Lessons Learned from Scaling to $10M with Joel Stevenson

INTRODUCTION: Welcome to The Daily Bolster. Each day, we welcome transformational executives to share their real world experiences and practical advice about scaling yourself, your team, and your business.

Matt Blumberg: Welcome to The Daily Bolster. I'm Matt Blumberg, co- founder and CEO of Bolster, and I'm here today with Joel Stevenson. Joel is the former CEO of Yesware, which was acquired nine months ago, six months ago?

Joel Stevenson: Yep.

Matt Blumberg: By Vendasta. And Joel and I have been in one of the same VC portfolios for many years, and Joel was kind enough to share with our CEO list, a retrospective that he wrote for himself about the experience of running Yesware all those years and things he learned on the other side of the transaction. And I asked Joel to come on today to share three of his top learnings from his retrospective. Joel, what are your top three?

Joel Stevenson: Okay, we'll just jump right into it. The first one is one, I think that's interesting for a lot of product led companies because what tends to happen with product led is you end up with lots of different customer types. And for us, we ended up with a lot of very small customers, and then over time, a lot of very big customers. These customers had radically different needs. And when we got to a place where we had to make some difficult choices about where to focus, it was sort of like, you could focus on the big ones or you could focus on the small ones. We decided to focus on the smaller ones because we thought we were more competitive there for a whole variety of reasons. But the thing that was difficult about that, I think we sort of violated an unwritten rule of SaaS, which is, your customers should just get bigger over time, harder. It's much harder for them to get smaller because you end up with all of this, I suppose, overhead that's hard to unwind. You might've done a SOC 2, so you can't get rid of inaudible because you still have these big customers. You have CSMs. You might've built out this elaborate sales process in your Salesforce instance that is now is thousands of lines of Apex code that's now hard to unwind. You may have things where you're in your software, you've got custom code or availabilities or all these. There's complications, and you think like, well, we're going to focus on these smaller... But it's very, very difficult to do that, so you just carry that overhead with you. And you could argue if you're just focusing on bigger customers, you might have some overhead on the smaller ones too. But it just seems to me that generally speaking, you can overcome that with the bigger customers due to the churn profile. And due to the fact that you can basically grow your ACV faster than your sales cost grows, and you get a lot of leverage from that if you do it right, and it's hard to get it to go the other direction.

Matt Blumberg: So easier to go up market than downmarket.

Joel Stevenson: Yeah, and it's almost like a one- way door. Once you decide that you're going to take on those big customers, it's very difficult to unwind that.

Matt Blumberg: Yeah. Okay. That's a good first one. What's next?

Joel Stevenson: One is about... I suppose it has to do with partner ecosystems and how you play in those partner ecosystems. In the early days of Yesware, we benefited greatly from being part of a big CRMs ecosystem, and I sometimes jokingly refer to our software as making that other CRM software suck less. And a lot of people bought it for that purpose and got a lot of value out of that. But eventually, what happened to us in a lot of cases was, because that was the core system of record and we were making that system of record better, and that ecosystem eventually decided, well, we're just going to buy somebody in this space and that's going to become the incumbent property. Then than that makes your life much more difficult. The sales benefits that you had, your price competitiveness due to bundling, all of that starts to get very, very difficult. And then the switching costs are low, so not only are you battling now the incumbent that's taken your position, but you may have other competitors in there that may have come up with something better. And it's like, well, part of the values, you've synced all the data into the system, and that actually makes it easier to move to somebody else, and I found that to be a difficult position over time.

Matt Blumberg: Absolutely. Great way to start. Probably not a great way to scale and finish.

Joel Stevenson: Yep.

Matt Blumberg: All right, and number three.

Joel Stevenson: Yeah, number three is... I don't know if I have a specific lesson about this other than I think it's something to think about, which is, as you go through the course of your startup, sometimes you're the hottest thing in the world, sometimes you're not the hottest thing in the world. It's even return path, I know you guys faced a lot of ups and downs and in your journey. And I think there comes a question, which is, do you just go and always try to be recruiting the best possible people you can get? And then when those people show up, if maybe things aren't exactly as they thought, you end up churning those people out. Or are those the people that end up actually figuring out the thing that takes your business to the next level? Or if you have good raw material inside your company, do you invest in that raw material and try to turn them into the executives that somebody else is going to want to go and poach at some later point? And I don't have a strong answer there other than we sort of did both, and I think the results are inconclusive. I really liked our team that we built up, but I wonder sometimes if, well, if I would've gotten that perfect candidate in, could we have done some different stuff?

Matt Blumberg: Yeah. I don't think there's a single formula for success. It kind of depends on the role on what you need at that moment, what you have at that moment. I think we had the most success hiring one level down from the top and growing people up. But look, there are times in a hypergrowth environment, for example, where you just can't afford to do that.

Joel Stevenson: Yeah.

Matt Blumberg: All right. Joel Stevenson, three great lessons learned from a great run running Yesware. Thanks for being here.

Joel Stevenson: Thanks for having me.