290: Disrupting the Desk Phone and Taking on Google Voice, With Dialpad Founder Craig Walker

Nathan: The first question I ask everyone that comes on is, how’d you get your job?

Craig: Yeah, that is, it’s a long and winding road. And so career-wise, I started as a securities attorney working in Palo Alto representing VCs and startups and investment banks and public companies, and really loved the work and wanted to get to the other side of the table and ended up leaving to go join one of my clients who had a venture fund. And then once on the venture side, made a number of investments into telecom related stuff. And one of those investments was a voiceover IP company that then put me in the CEO. So it was kind of this from lawyer to investor to CEO, and then I ended up running that company for a while. We got acquired by Yahoo and then started another on with my right hand man from that company. So it really was kind of a convoluted path to get to get to this place.

Nathan: Yeah. Wow, interesting. So you are a lawyer by trade?

Craig: I am, although it’s been a long time. That was in the mid nineties, so geez, 20 plus years.

Nathan: Yeah. Interesting. And did you ever think you wanted to be a CEO or found companies?

Craig: Yeah, for sure. Once I was a lawyer and I met a bunch of CEOs and founders, you realise there wasn’t any real magic to it. It was just taking a risk or taking a chance and having a good idea and a good team to go with you. And so when that first CEO role came up and I was able to spend a couple of years as a CEO and then we got acquired, I had great relations with technical folks and with other people that they were excited to go start a new company with me. So I was able to really kind of take that experience and roll it forward into the next one and the next one and the next one.

Nathan: I see. So, let’s talk about, I guess Dialpad today. So you guys started in 2011.

Craig: Yeah, so we were at Google and we were running the Google voice product, which was a consumer product that used voice over IP to give you control of all your communications. And we decided in 2011 that every business would ultimately move to the cloud for their Email, for their CRM and all these other things. And once they did that, you could work from anywhere and from any device. And so we realised we wanted to build basically the Google voice of business phones that was going to let people have all the power of a business phone system, but from anywhere in the world on any device.

Nathan: Interesting. So, how did you end up at Google to start? Yeah, I’m just curious. You’re a product manager there?

Craig: Yeah, so Vincent Paquet and I, he was my co-founder at this company in grand central. So we were at Yahoo after Dialpad one got acquired. So the first company we invested in while I was CEO was Dialpad. We got acquired by Yahoo in 2005. And then Vincent and I, he was my right hand man, …left, Yahoo almost immediately and started a company called grand central. And then Google bought grand central and that became Google voice. And so we were at Google for three years running the Google voice product when we wanted to leave and go start this. And then the reason the name’s the same as we called the buddy at Yahoo who was still there and, yeah, he sold us the name back from the earlier acquisition.

Nathan: Yeah. Well, interesting. Yeah, because they changed the name to Google voice.

Craig: Or the Yahoo voice back then, yeah.

Nathan: Interesting. So I’m curious, how come you guys really wanted the name?

Craig: Oh my God. When you’re starting a company trying to get a name that ends where it has a .com and it has a name that’s somewhat related to your industry and it’s easy to spell and it just makes sense, that is one of the hardest things to find these days. So knowing that we had an option to go buy it back from Yahoo was, it was one of the biggest headaches on the naming side, you can imagine. So we were thrilled to get it back.

Nathan: Yeah. Wow, interesting. So I’m curious, like so Dialpad two, are you able to kind of share with our audience any kind of traction users, how far are you in the journey and, yeah, where’s the company at?

Craig: Yeah, so we started it in 2011. We’ve now raised four rounds of financing and so we’ve raised $120 million. We’re about 450 employees around the world, headquartered in San Francisco. Approaching 100 million in revenues, so growing really well and really focused on this massive market of these legacy business phone and desk phones that are all going move to the cloud over the next one to 10 years. And it’s just like, it’s one of the last massive markets that still is kind of predominantly on premise. So we’re really excited about having a real innovative product that’ll make that a nice transition.

Nathan: Yeah. Wow, interesting. And like a lot of the big startups are using Dialpad. Like Uber, WeWork, Netflix, Stripe, Domo. So you guys are mainly really strong B2B enterprise.

