SaaStr Podcast 212: Nick Mehta, CEO @ Gainsight On Why Burying Customer Success Under Sales Does Not Work

 

 

Nick Mehta is the CEO @ Gainsight, the #1 customer success platform for corporate services, turning your customers into your best growth engine. To date Gainsight have raised over $156m from some of the world’s best VCs in the form of Lightspeed, Bessemer, Insight Venture Partners, Battery Ventures, and Salesforce Ventures. As for Nick, prior to Gainsight he was the CEO @ LiveOffice where he grew cloud archiving ARR from $2m in 2008 to $25m in 2011 and drove and negotiated the acquisition by Symantec for $115m in cash. Before LiveOffice Nick was Senior Director of Product Management @ Symantec where he led $378 MM market-leading email archiving / security businesses managing over 180 people across 3 continents. I do also have to say a huge thank you to both Byron Deeter and Jason Lemkin for the intro to Nick over two years ago.

  • How Nick made his way into the world of SaaS and came to lead the charge in the category creation of customer success as CEO with Gainsight? What were some of his big lessons from being CEO at 2 companies during 2 macro market crashes?
  • What does Nick mean when he says, “customer success will fail if it is just a role and not a strategy?” What can the leader and CEO do to imbue this company wide approach to customer success? What tangible actions are on offer? What works? Where do many make mistakes?
  • Nick has previously said, “burying customer success under sales does not work”. Why does this have such a high rate of failure? What should the optimal sales to customer success relationship look like? What does Nick mean when he says, “product is to customer success what marketing is to sales”. How should product and customer success work together?
  • Why does Nick believe the mythology of the “A player” when business building is fundamentally dangerous? What can leaders and CEOs proactively do to ensure a diverse and differentiated talent pipeline? What question does Nick find most revealing in terms of one’s character and potential? Where do many go wrong in building and scaling their teams in SaaS?
  • Why does Nick push back against the “hire fast and fire fast” thesis? What are the negative consequences of it? Why is it short-sighted and premature in many cases? What does Nick suggest for individuals struggling to find their optimal role within an organisation? How much time does one give someone struggling to find their role?

Nick’s 60 Second SaaStr:

  • Who must fundamentally own the renewal, sales or customer success?
  • What Nick know now that he wishes he had known at the beginning?
  • What would Nick most like to change in the world of SaaS?
  • Most surprising action that has moved the needle for a company in terms of retention?

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Jason Lemkin
Harry Stebbings
SaaStr
Nick Mehta

Transcript

Harry Stebbings: We are back in the world of the official SaaStr podcast, with me Harry Stebbings and I’d love to welcome you behind the scenes of my weird and wonderful life on Instagram @hstebbings1996, with two B’s. Mostly workouts and mojitos but it would be great to see you there.

Harry Stebbings: And to the episode today and very few people can claim that they truly created and defined a new category in the world of SaaS. Well, our guest today most certainly can. We had such a special discussion on round one over two years ago, I thought it would be incredible to welcome him back for a very special round two.

Harry Stebbings: So with that, I’m thrilled to welcome back Nick Mehta, CEO at Gainsight, the top rated customer success platform for corporate services, turning your customers into your best growth engine. To date, Gainsight have raised over $156 million in funding from some of the best in the world, including the likes of Lightspeed, Bessemer, Insight Venture Partners, Battery Ventures, and Salesforce Ventures, just to name a few.

Harry Stebbings: As for Nick, prior to Gainsight, he was the CEO at LiveOffice where he grew cloud archiving ARR from $2 million in 2008 to $25 million in 2011 and drove and negotiated the acquisition by Symantec for $115 million in cash and before LiveOffice, Nick was Senior Director of Product Management at Symantec where he led the $378 million market leading, email archiving security business. Managing over 180 people across three continents. I do also want to say a huge thank you both to Byron Deeter and Jason Lemkin for the intro to Nick over two years ago. I really do so appreciate that.

However, you’ve heard quite enough of me, so now I’m very, very excited to hand over to Nick Mehta, CEO at Gainsight.

Harry Stebbings: Nick, it is absolutely fantastic to have you on the show for a very special round two. As I said last time, I’ve heard so many wonderful things from Byron. He provided more than enough in terms of questions again. So, thank you so much for joining me again, Nick.

Nick Mehta: Harry, it’s so awesome to be back. I listen to your show all the time. I’m really excited to be here.

