SSP Webinar 5.27.20 2p
5:07PM Jun 3, 2020
This is Patrick Campbell, CEO of profit. Well, I'll tell you about us in just a second. But just to kind of set the stage here, what we're going to be talking about. And then for those folks who who listen, after, what we're doing is basically we want to understand a little bit of commentary and a little bit of kind of, you know, just a little bit editorial, I'm sure, but from some folks who are in the market, about what in the world is going on right now, right? You know, eight, nine weeks ago, you know, we were all kind of hitting the proverbial face, you know, when it came to to COVID, where as a business, we were sitting here wondering, like, is the world ending? That's what some folks were telling us, you know, don't expect revenue for four years, which is kind of scary. And on the other hand, like equally respected people, were telling us Oh, it's no big deal. It's gonna be you know, over in three months, and so, probably gonna end up being somewhere in between there. I mean, I think that's a safe bet as we head into the the third or fourth month here, but I think what's really kind of fascinating is, we now have had a chance to kind of, you know, basically temper ourselves a little bit, look into what's going on and really what we want to do now is give you some insight to guide you, you know, basically through this and into kind of coming out of this much, much stronger company and a much, much stronger operator as well. And so I think the big thing we want to do is we're gonna go through some introductions, we got some data, and then we're gonna, you know, do a ton of q&a, as well as just a good commentary from from these group, this group of folks, who, as you'll see are very, very qualified, very strongly qualified to talk about this stuff. So with that, I'm going to make you hype yourselves up a little bit. And I'm going to be the main height man for you here. But let's go around the horn here and maybe get who you are, what you guys do. And then just to make a little bit fun, a fact that it's not commonly known about you. Let's start with hearing about copper over here.
Hi, everyone. I'm Dennis, I'm the CEO of copper. Copper is a CRM for teams that are focused on relationships. So it's a lot of CRM for Salesforce, we work very closely with the G Suite team to integrate with G Suite seamlessly and a little known fact that's not To me, I think some people are trying to place my accent. And I'm not doing it from the east coast. Patrick, I'm actually further east than that. So I've worked and lived in six different countries and learn to speak really bad English and that's this result of this.
So you can tell us where you're officially from, or is it you're a nomad?
Yeah, I don't identify anymore. But believe it or not, I was born in Italy in a little island called sub Dania.
Oh, that's cool.
I actually didn't know that about you. So that was a fact. That's not commonly known.
Yeah, Dennis, for those. He's being a little modest. I mean, he's had he's had a career so far, in a good way. I mean, exited new voice media a year ago at this point, maybe two years ago. And it's kind of been in the game working for big corporates, as well as you know, into the startup world. And so good to have you, Dennis. And we'll take it in a second. Wes guru. You guys just raised a little bit of money. We did. Yeah. small little bit.
Yeah, it was interesting timing for Ray. Certainly. But yeah, so yeah, my name is Wes, I am Senior Director of growth at guru. We are a knowledge management platform. So if you think about one of the ways I like to describe it is if you remember back in the old days of Microsoft Word, there was that little paperclip who would kind of help you through your day as you're designing a writing something up, we're sort of that that guy grown up. So Guru is really meant to bring the knowledge that you need to do your job to you where wherever and whenever you need it. So whether that's in a browser in Slack, you know, just in workflow is is kind of the main value prop there which certainly in remote times has become more interesting. What people may or may not know about me, I have four dogs, three of them are actually in here in here with me laying on the ground, trying to stay out of the heat. I don't know if that's visible, but they're having a comfortable time and then
and, and for the people who do know that I woke up at 3:30am today, so if I have to save a lot of choice
or out of
Yeah. Out of one of the dogs choices. Oh,
well, that happens. That'll happen. Now let's get to know a lot. Let's hear about mixed max.
Yeah, good to meet y'all. So I'm a co op CEO and co founder of next max. And we're a sales automation platform specifically designed for ease and CSM. And something that might not be known about me is I'm a big hackathon fan and organize a hackathon called Art hack day, where the goal is not to produce a company but where the goal is to produce a digital art. So we get together in an art space and live in it for 48 hours and produce an exhibit that's up for one night.
