January 9, 2024 • 21 mins
EPISODE SUMMARY
In this episode of Scale Your SaaS, host and B2B SaaS Sales Coach Matt Wolach sits down with Luke Diaz, the founder of DBT Ventures. Luke is a seasoned expert in customer success and an investor with a passion for supporting underrepresented founders in the software space.
In this episode, Luke shares valuable insights into building an exceptional customer experience, improving retention rates, and what investors like him look for in software startups.
PODCAST-AT-A-GLANCE
Podcast: Scale Your SaaS with Matt Wolach
Episode: Episode No. 298, “How to Keep SaaS Customers Longer - with Luke Diaz”
Host: Matt Wolach, a B2B SaaS Sales Coach, Entrepreneur, and Investor
TOP TIPS FROM THIS EPISODE
- Building a Resilient Foundation
- Onboarding for Success
- The Oxygen of Customer Feedback
EPISODE HIGHLIGHTS
- Customer Advisory Boards
- Understanding and Mitigating Churn
- Thinking Funnel, Not Fundraising
TOP QUOTES
Luke Diaz
[12:04] “30 to 40% of churn can be traced back to a failed onboarding”
[13:07] “The lack of a churn process or a lack of an exit interview process is one of the biggest mistakes I see some founders make early on.”
[16:38] “I make an investment decision based on the founder. And then I rationalize based on the product, traction and things that I learned after that.”
Matt Wolach
[8:11] “I think in the early days, we have to figure out what's best for the customer for the users. And sometimes we have to figure that out through things that don't scale. “
[19:40] “I have many of my clients who have taken my advice, and I say, “don't give up until you hear no”, and they are shocked that they get a deal on like the 21st touchpoint. And it's crazy how often that happens.”
LEARN MORE
To learn more about DBT Ventures, visit: https://www.dbtventures.com/#trail-guide
You can also find Luke Diaz on LinkedIn: https://www.linkedin.com/in/lukediaz/
For more about how Matt Wolach helps software companies achieve maximum growth, visit https://mattwolach.com.
Get even more tips by following Matt elsewhere:
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Matt Wolach (00:10):
Of course, if we're going to scale a SaaS, we need
to have awesome customers andawesome customer adoption to the
product. How do we get people toadopt once they start using it?
And how do we keep them happy?
And how do we keep them aroundfor a long time making sure the
renewal rates amazing, theretention rates awesome and
churn is very low, lots ofthings that we need to figure
out. Fortunately, Luke Diaz fromDBT ventures came in, he has an
(00:32):
amazing customer successbackground, he's encountered all
these problems before and heknows exactly how to solve them.
And now what he does is he alsonow helps invest in other
startups to help them grow. So Ieven asked him about what he's
looking for what types ofcompanies he's looking forward
to now also, how can you makesure your company looks amazing
to an investor. So if you're anearly stage startup, and you
want to get in keep awesomecustomers, and you want to know
(00:53):
how to build your company, sothat people want to fund it?
This is the episode for youcheck it out.
Intro/ Outro (01:00):
Welcome to Scale Your SaaS, the podcast that
gives you proven techniques andformulas for boosting your
revenue and achieving your dreamexit brought to you by a guy
who's done just that multipletimes. Here's your host, Matt
Wolach,
Matt Wolach (01:17):
and welcome to Scale Your SaaS Thank you very
much for being here. By the way,our goal is to help you do
exactly that. scale your SaaS bygenerating a whole bunch of
leads, closing a lot of dealsand understanding how to put the
right processes in place so youcan grow your company. And
that's what we're here to do. Somake sure if you're new,
subscribe to the channel, hitthat subscribe button. That way,
you're gonna get all of theepisodes, you're gonna be
(01:38):
notified when we have amazing,awesome guests helping you
understand how to better scaleyour SaaS guests like who I have
with us today. Luke Diaz, Luke,how you doing?
Luke Diaz (01:49):
Doing well, huge fan of the show. Thanks for having
me.
Matt Wolach (01:51):
Absolutely. So glad to have you. Thank you so much
for coming on. Let me make sureeverybody knows who you are
Luke. So Luke, he's the founderat DBT ventures. DBT stands for
do big things. And what he doeshe advises and invests in
startups with a focus onsupporting underrepresented
founders building amazingsoftware and consumer consumer
products. Luke's passion isbuilding and leading high
(02:11):
performance customer success.
orgs CSM Am sa support to drivethree outcomes, accelerate
product adoption, drivequantifiable business impact for
customers, and achieve best inclass gross and net retention.
He is very skilled, very strongin what he does. And I'm so glad
to have him here. Once again,Luke, thanks for coming on the
show.
Luke Diaz (02:31):
Really appreciate it.
Excited to chat with you.
Matt Wolach (02:34):
Yeah, likewise. So tell me what's been going on
with you. And what do you havecoming up?
