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Ep. 290: Yousuf Khan is a serial CIO, start-up and VC advisor. Most recently Yousuf was the CIO & VP of Customer Success @ Moveworks, the advanced AI built for enterprise providing automatic resolution of IT issues. During his time at the company, they raised over $108m from Lightspeed, ICONIQ, Kleiner, Sapphire, and Bain Capital. Pre Moveworks, Yousuf was CIO @ Pure Storage during their period of hypergrowth both as a private and public company. Finally, before Pure, Yousuf’s first role in the valley was with Qualys again as CIO where he owned the entire global IT budget.
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In Today’s Episode We Discuss:
* How Yousuf made his way from the UK to the valley and how that led to his becoming one of the leading CIOs today in the rising prominence of CIOs in enterprise.
* How open and can transparent can CEOs be with CIOs? Do CIOs know the state of early-stage companies in terms of their cash situation, fundraising etc? Does that ever put them off buying? What is the right tone and temperament to take with those CIOs in the first meetings? How does Yousuf advise founders on quality or quantity of logos in the early days?
* How does Yousuf advise CEOs approach CIOs when it comes to discounting? Do they make a difference to the buying decision of the CIO really? Should founders offer discounts in exchange for customer testimonials? How can CEOs provide alternative forms of social validity to other CIOs in the ecosystem, other than case studies?
* How does Yousuf advise founders approach CIOs when it comes to multi-year deals? Does the mindset of the CIO change when the deal is paid upfront? How should the founders position that? When it comes to implementation, how important is time to value in the mind of the CIO? What is the worst thing a founder can do when discussing implementation?
Ep. 291: Experimental marketing brings together the science and art of marketing, allowing for creativity that drives results. It’s an essential skill in the toolkit of the modern marketer, and one that’s easy to get started with, no matter your company scale.
This episode is sponsored by Brex.
SaaStr’s Founder’s Favorites Series features one of SaaStr’s best of the best sessions that you might have missed.
This podcast is an excerpt from Karl’s session at SaaStr Europa 2019.
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Jason Lemkin
SaaStr
Harry Stebbings
Yousuf Khan
Karl Sun
Below, we’ve shared the transcript of Harry’s interview with Yousuf.
Harry Stebbings: Welcome back to another week in the world of SaaStr with me, Harry Stebbings. It’s nearly Christmas, and so if you’d like to see all things behind the scenes here, you can do that on Instagram at HStebbings1996 with two Bs. But to the show day, and it’s a real first for the show, as we have our first CIO on the show. These are the people that quite literally own the IT budgets of today. They can decide whether their large company buys your product or not. It’s that simple.
Harry Stebbings: And so with that, I’m super excited to welcome Yousuf Khan, serial CIO, startup and VC advisor. Most recently, Yousuf was the CIO and VP of Customer Success at Moveworks, the advanced AI built for enterprise, providing automatic resolution of IT issues. During his time in the company, they raised over $108 million from Lightspeed, Iconic, Kleiner, Sapphire, and Bain Capital. Pre Moveworks, Yousuf of was CIO at Pure Storage during their period of hyper growth, both as a private and public company. And finally before Pure, Yousuf’s first role in the Valley was with Qualys, again as CIO where he owned the entire global IT budget.
Harry Stebbings: Enough of these terrible dulcet tones though, now I’m very excited to welcome our first ever CIO, Yousuf Khan.
Harry Stebbings: Yousuf, it is absolutely fantastic to have you on the show, I’ve heard so many good things, both from Arif and the team at Lightspeed. So thank you so much for joining me today, Yousuf.
Yousuf Khan: Well thank you. Long time listener, first time caller. So excited to basically be here.
Harry Stebbings: That is incredible and thrilled to have another Brit also, with that accent. But I want to kick off today with a little about you. So tell me how did you make your way from the wonderful coast of the UK into the world of SaaS and come to now be one of the leading CIOs in the really rising mega wave of enterprise SaaS?
Yousuf Khan: Well, I think leading CIO is questionable, but I’m getting there. Definitely working on it. I think the key thing that I had realized after several years in Her Majesty’s United Kingdom, it really centers on the fact that a lot of the technology that I was seeing was really, a lot of the innovation was happening in the Bay area. I was super excited by it. I’d taken lots of trips and managed a team out there and I decided to basically make the move to the Bay Area in 2014 as a CIO for a company called Qualys. And it just happened that they needed a CIO and I’ve always been the first CIO for a company. And so the timing and opportunity just aligned and here I am. And so I’ve been loving it ever since, it’s been a great ride.
Harry Stebbings: I’m super intrigued on the element of being the first CIO, as you always are there. But I do want to touch on another element of the journey for you, which was your time at Pure Storage. So you spent close to four years at Pure Storage, during this incredible period of hyper growth. So how did that experience impact your operating mentality and I guess what were your biggest takeaways from that experience?
Yousuf Khan: So a phenomenal company and a phenomenal opportunity to be part of, really just honored to basically join a great team and a great culture. Company was going through massive hyper growth. And I think what it taught me on the operating side was that consistency is absolutely fundamental scale. Secondly, I think you’ve got to be able to make the hard decisions early versus later. Change management is super hard for companies that are growing really quickly. So think about is one of the things I did was listening to people like yourself and a whole bunch of others. I took away a lot of lessons about what not to do as well as what to do. And that was one of the things that I had learned from an operating standpoint.
Yousuf Khan: I think that one of the biggest takeaways is hyper growth and scaling fast is really exciting, but it’s also really hard. It really only gets successful if you build the right culture around it, which has got a foundation for it. And I think Pure Storage was one of those amazing companies where the culture was very positive, very collaborative. And it was a big takeaway for me to make sure that if you have the right people around you with the right thinking and as long as you’re aligned, then you can do so many amazing things. And I think that was just a really exciting time and exciting company to be a part of.
Harry Stebbings: Now you mentioned too there, and I didn’t expect to go off schedule–didn’t quite expect it this early, so I hope that’s okay. But you mentioned the elements of internal change there and then you also mentioned culture. Blending the two together, change can often create uncertainty or maybe concern within the team. How do you think about and how do you advise founders and operators on really enacting internal change? But also maintaining culture and ensuring that people don’t feel too disquietened or nervous by the change?
Yousuf Khan: Yes. As you know, I’ve spoken to many of our mutual friends in the VC, in the startup ecosystem. And one of the things I realized is that change in culture, probably the biggest thing that we need to do both as leaders and companies, but as well as operators is be very transparent, number one, about what you’re doing and over communicate. I think this are the things that people just take for granted. Things are just moving at such a dizzying pace that you have to really be able to reiterate an education through repetition is probably one of the advice that I tend to basically give to founders. I think the other thing I basically say is as a leader of a company, ask yourself the type of leader that you want to be and therefore ask what do you want this company to end up becoming and be known for?
Yousuf Khan: Not just from a product standpoint, but also from just the ability of what it represents and what do all of your team members represent? So all of those combined. Culture is everybody’s responsibility and so being able to signal early, being able to communicate it or over communicate, being able to define in very clear terms what works and what doesn’t work and what you want it to work is probably going to be one of the key things I’ve basically seen culture working. And I’ve seen that across companies which have been at early stages and companies which have been growing really quickly as well. So yeah.
Harry Stebbings: No, totally. I think the combination of transparency and over communication is the key there, really. I do want to touch now though on the meat of it, really, which is your role, and as you said there, often being the first CIO. So before we dive into how the role of chief information officer has changed. First really, what is a CIO and how would you describe the remit of the role?
Yousuf Khan: Well, the CIO is fundamentally owning the business technology function of the company. And by business technology function I want to define that because sometimes there’s a overlap with the CTO from an engineering side. So for simplicity sake it’s owning business infrastructure, application, and now the role has evolved into owning aspects of data. In some cases because of lack of CSO or security focus, sometimes owning security as well. And then helping being able to drive innovation across the company. The role really permeated from focus towards infrastructure for a very long time and that has evolved over time and I think SaaS been a phenomenal catalyst to be able to drive that change and for the CIO to be much more centrally focused to help innovate the company and help govern it.
Harry Stebbings: Can I ask, you mentioned there and we mentioned earlier in terms of the CIO’s buying power and them really holding a lot of the purse strings, so to speak. Is that a new innovation in org structures and the remit of the role? And how have we seen that purchasing power of the CIO maybe change?
