20VC What VCs Really Mean They Say 'Stay In Touch', Why Incentivisation Through Perks Is Lazy & Why Founders Should Always UnderPromise & OverDeliver with David Politis, Founder @ CEO @ Bettercloud

In this episode of the 20 minutes VC, host Harry Stebbings interviews David Politis, the founder and CEO of BetterCloud, a pioneering SaaS management platform. Politis shares his entrepreneurial journey, starting as the founding employee and CEO of Vocalocity, and subsequently at Cloud Sherpas, which led to the inception of BetterCloud. He discusses the importance of a deliberate company culture, the benefits of a diverse investor syndicate, and the lessons learned in fundraising and scaling a company. Politis emphasizes the significance of communicating a compelling vision to investors and the necessity of investing in people and culture over superficial perks. He also outlines his vision for BetterCloud's growth over the next five years, aiming to become the centralized platform for SaaS application management.

• "Founders Friday" is a segment on the "20 minutes vc" podcast hosted by Harry Stebings.
• Harry Stebings is active on Snapchat and has a blog named Mojitovc.com.
• The podcast invites listeners to share their thoughts on the blog and the show.

You are listening to founders Friday on the 20 minutes vc with your host Harry Stebings at h Stebbings on Snapchat with two B's, and on the incredibly named new blog Mojitovc.com.

This quote introduces the podcast segment and the host, Harry Stebings, who is active on social media and has a blog where listeners can engage with content.

• David Politis is the founder and CEO of BetterCloud, a unified SaaS management platform.
• BetterCloud has raised over $40 million in funding.
• Investors include Accel, Greycroft Partners, and Flybridge Partners.
• David was an early employee at Cloud Sherpers, which became a leading Google app service provider and was acquired by Accenture.
• Prior to that, David was a founding employee and general manager of Vocalocity, a top provider of cloud PBX technology, which was acquired by Vonage.

I'm thrilled to be joined by an incredible founder in the form of David Politus.

Harry Stebings expresses excitement about having David Politis on the podcast, highlighting his accomplishments and the success of his company, BetterCloud.

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• Xero can be accessed from computers or mobile devices.
• The software can be customized with over 500 business apps.
• Xero has over 860,000 customers in more than 180 countries.

Xero is beautiful, easy to use online accounting software for small businesses.

This quote describes Xero as an accessible and user-friendly accounting solution for small businesses, emphasizing its global customer base and customization options.

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• Installation is under ten minutes and does not require wiring due to solar power.
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• Pearl Rear Vision is available for purchase online and through select retailers.

Pearl Rear Vision is the only wireless backup camera and alert system that installs in minutes and updates throughout its lifetime.

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• Born and raised in New York City.
• Influenced by his entrepreneur father, David always aspired to own a business.
• Attended Emory University in Atlanta, Georgia.
• Joined a small technology startup in Atlanta after graduation.
• Became CEO of the startup after a significant downsizing.
• Pivoted the company's focus to cloud-based PBX technology, which was acquired by Vonage.

Born and raised in New York City, kind of always had the passion to be an entrepreneur.

David Politis shares his background, including his early entrepreneurial aspirations influenced by his upbringing and his father's career.

• Being young and inexperienced can eliminate fear and preconceived notions about what's possible.
• Trusting one's gut and believing that anything is possible with the right approach is crucial.
• Recognizing that inexperienced individuals can excel and make significant contributions.
• Importance of giving opportunities to those who can "punch above their weight."
• Learned about building sales organizations, customer support, product development, hiring, and firing.
• Acknowledges that mistakes were made, especially in investor relations, customer support, fundraising timing, culture building, and marketing.
• The experience was formative in learning what to do and what not to do in business.

The first thing, and I still follow this today, is just really to trust your gut and that really, if you put your mind to it, anything is possible.

David Politis shares that trusting one's instincts and believing in the possibility of success were key lessons from his early experience as a CEO.

• Early career opportunity to lead a company as CEO provided a significant learning experience.
• Learned about various aspects of business operations, including sales, support, product development, and company culture.
• Emphasizes the importance of learning from mistakes and applying those lessons in future endeavors.
• The acquisition of Vocalocity by Vonage was a notable milestone in his career.

I learned so much, and the mistakes, again, really way outnumbered the things that I would do again.