Luke Diaz (02:37):
Yes. So as you mentioned, DBT ventures invests
globally and software andconsumer products. And we're
really looking for underdogs. Wefound out that if you look at,
say, female founders, forexample, about 20% of female
founders start companies of allthe founders out there about 20%
(02:58):
of female. And I was shocked toread that they only receive
about 2% of the venture capitalfunding out there. So another
way to think about that is iffemales received 10 times as
much funding as they currentlydo, they would still be roughly
underfunded, which is shockingto me. So sadly, a similar trend
(03:19):
applies to people of color, andlike typically non white
background. So we're reallylooking for underdogs, people
that may have missed the VC,access to that network, and
trying to back founders who areunderdogs, and hungry.
Matt Wolach (03:35):
Wow, what a cool mission. And what made you want
to start this? Where did thisall come from?
Luke Diaz (03:39):
you know, it happened somewhat organically, as you
mentioned, my backgrounds incustomer success. So I've built
Customer Success teams fivetimes, three times from the
ground up and twice coming in toan existing team. And folks
started reaching out to me andsaid, Hey, would love if we
could get your thoughts we juststarted, you know, we we just
hit half a million in revenue,start to think about customer
(04:00):
success. Would you mind being anadvisor, we'll you know, we'll
give you some equity or whateverto make it worth your time. And
so a handful of companiesstarted doing that. And I just
would advise them on hey, here'ssome things to think about here.
Here's the mistakes I've made.
Maybe they'll be useful to you.
And then when you're workingclosely with founders,
(04:20):
fundraising comes up naturally.
So I had the opportunity toinvest in a few seed early a
rounds. And yeah, so it kind ofit kind of was like grassroots
just trying to help people andadd some value, as they're
building their dream of ascalable SaaS company.
Matt Wolach (04:37):
Very cool. I love it. Okay, so what are some of
the most exciting trends thatyou're seeing within tech and
within SaaS today? What are theydoing? What are how is the
industry changing? Because ofthat?
Luke Diaz (04:47):
I think one of the things to keep an eye on is
we're all familiar with, with AIand more, more recently, large
language models, and they'rejust becoming cheaper and
cheaper. So one of the themesI'm really looking closely at is
the commoditization of, of MLMs.
As they continue to proliferateall different parts of the
software ecosystem.The fact thatthey're getting cheaper as
(05:11):
technology tends to bedeflationary is really exciting
for founders who can build inthat ecosystem, and keep their
costs down while they're tryingto build apps, or tooling to
serve this massively growingspace. So that gets that trend
is really exciting. And I thinkit's meaningful for new market
entrants.
Matt Wolach (05:33):
Yeah, I would agree with that. Totally. There's a
lot of exciting things happen inthere. And it's crazy, it seems
like every other day, there'ssome new piece of technology or
growth that's happening there.
It's just wild to see. And it'sso cool that so many awesome
smart leaders are takingadvantage of it and finding new
creative ways to innovate inthat pretty amazing.
Luke Diaz (05:52):
It really is, we just wrote a check to a company
called True foundry, that ismaking basically a software that
allows you to manage, deploy,and fine tune large language
models across all acrossdifferent MLMs. And across
cloud. So there's this, there'sthis really interesting space
where it's kind of like theshovels to the gold miners, if
(06:16):
you will, there, they're reallymaking management of MLM 's at
scale much easier. And crosscloud, which I think will be a
growing need, as developers wantthe best model for the best use
case. So you won't be confinedto one, you can imagine a suite
of 20 MLMs, across threedifferent clouds. So I think
(06:36):
there's a lot of value in thatlayer. To, for founders to think
about as well.
Matt Wolach (06:41):
Yeah, I would agree with that. I want to touch on
your have some awesomeexperience in customer success,
as I mentioned earlier. So ifyou're a software leader, and
you're you're starting togenerate some interest or
getting people into your system,how can a leader How can
somebody make sure that thoseearly customers adopt and start
using the product?
Luke Diaz (07:02):
That's a great question, I think back to some
of the best advice I've gottenon that topic that's really
informed my approach basicallycame from from Y Combinator. And
there's this concept of doingthe unscalable things that allow
you to figure out what you needto scale. So that's something
(07:22):
I'll just throw out there. FromPaul Graham, were one of the
software advantages when you'rea startup is you can do these
unnatural, one off unscalablethings to get your customer to
value. And most of the startupsI work with are doing this, it
might be hopping on a plane tohelp them deploy the product. It
(07:43):
might be spending two hourseducating a new team on how this
workflow impacts their techstack, or maybe their their API
workflow. So don't think scaletoo soon be confident to do
those unscalable unnaturalthings to get them to value
because then once you figurethat out, you can figure out
ways to use technology toactually scale that deliverable
(08:06):
to hundreds of customers insteadof dozens. So that's one thing
that I try and anchor on earlyon.
Matt Wolach (08:11):
Yeah, I echo that advice as well. That's something
that I've counseled my clientson as well, I think that there's
so much talk about gotta makesure to scale, build for scale,
get your foundation for scale,and all that stuff. And
obviously, this show is alsocalled Scale Your SaaS. And
that's something everybody wantsto do. But I think we get too
hung up on that the early days.
And we start to only do that.
