When I first met David Politis in 2011, he was raising money for a company that has evolved beyond recognition. Now, as founder and CEO of SaaS management platform BetterCloud, he has about almost 2,000 customers, is on the way to $100 million in ARR, and has 330 employees across 22 states with a high concentration in New York City, Atlanta, San Francisco, Denver, and Austin. He’s raised about $187 million dollars to date. I passed up my chance to get in on the ground floor. I sure regret that now.

Luckily David isn’t salty about it, and sat down to tell me about his earliest lessons in entrepreneurship, how he spotted this opportunity before I could, and how he’s built the company, a SaaS management platform that allows IT high-level control over an always-expanding roster of workplace apps like Google Workspace, Slack, Dropbox, Box, and Salesforce.

So 2011, you start this thing, you were what, 27? 28? Pretty young for an enterprise software founder. Was your vision always to be a founder or did that emerge when you discovered this problem and you're like, "Damn, I just got to go do this"?

My dream was always to be an entrepreneur. My father has always had small businesses throughout my entire life, and starting at a very young age, he used to take me with him to work. He used to do low-income housing projects in Harlem and the Bronx, and so when I was really young, probably eight or nine, he would take me with him to work. When he pivoted to international finance, he started taking me to Nigeria, Ukraine, China. I've been all over the world in business meetings from a very young age. And all I wanted to do was really be an entrepreneur. This is my dream job, frankly.

And my first job out of college, out of Emory, I was in Atlanta at a very small technology company that did not do very well. Within the first six months, they fired everyone in the company except for me and an engineer. And one day the two founders took me out for lunch, and they said, "Dave, I guess you'll be the CEO, and he'll be the CTO." I was 22 years old. It was a company of two, but I was the CEO and this other guy was the CTO. And we built a cloud-based PBX system in 2005. If you think back, in 2005 no one was even using the word “cloud.” Back then it was “hosted”—we built a hosted PBX.

So I actually had an opportunity to run a technology company. Before I left, we got up to about $25 million of ARR with a couple hundred people. But I didn't start that company, which is something I wish I had done even earlier.

What are some of your earliest memories as a boy sitting in those meetings with your dad? What did you see and learn?

He was himself. He was the same exact person inside and outside the office all the time. I think some people, when you come into the workplace, especially if you're a younger CEO or executive, you think you have to be a different person.

When you and I first met, you were pitching a seed round. It was a pretty different business than today, not just in terms of how much progress you have made, but the fundamental vision. So talk us through the original genesis and how it changed.

So after that first company, Vocalocity, I joined Cloud Sherpas, which is essentially a a cloud consulting company. The CEO had been on the board of Vocalocity, so he brought me over, and what I saw in a very short window of time, literally from 2010 to 2011, was enterprise companies migrating to the cloud in a very real way, specifically to G Suite (now Google Workspace).

Our business was to move people from Microsoft or Lotus Notes to G Suite, and every time we'd move them, the users of the company were thrilled. And the IT team said, "This is terrible. I don't have the same tools that I had in my Microsoft stack." So it was very obvious there was this massive opportunity to build a management security wrapper around G Suite. I didn't even come up with the idea. The customers at Cloud Sherpas were telling us, "Can you build us a product that does X, Y, and Z?" And we were trying to build a product at a consulting company. For me, I enjoyed my experience there, but I love product.

So when we met, my pitch was that Google's going to beat Microsoft in the enterprise space. At the time, Google was winning every deal. Anyone who wanted to go to the cloud for collaboration went with Google. So my belief was if Google becomes the size of Microsoft  in the enterprise space, IT is going to need a toolset around that stack. And that's what BetterCloud was when we met—so it was very different. It's evolved a number of times with the core being the same.

I remember the reason I passed was that I invested in Divide, a mobile device management and security play mostly on Android, and it was very clear Google was going to own that—in fact they ended up buying Divide. I was looking at you and saying, "Well yes, problem is right, but doesn't Google either buy it or do it themselves?" What was the thing that you saw that I didn't see?

