Ep. 351: Chris O’Neill (Google, Evernote) shares his lessons from previous downturns and how to chart a new course for growth in today’s changing market.

This episode is sponsored by Lightmatter



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

This episode is an excerpt from Chris’s session at SaaStr Summit: The New New in Venture. You can see the full video here, and read the podcast transcript below.



Ep. 352: Decacorns ($10B+ valuation) are everywhere in SaaS, despite the downturn.  SaaStr CEO Jason Lemkin discusses what the new landscape of SaaS means for you in 2020.


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

Jason Lemkin
Chris O’Neill

We’ve shared the transcript of Chris’s podcast below. You can also jump down to the transcript of Jason’s episode.

Ep. 351:

Chris O’Neill: I’m thrilled to be with you here today. Thank you, Jason and the SaaStr community, for including me. I’ve spent a bunch of my career in and out of the Valley.

So I’ve been in the Valley off and on for about 22 years. I’ve held a bunch of technology leadership roles in startups, in rocket ships and turnarounds, including about 10 years at Google, and just over three years leading efforts at Evernote.

I currently serve on the board of directors at Gap, and earlier this year, I decided to take my operator experience and perspective to pursue a career as a full-time investor.

I grew up in a really small town in Canada on the shores of Lake Huron and in that community, sailing was a really big part of the community and the way of life.

So although I never really became a great sailer, I really love the metaphor of sailing for life and for business and I think we can have some fun with it in today’s talk, and I hope you’ll indulge me. So with that, welcome on board, let’s set sail.

So over the course of those 20 or so odd years in technology leadership roles. I have seen my fair share of storms and or crises from the early days of the dot-com boom and bust to 2008, 2009 crisis and then having a front row seat at some of these turnarounds at iconic brands like Evernote, and more recently on the board at Gap, which is undergoing its own transformation.

And there’s no shortage of advice floating around there, but the perspective I’ll lend today is through that of an operator who’s been through some of these crises, sailed through these storms, and made every mistake in the book and have the scar tissues to show for it.

So that’s really what I’ll do, and I’ll start by just giving a sense as to what it clearly must feel like to everyone. It is gnarly out there.

The seas are rough. It must be like you’re operating on the open seas with wind in your face and, gale force winds causing waves to crash at you from all sides, and if you’re like me in these crisis, you feel like, “Gosh, you could sink at any one point in time or get washed up on the rocks on these shores,” and it’s completely natural to feel this way.

I really do believe, however, that Roosevelt’s quote is true, and he said, “Calm seas never made good sailors.” And that’s of course, easy to say and hard to really figure out what to do.

And that’s really the purpose of this call or this chat today. I do believe that great leaders thrive under adversity.

People who are entrepreneurs with all the right reasons who have a deep personal commitment to the problem that they’re solving, and then have an earned secret and a special approach to solve that problem in an enduring way.

That’s really what it’s all about. Weathering these storms requires a steady hand on the wheel requires a resilient crew with endless reserves of grit, and if you’re really on a mission that matters, I believe that it’s worthy and you have to persist through the storms.

And to perhaps inject some good news into this crazy world we’re living in, is that storms have a way of washing away all that came before them, really thrashing previously held assumptions, and we’re certainly seeing that today.

So a lot of the assumptions that held us back and held technology from fully being embraced are really being challenged. Of course, we’re seeing many of the trends that have been in existence being accelerated by 5, 10 plus years whether it’s telemedicine, ecommerce, mental health, food delivery, we’re very well aware of these COVID fuel tailwinds which are changing industries literally in weeks as opposed to decades.

And there’s a quote in keeping with the sailing metaphor that I find myself coming back to at times like this and it goes like this.

It says, “The pessimist complains about the wind, the optimist expects it to change, while the leader adjusts the sails.” And really, that’s the jumping off point for our discussion today.

We’ll break it into three parts. The first will be sharing five perspectives and things that I found to be useful in adjusting sales in the midst of a crisis or a turnaround.

The second is really the how to think about your crew, really, how to take care of your crew, how to up-level your crew, how to invest in them, how to listen and engage them, and then also how to think about your extended crew.

And lastly, I’ll share briefly just a few things that I see on the horizon. 

First things first, adjusting the sails. So this crisis is very much like the wind and the gale forces on the open sea and that it’s the self-propagating, amorphous ever changing thing that requires us to take a different approach to how we lead.

