Part 1: Grafana Labs COO, Doug Hanna On Building a $3B Company with Open Source, Scaling Culture and Going From 70 to 500 People

Michael Koenig: [00:00:00] Hello and welcome to Between Two COOs, where phenomenal Chief Operating Officers come to share their knowledge, advice, and crazy stories. I’m your host, Michael Koenig, and this is part 1 of a special two part episode, featuring our guest, Doug Hanna, Chief Operating Officer at Grafana Labs, the company behind the leading open source projects in the observability space, Grafana and Loki. Grafana Labs recently added to their war chest with a $220 million fundraise at a $3B valuation.

Michael Koenig: So, why a two parter? Doug is leading Grafana Labs through explosive growth, both in headcount on the team, and customers and revenue. In this episode, we focus on the later, what goes into scaling an organization from 70 employees to over 500 over the course of just 18 months. Part two focuses on the commercial side of scaling their go-to-market for their enterprise SaaS.

Michael Koenig: Prior to joining Grafana Labs, Doug spent four years at Zendesk as their VP of Operations and before that as the founder and CEO of Help.com. Welcome Doug. Thanks for being here. I'm excited to have you on.

Doug Hanna: Yeah, thanks for having me.

Michael Koenig: So tell me about your path. How'd you end up as COO. Everyone's [00:01:00] got a different one.

Doug Hanna: Yeah. And I think mine is probably non-traditional in a group of people with non-traditional paths.

Doug Hanna: I started my early career doing technical support, and that's actually how we met a long time ago when I was at Automattic. And I've spent most of my early career in the web hosting industry and kind of companies around doing technical support leadership and then some consulting, and eventually kind of worked my way up through a couple of companies and started running one.

Doug Hanna: So I ran this company called a Small Orange for about four years and we sold it to a private equity backed conglomerate called the Durham International Group. They went public while I was there, I stayed kind of for my two years for the earnout and being part of a bigger company as a, kind of basically a GM of the company that I sold to them and then started a new company called Help.com.

Doug Hanna: The same investor that I did with my web hosting company. We did that for kind of 18 months or so, and then realized it wasn't quite the right team fit, space [00:02:00] and time, like all those things that can lead to a company, a early stage company, not quite working out, but built a really great team there. And actually one of the people that I worked with is the person who eventually, introduced me to Grafana Labs.

Doug Hanna: I'll get to that in a second. After helped our startup, I went to Zendesk for about four years and I led the platform there, uh, for about half my time. And then the other half of my time, I got probably my best exposure to the COO role when I worked for the COO at the time, a guy named Tom Kaiser.

Doug Hanna: who's since gone on to be the CEO of the company called HootSuite. And, that's kind of Tom's right-hand person running and kind of this ops and strategy and special projects and operational cadence and rhythm and things like that. Basically from like 1000 to 4,000 employees.

Doug Hanna: And I think about $150M to just under a billion dollars in revenue, in several years. So that was a great experience. Uh, after being a kind of an increasingly large company for four years is like thinking about it a change. So I got connected through, uh, one of my former help.Com [00:03:00] colleagues to Grafana and, had a bunch of conversations with them.

Doug Hanna: And that, that was a little over two years ago.

Michael Koenig: What was it that drew you to Grafana after spending so much time?

Doug Hanna: Like candidly, I was not familiar with, Grafana before. Uh, my former colleague and friend went to go work there. I hadn't even heard of it, which was shame on me. Uh, cause it was actually super popular and I clearly was just not spending time around the right people.

Doug Hanna: Cause when I started talking to the company and then talking to engineers that I knew and uh, SRAs and people like that, they're like, oh yeah, I use Grafana all the time. I get a lot of value from it, uh, which is super encouraging. But I think what drew me into Grafana was uh, like when evaluating a company you think about like, I I've heard it described as a tech, TAM and team. So the, the tech for Grafana or the product itself, uh, wildly love, widely adopted, growing really fast, popular in all kinds of organizations. One of the things that really initially interested me was Graham who's on our sales organization.

