SPEAKER_00: 0:12

We have now in an in a new environment where retention is existential, where every dollar matters, and if every dollar matters, every customer matters.

SPEAKER_01: 0:22

Once again, welcome to the Digital Customer Experience Podcast with me, Alex Turkovich. So glad you could join us here today and every week as we explore how digital can help enhance the customer and employee experience. My goal is to share what my guests and I have learned over the years so that you can get the insights that you need to evolve your own digital programs. If you'd like more info, need to get in touch, or sign up for the weekly companion newsletter that has additional articles and resources in it, go to digitalcustomer success.com for now. Let's get started. Hello, and welcome to the Digital CX Podcast. My name is Alex Turkovich. I'm so glad to have you back this week and every week as we talk about all things digital in CX. Folks, this is episode 100, uh, which is uh a cool milestone, right? 100, nice round number. Um, and it's taken us a bit to get there. We were publishing weekly for a while there and um been a little bit more sporadic over the last few months, but we're getting back into that regular publishing schedule. And if you've listened to the podcast for a long time, you know that um Gainsight and the Digital CX podcast have had a very close relationship. I've had, I think, five different people from Gainsight on and you know throughout the history of uh this podcast, and that you know, trend continues as we are pleased to feature a conversation with Chuck, who just took over as CEO uh of GainSight in the last few months, really. Um he's been with Gainsight for a little over a year, maybe a year and a half. Um, so uh this conversation is pretty phenomenal because Chuck has a has a great background when it comes to not only entrepreneurship and CS, but also artificial intelligence, and he's bringing all of that into the fold at GainSight. And so we have a cool conversation about um, you know, pretty free form about not just gain site, but also artificial intelligence and current state and what's happening and where we see things going and those kinds of things. So uh this one's slightly longer, but I couldn't cut Chuck short because he has so many great things to say. And I hope you enjoyed this 100th episode of the Digital CX Podcast. Enjoy. Chuck, I'd like to welcome you to the Digital CX Podcast. It's so great having you.

SPEAKER_00: 2:40

Great to be here, Alex.

SPEAKER_01: 2:41

Yeah, it's um, you know, I I think um it's so cool because if you look back at like the um the episodes in this podcast, there's been a lot of folks from GainSight throughout the couple of years that the podcast's been on. And so, in a way, like I've been able to track the evolution of GainSight a little bit. And um obviously you um I think you're you were brought in probably a year or two ago, something like that. And yeah, recently a year and a half ago, and have recently been named CEO. So congratulations on that. That's thank you fantastic. Um, that's really good stuff. But what I'd love to do kind of first and foremost, and what I what I do with um most of my guests is that kind of dive into your background a little bit and what your journey that led you into where you are today. But my first question to you is like basic, what was your first paying gig ever? Like what when what when's your where does your first paycheck come from?

SPEAKER_00: 3:44

Oh, my first paycheck actually was in the year 1995. Yeah, I was a grad student at uh Purdue, yeah, studying industrial engineering, and my first job was to grade undergraduate papers.

SPEAKER_01: 4:00

Cool.

SPEAKER_00: 4:01

That was my first paycheck.

SPEAKER_01: 4:02

That was your first gig. Yeah, that's really cool. Yeah, I mean, uh, I think yeah, I remember um I worked for the university. Uh so you have a little bit of a different educational background than I do. You you have like Stanford and Purdue on your resume. I went to music school.

SPEAKER_00: 4:19

So you had so much more fun. You did the right thing, Alex. What was I thinking?

unknown: 4:24

I don't know.

SPEAKER_00: 4:25

I wish somebody, I wish somebody had g advised me better. I had no one better, no one no one to tell me any better.

SPEAKER_01: 4:30

Oh, I mean, I spent more than$100,000 on a degree I'm not using, so there's that too. You know. Hey, you live and learn, right? You live and learn. That's right. But um say I mean, um, you know, I know uh a lot of people in the CS community kind of really uh know about you now because of of gain sight, obviously. But you know, what they probably don't know is some of the rich history that you have. I mean, you spent a considerable amount of time at Salesforce and you built amazing things at Salesforce. You've also been a founder and CEO, so you have the entrepreneurial thing happening. Walk us a little bit through um your journey, your uh 10 cent tour of your journey, so to speak.

SPEAKER_00: 5:12

Yeah, so I it's interesting. I uh I actually started my career after, you know. You know, I we talked about my first job at Purdue as a grader. After I graduated, I went to work for a company called Ernst Young doing main consulting. And back in those days, this is 95 to 97, they were still using mainframes, if you can believe it. So large telcos that were using mainframes to manage their customer relationships, call centers, things of that nature. That's kind of where I got my uh my start. And a couple of years later, I moved out west to go to business school and then joined this company called Siebel back in the day in 1999, uh, as a product manager, building some of their some of their um CRM products. You know, yeah. A lot of people don't know this, even though Salesforce has the uh the the stock ticker CRM, they didn't invent the term CRM. It was invented by Tom Siebel back in the SIBO days. And so, yeah, so I worked there, and so I kind of saw that shift from working on mainframes to client service software, which was pretty amazing. And I was part of that growth for six years, and then um uh I left Siebel, took some time off, and then I joined Salesforce. A lot of the early SIBL people ended up going to Salesforce. And one of them, my my um my good friend Brett Queener, uh, who I ended up working for uh eventually, and then another good friend of mine, Kendall Collins, who's now back at Salesforce, uh, they brought me into Salesforce from Sebl. Yeah and I spent a good five years there. And and the the interesting thing were there, I saw the shift from client server to the cloud.

