#397 Creating a Winning SaaS Strategy: Nick Jain on Retention, Growth, and Innovation

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Mehmet: Hello and welcome back to a new episode of the CTO Show with Mehmet. Today I'm very pleased joining me from the US, Nick Jain. Nick, thank you very much for being with me on the show today. As I was explaining to you before actually we started, uh, today's episode, that the way I love to do it, I [00:01:00] like to keep it to my guests to introduce themselves.

Mehmet: So tell us a little bit more about you, your journey and what you're currently up to. And then of course we have plenty of topics to discuss with you today. So the floor is yours. Thank you so

Nick: much. So my name is Nick. I'm the CEO of IdeaScale, which is a B2B SaaS company that makes innovation management software.

Nick: We've been in business about 15 years and have hundreds of clients across the world. The U. S. Coast Guard, U. S. Post Office, Comcast, Pfizer. Um, many, many organizations all over the world, including the Middle East, Asia, Africa, Latin America, et cetera. Uh, in terms of my personal background, I grew up in a mix of India and Canada, did my undergraduate at Dartmouth in mathematics and physics, and then got my MBA from Harvard Business School where I was a Baker Scholar.

Nick: The first half of my career was on wall street as a professional investor. And for the past five or so years, I've been a professional CEO. I've run a hundred million dollar revenue trucking company, a 2 company. And now I'm really excited to be at IdeaScale, which is the definitive innovation management [00:02:00] software on planet.

Mehmet: That's great. And thank you again, Nick, for, you know, I know as a CEO and, uh, uh, founder, how busy things can get and, you know, a lot of things happening in your space. So again, thank you again for being with me here today. Now, the first thing, you know, I would love to start, uh, the discussion with today, Nick, is the idea of starting, you know, your current business.

Mehmet: And especially you mentioned, it's all about innovation. So was the main, I would say opportunity, I would like to call it, not a challenge that you saw in the marketplace that led you to leave, you know, the investment world and come to the B2B SaaS world.

Nick: Sure. I just want to clarify. I did not found IdeaScale.

Nick: We've been around about 15 years and I was brought on as a CEO about two years ago, but I can talk a little bit about why IdeaScale was founded. Um, our two co founders, [00:03:00] Rob Hohen and Viv Poskara, and about 15 years ago, they realized that large, complex organizations were really struggling with how do we innovate?

Nick: Rather than counting on random ideas popping up from random people. And so they created this organization or the software company that really helps large organizations figure out where all the cool ideas are within their organization, figure out which ideas are good and which ideas are less effective.

Nick: And turn the best ideas into reality, which is something that large organizations really don't do well today.

Mehmet: That's fantastic. Um, Nick, I'm sorry for, for them, you know, uh, you know, for, for that, uh, small mistake, I would say from my side, but that's fine. You know, I'm very transparent and the audience know this now, um, you know, innovation by itself, it's, it's, you know, something, every company, they, they aim for that.

Mehmet: How have you seen. You know, especially in the recent [00:04:00] I would say one year or so because everything started to accelerate with AI Of course, we're going to talk about AI later but um What have you seen in the main motives for companies? To drive innovation and you know To, to try to, to do things in different ways that they are doing it currently.

Nick: Sure. I would say there's two things that have happened. Number one is that the speed of the innovation cycle has increased. So 30 years ago, you didn't have to innovate as quickly as you do today. Today, if you're an organization, whether you're a government entity or a private sector organization, then your competitors are innovating much, much more quickly.

Nick: And so you have to, there's this greater appreciation that if you don't innovate, You know, your competitors are and you fall behind. So that's number one. Number two is I think there's been a greater value shift within organizations, especially large ones that have realized, look, in order to be creating value for our customers, [00:05:00] we need to be doing things better each day.

Nick: It's not good enough. That to say we are great. We still want to be better tomorrow. And that's a philosophical shift that has occurred through is, is occurred and is occurring throughout the world.

Mehmet: Now, one thing I want to ask you, Nick, which is how much, you know, because we hear this term too much and from, you know, what you have seen so far, um, this requires from organizations to have what we call it innovation culture, right?

Mehmet: So whether they are a small startup or large organizations. From your point of view, how do you think, not only building the culture, but actually sustaining the culture, how do you, have you seen the successful ones have done it? I would ask you this way.

