With Lyft’s and Uber’s recent IPOs and the pending IPOs of Silicon Valley unicorns like Airbnb, Pinterest, and Slack, the world shines a light on the mythical way in which Silicon Valley startups change the way we live and work. It’s storied founders, hard-driving teams, “asking forgiveness” as a business tactic, bottoms-up go-to-market, with San Francisco at the epicenter of it all.
But creating a successful startup is really hard, and the venture way requires velocity and explosive growth that is extremely difficult for even the best companies to maintain. There are other ways to be a highly successful startup and not enough talk about them.
Blackline (BL), which offers a SaaS platform for a company’s financial close, is based in Woodland Hills in Southern California – not exactly a tech mecca. Their CEO, Therese Tucker, famously shared, “You could hear the VCs running away from the room when they heard a divorced, older woman was the CEO.” In her talk about busting myths, Myth #1 was “there is a playbook.” She found a match for her company in private equity, not VC backers. She couldn’t compete to get the best talent, so she just picked “crazy” but committed people. “We had people who had mental breakdowns. We had alcohol abuse. We had prescription drug addiction.’” But they coached and worked with their employees who tried their best and gave Blackline their loyalty in return.
Blackline IPO’d and has a 2.5B market cap.
My own personal experience with this was when I took a call as a courtesy to my colleague, Marty, from a company called WebFilings. They had a terrible looking website and built SaaS software to help companies file with the SEC. Turns out they had 98% customer retention, a 45-day sales cycle, off-the-charts customer satisfaction, and were adding new product lines as fast as they could build them. They were approaching $50 million in revenue in just a few short years and exploding out of their sprawling complex in–wait for it–Ames, Iowa.
That wasn’t all that defied expectations. They expressly avoided contact with all VCs, opting instead to use local investors. The leadership team called themselves “Managing Directors” instead of standard executive titles, and put loyalty above experience in how they managed. They opened offices wherever pockets of talent cropped up or their leaders wanted to live: Boulder, Scottsdale, Bozeman, or Boise. None of their employees had Silicon Valley pedigrees, many coming out of nearby Iowa universities. One even came out of the marketing department of a local casino.
The fairly young team was well-intentioned and full of ideas, but calibrated metrics, a strategy and systematic support of sales and product were absent. Yet the CEO at the time, Matt Rizai, was only encouraging, gracious, and grateful. After a team presentation, I turned to him and asked, “Why didn’t you ask more of them?” And he told me, “It’s important to know your horses. If that was you, I’d have been much more demanding. But if I’d done that to them, it would only have demotivated the team. How does that serve the company?”
He knew who he had to work with and that making it work was the most important thing. He did not try to press his people or company to conform to an impossible “Silicon Valley” norm that wouldn’t have served them well.
WebFilings went on to become Workiva (WK), went public, and now has a 2.2B market cap.
Blackline and Workiva reinforce lessons we know intuitively but few in Silicon Valley really practice. If the engine of what makes companies succeed are the people and management practices inside them, having people who are willing to be in the trenches with you and all that comes with it — trust, the freedom to make mistakes, a willingness to grow — matters far more than the pedigree we’re made to believe matters. Too many managers and VCs miss companies like Blackline and Workiva and the capable people in them because they are too busy applying their typical patterns believed necessary for success. Yes, the Silicon Valley template does work and can yield exceptional results, but often it does so at really high costs (in every way).
At a time when far too many tech companies look and sound like each other and we’re worried tech is losing its moral compass, isn’t it time for us to disrupt our own notions of what is necessary for success? Try taking a chance on people and companies that are outside the Silicon Valley mold and see what it brings you. It might surprise you.