Craig: Yeah, it’s a B2B SaaS product. And for all those companies that you mentioned, they’re like ultra modern type companies with a mobile, modern workforce, relatively young age workers. And so those were like our first wave of great customers were those types. But the interesting thing is we’re seeing now more and more of like older legacy businesses in everything from city governments to schools, to lawyers, to everyone realising that they’ve got to move to the cloud for their communications because the world has changed. I mean people are on their cell phones, you’re working from anywhere at any time and not having the ability to do that from your business phone system is crazy. So we’re seeing a lot more of these legacy companies making that migration now. And that’s really kind of exciting because that’s where the biggest pieces of the market are.

Nathan: Yeah, I see. So if you’re running phone sales right now and you have an internal phone system and there’s like a physical box that monitors all of that and all of that side of things, international numbers, you guys take it all to the cloud?

Craig: Exactly. So like one of our bigger, earliest big customers was Motorola. And so Motorola, they had customers all around the, or employees all around the world, different phone systems all around the world, different phone numbers from all these different countries. So we were able to say, look, “Have everyone in the company just download Dialpad. We’ll port over all your existing phone numbers from all around the world. And then you’ll now just have one system for everyone on the planet who is a Motorola employee. And then it’s so much easier for you to manage and maintain and to troubleshoot and to work with us on. And it’s just a such a simpler way to do it than them having to support an on premise piece of hardware in 40 different countries.

Nathan: So you guys have no physical devices?

Craig: Not at the customer. We obviously have our switches in the cloud and we have infrastructure in the cloud, but there’s nothing you have for Dialpad in your office other than if you want to buy or have your user, your employee use a desk phone. Although most of them don’t just because how often are you sitting at your desk waiting to get on a phone call? Like it legitimately is primarily built around your mobile phone, primarily built around your laptop or your tablet. And if you want a desk phone, great, we’ll make that work as well. But the majority of our users are just using software.

Nathan: Yeah, I see, interesting. So nowadays, because I haven’t been in the IT world in a long time in my career, but when I was, yeah, everyone had desk phones. So if you want to start a sales team tomorrow, you don’t need to buy, like you would just literally buy the team. Like, let’s just say, you stopped to hire a sales team, build a sales team. You have three to four people. You’d use a service like Dialpad and you would just get like mobile phones or you wouldn’t even, you could use your cloud-based software, right?

Craig: Yeah, exactly. So you wouldn’t have to do all, you’re already probably providing them a laptop, right, because they need that. You’re already providing them the internet connectivity. So now all you need to do is just give them a little headset to plug into the laptop and they’re off and running. That is their killer sales phone number or phone system. And if they want to use their cell phones, you just download the Dialpad app, make all your calls through the Dialpad app, and that uses your own personal cell phone but it comes across to others that it’s your work number coming out.

Nathan: Got you. Okay, that’s awesome. So yeah, it doesn’t even… Okay, awesome. And can you monitor those calls and stuff like that?

Craig: Yeah, for sure. I mean, those are now your sales team’s calls. And so we have a product called Dialpad sell, which is exactly for that; for sales teams. And so the supervisor can coach on calls, can get an alert if calls are going poorly, can get a lot of notifications of… But we incorporated artificial intelligence into all of our calls. So if, let’s say there’s a call where the customer is getting very upset, it can give your supervisor an alert, “Hey, you may want to go get involved in this call. This has a very negative sentiment score.” And so all those types of things, regardless of how you’re talking, whether it’s through your desk phone, whether it’s through your laptop, whether it’s through your cell phone, they all go through the same Dialpad servers. And so you get all the full feature functionality regardless of how you’re on the call.

Nathan: Yeah. Wow, that’s awesome. You integrate with CRMs. So then, yeah, you’ve got, you can put all the customer’s details or call notes, et cetera because… Wow, this is awesome.

Craig: Yeah, it’s very cool.

Nathan: Yeah, so I see you a $20 a month for standard plan or per user or $30 a month per user for the pro plan or you have obviously enterprise for obviously bigger customers like Motorola. I’m curious with your price points, how did you come to those price points? Was it a journey? Has it changed over time? Because I think pricing’s an interesting thing, whether it’s a SaaS company, whether it’s a physical product, with richer service, people just send to look at competitors and say, “Bang, okay, I’ll just charge a bit less, or they just literally just thin air pricing.” Like just whatever, like just choose whatever feels right, I’m curious.

