In this week's episode of the Enterprise Monetization Podcast, Sandeep Jain sits down with Taka Yokoyama, Vice President, Operations at Safehub to discuss best practices when setting up a Quote to Cash stack at a company and what some of the considerations are for pricing your product as an early stage company
Hi, Welcome to the 15th episode of Enterprise Monetization Podcast. And this is your host, Sandeep Jain. In this podcast, we invite thought leaders from monetization space that is CPQ billing, consumption-based billin so that you can learn about challenges, opportunities and best practices in enterprise monetization. Today, I'm excited to have Taka Yokoyama who is the VP of operations at Safehub Joining us, Taka has been on the product side of CPQ and dealing with actors, which is now conga as some really all of, you know, and salesforce revenue cloud. He also has spent some time on the operational and implementation consulting side of the space prior to joining Safe Hub where he now owns the entire monetization operations as well as technology stacks there. Taka also has an MBA from Wharton School and well, he's a proud new dad as of the first day of 2023. So, welcome to this podcast, Excited to have you here.
Thank you. I'm excited to be here as well.
Awesome. So, could you provide like a quick summary of your background to our listeners?
Yes. So in addition to what you introduced me, how you introduced me, Monetization will I think is what we'll call it for for this podcast. We also know that as quote a cast or lead to revenue depending on who you're working with, right? But monetization as we speak is really my second career. I started in this space as a solution engineer for activists now conga and that's where I was exposed to complex configurations like for elevators, a lot of attributes and then some some deals that involved heavy deal scoring algorithms with some of it being circular logic.nSo that was a lot of fun. And then my engineering past really lended itself into going deep into these complex customer use cases. After that, I joined the Salesforce Revenue Cloud in a similar capacity as a sales engineer. This time, I tended to get into a lot more discussions regarding just contract and renewal logic, distributor partner, pressing relationships and then approaches to usage. So after that, I consulted for Navint for about 10 months before being invited to join Safehub where I am now. And that's as you said, I own the monetization design for both the business and the technology.
Sounds good so your experience is interesting because you have been in the space not only from an operator side but as a vendor side as well. So it's good to have somebody who has seen both sides like how the sausage is made as the phrase goes. Alright, so before we go to Safehub and how you do your monetization, can you just share a quick fun fact about yourself?
Yeah, I'd say a fun fact is I'm a home brewer. I've been doing that for over 10 years at this point. And so I obviously need to have a greater near my front door. The fun part about that is that I'm the only one that I know of that hands out adult treats during Halloween when people I want to ask you to give you, give your address.
But that, that's interesting. How did you get into this? Was it like, I've never seen somebody who's kind of serious about this and you've been apparently doing this for a long time.
So, yeah. Well, it's, I mean, if you kind of look into sort of the operational side, the process side, calculations, it is CPQ in a sense of beer together, right? And then you actually get to enjoy that beer via consumption. but yeah, it has a lot of things I'm interested in from that, that sort of scientist side and math side of things as well as other hobbies.
I don't think anybody in the world would have drawn the shortest line possible between CPQ and brewing, which you just, anyway, let's get to more fun stuff. Now, for folks who don't know about Safehub, Can you just talk a little bit more about what you guys do?
Right, So I mentioned that monetization is sort of my second career. My first career was as a structural engineer. So if we tie those two together, we are a post-earthquake building damage notification platform. In essence, our mission is to save lives by equipping building owners and managers to make informed decisions on evacuating from damaged buildings, right? And we do this by sending out centers that track the earthquake and then understands how much damage or probability of damage to those buildings. This is important because far too often, and recently in Turkey, structural damage is not visible while collapsed, risk increases with every aftershock and we're seeing aftershock after aftershock in Turkey today. So that's the human end of the end of the business really. And then the other end of the same business is that we want to prevent operational losses due to evacuating buildings when buildings are not affected by earthquakes. And so without this, if you do evacuate you, those are business continental operational losses, you take obviously, then if you don't evacuate and then there's risk to the building that is human capital that you're risking. So that is safe hub in a nutshell in terms of our mission
Awesome. So do you have customers I'm assuming outside us as well?
Yes. So we are primarily in the US but also anywhere where there is earthquake risk. That means, you know, if we talk about the ring of fire around the Pacific Rim, right in Japan, Philippines, Indonesia, New Zealand. And then some, some places around the EMEA area as well
Understood. And can you talk about your role there and of course, you said monetization. But can you talk about like, how is your team structured and what do they do?
