“The problem that I really like solving is helping people get really, really good at their jobs in a data-driven way. If there’s a business unit or a role within a company of scale, you should know what it takes to succeed in that role.”
Dustin Watkins is the Co-Founder and CTO of DataBased, a data driven company that uses visualization tools that empower sales teams with performance standardization, development, and goal-setting efficiency. DataBased recently raised a $3M seed round with a $40M pre-money valuation with investors from SAP, HubSpot, Carta, Verizon, Klayvio, and Qualtrics. Dustin graduated from Brigham Young University in 2019 and resides in Lehi, Utah where the company is based.
Tell us about DataBased and how it all started.
DataBased as a legal business entity started about three years ago, but I’d say the real genesis of DataBased started actually more about fourteen or fifteen years ago. My brother Dan, who’s my co-founder, started at a company called Qualtrics where he was employee number fourteen. He started in the basement with the founding team and his role was to take their current sales team from selling purely into academics into B2B sales. And over time he became really good at sales and even better at sales leadership. And what he had found was that he was quite unique in how he did his sales leadership in a very data-driven model. Eventually it got to the point where Qualtrics was getting a lot of attention and so much so that Stanford and Harvard came in to study Qualtrics. And what they found was that Qualtrics products were great but their go-to-market strategy was absolutely world class. Dan had built that go-to-market function, and eventually he exited after the acquisition by SAP.
But what he had learned was this process that he built by breaking down the sales role into three dimensions:
First was hard work, or how much effort is being put in. The second dimension was skill, or efficiency. And the third was the business outcomes that you’re achieving. He was able to lead people in this way where he could say, “Based on all of these metrics and these three dimensions, I know exactly how to help each individual, each team, and each business unit, so it takes me less time to diagnose the problem. And I also am very good at selecting the problem because I have it all mapped out.”
So about four years ago, I started talking to him about what he was doing, and he told me about this process that he used. I was like, “How do you build that now? How do you do that now that you no longer have a team of ten reps but a team of hundreds of reps—how did you scale that?” He said, “It’s been really hard. It costs $1 million, a team of eight people, and it works—in terms of the software—about 60% of the time. When we make changes, it’s very expensive.” And I was like, “Oh, interesting.” I think I really could build something that would do that and do it for other companies. That’s the very beginning of how DataBased started, and it was really built around the idea of: How do we go and help teams and individuals get really good at their roles? Then it’s, how do you build a scalable and predictable go-to-market revenue growth?
So you specify the business outcomes you’re going for, you identify the skills and proficiencies of those skills that are going to get you to those outcomes, and then identify what’s the volume of work that’s required to go and hit those business outcomes. Then when you go and scale. You know exactly what the roadmap is in order for each individual to go and succeed and how to go and hold yourself accountable as a rep and hold your team accountable as a team leader. It really demystifies a lot of the “How do we go and scale from x in revenue to y in revenue?” It becomes a lot easier when you know the exact path to go and do that.
You recently raised a $3 million seed round at a $40 million valuation - that’s a pretty sizable valuation for a seed round. What did you do to achieve such a high valuation so early on?
When we first started, we weren’t really interested in taking on any VC money. Dan wanted to bootstrap the whole thing. So the first two years of development were purely bootstrapped. It was all market research, there was no sales, it was just based on “Let’s go talk with these VPs, these frontline leaders, about what they’re experiencing and just build purely for that.” There’s no pressure to hit revenue numbers which allowed us to really just go and invest in product development and just focus on the customer.
Then about two years later, we were convinced to change our mind by a Venture Capitalist. He posed that we were holding DataBased’s growth back because we were stubborn and not taking on VC funding. And what he said was, “How about you guys do an exercise: Go build a business model and a plan. What would you do with $3 million? What would that business model look like? And come back to me and let’s just see what happens.”
So Dan and I went and did that, and immediately we realized that $3 million would really allow us to go and do a lot of investment in our go-to-market strategy, and our product. We talked about the things that we could solve for and the things we could build and that got us really excited about taking on capital.
But what’s the cost that we’re willing to sell a part of the company for in order to get that investment? We used that as a data point to come up with the $40 million valuation of where it would be worth it to us to sell anywhere between five and ten percent of the company. Revenue-wise, this is probably what we’re worth in our minds, though in a year from now, we’re going to go and be this much instead. And so because we had that, and because we had the initial funding (from Dan’s previous exit), and we didn’t need the funding—plan A was always to bootstrap, and this became plan B. We also wanted to work with investors that have the same vision as us and have experienced that pain we’re solving so they know the value we bring to the table.
