20VC: From a $5,000 College Fund to a $10BN+ Public Company, How to Beat People Who Are Smarter Than You, Why Happier Teams Outperform and How Software Buying Patterns are Changing in 2023 with Henry Schuck, CEO @ ZoomInfo

Henry Schuck is the Founder and CEO @ ZoomInfo. From ZoomInfo's founding moment, putting $25,000 on a credit card, Henry has led the company to today, with over $1BN in ARR, a market cap of over $10BN, and a team of over 3,600. This is one of the untold but truly great stories in software. In Today's Episode with Henry Schuck We Discuss: 1. From a $5,000 College Fund to Founding a $10BN Company: Why did Henry always believe early in life that he would be successful? Along the way doubt sets in, what did Henry do to combat that doubt when he questioned his own ability and potential? What does Henry believe he is running from? What is he running towards? How did seeing the work ethic of his single mother impact his work ethic with ZoomInfo? 2. Henry Schuck: The Leader: What does Henry believe is the difference between trust vs safety in team culture? Why does Henry believe safety is built through performance? How does Henry manage and communicate underperformance? How long do you give an under-performer? Why does Henry believe that happier teams outperform? What does Henry do deliberately and specifically to drive happiness in the business? ZoomInfo is magnitudes larger than some competitors who receive a lot more attention, how does Henry think about this? How does he manage his own ego as a leader today? 3. Henry Schuck: A Leader in a Changing Market: How does Henry maintain internal morale when employees see their stock options get smashed every day? Does it suck to be a public company CEO in the current market? What element is the worst? How are the buying patterns and behaviors of customers changing in 2023 vs 2021? How does this impact the sales cycle, retention rates, upsell plans, and the structure of the customer success teams? Dec 2023, will we be in a better or worse macroeconomic position? 4. Henry Schuck: Relationship to Money and Fatherhood: How does henry evaluate his relationship with money today? How has it changed over time? Why does Henry very rarely fly private planes? What does he believe this says about his values? How does Henry instill the same desire and worth ethic within his children despite being a billionaire? What does Henry know now that he wishes he could give to his 23-year-old self founding the company? Items Mentioned in Today's Episode: Henry's Favourite Book: The Happiness Advantage: The Seven Principles of Positive Psychology that Fuel Success and Performance at Work

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Speaker 00

  The big premise is teams that are happier, people who are happier way outperform unhappy teams and unhappy people. That happiness is actually the biggest advantage from a productivity perspective in business.

• 0:14Harry Stebbings?

  Welcome back. This is 20 VC with me, Harry Stebbings. And today we tell one of the untold but truly great stories in software. This company has scaled to over a billion dollars in ARR, a $10 billion public company valuation and over 3,600 employees. Yet, it did not follow the Silicon Valley and venture capital playbook. Today, we delve into their incredible story on how they charted their own course. And so I'm thrilled to welcome to the hot seat today, Henry Schuck, founder and CEO at ZoomInfo. This is a very special discussion. But before we dive into the show today, SecureFrame is the leading all-in-one platform for automated security and privacy compliance. SecureFrame simplifies and streamlines the process of getting and staying compliant

• 0:57Harry Stebbings?

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• 1:41Harry Stebbings?

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• 2:23Harry Stebbings?

  So you can hire faster, streamline more processes and stay compliant always. To see how Deal can scale with your team, visit deal.com/20vc. And finally, now we have this amazing global team. We want them to work amazingly well together and Retool helps you work more effectively. Most teams build custom software to make business processes work better. But building these internal tools from scratch takes time and engineering resources. And that's why teams at thousands of companies like Amazon, DoorDash and NBC build internal tools using Retool. And Retool is a very different way of building custom internal software. Instead of waiting months, you can now build out five to 10 apps in just an afternoon using a bit of JavaScript and SQL.

• 3:07Harry Stebbings?

  That's a game changer for your business. Retool is free to teams of up to five and startups now get $25,000 in free credits. $25,000. Just get started at retool.com/20vc. That's retool.com/20vc. But now I'm so excited to hand over to Henry Shuck, co-founder and CEO at ZoomInfo.

• 3:35Speaker 02

  You have now arrived at your destination.

• 3:38Harry Stebbings?

  Henry, I am excited for this. You don't know this, but I'm like the biggest fanboy of ZoomInfo's journey. I've been looking forward to this for a while. So thank you so much for joining me today.

• 3:47Speaker 00

  Absolutely. Thank you for having me.

• 3:49Harry Stebbings?

  Not at all. Now, this direction of conversation is going to go in a couple of different ways. But I want to start on the founding story. How did you come to found the incredible brand that is ZoomInfo today?

• 3:59Speaker 00

  This started when I was in college. I went to college in Las Vegas. When I went to college, I grew up in a pretty sort of middle-class family. I was raised by my mom. She was a nurse. She worked three jobs. When I graduated high school, she gave me $5,000, which was the remnants of an old life insurance policy. And she said, here's your college fund. Good luck. So I went to college. I ran out of that money. First year and I went searching for a new job. So I applied everywhere around Las Vegas. And I ended up landing at this early stage SaaS company. It was the founder and one other person. He was looking for someone to do administrative work. This is like 2002. And he sold an annual subscription service to a database. Basically reports on the information technology departments of large companies.

