What’s Culture Got to Do With It? (Or, Why I Invested in Leanplum)

So, this just happened: https://www.leanplum.com/blog/series-d-funding-annoucement/

As a fresh-off-the-operating-boat investor, friends and colleagues frequently ask me: what qualities do I look for in companies I wish to invest?

The answer you may already know is that at Norwest we have a pretty rigorous process to determine the viability of a company and our potential return on investment. It involves a lot of research, vetting, modeling, and number-crunching — Investing 101.

Yes, yes, you say, of course it has to ultimately make money, but it’s still a gamble no matter how good the numbers look. What is the secret sauce that enables you to take that leap of faith?

I believe a company’s DNA is their people. Not their product, or their brand, or their emoji-fueled marketing. Ergo, vis a vis, concordantly, I invest in people. Because a great person is the start of a great team, and a great team with a clear and positive mission can create a truly special culture that empowers, inspires, and feeds the bottom line.

Recently, I met such a company.

You may have seen their emoji-fueled billboard campaign on the 101 here in the Bay Area as well as other cities around the U.S. I can assure you, that alone isn’t why we invested, though that may give you some insight into their unique culture.

Whoa…did I just sense a collective eyeroll?

I get it. Momchil, CEO of Leanplum, spent half of our initial dinner meeting talking about their culture. All startups talk about their culture, but it’s rarely actualized in a way that is meaningful, useful, and effective. The other thing about culture is, it’s exclusive. So, as an outsider, unless you can package that culture and sell it to others, it’s not on the list of must-haves in my dog-eared copy of Investing for Dummies.

But these guys and gals had something special going on. I really liked him and his management team, their pitch was solid, and I felt that they had a product that would enable them to grow more quickly than other similar products within the mobile marketing automation space.

As a product guy myself, I was hooked when Momchil told me that they collect 10x more customer data than their competitors, which they use to generate smarter optimizations over time with the right dosing of AI. But let’s get one thing straight — graduating to Investing step 3 wasn’t because of this mythical culture thing that Momchil kept going on about.

So, we decided to move forward with the due diligence, which required me to be a fly on Leanplum’s wall and observe how their business runs day-to-day while getting to know their employees, partners, and shareholders.

After spending more time with the team, I was thoroughly convinced that, not only did they cultivate a culture of transparency, empowerment, and accountability that was phenomenal to be part of, the result of this culture made their people and, thus, their product, better. In sum, this translates to better business for everyone including employees, customers, and all stakeholders.

Do you know how I know that it’s the culture that is Leanplum’s secret sauce? Because, despite the fact that their platform processes petabytes of data without blinking a transistor (which it does), one of those mornings at their office, I heard an engineer describe what he was most excited about…

It wasn’t the low bug count, application performance, or velocity of his team, which is what I would have expected. Rather, he was “excited to be accountable for building a product feature that needed to generate new ACV and increase customer satisfaction.”

Needless to say, we invested.

🎤 ⬇️ 💰⭐️ 🍔🎅🏽