Tiago Paiva (Talkdesk), Daniel Chait (Greenhouse), Nicolas Dessaigne (Algolia) – The 20% Club [Video + Transcript]
Leading up to the SaaStr Annual 2016, we’re publishing the full series of transcripts and videos from all of the awesome 2015 sessions (check out posts on Why Sh*t Really Gets Funded Part 1 and Part 2, Partnering with the Big Guys, the inside scoop from Zenefits, Slack and Yammer and MORE if you missed them).
Growing 20% MoM is pretty epic – and managing that pace of growth is no joke. In this session, Gainsight CEO Nick Mehta interviews Talkdesk CEO Tiago Paiva, Greenhouse.io CEO Daniel Chait, and Algolia CEO Nicolas Dessaigne about their experience piloting hypergrowth rocketships. Learn how these CEOs juggled and overcame challenges in recruiting, geographies, sales, pricing and marketing to thrive in their respective markets while sprinting toward $10M ARR.
Check out the full transcript from the session below!
Also, make sure you grab your ticket to the 2016 SaaStr Annual. Bring your team and join 5,000 SaaS founders, execs, and investors for 3 full days of inspirational content and unparalleled networking. We’re under a month away, 89% sold out (waitlist-only isn’t far off!) and everyone in SaaS will be there. You can’t afford to miss it.
Nick Mehta: Hello. I’m Jason Lemkin. Look a little different. Went for a tan during the break. I’m Nick Mehta. Excited to moderate the panel of 20 percenters. We’ll talk more about that in a second. I feel like kind of like Stephen Colbert taking over The Daily Show. No pressure here.
What we’ve talked about is 20 percent, and companies growing 20 percent. I don’t know if it’s 20 percent per month or did you just go 20 percent last meeting. But 20 percent something, right?
Daniel Chait: That’s it. 20 percent in stock.
Nick: Great. OK. None of of you guys are public, right? Nobody is public? OK, so straight up. No FTC regulations all that stuff? All right, good.
We’ve got three awesome panelists today. I’m really excited to have these folks here.
I’m going to do the pronunciation amazingly. Tiago Paiva, pretty good?
Tiago Paiva: Yep.
Nick: CEO of Talkdesk. Talkdesk spent two years getting its Zendesk for voice products right, and then boom, boom, went from almost nothing to six million in ARR in the last 12 months… that sounds pretty good and it’s accelerating.
Six months ago, Tiago was the only US employee. That’s pretty amazing. I did some research on you, Tiago, so I’ve got some stuff. First of all, you win the coolest name prize, although Nicolas also is a pretty awesome name, so good job.
You started your career at Proctor and Gamble, which was probably a little less fun and energetic than SaaStr. You have a presentation online that’s called Unsexy, which you’ll have to explain to me later.
Next up, we’ve got Nicolas Dessaigne.
Nicolas Dessaigne: Right.
Nick: Pretty good? CEO of Algolia. Algolia went from zero to seven figures in revenue in 12 months, and the launch of their search as a service product, and grew pricing from $19 a month to $100,000, which sounds amazing.
Nicolas: Not a month. [laughs]
Tiago: A month.
Nicolas: Yeah, not a month.
Nick: A month, exactly. A lot has changed. Nicolas has a PhD in computer science, search engine background, text mining, worked in search for a long time. I’m assuming all your friends ask you for advice on how to use Google? Is that your common go to?
Nick: Pretty much? Exactly. Then we’ve got Daniel Chait. Daniel’s the CEO of Greenhouse. Greenhouse followed a similar path to Talkdesk and should cross $10 million ARR later this year, up from almost nothing at the start of the year.
They built themselves into a core platform for HR 2.0 web services. Welcome, Daniel. Did some research on you, were at Lab 49 before?
Nick: Michigan undergrad? Harbaugh? Pro Harbaugh?
Daniel: Go Blue twice.
Nick: On your Facebook page at some point, accidentally, or intentionally, or ironically you liked Bud Light Lime, which I don’t understand that at all.
Daniel: That’s deep background research.
Nick: Awesome. You guys are not growing 20 percent every month, but sounds like overall you guys are growing really fast. Truly amazing story, can’t wait for all of us to get to learn from you. Let’s start with Daniel. Daniel, you grew to 3 million in ARR before you hired a VP of Sales. You had all the reps and SDRs reporting to you, managed it all yourself. How did you do that? Do you have a million 1 on 1’s a week? How’d you manage all that?
Daniel: We followed a lean start up approach to building our sales process. First thing I did was, I didn’t focus on growth, or numbers, or ARR, or anything. I focused on learning and getting the process right, so I did all the sales myself. An engineering team and the sales team was me with a laptop. Only once I knew that I had a repeatable process that we knew why people would buy it, and for how much, and who the buyer was and all that, then I hired three sales reps.