• 4:43Speaker 00

  And then he would send out a CD that had all the reports too, to these companies. And so I got this front row seat at a super early entrance in SaaS. It was 300,000 in revenue between 02 and 06. We grew it from 300,000 in revenue to just under 5 million in revenue. The business was 5 million in revenue and doing 4.7 million in EBITDA. There wasn't much of a business. It was this incredibly high margin company without much of a business infrastructure. I left the company and I went off to law school. And after my first year of law school, a friend of mine and I said, hey, why don't we start something that's like that? Doesn't directly compete and actually build a business around it. And we knew there was a market there. We understood how the business operated.

• 5:27Speaker 00

  We knew there was a large total addressable market. We knew what the product market fit looked like. And so we said, it won't be that hard to be better at the business side than the company we worked at in college. And so we did. We went out and we started building what was at the time, Harry called Discover Org, which is probably maybe the worst name in business history. So we started off in 07. I put $25,000 on my credit card. He put $25,000 in his credit card. This is 2006 Columbus, Ohio. There's no VC funding or VC appetite for these types of companies. So that was all the funding we had. We grew the business without any outside investor through 2014, where we were about $30 million of ARR profitable and brought in TA associates as a private equity investor in 2014.

• 6:10Harry Stebbings?

  There's so many things I want to add. I do want to start that you mentioned your upbringing. You mentioned your mother being a nurse, having multiple jobs. I always think that we're a function of our histories in many ways. And that separates into first, what do you think you were running from, Henry?

• 6:22Speaker 00

  When I was young, I really did believe that I could do anything. I could be anything that I wanted to, that if I worked really hard and set my My mind to something that I could achieve it, which I didn't appreciate. Everybody didn't feel that way. I thought that was something that everybody just intuitively knew. I guess I'm running from anything that is not meeting that full potential.

• 6:43Harry Stebbings?

  Can I ask you a weird question? I always had that same feeling of the inevitability of success. I wasn't sure how it would come, but I just knew it would come. But I do doubt myself and I have doubted myself and suddenly that, oh, well, obviously it will come. Suddenly goes, what if it goes wrong? What if I'm not as good as I think I am? Did you ever have that?

• 7:01Speaker 00

  Oh, yeah, I have it today. I think what you're saying there, when I think about that, it's what if I don't reach my potential? What if I do something that robs me of reaching the potential that I had? That was navigatable. I think that's the big fear is if you and I believe that we can be much more than we are today. And we can see it. And what if we don't reach it because of something that we could have overcome? That's the real fear that we could have learned, that we could have paid more attention to, that we made a bad decision that took us away from. That's the big concern. It's not that we're not capable of it. It's that probably we make the wrong decisions on our journey there.

• 7:39Harry Stebbings?

  I totally agree. I recently stopped drinking because I thought I lost 25% productivity a year and compounded over 25 years. I actually spoke to some of your colleagues and friends. And they said that your more humble upbringing, not being born into a life of great wealth, actually gave you a mindset of frugality, building the business. But in some ways, it prevented you from going for all out growth early on. Would you agree with that? And how do you think your humble upbringing impacted your mindset to growth?

• 8:06Speaker 00

  When I worked at that startup company in college, one of the things I learned was just what do you do with resource scarcity? So there was this moment where I met the founder of that company. We actually acquired that company in 2015. But the founder of that company, his brother was this big grow at all costs VC guy. And we met him one night and it was me and the founder and his brother, the VC. And his brother, the VC goes, why are you not investing in this business? It's just resource starved. Every dollar you're putting, you're generating hundreds of thousands of dollars on the other side. Are you not just aggressively investing in this thing? When we walked away from that conversation, the founder said to me, he goes, he's always spend, spend, spend.

• 8:48Speaker 00

  I like a business that's resource constrained because it ensures that the next investment you make is always the most important investment you can be making. And I was like, okay, I get it. There is like a continuum there where it's you're not investing enough to where you're investing way too much and you're getting sloppy with it. I think what was instilled in me was good businesses run profitably. And you're just not really a real business until you can figure out a way to be profitable and run a business. You can't just always be fundraising the next dollars to fund your operations. So I always believed that a good business should be run profitably. I also didn't have access to the capital markets in 2007, 2008, 2009 Columbus, Ohio.

• 9:33Speaker 00

  So there wasn't really an option to run the business in a non-efficient profitable way. That was more the driving factor than the upbringing part.

• 9:42Harry Stebbings?

  What worries me more is if I look at today's environment and I place you in it at the start, you would have got venture funding very easily and you would have got a lot of it. Do you think you would have charted your course differently had you had a lot more money a lot sooner?

• 9:56Speaker 00

  One of the real benefits of my journey is I started at 23. I didn't get any outside funding till I was 30. The business, we didn't do any really big M and A until I was 32. And I, so I had all of this time to mature, grow as a leader and build an executive team and build the foundations of a good operation and bring in a CFO. And I think if you rewind back to 2014, where we took our first outside funding or even earlier than that, and you said, hey, here's $40 million. Go spend the $40 million. I would make a tremendous amount of bad decisions along the way. I wouldn't have been as grown up and mature of a leader as I've become.

• 10:37Speaker 00

  And so the benefit of not being an overnight success, but being more like an overnight success 15 years in the making, I think has been beneficial for the whole business and definitely beneficial for me. When we were going on the IPO road. I remember I sat down with this one set of investors and they had printed out all of these like glass door reviews. By the way, we have a really great glass door rating and really great recommendations of me and the employees. But they obviously not interested in those ones. They want to talk about the bad ones. And so they pulled up the bad reviews and they were like, hey, so we read these bad reviews. Some of them would say that you get like really angry and what do you say to that? And I was like, I found this company when I was 23. We had hundreds of employees by the time I was 28.

