The Right Way to Build A Unicorn with CEO @ Qualtrics, Ryan Smith and Jason Lemkin (Video + Transcript)

We would all love to have our startup known as the “Unicorn for X.” Think Meltwater or Qualtrics as great examples. To figure out how to build a unicorn, our Founder, Jason Lemkin, sat down with CEO @ Qualtrics, Ryan Smith at SaaStr Annual. We also talk about the right way to build a unicorn…because there are many ways out there on how not to become one.

If you’re looking for more useful content, you should come to SaaStr Annual 2019! Tickets are still at discounted prices and you can learn from the best in SaaS.

Transcript

Jason Lemkin: So, I want to welcome Ryan, one of the greatest founder’s founder. Been running Qaltrics since, out of his father’s basement, for 16 years. Crazy story. I met Ryan, a good friend of ours, Lloyd Logo does Attraction Conference, mostly in Vancouver and San Francisco, about two and half years he asked me to moderate Ryan. I only knew a little about the company. I think it was just after you’d raised a unicorn round, but we’ll talk more about it. You never raised a dollar in primary capital before that, right?
It was fascinating. I chatted with Ryan, it was one of our, even though it wasn’t really our content, it was one of the most popular videos and it was one of the most authentic founder conversations on building teams, scaling teams, going up market, moving verticals from education to corporate. Tough learnings on scaling outside of Bay Area, so I couldn’t be happier that Ryan’s back to tell us what he’s learned and, lots happened since. Back then he was only worth a billion, now apparently they’re worth two and a half billion, an up round it sounds like. Excel, Sequoia, how else is left?

Ryan Smith: Insight Venture Partners.

Jason Lemkin: What about Softbank? Have they been knocking at your door yet? Would you take 10 billion from Softbank, or do you think that would muck up the IPO? What are you thinking about this?

Ryan Smith: I don’t know, I have good friends over there. They seem to be some interesting things.

Jason Lemkin: Interesting things, yeah.

Ryan Smith: I think what will be more interesting is how many people other firms, try to go raise a Softbank type round.

Jason Lemkin: They ploy out at eight billion.

Ryan Smith: Yeah, right at the fund.

Jason Lemkin: Can easily top you up for the next round.

Ryan Smith: We’re gonna see a little craziness. Either that or they know something we don’t know and they’re gearing up for a cold, cold winter.

Jason Lemkin: Yes. Well let’s talk about other things. Interesting thing about Softbank is, they have a 30 year investment horizon. You’re only half way there on Qualtrics, right? So you could be a short term liquidity event for them. So worth 2.5 billion, started in a basement, I want to get a couple other fun things in. Repeatedly fortune 40 under 40. It’s a little late for me, but it’s pretty cool. Thirty-five under 35 top CEOs. You got a lot of these awards to keep, are they all in the office on some sort of a [crosstalk 00:02:04]?

Ryan Smith: I don’t even know where they come from.

Jason Lemkin: Got a couple of cool things going, which we’re gonna dig in more. Silicon Slopes, which is a Utah Tech Conference, in three years it’s gone to 14000 people?

Ryan Smith: Yep.

Jason Lemkin: Pretty cool. A couple celebrities and stuff showed up this year over Twitter?

Ryan Smith: We had 14000 people in Utah, I think it’s gonna rival South by Southwest. It’s the first week of the Sundance Film Festival, so you can come out, watch movies, ski and I think there’s something magical going on in Utah.

Jason Lemkin: Pretty cool. We’re gonna talk about Utah on a lot of levels soon. Even things that have changed in the last 24 months in Utah, right. Then Cloud 100, Byron Dieter does the Cloud 100, we’re gonna do it again as our last session on Thursday. Number six on the Cloud 100 with a bullet, you’re looking for number three this year, we’re going up. Basically, best privately, all the great things, but I think in many ways, Ryan’s done it, maybe not the hardest way, but the hard way literally from the basement, founded the company in 2002 when we were still just trying to get these browsers to still work, let alone mobile. A lot has changed, which I want to talk about. First, talk about what Qualtrics does today as much as you want and then give us a hint of how it’s changed over the years.

Ryan Smith: Yeah, so we’re an experience management platform. We manage, we built a software that manages the experiences of business. We believe there’s four key experiences to manage. There’s the product, you’ve got to be at home and you’ve got to understand everything that’s happening from a product experience standpoint. The customer, which most people know. They’re doing MPS or something like that. If you’re not, jump on Qualtrics.

Jason Lemkin: Today, get it done today.

