Episode 011

Scaling the unscalable: How 1-to-1 conversations with customers help Drift grow

What happens when you go from being customer-centric to customer-obsessed?

David Cancel, 5-time founder & CEO of Drift, talks about the impact that having his entire company stay in touch with customers has had on Drift’s remarkable growth.

In this episode, we cover:

In today’s episode, you’ll hear from David Cancel, the CEO of Drift, the company behind conversational marketing, which emphasizes 1-to-1 conversations with your potential customers over a more traditional sign up-to-drip email funnel.

So why are we featuring a company that starts these conversations with a chatbot, instead of humans?

Because David, a 5-time startup founder and former Chief Product Officer at HubSpot, has without a doubt one of the most human approaches to understanding his customers that I’ve ever come across.

But he wasn’t always this customer-focused. In fact, he stumbled onto this approach almost by accident 10 years into his now 20 year stretch in SaaS, and it’s what has helped set Drift apart in the already crowded messaging market.

In this episode, David and I discuss:

  • How not having enough money to afford a proper support team led to the biggest breakthrough in his career, and how that helped him evolve from being customer-centric to customer obsessed
  • How his engineering team took leaps and bounds in productivity once they started talking directly to their customers
  • Why the only metrics that matter for measuring individual and team performance within a company are customer-related metrics
  • How doing the unscalable is critical to a company’s success
  • Why it’s so important for employees to discover their ‘superpower’ in order to thrive (as well as what David’s superpower is).

He also shares the biggest insights that he himself has gotten from his personal interactions with customers.

Honestly, David was a GOLDMINE of information for how to run a customer-focused company. So have your favorite pen and notebook handy, and get ready to take a ton of notes.

Show notes
  • [00:02:27] The time that David’s 11-year-old daughter came to his office to do a pricing study on baked goods
  • [00:06:38] The difference between a company that’s customer-centric and one that’s customer-obsessed
  • [00:07:09] How David got the idea for his business model at Drift
  • [00:011:07] What happened once engineers started communicating directly with customers
  • [00:011:43] What Drift’s methodology looks like now
  • [00:15:22] Which customer metrics Drift measures
  • [00:17:55] How customer metrics tie into the performance of the team
  • [00:20:15] How Drift is doing cohort analysis
  • [00:20:56] How individual performance should always be tied to customer metrics
  • [00:22:48] How Drift keeps different members of their product teams in touch with customers
  • [00:27:42] How the leadership team at Drift communicates with customers
  • [00:28:41] What one-to-one marketing means and how it works
  • [0032:00] The biggest insights that David’s gotten from meeting personally with customers
  • [00:34:17] Steps that David took to make his product easier to use for customers
  • [00:35:38] How Drift segments different types of customers in order to better serve different markets
  • [00:39:08] What Drift is doing in their company culture to ensure that their teams are successful
  • [00:43:10] Why David thinks it’s important for employees to find their superpower
  • [00:44:22] How to find your superpower
  • [00:49:03] What David considers to be his superpower
  • [00:49:58] How David would convince others to adopt a people-first approach
  • [00:52:11] Resources that David recommends
Transcript

[00:00:10] David Peralta: Welcome to The Humans Strike Back by Hotjar, the weekly podcast designed to help you succeed by putting people first. I’m David Peralta and today I’m talking with David Cancel, the CEO of Drift. The company behind conversational marketing which emphasizes one-to-one conversations with your potential customers over a more traditional sign-up to drip email sequence.

Why are we featuring a company that actually starts these conversations with a chatbot instead of humans? That’s because David—a five-time startup founder and former chief product officer at HubSpot—has, without a doubt, one of the most human approaches to understanding his customers that I’ve ever come across. But it wasn’t always this way. In fact, David’s stumbled on to this approach by accident after 10 years in the SaaS industry. It’s what has helped set Drift apart in the already crowded messaging market.

In this episode, David and I discuss how not having enough money to afford a proper support team led to the biggest breakthrough in his career, and how that helped them evolve from being customer-centric to customer obsessed. How his engineering took leaps and bounce in productivity when they started talking directly to their customers. Why the only metrics that matter for measuring individual and team performance within a company are customer-related metrics. How doing the unscalable is critical to a company’s success. Why it’s so important for employees to discover their superpower in order to thrive as well as with David’s superpower is. He also shares the biggest insights that he himself has gotten from his personal interactions with customers. Honestly, David was a gold mine of information for how to run a customer-focused company. Have your favorite pen and notebook handy and get ready to take a ton of notes.

I actually found a really interesting story in an article online about a time that your daughter actually came into the office to sell some cookies. I was just wondering if you'd be willing to share that story with us.

[00:02:27] David Cancel: My daughter is 12 years old now. She was 11 when she did this. I kind of never talk about work or building business or entrepreneurship, any of that stuff, at home. I leave that outside, so I'm always surprised. My daughter is hard charging. My wife was an entrepreneur, she definitely has the genes. I came home one day and my daughter said, "I'm going to work with you tomorrow." I was like, "What?" She had never been to my office. I was like, "This is strange," and said, "Okay, why?"

She said, "Because I'm starting a company," and I was like, "What?" and she said, "Yeah, I'm starting a company and I want to bring in some stuff to the office tomorrow for your team." At first, I still couldn't understand what she meant and I was like, "What do you mean?" and she hands me a menu that she had printed out. The idea was called CJ's Bakery–she goes by CJ–and it was a printed out list of different treats and desserts with prices next to them.

