Orbit 42
Vulnerability as strength in business: Nick Mehta of Gainsight
In this enlightening episode of the Hg podcast series Orbit, host Joe Jefferies converses with Nick Mehta, the long-standing CEO of Gainsight, about the intersection of vulnerability and leadership in building a successful software company.
Nick candidly describes his philosophy of "human-first" leadership, which has become a cornerstone of Gainsight's culture. He recounts his journey from childhood ambitions instilled by his father to the challenges he faced fitting in, and how these experiences shaped his transparent and authentic approach to leadership, coining the term "Nick 2.0" to signify his evolution. This transformation involved embracing openness and candidness, not just personally but also at the organisational level with "Gainsight 2.0," fostering a culture where honesty is valued, and employees are encouraged to embrace their own personal growth narratives.
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Episode Transcript
Joe Jefferies
Welcome to Orbit, the Hg podcast series where we speak to leaders from across the tech ecosystem to hear how they've built and scaled some of the most successful companies in the world. I'm Joe Jefferies, a Director in our Saturn Fund, and I'm delighted to be joined by Nick Mehta today, the long-time CEO of Gainsight. Nick, thank you so much for taking the time to join us on our Hg Orbit podcast today. It's great to have you here.
Nick Mehta
Joe, it's so great to see you. I love just learning from you and the team at Hg and couldn't be more excited for this podcast.
Joe Jefferies
So for those of you that don't know, Nick, you've been the CEO of Gainsight for over a decade now. Gainsight is the leading customer success software business globally. You've got more than $200 million of ARR, and you and your business have effectively defined the customer success software segment as your business has grown. Better in your words though, so do you want to summarize Gainsight today, Nick, and the journey that you've been on over the last decade or so?
Nick Mehta
Gainsight, we launched the company in 2013, and in 2013 the insight we had or the belief we had was that companies are going to move more and more to recurring gravity business models. So the traditional business model of selling something and then just waiting for the support call, works in a transactional business, where you're just selling a widget or a product or something. But in a world where you're selling a subscription, you're selling SaaS, cloud, consumption based pricing, anything that's a recurring relationship, you have to think differently. You can't just sell and walk away. The sale is the beginning of the life cycle, not the end. After the sale, you got to onboard them, you got to get them to use your product, you get them to like it, be an advocate, connect with other customers.
And so we believe that this is critical to driving one of the most important metrics in business, which is some people would call it a net retention rate. How much am I keeping and growing my existing clients? So Gainsight, we built a suite of products after years of customer feedback. Started with this software called Gainsight Customer Success, which is by far the leading platform to help companies, help their CSMs be more proactive, focus on the right customers, identify risk and scale. That's used by more than a 100,000 CSMs every day. About half the CSMs in the world use Gainsight. And then over time we realized, "Hey, it's not just about the CSM, it's about the customer journey." And so we introduced this concept, internally we talked about called Customer OS, Customer Operating System. How do you drive the whole journey from onboarding, to adoption, to renewal, expansion, advocacy?
So today we have five products, our customer success product; a customer community product to get customers to talk to each other and connect and learn; customer education product, focused on enabling customers through self-service learning content to be experts at using the product. What we call our product experience product, which is all about embedding in the product tracking usage and driving adoption through in-app guides. And then finally, most recently, what we call Staircase, which is a generative AI solution to help you understand where there's risk in your customers based on looking at all the communications, all the emails, all the video meetings, all the Slack messages, et cetera. So our direction is, how do we look at that entire customer journey orchestrated end to end so that you improve net retention and you do it in a scalable and efficient way.
Joe Jefferies
So if I take a step back, you are a Harvard graduate by background. You've worked in Silicon Valley for over 20 years now. Multiple venture capital and private equity firms along the way, most recently Gainsight's been invested in by Vista since 2020. And you also have a lot of customers that are Hg portfolio companies themselves. So fair to say, you're a pretty serious guy with a pretty serious job. And I think one of the most interesting things about you, as I've got to know you and clearly done my research, is the way that you've achieved your success is through a pretty unique leadership style.
