Introduction to the Podcast (00:00:02)
Julian Castelli welcomes listeners and introduces the theme of effective hiring in tech companies.
The Importance of Hiring Slowly (00:00:27)
Discussion on the balance between hiring slowly and ensuring quality hires without unnecessary delays.
Structured Hiring Processes (00:01:13)
Emphasis on using structured and data-driven approaches to improve hiring quality.
Challenges in Hiring (00:02:22)
Exploration of the difficulties and anxieties associated with the hiring process.
Refining the Hiring Process (00:05:22)
Suggestions for creating a structured hiring process to improve outcomes.
Standard Job Descriptions (00:06:25)
Importance of having standardized job descriptions across teams for clarity and consistency.
Defining Roles and Responsibilities (00:07:19)
Focus on specifying clear outcomes and responsibilities in job descriptions.
Professional Qualifications and Characteristics (00:08:17)
Advice on limiting qualifications and personal characteristics to ensure focused evaluations.
Screening Interview Process (00:10:23)
Recommendation for a preliminary screening to filter candidates before executive interviews.
Standardized Scorecards (00:10:30)
Introduction of a standardized scorecard for consistent evaluation of candidates.
Interview Structure and Evidence Gathering (00:11:30)
Outline of how to conduct interviews using scorecards to gather compelling evidence.
Scoring Candidates (00:14:18)
Explanation of how to score candidates based on their interview performance and characteristics.
Data-Driven Decision Making (00:16:08)
Highlighting the benefits of using data from scorecards to make informed hiring decisions.
Collaborative Review of Scores (00:17:07)
Encouragement for team discussions to refine candidate evaluations based on scorecard data.
Data-Driven Hiring Process (00:18:06)
Discussion on using data to identify top candidates through structured interviews and scorecards.
Structured Approach Benefits (00:18:55)
Explains how a disciplined, structured hiring process can lead to better outcomes without taking much extra time.
Confidence in Hiring (00:19:59)
Emphasizes the importance of structured job descriptions and processes in enabling confident hiring decisions.
Closing Remarks and Resources (00:20:28)
Encourages listeners to subscribe, recommend the podcast, and explore additional resources on leadership.

Speaker 1
00:00:02
Welcome to the Growth Elevated Leadership podcast with Julian Castelli. Each week, we talk with senior tech leaders to explore stories and insights about the challenges involved with growing technology companies. We hope that these stories can help you become a better leader and help you navigate your own growth journey.

Speaker 1
00:00:27
Hey gang! Today’s topic is how to hire slow and how to hire well. Previously in the earlier podcast, we we identified the theme and it was a trail marker about firing fast and hiring slow. And the point about hiring slow is not so much that you want it to be a slow process, but you want to hire well. And that implies that sometimes you want to take your time to make sure you get it right. And today we’re going to talk about how to actually do that. The key to do that is using a structured hiring process. Structure and data is the key to increase the quality of your hires, and you’re going to be using standardized hiring tools to make sure that you can get it right. Simple.

Speaker 1
00:01:13
The simplest, summary is we want to have standardized job descriptions, standardized scorecards, and a standardized process. And by doing that across your teams consistently, you will get better and better at this. And you can make hiring a competitive advantage. Now, why are we talking about this today? You know we we said fire fast, hire slow. And we kind of left it there and said that’s just important. We talked about why that’s difficult. And one of the reasons it’s so difficult is that hiring is hiring is difficult. And some people are intimidated by the hiring process. And one of the reasons that your your instinct isn’t to go slow is like, you have a job that’s open. You have, work that’s not getting done. You have anxiety about the process. And so you tend to reach sometimes we all do. We tend to put hope into our equation. We tend to read experiences into candidates, hoping that they can develop into what we’re what we’re looking for, which is a solution, rather than using a data driven approach that really can help you both stack rank your candidates in a consistent manner.

Speaker 1
00:02:22
Get the input from all of your hiring professionals who are involved. Do it in a consistent way and get better and better at it. And most importantly, if you get to the point where you have a great process, you can have confidence that you can go hire an A player. Well, guess what, then you’re not going to be concerned about, you know, not firing someone faster when it’s not working out. You’re not going to try to rush a process because you’re going to have that confidence. So our our whole goal today is to talk about how to hire slow and how to hire. Well, okay. Now the reason we’re bringing this up is I have had conversations with management teams all the time, and I am surprised how few teams really take the time to create a structured hiring process. In fact, in many cases, hiring is as simple as passing out resumes and getting people on calendars and then having, you know, a slack exchange regarding, you know, who do you like best? What did you think? What did you think? you might have you might take think about all the time you’re taking you’re taking an interview time for candidates.

Speaker 1
00:03:26
You’re taking members of your executive team for hours to, to get do these interviews. And then maybe you’re getting back together, but, you know, maybe it’s, it’s a little bit less formal. That’s very expensive process. And you multiply that times five candidates, ten candidates, whatever it might be. Of course, this is an intimidating process. And you’re you’re really anxious to get it done quickly. And you’re really anxious that you might make a mistake. There’s lots of risk. So you know that that is not the best way to do it. And that leads to that that dynamic where you’re anxious anxious to fire fast and high or slow. And when you’re not data driven, when you’re not consistent, you can end up using circumstantial clues as to I liked that candidate or, you know, what do you think about that candidate? Okay, you like them, I missed maybe maybe I missed something in my interview must maybe I like them as well. Or you might default to kind of the resume too much and say, oh, I like that person who worked at so-and-so company.

Speaker 1
00:04:24
Let’s just go with them. That feels like the safe hire, right? The old adage, no one gets fired for hiring IBM. You know, same sort of thing. Maybe no one’s going to get fired by hiring someone who’s got a great resume, but you’re still maybe missing something because maybe they got lucky and got to work at a great company, but really weren’t critical for that factor. All these things can lead to mistakes, and mistakes can create mis hires. and, you know, ultimately you’re back in that same doom loop where now all of a sudden, if you hire someone poorly, you’ve wasted all that time, wasted all that money and fixing the problem. And now you’re stuck saying, man, should we stick with this person and give them more chance? Or should we fire fast? And then because you’re not confident in your hiring process, you get stuck in that doom loop even longer. So that those are all the reasons why I want to suggest it may be worthwhile spending some time really refining your hiring process and putting a little structure into it.

Speaker 1
00:05:22
And I think the good news that I want to share with you today is it’s not that hard. The key is structure and standardization and getting everyone to be on the same page. There are four things I want I want to talk about. The first is the standard job description okay. Then a standardized candidate scorecard, then a standard hiring process. And then ultimately, you know, a, a standard, review of all that to, to keep making the process better and better. Okay. So let’s go through those one at a time. A job description Everyone has job descriptions. This is pretty straightforward. But you know, obviously you should have a standardized company description. I shouldn’t have to say that, but I literally I’ve been at companies where people are creating their own ones. So marketing’s got one job description, R&D has another one. You know, the sales and marketing team may have a different one, may have a different one. There should be a standardized company description that’s attractive, that is is marketing oriented and really helps your company shine.

Speaker 1
00:06:25
That probably comes from the HR department, just like the last section of your job description. The compensation next steps that should be standardized probably come from your HR department. Okay, then there are three sections that really should come from the hiring manager, the person responsible for making this hire, and who has the problem that they’re trying to fill a role. Okay. Those three sections are the role responsibilities and outcomes, the professional qualifications that you’d like to have for this, this candidate and the personal characteristics. Okay. So there’s just three groups. Let’s go through them one at a time, okay. Roles and responsibilities and outcomes. Okay. It’s basically what is it that we are hiring you to do in this job? And the reason I like outcomes, if you can get to an outcome, you’re not just saying, hey, you know, you show up and do this job, you’re saying this is what success looks like, right? So if I’m hiring a financial professional, it’s not just close the books.

Speaker 1
00:07:19
It is. The books are closed by the 15th day of the month, consistently and accurately. And, you know, we improve our clothes from the 25th day to the 15th day. That’s an outcome. It shows the candidate what you’re trying to achieve, shows them what success look like. And yes, it also explains the responsibility. Now, it’s important not to just put so many, responsibilities and outcomes in there that you just, you know, you, you, you use a shotgun approach, okay? You’re probably to come up with a list of ten. I’m going to encourage you to do no more than five key responsibilities. Just like the same with qualifications and personal characteristics, I would encourage you to have, you know, a total of maybe 12 to 15, which means you have 4 or 5 of each. It doesn’t mean that those are the only ones, but very importantly, it means they’re the most important responsibilities. They’re the most important professional qualifications. They’re the most important personal characteristics.

Speaker 1
00:08:17
Remember, we are trying to really focus on the most important ones because everyone’s going to probe on those criteria, and we’re going to stack, rank and score the candidates on those criteria. So if you have ten responsibilities and ten qualifications and ten characteristics, guess what? First of all, you’re scattered. You can’t really find a unicorn that has everything great. So if everything matters, nothing really matters. But secondly, you’re not going to naturally go and have consistent comparisons because some people are going to focus on numbers six and eight and ten. Other people focus on two and four, and you’re not going to be able to have a consistent comparison across interviews. And you’re also not going to be able to score that many items like 30 different items, it becomes just unwieldy. So I like to see you have three groups times four would be 12 or 3 groups of five. You have 15 total. Okay. So you have that and that’s what you put in your job description. So you got company description.

Speaker 1
00:09:14
You have the job responsibilities and outcomes number. Section two. Section three is the professional qualifications you’re looking for. Section three are the personal characteristics of the person that role. That would be great. Then you have a standardized compensation. Next step. You put that job description out there. And that should be a very straightforward process okay. Now we get into the interviews. For process wise, I like to have a screening interviewer who is going through and screening and making sure that they have the professional qualifications, salary and availability taken care of. And that allows you to take maybe it’s a pile of 30 or 40 candidates and whittle it down to 5 or 6, right? So I definitely encourage you to have a screening process. You’re not taking your your executives time for screening. By the time they get to you, you know, they have the qualifications. You know that the salary and the job description works in terms of where they have to be location, availability, salary, all those things. So you can get really down to the most important outcomes and responsibilities and the most important personal characteristics.

Speaker 1
00:10:23
That’s where you have your senior people doing the interviews. Okay. So what I recommend doing is creating a standardized scorecard. And I say standardize. You should create one template for the company. And then the hiring manager should customize the specifics for each job role. And guess what? Those specifics the responsibilities and outcomes come right off the job description. So you take the 2 to 3 most important responsibilities and job outcomes, and you put them right into the scorecard. Then you take the most important 2 or 3 personal characteristics, and you put them right in the scorecard. And guess what? This is the same responsibilities and characteristics for everyone. They’re going to have the same scorecard. So Max you’re going to have six grading criteria. Let’s assume you go and take three and three. You’re going to have six responsibility or outcomes and six characteristics. That becomes the grid that you’re measuring scores on. Okay. Guess what. That also becomes your interview guide. Now you go through you have maybe five minutes of niceties and background.

Speaker 1
00:11:30
You kind of describe how much time you’re going to take for asking questions, and then boom, you’re going down those six sets of questions that you’re trying to ask to get compelling evidence. Okay, so if the responsibility is to to hire and train a sales team, okay, great. I’ve got to come up with a grade 1 to 5 on this person’s ability to do do that. And has that person driven that in the past? What is the compelling evidence I can use to give this guy a grade, or this woman a grade on their ability to hire and hire and train and manage salespeople? Well, I’m going to ask questions specifically about that. The scorecard is going to have a section for compelling evidence that, you know, what are the types of things that I’m going to look for. I might ask, you know, have they done it in the past? I might ask them to tell me stories about how they solve problems with sales teams in the past. I might ask them how they recruit.

Speaker 1
00:12:27
and I have a section on that scorecard for both the types of compelling evidence I’m looking for, as well as the notes. The answer, the question. Okay, again, this is a lot of structure, but it gives everybody a consistent way to evaluate how can I come up with a score on that specific criteria, of a of a job outcome. Another one might be a personal characteristic. Same sort of deal. Okay. Personal characteristic might be, you know, a get it, you know, get stuff done type of character who doesn’t quit until the job is done and is consistent, consistently completing work to to to above above standard. Right. Okay. So that’s a personal characteristic, you know, what does it mean? Okay. What’s the compelling evidence? I’m looking for evidence of doing it in the past. I’m looking at examples like, you know, where you know, how they how they manage to do that. I’m looking for, examples as to why they’re driven to to be detail oriented and get work done, and they can’t stand not having things done.

Speaker 1
00:13:28
So I’ve got some clues in terms of what compelling evidence looks like. I’m going to ask those questions, and then I’m going to take the notes. Right. And if someone knocks it out of the park, excuse me. If someone knocks it out of the park, I might be really impressed. I’m going to give this person a four or a five. I’m going to have the notes. Why? Oh, well, remember that story that this person told about, staying up till midnight? Because they had a board meeting the next night and they just had to get it done. I’m going to. I’m going to reference that story later on in the process, or I’m going to, you know, I’m going to take the notes related to what the evidence suggested. If I have a low score, maybe it’s a one. Hey man, this person’s only worked a couple times. And, you know, they really couldn’t speak to, you know, getting stuff done and taking that personal responsibility. In fact, some of the conversation made me a little nervous.

Speaker 1
00:14:18
I might take a note about what made me nervous and put a one down there. Okay, so standardized scorecards, they have 4 to 6 responsibilities and characteristics. They have the type of compelling evidence you’re looking for. They have a section for notes and they have a section for a grade. And you have to put a grade in one through five. All right. At the end of this process, when you’ve completed your interview, you are going to have a number. You know, it’s maybe it’s a 3.5, maybe it’s a 1.5, maybe it’s a 4.5. And your first interview, you’re going to have a number. You’re like, okay, well, I think I think this person was a 4.2. That’s what my average was. That’s pretty good. It’s a it’s in the in the fours. Now I go and interview 3 or 4 more people and I get better at this interview. Right. So let’s say I’m doing the sales person hire or the sales leader hire. By the time I’ve done the fourth one, I mean, I thought, you know, a four was, you know, candidate number one answer.

Speaker 1
00:15:14
But man, candidate number four really blew me away. I can go back and change my grades. The key is that the individual who’s making the grades stack ranks everyone they interview on that 1 to 5 scale. So if the best person I interview is much better than the second best person, and I get given that second best person, maybe a 4.4 or a five on something, and then someone sets the bar as this is what a five looks like, I can go back and say, okay, well, the second candidate, I’m going to give a five and I’m going to move that that first candidate back to a three. As long as you’re stack ranking the candidates compared to each other, that’s what we’re trying to do is we’re trying to you know, get the best candidate from the group that we’re able to to bring into the process. And if everyone does that consistently within their own scorecards, that’s perfectly fine. And when you add those scorecards up, ultimately I’m going to have a grade for this candidate.

Speaker 1
00:16:08
You’re going to have a great for this candidate. We’ll have hopefully 4 or 5, and we’re going to have grades for every candidate. And we’re going very quickly. See okay, you know who’s who’s winning in the stack rank candidate scorecard for total score. And then we can go see, you know, we can look at the scores for every character characteristic. And that gives you so much data. Think about that process. Imagine, you know, we’ve taken two weeks, we’ve interviewed five candidates and we have data. We know where everyone stands between 1 and 5. And we can drill into okay, how are they at this outcome. You know, what’s the evidence. You know who’s who, who scored them where. How are they at this personal characteristic. Why. You know, why is this person higher than that one. You have all the data now and and you can make a data driven decision, Okay. That is that is the scorecard process. Then after that, obviously you look at the scorecard, this is typically done in a Google sheet or a spreadsheet.

Speaker 1
00:17:07
So it’s a live document. You know, you can you can, once you’ve done your interviews, you can compare notes and you can get together and you can drill down and really go into the specifics of where you have conviction. And maybe there’s an area where you didn’t get to make every question, finish every question you wanted. Well, you can go to other people and say, hey, you know, on this on this criteria for I didn’t get a great story there, but I also didn’t have evidence that they’re not good at it. And you can go to someone who may have gotten a good, good story score and say, tell me what, what you what what did you hear on that, on that, characteristic that made you, give you the confidence to make that that score and their conviction is going to help you, and it’s going to be specific. It’s based on a specific characteristic you’re looking for. It’s going to be based on specific interview feedback that they got. It’s not going to be the kind of conversation I referenced earlier, like, well, I really like the guy, or I really like the gal or, you know, I think that, you know, this guy is going to do a good job.

Speaker 1
00:18:06
She seems seemed like a good egg. You know, whatever it might be, it’s going to be data driven, okay. And you get together and you look at that and guess what? If you don’t have a 4.5 or someone like whatever your criteria is, that feels great. Keep interviewing. Right. So you maybe have five. Let’s let’s interview ten and we’ve got ten. You’re going to have a a bell curve. And you know the top candidates are going to become obvious just from the data. And you know using this process I haven’t had a situation yet where, you know, I’ve had just like I didn’t feel best in my gut about the people with the best grades. It tends to line up, but it gives you much more conviction. Okay, so that’s the process. I think it really helps the reason we want to do this, why do we want to do it this way? It’s really not a lot much longer. It doesn’t take much more time. It takes a little work up time up front.

Speaker 1
00:18:55
It takes a little more discipline to make sure that everyone follows the process, but it ends up giving you data so you can make data driven decisions, and ultimately you’re going to have better outcomes. So that’s the process. we, you know, again, we comes back from fire fast and high or slow. That’s really hard. It’s painful. But if you actually hire in a structured way. So I might posit that instead of hiring slow hire in a structured way with data and with consistency, guess what? Maybe it doesn’t have to be so slow. Or at a minimum, it’s not going to be so painful. And when you have confidence that you can hire an a player, then firing someone is not risky because you know you can upgrade the position because you have a competitive advantage. You hire a players based on a data driven, structured process, and that gives you confidence to do that. And you can have that confidence if you have a structured job description, a structured candidate scorecard and a structured interview process.

Speaker 1
00:19:59
All right. So that is our trail marker for the day. I hope it’s helpful for you. we have a blog about this at Growth elevated.com. If you want to read there’s a little bit more detail there. And as always, please check out, other podcasts and blogs at Growth elevated.com if you want to learn how to be a better leader, and if you got topics for us or guests for the podcast, please send them our way at info at Growth elevated.com. Thank you.

Speaker 1
00:20:28
Thank you for listening to the Growth Elevated Leadership podcast. If you enjoyed this episode, would you please follow us and subscribe on your favorite podcast player and we’d be grateful if you recommend it to a friend. If you’d like more resources on how to become a better leader in business, we invite you to visit us at Growth elevated.com. We’ll be back next week with more insight from another great tech leader. Thank you.

