Guest: Rav Daliwal – Why Do VCs Care About Customer Success?

Why DO VCs Care About Customer Success?
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The Jasons Take On...
Guest: Rav Daliwal - Why Do VCs Care About Customer Success?

Episode Description

In this episode, we sit down with Rav Daliwal to get a venture capitalist’s perspective on the importance of having a high-impact customer success program. Rav shares his views of the role the CS plays, where companies should be in their customer success maturity as they grow, and how you approach customer success influences venture capitalists.
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Meet Our Guest

Rav Daliwal

Rav Daliwal

Investor and Venture Partner

Rav has held a number of executive positions in various Enterprise Software companies over the last 20 years, most recently at Slack whereas the first UK employee he established the London office and founded the global Customer Success team.

No stranger to hyper-growth start-ups, Rav has also built and led post-sales business units at Zendesk (now valued at over $10 billion) as well as Yammer (which was acquired by Microsoft for $1.2 billion).

Rav has published several books on Enterprise Software Deployment, is a regular public speaker and angel investor, and now specializes in advising the portfolios of Venture and Growth Equity backed firms on how best to develop their go-to-market and post sales strategy and operations.

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Jason Noble: [00:00:00] Good evening. Good afternoon, everyone. Welcome to another episode of the Jason’s take on podcast series. We’ve got myself, Jason Noble here in London, wet and cold, and we’ve got Jason Whitehead over there in Washington.

So hello, Jace.

Jason Whitehead: [00:00:13] Hello, Jason

Jason Noble: [00:00:14] We have a very special guest with us today. I’m sure many of our listeners will have heard of him. It’s Rav Dhaliwal.  Rav is a venture partner at crane venture partners. He has a significant amount of experience in the customer. Success space is a public speaker and customer success and investor, so forth that you positioned yourself as a former software executive turned investor out.

But Rav was going to talk to us a bit about kind of the VC’s perspective on customer success. Which is a topic that I’m sure a lot of our listeners keen to understand a bit more about. And I think Rob brings a very unique perspective. Have you come across from many businesses, hyper-growth businesses taking them through to IPO, to public sale, seeing them set up customer success functions, and then turning to invest himself.

So really unique. Perspective. So I’m really excited here to have you with the drive. So a big welcome

Ravi Dhaliwal: [00:01:05] to you. Thank you. Thank you so much, Jason and Jason, and thank you for that intro. I am mostly describing myself these days as a recovering software executive. I feel that’s a little bit more accurate but it’s good to be here.

And as Jason pointed out earlier, before we started recording that, I’m also in West London about a mile and a half from Jason. So hopefully next time we get together, we’ll be able to do it face to face.

Jason Noble: [00:01:26] That’s what I think most of us cannot wait for that day. Thankfully with the vaccinations, it doesn’t look this, that far away.

We still, yes. W what I’d like, I what Jason, I’ll just pass normal questions over to you focusing on all the venture type questions, but just give us, give everyone a quick intro to yourself. People who don’t know you, your background the great things you’ve done, and what’s brought you to where you are today.

Ravi Dhaliwal: [00:01:45] Absolutely.  Again, thanks again for inviting me along. I’ve been really looking forward to speaking with both of you. My background is pretty straightforward. I’ve been about 20 odd years in sort of enterprise software. I started my early part of my career with all the very large, big user suspects IBM and Microsoft and Salesforce.

Wasn’t that big then, but obviously it became big. I was there, it was less than 3000 people, but it’s still a big company. And then for about the last 10 or 11 years, it’s been pretty much. This is not by design by the way, but it’s just been very early employee at very early stage startups that kind of went on to big growth and exit.

So I joined I was very early at a company called Yammer. We eventually got acquired by Microsoft. I still, I think it’s still the fastest billion dollar plus exit in the Valley. It’s certainly an enterprise software. And then after that, I. Was lucky enough to really work with wonderful group of people at Zendesk.

If there ever was a customer focused company, it’s that one for sure. Amazing experience. Obviously that went public and then I found myself as deep, the first UK employee at Slack.  That was quite a unique experience. I was a reasonably instrumental in convincing the company that the CS function was needed.

And I was tossed to go out and prove that, and I believe it’s like the. Third biggest part of your organization now after engineering and customer experience.  After that, then, this is all very exhausting, by the way, just doing this. And one gets a little bit older and a bit slower and.

I had a relationship with the team of crane, or I’m a venture partner, as you mentioned, Jason. And just through knowing the team there and helping them out on bits and pieces informally that relationship start to become a little bit more formalized. And so now I spend a lot of time working with the investment team on looking at new opportunities, but also actually the fund’s focus is really on go to market and actually helping people.

It’s quite unique as well because it’s an enterprise fund. It focuses on enterprise tech and helping people to accelerate, go to market. So I spend a lot of time working with founders and leadership teams on helping them think through business problems.  In a weird way, It’s really just doing customer success, but instead of selling software, we’re selling cash.

So what we’re trying to do, like any good CS group is we’re enabling people with money and then we’re really working closely with them to help coach them, nurture them to. Use that money, the best way possible to achieve their goals and so that we can achieve our goals. So I sometimes describe it as I’m in the founder, success business now with the rest of the team.

And so for me, it’s felt like a very very comfortable, very logical tra you know, move into what I’m doing now. And certainly my background and experiences has been incredibly helpful. I, as an investor, because I tend to look at it. Companies through a bit more of that operational lens. I think that’s such

Jason Noble: [00:04:27] a fascinating background there, and it really, I love the way you still doing customer success and the way positioning, because it’s something that Jason I’ve spoken about before that is, I think we’re very privileged working in customer success, that it isn’t just about our customers.

