THERE ARE MANY DEBATES ON WHEN COMPANIES SHOULD FOCUS ON GROWTH, AND WHEN TO MAKE THE TRANSITION TO FOCUSING ON PROFITABILITY. WHAT ARE YOUR VIEWS ON BALANCING GROWTH VERSUS PROFITABILITY?
ELENA: There is no perfect answer. The tension of growth and profitability, even at larger companies, still exists.
I anchor back to a few things. Firstly, the ability to be clear on your strategy and narrative – both the long-term and short-term views – and paint that picture for your stakeholders, such as investors, analysts, so that you can enroll them in what you see. By sharing your strategy alongside context and a long-term view, the conversation around growth and profitability is a lot easier.
I also correlate growth to profitability. Ultimately, you want to continue investing to grow your business. This approach has lived with me both at Zendesk and when I was with Salesforce. We dominate our narrative with the growth story because there is so much growth ahead. This does not mean we are not constantly considering how to improve our profitability, but over the long term, I believe the financial outcomes, including operating profit, will follow from growth.
MICHELLE: Growth is fun when it is managed well alongside the demands of running a business. “Growth at all costs” is not good. Having a clear narrative of where you are making investments, and where you are not, is important.
From the career perspective, I believe companies that are growing quickly offer different opportunities compared to companies that are managing profitability. For example, in Cloudflare’s growth to our current strength of 1,700 people, those who joined us when we were smaller would have been able to extract the unique growth opportunities within our company, assemble the plane while flying, and be able to look back and say, “Wow, we did that together”.
From the entrepreneur’s perspective, trendlines are important. You do not want growth or profitability to change too quickly. Big changes scare the market and send the wrong signal. You want to maintain trends, and even at big numbers where it will likely tick down, you want it to tick down slowly so that the variations year-to-year are not too significant.
ON GROWTH – AT WHAT POINT DO YOU THINK A COMPANY IS READY TO GO GLOBAL?
MICHELLE: Going global is an expensive effort, and it is easier to make those investments if we believe it will pay off. At Cloudflare, we think deeply about how we can tilt the risk-reward ratio, and how we can make every dollar invested in marketing and sales go further compared to our peers.
We have seen go-to-market strategies really change in the past decade, as companies have access to more data, and have also made it much easier for customers around the world to sign up. The best-in-class companies that are going global now start by asking where their customers are, then invest in marketing and sales in those regions to stimulate even more demand, so that every dollar of capital goes a little bit further. From a financial perspective, it shows up as good growth but without really hurting profitability.
ELENA: Before you put salespeople in a market, it is important to understand if your company is in a position to deploy resources to sustain and scale demand. At Zendesk, having a try-and-buy solution on our platform has been critical – where we do not need salespeople right away, but start by letting our self-service, go-to-market motion do the work.
I would also advise against going into all international markets/countries at once. Managing multiple regions and countries adds complexity. Take the time to understand this first. Pilot with the first region, learn from mistakes, learn what works, and phase into it.
Generally, the go-to-market motion does not vary much across regions, but there are exceptions. Some international markets, for example, have multiple countries and thus language support is critical. Another example is culture – there are some regions with a strong relationship-oriented culture, while others may be more comfortable with a self-service model. Understanding these nuances is really important.
WHAT HAVE YOU LEARNT FROM YOUR JOURNEYS OF LEADING COMPANIES AS THEY SCALE?
MICHELLE: Companies are groups of people working together to solve a problem. As a leader, make the hard choices that are optimal for your people. If you apply this approach to the people you work with, your executives, investors, board members – it will save you many hassles, and pay multiple dividends.
As you go from a startup, to a scale company, to a publicly traded company, you’ve got to rethink dogmas. What worked for the first few years is not going to work for the next 10 years. While it is good to have points of view and have conviction, you also have to be willing to change your mind over time and evolve. Your strengths often become your greatest weaknesses, and your greatest weaknesses become your strengths.
ELENA: I would echo that. As a leader in an organization, having the agility to pivot and change as the backdrop changes is a critical skill. That backdrop may be macroeconomic, it may be the company itself, but whatever the backdrop is, you have a choice on how to approach the job you have or the problem you are trying to solve.
WHAT ADVICE WOULD YOU GIVE TO OTHERS WHO ARE ON THIS JOURNEY?
ELENA: Being successful and effective is less about agreeing with everyone, and more about being respected and credible in your role. Care more about being respected than being liked. You may encounter situations where there are a lot of perspectives, and you shy away from sharing your good perspectives because you want to be liked. Remember that it is important to lean into your point of view, especially if have strong conviction and data to support your view. The level of respect you will get from that will more than outweigh the other part that you may want, which is to be liked.
Show up and act the part. Build your elevator pitch. Make sure you are crisp and clear with your message right away, because you do not know how long you are going to capture the attention of the people in the room.
MICHELLE: The rate at which you learn is one of your greatest assets. When I think about our company, it is the people who are curious, show up, want to learn and have high rates of learning, that get the job and take it to the next level. Technology has made people more open to reaching out, connecting and sharing insights on events such as the Bridge Forum. Leverage technology to learn from others, and apply what works to your business and your career.
One of the things I have come to appreciate is the importance of collecting experiences. You end up meeting new people, pushing yourself, expanding, and you never quite go back to the same shape. There is great personal growth and satisfaction that comes from having a rich collection of experiences.
Finally, choose your partners wisely – be it a life partner, or a business partner.