The Gainsight Formula: Unraveling the Product Strategy Behind the Customer Success Titan
Picture this: a bustling startup on the cusp of greatness. The team works tirelessly, pushing their product to new heights. The CEO, driven by unbridled ambition and a burning desire for innovation, becomes obsessed with the potential of a game-changing breakthrough.
In their pursuit of the next big thing, however, they risk losing sight of the core product that propelled the company to success in the first place. The team becomes fragmented, with some members struggling to maintain the day-to-day operations while others chase the CEO’s ever-evolving vision. The organization suffers from this lack of cohesion, and the once-promising startup begins to falter.
It’s a delicate balancing act, and the stakes are high: a misstep can send ripples throughout an organization, leaving employees reeling and the company’s direction unclear. “It’s like organizational car sickness,” explains Nick Mehta, CEO of customer success platform Gainsight. “It’s so common for CEOs to swerve the company this way and that way. You’re turning the steering wheel, and the whole company’s just throwing up in the back.”
Mehta is no stranger to strategy. Over the last ten years, Gainsight has helped put the customer success category on the map, growing the company slowly and deliberately from a fledgling startup to a customer success goliath boasting over $200 million in annual revenue and more than 1,200 employees. Before joining Gainsight, Nick served as the CEO of LiveOffice, spearheading the expansion of the Inc. 5000 company to $25 million in revenue and ultimately leading to a successful acquisition by Symantec. He’s also the co-author of two books on customer success.
We recently sat down for an in-depth conversation with Mehta. Drawing from his experiences at Gainsight and offering valuable insights, he shares his hard-won wisdom on how CEOs can avoid “car sickness” and steer their company through this challenging landscape while keeping their team engaged and on track.
How customer success became the norm in SaaS
Tech moves fast. When Jim Eberlin and Sreedhar Peddineni first founded Gainsight in 2009, selling software as a service was still a relatively new concept. “Ten years ago, people didn’t have a concept of customer success,” Mehta shares. “They would move to the Cloud, but then they’d sell software the exact way they did before: you’d have a salesperson who closes the deal, and then if the customer needs help, they’d call support.”
But it takes more than a steady stream of new logos to build a successful SaaS company. The earliest subscription economy pioneers – think Salesforce, Twilio, and DocuSign – realized that pitching products to strangers could only take them so far. Instead, they began fostering and maintaining symbiotic relationships with their loyal subscriber base to maximize retention over new growth.
“SaaS created a kind of forcing function for people to focus on their customers,” Mehta says. “Other industries didn’t have the same forcing function. Those managing customers weren’t all called CSMs back then – some were account managers, some were support analysts. But they all had a few common patterns, and these turned into the first three core features of our product – Customer 360, Playbooks, and Health Score.”
“SaaS created a kind of forcing function for people to focus on their customers.”
Those shared patterns first noticed ten years ago became the basis not only of Gainsight’s product but an entirely new category: customer success. “That was the beginning not just of Gainsight,” Mehta shares, “but probably all of customer success software.” That name recognition helped Gainsight grow to over 1,200 employees across nearly 30 product teams, raising over $150 million along the way and building a category-defining brand from the ground up.
KEY TAKEAWAY: Successful category creation takes more than just a perfect storm of luck and timing. Despite all the changes in the software industry, Gainsight followed the same playbook they were offering their customers: to be living proof you can win in business while being human first. “You can’t sell to your customers and walk away,” Mehta laughs. “Focus on the right customers, get your workflow consistent, and get all your data in one place, and you’ll find success.”
Death by a thousand feature requests
Despite their success, the past decade wasn’t all smooth sailing for Mehta and his team. As the company grew, it became harder and harder for product managers to keep up with the big-picture vision. Each of the company’s 30-odd product teams is led by a dedicated product manager who owns a single feature – but Mehta is transparent that it’s still far too easy for those product managers to develop tunnel vision around their specific solution area.
“Being customer-centric isn’t just about building everything everyone wants,” Mehta explains. “A lot of companies either have too generic priorities that are not actionable, or there’s too long of a list.”
According to Mehta, the key to Gainsight’s success has been twofold: maintaining a clear set of priorities, and ensuring all company activities map back to that core strategy. Mehta works closely with Gainsight’s Chief Strategy Officer Robin van Lieshout and President of Products & Technology Karl Rumelhart to develop a one-page strategic plan.