Yeah. It's a fun that's awesome, fun pastime.
That's really cool. Yeah, it was I don't I'm not gonna be able to top any of these fun facts. I feel. My life isn't as interesting. But I'm Patrick Campbell, co founder of profit well, Well, we're in the business of subscription revenue automation. So we plug into your billing system, stripe or Braintree, charge five, charge me whenever you're using, and then basically give you a number of tools to kind of help, you know, with with, with revenue, essentially. And my fun fact that it's not commonly known.
I grew up on a farm milking cows, which is kind of the most Wisconsin fact that you could think of. But yeah, so I not quite 330 Wake Up Calls, but 5am Wake Up Calls to go, you know, milk cows, basically, that was, that was the first like 10 years of my life, which was not looking back, I would not want to do that again. But it was it was definitely good for for a young kid. But with that, let's jump in. I don't know how to segue from cows and arts to data, but we're gonna try here. Let's jump in and talk a little bit about some data. And so as we kind of talked about, you know, eight weeks ago, we kind of got thrown for a loop and one thing that we noticed At profit well is, we were kind of in a position to kind of help subscription companies, but also selfishly like help us, you know, kind of get some data that we can use to basically plan and kind of move forward. And so we came up with this thing called the profitable index. And I'll explain it, what it is in just a second. But where this data kind of comes from, that you're about to see, so one of our core products is thing called profile metrics, which basically you plug in that billing system and we give you access to all of your foundational financial metrics for free so MRR churn cohorts, all that kind of fun stuff. And we enrich it with clear button for contact for free. So you can see a bunch of cool stuff around segmentation. But right now, it's kind of kind of cool about it is one because it's free, and two, because we think it's, you know, pretty good. We have about 20% of the entire subscription ecosystem using that product. And so there's a lot of data that we were able to kind of sit in and look at in aggregate. And what we ended up doing is we took all that data and we put it together, threw out a bunch of outliers, you know, did some function filling analysis of Really cool stuff to basically kind of look at what's going on in the b2b market, what's going on in the DTC market, and so on and so forth. And so we were left with about 15,000 companies that make up the data that you're about to see. And we broke it down, not only in an overall growth standpoint, so almost like a stock index, like, hey, this batch of companies, you know, they're growing in this direction or that direction, you know, how does it change and because we can't show you the actual, you know, 10s of billions of dollars that are in this, you know, it's like a stock index, it has, like, you know, an individual number. And then we broke down like the daily new revenue and the daily lost revenue for these different verticals, just to get some get some play into, like, should we be freaking out? Should be freaking out more, should we be freaking out less? What does that look like in our business? And so the first thing that I'm going to show you is this, like overall stock index, and what we found is that, which is kind of the most obvious point I made is that definitely, you know, subscription companies got hit. So this includes b2b DTC, anything that's a subscription is basically in here. And you'll notice is that basically when COVID started, there was a lot have like contraction within the market. And we'll see in a second, this came from a lot of churn. But it's one of those things where over time, we've actually recovered. And now we're kind of ahead of where we were, you know, pre COVID, which is a really, really promising sign. And this is just a zoomed in view of that same data since the first of this year, versus the first of 2019. Now, before any b2b folks, I know those are mainly the folks who are on here today, you know, freak out or anything like that most of this was driven by direct to consumer businesses. So basically anything having to do with going outside, anything having to do with, you know, basically, not helping you transition to being in home, most of the time, basically, those businesses got hit. And you'll notice this is just the DDC folks. This is where there was the most dramatic curve, and it looks mostly like that overall curve as well. Now, it's kind of interesting about this is that there's a really high variance within this dataset specifically, because there are plenty of e commerce companies that just were doing amazingly well. media companies doing amazingly well, especially when we transitioned to getting everything from our meals to toilet paper, you know, deliver to us, which was really kind of interesting or going and maybe canceling our Equinox membership. If we're kind of in in, you know, the luxury gym space and going to that $50 a month app that we might be using, which is super interesting as well. Now on the b2b side, is basically flat. So what you'll notice here is, you know, classic b2b, everything's up into the right and amazing, then all of a