How do you turn an idea into a big business? In March I spoke with a CEO who knows how to do that. And I think his insights can help your company grow.
This CEO runs a company that's doubling revenues by helping companies make better decisions faster -- that saves companies money and boosts their revenue growth. This CEO also helped turn an idea into a public company -- so he is a good source of expertise on scaling.
That CEO Ajeet Singh is running Palo Alto's ThoughtSpot which uses a machine to find out what is happening in a business faster than people can. He also cofounded Nutanix and owns a 4% stake worth $280 million as of March 6, 2018.
In 2012 Singh started ThoughtSpot "to help him realize his vision to deliver analytics at human scale to 20 million users by 2020."
ThoughtSpot has been growing fast. In the 12 months ending in November 2017. its customer count grew 227% -- including 32 of the Fortune 500 and 12 of the Fortune 100. Customers willing to go public include Amway, De Beers, Chevron, Miami Children's Hospital, Bed Bath & Beyond, and Capital One.
ThoughtSpot's headcount increased 67% to over 250 and it had opened new offices in Seattle and Bangalore to add to its headquarters in Palo Alto and its EMEA headquarters in London.
The company continues to grow. As Singh said in a March 2 interview, "We exceeded our plan for the year ending January 30 and we're growing at an excellent rate. We are selling well with the largest 5000 global companies, who make up 70% of the spend on analytics and business intelligence technology."
The secret to ThoughtSpot's growth is that Singh thinks in terms of four revenue growth tiers that step up by a factor of 10. And reaching the next tier is such an ambitious undertaking that many aspects of the company must be rethought.
"I think in terms of four growth tiers -- from $0 to $1 million in quarterly revenue; from $1 million to $10 million per quarter; from $10 million to $100 million per quarter; and from $100 million to $1 billion per quarter."
Here are the six levers that ThoughtSpot uses to scale to these revenue tiers.
1. Maintain a growth culture, but change the way it's communicated
If a company achieves initial success, there is value in maintaining its culture as it scales. Singh believes that the founders' values determine a company's culture but as the company grows, new employees will not intuitively grasp those values unless the company communicates those values in a systematic way.
2. Change the mix of people as you scale
Early in a company's development it needs builders -- people who are willing to take on many different roles and are eager to do what's necessary to get the company off the ground. At some point, such people are no longer useful because they resist formal processes -- so the CEO must replace some of them with scalers -- or formal process experts.
As Singh said, "In the $1 million to $10 million growth tier, a company needs builders. But as it goes from $10 million to $100 million, the company needs a mixture of builders and scalers. And as it goes from $100 million to $1 billion, it needs more maintainers who help keep customers happy."
3. Replace generalists with specialists
Along with changing the mix of people, companies must hire more specialists as they grow -- but make sure that they team up to make decisions and take action. "Some generalists can specialize. But usually they have to be replaced by executives with specific functional expertise -- for example, the executive in charge of Administration may need to be replaced by a VP Finance, VP Human Resources, and a CFO. But you have to get everyone in a room and make sure you close communication gaps," said Singh.
4. Make functions accountable for growth
When a company sets its sites on the next growth tier, different functions must figure out how their contribution to the goal should be measured. "It is easy for different functions to have metrics but not get to the right place. You need to ask how each function can contribute to the growth target. For example, customer service might set specific customer retention targets; sales will have revenue goals; and country managers will have their own metrics," said Singh.
"And functions should have leading indicators -- such as the sales pipeline or leads generated by marketing. It's important to be realistic about how each function can contribute to the goal. It is so easy to have a bad metric."
5. Stay connected to global team members
In order to grow from, say, $10 million to $100 million and beyond, companies must expand into new countries. And to make those country leaders effective, the CEO must keep them feeling connected. As Singh said, "You have to empathize with them and realize that it's a lonely job. You should give them the flexibility to optimize locally. And you should set a time for all-hands meetings that works for the schedules of those around the world."
6. Keep being CEO as long as you love the job
It is rare that a CEO can keep running a company as it scales. As I wrote in my recently published book, Startup Cites, it's better to host marathoners -- who can keep a company they founded growing after it goes public -- than sprinters who take an idea and build it into a company that gets acquired.
Marathoners like Jeff Bezos keep learning. As Singh said, "You have to maintain your intellectual curiosity and be willing to ask for feedback. The key questions I ask myself are: 'Do I feel bogged down or not? Am I having fun? Do people respect me or are they following orders? Are we hitting our goals? Are good people staying and doing well?' Every six months I ask for anonymous feedback on these questions."
These six levers could help you make your dreams a reality.