SPEAKER_02: 7:04

Yeah.

SPEAKER_00: 7:05

So kind of already saw two shifts in my career from from the mainframe platform to the client server platform to the cloud platform. After spending a lot of time at uh uh Salesforce building products, I'm sure you you've used, uh you know and love, maybe know and hate, uh, like Sales Cloud, I am sure you've heard of. Uh you may have heard of a product called Chatter, which was a precursor to Slack.

SPEAKER_02: 7:32

For sure.

SPEAKER_00: 7:33

Uh those are the products uh that I was fortunate enough to work on.

SPEAKER_02: 7:37

Yeah.

SPEAKER_00: 7:37

And after about five years there, I decided I had to scratch my entrepreneurial itch to start a company. So I started a company in, and it's called Tech.ai, it's in the mobile and AI space.

SPEAKER_02: 7:49

Yeah.

SPEAKER_00: 7:50

And did that. It's a VC back company, just like just like you, did all the fundraise for Series A, Series V, Series C, Series D. And then eventually sold the company 2023 and a joint gain site. So there again, you sort of see the shift. My career has been this story of platform shifts and following these platform shifts and learning and trying to understand sort of how to take what you learned before and apply it to this new world that's changing, where the technology model is different, the business model is different, the go-to-market model is different. And just sort of being through that shift from all the way from mainframe to client server to the cloud to AI, now with GainSight, and my own company and the now with GainSight and all the AI work we're doing has been fascinating. And so that's sort of a little bit about my history and why I'm so excited about the time that we have here at GainSite. The other interesting thing, the parallel in parallel track to this, if you run the GainSite history, it's also interesting. So if you think about SIBL, we didn't have there's no concept of churn, right? Like people don't realize that. We people used to buy software in CDs where they would pay you money. Sure. You know, and it's typically anywhere between$2,000 to$3,000 per user, was the price of SIBL. And it's a perpetual license. You get to use it for life. How lucky, right? And we shipped you a box of CDs, 50 CDs, where you installed those CDs into a server and installed one of those CDs into your laptop, and now you have SIBL client servers. And so there's no concept of churn, there's no concept of recurring revenue. So you don't have to think about those things. But when I went to Salesforce, the company had gone public. I joined Salesforce in 2006 when we were probably 800 to 900 people. So still a small company. And the company had gone public about a year and a half before I joined, and they were just starting to understand the impact of churn. They had a lot of churn in the mid-market segment and SB segment, they had a huge SMB segment back then. Uh, and and the churn was incredible. And Wall Street started to notice. So internally, they decided, you know what, this churn's a problem. What are we going to do? So they took a few people from sales, from account management, a couple of folks from support, you know, they took all the misfits, if you will, uh, that were really like wonderful people, highly skilled, but really customer-obsessed people, and said, we're going to put a team together and y'all need to figure out how to reduce churn. And they were like, okay, what do we call you people? There's no name for this. Well, back in those days, Salesforce's mantra and like the whole tagline and the and the ethos of the company was all about success, not software.

SPEAKER_01: 10:39

Yeah.

SPEAKER_00: 10:39

Because SIBL was software, and Salesforce was peddling success, right? That's what the cloud model, the SaaS model is all about delivering success, not just giving you a CD with software on it. So they said, you know what? We're just going to call you customer success managers because you're not customer support, you're not account management, you're not sales. What are you? Your customer success.

SPEAKER_01: 11:01

Yeah.

SPEAKER_00: 11:01

It was a completely made-up title. There was nobody by that title ever.

SPEAKER_01: 11:04

Little did they know.

SPEAKER_00: 11:06

Little did they know. And so then that sort of became a thing. And Gainsight and Nick made it a thing. Uh Nick Meadow, who I'm sure who you know, who uh was the founder of Gainsight, who I like to call the godfather. He hates it when I call him this. I call him the godfather of CS, and he just hates it. Um, but I like to I like to tease him anyway.

SPEAKER_01: 11:29

Yeah.

SPEAKER_00: 11:30

But you know what he did was he really took this concept. But interesting story, by the way, is when Nick started his company, I was starting my company, but I was his main conduit relationship to Salesforce, the Salesforce mafia, as you call it. Yeah, yeah. So I introduced him to all the Salesforce people, Maria Martinez, John DeRoscher, Kevin Sherman, like all of these early game Salesforce uh CS people, customer success people.

SPEAKER_02: 11:55

Sure.

SPEAKER_00: 11:55

Uh he didn't know, and I introduced him during those times. And I didn't even realize that until like now when I joined GainSight Research. That's amazing. It's like, oh, okay, that's probably what it is. So yeah, so you know that that I got to see the early days of customer success. Yeah. And I got to witness Nick take that fledgling idea and turn it into a movement.

SPEAKER_01: 12:15

That's so cool. Yeah, we I used to I worked for a Salesforce consulting firm for a little bit, and we always called Salesforce the mothership, which I I I thought was also like a a very uh that's a cool term for it.

SPEAKER_00: 12:28

But um Well so many of us got our stuff, so many of us owe our careers to mark at Salesforce.

SPEAKER_01: 12:33

Yeah, yeah, absolutely. And it's also um I I was I was very aware that the ties were strong um between you know early GainSight and Salesforce. Because it it if I remember correctly, even the first version or two of GainSight was built on top of Salesforce, if I'm not, if I'm not mistaken. And so that DNA must have um I mean, let me ask you, have you have you found that that kind of DNA has transitioned over and carried on through GainSight? And is that something that has helped you in your first couple of years there?