Speaker 1 00:00:02 Welcome to the Growth Elevated Leadership podcast with Julian Castelli. Each week, we talk with senior tech leaders to explore stories and insights about the challenges involved with growing technology companies. We hope that these stories can help you become a better leader and help you navigate your own growth journey. Speaker 2 00:00:27 Hello, this is Julian Castelli. I’m the host of the Growth Elevated Leadership podcast, where each month we talk with inspirational entrepreneurs and leaders in the tech industry. Past guests have included CEOs and CXOs of great companies like Work Front, CG healthcare, Radical Systems, and Moment, Vox, Pop me, the San Francisco 40 Niners, and many more. This episode is brought to you by Growth Elevated. Growth elevated is a community of tech founders, CEOs, and CXOs who are committed to working together to share best practices and learning an effort to help all of us become better, better leaders. We do this through educational programs like this podcast, as well as our blog and of course, our annual Tech Summit, which just so happens to be at the base of beautiful Park City Mountain. Speaker 2 00:01:10 So if you enjoy skiing and winter sports and talking tech, check us out at Growth elevated.com. You can subscribe to this podcast wherever you listen to podcasts, and please consider joining us this winter. Today I am super excited about talking to Rob Castaneda from Australia and service rocket. Rob is an Australian entrepreneur who has lived in Palo Alto since 2008. The company he founded in bootstrap service, rocket, is behind some of the biggest names in our industry, none of them bigger than Atlassian, and we’re going to talk about the role Rob has played in making Atlassian one of the leaders in the software space. Rob and his team have been working with Atlassian since 2003, and helping to build the Atlassian ecosystem from Australia. Since then, Service Rocket has helped dozens of software companies and thousands thousands of enterprise customers across the chasm drive adoption and revenue growth. Outside of service, rocket Rob serves as the president of EO Entrepreneurs Organization, is an active member of Ypo, and serves on the North American Board for the University of Technology, Sydney. Speaker 2 00:02:20 Now, he claims he’s a lousy triathlete and has a family who tolerates his intense passion for software and bad jokes. Please welcome Rob Castaneda. Hey, Rob. Speaker 3 00:02:29 G’day. Thanks for having me. Speaker 2 00:02:32 Just to start with a with a lousy joke or one story based on based on, you know, the background. Speaker 3 00:02:40 Well, I, I, I am a lousy triathlete, proudly. And, I, I was challenged in 2018 to do the Santa Cruz, half Ironman by one of my, my team members, one of our rocketeers, and I, I said yes. And then after that, I realized that I couldn’t swim. And so I had to learn how to swim. And it’s been an amazing journey. And I’ve learned a few tips and tricks, for triathlon. And the first one is, you you don’t talk to people who do triathlon about triathlon. You talk to people who don’t do it. So when you say you do a half Ironman, they don’t know the difference between a full and a half. Speaker 3 00:03:24 that’s still pretty intense. Speaker 2 00:03:25 What for? For a non swimmer. What’s the what’s the swim on a half trial. Half Ironman. Speaker 3 00:03:29 It’s a 1.2 mile swim. it’s a 56 bike, 56 mile bike and a half marathon, but, the. I guess the real trick is when you, when you talk to people who do triathlon about your time, the lower the time, the more impressive. And when you talk to people who don’t know triathlon. That’s right. The longer the time, the more impressive. Speaker 2 00:03:50 And so I can’t believe you’d be gruelling for that long. You do it, my God, man. And are you crazy? Speaker 3 00:03:57 That’s right. So that’s what I learned. And the other one is to always just doesn’t matter how how fast your your walking or jogging or whatever. You just have to know where the photographers are so you can flex your muscles for the camera so you can get the photos. And there you go. If you do that and have a good time and have a smile on your face, yeah, yeah. Speaker 2 00:04:14 If you have that photo on the shelf and then you can remember the positives, right? Speaker 3 00:04:18 That’s right, that’s right. Speaker 2 00:04:19 Well, you’re you’re a better man than I am. I tried to run a marathon once, and I had a last minute injury that prevented me from from doing that. But I certainly admire your work there. So. So, Rob, I’ve enjoyed getting to know you over the last few months. we know each other through ypo. And then we’ve also done some work where I had the chance to learn about Service Rocket. And so I’m so grateful that you came on today to tell us a little bit about the company. Yeah. Speaker 3 00:04:42 Thank you. Speaker 2 00:04:44 Tell us about, Service Rocket. What do you do? Who are your customers and how do you help them? Yeah. Speaker 3 00:04:48 So, you know, maybe a little bit about how I got started. I was working I started off at the the help desk of a company called Borland Software and working in the Delphi C plus plus and the initial Java J builder days. Speaker 3 00:05:04 and from that I got into enterprise Java, but I worked on the helpdesk and when I got into the enterprise Java space, there were these parallel worlds of the the commercial side of things, WebLogic and, and things like that. And then there was the open source world, JBoss and others. And so I was. Teaching courses. on on WebLogic. And at nighttime I was hacking on open source in JBoss. And I got to really understand the, the the beauty of an open source community and how those relationships work as well as, hey, what drives commercial success and kind of working that that intersection between knowing the technology training and getting people to adopt it and use it and how it all works. so that was that was kind of my background. And then in 2001, I went back to Australia after working in the Valley, and I started the company, teaching training courses, for WebLogic and Web methods and Java and Sun Microsystems back then and then we, stumbled across through, through a connection in Silicon Valley. Speaker 3 00:06:18 a friend said, hey, do you know, do you know Mike and Scott? They’re they’re doing some work in the same open source Java area. And it turns out we’re on the same block in Sydney. And, we had kind of heard of each other and we, we met together. And then I learnt, what they were doing with Jira at that stage. And it was still very early days. They, they were actually a services company that started building, Jira to manage that business. And we were doing a bunch of project work back then, and we were using Mantis and Bugzilla, and then we said, okay, let’s switch in and start putting in Jira. And very quickly we, we developed a great relationship where they were very, very disciplined and focused in the beginning of like, no, we’ve done a little bit of the services thing. We don’t want to do that. We’re going to build a product. And there was a very clear boundary for them of what they wanted to do and, and didn’t want to do. Speaker 3 00:07:16 And so, we quickly became a bit of a case study that they could push their customers to. It’s like, okay, yeah, talk to Rob and his team. and, have a look at what they’re doing. And so from there, we just. Speaker 2 00:07:33 Were you kind of still evolving and the founding of the business, did you? So you kind of were right there at the early stage of. Yeah, I’ve been running and as service rocket on the stage at this point, or is it just Rob and friends, we were. Speaker 3 00:07:46 Called we were called customer back then. Okay. And I had started the year before they started. Okay. And so I had a, I had a a profitable small growing training and implementation business. Okay. So I was teaching Java and Tui and doing some, doing some projects. and so we were already running as a business. Okay. And so then meeting up, meeting Mike and Scott was like, okay, great. How do how do we use that technology and replace and replace some of the things we were using. Speaker 2 00:08:20 And so you became a customer of the product itself? Speaker 3 00:08:24 Yeah, we actually became a customer. and we were doing so as an extra. Yeah. Customer of JIRA. And we were doing work for a small pharmaceutical company called Johnson and Johnson and, Speaker 2 00:08:37 Just just a small one, Speaker 3 00:08:39 Yeah, a small company. I’ve heard of them. We needed a little workflow engine for a project. And back in those days, if you bought Jira, you got the source code because the last one had a bit of an open source heritage. Okay, so if you bought the enterprise version for 2000 bucks, you got the source code. So I remember talking to Mike saying, hey, I need a workflow engine for this project for for Jay and Jay. I’m going to buy Jira, and I’m going to just use the workflow engine for non bug tracking purposes. And so it was really the genesis of a few things one. We from that deal. We co-wrote the resale program to say, okay, we’re going to resell it, right? so we needed an agreement and. Speaker 2 00:09:27 You had to give J&J a license of the tool as well. Yep. Yeah. Speaker 3 00:09:30 So, so that that was the genesis to actually create the resell agreement. and so we did that. And what it also started I think now, which is very relevant if you look at what what they’re doing is non non bug tracking use cases. Speaker 2 00:09:48 Yeah. Speaker 3 00:09:49 Right. So now it’s the system of work or work management. Yeah. And so so that’s how that Genesis or the how that, how that started. over time though the repeatable pattern has been. Listening to the customer base. And being able to respond to their needs in a very service oriented way that we have an eye on how to scale. And so, we, you know, multiple programs we did. But, you know, one would be training as an example where, there were a couple of requests coming in for training. And, you know, you would think, what do you need to do to train customers on how to log bugs, right? And, what we did is we built a short three hour training course. Speaker 3 00:10:41 And back then in like 2004, 2005. Training was done in person, and doing training over webinars wasn’t wasn’t a common thing like it is now, right? And so we built a three hour course and we have to do three hours because we were in Sydney training us customers. We could do them in the afternoons, us time. And what we realized was that, if you go back to Geoffrey Moore’s work on Crossing the Chasm. Yep. jeera was absorbed. Really quickly. It was eaten up by early adopters. Right. Every every engineering lead would have a computer under their desk running Jira. And that’s how they were running their team. And that person actually didn’t need training. What we realized was that the person that wanted the training was kind of like the late, the late adopter or the early majority on the other side. Right. Speaker 2 00:11:40 Yep. Speaker 3 00:11:41 And they were asking this person hey I want to use Jira too. Right. And so we actually built and marketed the course in a way that the early adopter could refer the course. Speaker 3 00:11:56 To the early majority. Speaker 2 00:11:57 Okay. Speaker 3 00:11:58 Right. Speaker 2 00:11:59 You were a bridge for the chasm. Of course. Speaker 3 00:12:01 Was the bridge for Jira? Speaker 2 00:12:03 Yeah. Speaker 3 00:12:03 We ended up teaching 80,000 students. Speaker 2 00:12:06 Holy cow. Speaker 3 00:12:06 How to use Jira. And. And none of them were early adopters, right? Yeah, right. So what? Speaker 2 00:12:13 Early adopters don’t use training. Speaker 3 00:12:15 Usually they figured adopters don’t want training. But what we built, we built the training as a bit of a shield for the early adopter, because the one thing we realized with early adopters is they they love talking about their successes. But they don’t like helping you do it. Speaker 2 00:12:30 No, they don’t want to. They don’t want to. They don’t need training and they don’t want to be trainers. Speaker 3 00:12:33 Yes. They don’t have time. They want to move on to the next thing. And so I think as a, as a, as a solution or a software or product, once you’ve got the attention of an early adopter, you’ve got to use their energy. In this case, it was through training to push to the the early majority. Speaker 3 00:12:50 And the early majority was like, yes, I want to get my all my teams trained and we all want to do it properly. And, you know, it’s a different cadence but in a different tempo. But but we successfully did that. And you know, you would think teaching 80,000 people how to, how to log bugs and do that stuff would be, you know, not necessary, but it really helped, turn one instance, you know, at a large bank into, you know, 12 instances, right? Because you have 12 project managers. All right. You start scaling. Right. And so that that kind of network effect then happened, you know, there are many things running in parallel. But that was one example of. Of doing that as training. And what we also realized was that I have a big training background, but, you know, the. The free training isn’t as as valued as paid training. Right. And just like if if Harvard put all of their courses online on YouTube, which you can get most of the material for things, it doesn’t have the same value as someone going to do a degree. Speaker 3 00:13:54 Right. And so we put value on these courses. And and you know, we realize that, you know, companies have training budget that they want to spend. And how do we tap into that and use the resources of the enterprise to pay to deploy product? Sure. And through learning, is one way to do that. So there was that there was a really smart, API and plug in strategy that, that, Atlassian had, which turned into the App Store eventually. And we built the, you know, some of the very first apps were open source and we nurtured those through. We had the first commercial apps to prove that model. and I moved back to the US, you know, in 2008. And to help build out, let’s. Speaker 2 00:14:43 Let’s book in. You started working here, you know, incredible story. You were you were kind of, you know, peers and colleagues or the founders of Atlassian in Australia, one of the best Australian success stories in SAS ever. And that’s around 22, 2003. Speaker 2 00:14:58 You started working with them? Speaker 3 00:14:59 Yep, yep. Speaker 2 00:15:00 Okay. And when you started your company, how large were you? Speaker 3 00:15:05 it was just myself when I started. So that was me. And, I bootstrapped it, teaching training courses. Okay. there was no, you know, I had a one page plan of, like, hey, you know, teach people how to use technology and, do that through Asia Pacific. That was that was going to be my focus. but pretty quickly we got pulled back to the US to, to to do that. Speaker 2 00:15:33 So and so today, 20 years later, you know, you, you, you, you obviously managed to grow with it last year and provide all sorts of professional services for them. But describe your company just in general today. Service rocket. How large are you. And and you know, how do you typically, who do you work with and what do you what problem do you solve for them? Speaker 3 00:15:54 Yeah. So we’re just under 300 people now, operating in ten countries. Speaker 3 00:15:59 So we spend the world, and we the goal is not to grow headcount crazily for the sake of just growing headcount. and I would say we we have two main customer bases. The first one is. We we get called into a lot of fast growing technology companies here in the Valley or around the world who, hey, we need to build ecosystem. How do we do it? And you know companies we’ve done that for would include Metta. We were very early on in the Facebook at work program. there’s a lot of other, you know, open source slash tech that we’ve done. we’re doing some work in the Miro space right now. And The when we approach any particular space we’re trying to work on. Okay, what is unique about this space and what is the customer base and what what are they trying to do so we can help grow adoption? and I think a lot of founders look at Atlassian and say, I want that. And what that is right now is might be a thousand resellers on their website. Speaker 3 00:17:12 And. Just trying to recruit resellers, right. And I think rather than copying anyone’s particular program, what you would want to do as a founder is copy the journey of how they got there. But it’s your journey of how your customer base is working and how you take your early adopter customers learn from them. And how do you get your product from those early adopter customers to their early majority in those enterprises? So that so that you work out what those scale patterns are? and I think Atlassian really mastered doing that themselves and also leveraging the pieces that they definitely didn’t want to do. Speaker 2 00:17:53 And training was the first one that you, you found. Speaker 3 00:17:56 Their training was one. Support was one. apps is another. And you know, from there obviously professional services and we do a lot of professional services and managed services now. Speaker 2 00:18:09 what type of professional services? Speaker 3 00:18:11 Yeah. So professional services, the what we what we do in. And the way we think about it is, essentially how do you enable a customer to, to get started, get quickly launched, and then how do you empower them to keep going? So our mindset on this isn’t get as many projects from a customer as possible. Speaker 3 00:18:35 The the goal is get a project, get platform in. And then what we look to do is build what we call a center of excellence and a center of excellence. is effectively how do you help the customer run a program? Right? So if you’re putting in any infrastructure, the early adopter will will get it going. But then how does the how does the enterprise get ROI? The cost? The enterprise will get ROI if they roll three, 4 or 5, ten, 15, 20 initiatives through that platform. Speaker 2 00:19:14 So let me let me back up a little bit. When you talk about enabling, you’re talking about it, IT services, helping them create integrations, create customizations. Do do you know do work to make sure that that platform, delivers the value that, that ultimately is, intended, but based on the custom circumstances of that client. Is that a reasonable. Yeah. Speaker 3 00:19:39 You. Yeah. You have to lean in and get very specific. Yeah. So that you can pull back and identify the patterns. Speaker 2 00:19:48 Yes. Speaker 3 00:19:49 And, you have to go in. You have to build the success stories. And in every in every case there’s new ones. Right. And I think there is our industry on the product side in many ways is, doesn’t like the nuance and doesn’t like hunting for the nuance. Right? Because it’s not generic, it’s not perceived scalable. And I think it’s a case of I think you need to know it, learn it, grab it, because that that becomes the secret sauce in your whole product solution, whether that be product service, whether. Speaker 2 00:20:24 You’re talking about a good partner that has someone like yourself to work with so you can capture that nuance. But I think, just let me just dumb it down to language that our listeners will understand. If you’re a SaaS company, you’re your venture capitalist is probably telling you that we’re going to value you based on subscription revenue. Yeah. You know, you know, you are a SaaS business with one platform, and we’re not going to do custom software, right. Speaker 2 00:20:49 You know, and, we, we, we want to solve the customer’s problems, but they, you know, their, their specific needs will go on to our roadmap and we will roll those out in a scalable part of the application over time. But I think that while that is conventional wisdom and it suits one set of ambitions, it leaves the customer often with gaps, right? Yeah. And you’re talking about is filling those gaps. And not only, you know, the not only the obvious ones that are there up front, like we need to integrate to the API or whatever it might be. But when you just talk about discovery, you’re saying, you know, I think you’re talking about a really refined understanding of, yeah, we’ll do the first few things, but then more importantly, we’ll understand what’s needed for them to go and cross the chasm within their organization. Is that hearing you correctly? Speaker 3 00:21:36 Yeah, totally. You’re like spot on, right? The the. If you don’t get it across there, I think we’ll just chatting before. Speaker 3 00:21:46 Right. It becomes like tech enabled. Self-Aware. Right. Speaker 2 00:21:49 Say that again. Speaker 3 00:21:50 Like tech enabled. Self-Aware, right? Yeah. Speaker 2 00:21:53 Because if they can’t use it in their ecosystem the way they do, they do business, right? Yeah. Then you know and that’s and that of course will lead to churn. Speaker 3 00:22:02 Correct. So that’s that’s basically I think the way I think about it in our company is logos don’t buy software. People, right? Yeah. So when when our sales team comes back saying, hey, we we close this customer and they give me a logo, I’m like, that logo didn’t buy it. Somebody at the company bought it. Right. And if that person isn’t early adopter that’s great. You now have a window to expand that. Otherwise they’re going to move on to something else. Right. And and that’s okay. They might renew a few times, but if no one’s continually expanding then something else is right. And so I think understanding who the early adopter is or the champion. Speaker 3 00:22:51 Right. Another word for that. and these concepts are in Geoffrey Moore’s Crossing the Chasm book. I think a lot of people just look at the, the, the curve diagram and that’s it. There’s another diagram which is the it looks like a pizza. Right. And it’s a, it’s a round circle, looks like a pizza or a turtle shell. And it’s basically in the middle. It’s two concentric circles in the middle is the core product. And on the outside is basically what what Jeffrey Moore calls the whole product. Right. And it’s basically your your SaaS product in this example and all the things the customer needs to make it successful and get and. Speaker 2 00:23:27 Run in their ecosystem right. Speaker 3 00:23:29 Inside of their business. Speaker 2 00:23:30 Right. And that’s and just to be clear, there’s all that stuff that needs to be discovered and provided for. And so you’re a natural partner for a SaaS company because they’re going to provide the platform. They might have a customer success team, but they probably don’t have the professional services to do all that custom work. Speaker 2 00:23:46 And that’s where Service Rocket is available in a flexible fashion with your, your 300, engineers to really both, you know, how much do you do discovering versus just fulfilling what’s been discovered by the customer? Speaker 3 00:24:00 I think there’s a lot of discovery. the. You know, in trying to build an ecosystem like it, logically, it fits right. Oh, grab a partner, they’ll go and do that. And I think the, the, the double click into this is. How do you build an ecosystem? Speaker 2 00:24:18 And what’s the ecosystem? Speaker 3 00:24:20 And an ecosystem is when you have many partners. That are. And I think of it like a forest. Right. You have some foundational trees, right? That that are really the backbone of what that is. But then you have other partners doing niche things that, you know, you don’t go to a forest and there’s one tree, right, right, right. Speaker 2 00:24:42 So it’s more complicated than you think. Speaker 3 00:24:44 And you don’t go to a, you know, a bunch of bushes and go, great, look at this ecosystem. Speaker 3 00:24:49 You kind of need a combination of things. So I think there’s some foundations that need to be planted and the ones that have been successful, and the model we work under is where you. Where you can work with a partner and understand that that first 1 or 2 foundational partners, and usually you have enough bandwidth for one. You need to help them build a profitable business. Right. So a lot of what happens is that, and I’ll simplify. Right. SAS company sells customer wants more and more and more. The SAS company says stop. We can’t do any more of this custom stuff. Right? Because my investors don’t want me to do the services work. We’re going to do the the product only. and so at some stage you’re like, great, let’s bring someone else in to do that. Right. Now, the initial bootstrap of that relationship is really important. And the and it’s natural to be like, oh, let’s try a little bit and see how it goes. And so oh we could do that ourselves. Speaker 3 00:25:57 Or someone can do that in engineering in their spare time, you know. Or or hey, let’s hire a services lead so we can do the ones we want to do, and then we can give out the other ones. And so inevitably, there’s not a lot enough clarity. And when working with a partner, right. Whether it’s us or anybody else, the if you don’t build enough of a book of business. For that partner to actually run a PNL. Then. Then they’re going to give you. A limited amount of investment before they have to go and make money somewhere else. And so the one of the biggest pieces of advice that I would give if you’re going to build a partner ecosystem is pick the foundational trees or tree. And invest in it. Right? Have some visibility about what is the PNL that makes this work and make sure that it it it can actually work. Because if you know that that PNL is working, then what happens is that that partner will give you all their attention. Speaker 3 00:27:05 If that pal isn’t working for that partner, they have to make up the numbers somewhere else. And so you end up becoming not a partner. You end up becoming a client. And when you become a client, they’re like, great, I can give you half of a person’s time, but that you’re, you know, if you if you cut up somebody’s time, they don’t give you the best of everything. They’ve got wholehearted. Right? So the one thing we did with Atlassian is we we managed to do enough work together that we made money from the customer base together. Yeah, funded the work we did. Right. That enabled us to fully focus on expanding the ecosystem. Right. And so it wasn’t like, oh, I’m going to go and do a little bit there and see how it goes. and, and the role that we then played inside of the ecosystem. Comes back to my open source roots, which is you have to pay it forward and build an ecosystem. And if the ecosystem is successful. Speaker 3 00:28:11 Hundreds of companies will be successful. Right. So the mindset that we take into these partnerships is, hey, we might be the first partner, we might be the preferred partner, but we know we are the first of many, and our role is to make a great PNL and then show how we can help others create that PNL as well, so that we create an ecosystem. And when you create an ecosystem and enterprises are adopting and expanding with software, everyone wins, right? There’s no point being like the exclusive partner provider. You know, a long time, you know that one partner does all the work. That doesn’t work. It’s impossible to. You know, you’ll limit your scale, but there there are some patterns to go through. Speaker 2 00:29:00 Can you describe one of those ecosystems like, you know, because you’re so familiar with those terms, but make it tangible. So explain a PNL and an ecosystem with one of your partners where you have helped enable that. Speaker 3 00:29:12 Yeah. So and I’ll keep on the same example. Speaker 3 00:29:15 Right. we a lot of the early partners. in the Atlassian ecosystem. We helped and still help each other and still keep in touch. Right? And we understand, okay, what’s working, what’s not. And we have a great open relationship in terms of like understanding. The health of how the ecosystem itself is working. Right? Because if there’s one player that. You know, it was like, hey, when it all cost, it actually doesn’t do well for the customers. It doesn’t do well for anybody. And even even like we had the the Atlassian conference earlier this month. And, you know, many thousands of people there, like, I was running a session for some of the newer partners that came into the ecosystem to really get their mindset right about how we think in this ecosystem and that we’re not out to kill each other. Okay. Speaker 2 00:30:19 So you’re talking about the dynamic between multiple parties in a huge multibillion unicorn like Atlassian. Yep. Okay, so I get that. Okay. You know, our customers are in that 5 to $50 million range. Speaker 2 00:30:31 So they’re much earlier stage. Yep. They’re trying to figure out how to just work with one partner, let alone maybe find a second. But they’re challenges in how to manage 50 partners. So so scale it back and let’s let’s talk about how they you know what what’s what’s the critical advice you would have for for the the SaaS company who’s trying to meet the customer needs by having professional services to customize a product and make sure that their product can. Their roadmap can benefit from the learnings that are part of that. And they can also, you know, work with the partners and the partners successful. I heard you say the partner has to have a good PNL, so has to be good for both the partner and the and the SaaS company. And ultimately, both of those parties have to solve the problem for the customer, right? Yeah, but but they’re they’re probably not thinking about ecosystems at that stage. Right? I mean, no, they’re trying to get, you know. Speaker 3 00:31:23 Solving a problem. Speaker 3 00:31:24 I mean. Speaker 2 00:31:25 It’s back to the crossing, the chasm. They’re trying to, you know, expand within that customer or expand within their customer base. Speaker 3 00:31:33 Yeah. The, the I think the if I, if I’ll answer it in like the biggest dysfunction that we see is lack of clarity, internally to be like, okay, A lot of what tends to happen is that a combination of support, customer success, pre-sales, or whoever worked on the deal end up doing the consulting work or the project work, or getting the customer over the line. And I think there’s a role for the CEO to play about being deliberate, about. How, how or the outcome that they’re looking for. Because. In the trenches further down. Even though like from a company perspective, hey, we we want to do some of this work or we’re getting this customer over the line. sometimes the people doing the work really enjoy it. As well. So the clarity from top down saying okay this is the direction and this is what success looks like. Speaker 3 00:32:39 And what we’re building I think is really important. And I’ve seen a number of times where that clarity isn’t there. And so the partner is not successful because they’re not given the full support. Because the internal team still wants to do it, or isn’t clear about how they’re trying to prop up the. Speaker 2 00:32:58 Clarity as to who’s doing what. Speaker 3 00:33:00 Yep, clarity. And the second one is actually, I would treat the partners if they were another employee. Speaker 2 00:33:08 An extension of the team. Yeah, absolutely. Yeah. So. Speaker 3 00:33:13 and I’ll give an example of what you don’t want or an example of what typically typically happens. Someone internally obviously has a lot of context and a lot of a lot of their own internal support and is working with the customer. The partner doesn’t have any of that. Right? Right. So they come in cold bandaged. They’re gonna make mistakes. Speaker 2 00:33:33 Yeah. Speaker 3 00:33:34 And so it’s like if you treat them as if they’re internal, you’re actually going to enable them, onboard them, support them. And the when that’s not done you get the scenarios where it’s like, well, you’re supposed to do that. Speaker 3 00:33:47 That’s not my job. And, it’s easy to well, the partner is supposed to do that. Right. And I think the the enablement. You know your smaller up and coming SAS company doesn’t doesn’t necessarily even have onboarding done internally properly. Speaker 2 00:34:06 Right? Right. Probably not. Especially not for these custom services. Speaker 3 00:34:09 Oh I’m definitely not for that. But even just internally. Right. So so I think onboarding is a really big key in treating treating the foundation partner or partners as if they are internal. And so I think establishing sea level to sea level communication and accessibility. Right. Like when I work with, with any of our partners they have my phone number I’ll answer I’m on, I’m on available all the time as if I was the VP of services for for that CEO. Right. That’s that’s the mindset I’m the chief customer officer or I’m, I’m reporting to your chief customer officer. That’s where I fit in the organization. And yes, now we’re going to build out what what we need to build out there. Speaker 2 00:34:53 So that’s a very healthy level of connectivity. Absolutely. Great. Yeah, I. Speaker 3 00:34:56 Think I think you need that, and you know, customers are also smart. They kind of know how to play things too. Sure. So the you want to be working arm in arm with that, with that partner and having that strong communication. because you are working with people. Yeah. Right. So folks on your side, folks on their side, folks at the customer side, you’re going to have all ends of the spectrum. You’re going to have people who are really involved and want it to happen, and you’re going to have people that want other initiatives to happen. Right? Or, and things that go on. So building those communication links. So clarity is a big one. and then having those communication links at the right level, and there an understanding of like, hey, you may be the first partner, but we, we were actually counting on you to build a model with us that we can help with. Speaker 3 00:35:51 You replicate to other partners. Right. And I think that’s a really a really key mindset to have. Speaker 2 00:35:59 That’s. Those are great. Great. nuggets for sure. And working with a partner and making it a win win. Tell him. Tell me about the journey, about building your own business. What’s been some of the challenges that you’ve learned from? Speaker 3 00:36:11 Yeah. Oh, many. You know, I, I think many, many of us, like, read these stories of like. Oh, well, just up into the ride. I mean, I probably almost killed the company 3 or 4 times in its journey. and I think the journey of a company is really the journey of leadership of the, the CEO, right? Or the founder or whoever’s running the company. So, you know, I personally have been caught up times trying to please everybody or trying to make everything. Work without coming back to the panel. Right. And so I think typically in my journey, it was always like, oh wow, I’m either a. Speaker 3 00:36:58 Really great friendly company to work with. Or I’m really ruthless and financially driven. And I think that as a. Speaker 2 00:37:06 Leader, as the leader in terms of as your relationship leader. Speaker 3 00:37:10 Yeah, yeah. And I think a big, big lesson is just making sure those things work. And I think, you know, there are times when when we’ve gone all in on things. and I think you need a combination of gut feel and reality check and keeping a plan and keeping those things consistent. So, so I’ve learned a lot about that. Learned a lot about, working with different cultures around the world and what what makes people tick. And, so it’s a real blessing to be able to get to work with great technology and great people all over the world and solve some interesting problems and, and do it in a way that’s, that enriches people’s lives, and gives people opportunity to learn and grow so. Speaker 2 00:37:59 Well. You’re doing a lot of that, right? You’ve you’ve built a great business. You’ve gone from one continent to the other. Speaker 2 00:38:06 You’re in the heart of Silicon Valley. I know you’re giving back through your leadership through IPO and EO. anything you want to talk about there that’s been part of the journey. Speaker 3 00:38:15 yeah. I mean, that’s that’s also I think mentorship is is a big thing. And that’s how we met. Right? I was looking for an example of reaching out to network, saying, I want to find great examples of really good. How do I how to assemble a board and run a board. And actually, you came top of the list of highly recommended board members, right? So that’s how we met. So I’ll give you some props. and just I think in many of those organizations, what it’s really taught me is. Pay it forward and help. And and good things happen. Yeah. And I think we do live in a world sometimes where we think of ourselves as consumers, like what’s in it for me every day or every week. All right. Very transactional. And I will say like one of the reasons why I love being being part of, you know, EO in San Francisco and Ypo is, being down in Palo Alto, right where we’re, you know, a little bit out of the city, but it forces me to go and meet people and do things. Speaker 3 00:39:23 And and the biggest thing is not, hey, what is the topic of the discussion or that’s not interesting or what have you? The topic actually doesn’t matter. It’s the fact that you’re connecting with everybody and you’re learning about something, whatever it is. And that’s the side conversations and connections that, that, that’s. Speaker 2 00:39:40 Where the magic happens. You can’t predict it. You can only. What is Steve Jobs that you can only connect the dots when you look backwards. Speaker 3 00:39:45 Right. Only connect the dots backwards. And so the more the more you get out there and help, the more you’ll be helped. And then you’ll be able to trace back and say, wow, this is this is how that that fit together. So I. Speaker 2 00:39:58 Love it. That’s a great that’s a great, lesson for everybody listening out there. Well, this has been great, Rob. Thank you. I’ve learned a lot about partnerships and and, your journey. And I look forward to continuing to work with you and learning more. Speaker 2 00:40:10 where can we work and people find you? Speaker 3 00:40:13 Yeah. So we we’re on, Silver Circuit comm. You can hit me up on LinkedIn. I have a small little Substack that I’m building, called Leadership Behaviors, which is at Leadership behaviors.org, and I’m just writing different articles about how I’ve been building and rebuilding the company and trying to share knowledge. and so if there’s any any questions people have or things that they might want to input on, I’m happy to happy to to share the knowledge so. Speaker 2 00:40:43 Well, fantastic. Thank you so much for your time this morning Rob. Speaker 3 00:40:46 Thank you man. Speaker 2 00:40:47 All right. We’ll talk soon. Speaker 1 00:40:52 Thank you for listening to the Growth Elevated Leadership podcast. If you enjoyed this episode, would you please follow us and subscribe on your favorite podcast player and we’d be grateful if you recommend it to a friend. If you’d like more resources on how to become a better leader in business, we invite you to visit us at Growth elevated.com. We’ll be back next week with more insight from another great tech leader. Speaker 1 00:41:13 Thank you.

