# Growing Your Business With Data-Informed Decisions

> A NachoTuesday interview — the C-Suite Insights series from NachoNacho, the B2B SaaS and AI
> marketplace. In conversation with Steve McGarry, CEO, Kissmetrics.

- **Page:** https://nachonacho.com/nachotuesday/video/Growing-Your-Business-With-Data-Informed-Decisions
- **Guest:** Steve McGarry, CEO, Kissmetrics
- **Guest on LinkedIn:** https://www.linkedin.com/in/stvmcg/
- **Recorded:** 2023-10-10
- **Watch:** https://www.youtube.com/watch?v=0YluVfE10Q4

## Summary

In this NachoTuesday, Andy Karuza interviews Steve McGarry, CEO of Kissmetrics. In this interview, they covered how to use data to make good decisions, the data you should be tracking as a SaaS company, and growth hacks that any startup can use to power its revenue growth. If you want to make better decisions by leveraging data, this webinar is for you.

## Full transcript

Steve: Good afternoon, everyone, and welcome to another NachoTuesday. Today, I have Steve McGary from Kissmetrics here. Steve is the CEO and, I believe, the founder. Is that correct? Steve: I'm the CEO, and I became CEO earlier this year. Andy: Exciting! I’d love to learn more about Kissmetrics. For those who might not be familiar, which is probably few, could you share what Kissmetrics does? Steve: Certainly! Kissmetrics is a simple behavioral analytics platform designed to help non-technical people understand their users and customers better. It aims to increase customer engagement and drive more revenue and growth. Andy: That sounds great. How did you end up as the CEO of Kissmetrics? What was your journey? Steve: I sold my previous fintech company to Max Levchin’s company, Affirm, in 2015. At that time, Affirm was a consumer finance company that was not yet public. This experience taught me a lot about sales motions and selling to various enterprises. After my exit, I started a gaming-focused company that was centered around analytics. This experience eventually led me to take over as CEO of Kissmetrics this year. It’s been an exciting journey. Andy: What drew you to the gaming industry? Were you always a fan of games, or was it more about the data and analytics? Steve: I’ve always been passionate about data, but I was also intrigued by the creativity in gaming. When I realized that individuals could deploy assets into different virtual experiences, it changed my perspective on what a game could be. I loved the combination of data and creativity. Andy: For seasoned entrepreneurs and SaaS founders following us, what are some key data points they should focus on to achieve product-market fit and grow their companies? Steve: Strategic partnerships can be very effective, such as co-marketing and collaborating on content. For measuring product-market fit, net revenue retention (NRR) is crucial. You want to ensure that customers not only return but also increase their spend. A good NRR, typically above 100% and ideally around 110-120%, indicates strong product-market fit. In the current tech downturn, combating churn and contraction is essential. Relying on your best customers and focusing on their needs will be key. Andy: What are some red flags that startups might encounter, indicating potential issues with their product-market fit? Steve: If you have a sales team and are experiencing a low win rate or struggling to book demos, this could be a red flag. One effective tool is using a notetaker to record sales calls. Analyzing these calls can provide insights into how to improve your messaging and product. Listening to prospects' questions can help you reframe your product and better target your ideal customers. Andy: That’s a great point. Sales calls can reveal a lot about how potential customers perceive your product. Sometimes, their questions and reactions provide more insight than explicit feedback. Steve: Absolutely. It’s important to pay attention to these cues, as they can indicate whether your product features align with customer needs. Andy: What are your thoughts on product-led growth (PLG) as opposed to traditional sales demos for SaaS companies? Could focusing on product design and a freemium model be more effective? Steve: Yes, product-led growth is an excellent approach. By creating a sticky product and offering a freemium model, you can attract users and then upsell them as they see the value. This method often leads to organic growth and can be highly effective in driving engagement and revenue. Steve: Different companies take various approaches, and often, they try to implement strategies too soon. At Kissmetrics, we pride ourselves on providing a human-to-human onboarding experience. We ensure that our clients are tracking the right metrics from day one, tailored to their industry. We don’t just offer a fully self-served model because complex products often require more than just a self-serve