Yousuf Khan: Well, it’s definitely evolved over time. It’s definitely increased over time. And I think the reason for that is, is that because of the interconnectedness of systems and architecture, there has been a big role of enterprise architecture across the company. And what that has resulted in is that you have CIOs and their leadership teams are basically involved in architecting systems across the company and what those basically mean. And there’s one thing that’s definitive as a result for, probably will be the next 5/10 years, is CIO’s and it teams and companies in general will be building more technology and buying more technology for years to come. And as a result of that, because of the interconnectedness, because of the governance, because of the implementation, all of these things have the IT function involved in some way, shape, or form. And as a result they have a bigger vantage point, they have a bigger voice and therefore they are a big influencer in the actual decision basically being made. And so that’s really evolved and I think it will continue to evolve over time.
Harry Stebbings: So given the centrality of that role there and the ever increasing prominence of it, I guess my next question is for operators listening, when is the right time to hire that first CIO? And what should they be looking for in those candidates?
Yousuf Khan: So I think it’s an interesting question because sometimes the CIO is a begrudging hire, unfortunately, for some companies. They’re like, do we really need one? Et cetera. My advice is hire earlier rather than later. And the reason is because even if you’re a small company, what’s happening is you just have a ton of systems in place. Now, it’s not the highest priority of course to be buying systems, but if you are on a good trajectory, getting someone in a technology leadership role early from either focusing on business applications at least is a very good thing to do.
Yousuf Khan: I think typically what I’ve have seen is basically post 500 upwards, 500 employees upwards, I’ve typically seen a lean towards basically hiring a technology [inaudible 00:10:00]. It’s not always a CIO, sometimes it is a VP of business applications and a VP of infrastructure and then they look for a CIO. But it really depends on the company as well. But I’m typically seeing that definitely a pre-IPO. I think most companies will want to have a CIO before they go public, before they do major funding events, as well. So situationally it differs from time to time, but it’s becoming a much more critical role than it’s ever been before.
Harry Stebbings: Can I ask, given the criticality of it and the founder’s awareness of it and it’s real rise in emergence and power. What would you advise founders looking to sell the role to amazing candidates? Is there anything that I can do to clinch them and really convert them to join them in that role?
Yousuf Khan: Well, so the biggest thing that I’ve basically seen is CIOs of technology companies, the biggest selling point for them is they represent technology on the external side, number one. Number two, as a result, they have a much better impact on the revenue side. So there are a lot of CIOs who do not want to be involved in that. They don’t want to be involved in being externally focused. But I think if you are a founder of a company and you are selling into enterprises, if you are an enterprise software company or enterprise infrastructure company selling into the CIO or selling into the technical organization, it’s good to have a CIO involved. Again, it’s about the right person who has a startup mentality, which he understands that the startups are very different than large scale companies and it involves a tremendous amount of effort across a much broader spectrum.
Yousuf Khan: But I would strongly advise those companies to think about two forms. One is to basically bring in a CIO at the right level in a full time capacity. And the other one is to basically think about a hybrid role, whereby you actually build a much more rigorous advisory board of CIOs, which is a brain trust for all intents and purposes. And you’re able to basically lean on them to be able to not just advocate for you but also be able to give you advice before you go to market. That will help you evolve as a company both operationally and then also as you go to market in terms of your messaging.
Harry Stebbings: So I want to take out two elements that we said there. One was, in terms of flipping sides of the table to selling CIOs themselves, I often hear the importance of selling the vision of what the product can be to the CIO. For you as a serial CIO, in terms of the importance of vision and product roadmap over time versus actually what we can do and offer for you now today, how do you balance between the two? And how important really is that vision and product road map in the buying seat?
Yousuf Khan: So the vision and product road map is absolutely critical and I’ll tell you why that is. Is because most people are buying into that vision. They’re buying a platform and as a result, what they’re going to be doing is probably saying we’re not going to be doing some other investment decisions because we know this company is likely to be able to solve this, and that’s what they’re basically talking about, number one. Number two, really having a CIO in that role allows that individual as a peer, not as a typical salesperson or a product person, to be able to articulate and probably have a degree of both empathy and confidence, as well as alignment with the CIO on the buying side.
Yousuf Khan: And I think that plays an important part which basically says, look, we’re aligned, we get your business and we understand this market and we’re building a product that will basically meet your needs for many, many years to come. And we’re building a platform that you want to basically be part of. And I think a lot of companies have done this really, really well, and I think articulating that and selling that in a way which basically gets people really excited and capsulate it is probably really critical and it’s actually hard to do as well. Simply because CIOs have so many priorities to be able to constantly juggle. I think being able to be able to be very prescriptive about that is really critical. I think a lot of companies should focus a lot more on it,as well.
Harry Stebbings: Another one totally off schedule, but I have to ask it. In terms of that buying decision, how much of a change does it make for a CIO in terms of their buying decision to have the founder themselves come to them and sell it to them versus the sales team itself? Does that really make a difference? We hear about Marc Benioff getting on jets in the early days. Does that make a difference having the founder there? What would you advise?
Yousuf Khan: I think it definitely doesn’t hurt unless the founder’s just very socially awkward. Put your best foot forward is what I tend to basically say. But I think that the critical–number one, I think it definitely helps. I think it both helps the founder as well. I think the other thing is that most people don’t gather is, selling is really hard. Going to market is really hard. Competing is, this is a really competitive industry because the ability to create a product in the SaaS industry and to be able to execute it, get eyeballs at market as become really, really–the barriers have really completely evaporated. And so I think having the founders get a viewpoint and vantage point into just that selling process is really important. I think from a buyer’s perspective, knowing that they basically have the founder’s attention is really important.
Yousuf Khan: And I think then the third thing is it makes sure that over the longer term you have much better alignment across a much senior level of the organization, basically. There’s a scale, so it’s a good question to basically have. And that’s where you have to have questions about how do you enable other people both in sales leadership and others to represent the company at the executive level? And that’s something that is a continual challenge for people to be able to do that.
Harry Stebbings: Totally. It is a challenge. The other thing that you said there was also building that brain trust and I love that brain trust comment because I know that you’ve done some incredible CIO group therapy sessions. So can I ask what are the commonalities in what they’re discussing there and have there been any interesting tidbits and takeaways for you?
Yousuf Khan: Yeah, so it’s interesting and it came about because I’m someone who learns all the time and there are certain parts of a role that I was doing and I really wanted to be able to bounce some ideas with a bunch of CIOs. Long story short, I booked a table for just a very few and twice the number showed up because we wanted to talk about this specific issue and it was very productive. And then four years later, every VC or a startup was calling me up to say, can we sponsor a group therapy dinner? The group therapy dinner really has been there to help founders and help VCs to get an unfiltered opinion on either investment ideas or product road maps. It’s not a formal dinner. It’s something that I organize for as part of my nurturing the community.
Yousuf Khan: The commonalities are that you have very collegial group that is able to think along and be able to build relationships and therefore that helps make decisions a lot faster. My ability to be able to go to at least 5 or 10, 15 CIOs in a very short amount of time about a project or initiative and be able to get really clear opinion, unfiltered, is super invaluable. So that’s one big takeaway. The second biggest takeaway is that the ability to build great customer stories, testimonials, case studies, these are absolutely key. Because when CIOs are together in a room and they’re talking about issues and they’re talking about vendors and what works well, whatever, you want them to be able to advocate in a very independent way and they’re able to do that and that’s been important.
Yousuf Khan: I think the third thing that’s really taken away is that some of the issues that I’m starting to see from my CIO peers, are consistent. One of the things which is absolutely consistent is more and more CIOs are focusing on the customer experience and being able to optimize that for every company that they’re part of. So it’s irrelevant of the type of company, whether it’s enterprise, small, large, medium, or consumer. The key role of the CIO is evolving in saying, how do we make a better customer experience? How do we basically accelerate revenue? Those are things which are very common and something that I’m hearing pretty regularly amongst the group therapy dinners that I’ve been organizing.
Harry Stebbings: My word, there are so many things to unpack, sorry I was just writing down my notes that I wanted to unpack. The first one is you mentioned there the element of the importance of customer stories and really customer testimonials. I often have founders say, hey, should I take this discount in return for the testimonial from the customer? What would you advise in terms of that trade off of discount for testimonial versus no, we’re holding far more price? How would you advise?
Yousuf Khan: Totally 100%. So here’s the thing, the buying decision for a CIO and any line of business, even if it’s CMO, it’s through so many different tiers. It’s not just, I’ve done some analyst research and I’ve asked my team to evaluate. It’s across so many different things, right? And so one of them, fundamentally, it’s about being able to relate to your peers in good context and actually accept that it’s not a perfect product. Software by nature is an imperfect industry, right? It’s supposed to be able to improve and innovate. That’s why we have this great ecosystem, where you’re able to innovate and build better products all the time.
