My guest today is Kylan Lundeen, Head of Marketing at Qualtrics. Qualtrics was founded in 2002 and is a subscription software for collecting and analyzing data for market research, customer satisfaction and loyalty, product and concept testing, employee evaluations and website feedback.
On November 11, 2018 it was announced that Qualtrics would be acquired by SAP. The acquisition is expected to close in the first half of 2019.
Prior to joining Qualtrics in 2013, Kylan worked in Turnaround & Restructuring Services at DVC while getting his MBA at Stanford.
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This is episode 201 of the Happy Market Research Podcast. I have the pleasure of chatting with Kylan Lundeen, Head of Marketing for Qualtrics. But first a word from our sponsor.
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Hi. I’m Jamin Brazil, and you’re listening to the Happy Market Research Podcast. My guest today is Kylan Lundeen, CMO at Qualtrics. Qualtrics was founded in 2002 and is a subscription software for collecting and analyzing consumer data. On November 11, 2018, it was announced that Qualtrics would be acquired by SAP; the acquisition is expected to close in the first half of 2019. Prior to joining Qualtrics in 2013, Kylan worked in turnaround and restructuring services at DVC while getting his MBA at Stanford University. Kylan, thanks very much for joining me on the Happy Market Research Podcast. I’ve been watching you guys very closely, of course, given my background at Decipher. I remember actually in 2002 when I saw you guys pop, I was in a meeting at Intuit. Intuit brought up that they had heard about you guys, and you had reached out. And I’m like, “Oh, that really interesting.” So I started to do some digging. Based out of Utah, kind of an unusual location for a technology company in those days. Subsequently, the company just ramped. I felt like every single year, it was almost like a new phoenix.
Yeah, it was interesting because it’s funny as people look back now it’s seems real intuitive. You look at the path and it seems [Jamie laughs]… And they’re like, “Of course.” When I joined the company out of business school, it was still very much an academic research tool. And I say “tool” very sort of specifically. And the very soon thereafter, we kind of committed to an academic research platform. Then we went into a corporate research platform. Then we went into sort of like, generally speaking, insight platform because it was sort of beyond this kind of market research that people were doing. And then we moved into experience management. And again, looking back, all those steps see really logical, but they were terrifying at the time. Each of one those felt like we were really taking a risk. Where we had core audience that was really important to us and that we wanted to continue to sort of prioritize and put at the center of everything. But we needed to expand sort of the messaging and our product offering to include different people, which means the messaging gets a little bit diluted to that specific audience at first. So every time it felt really risky, and, I’ll be honest, when I first met Ryan… He and I had a chance encounter in Palo Alto. He was out there closing the first round of financing from Sequoia and Accel and we had breakfast together. And there were two things…
And what year is that?
This is 2012. So, in 2012, I had breakfast with Ryan Smith. Again, he was closing the first round of financing. There were two things in this meeting that appeared to be true instantly that have proven to be true over time. So the first one was that Ryan, as a CEO, appeared to me to be a bet-the-business kind of person, meaning he did not come across as the kind of person that going to say, “Hey, I know Wall Street thinks we’re going to grow at 9% this year. Let’s go blow everyone’s mind and let’s do 11%.” That was not ever his DNA. He was like, “Look, I want to go completely, invent, and take a category all the way to top, or I’m not just interested in doing this.” Like so, “Let’s go be the largest enterprise software players in the world or else what are we doing?” He just had sort of energy of like, “Look we’re going to the moon, and if want to sign up, let’s do this.” So, that’s interesting because back to that original point, that’s what happened, right? Like he’s bet the business over and over again between going from academic research tool, to an enterprise research tool, to an inside platform, to now experience management. Each of those has been a bet-the-business decision and have led to phenomenal results for us in the company. So just couldn’t be more excited to be part of that.
Yeah, so, …
The other piece…
I’m sorry. Go ahead.
Yeah, yeah. He appeared to be a bet-the-business kind of person, and he also appeared to be a bet-on-people kind of person, meaning that I got the sense from him in our first breakfast ever meeting that he assumed people could do it before he assumed that they couldn’t do it. And so, you can imagine those things together were incredibly powerful. Someone emerging from business school – now granted I had been in the private equity space for five years, but the idea of moving to a technology company that was going to shot for moon and that would always assume someone could before they couldn’t. What that led to was a) if you’re in a hypergrowth technology company, there’s unfair opportunities in front of you all over the place ‘cause they’re just desperate for new talent to lead new functions in areas and in tactics. But then on top of that, you have a CEO who from a very top-down approach has built a culture where they’re going to ask you to do something, and it’s yours to lose. It’s not like, “Hey, well, let’s go…” Normally, in most businesses, a role opens. Someone leaves the company or someone’s promoted and there’s a vacancy. There’s a process where 35 qualified people all apply for that role, and may the best person win. At Qualtrics in a hypergrowth tech company, it’s exactly opposite: there’s 35 jobs that need to get done and they’re struggling to get talent into the building fast enough. So they ask you to do all of them. As long as you don’t drop the ball, “Hey, congratulations! That’s your new responsibility.”
Which is interesting, especially… I was doing research on you in preparation for this interview. Coming out, as you said, of the private equity world, which is a different lens than I’d put venture capital, especially in the context of the investors that you guys have. And then, moving into special operations and very quickly (I think just outside of a year) moving into overseeing marketing. I mean it’s a tremendous amount of responsibility that was thrown… I don’t mean “thrown on your shoulders” like in a bad way, but the opportunity that you were given that you could then subsequently grow into. Has that been a big part of the growth strategy or success is just giving people the opportunity and the autonomy to succeed?
