How Gong Built a $7B+ Company in the Age of Vibe Coding | Amit Bendov

Intro

00:00A lot of companies stall not because of external conditions. It's because maybe the market like isn't large enough. If your market is too small, very little else matters. There is like in math this thing of local optimum, right? You're climbing a hill and you reach the top, but you're not getting to the mountain.

00:18You can get to like 50 million, 100 million, right? You're not going to reach like a billion. Which market do you play in? That's like more than anything [music] else. We've built the system over 10 years. There's a lot of complexity. You know, you can't vibe code it even like with a 100 engineers.

00:32Otherwise, why are we not seeing one right now? Why are we not seeing like a competitor? If you're in an early market, which we are right now in AI, there is so many possibilities. Why would you like try to like one up a competitor, right? There more.

00:45Just just go and keep looking. Why don't go where all the other kids are going? Competition should be more like like an Easter egg hunt than like a football match that you're you got to match like every play that the other opponent is doing.

00:57It's not a zero- sum game like in in the early stages. Hi, I'm Amit Bendov, co-founder and CEO of Gong. Gong is the leader in revenue AI which helped company maximize their revenue potential. We saw an opportunity in [music] automating revenue with AI.

01:12That was like in 2016 before AI was like uh all the rage and uh today we're one of the fastest growing company. Our growth rate is over 50%. Every quarter we're actually growing faster than the previous quarter for almost like 12 consecutive quarters now.

01:27So pretty incredible times.

Design Product Like a Music Producer

01:39I grew like in a very humble background. I mean great family, loving family, but most of my family like did not even like go to college or university. So from my family's perspective, if I was like seller at a retail store, it'll be just fine.

01:52They love me still the same because it's a job and that's what you do. So my original dream as a teenager, I wanted to be a guitar player at a rock band. I was pretty good to be honest, but not like not top 1%. And I was like in a small country, Israel, it's not you can't even if you're big, like it's not all that big.

02:11That's a miss. But I started my career actually selling professional audio equipment at a retail store like like a guitar center. I was hoping to uh get close to the uh the show. But I realized okay maybe like you know I don't want to play in weddings when I'm 40 [laughter] to pay the bills and I was really intrigued by [music] computer science.

02:31So I signed up. There was a fork in the road for me. My first

Gong’s Origin: CRM Had Nothing in It

02:36job was an engineer. I wrote code. Uh many people don't know that. Then I I led an R&D team. Then I moved from Tel Aviv to the US to start uh my first company, Click Software. It's not part of Salesforce. And I became a CEO of a company called Cyence in Business Intelligence.

02:52We're growing pretty fast. And then all of a sudden, we had a quarter that wasn't great at all. I have no idea what was going on. We're analyzing a lot of data from the CRM that everybody thought this is the way to manage customer. It's a single source of truth.

03:05There was nothing there. it's actually relies on people telling it [music] what happened and that didn't make sense. So only 1% of the information ever [music] actually makes its way to the CRM. It's all in people's heads. Uh now what happens the companies only half the sales people are making their numbers.

03:22Nine out of 10 opportunities are not one without the company ever knowing why. And I thought wow this just totally doesn't make sense. like uh there was the year that AI was already beating the world champion in Go. You remember like Alpha Go and Deep Mind [music] and the thought was can we create like a system that will relieve people from the needs to update CRM.

03:46That was the idea that when I left Cyence I thought hey maybe we could build a company around that. The idea was like an autonomous system uh that automatically captures context from conversations and uses AI to turn it both to insight and and action.

04:01Are you using uh like a meeting assistant today?

How Gong Invented the Meeting Assistant

04:06We invented this. This was from my background in music industry. First, if we capture a meeting that we have usually would have like multiple people, but we didn't want people to listen to like 45 minute meetings, right? We want to know like here are like the interesting points out there.

04:22So things like markers, topics. Today it's pretty standard but that did not exist. So we have uh first drew and I plagorized a little bit from uh Soundcloud. That was the play buttons and uh where we put in and you have those like tracks. If you was like Garage Band or something, you'll see like here's a drum, guitar, bass, right?

04:47So if you look at gong, you'll see those tracks. all the concept like listen to talk ratio. This is the first application. It was like measuring how much you're listening versus talking. How it tracks competitors. We invented this thing that was uh pretty pretty innovative and we went to raise [music] money.

05:04I said, "Let's start a company." I was pretty sure it's going to be a walk in the park, but it [music] was a far cry from that. It was like very frustrating and almost nobody wanted to invest in us. They obviously took a meeting and like another meeting and what about this and what about that and people thought that sellers are going to hate Gong because they're going to see it as a big brother.

05:24Google and Amazon are going to own this space that the technology is not there. When we started like AI was nowhere near uh where it is right now. So it was it was a hard job. So, we struggled to raise money, but finally we found like a couple investors that gave us the money and that allowed us to uh start the company and it was pretty smooth from that point on.

