Building a world-class sales org | Jason Lemkin (SaaStr)

Lenny's Podcast2024-02-18

15K views|6 months ago

💫 Short Summary

The video provides insights on building successful SaaS businesses and sales teams, emphasizing the importance of hiring sales reps with genuine passion for the product. It discusses the significance of personal engagement in driving business success and the value of understanding the product before selling it. The video also touches on the evolution of sales processes, the benefits of free trials in sales, and the importance of balancing sales requests with product development. Additionally, it highlights the impact of reducing churn, offering free products to customers, and the value of kindness in business interactions.

✨ Highlights

📊 Transcript

✦

Key highlights from Jason Lenin on building successful SaaS businesses and sales teams.

00:49

Importance of understanding when to hire salespeople and how to structure the sales team.

Strategies for effective sales leadership and the role of product leaders in the sales process.

Value of trials over annual contracts and tips for maintaining a healthy product-sales relationship.

Advice on running conferences and significance of AI-powered tools like Command Bar for product growth and customer engagement.

✦

Importance of Sales Teams in Scaling a Business.

11:23

Companies that started with self-service eventually required enterprise sales for growth.

Recognizing the need for sales support, even if the founder is not fond of sales, is crucial.

Personal engagement with customers, especially in the early stages, is highly valuable.

Sales should not be considered optional, and founders should embrace sales strategies early for long-term success.

✦

Importance of hiring the right sales reps for startup success.

13:03

Founders should focus on mastering the middle part of sales process and asking for next steps and money.

Sales reps often lack deeper knowledge beyond basic questions, so founders need to hire reps with genuine passion for the product.

Finding the right sales rep early on is crucial as they can significantly impact the company's success.

Hiring the perfect person from a big company may not guarantee success if they can't effectively convert leads in the early days.

✦

Importance of hiring sales reps who understand and love the product being sold for more effective deal closures.

21:30

Caution against hiring a VP of sales too early, as they should only be brought in after sales reps have proven success.

VPs of sales should be hands-on and involved in deals rather than just focusing on management for success.

Sales leaders should have deep product knowledge, especially in the early stages of company growth.

✦

Importance of Hiring Experienced and Mature Sales Reps.

24:42

Trust and reliability are crucial qualities to look for in early hires.

Interview multiple candidates and select those with a genuine passion for sales.

Avoid hiring veterans who no longer have a desire to sell.

Effective interview questions can help assess candidates' commitment to sales.

✦

Importance of personal interactions in sales.

34:13

Sales professionals should prioritize meeting with customers over relying solely on digital resources.

Successful leaders like Mark Benioff prioritize in-person customer meetings for efficiency.

Sales leaders need to be actively involved in closing big deals instead of tracking progress remotely.

Advocacy for a hands-on approach to sales and the significance of personal engagement in driving business success.

✦

Importance of Understanding the Product Before Selling.

36:53

Sales reps should watch webinars and customer testimonials to gain product knowledge.

Sales approach has shifted from selling commodities to solving big problems, emphasizing confidence and honesty in sales pitches.

Hiring process in late 2020 neglected reference checks, leading to potential hiring mistakes.

Thorough diligence in hiring decisions is advocated to avoid detrimental outcomes.

✦

Focus on sales reps' ability to close deals rather than their compensation structure in the early days of hiring.

45:58

Offer a higher commission percentage at the beginning to incentivize new reps.

Sales reps should bring in four to five times their take-home pay to be profitable for the business.

Engineer a compensation plan that aligns with sales goals and ensures a win-win situation for both the rep and the company.

✦

Key Highlights on Structuring Sales Compensation Plans

49:51

Initial high bonuses are important for boosting morale and assessing performance.

Regularly reviewing and adjusting compensation plans is crucial to aligning with business goals and individual performance.

Concentrating leads on top closers can lead to substantial commissions.

Avoid excessive tweaks to the compensation model to prevent cash burn and prioritize hiring and retaining top-performing sales reps for company success and growth.

✦

Importance of hiring experienced sales reps for selling complex products.

57:56

Reps with experience selling difficult products possess necessary skills for success.

Reps who sold simple products may struggle with complex integrations.

Hiring from competitive spaces can lead to better sales performance.

Technical B2B sales require specific expertise to avoid failure in the role.

✦

Importance of Hiring Managers and Directors in Scaling Sales Organizations.

01:02:50

Emphasis on strategic hiring decisions, including promoting from within and hiring experienced professionals.

Highlighting the roles and responsibilities of Account Executives (AEs) and Sales Development Representatives (SDRs).

Insights on compensation structures for AEs and SDRs.

Significance of building a strong team with specialized roles for successful sales operations.

✦

Importance of Product Managers and Sales in B2B Organizations.

01:10:12

Great organizations have deeply involved product leaders who play a crucial role in ensuring success.

The VP of product is essential in sales meetings to align product capabilities with customer needs.

Customer success roles are moving away from product responsibilities.

A VP of product with deep knowledge and commitment can be a strategic asset bridging the gap between sales and product teams, which is rare but valuable in B2B companies.

✦

Importance of Balancing Sales Requests with Product Development.

01:13:46

Clear communication and collaboration between sales and product teams is crucial for success.

Providing sales with a budget or allocation for feature requests each quarter helps avoid constant changes in development priorities.

Managing expectations and boundaries between sales and product teams is essential to prevent organizational stress and ensure a well-run B2B company.

Effective communication and decision-making processes are key to maintaining a healthy balance between sales and product objectives.

✦

Strategies for Addressing Internal Conflicts in Management Meetings.

01:20:26

Weekly meetings between VP of sales and VP of product are recommended to discuss budget and promote team organization.

Aligning product teams with revenue goals is emphasized, with a warning against pressuring teams to prioritize revenue over customer relationships.

Personal experiences are shared regarding negative impacts of pressuring teams for revenue generation, stressing the importance of thoughtful decision-making.

Avoiding punitive measures for product failures is advised for maintaining team morale and productivity.

✦

Importance of reducing churn for startups.

01:26:39

Emphasizes the significance of compounding revenue over time.

Founders should focus on sales tactics and always have a next step after meetings.

Utilize resources like Saster University for sales education.

Evolution of sales processes and the need to adapt to a changing landscape with multiple stakeholders.

✦

Importance of Free Trials in Sales

01:31:06

Caution against annual contracts and focus on customer-centric approaches.

Emphasize transparency and learning from lost deals.

Prioritize customer satisfaction and product-centric strategies for successful relationships.

Advocate for delivering tangible benefits to customers rather than raising prices without adding value.

✦

Importance of offering free products to customers.

01:40:10

Even Enterprise customers can benefit from free editions.

Product leaders should focus on customer happiness and be the voice of the customer within their organizations.

Challenge to ship three great products in the upcoming year.

Prioritize delivering value to customers over monetization.

✦

Speaker's favorite books, movies, interview questions, and products.

01:42:19

Opus Clip app for creating video clips efficiently.

OnePlus phone as a versatile device.

Life motto of being kind in all situations.

Importance of kindness in interactions with others.

✦

Importance of kindness in business.

01:49:35

Emphasizes being kind to employees and customers.

Benefits of bringing customers and prospects together at events.

Evolution of events from small meetups to large conferences.

Significance of creating a community for entrepreneurs.

✦

Discussion on the costs and challenges of organizing large-scale events.

01:54:41

Significant financial investments are required to host events at various venues.

Hosting events in expensive locations like the Bay Area can incur high costs.

Careful planning is essential to ensure event profitability as many events end up losing money.

It is advised to focus on attending only the best industry events to maximize networking opportunities and benefits.

✦

Importance of Strategic Email Communication in Reaching Industry Professionals.

02:00:58

Crafting effective email pitches and leveraging LinkedIn for networking are key strategies discussed.

Providing free assistance to build relationships is highlighted as a valuable approach.

Urging thoughtful consideration of the recipient's perspective and potential responses in email communication.

Emphasizing the impact of email outreach in connecting with influential individuals and encouraging strategic and respectful engagement.

00:00here's the mistake that 99% of Founders

00:02and sales reps make we're not really

00:03selling in B2B we're solving problems

00:06our job as sales reps in SAS is to not

00:09sell a used car okay we are selling a

00:11Tesla Model 3 Performance it has

00:14competition I might not need it this

00:16week okay but it's pretty darn good let

00:19me help you get you into that model 3

00:21Performance today and I've even got a

00:23special discount for the end of this

00:24month and let me just help you and I've

00:25spent four calls answering all your

00:27questions and I've explained to you all

00:29the things and why the supercharging

00:31network is better than the regular one

00:33that doesn't really work at the charger

00:34near your house and I've gone on Google

00:36and I've seen there's no charging

00:37Network near your house there's only

00:38supercharges I I I kind of got you don't

00:41I and that's the job of SASS and sales

00:43because we're not selling

00:47commodities today my guest is Jason

00:49Lenin Jason created and runs saster the

00:52world's largest community for SAS and

00:54B2B Founders he also runs two of the

00:57biggest town conferences every year one

00:59in the bit area which attracts over

01:0115,000 people and one in Europe with

01:03over 3,000 SAS Executives Founders and

01:06entrepreneurs before saster Jason was

01:09the CEO and co-founder of echosign which

01:11he grew to over 100 million ARR and then

01:14sold to Adobe where he ended up as a

01:16vice president of their web services

01:18business if you follow Jason on Twitter

01:20or LinkedIn you know how much wisdom he

01:23has to share about all aspects of

01:25building a successful SAS business in

01:27our conversation we focused on what find

01:30most product leaders have the least

01:32experience in building a sales team we

01:34get very practical and tactical on how

01:37long you should wait to hire your first

01:39salesperson what your one to two first

01:41hire should look like why you should

01:43actually hire two salespeople not just

01:45one initially how to comp them how to

01:47interview them when it's time to hire a

01:49vpf sales how to avoid your salespeople

01:52flaming out and burning through all your

01:53cash we also get into how to make the

01:56product and sales relationship healthier

01:58including how to push back on sales and

02:00feature requests why your head of

02:01product should be super involved in your

02:03sales process how long you should make

02:05your trials why you should avoid annual

02:07contracts and so much more Jason also

02:09shares advice for running a conference

02:11which I found super interesting this

02:13episode went long because I just

02:14couldn't stop asking Jason questions but

02:16as a result I'm excited to bring you

02:18this incredibly Rich episode on building

02:21your sales team if you enjoy this

02:23podcast don't forget to subscribe and

02:25follow this podcast in your favorite

02:26podcasting app or YouTube this helps

02:28tremendously and I really appreciate it

02:31with that I bring you Jason Lenin after

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04:58today Jason thank you so much for being

