On average, 30% of revenue for SaaS companies comes from partner programs. And huge publicly traded companies such as Hubspot and Shopify rely on their partner channels for nearly 40% of their revenue! Early on with your program, you might feel like a partner channel is growing painfully slow, but in reality, the long-term value of this channel is huge.
In this episode, Bryn Jones, founder of PartnerStack, breaks down the ins and outs of how to build a great partner program for your company. Dave talks with Bryn about what investors think of partner programs, how to pitch investors on the idea, what percentage of sales should you give out in order to attract the right partners, and how to build your partner program in a responsible way.
In This Episode You’ll Learn:
3:18 Bryn talks about his YC experience
8:40 Bryn breaks down the 3 factors of partner channels
12:22 What does a really great partner program look like?
15:02 What percentage do you see most good SaaS companies giving up to their partners in order to go make the sales?
19:27 What do investors think about the revenue stream that is like a partner revenue stream?
28:35 What has that growth journey been like?
35:25 What have been the mistakes that you’ve made along the way?
44:36 Salty Six
DR: Today I’ve got Bryn Jones, the co-founder, and CEO at PartnerStack (formerly GrowSumo). It’s a company that we use that is an online platform to basically give you everything that you need to build your own partner program, turn your customers and fans into your own kind of distributed Salesforce is the way I look at it. So we’ve been using them for a while now, very cool product. And I’m excited to talk to Bryn about kind of how they’ve grown that to something that’s so cool. So Bryn, welcome to the show, man.
BJ: Awesome Dave, thanks for having me on here. that’s definitely something I was looking forward to.
DR: Yeah, this will be fun.
So I want to dive into PartnerStack here, and where you are at today in terms of some of the revenue numbers that you track or customers or employee numbers? Just where are you guys at right now?
BJ: Yeah, so we’re about 30 people right now. We’ve tripled the team in the last 12 months, we’ve grown revenue close to 400%. On a steady track to go through and to continue scaling up this year, we expect we’ll probably double the team size by end of the year so we’ll be somewhere in the range about 55 or so. So life is good and growing can sometimes hurt is what I’ll go through and say. But yeah, we’re having a lot of fun.
DR: Very cool, so you guys have been doing this about four years now, right?
BJ: Yeah, yeah, so I guess like going back to where we started is 2015. My co-founders and I founded another company and it was like Slack for nonprofits. And the one recommendation I always tell people is never build Slack for nonprofits, it’s not a business that you wanna be in.
DR: Should you build anything for nonprofits or is it the nonprofit part that’s the hard part?
BJ: You know what, I think it was, yeah, I think building for nonprofits is tough. Some people have done a really good job at it. It’s not what I can go through and do is what we went through and learned. And so yeah, it started with that. It was four of us. We sort of like, really working hard on the problem when we’re at graduate school and learned very quickly that that was not the business that we wanted to go through and be in.
And PartnerStack actually evolved out of that. Our partner channel was actually, what I like to say, the only thing that was working inside of our business. And that’s how we got started at PartnerStack back in 2015.
DR: And you guys did YC, we did YC, we were winter 2018 so right at a year ago. Did you guys take PartnerStack through YC or was that the nonprofit Slack deal?
BJ: Yeah, no, so we applied to YC twice before with the nonprofit slack deal and definitely didn’t get in. We got in with PartnerStack. It was like, I guess February 2015 was when we first started working on it just as an idea.
We went and did a whole bunch of customer discovery, made an application into YC and we got in really as an idea. So it’s very fresh when we first got in there.
DR: Did you have no customers when you got into YC?
BJ: We had no customers. We didn’t even have a functioning platform. So we got into YC, we actually put a landing page together and we reached out to 40 SaaS companies. And then 20 of those 40 SaaS companies signed up to platform within two weeks, and that’s the only thing that worked by the time we had our first meeting with Aaron Harris, Kevin Hale, and Kat. And so it was an uphill battle after that for sure.
DR: So what did you think of YC? What was your experience looking back on it?
BJ: I mean I think that YC’s, I mean their model is incredible, right? They put them all together where they bring investors all in one place and it becomes very easy to raise financing in a very short period of time. The things they teach you inside of there like setting goals and trying to go through and hit targets are things that we still use today. It’s how we actually go through and train all of our managers that come on board. So it really gave us like the playbook to go through and scale up the business.
DR: And what do you mean by that? What’s an example of the goal-setting that you’re teaching your managers that you got from YC?
BJ: Yeah, so I mean I think that setting a goal for where you want to be end of the year then working back from that, and how to have, everyone knows how to do that but how to actually have conversations that keep you accountable and how, feedback is really really important. And I think that that part of YC where you’re doing group office hours every two weeks and you get to have the hard conversations in front of a team of, like in front of eight other groups and you get to see the hard conversations that they’re having to have shows that everything’s broken always and so there’s no point of bullshitting it. Just be honest with what’s there and I think that that’s core to our business and core to who we are.
DR: And the YC partners love hard conversations. I mean it is like, I always feel like YC talking to somebody is like jumping into an icy river. It’s like this is gonna be tough and I’m gonna be a little bit upset at the end of this but it’s always so good. That was a shock for me I think going into YC.
