Veeva: The Biggest Vertical SaaS Success Story of All Time (Video + Transcript)
Peter Gassner, Founder & CEO of Veeva Systems, sits down with Jason Lemkin to share the story of Veeva and his journey as CEO. From how the seed of an idea got planted to 1,700 employees 10 years later, there are many lessons to be learned.
Peter is a huge fan of going against the grain and refusing to follow the herd. While it can be frightening to think differently, doing so has helped him make Veeva the biggest vertical SaaS success story of all time. One such example would be his insistence on thinking about the very near future, 90 days, for the first year and a half of the company. As Veeva grew, that’s when the long term vision came into play.
While this talk really shows his love of thinking about the bigger picture – this is the Strategy stage after all – Peter actually spends 90% of his time on execution. Anyone can copy a good idea; execution, however, is enduring.
And if you haven’t heard: SaaStr Annual will be back in 2018, bigger and better than ever! Join 10,000 fellow founders, investors and execs for 3 days of unparalleled networking and epic learnings from SaaS legends like Jyoti Bansal, Dustin Moskovitz, Jeff Lawson, and Michael Pryor. If you don’t have tickets, lock in Early Bird pricing today and bring your team from just $749! (All ticket prices go up September 1st.) Get tickets here.
Jason Lemkin: All right, let’s welcome Peter Gassner from Veeva Systems. Super cool.
Jason: Peter, thanks for coming. This is great.
Peter Gassner: Thank you.
Jason: I appreciate you coming. I know you’re not on the traditional speaking tour, are you?
Peter: [laughs] No, I’m not.
Jason: Did you miss the Crunchies this year? Were you able to go?
Peter: Well, I might not even know what that is.
Jason: You don’t even know what it is. This is a great… Twilio is one of our most iconic last IPOs, and Veeva, it’s my favorite success story. It’s fun to share it here. Let me hit a couple of highlights on Veeva, or actually, give us 60 seconds on Veeva, and then I’ll add a couple of other highlights for folks that are here. Tell us your version of the history.
Peter: The history of Veeva, so basics, 10 years old, about 1,700 people. We’re building the industry cloud for life sciences, so our customers are people like Pfizer and Novartis, etc., that are making medicine to help improve life. We provide a variety of cloud solutions for them.
In a nutshell, what we say is we’re building the industry cloud for life sciences. We want to be essential and appreciated to every CEO in the life sciences industry and help them be more efficient and effective because what they’re trying to do is bring better medicine to people, and we want to help them do that.
Jason: It’s pretty cool. We’ll get into that. 10 years old just about now. We’ll come back to that. About a $ 600 million run rate at this point?
Jason: It’s pretty impressive. What do you guys think? [laughs]
Jason: It’s pretty cool. Started off primarily as pharma CRM, right? Now we’ve got a couple different products which we’ll chat about in a minute, and what’s the suite like today?
Peter: We have a suite of products. It started off in pharma CRM 10 years ago, really focusing in there, built this CRM product on Salesforce.com. About 2010, we started a completely different product line. We’ve evolved around content management. That makes up about 35 percent of our revenue now.
We have our newer products. Some of our newest products are actually in the data area, where we’re generating unique data that the life science industry needs. We’re a real multi product line company now. We didn’t start that way, but that’s where we are.
Jason: I want to hit that in a minute, because we just talked with Jeff Lawson about his thoughts, and you and I chatted about those before.
Let’s go back for a minute. The early days, your background…you were early to just about everything, right? You were early at CBOL. You were a VP of Technology at Salesforce back in the day?
Jason: Back with the OG, right?
Peter: [laughs] Yes.
Jason: You came up with the crazy idea to start Veeva in 2007, just before the worst two years that we’ve experienced in the industry, ’08 and ’09.
We talked before. Tell us what gave you the bug to start Veeva? What’s the background story for the company?
Peter: Part of it is just how I was born. I never liked to follow the herd. I probably frustrated my parents at times about that. [laughs]
Literally, I never liked to follow the herd. I remember coming back in first grade and telling my parents, “I don’t want to learn how to read. I don’t think I need to,” literally.
Peter: My mom, bless her heart, she said…What do you think she said? She said, “That’s fine. You know, I never met a 18 year old who didn’t know how to read. I’m sure you’ll get there.”
Jason: Figure out one way or the other?
