June 4, 2020
Max Simkoff: Welcome to Ask the Expert (in a crisis), our webinar series where we’re asking industry leaders about their unique perspective on how to navigate the most difficult challenges faced by the broader real estate and financial services ecosystem during the current global health crisis. These also give you a chance to ask the experts some of the most pressing questions on your mind. My name is Max Simkoff, I’m the CEO of States Title. And today, I’m excited to welcome Silicon Valley legend, Karen Richardson, to talk about the topic How to drive innovation in a crisis.
Karen is someone I’ve known and admired for a long time. She built her early career at technology pioneer cc:Mail, Inc. and Lotus Development Corporation before taking on the VP of Worldwide Sales role at Collabra Software. I think it’s worth noting that when Collabra was acquired by Netscape in 1995 for over $100 million, it was Netscape’s very first acquisition.
So in other words, 25 years before Dropbox, Box, and Slack, Karen was leading worldwide sales for a company whose business focus at the time was to let corporations share and collaborate on documents.
And what I think is still fascinating about that deal is that – this is 25 years ago – Netscape was buying Collabra to fill a gap in Netscape’s strategy that would allow them to compete in the workplace collaboration market. So in other words, 25 years before Dropbox, Box, and Slack, Karen was leading worldwide sales for a company whose business focus at the time was “to let corporations share and collaborate on documents.”
Karen rose to become EVP of Sales at Netscape before she then became CEO of publicly-traded Epiphany, which was an early leader in the CRM space, that was acquired by Infor. And more recently, Karen, has been on the board of companies like British Telecom and WorldPay, which was acquired last year for $43 billion dollars in one of the largest FinTech M&A events in history. Karen definitely knows a little something about innovation. She’s seen it in up markets and down, and I’m very excited to talk with her today.
So without further ado, welcome, Karen.
Karen Richardson: Thank you.
Max Simkoff: I want to start with a question around innovation. When I looked up the definition of innovation online ahead of our conversation, the best definition I could find was as follows. It read that: “Innovation is the process of translating an idea or invention into a good or service that creates value or for which customers will pay. To be called an innovation, an idea must be replicable at an economical cost and must satisfy a specific need. During your 30-year career in the tech and software industry, you have clearly seen and helped several innovative ideas turn into revolutionary products. My question for you to kick us off here is: How did you know which of those ideas were worth turning into products and selling to customers versus those that were just no better than an interesting idea?
Karen Richardson: Yeah, so first of all, it’s a great question. I think if there was a simple answer to it, then you’d probably see that VCs would have a 90 percent hit ratio of success versus 10 percent. So it’s a good question because it’s a tricky one.
But I would start with a couple of things that I think are really, really important – and again, I’ve been seeing this for 30 years in technology companies – the first one is one I call: Make sure that what you’re doing isn’t just building a feature, but you really are building a product.
You’re not just building a set of features, because when you think about building a sustainable company, something that has long legs that will last and that will survive, it has to have enough there there, if you will – to keep customers coming back to you time and time again, year after year and decade after decade. So my expression is, I say, “Don’t build a feature, make sure you’re really building a product.”
I think if you don’t start with a bold vision for ultimately what you’re trying to create, you won’t create a company. You’ll create a product or a fraction of a product. And it may be interesting and it may be novel and you may get a few people to buy it, but you won’t end up with a company in a decade.
Now, what underpins doing that fundamentally, in my view, starts with companies having a bold vision for what they’re trying to do. I think if you don’t start with a bold vision for ultimately what you’re trying to create, you won’t create a company. You’ll create a product or a fraction of a product. And it may be interesting and it may be novel and you may get a few people to buy it, but you won’t end up with a company in a decade.
So, I think the vision is really, really important and it’s got to be a big vision, right? And if you look at the successful technology and service – not just technology companies – but service businesses, you know, they maybe start out doing X, but a decade and two and three later, look at all the things that they’re doing. You know, Amazon started as a bookseller, look at what it is now. And that’s because it had a bold vision of who it thought it could become.
Max Simkoff: Great. I am actually curious, just riffing on that for a second – because you’ve seen a lot of businesses make that transition – what would you say is the boldest vision that you’ve ever seen for a business? I’m just curious, in all the businesses that you’ve been a part of or have seen, is there one that stands out where you were just, from day one, blown away by how long term and strategic their vision was and how it shaped their development as a business?