BJ: Yeah, yeah, it’s like, I remember our first conversation, first meeting, first conversation, we sat right next to Kevin Hale. And he turned to us and I knew that we’re gonna get picked on to go through and explain to our business and he’s like, “Listen, this is a safe space. Like tell us everything that’s wrong.”
And we had no idea what we were doing, right? Like first-time founders, we’d done a company before, really had gone nowhere.
I turned to him and I was like, “The truth is like our platform is completely broken, “it doesn’t work and our customers “are going through it and complaining.”
And I remember just getting like, it was like walking over hot coals. The look on his face. And so thankfully that was, I don’t think it was the last time we saw that look but we got used to it and learned the hard way that this is how you have to go through and grow stuff.
DR: Yeah, we got our welcome call from Dalton and we were so excited and he’s like, “So pumped to have you guys,” and the next sentence was, “Honestly your churn is atrocious, “it’s gonna kill your whole business,” and like, “You guys have to fix that now.” It was just like one sentence of like congratulation then it’s the hard truth from here on out.
BJ: Yeah, yeah.
DR: And it’s good, I mean it’s like we knew that was true and it was kind of the emperor has no clothes type of moment and it’s just great, thanks for sharing that.
BJ: Yeah, yeah. So it was an awesome experience and I think the network after the fact like, and anybody that’s gone through it, there are always things that can be done better but I think the core thing that YC does and the thing that they do so well is they just focus on what they’re good at, and then kind of add to it and are constantly experimenting. Taking those same types of things and taking that application putting it into our business as well as the now thousands of companies that have gone through it, it’s been only beneficial.
DR: Yeah, yeah, very cool. Okay, so what kind of companies get the most value from you guys? I hear you trying to work with, and what are you really set up with these companies?
BJ: So we work with B2B SaaS companies. Typically, it doesn’t really matter the size of their ACV. It can be low, it can be high, it works the same way. What matters more is the appropriate time of trying to start a partnership channel, right?
Early days we found, early-stage companies would come to us and they would say, “Hey, we want to build a partner channel.” But if you don’t understand the unit economics of your business, you’re not ready to turn on multiple marketing channels. If you don’t understand how to go through and sell your platform, you’re not ready to go through and enable other people to sell your platform. And so the companies that typically work really well for us probably on the low end, a million to $2 million ARR.
Our sweet spot is companies that are between 100 and 200 people. That works really really well those mid-market companies typically at that point, there’s a lot of partners that are reaching out to them and there are different types of partners reaching out to them but we’ve seen it work early, we’ve seen it work late.
At the end of the day, the problems exist right across everything, right across the spectrum. But it’s:
- Do you have a real business?
- Is that business repeatable?
- And until then, there’s no point in trying to go through it and start a partner program.
DR: So these partner programs, basically they’re just opening up and saying we’ll give you a percentage generally of all the sales that we make if you go and promote through our own funnels and all that kind of thing. Is that essentially how it works for all your customers?
BJ: Yeah, so I mean partner programs can work in three ways.
There are the marketing partners, there’s a referral partner and then there’s a reseller. Each of those partner types has traditionally been segmented into multiple groups. We define partner channel or our channel as that whole, as those three main drivers and that’s exactly what it is.
If you’re opening a partner channel, you’re effectively putting a sign on your business that says we’re open to doing business with third party members. And you have to work with those third parties to do everything you can to enable them.
So if it’s a reseller, they probably want sales and marketing documentation, right? If it’s an affiliate, they probably want ad banners and rules and commissions. So whatever you can do, the same way as you go through and support a sales or marketing team, number and like the process of onboarding them to be successful is what you want to do with your partners as well.
DR: Interesting, so I’ve got my start about five years ago in the internet marketing space. And in the internet marketing space, there’s kind of this seedy underbelly that is affiliate marketing. And as people kind of get on, they’re usually working from home, trying to start the business for the first time and I don’t have a product, I’m gonna go like to JVZoo and I’m gonna sling some of these products I don’t know anything about. And it’s just like not the most attractive or transparent world and yeah, I think you guys have kind of come into that space. I’m curious how much you feel like you’re a part of that space and offered a really great product and a really great company, and you’re not attached to that world in my mind.
So I’m curious how have you guys navigated that and do you, has that been your experience or is that just my experience of working in internet marketing before the SaaS?
BJ: Oh yeah, no, affiliate marketing, all that stuff is where the industry’s been for a long time, right? Affiliate is really like the lowest rung of partnerships.
DR: And why is that?
BJ: I think that there’s a lot of negative connotations with it. Affiliate works for products that you wouldn’t talk around the dinner table about with your parents. I think that that’s why it’s got such a bad rap but at the end of the day, affiliate marketing is actually a tremendous growth tool for a lot of B2B SaaS companies. And more and more now where I mean there’s a rise in the total number of solutions that are out of the market.
And your sales reps, your marketing team’s gonna go through it and tell the truth. You actually wanna be able to turn to whether it’s, like somebody on YouTube or somebody that can run advertisements on their own. You wanna be able to turn to them and let them speak that story when you’re ready.
Our view on it is we don’t enable affiliates, we enable distribution channels. And so a distribution channel is very different than somebody that’s just running ads for you or someone that’s doing YouTube reviews. A distribution channel is a cost-effective way to go through and acquire customers. And technology companies have traditionally been very bad at distribution.
