[00:01:23] Andrew Michael: Hey, Firaas welcome to the. 

[00:01:26] Firaas Rashid: Thanks, Andrew. Thanks for having me.

[00:01:28] Andrew Michael: It's great to have you for the listeners, Firaas as the founder and CEO of hook hookups, B2B subscription companies know which customers to focus on and what actions to take to drive growth.

Foster prior to founding book Firaas started his career in engineering at credit Suisse, where he became a director and head of production for international wealth management. He then joined AppDynamics, a CTO and head of customer success for Mia shortly after AppDynamics is $3.7 billion acquisition by Cisco.

So my first question for you for us is what did your role as head [00:02:00] of production encompass a critical. 

[00:02:03] Firaas Rashid: I looked after a fairly large team. So I joined the bank as an individual country to being the person that looks after the traders when things broke. And then a few years later when it was running a team of 150, that looked after all of our software applications across the bank.

And a lot of what my role involved post financial crisis. How do we become more efficient as a team? And therefore do more with the same people or often more with less people? So a big part of it was actually changing my own team using technology while supporting the technology of the of the bank.

[00:02:38] Andrew Michael: Very cool. And in that as well can you talk a little bit about what that means supporting the team with technology? Was that yourselves building tools for internal tooling? Was it yourselves acquiring or perhaps like purchasing a software from outside vendors and then introducing those into the.

[00:02:55] Firaas Rashid: Yeah, I think it was a mixture. I think we started off doing a lot in house. To give you an [00:03:00] idea one of the first projects I ended took within the bank was we had a team of 24 people working around the clock. We knew that working around the clock was inefficient and we ended up automating 70% of what the team did throughout the course of the.

And I'm brought the beam team down to around 12 people and that was all done in house. I think as my career progressed, you started to see the explosion in SAS software and how easy it was to be able to implement within a banking environment. I worked for a Swiss bank that was obviously a heavily regulated environment.

So early on in my career, back in the early two thousands buying a piece of software, man shipping a physical box, having a six month lead time. And all the rest of it. Later on towards the end of my career, it became a lot easier to look at a product and say, we can get that up and running in eight weeks, maybe 12 weeks at a push.

So we became more and more dependent on on, off the shelf software to help us fix some of those. 

[00:03:54] Andrew Michael: Very cool. Let's dive into that a little bit. I think because that's something we haven't perhaps chatted a lot [00:04:00] about on the show and I'm sure it's pretty interesting for a lot of the listeners is the actual buying process from an enterprise type, all black credit Suisse and what that looks like and how you can end up actually maximizing the value of the product or service that you do end up purchasing.

So maybe you could talk us through what it was like when you got started purchasing software and what it got like once you. Felt that you had got to some level of maturity and understanding of how you could implement and maximize the ROI from a service. 

[00:04:27] Firaas Rashid: Yeah, I think I have this unique perspective in this space because I spent eight years at buying software, supporting software, changing teams, using software, and never at any point, being involved in the sales process and software for myself.

I then moved to and I spent Three years that joining us, that chief technology officer for Europe, then running customer success. And obviously now I run my own SAS software company building and selling software. And so I've got this unique experience about the whole life cycle of of it.

And I guess from the earliest experience the biggest thing that I would say is that in any case that I've ever [00:05:00] bought any software, we've been seeking to solve a problem. And the question is, How do we go and solve that business problem? At scale with a guarantee that we're going to get that outcome.

And I've always believed that the software solution becomes like completely staffed and Rita that it's not easy as a founder to fall into the bit of selling features and forgetting that. But it, but I think that's the number one thing is you're looking to solve a problem. If a piece of software doesn't solve it, it doesn't matter what you're going to solve.

It. My job's on the line if I don't solve that problem. I think the the large bit of buying the software is building around the business case of doing that. So if I solve this problem, what is the effect that solution is going to have on my team? That's all my budget. Me and ultimately my career is this going to make sure that I get a good rating at the end of the Erica Burness and so on moving forward.

And I, my message to enterprise software sellers and people who work in the churn retention spaces like that is the number one thing that your customers are thinking about. Probably the only thing that they're thinking about as you go [00:06:00] through the process, I think the interesting thing that then happens.

