Vimeo CEO and SaaS veteran Adam Gross and Jason Lemkin, SaaStr founder and CEO, recently hosted a fireside chat at SaaStr Miami, talking about running a profitable public company with $400M in revenue, including themes around:
- Using a combination of self-serve and sales-led motions
- How to juggle and manage several different ICPs
- How to avoid over-monetization during tough times
- Who owns “free”
- What to expect from AI in the near future
Adam is an OG in Cloud and SaaS. His first company was Personify and he went on to be a VP of Developer Relations at Salesforce, then hire number 11 at Dropbox, CEO at Heroku, and an investor and on many boards before landing as the current CEO at Vimeo.
Let’s talk about Vimeo and what it’s really like to make a large public SaaS company profitable in a short amount of time.
What’s It Like Running a Company Like Vimeo Today?
Vimeo is turning 20, which not many internet brands have achieved. There are pros and cons to such a long history — many people know who you are, but not many know who you are today. Vimeo has a special relationship with the creative and filmmaking world, yet people mistake Vimeo for being a social media company.
Vimeo has never had any advertising, so how did they make money? By being a video platform. They are the second largest video player after YouTube. If you want a place to host your videos without giving away customer information to TikTok, Google, or Meta, Vimeo is a good option.
Free video hosting isn’t the best option, even though Adam loves YouTube. But broadly, Vimeo allows companies more control, which is a big part of their marketing pillar.
Last week, they launched a product called Vimeo Central, a complete suite for using video in collaboration and employee engagement. They also have a media segment, a separate business supporting creators who want to do subscription-based video monetization. They top out of what you can do in advertising and rev share on YouTube.
How Does Vimeo Handle Long-Tail PLG vs. a Very Sales-Led Motion?
This is how Adam ended up at Vimeo. Before it was called PLG, he did PLG at Dropbox and Heroku. Part of the joy for him was being able to tie the two motions together, building an Enterprise business on top of an existing business, and by the time he left Heroku, they had gone from about 5% to 50% of revenue.
That’s the opportunity here. Vimeo has millions of people interacting with their product every month, and what’s the one thing so many founders struggle with? Customer acquisition. It’s a pain.
A lot of people think PLG is kind of a magic bean. It’s not. It’s more work in some ways to get all the pieces synchronized. But if you can pull it off, it’s very rewarding to be able to connect the business that starts with that kind of consumer-style customer activity that you can take through all the stages and ultimately monetize for 10, 20, or 30k, and even customers spending over a million dollars a year.
Vimeo Has Several ICPs, but Are Marketers the Core One?
Vimeo has new and Enterprise products so that probably means many ICPs. Jason asks if marketers are the real ones that are buying. As a multi-product company, it adds more complexity to a complex business. Marketers are a core ICP, and the other ones are IT, CIOs, and even, as a part of that, a little bit of HR. They sell a lot into internal video, which is employee engagement.
How much synergy is there between the long tail and the PLG piece?
There is a lot, yet more to do. Vimeo’s self-serve business is feeding most Enterprise businesses, but Adam doesn’t think they are done connecting those dots.
Does the majority come from the long tail? And how do you think about CAC for those free-ish people?
In their most recent earnings call, they made a change in strategy to lean more into product-led. Vimeo has spent a fair amount historically on advertising, primarily to fuel the more prosumer individual online subscription business.
One of the strategy changes is to say, “Hey if we turn up the innovation and actual product quality, can we ultimately get around having to spend all this money on advertising?” Well, they started the strategy, and Adam believes it’s a big opportunity.
Parts of the business resembled more of a consumer prosumer direct response marketing model. And if you can throw Enterprise on the end of it, you can materially change the CAC dynamics, so it’s an evolving equation.
One of the great things about Vimeo is there aren’t a lot of companies that have this kind of brand recognition and internet traffic. It’s an unbelievable asset.
“We have our own passionate community inside these organizations, particularly the film people inside a marketing organization,” Adam shares. “They have some deep emotional connection with Vimeo.” The question is, how do they translate or take that passion and create products, value propositions, messages, and GTM motions that are more strategic and have a bigger impact on those businesses?
