Ara Mahdessian and Vahe Kuzoyan are the cofounders of ServiceTitan which is a service management software that helps leading home services businesses generate more leads and close more sales. The company has raised over $370 million at a $1.6 billion valuation from investors like Bessemer Venture Partners, Index Ventures, ICONIQ Capital, Battery Ventures, I2BF Global Ventures, and Dragoneer Investment Group.
In this episode you will learn:
- What to look for in investors
- The Muhammad Ali quote that all successful entrepreneurs live by
- How to grow as a leader so your business doesn’t outgrow you
- What it takes to build a hyper-growth startup culture
- The highest yielding activity for startup founders
About Ara Mahdessian:
About Ara Mahdessian:
ServiceTitan co-founder and CEO Ara Mahdessian is a proud graduate of Stanford University and holds degrees in both Management Science and Engineering. Ara Mahdessian has used his background in engineering, sales, and domain expertise to help ServiceTitan to become the leading software provider for home service professionals.
As sons of residential contractors, Ara Mahdessian and ServiceTitan co-founder and president Vahe Kuzoyan started ServiceTitan to help their fathers manage their growing home service businesses—as well as empower thousands of other trades professionals to do the same.
Ara Mahdessian also believes in giving back to the community and does philanthropic work with Children’s Hospital Los Angeles. He lives in what he calls “the Center of the Universe,” Glendale, California, with his beautiful wife, Katherine, and their three wonderful little boys. If he had it his way, you would find him on the slopes skiing no matter the time of year. He also enjoys basketball and soccer, as well as spending time with family and good friends.
About Vahe Kuzoyan:
ServiceTitan co-founder and president Vahe Kuzoyan is responsible for defining the company’s overall product strategy, overseeing the development and launch of new products, and perfecting the platform’s user experience and analytics.
Vahe Kuzoyan is the principal domain expert and product visionary behind ServiceTitan’s innovations. Vahe dreamed up ServiceTitan as a “thank you” to his father, a veteran plumber who grew frustrated by the lack of technology in the industry. Vahe Kuzoyan and ServiceTitan co-founder and CEO Ara Mahdessian chose to forgo prestigious job opportunities with other tech giants to create their own game-changing product in ServiceTitan.
Vahe Kuzoyan earned his Bachelor of Science in computer science, neuroscience, and business administration from the University of Southern California. Aside from work, Vahe Kuzoyan enjoys traveling, skiing and spending time with his family.
Vahe Kuzoyan hones his business and tech knowledge by reading about industry pioneers he admires such as Steve Jobs, Jeff Bezos, Sergey Brinn and Larry Page.
Vahe Kuzoyan believes in giving back to the community and does philanthropic work with Children’s Hospital Los Angeles and underprivileged students in Armenia.
Vahe Kuzoyan lives in Glendale, California, with his wife Ruzan and their three amazing children.
Connect with Ara Mahdessian:
Connect with Vahe Kuzoyan:
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FULL TRANSCRIPTION OF THE INTERVIEW:
Alejandro: Alrighty. Hello everyone and welcome to the DealMakers show. Today we’re going to be talking about Home Services Market. We’re going to be talking with two co-founders that have built something super, super meaningful, and something really solid. A very interesting company that is disrupting what is a 400-billion-dollar space, and I think that they have really interesting backgrounds, and they’re really going to teach us a thing or two about how to build and scale a business. So without further ado, I’d like to welcome Vahe Kuzoyan and Ara Mahdessian, the co-founders of ServiceTitan. Welcome to the show today.
Vahe Kuzoyan: Hello.
Ara Mahdessian: Thank you for having us, Alejandro.
Alejandro: Amazing. Let’s start with the backgrounds here. I know that, for example, you were born in Tiran where there were bombs all over the place. Can you tell us how was life there, and then also being born, growing up there, and then moving to the U.S.? How was that process for you like?
