September 27, 2016
Ep. #4, When Should You Hire A PM?
In this episode of Practical Product, Craig and Rimas outline when you should hire your first PM, and what you should be looking for in your...
In episode 17 of EnterpriseReady, Grant joins Ben Hindman, Co-Founder & CEO of Splash. They discuss Ben’s path into enterprise software, the community-driven power of events, and the freemium business model.
About the Guests
Grant Miller: All right, Ben. Thanks for joining us.
Ben Hindman: Hi, Grant. Thanks for having me.
Grant: Cool. I'd love to have you share a little bit of your background, especially around how you got into enterprise software eventually?
Ben: Sure. I am not an enterprise software guy. My background is in events.
I've been throwing events my whole life, I love events, I think that they are the most powerful way for people to connect and for business to get done.
I've been throwing events since I threw my prom, and then I was the rush chair for my fraternity, so I know about events from that angle.
I was one of the co-founders of a conference called the Summit Series, which is a big conference for top entrepreneurs, and then I ran events for Thrillist, which is an online magazine for dudes.
I was running events for them for about two years, and about two years into that I realized that I needed software for myself.
We got to coding, and we built a pretty interesting piece of technology called 1Clipboard. That was our first piece of tech.
Grant: And the rest is history, is that right?
Ben: I wish it were that easy. 1Clipboard failed pretty miserably. 1Clipboard was an events management technology that we built for about two years.
Grant: You were building everything that you ever wanted, and then you realized you were wrong.
Ben: Yeah, exactly. I was the only person we were building for. The worst part was everyone said they wanted this tech too, I asked everyone.
When we launched it nobody really used it.
Grant: What did that piece of software do ?
Ben: That piece of software was a task list, contact list, budgeting tool and drop site that mad-libbed event contracts.
Grant: What does "Drop site" mean? I don't know what that is.
Ben: Meaning I had to drop a piece of paper on it.
Usually as an event planner you'll have a site map or some contract or invoice that you need to keep track of, and you want to associate it with the budget.
The budget in the events world is really the center point of the project management, so what we did was we created this incredible budgeting tool that had all of these great additions to it that were perfectly esoterically designed for an event process.
And as I said, it mad-libbed event contracts, which is a dream to any event planner.
Anyone who's listening to this that has planned an event and doesn't know how to create contracts is salivating.
Ben: So we built that, it took us about a year and a half and we raised venture capital from one person, about $400,000 dollars.
Grant: One person?
Ben: Yeah, in two sets. He was an angel investor and he really believed in us. I hired two incredible engineers, they were the best engineers.
It was three engineers and me, and we were building 1Clipboard.
Grant: You were building this not as enterprise software, you were building this as a piece of software that any body that was planning an event--
Like, a fraternity chair might use? Anybody else.
Ben: That's exactly it. We were building it for people who were professional planners, because that's who I was.
I certainly, as we'll probably get into later, had no idea what truly "Enterprise" meant.
But I understood at the time Highrise and Basecamp and 37signals were really hip, and so we really looked up to those guys and we were building with that model in mind.
Grant: Sure, that makes sense.
Ben: We weren't going to fundrais, we felt so good about that, and then of course we put in that money and we were like "Cash? Good. We'll keep on doing that."
But truly, it was about to die. It was almost over. Nobody was using it.
Grant: So this is you built something that was targeted at event planners, was that a role that is inside of most big companies?
If you have more than 500 employees, you have professional event planners? Or is that more a thing you work with an outside agency to do?
Ben: The person that we were building for One Clipboard was anybody who threw an event.
Which is the real issue, as we dove deeper into this world.
Events are a $560 billion dollar industry with every type of person who uses the word "Events" in their title, as you could imagine.
From an agency to an in-house to someone in procurement, it really is one of the clumsiest words to describe an industry, "Events."
To answer your question, at the time we really did not understand that distinction, all we understood was that I was an event planner.
I needed this, and we were going to build for me. So we tried to find people who looked like me, everyone from the head of events at Goldman Sachs to a small agency person.
Really, it was that lack of truly understanding our user that made it challenging for us to sell this thing.
Grant: OK. So you build this first product, it's not getting much traction. How did you end up with Splash?
Ben: I want to be clear, zero traction, and we kept on building.
My ego was strong in this experience, because it was a beautiful piece of software that I loved, but--
Grant: You're like, "OK. We just need to push harder. We can't give up. We have to keep grinding, we'll get people to up this thing eventually.
It's just about persistence and perseverance and determination."
Ben: That's right. Anyone who's created knows this plight, where it just feels so good to create something that is beautiful and you feel proud of, and everyone said it.
That's another important point, every one of our users said they really wanted to use this thing.
And it wasn't like they were lying, they did, but what we learned eventually was that they had a process and that we were retrofitting a new process.
To get them to do something that they didn't need to do, it was very similar to vitamins vs. painkillers. We were definitely building vitamins.
Grant: I'm guessing that they were just using an Excel spreadsheet or something.
Ben: That's right. We were competing against Microsoft.
Grant: Yeah, exactly. The ultimate tool for any esoteric job, Excel spreadsheets.
Grant: OK. So how did Splash come about?
Ben: We had a rule that we still have, we called it the "Belsky Doctrine."
Scott Belsky is the chief product officer at Adobe now, at the time he was running a business called Behance and he was one of our advisors.
He said "Ben, no matter what you do, only build one product." This is a little ironic, because Scott has probably built 15 products in one.
But anyway, he did tell me to do that.
Grant: "Do as I say, not as I do."
Ben: I brought that back to my team of amazing engineers, and I said "We can only build one thing, and we need to promote One Clipboard at South by Southwest.
So we should build a product, but per this advice from Scott, if we build a product to promote this we need to build it so that anyone can use it.
So it is self-serve and anyone in the world can also promote their stuff." True story, and that's how we built Splash.