So you're very open, you're very candid, you're very honest, and you share that with both colleagues and the market alike. Particular highlights would be the Taylor Swift parody videos that you see on YouTube. And then also one that sticks in the mind is the presentation that you did on some of the biggest failures that you've had over the course of your CEO career. And so if I jump right in, I guess in your own words, do you want to walk us through a little bit about your leadership style, how it came to be and really where it all started, I guess?
Nick Mehta
I think every person has their own style, and in fact when we can talk more about this, but I think there's a journey of really understanding yourself, which is obviously a lifelong journey outside of work even. But I've certainly gone through a lot of that, some intentionally, some because things happen in life. So sometimes you proactively are doing something, sometimes they just show up at your door, whether always good or bad. And so it actually, interestingly enough starts in my childhood as I've reflected, and frankly I think most people who they are is largely because of their childhood. And there were two dominant themes in my childhood that actually eventually I was able to channel into my style as a leader. One of them was that my dad, he was a small business person, nothing very big, but he always wished he had done something bigger. Sadly he's passed away now, but he always wished he'd done something bigger. And so he always had big ambitions for his kids, which is certainly common for immigrant children in general, because my dad immigrated from India.
But I remember sitting in our living room in Pittsburgh, Pennsylvania where I grew up, in probably 1986 or something, maybe '87. And my dad showing me the cover of Time Magazine, which is an old magazine. Some people probably don't know what, I should probably explain what a magazine is, but we'll put that to the side you can look it up. But showing me a magazine that had Bill Gates on the cover, who's the founder of Microsoft. And it was like, "Youngest self-made billionaire in the world." And I remember, I don't forget my dad's quote, he said, "I'd love to have you do something like this someday." And I was like forever going to be disappointing myself that I could never do that. So there was this ambition, this desire, which a lot of people I think have that go into business or whatever. And then there was this interesting thing where I, probably sad at the time, but I really just never fit in growing up. And so I literally had no friends in my school. I'd eat alone from kindergarten through 12th grade, which in America is your whole elementary through high school.
And the whole time I just never felt like a fit in. So okay, fast-forward, as I'm running Gainsight in a company before this too, and even when I was at a large company as a general manager, I started leaning in progressively to opening up more and more. And it started with us, me talking about fun but trivial things like my favorite NFL football team, the Steelers. And I would send an email, actually, one thing that was interesting. I've sent an email Sunday night to my teams across Gainsight, my last company and this company. I was at a GM literally 20 years, every Sunday night for 20 years. Except maybe a couple of times I'm on vacation. And in that email I say, "Here's what's going on in the business, and then here's what's happening in my personal life." And over time, those vulnerable shares grew and grew. So just to give you an example, or maybe the pivotal moment. We had a company event in 2017, no, 2016 brought everyone together in Napa Valley, California.
And basically I was going to do my normal presentation about how everything's great at Gainsight to the employees and they'd be great. This is just an internal event. And I decided to close with a vulnerable moment, similar to what Brittany Brown talks about, if some people know Brittany Brown. And so I decided to say, "Okay, yeah, this is all great, Gainsight. Let me just share with you who I am." And I talked about this feeling of never being successful enough. I talked about this feeling of being lonely and always, even to this day feeling like people don't really like me and I don't know if they really want to be my friend, etc. And I shared that, and then in that event, what was amazing was, we have this product manager named Julia and she got up and presented her own thing, and halfway through she shared how she has stage anxiety and she was being anxious and everyone in the audience was like, "We love you Julia."
And so it showed me it's infectious, vulnerability and authenticity infection. So that year we had our customer event, what we call Pulse, which is a big event. There are probably a couple thousand people in the room. And I shared the same stories about being lonely as a kid and not feeling successful enough. And over the years I shared worrying about my dad, worrying about my kids' mental health. My dad had dementia before he passed away, my daughter growing up and being sad that she's grown up, I share every year to thousands of people that never met me. And it's interesting how powerful this idea of understanding yourself and just putting it out there in the world is, whether it's a silly Taylor Swift video or whether it's talking about your dad's dementia, being real. I think that's something that I've found very powerful.
