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Welcome to Episode 170! Rob Reid is the Executive Vice President & Managing Director @ Sage Intacct, the undisputed global leader serving finance teams of any size. With over 10,000 employees and and over 3m customers, their financial solutions generate over $2Bn in revenue. Prior to Sage Intacct, Rob led Intacct over an incredible 8 year journey culminating in their reported $850m exit to Sage in 2017. Before that he was CEO and President of LucidEra, a market leader for on-demand business intelligence. Prior to LucidEra, Rob was group Vice President of industry leading Siebel CRM for Oracle, managing the SMB sector. Fun fact: over his phenomenal 30 year career, Rob has been involved with 8 startups, 7 of which have had successful exits.
In Today’s Episode You Will Learn:
* How Rob made his way into the world of SaaS over 30 years ago from wanting to be in advertising and hating computer science.
* As a multi-time CEO, how has Rob seen his role and understanding of what it takes to be a great CEO changed over the last 30 years? Does Rob agree that “management upscaling is the most important role a CEO can do?” What does Rob mean when he says, “the old school CEO approach is upside down and backward?” How should it be in that case?
* Why does Rob believe that an executive team is like a boat of oarsman? What are the fundamentals to ensuring your executive team are aligned and working in tandem? Why is transparency across the organization fundamental to both efficiency and culture? How does Rob think about internal promotion vs external hire when it comes to the exec team?
* Why is Rob adamant that “cloud companies like never before have to be customer-centric?” What does this mean for thinking about optimizing the structure of your organization? How does one think about such high levels of customer success and touch points when serving the immense SMB landscape? How is this feasible? What have been Rob’s key learnings?
60 Second SaaStr:
* Following many successful outcomes, what is Rob’s biggest splurge to date?
* Why does Greg Sands call Rob “The Big Fundamental?”
* What does Rob know now that he wishes he had known at the beginning of his career?
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Harry Stebbings: Welcome back. You are listening to “The Official SaaStr Podcast” with me, Harry Stebbings. Now, I’d love to see you behind the scenes where you can also suggest future questions for guests we have coming on this show.
You can find me on Instagram @hstebbings1996 with two bs. It’d be great to see there. To the show today and my word, what a guest we have in store for you as we welcome an individual with over 30 years of experience in SaaS, driving explosive growth in his companies.
I’m thrilled to welcome Rob Reid, Executive Vice President and Managing Director at Sage Intacct, the undisputed global leader. Serving finance teams of any size and with over 10,000 employees and over three million customers, their financial solutions generate over two billion dollars in revenue.
As for Rob, prior to Sage Intacct, Rob lead Intacct over an incredible eight‑year journey, culminating in that reported $850 million exit to Sage in 2017. Before that, he was CEO and President of LucidEra, a market leader for on‑demand business intelligence.
Prior to LucidEra, Rob was Group Vice President of industry‑leading Siebel CRM for Oracle, managing the SMB sector. A very fun fact about Rob, over his phenomenal 30‑year career, Rob’s been involved with eight startups of which seven have had very successful exits.
Now, that really does defy the laws of startup success. Now, I want to say a huge thank you to Byron Deeter and Greg Sands for the fantastic questions today. I really did so appreciate that.
That’s quite enough for me. Now, I’m thrilled to hand over to Rob Reid at Sage Intacct.
Rob Reid: That’s perfect. I think we’re warmed up.
Harry: Rob, it’s absolutely fantastic to have you on the show today. I’ve had so many great things both from Byron at Bessemer and Greg at Costanoa. Thank you so much for joining me today.
Rob: It’s my pleasure to be here with you, Harry.
Harry: I’d love to kick off state with a little on you. Did you always dream of financial management? What’s this story with you and Intacct today?
Rob: Harry, it’s really funny that you say that. I majored in advertising in college. They made me take computer science and they made me take accounting. I hated both courses. It was just like, “Oh, my God. I wanna go into advertising. Why do I need to go understand how to program a computer or why I need to understand the difference in debits and credits?”
It’s served me well to think about well‑rounded education. Sure enough, five years after getting into the workforce, I had this desire to get involved with high technology and get involved with the PC revolution. It served me pretty darn well. Thanks to the public‑school system for allowing me to have a great career.
Harry: What a credit that is. I do want to break the interview [inaudible 3:56] into a couple of different segments, starting on the theme of CEO‑ship. As we said before the show, you’ve been involved with eight startups, seven incredible exits. Then maybe move one layer down on the culture. Then also finish on customers and metrics. How does that sound?
Rob: That sounds super.
