Ep. 262: Jon Herstein is the Chief Customer Officer at Box, the company that provides one platform for secure content management, workflow and collaboration. Prior to their IPO, Box had raised funding from some of the best in the business including Andreesen Horowitz, Bessemer, DST, Emergence and Meritech, just to name a few. As for Jon, prior to being Chief Customer Officer at Box, he was Senior VP of Customer Success, responsible for all post-sales services Box provides from implementation to user adoption and more. Before Box, Jon spent 4 years as VP of Professional Services at NetSuite and prior to that, close to 8 years as Senior Director of professional services at Informatica.

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In Today’s Episode We Discuss:

* How did Jon make his way into the world of SaaS and come to be one of the leading figures in the rising tide of the customer success movement?
* What does Jon mean when he says, “You have to constantly bring your customers to the forefront of your employees minds”? For non-customer facing roles, what can one do to give them that perspective? Does it work to ensure every function spends time in customer support? What is challenging about that? What can be done in the onboarding phase to ensure the individual has the most empathy for the customer, regardless of function?
* For those in CS, what is the right communication cadence to check in with their accounts? What should the agenda look like? What outcomes should they drive towards? Should they be involved in the upsell process? How does Jon think about post-mortems on churned clients? How do they structure them? What lost client stands out to Jon and what would he have done differently to retain them?
* From Jon’s experience seeing Box in hyperscaling, at what stages do SaaS orgs start to break down? Why does Jon think that is? What can be done to proactively try and mitigate this? How does Jon think about the structuring of roles and responsibilities with scale? What does this done well look like? Where do many people go wrong here?


Ep. 263:Building a company made up of distributed teams presents a plethora of complex challenges that can derail productivity and impact employee retention. But with it comes immense benefits and competitive advantages such as the diversification of ideas, speedier product development, and representation in important regions and time zones. Come and hear about the typical pitfalls (and how to avoid them) from Eventbrite SVP of Platform Pat Poels, an executive with over seven years under his belt leading Eventbrite’s now 300+ strong engineering team that sits across North America, South America, and Europe.

SaaStr’s Founder’s Favorites Series features one of SaaStr Annual’s best of the best sessions that you might have missed.

This podcast is an excerpt of Pat’s session at SaaStr Annual 2019.

Missed the session? Here’s what Pat talks about:

  • Engineering your own luck
  • How to build an engineering team

If you would like to find out more about the show and the guests presented, you can follow us on Twitter here:

Jason Lemkin
Jon Herstein
Pat Poels

Below, we’ve shared the full transcript of Harry’s interview with Jon Herstein.

Harry Stebbings: Welcome back. You are listening to the official SaaStr podcast with me, Harry Stebbings, @hstebbings1996 with two Bs on Instagram and it would be fantastic to see you there. However, to our guest today, and I had him on the show over two years ago and it was one of my favorite discussions I’ve ever had on customer success, but I just had so many more questions to ask. And so with that I’m thrilled to welcome Jon Herstein, Chief Customer Officer at Box, the company that provides one platform for secure content management, workflow, and collaboration. And prior to that IPO, Box had raised funding from some of the best in the business, including Andreessen Horowitz, Bessemer, DST, Emergence, and Meritech just to name a few. As for Jon, prior to being Chief Customer Officer at Box, he was Senior VP of Customer Success, responsible for all post-sales services Box provides from implementation to user adoption and more.

Harry Stebbings: And before Box, John spent four years as VP of Professional Services at NetSuite, and prior to that, close to eight years as Senior Director of Professional Services at Informatica.

Harry Stebbings: But without further ado, I’m now very excited to hand over to Jon Herstein, chief customer officer at Box.

Harry Stebbings: Jon, it’s been a while since our first round one but a huge thank you for joining me today. I’ve been very excited for this. So thank you so much for joining me.

Jon Herstein: It’s great to talk with you again, Harry. I think it’s been a couple of years, so great to get an update on how things are going and hopefully it’s interesting for the audience.

Harry Stebbings: It’s been a couple of years and 1500 episodes for me. And so I want to kick off today with a little bit about you. And for those that maybe missed our first episode, tell us, Jon, how did you make your way into the world of SaaS and come to be Chief Customer Officer at Box today?

Jon Herstein: So I started in, well, the early 1990s and in a consulting career, worked for Accenture for a long time and then moved into enterprise software at a company called Informatica. That was all on premise. Went to a company called NetSuite, which is one of the earliest cloud companies. Started around the same time as Salesforce in the accounting space specifically. And from there to Box over the last eight years. And when I started at Box, we didn’t have a concept of customer success. I joined to help the company start up a consulting practice because we increasingly were getting into enterprise customers and we realized that we needed to do more to help them get up and running with the software.

