Building Customer Success Into The DNA of Your SaaS Start-up - An Interview With Aaron Fulkerson, CEO, MindTouch

As the SaaS business model has matured over the course of the past decade, it's fair to say that awareness of the importance of the customer success function has escalated dramatically. Any SaaS business' success is intrinsically intertwined with the success of its customers - and if you think about it, this is a good thing. It creates alignment as an imperative.

Enter Aaron Fulkerson, CEO of MindTouch.

I was fortunate enough to be introduced to Aaron a few years ago now,  just as MindTouch was beginning to hit its stride. MindTouch offers "customer self-service software" to customers including Optimizely, Zuora, Wal-Mart, Accenture, Whirlpool, Zenefits, and Intuit, to name a few. In early 2016 the company raised a $12mm Series A led by PeakSpan Capital to accelerate growth, largely on the back on fantastic customer success oriented metrics. These metrics included negative gross revenue churn - a measure that speaks to a company's ability to grow revenue from existing accounts at a faster rate than revenue is lost from cancellations.

Needless to say, as I was beginning to think about how we can build customer success into the DNA of Outseta from day one, I immediately thought of Aaron.  

If you're interested in listening to the audio version of this interview, here's what you'll find... 

First 10 minutes - Aaron shares how he and his Co-founder failed to find a suitable self-service product to disseminate research to internal staff when they were working together at Microsoft. He then details the journey that MindTouch took from being an extremely popular open source offering to making a somewhat terrifying pivot to a traditional SaaS business model.

10-25 minutes - Aaron shares how MindTouch now uses a customer success blueprint with each of their customers, which drives alignment not only throughout the sales and onboarding process but also across departments and with relevant executive sponsors. But simply having a customer success plan is not enough - you'll also learn how to hold your customers accountable to the agreed upon plan. 

25-31 minutes - Aaron offers his advice on how SaaS start-ups should be thinking about customer success from the get-go, and what they can do to build a customer success oriented culture.

If the audio version of the interview isn't right for you, a slightly trimmed down transcription of the interview is available below.

Enjoy!

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Geoff Roberts: Hi everybody. I'm Geoff Roberts Co-founder of Outseta and I'm here today with my friend Aaron Fulkerson who is CEO and Co-founder of MindTouch. How's it going, Aaron?

Aaron Fulkerson: I'm doing terrific.

Geoff: Fantastic. Why don't you start by telling us who you are and what you're working on at MindTouch.

Aaron: Well like you said I'm the CEO of MindTouch and I'm also one of the two Founders and my responsibilities, they've evolved over the years from being everything from operational to tactical, running different departments, to now I feel like I'm actually CEOing. What's involved with that is I focus on the development of strategic partnerships, helping the market understand how our technology is disruptive for businesses. And of course being the principal person for communicating internally with our team. But it's around finding strategy, communicating the outward facing vision to the market, the partners, the analysts, the journalists, and then internally making sure that there is a steady drumbeat that keeps people focused.

Geoff: At this point MindTouch has had quite a bit of success and operates in the customer success and customer experience space.

Aaron: I like to think of it as what we do is customer self-service and that impacts success, support, and other business but it's really focused on the idea that 80 percent of the population wants to self-serve when they have a support question or when they're onboarding; they don't want to talk to somebody. I know that I don't want to. Turns out 80 percent of the world doesn't want to either. So that's what we're solving for; self-service.

Geoff: Makes sense. What can you tell me about the success that the company has had today in terms of customer count, revenue, and those sorts of things? 

Aaron: Well we have about 350 customers. I don't know the exact count but it's approaching 400 customers and our customers will range from a lot of the software unicorn's from Domo, Zenefits, Zuora, Sprinklr, and Docker to more mature companies like Whirlpool and Electrolux that are in the consumer goods space all the way to the largest travel conglomerate on the planet which is TUI.  It's really across the board the kinds of companies that we service but it's all very specifically focused on helping their customers self serve.

Geoff: OK. So today I want to talk about early stage startups and what they can do to build a customer success oriented culture and customer success into the DNA of their business from the get-go. I know MindTouch took a bit of a long path to get to where you are today. Can you talk me through the evolution of the company up to this point?

Aaron: The technology began as an open source project that my Co-founder Steve and I started to solve for a specific problem that we'd experienced when we were doing research at Microsoft in distributed systems. We were frustrated that we didn't have a means of disseminating our research out to the rest of the product teams in a way that was effective. So what it meant was that we spent a lot of time talking to people, giving presentations and we thought that there had to be a better way to disseminate our research.