That was the same feedback we got from a lot of people who passed. The thing I think I saw was from my time at Cloud Sherpas—I had a very intimate knowledge of how Google's enterprise business was working. And Google had been pretty explicit with the fact that they had to build for the lowest-common-denominator customer. So at the time, that was a 50-person company. But if you are a 500-person company, a 10,000-person company, or a 200,000-person company, you didn't have the toolset that you needed in order to run Google. And I knew that that was a long gap between where they were and where they had to get.

The other big thing that we realized is if you look at what Microsoft—the best enterprise company in the world, ever—has historically done, they don't do everything. So how would Google, new at the time, deliver everything?

The belief was we'd have such a long runway that we'd be way ahead and continue to move upmarket. Fast forward eight years and Google still hasn’t delivered a lot of the functionality, which is mind blowing sometimes.

That vision gets you rolling. 2015 you raised a $25 million round from Accel—you're rocking and rolling. And then as I understand it, before you ran into real problems in the market, you realized you had to fundamentally change the business. Walk us through that.

The Google business gave us the foot in the door with a lot of really interesting, forward-thinking companies that were deploying SaaS applications. And they kept saying, "We use Google, but we also use this product called Slack, and we're using Dropbox, we like that better than Drive. Oh, and there's Zoom, which is better than Hangouts." They were saying, "I love what you do, but can you do it across SaaS applications?" That was coming up in discussions at the end of ’14, early ’15. I was hearing that a lot.

And when Accel asked, “What is the thing that's going to set you apart as a special company for many years to come?" I said, "Well, the truth is if we go across multiple SaaS applications and build this for the entire stack, that's the big idea." It's an evolution of strategy—it's what we did functionality-wise, just for more applications. But from a product perspective it was a complete revolution.

Did they back you when none of that new product had been built?

Actually, what I showed them was wire frames that had been developed between our first conversation and the actual round getting done. I brought my team together. We had a kickoff with all of my engineering and design leaders and I said, "We're going to go build this. What is that going to take?" There was a lot of nervous excitement. People said, "Dave, this is going to take a full, legit rebuild of the platform." I said, "So how long do you think that's going to take?" In the first meeting it was, "If we put everyone on it, maybe eight to ten months." Of course, it took twice that long. So yeah, we had nothing. We had a lot of traction with our Google product, and we had customers who loved that product, but we didn't have anything that we have today.

Was it easy to get your existing board to come along with that? It's pretty radical... I mean it was a "burn the boats" move.

100 percent it was burn the boats. But interestingly, it wasn’t  difficult to get them behind the strategy because they were all actively investing in some of the most successful SaaS companies and could see the opportunity that the rise of the best of breed stack would create for us. People were excited. One investor said, "It feels like you're skating to where the puck is going versus where the puck is." Now looking back on that, that was a very, very true statement.

So you thought it might take eight or 10 months, it takes almost two years. How do you manage through that?

That was a very difficult 21 months. You could see it forming. We put everyone on the new platform. Everyone. For our product engineering team, that was probably the most exciting time they've ever had at BetterCloud. I mean, how often do you get to build from scratch? And you actually know you're going to have data and customers flowing through it.

From a sales and marketing perspective, it was difficult. We turned over I believe every sales rep except for three people, out of 15 or 18 total.

Did you ever lose faith in that vision?

Never, because I kept having conversations with customers or prospects. They were saying they needed it. Actually, the biggest validation was in October of 2015, when we did a customer summit with 60 or 70 people. The first day was just industry stuff. The whole second day, all we did was show wireframes and clickable prototypes of the new platform. We sent a survey at the end, asking them to rank from one to ten, how big of an impact would this product have on you if we deliver what we showed you in the wireframes? And the score was an average of a nine.

So having gone through that, what's the lesson for a young first-time founder?

There’s one thing that I would do differently and one that I would do the same. The one that I would do the same: Spend the time with the customers and listen. They are truly the subject matter experts. Sit and watch them do their job.

A lot of people say, “Well the customer doesn't know what they want.” I believe that en masse if you have 80 customers somewhere and you ask them all a question and they all answer the same way, that's a pretty good indication.

