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Alan: Tomorrow.io, formerly known as ClimaCell, is a 6-year-old startup that’s grown very quickly. We initially started out looking at how we could make weather forecasts, which is a very complex science, better understood. I think a lot of people just think the weather’s one of those things you can’t control, and therefore, millions upon millions of dollars, if not billions of dollars are essentially written off.
And what we’re seeing is that it’s all very avoidable. You don’t have to go too far back to remember things like ERCOT here in the US, where millions were left without power, people unfortunately died, and a CEO lost his job. And it was all very avoidable. Because they were having to make decisions on a very impactful weather situation in the moment.
And I think what we’re trying to help people do is really be more proactive. Inform decisions ahead of time to rebuild that continuity plan, business resiliency plan, align that to the weather and climate, and make weather forecasts a lot more comprehensive, but understood, so decision-makers have the control and the confidence to make those decisions ahead of time.
Barry: What was it beforehand? Haven’t weather forecasts existed for years, if not centuries?
Alan: Yeah. There are a lot of companies, I’m sure many of you are familiar with them. The AccuWeather’s, the IBMs, and the DTNs. The industry has really been driven around. It’s been more of a services led-industry, where the data is all government-fed. Every dollar that goes into forecasting is largely coming from the federal government side of the US.
Some of those governments spend more on weather than others, putting satellites in the sky, radars, weather sensors, etc. In developed markets, the US, UK, and Japan, in particular, there have been enormous investments. So weather data is a good standard and traditional weather companies will reuse that data, deliver that in customized forecasts. And if companies have enough money, they’ll allow them to have access to their meteorology teams, or maybe even have a dedicated meteorologist.
And it’s really been a situation where the individual making the decision is not a meteorologist. But weather data is delivered as data. It’s wind speeds in knots, temperature in degrees, and humidity in percentage points. It doesn’t actually mean anything. It doesn’t help you answer the question.
Weather is one of these areas that has huge challenges around safety, efficiency, and very costly things. And as human beings, we always take the safe answer. And invariably, we’re picking up the phone to the meteorologist and say, “What do we do?”. And the big difference is what we’re doing is really providing a platform that helps you make a decision. Based on your autonomous levels you know the right way to actually make a decision. So even four or five days out at a time, you can see whether or not you need to close the roof of Arthur Ashe stadium for the US men’s final in tennis, or whether you need to delay trains or slow them down. Whether you need to transition to a different energy source from hydro to wind or to solar, etc. These are big decisions that people need to make. And we’re trying to empower those individuals to take control and have confidence.
Barry: It’s a lot more than just understanding, “Should I take my umbrella outside or should I put on boots?” It impacts millions of dollars for businesses.
Alan: It does. We have a consumer app too. So the questions that you’re answering there, even those are complex for people. You’re looking at ‘you have a 40% chance of rain in an hour’. Do you take an umbrella? Do you not? It’s trying to make that decision more easily understood. So even our consumer app is driven by what we call insights. So you can plug in what you care about. When’s the right time to go fishing, play a round of golf, walk the dog, take an umbrella. We try to make that a lot easier for people to make a decision.
Barry: There’s some recent news that our guests may be interested in. Do you want to tell us a little bit about that?
Alan: Yeah. I can’t talk too much obviously, but we went through a very interesting growth phase. And as part of that we’ve partnered with Pine Technology. This enables us to take in additional investment as part of that we will become a public company and enables us to do a lot of exciting projects and really take ourselves to the next level.
Barry: That’s awesome. And I’m sure you were involved with a lot of that. It’s nice to see some of your efforts going to fruition.
Alan: I had a small part to play.
Barry: And humble too. Let’s talk more about bringing your product to market. I’d love to go deeper into the development of the company and your go-to-market strategy. But before we go into your GTM strategies, I think we have to take one step back and understand the product a little bit more. We know there’s a consumer app that might help me understand if I need to take an umbrella. You’re also talking to some big companies. What are the products that you go-to-market with?