Jon Herstein: So there was a recognized need for consulting capability and that’s the reason I came, but when I joined, essentially got handed all the services components that we had, which included a client services team, a support team at the time, and then a remit to go establish a consulting team and we decided to call that customer success. That was 2011. It wasn’t the first time, obviously the term had been used, but it was the first time I’d been in a role of customer success and I’ve learned a lot over the last eight years.

Harry Stebbings: I absolutely love that as an entry point. But Jon, as I said, I’ve changed my interview style over the past 1500 episodes, and one of the ways I’ve done so is essentially by asking questions when I’m just too intrigued, even if that means going off schedule. I didn’t quite expect to go off schedule quite this early, but let’s–

Jon Herstein: Let’s do it.

Harry Stebbings: Let’s just roll with it. I speak to many VCs and the minute I say services, they pull this kind of awkward face and go, ooh, on services revenue, ooh, I don’t like that. And do you think that’s a fair summarization of services revenue or actually do you think there is an alternate view that we should maybe embrace and consider?

Jon Herstein: Well, I think it’s a question of degree and I think the concern for a software company, in particular a recurring revenue software company, is when the services revenue becomes too big relative to the size of the subscription revenue. And a lot of people refer to that as revenue mix. And there is a danger point where you start to be seen as more of a services company than a software company. And the other signal that it sends if that number gets too big is your software doesn’t work that well and what you need is consulting services to kind of make it work. We’re nowhere near that point at Box. And the prior software company I worked for as well. And the other factor is that they’re very dependent on the nature of your software. If you have a software like NetSuite, which was ERP and accounting in the cloud, there was a lot of complexity in connecting that piece of software to all the other systems that were inside of an enterprise and that takes a lot of work and a lot of planning and audit design and migration and so forth.

Jon Herstein: Those tend to be bigger, more complex projects. Historically at Box, our projects have been much smaller and much simpler because there’s not as much of that deep integration. Now that’s beginning to change, obviously, as we’re getting more and more into the enterprise and we’ve got more integrations, we’re starting to see that shift a little bit. But our consulting revenue, it’s a very, very small fraction of our overall revenue and it’s not been a concern for us. And I would just add one other thing, which is I feel incredibly lucky, frankly, to have a CEO who’s very supportive of the consulting business because he sees it as a key lever in getting stickier with our customers. The more services we provide to our customers, the more deeply we can kind of get embedded into workflow, the stickier we become as a solution. So there is some truth to what you’re saying, but we’re not anywhere near that point in my current situation.

Harry Stebbings: I totally agree with you there and awesome to hear about Aaron’s buy-in from that perspective. I do have to ask, you mentioned that degree. What element do you think is the tipping point? Is it 50/50 in terms of the revenue split? Is it 60/40? For founders listening, is there a case when they should really start to change their mindset towards it?

Jon Herstein: You know, I don’t know if I’ve got the exact number. I think 50/50 would be way too rich on the services side if they’re truly a subscription software company. My guess is if you start to kind of push beyond 15 to 20% of revenue going to your consulting services as opposed to subscription, then you’d start to kind of wonder what’s going on. And by the way, it might be that you truly do need all those services around your software, again, because it’s so deeply integrated to other things. And that may be the point where you start to think, what about my partner strategy? So maybe this is actually an opportunity to build my partner ecosystem and bring these services to our customers via our partners as opposed to us. So you know, it may be, there’s still lots of services but you don’t necessarily as the company, the vendor, have to provide them all.

Harry Stebbings: No, I do agree with you, especially in terms of the build out of that partner program. And I’m sorry for that, a very formulaic question I had to ask you, but I do want to dive in because you mentioned that buy-in from the top. And when we chatted before, you said something super interesting and it was you’ve consistently been kind of bringing your customers to the forefront of your employees’ minds. Diving in straight, what did you mean by this, Jon?

Jon Herstein: So we have a value at Box and it’s called blow our customers’ minds. And it’s one of the seven values we have in place. And interestingly, we did a project a few years ago where we sort of took a look at the values we’d written down in 2011 and asked ourselves, are these values still relevant and how well did we do in terms of executing against them? And we sort of took it upon ourselves to go refine them based on the feedback we were getting from the company then. And what we found was that value, the blow our customers’ minds value, was the one that did not change at all. Every other value got wordsmithed in some way, tweaked a little bit, not major changes, but that one was when we felt like, no, this is exactly what we wanted to say, which is it is our objective to create great products and great services for our customers. And our shorthand for that is blow our customers’ minds.

