Drift’s David Cancel on the importance of brand for startups in 2021

Drift is a company that we’ve been intrigued by for a long time. They’ve achieved rapid growth in a short period of time — all while building an incredibly strong brand. How do they do it?

In this episode, David Cancel (also known as the uncle, DC, or the GOAT) gives us his learnings from his 20+ year career as a serial SaaS entrepreneur. He’s had five companies acquired (BuyerZone, Compete, Lookery, Ghostery, Performable), he served as Chief Product Officer at Hubspot, and now he’s building Drift into one of the fastest-growing SaaS businesses of all-time.

In four short years, he’s acquired over 150,000+ customers, grown his team to 250+, and created a new category in the process: conversational marketing. David has a lot of opinions on SaaS, growth marketing, product, and team-building — and if you haven’t already gotten the picture, he knows what he’s talking about.

In this interview, you’ll hear about why DC thinks you should avoid in channels that don’t scale, why you should throw NPS out the window, and how to create new business categories rather than wait for the market to catch up. We’ll cover brand in-depth and the idea of customer-obsession as it applies to both Drift and Proof.

This episode is packed with juicy content, and we’re excited to share our full conversation with David Cancel of Drift with the #ScaleOrDie nation.

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In This Episode You’ll Learn:

0:01 — Introduction
2:54 — The story of Drift so far
4:08 — The unconventional ways David Cancel has built Drift to 150k+ customers
5:00 — It’s all about a brand in 2019. Build a brand first —it’s the secret to defensibility
6:04 — Focus on the things that don’t scale. A lesson we’ve heard echoed by other founders like Ankur Nagpal of Teachable
7:43 — How do you decide what to build at Drift? The deep vs wide debate
8:18 — DC on Product Market Fit in year 1— using a PMF score, and knowing when you’ve reached it
10:37 — Being customer-centric as a key company value and product philosophy
11:18 — Force everyone to do customer support — engineers, executives, everyone…
13:07 — Why Drift measures teams based on customer metrics
13:50 — The only metrics that matter to DC
15:51 — The best thing DC has done to develop himself in the last year
17:16 — The Salty Six, 6 rapid-fire questions to know DC better

Full Transcript:

DR:  What’s up Growth Nation, Dave Rogenmoser here, welcome back to Scale or Die where we uncover proven strategies from CEOs and CMOs behind some of the world’s fastest growing startups.

I’m super pumped about the guest here today, and before I introduce him, I wanna share a story about my first interaction with them and their company. So it was about two years ago, I was selling online courses, slinging them on the Internet because that’s what I did, and I was running this automated webinar.

Basically, it’s this video that people would come to, they’d run Facebook ads, they’d come to it day and night, and then they would go to a sales page and they would look at buying the course for $997. Our sales weren’t that good for it and we were thinking we gotta figure out a way to like talk to our customers more. But there wasn’t a great way to do that.

So that’s when I found this little tool called Drift:

And I put it on this site, and the coolest thing about it was that when somebody would chat on that sales page it would go right into Slack and we would be able to chat them inside Slack, because I’m always hanging out in Slack but I don’t want to wait around all day for the one person who’s watching the webinar to come. Because it would be like every couple hours or something like that. And what we found is when we would talk to people on Slack that were on the sales page like 90% chance they would buy if I could just get into a conversation with them.

And that was a huge shift for us in how we do marketing. The first time we’d ever started talking to customers and prospects in real time.

And that was the product Drift which is the company behind the guy we’ve got here today David Cancel or DC as you’re known by the homies and so yeah David CEO of Drift, welcome to the show man.

DC: Thanks I’m excited to be here. So yeah, David Cancel, DC, the uncle you can call me any of those.

DR: People call you uncle?

DC: Yeah, uncle DC.

DR: And what’s the story behind that?

DC: ‘Cause I got I got all these grays, look at that.

DR: You are the uncle.

DC: I’ve been around, so they call me the uncle. It started because we have a podcast and I call Dave my co-host the nephew, so he’s my young nephew.

DR: That’s awesome. I’m a listener of ‘Seeking Wisdom’ your podcast. I’ve left it six stars. And I listen to it on my drive home when I’m always kind of daydreaming it’s like you got DC, DG you guys need Dave Rogenmoser DR on the show–

DC: Yeah you are on the show–

DR: Well such good chemistry man I’m just dreaming of that day.

DC: Oh yeah, you gonna come up here.

DR:  I’ll work my way up there. Very cool man, but yeah dude we’ll get kicked off dude just kind of share —

What is Drift? How do you describe it? Where is the company at today?

DC: Yeah so we started the company a while ago now, the beginning of ’15 end of ’14 – 2014. We went into market 2016. And we created this category called conversational marketing.

