The Exchanges

Q back into Python. You playing with deep seek. What did you have any epiphany? Do you think God, if maybe in a year I could do this with Procore, I could just do something in industry, any AI, uh, don't mean to put you on the spot, but any, we're, we're all seeing so much change. Any, anything you all, any aha moments you had out of all of this?

A You know what I like? Yes. The aha moment is that we're all limited by our ability to prompt engineer. So I think as, as we get better at prompt engineering, we're going to be able to ask these models much more sophisticated questions. And now that you actually get chain of thought, you can actually ask really deep questions and really deep and ask for really deep analysis, which is completely different than just predicting the next word that's going to come up. For me, now that you have these models that are reasoning models that can do this chain of thought, I, I think that everything is going to change. I think the way that, um, I actually think the way construction gets delivered is going to change because a lot of the problem, a lot of processes in construction are built around trying to do risk mitigation because people know that mistakes are going to happen. If you can prevent those mistakes from happening, you can actually reduce all the risk mitigation and actually increase people's profits. So I, I just, I think. Yeah, I just think there's a lot that's coming, and it could not be a more exciting time to be a, essentially, a data company in a Industry that's as big as it, as construction is.

AI assessment note: “The aha moment is that we're all limited by our ability to prompt engineer.”

Q I get it, but I get it. Maybe it didn't sound like the hottest space, right? We get it. But a mid-sized market in all fairness, right? Even it's mid-sized, right? Classically.

A I think more importantly than that, you could get to Double digit AR just serving that market. And the thing that we, I think, saw that there's so many great competitors that have died around us over the last eight years was that we focused on a use case where the technology was actually good enough, not where we could dream it to be one day, but doing all sorts of cool marketing and sales content. It worked well for training because the alternative to training was a boring PDF document. And so what we've seen over the last couple of years, right, is that the better the avatar quality becomes, the bigger the tan gets. So the last 12 to 18 months, we've seen a massive shift towards product marketing with customer support, which collectively those two are now actually the biggest segments that we serve. And that's purely because the quality of the avatars have gotten better and better. We're not making like, we're not making Super Bowl ads and key brand moments, but we make a lot of tactical marketing content, right? You see the cool ad on Meta, YouTube, whatever you click to the website. And then once you're on the website, Then you learn more about the product with some easier videos, and we could just move further and further up that funnel, the better the quality of that.

AI assessment note: “you could get to Double digit AR just serving that market”

Q I get it, but I get it. Maybe it didn't sound like the hottest space, right? We get it. But a mid-sized market in all fairness, right? Even it's mid-sized, right? Classically.

A I think more importantly than that, you could get to Double digit AR just serving that market. And the thing that we, I think, saw that there's so many great competitors that have died around us over the last eight years was that we focused on a use case where the technology was actually good enough, not where we could dream it to be one day, but doing all sorts of cool marketing and sales content. It worked well for training because the alternative to training was a boring PDF document. And so what we've seen over the last couple of years, right, is that the better the avatar quality becomes, the bigger the tan gets. So the last 12 to 18 months, we've seen a massive shift towards product marketing with customer support, which collectively those two are now actually the biggest segments that we serve. And that's purely because the quality of the avatars have gotten better and better. We're not making like, we're not making Super Bowl ads and key brand moments, but we make a lot of tactical marketing content, right? You see the cool ad on Meta, YouTube, whatever you click to the website. And then once you're on the website, Then you learn more about the product with some easier videos, and we could just move further and further up that funnel, the better the quality of that.

AI assessment note: “you could get to Double digit AR just serving that market.”

Q today that are incredibly talented, worked together for decades, prepared eggshells with each other. Any tricks for keeping you? I'm sure it's great, but there must've been a few tough, tense moments or not everyone grows at the same rate, even if they get to the same place. Any, just any good learnings or tactics to keep the four of you together for so long to deal with the friction?

A I think it's always just being super real with each other. Like we've been friends now, 1520 years across these companies and we've been through a lot. I think we each know our strengths and weaknesses like with each other. And so we can be very open about, okay, I think you're missing this or. It's actually just all being honest and being open about, okay, we're all figuring this out together. It's not like any of us have done this at this scale. Like we are figuring it out as a team. And I think once that humility is there, it actually is, is much more possible to have a real conversation. I think when egos are at play, that's when you tend to see those like crazy conflicts and you just step back. Like we're all just trying to solve a problem here.

