In this season opener, Elena Donio shares her experience using data and domain knowledge to disrupt the traditional service and sales compensation model. She also discusses how to build companies that scale, manage corporate cultural evolution, and the influence of corporate boards.
Denny Lee (00:06):
Welcome to the first episode of season three of Data Brew by Databricks with Denny and Brooke. The series allows us to explore various topics in the data and AI community. In the first season, we had focused on data engineering while in the previous season, we focused on data science. For this season, our focus will be on data leadership, what chief data officers and CEOs have to consider when building up data teams and data services. To do this we’ll interview subject matter experts and dive deeper into these topics and while we’re at it, we’ll be enjoying our morning brew. My name is Denny Lee. I’m a developer advocate here at Databricks and one half of Data Brew.
Brooke Wenig (00:45):
Hello everyone. My name is Brooke Wenig, machine learning practice lead at Databricks and the other half of Data Brew. Today, I am pleased to introduce Elena Donio board member of Twilio and Databricks, and who has a wealth of experience. She’s also served as limited partner at Operator Collective and formerly the CEO of Axiom. Before Axiom, Elena spent 18 years at SAP Concur where she most recently served as president. All that to say Elena’s a very experienced technology leader, and we’re very glad to have her on Data Brew today. Welcome Elena.
Elena Donio (01:16):
Thanks so much happy to be here.
Brooke Wenig (01:18):
So to kick off our conversation today Elena, I want to talk about your time when you were president of SAP Concur. What kept you up at night? What kind of questions were racing in your mind when you’re trying to go to sleep at night?
Elena Donio (01:30):
You know for me, the kinds of things that keep me up at night always come down to people. Why are they here? What’s motivating them right now? What are the challenges that as leaders we need to address and get out of their way? A couple of examples. When I stepped into the role of president at SAP Concur, we had just gone through an acquisition obviously, and we had spent years and years standing on stages saying things like the reward for performance is independence. All of a sudden, you know, $8.3 billion later we have to say, “The reward for performance is some degree of decision-making autonomy.” Performance is still really important and I think what was really important during that time was to make sure that people had what they needed to do their jobs sort of first and foremost but that also we kind of put a box around how long are we going to mourn and then what are we going to go look forward to? I did a bunch of different things to make sure that the experience for our people was top of mind, not just for me as president, but for all of our leadership team. I felt like it was really important to illuminate what the opportunities were, not just what we were losing or what we were missing. Some examples of that were, you know, SAP was a much bigger company. We were going from 7,000 employees into an organization with 70,000 at the time. With that comes resource. And so my first question was, well, what are we going to do with this resource? It meant what product bets are we going to make? What market bets are we going to make? We opened China for the first time. Things like that, that we would not have been able to do as a standalone entity that were really good. Good for our people and good for the business.
Elena Donio (03:19):
Other things like SAP had this phenomenal social sabbatical program. I wanted to put Concur names into the mix to be considered for these service projects, the world over and just demonstrating the kinds of things that we could do as a bigger company that we couldn’t do as a smaller company was really, really important. Then at the same time, really thinking about our role as one of teacher, not just a student, so how could we take what we had learned by being a SaaS service, a cloud company from our very early stages of development and impart some of those lessons about scaling in a cloud environment to SAP, which really hadn’t been known for that to date. By thinking about what did our people care about? What were they interested in? What could be good for them and making sure that I was addressing all of those things and that the leadership team was addressing all of those things. We kind of found our footing and found our way and I think became a really good success story across that period of time.
Brooke Wenig (04:23):
So on the topic of scale and culture, how do you manage the evolution of the culture as you naturally double, triple many times over the number of employees you have in the company? Are you intentional about how the culture changes? Does it just evolve organically?