Nick: Sure. I think there's four things that any organization needs to build and sustain a culture.

Nick: Number one is someone near the top has to say, we actually care about innovation. [00:06:00] If that doesn't happen, an organization doesn't proceed down the path to becoming innovative. That's step one. But once you have that initial desire to be innovative, you need three things. Number one, you need innovation to be declared as an actual core value of the business alongside whatever your other core values of the business are in your mission statement.

Nick: Number two, you need the right incentives for people to actually want to innovate. A lot of organizations actually disincentivize people from, uh, from becoming innovative. And number three, you need the right technology and processes. You can have great people, but if you don't create technology and processes that actually enable them to be creative and innovative, then they can't.

Nick: It's like sending a carpenter to a worksite without a hammer and a saw. He or she could be the greatest carpenter in the world, and yet they can't actually go do carpentry without the right tools in front of them.

Mehmet: Now, let me ask you this question, Nick. Whose responsibility it is? Like, is it the People who works with, because when we say innovation, [00:07:00] maybe it's going to be driven by technology also as well.

Mehmet: So is it like the technology department mission? Is it like the board mission who, who you would recommend? I would say to, to drive this innovation.

Nick: Sure. So I don't think the board's job is to drive innovation. Their job is to hold the executive team accountable for driving innovation. It's really at the, you know, the ultimate accountability for any organization sits at the sea level heat.

Nick: They are responsible for. making sure the organization moves ahead. But once you've achieved that philosophical idea that or value system that we are going to be innovative as an organization, I think there's two, there's two types of groups of people who are responsible for actually going out there to achieve innovation.

Nick: Number one are the decision makers of the organization, whether that be junior managers, senior managers, executives, and number two is everyone throughout the organization you. Who is actually given a good incentive to be innovative. And that can include line worker, blue collar line workers [00:08:00] in a trucking company, or it can include all the way up to the R and D and senior technology executives within an organization, right?

Nick: Every organization needs to innovate, whether you're a government organization that's delivering driving, let drivers licenses to people, whether you're a pharmaceutical company, that's inventing new drugs. Whether you're a technology company that's building new features, everyone needs to innovate. And the way that innovation happens within that organization slightly depends on the characteristic and industry of that organization.

Mehmet: Makes sense to me now, you know, and the audience, they know this. So for the sake of, uh, Transparency, I would say. So we are recording on the 18th of September. So probably it's going to go out by end of September or beginning of October when they are listening or watching us. So today, uh, I've read an article which really attracted my attention and you know, like it came at the right time that I'm in, I'm talking to you today, Nick, where I've seen a study done by [00:09:00] IBM saying that You know, when I actually, this is why I didn't, I didn't actually like the wording because they said IT, uh, failed business executives and they are not happy with their technology departments.

Mehmet: And my opinion is, and I want to hear your opinion on that and this regarding innovation actually and business transformation at the same time. So they, they said like, because You know, they think their technology departments or what they I don't like the the I. T. World and the reason is I think I. T.

Mehmet: Information technology is so outdated. It was fit for, you know, when we start to collect information in our machines. But nevertheless, we have that today. So it should be the technology department. So what I want to ask you, Nick, From leadership perspective within the technology department, do you think, you know, they were facing certain challenges that [00:10:00] I would say slowed them down from adapting innovation?

Mehmet: Or do you think they were too much into the nitty gritty of the technology itself without focusing on the business outcomes? How do you, you know, I would say comment on this study and what's your point of view?

Nick: So I very much agree with much of what you said and want to provide some historical context.

Nick: If we roll back to 30 years ago, the chief technology officers, the technology departments were back office, their job was get some computers and network up and running, get email up and running and make sure our data doesn't get hacked. They weren't considered a core part of a business. But as we roll forward to 2024, we know that.

Nick: If your company doesn't have good technology, then you're, you're, you're screwed. And that can apply to whether you're an oil company, a pharmaceutical company, et cetera. Technology has now become a core part of the executive team, which is why you've moved from technology being a back office in companies to [00:11:00] actually sitting in the boardroom alongside the CEO and CFO, because in almost any industry technology now matters.

Nick: What that's resulted in is a change in incentives and a change in dynamics. 30 years ago, the, uh, the co the technology department was a cost center and a security risk. That's all your job was, minimize costs and don't get hacked. Today, a lot of, for especially forward thinking organizations are realizing technology is a core competency.

