This post is by Louise Lee from SaaStr
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We all know and could name several successful B2C and B2B companies. What sets apart some of the most successful, high-growth companies we see today—Slack, Dropbox, Atlassian—has been their ability to tap into and master a new GTM strategy: B2C2B. In this presentation, Pluralsight co-founder and CEO Aaron Skonnard will discuss how Pluralsight successfully transformed its business to serve both individual and enterprise customers independently and will share his lessons for SaaS companies looking to tap into individual customers to sell into enterprises and vice versa. Want to see more content like this? Join us at SaaStr Annual 2020. Aaron Skonnard | Co-Founder and CEO @ Pluralsight FULL TRANSCRIPT BELOW Please welcome Pluralsight Co-founder and CEO, Aaron Skonnard. Thanks everybody. Wow. Those were old videos, blasts from the past. It’s awesome to be back at SaaStr and be with all of you, and I’m really looking forward to
time we have together. My intention today is to share a little bit about our journey as a company, my personal journey as an entrepreneur, and give you something that you can take away to apply to your own businesses. I’ll start with the very beginning of my entrepreneurial journey, which was way back when I was only eight years old and my father brought home one of the first Apple II computers. We lived in humble circumstances in Southeast Portland, Oregon. He brought that home, and as an accountant, he didn’t really know much about it, how to use it, what he could do with it, but he knew something really important, which was that that device, that personal computer would dramatically change our collective future. He had a sense for it. He saw something. So my father sat down with me in our basement, and I remember working in this makeshift workstation that we built together and we learned how to code, because back then there weren’t a lot of applications, there weren’t a lot of games, a lot of software to be used, so we actually had to create it ourselves. So we cracked open a basic programming book and we started learning how to write our first lines of software together. That was the start of an entire journey for me. In that moment, I learned something very special about technology, and I also learned something very special about my relationship with learning. If you fast forward over 30 some odd years up till today, Pluralsight is really the combination of those two loves of my life, the love of technology, the love of learning, the love of teaching other people about it. That’s really what Pluralsight has become. So that’s where we started, and I hope that as I walk you through that journey … I intend to do that here over the next 30 minutes with you, to walk you through Pluralsight’s evolution as a company that was seeded in that early moment of my life so that you can see how our vision for the company evolved and changed over those years. And I would request that you look for the transitions in our vision, because everything starts with vision in building a company. You have to be able to see something, see something new that didn’t exist before, and your job as the leader of that company is to create that new future, a future that wouldn’t be possible without you, and Pluralsight’s evolution consisted of several evolutionary phases where each step of the way we saw a new vision, a bigger vision, an evolved vision for the company that took us from the classroom to the cloud to B2C onto B2B and ultimately to economies of scale that we experience today as a company. So, let me walk you through that. If I rewind about 10 years from now and painted a picture for what Pluralsight looked like in the beginning, you would probably be surprised. In fact, I wouldn’t be standing here on stage with you had we not evolved from that point in time, because I was teaching technology classes in a classroom, in a physical classroom like this. We had run around the world and we would show up to a company using technology in some interesting way and we would teach them for four, maybe five days straight, and that was our business model. I remember flying home from Europe, this moment that I’ll never forget, teaching a class to a big tech company over there, feeling sorry for myself because of the number of weeks I had lived on the road that year. I had this epiphany–I call it the epiphany in the plane–when I saw a different vision for what Pluralsight could become. It hit me, why don’t we use technology to change the way we teach technology to the world? And in fact, if we could do that, I wouldn’t be standing in a physical classroom with only 25 people anymore. No. Pluralsight would have the world as its classroom where we could reach anyone anywhere, regardless of race, gender, socioeconomic background, and we could give them the skills that would create a new future for themselves. That was when a new vision formed beyond the physical classroom to what would later become our cloud, where we can teach anyone anywhere the digital technology skills of the future. That was our first transitionary moment, and from that point forward, we began investing heavily in building a way to teach people technology skills outside of a physical classroom. My co founders and I were software developers, so we knew how to write the code, to build the website, to build the learning platform, to build the video distribution model. We were also teachers, we taught in the classroom, so we knew how to teach the first courses. And from about 2007 till 2010 we bootstrapped and built the first version of the Pluralsight you see today. The first few dozen courses that we published on the platform were authored by the Pluralsight co founders. Then we discovered there were people out there hungry for this kind of learning, people that were coming to us. This is when we discovered our B2C customer, individual learners all over the world who were willing to pay us a small amount every month to get access to a new future, to get access to the skills that they would need