Right. So team structure is, you know, it's a funny way to think of it. Well, I'm VP of operations or a head of operations for a series, a startup.So it's a very, very small team, right? So I'm essentially a generalist in every way. Of course, my part of my expertise is in this monetization of space. So I go ahead and run with the policy of the process and technology there. And then my small team includes some solution engineering, customer success, accounting. And then when I say a little bit of everything I do, a little bit of sales alliances, I THR and legal as well.
Wow, that's, that's quite a few things that you're, you're doing there. Alright. Could, could you describe your quote-to-cash?
So what I'm gonna start with a business model, I'm a context person. So, okay, a way of getting to that question. So we're generally a B2B subscription service. We are an IOT company. So we have a hardware component and we incorporate that in the service. You know, I knew just enough about revenue recognition from my time as a consultant that, you know, we bundle it all up together and have accounting figure out the allocation on the back end. But from that, we have three channels in which we sell through. And the first is direct to other businesses, customers in this space tender value, reducing people risk and operational risk. This includes 40-50 companies, joint purchasing groups or GPO s if you talk about sort of the hospital space and then some cities, the second is through a reseller. Much like adding a point solution to a suite of services that that reseller provides to their customers. And then third, a growing part is a parametric policy. If I were to simplify because before coming into space, I knew nothing about what it really meant. But this is a reseller model. But the use case and pricing is different from the reseller model that I just talked about, which is important for our discussion. So in summary, this means we have a direct B2B, a reseller channel with partner discount margin protection and then reseller channel where the processes were a percentage of that package that, that gets sold.
Understood, understood.
So technology stack, if we go down, I think from, if we say lead to, to cash zoom info, Pardot, Salesforce CPQ, you Quickbooks and obviously Excel.
Wow. That's a good list. And how many sales steps you have because you talked about your first channel as director business, right?
So at this point, we have zero sales people but that means everybody is a salesperson as a series A company in the middle of, you know, this tech trough that we're in, right? So we do approach it by a founder sales approach where all of our leadership is engaged in all the direct sales and support of our channels.
Understood. So I must tell you that you're one of the few companies that have come across, which is that early stage, but are still using a CPQ because traditionally, what I've seen is even when companies have like two or three reps, they are still using a manual sort of quoting process. So we'd love to hear your perspective on why you decided to go CPQ much earlier in your stage, right?
Part of it was I wanted to clean up contracts. And as we learn how to put proposals together and several people trying to put proposals out to customers constant changes to that proposal documents, I wanted to make sure that there is a template. CPQ is one way of of knowing how to do that. And then board reporting becomes easier when opportunities and quotes are in the system along with the contracts because you know, we call it contracted ARR are, are so CARR for, for us. And that's one of the metrics that we want to share with the board every quarter or even every month. And due to our deployment process of sensors, matching with buildings and keeping track of the contract fulfillment. Understanding the the order sort of management side of CPQ meant that I could build upon that and really build it into salesforce from that CPQ side.
Understood. Well, actually you talked about your, your business model, you talked about subscription and this hardware, do you, but you also talk about sensors. So do you have a usage-based or how many sensors you have deployed, And they're giving signals? Is that consumption-based pricing that you have?
No, not at the moment. I have opinions about that or, or sort of things I want to, to toss around. But at the moment, no, we don't have any usage. I think we're trying to keep it simple and basic. You know, the first thing that might come to mind as usage per earthquake, but we can't control earthquake. So I have someone pay $0 month and then, and then it also seems cruel to then have someone pay so much money if they experience a 7.5 Magnatude.
Understood, you know, different sort of your business. I understand what you're saying. And so how many SKUs or bundles you have in your current business model
We have five main bundle SKU’s so bundle is in the top level. And our, and we're subscription. So this is a notification is a service and the unit of measure is per building because we think the value is per building, not necessarily per person or per center. And so we classify those buildings at small, medium large and then custom. And then the fifth one is the parametric policy which is askew and it's just based on percentage of the premium. And then, so under those bundles, we have the new hardware skew or existing hard Rescue. This is where I'm tracking from the order side through the contract into a renewal. If we're, you know, if this person needs a new center or we're just tracking an existing center and then a setup skew for the accounting side as well. So again, approaches keep it simple, understandable and then manageable at this point.n That's, that's the best way to do this at this stage.