Ryan Smith: Yeah. The employee experience, which is in a whole new echelon where we’re seeing massive gaps between what organizations think they’re providing to employees and what’s really happening. Then the brand, which kind of catches all of it and the brand either goes up or down and to, give you a great example, we launched this new category of experience management where those aren’t four different groups within a company, it’s all one, last year, which was a huge undertaking, a lot of development and a couple months later there was an airline that oversold a flight, so it was a bad product to experience.
Someone, an employee let him on the plane, probably the employee had been taking a lot of those all day long. Customer gets ripped off the plane, brand goes down by $2 billion. The fact that there now is very visible to see that it’s one experience. We’re reading a lot about these experience gaps, is what we call them, so historically technology is built to line up around operational data and tell you what’s going on. But what you always read about, and what you always see in the media and where people are surprised is around X data, which is experience data, what the operational data’s not telling you. We’re seeing a lot of members of Boards say, “Okay, great, here’s all your operational financial data and everything that’s coming to you, but what about the rest of it? Where are the leading indicators? What are the customers saying?
That was very apparent when we raised our rounds, it was like, okay here’s all your financial, everything’s high to the right, now for the fun part. Let’s talk to your customers. They’re like, whoa. Then they found out all this stuff that we didn’t know and we’re like, was that good or bad? That was where the Aha moment came. Are we really as good as we think we are? Fortunately enough they still wrote a check.

Jason Lemkin: In 2018, what’s the typical, I mean typical is a tough word, what’s the typical Qualtrics customer? Rough deal size and with this broad set of capabilities? What’s a logo customer doing with Qualtrics today? Somebody you closed in the last year or so.

Ryan Smith: They’ll either start with the employee or the customer. We have 160000 MOS studies running on Qualtrics right now. If I think about Jet Blue Airlines. Jet Blue came in, they actually did their employee engagement and their employee MPS.

Jason Lemkin: Can we just stop for a minute? So Jet Blue came in, why did they pick you? Why did they find you? What were they, how did they know to find Qualtrics?

Ryan Smith: I think, I think that they saw.

Jason Lemkin: What were they looking for? What was broken in their existing software [inaudible 00:06:05]?

Ryan Smith: If you actually go back the experience management side of things used to be outsourced. So it used to be something that you would pay consultants to do if you were good. I think companies woke up and said, “Hey, look, we have to control our experiences.”. There’s things we can outsource, experiences is not one. We have to be home.

Jason Lemkin: Yes.

Ryan Smith: So, Jet Blue in their case, they started using us on the employee side saying hey look, if we can lower employee attrition or at least know what things we’re doing for our employees are resonating, we’re gonna win. So, they want a finger on the pulse at all times there. Then they got all the data in Qualtrics and said, “Wow, we can have this core competency internally.”. Our team can be better than everyone else in the industry at this, and then they had an option to come up and say, “Hey, look we need help on the customer side. They said, “Hey we can either use systems or what if we could put it all in Qualtrics? And what if our employee experience is tied to the customer experience?”.
Well, if you actually take a step back, most of the time when we have a bad experience or a good experience with a brand, there’s a human involved, right. So, if the employees are happy at an airline, obviously the customers are going to see that. If an employee’s made, I don’t care how great the plane or the trip is. If someone tells me sit down or won’t help me with my bag, I’m gonna remember that. Those are tied together and then they started using us on the product and brand and it’s like, wow, all this data’s in one spot. Now it gets really cool because we just launched IQ, which was all of our machine learning and natural language processing so we can take all of the data that’s in Qualtrics and start predicting what’s gonna happen and start showing key drivers and stuff like that. It’s pretty cool.

Jason Lemkin: Let me ask a related question, I have done a bunch of CIO type sessions, but I hadn’t done it in a while and the theme I’m hearing more is there’s so much vendor fatigue that we’re almost going back to suites. We want, if Qualtrics can give us four offerings, and are you benefiting from that as you’ve expanded a bit? Do you see this fatigue where folks that can provide multiple solutions, if I have trust vendor like Qualtrics, I don’t wanna go out and find four things, I want to buy more for you, is that [crosstalk 00:08:13]?

Ryan Smith: It’s an absolute real thing. I mean, we were just dealing with one where the CEO was running some employee 360s and engagement and someone else was running their MPS and we went in and said, “Hey, we could put this together. Now, the trick is, you can’t raise your hand and say, “Hey, we want to be a suite.” Everyone sees through that. You’ve got to have the number one product in every market. So, at Qualtrics one of our lessons is, we will not go into a market unless we think we can be number one. There’s probably 20 products that we can go into that we could say, “Hey, look at our resources, we got a ton of cash, got a great go to market engine”, but we’ve got to be able to win. We don’t want to run into a market and then we say, “Oh wow, they’re slack.” We want to make sure that we can actually win in that market.
Typically, what’s interesting is we’re normally going into a market that was historically outsourced, it was historically extremely painful and then need to have that internal competency is a competitive advantage. That’s the cool part. We did this in 2002. We built this survey platform. Our investors are like, there’s not enough space, I don’t know.

