Lessons from New Relic: Five Critical Steps to Scaling Enterprise (Video + Transcript)

Erica has led New Relic through massive growth, scaling the company’s enterprise business 10x since she joined the business pre-IPO. Growing a company’s revenues, customer base, team, process, and product doesn’t just happen without major work and strategy. Erica will share the five critical steps (and some lessons learned along the way) for scaling in the enterprise.

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Erica Schultz, Chief Revenue Officer @ New Relic

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All right. Good afternoon. Good afternoon. It’s so great to be here. Thank you to the SaaStr Team for having me today. I’m the chief revenue officer at New Relic, Erica Schultz, and I’m here to share with you a bit about our journey of moving into the enterprise space. Some lessons learned, some the hard way, and a number of things that we fortunately did right along the way. And so let’s dive in.

First, a little bit about New Relic. You may have heard the name. You may not know exactly what we do. New Relic powers our customer’s digital transformations. We tend to find that there are three key technology initiatives that we can help our customers with when they’re undergoing a digital transformation. The first is a migration to the cloud. The second is adoption of DevOps practices, and the third is a focus on a digital customer experience. So we spend a lot of time working with our customers around these use cases as they’re taking on massive digital transformations.

A little bit more about our journey to the enterprise. We are almost an 11-year-old company. We went public in December of 2014, so a little more than four years ago. Today, we have more than 17,000 customers, including 50% of the Fortune 100, and the 17,000 customers are broken up into what we would call about 2,000 enterprises and you see a lot of our current customers up there. And 15,000 disruptors. So many of these are born digital companies and fast-growing disrupting their market space, and we love the diversity of in our customer base of both many traditional enterprises and fast-growing enterprises as well as the disruptors. Both sides benefit from learning from each other.

We operate at great scale. We ingest more than 2 billion events and metrics per minute as we’re providing observability to our customers about what’s going on in their application and infrastructure environments. We’re operating at great, great scale more every day as we serve the enterprise market even more.

On our journey to a billion dollars in revenue, that’s the number that we have out there. We’ve communicated to the street, for example, that we’ll be a billion dollars in revenue by the end of our fiscal ’22. As we talk about that journey, the enterprise has been the growth engine for the last several years. So when I started at the company about almost five years ago, we were about $50 million in revenue, still private, and about 25% of our revenue was coming from the enterprise space.

Fast forward to today, we’ve crossed the $400 million revenue mark. That was in our last earnings announcement about 90 days ago. We announced tomorrow, but we’ve crossed that line and now we’re at about 55% of our revenues coming from the enterprise. So we’ve gone through a pretty massive transformation as we’ve taken on the enterprise market.

A little bit of perspective in terms of feet on the street. Of course, people are our most valuable asset and back in 2014, this was the global presence of New Relic. We had a headquarters office in San Francisco. We also have our engineering headquarters in Portland, Oregon. But virtually, all of our salespeople in 2014 were located in San Francisco. It was an inside sales team calling on all regions around the world.

And fast-forward to today, we have more than 12 global offices. We have an ever-growing relationship with WeWork. And as part of our enterprise transformation, we’ve put more and more feet on the street in local markets where our customers are located. Our enterprise transformation has certainly grown our global presence around the world, which has been a really exciting dimension of it.

So that’s a little bit of a panorama of where we’ve been and where we are now. Let’s talk about five critical lessons when scaling to the enterprise. As I mentioned, we’ve learned a lot along the way. Sometimes fortuitously, we made some great decisions. Sometimes, we didn’t make some great decisions and we had to learn the hard way, so hopefully I can share some lessons with you.

Enterprise is a company sport. I believe so strongly in this, and this was a really common refrain when we started moving into the enterprise four or five years ago. You heard us saying this a lot around the company. And the reason we did is because we didn’t want anyone to believe mistakenly that moving into the enterprise is only about taking the same product you’ve always taken to market just to a different target market. Or only about putting enterprise feet on the street on those local markets closer to your customers.

When you transition into the enterprise, there’s a lot of transformation that happens around the company. Just about every function in the company will have to transform and some, I would say, even have to re-platform. So what do I mean by that?

Let me dig into a couple of examples. I’ll start with some of the easy ones on the sales side. Your sales organization may go from being primarily hub based or inside sales based to having more of a field presence as we did. We also invested around those field account executives, more technical sales, pre-sales and eventually, customer success and post sales. So that changed a lot.

When we were SMB focused in the early years, our sales cycles were quick. They were weeks, maybe months but the vast majority of bookings in a quarter came from pipeline generated in that quarter. That changes quite a bit when you moved to enterprise. And so changing your expectations, your comp plans and a number of things change quite a bit on the sales side.