Well, there are a few things that led there. That’s certainly been a circuitous path to the CMO here at Qualtrics. Again, private equity really in a lot of ways I love the underlying sort of fundamentals that private equity brought to the table at Qualtrics for me. Everything has to rely on data, on spreadsheets, understanding exactly what the ROI, what every decision is. That was sort of the underpinnings of this. That’s why, as I joined Qualtrics, I actually joined the special operations team and was working on something called Redforce, which is essentially metricking the business for the first time. How do you know how many leads you need and how many salespeople you need and what kind of a pipeline they required to meet our sales goals for next year? The company was early enough that no one had done that before. And so, I spent the first year putting all the metrics in place to really understand how the business worked. That way, if there was ever a moment when growth stalled just a little bit or we sensed it was going to stall, we knew all the levers to pull to just accelerate right through it even if it cost money to do it. We knew then most companies often during the growth phase, they’re not disciplined enough to do that. And, by the time they start to slow down, it’s too late to go figure out what those levers are and they hit that plateau and the end is near maybe. And so, for us, it was really important for the founders to understand those growth levers early during the growth phase so that, if we ever even smelled a pause or slowdown, we could just accelerate right through it. So I spent the first year doing that. What was great about that is I got put my hands in all parts of the business. I got to explore marketing for the first time as I really thought about, “Well, what campaigns are running and how are they performing and what kind of budget should you require next year to be able to lead to the… feeding salesforce, how many leads is required next year for them to hit their goals. Ok, let’s go dive into sales. How often are you converting opportunities? We just went through everything and what happened is, on the side, Ryan started to loop me in on some of his sort of marketing activity. So, the CEO is out raising money; he’s closing deals; he’s doing a lot of sort of selling and one time he said, “I want to go raise another round of financing. Would you help me put together a story?” What is our story? We just sort of gone to the insights platform at that time. Let’s put it together. So, spend some time with Ryan, creating a deck, I’m handy in Illustrator and Photoshop. That’s kind of been a hobby throughout my childhood, just enough to be dangerous. But I could put together a PowerPoint presentation, you know beautiful keynote and then really put a story around it that was interesting. And together, I felt this like electric sort of vibe that I hadn’t experienced in business before. What I found is that any time I got to sort of live in the metrics, but then layer on creativity, I got this extra dopamine hit that I never had before in business. After that, I was hooked. And so, on the side, I started doing these marketing projects for Ryan. He’s like, “Hey, I want to go spend a significant amount of money in Dreamforce. Let’s go make a presence there for the first time. I don’t want our classic marketing play look. I kind of want you to go do it.” So I kind of peeled off, pulled together kind of a special team and we went and did Dreamforce and did something truly incredible at Dreamforce where we basically hijacked the entire trade show for two days. It was amazing, right, on a shoestring budget. And so, all these projects that I was doing on the side with Ryan that had a creative flair… Again, they were the ones that I was most excited about. I would wake up early; I would stay late. I was throwing everything I had into them. Of course, the result was they ended up going really well because I was personally invested in them. I got that satisfaction that was outside of just sort of like business results, which was great.
So, one of the things that’s really interesting about Qualtrics from my vantage point as an entrepreneur is you guys have very profoundly, successfully created a company that just frankly didn’t exist. There isn’t a competitive set that I’ve been able to identify or comparables are a little bit different, right? It’s not anybody, right? You guys are fulfilling this really different, unique role, and yet you’ve been massively successful in monetizing that. When you filed your S-1, it’s all anybody could talk about at that point in terms of the top line and the attention to the bottom line as well. When they market sees that “Oh Qualtrics is going to be there now”, I’m thinking about TMRE, I think that was in November of 2018, that conference… you guys were the anchor point for the conference in every way, shape and form. And that is a hallmark that has existed anytime that you guys are present at a location, at an event. There’s so much hesitancy for other companies to step out and be the belle of the ball, I think. How much fear, if at all, did you guys have in, “Oh, gosh! Is it going to be too much?” I’ll just give you an example of like Ryan giving a wedding ring to the couple that was going to get engaged, sort of that Oprahesque element of it, right? There’s part of me, when I first heard that, was like, “Oh, my gosh! That’s a scary move. Is that going to be viewed as impostor?” And then you guys just leaned in and just dominated that narrative so much and made it your own. Has conquering fear been part of what you’ve dealt with as a CMO?
