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Discover a cross-section of content from industry leaders and experts shaping the future of our innovation economy.
Discover a cross-section of content from industry leaders and experts shaping the future of our innovation economy.
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CIBC Innovation Banking Podcast
On our #CIBCInnovationEconomy podcast series, hear from leaders, entrepreneurs, experts and venture capitalists about the changing dynamics of the North American innovation economy
Maintaining the Momentum as a New CEO with Hootsuite CEO, Tom Keiser
[00:00:00] Tom You're skipping kind of all the traditional steps that you go through to go out and find your community, to build a following, to try things out with your brand and your product ideas. We believe that's just going to continue and get more and more sophisticated.
[00:00:20] Michael Hello, I'm Michael Hainsworth. The CIBC Innovation Banking podcast explores the world of startups, growth stage companies and late stage companies that have made a big splash in their industries around the world. There comes a time when a startup founder needs to turn over the reins of their company to a more seasoned CEO. The "founder's dilemma" is a topic of many books and conversations in MBA classrooms. Some founders hold on too long, and the company fails to accelerate its growth to capitalize on the momentum. Others don't get out of their own way at all, and the company fails to maintain that first-mover advantage. Turning over the reins is a major turning point for any founder, but what about the view from the incoming CEO? Tom Keiser more than quadrupled the valuation of Zendesk. He re-platformed the parent company of Victoria's Secret and The Gap for e-commerce, and he stepped into the role of Hootsuite CEO to scale up the social media management platform just as COVID-19 created a global pandemic and the uncertainty surrounding it. Keiser tells me this wasn't the first time he stepped into the breach.
[00:01:35] Tom Yeah it's a lot of fun. This is my third time working with a founder. I had the opportunity to work with the founder of Limited Brands when I was working in retail. And then when I went over to Zendesk, I worked directly with the founder there, Mikkel Svane, as the CIO and COO. And then this opportunity with Ryan and the Hootsuite opportunity. So, you know, I think you learn a lot each time you work with the founder. Founders bring a special skill set, passion and insight into what the company does, why the company does what it does, the decisions that were made to get you to where you are, and some founders can turn loose of their baby and let it grow and some founders can't. And so that was an important part of my interview process, and conversations with Ryan as I went through the interview process and what the board was really understanding was the role of the founder. Ryan initially was chairman of our board while I came in and has moved into a board seat. But just, you know, were there decision rights? Were there things that were kind of untouchable as I came into the role? And you know how much freedom and flexibility I'd have and we laid out a really clear plan. And Ryan's really embraced it. He's been super supportive from coaching and guided standpoint, but he's very much let me run the company. It's gone as well as I could have ever hoped.
[00:02:59] Michael You mentioned Zendesk and you scaled it from a two billion valuation to a nine billion valuation company. How do you apply that experience to Hootsuite?
[00:03:08] Tom Yeah, there's a lot of applicability, I mean, different areas of business, Zendesk is focused on customer support and customer experience. We're focused at Hootsuite, on social media management, helping companies successfully navigate that. But size of company, you know, I joined Zendesk when it was about 200 million in revenue and we got it up to a billion in revenue in the four and a half years I was there. I joined Hootsuite at roughly we're a little under two hundred million in revenue, roughly the same size number of people not growing at the same pace as Zendesk, but certainly with aspirations for that. So very much using the scaling playbook and kind of the focus on people and strategy and execution and cadence and using that as an example of what's possible for us as a company.
[00:04:00] Michael What do you take away from working in the fashion industry? You know, The Gap, Victoria's Secret, how do you apply that to social media?