Harry Stebbings: I mean, my word, that is so wonderful for my ego, but I would love to kick off today with a little bit on you and for those that missed round one, how did you make your way into the world of customer success and come to be the CEO of Gainsight?

Nick Mehta: Some would say that I was born to do customer success. I think that might be revisionist history but there’s a fun story from my childhood. I was eight years old, there’s a photo actually I still have of me with my brother and my dad growing up in Pennsylvania in the US and I remember my dad taking me to work, kind of a take your child to work day and I actually vividly remember him saying, “If you ever go into business, you should either be the person selling the product or the person building the product because once you got the customer, they’re kind of stuck with you.”

Nick Mehta: It’s funny that for those that don’t know what I do, now I run this company called Gainsight which is all about changing that model where it’s not just about building and selling but that you’ve got to re-earn your customers business every day and you’ve got to work to keep them and work to grown them.

Nick Mehta: So, from my childhood, I had this interesting thing planted in my mind and I had a meandering path from there. I’ve always wanted to be in tech. I did a consumer startup. I worked in a big company. I eventually ran another Saas company which I ran and then sold. Then in my last company, I learnt first hand that the world has changed and that you can’t afford to just sell a customer and move on and in these subscription businesses you’re with that customer for life and you’ve got to re-earn their business every day and that’s kind of the impetus that caused me to want, after selling my company, to jump into Gainsight.

Nick Mehta: I didn’t found Gainsight but I joined very, very early as it was just getting started. I met through some investors and I just fell in love with the idea and I just had my six year anniversary some six years ago.

Harry Stebbings: Well, massive congratulations on the six years. I do have to ask, you mentioned the other companies before and I’m fascinated by bubbles and macro crashes. Honestly never worked through one, so this is a learning opportunity for me. How did operating in the times of the crash running your own business, a PE owned business, how did that effect, re-impact your operating mindset today?

Nick Mehta: That’s a great question, Harry, and I’m old enough to have been through two crashes because in college I started my first company, this consumer internet company in the late 90s which when we graduated we ran, we raised a lot of venture capital. We actually almost went public. We were 20 years old and we thought we were done for life and then the market crashed, some folks may remember in the late 90s and then, subsequent to that, I was running a company during the 2008 financial crisis.

Nick Mehta: So you’re totally right and I think that’s interesting because there’s two sides to it. On one side, of course, you learn that things aren’t always going to be great and you’ll have really challenging times. In my last company in 2008, we almost ran out of money literally to the point where were wondering whether the executives would have to skip payroll one time, which is a very scary time to be. We made it and we eventually sold the company and had a great exit, but I think one of things that it teaches you is okay, you’ve got to be very disciplined and prudent about cash and you have to be prepared for downside but maybe the more important thing for me is the rebounds teach you a lot too.

Nick Mehta: I remember in 2000, the internet market had fallen apart. Literally people were saying that consumer internet thing was a fad. Amazon, that company is going to totally go out of business. I mean, it’s crazy to think about what people said. Same thing in 2009. The SaaS companies were worth almost nothing. I wish you could have bought all those companies at that point, I’m sure you feel the same way, and meanwhile the really smart people were buying them.

Nick Mehta: So, I think the big thing that crashes have taught me is that there’s going to be rebounds and there’s huge opportunity in those rebounds.

Harry Stebbings: I mean, I love thinking of the opportunity in the rebounds. Sadly, in 2009 I was 13 so I probably wasn’t thinking about [crosstalk 00:07:55] a Saas company. I do want to break the interview today, Nick, into two quite distinct parts really. I want to start on all things customer success and then move into really the culture and DNA of firms required to successfully scale. Does that sound good?

Nick Mehta: Yes, that sounds great.

Harry Stebbings: So, starting on the way we think about customer success in orgs because when we chatted before, you left me with a very unfair cliffhanger when you said, “Customer success will fail if it’s just a role and not a strategy.” Thank you so much for explaining this one further when we chatted, but how can I not start with that? What did you mean by this strategy, not role?

Nick Mehta: Oh my gosh, and I would say not just a role. So the role is very important but it’s not sufficient. It’s necessary but it’s not sufficient. To give you some context, why did customer success as a concept get created? Well, it got created fundamentally, because you had this customer journey that spanned, say all the services and support and renewals and you had everyone thinking in a silo. You had sales in their silo and marketing in their silo and they’re all doing a good job but nobody was thinking about that customer journey.