Joe Jefferies
I can see, and I researched, talking to you, meeting colleagues of yours, I can see the impact that it has on your organization. If you think about you personally and your effectiveness in the roles that you've had up until now, has it also been, has that liberating of bringing your personality to the table also enhance the level at which you operate? How's it manifested for you day-to-day?
Nick Mehta
A 100% it's continued to help me evolve. I have a CEO coach that I've worked with for 12 years named Kaylee, or maybe more than 12, maybe 13 years. And Kaylee, I met her through a CEO group. She would facilitate the CEO group. I started using her as coach. We actually have used her in Gainsight to facilitate exact off sites. And she's helped me truly understand, just like when I'm feeling something, what does that mean? How do I channel that to be the most effective leader and also a human being outside of work? And so yes, it changed things a lot because I think I got more comfortable with understanding who I am, sharing that, using that as a superpower because I'm not great at everything, but I'm okay at some things, so using those.
But then most recently, interestingly enough, we could talk more about this, I went through the next phase of evolution for me and it's been a step function, step function. Normally things grow linearly, right? Step function is when you all of a sudden go up. And so it was interesting, because I went through a lot of stuff outside of work, personal stuff, and it caused me to have a different view of life. Not because I was trying to, honestly the stuff sucked, so it wasn't something I wanted. But having it makes you feel a little bit like it's time to live your real life. And so I embrace this idea, I didn't come up with it.
Well, my Chief People Officer came up with that term, Nick 2.0. My name is Nick, Nick 2.0. And the idea was, what's the next phase of me? And so the biggest thing that changed in Nick 2.0 is being more candid. I would always want people to like me because of my childhood, therefore I'd tell you, Joe, everything that's great about you, but I'd never give you real feedback. And that's a disservice to the people around you. It's disservice to your business. And then we expanded that to what we called Gainsight 2.0. All of us embracing this new level of candor, still having our human values, but bringing in this concept of candor.
Joe Jefferies
It's interesting you say that. So I've read a lot and heard a lot from you about treating people the way you want to be treated, the cultural tone that you set in Gainsight. You're also pretty open that you're a tough taskmaster. And you probably don't remember this, but I remember our first meeting where we did the niceties, the pleasantries, and then I got grilled for about half an hour on who we were, what we were doing there, how we could help.
Nick Mehta
Oh my gosh, look at that.
Joe Jefferies
And I saw some of that come through and you did it in a very nice way, but you got exactly what you needed to out of that meeting. You were very direct when you needed to be, and very precise as well. And so, one of the questions I had reflecting on the conversation today is how does that marry the personality that you bring to work? Do you ever feel conflicted or am I right to call them the two sides of Nick and do they gel together or do you have to turn up one day as a certain persona, the next day as the next? How does that play out for you?
Nick Mehta
It's such a insightful question. We have a mission statement in our company, and the mission statement has nothing to do with customer success or SaaS. It's to be living proof you can win in business while being human first. Now human first is the idea that we treat everyone, whether it's a potential investor or it's a customer or it's an employee or somebody that left your company or a churned customer as a human being first. They're a human being, understanding them, being empathetic. But it's to be living proof. You can win in business while being human first. So there's this, I don't call it a paradox, actually I call it... It's almost like yin and yang of winning in a business is about us finding a way to be candid, be bold, make tough decisions. And then be human first is to do it in a way that we always think about the human beings.
Does that mean we don't make tough decisions? Absolutely not. I've fired a number of people over the years. I've given people tough feedback. It's not easy, but you want to do it in a way that's as human as possible. So if you're on our Slack channels, you'd see all these discussions about, "Okay, we want to do this, but we'll do it in a human first way. How do we think about that?" And so for me, what that boils down to is, I've always been comfortable with the human first side, the golden rule, all that kind of stuff. I've always been comfortable with leading by example, but now learning how I can truly give other people honest feedback. And I had a meeting, I gave a review to one of the people that works for me, and she didn't work for me before. She was a couple of levels down.