Doug Hanna: He's telling me about all these big deals company. It was [00:04:00] closing like really like large market customers. And I'm like, wow. For at the time, a 30 or 40 person company to do big deals with like fortune 50 companies. And, they must be on to something. And then TAM, the observability space is enormous.

Doug Hanna: Uh, pretty much every company, that has any sort of infrastructure needs observability, uh, and all the like kind of tailwinds of cloud, containerization, et cetera. Like all those are favorable to what we're trying to do at Grafana and have been really beneficial to us the last couple of years. And then hopefully it will be for some time.

Doug Hanna: And then the team I really enjoyed, uh, spending time with Raj our CEO and co-founder so other two co-founders Anthony and Torcal some of the go to market people that have been in place, uh, the early days of the company. And I was like, I think this is a group of people I could work with. So it kind of checked all the boxes along with this, like, hey being a part of a 4,000 person company is less exciting to me than being a kind of a bigger part of at the time, the 70 person company

Michael Koenig: that makes sense. [00:05:00] Tech TAM and team.

Doug Hanna: Yeah. And there's like three or four variations of basically the same thing, but I heard someone describe it that way and it just stuck with me and I've thought about it that way ever since

Michael Koenig: T-cubed.

Michael Koenig: And it's also worth noting you're back in open source. So coming full circle back to your days at Automattic with WordPress and now with Grafana. What's drawing you back to open-source and what's your passion around it?

Doug Hanna:  Yeah, I think open source is an interesting way to go to market. Uh, it has its pros and cons.

Doug Hanna: Like people that work with me will know that I'm, I'm like relentless about describing pros and cons of things, uh, and open source, not all pros and it's not all cons, but I especially think for software adopted by developers. Like definitely true of Grafana, uh, probably previously more true for, for WordPress than it is now it's gotten so mainstream, like open source is a great way to get kind of community like popular community growth, kind of mind share all these different things and then to build a business on top of that, because [00:06:00] really our business model for Grafana Labs is like, take this huge community of about 750,000 active instances of and monetize, like.

Doug Hanna: Low single digit percentage of those customers, uh, and build hopefully very large stand alone company on top of that. And MongoDB, elastic, uh, they've kind of done it in a similar approach to us. Automattic, it's kinda more moved into like managed services is my understanding of kind of their current business model.

Doug Hanna: But, uh, we're, we're, they're really about posting it in front of the value, add on top of that versus, uh, an open core model, which is like what Mongo or do.

Michael Koenig: The COO role isn't one size fits all. Describe some of the areas you filled as VP of Operations in Zendesk. What areas of responsibility do you have in Grafana?

Doug Hanna: Yeah. So I basically run all our revenue teams so that sales marketing, or post-sale seems like customer success and support and professional [00:07:00] services, and recently customer education solutions engineering, and then our different ops functions as well. So we have like a revenue operations team. I took over it.

Doug Hanna: Uh, all of our rhythm of business, kind of biz ops sort of things, as well as special projects. So, uh, it's, it's kind of revenue, plus some ops things kind of, not in my scope, it was product engineering. Uh, our CEO is super involved and that side, uh, and then we have senior leaders for G&A functions like finance.

Michael Koenig: That's very interesting because usually you have the G&A situated under a COO, and sometimes you tack on, in addition to that, the go to market functions. How was that separated differently at Grafana? And it almost sounds like you are a Chief Revenue Officer.

Doug Hanna: Yeah, my, my role practically is more similar to a CRO plus some other operational functions.

Doug Hanna: I think though, what distinguishes me from a pure CRO besides background, like I'm not a career sales [00:08:00] leader by any means, is that I do have some of these other operational pieces that I'm responsible for. And like, I think a lot about kind of how our company works holistically. What our goals are, how we communicate those, how we operate as a business and the team.

Doug Hanna: Uh, that's definitely a part of, part of the role. And I try to think about it beyond just to go to market teams, but I spend a lot of my time and my team spends a lot of their time talking about revenue, helping customers, uh, helping kind of grow our customers as well. So that, that is, that is the bulk of the role and the bulk of where I spend my time.