Yeah. There's a really hard struggle to get it over the line to make everyone in a company believe that this is a product you should be investing in, especially if it becomes a multi, a hundred K or a multi-million pound investment. And the next problem that then comes in is. You get the purchase order side.

So legal's been involved. Purchasing has been involved. Your boss has been involved. The CFO's been involved and every, everybody has seen you champion this product. And actually you've achieved nothing because all you've done is you have a set of licenses and a login into a product. Your team might have demoed it, but it's not changed them at all.

The main thing from that point on where there's, what is the gap between the purchase order that I designed and getting the value that I delivered that product? I would say that unique perspective I have is really on that exact one, one problem, because. I learned a lot in my time in banking and PTSD and SAS software around.

How is it that you actually get to change how people do their jobs? If they're not going to change how they do their jobs and there's not going to be a big ROI on, on what you're selling. And [00:07:00] then, and actually that can be a pretty tough uplift. You've been doing the same job in the same bank for 25 years and someone comes along and says here's an automated way to do root cause analysis for incidents, for example.

So I think that was a steep, an interesting learning curve for them, for me to get. 

[00:07:17] Andrew Michael: Yeah, definitely. That sounds super interesting. And I want to dive into specifically that, but you also mentioned a couple of other things that I think are really interesting. Is we also recently or previously, not recently previously at April Dunford on the show talking a little bit about positioning and what you mentioned earlier around selling transformations, not features.

I think this was like, he recently tweeted something along these lines is that like softened founders that we want to sell the features, but really what we need to be selling is what is the transformation? What is the change that our product or service is going to bring to companies? And there was a great episode on that point.

And the second one is what reminded me of another episode, where we talked a little bit about the invite flow of users. And a lot of sauce products will typically have this, like immediately in their signup flow, like sign-up and now invite five or [00:08:00] 10 users to the account to get advantage. But I think what you mentioned as well as a lot of times people yeah.

Checking out a product or service to being able to see, okay, is this really something that we want for our business before? And I'm, it's my social credibility on the line yet to introduce this product or service. And now you're asking me to invite users to an account before I've even seen value out of the product or service.

So it was interesting just thinking a little bit about these tools and services in the timing of when it makes sense to want to try and push for that invite for the team member versus when it's maybe better to focus on another action from the. But with that in mind, those are definitely two interesting episodes we had in the past.

I wanted to dive into a little bit more around this gap then from post-purchase to a different value, because it really is about changing user's behavior. And I think that is one of the things we. And the look when it comes to the products and services that we build for our users is like how much action needs to happen within an organization and for these changes to happen.

So it sounds like you've done a lot that, what are some of the lessons that you learned in changing these [00:09:00] behaviors internally? 

[00:09:02] Firaas Rashid: Yeah. The I'm going to use AppDynamics as an example for the benefit of listeners app dynamics is a software product that would help you diagnose an incident quicker.

By giving you a very quick view of the root cause. And I actually went through the cycle of both buying it and then leading customer success and actually leading customer success our up to when we got to 550 million ARR. So some of the, a lot of the examples, what people went through this change, but to give you an idea, we would we would go into a customer.

And that typical way of solving a problem in it would be you're looking at a terminal, which is a black screen of white tax, and you're scrolling through log files and you're spending 30 to 60 minutes trying to find where something is. And all of a sudden your boss is now telling you that this new cool tool can do that in two mouse clicks in a UI.

And I think one of the things that it's easy to underestimate is. The person that you're speaking to is looking at the black screen with white lines has been doing that for 10, 15, 20 years, if not [00:10:00] exact same way, using the same product and has like iteratively improved on that. And then all of a sudden, you're now walking in and saying, Hey, there's a UI that you mouse click on and you drag things around on it.

If you right. Click and click view recalls, I can tell you that the solution to your problem. And what we found when I was at credit Suisse and we made these changes, was that. In high stress situations, such as incidents, people default back to what they know, because the last thing they wants to be doing is to be looking at a new UI.

But that they don't understand. And actually I've seen similar things happen in hooks. So what we do as a product is we help customer success. Teams and leaders automatically understand where the churn risk is by using machine learning, to generate auto health scores and leading indicators for.

