Growth & Arrogance vs. The Power of a Customer Centric Culture | Art Papas, Bullhorn | BoS USA 2015

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From growth arrogance to customer-centric culture Art Papas, CEO, Bullhorn

In this talk, Art Papas shares his journey as founder and CEO of Bullhorn – a company that has grown extremely rapidly to more than 500 employees and nearly $100 million in revenue. He explains why and how he had to refocus his company’s culture back on customer service after facing a similar struggle, and how leaders of organizations can leverage his hard-earned lessons to position their businesses for long-term growth.

Every fast-growing organization experiences growing pains. The most difficult and complex challenge for leadership is maintaining an excellent experience as the business scales.

Customer centricity is easy for a small startup; the company’s founders are often intimately involved in every key customer engagement. However, when meeting sales quotas, achieving profit margins, and running your business by the metrics becomes more important than delighting your customers, you stop hearing about customer complaints simply because you don’t see them anymore, and your entire business is at risk.

Your customers become easy targets for the competition and your positive momentum in the market slows.

Slides, Video, AMA & Transcript below

Slides from Art Papas’ talk at BoS USA here

From growth arrogance to customer-centric culture Art Papas, CEO, Bullhorn

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The 11th Business of Software Conference USA, September 18-20th 2017. Boston, MA.

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Transcript

Art Papas, Bullhorn: Good morning! So I’m excited to tell you the Bullhorn story, because well frankly, it’s easy for me to remember. So this is my company, Bullhorn and we make CRM software. We started in a niche industry and I will tell you more about that. But we’re fast growing, we have 525 employees, we have a great product and it’s a very exciting time at Bullhorn. And we have almost 6,000 paying customers so we have a lot of customers and a lot of stuff to be excited about. But outside in, you wouldn’t know the unbelievable things that happened to us over the last few years and that’s what I’m gonna focus on today.

Before I get to today and how we got here and some of the crazy stuff that happened in the last couple years, I’ll just start at the beginning with mom and dad. So these were my parents. As you can see, they’re both poorly educated, came to this country, actually no, my mom came to this country when she was 2 from Greece, my father is a first generation American and they’re both doctors. Now my mom, it wasn’t enough to go to dental school and become a dentist, she had to get a PhD in nutrition and become a professor at Touch University. This was the house I grew up in. Clearly they wanted me to be a software engineer. That’s what they wanted for me.

No, I went to Wesson high school, which is a local high school and I walked over here. So I also went to Tufts University. So I have lived my entire life, except for 10 weeks after college travelling through Europe, within 5 miles of this very spot. So I’m not exactly what you would call a world traveller. But I do like to travel and I do get out of Boston occasionally. But I went to Tufts and I got there and I of course enrolled in pre-med. Of course, that was of course what I was gonna do. And I liked medicine and I love the idea of being a doctor, but I also took a course called the calculus 13, which was like optional calculus. It was not part of the program, I had already kind of graduated out of what was required for pre-med. I was good at math and I liked it and people said what are you talking about? Nobody likes math. But I really enjoyed math and I loved problem solving.

So I was at Tufts and a friend of mine who was in the math department said hey this may not be the best use of what we’re learning in math, but there’s a $10 an hour job at Thompson Financial Services doing data entry. $10 an hour translates to about, back in those times, to about 3 beers an hour. So that seemed like a really great deal to me. I got there, they handed me a stack of papers, they put me in front of their power building application that looked like this and I declared that this is mind numbing, I can’t do it. I lasted an hour and a half before I asked if there was a way to write a computer program to do it automatically. They said we do have an RD team, why don’t you – if you show an interest in that, we’re looking for some help. There’s a customer service team that uses an application that looks just like this. It’s brutal for them to do their job, it’s really inefficient and they’re looking for help and I said fine. I would much rather to do that. I taught myself how to program, while I was at the job. I sort of fibbed a bit and took some computer science courses and got to – I went and bought some sort of programming book and learned C and that was not C++ but like the original C. And so I got to sit with this customer service team who use software that looked like this and I said you do an incredible amount of data entry. My 1 ½ hours of experience with that is that it’s excruciating and they said yes, it’s awful! And I said so your job is to talk to the customers all day, but how long would you say you say you spend doing data entry versus talking to customers? It’s probably like 6 of the 8 hours we’re here is doing data entry and just updating records and we enter things 2-3 times which to me was why would you do that? If you enter something once, it should update in multiple places.