And again, I’ll dive into five specific things that, again, I found to be somewhat useful in times of crisis. And if I pause just to reflect on those mistakes that I’ve made, and one of the biggest is really being too slow to react to a new reality, or a close cousin of that, which is to take a playbook or a set of assumptions that worked in the past, and to extend them to a fundamentally new reality and fail miserably or failing to unlearn previous behaviors or habits.

So the first of these five really starts with battening down the hatches. In crisis, you have to react and your first job is to survive and really specifically, I found scenario planning trumps future or fortune telling, right?

Meaning, you’re not in the business of predicting the future, but you should really be in the business of doing a scenario planning to say, “Hey, what’s the worst case? And what’s the best case? What’s the base case?”

And invest your team’s time and energy to say, “Hey, if this, then that. How can we prepare for a variety of scenarios so that we can nimbly respond to whatever comes our way and adapt in accordingly to the situation?”

When I took the helm at Evernote in 2005, many people had written the company off. If you recall, it was one of the very first unicorns.

It attracted capital from the top venture capitalists in the planet, could do no wrong until in many ways it could do no right.

And the headlines were brutal. Evernote was written up as the first dead unicorn among other unflattering headlines, and it was somewhat of a risk of being true in that we had very limited resources and cash runway.

So we had to fundamentally batten down the hatches and address cost in order to survive. So how do we do that? The first thing was really to adopt what I call a zero-based budgeting approach.

We gathered every single line item of expense and we scrutinized every single one of them through the lens of, “Hey, can we survive?”

And then we debated like how across the leadership team to say, “Hey, can we afford this or not?” And it led to some decisive action, difficult decisions.

We shut down five offices, we said goodbye to many of our really talented colleagues. We shut down something called the Evernote Market, which was selling physical goods, sunset some niche products like Evernote Food which had nice followings, but I felt were distracting from the larger priorities.

We did all this by being thoughtful and compassionate with the employees and we’re careful to communicate to our partners, why we’re doing this and really what to expect in the future.

The good news is that we extended our runway by a minimum of six months and that allowed us to redeploy resources into some of the things that really needed our attention, like the fundamentals of our product.

We had way too many bugs, latency had grown to too long and crashes were a problem with the product. So we spent a lot of time there.

Another benefit was the ability and the confidence, frankly, to experiment. Get back into experimentation mode with our business model, with our pricing, to really think about not just how we can shrink costs, but inflect growth on the top line so we could ultimately control our own destiny, which is in fact what we did.

So the lesson here of course, is to save your powder, to really, really scrutinize every dollar of spend, and keep your powder dry so that you can redeploy on the other side and hopefully accelerate as that happens.

The second is what I call establishing ground truth. So inevitably, when startups evolve and start to scale, they get off course and this is especially true in times of stormy weather, almost by definition, and to invoke a sailing metaphor in the days before GPS, sailors used the North Star to determine where they were.

They had to figure out literally their latitude. And I think the same is true in companies. So I’m a big fan of two concepts: you have to understand where you’re going, and you have to understand where you are on that journey.

So the North Star, when I describe this, it feels fluffy and very obvious, but I really can’t think of a higher leverage thing, if you don’t have it in place already in your company, to really get everyone rallied on what your North Star is.

What’s your purpose, what’s the dream, the rallying and inspirational purpose of your company that really binds everyone together?

A mission, really the overarching objective for your company in any one time and then in times of crisis, I’m a fan of having like one singular objective or goal.

So when we, when we reached out to the community at Evernote in this turnaround, we really started to hear very consistently that the purpose of the company was more relevant in that time than it was at any other time in the company’s history.

People were seeking to gain control and find a sense of calm in a world of constantly being overloaded with information. So they really wanted to find, you’ll feel more organized and feel somewhat more productive, whatever that meant to them.

And that’s the job that Evernote was hired to do. So that was really fantastic, and then the mission really set up nicely as an extension of that to help people remember everything and turn their ideas into action.

So we spent a lot of time leading up to then our objective, which was to really reinvest in the core user experience, get back to the basics and deliver and untap the love that made the company and the product great in the first place.

And really doing that provided needed clarity around which the entire company could revolve, and then we doubled back on our current reality and our ground truth and we’re really brutally honest with everyone about where we were in terms of the company, in terms of the balance sheet, in terms of the team, in terms of our product.