sudden, COVID hit, and we were protected by a lot of our annual contracts, and everything was kind of flat, and then all of a sudden, we've kind of gone back up, we're marching, you know, we're marching up into the right, like b2b always is, and this is a little bit of a zoomed in view here. And so, what I kind of take away from this is, you know, obviously, there are folks who were really really hit. You know, there's b2b companies that serve gyms or restaurants that obviously were hit. And there's b2b companies that are obviously crushing it like the slacks are the zooms of the world, but for the rest of us who are kind of not in those obvious markets, You know, it's always really interesting to kind of dig deep into what those folks were doing to be successful or not. And we'll talk about that in a little bit in the q&a here. But before we get to that, one other view that I want to show you here is digging a little bit deeper on new revenue and turn revenue. Because what was really kind of fascinating is that new revenue and b2b actually was accelerating throughout this period, which is kind of fascinating. I'd love like, especially Dennis and Olaf, like your products are used by a lot of sales folks, like, I'd love to know, like, Did you see this? Why do you think this is because I don't have as much data on that as Hey, it did happen. But to give you this sense, a little bit more confusing. This top line here is basically the daily new revenue. So essentially, new revenue and upgrades like new customers. And you'll notice in b2b, we have these little humps, you know, because a lot of contracts will start on the first day of the month, or they'll end on the the last or the first day of the month. And basically on the right hand side here, new didn't go down. And this isn't just the slacks or the zooms of the world. Those would be outliers would be thrown out of this data. You know, this is You know, the middle of the pack there. And then obviously in the bottom here, this is where there's a ton of churn, where basically people were like, Oh, I got to reconsider every purchase I'm making, and then, you know, kind of contract as much as possible on the expensive side. But this Bade net look not so good. So this is basically the aggregation of that previous data. And essentially, what you're seeing is, is the net daily growth was going down within this segment. And then now we're kind of back up into the right, which is, you know, a good sign. So I think a really big thing to kind of think about is, you know, it's kind of wild, just how, you know, this data has has is kind of shaken out. Because, you know, like, most of us, we, as founders, we're always optimistic, you know, not all like, and then as operators, we're always pessimistic, right? Because we're like, oh, my gosh, the world's gonna end therefore, we need to contract. And so I don't know, let me let me kind of pause here. Like, you know, what do you guys think of this? You know, what, what are you seeing anecdotally, you don't have to speak necessarily to the data you're seeing here, but kind of what's your take, if we you know, let me Shut up for a second here and see what you guys are
I'm super curious to hear from Wes and Dennis if they're seeing any difference between self serve and direct sales businesses. And you think about that, Patrick, because on our end, what really resonates in this data for me is on the self serve side, we've seen an acceleration in new, whereas on the direct sales side, the picture just feels completely different. Where it's, you know, the biggest accounts were talking to are like, trying to figure out what shelter in place means work from home means what's important for them in this new world. And we're like deals just take way longer than before. So it's really like, yeah, it's like A Tale of Two Worlds.
Yeah, what do you guys see? Because both of you, I believe, will actually I think everyone on this call has a bit of a self serve model as well as a direct sales model. Like West Dennis, what are you guys seeing?
It's just for us. Oh, sorry. Good. Go ahead with the classic zoom. Right, we go. Yeah, for us. It's a similar story. We've seen an acceleration on the self service side so people getting in but, but certainly meetings, demos, things like that have slowed down a bit, I think. You know, there's, there's always been, at least in the last several years, kind of an influx of like, too many messages too many people reaching out a, hey, when's a good time to put time in the counter? And, and I think this has been kind of the breaking point where people feel like, Oh, I can just say no, every single time now because I have a real reason. And, and so I feel like there's you know, we've certainly internally made some changes in how we approach people what we're asking for, or we're driving people towards, and it's because you know, the responses have changed.
We've seen a slightly different picture, but some of it there's also orchestrated so what we, we both have monthly plans and your plants surf surf and obviously, assist that sales. But the first thing we did is we cut our paid backups, we wanted to see what would happen with the cost anyway. Then what we noticed is that the trials didn't, didn't decline, which was interesting insight for me. And so you had a market appeal.
