Lessons Learned in 17 Years Building and Exiting a SaaS Company | Gail Goodman | BoS USA 2016

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Gail Goodman

When Gail became CEO of Constant Contact 17 years ago, she had to persuade venture capitalists that selling anything to SME/SMBs was possible, let alone an online service – THIS WAS THE LAST MILLENNIUM!

Gail considers some of the things she has learned about marketing and serving SMB customers, about the software industry and about leadership along the path to a scale business. She also shares her thoughts behind the ultimate sale of the company, something she describes as good for customers, for employees and for shareholders, even if it was a bittersweet process for her personally.

Slides, Video & Transcript below

See Gail’s slides from her talk here

Video

 

 

Plus, see Gail’s previous Business of Software Conference Talk – ‘The Long Slow, SaaS Ramp of Death

The 12th Business of Software Conference USA, October 1st-3rd 2018. Boston, MA.

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Transcript

Gail Goodman: Thanks! Well I’m thrilled to be the opening act at BOS. And really this is the first time I’ve spoken since we’ve sold Constant Contact and I left it in February of this year.

For those who don’t know, it helped small businesses and non-profits create and grow customer relationships. We were a high volume, low dollars SaaS business so when we started with $30 and when we ended we had only $50 a month. And my first BOS pitch was all about how long it takes to get a low dollar recurring revenue business to scale.

So, I won’t repeat those lessons here, that is well archived at BOS and instead focus on what happens as you grow these businesses to scale? And what are some of the things with hindsight, the distance I now think wow, I wish I knew these things kind of before I got there. So, I will say a bit more about scaling a business. I know some of you are early stage but maybe there are like things you need to think about now before you fall in the same potholes that we fell in.

So, the first deck was the long, slow SaaS ramp of death. It really is about how long it takes to get the stuff right and just to give you some context on what I’m talking about in terms of scaling and growth I thought I’d share the Constant Contact story in 3 phases.

So, this was the long slow SaaS ramp of death, the chart starts at ‘99 but I’m cheated cause we started in ‘97 and ‘99 is when we pivoted to a SaaS business. Took us a year to get the product in the market so October is when we launched our hosting site, October 26th to be specific. Funny how you remember these things. And then we started trying to figure out how to find, convert customers and go to market and it ended up being the hardest challenge. And as you see, these are quarterly numbers and it scales its way to $1 million a quarter and then the next phase was 2003 to 2009. And that was really the tornado phase, like rapid growth and really fun – if only I’d known that this was the really fun time, because honestly, we spent the whole time just frantic about managing growth and worrying about everything. Dammit, I wish I’d known! This was the fun time! I was supposed to be having fun – and then growth got harder – it got harder for a variety of reasons.

The large numbers catches up to you. The competitive environment changes, complexity enters your business, we clearly made a bunch of missteps and I will talk about them in trying to find new products and markets and expansion. When I put this slide and looked from a distance, it doesn’t look that bad. Like $90 million in quarterly revenue and still growing but in the middle it felt like we were struggling to find growth, every quarter of every year. Now part of that is we went public in 2007 and we were public for 8 years, the public markets were very growth hungry and we were constantly compared to other SaaS companies who were consistently growing in the 20-30% scale and we fell down into the high teens – we sucked! [laughing]. So, I look at this now and think not so bad, you can see at the end it got flat cause we were in the process of selling. But when we were in it, it felt like we were not succeeding because we didn’t have an exponential growth.

So, as I think about the lessons, I put them into a few categories. Revenue and growth, leadership and team and strategy and then I will close by talking about the decision to combine forces, but the lessons are in those 3 categories.

So, let’s start with revenue and growth.

Everyone who met anyone from Constant Contact knows that we made funnel optimisation into a religion, it was all about the funnel. If you started there, you didn’t get out of the first day of work without finding about our funnel, why it mattered, how it contributed to the customer value lifetime and we made sure everybody who worked there knew what role they played in the funnel. And the long ramp of death SaaS is about funnel optimisation at each stage of the funnel. From the distance, I’d say the biggest lesson I learned is it’s all the same funnel. What you do at each stage affects every stage below? And if you organise around optimisation at each stage which you probably need to do, you need to make sure you’re making the connectors between the phases happen, right. So, I will give you a couple examples to bring it to life.

