Coming to the U.S.: Learnings at ~$10m ARR From Showpad and Conversocial

by | SaaStr Events, Videos

The other day, together with our good friends at Dawn Capital in London, we did the first SaaStr event outside the U.S. — the London Summer Social.

Screen Shot 2015-08-08 at 9.31.18 AMAlmost 300 SaaS founders and execs came on pretty short notice, not just from London, but from across Europe — Italy, Greece, Spain, Portugal, Ireland, Belgium, and more.

In the middle of cocktails and conversations of all things MRR, we packed an hour of discussion with the CEOs of Showpad and Conversocial and it turned out to be a pretty interesting conversation.   Both are just about to cross $10m in ARR and started in Europe, and both have gone “more enterprise” and upmarket from $1m to $10m in ARR.

Josh March, CEO of Conversocial, moved 50% time from London to New York fairly early on, and learned a lot from that process.  Among other things, that 50% here and 50% there is sort of 100% nowhere.  And also, it led to less oversight of key management hires, including leaving his first VP of Sales in the seat for way too long.

PJ Bouten, CEO of Showpad, went another way.  PJ stayed in Europe but his co-founder and co-CEO moved out to the U.S., to San Francisco (after a brief stop in New York) once the U.S.-side of the business had hit about $250k in ARR.  Today, the business is almost 50% U.S. / 50% ROW.  PJ himself stayed in Europe, but is now moving out to the U.S. as well full-time.  Interestingly, while only 33% of their headcount is in San Francisco … they represent 50% of the costs.  So Coming to America ain’t cheap. 

Full Transcript pasted below.

 

 

 

My #1 learning:  the SaaS ecosystem is 100x bigger and broader in SF than London.  That makes sense, but I didn’t get it until then.  Most of the founders that came to the event said they’d never been to anything like the Summer Social in London.  In SF, there are 3-4 great events every week.  This isn’t necessarily “bad” — I just think if you aren’t in the U.S. and doing enterprise SaaS, you’re just going to have to work that much harder to get the ecosystem benefits you’d get from coming to the U.S. Screen Shot 2015-08-08 at 12.52.54 PM If you are thinking of coming to the U.S., and wondering about the trade-offs, I can’t recommend this video highly enough.   We’ll transcribe it later and add to the post. ….. I’m also going to excerpt this great post on “The Top 10 Lessons” from the Event from Euclides Major, CEO of GuestU:

Screen Shot 2015-08-08 at 9.50.14 AM1) You can make it based in Europe until the “inevitable” stage (10M$ ARR). After it seems everyone tells you to go to the US. Valuations are generally better there. However EU VCs are reacting to it so any founder who achieves some early traction (+2 M ARR) should leverage this when negotiating terms.

 

 

2) Many of us, EU founders, struggle with the question East coast vs West coast! It’s a common theme. NYC only 5 hour’ difference enables half day team collaboration; plus direct flights from most EU capitals is also an attractive argument. Talent in the Valley is more abundant (for this sector) and more VC money available

 

3) EU founders tend to take way too much time to fire key executives. Trend to move upscale (charging more) often the reason why an initial good VPs (that was a good closer at transactional level and able to decently recruit) becomes inappropriate and unable to hit the overall plan

4) Recruiting in USA is even tougher for EU founders. It’s easy to get screwed with fast & good speaking American sales guys!

5) Experience does matter: someone who has done it performs better. Look for people who have already sold to your ICP at similar price points

6) Moving part time to the US: mistake. Either you’re there fully or not. Not only due to constant jet lag. VCs demand that. I’d love to see examples against this, but it seems more and more an undeniable truth

>> Read the rest here …

 

Screen Shot 2015-08-06 at 8.20.17 AM

Full Transcript:

 

Jason Lemkin: Thanks, everyone, for coming. This is pretty awesome. I already learned a lot, tonight, just at cocktails.

 

I have unintentionally worked with a bunch of startups that had moved to the US. I think I met PJ and his co-founder, Louis, probably two years ago, something like that. It feels like a lot of dog years.

 

I think Louis, his co-founder, just moved to San Francisco, the only US employee. You guys were figuring things out.

 

I’ve gone on to work with a bunch of folks, there. It seems almost routine, sitting in the Bay Area. Talking to folks here, tonight, I know it’s an interesting topic. How do I do it? How do I manage it? Should I move? I’ve got customers across the world.

 

We’ve got, probably, just about the most amazing two speakers here I could imagine.

 

Different stories, but both Showpad and Conversocial are hitting 10 million ARR, which is a classic moment. We talk about that as Initial Scale. It started to come together. You get out of that really painful period from two to ten. Where there’s too much going on and not enough people to do it.

 

Showpad’s on a hiring tear now, but even eight months ago cash seemed tight, yes?

 

PJ Bouten: Yes. It always seems tight.

 

Jason: Always seems tight. Josh is going to talk about I think we’ve 70 or 80 folks in the company now, between here, New York, and little San Francisco.

 

Joshua March: It’ll 75 by the end of the year.

 

Jason: The good news is they’ve done a bunch of things differently in scaling. I know a little bit more about Showpad, but they made a lot of mistakes, learned from them. We have a book coming out with Aaron Ross for the SaaStr Annual in the US.

 

I think it’s called, instead of “Predictable Revenue,” it is going to be “From Impossible to Inevitable”. My idea for title was “Same Old Crap”.

 

[laughter]

 

Jason: “Same Old Sh*t” because the products are all different. We’re innovating at a more rapid rate, we’re growing. We tend, for a given ACV, to make the same mistakes. If we compound trying to run companies in dual continents, if you can just make fewer of the mistakes than these two super successful case studies, then just think how much…

 

If you didn’t make the mistakes you make, would you be growing 20 percent faster today? Without question. [laughs]

 

PJ: Yes, definitely, for sure.

 

Jason: That’s what I really want to dig into. We’ll spend a little bit more time with PJ first, and a little more time with Joshua. We’ll keep it a bit interactive. PJ, give us, in brief, the Showpad story. You were dragged to the US by Jive, from Belgium, right?

 

PJ: Yes. We started Showpad four years ago. It actually spun off from the first company Louis and myself founded the year before.

 

Jason: Services business. That never works, right? The services, the SaaS business. It never works. The VCs run from it.

 

PJ: Nobody wants to invest. We still employ 50 people there.

 

Jason: Oh, you do?

 

PJ: We still own the company, but we don’t run it anymore.

 

Jason: Just don’t tell your investors that.

 

They don’t want to hear about your side business.

 

PJ: They made us sign a bunch of stuff that we couldn’t spend much time there anymore. No, just kidding.

 

Spun off from a service business. Founded four years ago. We already had customers, pretty early, in the US. We did a lot of stuff that SaaS companies do. You go to websites, you start experimenting with some AdWords, you have a free trial.

 

We had a couple customers in the US pretty soon, some pretty big brands. We just sold it from Belgium.

 

One of our customers, Jive Software, social collaboration technology, they were a customer of Showpad. Suddenly they said, “Hey, guys. Do you want to come and visit us in the US? Because we believe we can integrate both platforms and we can actually sell Showpad in the US for you guys.”