I mean absolutely. If you think of about it, any time you do anything interesting, there are going to be people on both sides that either love it or hate it. And it actually feels like especially things that again… Stuff that is actually interesting. You can do all kinds of stuff and no one cares, but when you do stuff that actually moves the needle, that gathers the mind space of your prospects and customers, it ends up being a little bit divisive. And so, for the most part, we have to be committed. I think one of the good things about Qualtrics is we’ve got a CEO who is a dreamer. He is like a true dreamer. Then you’ve got a CMO who has a brain trust with them and can go execute on some of these dreams. But it’s incredibly empowering when you know that… For example, most of our conversations are like this: “Hey, Ryan. I’ve got this crazy idea. [Jamin laughs] What if we blank (whatever)?” And Ryan’s answer is, “I’ve never heard of anybody doing that. There’s no way that would work. People are going to hate it. I think we should try it. I think we should try it. I like it.” I mean that’s how most of our conversations go. Yes, there’s a lot of risk, and I wish I could say, “Well, I’ve got this great risk profile and whatever.” But the reality is I’m enable by a CEO who wants to go and change the world. And you don’t change the world by doing what’s done already. You go and do things that are disruptive, and disruption usually makes people uncomfortable. The wedding ring example is a great one, right? Not only did… the first time we did this I told this story at TMRE. I didn’t give all the facts. I sort of presented it like that was the first time we done Dream team where we sort of fulfilled these dreams of the audience that attend our events. And I shared this story about how someone was hesitant to invite their partner to marry them and they said, “Hey, if you can give me any encouragement while I’m here this weekend, it’d be great.” And Ryan said, “I’ll do one better. Here’s a diamond wedding ring if you propose before the weekend’s over, it’s yours.” Now that was actually about two years in. So, we’ve been doing this on a smaller scale before that where most things were like, “Hey, it’d be great if there were hot coffee.” or “Hey, I spilt some mustard on my shirt. Is there any way I can find a local drycleaner?” And we brought him a new shirt. We wanted to do something that explained very dramatically to our customers who we are and what we did. In this case, it wasn’t as risky as maybe people think it is. It was really in line with our brand value. We were starting the experience management industry. We are the experience management company, and so we want to make sure that anybody that attends our events recognizes that they will have an experience unlike any other that they’ve ever had because one simple fact: we ask our customers what they’re feeling and thinking and we take action on that. Now, you might say, “Well, that’s a dramatic action to take.” Buying wedding rings, that’s not profitable in the long term for most businesses. Correct, but it highlights sort of at the core who we are as a company and what we enable other organizations to do, which is to listen to customers, employees, prospects, all stakeholders, and then take action in a meaningful way to drive sort of loyalty and sort of excitement for the brand that doesn’t exist for most companies.
When you think about your focus as an executive team, most companies, I think, are centered around… (I don’t know really what the ratios are, but I’ll just pretend like I do like I do with everything else). So we’ll say 80% focused on external customers and 20% internal HR. It feels like the needle is different at Qualtrics; it feels like there’s been more of a (I don’t know what it is) 50-50 or even if it is zero sum, maybe it’s a 100% in both camps. How much of your energy is spent on, and focus, spent on internal culture versus external sales?
Yeah, I mean… I wish I could give you a percentage breakdown that’s not off the cuff. It’s not entirely clear to me. But I’ll give you a couple of anecdotes of things and how we think about it. Well, just give you a couple of sort of artifacts of Qualtrics culture that perpetuated throughout our 16-to-18 year history. Every Friday for the first ten years when there was 15 people in the building, they would get together and have a TGIF meeting. They’d get together and over the course of an hour, they would sort of celebrate the new deals that had come in, so talk about sales success. And then they’d focus on people after that. The sales success was real important. The people part… And again, the sales piece I shouldn’t undermine that; we’re an incredibly sales-driven organization. That was the first thing we talked about, just to be clear. But then right after that and for the majority of the meeting, there were a couple of really key activities that were never missed, and those perpetuate today. So, one is anybody who was new at the company would get up and introduce themselves and, as they did, they would share you know where they’re from, what team they’re joining, etc., but also they would share their first concert. As they did that, it was interesting ‘cause it would really sort of… When you share you first concert, it actually illicits quite an emotional reaction from those around you. It’s like either people that was their first concert too and like they’re somehow your soulmates with that person [Jamin laughs] for some reason or “Oh, my gosh. You did not seem to me like a Dr. Dre or Snoop Dogg kind of person. That’s totally a mindblower.” There are all these things that are really interesting about the concert. That was an important sort of thing that perpetuated. And then, if the person said, “I’ve actually never been to a concert,” Ryan would say, “Hey, choose your dream concert. We’re sending you to your first concert.” kind of a thing. So, it’s kind of this great celebration moment for new employees. Then we would do this thing called “Whoops.” Whoops was the chance to celebrate people and mistakes at Qualtrics and the cost of going fast, which was again what we were trying to do. Basically, each week someone would raise their hand, a few people, and they would share a story about messing up that week. Right, if it’s like, “Hey, I.. you know, the crazy stories like [Jamin laughs] I look a support call on my phone because it was a crisis situation but I was in the bathroom. And so, I was talking to the client while I was using the bathroom, and there was this moment where they could tell I was in the bathroom. And it was super awkward.” Just everything that you could think of, someone would surface and tell the story. Then there was this award. Whoever had the biggest, funniest voted upon (everyone voted at the end) mistake, we celebrated that then and they got this award they carried with them for the week until the next Friday when someone else would volunteer. And it just sort of made it OK for people to go fast, to take risks, to fail. And there was always a learning moment; you know like the founders would step up and our CEO, Co-founder Jared would take the mic and just sort of comment around that mistake for just a second, just to make sure it brought context to why we should never do that again or “Hey, that’s the cost of you know going fast.” So those are kind of things… Today even now (It’s moved to Thursday; they handle our international offices) every Thursday we have a TGIT meeting now where it’s all hands globally, everybody dials in, and we do the same things. And so, we’ve tried really hard in a lot of ways to sort of make sure those components… we do stay very internally focused on making sure that we have the best benefits in the world, that our people are more engaged than their business. The rate of attrition is zero or possible. That’s a massive focus. What I think Ryan’s done is he’s built a family, at this point it’s a 2,000-person family which we intend to scale that to much greater than that. And we’re on track to do it.
