We'll dive right into the next session here. My name is Brent Bracelin, the Co-Head of Tech at Piper Sandler. We have Bill Magnuson, the Co-Founder and CEO of Braze, as well as Myles Kleeger, the President and Chief Commercial Officer. Welcome back to Nashville. Yeah, thanks for having us back. Absolutely. Good to be here. Thank you for organizing an incredible sunset last night as well. We dialed down the temperature this year as well, too. Yep. S o it's a little more comfortable. Listen, obviously, large enterprises are kind of stuck in the past as we think about marketing. You can kind of see that with some of the Salesforce Marketing Cloud and e-commerce cloud slowdown in the growth profile. Mm-hmm. But it feels like the market is changing, and Bill, maybe we'll kick things off with you here. I've always appreciated your technical insights, and one of the questions we get is the boundaries around sales tech, marketing tech, ad tech, it feels like those lines are blurring. Mm-hmm. Maybe walk us through how you see the evolution of that tech stack, this customer engagement platform, and how much of that broader TAM beyond "marketing"- are you reaching into? Yeah. So I think it's a good lens to look at the broader customer engagement space, because there's kind of a version of history of Braze that involves the progressive breaking down of silos that probably should have never existed, but did arise due to a variety of constraints that exist in the technology or just accidents of history. When we first started Braze, and we were called Appboy at the time, you know, we obviously had the strength in mobile, but most organizations' marketing groups were set up with totally separate teams running their website, running email, and then running mobile. And not only were their software systems disparate, the data wasn't talking to each other, the teams didn't have the same budgets, and the skill sets were not overlapping as well. And that obviously resulted in more disjoint customer experiences. You know, you would get messages in a mobile application that had no idea what you were already doing on the website. Emails were just, like, kind of coming in over the top, doing promotional things, but they weren't actually, you know, deep linking into the customer journey and able to be there really as a companion. It was kind of a natural consequence of both how this had evolved and also just because the prevailing software at the time wasn't really capable of managing the complexity that arose when you were trying to run multiple channels at the same time. And so, you know, Braze really built ourselves from the beginning to have that strong abstraction layer over the different ways of communicating with the customer, as well as the abstraction layer over the data that came in, so that any data that came into Braze was immediately acted upon using our stream processing technology. And then, you know, as we layered on more and more intelligence in the middle of the stack over time, it enhanced our ability to kind of manage the complexity that's inherent to all those different channels. So let's go back eight, nine years ago. You know, it was kind of the whole space was actually bifurcated in email marketing. There were push notification providers, there was mobile, you had web messaging. And then what's happened since then is that the number of relevant channels has only continued to increase, right? So you look at an average Braze customer today, it's not uncommon for them to manage five, six, seven, eight, some of them even up to a dozen channels, depending on how you wanna, how you wanna count them. That includes things like SMS, MMS, WhatsApp, it's surveys, it's, content centers inside of products on the web or in mobile, like an inbox. It's doing ephemeral messaging, like modals and, and slide ups and full screens and things like that. You're coordinating your advertising audiences in order to be able to bring first-party data into the performance marketing universe, and, of course, email, as well. All of those are coming together, and what's happening as that sphere is expanding is that you're pulling in other teams more, you're pulling in other skill sets, and you're pulling in more surface area and more kind of contact points. The direction of travel is that more and more places to learn about customers and actually understand the context as they're interacting with you as a brand, as well as more places to then, you know, take action directly. You know, you also, the other part of this that we haven't discussed as much is the product side. The first generation was, like, traditional marketing channels that were siloed; we needed to bring them together. Mm-hmm. The next stage was really the skill set side. Mm-hmm. You go from marketers working in a silo and kind of coming in over the top, and if you think about a channel like email, you know, the primary goal of email when the email service for, like, the big legacy marketing clouds was built, was just to drive top-of-funnel traffic, right? You were kind of taking the same thing you were putting in a commercial or in a newspaper circular, and you were putting it in someone's inbox and hoping they'd get to your website, and you go from there. You