 

That’s how we made our first trips to the Valley. That’s about three years ago that we started.

 

Jason: They probably set up one million in revenue.

 

PJ: Yeah, definitely.

 

Jason: Jive pulls you up, right?

 

PJ: Jive was probably at $200k ARR that they contacted us.

 

Jason: Had you ever met in person?

 

PJ: They were a customer.

 

Jason: But you never met them.

 

PJ: They were our biggest customer. We never met them.

 

Jason: They just had these foreigners with these funny accents on the phone, but they still buy?

 

PJ: Yeah.

 

Jason: They decided, for them, it was the best product to partner with?

 

PJ: Yes.

 

Jason: That’s your historical act.  Somebody out in Palo Alto decides to randomly, not really randomly, because you have a product. They decide to take a risk on you.

 

PJ: That’s how we met the founders of Jive. We met the CEO of Jive. We started meeting a bunch of people in the Valley. Going out there and also realizing, initially, as a European company, I would say any SaaS products, you should be born global, in a sense. Anybody can become a customer anywhere in the world.

 

That made us realize, going out there, that we started talking to these VCs. You come into the Bay Area, feeling the vibe, feeling the energy there. That’s definitely what triggered us like, “We should start doing business here.”

 

At that time, with Jive, we closed the OEM. Because we thought that Jive would sell Showpad in the US. Actually, at that time, we didn’t think yet of setting up a business there.

 

We just thought, “Hey, we’re going to fly over there a lot. We’re going to train the 200 Jive sales guys on Showpad, and they’re going to bring in millions of dollars after a couple of months.”

 

But that failed a little bit.

 

Jason: It’s a good learning from that. We could spend more time on it. So the relationship with Jive changed the game for the company by, talk a little bit more about it, USA-fying you, getting you going, learning to be more enterprise?

 

PJ: Yeah.

 

Jason: But as a pure partner, they never became a material line in your revenue?

 

PJ: No, not in ARR. They did sell a couple of very big deals for us, in terms of cash. They generated $1 million in cash for us. In ARR, it’s like 300k, they sold a super big deal to T-Mobile.

 

Jason: Yeah, but as a license or something like that.

 

PJ: Yeah. Three year, paid up front. That was a big party.

 

Then they started learning that actually Showpad wasn’t a big priority for Jive, and it’s really hard. They have their own struggles, they have their own products. We priced our products higher and higher, and they are just selling it as an add on, on their platform.

 

That’s when we struggle to compete. We should just start selling, building our sales team ourselves and not relying on an OEM partner.

 

Jason: What’s interesting is partnerships. Could be a whole session itself. I want to ask one more thing, then get a little bit more of Josh’s story, and then come back to you PJ.

 

Jive is selling what, I’ve never actually used Jive, social collaboration… And Showpad is selling this mobile application where I can share collateral with my field team. Jive has people doing chats. This partnership usually has a very high affinity partnership, or, it’s hard to make money. What was the high affinity?

 

PJ: The high affinity was a lot of Fortune 500 companies using Jive as well, to collaborate and also share sales collateral, sales materials. They used Jive as a point of reference, like “Hey, here’s the latest deck, for this video or this testimonial.”

 

Jason: Got it.

 

PJ: We still have integration today, but they were struggling with mobile, that was their big issue.

 

Jason: You’re the mobile checkbox?

 

PJ: We were the mobile checkbox, we needed something mobile, needed something…

 

Jason: They have their branding?

 

PJ: It’s still out there. It’s called Jive Present, so it has their branding.

 

Jason: Got it. Makes sense. Now, one of the questions that I wanted to get a little bit of the conversation started out. Jive reaches out, it’s a gift, in hindsight, with $250k, you took advantage of it, flew out. And then you make an interesting decision. Louis, your co-founder, moves out to San Francisco around $1-something million ARR or something?

 

PJ: Yeah, we raised, series A, $2 million dollars around $500k ARR. We used the money to start, we said, “Let’s start up an office in the US.” We picked New York, because there was a direct flight from Brussels.

 

Jason: A lot of people were asking about New York versus San Francisco earlier. It’s closer and Josh’ll talk about it, too.

 

PJ: It was closer. Of course, it’s a great city, but it seemed closer. We already had some customers in that area, as well, so we felt like, “Hey, yeah, that would be the right place.” Louis move there around $750 ARR. He was the only Showpad employee. I just went back and forth. We did long trips. I would stay three weeks, two weeks.

 

We would just do hiring days. We would post job ads on LinkedIn. But our problem in New York was that we didn’t have a real, yet, network there. We just had to build it from scratch. We were already spending more time in the Bay because of Jive and because of the partnership.

 

We hired three, four people in New York. Then, after four months, we decided to fire the whole team. We also were horrible hirers, actually.

 

With all respect for those people, we made a lot of mistakes there. We can talk. I’m sure, as well, Josh will be able to talk about that. In the US, people just sell themselves so good.

 

It’s a cliché, but we run into that.

 

Jason: You got seduced by the fast-talker.

 

PJ: Yeah, fast-talker. Everybody that we were hiring was like…

 

Jason: Yeah, “I was President’s Club. I did this.”

 

PJ: Great candidates, we felt like we were only interviewing great candidates.

 

Teddy: In the US, no one has ever missed quota.

 

Jason: Just one question on that, just because it was interesting. Louis comes out to New York, and then San Francisco. You’re doing $750k.

 

PJ: About $1 million.

 

Jason: Today, as you’re getting into eight figures, you’re revenue’s coming up on 50-50 US-European, which we’ll talk about later. What’s interesting is back then it was 10-90 or something.

 

PJ: Yeah, it was maybe 20-80.

 

Jason: So you take one of your co-founders and you split the whole thing across the world, when you’ve got $150,000 in US revenue. So it’s a big bet. Was there any doubt, or was it clear, to be in technology, you had to do it?

 

You think of it, it’s just $150k US. It’s early.

 

PJ: It’s very early, but there are some logical things there. You just look at the market. Again, all the very simple things. You look at the market, the market of where you can sell your product, but also the job market in and the talent there. It’s way quicker. You know you can scale there a lot faster.

 

It’s about, as well, the VCs and the knowledge there that we found. It’s just way more attractive. We met a lot more interesting people. At that time, we felt like, “Hey, this is great knowledge here.” It’s a bet, but you know, enterprise SaaS, you want to go more enterprise. If you’re not going to the US, you’re not going to be a billion-dollar company.

 

Jason: At $150k in US, not total revenue, but $150k, that wasn’t a wee too early, looking back on it.

 

PJ: It was early, because it took us one year to make the mistakes and learn the lessons.

 

Jason: What would your advice be to folks thinking about it? What is too early?

 

PJ: You need to have revenue in Europe. We definitely say, if you don’t have customers, you don’t have revenue, and you’re product is not sellable, I would say don’t go yet. First, sell the product, get some customers.

 

Here in Europe, it’s very easy to…you can have customers in Paris, Amsterdam, Belgium, and London. You can fly there and talk to them. It’s pretty condensed, and there are also a lot of companies here. I wouldn’t go before you have customers and real revenue. That would be my advice.