(08:32):
And you're absolutely right. Ithink in the early days, we have
to figure out what's best forthe customer for the users. And
sometimes we have to figure thatout through things that don't
scale. And once you I love thatyou talked about how we'll
figure out how to scale it,we'll figure out how to get
those efficiencies. But rightnow we need to make sure we're
doing things that don't scale.
It's a great point. Great. Sowhat strategies would you use?
(08:55):
If now we've got them in thereusing the product? What do you
think that some of the bestcompanies are doing that's
helping customers stay satisfiedand stay loyal?
Luke Diaz (09:05):
I appreciate that question. I kind of think, like
if you think of cash, like theonly unforgivable sin in
business is running out of cash.
If you think of cash as like thelifeblood of a company, or a
startup, I think of customerfeedback as like the oxygen, if
you will. So the theme here ismaking it as easy as possible
for customers to constantly giveyou feedback because, you know,
(09:28):
founders might not want to hearthis. But the the a lot of the
customers, they don't thinkabout the software you're
building all day, they usuallyuse it for a point in time, and
then they're off to the rest oftheir busy day. So when they're
engaged. That's why I'm a hugefan of in product feedback
tools, a quick email, eventexting with your early
customers just make it supereasy. Remove all those barriers
(09:51):
so that that feedback loop thatoxygen is really is really
flowing. So that's somethingthat I find some time gets in
the way of faster productdevelopment, is it there's not
an easy way to share thatfeedback. It's reserved for QBRs
or like big meetings, but itshould be iterative and on the
fly, if, you know, in the idealsense, another thing that's
(10:13):
really worked well was creatingthese customer advisory boards,
or I've also heard them calledcustomer advisory councils,
we're talking five to 10 of yourcustomers grabbing dinner once
or twice a year, all together sothat they can share their shared
experiences with your product,you treat them like VIPs give
them that, you know, insidebaseball roadmap, like, here's
what the product vision islooking like. And it's also a
(10:35):
great forum for feedback. And soknock on wood of the hundreds of
customers, I've had come througha customer advisory board or be
part of it. None of them haveever churned. Because they felt
like part of the core team, thattrue partnership. And again,
it's an unscalable thing. It'sharder to do at scale until you
get into like event planning andconferences. But I think anyone
(10:57):
can schedule a nice dinner andhave a debrief with your your
top roster, I think that can bereally powerful for relationship
building as well.
Matt Wolach (11:07):
Totally agree, I think that is super powerful.
And I've done that moreinformally at conferences, like
you said, at a conference willhost a dinner of 5-10 customers.
But you know, outside of that ifyou don't have a conference
where everybody's comingtogether, figure it out, make it
happen, because you're right,it's been so powerful, having
those conversations and justconnecting with them on a
(11:30):
personal level. So from both thebusiness side, the personal
side, it's, it's amazing whatyou can do just having those
types of relationships with yourcustomers. That's fantastic.
Luke Diaz (11:39):
Yeah, it gets me fired up.
Matt Wolach (11:40):
I can see that.
That's awesome. So now that wehave talked about how do we make
sure they adopt, how do we makesure that they're, they're
happy? What What about renewalsas a lot of companies are on
annual renewal plans? What stepsare some of your your best
customers your best clientstaking to to improve their
renewal rates?
Luke Diaz (12:00):
That's, that's a great question. There's a lot of
there's some nuance in in howI'm going to answer it, because
I'll kind of invert the questionand try and answer it from like,
what are the main drivers ofchurn. So like, what's the
headwind working against thatrenewal rate, depending on what
data you look at, and theresearch I've done 30 to 40% of
(12:21):
churn can be traced back to afailed onboarding. So if you're
looking for and what I mean bythat is, if they didn't really,
if they didn't truly get in theworkflow and adopt the product
in a repeatable, habitual way,human nature tends to revert to
the mean, and all of a sudden,you're coming up, you know,
you're six, nine months intoyour first year. And usage is
(12:43):
lackluster value is lackluster,and you're kind of setting the
stage for a churn risk. So ifyou're looking for a great place
to start, I like to interrogatethe onboarding process, the
rigor and the steps that aredesigned by the company to have
this new customer go through. Sothat's one that's one kind of
(13:05):
nugget I like to share withfounders,
just because it's such anoutsized driver of churn, based
on my research, and the secondpiece that I think of Matt is
like, customers vote with theirdollars. So if they do churn,
the worst thing you can do isnot learned from that. And it's
hard, right? Like I've beenthere when a customer cancels,
(13:26):
like it is heart wrenching. Andit's a really bad feeling. And
that bad feeling can sometimeslead us to be closed off less
curious. Try and protect theego, whatever you want to say,
but it's a great time to listen.
And so if you're in theunfortunate scenario, where you
have lost a customer, having aprocess for how that exit
(13:47):
interview happens, and the thequestions that you're asking in
a in a structured way, will beworth their weight in gold, to
product development teams, asyour as your company grows, you
just have this treasure trove oflearnings, their failures, but
they're also learnings because,hey, we didn't, we didn't renew
(14:08):
because of XYZ, like you justhave this arsenal of knowledge
to inform your go to marketmotion and in your product
roadmap, frankly. So the lack ofa churn process or a lack of an
exit interview process is one ofthe biggest mistakes I see some
founders make early on.
