In this episode, I talk with the Co-Founder and CEO of Passageways, Paroon Chadha. Passageways is in the secure enterprise collaboration space, which has 2 product lines. One of the products is OnSemble, an employee collaboration software that allows employees to engage with each other. The other product of Passageways is OnBoard, a board collaboration software that pulls together a paperless and seamless experience for board members and executive committees.
Paroon explains how he and his co-founder started in the credit union industry. They received a seed investment from a credit union, and the company quickly became one of the fastest growing companies in that space. They then transitioned to community banks, and grew to a total of five verticals.
Topics in the episode
Transitioning from boot strapping to receiving funding
Growing from one market into others that are adjacent
How to operate both horizontally and vertically
Customization of the products within each vertical
Getting key tactical and strategic support from the board
Building an international office based on the needs of the market
Utilizing the products within your own company
Mike Kelly: Welcome to the Startup Competitors Podcast. Today we have Paroon Chadha who is the Co-Founder and CEO of Passageways. Paroon, welcome man.
Paroon Chadha: Thank you. Pleased to be here.
Mike Kelly: It's been a long time since we chatted. I really appreciate you taking the time to do this. Why don't we start with an overview of Passageways and what you and your team do?
Paroon Chadha: Absolutely. We are a company based out of Lafayette, Indiana. That's where we started. We also have offices in Indianapolis and London, UK. About 100 people serving nearly 1,500 customers at this point. We are in the enterprise collaborations space, secure enterprise collaboration space to be more precise.
Paroon Chadha: So, really the two product lines we have. One is for the employee collaboration. So across the organization it's just a collaboration software that allows employees to engage with each other, stay on message, stay on plan and so on. That's called OnSemble.
Paroon Chadha: The second product is a board collaboration software for board meetings, people-less board meetings and the entire workflow that goes into pulling together a seamless experience for your board members and executive committees. That one's called OnBoard.
Paroon Chadha: So, two products essentially at this point. Both are growing product lines and uniquely we are one company, and probably the only company that allows you to look at your entire enterprise collaboration from the tip of the pyramid all the way to last employee you may have. We like to say from boardroom to the break-rooms. Collaboration software is really where we live.
Mike Kelly: Very cool. So, before we turned on the mics... maybe this is a good spot to have this discussion, you had mentioned that you're a five vertical company, can you unpack that for me a little bit?
Paroon Chadha: Yeah, absolutely. We grew up in the credit union industry which is interesting because me and my co-founder, Chris... our seed investment came from Purdue Federal Credit Union. This is right after school that's all we knew and that's where we went. We started to really work with credit unions and we got really good at it. In fact, quickly became one of the fast growing companies in the space, as well as, end up in the Inc. 500 list of fast growing companies in the entire country.
Paroon Chadha: Then we looked at some adjacent markets and community banks was the obvious next best place to go. We started to find success there as well. From there we needed to expand to other markets, product supply pretty broadly. So we started to go into community, hospitals and you start to get the idea... When you go into a small town like Lafayette, Indiana, there's always a community hospital, a community bank, a few credit unions. We found that niche and we really just started to get good at it.
Paroon Chadha: Thereafter, we've become very good at universities space as well. Increasingly, we are starting to show up in the non-profit space as well.
Paroon Chadha: As an organization, we have products that apply very broadly. These are horizontal products. Really it's tough to really make your mark, or really become the solution that comes to mind, if you're trying to service the entire market. Passageways, up until last fall was a bootstrapped company. That plays into your strategy at a very deep level. So without wanting to raise tens of millions of dollars, we wanted to make sure that we're very good at servicing the customer.
Paroon Chadha: It really came down to making some good relationships, finding some good use cases, being able to talk to their pinpoints and that's where we started to go from one to two and then at this point, our strategy's around being very good at these five verticals. It's reflected in the way the products is being developed. It's reflected in the way we recruit our employees. It's reflected in the way we partner with other companies.
Paroon Chadha: It's interesting that we've drawn a line at this five numbers for the moment, at least, simply because we feel like there's a lot of cross-pollination of ideas within these five verticals, yet there is a need for each one of these to be dealt with different. In the long run, I can see ourselves having a GM over each one of these verticals.
Paroon Chadha: We are not a horizontal playbook when it comes to sales and marketing, but outside of sales, marketing and the customer success function, we are a horizontal company, the tech support and the product development is actually being done pretty much as one product line, if you will.
Mike Kelly: That's what I was just going to ask because I think through that. So, yeah. How much customization is there by vertical in the product itself or is it really just how you position it for a sales and marketing perspective in each of those verticals?
Paroon Chadha: That's a good question. I think if it was just a sales, it's just sold vertically and it's a horizontal product, you get very little out of it, you do have some value to that. But I think we've gone, at least, a couple of steps deeper where we have partnered with organizations that are actually really very integral and very important in that space. I'll give you an example.
