Operators Ep 18: Chris Degnan (Snowflake)

  
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Chris Degnan is the Chief Revenue Officer at Snowflake.  Chris was the first sales hire at Snowflake and has grown his team to over 300 people. Prior to joining Snowflake, Chris worked at Aveksa and Dell EMC for over nine years.  He is also on the board at Clumio. 

In this episode we talk about the most difficult product he’s had to sell in his career, his secret interview question and what sold him on Snowflake. He also shares about his fear of failure, how realizing he didn’t want his boss’ job prompted him to make a big job change, and the importance of grit.

I hope you enjoy the show.

Full transcript available.

Operators Ep 18 Transcript

Delian: [00:00:00] Hi everyone, my name is Delian and I'm a principle at Founder's Fund, a venture capital firm based in San Francisco. This is Operators, where I interview non-BC, non-CEO, non-founder operators that make the start-up world go round. Today I'm interviewing Chris Degnan, chief revenue officer at Snowflake. Chris was the first sales hired at Snowflake and has grown his team to over 300 people. Prior to joining Snowflake, Chris worked at Aveksa and Dell EMC for over nine years. He's also on the board at Clumio. I hope you enjoy the show.

Cool, well Chris, thank you so much for coming on the podcast today. I really appreciate the time.

Chris Degnan: [00:00:51] Thank you. Thanks for inviting me.

Delian: [00:00:54] Cool. Before we dive into the whole world of Snowflake, which I'm sure many of our listeners are gonna be super interested in, I'd love to talk a little bit about the start of your career. Where you actually started off as anrecruiter in HR. What kind of led you to that, or how did you decide on doing that out of school?

Chris Degnan: [00:01:11] Desperation. [Laughs].

Chris Degnan: [00:01:14] I was from the East Coast, I'm from the Boston area, and I moved out in the dot com boom out here, and thought I would be here for six months. In fact, thought I would actually end up in Seattle for six months and stop in the Bay Area on my route to Seattle. And went to a job fair. I don't even know if they have job fairs anymore. But I went to a job fair and applied to two jobs at the same time. One was a short-term job at Aerotech where I had to recruit day laborers and administrative assistants. Which let me tell you was hard, because there's certainly, there was no LinkedIn back then, and day laborers don't necessarily advertise themselves, or necessarily want to show up to jobs on time.

At the same time I had actually gotten a job to be ina program and Franklin Templeton called the management trainee program. Um, and because it- what you do at that management training program is you rotate through departments every four months, and it was a program that starts in July. I needed a job between then and- and July, so, uh, I- I started working at Aerotech, and then because I had the recruiting background they thought, "Oh, this should be great. You can start your career off ... " Y- you know, your first rotation in HR. Um, and, uh, I knew that was not the career for me. Um, and- and my next rotation was into sales, and it was actually ... You know, Franklin was a great place, and- and that's kind of where I got introduced to, um, the world of sales, and- and kind of started to realize that was probably where I would gravitate towards.

Delian: [00:02:53] Yeah. What made you feel like, during that rotation at sales, this is what you want to do? So, you've effectively done, it seems like sales is, sort of for the rest of your entirencareer, 20 years since then. Uh, what sort of attracted to you to it? Like, did you feel like it was something you'd be sort of naturally good at, do you find it particularly motivating, like, why that, and 'cause you landed on Excel earlier. I feel like most people in their career don't land on like, you know, within the first year decide what they're gonna do for the next 20 years. Like most people, you know, take a little longer, so yeah. I'd love to understand how, how that came to be.

Chris Degnan: [00:03:17] Yeah. Well, first of all, I mean, frankly, it was, it was good. I mean, there, you had everyone who was like super smart, you know. That came from, you know, Ivy league schools. I went to university of Delaware, good school had a lot of fun at school, not necessarily focused on, uh, the great aspect of things. And, um, I think, um, when I, um, you know, got to Franklin, I quickly realized I didn't like diving into spreadsheets. I didn't like to the kind of the boring corporate meetings. I liked the ex- the excitement of creating your own income of, you know, really going out and hunting. Uh, you know, if you will, and, you know, get, you know, going out and and finding the kill and, and winning there. That's, that's what I liked. I enjoyed, I enjoyed that aspect of it 'cause not, not every day is the same.

And, and to me that was kind of that that hit a nerve. I didn't really genuinely like the financial services industry. Um, and you know, I happened to be during the dot-com boom. Um, so I got to, I thought, hey, I'm going to go join, um, you know, tech. And I went to really a dumb startup that raised a lot of money. Um, and, uh, and my, one of my bosses there, it was, it was literally a, a website called smarties.com. And one of my bosses there was, had sold enterprise software and he said, you're really good at this, but don't do this web stuff. Like, you know, go into tech and, and you'll, you'll find a better career path. And that's kind of the, you know, so I had some good people to give me suggestions and guidance along the way, and that, you know, I joined um, a, a, a startup in the tech space called Covalent Technologies. Right, as the um dot-com bust happened.

I think I stayed there for a couple of years and in my, my claim to fame is I think I had seven rounds of layoffs. I think that I, there was, you know, the multiple VPs of sales. I wasn't the only sales rep multiple times during my tenure there. Um, you know, I didn't make any money, but I did keep a job through, through the, through the dock, through the dot-com bust is, is what I'll say. But it, it taught me a lot of grit I would say. Um, during that time, because every day I would have to come in and just, you know, cold call and dial dial for dollars, literally. Um, and that's, I think why people kept me because they needed, they needed [inaudible 00:05:42]. So.

Delian: [00:05:43] What made you persevere through the dot-com bust and going through that many layoffs, like if people clearly guided you towards, hey, you know, enterprise software sales is what you're really good at, you should stick to that. But, you know, I imagine in like you know, 2003, 2004, uh, you know, it was pretty non-obvious that continuing to bet your career on being really good at enterprise software sales would lead to a, you know, particularly interesting outcome. I'm sure plenty of people were pretty bearish at the time about the success of enterprise software. Like what, what gave you this sort of, you know, headstrong or will, to like, you know, keep going down that career path.

Chris Degnan: [00:06:16] Fear of failure. In fact I'm scared as, until this day I'm still scared of failing. I started working early on in my life as going bag groceries. And I've never stopped. People always ask with the success of Snowflake will you, will you retire? And the answer is no. I, I don't, I don't have hobbies. I don't golf. I, you know, I, I enjoy what I do. I think what has always motivated me is I don't want anyone to take something away from me. Um, I want to be successful despite everybody else.

Um, and I think that's what drives me, you know, candidly. Um, and that's what drove me through the the multiple rounds of layoffs. It was certainly depressing to build relations with the people and see them go. I realized that that was, that was hard, but it taught me a lot of good lessons. I think that was basically a BDR slash inside sales rep, you know, you know, 2000, 2002. And it, it taught me life lessons, you know, in, in terms of enterprise software. That was important that I've carried through my career ever since. So.

Delian: [00:07:27] If you had to, like, you know, let's say articulate a lesson or two, do you feel like, you know, you learned early on that really impacted, let's say either future career decisions, or maybe even how you think about, you know, uh, BDR recruiting or hiring and firing or competition or things like that. Like, what were, what would you say some of the key takeaways were from that sort of Boston, all those layoffs around like maybe how not to do things that you've applied, you know, since then?

Chris Degnan: [00:07:49] Well, I think you just, you have to make your own way. It's, it's on you, I mean, that's the good of sales or the bad of sales. Is like a lot of people kind of want to say, I mean, it's, it's funny to have people come and want to join stuff like today and say how lucky I got that I chose Snowflake. Let me tell you something, no one wanted the job that I took when I started Snowflake. And I think, I think that, that, it's just the every day is, you know, instead of worrying about what seven years from now will look like, uh, you know, focus on the here and now.

And like, I can't control, I can't make great technology. I'm not a technologist. I can control what I do. You know, I'm a big, you know, I, I like the, the New England Patriots I'm from Boston and, and Bill Belichick always says, do your job. My job is not what know was, was a BDR or an ISR, or, you know, when I was the first sale up here at Snowflake, I was the first sale. My only job was to get customers. So I'm not going to go and make the technology better. I'm just going to go and focus on getting customers. And that's, that's really what I've always focused on is doing my job. And that's, and that's it.

Delian: [00:08:51] My favorite Bill Belichick quote is probably the no days off quote.

Chris Degnan: [00:08:54] No days off. Yeah. I mean, you know. Sometimes it drives you a little mentally, mentally crazy. I've certainly had my, my own mental language, but yeah. Yeah, for sure.

Delian: [00:09:02] Uh, so after the kind of bust, you ended up landing at, uh, you know, Dell EMC for, uh, what is still, you know, until another year or so more it's Snowflake, uh, your longest career stint. Uh, you know, what, what did it up like attracting you to that particular opportunity and what made you stick around there for such an extended period of time?

Chris Degnan: [00:09:21] Yeah, I, I think I was at, I was at, uh, Informatica in and I was, I was doing pretty well and I liked my boss. Um, and you know, one of my, one of my closest friends that I moved to California with his older brother was like, "Hey, do me a favor, talk to this guy. Um, at, at, uh, EMC," I was in Dell at the time. So at EMC and, um, you know, he, he was a good sales guy and he re... he said, look, come and build a career here. Um, and in fact, I remember the guy who ran my division, um, John McMahon at, at EMC. My boss at the time, he's really very difficult human. But he, and I worked for him for eight years. But I think he taught me the fundamentals and kind of going back to the Belichick things. I, you know, I think I learned some really good things along, along the way. And I always said, you know, I remember giving him on my, on my resume when I, when I sat down with him the very first time. I, I had on my resume, um, that I, I don't even know if people do this anymore, but I put an objective. And my objective was to be the V- uh, VP of sales of a technology company.

That was, that I was always kind of, as I had clarity around where I wanted to go, that was, that was it. And so when I sat down with him, I said, that's what I want to do, help me get there. And I think he was pretty, um, very direct with me around, well, you have to make it uncomfortable for us to not promote you. Um, and just do your job really well. So I, I was, uh, a very successful rep in that organization.

There were times when people would say, hey, come and cover this big account at this company for, you know, whatever. And I'm certainly got interested in listened, but, but really what I, what I started to think about is does the next move that I make, whatever move that is. Does that get me to my objective of being the VP of sales. And the answer was most of the time no.

Um, so I, you know, I needed someone to give me that opportunity to be a, a frontline manager. And so that's when I, I went and that's what got me excited. And did I need to stay at EMC eight years? Probably not. Call it my business school. I would never want to go get my MBA. And I think this would be, you know, I learned the school of hard knocks of selling, you know, a very competitive in a very, very competitive market with which served me well in my role at, at, at, at Snowflake. Um, so yeah, I did that for, for eight years and I, I think, you know, I couldn't remember why I decided to leave. It was, I realized that the cloud was coming and this, this was in 2012. I was selling at that at, in around 2012, I was selling to one of the largest companies in the Bay Area. My sales team was. We got into a very commoditized. I felt like I was selling a used car, like, you know, type thing. And I'm like, man, I don't want to do this anymore. I just, it was like a light bulb. And I was like, I'm done. You know. I don't want my, and I, when, what was the problem was I didn't want my boss's job. Um, and when I don't want my boss's job, I know that that's probably not the right place for me. Um, and so that's kinda when I ended up, you know, making the transition to, uh, uh, Aveksa.

Delian: [00:12:28] I love that criteria as a way to figure out whether or not, uh, whether or not you want to stay at a place. I'm curious, you know, in like, you know, let's say, 4O6 timeframe as you started to have people say, "Hey, would you like to take over this account?" Did you feel like you sort of had two paths in front of you? One was like, start to basically learn how to just like, be a really competent icy salesperson and basically manage larger, larger accounts. Versus start to learn, how do you not manage larger accounts, but instead manage more reps? Like, did you feel like that was sort of two potential paths you could go down. And like, I guess what made you want to go down the path of, it sounds like, sort of learn how to manage more reps rather than learning how to become a like higher and higher end sort of enterprise sales person.

