the employee goes a long way.

Managing through this period is bringing new challenges to all of us.  Clearly, just adjusting to the new economic environment and the health of our people are the first things to address.  Hopefully the ideas above can help us handle them in a more constructive and productive way.

Transcript

Hope Cochran

So guys, thanks for joining. And you know, clearly we’ve all had dramatic changes in our life changes that we could have never ever predicted. I was just on a call with another CEO. And we were just commenting on the fact that we do a lot of scenario planning, but this is one we could have never drummed up in our imaginations. So here we are. And it’s been major changes to both our personal and our professional lives. And you all have the difficult task of driving companies that are supposedly growing quickly and have big goals and ambitious deadlines. And so how do we keep those on track during this time? Now, I brought together three panelists who have dealt with this before this period, meaning working with remote workforces. And so we thought we could pull us all together I’ll talk about some best practices as to what we found to be effective during this period and building things from the ground up in this way. So we’ve got Barry Wark from Ovation on with us, Carlos Vega from Tesorio, on with us and Kara Hamilton from Smartsheet.           And so I’ll just let them kick it off by introducing themselves and talking about how they built their companies. With this distributed workforce in mind from the ground up. Carlos, you want to kick it off?

 

Carlos Vega

Certainly, thank you for having us.

 

Carlos Vega

So, Carlos Vega, co founder and CEO of Tesorio. We’re a Series A stage company, Madrona letter A. And we’re very lucky to work with folks like Hope. And so our company you know, I’m originally from Panama. Probably not in San Francisco, I’m in Panama right now just don’t have a pretty Panama background. And my wife’s also from Panama. So I always knew that we would eventually move back. And so we started our company to be distributed. And so we are today based in have an office in Burlingame in the Bay Area. But we only have about eight or nine of our 31 employees there. Everyone else is distributed across the United States. And then we also have people in Brazil, Mexico, Colombia, and Uruguay and in Panama, so it’s a it’s been an exciting ride. I guess the one thing I’d say is that we have to be, you know, deliberate about how we do things more than they would happen if everyone was face to face. And yeah, and company background. In case you’re wondering, what we do is we help companies manage their cash flow actually. So manage their accounts receivable. Time their accounts payable strategically out so the high party vendors are getting paid that sort of thing. It’s a good time right now to be doing those things so I’m we’re trying to do it ourselves and eat our own dog food. So happy to be here and thanks for having me, Hope.

 

Hope Cochran

Yeah, I you know cash right now is King and I know that there was a webinar last week on that very topic. Carlos your product is right in the sweet spot of it so I’m sure it’s getting used widely and deeply by your customers at this moment. Carlos, can you just remind us how many employees Tesorio has currently?

 

Carlos Vega

Yes, we have 31 full time employees. We have also five contractors in Brazil and five contractors in Argentina as well.

Barry Wark

Thanks. Well, it’s a pleasure to be here. Thank you for inviting me. I’m Barry Wark. I’m the co-founder and CEO of Ovation. We’re a Series A clinical informatics company.

 

We’ve got 35 people now in 12 states and a dev team in Paraguay as well. And we, we operate in a very specific vertical, clinical diagnostic labs. There are some amazing world experts in this field in the US, but they’re not all in one place. And so we built ovation from the ground up as a distributed company, knowing that we were going to have to recruit that domain expertise, wherever it was. And we built some of that muscle originally. And it’s now I think, serving us pretty well.

 

Hope Cochran

Yeah. Are you is your company at all involved in helping out with the virus right now? Barry?

 

Barry Wark

Yeah, we’ve had a busy week. Yeah, we’ve got a number of labs that should be coming on this weekend with testing. We’re hoping to make a significant impact in the US testing capacity probably early next week.

 

Hope Cochran

That would be very well received. Thank you for that work. And how many employees are you currently?

 

Barry Wark

We’re currently 35 people

 

Hope Cochran

So Kara, you’re in a bit of a different stage with Smartsheet at but clearly very distributed as well as you guys build a product that helps distributed work. And just so the group knows Perez, the chief people officer and head of culture there at Smartsheet, which I think is definitely important aspect to this conversation.

Thank you Hope. Thanks. Thanks. Hello, everybody. Yes, I am the chief people and culture officer for Smartsheet. And we do provide a collaborative work management platform. So we are in the collaboration space, trying to best practice really with our own workforce. We have grown we are publicly traded now. We’ve grown from 30 people to 1600 in less than eight years, and Madrona was our first VC partner. So part of the family here. We have those 1600 employees are across Bellevue, Boston, Edinburgh, London and Sydney. And I would say we’ve grown from a very in office local to now a global company. And it’s the work has been. There’s technology work to do and tooling. And there’s also like a cultural, I think Barry mentioned this intention. And so I think they’re both equally important. growing into that.

 

Hope Cochran

So, yeah, that’ll be good to talk about. And let’s kick it off with just talking about what is the cadence of work, meaning, you know, when you come into an office, there’s kind of standard norms, you come in in the morning and you leave in the evening, whatever that looks like. How is that different in a virtual setting? Whoever wants to take it away.

 

Carlos Vega

Yeah, I’m happy to start unrelated to work it starts like with yourself Actually, I’m not all combed and shaved just because of this webinar. I actually do follow that routine as if I were going to the office. You know, I think people think remote work is great, I get to work in my PJs, but that there’s something like psychological about just preparing yourself and think you’re to work. So that’s, that’s pretty important the morning routine, and the other one which often gets forgotten, and I’m not good at it. But probably most co founders on this on this line are not going to do either is unplugging at the end of the day. You know, I can share what our teammates do.

 

Hope Cochran

I really struggle with that.

 

Carlos Vega

Yeah, yeah, I’m not I’m not the best example for that. But you know, our teammates Do you know, go for a walk or go for a run at the end of the day to simulate the commute, if you will, or you know, people just very explicitly changed our slack status or something like that. So yeah, so on that end, right? That’s a little bit on the personal side. And then on the work side, I think it all starts with a culture of trust, which is something we can talk about later. But that’s that’s the bit that creeps in the back of your mind like I was previously an investment banker. And at Lazard it’s all about FaceTime not the app, but you better be at your desk, you know, leaning forward with like, madly typing away in Excel all day and if the MD walks by and doesn’t see you there, you’re not working, it doesn’t matter what you’re doing. And so I’m not saying that’s exactly how I manage but, but that’s one of those things that really going completely on the other end is critical, which is making sure you trust your team otherwise you end up micromanaging so we can talk about that later, I’m sure. But over to someone else.

 

Hope Cochran

Barry What have you found similar? Yeah. Oh,

 

Kara Hamilton

I was just gonna say I think the culture of trust is so important and also a mutual understanding of priorities so that we’re all working on the right things. We have a lot of people leaders at Smartsheet that have employees on their team across many time zones. So also being intentional about when we’re going to check in so that people in all areas are feeling like they’re connecting during their work day. And I think that takes a lot of flexibility and intention from people leaders, to really set their teams up for that kind of healthy connection.

 

Barry Wark

Yeah, I think that I think that’s a really good jumping off point. We think a lot about trying to design our interactions and our work environment to leverage what’s great about distributed teams, but also substitute for what is lost when you’re not all in an office together. So one of the things that we find is we somewhat select in some cases for people who want to work from home because they have a child or a parent or some other dependent, that they are responsible for at, you know, odd times of the day. And that work from home schedule allows them to contribute, and, and maintain those other responsibilities. And so, you know, we don’t have a, you know, if you’re sitting at your desk 8am to 5pm kind of approach. It’s very much a, like I said, you have to trust people to be doing their work. And then we have intentionally scheduled sync up points, right, like standups or meetings. And, and, and on the flip side, trying not to spend all of our day on zoom in meetings, right? Something that we often rely on in office environments is we can have a coordination meeting, and then you get, you know, diffusion of knowledge from that meeting, just by people sort of walking around and talking to each other. You don’t get that in a distributed environment. And so we have to design for communicating what happens in those meetings without having to have you know, 1000 one-on-ones to train for that knowledge, and I’d say the last part of cadence that we think a little bit about is when are we actually going to meet up together in person. So we are very intentional about currently Ovation does three, all hands meetings a year, we do it in a location. And it’s, although there’s a little bit of business it’s very intentionally, mostly social and getting to know each other. And part of what Carlos was talking about trust is really hard to build over Slack and Zoom. It’s much easier to build in person, and then transfer that to the distributed environment.

 

Hope Cochran

Yeah, so you’re saying like three meetings a year or gathering zero of the company, Carlos, I feel like you’ve done a similar type pattern.

 

Carlos Vega

Yeah, that’s accurate. Yeah. So what we try to do at least one annual like everyone gets together, but then the different managers have the freedom to basically create all sides for specific purposes, right? So we have a pretty big project we’re working on with folks in different countries and different teams all together. So we all went to Nashville, right?   Which was fun, but the point is really all coming together can really there are certain things which to be honest, are just better done in person. And coordinating those big projects and the timelines and hammering out the details. Sometimes is better to just bring together and so some of that budget from the bigger offices can be dedicated for people to selectively use and that’s part of that trust factor right? Like if a manager of a team or product owner initiative owner is saying like, Look, I think we need to do this and they have a strong argument for it and then going for it is something that’s powerful.

 

Hope Cochran

Yeah. So, Barry you touched on it briefly, but I thought we could dive more into it that kind of meeting cadences meaning, like meeting with your direct team, like do you have regular times that you try and coordinate every week? Or how do you approach that?

 

Barry Wark 13:30

So I personally do scheduled one on ones with all of my team. Again, because we don’t have that sort of passing in the hall interactions always. Most of our teams do team stand ups and then you know, scheduled one on ones. But we also have started doing we call them random coffees, and we, you know, spin a wheel each weekend and assign people to find some time just to sit down over zoom or or chat or something and have a coffee. And what we found is that that feels like

 

Barry Wark 14:11

it may be taking time that you’d want to be doing something else. What we found is that it’s actually reduced the number of meetings we have, by more than the total number of minutes that people are spending and I’m just because we get a little bit of that, that diffusion and synchronization of what’s going on in people’s lives that way.

 

Hope Cochran14:29

Got it. Um, so, yeah,

 

Carlos Vega14:35

I know you have a section on tools later.

 

Hope Cochran 14:37

Yeah, we’re just heading into that. So good segue.

 

Carlos Vega 14:39

Okay, I was just gonna share what Barry just shared is something that one of our engineers suggested too and Barry I’ll admit, I was also like, do we really need to do this like I think we could be doing other work so congrats on the foresight, but one of our engineers implemented a tool called donut which is kind of cool. And here’s a screenshot. It just basically automatically pairs people and you can opt into it. You just put it in slack. And they’ll automatically start pairing different random conversations automatically ask you like a cheeky question to icebreaker. And we’ll create the calendar invite and allow you ought to just connect. So a virtual way of doing what Barry had the foresight to do.

 

Hope Cochran 15:23

That’s interesting. So it’s kind of creating unlikely pairs and relationships that maybe you would have developed in the office because you ran into them. And yet, it’s, it’s giving you that nudge. Right. Yeah. So let’s talk about tools. Kara, let you pick it up, and what tools have you found effective prior to this time, and during this time

 

Kara Hamilton

Yeah, I think we have an approach of kind of a host of tools, looking at different teams, utilizing different things. So Zoom, absolutely, we’ve been able to use zoom to have very large and have meetings like this where you can almost do a town hall. And that feels really good. And we get a lot of participation. Sometimes I think we get more participation than a big in person meeting because it’s almost leveled. everyone is on the same plane. We Slack, we use workplace for internal comms and that provides a lot of area to socialize online. And Smartsheet of course, and then Google Chat. I think I’m between like Google Video and zoom, like back and forth throughout the day for different applications.

 

Hope Cochran 16:35

Okay, you have to tell us like the best use of Smartsheet during this time, as well.

 

Kara Hamilton

The best use of Smartsheet during this particular time is we have a we have a dashboard for our Covid-19 preparedness and so we’re able to keep that updated for our employee base so they can see what each offices we’re now all on complete work from home but as you we were working through this different offices. We’re in different statuses and then lots of links and information and intake if you had something to tell us about what was going on with you, that actually that whole kit is available to any of our customers and free to anybody who was in trial. So that’s like our one of our uses right now. That is been really, really helpful to us. And then just the general collaboration and sharing that we that we’ve always utilized. Smartsheet for.

 

Hope Cochran 17:37

That’s great. Barry, what have you guys utilized?

 

Barry Wark 17:39

So I think actually, our most important tool is just an attitude around written documentation. So we’re going to talk about culture I know. But but in a distributed team against it without that office diffusion, written documentation of what’s been decided and why so that people who are working independently can act independently sort of in the, in the right direction, we found has been really critical. Most of our team failure is centered around lack of documentation. So we use Confluence currently for that. But I think that it is just the attitude that meeting notes, get documented decisions get documented plans get documented. And, again, I think like these random coffee meetings, I feels like a big burden. But it ends up saving us a lot of time in the in the end. We’re also big zoom users and slack as well. So I think I think that’s kind of baseline now even in office companies. Yeah. in office teams.

 

Hope Cochran 18:44

So yeah, you referenced this rigor around writing everything down. I think that’s really interesting. Did you start that from the beginning?

 

Barry Wark 18:54

No, we didn’t. (laughing) But we had a couple of great conversations with distributed teams that were a little bit farther down the road from us. And one of the things that they told us was, by the time they hit, actually now the stage that we’re at, they didn’t have a lot of that, that documentation sort of hygiene in place. And it really ended up being a drag on their team’s ability to execute. So we got we got serious about that, I think in time, and it’s now it’s now one of the sort of driving forces of a lot of our rules of engagement and how we, how we document what we’re doing. We’re not perfect at it yet, but we’re working on it.

 

Hope Cochran 19:36

Yeah. Carlos, I feel like you guys have that rigor as well.

