When Lioness Magazine was just a concept and a PDF prototype, Gail Goodman was on my radar. She was at the helm of Constant Contact, a Massachusetts headquartered business that was synonymous with email marketing. Back then, it was rare to hear about a woman running a massive and steadily growing tech company.
I wanted to talk to her, ask her a million questions. How did she take a pre-revenue startup to $370 million in revenue? It would be several years before I had the chance to sit down with her. And, by the time that moment came on Oct. 2 at the Pepperlane Connect conference in Waltham, Mass., Goodman had led Constant Contact to a successful IPO and a $1.1 billion acquisition by Endurance. In addition to her incredible time as CEO, Goodman also serves on the boards of Shopify, MINDBODY, Entrepreneurship For All, Mass Challenge and Lola Travel.
She sat down with me and Lioness CEO Dawn Leaks to talk women in tech, what it’s really like to grow a startup to a billion-dollar exit and why a Mom Economy is the next movement in entrepreneurship. The conversation was rich, warm and full of gems of wisdom. Enjoy!
Natasha Zena: You’ve been on my radar for a while and I was like, ‘we have to talk to her for Lioness.’ And so when this opportunity happened, we were like, perfect. There’s so much to talk to you about. One of the things that really excited me, obviously, is that you’ve been with Constant Contact for a very long time when they were pre-revenue and then you help them and oversee them to this $1 billion exit. That is amazing.
Gail Goodman: Yup!
Natasha: When it comes to just, I’m sure there is so much, in terms of you leading the organization. What were some key things, do you think, you kind of kept in mind in terms of growth?
Gail: So when you lead a company from zero to — when we sold the company — at about 1,500 employees. What’s really clear is that what they need as a leader changes completely like every six months. You have to be a different leader. And so the thing that I took away was while you’re working on the business, you actually have to constantly be working on yourself as a CEO, to be right for the business as it is, not even now, but where it’s going to be three months, six months, a year from now. So it was a constant growth curve. Most founders don’t scale past IPO, right? And they certainly don’t — like we were public for eight years before we sold it. That’s a long run. In tech? That’s like an incredibly long run. The reason I think I made it that far was that I was always learning and growing and changing.
Natasha: Did you learn anything about yourself as a leader? Like we always say that we feel so exposed. I’m like, ‘people are watching us.’ (laughing) And like the personal development part, I’m like, oh man!
Gail: (laughing) Yes!
Dawn Leaks: What was one of the most surprising things you learned?
Gail: So, some of the skills that make you kind of a driven entrepreneur like impatience and go-get-it-ness can be really destructive to the culture as the culture grows. One of the things I really had to look at was the ways I brought my impatience visually out to people. So when it’s a small team and your — you guys know each other, right?
Natasha: Oh, Yeah.
Dawn: (laughing) Very intimate.
Natasha: (laughing) Too much probably so.
Gail: You get impatient with her and you can show it to her and she’s not going to take offense because you’re bonded. But suddenly, it’s like the original team of five you can do that with and then suddenly there’s hundreds and you’re meeting someone who reports to someone who reports to someone who reports to you, and if you give them that same impatient look that you gave to Natasha, it scares the you know what out of them. So you really learn that you have to be really different with people given how well they know you. And you have fewer and fewer places where you can not be, I’m going to say, ‘on.’ Because the organization has gotten so big that most people don’t know you. I’ll give you an unbelievably simple example. When we first started my commute, if I left the house at 8:15 was 45 minutes and if I left at 8:45, it was 20 minutes. So, I would stay home and do my emails and get in the car when the commute was much more reasonable and show up at like 10 or 15 minutes after nine. Since 90% of the company was getting those emails I was sending, they knew I was working, but then the company gets big and people like aren’t showing up to work on time. Because I am role modeling that it doesn’t matter if you walk in at 10 after nine. They have no idea how late I was there, they have no idea I was online at 6:30, they don’t know that. I am visually role modeling behavior I don’t want the organization to have. So you know what, I start commuting during the traffic. Because that’s what you do. If you’re not role modeling the behavior you’re expecting, you’re not gonna get it. That’s an incredibly simple example, but it’s true.
