The Sustainable Path To $100M Lessons From ActiveCampaign’s Growth

Jason VandeBoom @ ActiveCampaign and David Berkowitz @ Serial Marketer
Main Stage
Ascent Conference 2020

David Berkowitz [00:00:03] Fantastic. Well, welcome, everyone, really great to be a part of this conference, I’ve been looking forward to this one for a long time and just the kind of energy around startups, investors, all kinds of folks, people in the room like myself, marketers and others who feel like they’re part of some of these communities. But but then just get to learn from so many terrific people here at the meetings have been great. So so thanks a lot for coming. I’m Dave Berquist. I run the Serumaga consultancy and also the founder of the Cereal Marketers community, which is another big reason I was excited to come and bring a few of my friends here today. Jason, want to share a bit about yourself?

Jason VandeBoom [00:00:50] Yeah, I’m the founder of Active Campaign. We have a customer experience automation platform. But perhaps more helpful is we’ve had this interesting journey over time. I started the company in twenty three, fully bootstrapped for 13, 16 years, actually, I guess it was, and then have these different phases along the way of growth going from twenty people in twenty sixteen to over six hundred and fifty today.

David Berkowitz [00:01:16] So, so. Well let’s unpack in a very short intro. So, but, but let’s talk a bit about the journey and it’s like that, that long early journey. And so why, why did you stay bootstrap that long and then you can go right into what made you then after, after so long to do this on your own. You went for that that series?

Jason VandeBoom [00:01:41] Yeah. I always really never thought of it even as an option I guess, and what not. And I’m thankful I didn’t. Over time, I started to feel the pressure to raise in a way from the standpoint of it seems like it’s the thing to do right. From my standpoint, personally, I just want to maintain optionality as long as possible and I want to have a reason. So, like, I kept feeling like we should raise that success or something like that, but I couldn’t get to, like, what are we going to do with that? And I think that, as I thought that through and as we ultimately raised our series, eventually the reason wasn’t necessarily for success or something like that or some validator. It was more like we’re going to continue with the plan we had. It’ll just allow us to have a little bit more ability to stick to a certain extent with some of the decisions. Once I started realizing that, you know, we’re maybe making decisions out of fear to a certain extent, but there were calculated that was kind of the let’s maintain some of the bootstrap principles, but bring in some funding. And I think that, like, over obsession with funding. And it’s kind of funny because, like, if I went out and got a high interest loan, nobody is going to, like, congratulate me. But that’s essentially what you have to pay it back. Right. So, yeah.

David Berkowitz [00:03:04] Yeah, yeah, I’m always wear just because I’ve seen it from the inside of whether it even congratulate people when when they secure big round and or any round, which is not because of any size, it’s not exactly easy, especially these days. But but it’s also like it’s like I’d rather congratulate someone when they win the client or launch a new product feature that’s like a game changer.

Jason VandeBoom [00:03:31] Well, and I think that’s an interesting point, because I think you have to pay attention to it culturally as well. So we went from fully bootstrapped. The team was super energized around that fact, right around the fact that we’re just doing it ourselves and then bringing in funding. And I do believe it was the right thing to do. And we found this balance. But as we did that, as we had our series A, Series B and whatnot, we found ways to celebrate what really mattered. Meaning we we probably celebrated more around customer count than funding and we probably celebrated more of our customer count than even revenue. It’s like for us being like entrepreneurs and small business first in the way of like that’s what we’re really trying to help that drive so much value and passion. And I want my team caring about that. First and foremost, the energy and people should still be excited and proud of the way through the funding, like it’s a whole challenge in of itself. But like really try to make sure that the North Star of care within the company is on what matters. And to your point, that’s probably more the customer than like potential validators.

David Berkowitz [00:04:35] And even that depends on what kind of company you are. And I feel like not to bring up this poll or have this conversation because I like being a 360 agency for seven years before and after they became part of Dentsu. And it’s like early years. Some of the biggest wins at the management meeting that we talk about were our declining customer count because there was just so much there are just so many things like just draining accounts, both emotionally. And the revenue was so low per account that just stopped caring about the logos and start caring about like, OK, how healthy is this? How much can the account grow and support the business? So so it’s anywhere where it’s like customer accounts. Amazing. But but sometimes actually a shrinking customer account is a wonderful sign of the average revenue for customers Coming up.

