I got many questions during the last few days and figured out it is better if I answer them all at once.

Is it a big deal? Yes, it is. Enterprise Software purchase is still a complicated and laborious process. Most markets have dozens if not hundreds of possible solutions. The buyers need to sort through all of them, compile tons of information, dive into features, check references. Gartner is doing a lot of this legwork for the buyer and by that simplifies the purchase process.

Should you trust these guys? While I cannot provide a blanket statement about Gartner, the team that works on the CCaaS MQ is top notch. Every one of them has > 20 years of experience in the contact center space. They talk with 100s of customers and dozens of vendors every year and know the space cold. Their process is also pretty comprehensive: we have gone through a full RFP, quite a few meetings, and presentations, and they also interviewed five of our largest customers (with more than 300 seats).

Is it pay for play? I got this question a lot, and the answer is no. You can subscribe to Gartner services but the fee is relatively low and gives you access to their data and the analyst community, but it is not a fee to be included in the MQ. If you could cheaply buy your way into the MQ, you would see 100s of companies in every square.

Are you happy with your location? We are thrilled. We are the youngest company in the MQ by a decade. This is our first year in the MQ, and getting recognized as a Visionary was all we could hope for. With size, growth, and execution, we will make our way to the top right quadrant.

Should I consider it for my company? If you sell to SMBs, don’t bother. If your company is selling to Enterprise customers, who are the only paying customers of Gartner, absolutely. Gartner’s value is not only in the published MQ. Each one of their analysts is taking 100s of enterprise customer calls a year and they rely on the MQs to provide product recommendations.

It is a great honor to be on the list, but there is one point that makes us at Talkdesk even prouder: of the entire list, Talkdesk raised the least amount of capital. 99 other companies raised more money than us, with a median of $175M raised. Some companies in the list raised up to $1.5B and at least 6 raised over $500M.

Talkdesk has a unique starting story. The founders raised a little angel investment and were able to break even during the first three years of the company existence, with an amount that most other startups spend on sign-in bonuses alone. While living on a minimum wage (and sometimes less) in a shared office space does not sound like too much fun, Tiago Paiva, Talkdesk’s CEO, remembers these days as the most fun, productive and focused time of his life.

Now, why does it even matter?

• It is easy to raise money and hard to build a real business. Every business needs capital to grow, and we are no different. We sometimes need to borrow from the future to create it. At Talkdesk, we are trying to use this borrowed (or raised in this case) money to invest but not spend. We use it to hire engineers that can build our future products, we invest it in initiatives like Appconnect that create new opportunities for our customers and partners, but we will carefully try not to waste the money on presents needs. After all, we would not be able to borrow from the future forever, and the earlier a company builds this discipline, the better.
• Raising less capital gives our customers a voice: think of a company that raised $100M, and has a revenue of $20M a year. Who has a greater influence on the company: the investors, that keep the company alive, or the customers that only contribute a fraction of the company overall capital? When customers fund the vast majority of the company activity, they are the ones influencing its decisions, rather than the investors. When you know that your future is in the hands of your customers, not your investors, you quickly learn whom you are going to listen to.
• It makes your company more resistant. It has almost a decade since the 2008 recession and Sequoia slides of doom. Our economy is cyclical, and at some point in time, we will see a slowdown. Fiscally disciplined companies will need to make fewer adjustments and can weather the storm better, with fewer shocks to employees and customers.
• It is better for our investors and employees: additional capital dilutes previous investors. If you invested at the beginning of Talkdesk and got say 5% of the company, every new investor that gets her own 10%, takes 10% away from your share. While some investors like to see significant funding events as a way to validate their decisions, the reality is that every round is dilutive and should happen when the company needs/wants the money and not as a way to show progress. Same is true when it comes to our employee that will see less dilution over their years with the company. Joining early can be great, but you do not want to see your grant diluted by 40%-50% during the life of the company.
• It is hard to stop: often companies will use the “I can stop at any time” line. Let’s waste today when money is cheap, and when we need to show profitability, we will adapt. Many SaaS IPOs showed us how hard it is. The organization DNA is created with the notion of spending, and the muscles cannot operate without the extra cash. Saying that you can always stop spending is as hard as it is to stop drinking or smoking.

