No enterprise software sector founder or investor could have predicted the last 12 months. During a global pandemic that sent hundreds of millions of people home overnight to do their jobs from their living rooms and kitchen tables, the software that runs our businesses, organizations, and governments came into the spotlight. How many people think about the productivity, security, accounting, video, communications, and infrastructure software that powers our working lives? It turns out, this software was always there, running in the background, and we no longer take it for granted.
At the fifth-annual Evolving Enterprise event, held virtually for the first time, GGV Capital and our co-host Silicon Valley Bank welcomed leaders from Snowflake, HashiCorp, Confluent, Stripe, Twilio, Smartsheet, Cloudflare, Okta, and Twitter to discuss how their businesses have changed—and where they’re headed. This past year saw the largest enterprise software IPO of all time from Snowflake, private opensource companies such as Confluent and HashiCorp reaching valuations of more than $5 billion, and Zoom at one point eclipsing a $150 billion market cap as video chats became part of the everyday fabric of our socially-distanced lives.
GGV believes fervently in the promise of software to transform how we work, learn, connect, and grow as human beings. We have invested over $1.2 billion in the last six years in 97 of the world’s fastest-growing, most innovative enterprise companies—and we’re continually inspired by the visionary entrepreneurs building the next billion-dollar software giants. At Evolving Enterprise, over 400 enterprise software founders and leaders joined us for thought-provoking interviews, practical panel discussions, and engaging debates about how the sector will continue to evolve in a post-pandemic world. From how to create a bottoms-up sales model, to how founders should tackle cybersecurity, to how to grow your company from zero-to-IPO, the smartest enterprise leaders shared their own personal journeys, lessons learned, and hopes for the future. Here are some salient excerpts from an illuminating day that can help all founders as they build the next generation of SaaS powerhouses.
Build your company for long-term growth.
As a leader, it’s essential to recognize when you hit a milestone and then push out of your comfort zone to get to the next level. For Smartsheet, the first milestones were building a shipping product and getting early customers, but we had enough revenues, about five years in, to hire our first salespeople and, and as our customer base expanded, we needed a customer success team. When we hit $10 million in ARR, we hired our first expansion sales reps who only upsold. And it wasn’t until the company was 10 years old that we hired a chief commercial officer to focus solely on large strategic customers. Growth is a progression based on milestones and you have to know when to shift focus. — Mark Mader, President and CEO, Smartsheet
Go beyond incrementalism to fuel innovation.
In Silicon Valley, there tends to be a culture of incrementalism, but that doesn’t drive innovation. In technology, many new companies, and even the big ones like Google and Amazon, take what exists already and add a bit more to it and call it a new product. It’s very, very rare that founders create something completely new. If incrementalism worked to foster innovation, then GM would have invented Tesla, eBay would have invented Amazon, and Terradata would have invented Snowflake. Real innovation starts from the future and works backward, not the other way around. — Frank Slootman, Chairman and CEO, Snowflake
Hire salespeople who know how to sell.
The most important thing great leaders do is hire great talent, and for sales candidates, always look at what they have sold. Did they sell products that were already established and thus fairly easy to sell like Oracle database or Microsoft Office, or did they sell something like Oracle apps, which is much harder to sell because it’s not a dominant product? I look for salespeople who have succeeded with market creation, not just market replacement. Also, ask candidates for customer references. Great salespeople should supply you with the names of CIOs and CISOs who can vouch for them. It’s important to understand the contacts candidates have in their Rolodexes. — Susan St. Ledger, President of Worldwide Field Operations, Okta
Make the right technical hires to fuel organic growth.
We have hired so many engineers out of our open source community, and many are not just great with technology, but also engaged in writing blogs and speaking, so we gave them a sort of hybrid role of coding and evanglistm. They help our core developer advocacy team to get the right developer-focused content onto podcasts, blogs, social media, and at conferences, which makes our developer advocacy program authentic and useful to those we’re trying to reach: actual developers. — Neha Narkhede, co-founder and board member, Confluent
Don’t wait to hire a CISO.