know, as we look at email today, it's a companion to the product journey, which means it needs to both know what's going on as the customer navigates the product, and it needs to bring them back into the most important points for them to drive whatever action is most valuable. So what that means is that you need a lot more involvement from data teams, and you need a lot more involvement from product engineering teams, and you know, that has been kind of called the modern growth team, an agile marketing team, it's a customer engagement team. Sometimes it's even bringing marketing talent and having it report into a product and engineering group. But the underlying driver of all that is that the lines between a product experience and a marketing experience have not only blurred together, but they've also now become self-reinforcing, right? The marketing engine is trying to drive toward business outcomes, get people back into the product. Once you're in the product, they're trying to optimize your journey so that you're able to, you know, achieve — you're able to enhance stickiness, drive increased lifetime value, and to demonstrate and become a stronger part of someone's life. Now, as we continue to push into the future, we look at a few other places, like performance marketing budgets. So obviously, the drive toward building first-party data sets has also brought this kind of separation between acquisition and retention. You know, we now talk about activation, which is you acquire, you activate, you get people up and running quickly, you know, introduce the product to them, you try to enhance stickiness, make a great first impression. Then retention comes in further down the road. But also, one of the other strategies that you use to drive retention is performance marketing again, because reacquiring people that you've lost at some point along the way is marginally easier in most cases than a completely net new person. So these obviously work together in a virtuous cycle. You also look at things like customer research teams and surveying. Like, those in most companies are a totally separate team, different budget, they're in another silo. But what is surveying other than just learning about people and then communicating with them, right? And so that's obviously something that should be the purview of a customer engagement team when it comes together. When we look at something like feature flags, there are aspects of product experimentation that do live wholly within a product and engineering group, you know, being able to do progressive rollout of high-risk features and things like that. But there's a lot of it that's also tied to an experimentation engine that requires communication with the customer, that requires measurement of performance. You know, you're actually making a change in the product in order to drive a stickiness uplift or a revenue uplift. So there's places there where even something like feature flags, which I think intuitively we think about as kind of an engineering-only responsibility, obviously has strong interplay with marketing initiatives and marketing actions. So over the course of 10 years, I think the definition of a customer engagement team has not only become more expansive in their responsibility set, but they've also become more interdisciplinary, and they've gotten more intertwined with the broader technical architecture within companies. I always chuckle a little bit when people, you know, kind of talk about customer engagement and the market and the market size as if it's this static thing. Yeah. Because year-over-year, throughout our entire history, not only has the market grown due to a lot of the other things going on in the economy, which we'll talk about, you know, things like the launch of Disney+ and the building of direct-to-consumer applications by, you know, quick service restaurants and automobile manufacturers, and, like, all these other verticals, but also the nature of the teams themselves has become substantially more comprehensive, and that means both that you need to be more sophisticated to service them, because an interdisciplinary team is more demanding. It means that you need to be able to have stronger interconnections into a more comprehensive part of their ecosystem, and that's inclusive of things like reporting and data warehouses and, you know, product interconnects, but the value that you can deliver and drive is substantially higher as well. So evolving tech stack, a product portfolio that's now creating a flywheel effect, where it's actually expanding the reach. Myles, for you, first eight-figure contract early this year, you added two more, you now have three eight-figure contracts. Yeah. So how is this evolving tech stack and flywheel being funded by an organization? How do you find the budget? Yeah, absolutely. And for us, we have a variety of different ways to grow, which has powered our, you know, strong dollar-based net retention over time. And to answer your question, at some of these companies that we've been able to achieve eight-figure status in, they might be bringing us into new brands within their portfolio. So we initially start working with one or two brands, or maybe one or two geographies. They see ROI, they see