You’re there to make other people successful and it’s a really wonderful position to be in. And actually to see it, you’re showing this in reality, actually, you’re there to make investors successful.

Ravi Dhaliwal: [00:04:52] Yeah.

Jason Noble: [00:04:52] With your background and in customer success. I think you’ve already talked about, and these high growth companies, and you’ve seen some phenomenal companies that, but everybody knows Slack Zen desk.

These are tools that I use them day in, day out. A lot of people do. You’ve got this really unique perspective as to what makes good customer success? What are the key things or some of the key things then that now in your role as a venture capitalist that you’re looking for in companies, when it comes to setting up customer success functions, or even investing

Ravi Dhaliwal: [00:05:20] in them, what are some of the key?

It’s a really great question. First of all, you look to see if they actually have one. I think that’s the key thing. And Oh, I should just point out that, one of the reasons why I feel so fortunate is that, everyone certainly at crane is just philosophically, as investors aligned and understands the importance of, the success profession.

And the fact that, the team recognized when actually this is a gap where  we haven’t got the skillset to be helping them. And how can we work with somebody like Rob and the people he knows to help fill that gap. So I feel very fortunate. But in terms of what we’re looking for really it depends on what stage the company is in.

If you invest very early, like we do, sometimes there isn’t even a product. So either if there isn’t a product, why do you need customer success? But what you really are trying to do then at that early stage is you’re trying to accelerate what we call product market fit. So for. Some of the audience.

You may have heard that term. What that really is saying we have a hypothesis about the value that we add as a product and solution. And we’re building based on that hypothesis, but we really cause, we’re early stage. We don’t have a lot of money. We don’t have a lot of resource.

We really need to be very fast about how we test those items.  prove them or not prove that because what you don’t want to do is build the wrong thing for the wrong people. And so at this, at that stage, you may not call it customer success, but you are typically have people. Sometimes it’s the founder.

Sometimes it’s the product team or the product leaders who are doing that role as well as building the product. And interfacing with customers and finding out what adds value? What doesn’t, what problems should we be helping to try and solve? So we look for that to say actually, if it’s an early stage company, What are they learning?

One of the key questions I’d like to ask is what have you learned from the customers you’ve spoken to so far, whether they’re paying you or not paying you? That’s a really good signal to say, how actually are they thinking about building towards this is hypothesis. When you get into sort of the latest stages of investment, the series a series B the company has hopefully product market fit or close to it.

Or they’re getting it and at least one or two customer segments. And what they’re doing now is they’re building a commercial organization. Some people refer to that as go to market fit. Marketing sales. And if they’re talking to me, I’m saying no, that’s marketing sales and success. You have to think about.

All of it as a continuum at that stage, you then start to you have more basic data, right? So then you’re starting to look at some of that unit economic data. You’re looking at things like net revenue retention. If the company has been selling product for, year plus you may be looking at things like the what’s called the LTV to CAC ratio.

So this is the ratio between the lifetime value of the customer and the cost it took to acquire them. And there’s certain benchmarks, ideally you want. The lifetime value to be three times the cost of what it took to acquire. If the company is really accelerating and it’s a later stage investing, you’ll also want to have a look at what we call the payback period.

You may have decent long-term value to customer acquisition cost ratio, but you want that to ideally pay back in five, six, seven months. Not. 18 months, 20 months. So there’s a gamut of of metrics, like I say, they very much what you look at depends on the stage.

Sometimes if it’s a new category, there is no product yet. Or the products being built. The only thing you can look at is the total addressable market or the time. And he said actually, if they pull this off, if they build something, what’s the size of the property. It really just depends on on the stage.

But what you’re really doing is looking to S you’re looking at a data, or are you asking these questions to determine, are they thinking about, or are they learning things from customers that would indicate to you that they are thinking not just about optimizing for selling once. But for continually selling.


Jason Whitehead: [00:08:59] And just say, even out of high level, how are you finding the market right now? Cause customer success has changed so much over the past five, 10 years. Are you finding that most of the companies that you’re coming into that their founding team already is thinking along those lines and always thinking about success or is it a new concept that you’re bringing to them even

Ravi Dhaliwal: [00:09:15] at this stage?

Yeah, it’s interesting. I would, I’m going to, you might hear a sound here as I dragged my soap box over to stand on it. One of the challenges is with customer success is no one actually really knows what it is, right. And the reason that nobody knows what it is there is no industry definition for it.

And one of the things that I’ve been doing, a lot of the conversations I have with founders, whether we invest or not is it’s contextual. So what it’ll take to make your customer successful. Is likely to be very different from what it takes this company or this company, but at it’s cool, what you’re really trying to do, whatever you call it, a function, CS, customer experience, whatever is you’re trying to help them see value.

The more value they possibly can derive from your solution, but quicker than if you left them to their own devices. Yeah, really. That’s what you’re trying to do. You’re an acceleration function. How you do that is often where I think CS practitioners get hung up because they talk about the, how right or the activities they do.

But really at the core, what you’re trying to do is speed up the time it takes for them to see value and work with them. So they see more value and realize more value than they possibly thought they could. And. When you explain it to people, then they get it right there. Oh yeah. Okay. That makes complete sense to me because if I do that, then I’m going to get more money from them.

Brilliant. Or even if I don’t get more money from them, I hadn’t worried less about the revenue I already have for them. Because if you look at that customer acquisition cost, if you lose a dollar, you’re going to have to find anywhere between two, three, $4. Just to make up for the loss right before you even actually start making more money.

