2. What does it take to build a successful
enterprise cloud business?
At Emergence Capital, we were early investors in the movement of
enterprise software to the cloud. Over the last decade, we’ve closely
studied the factors that drive success in building successful companies.
In an effort to share some practical insights with the greater startup
community, we sat down with the CEOs of some of the most successful
SaaS companies to create a playbook on how to hire, scale and build an
enterprise cloud leader.
3. What follows is some tips from industry leaders in the Emergence portfolio on
important factors such as hiring the right team, the role of culture, professional
development and retention, the connection between sales and marketing, and
building for scale.
Featuring insights from:
Godard Abel, CEO, SteelBrick
Steve Adams, CEO, Navera
Larry Drebes, CEO, Janrain
Katy Keim, CMO, Lithium
Rene Lacerte, CEO, bill.com
Umberto Milletti, CEO, InsideView
Raj Narayanaswamy, CEO, Replicon
Jim Patterson, CEO, Cotap
Kyle Porter, CEO, SalesLoft
Rob Reid, CEO, Intacct
Josh Reeves, CEO, Gusto
Oliver Roup, CEO, Viglink
Paul Stahura, CEO, Donuts
Charles Thornburgh, CEO, Civitas Learning
4. Godard Abel
San Mateo, CA
On ﬁnding the right managers…
Culture is really important to maintain across the team. We are
conscious of building and communicating a consistent culture
through monthly, all hands, systematic sharing of plans and
challenges and recognizing team members who are going above
and beyond to help us win.
The key to scaling successfully is having an experienced sales and
marketing leadership team. This is particularly important when you
are experiencing small stage growth because you are building out
the team that will take you to scale. In your leadership team you
need people that can identify and recruit people that will thrive in the
You need to find people who can and will lead from the front– player/
coaches more than player or coach. This is particularly important in
sales where the person you hire needs to be willing and able to
execute as well as be a capable manager as the process scales.
We have zero voluntary attrition at SteelBrick, but to maintain this,
the company has to be winning. People want to be part of
something that’s winning and growing, which creates career paths
5. Steve Adams
San Francisco, CA
On team building…
The biggest mistake I’ve made (repeatedly) when building a team is
taking too long to identify when an individual is not performing, trying
to find another role where their talents can be applied, transferring the
problem to someone else, or just taking too damn long to terminate
their employment. It’s a huge mistake. If you want to leverage high
performers, you better surround them with high performers.
Treat retention (as you do hiring, recruitment and termination) as a
business process that deserves focus and commitment; that means
training managers on how to retain and develop the members of their
Treat hiring as the most impactful decision that you and any of your
hiring managers can make. Every hire in the early stages of the
corporate lifecycle is a “can’t miss” hire and should be treated with
The biggest mistake that new entrepreneurs are likely to make is to
think that creating a culture is an ad hoc exercise, a natural
extension of their values and that personally setting the standard and
then holding others to it will be enough. Creating a culture requires a
disciplined and rigorous process that includes planning, putting a
framework in place, executing and assessing performance against
that framework. If you want to create a culture, you must define and
codify it so that it can be socialized and scaled. While it may be
abstract in its language, it must be concrete in its execution.
6. Larry Drebes
On team building…
On sales and marketing…
Top talent is attracted to achieving big, audacious
objectives. That means you have to work to make the
company vision huge, and give talent the autonomy to
attack problems. Since there are so many companies with
big visions today you have to find the ways that your vision
intersects with the path of highly talented team members.
Sales and marketing need to be in lockstep in terms of
objectives and approach- they succeed or fail together. We
measure meeting conversion rates as the ultimate indicator
of whether marketing is creating the right conversations,
and also as an early indicator of revenue growth.
Wherever possible, promote from within. Your existing team
lives your values every day; someone from the outside
needs to learn it from scratch. But, inevitably, you will need
to bring in outside talent to break through barriers to get the
company to the next level.
Scaling is a balance between doing things manually, and
automating. Do it manually first, so you can do it fast. Then,
when it works, automate it. The team should spend 60% of
their time doing things manually, and 40% of their time
automating new things.