AI assessment note: “I think it's always just being super real with each other.”

Q too, but now that your brand is pretty dominant, you can challenge me, you can say it's not dominant, our TAM's eight trillion, but I would suspect it's dominant in your niche markets. Do you sell, can you sell telematics and safety and your other products? Can you sell them all up front? Is it gradual? How is, what's, what have you learned about how's that motion changed over time?

A It's both. So most of our customers today use multiple products. So they adopt two, actually three or more in the enterprise. So that's gotten to be really strong. Many of them are under contract with the legacy provider and they'll say, I need to roll off that telematics contract, but let's put in the safety coaching. And when I'm done with that contract, I'll just bring it all on to Samsara. Got it. So there is a benefit there. We can land with a number of different products, but ultimately customers are adopting the platform. And the scale, it's not just brand, right? There's actually a lot of data that we see in the system that nobody else has a scale of data. We have our ability to support customers at scale, help them with these programs, help them figure out how do you coach drivers? These are all things that get better, the bigger you are, because we, we see more, right? We see so many of these very large companies do this. That's an interesting flywheel effect as well.

AI assessment note: “It's both. So most of our customers today use multiple products.”

Q Okay, so I want to dig into it, but at a high level, you've got your pulse on 475,000 small businesses. Are we in a downturn?

A The way we describe this is I would say a year ago, and we talked about this on earnings, there was contraction, not a lot of contraction, but businesses, I would have said a year ago that businesses actually were in a recession because we saw year over year, economy wasn't, but businesses were holding, they were keeping their cash as long as they could keep their cash, which is what everybody here I'm sure did and was trying to do and probably still doing. But what we've seen this year is more stabilization in the last maybe three quarters. And so I call this the wait and see economy. This is, nobody's investing for growth the way they were three years ago, which is crazy. People were just investing, investing. Obviously the AI category is investing for growth, but all the other SMBs we see, they're pretty much, yeah, they're flat year over year. They're spent per customer is flat year over year, which means that they're Waiting because there's money there and people just haven't been investing it yet, but at a meta level.

AI assessment note: “what we've seen this year is more stabilization... I call this the wait and see economy”

Q you're blue in the face or sales strategy, but if you don't have the team to do it at your Zoom Info scale, there's no point in Talking to your office. So I mean, that's where I think you're better than me among many things is you got it. It's tiring to rebuild the management team, isn't it? Maybe you love it, but I don't know that anyone loves it.

A I think part of it is like, there's this piece that where you go, yeah, you should be recruiting 20 to 30% of your time all the time. The other side of it is you need to be evaluating your team a hundred percent of the time. And so a hundred percent of the time you're trying to think like, is this the right person? I think it's the right person. Are they doing the right things? Are they? And if they're not, how much time do I have to get them to be doing the right things and building a good team? Or do I have to go start meeting other people? And that's probably the most tiring part because you want to get your team Feel really good about them. But if you're trying to build, it's like you're constantly evaluating if they're the right people.

AI assessment note: “And that's probably the most tiring part because you want to get your team”

Q you just sell a POS, I don't think you can make that much. Right. And I don't think the TAM pencils out. So I feel like there's like You need to do it all. The merchant, the vendors want it all, right? The customers, but you almost need to earn 10 K from these small customers to make the bath pens a lot. Does that sound about right to you?

A I think it sounds right. And this is the development we've gone through the cycle where PLGs were a thing and ads were cheap and ROAS was high and like, you can't do that anymore. Basically like very few companies can pull that off, which drove all of the S and B economic model and all, and most of the S and B sales models were built On a PLG set of math and it doesn't exist this way. And so you have to make more money to justify the sales process now than you ever had to do. And so you have to look at the customers and say, a lot of what was driving the first generation of this has is rapidly commoditizing where the customers are like, I'm no longer paying for this. And everyone's chased each other to the bottom to commoditize it. And so where is the value curve for the customers? What do the customers actually value? Versus what has, what have we spent a lot of time and effort building? These are now no longer like perfect overlap. They're now the Venn diagrams actually starting to pull apart where a lot of what tech has built is no longer the high value curve because we were good at building it and we made it a commodity. And now we're stuck in what's the next value curve that generates enough revenue to justify the machine.

