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Breaking Out of a Niche to Break into New Markets - Jennifer Tejada + John O'Farrell

Jennifer Tejada
CEO & Chairperson at PagerDuty
+ 1 speaker
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2020 Startup Grind Global Conference
February 11, 2020, Redwood City, CA, USA
2020 Startup Grind Global Conference
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About speakers

Jennifer Tejada
CEO & Chairperson at PagerDuty
John O'Farrell
General Partner at Andreessen Horowitz

Jennifer Tejada is the CEO and Chairperson of PagerDuty (NYSE: PD), a leading platform for real-time operations. She is a veteran software industry executive and business leader with over 25 years of experience, spanning mass consumer products to disruptive cloud and software solutions. She has a successful track record in product innovation, optimizing operations and scaling public and private enterprise technology companies. She led PagerDuty through a strong IPO in April 2019.Prior to her role at PagerDuty, Jennifer was the CEO of Keynote Systems where she led the company to strong profitable growth before its acquisition by Dynatrace in 2015. Before Keynote, Jennifer was Executive Vice President and Chief Strategy Officer at the enterprise software company Mincom leading its global strategy up to its acquisition in late 2011 by ABB. She has also held senior positions at Procter & Gamble and i2 Technologies (acquired by JDA Software).Jennifer currently serves as a board member of The Estée Lauder Companies Inc. (NYSE: EL) and Puppet, Inc. Jennifer holds a B.S. from the University of Michigan.

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About the talk

A Fireside chat with Jennifer Tejada, CEO of PagerDuty + John O'Farrell, General Partner at Andreessen Horowitz talking about How to Break into New Markets by Breaking Out of a Niche.


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10 years is a friend Joseph house Silicon Valley Moving. Artgerm we should get right into it cuz we only have 19 and a half minutes left to ask you about your background, but I thought I'd ask you first about a jury duty. Everybody. So tough Duty do for your customers. Give us a quick background on business. All right, and if you need to take a page beer guess she is a platform that helps developers and increasingly modern employees detect and orchestrate work manage and

respond to issues or opportunities that are unplanned unpredictable but business or mission-critical and it was essentially started by three co-founders Andrew Alex and Bhaskar who were students together in the computer science program at Waterloo University in Toronto at the head. Turn together at Amazon in the.com side of Amazon and have been sent on call Early in their careers there and found it to be miserable. They were literally woken up all hours of the day and night with things breaking that they had no understanding of no concept of it was

all very manual. Every time a new incident would appear they would have to figure it out try and figure out who in the organization they needed from an expertise perspective and it thought surely there's some way to bring this together an automated and that was the start of pagerduty 10 years ago. Our success was built on having a very simple solution for very painful problem that not only affects businesses does imagine if you're any Commerce company or your entertainment company your consumers have come to your web app here mobile app to get an amazing

service and it doesn't go. Well, you can't transact your shopping cart etcetera that consumer gives up on you they give you about 3 minutes or less and then I give up on you and they usually don't come back and yet you've spent hundreds of thousands of dollars to to get that audience to your app to your Brandon and the customer experience you were hoping to provide for developers who now, we're on the front lines of the customer experience because they're increasingly building these brand experiences and they are responsible for ensuring that all of the infrastructure Cloud environments

systems and processes work perfectly. So that that experience happens just the way you imagined it. They all of that's out of their control. So when something doesn't go wrong, he usually starts impact the bottom line very quickly. We've increasingly moved from being a simple product that's very scalable and highly resilient to being a platform that starts to help people across at Enterprise used software to detect issues or real-time opportunities to orchestrate cross-functional teams across geographies and V. Within a business to get solving a problem before the

end consumer actually feels that problem. So moving from resolving things better to predicting and preventing challenges from happening and likewise if an unplanned Run free to opportunity pops up within the business also capitalizing on that more quickly as well. We have a lot of awesome customers who I I get very excited with yesterday. We were at Fox Studios 21st Century Fox which was recently acquired by Disney is a couple group Fox Theater in the Fox Theater. So so how

fitting the Gap is another great customer in the Gap leverages us not just within their it organization, but throughout store offs and we get really excited when something from the Gap causes and tells us that back to school and Christmas in a Black Friday Cyber Monday went without a hitch because of pagerduty. So there's also a lot of planning and strategy Evolved in ensuring that you can manage the unplanned and unstructured work very effectively Duty in 2016 coming up on

the summer. So one of the things that attracted us to you as the ideal CEO for the company about your background how you got here. I think you're a Nikon for CEOs in general and Female CEOs is a little non-traditional. I have a liberal arts degree from the University of Michigan where I went to school with financial support then work for Procter & Gamble for several years income classic consumer marketing branding and sales. I spent a lot of time with in the retail Channel scraping gum off the shelves of Austria things like Dairy coolers to try and sell

