SaaS Interviews with CEOs, Startups, Founders
1060 Why I Left Salesforce To Join VC Firm
19 Jun 2018
Chapter 1: What is the main topic discussed in this episode?
This is the Top Entrepreneurs Podcast, where founders share how they started their companies and got filthy rich or crash and burn. Each episode features revenue numbers, customer counts, and other insider information that creates business news headlines. We went from a couple hundred thousand dollars to 2.7 million.
I had no money when I started the company.
It was $160 million, which is the size of many IPOs. We're a bit strapped. We have like 22,000 customers. With over 5 million downloads in a very short amount of time, major outlets like Inc. are calling us the fastest growing business show on iTunes. I'm your host, Nathan Latka, and here's today's episode. Hello, everybody. My guest today is Scott Beechuk.
He brings over 20 years of deep product management, engineering, and SaaS experience to his role as a partner on Northwest's enterprise team, obviously at the VC firm. Scott most recently served as Senior Vice President of Product Management for Salesforce's Service Cloud. While at Salesforce, he also served as Head of Engineering, Product UX, and Documentation for Desk.com.
Scott, are you ready to take us to the top? I'm ready. Let's do this. I'm hoping my people don't kill me here because I've gone to the dark side. Usually I just have CEOs on and now I'm letting the VCs on. So we're going to make this a good one. We'll have some fun. All right. I'm looking forward to it. You're basically a founder. I mean, you're a product guy. You were at desk.
Why make the jump from Salesforce to MVP?
That's a great question. You know, I never thought I would. I was an entrepreneur for 15 years before Salesforce and then had a six and a half year run at Salesforce. So in a way, I kind of think of myself more as an entrepreneur and a company builder than anything else. But running through Salesforce was an opportunity for me.
to learn how to build at extreme scale and work with people who had done it many times over themselves. And I thought, you know, when I was in my twenties and I was raising my own venture capital, I thought, you know, one day I would love to be, I would love to have enough experience learning how to do things the right way, making enough mistakes that I could actually share that broadly with a
Venture capital is a good way for me to sort of express that over more than just a single company. So, again, that's that's my goal is to kind of share the good, the bad, the ugly and help these companies grow. And, you know, after 22 years of experience.
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Chapter 2: Why did Scott leave Salesforce for a VC firm?
But when it comes to product strategy, partnerships, scaling an organization, scaling technology, hiring great executives, these are all areas that I think I can add a lot of value. So that's where I'm going to do that over a large portfolio.
A lot of my listeners are CEOs that have built very successful companies bootstrapped. And so they're doing, call it, $5 to $10 million a year. They control a company. They pay themselves a couple million a year. It's a great business. I also have the other end of the spectrum. Before you, the two interviews, I think together they've raised about $400 million together.
It was DataStax and Trenda, which went public in 2016. And so I always wonder, as a capitalist-minded founder, and you've been there in your mid-20s when you decided to raise, Is it a quicker way if you're only optimizing for getting rich? Raise capital or don't raise capital?
No, that is the billion-dollar question, isn't it? Great example, a company that I invested in based out of Vancouver called ACL. This is a company that's a 30-year-old company, had never raised a penny of capital to date. They bootstrapped for 30 years, extremely successful, a nice steady growth path since the late 80s.
And, you know, they were at a moment in time where they said, you know what, we think there's an opportunity to strike there. They're in arguably, you know, not the sexiest area. It's governance, risk and compliance. But when you look at the opportunity and how every single large enterprise company in the world needs, it actually starts to look pretty sexy there.
And if they want to get a path to this hockey stick effect, an infusion of capital and bringing a company like Norwest into the picture where we can really help them craft the right strategy and the right execution to get them to potentially an IPO one day, potentially another form of liquidity.
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Chapter 3: What experiences shaped Scott's transition to venture capital?
The timing was right. And for them, it was a combination of bootstrap for as long as you can and do as well as you can. And now the right decision was let's infuse some capital in kind of a private growth equity type of arrangement. And it's so far so good, working out real well.
I'm not familiar with that company, but I imagine that founder was very comfortable if he's been doing this for 30 years. And it took a little bit of convincing on your end for him to take this deal. I'm assuming here, him or her to take this deal. Was any of that round secondary where he or she took money off the table?
Well, you know... The whole way that founders like this tend to think about these deals is they think about their company first, and they think about their employees first, and they think about how can they actually, after 30 years of success, how can they really take this to sort of this quantum leap next level? And so the founder, he's brilliant.
But he really cares a lot about the company and he cares a lot, but he thinks that there's a great opportunity. So for him, he wanted to bring as much capital to the company as he possibly could so that we can potentially make some really strategic moves that are going to be capital intensive along the way. We want to grow faster.
We possibly want to grow in creative ways that are going to require some additional capital. So he is, you know, he's a very humble person. uh, but smart, uh, founder. And I think it, I think it takes a lot for a founder to do, to make that mental switch from, Hey, you know what? It's almost like a family run bootstrap business to, Hey, you know what?
We're going to go big and we're going to bring a firm like Norwest in to help us superpower that next, uh, that next change.
