TCV Makes $200 Million Investment in Unified Retail Planning Pioneer RELEX Solutions

HELSINKI & MENLO PARK, Calif.–RELEX Solutions, a leading provider of unified retail planning solutions, today announced that TCV has made a $200 million minority investment in the company. TCV is one of the largest providers of capital to growth-stage private and public companies in the technology industry and has backed industry-leading companies, including Airbnb, Facebook, Netflix, Splunk, Spotify, WorldRemit and Zillow.

RELEX provides an end-to-end retail planning solution enabling companies to improve their competitiveness through accurate forecasting and replenishment, localized assortments, profitable use of space and optimized workforce planning. RELEX has consistently achieved 50 percent year on year growth and attracted leading brands across the globe including Coop Denmark, Franprix, MediaMarkt, Morrisons, PartyCity, Rossmann and WHSmith.

RELEX will use the funding to continue to fuel its successful growth. The company’s three founders, Mikko Kärkkäinen, Johanna Småros and Michael Falck, see the additional funding as a means of fulfilling their vision of changing the world of retail planning. The founders will stay in their senior management roles, remain significant shareholders and will continue to set the strategy and direction for the Company. RELEX’s existing investor Summit Partners will retain an equity stake in the business and will continue to hold a seat on the RELEX board of directors.

“The development of retail and supply chain planning has been held back by siloed organizations and limitations in how technologies integrate,” comments RELEX’s CEO Mikko Kärkkäinen. “Our vision is to change how the field works by driving a more responsive unified planning process. We are already off to a good start — now we will increase our speed by accelerating our product development ambitions, hiring more tech talent and investing further into the development of our organization as well as further expanding our retail-specific machine learning and AI capabilities that complement our core data processing platform.”

TCV’s General Partner John Doran says: “We seek to partner with businesses and management teams that are poised to grow to dominate global markets in their sectors. We are impressed by RELEX’s modern, highly flexible and cloud-based software, as well as its exceptional data processing performance. RELEX has very high customer satisfaction with customers benefitting from inventory and waste reduction, improved stock availability, more efficient goods handling and less time spent on ordering. We are aligned with the founders’ vision for RELEX and look forward to supporting the management team.”

“With a robust product and a keen focus on delivering ROI to customers, RELEX has built a significant customer base across numerous retail segments and geographies. We are thrilled to continue our partnership with RELEX and delighted to welcome TCV,” adds Han Sikkens, a Managing Director with Summit Partners.

About RELEX

RELEX Solutions is dedicated to helping retail businesses improve their competitiveness through localized assortments, profitable use of retail space, accurate forecasting and replenishment, and optimized workforce planning. Our SaaS solutions deliver quick return on investment and can be used independently or jointly for unified retail planning, enabling cross-functional optimization of retail’s core processes: merchandising, supply chain and store operations. RELEX Solutions is trusted by leading brands including WHSmith, Morrisons, AO.com, Coop Denmark and Rossmann, and has offices across North America and Europe. For more information go to: www.relexsolutions.com

About TCV

Founded in 1995, TCV provides capital to growth-stage private and public companies in the technology industry. Since inception, TCV has invested over $10 billion in leading technology companies and has helped guide CEOs through more than 115 IPOs and strategic acquisitions. TCV’s investments include Airbnb, Altiris, AxiomSL, Believe, Dollar Shave Club, EmbanetCompass, EtQ, ExactTarget, Expedia, Facebook, Fandango, GoDaddy, HomeAway, LinkedIn, Netflix, OSIsoft, Rent the Runway, Sitecore, Splunk, Sportradar, Spotify, TourRadar, Varsity Tutors, WorldRemit and Zillow. TCV is headquartered in Menlo Park, California, with offices in New York and London. For more information about TCV, including a complete list of TCV investments, visit https://www.tcv.com/.

Contacts

Alexandra Sevelius
Head of Marketing and Communications, RELEX Solutions
Phone: +358 45 674 4949
Email: alexandra.sevelius@relexsolutions.com

Katja Gagen
Head of Marketing, TCV
Phone: +1415 690 6689
Email: kgagen@tcv.com


Making Mobile Magical = Selling Without Sales Reps

When the world flipped from desktop to mobile, consumer brands made an often painful, but highly profitable pivot. It stood to reason that high-velocity B2B software companies could likewise take advantage of the big shift to mobile. Platform trends make for disruptive go-to-market models, right?

Many tried, but few have succeeded. SafetyCulture is one of the few that thrived. At TCV’s annual growth offsite, David Yuan, GP at TCV, caught up with Luke Anear, CEO and founder of SafetyCulture, to talk through his path. Luke is not only building a disruptive mobile-SaaS company. He’s also one of the most interesting entrepreneurs. Over dinner, he shared his career as a private investigator, nearly losing his shirt as a spec boxing match promoter and working as a videographer for Tony Robbins.