David reflects on the breadth of his learning experiences and the numerous mistakes made, which have shaped his approach to business.## Early Career and Transition to Bettercloud

• David Politis shares his experience at Vocalocity and Cloud Sherpas before founding Bettercloud.
• Vocalocity was focused on cloud-based phone systems for small businesses, while Cloud Sherpas was a cloud consulting company helping migrate companies to Google apps.
• David's role at Cloud Sherpas involved creating an SMB practice and productizing custom applications.
• He observed a significant shift to cloud applications, with large enterprises replacing legacy systems with Google apps.
• David noted the demand for tools to manage and secure SaaS applications, similar to what existed for legacy IT environments.
• The idea for Bettercloud emerged from the need for modern IT management and security tools for SaaS platforms.
• Bettercloud was founded in November 2011, initially focusing on Google apps due to David's background and the widespread use of Google's SaaS applications.

"And when I got there, my responsibility was to create an SMB Practice was to try to figure out how to productize some of the custom applications we had been building."

This quote explains David's role at Cloud Sherpas in developing a small and medium-sized business (SMB) practice and turning custom applications into marketable products.

"We were seeing companies, big, big enterprise companies, rip and replace these legacy systems to go to Google apps, which I don't think anyone at the time knew was occurring."

David describes the significant shift he observed in enterprise companies moving from traditional systems to Google apps, which was a relatively unforeseen trend at the time.

• David Politis expresses strong opinions against using perks to incentivize, recruit, or retain employees.
• He considers perks, such as free meals and other services, to be lazy, superficial, and ultimately unhealthy for both the company and employees.
• David argues that a perks-focused culture may attract employees motivated by the wrong reasons and require constant escalation to maintain interest.
• He believes investing in personal growth and career development is more important than offering perks.
• David compares a company's relationship with its employees to a marriage, emphasizing the importance of mutual respect and communication over material incentives.
• He discusses the natural development of company culture and the need for deliberate effort in maintaining it as the company grows, especially beyond 80-100 employees.

"I think it's superficial, it's unhealthy... I think the company is going to start attracting people who are motivated by perks and may not be passionate about the vision of the organization itself."

David explains his view that perks can lead to a workforce more interested in benefits than the company's mission, potentially leading to a lack of genuine engagement and passion.

"I think that it's actually easier to just spend money and deal with giving perks than it is to give the important stuff."

This quote highlights David's belief that it's simpler for companies to spend money on perks than to invest in the more substantial aspects of employee development and satisfaction.

"If you're not deliberate about it, it breaks down... you have to really start trying."

David discusses the limits of company culture, noting that without intentional effort to maintain and develop culture, it can deteriorate as the company expands and hires more people.## Deliberateness in Company Culture

• Deliberate culture-building involves being intentional about how the culture is shaped and maintained.
• Hiring a dedicated HR leader who is passionate about people and culture is crucial.
• This HR leader should report directly to the CEO to emphasize the importance of culture.
• Writing down and repeatedly communicating the company's values and expectations ensures clarity and accountability.
• Regular company meetings serve as a platform to reinforce the company's employee value proposition and expectations.

"We never really invested in being deliberate about it. And it broke down at some point because we weren't working on it."

This quote underlines the importance of actively investing in and working on company culture to prevent breakdown.

"We hired someone who's responsible to run HR... this person we brought on was really responsible for people and for culture... It reports into me, the CEO, because that's how important it is."

David Politis explains the significance of having a dedicated HR person focused on culture, reporting to the CEO to signify its priority.

"We took all the things that we preach, our employee value proposition, what we expect from our team... and we repeat them at every meeting."

David Politis highlights the practice of documenting and consistently communicating the company's core values and expectations to all employees.

• Leadership effectiveness sessions involve gathering anonymous feedback about leaders from their teams.
• Leaders must share the feedback with their team and commit to working on their weaknesses.
• This practice fosters transparency, accountability, and a culture of continuous improvement.
• The CEO leading by example in sharing feedback and improvement plans encourages others to do the same.

"The leader has to then take that feedback, good, bad and ugly, and show it to their entire team... it creates this sense of this real accountability at that level."

David Politis emphasizes the importance of leaders openly sharing feedback with their teams to establish a culture of accountability.

• Recognizing and rewarding employees for their contributions is essential for fostering a sense of ownership and motivation.
• The 'crushing it awards' segment in company meetings publicly acknowledges individuals who have performed exceptionally, based on peer and manager nominations.
• Balancing the introduction of new programs is necessary to avoid overwhelming employees and causing culture shock.