Jon Herstein: But one of the things that we realized over time, and I’ll give a ton of credit to Aaron on this, was that he realized as the company was growing, he always wanted us to feel like a startup, to act like a startup, to retain that startup culture. But one of the things that naturally happens as a company gets bigger is the roles in the company get more and more specialized, right? If you think about the scrappy days when it’s just the co-founders, everyone’s doing everything, right? Aaron’s taking support calls, you’ve got people just … you do whatever you need to do to make the company successful. But we’re at a point now we’re 2000 employees. And what that means is that they’re very specialized roles, right? There are database administrators who focus just on the performance of the database and there’s folks in my team who focus on very specific slices of the work that we do.

Jon Herstein: And as you get more and more of that specialization, you start to have more and more roles that are very disconnected from the customers. And it’s not anyone’s fault, it’s just sort of the natural thing that happens. If you think about a payroll administrator, they’re thinking about how our employees get paid. They’re not thinking about our end customers. And so the realization was we have to find ways to bring that customer mindset and the customer centricity into the company. And one of the specific things that we actually did, and this was something Aaron and I put together about almost a year and a half ago, is a weekly email that goes out to the company that talks about one customer story. One customer story. That’s it. But every single week, consistently, regularly. And what that does is it brings to the company specific examples of how our customers are benefiting from our products and services.

Jon Herstein: And one of the little tricks that we’ve sort of enabled there, and I would sort of encourage everyone listening to think about this for your own companies, is to make those stories relevant, not just because of your product, but also something broader that’s going on. So for example, if a movie is being released and it turns out that that movie production was actually partially done using our tools, using Box, we will highlight that. And then it’s tied to the launch of a movie that everyone knows about because we’re reading that in the news and they’ve gone to see it and they can instantly connect. Like, oh, that’s really cool. Box was used to create that film. And so you make these stories really relevant and really sort of bring the value of what you’re doing to every employee where they are, whether they’re customer facing or not.

Harry Stebbings: I mean, I love that in terms of really bringing that narrative to those that maybe don’t have that touch point with the front line. I often get founders that say to me, our engineering team or our product team, they’re quite disconnected from the founders. We want to put them on the front lines for an hour a week, two hours a week on support. How do you feel about the rise of integrating other functions into support even just for an hour or two a week to give them that touch point? Do you think that’s beneficial?

Jon Herstein: I’ll be honest with you, we’ve tried that and we haven’t found a way to make it work. And, actually, to answer your question directly, I do think it’s beneficial. I think what you have to find is a mechanism where you can do it very consistently. One of the things that I’ve heard that I really like is having people spend a more dedicated amount of time as part of the onboarding process. So imagine if for every employee, regardless of function, they spent a week on the support lines. Now that’s a huge investment for a company to make, but think about the value of that. And one of the things that we can talk about a little bit later is how we think about career mobility and folks in CS moving to other roles in the company.

Jon Herstein: You take people who have that direct frontline experience, who dealt with customers, who’ve heard their challenges, and you put them into other roles in the company. That’s hugely valuable. So this is sort of a mini version of that that you could do. We haven’t quite figured out how to operationalize that and make that work. We’ve had things where engineers will come in and listen to a few support calls, do it for a few hours at a time. It just hasn’t been a really sticky process and there’s probably a bunch of reasons for that. One of the interesting things is with support, you’re reacting to what’s happening with the customer. Sometimes those, those problems that are interesting and sometimes they’re not, you know, I forgot my password, I can’t log in, I can’t upload a file. Those are not super interesting from an engineer’s perspective. What they want is like where are the really thorny, meaty problems that customers have that as an engineer they can can really engage in.

Jon Herstein: So I think there’s something there. I think you have to think really carefully about what your company culture will support, what you can afford to do from the standpoint of the commitment of resources to that. But anything you can do, to get to your point, Harry, the non frontline employees thinking about customers, at least for part of their day, I think is a beneficial thing to the company.

Harry Stebbings: No, I do absolutely agree. I do want to stay on the front line, though, so to speak, reps themselves. ‘Cause I often hear the same questions around the relationship and engagement with customers. And many customer-facing reps ask me what’s the right communication cadence to check in with their customers. How do you think about advising your customer-facing reps on checking regularity?

Jon Herstein: I think it’s dependent on a couple things. One is the size and value of the customer. That’s a huge factor because part of it is just what’s the resource commitment that you can make as a company to doing that. If you try to check in with every single one of your customers once a week, and we have 95,000 customers, that’s just not something that we could scale to do so you have to find out mechanisms to do it.

Jon Herstein: However, if you have a customer spending $1 million or more a year with you, you probably should be talking to them once a week, right? You should be having some touch point with them, whether it’s, you know, working through the deployment or dealing with an issue or talking about the roadmap or talking about use cases. You should be in very regular contact with those customers. And in fact, I think there’s some customers that are large enough you should plant someone on site there. Right? Whether it’s paid or not paid I think is less relevant. But you go land a $5 million a year customer, you should probably hire someone or take someone that’s already there and dedicate them to that customer and they should be walking the halls.