We said "We're going to promote 1Clipboard at South by Southwest," and we launched Splash.
Grant: Wait, I'm so confused. The advice was "Only build one product," so your takeaway from that was "If we build something it has to be part of the product?"
Ben: That's correct. Isn't that amazing?
Grant: I don't think that's what the lesson was supposed to be.
Ben: Fair enough.
Grant: That's amazing.
Grant: OK, so you built Splash, and what was the problem you saw? It just didn't exist?
Ben: What Splash was doing was it was helping people really make their event look online as cool as they wanted it to.
"Cool" was hard in the Web 2.0 era. You had-- Squarespace was just kind of happening, so design on the internet was just becoming a thing.
You had Eventbrite and you had Meetup , and you had Evite, which was ad-supported and no enterprise could use it.
Then you had Paperless Post who had actually gone pretty far down that road, but weren't thinking about it from what a business needed. So Because--
Grant: It didn't have integrations with CRM, or something?
Ben: None of the integration stuff, but also just none of the true customization. Again, in this zone we were really focused on design. Making it look cool.
None of these things were available , even in Paperless Post. It wasn't cool, it was maybe beautiful, but cool was a different feeling.
We needed it to feel customizable, Squarespace-y at the time. We were looking at those guys.
Grant: Paperless Post always felt, to me, somewhat high-end.
Grant: Because you know it wasn't actually cheap to send, so it feels like there's a little bit of effort put in.
It's great for a fancy invitation to a cocktail party or something, right?
Ben: Totally. Try to remember, think back towards 2012. We were fitting a specific need for this new generation of designers.
Sure, it maybe wasn't fancy, but it was very clear that you'd spent a lot of money on something.
Like any good technology, ours looked like you'd spent a lot of money on something.
Ben: The fact that we removed our brand, that it was white label, that was actually one of the biggest and most important things that businesses really responded to at the time.
Grant: OK, so these alternatives out there just didn't allow you to have the design?
And you thought that "OK, we should build this tool because we want something different than sending a Paperless Post to promote our software. We want something different than Eventbrite, because that's not very customizable and not very great."
So you build a tool that allowed you to build--? What was the product feature set?
Ben: The product feature set was, at the time, just a very simple form to collect RSVPs.
I want to just double back on this, because I think this is an important point for anyone building enterprise technology.
We had a very clear thought, which was that brand is binary. Either "Splash is brand, or it is your brand."
In the enterprise world it was important that it was your brand.
We did things like we put our logo at the bottom and not at the top, or we made it very easy to design it to look like you, or the emails came from you, or the vanity URL was yours.
I know that seems simple but when we were selling it to Spotify, who was our first customer, that was what they said they wanted.
Just the fact that they could own it changed their perception of what our technology was.
Grant: OK, so you were the actual first customer? Because you used it to promote the one notebook, is that right?
Ben: 1Clipboard, Grant.
Grant: 1Clipboard, Sorry.
Ben: I knew that name wasn't good.
Grant: You used it to promote 1Clipboard at South by Southwest?
Grant: And then how did the conversation with Spotify kick off after that?
Ben: Great. We put it out there and we threw a party, and again, it was a very straightforward RSVP form that just captured names and looked cool.
One of those RSVP was somebody who worked at Spotify.
Ben: That was our viral coefficient at the beginning. At the beginning, one out of every 25 people who signed up for an event turned into a host.
Grant: That's amazing.
Ben: It really is. That freemium product and the RSVP viral coefficient that's inside of that still today drives, goodness, about a third of our leads.
Grant: That's amazing.
Ben: We just crossed over 2,500 on Alexa. We have a huge footprint on the internet.
Grant: OK, so then this person from Spotify ran their events and you knew them from a past life or something, is that right?
Ben: That was the crazy part. This whole time I'd been selling 1Clipboard door to door, truly as an enterprise sales rep for a two-person company, and all of a sudden Spotify was calling me saying "We need this up and running now."
Then the next one was Gansevoort Hotel, which I promise at the time was very cool. Then it was Google.
Google was the next customer that RSVP'd and said, "I need a site."
Grant: No way, really? So you had three--? And three cool brands, too.
Grant: OK, so they used your tool, but instead it said "Powered by--?"
Ben: "Powered by Splash. Do you want to make a Splash?"
Grant: So you named it-- Your product was called 1Clipboard, but you had a second product--?
Ben: That was also inside of that product. I swear 1Clipboard became the planning tab inside of Splash.
You had your Splash, and your 1Clipboard. Grant, I promise you, at the time it seemed like it made sense. In retrospect, it is very ridiculous how long I held on to that code.
What I will say is-- Now, we're going to fast forward six or so years to where we are today.
Those planning tools, I am writing a narrative for my team right now about a business that we are integrating with to really incorporate those planning tools.
I know and I would say to anyone who has that intuition early in their business, I knew that it was important.
And it was, it still is. But that didn't mean it was the first and most important.
The issue was that it didn't have any viral coefficient to it. It was a door to door sales product, and this new one became so clear that it caught fire.
Grant: In reality, you were trying to sell a piece of freemium SMB software with an enterprise sales process, which just doesn't work.
It didn't have all the enterprise features that it really would need in order to go out and demand a higher price.
Ben: Exactly right. We learned a lot in those early day, and probably also not enough.
Grant: OK, so you get these customers and then things just start rolling, and you basically are selling Splash That as the main product.
That's what everybody wants?
Ben: That's right, and we weren't even selling it. They were coming to us. It was so many businesses.
Grant: OK, were they paying you?
Ben: In the beginning, it was just that we were selling vanity URLs, email credits, and white label your page.
Grant: OK. How much was that?
Ben: That was about $100 dollars total, one-time fee, gets you that bundle.
Grant: Nice. But that's per event, so maybe you have lots of events.
Ben: Yeah, we were seeing some revenue. We were able to process money, which at the time was a big deal.