So I took it upon myself to go and try and change the software. And I had an amazing experience when I went and rolled out the software to these people. Their eyes lit up and it was like I had told them they won the lottery. Hey, here’s the new software. Remember how you had to do this and this? Now you just do this. Wow! And it was like all of a sudden I felt the biggest rush of dopamine that I ever felt in my life, well maybe not ever felt in my life, but it was like the light went off and I was like this is what I’m going to do with my career. I’m gonna make software and make people go wow! That was awesome! Like you just changed my life by eliminating data entry, which is a curse. It’s sort of like being a healer for me.

So I started my company Bullhorn and this was 1999. And if anybody remembers that time, all you had to do was use the words world-wide web on a PowerPoint, and this is the PowerPoint presentation that I used to raise $4 million from GE asset management. And I had two co-founders and it was like wow it was just raining money and we were rolling in it and this is awesome. And we don’t know what we’re gonna do yet, seriously. We had a business plan that said like internet + customers = money. Like I’m paraphrasing, but there was a lot of like where’s the beef? And GE’s response was look, we usually do mezzanine stage funding, later stage companies, but we got to get into the internet game and you guys seem like great guys. You will figure it out! And then their mood changed, right? Yeah, we were born just basically the worst possible time to be born because we got money and then it was like there is no more money. Like ever! And the NASDAQ tumbled, the pets.com sock puppet, like hey, all of a sudden people said you should not take up sock, make it talk on a Super Bowl add. That’s not a good way to sell pet food, Altavista, it was a whole different world back then. Don’t spend $400 million on vans that deliver groceries, like remember that time? Buddha.com was my favourite, they burned through $130 million in 18 months and then went into receivership, yeah.

So that was the climate we were in and it was like in technology it was like the great depression for the rest of the world that wasn’t that bad. But for us it was because we had spent money, we had hired a lot of people and we had spent it and remember, we didn’t know what we wanted to be when we grew up and we had little less than $1 million in the bank and this is a slide from the board meeting. I had left the fonts there, cause you can see they were – I wasn’t as good at PowerPoint as I am now, but we had 2 scenarios. One in which the investors got behind us and put more money in and one in which they didn’t and we’d have to cut costs and tighten our belts cause we only had about 4 months of cash left. Guess which scenario they chose? Yes, of course! And they said further, not only do we want to give you more money, we don’t want you to take money from anyone without diluting us. We will refuse to be diluted. If you’ve ever seen a term sheet – anybody has seen a term sheet before? Anybody has seen anti-delusion? Anybody has seen a full ratchet in a term sheet? Yes, so when you see this, you should run screaming, because what happens is – and this is what happened to me – we found an angel to put in $500k worth of money and I learned what a full ratchet does, there’s something called the waterfall and basically you’re underneath it and there are rocks and boulders falling on you, it’s very bad. So I went from being a 30% owner of my business to about a 5% owner of my business, just like that for $500k. So avoid the full.

Ok, so at this point, my parents being focused on education, they were supportive but they were worried, right? And we had a little bit of cash left in the bank and ok, mom and dad said forget about it! Maybe this was a bad idea. But then something cool happened, I met this woman, Leslie McIntyre and she had a recruiting firm. She had all these offices that were disconnected and they couldn’t talk to each other. Remember, this is the pre-internet date, where databases didn’t live in the cloud. And I said to her well what if we connected your businesses on a web based platform on the cloud? And she was like what’s that? That sounds awesome! That would change my life!

And so I went and I finally knew what to build.

I went and I built this thing that later became the application used by tens of thousands of people and I coded like crazy until Leslie told me I had solved her business problems and it was an excruciating 3 months of working with Leslie, but at the end of it, her business started to take off. And then word began to spread and all of a sudden – by the way, Leslie said she would pay me, which was amazing. And once she said I will pay you and she cut that first cheque, which was substantial, it was like a $10,000 a month cheque. We were transforming her business and it was worth it to her. I got inspired and I said alright employees we have a mission. The mission is to power of the desk of every staffing professional worldwide. Our first customers were staffing firm and we’re just gonna focus on that industry. And we’re gonna do it and we’re gonna go worldwide. Every professional. And it was a decent mission. I wouldn’t say people wanted to put it on T-Shirts, but people got it. They understood what we were there to do. And like any good mission it had some notion that the customer matters.