And really, that’s essential. So once you understand your North Star, and you have a sense of your ground truth, the question becomes, “Okay, how do you plot a course to go from one to the other, or at least move closer to your North Star?”

And that’s really the third, which is really about charting a new course for growth. This is about the cleared and shared understanding of the physics of how growth happens in your company.

And I have a really messy pie chart here on the left hand side. I’m not going to walk through it, don’t worry, but it should give you a sense as to how comprehensive people can be and companies can be when this is done right.

But also how you can really quantify each step of the way. And why you want to do this might be obvious, but I’ll state it anyways.

It’s really to rally around facts and data as opposed to opinions. There’s lots of opinions at all times in companies, but you really want to rally around the facts.

More specifically, you want to identify the single gear of your growth engine that’s really slow or stalled where you bring to bear overwhelming force.

In a B2B context, you can imagine overlaying the concept of go-to-market fit which really outlines your approach and your playbook at every step of the way, from awareness to evaluation, purchase, and then pricing and renewals.

That’s a really important thing to be really crisp on and know that these things almost certainly have changed in this crisis, so you have to go back and remap them.

A close cousin of this is cohort analysis. I’m not going to go into too many details here, but there are three things to look for here is just number one, the size of a cohort.

So cohorts of course are usually expressed in months or quarters or even years. The second is the engagement level of that cohort.

Meaning what percentage of that cohort is doing the thing that you really want them to do? In our case, it was capturing a note, and then lastly is just retention over time.

How is it performing and that in many ways of course is the most, single most important determinant of your success in SaaS.

If you’re really interested in this topic, I highly encourage you to read Sarah Tavel’s classic Hierarchy of Engagement, it’s just fantastic, and it really goes into lots of details here.

So how do you do this in addition to mapping it out? You have to actually go and talk to your customers. Again, this might sound obvious or common sense, but it’s not always commonly practiced.

So get out there, get in touch with them, and truly listen to them. Their needs have changed, their pain points have inevitably shifted, so you have to listen to them and understand how to stay top of mind.

At Evernote, one of the first things that I did was ask the team to send me a list of like 50 or 60 customers, and I just started outreaching to them and calling them directly to gain a sense of the visceral feedback and a sense of what was truly going on.

And the customers and members of the community were super receptive and in many ways, that did give me a really good grounding as to what our priorities ought to be.

So I highly encourage that as an activity and borrowing a metaphor, this notion of Davy Crockett comes from a friend of mine named Bob Tinker ,who’s a great entrepreneur, the founding CEO of a company called MobileIron.

He talks about channeling your inner Davy Crockett, and what he means by that is in the early stages of starting a company, you’re in like Davy Crockett mode.

If you think about backwoods explorers coming over the Appalachian Mountains, you and your team are often in the woods foraging your way and finding your way through and it’s usually messy.

It’s through experimentation and iteration, and if you’re lucky enough to survive long enough, you can start to build a sense of what’s working and where the dead ends are.

And you can crystallize and distill the things that are working into a playbook and if you’re really good, you can start to rally around that playbook and all of a sudden, you emerge like not a ragtag bunch of backwoods explorers, but like an army that’s charging across the plains, and he likes to call that the Braveheart mode, but I digress.

That’s really a call in this crisis to get back to your Davy Crockett. You have to learn to unlearn. About two, three months ago, everything changed literally overnight.

So your value proposition, your messaging, your positioning, and most likely elements of your product, have to change and they line up around two broad areas in what I’m seeing.

The first, of course, is just to save money. Everyone’s really watching every single dollar that they’re spending. CEOs literally have spreadsheets open with every line item.

So finding ways to address that is obvious. Secondly is to really reposition what you do from like a nice to have or an innovation budget to something that’s essential and must have that really reflects how people are doing business today and or operating their companies.

And I’ll share with you maybe a counter intuitive example from the 2008, 2009, timeframe while I was at Google. And for context, it’s hard to imagine but in Q1 of 2009, Google laid people off and had its first down revenue quarter, in its history, I believe.

And that was like super shocking, but really when you unpack it, Google at the time was primarily viewed as this tactic that primarily drove traffic to ecommerce sites.