Karen Richardson: Yeah, I mean, no question, and I just said their name. I would say Amazon is probably the example of the company that started out as X, selling books online, an eCommerce site, and then moved from books to other products. And I think if you go back 20 years ago, that’s what people thought Amazon was – and all it was ever going to be.
People would talk about Jeff’s vision of: “I want to have one of everything in a warehouse that you would ever want to buy to sell to you” – and people thought that was his bold vision. Well, guess what? He’s now – you know, look at AWS – he’s providing corporate and infrastructure software.
I would say Amazon is probably the example of the company that started out as X, selling books online, an eCommerce site, and then moved from books to other products. And I think if you go back 20 years ago, that’s what people thought Amazon was – and all it was ever going to be.
One of the largest consumer electronics companies is Amazon, between all their products with Kindle, etc. and so forth. And 10 other businesses: One of the largest transportation companies in the country, one of the – quite frankly, most people don’t know this – I think Amazon is one of the largest airlines actually now, in terms of their fleet of craft and pilots, etc.
So think about that for a minute, right? And 10 other businesses, maybe one hundred other business initiatives that you and I don’t even know about, but they might be in tomorrow. In my mind, that’s probably the boldest, not only because it’s so far afield from bookselling and eCommerce when you look at AWS, etc.
Max Simkoff: You were a part of another business that had a very bold vision, as I mentioned up front. You helped take Netscape’s pioneering browser to market, and in doing so, open the World Wide Web for business. When most people look at the adoption curve, especially for something that’s now as ubiquitous as a browser, they forget that there was probably a tiny number of trailblazers who led the early adopters and they pulled that entire curve forward, who are ultimately responsible for the outcome as a category leader. Those kinds of companies operate within the innovation curve. They tend to drive to consensus around product name and design… they constantly refine their product market fit. How did you identify and get those early adopters on board when you were at Netscape? And then more generally, what have you learned since then about how to avoid failure in making sure you get enough people early on to adopt something that’s truly innovative and really get some momentum behind it?
Karen Richardson: Yeah, so just to give a couple of anecdotes about the Netscape story. I mean, I think it’s always good to be very clear about when things are to some degree serendipitous or luck in timing and when things are really about brilliant execution. Because, you know, part of being successful in business has some of both, and it’s always good to nod a hat to where you were brilliant and where you just got lucky.
In the case of Netscape, Marc Andreessen did a brilliant thing, and that was that he put a human face, if you will, on top of this thing called the World Wide Web. This massive amount of information that was already out there. I mean, the World Wide Web existed. It’s just that you had to be a computer science nerd in a university or in government on the DARPA net to actually access it.
When he put that human face on top of the Internet, it very, very quickly went viral. I mean it was the first real viral thing I’ve ever seen in my lifetime – because people read about it and were able to see it, touch it, and feel it. It got written about and very quickly got adopted.
When he put that human face on top of the Internet, it very, very quickly went viral. I mean it was the first real viral thing I’ve ever seen in my lifetime – because people read about it and were able to see it, touch it, and feel it. It got written about and very quickly got adopted. So to be perfectly fair, I wouldn’t say that it was out of the brilliance of a bunch of Netscape salespeople that went around and got people to adopt it. It became known in the press and it was so inexpensive and quite frankly, so easy to use. It wasn’t like a software application, as you all know, you just go online and just click on things and type things in and magic stuff happens.
In those days, you could buy a Netscape browser for one of your employees for fifty dollars – and not fifty dollars every year paid to Netscape. Fifty dollars paid once… and then ten dollars a year in maintenance. So it wasn’t expensive in the grand scheme of software. So people adopted it very, very fast.
Now having said that, Netscape had a lot of other technology. They acquired Collabra, the company I worked for. We had the first ever technology that was called an application server, which allowed you to build a merchant mall and an eCommerce site. We had all this other stuff that no one even knew about or understood and that required us as a sales force, on the one hand, you were selling browsers, which was fine, collecting a lot of orders, quite frankly. But you had to be very, very creative about going to early adopters to get them to adopt all that other technology that we had, which was most of the product portfolio, right?
Even if everybody wants to be an early adopter, let’s just take our industry, our customers, mortgage lenders. I think if you went into any mortgage lender, they would not tell you that they want to be a laggard and have old technology and frustrate and annoy the customer and make it all manual. None of them would say that.