The reason being is it’s very easy to go direct to consumer, it’s easy to go on target early adopters but the reality is the majority of the market actually sits in those late adopters, late majority and those are generally people that you can’t reach or are cost-prohibitive — excuse me, cost-prohibitive to reach.
So you’re better to go through a third party to go through and reach them.
What’s been like a big success that you guys have? A company that sees you guys like what does a really great partner program look like? How well can it work? What kind of numbers are companies seeing? Just for people that are out there that are thinking maybe we should start to tack this on our business.
BJ: So I’ll give you two examples. One in an early stage and then one at a late stage. I won’t use the specific company name but I’ll tell you how many people are inside of it. So there’s an early stage company when they came to us, they were five people. And the fifth person had just joined and was working part time. And he said, “I want to make a big bet “on the partner channel.” And their ACV is about $125 a year so not huge, but that’s about what their ACV is. He came on board and we’re actually responsible for driving now 80% of their growth. They’re totally a bootstrapped company, they’re doing well over $2 million ARR at this point in time and we’re the ones that drove 80% of that growth. And it was all because that person that came on worked early days with them and is now actually their VP of marketing. He took a bet on and then saw an opportunity that’s there.
DR: And it seems like a bootstrapped company would find this model really attractive. A lot of the bootstrapped companies, I think those are doing really well, they’re using this because they, it’s a little bit better for cash because you don’t have to pay out the money typically until after the sale’s already been made, 30 or 60 days or whatever.
Is that something you guys see is that it tends to be more bootstrapped companies getting really excited about this early on?
BJ: Yeah, in the early days bootstrapped companies because they don’t have the cash, they don’t have the cash to go through it and buy ads. They’re not going through it and doing that. But more and more, we’re actually seeing later stage companies.
And so, the average SaaS company 30% of their revenue should be done through channel. And so if you don’t have a channel program, you don’t have a partner program today, you’re just giving up on potentially 30% of your revenue. And it will be impactful at some point in time. You can look at big companies like HubSpot.
40% of their new revenue comes through channel. Shopify is closer to 30% at this point in time, and it’s ultimately the thing that lets you go through and scale out. So we worked with early-stage companies of four people that scaled to 12 and now we’re working with companies as big as Intuit.
With the reason being that this is an incredibly hard beast to go through and handle. And so, we have customers coming to us that have overpaid their channel partners, that have massive holes in their programs. And at the end of the day, we just give a framework where we can turn channel and turn partnerships into science because today it operates very much something like art.
DR: Interesting, and what percentage do you see most good SaaS companies giving up to their partners in order to go make the sales?
BJ: So on the low end at 20%, on the high end, people go upwards of 40%. Those are typically for resellers that unload not only the acquisition costs with the support cost tied to it.
So we have like enterprise customers on our platform and the LTV of their customers that they bring onboard, that come through channel partners is 250% greater than the LTV of customers they actually onboard. And it’s because the channel partners, they’re hand-holding, doing all the training and is there just to go through and support the account. Yeah, so we see upwards of 40% and as low as 20. Anything that’s under 20 is questionable whether you’re actually gonna be able to recruit the right people. You certainly have to incentivize people the right way but yeah, that’s what we’re seeing right now.
DR: Yeah, when we first launched Proof two years ago, we started it for a 40% referral fee because we wanted to go kind of take the market quickly. Yeah, we were bootstrapped at the time but we were like you know what, it’s worth it, it’s worth more to us right now to have a lot of quick traction. That’s part of what got us into YC, was like we had a lot of traction early on and since then I think we’ve scaled back, I think we’re at 30%. Yeah, so we scaled back to 30% and then for agencies we do like a 15/15 split, it can pass on 15% to their client and then they get 15% themselves. And 30% I think feels really good to us, it feels right ’cause of the stage we’re at.
BJ: Yeah, yeah, if you try to undercut it, you’re not gonna bring on the really good partners at the end of the day. Partner is a unique thing. Like you’re not actually selling, the big mistake that we see companies go through and do is you’re not actually, it’s like companies are really good at selling their product, right?
But in a partner program, you’re actually selling a partnership. And so like what is the upside for the partner in working alongside of you, right? You can’t just say like well, you have the luxury of doing that. There should be a monetary upside and there should also be a solid working relationship. And technology is really important to that. And up until now, there just hasn’t been enough tech to go through and support that. I mean you wouldn’t go through and onboard a member of your team and not bring them on to Slack or give them an email.
How can you possibly expect your partner to be successful if you’re not gonna support them the way that it’s required?
DR: It seems like too with affiliates, it’s the 80/20 principle but it’s like 99/1 where like all of the revenues and all of the sales come just from a few affiliates that we’ve seen. We were talking about a guy named Erwin who’s been one of our biggest affiliates, our biggest affiliate for a long time. And we found out I think talking with you guys that this guy’s an affiliate for like a ton of companies and it’s like they kind of feel like this guy, this is what he does and like really really good at it.
Have you seen that across like all the accounts that, it is this super long-tail of people that have referred one person, maybe two people and then there’s a few at the top that do all the sales, and is that kind of the model that people should be going after?
