FORGET "Growth at ALL Costs" ft. Christian Kletzl

# Revenue Reimagine Podcast Transcript

And so from a sales perspective, we changed how we communicate our value so that we can help you in this, like how you can sell, because there's less fear of messing up if someone has already bought your product.

**Welcome back to another episode of the Revenue Reimagine Podcast.** We are so lucky to have with us today a super special guest. We have Christian Kleleinen with us. He is the CEO and co-founder of a company that I know Dale and I have both admired for a long time, but I would venture to say most of our listeners have as well, and that is UserGems. Christian, thanks for joining us.

Hey, Adam, what a great introduction. Thank you so much. Great to be here. My job's over. Have a good show, guys.

The radio random always comes out in the introductions, so it does.

Awesome. So what we like to talk about with founders—and I don't think a lot of founders do this really well—is tell their origin story. Tell us a little bit about the UserGems origin story. Why did you guys start? You must have had something in your head like, we have to change something.

I always say, how much time do you have? Because it also actually took a while, and I think that's one of the things that I always a little bit overlooked. Like, UserGems is now well known, but the fact that we started working on something like ten years ago is something that's easily overlooked. And I'm so curious about that infancy, like when you guys are starting and having that idea, because it's probably evolved over time.

Oh, absolutely. So we started out working on something, and it was always like a data product. Back then, the very first thing was actually we were analyzing what you purchased online via email receipts and compared it to like, we scraped the web to figure out how much is this worth. So we helped you resell products. That was the very first product, and that was very unrelated to what we're doing today.

So I'll skip a little bit, but the interesting thing is it has always been like kind of private data—what you purchased—compared to public data—what it's worth.

Um, we pivoted there, but we had a product. We had a company that was called SmartHires. It was a candidate sharing network. So it was like, companies with the same, could say, "Hey, I had this really great candidate, but they're not a good fit because I'm looking for more junior, senior, different location, et cetera." So you could share, and one of our customers there changed their job, and we noticed that we tracked them down and turned them into a customer again. And we thought, "Hey, this was really easy. We should do this for all of our customers."

So how long ago was that?

So SmartHires was about 2015. We got customers there, but this whole thing—that happened, I think, 2018. And I think this was also for B2B. You always need to know, like, how long am I sticking with something, right? You're not immediately getting results. But in this case, because of this hiring product, we had already professional information. Like, we were already able to get professional information about candidates. So we could take this technology and use it for, what if we can track customers for changes? So we basically used our product and could change this into this love. And it was so interesting how quickly the people we talked to about this new thing that we developed were so much more interested in that than the other product that we had. So we very quickly knew, okay, we need to fully focus on that.

And then, like, fully focused, I think the first customer was 2019.

Wow, cool story. So UserGems has been around for a while, right? Like you said, you know, you look at the journey from '15, the first customer to '19. We're now in '23, almost '24. The entire tech landscape has changed over that time. And specifically what I'm talking about right now isn't necessarily like the advent of AI and everything, but you've gone through this growth-at-all-costs mentality to sustainability and scaling properly. And it's funny—the one question we ask pre-show because everyone knows we don't script these—is like, what's something that's near and dear to your heart? And when I saw this answer, it was near and dear to my heart because it's something that Dale and I are super passionate about. Talk to me a little bit about how UserGems has adapted and isn't doing this kind of growth-at-all-costs and is really focused on true sustainable growth. Because I think a lot of founders that listen struggle with how to grow in a sustainable manner versus just go higher, 25 ARR, and they'll solve your problem.

Oh my God, yeah. I think that the benefit that we had of, let's call it, not being successful at the beginning with the other startups—so the original product, this B2C solution, this is actually one we went through Y Combinator with. So kind of like, okay, decently interesting, but we never managed to really raise much funding. And because of this, we were always forced to be like super creative, very efficient in how we do our sales process. Like, if you go to a conference, how can you just buy one ticket and have the maximum impact? So always being extremely cautious. Plus, it was really hard to raise money. Like, we actually saw the reality of the fundraising, which showed us it's basically impossible to fundraise like that.

And then 2019 came, and it turned out that it looked like fundraising is really easy. But we still had this memory of the real times where fundraising is actually difficult. So we always thought, "I do not like, what if times change and fundraising gets difficult again? I don't want to be in a position where I have to fundraise in an environment where it's really hard," which is the regular environment. So I feel like this DNA of suffering—like, I talk about—ABNB talks about the Thousand Days of Pain. I talk about the 1500 Days of Pain. And I think that prepared us well for all right, imagine actually an environment where you don't have any funding. How would you act in that environment? And it's so so different.