[00:04:08] Tom It was quite the experience. So we I caught the tail end of really the rapid growth of specialty retail. I got to learn a lot about kind of all things retail, both L Brands and at Gap Inc., their private label, specialty retail. So you design your own products, you cut deals with manufacturers all over the world to make your own label products. You've got massive supply chains to get that product back into your distribution centers, out to your stores, into your e-commerce business. So it was a fantastic educational opportunity for me as I ran technology for both companies and got to build and support and scale those supporting growth into big time growth into China. But what I learned and I learned it, you know, hard-core at L Brands and the approach that they use at Victoria's Secret and Bath Body Works is that the retail business is a weekly business and you've really got to have a cadence and a rhythm and a rigor to how you measure the business and how you react to the business. And you always have multiple planning horizons going on in retail. You have the immediate how do we win the next weekend? You're planning for the next season. That product is usually already being made somewhere, and you're starting to figure out the flow and the pricing and the marketing. Then you're looking at longer-term trends and starting to make bets on colours and fabrics and things like that. It's just a great business education to come up in, and that cadence and rigor is something that I brought into tech. So when I came into Zendesk and I took over the operational responsibilities, I really wanted us to have not a monthly cadence or a quarterly cadence, but a weekly and bi-weekly cadence, so looking at the core metrics of the business and really trying to make sure that we understood and were really on top of what was going on in the business so we were able to react and so we were able to adjust if there were roadblocks, a big part of the tech, the supply chain is people. You need talent and you've got to be filling the seats that you've budgeted for. And so really watching that supply chain of recruiting and people onboarding. And getting them to see it and getting effective, looking at your leads and your lead opportunities, looking at your competitive blockers that are out there, lots of similarities to retail, even though it's a little hard to see from a distance. But when you're up close there's a lot of similarities there. It's hand-to-hand combat every single week that you're trying to win.
[00:06:38] Michael And I can imagine, to your point about finding the right people, that there are a lot of tricks and traps associated with filling those necessary seats. What was one of those things that sort of was a learning opportunity for you in that sort of hiring process and filling out the necessary team members?
[00:06:56] Tom Yeah. You know, in retail, we valued experience. We valued a lot of deep retail experience, a lot of deep retail and e-commerce technology experience. So when you were recruiting, you were frequently out recruiting older, more experienced folks. It wasn't the case everywhere. The stores obviously, the store associates, distribution centers, a lot of those were young folks, but there was a very different mindset coming into tech and coming into Zendesk and then into Hootsuite, you are going after a set of expertise instead of education, but really, you're trying to look through that into the capabilities and the possibilities of what that particular talent brings. You're looking at it from a much more diverse and much more global standpoint. Tech talent is all over the world, and when you work in technology, you're comfortable leveraging technology so you're less geographically bound to where people actually are working to get things done. So I think it's a very different mindset. I mean, the thing that always stood out to me coming into tech from retail, in retail we always looked at all the constraints. There were physical constraints everywhere. You had so much capacity in your supply chain, you had so much capacity in your stores, you had so much capacity in your distribution centers. We only so much capacity to do things with technology. So you had constraints everywhere that you were working within, then coming into tech and specifically, the SaaS and the cloud-based tech, you know, the thing that stood out to me was there were no constraints. I generally recognized that. But once you're in it and you're like, well, how much does that cost to do? No one cares. How much is it going to cost to store that much data or to process that? No one cares. You're using the most modern of technologies that are available to you and you're solving a problem and you're doing it in many cases constraint-free. That doesn't always get to be the answer to things, but that mindset and having people that aren't constrained in their mindset is really, really important to being successful in the technology industry.
[00:09:03] Michael So now that you're large and in charge, what's next for Hootsuite? How do you take it to the next level?
[00:09:08] Tom Yeah, we're very focused on growth and really evolving our customer base. We have a customer base of almost two hundred thousand paying customers that are leveraging our product for, you know, simple things, for branding, for publishing their messages out for more sophisticated things like advertising across the social platforms, for building more sophisticated content with video becoming bigger and bigger and more important on Instagram and TikTok, helping our customers build that set of capabilities, building the analytics around, really seeing how successful the things that they're creating or doing, but more and more on this space that we're in, commerce is becoming more and more real and commerce being a version of both social commerce, where you're matching up an interest that a customer has in serving up ideas, but also the messaging platforms being able to drop into messaging platforms and having private conversations. So this whole idea of conversations and the evolution of conversations into commerce opportunities and the customer support opportunities just in more valuable added conversations with your customers is how we see the space evolving. And so what we're doing from a product standpoint, from a go-to-market standpoint is really evolving our thinking. We've been very, very focused on the publishing side of the business and we will continue to be. But how do we mature and help our customers mature and leverage these technologies to drive better businesses?