Jason VandeBoom [00:05:32] To the point. Yeah, every path is so unique. And I think that’s the that’s the point though, too, like the path you can create and whatnot. And what really matters should be unique. Can I think all too often we try to package it up and a lot of product minded people like myself to and like try to think like there’s a framework, there’s a playbook. Let’s follow that. When in actuality you should really figure out what’s unique and really push on that further.

David Berkowitz [00:05:57] So so since our principle, let’s keep down the funding path for a bit, then I want to go back to a few things about how you’ve grown your business. But a Series B that’s like a capital B, be a big headline grabber. Why don’t you talk a little bit about this and then what? Like why you went that route, too, especially after this very long, steady build.

Jason VandeBoom [00:06:23] Yeah. And the B was similar to those. So we did a hundred million shares B earlier this year and it was really similar to that in the way of we didn’t necessarily have to, but that was kind of the opportunity I was looking for. I was looking for like a time of momentum of where we really feel like there are some things and similar to the way we’re thinking about ideas in terms of expansion, both internationally, we’re thinking about ideas in terms of how much faster can we push on R&D and what not. And we kept going back to but like but what about this? And it started to feel a little conservative, even if it was fully paid for and whatnot. And so that optionality of having capital optionality out there, I really think does help at times if you’re able to get it at the right time. So combine those two things, don’t necessarily need it. Plus thought it would help us make better decisions. I also knew that I didn’t have, like, a clear cut purpose for meaning like it wasn’t like, come two months later, it’s like execute the plan. I think that that would almost be too obvious in my mind. So, like, just that ability gives a lot of freedom. Also, I think I spent a lot of time with those investors prior, so I’ve been talking to them since twenty sixteen and along the way. And I think a lot of people sometimes get this wrong. I shared some like ugly things as well. Right. Like I wanted to get reactions both along the way prior, but also as we were talking to firms closing, trying to close this Thursday, I want to highlight things that may not be super positive because I want to get those reactions and I want to do that live as much as possible or on a call so I can I can really get. Our understanding, and it’s counterintuitive because during that process, you’re just trying to push for value, trying to push for terms of trying to push her like this is the most amazing thing ever. But I think that’s a little bit of a mess because you have to deal with your investor or work with your investor for a long time. And like, I think that matters so much. And when I talk to founders of where it sometimes is less of an ideal experience, it’s it’s they almost it’s not going to sugarcoat. They didn’t reveal enough of the negatives along the way to see how how is that reaction going to be. And you can gain some of that by back channeling our investors, talking to others. But I think doing that with with people you’re talking to along the process is a is a powerful thing. It goes against the whole idea of trying to show it as an amazing opportunity. But I think it’s also appreciated by intelligent investors.

David Berkowitz [00:08:53] Well. Well, what one of those versions that that I saw and I think this was in that it might have been Inhorn class picture book of just enjoy it, enjoyed a lot of his writing and highly, highly recommend it. But but I believe it was him who who talked about one founder who who the first slide in their pitch deck was. Why why you shouldn’t invest at us. And and I’ve even made notes on this, like why you shouldn’t hire us, why you shouldn’t work with its. First of all, it’s a great site to have to create, even if you don’t include in your deck. But it’s like if you put this in and then and it’s amazing where also everything else you have to say after that comes off as so much more credible, so much more honest. And it it takes a lot of it. It takes a lot of self-confidence, which also investors.

Jason VandeBoom [00:09:53] And I think it’s now that’s a great point. And I think it’s either you reveal like authenticity through that process or you allow someone to guess at what it is and which would you rather have a guess of the truth or or get that understanding of how they operate?

David Berkowitz [00:10:11] It’s yeah, it’s just one of the things it takes effort, just even how you deliver stuff, especially if it’s not natural for you. Right. It might be a lot of my dating years where it’s like I just just want to kind of ramp things down and just try to be like all me centric. And it’s not like, OK, well, it’s like what do you do to help them? Right. And so so what I get into a bit about just how you run the company, too. And one of the things that’s fascinating to talk to it is where you put the primacy around customer experience. And and even with that, I think it’s worth first defining a defining it, at least as far as how it plays out an active campaign, and then get into a little bit of practical steps for what you’ve done to have a customer experience centric organization.

