Welcome to Episode 185! Jonah Goodhart is the CEO @ Moat, the SaaS analytics and intelligence company focused on transforming brand advertising online. Prior to their acquisition by Oracle for a reported $850m, Moat raised over $67m in VC funding from the likes of Insight Venture Partners, Founders Fund, Mayfield, Founder Collective, SV Angel, and more incredible names. Prior to founding Moat, Jonah was the founding investor and board member at Right Media, acquired by Yahoo for a reported $680m. Jonah was also the founding partner of WGI Group and co-founder of Billions.org. If all of that was not enough, Jonah is also an angel investor including the likes of adroll, Namely and fitmob all in his personal portfolio.
In Today’s Episode You Will Learn:
* How Jonah made his way into SaaS with is founding investor role in Right Media. How did experiencing both bubbles change the way Jonah thinks about operations today?
* How does Jonah fundamentally define “North Star?” How plastic and flexible does Jonah believe a North Star should be? What was a time where Jonah’s decision was guided in a certain direction by his strong North Star?
* Why does Jonah believe that in B2B your roadmap is given to you by your customers? What can founders do to clearly and quickly determine what their customers want from their conversations with them? What questions are crucial to ask? What response suggests real intent to buy from them? How does one prevent this from falling into heavy customization?
* How does Jonah approach the element of “brand” in the world of B2B today? What does Jonah believe is the secret to brand? How does this affect how Jonah both onboards, trains, and engages with new and existing employees? Was brand core to Moat being able to sell to enterprise so successfully in the early days?
Jonah’s 60 Second SaaStr
* What does Jonah know now that he wishes he had known at the beginning?
* Quality or quantity of logos in the early days?
* How important is it for SaaS founders to be involved in the process?
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Jason Lemkin
Harry Stebbings
SaaStr
Jonah Goodhart
Transcript
Harry Stebbings: You are listening to the official SaaStr Podcast with me, Harry Stebbings. It’d be fantastic to see you behind the scenes here on Instagram @HStebbings1996 with two B’s. There you can suggest both questions and guests for future episodes. I really would love to hear your thoughts and feedback there.
To this show today, my word, what an incredible guest we have in store for you today, and such a hard one for me to intro in a succinct time but I’m going to do my best. I’m thrilled to welcome Jonah Goodhart, CEO at Moat, the SaaS analytics and intelligence company focused on transforming brand advertising online.
Prior to their acquisition by Oracle for a reported $850 million, Moat raised over $67 million in VC funding from some of the very best in the business, including the likes of Inside Venture Partners, Founders Fund, Founder Collective, Mayfield, SV Angel, and more incredible names.
Prior to founding Moat, Jonah was the founding investor and board member at Right Media, which was acquired by Yahoo for a reported $680 million. Jonah was also the founding partner of WGI Group and co founder of Billions.org.
If that wasn’t enough, Jonah’s also an incredible angel investor, including the likes of AdRoll, Namely, and FitMob all in his personal portfolio.
I do also have to give a big hand to the wonderful Tim Chang and Rajeev Batra at Mayfield for the intro to Jonah today without which this episode would not have been possible.
That’s quite enough from me. I’m now thrilled to hand over to Jonah Goodhart, CEO at Moat.
[drumroll]
Harry: Jonah, it’s absolutely fantastic to have you on the show, having heard so many wonderful things from Tim Chang. Thank you so much for joining me today, Jonah.
Jonah: Thank you, Harry, for having me here. I’m delighted to be with you.
Harry: Not at all. I want to kick off today with a little about you and how you came to make your way into the world of SaaS and came to found Moat.
Jonah: My story began almost 20 years ago. I was in college at Cornell University in Ithaca, New York. I was an undergraduate student. My brother had just graduated and had gone on to Yale to begin a degree program in political science in a PhD program.
We both took notice of something that was happening in the broader market. That was companies were building Internet companies. They were developing ideas out of scratch and building a tremendous amount of value. We looked at this as two children of teacher, of folks that had gotten us exposed to the educational systems and the university system at a very young age.