For an inside story on how SafetyCulture reached high-level scale and a compelling market position on the back of a mobile-first product, settle back and click play.

 

Dave Yuan: I’m a general partner at TCV. I’ve been passionate about this conversion between consumer, internet and enterprise software go-to-market models. We’ve been exploring this intersection for the past decade. This past Summer I had Luke, the founder and CEO of SafteyCulture, join us at our offsite and talk through mobile first. SafetyCulture’s reached a high-level scale, great growth, and a really interesting market position on the back of a mobile-first product, monetization, and go-to-market strategy. Hey, Luke. Thanks for joining us today. Good to have you this Summer.

Luke Anear: Thanks, David. Yeah. Nice to be chatting to you.

David Yuan: Well, I know the topic for today is mobile, but before we jump into it, give us a snapshot in SafetyCulture.

Luke Anear: SafetyCulture created the checklist app that allowed teams to be able to do inspections and take photos and build workflow around maintaining standards in the workplace. And originally, it was based on purely safety and helping people go home at the end of the day, but today it’s across quality and really anywhere that teams are trying to maintain a high standard in the work they do. I think it collects about 400 million responses a year now through the app, and we’ve built a pretty interesting database now which allows us to benchmark and understand how well teams are managing risk and also how they can improve performance.

David Yuan: Awesome. Can you give us a sense of size? You know, customers or whatnot. Just so folks know the level of scale you’ve reached because it’s been impressive to watch you grow.

Luke Anear: Sure. We service about 70,000 organizations, and the team– we’ve got about 280 people on our team and we’re in most of the developed countries around the world. And people use us across all sorts of different industries from transport and logistics, to hotels, to Starbucks stores making sure they’re clean and look good every day. It’s a pretty broad spectrum of customers that we interact with.

David Yuan: That’s impressive. Okay. Well, the topic is mobile. On the consumer internet side, obviously, over the past 5, 10 years, we’ve gone through this often times painful pivot from desktop to mobile. But generally, that’s where the world is on the consumer side. Mobile is everything at this point, or at least for right now. Why hasn’t that happened in the enterprise software market?

Luke Anear: I think the people who buy software are typically still taking directives from management and it makes sense that they want to be able to get certainty from what they buy and so that’s based on traditional sales processes, people promising a lot with their software and then quite often they’re not quite coming to fruition over an extended period of time. We’re really empowering more operations and field-based people to do their jobs better and once they get traction with that, then it’s hard to stop. So I think we’re seeing more and more examples of that, but there’s still a long way to go. Enterprise is slow to adopt things. There’s a lot of stakeholders and so, I guess, companies like SafetyCulture being able to Trojan Horse our way in and then navigate through that process without having to be negotiating and trying to sell software to anyone. It’s a pretty fun time.

David Yuan: Absolutely. You’re obviously successful now but when you were getting going, when you were getting started, why do you think Mobile First would work as an approach for your product?

Luke Anear: I think you go back to around 2011-2012 when we started looking at this. It was really the point where everyday workers now had this computer in the pocket.  We heard the term before but when you think back, the iPhone came out in ’07, and it took three or four years really for people who weren’t sitting in front of computers to get that level of penetration. It was around 2011 that we went, “I think the timing is right for us to provide a tool that everyday people can pick up and build a workflow and start implementing”. The hypothesis was would these people be comfortable enough to even download software.  It turns out most of them, because they had never been involved in buying software and they didn’t know the rules about buying software and using software. And so they just would do it and other people would tell each other that that’s what they’re using and so word had spread. It’s worked well for us.

David Yuan: That’s great. I imagine when you were getting started that the first step was getting individual use, so getting that download. And we have seen quite a bit of that level of traction. But very few companies get the broad adoption that SafetyCulture has achieved within a company or organization. How did you do it? Was it intentional? Was it organic or a mix of both?

Luke Anear: Probably a little bit of luck in there as well. We focused pretty much on solving a specific problem for the workers out in the field trying to do their job, trying to manage risks so, it’s kind of like the field manager, is probably the person we targeted. And, essentially, they became our champions. They were our salesforce in a sense where they would all of a sudden feel that they’ve got this new superpower, and they can share that across and up and down through their business and that one thing would lead to another. Because they were able to articulate the benefits so well internally, they could steamroll over the top of IT policies or any of the normal barriers. We’re not going to stop using this. You guys are going to figure out how to make it work because we love it.