At that point we said, "We want more money. We can layer in tickets and ticket fees," so we started building that.
We started to process the dollars and dollars started coming in, and that's a good thing but it's also a really bad thing, because once you have one dollar then you start to say "Now I need lots more dollars."
Investors start asking questions about those dollars and start looking at the unit economics of the business.
So once we realized that we should be charging more, we said "What's more than $100 dollars? $2,500 dollars." In our mind, we were like, "Come on. No one's paying that."
Ben: Per year, excuse me. Yeah. I should have mentioned that we flipped the entire model in order to do that.
We said, "We want to create a subscription product." Again, we were really focused on Highrise and Basecamp, so an SMB subscription product.
So we launched something that we called the "Producer package." I know, I thought it was a pretty good name, and people started signing up for that like hotcakes. We started selling.
Grant: And that was like, you could create as many events as you wanted to throughout the year?
Ben: Correct, and you'd have all the white label e-mails, Vanity URLs, and we had one or two people at that time who were doing customer service.
They were manning the phones, so you had access to them if you signed up for this.
Anybody who's listening and thinking about pricing right now, I just wish someone-- I wish you, Grant, had come up to me and just shaken me at that moment and said, "If you don't sell something for more than $20,000 dollars a year, you should just stop immediately."
Unless of course you have a really good demand-gen engine. But man, we were selling it.
We were selling it for $2,500 dollars a year and it really needed much more money to make it economically viable.
You seem like you're pausing, and I want to hear why you don't believe that.
Grant: My pause there is I actually think that when you're entering the market and no one has any reason to use your gear, you need penetration pricing.
That's a concept in pricing economics, you need a price that you can come in at that's cheap enough that people are just going to buy it and they don't have to expect as much from it.
If you provide 10x the value on $2,500 dollars, they feel really good and they tell their friends about it.
If you charge him $20K and they get $25,000 dollars value, that's only a small incremental bump on the actual value of their ROI, so they feel less good about it.
I think early on this is what funding is for, you want to be able to get into a lot of these customers and get the success stories.
Realistically those early customers that you got, Spotify, Google, Gansevoort Hotel.
They might have paid you $100 dollars, but if you got to use their logo or tell their story, the value that you actually got, they paid you with like money but also with that story.
That story was worth hundreds of thousands of dollars to you, because you got to then say "Look. Here's how these great companies are actually sending out the stuff for their events."
Ben: I think that's a really good point, but I want to provide a small counter to it.
Grant: Yeah, great.
Ben: Pricing can often be a signal, and while I hear you that coming in with a lower price and truly attacking a specific segment makes a ton of sense and helps you really penetrate that market.
If you release pricing that looks SMB, you actually attract a lot of SMB, and while I hear you that $2,500 a year is incredibly small to a Spotify, $2,500 dollars a year is huge to an SMB and they expect as much as Spotify.
Ben: So what you end up doing is you end up treating those SMB customers like enterprise because they demand it.
So while I hear you that you should decrease your price in the early days, I would think about that $15,000 a dollar amount, or call it $1,000 dollars a month.
It's the threshold before you get into a zone where you're playing in the enterprise, and really past that I agree with you.
Start low, but if you go too low, man. The people you attract--
Grant: Yeah, that's a great point. My perspective there is you did and you continued to have raised prices over time, right?
Grant: You get more in, you figure more out, like who you want your users to be.
It's actually quite important and your pricing can signal that. So do your features, and so does how your team talks about everything.
At that point you might not have been ready for the deals that you're doing today. You didn't have the organizational maturity in order to make that happen.
Ben: Right, and that's a nice segue to what happened next in the story, is that Anheuser-Busch came knocking and they wanted a $500,000 dollar contract.
Again, we're selling $100 a month contracts and $200 a month contracts, and now a $500K contract.
Grant: What did they want for $500K?
Ben: They had a brand ambassador program with all of these people who went out into the world and collected information while they sampled beer, and what's really complex about the spirits as well as the beer industry is that they have a three tier system.
Which means that the wholesalers who don't actually work and aren't legally allowed to work for the brands, they are actually doing a lot of the on-site marketing in the accounts, which are the bars or the off-premise places.
Right there you had this incredible instance of a forced role based access control issue, where you need permissioning in between two organizations and many organizations at many different levels, and here comes Anheuser-Busch to Splash and says "We need this built fast."
So they forced us to create a very robust positioning tool.
Grant: That's awesome.
Ben: It was, and it was incredibly challenging. We just didn't know really what we were doing, but we went after it.
We didn't even understand-- We had never heard the term "Role based access control."
I actually hadn't really heard that term until I went onto the EnterpriseReady.com website. We were like, "Yeah. We built that," but we didn't know what it was.
So we built that and we rolled it out, and we had at one point AB was throwing 100,000 events per year on Splash.
Grant: That's crazy.
Ben: Across around-- I don't know, there was probably about 20,000 people in the system at any point.
Grant: So, what were they doing before you? Do you know?
Grant: Really? OK, so they built their own.
Ben: It still is. The space that I operate in, I feel like an enterprise seller would get a PhD by working in this space.
Because it truly is, events are the most complex, almost definitionally the most human complex activity you can think of.
The amount of notifications, approvals, creativity, workflow, the amount of time that goes into it.
We're talking about so much scale, as well as these micro-important moments that you have to support in the real world.
When an email doesn't go out for Marketo, whoops, we press send again. When an event doesn't go off, somebody gets fired. This has to be like NASA-tested.
It's been an amazing experience to be building in this space where creativity and complexity and humans all come together, and you're selling to businesses.
Grant: OK. That Anheuser-Busch deal came in, and you were like-- How many people were you at that point?
Ben: We had about eight people in the business.
Ben: We were still supporting this freemium product, we were supporting a couple, a handful-- I want to say twelve other enterprise businesses.