[00:10:41] Michael So what does an expanded product offering and growth through acquisition look like to Keiser? It looks like an evolution of Hootsuite from social media management to social customer care and social-based e-commerce. And in the age of COVID-19 and future pandemics, touchless communication is expected to grow exponentially. So once you've got the reins of a 12 year-long success story, how do you decide to pivot? Keiser started with a $60 million purchase of AI Chat Bot Heyday. Was it tough to convince the board of this new direction?
[00:11:16] Tom Yeah. So, I mean, there's a couple of things in play there, you know, the space that we're in, the social platforms that have been around for a little over 10 years now and we've been right there with them the entire time, starting with Twitter and then expanding across most all of the social platforms as they've evolved. And while there are new social platforms coming online, it's pretty slow for new social platforms joining them. TikTok is the biggest and most recent one. But then you've got to go all the way back to really Instagram for one that had a big splash like that. And you know, we continue to add more and more sophistication around our core products and helping our customers become more and more sophisticated in their use of product. But the reality is the space is being changed by commerce, and no one really knows how commerce is going to play out. And is it going to displace e-commerce? Is it going to displace store-based commerce? Because there are things you can do in social that are more one-to-one more personalized and more singularly focused on a specific product. That's just a very different buying experience. And so we felt like it was important for us to kind of skate to where the puck is to use the Canadian analogy of like, "this is where the space is going and if it's going to drive and change all of the different things that we do today around publishing, around branding, around advertising, around customer support to be more commerce-oriented in nature." And that meant that we needed a really strong focus and alignment with the social platforms, but also with the underlying messaging platforms. Because really, where we're seeing the most success in commerce is the ability for brands to really control the experience and they can control it inside of a messaging platform much more than they can on Facebook or on Instagram. So as we had conversations with Heyday, we love their leadership team. They had a retail and e-commerce focus. They were very much thought leaders around social commerce. They had a very modern platform that was growing really rapidly, and we needed to be a part of that. And so it allowed us to skip a few steps and jump forward with them. We've treated them and funded them like what they are, a startup. You know, they were going through their Series A and we effectively funded their Series A, and so we're continuing to fund and grow that business really rapidly and letting that kind of lead us from a thought leadership standpoint on where the space is going.
[00:13:46] Michael So I can't imagine this is the last acquisition you're going to make at Hootsuite. So tell me about how the mindset of a "growth through acquisitions" CEO differs from one piloting a startup.
[00:13:58] Tom Yeah, it's tricky. It's really tricky. The path of M&A for tech companies, as you know, is paved with disasters of distractions and of things that haven't worked out. Lots of good intentions, but things that don't work out. So you have to be really careful from an M&A standpoint. What we've got inside of Hootsuite is a long history of acquisitions we've done. I don't even know the number, eight-ish, 10 acquisitions over the years. Most are small tech and talent type of acquisitions. So the way I look at acquisitions is there's a set of capabilities which our customers need value and pay for. And is it a tech stack and the talent stack of people that will fit in well with our culture and our company and that we can bring together? And so we're very active out in the space. The space is so dynamic. No one really knows where social is going and how organizations and businesses are going to leverage it. We just know that more and more businesses are piling into the space as traditional channels of communication, as traditional marketing channels where they could connect with their customers go away. As this whole influencer kind of economy evolves, the space is changing and so you've got to be active, we've got to be active out there in what's going on and then look through the lens of should we build it or should we buy it? We've not done a raise of any kind financially since late 2013, early-2014, so we're self-funding as well as we go through this. So it gives us a different degree of focus and discipline around what we go by and a lot of rigor around that to make sure that we're buying the right things. And then ultimately, we're getting the right returns for what we're buying.
[00:15:42] Michael Yeah, it's after all, your money now, you're not playing with other people's money.
[00:15:45] Tom That's exactly right.
[00:15:47] Michael So knowing that, as you've just said, no one really knows where social goes from here. From your perspective, what's the social customer care and social commerce world look like post-COVID-19?