Alan: Our enterprise customers are really accessing our data primarily either through our platform, which takes what is very complex and puts it into a very easily understood format. It’s almost like looking at a Google calendar, four or five days out. What are the decisions I probably need to make as simple as red, yellow, green, in terms of the level of confidence you have in daily operations.
We also have an API. A lot of our enterprise customers are probably utilizing either our UI or our API. Many are using both. The API has the same insight-driven decision-making format built into the AI, but it’s powering it through an API so we can power your existing applications.
In many cases, certainly in the aviation world, we have direct customers like JetBlue, Delta, United, etc., but we also partner with people like Amadeus enriching their applications as well. That’s probably the second way we go to market. And also just having a mobile app for enterprises. It’s just another window into our applications. Even people that are on the ground, on the move. Maybe their network operations center, they’ve got our UI, our dashboards running. Those individuals on the ground, making decisions in the moment, they’ve got access to our information and that level of control and comfort wherever they might be.
Barry: I love the idea that you can go enterprise, but your product strategy can also focus on consumers and the developers.
Alan: Weather impacts everybody. Absolutely.
Barry: I wanted to focus on one specific thing about your enterprise growth. In 2018, your team had one or two enterprise customers. And then coincidence or not coincidence, you joined about two and a half years ago. And now your team has more than 120 enterprise customers, which is a big jump.
In the past three years, the product was ready to go enterprise or the go-to-market sales motion was ready to go enterprise. I think it would be interesting for listeners to get a deeper understanding of what you needed to do to get the organization ready. And what were the marketing strategy and sales strategy to get to 120 customers and beyond?
Alan: A lot of that was not done overnight. When I mentioned the fact we were founded six years ago, a lot of that early timed investment, in particular, was really building the technology in the platform. Not to get too much into the detail, but we’re taking data sources far beyond just that governmental data that I mentioned.
We’re taking feeds from everything from connected vehicles to planes in the sky, even looking at CCTV footage to see when rain turns to sleet, turns to snow, etc. Really building that and you move beyond the data itself into the models. Again, we’re not just repurposing governmental models. We’re the only private weather company in the world to have a numerical weather prediction model in production, for instance.
A lot of science went behind it to get to the point where even getting those first few enterprise customers was needed. We needed to actually bring value to the table, not just get a minimally viable product out there. We really did have a very robust enterprise-ready solution. Even three years ago when we were still very, very young. To your earlier point, I joined in August 2019, which seems a lot longer ago than it was. We’ve had pandemics in the middle and everything else. But when I joined, we already had some of these incredible brands. We had people like the NFL, National Grid, Ford, and JetBlue, and we were fortunate that some of those customers actually became investors in our technology and became so enamored with it.
When I joined, having that stable baseline was incredible, because we didn’t have to guess our value. We had these incredible customers. And the first thing I do, doesn’t matter what company I’m working with, whatever technology I’m engaged with, I always ask the question, “What is the cost of not using Tomorrow.io?” It’s a very specific question. It’s not what is the value of weather data, because there’s plenty of weather data. In fact, there’s almost too much of it and it confuses people. So it’s a very specific question. If you’re not using Tomorrow.io, what process are you stuck with and how is that costing you money? And then what I did coming in is, any sales either going into any business, you have to build a go-to-market plan. And that plan has to have focus.
Really you’re probably driven by two ways to grow a sales team, either growing teams out by territory. You might have a team in the US and the Northeast, Mid-Atlantic, Northern California, Southern California, etc. The challenge there is that they’re picking up the phone one minute to an airline, then the next to an energy company, then next to a sports team or league. Use cases are extremely diverse and different. The acronyms, the terminology, the impact the weather has, the actual cost varies enormously. So it was obvious to me that when answering that question, what is the cost of not using Tomorrow? It was such a specific answer. That we needed to build teams that were completely aligned to that value. That understood the cost. It can articulate that in the customer’s terminology. So we were credible and we were empathetic. And ultimately we became trusted advisors, which is an important phase to go through for any enterprise sales motion.