Nearly half of them were on the freemium product, and half of them were in our enterprise system.
We had certain groups that were starting to join, and then Anheuser-Busch and we started building.
We started building true enterprise tech, and that was our first step into the enterprise tech world.
Grant: So this is a complex positioning system because of these three tiers, and there's also some regulation and legal rules that--
Ben: So much
Grant: You're diving into those to understand and make sure that this is compliant with what they need.
And did you build that in a way that another company, not in their industry but that wanted the same concepts, could then use the same features?
Ben: That's exactly right. Per our "Belsky doctrine," build one product.
We always made sure it was self-serve and easy to use for another business.
Hennessey was the next one that joined up, and they had a very similar use case.
Grant: So you saw an opportunity within the adult beverage industry?
Ben: Exactly. Truly . Sampling.
Grant: So you were like, "OK. Look, Anheuser-Busch needs this and so does every other large adult beverage company in the world."
Ben: That's right.
Ben: So we kept on building for that, and I will say to our credit, we understood that events are events are events, at their core.
What we understood in the beginning of our process was that if we worked very closely with our customers, built products that they could use while also doing product discovery, we could actually build a product that could be used across many different use cases and be flexible across the enterprise.
I will say it's a challenging move to make, and as we've scaled as a business it's really no longer something we do.
It really only works in the very early stages of a business to launch features and products alongside new clients, launching them alongside existing clients is something that we do because we already have those existing relationships. But it's a tightrope.
Grant: That's actually a really interesting piece for product discoveries, I think early on you basically don't have a choice other than to work with new customers and build features that they need to see in your product.
It's something that people often will caution against. "Don't build specifically features that some organization needs, that's willing to pay you $500K, it might be one-off use case."
They suggest you try to collect feedback and then synthesize it, and you're right, because if you don't have a great working relationship with them or maybe you don't have a large contract and you don't know how they're actually going to use it if you build the things that they ask you to build.
So you take these risks early on, and in your case it really paid off.
Building this tooling, it turns out, part of the reason we wrote Enterprise Ready is because we wanted software founders and product folks to understand the features that when you hear these requests, you should probably lean into, because it's not going to be the last time you hear it.
Advanced positioning, amazing functionality. If it had been some one-off thing that they wanted to do or change things some other way, maybe not the best way to do it.
This is one of those features that you can just go so deep into, and bigger companies have so many requirements.
So you got that feedback from them, you built it in, they started paying you.
Were you doing professional services for them at all? Like, for them to be able to actually leverage that permissioning tooling?
Ben: So many professional services.
Ben: I really want to underline this. 2015 was when we started to understand what enterprise technology really was.
We come from New York, and New York is high design with lots of great agencies.
At the time there were some startups coming up that were mostly B2C. Warby was a big thing then, that genre.
We didn't have an old school of enterprise technology to explain this to us, so when we heard "Services"we just thought "Yeah, that's what it takes to get them up and make them happy."
We weren't charging for it, nothing like that.
We had no idea. Truly, I'd say one of the most important things I have done as a founder is to acknowledge the dearth of enterprise talent in New York, and go search for it outside of New York, or find people who really do know what they're talking about in New York City from an enterprise tech standpoint.
Grant: I understand that pretty well, being based in LA. It's really around that leadership level, folks that have done this before, almost all the talent is in the Bay Area.
Ben: Or Seattle.
Grant: Yeah, sure. Seattle, that's a great point. There's a bunch of folks there that have done that. It's hard to find it in other cities, and it's--
You can get great developers anywhere and you can get great designers anywhere.
But getting people that really understand how to scale certain components of an enterprise software business, it's hard.
Ben: What a difference five years makes. If you look at New York now, I am seeing tremendous talent. Mongo, they IPO'd recently and they're throwing off a lot of incredible talent.
That's just one, and so we are seeing that in New York and I do think it's changing, but at the time it wasn't the case. So charging for professional services, I came back and said "We're not an agency, guys. We're not charging for that. We're software."
Grant: It's one of those interesting pieces where I think maybe the tide is changing a bit, and I think people are more comfortable with the idea of having some services revenue.
Because you're basically doing services work no matter what.
Ben: You better. In a way, it was a great thing that we didn't understand that we were supposed to charge for that, because we built a culture of customer success that really served the client independent of dollars attached.
I really think one of our key differentiators, especially in the early days when the product wasn't right, was building a thoughtful support and customer success team.
Really investing in that, and taking a lot of pride in that too.
Grant: One thing I think is really interesting and is changing a bit is when you're getting this large deal with Anheuser-Busch or any of the other big deals you've done over time.
I'm going to-- I'll say this, I don't mean to insult you at all, but I doubt that the early Splash team had a lot of enterprise security background either.
I'm guessing that you saw some like vendor security assessment questionnaires, and were like "What the? Do I--?"
Ben: I am smiling here, you know. And everything you're talking about . Training, implementations, configurations, integrations, certainly privacy, certainly security.
It was a learning curve as steep as any I've ever experienced, and also we were pushing really complex--
We built essentially a CRM on top of the positioning tool with shared contacts, and then matched that with an integrated CMS that needed tabloidization, and we were trying to run a business, and this was just for one customer.
We ran right into a wall and it was very scary.
Grant: The interesting thing is that there was enough demand, like the person who was requesting this product from you at AB had enough sway to say, "I know that this might not be the most like robust and secure tool in the world, but it turns out the thing we're doing internally is not either, and we need this so bad.
This is such a big pain point for us," that they were able to push it through.
Maybe their security teams worked with you along the way, and compliance teams worked with you along the way to make sure that--
Ben: That's exactly right. You've heard it, I'm sure, a million times. It is all about making sure that champion has a voice, making them look as good as you can, and delivering.
Just setting expectations and delivering, a lot of that. It took us to implement them, to truly implement them was about six months.
