I'm Timo Rein, co-founder and ex-CEO of Pipedrive. AMA!

Hi Timo,

Thanks so much for doing this AMA with us. Congratulations on your stupendous success!

I am intrigued by how you made your support team your key conversion engine and have the following questions.

  1. Do your new hires spend time in support as part of their training process?
  2. How big is your support team as a percentage of your business?
  3. How has this focus helped you direct your product roadmap and staying ahead of the competition?

Thanks
Ravi

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Hi Timo,

Thanks so much for doing this AMA with us. Pipedrive is a gold standard for every SaaS founder.

I am interested to understand the journey from moving from SMB → Mid Market → Enterprise ? PipeDrive is predominantly SMB.

  1. At tentatively what growth stage e.g. ARR, Year in Business you think we should make any upmarket moves ?
  2. How should the marketing & sales function change as you made this transition ?
  3. How do we balance the product roadmap for these segments e.g. self serve for SMB from Day1 & customisation / CSM for Enterprise with onboarding & set-ups.

Moreover what will your 3 key advise for a $1M ARR - SMB + Mid Market founder to keep a sharp eye when they do make this transition ?

Thanks
Abhi

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Hey Timo,

Appreciate you taking out the time. What have been your personal challenges/beliefs that were the hardest to change but were most rewarding in your journey as a founder so far? Specifically interested in learning more about your transitions in the 0 to 1 phase to PMF to scaling and hypergrowth.

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Hi Timo,

Thanks so much for doing this. We are long time Pipedrive users, partners and fans at Klenty. Love the simplicity and power of the product.

Would love your thoughts on a couple of questions:

  1. Tell us about how you were able to enter the CRM space with large incumbents, heavy competitive and arguably feature commoditised market like CRM. What sort of product differentiation narrative and GTM were you able to adopt
  2. In the SMB segment which Pipedrive operates, churn is often a huge problem. How has Pipedrive been able to scale (very fast) and build a unicorn in spite of this
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Krish, thank you for your kind words! I think it’s not only a good question but also a good and necessary reflection point for any founder. Who are you confident in targeting? Which approach will give you the best opportunities for growth?

I came into co-founding Pipedrive with more than a decade of personal enterprise sales experience, and so we could have also easily built a sales system and team with enterprise targets. Easier said than done, of course :slightly_smiling_face:. Importantly, over these years, I also had learned the pains and needs of people in sales - salespeople lacked a user-friendly and actually useful tool while executives lacked a tool that would help them forecast results and control people’s efforts.

So, based on these insights and other co-founders experience from attempting to build SaaS products, our decision was to

  • target salespeople (not executives) because that’s where we saw the gap in the market, and we didn’t think there was a quick and quality way to address the needs of executives without solving the needs of salespeople first.
  • approach the global market from day one (because the customers would be predictably small, volatile, and only a large number of them would result in healthy revenues for us),
  • and do so in the lowest-touch fashion possible (because that felt like the right cost-effective way to reach, generate and serve a global base of small customers).

The decision, while it surely was to take us into many unknowns, felt natural and hence, not too difficult to make. It caused weird feelings sometimes (i.e. "can we properly grow without a sales team?, “can we sustain growth without 100% of control of the sales process?”) but those passed as we drafted and executed systems to attract and acquire customers in our own way.

In hindsight, I would not do it differently, given our co-founder team makeup - I think we were primed to build this product and execute this model. Could we have grown quicker with a different target/model? Possibly, especially early on (based on requests from larger companies were kept turning down), and maybe equally later on (based on a stronger brand awareness and reach). So yes, there could have been a way to reach higher ARPA and expansion and lower churn, but we liked our chances with higher mass market potential, lower acquisition costs, and better WOM more. Again, I think our path was better for our co-founder group, which is why I believe a good reflection of experiences, instincts, motivations, and desires is necessary to find and settle on the right model. Funnily, we sometimes, not knowing the makeup of our competitors, didn’t fully understand why they would go upmarket so early on their journey. Then again, that might have suited their makeup much better.

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Hey Rajamaran,

Glad to be here!

Well, you made me go back and listen to this interview because I had no recollection of what I was specifically talking about :slightly_smiling_face:.

