The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Monday.com: Scaling from $6M to $120M in ARR in 3 Years | How Monday Have Built the Best Performance Marketing Engine in SaaS | Going Upmarket, International and Multi-Product; The Biggest Lessons and Mistakes with Eran Zinman
Fri, 17 Jan 2025
The story of Monday.com is insane, turned down by most VCs, then scaled from $6M to $120M ARR in just three years. Today the company is public with a market cap of $12BN. Joining us in the hotseat today is Monday's Co-Founder and CEO, Eran Zinman. In Today's Episode with Eran Zinman We Discuss: 03:03 The Role of Video Games in Founders' Success 04:12 The Fail That Taught a $10BN Founder Everything 09:40 Pivoting to a $12BN Company: How, When and Advice on Pivots 14:15 Why 99% of Investors Turned Monday Down: Fundraising Lessons 17:05 Building a Performance Marketing Engine 21:25 How to Scale ACV and Move Upmarket 28:54 What Have Been the Most Effective Marketing Strategies 29:08 How Have Monday Been So Successful with Youtube Ads? 29:43 Biggest Challenges and Lessons in Channel Spend 30:50 Building a Multi-Product Strategy: The Rise of Monday CRM 34:37 Competing in the SaaS Market: Is Competition Good? 39:30 The IPO Journey: Why Then? Pros and Cons of Being Public? 42:38 How a Co-CEO Structure Works 43:55 How to Manage a Board 45:04 Quick-Fire Q&A
It was still hard for us to raise funds back in the days because people didn't get the idea. We grew from 6 million of ARR to 18 the year after, and then from 18 to 50, and 50 to 120 in three years. What I found about founders is that you try to avoid the hardest things in your business. If something is very painful, that's the right time to get into it and fix it.
The story of Monday.com is insane, turned down by 99% of VCs. The company then scaled from $6 million in ARR to 120 in just three years. Today, the company is public with a market cap of $12 billion. They have an incredible co-CEO structure, which is very strange. And Aaron, the guest today, does not use email. I'm so excited to bring this one to you today.
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You have now arrived at your destination. Aran, I am so excited for this. I heard so many great things from Avi, from Nino, from Rajiv. I spoke to pretty much the whole cap table. It was a lot of fun. But thank you so much for joining me today. Thanks for having me. I'm excited for this. Oh, so am I. I've wanted to do it for a while. I'm like the biggest Monday nerd. I love that.
Many reasons why I'm just perpetually single. But I want to start. I heard you're a really great video game player. And this is a commonality in great founders that I've interviewed. So why are video games correlated to success in founders?
Wow, you've really done your research, huh? Yeah, I told you. Yeah, I actually love video games. I actually play to this day. So it's been an old habit of mine as a kid. When I was young, I used to play a lot of strategy games. One of my favorites ever was, I don't know if you remember, but it was called Command & Conquer Red Alert 2. It's a strategy game.
I think if you play the right games, you can learn a lot from them, especially strategy games. On one hand, you need to see the big picture all the time. You need to understand the strategy, you need to understand what's going on, but also handle the tactics, know all the details, act quickly. Kind of similar in business, I guess.
I think it totally is. I remember Toby at Shopify saying to me that he thought that it was more relevant if you'd managed clans in games before and if you'd been to university, I think. And I thought that was rather apt. I agree. It's as hard as doing that in business. Now, dude, Monday is not your first business.
And I remember after your first business, you said something which is failing is part of our success. And I just want to dive into this because I think it's important. What have you learned about embracing failure over the years? And how do you think about that statement?
Yeah, there's something that really goes with me in my journey because prior to Monday, my first startup, I was in the middle of uni. I built some sort of a search engine, tried to compete in a category, which is extremely competitive. I think the more interesting part of it, it was a complete disaster. Like I built the product, I worked in it for about 14 or 15 months before launching it.
After 14 or 15 months, I didn't raise any money. I just felt I wasn't ready. And eventually it was a big failure. I ran out of money, personal money, and ran out of energy. I remember thinking to myself after I closed that company, I wasted all my resources, you know, personal, financial. I'm at point zero. I must have learned something. I didn't spend all that time without learning anything.
After a lot of processing, I realized that I've learned that the reason I failed in that company is that I was afraid to fail. It might sound weird, but I was so afraid of negative feedback from customers. I was afraid people are going to write about me on TechCrunch or on a blog post. I thought people are going to be critical of my product. I don't know. I was just afraid.
And I swore to myself that when I build my next company, I'm going to fail. I'm going to fail often. I'm going to be happy about failures because I want to learn as quickly as I can. and improve and get actual feedback from users.
Because after 14 months working on that product, people gave me feedback that if I've shown them like a mock-up or like an early version, I would get the same feedback and I would be in a totally different place today. And we keep that DNA up until today on Monday. We fail, we tell people, try it out. A, B test. Get feedback from customers. Just learn.
And it's a big part of our DNA today as a company.
As much as one can get used to failure, it's never easy to accept. When you look back at the different challenges you've faced, what internal fail has been the most challenging to accept?
Growing up, writing code, I was always this smart kid in school, in uni. When you build an actual product that people need to use, nobody cares about your achievement or knowledge or how much you know about anything. It's all about the product. Is it good enough? Do people really want it? It's not about an exam. It's not about somebody saying great job.
