#5: How Wistia survived the '08 recession 🏄♂️🌊And more
Brendan Schwartz on surviving the '08 recession, Steve Newman on creating the right tension between customer success and product, and Yamini Bhat's can't-say-it-enough reminder to "say no more often".
Hi there,
Welcome to the fifth edition of The Baton. A fortnightly newsletter that brings you three, select pieces of advice drawn from the thoughtful founder-to-founder exchanges and interviews taking place on Relay and the interwebz. So, stay tuned!
In this edition, you’ll find instructive and inspiring pickings from the brains of Wistia’s co-founder Brendan Schwartz, Scalyr’s founder Steve Newman, and Vymo’s co-founder Yamini Bhat.
#1. Brendan Schwartz, co-founder and CTO of Wistia, revisits yet another year (‘08) of far-reaching setbacks, and traces the fundamentals that helped them turn unceasing constraints into possibilities. (Source: Relay)
I’m not sure we had one secret for surviving the recession and in building our business there was certainly a lot of luck and good fortune, but here’s what I know helped us:
Keep burn low — this is an obvious one. We were incredibly thrifty from the start. It takes time to build a product and get fit with the market. You want to give yourself as much time to experiment and try things.
Stay super close to customers — in 2008 we only had a handful of customers. We talked to them weekly and made sure we knew what they wanted and were happy. Many of these conversations led to core innovations in our product that powered the business for years and years (e.g. video heatmaps came out of a conversation with an early customer that was doing sales training and asked us how she could know if people really watched the videos).
Do things that don’t scale — in good times it’s easy to spend a lot of thought and energy preparing for success and you’re often asking the question “will this scale?”. I’d argue you should never ask that question in an early-stage startup, but you definitely shouldn’t ask it at a startup during a recession. Before we had video embedding in our product, Ben (our first teammate) would generate embed codes for videos by hand and email them to customers. We weren’t sure if we should add it to the product, but we wanted to make customers happy and see if it was something they’d use. Needless to say, it was a hit, and we later figured out a way to scale that once the demand was there.
Recognize your advantages — many of the things about your startup that are valuable to customers are even more valuable during a recession:
Better support and help — your customers talk directly to founders/team building the product.
Flexible — you can solve adjacent problems for customers. You can be flexible while bigger companies cannot.
Likely cheaper than more established competitors because you have lower overhead. But DO NOT undercharge! Your prices are probably too low.
#2. Steve Newman, founder and CEO of Scalyr, talks about how the customer success function can unknowingly cannibalize your product and what to do about it. (Source: SaaStr)
I was the entire customer success team until about a year ago. We were quite far along in the growth of the company. We had well over 100 customers at that point. Customer success as a function, of course, is critical. So when I talk about ‘delay the team,’ I don’t mean delay customer success, I just mean delay breaking that out into its team. I think there’s two reasons for that. One is customer success is a critical input channel for you to understand how your customers are succeeding or not. Where is the product working for them? Where is it not working? Where are the rough spots where you can improve things? So you want to be careful not to hire that team too early… When you do hire them, they need to not become a communications barrier. By having other core people on the team, such as in my case, the CEO. Doing that work directly with the customers, you’re absolutely ensuring that you’re hearing all of the feedback directly.
The other reason is, we talk about customer success being critical, of course, what we really mean is happy customers and successful customers are critical, but having a big team of people devoted to that is the wrong way to accomplish it. It’s critical that the role of customer success is not just to make the customer successful, it’s to provide the product feedback so that the customers are successful without help. If you scale that team too quickly, if they’re too good at their job, they will make up for a lot of failings in the product and you won’t develop that organizational muscle of having to constantly improve the product to stay ahead of what customers are tripping over. So it’s a critical function, it’s a critical team, but you want to make sure that they are not strong enough to carry the organization and hide flaws in the products.
#3. Yamini Bhat, co-founder and CEO of Vymo, talks about the aerodynamics of the word “no” — the strategic drag that its sparse usage can cause and the true momentum lift that results from its ruthless application. (Source: Upekkha)
Both the co-founders did the POCs [Proof of concepts], Venkat [her co-founder] iterated on the code and product and I used to be in close conversations with end-users... And I think in that time what was very very important for us was to think through and have a very clear view of what we will not do. Because the opportunity was there in front of us to probably build a mid-market solution. To probably do a cheaper version of some other product out there. Or probably go horizontal. There were many different choices that we had.
What we really tried to question ourselves was, about our DNA. My DNA and my co-founder’s DNA and what we would enjoy doing. And when we realised that we really wanted to innovate on the product front. And create 10X differentiation versus any other product out there. And gradually realised that a product of that kind could only be bought by certain kinds of customers but they will be willing to pay because the problem was big enough. So we had to start saying no to a lot of things that came our way.
And in retrospect, I always feel, we could have said no faster. Even today, I feel like there are things we should say no to for sure. And we keep trying to push ourselves and collect data on deciding why we should say yes to something. Because the focus is what really gives us momentum... So, then, being greedy because that one particular customer who is a mid-market customer wants to close a deal within one week or so. Those become distractions. And sticking to our focus has led to momentum. So that’s what I believe is most valuable during your whole product-market fit stage.
Hope you enjoyed reading this edition of The Baton. We are trying to bring you the most actionable and nuanced insights from your fellow SaaS founders, so if you think we can do better or have any suggestions, let us know. We are all ears! :)
Until next time,
Astha and Akash