EPISODE SUMMARY
In this episode of Scale Your SaaS, Chris Hicken, Chief Productivity Officer at ClickUp, shares his thoughts on the current state of the IPO market, the crucial metrics investors focus on, and the strategic decisions software founders face with host and B2B SaaS Sales Coach Matt Woalch. As the market gradually recovers, many SaaS companies are preparing for potential IPOs, but it’s clear that a cautious approach is still prevalent.
PODCAST-AT-A-GLANCE
Podcast: Scale Your SaaS with Matt Wolach
Episode: Episode No. 326, “How to Grow to IPO with a Small Problem-Solving Team – with Chris Hicken”
Guest: Chris Hicken, Chief Productivity Officer at ClickUp
Host: Matt Wolach, a B2B SaaS Sales Coach, Entrepreneur, and Investor
Sponsored by: Leadfeeder
TOP TIPS FROM THIS EPISODE
Deciding Between IPO and Other Exit Strategies
For software founders, deciding whether to pursue an IPO, continue scaling privately, or seek other exit strategies is critical. Chris emphasized that an IPO is essentially another funding event but with public markets as the investors. Timing an IPO often depends on the lifecycle of investors’ funds and their need for liquidity. However, alternative options exist, such as partnering with private equity funds to provide liquidity without going public.
Building and Scaling Software Companies
Chris shared valuable lessons from his experience with UserTesting, where the company grew from $500,000 in sales to nearly $100 million before going public in 2021. One major lesson was the importance of hiring for culture fit and problem-solving abilities rather than relying solely on impressive pedigrees. Conducting projects with potential hires during the interview process can help reveal their true working style and compatibility with the company’s needs.
Transition to ClickUp
After leaving UserTesting, Chris founded Nuffsaid, a company aiming to consolidate work tools into a single platform. Eventually, Nuffsaid was acquired by ClickUp, where Chris continues to pursue the vision of creating an all-in-one workspace. ClickUp’s flexibility allows users to customize workflows and integrate various tools, making it a standout in the crowded productivity app space.
Differentiating ClickUp in a Competitive Market
ClickUp’s approach to growth focuses on solving specific needs for smaller work groups and then expanding its reach within organizations. By offering unparalleled flexibility and the ability to serve various functions—such as CRM, project management, and ticketing—ClickUp differentiates itself from other productivity tools. This adaptability and user-centric design have earned ClickUp top ratings across multiple categories on G2.
EPISODE HIGHLIGHTS
The IPO Backlog and Market Readiness
Chris highlighted a significant backlog of software companies ready to go public, waiting for market conditions to improve. Some companies, like Clavio, have tested the waters, but a full-scale rush of IPOs has yet to materialize. Wall Street investors are closely watching growth rates and efficiency metrics, such as profitability, the Rule of 40, and CAC payback, to identify strong candidates for investment.
The Challenges of Going Public
Going public brings a host of new rules, regulations, and transparency requirements. Founders must be prepared for the mental shift from private to public operations as they become accountable to a broader range of stakeholders. This increased accountability can be both a burden and a motivation as CEOs strive to deliver returns for individual investors who have placed their trust in the company.
Advice for New Software Founders
Chris’s advice for new software founders is particularly relevant in the current economic climate. With investors seeking to deploy capital efficiently, founders should focus on building scrappy, efficient companies that minimize cash burn. Leveraging AI and automation can significantly reduce costs and accelerate development. By combining technical solid and go-to-market expertise, small teams can achieve remarkable success without extensive staffing.
In conclusion, Chris Hicken’s insights provide valuable guidance for navigating the complexities of IPOs, scaling software companies, and leveraging technology to build efficient, high-impact businesses. SaaS founders can learn from their experiences and strategies to make informed decisions and drive their companies towards success.
TOP QUOTES
Chris Hicken
[09:57] “We often selected executives to join the company based on their pedigree, meaning the logos of the companies that they used to work at, they’re very impressive people very smart. They were pre-vetted by companies that we liked and trusted. But when they came to UserTesting, they oftentimes weren’t a fit.”