And that required a few things, which I think you need in every kind of company that’s trying to sell a new service or a new innovation, and that is you have to be ruthlessly focused. You have to be ruthlessly focused in prioritizing which customers to go after and why? Because not everybody can be an early adopter.
Even if everybody wants to be an early adopter, let’s just take our industry, our customers, mortgage lenders. I think if you went into any mortgage lender, they would not tell you that they want to be a laggard and have old technology and frustrate and annoy the customer and make it all manual. None of them would say that. They would all say: “Of course, we want to surprise and delight the customer.” “We’d like escrow to be easier.” “We’d like closing to be easier.”
But they might not be of a size or scale to act very swiftly or they might have other priorities that they’ve already committed to or COVID might be providing them extra challenges. You never know what might be the reasons. So it’s really, really important for sales forces – because you have limited resources – to make sure that you focus down on people where your value proposition resonates and they have a reason why you can make them differentiate from their competitors. If you can do that, you go laser-like focused after those prospects.
… no matter what business you’re in, you have to have unbelievable persistence. You can not give up. I mean, if you’re a person who gets offended easily, doesn’t like being told no, the phone slammed down or the door shut in your face, then don’t be an innovator. Don’t go to work in an early stage company because you have to have thick skin and you have to just persevere.
The second thing I would say, and this is true of every early stage company, no matter what business you’re in, you have to have unbelievable persistence. You can not give up. I mean, if you’re a person who gets offended easily, doesn’t like being told no, the phone slammed down or the door shut in your face, then don’t be an innovator. Don’t go to work in an early stage company because you have to have thick skin and you have to just persevere. And those who persevere – you never get it right the first time and you get a lot of nos before the one customer says “Yes!” – and so you got to just stick to it.
Max Simkoff: That’s great advice. We tell people here that no is where the sales cycle starts for us. And in fact, if you find that you’re communicating an innovative solution to customer prospects and everyone’s saying “Yes” you’re too late, right? That’s when you know you’re copycatting someone else because somebody else has already blazed a trail for you.
Karen Richardson: Max, I used to have this expression with all my salespeople which was: “’No’ doesn’t mean ‘no.’ ‘No,’ at least, means ‘maybe.’” So I never want to hear the customer say “No.” And all you have to do is take an example where you get thrown out of a deal and you demonstrate that you can go back in and win it after you’ve lost it – you know, the old thing called “winbacks.”
Max Simkoff: Yeah.
Karen Richardson: I used to promote winbacks. I used to work on winbacks myself so I could demonstrate to people that adage that no doesn’t mean no, it at least means maybe.
Max Simkoff: In fact, I’m glad you brought up the example of mortgage lenders who we spend a lot of time with. Those very reasons that you brought up, they want to obviously deliver better customer experience. They have a unique set of challenges – the reason for no that you get is very rational, right? Like, they have other priorities. It’s very difficult to embrace new technology. And you’re right, the persistence is so key in gradually getting them to “Yes!”
Continuing on this sales track for a second because, again, you have run and worked with legendary sales teams, and you’ve been a part of some groundbreaking sales and deals in your time (you and I were just talking about one right before we kicked off the webinar). It’s particularly relevant for our audience, because many of the mortgage lenders that we speak with are at their heart sales organizations.
They have large teams of loan officers who are themselves, pounding the pavement every day to bring in new deals for them. So I’m just curious, is there a deal that sticks out among all those that you worked on – because I know you worked on a lot of them – where you had to walk a fine line between selling the innovation, you know, the future bold vision of the company you were at – and the existing functionality of what you had that could be turned on right away. I know this is a struggle that a lot of innovative companies deal with. So, is there one deal that sticks out where you think back to “Well, that’s one we had to get really creative about selling the vision, but also being able to deliver the here and now.
Karen Richardson: Yeah, being grounded in some reality, too, right?
Yeah, absolutely. I mean, there’s one for sure. After Netscape, I went to another Kleiner Perkins company called Epiphany. I started out as VP Worldwide Sales and then moved into the role of CEO, it was in the marketing software space. That was our area. And at the time, you know, there were companies that were focused on Salesforce automation and there were companies focused on marketing automation. And that’s the area we intended to enter and disrupt.
We were, in our first couple of years getting our first customers, nice traction. And we had good customer names, I mean, we had Charles Schwab, Wells Fargo, Hewlett Packard, Procter and Gamble, etc. and we got an RFP one day from a little company called “Microsoft.” And they were looking for a new, what was called a campaign management tool. And there were existing vendors that had that product that had been around for a decade. And those people we knew were all bidding to get into this RFP.
