The Audible-Ready Sales Podcast
The Audible-Ready Sales Podcast

Episode · 9 months ago

A Conversation with Segment CRO Joe Morrissey


Segment's Chief Revenue Officer, Joe Morrissey, joins John Kaplan to discuss how Segment implemented a value-based sales motion to scale their organization’s product-led growth (PLG), increasing Annual Recurring Revenue by 150% over two years. They discuss:

  • Elevating the go-to-market approach
  • Key challenges when scaling product-led growth and how to overcome them
  • The right time to invest in distribution and customer success
  • Capturing cross-functional alignment behind customer outcomes

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When you're looking at evolving product led growth, it's really about accelerating a fly will. Right. You want to use your sales force as a point of acceleration for that fly will broader than being a point of friction. You are listening to the audible ready podcast, the show that helps you and your team's sell more faster. will feature sales leader sharing their best insights on how to create a sales engine that helps you fuel repeatable revenue growth, presented by the team at force management, a leader in BTB sales effectiveness. Let's get started. Hello, it's Rachel with the audible ready sales podcast. Have a really special trait for you today. In this episode, John Kaplan talks with the segment chief revenue officer, Joe Morrissey. Many of you know segment story. They've had an incredible growth trajectory. It required by Twilio for three point two billion in two thousand and twenty, and in this episode John and Joe Talk through that trajectory how segment was really able to align internally, get by your focus and really fuel their products led growth strategy. It's a great conversation. I hope you enjoy it. Here we go. It's my great pleasure to be with a an old friend and colleague, Joe Morrisey from segment. Joe, I think we go back. I want to say it's probably to the mango DB days. Want to do a proper introduction for you. I just also I want to congratulate you on just unbelievable success at segment and a great outcome of a three point two billion dollar acquisition recently by Twilio. Tremendous growth and success by driving company transformation and I'm really looking forward to what how we're going to talk about that today, kind of how you did that, but also incredibly impressive around, you know, hundred and fifty percent growth in Aarre over a two year period. So first of all, Joe, welcome and thank you for joining us. Thank you, John. It's great to be here. Really appreciate the Alife. Yeah, buddy, it's it's really I'm really really looking forward to talking to you because, you know, in our preparation of this conversation there's so much relevant content into what great companies and what companies that are trying to be great are focusing on. We're going to talk about that today, but you know, before we get started. Tell us a little bit about segment, kind of like the problems that you solve and and who you are. Yeah, so segment enables customer focus growth with good data. Well, well, so what does that mean? Well, we provide a single API for customers to collect and clean, activate and now orchestrate all of their customer data. And so the out comes that we're trying to drive with customers are to enable them to become data driven decision makers, to...

...enable them to move faster and more efficiently with a modern marketing text act and to reduce customer acquisition cost increase lifetime value and to manage their customer data in a secure, compliant manner so that they can, you know, govern their data regards to things like GDP are and then just manage their most sensitive asset, which is their customer data. So there's a there. The outcomes we help drive for customers and problems for trying to solve awesome and such a really, really hot space. Before we kind of dig into more of those outcomes and frameworks that you use to kind of to kind of get yourself there, I want to bring us back to you're coming to us live today from Menlo Park. California, I think, and I'm thinking back a couple of years ago and I'm looking down on my phone and and I see in a number from Ireland and I don't know if you change your number. For some reason it didn't come up with your with your name, and and I and I answer the phone and it's you and and we had a really, really interesting and cool conversation. You were telling me about this great opportunity, but you were all so this is probably a maybe a month or so before you were going to start at segment. Can you take us back to that phone call? What we call the call, the phone call? Yeah, while you're bringing me right back now. So I was very excited to join segment. You know, I I rare that you come across a company that had such a great culture, great product and such a massive market opportunity ahead. But I also knew that there were going to be a lot of significant challenges and you know, one of the things that made segments so great was just we had lots of really, really smart people, especially in our in our sales team, and you know, we had a great product that customers loved, and so we were growing really, really quickly and a lot of that growth in the early stages was what we call product led. But you know, that in itself presented significant challenges and it's clear from my early discovery that there was a looming retention challenge with customers. Are Engineering team was also finding it difficult to focus because they were working on so many customer escalations and a lot of that came down to, you know, the fact that sometimes they felt expectations were being misset by go to market with customers. So that was an issue. And then as we scaled, you know, one of the great reasons we were able to grow so quickly was we trained our people very, very well on the product. So we immersed everybody in deep product training and when I joined, our chief product officer said, look, you're going to have to scale the sales team here dramatically. My recommendation is that, you...