Ara Mahdessian: Of course. So like Vahe, I’m Armenian, but I grew up in Tiran. I was born there. I was born in the middle of the Iran-Iraq, so as my mom was giving birth in the hospital, the city of Tiran was being bombed, and they’d have to constantly rush us down to the bunkers and then bring us back up. Finally, I came out of the womb, and shortly after I was born, several months later, we left and immigrated to the United States. We ultimately settled in Los Angeles.
Alejandro: Wow. What about for you, Vahe?
Vahe Kuzoyan: My birth was a lot less dramatic, but it was in the Soviet Union era of Armenia. I was six years old when my family decided that there was a change that needed to be made. Like many other immigrants pursued a path to America where the belief was that there would be a better opportunity for the kids. So, that’s what we did, and we ended up settling in LA, and that’s where I grew up.
Alejandro: And why LA for the both of you? Was there a big community there of Armenian people, Ara?
Ara Mahdessian: You know, it’s interesting. I think early on, probably one Armenian family settled here in Glendale, and then many others followed suit, and we were one of the followers as well. Now, there’s a pretty large emerging community of Armenians here in Glendale.
Vahe Kuzoyan: Got it. Super, super interesting. Was it like, for the families, a big culture shock, Vahe, moving there, and then experiencing the U.S.?
Vahe Kuzoyan: Yeah, absolutely. Pretty much, everything was different starting from the system. They were coming from a communist/soviet system to now it’s the free market. And then, of course, all of the other things in terms of language, in terms of culture. So it was a pretty dramatic shift from what they were used to, and that journey, as many people go through it, was not always all rainbows and sunshine. There was a lot of culture shock in that process.
Alejandro: So Ara, how did you develop the love for computers?
Ara Mahdessian: When I was really young, five or six years old, when my dad would come home from work late at night, once every couple of weeks would actually stop by a Barnes & Noble and randomly pick out a book to bring home to me for my own development. He didn’t know English very well, so many times he didn’t know what book he was picking out. On one of these occasions, he brought home a book that I think he completely, randomly picked out of a bookshelf. I looked at the cover, and it said, Learn Visual Basic in 21 Days. I had no idea what Visual Basic was. It happened to be a programming language. I had no idea what programming was, but I opened it up to page one, and I realized it was teaching me how to build computer programs. So then, at the time, I went and downloaded Visual Basic. I started step-by-step with the book, and a couple of weeks later, I was coding and building software. I got fascinated by this, and this continued throughout my childhood and into my high school years. In my high school years, I would spend a lot of time after school building small software applications for various local businesses or friends of the family that needed something in their business. So I got exposed to this idea of B2B software way back when.
Alejandro: And really cool that you got into Stanford. I’m sure that your parents were super proud of you.
Ara Mahdessian: Well, back then it almost seems like they’d let anybody in, and they also let me in. I got the luck of the draw there. As you can imagine, for any immigrant family, education is the most important thing in the world. Stanford is one of those dream schools for my parents, and I’m very grateful to have gotten that experience.
Alejandro: And, Vahe, also has a very interesting background. I understand that you had a little bit of the business in you, but then also neuroscience. So where did the love for neuroscience or the interest into neuroscience – first and foremost, what is neuroscience so that people listening get it?
Vahe Kuzoyan: Neuroscience is the study of the brain. I know it may seem like on the surface, these are two completely different topics, but once I got a little taste of looking at how the functionality of the brain was basically doing computations just in a different way than computers were, that’s where the connection happened. Because at the end of the day, both a computer and a brain have some sort of input and have some sort of output. They just tend to approach it from vastly different perspectives. When I was deciding what to study, not only there was this cool functional connection, I just wanted the fanciest-sounding degrees I could possibly get my hands on, and computer science and neuroscience sounded pretty fancy, so that’s what I went with.
Alejandro: And very, very fancy. And why business in there? Did you know at one point that you were going to start your own thing, or what was the deal for you?
Vahe Kuzoyan: Yeah. Since early on, I was pretty ambitious in terms of what I wanted to accomplish. I figured that having some basic level of business understanding would be helpful. I actually started off majoring in business and was close to graduating when I realized that I didn’t feel like I had any sort of tangible skills that I could go to market with. So I ended up dropping the major and just left with a minor instead and refocused to the other degrees.