Peter: Yeah. She knew I was hardheaded. What I figured, what tipped it for me is I realized, “Man, I can’t read the road signs and I want to know where we’re going. OK, I better learn how to read.” I’ve never followed the herd. That’s one thing. I think you’re born with it.
The other thing is I’ve studied enterprise software for literally 30 years. I was an intern at IBM mainframe software when I was 20 years old. That was 30 years ago.
If you take this ability to not follow the herd and the experience, you can spot trends. When you think about it, when a trend is early, everybody thinks you’re wrong. That’s the definition of being early. I have this knack of doing that.
I’ll give a little example of Veeva. I had always done general software things, database software, mainframes, PeopleSoft, run that technology groups, Salesforce.com platform for everybody.
In 2007, I had this idea, “I’m going to make something very specific to an industry, very specific to an industry in the cloud.” I remember sitting down with this friend. We actually drew on a napkin, paper napkin.
“Look, here’s enterprise software. Now, here’s life sciences. That’s a very small wedge. Here’s pharma CRM. That’s like a pin prick. What are you doing? You’ve got so much potential.”
That’s when I knew, “Hey, I’m onto something.” I think it could be good. Most people think it’s dumb. That’s a very encouraging thought.
I would say to the entrepreneurs, recognize that. When you get that thing where you’re a rational person and you think it will be great and 99 out of 100 people think it’s bad, that’s when you have opportunity. Don’t get discouraged. I’ve always done that, even Salesforce.com the early days.
Jason: When did you join Salesforce?
Peter: 2002, I guess or so.
Jason: Another terrible time to be in technology.
Jason: The world ended in 2002 too.
Peter: Most people thought that cloud thing would never be big. I always remember people asking me, they would start to learn about it, and then at some point, they’d say, “I get it. I get it. Who are you trying to be like?”
I said, “Oh no, you don’t get it. I’m not trying to be like anybody. That’s the whole point.” It’s that, experience and a willingness to not follow the herd.
Jason: We chatted about this before on the phone. You leave. You see this white space. It seemed small in the beginning, but you know it’s there. How did you know you wanted to be a CEO?
Peter: I didn’t actually. I specifically didn’t want to be a CEO. That’s the real story there. I retired a little bit after Salesforce.com. I didn’t want to be a CEO.
I was a software developer, a product person. I thought, “That’s the most creative thing to do.” That’s what I wanted to do.
It happened to be I ran into some folks who wanted to fund me. I thought, “Well, that’s good. I can be the head of the products and the CEO.” Most startups fail, so I don’t have to worry about it.
Jason: The pressure was off.
Peter: Yeah, but if it doesn’t fail…
Jason: There’s no pressure for six months, is there?
Peter: Yeah. I always thought, “Hey, if doesn’t fail, then we’ll get a CEO.” That was my plan. It didn’t work out that way. We happened to…
Because, actually, it’s the truth. Most startups do fail. Most restaurants that startup fail, most technology companies. That’s the odds. Otherwise, you’re not being aggressive enough.
You can open a hamburger stand. You know it’s not going to fail, but you know you’re not going to make a lot of money. You’re most likely going to fail. That’s the facts.
I thought it was going to happen, but then the unexpected happened. We didn’t fail. It really started going, and I thought, “Man, I really enjoy being a CEO, and I’m pretty good at it.” I started feeling, “I can improve myself enough to remain the CEO.” It was never my plan to be the CEO.
Jason: What percentage of your customers today are seven figure deals and up? It’s a balance of revenue, right?
Peter: Yeah, balance of the revenue.
Peter: We have not so many customers, less than 500 customers.
Jason: That first year, when you decided you didn’t want to be CEO and you see how it goes, how did you get the passion around closing those big deals?
Peter: I’m competitive. I like to do a good job. You feel responsibility for your employees. I’m a hard worker. Most entrepreneurs are. I knew the likelihood is it wasn’t going to work, but I knew it wasn’t going to be because of lack of effort.
That’s what really matters, so iterative decisions every day about what product to make, when to cave into a customer, when not to, who to hire. We always had a quarterly plan.
We did not have any plan that extended beyond 90 days in the company, the first year, because I always said, “It’s irrelevant. Six months from now, we could be out of business. Why do you even want to think about that or talk about that?”
Jason: You had no 12 month goal for revenue, customer accounts?
Peter: We had only quarterly plans, period, for the first year and half of the company.
Jason: Quarterly plans.