Craig: Yeah, it’s always a pretty spirited debate around pricing when you’re about to launch a product, right. But like we start from… Okay, let’s boil down what are all of our costs. Then we say, “Okay, what’s a healthy margin we want to maintain, and then we take that and we look at, okay, what are our competitors doing?” And then, layer on top of that, what do we give an addition that’s unique that you could potentially charge a premium for or market as this is included that others don’t have it and then you come up with a price. And the nice thing is our margins have been really strong. It’s still a very competitive price. And what I wanted to do on pricing, Telephany has always been this huge bait and switch of like people will advertise one price and then you get your bill and it’s like three times as much and there’s always these hidden fees and there’s always like, “But you didn’t count the number of minutes and all these other things.”

So what we wanted to do was price it in a pure SaaS model of just say, “Look, the price is $30 a month or $20 a month. And that includes unlimited usage.” So use it like crazy. We’re not going to count minutes. We’re not going to go. I mean like obviously international calls are the only outlier to that, but other than that, feel free to use it as much as you want and it just makes it a lot easier, a lot more predictable and just kind of like breaks this kind of tyranny of old school telephany of how they used to gouge you and charge you for every little thing.

Nathan: Yeah, I like that. So, talk to me around kind of anybody that’s listening that is in a B2B space. Clients; some of the clients that you have that… Those are long sales cycles. I’d love to delve a little deeper on sales processes. You guys, obviously, you said you’re approaching a hundred mil ARR. You guys obviously have a scalable system that is working. How much of insight can you give us? What do people need to be thinking about if they do have a B2B product and they’re looking to get some of these big whale clients like a Motorola. Like what insights, what experiences can you share with our audience to help them?

Craig: Yeah, sure thanks. So we sell… And I think this is one of the great things about modern B2B SaaS. If you design it well and you have good UI and it’s really clear, like you can sell the exact same product that you sell to a Motorola, you can sell that to one person who is coming in and just needs a phone line online like e-commerce type. So we have online sales, we have inside sales team for mid market and then we have outside sales team for enterprises. And I’d say the biggest enterprise is the probably, it’s attractive because the deals are so big and they grow and they renew and they do all these wonderful things. But as you pointed out, it’s really, really hard to sell them. Like they’re long sales cycles. Like some of these are six months, some of these are 24 months.

So there’s a lot of investment into going into those deals. So for us, we always like to really balance approach. Like your online sales are super predictable. Your mid market sales is more predictable and your enterprise sales is less predictable because it’s really lumpy on timing. So I’d say anyone who wants to go into it, go into it with eyes wide. That it takes a while probably a little longer than you anticipate ahead of time. And it’s a complicated sale because, like the decisions made by a number of different layers in the organisation and it’s not just getting the user to like it, but then finding who owns the budget, who influences the process, who your champions are at each level. I mean, it’s a relatively complicated sales process. And that’s not just for us, that’s for anyone trying to sell into a big enterprise.

Nathan: Yeah. So I’m curious if you were starting again tomorrow with a B2B SaaS company. Obviously, you’d have the online component, but would you start mid-market first? Targeting mid-market because that, you think that’s a less of a long lead time?

Craig: Yeah, I would. I think that’s what you see traditionally in a lot of these things. Like take Slack for example or Okta or any of these types of B2B SaaS companies. They start as SMB to mid market. They do really well there. They add some more enterprise features, they get better known. They’re more like, they’re more established brands and then it’s safer for an enterprise to deploy them. And by that time, they’ve had a lot of iterations of increasing their security or their GDPR compliance or their PCI compliance and all these things that are a little more enterprisey than mid market. And it just takes time and complexity to get there. So I think it’s hard. One of the challenges is if you say, “Hey, I’m going to start this company from scratch and we’re going to come out of the gate and go enterprise day one.” It takes a while to get enterprise ready on a product side. It takes a while to get even enterprise acceptable from a buyer side. So it’s generally a wiser path to start kind of SMB, mid market and then move up.

Nathan: Yeah, that makes sense. So how should people be building a list of prospects?

