I’ve done everything wrong.
I’ve made great hires who turned out to be terrible. I’ve launched marketing campaigns that delivered no leads. I’ve botched presentations in front of my own investors.
And that was just the first month of 2019.
It’s easy to regret becoming a CEO during times like these, so I’d rather reflect on the bright spots of 2019:
- We drove our most important metric, customer satisfaction up across all of our services and have a ton of momentum here going into 2020
- We tripled ARR for the second year in a row
- We built one of the best executive teams of any software company in New York
- We opened three remote offices
- Nearly 10 of our team members formed a band and played at our holiday party. Including our CFO singing “Wanted Dead or Alive” by Bon Jovi
And so on.
I studied the tailwinds and decisions driving this year’s success and broke them down into two categories:
Our approach hasn’t changed, but the industry has caught up–now we find ourselves at the right place at the right time.
A. Automating back office tasks is the future: A lot of investors used to tell me things like “I just don’t think it makes sense to try to automate this stuff.” This seems like a ridiculous statement now, but three years ago it was not. Just about every back office function (HR, accounting, insurance, IT, office management) that was historically managed on spreadsheets or legacy systems is being re-imagined as an efficient, high NPS, subscription-based offering. Services becoming software is absolutely the future. I don’t mean traditional SaaS either which requires you to build the automation–I mean actual, legit automating the solutions to problems.
B. Tech-enabled services that become SaaS over time is not an insane approach: This was another knock on our business in the early days. Our master plan was to build an automated SaaS product by starting without any software at all. Mostly humans. Our theory was that by delivering a full solution out of the gate, we could collect the data needed to inform automation while simultaneously figuring out the sales motion. This has proven to be a very effective, albeit complex, approach. Pilot has proven this in bookkeeping, Expel for managed security, Atrium for legal, Newfront in the insurance space and most recently Dan’s rebooted version of Managed by Q for office management.
C. Return to management fundamentals: Surprise! Working unit economics, profitable growth, strong emphasis on culture and grown-up leadership are the ingredients of a successful business and one that people want to work for. The market has shown that growth at all costs and toxic cultures are a losing proposition in the long run. Since day one we have taken pride in a responsible approach to company building, and in 2019 it seems the rest of the market decided to value that again.
Years one and two of Electric were classic, early-stage individual heroics. 2019 was the year we decided to grow up and become a company rather than merely a startup.
- Total focus on leadership: I started this year by looking at our business problems as people problems first, and then solving for our underlying leadership issues before touching anything else. In doing so, I realized that for post-product market fit companies it’s the quality and calibration of the leadership team that determines success. In the long run, no amount of clever growth hacks or product strategy will make up for weak leadership.
- Know who your customer is: our sole reason for being is to serve our customers. But given the nascent stage of the business it was critical for us to redefine exactly who “our customer” really is. We looked at 2 ½ years of data and came up with a new definition of a good customer, vs a bad (poor fit) customer. Bad customers cannibalize your CSMs’ time from the great customers. Salespeople lose momentum when the bad customer churns and their commission is clawed back. Product builds features for people who don’t even care about what you are doing. Yuck. When you orient the company toward the most important points of leverage for your most important customers, everything begins to click.
- Taking a step back: we did a wholesale review of our entire business back in Q2. In addition to re-analyzing who our ideal customer is, we dove deep into budgets, margins, what was working, what wasn’t. We McKinsey’d ourselves. In some ways it sucked, but mostly it was a refreshing and reassuring self-reflection on why we were doing what we were doing. My view was that if we got in there with a stethoscope now, re-adjust mid year, and re-prioritize based on good data then we are less likely to get bit by surprises later on. We found a lot of stuff that we needed to address that was not obvious. We would not be rolling into 2020 with an abundance of confidence had we not done this.
While I’m proud of the company’s overall performance, I’m most proud of how we did it.
Nothing was by accident.
In fact, one of the benefits of running such a difficult business is that we don’t have the luxury of being mediocre or ‘seeing how things go’.
Everything is intentional. We have no choice but to be excellent.
Our team, which now numbers close to 200, works hard, plays hard. We give a shit. And most importantly we treat each other like a family.
This was a great year.