Promise Phelon, CEO @ TapInfluence: Venture Backed CEO: Lessons Learned Inside and Outside of Silicon Valley (Video + Transcript)
In the future, we’re going to be seeing a lot more Silicon Valley companies employ people that live outside of the Valley. Promise Phelon, CEO of TapInfluence, is living this reality running the company from Colorado…a challenge she was more than happy to take on.
So what’s it like to run a SaaS startup in Silicon Valley from the outside? One of the biggest challenges was the “culture shock” — she learned the hard way that what motivates people in Boulder is strikingly different than what motivates people in the Valley. There is also a lot less ego and a greater focus on building relationships when it comes to boards of investors.
The thing she recommends you tell yourself no matter where you are? When things get rough, don’t make it about motivation, make it about discipline.
You can see the slide deck here.
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Promise Phelon: I’m Promise Phelon. Good to see everyone here today. I’m a first here at SaaStr. I think I’m the first person to ever wear a dress at this conference because they just duct taped the mic to me. That means, if there is a wardrobe malfunction, I’m going to dive off the stage in that direction. [laughs] Be prepared.
It’s great to be here. I’m really excited to be here today. My goal is to talk about what it’s like to be a Valley CEO and run a company outside the Valley. I’ll give you my perspective and then some insights.
Who am I? I’ve run a couple of high tech growth companies mostly in the Valley and I’m a serial entrepreneur mostly focusing on SaaS and tech companies in the HR or SaaS marketing spaces. Love tough challenges, of which running a company outside the Valley is one. I’m really excited to talk about what we do at TapInfluence as well.
Where did I start? The Valley is a special place. I actually moved here just after business school and I was part of an amazing company called BEA Systems which I joined when it was about 100 people. Incredible ride from 100 people to a multibillion dollar company and an IPO within a matter of years and then a sale to Oracle for about $8 billion. That kicked off for me a career in tech and in leadership.
Ever since 2002, I have been the CEO of different companies, mine that I’ve started, but also ones that I’ve taken on as CEO. I’ve been a tech CEO since 2005, I had three exits and one lesson, which I’ll talk about as well as we go through this. I heard a data point in 2015. That data point was by Allen and Co.
They essentially said that because of the cost of living, because of what it takes to fuel the Valley, that more and more companies that get to scale are going to have more of their talent outside of the Valley. Imagine that half the people in this room, maybe even two thirds, over the next five years, you will have a third to more of your teams located outside of the city in which you live, outside the Silicon Valley, Minneapolis, Austin, Boulder, Dallas, Denver.
I made a decision in 2015 after coming off the great ride in a SaaS company here to go and become a CEO of a company based in Boulder, Colorado. They’re over here. I’m going to dive in your direction if I have any mal…ok, that’s a friendly crowd.
I go from the Valley to Boulder, and I was telling a friend of mine who is thinking about moving to Boulder, I said, “Literally, I was the only brown person in Boulder.” I was talking to Brad Feld and I said, “Brad, think there are three people in Boulder who are brown.” He says, “No. There’s just two but they’re on shifts.” I was like, “Oh, OK, that makes sense.” [laughs]
I leave the Valley to go figure out how to run a company outside and I thought it was actually going to be easier. In the Valley, we have this intense drive to build companies and run fast and billion dollars and all these things.
My head of marketing likes to say, I was like, “Hey Jesus, take the wheel, I’m going to chill here.” That did not happen and so I want to talk about my assumptions going into running a company outside the Valley but also what that forced me to do as a CEO but also as a leader.
In 2015, in April, I moved to Boulder to run this incredible company called TapInfluence. At the time, it was founder led company, small, slower growth, venture backed but really needed to evolve from being a services company to being a software as a service company, which as you know is a massive undertaking, not only in building new technology and rebuilding old technology but also bringing in a competency and a capability that didn’t exist.
