How Vendr Reached $200M Raised and 400 Employees While Competing in a Crowded SaaS Market (Interview with Co-Founder and Chief Strategy Officer Ariel Diaz)

Introduction and Vendr Overview

Ariel Diaz

00:00Alright. We had a cozy little crowd. We'll keep it a little informal. I'll also share for the video. So the talk today is about why velocity is the number one, and I believe increasingly the only sustainable advantage when building a startup. So the key areas are one, why that's the case? It's because there's so much opportunity in the market, more resources, meaning there's a lot more competition. I mean just out there we're seeing three companies that

Ariel Diaz Background and Blissfully Merger

Ariel Diaz

00:27are competitors of my company vendr, I should have introduced myself, Ariel Diaz, Co Founder and Chief Strategy Officer at vendr. Before that I was three time Founder and CEO, including company called Blissfully, which did SaaS management, merged with vendr about a year ago, two other companies before that. And so first is the fact that there's so much opportunity and resources out there makes for a lot of competition, which is part two. And then three is velocity

Why Opportunity Is Abundant: Capital and Tooling

Ariel Diaz

00:53is the only thing that helps you stay ahead of that competition. So first off, opportunity is so abundant primarily because there's been an explosion of capital coming in, in the last few years. This has slowed down more recently, but we're still seeing, lot market.

01:14Of growth

01:20market. Seeing a lot

01:26better tools to in build products faster. And So this is through technology. More and more of the stack that you need to build a product is plug and play. You can spin up a few NPM install, your favorite stuff, spin a bunch of great technology up, you've got all these great tools at your disposal, not just while you're building your product, but also while you're building your company with all the different SaaS products out there to

01:52help you run more efficiently, help grow business, to help find whatever niche you need. Again, lot of those companies we're seeing here. And you combine these two things and it also results in just a lower barrier to entry. It's easier than ever to get started with a SaaS app, a product to do one particular niche, start charging for it, and you end up having a bunch of coalescing factors that result in the key point number two,

02:18which is the market is getting more and more competitive. So to share a little bit of what we're seeing and some of the data that we see. So we see about a couple of percentage points of all SaaS spend at vendr that we help process and we help leverage that data to help our customers save money, to help find the right products. And we see interesting data across two big categories. One is project management categories. So

SaaS Market Competition Data from Vendr

Ariel Diaz

02:42this is well known companies like Asana and Monday, but also a lot of new entrants. And over the course of one year, we saw a 30% increase in the number of unique project management products that we're out there working on. And this is a mature category that's growing at 30% a year, not in terms of revenue and users, but in terms of number of products available for purchase. That's a lot of products out there.

03:06And the second category, so this is on the sorry, that was on the on project management, is growing about 25%. And another common category, analytics, is growing at 30%. We actually see some of these companies here. So you're seeing a lot of new entrants capitalize well, leveraging these great tools. So that results in this really intense competition that's likely going to continue to get more intense. So the reality is you don't have to outrun the bear,

03:38you just got to outrun your competitors. And that's why velocity matters so much.

Project Management and Analytics Category Growth

Ariel Diaz

03:46So velocity as the primary driver for overall success as you're outrunning, not the bear, but everyone else trying to outrun the bear. So one, we're seeing any time there's a new category, that velocity lead doesn't matter after the first head start, right? And you see a lot of times where the category leader has a head start, but that might last used to last maybe years, but that cycle keeps compressing where that advantage gets shorter and shorter.

Why Category Creation Is No Longer Enough

Ariel Diaz

04:19And it's because of all the stuff we've talked about: more capital, better tools, better products, faster marketing, more distribution channels and everything else. So that's not enough, right? Being the category creator is not enough. That gives you maybe a couple of quarters of heads up. So you have to just move faster, and you have to maintain that lead. And the ways you can maintain that lead is, one, through company culture. So velocity means you're shipping, you're

04:47iterating, you're improving the product, you're testing new channels, and you're doing this all at a really quick cycle time. So we and the word velocity matters here because velocity is speed and direction. It's kind of the magnitude of how fast you're moving and where you're going, and both matter. And in some cases, you might want to go slower speed, but find the right direction and then accelerate.