When you explain it in those terms, people get it. But the challenge is you have to explain it. There aren’t too many people, if people do come to you, Which saying, Oh yeah, we know what about success? It’s normally they have a model from somewhere to go out before or someone they talk to in the industry.

You said, Oh it’s like customer support or it’s actually, you give them all the stuff that doesn’t fit anywhere else and they just deal with it, and that is part of the thing that I’m trying to address in the position I’m in now is how much can I influence educate. Not just investors, but entrepreneurs to start a baking this into their thinking about how to build a company.

Jason Whitehead: [00:11:28] Wow. That’s fantastic. I love that. So I’m putting a different spin on this as well, too. Plenty of 20, it’s been such a challenging year. I’ll all the way around and cut them. Customers are doing, or companies are doing some great things with customer success, but they’re having to tweak it up.

And we’ve seen over the past year change people in the process tools and where they’re investing, where they’re focusing, given the current things. What over the past year or so have been like the biggest changes you’ve seen in how customers are approaching customer success and how do you think that’s going to change coming out of this whole COVID

Ravi Dhaliwal: [00:11:57] timeframe?

Yeah, I think big sort of macro shocks, like whether they’re economic ones or pandemic that we’re going through right now. My experience has been, they tend to act as accelerators, so there tends to be trends there and then they suddenly get accelerated because there’s this big macro change in, in, in the business environment.

And one of the accelerations I have seen is there are more and more entrepreneurs or potential entrepreneurs looking at CS as a use case and go, this is actually a part of the funnel in sales that doesn’t have a dedicated tech stack. It’s beg, borrowing and stealing bits of capability for wherever it can.

It’s well-served with CRM. The CRM is an existing category. That’s been retrofitted for the success practition. I’m talking to almost every week, someone’s going, I’m building for the CS profession that seems to have really accelerated. And I think that is part of a recognition of certainly if you could cast our minds back to last March, Which is really hard because obviously we’ve all lost all sense of time and proportion.

But last March is let’s say that’s a lockdown month. That was a kind of major seismic shift and panic, and a lot of companies and a lot of founders went, I’ve got to double down on my existing customers. I never really think about them. I’m always thinking about sales or my investors are forcing me to think about ACV, but all I got right now, at least for the next six months is my existing customers.

And suddenly there was this. Urgency is I understand what does this team do? How do they do it? What do we need to do to support them? Because we’ve got to keep every dollar that we’ve got. And I think that has accelerated the tooling discussion and I think that is a, that’s a trend I’m continuing to see.

And that’s a trend that I’m personally actively trying to. Promote, whether that’s with connecting people or angel investing or whatever, because I think it’s really important. And I think also partly the reason why it needed that acceleration was because there’s no definition for the function. So if there’s no definition for the function, how would you ever build any tools for it?

You just everybody on sales, you don’t have to be in tech to understand sales. What’d you do in sales? Oh, you ring up strangers and ask them for money. I know what you do. Most people understand engineering. Most people understand marketing at some basic level, but if you don’t actually understand what function does it, why did you ever build tools for it?

It makes it

Jason Noble: [00:14:12] even harder than when you’re trying to select where, you come in as a customer success leader. People say I need tools. What tools and they’re going out there and they don’t know, and there’s all these different platforms and services, but they’re all address different needs.

Exactly. I don’t think it’s such a, it is just so right. I We’ve seen such a boom in that market. There are all the big players that we know about continuing to mature and there as thought leaders, but there’s a lot of early players that are coming in with some  very interesting different technologies and different areas they can add value.

Ravi Dhaliwal: [00:14:40] Yeah, for sure. I think. I think today pretty much what’s happened in the CS profession is we’ve either built software, which is an existing category, but it’s been built to help see has practitioners, all we beg, borrow, and steal stolen, and little bits of components of other tools that were designed for other things.

To get a jumped down. And I think that is the shift I’m starting to see where it’s actually, this is a function that drives net revenue retention at its core. That is actually the key SAS metric. If you want to become a big successful company, we should have some dedicated tooling or there should be people building dedicated to no, I’m

Jason Whitehead: [00:15:22] not.

I’m wondering as well, too, how you spent a lot of time looking at the CS capabilities and perspective, that perspective. Companies that you might invest in, have their own share of between that and your other experience. You’ve seen a wide variety of, Oh, you have CS or you say you have it, but really it’s sport just under a different name or sales under a different name or something like this account management under different, whatever it may be.

So there’s so many different flavors of it. One of things that we’ve talked about as in the future is that we think that CES is going to be more of a competitive differentiator for companies, et cetera, your ability to actually feel that you can create value into, to retain customers because of it.

When you’re looking at a company as an investor to what degree are you really getting into the meat of things to really understand, how is this a competitive CS capability or do they have the potential to get it there? Or to what degree is it? We don’t really go to that

Ravi Dhaliwal: [00:16:10] one. That’s a terrific question.

Again. It all depends on what stage you’re investing in because at the earliest stage there isn’t really much happening in terms of commercial traction. So diligence of a company at that stage is going to probably be much more geared towards technical due diligence and market sizing, as opposed to maybe at that later stage where there are unit economics to look at what I can tell, are you telling us your question?

Jason is the, I. With a lot of portfolio companies and I look at sales pitch decks and first call decks and say, where’s the CS slide, but what do you mean? That’s a massive differentiator. You need a slide in there or what should the slide say? I think customers really liked the fact that you’re going to offer them resource that lowers the risk of the purchase, minimizes their effort and sh and quickens the time to value.