Evolve on that a little bit. So now we're in this environment. There's a lot of people contracting, sales cycles are expanding, average deal sizes are going down. So what are you guys doing at UserGems to like try to shift the field? Do you mean how, what we do internally for us to make sure we're still efficient? How are we still like closing deals on time? You're getting a decent forecast? Because I think a lot of founders and heads of sales and different people are struggling with, like, forecasting pieces. And so I'm just curious how you guys are kind of managing that challenge.

Yeah, yeah. I think there are two very big and important things. Like, the first one is we had to adapt even our message to this environment. Right, like before, as you say, this was like the FOMO environment where it's like, "I need to buy every tool. The fear of missing out." And now it's more like FUM—the fear of messing up. So I don't want to, I don't want to like, it's kind of like this whole, "Nobody ever got fired for buying IBM" came back. Where I can get fired, money is so tight. If I buy a product that's not being used, that's not valuable, then that is really bad for my reputation.

And so from a sales perspective, we changed how we communicate our value so that we can help you in this, like, how you can sell because there's less FUM—less fear of messing up—if someone has already bought your product. So we managed to get from a messaging of, "Here's how you get pipeline quickly" to "Here's how you can get pipeline that actually converts."

So I think that was the biggest piece. Like, in every, the biggest one is like, we need to adapt to what buyers care about. So we changed our messaging. But then obviously, you also need to adapt your own organization, like how do I forecast? And how do I think strategically about the future?

And what I found really, really helpful there is our investor communicated very early on. Ultimately, there are two things: When you do your forecast, you know how much money you have and how much money you're going to spend. What you can't predict as well is how much money you're going to make, right? And so if one is totally in your control and the other one isn't, then be as pessimistic as possible in that forecast.

And so our goal is always, what if the worst case scenario happens? How can UserGems still grow or like be efficient? And then everything else is like this positive surprise in the month or the quarter.

I like that. So I love that. And I think, you know, when you look at, you know, things like forecasting and worst case scenario, a lot of founders don't look at it that way, right? Like, I've been in the boardroom with CEOs who are giving the board such BS about numbers that are going to close. And it's like, and I literally, Christian, had a founder tell me like, "Well, we'll just deal with that next quarter when the deals don't close." Like, that's not a way you want to approach your board, my friends.

That's not a good solution. You want to make your board allies, not enemies. And have your board work for you. But when you look at especially now, sustainability is key, right? But you still have to scale.

Yeah, so when you're looking at balancing the need to scale and scale rapidly to what VCs want, but also sustainability and being realistic, how do you tow that line and walk that tight rope?

Yeah, if you know an answer there, tell me as well. But I think, here's how we approach this. I told everyone in the company that life right now is more difficult than, let's say, a year ago or two years ago, and this applies to everyone, right? For the marketing manager, it's harder to hit their goals. You need to do more with less. This whole statement, customer success, every renewal is really a negotiation. Selling is harder. So really, life is harder for everyone.

But what we've always done as an organization is we don't like throwing bodies at the problem. I always hated that. Rather, what I did is I gave the promise that life is hard, you will do more than you did last year, and we're going to stretch your position. But on the other hand, it also means that I promise you that we need you in that role. We need you to perform in that role. And it worked really well, just making sure that everyone knows basically their importance in the organization, even though it means there will be a short period of time where they will be stretched.

I think right now we're in that period, and I hope that's going to be over soon or it gets easier next year. But I think this year is just a little bit where everyone needs to stretch a little bit.

And I think you said something really interesting because if you tell them the why, they're much better than if you just tell them like we have to double your workload or you know you have to take on this new project. And if you say we're asking you to do this because of X and hopefully it's only for a Y time, they're much more willing to give that time and effort.

Yeah, yeah. And I think really the big thing is acknowledging it, that this is the case, because it totally is the case. And I see our people work really, really hard, and I see how much work there is right now. But on the other hand, it also means that we're all working on making UserGems a really good company, and we're still growing really well in this environment, which means that we're achieving the goals. And that then motivates people, and that also allows us to hire more people and make sure that we divvy up the workload.