Jason Lemkin: The Thames too small.

Ryan Smith: 300 million valuations, probably all, we can think about this. Those are funny conversations when I remind them how wrong they were.

Jason Lemkin: It feels a little good to remind them, doesn’t it?

Ryan Smith: A little bit, yeah.

Jason Lemkin: After all these years, that kind of reminder feels good.

Ryan Smith: If you look at everything was research, all data analytics, everything was called research back then. Then all these buzz words came out and we always said it was like lip stick on a pig. It’s actually research. Everything was handled within the research department over the next eight years.

Jason Lemkin: Yes.

Ryan Smith: Every marketing team had a research team and our job was to convince organizations not to outsource the research, which was like a $30 billion business to make it internal, to stand up that team. Get them really good at it. Now, only 10% of research is even done within that team. It’s even gone further. Every department has these statisticians, everyone’s playing Moneyball. Everyone’s looking at data and it’s becoming a currency. So, it’s actually played into the larger trim and so when we go into a new market like employee engagement in 360, we’re looking at it and going, hey, wow, the employee experience, it looks very much like 2002, we’ve seen how this movie ends, let’s go. We look at customer experience. Everyone’s outsourcing everything, they’re not good at MPS. We said, “Hey, how do we make this easy and how do we do what we did for research to customer experience?”. Then what if we could put it all together and have a combination of all that data in one?

Jason Lemkin: Let me ask you a slight off point related to it. If you’re deep in them as a customer, take a pass. But what should Wells Fargo do now in the customer experience? What should they do. [inaudible 00:11:15] should we move onto the next topic?

Ryan Smith: We’re working with.

Jason Lemkin: I just found out they opened three accounts in my name, I’ve got a car that I didn’t buy, a credit card I didn’t know. But it’s interesting as a case study right. They’re MPS for me just dropped, what’s the lowest MPS could be? Can it be negative 100? Where does it go? What can they do improve?

Ryan Smith: Yeah. We’ve seen this. I mean life’s long. Life is long. The customer journey is long. I think the key is first they need to measure exactly what the impact is and then figure out how to work their way out of it and they better be very close to the customer to realize, hey, who’s in a point like you, or actually, who’s okay? Then keep building out of it.
To sit back, if they’re sitting back in headquarters going hey, this thing just happened. How do we, getting everyone’s ideas. No, they’re gonna have to get really close to the customer. Really close to the customer. We’ve seen companies go through this phase. We see it all the time. Airlines are classic for it. You see them pull their.

Jason Lemkin: It’s very visceral, right. Their customer experience went visceral, airplanes and automobile rental.

Ryan Smith: When there’s a disaster it should be an incredible opportunity to circle the wagons and have a rallying cry if you’re a brand.

Jason Lemkin: Yeah. I want to talk about creating a category, that we were chatting about before. Let me ask a 2018 question and then let’s roll back in time. Today, at least publicly, you’ve said you’re at north of 250 million AIR, whatever it is, it’s pretty good, right. We don’t need to know the specifics for today unless you think it’s fun to talk about.

Ryan Smith: Thank you.

Jason Lemkin: But it’s pretty good. How much today, roughly, how much of our growth, and you’ve got big numbers to hit. These next year are like, you’re gonna add more revenue next year than a third of this room collectively, and that’s a lot of work. How much comes from the base? Whether it’s up sale, retention or even just brand, second order revenue, referral. How much of the next 12 months comes from all the hard work of the last 15 years, versus new stuff you gotta go find?

Ryan Smith: If you actually take a step back, it’s like you’re building a unicorn every quarter, which is kind of daunting.

Jason Lemkin: It is daunting.

Ryan Smith: When we first started, I remember I was sitting in the basement, we had about 20 employees which was kind of a cluster. I’m trying to figure out how all that worked, but we had our renewal business and we had our new business. The way that we.

Jason Lemkin: Even back in the early days? [crosstalk 00:13:43]

Ryan Smith: In the early days.

Jason Lemkin: That’s one of the reasons of your success.

Ryan Smith: I used to say, “Hey, the renewal business is”, at the time we’d say “Hey, all of the growth is gonna come from the new business and the renewal business needs to pay the bills. So everything we want to spend the current bills and everything we’re gonna invest forward needs to come from the new business. I think that that is a decision you make. It would be real easy right now to be sitting back and saying, “Hey, we kick off cash. We’re a high growth company. Actually things are going really well.”. That’s now how we think. We’re so hell bent on seeing what Qualtrics looks like at a billion in revenue and when we were in the basement, we used to sit there and say, “Oh my gosh, I cannot wait until the day where people know who we are.” How many have used Qualtrics before? Or used us in college? Or heard of us. [crosstalk 00:14:37]

Jason Lemkin: Lots of hands.

