Shanaz Hemmati, ZenBusiness COO on Building $1.7B Co.

Michael Koenig: Hello and welcome to Between Two COOs, where phenomenal chief operating officers come to share their knowledge, advice, and at the very end, a crazy story. I'm your host, Michael Koenig, and our guest today is Shahnaz Hemmati, the COO of

Shanaz Hemmati: Hello, Michael. Thank you. Thanks for having me.

Michael Koenig: Absolutely. Let's talk about the legal structure of

Shanaz Hemmati: Yes. So public benefit corporation is a type of a corporation you can set up. Um, Delaware mainly is a place where most, you know, companies are also setting up their domestic entity. And, um, and again, we are a corporation, but of type public benefit. The reason we did that is both, uh, you know, um, all founders, you know, Ross and I especially are very passionate about what do we give back to, how do we give back, how do we support, you know, our community, society, you know, what do we want to do differently to have an impact in the world. And that was when we decided to make our corporation a public benefit. So that is part of our charter and it enforces a mix. We make sure then that we have that and we have to make sure we constantly have activities and programs around, you know, us being a public benefit corporation.

Michael Koenig: So having that in your DNA, I mean, how does that translate into those programs and activities?

Shanaz Hemmati: Yeah, so it's part of our planning. Like every year as we plan the following year, we have, you know, certain initiatives that is right aligned with us being a public benefit corporation. And usually it's around multiple different areas, which is, you know, the, the charitable donations. And which organizations do we want to help and support in our voluntary activities. And as you know, we have employees in 30 different states, so it's pretty expanded and wide for us. And so we support that in, in a lot of locations. And on top of that is at times we start like a new program. Just last year, we started a grant program for our customers where every month You know, from those that fill up an application, we go through them, filter them, and we pick, you know, 3 or 4 depending on how much we've allocated to that program in that year and issue them a $5,000 grant to help them, you know, grow their business.

Michael Koenig: I love that. Supporting the businesses, supporting your customers, helping them beyond just the services you provide. I really do love platforms that enable people to actually do what they are good at, what their core reason for being in business is. So the fact that

Shanaz Hemmati: It is, it truly is. And actually, you know, when I joined, you know, this adventure with the rest of the founders, the reason this was like most interesting to me and treating as an opportunity was because I've always been very passionate about small businesses and people who have an idea and they want to go be their own boss and do something about it. So to me, this was an opportunity to really enable them. You know, by building this platform, by keeping it simple and easy for them and providing like educational pieces. Again, putting all of that together is exactly like what you said is a way in the platform to enable people who are just starting and really they can use all the help they can get. Like if it's like this one person that's just starting, like there is this one really thing that they are very good at and they want to go focus on. And, you know, make that a business versus like all the back office stuff that they have to worry about.

Michael Koenig: And it is quite a bit if you've started a business and handled all of that back office on your own, just going about and registering that first LLC if you wanted to, and then converting it to a C-Corp if you were gonna raise funding, even though really an LLC is Anyways, I digress. So your areas of responsibility at

Shanaz Hemmati: Yeah, so from early on, you know, when you're just starting a company and there are like a, you know, few founders, you're just trying to figure out what you want to be, you know, like first year for us was really all about a lot of research and testing and talking to people, talking to potential customers, and then narrowing down on like, we do want to be a platform that makes things easier for the customers. So, um, from the starting point, uh, you know, when Ross and I were talking about this, it was more about the technology aspect of things. It was more about the data pieces and all the solutions and tools that we needed in the company. And then within the first year, once like we kind of really solidified our strategy, then it became this much bigger piece that then through our conversations, you know, and also through our kind of some of our learnings in that first year of maybe like What Ross is really good at versus what I am really good at, you know, how do we want to divide up those responsibilities, especially as you're like pretty small, just a few people, you know, they don't have all the resources you need. And that means then you have to be pretty hands-on even as a CIO or COO or CEO. And then again, like, what are you like really good at and can be like hands-on and get it done or find the right people that can help you out. And that is when, you know, their role kind of changed to more of a broader one and being the COO of the company.