05:01here welcome to the podcast I'm so

05:03excited long time what's the expression

05:05long time fan first time dial in or

05:08something first time caller yeah first

05:10time caller I don't know if that exists

05:11in 2024 or not but yeah that's me so

05:14thank you so much for letting me come

05:15it's absolutely my pleasure I feel like

05:17you're the kind of guy that I knew would

05:18be on this podcast eventually and I'm

05:20glad that we're finally doing this I

05:22also feel like we can go in so many

05:24directions I feel like you have so many

05:26insights on so many parts of building a

05:29business especially a B2B business but I

05:32thought it would be most interesting to

05:34dive deep into building your sales team

05:36essentially trying to help people figure

05:39out how to start their sales team scale

05:42their sales team and all the elements

05:44that go into it how does that out I

05:46think it's great I think it's it's an

05:47evergreen topic but I think there's

05:50remains a consistent set of confusion

05:52fears around how to build the sales team

05:55and it's it's Evergreen the tools change

05:58and the the the pace has changed but the

06:01issues are like I I love to dig into

06:03them because we keep making the same

06:04mistakes as Founders and Executives

06:06again and again and again 100% agree

06:09it's such a blackbox to me sales I've

06:11never done sales and I'm always just

06:14like I have no idea what's going on here

06:15and so this is how I learn from folks

06:17like you yes you touched on this now and

06:20I wasn't gon to get on this but I think

06:21it'd be interesting just this question

06:23of does everyone need a sales team will

06:25you need a sales team if you're

06:26listening as a Founder yes is is it simp

06:28is it simply if you're a B2B business

06:30you'll need a sales team how should

06:32people think about like will I need a

06:33sales team if you truly build a

06:35self-served product you can either never

06:37have a sales team or like slack defer it

06:40or like canva really defer it okay canva

06:42didn't really build a sales team until

06:45they were well north of 500 million in

06:47Revenue because it's epic self- sered

06:49right slack started all self-served and

06:51by the time they went public the

06:53majority of their revenue was Enterprise

06:55sales so you can sequence things you can

06:57have Hybrid models like you know a third

06:59of aun's Revenue is still from self-

07:01serve and two-thirds are from a selfs

07:03serve motion so there's all different

07:06hybrid things the most important thing

07:07though I've found is however you get

07:10those first 10 15 20 customers be

07:13honest be honest and if they and if

07:17you've talked to them as a founder and

07:18you know that they need a sales type

07:21motion they need effort to deploy it

07:23they have questions about security they

07:25have questions about competition they

07:27they have onboarding requirements and

07:29you say hey I don't like sales so I'm

07:31going to do a self plg motion you will

07:33you'll fail one of the things that I've

07:35done with so many Founders over the

07:36years and and it it it it shocks some at

07:38first is your first 10 15 50

07:42unaffiliated customers the ones that

07:44find you from The Ether they are like

07:46the next 50 100 200 1,000 and you can

07:50either embrace them or run for them and

07:52too many producty Founders find that hey

07:56gosh I'm gonna have to do sales and and

07:58they and they exit it they exited and

08:00I'll tell you a company I invested in 18

08:03months ago when things were easier right

08:04maybe 20 months ago they were doing five

08:06million in Revenue growing over 100%

08:08with the sales life motion things got

08:10harder things got harder as they did for

08:12many of us and they decided to fire the

08:14whole sales team and now they're doing

08:16less than one from five million with

08:19beloved customers belove if I told you

08:21the logos your jaw would drop over 5

08:24million 20 months ago to 1 million today

08:26because they fired the sales team

08:27because the founders didn't like sales

08:29they thought it was icky they didn't

08:30want to do it they were tired of doing

08:32it and I can tell you several stories

08:34like this so you got to be honest about

08:36the sometimes we get it just right on

08:38Day Zero sometimes we know exactly how

08:41our company is going to work or Len's

08:42podcast is going to work we we we can

08:44predict the future perfectly but I find

08:46in

08:46B2B a lot of times the industry we end

08:49up winning in the segment of the

08:51industry the type of customer is not

08:52what we initially thought and either

08:54lean into it and be a success or run

08:56from it because sales is icky and risk

08:58risk failure when you talk about being

09:01honest is the what you need to be honest

09:02about is that you need sales help to

09:05close customers be honest about that

09:08just be honest about yes the motion that

09:11it will take to get those first 10 15 20

09:14customers and if they were able to find

09:16you by putting a credit card and no one

09:17had to talk to them then that's your DNA

09:19today it doesn't mean you won't go up

09:20Market later like a slack or a canva but

09:23if you can get them all to do that and

09:24you never have to talk to them then get

09:26really good at viral Loops get really

09:28good at almost B Toc type motions get

09:31really good at this kind of stuff and

09:32hire growth hackers and do the whole B

09:34to almost B to cish motion which we have

09:37it self- serve um but if your first 10

09:40customers come in and say you know what

09:41Lenny I'll pay you $5,000 but you got to

09:43solve this problem I have with online

09:45video that is not a self- serve

09:48motion it is not a self- serve motion

09:51and even worse sometimes worse is your

09:53first 10 customers F five of them sign

09:55up online but it takes a huge amount of

09:57effort for for 19 bucks a month and then

09:59five say they'll pay you $5,000 a month

10:01and some Founders are like I'm going to

10:02work on the five that pay us 20 bucks a

10:05month not the five that'll pay us $5,000

10:07a year and I find too many folks that

10:09don't like sales too many folks that

10:11have not had any life experience in a

10:14sales L environment flee from those

10:17those customers and I've never seen that

10:19lead to success we're surprised who our

10:22Niche is some we talk about nailing our

10:24Niche but sometimes we're surprised the

10:26niche that finds us there's a lot of

10:28startups I've invested in that start off

10:30product lead growth and quickly realize

10:33this is just isn't working and many of

10:35them move to we you to actually hire

10:37salespeople and start to go top down and

10:39it can be most companies are a hybrid

10:41right even big folks that are even

10:43there's Weird Hybrids like there's folks

10:45like and snowflake has a

10:47well maybe is a much better

10:48example has a a free low-end

10:51version and you know there's open source

10:52too it's a little confusing and then

10:53they there's not a lot in the middle and

10:55then there's a lot of big right there's

10:56all different ways to combine a product

10:59Le or self- sered motion with sales Le

11:01and and too many Founders in the

11:03beginning think it's either

11:04or it's not either or so I think the big

11:07takeaway here is sales is is not a

11:11question of if you're going to need a

11:12sales team it's a matter of when uh the

11:14can of examples is crazy maybe that's

11:16but they but they still have one they

11:18still have one I think notion I think at

11:1910 million ARS when they hired their

11:21first salesperson okay that makes sense

11:23so I think the question that leads to is

11:26what is a sign that you should start to

11:28hire your first sales person even if you

11:31hate sales even if you think it's icky

11:33even if you don't like it as a fatter

11:35you've 95 times out 100 you've got to

11:38find a way at least to close the first

11:3910 customers yourself you've got to find

11:42a way and we could dig into how to do

11:44that if you don't like sales that the

11:46hack though is that even if you don't

11:47like sales customers love to talk to the

11:51CEO they the customers love it and

11:53here's the other thing as a Founder

11:55you're really good at the product in the

11:57market hopefully even in the early days

11:58so what I mean so what's important is

12:01even if you don't know how to do

12:01outbound even if you don't know how to

12:03send a cold email even if you don't know

12:04how to do any of this stuff and even if

12:05you don't know how to ask for a check

12:06even if you don't know how to open or

12:07close almost all founders are A+

12:11middlers A+ middlers a plus middlers

12:15right and before we started you and I

12:16talked about podcast and content and

12:19immediately it was an A+ conversation

12:21okay maybe you you don't know how to

12:22close a big sponsor okay I'm just I'm

12:24just making that up and maybe you don't

12:26know how to find one but once you have

12:27someone in your spider web letting the

12:29conversation you and I just had was A+

12:31and any founder can should be there by

12:34day one right by day one and and

12:38Prospects love it they they don't if I

12:40if I want to buy CRM I don't get to talk

12:42to Yaman at HubSpot or Mark Benny off

12:44but I get to talk to you in your CRM

12:46company it's like magical for early

12:48adopters right so bear in mind no matter

12:50how bad you think you are as a Founder

12:52you're pretty good at the middle part of

12:53sales so find a way to get any prospects

12:56get really good at the middle and then

12:57work up your courage

12:59work up your courage and find how to ask

13:02for next steps and and money what would

13:04it take Lenny how can we get going on

13:06Riverside what would it take we would

13:08love to have you right what would it

13:09take to get you going next week you got

13:11to learn that little motion but you

13:13don't have to learn all the stuff you

13:14think is smarm me other than had to go

13:16from middle to just ask for how we can

13:18get going I like this term middlers so

13:21just to make sure I understand what that

13:23means like in the middle of the convers

13:24you're not great at initiating you're

13:25not great at closing but you could like

13:26talk about it yeah and this is where

13:28sales reps are terrible most sales reps

13:31once you go beyond the five basic

13:34questions they can't tell you how a

13:36database works or or or or you know how

13:39how to eliminate hallucinations from

13:41your product or how to do or how to do

13:43payroll in eastern Southern Guam like

13:46the the sales rep uh uh we can talk

13:48about this they need help right they

13:49need help from the founders in the early

13:51days they need help from sales Engineers

13:52or product people which is my favorite

13:54place to get the help as you scale but

13:55they need help the beauty to Founders is

13:57they don't need help in the middle and

13:59you can be 10 times better in the middle

14:01than any sales rep at your bigger at at

14:03your bigger competitor you if you're

14:05running I'm just making up CRM but if

14:07you're running a new CRM startup you can

14:09run circles around 98% of the sales reps

14:12at Salesforce or HubSpot right they have

14:13the brand they have the partners they

14:15have the Integrations but they cannot

14:17answer the questions you can answer okay

14:19so you closed the first 10 customers