Do you do any business in other currencies other than USD or it's just USD right now?
Were deployed in a lot of countries, but we have somehow been able to manage to keep everything in USD So far. And I've seen the complexity of multi-currencies and agreements on exchange rates and how often you refresh them and I really don't want to get into that. We really have to and hopefully that's a good problem to have at that point.
That's a smart choice again. So you talked about different tools that you're using five SKUs of subscriptions hardware. What are the challenges for you? What are the top like two or three challenges for you and your quote-to-cash right now?
I think the invoicing as a broader topic is definitely challenging because each customer, I have to think of a timing on when to invoice, how to invoice as it relates to hardware delivery. And the contract itself sometimes delivery takes two days while international shipping and customs can take a month. And the question is, do we want to invoice once or and if we want to invoice once we invoice necessarily a month later with the pass-through costs, right? With the shipping costs or can we invoice them twice to say first, the subs subscription that you paid for and then here the shipping costs, the surcharge that we might invoice again. And then the contracts as a smaller player, oftentimes we have to work with larger companies on their paper which brings in nuances of payment terms, hide your invoice, right? You have to go somewhere into their portal and start invoicing. And then how do we go about those charges and renewal's interesting.
Do you happen to do these contracts with your customers before you do a renewal. Is there an amendment like an Upsell or cross sell that happens?
We try to. So another thing that, you know, at least in the automation that I built in salesforce is basically three months before a renewal comes up, just picking one of the leaders or a sales person that is tied to that account to say, hey, renewal's coming up one. Let's check in to make sure they're happy if we haven't been checking in. And I make sure we try to check in every month or so. And then talk about, well, what is the larger plan? Was this a pilot or is this phase one phase two, phase three? So is their opportunity to Upsell If we change pricing models, how do we communicate that?
So that's the renewal workflow that you're talking about.
We, we do try to Upsell, right? We want to understand our sales motion and we wanna understand where are all the customers buildings, right? For cities is concentrated into local geography and we say, okay, what are your most important buildings like your first responders? We want to make sure that police station it's safe to go into before those people are deployed in terms of larger companies, their global footprint. So we then look at their portfolio to say here are all the faults in the world, which ones are higher risk for earthquakes. Let's start there, Right? And then prioritize. So, and I think typically when we go in, this is a novel concept, a novel business, a novel service. So we seldomly run into places where someone says, oh yeah, this is part of our annual budget. So necessarily we have to ask people to go get budget and that's deployments limited by the budget they're able to get for that year before it gets baked into that next year.
Understood. And what are the top priorities for you? Talk in the next like couple of quarters, what are you looking to do in terms of the company or maybe as in terms of quote to cash that you own? Anything interesting happening?
As a company, our mission is always we want to save lives and in order to do that, we want to save lives by reducing the frequency that people are reoccupying, damaged structures after earthquakes, which means we have to deploy as many buildings. Also, obviously that that's a sales thing and that's going to be first from the pure sort of business sense. It's responsible growth, right? We're trying to, we're seeing that all throughout tech based right now is responsible growth, not just growth for the sake of growth in NBA speak. We talk about ROI I think that's a mckinsey term where you can't be destroying value by having too much growth outpacing your ROI. So yeah, I think those are the two that we're focusing on
For the folks who don't know what is ROI
This is the return on invested capital. So clearly just making sure that the money input by, by shareholders and you know, effort input by stakeholders has a return that's larger than I guess losses Where and talk to any advice or recommendation to the vendors in the space like the court to cash lenders in the space based on your collective experience, adapt as sales cloud. And you know, here as an operator, the one of the most difficult things when I was selling into this space also then consulting and trying to do projects in this space. And obviously from an operational perspective is the vendors don't play well together and sometimes it's just an object model thing. Sometimes I think it's a partnership thing. So my recommendation is leading into more collaborations even if you consider someone a frienemy or arrival because collectively, I think there's enough space for everybody or great players to grow. An example of this is salesforce CPQ with Zuora. I've seen many approaches to this from all different angles. I think both solutions are good at what they do, but people need both solutions to work together somehow. It's easier said than done again, it is an object model that may be fixed. But perhaps as an industry, if you know enough of each other's models, maybe there's a way to map compatibility, ease of what solutions work together and what may work best for customers. And maybe that's something that a big consulting company should put together.
