Building a SaaS Company with Operational Discipline: Betterworks CEO Kris Duggan (Part 5)

Sramana Mitra: You didn’t really have any proof point yet. You didn’t have a product out. You didn’t have anything going. You just got a concept financing of $15 million from Kleiner.

Kris Duggan: The fact that I was in the process of having those 80 conversations and mapping the market was critical to the decision. Another critical factor was just how passionate John is about goal setting. He brought the goal setting process to Google. He worked with Andy Grover on OKR. He was already bought in to the concept. Just the fact that we were building a whole company around goal setting was very exciting to him and that’s why he invested.

Sramana Mitra: In October 2013, you’ve got $15 million in the bank. What happens next?

Kris Duggan: After that, we started growing the team. We’re about 80 people now. We have about 200 customers. We’ve now started working with larger accounts. We have about 25 of the Fortune 500. That’s growing pretty considerably right now. Tens of thousands of seats are being deployed here and there. We’ve also expanded the vision of the product beyond just enterprise goal setting to the concept of the business operating system.

The business operating system has three core components today, which is strategic planning, collaborative goal setting, and performance conversation throughout the year to have people performing at their highest level. We believe that if companies do the strategic planning, collaborative goal setting, and frequent performance conversations, they’re going to be a high-performing company that is truly operationally excellent. That’s the vision of the software. Once we started expanding into that, that is what led us to our Series B financing which we just announced recently. We brought Jason Green on the Board and raised a $20 million financing.

Sramana Mitra: I actually know Emergence very well. I know exactly what their investment philosophy is. They actually don’t do concept financing. They do financing based on metrics. To whatever extent you’re comfortable sharing, what kind of metrics were you able to achieve? $15 million is a very substantial Series A. It gives you ammunition to get very far. How far did you get before you raised the Series B from Emergence?

Kris Duggan: We just did that in March. The company was a little over two years old after doing the A round. You’re right. They’re extremely metrics-driven. It’s not a speculative investment. In fact, doing the $20 million B financing required a lot of due diligence. To give you an example, it required that we have a full leadership team in place. They’re looking for world-class SaaS leadership teams. They’re looking for significant evidence of customer traction. Our ARR is in the seven digits right now and growing to eight digits this year. We have a great vision, compelling story, and a big market. I believe they did 17 reference calls on our executive team. They did 10 customer references.

Sramana Mitra: They had invested in SuccessFactors as well, so they know the space very well.

Kris Duggan: Yes, Jason has been involved with Salesforce, SuccessFactors, Yammer, Box, Veeva, and now Betterworks.

This segment is part 5 in the series : Building a SaaS Company with Operational Discipline: Betterworks CEO Kris Duggan
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