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Jun 7, 2018 · 23m · top-founders

1048 How Zendesk Figures Out Pricing and Product Strategy

Matt Price · 14m spoken Nathan Latka · 7m spoken
0:00 / 0:00

gold bands on the timeline = statements, start to end. Hover to read, click to jump. CC turns on captions

Nathan Latka interviews Matt Price, SVP of Zendesk's product portfolio, discussing how the company transitioned into a multi-product enterprise platform through transparent value-based pricing, strategic build-versus-buy decisions, and disciplined cohort experimentation.

How this conversation actually went

Every chapter scored 0–10 on four independent dynamics. Hover any point for the reasoning behind the score. Nathan holds 35% of the talking time here. How this is scored →

Nathan as informed peer 6.3 Guest teaching 5.2 Guest disagreement 1.7 Nathan pushing back 4.5
05100:0010:0020:003:15–5:59 · Nathan as informed peer 5/10 Pre-IPO Product Evolution and Upmarket Strategy Nathan probes into whether moving upmarket was forced by board pressure and investors wanting higher margins. Matt explains that the shift was product-led and pulled organically by enterprise customers wanting simple deployment.5:59–8:12 · Nathan as informed peer 6/10 Product Portfolio, M&A Decisions, and AnswerBot Nathan presses Matt for undisclosed acquisition figures on Outbound and probes rumors about acquiring Front App. Matt navigates public company disclosure rules and outlines their build-versus-buy criteria.8:13–11:16 · Nathan as informed peer 8/10 Pricing Axes, Feature Packaging, and Value-Based Metrics Nathan cites HubSpot CEO Brian Halligan's multi-axis pricing framework and analyzes differences in Zendesk Support versus Chat pricing tiers. Matt explains value-based pricing, feature packaging risks, and per-resolution fees for AnswerBot.11:17–14:05 · Nathan as informed peer 5/10 Testing Methodologies and Cohort Analytics Nathan suggests reverse-engineering top LTV customer onboarding flows, but Matt cautions that top customers are outliers and advocates for disciplined cohort testing across the broader base.14:09–18:46 · Nathan as informed peer 7/10 Experimentation Frameworks and Product Cannibalization Nathan brings up rapid experimentation velocity frameworks and questions if AnswerBot's automated deflection cannibalizes Zendesk's core per-seat agent revenue. Matt uses Dollar Shave Club data to show how automation redirects agent capacity rather than cutting seats.18:47–21:33 · Nathan as informed peer 7/10 Future Growth Vectors and Cross-Departmental Expansion Nathan outlines the three primary SaaS expansion vectors and synthesizes Zendesk's land-and-expand approach across IT, HR, and marketing departments. Matt agrees with the synthesis and dodges a speculative analyst trap.3:15–5:59 · Guest teaching 5/10 Pre-IPO Product Evolution and Upmarket Strategy Nathan probes into whether moving upmarket was forced by board pressure and investors wanting higher margins. Matt explains that the shift was product-led and pulled organically by enterprise customers wanting simple deployment.5:59–8:12 · Guest teaching 4/10 Product Portfolio, M&A Decisions, and AnswerBot Nathan presses Matt for undisclosed acquisition figures on Outbound and probes rumors about acquiring Front App. Matt navigates public company disclosure rules and outlines their build-versus-buy criteria.8:13–11:16 · Guest teaching 6/10 Pricing Axes, Feature Packaging, and Value-Based Metrics Nathan cites HubSpot CEO Brian Halligan's multi-axis pricing framework and analyzes differences in Zendesk Support versus Chat pricing tiers. Matt explains value-based pricing, feature packaging risks, and per-resolution fees for AnswerBot.11:17–14:05 · Guest teaching 6/10 Testing Methodologies and Cohort Analytics Nathan suggests reverse-engineering top LTV customer onboarding flows, but Matt cautions that top customers are outliers and advocates for disciplined cohort testing across the broader base.14:09–18:46 · Guest teaching 6/10 Experimentation Frameworks and Product Cannibalization Nathan brings up rapid experimentation velocity frameworks and questions if AnswerBot's automated deflection cannibalizes Zendesk's core per-seat agent revenue. Matt uses Dollar Shave Club data to show how automation redirects agent capacity rather than cutting seats.18:47–21:33 · Guest teaching 4/10 Future Growth Vectors and Cross-Departmental Expansion Nathan outlines the three primary SaaS expansion vectors and synthesizes Zendesk's land-and-expand approach across IT, HR, and marketing departments. Matt agrees with the synthesis and dodges a speculative analyst trap.3:15–5:59 · Guest disagreement 2/10 Pre-IPO Product Evolution and Upmarket Strategy Nathan probes into whether moving upmarket was forced by board pressure and investors wanting higher margins. Matt explains that the shift was product-led and pulled organically by enterprise customers wanting simple deployment.5:59–8:12 · Guest disagreement 2/10 Product Portfolio, M&A Decisions, and AnswerBot Nathan presses Matt for undisclosed acquisition figures on Outbound and probes rumors about acquiring Front App. Matt navigates public company disclosure rules and outlines their build-versus-buy criteria.8:13–11:16 · Guest disagreement 1/10 Pricing Axes, Feature Packaging, and Value-Based Metrics Nathan cites HubSpot CEO Brian Halligan's multi-axis pricing framework and analyzes differences in Zendesk Support versus Chat pricing tiers. Matt explains value-based pricing, feature packaging risks, and per-resolution fees for AnswerBot.11:17–14:05 · Guest disagreement 2/10 Testing Methodologies and Cohort Analytics Nathan suggests reverse-engineering top LTV customer onboarding flows, but Matt cautions that top customers are outliers and advocates for disciplined cohort testing across the broader base.14:09–18:46 · Guest disagreement 2/10 Experimentation Frameworks and Product Cannibalization Nathan brings up rapid experimentation velocity frameworks and questions if AnswerBot's automated deflection cannibalizes Zendesk's core per-seat agent revenue. Matt uses Dollar Shave Club data to show how automation redirects agent capacity rather than cutting seats.18:47–21:33 · Guest disagreement 1/10 Future Growth Vectors and Cross-Departmental Expansion Nathan outlines the three primary SaaS expansion vectors and synthesizes Zendesk's land-and-expand approach across IT, HR, and marketing departments. Matt agrees with the synthesis and dodges a speculative analyst trap.3:15–5:59 · Nathan pushing back 4/10 Pre-IPO Product Evolution and Upmarket Strategy Nathan probes into whether moving upmarket was forced by board pressure and investors wanting higher margins. Matt explains that the shift was product-led and pulled organically by enterprise customers wanting simple deployment.5:59–8:12 · Nathan pushing back 6/10 Product Portfolio, M&A Decisions, and AnswerBot Nathan presses Matt for undisclosed acquisition figures on Outbound and probes rumors about acquiring Front App. Matt navigates public company disclosure rules and outlines their build-versus-buy criteria.8:13–11:16 · Nathan pushing back 5/10 Pricing Axes, Feature Packaging, and Value-Based Metrics Nathan cites HubSpot CEO Brian Halligan's multi-axis pricing framework and analyzes differences in Zendesk Support versus Chat pricing tiers. Matt explains value-based pricing, feature packaging risks, and per-resolution fees for AnswerBot.11:17–14:05 · Nathan pushing back 3/10 Testing Methodologies and Cohort Analytics Nathan suggests reverse-engineering top LTV customer onboarding flows, but Matt cautions that top customers are outliers and advocates for disciplined cohort testing across the broader base.14:09–18:46 · Nathan pushing back 5/10 Experimentation Frameworks and Product Cannibalization Nathan brings up rapid experimentation velocity frameworks and questions if AnswerBot's automated deflection cannibalizes Zendesk's core per-seat agent revenue. Matt uses Dollar Shave Club data to show how automation redirects agent capacity rather than cutting seats.18:47–21:33 · Nathan pushing back 4/10 Future Growth Vectors and Cross-Departmental Expansion Nathan outlines the three primary SaaS expansion vectors and synthesizes Zendesk's land-and-expand approach across IT, HR, and marketing departments. Matt agrees with the synthesis and dodges a speculative analyst trap.