 

Carlos Vega 19:41

Yeah, just echoing with what Barry shared about writing everything down. So we use an app called notion, which we all joke around that my co-founder and he’s a CTO, that he’s a angel investor, because if he sees anything that is, sounds like a process, he will immediately ping you on slack and say you should put that in notion. And so this has basically everything right? It’s got home with like the Quick Links for everything related to, you know, quick resource things that the team might want. But everything you can see over here, I don’t think I can zoom in. But on the left, we’ve been organizing, keeping through everything, everything from sock to processes. Now we’ve got a founders only folder for ourselves, like the different payroll process, employee onboarding, and off boarding, like everything’s on there. And it’s kind of cool. It gets managed, like a little Asana chart or Kanban style for the different proxies. You can choose different things that you do. And then we also just, it’s pretty straightforward. Just have a Google Sheet with all the key initiatives. And then every week when we meet, you know, everyone has the initiative. We have a weekly meeting of the initiative owners every Monday. They go through and they update the status on things and we go through and update, you know, whether something’s been, you know, backlog completed, etc. And this just helps us track like how things are going and what’s what’s, you know how things are progressing that, that we borrowed from a book called The Great CEO Within, which is, you know, a lot of you probably got a Google Doc for it. It’s a good one that was pretty valuable. So yeah, those are two of the main tools, other things, just like, you know, little rules around the tools also matter, right. So in Slack really enforcing people to use group chats instead of going direct, right, actually threading in in Slack, instead of having a massive conversation in the group channel. Always having your video on during a meeting is also really something is pretty relevant. And then establishing rules about when to use Slack when we use email, when you text, when to call. That’s also pretty valuable. And to Barry’s point earlier, like, we reached out also to folks like, like the CFO, CEO of Automatic is their customer and he’s become a good friend. They’re very distributed. And so he told me, basically write everything down everything that you think you kind of logically understand. make it explicit. And so that, that summarize everything. It’s make everything that’s implicit, explicit, and just keep that in your brain and just do that, but that they’ll have the outputs.

 

Hope Cochran 22:38

For Notion Carlos is that a, like an enterprise license that you pay, or

 

Carlos Vega 22:45

I don’t remember, it’s not that expensive. It’s, uh, yeah, it was, I think, I don’t remember honestly. We set it up. It wasn’t like a big decision at all.

 

Hope Cochran 22:54

Yeah. And then the other thing you mentioned, which I know is just a little point, but I’m just always do video when you’re doing these chats. I have found in the past week, I’m so much more present when my videos on. I wish I had the discipline to be as present when it’s off, but somehow I’m finding that when it’s on, it’s a lot more effective. And so as long as I’m not fighting for bandwidth with my teenagers um, let’s switch over to culture. And you know, there’s there’s the logistical aspect of this. And then there’s the cultural aspect. Yeah, Barry…

 

Barry Wark 23:30

Kind of one more thing just on tools that I think we didn’t mention. Not super applicable at the moment. But I think one of the important tools for distributed teams  are airplanes.  We have the now written rule that if you think you maybe should just get on an airplane and go sit and talk with someone, you should already be on the airplane. And what we found is that that breaks down a lot of the barriers that were you know, people are confused over Slack. For a long time, when they could have just sat down and talked about it, we don’t get that in this moment. And it’s definitely something that we’re starting to solve for now, but it’s a tool to have in your tool belt once once it comes back.

 

Hope Cochran 24:13

Very good. On the cultural and hiring like the HR side, we’ve got the logistics, of recruiting, hiring Clearly, we don’t want to be slowing down that process as talent is so key to us. And then also just how do you instill your culture throughout the company? So to kind of two legs to this topic, and let’s just take the tactical first care I’d love your thoughts on you know, how do you do recruiting? How do you do onboarding? I’m here during this time when we’re outside of our normal habits.

 

Kara Hamilton 24:48

Yes, during this time, we have for the past, I think three weeks, we moved all of our interview loops to video and we made a very intentional decision to move everything to video because we didn’t want to introduce bias of people who were this were these were the days where we’re still accepting visitors of the office with you know, health screening questions and we didn’t want people to feel like they didn’t have that they were putting themselves at a disadvantage. So we moved everything to video, it’s gone surprisingly well, we have we arm our candidates with some tips and tricks for video we asked them to practice we have recruiting coordinators that are able to like what I mean is practice the technology to so they can feel comfortable that they’re going to get it right the first time because it’s so nerve wracking, right or you’re already coming in and trying to present your best self and then if you get flustered over technology that can feel really bad onboarding where we have been very much, you know, that’s our touch point with people I can’t say enough about the airplanes and the in person meetings that provides such a great foundation to then build your district distributed relationships on. So onboarding has always been a time where we welcome people to the office, we have new employee orientations. In each office, we’ve gone completely virtual, we’re shipping laptops. And we are doing video calls to do HR onboarding, as well as it onboarding. And then we have sets of videos, I think we’ll do our first set of live new employee orientations. with senior team like every month, I do a half hour talk with all new employees who’ve on boarded in the last month. And so we’re going to start doing that more virtually than we ever have before. So it’s really just can we, I think we, we learned that we can do it. And I’ve gotten feedback from people who’ve been hired in the last few weeks and they’ve I think they see the intent wholly, you know, so that’s appreciated that they were still able to start on time and that we’re definitely doing our best and we’re learning as well. We go, but it’s been positive.

 

Hope Cochran27:02

That’s great.  And Barry and Carlos, you guys actively hiring and is it been awkward during this time or since you have set up this way already? Just continue as normal? And what does normal look like for you?

 

Barry Wark. 27:16

So we are we are still actively hiring. We did have at least some of our interview loops through Zoom already. Because our leadership team is distributed. And our team leaders are distributed. Everyone was always talking to at least a couple of folks on zoom. It has been there’s no question that having someone in person is a way to connect with them on a sort of non you know, not on the resume but just with them as a person. And we’re definitely still challenged to do that purely over zoom.

 

Hope Cochran 28:33

Carlos, you have a very rigorous like process before you start hiring.

 

Carlos Vega 28:41

Yes.

Hope Cochran 28:42

I think that’s interesting.

 

Carlos Vega 28:44

Yeah. It’s, uh, yeah, it’s, it’s, uh, I guess it came from Mike Maples at Floodgate and it’s pretty basic on paper, but it’s like takes about an hour and it really helps out and yeah, it feeds into like one of the points I was gonna make hope Yes. Thanks for bringing that up is like, what we found is to just be really rigorous about the role. And then how you validate that the person fits that description, just by having a lot written down and making sure that everyone’s aligned who is going to interview right. And so my mic, called it a hiring kickoff. And basically, you go through. First off, you define who the hiring committee is for that role. And then you schedule an hour-long call with that hiring committee. And you all work through two sets of questions. The first set is, you know, what are we expect this person to do and what could they be prepared for not doing? And that second part of that question, just kind of, I don’t know, it leads to a lot of passionate conversation, which is really interesting. And it’s mind blowing like, 100% of the time, like, I think we’re super clear on the type of marketing person that the company needs at our stage, given what we’re trying to accomplish and trying to create a category and do all that. And everyone shows up with a different, completely different perspective, that if we hadn’t done that, we would have been trying to hire the wrong like each person, we try and hire someone. Right? And then the second part is, how do you validate that the person meets these criteria? And what types of questions are you going to ask like to confirm that? Right? And that’s where we think about the questions and the exercises and things like that.

 

Hope Cochran 30:33

And I think as you’re hiring in a distributed environment, having this definition becomes so much more important. I do want to we got a question on q&a that I think fits in well here on this topic, which I think is interesting just about you know, maybe if during this specific time care, maybe you can jump in what are we allowing employees to expense and how are we handling their kind of at home stuff.

 

Kara Hamilton 31:00

So we have so what we’re allowing right now as we sent people home is the allowance for monitors because I feel that I mean, I know my first few days fully at home, being on my laptop was just exhausting between being on video and trying to work and collaborate. So monitors I think are like an instant productivity hit and my neck felt much better as well. So having my key like so little items like that, but as we are in a standard like in in our normal practice, if we have someone that is fully remote at home, which we have about 150 employees that are working, what we call in the field, we provide up to $700 allowance for them to set up whatever they need for their office that might be a chair, it might be a standing desk if that’s what they prefer. So it’s really up to them on what they need beyond the current technology that we provide. And we’re exploring a few other things. But right now we’re just on monitors and our IT team is pretty stocked with external keyboards and mice and everything else, you might need extra power cords. I think it’s all the little things that once you get set up, you can feel a little bit more productive. So we’re still exploring it.

 

Hope Cochran 32:28

Yeah, that’s great. Barry, you’d mentioned you know, get on a plane anytime you can. Clearly right now, we’re not getting on planes. But what are some of the ongoing expenses that you say, this is fine.

 

Barry Wark 32:38

That’s a great question. So we have actually, in in sort of normal mode. We do have folks working in offices and we do have folks working truly from home. The folks that are, you know, in the field working from home, one of the things that we pay attention to is like internet bandwidth and You know, when we, when we sent folks home this past week, anyone that didn’t have enough Internet bandwidth to make zoom work effectively. We just, we just paid for it.

 

Barry Wark 33:21

And, you know, I think the question of, you know, what do people expense at home versus at an office? we’ve we’ve been lucky so far. And admittedly, we’re not a huge company yet, in head count. We’ve been lucky that the people on our team have been pretty, pretty, pretty conscientious of what would I be spending in an office that the office would be providing versus what do I have at home? And and we assume that we’re spending about the same amount on people, whether they’re in an office or in their own home. So if we’re, you know, eating snacks or food or something for an office would do the same thing for folks at home.

 

Hope Cochran 33:57

Do they expense it or do you give them some sort of allowance?

 

Barry Wark 34:00

We’re still letting them expense it again because we’re small enough that you know we can see what’s going on before it gets out of hand. Yeah and we’ve got reliable people maybe this speaks I think back to Chris’s idea of you know trust in a distributed team is pretty crucial give people the guidelines and assume that they’re gonna operate within those guidelines.

 

Barry Wark 34:21

I see psi Kara smiling, it’s probably we’re probably going down a different road eventually here.

 

Kara Hamilton 34:28

It is a show of trust and we are not doing that.

 

Kara Hamilton 34:33

So I’m torn in my own head of like, okay, should we be doing that we do send care packages to our field employees every once in a while. So because they do miss out on little like swag that we might pass out in the office. We always make sure to mail anything like that to our field employees, but I have not we’re I don’t think the CFO and really allow us to have a snack budget for them.

 

Hope Cochran 35:00

I know Jenny and I would agree.

 

Kara Hamilton 35:02

It was a no go. But I’m gonna do more care packages because that’s in my control. So,

 

Hope Cochran 35:09

Carlos, are you doing anything for your employees?

 

Carlos Vega 35:13

Yeah, so we give them two options when they start. And we can either so first off, we give everyone laptops when they start, right, that’s something we, you know, at our stage, you know, we weren’t doing till we were about 15 people, but then we decided that that it was important. So that’s not part of this but we also give people $1,000 budget to build a home office. If they’re going to build from work from home they can expense whatever they want, you know, keep horse monitors desk chairs, whatever. And the funny part is, you know, by adding the thousand bucks you know, there’s a cap but man people buy some pretty expensive chairs is what I’ve noticed. It’s kind of it’s kind of wild. But um, but yeah, then then we if you’re not going to work from home, we also give you We pay up to $400 a month of co-working space that the company will cover for you. And most almost all of them are below that. And then that that co working space budget also comes with a $400 kind of budget to buy some equipment. If you’re working from home or benchmark on bigger companies, what automatic does is they give you a, I think they upped it to either $2,500 or $5,000 for your home office, and they also automatically update your laptop every six years. Right? That’s something else they do. And the chair and the desk are not part of that $2,500 budget. Those are must haves. And so that’s on top of that, and you can spend whatever you want on the chair and the desk, which again, I didn’t know it was such a thing but engineers and you know, mechanical keyboards really cool chairs and really good desks. It is a it’s a thing.

 

Hope Cochran 37:03

Okay. Let’s talk about culture. How do we establish and maintain our culture when we’ve got people working in all different locations? Do you want me to share it? Go for it?

 

Kara Hamilton 37:12

Okay, um, I think I mentioned workplace before, which is a Facebook product and platform and I think workplaces enabled us to stay well connected across our locations across different kind of interest groups. So we have all company announcements, but we also have different we have a diversity inclusion group, we have Smartsheet for dogs, we have, you know, Smartsheet kids, we have all sorts of different interest areas and that’s enabled I think relationships to bloom, where you might not expect them like we really want to have a lot of cross team connection as well as insight you know, in team connection. So that helps That kind of those flows. And I think we also are very purpose driven organization. So our purpose is, we empower everyone to improve how they work. And then we have a set of values that go with that and evaluate that action playbook. And, and I think that foundation that we built helps us we talk a lot about how, how am I showing up for Smartsheet? How am I showing up for my teams? How am I showing up for our customers? That’s all built into our kind of into our vernacular, and it’s built into our hiring process as well. Where Yes, like, where we are looking for expertise and experience and, you know, what is someone going to bring to the team from that side? How are they going to what are they going to bring in terms of leadership, but also what are they going to bring in terms of cultural add and are they are we aligned in our values and how we’re going to show up which is not an easy thing to write, um, like, believe me, we, we are on the journey of how you really evaluate that. But we’ve really looked at those three pillars and we’re dedicated to, to figuring out and doing our best because we think that’s, I think that the values and our purpose have helped immensely. And they communicate constant communication over workplace. I mean, I’ve put out three or four videos in the last month, where we’re doing a lot of lots and lots of updates. I think that kind of thing. Like, if you pull my arm, I’m going to talk about our values, our purpose, how we’re showing up what’s going on with Covid. And we can’t we almost can’t say it enough, because people need to feel that they need to feel that we’re there.

 

Hope Cochran 40:05

Yeah. Follow on conversation. And I want the other to comment on the cultural aspect too, but is worth continually hearing that people’s mental health is it’s hard right? Now, you know, people are feeling lonely. They’re feeling scared. Yeah. And so during this particular crisis time, what are your communication patterns? Or how are you trying to help employees? And so Kara maybe you want to kick us off at to kind of address that, too.

 

Kara Hamilton 40:21

As I talked about the cultural, I think the first thing is to be real about it. So I sent out a pretty long email to our entire workforce, about what it means to show up and our values through like where we are now, and how we have to be creative and flexible and support each other. We have a lot of people whose children I mean, we have a lot of parents who have school aged children, and they are trying to work, take care of their kids do the homeschool, and all of that. So I think it’s a lot about trust in space, and saying, like, we are going to, we’re in it together. We’re going to do the most important things, and we’re here for you and then the mental health things is extremely important. I’m really glad you mentioned that. I feel very fortunate that we had already rolled out better help, which is a virtual mental health tool where you can have a virtual session with the counselor. And we also provide membership to one medical which has virtual appointments. So that’s more of the standard health care. But better help I is great. We’ve also done some mindfulness training we’re very like one of our community awareness programs is is mental health for all and trying to stop the stigma. So it was already in our culture of people being brave enough to share about that. And so we’re and we’re being very intentional. I mean, I’m on our dashboard is are all the links to better health and our EAP and reminding people that we, we know they’re under stress, I think part is just like we’re not going to not talk about it. We’re not going to pretend that People aren’t struggling and aren’t scared. They don’t have the answers either where they’re where their employer and we’re going to do our best to show up how we can.