• 11:22Speaker 00

  And you want to take like a snapshot in time of my leadership capability and ability and style. And lay it upon me like seven, eight, nine years later, that's just not really realistic. It assumes that I haven't evolved or learned at all over those years. And if you talk to anybody around me, I think what they would tell you is I'm a very different leader today than I was five years ago or eight years ago or 10 years ago. I think the opportunity to evolve makes you more likely to spend that VC money and grow your business wisely.

• 11:53Harry Stebbings?

  This is so hard. What do you know now that you wish you could tell your 23 year old self founding the business back then?

• 11:59Speaker 00

  Probably the biggest thing I would say is along these lines is don't worry about what the Silicon Valley companies are doing. You're charting your own course. It's unique and it's going to be rewarded. Just have a lot of confidence in that. Because to your point, Harry, when we were growing, we grew the business in Portland, Oregon. But it was really easy to look down in Silicon Valley and see how the VCs were funding Box and Dropbox. And all of these darlings of the early 2010 and then just look at our business and go, yeah, it doesn't feel like that. Why doesn't it feel like that? And then be really hard on yourself for not growing it profitably and growing it as fast.

• 12:38Harry Stebbings?

  Do you know what? If there's anything we've learned from FTX, it's that being on a magazine cover does not always lead to success, Henry.

• 12:45Speaker 00

  Yes, one hundred percent.

• 12:47Harry Stebbings?

  I think it's fine not being one of them. You mentioned bringing in the exact team around you and kind of fostering that culture. I honestly hate the word culture because it's so misused and fluffy. But I think it's important to start at home. What type of Culture you fostering within your own family?

• 13:02Speaker 00

  Yeah, I think probably the biggest one or the biggest thing that I'm fostering in my family is nothing comes easy and practices everything. And so my daughter, actually, the one time I made my daughter cry with words, yeah, only one time. We were driving in the car, we had a two hour drive. And she was talking about one of her friends who's really great at soccer. And her friend is like four years older than her. She's been on like a club team, she practices three times a week. She's really great at soccer and my daughter has never really played soccer. And she goes, Daddy, I'm better than Colby at soccer. And I was like, that's ridiculous. You are not better than Colby at soccer. You could be if you practiced as much as her. She goes to practice three days a week, she's on two teams, she's been doing it for five years.

• 13:46Speaker 00

  I'm sure you could be as good, if not better than Colby, if you did all of that. But you're not just like out of the gates better than Colby, that makes no sense. And she started crying and my wife was like, whoa, take it easy. You don't have to be like that hard on her. But in my head, it was like, listen, she's gotta know. You don't just walk into situations and expect to be amazing at them. But that you have to work really hard and practice and put in the time and effort to get really great at things. And so I beat that drumbeat constantly. The other night, probably a couple of weeks ago, my wife bought this embroidery machine. And it comes to the house and I'm like, oh, that's gonna suck. You're gonna really need to learn how to use that thing. It's not out of the box, touching, easy to use.

• 14:30Speaker 00

  And my daughter walks in and she goes, mommy, don't worry. If you practice really hard and you spend a lot of time doing it, you'll get better and better at it. So you've just gotta keep practicing. I was like, okay, great, that's landing. So I think a culture of hard work and practice leads to better outcomes is number one thing that I'm trying to instill. But at the same time, like she's growing up very differently than I grew up. Not her fault, but we spend the summers in Boston where half of the Zoom info team is. So we have a house there and we have a house here and we have house cleaners. We didn't have house cleaners growing up. And so really explaining to her where the lines are. Hey, you don't tell your friends, hey, my house in Boston, my house. In Vancouver, my vacation house, people don't have that. You're in a unique situation.

• 15:15Speaker 00

  You have to appreciate the uniqueness of that. When you talk about those things, it can be heard in a negative way. You don't have to be embarrassed about it, but you also don't need to talk about it in a way that feels like you're flaunting it. She understands that, and so making her appreciate it.

• 15:30Harry Stebbings?

  What's the most challenging thing about parenthood?

• 15:32Speaker 00

  I think there's a bigger question, which is I work really hard to be the best dad, the best CEO, the best husband. Those are like kind of the three things. Then I have to find time to be like the best to myself. But those three things are always stealing from each other. More time at work, less time at home. More time being a great CEO, less time being a great father. More time being a great father, less time being a great CEO. More time being a great husband, less time being a great CEO. And so the hardest thing is building a framework that says, in order for you to be a great father, this is the minimum necessary time and involvement that you need to be doing. Don't ever fall below that. And then always look for opportunities to do more.

• 16:15Speaker 00

  And so I put that in place in the way that I interact with my daughter and my family. But that's challenging. It's always challenging because left to my own devices, ZoomInfo would take all of my mind share, 100%. It's very selfish.

• 16:28Harry Stebbings?

  I always say when you're winning at work, you're losing at home. And when you're winning, you're losing at work.

• 16:33Speaker 00

  Yeah, yeah, yeah, 100%. I'll figure out a way to get them both going. That's the magic.

• 16:38Harry Stebbings?

  You mentioned there about kind of the practice and the hard work and then seeing outcomes. How do you think about culture then at work? And is it the same values that you instill from family values that you instill at the workplace?

