Design Partnerships

Transcription
well first of all you never have conviction right as a Founder you got to have self-conviction because otherwise you're not going to start a company most 0:05 most people are going to tell you it's going to fail right this is one of the things as a Founder you going to realize you know most VCS did not want to invest 0:10 in go in the beginning they're like CRM is good enough it's a done deal you don't need any more sales to so it's kind of funny what gave us the 0:16 convention is two things first of all we knew the problem existed we knew we can to some degree Solve 0:23 IT welcome to indepth a show that surfaces tactical advice Founders and 0:29 startup leaders need to grow their teams companies and themselves I'm Brett buron 0:34 a partner at first round and we're a venture capital firm that helps startups like notion Roblox Uber and square 0:41 tackle company building firsts on the in-depth podcast we share weekly conversations with startup leaders that 0:47 skip the talking points and go deeper into not just what to do but how to do 0:53 it learn more And subscribe today at firstr round.com hi everyone and welcome 0:59 to in-depth I'm Todd Jackson and I'm a partner at first round I'm back guest hosting the latest episode in our series 1:05 that explores Founders different paths to product Market fit I'm really excited about my conversation today with Alon RF 1:11 co-founder and chief product officer at gong gong is one of the fastest SAS companies in history to reach $100 1:17 million in annual revenue and has over 4,000 customers like snowflake Shopify and HubSpot to name a few the company 1:24 has always been way ahead of the curve when it comes to building AI assisted products and it's been a core part of 1:29 their offering since gong started in 2015 as Revenue intelligence software for B2B sales teams gong's technology 1:35 helped sales leaders track record and analyze sales calls to drive sales Effectiveness across an organization 1:42 even in its earliest days gong always seemed to have strong signals of customer love in our conversation today 1:48 Alon picks apart what these indicators were going through each pivotal step in gong's product building process we start 1:53 with the origin story of gong and why Alon and his co-founder were so bullish on recording sales calls back when it 1:59 wasn't the norm Alon then walks through some of the biggest pmf Milestones gong hit while building like how 11 out of 2:05 their first 12 design Partners signed up for the first paid version of the product we wrap up with a fascinating 2:10 discussion about Innovative applications for generative AI Alon shares what's next for gong and how he's thinking of 2:16 using llms in a completely different way than chat GPT the gong co-founders had the foresight to see AI as a business 2:22 tool nearly a decade before it became table staks which makes this episode a master class in how Founders 2:28 self-conviction can pay off and now onto my conversation with Alon all right Alon Eilon’s unwavering conviction in Gong 2:33 welcome to the show we're so happy to have you here thanks for inviting me glad to be here can you explain what gong is and and who it's built for so uh 2:41 we're in a leader in a category called Revenue intelligence which is software for Revenue teams helps them carry out 2:47 all of the critical workflows coach better manage pipeline forecast engage with customer obviously infused by AI 2:54 we've been doing this since 2015 so been doing AI for a while making it more efficient and and making their outputs 3:00 eventually higher for the all rev work and so can you rewind the clock a little bit to 2015 and just take us back to the 3:06 very beginning of gong and kind of what that origin story was like and and where the idea came from I was in the 3:11 sabatical I sold at the time another company I had and I was looking for something need to do and then I got to 3:17 int introduced to am meit who's now my partner and CEO and he was running a SAS company by the name of cens a bi company 3:23 they had this issue where they had a really lousy quarter and they were trying to figure out what's wrong and the CRM all showed like good data 3:29 there's deals pipelines moving except one thing didn't happen which is deals didn't Clos so what they found out is if 3:35 they were they started like recording the sales conversations to understand what's going on and if they listen to dozens of them eventually they got lots 3:41 of good cues and at the time he was like there's got to be a more efficient way to do this I was in sabatical I was 3:46 learning deep learning at the time you know DNN way before GPT and I was like yes we can we can figure out how to 3:52 automate that and that was the origin story and so do you kind of remember where you were the the first time you 3:57 heard the idea and and what your reaction was yeah I was in a coffee shop I was you know in honesty I was dating 4:03 multiple people first of all I got time I was in sabatical so and then I met multiple people with multiple ideas 4:08 already had a reputation at time of one of the most brilliant or successful entrepreneurs so it was like yeah I was paying a lot of attention and then I 4:15 like the idea I like the market so it definitely caught me interested in a first meeting it was in a coffee shop 4:21 somewhere in Israel which is where I'm based remind us what was kind of the state of sales technology at that time 4:26 back in 2015 what what tools were people using or or not using for sales calls right it's a great question because one 4:33 of the one of the things I noticed was there weren't a lot of sales tools I had this like at the time I was looking at 4:38 because I was looking for things to do basically copies to start so I was looking at the marketing landscape and there was like dozens or hundreds 4:45 hundreds literally hundreds of companies anywhere from campaign automation whatnot and sales really had dozens 4:50 which is not a lot and my thought process at the time was sales it's kind of like marketing there's no reason to 4:55 not have as many tools so there are probably companies that are less kind of known now insidesales.com which was 5:01 trying to do the sales engagement back in 2015 obviously CRM was around all 5:06 sorts of Chrome extensions that were trying to help you but there weren't any significant tools outside of CRM I think 5:12 sales engagement was just starting so mostly it was just hey put data in a CRM look at reports and this is how you run 5:18 your sales organization and was there already kind of a pattern of behavior at that time in 2015 I can't remember were 5:24 were sales calls happening on video at that time yes not as much as obviously Co it's kind of changed the lens Cape 5:29 naturally but I would probably want to say 30 40% of calls were at the time 5:35 wasn't even Zoom right it was WebEx and blue jeans and all