We thought, “Wow, this is very different and very exciting.” As a junior in college, my brother had traveled back to Ithaca to spend some time there over a spring break. Almost haphazardly, we started our first business. It was really exciting. We initially started building an email list where we were helping folks find great deals online.
Finding out how do you get free stuff on the Internet, which seemed to be all the craze at the time. What started out as just a fun project that my brother and I were passionate about quickly turned into a business where we were helping ecommerce companies acquire customers using this great new medium of digital advertising.
This is now 1999 at the time. The bubble hasn’t burst yet at this point. Folks are going crazy. Stock prices are going crazy. We’re thinking, “My God, we’ve got to be a part of this.” We literally used credit card debt in the beginning to build our first business. It was a company called Colonize. We were off and running.
Little did we know, and this is important to us eventually founding Moat years later, was that we were about to run our business straight off of a cliff. 2000 and 2001 were right around the corner. The bubble was about to burst. The broader economic environment was about to change drastically.
One of the things we learned in our first business, which was quite successful from a financial standpoint but we never raised money. We never had institutional backers. We never had institutional advisors. What we had never done was actually build enterprise value.
We had built a business that was great while the market was great but when the market changed our business changed dramatically. It was one of the first lessons I think both my brother Noah and I took with us, which was you need to build enterprise value. In other words, something that’s sticky. Something that can withstand the ebb and flow of a market, even one as crazy as the 2000 and 2001 challenges.
Our business pretty much fell off of a cliff. Revenue was in the tens of millions of dollars and all of a sudden dropped, something like 60, 70 percent over the course of the next 12 months or so. We were faced with a pretty fundamental challenge, which is how do you continue to run this business.
We were fortunate in that we found our way through and we found our way to a place where we were able to survive as a company for a couple of more years but we had never really got back to the place that we had been at.
Part two, though, is where things got really interesting. I got a phone call from someone who had been selling us advertising for a number of years. This guy, Micheal Walrath was his name, was a salesperson at DoubleClick. This is way before Google bought DoubleClick. DoubleClick back in the day was a company that was both selling advertising and was also serving advertising technology.
They had these two functions. DoubleClick made a decision. It was a public company in New York City. It was what Silicon Alley, not Silicon Valley but Silicon Alley, was really named after, was this company DoubleClick at the height of the Internet boom.
Anyhow, DoubleClick decides, as the market begins to change, that they’re going to change with it. They’re going to split the company apart. They decide that they’re going to spin off their ad network and they’re going to keep their technology business.
This guy, Mike Walrath, who had cold called me to start doing business a couple of years before, decided to call me again in 2002. He said, “Look. DoubleClick is spinning off into two companies. I’m supposed to go with the media arm but I don’t want to. It doesn’t feel the same anymore. It’s not as exciting as it once was. I think now is the opportunity to start something new.”
He said, “You and your brother and I have been talking about the opportunity that exists in digital media. How the world is changing in terms of how people can communicate digitally and how you can reach your customers digitally.”
He said, “I think now is the time to try to build a business to take advantage of that.” Of course, Noah and I had been coming off of our experience with Colonize, had been a little bit in a challenged place, had been really excited but then challenged by the market and what we were dealing with Colonize.
Here comes this guy who says, “I’m going to start something new, right now, at a time that seemed like the market had collapsed.”
We thought, “Well, it seems interesting. It seems like an interesting time to bet on somebody. Maybe it’s an interesting time to start a business when other folks aren’t paying attention to it or aren’t focused on it.”
We decided to make a bet. This is the start of the second endeavor that we had, which was backing Mike as he began to build this company, Right Media. We partnered with him. We helped him create the company. We became his first client. We funded it. He was off and running with this new company.
This company, Right Media, would become the largest scaled advertising exchange, which is a programmatic platform for trading advertising inventory. It would eventually birth what now is called programmatic advertising. It would eventually get acquired by Yahoo in 2007 for a pretty amazing number at the time, $850 million.
Now, a couple of years later, Noah and I were on the board. We were still actively involved in the company, although not operating it. The company sells to Yahoo. Mike goes to work at Yahoo. Noah and I begin talking about round three. Round three was creating…
I’ll pause there for a moment, though, before I jump into Moat.