Alejandro: Got it. Obviously, you guys had seen as well from your parents the process of building your own business. I understand as well that both of your parents – what a coincidence. They were both plumbers. Is that right, Ara?
Ara Mahdessian: Yes. Both of our parents were home services contractors. Yep.
Alejandro: Got it. So did you, for example, in your case Ara, did you see that day-to-day of building and scaling the business the ups and downs? What was that experience for you living that from the outside? I mean, you were not really operating?
Ara Mahdessian: Absolutely. When our parents came here, they came here with no knowledge of the language, no particular job in mind, and definitely no money. So they had to do all kinds of odd jobs – whatever was available to them to put food on the table. By doing all these odd jobs, ultimately what they settled on doing was plumbing and other home services-related work. This became their profession. So growing up, Vahe and I saw all the trials and tribulations our parents had to face in trying to operate and slowly grow these very small home services businesses. You can imagine just what kind of fires they were constantly dealing with. I still remember. My dad used to come home really, really late at night. Almost a broken, tired, dusty, and all he would look forward to was the hot shower, a hot meal, and then it was the typical shoebox-full of receipts and invoices that he would have to process at home instead of being able to spend time with us. Or it was figuring out timesheets and payroll to make sure his team was able to get paid. All these things were not only extra work and made him more tired, but ultimately took away precious time that he could devote to us. He was really seeing these challenges that inspired us to ultimately want to do something for him. I think you hear the typical saying of founders created something to solve the problem they had. I think in our case, we created something to solve the problem our parents had.
Alejandro: Yeah, and this is interesting that you mention this because one of the founders that I recently interviewed it was the same thing. It was frustration that he was experiencing directly from a business that the father was running, and eventually, he went on, and he did it. So really, really cool. You guys, here you are, one is in Stanford. The other one is in USC, and you both decide to join this Armenian Association, and then one-day things come together. So, Vahe, why don’t you tell us that day where you guys finally got to meet each other.
Vahe Kuzoyan: Sure. We were both members of our respective Armenian Student Association Group at our school, and it just so happened that USC and Stanford had joined forces to organize a ski trip to a local mountain here, Big Bear, next to LA. We just happened to literally pull up next to each other when we were going in, and it’s very possible that we never would have met had it not been for that coincidence of pulling up because there were like 100 people on that trip. So we just bumped into each other, and we got to talking. It turned out that we were both studying computer science, and we were both trying to solve very similar problems for our dads. It was just like a very random set of coincidences. After that trip, we kept in touch, and we met a couple of times. It turned out that we were both going in the same direction, and we decided to join forces and haven’t looked back since.
Alejandro: Were there brainstorming sessions that you guys had, or just for the people that are listening to get a better understanding of how was that process from the day that you guys met to the day that you guys finally said, “Oh, wow. This is interesting. What about this? What about that?” Then, all of a sudden, everything clicks, and it makes sense to go at it together. So, Ara, why don’t you tell us and walk us through the process of that journey.
Ara Mahdessian: Yeah. I think ServiceTitan was almost born accidentally. I think both Vahe and I had these ambitions to work for some of the bigger tech companies, but it was during some of this downtime to help our parents where this bigger opportunity came to us. Originally, we just decided, “You know what? Let’s spend just the summer building something to help our parents better run their businesses.” Because by virtue of being exposed to Silicon Valley and tech, we had seen that for every industry in this world, from software companies to big pharma companies to consulting companies to whatever else, every industry had great software so that you could run a much more efficient business, you could sell a whole lot better, you could market a whole lot better, you could manage your financials. When we looked that the challenges our parents were facing, we almost thought it was crazy how backward things were. We had gone off to school for four years and came back, and we saw our parents’ businesses were practically frozen in time, and we thought, “There’s got to be a better way.” So we decided that we were going to dedicate that summer to building software similar to what we had seen to other industries to help our parents. I think what we saw after we built it and gave it to them was how remarkable transformation was, how much better their customer service became, their sales became, their marketing became, how much more efficient they became in the back office, revenue started going up, costs started going down, and through word-of-mouth, other people locally in LA found out about the software we had built for plumbing and related companies. Others reached out to us to get the software. Once some small critical mass of people started using the software, we realized, “Yeah, these guys depend on our software to run their entire business, and their entire business happens to be their entire livelihood as well as the livelihood of whatever dozens of employees they had. So we realized, this is no longer something we can abandon. We can no longer go and work at big tech companies. This pretty much has to turn into our venture, and then we started growing from there.
