Transcript
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I like to think that customer success is so
important in the 0 to 1 because it revs the
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engine of growth.
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Not only do you find product market fit through
it, but you also start
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that motion for growing your business.
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As soon as
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a founder lets the customer kinda slide out of
their purview.
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That's a really dangerous thing.
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When we're scaling at Motive, it was a series
of launches throughout our journey.
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You generally won't make it to becoming a
$1,000,000,000 company on 1 product alone.
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And so you're always testing and retesting your
product market fit.
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Henry Ford famously said if I had asked people
what they wanted, they would have said faster
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horses.
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Are you in the Henry Ford camp regarding the
product market fit and discussing products with
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customers.
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Are you in the Steve blank camp who started the
lean startup movement and who advocates
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for constantly iterating and constantly testing
with customers before releasing products?
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You can go back and you
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can read, like, Apple's marketing philosophy
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from the very beginning, like, 1977.
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And you know, the first word in that is
empathy.
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You work and collaborate with Jason Lemkin.
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Tell me about your collaboration together.
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I've known Jason for a long time now.
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I've been part of his network for over 10 years
now.
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You could probably go back in the vaults and
find a podcast with me and Harry Stebings when
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Harry was probably 16.
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Harry used to do Jason's Sasser podcast for
him.
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So Jason and I have known each other for a long
time.
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He's been really kind to me as I've started
success VP.
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He's probably one of the biggest proponents of
customer success, Trevor, was.
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And so we're collaborating actually this year
at Saster.
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I host the world's largest meetup now for
customer success, San Francisco, for customer
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success meetup is over five thousand people
now.
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We do events in New York City as well, and
we're gonna combine forces.
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How do you get in the top deals and tell me
about how you know that you're not being
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adversely selected?
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John, I've been really looking forward to chat.
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Welcome to Tenex Capital Podcast.
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Yeah.
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Thanks, David.
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I'm stoked.
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What was the impetus for starting success VP?
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Yeah.
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So You know, the insight for success VP
actually came from when I was investing with
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index dentures.
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So as an operator, I was a scout with index.
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I led customer success at a company called
Motive from less than a $1,000,000 in ARR to
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over $300,000,000.
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In ARR.
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As a scout with index, I noticed that I could
win allocation in these really competitive
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deals.
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Founders were basically raising their hand
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to work with me, and the founders I was already
working with were pulling me into the startups
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that
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their friends were starting.
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And so when I stepped back for a minute and I
looked across that entire angel ecosystem, I
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noticed that
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there was no fund that existed that was
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investing with the value prop
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of customer success.
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Nobody had seen the depth and breadth of scale
in the function that I had, and that was
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incredibly compelling to entrepreneurs.
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And so, you know, the more I thought about
that, the more that, like, kinda nod away at
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me.
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I just, like, it sat in the hit of my belly,
really, and I couldn't stop thinking about it.
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And so eventually, I laughed, motive, which is,
you know, a really hard thing to do and started
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success VP.
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So success VP helps founders with everything
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that comes after they get their
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1st customer.
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Our LPs are, you know, some of the best and
brightest customer success people in the world.
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We're talking, you know, github, Slack, Notion,
Aurora Solar, mulesoft, monday.com, which is,
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you know, growing at 30% even as it approaches,
you know, a $1,000,000,000 in ARR.
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Yeah.
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We're there to help founders with what we call
founder led customer success, everything that
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comes after they get that first customer.
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How does customer success actually lead to
increased value in a startup?
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Let's zoom out for a second.
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Right?
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So, you know, the thing that I was gold on at
Motive was net revenue retention.
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Right, NRR, it's one of the more important
metrics in subscription businesses.
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So NRR is just, like, this incredible thing.
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I like to think of it almost as, like, the 7th
wonder of the world, right, when you have NRR
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of 120 percent, that's how the compounding
piece of subscription businesses really starts
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to come together.
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So at the highest level, you know, it's just
this incredible value creation function.
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At the earliest stages though of building
companies, maybe what's not obvious, is just
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how early customer success starts.
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Right?
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I would argue that you probably don't have
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product market fit unless those early customers
are renewing.
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That starts the second you get a customer.
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And so I like to think that customer success is
so important in the 0 to 1 because it revs the
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engine or it revs the engine of growth.
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Not only do you find product market fit through
it, but you also start that motion for growing
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your business.
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When we were talking, you mentioned that
customer success starts to matter at the c
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stage.
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Why does it matter so early?
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Yeah.
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So we like to think of our product in really,
like, three stages Alright.
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So stage number 1 is this concept that we have
and we call it founder led customer success,
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right?
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It's the process where the founder is, you
know, doing the sales and also supporting the
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customers.
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So early on in my career, you know, I was the
1st hire I was hired number 1 at a company and
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went through that finding product market fit,
doing the first sales, building the first sales
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team, and eventually, you know, found my way
into customer success.
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The founders were like, Hey, dude.
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You're the figure it out And so we're uniquely
positioned to support founders with that early
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part of their journey, you know, starting the
flywheel for the entire go to market motion.
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You probably don't get customer number 2,
unless customer number 1, is really successful.
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You probably don't get, you know, customer
number 3 unless the first 2 are reference
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calls.
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You know, it's those first three logos that go
on your website.
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Right?
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So really customer success starts this, you
know, this engine of growth.
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So step number 1 is just supporting founders
with that entire motion.
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What are some mistakes that top founders make
when they build out their customer success
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function?
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Oh, man.
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There's so much nuance to that.
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I think, like, 1st and foremost, like, as soon
as a founder lets the customer kind of slide
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out of their purview, that's a really dangerous
thing.
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Right?
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You know, one of the impetus for success VP
actually came through 2022 and into 2023.