SPEAKER_00: 13:09

Absolutely. I think Salesforce was the platform GainSight was built on. You know, originally the company was called Jbarra. Yeah, and they had built an App Exchange app on Salesforce, and Nick and the team re-christened it as uh GainSight and really started their journey down this category creation path of turning customer success platform into a thing, into a category and of itself, not just an adjunct to CRM, but something that's different from CRM. And the inspiration for the product, for the profession, so much of it came from Salesforce. So if you talk to Nick, um, which I which I do even now, I we he and I text almost every other day. Sure. Um, you know, he the the the inspiration for the business, the the the idea of customer success, the focus that churn is a problem, retention is a metric that investors care about, and the way to secure retention, improve your improve gr these ideas, so much of Nick's early thinking and the early gain side thinking was influenced by people like Maria. Yeah, you know, sales Nick and the team wrote the book literally on customer success. You know, we've written like five books. The first book Nick wrote, I don't know if you remember this, Alex. The first book that he wrote, the foreword for the book was written by Maria Martinez.

SPEAKER_01: 14:41

Oh, yeah, that's right.

SPEAKER_00: 14:42

Who was the president of the what they call the customers of Customers for Life organization at Salesforce. And so she was very influential in the thinking around GainSight and sort of this, how this whole industry evolved. You still see some parts of that, you know. Today we even if today we have a very strong integration with Salesforce, we look at Salesforce as uh Salesforce and GainSight as a perfect combination where we pick up where Salesforce ends and you know truly drive customer success. And of course, we deeply integrate into Salesforce. Almost 90% of our customers by count uh are Salesforce customers.

SPEAKER_02: 15:25

Yeah.

SPEAKER_00: 15:25

Almost all of them integrate GainSight into Salesforce. Because at the end of the day, if you think about what the system of record is, it's still Salesforce. GainSight is not a system of record. We never aspire to be. We're a system of insights, we're a system of workflow, and we're a system of action. But this underlying system of record is still Salesforce or HubSpot or ServiceNow or all these other systems where data, customer data is stored, uh, data lakes, for instance. But that idea that Salesforce is a very important part of our existence, of our journey, of this industry is undeniable.

SPEAKER_01: 16:02

Yeah, that's so true. I remember, I mean, very, very clearly having spent a few years as a uh you know, deeply embedded in Gainsight as a user and an admin is like, you know, that that Salesforce um integration is is like rock solid and really a uh a foundation upon which to build. And and that, you know, um, I you know, we don't need to get too deep into the weeds here, but um, you know, spent many, many of our um mapping Salesforce, you know, fields to gain site fields and making sure that the sinks were working correctly and we weren't you know creating undue stress for any other team.

SPEAKER_00: 16:42

So um and you know from that from that experience it's not just a technology problem, right? So much of it has to do with the shape of your data, how clean it is, and that can mess up your data integration and the mappings and the syncs, and it's a hard integration is uh is a hard problem. And it's you know, for us, it's even harder now because we while it's true that Salesforce majority of our customers are on Salesforce, yeah, we have some very, very important customers now in recent years that are that are um you know not on the Salesforce platform. So one, for example, is SAP. Yeah, so SAP became a customer of ours last year.

SPEAKER_02: 17:25

Interesting.

SPEAKER_00: 17:26

And they have tens of thousands of users on Gainsight across the across the globe, both in customer success and in sales, by the way. Their sales team uses Gainsight too.

SPEAKER_02: 17:35

Yeah.

SPEAKER_00: 17:35

And we have a very deep integration into SAP Sales Cloud, which is their version of CRM. They call it SAP CX. It's a great product, it's completely revamped, they built it from the ground up, and we integrate deeply to it. We also have another customer in LinkedIn. And guess who owns LinkedIn? Microsoft.

SPEAKER_02: 17:54

Yep.

SPEAKER_00: 17:54

So LinkedIn is actually moving from Salesforce to Microsoft Dynamics. Oh, so as a part of our partnership, we have built a very deep integration to Dynamics and we're continuing to build it. So now if you think about it, we actually have three different CRM systems that we support equally well. Salesforce, SAP CRM, or it's called SAP CX, and Microsoft Dynamics. Now, of course, they're in different stages of evolution. Salesforce, obviously, we've done since for the last 14 years. So it's a little bit more advanced. We're continuing to invest in it because Salesforce keeps innovating, right? They keep, they have to agent force, there's data cloud, there's Slack. So we keep deepening our integration. Every time they release something new at Dreamforce or one of their releases, we want to make sure that we're on top of that. So it's it's that it's one of those things that's like a never-ending you're never done with innovation.

SPEAKER_01: 18:45

You're never done. Yeah, you're never done. And you know, the everything evolves over time, and and part of the part of the challenge with having integrations or you know, complex data sets and things like that is that integrations change, data changes, strategies change, and you gotta, you know, do your best to keep up with that. I I know I know that one thing that um you know you have been spending a fair amount of time on is um this this notion of uh retention as a service. And so I was hoping that we could spend a little bit of time on that because I think um most listeners of the podcast, that may be a brand new term um for them. And and I thought it was incredibly interesting the first time I heard you speak about it and I heard about it and and kind of dug deeper into the concept a little bit. Because I think it's it's it's one of your pretty strong pillars that you're driving at at Gainsight, if I'm not mistaken. So I'd I'd love to hear it from your mouth uh directly, just around retention as a service and what that's all about.