sorts of names sales were happening obviously it was more 5:40 hybrid than now mostly for mid-range customers you wouldn't call I know boying you know just over over WebEx now 5:46 you probably would but at a time you wouldn't so maybe like midsize customers and our assumption at the time it's going to grow regardless we didn't know 5:52 Co was coming so I'd be honest here but we did assume that over time people are going to be more accustomed more used and more comfortable with using video 5:59 versus flying on I mean this is so ineffective just you know flying and spending a couple of days on a m and in 6:04 2015 I mean you guys were sort of early to this AI wave the idea of having AI 6:09 assist in a call situation like this that was a pretty new idea back in 2015 what was giving you the conviction that 6:15 this could be a differentiator for you well first of all you never have conviction right as a found out you got to have self-conviction because otherwise you're not going to start a 6:21 company most most people are going to tell you it's going to fail right this is one of the things that the founder you got to realize you know most VCS did 6:27 not want to invest in gong in the beginning they're like CRM is good enough it's a done deal you don't need any more sales tools so it's kind of 6:32 funny what gave us the convention two things first of all we knew the problem existed at least in one company which is a meets company so at least you got one 6:39 potential customer right here's a tam of one company and you got to assume that if there is a company you know was a SAS 6:44 company I don't know what the sales worth somewhere between 10 and $15 million you got to assume there's like likeminded companies somewhere and 6:50 indeed you know later on we found them so we knew the problem existed we knew we can in some to some degree solve it 6:55 it wasn't about AI at the time I mean we didn't even use the term AI because people were scared of AI but it was a lot around more like sense efficiency 7:02 how can you what's working lots of sales business value reposition that we're pitching and you mentioned finding 7:08 like-minded companies and and you felt like this problem was pretty widespread did did you do anything to validate that this was going to be a big enough market 7:15 to support a venture Scale company or or is it sort of just implicit like every company has salespeople this Market will 7:20 be big enough I I think it's it's sort of top down yes you sort of how many sales people are going to be are in the 7:25 world somewhere between 5 and10 million you multiply this by you know pick a number thousand bucks a year whatever 7:31 like what s for charges more or less you have it's a VC siiz Market I think what was more interesting for us at the time 7:37 is can we find a beach head so it was less about hey can we eventually grow and become you know have Fortune 50 7:44 customers of course we eventually if we're successful we get there obviously no we do but at the time it was more 7:49 like can we find a beach head and then it kind of led us towards like hey let's find those companies that you know are kind of more lend themselves to be early 7:55 adopters versus the adps of the world or you know the the of the world or the Googles of the world so when you were 8:01 just starting out who did you think your Beach head was going to be and did that end up becoming the right Beach head 8:07 yeah so when we validated the market it was easy to validate we said let's kind of focus on technology companies again 8:13 we kind of knew the market we knew how to approach them hard to sell to them so and we also had of course you know personal relationships so we kind of 8:19 assumed this could be the beach head and indeed you know probably first I probably said 30 40 customers probably 8:25 most of them were in this space initially we were like super focused I think we're probably one of the most crazily focused companies in an early 8:31 stage we're basically aiming software companies located in North America selling B2B somewhere between a ticket 8:38 size of $1,000 and 50 maybe $100,000 in English over a handful of video systems 8:45 you know there's probably maybe now 10,000 companies like that in the world probably probably less um but it was the 8:50 initial Bach head and then we're going to later we do many other things but we wanted to sort of start with noticeable 8:55 impact in in a smaller category let's talk about when you actually started focusing on building the initial product 9:01 and kind of that zero to one phase once you and a meat started to kind of go all in on this idea how did the two of you 9:07 delineate responsibilities and and maybe who else was on the team at that time when we were raising money it was just a two of us and initially you know amit's 9:14 background Amit was actually an engineer many many years ago and then he did marketing and sales so he basically asked me you know Elon what do you 9:20 prefer product or engineering and I'm like what do you prefer sales or marketing and then we ended up like just like he he did sales and marketing I did 9:26 produ and engineering and later on I kind of focus on product he later on focused on being a CEO so kind of all 9:32 diverged so that was the original original kind of split talk a little bit about the very first kind of demo or MVP Initial reactions to Gong’s demo 9:40 and and sort of like what you thought needed to go in it and and who you got feedback on it from yeah so I think 9:45 there's two maybe types of you know what do you call a demo there's a slide there is a deck I mean you got to have some sort of a deck where you talk to a 9:51 customer you want to show them something even if it doesn't exist so that was like pretty basic you know am and I put it together probably AIT did 80% before 9:58 he even met me I mean it was you can probably still use this deck today if you wanted to sell a very very basic 10:03 version of gonk and so that was before any software was written you were you were sort of going out there with the with the deck yeah yeah I mean before 10:09 software and then I it kind of forced hand me into inter I was running kind of midsize engineering product organization 10:16 and he was like Hey dude you're like the engineering guy you got to Rite some something for the company so I was like 10:21 okay I'll download an IDE I'll open a Amazon account a cloud account using my Gmail account so I put together myself 10:27 like the first prototype I kind of forc my myself to remember how to code and then we put together a very basic Software System and what it did it 10:33 basically joined WebEx calls as a bot you'd see like a bot on the call and what basically did screen recording and 10:38 then he picked up the audio and the video and then it Ed a third party transcription engine at the time so I was remember myself so I couldn't write 10:45 a transcription engine