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You know, I got a call from a lot of my
friends' adventure, and And the the
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conversation went like this, hey, you know,
we've got this startup.
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It's experiencing some churn.
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Can you talk to the CEO?
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We think that, you know, maybe they've got a
customer success problem.
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And in a lot of cases, it had nothing to do
actually with the leader, and it was more
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through the fact that they were starting to
slide out a product market fit.
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You know, the founder had raised a lot of
money.
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When you raise a lot of money, there's lots of
other jobs that start to come up.
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And right before their eyes, they started to
lose some of their product market fit.
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The thing that, you know, founders really just
have to create space for is being close to
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their customers.
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The other thing, though, is, like, customer
success is, you know, such a nuance function.
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You can almost break it into a series of
funnels.
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Right?
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First, you have onboarding, which is one
motion.
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You might have expansion, which is another
function, renewal, certainly, our funnel.
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You know, it takes quite the leader to keep
their finger on the pulse of all of those
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funnels.
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Right?
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And so in a lot of cases, you know, customer
success, you get the higher wrong because the
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breath of things you need to do in that role is
just so broad.
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And so I see a lot of folks fail with their
customer success higher because they optimize
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maybe for the wrong funnel at the wrong time or
don't get somebody who can scale through as
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many stages of growth.
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Is there frequent bias when hiring for customer
success where somebody looks for an all around
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player versus hiring the best in class athlete
for a specific customer success function?
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Let me tell you a story.
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So at Motive, like, we grew incredibly fast.
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At one point in my journey at Motive, we went
from less than a $1,000,000 in ARR to
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$60,000,000 in ARR in the span of 6 months,
right, hyper growth in the truest sense of the
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word.
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And what you find is that because there's so
many funnels in that function onboarding
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expansion renewal, your team
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starts to break down, right, somebody cannot
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be great at onboarding, supporting, renewing
and expanding, right, that's a really diverse
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skill set.
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And so you're right.
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Yeah.
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We you in order to have a successful customer
success function, you have to have
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specialization on each of these roles.
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And so in order for us to, like, you know,
scale and serve our customers, what we ended up
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doing is we unbundled onboarding from the rest
of the customer success motion.
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Right?
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Onboarding looks a little bit different than
expansion and renewal
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Using specific metrics, when the founder is
looking at the continuum between sales and
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customer success, when does the founder know
that it's time to increase sales?
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And when does the founder know that it's time
to improve customer success?
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So at every stage of growth, like, you wanna be
really in tune with your customers.
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And you wanna be very honest with yourself as a
founder.
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Right?
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I think, again, like, through 2022, 2023, you
saw a lot of founders step on the gas start to
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scale their selling team before I feel like in
their bones, they they truly, you know, had
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product market fit, right, product market fit
isn't, you know, a one and done thing.
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You know, when we're scaling up Motive, it was
a series of of launches throughout our journey.
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Right?
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You generally, you know, won't make it to
becoming a $1,000,000,000 company on on one
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product alone.
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Right?
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And so you're always testing and retesting your
product market fit.
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You gotta be honest with yourself on this.
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You have to stay close with your customers to
ensure that, you know, you truly are
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delivering, on the value that you promised
them.
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And so, you know, churn is a a lagging
indicator of that.
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Generally, like, you don't know that you have a
problem until customers start to to turn or
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that metric really starts to go red once
there's, like, a full fully fledged problem at
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hand.
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And so the only way that you can, you know,
really assess that as a founder is just, like,
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staying close.
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It's through those right along calls.
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It's through, you know, spending time with your
customers, your VP of customer success, I would
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say, you know, be hesitant before you throw
that log on the fire, really be honest with
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yourself.
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You know, if you see things like incongruencies
or customers saying different things, you might
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wanna hit pause for for a second and and align
there before adding more sellers.
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I'll tell you, you know, it's one thing to find
product market fit when you're small, and it's
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a room of ten people or a room of a hundred
people.
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But, you know, in a thousand person
organization or a 2000 person organization,
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know, it gets pretty noisy.
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Right?
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And so, you really wanna be in tune.
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You really wanna have somebody who you can turn
to in the organization, who's that voice of of
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the customer.
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I'll tell you a really cool story about this.
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A couple weeks ago, I was in New York, and I
hosted a dinner with Cassie Young at Primary.
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She's a GP over there.
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And we had a room full of, you know,
exceptional chief customer officers.
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And, you know, one of the things that was
really interesting was actually, like, how many
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leaders in this room, had actually scaled
through so many phases of growth, Tom
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Ronan@monday.com.
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I think he was, like, higher number 20.
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We had Spencer Burke, who was higher number 2
at braids.
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We had Jillian Burnett, CCO at M Particle.
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Right?
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She joined at Series A.
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She's now CCO and, you know, a multibillion
dollar company.
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Anyways, you know, it's abnormal, or it's like,
it's not normal for folks to stick at a company
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for for that long.
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Right?
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Most people and tech aren't gonna be at a
company for 6, 7, 8 years like these people.
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And so when I asked them, like, hey.
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What's the secret to your longevity?
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There's actually a surprising answer, which was
all of them just, like, felt so appreciated in
230
00:11:50,294 --> 00:11:51,034
their businesses.
231
00:11:51,174 --> 00:11:54,980
Tom basically said to me, he's like, I think,
you know, I think they keep me around at the
232
00:11:54,980 --> 00:11:58,339
senior leadership level because, you know, they
can keep a Tom in the room.
233
00:11:58,339 --> 00:12:02,199
Like, I know our customers better than anybody
else in in the organization.
234
00:12:02,659 --> 00:12:04,579
Now Monday is growing incredibly fast.
235
00:12:04,579 --> 00:12:09,139
They really value this connection to their
customers, and that's been a secret to their
236
00:12:09,139 --> 00:12:09,879
their success.