success quickly, and then they start adopting us more broadly. In other cases, they might have originally started using Braze for, let's say, a set of mobile channels or use cases, and then they had an email contract that might have run out with one of the legacy providers, and we're able to finally win the email business. And then once we get a foothold in the email business in one corner of that company, we can expand from there. So even just within marketing budgets, there's so many different ways for us to grow: use cases, channels, geos, lines of business. Sometimes we jump over from initially a set of B2C use cases only to a two-sided marketplace customer that maybe wants to also use us to communicate to the supply side of their business. So lots of vectors for growth. And then to Bill's point, because of the convergence of teams and the increasing complexity of customer engagement needs, there are more pockets of dollars around a company for us to either land in or expand in. So it could be product, you know, engineering-oriented dollars. There were plenty of point solutions and tools that were being used for things like, you know, A/B testing within a product. Sometimes companies were building those things on their own internally, and then they decide that it's siloed, it's not connected to everything else, or maybe it's not the best use of resources. We talked about some of the CX survey use cases that are new dollars available to us. So we're constantly thinking about expanding our footprint of ways to add value, ways to grow. But then, like Bill said, more and more of these, ultimately, you know, you're trying to talk to your customers, and more and more of those things are either getting sucked into growing customer engagement teams, or we can find new pockets of dollars to land in in the first place. Yeah, an interesting historical fact, of the two of those three, one of them actually started out as a $70,000 deal with just a single mobile app running push notifications. And another one started out as similarly, another mid-tens of thousands dollar deal in Australia only. And over the course of multiple years, we've been able to continue to grow across these multiple dimensions and turn them into eight-figure contracts. So, you know, started out at five figures, and we've moved them up three orders of magnitude. I love that journey and love to see more of those— Absolutely. Journeys. But let's talk about that vendor consolidation opportunity. I know early on, you always talked about going in and not disrupting. You were additive. It was easy to add Braze— Yep. W ithout replacing these big legacy systems. But it sounds like the appetite's changing a little bit. I'd love to double-click into triggers for consolidation, Bill. Maybe walk us through, as you think about either direct-to-consumer being a catalyst or first-party data or changes to cookie lists. Like, walk us through some of those catalysts and triggers to consolidate, and does that maybe build momentum next year, too? Yeah. I don't know. Yeah, so I think that, I think first of all, I think there's a relatively broad understanding at this point that if you're still running on a legacy marketing cloud, that the kind of distance between what you should be using and what you are using is growing year-over-year. Have enough, yeah. And the question is just like, at what point do you hit that breaking point, or does the, you know, the cost of lifting and shifting or transforming really overwhelm that? And so to kind of go through a few of those things, you know, one of them, the cookie apocalypse, and, you know, obviously it's been delayed and whatever else. But the direction of travel on that is effectively that third-party data sets are increasingly incomplete, ineffective, or illegal, right? To use in your marketing. And so that has driven investment in first-party data. Now, that alone doesn't usually lead to you becoming a Braze customer, because a lot of times what people are doing is they're just trying to run their same strategies that they were before from ad targeting, and they're trying to use first-party data to help supplement that loss of third-party data. But what that is is it's actually a kind of a gateway drug into understanding the value of the first-party data and first-party data as a corporate asset, and so you start building out those first-party data sets. When you pair that then with the ability to communicate with people, that's where someone becomes a great Braze customer, even if their, maybe their direct-to-consumer activities were a little bit more limited before, and I referenced a couple of these examples earlier, but, you know, some of my favorites are looking at, like, the automotive industry, where, you know, you drive a car from a vehicle manufacturer every single day, and you by and large have no interaction with them. You buy it from a dealer, you fill it up at a gas station, you buy accessories from a, you know, big box chain store, or what have you. You get insurance from a financial services company. But the simple innovation of letting someone unlock their car with a mobile app now lets you get data on their driving habits every single day, and you can communicate with them on every