Transcript
Host (0:00)
You're listening to Revenue Vitals with Chris Walker.
Max (0:17)
Chris, thank you so much for coming out here. It's super exciting to have you. I've been following or actually a bunch of us have been actually following your B2B Revenue Vitals podcast for a while and listening and inspiring. Actually a lot of what Warmly is doing in Go to Marketland today. You've done it all from engineering, product management, all the way to marketing. Now helping we're helping marketing and go to market teams change kind of the way that marketing has been done and now you're even going bigger picture, helping the CEOs, finance team, ops teams really think about how to run business and get to the bottom line of pipeline. I know you had some topics in mind, so if you want to jump in.
Chris Walker (0:54)
Yeah. What's up everyone? Glad to be here. I couldn't make it on Tuesday because we had a little bit of a snowstorm, but good to be here and not be virtual. I think in person it's super cool. I'm going to set the table for 10 or 15 minutes about the big picture that I'm seeing and then we'll do some questions and then love the audience questions. And when we get to the audience questions we can take it in whatever direction, career development, marketing, anything that you want to know. I don't want to feel anyone restricted on the question side. I got some notes here so I'm just going to reference a couple of things to make sure I don't miss anything. But the take home point is that there is a massive transformation happening in how software and technology companies are built, how they're valued, how they should go to market and it creates a lot of downstream impacts on how we think about our strategy and things like that. The first point is that I truly believe what I'm about to say, and most people probably don't, is that a company of your size has a distinct advantage over $100 million company right now. Those companies have ingrained processes. It's difficult to change. A lot of their cap tables are underwater. So now basically all the stock is not worth anything. It makes it really difficult. And meanwhile here we are, we're flexible, we don't have a lot of constraints, we can move more quickly, we can build differently, we can think about how we integrate AI in our product as a native functionality, not as a feature or a bell and a whistle like $100 million company does. I think that just thinking about how that can work is a huge thing. The next point, and I see this in the big hundred million dollar companies and I've actually seen this for five years and I tried to tell them about it and they didn't do anything about it. And now they're paying the price. Big companies do not help their customers operationalize the product in a way that makes them successful. Think about sixth sense. Everybody buys it, nobody fucking can use it. It's not connected into demand based the same way. I'm not just shitty on 6 cents. They don't help their customers figure out how to connect it into salesforce. The reporting is super low level. They don't help executives drive organizational change. Most BDRs don't even use the product right. So the Companies are paying $200,000 a year for this product and they run $10,000 and display ads out of it and do some reporting. No wonder everybody is churning. And so what that means for us moving forward is that we need to take accountability not just in selling a product, but making our customers successful with the goal around that they have an actual business result, not a, not a tool or a utility, but actually getting what they need. So and that comes down to customer success. It comes down to implementation, account management, potentially other things that we maybe haven't explored yet. I think a lot of companies should consider having a paid professional services part of their company that make their customers successful. And then through that process you get back the insights around what product should we actually build. What product do our customers actually need instead of what they tell us they need, which is usually wrong. It's true. And I'm in there with a lot of companies and they tell you what they need, right? So I'm on more of like the analytics and attribution space at this point. And they're like yeah, we just need our Power DI dashboard and then we'll hook up ChatGPT to it. Or we just need to buy another marketing mixed modeling or multi touch attribution tool. And I've watched 100 companies do that and 100 companies failed. Literally a zero percent success rate. And so what companies think they need versus what they actually need is very different. And the way that you figure it out is being in there with the work with them. With a lot of companies solving the problem, they only see the problem from their perspective. We have the opportunity to see the problem at a hundred companies perspective when we work with a lot of companies at once, which gives us an entirely different view of the problem and what the market needs. I think that the evolution of AI is fucking incredible. Not just for product but for everything. If you haven't taken the two to six hours like I did six months ago and have Claude on one side of the screen and Versal on the other side of the screen and I'm not a dev and I rebuilt our whole product. It took us nine months in like three hours. And just to see it and understand the capabilities at that level and then you can see how it applies to how we collect our invoices, how we automate our outbound, how we accelerate product management and product requirements documents, how we accelerate content creation, how we build a website or a landing page in 30 minutes instead of six weeks when it has to go from, someone writes the copy and then we hand it off to do a wireframe and then we give feedback and then it goes to design and then we give feedback and then we do more design, then we give feedback and then we do development, then we give more feedback and all of a sudden it's taken us eight weeks to build a web page. Now that whole feedback cycle gets compressed. The person that writes the copy can get it 90% of the way done and then design and dev finish it off. And having that speed is something that big companies won't do. I think it's a huge advantage. The competitive landscape, you all play in like a incredibly competitive space. I know a lot of people like Adam Robinson, I think he talked on Tuesday, plays in a very competitive space. He was like the quote unquote first to market with that product and now he has 37 competitors, including ZoomInfo, which is a Goliath. The competitive landscape is totally changing. The copycatting is not just a five person company copying your product, it's the billion dollar company copying