Nick Mehta: So, along comes customer success as the superheros to save the day, right, and they come into the companies and companies have hired these teams and they’re so great and that’s my people, I love them, but at the end of the day, they on their own without the other departments, can’t solve all the problems. They can’t solve how the product experience works or the expectations set in sales or the way the marketing value proposition aligns to reality.

Nick Mehta: So, if your customer success team is brought in and has to solve everything on their own, they’re just yet another silo and that really doesn’t solve the problem. It kicks the can down the road. So the best companies have a customer success team but kind of think of all of the groups internally like a symphony where everyone’s playing their own instrument and the customer success team is kind of the conductor keeping everyone in harmony.

Harry Stebbings: I love that symphony and conductor analogy, but it sounds wonderful in theory. What can you the leader, and what can CEOs and the functional leads do to really imbue this strategy, not role, in terms of customer success permeating throughout the whole organization. What can they tangibly do?

Nick Mehta: I’ll give you kind of a multi-step plan. Step one, obviously if you don’t have a customer success team, create one because they become your eyes and ears for seeing this opportunity. Step two, lots of people, we’ll talk about this more in a second but, will bury their customer success team in the org. You’ve got to treat this team like a peer to sales and marketing and product. The customer journey is so important so make it an executive role.

Nick Mehta: Step three, give that team two charters. One charter is work with the customers, drive adoption, that’s kind of what you typically expect, but charter two is drive this cross-functional initiative around the customer journey. Run the customer council or the customer committee, whatever you want to call it, and have representatives from sales and marketing and services and have OKRs and KPIs, goals basically, for that cross-functional committee around things like the hand-off from sales to service or how product gets more tightly aligned to customer success.

Nick Mehta: So, kind of run it as a cross-functional initiative, just like you have a cross-functional initiative for your culture or for your business model. You need one for your customers.

Harry Stebbings: Can I ask, is there one function in particular, or a couple, that really stick up in terms of struggling to really embrace this, be it engineering who are focused so much on [inaudible 00:11:10] cycles and quick iteration or sales, so much focused on hitting quota for the quarter. Is there one or two which may be more resistant that you’ve seen.

Nick Mehta: You know, it’s interesting, the good news is that when you describe fundamentally this concept of customer success that our customers have power, we need to be proactive with them. We need to get them to use what they’ve bought and get value and they’ll renew and expand. Who could be against that? That’s like motherhood and apple pie, at least we say over here in the States, and so nobody’s against that. I go and speak at company all hands and there’s engineers and there’s product managers, there’s sales people. They love this idea and their question is how do they get involved.

Nick Mehta: So I think the precise answer to your question would be I think kind of a triangle, a triumvirate, which is customer success, sales, and product and that’s kind of what you need as the linchpin of alignment. All of them want to do this but I think there’s a little bit of okay, who does what? How do we work together? But that’s the problem as an industry we’re all trying to solve.

Harry Stebbings: Can I ask, do you ever get a conflict between marketing and customer success where you have a marketing team that you see performing insanely well, filling top of funnel to the extreme, almost bloating it, and then customer success team’s overloaded. Is that the tension? Where do you see tension between maybe marketing and customer success?

Nick Mehta: It’s a great question. I think that’s one of the next frontiers after product and sales. I was actually just talking to the CMO of a publicly traded company that happens to be one of our customers and the CMO said, “Here’s the deal, Nick. I would love to help with our existing customers but at the end of the day, I’m just measured on top of funnel. So, I’m just managing the number of leads, the number of demos, things like that, right?” So fundamentally she’s like, “I’m not measured on it. I can’t work on it.”

Nick Mehta: So a lot of marketing leaders I think right now are still thought of as kind of the demand gen team, the pipeline team, the new business team and in that world, fundamentally what happens is a customer success team kind of creates their own version of marketing for existing customers. You see that a lot where CS teams have some people that are doing the scalable programs to drive adoption, through email campaigns and things like that.

Nick Mehta: But there’s some marketing leaders that somehow have adjusted their charter with their CEO to say, “I’ve got the whole lifecycle from new business to adoption to expansion to renewals,” and those marketing leaders then can partner more closely. So I would say to marketing leaders either get your goals in tight alignment with the CS team or get out of the way and let the CS team do their stuff with the existing customers.

Nick Mehta: The worst thing that can happen is the CS team is waiting for marketing and marketing doesn’t have the charter and then all those customers get ignored.