And I gave her a review and there's some good constructive feedback in very positive. And she said, "Oh my gosh, this is such a gift. It's the first time I've ever had real feedback at Gainsight." Now she's been here five years. So that's an indictment on us. But it made me realize certain people, not all, really appreciate the honesty of candid feedback. Finally, I think that one of the things I think a lot about is when you're a leader, your job is often to figure out how the needs of the many outweigh the needs of the few. And so what that means sometimes is, yeah, this executive that's working for you is a really great person, but they're not delivering what the team needs or the client's need or the business needs. And you can keep them on because you think they're a good person, but then you're bad to everyone else.
And so I've had these situations where there's a leader who by the way, might've been a great leader before, but for whatever reason now the team doesn't believe in them. The customers don't believe in them, investors... And if I just let them stay because I'm just too weak to make that decision, I am being a bad CEO. And it's a tough one because you have to then embrace when you're a leader that yeah, you're going to make decisions that are unpopular. You're going to make decisions that for the person that was affected, they won't like. You're going to make decisions that you might lose a little sleep on, but I think it's good that you feel those emotions because then you're still human. If you didn't feel anything, then you're a sociopath. But at the same time, for me, not letting me shirk my responsibility because of just wanting to be nice to this one person.
Joe Jefferies
And because you do have big personality, there's a big public persona out there as well, Nick, the big events where you get on stage and talk about all of this stuff, I guess I'm thinking particularly in the context of hiring either new direct reports or senior leaders into Gainsight. Do you feel the need to show that more serious, that more direct, blunt side of you early on so they understand how things work? Or do you let it come out through the normal passage of their onboarding? I'm curious to get your view of that.
Nick Mehta
Yeah, it's interesting because I do think that they end up seeing both. And particularly people that work directly for me, I think we have about a 1000 people in Gainsight, a little more than that. And I think if you're a CEO and you give critical feedback to somebody four layers below, it's pretty rough for that person. And so you want to be really candid with your direct reports so that they can be candid with theirs and so on, and so on. And so yeah, I mean they see a mix. I just hired a chief revenue officer and as she was coming in, we sent her all the videos and the silly fun things Gainsight has and said, "Hey, yeah, this is part of who we are."
And then I sent her over texts because she was incredibly engaged and responsive in the process. I've texted her tons of feedback about the team. Now she hasn't joined yet, so she just joined, but it wasn't her responsibility for all the things we weren't doing right. But yeah, I mean she saw it. In fact, I remember this text where I sent her a message and said, "We have such a great culture, but some people are too chill, they're too relaxed." And in this new world of higher interest rates and more challenging business environment, you want to be relaxed such that you can perform but not too chill, that you're not really trying. And so I sent our new Sarah merrily, I text that said, "Yeah, some people at Gainsight are too chill. We need to change that."
And I said, "One of the things you'll know about me is although I'm very positive and try to be fun and funny and silly, I'm not chill at all." You mentioned it. I'm not chill at all. That's one you can go back to my childhood. And you're like, "Okay, there's this part that you want people to like you and maybe I'm creative and all those videos." And then there's part that's my dad saying, "Hey, I'd love if you'd be like Bill Gates." Okay, you're never going to be chill the rest of your life. And so I've never been a chill person. I've always wanted to do more, but I try to share that more with my direct reports because I think it is really hard to hear it from four levels up, tough feedback.
Joe Jefferies
And I can guess if you look outside of that close community of direct reports and what have you, I want to focus on what you perhaps have perceived to be some of the cons or the negatives or pitfalls of your approach. So I guess both with colleagues, but I'm also thinking in the context of customers, shareholders, people around your board, can you think of times where your style has had more negative consequences or you've had to tweak it or learn from how you go about it? I'd love to explore that with you a bit.