Mm hmm. Nine out of 10, though, right? You only need one winner, right? Whereas he or she, the owner, I mean, this is their only thing they're 100% in. How do you manage that, that kind of incentive gap? And and you know, I can't, I don't know how much I can share of this. So I'll keep it super high level. But you know, Ilya with data nice out in the valley, right? He's built a great company.
I don't know if he has shared how much revenue they're doing, but healthy company. And he's only raised about a million bucks. And he pays himself and all the employees a great dividend at the end of the year. And it is like enough money to make them very comfortable, way above average. And that's an alternative to raising capital to go for something big to get everyone a big payout.
How do you manage these diverse incentive structures between a VC and a founder?
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Chapter 4: How does Scott evaluate portfolio companies for investment?
Salesforce is arguably one of the best companies. And it's not me just drinking the Kool-Aid. I'm just being honest.
Scott, I would hit you if I thought you were bullshitting me. We've seen the reports. Benioff is up there in the top in terms of CEOs. The company's a freaking rocket ship. First SaaS major player. I get it.
Yeah. I mean, I feel it was very humbling and to even have an opportunity to work so closely with the team, the executive team at Salesforce and build what we built over that time. But for me, you know, I developed a bit of an expertise and a network around everything that's CRM. So it's Salesforce automation, customer service, marketing technology.
And I also learned kind of what it meant to build a real platform. I think the term platform gets thrown around a lot in our industry, especially in SaaS. And Salesforce is one of the few companies out there that actually has a real platform. They got a programmatic component to it. You can kind of pull apart the UI and the logic and rebuild. You can model any business process.
So their largest customers like Coca-Cola, can actually model their business in a really complex way. And what I wanted to do was I was thinking to myself, okay, this is a fabulous opportunity for me at Salesforce, but how can I actually take a lot of what I've learned and apply that and help build the next generations of Salesforce?
Maybe not in CRM, but there's plenty of other different industries and opportunities to do that. And I actually got pretty excited about the thought that, you know, we learned a lot of great stuff along the way. And the team at Salesforce, for me, it was both a learning strategy and execution exercise. And so I took a lot of that with me.
We also built some really strong partnerships at Salesforce. And arguably one of the most successful partnership organizations, they call it the AppExchange. And that is a great model, I think, for any company. It doesn't even have to be just a SaaS company, but any company. How do you actually build value-based partnerships that actually deliver value on both sides, like a bilateral win-win?
Everybody likes to talk about it. Really hard to do. And so those are some of the things that started getting the gears turning in my head. Well, how can I actually take all of that learning and the things that worked and the things that didn't work and apply that broadly over a multiple different companies? I love building companies. I always have.
And whether it's starting from scratch or joining somewhere in the early part of the journey, I'm on the venture side. And so I love companies that are asking themselves the question, how do I become the next great SaaS company? And Salesforce is certainly one of those.
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Chapter 5: What is Scott's investment strategy at Norwest?
Why, why would you do this BC thing? And I always tell them, I'm like, I took a gamble. I got in here and I didn't know if I was going to be any good at it. I don't know if I was going to like it. But I'll tell you what, I've never been happier.
And I'm getting an opportunity to meet some of the smartest CEOs, entrepreneurs, founders, and getting a holistic view of everything that's happening in an industry. There's no other way to do that. Maybe as an analyst or something like that. But I get to see companies... who are doing all parts of the spectrum to kind of form a much more kind of holistic thesis on these things.
Guys, I get asked all the time, Nathan, you host all these interviews, hundreds of them per month. How do you do them efficiently? And guys, the answer is simple. People always agree to my calendar, back-to-back meetings. I batch my interviews to stay very efficient. And the way that I do it is I use a tool called Acuity Scheduling at nathanlatka.com forward slash schedule.
And the reason I use them is very simple. They keep my no show rate very low because they send out reminders about when the interview or the meeting is coming up. And also they make it very easy to schedule time, right? I don't have to go back and forth via email 10,000 times with people I'm trying to meet with. Okay, at nathanlatka.com forward slash schedule. Helps me so much.
And by the way, look, I like have so many meetings. I'm the best at meetings. Okay, I do them back to back. Very, very efficient. You guys know me. many people say I'm the most efficient they've ever seen. Okay. So I use the tool. It's so efficient. And by the way, I got Gavin. I said, Gavin, he's the CEO. I said, I want a great deal for my people.
He said, Nathan, well, most people get a 14 day trial. Isn't that great? I said, no, he's given us a 45 day free trial at Nathan Latka.com forward slash schedule. That's not going to stay up forever. So go get it now. Nathan Latka.com forward slash schedule. Last question, Scott, before we wrap up with the famous five.
As the corporate tax rate comes down from 35 to somewhere in the 20s and an influx of money comes back into the States, a lot of these BD departments at large companies are going to have more money to play with. They might be doing more of their own investing.
Does that make it harder for a traditional VC firm like you that's not necessarily specialized in one category, at least to the degree that the actual company is? Does that make it harder for you to get into those kinds of deals?
I don't think so. I think what we end up doing at Norwest is we end up co-investing with strategics quite a bit. And I think there's a lot of value for companies to come in who can bring a lot of value to a company. So just as an example. We have companies in our venture portfolio that are looking to break into new markets.
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