Portag3 Ventures Partner Chris O’Neill discusses leadership and teamwork lessons he’s picked up in his career through a hobby and a metaphor of sailing.
Chris O’Neill | Partner @ Portag3 Ventures
I’m thrilled to be with you here today, thank you Jason and the SaaStr community for including me. I’ve spent a bunch of my career in and out of the valley.
So I’ve been in the valley off and on for about 22 years. I’ve held a bunch of technology leadership roles in startups, in rocket ships and turnarounds, including about 10 years at Google, and just over three years leading efforts at Evernote.
I currently serve on the board of directors at Gap and earlier this year, I decided to take my operator experience and perspective to pursue a career as a full-time investor.
I grew up in a really small town in Canada on the shores of Lake Huron and in that community, sailing was a really big part of the community and the way of life.
So although I never really became a great sailer, I really love the metaphor of sailing for life and for business and I think we can have some fun with it in today’s talk, and I hope you’ll indulge me. So with that, welcome on board, let’s set sail.
So over the course of those 20 or so odd years in technology leadership roles. I have seen my fair share of storms and or crises from the early days of the dot-com boom and bust to 2008, 2009 crisis and then having a front-row seat at some of these turnarounds that iconic brands like Evernote, and more recently on the board at Gap which is undergoing its own transformation.
And there’s no shortage of advice floating around there, but the perspective I’ll lend today is through that of an operator, who’s been through some of these crises sailed through these storms and did every mistake in the book and have the scar tissues to show for it.
So that’s really what I’ll do and I’ll start by just giving a sense as to what it clearly must feel like to everyone. It is gnarly out there.
The seas are rough. It must be like you’re operating on the open seas with wind in your face and, gale force winds causing waves to crash at you from all sides and if you’re like me in this crisis, you feel like, “Gosh, you could sink at any one point in time or get washed up on the rocks on these shores and it’s completely natural to feel this way.”
I really do believe however that Roosevelt’s quote is true and he said, “Calm seas never made good sailors.” And that’s of course, easy to say and hard to really figure out what to do.
And that’s really the purpose of this call or this chat today. I do believe that great leaders thrive under adversity.
People who are entrepreneurs with all the right reasons who have a deep personal commitment to the problem that they’re solving, and then have an earned secret and a special approach to solve that problem in an enduring way.
That’s really what it’s all about. Weathering these storms requires a steady hand on the wheel requires a resilient crew with endless reserves of grit and if you’re really on a mission that matters, I believe that it’s worthy and you have to persist through the storms.
And to perhaps inject some good news into this crazy world we live again is that storms have a way of washing away all that came before them, really thrashing previously held assumptions and we’re certainly seeing that today.
So a lot of the assumptions that held us back and held technology from fully being embraced are really being challenged. Of course, we’re seeing many of the trends that have been in existence being accelerated by 5, 10 plus years whether it’s telemedicine, e-commerce, mental health, food delivery, we’re very well aware of these COVID fuel tailwinds which are changing industries literally in weeks as opposed to decades.
And there’s a quote in keeping with the sailing metaphor that I find myself coming back to at times like this and it goes like this.
It says, “The pessimist complains about the wind, the optimist expects it to change, while the leader adjusts the sails.” And really, that’s the jumping-off point for our discussion today.
We’ll break it into three parts. The first will be sharing five perspectives and things that I found to be useful in adjusting sales in the midst of a crisis or a turnaround.
The second is really how to think about your crew, really, how to take care of your crew, how to up-level your crew, how to invest in them, how to listen and engage them, and then also how to think about your extended crew.
And lastly, I’ll share briefly just a few things that I see on the horizon. And then we’ll wrap and take questions and I encourage you to ask questions, I’d really enjoy them.
First things first, adjusting the sails. So this crisis is very much like the wind and the gale forces on the open sea and that it’s the self-propagating amorphous ever-changing thing that requires us to take a different approach to how we lead.
And again, I’ll dive into five specific things that again, I found to be somewhat useful in times of crisis. And if I pause just to reflect on those mistakes that I’ve made, and one of the biggest is really being too slow to react to a new reality, or a close cousin of that which is to take a playbook or a set of assumptions that worked in the past, and to extend them to a fundamentally new reality and fail miserably or failing to unlearn previous behaviors or habits.
So the first of these five really starts with battening down the hatches. In a crisis, you have to react and your first job is to survive and really specifically, I found scenario planning trumps future fortune-telling, right?
Meaning, you’re not in the business of predicting the future, but you should really in the business of doing a scenario planning to say, “Hey, what’s the worst case? And what’s the best case? What’s the base case?”