7. Katy Keim
San Francisco, CA
On team building…
On building for scale…
I've always built my team around the outcomes that you're
trying to drive for the business.
If you have the luxury of a large budget, shift as much as
you can in-house. People integrated into the team and
focused on delivering the right results really pay off.
Lithium has what we call a talent profile. We've formulated
them to the key areas that we're looking for, and as we
interview, we focus on each of those attributes. Today, I
would say in this market, a smart way is going out and
finding talent, not waiting for what's coming to you.
In terms of scaling, there are a few things that are contrary
to what I have done in the past. One is way more emphasis
on digital and content. Content and digital metrics are air to
some extent, and have an exponential scale built in in
terms of how they reach people. If I was building a
marketing department today from the ground up, I would
put digital hires and my Marketo specialists in content as
the first people in.
8. Rene Lacerte
Palo Alto, CA
On team building…
On culture and values…
An important lesson I’ve learned over the years is that employees who
mesh well with the company culture-- and whose thinking aligns with
leadership’s vision-- are those who are the most successful and have
the greatest impact on the business.
Scaling should be in mind from day one. With each organizational
threshold comes new issues, roles and responsibilities. Anticipating
these changes beforehand and cultivating a culture to meet them in
full stride is necessary to overcoming the challenges of propelling the
company to the next stage.
We create scorecards, not job descriptions. Developing a focused
understanding of what success looks like for a new hire in 30, 60, 90,
180, and 360 days helps to clarify the role for you and the
organization, and allows the candidate to better understand the
scope of work and what is expected of them.
Culture should be divided into values and behaviors. Values will
remain constant. They are the fundamental underpinning to all that
your organization does. Defining organizational values is defining your
true north when it comes to who you are, the people you work with
and the customers you serve. True north shouldn't change. Behaviors,
however, can vary from year to year, person to person. It is important
to evaluate these quarterly.
9. Umberto Milletti
San Francisco, CA
On go to market strategy…
On hiring executives…
Culture needs to be consistent and uniform across sales/marketing
and the rest of the company. Oftentimes this is challenging because
people tend to be so different. Some CEOs look the other way when it
comes to culture, particularly around sales-- sometimes heads of sales
have questionable judgment, but they close deals so they aren’t seen
as a problem. You need to find cultural alignment and not create a
special set of rules for people-- this never works well in the long term.
Importance of diversity cannot be understated. In 10 years at InsideView I
have learned that one of the most important types of diversity is gender
diversity. You want to be able to attract talent across the whole population. If
your whole leadership team is all male, you are probably scaring away a
huge population that is valuable to you, or at least not creating a friendly
environment. I actually think the solution is pretty simple– you need to hire
women at the executive level. All the diversity programs in the world don’t
matter if you’re communicating that the only people that will be on the
executive team are men.
For early stage companies, the “go to” market piece and how you’re
going to sell and market oftentimes comes too late. Most early stage
companies come from the product perspective and don’t spend
enough time on the most effective way to take it to market.
Don’t hire people for your executive team who all look like you. You
know if you’re hiring people who are like you-- if everyone feels super
comfortable then you’re hiring a bunch of people like you. You don’t
want it to feel like a bunch of buddies.
10. Raj Narayanaswamy
Redwood City, CA
On growing the team…
On executive mindset…
The way to scale sales and marketing is to create a process that is
repeatable, and then to scale it. This process is tied to a channel, so
you will need to do this for every channel in which you sell.
The biggest mistake I see is scaling ahead of your understanding
of the market, channel and process.
You need both inside talent and external talent in terms of
developing the team. We tend to provide opportunities for people
inside who have potential to grow. If you’re scaling fast though, you
need people who have done it before.
From an executive point of view, you need to think about if you are
creating a process or implementing a process. Creating a process
involves understanding your channel and the message, which is an
intellectual exercise-- really understanding your customers and how
they’re buying. Document this and create a process, and then hire to
fill out this process for implementation. Then you just need a
management system to implement the process.