Earlier said, “Weather impacts everybody.” We were looking at, “Wow, we could monitor everybody, anywhere in the world, and any industry.” And we quickly learned that while we could do that, it was really important to focus on where we could build repeatability and therefore predictability. And that’s how we grow a business.
We actually focused on five core markets originally. We built sales teams around those five vertical markets, one of those global teams, but really focused predominantly on North America. We obviously sold more through that focus point. And through doing that, you learn more, because you get more customers, you get more feedback. So you start to tailor the solutions. You start to tailor your marketing messaging. And we build these playbooks by industry, which really it’s the Bible to any sales representative. On day one, you get your laptop and you get your playbook for whatever industry you’re aligned to.
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Alan: The playbook is a cheat sheet that helps you understand “what is the impact to this industry?” How do we answer that question about the cost of not using us? What are airlines? What are renewable energy companies? What are logistics companies, sports teams, etc. What are they doing if they’re not using us? What’s the unique value that we bring? How can that be quantified and valuable and how do we communicate that? So you start to build this repeatability up, which is a magic word for any sales leader. And then as we grew, obviously people found you as well. What became five teams has grown to literally eight teams now. We’re looking to actually bring on a ninth industry vertical. And as we transition into this next phase of growth, one of the things I’ve done over the last four or five months is hire general managers for each one of these sales teams.
And we’re actually growing that beyond just being a sales team, but into cross-functional teams that just absolutely ooze that credibility. We’re all talking that customer language. So that’s everything from sales to account management, customer success, solutions engineering team, product marketing teams, all aligned to that general manager who carries the ultimate number. And that makes sure we’re all aligned to that same north star. So we’re breaking the overall global sales number down into those sub-industries, those business units. And then we all individually know what we need to do to get to that number. And we’re all talking the same language, which is very customer-centric throughout the process.
Barry: I’d like to deep dive into some follow-up questions. One thing I think that would be interesting for listeners is, when adding another industry, a line of business, how did you know which one to add first? And how did you know which target customers had the best product-market fit?
Alan: The first question any sales leader needs to ask is, “What is the cost of not using our technology?” In the early days, I really pushed that question both to the founders, but to people within the company, to our current customer base, as well. “If you weren’t using us, what would be the process?” “How impactful is this technology?” And you’ll probably get snippets. And maybe you’ll lock onto one or two things and maybe you’ve got one or two customers in that space. That’s certainly worth exploring. I would suggest that before building a whole business unit and team around that, actually put that to the test. Build materials, build a sales team, absolutely to align to that and see if we can get there.
For me, it was principally at least five core customers in that market. All five customers agreed on the value that we can provide to them. There’s consistency across all five. That’s where I knew there was repeatability there. That’s when I would then invest in other parts of the business. So I’d invest more in the marketing efforts. I’d invest in maybe an SDR team to really prime the pump and build the pipeline. And I’d probably invest more in the sales team too. Maybe there’s an opportunity to explore that in Latin America, which is now a key market for us. Same as in APAC and in Europe. Again, I can’t stress enough the point to focus and really hone in on one particular thing, make sure it works repeatedly, and then continue that repeatability to accelerate. The quickest way to kill any startup for me is trying to do too much way too quickly.
Barry: That alone is very valuable. Just to repeat, in order to get those types of customers, did you have a sales team already aligned to that vertical? Or was that someone from the C-suite that was pitching or someone that wasn’t aligned with any vertical that was selling to them and testing that new market?
Alan: So in the very early days, those first customers that I mentioned, the NFLs, National Grids, etc, they found it just through introductions, having conversations at an executive level and having them really use our technology so we could understand the value of it. Those became commercial relationships. And we grew our knowledge from there too.
The first few sales teams that we had might cover one or two industries. So for instance, our aviation team also covered logistics. Because we knew there was something around road logistics and rail and other things. But then as we got more customers in rail, as we got more customers in the road logistics world, too, that’s where we branched out and built teams specifically around that. So you can certainly start more broad in terms of overall perspective, but still with a very focused use case. And then as that use takes off and it can get even more hyper-focused, that’s where you build specialism. So even in an industry like energy, which sounds like a market. Essentially probably seven or eight different, very specific markets. Even if you take renewable energy, there’s hydro, there’s solar, there’s wind. On the utility side, you’ve got the traditional operations side, you’ve got the DSO side, that’s transmission and distribution energy. You’ve got commodity trading. How much energy should we produce versus sell, trade, buy, etc.