That was really the secret to our growth, that we were empowering those people. They had asked us for slide decks to present to their management. We still get asked that all the time from people like what materials can I use to present? It’s a marketer’s dream where you’ve got people who are your customers, who are working hard for us to roll it out because it makes their lives better. And that was really quite something I hadn’t seen before, when we saw that happening.

David Yuan: So I understand it, people are looking for help from SafetyCulture to present to the internal procurement folks or help to actually present the work that they’ve created in SafetyCulture to be consumed by upper levels?

Luke Anear: Interestingly, from a growth point of view, they’re pitching our software to their internal management. They’re literally doing pitches. They’ve got the decks up and they’re saying, “Here’s the company. Here’s how many users they have. These are the companies that use it. These are the use cases.” And then they bring their own use case in and “this is how we’re using it. We want everyone here to be using it.” It’s just a phenomenal thing to kind of watch. You kind of pinch yourself and think: How did ever even happen? Because we never had salespeople and, yet, these people were using our products and selling it for us.

David Yuan: Absolutely. I played around with your product a little bit. It strikes me, that there’s that elegance to it. The product really works well for an individual user, but it feels like the more people on SafetyCulture in my organization, the greater the power. And so how do you incent that team adoption?

Luke Anear: The path to getting them to adopt it across their team gets accelerated when we get more people doing it, particularly early on. That’s been an area that we were focused on in terms of onboarding and getting people up to speed as quickly they can, inviting other people on their team. That’s when things start to move. Frankly, if they’re a three- or a four-person team, they’re never going to experience incredible benefits from it compared to 1,000-person team. We want to help them get to 1,000.

David Yuan: That’s where you set the paywall.

Luke Anear: Yes, we move around the paywall and look at different things. You see churn come down once it gets stickier once more people are using it, and that’s when the value increases for them. So we focus on getting them to that point.

David Yuan: Are there other elements of the paywall? One, obviously, is users, which we describe, where the trade-off is monetization and adoption and churn, like you just walked through, but are there other elements of the paywall that you either experimented with or currently employ now?

Luke Anear: We’ve tried usage limits and things like that. We still have a usage limit for users in terms of how much they can collect and store, but I always try and push the free line out on that. And we’ve played around with a certain number of inspections and things like that and then you hit a paywall. But I try not to put shackles on the experience as much as possible. There are companies that try and extract money at every opportunity, and then there are companies that want to see you do well, firstly, and then we’ll give you opportunities to pay for more. And I think we take that seriously. It’s not something that we kind of sit back and say, “Let’s get at every dollar we possibly can.” We always leave quite a bit on the table from that point of view because we value that experience more than we value getting every dollar that we can.

David Yuan: Absolutely. Can we double-click a little bit on that because I think a lot of companies aspire to have that customer intimacy and insight but as you scale, it can be quite difficult to capture those voices in a way that cuts through at all. Are there specific things that you guys do to make sure you stay close to the customer voice on this like paywall on product and other aspects?

Luke Anear: Yeah. Like engagement metrics are probably the strongest signal on that. And you want to see at what points do people get their real sort of aha moments or wow moments. And building the experience towards those moments, that’s kind of key, and so understanding and breaking down what are the points where people achieve a certain level of interaction so that we can either accelerate the time to that moment or increase the peak of that moment. People remember the peaks of the experience and that’s what brings them back. And sometimes it’s simple things. It’s often not necessarily what we value. It could be a PDF report, for example, that’s got photos in it. That’s the most basic thing from a tech point of view. But from our customer’s point of view, they used to take photos on their phone and then type stuff up in Microsoft Word and then put it all in. And now magically, it kind of happens.

David Yuan: That’s great. If the broader topic is mobile, it leads us down a line of thinking, which is providing discreet value or utility value or great experience through individual user. As we talked about, as you deploy more broadly into organizations, you start bringing teams online. When you think about the features or the product experiences that really drive joy for an organization, are they different than the specific user experiences or are things like analytics or benchmarking?  Do they become more central? How do you think about the overall organizational experience to complement the user experience?

Luke Anear: I think collecting data for the sake of it is no one’s outcome. And so it’s about, what are the decisions we can make with this data? How do we get the insights? Or how does this make us more intelligent or smarter? That’s ultimately the goal. And the more that we can do that proactively and the less burden that we place on the organization to have to understand the data and make sense of it, the easier it is for them to be able to adopt it and share it. For us, collecting, having an incredible front-end user experience, is part of it. That makes it easy to collect information. But then how do you take a position on what information is important? And I think we’ve seen a lot of BI tools and stuff, where people can pivot and do all sorts of stuff with their data, but I don’t think that’s enough anymore. And for us, it’s about understanding our customers, so that we take a position on what data is going to be most valuable to them. And then we shape the experience around that and really serve up those decisions for them on a platter. They essentially want to know, our customers want to know, what’s working well across their teams today? What’s not working well?