Speaker 1 00:00:02 Welcome to the Growth Elevated Leadership podcast with Julian Castelli. Each week, we talk with senior tech leaders to explore stories and insights about the challenges involved with growing technology companies. We hope that these stories can help you become a better leader and help you navigate your own growth journey. Speaker 2 00:00:27 Hello, this is Julian Castelli. I’m the host of the Growth Elevated Leadership podcast, where each week we talk with inspirational entrepreneurs and leaders in the tech industry. Past guests have included CEOs and CXOs of great companies like Work Front, CHG, Healthcare Systems in Moment, Vox, Pop me, the San Francisco, 40 Niners, and many more. this episode is brought to you by Growth Elevated. Growth elevated is a community of tech founders, CEOs, and CXOs who are committed to working together to share best practices and learnings in an effort to make us all better leaders. We do that through educational programs like this podcast. We also have an annual summit each year in beautiful Park City, Utah. So for those of you who like to ski and like to talk talk shop with other tech leaders, check it out at Growth elevated.com. Speaker 2 00:01:18 today I’m super excited to welcome Blake Harbor to talk with us today about scaling sales. I can tell you that almost every business we talk to, scaling sales is a critical issue. Blake is a veteran sales executive, and he’s been with some of the big success stories here in Utah, including Hirevue and Lucid. And after that, he went to Work Stream, where he oversaw an incredible growth turnaround that we’re going to talk about today. And, today he’s working to help other companies scale their their growth journey. So we’re going to learn a lot, with Blake. Blake, welcome to the show. Yeah. Speaker 3 00:01:51 Thanks, Julian. honored to be here. Speaker 2 00:01:53 We’re excited to talk to you today. Yeah. Speaker 3 00:01:56 Appreciate it. Speaker 2 00:01:57 So, like, you’ve done a lot of things. you know, we were talking just early in the intro about about some of the, this successful SaaS companies in Utah, But, but Workstream is one where you had just an incredible story of both downs and ups, right? Speaker 3 00:02:12 Yeah, it was quite the journey. Speaker 2 00:02:14 Yeah. Well, let’s talk a little bit about that. tell us before we get started, what does work Stream do? Who do they serve? Speaker 3 00:02:21 Yeah. So work Stream is, started as an applicant tracking system serving primarily the hourly workforce. So there’s, in that HR air tech space, there’s a huge gap between operators or employers and then the workforce and how they communicate. And so Workstream set out to solve that and bridge that gap, by providing a texting platform for companies to engage with employees or candidates in real time. So an applicant might go to an indeed or all these job boards and apply for a job, and they can get a text in real time to go ahead and schedule interview and then post interview, go through onboarding process and all the other steps that would go in. So this is. Speaker 2 00:03:07 The desk list worker, right? That’s right. A lot of tech has been developed for the desktop and to automate the work. But but there’s all these industries where people aren’t at a desk. Speaker 2 00:03:16 That’s right. Right. And so we’re focusing on that niche And the the key communication breakthrough is texting. Right. Speaker 3 00:03:22 That’s exactly right. Speaker 2 00:03:23 Okay. Where’s Workstream based. Speaker 3 00:03:25 Yeah. So we’re based out of Palo Alto. I met them actually through Peterson Ventures that introduced me to the CEO. And, were some early investors there. And, they were looking to build a sales team here in Utah. The CEO had been in Utah many times, loved the culture, understood that there’s a good sales engine culture here. Yeah, we’ve. Speaker 2 00:03:49 Got that reputation, you know, and you’re an expert, you know, why should people come look to look to create sales teams in Utah? Give us give us a little pitch for Utah sales. Speaker 3 00:03:59 I’m a huge advocate for a specifically SMB mid-market. We have a ton of experience. And I think the there’s a handful of things culturally that lend that self to it. You know, the there’s the Mormon church here where people go out and serve, Mormon missions for two years. Speaker 3 00:04:14 They knocked doors at 19 years old. You learn this, a level of grittiness doing that that, you know, most kids never have it 35 years old and, you know, they come back from that. There’s a culture. Speaker 2 00:04:27 In different languages that they learn incredible, incredible training. expertise that they have to train these missionaries in different languages, send them across the world and then have them, you know, advocate and promote religion. So, yeah, that’s that’s got to be an incredible training for sales. Speaker 3 00:04:45 That’s right, that’s right. I think even, you know, they come back from their mission. There’s this element of culturally where people get married, they get and they have kids young. I mean, I’m one of I got four kids. I, you know, 34 years old and my my oldest is ten, my youngest is five. Like, we’ve been through all that well doing all this with SAS companies. And you go through that process, it’s like I’ve got a mortgage, I’ve got a big family. Speaker 3 00:05:08 Now I got to figure out how to pay the bills. And there you go. Typically the best option is how can I make the most money, the fastest to sell. And yeah, you know, you get this level of greediness that you might not get elsewhere. Speaker 2 00:05:19 All right. So we got a Silicon Valley company, you know, looking to grow a Salesforce. They’re looking for Utah. They find you as an experienced Utah, sales executive. You’ve been with some some great, Utah companies, as we mentioned earlier, Hirevue. and what was the other one? Speaker 3 00:05:36 Lucid. Speaker 2 00:05:37 Lucid. That’s right. So you had a great experience. And what was their sales force like at that point? Speaker 3 00:05:43 so the sales team consisted of myself, the CEO and, one rep that was based in Palo Alto. Okay. Speaker 2 00:05:50 So this is early, like seed stage or a stage. Where are you? Speaker 3 00:05:53 Yeah, they were just finishing up the series, Speaker 2 00:05:55 Okay, so you’re starting from scratch. Speaker 3 00:05:58 Start from scratch. So when I joined, we were, on paper, about 800 K of revenue and pretty much all founder led sales and the typical founder led sales network friends, friends and family. Speaker 3 00:06:12 Things like that had like translated to a sell a core sales team yet and I joined in February of 2020 and the world shut down 30 days later and we, we churned half the business that. Speaker 2 00:06:28 Was that was Covid when the lockdown happened. Right? Speaker 3 00:06:30 That’s right. Speaker 2 00:06:31 What a great what a great time to start a new company. Speaker 3 00:06:33 Exactly. I was I was questioning all my decisions in life. Right. Speaker 2 00:06:38 We all can remember where we were, but, you know, a new venture, early stage. And that must have been pretty frightening. Speaker 3 00:06:44 It was. I mean, we were very small, I think less than ten and, 15, ten employees. and, you know, now we’re at 400 K of revenue and I, you know, bless my wife’s heart, 400. Speaker 2 00:06:54 You’re cut in half. 800, 400. Okay. Speaker 3 00:06:57 Yeah. Lost half the business. And I remember telling my wife, I better keep feelers out just in case, because I don’t know where this is going to go. Speaker 3 00:07:05 It might be back on the street sooner or so. and, you know, obviously there’s so much learning that goes into that experience of like, okay, where do we go from here? We’ve we’ve reset. and at that point we were selling to probably 7 or 8 verticals. Right. Anyone who’s hiring hourly worker, if you think about that for a minute. So, so many industries and they make up a majority of the US economy. And, we were trying to sell all of them. I remember the first deal I ever did. It was $600. monster win. I think it took me three weeks to get done. and it was it was painful. It was a trucking company, and the guy was pinching pennies. You could. You could barely make it work. Speaker 2 00:07:48 But again, the point was they’re just workers. So these are truck drivers. They’re not going to be at a at a at a desk. What were the what were the 7 or 8 verticals you were thinking about as you were, you know, early stage trying to figure out your go to market. Speaker 3 00:08:00 Yeah. So trucking third party logistics was in there. just in sort of warehousing. we were we’re thinking a lot about the healthcare, which there’s probably seven sub verticals of health care. a lot of hospice, in-home care, assisted living communities. restaurant vertical, where we ultimately ended up, we were selling to a lot of restaurants, franchised, non franchised, quick serve. thinking about, like, fast casual segments. Speaker 2 00:08:30 Okay, so all the all the places where there’s less workers. And how did it go originally? Yeah, the founders had sold the friend and family. Your your first sell was to to a trucking company. Speaker 3 00:08:39 Yeah. Yeah. That’s right. They were a last mile, logistics company. you know, the first couple of months was just figuring out what the hell we were even doing, right? Like, where? What do we have left of the base revenue? What are those customers consist of? Why did they stay with us during through Covid thus far? And I’d hired one rep. Speaker 3 00:09:00 that I actually had hired previously at lucid, and he’d gone into other companies and I brought him over and just really great or really young, scrappy, willing to build from the ground up. We worked out of our office, Utah office, which was my camping trailer next to the house. Every day, out of the. Speaker 2 00:09:15 Trailer. Speaker 3 00:09:16 Out of the trailer. That was get. Speaker 2 00:09:17 Get all the image, get the imagery of Covid cut in half in the trailer. Speaker 3 00:09:22 We literally I mean, it was 100 hundred degrees outside and no air conditioning was brutal out there. But he was a trooper and we made it work. But, it was really looking at those core existing customers that stayed with us, through March, April, May, June and starting to flesh out and have those conversations go back to them. Hey, why are you still with us? Like, yeah, we have nothing left to give you. What why why are you here? Tell us. Talk to us about like why you continue to use workstream and what’s working and what’s not. Speaker 3 00:09:52 And we started to us a couple of things where some of the better customers that just passionately loved us and said like this is critical, business critical. We can’t do anything else without this. we’re within a handful of buckets of verticals, one being restaurants, the other was assisted living communities. and then the third one was actually like a logistics or a company. And, we started to really narrow in the scope there on who we were thinking about targeting and going outbound into, essentially. And we were looking for, obviously just look alikes who, who looks just like these customers. And why did they buy the way they did and how did they buy which there’s unique buying patterns in each of them. And how do we kind of like reverse engineer how they bought them in the first place, how they use it, and how do we start to identify more people like them? Speaker 2 00:10:48 That’s awesome. So, you know, what I hear you saying is, and this is a great, great strategy, it sounds simple, but talk to your best customers as to why why they are sticking with you, why your product is helping, and then, you know, use that information to figure out what your choices are for vertical focus. Speaker 2 00:11:06 Yeah. That’s right. How did you how did you land on restaurants? What was it about the restaurants? You said, this is why we should go here. Speaker 3 00:11:12 So, Mark Newman, CEO of Hirevue, a great friend of mine is incredible. Lovely guy. I remember something he’s always told me and I’ll never forget is you just need ten people that absolutely love your product and if you could lean on them, you can figure out what’s next. And I’ve never forgotten that after 12 years of working with Mark. is I started to think about that specifically and what I continue to find over and over again where these restaurant operators that would get on these calls, number one, they would even take the call. They would be passionate about showing up to the call with myself, the CEO, and say, hey, we love Workstream we here’s product feedback. We need your help. Even during Covid and during this time, you understand restaurants were firing everyone. They couldn’t do it. And you know, so the need for to hire more people or use an applicant tracking system just wasn’t nearly as dire. Speaker 3 00:12:05 And what we also started to notice is they would refer us so naturally to other restaurant operators. And as we start to get those referral businesses, all of a sudden our cell cycle went from 45 to 60 days, down to about two weeks or less on some of these referral business. And we thought, okay, we have a ton of momentum here. And as we start to map out the Tam and Sam and think about where do we where do we start to point our efforts, well, I how I can there’s a lot of there’s not a ton of friction in the restaurant space where I could figure out how to go find who that owns these restaurants, and then they have four other friends that they’re networking with on a regular basis that also need the same help to solve the same problem. They’re not necessarily competing against each other. Yeah. And so and. Speaker 2 00:12:52 Then you get a lot of turnover in restaurants. People go and bring you bring you with them. Right. Speaker 3 00:12:56 That’s exactly right. Yeah. Speaker 3 00:12:58 And and what we so really over the course of six months in the back half of 2020, we started just narrow in and say, okay, let’s just, let’s say restaurants. And we even got a little bit more narrow there and so well, actually quick serve restaurants, which is, you know, McDonald’s, Jimmy John’s five guys, all those which then we found out happened to be they’re all franchised. They’re all owned by a local operator that might own actually ten Jimmy John’s. But the best part about it is they also own five five guys, right? And now all of a sudden what happens is you have this network effect of operators that are plugged into multiple brands at a single time that all know each other. And, and there’s almost this kind of big dog in each brand that owns the most stores or is the most successful in the franchises, right? That’s right. And the you know, franchisors we love you know we love John. We love this person. He’s got 100 stores. Speaker 3 00:13:57 He’s killing it like everyone wants to be like them. And so we thought, wow, if we could figure out how to get John on board and John becomes one of our ten, that just loves it. So we would go find those guys and we would damn near give Workstream to them for free, because all we cared about is them using us, becoming a champion and talking about it. Speaker 2 00:14:14 We’re like a brand ambassador for you. Speaker 3 00:14:16 That’s exactly right. Speaker 2 00:14:17 That’s exactly right. But you had to really understand. So you had to. You know, I want to talk about going from seven potential verticals to one. That’s that’s frightening for founders. Totally. Right. And and, but if you didn’t do that, you couldn’t go deep enough to understand the dynamics of those franchise or franchisee relationships and come to this strategy. So, you know, did you did it take some resistance? Was there some courage required to kind of say, look, we’re going to really go after this one vertical? Speaker 3 00:14:43 Yeah, absolutely. Speaker 3 00:14:43 I mean, that was an entire company shift that wasn’t just necessarily go to market. Right. Like we had to get to the point where the entire company aligned on this strategy of going after one vertical and products building for the vertical specifically. And they’re only having conversations with restaurant operators to continue to build for them. marketing is only talking to restaurants. How do we build more collateral and so on and so forth. And so that took a lot of effort. And, you know, a lot of kudos to to Desmond, my CEO that did such a great job of helping champion those efforts to help us identify it and then say, okay, how do we lead the entire organization towards this and then get buy in to have some degree of confidence that there’s enough we could do here and And I the bet that Workstream is continue to play out to on these at this time is that there’s the that whole market is really just underserved in all his solutions, right? It’s really fragmented market. And they’re going to continue to build on, you know, the the applicant tracking system, as was the the, the landing, opportunity to break into all these. Speaker 3 00:15:53 And now they’re they’ve built onboarding and employee engagement and payroll and all these additional products that continue to expand. And as restaurants consolidate tech and spend allows them to consolidate under the same. Fantastic. Speaker 2 00:16:06 All right. So you you’ve you’ve shifted your your branding towards restaurants. You’ve made the big shift. How did it go. Like you get some of those big dogs and is that the driver. Tell me how that this this strategy played out. Speaker 3 00:16:19 We we had one one of the big dogs in a Jamba Juice. That was our kind of a beachhead, I would say the early indicator of of why we were gaining traction. Jamba juice, those are first like main customer. And he was referring to us other Jump juice franchisees, which allowed us to start to recognize where the opportunity lies within the franchise kind of hierarchy, I would say. And as we went into the second half of, of 2020 was when we started to recognize this and preparing for 2021. you know, we’ve gone from, basically 400 K to just north of a million at the end of the year, which is pretty successful in itself, having turned half the business in March. Speaker 3 00:16:59 And we thought, okay, this is our we’re gonna make a big bet. We see the great rehiring as an opportunity to kind of ride this wave of what restaurants are going to go through next year, and we didn’t know if it during Covid coming out. It was it could be one, 2 or 3 years out. But how can we help champion within this space? a technology that allows people to go out and hire again because they’re going to have to over the next two years and going into January of 2021, that was the big bet we made as the whole company shifted to the strategy all in on restaurants, we became the vertical ized solution and we took it one month at a time. You know, we go, I think it was 6 million that year, for the entire year, basically from from 1 to 6, which I thought was just absolutely crazy. And in the first half of the year, we we’ve crossed 6 million. Speaker 2 00:17:53 Oh my gosh. So 500%, 600% growth in six months. Speaker 2 00:17:58 Yep. Wow. So, so now you got a whole new set of challenges, right? You you’re winning the pie eating contest. You get some more pie. So, so so how do you scale at that level? How many people are you hiring at this point? Speaker 3 00:18:09 Yeah. So we hired over 60, over 60 sales reps just in Utah here alone, that year. And, to your point, that was a whole new set of challenges, which was then my a lot of thought about, like, how do we how do we scale, how do we go higher that many reps have 5 or 6 reps a month every single month. Speaker 2 00:18:29 And what gave you I mean, you’re clearly at 6 million. You’re feeling you know, let’s let’s give us the color and the feel because so many people talk about finding product market fit. Yeah. And you were right there from not having it to having it. What are the you know, in addition to hey, we’re at 6 million. What are the signs and signals that like we absolutely have to scale like, yeah. Speaker 2 00:18:50 What did you start seeing that they said the convince you had product market fit. Speaker 3 00:18:54 I get this question off is just like what does product market fit feel like? I work with so many early stage founders at this point, and the best definition I have is when the market starts to pull you. And that’s what we saw over and over and over again. The further we went into some of these brands, the further we developed some of these relationships with some of these key franchisees, the faster that the referrals would come in from that brand. And we could directly correlate some of these referrals to to the exact person we had originally reached out to her and engaged with. And all of a sudden, we have, you know, you have people reaching out directly to my reps that, you know, had owned a brand. I have reps that were just the Burger King guy, and that rep got all the Burger King leads because he knows that brand inside out. He knows every single owner in there, and they are coming through, flying him to their own conferences. Speaker 3 00:19:45 They’re asking him to come speak at conference. Oh my goodness. 23 year old sales rep speaking at these franchise conferences, teaching them how to hire people. You never hired someone pretty good. Speaker 2 00:19:54 Sign lying or sales rep to come talk. Speaker 3 00:19:57 Yeah. So, the market was very much a good. Speaker 2 00:20:00 Example of pulling you, right? Speaker 3 00:20:01 That’s right, that’s right. Physically pulling us out to to to be at those events. and of course, like deals were coming from it. Right. Our sales cycle got faster and faster and faster. And you know, we were having so many one two call closes over the course of the seven days on these franchisees, we could land and expand, within these brands very quickly. Speaker 2 00:20:24 That’s that’s awesome. Okay, so back to the hiring you. You’ve got the signals of product market fit. You know how you know you’re working with a company that helps hire non desk workers, but it’s not necessarily your vertical. How do you find 660 people. Speaker 3 00:20:38 Yeah. I’ve been really fortunate to build a handful of teams here in Utah. Speaker 3 00:20:42 I’ve hired over 200 sales reps. just in Utah alone. and I have found there’s a couple of things that I think have really stood out in my experience of recruiting. I mean, I would argue I’m probably a better recruiter maybe than SLC or even because I’ve had to be my entire career. But, well, yeah. Speaker 2 00:21:00 A successful says leader. Recruiters recruiting on the job. Speaker 3 00:21:04 Yeah, yeah, exactly, exactly. So, I, I network a lot. I mean, I could, I know a lot about all the companies in Utah and what they’re doing, where they’re at, what they’re going through. And that’s simply just by. I spend a small fortune on just going to lunch with reps. I invite them to lunch. They’re willing to come to me. I’ve built just spent over a decade building a little bit of following on LinkedIn, which has helped, I think, tremendously. for me to be able to reach out to people and go to lunch and learn what they’re doing, and by doing that, it allows me to understand what podium is doing, what they’re going through right now. Speaker 3 00:21:41 And to understand, I use podium as one example. There’s 15 of them that, you know, I continually to pull from. but I can understand, who’s top performers in those organizations just by going to lunch, networking, having Having those conversations allowed me to get pretty targeted on my outreach for recruiting efforts. and in addition to that, it’s no different than the way we went and approached franchisees was, you know, we have five schools in the Valley here that I have deep relationships with that I’ve recruited from for many, many years and plugged into their sales program. I speak at their sales events. I’ve been really fortunate to work with the directors of those programs pretty closely. And, having recruited from them for a long time, I can recruit some of the top talent that comes out of these schools. And when you recruit a, you know, ex athlete out of any program, there’s a lot of eyes on them. And people look at where they’re going and they recruit like minded people. And I’ve, I’ve worked with some of the top athletes that come out of all these schools just by nature, if they want to get into tech sales. Speaker 3 00:22:46 And it’s an opportunity for them, and they have deep networks of other people just like them that also want to come work and be in tech sales. Speaker 2 00:22:55 That’s awesome. So so how did it end up? What was the the next couple of years like? Speaker 3 00:23:01 Yeah. So that year alone, we we went we grew from basically one to over 10 million in revenue. scaled the sales team, I think. I can’t exactly remember where we ended the sales team. We’re probably 60 or 70 reps at that point. Speaker 2 00:23:19 so from from founder sales to 60 plus and one, one year. Speaker 3 00:23:22 Yeah. Year and a half years. Speaker 2 00:23:24 Okay. Speaker 3 00:23:25 Yeah. and then we spent really the next six months continuing to grow. We we, basically grew to just south of 20 million. when I, I left there in, September of 2022, it was. Speaker 2 00:23:43 That’s amazing. What a what an incredible story. And, the company to go public, raise money. What was the company? Speaker 3 00:23:50 Yeah. So that we ended up raising a $100 million series B? you know, this was during the good old days of fundraising, which is very different. Speaker 3 00:23:59 But, you know, we, it was really, really fortunate time, you know, raised $100 million. The, the K through boys from Founders Fund to join our board. Jay Simons, the president of Atlassian, to join our board, really fortunate to work with a lot of. Speaker 2 00:24:13 Great, real, a real success success story. Speaker 3 00:24:16 Yeah, incredible. Incredible team. And they you know, they continue to now they’re continuing to build additional products for that market. Speaker 2 00:24:22 Awesome. Well, that’s a great, great story from like Inside the Crucible and getting the product market fit. That’s awesome. So and so you’ve done this at a number of different tech companies and you’ve got a great expertise. And now you’re bringing that expertise to to help others learn from it. Tell us a little bit about Blake Harbor Consulting. Speaker 3 00:24:40 Yeah. So I stepped away. I’ve got, like I said, four young kids. I stepped away from that in September of 20, 22. And, you know, I’d spent over a decade just, in a grind and, and had it emotionally been there for my family and a. Speaker 2 00:24:57 60 can’t be easy. Speaker 3 00:24:59 It’s a lot. So, I thought, okay, I’ll take a six month break. And I, during that time, I mean, I’m antsy, got a lot of energy. So I ended up meeting a ton of founders during what was supposed to be my time off. just two introductions, and I recognize this enormous gap in this transition from founder led to building a repeatable sales motion and founders trying to figure that out. A lot of technical founders that have never hired a salesperson in their life, how are they going to do this? And so, I thought, man, I could I thought I’d go back full time, but, decided to actually step back and say, you know, I can I can help multiple companies solve this over and over again. And it’s it’s where my passion lies, is helping founders find repeatability at the early stage and have confidence in hiring and building a sales team and reducing the risk of those hires. Most founders are stuck with the idea that they either hire an SDR and they’re all of a sudden SDR manager, or they hire the VP of sales for 400 K a year, which is a huge bet and extremely risky. Speaker 3 00:25:58 And most sales leaders have never seen that stage before. so I know help founders, build repeatability at that stage, help build the playbook, to reduce the risk of of those type of hires when they’re asking those questions. Speaker 2 00:26:11 cool. How how long do you typically work with a team? What’s your engagements typically look like? Speaker 3 00:26:17 Yeah, it it really depends. I’m really flexible actually on my engagement timelines because, you know, I’ve had engagements where we get in there and realize that that’s, you know, they’re a long ways from, Prague market fit and they actually need to go do something else, to where I’ve worked with companies for over 18 months at this point and, continue to work with them on, you know, a couple of them have hired VP of sales, and I help them go out and source that talent. We’ve found product market fit and started to scale and hired a few reps and then go hire a VP, SLS sales and continue to work and advise with those companies as well. So they’re pretty flexible. Speaker 3 00:26:54 But I’d say, you know, within the first six months you have a pretty good idea of what and if something’s working and either where we should double down or continue to like, point our efforts or where we might need to pivot. Speaker 2 00:27:08 Got it. And are you working primarily with B2B or B2C C type of companies? Speaker 3 00:27:14 Primarily B to B. Yeah. Okay. Yep. Speaker 2 00:27:17 And more SMB or enterprise. Speaker 3 00:27:19 SMB and lower Mid-Market. I don’t do much enterprise. I have great partners and referrals that I can send your way that are great options for that. But I am a SMB mid-market guy and that’s your specialty. Speaker 2 00:27:32 Just just as our story explained, knowing your niche and going deep in it is there’s riches in niches, right? Speaker 3 00:27:39 That’s right, that’s right. Speaker 2 00:27:41 Well, where can people find you? Speaker 3 00:27:43 Yeah, I can always find me on LinkedIn. I can’t accept any more connection requests. I guess they cap that. but you can shoot me a note on LinkedIn. I’ll always do my best to reply. Speaker 3 00:27:53 you can always email me. My email is just me at Black harbor.com blackbird.com. that’s usually the fastest way to find me or my cell phone’s, I think, public on LinkedIn. So you can text me anytime. I always text back. Speaker 2 00:28:08 Well, fantastic. Blake, that’s a great story. And I’m sure there’s a lot of people out there. Would love to learn from you. So thanks for sharing that with us this morning. And, good luck with with the business. Speaker 3 00:28:17 Thanks, Julian. It’s great to meet you and, great to chat through it all. Speaker 2 00:28:20 Awesome. Thanks a lot. Speaker 1 00:28:25 Thank you for listening to the Growth Elevated Leadership podcast. If you enjoyed this episode, would you please follow us and subscribe on your favorite podcast player and we’d be grateful if you recommend it to a friend. If you’d like more resources on how to become a better leader in business, we invite you to visit us at Growth elevated.com. We’ll be back next week with more insight from another great tech leader. Thank you.