Matt Wolach (14:28):
Yeah, I totally agree. It's amazing how many
companies don't have an exitinterview process? Because
you're absolutely right, you canlearn so much. And in fact, I'm
a huge advocate of havingconversations with your
prospects and customers allthrough the entire customer
cycle all the way from the verybeginning, all the way through
(14:49):
when they're onboarding gettingstarted. And as we talked about
with the with the dinners andthen at the end, and you can
just learn so much from thoseconversations and not having
that exit interview is a killerbecause you're right it does
advise is on the product itadvises on how you can work with
them in the in the go to marketas well as with them while
you're having them as acustomer. And it's just, it's
(15:13):
super powerful. So that'sawesome advice for sure. I want
to I want to switch over to yourinvestor brain here, because
I've got I've got a questionthere and a lot of software
companies, they're looking forfunding. But from your
perspective, what are investorslike yourself looking for in a
software company? What looksgood? And makes you say, Yes,
Luke Diaz (15:33):
That's a great question that that I think the
this is it?
number one thing that I'mlooking for when I'm talking to
a founder is resilience. Andwhat I mean by that is, if you
scratch beneath the surface ofresilience, there's usually some
deep emotional need to see theirvision fulfilled, maybe it's a
chip on their shoulder, maybeit's growing up, kind of hard,
(15:56):
having a lot of childhoodstruggles and like wanting to
prove something to the world.
Maybe it's just outrightfrustration and rage with the
status quo.
Or what Frank Slootman callslike a malcontent posture, like
they're just pissed that theworld works this way. I look for
that, like, resilient chip onthe shoulder. Because that tells
(16:20):
me that when they do hitobstacles or setbacks, or
something goes sideways, theycan reach down they have a
really deep well to draw from,to respond to that challenge
creatively. All in. So that'sthe number one thing I look for.
The product is really secondary,because I believe in backing
(16:42):
great founders, I find like Imake a decision based on the
founder. And then I rationalizebased on the product, traction
and things that I learned afterthat. So double down on invest,
like kind of that founderpsychology, if you will.
Matt Wolach (16:57):
Yeah, that's great advice. And I love the chip on
the shoulder thing. I've talkedwith lots of investors and
people in funding, and I havenot heard that one yet. But it
makes a whole ton of sense.
Because there's so much moremotivation. When you feel like
you've been slighted when youfeel like people have kind of
left you behind. And I'm a bigsports guy. And in football, I
love football players who havethat chip on their shoulder felt
(17:17):
like they were disrespected,they go out and prove
themselves, they work hard. Andthey they make things happen.
And so I think the same thingapplies over here in startups.
And I think that's, that's,that's a lot of fun to think
about that way. So what I wantto ask is, what advice would you
have for startups, early stagecompanies, they're seeking
investment, they're wanting togrow? They want to improve their
organization? What advice wouldyou share with them, Luke?
Luke Diaz (17:41):
I would say two things. Number one, don't be
afraid to try unconventionalmethods. I think we've gotten a
little stuck in like, X numberof slides in a deck. And I feel
like there's some constraintsthat have evolved. So what I
mean by trying unconventionalmethods, my friend Darwish in
2017 raised almost a milliondollars by sending a very well
(18:06):
crafted email to his network, nopitch deck, just about 800 words
of what they're building andexactly what they're requesting,
and why they need that money. Sothat's unconventional, right?
And, and that's something that Iwish more founders did, and kind
(18:28):
of tried to try new channels.
And and just don't be afraid toput it out there.
The second piece of advice thatI found is more broadly
applicable is to think funnel,not fundraising. And so this
might, you know, your you havean amazing sales background in
building go to market orgs. Andas a founder, you know, that a
(18:51):
lot of people are gonna say no,but if you invite them into your
circle, and you can keep themupdated on a monthly or
quarterly basis, I found that alot of those checks, even checks
that I've written, I wasinitially a no, but then I, you
know, you're you're building afunnel of fundraising, you're
not just going for a yes and acheck. So thinking funnel over
(19:12):
fundraising, and taking thatlonger term approach of like,
Hey, how can I really add valueto these potential investors
over the course of a year, notjust trying to nail it on the
first pitch when there might bea lot of unknowns? So that's
something that I feel is like a,an approach that's, it really
works well for me, and couldgive founders some leverage, as
they almost think of it as like,the full funnel marketing and
(19:36):
no, doesn't mean no, you know,three, six months from now,
things could change.
Matt Wolach (19:40):
Totally true. And whether that's with an investor,
whether that's with a prospectthat you're working, I have many
of my clients who have taken myadvice, and I say, Hey, don't
give up until you hear no, andthey are shocked that they get a
deal on like the 21sttouchpoint. And it's crazy how
often that happens. But the samething with investing in I've
seen that I've seen that happenin my startups as well. I think
(20:03):
that that's fantastic advice. Infact, all of this has been
amazing advice. Luke, I reallyappreciate you coming in sharing
your experience sharing yourexpertise with us and our
audience. I want to make sureeverybody can learn more about
you and DBT ventures. So what'sthe best way for them to do
that?
