One of the greatest indicators of a prosperous business is its customer success. How do you bring that into private equity? In this exciting episode, Betsy Westhafer and Tony Bodoh sit down with Sirous Wadia, the Practice Director, Customer Success at K1 Capital, to discuss that answer. Sirous talks about his career path and gives listeners a view into private equity and its relationship with portfolio companies. He also discusses how the COVID-19 pandemic has impacted K1 and the overall SaaS industry — how COVID has accelerated it and what kinds of shifts they are making for portfolio companies. Sirous then taps into what separates successful and unsuccessful B2B SaaS companies, especially as the future remains uncertain.

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How Customer Success Is Executed In Private Equity With Sirous Wadia

Co-Authoring The Strategy And Product

Betsy, I’m excited about this episode because we have Sirous Wadia with us and he has done some pretty amazing things in his career. He’s been in software. He’s been in Software as a Service. He’s been in customer success, and now he’s taking customer success to an entirely new area. I can’t wait to talk about this and dig in deeper.

Tony, I was so excited when Sirous and I connected. I did not know this but finding out that there is a practice leader for customer success in a private equity firm. I find that to be extraordinarily exciting because these companies may or may not have that expertise and to have somebody that does to support them as they’re growing past their scale-up phase is really exciting. Without further ado, welcome, Sirous. We’re glad you’re here.

Thank you Betsy, thank you Tony. I appreciate the invitation.

Can you kick us off for our audience that may not be familiar with how private equity works and the vernacular around those things? Also, tell us about your company K1 Capital and walk us through what your world looks like.

The relationship with private equity, we invest in companies with the notion and the thought that we’re going to partner with the companies that we invest in and ultimately work with to get them to another level. They’re already on a path of greatness. They are largely and almost entirely super innovative in mostly non-saturated spaces. K1 specifically plays in a smaller cap, high growth. We have certain revenue targets that we specialize in. When we approach these companies, we do all our sourcing, our diligence, our execution and all the operations within the K1 roof. All in one roof, all in one operation, incredibly seasoned, very experienced high knowledge people that run these different departments.

In contrast to venture capital, when we invest in a company, we are with them on day one and throughout the entire journey until whatever that end exit or story is. We partner with the leaders within the organization, enable them with whatever expertise, knowledge, people, and resources we have to make them as successful as possible. In that way, we are partners in every sense of the word and again try to take the best practices, the winning ways that we’ve seen some of the other portcos and our family have seen, bring that and shine a light on that if it’s applicable and go from there.

Every engagement needs to be humanized. Click To Tweet

With portco, you’re talking about the portfolio companies that you have invested in, correct?

That’s correct.

When you say in an unsaturated market, can you give us some examples of what that is, what markets those might be?

If you look at some of those, I can’t remember the name of the forum, but basically where all the marketing and advertising technologies live. There are so many different players in different niches. We are more niche-based, not exotic necessarily, but also not living in a land where there are 5,000 or 6,000 other players trying to grab small shares of the pie. When it comes to program management, fundraising technology, and things of that nature, we have a footprint across the board and we help other enterprises. We are exclusively business-to-business, and we are exclusively SaaS, so Software as a Service. With those two fundamentals in mind, we go after areas that help other businesses grow and optimize and augment the rest of their business.

You said a couple of keywords there and I recognize them from your quick bio that I put out there. You’ve got Software as a Service, you’ve got customer success and you were in the software industry. Give us a little background of who you are and your pathway here. I know customer success didn’t exist when you and I both started out in this in the world of business. We’ve both emerged into it, Betsy, the same way. How did you get here?

It wasn’t a traditional road. My undergrad, I was actually a pre-med, bio major and I had a different course and thought for my life back then. I ended up going to business school in the Bay Area. In the Bay Area, if you’re going to spend any good amount of time, you’re going to end up in technology. That’s what I did. Sun Microsystems was my first big boy job. I spent about five years there and got a taste of both the hardware and the software side of the world. From Sun, I started getting my first taste into the post-sale customer success account management at the time, that side of the house with VMware.