And then things started to happen, I meet this guy Mark Elridge, he’s got 400 users. He’s gonna pay us $50,000 a month, he’s got massive problems in his business. I meet Bob Boudreau, Winter Wyman – we’ve got all these challenges, we’re trying to grow, we’re hiring people fast, maybe you can help solve some of our problems – no problem Bob. Then I met Robin Mee and then look at this! We take off – like crazy growth! We were one of the fastest growing companies in Boston – and by the way, we never took another dime in capital. So we – now remember, cause I couldn’t. I couldn’t fathom having less of my company than I already did. So we grew profitably, we essentially became a boot strapped company that grew profitable from $2.5 to $8 million and just unbelievable clip and here we are profitable and $8 to $15 million run rate and then the VC’s come around and say where have you been all my life? Let’s put some money to work in this business! And I had my pick, I really did. I had like tons of term sheets, which I haven’t experienced before. And I picked General Catalyst and Highland Capital Partners. Great partners – they helped me continue to build the business.

But an interesting thing happened along the way.

You remember my mission? We continued to evolve the company and grow, the mission stayed put but people sort of struggled to say it. I would ask employees ok you’re a new employee what is the mission? And they would to power…the desk of…I think it’s global domination. And it started as a joke but then people started to put it in slides. And it started as here is the original mission plus AKA global domination! And I didn’t stop it and somebody said yesterday I think that it’s about the cultures and the behaviours that you tolerate. And I tolerated this because I thought it was fine. Who is it hurting to say that our mission is global domination? What’s wrong with dominating globally? It’s awesome, right?

So and then I was always passionate about customers and delivering that wow experience and something happened with our NPS, it would dip. But this is our NPS actually. This is like an amalgam of data we look at CSAT NPS, and a number of other factors. Our customer experience index started to wilt, it didn’t drop precipitously, but I was worried. And the argument at the executive team was I think that it doesn’t matter, Art. We’re not a small company, you can’t be in touch with every single customer now that we have 1000 customers. You have to kind of grow up. We’re a big company now, you’re not gonna have every single customer love you. And in fact, my CTO used to say at any given point with 15,000 users I think we had at the time, using the system, they are 100 of them that hate you at any given moment. And I couldn’t get my head around that, why did they hate us? They don’t matter, they’re just angry people! They can’t be helped! And he sent me this email. And I’ll tell you, it makes sense. He’s right. You can’t necessarily fix every problem for customers, you can’t be there all the time. We’re a big company now and we gotta act like one and let’s stop obsessing about net promoter score and all these other things, ok? Let’s just look at the scoreboard, by the way we are selling a ton of software. We are the leader, we are achieving our mission of dominating the world, we are awesome!

And you know what? The external market validated that. Vista Equity Partners come along and say we wanna buy the business, we wanna buy out Highland Capital and General Catalyst and we want to give everybody a big payday. It’s gonna be awesome! And it was a big payday, we made a lot of millionaires that day. It was very exciting. I sat with an employee who was with me for 10 years and gave her cheque and watched the tears well up in her eyes. It was an awesome experience! And some of my management teams said I made money, I’m gonna tip out the door. That’s great, ok. We’re gonna find new people to replace you. Turned out every single person on my team left within 6 months. Every single – not the whole company, but my management team left. Either I asked them to leave or they left. Including one of my co-founders who was an incredible partner to me, very emotional time for me personally.

But we pressed on and you know, we continued to sort of world dominate. I went and acquired 4 companies in 12 months and the press actually started to say Bullhorn on global domination tier! Like it actually like – people – and like you were a customer of one of these companies you felt like holy crap! We just got bought by Oracle. The company we love is now owned by this big company and they are mean and big bad Bullhorn. Competitors started to crop up and their message was we actually care. Yeah, right? Not a good brand on developing, right? This is not how to build a brand. That’s the next talk, right? But look at the scoreboard. We just continued to grow like bonkers bananas. And then the awards, the accolades! On Ernst Young, you’re the entrepreneur of the year. How does that feel? That feels good, right? I’m doing something right, right? And then I thought that there was gonna be some cool music or something. I need drama now. Cause here comes the part where it gets nasty.

Reflection

So remember Leslie, my first customer? Leslie had probably done over 200 reference calls for us as we grew. She was my go to person, she was the person that we put in the VIP suite at our conference and the person that always greeted me with hugs. And always signed her emails you’re the best pal. I love you! But Leslie called and said I’m sorry but I gotta tell you, I love you but I gotta go with somebody else. I couldn’t believe it. What do you mean? Why? There’s another company, they’re a young start-up and they remind me of you when you got started. They’ve got the passion, energy and the drive. I just had negative experiences with your team and customers and your people are arrogant. Your sales person gave me a huge price increase.

