Russ Fradin is Co-Founder and CEO of Dynamic Signal, a Silicon Valley software company and the leading employee communication and engagement platform.
A digital media industry veteran, Russ has more than 22 years of experience in the online marketing world. Prior to Dynamic Signal, he was the CEO and co-founder of Adify (acquired by Cox for $300M in May 2008) and co-founded SocialShield. He was also SVP of Business Development at Wine.com, EVP of Corporate Development at comScore (NASDAQ:SCOR) and was among the first employees at Flycast (acquired by CMGi for $2.3B in January 2000). Russ is an active angel investor in the digital world and sits on the board of directors for multiple companies. Russ holds a BS in Economics from The Wharton School, University of Pennsylvania.
Interviewed by Donald Tucker:
Donald Tucker leads Cisco’s acquisition and investment efforts related to the market for Collaboration products and services. Donald joined Cisco from Oracle via the acquisition of Responsys, and prior to that spent time at Jefferies & Co., Liberty Mutual Investments and Chevron in a variety of finance, investment and research roles.
Donald Tucker (DT): Russ, I think it’s been over a year now since we announced the Series D investment last February.
Russ Fradin (RF): I know. We've already spent all the money. It's gone.
DT: Well time to raise again! We've certainly enjoyed getting to know you and just wanted to do a bit of a look back here now that it's been over a year, and really a lot has happened. So, what have been some highlights over the past year with Dynamic Signal and with Cisco being an investor?
RF: We’ve experienced significant growth with several large, new customers in Asia, Europe and the US., including the addition of several Fortune 500 and 1,000 customers. We've also grown our team, hiring about 75 to 100 people since Cisco’s investment in Dynamic Signal.
We figured out how to align with Cisco on the channel partner side, attended a few different Cisco Live Events and did the work to be included on the Cisco price list for Cisco sellers and resellers.
This partnership is about much more than integration with Cisco, the Webex Teams product, and the go-to-market side of things that's just starting to ramp up. That took a little longer because there's a lot of work on both sides in making sure the product works and that we're ready to work together. But, we were able to go live late Q4 of last year.
DT: On the product side, have you made significant updates over the past year?
RF: Yes, as always, we continued to delve even deeper into enterprise integrations. We just came out with a first version of our desktop app which is something that IT administrators ask for all the time. We've added a ton of video support because much of our usage is by customers who want to better connect and engage frontline employees who don’t sit behind a computer or have a company email address. If you work on a hospital floor, or in factory, or at a restaurant without email, you really don't have any solution to view videos. And so, we've added that support, bringing training and streamed or pre-recorded video to the edge for those frontline workers.
DT: Something I noticed was Dynamic Signal was certified recently by the independent analysts at Great Place to Work. Can you share more about that, the kind of corporate culture you've built and what attracts people to work at Dynamic Signal?
RF: The Great Place to Work organization is excellent because it's really just a survey to your employees. The companies who participate have no sway over it. It's not something where you pay more money to get ranked because it's legitimate and organic.
We're certainly proud of our culture and that so many people feel good enough about the company that they speak honestly about us and share what they love, but also how we could improve. They seem to really like working here, and it’s reflected in our ability to hire and retain employees and experience minimal changes. Our team seems to be happy, work hard and stay for long periods of time. And that's fantastic.
There’s no big value statement on the wall of our office. We are on a mission to improve the employee experience. We solve a real problem for some of the largest companies, so our work is meaningful. We try very hard to ensure people treat colleagues with respect. I've found if you're transparent, play nice, the work is interesting, and you’re solving real problems for real customers, it's actually not that hard to build great culture. As long as you do those things, you wind up being a great place to work.
DT: I think it often starts at the top as well. So, I think you should give yourself some credit there.
RF: It's basically entirely at the top. I AM delightful!
DT: And you’re funny too! I can attest that everyone I've met at Dynamic Signal has been as you described. So, it's been fun getting to know the employees. And obviously, as part of building that culture, is Employee Communication and Engagement, which you guys obviously know a thing or two about. Strong company communication fosters employee satisfaction, employee productivity, and talent retention.
And speaking of employee communication, Dynamic Signal recently released your Annual State of Employee Communication and Engagement Study, and it sounds like there's a surprising number of employees that don't feel like their employer communicates with them. I think the figure was something like 53% feel that way. That number struck me as extremely high. I would have guessed 20% or 30%! So, please explain what you found.
RF: I don't think companies set out to do a poor job communicating with their employees. I actually think the smartphone that we all live with all day and night has changed the way people expect to receive communication.
I think the power of the smartphone to deliver news has changed the expectations of employees, and companies haven't kept up with that. And by the way, they can, thanks to technology like ours. When we did that survey, we too were surprised by the results. But we see this as a huge opportunity for improvement. The way people are used to being communicated with has evolved, and companies haven't kept up with that.
DT: How are your customers who don't normally sit in front of a computer mostly being communicated to these days? By paper? Or is it kind of that weekly, monthly email?
RF: It's announcements, digital signage, posters in the break room, and kiosks. So, when you're talking about the true frontline employees it's lining up to log into a kiosk.
DT: Yes, I remember the first time I chatted with you when you were giving me the investment pitch. You carried around this big, thick booklet, I can still see you holding it up.