And importantly, what do we do about that? Understanding just those three basic questions drives a lot of the decision-making for us around how do we present this information back? And how do we make it easy for them to get the insights that help them run their business? And make it easy for your customers to get value from that data and those insights. That takes a deep understanding of the customer to do that. And also, when you do it well, it increases the competitive barrier for other people to come in, because a lot of them just take the easy way out and go, “Let’s just allow everybody to pivot, however they want to pivot the data.” And that just creates work for our customers. They’re like, “Don’t create work for me. Make it easy for me.”

David Yuan: I love it. The same intensive focus on consumer experience at the individual user level extending into the team level and ultimately the enterprise level. That makes a lot of sense. And do you see that progression as SafetyCulture is adopted in your customer? Do you see that progression naturally mirroring monetization? Is there a certain point in which that you realize that experiences gone from the individual now to the team, now to the organization, where it does make more sense to consider different paywalls or different levels of monetization?

Luke Anear: Yes. And it also gives you opportunities to add value layers on top of that. We can mix that data with other data sets. We now do IoT and sensor-based hardware as well, which collects data that we layer in on top. When you sit back and take a position on what’s valuable, you’re then in a great place to decide what else is relevant, and what else can we provide that’s going to be helpful? A lot of thought goes into that, and our customers have got other data that’s valuable. And we’ve mixed data with customer satisfaction data, and we can see uplifts in CSAT when people are doing regular checks and inspections. It becomes multi-dimensional.

David Yuan: We’ve talked about being super intentional about the user experience from individual users to team to organizations. We’ve talked about monetization along those same dynamics. Let’s shift gears a little bit to go-to-market. So, initially, most bottoms-up premium models are all marketing and, primarily, organic marketing. When did you get the conviction to start really leaning into paid marketing, if you have, and when did you start thinking through hiring that next layer of expense, those inside sales reps? You’re moving from a very organic business to more a traditional software model over time, so when did you know that it was time to start putting some money to work?

Luke Anear: I think we’re still getting there actually. We haven’t spent a lot on acquisition and that. We do a little bit on content and things, but I think we’re still at the beginning of that journey. I probably can’t offer much in that sort of area, but in terms of inside sales, we have in the last 12 months, had people who are now focused on our existing customers and helping them get more value and expand and accelerate their path to value. We now will pick up the phone and chat with people. We never used to do that. I think for about the first 40,000 organizations, we never picked up the phone and spoke to them unless they specifically wanted to talk to us about something.

Because we’re a fairly low price point, it doesn’t make sense for us to try and have someone closing every sale. We’ve always got to sort of separate that out and make sure that our organic growth engine is strong. And that makes everything else easier. If you’ve got a product that sells itself and that can be adopted and self-served, then when you come to talk to a customer they’ve already got their own case study. We’re very conscious of that. We never want to be just saying, “Well, let’s just build out massive amount of salespeople,” and that becomes your growth engine. For us, it’s all about the organic adoption and then expanding that adoption and making sure that they’re getting maximum value from it. That’s a conscious choice and something we’re continuing to find a balance on.

David Yuan: You’re the envy of probably 90% of the software world, to be a product-led go-to-market, that’s fantastic. In terms of your customer success and customer support, it sounds like you think about those heads or that expense on a return-on-investment basis. But my guess is you aren’t actually compensating them on sales. Are you assigning quota to your customer success reps or is it purely organic?

Luke Anear: Not for the most part. There are a couple now of account execs, two or three or something. But all the rest are just focused on helping the customer and doing what they do. So yeah, there’s probably a place for it, I think, as we continue to grow. And talking particulars, we never actually sold a big, upfront deal, in terms of 1,000 seats or something, until just probably seven months ago was the first time we’d even done 500-seat deal. It was always only just one user and then they expanded up to thousands. And now that we’ve got companies that come to us and say, “Look, we want to start with 2,000 users.” That’s where the account execs can have that conversation and it makes sense to have a quota for them. But that’s a new area for us.

David Yuan: The beauty of your business, and as we talk through it becomes more and more explicit, is that SafetyCulture is following a different playbook. It’s a different software business model. As you think about the mobile opportunity and the bottoms-up opportunity, do those apply to traditional application software companies? Are there things that a traditional app company can learn from SafetyCulture, or is it really a grounds-up business model and grounds-up product model?