Nick: No different than marketing, sales, operations. And we need a powerful leader in place in our technology department who is aligned. To forwarding the business's goals or organization's goals, not just minimizing costs. And that's resulted in a different caliber of leader, as well as a different incentives and goals for those leaders now that hold the CTO title than 30 years ago.

Mehmet: Now, like, not as they say, like, uh, being the devil advocate and, you know, like, this is maybe something, [00:12:00] uh, We heard, we heard about before. So someone can say, yeah, like we had all these good ideas. We had like all these things that we were telling the business, but the company wasn't investing in innovation.

Mehmet: Right. So, uh, is this a really valid thing you think, or is it something You know, we should accept that we were not up to the leadership level that we should have, you know, have acquired, I would say, to go to the business and say, Hey, like, of course, in the virtual sense, like put our fist on the table and say, Hey, listen, we have a problem here.

Mehmet: We need to do something about it. What do you think?

Nick: So, look, if an organization is not willing to invest in innovation, whether that be in the CTO department or any other department, that is ultimately their choice. But I always come back to my, a core thing I believe in, which is, If you're not innovating, remember that your competitors are right.

Nick: [00:13:00] So if you're not investing in your technology department or any other aspect of your business, if your competitors are, and if your competitors have realized that having a good technology department info, whether you call it information, technology, technology department, And they have invested in that.

Nick: They're getting ahead. It may not hurt you today, but it's certainly going to hurt you tomorrow. And so any good leader now sitting in the C suite, any good CEO and CFO, they're starting to think of technology not as a cost center, but as a core operational, uh, uh, capability. And if they're not, their competitors are getting ahead of them, and they're losing the race every day.

Mehmet: This is, you know, exactly what, uh, what my thoughts were. Like when, when I read the article, uh, yeah, I said like the biggest issue to your point is like the technology department or it department, whatever people, if they still feel they need to call it it, it's fine. Um, Yeah, it's been always seen as a cost center.

Mehmet: 100 percent agree with you on [00:14:00] that. And, you know, to your point, I like, you know, the previous answer you gave, you know, it's like, yeah, just get the emails up and running, get the network up and running and make sure that we don't get hacked, which is true, by the way. But, uh, yeah, I'm a big believer that and I'm being like advocate for this because I've been in that, uh, that's it for.

Mehmet: Some years in my career, and you know, I was always saying that Technology department should be treated or actually they should prove also the business that, Hey, we're not a cost center. Of course we have our own costs, which is normal, like any other department in the business, but also we can like be even revenue generating.

Mehmet: Uh, if, if we're allowed to do the things in the way we could, we could do, and you know, there's a famous say that every company should become a technology company. And I think the ones who managed to do this, You know, uh, the rest is history as they say now on the point of [00:15:00] transformation from pure business perspective, Nick, right?

Mehmet: So, uh, you've done this in your career like multiple times, right? So what are like the areas you would focus more from outcome perspective? Is it like the customers, the employees, the shareholders or all of them, but how you do this balance? Yeah, Actually, to to have what you are aiming for from business transformation perspective is coming out across the board for all these You know segments, I would say customers employees and shareholders

Nick: Sure, so those are exactly I love how you said customers employees shareholders.

Nick: Those are the three constituents I always talk about for a private business the whole point of any private company whether you're based in china dubai the united states is your your private company is creating value for your customers your employees and your shareholders and you have to Create value for all three.

Nick: [00:16:00] Otherwise your three minute stool falls down. Um when I come into a business There's Three areas that I really focus on, uh, that I believe helps you achieve that, uh, that goal of transforming the business and creating value for everyone involved. Number one is the decision making process. A lot of organizations make decisions based on gut feel or who's the most senior or who yells the loudest.

Nick: That's the wrong way to make decisions. Decisions should be made on a consistent analytical data based ROI framework, return on investment. When you're investing in your IT department or your sales and marketing department or your operations department, you're making an investment. And you should demand returns for it as a leader and that those determinants are not qualitative but in fact can be quantified.

Nick: That's number one. Be analytical about ROI positive decisions. Number two is make sure you're delivering differentiated value to your customers, right? If you're not creating value for your customers in a way that is different from your different and better from your competition, it's a race to the ball.