So there are a lot of changes that happen on the sales side. Marketing also goes through quite a transformation when you start to shift to the enterprise. In the early days when you’re focused on the SMB and especially in those early years of the company, marketing’s role is all about getting a brand awareness, getting the word out there, making your name be known and probably when you look at your sales and marketing spend, the majority of it is going to marketing. The CMO plays a really critical role in terms of being, creating that top of funnel, and most of your sales are probably coming in, most of your sales are actually bought versus sold.

As you move into the enterprise, that dynamic changes quite a bit. Marketing will literally have to scoot over and make room at the table for the sales function. The partnership between marketing and sales becomes so important and the sales team becomes such an important constituency for the marketing team to create awareness with and to enable. And the budget will change pretty dramatically, so you’ll start to see more of your spend. Your sales and marketing spend go toward those field sales reps and technical pre-sales folks. And your marketing spends accordingly will probably have to come down.

Your marketing mix changes quite a bit. You’re looking at creating more assets, selling assets, to enable your sales team. When I started at the company five years ago, we didn’t have a pitch deck. The product was the pitch and I’ll talk about that in a little bit. But that was really a big change. And we introduced things like a field marketing team. So, those were a couple of changes on the marketing side.

Product org changes quite a bit as well and as one chief product officer shared with me, he said, “You know, when we made the transition from SMB to enterprise, we went from being kind of in control of our own destiny and certainly of our own time. We had our own roadmap. We were driving it.” And he said, “You know, we took customer input but it was kind of like putting a little wooden like suggestion box out and people could drop note cards in. We might read them. We might not.”

When we got into the enterprise, a lot of things changed. We had to figure out how to go, get out in front of the enterprise customers and get comfortable taking their feedback. We had to develop empathy for those customers and I’ll talk more about that in a minute too. And we had to go from being totally in control of our own destiny to incorporating more customer feedback into our roadmap and getting really comfortable with that.

So, big changes on the product side as well. I could go on. There are other ways that other functions in the company change as you move into the enterprise but hopefully that gives you a flavor.

Alignment across those functions is so important. And for that, you need leadership and the right kind of leaders. Let me talk a little bit about talent. Hire builders who are experienced, strategic, and agile. First off, let me talk about builders. This is not a strange word to anyone in the room. All of us as we’re building companies, we’re looking to bring builders into the company, people who really love to create and to take something that’s pretty raw, dive into an environment where maybe resources are scarce and really build. And as you move into the enterprise, that is absolutely still true.

And the reason I point that out is because we tend to want to go hire people who are experienced and strategic in the enterprise and maybe hire a lot of folks out of big tech companies. And that is the right move to make but you also have to apply a filter to that talent to make sure that those experienced and strategic folks also really like to build.

In my own experience, I spent 17 years at Oracle Corporation, and it was a wonderful place to learn about serving the enterprise and about running organizations at scale. But I also, during my 17 years there when I reflect back, I always selected opportunities to go build something.

I moved to Latin America in the early years to build a new inside sales channel. I took on Oracle’s first software as a service product 13 years ago and took that to market very early for Oracle Corporation. But I found that I really love to build and so that’s one of the reasons that I love what I do at New Relic and I chose to come to small growing company. And there are lots of people out there with similar backgrounds who are coming from big tech companies, who have that kind of classically trained experience but who also love to build. So, look for those folks.

I mentioned agile here because we find that in these early days, we need folks to really scale up and down and be careful with that or be comfortable with that, I should say. In my experience, for example when I started at New Relic running the enterprise team, one moment I might find myself collaborating with the C-suite on the business value positioning. And on getting that next meeting with the CIO of a Fortune 100 company.

The next minute, I was rewriting the order form because we got some customer feedback that our order form was confusing and we needed to revise it in real-time. And so you have to be comfortable scaling up and down, and I think that builder DNA comes with that but I point that out because I think that’s so important. You need the gravitas to earn the executive meeting but then you also need to roll up your sleeves and stay close to the ground.

And finally, I would say when you think about leaders … And again, I don’t know that this is uniquely true to the enterprise. It’s true for other market segments. But higher leaders who are coaches and who love to teach, and leaders who aren’t afraid to really shape roles and responsibilities and provide clarity to the team and teach people along the way. They have to be able to define what great looks like and then coach their team along the way to get there.