It messed me up! It really did. And I went and looked at the data that I hadn’t been looking at and look at this. This is the equivalent of a train wreck. When your customer’s sentiment takes this kind of a dive, I gotta tell you I looked at this data and said I don’t know – if you’re taking pictures of this and tweet it out, make sure you tweet out the following one. Bullhorn’s customer experience! But yeah, so this is really – this is a good example of like what not to do. You get arrogant, full of yourself and the competition comes in and you have the read innovators dilemma, right? We weren’t paying attention and customers were frustrated. And I surveyed my employees what do you think about our mission? Hated it! What is the point? I don’t get it! Global domination, that’s not the mission. Half of them didn’t know what it was, the other half said it was pointless.

So I go to this beach in Madison where I go every weekend and I reflect. Do I even want to do this anymore? Because I haven’t had a positive conversation with a customer telling me our products are amazing like we used to, I haven’t had one of those in like 2 or 3 years. So maybe I’m a start-up guy, maybe I want to go and start a new company. And then I thought about it and I was like ok, maybe there’s another way. What if I change the culture of the company? And what if I change what we’re about? Because frankly, financially, I have the freedom to do that. I can do whatever I want. The private equity guys don’t care what I do as long as we continue to grow the company. So what if I did this? And I will be honest with you, I wasn’t quite sure this was gonna work. But I love this company and I want it to be about what I love doing. And I made a list of things that I loved about my job, that I no longer do and a list of things that I hated about my job that I do now and I said I gotta change and I said we’re gonna start with our mission.

Our goal is to help businesses to create an incredible customer experience

This is our core purpose. And I rolled this out. And people laughed. I had a town hall meeting and people laughed. They were like – are you kidding me? We’re gonna get all touchy feely now? And I said no, I’m serious. And in fact, I’m changing the whole culture of the company and this is what we’re gonna be about and if you don’t like it, it’s time to get your stuff and get out. And I said here are the core values, these are going on the review forms. If you don’t live these values – ownership, do what you say you’re gonna do. Be human! Build relationships with customers. Speed and agility, get things done for customers, don’t give them the run around. Energy, leave customers wanting to work with you again, leave your co-workers positively charged. Build your team up and then service respond quickly. Leave people thinking that Bullhorn really cares and you really are passionate about doing a great job.

And I put these on the review forms, we do reviews every six months and people were like I’m gonna be reviewed on this? This isn’t fair, cause people were no longer with us. And then I changed management compensation and I said forget bookings, revenue and any other metrics. What matters is the customer experience and the employee experience. And you are going to keep customers. Ok? So lastly, for the rank and file I said it’s not just about how I’m gonna measure you and hold you accountable, I want you to understand something that there is this cycle that we’re going to experience and start with creating incredible products and services, that will lead to our customers loving what we’ve done for them, which will lead to more referrals which will lead to growth which will eventually help your career. Because I did this thing, I said raise your hand if you joined Bullhorn because you wanted your career to stop at the job you took. Nobody raised their hand. Raise your hand if you joined because you thought you could advance and everybody raised their hand. And the power of saying ok we’re gonna take this growth and apply it to your career, but you have to deliver an incredible customer experience. That is gonna create the incredible culture and this is gonna be a great place to work. By the way, if you looked at our ratings at glass door, at the time I rolled this out we didn’t have an incredible culture. We were like a 3 on glass door. If we’re a restaurant with a 3-star rating out of 5, you would not go eat at that restaurant, ok? You would be like that’s a lot of 1’s and 2’s to get a 3 average.

So the first thing that happened was amazing as my CTO said. You know, I’ve been looking at the NPS data and the people – the detractors, all sight the fact that that product that you built for Leslie hasn’t changed since you built it for her and that does tell you the power of software if you build a good product, customers will use it forever. They’re not like I need the latest and greatest. I need this shiny graph; they don’t need that. What they need is functionality. But if it only supports internet explorer in 2013 my comment was who uses a Mac for business anyway? I see nothing but Mac’s right now. We get to do something, it’s slow, it crashes you can’t use other browsers. What about tablets? We have no solutions for tablets so he and our UX designer went and created this incredible product and its funny cause had we not been bought by a private equity firm, he might not have been CTO and he might not have touched the hallowed ground. This was a SaaS application with 50,000 users pounding on it every day. Outages were like an anathema!

He went and broke it and fixed it. With this amazing user interface. Like he didn’t just make it better, he completely revamped the whole thing and this was the feedback! We started seeing NPS change as soon as we rolled it out. And customers were sending me love letters, I got more gifts from customers that holiday season than I’ve ever gotten in my entire career. Customers sent me bottles of wine, chocolates, I’m like I’ve never sent you anything. Why are you? Thank you! This was amazing! You’ve changed my life! Cause remember, they lived in the software all day long.