Harry: I’m thrilled that you took the phone call in the first place from Mike when he was ready to leave. I do have to ask, then. There’s so many learnings you mention from the crash to backing Mike. I’ve got to ask, because I had Joe at Joymode on the show. He said that serial entrepreneurship as a title is maybe overrated.
I’m intrigued. For you, as a serial entrepreneur, you mentioned that, the three chapters. How do you respond and feel about the title?
Jonah: I guess I would say it’s interesting that where you identify yourself…I think when Right Media got acquired I spent the next two years, from 2007 to 2009, not being an entrepreneur per se. Being what I would call a VC. We started an angel fund. Right Media, at some level, was our first angel investment.
Noah, and Mike, and I decided to form WGI, Walrath Goodhart Investments, for lack of any creativity. We decided to begin doing angel investing. It was one of the things that I went through personally. I met with tons of entrepreneurs, had a heck of a lot of fun, continue to do angel investing today, by the way. We can talk about that.
I learned in the process of being a full time VC that I’m not one. I’m first and foremost an entrepreneur. I think that’s something that you have to answer for yourself.
At the end of the day, are you someone that gets antsy, that wants to create something on your own, that wants to build a company, that wants to put your blood, sweat, and tears into something?
Are you someone that wants to put the players on the field, wants to back the right horse, wants to back the right people, and can be absolutely satisfied in seeing someone else succeed in that way?
Don’t get me wrong. I feel incredibly great when I see an entrepreneur that we backed, someone like Howard Lerman at Yext, or Jon Brod at Confide, or Jon Steinberg at Cheddar, or Art Muldoon and Matt Greitzer at Accordant Media.
When I see one of these guys crush it, and we played any small part in backing them, I feel absolutely phenomenal. It is not the same thing as when you create your own company, when it’s actually yours, when it’s your baby.
When you really dig in and you deal with all the pain and suffering, or at least what feels at the moment as pain and suffering that you deal with as an entrepreneur with the roller coaster ride, the ups and downs, coming out of that you know is this for you. Are you at the end of the day an entrepreneur, or are you something else?
For me, playing a VC for a couple of years, I made the decision that I’m an entrepreneur first and foremost. I love investing in others but I need to go create. That was really for me one of the reasons why I wanted to start Moat.
In 2009, we made a decision that we were going to go do it. The company really got going in 2010 and we were off and running.
Harry: Speaking of off and running, what a journey it was. I do want to break the interview today into a couple of different segments.
I want to start on the importance of having, as you’ve called it, your North Star. Then I want to move to whether brand does or doesn’t matter in the world of B2B today and then finish on the all important culture. How does that sound?
Jonah: It sounds great. Let’s start with the North Star. For me, one of the things that I learned in building companies is that most companies don’t end where they started. That’s to say that if you look at any of the biggest, most successful companies, what they ended up becoming at the end of the day usually looks pretty different from what they started out as.
One of my takeaways is that you need to have a North Star. You need to have a guiding force, something that we’re trying to figure out, in the case of Moat, how to help brands tell their stories in a digital world. That can be your North Star. That doesn’t mean it’s dictating what you do on a day to day basis.
My lesson is you need to have a North Star, but you need to be flexible to iterate on how you ultimately get to the end point. You want to have this high level, 50,000 foot idea. I want to reimagine the world of, fill in the blank. How I do it is going to change over time, and I think that’s one of my key takeaways.
I think oftentimes, entrepreneurs start businesses and they stay too committed to the tactical. They stay too committed to it has to happen in this one path. When we started Moat, our idea was brands true Pepsi, Coke, Nike, P&G, Unilever the brands of brands will have to figure out how to tell their stories, how to build their brands in a digital world. That was the high level idea.
Our tactical idea was we were going to build a creative marketplace. We were going to build a crowdsourced world where you could build ads, where you could literally build creative. That ended up being a really cool idea but not the right business at all.