It's about actually succeeding in the real life. And I think I was not ready for that. I tried to not fail. I wanted everybody to clap and say, this is an amazing product. And this is not the way you build things. You need to get feedback. You need to get people involved, get their opinions.
Let's go back to 2012. You and Roy are sitting together, Da Pulse. Love the name. It really is brilliant. Genuinely, I actually like it. I remember, do you know what's so funny, dude? When I emailed you for the first time, your email was at DaPulse.
Oh, yeah.
Yeah. Yeah, you didn't respond. But my question is, you're sitting with Roy. How do you guys come up with the idea for DaPulse Now Monday?
Yeah. Initially, you know, both Roy and I, you know, I had my own startup. Roy also had a startup. And I remember us sitting down. I was working in a company called Conduit. Roy was working at Wix.
I guess it's a little bit counterintuitive because I think a lot of founders, when they think about starting a new business, they often try to think about something that nobody thought about before or a new idea. This is one approach, but we took a very different approach. You know, I would say the work management and project management industry was always packed with a lot of tools.
But we kind of had a different view about the market. We said, look, if we look at the market today, you know, CRM, what's the leader? Salesforce. IT might be ServiceNow. But who's the leader today about managing work and processes? Who is it? Who's the number one vendor that people rely on to manage the core of their work apart from the CRMs and the service part of it?
And when you think about it, there was none. And we just felt there's such a huge vacuum today in the market. And it doesn't make sense that there isn't one company that became the dominant player in that market. So we said, let's try to tackle that opportunity. One principle that was very important for us from day one, and I think it was a critical component of our success.
We said, we want to take a very different approach to how we're going to do it because we, both of us, we didn't consider ourselves to be like the best managers on the planet. I don't know what's the best way to manage a team or a group of people or, you know, a business, but I can give people the tools to do it and they know what's best for their business.
So from day one, we said, we don't know exactly what's the solution for every business, but we're going to give people the ability to customize Monday for their needs because they know best about what's right for their business. Since day one, nothing in the product is rigid. Everything is 100% flexible. They can change it to their needs.
And basically our own customers build their own product on Monday today.
So we go with the idea that, hey, we want it customizable so people can make it fit their business. When we launch, do we have immediate traction? Is there initial success that we know we have? How did that go?
No, I mean, the first few years was really challenging, I would say. When we started in 2012, our main focus was around communication. If you remember back in the days, there were other players like Yammer, HipChat. It was the days before Slack. So we initially thought that it will be more focused around communication and collaboration.
But one thing that we found is that a lot of those tools are under the category of, yeah, we can use it, but it's a nice to have tool. It's not something that is kind of managing the core work of businesses. So we pivoted from that. I think the first year and a half, we kind of focused on communication and then we kind of pivoted the business to focus more on that flexible management.
And that was a big pivotal moment in the life of the company.
How was that pivot often found as faced with the dilemma of, I'm told that resilience and persistence is important, and I should just keep going. And then we're also hearing of pivots where a pivot is required. How do you advise founders on whether to keep going and be persistent versus when to change direction and pivot?
Yeah, this is an extremely tricky part because both Roy, my co-founder, and I, we're software developers. Our natural instinct is to go to the office and write code. That was our go-to. We always felt that we're one feature away from getting the right product. And we kind of spent like 70% or 80% of our seed round. We sat down and said to ourselves, look, something is not working.
It's not about the next feature. We need to talk more with customers. We need to understand what they're looking for. And we've done something that's very not natural for us. We went and again, interviewed a lot of potential customers. And instead of showing them what we built, we actually interviewed them and asked them how they manage their businesses.
So we kind of took that into our own pivot as a company.
Okay, and so we pivot, and then we go to the more known product that we have today, which is obviously Depulse, at this time now, Monday. Did we get customers then? Was that immediate traction when we released that V1?
When we had the initial version of the collaboration tool, we had about three or four paying customers. One of them was Wix. So we had a little bit of traction, but When we pivoted the company, that was a really meaningful moment in the life of the company. We launched our payment system.
And I remember to this day, the first time a new customer has actually paid for the software without us talking to them. I bought a TV. I actually mounted it to the wall. And I built a dashboard that showed the number six. That was the amount of customers that we had. And every time a new customer came in, there was like a big Homer Simpson sound. Like, whoo-hoo!
I remember one day we sit down writing code and I hear this in the background and six turns into seven, seven turned into eight. You know, I remember even one day that we had three new pain customers in one day. And I was so excited. I called Roy, my co-founder. I told him, look, we got three new customers in one day. We can conquer the world. I'm sure that with that momentum.
How much are these customers paying at the time? I would say $12 per seat. But the exciting part was that we never talked to them. They got the principle of the product. They got the value, just onboarding. That was the exciting part. It just felt like we built something that can turn into a machine. And I think that's more than anything we're excited at.
One thing I find challenging is horizontal products and getting to the first 1,000 customers or 1,000 users. When you think about that, Monday is the joy of it is a horizontal product, but then the challenge is it's a horizontal product, and so your product marketing can't be that tight. When you think about getting the first customers...
How do you think or what are your biggest lessons in scaling to the first 100 or 1000, given what you've seen?