Paroon Chadha: We partnered with an organization called AGB. AGB Is Association of Governing Boards and they are a powerful membership organization out of DC. They work with the university presidents and their trustees. We've actually just built a product offering and we even co-branded, we call it AGB OnBoard. With the result that we get a lot of input on product functionality. We also get a lot of content that needs to be actually shared with that particular audience.
Paroon Chadha: When you think about a university, you have to think about how they are very different compared to the local bank. The local bank is motivated about the quarter and the year and the next recession. Universities don't think about that. They're planning horizons at 10, sometimes even longer, 10, 15 years. The trustees are there for a very long time, the tenureship at the board is actually really at a different level. The committees are very different.
Paroon Chadha: To be able to service them, just as a tech company, would require you to gain a lot of small anecdotal pieces of information that can actually make you good. But when you have a partnership going, then you can really just plow through not having to be a subject matter expert, just being a company that makes beautiful software, software that works well, but it's accurately then fitted for that audience through this partnership. I think that's where we found was the right cut to make as an organization.
Mike Kelly: Got It.
Paroon Chadha: Same thing in other words, because of course, we repeated that again and again.
Mike Kelly: Yeah. When did you start Passageways? What year was that?
Paroon Chadha: So 2003 January.
Mike Kelly: 2003. So you bootstrapped for-
Paroon Chadha: 15 years.
Mike Kelly: ... 15 years, right?
Paroon Chadha: Absolutely.
Mike Kelly: What led you to decide to raise money?
Paroon Chadha: So, I think, raising money it's a tricky decision. How much, what time. It clearly started with some seed capital. So we knew the benefits of actually raising money and we got a lot of calls when we were on the Inc 500 list and 5,000 list of people actually wanting to put in money. I think, in our journey, we were profitable right from year one. That's a key difference... We were profitable to the point where we could actually go very fast and diversifying into different products or going into different geos.
Paroon Chadha: All of that was always been tried, but we really just never saw a real repeatable growth engine. Once I started to feel like this is very repeatable, like there's not a single day at Passegeways when we don't add a new client. Sometimes we add, five, seven, 10 customers in a single day. I remember last December there was a day when we added 27 customers.
Mike Kelly: That's awesome.
Paroon Chadha: When you get to that repeatability, that's when you know it's time to actually now multi thread this and really make sure that you are able to increase your impact. So we took capital last fall and really from that standpoint, this came at a point where we knew the sales and the marketing was very finely instrumental. We needed to add capital to really increase the impact. That's what actually led to the raise that happened last year.
Mike Kelly: Got It. So then talk a little bit about that change. 15 years as a bootstrap company to now, where I'm also assuming you probably didn't have anybody from the outside asking you about returns and status and things like that, to now, I'm sure, investors have needs and wants in terms of where you're going and updates and stuff like that. I'd love just from your perspective, contrasting life before to life after, what's different and maybe some of what's better, what's worse.
Paroon Chadha: Absolutely. So I think, first of all, bootstrapped world and a funded, a real round being raised. This is chalk and cheese. This world is really very different for me. I've probably been a better student of this just because things that happened rather slowly and you really going to get to understand the difference.
Paroon Chadha: In the bootstrap the world I still... the operating cadence was actually driven by efficiency. You were because you were the only one responsible. I had a set of advisors that I've kept along for several years just to really make sure I'm putting my feet to fire and really just solve some of the tricky challenges that show up in a timely manner. But there were not as many expected returns every month, every quarter and so on.
Mike Kelly: Yeah.
Paroon Chadha: When we raised money... Now we have a formal governing board. That board actually has an operating plan. We need to make sure that we are not tripping any governance in our agreements and raising any alarm bells for no reason at all. I think it really changes the way you operate as well.
Paroon Chadha: So the operating cadence is gone from being efficiency driven to growth driven. There's a lot of appetite at the board level to try and either fail or succeed as long as you're very clear about why you are doing things in a certain manner. So this board has been very supportive in just making sure that we are maximizing our growth potential.
Paroon Chadha: They're also very supportive in doing things that we would not be able to do on our own in the past. So I get a lot of key input in terms of strategies and sometimes even tactical support. A good example would be, we started down the path of building a UK office. I had one single employee for a year and a half. After the growth funding we've increased that to a 10-people team at this point and we have... We know that by the end of the year we'll have, at least, a hundred customers in UK.
Paroon Chadha: A lot of that is a result of finding out exactly what will it take to really build a scalable team there. We've had to go together there a few times just to make sure that we understand that market. I got some air cover from my investors in terms of researching the competitive landscape there where they have analysts who could study that for me. I just don't have the cycles in the day to worry about a market that I'm not even actually really serious about yet. So that's been a big difference.
Paroon Chadha: The other big difference here is that you get a little more strategic about working on the business rather than working in the business. So my role has changed considerably. I have to think about the board meeting cadence and really making sure that we report back on everything that we actually discussed. Like most boards, you get what you invest into it. So to be able to discuss some key questions and bring out where the blockages maybe or where the key opportunities are, that's been a big difference.