And invest your team’s time and energy to say, “Hey, if this than that, how can we prepare for a variety of scenarios so that we can nimbly respond to whatever comes our way and adapt in accordingly to the situation?”
When I took the helm at Evernote in 2005, many people had written the company off. If you recall, it was one of the very first unicorns.
It attracted capital from the top venture capitalists on the planet, could do no wrong until in many ways it could do no right.
And the headlines were brutal. Evernote was written up as the first dead unicorn among other unflattering headlines and it was somewhat of a risk of being true and that we had very limited resources and cash runway.
So we had to fundamentally batten down the hatches in a dress cost in order to survive. So how do we do that? The first thing was really to adopt what I call a zero-based budgeting approach.
We gathered every single line item of expense and we scrutinized every single one of them through the lens of, “Hey, can we survive?”
And then we debated like how across the leadership team to say, “Hey, can we afford this or not?” And it led to some decisive action, difficult decisions.
We shut down five offices, we said goodbye to many of our really talented colleagues. We shut down something called the Evernote market which was selling physical goods, sunset some nice products like Evernote food which had nice followings, but I felt were distracting from the larger priorities.
We did all this by being thoughtful and compassionate with the employees and we’re careful to communicate to our partners, why we’re doing this, and really what to expect in the future.
The good news is that we extended our runway by a minimum of six months and that allowed us to redeploy resources into some of the things that really needed our attention like the fundamentals of our product.
We had way too many bugs, latency had grown to too long and crashes were a problem with the product. So we spent a lot of time there.
Another benefit was the ability and the confidence frankly to experiment. Get back into experimentation mode with our business model, with our pricing to really think about not just how we can shrink costs, but inflect growth on the top line so we could ultimately control our own destiny which is in fact what we did.
So the lesson here, of course, is to save your powder, to really, really scrutinize every dollar of spend, and keep your powder dry so that you can redeploy on the other side and hopefully accelerate as that happens.
The second is what I call establishing ground truth. So inevitably, when startups evolve and start to scale, they get off course and this is especially true in times of stormy weather almost by definition, and to invoke a sailing metaphor in the days before GPS, sailors used the North Star to determine where they were.
They had to figure out literally their latitude. And I think the same is true in companies. So I’m a big fan of two concepts, you have to understand where you’re going, and you have to understand where you are on that journey.
So the North Star when I describe this, it feels fluffy and very obvious, but I really can’t think of a higher leverage thing if you don’t have it in place already in your company to really get everyone rallied on what your North Star is.
What’s your purpose, what’s the dream, the rallying and inspirational purpose of your company that really binds everyone together?
A mission, really the overarching objective for your company at any one time, and then in times of crisis, I’m a fan of having like one singular objective or goal.
So when we reached out to the community at Evernote in this turnaround, we really started to hear very consistently that the purpose of the company was more relevant at that time than it was at any other time in the company’s history.
People were seeking to gain control and find a sense of calm in a world of constantly being overloaded with information. So they really wanted to find, you’ll feel more organized and feel somewhat more productive, whatever that meant to them.
And that’s the job that Evernote was hired to do. So that was really fantastic and then the mission really set up nicely as an extension of that to help people remember everything and turn their ideas into action.
So we spent a lot of time leading up to then our objective which was to really reinvest in the core user experience, get back to the basics and deliver and untap the love that made the company and the product great in the first place.
And really doing that provided needed clarity around which the entire company could revolve and then we doubled back on our current reality and our ground truth and we’re really brutally honest with everyone about where we were in terms of the company, in terms of the balance sheet, in terms of the team in terms of our product.
And really, that’s essential. So once you understand your North Star, and you have a sense of your ground truth, the question becomes, “Okay, how do you plot a course to go from one to the other, or at least move closer to your North Star?”
And that’s really the third which is really about charting a new course for growth. This is about the cleared and shared understanding of the physics of how growth happens in your company.
And I have a really messy chart here on the left-hand side, I’m not going to walk through it, don’t worry, but it should give you a sense as to how comprehensive people can be and companies can be when this is done right.
But also how you can really quantify each step of the way. And why you want to do this might be obvious, but I’ll state it anyways.
It’s really to rally around facts and data as opposed to opinions. There are lots of opinions at all times in companies, but you really want to rally around the facts.
More specifically, you want to identify the single gear of your growth engine that’s really slow or stalled where you bring to bear overwhelming force.
In a B2B context, you can imagine overlaying the concept of go-to-market fit which really outlines your approach and your playbook at every step of the way from awareness to evaluation, purchase, and then pricing and renewals.
That’s a really important thing to be really crisp on and know that these things almost certainly have changed in this crisis so you have to go back and remap them.