Grant: That's not bad at all, actually.
Ben: In retrospect, you're right.
Grant: For you it felt like an eternity, I'm sure.
Ben: Every day was the scariest day of our lives. It's still a great system and it's a great plan.
What I will say is that, and I hope I say this without feeling sad about it, at some point they decided to change the way they were doing stuff.
They were bought by some Brazilians and they started changing the way they did things.
They ended up rebuilding it from scratch on top of Salesforce at some point, and while that was certainly sad at the time, that was three years later and the organization had changed tremendously, the Anheuser-Busch organization had.
We ended up using that technology for so many different clients. And finally, what I will say is, four years now afterwards we're rebuilding our BAC.
So that ended up lasting us about four years, which is a pretty good lifespan for a piece of enterprise tech.
Grant: Yeah, it's amazing. Interesting that the Salesforce mentioned, do you guys integrate with Salesforce today?
Ben: We do, yeah.
Grant: Do you have integrations?
Ben: It's a bit nuanced, but essentially the difference between what they were doing and what they needed of us, they were doing a lot less on site marketing and a lot of our value prop was the sizzle on site less the capture.
We did both, but they essentially started and they said "We don't really need as much sizzle on site."
So they went into a Salesforce instance, and I would put out there and anyone at AB call me if this is actually launched--
I don't know, who knows if they've launched it yet. Someone had a good idea to build it homegrown, but I have no idea if it's actually out.
Grant: Build versus buy.
Ben: Always a fun one.
Grant: Yeah. OK, so then the one thing you mentioned earlier which I thought was really interesting was this combination as a founder, as you're building this first version of your software and you're really involved in product. It's like trying to balance that execution with also fundraising in the external world, and trying to get people to see the bigger vision.
You mentioned some challenges around this?
Ben: Yeah. I think the most important thing I've learned as a founder and a CEO, and certainly going from founder to CEO, has been an interesting evolution for me.
That time and your perception of time changes as the product evolves and as the company gets bigger.
In the early days you're really dealing with a couple months at a time, if not a month at a time timespan, and when you make a decision you're probably seeing that through and you need to see at least a couple months ahead.
When you're handling 500 companies, which is about the stage that we're at right now, you need to see about three years ahead. You need to.
So that goes from a month to three years, and that's a huge delta.
What happened to me really early in our evolution was that I was fundraising and I was also deeply involved in product, and when you're fundraising three years out and that's the story you have to tell, you must be that visionary in order to raise the capital.
If you're not checking yourself and actually executing today, which is what product needs, again product is probably now to a couple months out.
You can really screw some stuff up, because product requires that level of deep focus. So if there are any product-oriented CEOs out there, I would urge you to really think about where you're existing and where the team needs you to exist, versus where the investors need you to exist.
That's been a really challenging education period for me.
Grant: I've felt that pain, and I know my co-founders felt that pain. It's interesting that you pointed out, you said just acknowledging it is a really important first step.
Ben: Totally. Because often you're having conversations with your team about the three year vision, and they're telling you about a bug they're fixing for tomorrow.
Ben: So by acknowledging it, it's one step to letting them know that you're not talking about that.
Look what I will say is, and this is a deep credit to my team, they have come along for the vision ride with me.
Sometimes they are just like "I can't focus on the vision, I need to focus on today," and that's their job, and they're awesome for it.
So in a way, as a founder, you need to acknowledge and check yourself.
Grant: Yes. Especially when you're in the product, really deep.
Switching hats and going from "Let me tell you about why this is going to be a $200 million dollar a year business in three or four years," to "Let me fix this one customer workflow and make this integrate better with some tool, and make sure that end to end flow feels great."
If you're the product leader and the CEO, try to do both of those at the same time.
Ben: Man. Grant, I know you've experienced this too, so I'd love your thoughts on it.
But even having product conversations I find to be relatively dangerous if you're operating too far in advance, because they see you as the CEO, your voice--
Especially when the business changes from twelve to twenty people. At some point you're the boss of twenty people, and that's how you're viewed.
So you're no longer just a voice. You're not even allowed to be just a voice in a product conversation, where you're kicking around ideas on a whiteboard.
All of a sudden you are the boss of twenty people and that's a much louder megaphone.
Grant: Yeah. There's a couple of things that I do to help curtail that.
Number one, most of my product conversations are just with my CTO and co-founder Mark, who's actually the product leader.
So I'll talk to him and we'll go through things, and that's the longer term vision and other ideas.
Then I let him figure out how to make sure that we're executing that appropriately, and now he has even one other layer, which is our director of engineering who spends time with the engineering team to make sure we're building the right things.
The other thing that I try to do whenever I'm talking to people, especially around front end stuff, is just say "I'm not the CEO saying this, this is a personal preference thing potentially.
You have the agency here to decide if what's right. To me, this feels off, but I'm totally fine with you-- If you're like, 'No. Grant, you're wrong. This is the right answer.' Like, you should say that."
I think acknowledging is good and it probably still influences.
Ben: I was going to say, "Good luck." The first one, I think, is the only answer.
Which is to add levels and layers in between you and the team, and make sure that you're being clear with them that you're one input.
But certainly I can't tell you how many times I've come up to somebody and just even given some congratulations, or said something negative about what they're working on, and have gotten it in an HR conversation or gotten it from their manager saying, "Did you mention this?"
It's a different place that you're coming from, and so I think the only answer at this point is to hire really great people and filter those conversations through them.
It doesn't mean don't have great relationships with your people, I love my people.
I love working with them and I love seeing their work, I hope they'll show me more of their work and I promise I won't--
Grant: React too strongly.
Ben: Yeah, it's been a learning curve.
Grant: One of the things you just mentioned that I think is interesting is "Hire great people."
I think you mentioned that you have a framework use around creating clarity in roles in hiring, and really trying to find the right people. What's your framework for that?