Peter: We graduated, for the next two years, to an annual plan. After that, we have a three year plan. Just now, we’re starting to do the vaguest of five year plans.
It’s true. It doesn’t matter. Most cases for most startups, the next quarter doesn’t really matter. It’s this quarter.
Jason: One related point to that, you are legendary in terms of working with customers, providing huge value and getting good contracts out of them. What’s the secret to know when to walk especially in the early days?
Now you have the iconic brand, at least in your verticals. How do you pull that off in the early days? I was terrible at this.
Peter: In the early days, [laughs] you don’t have any brand. You tell your customers the company name, and they’re like, “What? Let me write that down.” They don’t know what that is.
Jason: Is that with three Es or one? How do you spell that Vee…?
Peter: I remember this one meeting with a large customer. We’re trying to win business, and the guy in the back of the room stood up and said, “We have more people in this room than you have in this company. Why would we ever buy anything from you?”
Jason: Why would they?
Peter: I told them. Those are the moments of truth where you have to tell the truth. You have to say what you believe. I said what I believed. I said, “We have great people, and we’re working on great technology.” That’s it. That was the reason.
My secret on it is always sell yourself first. When I’m talking to a customer, it may be a negotiation or something like that, or give somebody an employment offer, I will sell myself first. I will really understand, “What is the price I want for my product?”
I have apples for sale. I get to set the price of the apples, because they’re my apples. The other person can decide if they want to buy the apples, and so you just understand that and then, that way it becomes very simple.
It’s not actually my problem if it doesn’t go through. It’s the other person just didn’t…They didn’t see it the right…
Jason: They decided they didn’t want the apples.
Peter: They were incorrect. They didn’t want to…
Jason: They were incorrect.
Peter: Otherwise, I’m never trying to get the most out of something. I’m trying to get the right value.
Jason: Right value.
Jason: That’s still a challenge for many of us.
Peter: Yeah. That’s a challenge.
Jason: Most of us tend to back off because we don’t want to blow the deal. We don’t want to lose the logos. We all leave a lot on the table until we get help.
Peter: Leaving it on the table is fine, but not knowing what you think something is worth, that’s not fine.
Jason: That’s not fine, yeah.
Peter: Especially because when you’re making a product, the price you set will determine how good your product is. It’s self fulfilling.
Jason: That is self fulfilling, isn’t it?
Peter: Yeah, because it’s the expectation. Am I building a premium product that’s great? That should cost a little more and the money will come in and that’s the expectation.
Of course, I can’t accept anything wrong with this product. You know how much we’re charging for this? I can’t accept anything wrong. This is a premium product, so it just starts that way.
Jason: The better your team is, the more you should anchor high, because you can deliver that that’s the best solution in the market.
Peter: Yeah, it starts with the CEO actually. Are you going to make something that’s great or not? If it’s great, it must have value, and you have to assign the value, so I’ve always felt strongly about that.
Jason: Let’s talk a little bit about where we started, because I want to dig in on multiple products. You’ve got three lines now. I want to talk about some of the stuff we talked about before.
We had Jeff Lawson from Twilio out here, which is throw teams of five on it, see if it works, see if it doesn’t break. Yesterday, we had the CEO of Trello, that’s a spinout from a company called Fog Creek, you can see more breaks. When do you add a product line? What’s your view on this?
Peter: We’re on this enterprise software. It’s a slightly different.
Jason: It is slightly different. No question, yes.
Peter: We’re selling to these large customers and they’re really running their business on it and that, so it’s a little bit different. You have to be a little more measured, but what I always think about is a company usually starts up from a product.
You have a product idea and, “Wow. I find some product market fit,” and then it starts growing and then my company is my product and my product is my company. The two things are intertwined and that’s the stage.
Many, many companies fail, or become suboptimal, when they break that, when they say, “I’m going to really start another product line,” not an add on product or something like that but this is like Amazon saying, “I’m in e-commerce, now I’m in web services.”
Jason: That seemed crazy at the time.
Peter: Web services is not an add on product in e-commerce. When you decide, “I really want to make something big and different,” two things. One is it should be bigger than the first thing you’re doing. You’re really just…
Jason: If it’s not bigger, is it worth your time?
Peter: Yeah, is it worth your time? You have to realize when you do that, you’re breaking apart your product processes from your company processes, and that’s super, super, super hard.