...know, you put everybody true the same type of intensive product training that we put them through when we were we were smaller, and I felt like that that would be exactly the wrong thing to do. Right these were big problems and I needed a transformative way to address all of these issues holistically. I knew I needed to have a scalable way to enable our sales team. I knew I needed to be able to operate in a different manner with customers and align our solutions to problems that they were looking to solve, that we could measure the success accordingly with so that we could also give focus back to the other areas of the company that needed it. And then I knew that to do all of this we really needed to get not just sales and success around the same table, but the entire company around the table. And I'm the single point of view on you know what, what are the problems that solved for our customers? How specifically do we solve them? Where have we done it before, and how should we talk about them? And and so you know, for me there are lots of different ways that you can try and affect transformation, but it was clear that getting everybody on the same page and getting alignment was probably the most important and first thing that I had to do. And having been through the value framework workshop with you before the past it companies like I'Mong going to be, John, I knew that this was an opportunity to do that. And I know you also only get one shot, and so that's that's what prompted that first early call from for me to you prior to even starting at second yeah, well, there's so much rich so much rich content in there. A couple of things. First of all, from a Cros perspective, like one of the things that I was so impressed with is that you had done your homework, your due diligence, and you knew exactly where this company was. You knew exactly how the executive team viewed transformation, what we're going to be, some of the challenges, what we're going to be, some of the benefits. It was an amazing conversation for me because you were mapping out your road map prior to even starting. So one of the messages I just want to have out there for Cros and Joe's a great resource to tap into to have that discussion with, but that was very, very very telling for me. The second thing is, before we go too much farther, I want to dig in a little bit more on this product led growth, because that is a every day force. Management is having conversations with companies, with investment communities, you know, with resources that are thinking about going into certain companies, and product led growth is kind of... you know, the ten years ago we were talking about sales to or whatever and you had more of a collaborative sale with strs and and customer success and count executives. And okay, now we are in this in this era of this product led growth. Would you do me a favor and just give us kind of your definition of what that means? And then what are some of the significant things to contemplate as it relates to product led growth, because that, for me, is a really, really hot topic. It's on everybody's mind, probably comes up at least once a day for us and conversations with customers. Let's start with your definition of product led growth. Yeah, I think look for putting it very simply, product led growth comes when your customers typically adopt your product, more often than not in a self service matter. They use it, it works, they get great outcomes from it and then they spread the word vilely and you start to see adoption and revenue come from the back of that. And so you know, I it's interesting you put the context some of the ship change in dynamics in the market. John. I think we've gone from an era of sales leg growth where your primary lever to drive growth was investment in sells capacity to an era of marketing leg growth, especially, you know, with the emergence of the Internet and Modern Marketing Technologies. That was a big trend. But but today we find ourselves in this sphere of product leg growth right where where customers, very often developers, are adopting a product without ever talking to a salesperson and sometimes without ever engaging with any marketing content. And so that has great benefits, obviously, because you put your product in the hands of your customers and they sell your product. They become like a distribution channel for you as such. But it also presents a lot of challenges as the scale instead of very efficient model to scale. But and some companies can scale, you know, very dramatically using that model. But very often than not you'll find it most companies realize at some stage they've got to start investing in distribution and I've got to start investing in in customers success and in also, you know, in sales and and value based selling. And so what was really interesting for me to see here at segments, we had a lot of product leg growth. We scaled, you know, to multiple millions in air are off the back of the fact that, you know, a lot of developers and engineers it's really loved segment. It became a really no brainer way for them to collect and clean customer data. Rather than going and running custom code themselves, they would use our API and so we thought tremendous growth that was led in that fashion. But by the time I joined, you know, it was very clear that we'd...