Alejandro: So to that point, Ara, just to follow-up on that, how many people were there, or was there already a specific amount of revenue or sales that gave you guys the idea of maybe this seems to make sense to really explore fulltime rather than having this as a project? What was that trigger for you guys, Ara, to really say, “Let’s go at this fulltime?”
Ara Mahdessian: What I remember is, it was still just the two of us, and we had roughly I think at the time like ten companies, which isn’t an awfully lot. But you think about these people. They’re such hardworking, salt-of-the-earth people. This is not a very glamorous industry, but these people are first-responders that leave their families to come and serve yours when there’s something wrong in your house. For example, a burst pipe and air conditioning that shuts down in the middle of the summer, and you need someone to rescue you and your kids from those challenges. There’s a certain nobility to what they do. When you get the opportunity and the privilege to work with customers like that, it’s captivating. It grabs you immediately, and you don’t want to do anything else. Even at that small scale, we realized not only could we not abandon them, but this is incredibly rewarding work, and we really want to continue doing this.
Alejandro: And the co-founder relationship is definitely one of the biggest decisions that one makes in business. It’s actually one of the biggest reasons why companies fail. I think that over 60% of companies fail because of co-founder issues with egos or whatever. I know that you guys it has worked pretty well. So I want to know, and perhaps also the listeners would love to know, obviously, there was a really an interesting synergy. There was one thing that one of you guys contributed, and then the other one also contributed from a strength versus weakness perspective or expertise. So, Vahe, what did you bring to the table that was magic for this relationship to work, and what did Ara bring to the table as well? And how did you guys decide to say, “You’re taking this responsibility, and I’m taking that responsibility. So let’s move forward.” Vahe, can you walk us through that?
Vahe Kuzoyan: Sure. In terms of our journey, what was interesting is if you were to look at who we are as people, on the outside, we look completely different. Not, obviously aesthetically, but in terms of just how we think about things, even to stupid things like how we dress or our predispositions towards one side of an argument or another. During the early days, that difference created a lot of friction as you would expect. So, I think what a lot of listeners should realize is that sometimes, the best partnerships don’t always start out as being super clear. So, I couldn’t tell you when we were first beginning, these are my sets of strengths and weaknesses, and these are Ara’s. We just knew that we were both committed to achieving big things and that there was a common core that was the same, but there were a lot of differences. Then throughout the years, we started to see that there are certain situations where Ara is super strong, where I was not as strong. And then vice versa. So in our case, the way that ended up working out is that anytime there was more of a go to market motion or a sales conversation or some exercise in persuasion and negotiation, it was clear that I was not the stronger person to be taking that lead. Then in other situations, if we had a specific technical thing to figure out or the customer was going super in the weeds about this thing or that thing of their business, that’s where I would tend to jump in and take over the conversations. So we ended up separating duties pretty cleanly in terms of where the customer journey would begin and end. Then we both were pretty hands-on in terms of the product just from the fact that we were both technical and that we could write code. So over the years, it started becoming clearer and clearer what the difference should be and how to delineate responsibilities to ultimately deliver the best experience for the customer. So that’s how naturally things shaped out over the years.
Alejandro: So in this case, Vahe took over engineering and product, and then Ara really focused on go to market. How I want to follow-up on this is perhaps with Ara so that people really get it is, how did you guys end up really optimizing that business model and how you guys are making money today. What does that look like?