We ended up completely changing what we were doing but kept the North Star. We kept that vision in our head that brands still have to figure out how to tell their stories in digital.
The way that we’re going to get there, the path that we’re going to take is not going to be building a creative marketplace, which is what we thought it was in the beginning. It’s ultimately going to be building an analytics company, and at that, a measurement company. That ended up being the path that we went down.
I think it’s really critical when you’re an entrepreneur that you have a vision, a macro vision, that has to be a pretty big idea. It could be a pretty crazy idea. It could be something that sounds like, how is it that I’m going to make a dent in that world?
I think it gives you a way, a lens to make decisions that allows you the ability, the flexibility to say if this isn’t working, I’ll stay committed to it to give its fair shot, then I’m willing to iterate.
As long as I’m not changing my North Star, as long as I’m not changing the high level then I’m OK in continuing to try other things because I’m trying to just push towards my North Star. That was a critical takeaway that we had.
Harry: I do have to ask though, you said about the plasticity to iterate in order to achieve the North Star. How do you really determine between when something’s actually fundamentally not working and when it may be just a blip in the journey, so to speak?
Jonah: Yeah, it’s a hard question. I think it’s something that you ultimately have to feel as an entrepreneur. You have to make a decision deep down, is this what the path should be, or do I think that maybe there’s another way to get there? There’s signals.
One of the things that I love about business to business, B2B companies versus a B2C company, which we can talk about separately, in B2B, the road map at some level is given to you by your customers.
One of the things somebody said to me early on in Moat was go meet with a thousand people. Go meet with a thousand different folks who are going to give you different perspectives, who are going to tell you what their problems are, what the things are that you can try to solve for them.
When you do that they tell you, “Hey, that would be interesting. The problem with that is I couldn’t get budget for it because budget would have to come from here, and I can’t get access to that for that product.”
“That’s great. The problem with that is for that to work, we would have to do X, Y, and Z.” One of the things that I took away in the Moat process was in B2B, your customers, your prospects are going to tell you what they’ll ultimately buy.
You want to walk into that meeting and you want to have them nodding their heads. You want to have them saying, “Yeah, yeah, yeah. Got it. Yeah, that’s exactly the problem that we’re having. Yeah, you nailed it well. If you could do that, if you could do what you just described then we would absolutely buy it.”
There’s enough challenges in the world of B2B in getting budgets procured and figuring out contracts and figuring out how do you integrate and having the teams come together to actually partner.
If you don’t have immediate alignment on what the challenges are that you’re solving and a potential solution for that, you’re not going to get there. I think that’s one of the signals that helps you determine am I on the right path or not.
Go back to our creative crowdsourced marketplace example, we went to prospects and we said, “Hey, we want to help brands figure out digital.” They said, “Great, we’re with you.”
We said, “The way we’re going to do it is build a crowdsourced creative marketplace,” and people sort of looked at us. We thought, all right, we’re not getting the nodding heads. Maybe I’m just a head nod away from there.
They said, “Are you going to replace my creative agency?” We said, “No. I guess we’re not going to replace your creative agency.” They said, “OK, got it. Are you an additional cost on top of my creative agency?” We thought, “I guess if we’re not replacing your creative agency then maybe we’re somehow an additional cost. I don’t know. I guess.”
We had gotten to a place where we went, hmm, they’re not nodding their heads anymore. Somehow, we don’t have a very good business model. Somehow, we don’t have anything that we’ve figured out here yet.
Not to say that somebody can’t figure out crowdsource creative, not to say that there’s not a good business in there, but we couldn’t get there. We couldn’t find our way there.
The signals were pretty clear from the prospects that we went out and talked to. Again, one of the things I love about B2B is they give you the road map to a degree if you listen.
Harry: I’m super interested by the head nodding and giving the road map there. I’m a big fan of quotes, and Henry Ford said, “If I’d done what the customer wanted, I would have built a faster horse.” How do you think about customers leading product development versus innovation and category creation to an extent?
Jonah: Certainly, I’m a big believer in folks like Steve Jobs and Elon Musk and some of these great visionaries that have built phenomenal products.