It did other things, but primarily, that was the main source of revenue and I was responsible for the retail relationships at the time.

So that was really shocking to us that people were starting to pull back. What we did was really started to challenge those assumptions and really adopted what we call the more for less strategy, and what specifically we did, we approached media buyers and or the retailers themselves, and we created spreadsheets for every single category that that retailer had.

And we showed that with very small shifts in media allocation towards Google, in this case, that they could get at least the same, if not more traffic for fundamentally less cost.

And it really, it changed the game and people really embraced that, but we didn’t stop there. We also challenged the sacred cow, the assumption at the time, that the website was cannibalizing store sales, in the bricks.

So we decided to queue up 50 or 60 experiments that really were controlled causal experiments that really got after that and we proved definitively that when you drive traffic to a specific category on a website, rather than cannibalizing, it actually boosted sales in the store.

So really started to challenge some of the conventions and then the company became more relevant to the C-suite rather than just the director of ecommerce.

So that’s one example of many. So if you haven’t experimented with an ROI calculator in your go-to-market motion, I’d highly encourage it.

It seems to be almost a necessity in today’s world. Shifting to the fifth is around pricing. So pricing is obviously a very powerful lever.

I’d argue it’s one of the most powerful levers in SaaS, yet the least understood or the most misunderstood, perhaps. I talked a little bit about the cost side of Evernote and that really bought us time.

But really, the improvements we made to some of the product experience and then the pricing and packaging were really the keys to inflecting top line growth and doubling subscriber base and literally putting the company in control of its own destiny.

The way we went about this is really interrogating the value that got the people in the community derived from our product.

In this case, it was the ability to capture ideas in any format, anywhere, anytime, on any platform, and then use that insight to align our business model against it.

So specifically, we adopted a Netflix-like model in that to unlock premium features, we asked people with three or more devices to pay for those premium features.

We also raised prices by 30 to 40% at the same time. So clearly it wasn’t a very popular person on Twitter for several days or weeks, but really, this move allowed us to stay in the game and continue to improve our product.

Interestingly, we saw an improvement in conversion rates and we saw an improvement in retention rates, which were very counterintuitive.

And more generally, I just think pricing is so misunderstood and most people, most companies, don’t charge enough and then they starve themselves the ability to invest in great product, starve themselves the ability to invest in great go-to-market machinery that really allows people to get … To try and find customers on a consistent basis.

So that’s I think is really important to consider in pricing. In today’s environment, there’s a very uneven experience in terms of economic impact.

And to simplify it, those who are struggling to keep up with demand, and those who are struggling to find and retain customers, and if you’re in the first camp like, “Oh, congratulations. Good for you.”

I also would encourage you to resist the urge to increase prices and ride the wave. It might seem like a good thing to extract some surplus in the midst.

I think it will have potentially a poor impact on your brand in the short and most likely the long-term too. Maybe you can think about, in that situation, new layers of value.

White Glove service, a different premium product extensions and then charge more for that. In effect, raising your prices without actually being perceived as gouging or profiteering.

For most, we’re struggling with the opposite, which is really how do you retain and prepare for inevitable churn. So to protect the number of customers, protect long-term ARR and lifetime value.

It’s super hard to find new customers, we all know that. It’s easier to upsell them or resell them later when times return to a slightly more normal state.

I think it’s helpful as a tactic to classify and be really rigorous about doing your customer base along value and risk and really clearly tripling down on the high value folks, but also know that not all customers can be saved, and not all customers need to be saved.

One tactic that is very popular, people are going to be asked for discounts. It’s easy to … It’s not easy always, but one tactic that has been successful is to extend the terms of the contract and lower the overall cost on a per month or per year basis.

I guess I like that, but I’m more a fan of being a little more creative, to look for ways in which you could do more, offer more for the money.

So things like no risk trials, free cancellations, performance rebates, loyalty credits, you name it, and the last thing on pricing that I think is a good way to think about it is free months as opposed to discounts.

And the benefit there is you can end them more easily without having to have another charged conversation.

So those are the five big areas that I found to be successful, especially in the midst of a crisis.


Ep. 352:

Announcer: Welcome to the official SaaStr podcast. In today’s SaaStr Insider episode, SaaStr CEO and founder Jason Lemkin chats about SaaS decacorns and the COVID beneficiaries.