Pricing and promotions

So again, public, need to make the quarter and customer numbers. Let’s do pricing and promotion – let’s give the sales team closing levers to help them pull people through the funnel. Our funnel started with all sorts of different channels to bring people to the website to sign up per trial. So, the first part of the funnel was visitor to trial – then it was get them into the product and using with the sales touch to go from trial to pay and then further engagement to go from pay to stay or pay to refer. So, we tried giving the sales team these closing tools, mostly pricing promotions, half off the first 3 months, things like that. It was very successful in moving the trial to pay number, right? Those closing tools were helpful for the sales person to get that small business across the line, but it turned out when they got that small business to cross the line, it wasn’t as ready to use as our normal process. Right? We had pushed them through with a lever that had nothing to do with their value creation or understanding on how to use the software over time. So, guess what? Hire an electrician? Lower engagement, referrals, propensity to buy other products for us over time and grow their value to us. So, everything you do in the funnel has to be not just about lifetime customer value but about lifetime cohort value. You’re putting 100 people at the top, what’s the value created from those prospects?

I will give you another example, 17 years we debated how long the trials should be – right? None of you had this problem, right. Some early research and customer listening we did – it started us at 60 days and it was psychological – everybody who came to us said gosh, my calendar is full for the next 2 weeks. You’re sitting there and the calendar is packed but it frees up a little. So, in 60 days’ people were like I have a lot of time and it optimised visitor to trial, no question. But it didn’t create a sense of urgency necessarily although I will tell you a secret I shared before – we found that even though people said they don’t have time when they signed up they dove in. The vast majority of our conversion happened in the first 11 days. So, I’m not sure that was ever as much of an issue as we thought but we need urgency, we got to try it. So, we tried it multiple times, tried 30 and 15 days and what it did do was get people into trial who were far more qualified. They were ready to go so if you looked at the funnel metrics after visitor to trial, they look great. These people were ready to convert – the lifetime values of those customers were good. These were people that were right now, I’m ready to go and boom! In trial, pay, stay. Really great customers! But if you look at the lifetime cohort value of that group, we dropped off a ton of people at the top of the funnel who came and said 15 days? I won’t get to that and they bounced off. Not only that, we didn’t have any contact info for them. So, better to get them in on a 60 day trial cause those urgent guys are gonna come through but now we had a chance to also convert over time those trailers who weren’t ready, to nurture them into our funnel and turn them into customers. So, it’s all the same funnel.

Now, honestly you may have different funnels but between each channel you gotta optimise the whole funnel together. And when you get it right, great things happen. When you get it right and make that experience about the customer and the customer on boarding, you get customer referrals. They are the rocket fuel of your hyper growth phase. They are hard to measure, you can use MPS and other things but when you’re in your hyper growth phase, you know you get the referrals. You feel it in the gut and the business and if you’re at an early stage now, your goal should be to create an early customer experience that doesn’t just convert customers, but inspires them to refer to their friends. I say early experience because what we learned over time is that customer refer in the flush of newness. They just found something that is working for them and they are excited. I will – you can actually put your personal hat on and figure this out.

I will use UBER as an example. We went public and traveling in NYC and getting taxis there is like a competitive sport and I just sucked at it. UBER changed that for me. The first time I used it, I was like where have you been all my life? For the next month and a half, I told every single person I knew about UBER but then I got used to it, they introduced surge pricing and so as time went on, I was much less likely to refer. That happens in software businesses as well. So, you gotta strike while the iron is hot on referrals and they are all about that early experience, creating a wow that inspires your customers to tell others hey the ongoing experience is also important, because that’s what drives retention and our revenue up over time. You gotta get that right too but that is not gonna drive referrals for you. The referral moment wow is up front.

