Sramana Mitra: Is there anything else that you want to discuss?
Nick Mehta: A second thing is bringing our culture and values, which I think is a bit novel. We feel passionate about that. We brought that into our community. Many of these customer success people feel like they are a part of Gainsight. I was talking to one of our customers and she said, “I basically feel like I am an extended part of Gainsight.”
One of the ways that we did that was to bring our culture to our customers. We brought our values, culture, and the way we operate. Our whole community knows the five Gainsight values. One value of our company is called childlike joy. It means bringing the kid in you to work every day. At Gainsight, we enjoy funny videos. We’ve made dozens of parody music videos, rap music, and country music. I do the writing myself. That is fun.
The amazing thing is that the customers are so into this thing. They made their own videos based on our videos and made songs based on our songs. They also do collaborations with us. One of our customers is doing a rap music video with us. It’s not just about the silly videos, you are creating this shared set of values and culture with your community. That is something that people do but not enough. That’s a missed opportunity.
The third one that ties us together revolves around the purpose of our business. A few years ago, we went through an exercise where we had to answer that question. We said that it’s not about making money and going public, but it’s not the end all be all for us. It’s not even about just customer success. There are a lot of people that think that the way to win in business is to be austere, serious, and business-like.
We think that there is a way to win in a business where you are your true human self. We want to treat everyone around us just like human beings and not as customers, partners, or investors. We say that the purpose of our company is, “Be living proof that you can win in business while being human-first.” That idea of human-first business has taken off in our client base. They love that because it is tied to customer success which is all about treating your customers as human beings.
It also captured the spirit of a lot of people that are in the profession. All of that stuff are all tied together – the community, category creation, culture, and customer success. It’s all this one big thing that is breaking the walls between the company, the customer, the community, and everyone. It’s all one big collective. That is how we think about it.
Sramana Mitra: Talk to me about competition. When you create a new category, in the beginning, you are on your own. After a while, competition starts to come in. Competition is a healthy thing to establish a category. Talk to me about how that phenomenon has evolved as you built the category.
Nick Mehta: We had competition the entire time. When we talk about human-first, we wanted to be human-first to competitors too. They are just human beings. There’s nothing better about us. We were just lucky to have a market share advantage. In the early days, we were venture-backed. There were three other venture-backed companies in the same era as us.
Over the next eight or nine years, there have been 15 to 20 venture-backed companies in the customer success software space. For whatever reason, we have been able to be the leader. We have $110 ARR, meanwhile the number two player in space only has $16 million ARR. Number three has about $10 million or $12 million and then the number four has $5 million.
If you add it all up, Gainsight is probably 80% of the market in terms of revenue. We have been able to be the end-to-end leader. The gap is widening as well. I have a couple of thoughts on how that happened. A big part is because we focused on the category, the community, the job, and not just marketing Gainsight. That just built a connection with the community and the customers. We also defined the category. We wrote the book on customer success. Hundred thousands of CSMs learn based on our book.
That whole concept has allowed us to shape the category and define what it is. That is one reason why we have been able to be the leader. Early on, we focused on the bigger companies that we thought would be the brands that everyone would want to work with. These include Docusign. That was the second reason. That allowed us to not only have the right logos but also the right product direction. It allowed us to be the innovator.
The third thing that we did was we invested in our R&D. Despite the fact that we had such a big brand and category creation, we’ve had more than half the employees in R&D. We invested in the product, building a significantly differentiated product. Functionality-wise, there is a huge gap between anyone else. The category creation, focusing on bigger customers, and investing in R&D allowed us to have a big differentiation versus anyone else.
All of that is just part of the answer. The real competition for Gainsight is people not doing customer success or people doing it without technology. Being the leader, we focus on our customers and we focus on helping them evolve to this new model. The way we go from $100 million to $1 billion in revenue is 100% about convincing the world that customer success matters. We couldn’t get there off the competitors because the amount of spending is too little.
Sramana Mitra: If I am hearing you right, it’s a new category so all the spending and all the budget is new. You are basically winning new deals all the time and it’s not like you are taking business away from competitors. The market is large and everybody is finding new customers and increasing the TAM as all of you are going along at the moment.
Nick Mehta: Exactly. It has been a market growth game versus a market share game.