Chris Degnan: [00:13:03] Yeah. I mean, I think, look, I have people today that, that are kind of long time enterprise salespeople. I know plenty of them that like to do that. I particularly didn't want to be the 50 year old sales guy. Right. I mean, that's the, you know, I thought that far in advance, I'm like, well, the money is better as a rep. Generally speaking than it is a front line manager. And a front line manager job in tech is, is one of the more tough jobs as a frontline manager.

And so I, I wasn't, you know, I wasn't necessarily during, you know, the days of doing it. There were days, there were some pretty you know, dark days. I, I certainly had doing that role. But I, I think, um, I knew that, that, again, my objective was I wanted to be in a position like I am today. And I knew that being at an IC was not gonna do that for me. Um, well, it might've bought me a bigger house at the time. It might've let me buy a nicer car. That wasn't my objective. That didn't get me to where I wanted to be. So.

Delian: [00:14:03] Makes sense. And so, yeah, I guess you, you left, um, you left EMC to head out to Aveksa which insured enough, got bought back by, you know, EMC a short time afterwards. Uh, so why did you end up deciding, uh, you know, on them. And then that was sort of, it seems like your first time sort of achieving, achieving your objective. Which was, you know, sort of being, being a VP, you know, at a, at a tech company.

Chris Degnan: [00:14:22] Yeah. I, I, so, you know, Aveksa was, was kind of like, uh, okay. You know, I got introduced to them. Um, but by this guy, um, Chad Bids who I ended up, who recruited me out of, uh, EMC and ended up being really a critical business partner for me through my time at, at Snowflake and Aveksa. And, um, and, and I, I, it was a great experience. In fact, EMC owned RSA, which is the division that ended up buying Aveksa. I remember the, the guy who running RSA, you know, got on the phone with me when I was leaving EMC to tell me what a terrible company that was, and I shouldn't go there. And, and a year later, he's the executive sponsor that buys buys Aveksa. Um, so yeah, I think I, I just, um, I was excited about doing something different. In that in what you know, I was, I, I wanted to get back into the world of selling something of value, not a commodity.

And, and that's where I felt I was super excited to go talk about, uh, Aveksa. Although probably the most difficult product to ever sell in my career. I learned a lot. And it was a good, it was a very good experience for me. Um, to get outside of my eight years of being at EMC. To allow me to be actually, you know, do my job at, at Snowflake even better. So it was, it was a good step.

But when, when, when EMC bought Aveksa and I got back into the folds of, of Aveksa, oh sorry, of EMC as an overlay. I was like, man, this is just no existence for me. I might, my wife would see me coming home um, every single day and be like, you're miserable. And, and I was, I mean. And I had money vesting every month. Because you know, I, I'd only been there a year and my stock was certainly worth an amount of money.

And I always joked, you know, the, the 40 year old or sorry, the 25 year old Chris would have punched the 40 year old Chris in the face for making the decision I made. When I, when I came to Snowflake. Speiser convinced me to take a 50% cash pay cut. Um, to, to come to, to Snowflake. Um, but, but also, you know, mental health and, uh, and you know, passion, passion is, is how I sell. And I, I had no passion about being back at, at, at EMC and I knew I couldn't do that. So I was, you know, that was, you know, part of the decision criteria for me. So, so ultimately going there was, was, was, was a good thing. So.

Delian: [00:16:45] And golden handcuffs can be, uh, you know, the greatest gift of Silicon Valley and also the greatest curse that'd feel like in some ways. [laughs] Um, so you, you know, obviously, uh, EMC was quite large, you know, when you, you know, joined, obviously as it scaled. Aveksa was, you know, smaller, but Snowflake was the, like obviously, you know, smallest, it feels like, you know, opportunity, uh, that you've, you know, seriously considered, I guess. What about Speiser and what about Snowflake, like made you convinced to take a 50% pay cut and joined as like the first sales hire for like a tiny little company?

Chris Degnan: [00:17:15] So I, you know, look when I was at, Aveksa, you know, people that heard, you know, outside that I was, you know, uh, of the world of, uh, of Aveksa or EMC that I, I was talented sales leader. And, and so I got a lot of opportunities to take jobs, you know. So people like, you know, sales leaders from like app dynamics, who ended up getting bought by Cisco, um, you know, approached me. The, the, the challenge I had is I had worked for a very tough human at EMC for eight years. Again, learned a lot of great fundamentals, like, you know, almost like a bell check. You know, like you can only handle so much. Right. Um, and, and I didn't go want to go to work for someone that I didn't like. And that was, that was one thing. So go take a big job. You know, get, you know, almost a guaranteed payout.

Um, and, and I was talking to those types of jobs. Those, those types of companies. And they say, all, you go, you learn stuff from me. And I'm like, man, there's, I guess, you know, I guess I'll learn something from you. But I learned a lot at EMC for sure. Um, and, and so then I, um, I met Speiser and he's insane. I mean, he's absolutely insane. He, he's, he's probably the best venture capitalist I've ever met.

I don't say that lightly. I mean, a lot of, you know, he, he sold me on the concept of, hey, come here, it's series A, it's stealth mode. Um, meet the founders. Uh, and in Russia, he sold me on the market opportunity. The exposure I get to the venture capital community, um, and, and him really. And, and, um, and then Benoit and Thierry, the, the, the co-founders of Snowflake.

So, so really what, what he sold me on him, what I bought in on, was people were moving to the cloud. The data warehousing market was, a, a, a massive market that was primarily on premise. Amazon had launched a product called Amazon Redshift. Which, which is still competitive to stuff like to this day. And, and they had launched in 2003 in February, 2013. You know, and I figured, you know what? This is interesting. Mike told me flat out, he was the acting CEO.

He said, Chris, you're going to come in as the director of sales. You are never going to be the VP of sales. Let alone the chief revenue officer. Will bring someone in, you know, with, you know, with more experience than you to do that. But come help us build this. Um, and I said, you know, I, I just, I, I really felt from Benoit. I didn't like, you know, going back to my dot-com days. I didn't like the 25 year old, you know, MBA who had no real-world experience other than, you know, having a, a fancy degree from Stanford or Harvard or whatever.

And I, I didn't like those, those kids. Because they, they, they there's entitlement. Um, they, they thought they knew everything. And in fact, I've seen companies ruined by founding start, fou- founding CEOs who think they're smarter than everybody else. When they have no real world experience. So the guys that were building Snowflake was Speiser very experienced guy, sold companies. And, um, and, uh, Benoit and Thierry, they had gray hair. They, they built like Oracle database, right?

So these were smart guys and they were super passionate about what they were doing. So I was, I was just excited to be on, you know, working with some, some cool people. Um, the company culture. You know, I was employee 16. It was super small intimate. And I remember walking into my first day and, you know, it was just, you know, they didn't know what to make of me. I wore like a suit to my interview and they're all wearing like t-shirts and ripped jeans. Right.

And so I think, you know the walls were paper thin. They could hear everything I said. And they would make fun of me because they, they literally were PhDs in computer science. And I was the polar opposite of that. Um, so, so, yeah, it was, but, but I think, you know, overall, I was just super excited about people and market opportunity. That, that, that was my, those were my two key decision criteria.

Delian: [00:21:12] And just for sake of, you know, I think some people have an understanding of sort of what Redshift and Snowflake are. But let's say, how would the 2012 version of you describe, or sorry, uh, maybe 2013, uh, you know, version of you describe, um, the like market opportunity of, you know, Snowflake. Uh, to let's say your initial buyers and you know, why it was differentiated from some of the other, uh, you know, uh, options that they had out there.

Chris Degnan: [00:21:39] Sure. Well, so the way again, I just go back to where, the way I looked at it, and this is this quite, quite frankly, is how I recruited a bunch of people to Snowflake as well. And, and, and my process was, you know, when I, when I joined Snowflake in, in 2013, the enterprise data warehousing market was roughly, and this was primarily made of on-premise solutions from Teradata or Oracle or IBM.

And, and that was about a 10 to $12 billion market. And there was roughly about five to 7,000 enterprise customers spending 10 to $12 billion a year. Um, and then in, in, in, in, in February of 2013, Amazon had launched Amazon registry. And read. They signed up over a thousand customers in nine months. And this was public information when I joined Snowflake. Because I didn't start until November. And, and so there was no the, red shift was not taking over the enterprise data warehousing market.

There was, there was five to 7,000 enterprise customers. Let me tell you some of the large enterprises. They don't adopt technology early at all, even though they like they have these innovation centers, they don't do any of that. They're not, they're not innovative. And, and so they, they, they, but they like it to look at technology and pay attention to them. And so I, I re- recognize that there was this whole underserved market. Dating analytics is super important.

Whether you're a small medium business you know or whatever. You care about things like how, how many widgets are you selling? You know. What are your customers doing? How's your product working? All of these things, if it's, if it's web-based. And so, so that was really kind of what, what you know, peaked my interest in saying, okay, the cloud is coming. It's happening. There's 10 to 12,000 or 10 to $12 billion, five to 7,000 customers who are spending that. This market is a continuously growing market in the data analytics space. While Hadoop might've been super cool back then.

I was like, all right, this is, this is neat. This is a neat opportunity. There, there there's this tectonic shift that I don't, even though my technology may or may not be good, people are making the business decision to move from on-premise to the cloud. And it's my opportunity to put position Snowflake as this differentiated product, over all the other products in the market.

And that's, that's kinda what I, you know, what I, what I gravitated to, and that's kinda what, what it is ended up mattering. And then, and then wha- you know, what, what mattered even more is Redshift was the leader. And I was selling into, you know, the only, um, customer base I could sell to were people that were already in Amazon. So already in AWS, they had already looked at Redshift. And, and so I had to go and convince them that Snowflake was better than Redshift even though we didn't have a website at the time. Or I couldn't.

I had stealth mode on my director of sales of stealth mode company on my, on my, um, LinkedIn title. And, and I think ultimately, what, what, what got people excited was, and I, and I still have these emails. Um, where it's like, hey, you know, I would send out to people and say, "Hey, I'm the director of sales of a stealth mode, data warehousing company. Where we've built a, a cloud data warehouse, that's native to the cloud. We've separated storage from compute, and we can na- natively ingest semi-structured data."

Which is what primarily sits in Hadoop. Like click stream data. Like, Hey, you click on a web seat website. That's, that's Jason data. That's semi-structured data. Um, and so I, and I said, Hey, I'd love 15 minutes of your time and tell you what we're doing. And I, I first started on the large enterprise. And then I pivoted to people that were exclusively in AWS. And man, there was a huge, huge pain, huge pain. And, and we happened to s- I, I, found the, the vein. I found the issue. I tap that vein. And that's kind of the beginnings of, of where I started to see, see customer momentum. So.

Delian: [00:25:37] I assume these are more or less sort of like, you know, mid-market customers since they weren't at the point where they had like, sort of, they weren't old enough where they had massive on-prem systems from before. Or they hadn't maybe adopted, uh, you know, gotten to the scale yet where, you know, uh, they had adopted Redshift or anything like that. And I guess what was, how, how did you sort of, what was the, what was the pain point or what was the value proposition that really like, you know, stuck in their head that got them to like, really pay attention to you? Like, hey, you faced XYZ issue. And then what was the process of sort of like the challenger sale against something like redshifts. Or like, you know, how can you convince somebody when they're already on Amazon. Why they should have just basically like sign up for an additional, like Amazon service as opposed to using you guys?

