The Exchanges

Q Were you, were you looking at the deal at all?

A No, no, because Hotjar, again, is analytics. Hotjar would be the, the, the basic tool that you need to, to understand what's happening with your, with your website, right? So, um, you know, you have Google Analytics, you have Pendo, you have Hotjar doing some things and some behavior with heat maps as well, so they wanted to kind of, kind of take it to the so-called advanced analytics, just, you know, a little bit more, but they're not really in the user research Uh, space the way we are positioned. Again, you're not having direct conversations with users and you're not using Hotjar before it goes live, before the product goes live. So that's why we were not looking at that.

AI assessment note: “No, no, because Hotjar, again, is analytics.”

Q Were you, were you looking at the deal at all?

A No, no, because Hotjar, again, is analytics. Hotjar would be the, the, the basic tool that you need to, to understand what's happening with your, with your website, right? So, um, you know, you have Google Analytics, you have Pendo, you have Hotjar doing some things and some behavior with heat maps as well, so they wanted to kind of, kind of take it to the so-called advanced analytics, just, you know, a little bit more, but they're not really in the user research Uh, space the way we are positioned. Again, you're not having direct conversations with users and you're not using hot jar before it goes live, before the product goes live. So that's why we were not looking at that.

AI assessment note: “No, no, because Hotjar, again, is analytics.”

Q And that's a big moment. So thirty four million raised in 2015. Why was Sandstone the right partner?

A Well, they've been following us, uh, in our, our, our trajectory. You know, uh, we have good culture fit. Uh, Gus Alvarelli and I have been talking for years and, you know, I think, honestly, they believed in the market because today everybody would say, oh, experience insights and UX is important for products, of course, and customer experience, but we're talking in 2013, 14, you know, these were still very, very early, early years, right? So Sandstone was a boutique, uh, firm, a boutique private equity that came in and said, hey, Guys, you know, we believe in this market. We believe in the team and the opportunity. Uh, let's do it. And we, you know, we had a, we had a wonderful, um, few months of conversation until we finally closed the deal.

AI assessment note: “we have good culture fit... honestly, they believed in the market”

Q Now did the angels, I assume you basically said, here's an exercise price. Angels, if you want to take it, take it. If not, you'll stay on the capital. Did you force them to take the secondary?

A To be honest with you, we, we, I mean, force is a big word, but you know, everyone was so happy and there was, there was a good deal for everybody. I think only one, uh, stayed, which I think was my, my brother who had invested early on. Uh, but everybody else, the idea was really to recap and, and kind of start fresh. Nathan, you know, we wanted to start fresh. With a company that had a headquarters in, in, in California versus Barcelona, a new board here, but yet Spain and the Barcelona team have become, have remained absolutely critical for the success of the business. So really it was just a necessary step to professionalize the business. And, uh, we were all very happy with it.

AI assessment note: “force is a big word, but you know, everyone was so happy”

Q So, so who do you, like if you take off and you, you like crush it, like who do you kill? I mean, does Pendo go out of business if you do well? No.

A In fact, Pendo, uh, funny enough, this very morning, you know, we were discussing this, Pendo is a, is a great ally or, or partner, because they're very much specialized in product analytics, right? Uh, they do provide feedback, but it's a very simple, you know, feedback, you know, do you like it or not? Uh, but their, their core business is analytics, product analytics. That's more specialized in the what's going on. Like what are, we use Pendo, by the way, uh, our product team uses Pendo and uses UserZoom and a bunch of other tools. Um, but that's more analytics and what's happening. Um, the, the visits, the monthly active users, like activities that we call cold data. It is very important, but that's different than user research, which is when you actually engage in a conversation and you, um, ask people to complete certain tasks and you record everything they're doing. So we're not just saying what, we actually focus a lot more on the why and the how they do what they do.

AI assessment note: “Pendo is a, is a great ally or, or partner, because they're very much specialized”

Q And how do you handle giving your CSMs, your customer success managers, a book of business? Do you give them like a million and say you're responsible for hitting 25% expansion in this, or how do you do that?