They all started the same day and they sat next to me watched me sell for a month and then I turned them loose. They were like they could manage their own deals at that point because it didn’t take a lot of effort because they just did what I had them do. We grew it from there.
Nick: Did you get a lot off people telling you, you needed to hire a VP of Sales sooner and were you holding them off?
Daniel: We may have waited a few months too long, but I don’t think it was tragic. We worked through a year where we went from that we’re not trying to grow, we’re trying to learn mode, and then the next learning was OK how do I run a sales team, how do I run a SaaS sales team. I watched it very closely, and trolled through salesforce everyday, and sat with the guys and really figured it out.
Only once I felt like we knew how the sales team worked, not how I sold which is different, did we feel like OK now it’s time to bring in a VP of Sales, and step on the gas and go from three to six to 10, and on up from a sales rep standpoint. SDR and marketing came in alongside.
Nick: Awesome. Cool. Great story. We’re come back to it in a little bit. Nicolas, in ’14 you tilted from a $19 a month product, which it sounded really a great value, to being able to do these huge deals and really focus on the enterprise. How’d you do that? What were the things that you did, in terms of outbound and inbound organization? Take us through that.
Nicolas : Really, one step at a time, so we knew the first pricing was just testing the market, and we iterated a lot on it. Today, we have displayed the enterprise prices on the website today, very transparent. When we launched we couldn’t earn a six figures deal at that time. We didn’t have the trust from the customer, but really only one customer at a time in the beginning.
The first one, we got CrunchBase in the beginning. That was huge for us. That’s really awesome, and then possibly we added up customer’s bigger live stream genius and that adds up, and creates the kind of trust and from there you just got to scale step after step.
Nick: Got it. And you said you kept the pricing on the website?
Nicolas: Yeah. Enterprise is maybe around 60% of our revenue, it’s not the whole deal. We need a good market, the long tail of developers, product managers, that would simply self serve on the website. And then Enterprise is more like a standardized process. That said, we are just building our sales and marketing operations today. We did that with under 10 people last year. We’re hiring like crazy today, but yeah, it’s killing the business.
Nick: That’s great, awesome. Would love to talk more about the pricing, come back to you in a little bit. So Tiago, you pulled TalkDesk from its first 1.4 million in ARR. I guess you were the first US employee? You came over here, what did you do? Sales, marketing, kind of everything?
Tiago: Exactly. We started the company in Portugal, we were two people, and for the first year and a half we pretty much spent the money we had building the product, and trying to learn from customers, and grow as much as we can with the resources we had. In the first two years and a half I was in the United States by myself, and I did pretty much customer success, customer support, sales, and everything, not engineering. Everything else was in Europe, engineering was in Portugal.
Nick: If you could do it all over again, would you have hired folks here sooner? Because I know a lot of other people who start businesses in Europe, and other places and come here.
Tiago: I think we could have started hiring six months earlier. It was a decision because we didn’t have that much funding. We decided to stay a little longer lean with six, seven, eight people. And then, when we raised money in July, then we started hiring VP of sales, a sales team, marketing team, et cetera.
Nick: That’s great. What’s the one person, let’s say you had the money, you wish you could’ve hired sooner. Was it the VP of sales?
Tiago: VP of sales.
Nick: Yeah? Cool, great. We’ll keep talking about that in a little bit. So, when you think about going off in that thread, hires on the senior team. Let’s go to the other two panelists. Which one were you too slow to hire somebody? When you hired him you were like “gosh! I should’ve done this so much longer ago!”
Nicolas: VP of Marketing, definitely. And we’re still looking for him.[laughs]
Nick: Oh great, might be in the audience! Go talk to some folks there. And why is marketing really important for you to bring in right now?
Nicolas: Most of our leads today are inbound. If you want to accelerate the velocity of an integration inbound, you need to be out there, you need to have a real brand, and be known by developer committees. So for us marketing comes before sales, it’s because it’s mostly inbound today. That said, we also hired a BDR, so we’re also starting also to do some outbound.
Nick: Outbound, great. And Daniel, how about you? What’s the person you would’ve hired sooner?
Daniel : A recruiter. We’re a recruiting platform, obviously I believe in talent recruiting. For me the thing, when you have a recruiter on staff full time, it’s an incredible superpower that early stage companies don’t necessarily have. I mean, you can’t generate more candidates on your own, or it takes time and attention away from the executives and senior founders.
So when we first hired our recruiter, it immediately took our inbound funnel of candidates to another level and really started filling roles that we just didn’t have the power to fill on our own. That was a long time coming. It’s really important for us to get the right hire, so the reason I hadn’t done it earlier is that I was looking for the right person. It took a little while to find.
Nick: What employee number should the recruiter be if you have enough money to hire him?