Harry Stebbings: Absolutely, I couldn’t agree with you more. Can I ask, is it the CEO’s responsibility then, you as the CEO of Gainsight, is it the CEO’s responsibility in maybe more traditional companies to make customer success a more pivotal KPI for their CMOs?

Nick Mehta: Absolutely. I think if you think about it in a broad sense, go back to the orchestra analogy. The CEO’s job is to define the analogy, the metaphor, as I would argue the orchestra, right? An example there would be a lot of people historically would use the metaphor of kind of American football like a quarterback and that quarterback is often the salesperson and running the show. I’d argue that analogy is dated because there’s too many functions and customer experience has too many different groups and you need to have more of a distributive model.

Nick Mehta: So the CEO’s job is define the analogy and then define each person’s role. So you could say the marketing team is the violins and the sales team is the bass and the drums and all that and maybe the CS team is the xylophone, I don’t know, but define where people sit and then define kind of sheet music to keep people all together. So that sheet music in some ways is the KPIs and the goals. What’s marketing’s goals in this? What’s sale’s goals in this? I’ve run a lot of workshops with executive teams where we’ll sit down and go function by function and say, “What are your KPIs and how would they evolve in a world where we’re all a symphony together?”

Harry Stebbings: Absolutely and again, I’m going to steal the symphony analogy because it’s too good. In terms of CS’s relationship with sales, you said, and I do have to jump on it about burying CS under sales almost always fails. What does this normally look like, Nick and why does it have such a high rate of failure?

Nick Mehta: Absolutely and by the way like everything, it’s not 100% failure, in fact, there’s some sales leaders who are very enlightened and they see the whole customer lifecycle, but I think some of them naturally are just under a lot of pressure, for that quarter, and if you think about CS in general, you’re usually doing things today that affect the future, right? You rarely can identify a problem with a customer, do something to help them and try to renew and expansion all in the same month, right? It’s actually very much a long game.

Nick Mehta: So, I was talking to a friend of mine who was a CRO and he used to be a sales leader, then he became a customer success leader, then he became a CRO, Chief Revenue Officer, ran sales and CS. I said, “Okay, what was it like running both?” He said, “Nick, honestly, I would spend 50 hours a week on sales and one hour a week on customer success. Not because I didn’t want to spend time on customer success but there’s so much on the current quarter and getting my deals done.”

Nick Mehta: So he said, at the end of the day, either you need an org that truly is empowered to think longer term or split them out. So I would argue, if you’re a CRO who’s able to balance that, maybe you have a great sales leader underneath you, you have a great customer success leader. More power to you to bring them together but I think most companies, the sales team is so focused on the near term that CS often gets ignored, is a bit of an afterthought, and I would argue that’s the worst mistake you can make.

Harry Stebbings: In terms of that relationship–and you must be so bored of answering this question, but I felt while I had Nick Mehta on the show I had to ask it, so here goes. In terms of that relationship, who do you think fundamentally owns the renewals in terms of customer success versus sales and from an organization design perspective, what’s your recommendation on that?

Nick Mehta: Yeah, that’s a great … I never get bored because it’s actually a very dynamic question and it’s definitely the number one question I get asked, and I think the way I like to think about it is, there’s not one right answer but there’s a good thought process, and here’s the thought process. If you’ve got a business where the company basically has these long term relationships that are complex and there’s a lot of expansion potential in your accounts and fundamentally, it’s not kind of a one and done transactional model, there’s a lot of merit to the salesperson being involved, owning the renewal and the expansion. The renewal can be a catalyst for the expansion and the CS team basically being there to drive value and adoption but not necessarily owning the transaction. You’ll see that a lot in these large ACV high touch businesses where the sales team stays engaged for the lifecycle of the customer.

Nick Mehta: So the other extreme is a business that’s a low ASP, low ACV business. Maybe your average deal is 20 grand. The sales team’s going to hunt and then move on and you move on you hand it off to a CS team that owns that renewal, maybe even owns that expansion. I’m seeing more and more CS teams own expansion. So you have a model where you have one team, the sales team, getting new customers and a different one mining and growing your existing customers.

Nick Mehta: So you’ve got these two models, and I think that, generally speaking, if you tend to be a higher touch business, longer cycles, more expansion, more complexity, most of those tend to have the reps keep the accounts and if you tend to be a little bit more transactional, little bit more higher velocity, you tend to have a bit more of a separation between new business and existing.