Jon Herstein: And in fact, one of the things that we’ve done is we’ve created a … we call it a a Badger award. And the idea basically is if any one of our frontline folks, and they tend to be either CSMs or consultants, get issued a badge, a company badge from our customer, we give them award, we give them recognition and we celebrate that because what it means is that we are so trusted by the customer, the customer is happy for us to just walk in the door, walk in and out at any time, engage with their employees directly, and you just get a lot closer to the customer in that. So that’s a very extreme case. I think for our typical large enterprise customer, we’re trying to check in with them in a formal way, at least quarterly. So we go through a strategic business review on a quarterly basis. But we’re probably talking to the administrator to that account, you know, every couple of weeks. And again, it just varies a lot.

Jon Herstein: Now the other factor I would say is that it’s also very dependent on the customer. How often does the customer want to talk to you and do you have something compelling and interesting to talk to the customer about? If you’re just checking in with them and you don’t have anything to bring to them in terms of here’s what we’re doing from a roadmap perspective, I was thinking about some of your use cases and I’ve got some ideas. If you’re not bringing something of value to the customer, the customer is very quickly going to say like, I don’t really need this check-in. It’s not that helpful. Let’s talk next month. And obviously that’s a situation you want to avoid as well.

Harry Stebbings: I always actually have one question, especially there with the updates and communication on the company and the product, so to speak, with the customer. A lot of people on the show said before about the importance of really communicating the vision for the products and the product roadmap. I always find that interesting because to me, busy customers actually want what the product can give them today, not what you’re going to build in two years’ time. How important do you think it is to bring the customer along in terms of the vision of the product roadmap in the future? And is that core to clear communication with the customer-facing rep?

Jon Herstein: I actually think it is and I’ll tell you why. And it probably depends a lot on how strategic you are. If we’re talking about technology, and the customer’s thinking about their technology stack and how that forms up over time, they want to understand how your software fits into that overall picture. And if you can’t give them a clear view of how you’re thinking about your product going forward, they can’t figure out how to incorporate that into everything else that they’re doing. So imagine that you’re thinking about coming out with some major new feature and that’s a feature that other products also have, maybe either today or on their roadmap. The customer’s got to figure out do they use your version of that? Do they build it themselves? Do they use someone else’s?

Jon Herstein: And if you don’t give them visibility to how you’re thinking about that capability, they’re not going to factor that into their plans. The challenge here is always how far ahead are you willing to go in terms of outlining your plans for your customers? Because there may be, you know, competitive issues, you know, that word starts to get out to the market, what you’re thinking about from a longer term product perspective. There’s also the challenge of how committed are you to that future? If you’re not fully committed, you’re just thinking about it, and the customer has the impression you’re going to go do it and then they hold off on something else, you got a different customer, you know, sort of situation. So you have to balance all of those things.

Jon Herstein: One of the things that we’ve done is actually created a set of advisory boards and they’re at different levels. We have one that’s targeted at CIOs, one that’s targeted at a group of folks that we call service owners, which is sort of the main owners of our product inside their companies. And in those settings, we can be much more open about our plans and also get feedback from them. So we can have customers say, because we outlined our thoughts for the roadmap, they may say, why would you guys get into that space? Someone else does that really well, don’t focus there, focus here, and we can actually alter it and sort of adjust our plans based on that feedback. So you know, again, I think it’s very important. It may not always be top of mind for the customer and I think a lot of that, again, depends on how strategically they think of your solution relative to everything else in their stack.

Harry Stebbings: I couldn’t agree more in terms of how they strategically position you in that stack. In some cases, they decide to maybe not go with or to go with an alternate provider an after using one service for awhile. I’d love to hear, and I hope it’s not too open and honest, but maybe about a customer you lost. Obviously no names, but what did you learn from it and there are any thoughts on what you would do differently to retain them going forward?

Jon Herstein: I mean, I think at our scale you’ve got changes in customer base all the time. It’s a very fluid thing. And in particular what you see is given the range of customers that we have, and think about 95,000 companies, they’re everything from literally three seat deals where they’ve purchased us for, let’s say a small accounting firm or small legal firm where they’re collaborating and sharing content with their clients all the way up to some of the biggest names that we talk about publicly, like a GE or an IBM where they’re spending many, many dollars on our solution. And what we see is on the low end, you’ll see a higher natural rate of churn because of the fact that you know, companies go out of business, they downsize, they get acquired by somebody else, they change direction. They’re much more sensitive to the dollars that they spend and how they spend them and you see very different churn behaviors there.