and then would like index it or whatever and then let you kind of review it and maybe comment 10:51 or whatever I could do in a few months of like personal work in addition to founding a company I had one engineer 10:56 who helped me like as his side gig he was he later became our employee number one and we took that one to Market so we 11:01 basically took it to another another company and then we let them kind of play around with the software because I 11:07 couldn't scale it it was just like recording one call at a time so the most you can get is six calls a day or five 11:13 however many but it was still they found value in it so we basically said it kind of make sense and then we kind of started working with others you took it 11:20 to customers that had already seen the deck and were kind of warmed up and then you showed them the demo some months later yeah we pitched to a few companies 11:26 some of them said hey show it to us when you have it cuz it's like yes we like the idea some of them were like trying to be nice so they said that the idea 11:32 never came back and a handful of companies said yeah give it to us when you have something ready so whenever I had the first version stitched together 11:39 I was like hey James remember you told us that you kind of want try it out here is here it is and you know I think 11:45 luckily for us also at the time people weren't as aware of security as there are now so I was like yeah sure bring it 11:50 on I'll try it out which today I think you probably have to pass through 50 uh Security reviews so company was Acton 11:56 software so Acton software they did email marketing they found it very useful so it gave us lots of positive 12:01 energy do you remember what the most positive reactions to that first demo were and what the most kind of negative 12:07 reactions were the negative reactions are have always been by the way until today CU we still part of what we do is 12:14 is ingest and analyze conversation so the the negative thing has always been hey are salese going to want to be 12:19 recorded like oh big brother is anybody going to listen to my calls Etc and like dude the managers don't have time to 12:25 listen to your calls unless you ask them to so it's not like nobody's mon ing you but it's always been a concern and I 12:31 think so beyond this concern is the fact that we're able to provide value to sellers okay I'm willing to pay this 12:36 price of being quote unquote monitored because I get so much value out of it so that was always the negative the positive was just the dream of AI 12:43 telling you before it was called AI telling you what works and what doesn't even in very initial versions the system 12:48 would would have told you hey you're talking too much and like half of the people just talk too much I can't believe it that I just spoke 70% of the 12:55 call I should probably be speaking 45% and that's the first thing the I told her hey just look at your talk ratio and 13:00 there's no excuses right if your manager told you you're speaking 70% you're going be like no you didn't time it right it was necessary the customer just 13:07 didn't resp whatever the excuses are but when software shows you 70% and then 65 and another called 80 obviously you get 13:13 you improve yourself very quickly did you find that you had more interest and pull initially from the sellers or from 13:19 the managers it was both I can tell you that I remember this one onboarding class a couple of years later maybe 13:25 three years later where we had two people coming from a customer LinkedIn one one of them was an AE and one of them was a manager and like the a told 13:32 me oh now that I'm in gong it's the first time I realized the managers get value out of gong I was like oh that's interesting and then the manager told me 13:38 it's like interesting because the first time now the time in gong is the first time I'm realizing ae's get value out of gong it was the same the same class and 13:45 I think just everybody assumed it was for them and we're like okay fine sure so how long did it take you to build Keeping the beta lean 13:50 what you would consider like the first you know solid beta version of the product I was lucky in that I was able 13:56 to bring a whole team what now is being called maybe a part for my previous company cuz we had sold it a year 14:01 earlier and the guys were bored the people were like bored in being part of a bigger company so we raised money in 14:06 October of 2015 all of them joined like mid mid November and we had probably 14:12 something I might call Early beta somewhere in January that was like two month into it and then we kind of threw 14:17 a handful of customers on it in in in January so that was way quicker than maybe I would have expected but it was 14:22 it was nice and how did you think about what goes in the beta what's in versus what's out given that you you launched 14:28 it pretty quick we had this very strong hypothesis that just giving people visibility into what's happening within 14:34 the sales organization is super important so we had debates I even remember one of our investors telling me 14:40 you got to have your own speech to text engine like sure of course but I'm not going to put it into a beta he's like well that's not affordable you're going 14:46 to pay too much even now you look at like what Google charges it's an arm and the leg right but there's no way I'm going to build it he's like how are you 14:51 going to do unit economics I'm like yeah I'll tell you about unique economics when we get to round B or C right now I want to improve product Market fit right 14:58 so the idea was like I keep it very lean almost no sophisticated stuff but make sure you get those precious sales 15:05 conversation in front of the right people so we kind of had recording we had transcription we had commenting 15:10 capabilities so that you can bring on more people on board and a little bit of this like very lightweight AI around you 15:16 know talk ratio kind of thing and the hypothesis was just giving it putting it in your face is the first time you're 15:21 seeing yourself as a seller just how you perform and then for a manager it's the only way for you to ever kind of see 15:27 your team without being on the calls and that hypothesis kind of proved itself so we didn't need to iterate much in order 15:32 to get quote unquote product Market fit so it makes sense to me that you were trying to get this thing together Gong’s monetization strategy 15:38 quickly and trying to really test for customer love prior to thinking about 15:43 things like unit economics efficiency stuff like that were you so you weren't worried necessarily about what it costs to produce but were you worried about 15:49 what you could charge for it I think initially we weren't even worried about what we're going to charge for it because we had a very this grand plan of 15:56 gongas now which is hey this