Ara Mahdessian: You bet. Ultimately, we sell software to a specific industry. These are home services businesses that will do certain services like plumbing, air conditioning, to electrical, etc. You mentioned a 400-billion-dollar market, and our product is an all-encompassing business management software they use to run every part of their business. It does CRM. It does ERP. It manages scheduling dispatch, inventory, payroll, point of sale, everything from start to finish. It’s a subscription software, Software as a Service where they pay a monthly fee in exchange for the product. Our go to market motion is all direct sales combined with some sale initiated through a partner and a lot of marketing power behind it, and sales development practice in there as well.
Alejandro: One of the things, for a SaaS business, I think that keeping a low-churn is king. Like really, retention is everything. So, Vahe, since you’re leading the product side of things, even though the two of you are very much involved on the product side, what have you learned about churn and retention, Vahe?
Vahe Kuzoyan: Oh, yeah. For us, ever since the beginning, and I would say up until now that’s definitely been the most important metric that we focused on because it tells you a lot. To me, the biggest thing it tells you is the degree of product/market fit because if you’re hitting that correctly, you really shouldn’t have any churn outside of that for marriage if you’re in the enterprise space. By that I mean the only time you should lose a customer is if they go out of business or if they get purchased by or acquired. In our case, the whole value prop of what we were selling is that we’re going to help you build a stronger business. So we didn’t even accept a customer going out of business. Basically, we said they shouldn’t go out of business if they’re running on service time. So that’s been something we’ve been maniacally focused on. It served us really well because what happens is, the things that you would do to prevent churn ultimately lead you to building a more valuable product and service for your customers. It’s a very strong signal if someone’s about to leave you, that’s probably the best learning opportunity in terms of what to focus on next. In our case, because we lived in an environment where it’s not like there were a billion plumbing companies or air conditioning companies out there where we had unlimited top-of-the-funnel leads. We were forced to retain every customer that we had. In retrospect, that was actually the biggest factor in our success because we were forced to become the absolute best at understanding the businesses of our customers, communicating how we’re going to drive value, and ultimately delivering on that commitment. So for any business out there, I would say churn should be front and center in terms of everything that you’re doing. Even if you could attain the growth with the churn, ultimately, it’s going to be something that comes and bites you in later years unless you tackle it pretty quickly.
Alejandro: Got it. Obviously, to build the size of the company that you guys have built, I mean money or capital is going to be required if you want to speed up the efforts on all fronts. I believe you guys have done pretty well on the fundraising side of things, and perhaps, Ara, you can walk us through this. How much capital have you guys raised to date?
Ara Mahdessian: About 370 million.
Alejandro: So, 370 million. I understand as well the valuation is 1.65 billion. So pretty unbelievable. Guys, congratulations on the incredible progress! So, Ara, could you walk us through what have been those financing milestones, and what were the different expectations that you were seeing from investors? Then also, what was the process? Because I understand that in your guys’ case, it was very much inbound.
Ara Mahdessian: Yeah. I think we’ve been very fortunate here. Early on, Vahe and I built the software with sweat equity, and we were seeded by a close acquittance that had a lot of conviction I think in us as individuals early on when there wasn’t a product or market or anything like this to show for it. In hindsight turned out to be a good bet, I guess. Later on, we partnered with a local accelerator in Los Angeles called Mucker Capital. They were instrumental, not so much in giving money because, at the time, they weren’t giving much money. Today, they give a lot more money. At the time, it was a lot of advice and expertise that they were sharing with us. I think that was particularly important for us because, frankly, this was not only the first business that Vahe and I really ran, but it’s actually the first job that we had. We hadn’t even been able to see how you grow and operate a business from the other side of the table by being an employee. We had to figure everything out by making a bunch of mistakes until we realized what the right way of doing things was. The first real institutional capital was when Byron Deeter at Bessemer Ventures led our Series A. That was during a demo day when we were demoing our software, and Byron happened to be in the crowd. Frankly, at the time, we never really thought we would partner with these very large institutional investors because we were a little bit afraid of them. We didn’t know what they were like. We thought they would take control of the business, etc. So we were convinced we weren’t going to do anything. Vahe and I got to know Byron personally over the next nine months where every time we were in SF, or every time he was in LA, we would get together. Byron, at the time and continues to be the most successful earlier stage B2B SaaS investor of all time. So there were a lot of portfolio companies that we got the opportunity to learn from by talking to them. Over nine months, we realized, “Man! Byron is an amazing human being. He also happens to be an amazing investor. He’s not going to come in and mess things up. He’s completely aligned with our values and the way we like to run the business. We made the leap and partnered with him. That exceeded expectations so much and was such an incredible experience that we decided to do it all over again in our Series B when we came across the next investor that had the same values and operated the same way. That was Will Griffith, Iconiq. Today, they have the reputation as probably the leading B2B SaaS growth investor. Then C and D happened. In all of these rounds, fortunately for us happened to be inbound. We never really ran a process, so I don’t know if I can give a lot of advice on how to run a great process. I think the key is focused on building a great business, and if you have a great business that takes care of customers, investors will find out about you, and they will be knocking at the door to be able to invest.