BJ: Yeah, so partnerships isn’t even an 80/20 rule. It’s actually a 90/10. And so mistake that people often make is they always go out and they say oh, we’re gonna recruit this like one super affiliate or we’re gonna recruit this massive agency or we’re gonna get this partnership with this financial institution. And that’s gonna cure-all.
There’s no silver bullet in partnerships. You have to create a framework and then dump the chips in and support the people that are engaged. And that’s why you need technology for it to happen because really never before have you been able to do that accordingly.
So we see that right across programs. Interestingly, if you start creating a lot of content and that content hits home, agency partners, the level of engagement could actually be quite high. But on the agency partners the trick there isn’t again to sell your product or to sell the commission but it’s to be talking about their business. HubSpot and Shopify do a great job at this. I always point to them as examples to go through and emulate. Just go and look at what they do as far as content goes and then if you copy that type of framework, you should be able to provide a really great agent or build a really great agency program.
What do investors think about the revenue stream that is like a partner revenue stream? Do they think it’s better? Do they discount it and say oh that’s not as good as some other type of revenue stream, what do they think?
BJ: Yes, so I mean, a way that investors think of it is and I mean the way we pitch it is like sales was art and then it was a science, right? Like Salesforce changed the game there. Sales operations wasn’t even a thing until Salesforce came along. It was always a VP came in, they had their playbook, they implemented the playbook.
The same thing happened with marketing with Google AdWords as well as with marketing automation solutions like HubSpot, Marketo. And the last piece that’s just recently happened is with customer success.
Zendesk, Intercom — they’ve gone through it and taken what was an art and turned it into a science.
And so investors look at this and when we talk to them, we’re like how are you not having a conversation about where 30% of this revenue should happen?
When was the last time you ignored 30% of the revenue in a boardroom? And so the way the investors are looking at it now is they recognize that with the increasing number of solutions that are in the market, it’s gonna be like partnerships is an incredibly important piece of what’s there.
The challenge is investors don’t know how to fix it. And so there’s always some like poor soul that’s pointed to that’s doing a really good job in their area of expertise whether it’s in sales or marketing. And somebody in the executive group says, taps them on the shoulder and says hey we’re gonna give you this really great opportunity, you get to run partnerships. But it’s just you and you have no resources.
So it’s actually our responsibility and I think we need to do a better job at it, to be honest, to educate that individual how to have that board-level conversation and how to push the conversation up to the rest of the executives team.
DR: I think it is challenging, it’s a challenging concept even internally. We’ve run Proof for two years, kind of always had this partner program and we’ve kind of ebbed and flowed on how much effort we put into it. And, myself I’ve been skeptical of the amount of value that we get out of our partner program by doing a ton of things. We’ll kind of set up the big webinar, we’ll do the webinar, we’ll have for it, we’ll cradle these assets.
We get some meaningful revenue out of it but for us, not nearly as much as we, for the effort as we would get from a Facebook ad or ad or something like right now. But I feel like there’s so much education, we just don’t really know what we’re doing. It’s like there’s not a lot of information about how to really do this well. And I can see how once you can get a company to realize that and recognize that and train them up on that, that could become yeah, a main channel for them when some of the other channels probably start to get less effective and less efficient.
BJ: Yeah, I always point to Shopify. So Shopify started investing in its channel program in like 2010, 2011. And I talked to the people that started running it there first off, and they said 12 months into their partner program, it had eight active channel partners, right?
Like that’s nothing. Anybody looking at that on paper is gonna say can it, not worth it, absolutely not worth it. But they’ve doubled down on it. And I mean the first conference that Shopify ever ran was their partner conference. And in their perspectives when they went public, partner and channel was the main driver of what’s there. Because Shopify’s actually built not only Shopify and all their e-commerce stores which otherwise built businesses that service those e-commerce stores. And so when you think more broadly about what the opportunity is and the ROI that it provides, partnerships and channel, it’s something that you need to do. It’s just not gonna show you that immediate return like Facebook or building in a sales team. The reality is long term it’s gonna be the better solution.
DR: It seems like there’s more of a moat around that channel as well. I mean there’s a real relationship there, there’s affinity, there’s a brand relationship. And Facebook Ads obviously don’t have any sort of attachment to me and my company, and they just want the dollar and will spit back whatever they can, but you build up this community of partners and like, that’s gonna keep going. That’s not gonna switch to another company very easily, assume that that will have a lot more staying power.
BJ: Yeah, I mean like there are Shopify partners that have Shopify tattoos, right?
There’s probably more Shopify partners that have Shopify tattoos than there are Shopify employees that have Shopify tattoos. And so that’s the type of fanaticism you can kind of tap into if you make the right investment.
DR: Yeah, a lot of these people have built their entire business around that. They’ve built the life of their dreams because they’re just reselling Shopify or HubSpot or whatever. It’s totally transformed their lives when yeah, most people don’t get that opportunity.
BJ: Yeah, and I think that more software companies can do that if they serve up the content in the right way, right? It’s about having a conversation. It’s not about equipping them to go through and sell your platform. It’s just opening your employee base without having to carry the overhead of salaries. But you still have to go give them more support than you probably originally think.
DR: Okay, sweet, so you guys recently made a name change as far as I am aware.
You were GrowSumo when you switched to PartnerStack. What’s the story behind that and how has that gone?