Nick Mehta
So if you look at, we're joking, but Nick 1.0, in other words before let's say, the last year, year and a half, I think that my Achilles heel was, I was super positive and cared about people, and I still do. But I wasn't able to be candid. And because of that, I let people that are not performing anymore at the executive level, stay on too long. I wasn't able to steer the ship quickly as the environment changed. I was reluctant to... Like a lot of companies, we've done some staff cuts and I pushed those out too long. And so now, are there good intentions there? Yeah, for sure. I care about the human beings. Is that a disservice to the business? Absolutely. And so now Nick 2.0, now I'm managing the other side where I'm super candid and I think people really like it. By the way, silly story, and I won't do it on this podcast, but I literally through, I'm 47, through zero through 46, I was completely uncomfortable swearing, swear words.
And it's funny because obviously some people don't like swear words, which I respect that. I was this prude, I was like, "Oh, I can't ever swear." And so in the last year and a half I was like, "Okay, I can swear every now and then," And it shows, it's more candid. It's like, "No, this is F unacceptable." That's very, very candid. And so now I've been balancing the other side. Which is being candid while still keeping morale up, motivating people. You don't want to just give a total downer speech. And so to give you a very tangible example, we had an offsite recently with extended leadership team, and I've gotten it big into written documents before meetings. Amazon does this. And so I wrote this document about to prepare people for the offsite, and I said, "Here's the purpose of the offsite, etc, etc."
And they had this section assessing Gainsight, and I said, "Hey, we should be proud of the things we've done." Creating category, enabling the hundreds of thousands of people to have CSM jobs, doing these acquisitions of building this big portfolio, having a lot of big customers, dot, dot, dot. So let's say, 10 things we've done well. And then I listed 10 things that we haven't done well or that we tried and didn't work. And I talked about how a lot of things we're doing don't work and there's a small number of things that do work, and I need us to be better as leaders. And so that's an example where it's like, "Okay, you're going to be candid, you're going to have the positive because there are positives, but you're going to be honest about the tough things too." I'll tell you, people loved that memo. They loved it. This was the extended leadership team, so let's say 30, 40 people. They were like, "Oh, my gosh." And so they love the candor. There's some people who don't, some individual contributors.
And as an example, I think it's a positive example in a way, although it was surprising at the time. We had our whole company together for our US and European teams in Las Vegas about six weeks ago, eight weeks ago. And we were launching this Gainsight 2.0 Culture. So the goal is for me to get up there and launch it, and I said, "Hey, Gainsight 2.0, we're still going to have this human first element, but we're also going to be candid, whatever." I got to the stage and tons of people loved it. And some people were like, "Finally Nick." They were literally like, "Finally we're doing it." One person at the offsite quit. She wasn't offended or anything, but she's just like, "Gainsight 2.0, that's just not for me." And I respect that. And so I think that's one of the learnings I have too, is if you're optimizing for a culture that is for everyone, you really have no culture. Versus being super honest, that this is who we are. And that's great if you like it or if you don't, either way, it's great.
Joe Jefferies
Yeah, and it's interesting that the feedback to Gainsight or Nick 2.0 has been that positive response that you talk about. And I guess in a similar vein, have you started to see some of your close colleagues, senior leaders in the firm, begin to adopt that Nick slash Gainsight 2.0 mentality as well? Have you seen that evolution in, I guess it's within the culture of the business, but specific examples of senior leaders who are delivering the same values that you're talking about here?
Nick Mehta
You've nailed it. Yeah, I mean, absolutely. I've seen it at the leadership level where people in the reviews will say, "Hey, Nick, I want to figure out persons name 2.0 and what it is, and here's what I'm thinking." It shows up in individual contributors. I've Slacked people and I've said, "Yeah, what's going on with this customer or something?" And they're like, "Yeah, well, I'm trying in Tracy 2.0 or Sally 2.0 or whatever," Making up names. This is what they're working on. And so yeah, it's interesting how a phrase, a simple, not even that original phrase, 2.0, is something that can become infectious and become a touchstone for everyone to have common language on a new way to work.