At first, I was like, "Wait a second. You can't go into my office and sell stuff to people on my team," and she was like, "No, I'm not going to sell them." I said, "Okay, what are you going to do?" She said, "I'm going to do a pricing study," and I was blown away. 11 years old. I'm like, "What the…?" and I was like, "What does that mean?" I teased that out of her. She said, "Well, I'm going to start this company and I'm going to sell at the Farmer's Market, but I don't know what the prices should be and so I'm going to bring these baked goods in and then I'm going to ask your team what they would pay for them."

I was like, "Okay," so I come in and I still didn't fully believe it. The next morning, I wake up and she had baked a ton of items—brownies, cookies, cupcakes, everything you can think of. She came in with these things and then I was off in some meeting. She came in and I think she just set up by herself and I still didn't fully get what she was doing.

[00:04:32] David Peralta: Was this a school day?

[00:04:34] David Cancel: No, this was not. This was a vacation day, so she was home. I still didn't fully get it and I don’t want to interfere. I don't want to say no or anything, so I'm just watching. I go off to meetings and, all of a sudden, I can see out of the conference room that there's a line of people on my team, getting pastries from her. Oh, my goodness! Then, the day goes by and I come out and it's the end of the day. I asked her how it went. She said, "Great," but she didn't give me any more details.

When you know once you have a kid that's 11 or 12, getting into the teen areas, you can't ask too many questions or else they'll pull away. We leave, we go home and then, the next couple of days, I keep hearing from people on my team. They're like, "Your daughter emailed me." I was like, "Wait, what? I don't think she has email. What are you talking about? She emailed?" "Yes, she emailed me a link to a survey." I thought she was going to do this on a napkin, and it's a survey to fill out a pricing study.

Then, later, I find that she has business cards. I don't even have business cards, but she printed out business cards at home that said CJ's Pastry Company or something like that, and it had an email address on it and it had her name and then, underneath it, it said "CEO and Founder." It's amazing. This is my daughter and she's way more high-powered now than that. She's got a different baking company but she does horse treats, so she's really into equestrian and baking for horses.

[00:06:06] David Peralta: She went niche?

[00:06:09] David Cancel: Yeah, she sells on Etsy. She has an Instagram account. It's amazing.

[00:06:14] David Peralta: That is impressive. Did that come from you?

[00:06:18] David Cancel: No, I've never talked about any of this stuff. I'm sure there's osmosis that happens or it's unavoidable, but we've never ever had a conversation about this. The same with my wife. My wife has been an entrepreneur for a long time. She's had multiple businesses including retail, we've never pushed her or even really talked about this stuff. We answer questions that she asks but this has all been on her own.

[00:06:38] David Peralta: That's really impressive and kind of segues into the next topic, which is–clearly, she was really interested in what her customers had to say–at Drift. I know that's also really important to you and, in fact, in the past, you have described the company as not customer-centric, but customer-obsessed. I want to ask you: What is the difference? What sets a customer-obsessed company apart from a customer-centric company, specifically at Drift?

[00:07:09] David Cancel: I'd say one thing that I found is about a decade ago, I stumbled on this idea of building a company around the customer from a customer product and engineering standpoint.

[00:07:20] David Peralta: What do you mean you "stumbled onto" this idea? You had an older model in mind at the time?

[00:07:25] David Cancel: I've gone through three iterations of how to build a product in my career. I've been doing this a long time. We've went from Waterfall, to Agile, but both of those things, I always felt, were broken in today's world because they were built in a time when you could not talk to your customer.

I built software in an age where you would never talk to a customer and you would ship something, and it may ship a year from now and it may be installed by someone else and you never really could access a customer, but we live in this post-Internet age where, no matter what you're building, whether it's hardware, software, medical or not, you have access to an infinite number of people around the world, literally.

It's not infinite, but you know what I mean, but it's endless. Why not build a software methodology around that very notion where you can actually have real-time feedback with your customers and incorporate that into how you're building your product? Again, it doesn't even matter if you're building hardware at this point or physical goods, you can still react to it. Why follow these methodologies that are built on this idea of guessing, approximating and that as your core model?

I stumbled upon this on my company a long time ago. I had a company called Performable and we were tiny. We did not have dedicated support and so one day, I said, "We will have to do all the support because we can't afford to hire support people," and every engineer and product person grumbled and said, "You don't understand. I need maker's time and I can't be distracted by customers."

I'm sure many of your listeners have heard this before, but I made them do it and so they had no choice in the beginning. We kind of pushed down and convinced them into doing it. Then, I discovered something magical by observing it. What I discovered was that these same engineers and product people were reacting and fixing and doing things for the customer that delighted the customer in ways that we can never incent them to do that before.

There was one specific thing that I was trying to get the team to do, and no matter how I positioned it and what kind of drug deal I tried to run, they were not buying it and they were just like, "No, you don't understand. It's so difficult. It would take forever to do this." Then, all of a sudden, I saw that thing done in a matter of hours and I asked one of the engineers, "How did you do that? You told me it was going to take a long time," and they said, "Well, I heard from three customers today about this thing so I just figured out a way to fix it," and that was the light bulb moment for me.