It is super hard to build a great company whether you raise much money or not. What SurveyMonkey, Dropbox, and other large raisers did is incredible and rare. It is even harder to do it while staying customer focused and disciplined, especially when there is so much capital looking for great companies in the market today.

There is no a “one right solution” here. Companies choose different strategies and have different needs. Some CEOs believe that spending more will allow them to scale faster and take on more initiatives and for many, it works. I just wanted to highlight the other option, that can be as successful.

* I have no data on drunken sailors spending habits and I am not affiliated with the sailors’ Association, its members or family members.

Why partnering with Salesforce?

With almost $7B in annual revenue, Salesforce ecosystem is larger than the total addressable markets (TAM) of many IT markets. Salesforce customers all made a significant commitment to the cloud, and among them, you can find SMBs and large enterprises alike.

Look for the synergy

Not every company should partner with Salesforce. Sometimes you are just better off on your own. For example, while a project management system can integrate with Salesforce, the mutual outcome may not be 5X better than using both products on their own. For Talkdesk, the synergy was very clear. Salesforce is where our customers store every interaction with their customers, so a deep integration into this data and workflows made sense. As a rule of thumb, if you enhance a Salesforce dominated workflow (e.g. rank order leads using AI), you should deeply integrate to Salesforce. It doesn’t mean that your product is not great on its own, or can integrate with other products — you simply meeting your users where they already are.

It is all about the product

If you think of Salesforce as just an integration, you will not get the most out of this relationship. Think of it as new product and define new personas, including the Salesforce admin but also Salesforce AEs and SEs, that will promote your product. For example, we built a 2 minutes installation process for Talkdesk, so SEs from Salesforce can quickly show it to their customers, and Salesforce admins can easily test the product on their sandboxes.

Don’t think MVP — instead, think how deep you can go. The more integration points you build, the more attractive and sticky your product will become. For us, it was creating reports that mashup Talkdesk and Salesforce data, implement SSO and integrate user management.

Lastly, you want to make sure that you keep innovating and reacting to the new capabilities of the Salesforce platform. SEs will always look for partners that can help them demonstrate Salesforce’s latest innovation.

Launching on AppExchange is like publishing a website. It is simply not enough.

Posting your app in the AppExchange is like launching a website. Tons of work ahead of the launch, but nothing happens when it goes live. Why? Since there are 3000 other products there… To build Salesforce related pipeline, you will have to work and work hard.

You will need to show results first

I am sure you expect that Salesforce will immediately go on and promote your product. They will not. 1000s of partners got on their platform and failed, so it is prudent of Salesforce to wait and see who is becoming a star, before investing. You should also remember that a Salesforce AE has dozens of Salesforce products to sell, so they can only pay attention to few partners at a time. This means that you are almost 100% on your own in the first few months after launch. You have to build pipeline on your own, win Salesforce customers on your own and write your case studies. The fastest you grow (i.e. generate revenue for Salesforce), the fastest you will get notice. It is that simple.

It is hustle time!

With the initial traction, you have a story to tell. Congratulations: you now have to work even harder. Your target audience just expanded: rather than speaking to prospects only, you now have to market your success to Salesforce’s SEs, AEs, RVPs, CFLs and anyone else that will listen. The easiest way is to think of circles of influence: the RVP that benefited from your most recent deal will be much more likely to give you access to her team. Leverage this connection to meet an RVP that works in the adjacent territory and build your network this way.

Everyone in your company should be an ambassador

Encourage your AEs to take Salesforce AEs to drinks. Your SEs should geek out with Salesforce SEs and the product managers should share roadmaps. If you are a C-level exec, go make friends with Salesforce executives and find executive sponsors you can connect with and provide “air cover” to your team.

There are many more aspects of a successful Salesforce partnership like revenue share and how to think about it, roadmap, diversification and more. Might be a topic for another blog post….

Chatbots provide companies with a novel way of engaging with customers, one that is as imminently promising as it is potentially harmful to the customer experience. As more companies begin to incorporate A.I. and autonomous systems into their operations, we are about to see a massive uptick in the usage of these types of bots. In fact, we already are. So how do we find the right mix of bot and human in order to maintain the highest level of customer service?