237
00:12:10,174 --> 00:12:14,254
Henry Ford famously said if I had asked people
what they wanted, they would have said faster
238
00:12:14,254 --> 00:12:14,754
horses.
239
00:12:15,134 --> 00:12:20,254
Are you in the Henry Ford camp regarding
product market fit and discussing products with
240
00:12:20,254 --> 00:12:20,574
customers?
241
00:12:20,574 --> 00:12:22,139
Are you in the Steve blank camp?
242
00:12:22,379 --> 00:12:27,580
Who started the lean startup movement and who
advocates for constantly iterating and
243
00:12:27,580 --> 00:12:28,379
constantly testing
244
00:12:28,379 --> 00:12:28,416
with customers before releasing products.
245
00:12:28,416 --> 00:12:28,423
Yeah.
246
00:12:28,423 --> 00:12:28,452
I love this question.
247
00:12:28,452 --> 00:12:28,503
So I came to this wonderful world
248
00:12:28,503 --> 00:12:29,290
of startups actually through Steve Blanks
course.
249
00:12:36,894 --> 00:12:42,495
You know, I'd been an entrepreneur my my entire
life, but it was only, when I found my way into
250
00:12:42,495 --> 00:12:48,274
the the lean canvas class that this whole world
of software startups clicked with me.
251
00:12:48,779 --> 00:12:50,540
So I'm, you know, credit where credits do.
252
00:12:50,540 --> 00:12:55,899
I'm a massive steep blank fan, and I, you know,
I think it's incredibly important to be close
253
00:12:55,899 --> 00:12:59,500
to your customers, to learn with your customers
at every step of the journey.
254
00:12:59,500 --> 00:13:03,394
The Henry Ford piece know, it's a little bit
like the the Steve Jobs piece.
255
00:13:03,394 --> 00:13:03,634
Right?
256
00:13:03,634 --> 00:13:08,774
We didn't know that we needed an iPad until
Steve Jobs brought that to the world.
257
00:13:08,834 --> 00:13:14,695
And I think sometimes, like, people
misunderstand, you know, the whole mantra of,
258
00:13:14,754 --> 00:13:20,410
you know, Steve Steve Jobs, right, actually
think, like, jobs was incredibly customer
259
00:13:20,410 --> 00:13:20,889
centric.
260
00:13:20,889 --> 00:13:25,850
Like, you can go back and you can read, like,
Apple's marketing, philosophy from the very
261
00:13:25,850 --> 00:13:27,790
beginning, like, 1977.
262
00:13:28,090 --> 00:13:30,115
And, you know, the first word in that empathy.
263
00:13:30,174 --> 00:13:34,334
The quote is, like, you know, we truly know our
customers needs, you know, better than the the
264
00:13:34,334 --> 00:13:34,344
competition.
265
00:13:34,344 --> 00:13:34,354
Right?
266
00:13:34,354 --> 00:13:34,382
That's incredibly eccentric.
267
00:13:34,382 --> 00:13:34,488
So I think you need to have that jobs like
mantra.
268
00:13:34,488 --> 00:13:34,507
Like, you
269
00:13:34,507 --> 00:13:45,769
need to have a vision for how the world ought
to be or what something should look like, but
270
00:13:45,769 --> 00:13:49,129
you also have to keep your customer front and
center.
271
00:13:49,129 --> 00:13:53,929
Steve Jobs is known for spending hours
observing how people, you know, interacted with
272
00:13:53,929 --> 00:13:55,690
the Apple store in in Palo Alto.
273
00:13:55,690 --> 00:14:00,695
And so I just think, like, the the jobs piece
and the blank piece, they really actually go
274
00:14:00,695 --> 00:14:00,940
hand in hand.
275
00:14:00,940 --> 00:14:00,962
That's probably like the core thesis of success
VP.
276
00:14:00,962 --> 00:14:00,965
Right?
277
00:14:00,965 --> 00:14:01,002
I believe that, you know, founders who know
their customers learn about their customers at
278
00:14:01,002 --> 00:14:14,950
a greater pace than their competition or are
the ones that are gonna win in the end of this
279
00:14:14,950 --> 00:14:20,889
world of AI, you know, we can build, we can
write code at a faster pace than ever before.
280
00:14:21,029 --> 00:14:26,205
And so really, like, the only moat, the only
way to stay relevant is to simply learn your
281
00:14:26,205 --> 00:14:29,327
customers at a more rapid pace than your
competitors.
282
00:14:29,327 --> 00:14:29,330
Right?
283
00:14:29,330 --> 00:14:29,349
Shamont talks about this all the time.
284
00:14:29,352 --> 00:14:29,804
And we talked about this actually in in one of
our, you know, prior calls, in the 80, 90 piece
285
00:14:29,804 --> 00:14:42,309
where You know, you can now build the
functionality of a competitor really, really
286
00:14:42,309 --> 00:14:42,930
quickly and deliver most of that value.
287
00:14:42,930 --> 00:14:43,124
And so I think the value of customer success,
the value of understanding your customers is
288
00:14:43,124 --> 00:14:43,173
probably more relevant than
289
00:14:43,173 --> 00:14:44,019
it's ever been as this pace of innovation only
accelerates.
290
00:14:54,595 --> 00:14:59,014
80.90 stands for 80 percent of the value for a
90 90 percent less cost.
291
00:14:59,235 --> 00:14:59,283
I think as we see the proliferation of of AI in
product development, you could argue what
292
00:14:59,283 --> 00:14:59,294
becomes the value channel.
293
00:14:59,294 --> 00:15:10,769
1 is distribution, of course, and the second
one is customer intelligence.
294
00:15:10,830 --> 00:15:14,830
And how do you deliver the right product and
the nuances in the in the segmentation of the
295
00:15:14,830 --> 00:15:15,330
customer?
