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Ep. 357: Therese Tucker breaks through the dogma behind what it takes to build a successful tech company. With stories based on the founding of BlackLine — to the company’s successful IPO – you’ll learn the most common myths behind success and why they may be holding you back.
This episode is sponsored by Lightmatter.
SaaStr’s Founder’s Favorites Series features one of SaaStr’s best of the best sessions that you might have missed.
This episode is an excerpt from Therese’s session at SaaStr Annual 2018. You can see the full video here, and read the podcast transcript below.
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The transcript for this episode is below:
Therese Tucker: I’ve spent my whole career in B2B software. It’s an area that doesn’t get enough focus. Today, I’m going to start by telling you a little bit about me and a little bit about BlackLine and then some of the things that I’ve learned along the way.
I am the youngest of four girls. I was raised on a farm in rural Illinois. Neither of my parents went to college. Their big dream for me was that I could be a secretary. They made me take typing in high school, which worked out really well when I majored in computer science.
Therese Tucker: I’ve also always had trouble conforming, fitting into a certain mold, which might explain the pink hair, which you may be wondering about. We’ll dispense with that right away. It happened three years ago.
My marketing team wanted me to do the world’s most boring video. Older woman, “A blah, blah, blah, blah, blah.” I kept saying, “No, I don’t wanna…” I finally said, “Fine, I’ll do it, but I’m gonna dye my hair pink.” They laughed and they said, “No, you won’t.” [laughs] They didn’t realize it. I really try to never lose a game of chicken.
Therese Tucker: Turned out I liked it. Turned out it became who I am. I’m also a serial entrepreneur. I retired from SunGard Treasury Systems as their CTO. I got bored and started BlackLine. Not the best reason for starting a company.
Bootstrapped, because nobody in their right mind would have actually invested in us back then and took it up until 2014 as a bootstrapped company. Now, later in this talk, I’m going to give you a couple of my horror stories about fundraising along the way. I want to put a caveat on that.
In 2014, I sold a majority to Silver Lake Sumeru and ICONIQ. When you find the right partner, the right investor, what they can do in terms of helping you grow and scale a company is just invaluable. When I tell you horror stories later, just keep that in mind.
Bootstrapped it and then in October of 2016, we actually did an IPO, which was interesting and fun and cool, but it’s a lot of work, too. What is it that we do, you ask? Let me ask you, how much do you know about accounting? All of a sudden, you’re sorry that you asked.
Therese Tucker: Because accounting is probably the least sexy field out there. Yet, there’s a point to that because sometimes the best businesses are the areas that other people have overlooked because they’re not terribly interesting.
What we’ve been able to do is we’ve been able to build this very cool business, we’ve got an army of happy customers, and we’ve gotten just enough publicity that I get to be up here and speak to you today.
In the 16‑plus years that I’ve actually been working at BlackLine, the culture has shifted dramatically. We have gone through this myth‑making process where we deified founders as these brilliant geniuses. Yet, that really sharply diverges from my own set of experiences and the things that I’ve learned along the way.
Today, I want to tell you about some of the myths that I see out there and how I view some of the different experiences that I’ve had.
Therese Tucker: Myth number one, there’s a playbook. I’ve heard that word a few times around here already. There’s an old adage out there. If it was easy, everybody would do it. This applies here. If there was a playbook that worked for everybody, then everybody would go out and make a gazillion dollars and we’d all be happy.
It’s not like that. Companies are like people. They have a unique DNA. They have a unique culture. What might work beautifully for one can absolutely sink another. Those that are most likely to succeed, sometimes they fail. Sometimes, those that everybody else overlooks are the ones that succeed and quietly.
When you start a company, you’re betting on an idea or vision that nobody else has had. When you start a company, do you ever ask yourself, why didn’t IBM or Google or Oracle do this? There’s two answers for that. Either they really did overlook it or they actually looked at it and valued it differently than you did.
When you’re starting a company, it’s really just a bet that everybody else is wrong and they made a mistake. If somebody tells you there’s one way of doing it, they’re guessing. They are. I have a bit of a playbook now, but it’s my playbook. It worked for BlackLine.
The truth is, and when you start a company, to take it to a successful place, it’s a weird mix of hard work, perseverance, luck. Sometimes, it’s just having a friend who encourages you when you are ready to quit. It can be something that small as having the right person say the right thing into your life at the right time.