[12:50] “As we grew, UserTesting, all of these huge productivity problems started to emerge, for example, it became really hard to see what everybody was working on. So transparency, felt like it went to zero.”
[20:25] “Right now, in this environment, it’s ultra important to build companies that focus on being scrappy, and efficient and minimizing cash burn. So one of the tools that founders can use early on, of course, is to lean much more heavily on AI.”
Matt Wolach
[09:57] “I’ve learned the same lesson. Hiring for culture is so important. It’s something I’ve learned in my career. And beyond that, like you say, being a problem solver and finding those problem solvers is critical.”
LEARN MORE
To learn more about ClickUp, visit: https://clickup.com/
You can also find Chris Hicken on LinkedIn: https://www.linkedin.com/in/chrishicken/
For more about how Matt Wolach helps software companies achieve maximum growth, visit https://mattwolach.com.
Head over to leadfeeder.com and sign up for a 14-day (no strings attached) free trial: https://www.leadfeeder.com/
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Check out the whole episode transcript here:
Matt Wolach 00:00
Hello, Welcome. Thank you very much for joining us on Scale Your SaaS. This is Matt, I am your host. And our goal here is to help you understand how to do exactly that how to scale your SaaS. So if you’re new here, definitely subscribe to the show, we’re going to teach you how to generate a whole bunch of great leads, how to make sure you close those leads, and how to build a team around you so that they can help grow the company for you. If you want any of those things, and you’re looking to grow your software company, we will be here for you giving you all that information, putting the best people in SaaS in front of you people who are creators who are innovators who are founders who have done this before. And one of those amazing people is here with me today. I’ve got Chris Hhicken with me, Chris, how you doing?
Chris Hicken 00:34
Good Matt, excited to be here. Thanks for having me. And looking forward to conversation.
Matt Wolach 00:38
Likewise. I really appreciate you coming on. Let me make sure everybody knows who you are, Chris. So Chris, he’s the Chief Productivity Officer at ClickIp. And I’m sure you’ve heard of ClickUp. It is the world’s only all in one productivity platform that flexes to the way people want to work. It replaces all individual workplace productivity tools were a single unified platform that includes AI, project management, document collaboration, whiteboards, spreadsheets, and goals, you name it, they’ve got it. And this guy knows his stuff all around that. But he got there after building scaling and exiting UserTesting, which you’ve probably also heard that he learned a lot about how to grow and scale a startup to incredible heights. And I’m looking forward to hearing that journey. And Chris really is awesome with what he does. He’s an advisor. He’s an investor to several startups. So we are really lucky to have him, Chris, thanks for being on the show.
Chris Hicken 01:27
Yeah, thank you Matt. Looking forward to it.
Matt Wolach 01:30
Absolutely. So, tell me what’s been going on with you lately. And what’s coming up?
Chris Hicken 01:34
Well, very big picture, there’s this enormous backlog, maybe even, maybe even a historic backlog of IPOs that are ready to go in the markets to start to improve. And we’ve seen a couple of them go out like clayvo to kind of test the waters and see how the market reacts. So at a high level, you know, we’re watching out for what the market is doing. And making sure that the company’s metrics are in a really great position for whenever the time is right. And the company thinks it’s a good time to take the company to the next level.
Matt Wolach 02:07
Yeah, that’s, that’s very cool. What are you seeing with some of those metrics? Do you think it’s gonna be happening sometime soon? Like you said, some are testing the waters? Do you think that that’s really, we’re getting to the forefront of it?
Chris Hicken 02:17
Well, we’re definitely not seeing the floodgates open up yet, in terms of the IPOs going up, but certainly we know that metric that we know that investors, Wall Street investors are looking still, growth rates still is primarily the key metric that they’re looking at. But also now efficiency has become a super important metric. So they’re going to be looking at things like profitability, rule of 40, CAC payback, you know, the core, the core metrics that help identify which businesses are efficient and which ones aren’t.
