“From Hackathon to Unicorn” Talkdesk Co-Founder Tiago Paiva and SaaStr CEO Jason Lemkin (Video + Transcript)

This post is by Faith Storey from SaaStr

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In 2011, Tiago Paiva won a Twilio hackathon by embracing the overlooked call center industry. 7 years later that hackathon project achieved Unicorn status while transforming the call center space. Join Tiago as he shares Talkdesk’s unconventional journey and what it takes to build a top-valued brand. Also, don’t miss out on discounted prices for SaaStr Annual 2020 tickets.   Transcript Tiago Paiva:
Let me play a quick video. We are the fastest growing Contact Center in the space, in the industry. Just 4 years ago, we were 10 people in the company. Now we are almost 500. What we try to do is this integration between two or three companies to be so flawless that for the customer seems like it’s only one application, but you are taking advantage of the best E-mail service, the best chat service, the best voice service. Everything needs to be done right now.
have someone using Talkdesk every single second of the day. There’s no time to wait. You need information in your agent’s fingertips immediately. Jason Lemkin:
I want to do two things with this session a little different. One, I want to have some fun. Tiago and I met, I thought it was very early in the history of Talkdesk, but we’ll go through, we’ll come back to the agenda. But actually, we met in 2014 when you’d actually been at it for three years, which is- Tiago Paiva:
Around three years. Jason Lemkin:
… a long time. The first two years, no revenue, whatsoever. Right? For two years. I want to come back to that a minute. I’d like to say I met Tiago early, in the long run at will, but I was one of the first people he met when he came here and really got settled in the U.S. It was just you. You did not even have … you had a desk in San Diego, there was no office. You and five engineers in Lisbon. Right? So, it was fun to meet, and I want actually. You never get to see this. You’ll actually see the E-mail that Tiago sent to me, which you never get to see. You’ll see what a unicorn looked like before they got their first investment. I was lucky enough to … One of my first larger investments was in Talkdesk. Jason Lemkin:
You’ll get to see some early stuff that you don’t usually get to see with a startup. And then I want to have some, really dig in, substantively, on going up market. Because we all go … most of us in this room are going to go up market, we’re going to raise our prices. But few have done it as dramatically, and with as little money as Talkdesk, right? Before this unicorn round, Talkdesk raised about 15 million total, and spent less than that. Right? I don’t know how much was in the bank. But to go, it’s hard enough to build something of substance with limited capital. But in the enterprise, it’s really hard, right? Especially moving to San Francisco. It’s expensive in San Francisco. Some of these sales reps want more than a $100,000 a year, don’t they? Tiago Paiva:
Oh yeah. Jason Lemkin:
I’m kidding. I’m kidding. You go from the leanest organization and very small SMB, to closing seven figure TCVLs for enterprise. And few folks I know of, and certainly have known for so long, have done it so dramatically with so little capital, and we want… and there are a lot of trade offs to that, right? A lot of costs. I want to dig into those topics, among others. But let’s have just a couple things I want to talk about it. You were founded in 2011. You’re going to hear this Twilio hackathon story for your entire life. Right? You’re never going to be able to escape it, but it is true. Right? Tiago Paiva:
It’s true. Jason Lemkin:
I don’t want to spend all time on it, but it is true. But I had forgotten it was in July 2011. You’re sitting in Lisbon, and you come out to win a MacBook. That’s correct, right? You won it? Tiago Paiva:
Mm-hmm (affirmative) Jason Lemkin:
People wanted to build an app on Twilio, and you stayed and you had no revenue for two years? Tiago Paiva:
For almost two and half years, yeah. Jason Lemkin:
How’d you do it? Tiago Paiva:
Honestly, I was living in San Francisco. I was pretty much doing anything I could to make some money. I remember I was babysitting- Jason Lemkin:
You were writing Talkdesk and babysitting [crosstalk 00:03:28] Tiago Paiva:
I was babysitting, I was dog sitting, I was doing anything I could to make some money, and you just keep pushing until you make the first dollar. You just need to keep going. Jason Lemkin:
For two years, you were babysitting? Tiago Paiva:
Two and half years. Figuring out how to get- Jason Lemkin:
Yes. Tiago Paiva:
… money here and there. Yeah. Jason Lemkin:
Yeah. Then we skipped this step, but let’s jump back. Tell folks what Talkdesk is today, and why Contact Center’s a big space, and is that the same as 2011? Is it the same vision? Tiago Paiva:
Here’s an interesting thing. The vision, even though when I started Talkdesk I was right out of college. I was 24 … 23, 24. I didn’t know anything about the industry. The idea didn’t change much, it just evolved significantly. What we do is, really, we provide an easy-to-use software that any company can use to take support calls, sales calls, and basically contact with the customer. Think about a communications platform between the customer and your company. Jason Lemkin:
Why? Look, it’s 2019, we’re using Slack and E-mail and WhatsApp. Why do we need it? Why do we need a call center? Isn’t this dated? Don’t we not need this anymore? Tiago Paiva:
I’ve been hearing that for eight years. And pretty much actually, if you guys, think all of us, if we think about when we have a serious problem, we really don’t want to chat or E-mail or anything. We want to pick up the phone and call the airline, call Uber asking for our food. We want to talk with someone, and what we’ve seen is, over the last eight years, actually the usage of the phone has increased significantly. It’s different types of calls right now, so every single call is an urgent call, and it’s a call that you need to pick up and know the answer, which makes Talkdesk more valuable. That was one of the things we’ve, we kind of rode this wave of the calls and the contact, is becoming a lot more important than before. Jason Lemkin:
Yeah. Contact Center, for folks that don’t know, it’s something like the third or fourth largest segment of software, right? And really old, very on-prem, historically hardware associated, right? Then we’re going to talk a lot about the market in this conversation, because it’s relevant, because there’s a lot of players, right? But then what changed? This is a 20-year-old market, and then how did you really get traction? What changed in technology, in the market, that a new entrant for a CEO that by the time I met you, knew the market cold? Let me tell you, the first pitch. But how could you penetrate this old, dated market with this brand new company? Tiago Paiva:
The true fact is, if I knew what I know now, I probably wouldn’t have tried to do it. There’s- Jason Lemkin:
You would have done some sort of … You would have built just built Slack, right? Tiago Paiva:
I would’ve built Slack, but- Jason Lemkin:
You would’ve just built Slack. Tiago Paiva:
I wish I had built Slack, right? Jason Lemkin:
Or Zoom. You would’ve built Slack or Zoom? Yeah. Tiago Paiva:
Or Zoom, you pick. I am not picking on those two. Really what we did was, there’s 95 competitors in the space right now. I just saw a report that came up. There’s 95 competitors. There’s 10 competitors coming up every single year. Jason Lemkin:
95 good companies? Maybe not as good as Talkdesk, but viable. Let’s say- Tiago Paiva:
95 viable companies, yeah. Jason Lemkin:
There’s by real competitors in market. 95, right? Tiago Paiva:
95. What we’ve realized is, doing a product for SMB is fairly simple, and you’ll see in the graph, that’s why we grew so much in the beginning. Doing a product for SMB is fairly simple. However, doing a product to the enterprise, that was something that we were not expecting how difficult it was going to be. It took us a couple of years to even get close to that. Like you said, with no money, building an enterprise sales team, building everything that- Jason Lemkin:
Yes. Tiago Paiva:
… you need for the enterprise was … Maybe I should have raised money a little earlier knowing what I know now, but it worked out in the end. Jason Lemkin:
Then not to … We can get into the yields or not, and we don’t have to talk about WebRTC and other technologies. But as strange as it sounds, before maybe 2013, it was hard to do a call center in the browser, right? Tiago Paiva:
Yeah. Jason Lemkin:
Tech … We think that … why was that? But technology keeps changing, right? Much like mobile took a while. We needed … Talkdesk was a combination of two things, I think, in the beginning: change in browser technology so that you could actually do a call, and then leveraging other people’s APIs and platforms, right? You did it both from technology initially, with Twilio, and then with go-to-market partners like Zendesk and Salesforce, right? Tiago Paiva:
In the beginning was all of that. So not getting too technical, but before ’13, everything was on flash. If anyone even remembers- Jason Lemkin:
As crazy as it sounds, and it was still on … this segment of the market was still on flash, right? Tiago Paiva:
Yeah, and the quality was really, really bad. When WebRTC came in, and allowed Talkdesk to really build a product that worked back in the day, and using the technology plus the clouds, plus the simplicity. For example, our tagline back in the day was “Create a call center in five minutes.” When you compare to the industry, it usually takes six, seven, eight months. When you go with such a strong message, that’s what got us in the first couple of years after ’14, that got Talkdesk to grow as much as it did. So it was the combination of that plus partnering with Salesforce, Zendesk. It’s the easiest … not easiest, but the fastest go-to-market and cheapest go-to-market a startup can get. Jason Lemkin:
But let’s go back in time a second. But just because it’s so hard on the outside and some of you need insight to see when markets change, right? Literally in 2013, as strange as it sounds, this was a segment of the marketplace running on flash, and running on weird technology. You had to have a change in browser technology, right? Tiago Paiva:
Mm-hmm (affirmative) Jason Lemkin:
It was late. This was late to being cloudified, right? You and I were chatting, not too long ago on the phone, and you said you felt like the market was accelerating now. This was the best it’s ever been. Why is this space that took a long time to evolve? Why is it accelerating now? Is it because we’re five years into this technology change or why are these the best times today? Tiago Paiva:
Here’s the interesting thing. In 2014, when we met, the cloud was accelerating. But even now in ’19, 85% is still on-prem. Jason Lemkin:
Yes. Tiago Paiva:
The thing is the space is so massive that you really… 15% is still a lot of- Jason Lemkin:
[crosstalk] Only 15% of your customer base in the third or fourth large categories are even in cloud. Tiago Paiva:
So 15%… Jason Lemkin:
That just pulls you like crazy. Right, Tiago Paiva:
Exactly. And then we’re talking about an industry that’s 20, 30, 40 billion a year. So every year you have billions of dollars coming into the industry. So we are, we take advantage of that growth. And then when you combine technology like cloud, WebRTC, and pretty much everything we are used to now nowadays. Jason Lemkin:
Yeah. Tiago Paiva:
It makes a difference. Jason Lemkin:
All right, let’s, I want to talk about today in the future, but let’s just have a little bit of fun first and go back to a couple of these slides. Jason Lemkin:
So this is, these are some of the early days it should, we should have time, but this is roughly the middle of 2014. And you had, that’s your still babysitting I think on the left at 20 K and AAR right? And then all of a sudden you basically went from one to 15 in about 15 months. But with all SMBs, right? Tiago Paiva:
All SMBs. Jason Lemkin:
So what… going from one to 1.5 and two months, is a lot of growth like that. Like what happened here, right? What was this change where you went from good, like no growth, right? To you can draw a small salary to holy crap. It’s really growing. Tiago Paiva:
So this was a combination of a few things. The first one was the technology. So the technology, WebRTC actually allowed us to build a product that would work. Tiago Paiva:
And then the second one was, very early on, we had very quick partnerships and very deep partnerships with Salesforce and Zendesk. So 90% of these growths was partnerships with the two biggest players in the space and word of mouth. That was also pretty big. Jason Lemkin:
That’s what drove these last four months as you’re crossing the million in revenue. That was the, was more market pull. Tiago Paiva:
Definitely. Like we had no marketing, like no marketing initiatives four years in a row. Jason Lemkin:
Yeah. Tiago Paiva:
So this was all really customers talking about Talkdesk. Partners talking about Talkdesk. It was kind of like organic growth. Jason Lemkin:
And this is an interesting, just to dig in for a minute, because some of this will be a counterintuitive folks. When we met you had, I mean they are still your go to market partners say it’s just, it’s changed. You had Zendesk and Salesforce. At the time, Salesforce, it was desk.com, which was a low end product. Tiago Paiva:
Yep. Desk.com Jason Lemkin:
Now it’s Service Cloud, which is an enterprise product. But what was interesting was Zendesk, back then, had a voice product and they still do today. And if you are on an outsider, you’re [inaud] you might be scared of that. Oh my God, how am I going to… Zendesk back then was, I mean it was probably almost a billion dollar company. Today It’s 10 billion. Jason Lemkin:
But what I quickly learned when I talked to Zendesk, not just your customer, Zendesk is Zendesk would send you leads. Because Zendesk voice, it was very limited product back then. But even then, if you had more than 10 agents, just, Zendesk didn’t want the business. Right? So Zendesk referred you leads because they’re competitive, their pseudo competitive product broke it’s scale. Right? And then I talked to Salesforce. And Salesforce did not have a competitive product and, and Zendesk actually back then loved you. Salesforce was unsure about Talkdesk. Salesforce loves you today. I can tell you they love you. They were unsure, but they’re like, we were getting creamed by Zendesk. So when we bring Talkdesk into deals, we have a solution and we win it. So one partner brought you in because, out of desperation. One was because their existing product just didn’t scale. And on the outside they would seem competitive, right? So how do you learn to work with cooperators and pseudo competitors and make it work? Right? It still exists today. You have met a pseudo competitor or cooperators, technology partners. Tiago Paiva:
It’s very interesting now. So, so here’s the funniest story with, with Zendesk. I don’t know if I ever told you this. I probably did. So when we launched Talkdesk in 2011 on stage. and the name talk desk comes from Zendesk. Right. I removed the Zen, I put the talk- Jason Lemkin:
It does seem familiar. Tiago Paiva:
and I have Talkdesk, I used to call it Talkdesk. There’s Zendesk for voice. And in the same conference I launched Talkdesk. Michael came on stage, the CEO of Zendesk, and we launched Zendesk Voice. Jason Lemkin:
Oh the same day. Tiago Paiva:
The same day. And now… Jason Lemkin:
Great idea, Tiago. I had the same idea. It turns out. Tiago Paiva:
So for a few hours I’m like this is over. Jason Lemkin:
It’s over. Tiago Paiva:
It’s never going to work. Jason Lemkin:
You’re dead, right. Tiago Paiva:
We’re really in the, in the deal. So the way it works and even now is, you know like they, Zendesk has a lot of products and voice is one of them. They are not specialists in the voice. In the voice world. We are. So usually when there’s customers that are more complex, which you get complex around 30, 40, 50 seats. Jason Lemkin:
Yeah. Tiago Paiva:
They need the partner that kind of understands the industry more than they do. So they bring us in. So even seven years later, now we are at a different scale. Now we go after a thousand seats, 2000 seats. But it still works the same. So, they need us to compliment their product and we need them to work together with the customers, as well. So it’s a very interesting relationship, but it’s very friendly as well. Jason Lemkin:
But it is, we all, anyone that’s, that’s had, I mean, partnerships evolve over time. Right. And, you have, and we’ve all had what feels like a near death experience with a partner, where you open up the browser and get the E-mail. Oh, you know, I, I remember we were acquired by Adobe and I remember when Adobe, we were literally at Adobe the day before talking. This was before, this was like two years before, about partnering. And the next day, I pop up Tech Crunch and they’d launched a competitive product the next, and I call it the SUV. I’m like, it’s cool, right? I mean, we are at 2 million in net revenue, so that, but I’m like, you could’ve told me yesterday. like you could’ve. And they’re like, yeah, we didn’t know what to say. Tiago Paiva:
Well, you ended up acquiring it, so. Jason Lemkin:
Yeah, I get it. But like there’s always this, this thing, right? And I didn’t, you’re right, I hadn’t heard the near death experience. But if you feel that in the room, it’s probably not true. Right. And even if they do kill you, if you only do that one thing and you pick yourself up off the floor, they probably can’t kill you. Right. 95 times out of 100 they can’t kill you. Right. Tiago Paiva:
It’s difficult. Especially when these, these big companies, and again, I have a huge amount of respect for all of these companies, but especially in the contact center, is such a complex business that you really need to invest the… We have 700 people at Talkdesk now. You know, most companies don’t have 700 people in the contact center world. Jason Lemkin:
So yes. just doing that everyday, right? Tiago Paiva:
That’s what it takes. Yeah. And we’ll probably need 700 more because it’s a really complex space and the other players know that. Jason Lemkin:
And on the partnership thing, and then let’s move on. How did you, you have a very strong relationship with Salesforce today, right? How did that evolve from an arms length relationship to a close relationship? Tiago Paiva:
You know, in the ends, we can talk about partners all day, but each company cares about themselves, period. That’s how it works. Jason Lemkin:
Of course, of course. Tiago Paiva:
We all should start the conversation with these. And here’s the thing, eight years later, I understand why big companies might not want to partner with small companies. So I can, I can often see the other side now. Tiago Paiva:
Not that we are a big company, but we are bigger than some of our partners. And if you really think about your specific company, it’s very risky for Salesforce or Zendesk or even Zoom or Slack to partner with smaller companies because the competitor can acquire you. That that has happened to us many times. We’ve partnered with smaller companies. The competitor comes in, acquires the product and that’s it. So when you know all of these risks. Why will the partners sell you? Why will the partner recommend you? So you really need to add a lot of value to them. And that’s where we work. we work very closely with our partners and we try to add as much value as we can. So you know, so we stay relevant and we stay at and also less dependent. You also need to build a product that’s not completely dependent on, on the path to have some, Jason Lemkin:
You have to have the ability to not be a hundred percent dependent on the partner, right? Tiago Paiva:
You don’t know what’s going to happen, you know, they can buy your competitor. They can buy, they can build it, they can partner. And you don’t want be- Jason Lemkin:
All three. Tiago Paiva:
All of three. Jason Lemkin:
They can do all three, right? Tiago Paiva:
You don’t want to be in a situation where you have no company. And that has happened before. We’ve seen that happen. Jason Lemkin:
But a lot of us, when we’re starting, maybe you felt it like we’re so frustrated that we can’t immediately build a partnership with a big company. Jason Lemkin:
Why? I got to get points on the board. How long did it take for you to be an outsider to more of an insider at Salesforce? How long was, did it take to, even if it’s in their self interest, it doesn’t matter. But how long, you’ve got to be patient sometimes, right? How long did it take? Tiago Paiva:
It takes years and- Jason Lemkin:
Years. Probably three years- Tiago Paiva:
It takes years. Jason Lemkin:
to go from the inside to the outside, right? Tiago Paiva:
Three years. And also, it depends which customers you are targeting. If you are targeting the SMB, it’s also easier because the risk is not, there’s not that much risk. If you are going more on the bigger, the bigger accounts, the bigger market where Salesforce or Zendesk or you name it, are putting their name on the line for you. Jason Lemkin:
Yeah. Tiago Paiva:
You need to have a lot of trust. And where we’ve learned these, there’s a lot of executive relationships we have. But what really works is that the field, field relationship. Tiago Paiva:
So you really need to have our team meet their team all the time. You have drinks and you have dinners. It’s really at these lower level that the magic kind of happens, you know? Jason Lemkin:
That can be a cultural change, right? Tiago Paiva:
It’s, you need to change the company to accept that. And you need to have your field days to, to do that, to get into the habit of doing that stuff. So it’s really, it’s really a company thing. If you partner with a big company, your company needs to adapt to what needs to be done, yeah. Jason Lemkin:
If you want to, if you start off with SMB, talk to this dude, and you’re a founder, and you’d like to sit in front of the monitor all day, can you close big customers if you don’t get out and build these field relationships and these multi levels? Tiago Paiva:
You know, I used to think it’s so funny. We have people at Talkdesk that have been at Talkdesk for five years. And sometimes I sit with them and I’m like, look at us. Like two or three years ago thinking we could close a deal like this. Jason Lemkin:
Yeah. Tiago Paiva:
You get into these enterprise deals and I was, I was looking at the numbers. Sometimes we have 14 people involved. Think about it like if- Jason Lemkin:
That’s a good metric. You do have 14 people involved. Tiago Paiva:
14 people and working people, the sales, the sales, the sales engineer, the sales enablement, the partner do the reseller partner. So you add everyone together. It’s like 14 people involved. And you need, you need the infrastructure to support these deals because it’s all about trust. It’s all about trust. They need to trust, you need to know that you’re going to support them. And that requires a lot of investments on all angles. Jason Lemkin:
Yeah. Yeah. And how much time you spend on the road with customers or out meeting with customers? Tiago Paiva:
I mean, I was just meeting the customer right before this meeting. Jason Lemkin:
Right here? Tiago Paiva:
Yeah. Right before this meeting. Jason Lemkin:
The answer right there. Right. Tiago Paiva:
But it’s a lot of time. It’s meeting customers and meeting prospects, but prospects actually happens less as your team gets more professional. They kind of can do 90% of the work. Like at this time I was doing all the selling. I don’t- Jason Lemkin:
All the selling, Tiago Paiva:
All the selling. I was doing demos from day to night. Now it’s less. Now I’m just pulled into executive relationships. But with customers, I spend all my time with customers. Last week, we had the customer advisory boards in London where you had some of our biggest customers. And I’m on the road all the time meeting customers. Yeah. Jason Lemkin:
But, so let’s dig in on that a little minute and then we, then I want to go want to go back to some of those fun early day E-mails. But you are on the road all the time. So you went from like one to 15 million basically all SMB. You had good logos, but they were groups, they were silos, right? And then you made a radical decision to, for all intents and purposes, to dump that $15 million of business, literally to dump. And you went from one from to, I don’t know the exact, let’s pretend it was 15 months. It might’ve been 14 or 17, but it was fast, man. It was, it was like, and you dumped all of that. Not all of it, but essentially all of it. Right. How did you, how’d you make that? I mean, how’d you make that decision and how did you know when to go? All in? Tiago Paiva:
So let me just say that that was probably the wrong decision. But in only five years later, it’s, it’s kind of- Jason Lemkin:
You would have done it more nuanced? Tiago Paiva:
I’ll have done it. So here’s what I would have done, if I went back. I would have kept growing that segment. I would have raised more money to invest more on the enterprise. Jason Lemkin:
Done both. Tiago Paiva:
The problem is at right now we kind of have both, not the SMB SMB but the- Jason Lemkin:
Mid-market, Tiago Paiva:
The middle market. But my fear back then was we didn’t raise enough money. So we raised 15, $20 million before these big rounds and it’s very difficult to do two things well at the same time because when you’re talking about SMB, you need to focus a lot on for product, self service and easy to use and supports, which is all important. And don’t get me wrong. When you going into enterprise, the mentality is completely different. Jason Lemkin:
Yeah. Tiago Paiva:
It doesn’t mean you don’t need an easy product, but you need sales team, you need support to focus on bigger clients. You need customer success, you need, you need professional services. And we’ve, I fear that we didn’t have enough money for both. So I went all in on the enterprise. Like I said, I don’t recommend that because we had a couple of years where, you know, we’re figuring out, it took, it took two, I literally thought it was going to take a few months to, to get to go enterprise. They literally took a few years that Jason Lemkin:
Very hard on the team. Tiago Paiva:
It’s very- Jason Lemkin:
Right. Most, a lot of those SMB folks are not going to be your enterprise. Right. Tiago Paiva:
Well, I honestly think, I mean not, I didn’t look at the numbers, but I honestly think we probably turned through the entire company because it’s completely different people. The people you hire, even to support an SMB customer, it’s completely different than the person you hire to support- Jason Lemkin:
Well, you had a great team up to doing three call closed deals, right? Three, you know, as discovery call, a thing and then try to close even a big deal, a 100K deal, maybe in three calls going from that to 14 stake holders in a meeting. It’s the, there’s no, there’s no DNA overlap is there? Tiago Paiva:
No, it’s, you know, like some people grow into it. It’s very rare. It’s very rare. And honestly, I mean, I don’t want to sound like I’m being, when you have a company you need to, like is everything is against you, right? So you really need to optimize for the best people to do their job. And he has, some people might have grown into the role in a couple of years, but you just don’t have those couple of years. So you kind of want to have a couple of years. Jason Lemkin:
You don’t have a couple of years. Tiago Paiva:
You don’t have it. Like unless you raise a lot of money, you really need, every dollar counts. So we, we’ve made the decision of kind of changing the entire company, but that, that was building the company from scratch that that was, you know, I feel like we’ve built a few companies along the way. Jason Lemkin:
How many Talkdesks are there since 2011? Three, probably three? Tiago Paiva:
Yeah, this is probably the third one we have now. I… Jason Lemkin:
So let’s dig in a little bit of that but I want to but the money thing’s interesting because you and I never chatted about that too much. When Ryan Smith came from Qualtrics to SAS radio right after he sold for 8 billion, you know, the number one thing he chatted about was? Dilution, dilution. And I thought you’ve always been very thoughtful about the cap table and dilution. and it’s interesting that you say now you would’ve raised more money because there would have been dilution. You would have taken the two, you would have how much more money. So you raise 20 or 50, whatever we call it, how much more money would you have raised? Quick math and we don’t have to talk about what it really means for dilution, but it would have been diluted. So how much more could, you could’ve had raised unlimited capital, right? You could’ve easily raised 50 or 80, even back then it wasn’t today. You- Tiago Paiva:
Probably not 50 or 80 because also we were also at a time where honestly we didn’t know what to do with the money because when you are moving from SMB to enterprise, just putting more money, it’s not going to fix your problem. You know, you see you don’t know the sales motions, you don’t know how to get the customers. You don’t have the brand. Jason Lemkin:
Yeah. Tiago Paiva:
And that takes time. No matter how much money you have. That takes time. What I’ll have done though is probably raised another 20 or 30 million. So at least I could be more relaxed, you know, because- Jason Lemkin:
So it’s double? Double to relax, right? Tiago Paiva:
And then the thing is when you have a CEO that doesn’t have a lot of money in the bank, it’s very rare that the occasion where you can actually do bold bets, it’s all about it. You know what I mean? For example- Jason Lemkin:
You only make one bet? Tiago Paiva:
You make one bet and if things go right, great. If things go wrong, you are in trouble and you are always stuck thinking about it in the back of your mind. So having 20, 30 million in the bank after ’16 will have been pretty helpful. But- Jason Lemkin:
Yeah. Tiago Paiva:
You can’t go back. And we survived and that’s what matters. But, I’ll have done it. Jason Lemkin:
And then as part of that, cause you could only make one bet you, you ended up probably with more sales leaders and in this transition than you might have otherwise had. Right. So what are the learnings? You’ve probably had one or two more heads of sales than you might’ve needed if you could do it perfectly from scratch. Right. So any learnings for the folks from that? Tiago Paiva:
Sales. Sales people. The first- Jason Lemkin:
You’re still learning about sales and sales people? Tiago Paiva:
We’re still learning everything. So, here’s what we did right and what we did wrong. The first VP of Sales we hired, right, when we raised money. That was the right one. We nailed it. We really hired the right VP of Sales. Actually, Jason was the one recommending him. We really nailed that segment up to 15, 20 million. Jason Lemkin:
Yeah, just like that right? Tiago Paiva:
After that, that’s when things start getting a little complicated because then you need the person that has dealt with these bigger deals that knows these complex, complex sales. But not only that, you need someone to tell you, look, this is the team you need to build. Tiago Paiva:
For example, I didn’t know in ’14 or ’15, which is obvious now for everyone, you need the sales enablement team period. your sales guys are not entrepreneurs. They’re not going to figure out the deals by themselves. You need the sales enablement team and the VP of Sales or the Head of Sales you need to hire when you are getting to these bigger deals. Yes to have done it. You know what I mean? Like if he hasn’t done it before, if you making a bet on someone, it can work. Don’t get me wrong, everything works like with time, but there’s so many complex things and you need to make sure you hire the right person for them right time. Tiago Paiva:
So we are the few VP of Sales. After the first one. And they were great. You know, like they were great VP of Sales, they were just not the right ones for the stage we were in. And that was the biggest mistake. And then you literally lose a year. Jason Lemkin:
And what was your mistake as CEO to learn from for that hire? And if, because that’s usually what happens, right? If you’re a good founder is you hire a great VP of Sales but not for the role you actually needed them. Right? what’s your learning to your younger self on this one? Tiago Paiva:
So here’s, here’s the problem. When I look back two or three years and I made all the mistakes in the book, if there’s a mistake to make, you probably can put me there. I also didn’t know what I didn’t know. And maybe the lesson here is not about the sales. The VP of Sales. It’s about getting someone that will have advised me of something different. You know what I mean? Like more mentors at this stage of the company. Jason Lemkin:
We all need more mentors, right? Tiago Paiva:
You know, I’ve been a person. I’ve always run Talkdesk by myself. We’ve talked a lot. But pretty much, by myself. And I also regret that. If I had someone in this stage, like 20 to 100 million, that would have told me, “Tiago, if you want to close $1 million dollars this is what you need.” Then I would have been okay. From now on I don’t need to look at this set of people. I didn’t know. You know what I mean? I kept hiring and for every VP of sales, I figure out what I didn’t want. It’s difficult to figure out what you want from failure. People say, “Oh, I fail and I get better.” Yes, you learn what doesn’t work, but you don’t learn what works, do you? Because, you know, it doesn’t work! So, I cannot figure out everything that didn’t work until I finally got to a person that checks the box on everything. And when it works, when it works you see it. You have these blog posts that when the VP of Sales is a good fit it impacts you immediately. Jason Lemkin:
Yeah. Tiago Paiva:
That’s super true. Jason Lemkin:
We all need better mentors forever. Like infinitely. Right? Jason Lemkin:
And then related to that, just in terms of learnings. The other thing that you did, that now I actually see a lot of founders do, is you were relatively late to building out a traditional marketing arm, right? In fact, you probably got to 15 million, maybe even past, without ever having closed the senior marketer. You probably would do that differently today right? Tiago Paiva:
I will have hired marketing a lot earlier. Jason Lemkin:
Yeah. Tiago Paiva:
Again, this is the thing of not having a lot of money in the bank. You really can’t make these risks. I’ll have hired marketing a lot earlier. Start building the brands. Especially if you want to go into a markets. Jason Lemkin:
Brand market, now you appreciate the value of brand, right? Tiago Paiva:
Brand is the number one thing. Like it’s customers first buy on trust and then they buy on everything else. Jason Lemkin:
Yeah. Let’s come back. I want to do. This one’s pretty funny. Then I want to hit the next slide. When we met, this is how much the cloud has changed, right? I was trying to, you have to write an investment when you invest in a company. I was assigning probabilities of success before we had the “Unicorn Age” when there are no IPOs. 2014 is so long ago. Box was the first one of Salesforce at IPO to work it but none of these octaves and had. What’s the possibility? Well, there’s a 5% chance talk desk might be worth more than 300 million, but it would have to dominate the market. Interestingly, cloud’s so big that Talkdesk is number one in a segment, right? In sort of next generation web centric. But you actually didn’t have to get a hundred percent market share to, to be worth much, much more to be worth, you’ll be worth more than 10 times this number. And then lose money 25%. That should have been zero. Because the odds that if you’re at one million, growing, quickly assessed, like you just, it with a good founder, you can’t ever fail. Jason Lemkin:
But to the cloud, like there weren’t even any billion dollar companies five years ago. Now there’s a new one on Crunch Base every day. Right. Anyhow, so this one’s just funny. I thought cause folks ask about this. I don’t know if folks can read it but I’ll read it to you. They ask about how to put together a good E-mail when you’re a first time founder. First job, right? How old back then? How old in April 14th, 2014? 26? I am making up a number. Tiago Paiva:
27. 27. Jason Lemkin:
Right. This is pretty good for folks because you never get a few folks like Matilda Front have been transparent. But I love this E-mail. Jason Lemkin:
“Hi Jason. Talkdesk lets companies big and small…” Jason Lemkin:
So the same vision except the small got medium. Jason Lemkin:
“Big and medium today to set a call center in the browser. We’re easy to use. We’re web based and we have integration popular. Here’s some stats we launched in 2013.” Jason Lemkin:
So your fudge the, but that’s when you launched. That is true. We just missed the one in the… Tiago Paiva:
We started making any kind of money. Jason Lemkin:
And this is crazy. “So last month revenue, basically a million in our net profit $49,000.” That almost seems that almost seems impossible, right? Raised $450,000 from a guy off Angel List. You never met in person. Tiago Paiva:
I never met him. Jason Lemkin:
Never met him. A billionaire from London. Hedge fund guy. Found you on Angel List. Which you can’t even do this on Angel List anywhere. You just wired Tiago the money. Tiago Paiva:
After a Skype call. Jason Lemkin:
After the Skype call, I called him and he’s like, “I love Tiago. He’s never sent me an E-mail since I invested. Is the company going to make it?” I’m like, “Yeah! Let me show you this E-mail. It’s doing pretty good.” Jason Lemkin:
So never met an investor. Six in Portugal, yourself in California, that has no sales people, upstate, no tech people. 100% organic growth. Referral sources, Salesforce and Zendesk. Here are logos, some of whom have stayed. Some of whom were not appropriate for the company, but they sound good. The Fitbit, Dropbox, Bonobos, 42Floors, Pipedrive. Biggest customers. You’d already, even though you weren’t enterprise, you already had your whales. And this is great for founders to think about. Crystal clear on competition. I mentioned the competition today is not the same, right? It’s not entirely the same. Five9, which back then was dying. It was a $200 million. I wrote this later in the memo. The worst news for Talkdesk is their biggest comp is a disaster. Five9 now is worth $3.5 billion dollars. Tiago Paiva:
Yep. Jason Lemkin:
So don’t. You never know where your competition is going to go. Do you? Tiago Paiva:
RingCentral- 10 billion now. Jason Lemkin:
10 billion. RingCental for the small market and now they’re going up market. And In contact was a big deal. It’s not a big deal today, right? Tiago Paiva:
I mean, they were bought. So who knows what happens there, but they’re still pretty big. They make 500 million in revenue. Jason Lemkin:
Oh, 500 million. So the world, you just don’t know. Right. And then Tiago, even in one E-mail, one page slipped in two case studies. Fitbit was able to train 80 in one week before Christmas. Probably you had to fly there to do it. It would be my guess, right? Tiago Paiva:
Yeah. Jason Lemkin:
Yeah. The first time I called Tiago he was somewhere like Arizona or something and he’s like setting up the WiFi for his customer himself. I’m like, you need some help? You do. Great. And then Dropbox. So anyhow, what’s fun for this E-mail, Tiago. Feel free to point anything out is if you want, a bunch of the questions we got in the prior session were not appropriate, but how do you pitch an investor? Right? This is about the best E-mail I’ve ever seen for someone with no funding, no social proof, no fancy accelerator, no, just, just raised 10 million at Y Combinator before the Demo Day. No. Do you hear my 11 friends from Stanford? This is a guy seemingly out of nowhere, right? First job. But now by then you were already in some ways a domain expert. You were pretty good, you knew this market well. But copy this, not literally, but mentally, right? Look at this. Who are you? This is 78 pages long. This is like, it’s really good. Jason Lemkin:
The only thing you missed is this is a $50 billion market going through transition, right? Exact metrics. When did you launch? How much revenue did you have? Oh, there was a screenshot, which doesn’t work anymore in Dropbox, but the exact. Don’t hide anything. You’re not hiding. You sent me all your revenue for like six months. There was no, no games. Right? The net profits still hard to understand. We could chat about it. How much you raise the employees. Jason Lemkin:
This is as good as it’s ever going to get at this stage. You may not grow this quickly, your metrics may not perfect, but there’s nothing hidden here and I’ve shown this E-mail to a few folks, but never onstage as an example of investing. I’m like, well, how do you know if you want to invest in a startup if you haven’t met them? I’m like, well, would you at least want to take this meeting? Anyone in their right mind would, they might not invest, but you take this meeting. So do this or better and five years later, I guarantee you’ll get a meeting. I, there’s 200 VCs here. If you emailed them with this E-mail, even if your metrics aren’t as strong, it doesn’t matter. This good, you will get 200 meetings. If you E-mail them to see if they have coffee while you’re in Paris, you’re not going to get them. You’re not going to get them any responses. Anything this brings back to you? Tiago Paiva:
I mean, I remember exactly sending these things because I was reading Chauser back there, like in court. So that’s why I sent them out and you replied “Sure let’s meet.” Jason Lemkin:
Yeah. Tiago Paiva:
And the next they have to fly as to fly from like San Diego to San Francisco. And I got there and Jason was like, “Oh I thought you were never showing up and this was the Nigerian scheme because it sounded pretty weird.” So from Portugal and so it was very interesting days. This is where pretty much where Talkdesk in America started. After this E-mail you invested. We are the first VP of sales and that’s where it all started. Yeah. Jason Lemkin:
Yeah. Jason Lemkin:
Oh, I want to talk about two details cause they’re super interesting. What’s interesting about Contact Center, it’s true of all spaces. I went through it, but the technology demands and enterprise are much higher. So talk to us. Did something, maybe, you did two things at which are interesting. I want to, maybe we’ll chat about this and wrap up because they’re interesting today. Jason Lemkin:
About a year and a half ago, you guaranteed 100% up time. Now if you’re a website or on the website and you go down every month, you may think a hundred percent uptime as hard enough to guarantee. Talkdesk has a much bigger issue. Which is running on voice. Which inherently, since we abandoned POTS and hard wire lines has infinite problems, right? Voice has infinite… Every version of VOIP and routing. Voice on the Internet is inherently unstable. It doesn’t work. When we met, this is probably the number one technology challenge. And there are cool hacks. I closed the browser, the Wifi. These weren’t even software issues. Twilio used to go down, and Twilio is good now. It used to go down all the time and then Talkdesk would get blamed. So Twilio could go down, the Wifi and your office would go down, someone would close the browser, they’d be in the wrong browser, they’d switch a session. And how do you go? And then you had to radically re-architect this product to get to. How’d you do that in this industry? Tiago Paiva:
So the way we did it is we have almost 500 engineers now. So that’s the first thing- Jason Lemkin:
How many, sorry? Tiago Paiva:
500. Jason Lemkin:
So out of, this I did not know. Out of 700-ish employees you say you have 500 engineers? Tiago Paiva:
Almost 500 engineers. Jason Lemkin:
So that’s a high ratio. Tiago Paiva:
It’s what he takes. So the problem with this industry is nothing really works very well. Because like Jason said, there’s so many limitations. And this goes back to my point of trust. It’s all about trust. And we guarantee 100% of the time. We have a team of 30 plus people that all they do is manage our servers. And we use Amazon and Google for everything. And also using the new technology allows us to do things that the competitors couldn’t and do right. Everyone else was on-prem. Even the ones that say they are cloud, they’re actually like hosted clouds. So we use all these technology and we provided 100% of the time. And the reason is, you know, it doesn’t mean everything always works, but most of the time or almost 100% of the time works. But makes up for the customer really knowing that we are there for them if something happens. And this is just a lot of investment in infrastructure and technology and time. There are a few things that time cannot fix. You need time to fix. Jason Lemkin:
But I find it’s very hard. And Talkdesk had double challenges because of infrastructure challenges in the space. It’s very hard to take cultures where downtime’s okay. Where sloppy code releases are… And sometimes it’s okay. If you’re moving quickly and you’re selling to SMBs and you need to roll back in an hour or the site goes down for 40 minutes and it’s not mission critical, it’s maybe worth it. Right? But I find culturally it’s very hard to go from, sloppy but velocity to 100%. It’s hard isn’t it? Tiago Paiva:
So here’s what I’ve learned starting Talkdesk. There’s software you sell to companies and then there’s mission critical software you sell to companies. Jason Lemkin:
Yes. Tiago Paiva:
If you sell something that’s mission critical, you are in for a ride. It’s literally, it is. It’s a nightmare when things don’t work, you know. Jason Lemkin:
You’re blamed for everything. Everything’s your fault, right? Everything’s your fault? Tiago Paiva:
Everything and doesn’t matter. In our case, if the telecom goes down, if the servers go down. And the thing is like, literally, if Talkdesk has a 30 second glitch, and not talking about three minutes or 30 minutes. If there’s a 30 second glitch right now on Talkdesk, there’s thousands of E-mails and phone calls coming in to Talkdesk. Jason Lemkin:
Why doesn’t it work? Why doesn’t it work? Get Tiago on the phone. Tiago Paiva:
And then the problem is when you’re selling something that’s so mission critical, there’s a few advantages and disadvantage. The advantage is you can really sell really massive deals. You know, like you can sell a million dollar deals, $2 million dollar deals. Jason Lemkin:
Because they will pay for it. Tiago Paiva:
Because they will pay for it. Jason Lemkin:
They will pay it. We don’t realize that when we come from the bottom. But big companies aren’t stupid. They’ll pay a lot of money. But you have to solve a big problem for them, don’t you? Tiago Paiva:
That’s exactly the thing. But because it’s mission critical, they will pay for it. But at the same time they will demand. So, if you have any glitch on any mission critical software, it’s very difficult. It’s even very difficult to survive because they have the expectations on you are out of control. And that’s what I didn’t know when I started Talkdesk. For me Talkdesk was just, you know, it’s cool. You make a phone call online and the call comes in and if it’s, you know, we are all used to calls not working. Now it doesn’t work like that. And that’s why it’s so important for technology- Jason Lemkin:
That was the big…When we first met, it was sort of, it was a little bit the customer’s problem. It was the customer’s problem when the WiFi didn’t work or Twilio didn’t work. You don’t say that today. Tiago Paiva:
Yeah. No. Right now it’s like… Also, there’s also a big difference now when you sell to SMBs, they also don’t have the infrastructure to support something like Talkdesk. So if you sell to a company like IBM, when you go there, they have IT managers, they have IT directors… Jason Lemkin:
They have a person. Tiago Paiva:
They have a person that can deal with the infrastructure. So it’s not, it’s still our responsibility to make sure everything works. But there’s someone on the other side that works with you to make sure things work. Versus an SMB. We all know if you have 10 person in a company, you’re not going to have an IT specialist. You know, you’re going to be on real work making phone calls or are on Starbucks and then you are surprised things don’t work. It’s also a different way of interacting with the customer. Jason Lemkin:
Very different. Right. And we will… One last thing because then we’ll run out of time, but related to this, interesting. So, so moving from SMB to true 100% uptime, big holder change. And the other thing is I’m interested is you just launched hybrid cloud product, right? Tiago Paiva:
Yeah. Jason Lemkin:
And so you start off as making fun of on-prem, which was true. And now the cloud gets so big. And now you launch a hybrid service. And what have you learned from that? And what does that mean? Is Hybrid a transitional state? Is it forever? What is it? What does it mean in 2019? So how much work was it and how hard is it? Tiago Paiva:
The interesting thing is, so we just launched hybrid cloud, which pretty much means you can have Talkdesk on a public cloud and part of it on a private cloud. Which kind of seems counter intuitive to everything we talk about that the cloud is the next big thing. So cloud is still the next big thing and Talkdesk is pretty much all clouds. But when you get into these bigger healthcare and financial institutions, you know, you really cannot change them. There’s… Jason Lemkin:
Financial institutions all want some sort of hybrid cloud don’t they? Tiago Paiva:
And what they want is they want to make sure their data is saved in their private clouds. Everything else can be in the public cloud. And that’s what we’ve done. But surprising, surprisingly enough, it didn’t take a lot of work because the way Talkdesk is built right now, it’s all in. I mean, I’m an engineer by trade, but I haven’t done anything in tech for seven years. So forgive my [inaudible 00:41:12] right? Like we use all the [inaudible 00:41:14] and we put it on in all the containers and we deploy anywhere. So pretty much what we do now is we take the same containers and we deploy it on a private cloud. So the idea is very similar. And we just take advantage for the big, big customers. And funny enough like we launched it, we have more than 30 customers in a couple of months already using the hybrid cloud. It’s a huge success. So… Jason Lemkin:
And how much, and then let’s break, just help folks because it is, it is interesting isn’t it? That they want it. I mean getting into regulated industries without hybrid cloud. I think in 20… if you want to sell big deals, it’s impossible, right? Tiago Paiva:
Yep. Jason Lemkin:
So how, let’s flip it around. By doing this work, we all want to be web folks, but by going hybrid, how much more revenue can you access? How much bigger does this make, at a practical level, for deals in the pipeline? How much? How much is it worth? Is it worth another 20% or 30% Tiago Paiva:
So for us at this stage, that’s, if you think that 25, 30% of our market is in these bigger deals- Jason Lemkin:
Yeah. Tiago Paiva:
That’s what it’s worth. Like 25, 30%. Jason Lemkin:
That’s real. Tiago Paiva:
That we can get in. At least be considered because this is the kind of things that you either have it or you don’t. If you don’t- Jason Lemkin:
And you lose the deal immediately if they need it, right. You lose it. Tiago Paiva:
A smaller example of this is PCI compliance. You are either PCI compliant or you are not. If you are not, Jason Lemkin:
You’re out. Tiago Paiva:
You are out. No one looks at you. So a lot of these things you end up doing at this stage, is a lot to check the box and then you still have to go in doing the deal. Tiago Paiva:
But look, it wasn’t worth two or three years ago. Two or three years ago it would have been too early for us to do these because the Talkdesk brand was not known. So, we were not [crosstalk 00:42:43] Jason Lemkin:
You weren’t even getting pulled into those deals. Tiago Paiva:
We’re not even considering those deals. And at this point that we are calling to hundreds of deals a month. And we need this stuff. We need PCI compliant, HIPAA compliance, GDPR. You name it, we have 40 plus certifications now. Jason Lemkin:
Yeah. Tiago Paiva:
Which we had zero a year and a half ago. Jason Lemkin:
A year a half ago. Tiago Paiva:
A year and a half ago. So. Jason Lemkin:
I think do them all as early as your team can survive it. If you want to go enterprise- Tiago Paiva:
That’s it. Jason Lemkin:
We can talk about checking the box, but you will lose deals if you don’t do that. And you’ll always look back and wish I was PCI compliant six months earlier because you don’t realize you weren’t even considered for that $2 million deal. Right. Tiago Paiva:
That’s the thing. Jason Lemkin:
If Morgan Stanley or Aetna or something like that. Tiago Paiva:
He never check…He never shows up in the product requests. Jason Lemkin:
Yeah. Tiago Paiva:
Because no one even looks at you if you don’t have those things. So, if you go enterprise, uptime, security certifications, it’s, you need them all. Yeah. Jason Lemkin:
And you got to learn with your sales team you get so much data on why you won deals. You don’t get enough on why you lost it. Tiago Paiva:
No. Jason Lemkin:
And if you dig it on while you’re really, if you really go deep with your head of product, you’ll learn that you do all this stuff early and it’s magical. Right. Tiago Paiva:
And that’s actually a good thing because data from sales team, every time they lose a deal is product fault, right? Jason Lemkin:
Always, Yeah. It’s always, it’s always the product’s fault. Tiago Paiva:
So also understanding why you are losing deals and why or not you are not being considered is what you need to do at this stage. Tiago Paiva:
When you are on the SMB level, most of these things don’t matter really. Jason Lemkin:
There’s too much volume. Tiago Paiva:
It is. Exactly. It’s volume. You want to simplify things. You want to make things easy. And when you get into these mid-markets, enterprise deals, this is key. Jason Lemkin:
All right. So Tiago. This was a great story. Raise a little bit more money when you go up market, maybe stay at the bottom when you’re there. Maybe you just don’t, maybe maybe keep the happy customers. As many as you can, right? Raise a little more money. And spend, spend more time with your customers. Learn how to go up market and do these things. So a bunch of good ideas. But thanks for all this time. This was great. Jason Lemkin:
Thank you very much. Tiago Paiva:
Thanks Jason. The post “From Hackathon to Unicorn” Talkdesk Co-Founder Tiago Paiva and SaaStr CEO Jason Lemkin (Video + Transcript) appeared first on SaaStr.

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