VMware, when it was still a pup back in the 2006, 2007 timeframe, I joined an exposure and a hand in enabling sellers, post-sale enablers and account managers to do their business. It opened my eyes as to how fun and important it can be keeping customers happy, growing them, and retaining them, and how profitable that endeavor is when done right. That’s how it started, Tony. I cut my teeth at a company called Marine Software back in 2008. They are a paid search management platform. At the time, it was the largest in town. In 2008, I was a first post-sale resource and they had people that were moonlighting in certain ways, but the dedicated account management was me. Over the course of nearly five and a half years, I built that CS team. That’s where you get the bloody noses and the learnings and all of that happened. From there, the rest is history. I’ve spent about three years at Adobe which was a world-class organization. I saw the other end of not the long tail, but the big boys and how to manage those accounts.

Sirous, when you said about how, unlike venture capital, you guys are there with your portfolio companies from day one. I would imagine that there has to be a tight relationship based on trust because you’re seeing everything they’re doing, they’re looking to you for help. Can you talk to us a little bit about how do you, as K1, prove your ability to help them? How do they respond in return to say, “Yes, we’re a company worth spending your time on?”

I think it starts really in the diligence space. It starts even before they become part of the family. When we start having the conversations, building those relationships and that trust early days or the first conversations, that’s where all that happens. The moment that everyone signs on the dotted line and we decide we’re going to take the rest of this journey together, we create these 100-day plans on how do we want to get out of the gates strong? What areas can we augment your business that will take that next level? At no time do we ever impose our will or say we’ve seen it this way, of course it’s going to work for your business and your industry. It’s collaborative. Everything’s co-authored. We bring the leadership of knowledge. We have experts. Our operations within K1 are big and it’s robust and constantly getting better.

Continuous improvement is something that we preach internally in all facets of our business, but we bring that from the beginning. What do that first 100 days look like? What does it look like afterwards across the spectrum, Betsy? From the top of the funnel, sales clear through renewal, advocacy, retention of a business. People like me have counterparts that own different parts of that customer journey. We engage as needed. Not every new acquisition is going to need my two cents in the early days. It may down the road, but maybe not front and there may be other needs. That’s how we do a diagnosis, assess, and that diligence comes into play at that point.

You’re helping these companies both keep and grow their existing customers as well as going out there and acquiring new customers. In the B2B SaaS space, companies fail all the time here. In your mind, what are some of the keys that set apart the successful companies both at K1 and potentially elsewhere?

Number one, it’s not to have checkboxes in terms of processes. Not to have a generic customer journey that is not based on thoughtful engagement with your customers, internal stakeholders. It’s the fundamentals. Do we have a customer journey mapping analysis? Are we smart and thoughtful about the KPIs per stage, whether it’s onboarding, support, advocacy, enablement, adoption, what matters most? Only applying those activities that move the needle that are valued in the customer’s eyes. That gets thrown by the wayside when things get crazy, the bullets are flying, it’s COVID, things are topsy-turvy, sometimes that discipline goes away. It’s staying true to that is the first thing.

Much is accelerated because of the COVID-19 pandemic that’s happening. Click To Tweet

I also am a believer that every engagement needs to be humanized. Whether it is a retention marketing communication that you’re trying to convey an important use case, a piece of functionality or it’s a strategic business review. Whatever touchpoint, those need to be human to human. It needs to be nothing generic. It needs to be pointed to what they care about. There has to be a high level of EQ, especially today where we’re so removed from that in-person energy, rapport, and all of that is not there. Who knows what’s coming back? In this new world, and I’m taking this for your question, Tony, even the next phase, which we need to think about that a hundred times more than we did before.

I think those are the things that set us up. I also believe that the teams and the companies that are strategic about optimizing technology led engagement beyond the SMB, traditionally unmanaged, longer tail customers get the tech touch love. I believe that the most innovative forward-thinking and ultimately successfully profitable companies are the ones that take that same technology and treat it as a friend to the higher tier more strategic customers because it can bring so much value. Not every customer feels like they need a phone call or a human engagement. A lot of customers, if you’ve ever read the The Effortless Experience, Matt Dixon is famous for this. The data says otherwise. There are people that actually want to have the digital touch. There’s a lot more. I’ll stop there but those are some of the key elements.