semi-autonomous Revenue system it's going to help you do forast it's and 16:01 going to help you manage pipelines so we knew eventually value is going to accumulate so our biggest concern was is there value to the people or first of 16:08 all is there value to sellers because we are asking them to record calls I mean it was automated but you know you agree to give up some of your quote unquote 16:15 privacy and can you give value to the organization so the Assumption was we're going to pry somewhere like you know the 16:21 time The Benchmark was CRM Salesforce so your stage you know Seed Company you're not going to charge as much Salesforce 16:28 maybe half at the time so we knew there's going to be some value I mean if we can get there but what we want to 16:33 prove is there is value there's user love there's buyer apprehension of the value of these kind of things what were Early signs of product market fit 16:39 the first signs of that to you did gong pretty much work right away you felt like you had the signs of product Market 16:45 fit right away or or was there iteration required in hindsight yes of course we 16:51 in the trenches you're not you know I wish I was um maybe kind of more self-aware or more maybe optimistic but 16:58 you're always like M my and I both kind of look for negative signs versus positive signs so like oh this is not 17:03 working this company is not implementing blah blah blah so always looking what you can improve which is not a bad idea 17:08 but sometimes you're like you kind of lose a little bit of this celebration mode but yeah the first customers used 17:13 it in hindsight probably the first indication there was a strong product Market Fe were probably nine out of 10 17:19 complaints were how this how come you you didn't even record this call this call was not recorded which ironically 17:24 Amit when he had this vision for gong he was like let the first value of this is is for sort of the company to know 17:30 what's going on so even if you record 50% of the c or 60 you know you can do the analytics CU it work the same way 17:37 and turns out Sellers and managers were like you know and now I'm relying on this to be my ears and eyes and memory 17:42 and notepad for all of the calls so in hindsite again getting so many complaints about our system not 17:48 recording all scads which it wasn't even designed to do in the sense of we weren't worried about bugs or timing 17:53 whatnot should have given us better indication that this is like a becoming a critical tool versus just a nice to 17:58 have yeah that's that's an amazing sign when customers become reliant on something you don't even really realize it and then a call fails to record and 18:05 they're like hey what's going on here like I need this exactly um so I think we all appreciate you know sort of like 18:10 criticism is better than if people ignore you they probably don't need it if people start complaining that's usually a good sign Alon do you have uh The importance of design partners to Gong’s growth 18:16 I'm curious how you think about design partners and this is maybe for the founders in the audience what makes a 18:22 good design partner how do you choose the right design partners and how do you work with them it does depend a little 18:27 bit on the state of the company in my mind I want to maybe start by saying that gong were like maniacs about using 18:33 design Partners so each one of my PMS we got maybe 205 5 PMS now more or less and 18:39 the size we are thousand people organization is each one of them is working at any point in time with probably somewhere between half a dozen 18:45 to dozen design Partners so if you think about just like how many design Partners does gong have at this point in time 18:50 2024 that's quite a bit and we haven't like change that so we strong Believers in design Partners usually you want to 18:56 have early stage you want to have the innovator type people are like of course I can do this it's like oh this is going to change my life this is somebody who's 19:03 like maybe a little bit OV excited because they see the potential not what the tool does today but what it could do for the organization where we are right 19:09 now is gone we also look for other types of customers the more programmatic ones we like you know can can they configure it can they get the most out of it does 19:16 it actually work versus does it promise to work and but in both cases it should be individuals who basically believe in 19:21 the value they're willing to invest some time and they kind of align in thinking how this could change your business and willing to give you feedback they don't 19:28 just like put put it in and expect it to work kind of thing cuz I don't get any value out of it and this is for B2B Founders but do you find that Founders 19:35 should make a conscious tradeoff of going for these design Partners who are really enthusiastic Forward Thinking 19:40 even if they can't pay you very much I think early stage I would not worry about payment as a key thing I mean 19:46 there's always the question of you know can you can you charge for it and there's many ways to sort of find like maybe proxies for Value in some way or 19:53 form but I think if you sort of insist on paying you're basically kind of putting asking people to not just like 19:58 put trust in this is could work but actually Quantified and they haven't seen the value yet so maybe for some 20:03 systems maybe if you can do like direct say cost saving on ads right this is something people are going to be willing 20:09 to pay for because you just save the money but if you're asking to invest in something new theyve not they don't even know how to associate value with it I 20:16 think as a Founder you first of all want to see you know a is their value B is their impact and C probably most 20:22 importantly if there is impact are those people willing are the kind of people are going to be eventually willing to speak up and say yes installed my this 20:29 software it made this and this impact for me and that gets you the next wave because if you don't get that it's very hard to kind of get to the next wave so 20:35 we all you know your first 10 or so design Partners when you were getting started were they all free to start and 20:40 then eventually you got them to pay yeah yeah yeah so we had like a 12 design Partners we got them through Network and 20:46 a consultant we had work with and then we it was all free and in some stage they stopped complaining about calls not 20:52 recorded because we kind of fix most of the issues and then it was a little bit of quiet so we're like okay if people 20:57 are just using it and not complaining we maybe ought to charge them something so we called all of them and said hey beta 21:03 is over we're starting to charge something that was 6 month into the company and then 11 out of the 12 paid 21:08 which to your previous question probably should