The other challenge you get – I call it the great referral killer that happens as you grow your business is complexity. As you scale, complexity is inevitable, it’s insidious and it’s really hard to combat. What do I mean by complexity? First of all, here’s the bad news, it happens everywhere. It happens in your product, your channels, your pricing and organisation. Complexity happens with your business. I will give you a couple of examples. So, product is probably the easiest one. When we started out we had this clear target. This is our customer and we keep our customer target narrow and we optimise for that customer and we were like wow, here’s an adjacent customer we could add if we just could add these 2 features. We’ve all heard this story before, it never happens! And there’s another one 2 features from that and you’re hanging it off of your original, beautiful, clean experience. We gotta use that feature somewhere and slowly but surely, your elegantly designed user interface and customer experience becomes a mess. So, you’ve all seen it, it’s gonna happen. The challenge is you have to be willing to stop and clean up. And you have to do it while there is an incredible list of features that the sales people tell you they will get you more business. And it’s always fun to do new features than clean up the old features. Always, but as leaders in the software organisation, you have to fight complexity – but it comes in other places, channels are complexity generators.

We will go through a 3rd party channel of some kind. It turns out they need unique reporting, lead tracking that’s different, the accounting is different for that, we got to get the rev share right, so it doesn’t just happen in product but throughout the organisation. Complexity leaks into the system so you have to be very, I think this all comes to leadership, I will talk a bit about that and strategy – it’s easy to say yes to trying a lot of things. Let’s try that channel, this or that! We’ll just put one or two people on it. When you do it on the customer or prospect facing side, dozens of other people in the organisation get involved – we now need a special support line, the accountants, this and that person needs to deal with it. The marketers need to create collateral for that. Right? Little decisions, big resource suck, big slowdown. Let’s not even start to talk about international. Language, currency and legal and regulatory – right? Everything you do adds complexity to your business and I would say the funnel I would talk about is organisational specialisation.

So, as you get big or bigger, you get more specialised. You go from generalist to a specialist and as you add organisational specialisation, it adds complexity to almost everything you do. I will pick on channel partners again because I loved our channels and it feels I am picking on them, but they were the ones that added complexity and slowed us down. So, we had 4 different types of channel partners so each needed its own sales business development team and soon they needed their own marketing and program and customer support person and all of that was fine, but then every time we wanted to launch a new product or release a major new feature, that product and program manager needed to go and make sure it was set up for all those channels and we all slowed down. Organisational specialisation I think is why big companies are slow. It wasn’t the engineering, but how much we needed then to specialise everything for each channel and geography and this and that. So, complexity happens – it’s gonna happen. The challenge is that you need to have the kind of teen commitment and will to rebuild and simplify. So, I’m not saying don’t go for it or don’t add new channels and geographies and that, but do it mindfully knowing these things will happen and try to keep it as simple as possible cause what ends up happening is growth is fun but it’s a little dangerous and it’s the complexity that’s the danger because you really feel like we can throw 2-3 people on this or that without recognising how much it drags the rest of the organisation and it turns that when you go and clean this stuff up, the organisation refuses it. Cause there is somebody in the company who was very focused on that particular channel partner and knows they absolutely have to have this feature or that feature to be successful and if you will clean it up and hide that menu down in the settings instead of at the top, I will lose the revenue and it just ends up being hard. So, it comes back to I think leadership and teams.

Leadership & Teams

So, people always talk about it’s all about the team, and they are absolutely right. The quality of the leadership team you can bring together is going to be a major swing vote in how successful your business is. But the point I would make is it’s not just about the individuals, but the quality of the teaming of the individuals as well. And at Constant Contact we invest a ridiculous amount of time in being a great team, at the executive team, at the next level down and next level down. Why? I have had several experiences before Constant Contact where the executives were not aligned and were fighting and what that did to the organisation was just horrible – it was chaotic, it was wasteful, when there was a sales and marketing folks not getting along or the marketing people and the product people – product and support – we all know these stories, but if you let it happen, it will waste resources in a very dramatic way. You do go faster, so the anecdote to complexity a little bit is team alignment and prioritisation.