speaking balance: gold is Nathan, purple is the guest (3 minute bins)

0:00 · Nathan 59% · guest 41%0:00 · Nathan 59% · guest 41%3:00 · Nathan 16.8% · guest 83.2%3:00 · Nathan 16.8% · guest 83.2%6:00 · Nathan 33.4% · guest 66.6%6:00 · Nathan 33.4% · guest 66.6%9:00 · Nathan 33.4% · guest 66.6%9:00 · Nathan 33.4% · guest 66.6%12:00 · Nathan 47.4% · guest 52.6%12:00 · Nathan 47.4% · guest 52.6%15:00 · Nathan 33% · guest 67%15:00 · Nathan 33% · guest 67%18:00 · Nathan 16.3% · guest 83.7%18:00 · Nathan 16.3% · guest 83.7%21:00 · Nathan 41.8% · guest 58.2%21:00 · Nathan 41.8% · guest 58.2%
Sharpest disagreement ▶ 4:58 Rejecting the investor-pressure premise

Matt firmly pushes back against Nathan's hypothesis that board members forced the enterprise upmarket shift for margin expansion, clarifying it was driven entirely by organic product adoption.

 Hardest push from Nathan ▶ 17:10 Challenging per-seat cannibalization risks

Nathan directly challenges Matt on the business tension between automated resolution tools and Zendesk's core revenue driver of per-agent seat licenses.

 Biggest teaching moment ▶ 11:58 Why copying highest LTV accounts fails

Matt corrects Nathan's suggested strategy of replicating top LTV onboarding flows, explaining that enterprise accounts have outlier requirements that do not translate to broad-base product health.