Nick: Um, and number three, Is [00:17:00] be transparent to you and clear to your organization about what that organization's goals are and be the best at achieving those goals. A lot of organizations try and do so many things because their goals aren't clear or people are headed in different directions. Just go figure out what that one thing that you want to be great at as an organization is.

Nick: And go do that and make sure every one of your departments and people. Are focused on that one mission.

Mehmet: I think this is happens, Nick, when people falls in the trap of just following a trend for the sake of following the trend, right?

Nick: Yeah. So we, I get asked, you know, as a technology company, uh, what are we doing with AI?

Nick: Because everyone has been talking about AI and software for the last 18 months. And we've done a little, but we haven't just added AI to every marketing documents and every piece of our technology, because that's Just trend following. We are actually trying to build a really good product and that doesn't mean slapping AI onto every marketing document the way a lot of other technology companies have done.[00:18:00]

Mehmet: Absolutely. But you know, it's good that you mentioned AI because actually I was trying to relate to the next topic I want to discuss with you today. But we cannot ignore that AI is becoming, I would say, more and more integrated in even our daily life. So now I can't remember a day where I didn't, for example, used one of the You know gen ai tools whether it's chat gpt cloud gemini, whatever right?

Mehmet: Um, so do you see it? useful to introduce a I at least, at least I would say, you know, for for brainstorming, you know, maybe innovation within the organization or maybe try to see if we can enhance our day to day business operations within an organization. Do you see this something which might be useful?

Mehmet: Of course, I'm not talking about just like say, Hey, yeah, like we're gonna use a I for this for that. Yeah. But I mean, you know, at least start to adopt it slowly, slowly. What [00:19:00] do you think?

Nick: Yeah, I want to be clear. I'm actually a big, big advocate of AI. We've been adopting AI for both our operational and our software for within months of chat GPT coming out.

Nick: Right. So I'm actually a big believer. I, I was at the gym yesterday. AI decided my workout. Um, AI has been a key part of our sales and marketing strategy for, you know, for over a year and a half now. So I'm a I believe AI has creates two values for a company. Number one is it allows you to be operationally way, way more efficient.

Nick: We're really good at marketing and search engine optimization and sales conversations and M& A discussions, because we really leverage AI in both our writing, creative and brainstorming process internally as a company. And that's. Should be true for any company, whether you're selling oil, selling software, whether you're a nonprofit serving constituents.

Nick: The second is how does AI integrate into your technology? And in this, I think we've been a little bit more measured than a lot of other technology companies who've just incorporated AI into everything in [00:20:00] their technology. I think we've been careful here because One of the things AI does really well today is it frames things eloquently without necessarily being creative.

Nick: And so in our specific industry or what our technology does is it enables organizations to be more creative and more innovative. And if you just slap AI into everything, what our software does is it won't be coming up with creative or innovative things. So we've been a little bit more measured because we want to make sure that what is coming out of our software actually is.

Nick: New and exciting for organization, not just something regurgitated by AI. Now, that may change a year from now or a month from now where AI becomes more creative, but the technology is not quite there yet for application.

Mehmet: What's your take on everything called co pilot, Nick?

Nick: I love it. Our, you know, we use marketing co pilots. Our engineers use software co pilots. Uh, I built a small co pilot for me to engage in, uh, in [00:21:00] partnership discussions with consulting firms. Uh, so I love all these co pilot technologies, uh, you know, whether you call them clod or GitHub co pilot or Gemini.

Nick: We use them all aggressively and I push my employees not just to use them, but to actually take training courses in all of these technologies.

Mehmet: So just train on the prompts and you know, the, these kinds of things. Well,

Nick: prompt engineering, but also how do you write effective APIs to talk to these technologies?

Nick: How do you think about a hyper parameter optimization? You may want to deploy a, for, you know, anybody who's in technology, well, you can actually. Download Llama, which is a, you know, open source AI that you can use on your own systems. And there's a lot more tuning you could do to that than you could with, uh, let's say ChatGP, which is a commercial AI solution.

Mehmet: Absolutely. It's really fascinating how things change since 18 months or so, I would say, um, on that point, I'm going back a lot to innovation because this is the space you are in today, Nick. So, but with AI and we're talking about co pilots, so [00:22:00] do you see. As humans, you know, becoming more into the creativity.