Speaker 1 (00:00:02) – Welcome to the Growth Elevated Leadership podcast with Julian Castelli. Each week, we talk with senior tech leaders to explore stories and insights about the challenges involved with growing technology companies. We hope that these stories can help you become a better leader and help you navigate your own growth journey. Speaker 2 (00:00:27) – Hi, this is Julian Castelli. I’m the host of the Growth Elevated Leadership podcast, where each week I talk with inspirational entrepreneurs and leaders in the tech industry. On this show, past guests have included CEOs and CXOs of great companies like Work Front, CG healthcare, Radical Systems, In Moment, Vox, Pop, me, the San Francisco, 40 Niners, and many more. This episode is brought to you by growth. Elevated growth elevated as a community of tech founders, CEOs, and CXOs who are committed to working together to share best practice practices and learning in an effort to become better leaders. We do this through educational events like this podcast, and we also have an annual tech summit, which also happens to be the base of beautiful Park City Mountain. Speaker 2 (00:01:10) – So if you like tech and you like skiing, check it out at Growth elevated.com. Today I am super excited to be joined by David Bell, the CEO of canopy, which is a SaaS company serving accounting practices prior to canopy. Davis has held leadership positions at various SaaS companies and had a successful career on Wall Street. Before that, Davis is here in Utah with me and he’s married and has seven children. Please welcome Davis Bell. Hey, David. Hey. Speaker 3 (00:01:42) – How are you, Julian? I’m doing. Speaker 2 (00:01:43) – Great. How are you? Speaker 3 (00:01:44) – Doing well. Great to see you. Speaker 2 (00:01:46) – It’s great to see you. And congratulations. I understand you just raised a successful funding round. Speaker 3 (00:01:51) – We did. We just raised $35 million of funding, which, we’re excited about. And, you’re not seeing tons of funding announcements these days. No, that’s that’s. Speaker 2 (00:02:01) – A healthy round. And in a, in a, in a kind of a drought economy for for tech startups raising capital. So that means you’ve differentiated yourself from the crowd and must be doing some things right. Speaker 2 (00:02:12) – Congratulations. Speaker 3 (00:02:13) – Yeah. Thank you. We’re excited about it. Speaker 2 (00:02:15) – Well, this is super exciting. Tell us, tell us what canopy does, please. Speaker 3 (00:02:19) – Yeah. So canopy is a firm wide operating system for accounting firm. So we are not the the software where an accountant does the actual work of accounting. They don’t prepare taxes or run payroll or audit or bookkeeping and canopy, but they do everything else. It’s the place where you manage your customers, their information, your communication with them, as well as collaborate within the firm. Keep track of your time, send invoices, get paid. So it’s sort of that that system. Speaker 2 (00:02:47) – Of them run their accounting business versus exactly them helping their clients. Correct. Is it a system of record for these firms? Speaker 3 (00:02:54) – Very much so. It’s the it’s the sort of spine of of an accounting practice. Speaker 2 (00:03:00) – Wow. Okay. That I want to come back and ask you about that. I bet that has some unique challenges. But tell tell me when you started with the company and and if you wouldn’t mind, let’s book in the journey. Speaker 2 (00:03:10) – Where were you when you started with the business? And then obviously you just had a successful endpoint or, you know, milestone point, not endpoint where you raise some capital. Tell me about where the company was, where you started and and walk us through to today, please. Speaker 3 (00:03:23) – Yeah. Of course. So I started at canopy just a little under five years ago, so late 2019. And since that time we have, you know, I’m going to count the end of 20, four, but I think, you know, over the last five years or so, we will have, between 4 and 5 X revenues during that time. So growing quickly, growing the team from I think it was about 100 folks when I started. We’re coming up on about 170, people and thousands and thousands of accounting firms on canopy. Speaker 2 (00:03:55) – My goodness. So you joined in just five x the business. Sounds like it was a smooth ride, Speaker 3 (00:04:01) – Yeah. I haven’t really been doing much. It’s, just kind of, you know, set it and forget it, right? Speaker 2 (00:04:05) – That’s awesome. Speaker 2 (00:04:06) – Everyone wants to get into tech, right? Looks easy. No, I imagine it was anything but. Right. So so so what? Tell us a little bit about that journey. I’m sure there were some ups and downs. What were some of the biggest challenges? Speaker 3 (00:04:19) – Yeah, I mean I think a couple I mean, I think number one, when I came on, there was a reprioritization of one product in particular, which was our practice management, product. So we sort of said, hey, let’s really focus on on this or had been a couple other products. One got shut down right before I came, and then the other we sort of chose to continue with, but we weren’t investing nearly the amount of resources in that product. Speaker 2 (00:04:47) – So that’s always hard because you had existing customers, right? Speaker 3 (00:04:50) – Yeah. And, you know. Speaker 2 (00:04:52) – Fortunately for them, what did you do with those customers? That’s the kind of traps people into trying to do too much. Is that sure? Well, the one. Speaker 3 (00:04:59) – That got shut down was sort of in beta. So that wasn’t you know, it didn’t have a huge customer base, the one that we, we chose to, not invest as much in does have customers, but it’s a relatively simple product. It’s well done product. People like it. And so there’s not tons and tons of, requests on feature improvement and so forth. Speaker 2 (00:05:21) – So, okay, so you just kept it alone where it was and just didn’t reinvest more into it. Yeah, we do a little impact yet your customer base or is it one customer typically using all your products. Speaker 3 (00:05:33) – so not they may be but they can use one or over on practice management we have 5 or 6 modules and they could be using any one of them. A few of them, all of them together. Speaker 2 (00:05:46) – Got it. So practice management was what you decided to focus on correct. Speaker 3 (00:05:50) – Yeah. That’s that’s where we sort of we sort of said, hey, this is where our future is. This is our focus. Speaker 3 (00:05:56) – We’re going to go after this thing, and make it happen. Speaker 2 (00:06:02) – And what were some of the challenges in building a system of record versus more of a point app? Speaker 3 (00:06:08) – I mean, they’re enormous, honestly. So one, one of the key decisions, that we sort of made was our our market is dominated by two large incumbent products that have been around for decades and decades and decades, and they’re outdated and on prem, but they’re powerful and they do a lot. And and so, the temptation, I think in our market at least, and I think this is common to other SaaS companies, was to say, well, let’s carve off a piece of that. Let’s do one of the 5 or 6 things, just do it really well, and then we can sort of move up market. We can get bigger customers, better deal sizes, and then we’ll just either will integrate with that, you know, incumbent sweet or will just make them kind of run alongside. And we chose the opposite path. Speaker 3 (00:06:56) – We thought ultimately people want the one stop shop. They want to they don’t want to stitch together a bunch of disparate applications. So we made a decision to build the whole thing, which, I regretted, lots of times because that is incredibly hard. It’s very time consuming. It’s very capital intensive. Sieve. But I knew that if we could fund it and we could execute well on it, that that was really going to be the killer of these incumbent sort of legacy suites. So that was a really important decision and one that was really challenging and made life really hard for a while, but that has proved to be the right one. Speaker 2 (00:07:35) – Awesome. So you you made the right decision. You, decided to build the full enchilada? Yeah. Operating platform. Yeah, but I imagine you have raised capital for that. That must have been pretty tough. Speaker 3 (00:07:47) – yes, it was tough because I think we had been known, I think, among investors for, the product that that we discontinued that which was a tax preparation. Speaker 3 (00:07:58) – Yeah. Speaker 2 (00:07:58) – I remember you guys were called Canopy Tax. Speaker 3 (00:08:00) – Yeah, yeah. And then and then you have challenges in the marketplace itself because people were sort of, you know, focused on that because that’s how we branded the company. So, we we had to re re sort of educate the market. But as it relates to fundraising, we had to re-educate investors. And that’s harder than it sounds, actually. They they really get that embedded in their minds. And, and so going to them to say, hey, you know, we’re going to do something a little bit different, we’re focused on something different. and getting them to put money in, is challenging. And, fortunately, I think since I’ve been here, we’ve raised about $70 million, but it’s, it hasn’t been easy. And some a lot of that depends on what’s going on in the market, which is another thing that maybe I was a little naive about is I always assumed, hey, you show up with the right metrics and the right story, like you’re going to you’re going to be great. Speaker 3 (00:08:51) – But you you are a very small boat in a very large ocean. And, you know, if that ocean is is stormy, then investors really react to that. To to the extent that your individual metrics and story are often sort of irrelevant. Speaker 2 (00:09:08) – So when did you raise that first round that that was really going to help you build this platform product for, for accounting practices? Speaker 3 (00:09:16) – Yeah, I would say, You know, we’ve done a couple of different rounds, but I think one big one came in, sort of the, you know, spring of 2021. That was our series AA and that that gave us some. Okay. We’ve got, you know, we’ve got cash. We can continue sort of pushing this, this sweet approach. And then we raised a series B, B in late 21 with new investors. and that was really like okay, we, you know, we’ve, we’ve got the capital to do this. We’ve got a phenomenal market opportunity. And now we can really we can go after it pretty. Speaker 2 (00:09:51) – Quick between series A and series B, what kind of traction did you have? Did you find in the marketplace that allowed you to raise, you know, double down almost? It sounds like. Speaker 3 (00:09:59) – Yeah, I think the big thing is we were showing a couple of things. Number one, we were showing that we could execute in terms of building the product. We were showing a lot of progress in shipping. Really, really great stuff really frequently. and then number two, we were able to tell a story about just where it could go. Right? We were starting to move up market into larger and larger firms, which was really important to people, because when you’re in a vertical market the way we are, we sort of accountants and nobody else, investors are always going to be concerned about your Tam, right? Like, you know, if you’re Divi or Lucid or, you know, Salesforce or pick your, you know, horizontal player, that’s never concern. But when you serve accounting firms, they go and do the math and they’re like, okay, you know, if this is going to become a big company, you got to convince us that you’re going to serve a lot of that vertical. Speaker 3 (00:10:46) – And so we had to show that we could move to ever larger firms. and then I think we had some really exciting opportunities that we had not yet been able to prioritize, like payments that was really attractive to. We’re really attractive to to investors. Speaker 2 (00:11:00) – Yeah. That is that’s a that is a nice trend that a lot of companies are jumping on the bandwagon on. And investors do like that because it’s a it’s A12 punch in terms of revenue juice. Yeah. Speaker 3 (00:11:10) – Exactly. Yeah I mean that that used to be kind of a cool idea. Now it’s sort of like table stakes. Right. And if you’re not doing it there, you know you’re committed. Speaker 2 (00:11:18) – But you managed to get capitalized on that. Yeah. And if you’re going to be, you know, the operating system for a services firm, then you can you can start. Yeah. Be part of that participate. Yeah. Any particular investors that you know that that got that got the got on board and helped you understand the new story and kind of gave you some confidence to to circle others around them. Speaker 3 (00:11:37) – Yeah. I think, You know, people, I think it’s fast. I’ve learned a lot about investors and where their value lies. everybody’s money is green, right? and I, I don’t generally think that investors are going to be, you know, hugely value add in terms of telling you how to operate the business. And I don’t think, you know, most CEOs want that or need that. I think they can have great feedback and insight as people who are a little removed. And I definitely get that. But I, I honestly think the most important thing to select for and I lived through this was how do they behave when, you know, things don’t go to plan? So we had we had a set of investors that predated me who were super supportive as we were sort of, you know, changing focus. And then we had, investors at Ancona Capital, which is a newish fund out of Orange County. Speaker 2 (00:12:34) – Who were Brian Messick. Right? Speaker 3 (00:12:36) – Yeah, it’s Brian and Josh Harmsen. Speaker 3 (00:12:38) – a couple of, you know, a couple other guys. and they were just capable of kind of, you know, separating out noise from signal and just ignoring the noise and really getting in. And, and then, ten Cove’s capital came on as our series B b and they’ve been phenomenal, just incredibly value add their fintech folks, and they’ve really pushed us on payments and helped us figure that out, which was a little outside of my skill set is more of a SAS person. Yeah. so, you know, they’re they’re I think that’s maybe the other thing is, if you can find someone with some real topical expertise that you lack, that that can be really important as well. Speaker 2 (00:13:20) – Well, makes makes a ton of sense. And in your recent round, it was at the same group of investors that kind of continued on forward. Speaker 3 (00:13:28) – Yeah, yeah. And that’s an interesting maybe topic is, you know, we we talked to a bunch of outside investors and we had lots of interest from outside investors. Speaker 3 (00:13:38) – The reality is I realized, hey, our our inside investors, our existing investors were so bought in, and they’re just part of the story, and they understand in a level of complexity because they come to board meetings and you talk to them all the time. that it’s challenging for a new investor to, to get there. And then the other thing is it’s a tough market right now. Right. And so, I knew that our existing investors were able we’re going to be able to have confidence that would enable them to give us credit for like, you know, if the cake is like three quarters baked, it sort of gives us credit for a fully baked cake because they’ve seen us along the way. And they know what, that we’ll do, what we say we’re going to do. And an outside investor just doesn’t have that same level of exposure and confidence and context. So, you know, I just felt pretty. And the other thing is just easier and faster. And, you know, you don’t have to change your board and bought, you know, board dynamics that. Speaker 2 (00:14:35) – everyone’s happy with where the company is going. Congratulations. Yeah. Speaker 3 (00:14:39) – Yeah. So yeah, in some ways they’re harder to get to come in because they, you know, they they know where the skeletons are. Right. and so yeah, that’s, that’s kind of how I, why we, why we went down that path. Speaker 2 (00:14:53) – That’s. That’s fantastic. So. Sounds like you drove this, this truck right through Covid. And what kind of challenges? The Covid. Yeah. Speaker 3 (00:15:03) – You know, sometimes that feels like just a really strange dream that we. Yeah. Definitely had. I kind of mask in my coat the other day. I was like, what on earth? How did this form a big part of my life at one point. But, yeah, I started, I think I want to say four months before Covid and of course we had a huge nice office and we were all, I mean, it was a Utah based. You I don’t I think we had one remote employee. It was like, if you work at canopy, you come into the office Monday through Friday. Speaker 3 (00:15:33) – and so yeah, I mean, you’re navigating how do you set up to work remotely? What are you going to do? People are anxious to know what you’re going to do when you come back. and, you know, how do you deal with, like, the immunization thing and like, when can people come back and who’s allowed to. And I won’t go into all the details, but I, I feel like the, the sort of governing principle we settled on as an executive team was I just said, look, I’m going to let you all decide what you want to do with your teams. I didn’t feel that it was made sense for me to dictate, like everyone back in on X date and under these terms, because there are different jobs, right? And being an engineer is different than being an A, and that’s different from being a support agent. So, you know, that was it was a time to the other thing was just transparency. We were like super transparent. This is what we’re thinking about. Speaker 3 (00:16:30) – We’ll tell you x, y, y, you know, giving them just a lot of information so that they could sort of, you know, there was a lot of anxiety in that time. And I think that I think that helped. Where do you where. Speaker 2 (00:16:40) – Did you guys land on the office situation? What are your how how much in-office versus hybrid versus remote are you now. Speaker 3 (00:16:46) – Yeah. So our our engineering teams have elected to remain fully remote. We do they do come in for sort of stand ups and things like that with their squads, you know, UX design and product QA. everybody else is, in office Monday, Wednesday through Friday and at home Tuesday, Thursday. Speaker 2 (00:17:07) – you’re doing the three days in. Yeah. And have a full size office or have you done. Yeah. Yeah. Speaker 3 (00:17:12) – No, we we do. And you know, sometimes I go in on a Tuesday and Thursday and it’s like, oof still costing me money and nobody’s here, but I, I feel like we’ve landed in a good spot. Speaker 3 (00:17:21) – I, I don’t I’m, I’m also sort of skeptical of the idea that there’s this like perfect thing. They just all have. Speaker 2 (00:17:27) – I’ve heard it. Speaker 3 (00:17:28) – Yeah, yeah. Pros and cons. And we feel good about where we’ve landed. Speaker 2 (00:17:32) – Okay. Great. Well, you know that it’s been. Sounds like it’s been a interesting five years. What would you say you’re most proud of in the journey? Speaker 3 (00:17:42) – Oh, man. I’m proud of our team. we have really low attrition. We’ve had the same core exact team together with an exception or two, basically, since I’ve been here. I’m proud of our employee NPS. It’s really high. It goes, you know. Speaker 2 (00:18:00) – What is it? How long have you been keeping employee NPS? Since I. Speaker 3 (00:18:03) – Got there? yeah. So I think, you know, our record was maybe 72. I think it’s in the high 60s right now. but I, I take a lot of pride in that. I mean, you got to average it because sometimes, you know. Speaker 3 (00:18:14) – And did. Speaker 2 (00:18:15) – It happen? Climb from some point to go from X to Y. Speaker 3 (00:18:18) – Yeah. I mean, it was low when I, you know, when when we first started measuring it just because there had, you know, it was kind of a challenging time. But yeah. Speaker 2 (00:18:27) – Well you just get started. Speaker 3 (00:18:28) – Yeah. But but yeah, I mean, you know. Speaker 2 (00:18:30) – And how long did it go to. And Covid was that was, that was, it was it a barometer of how things were going in Covid? Speaker 3 (00:18:35) – No, actually it was pretty high during Covid because okay, you know, that was also a time where I think, you know, we had this new kind of vision and people were getting excited about it. but I think, you know, it’s also a good lesson. It’s like, not ever linear. It’s not like five points up every quarter, right? Like, it dips because people are stressed or they’re unhappy with the, you know, something going on. And and then, you know, you work it out and it edges up and you know, over time, you know, you want it to live at that. Speaker 3 (00:19:03) – You know, 60, 70 level, I think is is actually really good. Speaker 2 (00:19:07) – Is there anything that you’ve done, levers you’ve pulled or decisions that you’ve made that you think had a tangible impact on your employee NPS and overall people’s excitement and satisfaction with with working at the company? Speaker 3 (00:19:22) – Yeah, I mean, I think the number one thing people focus a lot on, like benefits or office policy or even culture, and in those matter a lot. I think the number one thing is people want to feel like they’re winning, right? Like they want to feel like this company is succeeding. It’s growing. We’re hitting our numbers. We’re meeting our OKRs. I think that’s the number one thing outside of that. Yeah. I mean, people care that, you know, you’re providing them autonomy and that there’s communication. I think probably the biggest thing outside of winning is transparency. We we do a monthly all hands where we show them everything. They see a board deck. I mean, they see all of our metrics, cash balance or our churn, like the whole nine yards, whole company sees everything. Speaker 3 (00:20:09) – Yeah. so I think that’s really important to people, which can be challenging to manage because it’s like, what are. Speaker 2 (00:20:15) – The challenges that creates? I think that’s an awesome transparency, but I, I imagine some CEOs will be nervous about that. Speaker 3 (00:20:22) – Yeah. I mean, I think there’s a couple of challenges. Number one, not everybody has the necessary context to fully make sense of some of the things you’re sharing, right? So you have to provide a lot of context on hey, yeah, like our new RR went down. But that’s because, you know, this is tax season and we don’t bring in as much new era. Right. And there’s actually a ton of jargon that you realize you’re using, you know, LTV or cap or whatever. And so you got to provide that to people because they don’t just that’s not something you learn in school, right? and then you’re always worried it could get shared, I guess, outside. But I don’t know, you just sort of have to trust people, that they want, and I it hasn’t, to my knowledge. Speaker 3 (00:21:04) – So, but, yeah, I mean, the flip side of it is it can create concern if, like, let’s say you’ve got a goal for cash and you miss your goal for cash. People get a little concerned. But ultimately I think that’s good, right? It’s like they’re participants. It affects them. And it’s also like, well yeah guys, we missed cash because we missed you know, we missed our retention goal. Yeah. You know so that’s like oh wow I connect retention and cash. And now I’m going to like think about that a little bit more. So you know that’s not perfect. But I think it the pros outweigh the cons. Speaker 2 (00:21:35) – That’s great. I think that’s really. A great practice and it does does require some investment to make sure everyone understands the context, but it also keeps you on your game to make sure you’re communicating clearly and, and, Helping people understand. So. So what were what was the what were the metrics that make people feel like they’re winning? Is it is it going to are growth or is it the whole thing? Speaker 3 (00:21:59) – I mean, it all matters. Speaker 3 (00:22:00) – But I think, I think art growth probably trumps most things. I mean, probably other things. customer NPS is a big one. You know, our product folks take that pretty personally, and they. Speaker 2 (00:22:14) – Have a lot of pride in that. Absolutely. And it’s typically linked with their growth too. Right. Speaker 3 (00:22:18) – Yes, very much so. You know retention I also think, you know, and probably almost to to an outsized extent fundraising, you know, people. Oh yeah. You know, that’s. Speaker 2 (00:22:31) – That’s a deliberate look that that is a outside benchmark. It’s kind of, you know, maybe it shouldn’t be, but it’s it’s certainly feels like a report card. Speaker 3 (00:22:39) – Yeah. It’s somebody outside said validation. Your baby’s your baby’s not ugly, right. Yeah. So no, that. Speaker 2 (00:22:45) – Makes perfect sense. Well, listen, this sounds like, you’ve had a great journey. What? What do you think? That, you know, now that, would make you a better leader in the future based on the experience and what you learned at canopy over the last five years. Speaker 3 (00:23:03) – You know, I think probably my whole conception of leadership has changed and and I, you know, wish I had known this when I started. And I think we’ve all probably read too many books about Steve Jobs and Elon Musk and Jeff Bezos and clearly very accomplished people. But, you know, I think that model is the sort of leader who stands, you know, astride the company and has all the answers. And, you know, when someone comes with an idea, you know, you shoot him down because you know that you’ve got all the answers, right? Speaker 2 (00:23:38) – 500 people on a whim. Speaker 3 (00:23:40) – Yeah, yeah. Just because I didn’t like that tie you were wearing and, you know, and it’s like these bold, kind of almost irrational moves and. But I think the central idea is like, I’m the visionary. I have all the answers and I know exactly what the future holds. And I’m just going to drag everybody towards that. Speaker 2 (00:23:57) – Yeah, there’s a prototype in the media and it gets a lot of attention. Speaker 2 (00:24:01) – Is that that iconic leader? Yes. It could also be very toxic. Speaker 3 (00:24:05) – Yeah, well I think it can. It is toxic number one. But I think more than that, I think strategically it’s just not a good idea because I just fundamentally believe that if you’re curious and open and don’t believe that you have all the answers, you’re going to get to the right answer way more often. Hopefully you’ve hired a smart team around you, and they all have different expertise that you don’t have, and they have different exposure to things that you don’t have because you’re not in their seat every day. And I’ve just been wrong about stuff like I just like flat wrong, right. And like, you know, if you’re in your mind you’re trying to be Elon Musk, then you know that that mindset doesn’t admit to the possibility that you could be wrong. And so I think listening and curious and like, hey, I think this why do I think it you’re saying something else. Why do you think that? And then there’s usually a synthesis, of those, I think of. Speaker 2 (00:25:04) – An example where you kind of led with, with curiosity and questions and got to a better result. Speaker 3 (00:25:12) – yeah. I mean, I think, man, a million of them, I think, You know, one one example would be when we were sort of pitching to investors back, like early days. You know, I was I was doing it in a way where I, you know, we had kind of two products. One was a legacy product that wasn’t growing as much. And then this new product that was small but growing much faster. And so I was conflating those numbers, just one R number because I wanted to show the scale. Right. You’re going to get a multiple based on your R. So I didn’t want to exclude the slow growth stuff. And my crow kept telling me, like, I really think you ought to separate those out and tell two different stories on those. because I think the growth is going to matter to people more than the scale. And I, I can’t actually tell you why. Speaker 3 (00:26:05) – I may have read something I don’t know, but like, I was really convinced that he was wrong and I was right. And, but I just kept running into a brick wall with investors, and I changed it. And it was one of those rare things. This doesn’t often happen in business, but it was like a magical kind of like I could see immediately. Like immediately. Yeah. Because they were like, oh, okay. Speaker 2 (00:26:26) – Frame the story had a huge impact. Speaker 3 (00:26:27) – Exactly. So but, you know, I didn’t want to. It’s like my job to be fundraising is my job. Right. Like and so it’s like, if I’m not good at that, then why am I in this job? And I realized, well, I don’t like I can be good at it by listening to someone. Speaker 2 (00:26:42) – And it can be even better by having. Speaker 3 (00:26:44) – Yeah, exactly. Speaker 2 (00:26:44) – Five brains on the problem, right? Speaker 3 (00:26:46) – Yeah, exactly. Speaker 2 (00:26:48) – Okay, that’s a great example. Really neat. Well, as you look back, if you had a chance to travel back and do it again, is there anything you’d do differently? Well, you know what? In other words, what lessons might you share that, you’d like to do differently next time? Speaker 3 (00:27:04) – Yeah. Speaker 3 (00:27:04) – I think, and I think this is becoming a little bit more popular, but. You know my background. the companies I was at, probably the last the one that got the largest is a structure. And that was very much the raise. A lot of money. Burn fast, raise more money, burn fast. And it worked out great. They went public. It was fine. But I think that I had that mentality. And I think that there’s actually a way to raise, but to do it in a way where you own your destiny a little bit more. So I’m not like anti venture capital by any means. Obviously, I’ve raised a lot of money at canopy, but I do think that if you raise in a way where you bring in, let’s just say you bring in $20 million, you can structure your, your expenses and your financial plan in a way that’s like, look, we expect to get to, you know, 20 million in RR on this capital. but if it goes slower, like we’re going to be in a tight spot because if we we have no runway, when, you know, we’re 15 instead of 20, we’re going to have a hard time raising number one. Speaker 3 (00:28:08) – Number two, even if you get to 20, you don’t know what the market’s going to be doing. That’s right. A lot of companies this is uncontrollable and it matters a ton. It’s not just about your company. So there’s a lot of companies that were doing great. And they just happen to run out of runway in like, you know, late 2022, early 23. And it was like the window was closed. That’s right. So I think yeah, exactly. So I think structuring in a way where you can, you can get to cash flow break even if you want to is smart. So that then but you don’t have to write. If then it’s like. Speaker 2 (00:28:43) – You have to break the glass in case of emergency. Yes. Opportunity. Right. Yeah. So how did you do that? Or is this something you’re saying this is something you would do next time? Have some contingency plans? Speaker 3 (00:28:53) – I didn’t do that. And in fairness, it would have been hard because we had to hire a bunch of people to build this thing. Speaker 3 (00:28:58) – But like, I think I think now we’re doing it like this round is that represents that for us. And I think that, you know, a lot of the companies I admire, maybe it takes another year or two and sometimes you’re in a land grab. You don’t have that time. But like most companies, can take just a little bit longer and operate with with a little bit more eye to optionality where it’s like, look on this round, we could keep going, cash flow break even, we could go raise another big round or we could sell the business. that’s a really awesome place to be. And I think I maybe would have those options. Yeah, exactly. And the thing is, if you can just stay alive, that’s what you can out. You can outlive anything, right? If you can just stay alive, then great. It’s the problem comes when your need for cash or to sell comes at a bad time, either because of what’s going on at your company and your metrics, or the the broader marketplace, and you have zero control over that. Speaker 2 (00:29:54) – That’s right. So control your own destiny. Have have the optionality by being able to get closer to break even. You know, if you if you know you can do it, you’ll you’ll sleep better at night. Yeah. And, have a plan whether you pull that plan or not, it still is a strategic decision that you and your investors make. Speaker 3 (00:30:13) – Exactly. Speaker 2 (00:30:15) – That makes a lot of sense. Speaker 3 (00:30:16) – Yeah, it’s a hard way to live where you have to do that at a certain point in time. Like that’s a and we and I lived through that and it worked out. But that’s a that’s I had a full head of hair when I started this job. Speaker 2 (00:30:28) – And yeah, you can definitely, definitely, benefit from, from having multiple options. Well that’s that’s a great story, Davis. I really appreciate you sharing it with us. you know what? What’s what’s next for the company? I mean, you just raised a bunch of money. Yeah. You’re. What are your goals for the next the next five years? Speaker 3 (00:30:46) – Yeah. Speaker 3 (00:30:47) – I mean, I think, we’ve got our eye on a couple of different adjacent products, which we’re excited about. we, we’re investing heavily in AI, which I’m super excited about. Like, you know, your average SaaS company, I think made people a lot more efficient, right? Like, you know, pick your poison, Salesforce or whatever. I mean, it really does. It saves a lot of time, makes people more effective. But I think there’s a chance for software that leverages AI to make people. Ten, 50, a hundred times more effective. And I and I’m really excited about like the, you know, the ability to do that. Speaker 2 (00:31:24) – Yeah. There’s a there’s going to be a lot of innovation over the next five, five years, five, ten years. It’s going to be super exciting. It’s going to happen fast. Speaker 3 (00:31:31) – Yeah it is. Speaker 2 (00:31:34) – great. Well, you know, last couple of questions. Any any, what do you do to keep up the speed as you as you’re learning? are there any podcasts or books that you’d recommend for our listeners? Speaker 3 (00:31:44) – Yeah. Speaker 3 (00:31:45) – Honestly, right now, my two favorite, things for that are newsletters. there’s a guy named Benedict Evans who, is really I mean, he’s he’s a tech sort of generalist, but he’s he’s spending a lot of time thinking about AI. And his newsletter is just phenomenal. The other one is a guy named Ethan Malik, who’s, a professor at Wharton. And he’s, like, very, very drilled into AI. He’s it’s more technical. You know, he’s he’s sort of in the weeds, but I, I don’t can’t believe and understand all of it all the time. but I’m trying to spend a lot of time thinking about AI. And then I love Jason Lumpkin just as a SAS, you know, person. Like, I think. Speaker 2 (00:32:25) – He’s. Speaker 3 (00:32:26) – He’s he continues to be I don’t know how he does it, but he continues to deliver a lot of value and insight, which he’s been doing for a long time now. So I’m a big fan of his as well. Speaker 2 (00:32:37) – Fantastic. Well, thank you so much for taking some time to tell us your story, Davis, and congratulations on all the success. Speaker 3 (00:32:44) – Yeah. Thank you. It’s great to be with you, Julie, and I appreciate you having me on. Speaker 2 (00:32:48) – I enjoyed I enjoyed our conversation. Have a great day. Speaker 3 (00:32:51) – All right. You too. We’ll see you later. Speaker 1 (00:32:56) – Thank you for listening to the Growth Elevated Leadership podcast. If you enjoyed this episode, would you please follow us and subscribe on your favorite podcast player and we’d be grateful if you recommend it to a friend. If you’d like more resources on how to become a better leader in business, we invite you to visit us at Growth elevated.com. We’ll be back next week with more insight from another great tech leader. Thank you.