I think they’d like that. Yeah, we should put that slide in right side. Do you spend a lot of time? You’re working with CS leaders on helping them to shape that message. So that it’s part of the overall proposition of the product or the service, because it is, it’s a major differentiator. And what I just described there, less effort.

Less risk, faster time to value. That is the business model of every single giant consultant company in the world.

Jason Noble: [00:17:17] Do you see when you conversations with his earliest days comes balance and they’ve got Mindy, do you find most are missing that slide? Are you seeing that shift? And people are beginning to have that, and there’s already something around customer success they’re doing, they just need guidance on that, or are you still seeing.

Lots of gaps where it’s still a kind of an alien

Ravi Dhaliwal: [00:17:34] concept for many, I think at that early stage, Jason, where, you know, like at the early investment stages, they’re still figuring out the value of the product and building the right thing. And actually selling is what I like to call bespoke selling. It’s normally founder led selling and they just, every deal is bespoke.

And this might be a 10, 20 K MRR business. They’re still a very much in the learning mode. So at that point, without them realizing it from a quote CS perspective, even if that’s not what they’re calling it, everything is white glove because they’ve already offered us in customers, right?

Everybody’s all hands on deck. And everybody’s given all of these customers a ton of love because they’re also then figuring out what function to build normally when, if we’ve done our job and help them on the go to market to accelerate that after investing. Then as part of that proposition, then we can help them actually to formalize that and formalize a charter for the team and position it, as a sales differentiator.

But at that early stage, they’re doing probably white glove, high touch CS without even realizing it because that’s just what it takes, just to deploy the software right now and get people to use it. I We invest in what we call deep tech. So this is, complex, often middleware type.

Solutions that really make use of data. So tends to lend itself to things like machine learning and AI based solutions. These are often very complex technologies that require integrations and all sorts of other things. So even if you’re not calling it services, we’ll see us. You’re doing it anyway.

Jason Noble: [00:19:02] I think  it’s fascinating. Cause it is when you look at kind of products and you said earlier on about. At the beginning of last year in COVID hit a lot of people suddenly knuckled down and say what one of our customers. But I think that there’s a lag without, as well. It wasn’t, there, there was a beginning part where people were thinking about sales and suddenly it took them a couple of months to really switch gears

Ravi Dhaliwal: [00:19:20] and our shock.

Jason Noble: [00:19:23] Yeah. But it seemed to take time and I think you’re still in our we’re in a much far different position to, it was 12 months ago and businesses are still not saying yes, it is about the customers, but the still. Some of them still struggle with it. And it is. I know in conversations, I have you still, you were amazed at times as to how can you not be positioning this?

And it does that white glove treatment thing. I I see it time and time again. And the challenge you’ve got then is how do you scale? Yeah, exactly. Cannot do that. The founder being involved in everything, you cannot do the whole team being involved with processes and systems that allow you to do it.

Ravi Dhaliwal: [00:19:56] The investor they’ll be telling you that or coaching you on that and go what actually, do you need to think about on the product roadmap, building some of this capability in, so you don’t have to do all of this stuff. You know what I mean? And that’s what if you’re a good investor? That’s what you’re trying to do.

You’re trying to help them think through. Go to market, not as a sort of, Oh, we have product engineering, sales, marketing, you’re trying to think of it as a continuum, because one of the things that I’m very fond of saying to founders is, there’s three types of selling there’s inbound selling, which is what tends to happen at the beginning is, or if you’re a self-service type model, people are coming to you and you’re doing that.

Found a lead sales or, you’re just all figuring it out. You get good at that. You formalize it. You start to build a sales organization, you’ve got outbound selling, we’re all familiar pipeline, revenue, forecasting, closing deals, targets, but there is a third type of setting. I call it continuous selling, which is actually when you sold the first time, how did you set yourself up for the next deal and the next deal and the next deal?

You’re not going to get any more deals from that company if they didn’t see value quickly from the first thing that you sold them. And so sometimes framing it like that. So there’s three ways to sell inbound, outbound, continuous. That can actually be easier for founders to understand because Oh, okay.

That, that makes complete sense because we’re not selling them a perpetual license and they’re putting. Serve as interacts and we’re not flying a bunch of people to install it and it’s subscription. If I can think about it as a continuous sales motion that can conceptually make it easier for early stage companies to understand.

Jason Whitehead: [00:21:27] There’s so much to do that. I think a lot of the work that I do work with companies to just find ways to put it in the language that they can understand and get them out of getting the selling piece. And that’s really great. Yeah.

Ravi Dhaliwal: [00:21:38] My job basically is to exaggerate and amplify.

That’s the transition time. What I tried to do is let’s exaggerate this, that you understand it and then amplify it. So it’s so the importance of it becomes apparent. Yeah.

Jason Whitehead: [00:21:48] So we’ve covered a lot of good stuff here and I’m wondering, what advice would you have for a new founder?

And it may not be that they’re an early stage, maybe their first time founding a company a little bit past up, they encounter you, but there’s someone who they’re starting up. They’ve never really done this before. And you liked the product and their vision. What advice would you give them about when it comes to setting up customer success in their organization?

Ravi Dhaliwal: [00:22:06] Yeah, it’s a terrific question. So I would probably be going to, we talked about it already. I was posed the question is take the time to figure out what it is that you can bring to the table that accelerates value for the customer. So what, typically what skill set is that easy dev ops skill is a regulatory knowledge.