 

Teddy: How did you decide which functions to put in the US? It’s very common to keep engineering in Europe and US your sales office, but you guys decided to put product management in the US, as well. How did you come up with that decision and how does it work for you?

 

PJ: Initially, product wasn’t in the US. Initially, US focus, we said at that time, “Let’s set up a sales team there.” The original plan was Louis moves for three months. That, at least, was what he told his wife.

 

Louis moves for three months. At that time, the thinking was, “Let’s set up a sales team, hire a VP of sales, and Louis moves back to Europe, and then Showpad will flourish.”

 

Again, that thinking changes really rapidly, once you get…

 

Jason: That he would come back…

 

PJ: Yeah, we thought that he would come back, but then he really realized, “OK, you’re talking to more product people.” You feel that the potential is just way bigger to have a bigger presence there.

 

Jason: Let’s come back to product, because I want to…

 

Joshua: Just quickly, on the flip side of the advice, when you’re really small and you don’t have revenue, and you have an early product, it’s much easier to move 100 percent to the US. As you start getting the small beginnings of a business here in the UK or in Europe, suddenly you have to manage both.

 

Jason: Let’s go back to the start of Conversocial. It started three years ago at a…

 

Joshua: It’s a very similar to story to PJ actually. We first got funding four years ago for then. It spun out of a services business.

 

Jason: Those never work, right, the service business, the SaaS business? It never works.

 

Joshua: It was great. The first year or so of Conversocial was funded from the profits from that.

 

Jason: Just the transition can be stuff, if you’re not really going for it.

 

Joshua: Yeah.

 

Jason: You give up the revenue, give up the profits, and all of that.

 

Joshua: I spoke to a lot of people, at the time, who were running agencies and trying to do SaaS products. I just kept seeing them being dragged into the services business. It’s like, “$100k projects with 50 percent profit margins and a big client,” or, “Work on this thing for three months, and maybe you’ll sign up a hundred dollars a month customer.”

 

They just kept getting pulled back. I was like, “Well, that’s never going to work,” so I was really clear. I had a co-founder in the services business. I was like, “Look, I’m going to do Conversocial, and as soon as I start this, I refuse to even answer an email on the services business,” and I was pretty strict on that.

 

Jason: Is he still working at it as a separate business?

 

Joshua: We separated him out when we were ready to VC, and then we sold the services business.

 

Jason: Got it.

 

PJ: We were three co-founders in the service business. One of the co-founders stayed in the service business.

 

Jason: The third one of which we don’t see.

 

PJ: We gave him a bit of Showpad shares and then…

 

Jason: That’s good. You spin it out, and then the management team is setting up Conversocial. So tell us a little bit about the story. It’s social media, all this. It’s a seemingly crowded space. What gets you off the ground? What’s the magic moment where you break out and it all comes together?

 

Joshua: It’s still happening, I guess. I was very early in the social media space, building big Facebook apps and big marketing campaigns for brands, back in 2007, 2008. It was a really cool thing to do.

 

Jason: Let me check when you were first on Twitter.

 

Joshua: Even though it was a great time and we were making lots of money as an agency, I was really set on, “How can we go and build a billion dollar software business out of this?” I really just didn’t believe in the future of Facebook apps and all the stuff that we were doing.

 

A, it’s not really the future of the Internet. Facebook doesn’t think this is the future of the Internet. These aren’t going to be around in a few years.

 

B, I was like, “Everyone’s giving us lots of money because this is the cool thing. And it’s like winning awards, and everyone else is doing it, and the agencies are really excited by it, but are we actually adding value to their business in the end?” I’m not really sure.

 

Maybe I just didn’t like fluffy marketing guy, or whatever, but I was really consumed by that. I was like, “Yeah, if we want to build a business that’s going to be a billion dollar business, then we’ve got to have like a 10-year time horizon.”

 

That means it’s got to be based on a trend that I think is a 10-year trend and it’s got to be based on something that is going to be fundamentally valuable to the businesses that we’re selling to. It can’t just be the latest, cool fad. It’s got to be something that’s essential to how they do business.

 

While I was doing the Facebook app agency, I was really spending a lot of time thinking about that. I really believed the biggest trend that was happening was this major communication shift. Everything we’re doing in smartphones is all dependent on social media. Now, that’s shifting to mobile, as well.

 

I really saw that as major 10-year shift and something that was bigger than just Facebook, bigger than just Twitter, but was pretty fundamental. It was based on that vision, that I started working on Conversocial.

 

It took another year and a half before we decided to focus 100 percent on customer service. The idea evolved that we worked with different customers.

 

Jason: How long from the official spin-out, whatever the notional date is, to a million revenue? How long did that take, to the first million ARR?

 

Joshua: I don’t have an exact date. It’s maybe a year and a half.

 

Jason: At that point, were you still 100 percent here, or had you gone to New York by a million revenue?

 

Joshua: Basically, as soon as we raised VC in the first round, which was early-mid-2011, we started thinking about the US.

 

Jason: How big was the revenue when you raised that capital?

 

Joshua: Not much, $150k, $200k.

 

Jason: You’ve proven you have product-market fit, but nothing else.

 

Joshua: That was about the same time that we realized we needed to focus on customer service, which I can talk more about. We spent 2011 shifting the business to focus on that, relaunched the beginning of 2012. That’s where I immediately started going out to the US and doing trips every month, speaking to customers.

 

We very quickly built a really good customer base in the UK, partly because of being in the industry for a long time, we had a lot of customers in the agency and really strong relationships with the social networks here.

 

So, Facebook recommended us, so we were able to very quickly spread in the UK. Then I started going out to the US to try and sell it further there.

 

Jason: How did you decide East coast versus West coast?

 

Joshua: It’s really just a convenience thing, just to start with. The customers we’re selling to, major BBC companies. We don’t have a particular focus on tech. And so, the companies we are selling to are all over the US. At the time, social media was still pretty marketing heavy, and there was a lot of anxiety happening with the agencies in New York.

 

But we had our engineering team here in London, had a business in London that I had to pay attention to. And so, just from a travel and a time zone perspective, I saw it as being much easier to do New York. There’s certainly lots of trade-offs, which I can speak around, but there’s more time for us now.

 

Jason: Now, just the counterpart to the media search event. I think the narrative you told me is, now you’re here in London for six weeks or something like that, it was 50/50 12 months ago. Try to relate that, so we can help people understand your business better.

 

Joshua: First of all, I will share a little bit of a lesson in terms of advice we give people now, when looking at the US thing. So I did almost 18 months of two week, two week, flying back and forth every month. We moved some sales guys out, trying to get a business going over there, and I actually view that is a terrible mistake.

 

For a number of reasons, not just the constant jet lag and exhaustion. What it meant was that you don’t really live anywhere, and you can’t really focus on anywhere. I wasn’t in America enough to focus on America, and I wasn’t in the UK enough to focus on the UK.

 

It just stalled us. If I was doing it today, either move completely to the US earlier, or not move to the US as quickly, worked harder to get the UK running independently, and then just moved more definitively to the US.