And basically what we realized was the way that companies sell to each other is kind of doesn’t make sense anymore. The whole idea of a lead form, going to nurturing flow, going to a CRM, going to BDR to qualify, going to an account executive to then try to sell it, all of this stuff made sense for a world where In the past, a world where the company had all the control but now we can buy everything on demand, we can buy everything now. And now the buyer has all the power and is gaining more power. And there are a million alternatives to whatever you sell whether it’s a service or a product.

"And in that world, we said we need to go back to basics. We need to go back to conversations. And we need to create a way to simplify sales and put the buyer in control."

And if we do that we think we’ll deliver better sales results and that’s been the story of Drift so far.

DR: So I want to talk about unconventional ways you’ve grown Drift. I’ve heard you talk about this some and you’ve been around the block, you’re the uncle, I feel like you’ve kind of got strong opinions about how startups could be done or should be done, or at the very least just how you guys want to do it.

What are some unconventional ways that you guys have grown Drift to what is it, 150ish thousand customers now?

DC: Yeah, yeah over that now but that’s kind of what we say externally. We’ve grown that big, we are 260 people on the team right now. Went from like 90 at the beginning of this year and 20 the year before that. So we’ve grown a bunch and really just helping our customers.

I definitely have a lot of strong opinions, and some of them when it comes to what we’re talking about here about growing are really around this area that we invested in from the beginning kind of two different areas.

One of them is brand which we can talk about because I think the importance of brands today is if you are creating anything in the world it’s all about brand today right. And that’s always been a squishy term it’s been hard to figure out.

But we are living in this world through this new time it’s unparalleled right. Where the buyers have all the control and they have infinite supply of whatever you sell.

I don’t care if it’s software, I don’t care if it’s hardware, I don’t care if it’s these glasses here or this computer. We live in a time where all of this stuff can be replicated in almost real time, it feels like real time. Like you can create some software, I can create some software, someone can knock that off around the world, 10 companies can spring up tomorrow and the buyer on the other side doesn’t know the difference between those two.

"In that world I believe, a brand becomes an important thing, and software becomes commoditized and we've entered that era and I could go on further on that. And there are different plays that you do because of that."

And then I’d say the second camp of things that we leaned into that I feel strongly about is focusing on those things that feel like they don’t scale. Like your experience with Drift early on, that you described feels like when you talk to someone like, oh wow that can’t scale. That’s interesting but like, I don’t have time for that, I can’t scale that. You know I don’t have time to be personal with all these customers.

And we don’t believe that.

We think those things that look like they don’t scale from a marketing standpoint, a growth standpoint are the keys to figuring out, like in your case the business model, and the keys to scaling the business. They are the only things that matter because those are the things that we are willing to pay extra for that experience, and the only way that you’re gonna get this insight.

And so we had this insight ourselves when we went to marketing and said, we were telling companies, like an enterprise sales company or whatever like they sold like super expensive things and saying like you should try Drift, and they’re like well we can’t try Drift, what about if we get millions of people looking at us?

It’s like – you are a B2B website that sells $250,000 service packages. There’s no million people coming to your website. Let’s look at your website. You have almost no traffic on this website and you have a whole room here of salespeople who will tell you that they’ve never done a lead from you. Something is crazy then. So you’re worried about this weird flood of people that are never gonna come to your website, but instead, these people are never getting any leads, so why don’t we do a better job of doing that. That’s an example of something that looks like it doesn’t scale but it scales well.

DR: Interesting, interesting I love that.

So, how do you guys decide what to build?

And here’s something I’ve been thinking about and maybe I’m the only one that thinks about this, I think okay we can build features that go deeper like our power users they’re already using everything, I can build something else that they’re gonna use, or I can go wide, I can get some new users, I can build the integration that allows a new subset of people to come on, I can do that.

I tend to default to going wide, but I kind of think that’s the wrong thing to do actually. But how do you think about that?

DC: We look at it differently every year. I’ll zoom it out on a yearly basis. So like the first year for us in the market was about how do we get to product market fit. And so we already know there’s a PMF score you can use that. So it was really about building enough product or just having just enough to get us to that PMF score for our general audience.

And then last year was about, our second year was about how do we from a product standpoint, how do we make some bets. And we started making different bets on a monthly basis, we called them marketable moments. We would launch a new product every month, which is crazy.

But what we were doing there was we were trying to find out the size of the category that we were trying to create, beyond our products. So this idea of conversational marketing, what were the edges of this category. And so we were ahead of the market in that case. And so we were starting to– and lots of unknowns and so we were testing with different product features out there.

Obviously, we split into multiple teams and we have a philosophy in each one of those products has an entire team, three-person team building it. The core product is still getting invested in, still has a team assigned to it, we’re not distracting those people to go build this other stuff. That’s kind of the cost in doing this thing. So that was our motion for last year. We’re ending this year and saying like okay we have an idea of now what the category looks like, we’ve heard from enough customers.