Yousuf Khan: But my point on that is, having peers, being able to represent a great buying experience end to end. And by the way, the customer experience is not just, I bought this product, I deployed it. It’s about the sales engagement, it’s about customer success, it’s about what the renewal process was, it was what the deployment process was, it was about where the time to value was. All of these things being captured and being able to represent it in a testimonial, in a case study which was written, these things are immensely valuable.
Yousuf Khan: And I’ve tried to be supportive of of startups for a long time and the reason is because I know that selling is hard. I know that basically being able to change people’s mind. But I would much rather that a CIO or a peer call me up and say, “Hey, by the way, this company is pitching to me. What do you think?” And my ability to basically be confident to say, “That’s a great solution. You should definitely use it. Here’s why. And by the way, if your situation is different, this is why you shouldn’t.” Of course that doesn’t really happen that often. It’s much further along. But one thing I would recommend every single startup to do is to focus on customer stories, customer stories. Let the customer tell the story and it will take care of itself.
Harry Stebbings: Now the other question I had was obviously I meet a lot of companies today and you said there about the importance and centrality of customer experience in terms of the CIO’s mindset. And a lot of companies say it and my question to them, is this a top three buying decision, one? And often that’s predicated around, does it fundamentally add net ARR? And does it fundamentally prevent churn? And it has to do, in my mind, one of the two. Prevent churn or add ARR. Is that too simplistic and binary thinking of me? And is there more of a nuance perspective to the CIO’s buying mentality?
Yousuf Khan: That’s a fair opinion, but I think as it’s evolved from that a little bit. Like I said, I fundamentally believe that because people are thinking from such a wide vantage point that they’re just going to have many more data points when it comes down to make that decision. And I think so, yeah, that’s… I’m sorry I haven’t answered the question.
Harry Stebbings: No, that totally is. No, it’s a total answer. I guess my other question was also you mentioned the budget of the CIO there. In terms of timing within the year, totally naive question, is there a right time to present to CIOs? And is there a higher likelihood dependent on certain times within certain courses that they have more elastic or available budgets or is it an annual budget that’s just [stopped given 00:00:19:41]?
Yousuf Khan: I’ll tell you one thing. So one thing to avoid is right at the end of the year. You have to understand just business planning cycles are just such that, just from a time perspective, CIOs just won’t be able to make the time, so that’s one. I think the second thing is they dislike surprises. So this aspect of being able to do a deal and try and get it done, by the end of the quarter. Look, it’s very exciting. It’s exhilarating feeling, being able to know and you see all this thing on LinkedIn, all these companies saying yeah we just did another quarter and this quarter and et cetera. That is great if you’re selling. If you’re buying, being able to constantly try to push things on the other side isn’t a great experience, by the way. Finance departments aren’t the biggest fans of surprises, especially if you’re a public company.
Yousuf Khan: And so I think you have to be thoughtful. One thing that I would advise most SaaS companies do is to ask what is the right time? Because there’s a lot of solutions. Ripping out solutions isn’t as easy as people think it is. It takes time to be able to make big decisions across a large end user base. And so as a result, remember that the buying cycle is long. I don’t think there’s a perfect time, I just think that there are certain times you should avoid. Quarter-end, is for some business absolutely works well. But in most cases it isn’t.
Yousuf Khan: I think one thing is actually thoughtful is knowing that the CIO does make the end decision but they do it in partnership with their direct reports, and so being able to get their time and so therefore you become an obvious choice and obvious decision is probably the route to market. Rather than, I just want to get into hold of the CIO and I’ll basically speak to them directly. Yes, it does work, but I think the world is moving much further than being able to [inaudible 00:21:10] because the people that are implementing the solution are the CIO’s leadership team and their direct. So being able to actually build momentum and a campaign across that set is something that is pretty consistent.
Harry Stebbings: Well, let me put on the startup founder hat, I am really interested. You spoke there about the challenges of the sales themselves, which absolutely they are. And I often have early stage founders say to me, Harry, should I go for the quantity of logos, be it maybe smaller accounts, but get more of them, higher frequency, higher velocity? Or should I go for those massive logos, that real social validity from your name that counts? How would you advise and think about founders with that, with maybe the trade off of time, what would you advise them?
Yousuf Khan: So it’s a very good question. So it actually depends on the type of business you want to build. If you are building what you fundamentally believe to be a longer term, large enterprise business, then fundament you should be going for the big logos. And the reason you’re going for the big logos is you want to demonstrate to pretty much everyone that you can play and you can operate and your product is being used by sizable companies where it is really difficult to maybe implement or create change, et cetera. If you’re able to do that, it demonstrates you effectively are sending a signal to prospective customers that, hey, by the way, you’ve been successful with these companies. On the flip side, you actually want to make customers really, really successful. So the trade off is do you want to basically have very few really good customers, or big logos, for example? Or do you want to have a list of diverse customers who are wildly successful with your product?
Yousuf Khan: The challenge that really becomes is because companies may spend too much time going after logos and therefore they’re now pigeonholed in the CIO’s viewpoint as possibly focused towards a very specific sector or a specific type of business. And so having diversity of customers is my biggest piece of advice that people should operate towards and make them supremely successful. If you make customers supremely successful, they will shout your praises and they will do it independently. They will tweet about it, they will talk about it, and they will love to be able to tell that story.
Yousuf Khan: Focus on the success piece first and foremost. And I think the other thing is think about the type of business that you want to be able to run. Look, you may just be the right software for a startup and if that’s the case, that’s great. There are thousands of them and you’ll basically make a great business. But you have to then know if you basically built up a whole huge logo count in that vertical, that going and selling into the bigger enterprises, the Fortune 500, is maybe a little bit more difficult. So there’s a fundamental question that the founding team really need to ask themselves first of all.
Harry Stebbings: Speaking of the founding team asking themselves questions there, another question that I often get asked is, if they’re doing multi-year deals, sorry, in terms of paying up front, how much of a role does that really play in the CIO’s mindset of whether to buy or not, if it’s a requested payment upfront for a multi-year deal? And how do you advise founders to think about upfront payment for multi-year deals?
Yousuf Khan: I would do it, depending on the product itself in terms of what the time to value is. The question really comes down to is are you basically buying a product where you’ve done a very good POC and you know this product is done well in that situation and therefore will do well in the longer term? And therefore from that standpoint it actually makes sense to be able to say, okay, I’m going in for the longer term and I’m going to be able to make this investment and I’m going to lock in and I’ve cost [inaudible 00:24:06]. the good thing, as I said earlier, finance teams don’t like surprises. So being able to present yourself as somebody who’s made a sensible investment decision as a CIO with a vendor that you’ve tested out the product and you’ve clearly thought through the buying decision and you’ve been able to give yourself cost certainty is a very, very good thing.
Yousuf Khan: However, the flip side to that, it really depends on what the posture is for the actual company. Most vendors, unfortunately most SaaS companies, and I say this with respect, really need to understand the context of a company. If you are selling to a company where the company has very low margins or it has cyclical for example, because of the nature of the industry, then you’ve got to be very conscious about what you’re asking for and what the trade offs are. What is the discount value that you’re going to basically attach to it? And what are you willing to offer for that discount, as well? So I think it’s situation by situation, but one of the consistent themes is getting cost certainty is a typically a very good thing and if you have certainty about being able to buy a product which you know will serve you well over the longer term, fundamentally you should be able to go in with a pretty strong posture as a SaaS vendor to say, we know we’re going to be successful. This is the right thing for you, and this is a commercially sensible decision to make.
Yousuf Khan: By the way, one of the things that founders don’t do, they don’t ask enough, and I mean this in the nicest possible way. They should be much more transparent about what it’s going to help their business. All of the CIOs know you’re a startup. We know that you’re basically trying to raise money or you’re trying to basically get logos, et cetera. We know that. And so it’s much better to be upfront and honest to say, this will help my company and help my business as a CEO and a founder of a company to a CIO. Rather than basically trying to basically be very hardball about, let me get a really good discount and let me get a win for everyone. Open transparency is probably a much better buying experience than trying to basically go back and forth on discount levels the entire time. I know when I speak to my CIO peers, they definitely want the more transparent way of buying and be helpful to startups and a lot of CIOs really do want to be helpful to startups, I’m just one of many, basically.
Harry Stebbings: I have to say, I love the way that I had a really precise schedule mapped out here, Yousuf, and I’ve totally gone off it. But you are just leading me down these tangents that I am too interested in. Another one was you said there about knowing that they’re startups. And that’s a big question that, again founders ask me, which is they’re raising, they have six months of runway and they’re typically managing mission critical applications for large enterprises. Do CIOs actually get very concerned by this? How open ball should founders play? I’ve heard of even showing company balance sheets. So I guess my question is how vulnerable are CIOs to the vulnerability of potential applications and vendors they buy? And what would you advise founders in presenting that to the companies?