 

Jason: So the platform would be sorted.

 

Joshua: Exactly. Things didn’t really start happening in the US until I made a decision like, “OK, this isn’t going to happen until I actually move here.”

 

Jason: Yeah, and PJ was fortunate enough that he’s going to move full-time to the Bay Area in October, but he had a co-founder who he worked together closely with that could do that. That’s two years ahead of you coming here full time. How did you manage that, with the home team?

 

Joshua: With great difficulty. We had a great CTO on the tech side, that was always fine.

 

Jason: Did you guys go to school together? How did you have the trust to span continents?

 

Joshua: From years of working together. We didn’t know each other before, but he was one of the first that joined us, the year before the agency. He was one of the first employees, and we worked closely together.

 

Jason: Did you know that would work, how you manage and run the office, or did you just hope it would work? Was it clear?

 

Joshua: As a strong management person, I always wanted to be pretty clear, that we had to separate the management of the engineering team from the commercial management. I’ve always had pretty strong opinions on how to build a really great engineering culture, and it was very different to have to build a really great sales culture.

 

I think that it’s a mistake for companies trying to force them together, and so I know that him and I were very aligned on the engineering culture he wanted to build. And so we could look after that side of things. It was much harder on the commercial side. The first VP of sales I hired in the UK ended up being wrong, and it took me far too long to realize that.

 

Jason: More than one sales cycle?

 

Joshua: More than one sales cycle. It was a mix of things.

 

Jason: So you hired your first VP of sales, and that’s when you were still doing the 50/50 thing?

 

Joshua: Yeah.

 

Jason: And he was in the UK, but was he had of global sales or European sales?

 

Joshua: Global sales.

 

Jason: OK, got it. So in addition to the wrong hire, which people learn, being there more than 50 percent of the time is helpful, right?

 

Joshua: Yeah, for me. I’m not that old, or that experienced in many ways at doing lots of stuff.

 

Jason: You’re pretty experienced.

 

Joshua: I am at this point. At the time, he was really the first person I hired that was older than me. I was 26, 27 or something.

 

Jason: Were you intimidated?

 

Joshua: It was right at the top, President’s Club. There were lots of reasons it didn’t work out, but one of them was primarily mine, which was that I hired this experienced guy who didn’t want to be managed. That contributes to the business, but also contributes lots of cultural issues, and lots of things came out of that.

 

There were some other reasons. Do you want the business? It would have been better for the business. And it was wrong, I would have found out sooner, if I had managed it properly, like I have learned to do now.

 

Jason: Just two questions on that, and then you did a good job of really clearing this job. For folks who do the hard stuff, this is my seven percent first week of sales don’t work out, and the fault always falls on the sender’s. It’s never the candidates’ fall. They took a risk on us.

 

Once in a while, it’s their fault, but even if it is, it still our fall, because we have a sixth sense within EQ. We should have realized and done our part. So, how long did you keep the wrong person?

 

Joshua: A year and a half.

 

Jason: OK, that’s horrible. Do you agree, if it doesn’t work out in one sales cycles, it will never work out, right?

 

Joshua: Yeah, you get better and better at firing people.

 

Jason: You keep them because you were desperate, because you have the venture capital and you might as well spend it? You’ve done great.

 

Joshua: It’s sort of inexcusable, but yeah. He did have a really beneficial effect on the business, when he first started, in terms of sales.

 

Jason: Had he been and added there before, or a contributor?

 

Joshua: He had been a manager.

 

Jason: So not just new clothes.

 

Joshua: He had new clothes. Part of the reason he didn’t end up working out, is we had been on this continuous shift more and more upmarket.

 

Jason: Got it.

 

Joshua: He was much better at the transactional, smaller to medium deal, a softer marketing department, which we were in when he first joined.

 

Jason: I see.

 

Joshua: Wrapped that up, but over the next year and a half we were evolving to doing bigger and bigger deals. Customer service in IT procurement, and a more consultative sales cycle. We really needed a different type of sales person.

 

Jason: You didn’t hire for next year’s target ACV, you hired for today’s ACV.

 

Joshua: Right.

 

Jason: That’s mistake number one.

 

Joshua: He worked out for a while, but then he didn’t.

 

Jason: Could he have been director of SMB solutions? Or, you handed all that small stuff in, so there was nothing left?

 

Joshua: For us as a business, we realized that what we do is significantly more valuable to large enterprise clients than it is for smaller clients. It’s exponentially more valuable. It doesn’t really make sense for us to be selling to small businesses at this point.

 

Jason: So his replacement’s background, him or her, the second one you got right?

 

Joshua: Yes. Now we have a VP of sales in the US, and one here.

 

Jason: OK, so you’ve got two. They both report to you?

 

Joshua: I manage two VP of sales.

 

Jason: OK, but so far that’s worked for you, right?

 

Joshua: Yeah.

 

Jason: And they both know how to do more enterprise, five, six bigger deals, that’s the background?

 

Joshua: Yeah.

 

Jason: OK.

 

Joshua: I can talk more on that. We’ve definitely seen differences in the US and UK on that as well.

 

Jason: Just one other thing I want to ask about on this. Looking back, 18 months with the wrong VP of sales. You’re building a company, so it’s all good. We all make mistakes. Looking back on it, we would have made a hire that was more up-front, right?

 

Joshua: And a better cultural fit.

 

Jason: A better cultural fit?

 

Joshua: I would have managed them better.

 

Jason: You would have manage them better? So what, you just didn’t enjoy being part of sales? You seem customer centric. How did you not act on that? What did you learn, from a management perspective?

 

Joshua: From a management perspective, you’ve got to learn as an entrepreneur that even if you hire some of these older and more experienced than you, they may know more than you in their respective area, but you’ve still got to manage them.

 

You’ve still got to be going towards your vision from the product, from the company perspective, the cultural perspective.

 

It’s really easy to be young and see these highly developed people, and be kind of wowed by them, and not manage them enough.

 

Jason: Did you set monthly goals, employers, one on ones and stuff?

 

Joshua: Yeah.

 

Jason: Did you interview the reps that he hired, too?

 

Joshua: I didn’t always interview them, at the time, I didn’t do it enough.

 

Jason: You just deferred to him, and he hired reps you didn’t believe in? Then you had to fire that rep. When you hire a VP of sales, we go through a rep change, because the ones before that were focused on who he would buy from. When you hire new sales, you need everybody.

 

When you don’t believe in them, you ended up with two. PJ, you ended up with the two situations too. You had a lot of learning to do, right?

 

PJ: Actually, we had two VP of sales. Our VP of sales in the US is actually like an interim VP of sales.

 

Jason: Let’s step back for a minute. You had a VP of sales in Europe for a long time.

 

PJ: In Europe, yeah.

 

Jason: He’s been there almost since the beginning, right?

 

PJ: Yes, he’s been there since 2004.

 

Jason: So he’s had these transactional deals, he has closed big names, and it’s worked.

 

PJ: He’s been through a learning curve. There have been moments of doubt with me, myself as well there. But I think it’s very exceptional. I recognize it now, how exceptional it is, and so moving forward he’s not only focused hard on the UK team, building a tier, but we hired six, seven reps.