 

Hope Cochran 42:14

Yeah. Barry, are you seeing these issues more? You know, acute right now versus in your normal day to day or how are you addressing them?

 

Barry Wark 42:23

Um, so we definitely have recognized that it’s easy to suffer in silence when you’re not in an office. Yeah, and the, the sort of passive status update when you see someone you know, shoulders slumped, or, you know, head on the desk on a project, you actually gain a lot of status updates that way in an office environment. So we knew already that it’s easy to lose that in a distributed team. You know what Carlos showed the visible status dashboards kind of thing is a really important tool. And that’s something that You know, we sort of doubled down on in this environment. The flip side of that is over communicating. Like Kara said, We are in a distributed team, you it’s important to over communicate what you think are sort of obvious decisions that have been made. And it’s because you don’t get that diffusion of those announcements through it through a group, you really have to actively think about how are we going to communicate every decision that’s made, so that people stay up to speed and feel like they’re part of the conversation. So those two things are maybe accentuated by the current environment. For us, I don’t want to call it lucky. But we’ve got a you know, 24/7 kind of purpose that’s driving us at the moment to get testing capacity and to help our labs that are at the sort of the tip of the spear for this effort. So we’re, I think, again, very motivated at the moment, we haven’t had folks feeling like they’re lonely and adrift, but It’s certainly something that can happen anytime in a distributed team. And so I think there’s an approach to being very proactive and open about, hey, we know that this is potentially challenging, is valuable, especially for folks when they join our company, if they haven’t been in a distributed team before we spend a lot of time getting them one on one, just, again, sort of random coffee sessions with folks that have done it a lot before. And we found that there’s really nothing more helpful than saying, I remember the first week working from home and it’s really easy to feel like you’re alone and adrift. And you know, here, here are a couple tips. And, you know, here’s how you can reach me if you’re if you need if you need an adult to talk to that kind of stuff.

 

Hope Cochran 44:42

Carlos?

 

Carlos Vega 44:43

Yes. So I say Yeah, I agree with, with what’s being shared, and I’ll share some things that have specifically changed that we kind of went through. Just like last week, right? There were some, I guess what I’ve what I’ve found is, I guess as a company, like We’re I’m extremely transparent about everything. And then as a company, they’ve come to expect that right? So we had our board meeting last week. So at our all hands this week, I walked through the board deck and presented it to the whole company in our own hands. And then that Ned led naturally the conversation around kind of, you know, what are we doing with everything around Covid-19. And I guess what’s been interesting for us is seeing, I guess, you know, very to what you’re mentioning, like if you’re in a room, there’s kind of you can sense everyone in the room the same way where right now I don’t know if everyone can see this in the Brady Bunch view. In in zoom right with the gallery. You can’t quite see everyone just exactly the same, right. And so, as I was overly I guess what I’ve found that as a remote or distributed kind of team is you have to not just explain the decision, but also explain your logic and how you’re thinking about it. Like what’s your framework, and so everyone’s come to joke here goes Carlos with another framework but it just like, at least now they know like why I’m thinking a certain way, right? And so even after going out of my way to explain Hey, look, no failing to prepare is preparing to fail. There’s, you know, the old Churchill way of like, you know, talk about hard talk, not just happy talk. David Sacks wrote a really good post about last week. You know, there’s explained all that share the articles talk about it, but then you still have the folks who’ve never lived through a downturn, which a lot of us have on our team, just start to get really nervous, even though you’re talking about stuff, super overly caveated. Like, hey, these are just things we’ve talked about things we talked about, it’s better to talk about it now. I’ll think about it together. Being together like the kindest, most empathetic things you can say, still character what you’re sharing, right? People are still very nervous, and that’s just like in one ear out the other end. And so going out of the way to reach out, right and so Some things I’ve done, you know, every Monday now I’m just like hanging out by myself until someone joins in zoom meeting, and anyone can join at the company and chat about whatever right like and it’s been pretty interesting. who joins or what people want to talk about. And then the other one…

 

Hope Cochran 47:19

That’s interesting, Carlos, so you just open up zoom and you’re just there and anyone can click in to talk to you?

 

Carlos Vega 47:24

It’s on my calendar. Yeah. And so people can go to my calendar and see it I send it out on the general channel in slack like Hey, remember I’m here I’ll be doing some work someone joins an office hours. Yeah, and then people would just show up and then like, managers are really important weapon right now to more asset not weapon in keeping in touch with those younger folks, or more anxious folks, or whatever it is, they know that the pulse of their, their team better than, than I do as a CEO and then giving you a heads up like So and so I was particularly nervous about that. And then I can vouch for that one on one, right and say, hey, let’s talk about this. Um, so I feel like we have a little bit of extra work right now because of the covert part of, like, extra degree of empathy. So, yeah, that’s, that’s a little bit of our experience, know some things that we could have done better. Some things that we’ve changed.

 

Unknown 48:22

Alright, you all thanks for joining me today. I really learned a lot and I’m learning a lot through this whole process. So I appreciate it. These conversations are helpful.

 

Transcribed by https://otter.ai

POSTED IN: Madrona News

Founded and Funded: Managing through the Downturn with Glenn Kelman, Robert Wahbe, Bill Richter and Steve Singh

These are certainly uncertain times.  The only certain thing is that the world has changed.  As these CEOs shifted to working from home and managing distributed teams, they got on a conference call with managing director, Steve Singh, to share how they have been addressing moving their business forward.  Everything from communication to how they are planning (or not!) for a very different year than was in the cards when we clicked over to 2020 is discussed.  Glenn, Robert, Bill and Steve share heartfelt lessons from previous downturns and how they are navigating their current reality and helping employees and customers through this time.


Transcript below

I’m Erika Shaffer. Welcome to founded and funded. I work at Madrona Venture Group. We are doing something a little different today. We have three CEOs with us. We have Bill Richter from Qumulo, Robert Wahbe, from Highspot and Glen Kelman from Redfin to talk about how they are managing through this really volatile period. As our moderator, we have a managing director, Steve Singh. Steve is best known as the CEO of Concur, which was pulling in a billion in revenue when SAP purchased it. But to get to that point, he had to manage through not one but two downturns. And so both he and Glenn can reflect on their experience of navigating the big recession of 2008 2009. And with that, I’ll turn it over to Steve. Thank you.

 

Steve Singh

Thank you, Erika. Good afternoon, everyone. Today our topic is managing through an economic downturn and we did a version of This webcast for Madrona only companies last week. This podcast is open for all companies. Sadly, the world has changed materially in the past week. At this point, it’s clear that we’re headed into an economic slowdown. Now we can all debate the depth and the duration of that economic slowdown. But what’s not debatable is that every business now has a new set of factors to consider in how they operate. Inclusive in that new operating model is that every company is learning how to efficiently and frankly at scale work remotely. So one of the many values of being a part of a community is that we get to share and learn from each other’s experiences.  Joining me today are three very accomplished leaders. Robert Wahbe, the CEO of Highspot, Bill Richter, the CEO of Qumulo, and Glenn Kelman, the CEO of Redfin. Each of these companies are market leaders operating in large markets, Qumulo and Highspot are private companies in the rapid growth phase of their business. And Redfin as a public company with a rich operating history, having navigated multiple economic cycles. Gentlemen, I’m going to ask each of you to briefly introduce yourself and your company. Robert, let’s start with you.

 

Robert Wahbe

Hi, everyone. My name is Robert Wahbe, CEO of Highspot. We are in the emerging category called sales enablement. We came to market around late 2015, early 2016. And we’ve been experiencing very rapid growth. So over the last 14 months, we’ve gone from about 150 people to about north of 450 people. So thinking about how we’re going to be having discipline growth going forward, given the economic downturn will be a very interesting part of the conversation. Also relevant to the conversation we just raised our series d 130 $5 million, series D, which gives us optionality, , but clearly we need to understand how we’re going to use that as we navigate the downturn. So looking forward to the conversation.

 

Steve

Thank you, Robert. Bill.

 

Bill Richter

Ah, hello, everyone. My name is Bill Richter. I’m the CEO of Qumulo. First, Steve, thanks for putting this on. It’s you and the gang over at Madrona has just been awesome in terms of bringing  together the community of companies to be able to share information quickly and learn from one another. So thanks for doing this. Qumulo is in the business of helping customers store, manage and understand vast sums of data. And we do that both in the public and the private cloud. So that’s our business and we’ve been at it for about eight years. Eight years now we have nearly 500 enterprise class customers and we just finished an absolute blockbuster record year and then we came into some of the new facts this year. And so we like everyone else are working through this downturn, and I’m looking forward to the conversation and to learn a few things the great fellow CEOs on the call here.

 

 

Glenn Kelman

Hi, I’m Glenn Kelman. I’m the CEO of Redfin, a technology powered real estate broker. Our mission is to redefine real estate in the consumers favor. We open for business more than 15 years ago, so survived the great financial crisis of 2008. Before that, I started Plumtree software, which went through the.com, boom, and then the crash before going public, in 2002. So I think I’ve been through some ups and downs and hope I can learn something today and also that I have something to share.

 

Steve

Thanks so much for joining us, Glenn. So my name is Steve Singh, and I’m a partner at Madrona Venture Group. And from time to time in this podcast, I’ll chime in with some of the lessons and strategies that we used to Concur as we managed a couple of economic downturns. But let’s start the conversation with Bill. Bill with the start of the new fiscal year, you sent a fairly detailed framework to your company on how you want Qumulo not just To operate, but to strengthen. So in what is clearly an economic downturn, obviously, you’ve got ahead of this, the key share the principles behind that framework, and maybe how the companies & your people are responding to it.

 

Bill

Yeah, sure. You know, listen, we we’ve been watching the news, like everyone over the last month, and about three weeks ago, or two and a half weeks ago, you know, when I saw enough of the evidence building, what I decided to do for my team is just to write my organization, my leadership team, a note saying, hey, look, let’s say we’re entering a recession right now, an economic downturn, that’s going to significantly impact our how our market behaves.  We don’t know exactly how but what we do know is that it will have an impact. And so I asked the organization just to sort of absorb that and clear the decks in terms of our current operating plan and start rethinking things with the idea that we were going to be entering this model. And one of the things I did for my organization is I kind of wrote them an FAQ, a frequently asked questions, Hey, what does this mean? Or, for example, you know, what if we get this wrong, and we overreact? What What, what will be the impacts of that? Should we act now? Or should we wait? And I walked through that with the team. And my strategy, there was really to, first of all, get the ball rolling quickly. I mean, like Glenn and yourself and Robert, I’ve been executive through the last couple downturns and, you know, you really learn a lot during those cycles. And one of the things I learned most quickly, was you have to move quickly. Going slow through these cycles is not helpful. And the second major thing I learned is that it’s important to communicate deep and wide with the team. And it turns out that people always surprise you when you give them enough information and you share what’s really on your mind. And so with those kind of two principles in mind sort of they are really recognizing that there really were a new set of rules to kind of admitting, hey, we’re going through an economic cycle, let’s get in front of it. And three, let me get really good at communicating with those three principles in mind. I shared a note with my team and said, hey, let’s, let’s rock and roll because the companies that operate well through this cycle will come out the other side, much, much, much stronger, and those that don’t will find themselves in very troubled waters.

 

Steve

Thanks, Bill. Robert, how are you thinking about this Highspot? Is this a process you already engaged in, as Bill has or is this something that you’re currently contemplating? Obviously, you’ve got a lot of capital on the balance sheet.

 

Robert

Yeah, I mean, very similar to bill. We’ve been communicating our plan and you know, we’re Really trying to face the reality that we’re going to be facing this economic downturn. We’re doing a few things. Probably the overarching theme for us is this phrase that we’re using which is ‘our job is to navigate the downturn, but invest for the upturn.” The one thing we know for sure is that inevitably, there will be an upturn. It might be in six months, it might be in 18 months. But  we need to react quickly. I completely agree with Bill. But we also have to not overreact. You know, building a company to survive is not the same thing as building a company to thrive. And you can look at a lot of the experiences in the post mortems from 2000 and 2008. And you talked about this Steve on the earlier panel, where you have to make sure that your balance between making sure you survive and making sure you’re ready to invest in that after and so that’s been kind of a theme for us. And it also helps the company as we communicate, why we might be pulling back in one area, but actually investing and even doubling down in another area because it might be confusing, they might think we should be locking down. But no, we got to be smart about this. And it’s art more than science about how to balance that. So one big thing is this notion of navigating the downturn investing for the upturn. The second thing is controlling costs, you know, and that is two things for us. One is it’s trying to save money wherever we can, but it’s also going through the exercise and not doing too much, because you can overdo this by trying to create optionality in our budgets and our operating plan. So we can say, based on trip wires that say the end of q1, the end of q2, the end of q3, what levers could we create now, so we can pull them whether it’s marketing, whether it’s other kinds of investment, so the second big thing for us is controlling costs. And then the final one, and this is really big, especially as you know, the pandemic has really changed over the last even two weeks and people are now really working from home and in certain cities based on your offices. They’re really required to shelter at home, and they can’t even leave this notion of focusing on execution, especially as opposed to forecasting. I think there’s very, there’s a very big tendency to say, you know what, let’s figure out what’s going to happen in the future, let’s start to think about what our conversion will look like, they start to think about how much we’re going to lose off the top line so we can begin to plan. And what I’ve been saying is, let’s not have that conversation. We don’t know enough yet. Let’s not forecast, it’s not clear how the operating model is going to change. Let’s just focus on execution. And really, we’ve been focused on kind of, you know, the details like, what does it mean to work from home? How should we use zoom and slack and G Suite? We literally had, believe it or not, in an all hands where we walk through best practices for zoom, slack and G Suite, trying to really focus on execution. And then the other part of that is really helping people as they’re anxious. They’re clearly very anxious, staying connected to them, to the company to their managers. And so a lot of talk in fact, I had a meeting today with all the people, managers, again, on best practices to keep connected even in this remote world. So those are kind of the three things that we’ve done. And there’s lots of details under there. But those are the three themes that we’ve we’ve approached it with.