A close cousin of this is cohort analysis. I’m not going to go into too many details here, but there are three things to look for here is just number one, the size of a cohort.
So cohorts, of course, are usually expressed in months or quarters or even years. The second is the engagement level of that cohort.
Meaning what percentage of that cohort is doing the thing that you really want them to do? In our case, it was capturing a note, and then lastly is just retention over time.
How is it performing and that in many ways of course is the most, single most important determinant of your success in SaaS.
If you’re really interested in this topic, I highly encourage you to read Sarah Tavel’s classic Hierarchy of Engagement, it’s just fantastic and it really goes into lots of details here.
So how do you do this in addition to mapping it out? You have to actually go and talk to your customers. Again, this might sound obvious or common sense, but it’s not always commonly practiced.
So get out there, get in touch with them, and truly listen to them. Their needs have changed, their pain points have inevitably shifted so you have to listen to them and understand how to stay top of mind.
At Evernote, one of the first things that I did was ask the team to send me a list of like 50 or 60 customers and I just started outreaching to them and calling them directly to gain a sense of the visceral feedback and a sense of what was truly going on.
And the customers and members of the community were super receptive and in many ways, that did give me a really good grounding as to what our priorities ought to be.
So I highly encourage that as an activity and borrowing a metaphor, this notion of Davy Crockett comes from a friend of mine named Bob Tinker who’s a great entrepreneur, the founding CEO of a company called MobileIron.
He talks about channeling your inner Davy Crockett and what he means by that is in the early stages of starting a company, you’re in like Davy Crockett mode.
If you think about backwoods explorers coming over the Appalachian Mountains, you and your team are often in the woods foraging your way and finding your way through and it’s usually messy.
It’s through experimentation and iteration and if you’re lucky enough to survive long enough, you can start to build a sense of what’s working and where the dead ends are.
And you can crystallize and distill the things that are working into a playbook and if you’re really good, you can start to rally around that playbook and all of a sudden, you emerge like not a ragtag bunch of backwoods explorers, but like an army that’s charging across the plains, and he likes to call that the Braveheart mode, but I digress.
That’s really a call in this crisis to get back to your Davy Crockett. You have to learn to unlearn. About two, three months ago, everything changed literally overnight.
So your value proposition, your messaging, your positioning, and most likely elements of your pride have to change and they line up around two broad areas in what I’m seeing.
The first of course is just to save money. Everyone’s really watching every single dollar that they’re spending. CEOs literally have spreadsheets open with every item.
So finding ways to dress that is obvious. Secondly is to really reposition what you do from like a nice to have or an innovation budget to something that’s essential and must have that really reflects how people are doing business today and or operating their companies.
And I’ll share with you maybe a counter-intuitive example from the 2008, 2009 timeframe while I was at Google. And for context, it’s hard to imagine but in Q1 of 2009, Google laid people off and had its first down revenue quarter in its history I believe.
And that was like super shocking, but really when you unpack it, Google at the time was primarily viewed as this tactic that primarily drove traffic to e-commerce sites.
It did other things, but primarily, that was the main source of revenue and I was responsible for the retail relationships at the time.
So that was really shocking to us that people were starting to pull back. What we did was really started to challenge those assumptions and really adopted what we call the more for less strategy, and what specifically we did, we approached media buyers and or the retailers themselves and we created spreadsheets for every single category that that retailer had.
And we showed that with very small shifts in media allocation towards Google in this case that they could get at least the same, if not more traffic for fundamentally less cost.
And it really, it changed the game and people really embrace that, but we didn’t stop there. We also challenged the sacred cower, the assumption at the time that the website was cannibalizing store sales, in the bricks.
So we decided to queue up 50 or 60 experiments that really were controlled causal experiments that really got after that and we prove definitively that when you drive traffic to a specific category on a website, rather than cannibalizing, it actually boosted sales in the store.
So really started to challenge some of the conventions and then the company became more relevant to the C-suite rather than just the director of e-commerce.
So that’s one example of many. So if you haven’t experimented with an ROI calculator in your go-to-market motion, I’d highly encourage it.
It seems to be almost a necessity in today’s world. Shifting to the fifth is around pricing. So pricing is obviously a very powerful lever.
I’d argue it’s one of the most powerful levers in SaaS, yet the least understood or the most misunderstood perhaps. I talked a little bit about the cost side of Evernote and that really bought us time.
But really, the improvements we made to some of the product experience and then the pricing and packaging were really the keys to inflecting top-line growth and doubling subscriber base and literally putting the company in control of its own destiny.
The way we went about this is really interrogating the value that got the people in the community derived from our product.
In this case, it was the ability to capture ideas in any format anywhere anytime on any platform, and then use that insight to align our business model against it.