Michael Koenig: So in terms of starting

Shanaz Hemmati: Yes, for sure. You know, Ross and I both coming from like technology engineering backgrounds, you know, one thing that, you know, we always talk about is in our past lives, you know, at other companies, we always built things that nobody wants, right? So like from really early on here, we're like, we want to make sure that we don't go off and spend time on building things that maybe is not what we end up, you know, providing to our customers or is not what our customers want. But at the same time, we are always about, you know, automation. Technologies are here to make it easier for us. And to help us move faster. And for nobody wants to keep on doing a manual process or work if you can actually automate it. So that kind of being, you know, always our, you know, goal. At the same time, we're like, we want to make sure that we don't go off and build something that's also very complex before really testing it out with our customer base. So this is how, and even today, that's how we go about it. We always try to test things first. We try to make sure we do enough research, get feedback, and before, you know, we expand on it.

Michael Koenig: So you just mentioned automation and we have entered at this point a whole new level of automation capabilities with generative AI.

Shanaz Hemmati: Yeah, it's, it's a pretty interesting. It's just a pretty interesting era we're entering, right? And, you know, I feel like anybody that I talk to, they're just like moving super fast, trying to figure out, oh my God, like, this is great. What are you doing? What do I need to do? You know, how do I need to use it? So we definitely, you know, are thinking about it. We're definitely doing some work, like, you know, as As you, I'm sure you already know, everybody knows it kind of a, as a company and your data, we have to be very careful about our data, especially because, you know, we collect all the business data, right? We have a lot of data about our customers. Our customers sign up for many different products and services and part of our platform and the easiness of it is because we already have their entity data, it makes it really easy to go sign up for the next product that they need within our platform. Versus if you're like online and you're picking all of those products and services from different vendors or different platforms, then you have to keep on providing your paperwork and all the data. So that is the reason where we have to be very careful of how we leverage, you know, ChatGPT or the AI solutions are out there, but we've already started playing around with it and doing research and definitely already thinking about the areas that it can be super helpful to us and help us move faster.

Michael Koenig: So that's from a product standpoint. What about just a general operations standpoint? Because I know, you know, I have so many conversations with COOs and we're all just kind of like, First it was, well, what's our policy, right? And it's been kind of just like, well, we don't know what it should be. Just, hey everyone, don't put anything confidential in there.

Shanaz Hemmati: Exactly. That's our point too. It's like, do not put anything confidential, but go play with it, right? There definitely are so many areas that, you know, you can save a lot of time in just like typing up, but, you know, kind of becoming good at how, what, how do you prompt, right, ChatGPT? What do you ask? How do you ask your question? How do you ask for what you're looking for in order for it to be really super helpful and save you time in what you're trying to do? So it definitely requires kind of some playing around with it and getting used to it. And yeah, I mean, we totally like, I am encouraging everyone at this point in our company, regardless of whether it's like regarding our building, our products, or it's on the operations side, it's like, use it and try it, be careful about the data, but then see this next task that you're going to be working on. Is it like, just try to ask it questions and see if you can leverage it in order to save you time. And there are times that you just, you learn a lot by doing that as well. You just like, you're like, oh my God, like, this is a great point. Like, I should include this in my general email that I'm sending out to everyone. Or, oh, I should be thinking about that if I'm working around the strategy around this area. So definitely, I think like, again, everybody's trying it. Everybody's like, you know, trying to leverage it as much as possible. And as we know, you know, as a CEO, when somebody asks me, what is your challenges, it's always been, you know, there is a lot that we want to get done and we don't have enough capacity, right? That's always a challenge. And it's a good challenge because then that means you're doing pretty good as a company, especially if you have a lot of stuff on your list that you want to get done. So to me at this point, we like what the AI solutions are providing is like, oh, what are some of the leverages that I can get just from the AI? Where it will help me to expand my capacity, you know, maybe put it in a different way. It's like expand my capacity, especially on the operations side.

Michael Koenig: Yeah, let's get into that. On the operations side, well, ChatGPT, when you have something that is just such a blanket tool, it really requires people to be creative on those inputs that you mentioned. But asking every single person to be creative, that's like a lot. I'm not that creative and I really just think about it as like, oh, how did ChatGPT change how I approach this today? In terms of operations though, because that's what our folks are interested here, how are you thinking about using, whether it's ChatGPT, whether it's another generative AI instance to streamline operations?

