Co-founders, executives, planning and money: keys to building a SaaS unicorn from someone who’s been there. As SaaStock 2017 kicked off in Dublin, Qualtrics CEO and co-founder Ryan Smith explained how he grew the company to its multi-billion-dollar valuation.
Smith started Qualtrics with his father Scott and later recruited his brother Jared. His preferred approach is to work “two in a box” with someone who will challenge ideas about solving a problem.
“You want to get a thought partner that thinks very differently than you. It’s hard but if you get it right, you will be able to go places you’re not able to go with most executives,” he said. What makes great cofounders is an ability to go deep and talk through multiple iterations to fix a problem. “You’ve got to have some sort of dynamic and chemistry that’s going to work. It’s kind of like putting a band together,” he said.
Tip 2: carefully hire the executive team
Companies invariably encounter problems as they grow and scale, so Smith describes his ideal executive hires as: “people who are willing to go through hard times, who want to learn and whose best years are ahead of them - and that’s nothing to do with age.”
Such people must be comfortable with tearing down what’s been done before. “When things are hard, that’s what you’re getting paid to fix… I want folks who are waiting for that moment. We’re constantly breaking our model, that’s what we do, we break stuff and your job is to fix it. If you’re not breaking it, and you’re not in hyper growth mode, then you’re running something smooth and you’re slowly dying.”
Tip 3: the next 90 days will make or break your business
Founders need to balance short-term operational issues with the longer-term vision for the company. Thinking in 90-day blocks forces founders to think about the valuable metrics around the business, and to target how they will change over that period of time. “The cool thing as an entrepreneur is that you write your own story. When I see startups or entrepreneurs… my response is, if I’m going to meet you in 90 days, you can’t tell the same story,” said Ryan.
Tip 4: money is the lifeblood of the business
Being based in Provo, Utah rather than Silicon Valley gave Qualtrics little choice but to grow customers and build revenue. The company bootstrapped for the first ten years and only took external funding in 2012 from Accel and Sequoia - who stayed through two more investment rounds. Investor continuity is important, Ryan added. “Find a group that can write the second and third cheque, not just the first.”
Tip 5: how important is your product?
Smith talked about the biggest hurdle he faced in business, when the global economic downturn hit customer budgets. “Not many people ask, ‘how important is my product’? When 50% of budgets are cut, where are you?” he said. “That’s where I learned it’s OK to pivot. There’s no amount of money in the world that I would not take to have those experiences because that’s where the innovation of our culture came from: being able to innovate with rapid pace.”
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