If you hire a CISO early on, you’ll save yourself a lot of money and stress later, because you have an individual whose entire job is to think about risks all day long. A CISO should ideally be one of your early hires. That is unfortunately not very common, but I think more startups are beginning to see the importance of putting security first, with so many breaches getting covered in the media. They realize if they have a breach, it will cost their company a lot in terms of lost revenue, momentum, and customers, and could ever permanently damage their business. — Rinki Sethi, VP and CISO, Twitter
Close the gap between developer evangelists and enterprise buyers.
At Twilio, we always think about how to shorten the fuse between developer interest and real enterprise projects with budget behind them. We host American Idol-style hackathons where we bring some of our developer evangelists on site to a customer, and the customer comes with some use cases that they want to explore and includes their developer team in the event. Over the course of the day, the company’s developers get skilled on Twilio for free, and then they demo how Twilio works to their business leaders. It's a win for our customers and a win for us. The customers can get started on projects that may otherwise have taken a year or more to get off the ground and we hopefully gain new business. — Sara Varni, CMO, Twilio
Keep the customers you’ve got.
The customer success motion is equally as important as the sales motion. As they say, it's far easier to keep a customer than to get a new one. So startups should start customer success right away, because the more successful you make early customers, the more they’ll be willing to sell on your behalf. And customer success should always be 100% data driven. Founders should measure net dollar retention, and understand new net versus upsell revenues, as well as lifetime value of each customer. Data is key because if your sales are growing 50% annually, but you're losing 10% of your customers every month, you’re not really growing. — Susan St. Ledger, President of Worldwide Field Operations, Okta
Grow your product roadmap through adjacencies.
When it comes to going from a one-product company into a platform company, you can start by moving into natural adjacencies. Stripe started with payments, and then we added all sorts of things like fraud detection and adaptive acceptance to optimize that payments layer. And then, sitting above that, there is all sorts of logic to run your business. And, you know, at some point, we're sort of running the whole revenue stack. It sounds trite, but you have to start thinking less about products and more about solutions. What big problem can you solve by putting five or more products together? — Jeanne Grosser, Head of Americas Revenue & Growth, Stripe
Invite collaboration and make it part of your development process.
All of our products, from Terraform and Packer, to Foundry and Waypoint, started out as early projects our founders created to try to solve underlying infrastructure challenges. Our tack has always been to put our projects up on Github and then just invite anyone to collaborate on them. It’s amazing to see the collaboration from developers who build code extenders to solve issues they have, add functionality, etc. We have over 1500 contributors to Terraform Core who are not employees of HashiCorp. Their contributions are a huge cornerstone of our development process. — Dave McJannet, CEO, HashiCorp
Just do it, and then think about strategy.
Silicon Valley is very big on strategy, because it's kind of an intellectual, high-minded parlor game. But as a CEO for over 30 years, I'm here to tell you that you'll never be any good at strategy until you're good at execution. So focus hard on execution and trust that the answers will come to you. Even if you are completely stressed and anxious, you have to drive yourself and your team to get on top of the challenges as hard and as fast as you possibly can. Once you get conviction, and you can get that through hard work, the energy and focus really follow. — Frank Slootman, Chairman and CEO, Snowflake
Don’t shy away from stressful situations.
Stress gets a bad rap, but there is healthy stress that motivates. As long as you figure out what you need to recover from stress, it can be beneficial to experience it, especially leading up to an IPO since that is inherently a stressful situation. The key is to always have something you’re working toward. Fifteen years in at Smartsheet, I still always have something exciting to look forward to, whether that’s a new product release or hearing a successful customer story, and that keeps me fired up. It’s important for everyone on your team to have things to look forward to instead of just grinding, heads down, which burns anyone out. — Mark Mader, President and CEO, Smartsheet
Ask for help when you don’t know the answer.
Security has permeated into every department, whether that’s the marketing, development, sales, engineering, finance, or HR. Every person is impacted in a company if there’s a security breach, so every person should be aware of the issues and what they need to do to protect themselves, their department, their employees, and the entire company. For entrepreneurs starting a company today, you have to understand the ABCs of security. And it's actually not that hard; just turn to experts and say, “OK, teach me the basics.” — Michelle Zatlyn, Co-founder, President and COO, Cloudflare
We would like to thank our partner Silicon Valley Bank for helping make Evolving Enterprise 2021 possible. If you’re an entrepreneur in the enterprise space, please feel free to reach out to our investment team members Oren Yunger and Tiffany Luck. For more information about GGV Capital, visit www.ggvc.com.