That was the moment that I was like, "Wait a second. If we're showing the feedback loop and we put the engineers here directly from the actual user, not you, not me, not someone else that they think are just trying to convince them to do something that doesn't make sense, then they're willing to take action right away. The customers are happier, and we had customers who were sending gifts to our engineers in the office because our customers were marketers and our customers would say things like, "You know, the engineers in my company won't even talk to me and your engineers fixed something, they got on the phone and they used to joke."

A lot of our customers would say our answer for everything was hit refresh, and so it was fixed or they added a feature and they would send chocolates and gifts and all this stuff to the office. That was the reward loop, and so what I was witnessing was this feedback loop, and we built a methodology that we continued since then around that idea of putting the engineers, putting the product people, putting everyone as close to the customer as possible, removing those roadblocks and creating a product cycle around that.

[00:11:07] David Peralta: What did it look like at that time? Did that mean your engineers were answering support tickets or answering customer service calls?

[00:11:13] David Cancel: They were answering the phone, just answering chat so we were using chat, and we do, obviously, at Drift as well. We were answering the phone back then. We don't have phones anymore. We don't have phones in our office at Drift. I don't know how many people with phones still left. Then, they were answering emails that were coming in. That's what it looked like back then and, today, it's a subset of that. It's mostly chat, every once in a while, email but not really. It's more chat than anything else.

[00:11:43] David Peralta: What does that look like now? You said you built an entire methodology around it so what is that methodology now? Let's start with that. What is that methodology?

[00:11:51] David Cancel: We should name it something but we came up with this and we call this customer-driven methodology. I wrote this really tiny simple book you can read that's called Hypergrowth. It's on Amazon. You can download it for free if you want from our website, and it goes into detail of how this thing actually works. In summary, what we do is we organize all of our teams but, in this case, we're talking about product. We organize all of our teams to focus in on and be rewarded only for customer metrics, measures that we've come up with that we think approximates customer success, customer happiness. They only get rewarded for that.

What that means in the engineering product sense is that we don't reward things that we used to award in the old days like some most people do to this day like, "Hey, you released this on X date so you met some date commitment," or, "We’re version two and we were version one before," or, "You hit some sprint points that you had come up with," and I don't want to go off on Agile because I can go on forever. That's another podcast.

You exceed your points or you have some fancy velocity chart or whatever way that people want to talk about this stuff. We don't reward any of that stuff and we only reward these customer metrics, and what that does is it forces everyone and sends everyone to focus on the real problem and not focus on these meta-problems that we create within organizations, and we create things that are totally misaligned. If someone takes a step back from it, if we measure things the way that most companies do, those metrics are totally misaligned with the customer and then we wonder why we're not doing the right thing for the customer. It just doesn't make any sense.

[00:13:36] David Peralta: Like Velocity, "How quickly are we shipping this?"

[00:13:39] David Cancel: Yeah, what does that mean?

[00:13:40] David Peralta: Right, exactly. It's not directly related to how much are we solving the customer's problem.

[00:13:44] David Cancel: Yeah, and we saw this firsthand like when we saw people that were rewarded with points or velocity or what-have-you, they had become so religious and so divorced from reality by focusing in on these meta-metrics that they weren't seeing the point. They were saying, "Hey, David, I'm doing a great job and I'm doing a great job because I said I would do 12 points this month and I did 14," and my answer was, "Well, you made up the points. You made up 12. You made up 14. You made up all this stuff and it doesn't matter."

My question would be, "Is the customer happier? Are they more successful? How can we prove that?" and every time I would dig in, the customer was not happier, the customer was not more successful but this person or set of people were 120% convinced that they were doing an amazing job and there was just a massive disconnect, and I see that in most organizations today.

[00:14:41] David Peralta: Like that engineer who said that what you wanted just could not be done, it was impossible and then, suddenly, he got it done in just a few hours once he actually thought about it.

[00:14:51] David Cancel: I can't tell you how many times I've seen that. "It's impossible. You don't understand. We have to rebuild the infrastructure. We've got to do this, that and just talking." I'm an engineer so I can know when they're spinning me, but I would let them, but endless, endless, "It's impossible. You don't understand. It's so complicated," blah, blah, blah and then, in the end, it was very possible. What they were really saying was, "Well, I don't believe you," or maybe they don't trust your reasoning or they were saying something closer to that, but most people won't say that to other people.

[00:15:22] David Peralta: What are those customer metrics that you measure?

[00:15:25] David Cancel: We look at the basic ones that we look at. We look at a ton of them, but let's say the basic ones are four A-teams, our development teams, our product teams, our product: Are our customers using the product more? And that one depends on the product because that's not always a good proxy but let's just use that one. Are they using it more? Are more customers buying that thing? Are the customers who buy that thing upgrading more often because of something that you wrote, some change that you've made? And we do this on a cohort basis and then also by segments.

As you can imagine, SMB, a very small business enterprise, mid-market, by cohort over time, over plan, and we look at it in a million different ways so we're looking at activity. We're looking at turn in that segment. Again, by segment, by cohort, we're looking at revenue expansion within than and then we're looking at metrics like how fast is the app load, that app, that team, is that getting better worse or over time because we see that as a proxy.

Number of customer support issues that we have for that product, are they going down or not? You can pick an arbitrary number but we look at the Top 10, let's say, for any given month and we see are the top–we call them call drivers, but then we don't call it anymore–the top 10 call drivers, are those going down over time? Are we addressing those or not? A lot of those call drivers end up being user experience issues, not outages and stuff like that.