We have a new head of what?
That was a very interesting observation, then what we saw is different buying behaviors for we actively changed our call to actions to actually drive more assisted sales. So more demos call to actions over self self serve trials, and we did that deliberately. And that's been a good call. So we could basically qualify a customer's better pretty understand what they use cases for and help them out. Our you know, our value proposition is to help them out and have a CRM that users actually use. And so we wanted to do that. So there's a few strange things in there. What we did see is different my motivations and see similar pattern to all of although slightly different in the sense that we see some organizations actually using the Probably the forced working from home as a necessity to to get organized and then gravitate to a CRM of sort is something out there that can help us get organized towards that kind of cut out, we need customer data and so forth. And that's actually accelerating buying decisions. And in other cases where we've seen larger deals where multiple stakeholders have to make a decision, those definitely have taken longer, mostly in March, middle of April. And then from middle of April onward, actually, we saw an acceleration and trend and actually want to look at may now. We, we actually have Converse going up. So very, I can't really call because we've got sort of wide and dispersed base. It's difficult to segment these audiences out. But we deliberately put more friction on the self serve. And
one thing that we're seeing that's kind of interesting and we didn't have the data here, but
the at least in the short term, And it's not for every every product. low low price products like lower ARPU, lower ACV and high price products, there wasn't really a difference in the trend in this overall data when we split this out. And in addition to that, we did see at least anecdotally, like our sales cycle, and some of our products did get a little bit more extended because more procurement steps were coming into play. But only with the deals that we were working on before COVID hit the ones that started after were kind of normal, which is really interesting. And then the other tidbit that's a lot more quantitative and I don't know if you guys have checked this on your products yet, but people you know, in the classic, you know, good better best pricing page, which is not great pricing, but you know, we can get deeper into that another day, probably where most people choose better. Now we're seeing a lot more people choose good. So the low end, they're starting with the low end plan as, hey, I still want to use this I still need the value from this but I'm gonna start a little bit lower and then I you know, maybe I'll expand depending on what ends up happening and so on. I think we definitely people are kind of like a cos like, I gotta rethink these a little bit. And I think that behavior like, I don't know what what your thoughts are, you know, Dennis on this because, you know, I know you've you know, obviously been through 2008 you know, in the tech world a little bit, not to age you a little bit, but you are a seasoned vet here, I think, you know, when when you look through that, like, how long did it take for people to kind of go Okay, cool. I'm okay, buying software. Like, was it you know, was it two years of Oh, my god costs or was it more? Oh, yeah, they snap back like relatively quickly.
It takes a very long time. And actually, this is also the reason why the reason what you just highlighted, which is basically how people make a decision on the pricing is one of the one of the drivers for us to put more friction on the buying process. So in a situation like this, you'll see that people instinctively make the right decision, which is hey, we need to get organized. All the teams are remote. Let's let's get this x tool. But then they go and try and shop with a cheaper First of all, most of the cheap plants don't help them with the implementation, so they're less likely to be successful. And so it's a really a good opportunity to have the conversation and whether with a with a good product expert or sales reps, the so that's as far as that you see the people are making a decision based on pricing. Absolutely. The killer with these sort of things is it depends on your outlook. But I do think that 2008 and the current situation in that regard, not too dissimilar, and that is the economic conditions under which we entered the pandemic in, we're already showing signs of stress, we are absolutely at the end of a cycle. There's a lot of debt that needs to be deflated. And that's going to take a long time. The pandemic has made it hard for economic recovery, so stimulus money to actually work to production and consumption. And so what you'll start to see in a few months is that these ripple effects will start to probably be amplified. So actually I am one of those people that believes that this is a longer game and absolutely a recessionary type mindset. And therefore price sensitivity or purchasing because it fixes a real problem, not not necessarily a productivity problem, really a cost saving or revenue creation problem. We'll be here first to stay much longer than many things, it takes a very long time for that mindset to disappear. I mean, it took more than two years actually in 2008. So we are preparing ourselves as a company for that and adjusted our, the way in which we engage with prospects according