SPEAKER_00: 20:42

Yeah. So software as a service has been the sort of an amazing journey for all of us over the last 15, 20 years, right? Starting with Salesforce and then kind of the whole revolution that happened and and you know grew tremendously during the COVID days. And I think as we think about the way we have approached retention, the idea of retention and grr, yeah, is that we say, okay, let's take our top customers and throw our best people at them. And we give them technology, we give them playbooks, we give them, you know, all of these these techniques uh and and and best practices on how to manage that relationship, drive success, drive value, drive the outcome, and get them to be a happy customer, getting value, getting outcomes. So therefore they renew. So the outcome of retention, it's it's an outcome, right? It comes all the work that CSMs do leads to the outcome of retention. Obviously, other things affect it like executive change and product and so on and so forth. But the fundamental idea of this industry, our profession, is that you take great people and you throw them on the top 20% of our customers and thinking, you know what, top 20% covers 60, 70, 80 percent. But you know, I I tend to think that uh the the doing I call it the 80-20 trap, right? The typical Pareto curve is oh, you do you you take care of 80-20% of your customers that that contribute to a significant part of your revenue and life is good. We can we can manage our return. And I think that may have been okay in a world when the market was massively expanding.

SPEAKER_01: 22:46

Yeah, right?

SPEAKER_00: 22:47

SaaS has been in an expansion phase for the last 15 years all the way through 2022. And when it's expanding, expansion and new logos can hide a lot of the churn problem. Right? And so this idea that somehow you can just serve your 80-20, you know, your 20% of your customers and get away with it, I think is going to be challenged in this new world.

SPEAKER_02: 23:14

Yeah.

SPEAKER_00: 23:15

And the things that have changed, there are two things that have changed. Number one, this whole industry, our whole like SaaS selling SaaS applications hit a wall in 2022 when ZERP ended, right? Zero interest rate period, which we all benefited from, like the low mortgages that we all refinanced, the you know, uh uh uh uh unbelievable growth that we all had in ARR, you saw the hockey stick AR growth that SaaS companies had during the COVID days. A lot of it was fueled by ZERP, zero interest rate. And when zero and when inflation hit and zero interest rate period ended, it sort of meant like that whole machine hit a wall. And when you hit a wall, then a lot of your churn problems start to become very apparent. So that's one thing that happened. The second thing that happened is that with the introduction of agentic AI, especially agentic coding, what we may call bycoding or agentic coding using cursor or windsurf if you're a developer or using something like Lovable or Bolt if you're a non-developer, anybody can now build software. Right. Right? That means the or it could even be your internal IT team that could build software. Sure. So the moat that we all thought we had, you know, as software entrepreneurs, software product people, and and and uh you know, uh VC backed companies that were building SaaS applications, we don't have that moat anymore. Because the bar has been lowered so much.

SPEAKER_01: 24:48

Somebody recently gave me the perfect analogy for this. They were talking about this exact thing, how you know the all of these agentic systems that are now allowing you to kind of code quote unquote code or create apps or things like that. Uh you know, if you've ever watched those videos of surfers at the beach who there's some kind of tributary that's blocked by sand on the beach, and they dig like a tiny little canal that then starts the water flowing, and slowly over the next you know, the the the coming minutes and hours, that trickle becomes larger and larger as the water erodes the sand out into the thing. I kind of feel like that's that's that's a similar thing that we're experiencing, I think now when you bring up this mo this this moat that's slowly being eroded, because I feel like we're in this place where in the not so distant future, I mean today, look, if you if if you throw lovable at somebody, they'll be able to make something really cool. But it's still kind of like a toy, it's still kind of hokey, it's still not highly complex or highly integrated into something unless you are a software engineer and understand back-end systems and databases in relation to blah blah blah blah blah. But but I don't think that world is too far off, right? Um, so I and I think that's just fascinating to you know bear witness to. So I I I didn't want to interrupt your flow, but I I thought that was really just an amazing time.

SPEAKER_00: 26:21

I love that analogy, and I completely agree with you that is a fascinating time because I'm look, I'm I uh I'm a product person. I grew up in product development most of my career. And it's uh it's I've never seen anything like this, right? Where it's you know, we used to we used to say, I'm sure you've heard this term, right? Like Google would only hire the 10x engineer, right? Yeah, everybody else got the regular engineer. Somehow Google was able to hire the 10x engineer. Well, guess what? If you start using, you know, cursor or wins, uh, windsurf or codex or CLI, you know, like uh anthropic, you know, Sonnet 4.5, whatever your favorite model, your whatever your favorite tool, yeah. Now suddenly every engineer can be a 10x engineer.

SPEAKER_01: 27:12

Right.

SPEAKER_00: 27:13

Right? So it's not just you know people vibe coding on Lovable and Bolt. Think about the company, the Y Combinator startup, right? That can build what your product does in probably a tenth of the time that you that you were able, that all the time and money you had to spend. One part of it is like our customers re-evaluating the build versus buy back?

SPEAKER_01: 27:37

Yeah, right.

SPEAKER_00: 27:38

That's one part. The other part is on the competitive side, you're gonna have agentic competitors that come out of the woodwork and they're able to build so much of your features because they're every one of their engineers can now code with AI as their co-pilot, and now they're able to develop features at a pace that your legacy code can never move. Right? It's not that your engineers can't move. Like people think that, oh, you know, the YC people, they're AI native engineers, so they can build much faster. Guess what? We have a great engineering team. They're all using all the tools the YC people are using. Okay. But here's the advantage the YC people have. We have a code base that's you know, a decade old. Sure. Parts of it are new, but parts of it are 10 years old.

SPEAKER_01: 28:25

Yeah, yeah.