Paroon Chadha: To be honest, it was the wild, wild west when I was just running it with some advisors I could ignore their advice. Now, there's a little more rigor. I could still like really go back as the operator and say, "My discretion says this is not worth pursuing or this is something that we should accelerate," and the board supports it. We met our numbers for every quarter so far, so I don't know if they would be different if that was not the case. But I certainly get the sense that I have an inner sanctum to the organization where I can discuss some real key issue, sometimes some very tricky issues. This could be your own blind spots, but your own weaknesses and really work to the words making this an organization that scales regardless of how I would want to do certain something.
Paroon Chadha: Then that's the biggest difference that I see. Being able to really take a strategic look at the business itself. Investors want returns. The day you raise money, you've already sold the company... at least a part of it. I get that quite clearly. But it doesn't have to be... In my search, I was looking for the investor who has the appetite to really just turn this up and really get it to $100 million in ARR. Really build a company that's across industries, across geographies, really build something that you could truly make it the one and done scenario for myself.
Paroon Chadha: I think this board supports that, but it requires... it forced me to really work on the business. That actually really led to a different leadership team, led to a different planning cadence and all of that. That's been the biggest difference. I would not be able to plow through so much because at the very least you had this doubt, "Okay. Why is this cheap?" Anybody can tell me what needs to be done, but there's no skin in the game so I got actually... They still go back and VA, "Is this the right time to do it?" Maybe the right thing to do it. Is this the right play to make? Am I right sizing these efforts?
Paroon Chadha: But somebody being on the same side of the table, really somebody who's seen plenty of investment... Our investor is five Ls, growth fund out of Kansas City. They've invested... they've recently just raised $300 million fund. That is the fund for... So they've invested in SAS businesses for a while. Very successful set of people. So the advice has ready credibility that comes with it.
Paroon Chadha: There's some interesting discussions that we have and I feel like that's the biggest difference that I actually... I was truly missing it as well. So in hindsight, this was a great move for Passageways and for myself as well.
Mike Kelly: So when that move to work more on the business and less in the business... and you mentioned changing the way you think about your leadership team and want that to look like. Maybe we can go from you then to that next level down and talk a little bit about how that's changed over the last couple of years and what some of your biggest takeaways are there.
Paroon Chadha: Yeah, that's how it actually really just know is... it plays out. You go from, "Okay, I want to actually more strategic team. I definitely want people who are well supported by their teams. I'm going to actually not underfund anything. You also need to accurately keep scores a little better.
Paroon Chadha: So the first thing we did was we said, "Look, we've had a good run. There's growth every year. There's profit every year. This is a business model that sustains. We've sustained it. The question is, could we actually accelerate? Accelerate in a form that actually really continues to stay sustainable in the long run.
Paroon Chadha: So obviously the capital is an investment that we have boarding at this point for the first time. So there's a... There was a need to really have a lot more rigorous accounting of things. There's the cost of customer acquisition or the gross margins or the... within the two products, the cost allocation.
Paroon Chadha: So the first thing we did was we looked for hiring a CFO. That was the biggest hire we made as well. This is the only other c-level I have in my team. The CFO is Colin. Colin worked in several Indianapolis firms and he has been a great addition to the team. We also hired a controller to make sure that when we're working cross geography, the sales tax and Vat and all that stuff, that needs to be in proper place for you to be able to scale without having to get stuck every time you take the next leap.
Paroon Chadha: Outside of the accounting function, we also wanted to bring a lot more rigor to our product management. So we hired Doug Wilson. Doug's actually from the exact target ecosystem. He leads our product management team. So other product managers, Nathan and Ann who've been... Ann's been there for more than 10 years. Nathan is about 10 years at this point.
Paroon Chadha: These are the old timers who really understand how everything is balanced. While they're good at what they do, we needed somebody to really just look at this more strategically and that's where Doug really has helped. We also hired a head of engineering.
Paroon Chadha: For the longest time we had a lot of people who'd shown leadership. These are leaders that we've known over the period of time, but they didn't really have the space in their calendars even to really just be objective about the engineering roadmap. The product roadmap we're all obsessed about, the engineering roadmap always gets... that's the one that I could get to this.
Paroon Chadha: In fact, we hired Mike Cobb and Mike's accurately Angie's list and several other companies here in the ecosystem as well. He's come in and he's really just talked about this is not just a tech that we are paying for this reason. He's also trying to right size that technology. To get 200 million, we will be at 20,000 customer base with 5,000 ACV. Are we going to be at 10,000 customer with 10,000 ACV? That's a very key decision. If you don't know the answer to that, there's no chance you can build the right technology set because there's a big difference in the way you'll architect the entire thing.
Paroon Chadha: So I think we become strategic in product, in engineering, in finance. Those are the key differences. I've had a settled leadership in marketing and sales of a while, I'm blessed with that, and that's actually wonderful. They've actually kept up with everything. We've also actually added a layer in our tech support and compliance and security area of the business because we are under secure collaboration space, security is key. Getting to your SOC certification, ISO certification, these become full time job.