to go develop a new career for themselves and a new future for the businesses where they worked. So we kept investing, we knew we were onto something, and little by little we saw our traction improve. We saw the momentum increase, and we were nailing that B2C customer. And I think in a large part because we as the founders of the company knew better than anyone else what those individual learners needed. Having lived in that classroom environment for so long, we knew what value look like to them and we are obsessing over it and creating it for them. Then something really interesting happened. We saw inside the company this tension between our classroom business and this new B2C digital business, and we knew we had to make a decision. Our salesforce didn’t know which one to sell. Should I sell a $20,000 engagement for a one week training course in a classroom or should I try to sell individual subscriptions to individuals around the world for only $100 a month, which was our initial starting price point, and we knew we had to burn the boats. It was our burn-the-boats moment as a company where we had to commit fully to going after B2C and that’s when we killed our classroom training business. We didn’t just phase it away, we didn’t try to sell it, we just shut it down. That was in 2010, and we committed the company to go big with this cloud-based SaaS business model that would allow us to reach individuals anywhere in the world. That’s when everything started to change. It was the focus, the laser focus on that one priority, that one objective that allowed us to really move into a hyper growth mode as a company. I remember back to the mantras we would keep saying to ourselves internally, laser focus and make it easy for people to pay you. That’s all we thought about. Keep it laser focused on the value we were delivering to these B2C customers and make it easy for them to pay us. And one way you make it easier for them to pay you is by delivering so much value that it’s a no brainer. So getting your price point right, really figuring out how to optimize that was a big part of what the early Pluralsight was all about. Then another really interesting thing happened. We discovered a new customer that we didn’t know existed. All these individual B2C customers were coming to us and saying, “Hey, I love the product. I love what you’re giving me here, but I actually don’t love paying for it myself. I actually think my business should pay for it. Can you enable that?” So they asked us if we could provide a simple mechanism–making it easy for them to pay us again–for their business to come in and buy a bunch of licenses for all of the developers. We said, “Well, we think we can do that. That doesn’t sound too hard.” So after we heard it enough, paying attention to what was happening, we said, “We’re going to go out and build a B2B platform,” or at least a B2B payment portal where a training manager or a dev manager or a tech lead could come in using a corporate credit card and they could buy a simple company plan that would give them up to 25 licenses on the Pluralsight platform. So we built it quickly and we shipped it. And before we knew it, we had a bunch of business customers showing up, and I think one of the main reasons they were showing up is because we had this healthy base of B2C customers just raging about how much they loved the product and requesting to the business that they come to us. That’s a really important dynamic. When we talk about land and expand, when you talk about B2C2B, that only works if you have nailed the B2C customer and you have these fans that are out there that are wanting the business to pay for your product. Then we realized we had two customers, and we started learning about both of these customers, the learner and the buyer, the individual and the business. We also talk about it in our business as the learners and the choosers. So we have these individuals learning our platform and we have the business buyers who are choosing our platform. It wasn’t until we really went deep on this that we realized they’re very different buyers, they’re very different customers. Their profiles are very different. What they care about is very different. And we really went deep on this. We started obsessing over both. I remember there is a moment in this journey where there were a lot of debates internally in the company about which customer is more important, the individual or the business. Those of you who are in this sort of B2C2B paradigm can likely relate to this. Like this is a common debate. Who gets more attention? Who is the higher priority? Now, I remember us having a lot of debates about this internally until a moment when we just experienced clarity. We don’t have to choose. It’s both. It’s an and. They’re both incredibly important. When you can nail both of them and leverage the synergies between them, you can build an incredibly powerful business. So instead of being forced to choose, we committed to both, and as we committed to both, we ended up learning more than we ever expected. At Pluralsight, my Chief Experience Officer who runs product and content has developed a user centered methodology for developing product called directed discovery that is completely organized around the voice of the customer. His name is Nate Walkingshaw and he has a book out on product leadership that was recently published, which is an incredible book. When you look at the process that we use at Pluralsight, you can’t deny that we are obsessed over both of these customers. We do thousands of customer interviews every year, both with the individual and with the B2B buyers that buy our product. We are obsessed over them, and through those learnings we discover how to produce more value for both of them independently and both synergistically. It’s in that, that we find the win, we find the progress. So the key point here is for B2C2B to work, you need to obsess over both and really understand the differences between those customer personas and what value looks like to them. The next phase of our journey took us to a board room in New York