What I tried to get across back then was that there’s always a reason why salespeople do things in a certain way (maybe personal preference, maybe cultural pattern, maybe corporate policy), and that there are also recurring problems that salespeople get into when they do their work. Recognition and understanding of these problems provides a much clearer picture of what environment your product will “land in” and what negative feelings it might alleviate or help avoid. So, for example, when referring to ‘taking notes during a phone call’ feature we would look at recurring problems like

  • difficulty to quickly and painfully record notes during a phone call
  • pain of manually attaching (copying and pasting) written notes to right contact in CRM
  • inability to quickly and specifically mark future activity based on exchanged thoughts in a phone call (i.e. time to call back, progress made in the last call, etc).

Identifying those problems was usually a result of hypothesis and educated assumptions by people with personal sales experience in our company, accompanied with analysis of customer cases by product/customers researchers. In short, we tried to have a task ahead of us (i.e. functionality to build) in front of product and marketing organization in the form of specific and easy to understand problem descriptions. Those then helped us also measure if we delivered - did we solve or alleviate the problem for our customers. In our reality, it was initiated top-down and then honed, challenged and tested by the whole product organization.

When it comes to time perspective, we kept certain more general problems in front of decision makers in the product org for years while more specific problems were to be addressed over the few quarters of development. As always, things are more messy in real life than in my description of it, so a grain of salt is needed to imagine what actually went on :slightly_smiling_face:.

That’s my best attempt to unpack what I thought you asked for.

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Hey Neil,

Thank you, it’s a pleasure! Indeed, a very relevant question to many more than before due to what the world has been up to.

A couple of points:

  1. Try to get a sense of the society of the country you’re trying to start hiring in. Visiting as a tourist usually does not help as much as talking to perceptive locals who’ve been around the world, and can explain how their society and national work culture is different from others. Having a local working/living experience (more than a year) yourself would help a lot but that’s usually not the case.
  2. Hire a strong senior recruiter with a soul of your company culture, first. This person, if hired well, will start to weave a web of your culture, and will have a stronger impact than any other method or process you have in place. This is not to say that you should not use your methods or tested processes, to the contrary.
  3. Avoid changing your process and system of hiring too much, based on what locals say. There surely are tweaks here and there that you want to incorporate but overall, keep what’s given you the best fit candidates elsewhere in place.

The remote or “work-from-home” method is a more challenging platform the cultural perspective. For me, it means that everything you wondered about (relationship building, culture) just takes more time, and requires more deliberate efforts. Ad-hoc kitchen/hall convos are out of the picture, so is “feeling the room”, etc. Human beings have more senses than vision and hearing that are needed for video calls for a reason - real life bonds and trust is built by relying on all of our senses giving us congruent (or, indeed, mixed) signals.

I’ll leave the more specific thoughts on it to people with more expertise. I can point you to Sergei Anikin’s post (Pipedrive’s long time CTO) in Forbes: Three Key Ways To Future-Proof Your Business In A Post-Covid-19 World.

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Hey Akhilesh,

Great question. There are so many different difficulties involved in raising venture capital. A few I’ve encountered:

  • just convincing someone enough to give you the money :slightly_smiling_face:,
  • being mentally ok with having a shareholder with expectations to report to until their exit (read: for years),
  • recognizing the dilution to all shareholders over time and further rounds, and understanding what it means in terms of required performance to offset it,
  • building an organization that can spend (venture) money in a planned and cost-effective way, so that you can avoid becoming dependent on it, and being forced to raise it on someone else’s terms.

We raised a FFF (fools, friends, family) round first, along with a government grant (2010). Then came an angel round along with an incubator and some institutional money (2011). Third, the first seed round with angels and micro VCs (2012). Then fourth, another seed round with more angels, and proper but still smaller VC (2013). After that came our Series A with a solid VC lead (2015). Once you’ve raised some money, it’s very likely that you’ll raise some more unless you go completely bust or broke.

Two hiccups along the way - not being able to raise any money at the end of 2011 when we ran out, and almost running out at the end of 2014 because of my strict standard for an expected Series A partner. We found our ways to deal with these, first with bootstrapping period of about 6 months and getting cashflow positive, and the second with a bridge round to help us stay afloat before the Series A. So, expect the shit to hit the fan at times.