BJ: So at our last company, we were called at first Unyte and eventually Pod. It was Unyte with a Y. And we wanted to go to office hours when YC came to Waterloo and we sat down with Sam Altman. And Sam’s only feedback was Unyte is an awful name. Unyte with a Y is awful. And we spent like I don’t know like four or five months trying to repurpose and find like which name made sense there. And so the only rule for when we made the pivot over to GrowSumo was we were only gonna spend five minutes on selecting a name. And so we wrote a whole bunch of names up on the blackboard or in the whiteboard rather. We went through it and looked at what was the most affordable domain was and GrowSumo was $12. So that is how we selected GrowSumo and that’s what we went through and it worked out.
DR: I think it’s the right way to do it. I mean do you regret that looking back, or do you think that was the way to go?
BJ: That was absolutely the way to go. There’s so many things that matter in your business. The name at some point in time matters for your brand but again, what matters at first is finding product-market fit. And that’s so hard. Who cares what your name is if you don’t have product-market fit?
Yeah, so when we hit product-market fit or could see us approaching that product-market fit, we went on this longer search to go through and find a domain. And anybody that’s done any type of domain searches know that six-figure domains, they’re pretty common practice these days. So we found PartnerStack because we think, PartnerStack is ultimately, partnerships are part of the technology stack instead of technology companies and it just made sense. And truth be told the domain was actually pretty affordable. So that certainly had an impact.
DR: And how has it been, like the rebranding? Has that been a big pain? Has that caused a lot of confusion? What was that like?
Because I think a lot of people were probably thinking hey it’d be nice for us to switch our name at some point but it also seems like a huge headache, have you found that to be true?
BJ: Yeah, our team did a really good job at it. The truth is, we don’t do much as far as marketing because our partner channel drives so much revenue for us. We just turn to our partners for that to happen. So we just equipped them with the right assets and then they just changed everything. It was actually easier than we thought.
We had, you know how people have like a swear jar, we had like a GrowSumo jar that if you said GrowSumo instead of PartnerStack, you had to go through and put some money in the jar.
So that was probably the hardest part of the whole thing is in pitches or in customer calls jumping in, talking about GrowSumo when it was really PartnerStack. And that’s the only thing that caused confusion but to be honest for us, it was a lot easier. I’m really happy we did it and it’s been really well received from our new customers and our existing customers.
DR: It’s a better name, so I like it. Do you guys think you’ll change, like right now, all your app and everything is still on app.growsumo I think it is, are you planning on changing that or you’re just like, that doesn’t really matter, we’ll figure that out later.
BJ: That’s something that I think we’re gonna go through to try to tackle a bit in 2020. There are some reasons why we can’t necessarily do that right now, like from a tax standpoint. But at the end of the day, it doesn’t really matter too much. We don’t get a lot of people going through it and even like you’re like one of maybe half a dozen people that would ever go through and notice it.
And so at the end of the day, our brand is what our brand is, our marketing page is what our marketing page is and it seems to go through.
DR: By the time you get inside the app, you’re probably, you already get it, you’re already sold, like I don’t really care at that point.
BJ: Yeah, yeah, no, exactly.
DR: Okay, very cool. So I wanna talk about your guy’s growth. You’ve been doing this for four years but then at the beginning, you’ve shared these like crazy numbers from the last year.
It seems like something has clicked, something has changed very recently that is just causing big growth. What has that growth journey been like?
BJ: Yeah, so it was so hard at the beginning. It was so hard. I mean I remember at YC because we went in as effectively no product. We’re talking about the total number of partners that were on our platform.
And I remember one of the conversations was why we have zero, or we have 19 partners on our platform. We sat down in office hours, we walked through oh, we only have 19 partners and one of my co-founders John, he stepped up and they said like what are you gonna do in two weeks from now?
And John’s like we’re gonna get 500 partners on our network. My other co-founder said like why not 5,000. And then Kevin Hale said yeah, why not 5,000?
We came back, two weeks later we came back and we had 79 partners on our platform and we were just like pumped. And I think I remember the look on Kevin’s face was like oh man, you guys are not gonna make it. Pretty sure that was the question in the room but we felt super excited about it. So we actually had great growth right before demo day. Not from a revenue standpoint but from companies coming through and signing up. We launched on Product Hunt and as an enterprise software company, we’re voted like the third product of the day which we almost didn’t launch on Product Hunt. So I highly suggest for early-stage companies to do it no matter how it goes. And then we went back to reality, we pitched on demo day and our platform really didn’t work.
It kind of felt like Vaporware because it kind of was. And I feel like everybody, it’s like some state of that. So that was 2015. Pretty much everybody that came through and signed up is now out the door and probably on to what they did next. So we spent 2016 really being deliberate in building our product. Our biggest mistake was growing, putting too much of an emphasis on growth before we had product-market fit, right?
We didn’t need to launch on Product Hunt when we went and launched on Product Hunt. We had some really great companies we were working with. And I think that Rainforest tells a very similar story from what I’ve gone through and heard. I wish we just stuck to those customers longer instead of giving in to pressure to grow at all costs.