I absolutely believe that you want to take customer input, you want to take customer insights, and then you want to build to a vision that you have to what you think is the right product to build into the future. It’s not building to spec based on customer input.
One of the things that helps you do that is meeting with tons and tons of customers. If you meet with a thousand different people, you’re not going to get one idea from those thousand different folks. You’re going to get all sorts of ideas.
As a good entrepreneur, your job is to take in that input and come away with, what’s the high level? What’s the big issue that these folks consistently want me to try to solve? What would a product look like that I could walk into each one of those meetings and have them head nodding, “Yeah, if you could do that I’d sign up tomorrow?”
I think there’s still a piece there that where, as an entrepreneur, you need to attempt to see the future a little bit. You need to try to attempt to try to create a path that you think is going to be right. It’s not building on spec or anything of the sort, I agree. If you do that you’ll end up with a hodepodgey product that doesn’t work for anybody.
I think you want to take input from lots and lots of folks, and with that input, you can ultimately begin to innovate.
Harry: I couldn’t agree more in terms of taking the multiple inputs. In terms of the North Star, often the North Star can lead to this creation of external brand often debated in the B2B world. I’m really interested. Before you said the brand is especially important in the world of B2B.
Why do you place such emphasis on brand first? Let’s start with that.
Jonah: I guess one of the things that my brother and I talked about when we started Moat was that we want to build a company that has a meaning. We want to build a company that when people think of our company’s name, they associate something positive with that.
One of the reasons was we had spent a lot time thinking about B2C companies. We had spent time thinking about the Pepsis and Coca Colas of the world and how when you say one of those brands, it instantly has some sort of association that comes up in a consumer’s head. Whatever that association is that’s called brand equity and that’s what brands spend a lot of time building.
What occurred to us was that B2B companies, for the most part, didn’t do that. For the most part, B2B companies didn’t seem to go out and purposely build brands. What they did is they built a matrix and they put it on their website. They said, “We check these seven boxes, and our competitors check six of these boxes.”
We saw the market building this utility based type of company, and Noah and I thought it feels like B2B can be the same as B2C, in the sense that you can have emotion. You can have a feeling that you have when somebody says the name of that company.
Very early on in the days of Moat, we decided we want to build a brand. We want to have it have meaning behind it. One of the things I learned through doing it was actually every company has a brand. It just doesn’t always get defined on purpose.
Sometimes it gets defined by what you choose not to do, or by just the way you go out to market and talk to folks, or the types of content you put out, or the types of interactions that you have.
It was something that as we were doing it, we thought, wow, actually every company has a brand. It’s just a question of whether you specifically focus on it, and whether you purposely tried to define it.
At Moat, we wanted to Moat to be almost like an apparel brand. We wanted it to have this emotional feel and not be anything that was too specific.
We wanted folks to say, “Oh, Moat. Love those guys. Love those folk. They’re smart. They’re hardworking. The women and me that work there really get it and they really care. They are willing to do what it takes to deliver on behalf of their customers.” We thought we really think we can create something that feels like that, now we just got to go out and do it.
One of the things that I would do with new team members when they joined, I would have these team member sessions. I would explain to the folks that would join that our brand was the essence of our company. The secret was that the brand was actually the people.
Even though externally it’s a logo, and it’s the jackets, and the hats, and the stuff that you might produce, and the way you represent your brand publicly.
Our brand at its core was actually the people who are the brand ambassadors, the folks who are out there telling our story, interacting with customers, responding same day on email, available 24 hours a day to help when folks needed it.
When I ultimately understood that and could communicate that to folks, we really saw our brand flourish. It ended up being the people that we brought on to be our team that ended up carrying our brand forward.
Harry: You said that you can be intentional or unintentional with brand building. If one does decide to be intentional, how do you know when it’s the right time to start thinking about and building your brand? Moving away from the stage that Paul Grande discusses, building and selling in the early days, when does that brand integration thought happen?
Jonah: I think it’s extremely early. I think it’s almost on day one. You want to have a sense of your North Star first, I would say. You want to have a sense of at a high level, are we trying to go to Mars? Are we trying to reinvent communications? Are we trying to break down the barriers in the world of healthcare? What is the fundamental challenge that we’re trying to solve?
