Do you want to avoid the common pitfalls of scaling a startup? Nick Mehta, CEO of Gainsight, shares part two of his 10 top mistakes in 10 years at the company.
The first five mistakes many startups make can be found here and include:
- Not holding leaders to the highest standard
- Not betting on your team
- Not scaling based on real leading indicators
- Not standardizing pricing and establishing systems early on
- Not investing in digital customer success early on
A quick recap on Gainsight — Gainsight is the leading platform for customer success with close to $200M ARR and 1200 employees. Scaling a business will be different for everyone because every business is different.
So let’s jump into part two of Nick’s ten mistakes and lessons learned over the years.
Mistake #6: Not Parting Ways Well
This is one of the top mistakes CEOs, executives, SDRS, and everyone across the spectrum make.
Nick writes on LinkedIn, “Why are so many companies (and CEOs) weird to teammates when they leave? Businesses have a strange expectation that they can fire people at any time, but if a teammate leaves, they think of it as some kind of betrayal.”
Honestly, it can feel like a betrayal when someone in a position of trust leaves without someone to replace them, but it doesn’t mean you shouldn’t be gracious to anyone and everyone who comes in contact with your team.
This is true for employees and churn. If you treat them well on the way out and trust they’re making decisions that are good for their business, and if you have a great product, they’ll likely come back in a few years or refer others to you over time.
The Lesson: End every relationship in a human-first way. Don’t burn bridges.
There are a few things you can do to mitigate angry customers who are leaving, including:
- Training your team not to take it personally. It’ll land on the customers if you come down hard on your team. Instead, recognize it’s likely a systemic issue and have a retro-meeting to learn rather than to finger-point.
- Create nice offboarding materials. Gainsight has “Life After Gainsight” content about getting data back. Put some thought into this. Also, if a customer is going through financial hardship, do you really need to collect on the last three months? No, you don’t. People come back or refer people if they’re treated well.
Mistake #7: Not Being Prescriptive Enough Early Enough
Early on, it’s natural to figure out implementation with a customer. But a few years in, you can still be in that situation where you don’t have a clear guide for customers to succeed with your product.
Some of the problems caused by not being prescriptive early enough are:
- The back and forth with customers leads to a long time to value.
- Every client uses the product differently, so it’s hard to make the software better.
- It’s hard to ramp new teammates in CSM and PS. How do they learn when there are a thousand ways to use your product?
People would have to learn through apprenticeship over years and years, and that’s what happened at Gainsight. With a process in place, their time-to-value went from months and months to an average of four weeks.
How do you get more prescriptive? It can be a challenge.
You need to get everyone together and determine what people are trying to achieve with your software.
Determine stakeholders and how you can configure the software to meet five or six goals. You’ll need to keep it updated as you do new releases and coach teammates to be brave and show customers they have a recommendation for using the product.
The Lesson: The Prescriptive Methodology isn’t without flaws, but it is one of the most critical step functions for any SaaS company in a new category.
Mistake #8: Not Starting Act II Fast Enough
Not starting Act II fast enough is a huge mistake startups make.
The fundamental problem is a growth business is valued on its growth. If you wait until you’re slowing down a lot, and then you need to launch something new, but you have to raise money, you’re in a trap.
Not starting Act II fast enough can hurt your business because you’re getting less valuable and have fewer resources to speed up again when it’s time.
Gainsight didn’t do this well. They slowed down pre-2020 and went out to raise money, yet people saw the slowdown. It wasn’t a good investor pitch.
The Lesson: Track your TAM vigilantly and start your second act well before growth stalls.
And not just the TAM side for your investors. That doesn’t matter. You want to stay vigilant about your ICP, how many counts, how many you’ve penetrated, and whether they’re really your ICP.
Run experiments to get more, but don’t hit a wall, and then try to figure out how to grow.
Mistake 9: Not Being Patient And Ignoring FOMO
Whatever market you’re in, you just can’t force it sometimes. Maybe it’s 2019 and 2021, and you’re watching companies like Snowflake and Databricks explode, yet here you are, not being Snowflake or Databricks.
What are you supposed to do?
In the words of Aaron Burr, you just have to wait for it. If you’re trying to keep up with other people instead of celebrating your own growth, you might ship product before it’s ready or hire too many people.
The Lesson: The patient tortoise beats the over-anxious hare in many markets. Stick to your values and vision. In the words Lin-Manual Miranda wrote for Hamilton, “Wait for it.”
Looking back, it doesn’t matter if you grew 78% better one year. Sure, you have to strive for it, but what matters is how much you’re growing going forward.
Years from now, people don’t care what you did at $300k or $600k, so think long-term about where you want to be at $100M.
Mistake 10: Not Being Yourself
A lot of leadership success is figuring out who you are and leaning into whatever you’re good at.
The danger of all advice is you can take it too far. So take the information that resonates, and then see how it fits with who you are as a leader.
For example, Nick does the Pulse conference every year. The first year went great, and he decided to be a motivational speaker and hired a speaking coach at a great company.
He got to the coaching sessions and was told he talked too fast and had too much energy. So he took their advice and slowed everything down. But that felt boring and didn’t align with who he was.
Over time, he learned that it’s boring not being himself, so now he embraces the fast-talking, high-energy speaker, and it works.
The Lesson: Being yourself is pretty powerful. Nothing can hold you back if you find the confidence to show up with authenticity and vulnerability.
Scaling a business takes a lot of iteration, mistakes, and learning from those mistakes. Part two of Nick’s mistakes made while scaling Gainsight include:
- Not parting ways well
- Not being prescriptive enough early on
- Not starting Act II fast enough
- Not being patient and ignoring FOMO
- Not being yourself