Jason Lemkin: Hey, everybody. I wanted to talk for a minute about COVID beneficiaries. And what do I mean by this almost macabre or strange term? Well, it’s tough to figure out what’s going on in the world today. On the one hand, we look at our LinkedIn and our Twitter, at TechCrunch, and we see many iconic companies laying off 30 to 40% of their teams. We see friends that we know losing their jobs. And it’s terrible, and the economy is terrible, and we are approaching 20 to 30% unemployment. Maybe more if you include underemployment, and furloughed and paid, but not working. And yet the stock market is essentially at all time high. And yet, there are over 20 SaaS decacorns, 20 SaaS companies worth more than 10 billion today. Shopify is worth almost a $100 billion, Wix just crossed 10 billion. Datadog, it just IPOed, it’s now worth 20 billion. Zoom, when Zoom IPOed, they thought they might be worth four billion. Now they’re worth $60 billion and going up. That’s more than the entire airline industry. Decacorns are everywhere in SaaS, in what are in some ways the worst of times for us.

So what’s going on right now? Well, the simple point is there’s three categories of SaaS companies, and you know this. There are the COVID beneficiaries, and that’s probably only 15, maybe 20% of SaaS companies that folks that are getting to benefit from it. There’s the COVID-impacted, folks who many of their customers are hurting. So their growth has decelerated, but still growing, but not what it was before March 15th or so. And then there’s SaaS folks who, they’re great companies, but their products just aren’t needed today.

Maybe the most iconic example that’s public is Eventbrite. We love Eventbrite. You love Eventbrite, but without live events, as much of 95% of their bookings have been lost. So that’s tough, but there was enough COVID beneficiaries. We know about Zoom and we know about Slack and we even know about AWS, but look at these other categories. Some of you know this, but some of you don’t. E-commerce is on fire. Look at Shopify. Its growth has gone up incredibly. And more importantly, it’s not just Shopify. It’s almost everyone in e-commerce. We talked about Gorgeous, a contact center for Shopify and e-commerce. They grew 70% last month, 70%. So anything connected to e-commerce is getting the boost. Algolia, a search as a service company, has seen record usage because people are searching for products to buy.

Etsy, which many of us almost gave up on a few years ago, it seemed like no one needed Etsy. Etsy is worth more than $10 billion today. So e-commerce everywhere that it can is growing. Instacart is coming up on $20 billion of value. So e-commerce is a beneficiary. Mobile apps and app development. Twilio’s on fire. Everyone I know building mobile apps is getting more demand. I’m not even sure why during shelter we’re building more apps, but we are. Banking and FinTech, all over the place. Some folks are struggling a bit, but other folks that are enabling this digital transformation, banking APIs and others, are growing at unprecedented rates since March. And another one that folks might not realize but now you’ll see it’s obvious is contact centers. Look here at RingCentral. RingCentral is coming up on $30 billion market cap for doing cloud contact centers.

Five9, which you might not even know about. In 2014, I know it was worth $150 million, because that’s what I wrote in my Talkdesk memo when I invested, $150 million in 2014. Today it’s worth seven billion. 150 million as a public company, which isn’t great. Seven billion today. That’s 40x by Five9. That’s a COVID beneficiary you didn’t even realize was there until you go to type Five9 into Google. So COVID beneficiaries aren’t all of us, many of us are hurting, but it’s enough. It’s enough that the BVP NASDAQ cloud index is at an all time high. There are more of them than we expected. We did not expect the Etsys, we did not expect the RingCentrals. We did not expect– here’s Atlassian. We knew Atlassian would be great, but we didn’t know that quietly, because Atlassian isn’t making a big deal of it. They would be doing just as well as Slack. So there’s enough COVID beneficiaries to drive the markets up.

COVID impacted, that may be more of you. My guess is that’s 50, 60, 70% of SaaS companies. Interesting times for the COVID impacted. You may have segments of your customer base that are doing well, the ones we just talked about. If you’re selling to e-commerce, if you’re selling to collaboration, if you’re selling to contact center, you may see more demand for your product today in those categories. But other segments of your customers can be hurting. If you’re selling to recruiting, they may be deeply hurting. If you’re selling to segments of sales and marketing, they may be deeply hurting. So do your green lights weigh out the red lights? It can really vary. You also see a balance between push deals and upsells, and a lot of folks in sort of what I call COVID impacted, a lot of their existing customers may need more during shelter. They need more of their product. And when you’re sheltering, you trust your existing vendors even more. So I’m seeing more and more upsells in the COVID impacted, but deals are still pushed.