Customer service benefits

The biggest benefit of a chatbot to the customer service industry is the ability to engage users without the need to hire and manage an increased workforce. The cost-saving aspect of chatbots cannot be overstated. If bots prove an effective alternative, they present a tremendous opportunity for businesses to scale, pivot, and expand customer service operations globally at a reduced cost.

The technology is improving. Chatbots are becoming smarter and more sophisticated. By combining commonly asked questions and deep learning neural networks, bots can predict an accurate response to a posed question or statement in a way that skips phases of conversation and that mimic regular chat. The caveat is that bot intelligence relies on input from their creator, which means that there is only so much a bot can do (e.g., whatever it is programmed to do), and it can’t know what it doesn’t know.

Further, A.I. can be easily duped or misdirected, as we saw when Microsoftattempted to engage millennials with the creation of the Tay chatbot on Twitter. When trolls decide to attack a chatbot, it is all too willing to play along. If a customer service chatbot were to learn inappropriate commands like Tay, it could have a serious negative impact on the company’s brand. More insidious, if a bot became patently unhelpful without being openly offensive, it could cause frustration for an extended period of time without being flagged as doing so.

It’s early in their evolution

If chatbots are to be the next major innovation in customer service technology, we need to understand both their strengths and their weaknesses, and the fragile balance between the computational ability and emotional intelligence needed to interact with real, live humans. Although a good chatbot will give you the illusion that you are interacting with another human, it will never be able to fully understand the subtle nuances of human emotion. As humans, we’re empathetic, we know when to listen and when to interject, and we understand the root cause of frustration and panic. But a bot can’t pick up on these cues.

When you see an unauthorized charge on your credit card and log onto your bank’s website, a chatbot may engage with you. You’re already irritated, perhaps panicking because your card has been maxed out on purchases you never made. The bot will be able to look at your account, calculate numbers, and offer you a multitude of different fact-based options, but none of these capabilities will be able to address the immediate sinking feeling a human has when his or her privacy has been breached.

They do play a role

So, what role do chatbots play in customer service?

Chatbots are best used for closing the gaps in a company’s self-service offering. Simple, repetitive tasks such as checking inventory, updating delivery times, and finding relevant information about a user are all things that can and should be automated. To the extent possible, the use of bots should be avoided for tasks that can be handled by an updated version of your UI. If a task is simple enough to automate a bot to do it, why not just build it into the UI?

Chatbots also incorporate well with tools customers already use like Facebook Messenger or SMS. Earlier this year, Facebook announced that it will be implementing A.I. bots into its Messenger and WhatsApp platforms, which are currently used by more than 1.8 billion people worldwide. The chatbots will help users with tasks such as making dinner reservations, searching for products online, and inviting friends to events. These types of integrations make it easier for a user to ask questions, perform queries, and find relevant information without having to switch their mode of communication.

Most importantly, chatbots must be taught the same core principle that is taught to all customer service representatives: Know when to escalate. Bots should recognize situations in which customers require human intervention and be equipped with tools that allow them to do so seamlessly. More to the point, customers must be given the option to escalate themselves and gain immediate access to a human being, preferably via phone, so that their situation can be quickly resolved without frustration and churn. This measure is particularly important as businesses “work out the kinks” of chatbot customer service.

They will never fully replace humans

As with any emerging technology, this is not about replacing humans or sending them to the unemployment line. Rather, bots should come to represent a shift in the customer service arena that will allow (human) support teams to become more highly skilled strategic assets. Bots are very much a means to an end. They can help answer easy questions, facilitate simple tasks, and, when they are in over their circuits, escalate the customer to a human representative.

The future of customer service isn’t just in chatbots and automated tools. Companies that succeed will find the right mix of A.I. and human representatives, using both to the best of their abilities and in conjunction with one another.

Published first on VB

The idea sounded great but  I couldn’t think of the specific buyer for it: is it the CEO? CFO? CIO? Who is the one person that you can make more successful in a company with this product?

This is your number one rule in enterprise product development: can you identify an exec or a C level buyer that you can help becoming more successful with your product? Box solves a problem for the CIO.Talkdesk allows the VP of customer service to provide better service and achieve higher customer satisfaction. Both specific to an exec that can be more successful if they use these products. 