You know, initially, I thought that most of our customers are going to be startup companies or tech companies like us. But we started to do marketing on actually Facebook was the first platform that we started to do performance marketing on. And I think what's great about it is it has such a broad audience and it brought us a lot of customers that we couldn't expect to have.
Like we got churches, hotels, retail, airplane manufacturing. Over the years, we found that up until today, 70% of our customers are actually non-tech companies. That's amazing because it just opens up the TAM and the audience of the company so much.
And we're going to dive into that because it's an incredible stat. But at this point, we're getting customers, okay? We've got the woohoo coming in. You do it much better than me. But we've got that coming in. But you've spent 70% to 80% of your seed round at this point. Your runway is pretty tight. What happens now in terms of funding?
So actually here, I give a lot of credit to our board members. Specifically, you mentioned Avi. I would say the typical investor seeing that a company spent 80% of their seed round and didn't reach like product market fit, maybe would kind of give up on the company or send that company to do like a round A and try their luck outside.
But, you know, something I give Avi from Entrez Capital a lot of credit. He saw the potential. He told us, I'll never forget this. I believe in you guys, even though I don't know why, but I believe in you guys. Don't do an A round. Just go out. I'll give you the money. Let's do a convertible. Just scale what you're building.
I think this was a pivotal moment for the company because if we would go and try to raise funds, you know, it's a long process, especially when you don't have momentum. Maybe the company wouldn't be what it is today, but because he gave us this runway, I think it really helped us kind of leverage the momentum we already had.
Was that the A?
Yeah, so that's complicated. So we finished, we kind of ran out of money from the seed round. We actually, just to give you some data, we raised 1.4 million at, I think it was 2 million pre, that's back in the days. Good times. Yeah, for investors. 30% of the company. We got this convertible when we wanted to do the A round.
Actually, our existing investors put the money in with the convertible to get us into an A round. I think it was still hard for us to raise funds back in the days because people didn't get the idea. Maybe we also didn't do a good job raising money with Roy and I. What did they not get about the idea? I always felt like this company is going to be a huge success.
What they don't get, I didn't get it.
I can tell you if you want my perspective. You're selling low ACV contracts. We like enterprise. PLG was not as notable as it is now in terms of being able to scale into massive businesses. And you're selling to hospitals and to hotels and to churches. Dude, this isn't a really big business. This is like SMB play. You can't make money selling to SMBs, right?
And so we've got all these investor heuristics which tell us this isn't a good business.
Yeah, so this is great feedback. I always felt like, you know, it's all temporary, like eventually we'll go upmarket, eventually we'll sell to large enterprises. I always believed in our ability to execute and to change the company to kind of fit to the next stage. And maybe that's something we didn't communicate well enough to investors or didn't build our confidence around that.
We got a lot of no's, I would tell you that in our A, B and C rounds. So is that when you raised the seven and a half million A? Yeah, with the convertible, it was seven point something. Yeah.
What do we expand on next? We've got seven and a half million. Where do we go now?
Okay, so something that I feel we've done, which was really meaningful to make the company successful in scale, we actually built a very powerful performance marketing engine. We call it BigBrain. It's a tool we built within the company to track every campaign, every user, We made an early decision in the life of the company to build this tool internally.
It was very tempting to use off-the-shelf software for that, to do analytics, monitoring. But we were very ambitious. We said, we're going to build a huge company. I don't know where we got the confidence, but we just said, we're going to build a huge company. We need to build our own tool because this is going to be a main part of our ability to scale this machine. So we built this tool.
We invested heavily into that. So we tracked everything, every click, every view, every ad that any user saw all the way through the signup funnel conversion, expansion, and so on. And with that, we built a very efficient marketing machine. Now, when I say efficient, I think a lot of founders get this wrong. And maybe this is an important message.
Something that we optimized for from the very beginning was cash flow. I think a lot of SaaS metrics are optimized not for cash. If you think about standard SaaS metrics like LTV, CAC, whatever, they never mention cash. It's not about cash. It's more about around accounting and predictability. But we always try to optimize for cash. What I mean by that is that let's say we raise $7 million.
I want to invest this in the most efficient way in performance marketing. So what's the best way to do it? We said we want to invest into performance marketing and we want to collect cash on cash as quick as possible from our customers.
So we've done a lot of A-B tests to get people to pay more annually, to improve speed to conversion, to find campaigns and keywords that get customers to onboard faster and pay more quicker for annual subscription. So you turn that $5 million, so every, let's say, million we invest into performance marketing, you get 70% or 80% back after a month. We built a very efficient machine around that.
So we actually managed to turn $5 million of money raised from investors into a $15.15 million performance marketing budget. So we built a very efficient machine that recycles money and kind of reinvested that back into the business. I think our customers has been the biggest investor of Monday, more money than we ever raised from investors.
When you think about building that cash cycle that is at velocity and at speed, is it multiple things that lead that to be very efficient? Or is it one or two things which really drove it, like annual payments? A lot of things.
First of all, we track the expenses. We ask Facebook, we ask Google to, can we pay you? Can we postpone the payments? Like, can we drive campaigns and pay you every 90 days, for example? So we optimize the expense on one hand. On the other hand, we optimize for campaigns. We actually pick campaigns based on the return, how fast it is to get customers on board. We optimize the onboarding.