Human to human is a big key part of what Tony talks about. We talk about that in our book. It’s such an important thing. Even if someone doesn’t want a phone call, that’s still that human. You’re respecting them as a human. That’s their preference. Even if they don’t want to engage so much other than digital, that’s still respecting their preferences as a person. I’m glad you brought that up. Tony always says that it’s not B2B. It’s person to person, human to human. That’s such an important aspect. In the world of COVID, how has that impacted your portfolio companies? How has it impacted K1? What do you see moving forward? How are you addressing these things?

For the businesses that we work with, and in general, largely highly disciplined, mission-driven companies that are mission-critical to their customers I’d say everyone’s been impacted in some way, but I think that we’re going the course. We’re doing what we need to do COVID or not. That has been a benefit. A big reason for that, Betsy, is because when COVID early days was coming about and we knew that this is going to be a different world, the focus to optimize and learn how do you virtually conduct an onboarding? How do you virtually optimize and crush a customer advisory board meeting? All of those different sorts of investing in it now learning and then starting to roll it out versus, “I’m going to get them out there.” There’s no real thought or upfront investment into being the best at that. We did that early. I think that it’s showing dividends. It’s crazy.

Right now, it’s a lot of forecasting and making sure we’re good on our forecast. There are no surprises in terms of churn or revenue. All those things we are hyper-vigilant about. Our operations arms are everyone’s antennas are up, their sleeves are rolled up and the army is helping our portcos in every facet. Staff augmentation in areas that maybe they need some extra help to push across the line or expertise in maturity modeling. In this age, value is different today than it was before in the eyes of the customer. These things that we help with but it’s helping our customers and getting through the storm.

I happen to know from previous conversations that you have an upcoming quarterly summit that has always historically been done in person. Now this one is going to be virtual. How are you going about making that switch from something that was in-person, relationship development, all of that, to a virtual event?

KYC 25 | Customer Success

Customer Success: There’s a way of taking what others have done that works, doing it for your business in a way that’s going to stick, and it’s repeatable and predictable.

 

It starts partly with amazing people like you to make it a success. Betsy, it’s one where we look for engaging keynotes, engaging portco leaders that have an incredible story to tell. When it’s not at a fancy resort, we don’t have the networking opportunities and all of the other signals and stimuli that keeps us there and engaged, we have to have the content. We have to have the viewership being driven by compelling messaging, compelling speakers. That’s what we bring. That’s how it’s been different. Not to say that our live shows haven’t had compelling speakers and presentation, of course, but in this environment, it’s crisp, it’s much more succinct in terms of the time allotment we have. The storyboard is much more hard-hitting. What are we trying to leave you to take home tonight and put in practice tomorrow? Theory has been stripped away largely. It’s all practicality. Our speakers are doing it. They’re fighting the fight in the middle of everything that’s happened like everyone else. They’re all friends with K1 and they’re all willing to lower the guard and say, “This is what we’re doing.” Some of the names and companies, I’m blessed and appreciative of their participation.

I have ten more questions I want to ask, but I know I won’t get through them all. I think it’s interesting. What you talked about the switch to this virtual environment, onboarding your virtual summit you have coming up. In a lot of things I’ve been looking at with Betsy, eCommerce is ahead by five years by some estimates. We’re looking at a very interesting holiday season coming up here. We can see that healthcare has moved by at least five years forward, if not more, as telehealth has even more than that. What would you say has happened in your space? Especially like in the SaaS space there, how far ahead have they moved by being forced to go virtual, which we probably would have been there any way at some point. It was probably on your plan, maybe 3 to 5 years out. Where was that? Where was that in your mindset?

