Mark Benioff came up with the term customer success and had the first CSMs. However, when we started, there were maybe a thousand CSMs in the world. Fast forward 10 years later, there's 300,000. By the way, at some point, this is how crazy we were. We made a music video trying to win Box. There's a song from the '90s called 'What If God Was One of Us?' You might remember it. We made 'What If Box Was One of Us?' It was so bad. And so I decided to get up on stage, just coming off pneumonia, and literally talking about being lonely as a kid, which I was extremely lonely as a kid. And what that does even to this day of not feeling like people really want me here or not, that started this thing that became like Gainsight is this vulnerable company. So the founder has a chance to not only define the words but make them real.
I'm Charisma Neyogi and I'm guest hosting a new series for the Village Global Podcast called Recall Sessions. Everyone talks about product, but I want to talk about something that doesn't get enough attention: go-to-market. Specifically, how did the world's most successful companies get their first customers? I'll be sitting down with founders of billion-dollar companies to hear the real story. Not the polished version where everything just clicked. The messy version, the cold emails, the first deals, the selling before the product was even ready. My guest today is Nick Mehta, former CEO of Gainsight. Gainsight is the platform that helps companies drive durable growth through customer-led and product-led strategies. Vista Equity Partners acquired them for $1.1 billion. Nick ran Gainsight as CEO for 13 years before stepping into a board role last year. He didn't just build a company, he built a category. When Gainsight started in 2013, there were just maybe a thousand customer success managers in the world. Now there are hundreds of thousands. He's co-authored four books on the topic, been named Entrepreneur of the Year for Northern California, and currently sits on the boards of F5 and PubMatic. We're going to go back to the early days before Gainsight became Gainsight. Let's get into it. Nick, I've been wanting to do this since I've met you. You're just an incredible person that has created an incredible company that everyone knows about in the customer success category, which is great. I appreciate you being here.
It's awesome to hear, and I genuinely mean you're one of the most gracious people I've ever met, so I'm happy to do this.
Thank you so much. So I really, really wanted to spend some time talking about the early days. I mean, everybody knows what Gainsight is today, the brand, the customer success category, but I don't think we've ever really kind of unpacked some of the early days. And I know that you and I met in Mountain View.
There was a Red Rock Coffee, right? So, for folks that live in Mountain View, you know, we're referring to, still there, right?
Mountain View is still there, I think. I don't know if Red Rock's there or not. Let's assume it's there. Most of it's there.
Let's talk about the early days. Tell us about how you got involved in Gainsight. It's probably an interesting story. Maybe you can start there.
Yeah, totally. So I'd run another SaaS company before Gainsight. We sold it. I was doing an entrepreneur-in-residence at a venture firm, Accel Venture Partners. Entrepreneur-in-residence, for folks that don't know, is a completely made-up job only in Silicon Valley.
It's completely made up, but you basically hang out with VCs, try to figure out what you want to do next in your life. And one of the problems we had at my last company, which was a SaaS company, was churn, retention, just literally knowing what our customers were doing. And I was shocked that we were sitting in the cloud with our software and we had no idea. And so I was thinking about it, written up this sort of rough set of bullet points of what a product might look like. And then random serendipity, a friend of mine who's another venture investor at Battery Ventures called me and said, 'Hey, I just met these two founders and they're working on this business, this idea to basically help reduce churn and improve adoption and renewal in SaaS companies.' I was like, 'Oh my gosh, that's exactly what I've been thinking about.' And so we met up, these two guys, Jim Eberlin and Shreesha Ramamurthy. They had a very, very early mockup of a product, some early customer interest, but pre-revenue and things like that. And that was in February 2013, which is for people watching now, that's like about 5,000 years ago probably in AI time.
Was customer success even a role? Tell me about the state of, were people, who was responsible for churn?
See, that's the thing. People knew that, okay, if you have a recurring revenue business, a subscription, today consumption-type business, you need to keep your customers. That's kind of like Captain Obvious, right? But who's responsible for that? In older businesses, customers were kind of stuck. So, nobody needed to be responsible, right? There's companies like Oracle, SAP, and the old kind of the '90s great companies. They would sell the software and then the salesperson would sell it and then you'd call them if it broke. Otherwise, you're on your own, right? And then but what happened was when SaaS was pioneered largely by Marc Benioff at Salesforce, this business model changed where the customer every year could decide, do we want to stay or go. And we'll talk more about this later, but this is so much a bigger deal now with AI, right, where the barriers to entry and exit are gone and so there's no moats. And so Salesforce had to figure this out. And in the early days, they weren't the company they are now and they needed people to make sure people were adopting the software, they were using it well, and they stayed. Marc Benioff came up with the term customer success and had the first CSMs. However, when we started, there was probably, actually we did the look, we'll count, a thousand CSMs in the world, people in the role, which by the way, is a terrible TAM to sell into if your software is a few thousand a year. I mean, I had like a $2 million TAM. But then, fast forward 10 years later, there's 300,000, right? Because we knew that eventually everyone would need this type of role. And certainly, that's one of the cool things is it actually happened.