Shanaz Hemmati: Yeah, again, like we're kind of thinking through what are some of the ways and means that it could be, because you can also end up spending a lot of time and not really getting the lift from it. Right. So to me at this point and working also very closely with, um, you know, our CTO is what are some areas that we can get a great lift from it? Like for instance, customer support. Right, the contact center, whether it's the chat, whether it's the call, whether it's emails, like, I think that is a great area where we can see, you know, how we can get a lift. And then a lot of that would be based on then us creating those prompts, us creating, you know, using the AIs that are available and then using our data and then, you know, providing that back to our customers. So again, it's like picking and choosing as we come across areas. It's like, what area do we think that we can have an impact and increase our capacity and be very great at by using the AI solutions? So that's like, this is like how we're thinking about it right now.

Michael Koenig: Hmm. It's a good frame. You mentioned your CTO. I understand that, and I had said this earlier on, you cover certain technical functions like engineering, excuse me, infrastructure engineering, data science. Where do your areas of responsibility stop and where do those of your CTO pick up?

Shanaz Hemmati: As far as like our organizational structure, right? CTO reports to me. Our customer success, you know, officer reports to me also, our head of HR reports to me. So, uh, we all like work very closely together. We're very collaborative, but they basically are really senior leaders. They have full responsibility of their areas and I'm just here to enable them and help them in any which way that I can.

Michael Koenig: So CTO, HR, customer success reporting to you. What falls into your CEO's bucket?

Shanaz Hemmati: So, so yeah, on top of that, also legal and program management, procurement, um, our corporate citizenship efforts, which is along the PPC lines. All of that is reporting up to me. And things that over time, again, Ross and I kind of over time make decisions or decided like what moves or what stays with me, what moves to him. And, and a lot of that had to do with the growth and the stage of the company, right? Like early on, like for example, I had finance reporting up to me up until last year when we hired our CFO. And at that point also for the stage of our company and how we're thinking of the next phases is okay, now the CFO is reporting to Ross. So Ross mainly focuses, you know, again, he has like C-level team members reporting to him. So they're pretty senior level. So it's the CFO, the Chief Marketing Officer, and Chief Product Officer. But Ross mainly has been focusing around like the strategy, you know, business development and corporate development. He's been heavily involved in that. And again, as far as me, you know, I like how a colleague of mine called it Chief Other Officer, right? So that means that things come up at times and there is really nobody else, you know, at that point that could take that on and maybe then decide what do we want to do with it. So in those cases, you know, it's sometimes like it just falls on me to go figure it out and, or take the ownership for a period of time. Time, and then decide if it needs to move to anyone, or do we need to go find an owner for it?

Michael Koenig: A great way to go about figuring out your needs and the headcount needs and who you have to hire next. In a previous interview, you mentioned that you're skillful at hiring great people. What's your trick? How do you approach it?

Shanaz Hemmati: So, you know, hiring great people besides having a great network, you know, because like, You know, my career goes over 35 years, both Ross and I. So we both have like great network and great group of people that we've worked with in the past. But for me, Michael, it's so much about how passionate you are and how much you love what you do. I think that is a super important element of not only you becoming successful as a person in whatever that you love doing. But also the company you become a part of is going to be successful because of your passion and love for what you do. So that is again, a big factor for me as I talk to people and, you know, the attitude and personalities of how they approach things is also super important. And all of that, if you get a big group of people that are all like really passionate, You know, they love working together. They love to work in a team environment. It's what's going to make a company successful. So this is like, and what's so important to me and we, I would say we do a great job of that here at our company is creating a jerkless environment, if I may say that. And if you come across people that maybe they're not a fit, you know, for your environment, trying to take care of it, you know, sooner than later. So, um, it's, that's how, you know, when I talk to people, those are the things that I look in them. Uh, cause I think if you really value what you do and have great standards for the product of your work or the result of your work, then it's, that is a great team member. I would like to be a part of the team.