Luke Anear: That’s a good question. What we’re seeing from a lot of the established desktop or legacy players is that they’re trying to extend their software to mobile. And I think at best all they’re going to do is sort of keep their current customer because their current customer wants them on mobile. You’ve got a lot of luxuries on desktop. There’s more real estate. You have typically people who sit in front of a computer for at least a good part of their day. Those luxuries don’t exist with mobile. People are on the move. They’re out and about.

Where we see companies struggle is when they’re simply extending the functionality, or even a reduced functionality, of their desktop experience. You need to be able to step back and think about that user as a different customer. You’ve got to break down what they do in their day, what their outcomes are, and how can we do that. And that may be an extension of some of our software. Or it could be a completely different experience.

We want to get them out of our app as fast as we can with the outcome they want. Whereas a lot of the time, people think about trying to keep people in their software for longer. We’re trying to help them get on with the things they need to do, and that means get them in and get them out so that they can get on with their day.

David Yuan: Absolutely. If it is a truly generational shift and it’s a new category of application companies, who else is doing this well? Who else besides SafetyCulture do you look to, do you admire, that inspires you from a mobile product standpoint?

Luke Anear: I think for enterprise software to do well, you’ve got to solve a particular problem. There’s an Aussie company, Canva for Work, which is a design experience for teams. They’re doing great. There are obvious ones like Intercom, where I can now see what customers are saying and how we’re interacting with them. I can deal with stuff. And then you’ve got other guys, Trello, which is part of Atlassian now. I think there’s a mix. But I think the key thing is not necessarily to follow some of these others. Canva for Work is very different to us, as is Slack and Intercom, and so while there might be similarities in some of the functionality, the outcome that they deliver, those peaks and those moments for customers are completely different. There’s a few around that we looked at. But I think that the biggest clues will come from your customer base and understanding that more than admiring what other mobile-first companies have achieved or mobile experiences are on offer.

David Yuan: Good point. You’re a global business. SafetyCulture is a global business, but you were founded in Australia and as we look at product-led software companies, a preponderance of them are actually coming out of Australia and New Zealand. What’s going on? Is there something in the water? Is there something foundational going on in your neck of the woods that make for these beautiful UI product-led business models?

Luke Anear: I think the simple answer is probably we never had the money that you guys had in the U.S. and so we just had to figure it out. And we didn’t have that kind of luxury of time and great investors that would just be backing us from the beginning. We had to really get traction and prove out a business model before people would even take any notice of us. I think that’s played a part for a while. And then there’s a couple of other factors as well. We never had the experience or the talent, really, in Australia. No one really had the belief on how you could scale a company from your garage. You’d hear about it, but it was always in the U.S. Now there are more examples, people are starting to realize what’s possible. And we’re also seeing a lot more talent coming back to Australia that had left. There’s 24,000 Australians working in the Bay Area. You’re seeing more and more of those come home. And then we’re seeing other people from all around the world realizing that there’s now a pretty healthy tech community, and it’s like doubling every couple of years. Sydney’s got at least twice as much talent as it had two years ago and we’re seeing that continue. It’s a number of factors all coagulating together to make it a better outcome for us all, but we’re still going to work hard. And as much as people think we’re out surfing at the beach all day, we’re doing some long days and hard work to get it done.

David Yuan: Absolutely. The good news is, the market certainly has noticed and I’ve been taking that 14-hour flight for the past five years looking for companies like yours, so the world has noticed. And congratulations to that whole ecosystem. This has been awesome, Luke. Really appreciate all the great thoughts.

Maybe stepping back from business a little bit, you lived a super interesting life in addition to being a successful entrepreneur. Taking a step back from SafetyCulture, what are you most interested in the business world or even outside of the business world?

Luke Anear: Well, a couple of things. I think travel is so accessible now to everyone fortunately, compared to previous generations, that your ability to go and experience different culture or different part of the world is greater than ever. I think that’s super exciting. I have a very curious mind, I love learning from different people, and cultures, and stuff. So anytime I can get exposed to the way other people doing things, that’s something I always look for. In terms of a broader business world, I think it’s great to see the amount of wealth that individuals are amassing, Bezos and different people, and even what we saw Warren Buffet doing with Bill Gates. I think to see them now harnessing that and channeling it towards solving really complex and big problems around the world that perhaps governments in the past would take responsibility for but just can’t anymore. I think to see that and these examples being set for everyone that’s following, is something that I look up to and think that’s making the world a better place. I think the more social conscious we become and the deep desire for people to want to improve the world around them, and make life better for other people, I think more of that that’s happening, the better. It’s just a great time to be alive.

David Yuan: Absolutely. 100%. Luke, thank you so much for your time and your thoughts. This is fantastic and congrats on all your successes at SafetyCulture.

