AMA session with Allison Pickens, COO at Gainsight and Top Female SaaS Leader.
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As COO at Gainsight, Allison Pickens has been #2 to the CEO in scaling the company from $1 million in revenue in early 2014 to 650 employees today, and in creating the category of customer success software. Along the way, Allison developed industry-recognized thought leadership on scaling a SaaS company.
Allison was named one of the Top Women in SaaS and Top 50 People in Sales and Business Development. She is part of the Fortune Most Powerful Women community, which recognized the thought leadership she has shared in hundreds of conferences, blog posts, and podcasts, including The Customer Success Podcast that she hosts (50+ episodes recorded, with 130,000 listens). She has served as an Independent Board Director for two companies (RainforestQA and eCompliance) and is an Executive-in-Residence at Bessemer Venture Partners, where she has advised dozens of portfolio company CEOs. She has a passion for working with CEOs to help them grow their companies.
Allison started her career in management consulting for Fortune 500 companies while at BCG and later worked in private equity investing at Bain Capital. Allison has degrees from Yale University and Stanford University. On weekends you can find Allison geeking out about philosophical topics, learning about the gut biome, or hiking in the Marin Headlands.
Thank you for joining us Allison. Because customer success was more or less a brand new category of software and tooling when Gainsight started, what were the biggest positioning challenges you faced? Was there a lot of educating customers?
Definitely a great deal of education. When we were starting out in 2013/2014, there were only a few hundred people with Customer Success in their title (compare that with the 10k’s of CSMs today).
We had to partner with the community on big questions such as, what does Customer Success mean? What’s the charter? What metrics should they be accountable for? What should you look for in a CSM? Helping the community resolve those questions was key to helping them purchase and make good use of software.
We also had to educate investors and CEOs on the importance of CS to revenue metrics, because if they didn’t believe in it, then the CS leaders couldn’t get budget for software.
Whats been the biggest difference in the COO role between when you joined and now?
When I joined, being right-hand to the CEO meant being the “Chief Challenge Tackler.” Over the course of less than a year, I did sales, took over Finance and fixed our billing process, took on HR and created a feedback process for managers and their team members, built Sales Ops, and built our Sales Development team. Those were the most important challenges to be tackled.
Today, being COO means (1) creating alignment across functions on our strategy, our goals (OKRs), and execution and (2) directly running a set of functions that need to achieve their own OKRs
What positions/hires have given you the most leverage?
In the early days, we hired a few “Renaissance people,” meaning jack-of-all trades who were good at (and interested in) many things. They were comfortable with ambiguity, enjoyed problem-solving, and could create frameworks from scratch. They went on to build initiatives and ultimately teams that reported to them. They gave me and the company tremendous leverage.
They happened to be ex-consultants and MBAs, but you can find similar personality types in other fields as well.
When you hire your first CSM and your ARR is still not at the level it should be (but getting there), do you also ask your CSM to pursue new customers until they eventually manage a more suitable ARR? And if not, how do you keep him/her productive and motivated during this period?
In the early days (say, <$5m in ARR), you can have 1 person as both CSM and Product Manager. This hybrid role is valuable because the same person is rolling out new features, helping clients get value, and gathering feedback from the client that they can then incorporate into the product roadmap.
You could also have your CSMs serve as hybrid sales people. I have heard of founders exploring that hybrid route, but I don’t personally have any data points to know if that works. I do think that in the early days, having coin-operated salespeople (who are simply laser-focused on achieving their quota) is not a great way to scale. The reality is that you will personally as the founder be closing most deals. So better to have someone who is versatile, can communicate the value of the product, and help you learn, so that you can figure out your go-to-market strategy.
For that reason I like the idea in theory of hybrid CSM-Salesperson.
Was there one deal/customer/moment where you realized your vision was destined to be a reality?
There were many signals along the way that things were working. But the truth is, you’ve never really achieved the “reality” that you want. Now we’re a pretty big company but we still have a long way to go. So we’re always looking for signals from the market and internally that indicate the future course.
In the early days, there were a few signals that we were on the right track:
(1) Our events were very well attended. That said that there was enthusiasm for a company that could be a thought leader in the space.
(2) People came to us with problems that weren’t simply about software. They wanted help getting promoted, help hiring someone, help getting budget. This signaled that we were valued as a trusted partner.
(3) Revenue growth rate was strong (4) Reps were consistently hitting quota (that’s a sign you’ve figured out your go-to-market strategy) (5) Then our renewal rates became very consistent. That’s super critical. If you’re growing fast but your renewal rates are low or volatile, you may not in fact have a real business. I know companies that have had massive lay-offs because they grew fast while not figuring out product-market fit and go-to-market-market fit.
Can you comment on your experience with organizational alignment as COO. It’s easy to say ‘our objective is to reduce churn or grow revenue’ but how do you translate that into action that trickles down to the execution level? Do you employ OKR’s, or another management framework to keep people accountable and goal oriented?
Yes, we use OKRs. We start off with 5 OKRs at the company level for the year. There’s an exec sponsor for each one (e.g. our Chief Sales Officer, CFO, etc.). Then those trickle down to 3 OKRs each, and those trickle down to 3 OKRs each.
Each company-level OKR has a certain cadence for actually determining the descending OKRs and then managing execution of those.