AI assessment note: “I think it sounds right. And this is the development we've gone through”

Q so many public SaaS and cloud companies see a decline in NRR of the last eight and 24 months. Do you find that the more products they buy, the higher the NRR is? I mean, I guess mathematically it's the case, so maybe, maybe that's the wrong question, although still the equation. Is your GRR higher? Is your retention higher? Your lower retention the higher, the more products they buy?

A I mean, certainly. Right. Um, you know, you just, as I said, you know, we don't have contracts, so anybody can leave anytime they want. And we even like refund them like mid month, no questions asked. So we intentionally want to make it easy to leave Mangamin because that way we know that the customers that use us and pay us, they really want it and they're really actively using it. And so, uh, what happens is, um, when you set it up that way, you have no choice, but, uh, Help hopefully get them more products. Right. And so if somebody signs up with payroll processing, let's say, and they get 15 workers to connect their bank accounts and fill out the w twos and all of that stuff, I mean, it's a pretty high bar now to switch away and, you know, we're not perfect, right? Like, you know, sometimes we mess up and like, there's something that's annoying in the product and customers will let us know, but because now they would have to switch the marketing tool, the payroll tool, like.

AI assessment note: “I mean, certainly. Right.”

Q So let's, we're gonna jump around in time, but one of the things a lot of, we're all thinking about, in two years or so, what does the AI enhanced sales executive look like? How is it, from your perspective, in the trenches, no Sony, no baloney, but so close to it, what does sales look like in two years with AI?

A Yeah. So first, no drudgery. Reps spend about 75% of their time on non-selling time. If you measure the hours that their customer facing, it's 25%, sometimes even less. Sometimes we see two hours a week, right? The rest is spent on filling in forms, one-on-one meeting, forecast calls, sifting through leaks, all of that. Much of that, well, ideally all of this goes away, but if not, then even if we cut half, that's huge. The second, I think, is blending of a role. Uh, there'll be no more SDRs, CSMs, AEs, BDRs, XDRs, all of these. Uh, I see them converging into one role, essentially. As SaaS companies, the last 20 years went hyper-specialized, where there are very specific roles. Everybody has their own unique thing, which has its advantages. First, it's easy to train people on a small sliver of their job, and it gives focus. But it also creates a not so great customer experience where they're being like handed over from one person to another. It creates inefficiencies in the company because it's hard to align the capacities of one group versus the other. But if you arm people with AI that can do a lot of the things, right? If you take a black cab here in London, right? It takes four years to get trained or something, right? It's insanely hard to do that, right?

AI assessment note: “first, no drudgery... The second, I think, is blending of a role.”

Q I just think it's sometimes it's, it's complicated where to draw the line, isn't it? Where to draw that line on monetizing when you've got this broad base. I don't know that the answers are always obvious.

A I always go back to the customer, and we're really getting value. Yes. We do a lot of really hard, complicated things. Some which are invisible to users, some which are visible. And I love business models, which are subscription models, where the user's paying for something they get value out of. I don't love it where I'm like, I don't love advertising models or other things where I'm like trying to gather a lot of people and then sell them to someone else. We do that as well. We're business. It's a good business model for some of our things, but what I prefer and what I cherish is that direct one-to-one subscription, that relationship with the customer, that sacred act of them taking out their credit card and saying, Hey, I value what you make. And I'm going to pay you for it. And what I want to build is a business of as many of those subscribers as possible.

AI assessment note: “what I prefer and what I cherish is that direct one-to-one subscription”

Q Um, so, we're about to hit two million dollars in revenue this year. When is the right time to hire your sales VP, and how do you know, like, that is the guy, that is the guy can take you to an A round or to the next stage? Thank you.

A Look, the answer, um, I've written this and no criticism. I've written this at least 80 times since 2012, but I'm going to say it again because, um, it's really true and I've had many conversations around it this week. For, If you can, the right, the perfect time to hire the VP of sales is when you have two scaled reps. When you do what we now all call founder-led sales. When Sastra started, I just said, you gotta do it yourself. Now we call it founder-led sales. Ideally take founder-led sales to two reps that can hit quota. When you have two reps, you have the beginning of an engine. You have something that someone that has sales experience can replicate, ok? So if you have two reps hitting quota, You can go out and fire your first stretch VP of sales, and her or his job will be to take you from three to 300. Once they have two, if they're smart enough to understand the pattern, close some deals themselves, listen and learn to these two, the good ones will listen and learn, the mediocre ones will disregard them. The two ones will say it's a blessing, and they will find two others like them, and then the next two will be a little less like them, and the next two, as you develop a playbook and get some heterogeneity and some diversity. But if you hire a head of sales before two reps, Maybe five percent of the time it works out. There's nothing for them to build on. There's nothi…

AI assessment note: “the perfect time to hire the VP of sales is when you have two scaled reps.”