...have to make some very significant investments and distribution and in, you know, sales and success to ensure that that growth continued. You know, it was was really really interesting to me was when you and I were talking in the beginning stage. is about kind of like the initial sale and ex segment. The initial sale was powered so tremendously by developers and the use of the product and the landing and expanding of the product, but the technical expertise matched with technical buyers. So there was an initial sale and then as as you were as you were coming on, it was the you know, the product was maturing, the buyer was actually changing. So this was something that I think and that, by the way, this is something I think's going on for a lot of product led growth companies. Could you talk to us a little bit about some of the awareness and the nuances of going from an initial technical sale to a more mature product to and we're it actually leaves buyers by tyers actually change inside the company. Yeah, that's right. And so when you think of a lot of the problems that we solved for developers and engineers at the the early stage of adoption of segment and in our growth, we were really solving a time to value problem, right. I mean, if you're developer or an engineer, what you want to do is you want to be focused on building product, right, but there are a lot of other things that that developers have to do and more often than not their tasked with writing custom code to collect customer data across a variety of platforms, web, Moll you know, mobile, and that's a distraction. And so what segment offered them was a really clean, unique way to accelerate time to value by having a single API that you can use to collect customer data instead of instead of writing custom code, and so that was a no brainer for many developers to adopt. They could then focus on the things that they wanted to do. And you know, that was great, because now we you know, these companies could collect customer data using our API. They could clean it, they could unify it, they could get a single view of their customer. But what was interesting is as usage of the product, you know, matured within the organization, and it's a company, grew, the ultimate owner of the deployment was not the developer, it was more often than not the marketer. And what we found, as you know, segment became more, you know, deployed in these companies, was that we often had to go back and resell or deal all over again to a completely new buyer at the time of renewal and expansion. And for the marketer the value driver is very, very different. Right, for the marketer, they're looking to grow efficiently and and...

...accelerate growth with a modern marketing text act. Right, they're looking to ensure that they can govern that customer data in a secure and compliant manner and they're looking to be able to make data driven decisions. That's a very different value driver from, you know, accelerating time to value for an engineer, for a developer. Yeah, it's fascinating because this is a significant problem out there in the market place. First of all, you can't compete. The good news is you've got companies that have product led growth strategies that are typically run by technical founders and technical teams that do an unbelievable job of creating you know, back in my day was, you know, in the sales led growth. It was like go sell and you can overcome product issues. And the great news today is that you have significant product superiority. But the challenges are that product superiority only gets you so far. First of all, you got to be able to differentiate yourself because there's many companies that are product led growth in the in your same space. So you have to be able to technically differentiate to that buyer, but you have to attach yourself to a positive business outcome as the product matures and as the usage of the product matures for other use cases or extended use cases. Talk a little bit about and I remember you having this conversation with me when you saw that early you said, you know, like the the value framework from command of the message. The value framework was so critical for you because it allowed your company and your sales teams and your technical teams to sit kind of smack DAB in the middle. We're technical requirements are attached to business outcomes. Could you talk a little bit about your experience with the framework itself and that environment. Yeah, I know, absolutely. It was incredibly impactful. I think when you know, when you're looking at evolving product led growth, it's really about accelerating a fly will, right, you want to use your sales force as a point of acceleration for that fly will rather than being a point of friction. And you know, bearing in mind that you know your usage of the customers usage and product is going to change over time after that initial land what you want to be able to do is is align your solution to the customers biggest pain points, right, and understand and get really clear on what are those pains and what are the what are the negative consequences of those pains and what is your buyer trying to achieve? What outcomes are they trying to achieve and what required capabilities will they need to achieve those outcomes? And and that's where the value framework became so critical for us, because it gave us a common language, you know, not only to talk internally about what problems and solved for our customers,...