So I'm going to go a little bit into that same mode because one of the things that you were talking about a lot of people that are in this environment right now, and I'm speaking mostly to sales, marketing, and revenue-focused type people, are having a hard time trusting companies. Because even if they were performing well, like the big cuts across Microsoft, like all the big companies, how do you earn the trust when you're talking to top talent to come to UserGems?

I think there are three things here that I think are really important. The first one is that right now when I do interviews, I actually tell them that it's a stressful time. People are working a lot. Be prepared that this is going to be the case for the next six months. But at the very same time, I also want to highlight that people are still happy at the company.

So for example, I always tell them, look at our Glassdoor reviews. They are great. As well as reach out to anyone in the organization. For example, in the very last stage, I can tell them I'm happy to make the introduction, but you can actually reach out to anyone in the organization to see how it really is.

And I think it's the mixture of telling them it's going to be tough but also that for us, I really think our employees are still happy at the organization.

But I think there's one more that I think is really valuable. There's this new metric that's really important: revenue per employee. It's really one that we have always optimized. We looked at comparables of companies our size, and I think we're in the top ten percent of this. And it tells the story in both directions. It tells okay, our people are very efficient. They probably work a good amount. But on the other hand, it also means that we really need everyone in their seat because you are really generating a lot of revenue for us. So we are not over-hiring. We've never over-hired based on our DNA, plus we're really efficient with everyone. And I think the combination of this story works well for us.

I think it's interesting there's not a lot of people who could say we've never over-hired. Most founders that you speak with, I think, would look back and be like, yeah, we really did over-hire. So it's great to hear that you have always taken that sustainable approach.

Christian, when you look at where you've gone as a founder, a lot of our listeners are, you know, first-time founders trying to figure out their leadership style, how to adapt, how to build a team, how to lead for the first time, right? And that's hard, especially a technical founder maybe who hasn't been in sales and hasn't really had as much of the interpersonal skills. Talk to us a little bit about how your leadership style has evolved from the start of UserGems to now.

Yeah, it's also interesting just based on my background because I'm actually an engineer by trade. So I don't know, the history of UserGems is also really interesting. My co-founder is my identical twin brother.

Oh, wow.

And which means we have the same skills, right? We have the same, this could be interesting. It's also really interesting because I actually was the one that studied engineering. He studied business. And he now leads the engineering team. I lead the business team.

But it also means I came from a background where I didn't know how to do sales. And I remember the first hundreds of calls, how nervous I was before that call. But I think for the engineers that now need to do sales roles, I think the most important thing is it's really a skill that can be trained. I'm now there's no hesitation. I'm very comfortable doing these calls. And I can tell you that five years ago, that was not the case.

So I think that's just from being the founder, being the CEO, and just basically taking any role at some point. You can learn it.

In terms of leadership style, I'm really, it's really interesting for me to see how this develops as the company grows because there are different things that are required from me: from managing individuals to managing managers. And obviously the way you give feedback changes.

But ultimately, I decided for myself what is really important for me that I do, and then I think others in the organization should do. Because anything it seems like anything I do will be emulated by the people reporting to me.

And the number one thing that I found so important is, and this is a word that's overused, but I'm going to tell you in a second, it's really collaboration and support. And what I mean by this is every single new hire, still to this day, that starts at UserGems, I have a call with them and I tell them that you cannot bother me enough. The only time you can bother me is if you didn't tell me things you should have told me.

And that is now the case. We have CSMs contacting engineers. We have so many people reach out to me with questions or with helping a CSM. I think everyone in the organization helps everyone because I think this was immediately what was super important to me as a leader, that it applies to everyone.

I love that. I think it's very difficult. A lot of people talk about open door policies or reaching out, but they never really carve the time out. So I really like that.

Yeah, think back. I want to highlight we just hired new CSMs, and we told them because the larger the company gets, they can hear the words, but then they don't dare to reach out. So I told them I have...

# Podcast Transcript

An hour earmarked for the first four weeks where my focus is on getting you started. So this means reach out and make sure you use that hour. Yeah, and what happens if they don't use the hour? Do you reach out to them then?

I tell them like, "You didn't use it." Yeah, absolutely. That's where you then start to bother me, right? Where you didn't reach out but you should have. I think that's important.