Is it. Change management and digital change management, whatever it might be, combination of things. That’s the thing you’ve got to figure out before you build the organization or go and hire some big company VP of CS because you see that problem all the time as well. We didn’t know what to build.

So we went and hired an SVP from this giant corporation and that person goes well, I don’t know. I’ve been 15 years away from figuring stuff out. Oh. And I’ll just go hard back all my lieutenants. They’ll figure it out. And they can’t figure it out because they go we just know the playbook, but you taught us.

So we’re going to do that playbook. So that’s the one thing I would say is just figure it, figure that out. That’s a series of, experimentation hypothesis, try it out, then work out what you can productize and what requires actually people. But then I would also say have a North star of what you’re aiming for.

So in that early stage, You guys would have seen this, right? You go talk to a company, sales lead a VP sales. What are you measured on? That? This is a long ACV stupid question. Right? Marketing leader, what you measure and QL. So it’s stupid question. CS leader. What are you measured on? Oh, I’m measured on gross net churn NPS.

SISA they’ll give you like seven different metrics. And I think that’s a function of people not understanding what the function does. So it’s just owns up, ends up owning everything else. That nobody else wanted founders would do very well to say, I want the North star of this team to be fast time to value because that’s what we’re trying to figure out right in that early stage.

So I want you to get customers deployed and using the product this way in 30 days or 60 days, and make that a target, make that a measure as that becomes well, understood. More ties, more systematized, give them a revenue metric, net revenue retention. I want you to. Create the conditions of product usage, where sales are coming back in and selling them.

All right. And I want that metric to become more important. So I would say, try and understand that value that you’re bringing. And then try and have a North star that you were aligning to. That’s very cool. There’s a whole, there’s about 500 others, but the thing is they have, I have a lack of another thousand things that they’re trying to figure out on a daily basis.

Anyway. So

Jason Whitehead: [00:24:23] I liked one of the things you said earlier about the early stage people. They don’t even have a product all the time. Sometimes they don’t. And then as they’re moving along when would you recommend a founder starts to devote. Time attention and resources towards starting to build out that customer success capability.

When is

Ravi Dhaliwal: [00:24:38] that? When they actually build it out formally or whatever, if they’re not actively talking to potential customers to test those hypotheses, then I would worry about, should we, would I even invest in this thing? I was on the phone this morning with a young group of entrepreneurs.

And you today, they have an idea of what they want to build. And they’ve spoken to 180 potential customers to try and validate some of this idea. And, yes, that’s what you should be doing.  If it’s at that stage,  you and I said, maybe the listeners probably wouldn’t think of that as CS, but that is a CS style activity, you’re instead of actually trying to drive adoption or usage, I’m trying to accelerate my product market fit and test these hypotheses. I’d say you need to really. It’s valuable from day one. Even if you’re still actually building the product, it’ll just be called something else.

Okay. Are there any

Jason Noble: [00:25:24] warning signs when you’re looking at investment that you guys are making on rent in different companies? Are there any warning signs when. And then not doing the right thing. So if you saw someone where they weren’t engaging in customers at all the founders, weren’t out there looking for that feedback, are there any things that play into what companies you wouldn’t

Ravi Dhaliwal: [00:25:41] invest in?

I think things like or no deployments, we sold this, it’s been sitting on the shelf for ages or we just can’t get it deployed being stuck in what we often refer to as pilot health. So we thought the name of the game was to do pilots and he’s no, the name of the game is to get people, to buy the product and use it.

That’s that’s another signal I think there’s the obvious ones. You can’t, you’re not holding onto the revenue that you are closing. There’s a leaky bucket.  Your net revenue retention is I below a hundred. That’s a sign. Now the company may not have had that longer time yet.

Sell it him to, for that to have materialized yet. But if you’re just going through the pipe, I’m going, I they’re not confident about the renewals. I think that’s a, not it’s a signal not having a clear understanding of who the buyer is and who the user is, and therefore you, and you can often see that through the marketing and the messaging.

It’s It’s a spray and pray. You actually haven’t figured out yet who this thing is for,  that’s that’s I think another sign and I think that another one is just not being on top of data. We haven’t used Demetry, we don’t really know how people use the product.

I think we haven’t thought about the fact that it would be a good idea to see how people are using it. And at what frequency, I think. Now that could just be an oversight because they have got limited resources to build and it might be on the roadmap, but if they haven’t even thought about  that’s often a, for me anyway, that’s a little bit of a trigger.

Jason Whitehead: [00:26:58] Yeah. Wow. Okay. So I’m wondering with the work that, but I do with my business partners, we spend a lot of time also working with the end buyers of technology, helping them to drive change and adoption and all that stuff. Because what you said earlier is I think so true with so many buyers,  they struggle to get their people, to use technology in a way to create value with it.

And I think that’s where CS comes into play. I think the whole reason we have CS is because if the buyer could get value on their own, they wouldn’t need us kind of thing. How do you see that changing? How do you see the demand or the nature of CS services changing over the next five to 10 years as theoretically?

Buyers of organizations get exposed to a lot more CS practices through all their different vendors and maybe get a little sophisticated either they’re buying CS services or the, even the amount of need that, that you must get better at some of these things on

Ravi Dhaliwal: [00:27:40] their own. Yeah. It’s a really interesting question.

And in fact, actually one of the previous questions there from the other Jason UK, Jason was, some of the warning signs, one of the things that I always like to try and assess when I talk to founders is what is this. Size and scope of the change impact on the customer, on their solution. So if they actually say there’s no real change in part, because it’s sits in the middle. So really it’s just like 20 engineers. We’ve got a plumber in. Great. If they say actually it’s impacts like 10,000 people at the company. There’s  why, what are you doing to think that through then?