Even now when people are calming down, deals get pushed. So there’s a balance. The green lights and the red lights segments, they weigh back and forth, and upsells and push deals. So in many cases, the COVID impacted might see their growth cut by 30%, 50%, in some cases as much as 100%, but they’re still growing in some segments, which is super important.

And then lastly, and I don’t want to spend a lot of time, there’s obviously what I call the COVID neutralized. These could be great companies, iconic companies, but if you’re in travel, if you’re in events, if you’re in similar areas, it will be years until things are normal. And it is what it is, no matter how good a company you are.

Now, especially if you’re COVID impacted, what are five lessons we can take from the beneficiaries and bring back to our companies so we can do better? Let me give you five things that I see working well today in this crazy world.

Number one is real free editions. And what do I mean by that? I don’t mean yet another free trial, and I don’t mean a COVID edition for first responders. Those are fine, but those are marketing tactics. Those are not changing what your customers can do today. A real free edition, I mean, is something that’s awesome, that most of you don’t have today, but, but think about it for a minute. You know what the two best free products on planet Earth are in my opinion? Zoom free and Slack free. They’re so free, sometimes we don’t even need the paid versions. I mean, you can go 40, 50 minutes on Zoom, and never pay. And Slack, I mean Slack free is awesome. Yes, you don’t get search and you don’t get some other things, but boy, you can chat away and communicate with your team for a decade and never pay with Slack. And yet it hasn’t hurt either of them. In fact, it’s just grown their bases. But the key to a real free edition is it has to be so good that five to 10 times more people will use it than are using your paid version. And they have to be roughly similar to your existing paid customers, so that they can spread the word and maybe eventually convert. So it has to be awesome, but an awesome, real free edition does work today.

The second thing, which sounds obvious, and we talked about this earlier, but you have to focus your sales and marketing teams, not just on small, medium, and large customers, not just on geographies and traditional ways we divide up our team, but on green, yellow, and red segments. You have to take part of your sales and marketing budget, and go after your customers in collaboration, in e-learning, in communications, in these areas that are benefiting. And there’s no need to reduce quotas or to change anything in green light segments. You may even be able to increase quotas a little bit. But in segments that are impacted, not unneeded but impacted, you may need to have some quota relief for folks doing that. It’s going to be harder. And in the not needed categories, you may not even want to charge. You may not even want to charge customers that are so hurting. So you have to segment your marketing and your sales activities by green, yellow, and red customer categories. You got to do it.

The third point is realize, if it feels like all the marketing spend in your category disappeared in March and April, it probably did. It probably did disappear, but I see everywhere that it’s back, that marketers are back. In some categories, they’re not back like they were before. In some categories, they’re back to normal, but they’re back. Marketers now have a plan for this year and next year, and they have to hit it. And their spend may be the same, it may be 50% lower than before, but they’re ready to spend on high ROI categories. There’s probably still skepticism on things they don’t believe will work, and we’re all still fatigued with dealing with new vendors, but marketing spend is back. So how can you access it? It’s back.

Fourth point is, this works really well today in challenging times. But when folks have time for discovery is better onboarding. And I don’t mean of employees, although that’s super important. I mean better onboarding of prospects during trials and discovery, and better onboarding of new customers. We all think we’re great at this because our web app has such a beautiful UI, but it’s not. A Wiki is not enough. An FAQ is not enough. One customer success person handling a hundred accounts is not enough. Make your onboarding awesome.

And how do you know if it’s awesome? Well, check your activation rates. Within one day, 24 hours, one hour, one week, whatever is right for your app, do more than 90% of your new customers go live? If it’s not over 90 in the shortest possible time you can define onboarding as, you’re getting an F. You are flushing customers you worked so hard to get right down the drain. And if you’re not over 90, something’s wrong in your onboarding. So go fix it, set a quantitative goal. And this is how you can measure onboarding. What percentage of customers go truly live, go for real, within the shortest possible date that makes sense? If you start measuring that, you’re probably going to be disappointed. You’re probably going to see it’s lower than you think, and if you set an almost immediate goal to drive it up, your onboarding will get better by nature.