Immediately after you’ve established what you think your North Star is, you start thinking about what is it we want our company to feel like. At the end of the day, your brand is just a representation of the people that come together to build an organization, to build a company.
When people hear our name, whatever our name is, or people hear about our company, what is it that I want them to think? What is it that I want them to instantaneously associate with us? I think that’s critical that you think about that. Just like the North Star, you make different decisions along the way that are either on brand or are not. They either follow your North Star or they don’t.
I think whether it’s a particular person to hire that you think is going to help push you forward, or it’s a particular business deal to do, or it’s a type of business model that you’re going to pursue, all of those things are decision points.
Once you’ve established your North Star, once you’ve begun to establish your brand, you’re able to build those muscles of decisions to be able to decide this one is the right path versus another.
Harry: Obviously, you nailed brand. You also nailed the attaining of large enterprises as clients in the early days of Moat. I’m intrigued. Would you say brand was the number one thing that allowed you to do so well selling to enterprise early? What were some learnings that you have from doing that so successfully in the early days, often when mean struggle?
Jonah: I think brand was one of the most critical components of our success, absolutely. It’s something that you end up getting emotional about because you’re trying to build emotion around what you’re doing.
When you go out and talk to customers and you talk to prospects, they can feel that kind of emotion. They feel that you care, that you care about how your company is represented externally.
A client comes in and they send you an email, for example, and it’s a Saturday afternoon. They send you an email with 6, or 7, or 8, or 15 questions in it, as I got one Saturday afternoon a couple of years into it from an agency.
You spend two hours writing back a detailed, long email that goes through and answers every single question, gives examples, gives attachments, makes it easy for them to take it and help solve the issue that they were trying to solve on their side. People begin to feel how much you care about what you’re building.
I think part of the brand that we were trying to build was one that was highly responsive, that paid attention to details, that was emotionally attached to the vision that we were trying to build. Other people, and it’s people that you’re working with, respond to that. They want to be a part of journey.
When people decided we want to be part of Moat, we want to be a Moat company, it was something that was emotional as well as utility. I think people said, yeah, we can get software analytics, we can get someone who can answer some of these questions through a lot of different ways.
When we work with Moat, it’s something else. It’s something that comes with this feeling of we’re part of a special team. I think that is really critical and has been really critical historically, and hopefully will continue to be into the future.
Harry: I do have to transition though, Jonah, into my favorite of any interview, being the 60 Second SaaStr. Jonah’s 60 Second SaaStr, are you strapped in and ready?
Jonah: Let’s do it.
Harry: Quality or quantity of logos in the early days?
Jonah: Good question. I would say quantity and quality are pretty equally important from my perspective. I think you want to build a logo machine at some level. At the same time, if you don’t have the right folks on board, in other words, if you don’t have names that people recognize that means something, it’s hard to get the next group on board.
People look at it and go, who else is working with you? When they see it’s great companies, they want to be attached to great companies. I’d say they’re both pretty important. If you forced me to choose one, I’d say quality.
Harry: Tell me a moment in your life that served as a inflection point and maybe changed the way you think, be it the crash, be it the sale of Chapter Two, be it the sale of Moat. What would your thoughts be?
Jonah: My oldest brother, Josh, started a company when he was in college at Cornell. He started a newspaper, and he ended up competing with the daily newspaper from the university. He taught me something pretty important which was that you could actually create something from scratch, or seemingly from scratch.
You could start something that you had an idea with, you could turn it into a business model. You could turn it into a business. You could go out there and create something. He had sort of paved the way in a lot of ways for my brother and I, Noah and I, to become entrepreneurs. That was a pretty important moment for me in our life.
Once we got into business, we had a number of moments. The crash in 2000 and 2001, we went, got it, you got to have a business that can withstand market troubles. Looking at Mike Walrath when he built Right Media, he always talked about where Right Media was going, not where Right Media was.