Natasha: Piggybacking on what you were saying about role modeling, and earlier today in the conference you were talking about pre-launch and getting yourself out there and connecting, how did you maneuver in the business world in terms of scaling when you guys were pre-revenue, right? Because how do you go out and represent your company, and you want it to be credible because you’re doing good work, but you’re not like, clocking all of this cash yet.
Gail: At the very beginning our first 10 customers were friends of the founding team. We would literally just beg people to use our product and then ask them to pay for it. So we did a lot of try it free, get it going, because we were just really anxious to have people get their hands on it. It’s also a tech product, so at the beginning it’s…
Natasha: Brute force like you said earlier.
Gail: We brute forced our way in. You know, because also at the beginning with a tech product you never have all of the features you want. There’s no such thing as a fully featured launch. And then you figure out if you get some people hands-on, ‘oh boy until we fix that, we’re not gonna, we really shouldn’t put any … I like to say we did a really good job of tuning up the product and its solution before we started to spend money on marketing. Now, I’d like to pretend that that was wisdom, we just didn’t have any money for marketing. But now it’s a strategy.
Dawn: (laughing) That’s hilarious because we’re a startup ourselves, and we’ve been having some talks with investors and things, and I basically said something like that. ‘We haven’t put any dollars into marketing yet, but now that we’ve perfected our business model …”
Gail: Now we’re ready for marketing dollars. (laughing) It was the plan. It was the plan all along.
Natasha: And the other thing I loved, when you were talking about customer development, is that when we talk to a lot of female founders, sometimes they’re hesitant to do customer development and we feel like it’s an intricate and integral part of the process, why do you think that people hate or fear customer development so much?
Gail: I think when you’re selling, which is what I think you mean when you say customer development, you hear no a lot. And if you sell for a living you get thick-skinned about that. Like, if I have a funnel and I put 100 people in the funnel and I get two out of the bottom then that’s our model. That means I had 98 nos. And salespeople are used to that. But people who come to leadership roles who haven’t had a sales background maybe aren’t as thick-skinned and I think as the CEO of the company it is often your baby, so like having someone say no to your baby …
Natasha: How dare you!
Gail: It doesn’t feel so good. So one of the things I always recommend to young people is to sell some time in their career. There is nothing dirty about selling. It’s part of the world of commerce. You cannot say you want to be a business person if you’re not willing to sell. If you don’t believe that what you’re bringing to market has more value than the price, go back to the drawing board. Because if you do believe in it, then you can sell from a place of integrity.
Natasha: Because you believe in it.
Gail: Because you believe in it. If you’re selling from a place of integrity, how can it be bad? So one of the things we focused on, one of our core values at Constant Contact was driving our customers to success. So everyone who worked there knew the type of value that we were trying to deliver and believed it. Selling gets much easier when you feel that way. Like you almost feel sad for the people who say no because they’re not going to get all of your great value.
Natasha: That’s a good way to look at it when you get your no.
Gail: One of the things that made it easy was we had a free trial. You feel good about it, try it for free. I mean not every business model can support that but for us, it was very helpful. The first step was just to give it a try.
Dawn: I feel like I was an early adopter of Constant Contact. Well … now that I realize the timeframe.
Gail: What year was it, do you think? We launched in 2000.
Dawn: Maybe not that early. I think it was around 2002.
Gail: Yeah, that’s still early. That was still pretty early.
Dawn: I was like, “I found this service, let’s try it.”
Gail: I used to say that we were an overnight success that only took 10 years to build, (laughing) because people suddenly saw us and were like ‘oh, you guys are everywhere.’ Like the first five years were really hard. Really hard.
Natasha: When you were out there growing the company and getting it going, how was the landscape? Obviously, in startup land, we feel like the landscape is changing and we’re trying to push more female founders to the forefront and help them get funding and that kind of thing. How was it when you were in the stomping grounds of launch time?