Is the plan post-close with SAP to operate autonomously, similar to a Google and Yahoo or is it to operate under the umbrella?
It’s this very cool combination of both, and I’ll tell you why. So, one the one hand… so, right now, SAP… I mean SAP is incredible. What they’ve been able to do almost you know their triple market cap under Bill McDermott… Like he’s a phenomenal leader; he’s amazing. Their most recent sort of like market strategy has been to build up the intel’s enterprise because with smarter businesses, you can improve the world, and there’s a lot of reasons, so that made a ton of sense, and it’s been great for him. But what they recognize is that the future of the business software industry is experience management. It’s not just producing more widgets faster you know with you know less overhead and you know reduce supply-chain sort of friction, but instead it’s about how do you actually manage the experience and then not only… So, for example, Ok, let’s say you buy a new pair of Under Armour shoes – they’re new HOVR shoes; they’re amazing. And you put them on; you’re like, “Wow! I ordered a size 9, but these fit a little bit different than most of my size 9 shoes. Well, now that information, that sort of that experience data you have can not only get back to customer service reps who can maybe give you a new pair of shoes or try trading them out like yeah great… That’s important and that’s an incredibly important part of customer success but not only that now you can back into the production line to the machines, the people, the processes that made that shoe and, all of a sudden, you’ve got end-to-end experience management. That’s something that nobody else can offer. And so, the intelligent enterprise will remain but, instead of SAP as the intelligent enterprise and Qualtrics experience management, it’ll be SAP experience management. And one of the products you can buy is Qualtrics, right, because that’s how they deliver experience management. You need the X-data, which is what we deliver, and you need O-data, which is what they’re best in the world at. 76% of all the world’s transactions; that’s amazing! So, what’s cool about this is, “Yes, the last thing they want to do is intervene with Qualtrics, who are one of their fastest growing assets. They’re just like, “Call if you need anything; like literally, if you need anything, call us; otherwise, you guys got this. Go, go for it!” And they understand the category and like what we’re doing is pretty special. At the same time, they’re elevating their messaging up to “We are experience management.” So, it’s this really cool thing, and we’re at the table and all of these decisions talking about what the future of the company is, mostly what the future of experience management is and how we do that together.
You know one of the things that you brought up is in the very, very early days, starting in B school, I think you guys actually have or had a (Gosh, it’s been a long time since I got my MBA) but there’s like this self-reported product where you do a… you have a bunch of people survey about who you are and then it’s a self-awareness assessment. That has a name, and I don’t know why I can’t think of it. But anyway.
Is it 360 performance assessment?
360 review. Thank you. Do you guys still have that product?
Sure, yeah, yeah.
Ok, great. Was that the first product or was there a B-to-B product? Was that the original strategy?
You mean outside of our research offering for academics?
Yeah, so I’ll give you a quick overview of the history of Qualtrics.
Sorry, really quick. And this is the reason why I’m interested in it, is it felt to me as an outsider like there was a pivot that took place inside of Qualtrics that was super important where there was – and this is just again, this is an outsider view – where there was an intention to go to the market at large and then sort of a refocus on the B schools, and then the B schools eventually empowering organizations and, already being the tool of choice because of the experience, it created this massive distance or benefit for Qualtrics as the platform of choice.
You know it’s funny because I would love to tell you, “Hey, look, we got in the basement one day and made this diabolical scheme [Jamin laughs] to go take over the world and here are all the strategic steps we were going to take, but the reality is and it’s why people keep talking about this so much – all the good things happened to Qualtrics because we are incredibly focused on the customer. And I know that sounds so cliché and that’s what everybody says, but just let me give you evidence of what that means and how that pivot you felt that was so smart and sort of put Qualtrics into the next stratosphere was absolutely just working and listening to the customers and then being smart on top of that ‘cause sometimes customers ask for strange things, especially academics. I mean academics in a lot of ways are the worst possible customers. Like they want really fringe-use cases sort of features that no one will ever use ever again but they need it for this very specific research thing we’re doing, and then they, they have so much time on their hands they’re in the product all day long, just pounding the product. So it’s like… I mean they’re really demanding customers, but what that did it forced us to innovate and to build something incredibly robust. It forced us to build an enterprise offering although we didn’t know that at the time. So, think about academics. Some of the data they’re collecting is so sensitive the university will be sued if any of the information gets out, right: medical records, gender preferences, like all kinds of stuff. It has to be incredibly secure. Out of the gates, we had to build a platform where data security was front and center. Then there’s probably not a more collaborative people group of people on the planet than academics. Not only do they want to collaborate with other professors but, “Hey, my mentor is at Princeton. I need to collaborate the same thing with this friend at Princeton.” And so, collaboration became an important part of the tool out of the gate. So, all of a sudden, you’ve got an enterprise platform that’s secure and with massive collaboration capabilities that was absolutely serving that customer, but we didn’t realize it at the time we building a lights-out enterprise commercial offering. And so, with the 360 in particular, what’s cool about that is universities who are primary customers said, “Hey, business schools in particular… we’re having trouble proving that people… there’s economic benefit to having an MBA. So, one of the things we want to do is we want to show people how big of a transformation they have as they go through the process.” So that where they, “Hey, we could use Qualtrics and just survey their friends and find out how they feel about their skills and then afterwards survey them again, a year after school, and be like, ‘Hey, did you see any changes? What happened?’” And they said, “But you know what would be really cool is, it’d be better if you could do one assessment but instead of like one survey that one person responds and another one, another one, another one, another one, what if it was one multiple people or what the call “multi-rater feedback” could exist. We said, “That’s a cool technology problem. We can probably fix that. Let’s go do that.” So we built the 360 to go address this B school problem of “Hey, we need to show the world that people come to our program and leave different, better, improved, more skilled more ready for the workforce.” And that’s what the 360.. that’s how it started. So, it started at Stanford.