Ben: OK, so at some point in around 2016 I read the book Who. Have you read this book?
Grant: I have not.
Ben: You've got to. Everyone has to read the book, it's the best book.
Grant: All right.
Ben: In so many words, the thing that I noticed after reading that book that everybody in my organization did, was they would have a meeting with this person and they would say a couple of things about the business and then ask the exact same questions in every single interview.
Then after the interview, they would write a note saying "I really liked him."
And honestly, especially if we're talking about implicit bias, what they probably were saying was "This person went to a pretty good school, spoke with a smile, and seemed like they had good experience."
That's what they meant. They weren't spending the time understanding, "Did this person actually meet the criteria that this specific role required?"
What we started doing after reading this book and then iterating on this process was coming up with what they called a scorecard.
It essentially means very specific objectives that this person is meant to hit, key results that this person is meant to hit, qualities that this person is meant to have and experience that this person is meant to have.
Specificity is the most important thing here. Specificity is a big deal. If you can't be specific about the role, I would challenge anyone who's hiring-- If they can't be so specific, then they don't actually know what they're hiring for.
That doesn't mean "Do the person's job for them," but be incredibly clear in the hiring process.
That's number one. But also specificity from the candidate, if they can't speak very specifically about their experience or their ideas or their perspective and they can't go three or four levels into that, guess what?
They haven't done that job, or they don't really know how to do that job, or they're really stretching. At least know that.
Then what we do is we make sure to equip every single new interview with a question that we've all agreed upon, and we've agreed upon what we're looking for, before they walk into that room.
What we find is it's really not so hard, you need three or four great questions and you spend three levels on each of those questions.
If people can come back and they can say, "This person spoke specifically, had great ideas, communicated well about them, and I realized also met these qualities," what they might also say is, "I couldn't figure this out."
I will say that's one of the most important things you can get your team to start saying, "I couldn't figure this out in the meeting. Can you try to figure that out?"
"Can you figure out if this person actually has great copywriting skills? Can you figure out if this person is actually led as big of a team as they say, or if they actually were a cog in the wheel?"
"Can you figure this out" is a really useful thing to understand.
Grant: It narrows it down , "These things all seem like checkboxes, but this one I'm not 100% on. I'm still-- The jury is still out on that one."
Ben: Correct. Really treat your team as if they're coloring in a coloring book together, and the end result is a beautiful picture of that candidate.
If you guys can actually align there, you can find great people.
I will say we have knocked people out of the process incredibly late in the process, and of course you want to get it as early as possible, but better to not hire that person than to hire the wrong person.
And actually, I would also say it's better to also not hire the wrong role.
Sometimes in a process you realize that this person is great, but you still don't have total team alignment on that role, so that's why the scorecard and being very specific and object-oriented around that scorecard card-- Objective-oriented.
Grant: That's interesting. So the idea of creating the scorecard, do you think it's actually a really important part of the overall process?
Ben: You must.
Grant: It defines the role, defines everything else you're looking for? Gets alignment for the team around what this person is going to be doing?
Ben: Absolutely, and if you need an economic model to explain it you can do the math yourself.
But if this person, let's just say, costs $100,000 dollars and they're going to be working for you for about two years if they're mediocre.
So if they're bad, sure, you'll get rid of them. But you don't-- Rarely do you know how good or bad someone is, but you do know that in about 2 years you're going to have to get rid of somebody who's mediocre.
And if they're great, they're about 3 years to 4 years if you can keep them.
That's $200,000 dollars, and then the effect on the business right there, it's worth spending time to write one page about what this is to get that team's alignment around the role.
I find that slowing down that hiring process in order to get that right has fundamentally changed what our team looks like, and that's been one of the biggest and most important things we have done.
Especially in a market like New York, where not everybody knows the tune to enterprise technology, so you have to work through that song together.
Grant: Yeah. It's also hitting on your point from earlier, it's amazing how an ecosystem can evolve with just a handful of companies that have scaled in the area.
Mongo and Security Scorecard and whoever else, like these actual deep enterprise software companies kick off these people that have done these roles.
Because all you have to do is go do it for 2 or 3 years, and now you're very well-equipped to go lead it at the next place.
Ben: That's exactly right.
Grant: It spins up all these people.
Ben: I do think we're looking at a very new New York. I'm speaking as if New York is in 2013. 2019 New York, man, we have some great enterprise talent.
We have a lot of people that have come from the Bay Area and from Seattle and have worked with us, and we've also built companies that serve many of those companies, so we've gotten a chance to see their playbooks as well.
Ben: And what I will say about it, I'm speaking to all my counterparts out on the Bay Side, when you match that with the grittiness and the creativity that New York offers I think you got a pretty cool ecosystem.
So, I'd urge anyone who's not building SaaS in New York to take another look.
Grant: Yeah, no. It's awesome and people sometimes just want to get out of SF. They've been there for a while and they want to come to a great city like New York or LA, or wherever else they want to go.
Ben: I'll do another plug for LA. I spent a lot of time in LA, and Grant's building is one of the best enterprise companies in LA, but you're also seeing a lot of enterprise people head to LA.
I'm really impressed with that ecosystem.
Grant: Yeah. It turns out it's an incredible place to live, so people just want to be there. Makes it easy.
Ben: You and your birds and your macha.
Grant: Yeah, exactly. OK. So then, what's the most important role that you've hired in the last six months?
Ben: Man. Executive coordinator. True story, we've hired a lot of amazing executives. I hired a VP engineering, a VP product, a chief strategy officer.
All of it very important. I will say that as a CEO, at this stage, we have about 150 people.
I did need somebody to really help me scale myself, and so hiring somebody who is incredibly bright and thoughtful and could really help me stay disciplined around where my focus lies has been a game changer for me personally.
Grant: Interesting. That person came on recently, and just is focused on--?