Now for the number two problem: can an SDR (Sales Development Rep) explain your product to the identified exec in a short email? The original idea I heard required a deeper discussion and abstract thinking to understand. Having a more vague use case is often not a hinder in the early days: this is the time your board and friends introduce you to the first “design partners” and they will spend disproportional amount of time with you to understand your product. But at scale, you’d find yourself employing 22 years old SDRs, that will have to explain your value proposition to a prospect in one sentence, 50 times a day.  If the product is not narrow and specific enough, it will not work.

So if you are thinking of your next enterprise product, spend few minutes and write an email that your prospect will open. If you can’t do it, go back to the drawing board.

Here is my imaginary email for my imaginary product: 

RE: Prevent expense report fraud in your organization

Dear CFO,

Once you get over the 1000 employees mark, you are exposed to 5%-15% of expense report fraud and inaccuracies. Current approval processes are focused on policy compliance but are not effective in finding misuse or fraud.

Ex-Act was designed to analyze your expense reports and highlight fraud or misuse. We developed a patented algorithm that will scan your data and highlight the issues in real time. Most of our customers reported 10% reduction in expenses 3 months after implementing Ex-Act. Can we set a 20 min call to discuss?

Bests,

Joe

Can you write one for your product?

From our incredible founding at a hackathon in 2011 up to this year, we bootstrapped our company. We paid rent, payroll and servers out of our initial revenue, borrowing office space and sometimes living space, just to get by. In 2015, all that changed.

In late 2014, we received seed funding from Storm Ventures, our office space was tiny in Silicon Valley and shared in Portugal, and our team was comprised of 28 individuals who worked around the clock. We are ending 2015 146 team members strong, with beautiful offices in downtown San Francisco and Lisbon, and DFJ and Salesforce Ventures added to our list of backers.

So what happened this year? To put it simply, we built out a real company. It all started with our team. We attracted like-minded executives and team members who believe in the customer experience above all else. These are the kind of people who are committed to Talkdesk’s original vision of providing customers with the highest quality product and support.

Our new team members see what we saw when we were eating $2 tacos every night while bootstrapping this company: The call center market is a $22B industry filled with legacy players. Ancient call center platforms are slowly dying, leaving room for new, cloud-based platforms like Talkdesk. Call center softwaredoesn’t have to be clunky, complicated and expensive. It can be as simple as Slack, as robust as Salesforce and innovative as Google. Our vision is to build and iterate on a real-time customer interaction platform for both sales and service.

It’s this vision that attracted DFJ, Salesforce Ventures and our other investors. Salesforce, the giant in the cloud industry, was in our shoes just 15 years ago, competing with Old Guard players like Oracle, SAP and Siebel. Like us, they believed that the enterprise software of the future should be easy to deploy, use and modify. Like us, Salesforce patiently won over individual customer after individual customer on their way to becoming the market leader. The support of Salesforce Ventures and our other investors has been invaluable in assisting us in our rapid growth in 2015.

This year represented a turning point in the life of our company. We’ve come a long way from that hackathon. Stay tuned. 2016 promises to be an even bigger year.

Focus on the company, not the title

Many people come to interviews with titles in mind. They have to be the CXO, they have to be a VP. As it often happens, the company is either interviewing for a different position, or is not yet conformable with hiring you as a VP. If you really like the company, you should join regardless of the current title. Would you have not joined Slack 2 years ago as a director? Was Uber in 2010 not a good idea? If a company grows fast, you’d have many opportunities to get promoted, but your chances will be significantly higher from within.

• Company advice: Don’t hire someone that is too focused on a title, without substantiation. Your candidate should probably mature elsewhere before they come back to you.

 You can’t negotiate a title

If the company is not willing to offer you the SVP title or responsibility you want, you can’t negotiate it. It’s that simple. You either built the conviction that you can do that bigger job, or you didn’t. Trying to “negotiate” it is a lost cause and would leave a poor impression. If the title is that important to you, don’t start an interview process for roles which don’t offer this title, or walk away if you failed to establish yourself.

• Company advice: It is common to look for a director and find a VP but you should be the one coming up with the idea. If the first time you thought about the option was when the candidate brought it up, it’s probably not a good idea.