I love that. I have to interject really quick since you’re on the B school. I have this. So, I have competed over the years with you guys vigorously, and I’ve won and I’ve lost. One of my all-time biggest losses is actually in my hometown, Fresno State. So, Fresno State has a Qualtrics license. I built a survey platform. That’s 200 employees here locally and even created a school in the CS department or a class in the CS department, which qualified programmers to be on my platform. And yet I could not unseat Qualtrics even though I’m friends with the president of the university. So, it’s interesting how once you were dug into that ecosystem, it felt like it was really hard, if not impossible, to unseat you.
Oh, we love that strategy and I wish I could say just because we have a great sales team, which we do, but early on, the strategy was very clearly focused on the academic market. And so, that meant we tried relentlessly to serve that customer. When they said, “Hey, we want you to build a question type that flies in from the left, watches their eyes as they watch a video that scrolls from top to bottom and then sees if their ears move while they’re watching,” we would go build that. And we’d say, “Like we’re going to do this you; we’re going to go do it even though we knew no one was ever do that again.” And what they liked about that was they built this trust with us where they said, “Even if I needed that one capability, the cool thing is 30 days later it was now standard in product for everyone.” And so, we just productized all this stuff they were asking for. Instead of making it one-off, custom, we just said, “Let’s just put all this capability in the platform, make it scalable to everybody because I bet there are other people like Professor So-and-So who want to see if their ears move when they’re smiling watching video from top to bottom as their eyes scroll doing whatever.
Love it. It felt to me a lot that one of the things that you guys did that, again being very centric to your experience data, applying those same principles to your customers and then letting that guide the road map, which ultimately created this suite of productization of research… Once it’s baked into the operations, it’s really powerful to inform and create change inside of your customers to create better benefit to their customers.
That’s right, that’s right, absolutely.
So, if you were a… You know we have a lot of entrepreneurs. I’ve got really three different types of listeners to these shows. You’ve got insights professionals; you’ve got people that are looking to get careers inside of the market research space or insights space; and then there’s this group that’s these entrepreneurs. When you think about and talk with this aspiring group of professionals that are started their businesses and trying to fill needs in the marketplace, what are a couple of recommendations that you would give them? Keys to success?
Yeah, for recognizing needs in the marketplace, you know what’s interesting is like – and I’m pretty passionate about this and I don’t know if this is the answer you’re looking for but I’ll just go with my instincts here. You know I have a bunch of classmates who are incredible people, but they fell onto that classic business school trap, especially at Stanford where like it feels like everyone around you has started a billion-dollar tech company. Your classmate’s doing a billion-dollar tech company on the side apparently. It just feels like that all the time, and so there’s this process of like market assessment. It’s like, “Ok, let me do a discover of market need. Let me go build out a…; let me understand the TAM. Let me go find a technical co-founder. We’ll fit that specific need.” That’s sort of this idea that sort of exists out there, and there’s books that talk about this, etc. And the reality is I just don’t think that works. Anybody I know that’s gone down that route, like maybe they’ve had a base hit, but most of them just folded up shop. What’s interesting about it is really what’s led to incredible outcomes: you know happiness for the entrepreneur and success financially or technology-wise or whatever that success-metric is for them has been around that founder passion that people talk about.
It’s where not only do they have an idea but it’s something they personally care so deeply about that, if it comes time to mortgage the house, they’re like, “Pfft, of course, I’m going to mortgage the house. Like if I don’t do this, what am I going to DO? Like I was BORN to do this.” Without that, I don’t think it works. It gets so hard, and so painful even by the time I joined Qualtrics. This is 2012, six years ago, they were well on their way, but like it was hard. And if you don’t have that conviction, to like stay the course, it is so easy to get blown around and you wind up with some quasi-successful exit along the way.
And so, I’ll give you a quick anecdote that’s been really powerful for me, and I’ve seen this happen over and over again. So, Andy Rachleff, one of the founders of Benchmark Capital, amazing entrepreneur, amazing leader, started Wealthfront. He’s just incredible, one of the smartest people I’ve ever met. He’s been a great mentor; he’s a great person. As I think about… He talked early on about the investment criteria that Benchmark would make. And they’d get their board together and they’d vote on them. And they looked at them; it was this oversimplification, but they put everybody in a 2 by 2 matrix. And on one side of the matrix, you had whether the entrepreneur was right or they were wrong, which again is hard to know as an investor but let’s just put it over there – right or wrong. Was their idea right or wrong? And then at the top across on the other axis, you’d say, “Is the entrepreneur’s idea in-consensus with the majority or non-consensus?” Ok, think about it: you’ve got whether they’re right or wrong, in-consensus of non-consensus. And what’s interesting is they didn’t want to, of course, invest in any entrepreneurs that were right and in consensus. It’s like, “Hey, we want to create a social network that does x, y, and z.” Ok, everybody agrees that that’s a good idea; in fact, there’s a hundred people doing it. It’s going to be a commoditized market; there’s no competitive advantage. We don’t want to be in that business. It’s going to be a base hit, and, as you know, venture capitalists are looking not base hits; they’re looking for dragon-type returns. So it doesn’t work for them, right, even though the entrepreneur they think is right and everyone agrees their right, they don’t do it. Then you go down to whether the entrepreneur is right… or sorry, in-consensus, and they’re actually wrong. So there’s a great example like groceries.com. Everyone is like, “Yes, why would I go to store to buy groceries when I can order them online! Well, it turns out that was in 2000; they poured 800 million dollars into that business, and it didn’t work because, for whatever reason, it’s a great idea but it turns out that people just still like going to grocery store and putting cans of soup in their cart, right? Now we’re starting to see a little bit more of the online thing. Everyone thought they were right, but the entrepreneur actually was wrong. We hate to be in that category, but who can blame you because everyone thought you were right. No big deal. Then there’s these other two really dangerous categories. One is you’re not in-consensus and you’re wrong. Everyone told you were wrong, and you ARE wrong. So, now you are just class clown; you’re an idiot basically. And everyone tells you that. It’s like that’s such a terrifying place to wind up that most people won’t do it. Now, the interesting thing is the last box is you’re a non-consensus and you were right. Everyone told you you were wrong, but you’re right. That’s where the magic happens; that’s where you get out in front of the crowd; and that, by the way, is exactly what happened with experience management.
