Business Breakdowns
· Ben Hensman
So he talks a lot about the lack of speed and iteration and impact that they were having with that first startup. He talks about excessive overthinking, a tendency to strive for perfection in product development. And that has really flipped in Monday.com where they learn really, really quickly about what their customers need and build according to that need and get it into their hands quickly. Roy, in his time at Wix.com, learned many lessons. There were two practices that come up a lot from that time. The first was not offering free trials to customers very early on, which is sort of counterintuitive when you look across the software space products. They typically give customers a lot of flexibility in how they use the product, but that also allows them to not commit or churn really quickly after trying something and perhaps not seeing any immediate value. Wix and Monday thereafter really tried and incentivized themselves to show customer value and show that ROI really early on. And one of the tactics to do that was not offering free trials. The other thing that they did was, in driving willingness to pay and really testing that, was accompanying that with a bias to upfront billing of the customer and incentivizing that. And that showed when customers were really using the product for a core workflow, that meant that they were making that commitment upfront. It was also helping to build the company in a really cash-efficient way rather than rely solely on external capital. And so you see that today in Monday. You see the way that they have built out this organization. Speed and efficiency really matter. And the other thing that they've learned through that time is that transparency and trust are absolutely critical. If we start with speed and efficiency, new product ideas and launches are core to any software business. But what you often see is 20, 30, 50 developers getting thrown at new products in other businesses. If you look at Monday's CRM product, which was built on the core primitives of the platform, that was built with just a team of four engineers. That product now has over 27,000 customers and is growing accounts at over 100% year on year. So they really push developers to think about what can be achieved in short time periods rather than how long an entire product build might take and maximize feedback and improvement.
· Ben Hensman
That all came from those early days. And then on billing and efficiency, you can see the output of this across the venture capital years of Monday's journey and its IPO. They raised around $800 million in capital. And the vast majority of that was never burned. It's still sitting on the balance sheet. They now have about 1.4 billion cash with no debt on the balance sheet. And that second point was that transparency and trust are critical, not just with each other. Roy and Eran have always worked unbelievably well with each other and with their leadership team. But they have a certain leanness and efficiency to the way that they run their business. And you can only get there through trust and really empowering people. And for them, what that means is a really high-performance culture, but also high care where they're giving people the chance through transparency. And so this was even more radical before they went public, where everybody in the business could see what was going on. Every number was available. They would often share a lot of that publicly. And practically when you go into the offices of Monday, you can see this. Every team in the business has their own KPI screen. They know what metrics matter to them and they also see what metrics matter to other teams. And so they can always pass comment and get involved and help each other out. Everyone can own the success of the business. And we're seeing that transparency and trust really scale to an amazing level. With a team size of two and a half thousand people today versus hundreds in the very early days.
· Matt Reustle
[00:00:00] S0: Yeah. I have to say I'm embarrassed to note I did not appreciate that it came out of Wix. I noticed that the Wix founder is a very large shareholder and it would be obvious to connect the dots there on that point. Was that a major opportunity for cross-selling? Was there an ability, because Wix is obviously this outward-facing customer platform essentially, build a storefront out of a box with a website, which I think was very innovative in a lot of ways. I think it helped a lot of small and medium-sized businesses. Was Monday.com able to tap into, whether it was the customer base or anything with cross-selling in those very early days to get that start off the ground with customers?
· Ben Hensman
[00:00:00] S1: Yeah, in the very early days it was really a single use case, single product platform. And we met them very early on in 2015. The business was growing very fast. I mentioned that at the end of 2014 they had about $400,000 of ARR and that grew to six and a half million by the end of 2016. During that period, when they were a single use case, a single product company, the usage patterns were extraordinary, both in terms of depth of usage, but also retention. By 2017, they had three-year-old cohorts with 100% net retention. And while we see software companies today with 115, 120% net retention, 100% net retention at an early stage, when you don't necessarily have product market fit with every customer, you've got plenty of customers churning who don't have product market fit. To maintain that 100% over three years for your first annual cohort is extraordinary. And the reason for that is that the product was so incredibly flexible. So you had customers coming in and using it, and we can talk about some broader use cases. You had companies coming in and using it for a single project and that was starting to evolve into using it for multiple projects that would often need more teams. And so you'd move into expanding and pulling in data from other teams, pulling in approvals from other teams. Sometimes you'd be pulling in approvals from external companies. And so you saw this incredible pattern of usage across many, many use cases, but without separate products for each of those, it was very much a flexible and open platform. And so the way that Monday solved that problem early on is effectively a discovery problem for customers is that you need to know what you want to use it for. And so in solving that discovery problem, they turned to solution-based selling or product marketing. So in the early days, their use of YouTube and other areas of content aligned with their performance. Marketing really went to customers with solutions. Instead of "we are a task management platform," it was "we are a CRM" or "you can build workflows within your business in any way that you want," or a very specific problem that a customer could solve and that very quickly allowed customers to start using them for core workflows early on.
· Ben Hensman, Matt Reustle
And that pattern has continued all the way through, if you look at Monday today, built across its platform, with individual products on top of the platform, the usage statistics are really interesting, but they've actually been quite similar for a number of years. 60% of customers manage two or more core customer workflows. And what that really means is, things like CRM service, that could be IT service or external service, HR functions, recruiting functions, 12% of the customer base today use it for HR, 47% use it to manage their clients, 14% for finance management, and 21% are using it as a ticketing system. And so it's an incredibly broad system. And you saw that in the early days, but really on an open platform in a way that today is much more organized across different building blocks. [00:00:00] S0: Yeah, it's interesting to hear, as much as you can, talk about your flexibility as a platform. And I've heard the LEGO analogy, it's one that I like. You need to spell it out sometimes just to give the end customer a sense of what they can use it for. You've hinted on some of the use cases, maybe you can bring it to life with examples of how customers might have used them early on and how that's evolved? And anything you can spell out with a clear example I think is particularly helpful.
· Ben Hensman
[00:00:00] S1: Yeah, absolutely. The rough framework to think about is that often companies will start or an individual team or an individual person will start with a one-off project. So managing a specific need within a business and that will typically evolve into daily, ongoing core work that will often then evolve into different departments and then together those teams start to invest in core workflows and standardize across the organization. And some really interesting examples. If you look at Monday's customer base, they serve businesses across 200 different verticals. About 70% of the customer base is non-technical or blue collar in industries like manufacturing, other industrial categories, managing really interesting and difficult processes inside Monday. So one example at the technical end is Canva. They've been a very vocal proponent of the platform for some time. Their marketing operations team was the starting point for that account. This was a set of teams who were pushing requests into the marketing team from all over the business. They were doing that in very different ways, through email, through different tools, some task management tools as well. You had some people managing in Jira, some in Atlassian. You had one or two using Monday and then a lot of emails and communications flowing in. They standardized on Monday and they did that with the Monday WorkForms product to bring data from those teams in a standardized way into a core platform. Then they built a set of automations across all the activities that they need to conduct inside the pipeline and integrated those with all the other tools that they work with and then execute in. If you look at Monday more broadly, there's about 80,000 integrations that are active every single week. So they act as a bit of a hub and allow teams to really orchestrate their workflows. If you look at Canva's ROI, and this is the most important thing for a customer, is ultimately what changes they were able to make. They improved marketing production time by 40%. They were able to increase their creative output for the business by 3x. And this is before the era of generative AI, so it'll definitely be moving faster now and more effectively manage concurrent projects as they rapidly scale into a whole lot of new markets. McDonald's is another really good example.