11. Jim Patterson
San Francisco, CA
On waiting to scale…
On promoting internal talent…
On hiring salespeople…
On a critical sales mindset…
The tricky part about hiring salespeople is that they're salespeople.
They're typically good at selling themselves. It's really hard to make a
decision based on an interview, particularly when your expertise is not
sales, because they're really good at selling themselves. But they
might not be the right culture fit or the right experience fit for the start
up where you are even though they're good at selling.
I'd say the single biggest thing that is important for setup is a
salesperson who understands that you can't sell out the product
roadmap. What I mean by that is there are some customers who will
always ask for, "Oh I want this. I want that. And I want us to do it this
way." If you have a salesperson, particularly your head of sales, or a
director level, who are constantly promising customers new features,
or even worse, very specific custom things, you will be in trouble.
You really don't want to build out your sales team until you have your
target market figured out, because once you start adding sales reps it
creates a momentum forward that makes it very difficult to change
I think in general it's usually better to promote from within. There is
certainly less risk promoting someone who has already
commandeered the respect of the team. Bringing in someone from
the outside is higher risk, but potential high return.
12. Kyle Porter
On culture and hiring…
On sales roles…
If you want to change culture, hire externally; if you want to promote
culture, promote internally. I like to hire people who can punch above
their weight class in terms of what they can do for the team and also
what role they can grow into. We decide through interview questions,
and have a coordinated and pretty structured interview process. We
also hire for culture– all hires need to share our core values, including
being positive, supportive and self-starting.
It is important to have a modern sales organization where you have
divided up the closers from the openers and the prospectors. The
biggest innovation to happen to the sales process in the last decade
is the emergence of the sales development field. We are huge
proponents of the sales development industry, and do the best we
can to practice what we preach.
My favorite and our most important metric is revenue churn. This
metric tells you if you’re losing revenue from customers. Our second
most important metric is probably month over month MRR growth.
Scaling a business can be the #1 threat to losing the energy, culture,
vibe and core values of the company you built.
13. Josh Reeves
San Francisco, CA
On hiring perspective…
I would say first, the backdrop to anything in a startup, in my opinion,
is having focus, because there are always a million things to do.
What I would advise other entrepreneurs to do: I would probably
have hired a recruiter as a second employee. Again, it's something
that is a huge focus. Doing it part-time just makes it harder. Having
a partner who's going to do it full-time would have probably been
helpful. Hiring is never easy, but I think it never should be easy.
People are the foundation of every business and they're the key
foundation piece of what makes everything we do possible.
I jokingly say my job is to keep firing myself from as many jobs as
possible. What I mean is really divide and conquer. As things
become more effective, as they become more successful, we want
to give new folks and hire or promote folks the ability to really own
those functions and be responsible for their outcomes.
The overall, holistic philosophy is cost-effective, scalable growth.
That's all that matters. It's not growth for the sake of growth. It's not
growth to hit a short-term outcome. It's easy to measure cost-
effective in the context of SAS because you have very clear
projections on LTV, of ACV, on CAC. Basically, there's an industry
standard and best practices in terms of what those ratios should be,
what turns should look like, what revenue returns should look like
and what conversion rates should look like.
14. Rob Reid
San Jose, CA
On the intersection of sales and marketing…
On developing employees…
Don’t go on to the next thing unless you have at least 50% market
share in what you’re doing right now. Most people move on because
1) they think it’s easier or 2) they’re greedy and think they can make
more money. So for these reasons, lack of focus is why companies
fail. Employees also fail for similar reasons.
Sales and marketing need to have joint metrics to measure so that
they can have joint success. You need to weave the fabric of the
company together so that you get team-oriented results, not orient
around individual people (although that accountability is necessary).
As long as people are performing you need to retain as many people
as possible for as long as possible. Intellectual capital is hard to get
and hard to maintain. This knowledge is built over time spent at your
company, and increases in value with the length of time employees
stay. You cannot replicate this type of knowledge, which is why it is
Try to have a 50-50 relationship with employees, and try to figure out
what’s exciting to them and challenging to them. Pull this together in
both objectives they need to pull together for the company, and also
what they need to ‘sharpen their saw’ personally. We do this
quarterly for every employee and it all goes down in a document for
both the employee and the management team.