Doug Hanna: I think to your point, like every COO role is different. I've, I've met a lot of COOs, a scope kind of similar to mine. Um, and then I've met some that are more like G&A focus. Uh, it really depends on the.

Michael Koenig: So at Zendesk, did you have exposure to sales or was this really the first time that you hopped in to leading a sales function?

Doug Hanna: Yeah, so, at Zendesk, my boss, Tom has basically had the same scope that I have at, Grafana. So [00:09:00]all the revenue teams reported into him for most of his tenure there. And, uh, and that was, that was super helpful. So I, my team, work with sales, with marketing, with our other kind of revenue teams that send us the sales strategy and analytics report.

Doug Hanna: So it's been a lot of time with that organization, the leaders in it, but it's very different to be like a supporting function to sales versus like owning the number and being involved in deals and some of those things. Uh, so it's definitely, it was, it was a new experience for me. And now we're, I guess I'm about to wrap up my eighth quarter at Grafana and it's never a dull day.

Michael Koenig: It rarely is. And I suppose you, like every other COO out there, has those moments where you have a new problem and you think, well, I never thought I'd see that. Do you have one that comes to mind that you can share?

Doug Hanna: Yeah, there's definitely like plenty of challenges associated with scale and with growing.

Doug Hanna: But honestly, like when I have the, never thought I'd see that, I'll turn it around a little [00:10:00] bit and make it kind of a, an optimistic note of like, if you had told me a little over two years ago, I guess two and a half years ago now probably started talking to the performance team. It took me a little while to get over.

Doug Hanna: They were very patient with me. But if you had told me, oh, fast forward, 24 months or 30 months in your company will have 500 people and the go to market team will be whatever, 200 something, people, you'll raise $350 million and be on this like really incredible path, I would have been like, there's no way.

Doug Hanna: That would just exceed all expectations. And, and that's really, really exciting. It's really humbling to be part of that. I think it's like, oh my God, I would not necessarily have expected that. And, it was definitely taking a chance on a space I didn't really know much about and in a product area that I knew I had to learn a lot about.

Doug Hanna: And it was super overwhelming, especially initially now I can at least like, pretend that I know a little bit about observability, but, two years ago it was like, I didn't know what observability was barely. And now, now I have to talk about it all. [00:11:00]

Michael Koenig: So 24 months crazy growth, what are some of the challenges that you face, particularly as a leader when you're raising all this money and the team is growing so quickly, how do you manage those transitions and what are some of the tricks of the trade that you've found really?

Doug Hanna: Yeah, I think I try to spend most of my time and mental energy and emotional energy focused on the things that are kind of within my scope of control and in my span of control. So really thinking about like, how do we make great hiring decisions? Like overall that's probably the most challenging thing is like we've added over 400 people to the company on a net basis since I started and

Doug Hanna: I'm making sure all those are good and their culture, creative and business value of creative and all these other things versus a dilutive is like so, so, so important, and it has such a big impact. So I built up most of my team, a lot of those people did not exist or weren't at the company before I started, uh, and they're running new functions or that we're really building out.

Doug Hanna: [00:12:00] So I've spent so much time there. And I think for any new leader, like taking stock of your team, understanding kind of where, where the people are today. And where they need to be four months from now, 24 months from now 36 months from now. And then in the, in the context of so much growth and change, like also setting expectations of like, Hey, you, you're going to have to do A, B or C to like kind of scale up this business.

Doug Hanna: And at the pace that we're scaling. Uh, or we might need to bring in additional leadership. That's not a bad thing for anybody. It's just part of a quickly growing company and how that happens. So I've had a lot of conversations like that with a number of people on my team, uh, and just being sensitive to like, Hey, it's a new company, basically every six months.

Doug Hanna: And, uh, and with that comes new people that we need to bring in new experience sets. We need new skill sets.

Michael Koenig: It's rather remarkable, 400 people net in the 24 months that you've been there. You essentially went from a company where pretty much everyone knew everyone, I'm assuming.

