Welcome to episode fifteen of the SaaS Backwards podcast, where we interview CEOs and CMOs of fast-growing SaaS firms to reveal what they are doing that's working, and lessons learned from things that didn't work as planned. 

You can listen to the full episode directly below via Spotify, or visit SaaS Backwards on Buzzsprout or wherever you listen to podcasts.

Healthy Decisions Help Services Firm Grow Through Planned Transition to SaaS - Optimove CMO Tells All

Amit Bivas, CMO, Optimove

Edited for clarity and readability 

Host, Ken Lempit:
Welcome everyone to another episode of SaaS backwards--the podcast that helps SaaS CEOs and CMOs reverse engineer what it takes to be successful in a SaaS business today. Our guest today is Amit Bivas. He is the CMO of Optimove. Amit before we dig in, could you tell everyone a little about yourself and your business?

Amit Bivas:
Hey Ken. First, thanks for having me on this podcast. So, I'm Amit Bivas, and I’m the Chief Marketing Officer here at Optimove. Optimove is a marketing technology that helps businesses scale their CR marketing. The idea is to help them communicate with hundreds of segments, providing the best message to the right customer through the right channel at the right time.

My career trajectory has been quite interesting. I studied industrial engineering and one of my professors had a small startup. And at some point, I sent him an email and said, “how about we change our student professor relationship into an employer/employee?”

Literally, that's how I started working for Optimove. I started as a data analyst back when we had 15 people in the company. Even though my background is in engineering, in a small company, everyone does everything. And I was attracted to the marketing side. Later, I was offered to lead the marketing and here I am.

Ken Lempit:
Nice, and tell us a little bit about who the clients are for Optimove? What kind of company needs what you guys do? And, what's the biggest, best use case?

Amit Bivas:
We're selling very high in the enterprise and we're looking for clients that data for them is a big lever to become a differentiator. Meaning that if they're able to leverage the data and create a better experience for me, then that data can become a differentiator.

So, working for those types of brands that are in areas that are somewhat commoditized, where the consumer wouldn't necessarily care if he buys it from brand A or B or C, and then use the data to create extraordinary experiences. And that's where we come into play. We'd help them, looking from a KPI perspective, make sure that they would increase repeat business because they're creating such a good customer experience, and because they're catering the right message at the right time through the right channels.

We worked with the likes of Staples, Dollar Shave Club, Dollar Tree, Papa John's Pizza and so on.

Ken Lempit:
So, in that commodity product, I ran out of oat milk today and if my grocer knew enough to track the periodicity of my purchases, might've warned me that this was a possibility this morning?

Amit Bivas:
It's funny you mentioned that because that's one of the examples that I always like to share. So, I have this habit just before the weekend, going to the local farmer's market. But there's one person that I come to time and again, and buy there just because of the experience.

He'd ask, how's everything going? How was your weekend? How is the wife doing because the week before I told him that she wasn't feeling very well. And that's CRM; that's the leveraging data in order to create a better experience, right?

That's it exactly (but at the very large scale) what we try to do here at Optimove. So, if you're looking at that oat milk example, you just provided, it's not just knowing when's the right time to remind you that you're about to run out. But it's also knowing that you liked your oatmeal with, I don't know?

Ken Lempit:
Blueberries.

Amit Bivas:
There you go. So, coupling it with blueberries and even adding something that works good with blueberries. So, I don't know, some kind of yogurt or something. That's exactly the idea to create that experience. Now, what you like is different to what James or John or Stephanie likes. And that's exactly the idea, to understand.

Even more so, what you want changes from time to time. It's also a dynamic environment. You always need to be on top of what the customers want and what creates value for one customer is not what creates value to another one. So, understanding that value exchange between the brand and the customer and catering to that time and again.

Ken Lempit:
Awesome. So, this company started out with a slightly different business model, didn't it? Sort of a service provider with some toolkits, right?

Amit Bivas:
Yep. So back in 2009, both of the co-founders of the company met in the corridors of the Tel Aviv university in Israel. One of them was mastering in operational research, the other one doing his PhD in machine learning.

They took a decision-making model from the operational research world that's pretty much a state machine and applied it to marketing in which this state machine, each state represents a segment and customers migrated between segments, hence the state machine. So, they took that model and started going to market as a service.

For example, they would take data from local retailers, wholesalers or whatnot and apply the model onto it, then understand how customers migrate between segments and by that, consulting on what's the best action to do, or what's the best campaigns to launch in order to make sure the customers migrate to segments of higher value. And that was pretty much in a nutshell, the service that we offer.