Chris Degnan: [00:26:14] Yeah. So, so I, it took me a little bit to figure out. I mean, you know, you have to find me. I, I, the ICP ideal customer profile, and it took me a little bit to figure that out. Um, it had to be, you know, a company that was already in the cloud already in the Amazon, um, and, and, uh, that didn't care about things like security. So, so, uh, because, because we, we didn't have any security features really. You know, when we first started selling. So that narrowed it quite significantly around who I could go sell to.

Um, and it was, it really the, the people that had the, the biggest pain. Where, where the ad tech industry, um, in online gaming. So, you know, basically what happens is if, if you're, you know, an online gaming company, you know. Users are in your game, they're clicking on it. As the, as the, you know, IT organization or the CTO organization in the gaming world who you're selling to. It's, the, they're trying to figure out what their users are doing.

And they're trying to provide that user information back to the, the business analysts so that they can you know, send in promotions. So that you can buy more, you know, swords in your game or whatever it is that they're trying to sell you. Um, and what would happen is in, in, in the, in the way that the world was working back then. People would take that clickstream data and dump it into Hadoop. Um, or EMR, um, in the Amazon world or Cloudera or [inaudible 00:28:55] or whomever.

And then the business analyst would try to access that data. And in turns out that, uh, that's super slow. The Duke was slow, EMR was slow. People were like, man, this is I, I the business analyst would take them three to four hours to actually figure out what a game... What a, what a customer was doing. So their promotions would be hours old. Um, and, and so then what we could do is take that, that log data, that Jason data and natively ingest it. And take a process that took three and a half hours down to about a minute.

And, and so for us to do that, that was my, it wasn't even really data warehousing per se, that I was selling. It was really, you know, okay, you wanted to have faster insight into what your users are doing. And you had a pain around that. And like, I could take two technologies. Your Redshift environment and your Hadoop environment and combine them into one. And that was really it. And, and, uh, and so as I, as I figured that out, that was the kind of the pain that both ad tech customers had. And online gaming customer had. And that was kind of where I, where myself and the entire sales team really focused. You know, there was pain. And we focus on that pain.

Delian: [00:28:53] I feel like this is a classic example of, you know, your job as a sales person is not to sell the technology, right? Like there's PhDs in computer science. I'm sure it could have described what they were building. A Snowflake is like, Hey, we have extremely efficient like search methods and either the way that we store our data allows it to be super flexible. And so that any query comes in super fast versus, you know, the customer pain point is we let you run your promotions to the right customers.

You know, 10 minutes later, not, you know, four and a half hours later. Do you feel like the prior roles that you had sort of, you know, worked at set you up with those lessons learned on like how to translate from like technology into like customer pain point? Or, you know, what, how would you describe to, let's say somebody else who's starting off in a similar position in first sales role at a company. Like, what is the process from going from technology to actually like, understanding the like, empathetic, like, you know, here's the pain point that my customer is facing. And how to describe it to them in a way that like, is their process not my technology.

Chris Degnan: [00:29:47] Yeah. I mean I think the good part about when I was at EMC. EMC was a big, you know, acquire of, of new technology. So they'd acquire companies all the time. And you'd have to learn this technology enough to be dangerous. And so that one of the, one of the sales leaders, um, who was actually the, the head of sales at Nutanix now. Uh, you know, taught us, uh, was he said, be a student of what you sell. And, and, and I think that was, um, that's, that's really important. Is if you, if you like, and, and even as a sales manager, and now even, you know, at Snowflake we've hired sales managers who are just sales managers. And say run faster. But they don't actually run faster themselves. They don't understand what they're selling and they fail. And I have no respect for them.

Right? So I think ultimately you as a, uh, a sales manager, uh, an individual contributor, be a student of what you sell. And understand what you're selling. And, you know, I, I, the first thing I did when I showed up to Snowflake is I interviewed all, you know, all of the engineers at the company. And, and the founders, and I, and I have the notes of it, you know, still from this day.

And then I asked them, tell me, what's the, what are you building? And it was like them explaining it to me. I, I'm trying to like, translate it to how the heck am I going to message this to the customers. And, and so you, you learn both from the people that are building the product, but also from the customers. And you have to listen. Like a lot of salespeople want to go up and just put something on a whiteboard. Showcase what they're doing.

Hey, this is what we do. Or here's the PowerPoint. But if you don't listen to your customer and the voice of the customer of them telling you, this is what our pain points are. You're, you're going to miss the mark a hundred percent of the time. So I think, you know, for me, it is about understanding and then taking what I have learned about the product and applying that to their pain. And that's, that's, that's served me well, you know, at EMC. That served me well at, at, you know, all my, all my, you know, sales roles.

Delian: [00:31:42] During your time at Snowflake, was there a particular, let's say, like exercise, your process. That helped you either assess sort of incoming sales managers or BDRs, and sort of whether or not they were capable of being students of the product. Or either like an onboarding process that helped sort of make them into students of the, you know, product. Like I assume maybe with like a super low level, you know, fresh out of school, you know, SDR, you're fine. Teaching them on the job. Versus you guys are bringing in a director of the Northwest. You know, you want that person to already, you know, be capable of being a student. How do you either assess that? Or, you know, train somebody in that?

Chris Degnan: [00:32:14] Yeah. We, we did a, um, we actually made everyone take an assessment. And so I, you know, I, I took an assessment on all, all the people that the kind of the early employees book assessments. Um, and you just look for that sparkle in, in there [inaudible 00:33:42]. That's the thing is like, you know, do they react? How do they ask you lots of questions. If someone sits in an interview and they're, and they're just like, you know, bragging about their experience and not asking you any questions about what you're doing. About you. They are not curious about anything. Just like, hey, I want to take the next step in my career. Then dude, it's probably not going to work out. Um, and I, I learned that. Is like, hey, you know, I've even, you know, even guys that, that might, my first two, uh, BDRs that I hired at Snowflake are actually still here in the field now.

The field reps for Snowflake. And they, they were, both of them were, you know, tough to recruit. Because of again we had no website. Um, but they, but they, um, they were both super curious around what we were, we were selling. And, and then I modeled, you know, we had this test. This, this both, it, it, it tests both like your emotional intelligence as well as your, um, intellectual intelligence. And, and, and we had these kind of profile fit scores for each one.

And what made a good hire. And you could actually see it. And there was attributes from our BDRs all the way up to sales leaders who were good. People who, you know, were, were super trustworthy. Um, probably didn't work well because they, they, they would, they would believe everything they hear. And, and you have to find people that are very suspect of everything they hear. Right. And especially in sales.

So, so there's a bunch of stuff like that. And, and the assessments worked and that what, we did that for a long time. Um, and, and, and that, and that was something that we leaned on quite heavily on, on, on the process. And then there's things that you ask, you know, in the, in the interview process. I mean, one of my, one of the questions that I, that someone asked me. And what I kinda stole along the way was, you know, what's the biggest misperception of you. Um, and the reason I asked that is, I just want to know, do you have, self-awareness.

When you and I meet for the very first time, um, I judge you, you judge me 100%. And, and I want to know if you're actually aware of, you know, how I think about you. And, and people are, I mean, that, and you know, the other one is what's the toughest situation you've ever been in. And man, the crazy stories I get out of that, um, are, are pretty insane. Um, but, uh, but, but I think those two things I look for grit. I look for self-awareness. Um, and then, and then you want them, you, the best interviews I've ever had are the ones that people are just asking me, peppering me with questions about the technology. About the company. Not about their career trajectory. Like throw that aside. Why are you coming to this place? I want passion. And that's, and that's ultimately what you're looking for. So.

Delian: [00:35:05] I had those first two BDRs. It sounds like, you know, what was the initial scale-up of the team? Like you found this initial use case of like, you know, ad tech go plus gaming. Lots of data. Need fast decision making. Don't care as much about security 'cause whatever, you know, people's gaming data gets leaked. Like, was it just like let's focus in on this and like capture that entire market and like hire around this. At what point did you start to like, you know, expand the sort of like new business lines, but yeah. What was the, what was the scale-up of the sales team from, we'll say like zero to the first, like, you know, 10, 15 kind of 20 hires. Uh, what were the markets you guys were focused on. And what did that team look like?

Chris Degnan: [00:35:37] I think that the incredible thing about Speiser. Like and, and this is, he's, he's one of a kind that, you know in in that he had the guts, like the engineers were like, why the heck are we hiring a salesperson? Right. And, um, he's like, it's time. And we, they had no one had even tried the product. Right. And, and what, what he, what he said to me is Chris, you're not going to have a quota for two years. For two years. You're not going to make more than X amount of money.

You're like, I've always been the commission sales rep. You're not going to make X more than X amount of money for two years. Because all I'm going to have you focus on is getting customers. Even if it's for free, to try the product. And you're going to, those customers are going to teach, you know, our engineers, what's good with the good, bad, and the ugly is of, of, of the, of the company.

And so I think, you know, we spent a lot of energy just navigating, you know, you know, okay. We found Ad-tech. And then we begged them just to use the product for free. I think they tried it for, for six months before I got the first two customers. Which was according to media and white ops who were still customers to this day. To be, um, to be customers. But as, as we started to, as I started to get busy, so I hired an into the first thing I did is I hired an SE manager and an intern.

And, uh, the in- the intern Alyssa and I would just build lists. And I would spam customers. And what my, my kind of my, my goal every week was I needed to have eight customer meetings a week. And my, the way that I held myself accountable is I'd send an email at the end of every week to the entire company, plus the board of directors on my week. Hey, and I was ashamed if I had less than eight customer meetings. Um, and so between Alyssa and I, I started to get really busy. And then we hired Steve, my first SE. And we, we started to get busy enough where I'm like, okay. I need help.

And I, and I would start to travel. So then I need, I hired two, two BDRs. Two is better than one. Um, because you, you don't want one person to be your single point of failure. Um, and so I hired two, um, and they ended up both working out. But they would end up, you know, doing the spamming for me. They would end up then, um, listening to my pitch. And then they started to take over my pitch. And as, as I started to, as my calendar started to, you know, feeling where I had 15 meetings a week. I'm like this isn't scalable for me anymore. So then I'd go to the board and say, Hey, I need more people. Even though we hadn't closed deals, there was enough customers trying out the product. And so then I hired kind of my first three, um, field sales people.

Um, and, and then, and then we started to kind of go from there. And then going into the, like, into, into, so this was in 2014. Uh, you know, I started to bring on people. And then in, in 2015 is when we announced GA. Um, uh, mid in June of 2015. So, so we started to kind of scale the sales team from there. Because we started to see tran- you know, the transactions happening. The customers coming. The pain points we were solving. And we could actually, you, you look for productivity.

And the productivity numbers are, you know, does a... can this sales rep generate $250,000 a quarter in net new ACV, um, every quarter. And those numbers were the numbers that we looked at. And we started to scale the business from there. And, and, and we started to see that pipeline uh, building. And that's, that's ultimately the board. I, you know, I give the board a ton of credit. John McMahon is on my board. He's a sales leader. Um, he was super helpful. Bob Muglia was our CEO. He was you know, very supportive of us building up the Salesforce from there.

Delian: [00:39:22] I think one of the things that sales leaders struggle with, especially in these like early days is figuring out when to transition from like that. Hey, you know, Chris, you don't have a quota for the next two years. Like, you know, do whatever you need to do. Just get like, you know, people to start using it. To, Hey, this is starting to look repeatable. Like at this point we [inaudible 00:40:50] shouldn't need to start putting in quotas. Putting in commission structures. Like at what point did you feel like the, the process was repeatable enough where there's enough structure to this, that it made sense to introduce the structure versus before. That the structure would have just inhibited your ability to just kind of go out and discover what the process should even look like?

