The Cinderella CEO | Ray Hein from Propel

Ray Hein 0:00
We were six people with no payroll system or no benefits, and people were betting, like, are you really gonna pay me I’m like, we’ll make this happen

Alexander Ferguson 0:13
Welcome to UpTech Report. Now on our founders journey, I’m joined by Ray Hein based in the California, CEO of Propel. on part one of our discussion, we learned about their platform, which is a cloud blade, cloud based PLM, product life cycle management tool built on the Salesforce. And now we’re going to be diving a little bit deeper into hearing Ray’s story, right. I’m excited to be here. Like, how did you get to where you are today? And feel free to go behind five years before that, that led up to where now?

Ray Hein 0:45
Sure. Well, I mean, the real early, really interesting part of my story is that, you know, I had parents that were both in in kind of the design space, my mom was a draftsperson, back in World War Two, and she was the only woman that you know, is really helping engineering teams build planes, and General Motors, you know, in a room of 500, guys and her. So she was kind of the Rosie the Riveter, you know, back in World War Two, and my dad was a radar electronic technician. So I’ve always been in and around, you know, products like that. And then fast forward, I got involved in engineering and design teams fresh out of school, there was a lot of computer aided design coming out in the 70s and 80s. So I started there. And then I got involved in management of really helping people think about how do you bring teams together in launch products, you know, collaboratively globally. So in the 80s, the disruptive industry moved to Singapore, and Bangkok, you know, early on before we went to China, and I realized, man, it’s inefficient if you’ve got global teams, and how do you actually work together. So my whole life has been around, you know, launching products. And in being involved in that side, and and then I got involved in the software side of helping automate and thinking about team collaboration. And the last piece was, I was part of a company called Agile software. And then in the 90s, and in early 2000s, that we built the company took it public, and then ultimately sold it to Oracle in 2007. So it was a 10 year ride. And I really enjoy helping companies, you know, build teams that can launch products better and faster. That’s my passion

Alexander Ferguson 2:24
that propel is the first company that you found in started,

Ray Hein 2:29
correct? Yeah, it’s first time I’ve been, you know, CEO and founder of a company. But I’ve been an executive management teams probably the last 1012 years. In various roles, building building teams along the way.

Alexander Ferguson 2:42
You’re no stranger to leadership. That’s that is for certainly, for starting propel. When it comes to funding. Did you get VC funding or a bootstrap? How did it begin?

Ray Hein 2:53
So I’ve taken a year off between the prior company Aptus, and propel and started looking at the this category that hadn’t had a lot of innovation and realize that it was going to move to the cloud, and somebody was going to do it. And there’s probably no better person than me, not my ego. I’m pretty humble. But I like this could be fun. So I knew a gentleman named Matt Holleran, venture capitalist at cloudops. Capital, he invested in a couple of companies built on the Salesforce tech stack. So he knew the space. I went to him, he knew me and I said, I want to build enterprise PLM, but different PLM on the Salesforce tech stack. And he said, I love the idea. Let’s go for it. And literally was I had a mock prototype, a couple of sheets of paper, a couple of cups of coffee, and he said, here’s a couple of people we need to talk to, if they think it can be done, I’ll fund it. So it’s one of these crazy stories that it was like, a month, you know, have conversations. And then it was let’s put this thing together. And I on April 22, we were at our corporate law firm. We incorporated it two weeks later, we had a term sheet. Two weeks later, we had our initial $2 million check written by cloudops, capital and Matt. And two weeks later, we had our first three employees plus the three founders. So we were six people with no payroll system or no benefits, and people were betting, like, are you really gonna pay me I’m like, we’ll make this happen. So it was amazing. And since then, we’ve raised, you know, additional rounds of funding up to $28 million in total now, and our last round of financing was November of 18 2018. And just have a great board and great investors that believe in us. Your story

Alexander Ferguson 4:37
is definitely not the common one that many people can listen to say, Well, that was happening to me, but that is powerful that to know that those stories exist. What would you say though, are could be the biggest mistakes one could make when seeking funding?