You may have to put your thinking cap on for this one. So you go back to when you were like a founder-level sales person. You're building this thing out and you're at founder-level sales. What was that one inflection point? That critical path that kind of flipped you over into, "Okay, now we have product-market fit. We're going to start scaling." What was that inflection point for you?

I told you, you may have to put your thinking cap on. Yeah, yeah. I think that I always say jokingly, but there's certainly a truth to it, that I realized we had product-market fit when I could sell the product. What I mean by this is like I was not the trained SAE person. I was not the person that knew exactly how to ask the right questions, but I knew that I showed empathy. I tried to understand the problem. I didn't know how to multi-thread or really get the right people involved to push the contract forward. But once signing deals got easy... and there's also the story. So we celebrated like when we closed the deal. I sent out an invite to everyone in the company for a five-minute celebration. And at the beginning, it was like every, I don't know, five weeks. How do you guys work if all you're doing is sending out invites for five-minute celebrations?

I didn't even tell you we close a lot of deals.

What I didn't, I didn't even tell you what we drank during the celebration. So that also made it worse, or even better. But basically, as soon as these, as soon as we had a celebration every day, I knew that we found something that works because it drove interest to us.

So what did you drink during the celebration?

Oh, it was always a vodka shot. It was the song like, "All we do is win, win, win." When I went in my mind as soon as you said that, my God, I'm going to have that in my head forever.

So it's funny. I was at the Pink concert last night and she was joking around and did Baby Shark. So she's like, "And you could all thank me for your next two weeks of not being able to get that stupid song out of your ear."

I like the idea of shots every time we win though. That's a good one.

So as the product continues to evolve, and it's funny, I'm normally much more sales-focused and less product-focused, but I find myself asking a lot of product questions because I'm fascinated by the pivot and the journey that you guys have taken. But especially with your engineering background, there's this balance between innovation and wanting to tweak the product and make the product better, and perfection, right? If we can't ship this until it's good, like you can't ship crap. How do you balance that inflection of like, is it innovation? Is it execution? And what wins, and when do you just say, "Ship it?"

I would even add a third layer to this. I think there's the innovation of like, big product releases, really like that, maybe a new line of product that drives new revenue versus the day-to-day feature functionality of individual products. I find myself, this is actually much like, it's so easy to be in the daily grind of like, this customer requests this, this customer requests this. So let's make this small feature, let's make this small feature. I find myself very hard to say no to the small features. And now we need to have rules around it. All right, it needs to be requested at least X times until we make this functionality. So basically, zooming myself out and thinking more about the product and then Chris calling all his favorite customers, "Hey, request this. Hey, request this if I like. Request is big piece, please." Okay, because I think the interesting thing is we are actually, we don't have issues with not shipping. And I always describe this, and I think because my brother is a maniac and he wants everything shipped extremely quickly, I think we have this...

Your brother and Dale would get along.

It's basically, I think he's just completely scared of having big company processes, of like how, because it slows everything down. So we, in a sense, we release pretty much everything way too quickly. But it means for us we have kind of like the CSMs that especially work with the product in like the first two weeks. So we have kind of like our own testing through our own employees. But we always ship extremely quickly. We get the complaint that we ship too quickly from some people in the organization, but I think it's really the only way you can innovate fast enough.

I love that. So at Revenue Reimagined, we believe in giving more than getting. So you've been gracious to give something to the audience. Let them know. And I just, it looks really cool, by the way.

Yes, no, it really is. So it's swag, but it's actually a MOMA lamp. So the first time we saw it in MOMA, it's a User Gem branded lamp where you, it's a magnet in the middle. When you connect a magnet, then it lights up. And we started sending these out for C customers as a thank you for reference calls. And after that, like they did the reference call, we sent them this, then we got another thank you from them where they showed us photos of how like the children played with it. So definitely check it out. It's a really cute lamp. And we're going to give that to 10 listeners. Eight. Because we're each, we're each going to steal 10. Ten listeners. We will figure something out to do for 10 listeners.

I just pulled it up on my screen and that does look super cool.

Yeah, super cool. Pretty darn cool.

Christian, one of the things that I don't think gets talked about in tech enough is DEI. You know, I've always made it a point leading sales teams to build very diverse teams. I don't want 25 little mes running around. What is User Gem's approach to DEI? And I want to piggyback that with, do you think tech is doing enough to solve the ongoing lack of DEI?