I was the Program Manager of a 14 person team. My responsibility was to take these brilliant minds' research and package it in a way to get it to the product teams. So I went around to the different product teams. This was in 2003 or 2004, and we were spending $2B dollars a year in research which is nothing by today's standards but it was for the most that was being spent at that time. I thought surely somewhere at Microsoft somebody is developing a technology that's going to be useful for what we were trying to achieve, which was self-service. I went to the Sharepoint team and they were not working on this. I went to the Office team - same thing. I went to a bunch of different internal research incubation teams and there was nobody trying to solve this problem of how do you deliver an effective self-service experience.

So that's when we decided we should do this. We came up with the idea of doing it and then we said well let's do it as an open source project. That's where we started with this idea of how do you deliver self-service. We released it as an open source project and it became wildly popular within a year. It was a top 10 open source project and before we knew it we were getting thousands of downloads a day. That was around 2008, and that's when we started selling a commercial license.  

Geoff: So the open source model very much validated the concept for MindTouch, and you knew you were working on something worthwhile. Talk to me about making the transition from the open source product to a traditional SaaS offering.

Aaron: It became clear that we were trying to address a market where the use cases were so broad and vast. We didn't have an addressable market that we strategically decided to attack. So we found herself in this position where we were like "what are we trying to do?" We're trying to compete with SharePoint and Dropbox and Box. It was at that point we were just like you know we've got a ton of distribution. In 2008 we did $1mm in cash receipts with an average deal size of $3000. In 2009, we did more than twice that - it was like $2.5mm. We were growing but we were clearly trying to address too big of a market. And all of us sudden we started to get all this competition in this category. So it was clear we didn't have that business model.

At that point we said look we don't have a business that we can scale because we're trying to be everything to everybody. So it was like, "OK why don't we divert our attention away from this broader use case and let's just focus on self-service," and it was Steve my Co-founder that was like "OK, well let's sharpen up the feature set and by the way we're going to do it in the cloud." I was initially really hesitant because when I started talking to our customers at the time they were mostly IT guys who had done installations for businesses. And for many of them their job, their sole purpose was to maintain that install. We were certainly at odds with the people who recommended us. I'm like Steve I don't know; I get that delivery in the cloud is faster and it's better for the customer. But at the same time I'm scared because all of our customers right now aren't there. So it was it was a scary proposition when we set out in 2010 to launch a cloud version, but we pulled it off.

Geoff: If you look back over the course of those 10 years and could shake your younger self and give yourself some advice on how the path forward could have been smoother, what would you tell your younger self?

Aaron: We were lucky that we actually turned what was a very popular project and a failing business into a successful business. If you look at what we did wrong, it's what I see so often when I talk to entrepreneurs - they have 10 businesses that they're trying to take to market instead of one. So they're trying to solve 10, 20 different problems instead of one. And there's no way you're going to do that; it's hard enough to solve one problem and build one business.

Geoff: So let's talk about MindTouch today. What does customer success look like within the company - where does it fit within the organization, and why?

Aaron: The idea that it is the success of the customer should be the central focus of the business. And that if everybody's economic incentives should be aligned. We have as part of the sales process this idea that we're going to develop a plan or a blueprint for customer success. So the customer success blueprint maps out the customer's objectives, their challenges. How we measure success. Who are the stakeholders. And this became something that helped me work deals, close business, and inform the customer success team after we close them so that they have a very sharp focus around launching the client. It also became something that informed the marketing team so that they could go back and develop case studies based on the impact that we had on the business. It also informs the product team so that they know which features to emphasize or de-emphasize. And of course as I said already it impacted our ability to close the business because it helped our sales efforts be very focused on the customer's needs and how they measure success.

So for us the idea of customer success back in 2010 became really the central aspect of our business that drove all our deal flow, all of our product development, and all of our marketing efforts by understanding this customer success blueprint that we put together for each client.

Geoff: What do these blueprints actually look like? Is it a Google doc? How do you actually distribute that plan amongst your team and amongst your clients?

Aaron: So this has become a thing in our industry now because a lot of our customers like Salesforce, like Gainsight - they've adopted the same model. Their CEOs and heads of sales have said "Hey straight up this is really effective, I'm going to use this model too."

In the beginning this just looks like a summary e-mail; you don't want to have a formalized document because then it makes it less likely that the prospect is going to actively participate in creating the document and you want them to actively participate - you want it in their words. So in the beginning it's really a series of summary emails after your conversations that say, "Hey I've updated what your objectives are. Your objectives are to improve the efficacy of your support team that's measured in cost and net promoter score. And and then our objective is to increase your renewal rates." Well how are we going to do it? So then it goes into challenges. What are your current challenges? Well our customers are upset because they don't know how to use the product or onboarding takes too long. So it really becomes this summary email that then later gets formalized into a document. Another key section is who are the stakeholders who are involved in the project? That's very important - who are you talking, who's measuring your performance, who needs to be involved to get the deal done. And what are the strategic objectives - if you're selling business software that's a considered purchase, there better be a strategic objective that ties into a board level issue. If it doesn't then you've got to hope that it's some kind of transactional software sale for a couple thousand dollars.  