It took Veeva about three or four years, and it’s just persistent effort and a lot of times you can fail at that, so really realize that, when is the right time to become a real multi product company?
Pick a clear market that’s clearly big. You won’t know if it’s correct until later. There’s no way. We say pick clear and correct markets.
You won’t know if it’s correct until later, but if you can’t write down, “This is what I’m making. This is who I’m going to sell it to. This is roughly how many people I can sell it to and this is roughly the price I want to get,” then you don’t have a clear market.
It’s possible to know if you have a clear market, and correct, I don’t worry about because it’s impossible to know.
Jason: Because we were talking before is the easy choices that is the adjacent product that clearly attaches, but ultimately, it’s the smaller market than your core market, right? That’s the easy ones…
Peter: That’s the trap.
Jason: …to grab. It’s a trap.
Peter: It’s a trap because when you think about it, you’re going to get that anyway.
Jason: Yeah, one way or the other.
Peter: Yeah, so that’s not aggressive and sometimes if you focus on those, you can lose the intellectual capital or the mojo.
You get busy and you pat yourself on the back for, “I’m doing that little thing. I’m doing that thing and that thing is a big thing.” “How big is it? Put a number on it.” “It’s not as big as the original thing we’re doing.” “OK. Well, don’t kid yourself,” but you have to be ready though.
You don’t want to be reckless, like if you don’t have the financial capital or the intellectual capital in yourself or your management team or the energy, don’t tackle something that’s obviously way too big, because then you’ll let people down.
Jason: Let me ask you a really good question and let’s talk about money, just briefly. Is capital an excuse to not do something that’s big? How much money did Veeva raise, again?
Peter: [laughs] We raised seven, and we only used three.
Jason: You only used three.
Peter: Yeah, we only used three.
Jason: You’ve burned $3 million. Sometimes when I hear capital as an excuse, I wonder if the root cause is something else.
Peter: I think it clearly depends on the business, some type of business, you’re building a semiconductor factory, I think you…
Jason: Something like that…
Peter: …you do that without capital, and then you wouldn’t be following the herd. That’s for sure. It depends on the business and then you have to be intentional and scarcity of capital can help you. You have to have enough, but you shouldn’t have too much.
You have to have enough to hire people to dedicate on it. That’s all you need.
Jason: You do need that.
Peter: You need that, dedicated people.
Jason: For Vault what was the initial core team size?
Jason: Vault was starting off and it was nothing at first, before we hired our first person, so we only had quarterly goals for Vault for the first year and a half of it. The rule was get to a dozen great people as quickly as you can and then after that, figure out what would be next.
Jason: I got it. That was the first base to close.
Peter: Why a dozen? I think it’s a good set of people that can work together and be multidisciplinary, software and engineering product management strategies, a cohesive group, so it’s get to a dozen and if we get there, figure it out what’s next.
Jason: That’s good.
Peter: [laughs] No long term plan, but it was get to a dozen quick. It wasn’t like, “Hey, let’s get three people.”
Jason: Because otherwise, it’s a distraction.
Peter: Yeah. If we didn’t have enough money to hire a dozen great people. We shouldn’t have started to do anything.
Jason: Let’s just chat for a minute on that capital efficiency. It’s such a visceral thing, we could spend all our time on it, but you did only burn $3 million. What are the learnings there? I don’t think it’s all ’08 and ’09, although I suspect that’s a little bit of it, right?
Peter: I don’t actually think it had anything to do with ’08 or ’09.
Jason: You’re still crushing it then…
Peter: The thing is, when we started out, I had a lot of pressure from people, including early investors and stuff to spend more, spend more, spend more. I had a lot of pressure on that. I was the guy who just didn’t get it. I just didn’t get it.
Jason: [laughs] I didn’t get it either sometimes.
Peter: They were saying, “Spend more,” and they were convinced, I was the guy who just didn’t get it. I was too conservative, but that’s OK. You get all kinds of outside pressure, and you have no chance for being great if all you’re doing is following the herd.
I thought it wasn’t right. I thought, “No, I think it’s good to have top line and bottom line, and I don’t want to take any more money, because then I’ll dilute the company. Why would I do that?”
Jason: Why would you do it?
Peter: I just, “Hey we have what…” When you’re making software, they would always say, “Hey, change the scope or the investment or the schedule, but don’t change them all at once.”