We optimize the payment form. There's a lot of steps involved into that. The point is we optimize for that. We optimize for that KPI to make the business very efficient. It's a key part of our DNA up until today. Monday is really efficient in terms of cash flow. It's a huge part of our DNA. We started from day one, literally.
We've got big brain. We're building this performance marketing machine. It's starting to work and we're building this cash flow cycle. First, how much revenues are we at when we raise the seven and a half?
Wow. Probably three or four million of ARR. Fuck, I really miss these times.
Now you do an A when you've got a design partner. That wasn't a joke. That was me crying in my studio. OK. And so we have this performance marketing machine. It's working. When do we go out and raise the B? Because then you raised $25 million from Insight, correct?
Yeah. When we raised our B round, we raised $25 million from Insight. That was kind of, I would say, a better round for the company. So we raised $25. I think when we raised that round, we had like $7 million of ARR.
What was the price on the round?
I think it was around 100 million pre.
Standard 20% dilution. Yeah, yeah. So we raised 25. Let's ask the question of upmarket. SMBs and kind of lower ACVs is kind of where our home is. When do we decide to go upmarket?
Yeah, so after we've done the B round with Insight, a few things happened. One, we branded the company as Monday. We changed names from the polls. And I think it was about a year after that, I remember that board meeting. It was in New York. And one thing that Roy and I said always, that we're never going to have a sales team in the company.
And I remember that we had this morning and we came to the board and said, look, we're probably wrong. And we have to have a sales team in order to scale the company to the next level. And we built an amazing sales team. Going forward to today, we have more than a thousand people in our sales team, but it was not obvious back in the days.
Why did you decide then was the right time?
Being developers and product people and building this incredible performance marketing engine, we felt that we can scale the company to infinity. But what we found is that having a great product is not enough because when you want to scale within existing customers, the product plays a very important component, but there's other things. You need relationship with people.
They want somebody to talk with. And I just felt that it wasn't a good product for our customers. Like they had their own processes. They cared about security. They cared about governance. They wanted help with onboarding people into the product. And software is not enough. As I said, we were always ambitious. I remember Roy and I talking and we said, we don't want to be an SMB company forever.
Like we have such huge potential. We want to be doing both SMB and go off market. And this is what we have to do. So let's do it.
A lot of founders are told, wait until you're pulled up market by large enterprises. Is that good advice?
It works for us. I think let's say the opposite is also not optimal. I think that if you start as a small company and you have an amazing VP of sales, you know, they can sell anything. even if your product is really crappy. That's a curse. It's not something positive because we work so hard to improve the product because every improvement, you know, just improve our marketing machine.
It's improved the retention of our customers. And it's built a DNA, a special DNA in the company And then when we felt that we're missing, like people knocking on our door saying we want to scale and there was nobody around to help them, it just felt we have to do it. We have to mature. We had to add this layer into the company in order to scale to the next phase.
I get you. But a lot of other people say, and I see this myself as an ambassador, It's such a different company to build an enterprise business. Not just sales teams. You need customer success. You need SDRs. You need AEs. You need CS. You need security, SOC 2s, compliance. Is it a completely different business to build?
I think there's a difference between a company that pivots into the enterprise and a company that wants to sell to the enterprise in addition to selling to SMB and mid-market. We didn't pivot into the enterprise.
A lot of companies say, look, we tried SMBs, we tried mid-market, we spent so much energy and effort converting those customers, we might as well just focus on the large ones and get a higher ICV. That wasn't our strategy. We wanted to capture what we call a pyramid. The whole pyramid, the baseline of the SMB is in the mid-market, but also the tip of the pyramid with the large enterprises.
So it was always about adding that layer, but also making sure the product is good enough for SMBs and mid-market.
When did you start to see PLG tapering off and really wanting to implement the sales team alongside it? What sort of level of revenue was it?
Probably 40 or 50 million of ARR.
Wow. Okay. And so we're still on the 25 million from inside at this round.
Yeah, we grew really quickly. We grew from 6 million of ARR to 18 the year after, and then from 18 to 50, and 50 to 120, you know, in three years. So it was like super rapid growth. You know, I think it was 40 or 50 million, maybe even 60 that we kind of added to the sales team.
Do you appreciate how strange that growth is? And what I mean by that is that when you're doing it, are you like, whoa, we know that we are one of the special ones?
I'll tell you something funny. You mentioned Jason Lemkin. Don't tell me you cold emailed him and he didn't respond. No, no, no. One of the reasons I didn't reply to your email is that I don't use email. But I actually met Jason a few years ago. I was one of his biggest fans. When we started in 2012, 2013, nobody knew about SaaS, anything. I became like the biggest geek on SaaS.
I read every article he put on SaaS. You know, he wrote answers on Quora, if you remember. I remember I went to Roy and I told him, look, you know, I read an article from Jason. He said that when you get to 1 million, You need to get to 10 in four quarters. And then once you get to 10, you need to get to 100 in like, I don't remember, like five or six quarters. And I said, look, we have to do it.
We have to do it. You know, Jason said so. And when I met Jason a few years later, I told him like, thank you for the guidance and everything. And it was very ambitious to get to that goal. He told me, you know, I was talking about like, the best companies, what investors want to invest into that. I took it as a grant. Literally, this is what we need to do.
So I guess ignorance is a bliss sometimes.
Dude, that growth is incredible. When you look back at that growth, what broke first? Because scaling companies is very hard. What was the first thing to break in that intense period of hyperscaling?