And now this next year 2019 is about having what we would consider more traditional roadmap is too heavy of a word but like a theme, we have a theme for how we want conversational marketing and our place in it to evolve over the next year. We tested a lot, we have a lot of customer data, we have a lot of stuff, so now we feel good about being able to make some predictions that are more– that have a more narrative structure to them on how we’re unveiling this stuff. But that was all based on all the customer feedback and all work and kind of successes and failures that we had from all those experiments in this year.

So I really think about it on a yearly basis, and what are the themes and that will dictate how I decide what I want to build next.

DR: Yep, love that. Let’s talk about customer obsession being customer-centric. We try to be very customer-centric. One of our core values, our number one core value is to be customer obsessed.

And we try to do a whole lot around that. You guys are doing amazing things there. Talk to me about that, you’re kind of Mr. Customer/Product guy in my mind.

How do you guys do that? How do you get that through the whole company? Like what does that even look like at Drift?

DC: Yeah I’d say I’m psyched to hear that, so we’re the same religion. It’s religious for me, it has been since 2009. So a long time now. So almost 10 years now. I’ve been kind of beating the drum on this customer-driven obsession and this kind of framework.

It started by accident ’cause it started at my company Performable where we forced everyone to do customer support, including all the engineers. And then kind of had a discovery which all makes sense now, that when the engineers and the product people were closer to the customer and they worked with those customers every day, and they heard their pain, the more likely they were to create solutions for the customer.

Because they were hearing it first hand versus hearing it from you or me or someone or three levels away from the customer. And so we wanted to move all decision-making kind of be more real-time and be closer to the customer. So we kind of stumbled upon that, it’s all obvious now but most people don’t do it.

So we stumbled upon that and then at Hubspot, I tested like can that actually work on scale. That’s fine, that works for like a 20 person company, could that work for 100’s, 1,000s of people. And we kind of proved out the model then.

And at Drift, we’ve taken it even further and we’ve built the entire company around this idea of, look, we’re only here to serve customers, right? and so the only purpose of business is to service customers. That’s it as Peter Drucker would say.

And so we’re built around the idea of being in service to customers. That’s core to everything. It’s core to how we hire people, we talk about that in the hiring process, we only select core people that are okay with that servant type of mentality. Which sounds easy but it’s not, it’s hard. To put away our egos and to focus on that. So we screen for that.

So now 250 people here are focused are all that type of person. And then what we do is we try to design all of our KPIs that we measure all of the functional teams, on all functional orgs and the teams to be around customer metrics.

To not be around company metrics only or internal feel-good metrics or whatever so we’re kind of pretty religious on that. So like product is the easiest one to zoom in on because product is usually the most distant in engineering from customers.

What matters is that we measure each of our product teams on a lot of metrics but there are three fundamental metrics that we look at.

1) ICP again that’s Ideal Customer Profile usage of that product.

2) Ideal Customer Profile revenue from that product. The products obviously if you’re buying a bundled thing the revenue is not just for that product, but we look at other ICP customers who use that product, how much revenue is attributed to that cohort of customers.

3) Then we look at ICP churn for that product. Those are key three things. Every team gets measured that way. And then we look at other indicators like obviously response time and issues from a ticket standpoint and all these other things that we believe are proxies for good customer satisfaction with the product. That’s what they get credit for.

They don’t get looked at any other way. ‘Cause they shipped some cool thing, I don’t care. That they fixed a bunch of bugs, I also don’t care. That they did some infrastructure work, I also don’t care. I care about have we driven those three core metrics for the customer or some of the secondary metrics which are experience based metrics that we think are a good proxy for customer satisfaction.

Then we look at a lot of qualitative stuff, stuff that we’re hearing from sales, marketing, from sales services, directly from the customer about that product, about that experience. All of those things we’re constantly looking at and that’s how all the teams get judged. We also have guard rails for each of the product teams to make sure that some portion of that product team is having customer interactions every week.

And so we’re looking at all of these things. And it basically just means, it sounds complicated but it’s actually simple, it just means hey you are what you measure so if you allow an engineering team or a product team to be measured in non customer terms, then you shouldn’t be surprised when they’re not doing things that are not in service to the customer.

DR: Love it, super helpful man. Alright, last question before we roll into what I call the salty six which is just six rapid-fire questions.

Just CEO to CEO what’s the best thing you’ve don’t to develop yourself in the last year?

DC: You know I’m obsessed with reading so I’m always learning. I think the best thing that I’ve done, for me it’s kind of getting outside the building and it’s two forms it’s customer conversations number one I never have enough of those.