Don’t try to reorg the company before you join

Imagine you are offered a GM role in a large company. They make you an offer to own sales and marketing for a vertical. You are excited about the company but think it will be much more effective if that vertical’s product and engineering team will report to you as well. While you might be onto something, the chances you can get a company to agree to a reorg just for a candidate is near zero. Join the company and try to make the change from within. Not only are your chances to build an internal consensus are much higher, you will be much more informed about internal dynamics and politics and can easily make it happen.

• Company advice: Sharing a reorg idea by a candidate is not bad. She might even be right. But if she makes it a deal breaker, break the deal…

No passive-aggressive emails

I am sorry. If you want to be an executive in a company, put on your big person pants and learn to speak your mind. I can’t tell you how many times we agreed on terms with a candidate only to get an overly aggressive email with completely different ideas. Even if they make sense, the fact that the candidate could not speak their mind in person, is not a good sign and usually makes me doubt the candidate’s ability to communicate openly and negotiate in person.

• Company advice: building a hiring process that mixes email/in-person, and phone communications to get a full view of your candidate communication skills. An executive should be able to be consistent across all forms of communication.

You have to have a reason to join

From your first screening call, to the final interview, you have to have a good answer to the “why would you like to join us?” question. Initially, your answer should be based on external research, but as you progress through the process, I’d like to see how it changes as you are getting to understand the organization better. Startups should never hire mercenaries, so don’t be one.

• Company advice: This is probably the most important question you can ask. Make sure you ask it…

I had a really good view into the company before I joined: I knew Jason Lemkin (first institutional investor) and several team members. Tiago Paiva, the co founder/CEO, was very transparent and shared full financials, board decks and challenges. I was ready. Or at least this is what I thought.

You can’t really be ready to join a hyper-growth startup

The treadmill is already rolling at 12 miles per hour. You just came from work with a suit and dress shoes. You are holding a briefcase in the right hand. The coach tells you to jump and start running. Oh, he also throws balls to you, expects you to catch them and throw them back at him. This is how it felt to join Talkdesk.

I’ve seen growth before. I co-founded a startup, got acquired by SAP and was part of growing our little baby to a 9 figures business in a short period of time. But this was different, very different. Back then I was “training and modifying the machine” to think and sell our product. This time around we are building the machine, while it is going a 7000 rounds per minute. What’s the lesson here? Join a hyper-growth startup only if you are excited about the journey. You will grow weary if all you care about is the outcome.

Don’t assume you know much

What got you here won’t get you there. I am not talking about the book (pretty good but very corporate-y) but about your skillset and experience. There are so few companies that grow so fast that the chance you worked for one and know exactly what to do is almost zero. Rather than trying to replicate what worked for you before, try to use your experience as a base, but be quick to unlearn, listen to the current team and understand what works, so you can help building a new, unique formula.

Assume mostly everything is broken, yet somehow everything works

It is easy to assume that a company that grows so fast has a near perfect operations. Nah. It is the opposite. Companies that grow so fast do it because of a unique product/market fit and not because they built an infrastructure for growth and hoped for product/market fit later. Respect the magic formula that got the company so far, but get ready to build the foundation needed to take the company to the next level.

Hire first, solve problems later

The first instinct when seeing a problem is solving it. As per the above, Talkdesk has many challenges to attack. Fight the instinct to sink your time into solving the problems and focus on hiring the people that can not only solve the problems, but continue improving things over time. It is not the fastest way, but the only way to solve more than one problem and for the long run. I spent about 70% of my time hiring in the last 3 months, and I don’t regret any permille of that.

Hire good people, even if you are not sure for what

Few months ago, we had roughly 3 roles in the company: engineering, sales, and support. As the company grows, new types of roles emerge and more management opportunities are created. If you meet someone great, don’t say “we don’t have a role for you”. Find a project or a role she can make impact in today, knowing that in 3-6 months, the right role will present itself. It is a win for you, and win for the new hire, that got an early seat in the rocketship and can grow with the company.

Only hire your next “GM of your UK office”

One day soon you’d want to open your UK office. Who will be the one starting it for you? You don’t really think you’d hire a Londoner you never worked with to do it?? In the last few months, we tried to put every hire to the UK GM test: can we imagine you as our next GM of Talkdesk London? If we can, you are in. If we can’t see this growth potential in you, we should probably not hire you right now. Obviously, we only need one GM for Talkdesk London but we need 10 people to build our future management.

