Going after greenfield opportunities with FullStory's Scott Voigt
Going after greenfield opportunities with FullStory's Scott Voigt
Scott Voigt:
The things that we've had to learn along the way, that is stuff that takes years to develop the right way. So a clone that copies and pastes your terms of service and your value proposition and your CSS selector, may look very much like a FullStory, but it is not a FullStory in the ways that really matter for you as a customer.
Peep Laja:
I'm Peep Laja. I don't do fluff. I don't do filler. I don't do emojis, what I do is study winners in B2B SaaS, because I want to know how much is strategy, how much is luck and how do they win? This week, Scott Voigt, co-founder and CEO of FullStory, a digital experience intelligence platform that combines quantitative and qualitative data to drive digital growth.
Founded in Atlanta in 2014, FullStory now serves over 3,200 customers and has consistently increased their ARR over 70% year over year. They're now doing over 100 million in revenue and have over 600 employees. In this episode, we discuss how FullStory repositioned early on when they found a better fit customer segment while their focus on enterprise clients has been essential to their growth and how an excellent user experience is creating a strong flywheel. Let's get into it.
Scott Voigt:
We started working on a tool that had nothing to do with FullStory, seemed like a great idea at the time. It was a SaaS tool for marketers. We launched it and it was going okay. We were getting customers, they were doing things in the product. It wasn't a rocket ship by any stretch, but we kept asking ourself, "What are our customers doing in that product?"
Like all other small technology companies at the time, we repurposed Google Analytics into our product to try to understand what people were doing and that didn't really scratch the itch. Then we went and bought a product analytics tool and we purposed that into our tool. We were quickly disappointed at the data that we were able to get out of that tool for this reason. The event instrumentation paradigm of having to know ahead of time what moments were important, we just weren't very good at that.
We call it the foresight fallacy. We thought that button was important and we thought that button was important. Turns out there were three other things on the page that were way more important and we never instrumented those things. That team were brilliant and they saw this opportunity, I think primed by working at Google where Google indexes the entire internet. Like every word on every page is sitting in an active index.
For business data, we had to know ahead of time what was important so we started experimenting for our own tooling, with something that was now today called auto capture. Probably talk more about auto capture. The idea of one script that just ingests all of the data so we could have full retroactive analytics on that. Then we started to look at that problem of, but what else are our customers doing in that tool session replay? Fell out of that thinking.
We showed some of our internal tooling to some friends at other SaaS companies and they were like, "That is a much better product than your first." So we pivoted and launched FullStory in 2014. It wasn't that we saw this huge market opportunity. It was we experienced something that the market was not currently delivering on and we saw an opportunity to just serve ourselves better. Turns out it was a problem that a lot of people had and still have.
Peep Laja:
Back then, who was the customer segment that you were going after and then, what channels worked to land those first customers?
Scott Voigt:
Well, we started by selling to people that were a lot like ourselves. We're based in Atlanta, there was a small, but growing contingent of early-stage software as a service companies, and so we went and talked to them. Were like, "Hey, do you want to understand when you're building a product who's using those features? When somebody files a ticket, do you want to be able to debug that ticket faster?" We sold to those guys right out of the gate and validated product market fit with them.
Shortly after that, we raised a seed round. We had our TechCrunch/Product Hunt moment and our first positioning was actually to customer support people. I think if you dig back into the archives of the TechCrunch article, it was talking about faster customer support through session replay, which really wasn't our purpose, but the position worked well. What we found out shortly after that is that we'd talk to customer support VPs, and they would say, "This is awesome. Can you go talk to my product in engineering teams because they need to install this thing so I can use it?"
Then we'd have to run the sales pitch to them and they would stop us and say, "Oh my gosh, this is the product that we've always wanted. This is much better than having to go do a UX study and sit behind the mirror wall or get a product analytics tool where we got to go instrument stuff." So we repositioned a product teams. I think that was really the catalyst to drive our product-led growth because we were a product-led company and still are in large part for, I would say first three to four years of the company's life.
Peep Laja:
Finding product market fit is not a one and done kind of deal. Your best fit customers change. New buyers will appear and old ones will stop buying. You need to figure out when to switch focus, disrupt yourself before others do. Early on, change is inevitable. Your strategy will change as you keep learning. Change is easy if the business is obviously working or obviously failing. The hardest decisions are whether to keep going or not when it's sort of kind of working.