Yousuf Khan: Here’s one of the advice that I’ve given, which I’ve done as part of these group therapy dinners. And the group therapy and dinners, like I said, are sponsored by either a VC or a startup. And one of the reasons that I’ve tried to be as helpful to VCs, as well as startups, is really because it has given me a vantage point in terms of where industries are moving towards, where the investments are, et cetera. So one resolution for every CIO should basically be that they should partner up with VCs lot more and more. And that gives them a little bit more reference when they’re looking at a company that they’re looking to basically partner with. On the other side, if you are a startup and you are a founder, then yes, having done a round of financing sends a signal to a buyer to say that you here for the longer term, number one. Number two, it gives confidence that a whole bunch of other people have decided to invest money because they believe that this is something will go for the longer term.
Yousuf Khan: I think the level of transparency, I have not seen that in terms of balance sheets, et cetera. I think the question has really come down to is what is the business trajectory and the traction that there are? So my biggest advice to founders and startup CEOs is as follows, be very clear about where you are as a business and where you’re heading towards. It’s absolutely fine for you to basically say, “We are basically building our first 10 customers and we would like you to be part of that foundation customers, for a very heavy discount because we know this is a good product and you’re a forward looking company and therefore we think this would be successful.” It’s absolutely fine for you to do that.
Yousuf Khan: On the flip side, you should also basically, when you are in a go to market motion, you should be confident about the type of business that you’re running. Most companies make this big mistake. They come in and try and sell them. They say, “Oh yeah, we’ve got this great product and it’s demonstrating. It’s a great demo. And by the way, we’ve got a whole bunch of references.” But why don’t you go one step further and say, “What is the type of business that you’re trying to run? What is the industry that you’re trying to basically change?’ These are the visions that people want to basically buy into. And as a result of that, that basically gives people a company. Because if you’re able to give that pitch to a potential customer, like a CIO, you definitively know that they’re giving that pitch to a VC and somewhere down the line someone’s going to buy into that based on a good track record and they’re going to invest more in it.
Yousuf Khan: So then any notion of, is this company going to survive or not? Kind of goes out the door to a certain extent. I haven’t seen it happen, by the way, I haven’t seen this aspect of being able to put in something and maybe I’ve picked relatively well, I’ve been overly conservative, I’ve done too much due diligence. Does that make sense? But some of these things really comes down to, are you buying a solution which is fixing a business problem? And how much are you willing to make it a success as much as the vendor? And that’s really where the CIO and startup partnership comes in place. I’ve been exceptionally verbose, so feel free to stop and say order, order, like Mr. Bercow himself. I want to try and be helpful there. So yes…
Harry Stebbings: As I said, this is the most joyous interview for me where I completely go off schedule. But I do want to ask one final question before the quick fire and that question is, you mentioned time to value. Now it’s a really interesting one. Everyone says, “Oh, time to value, you’ve got to be as short as possible. Got to be as short as possible.” When you’re in these longer cycles and selling to these very large enterprises and really integration and doing it well is key. How important really is time to value in the mind of the CIO?
Yousuf Khan: Oh, it’s become a lot more important over time. And the reason for that is, is because things are just moving at a dizzying pace. Every CIO I speak to, so I will tell you that change management and enablement is really hard in companies. You buy a solution and you want to deploy it out, you are sending emails and Slack messages. It just takes a long time. And so one of the things that CIOs need to get better with, especially working with companies, is what is the change management that’s involved? Some companies, that time to value takes a little bit of time, that’s fine. But as long as you’re transparent about what it takes to be able to make that work, great, you’re in a great position because you’ve set expectations right. The worst companies, or the worst experiences, are those where you’ve over promised them, where you basically said, “Oh, it’s really, really easy to deploy. Oh, it’s really, really easy to integrate.” Nothing is really easy.
Yousuf Khan: So with all due respect, the time to value conversation is much more about what the expectation setting is, rather than putting a definitive number and saying, “Oh, it’ll be done within a week.” That’s not what people are aiming for. People are aiming for successful deployments and being able to extract value. And then the conversation is, what is the plan to get to that value? I think the companies that present a plan, the companies that are transparent about a process, the companies that go through the steps and show you what success looks like. Because most people actually forget this, what does success look like? You end up doing these IT projects and deploying these solutions that take literally months and months to deploy and you’re like, why are we doing this again? So being able to reiterate value, being able to come up with a plan, being able to walk people through a journey of what that takes. Knowing that this is hard, knowing that this is different. Those are the companies that are going to be successful in your head because they’re going to make a much better buying experience and a deployment experience than others.
Harry Stebbings: Well, I’ve decided that while you’ve been talking that we’re going to do a round two on customer success because there is so much for us to cover that literally I cannot stop asking you questions.
Yousuf Khan: Well, the funny thing is, as you know, I’m the [inaudible 00:31:13] and the barrier for many reasons, other than just the fact that I always wear a sweater vest and my nickname is Sweater Vest, or Vest in some cases. But I will tell you I’ve been the one CIO, or one of few CIOs, I’d probably say, is I’ve tried to be helpful to founders as an operator, but I’ve also basically worked on the customer success side. So hopefully chapter two, if this is not a complete debacle, I’d love to be able to have that discussion.
Harry Stebbings: Listen, with or without your consent, we’re doing chapter two. I’m taking this under my remit, but I would love that to happen. But I do want to move into my favorite, which is the quick fire, Yousuf. So you know the drill here. I say a short statement, you hit me with your thoughts. Ready to roll?
Yousuf Khan: Yes, sir.
Harry Stebbings: So what motto or quote do you most frequently revert back to?
Yousuf Khan: Build a company that inspires you.
Harry Stebbings: Tell me, what separates good from great when it comes to CIOs?
Yousuf Khan: Taking some risks, communicating effectively, and driving for change.
Harry Stebbings: How should strong operates coming out of larger organizations assess which startup to join?
Yousuf Khan: Probably think about which product they would love to be a customer of and would love to sell well.
Harry Stebbings: Now you have this unique vantage point. You’ve been a board member and you’ve also operated with boards as an operator, what makes the best board members, in your eyes?
Yousuf Khan: Ones who are the most helpful to founders.
Harry Stebbings: What are you expecting from AWS this year? You’re in Vegas as we speak.
Yousuf Khan: I’m expecting Andy Jassy to say some key things in his keynote, which starts off with something like, we’ve been listening to customers, we’ve been working really hard and a whole bunch of startups fearing for their lives as a result of it. And I’m also expecting a dizzying pace of innovation being announced, as always.
Harry Stebbings: What are your strengths and weaknesses, Yousuf? 30 seconds on strengths, 30 seconds on weaknesses.
Yousuf Khan: On strengths, I’d probably say I’m an effective communicator, given the opportunity, intellectually curious, and I’m a very big learner. On the weaknesses, I’d probably say I need to get much better on prioritization because I get overly excited about stuff.
Harry Stebbings: Tell me, Yousuf, final one. What do you know now that you wish you’d known at the beginning of your time in the Valley when you moved in, was it 2014?
Yousuf Khan: The biggest thing I learned, startups are really, really hard. I know startups are hard, but startups are really, really hard. I applaud, respect companies and startups at early stages. People who want to be able to create a company and get an idea to market. I appreciate it so much more than I’ve ever had before having been here, and it’s something that I’ve always wished I could be more helpful towards, given the opportunity to do so.
Harry Stebbings: Well, Yousuf, as you can tell from my completely fleeting away from the schedule, I’ve so enjoyed this. So thank you so much for joining me today and we will do a round two.
Yousuf Khan: It’s been fantastic. I’m honored to basically be there to talk with you. I look forward to basically chapter two in the future.
Harry Stebbings: Well as you could tell, I absolutely loved that and when you look at the schedule, it is totally different to what we discussed because it was just such a free and natural flowing conversation. If you’d like to see more from us, you can do so on Instagram at HStebbings1996 with two Bs. It really would be great to see you there.
Harry Stebbings: As always, I so appreciate your support and I can’t wait to bring you our most downloaded episode of 2019 next Monday.
The post SaaStr Podcasts for the Week with Former Moveworks CIO and Lucidchart Co-Founder/CEO — December 13, 2019 appeared first on SaaStr.