Doug Hanna: Yeah. Yeah. I, I had this moment [00:13:00] a couple of weeks ago, I was like, oh, I used to meet like all of our new engineering leaders when they started.

Doug Hanna: And I was like, oh, like I introduced myself and be like, Hey, I'm Doug. I do these things. And now, like, I, I don't even know who their bosses bosses are. And a lot of cases, it's just because they've grown, we've grown so much. Like, it's not because I'm totally disconnected from that organization. It's just, there's so many new people and I haven't really had a chance to interact with them as much as I'd like, and like apply all this to like global pandemic and people not being able to meet each other, a person and things like that.

Doug Hanna: I kind of just saw amplifies it.

Michael Koenig: That's really interesting. So let's talk about people not being able to meet each other. You and I both had a lot of experience working in distributed companies, but for a lot of people though, is new uncharted territory. And how are you creating a sense of community within your teams for people who have never met?

Doug Hanna: Totally. So, one thing we're trying to do now is we are starting to get together. So if you're vaccinated and you're comfortable [00:14:00] traveling, like we're supporting that. Uh, and we're enabling that. And we plan to knock on wood in may of next year, 2022, I guess we're going to bring everybody at the company together, uh, and Whistler in Canada for basically a week.

Doug Hanna: And we're going to call it or Grafanfest, and just like, let everybody get to know each other and build some bonds. But like my team has started getting together. My direct team has gotten together twice now, kind of last six months, and really investing in that and leaving space in the agenda for just getting to know each other as people that's been valuable.

Doug Hanna: And then pre-getting together in between getting together, just kind of reminding people of like, there's probably some additional tension and other things that, that wouldn't be as true, or maybe there's, there's less empathy. And then it would be the case, uh, if people had met each other in person. So we have those conversations that right now it's like, so someone will be saying, oh, I'm frustrated with this person or this team or whatever, but.

Doug Hanna: I need to step back and remind myself I haven't met them in person. I'm sure it would be better if we were, uh, if we were getting together in [00:15:00] that way. So it's, I think reminding yourself about it, obviously being intentional about like time zone friendliness and meeting schedules and doing things asynchronously, like there's kind of some best acts of, of like working in a distributed environment that we try to keep in mind.

Doug Hanna: Uh, but I think assuming. No, not just assuming, but knowing that it's a real life person on the other side of that zoom box or slack message. And it's not just. And waking up to make your life difficult, uh, is so important, uh, and, and build so much empathy. And it's just so much more, it's so much better if you've had a chance to actually get to know that person in person.

Doug Hanna: That's what we're finding. Yeah, definitely.

Michael Koenig: And it's interesting within open source, how you find companies that are rooted in open source, a really great asynchronous communication and that being because that's how open source projects get together. So on the engineering front, there's certainly a more natural comfort with asynchronous communication.

Michael Koenig: How do you help [00:16:00] folks not on the engineering teams get used to asynchronous because it's not something that people are necessarily used to doing outside of just emailing and responding when you can.

Doug Hanna: Yeah. Figuring out the right cadences to talk live. Like, I, I am actually kind of a broken record at work where I see like a 40 message slack thread.

Doug Hanna: I'm like, consolidate, can you all just get on a call? Like, it will be easier to like talk about it live instead of going back and forth over this over like two or three days. And that that's actually super productive. But I think what we do is we do try to have a culture writing things down, having transparent.

Doug Hanna: Like for all of, pretty much all of our customers, we have a slack channel, like with the customer name. And like, if I want to see what's going on with customer a, I go into that slack channel. And like, I can ask questions that the account team, or, or just scroll back up and see what's been happening. So doing things like that, just make it easy for where even if you miss the meeting or you're not there for it, or there is no meeting, like you, you can know what's happening.

Doug Hanna: Uh, we, we tried to [00:17:00] implement a couple of processes like that, but. Ultimately, I still think we are like trying to get people talking to each other, live, making sure people have local management and kind of a friendly time zone as possible. And that they're, they're able to have these kinds of connections with other people.