 

Steve

Thank you. And obviously, there’s some themes emerging here. I want to pull the thread down a little bit further. But before we entertain that part of the conversation, Glenn let me ask you to share what’s happening at Redfin, as far as how are you dealing with this downturn? Obviously, I want to be sensitive to the fact that you run a public company. And so you know, the comments would be relative to what is appropriate to share within this context.

 

Glenn

Sure, well, I think we’ve been preparing for this day for a long time, in different ways. When we went public, we recorded a roadshow video that featured a cameo from Bane this villain from a Batman movie because we had told investors that you shouldn’t be afraid of Dark because we were born in the dark, and everyone at Redfin knows that we’re in a cyclical business, there will be ups and downs, and that we’re going to react very quickly to that. And so, if you don’t have that preparation, if you feel offended by a downturn, I think you spend valuable weeks and months, really wondering what to do. But if you’ve built the discipline from the beginning, that there are going to be ups and downs in every single business, and we have a mission that is fundamentally good to make real estate better for regular people. And that if we’re more efficient than other people, there will be times where revenue grows and times where it doesn’t, but over time, the business will become more valuable. So I think that’s the first theme which is just having a mentality, that there will be ups and downs and preparing for that before there are downs. On the second, which is related to is just talking about the mission of the company always because the reason someone should work at Redfin or Highspot or Qumulo is not just because you’re gonna go out and kill it. There’s always going to be a sexier business. There’s always somebody who’s growing five points faster than you. And so you have to develop a rationale to be at a company because you believe in the company. And if that rationale only comes to you, when you’re announcing a layoff, or some kind of cost cutting move, it sounds very hollow. But I remember in 2008 2009 2010 when I thought Redfin was going to go out of business. I told my wife that I felt like such a failure. And she said, Well, I thought you really believed in the mission of the company. And I said, Well, of course I do. But if we go out of business, I’ll still feel like a schmuck. And she said, Well, it’s still a good mission. And you need to be true to that. If you really believe in it, you shouldn’t abandon it now. And so I just think you Have to really reiterate the emotional, the soulful reason to be at a company in hard times because people need chicken soup for their soul as much as they need steaks in their freezer right now. And we try to address both of those issues.

 

Steve

That’s fantastic. I love that. Let’s, pull on a couple of threads. You all talked about a number of different themes, one of which is, is transparency and communication. One is really sharing the purpose of the business and why you’re doing what you’re doing. The other is just is. I think, Robert used the phrase optionality, really making sure that you’ve got lots of decision points or opportunities to react in a way that can add strength to the business over time, but let’s take the optionality piece for a second and drill down on it. Obviously, none of us knows what is going to happen over the next three to six months. How are you talking to the team about that? What is the definition of optionality? What does that mean? When you ask your team to look at optionality? And how much are you pushing on that topic? I mean, it’s easy, obviously, for people to come back and say, Look, of course, we can do lots of things. Are you then taking it to the next level of saying, I want to plan in every one of these areas? Anybody can jump in on this, bill? Maybe I can ask you to start but anybody should jump in.

 

Bill

Yeah, sure. There’s a lot of a lot of ideas come to mind there. I mean, look, we’ve kind of hit on this idea of planning and forecasting. I really like what Robert said that, you know, focus on execution, not forecasting right now. Because at some point that becomes, you know, an exercise that that’s not as valuable but what I’ve been telling my team is the following is, is you know, we at Qumulo really pride ourselves on running a data driven business. I mean, we, we, we talked about it all the time. It’s one of our values of the company, but what I’ve said lately over the last couple weeks is like, Hey, remember business leaders, your data right now in the cycle, your data is going to lie, your data is going to lie. And that’s something that we’re not accustomed to hearing. We love data. We’re a data company. And but what I really mean by that is like, hey, if you look at the old models, if you look at the old trends, if you look at a cost per or, you know, ramp rate of a certain segment of your business, or the performance of a, of a trade show, or whatever those types of things are, you know, you have to kind of figure that in this model right now, or this in this environment. You’re gonna, learn a lot of new things, and your historical data models are going to be far more fragile now than ever. And so what I’m asking people to do is sort of think around corners more than we ever have before. And, and do smaller things much more quickly and learn fast, and that’s going to give us a lot of optionality in terms of how we run the business and really how we resource the business. And actually, I gotta tell you, our team has been responding really well to these things.  We completely over the last two or three weeks, rebuilt our marketing plan for the year, for example, because a lot of our traditional marketing at Qumulo would rely on physical trade shows. So it’s like, okay, you know, that’s a great example. It’s like that the data that we have about performance of those trade shows is completely off. And most of the shows won’t take place, if they are happening, the attendance is going to be much lower, we have to change the way that we’re going to invest. And it’s through those fast changes that we create for more optionality in the business. And so that’s kind of a micro example. And then the macro one for the business, and I’ve been very clear with them on that we have a very healthy balance sheet here. Qumulo. We raised around about a year and a half ago, and we’ve been very slow to spend, which is good. And and in these environments, cash, I would say equals optionality. And so we’ve had very open conversations around that in the business, and people have been You know, I think more appreciative about balance sheet management than I’ve ever seen our tech, your average tech, tech and employee been in the past. And that’s kind of cool. It’s cool to see them adapt quickly.

 

Steve

Robert Glenn, would you want to jump in on this topic?

 

Robert

So one of the things that we’ve been doing, you got to not do this too much as we’ve been trying to take our plans. And we have this concept of a North Star, and then click stops along the way to that North Star. And so if you think about something that we might want to accomplish, whether it’s delivering a particular feature, or new new capability, or a marketing program, we’ve gotten more granular, and we’ve asked the teams, we understand your Northstar. And that took some amount of resources. Now think a little bit harder about could you do incremental things along the way. And then let’s think about kind of like a bill said, let’s do that. Click stop one right now. And let’s fund that right now. And let’s have some tripwires about how we think about click stop to and click stop three. If you go back, you know, it seems like so long ago, you go back on A month ago, we just said, Hey, the plan looks great, the North Star looks great, we’re going to invest toward that, you know, invest wisely, be smart about it. But we don’t need to have that finer grain in the plan. And that’s what’s happening. Now we’re getting much more fine grained in a lot of our big areas of investment, whether it’s marketing programs, whether it’s product capabilities, and the roadmap there, where our big spends are. And so this notion of getting more granular, the one thing I would caution is, you don’t want to do that too much, because then you just sit there and you analyze until the cows come home and you don’t actually execute. So a little bit more click stops a little bit more optionality a little bit more trip wires, and then go do that first click stop. Now right away.

 

Steve

And that goes really to the theme you brought up earlier, which is more data points, more engagement on day to day execution, to really be able to measure what’s going on. Glenn before we go to you,  one of the things I just jump in and share in 2008 2009, when concur was living through the financial crisis that obviously gripped the whole world. One of the data points that we did see early on, was advanced travel bookings were down 50% or there abouts immediately. And so literally on, on one day we saw for travel bookings drop off of a cliff. And in immediately you look at this and say, the first reaction is there’s something wrong in our systems, are we missing something, and then you realize, Okay, the next day, same things happening, same and so on. And what you saw was an immediate drop off in travel which followed very, very quickly with a whole string of other things, including drop off in employment. In fact, in the in the first month of 2009, you can literally pick up the Wall Street Journal. And on the cover of the journal were companies that were all our customers, where they’re laying off 25% of the workforce, 30% 40% of the workforce, or even going you know, bankrupt frankly, like a Lehman did. And so, one of the things that we really had to come to grips was that you All of our data elements as you’re is your highlighting Robert and Bill is that all the data and elements we had in the past were no longer valid. And we have to start measuring things on a daily basis, and learning how to react to things much more real time. And in one of the things we did we happen to be a business that was growing in the 30 40% per year range, and we’re 10% you know, free cash flow margins. But without certainty where the world was going, we decided to pull back and decided to pull back relatively hard. So much. So the operating margins jumped about 24 25% in the fourth year, and we still grew top line about 15% or so year over year. But in looking back at it, boy, I sure wish I hadn’t pulled back so hard. There are things within that, that that, you know, I feel like we might have gotten right there were instructive lessons. I’d love for you guys to comment on your businesses. One of the things we did is we realized that an economic downturn is an opportunity to actually distance yourself from the competition. To actually strengthen your business. And so while we slowed the rate of investment in every area of the business, we actually increased it in product development. So we decided we want to invest more in product and our key distance ourselves from everybody else who we know, didn’t have not just a balance sheet, but the operating, leverage and discipline the business to compete with us. And it has been a massive advantage for us in 2010. So Glenn, maybe you can, you know, kind of a segue off of that into into things that you saw at Redfin in the past, but frankly, also today, in how to improve your competitive position.

 

 

 

Glenn

The point that I wanted to make, which I think is really important is that you try to have employees hold two thoughts in their head at the same time, and one is about the fundamental long term strength in the business. And the second is the short term apocalypse that you’re now facing. Because if you only talk about how strong the company is long term, it sounds like happy horse manure when you’re cutting costs and freaking out. And if you talk only about how you have to cut costs, you throw the baby out with the bathwater. So you try to tell employees, it’s real. What we’re going through is perhaps an existential crisis if you’re a smaller company, but certainly a real threat to the business. And you have to hold that thought at the same time that you remember. We’re the best damn real estate brokerage or  are the best damn cloud software company in the world. And it’s hard for people to hold those to the people who think you’re great. often don’t respond with the right level of urgency. The people who respond with the right level of urgency often forget what made the business so great in the first place. And you just try to have both in your head at the same time. All the time.

 

Steve

Yeah. Bill, any thoughts on that?

 

Bill

I just love it. Like Glenn was talking about that when we think about the opportunities here. You know, I love this quote that gets tossed around, you know, big doesn’t beat small but fast beat slow. And so, you know, we compete with very, very large companies, and I think that they have a tougher time. We all face the kind of the environmentals, but the adaptability of an organization of our size with our mentality can be superior to large competitors. And all that’s in service of customers, right? If the faster that we can move, the more that we product that we can create more value that we can deliver to customers without having a massive amount of fixed costs and a bunch of entrenched people that make change difficult, gives us an advantage. And so that’s something that we’re talking about a lot around here. And then the other thing that just happens to be kind of a big opportunity for Qumulo is a lot of the vertical markets that we focus on, we think, have a decent chance of being counter cyclical here. You know, so for example, like the federal government’s becoming a fast growing market for Qumulo. That will likely be counter cyclical healthcare is a very large market for Qumulo. As healthcare organizations, you go to the doctor, a doctor visit generates an enormous amount of data for any patient. It’s very likely that healthcare will not be underfunded during this cycle. And so I can kind of go through some of the lists, but what we’ve told our organization is, you know, in every business is different. But we said, Hey, you know, pull back and think about the segments of your business that might be impacted less or more and every company’s different, and then go seize that opportunity. And so that’s like, gotten a lot of like, really exciting thinking going on around here. As you know, we’re talking about two things. What are the external opportunities and how nimble and agile can we be to go seize them? And how much faster Can we do that than our competitors? So that’s like been the rallying cry around here.

 

Glenn

I would just think about this as an opportunity to promote financial literacy. If you try to explain to an engineer or a marketer, a balance sheet, they just want to go back to writing their press release or putting together ones and zeros. But when you need to explain to people how much money you have in the bank, and what your ability is to withstand a downturn and you walk them through your income statement and your balance sheet, I think you really put them in your seat when they start seeing the business the way a CEO does, and just the level of urgency that conversation has in a tough time when people distrust rhetoric and just want to see the numbers can really be your friend, you can say, Listen, I’ll show you the business the way I see it. And I’ll explain what would trigger us to have to cut costs further, and how we make decisions about where to invest, and you’ll see exactly the numbers that the execs are seeing. And just walking people through that can build more trust than any bland proclamation about how much you love the employees, even though of course, all of us really do care about our culture and our people.

 

Robert

I was going to say one of the themes that’s emerging, is that done right coming out of an economic downturn, you can actually be a stronger company in many ways. You know, Glenn talked about financial discipline. Bill talked about being very smart about you know, segments. One of the things And I think is unique to this particular time is that we’re all working from home. And one thing that I think is happening is that we’re getting better at collaborating. We think of ourselves as very good at collaborating, but in lots of small and big ways, we’re getting better at it, because we’re having to get better as we work from home. So I think on every level, you can actually come out of this stronger whether it’s financial discipline, whether it’s being smarter about your marketing, whether it’s being better at collaborating. And that is a positive message which is looking at we’re getting better at you know, we had a hard time cutting costs, we’re getting better at it because we’re being forced to

 

Steve

Guys, let’s  pull on a thread here that certainly is becoming more top of mind for our people. And that is looking at difficult economic climate that some companies will have to deal with reducing their workforce. How do you think about engaging in that discussion with your evaluating whether or not it seems something you have to do., I would love to hear your thoughts on on this. What advice would you give others?

 

Glenn

I have been surprised talking to some startup CEOs around town, how slow people are to depart from the narrative of “we’re killing it”. They’re actually worried about what people will think, instead of just deciding what they can afford, and doing it as fast as possible so they can maximize severance for their people. There might be an exception, because some people are waiting for federal stimulus I can understand wanting to know what’s coming before e deciding but I’d still err on the side of moving fairly quickly so that you can give people the maximum amount of notice and respect.

 

Steve

So Glenn, on that transparency theme,  This is open to Bill and Robert How do you pull your team into that process? What have you historically done? What advice would you give young entrepreneurs who may not have gone through an economic downturn before?

 

Bill

I was having a text conversation with one of my leaders, and they were saying how they kind of appreciate what was going on, you know, how we were kind of working through this and, and, and what I told them is like, Look, you know, we get paid as leaders, not just for the kind of nice up into the right cycle, that has plenty of its own challenges, but you actually kind of like, earn your keep through managing through these cycles here. And this is like really, when you earn your stripes, and not just for a CEO, but for anybody in a company, but particularly like the leadership and management team. And, you know, the conversation I had with my leadership team is to say like, hey, just be cognizant of the fact that you’ll have many people that are management rolls in the company, some of them that run big teams that have never been through a cycle like this because they just haven’t been in their career long enough where we’re in a really odd scenario now where we’re sitting here on the back of like a 10,11 year, pure up into the right expansion. And so the implication there is you could be 10 or 11 years into your career. In fact, you could be more like 13 14,15 years into your career, but like as a manager, never having been a manager and not seen something like this. And so you have this scenario where you can have some of your veteran people that have not developed this skill set of being able to manage through a cycle like this and what I told the team is like saying, Hey, you know, the world is cyclical, it does go down. Like Glenn said a minute ago just kind of operating in the world killing it, cycle. Again, that’s hard because killing it’s not easy, but it’s through these cycles that you will really become like a veteran leader. And, you know, my team sort of like has responded to that they’re like, yeah, you know, this is a career development opportunity, as tough as it might be operating through the cycle.