This is part of the playbook.
How to Avoid Over-Monetization During Tough Times?
When you have a brand that people love, like Vimeo, how do you ensure you don’t over-monetize? How do you invest in the positive attributes of the community while protecting that special connection with people?
The past couple of years have been unique for many reasons. Many companies started missing plan, and pressure came down, so business decisions started taking precedence.
One North Star for Vimeo is being able to maintain more of a long-term perspective. The stakeholders benefit from this view in the long term, but you do have to ask for patience. One thing about moving away from paid acquisition to higher quality revenue is it requires a re-emphasis and reinvestment into free.
PLG isn’t for everybody, but if you do it, free is a component. If you try to mine too aggressively from free until they’re paid and before you have that engagement, you will pay for it on the other side with quality and retention.
Who Owns Free?
Vimeo’s KPI is MAU (Monthly Active Users). In their current model, they have a squad model. The whole thing about PLG is that it is challenging because it’s highly cross-organizational. Most companies aren’t good at cross-organizational in a single GTM mode, but you have to be.
At Vimeo, they have to be good at cross-organizational in three GTM modes — free, self-serve, and Enterprise. The degree to which an organization can get its wires crossed when talking about all those different motions is easy and profound.
The squad model has a VP of Growth in Marketing and a VP of Product who owns experience and growth inside Product. The two of them own a squad where they prioritize their projects together every quarter. It’s working well.
The two of them together own their metrics, and on free, it’s 100% MAU. A piece of tactical advice from Adam is to have fewer metrics, not more.
There’s a tendency to get lost in the data and think the answers lie there. It doesn’t. It lies with the customers. The first thing Adam did when he showed up was remove 80% of the metrics.
Pick a couple of simple things to focus on that everyone can keep in their head and align to. Keep it simple with 3-5 max.
Have There Been Any Big Changes for Vimeo Related to Efficiency?
In 2021, revenue per employee was around 80k to 100k. Times were good. Now, we’re moving to $400k of revenue per employee. “As an industry, we haven’t dealt with the ramifications for what that means,” Jason says. Last year, Vimeo announced something like $34M. 24 months ago, it was negative, which is a massive change in cash flow margins.
What are the big changes Vimeo has gone through to become so profitable?
A gross oversimplification is that everyone got twice as efficient. Vimeo became profitable by being really operationally expert, which is different than efficient. Efficient might mean CMOs grinding you down, and you switch from Zoom to Google Meet, which Vimeo did.
“Are app layoffs to save nickels done?” Jason interjects.
One of the more interesting experiences is Adam is now a major SaaS buyer. He thinks we spend too much on SaaS, and he’s not convinced of the value. As a CEO, he spends 5 seconds approving or not approving a $50k random SaaS request.
His advice? Generate one iota of value for the CEO, and it will make a difference.
His focus is not on operational efficiency but on operational proficiency. How good are you as an organization at planning, innovating, and thinking about business processes and then implementing them in your business? That’s the skill, especially on the GTM side, that you should invest in early.
How Will AI Fundamentally Change the Workplace and Products?
Long-term in a video company, GenAI and video will change the world x10. Today, it’s more about content extraction, discovery, and search. Vimeo’s goal is for all the video in your organization, whether it’s marketing, internal meetings, town halls, you name it, to be in their database. Vimeo Central then does all the content extraction — concepts and questions to chat with videos.
We’re in the early days in terms of how it changes how a business operates and unlocks. “That’s really exciting and occasionally scary,” Adam says.
Do you see massive disruption in workforces and marketing headcounts shrinking because of AI?
“I’m not connecting those dots yet,” Adam shares. “I think we’ll be surprised at how much collaboration tools and work experiences shift.” If you look at past years, none would guess we’d use video so much in our day-to-day productivity experience. We’re at inning one. Zoom and hanging out in COVID times is the Blackberry Era and not the iPhone Era.
Adam believes AI will heighten asynchronous communication and your ability to consume and collaborate.