Then we got an inspiration.

So raise your hand if you’ve ever seen a customer email like this. Like we need to talk – not a lot of detail, but something is going on, right? Raise your hand if you think it’s a good sign. Not a good sign. So there is an email thread that said this – I’ve changed the name to protect the innocent, but the email thread goes around. Hey, who owns this customer? Who is talking to them? What’s going on? You gotta talk to finance, I think they got a problem in billing, you need to talk to professional services, they have a project that’s off the rails. Oh no, you need to talk to support, you’ve got a bug. Oh you need to talk to development cause I can’t get a response. Meanwhile, 11 am comes, I get on the phone, I have no idea what to say to the customer. And the CTO got inspired again and he said what’s crazy is that if you had been able to look at the email that had gone back and forth with that customer over the last two months, you would have known everything you needed to know and you would have been able to pinpoint the right person and get a resolution right there on the phone. And he said why don’t we turn that into a product? And this sort of focus on the customers inspires this incredible innovation around we’re gonna – here’s a novel concept! We’re a CRM company, why don’t we take every single email that customers exchanged with our employees and make it really easy to go browse that data? Almost sort of like ways makes it really easy to know what every car on the road is doing, we’re gonna give you this enterprise control over what’s going on with your customers. And now, all of a sudden, instead of looking like idiots when they get on the phone, we look like superheroes. And then we said well this isn’t just applicable to the staff industry. Wouldn’t any company who have customers care about this? And all of a sudden, sales started to take off in other industries. So this focus on the customer all of a sudden is yielding innovation to the company.

Then we did another thing. We started recording our calls with our customer reps. Everybody recorded their customer tech support calls. Anybody actually listened to them? You should – not to catch people doing something wrong, but something right. This was so cool, the customer saying if this call is being recorded, I’d like you to hear what a great job Cierra is doing! So we started recognising people at our town hall meetings when this kind of stuff happened. And a very remarkable thing happened. When you make employees heroes for doing the things that you want them to do, they do more of it. Our CSAT went from the low 80’s to the high 90’s and it’s across 95% today. Even billing increase – I get love letters about our collections people. I’m not kidding! Like oh John is such a great representative of your company, he cares and does a great job and goes beyond. They owe us money and we’re calling them to collect it! But that’s the power of saying to people if you do a good job, you will be recognised.

So we said all right, let’s do that with software engineers too not just sales people or customer service. And then the innovation started to happen and new things started to happen and if you look at our customer experience index. From the last year, it went from 26 to 24 and it absolutely took off. And it’s still climbing today. It takes a long time for customers to realise that you care, that doesn’t happen overnight. It’s like one person starts to notice and then they gotta tell other people in the office how Bullhorn actually cares! Bullhorn did a great job! Maybe it’s just a fluke! Let’s not rush to judgment. I’m still gonna give them a 7 cause I know that’s neutral, right? So this really sort of took off and this year we’ve seen unbelievable acceleration. You can see the slope of the curve is increasing. And look at our glassdoor. Look at our employees.

So what started happening? We started growing faster, this year we started in January with 400 employees, we crossed the line to 500 in June. And when you do that, you create 100 new jobs, ok? Some employees get to take those jobs, some go lateral and some go up. I’m gonna become a manager, an architect, a senior lead, a practice lead. Others say I want to go from support to sales, from services to whatever. And if you’ve got a fast growing business you know what happens, right? You promote from within and people say wow, my career is going someplace at Bullhorn! And this has been to me, this metric is like the number 1 metric of how I’m doing as a CEO. If my employees say that the employee experience is getting better, I know that I’m delivering an incredible customer experience.

And by the way, the scoreboard like I didn’t – I never thought that when you got to the size that we’re at, that you could continue to grow at the pace that we’re growing. In fact, we’ve accelerated growth and we started to see large numbers catch up. But what it really was was we weren’t delivering that incredible customer experience. And now, our growth is accelerating. I think we can grow faster than this, which is really, really exciting. It’s funny that the PE guys were like yeah whatever you’re doing, keep it up!