Sunny Delight and I was kind of thing and I thought I want to be part of this thing that I think could be transformational but back then it was just sort of this online Billboards. Like we took everything we did in the analog world and pasted it on the web and waited to see what would happen. So I went to work for us late-stage supply chain automation software company, which is the kind of weird jump to go from consumer marketing and branding to supply chain, but what I loved about supply chain kind of sim What I love about pagerduty an infrastructure is you

know, you start with a problem that has a fixed cost associated with it you start to automate and innovate on every step in that process. And now from you know Innovation to in the customer's hands Costless delivers more revenue and it's very measurable and quantifiable. And that's one of the things that I I love about enterprise software and I think one of the things at the market also appreciates about it, so I'm so glad like 25 years later that now Enterprises sexy again. You

are as I said, you joined us in 2016 up quick better background on hiring Jen. We are between Boston and we did the series a round pagerduty back in 2013 to 2013 to seven years ago now and Jen gave you a little bit of background of the founders that Dad brought the commentator really exciting stage super impressive how they'd really a grown this company on very little Capital really appealing to the developer community and we knew we wanted to be and when are due diligence revealed that every one of our portfolio companies without exception

then was using pagerduty and was like the the best known companies if nobody's ever heard of and so anyway by 26 is very clear that we had something real that this could be a multi-billion-dollar probably company if we executed well and Alex salmond. Then CEO founder Two sided with the board. Look we need to bring somebody on board who will take this even faster and make it even bigger than I can as a first-time CEO. So we set out to hire a CEO we found Jan there was nobody else even came close in terms of background and

Fayette and the week we're and references. Why did we get so many reference call? We could not find anybody say anything bad about this woman. I still work and actually very irritating like if you want have a balance that are references so we couldn't find anybody to do like I even mildly critical reference. So we have we have to have Jan and she proved to be very difficult to hi. I just got a lot of options. But anyway, we finally managed to close the deal over a glass of wine at the Village Pub in the UK for the wind. I hope you paid for it

in some Warehouse. I don't know about that, but it was so I had looked at a lot of late-stage company's growth companies. I like to think I'm reasonably self-aware and I knew that going back to start up in the garage didn't make sense at the same time. I wanted to do something that would have an impact and also wanted to find a company that would help me change the industry as well and start of ticked all those boxes from a science perspective and I think finding the right fit from a career in a company perspective is an art and a science, science perspective. It's a huge total addressable Tam. It

just Incident Management is a 25 billion dollar total addressable Market if you look at all the developers and it individuals that are out there trying to manage these evolving technology ecosystems that are becoming more distributed through containerization and serve less and more complicated through the democratization of computer in the cloud and tell big total addressable Market just with our core solution and you know it Time we were lesson kind of 1% penetrated into that market. So I thought good Runway. Second thing was there were a lot of things about the product that I viewed

his platform ask and you know, this is a little bit pattern recognition having been in supply chain and consumer and more recently infrastructure software etcetera where we've been collecting data on responders and how they behave on events and signals coming off of infrastructure application environments the iot devices etcetera. And so how did those events storm and and develop together into what can become an incident or a major opportunity workflows. We know a lot about ads all workflows. And these are not wear clothes like the kind that start with a ticket and go

through a command-and-control process in three weeks later. Someone replaces the printer cartridge. We're talking about work clothes that are spontaneous burst of immediate work to action something that is super urgent so that there was all this data That had come to bear that have been stored in hot storage for 10 years. And I thought there's got to be something that we can do to help move our customers from like I said being reactive and responding more efficiently and effectively to starting to anticipate issues by leveraging that information using machine learning a

little more effectively. So that was the vision that we could move from kind of reactive and responsive to proactive in predictive. And then the platform opportunity really came when I started talking to customers until we going to like you referencing is so it referencing is so much more important than interviewing because anybody can interview while you learn a lot about people and companies it when you do references to I talk to more than 20 customers and probably twice that many users. I became very boring at cocktail parties trying to find developers and asking them about their

pagerduty experience. But what I learned was a people loved and trusted the products, which do you almost never here and it like, you know, I love my software product says no one ever but our users Pagerduty because of the trust that we built over the years you will not get notified or page. If there isn't an issue. There are no false positives that's important when you've got to be woken up in the middle of the night if half of America is down because there's a big shared cloud service failing pagerduty will still be up and we'll still be guiding you on what you need to do and when you

need to do it and so with that trust comes a lot of responsibility, but also a lot of opportunity our customers started using pagerduty for other forms of unplanned spontaneous, but mission-critical work, like customer service or security or even Finance billing and collections marketing growth marketing etcetera. And so the fact that that the market and the business and the product presented a lot of opportunity was really important to me but the most important thing was the culture. I mean, the reason that I leaned in and started really diligence pagerduty was the culture was