Ken Lempit:
So, there was a move (If I remember correctly) the move was planned pretty early on to become more of a software company. So, what did it take to go from a consulting environment to being able to sell software as a service? Was that actually the first incarnation here? Was that SaaS out of the gate?

Amit Bivas:
I mentioned there were two co-founders to the company, the one that was doing his masters in operational research. That's the CEO of the company today. Being an operational research person, he's all about processes and scale, and making things right.

So from the get-go, both knew that they wanted to become a platform provider or a software provider because service is something that's very, very, very complicated to scale. At least when you start very small (If you're not looking at a McKinsey or BCG) starting very small and scaling those sizes is very, very challenging.

So, the plan from the get-go was to become a college provider a SaaS solution. So what the founders did was they always had that vision in mind, but they also didn't want to raise any external capital. So what they did in a bootstrap model, all of the revenues from the service were invested back into the business in order to start building the actual product. Running the company wasn't their day job. He used to teach in the university.

That's how I met Vinny and the CEO and founder of the company and started working for the company. So, their day job was both teaching in the University, as well as starting the company, providing these services, making revenues, not even taking out a salary and investing it back into building a product.

Ken Lempit:
So, there's a lot to unpack right there. And I think for entrepreneurs, one is that services are a path to creating intellectual property that can become software, right? So you refine your recommendations, you refine your procedures in the services model, and then you can sort of abstract that and bake that into a software product, right?

So, you'd take what you did with some sort of tools that you built and you make that into a product. So that's one.

I think the other one was having this vision upfront that you're going to eventually scale to a software company. Might encourage people that feel like they have to do everything all at one time. They have to come out with all the software ready to go. You might be able to say, “hey, I can build some piece parts and whatever mechanism I use, is it a spreadsheet? Is it a purpose-built small program or series of small programs that I run against my data to deliver the consulting? And then I think there's an implied thing here. And I think you talked about it in terms of the founders not taking salary.

But you have to price in the cost of development in this young company, right?

So, you're going to either price it in, by not taking a salary off the early revenues, or you're going to have to find a way to price up your services such that you can afford to build the software. So that was sort of a three-in-one there. Did I capture that accurately?

Amit Bivas:
Yes, and I'll start with the advantages of starting as a service. It's jumping into the water, but they're not as deep because when you're a service provider, you gain a whole lot of experience with the industries that at the end of the day you sell to, so you get a whole lot of understanding of their market, which then moving forward, you'll bake into the product. That's super important.

The second thing is also those customers that you're selling service to will then easily become customers of your product. If you're able build that correctly, and also let your customers understand that this is a service now, but we're also working on a product that will not only encapsulate the service, but also give you a whole lot of additional benefits they're looking for because you live this industry, that creates a smoother path from service to the software.

In terms of funding it, the co-founders of Optimove decided not to take external funding. There’s always the shortcut of raising capital, which is the common way today.

I would say that the downside of fundraising is that the very organic process that we went through usually is accelerated when you bring VC money inside, and sometimes it could bend things.

We didn't have that pressure so to speak. And we were able to do that transition very smoothly and built it very correctly, because we didn't have that external pressure of growth, growth, growth. Yes, we did grow, but we did grow 80% year on year and in our first year.

Ken Lempit:
That's a really interesting thing. We had the founder and CEO of Lemlist on our podcast a couple of weeks ago, and he somewhat famously did a mock fundraiser in public. He had a lot of offers and abandoned all of them. His point was very similar, which was not taking venture money and bootstrapping caused healthy decision-making. All his decisions were aligned with the business and the customers. Those were the interests he was following.

VC and PE investors can put a new set of expectations on a young company, and that can sort of distort it. You call it bending things, but it distorts the business model a little bit.

I really want to explore a little bit about being closer to the customer as a result of bootstrapping and doing the service model first. Was it overt that you would ask your customers to contribute to a product roadmap? Or was it that you took these experiences and then went back into your own offices and said, “here's what we've been learning” and then build the roadmap outside of those relationships?

Amit Bivas:
So, at a very early stage, the ladder moved forward four months. So, in other words, at the beginning, we just thought that models that I spoke about that type of like the statement sheet that I mentioned.
That was the product itself. You feed data into it and you get a segmentation and predictions based on those migrations--that was a product.

We understood that people needed a lot because the services went well. We understood the implications and how people use the services. That was our initial roadmap, taking the core of the service. They can get into a product and then slowly but surely build audit applications on what they do and how our customers use it, adopting and answering them with more and more use cases.

Moving forward, a funny anecdote was that they saw them with this huge chart drafting a calendar where they would say, what days do they extract segments from our software in order to push into their systems and how that would build their marketing plan and when they sent each campaign?