So if you want to do what I’ve done, first thing you gotta do is ignore your customers and treat them really poorly and get really arrogant. But if you want to avoid the path, I think the key it starts with the mission that people can memorise, deliver an incredible customer experience that some people are gonna react to and go I don’t like that. That’s polarising to me, that’s repellent. That’s too soft or that’s too customer touchy feely or I don’t – good. Ok, leave! But if you have an unpolarising mission, it’s not useful. I use the mission to really hit people and go how is what you’re doing going to help create an incredible customer experience? But if we lock them into long term contracts, that will be good for the co – no. Stop! You need to think about the customer first. It’s very powerful cause there’s people all day long trying to change the way you deliver a customer experience and if you don’t have a mission that is clarifying and polarising and can be used as a weapon to thwart bad stuff, you miss out. So I think the other thing that clearly don’t drink your own Kool-Aid like I did, but I think the big company talk is just toxic. We’re a big company, we shouldn’t be in touch with our customers, you can’t be expected. That’s just wrong.

Cause I will give you an example. So Leslie, I ended up going down to Stanford, Connecticut, spending 2 days with her. We got around to S release and all the problems that she needed solved and Leslie was at my customer conference here in Boston just a few months ago and gave her a big hug on stage. And to me, that’s like I’ve had a customer now for 15 years. That’s what it’s all about, is that connection with the customer and the employees. And that’s how you deliver an incredible customer experience. Thank you!

The 11th Business of Software Conference USA, September 18-20th 2017. Boston, MA.

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Q&A

Audience Question: So my question is in terms of executing the strategy, did you consciously have to deploy more resources into client support and client engagement strategies or was it more just the mission and rousing the troops to focus more on what was important?

Art Papas, Bullhorn: Great question! I thought we were gonna have to allocate a lot of resources to customer facing roles. What turned out was the people that we had in those roles just weren’t given the right high level direction and we didn’t – if you look at our costs on tech support, on services, it’s actually remained flat as a percentage. So it wasn’t really more costly. It was just a matter of like what’s the mission? What are the goals and what are we trying – what are the outcomes that we’re trying to achieve? As opposed to metrics like first call resolution, right? Like I want to get rid of the customer on the first call, like it’s things like that, like the – you get the wrong mind set and you direct people to do the wrong thing. Or like billable utilisation, if you’re servicing people, not the management, but they’re focused on billable utilisation, they will make sure they send a bill every time for every hour that they work rather than thinking about their customer and their end. So you remove that as a goal, you introduce CSAT as the important goal, they just change their behaviour. Yeah!

Audience Question: Do you encourage your employees to post on glassdoor or is that something that happened organically?

Art Papas, Bullhorn: What we do is every town hall meeting, I put up the glassdoor results and I say here’s how we’re doing, which has the effect, if you didn’t know about glassdoor, you’re gonna go and check it out, you’ll probably post. But I think that if you say and oh wouldn’t you go rate us on – like of on Facebook? I think that’s disingenuous. So we don’t actually push people to do it. It just happens organically but it does build. If you show people that you care about this as a metric, people will go look at it and they will review you.

Audience Question: Do you ever run into tensions between existing and new customers wanting different things and feeling impossible to make both of them satisfied at the same time? And if so, how do you resolve them?

Art Papas, Bullhorn: Yeah, great question! That’s a huge tension. Like what do I need to build to win the next yield and what do I need to build for Leslie? And I think though that a good product CEO or manager zooms out and says there has to be a correlation here between those two things. Why is there a disconnect and I would say before the mission it was like well let’s just go focus on the new deal stuff as opposed doing the hard work of saying what should we be doing to change the game for both new and existing customers? And that – and if you just say I’m gonna do the hard work, it usually comes at the other end.

Audience Question: I’m curious about the polarising effect of your mission statement. Why would anybody want to create a horrible customer experience?

Art Papas, Bullhorn: It’s a good question. What I encountered was resistance to why does that matter? Doesn’t selling software and driving growth matter? That should not be our mission. Our mission should be shareholder value or x, y and z. And that soft, what is that gonna do for the top line, Art? You saw the results, but it took that sort of saying no, you’re gonna be measured. I had a sales executive say to me why am I going to be measured on this? This is bullshit! That’s the polarisation of that, like if you back up the mission with goals, people will be like what the hell? Why does this matter?

Audience Question: I’m interested in the redesign of the software in the context of David Hanson’s talk on Monday about rewriting your software from scratch. So a couple things. One, was that just a sort of reskinning of your existing software or did you actually rewrite the underlying software? And two, did you did everybody – was everybody brought along instantaneously? How did that transition happen? And were people ok with having their cheese moved?