Alejandro: Just to follow-up on this, Ara, when we’re talking about inbound, and especially for your C and D Rounds, was it like via an email. Were these people asking for an introduction to one of your existing investors, or what was the inbound? How did that happen?
Ara Mahdessian: I think you get both. We get a lot of inbound emails, and typically, these tend to be from more junior team members from the investment firm. Our conversations happen to be with the top partners. The top general partners are managing partners that these firms typically, sometimes those would come in through email, but mostly, they would find a way to connect with us. It was either through existing investors or other notable execs that we were close with or other CEOs that we built great relationships with or even bankers and advisors that get really involved in the later stages of a company’s growth.
Alejandro: To follow up on that as well, and Vahe, you can jump in. I would like to hear your thoughts on this. I understand as Ara was saying that you guys were very much aware of the potential damage of bringing in the wrong investor with the wrong type of agenda. Was there a must that you and Ara really got a line on like, “If this investor doesn’t have x, y, or z, there’s no way that we want to have them as part of this journey”?
Vahe Kuzoyan: Yeah, absolutely. In our case, what we were absolutely clear on from the very beginning is that there was a certain set of core values that we’re absolutely going to be non-negotiable on compromising with. So for example, being customer-focused and making sure that everyone was on the same page that at the end of the day, we were trying to build a long-term business, and we believed that the only way to do that was to make sure that your customers love you and that if you ever needed to choose between growth or focusing on our customers that we would choose our customers first. That was something that we vetted very carefully with every investor that we talked to. Then the other part is, you just have to comfortable once you get to know the person that you can build a relationship that ultimately results in a high level of trust because the way we operated our business was always with as much transparency as humanly possible. But being able to have someone around the table that we can ultimately be vulnerable to and pull into our internal decision-making processes, versus trying to impress from boarding to the next was absolutely fundamental for how we went about choosing a partner. That’s the high-level criteria that we went through in terms of picking who we ultimately wanted to bring onboard.
Alejandro: Got it. Ara, how many employees do you guys have? How big is the company today so that the people listening get a good idea?
Ara Mahdessian: We’re just above 800 employees now.
Alejandro: Wow. That’s quite a big number. I’ve also seen that right now, you guys have quite a lot of people that you’re servicing. So any type of metrics or anything that you guys will be comfortable disclosing. I believe you were over 2,000 customers or covering like 50,000 technicians or something like that that I read. So, Vahe, maybe you can share whatever numbers you feel comfortable sharing so that people understand how big the business is today.
Vahe Kuzoyan: Yeah. I think Ara might be in a better place for this one.
Alejandro: Go ahead, Ara.
Ara Mahdessian: Today, our customers annually do over 10 billion dollars of annualized transactions in the home services space. We have just over 3,000 customers on the ServiceTitan platform. As you mentioned, that represents some 50,000 technicians that are going in and out of homes every single day. I think it’s about 10 million homes that we serve every year. ServiceTitan, of course, doesn’t serve those homes, but our customers end up servicing roughly 10 million homes that they’re in each and every year. Business still continues to scale very quickly. We will be very close to doubling the business again this year and hope to continue a similar pace into the very near future.