Speaker 1 (00:00:02) – Welcome to the Growth Elevated Leadership podcast with Julian Castelli. Each week, we talk with senior tech leaders to explore stories and insights about the challenges involved with growing technology companies. We hope that these stories can help you become a better leader and help you navigate your own growth journey. Speaker 2 (00:00:27) – Hello, this is Julian Castelli. I’m the host of the Growth Elevated Leadership podcast, where each week we talk with inspirational entrepreneurs and leaders in the tech industry. Past guests have included CEOs and CXOs of great companies like Work Front, Healthcare Systems in Moment, the San Francisco 40 Niners, and more. this episode is brought to you by Growth elevated. Growth elevated is a community of tech founders, CEOs, and CXOs who are committed to working together to share best practices and learnings in an effort to become better leaders. We do that through this podcast, as well as events and a community of other tech leaders. If you’d like to learn more, please check us out at Growth Elevated. today I’m super excited to be. To be joined by Amelia Wilcox. Speaker 2 (00:01:17) – Amelia is the founder and CEO of Novartis. Novartis is a leader in employee mental health and wellbeing. Novartis, a high growth B2B company whose platform provides employee stress management tools and direct access to professional services. beyond Novartis, Amelia speaks on wellbeing, mental health and entrepreneurship at universities and events across the country. She is also active in promoting women and business communities and taking care of her family of five. Please welcome Amelia. Hi, Amelia. Speaker 3 (00:01:50) – Hey, Julian. Thanks for having me. That’s quite the guest list that you listed off. So I feel honored to be included with such great companies. Speaker 2 (00:01:58) – Well, we’re excited to have you. And, it’s been great getting to know you over the last few years and and, watching your journey at Nevada. And we’re looking forward to learn from it today. Speaker 3 (00:02:08) – Awesome. Let’s do it. Speaker 2 (00:02:10) – Yeah. Well, you know, tell us, you know, tell us what Nevada does. And how do you come up with the idea of starting that business? Speaker 3 (00:02:17) – Yeah. Speaker 3 (00:02:18) – So Nevada is an employee mental health and wellness platform. So we work with companies all over the US. And it’s an employee benefit where they can work with a provider or do self-guided care, across six different dimensions of well-being. So it’s a focus on mental health through the lens of mental health. but we recognize that there’s a lot of different paths to positive mental health for people, and we want to make sure we have the resources for all the things people need, whether that’s, financial well-being or nutrition, sleep, all the things. So it’s it’s pretty great. and yeah, therapy within like 24 hours. and we’re helping a lot of people. So it’s been really rewarding for me how I got started with this business. I actually ran a company before this called Incorporate Massage, and we did onsite massage therapy for employers, also as an employee benefit in the air space. and we were actually expanding to do all sorts of wellness services on site for companies. And so we were kind of evolving from just like an onsite massage company to onsite wellness. Speaker 3 (00:03:32) – We were expanding, and we had a lot of different partners that we worked with already that did, you know, onsite yoga or even like esthetics and nails and things like that, where everyone’s bringing everything into the office at that time, and we had grown the company to about 6 million in revenue. And then Covid hit and we basically went to zero in about ten days. Speaker 2 (00:03:54) – As, yes, an entrepreneur through Covid. We should talk more about that. But I’ll let you keep going. But I’m sure there’s stories there. Speaker 3 (00:04:00) – Yes. It’s a that’s a long story in and of itself. But yeah, the short version is we kind of looked around for a different problem we could solve. We didn’t know how long Covid was going to last. and my board really pushed me to just say, like, hey, what if this never comes back? What are you going to do? and so that was really difficult for me because I just couldn’t imagine a world where, like, what we live in now, my brain, my brain was like, no, of course everything’s going to go back to normal, right? and so I put together kind of a plan where I was like, okay, let’s see how we can, like, deliver wellness services instead of onsite, but doing them virtually. Speaker 3 (00:04:39) – And so we had massage therapists that already worked for us that did like personal training. We had registered dietitians, we had yoga instructors. And so kind of like our V1 was, let’s just do these sessions with employees one on one over zoom. Speaker 2 (00:04:52) – No employees are you are you A B to B to C model you you’re providing these to the individual consumer or the employee. But are you selling to the employer? Speaker 3 (00:05:02) – We’re selling to the employer. And then it’s being provided as an employee benefit that the employer is paying for. Speaker 2 (00:05:08) – Okay. Terrific. Yeah. You consider yourself a B2B business or B2C or. Speaker 3 (00:05:13) – B2B for sure. Okay. Yeah, we’re we’re selling the company. Even when we did massage, it was the same way. We never did like employee paid massage programs. That’s just not like my belief system is that, you know, the way we really help employees is by removing the things that are preventing them from getting care. So we have to make it affordable by, you know, covering the cost. Speaker 3 (00:05:36) – We have to make it accessible by bringing it into the workplace and making it really easy for them. So yeah. Speaker 2 (00:05:40) – So that’s, that’s that’s an innovation. Right. And that involves technology innovation and all the challenges of, of of who’s paying for what. And the complexity of, of health benefits I’m sure has been quite a bit. But let’s benchmark your journey here. So when did you start Novartis? Speaker 3 (00:05:57) – we launched with our first client in October of 2020. Speaker 2 (00:06:00) – Okay. So about four years now. and as he started at zero, where are you? Where are you now? Speaker 3 (00:06:07) – we’re currently, yeah, we’re at 1.5 million in revenue, and we’ve got 16 full time employees right now. Speaker 2 (00:06:17) – Okay. And I understand you just just raised some capital. Congratulations. Speaker 3 (00:06:21) – Thank you. Yeah, I was brutal. Yeah. No. Favorite fundraising environment? Speaker 2 (00:06:25) – The last 18 months has been a really challenging fundraising environment. So kudos to you to be able to come through and be successful there. Who are you? Who are your investors? Speaker 3 (00:06:35) – Access Venture Partners out of Denver, Colorado, and Firebrand Ventures out of Kansas City and Boulder, Colorado. Speaker 2 (00:06:42) – So fantastic. Well, you know, mental health is is really on the front page of the news these days with I don’t know if it’s social media or all the the turmoil that’s going on in the world or our politics or screens. But I keep hearing social, you know, the mental health crisis that we’re in right now is it seems like it’s bigger than ever. and it’s it must feel good to be providing those kind of services to people who maybe not now, don’t know how to get that help. Speaker 3 (00:07:14) – Yeah, it’s very rewarding. I, I really loved what we were doing previously in massage because we were really helping people, you know, in pain and who had chronic headaches or who were really stressed and anxious, like being able to physically relax them. you got a lot of positive feedback. And I felt like that was really fulfilling and my team was really fulfilled by that. You’re just getting like positive comments and feedback all the time. People are so grateful. And so it’s just really rewarding. Speaker 3 (00:07:43) – When we saw the opportunity to move into mental health, it was like, I didn’t even know we could like what we were feeling before as a company. and so that has been one of the most wonderful things about what we’re doing now is like, it’s it’s been, you know, we’re helping people who have problems in their marriage. We’re doing we’re doing like couples counseling where people have said like, hey, this saved my marriage. We have people that have said, this has saved their life when they’re dealing with extreme depression. And they needed to talk to someone. And they were, you know, having suicidal thoughts and, you know, people saying they just needed a friend to talk to, you know, on the lighter level or they’re experiencing a lot of stress and burnout. So we just again, it’s just like a lot of really positive difference that we’re making in the world that people seem to really, really need. And so being able to bring it in through the workplace and make it accessible and remove the, the concerns around like, oh my gosh, have I met my deductible yet? And your health insurance or do I have a copay like that? Cost can prevent a lot of people from getting the care that they need. Speaker 3 (00:08:47) – so we’re layered on top of health care, usually as a, as a faster way for someone to get in to see someone without having to go through insurance because it’s going through insurance is really it’s just a very friction. Speaker 2 (00:08:59) – Yeah, there’s tons of friction. And then you have this category of mental health, which I don’t know, am I right when I say it’s it’s kind of emerging into people’s consciousness that it’s something that you do can go get help for. A lot of people live with this for a long time without getting help. Is that is that accurate? Speaker 3 (00:09:16) – Yeah, I would say it’s definitely being brought to the forefront of like a social agenda. If you look at the US Surgeon General’s top six priorities, right. So you go to the website, US Surgeon General talks about like what his initiatives are. mental health and provider burnout are like two out of his six, initiatives that he’s really focused on. So even like at a, at a federal national level, we’re seeing that messaging being pushed out. Speaker 3 (00:09:44) – We’re seeing it, you know, city level like high school, right? They’re bringing in speakers to come in and talk to high school students. And so it’s raising everyone’s awareness. And and that’s really helping break down a lot of the stigma around it where people used to think like, oh, if I go get help, I’m broken or, you know, there’s something wrong with me or I don’t want to admit this, and it’s making it a lot more just approachable, like, hey, wait, maybe this is part of, like, normal self-care. Error, and we’re starting to see that shift slowly. over the last few years, just starting to happen. So a lot more people are willing to reach out, which has been great. Speaker 2 (00:10:19) – So the end consumer now is more aware that there’s help. You’re actually helping them understand that too by providing. Providing information about the various types of help that might be provided. What’s the challenge with the business model in terms of, making this a benefit and, and, you know, how does your business what does your economic business model work like? Speaker 3 (00:10:44) – Yeah. Speaker 3 (00:10:45) – So, I mean, we sell into HR, so there’s a couple challenges with that, right? Like HR pre-COVID, have their own budget and they could sign off on things with maybe without a cfo’s approval, where they could be the decision makers in some cases. post. It’s not even Covid, I would guess. I would just say, like with everything that’s happened in the venture market and how that’s trickled down into the economy as a whole. so the last 18 months, essentially, we’re seeing more HR people with less power, less ability to make decisions. and so we’re having to bring in like the CFO or the CEO and a lot of these conversations, or they’ll have like big committees that are deciding how to spend the money. Speaker 2 (00:11:28) – So now they but they’ve already got health insurance. The you know, yeah, all of our, our companies are providing health insurance. But is the mental health something that’s not included in their current packages. And do you have to educate them about that. Speaker 3 (00:11:41) – No. Speaker 3 (00:11:41) – So it is included in their packages. A lot of times they’re coming to us because their employees have a high need. So a typical HR person, there’s people marching into their office all the time saying, I’m really struggling with this, how do I get this help? And they can’t get in through insurance because it’s like an eight week wait. and so if you’re having a mental health challenge, you don’t want to wait two months to see someone. So there’s this huge gap where it’s like, yeah, we have health insurance, but like, how do we help people now? because a lot of people just give up. It’s like, I’m not going to wait two months to go talk to somebody, and then they just don’t get any help at all. and so we kind of come in and fill that gap. There’s also a lot of times we’re coming in and we’re replacing what’s called an employee assistance program. a lot of people are familiar with EAP. Maybe you use them in the past. sometimes those are provided, like with a health insurance package. Speaker 3 (00:12:28) – they’re basically designed for crisis care though. So it’s like, hey, if you’re struggling and you need to talk to someone immediately because you’re, you know, having an anxiety attack or whatever the case may be, you’re going to call this one 800 number. Someone who’s not a therapist is going to answer the call, and you’re going to tell them your problem. Then they’re going to give you a list of people to call, and you’re going to call all these clinics, and you’re going to get on a list and probably wait 2 to 3 weeks. you don’t get to choose your therapist. Usually they just assign someone to you. They’re usually the least experienced therapist. So they’re kind of like getting their experience, you know, helping you out. They don’t have a ton of experience to offer. So it’s usually not like the best quality therapists. And then you can only see them for 2 or 3 visits. And then like that’s your EAP benefit. And so kind of contrast something there. Speaker 2 (00:13:16) – But it’s not it either either has time delays or it’s not enough. Speaker 2 (00:13:20) – And you’re offering an alternative benefit. And and ultimately are you selling that as, as something that that’s going to help with, with retention and just a healthier employee population? yeah. You know what what what what is what is your primary, driver for people to say? Yeah, I want, I want to add Novartis to my benefits packages. Speaker 3 (00:13:42) – Yeah. So it’s a couple things I would say retention is a big piece of it. even just like so HR tend to be like really compassionate people. That’s why they’re going to HR in the first place. And they just really want to help their employees. And they see these employees with needs that are being unmet. The benefits they have in place aren’t sufficient. and so they want to help them. So we hear things like, HR is like, I can’t do my job because I’m basically being a therapist for my employees all day, okay? They’re looking to bring somebody in to take that workload off of their plate. and it’s been incredibly effective. they’re looking for things. Speaker 3 (00:14:17) – We’re seeing a lot more, high prescription health care costs around mental health, a lot more what people are calling like mental health days, right? When people are taking days off because their their stress level or their anxiety is just so high they can’t function. And these are trends that have been just like going up even since Covid ended. They’re continuing to increase. And so companies will say, oh my gosh, like we’re having a ton of absenteeism due to mental health, and we need to put something in place that will help people get the help so it doesn’t get to that point and our employees will come to work more. so yeah, productivity and absenteeism is one of those. And then of course, the health insurance cost where they say, oh, mental health prescription costs or mental health visits are in like our top three costs. And we need to figure out a way to reduce those. Speaker 2 (00:14:58) – So it sounds like the market’s coming to you a little bit or you’re you’re you’re seeing the need grow and you’re addressing it. Speaker 2 (00:15:03) – So it has is it easier to sell today than it was maybe three years ago because of the market trends. Speaker 3 (00:15:10) – in some ways, yes, it’s easier to sell because I think people are recognizing this isn’t going away. I think in the beginning people were like, oh, mental health is kind of like the top of mind, but maybe that’ll pass, like once Covid passes and it just kind of go away. And that hasn’t been the case. It’s actually if you look at the statistics, it’s gone up nine points. Mental health issues have gone up, nine points since Covid ended. Yeah. So over the last couple of years. So, yeah, I think it’s easier to sell in that, like, everybody’s looking for it and everybody wants something. It’s not as easy to sell in the last 18 months, because air has just kind of been like their legs have been kind of cut off out from under them. It’s like, hey, there’s tons of reductions in force happening. People are cutting their benefits. Speaker 3 (00:16:02) – And even though it’s like the need is the highest it’s ever been, if they can kind of squeak by maybe one more year, you know, we’re just seeing a lot of companies that are like, yes, we want this. We can’t implement it this year. We have to like, this is like a 2020 5th January 2025. So our deal cycles have gotten a little bit longer. air is having to bring in, some of the C-suite to get their decisions made instead of being able to make decisions on their own, which is extending the sales cycle, as well. And then just a lot of a lot of challenges around budget. Everything’s just kind of down to budget right now. Speaker 2 (00:16:35) – The last yeah, the last 24 months have been dramatically harder for fund raising. And that’s trickled down, you know, the economy with, with with a stall out in the economy, there’s been a lot of cutback, with businesses in general. And they’re spending. Do you, do you focus on any particular, verticals you sell into? I know you and I are both in tech. Speaker 2 (00:16:56) – Are you selling into tech? Is that that that group has been hit pretty particularly hard. Have you thought about other pivots? Speaker 3 (00:17:02) – Yeah. So yeah, that’s a great question. when we started at the beginning of last year about 70% of our revenue was in venture backed tech. So when. Speaker 4 (00:17:13) – Okay, so you. Speaker 2 (00:17:13) – Really got so, you know, okay, this is the entrepreneur’s journey that we want to capture. You know, first you you you pivot from from physical wellness and massage to mental mental wellness and then you, you you you go from a period of, of abundant funding in the markets to brutally difficult for both you as a, as a founder, having to fund your own business. But now you’re also serving those customers. Right? So. But talk to us about what it’s been like working with the venture community, the venture funded businesses, and what you’re doing about that challenge now. Speaker 3 (00:17:47) – Yeah, I mean, exactly. We we woke up and we’re like, all right, we have all these like huge deals with amazing companies and they’re like getting to the finish line. Speaker 3 (00:17:56) – It’s like you got to like March of last year. And all of a sudden everybody’s like, oh, we’re doing huge reductions in force. All new benefits are on hold. Right? And you’re thinking, okay, maybe next quarter, okay, maybe next quarter. And a lot of those, they’ve now been put on hold for like years now we’re like two years maybe 20, 25. so I realized pretty quickly as we had all these great deals that, you know, we’re going to launch our revenue, and then all of a sudden they had just all stalled. I was like, crap, we we can’t sell into venture backed tech. We can’t focus all of our efforts there. It’s also where most of our competitors are focused, too. And so I just did an analysis. I’m like, okay, where else are we winning? What’s like our number two market and our number three market. And we saw that, health care and education were both, markets where we had quite a bit of clients. Speaker 3 (00:18:43) – they were happy we didn’t have much churn. and, you know, we just had really good utilization metrics. So I was like, okay, let’s start running some campaigns to like, double down on health care and education. And, we’ve kind of moved around within those to figure out, like where our focus is right on healthcare. Is, is it hospitals? are we focused on clinics, long term care, you know, where are we seeing the need? Where are we seeing the dollars being spent in the budget? and we ended up with a primary focus as of today on really, like, small to medium hospital networks, is where we’re focused. And then we do we have continue to get more like higher education on the platform as well. so we’re seeing those come through pretty consistently. And so now where it was like 70% venture backed tech, now we’re sitting at like 25% venture backed tech because the ones that we’re already working with us for the most part, they’re not pulling those benefits away because their employees are using it. Speaker 3 (00:19:38) – They’re seeing the benefit. And so they’re cutting other things and, you know, cutting teams. But keeping those in place, well. Speaker 2 (00:19:44) – That’s that’s such a great exercise and, and discipline to actually look at your customers and figure out, you know, where you can focus and feel like you’ve got your best chance of success. Right, because you have limited resources. And if you can find an area that, like you said, has good retention and good economics and really are getting benefit from the product, you can double down on that. And those those categories are huge, right? So I’m sure you’ve got plenty of headroom to be able to sell into healthcare and, and education for quite some time. Speaker 4 (00:20:15) – Yeah. Speaker 3 (00:20:15) – There’s there’s a lot of experimentation too. Like if we’re just talking about healthcare, it’s like, okay, we’ve we’ve always worked with health insurance brokers that sell across all industries. Are there brokers that specialize just in selling into healthcare? And it turns out that there are. So we’re like, okay, let’s get meetings with those people. Speaker 3 (00:20:30) – Let’s go to conferences that are just healthcare specific. Let’s see if we can get in with like a group purchasing organization that sells into healthcare. And so we’ve got a lot of those kind of irons in the fire, right now that are coming to fruition, which is which is exciting. So I think we’re going to be able to open that category up even more. Speaker 2 (00:20:47) – All right. Well, fantastic. That sounds like a great pivot and good luck with that. so, you know, four years in, you’ve had a couple pivots, you’ve gone through a recession, you just raised money. You’re still alive. Congratulations. you know, what lessons, would you like to share with with with our community in terms of, you know, going through those challenging times, looking back. Speaker 3 (00:21:09) – Yeah. I think so. On a on a personal level, one of the biggest lessons I learned, is just that. You know, I think growing, growing this company growing the last version of of this company, which would be I will refer to as my last company. Speaker 3 (00:21:29) – I think there’s just been I haven’t really had, like a big exit or anything like that, like some entrepreneurs. A lot of people will say, you know, after I’ve had my first exit, then after that it’s like really fun, right? They’re like more experimenting. They can take bigger risks. It’s not as scary. so I’ve just been very focused on, like, I’ve got to have a good outcome and this fear of like, man, if this fails, I don’t know what I’m going to do because I basically have worked for myself since I was like about 20 years old. And before that it was like I had two jobs. I worked at the YMCA and I worked at Domino’s Pizza. So in my mind I’m like, I didn’t graduate from college, I don’t have any real jobs to put on my resume. So like, where would I go work if I’m not working for myself? I’m not building a company. So I kind of had this fear that if this fails, like, you know, my family’s going to lose their house, we’re going to be destitute. Speaker 3 (00:22:14) – Like, I don’t know what’s going to happen. And so this is a lot of weight to be carrying around, really high stakes. And as I’ve looked back. Speaker 4 (00:22:22) – What it’s incredibly. Speaker 2 (00:22:24) – Stressful. Speaker 3 (00:22:24) – It’s it’s very stressful. And so as I’ve looked back of like how I have grown in the skills that I’ve gained and like, through all of this process, and kind of learned more about what type of opportunities would exist for a person like I am. And like, actually, I am employable. I could go onto another company where they need a co-founder, and I know how to build the building blocks of a company and how to hire and find good talent. Like, I’ve developed a lot of those skills, and I could I could get hired at a, at a just a normal company to with the skills that I have. and that’s taken a lot of pressure off of me, which is allowed me to, to kind of be a little more free to take risks and have a little bit more fun with it. Speaker 3 (00:23:08) – so for me, that was like a really life changing lesson where it’s like, oh, actually, if this fails, it’s not the end of the world. And I have other entrepreneur friends that have felt the same, right? Where it just feels like everything you have is on this one bet. And if it goes wrong, and the amount of stress and anxiety that causes inhibits your ability to really drive the company well, you know. Speaker 2 (00:23:27) – Absolutely. No, I know what you’re feeling about I, I call it the waking up and staring at the ceiling at four in the morning, exercise where you put all that pressure on. But but you’re right. So having the confidence to to know that there are going to be lots of lots of doors that are going to open, that you don’t know, that are even there today, or that they will open, and the confidence that you can find your way through, you know, and now you must have more confidence. You’ve done several pivots. You’ve you’ve raised capital in a challenging environment. Speaker 2 (00:23:55) – You’re seeing more opportunity. And, you know, you probably couldn’t have seen the opportunity you’re looking at today 18 months ago. Is that. Speaker 4 (00:24:00) – Correct? Yeah. Speaker 3 (00:24:01) – Oh, 100%. It’s and yeah, you just never know what’s coming down the pike. And I think too, you get you’re going to get thrown curveballs like there is like a real element of luck, a large element of luck. Right? I can have the skill set to build the foundation of a, of a healthy company with smooth operations and, you know, great financial hygiene. I can understand go to market really well, but it’s like if the market’s not there, I mean, there’s just so many variables. It’s almost like we have to kind of give ourselves permission that it’s like, if the company fails, it doesn’t mean you have failed. It doesn’t mean you’re a failure. It may just mean like the market isn’t ready for this product or the market changed or, you know, I mean, I have I have a couple good friends that have had to like, shut down businesses with fantastic technology because there wasn’t really a market for it yet. Speaker 3 (00:24:54) – You know, and that doesn’t mean that they failed or their technology was terrible. There’s just so many elements that have to be perfectly aligned to really have that explosive growth that you know you want in that company. Speaker 2 (00:25:06) – No, I think I think you’re touching on a really huge point, which is the confidence the, the to be able to take what comes and, and have confidence that you’ll be able to get through it. And it takes that to be an entrepreneur. That’s part of that, that, irrational courage that founders and entrepreneurs have that, that, that. Allows them to, to to do irrational things and great things and change the world. So, you know, how do you how do you share that message? It’s so powerful. I’m grateful for you being your your candid, disclosure here, but how do you do you have other groups that you work with and, and does this topic come up a lot? Speaker 3 (00:25:45) – Yeah, I do, I, I personally like to mentor other entrepreneurs, especially female entrepreneurs, is kind of like something I’m really passionate about. Speaker 3 (00:25:54) – So at any given moment, I probably got like 3 or 4 different women that like, I’m meeting with and helping and taking calls with, and you know, that they’ve never raised venture capital before or they’re not really sure how to get started or, you know, they’re struggling in this area or that. and yeah, I think it’s important. I mean, one of my friends just finished a fundraise that she expected to take three months, and it took her six months. And and running the company and like fundraising is brutal. Normally it’s like I was my husband. So I raised capital five times. Every time he’s like, okay, he’s got to like, gear up. My family’s got to gear up. They’ve got to be like, ready for the haul that they know is coming. Because I’m I’m basically absent for that amount of time because I’m running the company. I’m flying all over the place. I’m having a million meetings. It’s incredibly stressful. It’s up and down. You get all excited about an investor and then they don’t invest, right? You know, I have to I think I my last fundraise not the one I just did, but the one before that. Speaker 3 (00:26:49) – I think I pitched 69 VCs before I got a term sheet. And so, you know, it’s just like, you know, it’s going to be hard. You know, it’s going to be difficult. You don’t expect that to be six months of that like that is that is brutal. So anyway, she just finished this fundraiser and she’s so burnt out. And I had finished mine like a month before. And she’s just like, how did you get through it? How did you recover? And I said, you know what? I took a ten day vacation with my husband right after it closed because I was like, I have to have this time to recharge because I was so wasted. And you run your company better when you take that time for yourself. Because I was just in this mode where I was so in the weeds and so, like zoomed in on everything and pulling out for ten days got me like to pull back and like, zoom out. And I could think a lot more strategically. Speaker 3 (00:27:37) – And we have like a ton of exciting stuff going on now that if I think if I would have just powered through it, I don’t know that my brain would have worked the same way. So we I think we forget that, especially if we’re, like raising money. We were like, oh, our VCs are just going to expect us to, like, jump in there and, you know, use their money. We got to be seen as like, oh, we’re working so hard to execute on the capital they gave us. But I think we need to give ourselves permission to like, take that break and take care of ourselves, because having a burnout CEO isn’t in the best interest of the company. Speaker 2 (00:28:07) – Well, that’s that’s a hugely important factor. And you know yeah we’re talking about mental health and your company’s an expert at that. And you’re helping people throughout all your clients and their, their employees. So that’s a great, great perspective. And I think people have to understand that. Speaker 4 (00:28:23) – Well, terrific. Speaker 2 (00:28:24) – I really enjoyed chatting with you today. you know, in addition to this podcast, you know, what do you like out there? What are you reading or what are you listening to? That’s that’s helpful on your on your journey? Speaker 4 (00:28:36) – Yeah. Speaker 3 (00:28:36) – I mean, my favorite podcast ever is how I built this. So I can listen to that anytime. My kids love it. I’ll sometimes let them pick an episode when we’re on like long trips and just be like, what company do you want to learn about? I just love the the beginning stages and the creation of companies is my favorite part. as far as books I love, Extreme Ownership is probably one of my favorites of all time. Just like this idea of like, always taking ownership for how things go. And I mean, we’ve everyone on our team has read that it’s like one of our core values. we’re always pushing for that, like this culture of accountability. and then right now I’m actually reading the four disciplines of execution. Our whole leadership team is reading that. Speaker 3 (00:29:20) – One is the four principles. And how to how to create alignment across an organization like powerful, you know, taking taking your one big risk. and so we’ve been really focusing on like, what is our wildly important goal. And like the big risk that we’re going to take and put our, you know, 20% of our effort toward that one thing outside of what he calls the whirlwind, right, the day to day. So, like. Speaker 4 (00:29:44) – Those are some. Speaker 3 (00:29:45) – Yeah. Yeah. So those are some of the ones, that I’m really focused on then. I love mental health podcasts and like, things like that for like personal development too. So. Speaker 2 (00:29:56) – Oh, fantastic. Well that’s that’s great. I appreciate your time today, and I can’t wait to hear about your success over the next, next few years. Thank you for joining us today. Speaker 3 (00:30:07) – Thanks, Julian. Speaker 2 (00:30:08) – All right. Amelia, take care. Speaker 1 (00:30:13) – Thank you for listening to the Growth Elevated Leadership podcast. If you enjoyed this episode, would you please follow us and subscribe on your favorite podcast player and we’d be grateful if you recommend it to a friend. Speaker 1 (00:30:23) – If you’d like more resources on how to become a better leader in business, we invite you to visit us at Growth elevated.com. We’ll be back next week with more insight from another great tech leader. Thank you.