Mehmet: You know, that brings actually the real innovation. So basically we have someone to do the, you know, again, I would say the repetitive tasks maybe, or the prepare for us, at least, you know, the things that usually we used to spend a lot of time on to, to start taking decisions and, you know, start brainstorming.

Mehmet: So is this, you know, bringing us and do you believe that as humans, this will make our creativity, You know, putting us on a really competitive edge when it comes to innovation.

Nick: So I'd say there's three phases to it. Number one is where AI helps us be more creative by eliminating mundane or repetitive tasks.

Nick: AI is already there. You have automated, you know, things for anything. You could do that. If this, then that logic, you know, five years ago. So AI has already accomplished that. [00:23:00] The next phase of AI and creativity is where we're in right now. Phase two. Which is where AI has already become more creative than, than let's say 90 or 95 percent of people.

Nick: And a personal example is I'm not a very creative, artistic person or, but so AI is already better than me at creative, at being creative in an artistic realm and music or drawing or video. AI is already beating me. Um, and it's probably already beating 90 to 95 percent of all people in the world in almost any field of creative endeavor.

Nick: So we're already there where AI is more creative than most people. Phase three, which we're still a ways away from is, can AI be more creative than the best of all people? And I don't know whether that's a month away or five years away or 50 years away, but right now sitting that we're in phase two, AI allows people who are not particularly creative in an area to be more creative.

Nick: So such as me, I can now be creative artistically or video wise that I couldn't have been. Uh, 18 months ago. But then it is also, as you said, allowing those who are already pretty creative to co pilot their creativity [00:24:00] powered by AI.

Mehmet: Really a valid point, Nick. And you know, what I feel personally, to be honest with you, uh, because again, without going into the technical details, how these LLMs models work, but I have, of course, there's a lot of, Now, as people, they call it garbage in the modern, I agree with that, but at the same time, you have the best ideas from the best human minds in the LLM.

Mehmet: So what I feel sometimes if, you know, I managed to, to communicate to this LLM, whether it's chat GPT or any other, uh, one of these. To get to to get me out of this brilliant minds Ideas that are already existing there You're like I feel I have superpowers to be honest with you because like same as yourself I'm for example on multiple things.

Mehmet: So first i'm not a native english speaker So, of course, [00:25:00] I don't ask gpt write me a link in post. I don't do this So I put it and then I said, okay Just fix it to me. Proofread it to me. And then I take it. And then I say, Hey, if you were, for example, this thought leader, how you would add to it and not change it.

Mehmet: And then, you know, it goes and brings really things that I never thought about it. And I feel like I have a conversation with the actual person that I wanted to talk to, which is really fascinating. I would say on that point, uh, Nick, I think, you know, to your point that I like what you mentioned, like maybe it's after one month after five years, but from, um, From all the things that happen.

Mehmet: Do you think we are five years really? Or or we are like much closer to this.

Nick: So again, I think we're in phase two where AI is smarter or more capable than 90 or 95 percent of human beings, which is a terrifying social proposition, by the way, right? That a lot of information workers, right? People who work with their minds, right?

Nick: Whether that be [00:26:00] consultants, bankers, already the AI is smarter than a lot of them. Um, that's terrifying from a social point of view in terms of employment, uh, you know, what do people do productively, meaning in life, all that stuff. I personally am, you know, reasonably aggressive that AI technologies will become smarter than, um, than human beings.

Nick: Very quickly with it, right? Uh, I don't know if you saw, but just, uh, four or five days ago, open AI or chat, you released their strawberry model, which now is able to do mathematical reasoning better than 98 percent of the, uh, what is the American international math, uh, competition competitors, which are the best of the best, uh, math, young mathematicians, I was a competitor and I'm a math theoretical math guy.

Nick: Um, it can outperform, percent of PhD students in their own field of expertise. So I actually, and so this is actually a thinking AI, not just an AI that is able to regurgitate information, but actually something that is able to logically think through things. That's really cool. So I am a big believer, and this is scary again, from a [00:27:00] social point of view, that AI is advancing much more intelligently than people, most people think about.