Harry: Starting on CEO‑ship, as Byron reminded me before the show, multi‑times successful CEO. Let’s start with that. How have you seen maybe your role in understanding of what it takes to be a great CEO changed over the last 30 years or so?
Rob: That’s very interesting approach. I think CEOs from 30 years ago thought that if they had a great idea, they had to find the investors, so that they could be able to deploy that great idea, and be able to have that in the capital to make that idea a reality.
Then they felt like they had to go and find the initial customers to prove the concepts and to really perfect what they were trying to do. Then they go through scale up and they would add talent. I believe that old‑school approach is truly upside down and backwards.
Today’s world is so much more complicated than it was 30 years ago. Literally, all the easy ideas, especially in business, had been done. You really need to surround yourself with great talent as fast as possible, so you can gain the multidimensional understanding to what you’re trying to achieve and how you’re going to achieve it.
It is rare in today’s world that one individual can come up with a vision and fully embrace all the different aspects of it. Drawing in others to help you figure out the best way to attack a specific business issue or problem and satisfy it for our customers, I think, is one of the most important things you can do.
It’s really interesting too that VCs don’t just look at TAM and they don’t just look at your uniqueness from a technology. They invest in teams. Having in initial stages a good set of partners that can go and attack this opportunity with you, I think, is really important.
Then next, it is getting an alliance with a set of customers, very specific customers that you’re trying to solve their issues and get an understanding of their issues and how you can resolve them is the next most important thing.
Then when you get that going as a true startup, that’s when you try to draw in the VCs. Having those engaged dedicated partners in the initial business, then the customers, and then scaling up with investors.
I think that you can really flourish with having a great culture and high customer satisfaction. Then investors will do really, really well if you take it from that approach.
Harry: I love the flipping of the funnel there, but it does lead me to an element that Chris Caren at Turnitin said that, “Management upscaling is the most important role of a CEO.” Clearly, almost something that you very much are aligned to.
I’m intrigued, how do you think about really assembling the best teams, what it takes to really get those best candidates in highly‑competitive markets, and how you’ve approached it so well?
Rob: I think Chris was saying, when he was going through and talking about management upscaling as the most important role, I think he probably meant both the talent and the management processes. I totally agree with that.
Let us start with the management processes. You really have to create a framework as to how you’re going to work together, how you’re going to communicate, and what is the dedication to the mission and the goals and the objectives, and how you’re going to truly have that all pulled together so that everyone is rowing jointly together.
I like to use the analogy of crew. It’s really interesting that in crew, if all of the oarsmen put their oars in the water at the exact same time and pull exactly the same way, you go straight and you can effectively beat the competition.
If only one of those crew members puts in his oar before or after, what happens is you start to veer to the left, to the right. You’re not moving forward and you’ll probably lose the race.
I think it’s really important to make sure that everybody is understanding the mission, the value that we’re going to provide for the customer, and then how we’re going to work jointly together to be the best organization on the planet to deliver success for those particular customers and that everybody has to be aligned.
You want to get great talent that understands the inspiration that you have in trying to achieve what you’re doing. Then you’ve got to put that framework in so that everybody understands it and it is moving forward jointly as a team.
Harry: I’m really interested to stick with that oarsmen analogy and ask, how do you determine whether someone’s really not scaling with the organization. Maybe their oars aren’t being put in at the same time and are slightly lacking. How do you determine that scalability of…?
Rob: This is one area where I will go back to old school. Old school is still working. I really believe in management by objectives. After you come through with your mission and you come through with your strategy and you determine ruthlessly what your priorities are, then you have to set both short‑term, midterm, and long‑term objectives.
Stephen Covey would say that, “Start with the end in mind.” Start with your longer term objectives. What are your three or five‑year goals? Then you have to draw it back to, “So what are we doing this quarter?”
The objectives have to be specific, they have to be measurable, and you need to be transparent. At Sage Intacct, all objectives for everybody in the organization, anybody else can see them. They are public.
They’re confidential within the organization, but they are public to all of the people within the group so that everybody understands who is trying to achieve what. Then what are the interdependencies.
Then when one individual comes on in and they’re working on maybe something as priority five, and I’m working on something as priority one, and they say, “Hey, I really need your help,” that second person can say, “You know what? I really do wanna help you.
“I need to finish this particular element. We all know that’s the number one objective, but I do understand that yours is important, too. Let me finish this, and then I’ll come back to you, and we’ll work together. So do you mind if I can come back to you in 8 or 10 days, whatever it works on out?”