Jason VandeBoom [00:11:14] Yeah. Now, I think I think of a customer experience of spending well beyond sales and marketing. I think all too often we focus so much on that piece and trying to make that repeatable. And it’s really missing out on the other aspects, on the service, on the advocacy. How do you how do you create organic growth through that? Oftentimes that’s put in multiple tools, multiple teams. As you scale, it gets even more complex. People don’t know what’s going on in different areas. That’s what we’re trying to solve in part programmatically. But I’d also say the most successful businesses I’ve seen are not just trying to over automate or not trying to over programmatically solve for a customer experience, meaning that human element and really finding and we found that differentiator and how we can differentiate compared to our competition, like what can we do in terms of even free services that are human that our peers simply can’t do, like it would eat into their service revenue or they just can’t do it at scale and use some of those things to differentiate, to grow. It also then grows advocates along the way. We’ve done things like different types of strategy services and migration services and things like that that have been really helpful. The other piece, as we scale, it’s hard to keep this mindset of caring about an end to end customer experience, meaning it’s very easy to start thinking about in silos. There’s like sales, there’s the marketing and there’s all these pieces and people can’t realistically look and end. But you need the organization thinking about that. And so, like we do things like all hands and whatnot of always bringing customers to that and actually going through the process of like mostly about them. But then how do they even find out about active campaign, like marketing involved? Who did that part, who did the sales part, who did the support all the time? And you start seeing this collection across the company of people and not just technology that touches the customer experience. And when you get that. Understanding of the individual and the success they have is something that resonates and something that sticks with people longer, and you can maintain this culture of being a little more customer centric versus disturbing in a report of like going up and down. And like engineering is like thinking one aspect of it. And everyone’s not thinking about it in a manner. I think that’s the the big thing we’re trying to solve, both as a company, but like as we scale have been trying to solve for ourselves as well.

David Berkowitz [00:13:32] So like tying a couple of these threads together with the customer experience, to work with one of the first aspects of it and just being able to do things that other competitors can’t has, is this one of those things where the funding rounds have been a huge benefit and allows you more leeway to do this.

Jason VandeBoom [00:13:54] A little bit. I’d say also actually created questions during funding processes like we have things we do that on paper looks super unprofitable at a glance. Right, because by definition it looks like something that won’t scale, but it allows us to roll something out to market and start to prove some value over time. So I think it goes back to like even if you can find some way of making a capital efficient, like there’ll probably be some hesitancy in your mind if you’re like we’re running right at the line. And so, like funding does help with that to some aspect.

David Berkowitz [00:14:27] Well, one of the things that I’m always fascinated by when working with companies and in marketing tech attack other related fields could also get into some of the services side of the business. But maybe my most and least favorite buzzword in this dog fooding, it’s like I explain this to people, especially outside of the industry, and they want to throw up. But the so this idea of eating your dog food and in this case, for those who have been exposed to this amazing, horrible term, just using your own product or your own offering to go and grow your own business and improve your business in some way if you have a perfect kind of business for that. So I’m curious how helpful active campaign has been in contributing to active campaigns growth?

Jason VandeBoom [00:15:28] Yeah, that’s a good question and it’s been quite helpful. But I’ve gone through different phases of how I feel about the whole whole whole thought in general along the way, meaning like we can solve for our marketing, sales, customer success. It all operates out of active campaign. So the idea of building a platform for customer experience is what we’re trying to build around resonates quite well. I’d say there’s an extreme approach to that, meaning you can’t use anything else, you just got to totally go all in. I think my view on that has altered a little bit, but I don’t think it’s one where you have to fully sort of retract from the idea of your platform or your product as being eventually there. And what I mean by that is like I think there’s a way where you can you can do whatever you want to call it, your own platform and product, while at the same time use something else. And I see some value in that meaning if your product is holding back your company and where you’re trying to go with it, maybe because your size or what you’re doing is getting beyond your average customer. It’s OK to bring in something that maybe serves a different level with the understanding. I think and this is the key part, if you could you could time box on, say, like we’re going to try using this tool for like 12 months. And by the end of 12 months, we have to figure out, like, how do we not use it? Right. And so and the reason for that is that you can really provide some learnings of like what? What are the reasons we even needed to use it? There are some learnings we can do not to necessarily imitate what that product did or anything, but like how can we solve that with our own platform product? And I think that’s something that’s a different way of thinking about it. That’s probably getting the benefits of both sides. And it really allows for it to be extremely clear within the organization why and time frames around like over time. This is the goal of of continuing to use the product.

David Berkowitz [00:17:19] And one of the benefits of citizens, both working in-house at some tech companies and and also coming from the agency side where I might come across a company like yours and I’m like, I can’t find the plot just yet. Like, let’s use this and let’s use this for the agency, including the ABC being an actual customer. And I know I’m sure I tried to get a lot of stuff for free, but that wasn’t always the case. And but it but in doing so, I’m like, well, look, when the HD customer, we could be a lot more creative with ourselves and come up with all kinds of all kinds of things that we couldn’t necessarily do just for a and wish way. And then some of those things just unlock ways to choose the business that there were people that could even just working on things like for a client account if to be a little more precious with. And now it’s like, OK, let’s just have fun and see how far this thing could go like that.