My caveat for today is I’m going to share some of my experiences with you, but they may or may not work. They may or may not be helpful to what you’re doing.
Myth number…Number two? [laughs] In Los Angeles where I live, there’s this guy. Oh my gosh, you can run into him all the time. If you ask him what he does, he’ll tell you that he’s in the business. For those of you that don’t know Southern California, that’s the movie business, Hollywood.
If you press him further, he’ll tell you that he’s working on his screenplay. Then, he’ll keep telling you. He won’t stop talking. He’ll tell you that Brad Pitt’s going to star in this pilot and he’s got so‑and‑so to produce it and Hans Zimmer to do the music.
You just know that this guy is full of it and you’re trying to be polite, you’re trying to get away. We see that guy all the time down in LA. Don’t be that guy with your startup. Don’t be that guy.
The reality is to even get to the point where you quit your day job and you’re going to go start a company, you have to have a stupid amount of confidence. You do. You just have to go, “I don’t care what everybody else says. I know I can do this.”
It’s almost an arrogant choice to say that I’m right and everybody else in the world is wrong because they didn’t see it. That’s how good I am. There has to be a certain amount of confidence that actually gets you to that point where you jump off that cliff.
The biggest mistakes happen when people start to believe their own hype, when they start to think…We have a saying in‑house at BlackLine. Somebody always says, “All that and a bag of chips.” You have people that think that they’re all that. When that happens, they lose focus on the business itself.
The reality is different. If you are the CEO of a small company, you have to be committed to doing whatever it takes to make that company successful. That could be buying bagels, that could be coding. I’ve cleaned toilets. Not fun, but in one of our offices, we didn’t have a cleaning service so, yeah, it got gross.
I did it because I wanted my company to succeed no matter what. You have to do all of that while you are selling all the time, while you are cheerleading, and while you are dealing with the stress of whether or not it’s going to work. The glamour might come later. Might come much, much, much later, so don’t be that guy. [laughs] Don’t be that guy.
Instead, if you pivot from arrogance to humility, there are so many benefits here. It allows you to be confident in your idea but still seek out the wisdom of people who have been there before.
I will always be indebted to one of my early board members and friends, Tom Unterman. I would bring all of my documents to lunch and lay out everything to give a snapshot of the business. He would, time after time, point to an area that I had completely missed. I’d go, “Oh my God, how did I miss that?”
He’d say, “You need to focus on that before it becomes a huge problem.” Cannot put a price on that. The ability to seek wisdom from others. The other thing about humility, it gives you clarity. It gives you clarity to look at your business honestly and assess what’s working and what’s not.
BlackLine started out by building wealth management software. I knew how to do that. I was great at it. After three years, we had one paying customer. Out of money, terribly broke, freaked out.
This customer came to us and it went something like this. We have a business problem, we don’t have any engineers, we have money, and said, “You have engineers. You obviously don’t have any money. What if we trade?”
Therese Tucker: Think about this. My big idea. Optimizing accounting operations was not my big idea. How embarrassing is that? It was created by an accountant at a bank in Nebraska. I’m not kidding. Humility allows you to do the pivots, allows you to capitalize on a great idea no matter whose idea it is.
If you’re married to your own idea and it’s not the right one, it’s not going to work. It’s interesting, in that humility can be an attribute, while not really prized in the tech industry, can really allow you to be successful.
Remember our aspiring screenwriter. One of the reasons that he is so annoying is because he’s got it in his mind that his future is all about riches and yachts and very exclusive Hollywood parties. He’s not necessarily interested in putting in the work that’s necessary or getting the coaching or the feedback that he needs.
We’ve all seen it. The reality is most startups fail. Most do. Even BlackLine. It wasn’t my first attempt. There were any number of times when I was really convinced that it was a dead, dead, dead proposition. We failed almost many times.
Even after we did our pivot to the accounting automation and optimization, we still had desperate moments. One of the things that was so interesting to me was doing business with large companies. They move at a glacial pace. We would have sometimes three‑ to five‑year sales cycles. I’m not kidding.
Then, they would call up and go, “Guess what? You’re selected. We’re going to introduce you and two competitors to our procurement department.”
Therese Tucker: Absolutely. Then, even if you get the software in and they love it, sometimes they take three or four months to pay. That would keep me up at night trying to figure out how I was going to make my payroll. Even when you’re successful, it’s a long road.