14:22what are other signs that okay now is

14:24really the time we need to start hiring

14:25sales I think as soon as you've got

14:28those 10 customers and more than 20% of

14:31your time is booked up with customers

14:33you need

14:34leverage you need leverage you've got to

14:36get if you do it too early if you're not

14:38spending 20% of your time in sales and

14:4020% of your time in recruiting you're

14:41failing as a Founder you need 20% of

14:43each 20% in sales and 20% recruiting

14:46nothing else really matters um at some

14:48level as a CEO maybe not as Founders but

14:50as CEOs but once you cross the 20% you

14:52need leverage or your calendar will die

14:55so you need to hire one rep and you've

14:58got to hire two because otherwise

15:00there's no AB test you have to AB test

15:01humans you have to AB test humans um

15:05you've got to hire two as hard as it is

15:07and there's just one sheet code to those

15:09first

15:10two there's one sheet code I talked to

15:13so many Founders that screwed up their

15:14first sales hires and they always nod

15:16when they hear it those first couple

15:18reps have to be people you would buy

15:20your own product

15:22from that's it now we can talk about

15:24other criteria we can talk about nor

15:26normalizing for deal size we can talk

15:29about industry expertise we can talk

15:30about all this kind of stuff but when

15:32you go out as a first-time founder and

15:33interview 30 reps and you're going to

15:35have to interview 30 okay and and 20 are

15:37just going to break your brain because

15:39they don't do any work and they don't do

15:40any prep and they didn't even go to your

15:42website and then and then eight of the

15:44eight of the next 10 are sort of okay

15:47but you know it's not really going to

15:48work but you might hire them if you get

15:49tired and if you're lucky one or two of

15:51them they're like magicians they like

15:53they they ask the right questions which

15:55we could talk about then take a pause

15:57and say look no matter how how strange

15:59their background was whatever they did

16:01it's not the right background it's not

16:02our same deal size it's not our industry

16:04they actually weren't very good at their

16:06last job they got let go at their last

16:08job but I would buy from Lenny I know

16:11I've been doing this for a year I've

16:13been every day I would buy from Lenny

16:15because Lenny just explained to me my

16:16product and my customers's problems in a

16:18way that I actually believe forget about

16:20what's on her LinkedIn or his LinkedIn I

16:22would buy from Lenny that rep always

16:23works because you can trust them with

16:25those

16:26leads almost every first time founder

16:28fire hire someone because they worked at

16:30tulo or Cloud flare or wherever and they

16:33talk the talk and they can say ACV and

16:35nrr and and and and they can talk all

16:37these acronyms none of which matter none

16:40of which matter and they get so we all

16:42get attracted to logos on our resume and

16:44but in our gut I always asked him did

16:46you know that Jason was gonna did you

16:48would you buy from Jason like you're

16:50right I wouldn't have bought I wouldn't

16:51have bought from Jason but he worked at

16:53twio like so just wait wait and

16:56interview 30 sales wraps however you

16:58find them through Linkedin through use

17:00recruiters use contingent recruiters

17:02it's exhausting do everything work your

17:04network and then be flexible in the

17:06beginning we're looking for pirates and

17:07Romantics in the early days we are not

17:09looking for folks with massive sales

17:11operations teams and enablement teams

17:13you're looking for someone you're

17:15looking for that quirky one that's got a

17:17few extra IQ points that for reasons

17:20that make no sense has fallen in love

17:21with your little product that is so

17:22feature poor and does nothing but they

17:24love it they love it they love it okay

17:27and my first rep had like this back in

17:29the day he had gotten Let Go by a prior

17:32startup and he was struggling and he was

17:34living in his brother's garage at the

17:36time okay this was not your number one

17:39person at snowflake but of all the 30 he

17:42came in and and what's now Adobe sign

17:44Echo sign he described the whole problem

17:46he described how we would solve the

17:47problem for customers in the early days

17:49of this category right and it was clear

17:51whatever it took we needed him and

17:53whenever we needed to backfill the

17:55garage or whatever this was the only one

17:58that could sell the product and and he

18:00did it for a decade closed our first

18:02five figureure deal first six figure

18:03deal first seven figure tcv deal didn't

18:06scale completely right inside of adobe

18:08was harder to scale inside of a 20,000

18:11person company than it was in a six

18:12person company but he was still there he

18:14still made that far to the journey but

18:16he was the only one that I knew could

18:18actually that I would buy my product

18:20from not that I would buy something from

18:22but I would buy my product from and and

18:24leads are so precious in the early days

18:26right it's so hard to find leads

18:29that's the problem you hire this perfect

18:31person from Snowflake and you have three

18:33leads a month and you give him two and

18:36he doesn't close them H your company's

18:38gonna

18:40die leads are so precious that's what

18:43folks don't get and so wait and I know

18:45it's painful and I know most Founders

18:47have hired this person with the right

18:49LinkedIn that they wouldn't buy their

18:50product from just keep interviewing just

18:52keep you need that quirky pirate romatic

18:54that loves your product and can sell it

18:56they're out there amazing advice wow

18:59there's so much there I'm going to

19:00follow a couple threads there okay in

19:02terms of the level I know a lot of

19:04people make the mistake of going with a

19:05VP of sales pretty quickly what's your

19:08advice I know you talked about General

19:09attributes but what's your advice for

19:11kind of the level and seniority of this

19:12these first two hires two things one

19:14that's Evergreen and one that's maybe

19:16especially appropo for today's

19:18environment the Evergreen one

19:20um which I've talked about for over a

19:23decade and I think folks that have been

19:25through it will see it which is you need

19:27to sales reps hitting quota closing

19:31deals before you're ready to hire a

19:33manager for them almost all VPS of sales

19:37their job is to take you from rep 3 to

19:39300 to take you from 3 to 300 to take

19:42something that's just just starting to

19:43repeat okay a script that's just

19:46starting to work leads that are just

19:47starting to come in and then take Lenny

19:50and Jason the two reps I have as Quirky

19:52as they are they're crushing it okay and

19:55then I'm going to hire a more

19:56heterogeneous type of person going

19:57forward I'm going to hire the person

19:58from cloud flare into I'm G to they

20:00can't all be like lendy and Jason

20:02they're pretty quirky but at least I can

20:03learn from them what's working what are

20:05the objections right how do we get

20:06around that feature Gap like we're one

20:08year we're two years old we' got a lot

20:09of feature gaps okay our product we we

20:11our this integration doesn't quite work

20:13how do we box around those issues how do

20:15we sell our 10x feature like because if

20:17you're a startup your product isn't very

20:20good your software is not very good and

20:21you have a competitor but you have some

20:2310x feature that is driving people to

20:25buy you something you're doing that does

20:27not exist in the market Marketplace and

20:28the really good reps get insanely good

20:31at selling that and the folks off the

20:32street the new VPS often doesn't even

20:34understand the 10x feature it's too

20:36subtle it's too subtle why the fact that

20:38your product is localized in Portuguese

20:41magically means you can win these deals

20:44or I'm making up something that doesn't

20:45quite make sense but so you need two

20:47reps that are hidden quota and then you

20:49hire VP sales if you hire it before then

20:51you're you're you're doing a hell

20:53Mary it ain't going to work it never

20:56ever never ever ever never ever Works

20:58you're asking them to find product

20:59Market fit to be the first rep to be the

21:02second rep and scale it all at the same

21:04time it's mission impossible to do all

21:06four at the same time right so that's

21:09the biggest mistake is I I Lenny I can't

21:12get sales going at my company I can't do

21:13it but I raised $4 million in my seed

21:16plus round I'm going to go out out and

21:17hire the VPS sales that vpa sales will

21:18not be there in eight months and you

21:20know what else two million of the four

21:21will be gone because they'll never

21:23understand the product they will never

21:25understand and if there was one thing

21:27that there's so things we could talk

21:28about but if there's one thing I could

21:30reinforce for this audience it's that

21:32you know that early sales team they've

21:34got to be product gurus for your product

21:36audience they've got to be product

21:37experts and later as you scale they

21:39can't be or you can't

21:40scale you know when I started when I

21:43came out of my own startup and started

21:44interviewing other folks I remember I

21:45would interview a lot of folks at places

21:47like GitHub back in the day I'd be like

21:49are do you have a technical background

21:51like are you an engineer have you ever

21:52built any software they're like no I

21:54don't I don't know I don't know and I

21:56like I I was curious how you could do it

21:57but GitHub was so well established that

22:00it's 10 questions it's 10 questions and

22:02grab a sales engineer it's 10 questions

22:04and grab so you got to be really good at

22:0510 then you grab a sales you grab that

22:07doesn't work in the real estate startups

22:08so you got to find these sales folks

22:10that are a bit of products of ons and

22:13dropping a VP a sales in that isn't a

22:15product seant which is a big issue

22:17that's all Mis or misprocessed this is

22:19the issue they're all Mis or

22:22mispress okay so the second point I

22:25wanted to make and I was on the fence

22:27for years of when you hire a VP sales do

22:29they need to carry a bag do they need to

22:31sell themselves or not does it matter

22:34does it and I wasn't sure for a long

22:36time and the reason I wasn't sure for a

22:37long time it's not that you don't want a

22:39VP of sales carrying a bag and I do

22:40think a VP of Engineering also should

22:42commit code we can talk car a bag

22:44meaning uh close sales themselves yeah

22:46not just be a boss not just be a boss

22:48yeah have a and the reason I was on the

22:50fence was because I was like well listen

22:52in theory it's great but let's say

22:54you're a hot startup and you want to go

22:55from two to six this year okay so I want

22:58to add 4 million in new bookings and

23:00let's say I'm I can do 400k in um quota

23:03per rep that means I got to have 10 reps

23:06she walks in with two I I got I'm at a

23:09race aren't I I gotta hire eight in the

23:10next six months to hit my plan and I got

23:12to put numbers on the board if I'm GNA

23:14out there as an individual contributor

23:16sales rep I'm never going to hire eight

23:17people am I it's never going to happen

23:20so I used to say I don't know if it

23:21matters but what I've learned the last