It starts to create harmony in the organization as opposed to the person came in with a number five objective and wasn’t prioritized and said, “Hey, Rob. Would you help me,” and I’d say, “No, I’m not going to. I’ve got other things to do.”
Then that person walks away and goes, “Oh, boy. Rob is really a jerk. He won’t even help me, and I don’t like working with this guy.” It starts breaking down the teams. Having those objectives, having the priorities in place aligns the team. Back to the oarsmen, you can go very rapidly forward.
Harry: Can I ask, if objectives maybe aren’t heard, how do you think about timing and allowing the time to ramp for each individual? When does one need to take action?
Rob: When I went through and said, “Your objectives need to be measurable, and there has to be deliverables associated with those objectives,” you set very specific times when this activity needs to be done.
If someone is not getting their objective done or appears that as we’re mounting toward the date that it’s supposed to be completed that they’re behind, that’s when the team can go on in ‑‑ or the managers ‑‑ and say, “What’s holding you back?”
In most cases, it’s not the individual that they lack the ability. It’s usually, there’s a process issue. There’s an interdependency issue that wasn’t originally identified. It needs to be identified. Or there is poor training.
Most people come to work ‑‑ in fact, I think it’s 99.5 percent of the people coming to work ‑‑ to do a great job. If they’re not achieving their objectives, usually there’s something broken down somewhere else. The plan wasn’t as good or the process isn’t as good.
Management then and/or the team that they’re working with needs to come forward and identify what we need to do and how we need to alter to get that individual or that element of the team performing to what was expected. That then usually aligns.
There are an awful lot of organizations that…Let’s just say that you and I have objectives, and I’m not achieving mine. You might say to your peers, “Oh, boy. Rob was a bad hire, you know. He really did a great interview, and he really pulled the wool over our eyes. He’s not as good as we expected. I’m not sure he’s gonna make it.”
That, I got to tell you, is rare, it’s very rare. You really should be slipping it back on why are we not able to achieve this and what is the root cause and attack the processes, not attack the people. I got to tell you, this is an element of creating a great culture.
If people know that you trust them, that you believe in them, and you rally to help them when they aren’t achieving their objectives, they just turn to their friends and go, “This is like the best place ever. I wanna achieve my goals. I do feel some anxiety that I’m not feeling here, but I don’t feel like they don’t trust me and they don’t believe I can do it.”
They attack the process, and then we get it resolved or we get it resolved rapidly. That gives confidence to employees walking in the door every day going, “Boy, I love comin’ to work.”
Harry: What a culture that is. I’m intrigued that you mentioned the key word there, culture. You continuously [inaudible 13:28] or [inaudible 13:29] what’s the best place to work. Speaking of culture, it’s bandied around so often in this day. What does that really mean to you at its core?
Rob: Harry, I think there are a number of key factors that contribute to a winning company culture. What I’ve learned over the years is that the most important things are you have to have an inspired solid mission.
You also have to develop values and strategy and execution against that strategy. The really hard part is back to what we were talking about, getting everyone within the organization to be on the same page and embodying all the right characteristics to be able to move forward jointly together.
What I’ve seen in technology is there have been a lot of companies. They grow very quickly. Their mission and their values are really acting as the glue to bind every person and organization together.
As the CEO, I know that it can be very difficult to pull the organization together. [inaudible 14:24] should do it day by day by day by day. If you have the mission and the values, they feed directly into you those objectives that we just talked about all the way down to every employee.
Every employee knows what they’re working on, and its priority, and how it feeds the overall mission, and the exact strategy that they’re trying to execute it against. I think the really hard part is setting the tone for this culture that we’ve been trying to define here.
That really comes on into making sure everybody has a sense of ownership and that the way we work together, those key characters of the organization turns coworkers into being teammates in fostering this winning environment and pulling everything together.
Culture really comes down to, how do you get teams to communicate and to embrace the overall goals and come together with plans and not have anybody being a jerk through the process.
One of our values is, no jerks here. We take people through what could cause somebody to feel that you were a jerk when you get into tough discussions. Having a diverse organization, you will get into different experiences.
People will have different ways that they’re judging the risk level associated with a particular initiative. You want them to bring forth those experiences to maximize the overall planning as you go forward.
Depending on the way someone brings forth those experiences, it could turn a difficult discussion into a terrible discussion. I feel like you’re attacking them. That’s where we train people about how to bring forth their ideas.
Not attack others, not put others down but to make sure that we’re building on each of the experiences as we can come out with the right outcome. Then if you do those somehow get into an offensive kind of interaction.