So specifically, we adopted a Netflix-like model in that to unlock premium features, we asked people with three or more devices to pay for those premium features.
We also raised prices by 30 to 40% at the same time. So clearly it wasn’t a very popular person on Twitter for several days or weeks, but really, this move allowed us to stay in the game and continue to improve our product.
Interestingly, we saw an improvement in conversion rates and we saw an improvement in retention rates which were very counterintuitive.
And more generally, I just think the pricing is so misunderstood and most people, most companies don’t charge enough and then they starve themselves the ability to invest in a great product, starve themselves the ability to invest in great go-to-market machinery that really allows people to get … To try and find customers on a consistent basis.
So that’s I think is really important to consider in pricing. In today’s environment, there’s a very uneven experience in terms of economic impact.
And to simplify it, those who are struggling to keep up with demand, and those who are struggling to find and retain customers and if you’re in the first camp like, “Oh, congratulations. Good for you.”
I also would encourage you to resist the urge to increase prices and ride the wave. It might seem like a good thing to extract some surplus in the midst.
I think it will have potentially a poor impact on your brand in the short and most likely the long-term too. Maybe you can think about in that situation, new layers of value.
White-Glove service, different premium product extensions, and then charge more for that. In effect, raising your prices without actually being perceived as gouging or profiteering.
For most, we’re struggling with the opposite which is really how do you retain and prepare for the inevitable turn. So to protect the number of customers, protect long-term AOR and lifetime value.
It’s super hard to find new customers, we all know that. It’s easier to upsell them or resell them later when times returned to a slightly more normal state.
I think it’s helpful as a tactic to classify and be really rigorous about doing your customer base along with value and risk and really clearly tripling down on the high-value folks, but also know that not all customers can be saved, and not all customers need to be saved.
One tactic that is very popular, people are going to be asked for discounts. It’s easy to … It’s not easy always, but one tactic that has been successful is to extend the terms of the contract and lower the overall cost on a per month or per year basis.
I guess I like that, but I’m more a fan of being a little more creative to look for ways in which you could do more, offer more for the money.
So things like no risk trials, free cancellations, performance, rebates, loyalty credits, you name it and the last thing on pricing that I think is a good way to think about it is free months as opposed to discounts.
And the benefit there is you can end them more easily without having to have another charged conversation.
So those are the five big areas that I found to be successful especially in the midst of a crisis. I’m going to shift to the concept of a crew and starting with the first and foremost is really taking care of your crew.
So if you’re running a ship and you’re a captain, you’re going to need to hire sailors again. So you want your ship to have a great reputation.
That in other words, Simon Sinek famously wrote a book about playing not just the long game, but the infinite game. Now, this notion that adversity reveals character, and how you deal with this crisis will determine your reputation and your ability to bounce back in the long run, regardless of how things turn out.
And it almost by definition, you’re going to have to make difficult decisions if you haven’t already and how you make those decisions, really, really matters.
And when anxieties are running high, and there’s lots of imperfect information, there’s a tendency and I find this amongst myself to sugarcoat things, instead of just being straightforward and super candid.
And I’ve learned that that’s always the best way especially in times of crisis. You’ve seen some just awesome examples and exceptional leadership in the past several weeks.
So people like Brian Chesky at Airbnb, Henry Ward at Carta and others who’ve been deeply compassionate in the face of making painful decisions to lay people off, but doing so with dignity and a deep sense of personal … Of compassion and really authentic leadership.
One thing I’ll add is to take care of yourself. This again is do as I say, not as I do. I’ve burnt out more times than I care to admit on my journey, but putting your own oxygen mask on before helping others is essential.
There’s this like … Sometimes, this culture of like, “Hey, we’re crushing it, and we’re just going to keep burning the midnight oil.” And that’s just counterproductive.
Find out how, what works for your body, figure out how to get sleep, and stick to it. This is a great time to lead with vulnerability and show that you really give a damn about your team.
There’s millions of different ways to do it. Be human, show up, share stories, share your hopes and fears in a really authentic way. If your kids or your dog walk into a Zoom meeting, embrace it.
I always just see a smile light up on people’s faces. If my kids or dog do that, they might come in a bit unexpected, but I actually take the time to introduce people and it just brings the human layer.
I also am very systematic and trying to reach out with a method or a desire to double the amount of gratitude that’s doled out in times of crisis and it can be simple.
It can be a Slack message, it can be a quick chat, a phone call, just some way to show that you care and it’s such a super important and often overlooked thing.
If you can afford it, a well-being budget, a wellness budget is terrific. That could be a subscription to a Headspace or calm or a meditation app or really just the acknowledgment that work-life has just really been challenged in this environment and you can offer flexibility as to when and where you work.