And then two I don’t like actually getting outside the building so I have to force myself to have more conversations with people, role models people in the same role like yourself, so have more of those conversations, that’s how we met originally, that was me forcing myself to get out of my comfort zone. And then, so I force myself to have those conversations, then I’m constantly looking for role models for the next phase, and I’m always changing my role models. So like we’re a 250 person company like what are the role models for people who have done what we want to do, that are 500, 1,000 whatever number of people. With similar motions and stuff, so I out and seek those people and make those connections and then some level of mentors and then I have coaches as well.

So I’m constantly on– like how do I grow, how do I get better, how do I upgrade, the people in services — upgrading people sounds weird, but relationships for that next phase.

DR: Love it, man, yeah I’ve been thinking about that a lot and yeah appreciate that. You’re kind of one of my mentors so appreciate the advice even more man. Alright, we got the salty six. This is punchy, it’s fast-paced, hang on to your seat.

First question, what do you do for fun?

DC: It’s a good question ’cause I was talking about it yesterday, I was like, I don’t think I know how to do anything. What do I do for fun, you know I have kids so I hang out with my kids. Do all sorts of ridiculous things that they want me to do so that’s number one. And then what else do I do for fun, hike, do water sports like paddle boarding and all that stuff. So I try to get out in nature. So that’s my form of meditation.

DR: Awesome, love it. What’s the best conference you’ve gone to?

DC: Hmmmm. Hmmmmm. That’s hard, HYPERGROWTH of course which is our conference. The best conference, I kind of don’t like conferences and so like in creating our own I’ve been trying to rethink the format.

🌟🌟 Check out our new post on the best marketing conferences to attend in 2019 🌟🌟

And so for me, it’s about making connections to whole new pockets of people. And so one conference that I’ve liked on the product side which is my favorite product conference is Mind the Product. Which is usually in San Francisco and London. And I think they have done a really good job, Martin runs that. And Martin has done a really good job at putting that together because he brings people that are not the same old speakers and so I have gone to connect with some people that have really pushed me on the product side of things. So I like that conference a lot.

And then I’ve done smaller conferences that are kind of like more experiences, like with other CEOs and things like that. One of them was Basecamp which Sequoia one of our investors puts on, that was by far my favorite conference. But that’s kind of a weird one because it’s like invite only, that one was ridunculous. So, those two.

DR: Alright, very cool, love it.

What podcast do you listen to, if any?

DC: Our own. I listen to a lot of podcasts, I listen to Finding Mastery, which is– I just discovered a few months ago now, I’m like wait a second this is like a better more detailed version of Seeking Wisdom. Right? And the title is almost the same thing like what, you know and ours is Seeking Wisdom. So I like that one a lot, highly recommend that one.

And then what else do I like. I flip through lots of different ones, like the industry ones kind of get to me after a while. A16Z I come back to a lot, I like that podcast a lot. And then there’s a whole bunch of smaller ones that I just ping pong around. But I’m usually subscribed to, I don’t know, 25 podcasts right now.

DR: Sweet, love it.

What book are you reading right now? What’s on your nightstand?

DC: I read, so my thing is I read multiple books in parallel.

So right now I’m reading a book called ‘Make Time’ which is recommend, halfway through it or more right now. And it’s about the art of being effective, they actually say it’s not about productivity being effective and it’s by — I’ve been following this blog for a while they wrote a book called Sprint, which is around design sprints. It’s two ex-Google guys. That was a good book. Then they’ve had a blog for a long time that I’ve been a subscriber of it’s called Time Dorks, it’s all about effectiveness and they wrote this book it just came out recently Make Time, good book, recommend that one.

And then I’m reading Blitzscaling which is Reid Hoffman’s book, good book. And I’m probably reading like three other books right now which I’m forgetting.

DR: Love it, alright this one’s serious.

Michael Jordan or LeBron?

DC: MJ classic, all the way. I was gonna look, I don’t have the MJs on right now. I have the Air Force 1s on.

DR: That’s awesome man, yeah he’s the man.

Alright and the last question who’s one person you’d like to invite to a dinner party right now dead or alive.

DC: My number on is Sara Blakely, founder of Spanx. Do you know her?

DR: No, no, no.

DC: You know of her, that’s good. So I deleted Instagram, Twitter, Linkedin off of my phone so I don’t have it anymore but before I had those on my phone my best follow from an Instagram story standpoint Sara Blakely, go follow her.

DR: I’d be so nervous firing anything out there you know.

DC: Lets go.

DR: That’s awesome. Very cool, well Dave there you have it man. Thanks for being on Scale or Die. If people want to find out what you’re up to where can they follow, where can they see you?

DC: Dcancel on Drift and David Cancel everywhere and just Drift.com. D R I F T dot com holler at me, next time you see me on this podcast I’m gonna have a slick studio. I’m in here in this dungeon here and look at Dave on the other side looking proper.

DR: Alright dude thanks so much and we’ll see you here soon.

DC: Alright take care.