Luke Diaz (20:17):
I'd say most of what I share is through LinkedIn, or
email. So the best resources,LinkedIn, so just Luke R Diaz.
My email is justLuke@DBTventures.com. And you
can find a lot of founder tools,book summaries, all sorts of
learning and engagement materialat DBTventures.com.
Matt Wolach (20:37):
Love it. We'll post all that into the description.
So if you're listening and gograb that right now go check it
out. He is Luke Diaz, DBTventures.com. Luke, thanks so
much for coming on the show.
Luke Diaz (20:47):
Love the work you're doing, Matt. Thanks for having
me.
Matt Wolach (20:48):
You're welcome. And thank you and everybody out
there. Thanks for being here.
Once again, make sure you'resubscribed to the channel. You
do not want to miss any of theupcoming guests. We have amazing
people like Luke sharing theirstory and their experience with
you so you can scale your sass.
Thanks very much for being hereand we will see you next time.
Take care.
Intro/ Outro (21:06):
Thanks for listening to Scale Your SaaS.
For more help on finding greatleads and closing more deals. Go
to Mattwolach.com
Of course, if we're going to scale a SaaS, we need
to have awesome customers andawesome customer adoption to the
product. How do we get people toadopt once they start using it?
And how do we keep them happy?
And how do we keep them aroundfor a long time making sure the
renewal rates amazing, theretention rates awesome and
churn is very low, lots ofthings that we need to figure
out. Fortunately, Luke Diaz fromDBT ventures came in, he has an
(00:32):
amazing customer successbackground, he's encountered all
these problems before and heknows exactly how to solve them.
And now what he does is he alsonow helps invest in other
startups to help them grow. So Ieven asked him about what he's
looking for what types ofcompanies he's looking forward
to now also, how can you makesure your company looks amazing
to an investor. So if you're anearly stage startup, and you
want to get in keep awesomecustomers, and you want to know
(00:53):
how to build your company, sothat people want to fund it?
This is the episode for youcheck it out.
Intro/ Outro (01:00):
Welcome to Scale Your SaaS, the podcast that
gives you proven techniques andformulas for boosting your
revenue and achieving your dreamexit brought to you by a guy
who's done just that multipletimes. Here's your host, Matt
Wolach,
Matt Wolach (01:17):
and welcome to Scale Your SaaS Thank you very
much for being here. By the way,our goal is to help you do
exactly that. scale your SaaS bygenerating a whole bunch of
leads, closing a lot of dealsand understanding how to put the
right processes in place so youcan grow your company. And
that's what we're here to do. Somake sure if you're new,
subscribe to the channel, hitthat subscribe button. That way,
you're gonna get all of theepisodes, you're gonna be
(01:38):
notified when we have amazing,awesome guests helping you
understand how to better scaleyour SaaS guests like who I have
with us today. Luke Diaz, Luke,how you doing?
Luke Diaz (01:49):
Doing well, huge fan of the show. Thanks for having
me.
Matt Wolach (01:51):
Absolutely. So glad to have you. Thank you so much
for coming on. Let me make sureeverybody knows who you are
Luke. So Luke, he's the founderat DBT ventures. DBT stands for
do big things. And what he doeshe advises and invests in
startups with a focus onsupporting underrepresented
founders building amazingsoftware and consumer consumer
products. Luke's passion isbuilding and leading high
(02:11):
performance customer success.
orgs CSM Am sa support to drivethree outcomes, accelerate
product adoption, drivequantifiable business impact for
customers, and achieve best inclass gross and net retention.
He is very skilled, very strongin what he does. And I'm so glad
to have him here. Once again,Luke, thanks for coming on the
show.
Luke Diaz (02:31):
Really appreciate it.
Excited to chat with you.
Matt Wolach (02:34):
Yeah, likewise. So tell me what's been going on
with you. And what do you havecoming up?
Luke Diaz (02:37):
Yes. So as you mentioned, DBT ventures invests
globally and software andconsumer products. And we're
really looking for underdogs. Wefound out that if you look at,
say, female founders, forexample, about 20% of female
founders start companies of allthe founders out there about 20%
(02:58):
of female. And I was shocked toread that they only receive
about 2% of the venture capitalfunding out there. So another
way to think about that is iffemales received 10 times as
much funding as they currentlydo, they would still be roughly
underfunded, which is shockingto me. So sadly, a similar trend
(03:19):
applies to people of color, andlike typically non white
background. So we're reallylooking for underdogs, people
that may have missed the VC,access to that network, and
trying to back founders who areunderdogs, and hungry.
Matt Wolach (03:35):
Wow, what a cool mission. And what made you want
to start this? Where did thisall come from?
Luke Diaz (03:39):
you know, it happened somewhat organically, as you
mentioned, my backgrounds incustomer success. So I've built
Customer Success teams fivetimes, three times from the
ground up and twice coming in toan existing team. And folks
started reaching out to me andsaid, Hey, would love if we
could get your thoughts we juststarted, you know, we we just
hit half a million in revenue,start to think about customer
(04:00):
success. Would you mind being anadvisor, we'll you know, we'll
give you some equity or whateverto make it worth your time. And
so a handful of companiesstarted doing that. And I just
would advise them on hey, here'ssome things to think about here.