Ryan Smith: We used to dream about the day that we were 2018. We used to dream about having money to go to conferences and doing all these things. Or having engineers and having designers and having sales people. Then there’s this mentality in Silicon Valley and everywhere else in tech that, oh wait, you’re 1600 employees, you’re getting too big, let’s go back to the basement and go do something a little smaller. It sucked. I never want to go back to the basement.
It’s like, we have this mentality, it’s this weird hamster wheel where it’s like, okay, you’re gonna go and you’re gonna hit some goals and you’re gonna become somewhat successful and then you’re gonna get there and you’re gonna be like, nah, you know what, I liked it better when we were grinding and we had no resources and we had nothing.

Jason Lemkin: No, it’s awful. It’s awful.

Ryan Smith: We tried to condition a culture where it’s like, hey, we all wanted to be here. We all pushed to get to 2018. But, the goal was when we got to 2018 we were gonna turn it up. That’s how I feel.

Jason Lemkin: So 2018 was literally a goal?

Ryan Smith: Well, like everything that makes up where we’re at as a company that you just described. I’m sitting her going, wow, like we’re here. We’re at this amazing point as a company, let’s not screw it up. I just got done with my last board meeting and I asked the board, I was like, “Hey, what feedback do you have for me?”. They were like, “Don’t eff it up.”. I was like, don’t eff it up?

Jason Lemkin: We could have done that on a telephone call.

Ryan Smith: Yeah. That’s encouraging ’cause it’s like, no, you’ve gotta go. We’ve gotta be running faster and it’s a lot more complicated now with so many different levers to pull and we’ve got to be extremely focused on new business. Relentless on new business. Now’s the time and we should have some wind behind our sales to go get that business. We got a great category, we’ve got a great brand. Our products great. Let’s go.

Jason Lemkin: So walk me, then let’s talk about creating a category. Walk me through that math because I get a little slow. Maybe it doesn’t work at today’s sale, but reinvent the money that comes from the, use the money from the customers to keep the lights on. Use the new revenue to invest. I’m almost getting it backwards. It’s more a construct than a reality. The sales team can’t bring in the cash quite fast enough to build the product that you want to have in the future, can they? Or what am I missing?

Ryan Smith: If you actually look at the bets we’re making this year and we sat down all of our employees, we said, “Okay, we went through the budgeting cycle and it’s like, okay the budgets came in at like $30 million higher than we were gonna spend.” Instead of saying, “Hey, everyone chop it down”, why don’t we say “Okay, where’s our new business? How do we go get new business?”

Jason Lemkin: Are you making 30 million in bets this year at your scale?

Ryan Smith: We’ll spend $300 and something million.

Jason Lemkin: In terms of bets, how you think about bets versus supports, how much you betting this year?

Ryan Smith: They’re all bets. They’re all bets. I think we got to keep them to be bets, but we’re betting a lot. We’ve got 250 employees in Dublin. We just opened up, we got Sydney and Melbourne and Singapore and Japan.

Jason Lemkin: Are those bets?

Ryan Smith: Those are bets.

Jason Lemkin: You’re not sure that they’ll be RI positive yet? You don’t know for sure?

Ryan Smith: No. I mean when we set them up

Jason Lemkin: You have customers there, correct?

Ryan Smith: When we set them up, yeah, we’ve got customers. But we set them up, we’d say “Hey, look, what’s the magic number gonna be in two years? In three years?”. It’s like a little start up.

Jason Lemkin: What’s the payback for a secondary office? What’s your, two years to break even?

Ryan Smith: Two and a half. At most three years, most of them have paid back in 15, 18 months.

Jason Lemkin: Fifteen, 18 months, yeah.

Ryan Smith: But then what happens, we’re like, oh wow that’s successful, let’s throw more people at it. That’s the quickest way to break something. It normally goes up and then kind of stops and we gotta, and everyone thinks like the growth’s high and to the right, actually if you look at Qualtrics over the years, we start, we grow and we hit a ceiling, hard. Then we have to slide over and go up until we hit that next ceiling and you’ve got to reinvent and then go up again. At the end, it’s like wow, that was high and to the right. But there’s no straight lines.

Jason Lemkin: Never, it’s an illusion right.

Ryan Smith: We opened up Dublin, it was slow, it didn’t work real well.

Jason Lemkin: What was the goal? Just to be closer to the European customers?

Ryan Smith: We had to have a European headquarters, one of the first things we did in 2013 when we took Venture Capital, we said, hey look, whatever reason we couldn’t, we were bootstrapped. Even though we had money, we couldn’t get ourselves to write a two or three hundred million, or $3 million check personally out of our own accounts to go in there which is kind of weird. We said, “Hey, we’re gonna go big and we’re gonna go. I remember standing in front of the Dublin Prime Minister, the Taoiseach, and said, “Hey, look, we’re gonna announce 50 jobs.” And there was two of us. I was at least, I remember sitting back in my hotel room at night and seeing myself on Irish television, going I’m at least five percent sure we can do this and we just committed all these jobs. Nothing was better than cruising back over there an announcing another 150 jobs.