And so yeah, in fact, I got over the weekend, I Slacked a CSM and there's some customer issue and I asked her what was going on. This is one of our best CSMs in the company. And she said, "Hey, I'm going to give you the 2.0 version." And the 2.0 version in her case was, they have way too many accounts per CSM at our company for this SMB segment, and it's not sustainable. And so it was great because I got honest feedback and we got to go fix that. So yeah, it becomes something everyone can attach to.
Joe Jefferies
If we switch it up a bit. So I guess, when I reflect on our conversations, reading about your business, there's other key cultural points which I think have been part of the success of Gainsight over the years. As I said at the top, you guys have really defined the customer success software category. And so the cultural points you're talking about, will get you so far, but there's other things that clearly need to come around that as well. And things you've talked openly about are having to be brave, innovation being front and center. You even referenced Jim Collins, Good to Great, which is a very popular book at Hg and running micro tests, seeing what works, seeing what fails. So it be useful I guess, to build on what we've talked about so far, what are the other parts of your style, your values, the business you've built that have been critical to the success over the last 10 years?
Nick Mehta
Yeah, absolutely. So I think that there's category creation and then there's category evolution, in my own words. So there's category creation, which is like, okay, there wasn't really a CSM concept, not even the software. There's very few CSMs in the world. Honestly, when we looked at it in hindsight, there's probably a 1,000 in the world on LinkedIn in 2013 when we launched Gainsight, and there's probably about 250,000 today. So today there's real market for CSMs, of course market for software as well. But back then, you can imagine. Imagine there's a 1,000 CSMs in the world and you're charging $2,000 per seat. That means that TAM is 2 million bucks a year. And so part of it was really thinking about what's the playbook for helping to create a category. Now, we didn't do it our own, other companies, other leaders did. So it's not just Gainsight. But a few things that came out of that.
One was community and bringing people together. And that was like, okay, wow, if you have a new category, most people feel like they're on their own in their companies. I don't even know what to do. Other people don't understand me and my company. So we started these events and Pulse is this big one. First year, 2013, two, 300 people, now a few thousand people every year. And it's a great way for companies to come and CSMs to come and see, "Look, it's not just you, you're not alone. Everyone's going through similar things." We do an executive event called the CXO Summit. We have all kinds of events, dinners, lunches, community building. That was the first thing. Second is content, so people want to learn where to go. And so, if you look back here, that blue book, that is a book that was written by a gentleman named Dan Steinman, who is our first Chief Customer Officer. Not with the company anymore, but still dear friend, and me, although he did most of the work.
And that book became the authoritative, getting started guide for CSMs. Actually, more than a 100,000 people have read that book. And so that concept of community, content. But then the third one, which you alluded to, which is the bravery to then push things forward. So initially it might be pushing the idea of CSM, then it might be pushing CSM at the executive level, then it might be pushing the CS teams at companies to have a new approach that's not just reactive. Then it might be now for us pushing that it's not just about the CSM team, it's about the whole customer journey. And so being able to be brave, lead the community, and I think this all fits together because you earn the right to show people where you're going based on all the stuff you've done, based on the book, based on the events, et cetera, et cetera. And so that idea of the content community and then being brave, those are three things that I think hold it together.
Joe Jefferies
It's interesting you did it that way round, because if I summarize your words, the establishment of the community, the credibility that you're opinion leaders in the space, that was a key focus for you to establish early on in yours and Dan's journey with Gainsight. How ready was the product to deliver on all of the promises of the thought leadership at that point in time? Or did you have to then run fast to go and catch up?
Nick Mehta
Oh my gosh, not ready at all. And that's, I think the startup challenge, opportunity, whatever it is. They say, fake it till you make it. So early times customers knew that it was very limited product. Honestly, it was built on Force.com, which is Salesforce's platform. Now we're not on Force for many years, but back then we were. It was very, very limited in terms of what it can do. The scalability was limited, but we are fortunate to start working with some larger organizations earlier. So Workday, Okta, people like that. And those customers who bet on Gainsight early, gave us a lot of feedback, helped us evolve our technology still with us today, by the way, those two companies.