Daniel: It depends on how fast you’re growing. But I think if you’re at 20 people, and you’re funded, and you’re growing, and you know you’re going to be growing for a while, I think that’s not too late at all to have a recruiter join the team. It feels a little bit early, you certainly can get by without it for a while, but all your hires will be better and faster if you do that sooner.
Nick: That’s really great advice. I hear that a lot. Great, let’s talk about 2015 plan. Most of you probably have your plan done and kind of working on it now, right? All of you will hopefully get into eight figures, or closing, ARR this year for most of your companies. When you look at it, how do think about setting that revenue goal? I’m sure you have a board, you have investors.
How do you think about being conservative versus aggressive? How much deliberation was there on your revenue goal? Why don’t we start with Nicolas this time?
Nicolas: We don’t have the most experience in setting these goals, so what we did was simply looked at the month over month growth we could sustain, and check up where that would lead us. And of course, going back from there, “OK, to get that kind of growth, who should we hire today? In six months?” And that was the way we did the plan.
Nick: So you started with the growth rate and then you figured out what do you need to do to hit that growth rate, basically? In terms of people and things like that?
Nicolas: Yeah exactly.
Nick: That’s a good, good model. Tiago, tell us how you think about setting the number.
Tiago : The way we did it, we pretty much have three plans. We got together and we decided that what revenue do we want to be at the end of 2015, and then we have the three plans. The one is externally, that one we share with investors, with people we talk with, we have the internal plan that the team is working together.
Then we have the too good to be true plan… that’s if we get there, everyone gets compensated for that. The way we did it is, we define that plan at the end of year, how much we want to be at, and then we go backwards and decide, “OK, how many leads do we need? How many sales people do we need?” and then we hire according to the plan.
Nick: If you guys hit just the lowest, that kind of external plan, do people feel good? You think?
Tiago: The external plan is $12 million at the end of the year.
Nick: What I meant was, would your team feel good if you hit that lowest plan, or did you just…
Tiago: That’s the lowest plan.
Tiago: That’s the lowest plan.
Nick: OK. Daniel, how’d you think about it?
Daniel: I kind of looked at it as “What are we trying to do objectively as a company?” first, and build a plan from that. For us at the time, the first time we ever made a plan was, we had raised our A, and so we sat and said “What would a great series B fund raise look like?” One component of that was revenue, there’s other components too.
Based on that, we said “Well if I’m going to… I mean I’m the guy that raises money,” so we created this graph that you’ve probably seen on run, and we were like, “OK, let’s… how do we hit that?” and we tried, then go from that. That was how we set our goal, and then we try to make a plan as to hit that goal based on achieving that outcome.
Hopefully it works.
Nick: You guys all going to hit your plan for the year? You got to work it hard. Awesome. That’s good, and never easy. One of the other things that’s so great about this panel is each of you has an element in the Bay Area, but also has an element of your team elsewhere.
Let me talk a little bit about how you think about the Bay Area. Is it just a recruiting office? Is it where you have to move to eventually?
Daniel, you’re in New York, which I think is still part of America, of our other side of the country, but quite different. How do you think about the Bay Area over there in New York?
Daniel: I’m from the Midwest. I’ve spent my whole life kind of having people look down their nose at where I’m from. Now being in New York, I’ve built a big business previously to Greenhouse in New York. I’ve never really been to San Francisco, so I’ve never been to Palo Alto, never talked to venture capitalists before I started Greenhouse.
When I came out here and started talking about our plans and ambitions, and heard people saying “Well is there enough talent in New York? Do you really think you can build a company there?” I was like “What planet are you from? New York’s a big city. There’s tall buildings and lots of people, it’s like you’ve…”
Daniel: “How many people do you think I need to hire?” like “Yeah, I can build a company in New York,” so I was…very mystifying to me that that’s a thing.
Nick: New Yorkers there. Awesome. All right, so Nicolas, Paris is also a big city…
Daniel: No offense to the California people here. I love you.
Nick: Exactly. Paris is also a very big city, very similar concept, but now you’re in a different country. How do you think about the Bay Area? Some people would say if you want to go big in SaaS, you got to come to the Bay Area. What do you think?
Nicolas: Actually, I think along the those lines too. What happens is that we do a product like API as a product, and experience in that field is definitely here, not in New York or anywhere, it’s only the Bay Area. Thrive, etc. all these companies.
While we can find say, great developers everywhere in the world, speaking about marketing or sales talents, they are in that domain, they are all here. That’s why for us, it’s so important to build that function of the company in the Bay Area.
For a tech company like we are, being here is being also kind of legit. What I mean is that even to sell let’s say, to a customer in London. It’s easier for us to do it from San Francisco than from Paris. For us it’s very important. We raise the profile of the company. The US it’s only half of our customers. We have customers in 45 countries today. That’s what we want. That you can get from any where. I mean the tech.