Paroon Chadha: So those are some of the things that we've added. Personally for me, I went from actually running an operational meeting on Monday and another operational meeting on Wednesday to then saying, "Okay, strategic view is going to be once a quarter," to now actually finding that even the one on ones with these leaders who've been there and they've seen much bigger organizations to really just be discussing much more of what are the key gaps, what are the key things that we are seeing that could be growth drivers and then not having to worry about operationalizing it. I didn't realize how much of a hold back that was.
Mike Kelly: Hold back meaning?
Paroon Chadha: Yes, I'm not breaking any news, I am human.
Mike Kelly: Yeah.
Paroon Chadha: When you come up with the news, "Oh, that's great, actually let's do that," but then you also have to design the team and the tactics and the playbook. You are not as enthusiastic about some of these areas. So these new changes allowed me to really think about what are the right things to do. Then honestly, I didn't think I'm going to like it actually because I'm too much of an operator, but I'm enjoying the fact that I could actually say, "Okay, let's agree on what is the right thing> Then let's meet again, maybe you'll come up with what's the best way to tackle." That's a huge difference in my book.
Paroon Chadha: It really has allowed me to really see us flourish in ways that I didn't even realize I was the hold up in a lot of these things and being able to trust people with something that... some of these people are new and some of them have been there for a very long time. It's just wonderful to see a whole lot of people who are showing leadership in areas that I honestly felt I've set out to build a leadership team where each one of them had to be better at that function than I can ever be. I think that was the only... there I went set out to build this team and I feel that was the best decision I made.
Paroon Chadha: We've also sunk in a lot in terms of human resource. We've hired an HR leader, Nancy. Nancy comes from the high Alpha ecosystem. It really has changed the way we've started to look at our team and we had to redo our benefits and compensation. Some of the discussion that are tough for a co-founders, CEO to really just know you built this thing. Somebody is going to now come and break it apart for you and say, "This is the objective way to do this."
Paroon Chadha: But I had to go through those discussions and really going to trust that this is the right way to scale this. Those were the changes that happened at the leadership level.
Mike Kelly: Right. To go one more level down from there then you had mentioned you guys have doubled the workforce, the employee base in the last 12 months. Talk a little bit about that experience and what that's done now. Not just your ability to now execute more, but I mean, that affects everything, right, culture, the leadership team that you need, it's everything.
Paroon Chadha: Absolutely. So everybody say that at a hundred employers (beep) starts to break. I think actually that we've seen that and I was better prepared for some of the things that I just mentioned, but at the same time it is a different level in the sense that at the very least, just think about going from 51, 52 employees last February to this February in the all hands meeting we had exactly doubled the number of employees. The number of interviews-
Mike Kelly: So that's a new employee every week?
Paroon Chadha: That was a new employee every week we had to do things that I just never thought I'd do. I have a monthly breakfast with new employees. I didn't think that was a thing actually. I used to read about it and now like, "Haha, that's pretty funny. Would you not know them and you hired them?" Then you get to the reality of it and you said, "No, you can't interview everybody. You'll interview a lot of them. Every new employee coming whether it's an SDR or success manager or account executive, you're just not going to spend as much time, but you get to meet them.
Paroon Chadha: So I think there was just a shift in interview work and making sure that there's a lot of thought given to what is our culture and what do we want to accurately just put out as our aspirational culture and really just working through that to make sure that you don't end up bringing in a whole lot of people that don't fit very well. We took 15 years to pull in the first 50. Then we didn't have 15 months to pull in the next 50.
Paroon Chadha: It completely changes the dynamic of the work. A lot of people need to be assured that this is going to be a net add to the team-
Mike Kelly: Positive change, yeah.
Paroon Chadha: Yeah, positive change for everybody. A lot of people actually look forward to it. How do you balance all of that? Then the fact that there are so many new ideas that you brought in, but you weren't prepared to handle all of these. Now, I have on Monday's a meeting that we call, the big swings meeting, where anybody can submit an idea, build a business case for it. It doesn't matter where you belong in the organization and you pull in the group that you think will actually do the best justice to it. That's become my Monday morning meeting. It's not the operational meeting, I moved that to Wednesdays quite simply because I feel I'm the sharpest and the team's freshest on Monday morning and we should look at the big things.
Paroon Chadha: So if broken this up and doing an explore category happens on Monday, they exploit category gets dealt with on Wednesdays where most of the stuff is already taken care of by then, but if it's not, we need to deal with it, but that shouldn't be what you start your week with.
Paroon Chadha: So those are some of the big changes that we've seen just the sheer amount of ideas we've got on pricing, on packaging, on marketing and sales, there's a lot that you actually want to listen to because this is why you brought these guys in. So I think that's a good summary of where we are at this point.
Mike Kelly: Where do you find that much talent?
Paroon Chadha: That's a great question actually. This is a two part observation in my part. First, I would say cities like Lafayette are at a much different spot now than they were 10, 15 years ago. You find a lot of high quality talent in the second year, third year cities today. Unlike what used to happen several years ago. Most of our recruitment was done out of Purdue University, fresh out of school. That's our mainstay for the longest time. That was our mainstay.