And so in that sense, have you seen any customer who's happy with these two products together? And it's not about just these two in particular. But my question behind the question, if you can say that is if two vendors have to separate data models, have you seen like a good implementation or is it just the nature of the beast that economic soil and water?
I guess I would say happy, I guess depends on who you ask. Ultimately, when you get down to the people who are having to day to day, get data from one to the other and make it work, I don't think they're as happy or people who are in the project trying to make it work. I would say probably not happy.
And Taka on the similar lines, Do you have any recommendation for operators such as your like people in, in your shoes who are starting just starting on their Q2C implementation? And maybe there are a series of company, maybe there's like a city C or D or later stage companies. Do you have any recommendations on some like cool things to do or not to do?
Yeah, recommendations I think is the context of the business. It depends on the context of the business. So for example, at Safehub at a small company and I discussed the reasons why we just went with Salesforce CPQ, you part of this was speed to value as someone as an expert in this, I can set it up myself without engaging with implementation partners and other contracts. I didn't need a full deployment, right? I can look at it and say, how can I make it work in two weeks and then how can I build upon it based on what I'm learning about my own business as I come in and, and tweak it as we go without always having to have a project around it. So that, that was my context and that's why I went with salesforce CPQ, which is not the same reason anybody else might go with CPQ or go take this approach as a consultant. Like I said, you have to understand the business and start designing the policies and processes first, you know, like B22B or B2C or is it reseller and then other components are, you know, packaging, pressing and then review the solutions out there and there are trade-offs everywhere, right? Nobody is perfect and everybody designing to a use case or a type of business that they would fit so that trade off, obviously, features and functionality is one way to look at it. But also the how much of the business model you have to adjust to that technology, how much the technology do you have to customize? Where's the expertise, what's the time the value, what head count you have to really resource it, what integrations might have to happen, one of the costs and all of that has to really come into play to make that decision. So it's it's not easy. And then I think the biggest thing that I would say is this is a long-term journey. So what you set up as a solution is for now and if you tackle this with an infinite mindset, as Simon Sinek would say, that makes it so that, you know, no implementation is perfect but does it meet the requirements of today? And as the requirements of tomorrow evolved, is it still right or the best solution or the best implementation temptation for tomorrow? And then from a business, from a financial perspective, you also want to be tracking, okay, what is the value of switching versus value of updating against the cost of switching or cost of updating?
Interesting. Yeah, one of the challenges I hear is people start with something and they later update their CPQ and billing. People have used several terms like open heart surgery. Call it maintain management. And I think for tools like CRM accounting systems, there's a natural evolution cycle. You go from probably a pipe drive to hubspot, salesforce accountings. You probably started the Quickbooks to intact to Netsuite to SAP. And it's, it's kind of natural naturally. There's an evolution there but in these middle systems, I've seen companies resisting the change because it's so hard. I think I read an article which says building is like an octopus. There's so many legs in so many different places, it's so hard to rip out these systems. So like changing these systems later on is a big, big task for the companies
And I think the joke that I've heard in the industry was the fastest way to lose a job is to rip and replace an ERP leader in a company. And in the second fastest way is to rip and replace CPQ. And I think again, going to this context of if you set yourself up to say this is a project that we go from something to perfect, you are just setting yourself up for failure.
That's interesting. Changing gears a little bit Taka, I think we talked briefly a little bit briefly about the usage-based billing and he said you have some ideas and of course, it probably doesn't make sense for your business. But could you talk about in general about consumption-based billing and some challenges there if you have given some thought to that.