296
00:15:15,550 --> 00:15:19,070
When it comes to sales and customer success,
why do you think customer success does not get
297
00:15:19,070 --> 00:15:20,590
as much attention in Silicon Valley?
298
00:15:20,590 --> 00:15:25,100
You know, I always joke that customer success
is a little bit like being a hockey goalie.
299
00:15:25,284 --> 00:15:25,784
Right?
300
00:15:25,924 --> 00:15:29,524
Nobody really pays attention to the goalie
until a goal happens
301
00:15:29,524 --> 00:15:29,618
until, you know, you get scored on, and now
there's this big red light over your head.
302
00:15:29,618 --> 00:15:29,640
We celebrate scoring goals.
303
00:15:29,640 --> 00:15:29,662
We stand up and
304
00:15:29,662 --> 00:15:38,250
cheer when a goal is scored.
305
00:15:38,409 --> 00:15:40,169
And sales is a little bit like that.
306
00:15:40,169 --> 00:15:44,730
In a lot of cases, we take for Granite that our
customers are going to stick around.
307
00:15:44,730 --> 00:15:49,450
The value of customer success has really risen
in in recent years.
308
00:15:49,450 --> 00:15:54,044
And the reason for that is, like, it's not a
given anymore that you're just gonna keep your
309
00:15:54,044 --> 00:15:54,764
your customers.
310
00:15:54,764 --> 00:16:00,365
It's not a given that you can just, you know,
hire more salespeople to, you know, fill the
311
00:16:00,365 --> 00:16:01,184
leaky bucket.
312
00:16:01,404 --> 00:16:03,565
Customers falling out the bottom of that churn.
313
00:16:03,565 --> 00:16:10,459
Really through 20222023, we saw companies
falling out of product market fit.
314
00:16:10,679 --> 00:16:14,919
And, you know, it's because they had lost touch
with their existing installed base.
315
00:16:14,919 --> 00:16:16,015
They had covered up for gaps in their product
and problems that they were having by simply
316
00:16:16,015 --> 00:16:16,700
selling more, and you just can't do that.
317
00:16:21,934 --> 00:16:22,414
Anymore.
318
00:16:22,414 --> 00:16:24,756
The only way that you can efficiently grow is
if you keep your existing customer.
319
00:16:24,756 --> 00:16:24,805
If you look at, you know, that proverbial
hockey stick curve that every startup is after,
320
00:16:24,805 --> 00:16:36,540
it's actually a series of stacked things.
321
00:16:36,540 --> 00:16:37,920
It's your new sales.
322
00:16:38,299 --> 00:16:38,959
It's your retained customers, and it's the
expansion.
323
00:16:38,959 --> 00:16:38,978
Sometimes we take that for granted.
324
00:16:38,978 --> 00:16:39,019
It's only when it starts to go away that you
really appreciate it.
325
00:16:39,019 --> 00:16:51,945
And so the reason we celebrate sales more is
the same reason that we celebrate, you know,
326
00:16:51,945 --> 00:16:53,644
somebody who scores a goal.
327
00:16:54,024 --> 00:16:54,745
That's exciting.
328
00:16:54,745 --> 00:16:55,865
It's net new logo.
329
00:16:55,865 --> 00:16:57,485
We ring a Gong for it.
330
00:16:57,625 --> 00:17:02,889
But the backbone of a company, the thing that
you know, really makes, a company turnover
331
00:17:03,029 --> 00:17:07,029
compound, you know, that compounding value of a
subscription business.
332
00:17:07,029 --> 00:17:11,349
It only comes from high net revenue retention,
and that only comes when you have successful
333
00:17:11,349 --> 00:17:11,599
customers.
334
00:17:11,599 --> 00:17:14,694
So In some ways, like, it's, yeah, it's fun to
be the hockey goalie.
335
00:17:14,694 --> 00:17:16,075
It's fun to be in the background.
336
00:17:16,775 --> 00:17:17,251
But anybody in the know, anybody who really
understands the fundamentals of how a
337
00:17:17,251 --> 00:17:17,360
subscription business operates knows just how
338
00:17:17,360 --> 00:17:19,434
important renewing successful customers are.
339
00:17:26,480 --> 00:17:31,140
Think it's also a function of the macroeconomy
and a bull market where you have companies
340
00:17:31,440 --> 00:17:32,180
raising every 12, 18 months.
341
00:17:32,180 --> 00:17:32,200
There's more an
342
00:17:32,200 --> 00:17:32,246
incentive to get revenue at all costs.
343
00:17:32,246 --> 00:17:32,306
I would even call revenue that's not sticky, a
344
00:17:32,306 --> 00:17:32,900
vanity metric of sorts.
345
00:17:40,345 --> 00:17:44,845
Where it looks good, but doesn't actually lead
to the long term value in the company.
346
00:17:45,065 --> 00:17:49,065
And as you go into a bear market, you start to
think, how do I build a business that's
347
00:17:49,065 --> 00:17:49,465
sustainable?
348
00:17:49,465 --> 00:17:51,485
How do I build a business that leads to
profitability?
349
00:17:51,545 --> 00:17:54,559
And so I think it's also a function of the
macro market.
350
00:17:54,700 --> 00:17:57,119
So let's talk about success VP, the fund.
351
00:17:57,179 --> 00:17:59,019
So what is the thesis for the fund?
352
00:17:59,019 --> 00:17:59,830
The core of the thesis is that founders who
understand their customers, you know, a greater
353
00:17:59,830 --> 00:18:00,650
pace than their competitors are the ones that
are ultimately gonna win.
354
00:18:08,875 --> 00:18:09,375
Congratulations.
355
00:18:09,674 --> 00:18:11,515
10 x capital podcast listeners.
