The Exchanges

Q Are there downsides to that or, like, local maxima problems you run into when your primary company value is peace of mind and or fear-mongering security and not much else?

A Yeah, this is, this is what I call the, the SAML, you know, SSL hostage play that many companies employ, including my own companies in the past. Here's the downside. The downside is Very likely, your upside case is essentially you have securitized and stabilized your initial organic user base. So at Dropbox, it was very common was we would see people pay, like, seven-figure deals, right, for the enterprise-grade version of Dropbox that has all the security bells and whistles, but it was primarily for just that 30% of employees. You don't really develop trust And the right relationships with the shared services and procurement and IT to really, like, deploy out wall to wall. Of course, you try, right? And I would say maybe five percent of your enterprise customers are able to actually leverage that access to IT's interest and security to drive a bigger deployment. A lot of times you're basically trading seats for a discount. You know, traditionally, traditional enterprise software, you think of Yourself as a company, as a strategic partner to the, to your customer. How can I help you actually achieve your company goals? And the hostage play, you're not setting up yourself for that kind of relationship. And so the local maximum, I like the way you, you framed it. Oftentimes the local maximum is your existing deployment and whatever happens organically, and you don't get pulled. L…

AI assessment note: “Here's the downside. The downside is Very likely, your upside case is essentially”

Q know, and you're getting together with the founder and they're trying to figure out what the next few years are going to look like and how do we think about enterprise and all the other types of things that we talked about. What are the most important things that you tend To convey or kind of most crystallized pieces of advice that you would tend to share with that founder?

A It comes down to that user value, uh, conversation we had earlier, which is, so I think there's actually two junctions from some PLG companies, which is some PLG companies start as an individual. Their product is really good for the individual usage, and now they want to go into teams. The value for a user versus the value for a team May require significant product changes and packaging and go to market changes. And then what we've talked about for the past hour is really going from small teams to big enterprise. Again, right? That value is very different. I always ask founders, even early on, even if I'm like, uh, evaluating a seed investment, I ask like, what's your hypothesis, right? Of what is that? If it's an individual, if it's like a, Productivity app, like one of those email or calendar apps today, right? It's like, okay, what's your hypothesis of what that team level user value, team level value will be? What are the problems you're solving on the team level? And then what are the problems you're solving on the enterprise level? You have to start generating these hypotheses as soon as possible and as early as possible so you can test them, test them, and validate as you go. Otherwise you end up with a company like, uh, like Evernote. Um, Evernote was a tremendous individual productivity app. It was, like, one of the first PLG companies. It's like, I still have it. I th…

AI assessment note: “You have to start generating these hypotheses as soon as possible and as early as possible”

Q Because I, I, I think it is related to an infrastructure company or infrastructure monitoring company like Datadog, but it does feel like more of a SAS tool style company is there versus AWS or some other kind of more classic infrastructure company. Is there something that you find intriguing with what they did, or you just chalk it up, you bundle that with AWS and all these other companies?

A What they did was really interesting. So I do, I do have a tremendous respect for, for Atlassian. I just think it's really hard for people to emulate what they did. So what they did from my perspective was it was really largely started with Jira, right? And Jira had a similar impact that Slack had bottoms up, which is it quietly and organically crept into lots of organizations. But at some point everybody woke up and was like, whoa, Everyone's using Jira. Uh, we should use Jira. And, and very quickly, you organically got at least a third of the organization, at least, right? All the engineers and PMs, usually, to be on Jira. And that dynamic is really hard to, to see happening, you know, again, but maybe there's an opportunity for others. But what Atlassian did that was amazing around that was then they built a whole ecosystem around Jira, right? And they, they, they started, they, they played almost like the same game like Intuit plays, Or like SMB players play, which is like, they started launching new product lines. And, and so, right, Confluent was a great add on. Bitbucket was a great add on. And they bought or built lots of adjacent things. On top of building the ecosystem, right? And, and their platform, they got that lock in, right? Much like, and so I think, I think what they did was amazing. I just think the dynamic they got with Jira early on, it's hard to see workin…

AI assessment note: “What they did was really interesting. So I do, I do have a tremendous respect”

Q of these topics about how you, how you set up to sort of successfully go after enterprise, I'm interested in the last 10 years, you've kind of had kind of two big chapters, the first at Dropbox and then the last six plus years at Asana. Do you have like crystallized big ideas that you keep coming back to that kind of ties that last 10 years of building together?

A I'll, I'll start on the people side. I think Winning the enterprise is really, and winning a more traditional PLG motion, it's almost like two separate companies. I think it's a very different way you think about building product, different way you interact with customers, and certainly a very different way to go to market. And as a result, I think even the talent is, it's usually quite separate across the whole company. Even how finance and legal and HR supports an enterprise, Company versus a more traditional bottoms up PLG company. I think it's very different. So the big idea here is like, it's really frigging hard, really hard because if it will feel like you get your, you're building two businesses at the same time. I think the big mistakes companies make over and over again when I see is when they try to blend, they think they can, they think they can just seamlessly evolve. And as they scale and Into an enterprise company. I think it's, I think it's a lot more complicated than that. If it feels like you're building two companies at the same time, I think you, that might actually feel, that might be ok.

AI assessment note: “The big idea here is like, it's really frigging hard... building two businesses”

Q As you're explaining what's happening in phase two, starting to build product and sell to a slightly more senior person in the org, did things immediately start to click as you're doing this, or was it wobbly in some way where the self-serve was firing on all cylinders, and you're kind of getting this new thing off the ground?

A Well, essentially, as a company, we layered on different motions, right? First, it was a hundred percent self-serve, and we layered on that CS sales experience. Then we layered on expansion sales, and eventually we laid on, let's call it more traditional enterprise executive selling. And in the beginning, of course, it's rocky every time you add a different layer. We got through it pretty well, uh, until the executive side was hard, right? Uh, because that, that was one where I think the, the gestational period to build that play Took us up by surprise. It took, it just, it takes a long, long time. And so I think to your question around where things rocky, I think things are rocky whenever the business and the product side are not fully aligned in terms of timing. Let's assume, let's assume you get your strategy right. If your strategy is wrong, then you got a bigger problems. Assuming your strategy is right, you gotta, you have to like time the execution of both the product and the business side really, really well. And also the, the GNA side too, making sure you have the right Legal support to drive enterprise deals is as important as the product, by the way. I think that's where things get difficult.

AI assessment note: “in the beginning, of course, it's rocky every time you add a different layer.”

Q How did you also figure out, just before we keep going, this was the time to make a concerted effort to crack enterprise?

A In retrospect, I can give you a really fancy answer. In reality, at that moment, I mean, I think you can ask anyone on my team, like, I want it all. I want it all. Um, and so I think that's probably the predominant feeling here, which is that we want to win, and we believe that, I remember talking about this in my all hands, we look at every single category that's been created, it's very noisy in the beginning, but there's a period of like, there's like a two to three year window, where there's a massive competition, but coming out of that, the category leader is kinged or queened, and that category leader gets like 70, 80% of the market share, and, and I think I saw this at Dropbox. I saw this at, you can see this in the messaging world. You saw this, um, in obviously CRM. Every category, like the thing about service now, like there is a peer, there's like a two to three, four year window where like all action happens, and then the leader is ordained. And so with that belief, and another belief was all categories have to go through the enterprise. All winners have to win through the enterprise. There's very few, I really can't think of many of any companies that Have become the category leader without winning the enterprise. So winning the enterprise was an imperative. Winning during a window when you feel like this category is being created was important. And so I think that'…

AI assessment note: “winning the enterprise was an imperative. Winning during a window when you feel like this category”