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How to Build a Cult and Pull Ahead

06:47At Gong, we have our number one operating principles like raving fans. We're not happy with just happy

Make Raving Fans, Not Just Happy Customers

06:52customers. Happy is like, yeah, I could be happy with a with a chair, right? That's not We want something people talk about that is a level above, right? What if I sit on a chair like here in the kitchen and all of a sudden it start to give me like a back rub and it adjust the temperature.

07:06Oh, what just happened here? Right? I mean, that's you get people to talk about it and it surprises you for the better. It does something that you don't uh don't expect. You got to understand your mission is not feature or AI or all of that.

07:18That's like what people buy. That's what they ultimately want to accomplish. First we focus on value not just features. So we said what does it do? So we have like two things that the gong will try to do. First like 75% of a seller's time is non-productive.

07:33All right it's like updating CRM it's like doing forecast doing training doing like sifting through a list. So what can we remove out of that second [music] when they're with talking with customers how do we help them be better on their job?

07:46So these are the two northstar metric people move from like somewhat reluctant to use it like ah is it like invasive to go oh wow like you just did that right so you get that that wow all the time and the product surprises you and what it does and it needs to work well and it needs to be above what you expect.

08:06We do have like a rough patch in 2023 because that was the postcoid

How Gong Pushed Through a Crisis

08:13growth right the hangover a lot of our customers have overhired people and got into uh financial stress so we saw like uh higher churn we also had competition that went in and and bought like a bunch of competing products and they're going to our customers and consolidating.

08:29They say oh we're going to do like all three or four products in one. the products were not very good but at that time customers were just looking at a spreadsheet and say okay like yeah 1 2 3 and so our growth slowed down substantially 23 I wouldn't say existential but it was definitely like uh not not fun days so we raised a lot of money but we barely touched it we just saved it for if and when we're going to need that so that gave us a lot of confidence and and the ability to execute and we knew that if we struggle right now all of our competition is struggling If you're in an early market,

09:07which we are right now in AI, there is so many possibilities. Why would you like try to like one up a [music] competitor, right? Just try go like in a different direction and there's so many option that could be like way better. I'm stealing from Jeff Bezos, right?

09:21Who

Are You Truly Customer-Obsessed?

09:23said that like most people say they're obsessed with customer. They're not. They're really competitor driven. They look, oh, they did this, I'm going to do that, too, and I'm going to do better, right? That's the wrong thing. So, what do you do?

09:33We step on a gas pedal, right? So, we know that everybody's going to struggle. We have the cash and we're going to invest in engineering. I'd much rather invest in people and engineering than than in office space. Cuz like I remember like in 99 I was stuck with like an office that was like all like steel and plastic bags, all the area and chairs and like you know millions of dollars.

09:55It was like giving goosebumps even to watch it and say like why do we do that? I mean we we we spent money on real estate and not on people, right? Is there anything that I could have done right that would have like changed the outcome? So we only do like two or three year leases right I think for now for the first time we did like a four-year lease in an office but generally we've been in we work at weiworks like since day one and we still are offices like either they're too small you grow so fast that you need to move out or if you don't grow then you're stuck now with a lot of space.

10:25So we built like two more products. Now we added our fourth. Then we started like uh consulting and now they're they're behind. I'm an amateur cyclist. When you're climbing, right, you know, everybody's exhausted, then you attack, right? You just give it like all you and then just psychologically it breaks your if you're good, right?

10:47If you're able to accelerate that, everybody just gives up because they know that they're barely breathing and now you're charging ahead. And that's exactly what we did. Competition should be more like like an

Competition Should Be an Easter Egg Hunt

10:58Easter egg hunt than like a football match that you're you got to match like every play that the other opponent is doing. It's not a zero sum game like in in the early stages. Just there they're more just just go and keep looking. Why don't go where all the other kids are going?

Local Optimum: The Trap Founders Miss

11:16A lot of companies stall not because of external conditions. It's because maybe the market like isn't large enough, right? So there's like uh in math there is, you know, everybody suddenly knows there's this thing of local optimum, right? You're climbing a hill and you're you're climbing and first it looks like very very exciting and you reach the top but now you're you're not getting to the mountain.

11:38The most important thing is

Why Your Market Matters Most

11:39the market like which market you're in like which market do you play in that's like more than anything else if you get it right then you could be okay in the others. There are two choices. Either you join an existing category. Let's say the advantage it's already established.

11:53People are buying and you just need to explain why you're better. There's already budget for this. Starting category is like uh is very compelling people. Oh, I'm going to start like a whole new category of of music or whatever, right? It's also hard because people don't have budget.

12:06They don't know how to think about it. So, there's a lot of education. And if you want to be precise, you can start a category. A category is by definition like a number of companies doing the same thing. If it's just you, you're not a category.

12:21You're a unique product. So you start by creating a unique product. If you're if you're not successful, then nothing happens. If you're successful, it's guaranteed that other will try to like either copy or do something better than you or like something different.

12:33That's when you start to have a category. It does take time. Today, Gong is considered or something like Gong revenue AI. Most companies say we need that but it wasn't like a must-have when we started like people had to find budget for it. It didn't exist right it wasn't like a CRM or a contact database.