And of course, people should come in with a network not only of other talent that you can go on higher but also of customers and partners that are going to be relevant to taking your products and solutions into the enterprise. So it’s so critical to get the right talent. I will say when you do find the talent who has both the training and has served the enterprise before, knows what a great account plan looks like and knows how to call in the C-suite but also is really agile and loves to build and loves to teach and coach, that is gold. So, good luck with your hiring efforts.

Let’s talk about the customer. Build a culture of customer empathy. I can’t stress this one enough. We haven’t talked a lot about the enterprise customer yet so let me pause and do that for a minute. What is unique about the enterprise customer? Well, let me highlight a few things. The first thing is, at least in our case, when we were in the SMB space, we’re primarily selling to one type of buyer. It was primarily developers.

When we moved into the enterprise is enterprises rarely make decisions just based on one person’s opinion. It’s usually a collaborative approach. So we had to get comfortable getting to know multiple personas in an account, developers, IT operations, personnel, site reliability engineers, CTOs. So, first off was enterprises are made up of teams of people in developing empathy for various roles, various personas, understanding what their problems are to be solved, what their jobs to be done are is really important. So, that’s number one.

Number two, I’ll never forget an enterprise CIO who once told me you have to understand that we look at every potential new tech vendor as a potential source of risk. So, don’t ever forget that enterprises are solving, yes, for new capabilities, new technology that can help them drive technology and business transformation but also they have to mitigate risk. And so capabilities like security, scalability, interoperability, and compatibility, those things are so important to enterprises in addition to your amazing features and functions, so keep that in mind.

And finally, enterprises will likely have a significant amount of technical debt. And it’s not that they’re uninformed or they don’t get it, and that’s why they’re not modern. Enterprises inherit that technical debt. I’ll never forget one of our customers at a large Midwestern insurance company told me … She’s an engineering manager and she said, “I just came across a line of code that my dad wrote when he worked here in production.” And so enterprises are dealing with a lot of legacy and you have to meet customers where they are. Again, to have empathy for how challenging it is to drive technology transformation when you’re saddled with a lot of technical debt.

We made a mistake once when we were competing for a Fortune 100 company’s business and we’re asking the customer about his technology environment. And he kind of hung his head and he said, “Don’t judge me.” He said, “But we still have … We have Informix databases,” and he went down this long list of legacy technology that was in his environment. And I had one brave pre-sales consultant on the team who said, “Don’t worry. Never fear, New Relic will lead you out of the Dark Ages.” That didn’t go over so well. That wasn’t empathy, and I think we scored 4th out of 4 in that evaluation.

Meet customers where they are. Have empathy for the technical debt and the other concerns that are on their minds. And back to this culture of customer empathy, think about how do you develop that culture across every function in the company. It starts with probably getting out and seeing customers more. So, back to what changes for your product org where they’re no longer only working on the product, they also have to layer onto that, getting out and meeting with customers.

You probably want to start a customer advisory board. I think us getting into the enterprise was what triggered our creation of a customer advisory board and that has been so valuable for us. And think about what data, what anecdotes, what reports from the field you can bring into different forms in the company, into the C-suite. How can you start to really build a culture of customer empathy? This is super, super important.

Okay, number four, stop selling products. Instead, deliver solutions with real business value. As I said, in the early days for us the product was the pitch. That was it. We had such amazing technology. We do have amazing technology that customers were flocking to it, and all we had to do is show the product to be able to sell it. And I remember in my first month on the job, April 2014, I was about three weeks in and I said, “You know, I need to get out there and just see some customers,” and kind of see what we do, see how we do our thing with our enterprise customers.

And I went with the team to go see major health insurer in the Midwest. And we walked into the meeting, didn’t do introductions. About 10 people from the customer showed up. We all just kind of sat around the table and one of our team members from New Relic flipped open his laptop and said, “What do you guys want to see?” And I thought, “Okay, this is how we’re pitching New Relic.” And at the time, it works because this group of developers, they just wanted to get into the product.

Actually it was a funny part of that story, I asked the account exec after the meeting. I said, “Did you do any planning for the meeting? Did we talk about agenda, any sort of pre-work ahead of the meeting?” And he said, “Yeah.” He said, “I planned for it.” He said, “I took everyone’s order of what kind of subs they wanted from Jimmy John’s and like I brought in the lunch. That was the planning. But all I have to do is show them the product. I don’t have to do any more planning than that.” I love that story because that account exec is now one of our top enterprise account execs, and he’s made the journey so effectively.

But back to the customer empathy, you take that amazing product that you have that customers are so drawn to and you just have to connect it to the problems to be solved, the jobs to be done by those various personas that are in the room or maybe that aren’t in the room but really connecting the what and the how with the why it matters and why it solves business problems, that’s the leap to make.