approach. If a product is complex, like most valuable tools, having a human touch during onboarding can be crucial. Andy: That’s where demo calls become valuable, right? Steve: Exactly. Even a brief 15-20 minute call can make a big difference. It’s important to address any questions people have and to provide support. Although we’re automating many aspects of life, returning to basic human interaction can be vital. Automation is helpful, but in a world where everything is automated, a personal touch often stands out. Andy: So, where does data come from, and what sources are reliable for building business strategies? What tools and sources should startups leverage today? Steve: Outside of Kissmetrics, a valuable tool is Stripe. It’s an underutilized resource for startups, especially those in regions with limited access to capital. Stripe can facilitate quick access to financing through services like Pipe, which uses Stripe data to provide capital. This process is streamlined compared to traditional data-driven due diligence. Utilizing modern financial instruments like Stripe can significantly enhance a startup's value and operational efficiency. Andy: What are some strategies startups can use to create a data strategy that boosts their overall value? Steve: Staying up-to-date with modern tools is essential. If you’re using outdated systems, it’s crucial to invest in modernizing them. Updating your infrastructure, including bookkeeping and payment systems, can increase your company's value. For instance, platforms like Puzzle, which leverages AI to categorize transactions, can replace older systems like QuickBooks. Integrations are key, and aggregating data onto modern infrastructure will enhance your company’s value. If you can't provide timely access to data or information, the value of your company can diminish quickly. Andy: And using data effectively can also improve customer service, right? Steve: Absolutely. Providing better services to your customers is one of the main benefits of leveraging data. Steve: Knowing more about our customers can lead to better software recommendations. Each startup has its own niche approach to leveraging data to enhance the product experience, which is incredibly helpful. Data is often considered the "oil" of this generation, as it drives business operations. Without data, artificial intelligence, despite being a buzzword, wouldn’t be very effective. The value of a company is closely tied to its data and tools, and organizing it can be challenging given the multitude of tools available. Simplifying and securing your data management can significantly increase its value. Andy: Have you ever heard of a company called Clearbit? What are your thoughts on what they offer? Steve: Yes, I’m familiar with Clearbit. They provide email verification and extensive profile information on individuals. Their approach, along with platforms like ZoomInfo, which offer vast amounts of data, is quite impressive. These companies are highly valuable, but their valuation will depend on how well they incorporate AI into their offerings. For instance, if ZoomInfo integrates AI to automate tasks for sales development representatives, it could dramatically increase their value. However, ensuring proper use and security of this data is another critical aspect, which might be worth discussing with a cybersecurity expert. Andy: Can you give us examples of companies that excel in their data strategy? We’d love to hear about successful examples outside of Kissmetrics. Steve: One standout example is Stripe. They recently introduced a feature called Link, which aggregates user data across services. For instance, if you subscribe to Uber using Stripe, you can use this link concept to pay for other services seamlessly. Stripe has revolutionized small business operations with minimal code, demonstrating how effectively they use data to streamline payments. Andy: Do you have any examples of companies that might have missed the boat on their data strategy, perhaps falling behind because they were slow to adapt? Steve: There have been many cases of companies that faced challenges due to poor data strategies. For example, a recent company raised $50 million but went out of business in under two years. The problem often lies in capital inefficiency and mismanagement of data. The Web3 space, in particular, has seen a lot of volatility, with many companies struggling due to rapid changes and missteps in their data strategies. Andy: What data trends are you seeing? AI is a big one, with many trying to integrate their services with AI. Do you have any tips for how service providers can utilize AI for their offerings? Steve: AI can greatly enhance data utilization. For instance, if you use a support document repository, AI tools like ChatGPT can access and utilize this data effectively. For SaaS companies, focusing