Speaker 1 00:00:02 Hello. Welcome to the Growth Elevated podcast. Today I’m super excited to welcome Dave Carruthers. Dave was the founder of Vox Pop me. I had the pleasure of working with him for several years, and we’re going to talk about that, that journey of building a tech company. Dave, hails from the UK. He is now an entrepreneur in the United States, and, he is a tenacious entrepreneur with some incredible stories. And I can’t wait to to hear them for our group. Please welcome Dave Carruthers. Speaker 2 00:00:33 Hey, Gillian, good to see you. Speaker 1 00:00:34 Great to have you, Dave. so obviously, you and I known each other for a while. We’ve had the pleasure of working together. my goodness, the amount of late nights, the amount of times we’ve set over a beer or whiskey, talking about stories. I think we could probably do five podcasts to pull out all those stories. Speaker 2 00:00:49 For sure. Speaker 1 00:00:51 But I’m looking forward to start. Start today. obviously we have to know each other working at Vox Pop. Speaker 1 00:00:56 Me, tell us a little bit about Vox Pop Me and the founding story. And when you thought that this idea you had could be turned into a company. Speaker 2 00:01:03 Yeah. For sure. So, we started Vox Pop me in 20, 2013, and, it was a kind of nine year journey for me from kind of zero to kind of just under 10 million of RR and kind of what we really kind of focused on building with, with the company was helping consumer brands really get to know their customers better. we really kind of, leaned in to video as a medium, and the idea for the company kind of came out of kind of seeing the the kind of rise of everybody having this smartphone in their pocket. It was just kind of like, well, you know, we looked at kind of how companies got feedback from people and they did all these surveys and it’s like, wouldn’t it be cool if as a brand, you’re Nike and you can just say, hey, we want to know what a hundred people think about this topic and give get feedback in, you know, 60 minutes, you know, a couple of hours. Speaker 2 00:01:57 And, it was really. Speaker 1 00:01:59 What were they doing that at the time if they wanted to find that out, what’s the what’s the state of play before vox pop? Me yeah. Speaker 2 00:02:04 So before vox pop me I mean, you’ve got two sides of the research quantitative which is your traditional surveys and then qualitative which was more kind of traditional kind of old school focus groups. And the focus group hadn’t really been involved since, you know, when it was originated in the 50s and 60s. And what we wanted to do is kind of mash the two together and essentially bring these, advances in technology forward and create something that was a video survey. So all of our surveys were typically 3 to 5 questions. People’s responses were about 60s per question, and it was done with that selfie style of video. And that was key, because what it allowed people to do is just articulate them their thoughts more naturally. But what it also did on the back end was provided the brands with really powerful consumer feedback that they could share with their stakeholders. Speaker 2 00:02:50 Tell, tell better stories, really kind of understand the consumer. The power of video to influence was huge. It was, you know, so funny. We saw so many times at big brands, you know, how, you know, there’d be survey data and people would ignore it. But then you show them a handful of clips of someone talking about the problem, and all of a sudden that’s what drives changed because because essentially, you know, as human beings, we kind of kind of, we need stories. You know, storytelling is such a core part of kind of how we make decisions, how we, you know, create emotion. And, you know, whilst the data provides that kind of rational, side of the thinking, the kind of emotional side, was missing. So, yeah, our value proposition was really about getting to the consumer, consumers meeting them where they were in the world and being able to, you know, you think about, the efficiency of being able to get into someone’s home and see how they’re doing things. Speaker 2 00:03:43 You know, previously to that, they would send a film crew and be like, hey, just that natural, you know, show us, show us dinner time at your house. And it’s like there’s like three camera crews and a moderator there. And, you know, this is this was so much more kind of like intimate in terms of getting into consumer’s lives and being able to understand them in the moment. Speaker 1 00:04:01 So that’s that that’s a strong value proposition. You can go out to more people, you can do it much more quickly, and you get that into some intimacy in that, that, that authenticity of, of people, you know, because of the comfort they have with their phone and the fact that they’re actually talking to their phone on all kinds of mediums. You’re bringing that to the corporate world and, and, you know, did it take was it hard for the corporate customer to adopt that? Did they see this right away and say, oh, we want this, or what were some of the the challenges and getting them to change their ways? Yeah, I. Speaker 2 00:04:32 Mean, I think, for the first, first 4 or 5 years, kind of felt like a missionary evangelizing. the good word of video, so ironically ended up moving to Utah, but, yeah, I mean, just. Yeah, it was it took a lot of, like, education and advocacy and, you know, kind of, you know, I think kind of people, like, were intrigued by the concept, but we were definitely selling into an. Industry that was, you know, this is how we do things. This is how we’ve always done things, you know, and things there. And, you know, in the early days as well, you know, our kind of hypothesis of like, people are going to want to watch all of these videos and really get close to the consumer. And the reality is that was too much of a time bird and they didn’t have time. So, you know, we were we were, you know, I guess doing AI stuff before everyone was doing AI stuff in terms of how do you take this corpus of, you know, hundreds of videos and use AI to, you know, manage transcription, theme, coding sentiment, you know, and the platform was even able to be like, hey, out of those 200 videos, give me a reel of females under 30 talking negatively about these three things and bring that into a highlight reel. Speaker 2 00:05:42 So yeah, really kind of took the all of the pain points out of working with video, there. But yeah, definitely in the early days kind of getting consumers, brands started using this. And even in the first days, we, we started the company thinking we were going to be a tool for the market research agencies. you know, the big the contours of the world. GfK is these big, big agencies. And, you know, we kind of got pushed back. Our clients aren’t asking for this. It’s not interesting. And that essentially forced our hand to be like, okay, well I guess we need to go and validate that directly with Unilever themselves and these other brands and McDonald’s and, you know, and all of a sudden, like when we got into the right people, the forward thinking people in those organizations that could see that this insights function needed to be the, evolved. Like that’s where we start to get traction. So that, again, I think is a big thing for any startup is you’ve got to find those early champions that believe in your product, that they’re trying to do something in, within their business. Speaker 2 00:06:39 And, you know, there’s some great examples of clients that were early adopters of Vox pop. Me, they spoke with us at conferences. They kind of turned their department around, and then they’ve seen benefits in their career in terms of their progression in terms of like, you know, the now running, you know, you know, hugely, large departments within these big companies because they’ve kind of, they adopted tools like ours and others. Speaker 1 00:07:04 You know, that’s a great point. You really had to find the early adopters, the the people at the beginning of the crossing of the chasm. Right. And let’s just go over the dates. So you started the business in 2013 and you grew it from, from zero to, you know, around 10 million of RR. What what was the headcount? You know, when you. Yeah, we got, we we got. Speaker 2 00:07:24 Up to about 70 I think at you know when I kind of left the business. So yeah, that was. Speaker 1 00:07:30 A great run zero 0 to 10 0 to 70. Speaker 1 00:07:32 But you know, you’ve got a great value proposition. You’ve got big customers, big enterprise customers. So all that looks positive. But I think, you know, sitting here now in 2024 looking back this seems obvious. But like you said, it really required people who were willing to change the way they were doing doing things. And as I also recall that it was it was also the way they were used to buying things and conducting the work. Right? So that was that was a big challenge. Yeah. I mean, that. Speaker 2 00:07:56 Was a huge challenge. I mean, you know, now it’s kind of a fait accompli that most of these insights teams are buying multiple tools on an annual license in a, in a SaaS model. And I you know, I remember kind of when we first sat down and I was kind of explaining to you a bit more about the business and you’re like, okay, tell me about the revenue. And you’re kind of like pulling faces and like, what? What do you mean? This is there. Speaker 2 00:08:18 And like, we’re kind of like working through it. But yeah, I mean, like in the early days, like these people were used to buying projects, you know, and yeah, it was it was wild. You know, they could get 50 grand signed up for a project, but try and get them to get 12 grand, signed up for a subscription. And it just like that wasn’t how they thought about stuff. So yeah, it took a lot. You know, we had a we started off as a kind of, pay per video kind of usage kind of based model. We then, moved into more of a like a buy and bought credits and then eventually kind of, through through kind of, some of your leadership and kind of focus and again, kind of, you know, you know, what the our investors wanted to see was, you know, moved more to a full SaaS model. But, you know, again, it was it was interesting because we were kind of, you know, a lot of that we were you’re trying to sell something that people aren’t sure they want yet. Speaker 2 00:09:09 Yeah. In a, in a modality that they definitely aren’t comfortable with yet. And so trying to balance that and. Speaker 1 00:09:16 Trying to change the, the, the long standing behaviors and, and relationships that the industry have is difficult for a startup. So that was you know, I want to talk about, talk to you about in this next stage about the move from a UK company to the US, which you, you know, you and me have done very successfully. you know, I think 80 or 90% of the customers now are our US customers. But one of the challenges was what you just described, which is, you know, coming we wanted to raise capital in the US. We needed to have a business that that was attractive to US investors. It was a SaaS. You know, it was a it was a it was a business that had some service revenue. We moved it to, to to SAS and we were successful in raising capital. But let’s talk about just the overall other. Speaker 1 00:10:00 Challenges of moving to the US. You made the move to say, hey, you know, you’re an aggressive, bold founder. You said, I’m going to go plant the flag and live there myself and come to Utah, as you mentioned. Tell us a little about that story and how that impacted your founding team. And, you know, looking back, is that the way you recommend companies would would expand in the US? Speaker 2 00:10:19 Yeah, I mean, I think, you know, I was I was fortunate enough to kind of, you know, it always been a personal ambition of mine to kind of, you know, I’d been in tech for a long time, building companies, you know, it was a personal ambition to kind of move to the US. I never imagined it would be to to Utah rather than kind of Silicon Valley, I guess. But, you know, we had a we had a great partnership with a company here, and it was a it was the catalyst to kind of convince the board that, hey, trying us expansion would be would be good. Speaker 2 00:10:49 I mean, we were probably about a million in revenue when we went to the US, which is way earlier than I should say, is that. Speaker 1 00:10:55 You think that was the right time to move to the US or what? In retrospect, what do you think? what do you what do you need to be able to move the US? Let’s start it that way versus a revenue number. Speaker 2 00:11:03 I think, I think it’s really tough to find if you might get lucky and find that key hire and things like that. But I was very much of the opinion that if we were going to go to the US, it needed to be a founder mentality person. It couldn’t just be a job for somebody, you know, it’s the biggest market in the world. you know, you’ve got to get it right, you know, kind of, if you kind of outsource that, you know, is it because you’ve picked the wrong person, or is it because, you know, the product isn’t isn’t there and stuff? So as ever, kind of throughout my career, I’ve kind of been opportunistic. Speaker 2 00:11:43 You know, there was an opportunity to kind of move to the US because of this partnership. so I was kind of really focused on how do we leverage this opportunity, to kind of to show that. But it’s yeah, there’s definitely challenges for sure. Speaker 1 00:11:58 So, so you chose the model of one of the co-founders moving and establishing the base and leading from the front. Do you think that was a key to your success? Speaker 2 00:12:09 I think it was a big part of it. Yeah, I still firmly believe that, you know, and again, it’s not it’s not, you know, something everybody can do and depends on your kind of stage of life and where you’re at and stuff. Fortunately, like my kids were young, my wife said yes, you know, kind of, you know, like, I think you’ve got to get kind of buy in and stuff. But, you know, it was I definitely sold it as a let’s go to Utah for a year. maybe knowing that like many. Speaker 1 00:12:36 People have done that. Yeah. Exactly. Right. How many years has it been now? Speaker 2 00:12:40 Guest nine. Yeah, yeah, I’ve been in the US nine years now, and yeah, my kids accent’s a little bit ruined. But, you know, other than that, it’s, it’s. Yeah. You know, love living here, particularly in Park City with all the great mountain biking, snowboarding and kind of, you know, access to, to, to everywhere in the US is just so easy with the, with the airport being 30 minutes away. Speaker 1 00:13:02 So let’s let’s unpack it. You chose the strategy of the founder move, which is bold. And I think it was a key part of me success. What you know, once you were here, what were the next handful of hires? And looking back, you know, were they the right, right sequence? And what were the critical ones that allowed us to get scale and us. Yeah, I. Speaker 2 00:13:23 Mean, I think we you know, initially it was just some kind of, more junior folks just to help, like on the project management side and the, basics there. Speaker 2 00:13:32 But, I mean, obviously kind of bringing yourself on board as our CFO was it was a big move. we’d obviously been chatting about kind of a fundraising journey where we where we were, and it was kind of, you know, it was such an interesting challenge going from the UK market and having raised money there, which is, you know, relatively conservative versus kind of US approach to fundraising. And I’ll never forget I had, you know, at the time we had one deck. And you know, I’d advise fathers founders. Now if you’re raised in the UK, have one deck and if you’re raising the US, have a different deck and don’t those decks are probably a little bit different because I presented this deck in the UK and someone was like, this is crazy. It’s like pie in the sky. It’s two things. What’s your EBITDA? You know, all this kind of like kind of UK kind of thinking. And it has improved in Europe and the UK, but it’s still lagging way behind where the US kind of thinks about scale and ambition and things like that. Speaker 1 00:14:28 What was what what was your revenue state when they were asking about EBITDA? Speaker 2 00:14:32 Oh like, yeah, like a million or something like that. Yeah. Okay. Yeah. Yeah. Speaker 1 00:14:36 It’s like that is definitely different. That’s that’s when you and I met and I’d been coming from Bessemer. I share with you there’s a little different expectations here in the US. Yeah. Speaker 2 00:14:43 Some of us like UK early stage investor. That’s like asking for a five year cash flow forecast balance sheet, fully integrated balance sheet. And you’re like, what do you want? Like, you know what I mean? It’s just such a disconnect between, you know, all that it is. And then, I presented exactly the same deck to a, a usb-C who’s based in New York. And, he basically described what we’re building as a lifestyle hobby business. And I was like, hey, Morley kind of offended by that because I was like, you know, that’s not what we’re building. But B is like the disconnect between one guy thinks this is a lifestyle hobby business, and another investor thinks that we’re, you know, pie in the sky, crazy big dreamers. Speaker 2 00:15:24 It’s just, interesting. So yeah, definitely some cultural differences on kind of raising capital. the growth expectations, obviously we were raising kind of a larger round kind of more towards 2017, 2018. And again, the market’s changed a lot. You know, we were definitely in a zero interest rate situation growth at all costs. You know kind of don’t you know don’t worry too much about the burn. As long as you’re growing 100% year over year, just keep on that trajectory. right. So you know and you know, that was this was a great while it lasted, but it’s also kind of a conveyor belt that you get get on and can be difficult to, to keep up. So, you know, there are definitely some benefits of, you know, the UK investor is more pragmatic, more willing to be patient support. the US investor, it’s like, you know, you better hit the market. Otherwise we kind of writing you off from our portfolio’s return. So, you know, there’s pros and cons of both both sides of that. Speaker 2 00:16:22 But that was probably the biggest thing for us. Like the cultural differences between, our mixed investor base having having, investors on both sides of the pond. Speaker 1 00:16:32 Yeah, the investing on both sides is definitely a rich topic. And I think you summarized it well. Let’s talk about building a team that can expand the US. I think that with with you and Victoria moving over here, you know, you had a co-founder and a senior operational executive. Do you think that’s the, you know, the right, set of anchors that you need? And let’s talk about some of the key hires that, you know, you made for the for your go to market expansion. Speaker 2 00:17:00 Yeah. So the key, the key hires, I think, well, obviously, you know, to get a foothold in the market, you know, it was all about. Sales velocity and sales traction. So it definitely became a company where, you know, find it out of the UK. Very proud to find the company in the UK. Speaker 2 00:17:17 Co-founders based there, all of the product team based there. So product became, you know very much UK based and stuff. So the the hires we were focused on in the US were all really go to market hires. So, a couple of the key first hires were a couple of experienced, sell, people on the sales side and then a customer, customer success leader, Brendan Johnson, who came in, who had experience in the industry and was able to kind of, navigate and build that kind of customer success and retention function, from the ground up. So I would say, yeah, kind of all all really focused around, around go to market. And then also we, we ended up hiring, VP of marketing in the US as well. So yeah. How did how. Speaker 1 00:18:04 Did you find these folks. You know, it was when you find them when we’re still in the UK or is it after you’re here in the US? And would that make a difference and be able to find these critical hires that had some industry expertise? Yeah, I. Speaker 2 00:18:14 Mean, a big part of our