Jon Herstein: And I think what you have to do as a CS leader is in your mind get comfortable with the idea that there is some amount of natural churn that’s going to happen because of the dynamics of business and not get too focused on that. What you have to focus on is what was the churn that happened because it’s something that you had some control over? Was it a product feature that was missing? Was it a poor service experience? Was it a bug that was below the line in terms of the priority for your product team to go fix, but was super important to your customer? Could you have spoken up louder with your product team to say we need to go fix this? And that’s the stuff we think about all the time.

Jon Herstein: And I think a lot of what we try to do on the customer success side is aggregate this concept of the voice of the customer. What are our customers telling us? Either because they churned and so we learned something from that or because they’re still with us but unhappy or there’s something that they want we haven’t provided. Our job is to sort of curate that and find a way to bring it to the product team, in particular these tend to be product things, and bring that to the product team and amplify the voice of the customer with the product team and say, we really need this capability. We do that through a number of formal mechanisms, so we have a quarterly interlock process where we’re actually literally stack ranking the requests from our customers and bringing them into the product team. There are much more informal things that we do all the time engaging with product managers.

Jon Herstein: But I think you’ve got to take every one of those churn situations as an opportunity to learn from the customers, where you’ve fallen down, what you could be doing better. And again, I think the responsibility of this CS function within a company is to push the company to do better on behalf of your customers.

Harry Stebbings: I agree with you in terms of kind of empowering these customers to be the best they can be. I do want to discuss another challenge. Churn is an inevitable challenge that any company faces. Another is with scale. Everything essentially changes and so an incredibly hard question to ask, but you’ve seen it now at Box in the hyper-growth. How do you think about maintaining that incredible culture and value system as you grow into really the massive 2000 person organization that you are today?

Jon Herstein: I think it’s a lot of things and it’s a lot of little things that sort of add up over time. It incorporates things like hiring. We have a component of the hiring process where we’re looking at not just technical capability to do the job, but also the fit to our values. And it’s one of these areas that I think is becoming a little bit … you gotta be a little bit careful in this area around this notion of culture fit. Culture fit doesn’t mean this person I’m about to hire is exactly like me, right? You get into the question of sort of diversity and inclusion. It’s not about hiring people who are exactly like you. It’s about hiring people whose values match the company’s values. And because we’ve been so careful and deliberate about writing down what our values are and incorporating them into what we do every day, they’re very top of mind for people.

Jon Herstein: So when you have a customer like blow our customers’ minds and you’re interviewing a candidate, show me an example or tell me an example in prior roles where you were able to do that. What were the challenges doing that? Incorporate into the conversations you have on the hiring front. When you think about things like performance reviews, in a perfect world, and we’re not quite there yet, you would actually have your values essentially assessable through your performance review. And you can say, how well is this employee actually demonstrating the values that we’ve written down as a company? So you can do those things operationally, you can do them through sort of word of mouth. And I think just the more you talk about these things, the more they become part of the culture.

Jon Herstein: So as another example at Box, one of our core values is GSD. You know, get shit done. But you hear that term GSD all the time at Box. It’s not just an empty thing. It’s something we actually talk about. And you describe people that way. You know, when you’re writing a recommendation from someone for promotion, that’s one of the terms people will use. It’s really part of it. So this is a cliche, but you can’t just put your values on a wall or you know, on a piece of paper, and expect people to follow them. They have to be part of your culture. And I think really importantly, you have to also be willing to let people go when they don’t meet the values expectations you have as a company. So I think there’s a whole thing around values in terms of maintaining culture.

Jon Herstein: I think another important thing is, you know, what is your leadership doing? We have a CEO who is very accessible to the company. We do a weekly Friday lunch. Typically he’s hosting that. If he’s in town and not traveling to see customers, he’ll send an email out every week saying, here’s what’s teed up for today. He’s hosting it, he’s getting in front of the company. We do quarterly all-hands meetings. So a lot of those things, which there’s a lot of overhead to a company in doing that, particularly for your senior leadership. But it’s really, really important. Now your employees understand what’s going on. There’s no question that can’t be answered in those settings and they’re getting direct access to your senior leadership. And so they really do feel connected to that, the mission of the company.

Harry Stebbings: No, and listen, I love that lunchtime routine. I do have to ask though, because you mentioned the get shit done, and more so internally. And I love it, but it’s actually … it’s very difficult to do because you’ve got to give people the freedom to make their own decisions and to feel that accountability. How do you think about that freedom? But also without the fear of messing up or not achieving with the decisions and risks that they take? How do you strike that culture and environmental challenge?