Michael Koenig: Those are fairly subjective qualities. How do you evaluate subjective qualities like that? How do you compare apples to apples?

Shanaz Hemmati: It's not easy, right? It just all comes through, you know, working with people for a while and kind of see how they work, how they communicate, how they collaborate, you know, what is the result of their work. And how much do they care about what they do.

Michael Koenig: Let's talk about M&A. You were on the buy side at HomeAway 25 times, I believe.

Shanaz Hemmati: Yeah, I think it was actually more than 25. I lost count at some point.

Michael Koenig: Oh my gosh, that's crazy. But I imagine that you all became a finely tuned machine. I'm wondering, first, can you tell us about the strategy that drove so much activity.

Shanaz Hemmati: Yeah. So at HomeAway, the strategy from day one was the HomeAway actually formed by acquiring 3 existing, um, VR vacation rental listing services. So that was from the, that was the strategy of like, how do we grow this company and how do we make it global, you know, as fast as possible, which like within a few years we were in so many different countries. And that was it. Like, okay, where do we go find the best vacation rental listing services or companies in each like region or country and then try to acquire them? And I wasn't like, when you say on the buy side, like I was, um, and the team in a group where we had to do a lot of the integrations because of all the systems that I had to manage at HomeAway. So it was, it was a great way of really growing the company and expanding it over such a short period of time. And it was also a great learning and experience for everyone that was in the company that was involved in part of those like acquisitions and integrations and expansion to a new, you know, region.

Michael Koenig: Tell us about the integration. What did you learn?

Shanaz Hemmati: That every single integration was just a little different. You know, I always say it's because at the time, you know, owning like all the data pieces and data structures for the company, you know, at some point I was like, oh my God, like designing data models and databases for such a long time before that, I never knew you can model a listing service so differently from one solution to the other. I'm like, really? Like, you can model it so many different ways. Not two of them were the same, like, they're even similar. Every single one was so different. So really early on, as we were learning that, you know, just with the first few, it was important for us, and this is how we went about it, to kind of build that integration layer in like a really standard way and have templates so that, you know, as we acquired new companies, that in order to be able to integrate their data, like fast enough to already have our requirements on like the elements that we needed and then quickly map out those elements in this like template level so that the, the rest of it, you know, the systems then on the HomeAway side that were corporate systems could quickly and easily consume that data.

Michael Koenig: Quickly and easily. With any sort of integration or merging of completely different data structures, databases, that is super complex. I can't even imagine. Was it ever so complex that you just went, nah, data's not even worth it, let's just toss it, start over?

Shanaz Hemmati: Well, you know, that was not like an option ever because these were already like companies that were making money. So you couldn't just like do that, but we would talk about it, you know, we're like, oh my God, can we just like drop this and start over? Yeah. So yeah, that was definitely never an option. So in, but in some cases, you know, it took longer, right? Some of those integrations depending also So the size of the company we were acquiring, you know, how much could we maybe mess up or not mess up in the integration? What was our level of risk that we were willing to take? You know, of course it was a little different and the timeframe was different because we needed more checks and balances, again, depending on the size of the company.

Michael Koenig: Getting back to your roots as an engineer. How has that shaped your approach to operations? And if there was something to pass on to other ops folks, what would that be?

Shanaz Hemmati: Yeah, I think one thing that has helped me, you know, being an engineer, I think is that, that being that detail-oriented and kind of applying logic maybe, or formulas to things. You know, the if-then-else statements, you know, and, and kind of remembering, okay, what are all the conditions in this case and how do I want to think about it? I think all of that is, it's been helpful to me, you know, kind of taking on this bigger role on operations, but then at the same time, you know, sometimes with engineers, You know, we are too much of, oh, true or false, like that's it, right? And I'm kind of learning how to maybe expand on that a little bit, that it's not always like black and white. There might be some grays in between. And what is that? And what does that mean? So this is like how I kind of over the years, you know, I think that I have learned to apply some of those concepts. And also, as an engineer, you know, we're always thinking about, I just want to build this thing, I just want to build the next new thing and move on, you know, get over. So for me, especially in the role of operations, is thinking about the consumers of what I'm putting in place, right? That becomes a much bigger thing as you become like a CEO of the company or do operational work is if I'm an engineer and creating this or building this, you know, thinking about the customer side of it and how the customer is going to consume it and whatever I'm building is super valuable to that customer. I think that becomes a really big part of it.