Let’s just say that I’m the one that’s being a jerk in this conversation. Or I’m telling you, “You know, Harry, you don’t know what you’re talking about. You have no idea about the issues that are in front of us.
“Here is what my experience has been in trying to do this, and it was just a disaster at another company, and you’re just being naive as you’re trying to move forward with this overall plan. You would probably be pretty offended that I just put you down.”
What we teach our team to do is for you to come back to me and say, even though I was the one that was a jerk and say, “You know what, Rob? I didn’t like the way that that conversation just went, we are both here together to serve our customers and make Sage Intacct wildly successful. And I’m sure I must’ve done something wrong. Can we start again, and let’s try and figure this one on out?”
I will tell you, 80 percent of the time, the jerk will say, “Ah, ah. Harry, that wasn’t you. It was me, and I’m sorry. You know what? I brought some of my personal issues into that conversation. I didn’t have a great conversation with my wife this morning. I was walking out the door. That was on me. I am so sorry I talked to you in the way I did.”
Now, 20 percent of the time, they won’t admit it. They’ll just say, “Harry, thanks. Yeah, let’s try it again.” Then usually, you still can get through it. We find that when people go back and interact with other people where they’ve had some difficultly with and do it soon and rapidly, you’re usually able to minimize the jerk quotient within the organization. The organization can proceed.
Now, if somebody remains being a jerk on an ongoing basis, that actually is the fastest way that we’ll ask them to leave the organization. It’s not about lack of experience or lack of performance as much as it is disrupting our overall organization and being a cancer within the organization.
Harry: If that’s the right structure then to really get that optimal culture, I’m intrigued. When you look at the Valley today, what do you think many go wrong in that desire to create this high‑performance company culture?
Rob: I think that one of the pressures that you have in Silicon Valley and with a newer organization even outside of Silicon Valley is that there’s so many things to do that a CEO could stay very tactically focused on execution.
It’s like we’ve got to do all these different things. We keep trying to move the needle day by day by day. There are always so many things to do more than you think is humanly possible. You’re usually up against bigger competitors, so you got to be agile.
You just got to be able to adjust to what’s going on in the market day by day by day. I would tell you that if you don’t create the framework we discussed up font about what’s the overall mission, why is it inspiring, what are the goals, and then setting up the objectives, that day‑to‑day agile approach actually can get you into trouble.
As Yogi Berra said, “When you get to the fork in the road, take it.” You may end up somewhere you didn’t expect to be.
Harry: [laughs] Speaking of that objectives and that quantifying of those objectives, I do want to finish today on arguably two of the most important elements in terms of SaaS business as a success today, external from culture and hiring, being the customers themselves and the metrics that they produce.
You’ve said to me before that cloud companies are customer‑centric companies. Tell me, what do you really mean by this? Are they more so than maybe other businesses?
Rob: A cloud company differentiation versus an on‑prem company is that in the past with on‑prem, most software companies got 80 percent of all the revenue up front when they sold the solution ‑‑ they sold their software ‑‑ and then typically about 20 percent through maintenance over the following years.
With cloud, you get it day‑by‑day, month‑by‑month, year‑by‑year. Most cloud companies have a yearly or an annual subscription. If you haven’t done a great job for that customer, they drop you.
Also, what’s very common within cloud companies, it usually takes one to two years to get your money back for the investment you’ve made in just sales and marketing from that customer.
If they drop you after one year, you haven’t even covered your initial costs, let alone your full P&L. It is imperative that a cloud company stay close to its customers in making sure that they are in it for the long haul.
Now, we know with regard to a customer lifetime overall value that in a cloud environment you typically can make anywhere between two to five times more as a company if you just stayed close to your customers and are providing them with great value. You’re going to be wildly successful and make a lot more money.
Cloud approach really gets you thinking about the customer and also long‑term relationships as opposed to the old way. I did on‑prem for about 25 years in my career. It was all about just getting new customers, selling them, and then figuring out where you’re going to get the next new customer.
It was rare that you spend a lot of time figuring out what else can we do for our current customers. You’ve already gotten 80 percent of the revenue that you are ever going to get from them up front.
That’s the cloud‑business model. It is really putting the company on the same side of the desk as the customer. If the customer doesn’t have wild success, the company won’t have wild success.
Harry: I’m so with you on the customer‑centricity. I am slightly perplexed and troubled when aligning into an SMB market where you can’t have this extensive customer success team serving them. How do you think about ensuring that retention and high customer touch point with such a wide SMB market?
Rob: You just have to change the different approaches within your overall business, so you can stay close to your customers. We at Sage Intacct are highly efficient in our sales and marketing efforts.