 

Unknown 34:14

I don’t know if you want to add to that.

 

Robert

I agree with both the things that Glen and Bill said, the one piece of I would add is that, even as you’re trying to be transparent, you also have to think about the speed of information and how it lands. You know, as companies get bigger, and I’ve, we’ve some of us work in very, very large companies, the speed of information might be literally six months, six months before everybody in the organization for real for real, understands the key thing that you’re trying to do in small organizations that might be you know, that day in the conference room, but if you think about what’s happening right now, you know, I find that people are anxious enough that they’re not hearing the information as they used to even a month ago, and you have to repeat it a lot more often than I would expect. So for example, we’ve been pretty consistent and pretty disciplined about our work from home policy, starting back when King County did the first set of guidelines, and we’ve documented that we send out an email every Thursday at four o’clock we have within Highspot, you know, the fact we have all these things, and we’ve been very consistent.  I do think as part of transparency, consistency, repetition is more important than it’s been in previous times.

 

Steve

I just expand on one comment that Glen made in the for every entrepreneur, your board will always give you feedback. back and always provide input on what you want to board things that you can do better. I will tell you some of the best learning opportunities I had I Concur, were the mistakes that I made, and that, that fundamentally, those actions or those, those events, created amazing learning opportunities. If I think about the times when we had to do reduction in force, the single biggest thing that I really wrestled with was, how did I not see it coming? How did I not see that this event would happen one day? And why didn’t I have two three contingency plans that I could pull on way before an event happened? And I realized that it’s a high bar to hold yourself to, but it’s the bar that you have to hold yourself to as the CEO, you are responsible for not just the the investment that people have made in your company, but for the people who have trusted you to come to work at your company. So the real trick and CEO’s far better than myself and figured out how do you take that, that ownership and accountability model and keep pushing it down to every level of the business? Because it’s it’s a fallacy to assume that you and you alone can can address challenges or or see them entirely on your own, the more you share, and the more that you involve everybody in the decision process, the better your company becomes. So I really identify with the comments that all of you made. Um, I’m going to hit one more topic and then we’ll, we’ll wrap up. Over the last several years, especially in software businesses, the the world has moved to much more of a SaaS or consumption based model. And that model has tremendous upsides to the customer, but will certainly be put to the test in an economic downturn. And so I’d love to get your thoughts on how do you manage a SaaS business or consumption based business in a In a economic down cycle, and obviously I’d love to share some some experiences from concur as well. So, Bill, why don’t you jump in on this one first?

 

Bill

Yeah, well, I’ll make a few comments. And then I’m going to learn a lot more than I’m going to teach here, but a couple things. And I was having a conversation with someone on my team about this today. And I think in these cycles, what you have to remember is like, keep your customers. And what I really mean is if if you have a model where you like to bill for, you know, multiple years, and customers can’t afford it right now or their or their or their want to be risk adverse, they want to bring in that cycle, they want more flexibility, or if you have a model where you sell them this much, but they only want to be able to buy this much for a little while. I think it’s really important to sort of, sort of rethink how flexible you can you can be for customers, and that’s going to kind of keep them with you like in our business Qumulo. We’re making 5,10, 15 year or more relationships with our customers. And so if you if you think short sidedly about your structures with customers and really push them on it, you know, you might get the deal. But you, you might also force them to back away. And so my opinion is during these cycles, it’s like, you know, think a lot about flexibility. Keep your customers and I’ll give you the counter example, which is, maybe probably, perhaps more telling someone literally came into my office two hours ago and said, Hey, I have this contract from from a vendor, and they’re forcing us to buy for two years. And I just tell him, I told him, why don’t you tell that vendor, absolutely not, goodbye. Because we just want to buy one year. And it’s like, hey, during a cycle like this, I expect my vendors to show up and kind of really partner with us and be and be flexible. And if they’re not willing to do that. It’s like now I know who my partner is and who my partner isn’t. And that’s just kind of an attitudinal difference about operating and actually like forming deep customer and partner relationships during one of these cycles, and I think being rigid is not the way,

 

Steve

Robert.

 

Robert

Yeah, I mean, you know, different businesses are going to be impacted so much differently. And so we’re, I don’t know how much we’re countercyclical. But our usage is actually going up right now, in a couple of ways. One is that the people that naturally aren’t on our platform, because they’re working from home need to access the platform even more. So we have our usage almost doubled across many, many of our bigger customers. And we’re seeing another thing and this is where we’re trying to be creative. And we haven’t figured out the answer yet. But to kind of Bill’s point, they’re also saying, hey, can’t we for a certain amount of time, open up the platform to more people in our company that we want to pay for right now. They don’t normally need access to it. But right now, because everyone’s working from home, can you somehow facilitate that and it’s not just a licensing thing. It’s also just something we have to do Figure out programmatically. So I think this notion of being flexible, is really important. I do think that, you know, you will see in our business and others, you know, when you think about consumption, there’s kind of per user, and there’s per per activity. On the per user side, I think everybody’s gonna try to trim users. Now, we’ve already thought about some of our biggest spends, you know, we’ve been fairly. We’ve been fairly lax about if you have a need and a reasonable will give you a license. And now we might tighten that up. And I think we’ll all see that. I don’t know what’s going to happen on the consumption side where you’re doing activity like AWS, I think for a lot of businesses, those run critical systems, and I don’t know if they’re gonna see a downturn or not, because they they need to run those things. Just like Qumulo for data, you need that data. So it’d be very interesting to see if they really see a downturn as long as those applications continue to function.

 

Steve

First of all, I want to tell you, I happen to be a shareholder in all of your companies, and I’m listening to you, I am very glad I am. Um, there’s a there’s a theme that you guys bring out, which is really amazing. And that is the compassion of who you are, who your company is, has to extend not just to your people, but also to your customers. And it’s now more than ever, having a long term relationship with your client is critical. So I mean, one of the things we did and perhaps not purely out of a thoughtful, you know, planning, but as much as we just want to treat our customers the way we wanted to be treated in 2009, because travel lines are way  Down and expense reporting was way down. And so we went to our customers proactively and said, Look, we’ll let you tier down, you know, we’ll let you buy it, the whatever tier, you need to buy it. And so if you want to reduce your commitment by 25%, that’s fine. Now, obviously, it gave us a chance to re engage with the customer. And think about how we might expand other parts of our relationship either now or in the future. But the biggest thing is that they knew that we had their back and and we were acting in a way that was truly a partner. And, you know, we’re hoping that that kind of partnership building or the relationship building would, over the long term be constructive. And honestly, it was incredibly constructive. The I will give you an example. I’m on the board of Washington federal. And one of these I love about this company is that the CEO has got a culture that that that, you know, honestly it, it speaks to being a partner. It’s not, hey, I’m just a bank and I’m looking at business with you, but it’s a partner. He literally proactively at the beginning of this downturn, went to all of his SMB customers and said, you can move to interest only effective immediately. And it’s it’s that model that that really helps build loyalty and trust. And that’s what I hear in the comments that you guys made.

 

Let me do this. We’re coming up at the top of the hour. And I’m going to try to summarize this conversation. And if I’ve not summarize it correctly , please jump in wherever you like. First is that be decisive and take action now. The theme behind this is very simple the best always take a leadership position and define the path forward before it becomes obvious that has to be done. In that process. The advice we’re getting is be brutally honest and assessing the challenges that your company is facing or that it likely will face in a downturn. The second is cash is king. And that’s true not just in good economic climates, but even more so in tougher economic climates. Use this downturn. to really focus your business, whether it’s on unit economics of driving efficiency into your business, or whatever the metric might be, but make sure that you have you use this opportunity to actually fine tune your business, either build cash reserves or actually decrease your cash burn. Third is take the opportunity to make your company stronger, increase your competitive advantage. One proxy might be every dollar being spent on your top three initiatives. If it’s not, then why is it being spent. It’s an opportunity to increase product leadership. It’s an opportunity to differentiate your relationship with your customers, for example, the Wafed did. Fourth is be transparent and be authentic in your communications across the entire company. There’s no way to over communicate the rationale, the strategy with the specific tactics that you want your company to execute against. And I’ll borrow from a phrase that Glenn used, don’t forget your humanity. do what’s right for your business. But don’t forget that your people are and they’ll always be a huge part of creating your business. If you’re considering reducing the size of your team, do it with full transparency, and do it within the cultural values that define your company. simple lesson trust is really the critical currency that we all have. It always has been critical. It’s even more so in this type of climate. Fifth is, and this is really just what I’ve benefited from, in my experiences, that instrument your business, use this opportunity to make your business better. Are you really measuring the right things? How broadly are those metrics measured? How fast can you take actions based upon that instrumentation? And, you know, look, the best get better in difficult times. So think about it in the context of what’s your competition doing? And how does that factor into your plans? How do you raise the bar and yourself?

 

I’m going to close with two thoughts. That first is that the ideas they’re never the differentiator, these are great ideas that we’ve all shared here. But they’re never the differentiator. It’s the execution of those ideas that create distance between market leaders and those that aspire to be more computers. And then, you know one more thing, this too is going to pass. And when it does, the companies that have adjusted and really optimized, their businesses will be stronger. And they will distance themselves massively from the competition that couldn’t be agile and couldn’t deal with these  issues in honest, authentic way. Bill, Robert Glenn, I can’t thank you enough for sharing your time and your insights to all of our listeners for everyone that madona our best wishes to you and your families. Please be safe. Thank everyone.

 

POSTED IN: Madrona News

Founded and Funded – The Road to Product Market Fit is Not Smooth with David Shim, CEO of Foursquare and Founder of Placed

David Shim, founder of Placed, now CEO of Foursquare has some invaluable advice for founders.  He built Placed over six years from an idea incubated at Madrona into the industry standard for brands and advertising agencies – and an acquisition by Snap. This conversation with Matt McIwain, managing director, covers how David and his team transformed Placed’s core location technology into a solution for the age old problem of how does advertising actually perform.

We hear the story of how David harnessed the power of big location data and revolutionized the way companies market to and understand consumers. Although he had developed a solution to a pain-point for many businesses, he ran into a few pain-points of his own, especially around finding product/market fit and scaling the company.

Matt and David reminisce about the trials of building Placed and how listening to the market transformed the potential of Placed.  David and Matt talk about being frugal with spending early in a company’s journey.  That  frugality made it easier to raise more money and also created urgency amongst Placed’s team.

David recalls stories of his time with aQuantive, Farecast and Quantcast. He also weaves in a sheepish story of his time sharing Madrona office space with founder and CEO of Rover, Aaron Easterly.

This episode is well worth the listen!

Full transcript

Erika Shaffer 0:05
Welcome to Founded and Funded! This is Erika Shaffer from the Madrona Venture Group. In this episode, Matt McIlwain, Madrona Managing Director, sits down with David Shim. David founded Placed.com and is now the CEO of Foursquare. Placed was incubated at Madrona and the two worked closely together for years. They talk about the journey of building the company including the struggle to find product market fit. Throughout his founder journey, David has consistently recognized big trends and embraced frugality. They talk about spending venture capital with intention to fuel the simultaneous development of a company and a culture of accountability. Listen on.

Matt McIlwain 0:49
This is Matt McIlwain from Madrona and I’m really excited to be here with my good friend David Shim. David and I have worked together for a number of years on a couple of different companies, but why don’t I give him a chance to introduce himself.

David Shim 1:00
Yeah, David Shim CEO Foursquare. Previously, I was the founder and CEO of Placed. Before that it was called Sewichi,thanks to the board we changed the name of. And for those who don’t know, Sewichi is a Korean term that I made up where “se” is three and then “wichi” is location. So location, location, location.

Matt McIlwain 1:17
I love that! David and I have had a great opportunity to work together. I’m actually going to take you back before Placed for a second because we got to work together on a company called Farecast that our great friend Oren Etzioni had founded back in 2003. And you joined in the business development area. So tell us how you joined Farecast cast and what you learned from that experience.

David Shim 1:39
Farecast was great. That was my first real experience in a small startup. So prior to that I was at a company called the aQuantive, specifically Avenue A doing business intelligence. So looking at how digital advertising drives specific actions like purchase on a website. During that time, someone named Mike Fridgen came along and said, “Hey, I’ve heard good things about you. Do you want to meet up for coffee?” And this is the first time I’ve ever actually, like been recruited. I’m like, yeah, sure, let’s meet up for coffee. So we meet up for coffee. He starts telling me about this company called Farecast, or at that time, it was called Hamlet

Matt McIlwain 2:11
Yes, to buy or not to buy!

David Shim 2:12
So he started giving me the pitch. And I was like, why is he telling me all this stuff? Why is he goes so deep in the business, and then he ended with like, “Hey, we’d love for you to come on board.” And that was kind of a first for me where I was like, “Okay, this is really interesting.” I like the idea. But it’s a startup. I’ve always wanted to join a startup, but there’s risks associated with that. So I kind of did the math in my head. And ultimately, I was like, let’s take that jump. And I will say, knowing that Madrona was funding that company went a really long way. Someone smarter than me believed in this company, that I should be more comfortable in taking the leap.

Matt McIlwain 2:44
Well, you know, that’s an interesting point. I mean, we have the opportunity all the time to meet with the talented young, you know, executives and really, it does seem to matter that somebody who is doing this for a living and helping build companies is on board and as a validation. And we were really fortunate to have you come and join the team, Mike Fridgen, was the VP of Marketing and Hugh Crean was the CEO. And at the end of the day, that company was one of the early companies trying to use data science in a very basic way to predict in that case whether airfares went up or down, and ultimately they were competing against Kayak. So what was your role there?