For that churn. But it's a really drastic difference to the way that they'd been used to doing things. We found a few things were really useful to doing it. The first is like being really clear with customers on what process are you actually trying to change? And what does that look like today and guiding them through the new way of doing that.

And the [00:11:00] way we do that hook is we actually ask teams what they do day to day. What is it that you do in the morning? How'd you prep for a customer meeting and we help guide them on the new way of being that within her. And then the second thing that I've learned is in changing humans you've got two ways of doing it.

Like you can either crack the whip or you can incentivize them. And we actually read a lot of studies around what works best and cracking the whip. Isn't very efficient saying you should use. It doesn't work very well. And what we tested at dynamics was how do we incentivize people to use our product?

So we started with something very simple, which is we used to game-ify onboarding and say, if you build the best dashboard and app dynamics out of your team, you'll get this set of apples. And this was on like multi-million dollar bills. So the cost was tiny in comparison. And and strangely we found that there was a huge uplift in how people started to use our products.

70 to 150 users within an account with using the product within a week or two. And what it was that the incentive had triggered[00:12:00] a reason for people to look up and take notice. And then over the course of the following few days, it triggered competition across the different teams.

To actually start to do something with that, with the product. And we do something similar now where we actually incentivize the first 30 days of adoption. We know that's the period at which onboarding council or doesn't count. But yeah I, the message would be really focused on what people are doing and how to get them to change what they're doing every day.

If you don't do that, then the customer that you're serving won't achieve the ROI that they've they brought into. 

[00:12:31] Andrew Michael: Yeah, I like that. I find it interesting. The sort of incentivization of engagement from projection. Definitely. It makes sense. When you have large deal size, like you mentioned with that dynamics to be able to give away prizes in the sense or giveaways as a result.

We do this, I think when we think a little bit about acquisition and referrals, But not so often, I think when it comes to engagement and I think this is also like one of those missed opportunities on both ends from an acquisition perspective, where we spend a [00:13:00] lot of money on ads trying to drive new users, but we don't really use that to bring back existing users.

And the same thing can be done for a Phyllis. I think this is just like applying that referral. Game that everybody tries to at some point trying to refer five friends and when this, or when that, but really focusing on engagement and activation I can see it being very powerful. 

[00:13:17] Firaas Rashid: I I'd love to just add a note on that.

I think. This is probably something that you and I believe believe in common that I actually think it's even more powerful in the post-sales engagement space, because you can afford to spend the money on acquisition because your cost of sale is factored into the cost of the product. The clear challenge that SAS companies have now is that.

Sales is important, but net retention is like the most important thing to go and drive valuation and your ability to spell, to raise money in your ability to be able to attract talent and investment and all the rest of it. And the only way to be able to do that at scale is by having an efficient strategy to.

Engage users get people to use your product and drive value out of it. Otherwise, you're [00:14:00] having to do that anyway. You're just having to do it with the same cost of sale at renewal time. And all of a sudden you're now damaging your NRR. So I yeah I'm fully aligned with you. And actually I think that that a big thing software companies have been missing is how do we use the same tactics that we use in acquisition, post acquisition, but bigger scale and lower costs than that, then you're doing the Salesforce.

[00:14:22] Andrew Michael: Yeah, for sure. We actually had low reckless on the show recently as well from traction advising. Who's helped sell over 30 different sauce businesses. And from his perspective, as well as the single biggest denominator in the valuation that SaaS businesses and multiples that they get when they sell their companies comes down to nitro attention.

So as you mentioned, like the amount of money that we spent trying to drive growth from acquisition, it's really actually like the multiples and the valuations that you're getting is on that. Metric and at the end of the day is where a lot more companies, I think sophisticated companies are realizing that's where the focus should should be lying.

Obviously you need both, but when we start to talk about valuations and the growth of the business [00:15:00] it compounds on that end. 

[00:15:01] Firaas Rashid: Yeah, for sure. It's, you only need to look at snowflake Octa and some of the top end companies to see. You go above 140% NRR, and you're looking at 50 to a hundred times valuation, you stay at 105% NRR.

You're looking at 10 to 20 times valuation and that's independent of your sales figures and your sales growth. And I would go a step further into maybe talking a little bit around the experience I found when I was app dynamics, was that we were able to actually correlate the adoption of our products directly to retention.