Q through that, now that I hear you say it again, You know, question is, when you have something this rich, especially to SMBs, how do you communicate that, right? Now, the Google search is an interesting example, right? Because, how do you communicate this depth? It's, it's, it's, it's so much functionality, right? How do you do that without overwhelming, or how do you expose a small business to it?

A Yeah, so, so I think, uh, the main point that, um, we, we've done, uh, which I think is important, you don't need to tell the whole story from the beginning, uh, especially when you sell to SMBs. Um, I think that we focused on giving them value as soon as possible. So if you were searching for a project management or CRM, we wanted to serve them a CRM or a project management. Don't need to explain the whole depth of the platform. And then as they scale the product and use it more and more, they're exposed to all the features. So, we call it, like, gradual discovery. Don't overwhelm them, don't tell them the whole story, because it's confusing, especially when you're an SMB. You want to understand what you're buying. So that's, that was our focus from day one.

AI assessment note: “we call it, like, gradual discovery. Don't overwhelm them, don't tell them the whole story”

Q The math just, like, the math doesn't work, right?

A Yeah, it doesn't. But, and, and, and I think there has been a correction, so the correction evaluation started with the, the super late stage stuff, because what happened is the, the crossover investors who had come into the market, like the Tigers and so on, They just got their faces ripped off, so they basically just got out of the market, and so the super late stage rounds is where liquidity just dried up, and then it started trickling down, and so, you know, first Series C was hard, and then Series B got hard. I mean, everyone who's kind of around earlier can look forward and see, oh, wait a second, there's no one to market my deal anymore. I better be, like, really conservative.

AI assessment note: “Yeah, it doesn't. But, and, and, and I think there has been a correction”

Q think it's dire. It's just we're back to a world. What, what got inverted for two years from late 20 20 to 20 22 We, this weird world happened in venture where each successive round got earlier, easier. It never got, it always was supposed to be harder, right? There was always supposed to be a winnowing from each round, and then it got inverted, it got easier, didn't it?

A Yeah, I think is, is why I don't really see that as maybe like a very tough time now. It's more like we readjust to what it should have been. So it just had been way too crazy in the past. Um, and then now we go back to, um, multiples and numbers that makes more sense. I think it just went Out of the line. And then now we're going back to something more reasonable. So during that time, you can also have seen a few VCs and a few entrepreneurs with a lot of discipline in terms of for funds manager is don't raise too much money. So that is difficult because a lot of them make their money out of management fees and not so much on carry. But it's the same for the founders. A lot of them also, um, didn't manage to have the discipline to don't raise too much because money was so easy to get. And a lot of them were willing to get crazy valuation. But I'm seeing now, like, people that are building their second or third company here, even if one of them got an exit with Google here in, in Singapore, um, they're only raising one, 1.5 million at an eight to ten million valuation, where they can, even if today still raise five million at a twenty-five million valuation, but they don't, because they know that is going to be very difficult for them in one or two years down the line, because they have raised too much money at a too high valuation. So I think the one having discipline will go t…

AI assessment note: “It's more like we readjust to what it should have been.”

Q So if we put on the hat of a sales leader or a founder, when we think about like target setting, how do we do target setting in a market like this, where there is such volatility and uncertainty?

A This is where there's a lot of burden on CEOs and CEOs have to Have to be the adults in the room and they have to do it the right way. You got it. You got to slow down. First of all, you have to look at your trailing velocity. You have to look at your last three to four months, average the growth rate, average the burn rate. And that's who you are. Whoever, whatever you've been growing or burning last week, even if you want to be a different person, even if you don't like how you look, that's who you are. The average of your last three to four months. And that's your base plan. And then you have to calmly sit down and say, Hey, if I don't like that, How do I do better? And how, and be realistic about it. You can only inflect a curve so much. If you, if you, if let's say you're, let's say last year you were growing, you were growing 200%, but for the last four months, you've only been growing 20%, right? That's your average growth rate. That's you today. And if you go to your sales team and say, we're going to get back to a hundred by the end of the year, you may destroy the team, right? You have to level, you have to take that trailing three to four months average And scale it, gradually scale it up to something that is sane. And you have to importantly do it with the burn rate. I think we've gotten better the last couple months, but people that don't do this on the burn rate a…

AI assessment note: “You have to look at your last three to four months, average the growth rate”

Q What are the big mistakes you're seeing there, Jason?