...but to talk to our customers about those those problems, to do deep discovery and understand, you know, what are their pain points and what are the impacts that they're driving across business, what are the outcomes that they're trying to achieve, how they measure success and how will we help them get there? And and for us that was, you know, truly transformative because we were no longer talking about features and functions and speeds and feeds, and it had a company wide transformation because it enabled us to get really aligned to driving outcomes for customers, which had a downstream impact on the level of focus that are engineering team and products team could bring to their roles and also just dramatically helped us improve our retention and our expansion rates, because we were getting to the point where, in having to resell a deal all over again because the buyer had changed and because the value driver of change, we were facing some some retention challenges. And when you aligned to your buyers biggest pain points and you convince your buyer that your product is going to help them solve those pain points and achieve the outcomes that they're seeking, that's when you create value as a salesperson. That's when you laid the ground for your product to be retained and for further expansion opportunities. I love that. It's it's one of the greatest examples of full adoption and utilization of the concept of the value framework from command of the message. And it brings me back to this which, by the way, is a company transformation. It's not a sales transformation, it's not a product transformation, it's not a go to market transformation. It's all of the above. And one of my favorite conversations at segment, well, one of them was when you, you know, gave me the heads up that you guys are going to get bought for three point two billion dollars, and that was such a great outcome. We were so proud to watch you guys, to watch you guys experience that. It's and again it's congratulations. But one of my favorite conversations with was with your one of your cofounders, Calvin French Owen, and he actually called us and he said, Hey, John, would you guys do a podcast with us that we can share with our customers? And I said of course. You know, what would you like to talk about? I'll do it in a harpy. What would you like to talk about? And he said I would love to talk about the concept of building the value framework and the alignment between our go to market and our product, and it was UNBLIEM. First of all, will attach that to the will attach that to this podcast and make sure that everybody has access to... It's it's one of my favorites because it is a technical founder talking about how critical it is to align the product with go to market, and so I wanted to just kind of get us in that head space for a second because it's one of the things, the first things that you did with your counterparts in in product. Would you kind of elaborate that on a little bit, a little bit and like how you drove alignment not just for go to market, not just for product, not just for company positioning, but for the entire company? Yeah, absolutely. So. One of the the challenges, you know, I discovered early on was that our product team, we're having difficulty maintaining focus, and that was in no part a small park dude to the fact that they felt that customer expectations were being misset sometimes with the the the the wold customer base. They are also felt that they were spending all of their time on on technical escalations from from the customer base and then they weren't always completely crisply clear on what it was that they needed to build. You know, when I looked at this challenge, it became clear to me that the downs the upstream cause of that was a fact that we were out selling on feature and function and speeds and feeds, right, and so we weren't trying to understand what are the big pain points that we need to solve for our customers. And so because of that we were unable to give clear feedback to our product teams about what is act exactly it is that our customer base needs them to build. And and so we often end up going up building things that, you know, we're a distraction for us and that didn't allow ours, our products teams, to focus. Maybe the other challenge that we saw was that we weren't asking customers to participate in their own rescue. Right. We were selling product and sometimes expecting that our engineering team on the back end would manage any issues that customers, customers ran into. So a big part of solving that problem was to introduce a professional services motion to ensure that we had really clear expectations, defined and agreed with the customer around what success us look like and that we had great, clear handots from the sales team to the success organization. And so, you know, those things were those challenges. Were were challenges that I felt like the value framework was going to give us the right construct to be able to solve. But first of all by, you know, aligning what we were selling to customer pain and customer problems and giving our sellers a very clear way to do discovery on cover pain and align our solutions to our top of mind business concerns.