your feature and putting it into their platform. So it's coming from both angles right now, which is going to drive commoditization of features and products and require us to think about how we add additional value to our customer outside of just the technology, which has been, it's all been tech up until this point. Now I'm talking, I talked about professional services, making the customer successful, being smarter around how we innovate on the product, being smarter around how we use AI to be faster, more agile, learn faster. On the copycatting side, this is more like super C level strategy. But I think that you all should think about playing the game differently than you have before when it comes to how you think about your product roadmap, how you market your product. I know companies that are at your revenue size, that don't even have a website. Anymore intentionally and so complete stealth mode intentionally so that other people don't see what they're doing. At least it's not like you're handing it on a silver platter to them. And I'm not going to share my own confidential strategies, but I've been thinking about that a lot too and I'm adjusting in certain ways with my, with my new business, which is entirely different than how I went with my last business. My last business was basically tell everyone what you're doing and then if they tell them what you're doing, then they'll trust you and then if they trust you, they'll buy from you. I, I was the biggest beneficiary of that strategy and now no longer believe in it because of how the world has changed. The commoditization of product is going to put a lot of pressure on SaaS. Gross margin, it's going to put price pressure and then with price pressure comes gross margin pressure and that's going to put more, more pressure on the efficiency of the business, particularly in go to market. In a company like this, go to market, expenses are going to be 50% of revenue, maybe more at your size and scale. So the majority of the expenses like product development and other sorts. But when you think about customer success, account management, operations, sdr, sales, marketing, it's like most of the headcount and the cost that we have in this and it's going to force us to operate much differently. What you can get away with at 3 million ARR, you will not get away with at 20 million. It will break. And I go in and help companies fix that problem at 20 to 50 million and it slows them down for one to two years because they didn't think, they didn't have the foresight to see how that was going to happen. Then all of a sudden their CAC payback's at five years and their NRR is no longer 110% or 120% and basically they're stuck, they're not growing anymore, potentially going backwards, burning money. And so I think it gives us an advantage to think about that now so that we can be efficient, maintain a CAC payback period even if we grow a little slower. I think that in the long run, if you think about the long game, it's a, it's a much better strategy. As a last point, I, I believe the biggest issues in go to market today are twofold. Number one is that marketing is this big bucket of stuff that has competing objectives between long term and short term tactical and strategic that make it very difficult to do the job. I think that smart companies will break marketing into two functions. And you have strategy which includes product marketing, analyst relations, thought leadership, customer insights, competitive intelligence, sales enablement, that type of stuff. And then you'll have a different function called pipeline creation and that side is math and science, a lot of what your product facilitates. So that would include traditionally demand gen, a combination of marketing ops and like SDR ops. I think those two functions should just come together and be the pipeline team, advertising, content creation, some things like that. And the second part is that the companies think that Revops was the solution to all their problems and it's clearly not. And that they're asking people that are Salesforce admins and technology implementers to be a strategic C level executive and tell their CMO and CRO what to do. And you're asking people that don't have the skills to do something that they clearly can't do, thinking that they can. And so a lot of companies are hoping that Revops is going to solve their problem of a four year CAC payback. And RevOps, most of the people can't even read a P and L. How are they going to fix your lower your CAC payback by two years? So I encourage your company to think about those two things is what I'm seeing as the biggest issues that companies run into when they hit 10, 20, 30 million in arrow. I think that the traditional way that companies organize around the departments of marketing and SDRs and whether SDRs go into sales or marketing is irrelevant. And then they force whether it's like it has to be revoff centralized under finance or the CRO. And if we do that then we can't have marketing operations and thinking about customer success and account management as two different things and whether we need both of them or how that could be different. I think that the traditional way that companies organize should be challenged completely. You can't do that at $100 million company. It's too, it's like steering, trying to steer a cruise ship. We're a speedboat. So we can actually make changes like that and be able to adapt to how things are working. And some of the core issues that companies face as they grow this stage is to get to like true product market fit and scale specifically this year that's coming up for you. But then beyond that the challenges are different. It's not about figuring out how do we get these customers, it's how do we, you know, improve our NRR from 103% to 111% so we get extra 8% growth for nothing. Instead of a lot of companies that get to 10 million ARR and have an NRR of 93% and then they're playing behind the eight ball every single, every single year that at this point you can get away with having a four or five year CAC payback period. You don't have a lot of costs that that will effectively destroy your growth in a couple of years from now. If that. If that's. I don't know what your CAC payback is, just to be clear. But just thinking about those things right now, it's do whatever you can to get to 10 million in product market, fit with happy customers with a product that works and is differentiated. And then after that you have to think about the scale phase which is a whole different, whole different game. And so hope that sets some context. Karina asked some questions about what's relevant to you all right now and then I would invite like the open Q and A is my favorite part. So I'd invite that afterwards. Yeah.