A Look, the biggest mistake I I've seen, which is probably twofold. Um, the number one, one is not enough sensitivities to models. And this got people in trouble last year, but it's going to hurt again this year, which is that if you miss your growth plan, even by a smidge, Um, it can dramatically increase your burn rate. People do not build sensitive enough models, right? If I've hired all this head count, extra head count, and they don't hit the number, but I've incurred all the expenses for that head count, um, my burn rate often is materially higher than I think. So people don't build the right sensitivity analysis to when they underperform, right? So you have to have at least either you have to have a great model or what you have to do is build a worser case model. Right? Where you miss the plan significantly, and you're sort of stuck with a certain amount of expenses, and just understand what your burn rate is. So, so really, that's the, that's the biggest problem I see. The second one is, there is still delusion out there on the odds of raising a, a later round. There's still delusion across all of the markets, and I still anger founders when I bring it up. I still get Toxic comments, but you just have to assume absent evidence, you're unfundable. Like, go find, go get a term sheet, or just go get someone you trust to tell you, hey, Harry, if you hit ten million growing to…

AI assessment note: “Look, the biggest mistake I I've seen, which is probably twofold.”

Q these, and I've seen the Octodate and others, but I haven't seen this 248 per SMB. It's really interesting. Do you have insights? Do you think that that was an explosion? Do you think it will stay constant? Do you think that are we, if we're selling to SMBs, are we competing for one out of 250 slots? Do you have a sense of how that will look going forward?

A I mean, look, everything comes in cycles, you know, within business. There's a period of You know, explosion of point solutions. There's a period of consolidation of point solutions. There's a period where everything is bundled and there's a period where everything is unbundled. I mean, if you go back, you know, and start looking at the different S curves, we've gone through those cycles. So I think we've just gone through the cycle of explosion and massive point, you know, solution adoption. Now we have to go through a period of connected solutions, right? We cannot just have, I'm not saying point solutions are all bad. I think you're not going to go from 248 to two. That's not possible, but I think you're going to have to think about how are you going to connect some of these solutions? How are you going to get the value out of them and what is absolutely need to have versus what is nice to have?

AI assessment note: “we've just gone through the cycle of explosion and massive point, you know, solution adoption.”

Q Interesting. I want to come back to that, but, uh, Alex, what, what are you seeing? I know you're in a public company, so you, you may have to, uh, put, put, put some quotes around it, but what were you on this, these two, one to tens?

A You know, it's interesting. I actually have a more positive outlook than Arun, um, you know, maybe because of just like the long-term sort of review. I mean, I guess I'd say on the, on the, on the overall industry, you know, I'd probably give it a, a seven or an eight, uh, in the sense that, you know, I think what we've seen is, you know, I think the big question right now is can these companies all continue to be mission critical as they have been the last five to 10 years? You know, I think if you look at how many SaaS companies exist today versus 15 years ago, We just have a huge, much larger data set of companies that have gone public. And certainly in the pandemic, what we saw is all these companies were sort of keeping the lights on for industries and, you know, companies of all shapes and sizes. Uh, and so what you're seeing now, I think is there's been a real refocusing of, Hey, what are the most mission critical companies that we need to support in terms of budget? And, uh, you know, that's, I think the defining factor that we're going to see the next three or four quarters is we'll get a real sense of what's mission critical versus not. Our view is that obviously, um, you know, a lot of what we've seen in SaaS is with the beauty of the model and customer success from at the forefront is, if you're delivering value to customers, we really think you will still see conti…

AI assessment note: “I'd probably give it a, a seven or an eight”

Q growing at rates that honestly, when, when, uh, when I met Alex or Doug, we, I didn't even think these growth rates were possible or as I didn't think we can grow at these rates north of a billion, right? And so I wonder if it's so bad or our expectations and our worldviews got warped for two years, right? Did this go on for too long, the good times?