And directly to NRR. So what we were able to do was to go and find that if people were using over 50% of our licensed product that they'd bought, they were likely to say on average it was 57%. If they say 29%, if they'd left. And if they stayed with us they were likely to spend between five to 14 times our initial investment in that, in their lifetime.

Focusing on like those numbers alone. When I rebuilt the customer success team there [00:16:00] within a year ended up, I flipped the uplifting our net retention by 10 units. So the only thing we focused on was let's focus on the adoption number and the adoption number alone. Ignore revenue. Ignore anything.

And let's focus on the accounts where that below there. And today we see this in every hook customer that we onboard that we trial that as soon as we plugged that data into a hook, we have a machine learning engine that says I'm going to go and look at your historic renewals and upsells and tell you what, it's a leading indicator.

And we find in every single case, 90% of the leading indicators are related to product usage in different ways for different companies, but are related to product usage and adoption.

[00:16:43] Andrew Michael: Yeah, absolutely. I think this is something as well. Like when companies get started, they focus too much on the awkward metrics, which is like churn and retention or revenue and not so much on the input metrics, which are actually the ones that are move the needle at the end of the day and have the biggest impact and obviously [00:17:00] activation or adoption being one of those that's key to be focused on.

I think more and more companies should be realizing this. There's a difference between the inputs and the outputs and having the team give core focus on the inputs really gets a clear way on what to do. I think there's something we did actually had Hotjar as well in the beginning where it's okay. Like we want to reduce churn.

And that was the focus, but slowly over time we realized, okay, the team couldn't really do much with that. We want to reduce churn, but giving them the inputs that are actually influencing the final output really allows the team then to understand, okay, how can we. Role within the organization and put the specific inputs.

And that might be something to do with the acquisition acquiring the right ideal customer profile, or it might be something to do with your activation metrics that we need to improve or on the engagement side, what sort of level depth of engagement do we need to be driving within the product or service?

So the more specific you can get with these metrics that you want to be sharing with your team and the focus, I think the greater, the outcome you end up seeing is because it really gives direction. Like [00:18:00] just saying, we want to reduce churn or want to grow revenue. There's nothing never knowing what is the root cause of that striving that growth or revenue is really powerful.

So tell us a little bit about today. And I was interested actually, because you started your career as an engineer and made the switch. When you went to up dynamics to CTO and customer success, like what did that role look like in the beginning? How did it evolve over. 

[00:18:24] Firaas Rashid: Yeah, I so I was at credit Suisse.

I wanted to move into a high growth tech. Ultimately because I wanted to have my, my, my own company one day. And and also I was eight years into the banking industry and joined in the middle of the financial crisis of of 2008. I joined in 2009, actually. And so it, it became eventually quite exhausting kind of shrinking teams and And I wanted to be involved in the growth side.

I at dynamics at the time had been acquired by Cisco for three and a half billion dollars. And the challenge they had was how do they scale [00:19:00] at particularly in Europe, where there was a huge sales presence, but very little outside of sales. And so they brought me on as as a CTO to help figure out what are some of the challenges outside of the sales process and Why is it that we can help help grow and scale the business in some of those problem areas?

The immediate thing that happened within like days of me joining was that the, I had a very deep understanding of the customer base because I'd been in financial services. I understood it operations very well. And so I immediately started to work with a whole bunch of problems. And and in that process, it became clear that we had this like repeat comment coming from different customers, that the product was great, but they hadn't figured out how to get value out of it.

And they were having challenges with adoption. I had a strong opinion on this because I had spent the last eight years getting people to use software. And my view was we needed to move away from the old school way of doing customer success with. Having a QBR every nine today, sending out an NPS report and maybe focusing on the [00:20:00] customers that were being the loudest.

And instead we should use data to figure out who are the customers with adoption challenges. And as is the case often when you're vocal about a problem you end up getting given it w which then was the rest of my three years at at dynamics. So I was asked to rebuild customer success at the time.

It felt like changing engines mid-flight because we had a customer base globally of 170 million ARR. We had a customer base in Europe of about 50 million that grew to about 150 million by the time that I'd left, maybe more. And what we were saying was that we were going to change everything that we're doing about customer success, to focus on not the biggest customers, not the loudest customer.