When I say we spend a lot of time together, what do I mean? By the time we sold the business, the executive team was doing 2 2-day off sites a year, one in the winter and the summer and a 1 day off site in the spring and the fall. That is a ton of time – I think it was some of the best time investment we made so what did we do during that time? We got ourselves aligned on what? So, first obviously on strategy – you talk a bit more about it, but it’s really pretty simple. Who are we serving? What problem are we solving and what’s our unique competitive advantage solving that? But getting that right and getting that tight, if you’re sloppy on that, that’s again where lots of things can get built that weren’t needed or they can get confused about the why. Having your company everybody understands your why and one of the things I’m proud of is everyone at Constant Contact could talk about who is our customer, what is our value prop and how does funnel work? Alignment is important.

The second thing you need to get aligned on is the culture stuff. Mission, vision, values. You need to take the time to make sure you’re living it and again I think it really works, I can stay during the day and just tell you Constant Contact’s mission, we empower small businesses and organisations to create and grow customer relationships and succeed. Our vision was even crisper, revolutionise the success formula for small organisations and our values at one point were long and wordy and there were 6 of them and ended up with 3 values, 3 words each, customer first always, make it happen – sometimes we put an sh in the middle one. Seriously awesome people! Which was code words for our no a-hole policy but it worked, seriously awesome people. And we lived those values and we also got aligned on priorities.

I’m guessing you guys live in an ever-shifting world so I have never met a company that didn’t have more things they wanted to do than resources. Anybody there? Right! I have idle engineers, right! Never happens! So, getting clear what’s important right now in the business, and getting that in an actual priority order, so we ended up using a variety of different external models and books. One I liked was the advantage, people have read it? Heard of Patrick? The 5 dysfunctions of a team. He’s written a lot of books but the advantages are the summary of that and it talks about this idea of having a rallying cry and key themes for the business. So, once – they should last 6 months, we come out of these off sites with rallying cries and key themes and what that told us is if you’re in a resource contention battle, these 3 things are the most important. Resource these projects and priorities first because it is always better to get 2-3 things completely right than do a half assed job with 8 and I see way too many companies where the priorities – we have 7 key objectives for 2016 – 7? I could tell you already it will be a chaotic year. So, this discipline of choosing is what the executive team needs to do. It takes time.

And then the final thing we did which was just a huge investment of time was we learned to give and receive feedback about both individual performance, team performance and how we each participated as a team. A question I get asked all the time is most founders never make it past the IPO and made it to IPO and 17 years and how did you do it? I was willing to look at myself and my role as a leader so both my individual behaviour and my role as a leader and be constantly open to the fact that I was screwing up the team, cause as the CEO let me just tell you something. You are currently screwing up your team. Who are the CEOs? All right, got some team dysfunction? It’s you! Sorry – it’s you because either you’re not creating and environment where the team is forced to resolve the conflicts or you’re not listening or one of your team and you’re not telling them that that’s not ok. One of your key responsibilities is making sure your team is a team. They don’t tell you that in the CEO handbook but it is and it takes time to do that.

The final thing we would do is having crucial conversations. Take time to talk about things that takes more than 10 minutes and can’t do them in the weekly operative meetings, it takes time. So, we spent a ton of time together as a team, driving alignment because it matters. And once you get there, you gotta communicate and make sure everybody in the organisation understands mission, visions, values, priorities, rallying cries and key themes. I’m running long so I will shorten it – you can ask me in QA. But it’s gotta go all the way down not just one way, two way people have to engage with the materials on the content to internalise it. People don’t sit on their hands and get strategy, it doesn’t work. You have to do different things to make sure they internalise it.

So, thoughts on strategy, the first thought is defend your core. This of course requires that you know what your core is. And I think we got confused about our core, I’m sure others do. There’s a classic strategic definition which is your core is where 80% of your revenues and profits come from. But it was like wow, we’ve said solutions providers are really important to our business. Now it’s a part of the core. You cannot declare things to be part of the core. If they are not driving, you can declare that you want to be 1-2-3 years from now but we got confused about what really was our core and we expanded – growth is important and we had 100,000 customers so we needed more than 1 product, so we expanded our product line. And I think we were so focused on product expansion, channel expansion, geographic expansion – we took our eye off our core ball for a while which was email marketing. And that led competitors to enter – we were threatened by suites. People were creating software of services operating suites that had a little email marketing. It wasn’t awesome but they bought it with the suites so small businesses didn’t need a separate tool. So, you may have a moat and feel confident but the bigger you get, the more you become the target.