"At the end of the meeting, we have a crushing it awards section... we call them out by name and also exactly what they did and why we're calling them out for, quote unquote, crushing it."

David Politis discusses the practice of publicly recognizing employees, reinforcing the value of ownership and personal achievement.

"We got so excited about being deliberate... It was culture shock, actually, to go from no programs to ten people programs... we definitely learned our lesson."

David Politis reflects on the mistake of introducing too many changes too quickly and the importance of gradual implementation.

• Every stage of fundraising presents unique challenges and learning opportunities.
• Early fundraising rounds can be nerve-wracking, with the need to understand VC communication and improve pitches.
• As the company grows, the stakes and expectations increase, making later rounds more stressful despite a more streamlined process.
• Having a supportive team, customer references, and investor endorsements can ease the fundraising process.

"Every stage for me was different and challenging and unique in its own way... the early rounds, I was really nervous."

David Politis shares his personal experience with the evolving challenges of different fundraising stages.

"The process got easier as time went on because I knew what to expect... The stress and because of the stakes, because the expectations internally and from investors that are giving you this much money, that got harder and more stressful for me."

David Politis contrasts the increasing ease of the fundraising process with the growing stress due to higher stakes and expectations.## Investor Syndicate Composition

• David Politis emphasizes the importance of a diverse investor syndicate.
• The syndicate includes a mix of geographical locations, industry expertise, and professional backgrounds.
• Such diversity brings multiple perspectives, connections, and insights.
• David regrets not doing this intentionally but acknowledges its positive impact.

We have people on the west coast, on the east coast. We have people who are really big in the New York tech scene. We have people really big in enterprise it. We have people who are operators, people who are full time investors.

This quote underlines the geographical and professional diversity of the investor syndicate, which has inadvertently contributed to the success of the company.

• David reflects on his conservative approach to fundraising, which led to under-communicating the big vision for BetterCloud.
• He recognizes the missed opportunity to share the company's potential during fundraising rounds.
• In hindsight, he wishes he had articulated the long-term vision more effectively.

I did not do a good job in any round, really articulating the really big vision for better cloud.

David admits his shortfall in communicating the grand vision of BetterCloud to investors, which he now sees as a key learning point for future endeavors.

• David's favorite books are "Red Notice" by Bill Browder and "Banker to the Poor" by Mohammed Yunus.
• These books provide insights into business in emerging markets and have personal significance to David.
• The stories are appreciated for both their educational content and the perspective they offer on his own business environment.

The first is red notice by Bill Browder, and the second one is banker to the poor by Mohammed Eunice.

David shares his favorite books, highlighting his interest in international business and microfinance, and the impact these books have had on his worldview.

• David wishes he had understood the openness and size of the market better at the start of his journey.
• He acknowledges the unnecessary fear of competition and the importance of confidence in a market with room for multiple players.

I wish that what I knew now is how much was actually possible in how open this market was going to be.

This quote reveals David's realization about the vast potential within the market that he underestimated in the early stages of his business.

• David regularly reads Recode and the BetterCloud Monitor newsletter.
• These are his go-to sources for staying informed on industry news and company updates.

The two must reads. The first one is recode. I read that every morning, and the only other newsletter that I get this is honestly the only other one that I read is our own better cloud monitor.

David shares his daily reading routine, emphasizing the importance he places on industry insights and internal company news.

• David's management style has evolved to delegate more and trust his team with various business areas.
• He places great importance on communication, ensuring the team understands the company's direction and rationale behind decisions.

I think that the biggest maturation is stepping back from certain areas of the business and trusting them to other people on my team.

David discusses the maturation of his management style, highlighting the shift towards delegation and enhanced communication with his team.

• David sees the next five years as a period of growth for BetterCloud, with the SaaS management platform taking off.
• The goal is to become the centralized control point for managing SaaS applications in businesses worldwide.

So the next five years, we're just really getting started.

This quote encapsulates David's vision for BetterCloud's future, indicating the company is at the beginning of a significant growth phase.

• Harry Stebings expresses gratitude to David for participating in the show.
• There is a playful mention of the frequency of the name "David" in the conversation.
• Harry also provides information about Xero accounting software and Pearl's automotive technology, highlighting their benefits for small businesses and car owners.

And I want to say a special thank you to David for giving up his time today to come on the show.

Harry thanks David for his contribution to the podcast, emphasizing the value of the insights shared during the conversation.