RF: I don't carry it around anymore, but you can see it, it’s falling apart.
DT: Well, it'll be interesting to see the study post Dynamic Signal being deployed, I’d bet that number is much lower than 53%. So, what other trends do you see in the Employee Communication and Engagement space as you're out there, and what are you finding with your customers?
RF: I’ve found the biggest thing is, how do companies have fewer apps for their employees? Which is why integrations are so important. How do I streamline things that live in my HR systems, social media, internet systems or my video platforms, sales software, intranet, and surveys into one place that I can conveniently access?
DT: Yeah, exactly. The number of apps has become overwhelming yet it's supposed to do the opposite and simplify; I’m glad to hear Dynamic Signal can help with this problem as well.
I wanted to go back to something you referenced up front was how you recently joined the Cisco price list and now Cisco sellers can resell Dynamic Signal.I've always been excited about getting Dynamic Signal onto our price list because I believe what you do is very complementary to what we focus on in Cisco collaboration, which is the knowledge worker. Obviously Dynamic Singal also adds value to knowledge workers, but I believe the communications you enable with deskless workers or those without access to email and computer on a daily basis helps expand our value proposition to our end customers.
RF: My perspective has always been, you guys have the Webex Teams and Meeting products, which are fantastic products for the half of the world that are hyper-connected, super online, knowledge workers. And as you said, it's very early days for us on the price list, and Cisco is a really big company. And factor in how it's more complicated because so much of your business is through resellers. Cisco's reach is 20 times the actual number of employees on Cisco’s payroll. So, it is very early days there.
We spent some time at all your various events, and the investments team has been super helpful in getting us there.
It was only November or December when we were first on the price list, and so we really only started training people in Cisco and Cisco resellers in December. I think the most fair thing to say as it relates to Cisco and the price list today is we're very bullish on what it can be.
DT: How do you feel about a strategic investor like Cisco Investments with a portfolio development team versus a financial investor and what they bring to the table? If you were to go fundraising, say for a new company tomorrow, how would you view those two types of investors and what they bring to the table?
RF: As much as I really like my VCs, you get diminishing return from adding incremental VCs. So, there are certainly some VCs that would be amazing and I'd be delighted to work with because there are partners out there in the world that are innovators in the HR Tech space and they built monster SaaS companies. So they can really help me build the company.
I'd rather add an incremental strategic investor for what we do today, given that we sell to large enterprises. And as you know, so much about selling to large enterprises is fitting into an ecosystem.
Even powerful companies like Oracle, Cisco and Microsoft all work together well. Even though they’re all 1000X larger than my company, you must play nicely together or no one wins. You co-own the customer with Oracle and Microsoft, or Workday and SAP or whomever.
DT: Absolutely, you know I won't disagree with you there. I might ask you talk to some of our investment prospects.
RF: I've been an entrepreneur for a long time. So, a lot of the bias against strategics is well earned by the strategics. In '99, in, you know, 2000, or '01, '02, '03, a lot of strategics disappeared. It was off-balance sheet investing. They weren't around for their pro rata. Part of the deal in working with a VC is they're within reason going to support the company for a while, and that has not traditionally been true with strategics.
I think, most smart strategics like Cisco, Microsoft and Deutsche Telekom have learned that lesson. I don't know how Cisco Investments acted in '01, '02, '03, but a lot of folks were nowhere to be seen, even though they had large balance sheets. I’m not saying that was the wrong decision for those companies, but it was devastating for their portfolio company.
Some of the bias against strategics is well earned, but financial investors make poor decisions too. I've been very fortunate Dynamic Signal realizes this as I’ve seen at board meetings. Our financial and strategic investors have been great.
DT: Yes, I think you've selected them wisely, folks that you know, and you're comfortable with and that's an important part of it, too. You know, I can certainly say on the Cisco Investment side, we've been investors since '93. And in recent times, it’s become very trendy for strategics to have a corporate investing group, and you see them springing up everywhere. But at Cisco, we've been at this for a long time, and have a portfolio of $2 billion in assets under management. So, for us it's not something trendy that is here today and gone tomorrow. And, from your statement, it sounds like those are the kind of investors that you're seeking, who will stick by you, support their investments, and be there, whether the economy is good or bad.
RF: Yes, exactly. That’s a big part of being an investor.
DT: Absolutely. So, Russ you have a great background you’ve been a serial entrepreneur, you've served on several boards, you've been an angel investor, as you look at the companies that you advise, and, you know, other Cisco portfolio companies, or anybody who may be reading this article, what advice do you have for folks that are starting new companies that are going through that growth phase?
RF: Make sure the problem you're solving is an actual problem that people have and not just something that feels good. So, especially in the enterprise world, it doesn't matter how cool your product is if it's not being used by customers, it doesn't have to be big or small, it depends what market you're going after, it's not actually being used by customers, then you're nowhere. And don't hire a big bunch of assholes because you won't want go to work.
DT: Love it. Stay away from from hiring bad people, even if they’re brilliant, if they can’t play nice in the sandbox they’re going to detract from the overall progress of the entire company. Russ, it was great catching up as always. Love what Dynamic Signal is doing and excited about the great things to come.