Paroon Chadha: At this point, we are finding a lot of people who have some Purdue connection, who really want to be back in the community or there's somebody who's actually really come back to the university because their spouse is doing a PhD and they want to work at a start up just because they're in Lafayette. It doesn't mean that they don't work in a high growth organization. So we're finding plenty of talent in Lafayette.
Paroon Chadha: While we do that, we also have great plans to be a global organization. My own journey is actually one of the main reasons for it. I'm rather unique in the fact that I grew up in India and then now I spend 15, 17 years of my life in US. But I also have a very distributed family. My-
Mike Kelly: You came to the US for college? Is that what brought you here?
Paroon Chadha: I came to do my MBA, yes.
Mike Kelly: Okay.
Paroon Chadha: So right after Purdue I started this. So in a lot of ways I have a family that actually is very interesting. I've not done much with it yet, but my sister and her family is based out of Melbourne, Australia. My brother and his family is based out of Singapore. My mom is based out of New Delhi. I'm here in US. So on a regular basis, almost on a daily basis, at any point in time somebody is waking up, somebody's about to sleep in my family. When you think in those terms and visas and currencies and fluctuation and economies, you really do start to wonder if your product applies everywhere, why would you not go there?
Mike Kelly: Right.
Paroon Chadha: We've also had lots of interesting data points to look at. Last year, we did about 40,000 board meetings on our platform. I'm not talking about small little organizations, I'm talking about some of the most prestigious organizations, the largest bank in Africa, the Supreme Court in Kenya, huge organizations. These are the largest IPO out of New York in the last 10 years, still to this day, I won't name the customer because some of these customers are sensitive to being named-
Mike Kelly: Yeah.
Paroon Chadha: ... hundreds of public companies. Banks are serious about their governance because it's a compliance put in play. Hospitals are serious about their compliance because really these are organizations where life and death is the decision you're about to make. So when you work with the clientele like that and you have a chance to really spread out the organization, you really start to worry about the talent gap that you may have locally. When you start to think at 10x levels, you realize, "Okay, this is great, but it's good for 30%, 40% growth. It's not going to suffice for 10x thinking." That's when we actually really just know we just put up an office in Indianapolis about 30, 40 people office in the Regions Tower right downtown. We already have march 15, 17, maybe even 20 people in that office at this point.
Mike Kelly: Filling up?
Paroon Chadha: Filling up. Then we have an office in UK. In January for my sales kickoff, I went from the Lafayette corporate office to UK right away after that for the sales kick off. Then we had a sales kickoff in Florida because there's a group of people there. The entire month was just sales kickoff and plan kickoff. That's a very different mindset. But you also realize that there's so much difference in the way people think.
Paroon Chadha: So I think diversity and just bringing in that talent level from different places really just them knowing the local work environment is actually a big part of why we are going in these communities. I feel like Indianapolis is a great place to really just pull in a lot of key talent. I'm sure you're nodding. So you guys have benefited the same this-
Mike Kelly: Yeah, obviously, yeah.
Paroon Chadha: Same thing can be said about a lot of other geographies that we are in. I can tell you there was expansion going on in Lafayette office in Q1. We doubled our space there. We took the Indianapolis Office and we took a UK office. You can imagine the number of leads and the followup work that happens. All of that is very different than where we used to be in the past. We built all of that out with the strategic goal to really just be impacting every community we are in. That's a big part of the cultural playbook that has worked well for us in Lafayette. So we want to actually replicate that wherever we go.
Paroon Chadha: So it becomes a very engaged decision at the same time we get this right I think the benefits could be we could have a business plan that truly starts to become synergistic in another way we operate.
Mike Kelly: When you reflect back on the last 15 years, what are the one to three things that surprise you the most in terms what you've learned on that journey?
Paroon Chadha: The first one that comes to mind, and I would be remiss if I don't mention this, that, we hear on television a lot of talk about how US is losing the edge. My experience is actually entirely different so I should talk about it. I found people trust you here very more than people would trust you anywhere else. I just have always seen that in professors that I worked with and Purdue, Bob and Gail, people who supported us in the community to me wanting help from whether it's Michael [Colleran 00:30:18] or you or whenever I've actually reached out to Scott Darcy in Indianapolis without any actually real reason to be helping us openly. They're my advisors who actually really helped me over the years without any financial benefit out of it often.
Paroon Chadha: I think that's the number one big call that was actually made correctly. I could have gone anywhere else in the world for my education. So I think if I reflect back on what I got right, one of the key things was that I actually came to the right country. The Midwest culture is a big part of it. We've deliberately not raised money from the post or not move there. You'll notice that that's actually going to strange for some of the plans we had. But I think what's already working, I mean, don't fix it. I mean that's really weird.
Mike Kelly: Yeah. You don't normally hear Sydney, London, Indianapolis. That's not normally the set that you hear.
Paroon Chadha: I think this is a new world where I think all of these second tier markets may have a bigger advantage to them than you realize. I have lots of customers in California and New York sitting down with any one of them it's always like, I don't know where the next person is going to come from or where the next fit is coming from. I think that's not why we live here and I think that's worked really well.