23:2318 to 20 months when everyone has gotten

23:25lazy Lenny everyone in Tech has gotten

23:27lazy

23:28is I see way too many VPS to sales that

23:31come in and never have any idea how to

23:33sell the product never never they only

23:37want to be managers now whether they

23:39carry a bag or whether what they do is

23:40they join calls with the Reps right they

23:42back whether they back fill the Reps you

23:44want your VP of sales in deals 20 30

23:47hours a week when they start and I see

23:49VPS of sales today start they're in no

23:50deals I'll go to a board meeting and uh

23:54BPS Sal will be there two three months

23:55and they'll have a logo on the word I'm

23:56like how's it how's it going with it

23:57there BNB and they'll be like I don't

23:59know I got to ask John doesn't know

24:02because isn't isn't even in the

24:04deal isn't even in the deal so I see

24:06this too often another company I'm on

24:09the board on I I really like this VP of

24:11sales a lot he joined and six months in

24:14you know sales were down from where the

24:16new bookings were down from where they

24:17were six months before and as he he was

24:20honest he like the biggest problem is I

24:22feel like I didn't have time to learn

24:23this product it's a complicated product

24:24it's more complicated than the product I

24:26last sold and I just didn't have time

24:29Jason this conversation is going exactly

24:31how I'd hoped there's so much actionable

24:33advice here let me try to summarize a

24:35little bit of the things you've said and

24:37then keep going so let me know what I'm

24:38missing here I'm going to try to just

24:39highlight some of the important things

24:41you mentioned so in terms of when it

24:42makes sense to start hiring your first

24:44salesperson couple things you shared is

24:47you've closed the first 10 customers on

24:48your own as Founders and if you're

24:51spending more than 20% of your time on

24:53sales and you need to start creating

24:55more leverage uh I'll throw in one

24:57another thing I've heard and just to

24:59tell me if this is also true that

25:00there's kind of a repeatable process if

25:01you created like you can sell

25:03consistently enough or you can tell

25:05someone here's how I've been selling is

25:06that is that right yeah if you hire a

25:09vpa sales before then is approaching

25:11100% chance of failure I see so you can

25:14hire the first two reps before you're

25:16like here's a pretty good process that

25:17has worked for me a number of times yeah

25:19I mean listen it's hard as hard as it is

25:21for a lot of Founders to even get their

25:24arms around the reason is is you've got

25:26to be that crummy first head of sales

25:27them you've got to manage those reps

25:29you've got to be in the field with them

25:30you've got to be figuring it out before

25:32you can hire the person you just have to

25:34even if you're terrible at it because

25:36you're still going to be a good

25:38Midler you're still gonna be a good

25:40Midler okay a few more things that stood

25:42out to me one is hire two sales reps

25:44immediately not just one these reps you

25:47need to interview about 30 people eight

25:50will be like pretty good 20 will be

25:51terrible two are going to be these are

25:53people you can see selling your product

25:55and you would buy from them and they're

25:57often very quirky uh and not maybe a

26:00traditional sales background they've

26:02never been VPS of sales essentially

26:04they're more like a and things like that

26:06historically or maybe not even

26:07salespeople historically is that is that

26:09right I think you will regret it if you

26:12don't hire these first couple sales reps

26:15that have a couple years of experience

26:17if you're in B2B with B2B sales they

26:19need a couple of years of experience and

26:21they need a certain amount of maturity

26:23and maturity is a real issue in these in

26:25any early hire because we just have time

26:28to babysit people there's no onboarding

26:29there's no training so they need a

26:30couple years of experience ideally

26:33something close to your deal size we

26:34could chat about why that would be nice

26:36and enough maturity that you can trust

26:39them with that lead you can trust them

26:41with your customer right okay and then

26:43you hire a vpf sales once you're ready

26:45to go from three to 300 reps your advice

26:49is also give the vpf sales a bag SL aota

26:52SL they need to be doing sales

26:54themselves in today's world at least at

26:56least for a little while and and more

26:58importantly I if they don't want to I

27:01think to in today's world you got to run

27:03from them exactly whether they fully

27:05carry a quota a half quota whether they

27:08back fi the sales team you want a

27:10salesperson and here's the thing Lenny

27:12you want a s this is going to sound

27:14silly but it's not this trust me on this

27:16for anyone watching listening you want a

27:19head of sales that actually wants to do

27:21sales and I gotta tell you and I'm still

27:24struggling with this myself after the

27:26last three years or so

27:28so many folks in all functions we could

27:30talk about other functions too okay but

27:32especially in sales don't want to do

27:34sales

27:35anymore they don't want to do it they

27:38don't want to do it 2021 was crazy

27:40because everything was too too crazy

27:42there's too much money too much going on

27:442022 was the knife falling that was

27:46crazy too 2023 was just hard okay and

27:50whether it's burnout or whatever out or

27:53just too much of a too much change I

27:56would say I've probably interviewed for

27:58different reasons 50 VPS of sales in the

28:00last 12 months I would say the majority

28:02don't want to do sales it's my first

28:04screening question and that's why they

28:07got to carry a bag because it proves

28:09they actually still care about the crap

28:12and the best sales folks love sales it's

28:14a craft they love money yes they love

28:16money and that does matter do not hire a

28:19sales rep that doesn't like money trust

28:21me on this one that there's zero% chance

28:23they'll work out either but they also

28:25like the craft they like honing the

28:27script they like beating the competition

28:29they like figuring out the counter fud

28:31they like figuring out the weapon and

28:32the 10x feature they like working on a

28:34team they like hunting they love it but

28:36then sometimes I just think burnout is

28:39is always a reality but I just think

28:41that the last three years have been so

28:43yo-yoed that folks are just they're

28:46out they're out and don't hire them no

28:49matter how smart they are and that's the

28:51test that I I'll tell you I talked with

28:53a really great vpa sales candidate that

28:55had worked with a top 10 tech company

28:58and I asked him what he wanted to do in

29:00this next role and he's like yeah I got

29:02a great team I've got eight eight people

29:03that I can bring with me we're ready to

29:05Lock and Load I'm like okay well let me

29:07tell you one of my views in today's

29:09world is that you've got to actually

29:10visit more customers now not less in a

29:12distributed world that's more important

29:14to visit

29:15customers and he lived in the East Bay

29:17in Pleasanton in the East Bay which is a

29:19maybe 20 minutes uh east of Oakland he

29:22said I'm willing to visit customers but

29:24I won't go as far as the peninsula in

29:25San

29:26Francisco

29:29he's just happy at home he's happy at

29:31home Lenny and he don't want to sell and

29:34this guy has the best linkon and the

29:35best references but you don't want to

29:37sell anymore he needs a job he wants to

29:38be a VP sales and I see this across the

29:41industry and I'm struggling to find

29:43answers and I think the biggest hiring

29:46we tal we talked about a lot of tactical

29:47hiring mistakes that you can make today

29:49in sales the biggest strategic mistake

29:51you can make today in sales because

29:52there's so many veterans there's so many

29:54folks that worked at T and and

29:56wherever pick any great company you want

29:58right there's so many veterans out there

30:00you just can't hire the ones that don't

30:02actually want to sell anymore and

30:03there's too many there's too many you

30:06mentioned that you actually just asked

30:07them in the interview the first question

30:08is do you actually want to sell what

30:10other questions do you ask for either

30:13let's go through both you said you have

30:14these questions that you ask uh for the

30:17early hires and then the VPS sales what

30:18are some tips for people when they're

30:20interviewing these folks it's

30:21interesting vpa sales and vpa product I

30:23look for the same answer one of the

30:25Columbo style questions I ask him I mean

30:28I mean this is so it's it's barely even

30:29count as the question is what do you

30:31what do you want to do your first 30

30:32days what do you want to do actually I

30:34usually ask what do you want to do your

30:35first two

30:36weeks and in B2B if I don't hear from

30:39the VP sales or the VP product that I'm

30:40going to go meet customers out I'm out

30:44there's too many VPS of product too

30:46Lenny that don't want to meet customers

30:47anymore either the majority of VPS of

30:50products that I interview they don't

30:52they don't say meet customers every

30:54single great vpa product Chief product

30:56officer I've ever worked with in my

30:58entire career you know what the first

30:59thing they do in the first two weeks

31:00they like leave me alone I'm going to go

31:02talk to 20 customers leave me alone

31:04leave me alone I'm going to go talk they

31:06don't want to sit out on meetings and

31:08look at prds and talk out of their Naval

31:11on endless internal meetings all the

31:13best ones they say they just leave they

31:15literally say some leave me alone I will

31:17see you in two weeks I'm GNA go meet

31:19with 20 classs and that's what product

31:21should do sales whether it's prospects

31:23or existing customers it can vary right

31:25but they should be like I'm my first I

31:27want to join five

31:28calls and when you hear that story of I

31:31don't want to travel out of Pleasanton

31:33or they say I here's what you're going

31:34to hear from the wrong person for

31:36anything even up to 50 million in

31:38Revenue I'm going to spend that first

31:39month working on

31:41process I'm going to spend that first

31:43month getting getting Salesforce up and

31:46running I'm gon to send the first month

31:48on territory planning L because we

31:50really with our three reps I really want

31:52to make sure we've nailed territories

31:54right ly will do the South will do the

31:57East Jason will do the West when you

31:59hear process process process from any

32:02from marketing product sales customer

32:04success too boy it's the death of

32:06customer success it's just people and

32:08it's not that you don't need process

32:10it's it's just it's even worse than it

32:11was than a few years ago because it and

32:13I know this is going to trigger some

32:14people but the truth is they don't want

32:16to

32:17work they don't want to work they don't

32:20want to work I literally just got this

32:22this LinkedIn in email to work with me

32:24at saster from this from this person who

32:27reading this saster for eight years

32:28you're like I want to run account

32:29management customer success for you

32:30here's what's you're doing wrong here's

32:32how to do it I'm like oh this is this is

32:33pretty good right and I and I and I dm'

