14 Minutes of SaaS

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14 Minutes of SaaS

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E113 – Bob Moore – 2 of 3 – Selling it Twice

Bob Moore:  What percentage of companies use the word “platform.” It’s massive. It’s like 80 percent of companies “we are a platform.”  We can’t all be platforms, right? A platform is like the baseline thing on which everything here should be built. And if you go …  it’s like platforms all the way down. It’s platforms on platforms on platforms. The real word of the day should be “ecosystem.”

Stephen Cummins: Yes

Bob Moore: Because all of these companies that view themselves as platforms, they see it in that way because they see that “Oh, there are 50 companies connected to us; and therefore they are built on top of us, and therefore we are a platform” …  but they’re forgetting that they are also connected to all of those 50 companies. So … a mesh of these companies that are self-identifying as “platforms” for really participating in “ecosystems”

Stephen Cummins: Welcome to 14 minutes of SaaS! The show where you can listen to the stories and opinions of founders of the world’s most remarkable SaaS scale-ups!

In this episode 113 of 14 Minutes of SaaS, the 2nd with Bob Moore, we learn all about his evolution as an entrepreneur through 2 exits and on to his current startup Crossbeam. If we think of a company as a product, then we learn how Bob managed to essentially sell his first company twice, the 1st time to Magento, the 2nd time to Talend. And we see another example of this pattern of serial entrepreneurs repeating similar levels of success, but in a fraction of the time the second time round.

Stephen Cummins: And Stitch? Tell us about Stitch.

Bob Moore: Yeah, so you think of RJMetrics as this big monolithic, like, “we do it all for you” one stop shop. So we’re gonna pull your data out of Salesforce and out of Marketo and out of your back-end databases and whatever else. We’re gonna drop it into our data warehouse and then we’re gonna let you set up these business rules so that you get charts and dashboards and log-ins and sharing and everything like that. That’s really three products in one:

It’s what they call an ETL service; which is Extract, Transform, Load. So all the data pipelines, all the, like, “let’s pull this data out; talk to the API.”
And then you’ve got the data warehouse, which is in the middle, which is where the data all lives.
And then you get the business intelligence tool, which is the charts and the dashboards and collaboration.
RJ was all of that.
And what happened between 2008 and 2016 when we sold to Magento is that each of those individual pieces became so extremely critical to the way in which modern businesses and data science teams operate that they actually became a category in and of itself.

So, like, take data warehouses, for example, in the middle. The release of Amazon, Redshift, Google, Big Query, Snowflake, which has become a real rocketship business itself, Microsoft has gotten into this game. All of the big public clouds have these massively scalable, cloud based data warehouses. So the fact that we have a data warehouse in the middle was great unless you wanted to control your own data warehouse, which you very well might want to if the rest of your infrastructure is sitting inside of AWS or inside another public cloud.

So like on the heels of that, businesses like Looker and Periscope and there’s kind of a new renaissance for tools like Tableau … because they could sit right on top of those existing data warehouses. They don’t have to worry about ETL. They don’t worry about warehousing. They can just be charts and dashboards and collaboration around data and build amazing businesses there. And they did. And our competitive set went from being other monolithic stacks of everything to being a mindset shift where people would say, I don’t want to buy a big monolith, I want to buy these three components and tie them together. People started buying RJMetrics just for the pieces. So, like somebody would buy an entire full-price RJMetrics, buy the whole stack, and then just use the part where we pull data out of these systems and drop it into a data warehouse; to put it in their data warehouse instead of ours. And ultimately, we saw enough of that pattern that we said we should just break off this piece of the technology and sell it as a standalone product called RJMetrics Pipeline that does nothing but the ETL piece. And we’ll drop it wherever you want it and then we’re hands off; we’re clean.

Steven Cummins: Yep.

Bob Moore: And that allowed us to go from being a competitor with these amazing rocketship companies like Amazon Redshift, like Looker, to actually being an extremely powerful complement to them. We could go to market alongside them. We could co-sell with them. They were incredible partners because we made their product better and they made our product better. When we sold to Magento, part of the negotiation was …. Magento only care about Magento data. They didn’t care about all these other data sources. And we had this amazing ETL product, RJMetrics Pipeline, that they didn’t necessarily value. So part of our negotiation there was … let us keep our RJMetrics Pipeline and in the process of doing it, you know, they bought the RJMetrics brand and everything else. They got all that. So we couldn’t keep calling it that so we’ve rebranded it as Stitch, and that’s where Stitch came from.