 

Jason: I should know this. Did he move from Belgium to London?

 

PJ: No, but he’s spending probably 70 percent of his time in the UK. It’s like a two hour train ride from where he is.

 

Jason: Do you think that migration will happen, where the immediate sales team will be London based?

 

PJ: Probably.

 

Jason: Just as you get bigger?

 

PJ: As we get bigger, it’s natural.

 

Jason: It’s an evolution.

 

PJ: Yeah. We’re actually now moving the second plan around. But, a very similar story to Josh, in terms of why our first VP of Sales in the US that we hired, last year, didn’t work out. He was a great closer. He had an immediate impact on the business.

 

The great thing is, the funny thing is, you interviewed, you knew the value, you said this like it happened. That’s the funny thing, looking back. I ignored some advice from Jason, and you said, “Hey, he’ll do great the first six months, but then stuff might happen,” and stuff did happen.

 

Jason: So, let’s get back to, you have someone you like, charismatic, a closer, and not as super experienced a manager of the team.

 

PJ: No, new to the team.

 

Jason: So, when the issue is that you need to hire a next year ACV similar to Josh?

 

PJ: Very similar. He’s more transactional, in his experience. He didn’t have the experience of going up market. You can also see there’s some management experience as well. If you’re managing a team of six or 10 people, in more transactional deals, working on smaller deals.

 

It’s a totally different thing than managing a team of people selling to the enterprise, or just doing different deals. It’s totally different.

 

We made a lot of mistakes, as well. We weren’t yet managing him at all properly. Big learning from us as well, for me myself, in the last year, is how do you deal with your management team? Really, we need to hire people who just, in their domain, are way better.

 

You do it all, and you can set the vision. You can set the vision of the company, the direction where it is going. Also, having the one-on-ones, things like that. That’s a big relief.

 

Teddy: Do you see any cultural differences in sales from Europe and the US, for example, in the deal sizes? How do you manage that?

 

PJ: For us, deal sizes in US are way up right now. You can really see that. It took us one year to start hiring the right people. Now you see really a big effect of that, even a year later.

 

Teddy: Because of people, because of market, or what do you attribute that to?

 

PJ: Combination, but I would say the biggest difference is that we start to crack the DNA of our sales guys. What is their ideal background? What products have they sold in the past? What type of companies do they come from, like, culturally?

 

Also, you make a lot of mistakes. Again, a big focus now at Showpad is onboarding. I believe that you’re wasting so much time, if you’re not onboarding your people in the right way.

 

Jason: Training.

 

PJ: Training, onboard. Right now, we’re able ramp sales within eight weeks. Our top sales guy, last year he brought in $1.5 million in ARR. After his month six that we hired him, he was one of the first reps in Belgium, actually, we were super close to firing him.

 

Jason: This is interesting.

 

PJ: He just in time closed a deal that kept him alive. Like, “OK, we’re going to keep him.” Then we started…it was because he didn’t have…

 

Jason: It was your fault.

 

PJ: It was our fault.

 

Jason: You didn’t train him.

 

PJ: We didn’t train him. We didn’t scale him. Also, he was selling the product in the wrong way. You learn a lot from that.

 

Jason: He now is doing 1.5, so he’s probably twice as good as the next rep?

 

PJ: Yes. We now record his sessions with customers.

 

Jason: He won’t train other people, will he? He’s an individual contributor, right?

 

PJ: Yeah. But he trains them, because we record what he does, and then we…we put the recording on Showpad for our sales reps to see. He’s not training people. Of course, people, we give them access to him. We make him feel important, as well.

 

Jason: Josh, you have one who outperforms all the rest, too? How big’s the sales team? How many reps?

 

Joshua: We run about eight.

 

Jason: Do you have one, who’s like his story, who’s 50 to 100 percent better than the other two?

 

Joshua: We have one guy who’s similar, about $1.5 million dollars this year. We’ve now got quite a few superstars on the team. And we’re starting to get to the stage where the majority of the reps are performing, consistently, really, really well, which is a very different place from where we were a year and a half ago.

 

Jason: Can your two VPs today routinely hire the reps now?

 

Joshua: We’ve been much more aggressive hiring in the US. I think now, like PJ said, we’ve got a pretty good idea of what makes a good rep and the kind of profile that will we’re looking for, which certainly takes a long time to find.

 

Jason: You’ve got eight now, so you’d probably want 20-something in 12 months, at least.

 

Joshua: Yeah, we want to get to 15 by the end of the year. That probably won’t happen, but…

 

Jason: Now that you’re more involved in sales management and operations, at least strategically, how much of your VP of Sales’ time do you think is involved in building his team now? Now that you want to go from 8 to 15 to 25, how much of his or her time…

 

Joshua: A lot.

 

Jason: A lot, right?

 

Joshua: Well over 50 percent.

 

Jason: Whenever I do this talk of what a great VP of sales does to folks, they’re always shocked when the first line’s recruiting. But, now 50 percent?

 

Joshua: I think it’s not just VP of sales. I think one of the biggest lessons, at our stage, when you’re looking at the exec team, is the output of any exec is basically the output of that team. Pretty much, the biggest determinant of, “Will that exec be really successful?” Is, “Can they inspire and hire a major team?”

 

Jason: That’s what matters. In early days, they can hack it as an individual contributor with friends. But, yeah, you’re too big for it.

 

I just want to think back. Being in Europe, we learned that we’ve got to London. We’ve got to go up market. We’ve got to build a team. In the US, we go transactional. It works for a while, because we see a pop, but it doesn’t scale with bigger customers. Now we have an interim…

 

PJ: He managed the transactional guys and he managed to close some very big deals himself. That is when, suddenly, you hit a wall.

 

Jason: So it’s a little bit of learning. In both these cases, we actually got benefits from these hires. Sometimes environments, unfortunately, end up being more management than we like, but sometimes they still get us to the next level.

 

I’ve known you guys. There’s a lot of stress, especially Louis coming out to make these hires. Like, “Let’s build a damn management team tomorrow.” Should you have waited longer or been more patient?

 

Patience is capital. What’s the meta-learning beyond the right ACV for next year? Be more patient or less patient?

 

PJ: For Louis and myself, I think that was a critical thing for us. We keep on doing that in the hiring of the management team. We always hire the management team together. Louis will never hire somebody in the US that I haven’t spent time with and vice versa in Europe.

 

I will never hire somebody on the European team who Louis hasn’t met in person. That’s why there’s a lot of flying back and forth. That’s a rule of thumb there, a meta-learning.

 

The other one is, if you’re in a co-founder. We’re co-CEOs, it’s double. On the other side, it did damage to business in some ways. Even right now, we let a person go in, I think it was, January. We’ve been looking…

 

Jason: A long time.

 

PJ: …for a VP of sales. Since then, we had a kick-ass VP of customer success that took over. He had the experience, as a customer success person, of actually managing those upsells to very big customers.

 

Teddy: You mentioned co-CEOs as titles. That’s not a very common setup.

 

PJ: VC’s never like that. They hate it.

 

Jason: It’s worse if you’re Jack, and it’s two companies.