32:36her back I'm like great to be honest you

32:38realize though you're actually going to

32:39have to talk to customers and sponsors

32:41yourself in the beginning no

32:43response just out just out and that was

32:46the best one I got the last 30 days that

32:47was the best inbound that I personally

32:49got so I know it sounds triggering or

32:52critical but as Founders we have to be

32:53honest that there's this vast pool of of

32:57veterans with great LinkedIn and great

32:59resumés that are so burnt out Lenny and

33:02let's not blame them I know it sounds

33:03like I'm blaming them or being negative

33:05and and I'm trying to not be negative I

33:07I'm empathetic I am empathetic to the

33:09burnout but don't H you can't hire these

33:12there's too many the the industry is

33:14littered with the burnt out they're

33:16littered with it and if you hear a touch

33:17of cynicism if you hear anger if you

33:20hear I don't want to meet customers and

33:22any and I'm going to say any VP role

33:24product sales marketing customer say if

33:26they don't want to meet customers their

33:27first for let's make it a 14-day test

33:29you know they're never going to want to

33:31be

33:32customers these folks that don't want to

33:34do sales that are VPS of sales I imagine

33:38when you're further along that's more

33:39okay because you don't need them to be

33:40doing sales right they want to manage

33:43optimize no I see you shaking your head

33:46I mean okay you think okay there's an

33:47element let's call it north of 50 or 100

33:50million where for what's sometimes

33:53called commercial sales SNB sales it's

33:55it really is all process

33:57okay so for sure I agree but you know at

34:01Salesforce they're trying to close

34:03hundred million plus deals you think

34:05that this the sales leadership doesn't

34:07need to be in those

34:08deals you think they can just hit

34:10Refresh on the dashboards and track them

34:13from home no Mark benof today is still

34:16flying to meet customers he said the

34:17other day you know why does Mark benof

34:19go to Davos right he sits and I've never

34:22been a Davos he sits at the same place

34:24at the top of some staircase okay and

34:26Salesforce drops milli of dollars and he

34:28waits to meet customers prospects and

34:29partners in person all day because it's

34:31efficient because it's efficient because

34:33he can do 50 or 100 customer or Prospect

34:35meetings a day at Davos he's still doing

34:38it at 30 something Mill billion in

34:40Revenue right so this idea that is there

34:44some truth at at at like for example

34:46when I worked at Adobe back in the day

34:49there it is true that adobe which was

34:51you know the parts of the business you

34:54know sales literally was not dashboards

34:57like I get it okay at 4 billion 10

34:59billion in Revenue but most of your

35:01audience is not ready to hire at 4

35:03billion or 10 billion in Revenue they're

35:04not ready to hire that person um don't

35:06hire them right I don't know maybe SAA

35:09is listening you never know I think and

35:11I think I but I I think on the sales

35:13side of the business um they're they're

35:15flying out to the big deals to close the

35:17loop on this thread uh when you're

35:20interviewing the early sales reps those

35:22first two cor key folks what are some

35:24questions and ways to know if there may

35:26be a good you mentioned one of like you

35:28feel like you would buy from them okay

35:30the one the really the simplest one and

35:33and early in my career I thought this

35:35was silly or hated it this Glen Gary

35:37Glen Ross I don't know if it's Glen Gary

35:38Glen Ross with that that that toxic um

35:40Leo movie about sales which is still

35:42entertaining but what yeah one way

35:45another Lenny it's got to be sell me

35:46this pen but it's not sell me this pen

35:48it's sell me this

35:50app so I don't like surprises I don't

35:53like games I like to do this in a second

35:55interview or whatever give them time

35:56time and I don't like to judge too

35:58harshly but it whether it's the first

36:00interview or the second they got to sell

36:01you this pen they've got to put in the

36:0430 minutes of work and maybe it's two

36:06hours but here's the thing today's world

36:09you can go on YouTube or someone's

36:11website there's an explainer video for

36:13every product under the sun isn't there

36:15I am shocked how many salespeople I have

36:18met Lenny from SDR to SCB of sales that

36:22by the time and I I'm doing an interview

36:23for like a portfolio company this isn't

36:25a screener interview they haven't even

36:26watched watched an explainer video yet I

36:28could be the fifth or eighth interview

36:30and they don't know how the product

36:31works they have not even gone to the

36:34effort of searching YouTube or the

36:36homepage and watching it and forget

36:38about explainer video is enough but so

36:40many companies do webinars now and they

36:42publish them on the like really good

36:43stuff customer testimonials right if

36:45you're a sales rep you don't actually

36:47have to know how the web hooks work or

36:49how to provision an API key but you need

36:51to know the product as well as that

36:53webinar that's on

36:55YouTube and 98 out of 100 folks won't

36:59bother an interview they won't bother

37:01they're just going to click on apply on

37:02the on the ATS and tell you hey I

37:05recently stumbled upon whatever it looks

37:07like you have time to discuss right but

37:10that one that actually does enough work

37:12and watches the video and then can sell

37:14it to you and they're going to make

37:14mistakes they're not going to get it

37:16right but they have enough confidence

37:19with the core problem to be solv because

37:22here's the mistake that 99% of Founders

37:24and sales reps make we're not selling in

37:28B2B we're solving

37:31problems and this is why so many people

37:33are struggling in 2024 because they

37:35can't Sol their products they as sales

37:37reps as companies they can't solve big

37:39problems anymore our job as sales reps

37:42in SAS is to not sell a used car okay we

37:45are selling a Tesla Model 3 Performance

37:47it has competition I might not need it

37:50this week okay but it's pretty darn good

37:53okay and I'm going to help you

37:54understand Lenny because you're in the

37:55market for the car why this is the best

37:57one I'm going to be honest about where

37:58it's not I'm G to answer all your

38:00questions I'm such an expert and then

38:02I'm ask you Lenny when when is that that

38:04how you have 280,000 miles on the Civic

38:07what let me help you get you into that

38:09model 3 Performance today and I've even

38:11got a special discount for the end of

38:12this month and let me just help you and

38:14I've spent four calls answering all your

38:16questions and I've explained to you all

38:18the things and why the super charging

38:20network is better than the regular one

38:22that doesn't really work at the charger

38:24near your house and I've gone on Google

38:25and I've seen there's no charg Network

38:27near your house there's only

38:28supercharges I I kind of got you don't I

38:31and that's the job of sassin sales

38:33because we're not selling

38:35commodities we're not and that's why the

38:37best reps will also tell reps when not

38:39to buy their product as as painful as

38:41that seems in tougher times in 2024 the

38:44best reps say no you know we're not

38:45there yet we're not the right if you

38:47need this feature if you need this

38:49integration I want you back in six

38:51months when you use this big product

38:53that isn't that great but today we're

38:55not the right solution for for you

38:56that's the best ones do that they have

38:58the confidence to know to close it and

39:00the rest of the world thinks this is

39:02like some sort of adversarial

39:04transactional thing and it's

39:06not right software I I think hopefully

39:09all your audience would agree when it's

39:11done right software is magical it solves

39:14incredible problems incredible problems

39:17what Airbnb does what Uber does what

39:20sasive things Sol I can track my

39:22customers I can manage I can automate my

39:24communications it's magical you

39:26shouldn't have to use Boiler Room

39:28tactics and use card tactics when you

39:31have something but it doesn't sell

39:32itself except for a little while in 20

39:34late 2020 early

39:362021 that screwed the whole world up

39:38when products actually sold

39:40themselves I feel like this is a

39:43separate podcast we should do of just

39:44how to get better at sales and how to

39:46sell but uh I feel like that's its own

39:48hour of conversation I did a great

39:51episode with April Dunford where I don't

39:52know if you follow her stuff but she

39:54essentially describes exactly your

39:56approach of help people understand the

39:58market like help them understand the

40:00entire landscape and then talk about

40:02your problem so anyway we'll link to

40:03that episode has a lot of good advice

40:04there in terms of this interview selling

40:07me a pen approach to give people

40:10something very concrete to do like how

40:11do you actually set this up is it like

40:13sell me your product and then they put

40:15together a pitch for your team and like

40:17they pitch you on the product I'll tell

40:19you until like the boom until everyone

40:22in late 2020 got so desperate to hire

40:24anyone with a pulse almost everyone in

40:27sales had to come and they had during an

40:29interview process they actually had to

40:30do the pitch they would come and you

40:32used to do it in person with this screen

40:34you can do it on Zoom now it really

40:36doesn't matter but do it for real do it

40:38for real and everyone would

40:40see and everyone in recruiting changed

40:45people stopped doing reference checks

40:47they stopped doing these tests and they

40:48would just hire Warm Bodies late 2020 I

40:52can tell you a funny story in a second

40:53and it was okay until it wasn't and our

40:56our our hiring processes have not

40:58reverted back to pre-march 2020 and I

41:01think it's failing Founders left and

41:03right feeling I can't tell you I would

41:06say 95% of the hiring I see out there

41:08people don't do reference checks anymore

41:09Lenny and we can talk about when they

41:11work and when they don't but no one does

41:14them no one does them no how you're

41:17going to invest so much and forget about

41:18the the the salary it doesn't really

41:20matter so much time your your your time

41:23your leads your everything's so precious

41:25to bring Jason into your company and

41:27you're going to go through all this

41:28recruiting process and you're not even

41:29to do any reference

41:31checks people don't even do reference

41:33checks and they don't they stopped doing

41:35do me this demo because they were so

41:36worried that rep would go to Gusto would

41:39go to deal or would go to remote there

41:40was no time I got to get like this SDR

41:42has 50 offers Lenny we got to hire this

41:45SDR with three weeks of experience we've

41:47got to decide today and that's the way

41:48and hiring does not come back and you

41:50just those if those highers bounce not

41:53only is it bad for you but it it's a

41:56service to the to the it's worse for the

41:58higher I mean that cloud that poor

42:00cloudflare woman that blew up right with

42:02the with the thing like there's so many

42:04issues there we could dig into but um it

42:08it's all Cloud Flair's fault for hiring

42:10her okay let's forget about that she

42:12didn't close a single deal okay so

42:14objectively in sales should you retain

42:16your job if you in sales if you can't

42:18close a single deal like I don't want to

42:19get into some of the triggering things

42:20but remember if you hire someone and

42:22they fail it's all your fault she didn't

42:24know what she was getting herself into

42:26you're no candidates can do enough

42:28diligence ever there's not enough time

42:30there isn't enough time and and this is

42:32true all the way to the top right and so

42:35when as an investor a board member it's

42:37funny when I do interviews I do this

42:39thing at the I try to be the last

42:41interview sometimes and the founders

42:42don't want me to do it they want me to

42:43to to sell right I want to be the last

42:46one and what I want to do is when Lenny

42:47you've decided to join Ellen at her

42:49startup right at the end I said look

42:50lady you got I've talked to Ellen she

42:52loves you you have the job you've got

42:54the job what I don't you do Lenny is

42:56bouncing three months after so let's

42:58slow down let's talk about the questions

43:01you have on your mind and let's have a a

43:05safe space where we can make sure you're

43:07going to be happy and successful there

43:09right and sometimes even the founders

43:11get mad at me for doing this because

43:12sometimes the candidate

43:13bails but I'm like I know you're mad at

43:16me today but this is the you know you it

43:19is your fault 100% your fault if any of

43:22your hires fail don't blame them and I

43:24I'm guilty of this I get upset when when

43:26people start and they don't give it

43:27their all right or they don't do it or

43:30you know um I mean uh you know what If

43:33you hired someone for your podcast and

43:34they decided you know I don't want to do

43:35the podcast the podcast this week I'm

43:37I'm tired I'll do it next you're so mad

43:40at them but you you should have seen it

43:42during the hiring process right so tying

43:46it back that's why you've got to do the

43:47S me this pen you've got to before you H

43:49hire the salesperson have them sell your

43:51product for do the demo and if they need

43:55more time give them more time let them

43:57watch another demo don't don't don't

43:59have them feel like it's a trap or spook

44:00them treat them the way you would like

44:01to be treated but if you skip this step

44:04I mean you know it's it's it's what's

44:06the point you're not helping them what I

44:09love about this process is it connects

44:10exactly to what you recommended you look

44:12for in these hires is would I buy my

44:14product from these people so this makes

44:16a lot of sense and you give them this

44:18assignment at home and they do work on

44:19this and they come in right it's not

44:20like come to the office if you talk to a

44:23great transactional VP sales that's

44:24hiring tons of reps to do it like

44:26they'll make them they'll make them do

44:27if they're still if they're still doing

44:28this they'll make them do sell the pen

44:30fast in the process they don't have time

44:31they're doing 20 interviews a week 30

44:32interviews a week you got to sell me

44:34this pen but if you're a founder and you

44:36and I'm talking about you've already

44:37talked to a bunch of candidates you're

44:38down to one or two make them tell them