Here's the mistakes I've made.
Maybe they'll be useful to you.
And then when you're workingclosely with founders,
(04:20):
fundraising comes up naturally.
So I had the opportunity toinvest in a few seed early a
rounds. And yeah, so it kind ofit kind of was like grassroots
just trying to help people andadd some value, as they're
building their dream of ascalable SaaS company.
Matt Wolach (04:37):
Very cool. I love it. Okay, so what are some of
the most exciting trends thatyou're seeing within tech and
within SaaS today? What are theydoing? What are how is the
industry changing? Because ofthat?
Luke Diaz (04:47):
I think one of the things to keep an eye on is
we're all familiar with, with AIand more, more recently, large
language models, and they'rejust becoming cheaper and
cheaper. So one of the themesI'm really looking closely at is
the commoditization of, of MLMs.
As they continue to proliferateall different parts of the
software ecosystem.The fact thatthey're getting cheaper as
(05:11):
technology tends to bedeflationary is really exciting
for founders who can build inthat ecosystem, and keep their
costs down while they're tryingto build apps, or tooling to
serve this massively growingspace. So that gets that trend
is really exciting. And I thinkit's meaningful for new market
entrants.
Matt Wolach (05:33):
Yeah, I would agree with that. Totally. There's a
lot of exciting things happen inthere. And it's crazy, it seems
like every other day, there'ssome new piece of technology or
growth that's happening there.
It's just wild to see. And it'sso cool that so many awesome
smart leaders are takingadvantage of it and finding new
creative ways to innovate inthat pretty amazing.
Luke Diaz (05:52):
It really is, we just wrote a check to a company
called True foundry, that ismaking basically a software that
allows you to manage, deploy,and fine tune large language
models across all acrossdifferent MLMs. And across
cloud. So there's this, there'sthis really interesting space
where it's kind of like theshovels to the gold miners, if
(06:16):
you will, there, they're reallymaking management of MLM 's at
scale much easier. And crosscloud, which I think will be a
growing need, as developers wantthe best model for the best use
case. So you won't be confinedto one, you can imagine a suite
of 20 MLMs, across threedifferent clouds. So I think
(06:36):
there's a lot of value in thatlayer. To, for founders to think
about as well.
Matt Wolach (06:41):
Yeah, I would agree with that. I want to touch on
your have some awesomeexperience in customer success,
as I mentioned earlier. So ifyou're a software leader, and
you're you're starting togenerate some interest or
getting people into your system,how can a leader How can
somebody make sure that thoseearly customers adopt and start
using the product?
Luke Diaz (07:02):
That's a great question, I think back to some
of the best advice I've gottenon that topic that's really
informed my approach basicallycame from from Y Combinator. And
there's this concept of doingthe unscalable things that allow
you to figure out what you needto scale. So that's something
(07:22):
I'll just throw out there. FromPaul Graham, were one of the
software advantages when you'rea startup is you can do these
unnatural, one off unscalablethings to get your customer to
value. And most of the startupsI work with are doing this, it
might be hopping on a plane tohelp them deploy the product. It
(07:43):
might be spending two hourseducating a new team on how this
workflow impacts their techstack, or maybe their their API
workflow. So don't think scaletoo soon be confident to do
those unscalable unnaturalthings to get them to value
because then once you figurethat out, you can figure out
ways to use technology toactually scale that deliverable
(08:06):
to hundreds of customers insteadof dozens. So that's one thing
that I try and anchor on earlyon.
Matt Wolach (08:11):
Yeah, I echo that advice as well. That's something
that I've counseled my clientson as well, I think that there's
so much talk about gotta makesure to scale, build for scale,
get your foundation for scale,and all that stuff. And
obviously, this show is alsocalled Scale Your SaaS. And
that's something everybody wantsto do. But I think we get too
hung up on that the early days.
And we start to only do that.
(08:32):
And you're absolutely right. Ithink in the early days, we have
to figure out what's best forthe customer for the users. And
sometimes we have to figure thatout through things that don't
scale. And once you I love thatyou talked about how we'll
figure out how to scale it,we'll figure out how to get
those efficiencies. But rightnow we need to make sure we're
doing things that don't scale.
It's a great point. Great. Sowhat strategies would you use?
(08:55):
If now we've got them in thereusing the product? What do you
think that some of the bestcompanies are doing that's
helping customers stay satisfiedand stay loyal?
Luke Diaz (09:05):
I appreciate that question. I kind of think, like
if you think of cash, like theonly unforgivable sin in
business is running out of cash.