I think at some point when we reached 50 or 60 million, you know, the performance marketing engine was working really well. But at some point you understand that if you want to reach to 1 billion, actually, when we got to 50, we built a dashboard. We called the road to 1 billion. We built like a vertical TV in the office showing that we want to reach 1 billion by the year of 2023.
We actually missed it by one year. It was like a vertical dashboard. And we said, we are here, 50 million. We need to get to 1 billion. And we put it for everybody to see in every office around the world.
And I remember when we sat down, we said, we cannot do it just with the performance marketing engine, because when we ran the math, we had to invest so much money into performance marketing in 2022 or 2023. It didn't add up. So it was obvious to us that in order to scale to that magnitude, it's not enough to have a very efficient performance marketing engine.
We need to build a very robust sales team and to expand our customers because eventually when you reach 1 billion and you want to grow 30%, you have majority of revenue need to come from existing customers.
I read, and our teams are amazing now for research, so when I say I read, I was given the numbers. But I read that you spent in 2023 17 million a month on performance marketing.
Yeah, something like that. A little bit less, but around that, yeah.
How did you spend so efficiently in performance marketing when so few others did?
Again, it's all thanks to this amazing engine that we built. We're very efficient in terms of cash flow, over 25% free cash flow positive. So we just scaled this cash flow machine to the extreme.
Did you focus on a small number of channels and really hammer them? Did you spray and pray and see what worked? How did you approach the kind of portfolio approach to channel spend?
We never spray and pray. We don't believe that pray... I mean, I pray sometimes, but it doesn't help you with performance marketing. We measure everything. When we build a new campaign, we track everything. We A-B test everything.
Why was YouTube so successful? Like, Monday has crushed YouTube. You know this as well as I do. But why?
So, first of all, the rebrand was a key part of that. That was one of the main reasons we rebranded the company. Because we wanted to pick a name that people can remember. Because when you see an ad, you have about five seconds of attention to capture people. And again, we managed to track when people saw the ad. We not just tracked links, but also people viewing the ad.
And we saw there's a great ROI on that. And we managed to get a great presence on YouTube. And it was, again, cost effective to do it the way we've done it. What channel did you spend on that you wish you hadn't spent on? Look, Facebook was amazing for us because I think it just changed the trajectory of the company. But definitely, you know, AdWords, YouTube, we're doing everything.
But which one's least effective? Least effective? Yeah, which one are you like, we spent on it and it was a waste of money?
That's not the way I look at it because it's not about effectiveness. It's different audience. When people search on Google, they have a specific intent. I'm looking for a project management tool. But some people are not searching for a project management tool, but are browsing Facebook. And those are two different audiences, but both of them can be potential customers. Some people have intent.
Some people have, I need a new platform in the back of their minds. I'll just go on Facebook and suddenly a commercial about a work window and do, aha, you know, maybe it's an opportunity. It's a different kind of audience that we kind of target.
Is it not like the most expensive ad word? Like CRM, respectfully, the competitive land field or landmines that you kind of face is intense. Is it not the most expensive ad word buy? It is, but it's very cost effective for us.
You know, if we go forward, we build our multi-product strategy. So basically what happened, maybe I'll give you some background before we talk about marketing around that. So basically people, we got everybody using Monday. And one thing that was super surprising for me is that a lot of people use Monday as a CRM.
And because it's so customizable, you can build your own boards, which is like kind of the equivalent of a table. And they build contacts, they build deals, they build dashboards, automation, like a full-fledged CRM. Like why? It takes so much effort to do that. And I'm not talking about a few hundreds or even a few thousands, tens of thousands of accounts. build CRM on top of Monday.
And the same goes for death. The same goes for service. Those products were not born out of thin air. They were born because customer demand. And when we interviewed people, like, why did you do it? Why did you go all that effort to build a full-fledged CRM where you could just buy off-the-shelf product? And they said, like, we want control. I have an idea what's the best CRM for me.
I don't want to use off-the-shelf product that's very rigid. It's built in a very specific way. And they told me like, you know, our only option basically was to go to Salesforce because it's enterprise ready. You can customize it. But the cost of doing that and the complexity of customizing that software, and Salesforce is just an example. I'm talking broadly about enterprise products.
They look for something different. And We gave them on one hand the freedom to build their most amazing CRM, but they've done it themselves. No third party vendor, no special IT team. They built themselves and they felt proud about that CRM. So eventually we said, look, let's build a CRM product. Let's
packaged the Monday platform into a full-fledged CRM and built like deep feature, you know, call recording, call analysis, email marketing. And we've done that. That strategy has been a huge success on multi-product strategy. You know, the CRM today is growing faster than what Monday did back in the days.
What's the CRM product today at, revenue-wise?
The last investor day last year, it was growing from almost zero to $25 million in one year.
Are we seeing the complete bundling of SaaS tools? You mentioned the cool recording elements. You mentioned quite a few different products within that, which kind of, bluntly, kill a load of other adjacent products. Are we seeing the bundling of SaaS tooling again?
Look, I don't think Monday will replace all SaaS tools on the planet, but our vision, our grand vision is that from day one, we built the platform. We didn't build the product. I think that's something that a lot of investors got wrong about what we're building, or maybe we didn't explain it properly, but we didn't build a work management or project management tool.