have been a good a good timing to say hey we have a good product Market fit but we're like pretty casual about 21:15 it it's like oh that's good now how do we scale that thing versus celebrating the moment okay those are two real Milestones though the first Milestone 21:21 being when people started to complain that the calls weren't recording and then the second being converting 11 out of 12 design Partners to paid that's 21:27 solid the only company out of the 12 who didn't buy the her was leaving there's still a customer so it was like they bought a year later you're basically 12 21:33 for 12 well some of them are not around and then the funnest story is one of those 12 was basically they actually 21:39 didn't want to buy so they're like we shut them down a day later amid gets a call from their CEO it's like why the F 21:45 did you shut us down it's like oh Loro told me that you don't need it it's like what is he talking about we use it all 21:50 the time for blah blah blah blah blah could you please turn it on so up until now we have this feature we can kind of deactivate and reactivate the customer Why VCs were afraid to invest 21:56 and keep the same state so to speak because of that customer but you know one of the 11 that actually bought but a 22:02 day a day too late maybe and so just shifting topics a little bit how were you thinking about fundraising through 22:07 this journey it sounds like you raised at the very beginning based on the idea and then you're starting to see momentum 22:13 and you're starting to see some of these design Partners convert did you then fund raise again at that point a little bit later I think we had think we raised 22:19 the time $6 million which wasn't huge but at the time was decent so it gave us more leeway to kind of get to the first 22:25 I don't know it was like a million dollars maybe so funding came a little bit later but even raising an a was not 22:30 easy people were still skeptical you know the same concerns are people going to want to be recorded is the CRM enough 22:36 for everybody um so aound was still tough I think beyond that people started seeing a lot of momentum but until we 22:42 got to this lot lot of momentum it wasn't easy and people were haggling we like oh we we're going to fund this at 22:47 like valuation X versus Y which obviously a few years later kind of kind of sounds a little bit funny I'm a 22:53 little bit surprised about that that the a was challenging because you had pretty much all of your design Partners converted to pay you had people telling 22:59 you they can't live without this product they have a CRM and they're clearly also buying gong do you remember more of that 23:05 feedback I think some concern was you know is this a separate category which is a valid always a valid concern you 23:11 start something where is it going to be some people were confused about this being having overlap with system for 23:16 call centers which were also analyzing calls maybe they enter this Market why would somebody selling to call center 23:22 ever get to B2B kind of companies but it wasn't obvious that they wouldn't I think some of them was like were concerned about the size of the market 23:28 you have before you know what percentage of calls are being recorded like oh it's only for inside sales okay well I think 23:34 we were pretty confident that over time you know a huge portion of conversations are going to be digital in some way or 23:40 form but again that was our conviction not all VC is going to share the same view let's talk about now kind of the Reaching 100 customers 23:45 next phase you've sort of established you know these signs of early product Market fit how did you go from your 23:50 first dozen or so customers to your first 100 so that's when you start building like a a real sales team so and 23:56 we hired this one SDR meting 24:58 obviously you're happy if somebody else does so we are very happy I was like excited when a first AE sells his first 25:03 deal that's a big thing for a company right it's not like me selling it's somebody who's been trained and and can convey the value there's some 25:10 repeatability element to it when you got past 20 30 40 50 customers on the on your radi to 100 was the basic product 25:17 still the same or did the product kind of expand in a lot of directions yeah I mean gong has been traditionally kind of 25:23 very fast and and sort of expanding our our Solutions so yes initially it was hey it's going to record your call and 25:28 then we added the whole layer of coaching cuz that's the first thing people were looking for like can I leave comments to my reps can I see aggregate 25:35 stats of like what are my people are doing can I see Trends can I search across all of my calls over the first 25:41 year it already became this oh can I be the library for calls for onboarding so probably the first couple of years we focused a lot around it was also aligned 25:48 with like our customer base was growing and then they were growing as companies many of them were te companies so how can you help me make sure my reps are 25:55 performing how can you help me scale my team how can you help me on boarding new people nowadays it's like a secondary 26:00 thing because people don't unboard as aggressively as they might have done in 2017 18 it's still a very popular is 26:06 case with gong so those layers were built over the uh subsequent couple of years and how much of the road map was Eilon’s unique product roadmap framework 26:12 you's kind of intuition and feelings on what should be built versus your customers and what they were saying it 26:18 sounds like so many of these ideas were just sort of like coming out of your customers and you guys were racing to keep up with what they were asking of 26:24 you I think the Strategic road map is maybe 80% quote unquote 27:28 big thing that we're developing in many cases is Market category Le how does the category going to look in a couple of 27:33 years and then within this category creation processes what are the pieces is what customers tell us that they want 27:39 more I think it's interesting this framework of you've got there's a strategic portion of the road map in which 80% of it is driven by founder 27:46 Vision company vision and then there's the sort of I think you call it the Tactical part of the road map which is 80% kind of customer driven what is that 27:52 how does that actually map if I've got 100 Engineers how many of them are working sort of on the Strategic stuff versus the Tactical stuff we have 27:58 various Frameworks I probably would to say at any point in time it's first it varies cuz sometimes you over invest in 28:04 a new product but I'd probably say in most cases you probably we probably do like 50% in a Decor product 25% in in 28:11 new and then 25% in net new which is call it strategy lead some years maybe we've done a little bit more of net new 28:17 and some years we're like okay we