Nick Mehta: Now, I talked to one of our customers literally this morning who actually had a really good point, which is sometimes those customers you get handed over, where they’re “renewal,” sometimes they’re actually a re-sell. This happens in Saas a lot, the buyer is very empowered. So when that renewal comes up sometimes they say, “You know what, I want to look at the market” and God forbid, maybe they even never deployed and they truly … it’s like a new sale.

Nick Mehta: So what some people will do is, even if the CS team has the account and owns it and owns the renewal, they may have a small incentive for the sales team so that they can be brought back in for those situations where you really need a truly new sales approach. So there’s basically two ends of the spectrum. I’d vary it based on how high touch your business is, what your ASP is.

Harry Stebbings: So, if that’s renewal and I totally understand CS being accountable for a renewal and not really infringing on that relationship of trust that they have with the client. The one where I don’t see and I’d love your thoughts here, I really have a problem when CS own upsell. Is that unfair of me because I always think it just ruins that relationship of trust and it’s like a friend trying to sell you something. Why am I wrong here and what are your thoughts?

Nick Mehta: Well, I think that you’re not wrong. I think that the thing that’s wrong is having one term called upsell. I think it’s one thing the industry … I actually read a blog post about this. There’s many kinds of upsell inside RU. Some make sense in some teams to be owned by CS but they really don’t look like upsell to the customer. If you think about it, when you’re a customer and you want to add a small number of additional seats and you literally, it’s because you have new employees and they need licenses. That’s not really being sold to. That’s like literally you’re buying.

Nick Mehta: Or maybe you need a new module that’s very incremental, right? But on the flip side, if you’re a customer and the company wants to get you to use the company in a total different capacity and total different division, that’s truly an upsell, maybe a completely different product. So what I would argue is, over time, some of that low friction upsell that’s really more like buying, not selling, sometimes that’s done in the CS team actually in service to the customer. So, there’s not multiple people to deal with.

Nick Mehta: By the way, the best way to do it is in the product. So you don’t have to talk to anyone, but that’s kind of very incremental and what I see most people do is, even if they do some incremental upsell through the CS team, when you’re trying to go and sell that new division or that brand new product, well I understand they’re bringing in the sales team for the reasons you described but also because sales people are good at driving new sales.

Nick Mehta: So, I think the real thing to happen is defining the different kinds of upsell and which ones may make sense in the CS context, which ones make sense in a true sales context.

Harry Stebbings: You mentioned product there, Nick, and I do have to dive on this because again, well actually on something that you’ve said before. You said that product and CS must be as tight as sales and marketing. Why is that and what do you think one can do, again maybe as the CEO, to create almost this intimacy between product and CS?

Nick Mehta: That’s a great question. Let’s go back to 10, 15 years ago in software. One of the things you would hear 10, 15 years ago over and over again is marketing is doing all this stuff and it’s not aligned to sales and sales and marketing weren’t on the same page. It was often a very dysfunctional relationship and what happened is sales and marketing realized that they can only win if they win together. Fundamentally, they had to be tied at the hip, and especially with the advent of digital marketing. Online marketing websites, nurture, that really brought them together and they had metrics that they agreed to, for example, a marketing qualified lead which essentially is the thing that came from marketing that went to sales.

Nick Mehta: So those two groups came together and it’s been really amazing. There’s still problems but I think most companies sales and marketing are much better aligned than they were ten years ago. So when we look at that analogy, we look at the customer success world and say well, customer success can’t win on its own. We talked about that before. It needs the whole company, but who it really needs is that product team building products that are aligned to customer needs, tracking what people are doing in the product and giving the CS team data and then helping the CS team leverage the product to drive onboarding and adoption and things like that.

Nick Mehta: So fundamentally, in some ways, marketing helped the sales team scale with kind of one to many strategies and the product team can help the CS team scale and most companies, they struggle with the fact that you could never hire enough CSMs to cover all your customers in all parts of the lifecycle, so how do you scale? We would argue that product is the key to scalable customer success and inside that, fundamentally, the product team, more and more, are being asked to produce data about how the product’s being used and consumed. Are being asked to listen to the customer better and collaborate with the CS team on roadmap and are being asked to leverage the product, meaning like, when that user logs in, guiding them to new features, guiding them through onboarding, things like that.

Nick Mehta: And so it’s really exciting to see that coming together. It’s happening in my company between my product and CS team. It’s happening in the industry.