When you met with Jim and Peter, was there just like love at first sight? I mean obviously you had interest in the same category and you're feeling it, but how was that journey? Was it like founder dating and how long was that dating process before?
It wasn't that long honestly because I think I was so passionate about the idea and they're like the most humble people ever and they're just great humans. And so it was just like, yeah, this is a no-brainer. So it was literally maybe a week or two. It was not...
You had slides? You had slides only?
No, they built like a mockup kind of product that was originally on Force.com, which you would remember, Salesforce application development platform. Very different from what Gainsight is today. But yeah, there was that, those are the two things that they had. But there was interest from customers.
Did you already have, at the time you started going on dates, were there already customers lined up that said we want this or where was it?
They were more like, we'd like to try this. Yeah, you know how like any startup is early on, right, where people are like, we'll try this. And of course they were the investor portfolio companies and all that, right? So that was that level, which is where you start. And for the first few months, that's kind of all we did was sell to our friends and sell our investors' friends.
Did people just pick it up and say, oh, maybe you can talk about what the first version of the product was and what was the thing that sort of drew people to be like, hey, I'm willing to give it a try.
Well, I think the interesting thing because it's so tied to category creation is I'll talk about the product in a second, but the first version was really more about the community and the people. So, what happened was in February 2013, we got started. In March 2013, we had this office in Mountain View, California, right across from Red Rock. It was on the second floor. It was above a bar. If you remember, there's a bar in the corner, right? The carpets peeling off the floor. The bathrooms are kind of gross. It was like not a nice office. But we're like, hey, there's this new role that's starting to emerge, customer success manager. It's at Salesforce. It's a few other companies. We're like, what if we threw a meetup to see if people want to meet each other? Forget about us, right? Because eventually we don't sell them software. And so we organized this meetup. We're in California, so we went to Safeway, which is a local grocery store. I got like the cheapest wine, the cheapest cheese tray that really shouldn't stay out more than a couple hours.
Yeah, we've all had that.
We've all had that. Put it on a ping pong table because we didn't have a conference table, but we had a ping pong table and we put them on there. And then we sent a Meetup invite out. We thought we'd get 30 people. There was like 75 people in the office till like 10:00 p.m.
And they weren't there because of us. They were there because of them, because of each other, right? And we were like, God, this is a community that needs, like a new role trying to figure out what's my job. You know, we've all been in situations where you're like, whether it's personal or work, you're trying to find people like you, right? That's what community is. Find people like you, right? So I'm less alone. Know that I'm on the right path. And these people came to this crappy little meetup not for the wine or cheese, for each other. And so we figured out, gosh, the opportunity here is to be the company that builds the CS community, defines the role, helps figure out the best practices, and then builds the software, right? And the software just is a manifestation of what we learned from the community. And so we can talk a lot more about it. That turned into a big conference which started with 300 people in 2013 and eventually was like 6,000 people in Moscone right before COVID. And then all of that fed into our product and what we built, which we could talk more about.
And so tell me about the community. Obviously lots of things to work on. What was the community kind of screaming about that they needed the most in the early days when you were just getting started?
Yeah. So were they asking for something or were you kind of throwing different things at the ladder? You know, so that's a tricky thing I think for people that are building stuff where it's not a well-defined need. I think AI is all this now. It's like, okay, people know they need something, they don't know what they need. So it's not like you go ask them what they need because they don't know, right? Like OpenAI and Anthropic don't go and ask customers, what do you need from AGI, right? Like nobody knows. And so the same way, you can do some customer discovery but you also have to give stuff for them to react to. So you need to know the pain points. For example, a pain point would be, I have a lot of customers, I don't have enough people, which customer should I focus on right now, right? But the way that that works and should it be workflow, should it be automated, all of that came from companies like Gainsight. There were a few competitors of ours who also were smart. So we were the ones saying you should do X, Y, and Z. And this is one of the things we'll talk more about, category creation. What's crazy is years later people will be defining their best practices and how they do CS and they'll be using the terminology from our product and not even be using the product.
Because it became part of the water cooler talk. Right? Similar to you at Salesforce and the idea of an opportunity record, a contact record, an account, a forecast. Companies like Salesforce and Siebel invented those.
And literally some people use them without even knowing that. And that's when you have success.
Building on Force.com. Yeah. Tell me about, was that the right choice at the time? I mean, obviously I was there when Force was kind of getting started. A lot of folks are kind of developing products, like do I build it on another platform? Do I go control myself? You decided to do it on Force. Tell me about that choice and when reflecting back on it, how would you approach it the same way that you did at the original state?