We had to do it in three quarters because there was a looming fund raise. I went for this brilliant concept. TapInfluence is building the world’s largest marketplace for brands to connect with influencers. If you don’t know what an influencer is, an influencer is an empowered social consumer who can speak on behalf of brands. We got great customers and we went from $1 million services company to a company that boasts today over eight figures in SaaS revenue and marketplace revenue.
We’ve hit a massive clip since then but the idea was amazing. All my investors are non Valley investors and at the time, all my employees were based in the Denver/Boulder area, but I went for this brilliant billion dollar concept and I got a lot of lessons out of it. You guys have probably seen on Instagram and YouTube and Facebook that influencers are changing the world – they are.
I have the opportunity at Tap to work in this incredible new space that’s lit up, that’s got influencers creating content for all different brands. At the same time, figuring out how to take this idea, scale it,and scale it under a very different business model. We did that.
We go from a smaller organization, expand, moved out of Boulder to Denver, and then the lessons begin. What I thought was going to happen was, you come in, you talk about the billion dollar vision, you talk about the value of equity. Everyone understands that. You bring in some blitz scaling, you bring in scrum and everyone gets it. That wasn’t what happened.
The motivations of teams outside of the Valley, they’re different. I don’t know how many people are in the Midwest. Maybe I can see some hands. Anyone got a company in the Midwest? OK, right. It’s different. People are motivated by family and by connection and by intimacy. Anyone New York in the house? They think the Valley is weak. They’re over there. Go get them.
People are motivated by different things and so my blind focus on results and growth, and this is all about your personal development, and we’re going to be a billion dollar business. That didn’t work in Boulder. Didn’t work.
Two years, or year and a half, at least, figuring out how to go from not only a services business that was founder led but go to one that has out of Boulder/Denver investors who are expecting a high degree of return, change the business model, raise 14 million in the up around, like all of that while also dealing with the fact that there was a culture clash between being a Valley CEO and now being a Boulder, Denver CEO.
I won’t say that I’ve nailed it. If you came to see that, there is drinks outside. What I will tell you is that it forced me as a leader to turn inward and think about what are the things that if I’m going to run a company and we all will that has employees outside of the Silicon Valley, outside of New York, outside of Boston, what do have to know about ourselves, about the teams we’re building and about the culture we’re creating that will allow us to be effective outside of an area where everyone thinks and feels and has similar experiences?
Most of the CEOs I know and I’m close to have had an IPO or have had an exit or have had this, but imagine going to a place where that isn’t common and isn’t as regular.
What I’m want to to outline for you guys is what I did. That’s me. I look exhausted because that was right after I fundraised, so I probably was asleep during that 1-on-1, but I’m smiling and I think my hair’s combed in that picture. One of the things I said is, one of my lessons is, who I hire as my leadership organization is critical to me, regardless of where I am.
The most important aspect to the people who lead with me is that they have one critical aspect, extreme ownership. Regardless of where you are, people are motivated by owning and having an impact. Maybe it wasn’t the Silicon Valley nature of having a leader but it was having people who led with me who had that extreme ownership, I own it, I’ve got it, I’m making an impact and that was their default.
I think we’ve all been confused. Second lesson learned is that we’ve all been confused and conflated with the idea of what is actually culture? If you’re running a venture backed company, you just hit a $50 million round, you can afford to have free lunches every day and to have all the accoutrements that come with the wealth of a bubble.
If you’re working and you’re running a company that is pushing to get to cash flow breakeven or pushing to get to be cash flow positive, free lunch can’t equal culture, so perks have to be different. We built a framework on what culture means to us and we started at the bottom, which is always having the resources to fund the business and the ideas, having transparency, focusing on decoding what works, building that into the business.
This is our structure for how we build culture at Tap versus that it’s all about the free perks, because that really isn’t culture.
My head of marketing put the photo of the puppy. I think he was trying to tell me something about myself. It’s cute and looks very sweet.
This is the intense part. I’m running this company, we’re growing and evolving. We’re changing the business pretty significantly and also trying to build a culture that combines the intensity of the Valley with the intimacy of the Flatirons. One of the things that was really important for me in this process was also managing myself.