But we were going to go and find out who were the customers that weren't speaking to us and that our data said that they were likely to churn, even if they told us they were happy. So at one point I was the only customer success manager at app dynamics in Europe serving some some a hundred plus customers and these were fairly big customers.

Our [00:21:00] typical sales price was a million. And slowly grew out the team narrowed because the following year to, to twenty-five people really just focusing on, we're going to focus on the gray customers. Like we're not gonna focus on that on the ones that are shouting. We're not going to focus on the big ones.

We're going to focus on the ones that the data says. There's a problem here. Even if it doesn't look like there's a problem. 

[00:21:19] Andrew Michael: Yeah, it's an interesting approach. And definitely think like, when you think about spinning up customer success, like typically it gets introduced to serve the biggest customers first, and then we figure out like, how do we serve the rest of the organization, but In my mind.

It makes a lot of sense. Just really focusing on those that need you the most, as opposed to just segmenting by arbitrary numbers or revenue on one end. I think other companies do end up using as part of the sales package is you'll have a dedicated customer success manager to work with and things like this, but really probably the bigger benefit then comes in.

It's like we focusing on the customers that need our help not the ones that are the shouting, the loudest or spending the most with us. So you did that then dynamics, you've got quite a bit of experience, obviously as a result of introducing this [00:22:00] new form of way. And then it sounds like that it was just a natural progression into, to starting hook a, you probably did most of what your product does today, internally fab dynamics, and then rolled that out and decided to, to other company, give us a little bit more of an overview of what you do today and how you help.

[00:22:17] Firaas Rashid: Yeah, I'll maybe just point on that app dynamics topic a second. So we that journey in a bit more detail was we started with simple metrics. We built updates team. We ended up spending $2 million. Data science to go and prove up our theory. And our theory was that sentiment doesn't make a difference on whether or not customers stay and engagement does.

And the data proved it. So we were able to predict our renewals with about 90% accuracy. And what we found was that if engagement data turns down, such as people use a product, less bias, we become less engaged with salespeople and attending marketing events have to say. People buy less services, packages after sale, then ultimately they churn.

And if they are [00:23:00] happy or not actually that doesn't make much of a difference on whether or not they stay. And we have a theory about why that is part of it is because. The buys of enterprise software or use of enterprise software. I can't make decisions on sentiment. And if they did, we wouldn't be value based selling.

And therefore, if people are unhappy or are using the product, that's difficult to use, you're not directly going to change it. If you have a value out of the product and it's being used at scale, because the cost of changes to. And the cost of change outweighs the value that you would get for doing that change.

So we had great success at app dynamics and doing that, and I looked out at the market. What I saw was great products that would help customer success teams and workflow. And so let me set a task and remind me what I need to speak to a customer. But everybody was screaming about this problem of how do I use my data to tell me what I need to do in my customers.

And there was actually no product out there to solve it. So what we do in and hook is we use product data to help customer success team. No, which [00:24:00] customer they should focus on, which customers are likely to churn at renewal time, what they should do. And we also help them take the action at scale so they can take a selection of disengaged users and reach out to them.

And we measure how well that that works. And we do all of that in a really short implementation time. And we do it out of the box. So our machine learning actually generates the health scores with an accuracy of about 85% on average in, in being able to predict. 

[00:24:26] Andrew Michael: Very cool. And so how's that going then?

When did you launch the company? How far along are you? Yeah, 

[00:24:34] Firaas Rashid: where we're about a year and a half in maybe slightly lower. I, we raised our first round back at the end of November, 2020 with local Globes, our, as our lead investor for pre-seed January. A small room on Liverpool street in London with me in our first engineer, figuring out how our Salesforce connector works.

I think we did a pretty awesome job last year on product builds. So we ended up shipping at the end of last year with with our first couple of design partners and our first paying customers. [00:25:00] And really this year is all about building our go to market. I'd say I'm proud that we've built an awesome team and the culture and that is around.

Both execution, but also how do we work? As a team? I think that's so important in the early days of team building and founding, because it's just hot and you want to do that hard bet with people that you like working with. And I think the second thing that I'm proud of is that we have a product that customers love, that they get value of.