Chris Degnan: [00:39:52] Yeah. I mean, I think all the, so, so a 100% of 2014. Which when I hired people, it was like, you're going to be on an MBO. Like, I, I, I, I, quarter to four [crosstalk 00:41:17].

Delian: [00:40:03] Did you say the Salesforce I I actually don't know [inaudible 00:41:19].

Chris Degnan: [00:40:06] Management by objective. So, so you're going to say, okay, here's your objectives for the quarter.

Delian: [00:40:11] Okay.

Chris Degnan: [00:40:11] Go on, go on, you know, 50 sales calls. Go and get, you know, um, X amount of POC, even if they're free. Whatever it is. Like come up with what, what is good for the company. And then I'm going to pay you, you know, your bonus. Um, you know, based on you hitting those, those objectives. And every quarter we would change those objectives. Um, 2015 we walked in and said, okay, we now have customers that are paying us. We can bill them. It took us a while to figure out how to bill them.

Once we were billing them. We said, all right, what's the goal for the year? And then the goal was like, I don't know. $2 million or something like that. And so we kind of backed into the numbers from there. And we knew this was going to be a, a, a, a money losing situation. But, but going, going, you know, get net new logos who are using our products. Um, and, and make them referenceable, um, and have a super local quota. And we just kept building on that. And so we made the quotas attainable.

Um, no one was blowing it out. You know, there, the first year they were, um, at Snowflake the first two years. I mean, [inaudible 00:42:35], you know, a 50 person startup. There's no way you're as a sales person, you're going to make one. So in your first year, you have to, you have to believe in the company. Um, and then hope that, that you'll start making money in years two and three. Um, and you're, you've gotten enough equity to kind of get you excited to do the job. Those are the things that, that we looked at. And, um, but we started to scale the, the, the, the quotas from there.

Delian: [00:41:46] So you said that when you are first joined, Speiser said no way in hell. Uh, were you ever going to be like a VP or a CRO that he's going to, you know, hire people in above you. But lo and behold, you know, seven years and a month later, uh, looks like you, uh, you know, proved him wrong. Uh, how, how, how did that happen? [laughs]

Chris Degnan: [00:41:59] Luck. I don't know. Uh, uh, I, you know, I think, I think, you know, I, I, I owe a lot to, um, I think two people in particular. John McMahon was, um, on my board. And one of the reasons I, I almost didn't take the job was, you know. Mike, Mike had told me he wasn't going to be the CEO, um, for long. And I initially worked for him. And I said, Mike, I need someone on the board who cares about me.

Um, when I joined, joined Snowflake and, and, uh, he's like, well, who's that? I'm like, well, a guy like John McMahon. He's like, I know John. And what are the next thing? Mike puts John on the board. So it's like, okay, objection handled. And, and taken off the table. Um, so John is, is just a great sales leader. And he unders- and he seen so many um, good things.

John's still on our board to this day. And he gave me such great guidance along the way. I learned so much from him. And the other thing was, you know, uh, Speiser hired Bob Muglia. And, and Bob is just this world-class human being. And an incredible products guy. And, I mean, Snowflake would not be at the company without Bob. And, um, he, he and I developed a very close relationship and a very trusting relationship. And I think he always, there was pressure from for on Bob to bring in people at, at certain times over me. But we were crushing it. And Bob was like, you know, Chris is hiring great people. He'd go to John and say, John, what do you think? And he's like, well, he's doing well. And I think it was kind of like, I had to control what I can control. Going back to what I said before is don't miss my numbers.

Right. And then, and so I would focus on, on exceeding every time. And, and then, you know, when it was appropriate, I'd say, "Hey, Bob, um, you know, I think it's time, you know, people are looking at me as the VP of sales. I'd like to have that as my title." And he said, well, I'm not going to give you more cash or equity, but you can have that title. I said, fine. I'll take it.

Um, and then, you know, I then had to go out and hire, prove every step of the way. Can you go and hire someone in Europe? Then I had to hire someone underneath me to run North America. And those were big tasks as I started to do that. They said, okay, you know what? You've solidified in, in their eyes and the board of directors eyes and Bob's eyes. And everyone's. That you've, you've, you've solidified that you can scale with this company.

And, you know, candidly, when, when Bob left, even Bob says he's, he's like, I'm surprised you, you, you survived. Um, I didn't, I mean, Frank Slootman is a, a legendary, uh, CEO. Um, who's, who's the bad-ass and tough guy. And I thought there was no chance that I would, I would survive, uh, you know, Frank. And, and so, you know, again, uh, you know, all I, I really focused on was doing my job. Being very upfront and honest.

One of the things that I am is, you know, how I think. I'm very, very much, um, upfront about that. And that's kind of how I've always been. So being very direct with, with senior people. I think they appreciate that. Because they think senior people, a lot of times, people manage up to senior people. And I, I, I find that people manage up to me now, and it's hard finding out the truth.

Like people want to like, kiss your, kiss your ass. And man that's not, not great. Because your job is to actually figure out what's wrong. And, and fix those problems. And if people are saying, everything's fine, everything's fine. It's not fine. Like, don't, don't lie to me. And I think that's how I, I always have operated with, with, with Bob, with the board of directors with, with Frank. I, I'm not afraid to tell him where I think there's, you know, challenges. Frank is not afraid to put me right back in my you know, seat and say, shut the heck up. But that's okay. I, I'm okay. You know.

Someone telling me I'm wrong. Uh, you know, and, and I have people that work for me that tell me I'm wrong all the time. And they, they're right. You know, more often than not. I, and I have to be self aware enough to know that I don't know everything. I'm always learning every day. But I think that's the thing is coming with humility, coming with honesty, um, and, and grind it out, man. Just go out and do your fricking job. And, and, and, and, and, and worry about, the other things that the next six years of your life. Worry about that later. Worry, you know, go and make sure the company has revenue. Has happy customers. Has a good strategy. And that's, that's, that's my job. And that's what I focus on. So.

Delian: [00:46:22] I feel like John [inaudible 00:47:37] one of those sort of like legendary, uh, behind the scenes, like sales mentors, or people like, you know, it was only, you know, just looking him up. And I didn't realize that I've always heard this star trope of just like, uh, uh, you know, from like half- for like 2011 all the way through like, even like, you know, in recent years. It was like, if a person lasted more than a year at blade logic, then you know, you can hire them as like a VP of sales. [laughs] I guess like, maybe my question is, I mean, maybe why did, why do you think that's the case that, that, like, why do you think he's been just such a phenomenal, like, you know, sales mentor for people like yourself and many, many others, it seems like.

Chris Degnan: [00:46:55] Well, I think it's hard because, I think the, you know, it's interesting is, is, is a lot of, there are a lot of folks out there that are heads of sales that, that worked for John. But a lot of them try to take John's. I don't want to call it stick. But the way that John talks and is in the interpreted probably the wrong way and become assholes quite frankly. Um, and, and John is not an asshole. He's very direct.

He's, he's very aware. He'll ask very tough questions. And he's looking for you to be very direct and honest back to him. And I think what's great about John is, he's not an asshole. He's a very tough guy. And I'm okay with tough. And I like tough, right? Is I love, I want to know where my blind spots are. And John will tell me, even to this day. Like before board meetings, he's like, hey, Degnan, uh, you know, he calls me up, he looks at the board deck and says, okay, what about this, this and this?

And we go through it every single time. And he's like, you're going to get hit here. You're going to, and so he's looking out and he's telling me if, if from his standpoint, here are the things that are concerning to him. And if they're concerning to him, they're going to matter to the investors in the, in the board of directors and whatever. And man, it's always been really, really good coaching. And so I think John, John is a, a very much behind the scenes guy.

He'll, anytime I, I call, he'll either text me back saying, Hey, I'll get back to you. And, you know, I'm just in the middle of something. I'll get right back to you. But he calls me back a 100% of the time. He spends time with me. And he, and he's thoughtful around the advice he gives. So John's, John's, um, a legend. Um, he has created a, uh, just a, a following of amazing salespeople. Um, and you know, I'm certainly lucky, very lucky to have been able to work you know, with John, um, at Snowflake, for sure.

Delian: [00:48:41] Snowflake is uh, interesting company where most of the time, I feel like the companies that get revered in Silicon Valley tend to be ones that are just like, you know, founder led CEO. From, you know, day one and through IPO and beyond. And I feel like in a lot of ways, stuff, like I said, quite the opposite of that, right. You know, VC incubating it as CEO. Um, to product focus to CEO. To now it feels like, you know, my intuition is Frank is a very sort of sales and go to market like, you know, focused CEO.

I guess, how have those, like various transitions, you know, been. And what gives you confidence in, you know, Snowflake being as world changing of a company. Despite the fact that typically people, I feel like in Silicon Valley think, Oh, in order to be a world changing co- changing company, you need to have the you know, quote unquote founder led CEO.

Chris Degnan: [00:49:22] The founders of Snowflake matter in a, in a meaningful way. Um, they are incredible human beings. And they set tone for culture and they are incredibly incredible engineers. And I think they set the bar so high for the engineering team. Um, so we're super lucky. And [inaudible 00:50:54] I just can't tell you how lucky I am to work with those guys. The humility they have and, and the, the brain power between those two, um, is just amazing. They've created this world-class product. Um, what, what, what was amazing about Bob was this, you know, he is a product that he invented our pricing model. It turns out, you know, consumption-based models were not exciting to companies. Everyone wanted to be a SAS company. If you go to look at any SAS company today, they are trying to transition their pricing model to consumption-based. That, I mean, that is, that is happening across Silicon Valley.

Um, and across the tech industry. Bob, I would say is a pioneer in that space. Bob was so critical. I remember he would stand in front of [inaudible 00:51:40] company um, meetings every single week. And he would have the entire company and entire engineering team sitting there with the, what will it take from an engineering standpoint to get us to GA? And if an engineer didn't deliver on a, on a piece of a feature set, the entire company would know about it. Because we would be in the all hands and be like, Oh, you know, Joey, over here didn't you know, do his job. Right.

And I can't go in and sell the product now. So it's funny talking to some of the founding engineers to this day. They're still like, wow, that we would have never got to GA without Bob. And Bob's vision for what Snowflake is even today is, was spot on.

Right? And, and, and the stuff that we're doing, we're transitioning. We started off as this cute data warehousing company. And really we're now this kind of cloud of clouds. This data cloud. And what Frank brings to the table. And along with his super important business partner, Mike Scarpelli, our CFO. They bring credibility to wall street. They also, Frank gets it, man. He, he like his uptick on what we're doing was phenomenal. And he transitioned service now to a platform company.

And really that's what he's doing with Snowflake. Is transitioning Snowflake to this platform company. And what excites me about Snowflake is that we have this very, very differentiated technology. And it's going to take a long time for our competitors to catch up. And then you have these founders who are continuing to add amazing feature sets that are, that are kind of going after other magnificent companies. That we're just going to say, Oh, it's a feature set of Snowflake.

And so all of a sudden you're going to have people developing applications. The next generation startups will be generating applications inside of Snowflake. And all the data will sit inside of the Snowflake. And we'll be a cloud on top of any cloud there is around the world, to do analytics. And analytics matters at the board level. And so I'm super fired up. I couldn't actually be more excited about kind of where we're going as a company.

Um, and I, and I think Frank gets it, man. I don't he's, he's no nonsense. He's a no bullshit guy. And he sees through it and he's quite upfront and honest. I'm super pumped on where his vision for the company. And I, you look, I mean, I, you know, I have a guy working for me that's worked for Frank in two other companies that service now in a data domain. You know, and, and, and he said, he's never seen Frank more excited about a company than he is of this company.