Yeah, I mean, of course, in life, we never know the counterfactual, what would happen, right? But what I'll tell you is I've thought about that question a lot. What it allowed us to do is kind of get started with larger customers. So large customers and mid-size customers don't trust startups in general. What they do trust is their underlying platform technology. And if there's a plugin to that platform, it's easier to get them. So our first customers, first 20 or 30 included Workday, DocuSign, Okta, huge customer within tech, those are big companies, right? And then later on, Gainsight's revenue comes from tons of large customers, tons of multi-million, some tens of millions of dollars, right? And it all went back to that Force.com decision. So Workday literally was customer number three, four, five. There's no way we get Workday. That's a very, the company has a lot of confidential information given what they do. So they're very sensitive. The only reason we got it, they've told us, is because we're on Force. And then for folks that don't know, we later four or five years later built our own platform, 100% native with just a connector to Salesforce, not on the Salesforce platform, much more decoupled. We had to move all the customers at the time. The benefit of moving the customers was multifold. They would be on our modern product. We also wouldn't have to pay the big royalty, because you pay royalty usually to these platform companies.
That was a gigantic and complex project. In fact, when we were built on Force, our chief product officer, he had a friend who knew Salesforce stuff well and he's like, you will never be able to leave Force.com. And I guess we took it as a challenge and we were able to do it. But it's not everyone's able to get off the platform. So I would say to, if you can feel like you can bootstrap off the platform and then move off of it, that's the best of all worlds. But it's a high wire act for sure.
A lot of founders are listening and kind of wondering about, were you just selling to all your friends? I mean what if you don't have friends that are running customer success teams? And I mean like, there's not that many teams to begin with.
Yeah. I actually honestly am super lucky to have a great network of CEOs and people to sell to now but back then no we didn't have them. What we did was really primarily sell to our investors' portfolio companies. I'm just being totally honest and this happens, hopefully all of you are leveraging your investors very well, it's one of their value props, getting the intros and things like that. So yeah, most of our early customers were that. But the other way we got customers was community. These events that we did where we would bring people together not about a product. And it was really not about a fancy event. When I think of event, most founders are thinking, oh, I got to go to a fancy dinner or something like that. We eventually did the big conference Pulse and things like that, but so much of it was these small things that cost nothing, like a thousand bucks, 2,000 bucks, 3,000, very, very cost-effective ways to market. And so yeah, it was getting people together and then it's having the long perspective. Like I think it's one thing I would say I'd encourage people to think about. I sometimes see a little bit of the transactional nature. I get it when you're a founder, you need something right now, right? But the more you push a customer that's not ready, the more you burn the chance to work with them when they are ready, right? And we've all seen that even in personal lives, right? Some annoying telemarketer or something calls you, right? And so I think some stuff that helped us was just being extremely patient. You know, some sales cycles took like two years, right? And I mean Box was one of those kind of legendary because they were a very high-profile SaaS company then even to this day. And for a year, a year and a half they weren't ready for anything because they built some internal tooling and then they're like, we want to look at some different solutions including Gainsight. And then I think we heard at some point one of our competitors was ahead in the eval or something. And so then I literally just started going there, sitting in their lobby. I'm glad that security didn't escort me. Literally, I knew the Wi-Fi password. I knew the front desk receptionist. She was into Disney movies. Like, I literally to this day, we made, by the way, at some point, this is how crazy we were. Some point we made like a music video trying to win Box. There's a song from the '90s called 'What If God Was One of Us?' You might remember it. We made 'What if Box was one of us?' So bad. And but you know, the patience, the persistence, don't make it transactional.
Was there budget for this stuff? Like how did you go? A lot of folks are selling something that there is no budget for.
And so how did you go make those early cases? Was it an ROI narrative or was it a like, hey, I'll just scrap and figure out something? How did you go about that?
So usually what happens is like when you're selling to growing companies, which is a little different than selling mature companies. Growing companies every year the department budgets are growing somewhat, right? And so the executive, so in our case let's say customer success leader, they have a budget and they have extra people they need to hire for next year. I was just meeting with somebody and she's like, she's got to hire, I mean it's an extreme example, she's like just got approved 100 headcount for next year, right? And so one of the things you're competing with is strictly headcount budget because they didn't have like a line item budget. But what you're competing with is essentially the executive saying, do I want to hire more people or can I use your software. And so one of the things you can do if it's a growing company is convince the executive this is self-funding, meaning if you buy this you'll need one less headcount or two less headcount or whatever, right? So that's a pretty simple ROI case. But I think people don't just buy for ROI, they also buy because they believe. And so the other thing we would do is just try to understand what are the pressure points. So for example, I remember one customer where we've been talking to them forever and then they called us. They're like, 'We need to buy now.' And I'm like, 'Why?' They're like, 'We just lost a huge customer. Our CEO's pissed.' Right. Another one was like, 'Hey, we need to do this now because we're about to launch a new product. We want to do customer success right from the beginning.' And so, a key thing is software businesses don't buy software purely intellectually and rationally. They often buy it based on an event or a problem or an issue or things like that. And so, a very important thing is to be there when they're in that moment. That's why great sales people are so important because you want to be there in that moment when the customers are like, 'Oh my god, I cannot take this anymore. I need to do something different.'
Right now, you though, there's a... Everybody talks about founder sales. Exactly. I mean, how long were you doing it yourself before you said, 'I feel like I understand what I'm trying to do. I understand how we're supposed to sell. Let me go hire folks.' Did you hire sales people right away or how did you go about it?
