How WP Engine CEO Jason Cohen grew WP Engine to $400M revenue and 120K customers in 2024.

quick context this was recorded March 28th and 29th so a couple weeks ago at my live event SAS open.com we had a thousand software CEOs there if you missed it we hope to see at the next one September 5th and 6th in New York City SAS open.com but for now let's jump into the recording we got to 100 million in a little less than 7 years and we hired a CEO and the second best decision I've ever [Music] made hey folks if we haven't met yet my name is Nathan ladka I launched and sold my first software company back in 2015 and went on to write a book about it which you guys made a Wall Street Journal bestseller purchasing over 30,000 copies thank you so much for that after the book I launched this show and went went on to create founder path.com I raised a large fund to do non-dilutive deals with B2B software Founders so far we've invested in over 400 software Founders totaling 50 million here in 2024 we're doing three to four New Deals per week so if you're looking for Capital and don't want to give up Equity go sign up at founder path.com for free to get your offer all right let's jump into the interview all right my name is Jason I started WP engine 14 years ago we have hundreds of millions in ARR I'm going to share with you some lessons that I learned along the way in uh in doing that you probably know me online though as a smart bear so hence that so we got to 1 million AR R in our first 18 months which is pretty good I thought maybe already the company could just grow like that but then in 2012 our growth rate shot up again we went from 1 million to 5 million in one year and as you can see it never ended we got to 100 million in something like a little less than seven years and uh this little flat part at the beginning that was that previous chart right just to give you a sense of scale of what happens and so I want to take 20 minutes and talk about stuff that I learned from this part where the company is growing faster than people can grow so the first thing is that you know it's going to be different but it it's dramatically more different I think than uh you expect if you had never done this before because before product Market fit you're exploring you're trying to figure out yeah everyone here knows this who's the customer and how do we get there and what's our unique thing and blah blah blah so this is all experimentation and unknown stuff so there's all these techniques you should use like trying crap and pivoting fast and nonsense like that but after you have product Market fit you know those things and so the things that you do dramatically change and so just saying things like we'll keep experimenting is not how you scale something that's already working so for example you're not just building stuff you're hiring and managing humans quite different from finding a marketing channel or building software you have something to lose like there's growth there's customers so defending that becomes a a whole uh thing to do that you didn't you not only shouldn't didn't do before but you shouldn't have there was nothing to nothing to uh to do um you built a kind of a crappy product because of course so now it's time to fix it which you you again you didn't do before nor should you have but now it's time that's different again different mindset before if you had a bug that affected 1% of your customers that might be zero or one people so whatever but now you have a bug that affects 1% of the customers you get 30 support tickets in a day and now everyone's behind and you get 30 negative tweets and that's really bad so that means the rare things which are now common you have to do something about and it's hard to detect and deal with rare things just in general totally different processes and mindset right also if you're let's say doubling in a year what's what does that mean in terms of how many people you need let's say in support and how long does it take you to find and interview and hire and get people up to speed in support especially since you have no processes and docum ation because you're new so what does that mean I don't know it'll take like 6 n months okay so you need to know how many people you need in six or 9 months that means your business has to be more predictable another new thing that didn't exist before so there's this stupid phrase It's not stupid it's a tired phrase what got you here you know right uh in this case it really is apt the stuff the activity that got you here won't get you there because there's these other types of behavior which are now correct and it's a lot of stuff and I guess the point I really want to make is that this changes who you are and what you are even proud of cuz you were proud of that you experiment and did it you're and you're like that's why we're different that's why we're better and big companies are stupid and we're smart and here you are having to change that that is the difficult not only from a skill set point of view but from an emotional point of view that is difficult and I think we don't appreciate how hard that is enough so that's the first thing this this fundamental difference okay another obvious thing that happens with scales now there's a bunch of people we all know that's going to be hard there's no way that's good so fun question I have a lot of people so we go faster you already know well okay let's say I have 30 people and some competitor has three people so we should go 10 times faster we have 10 times as many Engineers we may have hundred times as many customers we can learn more about customers that part's true right we all know this is not true uh we'll go faster but not like that much faster so there's no Silver Bullet to fix this as you probably know but there are things to do to be more effective in leveraging the scale which now should be an advantage of yours that you have extra people in time should be but of course it gets it gets pulled down so what can we do to take more advantage of that so observation is when you add people you tend to add more stuff you