Art Papas, Bullhorn: Yeah, great question! We kept the database structure, we rewrote everything up. So we didn’t have to do a data migration to get customers on to the new version of the code. And we actually changed programming. Somebody was tweeting about cold fusion and I was a cold fusion hacker back in the day and we got rid of all the cold fusion so I was very depressed. But – which nobody else was depressed. And that – I think if you look at glassdoor, I think that’s why the absence for the developers was why we went from a 4 to a 4.2. But the way we handled the transition was gentle. We took – first we took 100 users, then 1,000, then we started marketing it into the customers and rolled it out very slowly and it took about 18 months to get everybody off, especially the bigger customers because they had to build training videos and you got 1000 users using a product you can’t enter productivity. We designed it so that one customer could deploy it to 5 or 10 users at a time. The user level, you can have 2 different users of the same customer in 2 different products, which as long as you kept the database structure the same it worked out. But thankfully that’s behind us, cause it was a big project.

Audience Question: Great! Fantastic presentation! I really enjoyed it! I think one of the things I struggle with is for our support team that I manage, they’re at service to the customers and are always trying to solve their problems but they have only a handful of customers that eat up the vast majority of their time. So how do you determine when is the right time to sort of stop and maybe fire the customer? Cause that’s something that we struggle with a lot.

Art Papas, Bullhorn: It used to drive me crazy! I’d walk down to the support desk and there’s somebody on the phone and you can hear yes, Ross. No, Ross. And you walk by that person’s desk an hour later Ok, Ross. Can we adjourn this call and maybe touch base tomorrow and see – like there’s this guy Ross was on the phone all day long with customers. And there is a point in which somebody has to intervene cause your employee will go hang themselves. But I kind of came – and it used to drive me nuts, like they’re abusing the system but I got to the point where I realised once we get a little bigger, there’s no customer that can really drag down. And you do the math and it’s like that person is 1% of 1% or 10% of 1%. And if you look at what do they say about you in the marketplace, you were the only person to service their – they know they’re needy and ridiculous so I think they’re out there and brand ambassador and we make the investment, as painful as it seems, I think it’s worth it.

Audience Question: So do your parents still want you to become a doctor?

Art Papas, Bullhorn: Great question! I think my mom would love it if I became a doctor.

Audience Question: So when you experienced the full ratchet/full Monty, how did you address the issue of your ownership when you teamed up with the next truancy capital?

Art Papas, Bullhorn: Good question! I mentioned when we brought in Highland Partners and Capital Catalyst as partners, we cashed out the original investors when we did that and essentially recapped the company and set it up with much better management incentives, option pools and all of that. But it took like 6 years to sort of grow out of that, which you have the bubble with the unicorn poking through the bubble. I know there’s a lot of really funky structures out there that I talked to a lot of entrepreneurs, that stuff is like downside protections have really unintended sort of consequences, good investors though will say ok –

Mark Littlewood: What do you mean unintended consequences? They are utterly intended consequences on behalf of the investor. That’s the business.

Art Papas, Bullhorn: Yes, for the entrepreneur it seems like a good thing. I’m gonna give you downside protection. It’s investing in a tech start up. What, downside protection my ass! That’s – like go invest in Coca Cola and take your 3% dividend. Don’t put your money in a software company if you want downside protection and I think that’s the fallacy that we all get into. I promise the investor that nothing with happen with their money and I promise myself nothing will ever go wrong, it’s just a recipe for disaster. So I’ve lived it and I have the small piece of the big pie to prove it. So –

Mark Littlewood: Was it ever tempting to just go from the start again?

Art Papas, Bullhorn: In hindsight should I have restarted the company? And just started a new company? You could say yes but then I talked to our angel investors all the time, those guys got a great return when Vista came in, even though they got obliterated on the cap table. Had I washed them out, I think my brand would be a little different. So I hung on, but it doesn’t – it’s not right for everybody.

Audience Question: How much of the turnaround in CSAT and NPS would you attribute to the product changes versus the cultural changes?

Art Papas, Bullhorn: Good question! I would say the first half, going from a 24 to like a 40 was product. Cause we didn’t change the customer service team or really anything else for quite a while. It took us a while to figure out how to do that. We had to bring in a great leader who ran a call centre and all that. And so the first 12 months it was all product sort of just changing the customer experience and then really the lion share of the game came after. And so when you look at NPS now, a lot of the positive comments are about our people, they’re not about the product. So I would say half of your customers don’t care about the service and they care about the product – if your customers are like mine, then the other half don’t care about the product or UI, they care about the service behind it and the experience like what is it like to do business with this company?

Audience Question: You hear stories from companies like Zapp talk about how their call centre has like no time limit when speaking with a customer. Is there anything that your company does that is maybe counter intuitive to the normal customer service role – that helped you guys fulfil that mission statement you have?