Michael Koenig: So nothing really is replacing the power of live in that case then for creating those conditions.

Doug Hanna: I don't think so. Um, I, I think like, at least for me and the people I work with, uh, we really benefit from talking live and spending, spending our time and in conversations like these, uh, where, where you're chatting with somebody and hopefully you can see them as well.

Doug Hanna: Like async is great. I love asynchronous stuff. We trade a lot of docs back and forth. There's a lot of kind of debate and discussion and docs and slack and stuff like that. But. I, I couldn't imagine being at like a purely async everything's written out sort of memos where we're not, we're not quite as like post geographic and that sense of where, uh, we can just totally do all of it.

Doug Hanna: Asynchronously. We haven't figured that out.

Michael Koenig: It's not without challenge. Gitlab [00:18:00] seems to have done a pretty good job. I mean, they pretty much default to async and then have a similar sort of escalation pattern to synchronous communication that you described as well. But definitely agree with you that there's something to be said for just hopping on calls, seeing someone's face and, and understanding and hearing the intonation, versus just reading text chat, where the meaning and intention behind it can really get lost.

Michael Koenig: So in terms of some of the advice that you got along your path, we've all been fortunate to have those opportunities where we have someone like you had at Zendesk, who can kind of advise us. What's a great piece of advice that you received that's helped you along your path and that you still kind of use today?

Doug Hanna: Yeah, I think some good advice for COO’s in particular is a pre my previous boss attended us actually, when I was getting this job, he's like, you're going to have to deal with a lot of stuff you don't [00:19:00] want to just, you just don't want to deal with, but it's like your responsibility to deal with it.

Doug Hanna: And I, I felt maybe in previous roles, I was able to be a little bit more choosy and be like, eh, I don't really want to mess with that. Or that seems messy. I don't want to be able to, whereas that's not the case now. Like it needs to get done. It doesn't matter if it's uncomfortable or whatever. So, so that's been a good one.

Doug Hanna: Uh, I've personally invested a lot of time. How, how am I helping support people as people? How am I helping like empathize with them, help them manage kind of people, personal conflicts on their team and that they might have with, with peers and things like that. Like that, that's an area that I've tried to lean in more.

Doug Hanna: I'm naturally a very like analytic operational person. So like the people side is one where I'm like, okay, I'm having to invest more time and energy in it. So I can really help support people there. Cause it's so crazy. And like at, at any sort of scale, like these jobs are really just people, leadership and management and drama sorting, uh, problem or jobs.

Doug Hanna: And like that that's, that's what the job is and like to do it well. Uh, you need to be [00:20:00] really good at that side too.

Michael Koenig: There you have it. So everyone, thank you so much for listening. Doug, thanks for coming on the podcast. Where can people go to keep up?

Doug Hanna: Yeah, I'm on Twitter, not very actively, but I'm on there @douglashanna

Doug Hanna: Grafana is pretty active on Twitter and you can check out our website. It's just dot com and, uh, yeah, Iwould be happy to connect with others, other COO's that are kind of in a similar spot, trying to grow companies, trying to grow teams. Uh, I've really enjoyed those conversations and I've met other people and, uh, and appreciative of people.

Doug Hanna: That are a couple of steps ahead of me, uh, and making the time. And it's really nice to see a community that's so open to that. So also, thanks for doing this, Michael, and giving people an opportunity.

Michael Koenig: My pleasure, Doug. There, you have it. Thanks for listening to between two COO's I'm your host, Michael Koenig, and a very special thank you to our guests, Doug Hannah for joining us. Tune in next time for our next COO chat on Between Two COO's and be sure to subscribe on apple [00:21:00] podcasts, Spotify, or wherever you listen to podcasts. So you never miss an episode just visit betweentwocoos.com for more. And if you have a minute, please leave us a review on apple podcasts and tell others about the show so they can get great advice from phenomenal COO's.

Michael Koenig: Thanks for listening to this week. Tune in next time. And until then so long.