day of their customer journey. Fundamentally flips the script, right? It lets you start to give them tailored insurance offers. It lets you start to get ahead of them coming up on, you know, the lease renewal. You can sell them accessories that are guaranteed to fit their vehicle right out of the gate. You can do a better job of a warranty and just kind of generally navigating the overall customer experience from a liability standpoint. Look at the, you know, the QSR space. Your McDonald's is like, that's, that is obviously a replacement cycle, but it's also a place where they've invested heavily in new capabilities with mobile wallet, with enhanced takeout options, with delivery. And things like enhanced takeout also require more—y ou know, they require lower latency. They require higher levels of reliability because you're actually integrating it into your product delivery, right? And so that goes back to that example I made earlier of like, of course, McDonald's had an email program before, and they had offerings, and they did sweepstakes and what have you, but it wasn't part of the literal delivery of the product. Yeah. But then when you look at what that also does for their business model, as soon as McDonald's owns the credit card data and the consumer consumption data, and they have the ability to communicate with you inside that application, they flip the script in their supply chain, and instead of them losing all their margin to the delivery companies, they can negotiate with the delivery companies as a commodity supplier of transportation for their food, right? Because now they control the demand again. You look at Disney+, like Disney didn't actually have a direct-to-consumer understanding. Mm-hmm. You were watching their movies in a movie theater chain, you were getting the Disney Channel through your cable bundle, you were buying their merchandise from Target or Walmart. Now, with Disney+ and the emergence of their online commerce and the interconnection of that with their parks business and everything else, they now actually have both the ability to understand you and the ability to communicate with you, right? And so that's a big driver. And so there's a bunch of things like that, where it's like, as the corporate strategy starts to evolve, you start to understand the value of building the first-party data set, understanding the customer and being able to interact with them through the customer journey. The value that you generate out of that gets tremendously higher. You know, there's a whole bunch of things along the way that could be that breaking point. Trigger, yeah. You know, and it, you know, at some point it triggers, and that's when that replacement cycle starts to become a benefit to us. Now, one of the things that's definitely kept a lid on that, I think, in this macro, is that it is still expensive to make that change— both with humans and with dollars, right? So if you were gonna hire a GSI to help you do that transition, and maybe that budget got cut, or you were gonna, you know, you were gonna make a move, but your team, instead of growing, it shrank last year, or you were gonna launch that new app that was gonna be the direct-to-consumer interface, and that got delayed or canceled, right? These are all examples that have happened around the economy over the last couple of years. And so I think while the tension has actually gotten greater, because the level of competition in the space, the demands of consumers to actually have a holistic and connected customer experience across all these different channels, the value that you can actually deliver in it, all of those things are more true now than they were two years ago. But the ability to actually kind of stomach the transition has been a bit harder for companies that are not in a growth posture right now, right. And are in a kind of a loss avoidance posture. So I think to some extent, there's probably some pent-up tension, you know, that we're looking forward to taking advantage of once we start to see a little bit more of a rotation of business like leadership attitudes toward a growth posture. But yeah, I mean, that's hopefully that helps you understand some of the mechanics that are at work there a nd how we're thinking about it. The complexity o f that evolution, for sure. Myles, for you, where do you focus your go-to-market efforts in that environment? You have great examples of $70,000 land turning into an eight-figure deal. Are you, in a tougher environment, focused on those lands and that's— Yeah. A nd more shots on goal? Do you double down on trying to drive triggers for companies that are— Yeah. D oing that digital journey? We've never optimized for ASP or average selling price in large lands because we have so much confidence— Okay. In our post-sales motion and the value that we create very quickly. So that, that's a continuation. Everything is harder right now in this environment. Yeah. You know, even with installed base customers, right? Yep. There's more pressures all across the business. So we're thinking about how do we streamline operations internally such that we can have, like, eliminate redundancy, meaning we don't wanna have salespeople and CSMs, for example— swarming together to solve the