SaaS Interviews with CEOs, Startups, Founders
Hootsuite Approaching $400m in Revenue by Throwing out the SaaS Playbook with CEO Irina Novoselsky
10 Oct 2024
Chapter 1: What is the main topic discussed in this episode?
You are listening to Conversations with Nathan Latka, where I sit down and interview the top SaaS founders, like Eric Wan from Zoom. If you'd like to subscribe, go to getlatka.com.
We've published thousands of these interviews, and if you want to sort through them quickly by revenue or churn, CAC, valuation, or other metrics, the easiest way to do that is to go to getlatka.com and use our filtering tool. It's like a big Excel sheet for all of these podcast interviews. Check it out right now at getlatka.com. I remember back in the day, we were all using Hootsuite.
Ryan Holmes got the company going with an agency model, which is very popular for a lot of the most successful software companies. How many of you guys, your companies, how many of you started as an agency? Some form of professional services, Proposify, yep, yep, AJ, yeah, a lot of agencies.
At the start, Hootsuite was in the news like crazy, and then there were rumors about, you know, could they IPO? And then they hired Goldman to try and get a $750 million exit done. That didn't happen. Well, Arena has coming in now, leading as CEO since 2023. She's reshaping the business. Revenue is now over $200 million. You'll see her revenue graph, and she's teaching exactly how
you should focus on customers first and how she's doing this to reinvigorate Hootsuite. So on that note, please help me give a warm round of applause to the CEO of Hootsuite, Irina Novoelsky. You're on. Can you all hear me? Thanks for being here. Take it away. Have fun. Exciting to hear the story behind SaaS Open. Hello.
I am really excited to be here in a room full of CEOs and successful leaders. As Nathan mentioned, I started at Hootsuite about 18 months ago. And I started with a pretty similar mandate that I have started before, which is how do you reaccelerate high growth? And so I came in with the same playbook of focused execution. And I went to work. And we did it.
In less than 12 months, we took our enterprise core from 8% growth to 22% growth. But that's not the most interesting thing that happened. In this process, we started to unlock some insights that will materially change and fuel not only our growth, but every single person's business in this room. And it is a dynamic that is absolutely changing how we do business.
And it is there's a new buyer emerging with a very different customer journey and a very different buying pattern. And that new buyer is the Gen Z buyer. And so in order to share what I did next, I have to give you a little background. I'm originally from the USSR.
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Chapter 2: What challenges did Hootsuite face after the failed IPO?
And so as you can imagine, I'm part spy. And so part of that spy I had to put to work, but also, I'm also a Ukrainian refugee kid, yes, that showed up and had to figure out how do I blend into society with my salami sandwiches and almost every vowel in my name. And so I became part anthropologist, studying humans, understanding patterns, how do you fit in?
And so I took my spiness, I took my anthropology, and I went to work. I'm a millennial. I thought I understood the Gen Z person. We're close. We're similar primates. We're not. We couldn't be more different. And so I did what most anthropologists do. I went and I studied them in their natural habitat.
I met with almost 519 Gen Zers, and I asked them what they think about relationships, politics, life, economic, business. And what emerged was a really interesting insight. How we conduct business today is no longer going to work in the future.
And the material trend and stat that really shook me when I heard this was that by next year, literally in three months, 75% of all buyers will be either millennials or Gen Z. And all the playbooks that we have on growing SaaS businesses were built by older generations for older generations that will not work with this new buying generation. And so I went to work to understand what will.
And as part of that, I don't know if some of you have seen some of these stats in your businesses, but as I've been looking around
different businesses, and whether it was in my finance career or my operations career, there was trends emerging I haven't seen in a really long time in SaaS, which is the buying cycle is materially increasing, sales productivity was going down, even though they were doing the same things, and CAC was really growing.
And what I was seeing a lot of my peers doing is doing the same old against the same problems. They were throwing more budget. We need more SDRs, more BDRs, more salespeople. That'll fix the productivity. AI, just throw AI at it. It'll make it better. Do you know what it does?
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Chapter 3: How is Irina Novoselsky reshaping Hootsuite's business strategy?
Nope, just do it. Throw more budget. It's clearly more expensive. I need more marketing budget. And one of the things that TLDR, on all of my research, basically the SaaS playbook as we know it is dead.
And we have a moment in time, and especially all of you in the room who are building your businesses from the ground up, have an ability to build it in a way that is gonna materially change the trajectory of your business and allow you to become one of the future Magnificent Seven. The rest of us have to turn a whole engine to go adapt to what is happening.