growth story was being out and about events and conferences and stuff, and we really kind of made an impact and kind of, you know, were were, you know, were we’re very kind of visible at conferences. We’re very, you know, hosting a lot of kind of events and kind of, you know, kind of we we built a good reputation within the industry through that. So we, we attracted, a lot of talent kind of inbound because people saw what we were doing. So we got a lot of industry talent that was maybe, you know, kind of excited about how we were kind of coming into this new industry and disrupting it a little bit. So I would say like, yeah, I mean, it’s the most of those hires came through, kind of, kind of networking with people and recommendations and stuff. Speaker 1 00:18:59 Going to events, almost building a brand through your presence at these events. And, and that, that allowed you to build a team of people as experts. Speaker 1 00:19:08 And were you in the US at this time, and would you be able to do the same thing if you were in the UK? Speaker 2 00:19:13 so it started off, it was just coming here regularly. But yeah, I mean, most of those big hires were made once we moved here. And I think it’s just, you know, hiring is difficult when you’ve got a team down the road and you’ve got a thing. It’s even more difficult when you’re hiring people, you know, in a, in a different country. And and again, that was a big impact shock for us. I mean, the, you know, compensation expectations are vastly different here. That created some friction with like the team. And we’re spending this much on a project manager here versus here or, you know, this is how much. And you know, again, trying to as a UK company that was kind of modestly compensating its executives, trying to move to the US and hiring mid-level people that, you know, salary expectations were more than the, the, the executive team. Speaker 2 00:19:59 It was. Yeah, it was it was an interesting transition to, to kind of, to kind of deal with. So, yeah. So there’s definitely a kind of a lot of learnings around kind of how do you build that team and kind of, you know, how do you how do you think about, bringing, bringing the right people in? And we definitely had some mis hires, you know, for sure. In terms of like, people that didn’t work out, you know, for one reason or another, either, you know, we were we were very scrappy. I think companies take on the identity of their founders, particularly the CEO. So again, particularly in that 0 to 5 stage, you know, again, as you grow, you have to bring in, you know, different personality types, different levels of experience. But, a lot of the times, I think, I think early stage companies get attracted by logos on people’s resumes. Oh, like this guy was at Google. Speaker 2 00:20:51 It’s like, yeah, okay, great, he said. But they were used to having this, this, this, this and this around them. And that’s how they were successful. It’s not that they’re not good at what they do, but you take that away from them. They don’t know how to be a success as successful without the resources in the same ways. You know, smaller companies, right, aren’t quite clear on how to 0 to 5. Speaker 1 00:21:11 You have a different resource set for sure. And you have to be scrappy. And you’re right, you you definitely, you know, model that behavior. And I think built that culture in a great way. well, before we move on to another topic. Moving to the US. You moved first. You hired people within the industry. You made a presence at the trade shows. I think that helped. Speaker 3 00:21:36 To talk, talk, talk to me about. Speaker 1 00:21:39 some of the other challenges of coming, coming to the US. I know when we first started talking, the business had an operation in Australia. Speaker 1 00:21:49 You also were looking at expansion in EMEA. You were obviously growing in UK, and then you were now really pushing on in the US. Now, in retrospect, was that a sustainable strategy or did you kind of have to experiment to kind of focus? And I know we, we narrowed down to the US over time. But you know, looking back at that geographical expansion strategy, what are your lessons? Speaker 2 00:22:10 Yeah, I think the lesson was we tried to. being opportunistic works, you know, can work, but it also has downsides. So again, kind of, you know, like we had, someone from the industry that wanted to, you know, invest, you know, a decent amount and wanted to set up a presence for us in APAC. And we’re like, okay, well, it’s kind of little downside risk. You know, we’re getting a chunk of investment and, you know, you know, kind of adding to our expansion. But you know, the the the kind of lift or the additional kind of, kind of challenges that that brought weren’t kind of I guess a lemon wasn’t worth the squeeze in terms of that. Speaker 2 00:22:51 So I do think kind of we got a little bit distracted with trying to be too broad. I think it took a bit of time to kind of figure out, how to do that and how to do that, kind of do that effectively. but I also think kind of moving to the US also, you know, there are, you know, there was definitely unexpected impacts on the founding team and founding culture. You know, we’d gone from the three of us being like in a room together every single day, traveling together all the time to, you know, now one of us is, you know, 3000 miles away on a different, different time zone. And, you know, as we tried to transition the business and went through funding, obviously kind of brought in, brought in yourself, and I think one of the blind spots I had as a leader was essentially the impact that that created on the founding team, you know, because, you and I were very focused on, you know, the fundraise and some strategic thinking and, you know, and, you know, we kind of try to iterate quickly. Speaker 2 00:23:51 And it was it was it was more difficult to, I wasn’t intentional enough about bringing, my co-founders on that, on that journey with us. So they, you know, we, you know, definitely kind of ended up with a bit of like a, a them and us for a little period that we needed to kind of kind of work through and figure out kind of a better way to kind of communicate. So that was definitely a blind spot for me in terms of kind of, you know, it’s, you know, you know, the impact of different, different time zones and, and bringing other people in can, can have and just, you know, if you if you’re not talking regularly and I think being open and honest with each other, like that’s where kind of things start to, to bubble up that aren’t being said. And you know, there’s then assumptions, you know, on both sides that are kind of, kind of wrong. Speaker 1 00:24:43 Yeah. That’s definitely a hard thing when you, you separate the founding team and then the priorities shift, right? You know, with multiple markets, UK, EMEA and eventually I saw a shift to really focusing on the US, where most of the big customers were and most of the revenue was, but that that does have an impact on the team. Speaker 1 00:25:02 Let’s talk about scale. So so you know, there’s a number of journeys. There’s the 0 to 1. There’s the kind of the 1 to 3. And then there’s kind of, you know, the 3 to 10. you went through all three of those stages, but in that, that 3 to 10 and starting to scale a little bit after we raised the series A, let’s talk about some of the challenges you had in, in scaling the business and, you know, hiring teams for the next level. Speaker 2 00:25:27 Yeah, for sure. I mean, I think that’s definitely, Where I reflect on kind of most in terms of like, what am I good at? What, what what did I find more challenging? And, you know, 0 to 5, the scrappy stage, you know, getting anything off off the ground. I feel like, you know, you know, you know, in the top decile for doing that type of thing. when it starts to get a larger company and you’ve got to bring in, more senior roles and kind of figure out how do you kind of, build out that executive layer, to the team. Speaker 2 00:26:02 That’s where it was definitely, kind of more challenging and trying to figure out kind of who we needed and what did that look like, and what was the experience there? I mean, I think kind of, you know, key, a key thing for, a fitness perspective is obviously you’ve got to be able to be a great storyteller. you’ve got to be able to kind of inspire people to join the join the journey, inspire customers to take a chance on this new vendor. And you know, so, again, whether you’re raising money, getting new customers or recruiting key employees, all of that comes down to kind of storytelling. and being able to kind of, Gets people to do something a little bit crazy and kind of jump on this, this bus with you. We don’t really know where it’s going, but it’s probably going to be cool when we get there. So, you know, kind of get out. Yeah. Speaker 1 00:26:54 That requires a little bit of a magic. Right. That’s that’s the the founder storytelling, which is the, the key key ingredient. Speaker 1 00:27:01 Yeah for. Speaker 2 00:27:01 Sure. And I think that’s got to be matched with, you know, if you have a founder that’s like an amazing storyteller, but there’s no tech substance or product substance behind them. You know that’s not going to work. Likewise, if you have an amazing product tech founder, but they can’t tell stories or bring anyone in on the journey with them, that’s not going to work as well. So I think I think that’s the key thing that, you know, investors want to see when they’re looking at companies is like, what are the dynamics between the founders, you know, what are the you know what what is the kind of overlap skill set. Are there any gaps? kind of kind of between that. So, yeah, I mean, I think, in terms of scaling up, I think, yeah, as we started to kind of scale up, you know, I think a couple of things were kind of interesting. One was, we, we pushed into we had a core kind of audience for our product, which was insights of market research, but we’d had the partnership that brought us to the US was based on like a customer experience use case embedded into that there. Speaker 2 00:28:01 So we saw that as a really interesting idea and that kind of had more potential scale and kind of, opportunity. So we spun up our team that was focused on customer experience. We also because we’d seen one partnership, but also spun up a partnership team. And we’ll kind of figure out, okay, there’s a lot of other tools in this space that would benefit from having the video layer. How could we do that? So both of those were, I guess, interesting endeavors and like strategically made a lot of sense. And it’s always easy to kind of Monday morning quarterback this and be like, oh yeah, we should never have done that or done this and stuff. But I think from 0 to 10 you should be able to get you should be able to get to 10 million an hour with one core product category and one core product, and then expand. Speaker 1 00:28:50 And you’re seeing that because you think the focus is critical. Yeah, I. Speaker 2 00:28:54 Think the focus is critical. I think I think it it creates a lot of stress on the product team in terms of trying to do, you know, everything, you know, or try to be all things to all people. Speaker 2 00:29:06 And then a lot of the stuff with the partnerships was a lot of investment upfront for the promise of future revenue that may or may not come. So then you’re and that’s. Speaker 1 00:29:15 Hard when you’re capital constrained and resource constrained. Yeah. Speaker 2 00:29:19 100 100%. So you know, it feels like I mean we we I call them Bonnie partnerships. You know, I love you we love you kind of thing. Great press release but like where’s the where’s the dollars, where’s the revenue. And you know, we definitely had some that kind of, worked. But you know, I remember every year and you remember this. Well, we had a line in our forecast that was partnership revenue. And, you know, it was always, you know, you know, you know, five x what it ended up being because we were like, but there’s so much potential if we just do this and here’s this big pipeline. And the reality is if you haven’t, someone once described it as like, if you think about the McDonald’s franchise, like McDonald’s didn’t start franchising until they perfected the model and the go to market and figured it really has. Speaker 1 00:30:02 To perfect your own model before you can expand. Speaker 2 00:30:04 What you can’t do is start all these partnerships and be like trying to get them to kind of figure out the messaging, the go to market, when you’re still like. In iterating on that, you need to give them a playbook that is proven and, you know, works because otherwise you’re like, well, is it our current messaging and we’re not doing it right? Or is it how they’re delivering it and stuff? So a lot of lessons there. And I mean we went through four VP of partnerships, none of them bad, you know, bad hires. You know all experience partner people. But like, you know, we probably should have realized earlier that, hey, maybe it’s not the person. Maybe it’s the maybe it’s the stage or. Speaker 1 00:30:38 Yeah, or capabilities in general. Yeah. Well, Dave, despite all those challenges, you led the business through several stages all the way to 10 million. you had you have an incredibly, tenacious, leadership style. Speaker 1 00:30:53 You you talked about, you know, the challenges that kept coming up and, and the setbacks, and you had a particular way of describing them. I want to give you a chance to to talk about that briefly. And, you know, when you get hit like that, how do you come back and and keep your motivation high and keep being that, that motivational storyteller? Speaker 2 00:31:09 Yeah. For sure. I mean, yeah, I think, kind of coined the phrase like, yeah, when you’re, when you’re a startup founder, it’s basically about being kicked in the balls every day and just kind of keeping keep and going and stuff. And it’s just, you know, it’s I think from, from my perspective, it’s there’s always a lot of like, you know, ups and downs on any startup journey, you your best day and worst day are usually 24 hours apart in this side of things. And, yeah, you kind of have to, you know, not get too high on the highs, not get too low on the lows. Speaker 2 00:31:39 And, you know, it’s just it really is kind of, All right. That resiliency I think kind of you know, grit is a is a kind of undervalued kind of skill set. And the ability you’re going. Speaker 1 00:31:53 To get those highs and lows. And yeah, and it’s not easy. It’s it’s it’s really hard. Right. Speaker 2 00:31:58 Yeah. Kind of keep pushing on for and kind of keep figuring out, you know, that said the inverse of that, it did get to a stage where I decided, like, now is the time to step away. Like I’m not the right person to lead this from 10 to 25 and stuff. So I think it’s, you know, I think the key to good founders is, is knowing what you’re good at, knowing where you need help and bring it in the right people around you, and then also kind of being open to say, okay, this needs grit. I’m going to just push through this because I’m the best person to do this. Or actually, this needs more than grit. Speaker 2 00:32:30 This needs a different set of skills or different, kind of perspective on it and, and things like that. So that’s something kind of earlier in my career, I was I was less self-aware. And I think as I’ve kind of, you know, grown and, you know, had had the mentorship of yourself and others have become more, kind of introspective around, okay, what am I good at? What am I not good at? What are the what are what are the things that kind of gives me energy? What are the things that kind of drains energy and definitely is as the company started to scale, you know, as you get more people and more layers, you know, you kind of, you know, you you almost stopped doing work at some point as the CEO and you’re essentially just in meetings about meetings and, you know, there’s, you know, if someone’s talking to you, it means there’s a problem. So you’re just spending a lot of time firefighting stuff. And like, you know, I’m a builder and I like to be scrappy and iterate and like hands on and hands in. Speaker 2 00:33:22 And, you know, as a leader, kind of as you get a bigger team, you need to kind of get let them kind of be the people kind of doing the work. And, you know, that was a interesting transition for me. And, you know, I just kind of got to a point in my career where I was like, you know what? Like I am excellent at 0 to 5, 0 to 10. I’m going to focus here and can create incredible value for myself and investors in that, in that stage and, and get companies into a great space. And, you know, I’m sure at some point in my career, I’ll end up kind of hopefully finding the right opportunity where I can go, you know, all the way from 0 to 100 million. but I think kind of, you know, the stars will need to align for that to be the right thing. Or, you know, maybe I just need to, you know, you know, continue to work on those skills. Speaker 1 00:34:11 Well, that’s a great segue. Tell us about what you’re doing now. Speaker 2 00:34:15 Yeah. For sure. So, yeah, I’m launching a new business right now called Zeta. zeta.com. really exciting new, marketplace, business. So it’s a group buying platform. we’re focused on the outdoor industry right now. So bikes moving into kind of other outdoor enthusiast categories. And really the the value proposition on the buyer side is, you know, you’re going to spend, you know, 5 or $6000 on a bike. It’s difficult to negotiate a great price. You haven’t got five mates that all want to buy the same products. And we’re essentially, group aggregating buy side demand and matching it with sell side supply. So essentially finding 5 or 6 consumers that all want the same product in the same window. So think about an eBay auction where there’s one product, one person wins and they pay the highest price. The person who bids the most with the idea. The more people that join, the lower the price gets and everyone gets the product. Speaker 2 00:35:09 So we’re really excited. Speaker 1 00:35:11 As a as a as an outdoor enthusiast, I want to get a new bike, but I want to get a deal. And so this is kind of like Groupon for that category. Is that. Speaker 2 00:35:18 Yeah, absolutely. Kind of Groupon meets Overstock, for starting with bikes and then expanding into other, other categories. we’re starting as a marketplace, but our vision is really to not just be a destination marketplace, but also be, a technology layer that sits across kind of other sites. You can apply. Speaker 1 00:35:38 It to a lot of categories group. Speaker 2 00:35:39 By, power and group by across the e-commerce thing. So we’re thinking about kind of, you know, different ways to do that through browser extensions, Shopify apps, things like that. So I’ve got a co-founder based in Amsterdam. So doing the, long distance co-founder thing yet again. Speaker 1 00:35:55 You have experience doing that for sure. Yeah. Speaker 2 00:35:58 but, yeah. So that’s been, that’s been a great, thing. And, you know, obviously we, we share an office a lot of the time. Speaker 2 00:36:05 So you see, and kind of, I guess, it’s fun to be back in, that zone of excellence, zone of genius, and kind of scrapping around. Speaker 1 00:36:13 Well, I think you’re you’re you’re in your sweet spot. You’re a tenacious entrepreneur, and I can’t wait to see what you do with Zeta. Where can people find more information about Zeta and where can people find you? Yeah. Speaker 2 00:36:23 So, you can connect with me on LinkedIn. I always love to talk to founders, share their story, and and help wherever I can. So just Dave Carruthers, on, LinkedIn or at Dave Carruthers on, Twitter and insiders [email protected]. And so, yeah, check it out. sign up and, yeah, we’d love to help you get a great deal on, on your next. Bike right now. Speaker 1 00:36:45 Awesome. I look forward to to shopping with you. Hey Dave, thanks so much for your time today. This has been fantastic and best of luck with all the all the future endeavors with Zeta and your other other activities. Speaker 2 00:36:56 Thanks Julian. Really enjoyed the chat. Speaker 1 00:36:58 All right.