Paroon Chadha: The second part of what we've done quite well is basically investing in the customers, knowing customers quite well. I sent out an email to 10 CEOs in my customer-base day for yesterday and I was counting that I got nine responses in the first day. This was five part question. It doesn't happen easily. You need to really know them. Paul Marsh actually called me yesterday from his vacation and I asked him, "Why are you calling me from vocation? This is not this important?" He said, "It's just my 25th anniversary. He still worry about it." He was giving me some key input.
Paroon Chadha: I think that's the thing that is gone well. Instead of actually getting excited about the investors wanting to invest in big valuations and in all of that, we have been more excited about, "Hey, we didn't have to raise money this year."
Mike Kelly: How do you build that kind of relationship with a customer? Because it is not something that, particularly when you think of a SAS product offering, right? It's almost the opposite of SAS, right? When you think of-
Paroon Chadha: Much more transaction?
Mike Kelly: Yeah. Yeah. When you think of that kind of relationship that's going to be a sales driven organization that you need to... you're trying to provide enough value at the client to buy up again on a regular basis. In a SAS transaction it's like we need to convince you that you need this product. Then hopefully you swipe the credit card, walk away and-
Paroon Chadha: We don't talk after.
Mike Kelly: We never talk again, right. So how did you do that? How do you do that?
Paroon Chadha: I think this is a great question. I mean, I think for me there are various ways to do this. You can actually really work very hard to reduce your cost of customer acquisition or you could work extremely hard to increase the lifetime value. These are the two key levers we're talking about. If you invest in the customer correctly and when you put up on a slide, lifetime value is 17 years and... 16 years and people are like, "Well, wait a minute, that can be the right lifetime value." Then you turn around and say, "Look, I still have customers who signed up in year one. So it's 16 years. We have proof points to it."
Mike Kelly: Right?
Paroon Chadha: I don't know if I'm giving the exact same care to every customer increasingly because like I said, every day we are signing a new customer. They're not getting a call from me, but it comes down to recruiting the right people and asking people the right questions and really that's a big part of the culture that I talked about.
Paroon Chadha: If you bring in people who are too numbers driven, metrics driven, and they're constant... and in the examples, they site from their prior experience, you hear more processes and numbers, then people they worked with. I watch for that because I think people who build great relationships, they build the great relationships in their personal life. They build great relationships at work. They build great relationships in their friends circle, and the kids friends. That's how you are wired for it.
Paroon Chadha: If you're very transactional, and you really just think about where's the next hit build for me that's going to get towards me, I think that's the mindset that actually leads to great results in that this year, maybe even next year, but eventually, somebody somewhere is going to have to invest in those relations if they're not going to have the same response.
Paroon Chadha: I think money is a big driver in that high valuations. We've become a culture of celebrating how much money you raised. I can guarantee you not enough people even know about Passageways because they've not had today's money. I think that's a big part of what I see as... It's never bothered me. It's never really bothered me. It starts with the team that says, "Look, if you're adding value, and you don't need external money," you may have sacrificed some growth somewhere, or you may have learned the tricks of how to build sustainable relationships, and you can deploy it at scale when you raise money.I think it's just a question of how you think about it.
Paroon Chadha: In my role, I feel the two important things that I'm trying to do. I'm trying to enjoy the world and I'm trying to change the world. Those are the two things that I live for.
Paroon Chadha: When it comes to building an awesome team that actually has amazing relationships, that's how you enjoy the work. It's no fun if you don't know your customers. It's no fun if they can't pick up the phone and say, "I'm disappointed in you today, but I know you'll come through tomorrow for me." It is no fun if they can't call you and say, "By the way, you'll love this." I think that's the true benefit that you get out of it.
Paroon Chadha: Our investors saw this too. Anybody who's worked with us, will actually notice that. I've worked with developer down over several years, and you've made requests at times, and I've actually... you said, "I won't hold this against you," and I said, "No, I would actually do this for you." So relationship mindset.
Paroon Chadha: The second part of changing the world. Actually, I don't think that happens very easily unless you are this genius like Elon Musk who could actually go up against the world and change the world.
Mike Kelly: Right.
Paroon Chadha: That's one way to do it. My only shot at changing the world is to really build these relationships that people get down to telling you exactly where it is, where we are missing it. So I'd much rather actually have 1,500 organizations really feeling like this is the best vendor we have and the communities we are in feeling like this is the best employer we have.
Paroon Chadha: To do that, you'll have to spend a lot of time in taking a lot of conversations that actually may be a little more open ended and you'll have to... you find yourself doing things there. Sometimes the brain says no but the heart says yes and you will have to go with your heart. I think that's what it comes down to in my world.
Mike Kelly: That specific last thing you said where your brain says no, and your heart says yes and earlier we were talking about some of the amazing constraints on your time right now as you scale, as you hire a tremendous amount of people will try to take the product globally, try to figure out strategy for the product long term, you're balancing so much stuff. Tactically, how do you figure out how to make space for those things that you want to say yes to?
