Christopher Lochhead: evaluation

Transcript context

…Yeah, I know the space very, very well, and they did something incredibly smart. So they were a little later in the space than some others. And so there were a whole bunch of companies in today which you could broadly refer to as the revenue space, right? In the spirit of full disclosure, I'm familiar with Clary. I'm good friends with Andy. I know the team. I've done some work with them. So all disclosure. Clary, and a handful of others, in the beginning started to create the space that ultimately became RevOps. And the interesting thing that Gong did, very smart, was as RevOps started to emerge, they were smart enough to realize that revenue was going to be a big new important space. That CRM didn't actually do it. That ERP didn't actually do it. BI didn't actually do it. And so there was this sort of emerging set of thinking around, "We need a different approach to revenue." They were smart enough to realize that if they went for the whole enchilada, it's not credible from a startup that you're going to go build, that you're going to show up and say, "We have a suite that's equivalent to that of SAP, just for this other area." So they picked off a very tight part of a broader emerging category, and they executed incredibly, and they dominated that part. But here's the mistake they made. In all new mega categories, they start like this. This is exactly what happened in CRM. I could walk you through the history if it matters, but there were companies in support, there were companies in help desk, there were companies in sales, there were companies in marketing, and there were a whole bunch of sub-niches underneath that. There was a point in time in the Salesforce automation category, when that was a standalone category, that some of the hottest companies in that category were sales configurator companies, a further down niche. And so as these mega spaces emerge over time, no one company can fulfill the needs of a customer. And so there's all these niches. The mistake that Gong made, as well as the vast majority of others in that space, is they stayed in their micro niche. So the strategy in the beginning that was genius and exactly what you should do as a startup, all of a sudden, when they didn't expand and set the agenda, the design for the big category, they got fucked. Because now they're niched. And there's a big learning in this Lenny, which is, if you're a company that's already up and running and you're winning, and let's say you're becoming the category queen in your space, every entrepreneur, every CEO, faces a fascinating moment. If they become successful in the first five years or so, which is they realize their biggest barrier to growth going forward, is their current category, because you can only be as big and successful as your market category. And so you have to continuously expand the vision for the category and continuously build on that. rd, is their current category, because you can only be as big and successful as your market category. And so you have to continuously expand the vision for the category and continuously build on that. And if you don't, and somebody else frames, claims, and names, the bigger agenda, as has been the case, and look, I'm biased, as has been the case with Clary, Clary's crushing everybody in this space right now, and the Gongs and all the other players are now in this horrible position, which is they basically only have two choices. One, they can stay in their niche, which is what most players do, and they argue best of breed "Oh, well, we're the best revenue carbodingulator. And you could go buy an end-to-end revenue platform. But if you do that, you won't get the best functionality in the carbodingulator space. So buy our revenue carbodingulator." That doesn't work. Microsoft proved it over 30 years ago, and we can talk about that if you want. Microsoft proved it over 30 years ago, and we can talk about that if you want. You either stay in your niche and get diminished over time, or you uplevel and you go to play for the whole enchilada. The problem is for them and all the others in this space who didn't do that, if they were to do it today, well over a year after Clari did, they're just a Clari copycat. And so basically you either go compete with Clari for who can be the category king, or you stay in your niche and get diminished over time. And if you're going to go compete with the company that is laying down the category design that's picking up the most momentum for the overall market, you better know how to do a fifth dan black belt category wars. Following that thread, there's a bunch of threads I'd love to follow, but something I definitely wanted to touch on is, in this concept of the better trap, which is where most people go, where they try to be the better solution in an existing category. And just to reinforce that point, what have you seen? What have you learned about just why that is often, and maybe always the wrong approach?…

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