I was stunned at how quickly we went from scrappy start-up to the one everybody thought they could kill. And we still felt like a scrappy start-up and we’d go to conferences and we’d be like that slow Constant Contact, they’re a [laughing]. Right? So, you gotta stay humble and fast but most importantly you have to defend your core because it will get nibbled away. And we were stunned that there we’re still new competitive entrance the whole 17 years and most of them didn’t get to scale – one obviously got a significant scale but they were all little at the corners of our marketplace and making growth harder.

Second acts are hard to find…

The second thing I will say is second acts are really hard to find. I think that’s for a couple of reasons. If you do a great job optimising your funnel, the way you serve your customers for this particular product and market, becomes your DNA anything you move to is gonna require a bit of a DNA change and that’s really hard. Second acts are also hard to find when your first product is so – one of our challenges was email marketing was widely horizontal, really quick value delivery. It was a good first market – everything else we looked at – one of the dates we had frequently on the strategy side is we served – I think we looked at it once and it was 90% of the codes were customers. So, inside we said all right, we have business to consumers, business to business customers like accounting firms and software companies and we have associations and non-profits. If you think about it, it’s an incredibly large number of customers. Second act we looked at was only for 1-2 of those 3 macro categories. We were like gosh, we wanted to do horizontally, it was hard to find anything as good as our first product.

What I will say is you need to stay as close to your core as you possibly can.

And one of the mistakes we made is it’s sometimes hard to know what’s really close to your core so we acquired a company in NY called Single Platform. Great business! They were business to consumers only, that’s ok. They are still doing well and growing fast, helped them get their listings online, in particular menus. It was restaurants and spas and rumours and anyone who had a price list that was part of the consumer decision making process. Nail salons and that. And we got their listings on search engineers like google, yahoo and Bing, we got it on review sites like yelp and trip advisor and other places so this was a single platform to get you where you want to go. And we looked at them from the outside and were like high retention, software as a service, this is perfect! And then we bought them and figured out their selling model and customer service model were different. Our customers were used to logging in to Customer Contact and they – you sent them a PDF of their price list and they got it up for you. If the customer was gonna put that data in, they knew how to get there and they figured how to do that really efficiently. So, they started back selling them into our customer base and were like where is my login? There is no login, you didn’t have a SaaS back service office. So, we had believed that we could do this massive back sell and that we would help them get to market cause they were a little early. It wasn’t as easy as it looked. So, try to change only one variable at a time, new product to the same customer through the same channel and the same service model. Or same product to a new customer with the same service model and infrastructure. As you’re thinking about your second act, wait as long as possible. Get the growth out of your core. Stay close to your core and be great at it and then move slowly in small increments.

Strategically the great way to expand is acquisitions. Guess what? They are really hard, I mean really hard. No matter what side you’re on and whether they are 5-person teams or single platforms with over 100 when we bought them. What makes them hard is that if you find a great company and you only want to buy the good ones, they have as clear a mission vision and values as you do and there is no chance they are the same, they are two different companies. So now, you’ve got to take that team and do some form of merging. And remember I talked about the funnel was in your DNA, they’ve got their funnel in their DNA and you gotta find a way to bring them together that feels great. And 9 times out of 10 you really want to keep the team – maybe that’s 99.9% you really want to keep the team. So, you’re hesitant to say no, do it our way! What entrepreneur wants to hear that’s all gonna scare them away! They will leave! All the values in their team! Right?