And then we ran Stitch for … and when I say we, I should say my co-founder, Jake Stein …  while I did my 18 months at Magento, Jake ran Stitch as CEO. Actually we’re in the same physical building in Philadelphia so we saw a lot of each other. But the team there, Jake and Chris Merrick, our CTO just crushed it. And in about two years, a little under two years, Stitch got almost as big as RJMetrics did in eight year from a revenue and customer standpoint, and we were acquired by Talent in November of 2018.

Stephen Cummins: That’s an interesting negotiation to be able to get a decent … decent outcome, plus keep a company, and then build it up to the same size and double your exit basically.

Bob Moore: Yeah! One of my investors called it the triple Lindy. It’s like we basically sold the same company twice. It was, you know, it’s a glorified way really of describing a pivot where we at RJ didn’t move fast enough to capture our strong market position when we had it. And we really had a pivot that business hard. And we got …. we just got really lucky on having a series of transactions that made that lucrative instead of extremely painful. And I think that’s more luck than design to be candid.

Stephen Cummins: So what drove you to jump out into Crossbeam?

Bob Moore: I didn’t feel like I was done. And I love this idea. And I felt like there was a ticking clock on the idea. Crossbeam, conceptually, is, if you think of what we did at RJ and Stitch, it’s helping people get their data all into one place and analyse it and get value from it. At the end of the day, what you’re really doing is building a bunch of these data silos. Like your company has their silo. My company has mine. What I saw at Magento and what we saw at Stitch and at RJ was; when you want to collaborate with other companies, with third parties … I’ve got my silo and you’ve got yours and it’s a non-starter to think that you might let the other company into your silo. Our data is sacred and our data is protected. And there’s a lot of … especially in a post GDPR world … there’s a lot of really good reasons why that’s true.

But then how do you answer really simple questions with your partners; like “how many customers do we have in common and who are they?” Or “are my sales reps currently selling to any of the same people that your sales reps are selling to?” Maybe we’ve got 50 partners in our tech integration ecosystem and we can only do one webinar a month. So who’s the next company that we should do this webinar with? When we think about power over our target accounts overlap, or our addressable markets overlap. What’s the next tech integration we should build in order to either expand our market or increase the stickiness of our product among our existing users? Every single one of these questions, which will come up time and time again in all these environments, were unanswerable because the only way to do it is to draw a Venn diagram of mine and yours. And the only way to draw a Venn diagram is if one side of the other has both of the circles and if the data is structured in such a way where it can even be compared … apples to apples.  Two enormous problems. That….

Stephen Cummins: And a third problem, no?

Bob Moore: Yeah.

Stephen Cummins: You’ve got a conundrum because you’ve got, you’ve kind of articulated… you’ve got a conundrum whereby how do you balance, you know, doing things that are mutually beneficial and for the customers as well as for the two vendors, which is the initial drive, of course, while keeping that data private enough to not go.. go to the red side of the law or of of your customers perception of you?

Bob Moore: And that’s paramount. Yeah. I mean, that’s kind of like … that’s a through line to all of this around the privacy, security and compliance components have a lot to do with transparency, control, accountability, data ownership. That chain of custody of data and how and when and why it gets exposed And exactly having the ability to control those rules based on your regulatory environment, the nature of the partnership you may have in place, the nature of the outcomes you’re trying to drive. And we, you know, I looked around at what people were doing in this area to try and solve this…  and the answer was they were emailing spreadsheets around. And probably violating who knows how many laws. And the, you know, among other problems, they’re just oversharing. Like in order to answer the question of “how many customers do we have in common?” … I have to send you my whole customer list so you can compare it to yours or vice versa.

Stephen Cummins: It’s a lot of waste of time too.

Bob Moore: It’s a lot of waste of time, a lot of waste of energy, a lot of false positives and false negatives come up. So, it’s kind of like the prisoner’s dilemma problem from game theory. It’s, like, you either…ideally you both should contribute data and get the answers out but the actual, like, optimal, like, Nash equilibrium solution to that problem is that both sides defect and nobody shares and there’s no data there.

So Crossbeam … I felt that after seeing what we had done with Stitch and seeing all of these tailwinds around the maturity of the API economy, the mass enterprise level, adoption of cloud solutions, meaning that even the biggest companies in the world now have their data sitting in a CRM system that was accessible via the cloud that could be communicated with via API …. This meant that it would actually be possible to potentially build what really amounts in some ways to, kind of, a business to business network of data.

LinkedIn for data.

Where companies could rely on Crossbeam as this trusted intermediary, like an escrow service for data, that would allow them to connect on a shared platform, combine their data, analyse the combined data to get insights out, but keep the underlying raw information private and secure and have huge controls over how and when that gets actually disclosed.