got to catch up to stuff we already built but generally it's maybe 50 25 25ish so it Going from $2M to $9M ARR in one year 28:23 seems like in the first you know 2 three years you had really nice growth do you remember there being sort of like the 28:29 next big growth moment for gong and and a milestone that where you were like whoo this could be really big yeah 28:35 probably if I remember correctly I'm never sure about the numbers cuz it was a while I think the second year like the real first full year of sing selling 28:42 business were like a $2 million AR which is not bad for you first year and then second year was like nine and that was a 28:47 big thing like moving to from 2 to 9 that was okay [ __ ] this is exploding also meant of course who do you are H 28:53 the thir was also pretty I think it was like 3x but this is true hyper growth it's not like the war but if you feel it 28:59 inside because you know for every customer you have you're going to get put is it four more so it's pretty crazy and when did you start thinking about The journey to multi-product 29:05 kind of going multiproduct and and talk a little bit I think it's interesting alen that you you still have design 29:11 Partners it's still a part of the gong way of building talk a little bit about going multiproduct and then finding 29:17 product Market fit for the new products yeah I would probably lose an arm before I lose this the concept of design Partners so it's definitely uh I think 29:24 how people should be building every one of our new products is like built with people and maybe they think of it as beta but it's essentially design partn 29:31 program with the new products that we've developed there's probably I mean depending what you call product like features you might label this product 29:37 and there's skes that you sell separately the two skes we've built after we built our core conversation intelligence product as on our route to 29:44 what we now call Revenue intelligence for a skure on forecasting process and a skure on sales engagement which is 29:49 interacting with customers in this case it wasn't a brand new category it was existing category we've incepted a 29:55 product that we believe is you know better than incumbent and in certain ways has many advantages 30:01 obviously for V1 is never going to be major parity to people who've been around for five six years but has always 30:06 those kind of AI Nuance or understanding recommendation stuff that is not just data entry in this case I don't think 30:12 you're looking for product Market fit because in the end of the day product Market fit is for a category right do you need forecasting software well I do 30:19 I already have one so it's more about call it like maybe product completeness question is the product compete does it 30:24 solve the business problem first of all and then you know the second question question is can it compete successfully 30:30 with maybe other players in the market so building to call it like outcome to make sure it provides the outcome is any 30:36 a way easier you work with a design partner you build it together you see that you get the outcome building to make sure you can actually compete 30:42 successfully win 50 60 7 80% of the deals is much harder because over time 30:47 you find out what is customer number 371 to need which you might not have seen with the first batch of design partners How Gong measures success 30:53 and so what are you looking for then as indicators of success is it metric based 30:58 is it you know sort of anecdotal talking to customers so if it's a new category the first thing we kind of launch it 31:04 wasn't a separate product it wasn't a skew but was the whole idea of pip management we basically asked them this 31:09 question that was kind of popularized by superhuman which is how disappointed you're going to be if we took this away 31:15 so this is more like a product Market fit kind of question which indicates you know is there an early batch of customers who is very disappointed and 31:21 what big is that bch right I think for the new products in in existing category let's take gong and Gage for example 31:28 it's a product in the sales engagement category helping um sellers interact with their customers there's other 31:33 players in the space what we're looking for is of course just business consideration such as you know what is our win rate what is our average revenue 31:40 per user right and then eventually what is the customer satisfaction call it NPS or CA whatever metrics you're seeing we 31:46 try to also look at outcomes right have them been able to achieve goal X but I think on the way to achieving goal X is 31:52 like how are you happy with you know is it set up correctly is it helping you do your job is the user interace friendly 31:58 does it not crash all sorts of things to on the road to actually delivering the outcomes do you remember when you were 32:03 asking that how disappointed would you be if this went away question kind of what the responses were like the responses were very high meaning I think 32:11 the number was very disappointed was like I don't know maybe I think superhumans at 40% is a threshold of 32:16 some sort I think ours were like 80 maybe it was nice but I think it was I think we overread into this cuz I think 32:22 you asked the question of people who actually use this piece of the product so you very early see that there is a product Market fit to um certain portion 32:28 of the population what it doesn't help you do and we took us some time to realize that it doesn't help you 32:33 understand what is the reach so is it like 10% of your I mean you see it separately but not this metrics is it 10% of your customers even use the 32:41 product enough to tell you to answer or is it 20 or is it 30 or is it 80 because once you go out of a single product or 32:47 even a single use case it's always a question you know can you impact the whole population or you developing a feature or product that only applies to 32:53 certain portions of your customers and then it's the uh crell is harder or just the take is not as big yeah that makes 32:59 me wonder when when you're launching a brand new product do you think of it as like what percentage of gong's current 33:04 customer base will adopt this new product and that's what we're optimizing for or is it like hey this new product 33:10 will bring us into other segments and we're actually looking for net new customers with this product really depends on the product so the first 33:16 product forecast was definitely intended as a cross cell motion so it was can we get to x% of G customers using it with 33:22 in the first year and then for second year gong engage is also initial motion I think right now is 2third or 75% of 33:29 customers are existing customers so it's still a lot of cross sell versus new business but it might be a lend product 33:35 one day uh in our Q we have other