[00:16:00] Tom I don't think we go back. We've seen a massive movement onto the social platforms that is sustaining. Not just people, over half the world's population is active on on social. But, you know, a rapid movement of businesses of all size. And you know, this whole movement of the "I quit" situation we're in where so many people are leaving their jobs in this great resignation and going and starting new businesses and you're starting your businesses straight on social, you're skipping kind of all the traditional steps that you go through to go out and find your community, to build a following, to try things out with your brand and your product ideas. We believe that's just going to continue and get more and more sophisticated. Influencers and specifically, video influencers are only going to increase their value to brands and their influence around brands. And so we all have to think about kind of what products need to be in place and how this ecosystem all fits together to create ways for traditional businesses to successfully navigate this. If you look at our customer mix, you know, it's a lot of traditional businesses that are trying to connect very geographically, specifically with a customer or prospect base and communicate with them. But it's more and more these digital and social-first type companies that have a whole different set of needs. And how do you make all of those capabilities and the maturity curves easier and easier for customers to navigate? So we've invest heavily in education. We've got a whole academy process and certification process to help our customers navigate and mature. But also it's embedded in, you know, hundreds of universities are leveraging Hootsuite's Academy sets of products for students to get certified. I have three college-aged kids, one going through marketing. The whole marketing education now is completely different and kind of turned on its head from where it was, you know, a decade ago, and certainly from where I went through on how technology fits into and how content and content creation and how technology fit into driving brands and marketin. A long, rambling answer there.
[00:18:23] Michael What was it like stepping into the CEO role during the global pandemic?
[00:18:29] Tom Yeah, it wasn't easy. It was not the way I envisioned it. I went through the interview process right as the pandemic started. So I didn't really get to meet Ryan. I didn't get to meet the board. With one exception, I live in San Francisco. Hootsuite is headquartered in Vancouver. We've got almost thirteen hundred employees now, and half of them are in Canada. The border was closed for the first year and a quarter. I was with the company, so I wasn't able to actually meet any employees as well. So everyone adjusted. You all had to adjust, but I always felt like I was missing something. I felt like, you know, I was recruiting and I was bringing in leadership. We actually brought in some additional board members. But you always feel like you're missing, or at least I do, missing just a little bit of not getting to be able to meet people face to face. And so last fall, as the border opened up, I spent a bunch of time in Canada with the employees that I could meet with, which was fantastic. COVID kicked back up, so we slowed that back down but we are now starting to pick back up. But you can be very effective and certainly, there are all kinds of really good kind of work-life balance components to taking away the commutes that we all have and allowing people the flexibility to work when and how they want to. But there's nothing like being in the room together and having a conversation and solving things together. And we've actually got our first leadership team all together in Vancouver next week, which I can't wait for that to happen because you can just feel the difference. You can feel the connection in a very different way.
[00:20:01] Michael I was going to say at the height of the pandemic, but of course, we don't really know that, at the start of the pandemic. You made employee wellness a business priority. Walk us through that process.
[00:20:12] Tom Yeah. You know, we're in the business of people. We can't scale and grow our business without talent. I mean, the beauty of SaaS and the subscription business is you build a framework and a set of capabilities and the world comes to that, which is great. But ultimately, to grow, you need talent. And we were building our people team up. We were evaluating and surveying our employees and trying to listen to our employees, and we could see PTO budgets building. People aren't taking vacation. They were at home. They couldn't go anywhere. They weren't taking time off. They were tired, they were afraid. We were having lots of these kinds of conversations and trying to figure out what to do. And so we landed on, I've done in my past in retail, I had done shut down weeks where you effectively shut down as much of your business, you can never shut the whole business down, but you shut down as much of your business as possible to allow everyone to be on a break during that same time period. So you're not doing the half kind of vacation where, you know, you're on vacation, but people are still pounding you with emails and messages and looking for activities to get done. So we decided to explore a wellness week concept, and we also made the decision that we weren't going to reduce our employees' PTO count. So this was just a free week off for our employees and we have 200,000 customers, we had to navigate a customer support and all kinds of things like that, but it turned out to be really popular. We did it last July. We truly shut it down. Our leadership team honoured and did not send messages and honoured the week, and it was really, really successful. Our employees enjoyed it and they enjoyed the quiet that came from it. We also did some incentives, like some additional incentives, to encourage our employees to take vacation as well and just from a health and wellbeing standpoint. And so we gave some prizes and some awards and things like that for people to not just keep carrying their vacation, but to go take it as well. And it's painful when you lean into that and you lose at different times a third, half, or all of your workforce. But you make it up with the employees that are ready to be back at work and are fully focused on work when they're there.