This plan, updated annually, has two core functions. First, the strategic plan outlines five detailed company priorities for the year – for example, expanding TAM, maximizing gross retention, or improving competitive win rate. Each of those priorities has a dedicated owner – Gainsight’s customer success leader owns retention, while sales leadership owns win rate. Every new feature request or internal project needs a clear map to one of those five company priorities to make the roadmap.
“Being customer-centric isn’t just about building everything everyone wants.”
For each priority, the strategic plan outlines three core “needle mover” product areas where Gainsight’s leadership sees the most opportunity. “The risk of larger teams,” Mehta explains, “is that you end up doing 50 things moderately well. And what’s worse is that in the modern service-oriented development world, those things are all interconnected: everything depends on everything else, so those things never get that good because they depend on other teams.”
Mehta’s end goal: a pie chart showing Gainsight’s R&D allocations for the year, with three big chunks (or around 60-80% of the company’s R&D effort) going towards the most critical projects.
KEY TAKEAWAY: Keep a concise, actionable set of priorities. For Gainsight, focusing on needle movers means identifying strategic decisions that are most likely to propel the company forward. By concentrating on these high-impact initiatives, Mehta ensures that his efforts and the company’s resources are directed toward areas that can drive meaningful growth.
Avoiding the pitfalls of overcorrection
Despite the importance of focused development effort, Mehta also stresses the value of planning for the inevitable product peak. Every market eventually becomes saturated, growth peaks, and organizations must put effort into creating second or third growth areas to supplement what drove the initial success.
“Obviously, you’d love to have a business like Azure or Office where one product engine lasts for billions and billions of dollars,” Mehta shares, “but most companies aren’t like that. Most companies get to fifty or a hundred million in revenue before running out of steam.”
“The gravity of a business pulls you into the tactical and the near-term.”
But overcorrecting towards innovation is an equally common trap, particularly among large organizations. Focusing too heavily on existing products to meet existing customers’ unending demands means optimizing costs, leaving even less budget to allocate towards innovation. It’s easy to find yourself unable to innovate without becoming more profitable but unable to generate more profit without innovation.
The trap, as Mehta explains it, is that most companies wait to start seeking new product engines until it’s too late. He freely admits that many of Gainsight’s strategic setbacks stemmed from his focus being sucked in by the company’s existing products. “The gravity of a business pulls you into the tactical and the near-term,” he says. “I can do a customer interview every 30 minutes all week, and they’ll tell me about the one thing they want to see on our roadmap, and I enjoy it, and it’s fun. But what about those customers we’re not even talking to right now? If you’re not also thinking about the next big thing, the customers who don’t even know who we are, you’ll end up falling behind.”
Mehta’s solution for keeping himself and the company tracking straight is simple: he loops the entire team into his real-time thought process as often as possible. Each Sunday evening, he sends a brief email to the entire team, sharing three important insights for the upcoming week. In a recent email, he discussed how generative AI could revolutionize customer success by automating tasks, personalizing experiences, and predicting customer needs, ultimately helping Gainsight stay ahead in the competitive landscape.
Mehta is clear that this email leans more strategic than tactical. “I’m not saying ‘You need to do anything’ in this email,” he clarifies, “I’m literally just explaining it in my thought process and developing it in the open.”
KEY TAKEAWAY: Sharing your thought process as a product leader can be a powerful tool for avoiding overcorrection. Through his weekly emails, Mehta invites his team to share his thought process, helping them understand the reasons behind any potential strategic decisions and ensuring the company avoids impulsive, shiny-object-driven decisions. By fostering transparency and openness, he builds trust and ensures that employees are more likely to be receptive to change.
The roadmap to balanced progress
As Gainsight looks towards the future, the company remains excited about the potential of generative AI and the many opportunities it presents. However, what sets them apart is their unwavering commitment to staying grounded in reality and steering clear of “car sickness.” Gainsight’s purposeful direction, agile navigation, and relentless focus on customer success act as the guiding principles in their journey through the ever-changing landscape of technology.
Mehta emphasizes maintaining this balance as Gainsight continues to grow and innovate. “We’re always eager to explore the newest technologies and the potential they hold, but we never lose sight of our core mission: being human-first and ensuring our customers’ success,” he shares. “It’s all about maintaining that balance, having an ambitious vision for the future, but making sure you don’t lose sight of the present.”