can do just heard that in the last talk at first you're just making features and trying to sell it of course but then you start hiring people and maybe you expand the market or do other fun things more people more stuff makes sense maybe creative stuff like micro projects you created a YouTube channel hooray the YouTube is fun um everyone goes up Market to the Enterprise right that's what we all do because they have money don't they they do anyway so this is what people do and what I'm going to argue is that this is not what you should do that you should instead still have only a couple of things that you do and focus everybody all the scale that you have on just a few things instead of this and the reason is that if you cut up everybody into all these different initi IES then each initiative is not at scale doesn't have that many people doesn't have that many resources in terms of things like money and so isn't very good so you've taken what should have been this advantage of people and diluted it so if you have a YouTube channel and you have two people working on it and some little startup is good at YouTube and also has two people on it you're not better at them than at YouTube so that's not so good whereas if you put 10 people on that and lots of investment maybe you could dominate YouTube in your area that actually sounds pretty good so instead of splitting it up you want to not dilute your scale across a bunch of projects but still have just a few things that way you're using your leverage to win now of course this begs the question if I'm only going to do a few things what do I pick how do I pick just a few things since I have so many options here's what I actually do with teams at WP engine um and sometimes groups of teams at WP engine the first thing is we sit down we do this once a quarter and we say okay if we weren't encumbered by by problems challenges constraints how would we advance our strategy right now so like could be anything maybe there's a feature you know we all know would be great because customers talk about it we've invented it competitors don't have it we know it's good like it' be so strategic it's how we're going to win you guys so maybe it's that or you there could be this is just some ideas right there could be all kinds of things it's time to open a new sales Channel whatever would be the best way for you to win now this is obviously something where you can brainstorm lots of things and then come together on a few things right and it's it's good to get as many people in the room for that kind of brainstorming as possible cuz it means everyone's contributing to the answer which ultimately means they'll be more on board with the final answer okay I know objectives is a crappy word so pick a different one anyway so but then what's stopping us from doing that by the this is not Revelation right duh like you have goals and then what's that this is not like a but going through this I'm telling you is is is great so again there could be anything yeah we'd love to do that except our children rate is 5% per month people are just fleeing and not only is that bad from a financial point of view it means the customers don't want our crap that's probably more important than opening up a new geography that they don't want it oops got to fix that so okay so there's there's could be all kinds of things we lost a key person and so some team is screwed they need to go work on that first okay so it could be all kinds of things once again what are they let's find the top couple of things that are holding us back the most from doing the first things this okay then finally of course what are we going to do and this takes creativity there's no magic answer to this but at least we know what we're trying to get to here and for the obstacles we're either trying to attack it or we're trying to avoid or we're having to solve the first thing by avoiding it for example let's say one of the obstacles is we don't have enough money well attacking it would be like so we're going to raise money so we're going to get debt from I don't know Nathan um so we're going to uh do customer-based financing by charging an annual fee and getting people to switch to annual and the customers will fund us lots of ways to that you could solve that Obstacle of not enough money or you could work around it you could say um uh okay look it's a constraint we don't have that much money so we're going to have to get creative about how we make some progress maybe not all the progress we want but some on those top ones without money that just becomes an enabling constraint that's another way to do it so anyway as simple as simplistic as this might sound it's a very easy narrative remember everyone because of our strategy we want to do this but this is happening and so here's what we're going to do like it's such a simple story and so if you do this every quarter and it takes no longer than a page to say it everyone knows at a high level exactly what to do so again I do this on a team level and you can even do this on a on a larger uh level at the and then I I think doing it more often than this is not necessary it's a lot of overhead but about every hundred days this kind of stuff falls out of people's heads just like if you're distributed team about every 100 days all the social uh fabric starts getting weaker and you got to come together to rechar charge those batteries same kind of thing right this this helps you identify what that is and gets everyone aligned to it the final thing about focusing everyone is if the whole company is working on just a few things that means projects will cross over teams and that's another problem right and you know you already know what this problem is people have to talk and that's meetings and all this crap and then uh marketing says I think we should redo the design of the product to match the website they're not wrong and the engineers are like we have to refactor the code because that's what Engineers always want to do did you write that code yeah but we got to refactor it okay whatever they're probably right also and