12:54[music] So creating a category sounds very exciting and I'm I have no regrets but if you're an entrepreneur don't think that oh I need to start like a new category. So first understand if you're stuck understand if this is like intrinsic to your business or something that's happening right now.

13:09There are a lot of companies that are for example, oh we develop solutions for SDRs, right? Don't do that. If you live in the Bay Area, you think like everybody has SDR. Companies in Wisconsin don't have. So this is example of a small market.

13:20I mean you can get to like 50 million 100 million, right? You're not going to reach like a billion. So understand if you're stuck uh because you've reached a local optimum of your market. Uh also if if it's a small market and it's very competitive, that that's that's the worst thing.

13:36It's like five hungry dogs like fighting for a very small piece of [music] meat, right? For us, we understood, listen, we have like a trillion dollar opportunity. Like, if we don't succeed, like it's not the market, it's us. The noise that's happening

Advice for AI Software Builders

13:50right now with AI, I know it's very confusing. Just just make a bet and just keep going. Ignore the noise. Right now, people are very emotional. It's almost like when, you know, people fall in love with someone that, you know, it's more like the hormone thinking versus like the brain.

14:04The dust will settle. At some point it'll be clearer. So if you have a direction, hopefully it's good. Just keep going, keep plowing, do your own thing. Look a little bit like to what's going on, but don't be enamored with like things around you.

14:17If I have to distill it to one, this is it. Like who do you cater to and what do you offer?

Why the “SaaSpocalypse” Is Overblown

14:31Apocalypse. There's some truth in that but it's like a way like overreaction of the market right now. It's like uh uh investors are worried like if AI is has this like power of god anybody can do software. So what what is the mode? It's a natural question but it's way way exaggerated cuz most companies will probably like um open source their code and it will feel the difficult for someone to compete with them.

14:56The code is just a part. What about like running it? Like there's like a security vulnerability that you need to patch a package, a library, like what do you call it like 3:00 a.m. Just writing the code is one part of a software company, but actually like running it right and supporting production driving adoption is extremely hard.

15:16So even if like work there or Salesforce's like code was out there on the internet, it would still be extremely difficult for anybody to compete with them. CRM and HR are incredibly complex, right? People just underestimate it. They think, you know, you can't vibe code that like uh even like with 100 engineers or otherwise, why are we not seeing one right now?

15:37Why are we not seeing like a competitor? We have to understand that sales is asymmetrical engagement. So buyers don't necessarily tell you everything. They might even lie to you. I don't have a budget, right? Or I am the decision maker even though you're not.

15:52We're looking at a few of their competitors. they might not tell you what they are and they might not be looking at anything. So this is like already like AI needs to have like excellent context or data right when you negotiate like you want to lower the price you want to increase the price.

16:07So that's like uh one thing. Second at least for us like we help mostly with B2B sales which is complex. It's like multiple people selling to multiple people. Understanding the power dynamics, the political power structure, all of that something that AI will struggle.

16:24Ambiguity is not where it's good. Reading the room and judgment, creativity, right? AI is very straightforward. It's trained on u being plausible. Sometimes the creative moves aren't the ones that are plausible. It's just doing something like that seems unreasonable, but still like a winning place.

16:44when we're alone, like nobody cares. Once you're you're head there's a crosshair on your back, so everybody wants to kill you, right? And that's like we take it as a compliment. We've built the system over 10 years and and again, it's there there's a lot of complexity.

16:56Our vision was we thought of

Gong’s Vision: A Self-Driving Revenue System

16:58it as a self-driving car, right? So when we started Gong, we wanted to build an autonomous system. Our inspiration was a was a Tesla self-driving car like five levels. Five is like full self-driving and one is getting like lanekeeping alerts.

17:10And he thought if you want to build a self-driving car and this is a self-managing customer management system, you need three things. First, you need the sensors to capture all the data. In a car, it'll be the radars, the lighter, cameras. So, this is our revenue graph.

17:25Second, you need to make sense of all of it, right? So, you see like a red light blinking. Is it a traffic light or is it a car or a motorcycle? Is it accelerating or decelerating? Right? So, this is like the AI level. And then there is the application layer.

17:38So we always thought about like the five levels and we said okay today we're like uh 2017 we're like a level one right and when can we get to level five so we built uh even though something like a lighter didn't exist or the AI wasn't strong enough to be full self driving so we built the framework so we can plug in like the technologies as they mature if you could vibe code it like overnight then uh then we have a problem but it's it's not it's not easy there's a lot of uh nuance in details that goes into especially deploying at a large scale.

18:12So I think it's like a underestimation of what it takes to really run a company right me not an investment advice I think it's a good good buying opportunity for the companies that are real [music] from the outside when you see a company growing right it looks like this but from the inside there are multiple revenue sources right and you need to layer them in a way that it looks smooth from the outside but each one is kind of like S shape right at some point it'll hit a glass ceiling you know you ask me about the people getting stuck because you're you're doing one thing and and that's it.

18:44Like it's not it's not growing as fast anymore. So, you always need to layer those things. You need to think about like two or three years in advance cuz uh when you realize that you need it, like it's already too late.