Yeah, where's all of what are you going to say if I if I might jump into the question is, is it your sense that that sorry, and now perfect time for a truck to drive by it your sense that that sort of assessment about sort of recessionary feeling across a blanketing across many, many of the companies that you guys are working with, is that that is a that it is sort of a blanket thing or Is it more like? Because I think what we're also seeing is that like the rich are getting richer, not just individuals, but also companies, right? I mean, people are talking about the disconnect between the stock market and, quote, unquote, the
political Now jump into politics, I feel
just the economic part of it. But but it is, you know, and a lot of that is because so much of, you know, the market cap of like the s&p 500 is in five companies. And so in some cases, we're seeing like the richest companies, I'll use that as a broad term, but the richest sort of the most stable companies can actually act more decisively. And so there's almost a segment, as dennis is referring to, like people who are, hey, they kind of maybe took a pause, but they know that like in this new scenario, they need to be more decisive they need to make, they need to get that stuff in order, organize things, so that they're, their teams are still just as effective, if not more effective in a remote setting. So I'm just wondering if you look at it also that way, a company by company whereas like there's a certain cohort of companies were actually there, their buying processes might accelerate or they might be spending more because They're looking at this opportunistically because you know, they've a war chest or something. Yeah, definitely feels like an accelerant for certain businesses, right? Or just like heightens heightened some inequalities that were there from the from the get go even in b2b. So, yeah, I
think it's kind of so it's kind of, I feel like we could go for hours on that. And maybe we return to it. I'm just kind of curious. I think there's, I think everyone here maybe has a free plan, or at least a free trial. I might be wrong in that. But what's your take on you know, freemium, right, like, is this a chance to, like, try it out? If you're not trying freemium right now to kind of fill that pool of leads? Like, what's what's been kind of the take there? Because I know that, you know, dentists, if you're having the recessionary mindset, it's like, cool, top line revenue, maybe there isn't as much of an expectation there. Although, you know, I'm sure your investors may disagree, you know, but it's one of those things that like, are you guys doing free like things or are you guys doing things that you normally wouldn't have done today? more users that maybe you wouldn't have done a year ago, as I was saying,
Yeah, it's I mean, I'd love to get Wes. And all of this takes on this as well, because this is one of those, I guess, difficult points, right? You have to take a view. It's our perspective, we've considered a lot. What have you seen it? I think if the moment what i've landed with this is if the momentum is with you, I think you should use it freely, you should use it as a freemium with the ideology, it has to have a purpose, you need to be able to monetize it needs to work as an accelerant. Otherwise, it just becomes this user acquisition vanity metric. And people are starting to get tangled up in daily active use and whether or not it's collected to revenue. It's very confusing. For us. one's very important. It's actually a whole value proposition is adoption of the CRM, we built our CRM for the user. So that's the that's the basically our USP. So we want to be very Careful with the idea of and mass acquiring users that might not have the discipline of be the right users. So we actually benefit from more friction at the start, it's a bit like
a to do
app, you know, mostly look at each other's phone, maybe we could show them off how many of you do apps that we download over the course of time? And do they help you to be more organized so that you have adopt some sort of system, some of us that then finally got to getting things done that stuck with us, and that made us more productive. It's not so much the app, it's the kind of the productivity mindset that we have applied. There is a little bit of that in CRM and what we do so for us specifically, we decided not to do it, and we decided to just keep the trial open, allow people to offer more advice and experience during the trial or steer people walked into a demo and to not go for a freemium model because we felt that it wouldn't drive the right type of growth for us.
It's fascinating. It's just so fast. Adding to that you're introducing more friction in the self serve funnel for you. It's just it goes against everything I learned Dennis, he's a
man without a country, he's
got nothing to lose.
Listen, I it's funny. This is a great topic, I think for one bill, but it's got something to do with the belief in your ideal customer profile. And to basically double down on that and say what? So looking at your company as on the lifetime spectrum away from bookings, and orientating the whole company say we are successful if actually we extend the lifetime of our customers and therefore I'm going to be obsessively acquire the right type of customers. The more I screen out at the front of the funnel, the cheaper it is. And so but you can't do that without friction. So we even consider to take a remove the monthly plans of our website, but then the profit well team advised us not to. So we did that one and I do agree that that would have been Timing?