I thought, “Oh, we have the capital we have, don’t change that scope. Make a profitable business in the capital we have, and that’s easier. It’s less decisions to make,” and so we set that discipline, and that became what the thing…That’s just what we did.
Jason: Now I want to dig into a little bit more, but just from the physics of cash, doing bigger deals that prepay annually probably helped at the at the margin, right?
Jason: Because your customers did fund you, right?
Peter: Yeah, they did. Two things funded us. Making that product, so don’t waste any higher. I mean [laughs] don’t waste any money, be frugal, get the product out quick, and sell it for a good price to as big a customer you can. Don’t be too reckless, but just thread that needle.
We also didn’t give away our people. We had professional services, and we didn’t give…We had a rule very early, very early in the company.
Jason: That’s a good thing to chat about briefly. You didn’t give it away. I gave it away. You didn’t give it away.
Peter: Very early. I always had this mantra that, “Look, if our people are not worth the customer paying for them, then they’re not actually worth anything, because if they’re worthwhile, the customer will pay for them.”
That was a rule, “Hey, you don’t give away professional services.”
Jason: Services have to be accretive.
Peter: Yeah. What about if the deal was going to tank? Well, then I guess the deal’s going to tank because the one thing we’re doing is not giving away professional services, so that’s just a rule.
Jason: I haven’t done the scientific study, but if you look at a lot of companies when they go public, services are loss leaders, right? They lose, it’s negative 20 percent margin. You can’t do 60 on it, but if you can make it cash flow positive, especially in the early days, that’s a bit of magic, isn’t it?
Peter: It is.
Jason: The customers will pay if they get the value, will they? They don’t really push back, if the value’s there, do they?
Peter: Right. No, they don’t, because they’re generally rational. If they can get more value from that person, then they’ll do it, and you have to look at it yourself. If your services are not profitable, “Gosh, why cannot I make valuable enough services? Why do our services cost less than the cost of our people? What am I doing wrong?”
It’s, the pressure’s on you, so it’s very simple. I view it as a problem if we can’t sell services, because we’re doing something wrong.
Jason: Yeah. You didn’t. I made this mistake, a lot of us do is, we just want the customers to be happy.
Subsidizing services is a natural thing to do, because if you don’t provide good services, it’s even worse, isn’t it?
Jason: Bad services is worse than not even closing the deal sometimes, right?
Peter: Right, absolutely but you just have to understand, “Hey, I’m selling a product, a product comes with a certain amount of service.” It might come with customer support, or it might come with training, or whatever you decide it comes with, you don’t charge for that.
There’re some things that it doesn’t come with, and if you want that, you pay for that. You just lay it out real clearly and that helps you operate.
Jason: One last question about money, and then I want to talk about stages. You talked about in the early days, when you started to take off, the investors wanted to raise more money and to go faster. That comes in and out of fashion.
Jason: You resisted that, and then usually there’s another time, as you start to scale, whether it’s 20 million, 30 million, when you want to get ahead of the curve, and also sometimes your inefficiencies increase, right?
Jason: Sales efficiency goes down. You want to start doing more on brand and other marketing that isn’t ROI positive. Was there a moment in time there when you wanted to step on it more or was it still organic?
Peter: No, there was no moment in time where I wanted to step on it more, because I always thought, “Gosh, if we’re building a lasting company, a lasting company should have a reasonable profit margin.”
Jason: One would hope. Software used to be really profitable the old days, didn’t it?
Peter: Yeah, well, I mean…
Jason: It used to rain cash back in the days.
Peter: Long term, you go back the last 1,000 years, that has been the trend. Profitable businesses, they stay in business. Unprofitable, it doesn’t overall. That’s capitalism for you.
I always thought, “God, it’s sort of like a drug. If I get on that non profitable drug, like when am I going to get off of it and stuff.” It just seemed like, “No, you don’t do that. That’s not the way to do it.”
No, I was never tempted. Was pushed on the IPO roadshow, and then people would say, “Hey, well, you’ve got X number of salespeople, 50. Why don’t you just hire 50 more? You know, you’ll grow 50 times, you’ll grow, you know, twice as fast, and…”
Jason: Yeah, occasionally that works, but not usually.
Peter: Yeah, but it didn’t make sense. We’re running a profitable business, that was just not in the parameter. It’s not important that you do all things, or all things that everybody wants to do, but as a CEO, you have to decide what are you going to do, which I don’t know.