Our Director of Business Operations manages the OKR process and has done a great job.
At what point did you institute OKRs in scaling process?
Too late, honestly! We had it in some teams independently but only built it as a company around $65m in ARR. It was super impactful when we did it.
You mentioned working with community on defining what customer success means, among other things. How does community play into Gainsight’s strategy, if at all?
It’s probably the #1 thing that we’ve gotten right. It’s critical to our strategy. We’ve found that when people trust us as a partner to the community more broadly, they are more likely to want to partner with us on our software. They believe we’ll build the right things in our software, that we understand their profession, that we can help them get budget and help make this software purchase a “win” for them professionally (pro tip: get your clients promoted and they will always love you)
Can you breakdown composition of your 650 employees positions at a high level?
I will have to get back to you on the break-down of employees. A few things that are notable:
(1) A huge % of our employees are engineers. We’re able to invest more in product development because our product team is located in Hyderabad and Bangalore where we can hire super talented people with a lower cost of living.
(2) We do have a services business, which scales with the amount of services revenue that we sell. We sell services in order to drive ARR growth, not for its own sake.
What is the most challenging problem you have faced in the company?
In terms of the most challenging problem we’ve faced in the company: Every stage has its challenges.
• $1-5m: Being creative and running fast
• $5-15m: Incubating customer success best practices so we could “walk the talk” and sell with integrity (this is existentially important)
• $15-30m: Delivering outcomes predictably for our clients
• $30-60m: Scaling our go-to-market. How can you gain confidence that if you hire 1 more salesperson, they will achieve at least x% of quota?
• $60m+: Launching new products in a way that sticks (easy for innovation to get buried, no one focuses on it; need to execute well cross-functionally)
Can you describe your experience with the ‘Fortune Most Powerful Women community’? What can we as a predominantly male industry do to try and encourage more female founders to start companies?
It’s an incredible group. I recently went to the Fortune Most Powerful Women’s conference in D.C., which included Fortune 50 CEOs, a presidential candidate, people who had IPO’ed companies, etc. There are very few CEOs and COOs who are women/non-binary in our industry, so it gives me a sense of belonging and community when I see my friends at Fortune events.
In terms of what the industry can to do support female founders:
• Put more women in VC. So often a male VC will say “I haven’t experienced this pain point myself, so let me ask my wife.” :slightly_smiling_face: That’s not a great recourse.
• Men should mentor and spend time with women on their team as much as they mentor men. If you’re planning a company event where mentoring and bonding tends to happen, try to avoid traditionally male activities – e.g. golf, kitesurfing, etc. Women may like those activities too, but I think it’s safe to say that statistically, they will not show up in as high numbers and not enjoy themselves as much.
• Bring in an external expert to conduct unconscious bias training at your company. If each of us has an open mind and we don’t feel threatened, it’s amazing what we’ll learn through this. Keep in mind that your employees may be the next generation of entrepreneurs. Trainings like these can help them succeed, and also encourage them to help women succeed.
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Hi Allison, thanks for doing this. In response to this – “We do have a services business, which scales with the amount of services revenue that we sell. We sell services in order to drive ARR growth, not for its own sake.” – What do most of the services look like and how are they billed for?
• Onboarding (initial implementation) – this is a basic package for SMBs and more involved for enterprise (i.e. including a project manager, technical architect, education, and advisory services)
• Technical Account Management – this is largely for enterprise clients who want to outsource building things in Gainsight and also want someone who will be a technical thought leader as they think about their data architecture (enterprise clients are complex)
• Education: online and also in-person instruction
• Gainsight Advisory Services – this can be sold even independently of our software and includes a diagnostic / assessment service so a company can figure out their CS strategy if they don’t already have one.
Hi Allison! Thank you for being here! How is the SaaS industry as a market to target? Specifically, do you think it’s a big enough addressable market alone – especially given the competitor landscape for Customer Success software? It seems like to target SaaS as a market in general, given the number of SaaS companies out there, you’d have to acquire a large chunk of the enterprise-level companies to make it to the 100M ARR+ mark. Do you feel you are close to saturating the market for the CS product and what’s the next move to drive more revenue?
Great question. We started out by selling to SaaS, because it was an immediately addressable market – it was growing fast, every SaaS company needed a CS team, and our networks were strong in that industry.
Around the $5m ARR mark, we started selling to enterprise – e.g. Cisco was our first traditional enterprise client. That led to us selling to many more on premise software clients (beyond SaaS) who had recurring maintenance services offered by Technical Account Managers (which are analogues to CSMs). Then we started selling to non-Silicon Valley companies that had some form of recurring revenue.
Even in the early days we were attuned to the need to expand our market, and investors asked about it a lot.
Has the vision and positioning of Gainsight changed notably since you joined?
The vision hasn’t changed, but we’ve upleveled our positioning over time. We started out as a tool for CSMs, then evolved into a “solution” for Customer Success organizations more broadly (selling into a Chief Customer Officer), then evolved into a “Customer Cloud” for the entire company (selling into COOs, CROs, CEOs)
And that’s a wrap – thank you Allison for your time and thoughtful responses!
Great to spend time with you all. Feel free to connect on LinkedIn if you have more questions.