To your point, much is accelerated because of what’s happening. I think the notion of being even so much more efficient because of what we’re forced to do, it’s ultimately going to benefit all of us. I mentioned learning now how to conduct the best virtual implementation or CAB. It’s better now to realize that deficiency and how much better the quality can be even later. That’s all sped up and I think this notion of product-led growth, which is a session at our upcoming summit, which is having the product itself, the interactions of customer success with the customers. Not just find its way into a product manager where it’s now on the roadmap for a feature ad, but truly foundational in the product.

The product itself serves as a renewal engine, as a growth engine. The CS team has almost a different role. All of that is being accelerated. It’s been talked about previously, but now a lot of companies are like, “We have no other choice. If we’re going to survive, we have to get good at this.” Support organizations are becoming more nimble. They’re becoming much more aligned with the CS teams, with implementation, with the product. That’s the other thing, Tony. It’s alignment. The alignment between post-sales, sales, product, and customer success. Never before have I seen in my career, we’re at that inflection point now. All great things, honestly. It’s a shame that it’s this environment that’s causing this. It’s always some event that causes change and this happens to be it.

When you were talking about alignment, one of the things that we talk about with customer advisory boards is how the executive team has to be aligned before they walk into a boardroom with their customers, boardroom or Zoom room, whatever the case may be. That alignment has to be there. Much like COVID has forced a process for alignment between sales and customer success, that process of preparing for a customer advisory board also forces alignment amongst the executive team. The worst thing that you can do is get in front of all your customers and look like the right hand that doesn’t know what the left hand is doing, there’s conflict or disagreement amongst the leadership. I think your point about alignment is well taken.

I’ll say one other thing is in this environment where people are in different parts of the world, certainly different cities or homes and not in the same office, the executive alignment I’m now seeing is so much more critical than it was before. Once you have that on a regular cadence, it’s not opportunistic, it’s not reactive. It is a prescriptive forward-looking engagement. To combine that with the teams on the ground, the account teams and practitioners with the customer success teams, making sure that ecosystem is in concert it’s never been more important as it is now. I’m seeing a lot more variance in the sentiments and the different goals, and who’s doing what the left-hand right-hand like that notion you mentioned, Betsy. That alignment is so much more important than I’ve ever seen previously.

The alignment between post-sale, product, and customer success is even more important now. Click To Tweet

It’s fascinating to me as you go through this because now what I’m thinking is if we’ve accelerated the pace to what we were planning to do sometime in the future, what does the 3 to 5-year plan look like now for a lot of these companies? At least in the world that I’ve been in, it’s very iterative. It’s like, “Let’s add another year on the 3 to 5-year plan. If we suddenly accelerated the 3 to 5-year plan, now we’ve got to come up with a brand new one from scratch in a whole new world that we’re learning.” Tactically, we’re trying to solve the problem at the moment. Strategically, we’re trying to look forward and imagine what could be possible when none of us came through gradually, came through and evolved into where we are now. It was thrown upon us. How are your companies thinking about that?

We’re thinking about that in the form of value and redefining what that means. Historically, our customers are using our product a lot every day. They login every day. Our support ticket volumes are down, our time to resolution, time to value and onboarding, very important and ubiquitous metrics that we all think about and use. I think the fundamental shift is, what does it mean for our customers? A customer wants to know, “Am I going to dominate my space against my competitors more so because I’m now engaged with this vendor or this partner? Is this partnership going to get me ahead?” Things like formal and sophisticated maturity assessments, modeling and actioning off that curated plan to get your customer to become a number one in their space, that’s value.

I know we talk about it, but if you don’t have some semblance, especially for your tier one, you have to have some version of that. You have to think about, how do you co-author innovations and would it go to market strategies with your top customers and your more strategic customers? That’s why, Betsy, to your point, executive alignment, it’s not just talking about product roadmaps. It’s how do we get together and co-market together and become partners in every sense of the word. If you’re going to frame it, the new 3 to 5-year plan is how do we build toward that. Not just optimizing usage utilization and onboarding times. It’s all important, we still have to do that, don’t get me wrong, but the game has changed. I think that’s part of it.