Elena Donio (04:37):
Okay I love the way you’re asking that question because you’re sort of presupposing that culture isn’t static. This was a question I would get all the time during that time. How are we going to preserve our culture? My response has always been, “Well, what do you mean preserve our culture? You’re fundamentally different when you’re 300 people than when you’re 7,000 people and you’re kind of fundamentally different when you’re 7,000 to 70,000. I think it is important to be intentional and to think about let’s list the things we want to hang onto, and let’s be okay with some of the things that we want to see change. Let’s label those as well, right? Growing up in technology, I’ve grown up in a very male dominated world and our leadership team was largely male for a very long time.
Elena Donio (05:21):
Our board was always fully male. Let’s let go of some of those parts of our history and actually create room for different people and different perspectives. Let’s actually lose some of our thinking about just purely survival and scarcity and embrace some of our thinking about what would you do with the next dollar and being really, you know, forward leaning about how you’re going to embrace innovation, how you’re going to embrace sort of risk when you have the platform and the space to do it. Those all come down to how the culture evolves over time. We tried to be very deliberate about that. What are the things we want to hang onto? The things we wanted to hang on to were things like transparency. We’re going to be really upfront and honest about what’s going on in the business.
Elena Donio (06:08):
We’re going to overshare on metrics and numbers and data, and really trust our people to do the right thing with that information. Trust was a big driver for us. We’re going to continue to work, to build trust in new relationships that we were embarking on for example at that time and accountability. We want to hang on to accountability. We want to make sure we know who is in charge of what decisions and what projects and what products at what times. Those are the things we super cared about and ultimately a lot of other things we were okay either letting go of or changing and, kind of moving around as the circumstances changed.
Denny Lee (06:50):
This is really excellent because then it really leads to that idea of like, you had to make a bunch of decisions that were for the short term and a bunch of decisions that were based on the long-term. And so from that standpoint, how do you balance what’s right for short-term versus long-term?
Elena Donio (07:06):
Yeah, and I think every company faces this at some point in their evolution or maybe at all points in their evolution. Certainly short-term performance is important, right? We can’t be running around sort of embracing failure all the time, but we have to have room for failure as well. I remember early days at Concur, we shut down a product that I’d worked on for a long time and put it on the shelf for a variety of reasons and I had individuals coming to my office and saying, “Oh my gosh, how are you getting up in the morning? This thing, like all this code we wrote and these clients that we went and sold, like it’s going on a shelf.” My feedback was, “You know, listen, like if I wanted to work at a place where every line of code, we wrote, every product we built, every sort of puzzle piece that we put together was going to live forever we’d be at a place that was fat and dumb and slow. And that’s not a kind of place I want to work.
Elena Donio (08:03):
Like I want to work at a place where we’re taking risk and trying things and really working to invent the next thing that our client really needs that they maybe didn’t know they needed in that moment. So to get there, I think this also comes back to culture and creating room for some failure, but really knowing kind of what bounds you’re putting on that. And so I think it’s important to think about how much of our pie, of our resource allocation, of our funding, of our people are we going to put against things that need to show a near-term payoff? That need to be hitting gates around growth, around profitability, et cetera, and then how much of our pie can we allocate to things that we don’t know if they’re going to work or not.
Elena Donio (08:43):
And so we’re going to try them and we think we’ve got a hunch and we’ve done some research and we’ve got some data and we’re going to try, but then it’s about kind of putting the scaffolding around that and then putting the metrics around that and having the discipline to say, “Okay, if this works, I think it’s going to look like this. And so we’re going to measure A, B, C, and D at these different threshold points, and if we miss a gate, here’s how we recover. And if we miss too many gates, here’s how we shut down and we’re going to be okay with that and we’re going to build that muscle by practicing it every day.” It’s just like anything else, it’s a practice. I think risk-taking is a practice.
Elena Donio (09:20):
And so that’s kind of how I think about short-term, long-term. You’re really clear about the things that need to be right in the short term, but you’re always creating space for experimentation and trying new things and taking risks and then putting the metrics and measures around that, to know when to pull back so that there’s no question. I mean, I can remember many conversations in launching new things where it was like, “Oh, but just one more month. And we’re just about to hit this threshold.” And sometimes you might give that one more month and sometimes you might not, sometimes you might say, “You know, we’ve been really clear about what the threshold decisions were going to be and what data we needed to see to keep pressing on. And we’re not going to do that right now.”