Harry Stebbings: I always think unless things are structured though, they often don’t tend to happen especially in high [crosstalk 00:22:53] organizations. In terms of that feedback loop between the communicating CS and product teams, for you today, what makes you go aha, that’s a great communication flow between CS and product, and what should the structure be around their communication?

Nick Mehta: I’ve got two structures and by the way, I think we’re still learning, so there’s more to come, but there are two structures that I think are very applicable for everyone. Structure number one is a really strong workflow to take things that are coming from customers as requests that are critical to that customer’s success and really sorting them out and making them tracked with product and then having a closed loop to go back to the customer. So the challenge here is your clients will have thousands of things they want different, right? They may want the button to look a different color, then they log in, they want it to look a little bit nicer.

Nick Mehta: But there’s some things that are truly blocking their outcome. At Gainsight, we call this the product risk process. The customer success team knows the nuances of the customers outcomes, identify enhancements that the customer really needs to address their outcomes and then we track those and we have a very religious process of closing the loop. So that’s one process, very straight forward. We’ve even documented it on how to do it.

Nick Mehta: The second process is think about how you measure your product team. I talk to a lot of product leaders. By the way, I started my career as a product manager, so I kind of know this first hand. Where product teams want to do a great job but what does a great job mean in the modern world? It’s actually really hard to say how you measure a product team.

Nick Mehta: You measure a CS team by maybe renewal rate and expansion. You measure a sales team by their bookings. How do you measure a product team? That’s a core question for our age and so the second thing I would recommend is building a scoring methodology like you might have a health score for your customers, you might have an MQL for marketing. What’s the scoring for how you measure each product team in your company and most companies have multiple product teams because they’ve adopted an agile or scrum methodology so they might have lots of small teams.

Nick Mehta: For each of those teams, what is success? At Gainsight, we’ve got a scorecard for every team and that scorecard looks at things like not just quality and release time but it looks at, for example, adoption rate and customer satisfaction with that feature, that function. So we built a scorecard aligned between the way the customer success team sees the world and the product team sees the world.

Harry Stebbings: Absolutely love those two different structures and I can’t thank you enough for unpacking them for me. I do want to ask though because we mentioned there customer success really permeating its way throughout the structure of the organization. If we move to the structure itself and really what binds it all together being the culture, so to speak, commonly said that A players hire A players with this kind of idolatry towards the A player, always terrified because I’m probably not classed in that as a university drop out.

Nick Mehta: Exactly.

Harry Stebbings: But you said before that the A player is dangerous. Can I ask, Nick, why is it dangerous?

Nick Mehta: There is so many things that get said in Silicon Valley especially and then repeated without anyone questioning the fundamental assumption that sometimes I feel like Neo in The Matrix wondering why do I think differently about some of this stuff and I think a lot of the truisms about talent, I think are fundamentally flawed and I would say dangerous because they basically are in some ways just suddenly perpetuating our bias. So yes, A players hire A players, that’s what people say, right? The truth is they have an image of an A player and they went to a certain college and they’d look a certain way and they act a certain way, they speak a certain way and by the way, I’m super privileged, I probably fall into some of these stereotypes myself.

Nick Mehta: The reality is there’s all these other people that actually in my experience, they may not show up as a quote, unquote, A player to the average hiring manager but the reality is they have just as much talent and just as much potential. The companies aren’t giving them the shot and so they’re kind of dividing the world into the A players and everyone else. Actually I’d argue, almost everyone in the company, they can get a lot more out of them if they’re actually looking to find the greatness in those people versus constantly looking for the next great person.

Nick Mehta: I really think there’s greatness in almost everyone in your company and we had discussion this week in our management team where I asked every executive to say, tell me a time where you changed your opinion of somebody. Where you didn’t think they were great and later on they were great. Everyone came up with an example and that shows me that our initial impressions of people are fundamentally flawed. Our gut instinct is just bias and so I think this A player concept is really dangerous to us building diverse and high performance companies.

Harry Stebbings: I’m so pleased you said there about the discussion within the team because I spoke to one of your team members, Dan Steinman, before the show and he asked, “How do you look to root out dysfunctions when trying to make a team work and what does that process look like for you?”

Nick Mehta: Yeah, it’s interesting because it’s one of the hardest things, I think, is when you feel like there’s somebody who’s not truly bought into the values or maybe not operating in alignment with the values and how do you coach that person and how do you talk to them? Of course, there’s a lot of great techniques like 360 reviews, which I find are still the most powerful thing in the world where it’s not just you telling that person but them hearing it from lots of different people.