Now, to answer your question. If I look at the first round as

  • FFF: I would not do anything differently, I think. We badly needed money to get going, and we got it. Luckily, neither of the sources were expecting a return (grant), or a short term return (our founding investor, long-time business partner from the previous business).
  • First angel round: I think a decision to couple it with an incubator in the US was really beneficial for us. Would not do it differently.
  • First seed round: Maybe, for the future perspective, having less investors in the round? Then again, that was the best we could put together at the time - and we didn’t yet want to be exposed to bigger institutional money with higher expectations.
  • Second seed round: Having one lead investor would have been better for the future, we ended up with two, and that caused some stir.

Here are my overall thoughts:

  1. Raising money takes time, customers and conviction of the future. Time needs to be allocated and dedicated, no way around it, customers acquired and conviction built up and a presentation of it all put together, polished and practiced.
  2. Raising money is more about finding than convincing someone. Sometimes, you can talk to an angel or micro VC and there’s nothing you can really do to make them invest (they’re at the end of the fund and consider it too risky, not doing any investments that year, etc). Other times, you have more impact because the other side is also more hungry, willing, and so on. In addition, some people won’t like you or won’t understand your business - money never moves in these cases. Prepare to approach tens and hundreds of angels/VCs and please don’t take it personally that 99% of them will not invest in you.
  3. Money will run out when you’re building something from scratch. It’s not a matter of “if” but “when”. I would make a goal number one to be well ahead of that point in my planning, and raise money when you don’t really need it, yet. I only managed to get to that state of mind after our Series A. Before, we knew it would run out, but I started planning for a round too late. Sometimes it turned out ok, other times it was really risky as mentioned above. Point is, not needing the money yet gives you the best position around the negotiation table, and that’s what I would always prefer over the opposite situation.

We raised other rounds later on but hopefully the first 5 years here gives a good example of difficulties and my thought processes. Does that help? Damn, that was a long answer :slightly_smiling_face:.

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Hey Aditi,

Thank you, it’s a pleasure!

Here’s my recollection of practices we had at place that played an important part:

  • Internal comms tool that was used by all to connect to people in other teams and locations.
  • Monthly town halls which were broadcasted from one physical location and received in all other locations virtually.
  • Goal management tool to check on work progress made. Same with a data analysis tool (and a proper data warehouse) to check on metrics.
  • Quarterly extended leadership sessions (in-person), 1-2 days - to be honest, this became very tough to replicate in remote conditions as we had 20+ people in this group.
  • Executive team meetings (twice a week), already virtual as our execs sat in different locations.
  • 1-1s with team members (once a week in my case with most of my team, i.e. leadership team).

I think our global web of locations helped us as we had had to build all of our key practices to be location agnostic, really. There were a few technical setup changes in some organizations (customer support, for example) but we were able to manage these over a short period of time. Oh yes, an operation of heavy documenting of ongoing and completed work that our teams always did was massively important, too.

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Hey Ai Ching (I hope I’m addressing you in the proper way re your first name)! Thank you for kind words!

Maybe some of the earlier answers also help but here’s how I saw it with other co-founders. We did believe that

  • if we increase the level of simplicity for salespeople, more people will understand it, find it less burdening, use it and less will churn.
  • if we increase the level of usefulness for salespeople then more people keep it in their pocket and feel that it’s an important helper, or even instrumental to their success in sales.
  • if we increase the level of customization that can be applied without IT experience, then more people will be able to feel that “this product reflects how we really work and do our business” rather than “we really try to use it for our work but we have to adjust our real life to fit the tool”.

That’s how we approached it. There were tactics we used a lot, like “let’s mimic our analog world approach to work and tasks on this digital screen”, or “if a quick glance at the screen does not already tell you something about what you should be doing then we’re not connecting with a deeper brain of a user”, but explaining those would require more time :slightly_smiling_face:.

Obviously we benefited from a decade of sales experience ourselves. It gave us a deep sense of what pains we’re solving and it was more difficult for anyone (customers, investors) to distract us from the main pattern we had recognized. So that definitely played a role.

I think it’s important to ask yourself whether you see your space crowded by things that you specifically do. In other words, the space might feel crowded for some, especially on a high level, but near empty for someone else. Depends on what you believe you’re solving.

In our case, CRM market was crowded for years before we came around, and it’s even more crowded now. People in San Francisco in 2011 asked us point blank, “Why would you enter the market that’s so crowded and dominated by Salesforce?”. For us, though, there were huge gaps in geographies, salespeople really didn’t think they had a tool built for them, acquisition models were too expensive for all parties, configurations were time-consuming, costly or even impossible, etc. I sometimes look at FlightAware and it seems that the sky is completely covered by planes but then realize that it’s only at the very high level that it looks that way :slightly_smiling_face:.