very unique you have these three Canadian dudes who are super open and We're willing to have someone come in and put their fingerprints on a culture that was already quite inclusive and already in a fit of and competitive but also kind and transparent and I felt like this was the place where I could not only be comfortable and be my best self but it was a place where I could build on that culture to start to change the industry as well. And you know, anybody who tells you culture is not important has never run a business because

culture is strategic imperative at 26 s whether it's how what your customers expect from you or hire employees engage with you at supper. So that culture has evolved over the years but it started with this very strong Colonel that that came from her are co-founders that I just can't understand how important that was. And the last thing was that Alex was ready Alex, you know was the co-founder that was running the business at the time and having being the founder and having someone a little coat. Take over leading. Your business is a little bit like putting your baby up for adoption in

sticking around to watch someone else parent. It is like it's not fun. And so, you know, you got to go into that with really eyes wide open and I guess and Alex has been a terrific partner in that transition giving me the autonomy to leave the business and shape the business over time but also being a confidant and an adviser and you know, not letting me press Tumblr Dino get confused by data that I'm seeing his he's our historian and he's also a fantastic the customer is out in the field more than half the time now advocating an evangelizing within our customer base beautiful. So our

topic is breaking out of an inch to break it a really great background for that question. So you got a really strong existing business. You've also been very focused on new products new customer I use cases etcetera. How do you walk and chew gum at the same time? How do you dominate your Market on and break out of what's Poshmark, but it's really hard and there's a lot of risk-taking involved because if any of you have read Geoffrey Moore crossing the chasm, I'm a big fan of that book because it really describes this challenge the fact that you've got a sub really

successful product that has tight product Market fit. We impact created a category and leave that category, but we know that if we want to continue to grow the company we had to identify Horizon 2 and Horizon 3 to drive growth. You can't manufacture it though. You have to start with, you know, your customer and how people use your product how you leverage the trust that you've engendered to find a new Avenue and so for us it was it was a couple of things one. It was adjacent products. So we already had people depending on us using our core solution and there was a gap in the market around

event management event intelligence and then incident of automation automating the response for unplanned work. So that was the area we move first. Then we started to see these new personas and you use cases come up and that sort of where we move second but we we never lost sight of the core. So then we all we we serve recognize what role is product plays in our customer Journey so friends and all of our customers start on the core product. We didn't didn't give them the choice to start on product for your product or products that that is the core pagerduty solution is the on-ramp for the

platform and then we build on that and that's allowed us to continue to grow that strong base through our land and expand motion which tends to be quite viral. But at the same time then sell and attach new products and services through more of a hiretouch kind of medium to high touch go-to-market motion where we leverage our sales and gross teams, and then the business has grown starting to think about accountability and ownership. So who owns Which p&l? Like our product team when we first started experimenting with new products, we immediately put goals up on the

board around the percentage of our net new are our that would come from new products and it was something the board pays attention to and by the way, you know, I think you're coming up on your 30th board meeting. I was counting in my head so much fun. You get what you measure making sure that you're getting contribution back from those product experiments that you run was was super important looking at the underlying unit economics. So making sure that even as we add products and

services were watching what happens to average revenue per user and average revenue per customer not underestimate the power of a good or bad pricing strategy. So I think it often we build products and we think of pricing later and pricing is really it's it's the front page of your packaging. It's often the way you can meet a Brand value her performance. If you don't think of pricing kind of first and you think of it as a lagging indicator, that's problematic. So those were some of the things that you know that we did to make sure we could do both and I will tell

you like the it's messy it's you know, it's not easy. So you've got to be prepared to stomach some of the challenges that come with it in the audience. So any parting words of advice for those who are trying to break out of an itch and break in a new markets while continue to dominate their existing one. Hopefully not let the market position you you need to position yourself. So like I could actually argue that with a 25 billion dollar tamut is an itch, right and the market would love to say all that's

just a little niche that second but no one ever believed would be this much less, you know where we're going. We always believed since the very beginning Category or were disrupting an existing category. We have a tendency to say what we don't need to, you know position ourselves Visa V the old competition etcetera because this is brand-new redefining the category will if you don't someone else will so think about how you're going to position yourself in the market Visa V your competition the rest of the landscape

and think about where the markets going to be in 5 years and how you blazed a trail to get there and what you're going to do to deep position others along the way cuz that's part of you know, winning in in a in a space that's constantly converging and changing any words would buy some how to bring the team along cuz you know, nobody ever said in the startup. I have lots of time on my hands give me more stuff to do. How do you get the team to go along with you values as people first and I've learned in Silicon Valley with my with my organizational behavior

degree that people like to talk about the technology in the widgets and the that, you know, all of the The bells and whistles, but at the end of the day, it's the people and how engaged your people are and how mission-driven they feel and how purposeful they see their work that is going to determine whether you succeed or fail and I can tell you when our people are highly engaged and they feel like they they're their voice is wanted and hurt and they feel like they can impact decisions regarding their work. We perform better and when we get away from that or you were less focused or

we're not communicating as well as we could be we we don't perform as well. And so just never forget what it is. This actually going to make the difference for you. It's not going to be your technology is going to be the people who built that technology is going to be the people who Market that technology and sell that technology and me even be the people who manage your calendar or support your customers in the middle of the night when they're tweeting and chatting for help. So those people come ahead of everything else cuz the tech problems are easy to people problems are harder.