A related part is to engage your crew. An overlooked and underappreciated skill as a leader is that of listening. I think that it’s so important.
I’m on a lifelong journey to be a better listener in all aspects of my life. When I start a new role, I always asked three deceptively simple questions, I say, “Hey, what’s working that needs to be accelerated? What’s not working and needs to be improved and addressed?”
And if you were me, what’s the one thing that you would do or change right now? And in my journey, in my experience, the crew always knows and the journey or the road forward is often in plain sight.
If I’ve had the chance to stop and have the humility and the discipline to ask those questions to listen, truly listen, and then act upon those and then keep that dialogue going, right?
Find creative ways whether it’s a whiteboard session, whether it’s ask me anything, some AMA’s, Slack channels, you name it, there’s lots of different tools at our disposal now to stay in touch with each other.
A very tactical suggestion that I’m shamelessly stealing from Brad Smith at Intuit in 2009, 2009, he asked everyone at Intuit to keep a log of all the things that were working better in that downturn than they were before.
So when they were in a crisis mode, and then when they came out of it, they actually consciously took the things that were working and discarded some of the practices that were getting in the way.
I like that one. At Google, Jonathan Rosenberg famously would say repetition doesn’t spoil the prayer and this is just a great reminder that there’s no such thing as over-communication in a crisis, you need to over-communicate and the rule of thumb is that you should increase your communication amount by 3X relative to normal times.
And last and maybe most important is to really reconnect with your purpose. One interpretation of a leader’s job is to be the translator of dreams, right? Especially to keep it alive in hard times.
In keeping with the sailing metaphor, I love the quote that is, “If you want to build a ship, don’t drum up the men to gather the wood, divide the work and give orders, instead, teach them to yearn for the vast and endless sea.”
I just really think that speaks to the importance of connecting to the purpose and the dream that rallies everyone.
A great way I found to do this is like a wall of love, customer tweets, testimony, testimonials. This is just a tactic we used really well at Evernote and we got the most heartwarming stories from a woman who literally wrote a book using Evernote while running a marathon across the Sahara Desert.
We got examples of cancer labs that were changing how they did research by using Evernote to collaborate on potentially life-saving drugs, or literally a heartwarming one from a person with dementia who is literally using Evernote as an extension of their brain and specifically, their memory.
So really, never lose sight of why you’re on this journey. In terms of leveling up the crew, there’s never really a time to tolerate underperformance, but it really is a reminder to really have objective performance approaches and processes in your company.
At the same time, you have to allow for real-time in the moment development feedback and those two things are different and they need to be different.
If you’re interested Kim Scott who was my coach at Evernote has written a great book called Radical Candor and has a whole chapter on this topic, but also, encourage you in leveling up to think about doubling down on training for your key performers in sales or success or across the company.
Maybe investing in new tools. It’s also a time to embrace the duality of playing defense and offense at the same time. What I mean by this is selectively up-leveling key roles and that might be tricky in all times, especially now, but I found that that single move is probably the most important to position yourself for acceleration on the other side.
So don’t forget about up-leveling key roles in your leadership team or across your company. The last on the crew theme is really to choose your extended crew carefully.
So these are the folks that are along for the journey. Your partners that enjoy the highs and the lows with you. Now, so perhaps you’re thinking about adding a new advisor, an investor or a board member and I think it’s probably a good time to do that, but you just really need to make sure that these are the types of people that you want to be around especially in stormy weather.
So two tactical suggestions that I found work is you really need to screen to make sure that that partner really shares your dream and has a sense, at least a common enough sense of your current reality on both you as a leader, but also the strengths and weaknesses of your company and really, the plan to grow.
That’s really important, it just becomes really awkward and needlessly draining if you’re having to constantly re-debate and thrash around some of those fundamental things.
So make sure that you’re on the same page there. The other is really this notion of doing your homework just like you would if you’re hiring a key person for your team.
You really want to know what that partner is like in good times, but especially in bad times. So if you really want to know what a partner is like, talk to a CEO or someone else who’s been with them in stormy weather.
Ask them how they behave when things went sideways. You’ll learn a ton in those situations. Maybe just so obvious is to not need to be sad, but it’s probably a good time to really not suffer from assholes.
Life is just too short and you’ve got enough things to consider to really tolerate that. Last is this notion of bringing them on for a ride and this is something I’ve made mistakes all throughout my career is really, it feels sometimes like, “Oh gosh, it’s like another thing to do to not only communicating with your team but all the different stakeholders.”
But that’s actually really, really short-sighted and counterproductive. If you really want people to unlock and provide value for, you have to really invest equally aggressively in that crew as in those stakeholders as you would everyone else if you want to keep them engaged on the journey.