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Ep. 290: Yousuf Khan is a serial CIO, start-up and VC advisor. Most recently Yousuf was the CIO & VP of Customer Success @ Moveworks, the advanced AI built for enterprise providing automatic resolution of IT issues. During his time at the company, they raised over $108m from Lightspeed, ICONIQ, Kleiner, Sapphire, and Bain Capital. Pre Moveworks, Yousuf was CIO @ Pure Storage during their period of hypergrowth both as a private and public company. Finally, before Pure, Yousuf’s first role in the valley was with Qualys again as CIO where he owned the entire global IT budget.
Pssst 🗣 Loving our podcast content? Listen to the start of the episode for a promo code to our upcoming events!
In Today’s Episode We Discuss:
* How Yousuf made his way from the UK to the valley and how that led to his becoming one of the leading CIOs today in the rising prominence of CIOs in enterprise.
* How open and can transparent can CEOs be with CIOs? Do CIOs know the state of early-stage companies in terms of their cash situation, fundraising etc? Does that ever put them off buying? What is the right tone and temperament to take with those CIOs in the first meetings? How does Yousuf advise founders on quality or quantity of logos in the early days?
* How does Yousuf advise CEOs approach CIOs when it comes to discounting? Do they make a difference to the buying decision of the CIO really? Should founders offer discounts in exchange for customer testimonials? How can CEOs provide alternative forms of social validity to other CIOs in the ecosystem, other than case studies?
* How does Yousuf advise founders approach CIOs when it comes to multi-year deals? Does the mindset of the CIO change when the deal is paid upfront? How should the founders position that? When it comes to implementation, how important is time to value in the mind of the CIO? What is the worst thing a founder can do when discussing implementation?
Ep. 291: Experimental marketing brings together the science and art of marketing, allowing for creativity that drives results. It’s an essential skill in the toolkit of the modern marketer, and one that’s easy to get started with, no matter your company scale.
This episode is sponsored by Brex.
SaaStr’s Founder’s Favorites Series features one of SaaStr’s best of the best sessions that you might have missed.
This podcast is an excerpt from Karl’s session at SaaStr Europa 2019.
If you would like to find out more about the show and the guests presented, you can follow us on Twitter here:
Jason Lemkin
SaaStr
Harry Stebbings
Yousuf Khan
Karl Sun
Below, we’ve shared the transcript of Harry’s interview with Yousuf.
Harry Stebbings: Welcome back to another week in the world of SaaStr with me, Harry Stebbings. It’s nearly Christmas, and so if you’d like to see all things behind the scenes here, you can do that on Instagram at HStebbings1996 with two Bs. But to the show day, and it’s a real first for the show, as we have our first CIO on the show. These are the people that quite literally own the IT budgets of today. They can decide whether their large company buys your product or not. It’s that simple.
Harry Stebbings: And so with that, I’m super excited to welcome Yousuf Khan, serial CIO, startup and VC advisor. Most recently, Yousuf was the CIO and VP of Customer Success at Moveworks, the advanced AI built for enterprise, providing automatic resolution of IT issues. During his time in the company, they raised over $108 million from Lightspeed, Iconic, Kleiner, Sapphire, and Bain Capital. Pre Moveworks, Yousuf of was CIO at Pure Storage during their period of hyper growth, both as a private and public company. And finally before Pure, Yousuf’s first role in the Valley was with Qualys, again as CIO where he owned the entire global IT budget.
Harry Stebbings: Enough of these terrible dulcet tones though, now I’m very excited to welcome our first ever CIO, Yousuf Khan.
Harry Stebbings: Yousuf, it is absolutely fantastic to have you on the show, I’ve heard so many good things, both from Arif and the team at Lightspeed. So thank you so much for joining me today, Yousuf.
Yousuf Khan: Well thank you. Long time listener, first time caller. So excited to basically be here.
Harry Stebbings: That is incredible and thrilled to have another Brit also, with that accent. But I want to kick off today with a little about you. So tell me how did you make your way from the wonderful coast of the UK into the world of SaaS and come to now be one of the leading CIOs in the really rising mega wave of enterprise SaaS?
Yousuf Khan: Well, I think leading CIO is questionable, but I’m getting there. Definitely working on it. I think the key thing that I had realized after several years in Her Majesty’s United Kingdom, it really centers on the fact that a lot of the technology that I was seeing was really, a lot of the innovation was happening in the Bay area. I was super excited by it. I’d taken lots of trips and managed a team out there and I decided to basically make the move to the Bay Area in 2014 as a CIO for a company called Qualys. And it just happened that they needed a CIO and I’ve always been the first CIO for a company. And so the timing and opportunity just aligned and here I am. And so I’ve been loving it ever since, it’s been a great ride.
Harry Stebbings: I’m super intrigued on the element of being the first CIO, as you always are there. But I do want to touch on another element of the journey for you, which was your time at Pure Storage. So you spent close to four years at Pure Storage, during this incredible period of hyper growth. So how did that experience impact your operating mentality and I guess what were your biggest takeaways from that experience?
Yousuf Khan: So a phenomenal company and a phenomenal opportunity to be part of, really just honored to basically join a great team and a great culture. Company was going through massive hyper growth. And I think what it taught me on the operating side was that consistency is absolutely fundamental scale. Secondly, I think you’ve got to be able to make the hard decisions early versus later. Change management is super hard for companies that are growing really quickly. So think about is one of the things I did was listening to people like yourself and a whole bunch of others. I took away a lot of lessons about what not to do as well as what to do. And that was one of the things that I had learned from an operating standpoint.
Yousuf Khan: I think that one of the biggest takeaways is hyper growth and scaling fast is really exciting, but it’s also really hard. It really only gets successful if you build the right culture around it, which has got a foundation for it. And I think Pure Storage was one of those amazing companies where the culture was very positive, very collaborative. And it was a big takeaway for me to make sure that if you have the right people around you with the right thinking and as long as you’re aligned, then you can do so many amazing things. And I think that was just a really exciting time and exciting company to be a part of.
Harry Stebbings: Now you mentioned too there, and I didn’t expect to go off schedule–didn’t quite expect it this early, so I hope that’s okay. But you mentioned the elements of internal change there and then you also mentioned culture. Blending the two together, change can often create uncertainty or maybe concern within the team. How do you think about and how do you advise founders and operators on really enacting internal change? But also maintaining culture and ensuring that people don’t feel too disquietened or nervous by the change?
Yousuf Khan: Yes. As you know, I’ve spoken to many of our mutual friends in the VC, in the startup ecosystem. And one of the things I realized is that change in culture, probably the biggest thing that we need to do both as leaders and companies, but as well as operators is be very transparent, number one, about what you’re doing and over communicate. I think this are the things that people just take for granted. Things are just moving at such a dizzying pace that you have to really be able to reiterate an education through repetition is probably one of the advice that I tend to basically give to founders. I think the other thing I basically say is as a leader of a company, ask yourself the type of leader that you want to be and therefore ask what do you want this company to end up becoming and be known for?
Yousuf Khan: Not just from a product standpoint, but also from just the ability of what it represents and what do all of your team members represent? So all of those combined. Culture is everybody’s responsibility and so being able to signal early, being able to communicate it or over communicate, being able to define in very clear terms what works and what doesn’t work and what you want it to work is probably going to be one of the key things I’ve basically seen culture working. And I’ve seen that across companies which have been at early stages and companies which have been growing really quickly as well. So yeah.
Harry Stebbings: No, totally. I think the combination of transparency and over communication is the key there, really. I do want to touch now though on the meat of it, really, which is your role, and as you said there, often being the first CIO. So before we dive into how the role of chief information officer has changed. First really, what is a CIO and how would you describe the remit of the role?
Yousuf Khan: Well, the CIO is fundamentally owning the business technology function of the company. And by business technology function I want to define that because sometimes there’s a overlap with the CTO from an engineering side. So for simplicity sake it’s owning business infrastructure, application, and now the role has evolved into owning aspects of data. In some cases because of lack of CSO or security focus, sometimes owning security as well. And then helping being able to drive innovation across the company. The role really permeated from focus towards infrastructure for a very long time and that has evolved over time and I think SaaS been a phenomenal catalyst to be able to drive that change and for the CIO to be much more centrally focused to help innovate the company and help govern it.
Harry Stebbings: Can I ask, you mentioned there and we mentioned earlier in terms of the CIO’s buying power and them really holding a lot of the purse strings, so to speak. Is that a new innovation in org structures and the remit of the role? And how have we seen that purchasing power of the CIO maybe change?