44:41look this isn't a trick I'm not that

44:43great at selling my product you're

44:44myself right but we I got to know that

44:46you're going to be happy and successful

44:47here so do a demo for me and if they

44:49won't do it they're not a

44:50salesperson they're not and too many

44:52people went into sales not the other

44:54weird thing about speed to be sales in

44:56Good Times is actually a lot of these

44:59folks are not really what what you might

45:00think of sales people they can't do out

45:02pound they can't pick up the phone all

45:05they know how to do is to manage leads

45:07that come in and say I want to buy today

45:09and you need those people too okay and

45:10all I'm not saying you don't need those

45:11people too but that's not always what we

45:14think of as sales another black box for

45:17me and I think a lot of people with

45:18sales is comp and quota had actually set

45:22up their comp for your early hires and

45:23then had actually decide on quota what

45:26advice do you have for figuring that out

45:27early on like what percentage is

45:28commission what percentage is salary all

45:30that stuff yeah everyone gets this

45:32wrong um we worry look at at scale when

45:37you're extremely mature extremely mature

45:39and very profitable you really got to

45:41tweak this stuff very carefully okay we

45:43could talk about that if that's relevant

45:45but in the beginning we get this all

45:47wrong what matters is can a sales rep

45:50close more than they than they take

45:53home in the very beginning that's all

45:55that matters it's just you selling right

45:58the first three months of a new rep

46:01you're you're lucky if they can close as

46:03much as their Pome pay is their OT okay

46:06and so in the really early days my early

46:09early day comp plan is look your first

46:10three months you you keep 100% of what

46:13you close that of course that's not

46:14profitable for the business but you got

46:15to invest in them right you keep a 100%

46:17of what you close and if if you have

46:20enough going on your business usually

46:21that's enough to put to put supper on

46:23the on the stove and that's without a

46:25salary no no you pick an OT a salary but

46:28you gotta okay let's step back for a

46:30minute you got to pay

46:34Market you got to pay market and this in

46:38the early days if you're bootstrapped or

46:40really this stresses folks out like I I

46:42just talked to this great rep blendy but

46:44but he wants 150k OT right and in fact

46:47it's a step down he had 170k at slack

46:49but he knows this isn't a startup he

46:51wants 100 he might take 140 okay is

46:53total comp overall total comp and the

46:55founder panics I don't have a i me I'm

46:57only making 60 how can I pay 140 well

47:01let's break it down for a minute first

47:03of all let's be tactical it's usually

47:0750/50 right 50% base 50% bonus for a

47:09sales rep so they're really only taking

47:11home a 70k base trying to make another

47:1470 okay and then 70 divided by 12 help

47:17me do my math um it's not quite 6K a

47:20month well maybe with taxes it is you're

47:22really only paying 6K a month for a

47:23couple months to see if this exper works

47:26out you're investing 20,000 you don't

47:27have $20,000 to do sales then don't do

47:30sales if you can't find $20,000 so

47:33people freak out too much about this

47:34Topline number this this this base and

47:37bonus the On Target earnings o and

47:39they're not more practical about what am

47:41I committing to cash upfront two you

47:45need a plan where it's a win-win so if

47:47you this person makes 140 but ultim

47:50ultimately a sales rep's got to bring in

47:52four to five times what they take home

47:54okay so that 140 got to

47:56be 500 600 or more the more Enterprise

48:00you are the bigger the multiple has to

48:02be and the and the higher the comp but

48:04it's got to be three to 5x at a minimum

48:06three 3x for small businesses 4X for

48:08mid-market 5x you got to get there but

48:11you don't have to be there in day one

48:12and two when you get there the rep

48:13should be a creative shouldn't they be

48:16if they make 150 and they bring in 450

48:19unless your marketing costs are out of

48:21control which can happen but that's not

48:23sales fault is it if your marketing

48:25costs are reasonable and you pay a sales

48:27rep up 150 for closing 450 if you

48:29engineer your plan right you should be

48:32smiling not frowning where it gets tough

48:35is when you have a ton of folks not

48:37closing when you have a lot when you

48:39have a ton of folks not closing and you

48:40have extremely high marketing costs then

48:42it all breaks your CAC breaks your your

48:45payback period breaks but if you have

48:47inbound leads if you have demand and you

48:50have sales reps that can sell you this

48:52pen they're going to be a creative

48:54lending because of that math and don't

48:56take the pressure off don't make them

48:57close 5x they take on their first

48:59quarter make them close 1X let them put

49:02points on the board let them eat and so

49:04negotiating here's the point if you

49:06think about it negotiating someone down

49:07from a 150k ot to 130 it's not going to

49:10make any difference you want them to

49:12close 600 or 700 it's not going to

49:14matter at scale does it matter for

49:17maybe right maybe but you want what you

49:20care about is how much can they how how

49:21much more can they close than they bring

49:23in and then you that's why you want them

49:25to make a lot of money you want them to

49:26be rich you want them to take home a lot

49:30for a whole bunch of reasons and so

49:31don't freak out about the acronym OT

49:34what they take home figure out what it's

49:35really going to cost you and would you

49:37buy from them and if you would they're

49:38probably going to bring in more than

49:40they take home right and on the

49:42marketing side like in the other days

49:43you're lucky if you can find a marketing

49:45channel that is that ACC

49:48creative amazing okay so just to

49:51summarize you start a salesperson with

49:55say 7 75k in salary and then say 75k in

49:59expected sales and they take bonus bonus

50:02bonus bonus from sales yeah bonus from

50:04sales and the idea there is they take

50:06100% initially of their sales for the

50:08first month or two just to make it feel

50:11amazing they're making money y see how

50:13they're doing don't put a lot of

50:14pressure on them and then the plan is

50:17over time get it to a point where

50:19they're bringing into the business four

50:20to five times what they're taking home

50:22in terms of yeah do you I said every

50:26month or two we were going to or is it

50:27every quarter we're going to revisit

50:28your comp and quot it and

50:31adjust if you get it right you never

50:33have to revisit it not for years I mean

50:36I'm using the same sales comp plan I

50:37have for a lot of years it still works

50:40the listen you can make tweaks okay and

50:41you've got to listen and we're all human

50:43beings and people and again remember

50:44your sales team has to eat they've got

50:46to eat okay and you've got to be

50:48somewhat competitive but there's only so

50:50much you can tweak Lenny I mean they

50:52have to bring clothes more than they

50:53bring home right and so you can make

50:56tweaks at the margin the problem is if

50:57you make too many tweaks to this model

51:00you burn up all the cash you're you're

51:02you're trying to plug a leaky boat

51:03there's no point there's no point

51:06there's no point and remember related to

51:08this for a long time for most folks

51:11unless you're even if you're hyperf

51:13funded you're better off with fewer

51:15better reps than more reps there is a

51:18stage when you get big enough where this

51:20concept of capacity planning really does

51:22matter Lind if I got to go from 50 to

51:23100 this year okay I'm G add 50 million

51:26if each of my reps can do 500k I need

51:28100 don't I okay and literally if you

51:30have 20 you you mathematically cannot

51:33hit the plan so there's a certain Truth

51:34at scale in the early days it's this is

51:36a a rookie error like I'd much rather

51:39have two reps each closing to million

51:41right then 20 reps struggling to close

51:43100K each like culturally it's terrible

51:46that there's no domain knowledge in the

51:47company everyone's miserable everyone's

51:49fighting what you want to do in the

51:51early days is concentrate your leads in

51:53your best closers at the same time

51:55bringing new people up but you've got to

51:56concentrate your leads your best closers

51:58and that means year two year three year

52:00four they should be making a lot of

52:02money lot of money sometimes too much I

52:05remember the first investment I ever

52:06made was a company called pipe Drive

52:07which sold for a billion and a half um

52:10you know SNB CRM and I put in the first

52:12sales rep there he used to work for me

52:14and the founders got mad at him they got

52:17mad at him because in three months he

52:18was making more than any of the founders

52:20they they were pissed I'm like guys I

52:22know we're we're have different

52:24backgrounds and cultures but this is

52:26what you

52:27want but it took him a long time

52:29culturally as self- serve because pip

52:31Drive was 100% self- serve at the time

52:33they'd never had a sales drive and I put

52:34the guy in and what he did was he went

52:37he looked all these self- served

52:38customers he's like it was this was the

52:39company was at about two million Revenue

52:41at the time and he's like okay who's

52:42bought more than one seat he just did a

52:44reverse sort and he called them I

52:47remember he called AOL back in the day

52:50and he's like you guys have 20 seats of

52:51pipe drive would you like to buy more

52:53for your sales team they're like thank

52:54you very much we'll take 100

52:57SE and he just went down the list from

53:00the top to the bottom and he took home

53:02like 20% of those deals now that

53:04difference that extra 80 seats at AOL he

53:06brought it in so Kim keeping 20% of that

53:09is a great deal for the company right

53:11but he was pretty good at it and he was

53:12the only person for a while so he made

53:14hundreds and hundreds of thousands of

53:16dollars when the poor company the

53:17founders were paying themselves like

53:1950 so your advice there is don't be sad

53:21if your salesperson is making tons of

53:23money a good if you architect the simple

53:26sales F we talked about and they're

53:27making a lot of money you're making a

53:28lot of money and your Equity is worth a

53:30lot of money y your Equity is worth a

53:32lot of money right when do you make that

53:35switch from they're taking home 100% of

53:36what they're selling to smaller

53:39percentage look some people are gonna

53:41think it's goofy what I said about 100 I

53:42just view it as a simple ramp you could

53:44do I think you do it for one quarter Max

53:47one quarter the the problem is if you

53:49let this go for too long more than a

53:51quarter like if you make it too easy for

53:52long a quarter the problem is the

53:54mediocre ER lean into it too much and

53:57that doesn't help not only does it not

53:58help you it doesn't help them you don't

54:00want you don't want to make Mish hires

54:02they're so damn I mean you could have a

54:04whole podcast ly just on Mish hires like

54:06it's probably the single most important

54:07thing in scaling startups is not hires

54:09it's Mish hires but if if it it's a

54:12tragedy if you m hire rent but you don't

54:14want them there six months it's not good

54:15for them either you want to you want to

54:16support them you want to help them find

54:18a place where they're successful and

54:20here's the quirky thing on the Mish

54:22hires and this is why that first guy I

54:24hired was mid pack at that like it less

54:26than mid pack here's the thing about

54:27sales is you know someone can be very

54:30good in certain sales environments and

54:31completely fail in other ones completely

54:35fail it's probably more binary than any

54:38other function and so you got to find it

54:40before you hire them and but you also

54:42got to root it out fast because those

54:43leads are too precious and it doesn't

54:44mean they won't go on to another company

54:47and be wildly successful but you you

54:49could utterly fail and the one related

54:52point I'll give if I had to be if I had

54:54to throw one hint on this first any of

54:57these reps first 10 or V and VP sales

55:00one hint more more than anything else

55:02trust you gotta hire someone whose last

55:06product was harder to sell this is so

55:09important this is a recipe for utter

55:14disaster if you take someone in sales

55:17and their last product

55:20was easier to sell they will have none

55:22of the skills to sell your product but

55:24this is the M and I'll give you a St an

55:26example in a second if you hire someone

55:28from something that was just a smidge

55:30harder a smidge harder to sell and they

55:32come into your company it's like they're

55:34on Mars it's like weight has been

55:36released from their feet like they

55:38learned how to sell a harder product and

55:40get it

55:41done and then they come to you and the

55:43first example I had the first SDI hired

55:45was a guy named Sam blonde who went on

55:47to be um cero at brex and um and then uh

55:51now is a partner at Founders fund and we

55:53we worked together from the very

55:54beginning first SDR and he came before

55:57that he was an SDR at a company called

55:58intact which was bought for a billion

56:00which was online financials okay and

56:03back in the day no we know what the one

56:05thing people didn't want to put in their

56:06Cloud was their their financial

56:08statements okay it just wasn't trusted

56:10that there are some things you would

56:11trust to the cloud like a CRM but they'd

56:14be like these are my crown jewels I

56:15can't put these so he went from

56:17desperately trying to convince folks to

56:19do to move a business processing Cloud

56:20they had no interest and he came to us

56:22and it was hard but it wasn't that hard

56:24and he instantly was number one he went

56:26from SDR to sbae to midmarket AE to

56:29director of sales to to head of this

56:30whole sale because I mean there are many

56:32reasons he was great but he came to me

56:33and I said Sam why are you why are you

56:36crushing it when everyone else here is

56:37struggling he's like this is much easier

56:39than intact

56:42y so hire someone like that and don't

56:44make it no matter how much you like them

56:46the S me this pen thing will control for

56:48it a bit okay but when we give we give

56:51we give in the hiring process right we

56:52never get what we want be very very

56:54careful if the last product was easier

56:56to sell I love this advice what is a