Paroon Chadha: I don't. I struggle with that. This is the honest answer that I can tell you. When I got funding I said, "I'm going to buy a new set of custom golf clubs." It's been eight months now. The season is here. I ordered the clubs, I have not actually gone to put them up. It's unbelievable actually to me because it was obviously very important to me.
Mike Kelly: Right.
Paroon Chadha: Then not having... and this has been... I've been getting these messages because I actually think that in the final on balance I would feel like I had to do that a lot, lot more than I actually made space for. Golf is important. I have a two year old at home. So golf is not important anymore. Because he started to accurately talk back and then at the same time there are these new leaders who have come from success and they've trusted you with the next four or five or hopefully 10 years. How do you make sure that you actually really don't... How do you balance this on a daily, weekly basis? You struggle with it.
Paroon Chadha: One of the things that I've started to do, hopefully better than in the past is that I sign up for the day thinking about what my next day is going to be. I plan my next day much more deliberately. So if there are things I need to move around, I will do that in the evening and say, "Hey look, this sounded important. I think there's somebody else who has more passion for it. This I have been ignoring, I need to pick this up."
Paroon Chadha: Then on a weekly basis, the entire leadership team actually has to reflect on how the week was there, I don't know, to their teams and they copy the leadership on it. I write a note to everybody in the team. It takes a while to write a note because you frankly have to go through a sales review, marketing weekend review, same thing for product, engineering, tech support. It's a lot. Then you have to process and you have to say, "This is what the key priorities for me." I've been doing this for years. Several CEOs do it. I've admired anybody who's done this for a while because I know how much effort goes into it.
Paroon Chadha: But you'll find that every new hire, there's a moment where that happened and they come back and they tell me about something that they were not even supposed to know, but they know it from those notes. So that constant reprioritizing on a weekly basis and then now I've added a step of really looking through my schedule for the next day or two to really make sure if I need to actually rejig it at the last moment so that I can actually do the right things. I think that's become important way to really just keep my balance.
Mike Kelly: When you do that, so let's say you have a couple of things that as you reflect on the next day or the day after and you say, "Okay, this isn't strategic. Maybe I can kill this or put it off or are hand it off to somebody else." What happens to that white space that just got created? Do you hold it? Do you block it and keep that available for you to catch up on things, think strategically, go play golf or does it immediately just get replaced by something else? Are you cleaning your calendar and make space for new requests that have come in and so at the end of the day, you're still booked` from 8:00 AM to 8:00 PM, it just looks different than it looked the night before?
Paroon Chadha: I think honestly, I do okay in just handling the requests that are coming in. It's just the not having that free time, basically, compromises the surrender part is discussion that may happen when you sit down with somebody. That's what I worry about because frankly, if you sit down with a salesperson who just lost a deal and spend half an hour, you'll learn something new every single time. If your calendar is packed, which sometimes it does get packed, you don't have the time to read up on what else is going on. You don't have the time to learn from other organizations that have successfully scaled. Those are the pieces that I feel I struggle.
Paroon Chadha: I've become better at keeping my personal first and the team's actually I've hopefully earn their trust where they realize, "Okay look, we've got to act really make sure that he doesn't," I still check emails when I'm on vacation. I never missed a morning standup meeting, even if I'm in Spain, even if it's ungodly hour. I would always check in even on vacations. Because I like doing it. I feel like the rest of the day is very easy for me then because I know exactly where things are.
Paroon Chadha: But there are these pieces that I'm not able to do and I think I got to trust my leadership to be able to do more of that. So talking to the sales people or talking to... the water cooler talk that doesn't actually happen often enough. That's what my worry is and everybody's listening to stuff, everybody's going to these events. So they're bringing up what may be important for us. I worry about it. I think it's very straight forward. I'll tell you what the main discussion topic is in the board room as well as in the organization.
Paroon Chadha: The product market fit is there because we got a sale every day, something tells me we have the right product, right?
Mike Kelly: Yes.
Paroon Chadha: If you're getting 50 sales in a month, it's repeatable.
Mike Kelly: Correct.
Paroon Chadha: But the product channel fit is just not cleared. The-
Mike Kelly: Talk a little bit more about that.
Paroon Chadha: So the product channel, so currently we are doing a lot of direct sales, a lot of inbound, a lot of outbound and we've succeeded with that. We know the unit economics and that work for us. We also have these partnerships sales that are working. I have resellers in Africa that are actually producing. There's this power law of distribution that shows up in everything that we do that eventually, if you look at any one company that is scaled like Dropbox, they don't act really... They're primarily through vitality now they're expanded, right? Most of the sales come from that.
Paroon Chadha: When you look at somebody like Workday, they're not about vitality. There is a very enterprise sales kit.
Mike Kelly: Correct.
Paroon Chadha: What we find ourselves doing is dabbling in a little bit of this, a little bit of that and the mix is not like 80% of sales coming from this channel that's the dominant channel. Then you don't have some of the other channels being unnecessarily being embellished or they're gaining too much importance of your all index I'm going to channel, that's just not for us in the long run.