then they if they can't resolve it which often is the case it moves around I mean meetings and the CEOs deciding and this is of course a huge uh not only is it inefficient not only is this again diluting our power of scale it also sucks it's also bad for morale and I mean who wants who wants to live like this so there's two kind of main ways to deal with this one is uh called Matrix which means somebody runs the project and tells everyone across the different teams what to do what are the priorities what are the metrics Etc and um critically the direct managers or the CEO does not tell them what to do so the good news is uh this is better for people's careers because if I'm a designer for example I want to sit on a team with other designers where're working together and knocking stuff around I want a manager that helps me become a better designer that's what I need from my career this preserves that hooray but it's obviously complicated to have like the org chart structure and and then what does my manager do and what does this other so obviously it makes this complexity so that's a penalty it's true the other way is kind of the making the other decision right um okay this place in the orc chart that's an initiative and everyone under there is who we need to get it done good simpler bad for the designer case so okay there's no free lunch you pick the one that matches your culture and that you think you can execute better where you're more comfortable with whatever those downsides are but the bottom line is the orc chart somehow needs to reflect this Focus so that you don't get bogged down again in crap so that's some ideas of how to handle the many people problem another people problem though for the final thing of course because it's all people problems really I mean there's technical problems too we we host millions of websites and have tens of billions of events per day flying around so we have infrastructure scale problems too or challenges I should say but it's usually people and the big thing here I want to emphasize is that when you hire managers or even Executives who are people that building entire departments you might say building teams that's completely different than what you've been hiring for and let me start with the manager so everything so you you have um especially when you're small you usually have like the hero developer and that person that does 100 tickets a day but the problem is that if they leave or they have a baby or whatever then that grinds to a halt and of course that's scale we can't have that we have to be able we have to anything that's important must be a team so that when there's some issue there you the company proceeds right and that means you have to have managers and if you think think about it this is going to be a very different skill set but engineers in particular don't understand this if you ask an engineer what does what is a good engineering manager the first thing they say is they have to be great at writing code they they basically describe an architect or something right and they're completely wrong now it's not true that a non-technical person should be an engineering manager of course they need to speak the language of course but their job is not to be the best engineer hopefully you have that already their job is to build the team and to work on conflicts and to figure out these priorities and to work with other teams and so on and so it's it's especially Engineers they they don't interview for this ever if you ask an engineer when they interview their manager what they ask they never ask this stuff it's always like coding questions right they don't get it you may not get it either if you're a founder and you're not used to this and you're not used to have you know building teams so this is something where you have to change your mindset so do others the more interesting problem though or puzzle is is managers of managers or or Executives because again the things change a bit and in particular I especially as the as a sea-level person or a Founder everyone you hire has to be better than you or else the company is not progressing and certainly if again if you're scaling fast you're going to outscale how anyone can grow you have to get that talent that means that person has to be better than you but what do how do you do that like how do I hire a pancreatic surgeon I don't know right so interestingly as a leader you have this puzzle always of having to hire the pancreatic surgeon so again no Silver Bullet but here's some tips you can use especially in interviewing to try to sus this out even though you're not the expert first of all when you get off the call with them you should be giddy with like oh my God they they said they would do this and they've done that uh like even if we don't hire them like we've got to do some of these things you guys like I I took notes like crazy we got to do this if that's your feeling you literally have notes you want to go to that's a good sign now of course since you're not a p pancreatic surgeon you don't really know if you're right about that maybe maybe they weren't such good ideas you don't know that but the fact that you're excited and want to do it means it is a culture fit and a skill fit and a process fit for your company that's good that's a good that's a good step so it's more likely to work because as long as they're not completely dumb ideas which are probably not this is more likely to work at your company so that's actually pretty good another question you can ask yourself is do I think this person's going to uplevel all of us like not just the people on their team but their peers cuz they've seen them or done this or who knows why you could even ask questions about that so maybe they're good at metrics and no one's good at metrics and so although they're in support they're going to help everybody more or less good sign that it's going to make everyone better another signal of a executive as opposed to say a manager we don't expect the manager to uplevel the person next to them an executive that's exactly part of the job description