Tony, I know you have other questions you’re chomping at the bit to ask, so I’m going to defer over to you.

This has been interesting. There are a couple of things that you said earlier that I want to go back to. You use the word repeatedly, thoughtful. You use the word discipline. Those two things stand out as what we hear a lot in business school, we hear a lot in Harvard Business Review. We hear it all over, but I get the sense, and this is me picking up the energy you’ve got around those words. It’s more than just words for you. There’s something deeper there. What does that mean being thoughtful and being disciplined?

It means not to do something, not to take the quickest path toward completing an initiative or a deliverable to address a gap. There are different paths and a lot of companies, especially when the stress is on and when there are so many competing pressures, initiatives and priorities, what’s the quickest way? I’m a big fan of fail fast, do things efficiently. That’s how it becomes profitable, but I think there’s a way of doing it where you introduce the tried and true to get you to the sexy and new. That’s how I think about it. There’s a way of taking what others have done that works. Doing it for your business in a way that’s going to stick and it’s repeatable and predictable.

KYC 25 | Customer Success

Customer Success: Everything is a quantifiable event. If we can’t measure direct impact, don’t do it.

 

From there, you build onto the next thing. That’s the thoughtful approach. Crawl, walk, run but with always an eye toward every phase is it won’t break. It won’t be compromised because an outlined circumstance exposed some fundamental flaw that you hadn’t thought about. That’s what I mean about thoughtful. If you have a business review as a bad tactical example, but if you think about what is my story? When I walk into an executive review with my customer, what’s my story? That story will be completely indestructible irregardless of who’s in the room, the most technical-minded person or the most business-minded person, or any in-between, I’m going to have a story that’s going to speak to all of them.

That’s being thoughtful, not walking in and saying, “If anybody’s done a business review, you know the agenda. What did you do for the last 90 days? What are we doing? What’s forward-looking, a little bit of product roadmap?” There are so many ways of changing the game. The discipline is not to stray. Know the best practices, know what you’re trying to accomplish and don’t get distracted by a competing prior that maybe just popped it’s head up. There are ways to account for driving your core business forward down the path you want. Tony, to steal the phrase from you, that 3 to 5-year plan, don’t stray. Keep marching and then account for everything as it comes along. That’s the discipline and the thoughtfulness that I was talking about.

Do you find that you bring that to the companies or do the companies that you’re vetting before you invest in them already have a level of that thoughtfulness and discipline?

I think in their core, they do. We invest as much into the leadership and the people as much as we do in the technology. It’s a marriage of both, but I think what we do is we layer on the benefit of working across so many different companies and seeing so much that works and doesn’t work and curating, “Here’s the best of what we’ve got. This is what we saw in this particular area that you have need. Here’s the best version that we can bring.” That’s thoughtfulness at its peak, in my opinion. It takes someone with an appetite to work with someone and say, “I don’t have all the answers.” K1 partnering with them, what a blessing because they have purview that’s not behind some ivory walls but in practice. They’re going to bring that to us. That’s the layer that we can bring. The discipline is we measure everything. Everything is a quantifiable event. If we can’t measure direct impact, we won’t do it. There are things that we’ll always do to help and be helpful, but if we’re not driving bottom-line results and making sure that we’re driving value for the portco, with the portco, it won’t serve anyone any good. That’s a discipline we bring as well and accountability.

There are ways to account for driving your core business forward down the path you want. Click To Tweet

This conversation has been fascinating. I love humanizing private equity and talking about thoughtfulness, discipline and the human to human touch and all of that. I think this has been very enlightening for our audience to be sure. Switching gears a little bit, one of the things that we love to do on our show is ask our guests is there a community organization or a nonprofit charity that you personally have an affinity for, or your organization does? We’d love to hear about it. Shine a little spotlight on them. I think the world can use a lot of focus on the organizations that are doing good things for the world. I want to give you the opportunity to give a shout out.