Six months later, that was part of the product. If that meeting wouldn't have happened, we wouldn't have one of the main capabilities of the software as it is today.

Those are exactly the types of experiences that you get as a service provider. Also when you do the transition from service to assess, you also see that many people are using your product differently than you thought.

And again, not taking VC money, you don't need to make that transition quickly. You have time to get a deep understanding of how people use just your product and how you want to make it look and which use cases you want to solve with it.

Ken Lempit:
That's awesome. I think that's a really nice kind of window into a potential business model for entrepreneurs who are trying to figure out how to go, right? And it can be daunting. Building software first requires a lot more and being able to go to market with expertise and some toolkits really allows you to validate some things you thought might be meaningful to enough customers to be able to sell it.
When we first talked, you said it wasn't perfectly smooth moving from advisory to SaaS. What were one or two bumps in the road that folks might want to know if they got to take this path? What can they anticipate as bumps in the road?

Amit Bivas:
I mentioned at the beginning that you want to essentially build the product in service of your customers. Now in an ideal world, you have a conversion of a 100%. It's definitely not a 100%. It's less than that. There are customers that would say, "You know what, we liked your service because we liked the people, but the product is less what we had in mind." And then in the good case scenario, you're able to bridge that gap and make the case on why a product is better for them than a service.

But the thing is that transition from service to product also creates a shift in your relationship with the customer. Service is much more of a human-to-human type of relationship, where the product is human to machine or whatever.

That transition sometimes dilutes from the value you have as a service provider, and then as the business leader, you need to make sure that you have a plan on how to tell that story. People enjoyed your service very much. Now it's becoming a product. Will they get the same value? Will they get the same attention from you as a business owner or as an executive? And those are things that we thought of, but not probably deeply enough.

And sometimes it backfired.

Ken Lempit:
So, people still want their hands held in that transition?

Amit Bivas:
Exactly. In a way it's intimidating to take a software product that was well digested, well built, exactly for you, to take like a product that's supposed to be a one-size-fits-all (Even though it wasn't in our case) and then also ask the person to work on the platform and not have people work on it for him. Now there's always the easy way of selling managed services, right? So, I have the product and then I'm going to sell you my service wrapped around the product.

Ken Lempit:
So, you have DIY, do it with me, and do it for me. There are people that even if you build the tool for them, they're going to want you to do it for them?

Amit Bivas:
That’s a huge risk, especially for people that are taking that route from a service to software. Because that's the easiest solution--yes, I'm going to build a product and then I'm going to sell the service and the product.

From a revenue perspective, it might make perfect sense. From an expertise perspective, you have a service expertise. So why not? The thing is that if you want to be a product vendor, you want to be an assessed vendor, and you need to sell a product. The service needs to not be the main thing that you're selling. Many times, and I've seen many smaller businesses that tried to do that transition, and they had a product, but no one knew that product existed because it was just a small part of the service. It's all about the service. You need to make sure that the critical mass becomes the product and not the service.

Ken Lempit:
As you scale up there's a couple of things that need to happen. First of all, you need an army of people to manage all these clients on the tool, right? So you're creating your own ever-increasing cost basis. And when you do go to take money, the valuation is going to be impacted by how much of your revenue is coming off professional services, because that gets discounted versus your software revenue. Maybe that's the time you want to start building the channel. If the product's complex enough, you build a channel of implementers so that you get out of the implementation game. And those people might also be assets in helping sell more clients.

Amit Bivas:
We shifted many of the service people into people that integrated data into the platform and created that integration and onboarding. Others have become customer success managers. So, it's not like the people that were service people in the company are being let out.

On the contrary, those are people with a whole lot of knowledge. You just want to shift their focus from one place of the business, to another.

Those people that have branch data are exactly the people that can help integrate a customer's data into the platform. And those people that used to deliver presentations as consultants to clients are the people that could be customer success managers, or solution engineers. So, it's about transitioning the head count and the human assets that you have into people that would also support that transition from service to SaaS.

Ken Lempit:
So, it's really organic everywhere here, right? Its organic growth within the organization and organic building of the product. It's pretty exciting.

There's a lot of glory around raising a big round of funding and the rounds are getting bigger. So, the numbers are more exciting, but it just kind of feels like a more integrated, wholesome way of growing up a real business, as opposed to one that's just fueled by an excess of cash?