56:58heuristic that the last product was

57:00harder to sell than yours what tells you

57:02that that's probably true be very

57:04careful if it was more

57:06technical very technical it's some folks

57:09can go from a from from a from a like a

57:11business process sale they can go from

57:13selling a gong or a sales offer an

57:15Outreach and they can go sell a

57:16complicated API to VPS of engineering or

57:18VP a product but most can't okay so more

57:22technical is a tough is a tough turistic

57:24more competitive uh is a positive what

57:27really works Lenny is if you hire

57:29someone from the number four in a space

57:31and they did

57:35well you take someone that number four

57:37in the space and then you're number two

57:39in the space you think number two is

57:40really hard because number one's

57:41crushing you but they at number four in

57:43a space where no one can tell the

57:45difference between these products that

57:47that's a great one right so more more a

57:49space that's more competitive um a space

57:51that is uh is a positive more technical

57:54um the other one related to technical on

57:56the pure B2B side is much more

57:58complicated business process okay I see

58:01folks fail in B2B when they've sold a a

58:05a yeah it's hard but they've sold a simp

58:08a simple business process they go

58:09something that's got a lot of

58:10Integrations a lot of complexity and a

58:13lot of business process change and and

58:15they just melt because it's too

58:16complicated they just they just melt

58:18right like there's a company I invested

58:20in it's it's doing over 20 million today

58:22and for some reason to simplify what

58:25they do which is pretty complicated they

58:26called it the gong for X okay the gong

58:29for x and it's great for V to get a VC

58:32meeting and and a few but it's not even

58:33on their homepage okay it doesn't really

58:35make sense and the co had me listen to

58:38this to this senior sales exec he hired

58:40and the only thing he could tell the

58:41prospect was that they were gong for

58:43x and the prospect had asking well how

58:46do this deep integration with with this

58:48business process flow and zenes works

58:50and how does this go over to Salesforce

58:51is like well we're gong for

58:53x that that $600,000 deal was

58:59lost right but maybe that works in some

59:01space right I mean um and gong's hard to

59:03sell today too don't get me wrong but

59:05but you see my point it's just that that

59:06Simplicity it's too it's too complicated

59:08right and I know it's not the perfect

59:10turistic other than this technical thing

59:12but the technical one man trust me right

59:15um the the too many B say B2B type reps

59:20melt in b2d they just they just melt

59:23they just selling to venge is a

59:25different it's the same beast but they

59:26don't suffer fools do they not the VP

59:29I'm clo they don't suffer fools I

59:31haven't heard this term beat a d before

59:33business to to the developers it stands

59:36for oh interesting I haven't heard that

59:38term before okay let me zoom out a bit

59:41and I want to move on to a different

59:42topic but before we do that so we've

59:43talked about kind of these early days of

59:45hiring your first two reps getting your

59:47vpf sales to help scale out the team to

59:50give people a sense of where this goes

59:51as the business scales what is the org

59:54Evolution look like you have these two

59:56reps doing sales on their own then you

59:58have a manager what does it look like

01:00:00over the next couple phases of the sales

01:00:02org look it to to simplify um there's

01:00:06rules of eight so in sales I'm actually

01:00:09not sure what the typic heuristic is in

01:00:11product because product teams are leaner

01:00:13at least I hope I like it when they're

01:00:14leaner but in sale the thing about sales

01:00:16is there's no um there's no efficiency

01:00:18like if you have a sales Leed motion

01:00:20half your company's going to be in sales

01:00:22at 10 millionaire half your compan is

01:00:23going to be in sales at 50 half company

01:00:25is going to be in sales at 100 it's it's

01:00:27one of the tough parts of the software

01:00:29model is that there's no um there's

01:00:30actually uh almost anti-e efficiencies

01:00:32and sales the the the public companies

01:00:35are actually less eff they have the

01:00:37higher CS in startups believe it or not

01:00:39um because they have so much Market

01:00:40penetration but so you're gonna need a

01:00:42lot of people and it's rules of eight

01:00:43eight sdrs outbound reps need one

01:00:46manager eight AES eight sales exx need a

01:00:49director above them and then when you

01:00:51really scale you know eight eight

01:00:53directors you don't really ever going to

01:00:54have eight directors but eight directors

01:00:55could have a VP or eight reports and so

01:00:58there's rules of eight if you want to

01:00:59build an organization on it it's all

01:01:01rules of eight for a while for sdrs

01:01:04thinking this was this High Velocity

01:01:06entry level position people pushed it to

01:01:0812 but I but the more folks I talk to

01:01:11today um the more I hear everyone's

01:01:13reverted to eight like I'd rather have

01:01:14fewer sdrs having better conversations

01:01:17and so it's just you can build your

01:01:18whole or with eights that is way too

01:01:21easy of an answer so the idea there is

01:01:24hire this vpf sales then you hire six

01:01:27more a uh sales reps AES so what happens

01:01:30next you hire another got to start

01:01:32hiring maner manager got it and then you

01:01:33scale eight more reps yeah and once you

01:01:35have eight AES scaled um you know you

01:01:38you you almost always are going to start

01:01:40a VP is going to already a good vp's

01:01:42already be hunting two directors two

01:01:44directors whether they're just split up

01:01:46normally whether they're East West is a

01:01:48classic way another way depend like you

01:01:50might have smaller and larger customers

01:01:52that's pretty standard right commercial

01:01:53and Enterprise but a good VP of sales

01:01:55once you have once she or he has eight

01:01:58reports will'll be bringing in two two

01:01:59directors or maybe two VPS if they're an

01:02:02SVP maybe there's a lot of title

01:02:03inflation today which doesn't bother me

01:02:05nearly as much as a lot of other things

01:02:06we've chatted about I don't care what

01:02:08your title is if you'll actually do

01:02:09sales or do work but but yeah you need

01:02:11to bring in managers at eight and folks

01:02:14that can't also a related point is a lot

01:02:17of Founders wor when will my I really

01:02:19love my my head of sales but she's a

01:02:22stretch like most of them should be

01:02:23stretches

01:02:25if you hire the seasoned one they're not

01:02:27going to work so for 95 out of a 100 of

01:02:29us our first head of sales should be a

01:02:30stretch VP of sales and what that means

01:02:32is usually they were a director before

01:02:34that or a senior director or sort of a

01:02:36VP okay but you should be cautious about

01:02:39hiring your first VP of sales for their

01:02:41first third VP of sales gig they're not

01:02:42willing to do the job anymore you need a

01:02:44stretch and it's it's worth it for their

01:02:46career growth it's worth it for their

01:02:47personal growth it's worth it for the

01:02:48equity right so you're going to hire a

01:02:50stretch that's a that's an important tip

01:02:52right there but then you're going to be

01:02:53a little worried how how well how far

01:02:54can Lenny go how far can because is you

01:02:57know I love wenny but he was a director

01:02:59for two years before this and this is

01:03:01his first rule and he did so good last

01:03:04year but I'm worried Lenny's gonna break

01:03:07right I'm worried Lenny's gonna break

01:03:09and related to this qu the simple answer

01:03:12is Lenny will break if if he can't

01:03:14Source those directors under him you can

01:03:17scale forever as a sales leader if you

01:03:19can hire better managers under you and

01:03:21that's true of any functional area but

01:03:23what you'll see in sales is you'll see

01:03:25your stretch VP sales drown when they

01:03:29never can hire better managers under

01:03:31them right they'll end up doing some

01:03:33weird internal promotions which you want

01:03:35you want to do internal promotions my

01:03:37rule is you want to promote 50% from

01:03:39within and and and higher 50% without

01:03:41for your managers but if you're if

01:03:43you're really the only people you can

01:03:44promote are just Junior people on their

01:03:47team and you can't find leaders you

01:03:48can't you can't scale right and so I do

01:03:50see this happen too frequently is a

01:03:53first- Time head of sales does it and

01:03:55then they're like here are my managers

01:03:57Lorraine and Jason but they really were

01:03:59just Reps for two years and they don't

01:04:01know how to do it so you have a whole

01:04:02bunch of people who don't know how to do

01:04:03it that's when the organization

01:04:05cracks imagine a place where you can

01:04:08find all your potential customers and

01:04:09get your message in front of them in a

01:04:11cost-efficient way if you're a B2B

01:04:13business that place exists and it's

01:04:16called LinkedIn LinkedIn ads allows you

01:04:19to build the right relationships Drive

01:04:21results and reach your customers in a

01:04:23respectful environment two of my

01:04:26portfolio companies webflow and census

01:04:28are LinkedIn success stories census had

01:04:30a 10x increase in Pipeline with a

01:04:32LinkedIn startup team for webflow after

01:04:34ramping up on LinkedIn in Q4 they had

01:04:37the highest marketing Source Revenue

01:04:38quarter to date with LinkedIn ads you'll

01:04:41have direct access to and can build

01:04:43relationships with decision makers

01:04:45including 950 million members 180

01:04:48million senior execs and over 10 million

01:04:51se- level Executives you'll be able to

01:04:53drive results with Target getting and

01:04:54measurement tools built specifically for

01:04:56B2B in Tech LinkedIn generated a 2 to 5x

01:04:59higher return on at spend than any other

01:05:01social media platforms audiences on

01:05:04LinkedIn have two times the buying power

01:05:05of the average web audience and you'll

01:05:07work with a partner who respects the B2B

01:05:09world you operate in make B2B marketing

01:05:12everything it can be and get $100 credit

01:05:15on your next campaign just go to

01:05:17linkedin.com /od Lenny to claim your

01:05:20credit that's linkedin.com slod Lenny

01:05:23turn terms and conditions apply there's

01:05:26these terms that we throw around account

01:05:28executive reps it might be helpful just

01:05:30to give people a sense of like what does

01:05:31this actually mean when someone's an

01:05:32account executive is that they're just

01:05:34sitting there calling and doing sales

01:05:36directly whatever the key terms are for

01:05:38like the roles or the title might be

01:05:40helpful to quickly summarize yeah I

01:05:41think the two ones that are probably

01:05:43less obvious for folks that are new are

01:05:45SDR sales development representative and

01:05:48a account executive great and SDR is

01:05:51generally although I wish it wasn't it

01:05:53is generally an entry-level position

01:05:55often fresh out of school generally paid

01:05:58on the order of 60 to 80k OT in SAS and

01:06:00us-based SAS and their job is to email

01:06:04for dollars dial for dollars and to and

01:06:07in many cases to screen to screen

01:06:09inbound leads it's entry level and their

01:06:12job is to pass on a lead to a sales

01:06:15executive an account executive an AE and

01:06:17so not all companies have sdrs it's it's

01:06:20a it's a longer topic but uh pretty much

01:06:23all the best teams have some type of SDR

01:06:26function now so that because we've

01:06:28learned we want to specialize we want

01:06:29openers opening and we want closers

01:06:31closing and so that's the rough idea of

01:06:33of sdrs are openers in some cases and

01:06:36account executives are the more seasoned

01:06:38folks closing and you know it varies a

01:06:42compensation from account Executives

01:06:44that are us-based could be anywhere from

01:06:45like 90k to 200k depending on that's B

01:06:48with Bas and bonus split at 5050

01:06:50depending on whether they're hunting

01:06:51tiny deals uh or big ones that's the way

01:06:53to account executive works and I think

01:06:56what doesn't happen today which made so

01:06:58those are the acronyms SDR a I think you

01:07:00can figure people can figure out VP

01:07:01sales that's Vice President of Sales I

01:07:03think a thing that's gone on in the

01:07:04industry that Founders expect now

01:07:07because there's so much discussion of it

01:07:08on LinkedIn and social media but I

01:07:10haven't found worked is that an account

01:07:12executive will magically be full stacked

01:07:14they will do outbound themselves they

01:07:16will develop they'll go use zoom info

01:07:18and Apollo and develop a list themselves

01:07:21they will manage that outbound list

01:07:23themselves if if they don't have enough

01:07:24inbound or enough in their free time you

01:07:26know what they'll do anyting in their

01:07:27free time they'll just do more outbound

01:07:30it doesn't you know what sales reps do

01:07:31in their free time today they sell real

01:07:33estate or courses okay there is no if

01:07:36you want a tip for Founders I know you

01:07:38want this full stack AE and and they do

01:07:40exist when they're micromanaged in

01:07:42certain high performance sales

01:07:43organizations but they don't exist in in

01:07:46real life right they're specialized so

01:07:48most AES say want to be closers they

01:07:49want to be handed a lead I contact me a

01:07:51lead they want to work the lead and

01:07:53close the lead and and you you hire some

01:07:54sdrs to help generate more

01:07:56demand and so those are the those are

01:07:58the those are the basic acronyms um what

01:08:01what's hard for most Founders most

01:08:04here's the tough part most

01:08:06Founders have enough stamina to manage a

01:08:09couple these AES these count Executives

01:08:10these folks who work the leads most

01:08:12Founders do not have the stamina to

01:08:14manage 10 kids fresh out of college that

01:08:17need to be micromanaged on an hourly

01:08:19basis to call leads so very very few

01:08:22Founders themselves can manage a team of

01:08:25SCS but if you can it's like a

01:08:27superpower that was really helpful I did

01:08:29not know what exactly these terms

01:08:31represented and when you're hiring those

01:08:33first two reps they should be the count

01:08:35executive level yes yeah and they'll do

01:08:38some outbound and they'll do some of

01:08:39this SDR work it's just ultimately