• 16:50Speaker 00

  Yes, absolutely. I think, look, here's the interesting thing about culture. And I've read the books. We've talked about Frank Slootman and Snowflake. And I think the hard part about culture is you read Frank Slootman's book and you walk out and you go, okay, take the slack out of the rope.

• 17:05Harry Stebbings?

  It will bring your spear, kill someone.

• 17:08Speaker 00

  100%. And that is the feeling, but what do I do with that? What do I come into work and change and do? That's the hard part. We have a mantra that's get 1% better every. But what are you doing to make sure everybody appreciates that and is looking for opportunities actually to improve? I think the hard part about getting a culture is I can describe it to you, but what it really takes is really great questions about how the company operates and how it makes decisions that really can tell you the cultural story. The easy thing for me to tell you is it is a culture of constant improvement. You can't improve unless you have data that tells you how the business is operating. And then look for improvement against those.

• 17:51Speaker 00

  Ask questions about, hey, why is this worse than it was last quarter? Why is this worse than it was last year? If this is improving, why is it improving? Are we sure that the investments that we made behind it are what are driving the improvement here? That goes back to how you invest in the business and how you look for returns on the business. The biggest thing about our culture, it is a culture of constant improvement.

• 18:13Harry Stebbings?

  Trust and there's safety. And I always thought in teams, you needed both, actually. And Mickey from Volt, this very famous European company that sold to DoorDash for eight billion last year, said, bullshit, you don't need safety. I trust you, Henry, but no one's safe.

• 18:28Speaker 00

  Yeah, a hundred percent. I trust all of my executive team. I trust that they make the right decisions. I trust that they're focused on the business. But if nothing goes right for four quarters in a row, or all of the things that we were trying to achieve are not achieved, it doesn't matter that there's trust. Like, your safety is in your performance. That's it. That's where you get safety. I think that is actually misunderstood, which is people are like, oh, it's a hard-charging environment, and so I always have to look over my shoulder in case I'm gonna get fired or whatever. It's like, but that's not the case. The reality is, performance is what creates safety.

• 19:08Speaker 00

  What you've got to make sure of is that you're aligned on what the performance expectation is. If we have a conversation and I say, listen, here are the three things that I expect from you, and then here are the metrics that I'm gonna look at. Your ability to impact and drive those metrics, that's your safety. I don't care how you do it, I really don't. You may come to me and say, hey, Henry, listen- These metrics are really important. I'm not resourced properly to get to those metrics. But if I had an additional five headcount here, or 10 headcount here, or whatever it is, I can meet those metrics. If I don't, then the closest place I can get to your metrics is this and this. What do you want? Do you want me to get this close to the metrics?

• 19:49Speaker 00

  Or can you give me the additional headcount spend so I can hit those metrics? But being aligned to the metric and making sure like, hey, if I deliver against this metric, that's the safety. How I get there, that's the trust.

• 20:03Harry Stebbings?

  I asked earlier, what are you running from? I was the fat kid at school with no friends and it impacts my ability to be a leader because I just want everyone to like me. I struggle to deal with underperformance. So going to your point there of, okay, here are the three things. Henry, I'm sorry, I've missed all three things. How do you deal with underperformance in the right way? Because right now I'm too soft.

• 20:25Speaker 00

  So I think I talk about it a lot. No one's ever like surprised that they're underperforming. We're seeing that happen. Quarter one, it's missed. Quarter two, it's missed. By the time quarter three or four comes up, it's like, hey, listen, maybe it's not working. And at that point, actually, the conversation's not that hard. As long as you're constantly talking about the things that are not working and trying to help them achieve it. Well, I'm in this game. When things are not going right in engineering, or product, or sales, or wherever it is, I'm totally in the game with my leaders and trying to support and figure out how to fix things and get them on the right track. If ultimately it doesn't work out, everybody knows that it's not working out. They're not caught off guard.

• 21:05Harry Stebbings?

  Yeah, I think where you have the surprise, you have the problems. We mentioned a lot about how your family values have instilled into your work values. In terms of actually your takings from your parents, what was the single most important thing that your parents drove into you at a young age?

• 21:20Speaker 00

  Just hard work. My mom worked three jobs growing up. There was never a day she wasn't working. A day off was an eight-hour day. I felt obligated to work just as hard as she did. And in fact, like in the early days of success at ZoomInfo, I always felt bad about. People would be like, man, you work really hard. I'd be like, I work 11 hours today. My mom works Sixteen hours on a normal day on her feet in a hospital. This is not really hard work, yet the outcome on the other side of it way outperforms what my mom was doing. That always felt unfair, just unfair.

• 21:53Harry Stebbings?

  I would always say the same. You always say, oh, Harry, you're gonna burn out. I'm like, my grandfather shovels gravel on a golf course for eight dollars an hour at eighty. I have an EA bring me a macchiato at my nice desk.

• 22:03Speaker 00

  A hundred percent.

• 22:04Harry Stebbings?

  A jumper. Not really. Do you struggle with this entitlement culture? And this anti hustle, let's have Fridays off every other week. I'm like, I'm sorry, no. You wanna be great? Work hard.

• 22:16Speaker 00

  I do struggle with that. I have forever, by the way. It's just that noise to signal ratio has amped up over the last few years. I really believe that my success is attributed to how hard I worked in the business. Not just the business, but growing up, like in college, in law school. I always told myself, listen, I remember walking into law school and I all of a sudden was surrounded by a bunch of people who went to Harvard and Stanford and Berkeley. And I was like, okay, all of them are smarter than me. But I need to outwork all of them. Because if I outwork them, I can outperform them. And I did. That worked for me. And then in business, I felt the same way. Just outwork these people, out hustle these people, and then you will win.

