Insight's Growth Gurus series showcases inspiring leaders from our portfolio of growth-stage software and internet companies. In this episode, Insight Managing Director, Ryan Hinkle, interviews Smartsheet's President & CEO, Mark Mader, about his experience scaling the company from a startup to a publicly traded company. Smartsheet enables teams to get work done fast and efficiently. We are a leading cloud-based platform for work execution, enabling organizations to plan, capture, track, automate, and report on work at scale, resulting in more efficient processes and better business outcomes.
Let's start with your story. How did you get your start in business?
As I was wrapping up at Dartmouth, I had the unique opportunity to work with Paul Paganucci at a small trust department at a bank in New Hampshire. Paul had been in investment banking, an Executive Chairman for a large chemical company and the Associate Dean for the Tuck School of Business at Dartmouth. I was lucky to have been exposed to a person with all of these experiences, a heck of a businessman, and a heck of a gentleman. He inspired me to get on a great business course.
From the mid-90s to 2005, I was with a Onyx Software, a client server-based company in CRM, where I was a customer relationship manager. What I had observed were the early days of how people were buying software in the new era which was, “I'm going to go online somewhere, I'm going to try it out and if I assign value to it, I'm going to buy it. I'm going to move now.” I wanted to be part of that disruptive environment.
I remember meeting you in 2012 when we made our first investment in Smartsheet, but I know that you had been there for a number of years before that. Can you tell us about the early days at Smartsheet?
I started working at Smartsheet in 2006 when there were five people in the founding group and I joined along with a colleague. People often say, “So, what stage was that?” Well, it's not just pre-revenue, it was pre-everything.
In the early days, we had an intense focus on the product and service. You can almost convince yourself into believing that if all you do is have this amazing product built, then everything else would be fine. To achieve sustainable growth, it's not just about the product. You need to also focus on distribution, marketing, and partnerships.
For a number of years, we had to learn how to assess whether we had a product that was good enough to hook the distribution activities to it. We had a couple of runs at it and didn't achieve market-fit early, but the team persevered.
Today, we know collaborative work management as a space, but back then, no one knew what that was. What was your experience like defining a category?
In 2006, we underestimated the degree to which foundational cloud offerings had to first get set to become actually ready to consume this next category.
Our space, collaborative work management, is really a category that you can go to the mountain top and shout as loudly as you want. The market also needs to be, in a sense, predisposed to being ready for another category. And one of the things in 2006 we probably underestimated was the degree to which some of the foundational cloud offerings had to first get set to become actually ready to consume this next category. So, I'll be very specific and call out things like messaging. People used to have on-prem exchange for their email and then it went to the cloud. And then beyond email we had one-to-one and group-based messaging products and services come along. We had how things were authored. We used to run Excel and Word and they were all resident on our machines and on our file servers and then it went to cloud-based authoring. Then we had the ability to store those authored documents and those artifacts and we could sync those to places. So those were three major categories for which there was a pre-cloud analog and the ascension of CWM, collaborative work management, was really the market having deployed many of those front office tools and recognizing that the cloud enabling those categories alone was not sufficient to achieving, sort of, a super high-functioning business execution. And that's really where the demand for CWM started to pick up. People had taken many steps into the cloud and they realized that not everything was perfect.
It's a remarkable journey in watching this space emerge. What's interesting is that Smartsheet can be utilized by individuals, small teams and Fortune 500 customers, all in different ways. What was your experience having to service that range of customers and use cases?
It's about what you sell and what you provide to the market. Part of that is how you engage with the market, your customers, your prospects, and what you provide them from a service standpoint.
In terms of what you provide, one of the things that companies often get wrong is that they believe that if they find success in enabling and empowering an individual or a small team, then they could be an enterprise player. Being an enterprise business is not about lighting up a thousand teams, each of which have a small volume.
We started in this team-centric, individual empowerment area. We layered many things into our platform, which solved distinctly different things for large companies. The beautiful thing is when you start in that area and you layer on top of it. It's not that you're pivoting the company at each stage; you are building upon and you’re extending. It's about the individual-driven, high-velocity team adoption, that is still very much present today. And now as a company, as we earn our success in the enterprise, we deliver many different things that are very “enterprise”, if you will. Does that make sense?