Ray Hein 4:53
You know, I think I talked to a lot of entrepreneurs. I think you have to know your business. So many people think they need funding. And, you know, understanding are you going to compete in a big enterprise market. So we knew, ultimately we were going to compete with sa P and Oracle and, and dezso, and Siemens and PTC big, very big, large companies. So we only had one choice, we needed to plan for venture capital to swing for the fences in the long haul. But there are a lot of companies and a lot of businesses that you can bootstrap it, or you don’t need that much money. And so I think people think they have to really think that part through of where they ultimately are going to go, how fast they’re going to go there. And, you know, I think people design a lot of CEOs or founders, like we’re already thinking about the exit from day one. I’m like, no, no, no, no, no, no, that’s the wrong move. You have to think about where you’re going to be, what market you’re going to be in, and how much money is it really going to take for you to be that dominant leader in that space, if you actually break out and one of the lucky guys that that actually makes it

Alexander Ferguson 5:55
getting the funding is one piece, but then developing the product is next? How long did you guys spend in r&d and developing the product before you launched it?

Ray Hein 6:04
Yeah. It’s kind of fun. We, we started the company, April 22 2015. Salesforce, his Dreamforce event was October, November. So we had, you know, three or four use cases, the foundational level that we knew we wanted to solve. And Dreamforce is only once a year. So we had, I’d say, a minimum viable demo product by the end of the year, for those three or four use cases. And then it was in early 2016, that we had what I would say, as minimum viable purchasable product, where we could get three or four people, you know, either friends of mine, or people that knew me that we trust, but they would actually really write a check. And you know, when you talk to entrepreneurs and investors, it’s like, okay, you can give away free wear and find friends, everybody will take something for free. But when people start to pay, and then you see, you know, more and more people, that’s how, you know, you have a real product. So we’ve had a, you know, five plus year journey now, but our early entry was our first two or three customers were early 2016, that, you know, were willing to pay

Alexander Ferguson 7:12
nothing like a good deadline to get them in a viable demo online. And then, and then the product itself, getting those first few customers any tactics or insights you can share on making that happen.

Ray Hein 7:25
Yeah, I think, listening to their needs right up front, and just knowing that your use case matches really well. And that you’re not overselling, in the early days, it’s really, it’s really easy to try to, you know, oversell and be a Swiss army knife. And you know, it slices it dices it can do Julienne Fries, it does everything. It’s like, no be very transparent, transparent, and, and, and build relationships with those customers. And those, you know, in those first five to 10 customers that we have, by and large, the majority are still with us. And we have amazing references and and we just held our propulsion event, we were able to get 15 customers to talk. And people love us, you know, it’s like, it’s like how people love Apple products we don’t take my propeller away is what we have now. Because we have those, those trusted relationships. So I would say build trust relationships from day one.

Alexander Ferguson 8:21
What’s stats, can you share on the growth and where you are now today?

Ray Hein 8:25
You know, we’ve continued to grow. As I said, you know, somewhere, some good years, it’s been, you know, 75 to 100 150% year over year growth. You know, even in a COVID year, we’re exceeding our board plans. And we did some minor adjustments, but we’re getting tailwinds behind us. So we’re achieving all the milestones that our board wanted us to get to. And then there’s the board milestones, but then there’s my own personal and market milestones. And so we’re seeing that we’re taking away market share from some of the competitors in the legacy people in this category, because they’re seeing what we do is different and adding value. So we’re on track and on plan, you know, to do what we want to do

Alexander Ferguson 9:10
in order to grow what are some common mistakes you see people make when it comes to marketing and being able to scale

Ray Hein 9:17
on my so there’s marketing and sales. I think there’s, there’s, you know, a couple of things that you got to combine, right. So you talked about getting the product to market, and then driving customer success and being maniacal about that. You know, I think it’s understanding your ideal customer profile people talk about ICPs and understanding the use cases and making sure that there’s clarity there because it’s it’s it’s too easy to change direction and slalom down a hill. But the more you stay focused and can you know downhill and go straight. That I think is key. And early on. You know, you want to try a lot of things and you want to fail fast, but you also got to be able to prioritize and Stay focused, because it’s too easy to spend a lot of money and then run out of money because you didn’t know where you really were trying to go.

Alexander Ferguson 10:08
To be able to continue growing, obviously a team is is paramount to good team. Have you seen any common mistakes when it comes to hiring? Whether you’ve seen it, or you’ve done it, but you’ve learned from it that you can advise for?