I’m going to be brief but to the point. I am part of a group called the Good City Mentors. They are a nonprofit here in the greater Los Angeles area and we work with all lower served high schools within the area. Largely minority driven, largely in poor areas that sometimes are challenged and we bring a layer of friendship, knowledge and availability. We work with students on a weekly basis. Good City Mentors, I have a lot of love for. It’s only in LA now, but they’re growing into the state and nationally down the road. Check them out online if you get a chance.

Here’s a shout out for my own K1 family. It’s such a personal item for us to contribute to inclusion and bringing diversity to all our portcos, to our boardrooms, to all the communities that we serve. We actually have formal metrics that we have instilled within our family to make sure that there’s equality amongst our own family portcos as well. I’m so proud of us and the people within the K1 that are doing that. Thank you for that, Betsy.

Thank you so much for being here. This was very enlightening and it’s always good to talk to you and we appreciate your time. I know that you mentioned that you’re not in the country right now, so we appreciate you taking time out of your travel schedule to sit and have this conversation with us.

It’s always a pleasure. I appreciate both of you, Betsy, Tony. Thank you again.

Thank you.

Betsy, this conversation with Sirous was truly amazing to me because we’re now in this phase where COVID has been with us for so long that people are rethinking business as a whole. They’re not saying, “We’re going to be out of this in 2 months or 6 weeks.” They recognize that business is different and we have to rethink everything. The level of efficiency, of effectiveness that he talked about, the thoughtful, disciplined approaches, these things stick out to me as a way that we have to be doing business and how you engage your customers and how you get to know your customers by that thoughtful discipline. I like the word co-authoring, which he used so often. Co-authoring the strategy, co-authoring the product. All of that makes so much sense. We’ve literally in this conversation seen the future, maybe seeing the present and into the future of what customer engagement is going to be over the next few years.

He made so many good points. It’s hard to pick out a couple that resonated the most because they all did. I think one of the other things that I appreciated about what he said was how much this is about people and the human connection. You think about Silicon Valley, venture capital, private equity and SaaS companies. It’s not the first thing that comes to mind, is “They need to have emotional intelligence. They need to have this connection with their customers.” To me, that’s an exciting shift in the way that K1 looks at what they do versus other PE firms and venture firms that I’ve been in contact with where it’s mostly a money game. I’m very encouraged to see that shift that’s happening in the world of private equity.

To see what they’re doing, Sirous is not just influencing his company. He’s having this ripple effect in all of their portcos and that’s going to have a ripple effect into the clients of those portcos. It’s going to have a ripple effect that has an impact on the industry as a whole. That’s one of the things I’m excited to see. We’re at the beginning of a wave. We’re seeing the first bit of energy flowing and we’re going to see this rise up into a tidal wave. It’s going to take over the way things have been done. We can’t do them the way they used to be or we’re going to go out of business.

I can’t add a better way to end this conversation than that point you just made, Tony. Thank you, Tony. It’s always a pleasure doing this show with you. Thank you to our audience for being loyal readers. We’re very excited to have you here. If you want to share our show, go to your favorite podcast platform and subscribe and let people know about it. We appreciate the support that we’ve gotten. As a little sidebar, we have gotten such great feedback and we appreciate our readers who have given us feedback that helps us get better. We want to continue doing the show for as far as the eye can see. Thank you to our readers who take the time to let us know what they think. Until the next time, we’ll see you on the next episode.

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About Sirous Wadia

KYC 25 | Customer Success

Over 14 years in Customer Success and Executive Management. Sirous has a unique blend of Sales and Customer Success expertise, building and leading these teams at high-growth organizations of all sizes. As an early senior contributor to VMware, one of the fastest-growing software companies in history, he established VMware’s Global Selling methodology, helping propel them to their IPO in 2007.

From there, Sirous built the Customer Success organization from the ground up within Marin Software and helped the company go public in 2013. Most recently, he oversaw retention and growth at Adobe. Currently, he oversees the Customer Success practice at K1, a leading private equity firm, and is responsible for the retention and expansion outcomes of their entire portfolio of companies.