products which we believe are going to get us in into customers who might not 33:41 have enough who might not be getting enough value from G existing products so give an example right let's assume somebody does not cannot legally uh 33:48 record any calls so the value they would still be getting value out of forecasting or sense engagement but the core conversation intelligence is 33:54 limited we do have customers using us that way but it's limited there's a bunch of things we're doing to say hey if we ever go to more regulated 34:00 Industries or we going to maybe as a p right Germany they're never going to record calls because they're Germans so 34:05 maybe there's a product that's going to work well for them as well I want to shift a little bit into AI because again Lessons from building AI products for sales 34:10 I think you know in 2015 I think you guys were really early to this Market which is obviously the thing that 34:16 everybody's talking about now do you remember kind of when you got started was there anything unconventional about 34:21 how you were building and using AI in the early days I I think first of all unconventional was just about bringing 34:26 AI to business users most people when they were talking about AI was this could be a predictive model for placing 34:33 ads or this could be something that runs in the background people weren't necessarily even expecting AI to tell 34:38 them something as business users so I think that was the first thing there was a lot of debate and thought process 34:43 around how do you bring it because AI is going to make mistakes every AI is going to make mistakes humans make mistakes 34:48 right so how do you even like present stuff to people that is known to not be 100% accurate so there is a question of 34:55 you know what is the what UI for it just say the system might say hey we think this is what you should be doing but hey 35:00 just verify before you do so there's a lot of of non-standard way to approach 35:05 customers even you tell somebody hey this is a call you got to follow up on this call right should you follow up on 35:10 every call there's the tone of the voice and tone and like we wrote this email for you we probably not the email you want to write but you can probably get 35:17 it fixed within a couple of typers so it's like hey this is AI generated it's like go and please review it before you send it out so I think the mechanism of 35:23 communication to customers is still being refined but that's been a lot of investment on a do you know that there's a big difference in how you're talking 35:30 to customers now about Ai and how you're integrating into the product and sort of just the education of the market that's 35:36 happened over the last eight years like do do you talk about it differently now than you did back then yeah at the time we just didn't say AI we said hey this 35:42 is like Revenue intelligence or conversation intelligence and then AI people even know I think they thought it was an action item nowadays you started 35:48 conversations like hey you want to introduce AI to your Revenue organization this is how AI affects your Revenue organization you know admittedly 35:54 there's much more AI in gong than it was there used to be like six seven years again but people are much more receptive they know they got to use AI so it's 36:00 more like what do I use obviously people think that you know GPT is AI but GPT is not going to help you sell more so so 36:06 they're kind of thinking you know what is in this promise that I can bring to my Revenue organization and can scale and can deliver outcome connect to my 36:12 systems and so on are there developments over the past two to three years you know related to large language models 36:17 that you think are really interesting relevant to gong things that you've been keeping an eye on I think the whole L&M 36:23 piece is very relevant to gong we've taken it in in in directions that are not necessar like the GPD kind of 36:29 conversational interface which I think is nice but it's just one angle I'll give you an example of how we've kind of put it together so one of the things 36:36 Revenue leaders want to do is also quantify behaviors so not just hey summarize a call for me it's like are 36:41 people following my message or are our customers asking you know about whatever it is Integrations for this to happen 36:47 you actually have to train an AI model to correctly identify the thing you care about it's like ask GPT you know are 36:53 they following the message GPT is going to say what message right has no idea what your message is right and then we build I call it like Tinder like 36:58 interface where he basically kind of gives you option you're like yes no yes no and within a few examples it kind of learns that stuff so I think where my 37:05 mind is at is that's kind of the core technology or they using rhf or are they using you know it's kind of open a or 37:10 versus mic foundational models are kind of awesome I follow them all the time we kind of pay a lot of attention to them 37:16 but I think what we're more concerned with is what is the how do you bring it into the world of the revenue organization in a way that brings immed 37:23 value it doesn't have to be generative the example I mentioned is 50% generative it first of all identifies 37:28 then it kind of writes down the explanation some others are generative you know right in last week's update for 37:33 me right it is generative but again it's less about GPT and more like what data do I use what tone do I use what needs 37:39 to be in a in in a in the last week's summary versus you know GPT could you please take this like five Cs and try to Predicting the future of B2B sales 37:45 write something right what do you think B2B sales looks like you know 3 to four years from now Forster has this nice 37:51 stat which I think sellers are spending 23% of the time selling 23% meaning 77% 37:57 is not selling and they kind of include in the 23% not just FaceTime just writing emails and other things that are 38:02 productive so 70 7% is almost non productive I think that one is going to go down significantly we internally we 38:09 call it drudgery so things like updating CRM Fields so that the company can eventually analyze them AI should be 38:15 able to do this share information write summaries write account summaries be in 38:20 deep brief meetings account handoffs account Handover account strategy documents all of that AI should be able 38:26 to do and the stuff people hate to do right he writing emails by the way you're still going to edit them but not write them from scratch so a lot of the 38:32 drudgery stuff that people have to do it's going to leave salese with the good stuff the fun stuff which is building relationships which is what they like to 38:38 do so I don't think they're going to go away I mean people are like oh can virtual rep call you and sell you something