Luke Anear: Thanks, David. Much appreciated.

 

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The statements, views, and opinions expressed are those of the speakers and do not necessarily reflect those of TCMI, Inc. or its affiliates (“TCV”). TCV has not verified the accuracy of any statements by the speakers and disclaims any responsibility therefor. This interview is not an offer to sell or the solicitation of an offer to purchase an interest in any private fund managed or sponsored by TCV or any of the securities of any company discussed. The TCV portfolio companies identified, if any, are not necessarily representative of all TCV investments and no assumption should be made that the investments identified were or will be profitable. For a complete list of TCV investments, please visit www.tcv.com/all-companies. For additional important disclaimers, please see “Informational Purposes Only” in the Terms of Use for TCV’s website, available at http://www.tcv.com/terms-of-use/.


The Guts and Glory of Category Creation

Customer Success is an established concept these days. Harvard Business Review has written about it. There are how-to guides online, and “Customer Success” even has its own Wikipedia page. Customer Success Manager positions, are among the fastest growing in the titles in the US. Customer Success is definitely a “thing” now.

The rise of Customer Success didn’t happen organically. Nick Mehta and the rest of the Gainsight team put the Customer Success category on the map through a deliberate and inspired effort.

In this Q&A, TCV GP David Yuan and Gainsight CEO Nick Mehta share lessons on the pros and cons, and the key success drivers of building an entirely new category of enterprise software.

 ***

David Yuan: Let’s start with the basics. What is Customer Success, and what made you think it was a big enough problem space in which you could create a large company?

Nick Mehta: Most companies today either already have or are transitioning to a subscription-based business model, so that means retaining and providing value to your existing customers is more important than ever. That’s where Customer Success comes in—when you’re proactively engaging with customers, you’re able to stay ahead of customer churn and even discover other opportunities to provide more value and upsell. And you know all of that ends up increasing renewal rates and ARR. It’s really cool to see more and more businesses recognizing its value.

David Yuan: And why did you think it deserved its own category? You could have fit in a number of existing categories. Why try to create your own?

Nick Mehta: Yeah, Customer Success has been confused with customer support, customer service, professional services, or account management, but really, it’s a mash-up of those functions. Early on we didn’t know what to call it. Honestly, if you said “Customer Success Manager” to somebody back then, nobody would have any idea what you were talking about. But we knew we were looking at a new discipline for the next generation of businesses—something that’s at the intersection of customer support, service, customer analytics, customer machine learning, etc. They do share some similarities, but the fundamental shift is going from reactive (waiting for the phone call) to proactive (owning the customer’s outcome).

We could have attached ourselves to a category like account management and become a boring old company that’s somehow related to customer support. Many people actually tried to push us into those types of categories. Fortunately, we stuck to our gut because we knew none of those were a fit.

David Yuan:  To be honest, category creation is a little bit a of a flashback to the 1990’s when Ariba and i2 spent gobs of money making procurement and supply chain sexy. Hmm, must have been an interesting discussion with investors…

Nick Mehta: Yeah, people didn’t like it. Not only because of the potential expense with creating awareness, but also because they thought Customer Success was too much of a niche. That putting ourselves in the category would box us in.

David Yuan: Were they wrong?

Nick Mehta: Yes and no. It was certainly an obscure area, but we truly believed it could get big. So we went down that path and became very passionate about building the Customer Success company—we decided to go all in.

David Yuan: So how did you define scope? Define it tightly and you have 100% market share and no TAM, define it broadly and you have big TAM and you compete against everyone. In picking scope you get to pick who you compete with today and potential in the future, as well as who may view you as a strategic acquisition. Was this all in the plans, how intentional was your scope?

Nick Mehta: Really good question and we still wrestle with it. I think we embraced the concept early on of focusing on a very specific market (subscription) and persona (Customer Success). Many people said “your TAM will be limited” because of this. But the reality is that that market and persona have grown radically. So I think the lesson is there is a tradeoff to focus but it’s less of a tradeoff if the “niche” has a big tailwind behind it.

David Yuan: And how did you actually put on a name on the category. Customer Success actually feels really nature–simple and non-technical, yet distinctive.

Nick Mehta: We actually had a lot of debate about naming it because there were existing categories that we could have slotted into. Friends of the company suggested we call it “customer artificial intelligence.” Others told us we should call it “customer insights” or “customer machine learning.” But none of those fit for our vision.

We noticed Salesforce had a team of “Customer Success Managers” that had like 80 people in it and were starting to hire more, and when we saw this new job and description it made sense to us. There was also a small community of folks who met in online forums and around local offices in the Bay Area who really resonated with this Customer Success message.