it's about us the company uh not just the department that you're responsible for this is my favorite one which is background checks I I I don't mean whether they they went to jail although I guess that too I mean call they their references and of course if you call their references and ask how are they they're going to say they're great so of course you don't do that that's tells you nothing what you do is you call and say what is the perfect scenario where this person is an absolute superstar that they're so happy and so effective and they just get 10 times more done than you would expect what does that if you were to construct that for them what would that be like for example some people say tell me exactly what to do and I will crush it and they will and there's other people that are like if you tell me what to do I will leave show me where we're going I want to figure that out then I'm super happy who's right nobody that's just different modes is all so that's what that's what you're trying to sus out what are the modes whether that's company culture or skill sets or what their team composition is like or whether they have to hire a team or fix a team or build something big you what is it that's that that makes them amazing you're asking the other person that's actually pretty easy it's actually easy to think of oh yeah yeah if you do this they're mad and if you do this they're great like it's actually easy for people who know them to answer that and then I ask the same question in the negative construct a scenario where you will crush their Spirit they'll be worse than neutral they'll be destructive you know again it's easy oh my God yeah if you try to tell them what to do every day they will just quit or or they will take it out on other people you know okay you've never told them what your company's like so this is a completely unbiased view of this cuz we're all like this we all have scenarios where we'd be very happy um and scenarios where we would not so we're all like this you're just trying to find out what it is so then of course you're going to take that and think about the slot and your company the culture your company has and the specific slot and conditions that they have that you're going to be asking them to to do and just trying to think is that a fit so once again this is a way even though you don't know anything you don't really know anything about their specialty you can see if they're F fit so that's how I do it that's that's actually literally what I do the final thing I'll say about the executive level is it's nice to have somebody who's done it before some yeah sometimes people are like oh you got to stack the executive team with people who done it before maybe that could be a good idea it could be but there's a really big difference between zero people who have done it before and one and so it can be any role um at WP engine it was actually the CEO I became the CTO and we hired a CEO and it was the best the second best decision I've ever made you can you want to guess what my first best decision ever no my wife my wife was the first best decision ever we've married over 20 years by the way anyway my second best decision though was hiring Heather Bruner to be our CEO she's been here for over 11 years now and uh fantastic but it doesn't I mean I I've seen other companies uh where it was the COO or the CFO often in some kind of operational role where this human scale is part of the challenge and then they tackle it that just makes sense right and they bring these practices things they've seen good and bad to the conversation as you're solving all the conversations at the company and that's really valuable so again lots of times I've seen for example you have your CEO founder and you're you're like your you know product or engineering co-founder and then maybe the CFO or coo is that person and it's this beautiful Trinity and in fact that's what happened in Google too right like that kind of a thing regardless of the titles that really is quite smart at the scaling face why not import that information so that's what we've got the the it's really really extra different after product Market fit and scaling sets in not a little bit different more than you think it's a big mindset shift you have a lot of people you don't want to have to qu coordinate them very much and you don't want to dilute them so don't split them up too much decide what it is you're going to do what's strategic what's stopping you so here's what we're going to do and get everyone in the company aligned on those few things even though you have a lot of people so you can Crush those things you because you have so many people to to crush them with and then the or chart is hard no matter what it's hard but be mind be intentional let's say of how that matter to the or chart and then finally with Executives managers are not just good ic's they are a different thing to build people than to build products and then with Executives you can use these little tricks I guess or tools I suppose to try to hire people better than you because that's the only way the company is going to be good enough and then you'll be able to scale really well cheers [Applause] I'm expecting to be saved by somebody but there's no somebody that's okay I don't care yeah let's take questions why not great talk quick question for you on an annualized basis how do you you think about yourself from an evolution standpoint right like how do you me oh how so the question is how to I changed as we've grown personally every every year how do you measure yourself from your own Evolution right oh personally yes so the question is how do I measure myself personally as I Evol or don't as we scale cuz that's the truth there's some ways which I have and some ways I have not I just know like well that's a weakness and so I should just not be in these positions or not for long you know um I think a 360 is a is a is again another big business answer but man is it good to get Anonymous feedback from people that report to you and peers and and then have someone that knows what they're doing