• 22:59Speaker 00

  That's a pretty shitty reason to not succeed. I didn't work as hard as the other people. And I don't wanna wake up and go like, oh, I didn't succeed. But jeez, if I just worked a little bit harder, then I could have succeeded in this thing. Wouldn't like horrible regret? So I'm gonna work as hard as I possibly can. I'm gonna have boundaries in place to make sure that I'm also giving to myself and my family. But I will never walk away from an unsuccessful situation and think to myself, if I just worked a little harder, the outcome would have been better. I wanna take that off the table. But yeah, I think it's a weird new expectation of large rewards without the commensurate effort for those rewards.

• 23:44Harry Stebbings?

  Henry, what's your biggest regret today?

• 23:46Speaker 00

  There are things that I would have changed to make things easier and better. Along the way, but it's hard to have a real regret. I actually think I'd be like kind of an asshole to sit here and tell you, hey, I've got these big, deep regrets. The easiest one, Harry, I'm certain is I have not given myself a chance to appreciate what has happened here and the success that we've had. There's no nostalgia in it. It's always just like marching to the next thing. The minute the IPO happened, it was like, great. Now I gotta figure out how to do this for a decade. We bought our biggest competitor in 2017. It's a company that I woke up every day for 10 years, wondering about, searching Twitter to see mentions of, searching LinkedIn to see mentions of every day. First thing, boom, what are they doing?

• 24:30Speaker 00

  And we bought them in 2017, put the companies together. It was a great, successful acquisition. Today, people are like, how did it feel? It felt like a panic attack. That's what it felt like in the moment. Really nervous. How do you do it? Am I gonna do it right? How many mistakes am I gonna make? It would have been wonderful to have moments of real, deep appreciation for the success we had along the way. I haven't had very many of those.

• 24:55Harry Stebbings?

  Do you worry that you just won't be happy though if you never get off the treadmill? If you told me the things I'm doing now, I would be like, oh my God, amazing. But now I'm just like, more, it's never enough.

• 25:05Speaker 00

  Yes, totally. I don't view actually getting off the treadmill as a means to achieving that. I think it's just something we have to figure out how to do within our own minds and our frameworks. And we should be good at gratitude journaling. We should be good at thinking backwards. By the way, that's my.

• 25:21Harry Stebbings?

  You journey, Henry.

• 25:22Speaker 00

  Watch this. Give me two minutes and 30 seconds and I can get you on board. You ready?

• 25:27Harry Stebbings?

  Yeah, hit me.

• 25:28Speaker 00

  I hated this stuff. I thought basically if you tell me to gratitude journal, you might as well also tell me to drink kombucha every couple of hours and sing kumbaya melodies at what breaks throughout your day. It was just BS. There's this book that was written by a guy named Sean Acker. He's a Harvard researcher around happiness. They have a happiness lab and the book is called The Happiness Advantage. If you read it, I guarantee it'll change your life. It changed mine and the way that I think about things. And here's the big premise. The big premise is teens that are. People who are happier way outperform unhappy teens and unhappy people. That happiness is actually the biggest advantage from a productivity perspective in business.

• 26:12Speaker 00

  And think about all the stuff, Harry, that you do to get an advantage in business. All the little things, all the big things to get a little bit of an advantage. And it turns out happiness is the thing that drives the biggest advantage in business. And an outproduct of it is that you're happy. What can be a better productivity advantage? He went and did a bunch of studies. One of them, they took two control groups of people. And in one of them, they said, you gratitude journal every day, three minutes. Write down three things from the day before that you were thankful for. Not, I'm thankful for my health, I'm thankful that I have food. But key moments in your day that you were thankful for looking back. And if you do that for 21 days, what happens during those 21 days?

• 26:53Speaker 00

  Is that your brain actually creates a background screening application. While you're doing it, your brain is learning how to recognize those moments in the moment. And so instead of having to look back after 21 days, your brain created an application that just notices it in real time. And all of a sudden, you're much happier because in the moment, you're appreciating those moments of gratitude. I did it for 21 days, I did it for longer. It definitely works. You definitely are much more appreciative of the things in your life. And I think that is just one of those things where because it gets explained, by the way, mostly by these anti hustle, kombucha drinking world. It gets underappreciated when it's actually really valuable.

• 27:37Harry Stebbings?

  I find it slightly ironic having just had the conversation about you struggling not to appreciate. They do just.

• 27:43Speaker 00

  Yeah.

• 27:44Harry Stebbings?

  Gratitude journaling. I will give it a try and I will be open minded. I will do a deal with you now, I'll do 21 days. There we go.

• 27:51Speaker 00

  Do 21 days. You know what's cool too? I can go back and see what was going on. The things I was thankful for four months ago are actually pretty cool to read today. There is a lot of advantage to it.

• 28:01Harry Stebbings?

  People were buying software then.

• 28:04Speaker 00

  Yes.

• 28:08Harry Stebbings?

  But I have to ask this because. It is an amazing opportunity that you have such a fascinating purview being where you are. When we look at the market today, it looks concerning.

• 28:17Speaker 00

  Yeah.

• 28:17Harry Stebbings?

  What are you seeing in overall buying patterns and how do you think 2023 will look?