And the last of the five tips of things that are working well today that are maybe slightly non-obvious is helping builders. Folks like Twilio are seeing this left and right, they’re exploding. Folks that are helping builders build for real are accelerating. It’s related to but different than the onboarding point. If you’re B to D, if you’re an API, folks are out there. They want to build more stuff during shelter, for whatever reason. Square, Twitter, they’re never going back to the offices in many cases. Salesforce will be very limited this year. Facebook, Google, not going back to the offices. Your folks want to build more, but enable them. Whatever you’re doing, make your documentation better, make your API better. Do a weekly webinar, hire a solution architect. Do whatever it takes to help builders build, and they will build more today than they would have 90 days ago.

And just two last points on cloud beneficiaries. Here’s one from Gartner, and Gartner isn’t perfect, but it’s probably our single best source of what’s going on in enterprise minds today. At least they’re doing the work. At least they’re talking to hundreds and hundreds of CIOs every day and every week. And it’s very interesting, and what they said, just as recently as a month or so ago, they said IT spending would be 0%, would be flat this year, which is unprecedented. Even 0%, IT hasn’t grown 0% since the last [inaudible 00:11:13]. So for over a decade. Now they came out with a report that said IT spend is going to be down 8%. I mean, that’s stunning. IT is almost $4 trillion spent just in the US. The US alone, four trillion. And for the first time it’s going to drop, and it’s going to drop a breathtaking amount, 8%. So if that was it, maybe we should all hibernate or quit. I mean, that’s a drop like we’ve never seen before. That is falling off a cliff, IT spin.

But Gartner also said cloud spend, not withstanding that, is going to grow 19% this year, and SaaS will grow 20 some odd percent. And they said that 50% of the CIOs they talked to are cutting their spend. Cut, cut, cut. Even now, 50% said they’re increasing their spend in automation. That can mean digital transformation, that can mean collaboration, that can mean contact center. That can mean whatever. That can mean RPA. But SaaS, the money that’s there, it’s going to SaaS and cloud and automation. So find a way to position yourself so you can get it.

And the last related point for these COVID beneficiaries, and really, if you think about Gartner and you think about things that are working, even if you’re not a COVID beneficiary, you have to find a segment where you’re a COVID beneficiary. Find an area where you are, and focus your efforts there so part of your company can thrive, even if all of it can’t today.

But what’s going on with VC? Well, VC is back with a passion. The Wall Street Journal just said that Sequoia, Lightspeed, and a bunch of the other top firms all said they’d done a significant investment since COVID-19 with founders they’d never met in person. So that’s a big step forward. It had to happen. But the biggest firms and the best firms are investing on Zooms today, with new teams, not folks they met before all of this. So VCs are back. They’re back, they have more funds than ever. They may be a little more conservative before, but not much. They’re all sitting on lots of money, and they want to make money. And they’re looking at these decacorns, they’re looking at the Datadogs and the Zooms and the MongoDBs and the Wixes, that are all worth 10, 20, 40, 50, 60 billion. Wouldn’t you want to invest in them? Of course you would. VCs are back. There’s more decacorns than ever.

But here’s the thing. Remember all the money’s going to cloud beneficiaries. I mean, not all of it, but almost all of it. If even only 15% of SaaS companies are growing faster since March 15th, wouldn’t you invest there? Of course you would. VCs can make a bet. They can make a bet in the future. They can even make a bet that, “Hey, you’ll come back. You’ll come back when the world is normal and you’ll be stronger than ever.” But the further along you are, the harder it is to make that bet, because VCs do need proof points. They don’t need all the proof points, but they need proof points. And if you have fewer proof points than 60 or 90 or 120 days ago, it’s very hard to get funded.

So they’re going to put massive amounts of money into Instacart. They’re going to put crazy monies into Notion. And even though Notion’s only doing 40 million, 30 million, and it’s worth two billion, but it’s growing like a weed today. That’s where the money is going to go. So if you’re not a COVID beneficiary, either just don’t even try to get funded today or find a way to make yourself a beneficiary. Find a way to highlight the part of your business that is growing like a weed, even if the rest of it needs to be in a different color than it is in. So hopefully you are a COVID beneficiary, but if not, find the piece that is. Rally the team around that, and use that to pull you through these crazy times.


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