Jason Lemkin: Pretty cool.

Ryan Smith: And hitting it and saying, whoa, if you throw that flag out there and you plant it, you’re gonna get there.

Jason Lemkin: On the, we could spend a lot of time talking about bootstrapping, but you chat about it a lot, one interesting thing for folks here bootstrapping, how long did it take to get your arms around investing more when you went from bootstrapping? The first check was decent, but did it take a year to figure out? Did you go too far the other way? Folks have trouble switching their mindsets. That $3 million check doesn’t seem huge today, but at the time it was stress inducing, probably hive inducing at the time.

Ryan Smith: Yeah, so if you think about Qualtrics, we’ve had three different businesses. We had the business where it was, the motto was, my father and my brother, my brother had left Google, he ran a third of the world’s internet search and was at Google for seven years and he came back to work with me. I said, hey, look, this is like 2009, we’re totally bootstrapped. I’m like, hey, I think there’s a multi billion dollar opportunity here, let’s go raise capital. He’s like, hell no. He’s like, I didn’t leave Google to come work for a boss.

Jason Lemkin: Amen.

Ryan Smith: I was like, you’re joking me. We’ve got this huge opportunity and we went down this road and he finally said, “Hey look, if you can raise $100 million for 20% of the company” or whatever it is, “I’ll listen.”

Jason Lemkin: Yeah.

Ryan Smith: We’re sitting there in 2011, I think we had done, I don’t know, $6 million in Q2 and under my math it would have taken us a year and a half to go get the number that he needed. We rallied, we said, hey look, this is what we’re going after. I think we did nine million in Q4 of ’11.

Jason Lemkin: With 50% growth, that’s pretty good.

Ryan Smith: Kicked off about six million in cash that quarter.

Jason Lemkin: Everyone’s jaws are allowed to drop.

Ryan Smith: It’s all folklore at this point.

Jason Lemkin: It can be done. You can make money in [inaudible 00:21:39], can’t you? It is entirely possible to generate positive cash flow with offering a service, isn’t it? No matter what Tech [crosstalk 00:21:44] says, it can be done.

Ryan Smith: Look, we’re all super resilient. We’re all super resilient and when you’re given constraints, most founders will actually hit them. They will rise. The problem is, is when they’re not, they’re only gonna bring what they need. That’s why we’re founders. So, we went out in January of 2012, I had five term sheets that all fit his and an offer to sell the company for $500 million. I went back and said, “Well we better have a discussion now.”. He said, “All right, if we’re raising money I’m going with Bryan Trier from Sequoia ’cause I worked with him at Google.”. I was like, okay. Then I was pretty close with Ryan Sweeney and the Excel guys and we did a deal. It was the largest Series A since 2008 and that was back then.

Jason Lemkin: Yeah.

Ryan Smith: Then we had to shift to, okay we’re this bootstrap company, everything is resource constrained to actually how do we flip to another model?

Jason Lemkin: How did you do that? It’s not always easy.

Ryan Smith: No. You have to really focus on what you care about and what you don’t care about. When we were bootstrapped I cared about everything. I was in every single detail and as you start adding hundreds and hundreds of employees, you gotta say where are the sacred cows? You can’t dive deep and focus on everything. Then it gets even worse and more complicate as you go. But you’ve got to be extremely, extremely comfortable saying that was a model for then, it’s all gone. We did that in the academic market. All we did was academia. Then we said, okay we’re going to corporate. We’re going to the enterprise. Totally shifted the model. I think that’s a part and you start to fall in love with the old way of doing things. It’s like a band, you won’t listen to the new songs because you’re so in love with the old ones. It’s like, no, you’ve got to go get to know these new albums and fall in love with those.

Jason Lemkin: It is hard. So let’s go back to category creation. We were talking about it before. You’ve been, this is year 16 for Qualtrics? I forget, what did we count, 15, 16, where is it?

Ryan Smith: It’s my 16th year.

Jason Lemkin: Okay, so you’re ready to drive to that, some sort of bad analogy I’m not going to get right. As a category creator, where do you feel like you are in terms of innings of the space? It’s hard to create a category.

Ryan Smith: It’s really hard, a lot of timing has to be right. Everyone once again raise their hand and say, “Hey we want to go create this new category.” Or “We don’t compete with anyone.”

Jason Lemkin: When you hear I don’t compete with anyone, how do you react as a category creator?