SPEAKER_00: 28:26

Those people, those engineers have nothing. They're starting from scratch. So therefore, it's much faster for agentic coding to build new features than try to do agentic coding on an existing customer, customer, excuse me, existing code base that you now have to enhance. It's much harder to do. So, therefore, we have it, we have, we, even though we have engineer who are engineers who are amazing and we have the will and the and the desire to use agentic coding to make us go faster, yeah. I think the legacy vendors or the incumbents, I shouldn't say legacy, the incumbent vendors have a disadvantage because your success, which is you have an existing code base that's been around for a few years, actually slows you down because agentic coding doesn't work that well when it comes to uh existing code bases.

SPEAKER_01: 29:16

Yeah, yeah.

SPEAKER_00: 29:17

Yeah, so so I think this this idea of retention as a service comes from that background, just so you know.

SPEAKER_01: 29:22

Yeah.

SPEAKER_00: 29:22

So software as a service was great. We have now in an in a new environment where retention is existential, where every dollar matters. And if every dollar matters, every customer matters. And if every customer matters, then this 80-20 trap of like, oh, let's just take care of 80% of our customers, throw great humans at that, at that group, at that cohort of customers, forget the rest, ignore the rest, we'll send them some mass emails and they'll be fine. We'll throw them in the in the digital bucket and they'll be fine.

SPEAKER_01: 29:52

Right.

SPEAKER_00: 29:52

That's not gonna work anymore.

SPEAKER_01: 29:54

No.

SPEAKER_00: 29:54

Like you have to treat every customer like your best customer. Your digital experience, which I know you're very passionate about, has to be as good, as close to being as good as your human experience. That I think is challenging. To me, that's what I that's what we call retention as a service.

SPEAKER_01: 30:10

I love this. Okay. So and I think there's an extra layer to this too, right? Because um, look, 10, 20 years ago, if you were focused solely on your top 20% of your customer base because they were highest and highest revenue customers, and you kind of ignored the others, that was a perfectly reasonable way of operating and made sense to everybody because there wasn't this kind of proliferation of voices and opinions uh in things like social media and LinkedIn and even things like um I don't know, I feel like I feel like just business worlds through through digital communities and groups and things like that have gotten so much tighter that if you as a company have a strategy of ostracizing. Your bottom 80% of your customer base, that stuff's gonna get around. You know, it's it's it's going to be a thing. And so, in a way, that retention strategy of covering your entire customer base you know, isn't solely a retention strategy, too. It's also you, I mean, you could kind of tie that into a marketing strategy as well, because you know, yeah, our our communities are so tight-knit these days. Everybody talks with each other, everybody's in the same, you know, especially in my world, which is vertical SaaS, where we you know, we serve one industry and everybody in that industry talks to each other on a regular basis. Um word gets around, you know, and so it I think that's become hypercritical these days, too.

SPEAKER_00: 31:53

Yeah, yeah. You know, it's funny, uh, you said um uh it's a it's a marketing strategy. I'd go one step further and say it's a growth strategy.

SPEAKER_01: 32:03

Sure, yeah.

SPEAKER_00: 32:04

Because you know, your SMB customers of today might be your enterprise customers of tomorrow.

SPEAKER_01: 32:13

Completely agree.

SPEAKER_00: 32:14

There, you know, we've had we have some customers, um large ones that that I I I won't name their names, but their long tail, we asked them about the long tail, and then they were like, look, our long tail is only 15% of our of our revenue. Okay, this is a company that has a very large enterprise business. So 15-20% is their is their long tail revenue. But you know what they said? They said, look, the reason it's important is not just because of that 15-20%, which is still a reasonable, uh, that's a nice big chunk. And that that churns a lot, by the way, right? The the the the long tail typically churns a lot. So you do the math, you go, oh, you know, it's only 20% of my revenue, but if it's churning at 60%, okay, do the math. That's a lot of your revenue walking out the door.

SPEAKER_01: 33:05

Totally.

SPEAKER_00: 33:05

That's impacting a GR, GRR. Because even though the total revenue available to revenue might be smaller, if 60% is churning, or 40%, sorry, 40% is churning, then you have a problem.

SPEAKER_02: 33:18

Right?

SPEAKER_00: 33:19

So it's it's it's going it's going to show up in your numbers. So I think that's the math we forget is that yes, the revenue is small, but the churn is very high. But what's even more beautiful is this customer, they told us they were like, look, these companies, we we have seen that if we can make them successful and we can we can get them to adopt the product and grow the product, our growth comes from them because they grow at a very fast pace. Because you have new products that you want to sell to them, they're actually perfect expansion candidates. So I think this idea that these smaller customers are somehow not important is such a mistaken notion. I will just say one thing, which is you said, you know, ostracizing those long-tail customers is a bad idea. I don't think any leader in customer success sets out a goal of saying, let's ostracize those people, right? They don't do that. I know that's not what you meant. I just want to pick up on that word for a little bit. We all have great intentions. We do. We want to treat those customers really well. Nobody wants to treat your, no matter how small they are, you want to treat them well. So we in in our hearts we know it's the right thing to do. But the economics never made sense. Right. Right? And you could never hire enough humans to go after that base.

SPEAKER_01: 34:32

And you can't make a day 26 hours long to, you know, you cannot do that.

SPEAKER_00: 34:38

You cannot do that. Maybe nowadays, you know, everybody's talking about 996. I'm like, right. We're we're all workaholics, we all work work way more than that anyway. But like this this 996 seems to be the new thing in in Silicon Valley these days, as I'm sure you've seen. But oh, I don't know if you've heard. I haven't actually.

SPEAKER_01: 34:55

That's a new term.