I bet that a lot of things you are doing are in the zombie land territory, not quite dead, but not exactly alive either. They're producing some money, some leads, something's happening. Maybe something more will happen if we just keep going. You keep tinkering with these initiatives. Maybe we can get a 5% improvement here or there, but most of the time it's a trap. You're likely better off trying something else. Changing up strategy.
When you're under 10 million in revenue, you can change your positioning basically overnight and nobody will notice. When you're searching for the right fit, try different ones on. Anything you come up with, no matter how a data-informed, is a hypothesis. Test it. In the beginning, was it more of an outbound motion to land customers or did you already start focusing on inbound?
Scott Voigt:
Our thesis was that we wanted customers to be able to come to fullStory.com, try the product, get instant value of it and then swipe a credit card and buy it. The bet was, and it proved to be right, if you could deliver value, they would go tell their friends and that would lead to a flywheel effect of more inbound leads. Now, we're not going to just sit around eating popcorn, waiting for inbound leads and so we did all the things.
Very early in the company's life... We call this theme within FullStory, bionics. A bionic process. Bringing life at scale through an outbound cadence that was very, very personalized, but we did it at scale. We actually had a third party group that would go to a target's website, they would use a Chrome extension to record a session of their visit that would get packaged up into an email with a play button on it and that the subject line of the email was magic goggles. We thought that would be intriguing.
We would send that to VPs of product at any company whose site was visited and they'd get this outbound email that said, "Wouldn't you love to be able to see what your users are actually doing within your website and get the retroactive analytics?" Then they would hit play. It would pop them over to FullStory and they'd get to see a high fidelity session of the visit of our SDR. That just pulled them like gravity into the FullStory process. We still do a bit of that today and it works fairly well.
Peep Laja:
After you hit your first 1 million in revenue, what changed in your product strategy? The target customer segment? I mean, go to market.
Scott Voigt:
From a milestone standpoint, we try not to really overfocus on a million dollars, $10 million, a hundred million dollars. We've hit those and they're awesome, but they're not as strong an inflection point. I think what we looked to do was always think about where are we seeing growth? Then are we in a place where we can take on a new chapter of growth? Probably correlating around that $1 million ARR mark, we knew at that point we had product market fit.
Rewind earlier in the discussion, we had a product that did not have product market fit so everything was a grind, but we had this flywheel of a hundred million dollars, if you zoomed in on the chart enough, you could see the inflection building and so one of the things that we always believed was going to be true, was that we needed to start to move upstream to bigger and bigger companies. Most of our early companies, small SaaS companies, small e-commerce companies and so we started to layer in a sales organization.
We did not have sales in the early days until probably let's call it 1 million to 5 million. But even then we were focused on that commercial mid-market segment, trying to sell bigger and bigger deals.
Peep Laja:
When you hit around that 5 million mark, did you pay attention to the competitive landscape? Did that influence your strategy?
Scott Voigt:
Hit 5 million? I would say no. My recount of events, people may disagree with this, it really was a wide open market in the 2014 to 2018 timeframe, hand waving a little bit. There had not been, and still I would argue pretty strongly not auto capture plus session replay, and even session replay was fairly new onto the scene. We prided ourselves on delivering the best, fastest, product-led approach to that.
So while there were a few out there, we certainly were not running into competitive cycles. We were still winning the greenfield of, "Oh my gosh, I didn't know this was a thing." It was only later when we started to move more aggressively into the enterprise and the category started to merge, did we really start to see those much more competitive cycles? I will note, there was a gen one category of players that probably were constructed in the early 2000 era.
It was foundationally a different paradigm of technology on how they were recreating sessions as the web moved from web10, where it was click, wait, new page, to web20, where everything lived in the browser. Those pieces of technology just started to break down. So we were one of the first area of DOM capture session replay.
Peep Laja:
Tell me about that moment where you realized that, "Hey, we need to go way up market. We go to enterprise." What was happening? What were the signals that you were seeing? Then when you said, "Okay. Let's go for it." What changed in the organization?
Scott Voigt:
It was a slow boil and if I'm honest, one of the biggest regrets I have with FullStory is that we did not push more aggressively into the enterprise earlier in the company's life. Pro tip to founders, in SaaS, by and large, you want to get to the enterprise. Look, we were a team of, with myself set aside, ex-Google engineers, were product-led people. The best products will win.
We believed that in our soul and so we felt like the product should stand on its own and people should be able to try it and find it and I really think we believed, we drank a lot of Kool-Aid that people would show up and swipe a credit card for a million dollars on the website. That is just not the reality. The truth is we're a venture-backed company and so we have Google Ventures and Kleiner Perkins, and we would sit around the board.