Jon Herstein: Yeah, I think it’s an interesting point because the GSD value that we have has a downside. And the downside is, let’s assume you’ve hired a whole bunch of ambitious people who believe in that value of GSD and who see problems and want to solve them. What you actually wind up with in a lot of cases is a whole bunch of people tackling the same problem or similar problems, but from a different perspective. And you can wind up with a bunch of disjointed work that that goes on. And so then you have to create infrastructure around that. Things like PMOs or project review boards, something along those lines that say, Hey, you know, Jill, it’s great that you’re working on this problem, but did you know that Bob is actually doing something similar? Why don’t you two go connect together and work on this together?

Jon Herstein: And so we found that certainly in the earlier days of Box when there was a little bit less sort of management infrastructure around this, was there were a lot of these little projects going on. We didn’t always have super clear scope, they weren’t always fully chartered projects. And we put a lot of things in place with PMO teams in different parts of the business to try and clean that up. You don’t want to take away the GSD mindset. You still want people to go after problems and solve them. But you just want to do it in a more organized way. Otherwise you sort of wind up with a little of chaos.

Jon Herstein: And that that’s okay in the startup days. But you know, again, we’re 2000 people. We’ve gotten 70% of the Fortune 500 as customers. We can’t afford to be chaotic, right? We’ve got to execute really, really well. So you just have to find that balance. Unfortunately, I don’t have a simple answer that says just do this and you’ll find the balance. You kind of have to find it over time. And again, it will shift as the company gets bigger and more mature.

Harry Stebbings: Speaking of kind of shifting place as the company gets bigger, I do want to touch on that because you have seen the hyper-growth over the last eight years. And I’m really interested, where are the … not breakpoints, but where are the inflection points in company scaling when things do start to strain. Often I hear on the show it’s kind of Dunbar’s theory of 150 people. Where have you seen those break points were things change and get very different?

Jon Herstein: Yeah, I think, you know, there’s probably a few different ways to describe that, and the Dunbar Theory is sort of an interesting one because when you get to the point where you’re leading a team and you don’t know every person, it becomes very uncomfortable, particularly for leaders who haven’t done that before. In my previous job, I had an org that was a bit bigger than that, so I was comfortable managing through managers and managing through other directors and VP level folks. But for newer managers or newer directors, that’s a really tough thing. It’s not only that you’re not as close to the work as you once were, but you literally don’t know the people. And so you’re really counting and trusting on your next level of managers and the folks below them to kind of execute the mission.

Jon Herstein: And what becomes a much higher priority for you as a leader is communications, and do you have a clear strategy and are you articulating and repeating that strategy, you know, in every venue that you have. And that’s not necessarily a natural strength of mine. So sometimes you need help. One of the roles that we’ve put in place at Box is a chief of staff role. And in some ways it feels very luxurious, like, Oh, I’ve got, you know, I’m a leader with a chief of staff. Like, no, no. It makes you more effective as a leader because these things that you’re not naturally good at, you can start to incorporate systematically into your routine by having someone kind of help you do that. And we found that to be a very effective role for us in driving those things like regular cadence of communications and setting OKRs and all the things that just make the company run and has been very, very helpful for me.

Jon Herstein: And if you can afford to do it and you’re at that scale, I think it’s something to keep in mind. And those folks can also keep their ear to the ground with the team so you don’t lose touch with what’s going on and what’s the feedback that, you know, maybe people aren’t willing to directly tell you but is kind of bubbling up through the org. And you want to capture those things and address them as directly as you can. We do things like all-hands meetings. We do AMA so people can directly ask questions. Sometimes we allow them to be anonymous. Sometimes we just make them more face to face. And the idea is make sure as much as possible that no one’s confused, that no one’s speculating about what the strategy is or what’s going on and that they’re just asking you directly.

Jon Herstein: And again, we do that through our Friday lunches where people have direct access to Aaron, all the way through the different parts of the org. So I think that’s probably one piece of it. Just the communications and the cadence around that. There’s probably other areas that I can think about more as we talk more, but I think that’s a pretty key one.

Harry Stebbings: Yeah, absolutely. And I’ve always thought the chief of staff is the most glamorous role and so I look forward to the day when I can have that. That sounds very exciting. I do want to finish then. Before we move into the quick fire, Jon, I want to mention one other thing that we’ve spoken before about, and it was when you said to me before about the transition from delight to value in terms of the product itself. Tell us, what did you mean by this transition from delight to value and how does it maybe change the KPIs with which you use to really determine success?