Yousuf Khan: Well, it’s definitely evolved over time. It’s definitely increased over time. And I think the reason for that is, is that because of the interconnectedness of systems and architecture, there has been a big role of enterprise architecture across the company. And what that has resulted in is that you have CIOs and their leadership teams are basically involved in architecting systems across the company and what those basically mean. And there’s one thing that’s definitive as a result for, probably will be the next 5/10 years, is CIO’s and it teams and companies in general will be building more technology and buying more technology for years to come. And as a result of that, because of the interconnectedness, because of the governance, because of the implementation, all of these things have the IT function involved in some way, shape, or form. And as a result they have a bigger vantage point, they have a bigger voice and therefore they are a big influencer in the actual decision basically being made. And so that’s really evolved and I think it will continue to evolve over time.
Harry Stebbings: So given the centrality of that role there and the ever increasing prominence of it, I guess my next question is for operators listening, when is the right time to hire that first CIO? And what should they be looking for in those candidates?
Yousuf Khan: So I think it’s an interesting question because sometimes the CIO is a begrudging hire, unfortunately, for some companies. They’re like, do we really need one? Et cetera. My advice is hire earlier rather than later. And the reason is because even if you’re a small company, what’s happening is you just have a ton of systems in place. Now, it’s not the highest priority of course to be buying systems, but if you are on a good trajectory, getting someone in a technology leadership role early from either focusing on business applications at least is a very good thing to do.
Yousuf Khan: I think typically what I’ve have seen is basically post 500 upwards, 500 employees upwards, I’ve typically seen a lean towards basically hiring a technology [inaudible 00:10:00]. It’s not always a CIO, sometimes it is a VP of business applications and a VP of infrastructure and then they look for a CIO. But it really depends on the company as well. But I’m typically seeing that definitely a pre-IPO. I think most companies will want to have a CIO before they go public, before they do major funding events, as well. So situationally it differs from time to time, but it’s becoming a much more critical role than it’s ever been before.
Harry Stebbings: Can I ask, given the criticality of it and the founder’s awareness of it and it’s real rise in emergence and power. What would you advise founders looking to sell the role to amazing candidates? Is there anything that I can do to clinch them and really convert them to join them in that role?
Yousuf Khan: Well, so the biggest thing that I’ve basically seen is CIOs of technology companies, the biggest selling point for them is they represent technology on the external side, number one. Number two, as a result, they have a much better impact on the revenue side. So there are a lot of CIOs who do not want to be involved in that. They don’t want to be involved in being externally focused. But I think if you are a founder of a company and you are selling into enterprises, if you are an enterprise software company or enterprise infrastructure company selling into the CIO or selling into the technical organization, it’s good to have a CIO involved. Again, it’s about the right person who has a startup mentality, which he understands that the startups are very different than large scale companies and it involves a tremendous amount of effort across a much broader spectrum.
Yousuf Khan: But I would strongly advise those companies to think about two forms. One is to basically bring in a CIO at the right level in a full time capacity. And the other one is to basically think about a hybrid role, whereby you actually build a much more rigorous advisory board of CIOs, which is a brain trust for all intents and purposes. And you’re able to basically lean on them to be able to not just advocate for you but also be able to give you advice before you go to market. That will help you evolve as a company both operationally and then also as you go to market in terms of your messaging.
Harry Stebbings: So I want to take out two elements that we said there. One was, in terms of flipping sides of the table to selling CIOs themselves, I often hear the importance of selling the vision of what the product can be to the CIO. For you as a serial CIO, in terms of the importance of vision and product roadmap over time versus actually what we can do and offer for you now today, how do you balance between the two? And how important really is that vision and product road map in the buying seat?
Yousuf Khan: So the vision and product road map is absolutely critical and I’ll tell you why that is. Is because most people are buying into that vision. They’re buying a platform and as a result, what they’re going to be doing is probably saying we’re not going to be doing some other investment decisions because we know this company is likely to be able to solve this, and that’s what they’re basically talking about, number one. Number two, really having a CIO in that role allows that individual as a peer, not as a typical salesperson or a product person, to be able to articulate and probably have a degree of both empathy and confidence, as well as alignment with the CIO on the buying side.
Yousuf Khan: And I think that plays an important part which basically says, look, we’re aligned, we get your business and we understand this market and we’re building a product that will basically meet your needs for many, many years to come. And we’re building a platform that you want to basically be part of. And I think a lot of companies have done this really, really well, and I think articulating that and selling that in a way which basically gets people really excited and capsulate it is probably really critical and it’s actually hard to do as well. Simply because CIOs have so many priorities to be able to constantly juggle. I think being able to be able to be very prescriptive about that is really critical. I think a lot of companies should focus a lot more on it,as well.
Harry Stebbings: Another one totally off schedule, but I have to ask it. In terms of that buying decision, how much of a change does it make for a CIO in terms of their buying decision to have the founder themselves come to them and sell it to them versus the sales team itself? Does that really make a difference? We hear about Marc Benioff getting on jets in the early days. Does that make a difference having the founder there? What would you advise?
Yousuf Khan: I think it definitely doesn’t hurt unless the founder’s just very socially awkward. Put your best foot forward is what I tend to basically say. But I think that the critical–number one, I think it definitely helps. I think it both helps the founder as well. I think the other thing is that most people don’t gather is, selling is really hard. Going to market is really hard. Competing is, this is a really competitive industry because the ability to create a product in the SaaS industry and to be able to execute it, get eyeballs at market as become really, really–the barriers have really completely evaporated. And so I think having the founders get a viewpoint and vantage point into just that selling process is really important. I think from a buyer’s perspective, knowing that they basically have the founder’s attention is really important.
Yousuf Khan: And I think then the third thing is it makes sure that over the longer term you have much better alignment across a much senior level of the organization, basically. There’s a scale, so it’s a good question to basically have. And that’s where you have to have questions about how do you enable other people both in sales leadership and others to represent the company at the executive level? And that’s something that is a continual challenge for people to be able to do that.
Harry Stebbings: Totally. It is a challenge. The other thing that you said there was also building that brain trust and I love that brain trust comment because I know that you’ve done some incredible CIO group therapy sessions. So can I ask what are the commonalities in what they’re discussing there and have there been any interesting tidbits and takeaways for you?
Yousuf Khan: Yeah, so it’s interesting and it came about because I’m someone who learns all the time and there are certain parts of a role that I was doing and I really wanted to be able to bounce some ideas with a bunch of CIOs. Long story short, I booked a table for just a very few and twice the number showed up because we wanted to talk about this specific issue and it was very productive. And then four years later, every VC or a startup was calling me up to say, can we sponsor a group therapy dinner? The group therapy dinner really has been there to help founders and help VCs to get an unfiltered opinion on either investment ideas or product road maps. It’s not a formal dinner. It’s something that I organize for as part of my nurturing the community.
Yousuf Khan: The commonalities are that you have very collegial group that is able to think along and be able to build relationships and therefore that helps make decisions a lot faster. My ability to be able to go to at least 5 or 10, 15 CIOs in a very short amount of time about a project or initiative and be able to get really clear opinion, unfiltered, is super invaluable. So that’s one big takeaway. The second biggest takeaway is that the ability to build great customer stories, testimonials, case studies, these are absolutely key. Because when CIOs are together in a room and they’re talking about issues and they’re talking about vendors and what works well, whatever, you want them to be able to advocate in a very independent way and they’re able to do that and that’s been important.
Yousuf Khan: I think the third thing that’s really taken away is that some of the issues that I’m starting to see from my CIO peers, are consistent. One of the things which is absolutely consistent is more and more CIOs are focusing on the customer experience and being able to optimize that for every company that they’re part of. So it’s irrelevant of the type of company, whether it’s enterprise, small, large, medium, or consumer. The key role of the CIO is evolving in saying, how do we make a better customer experience? How do we basically accelerate revenue? Those are things which are very common and something that I’m hearing pretty regularly amongst the group therapy dinners that I’ve been organizing.
Harry Stebbings: My word, there are so many things to unpack, sorry I was just writing down my notes that I wanted to unpack. The first one is you mentioned there the element of the importance of customer stories and really customer testimonials. I often have founders say, hey, should I take this discount in return for the testimonial from the customer? What would you advise in terms of that trade off of discount for testimonial versus no, we’re holding far more price? How would you advise?
Yousuf Khan: Totally 100%. So here’s the thing, the buying decision for a CIO and any line of business, even if it’s CMO, it’s through so many different tiers. It’s not just, I’ve done some analyst research and I’ve asked my team to evaluate. It’s across so many different things, right? And so one of them, fundamentally, it’s about being able to relate to your peers in good context and actually accept that it’s not a perfect product. Software by nature is an imperfect industry, right? It’s supposed to be able to improve and innovate. That’s why we have this great ecosystem, where you’re able to innovate and build better products all the time.