it's like I'm not going to 38:44 pick up the phone for what in the next 10 years but certainly make their work much more efficient so Alon zooming out The concept of “raving fans” 38:50 a little bit if you were to give Founders advice on finding product Market fit and the advice that you 38:56 actually used yourself what would some of that advice be you know I would always urge anybody to work very closely 39:02 with a customer get in bed with them you have a software idea you go in and implement it with the customer to make 39:08 sure they get they're like fully in love with it we call it internally raving fence make sure the customer is like super happy about it and then scale 39:14 sometimes you know maybe also what I've done in my previous compan is going of a little bit you know got to an okay version of a product and then kind of 39:20 started selling it to more people I think just going in bed with a handful small number of customers making sure they're super successful and super 39:26 enthusiastic is a much better way to kind of know that you've got something right versus something that's okayish Why it’s “easier” for second-time founders 39:32 you mentioned your previous company so how did your experience starting gong differ from your first startup web 39:38 collage like what parts of company building you know did you expect to say the same and what surprised you first of all I do recommend to all founders to 39:44 start with the second gig it's much easier um I wish I'd follow this myself to start with the second one of course it's always easier right I probably made 39:51 so many when people ask me about mistakes in gong we did make mistakes but I'm like not so many because I made so many of them I'm like my bag is full 39:58 of mistakes in in the first one so you kind of learn from mistakes as well hopefully not just from mistakes but I 40:03 think in the first company we triy to scale too fast so we had this one customer and we're like okay good now 40:09 we're going to hire six sales people and sell which is ridiculous cuz you want to make sure that you're entrench with with 40:14 the first few customers as I just mentioned so I wish we had stated a time like more founder Le for the first five 10 customers probably would have been in 40:20 a much better shape cuz sellers are not as successful they're not as knowledgeable and then you got not don't 40:26 get enough feed back so scanning too fast is probably a tempting sometimes VCS push you to do this right but you 40:32 know first time they push you second time it's harder for them to push cuz you've been pushed so much before so 40:37 couple of wrap-up questions what is your nonobvious founder superpower and how did it help you build gong I'm probably 40:44 more on probably top 10% of people in terms of curiosity I truly care about 40:50 lots of things I like so obviously gives me very easy time in learning new stuff when I learned deep noral networks it 40:56 wasn't because I need this work it was like hey this is back in 2015 was oh that's cool I got to learn this and you 41:01 know I kind of took a few data science courses you know being being a product that I don't have to do this like oh this is cool this is interesting so it 41:07 does help I think it helps a lot because it kind of makes it very easy for you to learn and that's true for Industries it 41:12 it's true for customers it's true for Technologies and it really helps you as a Founder I remember going to this 41:18 Fortune 100 customer that was my previous company sales call and basically customers come in and I'm like 41:23 okay so can you tell me a little bit your business and you know they tell whatever they do and I'm like oh can you tell me this for a whole hour I 41:29 basically interviewed them about all stuff that they do and then the hour ends and the guy kind of escorts me to the way out which at the time everything 41:35 was physical and he was like wow that's the one of the best call sales calls I've ever had I really didn't tell him anything about a product he was like you 41:42 understand our business so well of course I did because I kind of listen to but I was wasn't because I wanted to a good sales call it was just because I 41:47 was curious about their business it was a retailer I was wasn't familiar with and it really helped me can understand their business but it was even good as a 41:53 sales mechanism but I think it comes from True curiosity because you can fake it you can fake it all 50% but if you're 41:58 not truly interested it's going to much much harder any favorite books or resources that you'd recommend for other Eilon’s favorite books 42:04 Founders so there's I mean there's numerous books across I would probably every founder should probably be be 42:09 reading the more like the classical kind of crossing the Chasm by Jeffrey Moore I mean if you're a founder and you have not you should probably read it if youve 42:16 read it maybe again this is what we've done with gong I mentioned before we kind of start with a very small set of 42:21 customers and then sort of the bowling pin kind of start moving to other directions so recording phone calls doing emails and other things first 42:27 company did it completely wrong I read Jeffrey mors book we had this one customer in the Cosmetics industry I was 42:33 like ah that industry is too small let's go to different Industries and maybe two years later we're like hey we got those 10 Cosmetics companies and there was a 42:39 great Beach head to other manufacturers and you know I figured I was going to be smarter but that's probably where I Gong in 2024 42:45 would start so but you know being in this form probably worth mentioning first round is one of the uh uh blog 42:50 posts I am actually subscribe to not just read subscribe to and read so Kos to you for putting it in place so so 42:55 it's 2024 you know about 9 years after the founding of gong uh what's next for you and the company well for the company 43:02 it's always how do you continue to grow make customers successful for now what's top of mind for us is making sure we can 43:08 be the One-Stop platform for all of the revenue organizations so if you look at our typical customers we serve 43:14 salespeople sometimes in the tech industry customer success managers and over the next couple of years plan to 43:19 kind of provide a system it's going to help say everybody account managers post sales professionals going to be this one 43:24 system that serves them all using the unified Analytics platform unified workflows and many other things that I think they don't get today from any 43:30 vendor or any system not the CRM system not the Tableau system so this kind of unified system for everybody who's 43:36 touching the customer uh Alon thanks so much for being with us here today you a great guest we really appreciate it thanks for inviting 43:48 me

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