Michael Koenig: You all have grown quite quickly. Still a relatively young company, I want to say 7 years at this point?

Shanaz Hemmati: Correct. January, coming January, it'll be 7 years.

Michael Koenig: And you all crossed the 9-figure revenue mark, I believe, pretty quickly. What did you all do right?

Shanaz Hemmati: I think that, you know, taking risks and testing stuff out and like, Not worrying about, you know, everything to be super perfect at all times has helped us. And also I think what has helped us tremendously is this continuous research and test and then see what happens and then move on and, you know, build it out or go to the next, you know, idea or the next solutions. So that is a piece where, you know, I think that has really helped us in moving, you know, as fast as that we've moved. And again, being very close to our customers has been super helpful. Like from like really early on in the company, we started, you know, doing customer reviews. We also did the NPS, you know, score, but both of those are done through like third parties. And it was a tool for us to really learn really fast and everything that we do. And then where do we have to improve and make it better or change? And what are the areas that we are good at and keep up with it? Right. So I think that all of that, and again, start doing those things really early on has helped us be where we are now. Yeah.

Michael Koenig: And to give listeners a bit of context here,

Shanaz Hemmati: Yeah, so yeah, it's great. We really are proud of our Trustpilot score. As you said, it's not just a few hundred, it's thousands of reviews. And that has, you know, changed over time a little bit. It has been down at some point and has gone up, but we pay very close attention to it because again, for me, like having happy customers is really important, like for any business. Like if you don't have happy customers, we can't survive and we can't grow as a company. So, um, you know, how we've— again, paying close attention to what happens with the customers. And we're on the call with customers constantly. You know, we have ways where we're capturing, you know, certain feedbacks from the customer and we're all like paying attention to that. Um, you know, when it comes to reviews, when it comes to, customers, you know, commenting on certain things, we make a personal contact with them so that we can learn more and we see what is it that we need to improve. And there has been times actually, you know, through our growth process, because there are things that happen unexpectedly. Like we've had cases where in just over a month, couple of months, our traffic grew tremendously. All of a sudden, you know, our number of customer acquisitions grew. But we didn't have enough staff to support that. So what did we have to do? Like jump in very quickly and hire people as fast as possible, but then they also have to go through training. So how can we speed up that process? How can we speed up the process of like hiring and adding capacity? Because our score was going down and we didn't want that. And, but we knew the main reason for that was the time to respond to the customers. Right. So measuring all those KPIs constantly, like your time to response, you know, the level of happiness from the customers, what are they saying is what has helped us to have quick reactions into where there is a major issue. It's like, how do we need to go fix that? And we also make that super important across across the company, right? We make sure that everybody at the company knows how important those KPIs are so that when something comes up that requires attention, that we're all paying attention to it. We're all in it together to make sure we fix it.

Michael Koenig: What sort of tools are you using for keeping track of KPIs and maintaining visibility?

Shanaz Hemmati: Uh, we use Salesforce. That's our, you know, CRM. You know, we have data team that, you know, gets data from basically all of our systems where we can have insights into our data. They, you know, building structures constantly in like, okay, what is the next dataset we want to look at? Our reporting tools like Tableau, you know, we recently got subscription just like last year into Tableau and moving everything in there. And then the data analysts that we have that are also constantly digging into data, you know, based on what they're seeing and what's changing is also helping us, you know, to dig in further and also find out if there is like, no, another dataset or another piece of data that we need to break down further or start like adding to our structure to be able to dig in easier. So for us, it's just like constant improvement. Like day one, we had pretty small like dataset or solutions and we've been growing very massively in those areas of like data. Data is super important. Like data is power. We say that all the time and data is what's going to enable us to build better and to be better. So, um, it has been a pretty important piece of like what we wanted to invest in. And we have made a lot of investments in that area in the last couple of years, especially, and continue doing so.