Matt Wolach 02:47
love that. And when you talk IPO, that’s definitely something that a lot of people are wanting to do, especially if you’re a founder of a software company, that’s something that might be far in the future. For someone like you who really understands this industry really well, how can a founder decide, hey, the IPO is the right path, or maybe just building and scaling and reaping the profits? Or maybe another type of exit? What do you feel like is how does a founder decide between those options?
Chris Hicken 03:14
Yeah, that’s actually an important question. For founder’s that aren’t familiar with this. An IPO is really just another funding event, except that the funders are the public markets rather than investors. So first of all, it’s important to know for founders that an IPO it is a funding event, you’re gonna give up a portion of ownership of your company in exchange for money that’s being put onto the balance sheet. So that’s, that’s number one. In terms of when the right time is to go public, a lot of it’s going to have to do with the conversation with the board and investors and when the right time is to provide liquidity for those investors. So one of the factors that often plays comes into play is that investors are oftentimes investing out of specific funds. And those funds have a lifecycle. So a typical VC fund, for example, lasts for about 10 years. So if an investor put in money about 10 years ago, they’re going to be looking for a return for their investors. And so they might start to want to put some pressure on the company to provide some liquidity for them. An IPO is one way to do that. Now, there are lots there actually a bunch of other really good options too, that some companies have done, for example, rather than going public, a company can choose to pair up with a private equity fund. And that private equity fund will buy stock from existing investors or employees at a at a fixed price before the company goes IPO. And so that would be a way for a CEO or founder to give liquidity to those investors without having to take the company public. Of course, when you take the company public, it does introduce a lot of new rules and regulations that you have to Follow quarterly reporting, SEC. So there’s there’s a lot of rigidity that you have to introduce into the company in order to go public. And so a lot of founders would, will delay that as long as they can.
Matt Wolach 05:13
Yeah, and exactly that it’s really public. So a lot of founders, especially in software, are used to being really private with what they’re doing with all their financials. And now all of a sudden, it’s out there. That’s pretty crazy, right? It’s quite a shift mentally, I bet.
Chris Hicken 05:28
Yeah it’s, it’s a shift mentally. And you know, there’s another thing too, which is, you’re accountable to so many more people, once the company is public, and people are putting their own personal money into your business. So in some ways you feel as a CEO you feel accountable to provide a return for individuals who believe in you and your company.
Matt Wolach 05:51
Yeah, that’s, that’s got to be a pretty good feeling. But you’re right, you would feel that obligation. There’s, there’s Mary Johnson from Indiana, who’s got her savings in your company. And that’s, that’s pretty cool. And also something you feel like you’ve got to deliver on 100%.
Chris Hicken 06:04
Yeah, that’s, that’s why a lot of CEOs, you know, in some ways, the and I’m gonna do a little tangent here, but, and you can cut this out later, if you want. But it’s one of the reasons why CEOs, you hear the media will talk about shenanigans that companies do to boost up their stock price. Some of it is, of course, because their incentives are to drive up the stock price. But also, there is a sense of a true sense of obligation that CEOs have to provide a return for people to trust them to invest in their company.
Matt Wolach 06:35
Yeah, it makes a lot of sense. So tell us your story. UserTesting, I want to hear about this company. Where did the idea come from? How did that whole thing happen?
Chris Hicken 06:44
Yeah, so I wasn’t one of the founders. But I’ll show you I came in really early on, I’ll kind of talk about that story briefly. So at my first company, headsets.com. And by the way, this was back when it looked like online, retail was going to be the future of the Internet. Right. So there was no SaaS, there was no, Amazon had just gotten started. Google might have just launched YouTube wasn’t out yet. So there’s, there’s very little SaaS available at the time. And so while I was there, one of our secret weapons was that we would do user testing on all of our marketing material. So we would, and we were sending out 10s of millions of catalogs every year, we were very popular website. And so we were able to see how people reacted to our marketing before it went live. So we never shipped any campaigns without user testing it. And so when I approached the founders of UserTesting, I thought it was this huge company, because we were doing all this testing, I thought this thing must be huge. But it turned out, it was for people in a small office in Mountain View. And the the founders are just incredible. I mean, incredible product visionaries, Dave Garr and Darrell Benatar. And my pitch was like, Look, I know how to use this as a marketer, and I know the value that I got. So can I come in and join you as the person who drives the go to market part of this business? And so I came on as the fifth employee. And we built the company from, you know, about half a million in sales when I joined to just shy of 100 million when I left. And the company went public in 2021.