356
00:18:11,515 --> 00:18:13,519
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357
00:18:13,519 --> 00:18:13,544
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358
00:18:13,544 --> 00:18:13,616
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359
00:18:13,616 --> 00:18:13,621
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360
00:18:13,621 --> 00:18:23,779
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361
00:18:23,779 --> 00:18:27,720
bring in the very highest quality guests and to
produce the very highest quality content.
362
00:18:27,859 --> 00:18:29,159
Thank you for your support.
363
00:18:29,940 --> 00:18:31,700
You focus on pre seed and seed.
364
00:18:31,700 --> 00:18:34,900
How do you get in the top deals and tell me
about how you know that you're not being
365
00:18:34,900 --> 00:18:35,720
adversely selected?
366
00:18:35,775 --> 00:18:36,015
Yeah.
367
00:18:36,015 --> 00:18:36,974
I love that question.
368
00:18:36,974 --> 00:18:40,483
So what we offer is so valuable to so many
different types of companies.
369
00:18:40,483 --> 00:18:40,506
If you're
370
00:18:40,506 --> 00:18:40,563
a company, you have customers.
371
00:18:40,563 --> 00:18:40,609
If you have customers,
372
00:18:40,609 --> 00:18:40,677
you need to make them successful.
373
00:18:40,677 --> 00:18:49,869
The function that's gonna do that is is
customer success.
374
00:18:49,929 --> 00:18:51,258
When I look across our LP base, we have VPs of
customer success at, you know, every type of
375
00:18:51,258 --> 00:18:51,269
software business imaginable.
376
00:18:51,269 --> 00:18:52,829
We've got folks at GitHub, slack, MuleSoft,
Notion,
377
00:19:01,244 --> 00:19:01,428
Aurora Solar, right, we're we're covering
everything from, you know, legal tech to
378
00:19:01,428 --> 00:19:01,541
FinTech, to developer software, security,
motive, and Verkada.
379
00:19:01,541 --> 00:19:01,612
Those are hardware enabled businesses.
380
00:19:01,626 --> 00:19:01,654
We've got
381
00:19:01,654 --> 00:19:17,250
Waymo, Dusty Robotics, right, hard tech,
solutions.
382
00:19:17,710 --> 00:19:19,869
So what we offer is really
383
00:19:19,869 --> 00:19:20,125
accretive to, a wide variety of companies, and
investors know that retention is really, really
384
00:19:20,125 --> 00:19:20,142
important.
385
00:19:20,157 --> 00:19:20,269
So we tend to get tagged in
386
00:19:20,269 --> 00:19:20,334
to these incredible deals.
387
00:19:20,334 --> 00:19:21,179
I'm looking over at my other monitor here.
388
00:19:32,044 --> 00:19:34,365
And there's an email from Gaurav Jain.
389
00:19:34,365 --> 00:19:35,804
Gaurav started a Ford Capital.
390
00:19:35,804 --> 00:19:38,204
It's one of the best precede funds out there.
391
00:19:38,204 --> 00:19:40,684
He he champion that term, pre seed.
392
00:19:40,684 --> 00:19:45,565
But it's basically, hey, dude, you know, this
is the fastest company in our portfolio to ever
393
00:19:45,565 --> 00:19:47,005
reach a $1,000,000 in ARR.
394
00:19:47,005 --> 00:19:49,900
They're looking for customer success help, can
I tag you in?
395
00:19:49,900 --> 00:19:50,140
Right.
396
00:19:50,140 --> 00:19:53,179
I'm getting emails like that every single day.
397
00:19:53,179 --> 00:19:56,880
And so I really think that, you know, customer
success is so valuable.
398
00:19:57,099 --> 00:20:02,725
It spans so many types of businesses and I'm
getting tagged in by my smartest friends in in
399
00:20:02,725 --> 00:20:05,305
venture to work alongside their portfolio
companies.
400
00:20:05,445 --> 00:20:07,384
How much are you able to get in these rounds?
401
00:20:07,525 --> 00:20:07,765
Yeah.
402
00:20:07,765 --> 00:20:10,965
So we rated 200 to 300 k check.
403
00:20:10,965 --> 00:20:13,210
And so know, a a meaningful size.
404
00:20:13,210 --> 00:20:17,390
You know, obviously, we we can't compete with
the folks who are bringing us into the deals.
405
00:20:17,450 --> 00:20:22,169
And so our strategy is built around that 200 to
to 300 k check.
406
00:20:22,169 --> 00:20:25,529
I'll I'll tell you a really cool story about
just, like, how valuable this is.
407
00:20:25,529 --> 00:20:27,559
I mentioned Cassie over at primary.
408
00:20:27,984 --> 00:20:28,944
A little while ago.
409
00:20:28,944 --> 00:20:31,505
Recently, we we both invested in this company
called OneMain.
410
00:20:31,505 --> 00:20:35,284
The founder of that company is this woman by
the name of Amanda Carlo.
411
00:20:35,424 --> 00:20:36,804
Amanda is exceptional.
412
00:20:37,345 --> 00:20:39,264
Previously, she'd started the company 6¢.
413
00:20:39,264 --> 00:20:45,899
It's a $5,200,000,000 business and you know,
Amanda will be intent sales category into
414
00:20:45,899 --> 00:20:46,619
existence for
415
00:20:46,619 --> 00:20:46,636
the first time.
416
00:20:46,636 --> 00:20:46,686
I got to know Amanda late in her process.
417
00:20:46,686 --> 00:20:46,713
She'd already closed the round.
418
00:20:46,713 --> 00:20:46,730
She opened up
419
00:20:46,730 --> 00:20:47,529
the round to include success VP in, in her
company.
420
00:20:57,154 --> 00:20:58,355
She's a second time founder.
421
00:20:58,355 --> 00:21:01,154
Afterwards, she I asked her, like, you know,
why did why did you do this?