So what’s on the horizon just to spring in this home is really the aftermath to me, I think we’ll see as we have in previous downturns or on the other side of them.
This Cambrian explosion of innovation. I think we’ll see more openness to different approaches, different perspectives than we have.
I think a very real reality today is we’re seeing just how messed up certain things are whether it’s supply chains, whether it’s food distribution, you name it, there’s many, many things that need to be reworked and I think rather than rebuilding things and trying to get better to some normal, I hope, my expectation is we’re going to radically think differently, and hopefully radically reinvent things in different ways and that was literally my interpretation of market reasons, call to arms, it’s time to build.
And I just think he absolutely nailed it. I also just think there’s some implications and practical implications from this call to arms as I said, and there’s really three, maybe four.
The first is the mindset that comes with this. So I think there’s going to be the need to take more audacious views to find some of the breakthrough solutions to enormous problems.
I had the good fortune to be at Google X for a time and be surrounded by just amazing human beings. People like Astro Teller who just see the world totally differently.
They dare to dream the impossible and then the teams … The super talented cross-functional teams would throw themselves at these problems, and really, come up with radical solutions often which would fail, but that’s really the way I think we’re gonna make it through to solve these big problems.
And it’s fun to laugh at these sorts of … At these sorts of people and make memes, but I think we have to stop that and really, encourage more people to adopt that mindset.
I think the second related part is on talent. I think we’ll see the emergence of more seasoned founders who have seen success, but also experienced real adversity and have the fortitude to kind of come back and bounce back to solve these fundamental problems in new ways.
So I’m a big fan of Seth Sternberg over at Honor who’s looking at solving fundamentally tackling in-home care for seniors and their families.
Sami at Virta Health is tackling one of the biggest challenges in health care which is Type II diabetes. Adrian is looking, shaping a company called Forward to rethink the doctor’s office of the future, all anchored around preventative medicine and there’s many, many, many more.
I think that the type of capital required to support these types of journeys and these entrepreneurs will take a slightly different mix.
It will take a different mindset which would be 10, 15, maybe even more years, and then surrounding these people with a robust company building support at every stage of the way.
And that leads to a couple of other trends, but one where I’m so biased, it’s not funny, but I do believe that we’re going to see increasingly see the rise of the operator investor.
Interesting to turn back to sailing in the nautical theme like by law, when a ship comes in to call one of the ports in the Bay Area, San Francisco Bay Area and areas all over the world, they are required by law to bring on an expert who understands the underground topology exceptionally well.
They know where the streets are narrow, they know what the underground, under the water looks like and they’re also explicitly tasked to use their expertise to understand how the currents are behaving at any one point in time.
And I believe that will be a similar metaphor for what an operator investor can do for a founder. Really, who are increasingly looking to these types of investors and advisors, to give them real hard facts, real hard experience to complement their audacity and their team’s skills.
So people who are short on pithy platitudes and strong opinions and long unearned experience and practical advice. So people who can make introductions of course, but do more than that, really roll up the sleeves when needed to get on board and maybe help with product strategy or re-platforming and engineering, maybe it’s rethinking your go-to-market motion, helping out with key hires, understanding the real value levers in a company, how to measure them and how to rally the crew around those very measures.
Perhaps it’s dealing with a thorny personnel issue on a leadership team, those happen all the time, coaching on leadership style, how and when and where to communicate, the list goes on, but that’s really what I see as the emerging value of these sorts of investors.
And again, I’m biased because that’s in fact what I’m bringing to the investment world. The last couple of themes we’re seeing innovation flourish in all pockets of the world now, not just the valley which I think is a great thing.
So in 10, 15, 20 years, I think it will be equally likely that we’ll see a Shopify-like thing where, where this wonderful category-leading company is growing up outside of the valley in the US just as equally likely to see a company like that in the valley as outside the valley.
And the leading indicator for this is the flows of venture capital money. We’re seeing about half of the venture capital investments outside of the US at this point and I believe that trend will only accelerate.
The internet has grown up in the US, but it’s now become fully global. If you look at China, India, it’s five times more cell phones or mobile phones in those countries than the US.
China’s e-commerce world is over 40%, roughly 40% of the global eCommerce world. Of course, COVID has really accelerated the remote work that will I think lead to more, more and more companies being distributed for one, but also being founded elsewhere.
And lastly, the high cost of operations in companies and regions like the valley coupled with what I think are just completely backward immigration policies will really accelerate this notion of globalization of startups and innovation.
Two maybe narrower points it’s like in order to provide the level of support from an investment perspective, I think you’ll see a narrower focus, people going narrower or deeper in a specific area to be to bring a truly differentiated value proposition set of data and experiences to add real value.