Ryan Smith: You’re not on to anything if other people aren’t kind of in there. I mean, we’ve always competed with people. Even when were in the basement, everyone had to raise 40 or $50 million and we were competing head to head with them. I don’t worry about that, that much. If we can kind of go from where we did to now, I think it’s good. But competition is good. It’s really hard to go educate a market and be the first one out. A lot of times you’re just setting the table for the net person, right. If you’re gonna go create a category you better go win it. So, I think that’s the way we think about it. Experience management is a huge category. If you look at our journey to get there from a product standpoint, there’s no way that someone would have predicted in 2002 that what we were working on would be XM. There’s no way.
It’s like, you guys are smart entrepreneurs, you have great. Yeah, but we’re extremely fortunate and extremely lucky to be in this spot. We’re extremely lucky that we didn’t do anything to the business that hamstrung us. Let’s talk about cap tables. That’s one of the things. Half of the competitors that we had that were going along hyper-grow, they all made stupid mistakes with their cap table. That’s the problem, they took money. They took money too early. They wanted to be a unicorn. They went out there, they got all the press. They raised a bunch of debt. The nit’s like, we’re growing at 16%, my board won’t let me do anything. Okay, wow, see ya, right? That’s the problem that people make. To be able to go for a long time in reality is, if you’re an enterprise software, it’s going to take you a long time.
Every single one of my friends, every single unicorn CEO that I know in enterprise software has eight, nine, 10, 12 years. You sign these customers up one by one and you grow with them. There’s no short cuts. Don’t even try it.

Jason Lemkin: When you started you were in your early 20s, or maybe even slightly younger, I don’t know, but did you know you could do enterprise software for 20 years?

Ryan Smith: I didn’t even know what enterprise software was.

Jason Lemkin: You knew you weren’t making video games. That was clear.

Ryan Smith: Yeah, but I didn’t wake up and say, “Hey, look, I want to create XM and I want to go be in enterprise software.” I wanted to play in the NBA. That didn’t work out and then I wanted to play on the PGA tour and that didn’t work out.

Jason Lemkin: So how did you steel yourself for 16 years? How do you, as a CEO, as a founder, how do you do it?

Ryan Smith: It’s hard because I have massive ADD and I’m always working on different things, but I think it’s the challenge and I think that, here’s an interesting story, we just, I just earlier this month, I got back rom Dublin where our head, this person that I opened up Dublin with just passed away of cancer.

Jason Lemkin: I read that, sorry about that.

Ryan Smith: I think it taught us all a lesson, right? He did. I’ve never been around someone who’s about ready to pass away, who was so lucid in the way they were talking. He gave one last YouTube, I should send it to you all because you will all learn something. He did one last video and a talk to the office and he said, “Look”, and he’d gone through more chemo than anyone I’d ever heard of. He’d taken more treatment. He would take his treatment, he would come into the office and we’re like, hey Dermot, you don’t have to work anymore. You’re good, we got you man. We got you, we got your family. He’s like, no, I need to be here.
He talks about in the Q&A, like what are you gonna miss most? He says I’m gonna miss the party. I’m gonna miss the party. I was over at his funeral and I was like, and the next day we had sales kickoff and it was kind of somber and I was like, whoa, this is the party that he was going to miss. So I think that you, people don’t really spend a lot of time thinking about the journey that they’re on, that that’s the party. That’s what they’re chasing. If you get to be at my spot and say, hey why are you still going? Why are you waking up for 16 years? This is my last job. I’m not going to work after this. This is it. Sorry. I don’t want to go invest. I don’t want to go VC, no offense.

Jason Lemkin: No, don’t do it. Barely investing, I get it.

Ryan Smith: If I could start over right now I would want to go build Qualtrics and I would hope that Qualtrics, I could get to the spot where Qualtrics is. To think that you could start something as a junior in college and that you could keep rolling all the way, but I’ve already gone through my head on how long I’m going to work. I know I’m gonna work ’till I’m 80. I know it. Everyone of my friend who checks out early turns into a total prick. No one wants to be around him. They’re retired, no one else is retired. Their family doesn’t like them. The wife doesn’t want him home.

Jason Lemkin: The family definitely doesn’t like him, that’s for sure.