422
00:21:01,154 --> 00:21:02,115
And she said, Hey.
423
00:21:02,115 --> 00:21:03,875
Look, like, I know marketing.
424
00:21:03,875 --> 00:21:04,595
I know sales.
425
00:21:04,595 --> 00:21:06,034
I'm best in the world at that.
426
00:21:06,034 --> 00:21:12,069
You know, as a second time founder, the thing
that I know I need to be better at is customer
427
00:21:12,069 --> 00:21:12,569
success.
428
00:21:12,710 --> 00:21:13,990
I need you on my cap table.
429
00:21:13,990 --> 00:21:17,750
So that's pretty powerful stuff, right, when
you have, you know, some of the best seed
430
00:21:17,750 --> 00:21:20,809
investors in the world tagging you into their
very best deals.
431
00:21:20,950 --> 00:21:24,149
Not to rain on your parade, but today, you're a
$10,000,000 fund.
432
00:21:24,149 --> 00:21:27,615
You're able to get into all these great deals
how in the world do you go about scaling that
433
00:21:27,615 --> 00:21:29,455
platform for a fund 2, fund 3?
434
00:21:29,455 --> 00:21:30,414
The way to have
435
00:21:30,414 --> 00:21:30,700
longevity in venture is to produce funds time
and time again that are top decile.
436
00:21:30,700 --> 00:21:30,777
And so you have
437
00:21:30,777 --> 00:21:41,610
to leverage every advantage that you have in
order to get there.
438
00:21:41,610 --> 00:21:42,343
And the thing that will,
439
00:21:42,343 --> 00:21:42,443
you know, give you longevity, give you scale
over time, is producing those those great
440
00:21:42,443 --> 00:21:42,450
funds.
441
00:21:42,450 --> 00:21:55,644
So right now, the thing that we offer is
exceptional support when it comes to everything
442
00:21:55,644 --> 00:21:57,484
that comes after you get that first customer.
443
00:21:57,484 --> 00:21:59,744
That tags us into these fantastic deals.
444
00:21:59,964 --> 00:22:04,464
You know, over time, though, we're going to
build a brand as an exceptional investor.
445
00:22:04,720 --> 00:22:08,820
Our companies will go on to be generation
defining companies.
446
00:22:08,960 --> 00:22:10,786
Our leaders, our LPs will, you know, only get
more prolific.
447
00:22:10,786 --> 00:22:10,848
The way I
448
00:22:10,848 --> 00:22:10,973
think about things is, like, I
449
00:22:10,973 --> 00:22:11,870
wanna do this for the rest of my life.
450
00:22:17,505 --> 00:22:22,625
I was at the top of my game as a as an
operator, as a chief customer officer, you
451
00:22:22,625 --> 00:22:24,085
know, at the top of my game.
452
00:22:24,224 --> 00:22:28,464
And I'm leaving that behind to do this because
I wanna do it for the rest of my life.
453
00:22:28,464 --> 00:22:32,305
And so, you know, I really just focus on the 6
inches in front of my face and, like, mission
454
00:22:32,305 --> 00:22:38,779
number 1 right now, is to create a fund that
outperforms the vintage in a in a
455
00:22:38,779 --> 00:22:38,794
absolutely meaningful way.
456
00:22:38,794 --> 00:22:38,878
It reminds me of something I once read from
Keith or Boy, which is the purpose of the
457
00:22:38,878 --> 00:22:38,893
startup is to
458
00:22:38,893 --> 00:22:39,690
get the resources in order to unlock the next
level of growth.
459
00:22:48,434 --> 00:22:49,735
So you don't have to solve.
460
00:22:49,875 --> 00:22:50,835
You're starting SpaceX.
461
00:22:50,835 --> 00:22:53,394
You don't have to build a rocket that goes to
Mars.
462
00:22:53,394 --> 00:22:57,715
You have to build a prototype that raises you
the 10, the $100,000,000 to build the next
463
00:22:57,715 --> 00:22:59,154
prototype to hire the engineers.
464
00:22:59,154 --> 00:23:00,535
They'll figure out all the specifications.
465
00:23:00,755 --> 00:23:03,575
So they could get really overwhelming on any
task.
466
00:23:03,769 --> 00:23:09,529
If you think about how do I get from 0 to 100
versus incrementalism, I guess, versus thinking
467
00:23:09,529 --> 00:23:13,049
of everything as a resource game in order to
get the next milestone.
468
00:23:13,049 --> 00:23:17,494
I'm looking over at my bookshelf here and, you
know, one of the things that we read Motive
469
00:23:17,494 --> 00:23:21,095
Shoaib was a big fan of it was the Bill Walsh
book, the score takes care of itself.
470
00:23:21,095 --> 00:23:27,015
I really think of this as, you know, as that,
you know, game number 1 is produce the very
471
00:23:27,015 --> 00:23:28,615
best fund you possibly can.
472
00:23:28,615 --> 00:23:31,355
And if you do well at that, the score will take
care of itself.
473
00:23:31,539 --> 00:23:32,039
Absolutely.
474
00:23:32,259 --> 00:23:36,819
A lot of other fund managers would want to
emulate what you did with your LPs and that you
475
00:23:36,819 --> 00:23:40,279
brought in operators and people that provide
value out to your portfolio companies.
476
00:23:40,339 --> 00:23:42,519
How did you go about building that capacity?
477
00:23:42,819 --> 00:23:43,960
This is not an overnight.
478
00:23:44,365 --> 00:23:44,865
Thing.
479
00:23:44,924 --> 00:23:45,244
Right?
480
00:23:45,244 --> 00:23:50,065
It it might seem like it is, but I started the
customer success meet up in 2016.
481
00:23:50,605 --> 00:23:50,765
Right?