Cause that’s going to potentially be very resource intensive. That’s a, normally when the founder will say something like, Hey, this product so simple, everyone’s going to get it. And I just love it. Insomnia. It’s yeah, you’re a power user. You use this thing every day. You want to use it.

Companies are full of people who aren’t power users have been told to use the product, it’s a completely different problem.  It’s a long-winded way of saying, I think that over the next few years, I think there needs to be. Both with leap leaders and founders and the CS profession, much more skillset developed around digital change management because when the friction in buying the software and actually deploying the software or standing this solution up is getting lower and lower and lower.

There’s so many products out there, you don’t even have to deploy things. You just swipe the credit card and away you go, there’s nothing to deploy it. You got to be thinking about how do we actually help this? How do we assess first? What the impact of the changes to the way this person works?

And how do we minimize that gap? Is that people, is it in product? Is it collateral? Is it a number of things on the internal side? It’s recognizing that, but it’s actually. I have, I get asked this question a lot. What skill sets do you look for in a good founders? And that’s very many, but one, I always recommend family.

There’s a muscle. They try to exercise is get really good at change management because really your job as a founder is trying to absorb, adapt and deal with. Constant volume of change every day. So even if the change impact of your products low, or the scope of it’s low, if you’re going to build a company, the changing part you’re going to have to deal with internally is enormous.

So just get really skilled at that. And then I normally send them something to read about the ADKAR framework or some other change model. I could just read this at least you’ll understand what you know, what I’m talking about. So I think that it’s increasingly going to be an important determinant of.

Not only making customers successful, but actually the company being successful as well.

Jason Noble: [00:30:10] It is quite often one of those missing links, isn’t it. And I think any role that anyone, any listeners that in customer success, just to an understanding of what change management is really, it’s a discipline in its own.


Ravi Dhaliwal: [00:30:23] It’s a discipline focused on behaviors. Absolutely.

Jason Noble: [00:30:27] And it’s, it requires a very different way of thinking, but there are some skills, like you say, looking at these different frameworks, different books, how it works, and that can really help.

Ravi Dhaliwal: [00:30:36] Yeah. I talked to the founder last week just as a favor to a friend and that’s not very sophisticated solution for DevOps, and and, walk me through the solution. I was like, wow, this is an underserved area in dev ops, Katie. This is, they’re doing very well. And I said, so how do you tackle the problem of companies that aren’t working in a DevOps way? And he goes what do you mean to go well, just giving them the solution.

Isn’t going to make them dev ops. Is it, what are you doing outside of that? And it was just silence. And that is part of the problem, which is, if you’re not thinking about the change impact of the change scope, you could get fooled into thinking the technology is just going to make them change.

Jason Noble: [00:31:16] Does it sound,

Ravi Dhaliwal: [00:31:17] does it one of my, let me introduce you to another founder who runs a DevOps consultancy. And that’s all they do. I’m sure he’ll be able to give you some insight into why that’s important. Really

Jason Noble: [00:31:28] fascinating insights there. If we just take a step back when you look at venture from a, from its own standpoint, I it’s a fascinating industry that you’ve moved into.

Really excites you, particularly when it comes to tech, we’ve seen some amazing growth in people, investments. are, What are some of the new areas that you see as opening up in venture and new trends and different changes that happen? The things that are getting you really excited?

Ravi Dhaliwal: [00:31:48] One of the reasons why I’m do what I do now is I really and apologies Jason, because I know you’re in Washington, but I really wanted to focus on Europe.

Because, I worked in Europe, but, and spent a lot of time in the U S but there will be new U S had gotten companies. So one of the really exciting things is just more and more focused on the talent in Europe. You see that manifested with the, top tier VC firms, like Sequoia setting our offices in London.

So that is very exciting. That’s a change. Actually the focus on enterprise. Enterprise is really hot space. And that was not the case, not that long ago. So you know, that is a change that people are actually doubling down on looking at enterprise software companies and looking at the returns of some of these enterprise software companies.

I think that’s a change in that and that’s really exciting. And then I think from the tech point of view, the importance of data. And being able to do interesting things or key, sorting key business problems out from a data perspective. That is really what I’m very excited about.

It’s really interesting. Cause having got into the space, what I realized is things that on paper sound really boring or genuinely best. So when you actually start to go, wow, that sounds really dull. And then you scratch under the surface, oh wow. That’s amazing. The technology is amazing and I can see that’s going to solve all these problems, I find that those are the kinds of things. I think that I’m seeing that just are really very exciting. If I remember my book, I’m just gonna call it boring is best because the book will just review itself then.

Jason Noble: [00:33:15] You’re so right with a lot of people don’t, you’ve got to dig into a lot of these technologies to actually see what’s underneath them and yeah.

And it almost makes them that much more beautiful. When the outside of them looks, it just works. It’s quite simple. You have just does a job, but when you go behind the scenes and you think, Oh my God, this is incredible how

Ravi Dhaliwal: [00:33:32] this works. Yeah, for sure. Plumbing of what kind of keeps businesses running.

It may not be on the surface sexy, but that’s stuff that’s really important, right? Like the plumbing and the infrastructure that poles businesses up that runs airline reservation systems that allows you to do bank transactions that does insurance quotes. All of this stuff, you start to,  was asked to my friends have actually just listened in, on a meeting.

I said what’s this? And he told me, he was like, I can’t even fake any enthusiasm about that. That’s really, I was like, wow, this is amazing. Like it’s Greenfield. There is no technology that actually solves this problem. They proved that it solves a problem. And they can’t sign up customers quick enough.