We are out of time. I have no idea if we should just keep chatting here until they drag us off, but I'm happy to cuz I'm enjoying this. Keep chatting. So well, the company went public in April last year y'all of you see the pictures in the tweets and everything but going public is a journey that started two and a half years ago. When you start to think about your path as a company and going public as a lot of work, it's not just the the effort to get your financials ready and get the team ready. It's that the way you make decisions. Once your public company looks a little different than the

flexibility and that you have to run experiments and make decisions when your private and so we didn't take that decision lightly. We felt that going public would really help booster the pagerduty brand. It's a silly name every adult it comes in contact with pagerduty immediately tells us to change that name and we haven't done it yet for a lot of good reasons not the least of which is it is it got a deep connection to our user Community, but we really felt like going public would really help connect us to the Enterprise companies that we're starting to serve. Enterprise is increasingly

growing in his the majority of our Revenue comes from so it's been fun to sort of get out into the market and not have to start with what we're pagerduty. I know you never heard of us in this is kind of what we do because now we go see a CIO and we say that were pagers. He's like, yeah. I know. I know I'll have a hundred people in the company already use you and I didn't even approve it because we have a Bottoms Up selling motion. But the IPO is is is the start of something amazing. It's a little known fact, but most companies grow 10x post

being public than they did prior to being public and yet in in this part of the world. We often talked about the IPO as an egg exit in our company. We thought of the IPO as a wedding it was the symbol of a brilliant relationship that we're building with our customers is it's a long journey, you know marriages go through all kinds of trials and tribulations and ups and downs, but I'm sure we will but we anticipate to be Around for a very very long time. It has served two to be a great brand building exercise for us to the Enterprise pipeline, you know was

strengthened by going public being able to be transparent about our growth in our numbers actually been helpful for us because people used to underestimate little old pagerduty. And so that doesn't happen anymore. Now, you have to try and stop them from Nino getting overly excited about it, but it's it's been it's been an incredible journey in at the same time is very much the same in side of face beauty are cultural still the same. The people are largely still the same the challenges with with, you know, our customer Community are still the same and the opportunity is probably, you

know, big and getting bigger. There was a lot of fun. It was a great opportunity to look back on what we've done. We went public right after our 10th anniversary. So pretty good decade on the part of pagerduty and wiggle. It was a lot of fun to also celebrate our very early employees, you know who really took the biggest risk. I took the biggest swing to join pagerduty and help us build pagerduty. We also had customers join us on the New York Stock Exchange floor, which is amazing. A lot of them have been applying to work for us since doing that but the

New York Stock Exchange, you're literally directly above your team and as the bell is ringing you see this expression on people's faces like some mix of Joy disbelief release excitement exhilaration and it's a moment that I won't forget in my lifetime really really really cool there recently a countdown clock to 20 minutes now, it's back to zero. I think I told him I'd be giving us no 20 minutes and we don't burn very much of it. So we are starting to think about an organic rose has a way to complement our products at and we are also always hiring

great people and we've been very intentional about how we built our Workforce to be inclusive from the start from an operational perspective and just to give you an example of that when we open a new office. When you when you decide you're going to open a location you look at a lot of things like the cost of living in the cost of real estate and access to Talent proximity to computer science programs and loafing universities. We look at the diversity index. We look at me look for communities where we can make a meaningful impact on the community Itself by creating access for

underrepresented people who want to have careers in the tech industry, but also like getting to Talent that may otherwise not be visible to us here in Silicon Valley or in New York City or somewhere. That's very expensive to live. So this week in fact Monday. We opened our office in Ponce City in Atlanta in Midtown. It's very cool part of town near Ponce City Market's and one of our most diverse teams in the company. We are is really excited that we're going to be able to hire I think up to 400 people in that location before we have to expand again and then you know, we're also expanding

overseas. So in the last two years we've opened in London and Sydney. We have a large organization in Toronto and all of our offices are cross-functional so we don't have an engineering office in one city and a sales office in another city. We believe that's good to bring the voice of the customer into every office. And since we did that it's really you shift in our culture from engineer's building for engineers without you know, kind of visibility of the different kinds of customers that we support to sales people who now Understand what incident response and on-call really

looks like because they see their colleagues doing it. You know, when when we have an unplanned issue at work, I think so, I like holding a it's kind of fun. Have a great conference.

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