Amit Bivas:
Right. So, we all know that today we're part of a growth economy. The main factor that's taken into account when evaluating a company is growth. That said, you see this a lot during COVID, there's a lot of importance in the unit-economics. So, profit isn't a bad word. It's not only growth. You also want to have profit. Optimove from the get-go was a profitable company. And we were able to build that by again, by not accelerating growth so quickly.

By the way, don't get me wrong, today we're definitely growing and growing fast. But we're definitely part of that growth economics. We're still a financially healthy company because we're looking at the unit economics very much microscopically. We also aren't privileged to burn through money.

If I look at my peers that also lead marketing and venture backed or larger companies, they're looking to create accelerated growth and they'd put money in forever. Now for me, my team would put together a business case on each and every cent that I would invest. So, in that sense our mindsets is a bit more modest or a bit more cautious. You want to make sure that each and every investment would yield the highest ROI, and we definitely do more thoughtful investments.

Ken Lempit:
It makes sense from the formation of the firm today that you would have that approach. Maybe you could share what you think are the highest value campaigns you're running? Where are you seeing the most ROI in your marketing?

Amit Bivas:
Our marketing in the past a year and a half is quite different. We went on a track that we transitioned all of our marketing into account-based marketing (ABM). We have a very good understanding of who are the businesses that can make the most out of our solution. So, we're able to define them very well into a very small group.

And then what we did is we flipped it around instead of doing the classic reactive marketing where you're reacting to intent or search or whatnot, we do proactive marketing. We're sure that we're under the radar of those companies that can make the most value from using our solution.

We're going to be there even before they have the need. At some point, we're going to help them create the need and create the business case for whatever, but we're proactively there. Hopefully, when they'll have a need, we'll be the vendor. That'll help them build the RFP and hopefully win it.

Ken Lempit:
Interesting. I don't think I've heard that yet. So, I like it. We have hundreds of organizations that could benefit from that solution. We know who we think the decision makers are, and we know their pain points, so we can develop content against their likely needs. And if we're present enough over time, we'll get a lot of opportunity to come out of that. So, it's a process against a finite group of targets. Is that about right?

Amit Bivas:
That's exactly it. It's being there and being alert and when it's the right time, taking action and making sure that you're always there. Again, it's never salesy or a hard sell. I hear a lot that SDRs are one of the new emerging ways to drive business. Now, SDRs were effective, say six years ago, when it was unique. Today, I don't know. I received probably a couple 100 emails from SDRs a week. Those are deleted, blocked, and ignored.

Ken Lempit:
Here's my latest, "Ken, I imagine you've been preoccupied with other concerns the past few weeks. I wanted to send this one last email." I mean, I don't know how many of those I get. It's terrible.

Amit Bivas:
Marketing automation was built for that. If you want to send the same cold email to thousands of people, use your Marketo, HubSpot, whatever. You want to use SDRs that make the most out of them, let them do their research. They don't work on volume. They work on quality, not quantity. They should do what marketing automation can’t do. They need to do their research and reach out to a Ken and mention that you like oatmeal, and how about we do breakfast and have oatmeal and berries? That's what a good SDR should do.

Ken Lempit:
Yeah. I happen to have a favorite restaurant in London for oatmeal and berries. So there you go.

Amit Bivas:
Now think about an SDR that would send you an email, "let's meet and have breakfast there."

Ken Lempit:
Yeah. Right. I mean, I agree with you and that's a lot of what we coach clients on as well, is that the process has to include true personalization, understanding and kind of surrounding the prospect too. Just because we know a lot of people doesn’t mean we know everybody we need to know. We need to know who Amit works with, and what those people are concerned about. And even if Amit downloads something on our website, the knee-jerk response can't be to try and call the guy right away. It's, let's map the organization and figure out why would somebody have downloaded something and who else should we be reaching out to at the same time.

Amit Bivas:
That's exactly what we're trying to do with that strict approach of ABM. It's the smallest of accounts. We're making sure that we have all of the intel. We do all of the research we gather whatever we can before we go out and try to bring that prospect in.

Ken Lempit:
Awesome. I think we should talk a little bit about how you do sales enablement. Because this is a large sale, right? This is a six, seven figure sale. What does sales enablement look like at Optimove?

Amit Bivas:
So, sales enablement for us, it's usually led by product marketing under my team. That is usually divided into existing business and new business, where you want to make sure that your customers make the most out of your product. You want to make sure that they have what they need. And if there are additional products that they might find valuable, they know about them. So, that's existing business.
New business would be looked at as funnel pipeline. Funnel is marketing, pipeline is sales enablement. It's a pricey product. It's a long sales cycle. Our base assumption is that we're always against three to five competitors. Then at that point, when you want to do sales enablement, you want to make sure that you always come out with the best and are always top of mind during the sales process.