Craig: Good question. No, the way we did it is we realise, look, every, just the benefits of having like a mobile first solution in the mobile modern age was pretty obvious. So when we said, “Okay, how are we going to figure out who are the most modern thinking companies and CIOs?” And we decided, okay, well the most modern thinking companies and CIOS are probably already using modern cloud based systems. So there’s different tools you can use or can buy, where you can see the tech stack of the companies and you can create basically a profile of, “Okay, this guy’s using Salesforce, Zendesk, G suite and one other cloud product.”

And okay, well that’s a pretty forward thinking CIO. Those are all cloud products. That’s going to be a person who’s receptive to our message of moving your voice to the cloud. But if I looked at that same kind of techno graphic information and it said, well, he’s running on premise exchange, he is running on premise PBX, he’s running on premise CRM, on premise file systems. That’s not anyone who’s going to be receptive to moving their phone system to the cloud. So we just wouldn’t target those folks. So really kind of using the tools that you have to try to find a buyer persona that makes sense and then really go execute against that.

Nathan: Yeah. Okay, I see. So, yeah, like there’s a tool called Built and you can pay to find out what, like SaaS products that particular company is using. You scan the website. It’s a really good tool built with. And then you said you’d look at Cis. Would you want to contact the CIO or would you want to contact? Like who would you want to be contacted? Like the IT, systems admin or.

Craig: Yeah, ultimately you want to get up to the CIO, but building champions below the CIO is great. So the folks who are going to be actually responsible for managing the day to day of the product are a great one to start with because we feel we have really differentiated product. It’s super easy to deploy as really unique features that will make their employees more productive. And so by building those champions at the lower levels and then as you work up toward the CIO, having that kind of credibility from within is really important. But generally, at least in the telephany space, the IT spend is controlled by the CIO.

Nathan: Got you. So when it comes to kind of building that prospect’s list, would you guys outreach cold via email or phone or, yeah.

Craig: Yeah. I mean like all avenues to get there, right. So like hopefully we do a good job with our demand gen marketing that’ll drive people to us and they’ll, if they’re interested, they’ll fill out a form and ask to be contacted or they’ll chat with our sales people on the website or they’ll see our number on the website and give us a call. Like those are the vast, because they’re inbound and they’re already interested. I’m a cold outbound. Yeah, you can do things. You can buy lead lists of people who are theoretically in the market for four years solution. You can have events. You can work with partners who know, like if you work with partners who advise companies in their telecom buying, they can let you know who’s in the market for deals because there’s a lot of ways to try to figure out who you want to spend your outbounding time on, so you’re not just legitimately cold calling. You want to have some sort of warm connection or reason why you think it’s going to be recepted.

Nathan: Yeah, no, that makes sense. So I’m curious, when you guys first started, how did you get your first batch of customers?

Craig: Yeah, so we started with our product being available online and we got a bunch of PR, we won TechCrunch disrupt. And so you started getting people coming to you and people, bloggers writing about you, and then you can start getting a little word of mouth, a little momentum. And then we hired our first sales person and then he called on his first customers and then we got our first purchase order and someone like was literally willing to pay us $5,000 a month and we couldn’t believe how amazing that was. And so then since then it’s just a snowball effect. Right, and then your marketing, you spend a little more in marketing, hire a second sales guy and you just like slowly build that momentum.

Nathan: Yeah, no, it makes sense. It’s yeah, it’s a really good product. You’d have very, very strong lock in, and yeah, customers would be very sticky because why would you go anywhere else? So I assumed churn would be quite low as well.

Craig: Yeah, that’s one of the nice things about me like on the innovative side, it’s like if you keep making it better, and this is what I love about SaaS, right? Like you sign up, but the service chest keeps getting better. We keep adding features, we keep debugging, we keep improving. If we’re doing our job, once you’re in, I don’t see another B2B SaaS startup phone company that’s coming after us. Like it’s just too hard to do and it requires just a little like to do worldwide Telephany at the scale to support an enterprise in 50 countries and you got to have a real deep knowledge set of how to do that and it takes deep pockets to even get started. So the nice thing is I don’t see any other competitors kind of on the horizon, like coming out of the startup world. So now you’re just competing against the legacy guys that you know you’re ahead of and you can now innovate because you’re more modern. So yeah, hopefully churn is always really low in that situation.