[00:22:23] Michael Tell me more about your employees, particularly about lessons learned. You walked back a contract with US Immigration and Customs Enforcement agency. How did that pushback from your employees make Hootsuite a better company?
[00:22:36] Tom Yeah, that was a tough one. It happened in the first month that I had joined the company, so we were in a virtual- we do a lot of work with governments, U.S. government, Canadian government, governments all over the world. We've got a product that works really well supporting government agencies. We had a series of criteria that we took each of our prospects through. It was effectively, "Is this a legal business or not?" And there wasn't really another criteria around who we do business with. And so we had a conversation at leadership team level. There had been conversations going on around the company around whether this was a good idea or not to work with such a controversial organization. The use case was, you know, rather it was very plain and a boring use case for the comms part of that organization. And so we let it go through. And what happened next was, you know, we work in social media, we have a young workforce. They have no problem speaking out and they did. They were not happy with the decision. We have close to 100 employees in Mexico City, we had a lot of employees that had real life experiences with the U.S. Immigration Authority. And so we listened. I listened hard. I was still onboarding and getting to know the company. And as I listened, it kind of exposed a little bit around, you know, social media is wide open and if you just embrace the beauty of everyone can communicate, that's one thing. But when you're working as an organization, you're an organization made up of people who have beliefs and care about the company and what it stands for. We recognize that we had not done the work we needed to as a company to really put definition around who we were beyond supporting just freedom of speech. And so we went through the painful process of undoing that contract. I got blasted from every direction. It was my introduction into the world of social media and how-.
[00:24:45] Michael Baptism of fire!
[00:24:47] Tom Oh my God. But it was the right decision for us. And as a company, it allowed us to really step back, at that point, we were a 12-year old company, to step back and say, "What are our values?" So we had the startup values that you always have, you know, grit and hustle and things like that. But really who are we as a company? And so we went through a fairly significant investment of time of building out our guiding principles, really talking about them, about how we would make them real and then rallying around those. We built out a process called the WHOBIZ process where we look at who we actually do business with, and we have an escalation process where we can evaluate and we're building out more and more policies of what we do and don't allow on our platform. We've also, you know, with wars going on around the world we've introduced a WHEREBIZ process because right now in a legal country, when you have access to the internet, you can sign up for our product. And so, you know, how do we think about that? So we're continuing to just grow up as a company and put policies in place that make our platform safer and better for our customers and make it a platform that our employees feel good about working with.
[00:26:01] Michael Tom, this has been fascinating. Thank you for your time.
[00:26:03] Tom Absolutely.
[00:26:04] Michael Now, if there is one thing that you'd like a startup entrepreneur or growth CEO to take away from this conversation, what would it be?
[00:26:11] Tom Yeah, ultimately it still comes down to people. It comes down to having the right people in the right place at the right time, having people in place that you can align with, disagree with, and go get things done with. Having people that have a focus and a bias to action that can be a great individual contributors, but also can be great team members and that want to play to win, that want to do something great. And that's been the case in every role, in every job, no matter what kind of business that I'm in. In technology, because we're always hiring so many people, sometimes you take the lens down from that and you just look at pure skills more so than, you know, the right fit and mind set to do what you're trying to do. You sometimes try to go too fast. You know, we need 100 engineers. You let down your standards for diversity or for the right mixture of skill sets and then you pay a price for that. And so we've seen that in traditional industries over the years, and it's front and center in the technology space today. So that focus on people and culture and getting that right or going back and fixing it and making sure that it's right for going forward is an investment that will pay off over and over again for you, more so than really almost anything else that you can do.
[00:27:44] Michael Keiser is clearly a people person. It was evident in our time together, and for this growth-oriented CEO, success means finding the right people, then treating them right from instituting time away, adjusting to the realities of working under COVID-19, to listening when they push back in areas of social concern. Artificial intelligence is clearly a key technology not just for the future, but for today and for Tom Kaiser moving the company in that direction isn't just intelligent. It shows his street smarts. I'm Michael Hainsworth. Thanks for listening.