Alejandro: Really, really cool. Very, very impressive guys. One of the things here that I’m seeing, for example, on LinkedIn is they show the insights and the growth of employees. I know that this is really not accurate, but it gives you an estimation. It says that in the past 24 months, the company has grown from an employee perspective over 150%. So, obviously, that’s quite significant. You were eluding to the 800 employees that you have now, but I think that if the company is growing at that rate, you guys also have to grow at the same rate as founders in parallel. Otherwise, you’re going to be outgrown by the business. So I’d like to get your perspectives on this individually, and I’d like to understand how you guys have also been able to keep up with the growth, personally, yourselves. So maybe Vahe, you can tell us how you have grown in parallel as a leader yourself as well in transforming yourself through this journey.
Vahe Kuzoyan: Sure. As you’d imagine going from a couple of buddies working together to an organization of 800 requires a lot of growth, and in our case, we’re starting with basically no reference point this being our first job. So I would say the most important thing that’s allowed us to do that has been our ability to not hide or not run away from our shortcomings, and in fact, run into them and be very open to acknowledging, “This is an area where I need to improve. This is an area where I can do better particularly between us being able to have that trust where we can each let our guards down and acknowledge those areas is, I think, the most important aspect. Because once you get to that point, it’s pretty straight forward in terms of how you make this adjustment or that adjustment, and what further helps is if you have someone on the other side who has a complementary skill set where you don’t have to fight every battle all the way to the end. You can kind of divide and conquer. As far as the rest of the team grows, that same principle applies in terms of having a culture that is focused on a high level of trust that allows you to openly discuss where the big opportunities for improvement are. And to be frank, we constantly ask ourselves, “Are we scaling with the business? Have we reached the point where we are no longer driving it forward? But in some ways holding it back and being very open to whatever answer comes back when you’re asking that question. Being able to be open about that topic and just acknowledge that it’s a continuous effort in growth, which as anyone who’s done anything big understands that it’s painful and it’s uncomfortable, but that’s when you know you’re growing. There’s that great quote about somebody asked, I think it was Muhammad Ali, how many pushups he does. The number he gave was extremely low. When people said, “Hold on. How is that possible?” He said, “Well, I only start counting once it starts to hurt because that’s when you know you’re actually making progress. So being able to take that on and get punched in the face and come back up every day and continue growing is the most fundamental thing you need in order to have that ability to scale with the business.
Alejandro: That’s very powerful. So, Ara, feel free to build on top of that.
Ara Mahdessian: Yeah, I think Vahe and I try to focus on only a handful of things, and frankly for the rest get out of the way. As I said, we’ve never built a business, we’ve never let it scale, and we’ve never had a job other than this. I think those handful of things are: 1) We have to make sure we get the vision to the company correct. So in terms of figuring out how the product is going to evolve over time so that we go into new markets. We build and launch new products, and we continue to iterate the business model over time. All that is part of the vision, and that’s where Vahe and I spent a lot of our time and where we think we’re uniquely positioned given our domain expertise in this industry. 2) The second thing we focus on is building a great leadership team. It really is the leadership team that pretty much runs the business, not necessarily Vahe and I, so we focus on how do we recruit and retain and enable high performers and not just high-performing individuals, but also how to cultivate that incredible leadership dynamic where there’s a high degree of trust and commitment and ownership and debate and people have each other’s’ backs. So that leadership team is number two. 3) Number three for us is the high-performance culture. I think culture is the buzzword these days. We like to be specific about this. Our culture is one of high performance. What that means for us is, one, there is the very high expectation of results, and two, there’s a very high expectation that people genuinely care about their fellow teammates and will do anything to make them productive and successful. These happen to be the three areas we focus on: vision, developing the leadership team, and a high-performance culture. For the rest, it’s the leadership team that has far more experience leading businesses that leads for us.
Alejandro: Very cool. And maybe we can follow-up on that, Vahe, in regards to culture. What would you say are the building blocks of high-performance culture?