And he's like, and wow, what a great job he did at service now. What a great job he did a data domain. But man, this is pretty awesome. So it goes back to what I said in the beginning. It's you, you certainly wanna buy into market opportunity, but you also buy into people. And I bought into the Frank Slootman, Mike Scarpelli show. Because those guys understand and they get shit done. So that's all I can ask for my CEO is to be a strong leader who gets stuff done and gets it and he does. And so I'm fired up. And I think the sales team in our customer base, and when I talk to the customers, the energy from our customers around what we're doing is super, super, super exciting.

Delian: [00:53:47] That's awesome. So you've gotten through some, like, uh, let's say, company transitions in your prior careers. Whether it's been acquisitions or things like that. I'm curious how you compare and contrast that versus Snowflake now going through the IPO process. Obviously extremely well received by the public markets. But have you seen any sort of meaningful shift in terms of how the company operates, where maybe before obviously the price per share was a little bit more opaque and not as regular versus now, obviously you're managing to a daily stock price. What have been like the biggest changes that have happened over the past year from private to public.

Chris Degnan: [00:54:22] It's customer sentiment. I think that's probably the number one thing is, you know, when you're, when you're a database and, or, uh, you know, in, in people are building the kind of the, we have some of the biggest companies in the world building their next gen applications on top of stuff. And so if you're betting on Snowflake it scares the crap out of you. I was on the phone the other day with one of the largest companies in Japan.

And they're their you know, most important technologists, at the company said, Hey, here's our future state architecture and stuff like smack dab in the middle of. And you know, prior to that, everyone would say, Oracle is going to buy you. You know, IBM is going to buy you. Whatever. And we'd have to like overcome those hurdles. What's, super awesome about being in the situation we're in as a public company with a high market cap, is that people know that. I mean, dude. They're not many people that many companies that can buy us.

And they look at Frank and Frank has no interest in selling the company and super energized in what he's doing. So for me, it is, it's the validation that we're a real company. We're here to stay. We're the next big tech company. In, in really companies are, are super fired up to, to kind of partner with us. And that's the amazing part is, you know, I'm, we're, I watched Frank come in and we're, he's talking to the most important CEOs in the world. And, and, and it's like, they listened to him. And they're betting on Snowflake. The most important tech companies that are not competitors are also betting on Snowflake. And they're, they're plat- re-platforming their, their next gen, you know, applications on top of Snowflake. I mean, man, that's what the being public that and having a big market cap has, has given us. Is credibility. And Frank helped with that credibility. Mike Scarpelli helped with that credibility. And, and I gotta give you know, Speiser credit for that. Because he saw the potential of Snowflake. And, and he always used to say to me, when we were, you know, had no revenue. That we would be a 100 billion dollar company someday. And I thought he was on crack. Um, but, but it turns out he was right. So it's pretty good.

Delian: [00:56:38] Amazing. Well, Chris really appreciate you taking the time to hop onto the podcast today. It's amazing to hear these stories of, uh, you know, Speiser and Slootman and all these, you know, truly the greats of Silicon Valley, including yourself obviously.

Chris Degnan: [00:56:51] I bet I look, I'm, I'm better lucky than good. I've been along for, for the ride. And I, and I feel super fortunate and, you know, I, you know, to work with those, those folks like spies or like Scarpelli, like, like Frank, like Bob man, McMahon. There's just been so many awesome people that, that have made my journey possible. And, and, and I feel super fortunate to work with those folks. So it's been an awesome ride. It's not over. And I'm, I'm super excited and energized to keep doing it.

Delian: [00:57:21] Thanks for listening everyone. If you'd like to support the podcast, please sign up for a paid sub-task subscription. Which we use to pay for transcripts, mics and other improvements. If you have any comments or feedback on what kinds of questions I should ask. Who should come on the show or anything else. Please do let me know. Have a great rest of your day.

Operators Ep 17: Ian Fliflet (OfferUp)

  
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Ian Fliflet is the Chief Growth Officer at OfferUp.  Prior to joining OfferUp, Ian was the General Manager at GameHouse, a computer games company.  He also spent 10 years at Real Networks, a digital media company where he worked in Corporate Development. 

In this episode we talk about Ian’s motivation for moving to a higher risk company, why he finds that focusing too much on the minutiae can result in missing big opportunities, and his largest M&A deal to fall through. He also shares his thoughts on the tech space in Seattle back in 2000, how the metrics were able to show him that OfferUp was something pretty special, and why creating value for customers is still the biggest motivator for him.

I hope you enjoy the show.

Full transcript available.

Operators Ep 17 Transcript

Delian: [00:00:00] Hi everyone. My name is Delian and I'm a Principal at Founders Fund, a venture capital firm based in San Francisco. This is Operators where I interview non VC, non CEO, non founder operators that make the startup world go round today. I'm interviewing Ian Fliflet, Chief Growth Officer at OfferUp. Prior to joining OfferUp, Ian was the General Manager at GameHouse a computer games company. He also spent 10 years at RealNetworks, a digital media company, where he worked in corporate development. I hope you enjoy the show. Cool. Well, yeah, Ian, thanks so much for taking the time to be on the podcast today.

Ian Fliflet: [00:00:47] Very nice to be here.

Delian: [00:00:49] So maybe to backtrack a little bit to that earlier in your career, you started off your career as a business analyst at a, you know, RealNetworks, I believe it was called-

Ian Fliflet: [00:00:57] Yeah.

Delian: [00:00:57] ... which is, I guess, somewhat related to sort of what you studied, um, at University of Washington i, information systems. Uh, can you talk to us a little bit about sort of what RealNetworks was, um, how you ended up spending sort of over 10 years there and how you ended up as like the director of a, you know, Corp dev?

Ian Fliflet: [00:01:12] Yeah, for sure. So I graduated in uh, from college in June 2000. So about a month and a half after that first internet bubble burst. Um, when I was at the fall of my senior year in college, everybody's interviewing at all the consulting firms, uh, getting their jobs lined up. I never got any of those jobs. I'd never passed any of their interviews. Um, but what happened was it, as the spring came along, uh, anybody who had a job ready for them, uh, I was getting their start days delayed, uh, and it became really hard just to frankly get a job.

So, uh, the tech space in, and, uh, Seattle had, you know, exploded in the first, the first round of the, the internet. And there were a few companies out there. The Amazons, the Expedias, uh, the RealNetworks of the world back then, uh, were the, were the names. So I was applying for any job that I could get. I applied for actually an internship at Real. So, uh, RealNetworks, uh, for those of you don't know it, uh, they invented streaming media in the late '90s, uh, and back then to listen to, or watch any video online on your computer, you had to download what was called the Real Player, uh, to watch it. Um, so it, it was an interesting opportunity. So I took a job making 10 bucks an hour as a bit as a business analyst because it really, I couldn't get any other job and, uh, you know, I need to make some money, so I didn't live with my parents.

So I started off at Real, uh, and I got, um, I was in the consumer division. So Real had two divisions, uh, um, um, systems divisions, what it was called and they created the servers, uh, that websites needed to encode software and play video. And then the consumer division. So the consumer division was what managed, uh, the Real Player software and distributed it. So that right there, it was, I just kind of lucked into high volume software distribution and, uh, and, uh, uh, because the Real, the Real Player had, um, there was like 2 million downloads of a day of this software. Uh, at that, at some point we had 400 million registered users on the platform, which, uh, was kind of suspect since we didn't have 400 million people on the world at that point on the internet, but I, I got thrust into figuring out how to get people to download a free software and premium software.

Uh, the fun part there was that I was given a lot of, uh, leeway to come up with ideas and start testing them. So right off the bat testing button sizes, button colors, uh, two-step processes, order flow, uh, all that, all of that to try to optimize funnels. And that was my kind of indoctrination to high volume consumer software. So what I've done since then, and it all just started because I, I kinda got, I just happened to fall, uh, fall into it, an internship at Real, um, back in the day.

Delian: [00:04:05] It's funny. I feel like nowadays the types of roles that, uh, are responsible for yeah, optimizing button sizes and things like that definitely aren't called like business analysts anymore-

Ian Fliflet: [00:04:14] [inaudible 00:04:15], yeah.

Delian: [00:04:14] ... uh, assessing how the terminology has shifted. But yeah, obviously that's basically what, you know, honestly, most of growth is nowadays.

Ian Fliflet: [00:04:20] Yeah. Just kind of figuring it out, figuring out what's works and figuring out what the, what the levers are and testing them.

Delian: [00:04:26] And so I guess, yeah. How did the transition happen from, you know, it sounds like a, roughly six years in or so, uh, started got the promotion to like Director of Corp dev and spent about five years on that.

Ian Fliflet: [00:04:35] Yep.

Delian: [00:04:35] Um, how did that sort of promotion come about and then, uh, yeah, it would maybe love to hear a little bit about the corporate development. Like, were you sort of given a mandate of here are the types of companies we're looking to acquire or was it more companies coming to you? Um, what did that kind of look like?

Ian Fliflet: [00:04:47] Yeah, so that oppo, opportunity came about because, you know, like, um, a lot of people that far in four or five years into your career, you're looking at, "Okay, should I go to B School?" That was the thing to do. Um, so I was, you know, taking the GMAT and looking at those types of opportunities, but at the same time, Real had a big antitrust settlement with Microsoft, uh, for about, it was about $750 million, all in which in 2006 or '07 ballpark, that was a lot of money. Uh, and it stemmed from the Real Player, um, and, uh, windows media player back in the day, um, and, and, and relate it to how Microsoft leveraged that their operating system to grow windows media player at the expense of the Real player.

So it was a lot of money, uh, uh, a guy that I had gotten to know a guy named Steve was running corporate development, and, uh, he had an opportunity. So I jumped in there, uh, the edit for us was to figure out ways to smart, smartly, invest those dollars because given the relative size of the company and how much cash we had, we couldn't hold it, um, for too long, um, 'cause our enterprise value actually wasn't, it wasn't that high at the time. So we did a bunch of different things. So Real, we had at, at that point, a bunch of different businesses, um, that was six or seven years after I started.

So we had the Real Player business. We had Rhapsody the music subscription business, which was the first streaming music, uh, on-demand service. Uh, we had a big games, business, casual games for business that started out was called Real Arcade and then it morphed into what was called GameHouse. So we had a bunch of different businesses that we could, um, bolt, uh, acquisitions onto. So, uh, my, my induction and the Corp dev teams either was to go figure out, uh, and identify opportunities that fit well with our current businesses, where we could leverage the distribution. And so did a bunch of acquisitions of smaller, casual games, businesses, where we, uh, acquire con, content games, uh, teams, uh, studios all over the world.

Uh, we would find music streaming services to, um, bring in to combine with Rhapsody. We, we, uh, merged with Yahoo Music with their, uh, streaming service. We did a acquisition/joint venture with MTV where we brought in their streaming service, uh, and consolidated all of those. Uh, it was just a bit ahead of its time. Um, streaming wasn't quite as, as a, as it is today, there was, that was still back in the, "Are people going to pay for music at 99 cents forever and ever to own it, or are they going to ever, you know, just pay a subscription?"

Uh, so, uh, the thing about Real Networks was it was in a bunch of different businesses. So from a corp dev perspective, it was opportunity to, um, look at all kinds of different, uh, industries. Uh, what I got out of that, which kind of set me up for my next role is my role in corp dev was to, um, it was to look at a bunch of the smaller opportunities, a lot of the time. So I went to all the, early on went to the YC Demo Days, um, back in the day in that 2008, '09 timeframe. Uh, spent time with a bunch of the VCs in the Bay Area. Some of the early, uh, angels, spent a lot of time with Jeff Clavier back, back in the day when he had Soft Tech, which was really early on.