Nick: Taigo, you kind of voted with your feet. You moved here and you moved here a couple of years ago now. Right? Tell me what your thought process was? How did you position that to your company? Are guys an American company now? Are you a Portuguese company? Are you both?
Taigo: We started TalkDesk in Portugal.
Taigo: During the first month we had the opportunity to move to the Bay Area. We got investment from 500 Startups. We moved let’s say the first month when we were building the product. Then after three months, Cristina Fonseca, she went to Portugal and I stayed here.
That was the best decision we made. Because being here allowed us to grow very fast in the beginning. For example, the first 50 customers, I met them all in their offices. I flew everywhere in America just to meet them.
We were able to close six figure deals in the first two months, or three months of selling. Because we had this personal relationship with all the customers. If we were in Portugal, it wouldn’t be possible to just fly here every single night or every single week.
Totally changed our company. The company’s now based on me staying here.
Nick: That’s good. Well obviously you guys are all very successful. Three different ways to do it which is really great. Let’s talk a little bit about you know, how you decide when to accelerate. You run your company, and you never know when to go faster or go slower. Particularly probably around hiring, and investing money especially, and you’re kind of driving sales.
How do you think about when the right time is to put on the brakes versus the gas? Maybe specifically in your current situation with your 2015 Plan. Start with Nicolas this time.
Nicolas: Tough questions. We were wrong at that. I mean it’s very good when you’re growing very quickly and you are first timer. You see second timer soon. You don’t realize what it means when projecting six months later. It’s very difficult to project yourself and to hire for the next six months.
We definitely under invested last year. We didn’t see that we were ready to really scale faster soon enough. Which was at pretty late say end of last year around October.
We already started to realize our outfit is getting big. That’s when we really started to look at what it would take to accelerate even faster. There’s no specific metrics. Metrics like the number of customers. The number of the size of the deals. We spoke a bit about that.
We started, we signed our first Fortune 500. Even if it was for back to want. Not a huge project, but you start to see that as OK, we can sell to big enterprises, that works. We need to accelerate.
Nick: That’s great. Daniel, let’s make it more specific. What’s the thing in your spreadsheet that tells you need hire more reps?
What’s the thing like you’re like OK it’s time to hire a rep?
Daniel: We’re hiring them as fast as we can. The sort of signal to me on that was specifically for growing a sales team. Was you know your lead sources, right? If you can generate leads, you can keep sales reps busy. I think the hard question is, “What’s the right balance there?”
You have leads. Then you have SDRs. Then you have reps. Then you have account management, and on boarding. There’s always going to be little imbalances either way. I’ve always tried to keep a little more pressure on the top of the funnel. I’ll over hire SDRs, and I’ll over spend on marketing. It means yeah your sales reps aren’t as efficient as they could be.
They don’t pay attention to all the deals throughout the funnel. But nothing is worse to me than seeing a sales rep sitting around shooting baskets because there are no leads. When you have those tradeoffs to make, juice the funnel a little bit, get a little bit more leads in there that you maybe need so that you are not starving to death.
It keeps things moving along. But those are hard balances to make between those, as someone moves through that whole funnel. It’s a lot to track.
Nick: That is a good model. Let’s ask Tiago. I don’t know if you use leads in your forecasting model for sales. I am assuming you do. How do you think about the fact that probably not all leads are equal, and how do you, because your sales team probably think some of the leads are great, and some aren’t that great. How do you think about what leads you’re using, what quality to determine how your pipeline is growing?
Tiago: At this point, even though we are growing fast as we are, we don’t have a VP of Marketing so that is one position that we really are looking to hire, a VP of Marketing or Head of Demand Generation. What we do now is we have a VP of Sales and we agree on a number of leads per rep. Then, at this point, it is my responsibility to make sure that we provide that number to the sales team.
The forecast goes backwards. Every month we know we need X amount of sales reps, and we multiply the number of leads that each one needs, and that is also what marketing has to produce. In this case, I’m marketing, pretty soon I will stop being marketing, and we will just have a machine that works on both ends.
We get leads, and then we get more sales people, we get more leads and more sales people.
Nick: If I called some of your sales reps then do they get enough leads or not? What do they say?
Tiago: [laughs] Absolutely, they would say they have plenty of leads.
Nick: Plenty of leads? Nicolas, would they say lots of leads?
Nicolas: Yeah, definitely.
Tiago: They always ask for more, right?
Nick: Exactly. It would be a little different than most sales teams I have met. That is great. Let’s talk about reps because it is a good segue. You can hire very experienced reps. You can hire people and train them. What is your philosophy and maybe how has it changed as you guys have learned? Let’s start with Tiago this time.
Tiago: The way we did it, and it wasn’t defined by me. We hired a great VP of Sales and a very expensive VP of Sales that was Jason’s VP of Sales at Echosign. Why he did it, which I think is very helpful and that is the way to do it, is the first couple of reps were very experienced reps that already knew what they were doing.