Jon Herstein: Yeah, I’d love to talk about that and maybe I can just tell you a quick story about that. When I started at Box … I’ve told this story a few times, so I apologize if people have heard it before. But when I started at Box, we didn’t have this concept of customer success. So I was hired into a role that didn’t really exist. And the day I started, my boss, it was already our chief operating officer at the time, essentially handed me basically a half page piece of paper. And it basically said, your job is to delight our customers. With a few other words in there, but it boiled down to, your job is to delight our customers. And so probably for the first one to two years that I was at Box, my recurring mantra with my team was delight customers, delight customers.

Jon Herstein: And there was a point where I had an epiphany, which was delight is important but insufficient. And what I mean by that is that having happy customers, it’s an important thing to do. It’s great if your customers are happy, but at the end of the day, if they’re not deriving value from your solution, they are, you know what you can think of as future lost customers. You will not keep them forever because they bought your product or service to derive business value. Right? We’re selling to businesses. So if they are not getting an explicit ROI on their investment, however they decide to measure it, then they’re only going to be customers for a finite amount of time. And our objective obviously in a recurring revenue business is to have customers forever.

Jon Herstein: And so you have to start switching your mindset from making customers happy to delivering value to customers. And one of the challenges that you have, depending on the solution that you’re providing is measuring value is a really hard thing to do. Some products or services have an explicit financial ROI, but a lot of others don’t. And when you’re talking about the space that we’re in, a lot of is around how have we eased the work day for an employee? Are they more collaborative? Is it easier for them to work with their vendors, their customers, their partners? That’s not always measurable in dollars and cents. And it’s definitely not measurable from the standpoint of the metrics that we can capture based on their usage of the product. So what you have to strive for is figuring out what does the customer value, what are the customer’s business objectives and how do you kind of track those and report back on those with the customer on a regular basis?

Jon Herstein: So I referred earlier to this idea of a quarterly business review or strategic business review. Ideally every quarter you’re checking back with a customer and saying, our understanding when you purchased Box was to meet these four business objectives. We think we’re doing well all against the first two. The third one, we’re struggling a bit, here’s what we think we need to do to go correct that. And the last one, we haven’t started tackling that one yet. But checking back regularly, making sure you’re aligned with the customer on that is really, really critical. Because again, when it comes up for the renewal and your sponsor on the customer side says did we meet the objectives we set out to when we purchased this product and the answer is no. You’ve got a problem.

Harry Stebbings: Totally agree with you in terms of having a problem there and the importance of that kind of inter-renewal communication pathway. I do have to ask though, because you mentioned really two different elements of the customer role there, the delight being that in-person engagement relationship and then maybe the more data-driven actual value accumulation.

Jon Herstein: Yeah, no we don’t have separate roles. And we do have one customer success manager assigned to our largest accounts. We have a team that deals with our scaled accounts and so forth. You know, you can create a standalone customer experience function. But I would think of them as mostly thinking about the measurement of customer delight. So surveys that you do and then the processes you build to react to that feedback. But they’re not owning those relationships with the customers. And I think it’s important to say that there should be a single point of contact to the relationship with the customer.

Jon Herstein: In our case, we have a commercial point of contact, which is the salesperson, and we have a non-commercial point of contact, which is the CSM. Our focus is on things like customer health, adoption, delight, if you will, making sure we’re meeting business objectives. And it’s the job of the sales team and the renewals team to actually transactionally work with a customer, whether it’s cross-sales, upsells, the renewals, whatever the transaction is. So that’s kind of how we’ve split it up. But no, we don’t split it up based on your job is to delight the customer, your job is delivering value to the customer.

Harry Stebbings: Literally the most unfair question to finish before the quick fire, but I have to ask it. You mentioned the word upsell there. Is customer success responsible for upsell, or is that sales team?

Jon Herstein: This is a religious debate. And in my religion, I would say the customer success team is not responsible for upsells in the sense that we don’t transact. And this is just the model that we’ve built and it’s not to disparage any other model, but it’s what we’re comfortable with here. The CSM’s job is to drive healthy adoption of your product, make sure the customer is deriving value, and we believe that if you do that really well and if you have additional products or services to offer, the customer will take those up. So it’s a little bit of a leap of faith, but my view is if someone’s getting value from something, why wouldn’t they want more of that? And whether that’s additional use cases, additional user populations, additional features and capabilities, whatever it is, if they’re deriving value today, why would they not want more?

Jon Herstein: So I think depending on how exactly you interpreted the word responsible, I would say no, they’re not directly responsible, but they have a role to play in that in terms of nurturing customers and also identifying opportunities. If they’re working closely with a customer and the customer mentions a business problem that they have that your product can help solve, well, we should absolutely be highlighting that internally to our sales team to say, Hey, there may be an opportunity here. You know you should go talk to this person in your organization.

Harry Stebbings: I’m so glad I asked that truly unfair question, but thank you for being so direct. I do want to move into my favorite though, which is the quick fire. So it’s Jon’s 60-second SaaStr. I say the short statement. You hit me with your immediate thoughts. Are you ready?