Um, so that was really fun. And that's when I got the opportunity to get exposed to startups and small teams that were nimble and able to make a big difference quickly. So brought in a few of those smaller startups where they had run out of runway. Gave them opportunity to work with Real and try to build something at Real. So, yeah, Corp dev is an amazing experience in terms of taking you from working inside a company and having one perspective. So getting exposed to different perspectives and different people, and people really have that entrepreneurial drive that, that founders have that in a big company people always say like, "Oh, you know, I'm a founder and we're just like a startup, you know, I'm at Google, I'm just like a startup."

Or we even used to say that at Real. The reality is you can't ever replicate everything about a startup, unless you're actually at a startup where you don't know how you're going to succeed. And failure means that you lose your job. So, yeah, so that was a really neat opportunity.

Delian: [00:09:20] Do you have any particular, I guess, like a favorite acquisition deal or maybe one that didn't quite make it across the line, but was close-

Ian Fliflet: [00:09:26] Yeah.

Delian: [00:09:26] ... at that time?

Ian Fliflet: [00:09:27] Um, I, the best one was one of the first ones that I worked on, um, was, uh, we were, um, so PopCap Games, which is the maker Bejeweled, uh, had a game called Zuma. And then of course, Plants vs Zombies. So RealNetworks had the distribution platform for all these early casual games. And PopCap was, uh, one of the most popular, popular games distributors on the platform. And at that point, some other, uh, uh, uh, distribution channels had opened up Big Fish Games, which was started by one of the early, uh, product managers at Real in the games business, um, was, was also getting a bunch of traction as well.

But, um, Plants vs Zombies and, and, uh, Bejeweled, Bejeweled was the big one act, actually at this time. Um, they were all, this was all on desktop and they were just starting to build games on the iPod. So I phone wasn't even a thing at that point. Um, and we came really close to acquiring them. Uh, we, uh, I think the deal was the term for something like 130 million upfront, uh, and with like a $10 million earn out, so $140 million acquisition. And, uh, when it came down to came down to it, um, you know, way above my pay grade, uh, we were negotiating really hard over that earn-out like, you know, the difference between 10 and 20 million, um, obviously in retrospect it was penny-wise and pound-foolish, but, uh, the deal blew up after eight months.

Um, uh, and it, it felt really, it felt like a failure and it was a failure, uh, even more of a failure in retrospect. Um, and that was kind of the first, my first experience of, of, uh, learning that, you know, that, um, if you don't have a big vision for these types of things, if you're too focused on the minutia of getting a deal done and worrying about stuff like that, you're gonna miss the really good opportunities. And that's kind of my biggest takeaway for my Corp dev time there is, uh, great companies are not sold. They're not the ones that you're getting pitched by the bankers, uh, um, incessantly. They're the ones that you go find, uh, that you're, and, and you have a vision of their future that generally doesn't align with everyone else's, um, and you take that risk. So, um, I think we can probably, you know, you're involved in this business more than I am, but you probably see seeing that be true more often than not for the really, really deals.

Um, so that's a hard thing to do because you have to be aggressive, something we weren't ever willing to do. Um, which, you know, started that started to get me, uh, in the mindset. You know, albeit way before I left of like, "Hey, I want to go try one of those... Um, I want to try an opportunity or take a career risk, um, at some point in my career, um, that I could, that just can't be replicated at a big company."

Delian: [00:12:20] And yes, I guess, in terms of taking a career risk, at some point you sort of left RealNetworks. I can't tell if GameHouse was sort of a subsidiary or was sort of a completely new company to think about like bought back in later, but yeah, I guess how did you sort of make your way to GameHouse? What did you work on there and then obviously eventually into OfferUp?

Ian Fliflet: [00:12:35] Yeah. So GameHouse was just the new name of the, uh, RealNetworks as business unit. Um, it was one of the companies that we had acquired actually locally in Seattle. Uh, so, uh, a friend of mine had come back to Real and he had been gone for a while. So I run the games business, and he was just looking for people internally who could help him kind of figure out what to, what to make of the business, because what was at that time, we were, uh, iPad and iPhone were just launching like V1 because Real had a bunch of content, they were early partners there.

Um, and then Facebook games was, was blowing up. That was back in the day of Zynga. Um, Zynga, uh, Poker was back. It was the first one. It was even before Farmville. Uh, and we had, so we had some content. And so I was, uh, it's not on my resume, but I was Director of Strategy to start out. And it was basically what kind of game should we build and how should we build them? Uh, so I spent six to eight months on that, and then he just said, "Hey, why don't you run this business? I have a guy who runs the studios, you guys partner up and build these games." Um, so I was just given the opportunity to figure a bunch of stuff out.

Uh, I owe a bunch, uh, a bunch to him. His name was Matt Hulett, he's actually the President of Rosetta Stone now. Uh, but he, he basically gave me more opportunity than I deserved. Um, and I was able to, uh, leverage a bunch of the learnings that I've seen in the past in terms of test, test and learn, uh, iterate, um, you know, uh, and figure out how to make, uh, a game work. So, uh, we were building games, um, primarily on, on the early versions of, um, uh, iPod, iPads and iPhones and on Facebook. So that's when I got my, um, exposure to the Facebook. Uh, it was right when Facebook adver, advertising opened up, so started spending money on Facebook to acquire, uh, users and figuring out how to create positive, uh, LTV to CAC relationships, um, cohort based analytics, uh, which I had developed an understanding and kind of affinity for in the music subscription business.

Um, so then I really started to get the opportunity to test, "Okay, how do I, what do I say to people? What type of ads do I create for people? How do I follow those users into their first experience, a product what's success look like? When do you break even?" Basically the, the, the, um, the beginnings of how all mobile businesses are operated today, if they're operated well, and then melding that kind of, we called it back then combining the heart and the math. So the math was all the, how do you measure the, um, the, uh, CPC, the click-through rate, the, uh, first-time user experience, LTV, all of that. And then combining that with the heart, in terms of understanding what resonates? Like what's a good user experience, um, uh, for a game, like what's the first thing that people need to do?

What do we want to optimize for what produces the user delight? Like what produces, um, the, uh, the, uh, success for the user that gets them to the point where they'll actually say, "Hey, Hey, but Hey, Hey, um, Delian you gotta try this game out. This is awesome." You know, so how do you get, how do you get to a word of mouth? So, I was just given the opportunity to, to learn all that stuff on the fly. Um, again, you know, um, failed, failed a bunch, um, but that was kind of the basis for, uh, jumping off into, uh, which ended up being a few years later and to OfferUp.

Delian: [00:16:02] Nice. So, yeah, I guess talk to me sort of, how did you discover OfferUp, what was sort of the, you know, early responsibilities? Yeah, it sounds like was had a pretty GM role at the end there with GameHouse and so were covering right different functions. Sounds like, sort of similarly, when you hopped into OfferUp is there a variety of different functions? What was like the scale of business? Um, and you know, what were the main things you were sort of working on early on?

Ian Fliflet: [00:16:22] Yeah, so, uh, OfferUp was... Uh, to go back a friend of mine who was, uh, who was actually the guy at RealNetworks who started the games business at Real back in 2000, a guy named Andrew Wright. He was an early investor in OfferUp, uh, angel investor. So, uh, I was actually contemplating going to work for him. Uh, you know, as a junior guy, who um, looking at investments for him. Um, but he, uh, he just, he couldn't, he couldn't get to that point where he would want to take on an employee. So he said, "You gotta meet Nick who's, um, who's our CEO, uh, OfferUp would be a good fit for you."

Because at that point OfferUp was there were three people, four people. So it was Nick, uh, who is co-founder, Arean who's, uh, who was our CTO, and then, um, uh, web dev and, uh, and they, um, a marketing manager. So, um, I just started talking to them and, you know, I was looking at a few other opportunities, but, uh, OfferUp was super open in terms of, uh, opening kimono in terms of, uh, of their metrics and their business. So I approached it just like I would a Corp dev opportunity, um, and went through a diligence process. And, uh, they were really dialed in from the early days, in terms of event tracking metrics way beyond any other four person startup I'd ever seen.

Uh, and the numbers were so good that I was, I was pretty convinced that they were double counting things because, um, uh, the retention metrics for through the roof, you know, had the classic, like smile curve in terms of retention. But, uh, really, really small scale. Really low scale. So this was, you know, we had like 2000 DA use a day when I was going through this in the summer of 2013. Um, and they were looking for someone to help with the marketing. So, you know [laughs]... I never considered myself a marketing guy. I just consider myself someone who kind of figured out how to make things work and grow.

Uh, but I took on that title. So, um, jumped in, it was, you know, exhilarating, I went into an office where there, you know, 600 square feet and there were five of us jammed in there. Um, but I knew right off the bat, the metrics were indicative of something really special. So OfferUp back then was... Actually have the metrics right in front of me because it's on the same dashboard. So, yeah, so I started in September 2013 and we had 5,500 daily active users on the app. And 80% of them were in the Seattle–Tacoma–Bellevue area. Uh, and they were spending some money on Facebook, but, you know, pretty inefficiently.

Um, so, uh, I came in and tried to said, "Okay, well, what can we do here?" And this was, it was the days of Facebook marketing and on mobile, nobody was targeting locally. Uh, I don't remember anybody targeting locally other than us. And you could just aggregate zip codes, cities. So we just experimented all day long with, uh, targeting in Seattle. Um, and then we quickly launched Portland, Oregon, and launched just means we launched a Facebook campaign [laughs]... and got people using it. Um, we started, and then we started to develop metrics in terms of what success looked like in cities.

So, okay. What, what, what do we need to acquire in terms of supply? What do we need to acquire in terms of demand? What can the, uh, acquisition strategy look like? What does the bidding structure look like? How quickly do we need people to, um, post their first item? Um, what, what, what is, what does good look like? Um, and so we just started iterating on that, uh, the app itself, this is the app back then, again, they had instrumented this thing with a bunch of levers to, um, that I could pull. So I could say, "Okay, show items within five miles, 10 miles, 20 miles, um, uh, put, put someone through this experience first, put someone into, or put someone in the posting experience first, put them into the category."

We could experiment with all those types of things, combine that with our acquisition at the top of the funnel, in terms of targeting the right users. And, um, we started to see success and it was, you know, it was probably the most fun time of my career because, uh, we were just watching, um, a product just to explode. And it was at the root of, it was just like an, a product experience that created success for people as buyers or sellers. Uh, and then we took that and then what happened was people started telling their friends about it. So we'd look at what's the ratio of the, uh, the organic installs to the paid installs in that accelerated. So that was the beginning, that was the beginning of basically, "Wow, OfferUp's going to be something here." Uh, and I was just doing the marketing.

So, um, pretty quickly after that, uh, you know, the word started to get out amongst investors and Nick started to go out on the road, um, to talk to people. Um, and, uh, you know, he, he had done a bunch of series a investor, uh, getting his series a done, uh, and, uh, the guy who led that it was a guy named Josh Breinlinger he's, um, Jackson Square Ventures. Um, and that took Nick a long time because nobody believed that, um, a horizontal marketplace was going to work. Um, it was all, everything was go all vertical marketplaces. Um, so he had gotten the Series A done on some very, very, very early metrics. And then basically, you know, uh, an investor who believed in him, um, but now we had a bunch of metrics.

So Nick went out there and he talked to a few people and he'd come back to the office and he'd say, "Oh, they're asking all these, all these data metrics like retention and everything." And I said, I said, "Okay, well, I can help you with that. You know, I've done that before." So I started to build out models, um, to, in terms of what it could look like, uh, started to build out, you know, our P and L. So then I, uh, at that point I quickly took on finance, um, hired an analyst to start building out kind of business operations, um, predictive models, uh, leveraging actually the actual same models that I had used in the games business. Um, and then we went out on the road and, um, uh, that was kind of later in 2013, early 2014. And we presented our metrics, you know, on the city by city basis with a plan to expand into other cities.