And then as we matured the product, eventually moved off Force.com, made it more enterprise grade. They came along with us. And so what happened was, we got Okta and Workday, we got IBM in a small footprint, and then they all propelled us to do more and more. And by the way, they all became big clients, multimillion dollar a year, AR clients. Even though they might've started at 50 or a $100,000 a year, they all grew pretty steadily with us. So yeah, we didn't have the product to meet the needs, and then we worked with our customers to build that over time.
Joe Jefferies
And now I guess, particularly when I think through the feedback from our portfolio companies that are users, I'm guessing it's probably flipped the other way, where the platforms there, the full suite of modules and capabilities, you're probably learning increasingly how you can support customers with the data that they're providing you and get smarter, more insightful, particularly with the advent of AI. I don't want to put words in your mouth, but that's the sense I get when I speak to some of the users that I'm close to at least.
Nick Mehta
I think that's the thing that's changed in both customer success, but probably in general in the world of front office software, sales, marketing, CS support. Which is obviously generative AI disrupts everything. And we have embraced that actually for a couple years now. There's all kinds of cool things in Gainsight CS, like automatically taking meeting recordings and transcribing them and creating notes and action items, and automatically giving an executive summary of a customer before you're get to go into a meeting. And automatically giving you a Copilot, letting you ask questions about your customers. A lot of cool things like that that are about really assisting CSMs in doing their job better. But we think one of the couple of big needs people have, one is what's the signal to truly understand customer health? And today, most companies do a combination of the following. They've got some kind of survey program and that's great, but typically almost like a lagging indicator.
By the time somebody gives you critical feedback, it might be too late and you get a low response rate. Not everyone's going to fill out the survey. And then often they look at product usage data. So this is like, "Hey, are they using the product? What features are they using?" Unfortunately, sometimes that's also a lagging indicator or misleading. Lagging because when they start dropping usage, they may be moving off, so it may be a done deal. Or misleading because sometimes they might use the product and hate it. And so therefore, one of the things we think is a goldmine is all of the conversations you're having with customers, all the emails, the video meetings, if you have private Slack channels, we bought this company called Staircase, which runs all of that communication through a large language model, similar to the technology that powers ChatGPT. We actually use the ChatGPT APIs and looks for customer risk based on sentiment in a very sophisticated way, based on engagement.
How frequently are they writing back? And so this is an example where generative AI can help us rethink the way we do things from this more subjective view of health to a much more data-driven view. Now, where does that go over time? Well, one of the big things that has happening in software is, companies that are pivoting to say, "Okay, I used to build workflow software that helps employees, and I'm going to continue to do that, make that generative AI powered, et cetera, but I also need to provide digital workers." And so in this case, digital CSMs or virtual CSMs that are not going to replace all the CSMs out there, but will help companies scale. Because you can have CSMs for your big accounts, but you can't have enough for single accountant in your customer base. And so this idea of what we're working on is, can you create a fully digital CSM that engages with the customer in the product through email in the community, and helps those customers get to value without having to have a human being shepherding each one?
Joe Jefferies
If we switch gears, so I talked about it a little bit earlier, but my favorite post and presentation of yours is about your top 10 failures since being CEO at Gainsight. So I'm sure, I'm guessing that's the one everyone talks to you about in excess.
Nick Mehta
Everyone asked about that for sure. Yeah.
Joe Jefferies
So I won't go too tough on you then, you'll know the answers here, that you don't see many private equity backed CEOs doing that. You don't see many CEOs doing that candidly. So first thing I'd recommend is that everybody has a watch or reads that article. And then I guess if I play back some of what you've said today, where Nick 1.0 is now Nick 2.0, what are the mistakes you are making now before you become Nick 3.0? So clearly huge bunch of accumulated mistakes, successes you've talked about. Yeah. Where are we at today?