Why that's important is that most support teams, once you have dedicated support, become really good at creating workarounds that are really product and user experience issues that the product team should be focused. Therefore, once they come up with a workaround, the product team loses visibility about those issues. Then, we also look at–if you have a sales team, but not everyone has a sales team, but if you have a sales team, what are the top objections? Why did they lose a deal? What are the features that are being requested and then we, again, look at the delta month over month and say, "Are those going down or not?"

Those are our proxies to understand is that product team, what they're doing, pulling those metrics in the right direction or not. Once you focus on those things as a goal, then you shouldn't actually care that much about aversion, a release date or how much infrastructure work we're doing versus new product work or any of that. That stuff doesn't matter because all that matters is that the customers are more successful and using your product more over time.

[00:17:55] David Peralta: How are you tying those metrics directly to the performance of the team? A team works on a specific feature then they release it. What are you using to concretely measure the impact that that release had on a cohort? Are you using a specific software or something? How do you tie that back to performance?

[00:18:13] David Cancel: The way that we've done it is to start from the top and say that all of our product teams–we call them product teams and they're a mixture of product people, designers, engineers, researches, et cetera–and we say every one of those pods or those teams hone a specific product that we would consider a product in the eyes of the customer. For us, sales email might be one of them, or marketing email might be another, or chat might be one of them.

We have lots of different ones but it looks like a discrete product. That way, we can measure that unit and how that unit is being more successful over time. What we do is, once we start up a product team, they own that product for the life of the product. We will not take that product team and move them off to some other initiative. We will keep them focused on that, and what we say is the only way that that team from a resource standpoint goes away or gets pulled somewhere else is if we're willing to give up that product, i.e., get rid of it from a revenue standpoint.

Otherwise, there will always be a team there. Now, those people can move to other teams and we'll replace them and back fill them, but that actually rarely happens. I thought that it would happen more often because those teams end up becoming little families or little teams and they want to stay together and then really focus on that problem. That's how we can measure their performance. That way, because we designed it that way, we don't have to worry about, "Did this feature that they released on X date actually move or not?"

We know that this team is focused on the health of this product that we can measure, how people are using it and the revenue that we attribute to the people that use that product because if you have a flat fee and you pay access to all these things, it's more usage-based that we can attribute the revenue to. We say those customers that are using that part of the product, are they getting better or worse over time? That lets us let up from worrying about specific features that may be released and when they're released and what have you.

[00:20:15] David Peralta: What are you using for that cohort analysis?

[00:20:18] David Cancel: We do it by hand. We do a lot of sequel.

[00:20:25] David Peralta: So, custom? It's all in-house?

[00:20:26] David Cancel: Yes, we use a tool called Mode for analytics for visualization which is like a lever. There's a whole bunch of them, like Domo etc, but that's how we visualize it and we use some other tools that we built internally and some other development tools. Really, we have a centralized ops team that does biz ops, sales ops, product ops, etc, and they are the ones pulling that stuff together and reporting that into the company.

[00:20:56] David Peralta: The team performance is tied to the metrics, but is individual performance also tied to those customer metrics as well?

[00:21:04] David Cancel: No one has ever asked me that question. That’s a good question. Yes and no. Obviously, we're tying the whole unit, the whole team and their health to that product so it's getting better. We usually look at each person's progression. We're obsessed with each person's progression, and if you are an individual contributing, you don't manage anyone, then we usually look at you from two dimensions. One dimension is performance and, here, the product performance and all that kind of stuff goes into it so that's the performance.

The other one is your fit for the role that you're in now. Everyone's progressing and we have lots of ways that you can progress within your same role without moving to a manager et cetera and we can talk about that if you want, but are you progressing from those two dimensions? Then, if you manage people, we add a third dimension which is a leadership dimension. When you're having one-on-ones with people, our method is that we're always talking about those two or three dimensions and how they're getting and what they need to do to get to the next step.

We used to this on a number basis. We do one to five, but then we got rid of the numbers because engineers got too pedantic about scores because the important thing is your relative improvement but everyone was comparing themselves to others and saying, "Why did David get a 4.2 and I'm a 4.1?" It was just like, "It's totally daring and totally different." It's a totally different thing and they're a different person; it's a different part of their journey. People get obsessed about these meta-things and so I got rid of this number.

[00:22:48] David Peralta: You tied the team's performance to the customer metrics and that's what keeps them customer-focused, but you spoke about how, at your previous company, you actually had the engineering team, the product team, everybody on calls with the customers. Is any aspect of that still a part of your current methodology?

[00:23:07] David Cancel: Yeah, we do a thing where we measure – although it's quantitative but it's more qualitative, actually, that we have which is we're looking at every one of those product teams and we are looking at the exposure that they have to customers. One of the guardrails–we call it guardrails–in our system is that each one of those product teams has to be working with and having contact with some set of customers each week.

It's more of a guardrail so we don't have an absolute measure that we're trying to say, "You have to do it 2.3 times," but it's kind of an early warning signal that, when we see a team that has not had customer interactions that week, then we zoom in, double-click in and we kind of parachute in and try to figure out what's wrong with that team. Almost always, it's that they're going off on some deep end we try to bring them back and so it ends up being a proxy.

Customer interaction for us is they shadow support calls. They no longer do them firsthand. Up until recently, they did through chat, but they make shadow calls. Some of them still have rotations in chat especially if they're new. They all have to go through that. They are all doing user testing or user research along with the designer and product manager every week so we have some number of Zoom calls, meetings or whatever, physical or virtual, that we're having each week. Then, we have customer success and sales calls that we are part of. These are all different ways that they can have interactions with customers, and we're measuring to see how often those teams are having those interactions.