You were once a CEO of a small team—I think you said five—and today you manage a global team of almost a thousand employees. How have you evolved as a leader as the company has grown?
It's about having a scale mindset. That means not only having an intense drive to grow, but it's also a willingness to let go and to hire people who are dramatically better than you in a variety of disciplines. While this can be difficult, the trick is, as you move up the curve to fifty people, a hundred people, two hundred and fifty people, five hundred people, a thousand people, how do you stay true to your prior commitments? Rewind the clock to when you were twenty-five employees. How do you continuously set markers for people where they perceive you as being fair and that you're very clear on what you expect. If you do that well, then you can actually maintain a high-functioning and tight team.
I've been a part of three separate financing rounds where you raised money and Insight was proud to be involved in Smartsheet's IPO process. What advice would you give on when a company should raise money? What other considerations do you think are important for management teams to consider when they're accessing capital markets?
As you highlight, Ryan, there's a real diversity in the different categories that we've experienced, from our first non-seed round to going public. It's important to understand and focus on the objective that you want to achieve.
Your sole objective could be an economic outcome. For example, let's say you want to solve for a million dollars, you can do that as a 100% owner of a million-dollar valued company or you could do that as a 10% owner of a $10,000,000 company. When you assume the mindset of “you want to grow”, you also should then think, “How can I align myself with people who are incentivized to help me achieve that outcome?” Some people have this intense focus on maintaining maximum ownership and not letting people in.
For us, we we were solving for growth and success at scale. We have benefited greatly from our partnership with Insight and others by giving up ownership in our company. In exchange, we get access to Insight, which includes talent, relationships and best practices.
The second piece is the dynamic of feeling accountable to others, whether it's a customer, an employee, or an investor. For me, that's an incredibly motivating feeling. The IPO process for me was not only a great marketing event and a wonderful event for our employees, but it was laddering our entire organization up to a whole new level of accountability. That is incredible fuel for driving us forward.
In the years leading up to IPO, I can remember many boardroom conversations where you mentioned how there were so many things that you wanted to accomplish before considering IPO. Then there was a moment when you realized, "I'm never going to be done being ready completely. It's time for the world to hear my story.” I'd love for you to tell us a little bit about that spark for you that flipped you from curious to committed in terms of that IPO journey.
I'll use our ENGAGE conference as a comparative point. For years, people would ask when we were going to host a customer conference. My response was, “We're going to do a customer conference when we're ready to host a real customer conference.” I hold the same sentiment to going IPO; when we IPO, we're going to be ready to IPO.
Then the leadership team and I realized that there is no perfect moment. At no point will you have your strategy, partners, and growth dynamics in perfect focus. Achieving greatness is difficult. There's no "easy button."
The process to going public never is as easy as you want it to be, but you obviously had a fabulously successful IPO event. Now that you've had a couple quarters to reflect and grow, are there any specific adaptations you've had to make as a company in the time since the IPO?
It's very important to have a story arc and ours isn't a three month story arc, it's a multi-year story arc.
The IPO process was an amazing forcing function for us to articulate what was in our minds and what we had shared with one another. When you actually are forced to put that on paper and then in a one-hour meeting with an investor from a big mutual fund convince them of why that has merit, that is something that you don't do until you go public. You are forced to do it. There was such positive ripple from that effort because all of that focus and all of that story arc development, really making it tangible, is something that you can use with your customers, your employees, your candidates who are considering your company. Until you go through that process, you might think you have articulated your strategy and put together a coherent multi-core multi-year plan, but it gets very different when you go through this process.
Last question, at end of your career, what do you want to be known for?
Mark: A person who provided millions of people the unlock code. The thing that gives me most joy in my life is when something that I represent or sell or can do for someone results in someone saying, at least having the realization, that, “I didn't think I could do that prior.” When you strike that chord with another human being, it sets them up on a different trajectory and sometimes they're small, but when you hit a big one, they never forget it. I think there are so many people in this world who have amazing skills but they just don't have the code. And if you can play a role, either through your personal engagement or through a service you've delivered to them and they feel that and they associate you or your company with that, let me tell you, they will go to that mountain top and shout it. If I can be known for that, Ryan, I will have led a good life.
I love it. It speaks to me, and knowing the man that you are and the executive you are and the leader you are, it is certainly true to form.