Nathan: Yeah. So you guys are building a moat?

Craig: Indeed. That’s what we tell our investors.

Nathan: Love it. So let’s switch gears and talk about like the hard times. You guys on the journey to, I guess unicorn status. Talk to me around kind of, yeah, like what have been the challenges with this business?

Craig: Yeah. I mean there’s, they’re on the road to success. Like there’s plenty of roadblocks and challenges on a daily basis. So, and I think every startup goes through those. So challenges, I’d say, there’s always challenges of one, when we left Google in 2011, the question was, “Would a CIO of a fortune 500 company ever trust the cloud for their mission, critical voice communications?” Like that was a pretty big gamble that they would, but our bet was, ‘Hey, networks are going to improve perpetually. And if the networks continue to improve, your quality will continue to improve. And the benefits of mobility and all the other stuff that comes with the modern system far outweigh the rest. So we figured that was a big bet. Number two, then, raising money, getting traction, getting early customers, building out a proper organisation, continuing to be innovative but also serve the customers that you have.

I mean, went to really double down and pour gas on the fire. When to really spend a tonne of money on ramping up your sales, how much to go at enterprise versus mid-market versus online. How much discounts to give partners and people who are bringing you deals. Again, it’s a never ending list of questions and challenges and sometimes you make a decision, it turns out to be wrong and you just got to be able to correct it really quickly and get back on track. And I think that’s one of the beauties of a startup is if you do realise you missed something or you moved too quickly one way or you move too slowly one way, you can pretty quickly adjust as long as you stay nimble.

And so I think that’s one of the beauties of that I love about being at a startup. Like I can literally sit down with my co-founders and leaders and say, “Hey, what do you think about this.” We all agree on it. And then we leave that meeting and that’s a new priority. So that nimbleness is the thing that gets you through these hard times. And so you just gotta be, have a growth mindset and read the tea leaves and see what’s happening in the world and what the competitive landscapes like and what you’re doing and continue to adjust because no one has a set it and forget it strategy. You’re always adjusting.

Nathan: Yeah. That’s an interesting one that you mentioned around decisions. I was thinking about that the other day; that like what got you to this point where you are right now Craig, is probably making decisions where you’re right, I’d say 70, 80% of the time. Would you say that’s a fair assumption?

Craig: Yeah, I think that’s fair. You have such limited information and you’re going off common sense, but you don’t always have all the information. You just got to trust your gut. I think there’s this great quote I have by Teddy Roosevelt. We have it hanging in the office and it’s like in any moment of decision, the best answer is the right answer. The second best answer is the wrong answer, and the worst answer is no answer. And so yeah, like there’ve been many a times I’ve been wrong, but you just need to adjust and move on because you’re never going to always be right. And if you wait until everything is so clear that you’re always right, you’re going to be moving away too slow.

Nathan: Yeah, I agree. So tell me like if we can say, on average, you’re right, you have been right thus far in your entrepreneurial career, 70, 80% of the time. How do you make decisions? Like do you just follow your gut? Do you always speak to advisors? Do you, like do you speak to your partner. Like how does that work? Like what are you doing to make decisions and making them fast and being right most of the time?

Craig: Yeah, I mean, first things first, you try to get as smart on the topic as you can and get as much information as you can. But then the question comes down to your gut, and I have like my co-founder, like Vincent Paquet. He and I go back to working together since 2001, so I can literally ping him at any time and ask him a question and give him what I’m thinking. And he’s French, so he loves to argue and so I find him to be a really good sounding board on a lot of stuff. And then my other co-founders, the tech leads who came over from Google voice, like all bounce ideas off them, even if it’s not technical, they have really good product sense and market sense. So, but at the end of the day, like it’s ultimately my decision. So if there’s something that just doesn’t feel right to me or a decision that I think I have to make, even if everyone else disagrees, I’ll still do it.

Nathan: Yup. And that’s because you’re following your gut?