We just decided to do a certain thing. It’s not that it’s the best thing to do, or it’s the only way to do it, but we just said, “Hey, we’re running a profitable business. We thought that was good, and that’s a parameter, and so that’s that. There’s no…”
Jason: There’s two models that people come in SaaS. There’s revenue drive headcount or does headcount drive revenue, and it’s sounds like you’re squarely in the former camp, that you derive headcount from revenue.
Peter: No, no. I actually drive revenue from headcount, but I make sure I have enough stocked away. Any revenue that’s generated in Veeva is because of people.
Jason: For sure.
Peter: Yeah. If you want revenue four years from now, you’ve got to hire those people now. We’re starting up a brand new, probably our biggest product area to date, and this year we hired 30 people.
Those people will produce real good revenue for Veeva four or five years down the road. That’s when that will be a $100 plus million business, but you’ve got to hire them now, so revenue follows the people.
Jason: Related to that, how do you think about how many of your sales teams should perform? How do you think about that? Do you believe in that bell shaped distribution, do you hate the bell shaped…?
Peter: In terms of the salespeople?
Jason: Yeah. If you’re waiting four years for them to perform, it’s terrible if you have that attrition, isn’t it?
Peter: Yeah. No, I’m really thinking more about the product ingredients and the product people. That’s like a soup that has a…
Jason: They start to hit their stride…
Peter: [laughs] Product has a four year cooking cycle. It’s a soup that like, “Oh, my God. I want to eat it four years from now. I’ve got to start cooking it now? Really? That’s not good!” Product takes a long time.
With sales, we have a philosophy that we say we don’t over cover, so we want to leave topline revenue on the table. We don’t want to get all the topline revenue, because if we push all the way for that, we will get some inefficiencies, and that’s not so good.
Also, we will get bad customer feeling, because a desperate rep will do desperate things, and the rep’s in front of the customer, and they’ll feel it.
Jason: You don’t want those desperate things, do you?
Peter: No, because for us, we have many customers that are well over $20 million a year customers from us. Do we want them ever having some…?
Jason: There’s an affinity relationships, right?
Peter: Yeah. These are 20 year relationships. Do we want somebody in there saying, “I got to close this thing on my quarter because of my commission, and I don’t really care that you’re paying us $20 million a year.”
The way you do that is you sacrifice topline revenue, and you don’t put too many reps on there, so then a rep is not desperate.
Jason: Let’s unpack that, because that’s something we all think about. As founders, we don’t want a bad customer experience during sales, so we struggle with this yin and yang, right?
What does that mean? Does that mean that the effective quotas are lower, or does that mean it’s OK to miss a quarter as long as you make the annual plan? How do you productize that insight?
Peter: The way I do it is I always think I’m under cover on reps, quota everything that comes out. I always want to know I’m hiring slightly fewer salespeople, and I’m sacrificing some topline revenue in the short term.
After that, the quota just comes out of the annual plan, how much we think we’re going to sell, how many people do we have? I think as long as you don’t over cover with reps, salespeople are internally motivated, they’re going to want to sell more, so I’ve never been a…
Jason: Yeah, they over cover. I call it lead poor, but over cover’s maybe a better way to put it. There’s an incentive over time to just over cover, and that does get you the extra nickel.
Peter: It does, that’s right.
Jason: It has a cost.
Peter: It has a cost. The cost is you just get going on that drug a little bit. Also, if you’re in a business like ours, it’s probably unique to ours. If we’re selling payroll to thousands of companies, who cares?
Jason: Might still be a 20 year relationship though.
Peter: Might be, but this is a deep one, like a $20 million a year relationship, the CEOs of these companies really know us and they expect certain things.
Jason: Yeah, this is one of the biggest bets they’re going to make in their career in software, right?
Peter: Yeah, and it affects the IT and the business side, so you just can’t afford that. It’s more of a long term relationship like, for example, Morgan Stanley in the banking business.
It’s a long term relationship that they want, and they don’t want to sub optimize a little interaction here or there. We learned this stuff as we went along. That would be very unique to Veeva and our large customers.
Jason: One question, quickly, I want to get to some other stuff, but when you said 20 million, my limited experience in a Fortune 500 software company, what I learned is pricing’s relative on these big deals.
There were two pieces of software, I won’t name names, but one you might have used to work at, and it was like 20 million a year, and then there was another product, which I won’t name at all, that was almost as important, but it wasn’t for sales. It was for another group, and that was 18 million.
