“Who’s Fired Up Gainsight!”
Tags: Venture Capital, Bain Capital Ventures, Customer Success, SaaS, Portfolio News

Creating a Category with Human-First Leadership and Childlike Joy!

In November 2013, I wrote a post announcing our initial investment in Gainsight. I had titled it “Customer Success Doesn’t Matter”, a tongue-in-cheek reference to a pervasive attitude among enterprise software companies in the 80s and 90s, who collected their upfront license fee and often moved on without ensuring results for the customer.

Over the past two decades, companies and vendors adopted software-as-a-service (SaaS), distributing the lifetime value of a software contract over several years, and making renewal and retention key to strong customer economics. Into this new reality stepped Gainsight, which in seven years since our investment has not only become the industry standard for managing and executing the relevant workflows, but has also championed “Customer Success” as a job function.

Today marks an amazing milestone in the maturation of the Customer Success space. Having pioneered the category and sustained market leadership, Gainsight announced today that it is partnering with Vista Partners in a majority transaction valuing Gainsight as a “unicorn.”

We couldn’t be more proud of CEO Nick Mehta and excited for the entire team at Gainsight.

Pittsburgh Born and Raised

Every journey has a beginning, and in the case of Nick and Gainsight, our story begins in the Pittsburgh suburb where Nick and I grew up, and specifically the high school we both attended, Fox Chapel Area High School. In fact, it was this connection that Nick highlighted when he sent me a cold email in 2012. It turned out that while we had never met before, our parents knew each other and were part of the tight-knit immigrant Indian community in Pittsburgh that had settled there in the early 70s.

In our first meeting at the Palo Alto office that I helped BCV open a year earlier, Nick and I immediately found common ground in our childhood upbringing, obsession with the Steelers, and view of an emerging whitespace to help software companies build healthier customer relationships. When Nick officially joined Gainsight as CEO in 2013, we jumped at the chance to lead their next capital raise; paying a rich premium (which turned out to be well worth it!) at the time for a company that had less than $1M in recurring revenue.

Along the way, there have been plenty of ups and downs, tough decisions and key product/market choices that Nick and I debated over dinner or drinks (many times during a Steeler game at the Old Pro in Palo Alto): how do we move up to the enterprise without losing our leadership with the mid-market tech companies? How do we evolve the product from analytics (“customer health score”) to daily workflows, and to ultimately deliver on automation? Once Gainsight became the leader in Customer Success, how could we expand our vision to incorporate the needs of increasingly “product-led” companies?

Nick and his team deftly navigated each question (and the journey overall), making bold choices to ensure we stayed on course to building a category-defining company.

Creating a Category

It’s hard to believe that just ten years ago, Customer Success as a function, and Customer Success Managers (CSMs) as a job title, simply didn’t really exist. Acronyms like GRR (gross revenue retention) and NRR (net revenue retention) were unknown and rarely discussed in board meetings, let alone used as part of investor decks and IPO S-1s. CRM software didn’t even have a field for “customer”, only fields for “opportunity”, “lead”, etc.

Thanks to Gainsight, we are now in the midst of a customer success revolution. CSMs are one of the fastest-growing job titles on LinkedIn, and responsibility for customer experience has become a C-level position at every technology firm. Every board meeting, even for very early stage companies, includes a discussion of customer health and retention.

Along the way, there has been no bigger evangelist for this movement than Nick Mehta and the team at Gainsight. When Gainsight started, the concept of “churn” was so barely understood in the software world that the company opted to publish a children’s book featuring the ChurnBot to educate readers, young and old, of the dangers of excessive churn!

By taking this leadership role, the Gainsight team has propelled this movement and helped elevate the entire SaaS industry. Aside perhaps from our friend Jason Lemkin (founder of SaaStr), there has been no bigger spokesperson for SaaS than Nick and Gainsight. One of the creative initiatives I loved is the Customer Carpool Karaoke series with leading SaaS CEOs. See this one with our friend, Keith “Docusign is disrupting paper” Krach. (Begin at 1:40 seconds to see the singing!)

Human-First Leadership

Of equal importance to Gainsight’s commercial accomplishments is their approach to team-building and reinforcing a unique culture. Nick has been at the forefront of a new style of “human-first” business leadership, which he eloquently describes in this post. In essence: at the end of the day, we are all human beings, and a great leader needs to see business as a human-centric endeavor rather than just a series of deals, transactions, and spreadsheet figures.

For Nick, this starts with “Success for All”, one of the core values of Gainsight. As a Customer Success company, this certainly characterizes the desired dynamic between the software vendor and their customer, in contrast to historically win-lose outcomes in favor of the vendor. But Success for All, as Gainsight practices it, also includes the success of employees as well as success for the communities we all live in. Nick embodies empathy for his team and is always working to make every person’s voice heard.

This value has shone particularly brightly through difficult times this past year. Every Sunday, Nick sends out a weekly message to the entire company with deeply personal vignettes from his weekend with his wife and three kids, including his own ups and downs, and some of the stresses we all have with our families. These missives convey the message that even a company leader and CEO is human, working through his own good days and bad days. Nick’s empathic approach has been inspiring and galvanizing for the entire company, and I have found myself, on many occasions, tearing up and sharing Nick’s emails with my wife.

Nick reminds us on a daily basis that true human connection is ultimately the most important thing in life and in business. And human connection (in all due respect to Nick favorite, David Sinclair) has been shown scientifically to be the #1 driver of health and longevity.

Childlike Joy

No discussion of Gainsight can conclude without mentioning the core value of the company culture: “Childlike Joy”. Nick and his team truly live this value, and it’s always present in how the company runs its events… see, for example, this video from Gainsight’s 2015 Pulse event.

I can’t think of another tech CEO who happily puts themselves in uncomfortable or self-deprecating situations as much as Nick does. Check out this classic, and my personal favorite, “Who’s Fired Up” which took place in an unnamed recording studio a few years ago:

This joy often proves magnetic to Gainsight’s customers, and it is little wonder that the team has drawn in thousands of passionate users and practitioners to the Customer Success community.

The Road Forward

For Nick and Gainsight, this is just the beginning of a new chapter with our friends at Vista. We are still in the early innings of this movement, and Customer Success keeps growing at astonishing rates as more and more companies, inside and outside of tech, move from one-time transaction-based business models to recurring revenue.

For me and the Bain Capital Ventures team, this is the end of our formal journey with Gainsight. We will always be eternally grateful for the partnership we’ve had, and honored to remain part of the extended family. We owe a special thanks to the Gainster executives, past and present, who made this all happen: Jim Eberlin, Sreedhar Peddineni, Dan Steinman, Anthony Kennada, Mike Schmidt, Allison Pickens, Karl Rumelhart, Ashvin Vaidyanathan, Igor Beckerman, Carol Mahoney, Stephanie Robotham, and Robin Garcia-Amaya along with so many others!

Nick, thank you for that cold outreach email in 2012. Thank you for what you’ve done for the SaaS industry, for the category you’ve created, and the company you have steered. More importantly, thank you for helping us all become better leaders and human beings. The friendship we have and this incredible run we’ve enjoyed together has been an incredible gift.

Even though there won’t be any more board meetings together in the years ahead, I know that at least every Sunday in the Fall, we will be chatting, just as we have every Sunday for the past eight NFL seasons!