Uh, and that's when Andreessen Horowitz came on board, um, because, uh, you know, the metrics spoke for themselves and it can, I could have, uh, um, been any, any two jokers up there in front of everybody, but the metrics were, were, uh, were beautiful. Um, you know, everything you'd look for in terms of, uh, potential for scale, um, there easily, easily, you could easily extrapolate themselves. Uh, from there basically we got, we raised money from Andreessen and we're able to keep going on that, uh, um, uh, growth, growth trajectory by iterating. As we went into every new city, we would come across something new in terms of positioning, whether it was on the marketing side or the funnel side, or the, the repeat user, you know, user experience. Um, and it was off to the races for a couple of years after that we flew under the radar, uh, had, uh, had no competition.

We, we didn't, uh, draw any attention to ourselves, uh, purposely because we knew it would be, um, copied quickly. Uh, and it eventually was first by a couple of smaller shops, um, then by Naspers, which, uh, they had created Letgo, uh, and then eventually Facebook Marketplace. So, um, that was, I can jump in more into the details of that and the tactics. Um, but that, that was kind of the story. So I, uh, I was in the right place at the right time. I took an early career risk, um, uh, knowing that it may or may not work and, you know, came across an opportunity that I'm thankful for.

Delian: [00:24:16] I mean, you've got, I guess, a couple of macro questions that I'd love to dive in and sort of one by one, maybe the first one, given that you just sort of touched on it is, you know, I think a lot of let's say, uh, early employees at like a VC backed company, especially if you go through something like that, where it's like, you know, Series A, you know, it gets done early on, Series B gets done by, you know, top tier firm, attractive price, attractive terms, but then yeah, you actually have to go like build the business and scaling to it.

And then you're going to start to have like ankle biters. And that can obviously get worrisome, I guess, like, you know, what, what, what kept you guys focused? Was it still like, did the metrics continue to grow smoothly or did you start to see some real hiccups that you started to see sort of CACs go up competition, make liquidity in your marketplace a little bit more difficult? How did you guys start to sort of like, you know, deal with that? Um, and then, you know, maybe even, you know, even the risk if you're willing to just sort of chat through the most recent transaction with like, sort of like how, how-

Ian Fliflet: [00:25:04] Yeah.

Delian: [00:25:04] ... that sort of came about, um, and obviously given your Corp dev background, um, you know, how you guys sort of like, thought about that, the synergies of a, you know, I assume you were pretty involved in that transaction, given your-

Ian Fliflet: [00:25:13] Yep.

Delian: [00:25:14] ... background and where you focus on and sort of how that came to be, would love to hear about all of that.

Ian Fliflet: [00:25:17] Yeah, for sure. So, um, so, uh, first mover advantage, uh, is a beautiful thing. Um, one of the things that we discovered was that if you get, uh, early users, they're going to be, it's the classic adoption curve, the early users are, um, you know, your, your, uh, they're your best users. They have the most intense usage. They're the ones who are the champions for your product, and they tell their friends about it. Um, and for us, we, because of the opportunity we had to find all these users on Facebook, on a city by city basis, um, and develop this liquidity quickly, um, network effects, uh, organic network effects took over in each one of these cities. So we'd see, um, crazy cheap acquisition costs on a per install basis.

It was, you know, we'd have some markets where the cost per acquisition was 10 cents per install, um, with, with like 50%, um, uh, actually like, uh, post rates or engagement rates for us as what we call an engagement when someone sends a message and says, "Delian, you know, tell me about that couch, or how big is that couch?" So, so super productive and super cheap, uh, new user rates. Um, and those are the users that, that created the core of our, uh, liquidity, uh, for our buyers and sellers in every market in the country. Uh, and so what we would do is we would launch, um, one, one city a month, two cities, and of three cities a month, you know, okay, go faster and faster and faster.

Um, and that early strategy enabled us to create these, um, uh, um, liquidity beachheads in a bunch of the major markets in the country that work really well for C to C commerce. Um, and those are still our strongest cities today. And, uh, as the ankle biters, as you would call them, uh, started to, um, um, surface, uh, they couldn't penetrate those network effects, um, network effect, network effects, you know, your investor, you know, how strong they are. Um, and what's really interesting in this type of, in this space, see, to see there is zero switching costs for a consumer. So a consumer will try everything, but if they don't get the quick response rates or sell through rates or success that they get on the platform that they're comparing it against, they just won't go back.

Uh, so that was what enabled us to withstand a bunch of competitive pressure. Um, there were, uh, if I just boil it down into, um, uh, uh, Letgo, and then Facebook Marketplace, I'd say, uh, Letgo came a couple of years later, and they came in with a strategy to spend, uh, above the line advertising dollars, uh, to create brand awareness. Um, this was the strategy that they executed worldwide, uh, in the global classified space, um, to create interesting dynamics that you could, that you could read about, but basically they spent a bunch to create brand awareness, um, and create usage. And then, uh, you'd take out the incumbent or create friction.

Uh, so that, uh, didn't, that didn't inhibit our growth at all because of going back to being first mover and creating these network effects in the big cities in the country. Uh, it did enable them to create some traction and a bunch of different parts of the country where we hadn't focused, um, that, uh, in retrospect, I wish we had, but it was really, it was really a function of how much money we wanted to spend and how quickly we wanted to burn it, because, you know, we didn't have any lines of revenue back then.

Um, so where, uh, you know, we just completely completed the transaction with them this summer and the synergy there is the, um, they had strength in markets that we weren't strong in and, and vice versa. So synergy play there. Um, and, and it really goes back to our growth strategy and then, um, the timing of their growth strategy. And that was, uh, as you can imagine, that deal was many, many years in the making, um, those things don't happen quickly.

Delian: [00:29:21] Was gonna say, I assume at that level of scale, it's actually a deal that gets reviewed by the SEC. Right? Um, was that a process that you, you know, got to be a part of or was that sort of like preparing the, you know, documents to actually get it or started by the FTC?

Ian Fliflet: [00:29:33] Yeah.

Delian: [00:29:33] I see you got the SEC.

Ian Fliflet: [00:29:34] Yeah.

Delian: [00:29:35] Um, you know, w, what was going through that, like, I assume you had never done that a RealNetwork since I feel like-

Ian Fliflet: [00:29:39] No.

Delian: [00:29:40] ... there is no acquisition that you had, was that at that scale or with that sort of a competitive dynamic?

Ian Fliflet: [00:29:44] Yeah. Yeah. I mean, um, so yeah, I was involved in the deal from beginning to end, um, deeply, uh, and our general counsel, uh, worked on the, the, uh, um, antitrust and, um, uh, what's the, uh, the for, the CFIUS, uh, but yeah, definitely, uh, we would have gotten the deal done much earlier. Um, but that's a, that's a typical part of the process.

Delian: [00:30:06] CFIUS just because it's, uh, it's, it has a Chinese investor or owner, or...

Ian Fliflet: [00:30:11] Well, just being an international investor.

Delian: [00:30:13] Uh, interesting. So it still gets passed through CFIUS.

Ian Fliflet: [00:30:16] Yep. Yep. So, no that's nerve wracking in a deal, of course [laughs].

Delian: [00:30:20] The government can say, "No," you don't always love that in a deal [laughs].

Ian Fliflet: [00:30:23] Yeah, especially in this environment. Right? So you just never know. So that was, yeah, that was nerve wracking. Um, but, um, everything, uh, everything is, uh, well, that's all behind us now.

Delian: [00:30:33] And I guess another, like macro question is, you know, obviously RealNetworks hasn't, uh, you know, uh, you know, since let's say you left and like, you know, 2010 or so-

Ian Fliflet: [00:30:40] Yep.

Delian: [00:30:40] ... uh, you know, not been there, let's say like, you know, best performing company. I think most of that does partially come down to maybe, maybe a little bit of focus at a bunch of business lines or partially just timing, right? Like, you know, think Rhapsody, if it, it, uh, you know, coming out three or four years later, a little bit better user experience, a little bit more mobile adoption, the combination of all that would have made subscription more likely. I guess, what gives you confidence in like the, uh, you know, I'm sure you thought through the macro timing of OfferUp beta before heavily, you know, considering joining what gave you, let's say like confidence in like the macro, you know, timing of OfferUp versus let's say like RealNetworks.

Ian Fliflet: [00:31:10] Yeah. Um, I mean, to, to be totally transparent and give it that type of thinking, uh, I was at a point, I mean, I had just gotten married and, uh, it was 35 at the time. And I, um, I had no debt, um, the risk wasn't that great. And I wanted to take a career risk because I didn't want to look back in time and be whatever age I'm 40, almost 43 right now. I didn't want to look back and say, "I just, you know, work for a paycheck." And I, uh, so that was more of like a personal thing. Like, "Hey, give this thing a shot."

Uh, it w so I was gonna, I gave it a year in my mind, uh, what was also, uh, really excited about the, uh, business opportunity, because it combined these incredible metrics early on with something that was that I didn't experience it Real. Um, we were creating value for our customers in a way that changed their life materially. Um, and the positive stories that we get from our customers is still, is the most motivating thing about working at OfferUp today is that we help people and we help them in their lives. They make money, they find deals. Um, I mean, the, the degrees to which people depend on OfferUp are like, they need it for their daily existence to be able to find things, to buy and flip it to, like, I use it every once a year when I move or whatever.

But people feel good and they have these great stories. Um, whereas at Real, we were, we were creating software for things like music, streaming product, uh, watching video, um, you know, things like, things like that, that weren't really like life-changing for people. Um, the OfferUp is just inspiring and the customers are inspiring. So, um, it's, that's, what's not, was what wasn't even comparable. And I didn't really realize that until once I kind of, I started and started to see that. But, um, a lot of these, a lot of these things when we were in, if you're in tech for a long time, uh, a friend of mine, uh, um, had a quote, um, that was something along the lines of like, "All, everything that we're working on is like sand on a beach at the point in time.

It's right under your feet, it feels really important, but then you look back five, 10 years later, and you can barely remember what you're working on" [laughs]. So I kind of described some of the things I worked on it Real like that, like, they felt really important at the time, but in retrospect there weren't. I know for OfferUp, that's not the case because what I, uh, what I always remember is that these, the value that we're creating for people in these stories. So...

Delian: [00:33:40] That makes a ton of sense. So you've been at, um, OfferUp now for a little over seven years.

Ian Fliflet: [00:33:45] Hmm.

Delian: [00:33:45] Um, I think congrats on your seven years anniversary, literally this month [crosstalk 00:33:49] or last one.

Ian Fliflet: [00:33:50] Yeah.

Delian: [00:33:50] Um, and over the time, you know, it seems like they serve only increased scope responsibilities, seems like you have an even more sort of trusting close partnerships with the CEO. What do you think is like-

Ian Fliflet: [00:33:59] Yep.

Delian: [00:34:00] ... you know, led to that obviously instead of reintroduce bipartisan party early on since you joined very early. So you probably have at this point a ton of shared contacts, but what do you think has made it sort of a, you know, successful working relationship? I think a lot of early employees sort of dream to sort of be in position that you are [inaudible 00:34:13] company's now grown to, you know, massive scale 20 million, you know, monthly actives.

Ian Fliflet: [00:34:18] Yeah.

Delian: [00:34:18] Um, and, you know, still sort of, you know, I feel like a lot of times people sort of get, you know, layered away and, uh, are no longer as close to the CEO, you know, seven years in-

Ian Fliflet: [00:34:26] Yeah.

Delian: [00:34:26] ... versus it seems like you've been able to, you know, maintain that, uh, you know, sort of growing yourself while the company has grown. What do you think is sort of like, you know, led to that? Or how would you recommend other, let's say early States that have employees that are listening to this, they would like to be in a position that you're in seven years down the line. Uh, what do you think you did well?