The first month, the first two months, they just killed it. They did really, really well in the first couple of months. Then after that we started hiring less experienced guys. But with a lot of potential that the VP of Sales, or the other sales guys can teach them and coach them become great reps. That is how we did it.
Nick: You would do that over again? You would start with experienced reps and then build in less experienced over time?
Nick: Step one is hire somebody from Echosign, is that the way that it all starts?
Nick: Yeah, that sounds like a good pattern. Nicolas, tell me a little bit about, let’s say, one of the best reps you have hired so far and what was their profile?
Nicolas: We hired our first rep last month.
Nick: Oh, there you are.
Nicolas: Hopefully they are working out.
Nicolas: Yeah, he is doing great. Just hired a new one this month, so it’s scaling up from there. Of course, because he is the first one, same thing, we need the experienced ones. Later on, once we hire a VP of Sales it makes sense to get more junior people. But for the first one it is very important to get people with experience.
Nick: Daniel, let’s talk about a mistake. Have you guys had a rep that didn’t work out, so far?
Nick: No? No, that is good. OK. Maybe tell us a little bit about what you learned from the best versus the ones that are performing a little less.
Daniel: For us, we look for ability to sell on value. We have a solution sale, a lightweight solution sale product. It requires a relatively junior person. Our sales reps are early career, five to six years of experience, to make a fairly sophisticated ROI argument to someone on the other end of the phone. Not everyone at that stage can do that. It is not selling a $99 product where I take your credit card.
For us, we test very explicitly during the interview process around their ability to convey value, and to dig for pain, and solution sell, and spin selling those things. That has been the best indicator of sales person productivity for us.
Nick: Is that a mock sales call? What do you do to make that practical?
Daniel: Yeah, we give them case studies and tests. We have them do writing exercises. We have them do a mock pitch. We have them explicitly sell value. We give them a scenario and we say “Pitch me on not that the price, or the features, but the value. I want you to convince me of the value of this thing.”
You would be surprised how many times people go through that and it is like feature, feature, feature, feature. You just want to hang yourself. The people that can do it right, it is night and day. They come in and they just nail the value and ROI, and you just want to buy the thing.
Nick: Great. Some of you guys are doing larger deals. I think one of the things people wrestle with in the audience and elsewhere is a larger deal might have lots of different touches from marketing, from outbound rep, from the sales rep, maybe even from one of the executives. Tell me a little bit about, when you close a larger deal, how you try to break down what drove that, whether that was a marketing source, or a sales rep, or an SDR. I’ll start again with you, Daniel, because we talked a little bit about this in the prep.
Daniel: In super practical terms for a second, we track in Salesforce both the source and also the marketing lead source. We track both of those things. I think we talked earlier, if you look at all of the deals that we had that were influenced or somehow caused by marketing, and you add that up with all the leads that were done through outbound, what we find is that that adds up to more than 100 percent because lots of deals are influenced by both.
Somebody reads or subscribes to our newsletter, “The Modern Computer Wrap up,” and if somebody comes to one of our events, and if somebody reads one of our case studies, and then an SDR rings them up and they answer, is that an inbound or an outbound deal? We definitely track both. We absolutely see a huge lift from some of our marketing efforts that aren’t specifically lead gen activities. I think you just have to expect that.
Back to your question about plan. Your plan therefore for the year has to count on the fact that marketing is going to generate 60 percent of it, SDR is going to generate 60 percent of it, and together you get to your goal.
Nick: Nicolas, you have an interesting situation because up to now it has been all inbound. It is all marketing word of mouth, and you got a great product. As you start hiring sales reps, how are you going to figure out what was the impact of that rep versus the impact of the word of mouth and marketing?
Nicolas: Again, using Salesforce, of course, to follow up who all the test searches and so on. But that is something that we need to put in place, yet today. So far, when you have only a couple of reps, it is pretty easy to follow.
That has not been an issue yet. But even if customers come inbound, that doesn’t mean they don’t need some high touch conversations with sales, especially for the bigger ones. It makes sense.
Nick: Awesome. Switch gears again. This morning James talked to Aaron from Box about big deals and how much do you make concessions to get a big check. Maybe if any of you guys have a story, tell me about a deal you walked away with, or a market you walked away from, or a deal you walked away from, because they wanted something that was just not aligned with your core product vision. You don’t have to name the company.
Nicolas: Yeah, that happened once last year. To give you a bit of context, when we created Algolia, our first product was a bit different. We created a search engine able to run locally on a mobile device with limited hardware. We pushed it to invent to bit search. That is what made us successful later on when we piloted to SaaS.