Spend time understanding why you grow so fast

Why should you even ask? When you are in the thick of it, you don’t care. The company grows and it feels like magic. Like a dream comes true. But understanding why we grow the way we grow is essential to make future hiring and investment decisions. For example, if most of your growth comes from upsells and account expansion, you better have the best customer success team in the valley. If it is driven by 1-2 accounts, you better find ways to diversify fast. Every growth is different, and have a honest understanding of yours will help you fuel the growth where it matters.

Revenue and growth ground you

When you work in a fast growing company, you tend to have less of “here is a cool feature I thought of/my girlfriend-that-works-for-Facebook suggested” discussions and much more of a “what should we do to not slow the growth down”. New, innovative features are easy to think of, but their promise usually doesn’t outweight the cost of not supporting the current growth engine.  Focus on what can drive an immediate value, not on what’s sound cool.

There are probably 8 other Do’s and 20 Don’ts but the most important one is come ready to learn. From the 20 something year old founders, from the first customers and from other companies in the valley. What got Yammer from 1M-20M in 5 years, is not what will get you from 1M-20M in two.

This article was written for SaaStr.

For years, LinkedIn thought the same. It encouraged us to come back, update our profiles, add skills, and recommend our colleagues. It monetized our data by creating tools for recruiters and headhunters and we were fine with that: if LinkedIn makes money and helps our careers at the same time, we all win.

But LinkedIn wants more. People change jobs only every so often but they need to buy stuff all the time. The next big opportunity for LinkedIn is in the sales tools area. Current products like Sales Navigator are only the beginning. LinkedIn’s sales tools help salespeople find relevant leads. The tools provide more information about these prospective customers and help sales professionals easily get in touch with leads.

But there’s one problem: the lead is you. If LinkedIn is successful in its mission to provide better tools for salespeople, you will open your inbox and instead of seeing 2 job opportunities and one for networking, you’ll see 10 products or services you should be buying right now. Now, it’s a good business decision for LinkedIn to build this tool and maximize its potential revenue from the network it built. The question is:how will it affect the future of the network? How will people respond to becoming sales leads on a network that formerly seemed to exist just for their benefit?

Reid Hoffman, the founder of LinkedIn, brilliantly explained how people think of different networks:

MySpace is like a bar, Facebook is like the BBQ you have in your back yard with friends and family, play games, share pictures. Facebook is much better for sharing than MySpace. LinkedIn is the office, how you stay up to date, solve professional problems.

In other words, Hoffman understands that people like context segregation: in fact, this is the reason why LinkedIn is the great company it is. It is the one-stop shop for everything around your personal career. It is not about staying in touch with friends, nor it is about getting good local deals. LinkedIn is about promoting yourself professionally.

The more a product like Sales Navigator becomes successful, the less single-focused LinkedIn becomes. When your inbox is 80% sales pitches and 20% career opportunities, you might not be as motivated to visit LinkedIn, keep your profile up to date, and create new connections. When LinkedIn feels more like a sales tool and less like a career tool, you’ll start feeling like you’re serving others (salespeople) and not serving yourself. When LinkedIn becomes the home of rain makers and not the home of networkers, someone else will create a single-focused career network and people will move over there, just as they moved to LinkedIn and Facebook before.

LinkedIn needs to be extra careful in the next few years. A huge success of its sales tools can be the beginning of the end of LinkedIn as a professional network. Balancing the two needs to be carefully measured so the success of one does not cripple the other.

Photo creds + Elvert Barnes

The ones that failed are the ones that didn’t make sense: Zippo for example, is a “manly” lighter. Their attempt to extend their brand to perfumes was not a huge win.

Why do I write about brand extensions? Because SnapChat just came up with a payment system, which in any marketing term, is a brand extension. If you follow the logic above, you can assume it will fail. SnapChat is known as a tool for sending indecent photos, not a reliable and trusted payment network. It is not perceived as “serious” enough to handle money and while some will try using it, I find it hard to believe it will become a significant business.

Time will tell if I am wrong or right, but the odds are against this brand extension.

UPDATE:

Pando is bringing up an interesting point and a use case: snapcash for porn. People (mainly young people) might exchange nude pictures for cash. As disgusting as it sounds, this is a perfectly reasonable brand extension and a way to monetize the service.