same problem when we can have them working on separate problems, just as we think about, like, overall operational efficiency and productivity within the business. B ut bigger picture-wise, it's like three things I would point to that we're focused on are value selling, because this environment, helping people understand why we're a premium product, how we help you grow the top line, how we help you unlock new, you know, revenue opportunities, but also how we make you more operationally efficient internally and reduce risk of failure and things like that, is paramount. S o we spend a lot of time on that and telling that story. We've introduced new sales methodologies. We weave them into all the post-sales conversations and executive business reviews with our customers to reinforce all the things that we talked about before you bought Braze. We want to remind you of, and then show you the progress we're making on them six months, twelve months after you've become a customer, because that's how we're gonna grow. Another big area of focus that I personally believe is a big, you know, tailwind driver for us well into the future, particularly with big enterprise, is our traction in the partner ecosystem. So continuing to invest in our relationships with the big GSIs, that Bill mentioned, Accenture, Deloitte, WPP, Publicis, the list goes on and on. They control a lot of mind share, particularly upstream, when companies are thinking about, you know, is now the time for me to make a big switch or transition from a legacy technology stack into something new? You know, it's good news for us, because as we influence their thinking around that and the idea that the monolithic, you know, stack is no longer necessary, and actually, the composable, flexible stack that allows you to take advantage of all the new things that are emerging and the higher consumer expectations of brands is actually the path forward. We become a conduit for growth for those SIs and big agencies, so we get them selling for us, shortening sales cycles, opening more doors, things like that. Mm-hmm. So those are, you know, probably the biggest areas of focus right now, and just continuing to execute and you know, push companies to really think about future-proofing their stack at the end of the day. And we have to demystify the complexity Bill talked about around a switch, and helping people understand that it's not as complicated as it seems, but you want to make sure you're aligning yourself with the right partner for the next three to five years of what comes next in your business. Officially won the bet that we didn't talk about AI twenty minutes in. So, but I have to talk about it. It is an important part of the investment philosophy. And sales and marketing is an area that people are now talking about AI, servicing and driving some disruption. And that disruption might be pricing, driving a shift away from seat-based pricing to this new type of pricing model. It also might be a disruption across these new agents. I mean, we're going to hear a lot from Salesforce next week, at—i s it Dreamforce or Agentforce? I'm not quite sure what. But, walk us through AI as a potential risk or opportunity— it's probably a little bit of both for you guys. Yeah, I mean, I think when you look at the history of Braze within marketing technology, we've been progressively benefited from the frontier and the state-of-the-art in AI continuing to advance throughout our history. And, you know, take, to take as an example, look at our Canvas environment. Mm-hmm. In Canvas, which is a visual programming language for marketers to use, the conceptual goal is to actually map out what the customer journey is and marry that with your business goals, and then be able to optimize for the achievement of those business goals. So it's like the customer is gonna move through this journey. We're gonna map that out, and in Canvas, you can literally map that out visually. And then, based off of these different data inputs and triggers and other sorts of contexts that we know that's there, we're gonna intervene at various points in order to try to optimize for the business outcomes that we're trying to push. Like, you know, adopting new features that we know make you stickier, driving you toward purchase, getting you up to subscription, having you refer and help drive our organic growth, or just, like, showing someone how our product and service can be a part of your life, so you can help build habits and stickiness and what have you, right? So throughout that journey, over time, what we've been doing is using things like machine learning and statistical methods and deep learning and recommenders and what have you, to either kind of take aspects of that customer journey and the business logic that sits alongside it and collapse it down and say, "Hey, instead of having thirty different nodes in here to kind of map out this logic, you can just trust the machine learning to run this now," right? Instead of needing to, like, kind of walk through all these content conditionals, you can now trust this automatic experiment engine to, like, run this for you and produce it for you. That's actually something that we've been doing throughout the entire history of the Canvas