David Shim 3:19
So when I first started there, this is where it started for interesting, I came on board to lead marketing, and he got me the experience around things like PR when you’re in an ad agency, you think you do PR, but in reality, you’re doing a lot of PowerPoint, you’re doing a lot of spreadsheets and Excel. And so it got me to understand what is the full marketing in it all the way from spending media to see how it performs, to going in and actually saying, did that actually drive return? What’s the right narrative that you want to put what’s the right creative, it was a great experience to do all of those things in a very short amount of time. And I wouldn’t trade that experience for the world in terms of it set me out for what I was going to do next. And then from the role itself, so it was doing marketing first, then we expanded to things like monetization. How are you going to make money? And are you getting traction there or not. And in those days, we had a search engine similar to Kayak, we had airfare price prediction, say is the price going up or down. And people were using us at a very high rate, we were getting great press because this was the early days of Web 2.0. But what happened was we weren’t monetizing it because we weren’t selling tickets directly, we send somebody else and we get a referral against that. So we started experiment with advertising. And that advertising was like, hey, let’s put a Google Ad here. Let’s put some text links here, hey, let’s start to put logos on here. Let’s start to drop them off into other online travel agency websites. And we started to see revenue starts to come in. And then it became really kind of this experiment where what is the right layout? What is the right kind of area to focus in on to drive maximum revenue? And it was really fun in those days, because there wasn’t a bunch of software solutions. We were actually working with the web developer with Google and saying, how do we actually monetize this?

Matt McIlwain 4:54
Yeah, it was a lot more hand rolled as it were back in the day and one of the things I I noticed about you then is that you were great at coming up with little hypotheses, testing, iterating testing iterating, and it just kept getting better. The company got bought by Microsoft and became Bing travel, you went off to California, you know, in a flight of fantasy maybe mentioned that for a second. And then we’ll come back to how that led to the startup Placed.

David Shim 5:16
Yeah, I think this is I want to go to the valley like that was one of the things like if you are in the startup scene, it’s kind of like if you’re in country music, you can be in LA, you can be in New York, but you want to go to Nashville at some point. I went to Nashville for me, Silicon Valley, work for a startup that had recently been acquired. And the thing that I was missing in my kind of portfolio was Farecast was doing really well. But at the same time, we weren’t going to have a team on the marketing side that was going to be 20, 30, 40 at the time, and the opportunity came up with the startup that was acquired to say, “hey, we want you to come on board and we’ve got a team of 40 people right now that you would be managing,” and I did that not because I didn’t like Farecast but it was just more something to fill out my resume. I stayed there for a year good experience. learned a lot of things and then ultimately made the jump over to a company called Quantcast. Quantcast was a great experience. So during that time, it was a little similar to farecast and Hamlet in the sense that they didn’t have any monetization, but they had a lot of great data, a lot of great engineers and data science. So for people who don’t know, Quantcast, you will put a pixel on your website, and they would give you analytics but not analytics on what pages were most visited. But it would give you analytics on demographics, and who actually came to your website. And then where else do they go, what other websites that they visit, and they build a very large business where at one point, I think they were measuring, you know, 90 plus percent of the internet population, the US because they were on so many different types of websites. And that was a lot of fun because I had this great data set and they said, “hey, let’s figure out how to monetize it.”

Matt McIlwain 6:47
Yeah, and you had some experience with that. And so it’s really interesting to think if you go back there’s you know, Avenue A and aQuantive. And then there’s Farecast and there’s Quantcast and these names are all kind of blending together a little bit here, but what I’m noticing is that both from a sort of domain experience perspective, it was building a lot of experience sets for you. And then from a skill building perspective, it was building a lot of capabilities to potentially step into that role of being a founder. And you came back to Seattle, you saw the light, realize that it wasn’t quite so wonderful down there in Silicon Valley came back up to Seattle. And I remember, it was right around the beginning of 2011, that we had this conversation now.

David Shim 7:26
Absolutely. So the first thing I did want to get back to Seattle was reach out to Matt, I said, “Hey, I’m starting this company.” I didn’t think Madrona be interested. So this is where I was a little bit of a rookie in terms of the entrepreneurial space or the funding space. I was more moved up to Seattle because I wanted to start the company outside of the noise of Silicon Valley, because in Silicon Valley at the time, everybody wanted to be a founder and people were raising like a million dollars $2 million with four engineers, but they were really diluting the equity value right off the bat. So I came up to Seattle, I had some money that I earned from the Farecast acquisition as well as a couple of other things that I said “Hey, I want hire one or two engineers and I want to build out a prototype.” I met with Matt. Matt said, “Hey, this, it is interesting,” but I think he more believed in me as an entrepreneur, “He said, Hey, you know, we do seed investing.” And I was like seed investing, I kind of know what it is, but I wasn’t like 100% sure. And I was like, “Yeah, I don’t know.” I remember the conversation. I was like, “Oh, I felt really honored that you would say something like that.” But I also it wasn’t necessary part of my original plan. We continued to have those conversations. And I was talking with engineers and product people and saying, like, “Hey, do you want to come on board?” And I kept on running to like, it’s a really good idea, but you have no track record. And, and then we continued the conversation. And it really when I mentioned to someone, I think I probably mentioned one of the engineers I was trying to recruit, “Hey, I’m talking with Madrona.” All of a sudden, he changed a little bit where I got further along in that recruiting conversation. I’m talking with Matt McIlwain, who made the Midas list he’s the only VC in Seattle did that. And that actually helped me out a lot as an entrepreneur because becasue I didn’t have a track record. So I was kind of borrowing from you, that really helped me kind of say, I do need to get money from a drama in a way that it would be beneficial for the company, as well as beneficial for recruiting.

Matt McIlwain 9:10
That’s an interesting set of dynamics. And we’re just delighted that sometimes we can be helpful in terms of both the early capital because sometimes people are taking a big risk on leaving an established company and established job, even if they’re willing to kind of in that short term sacrifice a paycheck or portion of a paycheck that they would otherwise be able to earn for the equity and the excitement of being in a startup. And they want to know that there’s some kind of hooks and kind of guardrails around this really early stage startup. You know, one of the other things that really impressed me in addition to kind of your ground truth understanding of the market, is that you saw some of these big trends. I mean, the way I think about at least be interesting to hear how you thought about it, you appreciated that, you know, smartphones at that point, which were only like three or four years old, you know, we’re really maturing and the 4g network was starting to come online, and even the fact that there were cloud services where you could actually do real time analytics. Tell us a little bit about some of the trends you were seeing that led you to believe that this thing that came to be known as Placed after it was called Sewichi, might be possible.

David Shim 10:11
One was, even while I was at Quantcast, I wanted as a company for us to do more and mobile because the iPhone had just come out while I was at Quantcast. When I left Quantcast, iPhone two had come out and Android was just rolling out as an operating system. And what I did during that time was I actually had an engineering friend and I paid him to go to different conferences for me and just check in and say here, here’s my thesis, I think location is going to be important. I think that it requires an operating system that is available widely. And it has to enable programs to run in background and persistently. Yeah, so those things for a while didn’t exist like iPhone didn’t nice actually let you run apps and background for a little bit. Android did not roll out yet. So there was no kind of widespread adoption across carriers. But he went to one conference for Android. I think it was an at&t. conference, they said you could actually do this. So that was my kind of tipping point to say, Do I leave the company and work on this project? Or do I stay at Quantcast and really kind of continue to build a great company. And that was a really hard decision. Because when you’re in a startup that’s successful, that’s doing really well where you’ve got a lot of opportunity in front of you. But it’s also you don’t get many chances where you see that product market fit. And then you see the market saying like, “Hey, there is no incumbent, there’s nobody that is better than you bigger than you. It’s wide open.” And that was something that got me really excited. So that was one thing. So the the operating systems for smartphones were enabled technology in the smartphones were “Hey, most people don’t know this right now. But you actually had to carry this computer around. You put it in your car, it’ll give you directions.”

And then getting it into the smartphone. That was crazy. That was like “What is going on here?” And you see that where if you ever remember going to the Best Buy in the 90’s. They had a whole section for navigation. Yeah, that section completely disappeared and it was replaced by smartphones. Right and that just got bigger. getting bigger and bigger. That was a huge opportunity as well, in terms of market was saying I’m buying smartphones, the technology to do GPS was built into the smartphones, the operating system existed, then it was kind of a bet to say are mobile phones going to be big. That wasn’t a really hard bet to say, it’s just more when it was going to happen. And it was right around that.

Matt McIlwain 12:18
But it’s good to tease out the GPS point too. It’s now 10 years post that timeframe. And we just take it for granted that you know, there were the 4g networks and there was the GPS network and you could leverage it. I mean, I remember in the earliest days of Placed, you know, we were worried that we were just killing the battery life on phones so there was a whole optimization even once these things were available that you could run the place that but maybe tell a little bit about well what was the purpose of the place to app and why was it at risk of burning somebody’s battery life and why does it even matter given what you were trying to do?

David Shim 12:49
We started with this when check-ins were big and this actually goes full circle back to when Placed was started we built an app that was called Check-in King. It let you check into Foursquare, Gowalla, Google and Facebook and this is when it was really a fun thing to do is check into a place, let everybody in your social network know. As part of that, we actually went out and said, “Hey, we’re going to build an aggregation app,” that aggregation app would let us run location data and background and users would opt into that. And we were transparent. But these were people that love to check in and they wanted to show people where they were. So that got us a lot of data where it said run the application and background, people are going to confirm where they are. So it’s ground truth data points. And then we had scientists that actually ran models against that to say, “Is there enough signal to predict a store visit occur?” And so in the old days, batteries used to die very quickly. And so you’d have to be very careful on how you collect or measure that data and process the data. So we did something that was kind of unique back then, we didn’t actually push it out to the cloud right away. We said store the data on the device, collect it, but then when someone charges their phone, there’s a flag when the battery starts to go, then sync that up and you don’t have to use the cell towers, but you can actually use the WiFi connection. They’ll be faster. So you had to find all these like novel hacks to solve that battery issue.

Matt McIlwain 14:04
Yeah, you guys were really great. Not only I think, you know, technologically speaking, also, culturally speaking, I mean, one of these things that I used to give you a little bit of a hard time about I don’t do this very often is you were pretty frugal. So just tell us a little bit about like, in those early days, you know why frugality was so important to you into the company.

David Shim 14:23
I thought of the VC money as my money, it was a very high bar to side what to spend against. And the way that I kind of addressed it was to say, “Hey, would I spend my own money in the same way,” and that let me make the right decisions for the business where we raised $300,000, $400,000 seed round, like that is nothing these days, but that was a very big round for me that we wanted to make sure and Shepherd that correctly. And the way that I wanted to go out and extend that even further was I took zero salary. So technically, I think I’m employee number seven or eight, because I was never on payroll. But that that was that extended the runway even further out, and that frugality actually helped out on the recruiting side because people started to understand like, this is a company that wants to be around for a long time, they’re not going to go out and flame out after three months because they spent all their money. And that let me recruit the right type of person. And that right mindset,

Matt McIlwain 15:12
and I think that that frugality did serve you well. And it was part of that it was one of the cultural cores of the organization. And what was interesting is that, you know, you needed to get to a critical mass of these consumers that decided, “Hey, I’ll trade off having your app running in the background on my phone.” And eventually, I think pretty quickly, kind of the trade was well Placed would give you something, a Starbucks gift card or other kinds of monetary appreciation for allowing us to have your data so it was a very explicit triple opt in tray, but it took time to build a critical mass of those folks, but because you were so capital efficient, I think it gave us the confidence because that was taking a little bit longer to collectively put some more money in together.

David Shim 15:53
I would say also the frugality also had hunger. Yeah, where he you had to be successful. You had a clock, it wasn’t something where I could wait six more months and kind of develop the code further try to test out these different ideas, you had to make a bet you had to go all in on the men, but that actually helped to the people that we brought on board as well. The frugality actually said, like, “Hey, we have a small amount of money, we’re investing it correctly. Now let’s go really aggressive and dive into it.” And that’s where people were wanting to stay. This is like the old school startups where people would stay till 9pm, 10pm, 11pm. Like it was nothing. And then we come back in early in the morning, but that was the culture that we had built. And we kind of extended that even further out where this is unheard of these days, but we had office hours, etc. So we, we said in the interview process, anybody who wants to join the company, we have office hours, nine to six o’clock, if you are not okay, with nine to six o’clock, you should not join this company.

Matt McIlwain 16:44
And what David means by that is that there is this expectation that we’re going to all be in the office together during that time window because we want to productively work together, engage with one another, and we’re going to make that commitment to each other. And yeah, sure there was going to be obviously people had a little bit of a here and there. And there’s gonna be times when you had to work later. But it was it was another interesting cultural dimension of the company. Before you know it, you had thousands of people that had made this trade and then even 10s of thousands of people, of course, it cost you some more money to get people to, because you had to market to them, get them to download the app store very nacent at the time. Eventually you started having enough data that you started to think about what might we do with this data that might be valuable in a kind of an anonymized, abstracted way to different audiences?

David Shim 17:31
Now, and that’s where the thesis was. The digital world is very measurable today. Like if you go to a website, they measure every possible action on the site, they try to get inferences on who you are when you visit the site. But when it comes to the physical world, there wasn’t a Nielsen there wasn’t a comScore, which are rating services to say how many people actually went into a Best Buy and how many people went into a Walmart, a Starbucks. And so the play for me originally was to say, let’s measure the physical world, make it as measurable as the digital world, and then the use cases will come. And the first use case that we had was called Placed Insights. And this was the idea that if you wanted to go to our website, you type in any business, let’s say Starbucks, we could show you how many people visited a Starbucks that month, we could break it down by day, our what other businesses they visited afterwards. And that got a ton of attention. Like we were in the New York Time, Wall Street Journal, and I was doing the press and this is where I probably should have someone else doing the press. But we had a lot of traction in market where people were talking with us, I had VP’s, CMO’s pinging me. The problem that I ran into, and this is where Matt was actually great was, and I didn’t think at the time I was like, now you don’t understand my business. I know what’s right. So we probably spent 18 months to 24 months, acquiring the data from users doing it in a very transparent way. Then we had the analytics where our team was predominantly there was almost no business people on the team. It was mostly data scientists crunching the data as well as engineers on building the app and processing it. We built this great suite got a lot of press. We were able to go in and for the first time ever tell someone how many people went into a given business on Black Friday, and was that up year over year, but people wouldn’t buy it.

Matt McIlwain 19:07
People liked it. They appreciated it. They thought it was interesting data and made for great media coverage. But there wasn’t a business model there that was a sustainable business model. It was kind of a researchy, novelty kind of thing.