DR: I was talking to our team recently and have the exact same thought, is that I think YC, I mean one of the best things they do is tell you to grow 10% week over week. But then we kind of kept doing that and all of a sudden, we just hit this wall, we’re like we’re trying to grow faster but our technology is just not ready. And things started churning out and it was just like we’re spending all this time fixing stuff and trying to scale and couldn’t go deep with those first people that we had on that cared so much about it. Yeah, I have the exact same feedback that sometimes growth at all cost can just actually kind of kill you or at least slow you down quite a bit.
BJ: Yeah, I think that growth cures everything until it doesn’t, right?
DR: Until it breaks everything and then you gotta go back.
BJ: Yeah, yeah, I mean our turning point was we went back and did heavy heavy work. We went to some of our investors and might meet with them every month and they say, like okay, what’s the update?
And for a while the update was like we’re going to the dentist, right? No one wants to go to the dentist but everyone has to. That was the same update I think for like three months in a row. We’re going to the dentist, we’re doing the hard things, we’re making the hard decisions from a product standpoint to get to a point where we hit product-market fit. So we came out in 2017 and that’s when we really started to commercialize the product. And it wasn’t probably until that mid-2017, early like late 2017 was when we found not only product-market fit but sales market fit. We know who to go through and target, what the buying process was like, materials that they required to sell internally. And that was really something that changed everything. We’ve never done like really much of anything on marketing spend.
We invest in our sales team and we invested in our partner channel. And that’s driven everything and then the referrals that we go through and grow and get from it have been incredibly valuable. So it’s very much so product-market fit and then like sales market fit. At some point in time, we have to work more on the marketing product fit but our partner channel works so well for us right now that that’s our bit and our crutch.
DR: Do you feel like you have hit product-market fit now?
BJ: Yeah, yeah, it feels very real. I think when you hit product-market fit, all of a sudden you start having all these really good problems to have. And they feel like the weight of the world is on your shoulders but objectively, they’re really good problems to have. And so I think that that’s how I would describe if you know that you have product-market fit.
DR: It’s like oh this really great company wants to work with us and we’re gonna have to build all this new stuff for them but they’re gonna pay us 10 times more than anybody else has ever paid us. Huge problem to have, also an amazing problem to have.
BJ: Yeah, we had something where like or analytics went down, it didn’t work, it stopped working. What happened? Oh, we dove into it. It’s because one of the companies that started using us 10x their channel revenue like in a day and we’re like we’re not expecting that whatsoever and we’re like oh man, I guess this thing works. We’ll go back and fix those analytics after the fact, so those are good problems to have.
DR: We had a moment like that recently when our login wasn’t working because our system was overloaded. Obviously, you should have a good login process into your app but we kinda went back and looked at it because we saw like traffic and this huge spike and we’re like Oprah started using it yesterday, and ran this huge launch on it and like had more traffic than the rest of our customers combined or something like that. That’s a cool problem to have.
BJ: Yeah, yeah, and I think that that’s a hard perspective to keep in mind. We always try to put like good problems to have in context so it’s like hey last year this time, we closed like this type of revenue and like this year in this same period of time, we closed like 5X what we did last year. And everyone might be feeling the heat from that but this is a really good problem to have.
And we’ve been really good at being able to keep the employees around that have joined our team. We don’t really have much of, like the people that come and stay with us generally stay for very long periods of time. And they’re able to provide that context and we actually let them speak to the rest of the team as like hey, you know what, in 2016 when there were six people in this office, this is what it looked like. And I’ve been a part of effectively four different companies still with the same values with four different companies nonetheless. And I think that that’s been pretty valuable too.
DR: What have been the mistakes that you’ve made along the way? Have there been any one, two or three that have really stood out as okay, that was some way that we messed up?
BJ: Yeah, geez, I mean… I mean first is we put too much of an emphasis on growth. We lost like, I mean we had at the time, they were a bigger customer for us, Base CRM, they were recently acquired by Zendesk. We had them on as a customer and their team said we will walk you through exactly what needs to be built in order to support our channel program. And we learned over time, they stuck with us for two months, they tried to make it work and it just didn’t work out.
And we learned over time that Base ended up driving more than 50% of their revenue through channel partners. And a huge mistake to ignore that in favor of growth, right? The result of that probably put us like six months behind realistically. I mean there were like fundraising mistakes that we went through.
DR: Looking back on that, would you have just built what they wanted you to build and said we’re gonna really put a ton of focus on this one customer here?
BJ: Yeah, that’s exactly what we would have done. And actually, Sam Altman gave us that advice. Find five customers, make them happy and you’ll build an enormous company. And I feel like we did that. We started to do that in 2016 and we started like 12 months too late. And it’s just because we gave in to the pressure from VCs and everybody around us saying grow at all costs.
There are some businesses that you should not grow at all costs whatsoever. And often it’s like enterprise software. You should be very deliberate in the way that you go to market. You should go to market sooner but you can sell to people and work those relationships and learn how to upgrade the accounts rather than just trying to bring on new customers. Dance with the person you went to the dance with. Don’t just try to bring someone new.
DR: It’s so good for me to hear. When we first launched Proof, like I said, we kind of just went really big, really fast. Weren’t really talking to our customers, just like get more, get more, get more, get more. We’re now launching two years in a new product called Experiences.
It allows companies to basically personalize, is a personalized marketing funnel and this time we’re flipping it. We’re going really really slow. We’re working with two people right now for the last couple of months. Then we’re gonna bring on two more here this week and going really slow. My hypothesis is like okay, this is gonna work way better, it’s cool to hear you say that, it kind of reaffirms that decision here early on ’cause it feels so different in the way we launched initially.