Gail: I feel like when I was raising venture — so I did my first venture in 2000 and then more in 2002 and then the final round into 2006 — there weren’t a lot of female founders. But for some reason, I don’t think that was my problem. My problem was there weren’t a lot of businesses that looked like ours. We were selling a small dollar, recurring revenue, monthly subscription fee. Which now lots of businesses do …
Natasha: You guys were way ahead of the curve.
Gail: We were way ahead of the curve. The objection that I always got was you will never get this to scale. You’ll never be able to get it big enough. You’ll need hundreds of thousands of customers. And I was like, ‘Yeah. There are 26 million small businesses in the U.S. I can easily get to 100,000.’ Well, you only have 2000. Well, I’m on 2000 on my way to three. It’s going to happen and then we did hit 100. We did hit a quarter million and we did hit a half a million. Like we got there, but it took a really long time to get there. And so I felt like my biggest problem was raising money. What is the business model? Now there could’ve been embedded behind that the female entrepreneur thing, but I just took it at face value that they were telling me it was because of the things that they were telling me. I never was much for trying to read gender bias into what people said. Because I never felt like I could make myself something other than what I am. So I was just kind of like, ‘here I am and this is what I do’ and just kind of went at it.
Natasha: In terms of … you were just talking about the revenue model and obviously you have to continuously build. We know that nine out of 10 startups fail. For you, what was the point where you had to evaluate do we keep going on? Do we stop or do we go?
Gail: I wrote two shut down plans for the business. Two times we were about to run out of cash and it turns out to shut down the business there’s a lead time. When you have full-time employees there’s a legal and regulatory kind of shutdown process that I got way too familiar with and they were both funding crises. So never in either one of them was I questioning if we had a business that should live. The reason that I never questioned that was the response we were getting from the small businesses we served. People would use our product and they would literally write us thank you notes. We knew we had something of value, so I never doubted efficacy or market. Is this the right product to be bringing to market? Yes. Can I fund it? I don’t know. So my moments of dark doubt were around the funding. Particularly because when we started we were either charging $15 a month or $30 a month for the product and it was costing us $300 to acquire a customer. Which, in reality, was pretty good. Because at $30, then we got it back in 10 months. Our average customer was staying for four years. So our profit model was just fine, but you had to put the money out upfront to get it back later, so we did have a cash flow challenge in our business. We had to fund our growth with other people’s money. And so, yeah, we had two very dark moments when I didn’t think I’d get a funding deal across the line and then in both cases — a lot of selling, it’s another form of selling, by the way, raising money is just another form of selling — somebody came through at the end and we got the deal done.
Dawn: What was your background before coming to Constant Contact? Because, did you know … I guess it’s a two-part question. Which pieces did you have to buff up your skills, your acumen around in order to run this company?
Gail: My background before had been in software. So I had been in the software world. I had done sales, I had done product management, so I kind of knew the technical side of the business. What I had never done was raise money. I had never been responsible for the financial side like cash flow and watching the cash. I had never been the CEO. I had always been the VP of Product or the VP of Marketing. Somebody else was worrying about whether or not we have cash. So for me, the financial side of the house was all new, raising money was all new. And those were probably the biggest hurdles for me. I kept feeling like I kept hitting something new that I had never done before. I remember I was like a month into the business and we needed to negotiate a lease on the next set of office space. I had never seen such a thing before, right? It just was one more thing after the other. I remember when the first employee got pregnant, we had to write a maternity policy.
Natasha: (laughing) Stuff will happen and Dawn will say, “Write that up! Save that in Google Drive.”
Gail: Right! There were just a lot of things that as I found them, I figured them out. I would say the financing and the financial side of the business was the biggest new [thing] for me.
Dawn: And did you have mentors or coaches or paid coaches or just friends you made along the way, who helped you with that?
Gail: I had really two approaches to that — one, I was never shy about asking for advice and I had a peer group of people I had worked with in the past that I went to on a very regular basis. But then a little further along kind of in 2002, I joined a CEO peer mentoring group. We were 10 venture-backed CEOs. I was the only woman in the group.