Art Papas, Bullhorn: Yeah, great question! So we used to compensate on tickets closed. And when I said hey, why don’t we abolish that and compensate on CSAT? It was like well but that’s unfair, like if I crush tickets and go fast, I should get rewarded because if you don’t work very hard but your customers are really happy, I get a lot of pushback on that. Sorry! I’m glad you asked! It’s customer satisfaction. So we do these transactional surveys, somebody closes a ticket we say how was your experience? Grade us on a 1 to 5. So we started grading on that, customer feedback rather than on volume of tickets closed and what we saw was the efficiency – we were able to get just as many tickets closed and just as many customer issues processed but the repeat of customers coming back and saying I still have a problem I got a new ticket so the average number of tickets per customer went dramatically down. So what people were doing, what they figured out, if they just give the customer a half assed answer, close the ticket, and then move on to the next issue, the customer is going to come back but hey that’s a new ticket and that is someone else’s problem.

Audience Question: Hey, Art! Thanks a lot! Long-time listener, first time caller! The guy up there made me think of a question. When you did your presentation I didn’t know if this was just because of the linear line of the presentation or if this actually fell in chronological order, but was the culture change or the S product roll out, did that all happen at the same time?

Art Papas, Bullhorn: I have to think about it a little bit. For me the S thing was like wow I said something and people actually responded. For me, that was when the culture changed. But for the rank and file employee it took a little longer. I had an employee tell me – I said oh we should publish our change in net promoter score and I had someone in marketing say are you crazy? I don’t believe it. So for the people on the ground it took a while for the hearts and minds to shift but about a year in, the product thing, people believed. It was like ok, this is in the ground water. And it really did, you would have people talking about an incredible customer experience, and it took about a year for that to seep in to the groundwater, but the product definitely was the first proof. That was the proof you take customer feedback and you tie it to action. And it was like ok, we actually are gonna make good on this. And as soon as employees heard from customers saying wow, this product is awesome! Good job! They were like yeah, I did that. We did that.

Audience Question: Hey, Art! Great story! And I don’t know if you’ve been to BoS before, but Norm has presented a number of times about the founder’s dilemma and be rich or be king. You’re probably not quite there yet but certainly the decision is gonna be on the horizon. Do you think you can scale to be the same guy, both rich and king 3 years from now?

Art Papas, Bullhorn: Yeah, good question. I do. We’re gonna take this company – honestly, like the rich thing that’s not the goal for me. The building a great company, culture and making customers go wow! I gave a reporter a demo yesterday of something new we’re doing and he was like how the f did you do that? For me, that’s what I want to do for the rest of my career and I love my job. I didn’t necessarily love it in 2012 but I love it now and I want to keep doing it so we’re going to take the company public and we’re going to build a big standalone company. That’s what I want to do. I guess the public shareholders will decide whether or not I can remain king.

Audience Question: Hi. Thanks for an insightful presentation. What you said struck a chord with people and culture. If you had one question to ask in an interview, its about hiring right, so when you’re bringing people on board, what is that question you ask to ensure he or she is the right fit for the culture. And a follow up question, once the person is in, what’s the on boarding process to embed them into that culture?

Art Papas, Bullhorn: Yeah, good question! So in interviews, my favourite question to ask is what do you enjoy doing professionally? And I think it’s like a question for the GE methodology but it’s amazing what people will tell you. And people will tell you they really like interacting with customers if they really do because if you ask them freeform, what do you like doing? And this is like a customer facing role, they will tell you I love winning and closing the deal and you will hear words that either fit or don’t fit with your culture. And many times they’ll either fit or not fit with a role. I interviewed someone for an accounting position and I said what don’t you like doing? And he said oh I hate spreadsheets! Thank you for telling me! But people will tell you. So what you like doing/what don’t you like doing is a good question. And once you onboard them, we do very extensive training, our onboarding is anywhere from 10 to 12 weeks depending on the role. So each function has a different onboarding. Development will train people on how to actually write Java and angular JS or technologies we use. Sales we do a 10 week intensive sales boot camp. Support we have a whole customer training and product track. I actually do a lot of new hire training. I do the training on culture and core values and why they are important. And I tell a version of this story. I tell people here are our core values and if you don’t think you can do these things, let’s talk because maybe it’s not a fit. I think the onboarding part is important.

Mark Littlewood: Art, thanks so much!

The 11th Business of Software Conference USA, September 18-20th 2017. Boston, MA.

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