Today, we announced that we raised $20 billion. Just kidding and checking if you’re reading carefully. But we did announce we raised $20 million (almost as cool), led by our new friends at Bain Capital Ventures with participation from Summit Partners and our existing investor Battery Ventures.
The Wicked Witch Of Churn Is Dead
When our investors asked for our wire instructions for the $20 MM, we told them to send us gold bricks instead. Sure, that caused them to look at us funny and double check their diligence background checks. But beyond our company value around Child-like Joy, we feel that Dorothy and Toto from The Wizard of Oz are a great metaphor for customer success.
A senior exec at a public SaaS company recently told us: “I know my company has tons of data about our customers – what they’re using from us and how often, whether they’re paying their bills, what support issues are open. But every time we need to get this data, we have to go to Engineering or IT and it feels like asking the Wizard of Oz. So most of the time, we have to go into customer calls blind.”
That’s no way to live and definitely no way to build the Subscription Economy. Every 2 percentage point improvement in retention or up-sell means a 20% increase in equity valuation for subscription businesses. And our recent survey of 100+ subscription businesses showed that companies with a Customer Success team have a 24% lower churn rate than those without one.
Why Did We Raise The Money?
- Customer Success Is Going Prime Time. We were bootstrapped for approximately 3 years before raising Series A funding from Battery Ventures and launching in early 2013. Since then, the interest in Customer Success has exceeded even our largest expectations. Businesses across every industry are moving to recurring revenue business models and hence are thinking about retention and Customer Success as much as they think about sales. You are not alone.
- We Are
DoublingQuintupling Down On Our Customers. While we provide a lot of value to our customers with Gainsight, there is so much more we can do. The broad landscape of problems in Customer Success is huge. We are going to use the money to (1) grow our Engineering and Data Science team by 5X, (2) continue to grow our Services and Customer Success teams to scale and deliver value and (3) expand our community and thought leadership efforts around the Customer Success movement.
- Investors Believe In Customer Success. Many investors have seen these same trends and needs in their own portfolio companies and board meetings. Hence several investors reached out to us to start the process much earlier than we were planning to raise. We were fortunate to work with a set of firms that see the huge opportunity the same way we do and that want us to invest aggressively to get there.
What Does This Mean For Our Customers?
- Expect More Innovation From Us. Today, we separately announced our new big data back-end architecture, leveraging best-of-breed technologies like MongoDB and Hadoop, to allow our customers to dive into large volumes of granular data, while still rendering the visualization, analytics and workflow inside CRM systems like Salesforce.com. Keep your ideas and feedback coming and we will continue to deliver new capabilities like this.
- Expect More Expertise From Us. We also announced that Denise Stokowski is joining us as VP Client Solutions. Denise has a long tenure leading services at world-class organizations including Marketo, Right90 and Epiphany. As we scale our customer base, we need to make sure we have the deployment processes to keep up. As importantly, our clients want our expertise in Customer Success and our partnership around analytics to ensure they achieve their business objectives. Denise and her team look forward to the challenge.
- Expect More Community From Us. We know how to have fun. And more importantly, we think we have a unique opportunity to bring the Customer Success movement together. We did it at our Pulse conference last May. We will do it again at Pulse 2014. I might even do the Heisman again on stage. And in between, we are bringing Customer Success to the floor of Dreamforce in a few weeks.
Where Do We Go From Here?
That, my friends, is up to you. Together, we are solving a massive problem in the Subscription Economy. And if you’re feeling like Dorothy, we’ll be your Toto – or even the Munchkins.
But I know for sure that we’re not in Kansas anymore.
-Nick Mehta, CEO, Gainsight