• 28:22Speaker 00

  I think the biggest thing we see today is people are rationalizing spend in a way very different from 2021 or even the end of 2020. Really believe that there wasn't like a COVID pull forward for our business and many other software businesses. But what did happen was that there was a tremendous amount of money in the economy that the government put in the economy in late 2020 or early 2021. So decisions about spending that money were very different in 21 than they are in 22 or from after the first quarter of 22 is when we started seeing it. In 21, let's say you have a sale to a midsize technology company. The way that the renewal would work is we'd send over the renewal paperwork to our main point of contact in the business.

• 29:05Speaker 00

  The main point of contact in the business would say, great, thank you for sending this. Can we actually add 25 users? We're going to grow into that. Great, thank you. We send back the invoice, signed, done, your renewal is done. You're off looking to upsell other clients and get your other renewals done. Today, that same renewal actually feels like, here's your invoice. Okay, thank you. We have to go take this to my VP and SVP to get this approved. Can we meet next week to discuss putting together a deck? Get me these stats on usage, get me these stats on ROI. And then let's go to my VP and SVP and present it. Go to the VP and SVP and present it. VP and SVP go, okay, great, super helpful, thank you. We're approved on this thing. We've got to take to the CFO to get it approved. Can we build a deck and take it to the CFO?

• 29:49Speaker 00

  Then we go and take it to the CFO. CFO goes, great, thanks, approved. Sometimes in the bigger companies, you have to go to a global CFO. But that is happening in all of our businesses, in every software business that's happening. When people say elongated sales cycles, which every public software company is saying they're experiencing, that is what an elongated sales cycle means. How does it manifest in your business? Our business, to have a high net retention rate, we upsell into the client base. We sell more users, more seats, more functionality. We run a really efficient go to market motion, the most efficient go to market motion in software, which means there's not a lot of slack in the rope. And so when all of a sudden the same renewal takes 30% longer,

• 30:32Speaker 00

  you lose your opportunity to go and find other pockets of opportunity within your accounts to sell to. And so that greater scrutiny is just, it's hurting efficiency and velocity. I'm hopeful that by mid 2023, people understand what the normal operating environment is going to be like, and then it softens in the back half of 23. I don't anticipate it does until then.

• 30:53Harry Stebbings?

  The one thing I really want to pick up there is you mentioned in 21, they'd also say, hey, and can we add 25? Now they're cutting most of their teams as well. Are you seeing that in terms of the seat churn, just not because of the product usage, but just because of team size reduction?

• 31:07Speaker 00

  99% of our accounts were not wall to wall in those accounts. We're much less penetrated within an account. The chance that the cut actually hits our user base is unlikely. What I will say is that there is a lot of focus on the usage of the seats. If you bought 25 seats and you really only provisioned and used 20 of them, no one's going to hope for the five to get used in the upcoming year. They're just going to cut those five out. That's happening for sure. The other thing I would tell you is we sell to sales departments, marketing departments. And even if there is a layoff of a SaaS salesperson, I don't see them not struggling to get another job.

• 31:48Speaker 00

  There is a very strong environment for hiring software salespeople today. Any of my salespeople have seven recruiting offers in their LinkedIn in-mail today. People may be laid off of their existing software sales job, but they're going to land in some other sales job, probably in software. At least today, you're seeing that happening. I anticipate that continues. There's a really tight labor market for software salespeople. So I don't see people sitting on the sidelines very long.

• 32:16Harry Stebbings?

  Have you had to change your org chart to accommodate the elongated sales cycle? And also the increased requests from customer bases on data, on usage, on ROI? You had to change your agile strategy?

• 32:30Speaker 00

  Structures of business. Yeah, yeah, totally. We had an overlay sales team that sold our sort of advanced and additional emerging products and functionality. And we ended up taking that team and instead enabling all of our sales team to sell that advanced functionality. And taking that team, it was a decently sized team, and then embedding it, pushing it back into the business. And saying, we don't need this overlay team. We'd rather give more slack in the rope by putting more bodies, more quota on the street. And lowering the number of accounts our account managers have today. So that they can continue to drive similar results as they were able to last year. We took a team of, call it a couple dozen SDRs, who, when you looked at the leads that they were processing, turned into very little ACV on the other side.

• 33:15Speaker 00

  So we said, look, let's self-service those leads, but then through automation, let's take these couple dozen SDRs. And let's build a renewal team who can handle sort of low to no-touch renewals. So the account managers don't have to focus on that, can continue to focus on upselling and selling through their different businesses. So yeah, we've made a number of tactical changes to account for that. December 2023, is it going to be better in December 2023 or worse? I'm of the opinion that it will be better because it will be normalized. I think today, there's just a bunch of panic-induced decision-making. That's not thoughtful, but just says, hey, troubles are brewing, so just stop doing a bunch of stuff. And it's sort of haphazard. At the end of 23, I'm confident it will be a better selling environment than it is today.

• 34:00Speaker 00

  Is it a pain in the ass being a public market CEO in this environment? Yes. I was just kind of like, you have to communicate every little thing and it's so private. You're like, guys, it's shit, but we're going to get through it in this way. Now you have to be the politician. There is no question, a tremendous amount of upside to being a public company. From a validation perspective, from an enterprise customer perspective, from an investor pool perspective. So don't hear me wrong about that. It is great for the company to be a public company. For a CEO who goes from a private company to a public company, as a private company, I had two private equity firms on my board. Before we went public, one had six years of operating history with me, the other had- Had three and a half years of operating history with me.

