Mikkel Svane has reached the kind of success that means he had no issues sharing the stage at Collision 2019 in Toronto on Thursday with another CEO — especially since it was a CEO who would now be reporting into him.
A session that was originally designed to be a fireside chat with the CEO of Zendesk, a maker of cloud-based customer service software, turned into a min-panel of sorts as Svane was joined by Warren Levitan, CEO of Smooch, which Zendesk had just acquired within the previous 24 hours.
Svane explained that the decision to acquire Smooch, which lets organizations create conversational service via messaging apps, was typical of the kind of decision faced by many enterprise-focused CEOs: how to ensure you continue to show up where your customers expect.
“This is the future of how businesses will engage with their customers,” he told the Collision crowd. “E-mail is slowly going away. The newer generation are not going to use telephony anymore. (Messaging is) intimate, fast, you don’t have to wait.”
For Levitan, meanwhile, agreeing to be acquired by Zendesk is typical of the decisions faced by B2B CEOs in smaller or emerging companies, where growth can come organically over time, or quickly by plugging into a larger entity. Whereas Smooch had built up some 4,500 customers, he explained, ZenDesk has more than 140,000.
“We looked at the business and decided we had a greater ability to accelerate our vision and mission with Zendesk,” he said. “The time it would take us to get there otherwise would be 10 years . . . ultimately we’re focused on building a business to have an impact on users. When you measure the decision on that standard, it becomes really easy.”
Many other CEO decisions are far less easy, based on some of the other business leaders who spoke at Collision this week. Take Ben Chesnutt, CEO of MailChimp, which recently expanded beyond its core e-mail marketing tools into customer relationship management and other products that would offer greater capabilities to its small and medium-sized business customers.
Looking back on a journey that started after being laid off during the dot-com boom of the early 2000s, Chestnut recalled having to evaluate whether or not to take venture funding (he didn’t), to move to Silicon Valley (he stayed in Atlanta) and how best to grow. One of his biggest learnings, he said, was to rive the waves of various technology innovations, whether it was the advent of managed hosting or more recently cloud computing. Doing so allowed him to keep control over financing and how MailChimp evolved.
“When AWS came out, we realized we could take advantage of that. We’re now opening offices around the world, which is now possible because of WeWork . . . something always happened that made running our business cheaper and cheaper and cheaper,” Chestnut said, acknowledging that sometimes VCs and other funding partners could provide insight to developing a firm. “I don’t feel like profitability hampered us. It’s not like we were less ambitious about growing. I probably never really prioritized faster or bigger. I prioritized useful.”
While MailChimp has not yet taken the IPO route, Svane said going public has made a considerable difference at Zendesk, giving the organization the resources it needed to create well-defined processes and make bigger moves.
“I think about our IPO as the beginning of our company. That’s when we moved out of our parents’ basements,” he said. “It’s a high-growth, long-term objective that you have. It’s a natural way to set yourself up for the future.”
As an example, Svane pointed to the acquisition of Smooch, where the due diligence was conducted by his cadre of three different legal firms.
“I was on the couch most of the time, while the corporation and legal teams were doing all these terrible things to Warren,” he joked. “Building that maturity into a business — it’s such a relief for a founder.”
Of course, the journey from startup to large enterprise will inevitably be driven by the culture of those employed by an organization, but Chestnut advised other CEOs to wait until they had achieved product-market fit before focusing on it too move.
“You’re going to pivot. You have no idea yet and your culture is really going to have to support whatever innovation style you need as a company,” he said, adding it wasn’t until MailChimp had employed about 200 people that he started to codify its culture as part of a management training exercise.
Similarly, Chestnut said CEOs shouldn’t always be worried about pleasing everyone, including customers.
“You have to constantly change and evolve. Early customers do not want that change one bit,” he said. “If all of your customers are perfectly happy and content, you’re probably not innovating.”
Svane said he felt similarly about having to answer to shareholders and investment analysts.
“As a CEO, you should be focused on driving the vision and growth,” he said. “You have to stay on top of your margins, predict them, forecast and be transparent about it. It’s not living up to something somebody built on a spreadsheet. It’s about owning your business.”