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Hey Alo, thank you! It’s a question that could take quite long to answer in detail. Let me try a condensed version.

  1. From what I’ve seen, sales is tough. Probably not too many of us who would sell day after day without receiving any pay. So, the rewards should be there, and usually it’s achieved by aggressive bonus system. Agressive in a sense that if you bring money in, you will be paid, if you don’t, you won’t. 100% commission is tough for many, of course, but so is sales. So, there needs to be a respective driver and reward.
  2. Strong bonus helps hire people that are willing to enter this sort of arrangement, and keeps away the people that look at sales as way to “meet people and make acquintances”. It’s a goal-oriented and a process-oriented job which needs to be executed first, and mastered, second. So, I would hire the ones that would be willing to dive in and develop in that order.
  3. Sales, luckily, looks like a fairly even playing field (at least at the beginning of a month or quarter with everyone at zero :slightly_smiling_face:). This is where competing comes in. Yes, people need to get paid and that alone motivates them in sales. But, so does kicking someone’s butt. I would put together a number of activity and result goals to ensure there can be many winner categories and make sure that the recognition of on-going effort does not go unseen. I’ve seen what a physical gong does in a room of salespeople when one of them goes for a hit after a successful close. I’ve also seen how important it could be to be closing in midway through the week to someone ahead in interim results. People are at different levels of skill and are triggered by different competitions, so multiple metrics to compete on is a great way to engage everyone somehow.

There’s more about each of these things, of course (in terms of detail of how one could build it up), but hopefully it helps along.

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An update: Wow, this earnest and thoughtful looking-back at the past decade of a most (universally) admired SaaS company, has been truly fascinating to watch unfold. :slightly_smiling_face: @timorein is away for some time and will be back to address the rest of the founder questions, later in the day.

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Hey Ravi, thank you!

Yes, at least 2 days for any role.

15% of the total staff.

It has definitely had its impact over the years.

  • First, doing support creates more awareness about the impact of not building the right features and helps tighten the bridge between product and operational teams - quicker feedback on customer wants and needs and better preparation ahead of any launch.
  • Second, it helps marketeers better understand our customer personas and communication style.
  • Third, roadmap will be impacted especially when there’s something off with a specific feature that requires improvement.
  • Fourth, product organization now has access to support conversation categories and knows in a quantitive way what product related questions and topics are coming in. That is always being accounted for during any product roadmap discussions.
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Thank you, Abhi - you’re too kind!

I actually don’t think it’s that much connected to these metrics. I would say it would be more important to somehow test if your organization is ready for such moves. Run a pilot with just a few more upmarket customers which gives you a good understanding of what you’re capable of and where you’re lacking. Maybe you discover you’re ready and should commit, maybe you find out that there are areas that need to be tightened up or completely studied before doing the move, and maybe you realize you don’t want to sell to upmarket :slightly_smiling_face:.

It’s obvious that new roles are needed along with new approaches and skill sets. So, hiring is one change, it’s important to have at least someone more senior with relevant experience for starters. This brings a different sales process, different targeting and lead gen practices, less of a blanket approach and more of a sniper’s one.

:slightly_smiling_face:, I don’t know. I would ask Pipedrive’s current product and sales leaders how they’re currently doing it but I’m unable to do so at this hour, I’m sorry. Maybe I can get back tomorrow with some information.

I’d love to give that advice but I don’t think I’m the best person - even though we started to transition during my tenure in Pipedrive, I would not be able to explain how it’s been going during the past year, for example, as I’ve been away from day-to-day business and updates. It sounds like I should get back after asking for comments from one of the leaders in the organization. It would provide a more accurate and honest response.

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Hey Divyansh,

It really made me think. Here’s what came up:

  1. From “I’m just a guy who can sell” to “I can build and run a global software business”. Took years to change.
  2. From “This is ⅓ of the product and should not enter the market being so incomplete” to “This is ⅓ of the product but ok to enter the market if customers find it useful as is, we’ll just continue developing while being used.” I needed other co-founders to convince me that it’s a good way forward, and it sure looks like it was :slightly_smiling_face:.