We went out with experience management and, before we did by the way, everyone – and I mean everyone – was going, “I don’t get it. You guys are great survey platform, why don’t you just stick with what you know. That makes sense; people understand that. Experience management: Are you a wedding company? Are you a river rafting tour operator? What do you mean “experience management?” It took work, but we were so convinced, we were so convinced even though everyone said it was wrong. We paid the price; we stayed the course; and we wound up in a really special place. And I think everybody in this last acquisition, it painted a picture of how special it really was.
What’s cool and what’s counterintuitive about this is Andy tells a story about how they would have the board vote at Benchmark and, if the entire board agreed that it was an amazing investment, that they should do it, they walked away because they knew they were in that territory of box that was “The entrepreneur is probably right and everybody knew it. That wasn’t the kind of business they wanted to it invest it,” which is so counterintuitive, so counterintuitive. It’s funny ‘cause now I have friends come to me, and it’s funny this is pretty common: there’s either the entrepreneurs who don’t want to tell anybody because they think people are going to steal their idea or the entrepreneur that’s a little… they don’t have the confidence they need, so they’re out there, “Hey, I this kind of have this idea. What do you think?” And they’re looking for people to say, “That’s amazing. That’s genius. You should totally do that!” When the reality is, in a lot of ways, you should be doing the opposite. When you go, “Hey, I’ve got this idea. What do you think?” People are like, “That’s really stupid. I don’t get.” [Jamin laughs.] The answer should be like “So you’re saying there’s a chance.” It’s that pushback that’s uncomfortable that says, “Ok, this is something I care about so deeply; the rest of the world doesn’t quite get it yet, but they will.” If that’s what you have inside, that’s a good thing.
Exactly. It’s this capacity to be able to trump the fear of failure and the fear of how the market, your parents, whatever might view you and just be dogmatic about your going to be successful because this is what the market needs. But the fear part is that you move to your… you know, using your quadrant example, you do move into that position of, “Yeah, I already said it was a bad idea and, oh yeah, it turns out it was.” [laughs] But, thinking about your transition into experience management, I think that view that you described, and I appreciate that color commentary, is exactly correct, right? I mean I remember when you guys did the announcements of four quadrants, website change. I looked at that and I said, “Holy moly, that is a completely different company. How are…?” And this is where my brain went: “How are corporations going to pay for it?” In other words, it’s uncharted territory; there isn’t a budget line item, right, that’s been set aside for this experience management or experience data, and it seems like the corporations adapted.
Yeah, so you know what’s interesting again it wasn’t like, “Hey, we blindsided corporations with this announcement. This was something again… Experience management was something that we were being pulled along by our clients in a lot of ways. Try to be as customer-centric as possible. We realized is even though we’d set out a long time ago to build the number 1 online market research platform, like that’s what they want to go do, and by the time we checked (This is the time I am joining the company) we checked in and actually had usage data; we were combining our O-data from the platform with X-data from what people said they were trying to do and wanted to do with what they were actually naming and doing in surveys, we found that market research had actually slipped to the third most common use case. The number 1 use case was customer experience, customer satisfaction; the number 2 was employee experience; and then number 3 was market research but primarily a combination of product work and brand work. And so, it emerged and it was clear to us, but you know putting a container around it, building a category that highlighted what that was that felt super risky. So what we ended up doing was… Right before that we started to build out very specific technology stacks that lined up against the unique use cases that our customers needed. So, we were delivering the needs… you know delivering products for our customers’ needs unquestionably. How we talked about it and what we called it, that was really hard, and that was really risky. And I’ll tell you what. Here’s what people would say… people would say, “Wait a minute. So you’re going to have competitors out there who have a single buyer, a single focus, a single message, and just as much marketing money as you have. And you’re going to go out there and talk about this thing called experience management that probably only resonates with the CEO, and now you’ve got four different buyers that you’re supposed to be selling to. It’s going to be such a cluster; it’s going to be so hard; it’s not going to work.” That’s the kind of stuff people were coming back with and we had to say, “It’s the right thing to do. You don’t get it. We’re making the bet. Let’s go.” And that was really hard. It was a classic Ryan Smith move. It was a bet-the-business move. Once we made the decision, he went top to bottom through the entire company and said, “This is our future. This is what we’re doing.” There was never like a, “Hey, we’re going to go test the waters. We’re going to… I’m going to go socialize this with the teams.” It was like, “This is what we’re doing. Let’s go.”