If you think of cash as like thelifeblood of a company, or a
startup, I think of customerfeedback as like the oxygen, if
you will. So the theme here ismaking it as easy as possible
for customers to constantly giveyou feedback because, you know,
(09:28):
founders might not want to hearthis. But the the a lot of the
customers, they don't thinkabout the software you're
building all day, they usuallyuse it for a point in time, and
then they're off to the rest oftheir busy day. So when they're
engaged. That's why I'm a hugefan of in product feedback
tools, a quick email, eventexting with your early
customers just make it supereasy. Remove all those barriers
(09:51):
so that that feedback loop thatoxygen is really is really
flowing. So that's somethingthat I find some time gets in
the way of faster productdevelopment, is it there's not
an easy way to share thatfeedback. It's reserved for QBRs
or like big meetings, but itshould be iterative and on the
fly, if, you know, in the idealsense, another thing that's
(10:13):
really worked well was creatingthese customer advisory boards,
or I've also heard them calledcustomer advisory councils,
we're talking five to 10 of yourcustomers grabbing dinner once
or twice a year, all together sothat they can share their shared
experiences with your product,you treat them like VIPs give
them that, you know, insidebaseball roadmap, like, here's
what the product vision islooking like. And it's also a
(10:35):
great forum for feedback. And soknock on wood of the hundreds of
customers, I've had come througha customer advisory board or be
part of it. None of them haveever churned. Because they felt
like part of the core team, thattrue partnership. And again,
it's an unscalable thing. It'sharder to do at scale until you
get into like event planning andconferences. But I think anyone
(10:57):
can schedule a nice dinner andhave a debrief with your your
top roster, I think that can bereally powerful for relationship
building as well.
Matt Wolach (11:07):
Totally agree, I think that is super powerful.
And I've done that moreinformally at conferences, like
you said, at a conference willhost a dinner of 5-10 customers.
But you know, outside of that ifyou don't have a conference
where everybody's comingtogether, figure it out, make it
happen, because you're right,it's been so powerful, having
those conversations and justconnecting with them on a
(11:30):
personal level. So from both thebusiness side, the personal
side, it's, it's amazing whatyou can do just having those
types of relationships with yourcustomers. That's fantastic.
Luke Diaz (11:39):
Yeah, it gets me fired up.
Matt Wolach (11:40):
I can see that.
That's awesome. So now that wehave talked about how do we make
sure they adopt, how do we makesure that they're, they're
happy? What What about renewalsas a lot of companies are on
annual renewal plans? What stepsare some of your your best
customers your best clientstaking to to improve their
renewal rates?
Luke Diaz (12:00):
That's, that's a great question. There's a lot of
there's some nuance in in howI'm going to answer it, because
I'll kind of invert the questionand try and answer it from like,
what are the main drivers ofchurn. So like, what's the
headwind working against thatrenewal rate, depending on what
data you look at, and theresearch I've done 30 to 40% of
(12:21):
churn can be traced back to afailed onboarding. So if you're
looking for and what I mean bythat is, if they didn't really,
if they didn't truly get in theworkflow and adopt the product
in a repeatable, habitual way,human nature tends to revert to
the mean, and all of a sudden,you're coming up, you know,
you're six, nine months intoyour first year. And usage is
(12:43):
lackluster value is lackluster,and you're kind of setting the
stage for a churn risk. So ifyou're looking for a great place
to start, I like to interrogatethe onboarding process, the
rigor and the steps that aredesigned by the company to have
this new customer go through. Sothat's one that's one kind of
(13:05):
nugget I like to share withfounders,
just because it's such anoutsized driver of churn, based
on my research, and the secondpiece that I think of Matt is
like, customers vote with theirdollars. So if they do churn,
the worst thing you can do isnot learned from that. And it's
hard, right? Like I've beenthere when a customer cancels,
(13:26):
like it is heart wrenching. Andit's a really bad feeling. And
that bad feeling can sometimeslead us to be closed off less
curious. Try and protect theego, whatever you want to say,
but it's a great time to listen.
And so if you're in theunfortunate scenario, where you
have lost a customer, having aprocess for how that exit
(13:47):
interview happens, and the thequestions that you're asking in
a in a structured way, will beworth their weight in gold, to
product development teams, asyour as your company grows, you
just have this treasure trove oflearnings, their failures, but
they're also learnings because,hey, we didn't, we didn't renew
(14:08):
because of XYZ, like you justhave this arsenal of knowledge
to inform your go to marketmotion and in your product
roadmap, frankly. So the lack ofa churn process or a lack of an
exit interview process is one ofthe biggest mistakes I see some
founders make early on.
Matt Wolach (14:28):
Yeah, I totally agree. It's amazing how many
companies don't have an exitinterview process? Because
you're absolutely right, you canlearn so much. And in fact, I'm
a huge advocate of havingconversations with your
prospects and customers allthrough the entire customer
cycle all the way from the verybeginning, all the way through
(14:49):
when they're onboarding gettingstarted. And as we talked about
with the with the dinners andthen at the end, and you can
just learn so much from thoseconversations and not having
that exit interview is a killerbecause you're right it does
advise is on the product itadvises on how you can work with
them in the in the go to marketas well as with them while
you're having them as acustomer. And it's just, it's
(15:13):
super powerful. So that'sawesome advice for sure. I want
to I want to switch over to yourinvestor brain here, because
I've got I've got a questionthere and a lot of software
companies, they're looking forfunding. But from your
perspective, what are investorslike yourself looking for in a
software company? What looksgood? And makes you say, Yes,
Luke Diaz (15:33):
That's a great question that that I think the
this is it?
number one thing that I'mlooking for when I'm talking to
a founder is resilience. Andwhat I mean by that is, if you
scratch beneath the surface ofresilience, there's usually some
deep emotional need to see theirvision fulfilled, maybe it's a
chip on their shoulder, maybeit's growing up, kind of hard,
(15:56):
having a lot of childhoodstruggles and like wanting to
prove something to the world.