Geoff: Sure. So I would argue an entire generation SaaS companies, let's call them SaaS 1.0 companies, invested too late in customer success programs and churn caught up with their businesses. Then as SaaS 2.0 companies began to emerge you heard a lot more about customer success plans, onboarding programs, all those sorts of things. These of course are only effective if the client takes them seriously and commits to them. What sort of things are you doing at MindTouch to hold the client accountable to the plan or blueprint that you put together with them?

Aaron: That's a good question. I mean one thing I'll say is that when we started doing this our prospects thought it was a sales tool. And it took a lot of effort and literally years to help them understand that this is a tool that is useful to you whether you by MindTouch or not. This is something that frames up for their own internal team their team's thinking around a particular set of objectives and challenges.

So let me start now to answer your question - what techniques to use to hold them accountable. What we've done is map your success plan to a customer success program that ties in with a maturity model. Over the last five years we've collected all of the best practices and put it on like a continuum of effort and value for how do you deliver an effective self-service experience. That aligns with our customer success program; the maturity model you can use whether you buy MindTouch or not. It's just this industry best practices, it's unimpeachable. This is exactly what you should do in the kind of value you should get out of it, but we layer in our customer success program that's enabled by our software to drive them along this value continuum which is this maturity model. So by having a maturity model that ties back to value delivered for the company and having one that is technology agnostic is, I think, the best thing you can possibly do to help the company understand why they need to go through the series of steps.

Now you will always run into, periodically... what will invariably happen is that you have stakeholders at your client who don't give a crap. They're like, "Man, I just I want to collect my paycheck. You're making me do things and I don't want to do things. Leave me alone." And again it's by having a maturity model that ties back to very specific value, and having had that communicated to the executive team who are involved in the purchase before it got handed off to the team to operationalize you can hold them accountable.

There's things that you can do to hold them accountable because then you go back to the Vice President or C-level Executives and say, "Hey, you bought us for these reasons, we've got these plays and the guy  won't follow through." So having that all sewn up with with look you've got your your customer success plan that maps to your success program that ties in with your maturity model those are the different pieces. I remember Joe Payne who, he's a great guy, he's the CEO at Code 42 but he was the CEO Eloqua too - Joe told me that at certain stages he had like these, I forget what he called it, but like a nuclear e-mail. If the stakeholder who was operationalizing Eloqua didn't follow through with their commitments, it would automatically send to their boss. It was a way of holding them accountable to the different stages of the maturity cycle. So I thought that's another interesting one that that I don't know if we fully adopt it, but I I know I laid it out for the team. I don't know if we're actually doing it, but it's basically like hey when you have somebody who we think of as a Jar-Jar here which is somebody who's like a stakeholder but totally ineffective like Jar-Jar Binks, he's useless right? Who doesn't want to follow through the steps for whatever reason probably because they don't care. Then you have these nuclear options that send to their boss and their boss is already informed because the tools you used earlier.

Geoff: Understood, but you're kind of walking on a tightrope at that point though - you're trying to drive accountability, but at the same time you don't want to come off as, you know, tattling on somebody who isn't taking this plan seriously. That that must be a challenge.

Aaron: Sometimes it is. But I would rather us aggravate somebody than us be shelf-ware. You know when we enter into a commitment with a client we're SaaS, and some people think that second "S" is about hosting but it is not. It is about the expertise that our team brings to the table in an engagement. Because we are the experts on this; when it comes to customer engagement, when it comes to self-service, there's nobody on the planet that is more dialed in, more capable, more competent, more informed than MindTouch. And we take that very seriously - the technology is just an enabler of those best practices. It's the best practices where there is the value. It's the second "S."

Geoff: Sure. I would imagine when you bring on a new client you're going to hold their hand a little bit more at first during the onboarding process, you need to get them up and running with the software. What does outreach to that client look like going forward? How often are you checking in and who at MindTouch is actually having those conversations and doing those routine follow-ups?

Aaron: Well we have a customer success team and an accounts team and both of them are hyper focused on the success of the account. Meaning that there are certain milestones and a four stage process that we expect our customers to be moving along. The customer success team tends to take more of a proactive support approach around training and "Oh you've done these things now do these things." The account management team comes in and they're compensated based on upsells. But the only way to get the upsells is by moving them along a maturity model. So if we aren't delivering value they can't upsell. So everybody who interacts with the client post-sale is focused on moving them along the value continuum.