[00:24:49] David Peralta: Is each team member required to join one of those calls or some of those calls?

[00:25:57] David Cancel: We used to do that a couple of years ago, a number of years ago, and we got rid of that and made that the job of the tech lead, which is like the leader of the pod because they're really engineering-led more than anything else, that they're rotating people. We no longer zoom in and say, "Did this guy do it or not?" We leave it up to them to rotate. We also leave it up to them to rotate, and they do rotate when those teams present to the company, like which of the team members goes up. Again, that's more like a guardrail. It's more like we're noticing if it's always the PM presenting or it's always this one engineer and they're never rotating. It's more qualitative than a hard number.

[00:25:42] David Peralta: What was the reason that you switched away from having your engineers take those support calls or those support chats directly?

[00:25:48] David Cancel: The only reason that we did it is it wasn't because engineers would say, "I got to go code because that's about it." That's not an acceptable answer. It was only because we were getting to the size with many thousands of customers where we weren't providing the best experience every time because we had so many people coming in and out of shifts. This is everyone in the company so like an engineer, a salesperson or a marketer, someone in the team might come in for two hours today and then they would come off.

We were not having a level of quality in terms of closing out a conversation or we would close out the conversation but someone might have to talk to more than one person. We just thought the experience was bad, and that was the only reason that we made that change. We still require everyone to shadow and be part of it but, since then, we've added some dedicated people to make sure that when you have a conversation with someone, that you own that conversation for the session's length of that conversation.

[00:26:55] David Peralta: How many calls do you recommend that people join on a regular basis in order to really get a sense for what's going on from the customer's perspective?

[00:27:03] David Cancel: We no longer have a set number on that. We do it based on time. We don't have a number of interactions and, depending on the roulette, you may have a super heavy-duty time when you're drowning with the number of interactions that may be coming on and then you may have slower times. It's usually closer to drowning than it is to slower, but it's amount of time. We're just making sure that they're spending at least a couple of hours per week, interfacing with customers, and it tends towards more like six, seven or eight hours, something like that, but we don't actually measure each team based on that anymore.

[00:27:42] David Peralta: What about the leadership team and, actually, yourself? Do you still hop on calls?

[00:27:48] David Cancel: 100%.

[00:27:49] David Peralta: What are your interactions? What kind of things do you do?

[00:27:55] David Cancel: I jump in on support. I jump in on customer success—calls that's more like on-boarding and helping someone get set up.

[00:28:03] David Peralta: As a shadow or are you taking the call directly?

[00:28:05] David Cancel: It depends. On some of them, I might take the call directly. On most of them–I'd say 80%-20%, so 80% of the time, I'm just shadowing. Sales call, for sure, I'm part of those. I think that's about it, and then product testing, like user testing and stuff like that. I'm super involved in marketing and product at Drift and so those kind of things, I'm having all the time. When you're out doing marketing the way that we do it, which is more of a one-to-one marketing, then we end up having those customer interactions anyway from existing customers even though that wasn't the intent.

[00:28:41] David Peralta: What do you mean by one-to-one marketing?

[00:28:50] David Cancel: The key to scaling is focus on the unscalable things so we do things like we meet up small groups of customers all the time. Every week, there's some number of those that are happening. We'll fly out to a city, one or two of us–I do it a lot–and meet up with some prospective customers and people in the industry, some existing customers, and I'll do a lunch with them. I'll do dinner with five of them if that's happening every single week. That is one form that's kind of more on the events side. Then, our marketing that we think of is we're always doing videos, we're doing posts; I'm doing videos, I'm doing posts. On any social channel, customers and prospects can obviously comment back and questions, and send me emails, and send me chats, and send me DMs and all that stuff. I'm constantly on that.

[00:29:42] David Peralta: How do you select those customers that you have these dinners or these lunches with? Is it just at random or is it specific? Do you have any criteria of who you want to meet?

[00:39:52] David Cancel: Yes, I always have a criteria but, often, that's the success team and the sales team and a little bit of the marketing team that are coming up with that list. We might come in and, let's say, we have a dinner. We always want to have some number of our customers. If we're going to visit a city, we want to be spending time with our customers so we'll predominantly have more customers and sales might invite some people that are prospective customers to that. I'd say it's 90% customers and so, in that case, we want to hear from customers who want to have a mix. You want to have a mix of successful customers. You want to have unsuccessful customers, new customers, old customers and so we try to mix it up. There is a fair amount of matchmaking to make sure that happens.

[00:30:36] David Peralta: What are you asking them specifically when you have these interactions?

[00:30:41] David Cancel: Almost nothing.

[00:30:44] David Peralta: You just let them talk?

[00:30:45] David Cancel: Yes, which sounds funny but I do that in one-on-ones, too, and I do that when I have team lunches which I do every week. I call it a random lunch with DC and we just pick people at random and I just have lunch with them.

[00:31:01] David Peralta: One-on-ones or with groups?

[00:31:04] David Cancel: There'll be five people including myself so four others. We'll go out for pizza and we'll do something. I don't want to come with an agenda, same thing when we have those dinners that I mentioned. I don't have an agenda. We just talk about what we're doing from an industry side–this is not a product pitch–what we're working on, what they're working on, and we just let everyone talk. It's just like, "Let's be real people and let's just have a conversation."