Like it’s amazing. Then that’s one of the things that I really enjoy about what I do now is I just get exposure to such a variety of really interesting companies and technologies and and entrepreneurs are fascinating people. I really like talking to entrepreneurs.

Jason Noble: [00:34:26] I think that basic plumbing behind businesses, it becomes so essential and people just expect it to work and there are, yeah.

 You talked about earlier on about how can you do things quicker, less risky that, and that’s what they want. They just want the plumbing that works.

Ravi Dhaliwal: [00:34:41] Yeah. And I would advocate that, if you want to be a hundred million dollar, a hundred billion dollar trillion dollar market cap company in software, the plumbing is actually CS because if you do not have emotion, For extracting new revenue from the people you’ve already sold to you are eventually going to run out of money to acquire more capability to sell.

That will happen.  Did have a founder not so long ago asked me, so why is CS important? I’m struggling to understand why we should invest in this. And I was like, tell me how much new revenue you think comes from existing customers at Salesforce. Have a guest.

And he was like 35%, 25. I was like, it’s 73. As of the, the last financial reporting legend blew his mind. I’m like they make all their money, not from new customers from existed, by the way that started in year five. That is not a recent phenomenon, so I think that is the thing.

And I think. What I’m trying to do is to the position I’m in now get founders to understand it. I luckily work with investors, really understand it, but get more investors to understand it. There is a third dimension to this. I think we need to get more and more of the CS profession to understand it, because I think the T the profession is so underwater, just dealing with all the stuff that’s been palmed off onto them that they haven’t got time to think about any of this.

And I think there needs to be. Shift, not in before the profession actually is recognized as actually this is material. This is material infrastructure for how we build this company.

Jason Whitehead: [00:36:08] Think that’s such a good point. It’s a segue into our final question, which is,  Yeah.

There’s so many things out there as a VC that you’re looking for. Are there, and are there magic numbers or ratios? Cause you mentioned a few ratios earlier Yemen, but if the number is below this or it’s below that, that you’d go to the founder and you say your CS, people should be getting this number up or you should have CS focusing to help there so that both the founder and the CS people can really understand the financial impact of yes.

And where it needs to be focused.

Ravi Dhaliwal: [00:36:33] I think it also that question with Jason with a hypothetical, just to not sound repetitious about it depends on what stage you’re investing in. I think if you are a company that has a track record at selling, even if it’s a year’s worth of selling and you’ve got a CS team, but yeah.

Were in RR is under a hundred. All your deployment time is in many months rather than. 30 40 50 days then I would be saying, Hey, I think there’s something not working here. Now. The deployment time might be fine. He goes, it would take seven months, but we only sell three-year contracts. And you think, okay.

And then you look in, and you look at that, actually there’s lots of custom development, et cetera. You can dig into it. But if the partner that you’re seeing on paper is, 95, 96, 97, And you normally you normally know there’s a problem because that conversation always starts with our logo, retention numbers.

Great. And you go, okay, I’m about to hear the, but the net revenue retention is not something I really want to talk about. And that’s probably because it’s under a hundred, so that’s always a a key indicator. And again, things like, deployment time.  And yet our are, I think that those are probably two.

I wouldn’t say they’re magic, but if the companies had some track record at selling, you would start to look at those, those questions, especially if they have complimentary capability that they sell people so we can move you to tear, or we can add more capability or more feature. It just get a little bit of the mystique around venture.

There is also a lot more to the people you’re investing in than you might think. Ryan. You look at the product, the technology, the landscape, you can look at the unit economics. You can look at the there’s endless SAS metrics. At the end of the day, a big determinant of success is like the leadership, the founding team and the skills, right?

So that is actually far more of an important set of variables. Then, might be apparent to the audience. Listening today will be the hardest one to get

Jason Noble: [00:38:22] right, as well as an official. Absolutely. I You can meet these people  many times understand them but actually. Are they right for, this

Ravi Dhaliwal: [00:38:28] is really difficult for me.

That’s my role. All my experiences, being a people leader and hiring people, I look at it as a kind of a similar problem, which is there’s competency ability to execute because certain things. But then there’s the behavioral traits, are you mature? Are you coachable? Are do you have strong opinions, but are they loosely held?

And those are kinds of things that, sometimes you do get it wrong, but when you get it right, you find these teams, they will fire on all cylinders. Because they’ve just got the right behavioral traits. But I just wanted to mention that because. It can be maybe from the outside.

It can often look that venture is just highly scientific metrics, driven technology driven, deductive thing. There is that for sure, but really good investors. Look at the team and the people and spend as much time coaching and developing and mentoring them as they do to business.

Jason Noble: [00:39:19] I love the way you’ve talked a lot about this aspect of that.

I’d not really thought about in ventures, but it’s the coaching. And I think it’s such an important thing. And I love the fact that you have mentioned it. Yeah. Something that you

Ravi Dhaliwal: [00:39:29] did that’s West is dude. Absolutely. Thanks for taxable

Jason Noble: [00:39:34] organization. She’s looking for, they don’t just want the money.

They want people to show them how to be successful in this. How do we give you this? 10 20, 3,000 X return on what you’ve

Ravi Dhaliwal: [00:39:43] done. How do we give you the thing that we have, which is capital and how do we help you to use the best way to be successful? Absolutely. I signed someone today, I’m reading the founder success business.