So, classic mistakes we made is we were shy about being clear about what needed to happen. And so of course, months later, we were like guys, the whole rationale was you’re going through our channel and you have to sell it our way. 6 months passed, lots of hair tearing so the lesson is remember their heart. It’s all about the team but if the team is smart and focused, go and have a conversation with them. Work it out together but go fairly quickly to creating the synergy value that was the rationale. Have them be part of the conversation but don’t be shy about saying you know, you did it this way but together we’re gonna do it this way. Why? Because we have 100 sales people and you do. They will understand so don’t be shy, be clear about what you want. But remember they are going through wrenching change so be compassionate. It’s always a good general good rule on teams. But be clear!

So, we did 5 acquisitions, I would say all were successful and none of them followed the path we thought they were gonna follow before we did the deal. If you went back to the board deck and said here’s why and then you looked a year later, it was all different so you need to stay tremendously successful. And then at some point in the land of acquisitions, there comes a time where you need to think about whether you should be acquired and it’s time to combine forces.

I would say it’s really hard to know when the right time is and I mean really hard. So, Constant Contact had multiple approaches and before we went public during the IPO process we had 2 offers on the table in the course of taking the company public. After we were public there were 3 serious approaches – people were saying things on the side but there were meetings and board discussions and bankers. You know, in the end, the yard stick that we used was is this gonna help us fulfil our mission? We had a strong biased to independence we thought we knew our customer and our market and serve them in very unique ways. But we kept saying is this gonna help us go faster and get to another place? So, why this time? Well, let me start with this situation we found ourselves in.

So, it’s 2014, I know we sold in – the deal was announced in November 2015 and closed in Feb 2016. But these things, it’s always a long backstory and so here’s where we were in 2014. Our growth customer engine was stuck – what do I mean? We were doing 50k new customers a quarter. It’s one of these things where you say that and most companies would be thrilled, but we were a public company and while we were driving average revenue per customer nicely, retention was improving and we were profitable in getting more profitable although at this stage public companies didn’t care about that. We were driving a lot of cash flow but we were operating in a public market that was just all evaluation was driven by revenue growth. You could do a chart revenue – growth rate and market cap and revenue by multiple. It was a line and we were not driving enough revenue growth. Again, we were mid to high teens, shame on us! But we’re public so we do work for the public shareholders. In the end, once you make the decision to go public, you make it for the shareholders. And we were not delivering the kind of value creation that they wanted to see.

So, we got approached by one of our partners, it was actually an ace, they were a partner but it hadn’t gotten – we hadn’t gotten a lot of volume and they said you know, we think we can sell a ton of your products. We’re a partner and you’re not doing it and they were like it’s different when you own somebody. We think if we joined forces, we could drive a lot! And we said that sounds great but how are we gonna be confident? And so almost literally 6 weeks later we had the same conversation with another partner. I will call them bachelor number 1 and number 2. So, we said we need to prove it, we’re not gonna give up our – this is one of these decisions where there is no going back, right? You sell the company, it’s like very final. So, let’s test. And we basically with both companies began a very intense can we really cross-sell? Cause we’d seen a lot of partners where they said they could and they couldn’t. there were many criteria that were important and certainly as a public company what they were willing to pay was the most important but with both companies, we went through a process of really understanding. We were focused on the small businesses. Are we gonna be able to capitalise on their funnel? Are we aligned on mission, vision, values? That whole culture and team and kind of how easy is it gonna be to work together? And endurance really had it all for us. They had an unbelievable focus on the customer and when we started really teaming in their funnel, we started selling a lot. It was really clear that that stuck customer volume was gonna be able to be unstuck. Their number one core value was like – I think ours was customer first and theirs was – it wasn’t the same but we were reading what they believed in and it felt right and they were 10 minutes up from us so working together was gonna be unbelievably easy. So, we began to have a strong preference and the great news was they came in with the best offer. Right? Cause we’re a public company and if you want to understand when the board dynamic changes when there’s an offer on the table. You will get sued, we got sued every public transaction gets sued and you need to prove you took the highest offer, not the one the CEO and her team wanted. So, we got lucky here and the deal was struck.