But if you don't adapt, the future does not exist the way it is today. I want to share a little bit, before I get into kind of some of the what do you do with your business, I want to share a little bit about what I learned in my spinus, in my investigations, in talking to these Gen Zers. And it was very different than the assumptions of going in. It's a generation of contradictions.
They were born with cell phones in their pocket, yet they don't use them to talk. They won't work at a job that is 100% remote, yet they don't want mandatory return to the office. They use artificial intelligence for work, but they do not trust it. They want authentic intelligence. They do not trust things that they do not see, know, or have a relationship with.
They want a relationship, they just don't want to talk to you. And it is a completely different way of interacting. And if you're sitting there and thinking, okay, that's interesting, but what does this B to Z era have to do with me and my business? Well, they're gonna be 75% of your buyers. They are your business.
And when you think about what's happening is we have to change the playbook for it. And when you look at their patterns and how they do business, it is completely different than any of the patterns of the generations before them. 62% of Gen Z employees are involved in buying decisions today. How many of you have Gen Z employees that are telling you, hey, we have to look at this.
There's this trend that's happening. There's this software that we're looking at. How many of you are getting that insight? It's almost half the room in here. They were already one of the first champions in what we all know to be an eight, nine, 10 person B2B SaaS buying journey. They're the ones that get that software in the door to have put on the table to have the conversation.
Here's the stat that's really alarming is 65% of the B2B search starts on social, not on Google. Over the last few generations, Google search has declined almost 30% from Gen X to Gen Z. If you are putting money behind Google, great. That's not where they're going to start their search. So you are one derivative away from getting the most on the investment that you're making.
And then the other part that really was the aha moment for us is they don't want to be sold to. If you want to be in control, you have to put them in control. And it is a very different buying pattern and journey than we all have in our businesses today, or most of us have. And that is 60% of the process for buying B2B SaaS is done before a Gen Z person gets on the phone or talks to a sales rep.
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Chapter 4: What insights did Irina gain from studying Gen Z buyers?
They're doing the SDR's job. They're also reaching out and trying to learn as much as possible from every different aspect of the business. Death of the demo. Demos as we know it, which is a push mechanism to get them to call us. And by the way, we're the worst at it. Fun fact, 95% of our business comes to us. I don't have an outbound sales force. And we're almost 400 million.
They come to us, and when they get to the product, they get to the site, do you know how I turn them into a lead? They click, ask for demo. And so we are in the process of massively transforming our customer journey. They don't want to click, ask for demo. They wanna do the demo themselves. They don't want a perfectly scripted pitch. They don't wanna hear you walking through the product.
They're a high demand, on demand, generation. They want to watch what they want to watch, when they want to watch it, and they want to consume when they want to consume it. The company that has done it the best is monday.com. Has anyone been through their demo process? If you haven't, do it. Yes, of course you have. Go through their demo process.
It is made for somebody that does not want to talk to a person. You can do the whole thing without interacting with a human being. And we are in the process of massively changing our entire business model in order to do this. And you're saying, why would you do this? It's working. Sure, it's working today. You know what happens with trends? We are early.
We are day one of what is about to be happening starting January 1 for the next 2, 4, 6, and 10 years. If you don't adapt and pivot today, you're going to miss everything. what is gonna be happening in the future. And this generation is here to stay. They are just getting started as decision makers.
And not only that, but they're also comparing you not to other B2B companies in this product experience. How many of you have been on Amazon? Come on, really? Okay, thank you. They live on Amazon. They're consumers of Amazon. They go, they buy, they try on, they return, and they never get charged.
they're expecting that same kind of digital experience or that same type of consumer experience in the digital world. They don't know how to separate being a consumer from a customer. This is what they grew up with and they're taking those consumer expectations and bringing them to your business. Last, social selling. How many of you are on LinkedIn? Okay, love it. Well, I did a little math.
and looked at all the speakers that are speaking over the next few days, and on average, there's about 10,000 followers for every speaker. The number one winner goes to Josh Aronoff. He has almost 400,000, so if you can corner him and find out what he's doing, you should. But the interesting thing that really exists is they don't wanna be led to buy, but they will 100% follow to sell.
And social selling is an amazing tool. When you think about what that means for a CEO in the room, it is a whole vibe, as they say. 78% of salespeople that leverage social outsell their peers. 77% of buyers are more likely to purchase if they just see executive presence on social, let alone even what you're posting. The majority of the social world is lurkers anyway.
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