Jason: If you think about who’s going to like the one that’s almost as important, but they’re just bits. At the end of the day, it may cost as much to ship this Google Doc I’m looking at as that software, right?
I mean if Veeva can do these bigger deals, but it’s because it’s a system of record, it’s a system of managing customers, this is one of the most important things that your customers are going to buy. Is it relative at some point?
Peter: Yeah. At the end of the day, over the long term, it’ll be relative to two things. What is your competition out there, because somebody else has something exactly as good as yours, and they’re going to sell it for…
Jason: It’s direct…
Peter: Yeah. That’s one thing, and then the other thing, it’s related to the value. You can’t sell it for more value than it provides a customer. Over the long term, you can’t. The things that we sell that are quite expensive, they’re probably automating and increasing the efficiency of thousands of people.
That’s pretty important, that adds up.
A good example. One system we sell is about collaborating around clinical trials for a life sciences company. A big one might have 5,000 people around the globe collaborating on these trials in a very specific business process to get the drug approved.
That’s a big expense, 4,000 people. If they don’t have a good system for getting that done, their efficiency goes down, and if they make mistakes, they might not get their drug approved, and that’s hundreds of millions of dollars.
Jason: Hundreds, yeah, it is.
Peter: You have to pick a problem we’re solving. That’s hard.
Jason: My guess is I just hadn’t thought, but that 20 million, it’s so similar to these other 20 million price points I saw, [laughs] living in the Fortune 500, that it wouldn’t surprise me that that would be an organic price point that if you provided enough value, it would end up at, but 200 million might be tough, right? [laughs]
Peter: The thing is we have no one thing that’s 20 million, we have lots of things.
Jason: Of course not, but it’s interesting.
Peter: They add up. I don’t like to… I always like to focus on the value. I do think it’s interesting. We’re making life sciences more efficient. I can feel that only in the little 10 years that we’ve been operating, and it actually makes a difference.
One in 10 people gets a rare disease in their life and to varying degrees of seriousness, and far less than half of them have effective cures.
Peter: It makes a difference.
Jason: It’s pretty cool.
Peter: It’s pretty cool. If you ever have a person that you know, they don’t get the right medicine, and then they do, they get the right medicine, you can see that difference.
A lot of times, that medicine was already approved three or four years ago, but somehow that person wasn’t taking it.
That’s the inefficiency of the system. The life sciences company makes less money, and the patient’s not well. We’re trying to make that better. That’s a ton of value.
Jason: It’s huge value.
Peter: It is. It’s a great place to work. I guess that’s why I work there.
Jason: Do you hire folks that are mission driven around that? Does it resonate with the average hire now, or are they joining a software company?
Peter: Honestly, we’re just growing into the mission at first. Like I said, at first, the start of the company, the mission was, “Let’s not go out of business this quarter.”
Peter: That’s the mission.
Jason: That was the mission.
Peter: Now we’re realizing our place in the world. We can really affect change. We are respected as a company that can do what we say we’re going to do, and life sciences trust us. Now we have a responsibility.
Increasingly, we are getting more mission driven. It’s really fun to see. That’s the transformation of Veeva. We’re becoming more mission driven.
Jason: That is you get more mission driven over time. You can find your bigger mission over time, right?
Jason: You start up at this atomized level.
Peter: You go there.
Jason: Let’s tap into one topic. I want to hit two things to make sure we don’t run out of time.
Let’s talk about how, and we can even start right there…the stages of Veeva we chatted about before. Now you’re thinking about how to build 100 year company, right?
Jason: Does that seem crazy looking back 10 years ago? Did you even think that at the founding? Did you think about building 100 year company?
Peter: Again, I’m more of…
Jason: You were thinking about one quarter back then.
Peter: I’m real honest about that. I thought, “Gosh, I don’t want to go out of business. If we don’t go out of business, then it’ll be good. We’ll have time to figure out what to do.”
The other inflection point was about 2010 when we really had to look at ourselves as a management team, “Do we really want to become a multiproduct company?” Because once you do that, you either crash the car or you make it big.
Most likely, it’s crash.
Jason: Could’ve been a little smaller, but the focused…
Peter: A little smaller, maybe got public, got bought inside somebody, product is the company, but we decided in 2010, “We can do it.” We thought we could do it, multiproduct company, which that means you’re on your way to $1 billion. That was a big phase.