on tracking upgrades and downgrades is crucial. Identifying power users and engaging them with new features can be facilitated by AI, which helps in targeting the right users and maximizing their value. There’s exciting work being done to identify and prioritize high-value users, which can significantly benefit from AI enhancements. Andy: What tips would you offer for identifying super promoters or high-value product users to introduce new features and work more closely with? Steve: Using Kissmetrics or similar tools, you can track user engagement and identify key power users. By analyzing how users interact with your product, you can find those who are highly engaged and likely to be early adopters of new features. This approach helps in focusing efforts on users who can provide valuable feedback and drive further product improvements. Steve: There's a really cool tool called SparkToro that I think is worth mentioning. Created by Rand Fishkin, the founder of Moz, SparkToro helps analyze sentiment and social engagement. It allows you to see where your customers are and how they’re interacting on social media. It’s a great example of the innovative tools emerging to help businesses understand their audience better. Internally, it's important to monitor key metrics like Net Revenue Retention (NRR), as well as upgrades and downgrades. These metrics are crucial in tracking customer engagement and satisfaction. HubSpot, for instance, did an excellent job by focusing on customer delight and creating ambassadors who genuinely love their product. Andy: I was just at HubSpot Inbound, and it’s impressive how they've built such a large network and community by providing exceptional service and working closely with their customers. HubSpot’s partner initiatives also contribute significantly to their success. Steve: HubSpot is indeed a beacon in the SaaS world. Their approach has set a high standard for focusing on small businesses. Des Traynor, one of their key figures, is an outstanding keynote speaker and a humble leader. HubSpot’s model is a great example of how to serve SMBs effectively. Similarly, companies like Shopify have also excelled in supporting small businesses. Microsoft, as one of the pioneers in developing strong partnership networks, and Salesforce, which has done well with its own strategies, offer valuable lessons in building successful partnerships. Andy: Once you achieve product-market fit, what are your tips for scaling a business effectively, especially with the data at hand? Steve: A new concept called the burn multiple, coined by David Sacks, is a useful metric for scaling. It measures how efficiently a company spends its money. For example, a burn multiple of one means that for every dollar burned, you gain a dollar in net new Annual Recurring Revenue (ARR). In early stages, you might have a higher burn multiple due to rapid growth and team expansion. As you mature, reducing this multiple indicates improved efficiency. It's a simple yet powerful metric to track the efficiency of your scaling efforts, including team size and ad spend. Andy: What are some of your favorite books for entrepreneurs and executives looking to expand their knowledge and avoid common pitfalls? Steve: "Atomic Habits" by James Clear is a great read for developing effective habits. It emphasizes making habits obvious, attractive, easy, and satisfying. Another excellent book is "The Hard Thing About Hard Things" by Ben Horowitz, which offers deep insights into the struggles of entrepreneurship. For entrepreneurial parents, there's "Good Inside" by Dr. Becky Kennedy, which provides valuable guidance on parenting while managing a career. More books in this niche could be beneficial for many readers. Andy: What’s next for Kissmetrics? What should we look forward to in the coming years? Steve: We have some exciting developments on the horizon. A major partnership announcement is coming in November, and we’ll be rolling out numerous integrations over the next six months. We’ve received extensive feedback from customers and community members, and we're working diligently to implement these new features. Stay tuned for updates on LinkedIn and Twitter, as there will be some unique integrations and features launching at the beginning of 2024. Andy: It sounds like you’re staying true to your focus on customer needs and integrations. I’m excited to see what’s next and to work together. Anyone interested in Kissmetrics should check out their website or visit them in the Nacho Nacho B2B SaaS Marketplace. Steve, it’s been a pleasure talking with you, and I look forward to growing together and supporting each other's initiatives. Steve: Thanks so much for having me, Andy. It’s been great discussing these topics with you. I’m excited about the future and our collaboration.

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