There were others I’m sure but I guess less harder to change then, I’m happy to change my mind and habits :slightly_smiling_face:.

Don’t know if it helps but that’s the hardest one to reflect on for me at this point.

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Thank you, Vengat, that’s great to hear!

I think there’s an answer to the first one in one or two other responses I’ve given today, hopefully you can browse through them and find out that it’s the case.

I believe we’ve been extremely lucky while we’ve also worked very hard. The luck part is rooted in the fact that so many customers of ours have consistently found us on their own and then advocated us to their friends. We provided support, and worked the hell out of ourselves but they did the actual selling. When you think about it in business terms that dynamic alone lowers acquisition costs dramatically and fuels growth while offsetting the high churn on the other end. A prime example of this is that we had no one in Brazil working for us for nearly ten years while we had thousands of Brazilians working for us for nearly ten years. In other words, no employees + thousands of customers = 10% of our business worldwide and 2nd largest market.

The hard work part meant that we took a lot of time to learn sales through practice in different settings, be it enterprise or door-to-door. We spent years prior to Pipedrive on this. It shaped me to be able to know which concepts work for salespeople when it comes to such tools and which won’t. The co-founding group was very good at recognizing that many things go into a successfully scaling business:

  • raising money early on and learning from investors who had seen success,
  • hiring the best people we can get and giving them a chance to build up important parts of the business,
  • setting up systems for smooth global operations even without local presence,
  • staying true to simple/useful in order to win the minds and hearts of massive numbers of salespeople worldwide (often at the expense of losing larger businesses to competitors),
  • quantifying our efforts and results in daily and hourly data that we can use for insights, problem recognition and decision making,
  • being business oriented when it comes to goals, customer-oriented when it comes to promises and deliveries, and employee-oriented when it comes to company.

I’m not saying we were incredible in all these things but I liked that, as a group, we found these things important enough to pay attention to and do something about them. By the way, this here is all my account - I’m sure my co-founders have different takes on what worked and why but that’s part of having a little larger group.

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Thank you all for your questions, and best of luck in your businesses and lives! Stay curious, naive and persistent while looking for your light :slightly_smiling_face:.

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Some insider intel as we conclude this amazing session. :)) Over a month ago, in a wonderful stroke of luck, our outreach note slid past @timorein’s email channeling system. Responding with a kind note, almost immediately, and christening that cold email of ours ‘a sign,’ he generously agreed to do this AMA.

And what an invigorating one this has been! Timo has spent way more than the scheduled 90 minutes (which, we always admit, in itself, is a tall ask on a founder’s time) to address every single question here with admirable depth; responding to some, post midnight.

Each response glimmers with clarity that a decade of building and introspection brings, each of these speak for how many of those founding decisions may elude expectations yet how one must persist, learn to see things as they are, and open up to what’s possible. And all typed in with incredible humility, coming as they are, from what has been a decade-defining SaaS run. Inspiring! :cherry_blossom:

Thank you, @timorein, for your time, attention, and perspectives! :pray:

And, thanks, as always, to our ever-thoughtful Relay founders, @ncameron, @Akhilesh, @aditi1002, @cathching, @aloarro, @raviramani, @aballabh, @navydish, @Vengat for joining us! :raised_hands:

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Thanks so much, Timo! This has been wonderful.

I loved this bit among others :point_down::

Again, I think our path was better for our co-founder group, which is why I believe a good reflection of experiences, instincts, motivations, and desires is necessary to find and settle on the right model. Funnily, we sometimes, not knowing the makeup of our competitors, didn’t fully understand why they would go upmarket so early on their journey. Then again, that might have suited their makeup much better.

That’s such a profound insight. The idea of founding-team-model fit is rarely evident from the outside and sometimes even remains unaccounted internally. Which results in misreading competition, but worse, our own selves. You’re right. It’s so critical to reflect on one’s own motivations ever so often.

Thanks, again, for doing this with such detail and care! :sunflower:

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Wow, Timo, you actually went back and listened to that podcast!

Your account of this process is so perceptive. I’ll make sure to share this way of thinking on assessing the ‘environment’ of customer problems with product people on our team. Can see how that team-wide attention on specific user pains, not as mere feature requests or even potential solutions, would reinforce, widen, and inspire great customer-centricity.

Thanks so much for all your thoughtful responses, here! :raised_hands:

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