My network wasn’t there in Boulder. I had to build a new one and it was also a space where I was living about a mile from where I worked and focusing on not only building a business being a CEO, but also changing the culture. For managing myself, it became about staying curious. I got into trail running.
Boulder is amazing. You can ski there too. So skiing but also staying uncomfortable. I did personally a lot of work on….OK, what are the things I personally wanted to develop and how do I develop my people? And doing it in a way that I can’t do here, that’s not traditional to Silicon Valley.
Managing your board. One of the things that I found interesting about my time in Silicon Valley, raising money and working with venture investors, I’d say the average venture investor in the Valley is on probably 8 to 10 boards. It’s probably meeting with several hundred companies per year, that are prospective investments.
Outside the Valley, it’s very different. There’s a lot less ego. Not that that’s what the Valley is known for but people are much more relationship based and your average investor has about six to seven boards that’s he’s on. It’s a different relationship where it’s no ego, much more about relationship building and there’s a much bigger partnership between you and that investor. They’ve got more time.
What I appreciate about the Valley investor outside the Valley is the importance of having no egos in the boardroom but also people who have the time and the focus and the ability to understand your business and to be helpful and additive, especially when you’re going through tough spots which I’m sure no one here has ever missed a number or ever had to go through a tough period.
That made a huge difference in our business, is having that board that brought those lessons and brought the time and lack of ego.
This is one that I am going to borrow from Tim Ferriss. One of the things that I find with being a CEO — and I heard backstage, it’s a lonely job. I think that’s definitely something that we all can relate to for the CEOs in the room.
One of the things that you do when you go through a tough time as a CEO is you attempt to motivate yourself. How do I get my energy high? How do I stay excited? Does that relate to anyone you guys are looking like, “I’m crazy”? OK. One person. Thank you, sir, for showing up today. Everyone else. When you’re a CEO, you’ve got to raise money, you got internal issues, there’s legal stuff going on. I’m not sure why. It must be created by lawyers.
There’s always something that’s happening in this business that requires you to be at the top of your game, and so the mistake we make sometimes as CEOs, I believe, is try to self motivate, pump ourselves up, get excited. I’m going to go and say, “I make this happen.” I don’t think that’s sustainable.
I believe what you have to do as the CEO to stay motivated in tough situations is the exact opposite of that. I think is not to be motivated. I think it’s to do the opposite.
This is a quote from Zig Ziglar. “It was character that got us out of bed, commitment that moved us into action, and discipline that enabled us to follow through.” I believe one of the things that we don’t talk about is, CEO as a profession, and CEO as a set of disciplines that help us get better but also help us to stay focused in light of challenges, issues, whatnot.
Have you guys noticed I am not a white 27 year old male from Harvard.
Promise: Thank you. Don’t make me take this jacket off, because I’ll do it. One of the things that, just to get real here for a moment, I find being a female, being a woman and being black, deliciously brown as my husband likes to say, and, is that one of the challenges is no one who has gotten funded by this person has ever looked like you. Does that make sense?
You’re walking into a room to pitch someone. You’re leading a company where no one who came before you in any way resembles you. I’m not the only one. If you’re Asian, if you’re older, if you come from a different background, if you’re not a tech founder but you have an English major and you went to a state college. Most of us don’t fit the mold.
What’s interesting about that is that becomes a de-motivator. You don’t look like anyone that fits a pattern and so when you meet with someone or you’re pitching or you’re building your business, you are fully aware that the person in front of you has never seen it and has to talk themselves into removing their own personal bias about what you look like or what you bring to the table.
Now, I’m going a little off script here, so you need to prepare yourselves, but that’s going to be true for most of the people that are going to be raising money over the next 20 years or running companies. Most of us will not look like Mark Zuckerberg. Most of us will not fit any pattern that people are used to.