David Shim 19:18
Absolutely. And this is where Matt did a great job. At first, he’s like, Hey, this is great. You’re getting a lot of traction. But let’s look at the pipeline. Like what’s the flow in from the meetings that you have to the actual in person that gets to an opportunity that turns into a contract, and we we had a couple wins, but it wasn’t something that was like replicable. It wasn’t like, hey, for every 10 we got two meetings in person that one turned into a contract. And that was strategically that was as an entrepreneur. The mistake I made was sticking too long to what I thought was right, versus I think this is where Matt did a great job of just pinging me just kind of reminding me like, what’s the revenue model? What’s the sales process look like? Are people actually buying this even though you’re getting all of these meetings and over time it’s a subtle process, but because it was never like you need to get revenue, it’s very much like, are you thinking about this and we got to the point where this is hard. It’s like a six to nine month sales cycle and we’re making 100 grand on a contract like this is tough.

Matt McIlwain 20:11
Probably not going to scale. One of the things that you did is you also noticed the rise of these mobile ad networks. And I think this is where, you know, while we might have been encouraging you to think about is there a real business model here, your insight around the attached to the mobile ad networks, you know, made a made a big difference in terms of getting advertisers to see the value in mobile ad attribution. Tell us about that.

David Shim 20:35
I take zero credit for the product that generated all the revenue and the acquisition that it drove from so one was the board kind of telling us “Hey, look for product market fit, you’ve got a great solution but you haven’t found the right product or services to sell to customers.” The big thank you will be to Ground Truth formerly known as xAd, where Monica Woo, who was their head of marketing reached out to me and said, “Hey, I see all this press about you. Everyone trusts the you’ve got really great data, what we would love you to do is actually take our ad impression data, bump it up against your store visits because we have an audience that opted in to let us measure where they go and tell us did that ad drive someone in the store?” I actually told her no for about three months. So I said, I don’t want to do this, like I am comScore Nielsen for the physical world. That’s a billion dollar company like this. Then I then you had mentioned like, Hey, what’s the process? What’s the revenue? How’s this flowing? Finally, we took it. And I said, Sure, we’ll do it. I’m getting enough pressure from the board. Let’s try something else. And it worked, where they’re like, “Hey, this is great. We’ll give you 10, 20 $30,000 for one report, we deliver the report like, “Hey, we want to do five more.” And I was like, okay, we’ll do five more report back to board a we get someone that wants to five more should we explore this like yes.

Matt McIlwain 21:47
Sounds like it’s a winner!

David Shim 21:48
They were growing at the time they were offering it to more and more advertisers. As advertisers received the report, they saw the benefit of measuring media to physical store behavior, so saying this address Someone in the store, they started to ask other publishers and mobile ad networks to include Placed. And that just snowballed where all of a sudden, without a sales team without a business development organization, we went from no business to, you know, 10s of millions of dollars, hundreds of partners on an annual basis. And we never actually grew out that function. But by the time we were acquired by Snapchat, we had over 400 publishers that were using us for in store attribution.

Matt McIlwain 22:26
Yeah, I think that that was just a high leveraged, you know, sort of frugal and smart way to scale your organization because it started to become the expectation that if you’re running mobile ads, where you’re going to be able to attribute that to whether or not people actually went into physical stores. You had this by now really built out healthy network of hundreds of thousands, if not millions of people that had downloaded the app, and you had a really great panel. So you could get down from a demographic level into a really precise level. And as you say, you know, you were doing 10s of millions in revenue growing very nicely. So what happened? Why did you guys sell to Snapchat?

David Shim 23:00
It was very interesting. So as a first time founder, you don’t know when you’re actually being courted a lot of times. And you had mentioned before we’re having meeting with this big internet company, even early days where we just raised a series A people would reach out to us and say, “Hey, do you want to meet?” And I didn’t understand the difference between Corp Dev and Biz Dev. It’s I go to these meetings, it’d be great. It’d be like, hey, do you want to come back again? I’m like, That sounds good. And I would tell you, like, I think they want something else. Yeah. And I’m like, I don’t think so, Matt, I think I just wanted the business deal with them. So we had a couple of opportunities. But as an entrepreneur, I would say one thing I would recommend to others and I’ve done this myself is never think about the exit until you’re right at that point, because the minute you do anyways, for my personal mindset is I’ll overthink it. I’ll start to go to that direction because now I’m thinking about, “Hey, if I have an exit, that’s great. My employees will make this much money. I’ll make this much money. Hey, what would I do with that money?” It starts to clear a path to go down that direction. I’m glad I didn’t do that because we had multiple offers or any indications of interest over the last kind of six years of the business while we were independent. And with Snapchat, it was really they came to us and said, We want to partner with someone location space.

Matt McIlwain 24:08
Tell me about what you look for because you get, you know, young entrepreneurs coming and knocking on your door to get your advice. And sometimes have you consider making an angel investment. What do you look for in an entrepreneur, that’s at the the early early point of their journey.

David Shim 24:23
So I’m probably the worst investor in the world when it comes to seeing opportunity.

David Shim 24:26
But there are things in terms of what I look for. But I will say the reason why I’m the worst investor just so people know, Madrona incubated so that you have a space they gave us, internet, they give us desks, all these things that were great. And Madrona has this program back then where it was more of a section of the office that we worked into, but it was incredibly helpful because I didn’t need to hire an executive assistant office manager. Right behind the wall. There was another company that was being founded that I thought was a horrible idea. I was like, Who would ever do this? It was called Rover.

David Shim 24:56
There were dogs running around the office and they were having accidents and I was like “Is this a real company?”

Matt McIlwain 25:01
What is Madrona thinking about?

David Shim 25:03
And looking back at it, I should have said, “Can I invest in this?”

Matt McIlwain 25:09
Well, they’re really fun thing about that, of course, is that both you and Aaron Easterly, who’s the founder and CEO of Rover, were ex aQuantive folks. And in fact, Brian McAndrews ended up being on the Placed board prior, who was the CEO of aQuantitive. And a longtime friend here at Madrona, it does come down to people.

David Shim 25:26
Absolutely, absolutely. And then I would say the investments that I’ve done, it’s been people that I’ve it’s very similar to kind of how you invested in Placed It was about the people that I know. So when they’ve had success in a career that I believe that they’re really the best or one of the best in a certain area or field. They’ll come to me and they’ll say, “Hey, would you be interested in investing?” And lately, at first I dive into the business model, I’d asked a bunch of questions. Then I realized, like if you’re giving 20 or $25,000, that’s a lot of money. But at the end of the day, they’re trying to raise a really big pie like I don’t want to distract so you really kind of have to bet on the person more than the idea to live have cases and I think that has its early days because I’ve only recently started investing. But I think those companies that I’ve invested in where it’s bet on the person, it really does mean a lot more from a return perspective versus Hey, it’s a referral from somebody else. I think this person’s good, but don’t know as well

Matt McIlwain 26:17
Maybe share a thought or two on where you think the big opportunities are going for areas that you are more excited about. And obviously, as you were just saying, you know, you want to have people that intersect with those opportunities that can do something really special. But as you think about opportunity spaces, what are areas you’re interested in,

David Shim 26:33
one of the biggest areas that I’m interested in as part of Foursquare, but I think from an investment thesis standpoint is privacy. I think privacy is something that people care about. There’s a lot of news stories, but there hasn’t been a company that has been able to kind of address privacy. I think the closest that you’ve been able to see is things like ad blockers where that’s great, you block an ad, but it doesn’t really help the ecosystem at all from a publisher who creates the content. It helps for the user to not see ads, but you also get a blocked area where there’s no ad. So it’s not a great experience. There are things where there are bad players in space around advertising and measurement…

Matt McIlwain 27:09
where you want to block those people and consumers want more ability to control who gets access to their data. And I think there is a big play there to say, who actually controls the data. And how do I meter that? How do I monitor that, as a consumer, I don’t know what the actual play is going to be. But that is something that I’m very interested in. And it’s on the privacy side of the business. And you guys were also I think, very early to go back like 2011, 2012, 2013 and understanding the potential in the data and using both AWS from a cloud perspective and then also, you know, hiring some some smart machine learning data scientists to leverage that. Things have come a long way since then, you know, do you see those areas accelerating as well?

David Shim 27:52
Absolutely. I can see on the cloud side, more services going on there. I think as a part of Foursquare, being the leader in location, we are getting a lot of people asking to say, “Hey, can you put your services in the cloud? Can you process data in the cloud,” and we are exploring those things today, we don’t have anything to announce specifically. But that is where the market is pushing. And people want the data within their walls, because that lets them kind of control who has access to it. And I think this goes to the privacy theme, where if you’re a company, you might have a partner that you’re interested in. But you don’t necessarily want to give up all your data. Now imagine being able to process it in the cloud in a protected environment, and then taking the data and the value out and then you deciding how you want to use it. So it becomes more of a relationship of a service than it is a product at the end of the day.

Matt McIlwain 28:36
Right? Well, maybe as we wrap up here, you know, if you’ve got any last words of wisdom to entrepreneurs, having been through this journey since day one have Placed and seen a lot of different angles on it over time. What would you say to the you know, kind of the the entrepreneur who’s either trying to decide if they’re going to take the leap, maybe leave one of the big companies here in town to go start their own business or they’ve just taken that leap. The most important thing or two that they should really focus on.

David Shim 29:01
Where I’d say I made the right decision was to quit a company that was doing incredibly well where my options were worth a lot. But it was a decision point where it was an idea that I wanted to go after that. And I was willing to walk away from all this opportunity. When I talk with founders from an investor’s standpoint, a lot of times they have their foot halfway out the door, but not all the way out. And I think a lot of investors will disagree with me. But my take is that it is important for you to go all in. You don’t have to take zero salary like I did. But it’s you need to go all in and say, can you actually make this work? By doing it as a side project? I think from an investor from a an advisor perspective, it’s kind of like if you don’t believe in it enough, why should I believe in it, and I think you should, if you believe in the idea, you should make the full jump. Now with that said, I made the full jump where I spent money to hire a friend that went to different conferences, and he validated this this idea as possible. So there’s also you make the jump You make an educated jump to say, “Hey, does this idea exist in the marketplace? Is this even possible to do?” And there are a lot of entrepreneurs, and I’m sure you get this a lot where they haven’t done the research to say, Is there somebody already in this space doing this? And I think that’s important. I think the second is really being able to go in and say, an idea has failed. When I saw I didn’t have product market fit for placed insights, I should have moved more quickly, where I did see product market fit versus I was a little bit hard headed as an entrepreneur and saying, like, my vision, my way, I believe I have the force to make this a thing. And in reality, you can do that a little bit, but not all the way. And I think the easier path was the one where the market said do this. And then I was able to apply the same type of force. And I was able to accelerate that to a very large business.

Matt McIlwain 30:48
Well, it was such a pleasure to work with you for all those years. I miss it and I’m looking forward to the opportunity we get to partner together again and building a great business. So thanks for spending time with us today.

David Shim 30:59
Thanks a lot, Matt.

Erika Shaffer 31:01
Thanks for listening. You can find Placed powered by Foursquare on the web at Placed.com. If you like this podcast, please share it with your friends and subscribe. We have more great episodes coming in 2020 so stay tuned.

Transcribed by https://otter.ai

POSTED IN: Madrona News

Welcome to Ishani Ummat

Madrona is excited to welcome Ishani Ummat as our new Associate. Ishani hails from the Seattle area and graduated magna cum laude and Phi Beta Kappa from the University of Washington with a degree in Finance and concentrations in Global Health and the Comparative History of Ideas.

As her degree implies, Ishani has varied interests and approaches problems with a broad viewpoint.  She joined us directly from Bain & Co in San Francisco where she worked across a variety of technology and healthcare strategy and operational projects, ranging from digital user experience and customer journeys to strategic M&A.

As a key member of our investment team, Ishani will be spending her time evaluating prospective new investments, identifying new trends and developing our investment themes, and working closely with existing portfolio companies to help them with growth and strategy.  A significant portion of her time will be spent getting out in the Pacific NW community, meeting founders and young companies across the technology ecosystem in the Puget Sound, Portland and Vancouver, BC.  Ishani is particularly interested in how the next wave of digital-physical customer experiences are going to shape verticals like fintech and healthcare.

“Seattle is home to so much interdisciplinary innovation already and I’m incredibly excited to work alongside this community of founders and builders to create more. I believe in the power of young entrepreneurs with bold ideas to change the world. Perhaps I’m a biased native, but I think the Pacific Northwest is one of the best places to start,” said Ishani.

Tim Porter commented, “We work in a dynamic industry and when we go to hire we look for people who are self-starters, passionate about technology, analytical thinkers, team players and who are entrepreneurial and love working with early stage companies. Ishani is all of these things and brings an authentic curiosity to everything she does.  Welcome!”

While not visiting companies or at Madrona, Ishani can be found skiing, biking or backpacking across the Pacific Northwest.  She looks forward to meeting many of you in the community!

POSTED IN: Madrona News

Founded and Funded: Growing a Business Depends on People, How to Build with Intention with Mikaela Kiner, Founder of Reverb, Author of Female Firebrands

Wow I just listened to this episode with Mikaela Kiner, the founder of Reverb and the author of the new book, Female Firebrands and it’s wide ranging and inspiring.  We hear the story of how Mikaela left her corporate career to strike out on her own and ended up building a company to help thoughtful leaders build the kind of culture that sustains a company.

While D&I topics are scattered throughout here, the conversation makes them real and not buzzwords.  “Culture” is the new “HR” and the conversation with Shannon Anderson, our director of Talent, and Mikaela gets into why human resources, people management, human capital – whatever you call it, is a crucial ingredient to building a company that people want to work for and that succeeds.

Great stories in here from companies like TomboyX and Heptio as well as stories and call outs from Female Firebrands, including a stunning story from Dr. Cheryl Ingram, CEO of Diverse City and Inclusology.

This one goes a little longer than most but it’s worth it!

K

POSTED IN: Madrona News

Founded and Funded: Starting a Company with your Best Friend, the co-founders of Algorithmia, Kenny and Diego

(Kenny Daniel and Diego Oppenheimer)

Tim Porter opens Season Two of Founded and Funded, with Algorithmia’s founders, Kenny Daniel and Diego Oppenheimer.  This duo started Algorithmia in 2014 and teamed up with Madrona, working out of our office for a while as they got off the ground.  The team has made huge strides since their initial algorithm marketplace.  Corporations and government institutions now turn to Algorithmia  to enable them deploy AI models and run them at scale.