A Yeah, I think we, I think we were drunk. I do think we were drunk last year. Um, and, and I think that the, the hangover is, is going to be real, but, but you're right. There are those incredible public billion dollar revenue companies that are growing well. You know, they've proven that they are standards. They are platforms. Uh, they're kind of like IBM was back in the eighties. You don't get fired for buying IBM. Um, and, and clearly they've proven they have insane product market fit and ROI. So it stands to reason that they might be the ones that continue growing the fastest. What I think all of us on this call are worried about. Are the thousands of companies that were funded in the last three to five years. Uh, that aren't those companies and and I think that group. Is the one where there's going to be real differentiation, like Alex said, between the must have the nice to have the core products that deliver real ROI. And that's where the rubber meets the road and not everybody's going to win. I think the drunkenness last year was we, we made two fundamental errors. I think one, we thought everything would work. Every, every company looked like it was going to work. And by the way, for a while, In a free money economy with no, no focus on budgets, almost anything could sell. And I think those days are over the must have nice to have line. It's very bright now, and it's pr…

AI assessment note: “Yeah, I think we, I think we were drunk. I do think we were drunk”

Q Yes. What's the secret sauce? We built our last point.

A We built our marketing app. We have, let's say a workflow engine in there. We have reporting in there, and then we decided we're going to build a CRM suite. Sales. We started building the sales app. We built, started building our own workflow engine, our own reporting, everything. And then one day we woke up. It's like, why don't we put those all down below the stack and have a set of, we call them primary colors that we can paint from data, uh, reporting, uh, workflows is a handful of these. And then each application, we take these pieces and we paint the application because they share these things that makes the application just Fit together so nicely, so much easier to use, so much easier to unwrap, and it's just unique relative to the landscape of these cobbled together monstrosities that the competitors sell. That's the secret.

AI assessment note: “why don't we put those all down below the stack”

Q So it sounds like you had, like, You know, at the end, companies are either sales-led or sort of product-led at some level. Occasionally there's quirky other ones, marketing or design, like Mailchimp or Figma we chat about, but did you argue? Did the CTO argue that there was not enough resources in engineering? Were you, were you frustrated with your co-founder?

A Well, I wouldn't call it frustration because we both made a deliberate decision in the early, um, early years of HubSpot. This is, okay, we're building business software. Okay, we're not putting someone on Mars, inventing a new energy source. So let's stipulate that if we happen to stumble into an actual market, that we will be able to build a product to kind of serve that market. So the risk we were trying to mitigate in the early years is the only way to figure out if there's a market or not is to try and sell into that market and see if people will pay you money and if they will stay, right? So that's the thing. Um, the, the challenge was, uh, so that was a very deliberate, intentional decision. But then you sort of get addicted to that curve, right? They're going month and month and quarter. It's like, ah, that looks really pretty. It's really fun to show that at a board meeting. Um, so we didn't get frustrated with each other, but we, I think we had like a, a joint epiphany that says, okay, well, this can't continue. Like it's been a good run, but we can't do this. There was no argument. It was like, yeah, let's do this.

AI assessment note: “so we didn't get frustrated with each other... There was no argument.”

Q days of eSignatures, my co-founder wanted us to be the bad boys of eSignatures, and I'm like, I don't think that's gonna work. Like, this is a product that 99% of the world doesn't trust, and I know you're a great marketer, but this is too edgy for back in the day, right? So how did, what did you want to get out of WEIRD? What was your vision here?

A Uh, I mean, it was really probably coming from our small business customers. Uh, my co-founder Dan and I just believed in, really, we didn't try to strategize that much or come up with all the answers ourselves. We just went out to the customers. And when we talked to them, they were kind of kooky themselves. I mean, whatever small business it is that you're trying to run, it's probably been done before. But each founder thinks, I'm going to do it better. I'm going to do it my way. And that's their personal brand. And I don't know, there was the first couple of iterations of our brand. They were a little bit weird and funny, um, in a kind of a monkey kind of way. That was really the theme. Uh, and they just loved it, and we just sort of rolled from there. And, you know, I think one of our, one of our teammates, uh, uh, kind of encapsulated perfectly. I think she came up with, uh, we got you because we get you. I think that's the appeal of our brand. For small business owners, we get them. Look at us. We're weird like you, or we're kooky and unique like you. And it just, it's just worked for 21 years.