From day one, we built the equivalent of force.com, which is for Salesforce. We built a generic platform. Not about work management, not about CRM, just the building blocks. And then work management was the first implementation. And then came CRM and dev and service.
The effort that it takes us to customize the platform as a CRM as dev is minimal compared to the compound value that we get because we build it on our Monday platform. And eventually, I definitely see a future where a company buys several tools and consolidates on Monday for the core business use cases, whether it's CRM, work management, dev service.
And the compound value of using several of those tools, the flow of data, automations, processes, is a huge value add. The reason I'm excited so much about the future of the company, I really feel... from the bottom of my heart is that we have one of the biggest opportunities today in the software market and we have to execute in order to deliver that.
But I really feel that we got everything right. We just need to scale the company to the next phase.
What do you know now about going multi-product that you wish you'd known when you went multi-product?
Maybe one lesson is it's not just about the product itself. Go-to-market is as important. And every product has a very different go-to-market. It's unbelievable. It's so different. Different buying dynamics, different buyer, different decision process, different way people consume ads. They're all special in their own way.
As a result, do you have to build independent teams for every product? How do you think about how the company changes with the additional product line that's built?
Yeah, that's exactly how we think about this. We have different business units dedicated for each product. Every product is in a different phase. So, you know, CRM is more mature and then dev and then service. And obviously work management is kind of the most mature product. But every product has its own team, its own marketing efforts, dedicated salespeople. And we scale them.
It's like small startups within the company.
Dude, when you look at the revenue lines today, like Monday is like, what's Monday core revenue?
I mean, we announced we reached 1 billion of ARR about like three months ago, I think.
Okay, great. And so we've got a billion of ARR and then CRM is like 25, as we said in Invest Today.
Yeah, that was like a year before that, but it's bigger today.
What smaller line of revenue today will be one of the biggest lines of revenue in five years' time?
Definitely CRM will be very dominant going forward. Dev as well. Actually, the momentum we got from Monday's service is unbelievable. It's still early days.
Who do we compete against for Monday service?
With CRM, we compete with HubSpot, Salesforce a little bit, Zoho. Service, we can see Jira Service, Freshdesk.
A little bit ServiceNow, although they're very focused on the enterprise. When we look at the names that you just mentioned, like on CRM alone, respectfully, wow. How do you advise founders who are told, oh, that's a really horribly competitive industry?
For me, it sounds like it's an opportunity to disrupt that industry. There's players that have been dominating each one of those industries for a very long time. People willing to pay a lot of money to use those tools. They bring a lot of value. And I think it's just an opportunity to disrupt that market.
Do you pay attention to competition?
When I built my first startup, I remember that I used to log into TechCrunch or read tech news. And every time I saw a competitor that I felt was competing with me, I felt this weird feeling in my stomach. And then I swore to myself, I'm never going to do it again. I'm just going to focus on myself and my journey. don't.
So you don't pay attention to competitor products?
I mean, we analyze them and we look at them and see what they're doing. But I don't feel like that's what's going to stop us in any way. I feel if anything, it's in our hands. It's in our control and our execution ability. Okay.
Okay, so when we think about execution ability with an eye moving forwards, you're an incredibly insightful, smart founder. Everyone is questioning horizontal software's ability to sustain in the next wave of AI. How do you respond to the question of Monday sustaining when we live in a world of agents, when we see a new generation of AI impact all of SaaS?
For me, this is one of the things that excites me the most because what we already seen once we now built a lot of AR functionality is that people use AI inside Monday. So it's so easy for them. We took the same principles of easy user experience and custom custom ability.
And instead of building like a dedicated AI product, we just allowed our own customers to integrate AI into their own workflows. So we helping them today make their own work more efficient.
Do agents not make Monday a simple system of record or a database given they do all information and data collection, retrieval and migration and then bring it back to Monday? And is that a good thing or a bad thing?
I think it's an amazing thing. I think there will always be room for a system of records. I don't think that anybody will be willing to put their future into an AI bot without having the ability to question what's going on, see dashboards, graphs, analyze the data. So I think it's very important to track the data. I don't think that will go away.
Maybe some of the work being done by people will be done by AI, but it doesn't take away the fact that you need to analyze the data, you need to see it, you need to track it. And also, I think there's still going to be a substantial human element that will be part of that. So I don't think that SaaS tools will go away.
I think if anything, some of the work can be replaced by AI, but still the fundamental principle of why those tools exist is strong and will remain going forward.
Do you think AI will change the future of SaaS pricing?
For sure. For sure. You know, I think a lot of SaaS tools have been very focused on seat count. And, you know, once you replace, you know, human labor with AI functionality, pricing should adjust and maybe be more focused on consumption in addition to seats.
Can I go to the IPO? Why did you decide to IPO when you did? You know, we live in a world now where there is such extended windows of private capital. You don't need to IPO as we're seeing with Stripe, Databricks, Starlink. How did you think about when was the right time?
First of all, it was more random than you might think. We just felt that eventually we want to build a huge company. And when we look at the most inspiring SaaS companies in the world today, they were all public. And I think it adds a layer of maturity into the business. I really like the fact that we're a public company because, first of all, public market investors really surprised me.