I have a very smart set of seasoned investors that see these patterns all the time and they'd sit around the board room and they're like, "Yeah, you should move to the enterprise." We'd be like, "Ah, we don't need to move to the enterprise. People are going to swipe for a million dollars." There was just that gentle nudging and then we'd run an experiment. We hired some sales people and then we'd win some really big business and we could serve the business.
We didn't sell our soul as part of that. We were still the same company. A lot of those fears I think that engineering product-centric product-led companies have is that sales people are somehow going to just completely wreck the culture and you're not going to be able to control what you're building. We always try to be pretty methodical about that and so we've scaled very nicely into the enterprise.
Peep Laja:
If you're in an emerging category or what you sell is new or perceived as such, you're in a greenfield territory, which means you are not replacing anything. It's easier to sell if you're not replacing someone else. When FullStory got started with their session replays and event auto capture, it was greenfields all around. Nobody had such tech yet. Sure, the competition cropped up more or less around the same time, but most of the market was not using anything.
Looking back about what they could have done better back then, their CEO, Scott, said, "We should have gone enterprise sooner." By the time they did that, some competition was already there and it made it harder for them to get in. Also, corporate buyers want to buy from the leaders. There's some safety and social proof there. As Dave Kellogg said, "The best way to become the category king is to be the most aggressive company during the growth phase of the market."
This is what makes raising VC money, such an attractive option. Bootstrapped companies can't afford to be nearly as aggressive. If you do something innovative and new before you have direct competition, you maybe have one to two years of head start. Your play should be to capture as much mind share in the market as possible before others get to your greenfield. Establish your perceived leadership and go up market as soon as you can.
Enterprise clients are more difficult, more costly and much lower to land than SMB clients. That's why if you are set up to meet their needs, it can be a decent mount. Newcomers in your market won't be able to compete for their business until much further down the road. Enterprise focus as the way to play part of the strategy is something we heard about from Seismic's Doug Winter on a previous episode of How to Win.
Doug Winter:
We knew how to service big companies. We knew how to work with big companies. We knew the patience required to navigate larger enterprises. We knew the complex needs of big companies, financial services companies. So we focused on larger enterprises and financial services companies and that's where we got our early traction.
Peep Laja:
What is the product strategy today and how has it evolved? You were all click stream and auto capture. How has that changed over the recent years?
Scott Voigt:
It's a great call-out. In the early days of FullStory, hurts my heart to say it, we were a session replay company that was kind of a tool. It was a little bit of a tool. You could use it.
Peep Laja:
Like point solution.
Scott Voigt:
Yeah. Yes. Yeah. Okay. I'll admit it. But look, it provided a ton of value and it was the anchor place for the category. What we've seen though is that once you land in an organization, the power of FullStory moves to multiple organizations really quickly, and we've watched how people are using our product enough to understand that it really is the data that they care about. So auto capture really is the wedge in the war going forward now, as people think more about the modern data stack and their data lake.
I'll be really simple. The answers to problems of digital experience are resident and data. If you do not have the data, you cannot get at the answers. FullStory is, and I'll stand by this claim, the only company that has the deepest record of every digital visit in a privacy-friendly way.
It's taken us a while to figure out how to take that really rich, structured, indexed set of data per visit, and then unlock value beyond hit play and see what your users are doing, into retroactive analytics, proactive insight, feed your data lake type valuable propositions that our customers are paying us for. So auto capture is the future of digital analytics. In my opinion, there's only FullStory that does it well and that is resonating right now.
Peep Laja:
A company is bigger than a product, but it's also not its vision. This has big implications on how you should do it's messaging. Should you position yourself as a point solution that does one thing, or should you talk about yourself from the lens of what you're going to be? Your vision is not your go-to-market message. Trying to appear bigger and broader than you are now is a mistake. This can easily lead to fuzzy positioning.
Startups should own being a point solution when they still are one, but attach themselves to a bigger narrative. Your company's not your product. It's a means to an end. Fitting into a bigger fabric, being part of narrative and movement matters. It matters to the people working at the company and it also matters for demand generation.
In the story that you tell to prospective customers in the market, is it like a product-based differentiation? Like it's an objectively better product because et cetera, or is there also a completely distinct story that you tell like branding, marketing-wise that nobody else is telling?