David Yuan: It’s one thing to put a category name out there—most companies attempt to do that, but most are unsuccessful. How did you turn a Gainsight term into the category label?

Nick Mehta: We said to ourselves that we were going to create and really own the industry. We facilitated the creation of a community. With their help, we created best practices. We described what a Customer Success Manager does, how you pay them, and who they report to. We even published a book about the entire discipline. And we’re still helping define roles and titles based on the trends we’re seeing.

At first we wanted to do what a lot of enterprise software companies do: host a conference with our customers. The problem was that we didn’t have any customers, so a conference would have been depressing!  So instead of doing a company event, we decided to do an industry event. We focused on Customer Success Management, not our company per se. We said, let’s connect with other players in this still-young industry. We called the event “Pulse.” It was the most important thing we ever did as a company. When we sent out invites, we thought we’d get maybe 50 people to attend. Instead, 300 showed up the first year. Just to show you how fast this industry has grown, this year, our sixth year, we had over 5,000 people show up.

We’re not that big of a company, but our conference brand—Pulse—has become very big. We even expanded globally. We have a conference in London and we’re planning to continue that, and we’re hosting our first Pulse in Australia later this year.

David Yuan: Why do you think Pulse was so successful?

Nick Mehta: In order to create a category, we needed to create a community, and Pulse helped do just that. Fundamentally, in a new profession, people want to meet others “like them.” So Pulse has become in some ways like eHarmony for Customer Success.

David Yuan: Is it as expensive as it sounds?

Nick Mehta: Yeah, don’t do this if you’re bootstrapping. I don’t think it’d be possible since it’s not cheap. We raised $156 million in venture capital from investors who believed we could create this new marketplace. We were fortunate to receive their support because it allowed us to really distance ourselves from the little competition we had.

David Yuan: You’ve cultivated this community, so now what?

Nick Mehta: We try to put ourselves in the shoes of the people in the Pulse community. The terms “thought leadership” and “content marketing” have often been cheapened into thinly-veiled advertisement and we tried to change that. We strived to focus on the issues on the minds of people in Customer Success – from compensation to org models to career paths. We built a job board and an online university to help serve the career needs of our community.  At the end of the day, it’s fundamentally about the people.

David Yuan: How do you hire in an industry that’s so new?

Nick Mehta: Trying and failing. That’s the challenge. There is no playbook or existing job description to follow. So in the early days, we really focused on our value of “Shoshin” (Beginner’s Mind) – people that were creative and willing to learn.

David Yuan: You’ve said that you don’t sweat the competition. Why not?

Nick Mehta: In a new market, it’s not about the competition. It’s about creating the market. Our competition is inertia and ignorance.

David Yuan: Why don’t you have more competition?

Nick Mehta: In some new markets, the “friction” to get started is very high. In our example, you need to build a complex product AND a new profession!

David Yuan: You’ve put a lot of attention on your company’s culture. What have you done and why is it important?

Nick Mehta: When you’re creating a category, your culture is doubly important – it’s the framework for your company AND for your community. One of our core values is Childlike Joy, which basically means we want people to embrace their inner kid and bring the kid in you to work. We really lean into our community with that. We’ve done all kinds of fun things. We wrote a children’s storybook for CS professionals to explain to their kids what they do at work. We also do a lot of things with music, like create a Customer Success version of a Taylor Swift song, a rap song, a musical, and even carpool karaoke with Aaron Levie from Box and Keith Krach from Docusign. We also had Vanilla Ice at one of our Pulse conferences. Actually, there was a time that if you googled Gainsight, it literally listed our company as a musical artist in the hip-hop/rap genre. #lifegoal

David Yuan: Ha! I’ll have to check it out. Vanilla Ice, that’s when you know you’ve made it. You’ve come a long way from ‘nerding’ out at Harvard, my man!

Nick Mehta: Yeah!

David Yuan: Awesome, thanks Nick. Really proud of what you’re doing at Gainsight and appreciate your sharing some of your learnings!

Nick Mehta: Awesome! Thank you for having me.

###

 

 

 

The views and opinions expressed in the transcript above are those of the speakers and do not necessarily reflect those of TCMI, Inc. or its affiliates (“TCV”). This transcript is not an offer to sell or the solicitation of an offer to purchase an interest in any private fund managed or sponsored by TCV or any of the securities of any company discussed. The companies discussed above are not necessarily TCV portfolio companies and are not necessarily representative of any TCV investments. For additional important disclaimers regarding this document, please see “Informational Purposes Only” in the Terms of Use for TCV’s website, available at http://www.tcv.com/terms-of-use/.