Velocity as a Vendr Company Value

Ariel Diaz

05:11And then at vendr, we've actually created velocity as one of our four company values. Vendr is the name of the company, so we call it V is for velocity, because we want to make sure that every day that we realize we've got a whole slew of competitors, both direct and indirect, adjacencies that could potentially get into the same space. Again, a few of them are here with some booths right outside. So therefore, we need to maintain

05:39that velocity, accelerate what we're doing, whether it's across product, marketing, internal decision making. There's lot of rubrics out there. One well known one is Jeff Bezos at Amazon's as one way door versus two way doors. So if you have two way doors, you can actually make that decision quickly because you can reverse it if needed. Whereas one way doors, you might want to be more thoughtful and deliberate. So there's a few ways that you can build

06:05velocity into the culture. And then another framework that's interesting is that if you think of a company as a group of individuals, each individual is a little vector, and velocity itself is a vector, right? The vectors of magnitude and direction. So the overall company velocity is going to be the sum of the vectors of individuals. This is actually a talk that Darmesh Shah at HubSpot gave from a fun conversation with Elon Musk, who's kind of name

Individual Vectors and Company Alignment

Ariel Diaz

06:30dropping some folks that believe similar things to show some reinforced ethos. So if you think of it that way, you want to increase velocity, you need to do two things. You need to increase the magnitude of all the individuals in the company, and you need to make sure they're aligned pretty well. So this is how we think about Velocity. So to kind of summarize, again, there's three big things: more opportunities, resources and tooling reduces the barrier

Nathan Latka

07:02to entry increases competition, resulting in velocity being the only true sustainable advantage. So I'm that's kind of the bulk of it. Keep it short and sweet. I know we're the first one, and I can kinda switch it open to to questions, and we got a little cozy cozy crowd here.

07:26In a long time. Yeah.

Ariel Diaz

07:45Great question. So a couple of things that we've done, especially when we're building OKRs for this year, try to figure out which ones are high confidence areas that you're pretty sure on the goal and you just need to get there faster. And then it's really about operational efficiency, building the right team, getting the right folks to move faster into a known kind of good hill to climb. But there are other initiatives where you don't know enough.

OKRs: High-Confidence vs. Exploratory Initiatives

Ariel Diaz

08:11And in those times, you probably want to slow down and more and be more of like a wayfinding mode. We have one of our OKRs this year across the company, and we're a post product market fit, raised $200,000,000 foreign person company, but one of our OKRs for this year includes finding product market fit in this new initiative, right? We'll start talking about it more publicly in a bit. So in that category, velocity is more about direction

Scaling Sales, Product, and Marketing

Ariel Diaz

08:39finding than it is about speed and and increasing that. Whereas there's other areas where we've got a mature sales team, 100 people. We've got a really aggressive product road map. We've got 100 people there too, and it's around build a road map that we're really highly confident in. How do you build that with high quality and velocity on the product? How do you build a marketing channel that's delivering the pipeline that we need to go hit

09:01our aggressive sales goals? So those are kind of pretty clear waypoints, and we're just moving fast, increasing speed towards a known direction. And there's others where we're in kind of exploring, we're moving slowly, we're finding product market fit, we're kind of heat seeking. And then as we get more signals, we can start increasing the speed. So we think of those as different.