Now this phase is we’re starting to think about mission driven, digital disruption. How do we really help you guys get into the clinical trial you need to get into? That’s pretty important, if you can, both for the patient and for the life sciences company.
How can you get in the clinical trial? How can you get the right medicine? How can your doctor know about the right medicine? That’s the phase, but I would say, one of the things…
Maybe I could talk about execution a little bit because that’s underrated. We have time enough to go into that one?
Jason: Sure. Absolutely.
Peter: I maybe talk like a visionary or something like that, but I’m a Swiss American. I like trains to run on time. My parents were Swiss. It’s ingrained. Do things the right way.
My dad, I don’t know how many times he used to say…I’d go to him. I’d say, “Hey, dad, is that good enough?” He’d say, every time, “Good enough is not good enough.” Meaning, if you ask me the question, it obviously ain’t good enough. [laughs]
I like the execution part. It starts with picking those clear and correct target markets. That’s number one. As you scale, as you get to about 150, 200, 300 people, past Dunbar’s number, past the number of people that you can know, it’s this engaged teams working together. That’s a core. You’ll hear everybody at Veeva saying that, engaged teams working together.
How do I know in my company who’s supposed to do what and this culture of managers? “I trust that other team. I manage my team,” which is counterintuitive. People want to say, “Hey, I got my team. I got my team.” We rail against those words. That’s not your team.
Jason: I hate my team.
Peter: That is the team that you manage. My head of sales is not on the sales team. He’s on my team. He trusts the services team, but he manages his sales team. This engaged teams working together is really key.
Jason: I love it.
Peter: We actually developed an app on that because I couldn’t find anything to help us do that. We developed an internal app.
Jason: Can you tell us?
Peter: Yeah, it’s called OrgWiki. You can find it out there. You can subscribe to it, if you want. It’s been a key to our growth. The last thing I will say, we say, “Execution matters most.” All that other stuff is hoo ha.
I spend 90 percent of my time executing. What am I going to do today, this week, this month, this year? Write down a plan. Execute the plan. Measure yourself through a plan. Execution matters most.
Over the long term, any good idea gets copied. Execution is enduring. If you start to see yourself growing, execution will matter most at the end of the day.
Peter: It’s hard, and it’s maybe not sexy, but it’s the thing that will separate you. There’s a downside of capitalism, meaning there’s no free lunch. If you want to be great, you have to execute.
Jason: You do have to execute. One last thing, we’re over, and then one and half last things, but related to that, you spent how much of your time in execution you said, 90 some odd?
Peter: Yeah, probably 90.
Jason: I think you told me every three weeks, you try to take a break and meet with someone to challenge your thinking?
Jason: Tell us quickly how you do that because that’s a great takeaway if we can all do that later.
Peter: We use the term. We have a vocabulary. We call it the adjacent possible. I borrowed it from…
Jason: Adjacent possible.
Peter: Adjacent possible.
Jason: I like this, adjacent possible. It’s going to be our next book. I’ll just sell on this today.
Peter: Through adjacent…
Jason: …some impossible, the inevitable, the first is to…
Peter: It means take some time. About every three weeks, I take about a day, and I usually go to San Francisco or I’m in some other place. I meet with people that are outside of my daily routine, but somehow adjacent.
It might be somebody that’s starting a software company that’s focused on banking, or hospitals, or any number of things, somebody making a medical device, or a physicist, or an actual doctor or something like that. I force myself to talk to them and be open because otherwise you become myopic as a…
Jason: You got myopic, sitting in conference rooms, meeting with same customers.
Peter: Adjacent possible is a way to bridge. When a chemist talks to a physicist, something might happen. If the chemist only talks to the chemist, that thing isn’t going to happen. You’ve got to make time for that and enjoy that.
Jason: I love it. Everyone, let’s give it up for Peter Gassner.
Jason: We may have one memento of the…Do we have a memento backstage of the 10th Anniversary of Veeva? We may. We may not. Let’s see.
Jason: Do we have a cheesy memento? We may or may not. Bring out the memento. Roll the prop. There we go.
Hold on. We just have to have one toast for year 10, and then we will take a coffee break. Which color do you like?
Peter: I get to take one? I always never follow the herd.
Jason: You can take two. Cheers.
Peter: Cheers. [laughs]
Jason: Congratulations, Peter. Thank you very much.
Jason: Thanks everyone.
Peter: Thank you.