Stephen Cummins: So some of those insights … would they be insights that would make a company decide, for example, to do a joint webinar?As opposed to kind of digging deep into individuals, more like, ‘Hey, we have enough a lot of overlap over there. Let’s create an event for that. Let’s create…

Bob Moore: Yeah. You can run all the way up and down the revenue funnel for it. So there’s a lot of marketing use cases that are a little more broad based like that. Like, we conceptually need to decide where to put our energy and we can identify via aggregated kind of roll up statistics where the mass of qualified opportunities might exist outside and our customers, or our partner’s customer bases. You can run down the funnel and you get into these motions like co-selling an account mapping where I’m going to share anything about my customers with you except who that sales rep is on my team that owns the account. So like, if we’re both selling to the same company at the same time, let’s get our reps on the same page. And I’m gonna reveal no PII,  no information that is about the humans or the people at this customer? I may not even reveal what the nature of my business relationship is. That’s, kind of, up to me but what I will do is say, “Hey, if we’re both working on this account at this time, let’s have this rep talk to this rep.” Because there may be a positioning motion if it’s a channel partner who is also reselling my product.” You can avoid conflict by doing this, because if you’re direct team and your channel sellers are selling to the same person at the same time, your same product, you can be competing and not even know it. The ability to actually kind of keep records around “what has been happening”, “who’s been connected”, “what’s been visible by whom”, “at what point in time” and this is all stuff that our platform, kind of by default, is what it does.

Stephen Cummins: Very good.

Bob Moore: So, yeah, so it runs the gamut from the inconsequentially seeming high level kind of marketing head scratcher decisions … all the way down to M&A, like, should I buy this company or not. I’m in a competitive situation and I need to give a term sheet to this potential acquisition. How do I know how I should value it when they haven’t even started diligence or giving me access to the data room yet? And Crossbeam is increasingly in more and more of those situations where you’re answering those major, major dollar decisions.

Stephen Cummins: Did you know enough about the industry already where you kind of felt, you know, we just need to build this and go out there? Or did you … did you need to really validate this quite a bit before you pulled the trigger?

Bob Moore: Yeah, this is a little bit of the old trope that, you know, if Henry Ford asked the market what they wanted, he would have tried to build a faster horse. This a very vision based play based on kind of these … a couple of core beliefs about what’s going on in the broader market. That is the increasing focus on security, compliance and responsibilities around data are forcing us into a world where process and workflows that are built into things that are measurable and, you know, can be monitored and logged is extremely important. And you couple that with “Wow the power and how prolific the amount of data that’s actually available is, is growing so extremely rapidly.” And that “These walls are actually moving further apart rather than getting closer together when it comes to intercompany collaboration”, despite the fact that companies are more connected than ever because of all these APIs. Like every single word “Live from Web summit” right now … and if you go and walk down that expo hall …. Our Head of Content is here and he was doing this for a blog post earlier today … He went to go see just on the tagline… the one sentence tagline of what percentage of companies use the word “platform.” It’s massive. It’s like 80 percent of companies “We are a platform!”  We can’t all be platforms right now. A platform is like the baseline thing on which everything here should be built. And if you go, it’s a platforms all the way down. It’s platforms on platforms on platforms. The real word of the day should be “ecosystem.”

Stephen Cummins: Yes

Bob Moore: …Because all of these companies that view themselves as platforms. They see it in that way because they see that, “Oh, there are 50 companies connected to us; and therefore they are built on top of us, and therefore we are a platform but they’re forgetting that they are also connected to all of those 50 companies. A mesh of these companies that are self-identifying as platforms, but really participating as ecosystems. And that is… you compare that to five years ago; I mean, we’ve got a site called Partnerbase.io … where we try to draw the map of these technology partnerships between companies and it is just, you know, it’s tens or hundreds of thousands of companies and millions of connections.

Stephen Cummins:  And the combinations are…

Bob Moore: You know, growing at N-squared. That N-squared, that is the order of growth of the opportunity of our market.  It’s kind of our core thesis here, that like, if we can be a go-to-market overlay that allows any company that’s participating in an ecosystem like this to actually drive revenue and results for their business as a result of participating there … Instead of just having it as a cost center or an R&D or product focus …  then the market opportunity that gets unlocked is tremendous.

Stephen Cummins: In the next episode we hear about the real business reasons why growing the network – growing those inter-connected ecosystems – is the single biggest metric for Crossbeam. Bob talks about issues close to his heart like inequality of opportunity regarding education in the United States, and he has great advice for entrepreneurs and founders.

Stephen Cummins: You’ve been listening to 14 minutes of SaaS. Thanks to Mike Quill for his creativity and problem solving skills, to Ketsu for the music and to Anders Getz for the transcript. This episode was brought to you by me, Stephen Cummins. If you enjoyed the podcast, please don’t forget to share it with your network, subscribe to the series, and give the show a rating.

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