Ryan Smith: If you know you’re gonna work that long, this is what you’re working for. This is the party. This is the journey. Enjoy it. It’s hard. And it’s gonna be the hardest, especially if you’re a CEO or you’re an executive, you’ve got to be the fastest learners in the building. The fastest. It’s daunting when you get humbled where you’re like, I suck. I’ll never forget when I recruited my brother back. He’s four years older than me. We were close, but we weren’t that close. We’re exact opposites. But he sat down the first day with him and I was like Jared, we’re working together we gotta figure out how this is gonna go. He’s like, it’s pretty simple Ryan, I’m good at these five things and I suck at these five things. I was like, whoa you suck at stuff? That’s weird. I thought I made a bad decision, but how wrong was I? He just knew what he sucked at. I’ve had to learn along the way. I am horrible at these things.
If you don’t know what you suck at, you gotta long way to go on the journey. You’ve got to figure that out quickly and then really enjoy the party. I mean, that’s what we’re here. We’re in SAAS, how fun is that? We’re in tech. We could be doing a lot of other things if we weren’t born at this time. This is an amazing, amazing ride for the whole tech industry to be on and we’re super fortunate

Jason Lemkin: What are, just two things I want to share a bit on that, the GM you had, the Irish CM, I did read the piece that they guy with cancer, which is tough. The flip side of that is obviously you’ve done some very special things on creating a culture where people feel like they’re part of this journey. What are, any one or two tips of things that you’ve done that are not obvious that have made that enduring? That’s the sign of really building something special, right. What are some actionable tips from that?

Ryan Smith: If you take what I just said, and you said, hey it’s about the journey. This was a journey and you start asking yourself, why don’t we do it now? As opposed to we’re gonna do it when we get to this point. I’ll give you a great example. I was in San Francisco, I wasn’t too far from here. The Utah Jazz had, I’m a big NBA fan. The Utah Jazz, who smoked the Warriors the other night, by lie 30. That was weird. I just had to throw that out there.
They sent us the jersey with the Qualtrics logo, you guys have [inaudible 00:31:28] and all these things. I was here and Mike Mahn and I had just started this cancer research thing with Five for the Fight, where it’s like how do we get everyone in the world to give $5 to cancer. It all started with John Huntsman Senior, who just passed away this week. John, had borrowed $200 million from the bank and donated to charity. The bank’s like, you can’t borrow money from us and donate it to charity. I’m sitting here interviewing this guy, hearing this story and I was like, whoa. Then he looks at me and he’s like, “Hey Ryan, I love what you’re doing with Qualtronics.”.

Jason Lemkin: You just smile right.

Ryan Smith: He’s like, I love what you’re doing with Qualtronics, but what you’re doing for cancer is more important than anything you’re doing in tech. It hit me. I remember Mike and I were driving out of there, going we went and got a Diet Mountain Dew together and I was like, you know, we gotta do something here. So this jersey patch thing came along and the league sets the price on it, it’s not cheap. We said, what if we did it? What if we did it for Five for the Fight? What if we didn’t put the Q on it, which is hard for me, because I want the Q on everything. What if we put Five for the Fight on it? It felt really hard, and it hurt, and I was like wait. When it hurts we’re on to something right. If you look at the Jazz logo, it says Five for the Fight. It’s a campaign where everyone can do that. We’ve raised millions of dollars so far, and all the players are behind it. People in the league. All the GMs are behind it.
It’s just one example of, hey when you feel like you should do something, often you have to, you feel like someone’s blocking you, or you have to ask permission. Reality is no one’s there. I learned this the hard way with my father. I remember screaming at my father one day. I’d go into his office and it was just him and I, and I’d be like look at our competitors. They’ve raised all this money. Look at their websites. Look at this. I was really emotional. And he finally turned to me and he’s like, hey Ryan, who’s stopping you from going and changing things? It’s just me and you and I was like, whoa, who is stopping me? In reality of the times, we’re blocking ourselves. It’s a mindset. When you feel frustrated, it’s because you’re stuck on your own. Likely it’s not political. Likely it’s because you can’t get something done.
I tried to explain that to our employees. If you’re blocked, it’s probably not the organization. It’s because something is really hard for you or you suck at it. Because someone else could be in your shoes and that 12 hour task, my brother Jared could do in 30 minutes. That’s a mindset that we have to make sure that we instill in the corporation and then that sets a culture that lets us go create.

Jason Lemkin: Hope I can have that energy for 16 years. We’re over. I’m only getting through, I’m not even getting through the first page of stuff I want to talk about, but I want to hit one last thing at a minimum that we were chatting about behind, I haven’t heard it talked about it much, but I thought about it a lot, which is family. I had a mentor for me between my two start ups and he said something to me that you might disagree with, but it was a bit haunting, I thought about it. He said, this is so hard what we’re doing as founders, you’re gonna get a lot of support from your family, but after six months you have to left them off the hook. It’s so hard to get something off the ground that if they have to take that, if you take that weight home for you every day, it’s too much. What are these trade offs? How can family come first when we have to do these impossible things? What are the learnings? How do we do it?

Ryan Smith: This is, when I get together with my groups of other CEOs, it’s the number one thing we talk about. We don’t actually don’t talk about anything else. It’s like how are you managing? A lot of founders don’t do it well. They can scale one aspect of their life, which isn’t interesting to me. You go, you go and you’re so focused on something and then no one wants to show up to your funeral because you left all these bodies behind you and you don’t have relationship with your kids or anything like that. I have five little kids. I’m gone a lot, and it’s always the Ryan show. I think that I’m constantly trying to figure out how you balance that? A lot of it is communication about what’s going on. At the same time, when I get home from work, I don’t want to talk about Qualtrics.