Last year, when we were full in our SaaS model, we had this opportunity to do a deal on this offline SDK, an OEM deal on the car industry. It was like a million dollar deal. At that time, we were a 10K ARR. That was kind of crazy for us. But when we thought a bit about where we were going with the company, where the market was going, and we knew we wanted to stay in SaaS. That is why in the end we said “No, not for us.” It would have completely made us lose our focus. That means that we wouldn’t be where we are today, especially in terms of growth. We walked away.
Nick: Yeah, Tiago ever say no?
Tiago: We do that all the time. We didn’t use to. But when we started doing that is when we started to grow really, really fast. What happens is we sell a very horizontal product. It is voice so anyone can use it. Customers, our leads, come to us with every single use case you can imagine, really every single use case you can imagine. Before, we tried to get every single customer to close. Every single lead we tried to close, either for support, for sales, for marketing, you name it.
We realized that we were just spending time on leads, that after a couple of months didn’t take advantage of the product because the product was not built for them. What we decided, between myself, Brandon, sales, let’s focus on the customers that we know we are a clear fit, and that is for the support use case.
Now everyone that comes to us with a support use case, perfect. We close them. The average sales cycle is three weeks, even for six figure deals. It works perfectly. If they come for sales, for marketing for everything else, we are not there yet. We will, but for now we prefer to handle just the use case we do now.
Nick: Awesome, that is great. You’re at the end of a month, end of a quarter, how do you get customers to buy? You have got monthly plans or quarterly plans, how do you drive urgency? This is probably less relevant for Algolia at this stage you’re at. But let’s talk about Greenhouse.
Daniel: I think we try to be patient, to be honest. They will buy when they are ready and you can’t really force customers, especially for a solution like ours, where they really have to buy into the philosophy, and they are going to roll it out firm wide. You can’t just make them do it. We try to be patient and they will buy when they are ready.
Nick: Do you do end of the month discounting?
Daniel: No, never.
Nick: Great. Tiago, what is your philosophy on discounting?
Tiago: I don’t like discounting very much. But we do, especially on the bigger deals with 300 seats, 400 seats, we do definitely do some kind of discounting. But to be able to create urgency on the month, I think it really depends on sales person and on the VP of Sales. There is always ways. It is very, very rare that we have to discount to close a deal at that the end of the month. It is usually not the way to go.
I think Brandon has a great blog post about that, where he explains how to create urgency without having to give a discount. That is what we try to do.
Nick: What are the things that you see him do that you are like “Wow, that is awesome,” in terms of driving the end of the month? Any stories?
Tiago: It is very difficult to describe because it is just natural and if people are that good you just talk with the customer and without being rude to them, explain and make them understand that they should close at the end of the month. There is really no logical reason. Most of the times, but just make it happen.
Nick: That is great, awesome. I like the philosophy. Let’s talk about partner ecosystem. What do you do, thinking about partners that want to work with you, you want to work with partners. You are opening up your APIs. I think Greenhouse has a pretty well defined philosophy on this. Let’s start with you guys.
Daniel: Yeah, we have a lot of APIs on our platform because it goes from, if you think about the candidate life cycle, it goes from prospecting all the way through interviewing, and sourcing, and testing, and all the way to the hire. Each of those steps, there are lots of different technologies our customers want to use. For us there are like a dozen, two dozen, three dozen categories of partner. Each of them has a dozen players in it.
How do we choose which to do? It is customer demand. If there is mutual customer interest, that their customer is asking “Hey, we want to go onto Greenhouse” and our customer is asking they want to use the partner and the partner has the capability to execute, because there are a variety of capabilities that the partner can do to execute the integration, then we will queue it up, and kick it off.
But for us, it is less of we make a bunch of money off partners and it is much more about solving a customer problem. If the customers are asking for it we will do it. If a partner comes to us and says “Hey, we want to integrate into Greenhouse and we don’t have any mutual customers in common,” it is really hard for us to dedicate any resources to that against all the other priorities that we have. It is a product management question, not so much a sales question.
Nick: Can you say we have driven this much revenue because of our partner ecosystem, or is it something you just believe in, and you just do it?
Daniel: We don’t think of it that way. For us, there are a huge number of problems that our customers need solved in recruiting that aren’t part of what we do, video interviewing or social scraping or whatever. They are going to get those things from partners. Our job is to make it all work well together and let the customers have visibility. It is not really a revenue opportunity. There are little rev shares and referral partnership deals that we do to make it happen. But it is not a meaningful piece of business to the scale where at, maybe when we’re Salesforce.
Nick: Got it. Cool. Nicolas your business is fundamentally an API service, right?
Nick: Partners are everything to you. How do you think about it? Do you want to just set up a set of standards, and to let people integrate, or do you want to go proactively tie into people’s applications?
Nicolas: Partner wise I would say that we are just starting on the research side. What we started with was actually more reaching out to communities like Product Hunt to Hacker News for the search just because that’s exactly our target, like the people being in those communities.