They are way more sophisticated than what I thought. I thought initially when we went public, I thought that, you know, it's all about the private market, those investors, but public market investors are super sophisticated and smart. And also I think that cadence of quarterly, you know, earning reports really add a great cadence to the company.
So all in all, I think it was a great move for us as a company.
You go out at seven and a half billion. How does that feel?
You know what? You told me you like stories. So let me tell you a story. I'll tell you about the day of the IPO. It was a long two weeks in New York. It was actually on the edge of the COVID kind of lockdown. So I think it was one of the first IPO that was done in person after the COVID lockdown, actually.
And it was all on Zoom because before COVID, you used to take like a pride jet and meet investors and do like a bus tour. But it was mostly on Zoom. So we were exhausted like a day before the IPO. Here it is, the IPO, the big day. We go to NASDAQ. It's a beautiful ceremony. I remember seeing kind of the... opening of the trade day.
And then a few hours go by, I do a bunch of interviews on TV, newspapers, and it's like 4 or 5 p.m. I look to my left, I see Roy, my co-founder, doing interviews as well. And we're alone, like literally alone. Everybody left. We're alone. I had like this blazer that I never wear, but for the IPO, we wore matching suits.
We took off the blazers and we walked to the hotel, like 25 minutes, like with the white t-shirts. We walked to the hotel. I go to my hotel room. I sit down on the bed and just stare at Netflix for like three hours. That's the IPO day. That's the anticlimax of the IPO.
But the day after- Why was that hard? Because it's like, you know, triathletes or Ironmen or people who run a marathon. There's so much build up and then it happens and it's like, oh. Yeah.
The day after, when I woke up, I opened my iPhone, opened the Stocks app and added Monday. And that was the most exciting. I felt it throughout my whole body when I saw the Monday ticker. It just felt real.
What was the first 24 hours performance?
I think we went up like 10 or 15%, so it was good.
It's a tough morning when you wake up and it's like, oh, fuck. You mentioned Roy there. You are co-CEOs. That is a crazy arrangement in traditional startup land. It's worked phenomenally well for you, which is amazing. What have you done to make co-CEOs work?
When we started the company, actually Roy was the CEO and I was the CTO. So we didn't start as co-COs, but I remember like a week into the company, he told me, look, I want us to do everything together. So I told him, of course, like we're co-founders, but he told me, look, everything, you know, raise money together, be co-COs. I told him, okay.
And we would meet investors and it was weird because I would sometimes talk about the business and he would talk about technology and then next meeting we'll switch roles. I think we got everybody kind of confused, but after a while he just told me like, let's make it official, kind of name ourselves co-CEOs just so we don't have to explain it to everybody.
What's so special about him is that he's one of those people that has no ego. He wants to do what's best for the company. He doesn't care about his own title or to be on top of somebody else. We spend a lot of time together. We actually walk home every day, like walking. We live in Tel Aviv, so we walk every day. We spend hours just to think and talk about things.
You walk home every day together?
Yeah.
Wow. What have been your biggest lessons on board management? You have a great board.
First of all, my number one rule is never surprise the board. Never. That's like the worst thing you can do. Actually, one of the things we built into Big Brain is I don't know if Avi told you, but we used to send every day a daily SMS of the company performance every day to our board members. Whether it was good or bad, it was automatic.
So when they came to the board meeting, they knew the numbers better than I do. They saw everything. The board meeting was basically done on the numbers and the metrics because they had full transparency. And that's something that I really believe inside the company and also for our board members.
And if we had something that we wanted to make a decision about, we always talk with each one of them individually before the meeting, because the last thing you want is to get into an ego fight. So just get their opinions and change the things before the meeting. So we talk more about the future than waste time on disagreements.
That's so interesting. I wonder if that's possible to do for a fund. I'm just wondering now if I could actually have that with my investors, or at least my board, whenever we had a change of marks or a new investment or whatever it was. Okay, one to think about. Listen, I could talk to you all day. I want to do a quickfire with you. So I say a short statement, you give me your immediate thoughts.
Does that sound okay? Okay, and just no tricky questions. Never a tricky question.
What do you believe that most around you disbelieve? Maybe something that's not intuitive is about setting goals. Most people, when they set goals, they try to figure out what they can do. I never think about it this way. I'm thinking about what I want to achieve and then try to figure out a way to do it.
Because when you build like a plan for next year, bottom up, people will kind of think about a plan of what they've done last year and let's do it again with small adjustments. I always think about how can we do above and beyond and then just changes how people think about what can be done and how they can achieve it. Why don't you email? I never got anything good out of an email.
I'm an extreme believer in focus. You asked me about investments. I don't do investments. I focus 100% on the company and I always try to set my own priorities because I think all those tools really distract you. I always try to look inside and try to understand what's most important for the company. And when you start kind of being managed by...
external tools, I think it's a huge distraction for the company.
It sounds wonderful, dude. But how do you actually do that? Because when you have investors, board members, customers, they get in touch by email. You set up investor meetings by email. So how do you not do email? I'm so fascinated.
No, I mean, we have other people in the team that use email for coordinate meetings and other things. It's not like a company rule. I just don't do it myself.
And so you Slack and WhatsApp?
Yeah, we use Monday a lot to sync. We use Slack, WhatsApp, kind of more instant communication channels.
What have been your biggest lessons on priority setting? You're a fascinating mind in terms of focus. What's your biggest lessons on priority setting?