BJ: Yeah, that’s like, I think it’s just a hard lesson to go through and learn.
Because growth feels good. The nice graph up into the right feels good and it’s an easy measuring stick. But if I was to do it again, that would be the advice that I would provide myself five years ago. It’s like actually growth only matters when you’re ready to grow. And before that, it could just kill you. And so ignore the noise and just like heads down and get to work.
So that was definitely like one area that we want through and struggled with. The other mistake that we made was we needed to invest in our sales and marketing stack earlier. The tech stack that went through and in support of that, we were really unsophisticated with that. We tried to go for the cheapest CRM, we tried to go for the cheapest solution all the time. And what we learned was we would go through and make the purchase on it and we would never get it implemented.
And it would always work as a sort of, not all the way and we started to realize the breakdown when we started to bring more people onto the team when it wasn’t just founders when we’re bringing on AEs, SDRs, marketers. You need to invest in your marketing and sales stack more than anything. So we eventually brought on a sales operations person before hiring a sales manager. And it was easily the best decision that we’ve made in our company, totally changed our trajectory.
DR: And what did that person do?
Just figure out all the flow, all the integration, how does this kind of whole process work from a tech level?
BJ: Yeah, so we actually first tried to do it through a consultant and don’t work with Salesforce consultants, was like ultimately the takeaway that we went through and had. So he figured out what was gonna, and still, we have somebody dedicated to this that goes through it and revisits everything about once every six months. Makes tweaks but then like truly redoes the entire sales flow and sales funnel and how stuff’s passed off.
So the first thing that Sean came through and did was he cut I think like six platforms that we were going through and using. I won’t mention their names but they were cheap platforms and he said like listen, if we’re gonna be serious here, we’re gonna build a company that can at some point in time do $100 million ARR. The sooner that we transition over to something like Salesforce, a professional, as soon as we can go through and do that, the better.
DR: And is it truly something like Salesforce or is it actually Salesforce?
BJ: Yeah, it’s Salesforce.
DR: Sooner we can get on to Salesforce, the sooner we’ll be there.
BJ: Yeah, and the reason being is there are so many reps that are trained on just how to use Salesforce. I know that there are other people that play in the market and it can go through and work but I wish we’d done that earlier. I really really do and I’m really happy that we did. I also wish that we were just, like if we wanted to dedicate time towards something, whether it’s like building a product or like launching a marketing channel or scaling at the sales team a certain way, I wish we would have just invested all of, I wish we would have gone all-in on it, right?
You don’t know if something’s gonna work unless you truly go all-in on it and it’s not enough to just hire someone to go in and do it, right? You have to actually give them all the resources required for them to do their job. And we see that all the time in partnerships, right?
People dip their toe in the water and they realize like oh my whole body is not warm. It’s like yeah, you just dipped your toe in the water. You have to go all-in on this. If you think that this is something that’s gonna work, it probably will, it’s just a matter of when. And so I would have made fewer investments but gone more all-in with those investments.
DR: You feel like going all-in a lot of times looks like you as the CEO is really interested and really involved in something instead of it just being kind of handed off to somebody else in your team but you’re not really thinking about it or like keeping up to date on it?
BJ: Yeah, 100%, absolutely. If I’m gonna go all-in on it, it has to be a priority of mine. I have to be at the very least involved in the project, probably for at least 30 days and then do the handoff. And then hold people accountable to that for at least a quarter, and then have them go through and change whatever the reporting structure is. That kind of leads into the next thing as like, I had way too many opinions as a CEO.
And I think that after you hit about 15 to 20 people, those opinions that you have, they actually hurt your business. If I say something now and I think that oh like, for example like this button should be bigger, like I think that that’s something that we really need to go through and do. That’s the thing that’s gonna go through to get worked on. And the reality is like on our stage for 30 people, I know what’s happening in the business but the day-to-day, some of the day-to-day specifics, I don’t know.
And so I try to actually not share my opinion as much and try to force my team to share that opinion. So that was a huge lesson and that’s a lesson that I see a lot of our managers having as well now as they go through and build their teams. It’s like have fewer opinions and when that you have those opinions, but communicate to the team, is this something that you strongly believe in? Or is this just an idea? And then differentiate that.
DR: There’s something I heard recently from Wade Foster, CEO at Zapier. He was on season one of Scale Or Die, but he had tweeted out something that I think he heard from Dharmesh from HubSpot where at the end of his communication, he’ll put like a hashtag and he’s like there are different levels of what he means or what he’s trying to say and he has like a hashtag FYI or hashtag recommendation or hashtag like strong recommendation.
Because he was saying things, sometimes he didn’t really care that much about it. Like hey, that budget should be a bigger FYI. And FYI for him means this is a suggestion, I don’t really care if you do it or not, I’m not gonna follow up on this and you have total freedom to do what you want. But then it kind of got extended more and more and he said that was one of the best things he did as CEO in growing because he was having a hard time saying things because everything got taken so seriously. And I’m with you. I’ve had to kind of start to preface things when I say it. Like hey like I really don’t care if you do this or not. I trust you, here’s what I would do if I were you but yeah, I think that’s a huge part of CEO is learning how do you kind of communicate and like yeah, share fewer opinions as you grow.