Jason VandeBoom [00:18:26] Yeah.

David Berkowitz [00:18:27] So so we’ll have so much time with let’s just get into a few of these areas. But before we do it and do it just just since you’re so good with this stuff, what would it be one or two of the more meaningful mistakes you’ve made that that you think others can learn from?

Jason VandeBoom [00:18:50] One of the one of the things I would I would correct if I could go back in time is my thinking about a product mentality. I come from a very product mindset, engineering, design background. And I’ve always been product has to solve everything. Right. And that led to let’s not build a sales team. Let’s let’s try to just like surely we can do it without a sales team. The thing is, everyone has a sales team, whether it’s the founder of Blind Support or someone who’s replying to your customer, hopefully, or your prospects. And so building that out and really figuring out how do you instead of trying to remove human elements from the customer experience, how do you enable that? So instead of just automating, how do you automate enablement of individuals to make them more efficient, then more performance with your prospects, with your customers? And that’s something that is definitely evolved over time. But was was one key thing that I think without that we wouldn’t have had the momentum we have right now. Other than that, I think there’s a lot of different things. The other one that sort of sticks out there would be this over gassin or overthinking rather decisions, meaning we have something we want to do. We switched from being an on premise company to a fast company, overthought that for like a year or two and really started thinking about what happens next if we’re successful, what happens next and what do we have to do next. And we spent all that time and energy. Almost none of it actually was accurate. At the end of the day, we had challenges. We just didn’t know what they were. So figuring out how do you create that culture of of like let’s take the step. Let’s iterate on it. Let’s continue to iterate. Let’s just continue to move forward. I think that’s very easy to say out loud in reality, and especially as you grow in a company size, it becomes far, far more difficult because everything feels so important. And that’s something we’re still not perfect at. But yeah.

David Berkowitz [00:20:49] And with culture, how much of it came from here, your 10 principles and this is where you’re going to go to follow and how much of it is OK, you build this business and then you see, like, you know, who you are and what the company is. But then you see what kind of happens is more iteratively out of the nature of doing that and building the business.

Jason VandeBoom [00:21:12] Yeah, in terms of how the culture of apps and whatnot,.

David Berkowitz [00:21:15] How much of it is that like top down versus.

Jason VandeBoom [00:21:19] I think it’s more around like alignment of of clear alignment of of kind of what are the areas of focus and just setting some lines like we made it very clear from the beginning, we’re entrepreneur and like we’re not moving up market open to addressing midmarket and whatnot, but not not moving all the way up. We don’t want any substantial customers. We created a rule early on, no customers, more than half a percent of our revenue. So, like, you have those clear things. And and that’s that’s a piece of culture, I’d say, in a way, because it’s like that it’s a different way of approaching the focus of what you give up and like what you stand for in different areas. And if you’re actually standing up for something, if you have a value or something, you’re probably giving something up in return. Right? I think that is what drives culture far more than a statement, a list of things, stuff like that that can make for a nice page. But like, if it’s not reality, what’s what’s the point? Right. And I think it’s also just super important to know that, like, it’s not going to be static. It’s going to adapt. It should adapt. It should evolve over time. It has to. So being comfortable with that, but setting that expectation from, too. And so I think it’s a lot of alignment of expectations. It’s it sounds simple, perhaps, but it’s probably the most difficult thing of scaling the company.

David Berkowitz [00:22:37] Well, just as we wrap up any final tip to have in terms especially for companies like this that are are trying to just get themselves in a position for a theater or a or just a couple of tips for them,.

Jason VandeBoom [00:22:53] Just make sure you’re doing it for no reason, not just to appease others or find a way to success. And I would also just say trust your own instincts and intuition more than comparing yourself to competitors, comparing yourself to peers. You’re going to find far more innovation. You’re going to have a lot more fun. And I think you can have more control of your destiny and optionality if you follow your instincts. So there’s a lot of intelligence in there.

David Berkowitz [00:23:17] Terrific. Well, thanks a lot for joining today. I see it the rest of the conference. And Jason, thank you so much for doing this. Great.

Jason VandeBoom [00:23:23] Thank you so much. Awesome. Appreciate. bye

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