 

Teddy: That does work out well for you guys, because you’ve been on different continents. Now you’re going to be moving to SF as well, so you’ll have two CEOs in the same office. How do you see that working out?

 

PJ: How do you do it?

 

Jason: Left and right, left CEO and right CEO.

 

PJ: First of all, when we made the split, we split up certain responsibilities. US sales was Louis. European sales was me. US customer success was Louis. European customer success was me. Then I did a bunch of operational finance source stuff, because we’re headquartered in Europe. We decided to be a product and marketing, to make those hire in the US.

 

Everything around product, marketing, and anything related to strategy, then we always take decisions together. I’m super involved always in the marketing and product side of things. So going on the calls with product team leads, going on the calls with marketing leads. That’s what we do together.

 

It’s not easy. It works for Louis and myself, because we like Siamese twins. There’s some psychic kinds of things going on. We have a really good connection. We started off as not being friends. I think that’s a good one. If you start a company…

 

Louis was a colleague of mine, and I always think that enabled us. We worked one year in the profession together. We then started a company. Of course, now, we’re very good friends, but the basis of our relationship is professionalism and being co-workers.

 

We can be super brutal to each other, super hard, and can still walk out of the meeting room, have a beer five minutes later, and be all happy.

 

That’s what works for us. Of course, in how it will work right now, with me moving to the US, we’ll see. We’re talking about it right now. We have a great management team in Europe. We decided, “Hey, PJ’s not going to move to the US until we have a great engineering team, the right people in place.”

 

We feel the timing is right now. Maybe next year, I can talk about learnings and maybe mistakes that we’re making possibly now. But, we feel the time is right now, because of also fundraising and just US traction. The scaling is going to happen, for a big part, in the US.

 

Jason: I want talk about that, but also want to save a few moments for managing product across the continents. To me, it’s fascinating. It may be that, to other folks at an earlier stage, it’s less interesting than it is to us. To me, it’s…

 

Let me jump ahead and then come back. The one topic that bores me to tears is money, but everyone’s interested in money.

 

Even though, as a founder, I found it an episodic thing I had to do every once in a while. Even as an investor, I find some of it boring, but I’m in the minority. A couple questions on it. Both of you raised, notwithstanding, maybe partial US-ified, still raising money from European investors so far, right?

 

PJ: Yup.

 

Jason: Some of the folks I’ve talked to, they’re like, “I’m going to move to San Francisco to raise money. I’m doing $20k a month in MRR, $50k a month, but I’m going to go.” Certainly, there’s, I’m sure you agree, simply more money in the Bay area than there is anywhere else.

 

But what are the learnings on this in terms of how to play that? Do just people just throw money at you the minute you show up on Market Street? And so you moved?

 

PJ: My simple learning would be, if you don’t have the vision and willingness to go the US, your valuation will drop drastically in Europe, for sure. You could get money, but it will be at a much lower valuation than if you don’t have that vision of going there. It makes sense, if you can prove that you’re going to.

 

Joshua: We’ve raised $16 million now, primarily from UK VCs. We were here. That’s where I had the relationships, and that’s where we had all our early traction. We certainly, when we did our next major round and brought on the second VC here in the UK, we spoke to US VCs as well.

 

At the time, the business was still, from a revenue perspective, primarily UK. We weren’t that big in the US yet. I was kind of half there, half not. We found it really hard to raise in the US at that point. US VCs wanted to see a US business. It was fine to be in the UK, in terms of entrepreneur, you have to be there.

 

Jason: And 50-50 didn’t count.

 

Joshua: We weren’t 50-50 at the time. They wanted me to be living there…

 

Jason: Full time.

 

Joshua: Full time, and, from a business perspective, they wanted to see a business…

 

Jason: A higher percentage of your revenue in the US.

 

Joshua: They weren’t interested in a growing UK business with a tiny US customer base.

 

Jason: What do you think? Does it have to be 50-50 or approaching 50-50, to cross that line?

 

Joshua: It’s like if more of your revenue is US, then you’re there. Or, once you get past the $10 million and you’re more a growth business. But, the earlier stage, they want you to be closed. And they want it to be a US business they understand.

 

PJ: When Louis and myself made our first trips to the US, we already talked to two US VCs. Their first question was always, “Hey, when are you guys going to move here?” That’s literally the first question you would get in most of the meetings. “Are you living here? Are you moved already here?” It’s constant.

 

That’s a big part of raising money in the US. We haven’t done it yet, but it should go smoother now. We did get some term sheets in the US on our last round, but then Louis already moved there. We had maybe 25-30-ish percent of our ARR coming from the US.

 

You could definitely see we had more traction there. We had our office there. We had our team there, and then it goes smoother.

 

Jason: I’m curious what you think. When I hear folks say, “I’m going to move to San Francisco, at $20k MRR to raise.” Here’s this phenomenon. I’m curious your thoughts.

 

You’ve been in Europe, you’re starting to take off, and you move to the US, you’re moving, even though the investment community’s smaller, it’s easier to get attention once you break out.

 

Whether it’s $2 million ARR or $3 million, once you’re one of those companies that’s breaking out. So what I see, and maybe this is not accurate, but I see a lot of European VCs then wanting to be even more aggressive in the US. They see the star pupil going out of town, and it’s almost an easier time to get that European money than US sometimes.

 

PJ: We always leveraged that, as well, in our negotiations with VCs. We were literally saying, “Oh, you know, we got some US terms sheets,” and we would have them, actually. Then, yeah, you just negotiate more. I think there’s also a way better culture right now, across the globe, and more founder-friendly terms, when it comes to funding.

 

It can really help to negotiate some of those points in terms of control, or participating, and all that kind of stuff. It helps. If you’re raising in Europe and you want to raise in Europe, definitely talk to US VCs.

 

First of all, you’re going to learn so much from those conversations. We would just go out and do these trips, 10 days of VC meetings. In those 10 days, your vision on your product will change. Your vision on your company will evolve. You will have so many challenging questions, it helps you in your fundraising in Europe.

 

Even if you’re doing your first round in Europe, just go to the US, go talk to VCs. That would be my advice.

 

Joshua: Hundred percent, it’s so worth doing. Also, if things have changed. And certainly now, US VCs are being much more aggressive about getting into European companies than they were even a couple years ago.

 

Jason: No magic sauce, just move to the US to get money. That’s a bit apocryphal. You would agree?

 

Joshua: You move your entire company to San Francisco, you’re there, and you’ve got great traction, then you’ll be in pretty good…

 

Jason: But you’ve got to go 100 percent in, with 50 percent of your revenues, to make the play work, right?

 

PJ: I think actually the best time for the US is right after you do a funding round in Europe, and then position yourself for the next one. I think that’s what you’ve got to do.

 

Jason: I want to jump around a little bit. The product question, to me, is so interesting, which is so many companies end up…they come from London, Brussels, or Paris, so many other companies I work with.

 

One way or another you end up with an engineering center of excellence in your home town. Sometimes, it’s your entire engineering team. Sometimes you end up with two engineering teams.

 

It sounds like you just started that at Conversocial, just an engineer or two in the US?