Jason Lemkin: Yeah. But does your mind stop? Does your brain stop about Qualtrics?

Ryan Smith: No, never.

Jason Lemkin: While you’re playing with your beautiful kids, does your mind stop thinking about the next release? The next customer?

Ryan Smith: You’ve got to do an incredible job at managing polar opposite emotions. You’ve got to care, but not care. You’ve got to be up there thinking strategically, but be able to shut it off in two seconds. You’ve got to be extremely emotional and what to grow at all costs, but you’ve got to make money. As an executive, this is what you have to master. The people who can master them the best are the ones that do the best. You also need to surround yourself by people who had done that. When I look at my mentors and I have them all over, I’m only looking at mentors who have scaled every aspect of their life. I could give a rip if they’ve scaled a tech company at all costs. That’s not interesting to me. I want nothing to do with, okay great, wow, you’re cool, you cashed in 1000% of your hours to go scale the tech company, but look at you now. It’s empty. It’s lonely. It’s this. I want to try to do it together.
That’s one of the reasons why we’re in Utah. There’s not a lot of noise. I don’t have dinner appointments there. I go to work and when I come home, I come home. I couldn’t imagine. I come out here and it’s just like, even now, I’m trying to get to the airport and it’s like I’ve got four stops on the way to go visit people. It’s hard. There’s a lot of noise. There’s something about being there and being able to focus on the customers and focus on growth and focus is the hardest part. The other thing is, I’m a big fan of doubles and triples. What I mean by this I like, I try to think at the beginning of every week, what do I need to do and my kids are part of it. What do I need to do with my kids?
I’ve got to teach my three year old how to ride a bike, but I also have to visit my grandmother because I’ve been traveling and she’s getting old, I’ve also got to do dinner. So I’ll grab the kids, drive through Wendy’s, through the bike in the car, sit at grandmother’s house in the driveway. They’ll eat Wendy’s while we teach the kid how to ride the bike and it’s a triple.

Jason Lemkin: I’ve gotta learn that skill.

Ryan Smith: But you actually don’t think that you can integrate those and do them together. I found that the best moments I’ve had in scaling and trying to do it all, is when I bring it all together. I think that it’s impossible to think, and by the way, as tech, we are the most inclusive of any industry out there for this type of a thing. I know we get a lot of garbage for not being inclusive. We are extremely inclusive on a lot of fronts. I’ve never had one meeting where I brought my kids to where someone said, “Oh, what are your kids doing here?”. I’ve never seen someone bring their kids to Qualtrics where someone’s been like, why are your kids around? We’ll say that about the dogs, but not the kids. I think if you actually think about the world that way, we can do it. We can do it all. Actually, I think the reward for that, and once again, if I’m gonna be working ’till I’m 80, I’m gonna do it all. I’ve got to bring it all together.

Jason Lemkin: You’ve gotta find a way.

Ryan Smith: I want, my identity isn’t Qualtrics and everyone’s like “Oh, there’s the Qualtrics guy.”. No, I want to be like, “Hey, that’s Jett’s dad.” Or that’s Ashley’s husband. I think that’s probably what’s most important and it’s a constant battle to keep that. The other thing is there’s always one wing of the plane that’s down. So if we’ve got our big summit coming up, or I’ve got a board meeting, or heaven knows what’s coming at the end of the year, you start looking at things, the Qualtrics wing’s gonna be down and probably the family wing’s not gonna get that much attention. Then I better figure out how I’m gonna balance that back out. It’s not this smooth.

Jason Lemkin: They can’t both be down can they.

Ryan Smith: No.

Jason Lemkin: You can’t survive.

Ryan Smith: But it’s never flat. It is never flat. Balance is not this way. Something is also down. Then all my kids are sick, and then that’s down. You’re playing whack-a-mole, you just got to get really good at it. Everyone’s like, I’m getting out of this right now.

Jason Lemkin: You gotta find a way if you’re gonna do it 17, 20 years. You gotta find a way.

Ryan Smith: And when it comes, back to category creation, you created a phenomenal category when you sold your company to Adobe and I think you’re seeing how long that’s taken to actually happen and I’m watching those.

Jason Lemkin: Takes a long time.

Ryan Smith: I’m watching those commercials with the Adobe sign and saying, “Hey, wow, here’s a 10 year play that’s happened.

Jason Lemkin: You gotta go long. Anyway we’re over, I only got halfway, but let’s give a big hand for Ryan Smith, this is really great.

 

Published on September 4, 2018

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