And then, once we had done that, we define the required capabilities, we decide to find what the success metrics look like. We were now in a position to be able to do a very clear, clean handoff to our success organization and in that handoff and agreement and participation from the customer in the process allowed us to ensure much better outcomes for our customers. Right. We saw retention improve we saw expansion improved, but the most dramatic thing for me, and I think for also for te too, are chief product offs. Or was that we saw transformation also on the product side. You know, the product team. We're now all of a sudden freed up from being swamped with customer escalations and they were able to focus on building product and and building sound roadmap and and, you know, proving product quality, which had again that fly wheel effect on improving our retention rates and giving us a lift in being able to sell to new customers because we had a really clear, crisp product roadmap that aligned with what customers needed from us. And so, you know, making that transformation, you know, across the company is it's not an easy thing to do and the value framework was such a critical part of that. But it doesn't work unless everybody has bought in. And so what I most appreciated about the approach that force management allowed me to take care and allowed us to take with the company was said we was a very inclusive approach. We brought everybody around the table and we brought a product engineering our marketing teams, the sales team, sales engineering team, are founders and CEO. We all participated in that workshop and in building out the framework and answering those questions. What problems do we solve for our customers and how do we solve them? And that became, you know, that became our mantrap, became the way that we talked about the the product of came the way that we talked about the future, in the direction of the company and gave us very clear focus and alignment. It was it was really impactful. While Joe. So, just summarizing, we talked in the beginning about the value to the buyer and the value to the selling organizations as it relates to a coaching a buyer into approaching collective buyers inside and account as your product acquisition and adoption continues to mature, you've now taken us down the path that says, because of taking an outside in approach, starting with the problems that you solve for your customers. How specifically do we solve them? How do we solve them differently or better, and where have we done it before? This created an aligned common language and common framework that allowed all the organizations to plug in and kind of know what their swim lanes were, and I just think the way that you guys adopted it, the way that you guys drove success around it,... incredible. It's like Tito's organization knew exactly they got grounded on. This is what we need to be focused on, because these are the problems were solving. Sellers could count on product teams and marketing teams to provide them content, learning and understanding, because it was in a common language. Hey, these are the problems you solve, here's your buy or these are the problems you solve, here's how you solve them. Here, so how you solve them differently or better, and here's where we've done it before. It's like that complete aligned effort is just a great, great example and no doubt in my mind, which led to your outstanding growth and then a great outcome for you guys. So now what I'd like to do, if you don't mind, is transition gears a little bit and speak to our kind of CR rows out there that are that are kind of contemplating how to accelerate this growth and some of the things that it's that it's going to take and maybe how do you get alignment? How do you get alignment around that? One of the things I just want to kind of highlight here that you've talked about, which I really love. There's like two main skills right now that I see that are just critical skills out in the marketplace. Sales organizations have to be able to attach to customer biggest business issues and then they also have to differentiate themselves through the technical product capabilities, and you'll hear me talk about this. Is like companies have to have both feet planted in the technical world and in the lines of business world, and we're people do that really, really good, really really well, and what you've just articulated is the framework really helps us do that. Let's talk about some advice for CR rows in the first ninety days, where you may be in this product led growth situation. You've got a young, brilliant technical founder and you find yourself in the challenges in the high expectations of product led growth. Could you just kind of give kind of like your your first ninety days, kind the thought process of what you would do? Yeah, it's a great question, John. Well, obviously those first ninety days are critical and you've got to build trust and you've got to build credibility and you need to build alignment and most likely you're going to find a lot of challenges and you can't solve everything at once. You know of a lot of different competing priorities. So I think the first thing you've got to do obviously you've got to do deep discovery right and you've got to understand what those challenges are. You know. So one of the things I did was I, you know, doted a very structure discovery process and I interviewed pretty much everybody and the executive team and, you know, and and and...