Paroon Chadha: I think it's very important simply because I have now come to realize that the channels cannot flex to the product, but the products can flex to the channel. Once you know this is the channel, I can change my product really going to be perfect for that.
Mike Kelly: Got It.
Paroon Chadha: This took me such a long time to realize and if that fit is established, I think that'll solve and unlock us in ways that I don't need to do the rest of the stuff. It's not going to lead to much.
Mike Kelly: Can you share an example in the past where you've done that? You've seen good results where you've changed the product to fit the channel?
Paroon Chadha: Yeah. So, I mentioned about AGB. AGB is a great organization. They have tremendous insight into what the planning agenda should look like. They also help a lot of the universities, including Purdue actually has worked with AGB extensively to really kind of just think about what should the next generation of leaders think about and all that work that they're doing. It's got nothing to do with the board portal off and that we sell through them.
Paroon Chadha: When you are flexing to the channel, then you will build tools in your product to really kind of just have all of that output be available through your product to your customer base. When you don't, you'll say, "Why? It's pretty easy." It's just as long as you have it in a pdf or a video, you can always upload it. But what you miss out on that is you'll never create a centralized way for AGB and Passageways to distribute this frictionless, which is where it lives.
Paroon Chadha: So if your product is not ready for that channel, you will keep selling one at a time. The moment you marry it together... I think about this as HBO, and The Game of Thrones, and I see you we're... If you have one Game of Thrones, so many people have HBO just for that.
Mike Kelly: Yeah.
Paroon Chadha: I think in our world need to figure out, if it's just going to be direct sale then let me find the best collateral, and the best cadence, and the best sales managers to really going to plow through that channel. If it's going to be partner driven than I need to actually find the ways for the product to flex. So I don't need to build a self serve and all of that because really it's going to be partner enabled. If it's going to be resellers and value added resellers across the world, I need to do multilingual and co-branding and all of those different pieces that make those partners be successful.
Paroon Chadha: So I think there are... Each one of these place is very different in the way it plays out on the product side. But once you know what the right channel is, I think it becomes very easy for you as an entire organization to really accelerate in the right direction. I hope that helps.
Mike Kelly: That's fantastic example. Might wrap up on this. What's the biggest thing you're learning right now personally that you think is going to better position you to run Passageways in the next six months to six years?
Paroon Chadha: I think my learning has just been that, what an organization achieves it's so much a function of how the leadership team thinks about themselves. Almost anything is possible. Without exaggeration, I never owned a computer in my life before coming to Purdue. The first laptop I bought was at Purdue. There was this bullheadedness about being able to do anything and it was a rather foolish, but turns out it's actually not far from the truth.
Paroon Chadha: I apply that to my current context and say, "Look, I'm going to be like Clockwork, a $25 million company in end of next year," or the year after or whatever. That's a great number. A lot of companies would actually say that's a great place to be. Or I could actually be $100 million company after the same timeframe. It's the real vector that drives that is just your ability to aspire for it.
Paroon Chadha: It's so hard to really just come to terms with that that the ultimate blockage in the company is right between my ears. I think that realization has to transcend, just meet myself, but you need the leadership team also to really have that belief. Then we start to call each other out on the things that we may be actually unnecessarily holding up. I think that's the biggest thing that we've not been able to do.
Paroon Chadha: This is a newer team, like I said, a new CFO, new head of engineering, new head of product, new HR leader. The teams' just forming, but I am trying to make them resilient to the point where we can have these tough discussions and see if we can make some music together. Something that we can all be proud of.
Paroon Chadha: I say this simply because it really applies, in my case, because I think I've stumbled upon a space which you could actually continue to process for your entire career. A lot of the business plans that I see, they are great three year, five year, seven year gigs. But when you talk about enterprise collaboration, it's going to stay 20 years from now there'll be somebody actually trying to move the bar. I think we are in that space.
Paroon Chadha: Then this point, I'm a triple PhD in enterprise collaboration just from staying for such a long time and I feel like I have the chance to change the world. I just need to make sure I have the right room and really everybody's convinced and we could probably make anything happen.
Mike Kelly: Awesome. Do you use OnBoard for your own board meetings?
Paroon Chadha: Yes, we do, actually. It's been one of the big reasons why I think we operate better as a board as well, because everybody's got all this information at their fingertips and I think it's a quick way for us to experience what we are doing as well. There's seven people on the board who are on other boards that are using OnBoard as well, so we get some other-
Mike Kelly: Oh nice.
Paroon Chadha: ...feedback points as well.
Mike Kelly: Yeah. That's great. Excellent. Man, I really appreciate you taking the time. I've already kept you longer than I'm supposed to. Thank you so much for coming down here and out of your very busy schedule and talking with them.
Paroon Chadha: No problem. Not at all. You guys are doing some amazing work here. We are a big beneficial of developer down being here and all the other companies that you and Michael have ramped up. It's quite amazing to watch this and just a pleasure to really just be a little part of what you're trying to do now. Thank you.
Mike Kelly: Thank you so much.