 

Joshua: Yeah, but we will…

 

Jason: So you just started those two centers?

 

Joshua: Yeah, it may be a process that we just started hiring products in the US.

 

Jason: Let’s chat about that. PJ, do you have any engineers in the US?

 

PJ: We have two engineers now. We have our entire product organization in the US.

 

Jason: Let’s talk about you, and then let’s go over to Josh.

 

Louis comes out and he hires the whole management team, over night. You hired your first product manager in the US…

 

PJ: Yeah.

 

Jason: …out of a well-known SaaS company, to manage a bunch of engineers over in Belgium, which is tough.

 

PJ: Yeah, first…

 

Jason: And someone relatively junior.

 

PJ: Yeah, the guy was relatively junior. He had a product management role at Yammer. Great guy.

 

Jason: Good logo.

 

PJ: Yeah, good logo. This is one of the biggest challenges and it’s still our biggest challenge right now. Teddy will know that, as well, on our board, we talk about that a lot. Right now, we have almost 30 engineers in Europe. We have two or three in San Francisco. We have our product team that we built.

 

That first hire we made in the last year. Again, he did a lot of the right things at the time, but then suddenly you hit a ceiling. Then, it’s really hard, because super-motivated guy, hardworking. Our engineers were actually happy that we had a…

 

Jason: It worked. Culturally, you made it work.

 

PJ: Culturally, we made it work. At that time, maybe that was already one of the mistakes. We didn’t fly him enough to Belgium. That’s my opinion. He only made one or two trips, and you could definitely see those trips had a big impact.

 

Jason: The engineers would listen to him?

 

PJ: Yeah.

 

Jason: Oh.

 

PJ: They would listen to him. But the problem is, again, being a product engineer from an enterprise, it keeps evolving to hiring people who have the playbook. You will have certain…

 

Jason: You need someone more senior.

 

PJ: Yeah, you need somebody more senior. You will have, like David, our VP of Sales, he’s the only guy I’ve seen doing it, like, evolving. He did have the playbook when we hired him and he learned so fast that he can just keep up with developing his playbook and implementing.

 

But, with our first head of product at that time, he’s figuring out so much stuff. We realized as well, we put him in front of VCs. At that time, horrible mistake, because we didn’t get some term sheets just because of that. We would get responses like, “Why don’t you invest?” “Your VP of product sucked.”

 

Louis and myself were like, “Nah, this guy’s the bomb.” He’s good. We just didn’t see it. Now we hired a guy who has that experience, playbook.

 

Jason: It sounds like you’re becoming anti-up-and-coming.

 

PJ: Yeah, no, I…That’s our problem. As a co-founder of a business, you’re immediately attracted to people who are high energy, who want to make things happen. You’re actually even…

 

Jason: We’re all attracted to…

 

PJ: You even like the underdogs a bit, people who are like…yeah, I want give this person the opportunity to do it. The problem is, the further you get, you realize it’s super hard and super rare that somebody will actually figure it out while doing it.

 

When you’re growing at more than 125-150 percent a year, the company’s expanding that fast, and you’re hiring at a super high speed.

 

Jason: It’s hard.

 

PJ: It’s very hard. I think, as well, that’s one of the hardest lessons I learned. You want to give those guys the opportunity, but it’s sometimes very hard.

 

Joshua: I had exactly the same experience. It took me way too long to hire a great exec team, for that reason. I have this fundamental belief that any smart, young person can learn anything.

 

Jason: It worked well at PayPal. They were all like 17, and now they’ve gone on to great things.

 

Joshua: It can work well.

 

Jason: It can work well, yeah, but harder in the enterprise. Enterprise, without the experience in building a product, selling it, marketing, the chutzpah only takes you so far.

 

Joshua: It took me much longer to figure that out. And start hiring really experienced people.

 

PJ: You can also read the other side as well. We hired a super experienced guy, and that also…

 

Jason: They not only do the work…

 

PJ: Totally.

 

Jason: The ideal thing for me is as senior as you can go in enterprise, but will still do the work. Once you’re even north of $10 million and you’re well-funded, they don’t even have to do the work any more. Then they’re going to hire a four-person team.

 

Josh, going back, essentially you’ve gotten pretty big without yet building a traditional product development/product team yet. Is that right, or is that wrong?

 

Joshua: No.

 

Jason: Are your CTO and you active, or…?

 

Joshua: We are have head of products here in London.

 

Jason: Based in London, with engineering team, sitting together?

 

Joshua: Yeah.

 

Jason: Right? Not in the US with customer success, right?

 

Joshua: Yeah, we’re now hiring product managers in the US.

 

Jason: That will report to him?

 

Joshua: That will report to him. Product was a difficult area, because I was head of product for a long time. I was like deep…

 

Jason: That works up to like three million.

 

Joshua: Yeah.

 

Jason: And then the product gets complicated and it’s too much to hack, right?

 

Joshua: The early days, I was running everything. I was heavily, heavily involved in engineers. And then we got bigger, I was spending more time in the US, and realized there was just no one really managing the product.

 

Also, my style of managing product, which is probably quite similar to a lot of entrepreneurs. Which is like, “I have an idea and I have a very clear on it, and I’m pretty sure I’m right,” and I’m just like… That works when you’re small and early on. But once you have real customers, or real needs, and you have product-market fit. And you have lots of account managers and salespeople, then it’s really about, you need to build a process.

 

Jason: You have to professionalize it.

 

Joshua: You have to professionalize it, and that wasn’t my forte. We managed to bring in a great VP of products.

 

Jason: How old were you when you hired him?

 

Joshua: That was coming up to two years ago. We’d probably had like, two and a half.  Three and a half, yeah.

 

Teddy: Should have been six months earlier.

 

Joshua: Six months earlier.

 

Jason: Half a million in revenue, you’ve got the logos, you’ve got the roles that have come up and then that’s the right time. So it seems to work. Your VP is here. Do you like to bring him to the customer meetings?

 

Joshua: Yeah.

 

Jason: So he flies over to California to it. I like to have the VP of product with the big customers. So they learn, this is important to your engagement. It’s a relationship.

 

Joshua: Absolutely. You can, and he comes over to the US quite a bit.

 

Jason: 50-50?

 

Joshua: But we realized we really need product managers under him in New York.

 

Jason: Do you think one of the juniorfolks can go to your biggest customer in the US and have a meeting with you?

 

Joshua: We’re in the process of hiring, and we’re hiring people who aren’t VP of products, but are senior product managers who are capable of doing that.

 

We have an awesome senior product manager, here in the UK, for one of our product lines. He goes to all the big customer meetings, and it’s great. You can have people like that, at that level.

 

Jason: The learning there, again, hire as high as you can, so they can still do the work.

 

Joshua: I would say that, we’re behind the curve in investing in the product team. We have a VP of product, but we really realize now we need a few product managers under him, for different areas of the products, really, really focused.

 

Jason: Did he know that? Or didn’t get it, or was an evolution?

 

Joshua: Yeah, to an extent.

 

Jason: This is interesting. Let’s make sure we get to one more topic before we run out of time.