city. It was a board meeting I’ll never forget. It was in late 2015, it’s about five years after really succeeding with this online platform and evolving it and taking it into businesses all over the world. We sat around the room looking at each other and we asked ourselves, are we really an enterprise company yet? Have any of you asked yourself that yet? Are we really doing the enterprise? And I’ll tell ya, I thought we were. I was convinced we were. I was sure of it because we had lots of business customers. In fact, at that point in time, we probably had over, I don’t know, maybe 10,000 business customers and I was sure we were an enterprise company because we were selling into lots of enterprises, but as I looked around the room and I was listening to my directors, my board members, I was hearing them say things that that didn’t sound right. They were telling me that what they were seeing in our motion, our go to market motion, what we were hearing from our customers, what we were hearing from our sales leaders didn’t sound like we were winning in the enterprise, and there was lots of evidence of that. As the CEO, I had to really listen. I had to start listening what was really going on, and that’s when I discovered and finally accepted the fact that we weren’t. We were not an enterprise company yet. The next phase of our journey was committing to this idea of going big. To really become an enterprise company would require a significant commitment and investment. The evidence that made it super clear in the end was that we were not closing big deals with technology buyers at scale. Our average deal size was tiny, and we weren’t reaching the leaders within the business that would pay for a much bigger value proposition. So, as we committed to go to the enterprise at Pluralsight, we knew that we were on a multiyear journey. In fact, Ryan Smith, who was just on the stage a little before me, he and I were having a conversation. We’re both from Utah, both companies, and Qualtrics was going through a similar evolution. He was telling me, “Look, this is going to take a while, to go from small business to the enterprise.” And I thought, “Oh, we got this. This won’t be that bad. I think we’ve got to figured out.” And sure enough, he was right. He told me, “It’s probably going to take you at least a couple of years.” He was probably a year and a half ahead of me in the journey, so he’d already seen a lot of the potholes, the signs along the way. And I knew, “Okay, this is going to be harder than I thought.” It was really accepting that and being intentional about it, that actually unlocked us, helped us really see that, hey, to really go after this enterprise market, we’re going to have to really do things differently. We’re going to change things. That was when we realized we had to go hire some experienced enterprise go-to-market leaders, like Heather Zynczak who runs marketing at Pluralsight. She’s here this week, speaking as SaaStr. I think she’s on stage tomorrow. Nate Walkingshaw, who I mentioned before, who’s my Chief Experience Officer, Joe diBartolomeo, who runs all of our direct sales motions globally around the world. These are leaders who have worked at large enterprise technology companies who knew how to build a product that could work with the enterprise and then take that product into the market. So there was this leadership evolution that we had to experience as a company. We had to know, we had to be able to see as a company what we were intending to go build without the right leaders around you. That’s really hard to do, to be able to see it. But once we were able to see it, I knew we could go execute and create it. And over the next several years, we significantly evolved our product to deliver value into the enterprise. It was no longer just about the learning, the learning was important to our individuals, our B2C customers, but even more important to the business were the insights we could deliver to them around that learning. We realized that what the CTO and the CIO need to know is what skills do I have, what technology skills exist in my business, what skills are missing relative to my tech strategy? Where’s the skills gap? And then give them the tools they need to build customized solutions to go close those gaps through the learning we can provide. So those were the products and solutions we set out to build for our B2B customer in the enterprise. It went way beyond the learning. In the beginning it was just all about the content. It was sort of like Netflix for technology training, then we became a platform, a true skills development platform for the enterprise that any CTO, CIO in the world would find as a must have. If you’re a CTO today of any company, regardless of industry, you are striving to become a tech company. So we set out to build them a platform that would serve that need, and that’s what it meant to commit to go big at Pluralsight. As we found that success, we then found this incredible opportunity called B2C2B. We now had a foothold in the enterprise. We were succeeding at large scale. We had experienced our first seven figure deals as a company, which was the moment I knew it was working, and we still had this incredible fan base of B2C customers who were deriving significant value from our platform every month, paying for it with their own credit cards. We knew that to really take Pluralsight to the next level, we would have to leverage the synergy between B2C and this incredible B2B opportunity.
TWO SUCCESS STORIES: “I heard one of our sales reps come into one of our executive meetings talking about how they had just showed up at HP, and HP had over 2,000 individuals paying for our B2C product using Pluralsight, and it completely changed the tone of that conversation with that B2B buyer.” “I also remember recently Barclay’s showing up there for the first time and then them telling us how they had just discovered a 19 year old young man who had been self-taught on Pluralsight and ended up building Barkley’s first Siri enabled mobile app for the company that was then adopted and then used in the wild.“