Like, yeah, interesting. Are you guys, so kind of maybe take this a little bit deeper? Like we just talked, I just alluded to a little bit like you have a top line expectation all of you have investors like, I'm super curious, like, Are your How are your investors reacting to this? Are they kind of giving you a little bit of a longer? I mean, maybe they never had you on a leash, but, you know, to kind of use a metaphor here, are they giving you a little bit of a longer leash in terms of, you know, hey, don't worry about the 29 2020 plan, you know, do what's best to go after this metric, or that metric? Or are they still kind of like, no, no expectations are still Double, double, triple, triple, you know, that type of thing.
You know, for us, it's really been, I think, a measured response. And so, our investors have a certainly a long term outlook on the business. You know, we call potentially at the beginning of the call, but yeah, we just we just got a round of funding in April. And so it was certainly part of the conversation was like, what things look like in this in this new world, but you know, they've been great to work with in resetting expectations and giving us some of that insight into what things look like in the last in the last recession as well, and what they saw with portfolio companies. And so I think that's given us, you know, a more reasonable expectation, but also, you know, sort of the stability to be able to send us was talking about earlier be in that cohort of companies who were taking decisive action and investing in the long term, because we sort of have the benefit of some of our investors coming to us with, you know, not not a word for word playbook, but a little bit of a guide to hey, here's how you here's how, you know, the companies that that came out of last recession successful did it and you know, try to take some of those ingredients and elements and apply it to our business. Yeah. Yeah, it's interesting. I guess the way I think about it is prep. speaking a little bit for our investors too. It's like, and I think you mentioned West how some people are using COVID as an excuse to do things they They might have done anyway. And so kind of the viewpoint that we take and from our investors is like there are no excuses for not crushing it on some dimension. And so even if you have a segment that's going to be way softer in terms of revenue growth, then how are you compensating for that? How are you growing market share? How are you serving your customers better? And if you have more bandwidth to you know overall in the company what else are you are you taking the opportunity to fix
what can you How can you use this to build like a better stronger product so
yeah, if only there were If only there were free lunches.
Yeah, that's that's free lunch will come with a high interest payment. And so I feel Be very careful with throw your 2020 plan away a similar similar story. I really liked the way of put that as well. I think there's one thing though, I would say I guess there's Been a there's been a lot of discussions around playbooks, and investors and others being helpful wanted to share them, I feel it's very important that you design your own. And so for us, it meant that we, as an executive team came together and decided what we believe the outlook was and whether this was a short term, is it a three month thing is the longer term thing? What should our response be? How do we take care of our employees? And because we wanted to create a new level of stability, because once you make a change like this, you don't want to be a rock in your core because we felt that the news media was very, I guess, hard to follow at times quite confusing. And we want to create a level of stability we felt if we have the nicest way you could have said that. I was trying to be diplomatic, sir. So while we settled with a say, okay, we think it's going to be a longer thing. This not necessarily pandemic but the economic situation. We think it's going to take a long time, especially here in California for folks to be able to return to the workplace and as we headed So let's make decisions in aligned with that philosophy, financial decisions, organizational decisions and so forth and present that plan as our plan to the board and our investors rather than wait awaited, they're pretty awaited early in March. So I think the productivity keeps you to the actual orientation productivity keeps you on the front foot with your investors and your stakeholders. I think that's a very important mechanic that we I guess, sometimes forget, I guess to mention the situations like this. In other words, you know, build your own playbook. Don't wait for for the resources to come to you because that this definitely puts you on the reactive of implementing somebody else's playbook, which in my experience, I don't know how good the HDX has, you can see the scars on my face that's basically from previously failed playbooks. Now, yeah,
it was kind of funny, right? Because I think the biggest thing, a lot of the things all of you have been saying is these are just fundamentals right. These are Just fundamentals is just being disciplined. And, you know, last year, we probably didn't need to be as disciplined, you know, the year before that, you know, maybe a little bit less. So, you know, now it's like snapping back. And I think that's a silver lining of like, wow, like, we have to learn how to be real executives, right. We have to be like, learn how to be real operators, you know, and kind of what we're doing kind of like a curveball question here, or maybe not such a curveball. What's something that you felt at least somewhat confident, if not very confident in at the start of this either, you know, pre COVID or like, right, when COVID started in the first couple weeks, that you've kind of changed your mind on, you know,
throughout these eight weeks?