Right. And you know, you're not on the call 24/7 with decision makers on the other side. So, you want to make sure that you highlight the benefits of your solution at that phase. And that's how I see a sales enablement.

If I translate that into deliverables, we're talking about use cases that we support and why we support the best. We're speaking about accolades, why we're considered a challenger by Gartner and a leader by a Forester and so on and so forth. We want to make sure that we highlight our biggest acknowledgements and why we're better than the rest at that point, because our base assumption again, is that we're compared to a short list of somewhere between three to five other vendors.

Ken Lempit:
Is there a platform that you use to span time with prospects? Do you use a sales enablement tool of any kind?

Amit Bivas:
Sales enablement for us is creating the relevant content, and then we use many distribution technologies in order to make sure that they're in front of the right eyes. So, for example, if a certain company has become an opportunity and is currently in our pipeline, we're going to start a LinkedIn campaign on that company. Then target the relevant people with those types of things.

So, what a prospect will see is an active sales cycle that’s different than what they'd see when they're unaware of the company, when they're aware and so on and so forth.

Ken Lempit:
Kind of sounds like journey orchestration.

Amit Bivas:
We take pride in Optimove as the product of journey orchestration. We don't necessarily drink from our own Kool-Aid. Because what we do in our B2B marketing is not as large scale. Whereas the product Optimove is. Our tagline is scale from 10s to 100s of segments. So, what we do for our B2B marketing is totally different. It's much more tailored in its small scale where our clients would communicate and create those moments or hundreds of thousands of different segments. And then that becomes orchestrating the journeys.

Ken Lempit:
Fair enough. But it just seems like you're very mindful of what people experience at each point of their engagement with the firm. It would be interesting if we could find some metrics on what the close rates are or what the pipeline velocity looks like? The more you tailor the experience. An area of research, maybe we should take up.

Amit Bivas:
Also, some things that I took from how our customers do things is always set aside a whole group, that's control. That's the only way to measure impact. Then you can measure on any KPIs that you want. You can measure off lists. We have customers that measure uplift in returns of their orders. We have customers that measure uplift on profit, obviously on revenue, whatever. Once you set out a hold group, you can measure the incremental impact. And that's how you measure ROI. That's how you build a business case. And that's the only way to actually measure the success of marketing.

Ken Lempit:
One last topic I wanted to talk about is, you guys did ultimately take some investment money. And I want to look into the decision-making and the timing. Obviously intentional. Tell us about how you knew it was time. What if any changes having raised money brought to the firm?

Amit Bivas:
So, we took our first and only investment in 2016. And during those seven years, the company was already established. It had a culture, it had a viable product, it had revenue, it had personality, it was a proper company.

We were 100 employees strong back then. Then at that point, when you're already established in terms of your mindset and already understand where you are, where you want to be, what the roadmap looks like, that's the point where according to our philosophy was the right point.

They could invest in it because we knew what we wanted to do with that money. Then, even if you bring in people into the board and you bring in the right business functions, they can help you execute your vision and not crash and rebuild that vision or disrupt what you had in mind.

Because once you disrupt critical mass, a hundred employees, significant revenue and so on and so forth, when you take the money, it is much more mature and you understand exactly how you want to invest.

So, I would say if this philosophy makes sense to listeners, then the right time to take money is when you feel that you're established enough in order to understand exactly what you're going to do with the money. And you have a very clear vision, then you're able to take that money and just realize that vision.

Ken Lempit:
I think that's a great place to land the podcast episode. Amit I want to thank you. We had a really interesting conversation and lots of value for people who've listened to this point. And if they do want to get a hold of you or learn more about the company, how can they do that?

Amit Bivas:
Hit me up on LinkedIn or any other social channel. I'm more than happy to answer any questions share from my experience. And yeah, thanks for having me Ken.

Ken Lempit:
And the company is called Optimove. And the website address is optimove.com. Right?

Amit Bivas:
That's correct.

Ken Lempit:
Awesome. Thanks again for making this a great episode of the SaaS backwards podcast. Again, my name's Ken Lempi. You can also reach me on LinkedIn, and my company website is austinlawrence.com. Thanks everyone. And we'll see you next time.

Thanks for listening to the SaaS Backwards podcast brought to you by Austin Lawrence Group. We are a growth marketing agency that helps SaaS firms reduce churn, accelerate sales, and generate demand. Learn more about us at www.austinlawrence.com. You can email Ken Lempit at kl@austinlawrence.com about any SaaS marketing or customer retention subject. We hope you'll subscribe, and thanks again for listening.