Ian Fliflet: [00:34:42] Um, well, I mean, you got to find the right fit. It's like a relationship with, um, any type of relationship. And, uh, so, so early on, it was just, uh, "Okay, well, how can I help? How can I help this team?" So, uh, kind of like what I described earlier, it was a, it was a good combination of things that I brought to the table that, that weren't there. And then trying to figure out how to, um, how, just how I can show those types of contributions without just saying, "Give me that, give me that." Like, now let me, let me take a crack at it. Or, you know, if, if I saw, like, for example, on the fundraising side, you know, I'd say, "Hey, well here, let me take a crack at it. What do you think of this?"

Um, uh, so, you know, not taking something, but, um, making that kind of, uh, uh, kind of making it easy for, for Nick early on. Um, and then, you know, in the end, just the proof is in the pudding. So, uh, the reality was, uh, uh, I, um, happened on an opportunity to leverage my strengths, um, and we were growing really fast. And a lot of that was because of the, um, things I did to help accelerate that growth. A lot of other really smart people could have done the exact same thing. Um, but I happened upon an opportunity that leveraged my strengths. Um, but being, uh, you know, being, um, kind of, uh, when you're trying to develop a relationship with someone and you're trying to understand them and you're trying to help make sure that you're helping them in a way that they need help.

Um, so, uh, with, with Nick, I mean, I, I sat next to Nick, you know, once COVID hit, not any more, but I sat next to him every day for like six years. And we just happened to have a good combination of, uh, he's really good at things like, um, he's, he's, he's an incredibly motivating person to be around. Uh, he, I never see him go out the door and, um, I never think, "Oh, Nick's having a bad day." He's one of the most positive human beings I've ever been around in my life. Uh, he's amazingly creative. Uh, he can see things really well and when you, um, uh, show them to them and visualize them, I'm on the other side of things I'm analytical, practical, um, and measured. And he really respects that. And I really respect him so early on, we were able to create a really good, um, combination of kind of those two, uh, personality types, good combination of personality types, um, and then really develop a trust.

So, uh, for success for us at OfferUp, like it, it's all about a vulnerability based trust. So trusting each other to the point where you're very clear on what your weaknesses are. So, um, and, and asking for help. Um, no, it took a while for us to develop that and something we, and I mean, as a broader team are always working on, uh, but at the root of it, it's trust. Um, really deep trust to know that someone's, um, you know, um, gonna always do their best for it.

Delian: [00:37:40] You guys have a level of scale that you're at now. Um, how do you think about having a sort of, let's say incumbent competitor that, you know, provides maybe some level of platform risk, right? I'm not sure how much of your acquisitions today, you know, still come via Facebook in terms of, you know-

Ian Fliflet: [00:37:53] Yep.

Delian: [00:37:54] ... consumers coming in, but obviously Facebook Marketplace is now, you know, a relatively credible threat. I mean, I don't know the exact numbers or whether or not Facebook even releases it, but it does seem like they're sort of Facebook Marketplace is relatively active. How do you guys sort of think about that? Does it make you diversify your sort of acquisition streams as out of Facebook's that you don't have, you know, your main acquisition channel also being your main competitor? Um, how have you guys been sort of dealing with that?

Ian Fliflet: [00:38:17] Yeah. Um, well, first of all, it's, um, we've never believed, uh, commerce or local commerce is a zero sum game. Uh, that, that's our kind of our fundamental belief and it always has been, uh, because people can buy and sell on any type of platform and it all goes back to the success that they create. So, um, those dynamics are different depending on the city and it's kind of somewhere to let go. There's some markets where, you know, we're many, many times larger than Facebook Marketplace. Um, but then there's other markets where, you know, they're much, much larger than us.

Um, so we're always trying to do our best to create a differentiation in our experience that is, uh, solely focused around, uh, commerce, local commerce, and, uh, whereas our competitors, um, it's one of many things that they do. Uh, so they've created a great, a great experience and leverage their ubiquity in a way to grow really fast. Um, but it's something that they've done in parallel to OfferUp, um, not in place of OfferUp's growth or at the expense of OfferUp. We've got Google and Facebook. Um, so Facebook's are great partner of ours on the, on the marketing side and always has been.

Uh, and so, uh, you know, of course from a strategic standpoint, you're always thinking, what can I do to, uh, to, um, to diversify. And we're always testing, uh, you know, whether it's TikTok or Snap or Pinterest, we're testing everything. Uh, but the reality of a lot of it, uh, today is from a paid side you're, you're relying on Google and Facebook more than others. Luckily for OfferUp the lion's share of our new user funnel comes from word of mouth. Uh, way, way, way, way over half, um, comes from word of mouth. And that's just rooted in people having success on the platform. Uh, if we were, if we, if, if we were reliant on paid to grow, we wouldn't be here.

Delian: [00:40:16] Yeah. I know i, it's tough if that's your only channel. Um, so you've been in Seattle now, you know, for sort of, I believe in a sort of entire, let's say-

Ian Fliflet: [00:40:24] Yeah.

Delian: [00:40:24] ... like your career and obviously you went to school there as well. How do you think these sort of, like, let's say like, you know, tech ecosystem where the general, like Pacific Northwest, uh, tech ecosystem and sort of adopted changed over the past 20 years, where do you think it's headed vis-a-vis like, you know, Silicon Valley where it says, you know, are there some similar things where we both are experiencing somewhat of an exodus right now? Or do you think, uh, you know, there's actually, you know, differences in terms of where they're headed?

Ian Fliflet: [00:40:50] You know, I don't spend a lot of time in the Bay Area these days, so it's kind of hard for me to compare, but, um, you don't hear of an exodus out of Seattle. Um, like you, like you are in the Bay Area right now. Um, people in Seattle are, are definitely, um, uh, different. Um, but it kind of depends on, um, what that means. So people that grew up in Seattle like myself are definitely, uh, different, but there's a bunch of people who work in who work at the Amazons of the world and the Microsofts that aren't native to Seattle.

So they, they come here and they live here and, um, they, sometimes they have chosen to come here instead of the Bay Area, if they're in tech sometimes not. But, um, it's a very, it's a, it's a different vibe than, than, than the Bay Area. It's peop, people tend to stay at, uh, uh, companies a little bit longer. Um, there's, you don't get the, like, you don't get conversations about joining the hot startup. Um, it's much less startup oriented and it's much more oriented towards people who work at bigger companies and have, uh, um, kind of career paths that, uh, are more common, um, over a longer period of time.

Um, the, the, the, so it's kind of a hard thing for me to compare, to be honest, because I haven't spent enough time in the Bay Area, but that, that's, that's at a high level, um, that might not be helpful might not [laughs].

Delian: [00:42:14] And, you know, over the course of your career, you've sort of hopped around in terms of, let's say, you know, skillsets or functions, you know, everything from like marketing to Corp dev-

Ian Fliflet: [00:42:23] Yeah.

Delian: [00:42:23] ... to, um, you know, a variety of variety, different functions. And I'm curious how you think about sort of, um, honing in one particular skillset and being, you know, super, you know, how let's say deep, you need to go in before you start to like, hop around. Like, obviously for the first couple of years of your career, it was really a focus on business planning analysis, but then since then you've sort of started obviously build up like additional skillsets.

How did you think about sort of, you know, when you were sort of ready to take on new skillsets, how deep did you get into those? Like, did you feel like you needed to get world-class or just like, just good enough to recruit somebody world-class and be able to like, you know, uh, you know, manage and support and like, uh, assess them? How have you thought about sort of expanding your skill sets over time?

Ian Fliflet: [00:43:01] Yeah. Um, you know, um, I think people, there's the classic, like, look for people whose skill sets are T-shaped in terms of, uh, they can go broad, um, but are able to go really, really deep in one area. Um, my T is that I'm analytical by nature and that's the root of, of my, uh, skillset. That's been able to put me in the position in the different, um, uh, roles that I've been in and be successful and be analytical in that, in that role. Um, but then what the different skill sets enable you to do is get exposure to different parts of the business to kind of extend that T uh, more broadly.

So, um, whether, uh, so if I use my career, so I was an analyst early on, but then the Corp de, on the Corp dev side, I've got to actually start to be able to learn how to converse with people outside, um, outside of the, the company of RealNetworks. So, okay, how do I, um, how do I start to kind of sell RealNetworks to startups? So that was more of trying to learn how to position something, ex, position something to someone externally. Um, how do I present something in a way that's attractive to someone? How do I tell a story? Um, and when I got into the games business, uh, still analytical, but then how do I apply that to growing a business? How do I apply that to marketing, uh, along the way, of course, you're required to manage people and okay, you have to develop that people management skillset over time, um, and, you know, at, uh, OfferUp, it was just kind of expanding on those things even, even further.

Uh, but still at the root of it was being analytical and thoughtful in terms of how I make decisions and create opinions. Um, but further developing my T in terms of taking on things like I took on early on, I took on, uh, our communications group, um, jumping into that, still analyzing things, but, um, trying to figure out how to be able to communicate with the people who, um, are in the comms world. Um, uh, building out orgs, I build out our finance org for the first, you know, five years or so.

Okay. What do I do there? How do I analyze this and position this? So early on, we actually use that T, um, uh, T type of, uh, of, um, uh, per like personality type or skillset type when we were looking to bring people into a startup.I think that's really important because he, people who are really good at certain things, um, but who can also interact, uh, along the, kind of the, the spectrum of the different business needs that you would see.

Delian: [00:45:36] Maybe it's like a final question you, uh, uh, you know, wrapped up your, your, uh, university time, uh, in the midst of a sort of, you know, crazy time in tech, uh, I, the tech crash, uh, now 20 years later, we're also in the midst of a crazy time in tech that somewhat flipped the, the world's crashing around us while tech at, it seems like, you know, offer up is included in that, uh, is rocket, rocket shipping upwards.

Ian Fliflet: [00:45:56] Yeah.

Delian: [00:45:56] Um, I guess, you know, if there's somebody on the podcast is listening, that was similarly, let's say graduating today in 2020 with a, you know, BA of business from University of Washington, what do you think it would be like, you know, sort of your suggestions or career advice, sort of, where would you point them towards the areas that you think are most exciting? Like, would you tell them to join a larger company like you did from the get go at either sort of, or junior stage grow your skillset from within there? Would you be diving into startup straight away? What would be your, you know, I don't know, feedback, direction, advice that you give them?

Ian Fliflet: [00:46:25] Yeah. Uh, I mean, I owe all my success and my opportunities to the managers that I worked for and people that gave me the opportunity to, uh, learn, fail, uh, and get more responsibility than I deserved [laughs]... at any given point in time. So, uh, my feedback would be to look for an opportunity where you see someone who is there and who's going to help you along the way, whether that's a sponsor or a mentor or a manager, because it really comes down to that, um, that person early on in your career who helps put you in positions to be successful. Um, and who's willing to take the time to give you opportunities, give you feedback and help you develop. If you can do that at a big company, you can do that at a small company. Um, but really that's what it's, um, that's what I think it's all about in terms of early career development is having someone who's out there who's looking out for you.

Delian: [00:47:17] Like that, like that, finding the mentor. Well, uh, Ian, thanks so much for taking the time to be on the podcast today. I really, really appreciate it.

Ian Fliflet: [00:47:23] Yeah, thank you Delian.

Delian: [00:47:24] Thanks for listening everyone. If you'd like to support the podcast, please sign up for a paid substack subscription, which we use to pay for transcripts, mics and other improvements. If you have any comments or feedback on what kinds of questions I should ask, who should come on the show or anything else, please do let me know. Have a great rest of your day.

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