Brooke Wenig (10:00):
So you bring up an excellent point about being data-driven, which is actually one of the cultural principles we have at Databricks. And so given all of this discussion about data and metrics, I want to know do you have any examples of where the data can actually steer you in the wrong direction?
Elena Donio (10:13):
Yeah. I think it is so important to match data with insight and at times intuition as well, and really sort of being clear about what you don’t know. I remember a couple of really fun examples of that from my days at Concur, when we were starting our SMB business, this was around 2011, 2010, 2011. We had for years been a company in enterprise software company selling to big enterprises. And inevitably you would have some small and mid-market companies kind of coming into the net, either through digital marketing or events and things like that. And so we had a handful of small and mid-market clients in the client community, in the Concur family as we would call it. And so when we decided to really drive growth and to continue to see 20, 30% growth over the years that we had to open new segments, and one of them was SMB, we knew that they needed automated travel and expense, but we didn’t think they needed our flavor of it.
Elena Donio (11:16):
So with the level of customization and configurability with the price tag and all of the things that went along with that, we knew we needed to change some things. And so we looked at every element of how we were going to market, everything from sort of rep compensation and pricing to product capabilities and set up approach, and all of that. One of the big ticket things that was always a piece of our pricing model and go to market strategy was that we charge setup fees. And the idea was, “Well, this is a way to get the client’s skin in the game. It’s a way to demonstrate that they’re in and they’re going to dedicate resource to getting this live and deployed. And it’s also a way for us to defray some of our setup costs as we’re provisioning, they’re kind of set up an instance and we’re putting some resources against all of that.”
Elena Donio (12:04):
So it makes great sense, right? We’re going to defray some up some upfront costs and they’re going to demonstrate that they have skin in the game. Well, when I had an analyst come to me very early days in our SMB journey and said, “You know, listen, we’ve been through thousands of clients’ records of data. We’ve been through all of our win-loss for the last five years, and we’re not losing deals even in small and mid market companies because of setup fees.” My hunch was that we should not have set up fees in that part of the market and that we should be very comfortable taking some risk, asking the client to take some risk and removing what I felt was going to be a barrier to them signing on and utilizing our service and that we’d make up for it over time.
Elena Donio (12:46):
We knew that we only had to be live for about 13, 14 months for that deal to be profitable. So why add even five or 10 or $20,000 of upfront commitment to that when that might just slow down deals. And so when these analysts came to me and said, “We’ve been through thousands of records, we’re not losing based on setup fees.” My point was, “Well, we don’t know what’s not in the net. We don’t know what’s at the sort of very base level of demand generation and who actually didn’t even get an opportunity to participate in win-loss because they were never in the funnel in the first place. You only have to go to our website to see that our clients are the likes of Pfizer and Honeywell, and you name it big fortune 500 company. I’m immediately thinking this isn’t for me. I can’t afford it.”
Elena Donio (13:36):
And so we were successful in convincing the business to take a chance on not having a set up fees and it’s a risk because we’re going to incur costs right. In the beginning, it kind of gets back to Denny’s question about short-term and long-term we knew it was a risk, but ultimately we also knew that we had to experiment and kind of put what we knew to be true in our current life, to the side and what the data was telling us and really go get some new data, really go experiment and understand what else was out there that we didn’t quite know about yet.
Brooke Wenig (14:09):
And did they give you a timeline at all for this? It’s almost like an experiment or testing out a hypothesis. Did they give you a deadline of, “If we can’t increase our number of customers by 2 X in a certain time, we’re going to cut it and go back to charging these platform fees.”