BJ: Yeah, it’s a tough thing to go through and do. And then also managers at some point in time, right? When you’re a manager managing managers which we’re kind of getting into the phase of. And it’s a hard thing to do. It’s a very very very hard thing to do.
The Salty Six
DR: So Bryn, we gotta wrap up here with what I call the Salty Six, which is six very salty rapid fire questions just for us to get to know you a little bit better. Some personal, some business. I promise this is the saltiest set of questions you ever had, you ready for it?
BJ: I’m ready for it.
DR: All right, outside of building partner channels, what do you do for fun?
BJ: I like biking, I like cycling. I got a bike last year and I mean it’s just been awesome. I actually have it in the office. And so Canada gets a lot of snow and so I know that I’m gonna go through and cycle after work at least three times a week.
DR: How many months a year can you cycle in Toronto?
BJ: Probably six, probably more than you think. it probably depends on how tough you are. I’m a little bit softer, and so when it’s not, sweltering hot outside, I find myself in the office.
DR: Okay, number two.
Do you have a morning routine and if so what is it?
BJ: Yeah, I mean my guilty thing is I check my emails as soon as I wake up. Unfortunately, I go then make my coffee and then just go for a walk into the office. Typically I’ll grab breakfast on the way in and then I need like five minutes when I get here just to kind of like reorient myself. But I’m very guilty at checking my email, and I feel like that’s not something you wanna do in the way you want to start your day off.
DR: Yeah, but that little dopamine hit, it feels good man. It gets you going.
BJ: I know, it’s addictive.
DR: Okay, number three.
How do you focus during the day when you have something you really gotta get done?
BJ: I go for a walk, even in the snow here in Toronto. I make sure, if I have something that I need to sit down and get done, I make sure that I can go for like a five to 10-minute walk beforehand and then I’ll just quarter myself off, right?
If there’s something that really needs to get done, I’ll leave my status on Slack that says don’t bother me and if people walk up and tap me on the shoulder, I just totally ignore it. That’s something that I’ve had to learn to go through and do and it’s something that some of the other people on our team have gone but I think a little bit of physical activity before like stooping down and going like hard and heavy on something is really important. And I also think the same thing too after physical activity is super super important.
DR: At number four. What’s a book that has impacted you deeply in the last few years?
BJ: Ooh, what’s a book that has impacted me deeply?
BJ: I mean like I love “Hard Thing About Hard Things”. I think it’s a really well-told story as much as anything. Andy Grove’s book, like absolutely incredible. And all of our managers have to go through and read it. It can be dry at times. So impactful but Ben does a really good job at telling the story.
DR: Is that High Output Management?
BJ: It’s High Output Management, yeah. Everybody sort of reads that. We actually start, like our managers do like a book club where they’ll go through and read a chapter at a time. Because I didn’t like quite frankly I trust everyone to go through and just read the book of their own. If it mattered and if it’s a book that we go through and give, we’ll do like a book club around it.
DR: What’s the best purchase you’ve made recently under 150 bucks?
BJ: Ooh, that’s a good one. Yeah, this like a really awesome bike pump. As weird as it sounds. I think it was like $80 so it’s more than I even planned on going through and spending but the whole office uses it now. There’s a lot of cyclists here in the office and yeah, that’s been great.
DR: Love it, okay. Number six, what’s a trait or a characteristic that you have that has led to the success that you have today?
BJ: Probably my capacity to be perseverant. I think that is what matters most in this. There’s an element of getting lucky but at the end of the day, you just have to kind of withstand really hard things and not lose focus. So perseverant first because if I’m focused and not perseverant, I’ll never get to the end of what I need to go through and work on but I can persevere pretty much through everything and anything and that’s what I’ve kind of learned.
It’s really hard to build a business. It’s a lot harder to build a business and have a successful personal life. I think that everybody kinda knows that, it’s just not something that’s talked about too often.
DR: Yeah, I remember that at YC I think it was Michael Seibel talking and he said the only way your business dies is if you stop working on it. By definition if you wake up and you start working on it that day, your business is still alive. And so can you just hunker down and persevere, there’s a long winter through the dips and actually keep working on it until you hit that lucky spot. Yeah, because I do agree, I think there is some luck to it. I do think there is some things that you hit that you couldn’t have predicted but can you stay around long enough to actually reap some of those rewards?
BJ: Yeah, no, I totally agree.
DR: Well Bryn, this has been awesome man. Thank you so much for coming on. This has been a really great conversation. Good to finally meet the man behind one of our new favorite software tools as well here.
BJ: Love to meet our customers and it’s been great talking with you. Thanks for having me on, I really appreciate it.
DR: Yeah, you bet. If people wanna find out more about you, do you tweet? Do you do stuff on Medium? Where can they look you up?
BJ: Just email me, [email protected] I got rid of my social media so I can focus on the business. Took Twitter off my phone, just email me. Feel free to reach out, anybody anytime. If I can’t help you I can put you in touch with someone that can. And so just reach out. And if you wanna check out our company, partnerstack.com is the best place to go through and find it.
DR: Sweet, thanks much for being on, Bryn.
DR: And thanks so much for watching guys, we’ll see you in the next episode.