Michael Koenig: Now,

Shanaz Hemmati: Yeah. Yeah. So, um, you know, data is always interesting. You always learn something new. Um, one thing that's been great about what we do as a company is, you know, if you talk about just the, um, what happens in the market or economical factors, it's interesting. And this was like kind of a very similar to when we were at HomeAway. Was, you know, when the economy is good, people who want to start their own businesses really want to just go do it because market is good. They can get their service up and running pretty quickly and start having customers very quickly. And also when the economy is bad is when some people start thinking about maybe it's time for them to start what they wanted to do for a long time. And that is maybe an opportunity for them, whether they lose their job or whether they're just like thinking that they're tired of like what they're doing and they want to go do, you know, what they wanted to do at all times. So that's like related to like economic factor and how market impacts, you know, what we do. And then on the data side, yeah, again, like all the data we capture about our businesses and as that data grows, right, we're still like, yeah, we've been around for almost 7 years, but I still consider us pretty young company, as you mentioned. So as we're acquiring more and more customers, and as we're offering more and more products and services and expanding our platform and expanding on like integrations within our platform, then there is more data that we can dig into and learn more from. So again, making a lot of progress in that area.

Michael Koenig: So from that description, Essentially, when the economy's up, you get customers. When the economy's down, you get customers. Is there a— is it when the economy stagnates and doesn't go up or down that we experience a down? That's fascinating. I love it. And here I'd think that it was completely different, but lo and behold, that's the power of data. Well, Shahnaz, it's time for my absolute favorite question. Which is, as COOs, we've all had those moments that come up. It's completely crazy, completely off the wall, and we think, like, I never thought I'd see that. Do you have one you can share with us?

Shanaz Hemmati: Yeah, it's interesting. When I heard the question, I'm like, wow, this is pretty interesting. And the first thing that came to my mind, which of course I had to think about it because I'm like, is that really like a real— it is. It was like something that I never thought that would happen and would work so well was when COVID happened, you know, we were a pretty small company. It was only like 30 of us at the time. So we quickly sent everybody home and said, we want everybody to be safe. Let's go work from home until further notice. Maybe 2 weeks later we come back. But you know, then a few months later, you know, it's like, oh wow, you know, we don't know when we're gonna go back, you know, I don't know when this is gonna end. And I don't want to continue having these expenses at the time where we don't know what the market is gonna be like, or how we're gonna be able to continue on as a company. So I'm like, we're closing the office, you know, luckily we were able to get out of the list. We gonna like end all of these expenses that we don't need to be on our financials and we'll decide later what we wanna do. So at that point, you know, and then continuing into the next following few months, I learned from like everyone at the company that actually this working remotely is working well, right? Everybody's much happier working from home. They're saving a lot of time. And money just so that they, because they don't have to commute back to the office, you know, every day. And some people wanted to like move closer to family, right? Some people couldn't afford buying a house here in Austin. So they wanted to move away so that they're able to buy a house and all of that made everybody much happier. And then as we were growing in a city, like especially like Austin or any city, if you're growing as a company, then it's gonna, at some point, it becomes hard to keep on wanting to find resources in the same location, in the same city. And what dictates that all the time is the fact that you have an office, you know, and you want people to come to the office and people want to be in the same city as you are. So that is when I said, you know what, things are working well. Let's just expand on this and go find the resources we need in other cities and maybe other states. We started maybe with another one or two states and then we're like, wow, this is great. This is how we're able to find the resources we need, you know, as soon as we need them. So we kept on expanding on that and things are working pretty great. We now have employees in 30 different states in the United States. And this is something that I would have never even think about that it would work so well for a company to just, for everybody to be remote and not to meet on a regular basis, not to be in person, you know, on a regular basis. So that was a big thing that I thought, again, like I never thought that this was ever going to happen, first of all, right? In my whole career, I never thought such a thing would happen. Um, and then, uh, but I'm glad how, you know, how well we were able to support it and to make it work.

Michael Koenig: And I'm assuming that you use

Shanaz Hemmati: It was my pleasure, Michael. Thank you again for having me. You know, I am on LinkedIn And I think that's like the major place that I check, you know, regularly, more regularly, of course, like Checkout