to process that into something where you can't tell who said what which I guess now could be AI I think what's good about AI in those things is it does summarize okay but it leaves out detail that might be the whole story like the details where you really understand if you just say stuff like you need to listen more you're like okay I get but when you hear the the details now you start to go oh I did that and that's that did that to that other person oh right and and AI tends to throw that away so I'm not sure about AI but 360 is as a kind of a big busy thing as that sounds um I found that to be quite quite Illuminating and some of that is oh I'm doing this wrong okay but actually also I didn't realize what I was really good at people very consistently said like I get people excited about the vision of the company and I didn't even consider that like at all so I was like oh well I then I should do that more and I didn't even I didn't even know that so it's not just about what to fix but about what are these strengths that you want to lean into even more you learn that as well I don't know what we're doing in the timeline but I'm happy to do whatever if anyone has another question or not I don't care I know there's not another speaker cuz it's food so it's okay if you want to leave also but I won't be offended yeah tell us a bit more about the quarterly that you do is it like pros or is like bullet points istion points like what's in that quarterly document so the question is what's in the quarterly document the result is yeah just a literally a word a Google doc with bullets just text like some some people like to do things like link to J epics and stuff and like connect it all that's cool if you're into that but to me that's not even important if you don't cuz you know it could just be that now in the process of making it um the first time you do it it's messy because you're you're asking these questions for the first time a lot of people like to use Miro to like brainstorm and everyone doing that at once and then maybe you cluster it in certain things what's more important than others or uh you know there's different kind of standard ways of doing that um but subsequent times it becomes really fast like we I we just did one with our corporate data team and it took two days I think the first time it took three weeks right because we're like look most of this is the same as last quarter a little bit change a little bit of that nothing new is cropped up here so it's just like tweak tweak tweak we're good so it took almost no time and yet we're 100% aligned and so is the rest of the company about what they're doing and why another good reason just to throw it out there is when somebody is I'm a oh I have the top priority thing I have to have you're like well here's our priorities is it really and all of a sudden it's not and you know or if it is again we have a narrative to to to to like understand that so so so it can get really fast and efficient uh how did you realize that you needed a CEO and second followup is uh when trying to recruit or interview a CEO what were the most important aspects to determine that you're making the right decision o good questions the first one is how did I know and may come to the decision to hire a CEO and the second one is how do you interview for that how do you what are you looking for um I have I did a whole talk uh at a different conference on this topic and I have an article not to like push everything but on on my uh I've been writing for a long time at a smartbear.com um and you can read I I I show you exactly what I do but the bottom line is a like a lot of these things of what makes you fulfilled these kind of thoughts about that they're very similar Dan pink with the Mastery autonomy and purpose uh there's eeky guy right which is like four things I had a way that I did it um and it's that when you do stuff that you love most mostly and stuff that you're good at and that the company needs done then you're in a good place again not Revelation but what I was able to see with this simple thing is oh the company needs various things that say 70 80 people that we were and growing fast we need to hire an executive team that can manage the stuff a global sales team for example um we need uh we're going to be raising more money and that that's the whole thing we're going to have a more serious board and we we we it's we we want the CEO to we have a culture we're trying to maintain what does that mean at scale that's a whole another difficult topic right so these are some of the things needed and for me it was like these things are either things I'm not skilled at or don't like or both so it's one thing if you aren't skilled at it but you like it then maybe maybe it's maybe it's a a growth path but if you don't even like it you're just going to hate it and not do a good job and we just said the company needed it so like what's What's Happening Here the thing that finally so that was the intellectual part that took like 3 months what got me over to the line emotionally was I was sitting in a wine bar with one of our um uh early investors who himself was a Founder he had taken a company public blah blah blah so he understood right and he goes Jason I know what you're thinking because I was like I know we should do this but I you you know and he goes I know what you're thinking you're thinking one day you're going to ring the bell on the NASDAQ and you want the credit I was like look I know there's thou I mean at the time there was hundreds now there's thousands of people at the company I know it's not just me I know I didn't do it but yeah you're right right it's ego like purely yes of course I woulde here's what he says here's the thing you're the founder you'll always get the credit that's what I needed to hear of course I get to keep the ego part get to keep it wait a minute I get to keep that part good like what am I doing hiring a VP of sales I don't want to do that you know so that for whatever reason that's what I needed to hear to get over the line of course it's true um look to this day...