15. Oliver Roup
San Francisco, CA
On ﬁnding the right people…
On building a team…
When you’re coding something new, you want to build for something
that's 10x as large. If you're building for 100x as large you're probably
over-engineering and if you're building for 2x you're probably going to
run into the limits before you finish. A similar principle applies in
management, but it's not 10x. It's probably 2x. When you are currently
building a team of 20, you should keep in mind that it's going to be 40
soon and build for that team.
The very simple framework is can they do the job, will they do the
job, and can I stand to be around them while they do the job?
I have had pretty bad success bringing in expensive, experienced
outsiders, and I have had pretty good success growing young,
hungry insiders to take on a bigger job.
Clarity around communication is also something you have to keep in
mind when building a team. Getting a message to a group of five is
easy-- you sit in a circle, you have dinner, you talk, everybody hears
you. Getting the same message to a group of 50 involves
communication plans, delegation and talking points and a roll-out
16. Paul Stahura
On team building…
It's very important to think about scaling when you build out your
original team. When we started making hires beyond just the co-
founders, we looked for people with wide sets of skills who could
handle more than one function with their core competencies. This
helped us ensure our hires were efficient and very productive.
One important value stands out at Donuts-- we constantly challenge
ideas without challenging each other personally. It's important that we
test our own thinking until we know we're on solid ground, and we do
so consistently while ensuring nothing is taken as an offense.
Employees here know they're on safe ground when it comes to
contributing their thoughts and ideas.
We've intentionally hired equally for personality and fit as much as we
have for talent. Donuts has tried to secure talent from both inside our
industry (for the benefit of experience in a very niche business) and
outside (to benefit from fresh thinking, particularly in the area of
While we have a very businesslike approach to our work, we also
have a "family" atmosphere that gives our people the sense that we
have each other’s best interests at heart. Our approach is unique
because employees know there's long-term reward available for a job
well done, and they know there's latitude to create value even while
making the occasional mistake. Our experience is that employees
need more than just a financial incentive for motivation-- they need a
personal, emotional connection to what they're doing, and a belief that
they're contributing to something larger than themselves.
17. Charles Thornburgh
CEO, Civitas Learning
On domain expertise…
On traditional sales values…
We needed to find a way to build an organization that brought a
different level of sales athleticism into this industry than has
traditionally been in the industry before. And part of the reason why I
think that is so important for vertical SaaS businesses is that you're
often defining a new category.
As a founder and CEO, if you don't have enough domain, insight, or
credibility in your domain to be able to effectively sell your idea
yourself, then you've got to find somebody who has credibility and
relationships within the domain to make sure your messaging is the
right messaging, and that you're not stepping on any land mines that
you're unaware of.
What I found in my experience early on in building Civitas Learning
is all of those things that are traditionally valued in enterprise sales--
the need to have a Rolodex and relationships within the vertical, to
speak the language of that particular industry really effectively-- are
dramatically less important than people believe them to be. What's
been most important for us has been finding really, really high caliber
I get this question all the time-- how did we protect our culture as we
went from a 5 person to a 20 person to a 50 person to a 100 person
company? I actually feel like we've got, in some ways, a stronger
culture now than we did when we were smaller. And I think part of
the reason is that you're able to often attract a different caliber of
leader as you get further down the road and as you cross a variety of
thresholds in size and scale and traction.
18. About Emergence Capital
Emergence Capital, based in San Mateo CA, is the leading venture capital
firm focused on early and growth-stage enterprise cloud companies. Its
mission is to invest in the cloud visionaries who are building the most
important business applications. The firm's investments include
Salesforce.com (CRM), SuccessFactors (SFSF, acquired by SAP), Veeva
Systems (VEEV), Yammer (acquired by Microsoft), and Box (BOX).
Emergence Capital has nearly $1 billion under management.
More information on Emergence Capital can be found at www.emcap.com.
Alison Wagonfeld, Operating Partner, Emergence Capital, firstname.lastname@example.org