Yeah, it's such a good question. And the later you try to solve this, the more difficult it gets. Like, we had good diversity across the company, but for example, we didn't have it in the sales team where I think the first five people were like young male salespeople. And we really thought like, "Hey, we will run into a problem here because people want to see, 'Who am I working with? Can I identify with that person?'" So we have our leader in marketing who is female and Asian. So we know the importance of the diversity of thought. She always pushes back on me and it's super, super helpful in that direction. So for us, it was really identifying what are even the pockets in the organization where we are maybe lacking in diversity, and what can we do about that? And for us, because the longer you neglect this, the more it becomes kind of like a self-fulfilling prophecy where fewer people apply that are diverse because they can't identify themselves in the organization. So as soon as we identified this, we made sure that we talked to a lot of, in this case, female salespeople to understand like, "What do they care about? How can we make the organization better for them? And how can we make sure that we also add, in this case, female sellers to our team?"

Awesome. I love that answer.

So founders and CEOs are always the visionaries of their companies. So what do you see, and things are evolving so quickly in B2B tech for User Gem, where do you guys see yourselves progressing to over the next two, three, five years?

I think it's such a timely question because there's so many things coming out right now. Specifically, I'm also referring to Gmail's cutting back on what they identify as spam. It gets basically, so far the answer has always been, "What is that?" The answer has always been like, "Let's send more emails," and it's already not working for the last few years. And now even more so, right? Like the answer in a bad environment is always, "Let's send more emails," and that's not working anymore. And so what we see the world is going towards is not that there will be no more cold outreach. There is, there's a need there. Like it solves a need, right? Like people identify, "Hey, I could really need this product. It can actually help me." But you need to be much, much more thoughtful around who am I contacting and why. So I call this kind of like every email, every touch point that you have needs to justify its existence. And this means we're not putting them into a 12-step sequence.

anymore because maybe the E step doesn't work anymore. And instead of the E step of this follow-up email, I reach out maybe to someone else in the organization, or I have an advertising add to them. So that's a really long answer for—I think that we are getting much, much more thoughtful around every single step that's being taken by every single person in the revenue organization: the SDR, the AE, even in advertising.

And when we think about user Champs, we think about the signal of a past champion joining their job as a really, really valuable one, right? That's for the SDR. You should certainly reach out. It has a high conversion rate compared to, let's say, a cold email in getting a meeting with that person. And there are more signals that have a good conversion rate. So where we want to get to is: what are more of the signals that we can enable you and maybe even rank, and make sure you're taking the right next best approach in your outreach.

Love that. It's super important. Yeah, absolutely. All right, let's do some rapid fire. The rules here are 10 words or less, or Dale hits the gong. Where's the gong? Is there a gong or is this no? I'm gonna have to get a gong. He says you might have to get a gong.

Christian, if you weren't in tech, what profession would you be in?

Something with finance. I'd be an investment banker. I just love playing with numbers: engineer to owner, founder to investment banker.

Cool. Yeah, but I was not allowed to be in tech, right?

Yeah, yeah, yeah, true.

So going back, you're in your founder-led sales going into the product-market fit. What do you start first: marketing or sales?

You need to start with sales. You need to talk to the customer first and understand what they care about.

Love that. What's the first app you check when you wake up on your phone?

It's my Eight Sleep bed to see how I slept.

I thought of getting one of those. We'll have a whole separate conversation about that. It's the cooling bed, right?

That is right.

Nice, super cool. I think this will be an interesting one for you. What's the most used emoji in your work chats?

I think it's a thumbs up, or the tada. I like the tada.

Let's change it to nice. I was gonna think it was like the vodka cheer thing.

No, we're a mature organization now. We're not even doing the vodka shots anymore.

What's your one go-to to unwind after a long day?

The answer is, whether it's a long day or not, it's meditation. And that's during the day as well.

Nice. Awesome. Last question as we wrap up: dream vacation destination?

In the wilderness in Norway, watching the Northern Lights.

Yes, love that. Very cool, very cool. Christian, thank you so much for joining us. It was great to chat with you. It was great to learn about your journey, to learn about User Champs. Where can people find you? What's the best way to get in touch?

I think LinkedIn is really easy, and Christian at userchamps.com. And if you run into me, there's a chance it's my twin brother.

I love it. Awesome, Christian, thank you so much. It's been a pleasure. Have an absolutely awesome rest of the day.

Awesome, great to chat.