So there’s a lot of complexity around that. You might start with one person that covers all of that and really focus on one or two key use cases across the entire vertical. And then as you really find that in hydro with that one use case is really taking off or picking up, that’s where I might dedicate that individual to that particular case and market. Maybe grow other people around it. It’s all based on success. There is no such thing as a risk-free decision in general. But I think in the sales game and as a sales leader, if you can minimize your risk as much as possible and invest where you can see success and anything outside of that is probably tactical. You investigate it, can smell the signs of success, then you double down on it. That’s only been my approach.
Barry: I think another interesting thing, not only did your team expand to 120 enterprise customers, but your team also increased average contract value. I saw online that it went from 300K one year to 425K for one specific industry. Tell me more about how your team was able to do that.
Alan: A big part of increasing your customer base is you start to really understand and quantify the value of the solutions. And I think the biggest challenge with any startup is when you’re really getting those first few customers on board, you don’t necessarily know the true value of the solution. And I think some of those very early customers are probably grandfathered into deals that probably you wouldn’t price now knowing what you know. And that’s certainly the case for us as well. But the value you get from those relationships is just so critical.
I’ll give you a use case, the market you’re referring to is aviation. One really good use case for aviation that sounds simple is the dilution type that aviation organizations use for deicing, for instance. Which given the temperature in Boston today is very relevant. It’s an extremely complex decision. A lot of different variables go into that decision. There are about 12 different dilution types. They range in severity. They range in price enormously. And even the cheapest dilution type is way more expensive than gasoline. So it’s a fairly expensive decision. But there are variables like temperature, wind speed, wind direction, solar radiation, time of day. For here in Boston, Logan Airport, even sea temperature and tide. Because the runway is actually out on the water.
So a lot of complexity to it and the cost of not using Tomorrow would be a very manual process. You may take a data dump from a traditional weather provider. You pop that into an Excel formula, for instance, and then you’ve probably got some individual trying to make sense of that and decide what dilution type to use. And to quote a very senior leader inside JetBlue, who I think this was a Wall Street Journal Interview that they gave, before Tomorrow.io they used to deice every plane, every day, just in case. So it’s fairly an impactful decision. Human lives are at risk if you don’t deice a plane and don’t use a severe enough fluid, for example. We learn very quickly, and that same individual credited that use case to them is worth $50,000 per airport per month. That is a sales leader’s gold dust. Because you start to really understand the value and the cost there.
As we build our pricing strategy and as we understand our value, a rule of thumb I always use is at least ten to one. So if it’s a million-dollar solution in the SaaS world where it’s the same cost year on year, someone’s willing to spend probably a hundred thousand dollars a year to solve a million dollar-a-year problem. A 10 million dollar problem is a million dollar a year solution. That’s always been a rule of thumb for me throughout my career.
Alan: As long as we understand the cost of not using Tomorrow, we can apply numbers to it that really help inform what the pricing is, how it’s relevant, how we can build an ROI with that prospect throughout the process, based on their numbers, their decisions. And you’ve got that credibility and referenceability of those customer stories. You can bring it to life. That for me is how you grow an average selling price (ASP). You align it back to value. So it’s never so much a cost you’re presenting to people. If you can get them into that mindset, that every day they’re not using your technology they’re essentially losing money. So this is an investment on their bottom line. If we’re not using Tomorrow, we are going to be losing money. Because one thing we learned during COVID more than anything else is that people really did focus on margins.