Matt Wolach 08:24
Very, very cool. Congratulations on that growth. That’s fantastic. And having that that journey is such an awesome experience. In your background. What would you say were some of the biggest lessons that you learned going from that 500k To even getting to like a 10 million before you even got to the 100 million?
Chris Hicken 08:43
Yeah, well, a lot of lessons. Probably the biggest, I’d say the biggest mistake, which became our biggest lesson was that we were we often selected executives to join the company based on their pedigree, meaning the logos of the companies that they used to work at, they’re very impressive people very smart. They were pre vetted by companies that we liked and trusted. But when they came to UserTesting, they oftentimes weren’t a fit, either, because they brought a pre existing playbook with them. And they were not flexible enough to implement a new playbook based on the needs of UserTesting, or there was culture or personality clashes. But basically, we learned that in order to hire great executives into the company and help us scale, we had to vet for culture. And we had to vet for the ability to be a problem solver. And we actually started telling people look, we actually don’t care that much about your experience coming in. We’re not going to rely on that very much. What we are going to care about though, is your ability to understand this business this business needs and solve problems in that context. So that was probably the number one. It’s the hardest lesson that we learned. I’ll put it that way.
Matt Wolach 09:57
Yeah, I get it. It’s definitely an expensive lesson to go through with having some people that weren’t great fits and going through that process. I’ve learned the same lesson. And you do get, you know, kind of blinded by the amazingness of the logos in this in their background, like, Oh, they’ve been here, they’ve been here, they definitely must be incredible hires for us. But you’re right, hiring for culture is so important. It’s something I’ve learned in my career. And beyond that, like you say, being a problem solver and finding those problem solvers is critical. How do you evaluate somebody before you meet them? If they’re a problem solver or not? How did you guys do that?
Chris Hicken 10:35
Well, a couple of ways. My favorite way is to actually do a project together. So as part of the interview process, you work on a specific project. So if you’re bringing someone into the product team, for example, well, let’s actually scope out what an MVP would look like, and how we would build this new feature. And let’s and just watch how they think through problem solving. What data do they want in order to make decisions? How do they collaborate? What types of questions Did they ask? So that’s one of the one of the easiest one of the best ways to screen for both problem solving and culture fit. Now, we don’t we don’t blindside them, we do tell them what the company’s core values are ahead of time. But having said that, people do have their natural working styles. So that emerges when you’re actually in the middle of a project, it’s hard to fake culture is hard to fake problem solving in that kind of a situation.
Matt Wolach 11:35
Yeah, that makes a lot of sense. And you’re right, once you’ve done a project with somebody or even kind of modeled it out, and you start to really see what’s underneath the hood, and what’s behind the curtain.
Chris Hicken 11:45
Yes, it’s also important as part of the conversation, for example, to disagree with something that they’re saying, just to see, are they defensive? How do they take feedback? If you know, watch carefully how they treat their previous experience, versus maybe, you know, industry best practices versus customer data. So how do they use data and decision making? So all you all those wonderful things emerge As you do a project together.
Matt Wolach 12:15
So true, I think that’s something we can all take away is how can we get those problem solvers on our teams, especially in an early stage company, you need people who are able to kind of work outside of having a set, regimented process that, you know, has been tested 1000s and hundreds of 1000s of times, you know, you need people who need to kind of figure it out. And I think that’s fantastic.
Chris Hicken 12:35
Or even a set regimented role, because a lot of times when you’re early in, you got to wear a bunch of hats. And that’s just the world of a startup.
Matt Wolach 12:43
So true. So true. Okay, so you guys did great there, boom, hundred million IPO. How’d you get over to ClickUp? How that happened?