Kenny and Diego met in college at Carnegie Mellon and stayed in touch as they went very different directions – Kenny to do a PhD and Diego into business at Microsoft.  They came back together to bring the power of academia to business and started the company to unlock the power of algorithms.

They talk about everything from the six month backpacking trip with a beat up laptop that was the genesis of the company to building a distributed team (by happenstance) to where we are in the adoption of machine learning and intelligent applications in this wave of innovation.

 

Also available on all your favorite podcast platforms.

POSTED IN: Madrona News

Building a B2B Marketing Culture from the Ground Up with Elissa Fink, former CMO of Tableau Software

The latest Founded and Funded podcast with with Madrona Venture Group’s Tim Porter

Elissa Fink joined Tableau early in the company’s journey as their marketing lead.  Tableau was always a product driven company with an early passionate audience.  Elissa saw this and undertook at the start of her Tableau career to update the brand positioning to be people first and lead with their stories.

Tableau is one of the Seattle success stories.  It was acquired by Salesforce for $15.7 billion in the summer of 2019, making it the second largest acquisition ever in the Seattle tech ecosystem and brought together the leader in CRM with the leader in analytics.  The company started in 2003 and Elissa joined Tableau four years later when revenue was under $5 million a year.  She helped grow the company to over $1billion in annual revenue and helped take the company public. 

A key to Tableau’s marketing success was an intense focus on customers and end users.  By tapping into these early customers and their appreciation of getting a job done faster and better, Tableau was able to have early broad-reach success that was later leveraged into larger enterprise sales.

Elissa addresses the importance of brand in the early days.

“It’s all about consistency.”

– Elissa Fink

The brand voice was the backbone for the demand generation work which was the key to the growth of the young company.

As the company moved into enterprise sales, marketing played a big role.  Elissa and her team had seen the writing on the wall and been working with the influential analyst firm, Gartner, for some time.  Elissa remembers when the Magic Quadrant that had them clearly in the challenger category was sent to her – that was a big day for the company.

In fact one of the important roles for marketing is to look 18-24 months ahead.  What will the market want at that time?

Competition was sparse in the early days but that changed.  Microsoft announced a competing product and wrapped it into their formidable enterprise sales process.  This was a frightening time at Tableau but the strength of the product prevailed.  Customers who were passionate about data wanted to use Tableau and they continued to buy.  Tableau’s product driven approach paid off yet again.

For startup companies, Elissa knows hiring is hard.  For marketing which has become such an analytics and numbers focused endeavor, Elissa advises not to hire for experience but hire people who are deeply interested in a problem you need to solve, and who have the good judgement needed to succeed in a startup.

For marketing leads, she suggests assessing the assets you have across brand, product, and community.  Where are the leverage points? And where do you need to shore up your leverage points in order to have a strong basis for marketing.  This assessment will help you prioritize in the busy world of a startup.

Elissa is an advisor to startups including Outreach.io, Qumulo and Amperity and sits on the board of the Washington Technology Industry Association.  She recently taught a class at the University of Washington on B2B marketing.

Note: The largest acquisition was Amgen’s acquisition of Immunex for $16.0B in 2002. Source: https://www.seattletimes.com/business/technology/salesforce-buying-seattle-based-tableau-for-15-7-billion-in-stock-one-of-the-northwests-largest-acquisitions/

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Our Investment in Clari, Intelligent Tools for the CRO

We, at Madrona Venture Group, are excited to invest in Clari, a company applying AI to the multi-layered task of revenue operations.

Earlier this summer, we raised the first Madrona Acceleration Fund and Clari is the first investment out of that fund. The fund’s focus is to invest in great companies and teams that have found product-market fit and are ready to scale to the next level. Clari already has had incredible success and is on that path.

Over the last year or so, we have focused deeply on a number of themes that have guided our investment activities.  One such theme is intelligent applications. Clari is a great example of an intelligent application that ingests data from a variety of sources (CRM systems, marketing tools, customer success tools, email, calendar and the like) and applies AI and ML techniques to provide better insights and forecasting capabilities to drive revenue operations for an enterprise.

We believe there are some key trends in the industry which make a platform tool such as Clari a “must have” solution for all Go-To Market (GTM) employees in an enterprise today.  These trends include:

  • Companies continue to rapidly innovate on business models. Driven by changes in customer behavior, over the last decade we have seen a strong movement from traditional license models to subscription models.  And we are in the early days of moving from subscription models to consumption models.  As these business model innovations continue, the challenges that businesses and organizations and people deal with are getting more complex.
  • The rise of the CRO (Chief Revenue Officer). More and more enterprises are looking to have a top-level leader who looks holistically at all aspects of revenue operations.  This has started shining the spotlight on and the opportunity to manage revenue generation as a predictable end-to-end business process and managing  marketing, sales and customer success as one integrated system as opposed to different silos.
  • ML and AI technology advances have truly enabled every application that is being built today to be an intelligent application. Being able to bring data together from multiple sources and build a continuous learning system that provides better insights and predictive capabilities is becoming more possible today than ever before.

Clari is an AI and ML platform that looks holistically at revenue operations by unifying sales, marketing and customer success systems and data to provide insights and forecasting capabilities. It is led by a fantastic team including Andy Byrne (CEO and Co-Founder) and Venkat Rangan (CTO and Co-Founder) who have a long history of working together in a variety of successful start-ups over a couple of decades and they bring a tremendous amount of experience and expertise to solving this problem in a best-in-class way for all businesses.

We heard amazing feedback from Clari’s customers about why they love the product.  Hearing things like “sales folks just love the product”, “my CEO doesn’t ask me for forecast information anymore and just looks at Clari’s forecast”, “my Board member’s first question always on the plan is how does this relate to Clari’s forecast”, etc. reinforce how Clari’s core value proposition resonates strongly with customers.

For these reasons, we are thrilled at the opportunity to invest in Clari and to be a valuable partner in the journey as we build the next generation AI-driven revenue operations platform for companies around the world.

 

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Building Marketplaces is Hard, Mark Britton Shares His Tips for How to Succeed

Seattle is known for marketplaces, Expedia, Amazon, Zillow, Redfin, Rover.

“Building them is REALLY hard.”

If you are looking to build a marketplace based company – you inherently have two sides and two potential customer groups for whom to optimize.  In the latest episode of Madrona’s podcast, Founded and Funded, Mark Britton, the founder of AVVO, talks about how he approached this at AVVO; the opportunities founders have to create meaningful marketplaces and the common mistakes they make.

One of these mistakes comes from misjudging who your most important customer is.

“The touchstone is the consumer – you have to really understand the consumer and solve their problem in a very unique way.”

Since a marketplace is a flywheel, you need to get it going and that is not easy.  Mark suggests get started by limiting your geography or the product in a way that makes it possible to generate the supply side in a meaningful way for your very first customers.  For AVVO that meant a practice area of law and a geographic region.

With most marketplace businesses, the big tech companies will start to encroach.  One example is the Trips service from Google released earlier this year that offers a search for vacation packages, flights and more, all of which have been traditional fare for travel marketplaces for years.

“Every single e-commerce model that is informationally driven; Google believes they should own that.”

Mark suggests that entrepreneurs who are thinking about a building a marketplace, focus on the community they have a passion for.  Google is trying to capture everything about the world, you know a community or a specific market, so leverage that focus and lean into it.

Build out the tools to increase interactivity on the platform and keep your eyes open for when the competition from big tech companies heats up.  Your focus has the opportunity to prevail against big tech.

The addition of AI and ML related technologies is another challenge for startup marketplaces – the big companies have teams, compute and the technology to help make the connections and matches in a marketplace.  Even if they do so incrementally, they will be doing it at scale.

This all comes back to your unique love of the community and ability to understand and build it in a way that is not possible from a Google or an Amazon.

“Building community is such an art – Google will not be your tight community.”

 

 

Mark is a Strategic Director at Madrona Venture Group and Elisa La Cava is a Senior Associate.  You can contact them by emailing or connecting through LinkedIn

 

 

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Founded and Funded – Building a Customer Satisfaction Team (and a lot more) with Oliver Sharp

In this episode of Founded and Funded, Tim Porter, speaks with Oliver Sharp, co-founder of Highspot about the journey of building the company.  They talk about the inspiration behind Highspot (corporate content you need for your job should be as easy to find as a how to YouTube video), building a culture of customer satisfaction from day one, and how people from large companies transition (or don’t transition) to startup life.

Highspot has raised $120 million with their most recent round of $60 million announced in June of 2019.  Highspot is a sales enablement platform that helps sales people find the content they need to close deals.

The team came together at Microsoft and the transition to a startup was a return to their roots as hands on learners.  Though senior contributors and managers at Microsoft, as Oliver says “a startup doesn’t care how senior you are – you have to learn it all yourself” and they all had to re-learn the hands on work of creating and marketing a product. Customers were at the center of this.

Some lessons from this discussion:

  • Customers have crucial insight, though you have to figure out which ones to pay attention to early on.  Oliver talks about how they learned more from the customers who passed than the ones who bought the product in the very early days.  The ones who passed had reasons they didn’t and understanding those were key to building the product.
  • But while focusing on the product is crucial it’s not the way you succeed.  You have to take your technological masterpiece and tune it to the customers’ needs.
  • And the words are important – How you define the problem may not be how they define it.  Highspot originally set out to create the best content search out there to help marketers and sales people identify the best content for a given situation.  But your customers “don’t think about search problems, they think about the making more money problem.”
  • So you both need a great product and you need the story you are telling your customer to fit with what they are looking for, or the pain they are feeling.  You aren’t selling search (in this case) you are selling the solution to their problem (which you know is mostly search.).
  • CSAT or Customer Satisfaction measurement is not a new thing in business but with SaaS it is more tightly woven into the software renewal cycle.  And it’s so much easier to measure and to react quickly.  SaaS puts more emphasis on the customer satisfaction as a direct ingredient in sales.
  • Building a successful CSat team starts with the product creators. Start with the people who helped design the product.  Those people are the most invested in what the product is now – hearing from customers is the most powerful way to learn where you went wrong.
  • Other topics of interest are building a team from junior on up – how hiring college grads has worked out extremely well for HIghSpot – and Oliver covers what not to say in a startup interview!

You can listen here or on any of the platforms you prefer – iTunes, Spotify, Google Play, SoundCloud, and Stitcher

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Teamwork from Sports to Business

Teamwork is what enables startups to survive to be successful companies. Building a team takes all kinds of people, coaches, players, business experts and investors. Today Terry Myerson  and S. Somasegar from Madrona and many others including Satya Nadella, Russell Wilson, Ciara, Ben Haggerty (Macklemore), Amy Hood and others stepped up to invest in a great Seattle community builder – the Seattle Sounders. There are a lot of fans here  and we are excited to support the team and the organization through our spirit! Here is Terry’s story of how it came about. https://lnkd.in/gamDtSH

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Founded and Funded Episode 1 – Hope Cochran on the Entrepreneurial Journey – Hers!

Our first podcast is live – Hope Cochran shares her stories of startup life  – mistakes made and lessons learned in conversation with Principal, Daniel Li.  It was a great conversation and we hope you like it! You can also find this in iTunes, Spotify and SoundCloud with Google Play coming very soon.

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Founded and Funded – Madrona’s Podcast about Startup Life

Today we are launching a podcast.  We looked around at the offerings for startups in Seattle and felt there was room for experienced entrepreneurs to share their moments of truth – where they made mistakes and figured it out, a turning point in the business, their “ah ha” moment, or just what got them through.  And to tell some great stories along the way.    We have entrepreneurs of all kinds in and out of our doors every day and every one of them has an interesting story.  We hope to share some of them here.

In each episode, someone from the Madrona team will sit down for a discussion with one of these entrepreneurs.  We hope you get to know the broader team here through some of these discussions – from investors to HR and recruiters to Biz dev and Comms pros.  In the first season you will hear from Managing Director Hope Cochran who used her pursuit of opera early in her career to help her manage a room full of businessmen, and Venture Partner, Mark Britton on what he learned building Avvo into a leader in the field.  Others in the first season are Oliver Sharp, founder of HighSpot who advocates that customer success is not just a department at a company, it’s everyone’s number one goal, and Elissa Fink who talks about how building a BtB brand that resonates with customers is just as important as a BtoC brand.

We worked with Larj Media to get going and they were great Mentors – thanks Tina and Joelle!

Here is the teaser to give you an idea of what to expect. We will be putting the podcast in all the usual places, ITunes, Spotify, Google Play, SoundCloud etc – if there is somewhere you want it and can’t find it let us know at foundedandfunded(Replace this parenthesis with the @ sign)madrona.com

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It’s Been an Incredible Experience – 23 years on the Amazon Board

Managing Director, Tom Alberg, announced today that after 23 years on the board of Amazon.com he intends to step down in May of 2019.  Alberg first invested in Amazon.com in the company’s Series A financing in 1995 and is the longest serving member of the board after CEO and founder, Jeff Bezos.  Alberg will continue as a managing director of Madrona Venture Group and several corporate and non-profit boards.

“Serving on the Amazon board has been an incredible experience.    Amazon’s growth and expansion is a testament to not only how technologies like the Internet have expanded in just 20 years to dominate our lives, but also to the ability of Jeff to build a team that inspires innovation and creativity at every turn,” commented Alberg.

Alberg is a co-founder and managing director at Madrona Venture Group, which invests in information technology companies in the Seattle region with a focus on early stages companies.  The firm raised its 7th fund last year and has nearly $1.6 billion under management. Alberg also serves on the board of Impinj (NASDAQ:PI) and the non profit boards of Oxbow Farm & Conservation Center, the Pacific Science Center and sea.citi.  Alberg and his wife, Judi Beck, cofounded Oxbow as well as the Novelty Hill Winery.

The original Amazon board was Jeff Bezos, Tom Alberg and John Doerr of Kleiner Perkins.  Doerr left the board in 2010. While the board has grown over the years, the company and Alberg maintained a philosophy of having a balance of business know how and people who are on the cutting edge of technology.

“Being a venture capitalist in one of the healthiest tech ecosystems in the U.S. means that I get a bird’s eye view into the latest trends driving both startups and customer traction.  Having this balance on the board for a company like Amazon has been very helpful for the company’s growth,” added Alberg.

Madrona has created strong ties with Seattle anchors, Amazon and Microsoft.  The firm holds regular briefings with both companies in key technology areas such as cloud, productivity and new user interfaces such as voice.  This connectivity in an increasingly competitive world is helpful for entrepreneurs of early and mid stage companies.

 

 

 

 

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