It’s more on the marketing side than actually on the business side for that. We are just starting today on the business side with agencies. They integrate us for one of their customers and then they come back to us and say, “OK, could we do something? I want to integrate for other customers.”
Maybe the last thing, something that we are also pushing this year are also integrations inside marketplaces, say Magento, for example, to really ease the onboarding of customers inside these ecosystems.
Nick: That’s great. Tiago, I think you actually have driven meaningful leads from your partners that you can track and attribute. Take us through that. I think a lot of people are interested in that.
Tiago: The idea of Talkdesk, the idea that when we started Talkdesk is really, “What if you could receive a phone call for support, for sales, for anything, and you have all this information about the person calling?” To get that information we rely on partners like Desk, Salesforce, et cetera.
In the first year of building the product we actually built all the integrations, and the first outside $2.5- 3 million of revenue came from these integrations. We had no marketing. We didn’t spend one dollar in marketing in the first year and a half, so they all came from these integrations.
I think the secret really…There is no secret. But the goal is, “How do we add value to the partner versus just ask for something?” We don’t ask. We help. We add value to helpdesk systems, to CRM systems, to e commerce systems and then things just go from there.
Nick: That’s awesome. I think you’re going to get mobbed afterwards for advice on that, so that’s a great story.
Nicolas you’ve built an amazing business mostly on inbound so I’m guessing you’re looking at where these people are coming from. What’s the one that surprised you? What’s the lead source you’re like, “Wow, I can’t believe we closed deals through that?”
Nicolas: Word of mouth is huge in our business. What we discovered was that early developers, they really speak among themselves. For us the best investment in marketing is actually investment in customer success.
Like an example, we get today, I think it’s 10 customers in Dubai. Strangely, Dubai. Why Dubai? The first one discovered us on “Hacker News.” I’m very confident that the nine others came from word of mouth. Our goal today is really to accelerate that of course and then of course, Hacker News, and Product Hunt are really working very, very well.
Nick: That’s great. Let’s talk a little bit about pricing because I think a lot of SaaS companies struggle with it. Should you be transparent? Should you be simple? How do you do big deals?
I think it’s interesting maybe starting with Tiago because you sell in the market where people think about seats and per seat, and probably how you compare to other things that are first seed.
How do you guys think about your per seat pricing and how do you position it when somebody says, “How does that compare to something I’ve already purchased?”
Tiago: We sell a critical platform for companies. Just because we do this we can actually charge higher prices than most SaaS companies can. In the last three months we doubled the price and added a plan that is another 50 percent higher than the plan we had before.
The strategy was that we have three plans. It goes from 29 to 125 and the middle one is the 49. The plan was that 29 we don’t give a lot of functionality, 125 is just there to make people feel good to buy the 49 and we didn’t expect anyone to buy the 125.
What you realize is when you are selling something as critical as Talkdesk, customers will pay for it. Now our biggest deals, and last month we closed three or four six figure deals, they are all in enterprise. It works for us, and we are probably going to double prices again soon.
It also works because the competition is more expensive usually. But it’s also more expensive because they sell to bigger enterprises and the more bigger the more functionality you need and the more you’re willing to pay to sleep well at night. I think that’s the answer.
Nick: Daniel, you probably deal with people comparing you to all kinds of competition that may or may not be comparable to what you do, so how do you position your pricing versus your competition?
Daniel: I think one of the smart things we’ve done on pricing is to price the contract terms that people want, explicitly. We price not just based on overall the organization’s size which is the primary price point driver but within that then the length of the contract commitment and payment terms are things we price.
It’s a very useful tool because we often get people in the pipeline who say, “The system seems great but I’m not really ready to commit to a year,” or, “I don’t really like paying up front.” Nobody likes paying up front, that’s why we give you a discount. If you want the discount you pay up front.
If you don’t want the discount, that’s awesome, we love you, that’s fantastic, here’s the price and it’s totally up to them. It empowers them to make the tradeoffs. It’s very surprising to me how different organizations value those different parameters.
Some people have an absolute hard and fast rule they cannot sign anything longer than a one year contract. Other people are very budget driven and it’s like, “What can I do to get the lowest price?” They end up with longer commitments.
It lets them have the freedom of movement they want and still happy outcomes for us all up and down the dial.
Nick: You put all those parameters online?
Nick: No. Would you advise somebody else to do the same, keep that in your back pocket? Or how do you think about that?
Daniel: I don’t know. We’re thinking about it. I don’t know the answer. There’s a website about sales strategies, SaaStr …
Daniel: …you may have read, and I’m hoping he writes a blog post about that.
Nick: That’s great.
Daniel: You can’t unring that bell… once you put it on the website, it’s going to be there.
Nick: Nicolas, you’ve got your pricing on your website, right?
Nicolas: Yeah, we went through transparency approach…
Nick: What do you think, could you envision if someone want to pay you a million dollars, $2 million. Are you going to have to have different things that you cannot find online?