Chris Hicken 12:50
Yeah, So as we grew, UserTesting, all of these huge productivity problems started to emerge, for example, it became really hard to see what everybody was working on. So transparency, felt like it went to zero. Every team had their own workflows, their own data, their own tools, collaboration really started to deteriorate, especially when it’s cross functional, collaboration, data silos, you probably hear about this, you know, teams fighting over what the, I’ve got my data, that marketing has their data of how many leads are coming in sales as their data. No one agrees as you start to start fighting about, you know, things like data quality, and I felt like there, there just has to be a better way to run a company. And at the time, there were no really good kind of like, overall project management tools. I mean, there were two like Clarizen was out there and Asana, but they were really more for like professional services. So anyhow, I left to start a company called Nuff said, and Nuff Said was a company that would allow you to do all of your work in one place, starting with chat, email, tasks, and calendar. So we combined all those into a single place. So for example, Matt, you could combine, you could plug in all of your Gmail accounts, all of your Slack accounts. And I can say, okay, based on on Matt’s role, I know these are the three or four messages or notifications that actually mattered to Matt right now. And then you can go create tasks and you can collaborate with other people in the company, you could schedule time to meet etc. Cool. So a really cool product. We raised a bunch of money from, from Google general catalyst, several other great firms. And then about three years in, we discovered ClickUp, which had an identical vision, but they were about three years, four years ahead of us probably in product development. So long story short, we decided to sell Nuff said to ClickUp. And that was about a year and a half ago. So that’s, that’s how I that’s how I came here and ClickUp is carrying that same vision forward, which is if you can bring it All of your work together into one place. And by all your work, I mean, chat, projects and tasks, calendar, voice notes, whiteboards. If you can put documents and you put all that together in one place, then then surely all the work is together in one place. It’s visible and easily, easily shared with everybody, and incredibly improves the things that I talked about before transparency, collaboration, data silos, all those problems are improved.
Matt Wolach 15:31
Yeah, no doubt. It’s definitely something that’s, that’s really, really helpful. And man ClickUp has really been after it. production wise, lately, you guys been out and all kinds of stuff. So, you know, how does that I want to really understand, you know, you have these couple exits, now you come over and do something else. How are you separating? I mean, ClickUp is in a pretty crowded space. There’s other productivity apps all over the place. And yeah, ClickUp seems to be the one that people think of, how are you separating from all that competition? How do you differentiate?
Chris Hicken 16:04
Well, I think ClickUp started as a project management tool, with a vision to eventually become kind of the everything app for work. So whereas other companies have aspired to be really great project management tools ClickUp as aspired to be, almost like, I mean, this might be a stretch here, but almost like Microsoft Office, version two, it’s like the evolution of all of your apps together into a single place. And because clickup has been built in a super, I mean, this, I think the one of the brilliance, this is this is the brilliance of Zeb, the CEO of clickup, he built clickup, with incredible flexibility. And what I mean by that is you don’t need an admin to to customize your clickup. Anyone can go in and customize their workflow in exactly the way that suits them. They don’t have to follow very strict company rules. You hear salespeople all the time complaining about Salesforce, and it doesn’t work for their process, fine. ClickUp lets you customize it however you want. And on top of that, click up. Because work typically flows through a process. You know, in sales, for example, you’re gonna go from lead to a contact to an account to an opportunity to a close deal. And work like that happens almost across every department in the company. ClickUps underlying data structure allows companies to build any app that they want within clickup. So for example, clickup is actually the number one rated CRM on G2, over Salesforce and over HubSpot. Who would have thought? ClickUp is also an incredible ticket management tool for I.T.. ClickUp is I have to check, I think it’s number one and number two, for marketing, wikis. clickup is, you know, always in the top three for project management. Actually, one more thing clickup was was rated by G2 the number one collaborative workflow tool. So So because of the underlying flexibility ClickUp can mold itself to the needs of the business that literally all teams can run their work in one place. And I think that’s that’s truly what differentiates ClickUp from everybody else.