Where if in the older days or even at the enterprise level, you aren’t as efficient in sales and marketing, it’s OK for you to take on that cost. Then you’re selling extremely large deals. Or in the past, you extracted more money up front from the customer.
Let me give you an example. Most software companies in Silicon Valley are selling to enterprise or are selling on‑prem. Marketing would typically generate about 20 percent. A really good case would be 50 percent of the opportunities for this sales team.
At Sage Intacct, marketing generates 80 percent of all the opportunities. We’re highly efficient through digital marketing and other means of finding customers, finding prospects, and executing against that so that we then can stay and invest in our customer success teams.
Then our product management and engineering organizations are constantly interacting with our current customers, as well as we dissect the marketplace from a vertical perspective.
Not only verticals but going into micro‑verticals, so that we can be the best in the world for those verticals that we serve, which causes us to then be interacting with those customers on an ongoing basis and understanding after we’ve already deployed and implemented our financial management solution what can we continue to do to help them in their business.
What we find with most of our customers is six months to a year, and after they first have implemented Sage Intacct, their business is already changing. They already have new requirements. We want to make sure that in an ongoing basis, we’re constantly satisfying and actually staying ahead of them as they’re building their typically growth‑oriented businesses.
Harry: Amazing to hear that customer‑centricity. I do want to though dive in to our favorite 60 Second SaaStr. Rob, 60 Second SaaStr. Are you ready?
Rob: I am ready.
Harry: One from our friend, Byron Deeter, “What’s the biggest splurge or purchase to date?”
Rob: Too many cars.
Harry: Too many cars.
Rob: Fast cars. I’m not going tell you what kind. There are a lot them. [laughs]
Harry: Fast cars. We’ve got it. Why does Greg Sands call you the big fundamental?
Rob: I think he relates it back to the Spurs and that we have been very, very consistent in our performance year‑over‑year, quarter‑over‑quarter, month‑over‑month, day‑after‑day.
For the last five years, we have been within one percent of our plan and delivering results for our investors and for the organization. It was within one percent, plus or minus either way. That consistency is truly unheard‑of with an organization growing 35 to 40 percent.
Harry: Tell me a moment in your life that’s really changed the way you think about life going forward.
Rob: My mother really focused on making sure that I had the right values. She instilled in me the golden rule, “Do unto others what you have done unto yourself.” About 10 years in the business, I actually found out that there was a better rule. It was called the platinum rule, “Do unto others as they would want to have done unto them.”
Find out what is important to others before thinking about what you think you would like. In this particular situation, find out what they would like and then do that. Too many times, we concentrate on ourselves. I’ve just learned that if you concentrate on others, you can just have wild success, not only in business but in your personal and family relationships.
Harry: What’s your favorite SaaS reading material, Rob? Rainy day, what do you sit down to?
Rob: I don’t know that it’s specifically to SaaS as much as I really just like reading a lot of the latest business books. I like the broader perspective of what others are doing throughout our economy, and then try to apply it back to SaaS and cloud.
Trying to stay up on the latest business trends across the board and then trying to be a visionary as to how you can take concepts that were started somewhere else and apply it to our business.
Harry: Then I want to finish today, Rob. As you said, incredible eight companies, seven immense successes, what do you know now that you wish you’d known at the beginning?
Rob: We talked about CEOs 30 years ago. I was classically taught. You got the investors. You have to have great customers and then take care of employees. I wish I had known, figure out how to develop a great culture and draw in the teams as fast as possible and hire a great talent.
Great talent will get you through the best opportunities. They will maximize it. They’ll also help you get through the lulls that always happen in business where the business environment is retreated.
Great people will figure out a way to gain market share and come of it on the other side, more ahead of the competition. I wish I had learned that earlier in my career.
Harry: Rob, as I said, I had so many great things both from Greg and from Byron. I can’t thank you enough for giving up the time today. It’s been such a pleasure.
Rob: Likewise, Harry. Thank you so much for giving me this opportunity. I’ll always enjoy passing on a lot of the great experiences I’ve had. You’ve helped me facilitate that, so thank you so much.
Harry: What an incredible figure in our industry and someone I so look up to. If you would like to see more from Rob, which I highly recommend, then you can find him on Twitter @sageintacctrob. That really is a must.
Likewise, we’d love to see you behind‑the‑scenes here at SaaStr. You can find us on Instagram @hstebbings1996, for all things behind‑the‑scenes.
As always, I so appreciate all your support. I cannot wait to bring you next week’s episode.