Nick Mehta
Well, it's so interesting in that the presentation I open up with this quote I found on the internet. I don't even know who said it, but it said, "I'd never make the same mistake twice. I make it five or six times." And I'm like, "Yeah, that's totally me." The list of things in that presentation, I'm going to continue making some of those mistakes because I'm a human being. We all do it. But it's a very provocative question of what will Nick 3.0 say about Nick 2.0 and the things he got wrong? And it's hard to know and intuitively because of course if I knew that I would be doing it now. But I do think that the thing that, there's a couple of things that are risks. One is over rotating on the candor and losing the positivity. So I think that's a risk that we have and have to watch out for it. Another one is, over rotating. I think this is probably quite common in private equity, on over rotating on efficiency and profitability and hurting growth.
And we have a profitable company, which we're very fortunate and lucky for, but we can certainly, we will continue to improve our margins. But we need to be careful not to kill the growth engine that we have. And so this is actually an interesting exercise in candor because how do you work with your board and Vista's amazing partners? How do you work with them to understand this balance? To understand, yes, okay, if we take that marginal extra point of margin, here's what's going to happen. We know we can increase margins by X, five points or whatever year over year. But if we try to increase it by 10 points, here's what's going to happen. And really being honest with them and being data driven because as you know, good investors and good CEOs don't just go off of gut feeling. So yeah, yeah, okay, we can increase margins by 10% by cutting R&D by X, and here's the impact it's going to be, and here's the data to support that. I think that's a potential mistake I and our board will make is going too far and then affecting long-term growth.
Joe Jefferies
It's interesting that the maturity of the category, maturity of your business, there's a lot of parallels to how you've tweaked your style as you've gone through as well, because the problems you're solving now, I'm guessing there was a long period of time where it was as much growth as possible, Nick, as fast as possible. Let's capture this category as it's emerging. But I can see the two are quite closely linked, actually.
Nick Mehta
That's exactly right. Well said.
Joe Jefferies
So I guess, final question from me would be, if you take a step back and reflect on your career to date, what would be the top three bits of advice that you'd give to yourself first time you stepped into an exec role?
Nick Mehta
Yeah, totally. And I think one of them is something that I've done, but I feel like you can never do it enough, which this is probably the biggest piece of learning for me, is understanding yourself. That is just for me, the ultimate superpower. If you understand yourself, then you can channel that. And so what does that look like for me? Well, it's like understanding that yes, I do have this weird creative style of writing scripts and videos and all that and I enjoy it. And leaning into that, that it works. If you're into it and you're decent at it, it actually works. So literally, it's funny. We don't do any announcement without a silly video. We're announcing our chief revenue officer and another exec hire. There's a silly video which folks can eventually see on LinkedIn. Actually, by the time people are watching this, they'll probably see it on LinkedIn.
And so understanding what are the things that are who you are. So for me, there's a creative side, there's a introspective side. There's a positive and high energy side. Interestingly enough, outside of work, I think, I don't know for sure, but I think I'm an introvert, which is shocking to people. But actually if you looked at my weekends, besides my kids, I don't see anyone. And my dogs, by the way. Do see my dogs, I love my dogs. But learning who I am and applying that and saying, "What can I do with this?" Because I don't have all these other superpowers, but these things are who I am, so I'm decent at them. So that's number one. Number two is, I think one of the things I've learned, and I think I've continued to try to do it, I feel like I can never do enough, is just help people.
So I get tons of inbound, like, "Hey, Nick, I'm looking for my next job," Especially in CS. And honestly, I try to take every one of them I can. And so usually the weekend, early mornings, my kids are asleep. There's nothing to do. And so weekend, early mornings, I'm like literally 7:30 to 9:00 every morning, Saturday and Sunday I do calls with people looking for jobs. And it feels really good to help in some small way, and maybe it helps our business long-term too. But I think helping people is so important to both your long-term success because it comes back to you, but even more important to feeling good about your job. So helping people is the second one that for me is really important. And then the third one I think is, could I have channeled this Nick 2.0 thing earlier? Could I have made some of these candid tough decisions earlier? You can't replay your life, so is what it is. But that's the one that I'm like, "Yeah, I wish I'd given myself some of that confidence earlier in my life."
Joe Jefferies
Nick, thank you so much for taking the time today. It's been great to chat with you. And yeah, really good to catch up.
Nick Mehta
Same here, Joe. Thank you so much.
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