Turning the page was very bittersweet. It was good cultural alignment, but obviously not perfect. Things were gonna change – we’d created a company we were very proud of our culture and it’s a great place to work and were proud of our customer value delivery. We will lose a bit of control but we’re also gonna be a different company, we weren’t gonna be in charge anymore. So they were gonna run it more profitably so the first thing we will do close the deal, the second day big lay off. We’ve never done one! Just felt culturally – anyway it was very clear pretty early on in the negotiations that for them it would be easier if I wasn’t there. That I had become such the cultural icon of the company that if I was there every time they tried to drive a change people were gonna be in my office, and we built a high strong leadership team and I had a number 2 that was ready to step in and it was clear that some transition assistance would be helpful, my permanent assistance was not. And I was sort of ok with that and sort of like what do you mean? You don’t want me!

And so we closed the deal, it was the end of an era, certainly for me, but I think also for the company but it’s been an extraordinary run. For me it was a couple months short of 17 years in the software business. We had reached over 370 million in ARR, $49 at a time, just unbelievable! Couldn’t get to scale? Ha! Great team! So, when we ended we had about 1400 employees but over 17 years over 5k people worked at Constant Contact and we stayed true to our no a-hole policy. It was a great team, we invested in it and grew in it. I think we’re at 6 CEOs now that come out of the company and I think we’ll see more over time. And as I sit here 7 months post exit the thing I miss the most is the team. It was – in many ways they were a family to me. They certainly played much more of a social role than I was giving it credit for cause when it got ripped up from under me. Where is everybody? And then of course the customers, we loved our customers over 650k customers who we felt very passionate about serving every day. So, it’s the end of an era and I could not be prouder of what we built together and the way we worked together as a team. So, I will end it there and leave time for some questions [clapping].

Q&A

Mark Littlewood: What a start! Can we have the house lights up a bit? The way I do questions is microphones up here but you can stick your hand up and we will go over there. Cause I try and get a good circulation with questions over time. It’s gonna be shorter and we’ll go over here. That means we will get as many questions in and please remember our little – these microphones do explode remotely if your question starts with this is not so much a question but a statement.

Audience Question: Gail, thank you! Could you give us an example of what some of your channels were?

Gail Goodman: Sure! So, we had 4 types of channel partners, very large companies that also served SNB think into it, American express, our biggest set of partners were what we call solutions providers. These were small companies that served small businesses in their community. Agencies, marketing consultants, where we became something they did. Franchises, where we would go to them and they would bring us to their franchisees and you would see how each was different and the 4th was integration partners where we were in somebody’s – we became the marketing module for their yoga studio and salon solution or people who integrated with us like form stack which became our form caption tool. So, the integration partners so 4 different types, all with different needs.

Audience Question: Two questions. Do you regret the decision of going public? Now that you have time, do you do any executive coaching [laughter]?

Gail Goodman: So, I definitely don’t regret the decision to go public. So, we had taken venture money and we had reached the kind of scale where we either needed to sell to get them their return or go public and we were not done. So, we were public for 8 years, it wasn’t – every moment of it wasn’t fun but it was mostly ok. I think I did a really good job of pushing most of the crap work on my CFO, someone’s thinking about going public, I can tell you about that. So, I got my public time to about 2 days a quarter. And it was a wealth creation opportunity for the team that was extraordinary. I feel fine about that decision cause otherwise we would have been somebody else’s company much sooner. So, I am doing a little what I call mentoring. I don’t want to take money for coaching and have to like do stuff and be accountable. But I spent time with entrepreneurs and doing mentoring and I’m happy to start out short and we’ll see if it’s a fit. It has to be a fit, it has to be – I have expertise and we have chemistry but I am giving away my time at this point – I shouldn’t say that to this big a room [laughter]. And then I will figure out what I’m doing and I don’t want to be busy. I wanna be active but I don’t wanna be busy cause I was really busy for 17 years.

Audience Question: Hi! My name is Danielle – what your internal self-talk was and how you calibrated it to be effective?