Nick Mehta: I think fundamentally there are people where you need to tell them these are our values and this is what we believe in and need to be confident and say if you’re not into those values, there’s no judgment on you but you probably aren’t the right person for the company. I think being willing to be strong about that is really challenging. It’s never been easy but you need to be willing to actually have that happen.

Nick Mehta: But I think that fundamentally, going to everyone and pointing out the types of values that you’re looking for, the modeling of those behaviors and actually reinforcing those all the time is one of the strongest things you can do. Every single week in our exec team, we have an opening ice-breaker question and almost all of them are oriented around us reinforcing our values. Like this question I mentioned about tell me about a time where you changed your mind about somebody. That’s all aligned to our values around fundamentally being more inclusive and looking at different types of people’s backgrounds and being willing to see the greatness inside them. It fits into one of our values we call Shoshin which means beginners mind and really being willing to approach everything with open-mindedness.

Nick Mehta: So to me, it’s not just about rooting out the disfunction, it’s about highlighting the function. Highlighting the people that are really doing things well.

Harry Stebbings: I completely agree with you there in terms of highlighting. My question to you is, I can say Nick, I’m so into Shoshin. I’m so into all the Gainsight values pre-hire this is. This is in the interview phase. How do you actually get to the root of a true person,s beliefs and values pre-hire? Are there some things that you like to do, questions you like to ask?

Nick Mehta: Yeah. It’s interesting because I would say that we’re still evolving in this area. I would say that one thing you can do really well, which I believe is maybe the most powerful thing, is be super, super external about your values. So let’s say, one thing that’s interesting about our values, we have five values, everyone in the company knows them. We kind of live and breathe them but all of our customers and all of our community know most of our values as well.

Nick Mehta: One of our values is called childlike joy. Bring the kid in you to work every day and I’ll be in many meetings with customers and they’ll say, “Nick, you’re going to do the childlike joy thing now, huh?” And I’m like, “Yeah, I’m going to do that.”

Nick Mehta: Now, why do we do this? Well, number one, obviously we want to be authentic to ourselves even with our customers but number two, I want the whole world to know our values so that if you weren’t into them, you wouldn’t even apply. There are some people who think that childlike joy and golden rule, they’d say, “What is this? Like a bed and breakfast?” They might say, “I want to work in a company where you kill your competition and it’s all about being number one.” I love those people and I definitely would love them to work in a different company, not at Gainsight.

Nick Mehta: So one thing I think you can do is be very, very external with your values and talk about them everywhere and so that means that the people that are really into them will apply and the people that aren’t wouldn’t even apply in the first place. I think that’s one critical thing.

Nick Mehta: Now, the second thing I think you can do when you actually want to assess values is really ask questions about stories. So, you’d never ask somebody, “What do you think of the golden rule?” “Do you like to treat people like you would like to be treated?” I think most people would figure out how to answer that question. But as an example, if you said, “Tell me about somebody that was really difficult to work with in your past life.”

Nick Mehta: Now, there’s two ways somebody can answer that question. One way would be, “Yeah, there was this person and they were so difficult to work with and I don’t know what was wrong with them but that person was just the worst and I saved the day because I was so great.” Now, the second one answers, “Well this person, and on the surface they looked difficult to work with but actually I figured out that they were really stressed about their job and their spouse had just lost their job and they didn’t actually know about their own security and they were having family health issues at home and I could give you a lot of empathy for who they were.”

Nick Mehta: That kind of person is a person we’d want at Gainsight.

Harry Stebbings: Final element before the quickfire for me, Nick, is hire fast, fire fast. The other incredibly wise [crosstalk 00:31:07]. How do you feel about this one, Nick?

Nick Mehta: It’s another one that I think fits exactly with A player. There’s this element of you hire somebody, you make a quick judgment and you fire them if they’re not working out et cetera, right? And I understand, there’s some cultures where that’s the way to make it work. By the way, what I’m saying is not for everyone but what I’ve seen, and this kind of goes back to some of our learnings internally, is that we’ve seen countless team mates where in one role and in one situation, they really struggle and in another one they thrive.

Nick Mehta: Maybe it’s a different manager, it’s a different function. It’s just a different change of scenery and those people, if you fire them, they’re going to go find that next role somewhere else. Why wouldn’t you find it in the company? People in Silicon Valley spend so much time on hiring and recruiting and finding great people outside, they don’t spend enough time finding great people inside their company that maybe just haven’t been put in a position to be great.