Yousuf Khan: But my point on that is, having peers, being able to represent a great buying experience end to end. And by the way, the customer experience is not just, I bought this product, I deployed it. It’s about the sales engagement, it’s about customer success, it’s about what the renewal process was, it was what the deployment process was, it was about where the time to value was. All of these things being captured and being able to represent it in a testimonial, in a case study which was written, these things are immensely valuable.
Yousuf Khan: And I’ve tried to be supportive of of startups for a long time and the reason is because I know that selling is hard. I know that basically being able to change people’s mind. But I would much rather that a CIO or a peer call me up and say, “Hey, by the way, this company is pitching to me. What do you think?” And my ability to basically be confident to say, “That’s a great solution. You should definitely use it. Here’s why. And by the way, if your situation is different, this is why you shouldn’t.” Of course that doesn’t really happen that often. It’s much further along. But one thing I would recommend every single startup to do is to focus on customer stories, customer stories. Let the customer tell the story and it will take care of itself.
Harry Stebbings: Now the other question I had was obviously I meet a lot of companies today and you said there about the importance and centrality of customer experience in terms of the CIO’s mindset. And a lot of companies say it and my question to them, is this a top three buying decision, one? And often that’s predicated around, does it fundamentally add net ARR? And does it fundamentally prevent churn? And it has to do, in my mind, one of the two. Prevent churn or add ARR. Is that too simplistic and binary thinking of me? And is there more of a nuance perspective to the CIO’s buying mentality?
Yousuf Khan: That’s a fair opinion, but I think as it’s evolved from that a little bit. Like I said, I fundamentally believe that because people are thinking from such a wide vantage point that they’re just going to have many more data points when it comes down to make that decision. And I think so, yeah, that’s… I’m sorry I haven’t answered the question.
Harry Stebbings: No, that totally is. No, it’s a total answer. I guess my other question was also you mentioned the budget of the CIO there. In terms of timing within the year, totally naive question, is there a right time to present to CIOs? And is there a higher likelihood dependent on certain times within certain courses that they have more elastic or available budgets or is it an annual budget that’s just [stopped given 00:00:19:41]?
Yousuf Khan: I’ll tell you one thing. So one thing to avoid is right at the end of the year. You have to understand just business planning cycles are just such that, just from a time perspective, CIOs just won’t be able to make the time, so that’s one. I think the second thing is they dislike surprises. So this aspect of being able to do a deal and try and get it done, by the end of the quarter. Look, it’s very exciting. It’s exhilarating feeling, being able to know and you see all this thing on LinkedIn, all these companies saying yeah we just did another quarter and this quarter and et cetera. That is great if you’re selling. If you’re buying, being able to constantly try to push things on the other side isn’t a great experience, by the way. Finance departments aren’t the biggest fans of surprises, especially if you’re a public company.
Yousuf Khan: And so I think you have to be thoughtful. One thing that I would advise most SaaS companies do is to ask what is the right time? Because there’s a lot of solutions. Ripping out solutions isn’t as easy as people think it is. It takes time to be able to make big decisions across a large end user base. And so as a result, remember that the buying cycle is long. I don’t think there’s a perfect time, I just think that there are certain times you should avoid. Quarter-end, is for some business absolutely works well. But in most cases it isn’t.
Yousuf Khan: I think one thing is actually thoughtful is knowing that the CIO does make the end decision but they do it in partnership with their direct reports, and so being able to get their time and so therefore you become an obvious choice and obvious decision is probably the route to market. Rather than, I just want to get into hold of the CIO and I’ll basically speak to them directly. Yes, it does work, but I think the world is moving much further than being able to [inaudible 00:21:10] because the people that are implementing the solution are the CIO’s leadership team and their direct. So being able to actually build momentum and a campaign across that set is something that is pretty consistent.
Harry Stebbings: Well, let me put on the startup founder hat, I am really interested. You spoke there about the challenges of the sales themselves, which absolutely they are. And I often have early stage founders say to me, Harry, should I go for the quantity of logos, be it maybe smaller accounts, but get more of them, higher frequency, higher velocity? Or should I go for those massive logos, that real social validity from your name that counts? How would you advise and think about founders with that, with maybe the trade off of time, what would you advise them?
Yousuf Khan: So it’s a very good question. So it actually depends on the type of business you want to build. If you are building what you fundamentally believe to be a longer term, large enterprise business, then fundament you should be going for the big logos. And the reason you’re going for the big logos is you want to demonstrate to pretty much everyone that you can play and you can operate and your product is being used by sizable companies where it is really difficult to maybe implement or create change, et cetera. If you’re able to do that, it demonstrates you effectively are sending a signal to prospective customers that, hey, by the way, you’ve been successful with these companies. On the flip side, you actually want to make customers really, really successful. So the trade off is do you want to basically have very few really good customers, or big logos, for example? Or do you want to have a list of diverse customers who are wildly successful with your product?
Yousuf Khan: The challenge that really becomes is because companies may spend too much time going after logos and therefore they’re now pigeonholed in the CIO’s viewpoint as possibly focused towards a very specific sector or a specific type of business. And so having diversity of customers is my biggest piece of advice that people should operate towards and make them supremely successful. If you make customers supremely successful, they will shout your praises and they will do it independently. They will tweet about it, they will talk about it, and they will love to be able to tell that story.
Yousuf Khan: Focus on the success piece first and foremost. And I think the other thing is think about the type of business that you want to be able to run. Look, you may just be the right software for a startup and if that’s the case, that’s great. There are thousands of them and you’ll basically make a great business. But you have to then know if you basically built up a whole huge logo count in that vertical, that going and selling into the bigger enterprises, the Fortune 500, is maybe a little bit more difficult. So there’s a fundamental question that the founding team really need to ask themselves first of all.
Harry Stebbings: Speaking of the founding team asking themselves questions there, another question that I often get asked is, if they’re doing multi-year deals, sorry, in terms of paying up front, how much of a role does that really play in the CIO’s mindset of whether to buy or not, if it’s a requested payment upfront for a multi-year deal? And how do you advise founders to think about upfront payment for multi-year deals?
Yousuf Khan: I would do it, depending on the product itself in terms of what the time to value is. The question really comes down to is are you basically buying a product where you’ve done a very good POC and you know this product is done well in that situation and therefore will do well in the longer term? And therefore from that standpoint it actually makes sense to be able to say, okay, I’m going in for the longer term and I’m going to be able to make this investment and I’m going to lock in and I’ve cost [inaudible 00:24:06]. the good thing, as I said earlier, finance teams don’t like surprises. So being able to present yourself as somebody who’s made a sensible investment decision as a CIO with a vendor that you’ve tested out the product and you’ve clearly thought through the buying decision and you’ve been able to give yourself cost certainty is a very, very good thing.
Yousuf Khan: However, the flip side to that, it really depends on what the posture is for the actual company. Most vendors, unfortunately most SaaS companies, and I say this with respect, really need to understand the context of a company. If you are selling to a company where the company has very low margins or it has cyclical for example, because of the nature of the industry, then you’ve got to be very conscious about what you’re asking for and what the trade offs are. What is the discount value that you’re going to basically attach to it? And what are you willing to offer for that discount, as well? So I think it’s situation by situation, but one of the consistent themes is getting cost certainty is a typically a very good thing and if you have certainty about being able to buy a product which you know will serve you well over the longer term, fundamentally you should be able to go in with a pretty strong posture as a SaaS vendor to say, we know we’re going to be successful. This is the right thing for you, and this is a commercially sensible decision to make.
Yousuf Khan: By the way, one of the things that founders don’t do, they don’t ask enough, and I mean this in the nicest possible way. They should be much more transparent about what it’s going to help their business. All of the CIOs know you’re a startup. We know that you’re basically trying to raise money or you’re trying to basically get logos, et cetera. We know that. And so it’s much better to be upfront and honest to say, this will help my company and help my business as a CEO and a founder of a company to a CIO. Rather than basically trying to basically be very hardball about, let me get a really good discount and let me get a win for everyone. Open transparency is probably a much better buying experience than trying to basically go back and forth on discount levels the entire time. I know when I speak to my CIO peers, they definitely want the more transparent way of buying and be helpful to startups and a lot of CIOs really do want to be helpful to startups, I’m just one of many, basically.