Where are you investing the majority of the $3 million?
It’s almost a 50-50 split down the middle of go-to-market and product. So for my team (I run the engineering product and design), there are a few things that I have been learning that I really wanted to capitalize on. One of those is the market that we’re selling into. Most people that I talked to were like “You could have world-class analytics but poor UX, and you probably aren’t going to succeed because of the people that are using the product. They need something that’s very visually appealing and very easy to use.” That is not my expertise. I’m horrible at UX design. I was like OK, we need to go find an elite UX designer. So that’s going to be a big hire for us.
What are you focused on as the CTO? What’s your main focus?
Honestly, it has changed quite a bit. It started off as I was doing all the market research, all the selling, all of the customer experience and coding with one other engineer. Then we got a customer support/customer experience hire to handle the implementations and onboarding and support. Then I started moving more and more to engineering and product. This is where I’d like to be and stay focused on. I still spend twenty to thirty hours a week in the codebase. I love doing that. But I also am managing the engineering side.
What do you think has been the best piece of advice that you’ve received as a Co-Founder?
I don’t know if this counts as advice, but it’s more of a situation that happened with me, and it’s been a really profound moment where I had to do a lot of soul searching. We were looking for those investors to come and invest in DataBased. I won’t say the name of the company, but he was a VP of product of this company that’s a household name. So we’re doing the pitch, seems to be going really well, he’s asking a lot of interesting questions . . . and when we get to the end, he says, “So, Dustin, why would I invest in you?”
This was probably my thirtieth pitch at this point, but it really caught me off guard, and I was not ready for the question. After that pitch I had to do a lot of soul searching. Would I invest in myself, knowing my story? When I was talking to him, I was just a couple of years out of college, a computer science grad. This is my first really big thing that I’ve been doing. I had to think a lot about that, and it forced me to think What are my core strengths? Because I felt a little bit of imposter syndrome.
So I went through that exercise and become really confident in myself as an early founder of a company, and of like, what matters to me, who do I want to become right now, who do I want to be in a year, three years, five years, what do I want to say that I’ve accomplished in those time frames . . . And it gave me a lot of personal confidence to just figure that out and have my own personal belief in myself. When you’re starting a company, there’s lots of ups and downs that you’re going through and it gave me a lot of mental fortitude to ride those and believe in myself.
You obviously did a lot of things right to get the company to raise capital on such a strong valuation - Is there anything you guys did early on that was really instrumental in getting the company on the right path?
Bootstrapping that first two years was a big deal because it just allowed us to focus on our problem. There was no pressure of we’ve got to go and sell. It’s just here’s the problem we’re going after, and let’s just obsess over that, and we’re just going to talk to anyone that will talk to us. And just being able to do that gave us a really strong advantage early on to just go and build something towards that problem. What can happen is, if you’re not laser-focused, and you’re going after that revenue, you came back with “Um, someone’s going to pay us $30K to go and add this thing. It fits under the umbrella of what we’re doing; we should go do that.” And then it slowly starts eating away at that time, and you’re not really solving the core problem. When you’re early on, most people don’t have that many resources or the time to go and do those things, and so you’re kind of chasing revenue that’s not necessarily scalable. And you also haven’t really contributed to finding a product-market fit, so it’s kind of like fools gold. Because we didn’t have that pressure to go hit any revenue numbers, we were really motivated to just go work on the product and the problems.
Did you feel like you had product-market fit before you raised capital?
No but I would say that we were able to go and identify a problem and solve part of it for a certain subset of our users.
In wrapping up, what is your vision for the company going forward?
The problem that I really like solving is helping people get really, really good at their jobs in a data-driven way. We’re starting in sales because that’s where our subject matter experts are, and we know how to go and do that. Basically, our premise is if there’s a business unit or a role within a company of scale, like you’re hiring people and it’s a repeatable motion—customer success, customer experience, account management, sales, or recruiting—as a rep or person in that role, you should know what it takes to succeed in that role. And as a company, you should know: What is the work that we’re asking you to do, and what’s the skill level required to go and be good at this? Here are the outcomes you are trying to drive, this is why you are hired, and here’s the expectation where it makes sense for us to keep you employed, and if you’re doing this and you get this good, you should get paid more money because it’s a win-win. And that’s where we’d like to get to: where people can use it to get really good at their jobs.
Do you have a favorite book?
Crucial Conversations by Kerry Patterson, Joseph Grenny, Al Switzler, and Ron McMillan
Do you have a favorite quote?
“A good king: searches not for what he can take but what he can give.”
Mufasa, from Lion King