482
00:23:50,765 --> 00:23:53,484
I was, you know, scaling in my function at
motive.
483
00:23:53,484 --> 00:23:58,230
I I knew what an opportunity I had on my hands,
and I just wanted to learn from you know, the
484
00:23:58,230 --> 00:23:59,349
very best people in the world.
485
00:23:59,349 --> 00:24:03,670
So we started this saying San Francisco
customer success made up, gave me a chance to
486
00:24:03,670 --> 00:24:07,990
become friends with some of the best vice
presidents of customer success in Silicon
487
00:24:07,990 --> 00:24:08,490
Valley.
488
00:24:08,950 --> 00:24:14,434
When it came time to raise my fund, you know, I
had you know, relationships that were, you
489
00:24:14,434 --> 00:24:18,355
know, over 5 years up to 10 years in some cases
with some of these folks.
490
00:24:18,355 --> 00:24:22,914
So it's just like this really natural
progression to call on your friends to become
491
00:24:22,914 --> 00:24:23,654
your LPs.
492
00:24:24,274 --> 00:24:26,660
Spencer Burke, for example, at at braze.
493
00:24:26,660 --> 00:24:31,619
I knew him when braze was called that boy, and,
you know, they were less than twenty five
494
00:24:31,619 --> 00:24:34,740
people we used to get together in New York City
and and talk shop.
495
00:24:34,740 --> 00:24:38,019
We were both early stage, you know, startup
people at that point in time.
496
00:24:38,019 --> 00:24:43,394
It wouldn't even call ourselves, you know, true
customer success people, And so, I've really
497
00:24:43,394 --> 00:24:47,075
leveraged my network, and I've been lucky
enough that a lot of people in my network have
498
00:24:47,075 --> 00:24:51,474
grown into, you know, these really high profile
positions in customer success.
499
00:24:51,474 --> 00:24:53,249
So that was, like, step number 1 of,
500
00:24:53,249 --> 00:24:53,974
you know, bringing in these world class
operators into the fund.
501
00:24:57,210 --> 00:25:01,710
If you look at your fund as a product for these
world class operators, what are they getting
502
00:25:01,849 --> 00:25:03,470
outside of financial return?
503
00:25:03,529 --> 00:25:06,009
We have 2 classes of LPs in the fund.
504
00:25:06,009 --> 00:25:11,230
So we have operator LPs who are the best and
brightest people in customer success.
505
00:25:11,369 --> 00:25:14,345
We waive you know, our minimum for them.
506
00:25:14,345 --> 00:25:17,565
We want, you know, the smartest people to be
part of our fund.
507
00:25:17,944 --> 00:25:21,384
Our our class number 2 is, you know, more
institutional capital, right?
508
00:25:21,384 --> 00:25:24,365
These are fund of funds, family offices, high
net worth individuals.
509
00:25:24,700 --> 00:25:25,740
Folks like that.
510
00:25:25,740 --> 00:25:29,340
For the operators, like, certainly they're in
it for for their return.
511
00:25:29,340 --> 00:25:30,460
Don't get me wrong on that.
512
00:25:30,460 --> 00:25:34,700
You know, we we have that conversation, and
this is real money, harder money for these
513
00:25:34,700 --> 00:25:35,019
people.
514
00:25:35,019 --> 00:25:36,859
And, you know, they're expecting a return.
515
00:25:36,859 --> 00:25:39,204
They probably push me as much as anybody else.
516
00:25:39,204 --> 00:25:43,684
But they're also in it because there was people
on their journey who were helpful to them.
517
00:25:43,684 --> 00:25:46,964
They have seen, you know, how these companies
are built.
518
00:25:46,964 --> 00:25:49,845
They have something to say, and they wanna roll
up their sleeves.
519
00:25:49,845 --> 00:25:51,180
And and help.
520
00:25:51,640 --> 00:25:55,960
I also think too, like you mentioned earlier,
you know, why does customer success maybe not
521
00:25:55,960 --> 00:25:59,160
get their recognition that sales does?
522
00:25:59,160 --> 00:26:02,200
You know, a lot of my LPs have a little bit of
a chip on their shoulder.
523
00:26:02,200 --> 00:26:03,500
They're chief customer officers.
524
00:26:03,559 --> 00:26:08,075
They're the highest ranking you know, function
there is for the post sales motion.
525
00:26:08,075 --> 00:26:12,714
They've got a chip on their shoulders, though,
because they know that business is ticked with
526
00:26:12,714 --> 00:26:17,194
exceptional retention rates, exceptional
expansion, and they wanna make sure that, you
527
00:26:17,194 --> 00:26:19,319
know, that credit gets out there in the world.
528
00:26:19,319 --> 00:26:24,599
And so success VP is just, you know, one of
their ways to beat the drum of of customer
529
00:26:24,599 --> 00:26:25,099
success.
530
00:26:25,319 --> 00:26:27,720
Talk to me about your portfolio construction
for your fund.
531
00:26:27,720 --> 00:26:32,535
I wanna play in the deals that my smartest
friends and venture are doing.
532
00:26:32,615 --> 00:26:36,134
Right, I mentioned, you know, that email from
Gaurav a moment ago.
533
00:26:36,134 --> 00:26:42,695
In order to do that, I really think that your
strategy and your fund size have to align.
534
00:26:42,695 --> 00:26:43,015
Right?
535
00:26:43,015 --> 00:26:46,154
So our fund is $10,000,000, and that's by
design.
536
00:26:46,250 --> 00:26:52,009
Right, it's proportional to the size of check
and the ownership that we can get in in these,
537
00:26:52,570 --> 00:26:53,070
companies.
538
00:26:53,130 --> 00:26:54,750
And so it's very, very straightforward.
539
00:26:54,809 --> 00:26:59,609
We want to, you know, own as much as we can
early with the check size that we can write.