What a great question.
So stumper I didn't
tell you though. Let me
start first that Well, speaking about it.
I would say I've changed my mind on I was pretty confident that we would generally made a good level of revenue by focusing on our existing customers and see your level of expansion then and we'd be able to drive some of it up or be more proactive with it. And I almost thought that the inverse would be true for sales for new business sales, new bookings. And I was about to basically, I guess, design ourselves that way. And until we saw this evolution of these trials, nothing to respond this responsive to the advertisement spent, and so actually coming in at a steady spate of pay so I definitely had to rethink this completely because I have not seen a scenario where you're and you still have to demand coming in when you kind of have to feel that it's not the right type of demand. The normal normal recessionary scenarios that you actually your new business dries up and you focus on your existing business, most of us would be telling that to our customers as well. So that was a curveball that was actually tricky. It was tricky because now when you look Looking at your op x, you have to think about both of those, I guess revenue generators and still keeping this most active and but very efficient. not straightforward, because we didn't know what was going to happen with tax conversion rates. So that's definitely something I've changed my mind on. I'm happy that we actually did change a month to my children like and hopefully,
Less roll off.
Yeah, I dive into that in a second that I think at the beginning of the recession, it was like oh, no is going to dry up. And now's the time to like double down on existing customers. And there might even be a separate topic here around what we're doing for our existing customers. But if anything, we have a lot of accounts that have downgraded because we have a by seat model, and a lot of companies are hurting and doing layoffs. And so that will affect us in terms of downgrades as well. And on the flip side, we've actually seen an increase in new which is just like kind of confusing, right? And two other thing I'd say is at the onset of this, I was like, holy shit, this is going to be like a year long, like recession, if not longer, it's going to be really dark and bad. And, and now suddenly, you know, the sun's out, it's 85 degrees in San Francisco sip is about to lift people's optimism is coming back at you know, profit wells charts are showing up and to the right. So I'm actually curious, like, are are we coming through it? Or is this Are we just like, suspended midair in the real with like, the second way of this fall? That was kind of gonna be my, my observation or my surprise piece was sort of how quickly it seems like people found that stable footing in the new world. I kind of thought we would see customers, you know, every week for months as this is going on, you know, suffering coming to us say hey, we You know, relief from a need to downgrade or something like that. And, and really, you know, there was certainly some right up front who were they immediately impacted, you know, think travel industry companies like that. But you know, as as we kind of got out of that initial wave there hasn't been like a repeated group it seems like people sort of took a moment took stock and we're very in like, either became very comfortable with the new normal as far as at least their decision making at the, at the base of their business, which I think was surprising to me. And to your point, all of this like,
it as we look at some of these charts, it's like, it almost seems like things are already back to normal people feel, you know, they've adjusted very quickly.