Elena Donio (14:22):
We had a specific plan that said, “Okay, we’re going to hire this many sales reps around this amount of time.” And we sort of stepped into it knowing… And in fact, when I decided to take the role, I remember a very distinct conversation with our CEO and COO, where I said, “Listen, we have to invest. This is going to be a loser for a couple of years. And if we want to make it a winner, it’s going to take three to five years. And so, but I have to know we’re in this.” And this was at a time when the economy was just recovering from the great recession and the financial crisis. And so my feeling was, I’m very comfortable if we can’t do it, I get that. But if we do do it, we’re in. And so I asked for a couple of years and I said, “Well, we want this business to be a hundred million within five years.”
Elena Donio (15:10):
We did better than that, “but it’s going to take a couple of years to get there.” And so we did have gates set up and then, and then it was things like, “When are you going to hire the next sales rep, the next market development rep, when are you going to put the next program dollar in play?” And those were the things that helped us be really disciplined about what we were learning early days and then how we would fuel the machine from there. And so once we started to see some success, we were willing to spend the next dollar and the next dollar and the next dollar.
Elena Donio (15:39):
I would say a bigger problem though, was that we were changing so many things all at once. We didn’t have an awesome control. And so we were changing, like I said, everything from product to rep compensation, to pricing model, even contract terms we move from commit to a 90 day out.
Elena Donio (16:03):
That’s a pretty big difference in how you think about earning the right to serve your customer day in and day out. And those were all the things we were trying all at the same time.
Denny Lee (16:08):
Awesome. Okay. Now, you bring up sales rep compensation. And even though I realized that we’re very much a data type, a vidcast podcast series, I find that super interesting and super important. So can you explain, like talk about what you changed and why did you do that?
Elena Donio (16:25):
I think this is a data problem too, right? Like when you think about how sales rep compensation works, there are certain things that are tried and true, and there are certain things that you should experiment with around the edges. And then there’s outcomes that you need to look at. And particularly in an SMB business where you’re turning over a lot of transactions all the time, and the sales cycles are very short. And we used to have a concept of a one-call close, which is super fun when that happens. That’s a sales cycle of 25 minutes or something like that, not common, but super fun when it happens. But as you’re building up data about what’s happening in your business, you’re also seeing how that impacts your rep productivity, how that impacts your even retention of key wraps and things like that.
Elena Donio (17:11):
So we’re looking at the data all the time. And so I do think it’s actually a pretty relevant question and topic. One of the things we did that was pretty controversial early on is it used to be in sort of the early days of SaaS. And I think this is still the case across many companies. It was very common to compensate on something like ongoing or first year revenue. And it was sort of revenue in, commission out, revenue in, commission out, revenue in, commission out. And it was very much a purely commission-based process. And that’s how you would retire quota. That’s how you’d go to President’s Club, et cetera, et cetera.
Elena Donio (17:47):
Well, we knew that and based on lots of data, that when you compensate that way, it’s very common for people in the field to focus on the larger tranche of their customer base. And by that, I mean, bigger deal, more money immediately. And so, we also knew when we were starting up the SMB business that we had a ton to learn, and we kind of hit on this a little bit in the prior questions. We needed to know was the product good enough for all the way down to 25-50 employees, up to a couple of hundred. Was the product going to work, was the setup process going to work, were the integrations going to be easy enough for people. This is a system that talks to a lot of other systems, whether it’s the GL or payroll, or you name it, even outside systems and travel. Were are we going to be able to do all of that? Was the client going to be able to do it with resources that were not always as technical as you might imagine, as an organization that’s much bigger, that has specific IT resources dedicated to T&E.
Elena Donio (18:56):
We had to work on a lot of things. And so what I felt and what our leadership team felt was really important was units. Like we needed to just get a bunch of units in the door because we had a lot to learn. And we were only going to learn those lessons by having a volume of data and experiences to go look at and analyze. And my feeling was that if we kept with the historical mode of compensating our people, we might miss out on an opportunity to have hundreds, if not thousands of units coming in the door quickly. And so, we instituted a concept of a unit bonus and we basically said, listen, if you do a deal that’s $500 or north in annual revenue, we’re also going to give you a unit bonus. And these unit bonuses range from a couple hundred to a couple thousand dollars, depending on the kind of client it was.