Now what are the check ins? We do a quarterly business review. But last time I was checking it was more frequent than that; it was like every four to six weeks there was a check in with the QBR and the QBR was about assessing where they were on that maturity model.

Geoff: Let's shift gears for a moment and talk about culture within an early stage SaaS company. One of the things that I've admired from afar when it comes to MindTouch is just the culture that you've built here within these walls. What would your advice be to other entrepreneurs, other founders who are looking to really create a culture where customer success is embedded in the DNA of the company from day one.

Aaron: Well, I think about it in terms of MindToucher success and a MindToucher could be somebody who's a client of ours or it could be somebody who's on our team and why that's important is that I think about anytime somebody works with us, it's our goal, this is Steve my Co-founder and I, it's our sincere desire and our goal that that person's career is accelerated. And that's true whether the MindToucher is a staff member or a client. That's our business. It's really about advancing the careers of all MindTouchers.

“Anytime somebody works with us it’s our sincere desire and our goal that that person’s career is accelerated. And that’s true whether the MindToucher is a staff member or a client. That’s our business.” — Aaron Fulkerson, CEO & Co-founder, MindTouch

Now there's a very specific way we do that; it is for our clients moving them along the maturity model. For our staff it's about making sure that we're making the hire that puts them in a position where they have growth opportunities etc. Right. But I think that whether it's a SaaS business or any business if that's what your focus is, on the success of your version of the MindToucher, you know your team and your clients, then you're going to succeed as a company. And that's how you build a lasting culture, a lasting company. It's being hyper focused on that. When somebody leaves here I take it as a personal failure if they haven't moved on to a better position. If it's a lateral move or a step back I failed.

Geoff: Now that you're a more mature company, how have you sort of formalized all those sentiments that you just expressed. Have they made their way into your core values as a business, for example?

Aaron: Yes. So we have our core values that we're very vocal about. We go through a new MindToucher orientation. We walk them through it. They're embodied in samurai's sculptures on the walls, there at the beginning every one of our all hands presentations. Those are kind of the cultural pillars. And then the other thing that that we've been really focused on is our guiding principles. Number one is having a culture that attracts smart, good people who want to work hard doing great things. And the second is delivering to market a product that our customers love so much that they recommend us.

So we have our values, grit, integrity, beginner's mind, passion for process, and incremental improvements. Those are our core values that really guide everything that we do and those are the guiding principles that we keep going back to and reminding ourselves, "Hey look are we building a culture that attracts good people that want to work hard doing great things? Are we delivering a product that our customers love so much that they recommend us? So those are kind of the things that we really focus on around culture.

Geoff: Sure, so in tying it back to customer satisfaction, customer success - do you use things like NPS or CSAT scores here at MindTouch?

Aaron: So we use NPS. I don't know that we've got our NPS dialed in. When we're posting scores in the high 70s, I question is that a function of their last interaction with support? Or is that something more holistic across the entire engagement? Maybe it is. You go to G2Crowd or Trust Radius and we have really, really great reviews on there. So we do use NPS. The thing I caution about is that the way we capture tends to be at interaction points with humans. With MindTouch humans, so I always question like is our NPS score ridiculously high because of that? I just don't know.

Geoff: Fair enough. Lots of actionable, good tips there for other SaaS start-ups. Any final words for new founders starting a SaaS business as they think about their customer success plans?

Aaron: Well, we've covered customer success plans, we've covered having a maturity model... just make it up to begin with. You know we started with this just feels right and then we iterated, iterated, iterated, iterated over the last five years to now something that Accenture uses in their customer engagement plans, our maturity model.

One of the things that I think is really important for us Founders is I think that there's a lot of misconceptions about the importance of, "Oh, if I build a great product then I've got an opportunity in the market." Most of the people who come to me seeking investment or introductions to get investment, I look at what they're trying to do and my response is do you have $500mm? Oh you don't? OK. You have no chance of succeeding. The reality is that there is so much capital flooding the software market that the broader the market opportunity you're trying to address the less likely you're going to be successful. So focus on a very, very boring, boring niche. Focus on something really, really small that you can really crush because nobody else has noticed it and then expand from there.

That's the most important piece of advice that I find myself giving entrepreneurs who are starting companies; it's "Dude you are going after way too big of a market opportunity." Focus on something much much smaller that you can actually be successful in and grow from.

Geoff: Well thanks for the time and the tips Aaron, I very much appreciate it.

Aaron: My pleasure, Geoff. Always great to talk to you. Take care.