That’s such a great story. It’s so inspirational, honestly. As an entrepreneur, being willing to make those choices and, of course, it’s always nice when you’re right. There’s so much of that the psychology part of it that is just not understood unless you’re part of that experience because you don’t know… Steve Jobs – the dots connect when you look backward, but as you’re going through it, you don’t know that the B school grads are going to wind up using you as a platform of choice in five years. I mean you just don’t know. It’s great if it happens, but you just don’t know. And being so dedicated towards creating and realizing that vision is, I believe, to your point the reason that there are companies that are successful and as it wavers, why they’re not.
If I was to give one tidbit of advice to those aspiring entrepreneurs out there, and it’s not even advice that I could say, “Hey, I’ve internalized this, and I’ve exemplified this.” It’s just that I’ve experienced it and watched at Qualtrics. So that’s why I feel like… it feels somewhat authentic to share it and that is that the founders of Qualtrics, Ryan and Jared, have always unquestionably played the long game. They’ve always played the long game. What’s interesting about that is you think back to like the student thing. We interviewed someone from Microsoft the other day and they shared that there are 34 million free licenses available to college students right now for Office and something like 2% of them are being used. So it’s like just getting into academics and, for example, playing the academic game, they’re saying, “Hey, we’re going to go and serve this audience. Yes, and in the long run, all the students are going to adopt it and drag it with them out to the workplace.” That’s not a slam dunk bet, but if you’re playing the long game, it’s the right decision. So, when you’re playing the long game, it doesn’t make sense to you know give away the entire company up front for ego to be like, “We are the fastest fund-raising company or the most valuable company in Utah.”
There’s a bunch of reasons why it would have made to go raise it at higher amounts, but instead of doing that, they remained in control of the company because they wanted to build a legendary business that would be generational. I’ve just seen this in every single decision they’ve made; they’ve stopped and said, “Fast forward 15 years. what do we want to look like? Ok, let’s take that into consideration for the decision today.” It’s just part of the decision making. They don’t make decisions without pausing and saying, “What will it be in 15 years?” Now that’s the same thing with benefits, the same thing with technology, like as we think about future investments. Like that’s the process we go through. I see so many entrepreneurs you know doing what matters now and not staying the course. I think that comes from what we talked about earlier: If you don’t have deep founder conviction. You’re like, “Look, I’m going to do something that’s going to change the world or change it in industry or change something.” If you’re not that passionate about, you’re probably just going to do whatever it takes to survive now because you don’t really know what the end game is, because you’re not that passionate about it, and it just doesn’t work. Only go in on something that you’re passionate about, and then play the long game.
Yeah, it’s a lot like reading or writing rather a fiction and then reverse engineering that outcome, right? In every way, you are creating the world around you every single day.
That’s exactly right.
And to your point, it’s probably one of the hardest things, I think, that there is to do successfully because every day is a blank slate and every day there is this – not matter what when you’re creating from nothing – there is always headwinds. And it just takes a tremendous amount of fortitude.
Here’s my authentic version of that and it’s maybe a less business-relevant-context example but, nevertheless, important. I think people do this intuitively in their personal lives, then forget to do it in business. So like when I met my wife (she’s one of the most incredible people to date that I’ve still ever met. She’s bright, she’s beautiful, she’s kind; she’s just amazing on every level.) And when I met her, I was like, “There’s no way she’ll date me, zero chance that she’ll ever date me.” [Jamin chuckles.] So what I did is that I said, “Well, who do I think she’s going to end up marrying? Who’s the person she’s going to want to be partnered with for life? What does that person probably do? What do they probably say? What kind of things do they invest time in?” I just sort of watched that story unfold when I said, “Well, there are some parts of that that I am today, and there are some parts that I’m not there yet.” And so, I started to go and do those things and become that person because I knew that was the long game; I knew that was the end state. It was this two-year (It’s not just that long in the grand scheme of things) but this two-year dating journey to sort of get to where I knew we needed to be in the end. So, fast forward ten years. What does this life look like? How do you become that person? What decisions are you going to make today to make sure those are true ten years from now. I think people do that intuitive in their lives, and then we forget in business. We’re like, “No, let’s just go find a market need and build something, and we’ll do whatever it takes to raise money today.”
So, do you have children?
I do. Four kids, four kiddos.
Congratulations. I have five. So, you’re still younger than me, so you’ve got a lot of time. [laughs]
Four is the new six. We’re done, we’re done. [Jamin laughs.]
I imagine you travel a fair amount. How do you balance that with the heavy responsibilities at home? Do you have any tips for us seasoned professionals, road warriors?
So a couple of things. I actually feel… (Maybe this is one of those things where you’re always delusional. Like you always think you’ve got a better handle on work/life balance than you really do.) A couple of things: One – I think it’s been really helpful to… I’ve just acknowledged out of the gate; I’m very open about this that I don’t have great work/life balance. So, I like to work; I like my job; I like coming in early; I like staying late. When Ryan comes to me and our CEO says Friday at 4 pm, he’ll be “Hey, I forgot to tell you I have a presentation Monday morning. Can you put it together for me?” I love those scenarios. It’s like, “Oh, yeah, let’s just go and scramble the jets and get this thing done.” So, that’s something that I have to just acknowledge about me. Instead of being like, “Oh, yeah, I got to figure out balance. I just sort of acknowledge, first and foremost, that I like that, I do. So now the question’s, “OK, how do I put checks and balances in place to make sure that…” But I also love my family. There’s nothing more important in my whole world than that. So I had to figure that out.