AI assessment note: “For small business owners, we get them. Look at us. We're weird like you”

Q Got it. Well, that'll be a big experiment, right? Um, it's, it's the big, Related to that, we chatted before, um, about product expansion. I learned some interesting stuff from you, but what works and what doesn't, right? And what worked for you, I think we talked about landing pages being a surprise, right? And e-commerce being harder than you expected to expand in, right?

A Yeah, e-commerce, e-commerce was a bit, it's, it's a challenge to break into that world, um, but, and, and we, we built all kinds of things for our small businesses, um, Landing pages was one that we built. I kind of thought they were boring, uh, not really a big deal, and it was probably one of our most popular features over the last, in recent years. I mean, it just took off and sold like hotcakes, and I still to this day can't explain it. I'm just thankful that we had this culture at Mailchimp to constantly not, we didn't even use the word innovate as far as I can remember. I always just said tinker. I said just keep tinkering with code and just keep trying little, make small bets. I didn't want moon shots. They were too expensive. I just said, make little small bets, and fail fast, and then just kind of, like, recalibrate, and landing pages was one of those little tinkering experiments someone did. Who knew? I mean, it just took off.

AI assessment note: “Landing pages was one that we built. I kind of thought they were boring”

Q confidence of a lot of folks in the next Figma being relatively valuation. I mean, I wish I had the data from this YC class, I'm sure it's down, but I bet it's pretty good. I bet the valuation, I bet there are plenty of people that were thrilled to write twenty million, um, post safes in very risky early stages and have no qualms, right? No qualms at all.

A I do think some of that speaks to, um, like what we called, like, we derided them as tourist VCs, um, and that's not very respectful, so I won't use that term, but Um, I think there are a lot of people who have not seen cycles before in the industry right now. There's a lot of, like, basically, as these funds got bigger, they had more fee income. And so they could feed more mouths. And they would hire younger people and say, you have a checkbook. Like, you don't have a big checkbook like I have. Like, you know, the part, the general partners could write 20, 5000, hundred fifty million dollar checks. The younger people are given checkbooks to write A two million dollar check. A four million dollar check. That way if they don't work out and you let them go, you're not actually losing that much money. Um, and it's kind of like training wheels for the next generation investors. And so a lot of those folks have not seen cycles. They only understand the world we've lived in for the past three to five years. And so for them, going from a seed that was at 50 post to a seed that's at 25 post is like, cool, it's like a bargain. Um, but they don't realize that things are still going down. Um, and so I think we're still in this adjustment period.

AI assessment note: “a lot of those folks have not seen cycles. They only understand the world”

Q Yeah, you gotta do the write-up. Um, related to this, there's a topic I'm lately super passionate about is, I've realized it's getting worse and worse too. How expert does the sales team need to be in the product?

A Yeah, that's a great question. The answer is it depends on your stage. So early on in, in, in the evolution of our company, um, when you were creating a, kind of creating a category, and people hadn't heard of the product, and you're the only one in the space, and competition was, like, really fierce, and it was kind of a, like, more of a duopoly at the time, they have to know a lot about the product. They have to know how to navigate the product. They also have to be usually really bright. We did a really bad job of hiring salespeople. We'd hired six, and then one would be remaining. We'd hire one, five, three months later, two would be remaining. We ended up giving essentially a cognitive test in the early days, and it turned out we gave it to our best sales reps. They scored way high on it, and so then we went, and we went back, and we gave it to everybody who was a prospective salesperson. The ones who scored high came in. They did a really great job. When the company got bigger, that was just a bottleneck to hiring, and it turned out, as the company got bigger and more people understood what the product was, more the buyers in the market understood things, the product was more featureful, that you didn't really need, like, the super high IQ person anymore. Um, and that was just hurting our ability to scale the sales team, and so it is, the, the smaller you are, the newer t…

AI assessment note: “The answer is it depends on your stage. So early on... they have to know a lot”

Q trusted sales. So I just put with limited capital. I put it where I knew, but You're really saying I didn't know these other areas and I'm not sure about the leaders I hired. Did you hire the wrong first generation of management team because you, you hadn't done those functional areas before? What was, why are you not able to trust them? Did you just make the classic mishires?

A I think I made the classic mishires. And then after I made the classic mishires, like if I took marketing, for example, after I made a classic mishire there, what I convinced myself of Was what I was getting from them was better than what I would do myself in the limited time that I would have focused on marketing across all of the other things I was focusing on instead of am I getting what I would in just a vacuum, what I would expect from a fantastic marketing organization. And I wasn't ever getting that in the early days. What I was getting instead was something better than what I was able to do on my own. And it was just the wrong lens to look at it through.