Elena Donio (19:48):
And everyone thought we were crazy. It was like, whoa, wait, that’s actually the amount of the entire deal that you’re doing in a year. And my feeling was, yes, there are going to be times when that happens. However, when you think about the portfolio, what we really want people focused on is bringing clients into the net for two or three reasons. One I talked about, we have a ton to learn. We got to know if this thing’s going to work.
Elena Donio (20:11):
We also know that the louder we are, the more noise we make, the more successful we are, the more competitors are going to come into this and think that it’s easy and that they can just bang out a simple app and go to town and eat our lunch. And we don’t want that to happen either. So not only do we have a lot to learn, but we have links that we’ve got to cover by blanketing this new universe that we’re selling into quickly. And by thinking about units, by flipping the perspective of our sales people into that world, we get them oriented toward more and more and more and faster. And it worked. We didn’t do it forever, but the portfolio ended up playing out okay. And I think it was the right way to start. And so, those were some things that we experimented with that I think ended up serving us really well in the early days, as we were building a name for ourselves in a place where it didn’t exist before.
Denny Lee (21:06):
No, that makes a ton of sense. And by the way, do you want to just do a quick call out for folks since it’s a technical audience, what exactly is President’s Club?
Elena Donio (21:16):
You may have heard of President’s Club before in that it’s a common sales incentive where individuals that kind of finish above their quota for the year get to go on a trip together and always surprised me what a big motivator it was. I think, because at Concur, we had allowed folks to bring their families. And so it was a way for people’s significant others and children to meet one another in kind of a really special event, more so than the cost of it. It really had, I think, a lovely, motivating, and psychological impact on people.
Denny Lee (21:57):
Okay. So leading up to it, you did this as president of SAP Concur, and then you became the CEO of Axiom. I guess the question that leads is that what type of profile or skillset do you think CEOs need to possess in order to be able to do the things that you did?
Elena Donio (22:15):
Yeah. Yeah. I’ve worked for alongside so many phenomenal leaders. And I think there are so many differences, right? You’ve got really very technical leaders that are incredible intellectuals. You’ve got people that grew up in sales and marketing that are charismatic, create following through charisma and enthusiasm. And then you’ve got people that are quite soft-spoken and deliver followership through execution and operational discipline. So, so many different kinds of things. But I would say there are two or three things that I think all of the best leaders that I’ve worked for and with have in common, and they’re things like curiosity. They are things like grit and ambition, having a learning mindset.
Elena Donio (23:09):
Not needing to be the center of attention, but rather seeing their value in lifting up other people. Building and developing conviction is a big one. I think people that have conviction and a vision are so much easier to follow than those that are kind of playing a wait and see a safe approach. Above everything, the kinds of leaders I’m most attracted to are those that you walk away from feeling better about yourself, not just better about them. And I think that’s a really sort of special part of leadership that I’ve seen demonstrated time and again in those that win and that create environments where people want to go do the hard work to win with them.
Brooke Wenig (23:57):
And I really liked all those skillsets that you pointed out because they’re applicable not just to managers, but to individual contributors as well. They are leaders, even if they’re not directly leading people.
Elena Donio (24:07):
I love that you’re saying that Brooke. One of my favorite things to talk about is leading from whatever seat you sit in. I think every seat has leadership opportunity.
Elena Donio (24:19):
We used to talk about it, back to President’s Club Denny, who are you going to take with you? And I’m not talking about your significant other, I’m talking about the person sitting next to you. What are you going to do at the end of the day when you have another extra cycle to give? How are you giving it? How are you serving others?
Elena Donio (24:36):
And also just simple things, like I tell people all the time, if you’re in an individual contributor role, sign up for something else, run a project, be a liaison into some other team, create a process that you get to go talk about, fix something that’s broken in your day-to-day. And those are all opportunities for leadership even when you don’t have the manager title or the leader-oriented title, as we’ve historically thought about it.