Yeah. First off, I'm a huge fan of the concept of usage-based billing. And this is looking at from the consumer side of things, the vendor side of things and then vendor as in the product team and then the account management team and then pure selling and for, for, for each one, I think it's a positive right from the end customer, it allows an end customer to start small with any solution. You don't have to say this is a pilot and you're just consuming what you think you're consuming and if it works, you scale as it's needed. So it's great for small businesses, small cost who might have a difficult time forecasting growth over a full year, right? Because a lot of these vendors come in subscription, you say how many, how many licenses do you need for this year? It's like, I don't know today we have 10 people in a quarter, we may have 20 in a quarter, we may have 12. So then that actually you buy up front, go for the year. If you don't buy upfront, then you're amending the contract several times and then you come into this renewal preparation amendment mess from there. So if you just set it up on users, a number of users and allowed to go up and down, easy to track. It also reduces shelf ware risk from the vendor product team, they get to track how their products are being used. And I think if you track by usage, then you can see each feature or function that you might put out there and track usage, which ones are being used the most. And that is a way to say, well, which feature has the most ROI, what features do you might, might you have to tweak to make sure that you get your getting some value out of it or customers getting value out of it from the account management team. I think far too often we're towing the line between churn based on the shelf ware or we're forcing that shelf ware to stay there, right? Because that is your income source, which I think is an unfortunate ethical burden on account management teams. And so usage gets away with that and I don't know how to structure the comp based on usage and what the best approach is and that's for somebody else to come in. But overall, as a seller of owner of a company, I think it's great purely to call it a two-part tariff as a way of price discrimination. So in theory, this allows you to capture the most value you can from each customer based on what they're willing to pay.
That's interesting. Have you seen usage-based billing in your past experience working well at some businesses?
I think there are there's intent out there, that's I think working generally well, I think from my end. Well, I, I see, you know, slack and one password are to think usage-based but, but simple usage right to say if, if we add a user or subtract a user, they just adjust or credit that monthly between and so every, every month I'm able to adjust my spend based on the growth instead of locking me into, into some number of seats.
This is interesting you mentioned this because internally at our company, we are using a tool and they have a static pricing. So let's say if, if the number of users change, we have to go manually in the system and change it, sometimes you're over paying for something. And it's like just I would love to have that model where you define a concept of like for using this tool, there's a base pay, but then it is monthly average users and you define how you define the monthly average. Like if a person is using once every month, you con them. But I think that's fair. And we love this tool by the way, but I think it's very unfair pricing because of this static. Like you have to configure how many users and I find that kind of annoying to be honest. So, so interesting.
This, this has been a great conversation. I don't think I've ever interviewed somebody in this kind of space earthquake prevention with sensors. Safehub, is kind of a unique company in that sense, at least from my perspective. But before you go, is there any recommendation on a resource like a book or podcast or maybe a blog that created sort of an impression on you that you would love to share with our audience?
Yes, several. I think these days, the whole space monetization is not under one team, right? And we talked about team a little bit and and there are people from different teams participating in that space, which necessarily means that you have to balance each team's needs. The simple one is sales versus finances comes up all the time and they have different priorities. And so in order to balance that, I think the leader of monetization has to be able to work with anyone, whether there's a direct line, a dotted line or no reporting structure at all. And so from that perspective, I think being able to have influence in a positive way and negotiations definitely top skill set. So along those lines, if you find any webinar online course provided by Professor Kate Massey of the Warm school, I would look it up and go for it. I also recommend this book called Bring Yourself By Mori Taheripour. And then the other book that I referenced earlier today that I'm about to complete this weekend is The Infinite Game by Simon Sinek.
Could you talk a bit about, bring yourself like what's unique about the book that you found
It fits under the negotiations category, but the approach is more about authenticity and introspective. So a lot of negotiations books that I've read and I've had, have a sample of these over here. It's, you get these strategies and tactics on, you know, what's the floor that you're gonna, you know, the simple one is any, any pricing thing, what's your goal, your target and your floor and you, you start and you just whittle back, right? But Mori’s approach is one really be understand who you are, be honest with yourself. What are you trying to get out of it and work with somebody to say, well, can our goals align and we both get what we want out of it and then how do we structure that? So it's, I would say it's a lot more cooperative. It's a lot more encouraging you to stay yourself and not try to put up a front, you know, try to play the good cop, bad cop type of thing is really understanding where the other person is coming from so that you can really understand what type of structure works for both of you.
I remember from my MBA days, there was a phrase called Bagna. I forgot what it stands for. Like the best, I don't know, it was the next best alternative or something like that. So interesting that you talk about this. But awesome. So we got to hear about three resources and sort of one. I'm gonna look up, do you know if Professor Massey's videos or webinars on youtube online? Because that's negotiation is always an interesting topic to most people that I speak with.
Yeah, he often has webinars and, and I'm sure you can look it up. Actually, I looked it up before joining here. Just, just in preparation. I think there was something on Coursera for free.
Interesting. Thank you for the tip.
I'm pretty sure if somebody wants to take a look, they can take a look there.
Taka, it's been awesome speaking with you. Thank you so much for your time.
Thank you.