Ben: Leveraging me. How can we create more leverage out of Ben?
How do we get Ben to focus on the most important things? Look, I think that's a cop out answer.
I think that anybody who is listening to this is thinking about their executive team, and I will say a thought that's really important in building a team is this.
Just because you don't have the headcount does not necessarily mean that you don't have the role.
I think that's been an unlocker in understanding my business.
Just because you have a head of CS does not mean that you shouldn't have that person be thinking about implementation.
There is a role for implementation even if there isn't a headcount, so seeing what best in class enterprise technology stacks look like from a people standpoint and acknowledging that you have one person doing two of those roles, at least acknowledging that is a really important first step.
Then what you start to do is you start to fill in those roles with best in class people and actually become positions, not just roles.
But I think just making sure you understand that has really changed my understanding of the business.
Grant: Yeah, that's actually a good point. There is a similar feature set which-- The Enterprise Ready features, almost every enterprise software company has a very similar organizational structure.
I think acknowledging that and knowing how that organizational chart maps to your organization, because you're right, everybody is doing sales and marketing and customer success and implementation and support.
You can map out the whole list. Product marketing, product, you go write every executive roll down and realize and understand what the different aspects of that job is.
Even if you only have eight people total, you're doing all of those roles.
Ben: That's exactly right.
Totally acknowledging that, and acknowledging it almost publicly and saying, "You're doing two roles and we need that of you right now. That will change with scale, but right now we need you to operate as such."
It gives you a much easier framework to operate in, and it also acknowledges the reality of how you're actually working.
Grant: Yeah, that's great. You're so right. I think I'll actually write a little blog post up about that at some point.
Ben: Winner. I like it.
Grant: That's a good one. Because there are so many pieces of what you're doing every day, and understanding when you're putting on or who's putting on different hats, you actually do implementation. Right?
Ben: Yeah. You do education--
Grant: You do training--
Ben: You do professional services and you do all of them. But are you acknowledging that?
Are you just telling somebody that they're doing one thing, and they're actually doing five?
Grant: Yeah, that's a great point. You think about early on product leaders end up really taking on a lot of those roles.
Ben: Right, and customer success. You'd be surprised. Look, under my customer success team--
I think this is hopefully helpful for anyone who's building it, we have-- He has customer success, which is different than customer support, then he has education and implementation.
We have something called "Creative design services," that's part of our service arm on the creative end.
Then he has the data team, the data team works very closely with him reporting from a customer success standpoint, and then there's also a tight handshake with solutions consulting.
So those are going to be the people who are configuring in advance, and what I need to tell everyone is that all of those roles are now departments with several people in each.
That is a new evolution as of probably 18 months ago, but certainly we've been doing all of those things.
Grant: Yeah, exactly. So then what's next for Splash? What are you guys working on? Is it or more enterprise, does it go down market? How do you think about--?
Ben: It is more enterprise by focusing on our core.
I think we are really lucky to have gotten to a point where we have critical mass of customers and very clear value proposition.
We've hired an incredible executive team that has just started this year, and really starting in Q1 we have--
All of these executives have been ramped and our plans are really clear.
It pains me, Grant, it pains me to say we need to step on the brakes.
As a founder, as a "Go get 'em" founder, I want to go as fast as we can and I want to build this incredible vision.
Our goal is to make it unbelievably easy for businesses to host meaningful events, and as I see into the future of events, I see these things happening in a click.
I see the entire event coming together with the right people in the room, getting the right experience, and leaving with something beautiful in their hearts.
But in order to accomplish that I need my business to take a quick step back, and to really focus on what made us good in the first place, and make our customers who have been asking for features and higher quality issues to really feel loved.
So we're doing that, and we're spending about a year doing that.
We've been spending this last quarter really planning for that next stage, and I'm really proud of the team for coming and rallying around it, because it's brave to say we're going to slow down.
It's brave to say, "We have a couple of customers who would be really happy if we really focused on that, so that's what we're doing this year."
I think that is going to set us up to become a much bigger business.
I hope when someone's listening to this podcast in 2021, they're like, "Man. He made the right move there. He really focused on the core and really scaled this thing up."
Grant: That's a really interesting way to talk about that, because I think it doesn't necessarily feel like the sexiest move.
"We're going to focus on the core. Do we do better?" Everyone's like, "Here's the next thing, and the next thing. Here's how we expand."
Reality is, you already have this existing thing and it's not perfect.
The more you can pump into that and make that experience better and improve the core, that is where your business is.
I actually think that's really probably the right move around your business, but I can see how many businesses would benefit from that approach more often.
Ben: Absolutely. Again, it's very scary, because you need to grow. Cash is a really beautiful thing.
Ben: We've really as a business changed the marketplace, so now much of our differentiated product-- They're copycats, even at larger businesses coming after us.
So of course we want to differentiate more, and it's scary. You're building tech in the 21st century, and so you want to go fast.
Also, you see all these great businesses like Uber and Facebook, who are adding products left and right and buying businesses.
You want to go as fast as they are, but as I said I'm really proud of our team for taking a step back.
It came from them and it came from our customers, and they said "Let's really focus back."
Grant: Will that be like adding in--? You said you're going to rebuild your role based access control.
Grant: And you're going to build some new--?
Ben: Create flow is really exciting for us.
Grant: OK, great.
Ben: We're going to make the create flow much easier and do more stuff, sure, but built off of core tech.
We're going to go back into our CMS and really just make it more fun.
We're changing the nav so that the nav just feels better, and that is not sexy, to change a navigation system.
Grant: Anything like any of the other Enterprise Ready features? Like more advanced reporting, or deeper integrations?
Ben: Deeper integrations, for sure. But even that, we're not saying "Let's add more integrations," we're saying "Let's go make our core integrations more robust."
Grant: Yeah, OK.
Ben: And "Let's sell to the clients that are using those. Let's focus on our API a bit."