Vahe Kuzoyan: Sure. I think first and foremost, it’s being very clear that that is the culture that you want and defining that in a way that makes it easy to understand. So for us, some of the elements that go into that are things like we’re ambitious. We go after big goals. We set lofty targets for ourselves. We don’t sandbag; we don’t accept mediocrity. Some of the other elements that go on there is having enough trust within the team to be able to hold each other accountable and have that be an acceptable part of how we work together and not turn into some political sideshow where you have a Game of Thrones-type thing happening. That becomes increasingly difficult as you scale. Ultimately, being metrics-driven and having a consistent rhythm of setting high expectations and then iterating and seeing where you’re doing well, where you’re not doing well, and quickly adjusting to whatever those things are. These are all the fundamentals. But at the end of the day, I think it comes down to the basics, which is – you know, you hear a lot of companies talk about “We’re a family. We’re a family.” And we just believe that that’s disingenuous because I don’t know about anybody else, but I’ve never hired an aunt or hired a cousin.
Vahe Kuzoyan: You know, in a high-performing team, there’s still love, but that love is conditional, and it’s conditional not only on results but how you get the results, and being a great team, and not stabbing each other in the back, and all that kind of stuff. That’s an instrumental part of being a great team. But just calling it what it is and not pretending to be something that we’re not. Once you do that, once you set expectations clearly, it becomes pretty straight forward for people to understand what is expected of them and what is expected of each other. Ultimately, for high-performance culture, what you want is, you want the team to be motivating each other, not Ara and myself from the top saying, “Come on, guys. Push harder; push harder.” No, it should be the team that does it to themselves.
Alejandro: Got it. That’s very powerful. So there’s one question that I always ask the guests that come on the show, and I’d like to ask this question as well and to get both of your perspectives. So perhaps we start with your take on this, Ara. Knowing what you know now – we’re talking about a business, over 800 employees, 1.65 billion, and a remarkable hypergrowth journey, now looking back, if you had the opportunity to have a chat with your younger self, maybe that Ara that was about to graduate let’s say from Stanford, and you were looking at launching your first business, knowing what you know now, what would be that one piece of business advice that you would give to yourself before launching a business and why?
Ara Mahdessian: Man! I think I always knew how important it was to find all the great people and bring them onto the team, but I’ve realized it’s even more important than I thought. And the only way to build high growth in a business is by really making that #1 priority. That means it takes up the most amount of time on your calendar. An interview or searching for profiles isn’t one hour on your calendar for the week; it happens to be the dominant item on your calendar. It is the highest leverage activity a founder can have is, not just getting their own productivity but the productivity of 10 or 100 other great people that is close to their product as possible.
Alejandro: Got it. What about you, Vahe? What would you tell your younger self, knowing what you know now before launching a business?
Vahe Kuzoyan: I would agree with Ara, that particularly once you’re at a point where you’re able to hire people and have the focus, that is the highest leverage and important thing. The advice I would give would be probably for earlier stage, and it would be around making sure that you’re focusing on the right problems to solve because at least in our journey, one of the big learnings was that we wasted an inordinate amount of time chasing problems that were not necessarily fake problems, but they weren’t the right problem for us to be solving at that point and time particularly when it comes from a product/market fit perspective and having a nose for what matters and what doesn’t. A lot of times, it’s not some crazy like genius insight that you need to get, but it’s just being mindful of where you’re spending your energy and taking that little bit of effort to validate and understand what the underlying assumptions are before you spend months and months going in the wrong direction.
Alejandro: Got it. That’s very powerful; very powerful, guys. For the people that are listening, what is the best way for them to reach out and say hi? Perhaps you have an email or a social media handle that you would like to share. Ara, let’s start with you.
Ara Mahdessian: Yeah, absolutely. firstname.lastname@example.org – I’m always happy to communicate with people in the community.
Alejandro: Fantastic. And Vahe, what about yourself?
Vahe Kuzoyan: Same, just with my name out front: email@example.com
Alejandro: Fantastic. Well, Ara and Vahe, thank you so much to both of you for being on the DealMakers show today.
Vahe Kuzoyan: Thank you. It was a pleasure.
Ara Mahdessian: Alejandra, thank you so much for having us.
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