Speaker 1 00:00:02 Welcome to the Growth Elevated Leadership podcast with Julian Castelli. Each week, we talk with senior tech leaders to explore stories and insights about the challenges involved with growing technology companies. We hope that these stories can help you become a better leader and help you navigate your own growth journey. Julian Castelli 00:00:27 today I am very excited to welcome Deepak Simone. Deepak is the co-founder and managing partner of Wave Crest Partners. He focuses on helping founder led capital efficient B2B software companies to grow and scale. Deepak has been in the investing business for a long time. He was a partner at Bain Capital Ventures, in their growth equity group and also in venture capital at Comcast Ventures. Welcome, Deepak. Deepak Sindwani 00:00:55 Hey, Joy. Thanks for having me. Great to be here. Excited to, you know, Chad and and and hopefully, hopefully I have something smart to say. Julian Castelli 00:01:06 Well, you always do. We’ve had a lot of these conversations over the years. And when I started this podcast, I had you in mind as someone to, to to talk to and hear your story. Julian Castelli 00:01:16 You and I got to know each other when you were at Bain and up in Boston. And, I recall you being a very, very smart investor, very vertically driven. We were in a travel tech business at the time, and you had done a lot of work in that space. And, and, you know, we were talking about potential deals. But, you know, I also considered you an industry expert that I enjoyed speaking with. And, I also I was was excited when you called me one day and said you were starting your own firm, and that became Wave Crest Partners. So tell me a little bit about that founding journey and your path to starting your own growth equity firm. Deepak Sindwani 00:01:51 Sure. So as you mentioned, and I’ll just add a little bit to it. You know, I started out of undergrad briefly as an investment banker, was quickly reformed from that, started my own software company. So I always had a little bit of an entrepreneurial itch, but did it at exactly the wrong time during what I call bubble window now, and kind of the 99 2000 era. Deepak Sindwani 00:02:13 got more into the operating side, came back after that didn’t work, in product management and marketing and business development for a few years, both growth companies and one larger company, and so saw some ups and downs and then was lucky enough to get into the venture business in 2003 at Comcast, as you mentioned, joined Bain Capital in 2009. And then, you know, as you mentioned, you know, what I learned in my journey, which I’m excited to cover today, is I thought that Silicon Valley venture was the only way to invest in tech. And I went out and lived for two years in Silicon Valley. I joined a firm that did a lot of investing in Silicon Valley and then what I came to realize was there was a different form of investing called growth equity. And, you know, it’s a different level of risk. But it’s also, I think, a different approach to working with founders. And so I learned that through investing in a founder led business across from the Coors Brewing Company in Golden, Colorado, in 2006 while I was at at Comcast. Deepak Sindwani 00:03:21 And that changed my life. And, and that caused me to pivot to Bain. And so I did a lot of growth equity at Bain with non Silicon Valley companies and exclusively focused on non Silicon Valley companies, because we had an office there that focused there. And you know what I discovered was kind of a gap in the market. you know at the lower end of the market businesses that are what I call more in the expansion stage, you know, 5 to 10 million, 5 to 15 million of are, as I like to say, they’ve got something that’s working product market fit. Maybe they have one product instead of multiple products. And what they want to do is scale that. And, and so they need more help than I think just someone who deploys capital and shows up to board meetings, they want somebody who can they can be real sounding board on issues in particularly the go to market arena, sales, marketing success, analytics. And so that’s that was the impetus for starting Wave Crest out of Bain. Deepak Sindwani 00:04:24 Obviously, Bain is a great firm. I learned a ton, worked with really smart people. and obviously we met there, but I felt like if you know, one, I had the itch to do something entrepreneurial again and to felt like there was a gap in the market for, you know, companies that wanted less than, you know, 20 million of capital and, but wanted a, a partner to help them grow. So that’s why we name the firm Wave Crest Growth Partners and started hung a shingle as in many, many of your. Julian Castelli 00:04:55 Yeah. That’s your entrepreneurial journey. So you you, you probably, have your own story of the struggle. Right. And it was it was easy just people gave you money and said, invest it for us. Deepak Sindwani 00:05:04 What’s interesting is, you know, we we are entrepreneurs ourselves and so have a lot of respect for founders who go through the struggle. And we went through struggle in the first three years of our business, including one founder departing, departing, which I know has happened in some of your founder situations. Deepak Sindwani 00:05:23 And it happened to us. we also, you know what what’s interesting about starting an investment business versus technology companies. And certainly I’m not saying it’s at all any harder or easier. It’s just different is in an investment business, if you don’t have capital, you’ve got nothing to do. Right. And so a big part of the game is, you know, pitching like an entrepreneur goes and pitches investors or pitches friends or pitches customers. And in our case, we have to pitch. You know, either wealthy individuals or institutions like universities or foundations or pensions and, you know, but in the case of, of of investment funds, you know, you need to get ten or more of those investors to align in order to, you know, get past your existence risk. Julian Castelli 00:06:13 And so that was your existential starting point, your cold start problem. Right. Exactly. What was your what was your first round and how long did it take you to raise it? Your first fundraising? Deepak Sindwani 00:06:23 It took us so what’s what’s it what’s really interesting is and this was a learning for us as well that you go through in the journey is we we started and said, okay, we should go raise some capital. Deepak Sindwani 00:06:35 But then very quickly, from my past at Bain, I had been building a relationship with an entrepreneur in the commercial real estate technology space and his company. He wanted to, bring in some growth capital and bring in some help to continue to grow his business. He was around, you know, 8 or 9 million of RR. And so so, you know, we started early January 2016. By March, you know, we were already really talking to him, this gentleman named David Osborne, who’s a phenomenal individual about how to help him before we had capital. Julian Castelli 00:07:13 And that could be helpful. Right. Because you’ve got a deal on the sideline or even do an SPV for that deal or something. Deepak Sindwani 00:07:20 Yeah. So that’s exactly right. It was it was, you know, it was like the first customer that some of your founders. Julian Castelli 00:07:24 Have found in customer. Right. Deepak Sindwani 00:07:26 You learn it was our first, first investment. So we ended up really liking this business and and going hard after it and convincing the founder that we brought a different approach than other investors that he had met in the market. Deepak Sindwani 00:07:41 And we gave him a term sheet. And so part of our our story, if it was, you know, all founders have to be audacious. We were being audacious through. Julian Castelli 00:07:51 Did you have the capital behind that term sheet. Deepak Sindwani 00:07:53 We that’s the secret right? We did, we did. And so very stressful time as I’m sure all founders go through. And you promise something to a customer and then you got to go build it. That’s right. It was very similar. And so in June of 16 we signed a term sheet with him. And then we went and we of course had, a sense of what we would do. Like most founders, we weren’t the only. Julian Castelli 00:08:18 Of course, but we but you didn’t have it signed yet. You had to. Deepak Sindwani 00:08:22 Go do it. Julian Castelli 00:08:22 So, you know, it’s like the like like the, the not as a vaporware, but when you show a presentation or a figma or something of what you’re going to build on a in a piece of software. Right, exactly, exactly. Deepak Sindwani 00:08:33 So it’s the wireframe becoming the frame. Julian Castelli 00:08:35 That’s it. Deepak Sindwani 00:08:36 And so we went out and raised capital and invested in David’s company. And, you know, it was like the, the, the, the Genesis story. And so from our perspective. Julian Castelli 00:08:49 You did you close that deal before you raised your funds. So yeah. So we purpose vehicle. Deepak Sindwani 00:08:53 Yeah. We raised, as you said, a special vehicle. We raised a little over 26 million. We had some friends co-invest with us in that, from other funds that we knew just from being in the business. And, in September of 2016, we closed. And, you know, to your point, and this founders will understand this when you get that 0 to 1 and you get that first customer and it proves that there’s a value prop and a use case, then the next customer and the next customer are easier, right? I mean, they’re all hard, but it’s. Julian Castelli 00:09:26 The cold start problem. You have to start with something. Deepak Sindwani 00:09:29 Exactly. Deepak Sindwani 00:09:29 And so the ability for us to kind of get moving and have motion created more interest in us. I mean, obviously my partner and I had background in investing for 12, 15 years each, but to the institutional investment community where nobody’s yeah, they don’t care that you previously had Bain on your resume. And so, when we had building engines completed, they said, wow, you guys, you know, one, I like the company. And two, it shows that you guys can win and that you know what you’re doing. Right? So it gave validating as it does in your founders when they launch, you know, they land a big customer. Julian Castelli 00:10:07 That that really is very similar to a founding story of a tech company. So you can relate with your, your partners and portfolio company founders and CEOs. So, so from that starting point, in 2016 is now 2024, it was you. And by both at the time with, with with no fund and no companies, you got this first company, you know, you know during the process. Julian Castelli 00:10:30 And now tell us where you are today. From a size standpoint. Deepak Sindwani 00:10:34 I have a lot more gray hair, but, and a lot less hair, but, you know, the. Yeah. So we’ve gone from the two of us to 15 people now, we raised fund one at 145 million, invested another 100 million alongside of it. It took us two and a half years to raise the capital. So. To to point you raised. I mean, these things are never linear. They’re never up into the right. There’s always the stop and start and the side you go sideways for a few months. Julian Castelli 00:11:05 And that is something I’m sure every one of your portfolio companies can relate to. Yeah. Deepak Sindwani 00:11:09 And look I think that and I’ll talk about it. We gain I mean we had we had both been operators for short periods of time, three or 4 or 5 years prior to, you know, being investors. And in my partner’s case, after being an investor. And so EQ and humility are things that we developed through that. Deepak Sindwani 00:11:29 And then we went through it ourselves. Right. And staring into the abyss and wondering, you know, if we have a business. And so we try to bring that humility to the table with our with the entrepreneurs we are fortunate enough to partner with. But, you know, now we’re, you know, 15 people. We we we have about 600 million under management. We’re halfway through investing one, two. And so, you know, obviously a big difference in how many you wake up when you feel grateful. And, you know, obviously I try to do that. Julian Castelli 00:12:02 How many companies have you invested in now? Deepak Sindwani 00:12:04 We’ve invested in 14 companies. We’ve also one thing I’ll talk about on this podcast, we we’ve acquired, you know, 22, 23 companies into those 14 companies as well, which can be an alternate strategy, additional strategy for growth for founders. Julian Castelli 00:12:21 And so that’s that’s after you’ve made the initial investment, you’ve helped those founders grow through M&A. Exactly. So let’s definitely talk about that too. Deepak Sindwani 00:12:31 There market opportunity really. Julian Castelli 00:12:32 Yeah. That’s awesome. And your growth equity. So you’re you’re in between venture capital and private equity in a category called growth equity. Why don’t you help us define that. Deepak Sindwani 00:12:45 Yeah. So look many of your founders will build software companies and never raise capital. And that’s a great approach. Many of your founders will. Build companies and raise venture capital where the the approach. And having been a venture capitalist myself, you know, 10 or 15 years ago is very is different because it’s a riskier proposition to the venture capitalist. If you sit in their shoes because they’re backing these founders with zero revenue or a million of. Julian Castelli 00:13:17 Revenue, very early stage, part of the risk curve, right. Deepak Sindwani 00:13:21 And so in order to make the business work for them, they need to invest in lots of company. If they invest in three companies and they’re all early stage and they all don’t unfortunately work, then they they won’t have a business. And so from their perspective, they typically invest in 25 plus companies in a fund. Deepak Sindwani 00:13:42 as a result, they usually can’t spend a lot of time with those companies because they have eight, ten, 15 companies each that they are responsible for. But what they’re really trying to help figure out is which of these companies can be my Google can be my. Julian Castelli 00:13:57 Work, breakouts. Deepak Sindwani 00:13:59 Can be my Domo. And, you know, so that’s the model of venture capital. And I did that for, you know, 6 or 7 years. And then, you know, this company in Golden, Colorado invested in that was a little bit later stage business. So what the founder ended up doing was bootstrapping, raising a little bit of friends and family money along the way, but effectively building a company the old fashioned way through blood, sweat and tears and taking profits and investing it in more people and more technology. And so what growth equity says is or the principle of growth equity is your business is already existing and it’s growing, but maybe it’s undercapitalized and that, you know, you could land, grab the customers faster. Deepak Sindwani 00:14:43 You could you could invest in more products. You want to go faster. You want to improve your management team. You want to accelerate. And so our capital is less risky because there’s already a business. But it’s still focused on growth. Yes. And so that’s why it’s called growth. Equity is a little bit later stage. It doesn’t suit every founder because some founders, you know, in a large horizontal market should raise venture capital or some founders. It’s your point may be like the founder of MailChimp, you know, may want to bootstrap his way all the way to a multibillion dollar exit. Right. And so but for the founder who says, I’ve put five, seven, ten years into this, I’ve gotten it to 5 or 10 of IRR. It’s working. I would love to have someone who can help me, hopefully see around corners. But in addition, I’d love some personal diversification. Take some chips off the table, and I’d also like to double down on my growth. It’s a good solution. Deepak Sindwani 00:15:43 And you know, so it’s really a partnership model working with the founders. Julian Castelli 00:15:47 And what size of a company do they get into your range and your target. Target sweet spot. Speaker 4 00:15:55 Yeah. Deepak Sindwani 00:15:55 5 to 20 of our is where we typically invest usually more in the 5 to 12 range. So as I mentioned early growth expansion product market fits there. You have. Julian Castelli 00:16:06 Yeah they’ve they’ve got you know call it $8 million that they’ve gotten. Enough customers and enough traction to be able to to really understand the value proposition of their business. They’ve got some brand reputation in the space, and now it’s about going from that eight to 10 to 30 and that next stage. That’s exactly. Deepak Sindwani 00:16:26 Right. Yeah. We view kind of 0 to 5 as the hardest part of a founder’s journey. And you know every every part’s hard. But you know going 0 to 5 figuring out a value prop that you can sell to multiple the same value prop you can sell to multiple customers in a repeatable motion is really, really, really hard. Deepak Sindwani 00:16:47 And, you know, the founders should get paid for taking that risk, right. And in, you know, and so after you’ve gotten to that stage, then the, the the problems become different problems of growth, you know, how do I hire a sale? How do I take go from three sales reps to 15 reps? How do I have a Legion machine and a content marketing machine that works? How do I have customer success that is scalable in some cases international? How do I, you know, my pricing model? Every software, you know, sorry, not every time. Nine out of 10 or 99 out of 100 software companies that are 5 to 10 million of revenue, the pricing model they’re using probably isn’t the one that will get them to 50 million. So there’s these. Julian Castelli 00:17:32 Strategic. It is not. They’ve got to do something different. What got you here won’t get you there. Deepak Sindwani 00:17:36 Exactly. So there’s these strategic decisions on the go to market side that are really important as you go from 5 or 10 to 25 or 50. Deepak Sindwani 00:17:44 And so that’s what we specialize in. That’s what we love doing day in and day out. That’s where we have specialists on our team who all they do is work with the portfolio companies on those key decisions. Yeah. Julian Castelli 00:17:55 Talked about talked about your value added. You obviously are providing capital. You mentioned that you can provide the M&A playbook and capabilities. But but how do you what do you bring to to really help the business on that journey from operating operations or advisory standpoint? Deepak Sindwani 00:18:11 Yeah. Look, I mean, I don’t won’t go as far as to say, you know, capital is commodity, but it’s table stakes. And the real value is, as I like to tell entrepreneurs, the scars on my back shouldn’t be the scars on yours. And so it’s really the having built 30 companies from 5 to 50 or 5 to 25 or 5 to 100, there’s just a lot of learnings. Right. And and same thing that you have, Julian, from being a multi-time CEO. And so, you know, our hope is to package up those learnings into, you know, digestible, points of value where we can help the next generation of entrepreneurs. Deepak Sindwani 00:18:55 And so we’ve done that with something called the Wave Crest operating platform, which is five different pillars of value, which include best practices for sales, marketing, customer success, pricing, analytics, people who can help on the journey, you know, cohorts like you’ve done with growth elevated, but of CEOs that are on the journey from 5 to 50. and, you know, functional experts at Talent Network to help them grow the business with execs. And so the goal of Wave Crest is not to take the keys or take the steering wheel. The founders and the CEOs drive the business. It’s to really surround the company with value so that they have access to whatever knowledge and resources. In addition, we have two people full time who who are, you know, go to market SAS experts that work with the portfolio companies day in and day out on whatever they need. If that product pricing, if that’s customer success, it’s really at the strategic level, helping them think through the org design, helping them think through Tam expansion. Deepak Sindwani 00:20:01 I mean, we have multiple different projects we do across different companies. Julian Castelli 00:20:06 That’s awesome. you know, that that that is really value added to have that capability and that expertise. Is there a story or an example of a company that you want to you can maybe share with us, you know, show us how that works? Deepak Sindwani 00:20:20 Yeah, I’ll talk about this company. I have the logo on today. It’s named impel, used to be called Spin Car. And that also speaks to one of the things that happened to these companies. They go from 5 to 50 things changed your market changes. And so Spin Car was is founded by two very talented young gentleman in Syracuse, New York of all places. So we invest in it’s far. Julian Castelli 00:20:43 From Silicon Valley. Yeah, we. Deepak Sindwani 00:20:44 Invest in places that oftentimes people didn’t even know tech companies existed there. Yeah. Which is the beauty of the world we live in today, where you can, with AWS and Azure, do a lot and from a lot of different places. Deepak Sindwani 00:20:57 But, you know, they had built, you know, actually gone through their own, you know, pivots and tribulations before we we invested in 2018 and they were a, augmented reality. Digital merchandising solution, for the automotive vertical. So helping consumer helping. Auto dealerships and auto OEMs to, improve their customer experience online through the ability to, for example, go look at a car without going to the dealership, okay. Seeing the vehicle inside and out, which is something that all of us have done. You know, you go and you inspect where the scratches, particularly if you’re buying used. And one of the things, you know, obviously you can’t fully replicate sitting in the seat and seeing how it feels, but you can do a lot and save a lot of time. Right. And so, you know, trying to really bring a e-commerce experience to an industry that really didn’t have e-commerce five years ago. and so that’s what they were. And around that, they had built a data product as well, because they collected a lot of data around consumer interests and features and safety and the other things that consumers cared about. Deepak Sindwani 00:22:12 So they were 8 or 9 million of RR growing really fast. They had seed investors who, you know, really, you know, they had a couple of strategic offers on the table to buy the company. But the two founders, who were 30 years old, said, you know what? Like, this is so much fun and I see so much runway ahead of us that I’d rather continue to grow the business. But they had investors who were happy with some of the offers on the table. Yeah, okay. And provided an alternate solution that said, you know, we’ll we’ll buy out your investors. We’ll, we’ll give you, you know, 5 million of fresh capital on the balance sheet. And we’ll give each of you guys a little bit of, of a little bit of liquidity for, you know, the hard work you’ve done over the last 5 or 6 years. And so it was a packaged solution and it has worked great. I mean, the company grew rapidly after that. But then, you know, we hit Covid and you know, all the brick and mortar stores like dealerships were shut down. Deepak Sindwani 00:23:15 Right? And, you know, we had, as I’m sure, lots of founders who started their companies pre-COVID, you know, crisis moments of, you know, churn went up and, you know, no one knew digital marketing of vehicles when no one’s buying vehicles. And so and, you know, merchandising still matters. And actually, what happened was Covid ended up initially being a massive headwind, but then actually being a real tailwind because consumers said, I don’t want to use public transport anymore. I want a car. I can be alone. Julian Castelli 00:23:47 Prices really shot through the roof all of a sudden. Deepak Sindwani 00:23:49 Exactly. And then and then with the supply chain issues that happened after that in 21 and 22, the, you know, inventory became an issue and pricing actually went up. So but the point is, we went through, some tough times with churn. We had to, you know, make some cost cut cuts, including, unfortunately, some heads and we had the belt tighten. And, you know, the business, you know, was growing over 50% a year pre 2020 that year I think grew you know between 10 and 20%. Deepak Sindwani 00:24:23 So you know we had a this moment of you know did we miss the window. What happened. You know is the market going to recover. Luckily it did you know but but that’s part of the benefit of, you know, these are two, you know, very smart young guys. And hopefully we were a good partner to them through that and helping them with the advice and the budgeting and lots of other things that we were doing around customer, you know, saving customers and customer retention. And, and now then the next thing that that happened was in 21, we had the opportunity to acquire, a conversational AI business. And, what we realized was as part of the digital merchandising process that the these are considered purchases, you spend 20, 40,000 whatever on a vehicle. You don’t just buy it like you would something on Amazon, you know, in five seconds. And so the ability to do conversational AI makes a ton of sense. The ability to have 7 or 10 touchpoints with a shopper in multiple channels. Deepak Sindwani 00:25:34 Right. And so, you know, we did a small acquisition of a product tech company that actually was based in Eastern Europe, and had some initial US traction, enfolded it into our product and actually use that to broaden the vision and the Tam of our company and our and added another product to sell to the same customers, which was extremely lucrative from a lifetime value perspective. So we ended up changing the name of the company over the next couple of years from Spin Car, which, which? You know, it’s more of a merchandising and kind of viewership, value prop to impel, which actually in the Webster’s Dictionary means to drive forward. And so, you know, the whole vision of the company changed the trajectory changed, the Tam changed. And so, you know, now the company fast forward, that was. Julian Castelli 00:26:30 That acquisition, a key part of that that yes uptick. Deepak Sindwani 00:26:34 Took us in, made the product a lot more mission critical. You know, it’s hard when as as your founders know, when you use AI and you see the good things that can unlock to kind of do away with it, and the customers actually like it too. Deepak Sindwani 00:26:51 And if it can, you know, automate tasks and in, you know, in this case, chasing the customers and making sure that they want to buy your Jeep Cherokee or your Land Rover. yeah. There’s it’s a great use case. And so it made the product. Julian Castelli 00:27:06 Is very manual. Deepak Sindwani 00:27:07 And yeah, having. Julian Castelli 00:27:11 A used car recently and I’d say, you know, I probably responded to eight and only three could continue the dialogue enough to keep me engaged. Five. Fell through the cracks. Yeah. Speaker 4 00:27:21 It’s almost your. Deepak Sindwani 00:27:23 Point is and this goes for probably every industry. If you’re not using AI for repetitive tasks and you’re not using the benefits of automation, you’re going to lose to your competitors who are. And so to your point, you know, human beings are, you know, and with all the media we consume and all of the things on our phone every day, we have short term memory. Yeah. Julian Castelli 00:27:48 So it’s the attention span. That’s where that’s where competing for. Right. Deepak Sindwani 00:27:52 Three days ago we forgot what we saw. Deepak Sindwani 00:27:54 Yeah. And so you know it’s important to stay in front of anyways you know the business is now closing in on 100 million of RR. Julian Castelli 00:28:02 Oh my gosh. Wow. Deepak Sindwani 00:28:03 And so you know and all all, all kind of credit goes to the founders and the management team and it’s been a wonderful journey. We ended up along the way. Another solution where we can help founders, you know, for years in the founders and we looked at each other and said, we love working with each other, but we’ve helped the company and they’ve helped, you know, obviously they grew the company from seven or 8 or 9 when we invested to 50 and they said, you know, we should probably diversify risk a little bit at this stage. Julian Castelli 00:28:34 Their personal risk and their investments. So you help them take some more money off the table. Deepak Sindwani 00:28:38 So we brought in a great investor that we knew well did for a minority of the company. They took some more chips off the table. And you know we said but let’s keep growing. Deepak Sindwani 00:28:50 And you know, that was at 50 and now we’re closing in on 100. We have another acquisition we’re working on. And so anyways, there’s my point is journey can oftentimes include lots of different twists and turns, but some very accretive ones. Julian Castelli 00:29:05 Oh that’s a great story. The founders managed to get a partner that could help them grow ten or more, but they also managed to take some some chips off the table and diversify their risk. And it sounds like you guys built a great partnership. Deepak Sindwani 00:29:19 Yeah. That’s what honestly, it’s really about partnership. I mean, you know, the most fun and rewarding part of what I do as the quote unquote coach is, work with founders and, you know, their success. It makes me so happy, you know, and it’s it’s, you know, everyone. Everyone gets excited about different things. When I see founders kind of realizing their dreams or taking however many trips off the table or, you know, the company growing in size. We started the company was, I don’t know, 60 people now or over 300. Deepak Sindwani 00:29:55 I mean, those are just great, you know, milestones. Julian Castelli 00:29:58 Yeah, that’s that’s got to be really rewarding. Well, that’s a great story. And that, that sounds like the growth equity journey and did it did a great job of explaining how Wave Crest could partner with companies to do that. So that’s fantastic. Thank you for sharing that. before we wrap up, you know, for for our listeners who are out there and they want to get on a journey like that, any good books that you’ve read recently or a podcast that you’d recommend? Deepak Sindwani 00:30:23 So while it is Silicon Valley, because I, you know, I do feel like it’s like the political discourse, you always need to learn about what how different people view similar markets of the world. Right. And so if you’re on the left, you should listen to the right. If you’re if you know you’re on in growth equity, you should listen to venture. So one of my favorite podcasts I listened to every week is the All In podcast. Deepak Sindwani 00:30:46 that’s. Julian Castelli 00:30:46 A good one. Deepak Sindwani 00:30:47 For Silicon Valley guys talking about business. And, you know, it’s folks sitting in San Francisco who have a certain point of view, but they’re extremely smart and articulate. And so I always learn whether I agree or disagree, I learn. Yeah. So I think that’s a good one. on the the light lighter side, one that I really enjoy is is called, smart lists, which is a, which is a comedian, a comedic one. It’s basically three guys. You probably know Jason Bateman, Will Arnett, and and, I forget the third guy’s name, who are personal friends, and they interview athletes and celebrities and political figures. And it’s funny, you know, you get to see the personal side of, you know, people like Amy Schumer and, and other people they bring on. And then on the book side, you know, I, I, I’m someone who’s always kind of, you know, you reevaluating my own priorities in life and how I spend time and do I spend, you know, and so, you know, a few one that I love is, you know, I’m reading Charlie Munger’s Almanac right now. Deepak Sindwani 00:31:56 I mean, as you know. Julian Castelli 00:31:58 One of the titans of. Deepak Sindwani 00:31:59 The titans of the investing world, but it’s less about the almanac is less about investing and more about just philosophy on life and how you think about, you know, making decisions and being decisive and doing doing your research and, you know, clearing, clearing out the clutter. I love, you know, I love people who are candid and plainspoken. And, you know, he’s a kind of personal hero of someone who just told you like it was right and, and obviously lived a great life to 99 and did a lot of things. So, you know, and another one on my personal journey I’d recommend is one called Die with Zero, which is a really interesting book, kind of flips on its head what all of our friends at Merrill Lynch would tell us around how to save and invest your money. And it’s really around, enriching your life with experiences as early in your life as you can. Julian Castelli 00:33:01 Oh, I love that. Deepak Sindwani 00:33:02 Those like capital compound those experiences, compound your life. Deepak Sindwani 00:33:07 And so it’s a great book that was written by a very successful guy who’s and it was an energy trader. And, but its whole philosophy is, you know. Julian Castelli 00:33:16 Don’t don’t save up and wait and then like. Speaker 4 00:33:19 Don’t wait till you’re. Deepak Sindwani 00:33:19 65 to do the things you want. Do it now. Julian Castelli 00:33:22 I love that. Well, that’s a great, great message to end on. Deepak, where can people find you in Wave Crest? Deepak Sindwani 00:33:29 Yeah. Look, if anyone love to have conversations with your listeners, wave crest growth. Com is the website. Deepak at Crest growth comm is the email. certainly they can come through you as well. And obviously looking forward to doing a lot with you with these companies as well. Julian Castelli 00:33:49 Absolutely. And come, come join us at the Growth Elevated Summit next year. Look forward to that. This is great. Speaker 4 00:33:55 I could stay away. Deepak Sindwani 00:33:55 From Park City. I mean, it’s such a you live in such a great place. Julian Castelli 00:34:00 Well that is a that is a definite advantage and we’d love to host you. Julian Castelli 00:34:03 So look forward to seeing you there. Thanks for joining us this morning. And this was a great talk. Deepak Sindwani 00:34:08 Thank you for having me. Speaker 1 00:34:11 Welcome to the Growth Elevated Leadership podcast with Julian Castelli. Each week, we talk with senior tech leaders to explore stories and insights about the challenges involved with growing technology companies. We hope that these stories can help you become a better leader and help you navigate your own growth journey.