Doubling Down On Our Investment In Gainsight.
Earlier this week, Gainsight announced its most recent financing — a $52m round led by Lightspeed. We first invested in Gainsight in their Series C and couldn’t be more excited to reaffirm our commitment to Nick Mehta and his team by leading this round.
My involvement in Gainsight dates back to early 2013, when I was part of the deal team at Battery Ventures that led the Series A in the company. Since then, I’ve had the privilege of having a front row seat to the intertwined story of customer success and Gainsight.
In the last 5 years, Nick and his team at Gainsight have taken customer success from a buzzword to a business imperative for companies of all shapes and sizes. As we were making the decision about leading this round, here are the thoughts that led us down the path of investing in the company (again!):
- Why now. This is the most important question in any investment decision. In Gainsight’s case, the market opportunity is coming together because of two macro forces: (a) Companies increasingly have a ton of data in the form of online usage analytics, customer support tickets, NPS surveys etc. to be able to track and analyze whether a customer engagement is going well or not. For the first time in business history, companies across all industries can proactively understand whether their customers are happy or not; and (b) We live in the world of social media and short feedback loops. Every positive and negative customer experience has the potential to be amplified 100x within moments across the world. This is not just about Twitter or Facebook, but also discussion forums like LinkedIn/Quora/Medium, and vertical market communities across industries. Companies can no longer afford to think of customer success as a nice-to-have aspect of their businesses. It is THE thing that matters in business today.
- Role of the product in its user’s life. Gainsight’s customers run their entire CSM practice on the platform. It’s mission critical for them, and is used on a daily basis. Once a customer success rep has been onboarded and trained on Gainsight, it is impossible to ask them to move back to their old ways of running customer success.
- Market size. Sizing up a new category is a tricky exercise. It’s easy to be skeptical by saying that this new trend only applies to a certain type of customers. For a long time in Gainsight’s history, the big question was: is its solution applicable only to SaaS companies? When we first invested in Gainsight, we had the belief that customer success is a business imperative for every company that wants to have a repeatable relationship with their customers. We believe so now too. But in the last two years, Gainsight has answered this question in the affirmative in the best possible way — with customer wins that prove the point. Gainsight’s customers today include industry leaders such as Cisco, VMWare, ABC Financial, Resmed Brightree, Gigamon, MCG Health, and naviHealth. When I meet someone who’s still a skeptic on the market opportunity for customer success, I offer them a simple anecdote:
In 2013, Gainsight hosted their first annual customer success conference, Pulse. They had ~20 customers at the time. Customer Success wasn’t a big thing back then. They hosted the conference just two months after Nick Mehta and Anthony Kennada joined the company. 300 people showed up to the day-long event. We knew then that there was something here. This week, Gainsight hosted its 4th annual conference. The audience size has grown from 300 to 4,000 in these 4 years.
- Leadership potential in the category. When we invest at this stage of a company’s life, we already know that there is a sales and marketing engine that is working and scaling. The question at this stage is: does this company have the potential to be the leader in its category?Will it be able to impose a winner-take-most, if not a winner-take-all dynamic in its industry? In Gainsight’s case, the answer couldn’t be clearer to us. Gainsight is THE category defining company in customer success. They’ve built the largest community (online and offline) around customer success. Their online certification for customer success is the most sought after in the field; they host the largest annual conference in the space; have the most revenue traction and some of the world’s best companies are standardizing their customer success practice on Gainsight’s platform.
When we find a team as talented as Gainsight’s leading the charge on a movement that is touching every business in the world, we like to double down. And that’s exactly what we did with Gainsight.