What I found about founders is that you try to avoid the hardest things in your business because they're usually the hardest to change. And I always think to myself, if something is very painful, that's the right time to get into it and fix it. And I always try not to avoid going down and deep into the hard things because I think eventually those are the things that cause stress.
And once you deal with them, it just changes your mindset and the course of the company. I always try to focus on the hardest things and try to figure out what's not working in the company.
What's the single hardest element of your day job as co-CEO of Monday?
I think finding the right balance. I think that for many years, I didn't have the right balance of family life and work life. And I was really stressed. And I made a decision a few years ago to make a change. I spent a lot of time with my family today. I'm more efficient.
What have you changed to allow yourself to do that?
Actually, I went to therapy and one of the things my therapist told me, which really resonated with me, she told me that, you know, I can do the extra meeting. I can do the extra thing. But at the end of the day, I'm a leader in the company. I'm leading the company. So people look at me and when I'm exhausted, when I'm stressed, When I don't have patience, it just reflects on everybody else.
And I need to take care of myself in order to be able to take care of the company. And it really hit deep on me. And I just felt I should treat myself like a professional athlete. I should be at my peak all the time.
I mean, you look wonderful. But how do you? No, you do. You really fantastic hair, by the way. I've been thinking this is like solid hair. How do you look after yourself? Well, today, then?
Actually, I exercise every morning. What time do you get up? I have three little kids, so I have... My baby usually wakes me up at like 6 a.m. I try to exercise every morning before I go to work, and then I try to spend time with my family in the evening. It's not always possible. It's really something that charges me as a human being. Do you need much sleep?
Yeah, I got the Oura Ring, so I've improved my sleep.
So when do you go to bed? If you get up at 6...
Well, I'm embarrassed to say, but usually like 10pm.
Wow. Yeah, that'll do it. Do you watch your diet? Are you healthy?
Yeah, well, I hope so. But yeah, like I said, I try to optimize my sleep, my nutrition, my exercise regime. I just feel the need to be sharp. I need to be at my peak. I need to take care of myself, you know, to take care of the company. So I really treat this like professionally, I guess. I listen to a lot of podcasts about supplements and just healthy living, I guess.
You can be CEO of another company for a day. Which company do you choose to be CEO of?
Wow. I'm fascinated by Microsoft. I think that's a company that's done one of the biggest transitions in the history of software or tech. It had its lows, it had its highs, but I think I'm really interested to understand what was the transition. I think Sotaya, the CEO of Microsoft, have done a tremendous job pivoting the company. So it'll be interesting to see this from the inside, I guess.
Totally get you and agree. If you were Mark Benioff today, what would you do with Salesforce?
Salesforce is an amazing company. It's an inspiration. He deserves so much credit for building the SaaS industry.
If you could ask him one question, what would you ask him?
One question for Mark? I think he's one of the people that probably knows the best in the world of how to build a sales machine at scale. So I think there's so much I can learn from him about how to do it. Things he probably forgotten that I didn't learn yet. Probably a question around that, I guess.
What about the way your parents brought you up? Are you deliberately not doing with your children?
Oh, wow. It's a good one. Look, I think my parents, first of all, I love them and I appreciate the way they raised me. And I think they taught me a lot of important lessons. I think my dad taught me to go deep on everything I do, everything. He always asked me like, why? He always asked me to, he forced me to understand every decision, every thing that I said.
He always asked me like, explain to me why. And I think it just developed a sense of me that I always try to understand why and dig deep. And I think my mom told me a lot about compassion and how to deal with people and to be ambitious and to be a winner, I guess. Maybe something that I've learned along the way that maybe I do differently is also to accept different paths of
how people grow up and what they care about and what's not. I try to be very open with my kids and try to understand what they care about. And I'm not trying to push them in any way and just let them be who they are. I often think about what is a successful person? Like what defines success? Is it status? Is it money? Is it professional career? Is it happiness? And I don't know what the answer is.
It's market cap.
I just want my kids to be happy. I don't know what's the best way to achieve it, but that's what I want for them. When were you happiest? With my family, for sure. That's the moment I find peace inside. I love the company. It's one of the most meaningful things I've done in my life. But spending time with my kids, it's like the best thing for me.
What stage of the company did you find most unnatural for you as a CEO?
Everyone, every stage now. I've never done it before. It's a new experience for me and I learned a lot of things along the way, but I want to continue in this journey and I want to keep learning and evolving as a person.
Final one. What question are you never asked by employees, by investors, by board members that you should be asked, do you think?
Oh, wow. You have tricky questions, Harry. I don't know what's the answer, but nobody asked me why we built this company. Why did we go on this journey? Being an entrepreneur, it's not intuitive. Why people do it, it's a big question. Why did you decide to be an entrepreneur?
My quest in life is to find out exactly, but I think it's a combination of trying to prove myself, I don't know to whom, but maybe to myself, and do something meaningful and good that affects other people. But I don't have the full answer yet, I guess.
Eran, listen, I so appreciate you putting up with my deep and meaningful questions, my bluntly meandering around different topics. You've been fantastic. So thank you for joining me. Thank you, Harry. It's been a pleasure. My word, I am such a fanboy of the Monday business. If you want to see the episode in full, you can find it on YouTube by searching for 20VC. That's 20VC.
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