Scott Voigt:
It's never just one thing. It starts with the product though. If you look at evolution of categories, there has to be a step function invention in order for it to really unlock step function value, right? Otherwise it's just a prettier UI on an old piece of technology. There are companies that are successful with a prettier UI on old technology. I would argue that the category of product analytics by and large is just a reboot of Google Analytics and Omniture with a prettier UI. There's no invention there.
FullStory has an invention, auto capture, auto structure, auto index is new and it gets you answers to questions that you have never been able to get answers to before. We want in that bet, we want to be in the room. We are going to push really hard to do a proof of value for our customers. That proof of value is going to let us demonstrate while we're unique and different and more valuable than the old guard, the not step function, where they're still instrumenting events behind the scenes, they're still throwing bodies at the prod.
When our customers see it, we win without question. Then you have to say, "All right, well, how do we make sure we're in the room?" That's where our marketing strategy and we're constantly evolving our marketing strategy, the magic word for us is flywheel. We've got many, many thousands of customers and within those customers, many, many thousands of users and so we make sure those users are having great experiences with FullStory, that they feel like they're part of the club and that they get why we're better and unique and different.
If you think about a category as it evolves, those people are going to change jobs. Probably every three years, they're going to change jobs. We want to make sure when they go from company A to company B, they remember FullStory and they bring us with them.
Peep Laja:
The flywheel effect as a business concept was introduced in 2001 by Jim Collins in his book, Good to Great. The basic theory is simple. Initial small impact actions will build on each other to create momentum that will compound over time, building up speed until that momentum makes your company virtually unstoppable. For FullStory, their flywheel is built on winning the loyalty of the end user. Yours might be different.
Here's Jim Collins explaining how Amazon created a flywheel that allowed them to dominate the market and how you can do the same.
Jim Collins:
The story of Amazon, amazon.com, grabbing the flywheel concept, but then taking it to another level and saying, what we need to do is to capture the drivers in our flywheel, crystallize the components of our flywheel, and then turn that flywheel to build relentless momentum, unstoppable momentum.
The Amazon case is an archetype of a spectacularly powerful flywheel, but what it really leads to is the idea that to get full power out of the flywheel principle, it's very helpful to rigorously ask the question, how does our flywheel turn? What are the components in our flywheel? What's the sequence in the flywheel? How can we do for ourselves what Amazon did for itself?
Peep Laja:
What else are you doing in the marketing and the brand arena to grow, to outcompete others?
Scott Voigt:
To your point, there are lots of companies out there that are telling a similar story to FullStory and so what we're doing is making sure that customers and the market and the analysts understand that no, there's a foundational difference when it comes to data capture and structure that has a meaningfully different impact. If you go to fullstory.com, right now, you'll start to see much more language on auto capture.
There is the now definitive guide to auto capture that is something that we make sure that our customers understand when you're looking at other vendors, are you getting all the data? Are you really able to share this information throughout the organization and hitting those value points? Because if you don't have the data you can't solve the problems.
Peep Laja:
Messaging is about identifying two to three key messages you want to target customers to know about you and then conveying these ideas through copy. For FullStory, the key message is that they're all about event auto capture. Your key messages don't just live on your homepage, but should also be repeated again and again and again in your marketing and your social media content.
When you start to feel sick at how much you've repeated the same message, that's when it's just starting to get through. It's as Dan Kennedy, author of Magnetic Marketing said.
Dan Kennedy:
The most futile wasteful thing you can do in marketing is one-shot stuff. They don't even feel the breeze as it goes by. If you want impact, you must have strategic repetition.
Peep Laja:
There is a common wisdom in the B2B tech space that every innovation is a transient advantage. Sooner or later the competitors will come and copy you and sell it cheaper and everything gets commoditized over time. What is your point of view in that? Like competing on innovation versus competing on other things?
Scott Voigt:
My co-founder, Bruce, he used to love to say, start with a lead and then run faster. We were one of the firsts in the category doing what we do. It is important to understand though that we're not just sitting around not innovating, not constantly improving. What we're doing is thinking about what are the things that matter most to our customers that cannot be easily copied so we can start with our lead and move faster?
We invest heavily in R&D because again, the product is the foundation. People buy from software as a service companies because they don't want to build the stuff themselves so we're going to be the best R&D company we can be to build these things. Privacy is a great example. We invest more than any other competitor in the space when it comes to making sure that only good information crosses the wire. That is sacred and important.
Most of the category just doesn't talk about it, because they don't really want to surface that yeah, if you're not doing session replay right, bad information can come across. We've burned our hand on the stove before. I'll tell you, because we invest more, the different technical approaches we take to making sure that no data ever crosses the wire, we have workflows and our machine learning that's looking for any bad pattern, we lead the way on that.