Now that’s really how I think about it, because if they’re successful, then you know, our investments successful will win. So it’s the same when you’re selling software. You’re in the customer success business, because if they’re successful with the software, their business prospers, and so does yours.

So the challenge is we just have a lot of thinking mindset and organizational structure that was developed in the on-premise era of software, not in the current sort of SAS. The companies are so structured with these. Yeah, silo department with different measures, but the way we build and deliver software and get people to buy it, it’s completely different.

So hence this idea of inbound selling outbound, sending in continuous selling. That is something trying to get people to think about.

Jason Whitehead: [00:40:37] It’s amazing. That’s the case, but it’s been what, 20 years plus now the people,

Ravi Dhaliwal: [00:40:42] yeah, look, I’m not advocating. We radically overhaul your chart and structure. You need that stuff because not stuff is designed for scale because when you scale, it’s not about experimentation and innovation as much.

It’s actually about predictability repeatability efficiency. That’s what that structure is for, but there’s nothing stopping us, looking at how we align and incentive people in that structure to make their incentives a bit more geared towards everyone’s incentive, a bit more geared towards the long-term value of our customers.

So why should I pay an engineer and comp them or when the sh features shipped, why don’t I just comp them on how much people use the feature? That’s a simple example, and it, people tell me why that’s really radical and I don’t think he’s radical, it’s just, we’re so used to thinking a certain way.

That’s come from. 2030, 40 years of how we built software companies.

Jason Noble: [00:41:32] That’s the key thing it is to us. It doesn’t seem very different. And actually it makes a lot of logical sense, but it is, it’s just, we’re ingrained. Yeah. Yeah. It’s a change

Ravi Dhaliwal: [00:41:39] management behavior. That’s exactly what it is.

Jason Noble: [00:41:42] Ravel. This has been a super conversation.

So a huge thank you. And I think this is a topic that we’ve never really. Dug deep into with someone that’s got the background, I’ll let, you’ve gotten. I think you’re

Ravi Dhaliwal: [00:41:53] no learning. Like I say, it’s very nice to be at this agent stage of career and learning new things. So I can’t profess to be the, be all and end all when it comes to venture.

But I, hopefully the perspective has been useful and at least hope, somewhat understandable for. For you guys in the audience there’s this idea that, there’s broader, the three types of people in venture. There are people who come from a finance background, banking, hedge funds, accounting, et cetera.

There’s people who are entrepreneurs. I built businesses and I exited them and I made a ton of money. And now I’m an investor and then there’s operators. So people who have been in companies, VP sales, VP success, et cetera, who Now working at space. So I got that perspective, but I spend a lot of time trying to learn the other two because that to me helps understand where everybody’s coming from.

Jason Noble: [00:42:37] It’s fascinating that revive, I said awesome conversation. What we always like to do, give out guess one question, a bold challenge question, really for our listeners as part of the podcast, and really provide the listeners with some kind of actionable ideas. And the one we’d like to pose to you is.

What would you say? The number one area that people in the customer success industry can really focus on to help drive that success and the success

Ravi Dhaliwal: [00:42:59] for investors as well? The one thing I will say we touched on earlier is define in two very crisp sentences, the value you’re adding to your customers into your own company, right?

Because it all stems from the definition. If you can actually stop, someone stops you in the car to go, what are you doing? CS you go, I drive net revenue retention. How do you do that? I’ll bring digital change management skills to the company, the customers that they see value in 30 days. That, that’s a hypothetical example, but find your version of that because unless you have that, everything else is far more complicated and you also don’t have any ability to push back the things people try to give you that you shouldn’t own.


Jason Noble: [00:43:40] Which is the hardest thing, because just the nature of people, I think we are, we don’t like saying no, that’s not part of

Ravi Dhaliwal: [00:43:45] what we do, yeah. Yeah. And I think the other thing about that is it leans into two things. One the skill and the value that you’re adding to the material revenue outcome.

And I think, again, that revenue outcome is another area where I think the CS profession practices need to get more comfortable. Thinking about when I have a CSM, tell me, Oh, I’m not in sales. Okay. You’re in the wrong job. Because if you’re in a software company, everyone is in sales, you are just pulling a different lever than the commercial one.

You’re pulling the value product leader. So it would be my one takeaway is sit down with your team, sit down with your leaders, come up with a definition. Don’t have any flowery language about outcomes and stuff. That’s. A bit existential, what skills do you bring that make the customer see value quicker?

And how do you add to your company’s bottom line? Those two things. That’s awesome. I love that. Thank you so much. My pleasure. Thank you so much, guys. It’s been a lot of fun and as I did mention it, it’s my turn to cook dinner. So I have at least another two hours


Jason Noble: [00:44:49] plug. All the list is a little bit about crane

Ravi Dhaliwal: [00:44:51] ventures. Yeah. Oh, look, we love hearing from entrepreneurs. So if there’s people out there that are looking at data and building solutions on data, in very specific ways, I’m super easy to get hold of. We’d love to hear from you.

If you are in the CS space or CS tech or digital CS, as I’ve heard it being coined. I’d love to talk to you, just, see if I can help regardless of any investment thing.  Yeah. Super easy to get a hold of. If anyone’s interested in some of the stuff we’ve spoken about today, I do write about this stuff on medium and other places.

And it’s been great. Thank you. Thank you so much. And thanks for the opportunity, talking about. Nice. Thank

Jason Noble: [00:45:27] you to, sir. Really enjoyed the conversation.

Jason Whitehead: [00:45:30] Thank you so much. Alrighty, bye.

Ravi Dhaliwal: [00:45:32] Stay safe, everyone. Okay.



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