So, a couple of things: One – A friend gave me this advice a long time ago, and it’s been amazing. One – is I think about at the beginning of every week, so Sunday nights my wife and I spend a bunch of… Weekends are mostly sacred for me, mostly. They get blown up all the time, but for the most part, like that’s when I’m home; I try to unplug, etc. I’ll talk about that in a second. But on Sunday evenings, we sit down; we say, ”OK, well, what do I need to do to make sure that I stay connected with my kids this week and with my wife.” And so, you know in lot of ways if you just do an evaluation at the end of the week, it’s really easy to feel like you’ve failed. For example, I traveled in December; I traveled 20 of the 25 working days in December. And so, that sucks, right? With the holidays and everything, that’s like super hard. So, it’s easy to look back and be like, “Oh, my Gosh! I totally failed as a dad, as a husband. This is a nightmare. But instead, if you take a proactive approach and you say, “OK, it’s Sunday night. What do I need to do to feel connected to my oldest daughter this week? And you know I’ll say something like, “If I can go… and she’s got dance twice a week. If I could go and watch her dance for a full hour, just take her, drop her off, and sit there, and just watch her dance, and then take her to get an ice cream on the way home. Like that’s probably enough this week to just feel like I stayed connected.” And what happens is then I’d say, “OK, for my son, if I’ll just ask him to tell me the names of his dinosaurs. One time, for five minutes before he goes to bed. He loves dinosaurs. I’m just going to ask him. I’m going to lay down on the floor, and I’m going to ask him to tell me the names of his dinosaurs, and we’re just going to do that til he falls asleep, you know, a 10-minute process.” And I would do that with each of the kiddos. And even if it’s a really small thing – sometimes it’s a five-minute engagement. And I know that that sounds maybe a little bit cheap now, but in the moment, it’s actually really amazing to just be present with the people that you love and care about, even if it’s just for one or 2 moments a week. So, if I design that at the beginning of the week, at the end of the week, I’ll say, “I did it. I sat down; I played dinosaurs for 15 minutes with my son.” That was 15 minutes for the whole week, but I did that. And without that, I found myself not doing anything and being frustrated at the end of week or maybe I did but I forgot. It felt really toxic. So, designing that you know made a big difference.
So really quickly. I have to interrupt really briefly. The thing that I love about that tip is all too often I hear people say, “Oh, I’m going to watch less TV or whatever so that I focus more on my family.” But you’re doing the positive as opposed to the negative, and I think that’s a big key here, and that is you’re saying, “Alright, I’m going to do ‘boom’ five minutes or an hour or whatever the specific activity is,” which gives you a specific view of what success looks like, as opposed to framed in the negative of “I’m going to stop a behavior. Then as a by-product of that behavior, I’ll spend more time with my kids or whatever.”
That’s exactly right. It’s worked really well for me, and it’s not perfect every time, and there are some weeks where the commitments are larger than 15 minutes, and some weeks they’re shorter. But the consistency over time… I feel incredibly connected to my kids. It’s been great. So, that’s a tip I’d share.
Then the other one is on weekends, I’ve taken a playbook out of Clayton Christensen’s How Will You Your Measure Life book, where he talks about you know he reserves Saturdays for teaching his kids how to work. That was his thing. He’s like, “I don’t work Saturdays. That is the day that I teach my kids to work.” And so, I’ve really taken to heart. On Saturdays, I grew up a little bit that way, so it was somewhat intuitive to me. Where I’d say, “You know what? On Saturday, I’m going to get all the kids… and it’s so hard because I’m kind of a neat freak. So like I like you know pruning the hedges with scissors just like getting it bonsai perfect. You bring the kids out there, and they’re just like running [Jamin laughs] over the bushes with the lawnmower. It’s just not a great scenario. I have to remind myself every time like, “No, this is… I’d rather have my kids connected to me through work ethic and understanding how to take care of the things that we have than having the perfect manicured yard and a couple of dead spots where things happened. I hold weekends sort of sacrosanct. I use them very much Saturday as a work day. Kids don’t play with friends on Saturday like maybe, maybe in the evening or something. It’s a day that we’re together. And then you know I do the same thing with my wife: Every week we say, “Hey, what do we want to do to stay connected?”
And then one last tip – I love a good hot soak like a good hot bath. And so, most nights, no matter how late it is, if I’m in town, I’ll hear the bathtub filling up, and my wife knows that I can’t resist. And when you’re in the bathtub, you’re probably not using technology. It’s not…
[laughs] I hope not.
And it’s just like eye-to-eye, bath time with my partner at least twice, but probably three times a week. And when you get into the bath, a hot bath, it’s like intoxicating. You have to stay in there for at least 30 minutes. I can’t get into a hot bath and get out in two minutes. So, we invest; we talk; we catch up; it’s our time to kind of resync and connect. So, yeah, fill up a hot bath tub. That’s worked miracles for me.
My guest today has been Kylan Lundeen, CMO of Qualtrics. Kylan, thank you so much for being on the Happy Market Research Podcast with me today.
Thanks for having me. Great to be here.
I’d also like to point out that he accepted this interview by me submitting to the Dream Cast my wish for him to be on here. So, again, special thanks to all those who made this happen.
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