Eventually, the conversation–and it's never led by us–goes into because we've gathered all these people that have one thing in common which is Drift or this interest in this area and so they naturally start to talk. It's amazing that, in every one of these cases, we've never asked them to talk about this stuff. We've never coaxed them and they just end up going down that road on their own, and we just sit back and mostly listen. That's the truth, just listen to them.

[00:32:00] David Peralta: Can you share one of the biggest insights you've ever gotten from one of these or something that you left with thinking like, "Okay. I hadn't thought about that."

[00:32:15] David Cancel: I think the one that comes up all the time which shouldn't be a surprise at this point is when you're dealing with bigger organizations, the level of complexity and the lack of communication that may happen in those companies. It should be obvious at this point but, I've got to tell you, I've been doing this a long time and every time that you go through it, it just blows your mind. You're like, "What? That's unbelievable," and so that's an easy thing.

The reason I think that's relevant is it's the easiest thing for us always to forget because, like you, you're in Hotjar; you're in this fast-growing dynamic company. You can talk to anybody in the company and you can get anything done. Then, you forget that we live in a bubble. We live in some weird, weird imaginary land that is not true for most people out there. Every time I see that, you're like, "What?" and when you try to explain that to other people, I find that most people will not get that especially within the company. They can't get that thing.

That's a reality within the company and so you have to design, "Well, how do we design software and education?" and, "How do we make these people successful when they have all these hurdles?" because most of us, I think, design software–and this is what I've done–for this frictionless world, in this world where they don't need any education, they don't need anyone to teach them anything. They can just figure it out on their own. It's fully self-serviced, and that's us. That's me, you and other people probably listening to this podcast. That's not the real world that we live in. We are quickly going towards that world–there's no doubt–but the vast majority of those larger companies that you may deal with do not live in that world.

[00:34:17] David Peralta: Can you give me some more concrete examples of the specific steps that you took to address that issue to make it easier for people who don't live in this alternate startup universe?

[00:34:28] David Cancel: What we've done is we've probably invested way more in education. Education is one. That's an easy one. Two is bringing these people together.

[00:34:40] David Peralta: When you say education, you mean like training videos for your product?

[00:34:44] David Cancel: Training videos, like academies, creating the academy, creating training, creating guides, creating personal videos for that company with specific problems that they may have. Our customer success team may record specific videos for that company, specifically, because we know the challenge that they're going through and then point them in the direction to more general kind of content for the general stuff. We've done that.

Third, I was going to say, is invest in partners, partners who may be able to deal with a lot of those issues for those companies and making those introductions with those partners who can take on maybe some of the service work that's needed within those companies or some of the training work that's needed in those companies. I'm sure there's stuff I'm leaving out but those are some good examples.

[00:35:38] David Peralta: When you say you bring some of these people together, you mean you found one company that suffers from a particular issue and you know of another company that has a solution for that, and so you bring those two companies together?

[00:35:48] David Cancel: Yeah, and this is an interesting thing that I've learned over time, is that I would say that the market is at two ends of the spectrum. One is the real S&B, the mom and pop-like S&B, not the startup S&B but like the mom and pop S&B, and then at the other end is the enterprise. Those two ends are massive and they need a lot of help, service and education because the S&B, the true S&B, has no people to help them with this stuff and they're busy actually running the business and, on the other end, the enterprise has complexity, hurdles, communication issues, and all that stuff.

In the middle is actually the very smallest part, and that's people like you and me who can do stuff on our own. We need no education, no videos, no anything; we'll just put zaps together and make everything work. That's a small part of the market, and so I've kind of stumbled upon this over time and said, "Okay, we've got to design systems if we want to serve the true S&B and then the true enterprise that act differently than systems for you and I."

[00:37:00] David Peralta: I'd really like to dig into the details with you because you obviously know your stuff so when you say you put these systems in place, what are these systems? Actually, step back. Do you prioritize one type of customer over the other, like do you prioritize big-business customers over mom-and-pop S&Bs?

[00:37:14] David Cancel: We don't because we service customers from S&B into the enterprise and so we don't prioritize one and the other. What we do is we segment and we have different teams, let's say, on the success side or even the sales side that deal with S&B and deal with it in a totally different way than they may deal with enterprise and yet another team that's dealing with mid-market and yet another team that may be dealing with partners.

What we do is almost the same thing that I described in the product side which is we create these small teams. On this case–I'm going to go to market side–it ends up being by segment, and then we keep those people focused on that segment and then they develop solutions that are best for their segment. Obviously, there's commonality between them but they end up being custom for that segment because what enterprise needs is different than S&B at least for 20% of it if not greater, and so they end up building the right solution for that segment.

[00:38:13] David Peralta: Whether it's education or, like you said, specific academies or trainings and things like that, that particular segment?

[00:38:20] David Cancel: Totally. An example would be for S&B, they might invest more in one-to-many education so group webinars, group videos, email-based reminders, that kind of stuff. In enterprise, they may focus more on user groups, partners, one-on-one education. We don't really on-sites and any of that kind of stuff–everything but that kind of thing. The only on-site that we'll ever do is the dinners that I described so they might invite them to more smaller intimate events where they can meet with other customers that are the same size and have the same issues. We'll do that more for those enterprise customers than we do–we don't do that in the S&B segment, really.