Matt Wolach 18:31
Yeah that’s, that’s super impressive. And something that definitely would separate. One of the questions I have is if we get down to kind of a micro level and individual conversations, we have a lot of people building sales teams, I think about your sales team. And a lot of the market I’m sure still thinks of ClickUp as the productivity tool. And so they’re comparing you against other productivity tools. How do you educate the buyers in the market as a whole, so that they realize, hey, you could do more than that? Because they might think they only have that one little problem. They think they just need productivity. How do you get them to realize that their problem is bigger?
Chris Hicken 19:09
Well, just just like any other company, it’s easier to start small and grow. So what’s we actually don’t need, we don’t need a, a CIO at a fortune 100 to adopt ClickUp across the whole organization on day one. In fact, because clickup as a product lead growth company, it’s actually way easier if maybe we would take on a smaller group, a work group of 25 people, 100 people, or 250 people. And so clickup is really good at going into an individual group, solving their needs, and then using that success to expand into other teams and departments. And that’s actually really the way that clickup grows most efficiently. And it’s one of the one of the secrets or one of the beauties of product led growth is if you can make it really easy for a group or department to get value into on their own Using the product, it makes it super easy for the sales team to go in and expand those accounts.
Matt Wolach 20:06
Yeah, no doubt, I can see how that would be the case. Okay, so this is really, really great stuff here, Chris. We’re running out of time, though. So what advice based on your experience and what you’ve gone through. What advice would you share with new software founders who are starting out? They’re growing their company, what would you share with them?
Chris Hicken 20:25
So this is July 2024. And most investors I’ve talked to in the last couple of months have said that this is a great time to be an investor. Now, that is not good news for founders. Because what they’re really saying is, this is a great time for them to deploy capital, because they can deploy less capital and get more ownership than ever. So for founders, right now, in this environment, it’s ultra important to build companies that focus on being scrappy, and efficient and minimizing cash burn. So one of the tools that founders can use early on, of course, is to lean much more heavily on AI. We haven’t talked about that as much yet. But there’s some very interesting things happening in AI right now, including the ability to build software, early versions of software from scratch using AI. And if you can get a strong technical person paired with a strong go to market person together, the two of them could build, you know, there’s, I think, OpenAI likes to talk about a billion dollar company with one employee. Well, that might not be realistic, but it could maybe be a small team of like 20 people leveraging AI. So I think that would be the goal is, you know, build a software company, but do it in a really scrappy way, minimize or eliminate salary expenses early on, if you can. And lean in as much as you can into AI and automation to do work that you normally would hire people to do.
Matt Wolach 22:03
Yeah, brilliant. I echo that. I totally agree. I think that the right now we’re just such a great moment in history to be able to get that right at the kind of ground level and just start really growing and scaling with AI. And I think it’s amazing. So awesome. Advice. Chris. This has been fantastic. How can our audience learn more about you and ClickUp?
Chris Hicken 22:20
Probably the easiest thing to do is just find me on LinkedIn. So search for Chris Hicken H I C K E N, easy way to remember my name is my first initial c plus my last name Hicken spells chicken. I do chicken@gmail.com.
Matt Wolach 22:35
Oh, that’s amazing. That’s a great email address.
Chris Hicken 22:39
I post on LinkedIn frequently. So if you want to follow tips and tricks on management, or leadership, that’s typically the topic I post on and so feel free to connect or follow there.
Matt Wolach 22:51
Okay, perfect. We’ll put all that in the show notes. So if you’re listening, go ahead and grab all that there and go follow Chris. He definitely post some great stuff. Chris, this has been awesome. Thanks so much for coming on the show and sharing all your wisdom.
Chris Hicken 23:01
Yeah. Thanks, Matt. Appreciate it.
Matt Wolach 23:03
Absolutely. Thank you out there for being here as well. Hope you got a lot out of this. Again, make sure you subscribe so that you can get more and more insights from other founders and leaders in the software world. Thank you for being here. We’ll see you next time. Take care bye bye.