It's all of those things that are really things we're already doing in a really significant and scaled way.
How do we just make the NPS score for each of those products go a little bit higher? If we could do that--
Look, anybody who is running and enterprise business, you know this, retention is the one. Pick a metric, that's the one. So we're focusing on that metric this year.
And I will say, this is actually-- Now we're going to geek out a bit on metrics.
We changed our KPI. We run our business with 5 KPIs, and we decided this year to change one of our KPIs from net negative churn, the net churn, to gross churn.
We said "We're going to be focusing on gross churn, not net churn."
Grant: OK, so explain the difference.
Ben: Sure, meaning that net churn is all the money you lose, plus all of the money you expand, and you're looking to get it above 100% so that you are expanding more than you're losing. That's called net negative--
Grant: So, recurring revenue that goes away and then recurring revenue from existing customers that grows?
Grant: Put those together, hopefully that's bigger than one, right?
Ben: Correct. And we have a great percentage that we feel really good about that, but what's important, especially as you're thinking about the stability and robustness of your core product, is that can often--
It can hide some warts in that you might be losing a lot of gross revenue and you're expanding enough that you don't really notice it.
We're a business and we do this quite publicly, or at least internally.
We say, "This is how and why we're changing this metric and we're going to be focusing on it. We're going to be projecting against this metric, we are going to be thinking about this all day and all night."
Really, we're doing that for our customers because they scream loudest through their retention metrics.
Ben: We never wanted to get there, we hoped that we can get them excited before that happens, but it's a really important way to think about it.
Grant: OK, so that's one. What are the other core metrics?
Ben: Last year was MRR, the CAC ratio. I would say anyone who is raising series B or C, the CAC ratio is the only one.
It just is inefficiency. It's dollars in and dollars out, it's called the "Magic number."
Grant: So, talk more about that one.
Ben: Sure. If you spend a dollar on marketing spend in Q1 and you get a dollar back in Q2, but it's gross margin adjusted, so let's just say you have a 70% gross margin.
That will be about a .7 CAC ratio, because it's .7 back of the one that you spent. "Magic number" is and other way to see it, and people calculate it differently.
I would look at-- I think Matrix has the best one here. Scale Ventures also has a good way of explaining this, but anyway, that number is dollars in and dollars out quarter to quarter.
So "Payback period" is another way to think about it, and you really end up seeing the business in a really naked way. It's the most naked of the numbers.
Now what I will say is, especially as you're growing the business, you want to invest more.
Sometimes it might dip and you'll see these businesses go, their CAC ratio will go .5 and then up to 1.2, and that's probably too high.
You're not spending enough to grow, you need to acquire new customers and expand existing customers. You do need to spend on that.
It's not to say that there is the right number, but there's probably a right number for the right stage and right time and right cycle of any business.
We find this is a really helpful way for us to keep control of burn.
Again, we spoke a bit earlier about time and seeing ahead.
That's probably the hardest part of our job as enterprise founders is that we are forced to think years in advance so that we can make investments now with our marketing and product and sales.
That CAC ratio is a helpful way to watch that trend line. We report out on that, and the other ones, we just added in two new KPIs.
Active monthly users, so now that we're at a scale that we can see across all of our user bases, seeing how active they are and measuring and projecting against that.
Grant: Is that included with the freemium, or is that just paid?
Ben: Just Enterprise, we call them "Business users." Yes, certainly the freemium is interesting, but that's not the metric.
We do even segment that down in further analysis, but we're always thinking "OK. How do we make sure people are active in the system? How do I make sure that they're actually getting value?"
The last one is a company-oriented one, which is unplanned attrition. People leaving without us planning for them to leave.
What I will say for any investor listening, we're doing quite well on all of them because we're focusing on them.
Grant: What I love is the idea, what you said with gross churn.
Because you're like "Look. It's very easy for us to want to look at the metrics that are the most vanity oriented. Whatever metrics feel the best," because we all have some metrics where we're kicking ass.
But unless that's just some superpower that is just going to drive your whole business, looking at the ones that you're just going to continuously do well on is not how you're going to fix the problems.
You're just making yourself feel better. So you probably have a few vanity metrics that you'll share with people randomly.
Ben: Of course.
Grant: To just get him excited, but the ones that you drive your business by shouldn't be the vanity ones.
They should be the ones that are actually going to make an impact, and if there's an opportunity for you to chase those down, you should.
Ben: It really is crazy how when you pick only a few metrics and you make them important to the business, and if you think about each of those metrics as having one stakeholder associated with it, there can be some metrics that are very important to new investors and some that are very important to the existing.
Some of them will be important to the executive team, some will be important to the customers, and some will be important to the total team.
If you can say, "This really matters to that key stakeholder," and you make it important, it actually just fundamentally changes your business.
You start focusing on different things and you can actually drive the business by projecting and watching those particular metrics.
Grant: I love that. Ben, I know our time is about up and you need to run here in a minute, but I just wanted to see if you have any parting words, or any way you want to end?
Ben: Man, thanks for this. I will say anyone who's listening already knows about your site.
We have used your site and been really thoughtful about how we've built our business because of EnterpriseReady, so I want to thank you.
Grant: Of course, man. That's why I put it out there.
Ben: Just keep on building it.
And what I would say to any founder out there is "The ride is long, but it is so valuable to build workflow and data-oriented tools that can change people's professions and change their lives."
I want to urge everyone to keep on building out there, and build awesome stuff, and good luck. If you want a shoulder to cry on, you can always call me.
Grant: We spent a lot of time at work, and so having experiences that are not terrible and tools that we love using, it makes a big difference in people's lives.
Ben: It is so fun when it works. It's the best. And look, if you're selling enterprise technology, don't forget there's no better sales method than an event.
Just saying, and I've got a heck of a piece of product for you if you think in those terms.
Grant: Check it out, Splashthat.com.