• 34:42Speaker 00

  They knew me really well. They knew how I made decisions. They trusted me. They trusted my integrity. They trusted how I made decisions about hiring and firing and strategy. We were very close, confidants, basically. And then you become a public company and you have hundreds of investors, probably forty, who are really important, long-term investors and shareholders. And they don't know you. They met you a couple of times during the road show. They don't really trust you because they're not in the trenches with you. You talk to them once a quarter to tell them the update after the earnings call. They all have different questions. They're all dealing internally with their own stuff. Their manager is asking them questions and then they don't know the answer. And so they want to ask you a question.

• 35:26Speaker 00

  There's this big constituency to manage that's different from when you're managing just two private equity shareholders on your board as your constituency.

• 35:35Harry Stebbings?

  Morale in these times is tough. When team members come in and they see that actually their stock is worth considerably less than it was yesterday just because of the fucking market. Like, how do you think about managing employee morale in volatile stock price environments?

• 35:49Speaker 00

  First of all, people have to understand what is going on, which they don't. There isn't a fundamental understanding of how the stock market works and what's happening. If you track our peer group, there will be a day where our peer group goes up seven percent. And there will be a day where our peer group goes down seven percent. Those days don't matter at all. They are just, the market's doing a thing. And I'm not ever going to pay attention in any situation where we're in line with our peer group. It's when we fall outside of the peer group, which is usually around earnings time, where we will either go up or down relative to what the peer group is doing. The employees don't know. That's how it works. And so they're like, oh, I think it's the shorts. The shorts, there's just a lot of shorts on this thing. Or, hey, do you know what happened?

• 36:31Speaker 00

  I wonder if there's like a thing that happened and that's what's taking it down or up. So the biggest thing is you have to first of all, explain, this is how the thing works. You get valued on growth and profitability over time. It's our job to execute on the strategy that we told the market we're going to execute on. That's how we get. rewarded as we execute well for a long period of time. They have to understand those fundamentals. I'll send out emails that explain that. And we had an earnings call where we reset guidance for 2023. The day after the stock dropped differently than the rest of our peer group. People still didn't totally understand why. And so I spent the next week just building a communications plan to explain. Here's what happened.

• 37:14Speaker 00

  Going into that earnings report on a relative basis. We were the third most valuable software company in the world from a valuation purpose. Snowflake, Cloudflare, us. There is an expectation of perfection. If you show up with anything less than what can be perceived as perfect. And by the way, we grew 46% with 41% operating margins. We showed up good. We just didn't show up perfect. In moments where you don't show up perfect and perfect is the expectation. This is what happens. Here's the stuff we're doing to address that. And here's what the chart looks like today after that drops. I think a lot of it is education around it.

• 37:50Harry Stebbings?

  Chris, we all have egos. The thing I get upset about when I look at Zoom info is I'm like, as you just said, the third most valuable. No offense, not as famous a brand as Dropbox, as Box, as some of the darlings who've been on magazines. Do you ever get, seriously, like, we're here smashing it, bringing big dollars in, killing it as a company. Where's our love? Do you ever feel that? And does that ever hit the ego?

• 38:13Speaker 00

  There is no benefit in feeling that. The way that I think about it is that the people who matter, no. You can quiet a lot of noise when you get upset about just about anything like that. If you just think about, do the people who matter, no? And if the answer to the people who matter, no, is yes, then nobody else really matters. You don't get worked up about the universe of people who don't matter. You should be focused on the universe of people who do.

• 38:39Harry Stebbings?

  I totally do. I think that's probably why you have a healthy mindset and I see a therapist so often. If you want to ask one final question, then we'll go into a quick fire. Circumstances change, the financial profiles change. We chatted a little bit before about it, but how do you think about your relationship to money today? How do you mean, Harry? I always thought that money was everything, actually. And then it kind of was. I got it and I was like, oh yeah, it does make you happy. And then you got to a little bit more and you're like, huh. I'm just hanging out with my mom and my brother. And it's this kind of awareness. It does to a certain point and then it doesn't. And then it really does again when you can buy the Gulfstream. But there's that middle ground where it doesn't. And that's where I struggle on it.

• 39:20Speaker 00

  Yeah, so let me talk about the Gulfstream thing because I think it's an interesting. It's interesting because I can afford a Gulfstream and I don't have one and I don't fly private very often. Because I think at some point, when you get to that other point, you're making more values decisions than you're making spending decisions. It's very hard for me to square my values with fly back and forth to Boston. It costs a hundred thousand dollars. It's just very tough to say that's the best way that I should spend a hundred thousand dollars. Never really been able to rationalize the spending on a private plane. And probably a lot of other things underneath that. Here's what actually happens with wealth. You have a limited amount of time and so you can't do everything.

• 40:03Speaker 00

  There's only a certain amount of things you can do. I'm not on vacation for 12 weeks a year. And so it doesn't make any sense for me to have multiple vacation houses or a yacht or any number of things. There is a set amount of time that I'm gonna have to go on vacation or really just spend my money. What you end up doing is funneling sort of your energy around those probably three or four times a year where you can have a big experience. And they're just not that expensive when you go do those things. You don't need hundreds of millions of dollars to have a nice vacation in a nice hotel somewhere. So my relationship with money is that I expect it to provide cool experiences for me. And I will use it as a resource to provide great experiences for me.

• 40:48Speaker 00

  But those experiences are always sort of tempered by value-based decisioning.

• 40:54Harry Stebbings?