Nick Mehta: Of course we have to part ways with people from time to time and we’ve done that but I would say probably more than the average bear, we try to find situations where maybe the person isn’t performing because of the situation, not because of the person. If they’re aligned with our values, perhaps if they’d been successful in the past, I’ll always personally push to say is there something that’s a fit for them internally.

Nick Mehta: Now, maybe there’s not but we’re going to try.

Harry Stebbings: I’ve got two subsequent questions which is so unfair of me but I do have to ask. How long is an appropriate time to really give someone to mature into their roles? Let’s start with that.

Nick Mehta: It’s interesting because what I don’t believe in is just throwing them to the wind in a role where they’re struggling and just hoping they mature. I think that actually is not a great service for the team mate either. I think there’s some period of time, of course, they’re just getting their legs under the … I mean, it’s three, six months or whatever. You get to a point where okay, they’re not performing and then to me, I ask some questions. I ask number one, “Have they been enabled in this job? Are they really, truly enabled for success?”

Nick Mehta: Now, if they’re not, you can say should we invest in enablement to make them successful? If you’re a small company maybe you can’t do that but Gainsight has 600 people, we can choose to invest in enablement. We’ve tried to do that, for example, in sales and CS.

Nick Mehta: Question number two. Are they aligned in their role versus where their true gifts are and are there other roles where their gifts would show up more? Is there a place in the company where they would show up more and is there another potential tour of duty? I love Linkedin uses concept of the alliance. Reed Hoffmann wrote this book and talks about these tours of duty and I love this idea that there may be another tour of duty inside the company.

Nick Mehta: Now, at the same time, if they decide that tour of duty is outside the company or if we decide, we completely accept that too but you know what, I spend so much time getting these people and so much energy and often they have so much potential, why would I just give up after one try? I think that’s the bottom line.

Harry Stebbings: No, I love that and it’s almost customer success of people and their roles within the organization.

Nick Mehta: That’s right. Great analogy. We actually call our HR team, team mate success because there’s so many parallels.

Harry Stebbings: I love that. I would love to dive into a quick fire round now Nick. [crosstalk 00:33:53]. 60 seconds, ready?

Nick Mehta: Sounds fun. Great. Let’s go.

Harry Stebbings: Is it right for CEOs to be vulnerable?

Nick Mehta: I think it’s right if it feels right to you. I think what’s wrong is feeling like you need to be a certain type of person to be a CEO and I think there’s an image of a very not open person. I choose to be vulnerable in my life.

Harry Stebbings: From Brian at Bessemer, what advice would you give to founders trying to create a new category?

Nick Mehta: This thing is you’ve got to be long term greedy. I think Sequoia came up with that phrase. You can’t be short term oriented. It takes a long time to build a category but you’ve got to be long term greedy.

Harry Stebbings: The most surprising change a company that you’ve seen make that has moved the needle for retention.

Nick Mehta: One of the biggest things I’ve seen is aligning the CSN product. One customer of ours actually went so far as to merge the orgs together. So there’s one person running CS and product but aligned CS and product.

Harry Stebbings: What would you most like to change in the world of SaaS today?

Nick Mehta: I think that we still set upper limits in how big SaaS could be and that we constantly blow through them. I think we should realize SaaS is going to be the biggest industry in the world in the long term because everything’s becoming software.

Harry Stebbings: And then the final one, Nick, what do you know now that you wish you’d known at the beginning of your time with Gainsight, six years ago?

Nick Mehta: Buy Amazon stock would be number one but beyond that it would be that you will read lots of books and you’ll listen to lots of podcasts from people telling you to do things a certain way but eventually you figure out your own way and that’s usually the best way.

Harry Stebbings: Nick, as I said at the beginning, I’ve been so looking forward to this one. It really has been such a pleasure and thank you so much for coming on the show again.

Nick Mehta: It’s so fun. Thank you, Harry.

Harry Stebbings: I have to say, Nick really is the dream guest for me to have on the show. If you’d like to see more from him, which is a must, then you can find him on Twitter at nrmehta. Likewise, it would be great to welcome you behind the scenes here at SaaStr. You can do that on Instagram at hstebbings1996, with two B’s. Again, would love to see you there.

Harry Stebbings: As ever, I so appreciate your support. I also really appreciate the feedback on last week’s compilation episode. We’ll have more of those coming and I cannot wait for some very exciting episodes ahead.

Published on February 22, 2019

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