Harry Stebbings: I have to say, I love the way that I had a really precise schedule mapped out here, Yousuf, and I’ve totally gone off it. But you are just leading me down these tangents that I am too interested in. Another one was you said there about knowing that they’re startups. And that’s a big question that, again founders ask me, which is they’re raising, they have six months of runway and they’re typically managing mission critical applications for large enterprises. Do CIOs actually get very concerned by this? How open ball should founders play? I’ve heard of even showing company balance sheets. So I guess my question is how vulnerable are CIOs to the vulnerability of potential applications and vendors they buy? And what would you advise founders in presenting that to the companies?
Yousuf Khan: Here’s one of the advice that I’ve given, which I’ve done as part of these group therapy dinners. And the group therapy and dinners, like I said, are sponsored by either a VC or a startup. And one of the reasons that I’ve tried to be as helpful to VCs, as well as startups, is really because it has given me a vantage point in terms of where industries are moving towards, where the investments are, et cetera. So one resolution for every CIO should basically be that they should partner up with VCs lot more and more. And that gives them a little bit more reference when they’re looking at a company that they’re looking to basically partner with. On the other side, if you are a startup and you are a founder, then yes, having done a round of financing sends a signal to a buyer to say that you here for the longer term, number one. Number two, it gives confidence that a whole bunch of other people have decided to invest money because they believe that this is something will go for the longer term.
Yousuf Khan: I think the level of transparency, I have not seen that in terms of balance sheets, et cetera. I think the question has really come down to is what is the business trajectory and the traction that there are? So my biggest advice to founders and startup CEOs is as follows, be very clear about where you are as a business and where you’re heading towards. It’s absolutely fine for you to basically say, “We are basically building our first 10 customers and we would like you to be part of that foundation customers, for a very heavy discount because we know this is a good product and you’re a forward looking company and therefore we think this would be successful.” It’s absolutely fine for you to do that.
Yousuf Khan: On the flip side, you should also basically, when you are in a go to market motion, you should be confident about the type of business that you’re running. Most companies make this big mistake. They come in and try and sell them. They say, “Oh yeah, we’ve got this great product and it’s demonstrating. It’s a great demo. And by the way, we’ve got a whole bunch of references.” But why don’t you go one step further and say, “What is the type of business that you’re trying to run? What is the industry that you’re trying to basically change?’ These are the visions that people want to basically buy into. And as a result of that, that basically gives people a company. Because if you’re able to give that pitch to a potential customer, like a CIO, you definitively know that they’re giving that pitch to a VC and somewhere down the line someone’s going to buy into that based on a good track record and they’re going to invest more in it.
Yousuf Khan: So then any notion of, is this company going to survive or not? Kind of goes out the door to a certain extent. I haven’t seen it happen, by the way, I haven’t seen this aspect of being able to put in something and maybe I’ve picked relatively well, I’ve been overly conservative, I’ve done too much due diligence. Does that make sense? But some of these things really comes down to, are you buying a solution which is fixing a business problem? And how much are you willing to make it a success as much as the vendor? And that’s really where the CIO and startup partnership comes in place. I’ve been exceptionally verbose, so feel free to stop and say order, order, like Mr. Bercow himself. I want to try and be helpful there. So yes…
Harry Stebbings: As I said, this is the most joyous interview for me where I completely go off schedule. But I do want to ask one final question before the quick fire and that question is, you mentioned time to value. Now it’s a really interesting one. Everyone says, “Oh, time to value, you’ve got to be as short as possible. Got to be as short as possible.” When you’re in these longer cycles and selling to these very large enterprises and really integration and doing it well is key. How important really is time to value in the mind of the CIO?
Yousuf Khan: Oh, it’s become a lot more important over time. And the reason for that is, is because things are just moving at a dizzying pace. Every CIO I speak to, so I will tell you that change management and enablement is really hard in companies. You buy a solution and you want to deploy it out, you are sending emails and Slack messages. It just takes a long time. And so one of the things that CIOs need to get better with, especially working with companies, is what is the change management that’s involved? Some companies, that time to value takes a little bit of time, that’s fine. But as long as you’re transparent about what it takes to be able to make that work, great, you’re in a great position because you’ve set expectations right. The worst companies, or the worst experiences, are those where you’ve over promised them, where you basically said, “Oh, it’s really, really easy to deploy. Oh, it’s really, really easy to integrate.” Nothing is really easy.
Yousuf Khan: So with all due respect, the time to value conversation is much more about what the expectation setting is, rather than putting a definitive number and saying, “Oh, it’ll be done within a week.” That’s not what people are aiming for. People are aiming for successful deployments and being able to extract value. And then the conversation is, what is the plan to get to that value? I think the companies that present a plan, the companies that are transparent about a process, the companies that go through the steps and show you what success looks like. Because most people actually forget this, what does success look like? You end up doing these IT projects and deploying these solutions that take literally months and months to deploy and you’re like, why are we doing this again? So being able to reiterate value, being able to come up with a plan, being able to walk people through a journey of what that takes. Knowing that this is hard, knowing that this is different. Those are the companies that are going to be successful in your head because they’re going to make a much better buying experience and a deployment experience than others.
Harry Stebbings: Well, I’ve decided that while you’ve been talking that we’re going to do a round two on customer success because there is so much for us to cover that literally I cannot stop asking you questions.
Yousuf Khan: Well, the funny thing is, as you know, I’m the [inaudible 00:31:13] and the barrier for many reasons, other than just the fact that I always wear a sweater vest and my nickname is Sweater Vest, or Vest in some cases. But I will tell you I’ve been the one CIO, or one of few CIOs, I’d probably say, is I’ve tried to be helpful to founders as an operator, but I’ve also basically worked on the customer success side. So hopefully chapter two, if this is not a complete debacle, I’d love to be able to have that discussion.
Harry Stebbings: Listen, with or without your consent, we’re doing chapter two. I’m taking this under my remit, but I would love that to happen. But I do want to move into my favorite, which is the quick fire, Yousuf. So you know the drill here. I say a short statement, you hit me with your thoughts. Ready to roll?
Yousuf Khan: Yes, sir.
Harry Stebbings: So what motto or quote do you most frequently revert back to?
Yousuf Khan: Build a company that inspires you.
Harry Stebbings: Tell me, what separates good from great when it comes to CIOs?
Yousuf Khan: Taking some risks, communicating effectively, and driving for change.
Harry Stebbings: How should strong operates coming out of larger organizations assess which startup to join?
Yousuf Khan: Probably think about which product they would love to be a customer of and would love to sell well.
Harry Stebbings: Now you have this unique vantage point. You’ve been a board member and you’ve also operated with boards as an operator, what makes the best board members, in your eyes?
Yousuf Khan: Ones who are the most helpful to founders.
Harry Stebbings: What are you expecting from AWS this year? You’re in Vegas as we speak.
Yousuf Khan: I’m expecting Andy Jassy to say some key things in his keynote, which starts off with something like, we’ve been listening to customers, we’ve been working really hard and a whole bunch of startups fearing for their lives as a result of it. And I’m also expecting a dizzying pace of innovation being announced, as always.
Harry Stebbings: What are your strengths and weaknesses, Yousuf? 30 seconds on strengths, 30 seconds on weaknesses.
Yousuf Khan: On strengths, I’d probably say I’m an effective communicator, given the opportunity, intellectually curious, and I’m a very big learner. On the weaknesses, I’d probably say I need to get much better on prioritization because I get overly excited about stuff.
Harry Stebbings: Tell me, Yousuf, final one. What do you know now that you wish you’d known at the beginning of your time in the Valley when you moved in, was it 2014?
Yousuf Khan: The biggest thing I learned, startups are really, really hard. I know startups are hard, but startups are really, really hard. I applaud, respect companies and startups at early stages. People who want to be able to create a company and get an idea to market. I appreciate it so much more than I’ve ever had before having been here, and it’s something that I’ve always wished I could be more helpful towards, given the opportunity to do so.
Harry Stebbings: Well, Yousuf, as you can tell from my completely fleeting away from the schedule, I’ve so enjoyed this. So thank you so much for joining me today and we will do a round two.
Yousuf Khan: It’s been fantastic. I’m honored to basically be there to talk with you. I look forward to basically chapter two in the future.
Harry Stebbings: Well as you could tell, I absolutely loved that and when you look at the schedule, it is totally different to what we discussed because it was just such a free and natural flowing conversation. If you’d like to see more from us, you can do so on Instagram at HStebbings1996 with two Bs. It really would be great to see you there.
Harry Stebbings: As always, I so appreciate your support and I can’t wait to bring you our most downloaded episode of 2019 next Monday.
The post SaaStr Podcasts for the Week with Former Moveworks CIO and Lucidchart Co-Founder/CEO — December 13, 2019 appeared first on SaaStr.
Small Business
via https://www.aiupnow.com
Deborah Findling, Khareem Sudlow