Nicolas: Yeah. It’s what leads us to different things. You have to consider our public is a bit different. Our public is developers, and as deep purpose, they would never buy something when they don’t know the price. They wouldn’t call you to know the price so you need to display the price.
When you went to website it you need to upsell, you add more value to the price that is displayed. That’s why we’re working on things that are adding up, We just launched, end of last year, a digital search network making our customers able to replicate the data. It’s kind of a CDN for search.
That adds value which is an option, and enables us to go higher in terms of price point, especially enterprise customers which values that alot. I am not price sensitive so you can go quite high in the price.
Nick: Let’s talk about hiring a little bit. What’s the…There we go, perfect set up [jokingly].
Nick: I know, exactly.
NIck: What’s the hardest role to fill in your organization? Tiago, start.
Tiago: Right now, like I said it’s marketing, we have sales. We have products we need marketing. Marketing is the thing we need now.
Nick: Why is it hard to fill? Is there something that you’re looking for that you don’t see enough of in the market?
Tiago: We are looking for someone with specific skills. In this case, we are looking for someone really strong at the demand generation. There are definitely people there, but we have very ambitious goals for the year, so we want someone who can carry us from the five, six million dollars to 15 and 20 million dollars.
That’s not easy to find that person.
Nick: Nicolas, you say you’re looking for VP of Marketing?
Nicolas: Yeah, marketing and also pursuing difficult customer success engineers. We are looking for developers, engineers that can always speak to customers. It’s difficult find the good ones.
NIck: It’s usually not easy to overlap those two things, I see that. Greenhouse?
Daniel: I think the hardest thing to hire, is one where it’s the first x that you’re hiring and you have never done the job yourself. For us, I was an engineer and I have done sales, I have done HR, I have never done marketing. I have never done training, I have have never done outbound sales.
Every time you get into a new thing, where you don’t have the experience it’s really challenging. You don’t know what success looks like at, and at what it’s good at. For something where we were a hiring the 15th SDR I knew exactly how to do it, but the first time we hired an SDR, it was a complete mystery.
There’s a lot learning that you have to go through. I always advice people to start with a research phase, if you’re hiring a new role you don’t know what it is yet. Go meet people that aren’t candidates, and you’re not trying to recruit them.
You’re trying to say, “You’re someone in this job that looks like a successful outcome for me. I want to know you and know what makes you tick so I can go try to hire one like that.”
Nicolas: Quarterly… you have to defend being the dissenting vote there. Why quarterly versus monthly?
Daniel: The SaaStr thing, basically, drives everything. For us, as we get into larger deals, monthly isn’t so relevant. And at early you’re like, “if it’s the last day of the month, the customer is not going to buy, they’re going to buy next Monday, great. I don’t want my sales guy in a dead panic, harassing me for a discount so he can close that month.”
It’s just more sensible for us.
Nick: Great. How do you celebrate as a sales team… guns, champagne, something else?
Nick: Champagne, shocking [jokingly]? That’s real champagne not sparkly wine or something like that, is that right?
Daniel: Bourbon and Trivia.
Daniel: And bourbon.
Nick: Are you good at trivia?
Daniel: I’m terrible at trivia. I like bourbon.
Nick: Bourbon with trivia makes your trivia, worse or better?
Daniel: It makes it better for me.
Daniel: It’s something for everyone.
Nick: Firing, tough subject, did you do it too fast or too slow, or both?
Tiago: It depends. We try to fire slow, and fire as soon as you see it is not a good fit, but sometimes if you’re going within six people to forty, you cant really try to fire slowly. So it’s a combination.
Nicolas: Not pretty sure, it can be too fast so we’re on that side.
Daniel: Same. As soon as you have to try to worry about it, you have to fire the person.
Nick: We’re going to do word association and close it out. December 31st, what is the word that comes to mind at December 31st for you?
Tiago: The last one, or this one?
Nick: The last one, it’s the last one.
Tiago: It was “amazing.”
Daniel: Dick Clark? Happy New Year.
Facilitator: “Happy new year,” awesome. I like it, festive. Enterprise sales reps, what is the word that comes to mind?
Tiago: You should do it first.
Daniel: Suit and tie, I don’t know.
Nick: Enterprise sales rep?
Daniel: We don’t have any so…
Nicolas: We don’t have any either, but it’s kind of…
Nick: None, you have one, no? So no word comes to mind. Board meetings?
Nicolas: We had one.
Nick: What’s the word that comes to mind?
Facilitator: OK. That’s a good one
Facilitator: Friendly, good, awesome.
Nick: Good boards, the last one, close it out, one word? Jason Lemkin.
Nick: Awesome. With that, some great closing, I want to thank the panel. That’s an amazing discussion, really great insights. Thanks everyone.