product. Adding more intelligence, adding more automation. Exactly. And what it kind of visually looks like is you could take a, you know, a Canvas program that maybe was a 100 blocks and collapse it down to 20. Right. But, of course, once you get there, now you want to expand it back to a hundred again— Right. Because you want to. You know, it's not like the version of this you built before was at the optimal level, right? You just kind of succumb to the complexity of building these things at some point, and similarly, throughout them, even as these have gotten more sophisticated, you want to be able to prove to yourself, like, check the inputs and the outputs, make sure that, you know, things are performing as you expect them to. Like, then, as these things get more manageable, you also want to start to bifurcate the customer base and say, like: All right, this program runs super well for the developed world and English-speaking, like, Western nations. This other program, I'm gonna start to adapt to my growing Brazilian audience, right? Or I've now expanded my own product, so the personas that I'm bringing into my customer base have changed slightly because my offering has continued to evolve, and I need to kind of treat the people that sign up for Disney+ because of the cricket rights very different from the ones that sign up for it in order to watch Frozen on repeat, right? And, like, kind of run them through these different journeys. And when we look at the way that agents are now being composed together to build software, you know, they're being broken down in very similar ways, where it's like, okay, it's not just an agent, it's a bunch of agents, right? And the agents are actually being, you know, brought together to perform different tasks. We're rigorously looking at the inputs and the outputs. They're being trained. They're being run against each other. You need to make sure that today's agent is performing, you know, better than yesterday's, and better than the one from six months ago. As you bifurcate it, you need to make sure that the training that you gave it for, you know, the English-speaking, like, Frozen use case is also working over here, and you need to modify it if not, right? So if we kind of think about what kind of environment it takes to actually incorporate in the intelligence that agents are bringing us, you need an environment where you can map out the customer journey— Yeah. you can understand how it's evolving over time, you can test it head-to-head, you can look at the inputs and outputs and manage it. So when I look at, you know, Braze's position in the ecosystem. Maybe you need a real-time stream processor as well. You also need, obviously, real-time access to data to make those decisions. Okay. And I kind of think about it as actually, like, the senses and the ability to interact with the world, right? Like, you need the eyes and the ears— Yeah. T o be able to know what's going on. Yeah. And you need that in as real time as possible, which is exactly what the Braze Data Platform is built for, right? Quickly, completely, and cheaply get the full data picture in. And you need an ability to engage with the world, right? You need to be able to talk to people or interact with them or whatever, and that's where the great breadth of communication channels and the integrations into the products comes into play. So I think we've got all the right senses to understand what's going on. We've got the Canvas environment to be able to manage it, and understand it, and govern it, and report on it, and evolve it over time. And then we have all the output optionality— Yeah. S o that, like, if you've got intelligence further up the stack, you can do something with it. That's all available end-to-end in Braze, and so it's obviously on us to continue to kind of push ahead with the frontier of where these agents are going. But I think we're perfectly positioned to fully take advantage of them as they develop. Last question. We're a little over time. I gotta get it out. What are you most excited about next year, and what are you most excited about next year? I'm really excited about all the underlying changes that have been happening within Braze. You know, we've announced a number of new programs that have driven through our product-led growth efforts. We've got new expansion internationally. We've got great new reference customers across different verticals. There's new channels that are coming out. Yeah. There's new sophistication throughout the stack. Like, this macro has kind of kept a lid on everyone's results, but Braze has absolutely not been standing still while this has been going on. Good. You know, I'm just really excited to see what happens as the pressure comes off a little bit and people rotate a little bit back into that growth posture. Like, you know, I think we're ready to go. I like it. Yeah. For me, the partner piece I touched on earlier — For me, the partner piece I touched on earlier — Partners. I s so huge. Yeah. And then our ability to further penetrate some of these massive industry verticals and big enterprise that we've yet to even really approach. Like, that's, that's what I get excited about. Awesome. Thank you guys so much. Yeah. Thank you. Take care.