Promise: Thank you. It’s true. To go really off script here, that’s a good thing. Because the people who are buying our products, the people who are using our stuff, they’re women, they’re in India, they’re in China, they’re in Europe, they’re in all these different places that are outside of this bubble that we’ve come to know and love.
I believe that it’s incumbent upon all of us, even the people who are subject to bias, to first get over it because it’s happening and you can’t change it but secondly, understand that you can’t motivate yourself out of it, but that you actually have to have discipline in how you approach everything.
My quote for myself coming out of two years of running a non Valley based company is, “When the struggle is most real, the answer is not about motivation but about discipline.”
Here’s mine. I read a book a week, which I know sounds crazy but a quest for self learning and self development is so essential. I heard a quote once that struggle comes from a focus on one’s self. So, don’t struggle.
I read a book a week and I think I’ve spent about $4,000 with Audible last year, so I continue to make Jeff Bezos money, but that allows me to do something.
Number one, to codify every lesson rather than feeling like…I’ll give you guys a really interesting stat. Last year when I raised money in 2016 in April, in Colorado, our fundraise, it was an up around, we quadrupled the valuation, it was two thirds of all money raised in the Flatiron district, so that’s basically Boulder and Denver, two thirds of all of venture capital raised. It’s the largest African American female round. We’ve grown 300 percent and I had 40 negative Glassdoor reviews.
My valuation is doing this and my personal valuation is doing that. There are other CEOs that this has happened too. You don’t have to raise your hand, I know who you are, but when that happens, you start to question yourself and you start to say, “Well, what have I done wrong?”
No one else in the room does this but me,but you beat yourself up about, “OK, could I have been better? Are the things I could have done differently? Am I the right CEO? They need to hire someone else to do this job.”
The answer is no. The answer is we are who we are but part of the problem with being a CEO is you don’t have time to self reflect and I think that’s one of the problems that keeps CEOs stuck and also makes the job suck, is that you don’t have time to think about the lesson.
I forced myself to think about the lessons. So I codified. One of the things I do every night, this is part of my discipline, is I do a one minute recording on my phone every night and reflect on what happened that day. Who did talk to? What did I learn? What were some interesting takeaways? So I force myself.
On every Sunday, I go back and listen to all six or all five. It provides context. At the end the year, in December, I listen to them as a podcast series. [laughs] So that’s one.
I don’t make pros and con list anymore. Part of my discipline, if it requires a pro and con list, the answer is definitely fucking no. Don’t do it.
Promise: Whatever it is, answer is, it’s absolutely no. I do morning pages. I am not sure if anyone knows what that is, but basically every morning you got out of bed, before you do anything, before you look at your phone, you just basically spend two minutes and you write notes and that’s where the best stuff comes from, best ideas, best concepts, best thinking happens at that time.
I also try to connect to other stories, like who has experienced this what I’m going through, who is raising money, who is doing X, Y, or Z and connect to their story and understand that there are lessons in that.
My discipline is basically, you don’t see anything in here which is sort of focusing on myself or ruminating or therapy because I can’t afford it, but basically really thinking about that every experience that you have as a CEO is a career fulcrum and it’s important not to ruminate or self-flagellate but really to learn from those experiences.
Whether you are outside the Valley or inside the Valley, I think it’s important to have that discipline but it’s also important to know that great CEOs need to be mobile. I want to someday be able to run a company in Paris. I speak no French but I like the men. So it’ll all work out. I want to be able to run a company in New York. I want to be able to run a company in DC.
Go anywhere, and so that requires that we can’t all expect that everyone shows up, acts like Valley people, or New York, wherever you’re from, or even Boulder, but the expectations, the culture, the requirements are going all be different. I know that if you’re running a startup or if you’re a founder, today you’re beating yourself about something that’s not going right. You’re running out of cash. You missed your quarter, you’re going to miss next quarter.
There’s learnings in that, and so rather than trying to motivate yourself or make yourself feel better, focus on discipline, focus on learning, codify lessons.
View Promise’s slide deck here.