Jon Herstein: I don’t know. Let’s see what happens.

Harry Stebbings: This is actually a really challenging first one, but what motto or quote do you most frequently revert back to?

Jon Herstein: I’m going to cheat on this one. It’s what I just said, which is customer delight is important but insufficient.

Harry Stebbings: Yeah, I thought that was a great one. I was thinking that’s a tweetable moment right there. And what is the most challenging element of your role with Box today, Jon?

Jon Herstein: I think hiring is always a challenge. How do you make sure that your team is staffed with the most capable, most competent people, and not only people who can do the job today, but who can grow into the job that you need them to do in the future, right? So selecting people to help you accomplish your mission, I think is a challenging thing at any point in any company.

Harry Stebbings: A great follow-up question that wasn’t deliberately planned, but I’m so glad that I wrote it down now. What’s the hardest role to hire for today, Jon?

Jon Herstein: You know, what I’ve found is because customer success as a discipline is still relatively new. It’s not new new anymore, but if you compare it to consulting or sales, those functions have been around for decades, if not longer, certainly in the software space. Whereas customer success is relatively new. So if you’re looking for a very experienced cross-functional CS leader today, that’s actually pretty hard to find. So I think that’s probably what I would pick.

Harry Stebbings: John, what are your strengths and weaknesses? 30 seconds on each.

Jon Herstein: My strength is talking to you, Harry. That’s the number one thing I do.

Harry Stebbings: That’s a very malleable strength. Every C-suite exec needs that.

Jon Herstein: 100%. I mean, hopefully I am able to kind of create a culture within our customer success team of truly looking out for our customers. And when you’re hiring, if people understand that’s really the mission and they’re aligned to that, then you’re going to do good things, I think, regardless. So hopefully I’m able to kind of create that culture of true empathy and commitment to our customers and hopefully that’s a strength.

Jon Herstein: My weakness, I’ve got a lot of weaknesses, but I’ll pick one. I am a pretty analytical person so decision making has always been a little bit of a challenge for me in terms of how rapidly we can make decisions. And at the pace business moves, you have to push harder on that. And it’s actually one of the areas where I talked about chief of staff role. That’s one of the areas where you can leverage folks who can kind of make that stuff more systematic so that you can get better at things you’re weaker at. So that’s probably what I’d pick.

Harry Stebbings: Do you agree that a good decision made today is better than the perfect decision made tomorrow?

Jon Herstein: Yes, but that’s a hard lesson over time for me.

Harry Stebbings: Do you want to finish on it? What do you know now, Jon, that you wish you’d known at the beginning of your time with Box?

Jon Herstein: You know when I started, as I mentioned at the beginning, I was not a customer success person. I’d never had a job that was called customer success before and there were a lot of aspects of the business that I did not know. I didn’t know how to run a support team. I’d never managed CSMs before. I really had a consulting background. And what I’ve done over the last eight years, I think reasonably well, is build relationships through a network of other people in similar situations. So there’s a whole bunch of customer success leaders that I know that I’m either acquainted with or friendly with and I’m much more willing to reach out to them, grab coffee, grab dinner, grab a drink, whatever it is, and just talk about the stuff that we’re all sort of dealing with as we figure out what this domain is.

Jon Herstein: And I would say earlier in my career I just relied on the people I was directly working with for those kinds of interactions. And a lot of times getting a perspective from outside your own company is actually as valuable or more valuable than the perspective you’re going to get from inside your company. So certainly for me personally, building that network early and using that network. And then also by the way, it comes in handy when you’re looking for talent, right? And you can then reach out to people and say, hey, do you know anyone who’s sort of at this point in their career with these sorts of skills? I’m looking to fill a role that looks like this and you will find a lot of great talent through that network. And then at some point maybe you’re looking for a role and that networking helps you as well, so definitely the networking component and building those genuine relationships where you can rely on folks, they reach out to you, you reach out to them, is super valuable.

Harry Stebbings: Jon, there’s been 1500 episodes, as we said, since our first. It’s been more than worth the wait for this one today. I can’t thank you enough for joining me and really do appreciate it.

Jon Herstein: Thanks, Harry. Really enjoyed it.

Harry Stebbings: I do have to say I absolutely love having Jon on the show. And a huge thanks to him for giving up the time today. If you’d like to see more from Jon, you can find him on Twitter at @JonHerstein. Likewise, it’d be great to see behind the scenes here at SaaStr. You can do that on Instagram at @HStebbings1996 with two Bs.

Harry Stebbings: As always, I cannot thank you enough for your support and I can’t wait to bring you another phenomenal episode next week.


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