[00:39:08] David Peralta: All of this so far has been on the customer-facing side, really, how to make the customer as successful as possible and how to tie the team's performances to what the customer needs. But what about the teams themselves? What about the team and the culture at work? What are you doing to make your team as successful as possible?

[00:39:26] David Cancel: Good question. An endless number of things. My career is over 20 years now but let's say the first half, the first decade plus, 99% of the stuff that I focused on was go-to market strategy tactics, product engineering, design, et cetera, all the cool stuff that we all like to talk about and read articles about. 1% of my time, I focused on people or cared about the people, the culture, what have you. Now, I say, the next 10 years plus of my career, I've said it's 99% people and it's 1% all that other stuff, which is all the cool stuff that we want to talk about and geek about like go-to market and product and all that stuff, but that's the easy stuff.

It's just that, man. This would be a cakewalk. The reality is that it's hard because of people. It's hard because those people can be inside your company, those people are outside your company and they are customers, they are prospects, they're investors, they're partners, and people are hard. We're all hard, how we communicate with each other, how we align people, how do we get people to be effective and be high-performing when we're 1-10 people is radically different than when we're 50-100 people.

It's radically different, again, when we're 200-500 people, and it just keeps changing, like there's a stage aspect/dimension to things that at least I didn't really appreciate before. It's an important one because I think very few people can make it over multiple stages of a company, like 0 to 10, that 10-50, that 50 to whatever, like there are few people. I think we glorify people that we can tell a story of, whether it's jobs or whoever these founders are that went from the garage and then they built a multi-billion dollar company.

Beyond the success in the product and all that stuff that they've built, the really amazing part is that that person was able to go through all of those stages of growth because almost no one can do that, like almost no one can go from all of those different stages because you just need a radically-different approach at every one of those stages. It's a totally different problem as you go through all of those stages.

Most people are good at one, two or three, whatever the number is, but in limited number of stages, and that's okay. There's nothing wrong with that. I wish someone would have told me that early on. If someone loves that 0-50 scale, they might not love the 5000-10,000 but there's nothing wrong with you and there's nothing wrong with that, just saying, "I like that stage." This is a long answer to your question.

In terms of how do we make our team successful, I have this model where we're trying to build this pull organization, and what I mean by that is I believe that if we focus in on the personal progression of everyone on the team, within our team, and that everyone is growing, learning and has this feeling of personal progression, not just business progression but their personal progression, then they will pull the company with them and pull us in a good direction where I think most companies are set up including many of my own in the past to be a push organization where we're just pushing and trying to incent people and figure out why wouldn't they just do the thing that we needed to do and we lost the focus. We never had the focus on their personal progression.

[00:43:10] David Peralta: What are you doing differently now that you didn't do before? How do you pull them up?

[00:43:15] David Cancel: One, it all starts with the hiring process that we're trying to figure out as a company and we spend a lot of time learning, training and trying to figure out how to do this best but figuring out what's this person's superpower. Most people can't express their superpower; they don't know so we're trying to figure that out, like what is the thing and they might not even know what it is. We're trying to figure out what is it, one, because we've got to figure out their superpower as to align with whatever the opportunity is within the company and then, two , it's just like comic books. Superpower is usually your super-weakness. In a different context, your superpower becomes your super-weakness. We're trying to figure that out.

[00:44:03] David Peralta: How do you figure that out? It sounds great but what does it actually mean, like, because if I go back to my company and say, "Okay, well we've all got to figure out our superpowers," it's like, "What are we going to do? Are we just going to sit around and talk to each other?"

[00:44:22] David Cancel: Here's some shortcuts: One is whatever your superpower is, you've already heard about it in your life. You may not appreciate it but there's probably been, if you look back early in your life, a thing that people have naturally complemented you about. You may dismiss it and not even recognize it and not even think about it but there's probably something, one, two or three things that people will consistently compliment you around, and that's a hint towards your superpower, a natural inclination and natural place where you feel you may have a superpower. We try to discover that. Is there something that people have always complimented this person about, their certain aspect about that?

[00:45:03] David Peralta: Do you have a survey that you give to every incoming member or is it a conversation that they have with their team lead once they start?

[00:45:11] David Cancel: No, it's during the hiring process. We do things. One, during the hiring process, we do use a tool called Predictive Index which is a personality test. It's probably the wrong way. They would not like using that, but check it out: www.predictiveindex.com. What you see is Myer-Briggs which is just a personality test and Predictive Index is a little different, but what it's trying to get at is trying to figure out what are the things that you're naturally inclined towards, not inclined towards, like how do you work best on a team, those kinds of things. It's a very simple question and it's very interesting. That's not the totality of the person but it gives you hints. That's one thing we do during the interview process.

The second thing that we do during the interview process–and I developed this because I have interviewed endless numbers of engineers who would be hard to figure out what they curious about and then what was their superpower. The way I discovered what they were curious about and then matched them up was that I had weird interviews–I still do. I have a very weird interview style where it's kind of like a psychological test. I'm just asking, ping-ponging around, asking random questions to this person.

[00:46:26] David Peralta: Like what?

[00:46:28] David Cancel: Everything like, "What did you do this weekend? What are you interested in? Do you ski? No? Do you ride bikes? What do you do?" I'm just ping-ponging. It's mental. If I were on the other end, I would think that I was crazy, but what I'm trying to do is I'm looking at the person and I'm trying to see when they naturally light up which sounds so simple but it's so important. I look at you and what do you do naturally, your eyes light up, ping, and there's a little spark in the eyes.