 Nathan holds their own ▶ 10:01 Detailed teardown of Zendesk pricing mechanics

Nathan demonstrates high domain knowledge by contrasting Support's strict per-seat model against Chat's multi-variable limits on triggers and departments, tying it to HubSpot's multi-axis growth model.
the scores for every segment, with the reasoning behind each
ChapterTopicNathan as informed peerGuest teachingGuest disagreementNathan pushing backWhy
Pre-IPO Product Evolution and Upmarket Strategy 5524 Nathan probes into whether moving upmarket was forced by board pressure and investors wanting higher margins. Matt explains that the shift was product-led and pulled organically by enterprise customers wanting simple deployment.
Product Portfolio, M&A Decisions, and AnswerBot 6426 Nathan presses Matt for undisclosed acquisition figures on Outbound and probes rumors about acquiring Front App. Matt navigates public company disclosure rules and outlines their build-versus-buy criteria.
Pricing Axes, Feature Packaging, and Value-Based Metrics 8615 Nathan cites HubSpot CEO Brian Halligan's multi-axis pricing framework and analyzes differences in Zendesk Support versus Chat pricing tiers. Matt explains value-based pricing, feature packaging risks, and per-resolution fees for AnswerBot.
Testing Methodologies and Cohort Analytics 5623 Nathan suggests reverse-engineering top LTV customer onboarding flows, but Matt cautions that top customers are outliers and advocates for disciplined cohort testing across the broader base.
Experimentation Frameworks and Product Cannibalization 7625 Nathan brings up rapid experimentation velocity frameworks and questions if AnswerBot's automated deflection cannibalizes Zendesk's core per-seat agent revenue. Matt uses Dollar Shave Club data to show how automation redirects agent capacity rather than cutting seats.
Future Growth Vectors and Cross-Departmental Expansion 7414 Nathan outlines the three primary SaaS expansion vectors and synthesizes Zendesk's land-and-expand approach across IT, HR, and marketing departments. Matt agrees with the synthesis and dodges a speculative analyst trap.

Statements from this episode (11)

Assertion Partly supported
Price: Zendesk acquired first 10,000 customers with zero salespeople
“Zendesk got its first 10,000 customers without any salespeople, and what they figured out was a way to actually take something that was Kind of simple that everybody needed, which was customer service, but cost hundreds of thousands of dollars and loads of con…”
Matt Price Jun 7, 2018 ▶ 2:03
Insight
Price: Zendesk avoids costly consulting to drive enterprise software growth
“And that's what we try and do today with, even as we move more up market, we try and make our software such you don't need to spend hundreds of thousands of dollars on consulting, but you know, you can deploy it very quickly. And that's where a lot of the ente…”
Matt Price Jun 7, 2018 ▶ 5:47
Disclosure
Matt Price denies rumors of Zendesk acquiring Front App
“We are not.”
Matt Price Jun 7, 2018 ▶ 7:00
Disclosure
Price: Zendesk built AnswerBot in-house rather than acquiring AI startups
“Our machine, latest machine learning product, AnswerBot. We built ourselves you know, and you know, we have data scientists on staff, and because a lot of the work on that is how does it integrate, integrate very, very smoothly into the other products that you…”
Matt Price Jun 7, 2018 ▶ 7:56
Insight
Price: Bundling unwanted free features makes customers feel they are overpaying
“Sometimes putting things in as free can actually add complexity to the customer if they're not going to want to use it and also makes them feel that there may be over overpaying because they're getting things that they actually don't want to use.”
Matt Price Jun 7, 2018 ▶ 8:47
Disclosure
Price: Zendesk charges $1 per AnswerBot resolution to capture $10-$20 value
“The value to a customer of them not having to have that question go to a support agent, which tends to cost, you know, can cost tens, 15, tens, 20 dollars is very, very high. So we decided to price that separately, and we charge one dollar per resolution on th…”
Matt Price Jun 7, 2018 ▶ 9:41
Insight
Price: Long-tail features with narrow utility enable premium SaaS pricing
“Typically where a long tail exists, then there's an opportunity to actually add the premium price to those into those features because they have very specific utility to a small number of customers.”
Matt Price Jun 7, 2018 ▶ 11:06
Insight
Price: Largest SaaS customers are outliers needing dedicated service layers
“Largest customers tend to be outliers and have very unique requirements in which case you need to overlay certain levels or levels of Service on top of that.”
Matt Price Jun 7, 2018 ▶ 12:31
Insight
Price: Deep cohort analysis of 100 customers beats top-down metrics
“So actually you can get probably more intelligence a lot of time out of taking a hundred, a sample of a hundred customers and looking deep into what those customers are doing, whether it's when did they adopt, what features are they doing? You've got a big eno…”
Matt Price Jun 7, 2018 ▶ 14:53
Assertion Supported
Price: Dollar Shave Club used AnswerBot to improve service, not cut headcount
“I mean, what's interesting on AnswerBot, which is our product, one of our earlier customers was Dollar Shave Club. And actually what they did was, even though that they were freeing up time, even though that we are answering more, more solutions, they decided …”
Matt Price Jun 7, 2018 ▶ 18:18
Assertion Supported
Price: Over a third of Zendesk MRR comes from 100-agent accounts
“You know, our, I think over a third of our MRR now comes from customers with more than a hundred agents, and we are investing all the time in order to add capabilities within that area, but at the same time, keep the product super simple to deploy and configur…”
Matt Price Jun 7, 2018 ▶ 19:11
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