So we came in, “The Little Engine That Could” with our little, small company of 100 employees, and we filled out the RFP. And of course, we got unceremoniously told “No, thank you.”
We, through a long story I won’t bore you with, managed to be able to resubmit the RFP again, and this time we were better at responding in the RFP, expounding on our full vision of the company. And that was my lesson I was talking about earlier: You have to have a big vision and you need not to be shy about communicating, ultimately, where you’re taking your company and your technology – and therefore the value that it’s going to deliver to the company.
So we had a pretty bold response, right? I mean, we disclosed all kinds of future ideas. Now, we took the risk that maybe our competitors would see all of this, etc., but we felt like, jeez, if we were going to play and maybe get back into this deal, you know, we had to do that. So we did. We got told no again. They decided to go ahead and pilot the large incumbent vendor that everybody knew about. And it was only a couple of months later that we got called back and they had fallen over flat on their faces during their pilot because their product didn’t scale. I mean, Microsoft’s volume of data was so much bigger than anybody else’s on planet Earth – there was nobody bigger than Microsoft at the time in terms of a corporate that had masses and masses of customer data all the way down to the consumer, and email IDs, etc. – so it was the biggest sequel database in the world, and their product failed.
And they called us up and they said, “You know, we’ll give you a shot, little Epiphany to come up here and do a pilot and show that you can scale.” And it was such a risky maneuver. Our chances of winning were so low that I basically told my head of sales. I said, “Listen, we’re planning an IPO nine months from now. I am not going to distract you or your sales force from this deal. I am going to work on this myself. I am going to fly to Seattle every week, whatever is required. And, we’re probably not going to get it. And then no one will be out a commission and no one can complain.”
I grabbed a really smart SE [sales executive] and the two of us worked on it for eight months and we won it. And one of the commercial things we negotiated in the deal was that they were required to do one reference call a week forever, and they agreed to that. We went public three months later with them on a flagship, and for the next eight years, they had to do a reference call a week, and you know reference calls to buy enterprise software could go on for two hours, and our sponsor ended up having to… I mean, it was amazing – I can’t even tell you the number of customers that we got.
… by definition, talking about future product plans are not firm contractual commitments. They’re your vision. You’re planning out a roadmap of how you are going to take your customer along in the journey of success – you shouldn’t be in an innovative startup technology or services company if you don’t feel comfortable doing that.
So I think the lessons there are: Don’t be shy about your bold vision. I mean, you can’t bold-face lie and make stuff up that’s got no grounding in reality. But by definition, talking about future product plans are not firm contractual commitments. They’re your vision. You’re planning out a roadmap of how you are going to take your customer along in the journey of success – you shouldn’t be in an innovative startup technology or services company if you don’t feel comfortable doing that. That’s number one.
And the number two lesson in it is: Don’t ever ask your teams to do things you’re not willing to do yourself. They’ll follow you if you’re willing and demonstrate leadership in that regard.
Max Simkoff: Absolutely. That’s a great example.
I’m going to do one more of my questions and then we will take Q&A.
So I guess this last question I have for you relates to, really, the title of the webinar, which is, you know, managing innovation in a crisis. And staying on the sales topic, which, again, quite relevant for our audience: What parallels do you think there are or not between selling in a crisis and selling a brand new product category or idea? So just selling a typical product in the current environment and having to compete with a very difficult set of circumstances, unable to get to your target buyer and communicate the aspects of the solution. Are there parallels between that and then, you know, just trying to resonate with this bold vision and innovative product, and then maybe even to come full circle, what advice would you give for selling an innovative product in a crisis which is kind of the most difficult of all worlds?
Karen Richardson: Yes, double whammy.
Yeah. I mean, there are some parallels. And I highlighted one of the things earlier in our discussion, which was persistence, right? So if you think about the fact that you have to have persistence when you’re selling any new innovative technology or service, you have to have it in spades when you’re doing it in a crisis. That’s point number one, because, you know, obviously in a crisis like we’re in right now – and I’ll just talk about COVID right now, but I’ve been through the financial crisis, the Internet boom and bust, and they all have very, very similar characteristics.