Ray Hein 10:24
Yeah, great, great question. You know, I’d say sales and marketing is the toughest part of an organization to hire into, you know, to be to be blunt. You know, I’d say engineering, customer success, your GNA, you can find great people in those areas. But, you know, we’re a very domain based problem, we solve, you know, something that, that the Chief Product Officer, Chief Revenue Officer and Chief Services Officer wants to focus on. So finding the domain people, and making sure that they, they know, you know, they understand the space. And then I’d say one last thing is is Alexander’s that you go through stages in the early stage, that people that can have the right risk profile that can build with you are great. And then you need to be able to shift to the next level and the next level, and some people can make the shift and some people can’t. So when you’re interviewing people, you kind of have to assess, almost like you think about sports teams, you know, who’s the right person at the right time to go fill a shortstop position, because that’s the weakest part on your, you know, on the team, you know, but they may not be next year or the year after, you may need a great outfielder or a great pitcher. And you need to understand when’s the right time to bring the right people on based on the stage of where you are in the company.

Alexander Ferguson 11:46
I imagine as the team grows, managing that, and the culture changes over time, how big is the team today?

Ray Hein 11:56
We’re 65 heading to about 7075 people here.

Alexander Ferguson 12:00
And as it grows, what do you see? Are some of the lessons learned on how to keep the culture effective and working well together?

Ray Hein 12:09
Boy, you know, if you asked me that last year, I’d have a very different answer than in a COVID year, you know, for sure, with everybody working from home, so we shut our offices on March 6, you know, ahead of in California, it was it was St. Patty’s Day, March 17, Governor Newsom shut everything down. But we were in Santa Clara, right in the hotbed where all the early COVID cases were being announced, you know, nationally. So for us, you know, we hold weekly, all hands meetings, Wednesdays at noon, and I think we overshare everything about the company in, you know, everybody knows where we are in the business side, we run a monthly business review, and every business leader provides the three to five key metrics and slides. And we share that across everybody in the company. So there are no, there are no real secrets, Jen, you know, generally speaking, obviously, we say we’ll continue to share as long as everybody respects the non disclosure, but this is how we build a great team. And it’s transparent, and trust. And we’ve got, you know, we span the gamut from people fresh out of college to people, maybe it’s their first or second jobs to people that are more like me. And I think blending, I’d say, three different cultures, because of the age and experience levels. In managing that way. That’s That’s how we’re doing. And as soon as transparency and trust and appreciation of each other.

Alexander Ferguson 13:37
What challenges do you see, you’re going to need to overcome both internally with the team, communication wise and externally, with your clients, the consumers and the way the industry is going?

Ray Hein 13:48
You know, it’s a large category, it’s the fourth largest software category in the world. So are our biggest challenges. You know, we have great customers, they love us. But the market, you know, it’s about, you know, it’s why we’re talking to you. It’s about getting our brand and getting people to know who PROPEL is and what great things we can do. So that’s probably our biggest challenge that we know, we’ve got, you know, the the amazing next gen solution like Salesforce, and workday were in their respective areas. But it’s getting that out in the brand awareness number one, and I’d say that the second piece is, you know, while we have I think did a really good job on on being a remote workforce, figuring out the whole return to work and how to manage through that challenge. And, you know, I’d say out of those 65 people, we’ve had a half a dozen people leave California and moved to different states because, you know, they want to go back home to Utah or Ohio or whatever. And it’s like, we hired you here, you know, can you how well are you going to be able to work remotely or not. So we’re figuring that out as we go.

Alexander Ferguson 14:49
You’re gonna go back to everyone in office hybrid model and

