Building an Analytics Company to $10M+ in Revenue: Mode Analytics CEO Derek Steer (Part 6)

Sramana Mitra: What happens next?

Derek Steer: When you raise money from a venture firm, you show them an optimistic projection of the business and then you are expected to hit it.

I remember the key moments clearly but the day-to-day memory of May 2015 is lost. If I sum it up into what happens next, I would say financing is a natural place in which founders tend to reflect on what is happening in the business and the leadership teams. You had to step back and look at everything holistically during a fund raise.

It’s hard to remember day-to-day moments because you are mired in the problems. The things that take up time on a day-to-day basis aren’t the strategic things. I remember when I was in school, everyone wanted to work at strategy. The reality is strategy is such a small portion of time and execution is such a big portion of it.

Sramana Mitra: With startups, you don’t change strategy every day. Hopefully, you don’t change it. Otherwise, you won’t get anything done.

Derek Steer: Every one of these financing rounds has changed who I am as a person a little bit. This was my first feeling of growing up into a CEO. There is a difference between a founder and a CEO. It’s an important difference. It’s one of the differences that make a CEO.

Aside from knowing where the pitfalls are, there is also an attitude aspect of being a CEO from day one that is important in understanding what it means from a leadership perspective to align a company around certain things.

That was something that I had. It’s been something that I have been developing in my whole career as a CEO. My realization when we raised series A was that I needed to grow up now. 

Sramana Mitra: Tell me some of the inflection points and highlights of the journey from this point on. 

Derek Steer: There is a recency bias here. Partially because of conditioning, we recognize milestones around things at base 10. The $10 million mark was a big one. 

Sramana Mitra: When did that come?

Derek Steer: We hit that ballpark a year ago. It all blends especially now in this COVID time when it’s hard to tell the difference between a month ago and five months ago. It’s interesting because when you hit the $10 million mark, there is no conversation about it.

Some of the moments I remember are these conversations where this one investor lit a fire to go from zero to a half a million in five months. That was something that I remember clearly because I couldn’t sleep for two nights. 

Sramana Mitra: In terms of customer acquisition strategy, what became your enduring go-to-market strategy?

Derek Steer: The word enduring is an interesting one. The businesses that grow often do so by selling more stuff to the same audience or selling to a new audience. Both of those require different motions in the thing that got you to test the product.

One of our investors said that product-market fit is a liquid amount of solid. It’s something that evolves. Right now, we have an engine that works incredibly well in small businesses and new markets.

We have lots of folks who adopt cloud data warehouses like BigQuery and Mode along with it. Where we don’t have a foothold is in the Fortune 500. Most companies have been slower to adopt modern data tech. They are more hesitant to move data into the cloud, especially data with top security concerns. That is something that we are working on.

One of the big milestones for us to get Anheuser-Busch as a customer. The market proof point is really important. The Snowflake IPO is a really big deal for Mode in terms of the implications on our market and our space.

Last year, a number of companies in our space were acquired. Looker and Tableau were acquired within a month of each other. I remember I was on paternity leave at that time after the birth of my daughter. Each morning when those acquisitions were announced, I received a flurry of text messages from people that don’t normally text me. 

Sramana Mitra: Go back to my question about enduring customer acquisition strategy. 

Derek Steer: Here’s the thing that I think is important and enduring for us. We sell to primarily analysts and data scientists. The person who buys Mode and really pounds the table for it is a director of analytics and data science. For that person, as with many technical audiences, they value authenticity.

It’s different from selling to a salesperson. If you want to sell CRM software to a sales team, you could take people out to dinner. That does not work for our audience.

Our audience can smell phony cheesy tactics from a million miles away and they hate it. That’s why open source tends to be adopted so well. That’s part of it because, from the early stage, we produced content that was to show other folks that Mode is associated with good data analysis.

We are people who live and breathe the problems of analysts and data scientists. We have done this job ourselves, and we understand what that means. We are not telling them explicitly that we understand it; we are just showing them that we are showing good analysis.

My co-founder Ben used to publish blog posts on the analytical breakdown of MTV’s video music awards. That kind of thing resonates with people. It’s fun for people to read, but it also showed people that we understood what this job is about.

One of the things that I recommend to people when they join Mode as an introduction to our space is reading a book called Dataclysm which is by one of the founders of OkCupid. The reason why I recommend this book is not because it tells you about data analysis itself, but the whole book is an example of storytelling through data in a way that we serve.

Our product and people help users do that type of analysis. Dataclysm is a thing that everyone can read about and understand. They find the online dating scene interesting and funny. It’s an entertaining book, but underlying all of that is a fantastic example of who these people are. Conveying that has been a big part of success in the market.

This segment is part 6 in the series : Building an Analytics Company to $10M+ in Revenue: Mode Analytics CEO Derek Steer
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