That was critical for me to understand because when I built Moat, I thought, it’s not about what we’re doing in this moment. It’s about the journey that we’re on. It’s about where we’re trying to together get to.
There’s been a number of things throughout my business and personal life where I’ve felt like, got it, there’s a takeaway there. I’ve tried to pay attention when those moments arrive.
Harry: How important is it for SaaS founders to be involved in the sales process?
Jonah: Critically important. I think that the SaaS founder is your number one seller. Your CEO in a lot of cases, if not most cases for a SaaS company is the head of the product and the head of sales initially. Now you ultimately can absolutely hire product leaders and chief product officers, and chief revenue officers.
We certainly went out and hired a heck of a lot of great people that really took our business to the next level. In the end of the day, in my opinion, a lot of the best software companies tend to have a product focused CEO who’s also great at telling the story.
One of the things that I think is awesome about selling is when you do it well, it doesn’t feel like you’re selling. When you do it well, you’re talking, look, here’s where we’re trying to go. Here’s where we think the future could get really interesting for all of us. Do you want to go on that journey together with me?
I think when you do that and you hit the right chord, it doesn’t really feel like selling. It feels like you’re doing something together and that’s a heck of a lot of fun.
Harry: When I say “success in SaaS,” who’s the first person that comes to mind, and why?
Jonah: I think there’s a lot of folks that have built successful SaaS companies. I think of certainly Larry Ellison at Oracle. I think of Mark Benioff at Salesforce. I think of folks like Howard Lerman at Yext.
I think of people that have built strong, recurring revenue, software based companies that have begun to stand the test of time. I think there’s a lot of companies that would come to mind.
For me, what I love about SaaS is that it’s predictable. It’s something where you can see what your next year’s revenue is going to look like and you’re simply building on top of that. I also love the fact that there’s only a handful of metrics that you need to understand in SaaS.
You need to understand your churn rate. How many customers are you losing? Hopefully, very few. You need to understand your growth rate. What are you growing in terms of revenue, in terms of logos, in terms of customers?
If you have a solid growth rate and you have low churn, almost not matter what, you have a great business. The only third one might be gross margin and making sure that you have a producing business model. If you control for those three growth rate, churn, and gross margin you’re going to be successful most likely if you get a couple of other pieces in place.
I love that about SaaS. I love that you only have to master a couple of things. If you do those well, you can build a great company.
Harry: Final one, and this is a very challenging one, I have to admit. What do you know now that you wish you had known at the beginning of your very first company with Noah?
Jonah: I think one of the things that I would say now, 20 years later, is that my outlook on building companies is longer than it was in the beginning. In the beginning, you think about what can I get hooked on in the next day, in the next week, in the next month, at most? A month sounds like a very long time in the beginning.
After doing it for 20 years, a month is nothing. In fact, a quarter is nothing. Six months is nothing. A year is not that long of a time period.
I think one of the things that I decided eventually was you need to have an outlook that is reasonable time period, and when you do, you make different decisions.
You decide that certain things that matter a lot when you’re looking at the world through the lens of days, weeks, and months matter a little bit less when you’re looking at the world through the lens of years.
That was probably one of the biggest learnings that took me some time to understand. Hopefully, I’ll continue to grow and continue to learn.
Frankly, I love to listen to folks like you and guests that you bring on. I love to hear from others who have great experiences and to try and figure out, all right, how can I apply some of their learnings to continue to grow.
Harry: Jonah, I can’t tell you how much I’ve enjoyed this. As I said, I heard so many great things from Tim Chang. Thank you so much for joining me today.
Jonah: My pleasure. Thanks for having me, Harry.
Harry: As you can tell from my overexcited tone, I was hugely excited to have Jonah on the show there. What an incredible guest. If you’d like to see more from Jonah, you can on Twitter by following him @JonahGoodhart.
Likewise, we’d love to see you behind the scenes on Instagram. You can find us @HStebbings1996 with two B’s. There you can suggest questions and guests for future episodes. That really would be great.
As always, I so appreciate all your support. I cannot wait to bring you an incredible episode with Tom Bogan, CEO at Adaptive Insight on how they scale to $100 million.