 

Since engineering is going to stay in London, you decided to put the VP of product there, which makes total sense to me. You want them together, but no matter how good these other folks are, you lose a bit of that direct customer connection.

 

Joshua: Yeah.

 

Jason: I think you guys decided to go the other way, which is try to have product in the US, where you saw the majority of your revenue going. Right?

 

Joshua: Yes.

 

Jason: What are the learning?

 

PJ: The learning, there’s no substitute for having product and engineering sitting together. Things will always go better if that’s a possibility. If we just look at it from a financial perspective, as well as a company, one-third of our head count is in San Francisco, two-thirds is in Europe.

 

Half of our cost base right now is in the US, so one-third of the people and are costing us half of the money to the salary.

 

If you would do engineering in San Francisco, that would explode to a crazy amount, because it’s so expensive to hire engineers. They’re less loyal and they’re not…

 

Jason: You have 30 engineers in Belgium.

 

PJ: It’s great, it’s good, but what we do now, we hired an apartment in San Francisco. We fly in a lot of our engineers to San Francisco on a regular basis. There would always be a couple of people in the house there, working on strategic projects with our product team together.

 

We have our product guys flying a lot from San Francisco to Belgium and spending two consecutive weeks with the team there. We’re now considering to add an intermediate layer, having the product managers in the San Francisco, but then having more projects.

 

Right now, we have three product people in the US and we have a team of 25-30 engineers. They’re communicating directly with all those engineers, and that’s a real hassle with a nine-hour time difference.

 

Jason: That’s the question, right?

 

PJ: Yeah. We’re now working with team leads in our engineering team who then will work with somebody with a product background, but more program/project manager skills. Who’s really good at communicating things and making small decisions during the day.

 

That’s a big problem if you have an engineering team here in Europe and your product is in the US. The engineering team is going to run into a bunch of problems during the day. And they need feedback to move forward in a swift way. If you don’t have that, then yeah, wrong things get developed.

 

Jason: I’ve got to put you on the spot to answer questions. I’m a little bit confused. Learnings. Your VP of product, when your engineering team stays in Europe, in Europe or US?

 

PJ: For me, US, because US…

 

Jason: US, because of customers.

 

PJ: Yeah, customers and knowledge. Just because of the sheer amount of talent, in product, that is, in San Francisco.

 

Jason: Josh, you say stay with engineering, right?

 

Joshua: There’s always an ideal situation or there’s no ideal situation. In the end, it probably depends on where you are at that stage and the people that you find. We’ve certainly learned that we need product, to an extent, in the US, near our big customers.

 

The way we’re working on that at the moment is keeping the VP here, but having senior product managers in New York who report him and then travel back and forth. He travels back and forth a lot.

 

Jason: But I think you’d really like the VP product, I’m sensing, right?

 

Joshua: Yeah.

 

Jason: Ignoring that, let’s say it was just a random hire, where would you go, US or…?

 

Joshua: If it was a random hire, now I would try and hire it in New York.

 

Jason: My view is, with A+ is, you take anywhere in the world. An A+ wants to work from Zanzibar, then there’s always someone. I’m not talking about great employees.

 

PJ: Look at companies like Zendesk, GoodData. You can really see that, even those companies, they’re still changing things. I think it’s going to be an eternal way of trying to optimize it.

 

Jason: It’s hard.

 

PJ: It’s pretty hard. You have to make it work, and that can change from quarter to quarter quite a bit how you do it.

 

Joshua: One thing I would say, in terms of where the product managers are, is that no matter how global you are as a company. No matter how much communication, follow-up, the fact is that, if a product manager’s here in London. And, they’re sitting very close to a sales rep, who’s here because it’s a UK client. And they’re aware of the UK clients you have, they’ll be more UK-focused.

 

Even as much as they try to think about US customers, it’s just easier.

 

Jason: It is easier.

 

Joshua: They don’t speak to a UK customer or learn about a UK customer’s problems. That really makes a big difference, the soft side of things.

 

Jason: I know we’re out of time, but one thing I do want to get because we didn’t get is PJ gave us a great story of Louis, his co-founder, going to New York and then moving everybody on to San Francisco.

 

Maybe in couple minutes, Josh, we want to hear why you decided New York worked for you. We heard a little bit about time zone, but let’s talk about management team. You’ve got a couple sales guys in San Francisco. But it’s not HQ. How do the sales guys compete with Box and Zenefits, when it’s not even your HQ in San…

 

What’s your learning for the room for New York-San Francisco.

 

Joshua: There is no doubt that there are, in general, more experienced startup execs, at every level, on the West Coast. There’s no doubt. I feel really lucky. I think I’ve got the two best enterprise SaaS execs in New York. It wasn’t easy to find them, and there isn’t a massive, massive pool.

 

Jason: How long did the searches take?

 

Joshua: I’d say building my exec team was pretty much the whole of last year for me.

 

Jason: In New York, for those positions, do you feel like you got six good folks, or do you feel like you only got one great one?

 

Joshua: I’d say I have two real contenders.

 

Jason: Keep going. So it took a year, it took a while. Keep going.

 

Joshua: That’s changing, as well. There are more and more enterprise SaaS businesses. There’s no doubt there’s more in the Valley, but they are there.

 

One of the interesting things about, for example, one of our execs in New York, she’d always worked for Silicon Valley companies who have New York satellites. She was really excited to work for a parent who was in New York.

 

Jason: So hiring from satellites is a big one.

 

Joshua: Yeah. We have been able to build a great exec team there. Could we have done it faster in San Francisco? Maybe, but we have managed to do it. For hiring sales reps, it’s a similar story. Are there as many enterprise SaaS sales reps in New York as there are in San Francisco?

 

No, but there are a lot and there are a lot of really great ones. You have to filter through a lot. You just filter them out from day one, and then you…

 

Jason: Just to summarize that, like I did with PJ and product, if you had to do it again and you didn’t keep the first VP of sales for 18 months. And you didn’t do your 50-50, you just got up here and moved to the US full time, New York’s great.

 

You’re going to kill in New York, but Europe or San Francisco, from those two, which would you do?

 

Joshua: It’s a hard…

 

Jason: Including time differences…

 

Joshua: It’s a hard choice. Maintaining communication and culture between two offices is really, really hard.

 

Jason: Really hard.

 

Joshua: It’s really hard. It’s hard enough with the fact that we share half a day. There are certainly a lot of advantages to the fact that our teams do share half a day. We can have all-hand meetings together without that much difficulty. We did our HQ kick-off, three hours, and we had both offices.

 

Jason: You’re not talking California. They don’t even know what it is over there, right? A lot of folks in this room are going to make this decision in the next 12 months, the same decision.

 

Joshua: This is what I say. If you have a real business here that you need to be heavily involved in, I think New York’s actually a really great choice. If you can just pack up the whole thing and move, then go to San Francisco.

 

PJ: That’s what I think about it.

 

Joshua: There is more money. There are more people there. Personally, I also prefer New York.

 

Jason: We’re pretty much out of time. Anything else we could hit?

 

PJ: I think that’s it.

 

Jason: All right, thank our guests. This was really great.

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