 

 


Congratulations to the entire Avalara team on their IPO!

Avalara Announces Pricing of Initial Public Offering

The shares are expected to begin trading on the New York Stock Exchange on June 15, 2018, under the symbol “AVLR,” and the offering is expected to close on June 19, 2018, subject to customary closing conditions. Avalara has granted the underwriters a 30-day option to purchase up to an additional 1,125,000 shares of common stock to cover over-allotments, if any.

Goldman Sachs & Co. LLC, J.P. Morgan, and BofA Merrill Lynch are acting as book-running managers for the offering. JMP Securities, KeyBanc Capital Markets, and Stifel are acting as co-managers.

The offering is being made only by means of a prospectus. Copies of the final prospectus related to the offering, when available, may be obtained from Goldman Sachs & Co. LLC, Prospectus Department, 200 West Street, New York, NY 10282, or by telephone at 866-471-2526, or by email at prospectus-ny@ny.email.gs.com, or from J.P. Morgan Securities LLC, c/o Broadridge Financial Solutions, 1155 Long Island Avenue, Edgewood, NY 11717, or by telephone at 866-803-9204, or email at prospectus-eq_fi@jpmchase.com. A registration statement relating to these securities has been filed with, and declared effective by, the Securities and Exchange Commission. This press release does not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of these securities in any state or jurisdiction in which such offer, solicitation, or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction.

View source version on businesswire.comhttps://www.businesswire.com/news/home/20180614006357/en/

Investor Contact
ICR, LLC
Kevin Faulkner, 206-641-2425
investor@avalara.com
or
Media Contact
Avalara
Jesse Hamlin, 518-281-0631
media@avalara.com

Source: Avalara, Inc.


Watermark and TCV Close on Strategic Investment to Accelerate 2018 Growth

NEW YORKApril 17, 2018 /PRNewswire/ — Watermark, the largest provider of assessment software for higher education institutions worldwide, has announced the close of its agreement with TCV to acquire a controlling interest in the company. TCV is one of the largest providers of capital to growth-stage private and public companies in the technology industry and has backed industry-leading technology companies, including Airbnb, Capella Education, EA, EmbanetCompass, ExactTarget, HomeAway, Netflix, Spotify, and Zillow. In addition, Quad Partners and Watermark’s management team have reinvested alongside TCV and are joined by new investor Exceed Capital Partners.

Watermark provides educational intelligence systems to over 1,100 higher education institutions worldwide, including a majority of the top 200 U.S. News & World Report colleges. Watermark continues to grow rapidly, with over 50 institutions joining the Watermark community or expanding their use of Watermark across the institution so far this year, including top universities such as Syracuse UniversityPrinceton UniversityMichigan State University, and Prince Sattam Bin Abdulaziz University in Saudi Arabia. With over 300 employees supporting these partner institutions, Watermark will use TCV’s investment to continue its growth trajectory as well as accelerate development of its innovative educational intelligence platform.

“We’re excited to have TCV as a financial partner. With a deep understanding of and experience in the education technology and software/SaaS markets, TCV will help us to welcome more clients to our community and to continue building solutions these institutions need to drive meaningful improvements in institutional effectiveness, program quality, and student learning,” said Watermark CEO Kevin Michielsen.

Assisting in the close, global independent investment banking firm Evercore advised Quad Partners, and investment banking firm Tyton Partners advised TCV on the transaction.

About Watermark
Watermark’s mission is to put better data into the hands of administrators, educators, and learners everywhere in order to empower them to connect information and gain insights into learning which will drive meaningful improvements. Through its innovative educational intelligence platform, Watermark supports institutions in developing an intentional approach to learning and development based on data they can trust. For more information, visit www.watermarkinsights.com.

About TCV
Founded in 1995, TCV provides capital to growth-stage private and public companies in the technology industry. Since inception, TCV has invested over $10 billion in leading technology companies and has helped guide CEOs through more than 110 IPOs and strategic acquisitions. TCV’s investments include Airbnb, Altiris, AxiomSL, Dollar Shave Club, EmbanetCompass, EtQ, ExactTarget, Expedia, Facebook, Fandango, GoDaddy, HomeAway, LinkedIn, Netflix, OSIsoft, Rent the Runway, Sitecore, Splunk, Spotify, Varsity Tutors, and Zillow. TCV is headquartered in Menlo Park, California, with offices in New York and London. For more information about TCV, including a complete list of TCV investments, visit https://www.tcv.com/.

Contacts:
Victoria Guzzo
Director of Corporate Communications
708.588.1735
vguzzo@watermarkinsights.com

TCV
Katja Gagen
Marketing
415.690.6689
kgagen@tcv.com