...everybody, every leader of every function, all the way down to sales reps and success reps, went on a did about fifty hours of interviewing and and from that I was able to, you know, really kind of synthesize what the key challenges were and and of course you end up with more things than you can bite off and and and fix and so, you know, I really made a big bet as to what was the highest impact thing that I could do to drive transformation, and that was to get alignment across the company on what the challenge, the biggest challenge was right and then get everybody bought into solving that. And that's where, you know, the value framework helped me enormously and the engagement with forest managing. But I will say this right it, whatever you choose to do as a crow to drive transformation, you've got to be a hundred percent bought into that and the entire organization has to know very clearly that this is the priority. And then it's not enough for you just to be bought into it. Everybody above you needs to be bought into a two right. So if your CEO is not the same page as you, the organization's going to see that and and they're not going to be as bought into it as you are. And so one of the first things I did was actually talk with my CEO, Peter Ryn, art's amazing founder and CEO, and he recognized this very clearly and he suggested that we get force management talk to the board and you know. So I exposed this transformation effort to every board member and actually got the board bought in from the top down, and so that was enormously helpful. Once the company sees that the board, the founders, the CEO, all of the executive team are bought into this as the biggest transformation initiative that you're driving, then everybody gets bought into it and that's how you actually make change. So I guess my advice is figure out to your discovery, figure out what the big challenges are, pick one P one, you can only know one p one, and then make sure you get alignment across the executive team and even at a board level, as to the the choice and the Avenue of transformation that you want to drive. It is one of the greatest segment for me, is one of the greatest examples of alignment throughout an entire organization. The critical areas of alignment that we typically run into is the functional areas of, you know, product and marketing and sales and customer success and but the level of alignment that your organization and my hats off to you and Peter and the board members. I was in on the I mean it's peters suggestion. We were talking about a couple of board members that we were going to talk to and it was peters suggestion that he set up conversations with all of the board members and that for... of being a partner to yours, of yours like getting insights on the things that they thought that segment did really, really well, the things that they thought were going to be challenges for us, just gave us so much great insight and so they would have like kind of a philosophical representation in the engagement, because we were constantly balancing that feedback in working with you, and I I think you were telling me earlier about one of the proud moments that you had when you actually built the framework. So you you went to them instead of we're going to do this big expenditure with force management, but we all know, because it's attached to the p one that were that we're working on and you actually delivered the value framework to each of the board members. Would you just kind of share a little bit about that? Yeah, I mean that was that was obviously very gratifying moment to deliver such high quality output and put it in the hands of the board members. But but I you know, I had come back to the fact that if you're going to make a big bet on a transformation like this, why wouldn't you want to ensure that every one of your board members was read into and behind what you're doing? As you start out, as any sea leg level executive, you need to have the confidence and credibility with the board and so you know, it just makes sense to get your board bought into what your big bets are and what your transformation initiatives are. But of course, again you know, it's all about the outcomes, right, it's all about delivering, and we had a very rigorous board who you know they were very clear in ensuring that I had defined success metrics for this program and that we could tie it back to improvements and retention, improvements in efficiency, improvements and sales productivity. And you know, I'm very happy to say that we delivered on all those. Yeah, brother, it's it's one of our proudest moments. It was a blast to work with you on the project, with your team and you know, all of your team, your your extended team, the product folks, the marketing folks. There's just no surprise to us that you guys wound up with a great outcome of being acquired by a great company for a great for great price, and so our hats off to you, Joe. As we wrap it up here and you and I've been preparing to have this conversation, is there anything that we didn't talk about that you would have expected me to ask you about, anything that you were thinking about as we were preparing? Any last words that you want to share with our listeners? I think we've covered a lot of ground here. Yeah, rather, I think you know, it's been a really good conversation. Certainly and enjoyed it. John. You know, I would just come back to saying that you know, enablement of your sales team is obviously a very critical requirement for success when you're trying to...

...grow and the environment and we find ourselves in today, you know, it's not always just about product like growth or marketing like growth. At some stage every company is going to need to invest in distribution. They're going to need to prove the value that they're delivering to customers, and so you know, my advice, if they were to ask me what my advice is for, you know, for technical founders or starting out, is don't wait too late to start building your go to market muscles. Invest in it as early as you possibly can, because it'll pay benefits on the line. Brother, so well said. That's a great way to wrap it up. Congratulations to you. Congratulations to you and your family. I know you've just made the family transition post covid back over to the United States and and in Menlo Park there and we wish your your your kiddos that are experiencing a little bit of that fun life in California. We wish you great success. Thank you for spending the time today and thank you for sharing your expertise in your insights on such critical, critical topic. As things like product led growth alignment and value frameworks and and brother's been an absolute pleasure. Thank you, John, and thanks for the whole force management team for all the help you've given us over the last two years. Pleasure of force management. We're focused on transforming sales organizations into elite teams. Are Proven methodologies deliver programs that build company alignment and fuel repeatable revenue growth. Give your teams the ability to execute the growth strategy at the point of sale. Our strength is our experience. The proof is in our results. Let's get started. Visit US at force MANAGEMENTCOM. You've been listening to the audible ready podcast. To not miss an episode, subscribe to the show in your favorite podcast player. Until next time,.

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