Think of people like Ribbit Capital and FinTech collective and the company I’m with very much subscribes to this that it’s great to be narrow and deep to unlock real value.
And then the last has been really more just like an observation that I’ve seen in going to the other side of the table is while almost every engineering technology company has at its heart, a robust data platform or engine that really makes everything, insights and everything better.
Now, the same isn’t necessarily true on the other side of the table. So I think that we’ll start to see that change. Really, companies on the investment side will see that this is a huge advantage to not only gain access but to make better and faster decisions.
Of course, we’re seeing this with companies like signifier who’s really differentiating around talent, GV and Go2 who’ve really, really leaned in early and often with data scientists and willingness to spend on data itself and then many other later stage firms like Meritech and many, many others who, who really are starting to differentiate around a data platform.
So that’s a wrap of the main session. In summary, we’ve covered five things that I found to be successful when in adjusting your sales in times of crisis.
We talked about the crew, right? How to take care of the crew, including yourself, how to engage and listen to the crew especially when times are tough, how to up-level that crew, and think about the broader crew that is on the journey with you and we’ve briefly touched upon what’s on the horizon.
And just in terms of this call to arms of what … It’s time to build, and how to surround and wrap at every stage of the journey, the type of support that entrepreneurs deserve to truly make the world better in every possible way.
So calm seas never made a good sailor and it’s time to take the wheel and find your sea legs. Well, the next few quarters and maybe even beyond will be anything but smooth sailing.
I do think you can find your way through these rough waters in these perilous straits and with the right strategy, the right mindset, I have every confidence that you’re going to make it through this crisis and emerge with the wind at your back.
Thank you so much. I’ll turn it over to questions at this stage and go from there. Just one second. Okay.
First question is, “How do you accurately forecast returns of your experiments?”
Well, when you start to look at a growth map, the reason I’m such a big fan of being very rigorous and quantifying that step, that’s really how, why I am such a big fan because at all times, but especially in crisis, the tendency is to start pulling lots of different levers.
And then you can actually get a clear signal from your experimentation. So I’m a big fan of laying that out and then narrowing the beam on as I said, in the presentation, the slowest gear in the growth engine at any one time.
So that’s how I think you can do it, but just changing one at a time and freezing it. I think there’s lots of emerging tools that will start to allow you to run multiple experiments at a time so you can continue to get signals from the noise, but that’s really what one of the best ways I think you can get a signal and a read from experimentation.
“Per your opinion, is this a good time to hire new positions if they are related to growth?”
Obviously, this depends on your situation. To be clear, I think job one is to respond and reassure and make sure that you’re in a position to survive. I talked about selectively playing offense, and I do think that that’s the right way to do it.
I think there’s just an abundance of talent, unfortunately, that’s available. So the ability to maybe get an A-plus player that you couldn’t get before is higher.
So I think it’s really just, it’s company by company, but I am a big fan of up-leveling it. It sounds counterintuitive, but the team after getting over maybe initial shock usually comes out the other side feeling energized.
It’s a clear signal to them that you’re investing for the long-term and you’re going to find A-plus talent whenever and wherever you can find it.
“How important is it to rearrange your go-to-market for current urgent problems? What if COVID disappears by June next year?”
I think it’s essential, I don’t think you have a choice, but to rearrange your go-to-market. So part of it is to be clear on your model, to be clear on your playbook, and then really refining urgency.
And the way to do that, I touched on it a little bit, but you have to get out and talk to customers and prospects. One of the benefits of this time is actually, really getting candid and really quick feedback.
People have time to spend with you that they maybe didn’t before. So you can get a sense as to how things are changing and adapt really quickly and to the point about like I think part of the underlying question is, “Okay, what if you change it and then it goes away?”
That’s life, that’s like the reality of business at all times. So the ability for you to nimbly adapt is the advantage, the single biggest advantage of a startup or a smaller company.
So I think the ability to adjust and pivot into that, adjust your go-to-market is a strength that will serve you well at all times. So that’s how I think about that as well.
What is the most important thing about pricing that entrepreneurs don’t understand that they should?
Well, first of all, usually it’s not just set it and forget it, that there is an art and a science to this. So you can measure this stuff.
There’s actually a whole toolkit of things. You can do, conjoint analysis, and all sorts of ways to quantifiably assess where pricing should be, what packaging should look like.
So I’m a pretty big fan of both the art and the science. So I’d encourage you to read up on that. There’s a great book by the folks at Simon-Kucher called Monetizing Innovation if you’re interested in the topic, but it’s really that layered with common sense overlaid.
So you can’t just use the science, you have to blend it into the art, but really, leaning into pricing is just number one, and then being really surgical when you’re thinking about changes.