Yeah, I think what's scary is if you think about every, every financial downturn, you know, it's at least a US based one because that's that's kind of what I've studied more so than than others is caused by either a liquidity crisis like in 2008. You know, it just wasn't you know, the everything was seizing up or like a movement of money crisis. Like consumer sentiment, just tanks, you know, and or there's less movement of cash. That's kind of like 87 or 1929. And I think that what gave me hope
was, oh, like,
neither of those things happened here, like the economy was, it wasn't great, but it wasn't bad. You know, it was kind of good. You know, it was doing okay. And everyone is fearful of a recession. What I fear, though, and this was kind of to think was West's your point is, is this, are we seeing it this way? because of some of the inequality out there, right. Like, and maybe from an economic standpoint, that does not matter. I know, from a human standpoint, that absolutely matters. But it's one of those things where are we recovering? Or are the graphs are going back up into the right because we're selling very specifically into a market and what's going to start happening is, as things open up, and these are the indicators I look at is like, as more flights happen, or more travels happening, more Airbnb bookings happening, all of a sudden you're going to see these good indicators and that's going to feed into at least the people we mostly sell to and that's going to make us go up above. And then there might be this, you know, situation where there's this other market. That's just doing terribly. And that's the, you know, 40 million people are unemployed. Right. And
I don't know, I think there's
a, there's a lot of I mean, there's two, there's two big things in there, though I would say, Patrick. One is, do we feel that this we sitting here, we have a good view on the market? Because most of us, you know, to be honest, technology companies are probably actually, if you look at this current situation, are in favor, right in favor of moving to remote. It's like we make software, we're a favor to selling to each other because we make and consume software. But the reality is, that's a very small part of the world's economy and a very small part of our currency of times, right. So even from a time perspective, that's still not the majority, certainly, when we're looking at core programming software is about 20% less in technology systems when you start Yeah, exactly. So that's point number one, which is basically I mean to probably be mindful of our own biases here. And what we see we see a lot of tax software subscription businesses. That's not that's not a big economic driver. Right. And the second point is that the stock market is not the economy. And, and so,
because we definitely
had a liquidity crisis, we had a ton of dollar denominated debt. There was and that's why the dollars were being printed. It wasn't it wasn't in the US, it was outside of the US. And so the issue is that if these dollars are being printed now by the Fed, and actually all the central banks in the world, and those dollars are not going to consumption or production in the vehicle. In other words, people are not spending them to consume goods or produce goods there's, they're spending them to either save or just simply survive to pay the electricity bills and increasingly expanding consumer goods. Then what you have is massive, massive mess if you only have to look at the Fed's balance sheet if you're interested in massive debt. accumulation. But it's not funding that because it's not making the economic cycle work. So now you're storing you're delaying an effect.
Well, but this was this was kind of my point, though, that I was trying to make, which is, you, you have, this isn't like a 2008. Right? 2008 it was felt by mostly everyone on some way, like, not dramatically. And yes, the variance was high, but it's felt by mostly everyone. Right now we have a situation where there's, there's a group of people this is being felt and hurt, like, a lot, right? And then there's a group that's kind of like, yeah, it's okay. Right. I think it was something like those making over 100,000 a year, like 10% were laid off those making less than 100,000. Like 40% of that group was laid off, at least in the US. And so what what my fear is, is and this is kind of what you're alluding to, is it is it a delay, right? Is it a delay where, basically, you know, as Wes was saying, and Olaf was saying, like, there's a calm before the storm and all of a sudden, boom, like, you know, it's gonna get a hit, or is it something where the recovery actually does happen a little bit quicker, because the top half of that hundred thousand, you know, below 100,000 group starts coming back, we start getting these big economic indicators, because the stock market definitely isn't the economy, but it's one of those things that like it is affected by it right? Like, you know, I don't have a lot of cash in the market, but I look at the Dow every day, it'd be like, oh, what's going on? Right? I know, it shouldn't do it, but I still have to write I still feel like, Oh, that's an indicator, right. And so I think that's, that's the thing is like, this is why economists only make predictions in the past and never make them in the future as because, you know, this is such a different situation. And I just worry that the founder and me is optimistic in the sense of, you know, not quite a V, but maybe a small U shaped recovery, right, that has been kind of talked about, you know, the operator and he is like, Where is my prepper you know, like, layer that I'm going to go and lock myself into the fallout shelter, you know, and be nervous, right. So, I don't know, it's interesting. I don't know, this is why we're talking is like, you know, I don't know and I don't I don't know where I put a stake in the ground. I don't know if If any of us would put a stake in the ground, I think the one thing we do know is, you know, the fundamentals, at least of our businesses are important. And you know, pushing those forward is the most important thing. It's just we're going to have to react in the right way. And I guess that's a question. I wanted to bring up a little bit. Like, you know, Dennis, you mentioned planning before, all of our teams equally don't have certainty about the future. Like, how are how are you guys talking to your teams? Or what's going on internally? Like, I'm sure Wes, you guys are documenting all kinds of things. You're seeing people document all kinds of things and just like constant communication, but what have you done to kind of calm teams down a little bit? Or at least like give them you know, the feeling of Yes, there's no certainty but here's, like, you know, confidence that we're going to figure this out.