SPEAKER_00: 34:57

Look up 996. Yes, 996 is this, it's a meme in Silicon Valley where you work from 9 a.m. to 9 p.m. six days a week. Oh. That's like the new standard. If you're working for one of these AI companies, that's the new expectation, right? So I know a lot of our, you know, people in our community work equally as hard, if not more, but there's only so many hours in a day, and there's only so many customers you can reach. So you can never hire enough humans to serve the long tail in the way they deserve to be served. But you know what you can do now, which you couldn't do two years ago, actually, you couldn't even do six months ago, maybe, is you can hire agents to go after that long tail.

SPEAKER_02: 35:42

Yeah.

SPEAKER_00: 35:42

And to us, that is the idea where you can have agents and humans working together to cover your entire customer base and treating every single customer like your best customer.

SPEAKER_01: 35:55

Coexisting.

SPEAKER_00: 35:56

You couldn't do it, you couldn't do it without agents, but you can now with agents.

SPEAKER_01: 36:01

And you know, I don't I don't it's not enough to just throw an agent at things, right? Because um if you uh you know build an AI agent that does XYZ, that's all that's all well and good. And that's gonna handle a lot of you know different use cases, and it's gonna handle certain scenarios that come up. But at the end of the day, that orchestration between agent and human, I think, is really where the power is because you know you want to make your humans as effective and as powerful as possible. And the and one of the ways to do that is you're gonna have the agent take off the mundane, repeatable things and the low value activity, throw that, you know, throw the agent at those kinds of things, but then have the agent engage the human, you know, when it when it gets into a different territory of value or retention or you know, whatever it may be. So I think the system of uh all of all that is fascinating. 100%.

SPEAKER_00: 37:01

I mean, I tend to think of agents in sort of in two flavors, and it's this is a little bit inspired by a talk that Andre Carpathy gave at uh a white combinator event. Do you know who Andre Carpathy is?

SPEAKER_01: 37:15

Uh-huh. Yeah.

SPEAKER_00: 37:16

So he did this uh awesome talk in September, I think, late September, where he talks about the the decade of agents. Now, people say like 2025 is the year of agents. Right. And to me, that harkens back to like back when I was here, when I first moved to Silicon Valley in 97, people thought dot-com was going to change the world in a year.

SPEAKER_02: 37:41

Right.

SPEAKER_00: 37:41

It took 20. Okay. It did change the world. The internet did change the world. It just took 20 years, not two, right? So he he was making the argument beautifully that don't get sucked into the hype, that the this idea that agents are agents are um uh uh it's not about the year of agents, it's about the decade of agents. Yeah, and one thing that he did really well beautifully in that is he talked about two kinds of agents augmentation and autonomy, two properties of agents, right? But the augmentation agents are those that are agents that are helping you helping you do things better. You've got humans, human CSMs doing work, serving their customers every day. How can you help them do do things better? Right? Autonomous agents that drive with autonomy, without human supervision, maybe there's human supervision, but but it's not humans actually doing the work. Humans maybe are supervising the agents, but the agents are actually doing the work. Give you an example. What's such an example? Well, one we're working on is called a renewal agent. So if you're a renewal cut, if your if your renewal is coming up and you're a long tail customer, you know, we're not gonna have it's not economical for you to hire uh a CSM or a renewal manager to call somebody that's paying you$2,000 a year, right? Right. But what if an agent could call them? What you what if an agent could email them and get them, you know, 90 120 days, 90 days, 60 days before, have that cadence. The agent does its own cadence, it writes its own emails, it makes phone calls to the customer. That's what we've built. And if you could do that, then you are able to get that customer renewed in a way that you just couldn't have done before. And so to me, that that is an autonomous agent. You need humans to supervise those agents, but they work autonomously. So I think this augmentation versus autonomy is a really interesting way to frame what how does agentic help in the customer experience.

SPEAKER_01: 39:46

I think that's uh that's incredibly smart, and I I totally agree. Because um You know, and and you know, there are some there are a lot of business processes where an autonomous agent probably isn't the right solution. And I feel like there's a lot of people just rushing to build stuff and and rushing to kind of get in the game because they feel like they're gonna be left behind. And I'm here to tell you that if you are if you are in that category of feeling stressed out about not having built an agent and installed an agent to do something, it's still early days. You're not behind the eight ball. The fact that you're like listening to podcasts like this and reading up on agents actually means you're probably ahead of the game a little bit. And and truth of the matter is that we're still early days on on all of this agentics stuff because I mean, you know, the use cases are endless and and um and you know the the the ways of doing it aren't really fully baked, in my opinion.

SPEAKER_00: 40:47

Yeah, I I really encourage you uh your your listeners to watch that video. Uh Andre Carpathy's gonna be a good idea.

SPEAKER_01: 40:54

I'll link to it in the show notes.

SPEAKER_00: 40:56

Yeah, I'll send you the you can see you can link to it. It's it's a pretty it's only 30 minutes, but he breaks it down so so nicely, very simply, uh using he uses the Iron Man analogy. So Tony Stark, Tony Stark wearing the suit is augmentation. The suit is augmenting him. But you know, in one of the later movies, the suits, the suits started flying on their own. They had an army of suits, the robots. That's autonomy. They're flying and doing things by themselves, and Jarvis is controlling them. So if you think about these two pads of agents, they're both equally valid, they're both equally useful. One set of agents helps your humans, one set of agents does the work without the human involved. Right. For the customers that you cannot put humans at uh onto because it's uneconomical.

SPEAKER_02: 41:46

Yeah.