Brooke Wenig (25:08):
I love all of that. But now I would like to switch gears a little bit. We’ve talked about your time as president of SAP Concur, CEO of Axiom, now I want to discuss your experience as a board member of both Twilio and Databricks. So for our listeners that aren’t so familiar with the experience of being in a boardroom, what is it like? What are the committees comprised of? How often do you all meet?
Elena Donio (25:29):
Yeah, it varies company to company and stage to stage as well. So Twilio is a public company. I’ve been on that board since just before their IPO, so about five-and-a-half years. And I’ve also historically served on a private equity-backed board, so a private company that was majority owned by one investor. And then Databricks is obviously a venture-backed sort of late stage private company I’ll call it.
Elena Donio (25:53):
And so they all have different dynamics, and you can add non-profit boards into that as well, that all have different dynamics as well. In fact, that’s a great place, Brooke, to the prior point about individual contributors sort of getting leadership experience, thinking about things that you’re passionate about, getting involved in a nonprofit board, and then you just see sort of how do meetings run? How are they ordered? Like when do you vote and not vote? And it’s a great way to get your feet wet in some things.
Elena Donio (26:21):
But as you think about corporate boards and the way they work, sort of everything you read about is about governance. It’s about, “Well, how could the board have allowed this to happen at XYZ company?” And like, “Who was paying attention to A, B and C?”
Elena Donio (26:33):
Governance is important. I mean, if you were to ask investors and general shareholders, they would say, “I want those people to be doing their fiduciary duty on behalf of the company and on behalf of shareholders first and foremost.” They’ve got to make sure that the trains are running, ethical standards are high, and that they’re dealing with governance; totally important, not necessarily the part that’s the most fun, I would say.
Elena Donio (27:02):
Super important that we get this kind of thing right. But where I think board members really shine and bring their unique value is when you think about how to leverage the resources of all of that operating experience, whether it’s in product and technology, sales and marketing, human resources, when you think about the functional skill sets around the room, how are they applying their talent and skill to the problems and opportunities ahead, and challenges ahead, for the individual organization? So at Twilio, for example, we spend a lot of time on product strategy. We spend a lot of time on things like how are we enabling the leadership team to do the best work they can do? How are we getting scale inhibitors out of the way? Like when you grow really fast, like Databricks is, scale inhibitors start to fly at you from all different directions. And ideally you have board members around the table that have seen around some of those corners, and not necessarily the exact same circumstances, but circumstances that are similar enough where you can really benefit from their experience.
Elena Donio (28:04):
So those are some of the things we talk about in the room. Typically boards meet quarterly, sometimes a little more than that if there’s transactions happening, there’s a lot of sort of meeting on the fly as needed. There’s committees certainly, Brooke you talked about that.
Elena Donio (28:19):
The committees that you have to have in a public company are Audit, Compensation, and Nominating and Governance, that’s the committee where largely ESG, or environmental, social, and governance types of topics tend to sit. Though those topics also cross boundaries. Often Security and Risk might have their own committees, though they might also be associated with the Audit.
Elena Donio (28:42):
Over the last five years I have served as the Compensation Committee Chair at Twilio, and I’ve built up a lot of experience in navigating that. And so that kind of has become my thing inadvertently, but I love it because it really is an opportunity to get into people, how people are motivated, how investors think about compensation and use of equity and things like that, that I think are really important as you think about how companies scale long-term
Denny Lee (29:09):
Perfect Elena, we really appreciate you taking time out of your busy schedule to give us that insight on leadership, whether it was about sales compensation or board committees, there’s a lot of really interesting tidbits about culture and motivation. So really appreciate your time and for joining our Data Brew cast today.
Elena Donio (29:27):
It was a pleasure, loved talking to you both, appreciate the insightful questions and digging at things that I think are fantastic topics for us to all think about and talk about together.