And that’s where we did a lot of hard work with our marketing team, with our product management team, with our executive team trying to make those connections. We know we have great tech, what big problems does it solve? And then paying it down with your customer stories that play back, here is the value that we realized as a result of implementing New Relic, really important transformation to make.

And then last but certainly not least, let’s talk about partnership. So, partner closely with customers to create advocates. First and foremost, I think, when you move into the enterprise or frankly any new market, we think a lot about this as we enter new markets around the globe. Being really deliberate about the customers that you target, who are the companies in your sweet spot where you’ll have the highest chance of success as well as who might be able to advocate for you once you do make them successful and help you make the market.

We did this as we were moving into the enterprise. We wanted to find enterprises who were already leveraging modern technology, already migrating to the cloud and looked like a great fit for us. And then within those companies, we would work with our executive team, with our board to identify executives we knew at those companies to go ask them for introductions, for meetings, and ultimately to be our advocates as we look to make a name for ourselves in the market.

So, that is definitely part of the game is identifying who are your sweet spot target customers and then how can you leverage your network to get access at those companies, super, super important. And we’re so grateful for partners who’ve been with us along the way. One who comes to mind is Gill Haus who’s the CIO of the retail bank at Capital One. He was a New Relic customer at a prior company, two startups actually before he ended up at Capital One. And he was someone we called on and we said, “We know you’re a really modern technology enterprise. We’d love to partner with you to go on a journey with Capital One,” and they’d become a fantastic customer and he’s become a great advocate. So, that’s a super important piece.

The other thing I would say just honing in on the word partner. Working in the enterprise is very, very much a partnership and it’s a relationship with these companies. And that also is something that can be a little bit new if your teams are used to working in a more of a volume and velocity SMB market. When you get into the enterprise, you are very much in relationship with these companies.

And what does that mean? Well, like any relationship, it’s built on a foundation of transparency, and communication, and trust, and make it personal. These leaders, the companies that we work with, they’re betting their success on us and we have to take that really seriously. And so spending time with people, and again, just communicating and holding yourself accountable to do what you say you’re going to do.

And when you stumble, which you will, which we have, you own it. And you acknowledge that no relationship is ever perfect but you really work through things together. So how you show up in relationship is really, really important. And again, that applies to the whole company. It’s not just the account team. It’s the product team. It’s the executive team and really accepting that, I think, is something super important.

And then finally when you do that, when you do land those customers in your sweet spot, when you partner with them and you bring them on a journey and you demonstrate that you’re really committed to their success, you can create amazing advocates. And there is nothing better than those moments where you’ve stood shoulder to shoulder with the customer. They’ve leveraged your technology and then together, you’ve achieved the outcome that that you were going for, that was success to that customer.

I remember the 21st Century Fox is a great customer of ours. And their Hotstar business unit in India, they had a moment where they broke the record for the most concurrent video streams to mobile phones when they had the rights to the International Cricket Championships. So, the most concurrent video streams and New Relic screens were all over their NOC and we were key partner to them. The customer texted us a picture. He said, “Here you are in our NOC as we’re breaking this record for the most concurrent video streams.” That a moment that we’re so proud of.

Or when a chief technology officer of a major global retailer tells me after their peak season for the first time ever, they achieved 100% uptime through the retail season, the peak season. And that was thanks to partnership with New Relic and leverage of our technology. Those are moments that need to be celebrated and we do that quite a bit internally to remind the company of here’s why we’re in this. We’re in this to see our customers achieve these milestones and achieve their success. So that’s been really powerful.

So those are the five lessons I thought I’d leave you with. There are many more, but those are few critical ones that we’ve certainly learned at New Relic. And if I could leave you with one more thing, that is that as you transition into the enterprise, don’t let go of everything that made you great in SMB. There are some things, some secret sauce things that likely helped you achieve your success in SMB that are also still, not only valuable in the enterprise but so core to who you are. For us, for example, really embracing the developer and making sure that we have great products for developers is so core to us.

New Relic was founded as a disruptor in the APM space. And our ambition was to deliver joy and delight and value within minutes in a category that had typically only been served by really complex implementations. So, that is something that we hold onto in part because it’s part of who we are and it’s our roots but in part because it’s also valuable in the enterprise. So, don’t lose everything that made you successful in SMB.

With that, I’ll leave it there. I wish you luck on your journey as you move into the enterprise. It’s a blast. Enterprise customers are amazing, and best of luck. Thanks for having me.

Published on June 27, 2019

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