A Yeah. Very good question. I'll tell you, I'll tell you, I'll answer the question telling you where we came from and how we're doing it now. Right. So, uh, we used to have a leader in customer success and a leader in sales for new, for new sales. Right. And they were both reporting to me and to be honest, they tried really hard, uh, but they didn't really work that well. Uh, the retention wasn't where I wanted it to be. And they didn't talk to each other that much. Keep in mind that most of our business is high end. High value, high touch. Okay. So what we discovered is that the CSM, you know, is more like an account manager, um, and work and should work together with the account executive that sells the deal and should be kind of like in the same team. Um, I felt like what we needed there is a consultant. We call them research, we call them research partners to come in and help them in the more of our domain expertise and advisory works. We call this two in a box, the sales guys and the experts. And that's how we set up the, the accounts. Now we used to have a separate and it didn't work. Now we have it. Everybody's reporting to the CRO. Um, there's account managers that have a quota and they have a book of business and they're responsible for that. They work together with the account executive and, you know, obviously their quota, the account managers are quota carrying, uh, a…

AI assessment note: “there's account managers that have a quota and they have a book of business”

Q their VC's wishes, because of the margin hit, you take professional services, they will touch agency account, big accounts with sort of agency like services. And you see typically net dollar retention on those touched accounts go through the roof because there was a big setup. So your agency guy, To SaaS, you raise VC now. Do you put touch and big agency contracts as setup fees on these accounts?

A We look at, so we look at the professional services and the consulting, you know, we call it actually managed services at UserZoom as, as a real value to our customers, you know, um, and it is true that those customers that use us for both product or they license our product and use us for professional services actually have the highest retention and the highest net retention. Yes. However, um, it's also related to the maturity of the market. Some customers just need that and they, they need handholding or they need, you know, we, we actually provide more of a, uh, advisory, uh, type of services. Um, you know, we help them. We, we always say we help them, uh, fish versus fish for them, right? We help, we enable them and teach them how to fish. Um, so we found that in the beginning we dropped the agency model, so to speak, or the consulting completely because we didn't want to go back to it. Um, over time, we learned how to manage it with a good, uh, gross margin, by the way. Uh, so it's not, uh, you know, first of all, but only, it's only about 20% of our, of our revenue is coming from, you know, other than license, other than product subscription. Um, and second of all, we're doing a good job at, um, selling the value and getting some good margin performance from it as well. Sorry?

AI assessment note: “we call it actually managed services at UserZoom as, as a real value”

Q So, so who do you, like if you take off and you, you like crush it, like who do you kill? I mean, does Pendo go out of business if you do well? No.

A In fact, Pendo, uh, funny enough, this very morning, you know, we were discussing this, Pendo is a, is a great ally or, or partner, because they're very much specialized in product analytics, right? Uh, they do provide feedback, but it's a very simple, you know, feedback, you know, do you like it or not? Uh, but their, their core business is analytics, product analytics. That's more specialized in the what's going on. Like what are, we use Pendo, by the way, uh, our product team uses Pendo and uses UserZoom and a bunch of other tools. Um, but that's more analytics and what's happening. Um, the, the visits, the monthly active users, like activities that we call cold data, it is very important, but that's different than user research, which is when you actually engage in a conversation and you, um, ask people to complete certain tasks and you record everything they're doing. So we're not just saying what, we actually focus a lot more on the why and the how they do what they do.

AI assessment note: “Pendo is a, is a great ally or, or partner”

Q How do you do both? Aren't those very different paths? Isn't it distracting?

A Yes, but it's, it's what it's, it's what it takes to scale. Uh, you know, we, we, we want to go public next year, by the way. So that's our target, right? And if you want to go public, you need to show that you're able to grow in both expansion dollars as well as new bookings or new logos. So what we have as a, as a strategy right now, go to market strategy that up until now, we've been focusing quite a bit on, you know, really expanding our current accounts. I mean, we're seeing some, our, our NRR, for instance, I think the last time we spoke was one 20, we're looking at one 25 right now.

AI assessment note: “Yes, but it's, it's what it's, it's what it takes to scale.”

Q How do you do both? Aren't those very different paths? Isn't it distracting?