Gail Goodman: So, first of all, not to keep pitching other talks I did, but I did a talk called founders can’t scale which was all about the topic of being willing to hold up a mirror to yourself – founders can scale but only if they change. So, I think you will learn some techniques and tools that are part of that, the self-talk was really about – we are all human and so we are all imperfect. And if we are not self-aware enough to understand what our baggage brings, we can’t change. And so you have to create the ability to get feedback so most of us are just not that self-aware and we don’t know which of our behaviours – we know a couple that are not good – but there’s 5 others you’re not as aware of. You’re not as aware that you’re sending these silent signals of disapproval and one of the things about CEO is people watch you like a hawk and so sometimes you’re sending unconscious signals that – so it’s an understanding that not only do you have flaws, everybody does. You’re like everyone else! You’re not special! Because you have a CEO title, right? You’re just the CEO so by the way, I didn’t do this alone, I made my executive team understand and see their flaws as well which wasn’t always fun to work for Gail because this was the process, but I think it created an extraordinary team and I think the exception of one and maybe 2 execs who worked for me, they would say that process made them a better person.

Audience Question: Hi, Gail! Whether that was a difficult process and you framed it to make it easy on yourself. You can regard yourself as a failure and success at the same time or was it just a relief?

Gail Goodman: Someone had to go there, it was really hard to sell the company. And it was really hard to leave it. It had become my purpose in life, my identity and people were like you meet people who don’t know who I am. What do you do? I don’t even know what to say [laughter]. Like how long can you be a former? An ex? I don’t wanna be an ex at anything, my badge says ex. But I didn’t know what else to do – so it was my purpose and my identity, my community. I didn’t understand how important the community was to me so it was wrenching to have it be like a switch – we closed the deal and the next day I was consulting and giving advice to an integration team but I wasn’t coming to work every day. You know, it was just unbelievably hard and I think I just wondered for 3 months – I just didn’t know what to do with myself then summer came which was very helpful and I decided to disengage from professional and just enjoy the summer. And now I’m re-engaging and not sure what I will do but I’m at a better, more settled place about it but it was – I won’t get emotional in front of a big crowd, it was very difficult.

Audience Question: Thanks for a great talk! Early on you talked about complexity as part of the growth process and the difficulties that go along with it and then you made a passing reference to the importance of rebuilding and simplify – I was wondering if you could expand on that, what you did.

Gail Goodman: I have an example of both, so I will just start with product because it’s probably the most obvious, one that we’ll all be in common and most visible. So, the product had just gotten heavy. So, at some point, we had a clean it up moment and we did it in stages so we started with the CRM customer management system and then we moved to the editor and we were always cleaning up fonts and things like that. This was like radical surgery, go through all the features, decide which ones really needed to be there and which were extra. Every extra feature has a set of customers who are dependent on it, decide what’s a more intuitive reorganisation and break some metaphors, we had to break some. So, those we did, with classic design principles and practices and all that, I would say customers hate change so when you do that, we’re all the same way, right? Somebody changes the software on us and we’re like why? I hate it! I have to learn something new! I wasn’t planning this this week! You weren’t planning on time to re-learn something you used by habit. If you get it right, they will squawk but they will get over it. If you get it wrong, it’s just really bad. And so we got the customer CRM we buried a couple of frequent usage, we did the – it’s nothing you haven’t seen we weren’t as crisp in understanding the use patterns of our customers so we buried down too far some of the frequent use patterns and had to resurface those and it was the usual – but having a team that knows how to hear customers and listen and I think we made the mistake of spending the first 2 months saying they are just trying to get used to something new. Well we weren’t listening well so as we got to later re-configurations and changes, we were better listeners – we had tested it but with a limited set of our favourite – we made a lot of classic mistakes in the first round. When we got to the editor, we were in a far better situation and we did it with a much better job. My red light is flashing.

Mark Littlewood: We could take at least 2 questions from everybody in the room. So, we’re just gonna run out of time. You are around –

Gail Goodman: I’m hanging around for a while.

Mark Littlewood: Thank you very much indeed, Gale! [clapping]

The 12th Business of Software Conference USA, October 1st-3rd 2018. Boston, MA.

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3 responses to “Lessons Learned in 17 Years Building and Exiting a SaaS Company | Gail Goodman | BoS USA 2016”

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  2. […] that inspires your customers to tell others about how great your product or service is, she said in a Business of Software talk in […]

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