AI assessment note: “I think I made the classic mishires.”

Q Okay, we got a bonus mistake number 11. Um, I'm sure there's bonuses 12 through a hundred out there too, but undervaluing communication and messaging internally and externally. Yeah, we all make this mistake, but what is this, what does this mean specifically?

A So specifically for me, this means like Getting your message right on any number of things can really mean the difference between success and failure between getting your team behind you or not. Um, and that, and that goes from everything from like your sales deck and your pitch deck to the messaging on your website. But for me, where this, this happens most is internally where I'm trying to get the team excited about some direction I'm going and, you know, At this level, I think like the, the somewhat naive view is I get, I come in and I go, Hey, do that, do that, do that. And everybody goes like, yup, we're going to go do that. And it's just like, it's way more nuanced than that. It's not like I just go like, I can't just go to my CTO and go like, do that. And he goes like, yup. Okay. I'm going to go do that. Like I have to be persuasive about it. I have to tie a story around it. I have to explain why it's important to our business, why it's important to his business. And I have to get people around the idea so that everybody is convinced that this direction from a product perspective or a go to market perspective is the right one. And how you message any of those different directions is that it really makes the difference between like everybody being really excited to run through a wall for you. And like a couple of people getting in and a couple of people being like, y'all …

AI assessment note: “specifically for me, this means like Getting your message right on any number of things”

Q Was there like back in 2014 when you were writing this was, what was the 10 X feature for Canva in the early days? Like what, what, what did you win? Were you doing something on social media that was hard to do in other apps or what was that? What was that step function that, that wasn't in the market back then?

A Yeah. Like the, the, the, the products, uh, back then, uh, we, you know, we launched really focused on social media. Uh, we call them, you know, dock types, but, um, you know, we had, A suite of templates that you could go and choose from. And it was really easy to kind of edit and create things like, you know, Facebook posts or, you know, your, your email headers and things like that. And I think it was actually just by making that process really, really easy. Um, you know, Canva had, uh, relaunched with, um, You know, this, this idea of like integrating everything into, into one page. So you could just go to one, one, one place. You had the templates. There was, um, you know, stock photography, um, that was, you know, free or, or a dollar to use. Uh, it was really easy to kind of publish that, like in the, in the right format, um, for, um, you know, at the end stage. So I think it was just about really solving that problem really, uh, really well early on. And, you know, a little bit later on, we, um, we launched I remember when we, um, we launched, What's now Canva Pro, uh, where you came up with this feature called Magic Resize, uh, and that was, um, that was just, like, an incredibly popular feature, and it was just something I think that, um, social media markets in particular really struggled with. You kind of go and design a Facebook post, and then you have to resize it…

AI assessment note: “we came up with this feature called Magic Resize”

Q or maybe sales success, I don't know if you own the post sales piece too, but do you, what are the tools you use? Do you use QBRs or what other things do you do besides the data to discover customer needs for additional products without, you know, overselling them? How do you manage that? How do you manage that line? How do you, how do you have those conversations?

A Um, so a number of ways. So the first thing is, um, is that, uh, you know, we're very much a use case oriented sale, which many, many SaaS offerings are, but I mean, the truth of the matter is, is there, we don't get any inbound RFPs for companies that are going out to bid for a content cloud. So we have to go into our customers and into our prospects, and we have to identify high value use cases that are a good fit for the box content cloud. And so it takes a certain level of technical acumen and business acumen On, uh, uh, amongst our go-to-market teams in order to do that successfully. And then with our installed customers, we do do QBRs, we call them SVRs, so our, our, our, our full extended account teams meet with our, with our customers on a quarterly basis, and we do the standard stuff. We go through what their usage is, which products they're using, which ones they're not. We help them understand how they can get more value out of their current investment, because if they're not getting value out of their current investment, There's no opportunity for them to expand that investment. So we do all those sorts of things. Then along with that, uh, especially, you know, right now, because we have such an exciting roadmap, we will brief them on our roadmap to get their feedback. And then as they're doing their strategic planning and their IT architecture, they can make decisi…

AI assessment note: “with our installed customers, we do do QBRs, we call them SVRs”