So it’s not just one size fits all. So you’re really aren’t just throwing the baby out with the bathwater so to speak.
Are there any books you suggest to read that it helped you change direction of sales, and rethink or think creatively, et cetera?
On the creativity front, I think Creativity, Inc. is one of the best by Ed Catmull. On sales, I’m a big fan of the challenger sale, that’s an interesting way to talk about how you position and position yourself as an inevitable part of a movement, but also, have a balance of an ROI or a rational drowning. So I’d suggest reading that book.
“How much do you think companies can play the remote working value prop? Almost any SaaS company can play this angle. How much longer will display make sense especially in certain verticals?”
I really don’t know. That’s a question I have that. I’m not sure how durable the remote working thing will be. I do think it’s highly personal and dependent.
I think there’s going to be a cohort of people that are like wanting to get back to the office almost immediately. There will be some people that really have found that there’s a new normal here and they push past all the unpleasantries of adapting to a new behavior.
So time will tell, but I think you’re seeing moves from Twitter, Square, more recently, Shopify are really going to join and look more like GitLab, Automatic and Zapier that have really unapologetically decided and really figured out a way to be all remote and awesome at the same time. So that’s really how that will shake out I believe.
Any thoughts around fundraising right now? What are the key things to focus on when interacting with investors?
Well, I’m new to the investing game. So I fully admit that, but I think that it can be a good time. I think you have to be really buttoned up and committed for the journey.
I think that a lot of this is going to be done asynchronously. So I think that finding ways to either do working sessions and or have your materials in a way that travels well and doesn’t require added interpretation.
So that might just be another thing and you’d have to be persistent and creative, and really tight in terms of the things about the problem you’re solving, the uniqueness of how you’re going to solve it and why you specifically have the team and the personnel on board to solve that.
Oh, I think that covered that one.
What industries do you think will be shipwrecked?
Oh, okay. I’ll choose to pass on that one. I think I’m an optimist. I think that we’re going to see companies that will really suffer the travel and leisure and hospitality, industries are being decimated right now.
I believe they’ll come back in new and interesting ways. People will fundamentally want to travel again. People will fundamentally want to go on vacation. So I think that’s probably short term.
Would you consider starting a new software venture in this time?
The short answer is of course, you have to believe in it.
If you can survive, this might even be the best time to start, right? And that’s really I think what explains the fact that many of the best companies are started in these times.
Almost everything’s easier if you think about it. Talents, talent is more available. People have a slightly more long-term view.
A lot of the BS gets washed out of the system. There’s a lot of dry powder, right? There’s capital that needs to be put to work.
There’s less competition. There’s more concentration of talent. I mean, I could go on, but I think that it is now … Now is a great time.
“What is your own oxygen mask, sleeping, fitness, and family?”
Well, I have what I call my recipe. I don’t always stick to it, but I optimize primarily for sleep, and if I’m lucky, I can get some combination of 10 to 15 minutes of meditation, some cardio exercise, and then I really try to limit the type of things I put into my body like alcohol or not healthy foods.
If I do two or three of those things on any one day, I’m really happy and I do see a disproportion effect, but it really starts with sleep.
“What our best tips to reduce friction in B2B sales process?”
I’m a big fan of Bob Tinker’s work, he’s written books on this topic really talking about go to market fit and it really, there’s no magic in this.
I think it’s about grinding away and constantly iterating. He’s written a book, it really talks about go to market fit, so you can check out his book and I think that would be a great way to go and learn. I’m mindful of time, I just probably have a minute one or two more.
“How do you think about companies who can play the remote working guy prop, SaaS angle?”
Well, actually, I already answered that question. Sorry.
“How do you know if you’re on to a big market size in an untested market?”
I’m a big fan, just you’ve got to get out and ask. Metaphorically, get out and start to ask people questions like there’s no silver bullet there.
I actually, I might have a slightly contrarian view. Market size is kind of a useless analysis. I’m more interested in the degree to which the pain is real and durable and your solution is durable in terms of solving it and then that you have the right team to really creatively expand market and lastly, I’ll just answer this question.
“Which country talents would you suggest remote working and why?”
I think the one benefit with all the improvements of tools, and we’re just in the early stages of this is pretty much anywhere.
So I don’t have a … I maybe have a preference for my homeland because there’s such great talent up there, but I think the best part of really unleashing remote work is that you can find the best person wherever they happen to be.
So it’s a really great opportunity and I think we’ll find cultures that we’re going to adapt and evolve to this remote reality, but I’m going to leave it there.
Thank you so much for your time, your patience and your questions. Appreciate it very much and I wish you some smooth sailing.
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