540
00:26:59,609 --> 00:27:01,724
It's a highly concentrated fund.
541
00:27:01,724 --> 00:27:03,424
So we write 30 investments.
542
00:27:03,964 --> 00:27:09,005
And like I said, we wanna make sure that we're
the most helpful people on their cap table.
543
00:27:09,005 --> 00:27:11,664
I think of this actually in a lot of ways, like
customer success.
544
00:27:11,724 --> 00:27:15,869
I want those 1st 30 entrepreneurs to step back
and say, hey.
545
00:27:15,869 --> 00:27:20,669
The most valuable person on our cap table was
John, NPS score 10 out of 10.
546
00:27:20,669 --> 00:27:21,169
Fantastic.
547
00:27:21,630 --> 00:27:26,605
It's only if that first cohort, that first
vintage is widely successful that we ever get
548
00:27:26,605 --> 00:27:27,644
to fund too.
549
00:27:27,644 --> 00:27:33,105
So it's very straightforward exactly how you
think maybe a $10,000,000 fund should allocate
550
00:27:33,164 --> 00:27:39,484
30 checks, 200 to 300 k pop, not a lot for
reserves, of course, a little bit for for the
551
00:27:39,484 --> 00:27:40,224
very best.
552
00:27:40,259 --> 00:27:44,039
But it's really to wheel this incredible thing
into existence.
553
00:27:44,579 --> 00:27:46,820
You work and collaborate with Jason Lemkins.
554
00:27:46,820 --> 00:27:48,519
Tell me about your collaboration together.
555
00:27:48,579 --> 00:27:50,180
I've known Jason for a long time now.
556
00:27:50,180 --> 00:27:53,460
You know, I've been part of his network for
over 10 years now.
557
00:27:53,460 --> 00:27:57,275
In fact, you could probably go back in the
vaults and find a podcast with me and Harry
558
00:27:57,275 --> 00:27:59,214
Stevings when Harry was probably 16.
559
00:27:59,835 --> 00:28:03,115
Harry used to do Jason's, saaster podcast form.
560
00:28:03,115 --> 00:28:05,355
So Jason and I have known each other for a long
time.
561
00:28:05,355 --> 00:28:08,714
He's been really kind to me as I've started
success VP.
562
00:28:08,714 --> 00:28:12,690
He's probably one of the biggest proponents of
customer success threat for it was.
563
00:28:12,690 --> 00:28:15,829
And so we're collaborating actually this year
at Saster.
564
00:28:16,930 --> 00:28:19,569
I host the world's largest meetup now for
customer success.
565
00:28:19,569 --> 00:28:23,009
San Francisco customer success meetup is over
five thousand people now.
566
00:28:23,009 --> 00:28:25,005
We do events in New York City as well.
567
00:28:25,085 --> 00:28:26,684
And we're gonna combine forces.
568
00:28:26,684 --> 00:28:32,125
So we're running a chief customer officer
summit inside of SASTR this year.
569
00:28:32,125 --> 00:28:33,164
I admire Jason a lot.
570
00:28:33,164 --> 00:28:34,545
He's a 10 x investor.
571
00:28:34,845 --> 00:28:35,164
Right?
572
00:28:35,164 --> 00:28:36,144
He's he's remarkable.
573
00:28:36,204 --> 00:28:37,105
I really admire
574
00:28:37,570 --> 00:28:38,609
Very humble guy as well.
575
00:28:38,609 --> 00:28:39,650
I'll never tell you that.
576
00:28:39,650 --> 00:28:40,390
Sorry, Jason.
577
00:28:43,410 --> 00:28:45,970
This has been a master class on customer
success.
578
00:28:45,970 --> 00:28:49,730
What would you like our audience to know about
you, about success VP, or anything else you'd
579
00:28:49,730 --> 00:28:50,565
like to shine a light
580
00:28:50,724 --> 00:28:55,204
I scaled at motive, like, in a way that a lot
of leaders, you know, don't get.
581
00:28:55,204 --> 00:28:56,264
You know, it's unnatural.
582
00:28:56,804 --> 00:28:58,825
I really, you know, value community.
583
00:28:58,884 --> 00:29:02,804
I really value having, you know, a clan of
mentors that you can lean on.
584
00:29:02,804 --> 00:29:07,150
So if you're you know, if you if you're craving
community, I would say definitely come out to,
585
00:29:07,470 --> 00:29:08,750
customer success meetup.
586
00:29:08,750 --> 00:29:13,230
We're hosting New York City customer success
week this fall in in New York 1st week of
587
00:29:13,230 --> 00:29:13,630
October.
588
00:29:13,630 --> 00:29:15,904
Email me, john successvp.com.
589
00:29:16,765 --> 00:29:18,625
I'd love to plug you into our network.
590
00:29:18,684 --> 00:29:21,805
On top of that, like, maybe just like hats off
to you, David.
591
00:29:21,805 --> 00:29:27,404
You know, I feel like I've accelerated my
growth in this space through your podcast,
592
00:29:27,404 --> 00:29:28,845
through through the friendship with you.
593
00:29:28,845 --> 00:29:32,629
Like, know, the amount of learning that I've
got out of your podcast listening to, you know,
594
00:29:32,629 --> 00:29:38,230
folks like, you know, Hunter at Stepstone or
Michael Kim or Chris Devoss or, you know, Jamie
595
00:29:38,230 --> 00:29:40,409
at Screen Doors is absolutely incredible.
596
00:29:40,470 --> 00:29:42,649
So, yeah, really value that, really stoked.
597
00:29:42,869 --> 00:29:43,545
Thank you.
598
00:29:43,545 --> 00:29:47,164
Thank you, John, for the kind words, and look
forward to seeing you down very soon.
599
00:29:48,345 --> 00:29:52,445
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