Successful Pivots on Product, Market, Business Model: Gigya Co-Founder and Chief Strategy Officer Eyal Magen (Part 6)

Sramana Mitra: What are other highlights in the journey of building Gigya that are major strategic points where you went to the next level? Of course, one of the big strategic moves was figuring out what problem you were going to solve and achieving that product-market fit. It sounds like you achieved that in the 2006 to 2007 time frame.

Eyal Magen: Originally, we provided the product for free. We were thinking that sites would integrate their systems and we would find advertising opportunities around the data. Switching from a free model to a SaaS pricing model was a big decision. There’s something to be said about that because once you find out the right model for your company, a lot of things in the organization become clear because you know the metrics that you need to watch. Everybody knows that for SaaS companies what’s important is new bookings and your renewal rate. It’s the same for every SaaS company. If you’re an advertising company, you have a different set of metrics.

Sramana Mitra: When you made the pivot in 2006, you were thinking of being an advertising-based company and not a SaaS company?

Eyal Magen: Yes, that was also our background.

Sramana Mitra: How long did you have that assumption of the advertising business model and when did you switch to the SaaS business model?

Eyal Magen: I think we were building the product in 2007 to 2009. I believe it was in 2009 or 2010 when we decided to go for the SaaS business model.

Sramana Mitra: That’s a gigantic leap.

Eyal Magen: Yes. I remember very clearly in a Board meeting where we said, “We need to decide if we do this or that.” As I said, we looked at data and it seemed that we had traction from bigger clients. They were coming to us and saying, “We want to pay for this.” We had to do a big mental change and get everybody aligned.

Once you have the right metrics for your company, it’s more efficient. Everyone knows what the metrics are. For every department, you can say, “This is how I’m going to contribute.” Client services says, “I’m more in charge of renewals.”

Sramana Mitra: The organization design is different for an advertising-based company versus a SaaS company. Did you have to get rid of a lot of people whom you had hired in the advertising model?

Eyal Magen: No, we weren’t big at that time. We were mostly still R&D. We did have some sales people that were more from the advertising background but they were flexible enough to make the shift. It was before we scaled so we had a relatively small sales team. When we started scaling, it was already with the SaaS model in mind.

Sramana Mitra: What else is interesting in the story? I know you raised a lot of financing over the years?

Eyal Magen: Right. When we went to the SaaS model, one of the things that we needed to agree and understand is that SaaS companies take a lot of time to grow. Because unlike 20 years ago where you were licensing software, you would not be paid a lot in advance. With the SaaS model, you are planning to get four or five years from a customer but you have to finance the growth and you have to finance the one or one and a half year with the customer.

It’s a very long play. It takes time. Salesforce took nine years to get public. What we’re trying to do is what Salesforce did to the B2B market which is becoming the central place for a business to hold their data about their clients. We are doing that for the B2C market.

This segment is part 6 in the series : Successful Pivots on Product, Market, Business Model: Gigya Co-Founder and Chief Strategy Officer Eyal Magen
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