Companies are put into a horrendous situation having to furlough employees. So if you take a piece of paper to a CFO and say, “Hey, I’d like to buy Tomorrow.io.” You’ve got to expect the CFO to say, “Why on Earth would we be spending money.” “We’ve got a budget freeze, we’ve had to let people go.” Unless you can say, “If we don’t invest in Tomorrow.io, we will lose X and here’s why,” then we wouldn’t have got a deal. We were able to grow very aggressively during COVID because we built that playbook. We built the logic and we really empowered the sales team to understand the cost of not using us. And it’s all built off customer guidance.
Barry: I read some insights that value-based pricing is the most impactful pricing because it talks to both parties. It’s a win-win deal. It’s not based on seats. It’s about, “What value am I bringing in?” And, “What can I give you?” And then they’re like, “What can I tell my manager?”
Alan: And it really starts with the very first call. One of the key metrics that we measure here at Tomorrow is what we call discovery calls. We need to make sure that around a certain amount of discovery calls every single week. You can’t manage what you don’t measure. And we know the conversion rates from a conversion call to an opportunity to actually closing deals. For me, a lot of companies call them discovery calls, but it’s really more of a pitch call. You’re talking about your technology. And therefore it’s all about you. It’s really a mind shift that we need to appreciate. No one cares how great you think your technology is. They only care about how it can help them and their business and maybe even uniquely within their business in terms of how they can save budget and really be more successful.
So if we can begin those early calls, really helping understand their business, becoming obviously credible by being able to talk their language and use cases and other examples from within their industry and we’ve hired individuals from those industries too, so they have an existing network and a wealth of information. But really empower them to ask empathetic questions so we can start to really understand, in many cases, the pain that these customers are in that we don’t realize that they’re in.
As I mentioned right at the front of this call, there are billions of dollars a year written off because of weather. And it doesn’t need to be. If you can be more proactive, if you can make those impactful decisions proactively instead of in the moment based on instinct or experience you can actually save an enormous amount of money on the bottom line. And if we can get that into the buying cycle right from that first call, then to your point, Barry, it’s really about them and it’s value-based and it’s, “How can we improve your business?” That’s the measurable proof of value or proof of concept. Not just some validity exercise in terms of our technology. It’s really about how we can help them.
Barry: And whose role is that? Would that be the CROs, marketing, sales? Is that something that the whole team does together to figure out that ROI?
Alan: It really is a team effort and that’s why we built these cross-functional teams by industry. Because it’s not just on a sales persona, or it’s not just on a buyer persona or anything else, nor a leadership thing. What you typically find in any company is that there’s extreme knowledge in people’s heads. And part of the challenge of any CRO is extracting that data out of people’s heads and getting it to the right medium to be appreciated by all. And a lot of that knowledge quite often will exist in something like an account management team or customers success team because they are talking to customers all day long. But if that’s just a silo in your organization, then that’s where it lives. And you’ve got these new business reps going out there into the world jungle with machetes just trying to find their way to a water source for the first time perhaps. If they’re not empowering that knowledge, you’re doing them a disservice.
So by really creating these teams that are cross-functional, you have account management, customer support, sales, the solutions engineering team and leadership of that team, all communicating around projects daily and sharing ideas and thoughts, and as I mentioned, all of that goes into the playbooks. We officially update all of our industry playbooks, which are now sub-industry playbooks, because that knowledge has grown and grown. We update them quarterly, but there’s always a point we’ll exist throughout that too. And I love reading those. Even as the CRO, I can’t be talking to all customers all the time. I love just learning new use cases, the value that we provide and it really does power thoughts and ideas for the future as well.
Barry: I learned a lot from this interview. I really appreciate you being a guest, especially on such a big PR day for your company. Looking forward to keeping in touch and learning more. And for our listeners, where can they reach you if they have any questions on this podcast?
Alan: They can certainly find me on LinkedIn, my email is email@example.com. And yeah, please do reach out. The CRO community is a great one. I think we’ve all been in different walks of life and different technologies and different industries and faced different challenges. And certainly, I’ve learned from the best. I’ve been very fortunate to have incredible mentors along the way and continue to. I would love to continue to grow that network as well. So I love the work you guys are doing on the podcast and wherever I can help and I’d be happy to join again whenever it makes sense.