Ray Hein 14:54
well, I you know, I’ve always been I love going into the office, actually, my wife likes me to get out of the house and go to bed. Probably the real answer. But no, I think we’ll be in a hybrid model for sure. And I was always a, I’m going to go in and work my long days in the office, and I like to walk around and talk to people. But, you know, I, I’ve absolutely seen the value of remote work. And, you know, the, the, the pluses and the minuses, remote works awesome, because we’re making it work. But I’ll tell you, people are working harder and use Zoom meeting back to back to back, there are very few gaps. And so employee burnout, and managing even in a hybrid model, I think is something that, you know, we have to we have to as CEOs and leaders have to really think about how this new model ultimately is going to help us deal with that. Last piece. You know, Alexander, I talked to all my, especially the folks that are earlier in their career, I’m like, I grew because I worked with people that saw what I could do. And I built coffee relationships, or went to lunch and had very personal physical relationships with these young people trusted in me, if we all are in a complete remote world, how do you be build those deep relationships that I might have a superstar, that’s 26 years old. And he’s a rising star that’s going to be a director of VP or he’s going to be, he could be a CEO when he’s 35. But without the physical relationships, in that, it’s harder to see how we’re going to grow teams and career path people and find those bright stars when you’re in a complete remote environment.

Alexander Ferguson 16:25
For you last two questions, how have you gained your insight leadership? Are there any books, audio books, podcasts that you’re currently reading to listening or would recommend that you read in the past?

Ray Hein 16:36
I, I’m a big fan of Daniel Pink, and, you know, drive, you know, and how you motivate people, you know, autonomy, purpose and mastery are the three elements of Daniel Pink that, you know, it’s always top of mine, you know, for me, so I’m a very people culture oriented, you know, CEO and leader, dear founder, you know, it’s on my desk, you know, dear founder is by manner good. He’s a VC. You know, it’s letters advice for anyone who leads management managers who want to start a business. So they’re like, it’s almost like Chicken Soup for the Soul. But for co founders, if you will. Box is a cool as a cool book. It’s a little bit geeky, it’s about how shipping container made the world smaller and the world economy bigger. And so if you think about e commerce and Amazon, or the out of the box experience that happens with an Apple product, and how you love that are fighting for shelf space, you know, in the retail space, pretty cool. You know, I like to read some geeky books that make you go hmm, on that side. But for me, you know, with COVID, we, as a culture thing, we gave all of our employees access to masterclasses. So, when we had our five year celebration, we were you know, we couldn’t do a food celebration, we said, hey, one year you guys every Go Go learn some really cool new stuff. So Jake Shimabukuro, who is a great Hawaiian ukulele player. So I have my ukulele. And so I’m, I’m a master class to try to figure out, you know, in my spare time and driving my wife nuts, but trying to learn how to how to play the ukulele, or watching Chris Hadfield on masterclass of how to be an astronaut goes back to my science, math physics days. So those are the things that, you know, I’m doing to watch, you know, watch, and keep myself learning continuous learning is, is one of our core tenants as a company. So these are the kinds of things that that I enjoy doing. Last question

Alexander Ferguson 18:39
for you, what kind of technology innovations do you predict? We’ll see in the near term next year, so and long term 510 years?

Ray Hein 18:47
You know, I think we’re seeing, you know, we are seeing AI and bots and, and remote process automation, I think they’re, we’re gonna continue to see, you know, that element. And so I think it’s, it’s really taking, you know, like snowflake now talking about big data, lakes, and how you bring data together. But at the end of the day, getting the data together doesn’t matter. It’s what really comes out on the insights and the outcomes. And how do you make it, you know, efficient, so that the end, the people that really need to get the insights, can distill it in a way that’s meaningful to them. And there’s just so much data and so many ways to slice and dice it, whether using Tableau or all these really super cool visualization tools. Getting it so I get more time back in my day, by taking the technologies that makes it useful and to syllable and makes it efficient, I think is going to be you know, key for us technologists to make make our jobs easier and more efficient so we can get more done and show value.

Alexander Ferguson 19:53
Thank you so much for sharing your insight and this journey that you have been on this has been wonderful.

Ray Hein 20:00
Thanks appreciate, appreciate the time. Again,

Alexander Ferguson 20:03
this is a part of our founders journey. To learn more about Ray’s company propel go to propel plm.com. Our sponsor again for today’s episode is TeraLeap. If your company wants to learn how to better leverage the power of video to increase sales and marketing results, head over to TeraLeap.io Learn more about the new product customer stories. Thanks again everyone, and we’ll see you guys next time. That concludes the audio version of this episode. To see the original and more visit our UpTech Report YouTube channel. If you know a tech company, we should interview you can nominate them at UpTech report.com. Or if you just prefer to listen, make sure you’re subscribed to this series on Apple podcasts, Spotify or your favorite podcasting app.