And also that it solves a really meaningful problem. Yourself how frustrating it can be being stuck, handling the churn problem with that. The data teams and the product and all the other things that you need to be able to be effective because you're shooting in the dark.

Yeah, it's been going well and this year we've we've just started hiring our first sales people. And we're starting to look at areas such as marketing and expanding on sales.

[00:25:53] Andrew Michael: Very cool. And I think early sales, then obviously you focus that on yourself and then really start to see how can we scale this up now? Nice. So I see we're [00:26:00] running up on time. I want to make sure that I have time for a couple of questions. Ask every guest. First one is let's imagine a hypothetical scenario.

You joined a new company, tryna retention is not doing good at all. And the CEO comes in and says, Hey, for us we really need to turn things around. You're in charge. You've got 90 days to do it. What do you do? The catches. You're not going to tell me I'm going to go speak to customers or look at the data.

The only thing you're going to do is you're going to pick a tactic that you've seen work at a previous company and run with that blindly hoping it works. What would you do? 

[00:26:30] Firaas Rashid: The two things I just joined down with speak to customers and use data. Exactly.

Oh, I just need a second to think about it.

 I would figure out how to go through the buying experience and usage experience of that product. I think that you can start to make some pretty clear assumptions around what does the sales process look like and what are people [00:27:00] selling and what they actually buying, because it's not the product. Like people are not buying the product, they're solving the business that they're buying the solution to the business problem.

And then I would go through the experience of what does that look like? And what's the first day of the product looked like, and what was the second then? What's the next, then the next, 30 to 45 days looked like, because I think if you can do that and you can generate some really good hypothesis about probably where the challenges are and what you need to do.

And then the second thing that I would do, knowing that I can't speak to customers of the. I speak to people who do the job that the product solves. I think that people get wound up in like the product problem, and it's not if you're selling a software that helps accountants become more efficient.

And actually what you're doing is you're helping for example, using workflow, you're helping accountants with their admin problems. So I would go and speak to either accountants or people with that help people with that admin problem and figure out like when and how a product works. I think that's where I've [00:28:00] had this like unique perspective in my career and it's worked and actually we do it with customers.

The first thing we'll usually ask our customers to do is to give us access to their products. And then we'll just build hypothesis about where we think the problem areas are. 

[00:28:12] Andrew Michael: Very cool. I like that. Last question then what's one thing that, you know today about tryna retention that you wish you knew when you got started with your career.

[00:28:25] Firaas Rashid: I think it's even more important than I thought it was. When I started my career, I thought it was important. I think you now look at the metrics around how it's driving growth and change within public valuations, private valuations. How the whole world has moved to subscription software from the consumer 

 B2B SAS world.

And I had an inkling that it would move in this direction. If I'd have known that five or 10 years ago, I'd have been screaming about it louder. I think I always had a forward view. And but I was part of the train of change in what's happening in the world. For sure.

I wish I'd have known how important it is now. And I'm [00:29:00] sure if you ask me in 10 years, what would I have known now? I wish I'd have said that. I probably will say the same thing, which is that it was even more important in 10 years than I thought it was. 

[00:29:09] Andrew Michael: Yep. And obviously I think that's clear in the company that you're building the importance that you see in it today.

When I was first has been a pleasure chatting today is in our final thoughts. You want to leave the listeners with, obviously anything we mentioned today, we'll have in the show notes for anybody to catch up on, but isn't there anything else you'd like to leave before we finish 

[00:29:25] Firaas Rashid: off? Yeah. I encourage you Redis to listeners even to re reach out to me.

My name's Ferris F I R AA asked, so add me on LinkedIn. There's not too many for us in this. And the other thing I would say is if you go to my LinkedIn profile we have a link on our website to our customer success metrics survey. We surveyed a hundred plus leaders on what metrics they use to help drive and churn prevention and growth of that revenue.

And I think those results are pretty fascinating. You can download them online. There's no need to wait to speak to a person. So please do. 

[00:29:58] Andrew Michael: Nice. We'll definitely add that as well as [00:30:00] in the show notes, but it's been a pleasure having you today, and I wish you best of luck now going forward into the new year.

[00:30:05] Firaas Rashid: Cool. Thank you very much.