  I have to be honest, I really love flying private.

• 40:59Speaker 00

  It's, I don't know, it's maybe that's part of it, like in and out of a very tough place to get in, I get it. Flying cross-country when there's a JetBlue plane going the same place. I actually prefer first class than a commercial plane.

• 41:13Speaker 00

  Okay, Henry, that's one to discuss. Listen, my friend, I want to dive into a quick fire answer. I say a short thing, you give me your immediate thoughts. Does that sound okay? Yes, it sounds great. Okay, so what's the favourite book and why? The Happiness Advantage by Sean Aker, because it changed the way I think about happiness as an advantage in business and made me a happier person. You've really sold me on this one. I'm going to send it to you anyways, I already wrote it down. You're too kind, thank you. I'll send you a Gulfstream. What's your... I've lost that battle. What's your biggest strength and what's your biggest weakness? My biggest strength is that I'm a great communicator, written and verbal. My greatest weakness is that often my passion for any topic may come across as anger or something other than being really passionate about a point.

• 41:58Speaker 00

  Tell me, what's your biggest mentor and what have you learnt from them? I would say my biggest mentor is a guy who's on my board, Todd Crockett. He's been on my board since 2014 from TA Associates and he taught me how to think about creating value in business and how to communicate how you're going to create that value with business writing in a really cohesive way. Who's the best board member and why? Todd's a great board member. I will say right now, the person who gives us the most insight is Mark Mater, who's the CEO of SmartGiant. He's really great because... Oh, you've had him on the show? Okay, awesome. He's great because a lot of the things that we're dealing with, Mark maybe dealt with a year ago or two years ago, or he just has a really unique insight on running a software company.

• 42:42Speaker 00

  He brings those insights to bear and he's always the person you're like, "Hey Mark, can you tell me what you think about this?" And he always has an insightful perspective. What's your biggest guilty pleasure? Cheeseburger. I'll eat fast food, I don't have any control over cheeseburger. Do you have an exercise routine? Every day. I work out at least 30 minutes every day. What do you do, run, bike? I usually run like two and a quarter miles and then I do some set of strength training, push-ups, sit-ups, bench press, something, strength after that. Do you get up early? I do get up early, but I get up early, I take a couple of calls, then I take my daughter to school every morning and then I come back and I exercise them in the office at 10. What do you want your legacy to be? Let me answer this in a little bit of a different way. There's a time where I'm not here. I would like people to say he was a really great person.

• 43:27Harry Stebbings?

  What do you believe that few around you believe?

• 43:30Speaker 00

  If we work really hard, our potential continues to open up and open up. And maybe said another way, I believe that if you get the right people around you and they're all committed and hardworking, that you can outperform and outachieve anybody else in front of you or around.

• 43:46Harry Stebbings?

  Don't know if I agree. I think you also need to be really good.

• 43:50Harry Stebbings?

  Some people say that to me. I'm like, I don't know if you're good enough.

• 43:53Speaker 00

  Yeah, that's fair. You also have to be good.

• 43:55Harry Stebbings?

  Palms at one. What would you most like to change in the world of SaaS?

• 43:58Speaker 00

  That's easy. I think that the way companies go to market is really inefficient. And that growth is solved by adding more heads and not adding better processes and systems for go to market. And I'd love to see a more forward looking and thinking and sophisticated go to market motion in SaaS.

• 44:16Harry Stebbings?

  December 2027, so five years time. Where's Henry then? And what does the world look like?

• 44:22Speaker 00

  Assuming I can continue to do my job well, Henry is still CEO of ZoomInfo. And he's really happy and the company is growing 30% a year over year. And the world of SaaS, I think, is back to really fast paces of growth.

• 44:38Harry Stebbings?

  Henry, I've loved doing this. It has been so much fun and so really appreciate you joining me.

• 44:42Speaker 00

  Awesome. Thank you, Harry. Thank you for having me. I really appreciate it.

• 44:47Harry Stebbings?

  I mean, what a fantastic guy. I just love doing that show. A huge thank you to Henry for being such a brilliant and open guest, moving with a very flexible schedule there. If you'd like to see more from us, of course, you can on 20vc.com. You can also find us on YouTube at 20vc. Always love to see you there. But before we leave you today, Secureframe is the leading all in one platform for automated security and privacy compliance. Secureframe simplifies and streamlines the process of getting and staying compliant to the most rigorous global privacy and security standards like SOC 2, ISO 2701, HIPAA, GDPR and others. Secureframe's industry leading compliance automation platform, paired with their in-house compliance experts and former

• 45:32Harry Stebbings?

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• 46:16Harry Stebbings?

  in one platform with a tool built to evolve with every stage of your company's growth, no matter who, how or where you want to hire. So whether you want to compliantly work with a contractor on a project in Argentina, hire an employee where you don't have an entity, or run payroll for a direct employee overseas, you can do just that and so much more with Deal. It's way less HR admin and a whole lot more peace of mind. Simplify global team management, payments and HR. So you can hire faster, streamline more processes and stay compliant always. To see how Deal can scale with your team, visit deal.com/20vc. And finally, now we have this amazing global team. We want them to work amazingly well together and Retool helps you work more effectively.

• 47:00Harry Stebbings?

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• 47:44Harry Stebbings?

  Now, if you are thinking about raising a first time fund, stay tuned. We have the ultimate masterclass coming on Wednesday with an incredible deep dive on how to raise your first time fund from institutional and normal LPs. It's a great, great show.