Think about BlackLine. 15 years from inception to IPO. When I think about building this company, I think about…I hate bugs and I hate jungles. I think about trying to make a road through the jungle. There’s no road, there’s no path, there’s no map. There’s no straight line. You don’t quite know where you’re going. You’re zigzagging back and forth.
It’s a long, slow haul. You have to learn things like how do I scale my sales force? How do we sell to accountants? How do we market? How do we handle the security around financial information? The things that we had to learn were not something that I could go Google on the Internet.
It was particularly tough because when you’re bootstrapped, every single dollar matters. When you make a mistake, that’s a dollar that you don’t have any more.
In fact, one of our decisions, in 2007, we had to decide, are we going to sell SaaS or are we going to be an on‑prem software company? Terrifying, because back in those days, big companies didn’t even know what SaaS was, much less they weren’t going to put their financial information out in the cloud.
We decided, at that point, to bite the bullet and say everything we’re going to do, whether it’s how we architect the software, how we go to market, how we actually contract everything, is SaaS from here on out. That was a terrifying decision.
Yet, it turned out to be a very, very good one. Could have gone the other way. You hit points like that in your journey where it’s like wow, fork in the road. Flip a coin. I hope we’re doing the right thing. You can’t really call those out ahead of time. They just spring up and hit you at times.
If you get to be successful, it will probably take longer than you really, really wanted it to. When I started BlackLine, I thought it would take about three years. That was really my expectation. You will hit things that you don’t anticipate, but this is your story. This is really about what you craft for your own journey.
Let me be really clear here. I’m not advocating not raising capital. They’d probably kick me out of the stage right now.
Therese Tucker: VC money definitely is what makes tech companies happen, but bootstrapping is brutally hard. It is so many sleepless nights. There are no shortcuts. It’s a day‑to‑day fight for survival.
We did look at funding on multiple occasions. We had some lowball offers from names that you would recognize that we turned down. I believe that the habits that we learned from bootstrapping BlackLine, in terms of just being wise about how you spend money, really were very instrumental in our success later.
I would say avoid building your business with the intent of raising money. We see people sometimes, they’re all about their business plan, they’re about how many meetings they can get, they’re about who they’re talking to.
Oh my gosh, sometimes you walk around the streets of San Francisco and people are on their phones bellowing out that their plans are getting funded. It’s just like, “Oh, no.” That’s not…You’re losing the focus on the business when you do that.
You’re falling in love with the idea and it’s easy to do because the money is what sustains your business. But the person on the other side doesn’t know your market and doesn’t know your business. Focusing on impressing them over building your business or getting customers, that’s dangerous.
Frankly, we got some bad advice from VCs in the early days. I had one firm who gave me the proverbial pat on the head and said, “You’ve done a nice job, we’ll take it from here.” They said, “We’ve got a rock‑star CEO.” I thought, “Well, maybe this is good for the company. I’ll meet him.”
Met this gentleman, he spent two hours talking about himself, how great he was, his much younger very beautiful second wife, and his home renovation project. He was almost a caricature of himself.
Therese Tucker: Had I taken that advice and money, I doubt that BlackLine would be here today. Venture capitalists are playing a numbers game. If they can take 10 companies of a similar profile, there’s a pretty good chance that one of those is going to be really successful and make back the investment, which is great if you’re the one. If you’re not, you may not be aligned.
Rather than focus so much on the raising of capital and sometimes, I won’t say anything political, but, well, we have people that can’t stop campaigning.
Therese Tucker: It’s a similar issue. You don’t want to be the guy who’s always just not building the business but trying to raise money. One of the most important predictors of success of a company is if people want to pay for what you are doing. It sounds so simple and so obvious, and yet sometimes people don’t really focus on that.
My recommendation is to take the smallest amount of capital possible and maintain the most control. If you build a successful business that has paying customers, a clean ledger, a thrifty attitude, you will be able to raise as much money as you need when you need it.
Now, something else to be careful of is when you raise money, people sometimes have a tendency to spend like they’re rich. I always think about lottery winners. Do you know most lottery winners are broke within three years of winning because they just start throwing money around?
It’s possible, I suppose, to plunge large amounts of the money efficiently into your startup, but it’s not that common. Usually, people end up wasting it. It is much more painful to have to fire people and contract as a company than it is to grow. It’s much more fun to grow. It’s much more fun to have a little bit of a stretch and a bit of a reach.
Build a real business with paying customers. Run it lean and you will be amazed at the amount of money that will be there when it’s the right time to scale.