Mehmet: Absolutely. Just, you know, I don't want to go and steal too much, you know, from, from, from this conversation, but because you just mentioned the strawberry model, and this is something I expected that to happen. So it looks like with this reasoning thing, And from the way, at least how they brought it into the UI, I always keep talking and I ask a lot of guests who are experts also in this space about the AI agents.

Mehmet: And then, you know, you have a kind of a, a maestro agent and this maestro agents, he has like, couple of other agents that work and report back to the maestro. And you know, because of this reasoning thing, they can go back and forward and they would act as if this is my expectation. Again, maybe it will happen in one month to your point, maybe five years, but this is how I see things [00:28:00] going, which is really mind blowing.

Mehmet: As, as you just mentioned, yeah, that's

Nick: called a principal agent or a master agent model. Um, um, We're already, you know, dumb versions of those sorts of systems have been in place for about 10 years where you have a master controller, um, with, you know, several independent operatives and they reach rather than, uh, they reach consensus.

Nick: It's consensus based decision making AI just enables, uh, technology or to do that in a more sophisticated fashion than was possible 10 years ago. Remember, like. Everyone talks about AI as if it's something brand new, but no, we've had some form of AI since 1960, it's just each year the AI is getting a lot smarter, and the big innovation about a year and a half ago, when Chat Chief T came out, was now we can, a normal person can talk to AI without needing code.

Nick: And that, that is cool by the way, because it makes the technology more accessible to all of us who are not software engineers and don't know how to do APIs or write Python code. But the technology is just [00:29:00] progressively getting smarter, smarter than it was five years ago, and it will be smarter tomorrow than it was yesterday.

Nick: And that's something really cool and exciting.

Mehmet: Absolutely. Absolutely. You know, like it's a mind blowing now. Uh, you know, I, I think this, we can talk about it for hours and it's a very, uh, I would say, uh, you know, it, it makes, it makes me like feel weird sometimes about the things. Sometimes I, I even I ask the question, I say, wow, like, imagine I can, you know, we are talking now about this, like living in the future.

Mehmet: Now I want to shift gears a little bit, Nick, and ask you about something which you are now, um, into the SaaS business, into the B2B, uh, software business. So what have you seen a secret sauce kind of formula? I know there's no one, but I mean, let's say the important metrics that people should focus on for a [00:30:00] successful and sustainable growth in this B2B, uh, software area.

Nick: Sure. So there's four numbers. I'm coming from a professional investor where I, for the long, for most of my career is that I was actually an investor into, uh, into SaaS businesses. And there's four numbers that really matter from a theoretical and practical perspective. Number one is what's your net retention rate?

Nick: Number two, what's your revenue or ARR? And number three, what is your profit margin? Those are the first three. And those are backwards looking metrics to understand where your business is today and where it's been over the past year or two years. The forward looking metric that smart investors should be thinking about is the incremental return on our, uh, the incremental return on investment, which is okay.

Nick: The company's about to spend money on a marketing campaign or a new chief product officer, a new technology or M and a, how much return is that going to generate over the next several years? So if you have those four numbers and really understand them and are effectively managing them, you're really running your business.

Nick: Well,

Mehmet: that makes sense. [00:31:00] Especially, uh, you know, the NRR, I think it's underrated. I would say because people focus more on the ARR, but you can't have the growth really grows if, if you're not, uh, you know, retaining your, your, your customers and you have like. A large churn also as well. So a hundred percent on this one.

Mehmet: Um, How have you seen of course this is you know, we talk about these numbers. So Probably these companies they have found, you know the proper Uh product market fit, you know, and and you know, they are aiming to go into the profitability uh area Some people or some founders who are like in still early stage phases, I would say.

Mehmet: Um, and this is maybe coming back to the innovation thing. So how they could manage from your perspective, this need to show profitability or [00:32:00] growth, at least at the same time, You know, do the innovation that they need to do. So how do you see this balance, I would say, between the growth or aim to growth and innovation?

Nick: Sure. So it's, it's funny that you asked that about profitability. One of my board members is serial entrepreneur. He's run several businesses that he's bootstrapped into tens of millions of dollars of revenue without taking a dollar outside capital. And he always jokes that there's some founders who just don't know how to make money.

Nick: Almost any business can be profitable if the leaders actually know how to make money. And one of the things that a lot of founders really struggle with, they may be a visionary, they may have a great product, but their skill set is not, is on the product or vision side, not on running a business side. And that's an important skill set.