SPEAKER_00: 41:46

It's you know, what's what I found is that in terms of adoption, augmentation agents are actually easier to uh get going with. And we have some of those. So for example, staircase, you know, it's a company we bought last year and has seen 7x grow ARR growth in one year. Uh it's just come uh like unbelievable growth. And that's an augmentation agent, right? Yeah, it basically allows a CS leader to get a sense of what's happening in the customer base, where the risks are at, where the expansion opportunities are at, and arms the CSMs and their and their leadership to think about their customer base in a completely new way. And that's supremely useful. You know, it doesn't work autonomously. I mean, it works for the the user. The user has to consume that and take some action. But but it's it's unbelievably useful. And I think those kinds of agents, I think there are more of those available, including from us, and there are other companies that provide it. And you can even build some of your own. You know, I mean anybody who's ever built a custom GPT for themselves is has is using autonomous agents, exactly right, especially if it's a long-running process where you can you can pull some of these things together. I know people who are using Zapier and integrating to their systems, like get some gong recording calls, get some data from Gainsite and Salesforce, throw it into Notebook LLM, and then push it out to this, and then stick it here. Like people are building this stuff that's happening. You know, we have our CSMs, some of them who are exploring and building their own agents to make their jobs easier.

SPEAKER_01: 43:25

I love that. I love that. And I I I so encourage um frontline CSMs to not wait for their operations team to launch a new tool. Like get in there and and and do stuff, you know, and do things that your your team members will benefit from. Because you're right, uh, you know, a lot of people ask me uh a very common question that I get is okay, I'm using ChatGPT now. I'm like, awesome, that's great. Um, in fact, I I did uh uh kind of back-to-back years of uh of the of one of the major conferences or whatnot. And um the first year I asked the question how many people in the room were using Chat GPT on a daily basis, maybe 30% raised their hands. And then a year later, which was last year, I asked the exact same question. Probably 90% of the room raised their hand. I was like, awesome, okay. But the question I always get is like, what's level two? Like, where what is where do I take this thing to the next level? My answer invariably is automations, you know, whether it's Zapier or Make.com or uh well, I mean uh OpenAI now has an agent builder as well. You know, there's all these tools where you can essentially connect your connect systems together to have these, you know, to have these custom GPTs or these agents do things for you. And okay, let's be real about this for a second. A lot of people live in a data environment that does not allow them within the the confines of their enterprise to go build stuff like that. Okay, I totally get that. But I also I'm and I'm curious to get your take on this a little bit, and this is totally off topic. We didn't prepare for this at all, but like I see the value of enterprise automations you know just exploding in the next few years if they aren't already, um, and and having bespoke people in you know RevOps Teams or IT or wherever that may be, heck chief automation officers. I mean, that I think that's a thing, right? Surely it's a thing.

SPEAKER_00: 45:40

Oh, I agree. Uh you should talk to um you should talk to Wade, Wade Foster, who's a CEO of uh Zapier. Yeah. Um I spoke to him a couple of weeks ago, and it's incredible what he has done. Of course, they they they offer Zapier to their customers, but they're also the best users of Zapier internally. Yeah and he has automated everything in his own life. Like, for example, his his EA, his executive assistant, uses Zapier and LLMs because from Zapier, their tool, their their framework, you can call LLMs to do all the summarization tasks and other sort of probabilistic tasks. So she built an entire set of operations to make what they call exec ops. You know, think about sales ops and rev ops and marketing ops. And yeah, and he he's like, well, she created exec ops all using Zapier. I was like, I was so inspired by that. And so we're now you know, we're talking to their team about how we can we can learn from that and how we can enable our employees within the company, regardless of which department you're in, customer success, support, legal, finance, accounting. There every department should be thinking about automation. I actually I love your idea of like chief automation officer, because at the end of the day, you can say chief AI officer, but like what does that actually mean? Like AI is not a value. No. Automation, however, is a value. So I love this idea of like a chief AI officer. Um and and and sort of start to think about how do you how do you use you know these tools like Zapier, and uh, there's so many of them now uh that I I think are they've become supercharged because of LLMs. Zapier has been around for a long time, right? I've I've known Zapier and used that Zapier before, but Zapier plus you know LLMs, it's magical.

SPEAKER_01: 47:42

Yeah. And you know, even in your own personal life, I'll give you a fun one. I have I have an NFC tag in my car and I built an like an Apple automation that basically when I scan the NFC tag, it sends a text to my wife that says that I'm headed home. Yeah.

SPEAKER_00: 47:57

Awesome.

SPEAKER_01: 47:58

It's like sure. Why not why not do that kind of stuff, you know? So but I but I think it's that kind of I think we're only limited by our creativity on some of this stuff, you know. And yeah, I think that extends from leadership level all the way down to individual contributor.

SPEAKER_00: 48:14

So I need to I need to build one of those NFT tags for my son. He's he started driving last year. And you know, ever since he started driving, it's been uh, you know, it's it's it's been difficult for my wife and I to keep track of where he's at. That's a good one. I'm sure. Uh maybe, maybe I'll I'll borrow your zap recipe.

SPEAKER_01: 48:33

Totally, totally. Well, look, I hey, I want to be respectful of your time, and we've had an amazing conversation. We didn't talk about half the stuff that we were going to talk about, but we talked about some amazing things. So I think we'll we might do um, you know, maybe a part two at some point. But I do I would love to kind of close out with like quick, quick, quick questions. One is just around your content diet and what you're paying attention to, whether it's Substacks or blogs or podcasts, and what do you what do you um what are you digesting on a regular basis?