And what similar characteristics they have is that people get vapor-locked, and for very good reason. I mean, people in companies don’t know if they’re going to have a job later that day. They don’t know if their budgets are going to remain intact. They don’t know if their company’s going to be in business, you know, etc. and so forth. They don’t know if they can make payroll. So people have a whole lot of things that are kind of causing them to be stuck in quicksand.
So you have to try to put yourself in the shoes of the other person to try to understand what they’re going through so that you can, a) not be offensive, b) have meaningful conversations that help resonate with what they’re going through and punch through how your message can help them once they get through whatever their current urgent crisis is.
And no matter how good your value proposition is, it just may not be what’s on the top of their mind that day. They may have very, very personal concerns. So I think, number one, you know, the persistence times 10. The second thing I would say is a lot of understanding, because yeah, somebody might just have had to lay off some of their employees that day or maybe their budgets were cut in half or what have you. So you have to try to put yourself in the shoes of the other person to try to understand what they’re going through so that you can, a) not be offensive, b) have meaningful conversations that help resonate with what they’re going through and punch through how your message can help them once they get through whatever their current urgent crisis is. So I think that’s the second one. Good listening skills, good sort of understanding skills. And those are probably the two biggest things.
Max Simkoff: Great. OK. So I’m going to give you this question we got from the audience because we’re getting right to time – this has gone by super quickly, some really insightful thoughts here.
You have previously been identified as one of the 100 Most Influential Women in Technology. You are looked up to as a leader, not just in the realm of technology because of some of the leading companies that you’ve led or been on the board of, but also an example of C-suite diversity. And so the question here is: How do you think diversity of thought contributes to innovation?
Karen Richardson: So I think diversity of thought is one of the most important elements that contributes to innovation.. and it needs to be fostered, it needs to be developed, it needs to be encouraged and rewarded. And I believe this is true in building companies. It’s true when you’re building a home, when you’re creating anything.
You get diversity not just because you have different people of different genders, but you get that from people from different backgrounds. Quite frankly, you get it from people from different age groups who have different perspectives because they view the world a different way and you get the best outcome. And I think the best teams – and they’ve proved out that diverse boards, diverse management teams, and diverse companies and diverse teams end up achieving the best results. I mean, there have actually been studies showing shareholder returns of publicly traded companies with diverse boards of directors, for example, do better than those without. And there’s examples of this all over.
I personally have experienced this myself. I experience it when I watch teams operate. It is something that has to be fostered and encouraged because when you’re laser-like focused on a certain thing, you’re trying to manage a team towards a deadline, it’s really, really easy when somebody is like, “Hey, let me just explain my crazy idea. It’s really easy.” to go “No, no, no, no, no. Don’t have time.”
My husband loves to say – we’re building a house right now – and my husband, I always get this horrified look in my face when he starts the sentence with: “This might be a crazy idea…” but the reality is what I’ve learned is, you know what, even if it is a crazy idea and it’s aesthetically going to be horrible and I’m going to hate it and the decorator’s going to hate it, you know, I need to listen. And the reason I need to listen is there is probably a jewel in there somewhere. And even if there isn’t in that idea, it tips off a set of thinking about: “Oh, my gosh. Yeah. I didn’t think about how that operates and you’re right, we need to come up with a better solution in X, Y, Z, etc.” – and you end up with a much better product in the end.
I think diversity of thought is one of the most important elements that contributes to innovation.. and it needs to be fostered, it needs to be developed, it needs to be encouraged and rewarded. And I believe this is true in building companies. It’s true when you’re building a home, when you’re creating anything.
So I couldn’t believe more strongly that companies need to build diverse teams and I mean that in the broadest sense. And then I think managers, if you’re managing a team of five or 5,000, you need to foster diversity and encourage diverse thinking and brainstorming because I think that’s where brilliant, brilliant breakthroughs come from.
Max Simkoff: Awesome. Great, great advice. And I’m actually even kind of curious to – maybe we could talk offline – about whether there was at least a jewel of an idea about ideas for the house that you’re building and in some of the boneheaded things that your husband suggested.
This has been really great, Karen. The time just flew by and super valuable, as always I learn a ton from you, and super grateful to have a chance to work with you. So I wanted to thank you again for providing some insight today on innovation and really appreciate the time. So thanks so much.
Karen Richardson: Hey, listen, thank you. To all the folks from States Title who might be listening or potential customers and partners. Thank you! First of all, to the employees for all your hard work, and thank you to those listening in – we’d love to get to know you better.
Thank you for having me, Max.