Craig: And that’s because I’m following my gut. And your gut’s usually right. I hate to say it. It generally is. Things that just don’t add up or just don’t make sense, or like if you, every time you come up and you ask someone about it and you’ve got to kind of squint your eyes to kind of like make it make sense, that’s your gut telling you that there’s the wrong decision. And so like, and there’s many different points of view and we have almost 500 people. Like some people come and say, “We got to invest more and more here and we got to do less here.” And then another really smart person will come and give you the exact opposite advice. And so at the end of the day, you’ve got to make those decisions. You’ve got to be the tiebreaker and you got to be decisive.

Nathan: Yeah. And I guess you’ve got to, as the CEO, you’ve got the biggest overarching view of everything that’s happening around the call company.

Craig: Yeah, exactly. Like you see it all and then you also get the kind of like the interaction with the board from above, right. So you just get a lot more inputs than anyone else does.

Nathan: Yeah, true. At the position you are now, 500 people plus, I’m curious around customer interaction. Do you actively make sure that you are still speaking to customers, understanding their ping points and where they are? Are you more of a product in market or a product guy or a marketing guy or more of a finance operations guy? Yeah.

Craig: Yeah, I’m much more of a product guy and so talking to customers is hugely important for me. In fact, I was just talking to our head of customer success yesterday and then just let her know that, “Hey, if we have any customer turn over any, over this size, I want to personally have a conversation with them.” Not necessarily to be there of like, “Hey, it’s the CEO, I want to win you back but I want to learn what weren’t you happy about and just make sure we’re addressing it on our roadmap and everything going forward.” So I think it’s super important to base, take close to customers and then on, before there are customers, I think there’s no better salesperson than a co-founder to really kind of get in and talk about the vision and why we think will be best for their business.

So, yeah, I’m really… And then we set up a customer advisory board where we get our representatives from our top 20 customers together every six months; East Coast one time, West coast, the next, and really do a deep dive for two, three days with them of what would they like to see, what could be better, what do they love? Well, how does that impact to them and all those types of things. Like you really can’t gap unless you really dig in and spend time with customers.

Nathan: Yeah, that’s super smart. We’ve been talking about building a customer advisory board for what we do. Not on the media side, but on our product side. I’m curious about that. So you fly them down?

Craig: Yeah. So we flew … We got one coming up in New York in two weeks, but the last one we did was in San Francisco about six months ago and we flew them all out, put them up, had kind of two day session, dinners, events, but mostly working sessions throughout.

Nathan: Yeah, wow. And basically you guys come away with, and you’ve got a good clear road map for the next 12 months, six months, I think. Yeah.

Craig: Yeah. I mean like it’s good. It’s good to say, “Hey guys, here’s our product roadmap. What do you think of it?” And then secondly, are there any things not on it that would make your lives a lot easier? And then, in a weird selfish way, just through that you generally discover, uncover a whole lot of growth and expansion opportunities in this business because they’re like, “I didn’t realise you now had a call centre product.” Yeah, we have 2000 call centre agents and if you can do this, this and this, we’d love to move those over. So it’s a real win-win to have those types of events.

Nathan: Yeah, really smart. Is it only enterprise you bring down or you do bring down some of your mid market and SMB?

Craig: It’s primarily enterprise, but there are some mid-market like the bigger side of the mid market and then SMB, probably not.

Nathan: Yup. Okay. All right. That makes sense. All right, awesome. Well look, Craig, this has been awesome chatting with you. Learnt a tonne personally and I’m sure our audience will have… The last question I have for you is, basically what parting words of wisdom would you like to share with our audience? Please keep in mind, majority of our audience is somebody that want to start a business, don’t know where to start or they have just recently launched something or they have been working on it for a while and … product market fit.

Craig: Yeah, I’d say, I mean like more than anything, the founder startup role is a pretty lonely and stressful job and the decisions all come down to you. And because of that, I do think you’ve got to trust your gut. Like you’re the one who’s going to live with the outcome. Don’t let people talk you into things that don’t make sense to you and just kind of like stare like this. Stick to the North Star of whatever your ideal was and see it through. And I think that’s probably your best chance of success.

Nathan: Thanks so much for your time, mate. Where’s the best place people can find out more about yourself and Dialpad?

Craig: Cwalker123 on Twitter and then Dialpad is just dialpad.com.

Nathan: Awesome. Well look, thanks so much for your time, mate.

Craig: Yeah, Nathan, really enjoyed it and have a good one bud.