I start by trying to find a personal thing that they're interested in, some personal thing. Once I have two or three things that I've seen how they react, then, at the same time, I'm also seeing things that I'm talking about where I'm putting them to sleep, where their eyes are falling asleep, where the eyes are dead. There's no interest in there. I have some kind of calibration of how do they look when they're excited, how do look when they're sad, and then I start to go into things from an engineering standpoint–and we do this with everyone but I'm just talking about engineers–where, "We're working on this thing, or that thing, or this back-end tool, or this language, and this," and I'm just watching for when do I get the same reaction.

A lot of times, what I would find is that someone might have that same spark or that same curiosity about a specific problem or engineering challenge or something, but they may have no experience in that area, maybe they've never used that tool or that language or whatever, but there's some spark there. What we would do then is, if everything, if they ended up being the person, we would try to put them on teams that were dealing with that technology, that problem, that thing to see is there natural excitement there.

What we would figure out–and, of course, it's not always right. A lot of times, we might have to move someone to another team because maybe it didn't work or the dynamics were off, but when we got that right, that person was superpower-ed . That person was unstoppable because what they were doing was fundamentally doing something for them because they were curious about it. They weren't doing it because the company needed it, because they had a release date, because they were being pushed. They were doing it out of natural curiosity and hunger about that area, and then we started to see this idea of this pull. All of a sudden, they started to pull us forward without us having to spend all of our time pushing them to do stuff that we couldn't figure out why they wouldn't do. Anyway, I have lots of other ways that we could probably spend hours talking.

[00:49:03] David Peralta: We're coming close to the end here but I have to ask. What's your superpower?

[00:49:10] David Cancel: My superpower is that I'm very, very logical AKA robotic and so I tended towards engineering, figuring things out, being like a MacGyver-type person so I can go deep on anything, any weird thing that I become interested in, and learn a lot in a relatively short time on that subject. The superpower is not that; the superpower is that I can do that but yet I like talking to these business types which is kind of usually strange, to be an engineer and to be someone who likes to go very, very, very deep and yet has empathy and actually likes to talk to those salespeople, marketing people, support people or what have you, and I end up being the bridge because of that.

[00:49:58] David Peralta: I know we're almost out of time and you're going to have to go soon. One question that we ask every single guest is there's a lot of people that are on the fence about embracing people-first approach, customer-first approach. What would you say to them to help them understand that this really is the most sustainable way to succeed?

[00:50:17] David Cancel: It's all meta because, fundamentally, what we do now at Drift is enable this so I think about it all of the time. I'd say that we've lived through lots of massive shifts, especially in my time, pre-Internet, to where we are today and I'd say that we fundamentally live in a world today where your customers, no matter what you sell, unless you have a government influence monopoly of what you sell or are one of the few people that fully monopolize at this point, your customers have infinite supply right now.

That wasn't true even 5 or 10 years ago, meaning whatever you produce, whether it's a hard product, whether it's a watch, whether it's a phone, whether it's a laptop, software service or whatever, now you're competing with the seven billion other people on this planet and, now, a massive percentage of them are online. Whatever you produce can be copied now, from a product, from a service, from a piece of software and so now, the idea that you, as a company, can dictate and you, as a company, have full control over how you want to communicate and work with your customers is crazy.

We're seeing this massive disruption happening. We're seeing all the value in the system today going to the few companies that have massive aggregation of that customer interest, whether it's Google, Facebook, Amazon or whatever. We can go to Uber. We can go on forever, Airbnb, et cetera, et cetera . We're seeing this massive disruption happening and it's not just that they're technologies; it's that they have massive concentrations of customer interest and you're living in this world now. For you to stand out and for you to compete in this next century, you're going to have to figure out how you stay closest to the customer so you can continually evolve and build products that meet that customer's needs in this world of infinite supply.

[00:52:11] David Peralta: If you had to pick one resource for our listeners that would help them succeed by putting people first, what would that be?

[00:52:18] David Cancel: That's a hard one. I don't want to plug anything. I mean, I did write this free book which you can download on www.drift.com or you can get on Amazon. It's called Hypergrowth. It really talks about this shift in more detail than I've been able to talk to now and gives you some concrete examples of how you could change, how you build software, how you build products, how you build teams. I would just steer people towards that, and you can find out lots of other articles and thoughts around this.

[00:52:49] David Peralta: Fantastic, and we'll be sure to include a link to that in the show notes at www.hotjar.com/humans. David, thank you so much for taking the time. It was a very insightful conversation. I really enjoyed it.

[00:53:00] David Cancel: Thanks for having me and, hopefully, I didn't go on too long.

[00:53:04] David Peralta: No, not at all. It was great. I'm sure listeners are going to be charmed.

[00:53:16] Louis: Thanks for listening, my fellow human. We know how fast paced life is. If you're listening to this on your daily commute, while running, or even cooking, you can always go to Hotjar.com/humans and look for today's episode. That's where you'll find access to all the resources and humans we talked about, the full transcript of the conversation, and even links to really see the episodes.

[00:53:39] David: If you like today's episode, please help us out by leaving your honest rating and review on iTunes or wherever you get your podcast. The more honest feedback we get, the more we can improve the show for you, and the more this podcast will be discovered by other humans. It's a win-win situation. Until next time, take care and be human.

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