Nathan Latka

09:35That's a great question. And I kind of threw this together very quickly. So there's some a lot of fun depth in here. So it depends a lot on the department. So if we look at product versus like sales, those are kind of like two big categories where we know where we're going and it's all about increasing the speed. So for product, it's hard to put a number on it and measure, and I think there's a lot

09:59of potentially bad effort to create a number more too specifically. But conceptual, the way we think about product velocity is how quickly are we shipping high quality products to customers? How quickly are we adding customer value? Not how quickly are we writing code, not how quickly are we shipping features, but how quickly are we delivering customer value. And that's the unit. Now measuring that is a little nuance because it's, well, there's ways or indicators of feedback

Measuring Velocity: Pipeline, ARR, and Customer Value

Nathan Latka

10:31and product board and customer satisfaction and feedback to customer success. But in general, the unit is customer value, and then the measurement of that gets a little squishy. Sales and marketing is much more straightforward. The unit for marketing is pipeline generation, right, in a sales led company. The unit for sales led for sales is revenue, right, or ARR. You can kind of slice in first year TCV. Now the funds part is all right. I'm gonna I'm

10:58gonna give come on in. We're gonna give a lightning summary. There's some fun stuff in here. Okay.

Ariel Diaz

11:05Presentation two. Yeah. Round round two. I'll I'll I'll breeze through this. These slides are also a little wordy. Sorry about that. For the new folks, I'm Ariel Diaz, Co Founder and Chief Strategy Officer at vendr. Previously was Co Founder and CEO at Blissfully, a early SaaS management platform. We merged with vendr about a year ago, so now I'm Co Founder and Chief Strategy there. And before that was three time FounderCEO, been doing start ups for a

11:30while. And I believe that velocity is the number one and increasingly the only sustainable advantage in the start up ecosystem. So we'll talk about three big reasons. One is there's more opportunity and resources and funds than ever. Two, resulting in much more competition. Three, which means you can only win by increasing velocity. We're that. Do

12:00to to

12:06do whatever that. You're doing. It has reduced the barriers to entry as all these things combine. So every category, what used to be a category with one actually, I'll I'll switch there. So so that results in the market getting a lot more competitive. A couple of data points on the competition that we see at vendors. We we see a couple of percentage points of SaaS spend across the world. Project management category, the number of vendors, let

SaaS Category Competition Data Revisited

Ariel Diaz

12:32alone the growth rate, has increased 25% year over year. So and that's a mature category. In digital analytics, it's been it's increased 30%, another mature category, BI. And these are products that increasingly are harder to differentiate, but you're still getting new entrants coming into the space. And so this increased competition because of more fund, better technology to build products faster, lower barriers to entry means that every category gets much more competitive, and the first mover advantage

The Bear Analogy: Outrunning Competitors

Ariel Diaz

13:04gets lower and lower. So the good thing is you don't have to outrun the bear. Right? Competition is this mass is the bear. You don't have to outrun the bear. You just have to outrun your friends. Right? Because the bear is gonna catch catch someone. So you just have to outrun your friends. And the way you do that is by building velocity into how you build and run your business because of all the factors. And then

13:24a couple of things. One, category creation used to be maybe a multiyear head start. Now it's a few months. The number of category we have three competitors, a vendor here. We've got multiple people in the security and kind of SOC two automation here. So that head start goes is is months, maybe quarters at at most these days. So that's why velocity matters so much. Two ways to do it. You kind of embed it into your company

13:52culture. We're talking about some of the KPIs and how you track that for product, for sales, for marketing. And the reason to think about that way is because the company essentially is if individuals are vectors, right, and velocity is a vector of speed and direction, the company is a sum of all those vectors, right, and you add vectors by summing their magnitude and their direction. So there's two ways to increase velocity. One is you get people

14:19aligned in the right direction, and two is you get them to increase the magnitude of their own kind of speed, their effectiveness. And if you do that over and over, you can really build velocity into the company. And otherwise, it's just gonna be really tough because there's a lot of other people that are working on this. So like the old saying, right, in Africa, every day a line wakes up, and if he doesn't outrun the slowest

Embedding Velocity into Company Culture

Ariel Diaz

14:43gazelle, he goes hungry. And every day, a gazelle wakes up saying, like, if I if I don't outrun the fastest lion, right, I'm not gonna see the next morning. So the either way, whether you're a lion or gazelle, you're running. Every day, you're running. So you just have to realize that that's kind of the only sustainable advantage. So thank you. Hope that Lightning version was fun and happy to we got another couple of minutes for questions

Nathan Latka

15:05if anything jumps out.