Nick: And if you are really introspective about yourself as a leader, You can say, look, I'm not great at running a business. I'm great at building a product. And so you hire someone who is actually good at running a business. Because if, you know, uh, almost any business can be profitable. If it's [00:33:00] well run, you just need to find the people who actually know how to run a business.

Nick: Well, which is a, which is a valuable skill set that many people underappreciate.

Mehmet: When you say this, Nick, like, what do you mean exactly? Is it like the sales? Uh, skills. Is it like the marketing skills? What skills? No, no. So those

Nick: are all elements. So you talked about profitability, right? Profitability basically boils down to revenues minus costs backwards looking and it are incremental return on investment forward looking.

Nick: Those are a bunch of numbers. But how do you like a, who knows those numbers? How do you analyze those numbers? Who actually can make those, you know, make the net revenue go up, the costs go down and the incremental ROI go up. That's a skill set, right? Just like sales is a skill set tech, you know, engineering is a skill set.

Nick: And a lot of companies, unfortunately, especially younger companies, right? Where you have a visionary founder, who's really good at the product side, have not actually investor brought on to someone who actually knows how to run a business, right? Large organizations, multi billion dollar [00:34:00] organizations.

Nick: What they do actually have professional ceos and professional cfos and professional operating officers Small companies don't and they often should at a much much earlier stage than they typically invest in professional business operators

Mehmet: So they should be finance savvy in in other sense, right?

Nick: Yeah, and finance doesn't is not accounting by the way I want to be very clear.

Nick: A lot of people think of the finance department as an accounting person No, a good finance arm is thinking about Are we making positive return on investment decisions in our sales department, in our technology department, in our, uh, in our marketing department? And that's a very difficult, but valuable analytical skill that again, a lot of young organizations underinvested, right?

Nick: They get an accountant or a CPA. They don't get a financial decision maker.

Mehmet: Absolutely. And thank you for bringing it. In fact, when a lot of VCs

Nick: actually. Yeah, one fun thing, a lot of the tier one VCs, the Kleiner Perkins of the world and so on, when they invest in [00:35:00] technology companies, one of their requirements is you actually hire a professional CFO, right?

Nick: It can't be the founder anymore, but somebody who actually knows how to run a business. That's actually a requirement for a lot of, you know, good VCs. When they invest in you, they demand that you get a good financial team in place.

Mehmet: Absolutely. Yeah. We're a

Nick: accounting team. We're a financial team.

Mehmet: I'm very happy you are, you know, putting these underlines about not accounting a finance.

Mehmet: Um, it took me years, you know, to, to, to understand the difference myself also as well. So accounting, yes. The basic things, right? Like, okay, this is, we voted for this, you know, like, but I mean, decisions I need, you need to understand the numbers to your point and you need to understand, you know, How things will affect, for example, if if revenues goes up like this is how it will affect the business.

Mehmet: If you know, for example, we do this, you know, like it's it's like more of a holistic view of the whole business, as you call it, that the whole [00:36:00] company that and I like how you mentioned like the It drives us to take decisions, what we should do next. Right. So, so this is, this is very, very important. I think, yeah, like it's underrated in my opinion also as well.

Mehmet: Um, from, from the SAS business perspective and, you know, because, um, you, you've done investments before also. So how you're seeing this is like SAS slowing any soon, you know, or is it like still, you know, up and running, how it's passed.

Nick: SAS is still a really exciting business because there's something really deep and fundamental about software that people underappreciate, which is, number one, software is more, actually three things.

Nick: Number one, software, on average, makes fewer errors than human beings. That's really valuable to a business to not screw up or make mistakes. People make a lot of mistakes. People get tired, they get hungry, software doesn't. Number two, software is infinitely scalable, right? Whether your business is a 10 person business or a 100, 000 person business, [00:37:00] software scales with you, whereas no individual does.

Nick: Even if I'm the greatest, most hardworking individual, I only, I still need sleep. Software can scale up with me, right, uh, with my organization, whereas no human being, no matter how great they are, you know, can scale up infinitely. The third is cost. People often talk about software is expensive, right? You may be paying 50, 000 or 100, 000 or half a million dollars a year for software.