Gail: And we were all sub $2 million in revenue, the same size at the same kind of stage and growth and we met once a quarter and talked about our issues and challenges and compared notes and, that group, I was with until the day we sold the business. It changed in form and format as we grew. Some people fell out. In the end, it was all public company CEOs, because they formed it against the issues and challenges you were facing. But that peer group was invaluable to me. Everybody came from different backgrounds so one person was better at this and another person was better at that, and so everything you saw as a challenge, one of them had already seen. And sometimes you were the one who had seen it and you could help them. So it’s one of these everybody gives to get and it was just very supportive. It sounds, very trite, it’s lonely at the top, but it really is.
Dawn: Yeah, absolutely.
Gail: So it was a place you could share the issues and challenges of being a CEO.
Natasha: Was that a group that you guys put together informally?
Gail: No, it was run by a consultant.
Natasha: These days, what is stoking your passions and fires? What are you up to these days?
Gail: My big thing is fostering entrepreneurship and, in particular, inclusive entrepreneurship, helping in mostly underserved communities, people create businesses. So, that’s not always scalable tech, by the way. Sometimes that’s a restaurant or food truck. But, I think, the way to make sure we have a vibrant and growing economy is to make sure there are entrepreneurs of all shapes, sizes and colors in communities both prosperous and not prosperous. In particular, I’m working with an organization called Entrepreneurship For All.
Natasha: Oh, I’ve heard of them.
Gail: Have you heard of them?
Natasha: Yeah, in Massachusetts.
Gail: Well, we’re getting beyond Massachusetts. We are in five cities in Massachusetts but I’m helping the CEO put a national rollout plan together and raise capital. I’m fundraising in a very different way which is charitable and philanthropic. (laughing) I was much better at asking for venture money than I am at asking for charitable dollars, but I’m learning. So that’s sort of the big thing that I’m doing, and then I am serving on some boards, two public, one private and two nonprofit and I’m an advisor to Pepperlane. I’m spending about a day a month with Pepperlane.
Dawn: I knew that she was involved with Pepperlane in a significant way because you were seeding [during your talk]. You were saying, ‘so you really need to direct people back to your website or your Pepperlane profile.’ (laughing) and I was like did you catch that? That was amazing. I’m like she’s involved with Pepperlane in some way.
Gail: I’m also actually an investor, so I put some money in. I’m all in with the Pepperlane team. I think that what they’re doing is amazing. There is just entrepreneurial energy in every corner of our society. And it’s been hard to unlock if you weren’t traditional.
Dawn: So what do you think is significant about the way they’re doing this for mothers?
Gail: I think they are figuring out the success formula. So you’re a mom, you’re starting a business, you don’t have a marketing budget. You probably don’t have any marketing expertise. This combination of community and community engagement to help you understand, to give you the confidence, to give you the pathway, the step-by-step way to do it and to connect locally to find customers and then grow from there … I think it’s extraordinary. It’s a movement. We’re not there yet, but I think it’s going to be a movement. Mothers helping mothers. I think in the end, most of these moms, these stay-at-home moms will end up selling to the working moms and they will create a symbiotic relationship that actually let’s both do what they want to do with their lives. It’ll make it easier for working mom because they can get a stay at home mom to do meal prep or party planning for all the things that they’re not getting to because they’re in a full-time job and the stay-at-home mom will feel fully empowered to be both a stay-at-home mom and be an entrepreneur. And I think that’s just going to change everything.
Natasha: What I love about that is, growing up I always felt like the stay-at-home mom was pitted against the woman in business and there’s no reason that they should be.
Gail: No need that they should be. It’s just a shame that our society has the stay-at-home moms starting the with the ‘I’m just a start at home mom.”
Dawn: I know, it’s horrible.
Natasha: First of all, have you ever stayed home for a couple days? (laughing) I’ve stayed home a couple days because I have a son. I’ve stayed home a couple days and done some house stuff and thought, ‘my God!’
Gail: (laughing) I got to get back to work!
Gail: You were exhausted!
Natasha: Yeah, it’s a job! So it’s nice to see them getting that respect.
Gail: It is. Exactly. Pepper Lane can give them a [business] identity that complements their stay-at-home identity. It celebrates one and adds to it.