A Yes, but it's, it's what is, it's what it takes to scale. Uh, you know, we, we, we want to go public next year, by the way. So that's our target, right? And if you want to go public, you need to show that you're able to grow in both expansion dollars as well as new bookings or new logos. So what we have as a, as a strategy right now, go to market strategy that up until now, we've been focusing quite a bit on, you know, really expanding our current accounts. I mean, we're seeing some, our, our NRR, for instance, I think the last time we spoke was one 20, we're looking at one 25 right now.

AI assessment note: “Yes, but it's, it's what is, it's what it takes to scale.”

Q Out of Barcelona, very effective. I mean, Are we going to, am I going to be interviewing you in a year and all of you guys are coming together and you're going to have three hundred million of private ARR and you're going to be looking at stock in this thing or something or what?

A Yeah, I'm not so sure about that. Uh, I do believe, and yes, you've seen the, our, our M&A record is actually pretty good. You know, we've done four, actually four with the EnjoyHQ recent deal. Uh, you know, we, we believe that there is an organic and an inorganic way to grow. And this is, yeah, this is a very fragmented market. Uh, so we think that there's a lot of point solutions out there that could Be part of our platform. You know, we have both, we have, we have both the, the collection, the data collection, as well as the analytics within our platform. And then let's not forget the whole panel and sourcing business that we also offer. So it's a, it's a very broad solution. Um, within, within those three buckets of collecting sourcing participants and analyzing the data, there are tons of little companies out there that could help. Um, but to be honest with you right now, we're very focused on what we did with enjoy HQ because we think it's a phenomenal, um, fit for our vision of, you know, uh, providing a broad experience insights management solution. And, uh, you know, I'm going to be focusing, we're going to be focusing a lot of that for the next year for sure.

AI assessment note: “Yeah, I'm not so sure about that. Uh, I do believe”

Q So how did you have the conviction to shut down a two, three million dollar revenue stream to go on to SAS? That's where most folks who are going to be great SAS CEOs eventually, they get stuck in the agency because they don't want to give up the sunk cost.

A But we, I thought it's a great point that you're bringing up, Nathan. And to be honest, one of the reasons I always say we were successful is because instead of just jumping in to a SAS model and building an MVP and, you know, trying to finance that, we actually, it was a very, very tough time for about two to three years to keep both businesses kind of, um, running parallelly. And, um, you know, it helped us finance the MVP and also helped us do actually actual market research because we were working with customers that needed this type of insights. And we were working in a lab, but at the same time, we were working and offering them a product to do it remotely, do it online like it is today. And so it was very tough. I gotta say, because on top of this, we also had it in different, um, markets. Uh, one was in Spain where user zone was born and the previous startup as well. And, uh, the other one obviously is the U S uh, where I moved over in 2009 to roll out the U S market. So very, very complicated, very tough thing to do.

AI assessment note: “two to three years to keep both businesses kind of, um, running parallelly.”

Q So you want to, you want to basically, you know, invent new mousetraps at the top of your funnel to bring in smaller sized customers, right? And then obviously excel, expand them and excel them across your other product lines. What mousetraps for you right now are working the best to drive more top of funnel product wise?

A Well, what we want to do is we want to, we know that there is a, an SMB market that doesn't require the belts and whistles and the advanced, uh, features that we have for the enterprise. And they just want to do some basic interviews, you know, kind of like what we're doing right now. We have a, uh, a product that, uh, you know, it's kind of like a purpose-built, uh, uh, zoom for research, you know, for testing, for interviews. And then we have, um, others that are, You know, um, unmoderated. So without somebody just, you know, asking questions, and maybe they just want to run some quick, you know, studies with 10 users or 10 participants, and they don't need a lot of, um, Again, the advanced or bells and whistles that you add when you have behavioral data or surveys and logic and condition and a lot of things that you need for more quantitative analysis. So that those, those products are ideal for SMBs or for immature customers that don't want to pay. They don't have the budget. Uh, the enterprise wants something like more like an XIM, right? Experience insights management, um, solution and platform that gives you all sorts of different types of, of research methodologies. And, and insights related to user experience and customer experience and so on and so forth.

AI assessment note: “purpose-built, uh, uh, zoom for research, you know, for testing, for interviews”