Maybe it's just outrightfrustration and rage with the
status quo.
Or what Frank Slootman callslike a malcontent posture, like
they're just pissed that theworld works this way. I look for
that, like, resilient chip onthe shoulder. Because that tells
(16:20):
me that when they do hitobstacles or setbacks, or
something goes sideways, theycan reach down they have a
really deep well to draw from,to respond to that challenge
creatively. All in. So that'sthe number one thing I look for.
The product is really secondary,because I believe in backing
(16:42):
great founders, I find like Imake a decision based on the
founder. And then I rationalizebased on the product, traction
and things that I learned afterthat. So double down on invest,
like kind of that founderpsychology, if you will.
Matt Wolach (16:57):
Yeah, that's great advice. And I love the chip on
the shoulder thing. I've talkedwith lots of investors and
people in funding, and I havenot heard that one yet. But it
makes a whole ton of sense.
Because there's so much moremotivation. When you feel like
you've been slighted when youfeel like people have kind of
left you behind. And I'm a bigsports guy. And in football, I
love football players who havethat chip on their shoulder felt
(17:17):
like they were disrespected,they go out and prove
themselves, they work hard. Andthey they make things happen.
And so I think the same thingapplies over here in startups.
And I think that's, that's,that's a lot of fun to think
about that way. So what I wantto ask is, what advice would you
have for startups, early stagecompanies, they're seeking
investment, they're wanting togrow? They want to improve their
organization? What advice wouldyou share with them, Luke?
Luke Diaz (17:41):
I would say two things. Number one, don't be
afraid to try unconventionalmethods. I think we've gotten a
little stuck in like, X numberof slides in a deck. And I feel
like there's some constraintsthat have evolved. So what I
mean by trying unconventionalmethods, my friend Darwish in
2017 raised almost a milliondollars by sending a very well
(18:06):
crafted email to his network, nopitch deck, just about 800 words
of what they're building andexactly what they're requesting,
and why they need that money. Sothat's unconventional, right?
And, and that's something that Iwish more founders did, and kind
(18:28):
of tried to try new channels.
And and just don't be afraid toput it out there.
The second piece of advice thatI found is more broadly
applicable is to think funnel,not fundraising. And so this
might, you know, your you havean amazing sales background in
building go to market orgs. Andas a founder, you know, that a
(18:51):
lot of people are gonna say no,but if you invite them into your
circle, and you can keep themupdated on a monthly or
quarterly basis, I found that alot of those checks, even checks
that I've written, I wasinitially a no, but then I, you
know, you're you're building afunnel of fundraising, you're
not just going for a yes and acheck. So thinking funnel over
(19:12):
fundraising, and taking thatlonger term approach of like,
Hey, how can I really add valueto these potential investors
over the course of a year, notjust trying to nail it on the
first pitch when there might bea lot of unknowns? So that's
something that I feel is like a,an approach that's, it really
works well for me, and couldgive founders some leverage, as
they almost think of it as like,the full funnel marketing and
(19:36):
no, doesn't mean no, you know,three, six months from now,
things could change.
Matt Wolach (19:40):
Totally true. And whether that's with an investor,
whether that's with a prospectthat you're working, I have many
of my clients who have taken myadvice, and I say, Hey, don't
give up until you hear no, andthey are shocked that they get a
deal on like the 21sttouchpoint. And it's crazy how
often that happens. But the samething with investing in I've
seen that I've seen that happenin my startups as well. I think
(20:03):
that that's fantastic advice. Infact, all of this has been
amazing advice. Luke, I reallyappreciate you coming in sharing
your experience sharing yourexpertise with us and our
audience. I want to make sureeverybody can learn more about
you and DBT ventures. So what'sthe best way for them to do
that?
Luke Diaz (20:17):
I'd say most of what I share is through LinkedIn, or
email. So the best resources,LinkedIn, so just Luke R Diaz.
My email is justLuke@DBTventures.com. And you
can find a lot of founder tools,book summaries, all sorts of
learning and engagement materialat DBTventures.com.
Matt Wolach (20:37):
Love it. We'll post all that into the description.
So if you're listening and gograb that right now go check it
out. He is Luke Diaz, DBTventures.com. Luke, thanks so
much for coming on the show.
Luke Diaz (20:47):
Love the work you're doing, Matt. Thanks for having
me.
Matt Wolach (20:48):
You're welcome. And thank you and everybody out
there. Thanks for being here.
Once again, make sure you'resubscribed to the channel. You
do not want to miss any of theupcoming guests. We have amazing
people like Luke sharing theirstory and their experience with
you so you can scale your sass.
Thanks very much for being hereand we will see you next time.
Take care.
Intro/ Outro (21:06):
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to Mattwolach.com
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