So when you have a clone show up, you just have to make sure that you're arming your team with the, let us tell you what we've learned in the past and what's important for you. Because in a new and evolving category, your customers don't always know, and the clones certainly aren't going to tell you. Can I talk about clones for a second? It's one of the things that nobody really told me was going to happen, you expect competitors.
There's no question about competitors, right? Different technologies unlock similar thinking across the world, people start solving the same problems. You have a noble set of competitors. The thing that caught me off guard is the clones. There's some company in frigging Boston, and they showed up and literally copied and pasted so much of FullStory. If you went into their UI and looked underneath the hood, you'd see our CSS selectors. They just copied it. It's just so gross to me.
What we know and we need to make sure our customers understand is that the things that we've had to learn along the way, when it comes to performance on the site, you can't slow the site down, privacy, it's a really hard problem to solve, indexing, cogs, that is stuff that takes years to develop the right way. So a clone that copies and pastes your terms of service and your value proposition and your CSS selector may look very much like a FullStory, but it is not a FullStory in the ways that really matter for you as a customer.
So other founders, I'm just telling you now, be ready for the clones. You're going to be incensed. I want to throw computers at times when one of these folks shows up. It's the world we live in today.
Peep Laja:
You need a killer product to win. You can't grab significant market share without some innovation, but over time, if you keep competing on features alone, they will clone you. You need to win on other things on top of the product, starting with mental availability. Are category buyers thinking of you in buying situations? How can you get inside their very limited consideration sets? It's very hard.
One way is to invest in media-building machine, brand, content and having excess share of voice. If you have the funds, you can literally buy your way into the consideration sets. If you look at some of the fastest-growing B2B companies over the last years operating in saturated markets, you'll find examples like monday.com. It spent a enormous amount of money on advertising and now firmly sits in peoples top five.
If you had to pass on more advice to fellow B2B SaaS founders, what advice would you give?
Scott Voigt:
I would say in that earliest stage, if you're the founder trying to find product market fit, you need to listen to that voice in your head and get good at listening to that voice in your head. We started with a product that wasn't the right product. It wasn't FullStory. You read all these articles about how people are going to tell you that your idea's not right and they're going to be haters. It's hard to know when to listen to those people.
But in the middle of the night, if your voice is saying over and over again, "What do we need to build to make this product really work for our customers?" That means you probably don't have product market fit. I wasted a year and a half trying to talk myself into thinking that it was a good idea, because I had pride involved and there were people along for the ride. That's a really hard one.
I think I said earlier, move to the enterprise faster than you think you need to, and I'll tell you why. As our category has evolved, we serve the enterprise super well. It's much, much easier to win a greenfield opportunity than it is to displace something, even if it's inferior. So if you've got a competitor and the way categories evolve, there's always the very small business company, the mid-market starting company and the enterprise player.
Like Oracle is enterprise, Mailchimp is VSB and you can do well in all of those. But if you're in that mid-space, you are going to get to the enterprise sooner or later, and displacement is hard, greenfield is easy, even if you're significantly better. We run opportunities with companies that love FullStory, but they're just like, "I don't know. This year we're just not sure we're going to change this year. We'll wait till that contract is up." So get there faster.
Peep Laja:
What are FullStory's three winning strategies? One, they didn't hesitate to pivot on the target customer when they saw a better fit.
Scott Voigt:
We repositioned a product teams and I think that was really the catalyst to drive our product-led growth.
Peep Laja:
Two, they built out the infrastructure needed to make them the go-to option for big budget enterprise client.
Scott Voigt:
Pro tip to founders, in SaaS, by and large, you want to get to the enterprise.
Peep Laja:
Three, they have focused on the experience of the end user, creating a flywheel as those users change jobs.
Scott Voigt:
If you think about a category as it evolves, those people are going to change jobs. Probably every three years, they're going to change jobs and we want to make sure when they go from company A to company B, they remember FullStory and they bring us with them.
Peep Laja:
One last takeaway from Scott.
Scott Voigt:
We were one of the first in the category doing what we do. It is important to understand though that we're not just sitting around not innovating, not constantly improving. What we're doing is thinking about what are the things that matter most to our customers that cannot be easily copied so we can start with our lead and move faster.
Peep Laja:
That's how you win. I'm Peep Laja. For more tips on how to win, follow me on LinkedIn or Twitter. Thanks for listening.