SPEAKER_00: 49:06

Well, a lot of it is uh I I a lot of it starts with LinkedIn these days for me, and and I follow a couple of uh very uh people that have very, very, very uh useful things they post. There's a lot of you know not very useful stuff. There's a lot of AI slop in LinkedIn, so you have to be careful.

SPEAKER_01: 49:30

Correct.

SPEAKER_00: 49:31

But I've kind of I think I'm I'm slowly training my LinkedIn algorithm to give me stuff from people uh that I respect and and Substack. And a lot of them, by the way, just link to their Substack. That's one way to tell, right? Like a you'll see some AI slop that's just there, but some of these people who have really good content, they'll post the summary and then they'll say, here in the link, here's my substack to go read. So a couple of favorite people that I love, uh two people that I love reading, amongst others, but I'll mention two that I think I would recommend to to your listeners. Uh, one is uh Professor Ethan Malik at the University of Pennsylvania. He is amazing. I've met him once before at what at one at one of the events. He's just sort of a leading thinker on what's happening in the world of AI. But he's a business school professor, you see? Interesting. So he's he's a technologist. He's he teaches at Wharton, yeah um, at the uh Wharton Business School at the University of Pennsylvania, but he understands technology very deeply. So he studies and he works by the way. He he you before any before you and I see any new model from OpenAI, he has access to it. He's in that and open AI has given him given him access to like three weeks or four weeks before you and I got it, and he's played around with it, and he's you know, like on the day they're they announce, he posts that this I've been playing around this the last three, four months. This is what it does, what I like, what I don't like. Amazing, amazing guy. He he posts some great content on LinkedIn, has a sub stack. His sub stack is called One Useful Thing. Okay, amazing. Just uh I would highly recommend that. The other one I've started listening to uh uh sorry, reading recently is um uh is a is a partner at one of the VC firms, Bain Capital Ventures. Uh her name is Sanya Oja. Last name is OJHA. And amazing, like less technical, but more on the industry dynamics, pricing, you know, partnerships, sort of strategy, you know, AI strategy and how it's evolving. She's amazing. I don't know if you've you've read any of her posts. I haven't, no, but I wouldn't. She's fantastic, like fantastic analysis, like her takes on what's going on. You know, she had like a very interesting take on this whole um the hundred billion dollar, you know, moving between Oracle and OpenAM and video. You pass$100 million around the table. That's you know, it's amazing. It was really, really, really fun read. I I think she has some fantastic takes, and I always respect uh and like reading her stuff. Another eternal favorite of mine, just going back to like the old SaaS and SAS, what's going on in SaaS and SaaS metrics, is Cloud of Judgment by Jammin Ball, who I'm sure you know from Ultimator. Uh and last but not least, my favorite of all time, if you're interested in technology, uh I love listening to anything Andre Karpathi says. Yes, of course. He just did, by the way, did you just watch the uh Dwarkesh uh podcast? No, I didn't. So do you know the Dwarkesh podcast? So he just did one this past weekend. They and they released it, I think, Friday or Saturday, uh this this this weekend. Um you know, it's two and a half hours. So I it's hard to take the time to listen to all of it. I'm trying to listen to bits and pieces in between meetings or when I'm driving my kids to to do activities. But it's a two-hour pro uh uh do a two and a half hour podcast about the future of AI and agentic, must listen. And um, I think I'm about like a third of the way through, and I can't wait to wait to listen to the uh to the rest of it.

SPEAKER_01: 53:11

Cool. I'm gonna link all of those in the show notes. So if uh everybody wants to follow what you're following, they will be able to. That's great. I appreciate that. Well, look, um I've really enjoyed this conversation. It's been uh super fun hanging out with you and just talking shop. So I definitely appreciate it, and I hope the listeners appreciate it too. Any any parting words for the masses out there?

SPEAKER_00: 53:37

Uh, you know, I look, I think I I think listening and learning uh in this in this day and age is so important for us to stay on uh on on top of what's going on. Like I said, I think I've I've been in this industry for 25 years, building software and technology, and I've never been more excited. And and bringing that learning mindset is so important now, no matter how much experience you have, and you know, you have to take a beginner's mind to everything because everything is changing. And yes, it's not gonna change in a year, but it's gonna change. The world's gonna look very different in five years. I wouldn't even say 10 years, I think in five years it's gonna look very different. So I think the more we listen and learn to podcasts like yours, you know, some of the people that we've talked about, just keep an open mind and keep on learning. That's what it's all about. And and just don't forget that like I think in this, you know, you know, uh at the end of the day, you know, this this practice of customer success that we're in is an eternal practice, right? Like, who doesn't want to like when if not good things happen? You know, uh good things have not happened when you make your customer successful. That's never gonna go away, whether it's AI or agentic or whatever. Yeah. And yeah, at the end of the day, humans buy from humans, like you and I talking to each other, right? So the the human relationship matters, and as long as we stay focused on that and we keep a learning mindset, I think we're gonna we're gonna have an amazing future. So I appreciate you.

SPEAKER_01: 55:08

I really agree. I completely agree. That human-to-human thing is never going away. So it's not going away. Yeah.

SPEAKER_00: 55:14

Well, I appreciate you uh having me on the show.

SPEAKER_01: 55:17

Thank you for joining me for this episode of the Digital CX Podcast. If you like what we're doing, uh consider leaving us a review on your podcast platform of choice. If you're watching on YouTube, leave a comment down below. It really helps us to grow and provide value to a broader audience and get more information about the show and some of the other things that we're doing at digitalcustomersuccess.com. I'm Alex Drogovic. Thanks so much for listening, and we'll talk to you next week.