Nick: But that takes the place of 10 and 100, a thousand people. And those thousand people are much, much more expensive. So software though, it seems it is often expensive. It is actually really cost effective for your, for almost any organization. Um, because it does things a lot more efficiently and cost effectively than people.

Nick: So as long as these three fundamental forces are in place, lower error rate, more scalable, more cost effective. Software has a lot of room to grow within organizations, taking the places of people, um, and replacing things that could be done better with technology. A

Mehmet: hundred [00:38:00] percent, you know, like, uh, and because Now, one, one code that just, I was checking it very quickly.

Mehmet: So I don't, uh, quote, uh, quote it in the wrong way. So never have you can't. So he has a famous quote saying competing without software is like competing without electricity because you know, everyone needs that software. Right. And, and also he, he, he mentioned another one, like you need to create something that can.

Mehmet: scale and that can, you know, make your money while you sleep. And exactly what you just mentioned also as well, like because software businesses are the ones that, you know, people will rely on it. And if you have, if you're lucky enough to scale it, I mean, from not only numbers perspective, geography perspective, so people from all over the world.

Mehmet: So while you're sleeping, for example, in Dubai, people in the US will be using your software, which is really fascinating, right? Um, So, as we are almost, uh, coming to the end, uh, Nick, today, [00:39:00] what would be your final word of advice to fellow people? Startup founders, especially in our times, or entrepreneurs in general, what do you tell them?

Nick: I'd say two things. Number one, uh, is make sure your product has a purpose and that's both a longer vision purpose qualitatively, as well as product market fit. Make sure your product is real and creates value for your customers, because if it doesn't, Your business is not going to succeed no matter how long you try.

Nick: That's number one. And that's a really difficult question to ask yourself when you're excited about your product or your vision, does your product actually create value? The second is going back to that point about running a business. Well, be introspective as a founder or a leader. This could be true of a multi billion dollar company.

Nick: Um, if you realize that your skillset is X. But you are missing skillset. Why go hire skillset? Why? And that's true day one, right? Whether that be a CFO, whether that be you, you know, a lot of founders rightfully make the decision [00:40:00] that they're not going to be the CEO of a company. They're going to be the chief evangelist or chief product officer.

Nick: And you're going to hire someone who's a professional CEO. That's okay. It hurts your ego sometimes, but it's the right decision. That's how you take your vision to, uh, to the next level.

Mehmet: Absolutely. A hundred percent. I agree with you. Like, you know, the, the, The ego sometimes is the is the killer, right? So so and I always like advise people Accept it, you know, it's better to have a co founder that can complement your skills So if you are a very strong technical you might become the cto or as you said like Chief evangelist whatever and give give the rest of the things to the guys who might be able to run the business the way They want to It should be around.

Mehmet: So 100%. Nick, where people can get in touch with you.

Nick: Sure. There's three great ways to get in touch with us. Number one, you can go to ideascale. com and sign up for our software. It's entirely free for anybody who's works for an [00:41:00] organization with less than a hundred people. So Uh, go, go sign up free. Second way is you can reach me at, on LinkedIn.

Nick: My name is Nick Jain, and I'm usually the first result that pops up on LinkedIn anywhere in the world. The third is you can email me directly at nick. Jainatideascale. com.

Mehmet: Fantastic. I will make sure that all these addresses are available in the show notes and available also in the description. If you are watching this on YouTube, Nick, really, I enjoyed the discussion with you today.

Mehmet: And we're, we're really You know, one of the favorite topics that I always enjoy when I have guests like yourself with me, innovation and, you know, like edge technology and all this, and you are in the space of managing actually, you know, this innovation. So with the, with the innovate, uh, and idea scale, right.

Mehmet: So, uh, I really enjoyed the discussion and I hope also, you know, the audience will, will enjoy it as well. And this is how I end my episode. This is for the audience. If you just discovered this podcast for the first time, [00:42:00] thank you for passing by. I hope you enjoyed it. If you did so, please subscribe and share it with your friends and colleagues who are available on all podcasting platforms.

Mehmet: And we are available also on YouTube. So give us the thumb up also as well. And if you are one of the people who keep coming and send me, um, you know, their recommendations and suggestions. Thank you for doing so. I read them all. Keep them coming. Thank you very much for tuning in and you will be again very soon.

Mehmet: Thank you. Bye bye.