The thing I would do differently is not pushing so many very large rocks up the hill at once. We tried to add a workflow engine, an alert system, and an admin permissioning extraction layer all at the same time. We did everything simultaneously.

That was definitely a mistake. We could have brought things online much faster. A full rebuild, yes, it's nice five years later, but a year or two later, it's not nice.

So when you finish it though, and you've built the thing that people said is a nine out of ten, did they start buying it like hotcakes?

No.

What happened?

First, that nine out of ten is essentially what we have today, not what we had 21 months in.

The second thing is I didn't appreciate how changing the product meant evolving the sales strategy. We had to change how we sold. We didn't have a single solutions engineer or sales engineer. Not a single one. All of a sudden the price to the customer essentially tripled and quadrupled. But we were using the same sales and marketing model.

Third, we priced it in a confusing, complicated way. So when you put the three things together, it was a product that was maybe a six and a half on that scale of nine. The sales team essentially called a meeting with me, and 48 hours later we changed the price and simplified it.

If you ask anyone who was here during that time, every single person remembers that period. And those customers are now our best customers. They helped us to continue to shape where we took the platform.

So you've made it through COVID...what were your unique secrets or tactics that helped your team perform so well during this crazy experience?

As you can imagine we’re 100% cloud and SaaS, so it was relatively easy to shift to a work from home model and have our team be productive. Honestly, we were probably more productive as a team once we moved to work from home. One major change that I believe made a big difference in our success was a change we made around communication. Starting in March 2020 we moved to having two 30 minute company all hands meetings a week. We used to have 90 minute all hands once every 6 weeks. We used the more frequent meetings to communicate key initiatives, keep people updated on how we were responding to the pandemic, take anonymous questions from the team and more. During a time of a lot of uncertainty those meetings gave the team certainty.

What's your post-COVID strategy? Are you guys going back in full, hybrid, or moving to a much more flexible model?

As much as I would love to go back to the office full time, that isn’t going to happen. We’re now moving to a much more flexible model. Pre COVID, we would only hire people in one of three cities: New York, Atlanta, and San Francisco. Those were the three cities where we had offices and people came in every day. During COVID, we started to hire all across the country, and it was a game changer for us. We were able to bring on some amazing talent and have decided that it’s more important to be able to attract that kind of talent than to come into the office every day. We’ve started to see some people coming back into the two offices that remain and that we unfortunately have very long leases on but it it’ll never go back to what it was.

Speed Round

The great religious debate about product and technology, product reports to the CTO or the CEO?

Product reports to the CEO. I'm also a big product person.

Would you rather be sales driven or marketing driven?

Marketing driven.

The best background for a founder: engineering, product, sales marketing, something else?

I wish I was an engineer, so I would answer engineering.

The most fun stage of growth: zero to 50 people, 50 to 150, 150 plus?

Zero to 50.

Work from home or work from office?

Work from office but I’ve learned to adapt to having a distributed team post COVID. Even though I have been in the office every day since September 2020, most days by myself.

The blog or podcast that you have learned the most from?

I don't know about learned from, but I really liked the Gimlet Media StartUp podcast. The first season was my favorite podcast I've ever listened to.

That was awesome. Favorite book you read last year?

I did not read any books last year, I'm embarrassed to say. I did write a book though.

You get credit. Favorite New York City spot for a lunch meeting?

I really like the NoMad for special occasions.

Best coffee spot?

I don't drink coffee, never had coffee in my life, but Cha Cha Matcha is my favorite. When I really need a pick me up, I get matcha.

You and me both on coffee. Your go-to stress release activity?

Used to be basketball until I tore my achilles playing. I have now moved to Peloton.

Favorite way to spend a weekend?

At home, decompressing, seeing no one but my family.

I read that you have a total focus on BetterCloud, no hobbies, no side projects?

That's pretty much true, yes.

Is that advice you would give to other founders?

Definitely not. Everyone tells me I need to find a hobby. I just really love this.