01:08:41people end up specializing what is the

01:08:43title for someone above the account

01:08:44executive as a director of sales yeah

01:08:47there's really no you know it's it's a

01:08:49metat topic I I wish there were another

01:08:52career path for these I's mhm okay this

01:08:54does exist in product it does exist in

01:08:56engineering okay it should exist in

01:08:59sales but the truth is it does there is

01:09:01no senior SDR and for for this outb and

01:09:05for this AE this this person closing yes

01:09:07you can go more Enterprise and make more

01:09:09money but there isn't really a senior AE

01:09:11track but there should be it's

01:09:13unfortunate it should be uh too many of

01:09:15these folks are looking for they they

01:09:17look to go into management for promotion

01:09:19when what they really should look for is

01:09:21to be a super IC and it's a shame that

01:09:24that more folks don't try to implement a

01:09:25super IC role in sales but that's

01:09:27basically it the career path is to in

01:09:29management right and that's why another

01:09:32tip another mistake that Founders often

01:09:34make is they hire the number one account

01:09:37executive at a hot company to be their

01:09:39head of sales it's not the same

01:09:41skills most sales Executives should not

01:09:45be managers they don't want to be

01:09:46managers they want to be individual they

01:09:48want to be highly paid individual

01:09:49contributors these days that mostly work

01:09:51from home and make a lot of money

01:09:53working 30 hours a

01:09:55week that's not does not lead that does

01:09:57not naturally breed Great management

01:10:01skills I want to shift directions a

01:10:03little bit and talk about product and

01:10:04sales a lot of listeners of this podcast

01:10:06or product managers or Founders Building

01:10:09Products how involved should product

01:10:12managers be in sales and vice versa how

01:10:15involved should sales be in the road map

01:10:17and what's being built I think in the

01:10:22bestr Run B2B organiz ganizations that

01:10:24I've worked with in my own as well the

01:10:28great at least the head of product the

01:10:30VP of products are deeply involved in

01:10:33sales deeply involved in sales deeply

01:10:36involved in sales um I a company I

01:10:39invested in that's just crossing 60

01:10:40million they just had a meeting with who

01:10:43will be their largest customer okay and

01:10:46the head of product was there is that

01:10:47the Boardman is like thank God I was

01:10:48there because what they want to do with

01:10:50our product we sorted

01:10:52to

01:10:54we sorted that the product does do it

01:10:56but what they want to basically do is

01:10:57deconstruct the product okay they don't

01:10:59actually want to use the back end and

01:11:01analytics and some other pieces but they

01:11:03don't really need the front end of the

01:11:04product if the head of product hadn't

01:11:06been there that deal would have been

01:11:08lost would have been lost an AE doesn't

01:11:11know that even if an AE did know that a

01:11:13sales rep did know that even if the VPS

01:11:15sales didn't know a VPS sales would not

01:11:17be empowered enough to stand up in a

01:11:19meeting and say I know what you want we

01:11:21we can launch tomorrow on this and in 90

01:11:24days we'll we'll tweak the UI so it does

01:11:26exactly what you want you want that in

01:11:28your big deals if you have that that

01:11:30that magical VP a product that truly

01:11:33owns the road map owns it and has the

01:11:35gravitas for that meeting they become

01:11:37like the mini CEO in these meetings a

01:11:39lot of cosos at scale I've talked to I

01:11:41was just talking with uh Daniel cha at

01:11:42Greenhouse he does this they're over 200

01:11:44million when they have that head of

01:11:46product they they divide and conquer

01:11:47with the big customers and the co can do

01:11:49some right and the VP of product can do

01:11:52others and sometimes the VP event if

01:11:53they're very producty can also do that

01:11:55role too like sometimes you get this

01:11:57this three these three weapons in the

01:11:59old days sometimes your vpf customer

01:12:01success could do this but unfortunately

01:12:03and I know this is going to trigger some

01:12:04people I don't see customer success

01:12:07stepping up for this pseudo product role

01:12:09anymore and I see them shrinking more

01:12:10and more into process but that magical

01:12:13VP product they they they give you that

01:12:15scale that Co level scale can a product

01:12:18manager or director do that in my

01:12:21experience the best ones absolutely

01:12:23abolutely

01:12:24the the M mid pack ones that are working

01:12:27on the color of the pixel uh I'd rather

01:12:30not have them in the deal they're that

01:12:32you have to be Empower you have to be

01:12:34utterly fluent in the product the entire

01:12:36product right you have to be the one

01:12:37that knows how to connect the pieces

01:12:39that don't uto always connect themselves

01:12:42right and you have to have the gravitas

01:12:44to work with a large customer to to to

01:12:46make commitments right and so that that

01:12:49that deep knowledge and commitment like

01:12:50it's hard below the VP Lev but if it

01:12:52does exist I I love it they become they

01:12:54become one of the greatest strategic

01:12:56weapons of a B2B compan is bringing the

01:12:57product team because the vpa sales never

01:12:59quite goes that deep and can't make the

01:13:01commits right and the co can't be

01:13:03everywhere the bane of many product

01:13:05managers existence is the flip side of

01:13:08sales's involvement in product do you

01:13:11have any advice for how you've seen the

01:13:13best s companies handle requests from

01:13:15sales going into product how product

01:13:17team should think about requests from

01:13:18sales and making that work I think this

01:13:21one is so simple and I'm surprised

01:13:22people make a so

01:13:24complicated okay I know we all release

01:13:2728 times a day okay but the reality is

01:13:30software still goes on quarterly release

01:13:31Cycles no matter what we say Okay

01:13:32business business your customers cannot

01:13:34process 88 releases a day okay the

01:13:36maximum a customer can process is two

01:13:38big releases a year and maybe quarterly

01:13:41right so let's let's simplify because

01:13:43that's how customers think don't forget

01:13:44about how we build software every

01:13:46quarter give your head of sales a

01:13:48certain budget whether it's story points

01:13:51or 10% of the pie chart however you do

01:13:53it give them a budget and when you do

01:13:56this things will radically change they

01:13:59radically change because even the best

01:14:01VPS of sales uh they change like the

01:14:03wind okay on Monday what they really

01:14:05need is the HubSpot integration and like

01:14:07they like oh my God like you know we

01:14:09weren't going to do that for two years

01:14:10but I guess we could change everything

01:14:11on Monday but then on Wednesday a New

01:14:13Prospect comes in and you know we need

01:14:15sap like but but we just spent two days

01:14:17specking out the you you need sap and

01:14:19then on Monday it's Salesforce right and

01:14:21it's not that sales isn't honest it's

01:14:23just the big deals the big ones always

01:14:26the the Tails wagging the dog and it's

01:14:27it's it burns out the organization okay

01:14:30even with the best sales leaders I find

01:14:31it burns out especially because the

01:14:33stressful deals like they overreact and

01:14:35they're not pro as good as they are

01:14:36they're not product people so they don't

01:14:38really know how to prioritize and Force

01:14:39rank if you say Okay Lenny my vpsl is

01:14:41great HubSpot sap whatever you want

01:14:44you've got 10% of the budget you've got

01:14:46100 story points whatever metric or

01:14:47fistic you use but you got to decide now

01:14:50each

01:14:51quarter and if you want a if you want to

01:14:54change during the course of if you want

01:14:55to disrupt our whole engineering product

01:14:57team you can do it but other understand

01:14:58there's a high cost and the later you do

01:15:00in the quarter the less successful it's

01:15:02going to be because we already started

01:15:03the HubSpot integration like not only

01:15:04will it demoralize the team but we're

01:15:06going to run out of like you already

01:15:07used your budget so when each if if you

01:15:10as a product I just don't see enough

01:15:11product leaders being objective here

01:15:12saying listen here's your budget you get

01:15:14it period no one can take it from you no

01:15:17you know I guess the co can steal it if

01:15:19she really wants to but it's yours vpa

01:15:21sales and it will they they will they

01:15:24will do the load balancing across their

01:15:25team they will do it they will listen

01:15:27and they'll say maybe I don't need that

01:15:29hubot integration after all maybe right

01:15:32because what a vpsl should be doing is

01:15:34taking look a VPS you can't the product

01:15:37has to look like Co has to look five

01:15:39years into the future product has to

01:15:41look about two years into the future and

01:15:43you really can't ask a vpsl to look more

01:15:44than 12 months into the future because

01:15:46that's that's where they're next on the

01:15:47line but a good one will load balance

01:15:49feature requests across the year and

01:15:51they will listen to all the because

01:15:52they'll actually be in sales they'll

01:15:53actually be in deals and they'll be

01:15:55listening they'll realize look even

01:15:56though we're going to lose this deal to

01:15:58HubSpot I've gotten four sap requests

01:16:00last I'm I'll I'm gonna take that bet

01:16:03even if I'm wrong I'm gonna take that

01:16:04bet you got to give them that and and

01:16:05you got to talk about it every week and

01:16:07say look here's your budget Jane here's

01:16:09your story points your whatever your 10%

01:16:12this is what we're currently this is

01:16:13what we're building now for you

01:16:14objectively and this is what we're

01:16:16currently planning for the next two

01:16:17quarters would you like to change the

01:16:19ones for the next two quarters because

01:16:20we haven't committed any code yet and if

01:16:22you really want change what's in process

01:16:24you can't otherwise it's going to be

01:16:25hyper disruptive right but you got to at

01:16:27least pretend to be objective for sales

01:16:29if you're too emotional about it you

01:16:31break your organization you've got to

01:16:32say listen I know we've already written

01:16:3480% of the subside integration if you

01:16:35really need us to put us on the shelf

01:16:37and drop everything for a million dollar

01:16:39deal we that we're startup we'll do it

01:16:41but understand just is just really

01:16:43really what you want and if you involve

01:16:45them every week as a stakeholder it it

01:16:47magic happens but I see I just don't see

01:16:49this H I don't see the VP as a product

01:16:50that I work with I don't maybe I'm not I

01:16:52know on all the staff meetings but the

01:16:54meetings I'm in and the board meetings I

01:16:55don't I don't see this this back and

01:16:57forth happening this might be the same

01:16:59exact answer you just gave but say

01:17:01you're pm and a salesperson comes to you

01:17:03hey we're about to close this deal we

01:17:05just need this one feature can we just

01:17:06get this on the road map what's the best

01:17:08way to help that salesperson understand

01:17:10why it's not happening help them feel

01:17:12like okay I get it is it exactly what

01:17:13you said like okay we could change

01:17:15everything here's the story points you

01:17:16have this quarter well are you assuming

01:17:18are you assuming that PM is the head of

01:17:20product or or empowered enough to make

01:17:22the decisions I'd say yeah that PM could

01:17:25put something on the road map if they

01:17:27think it's important the the reason I'm

01:17:29a little confused just but I want to get

01:17:30it right is I'm hearing what I'm hearing

01:17:32which maybe isn't what what you said

01:17:34what I'm hearing is a j an Junior IC rep

01:17:36is talking to kind of a more mid-level

01:17:39product person about the road map that's

01:17:40a bro as and that's you want to have

01:17:42that that's like one of the reasons we

01:17:43actually go to the office because those

01:17:45discussions don't happen on Zoom Ling

01:17:47they don't happen and you want those

01:17:49discussions to happen but you don't

01:17:51actually want them empowered you want

01:17:53them to say listen I will talk to my

01:17:55boss that's the right answer it's too

01:17:57confusing this stress between product

01:18:00and sales is a good thing it's a it's a

01:18:03sign of a well-run B2B company when

01:18:05there is stress between product and

01:18:07sales it's a good sign it is a good if

01:18:09there's no stress you're not you're not

01:18:11in enough deals you're not in enough

01:18:14deals if there's no stress but the

01:18:16stress has to have enough process even

01:18:18in a startup that it doesn't break

01:18:19because as your question the fact it can

01:18:21break organizations again and again

01:18:23again right people get people resented

01:18:24on either side right and so you this is

01:18:27one thing where the answer has to be

01:18:28look we can chat about it over lunch we

01:18:29can chat about this and and and and

01:18:32actually you've got a good idea you

01:18:33you're individual contributor I'm gonna

01:18:35tell my boss on Monday that I think we

01:18:37should do I'm gonna I'm gonna use a

01:18:38little social say we should do but you

01:18:39got to push the decisions up that's as

01:18:41far as in go make recommend otherwise

01:18:43instead of that one one stressful

01:18:45conversation at the vpl love you've got

01:18:47a hundred you've got 10 times 10 times a

01:18:48100 and again they're fun lunch

01:18:50conversations but they they wreck you so

01:18:53the advice there is basically let talk

01:18:56to your manager I'll talk to my manager

01:18:57they need to Hash this out it's not my

01:18:59call I think you got to push it up and I

01:19:01think you got to force the VP of sales

01:19:03and the VP of product to have this

01:19:05weekly meeting about the budget and that

01:19:07will force them to have enough just

01:19:09enough organization on their team so

01:19:11that it can all be surfaced up because

01:19:12that means they each have to have a

01:19:14meeting with their team for 30 minutes

01:19:15each week and say I'm going to put up on

01:19:17the Whiteboard guys to my sales team I'm

01:19:18going to put up on the white like the

01:19:20sales team's going to say and I've been

01:19:21in many of these meetings where Force

01:19:23the sales team to Force rank what they

01:19:24want and you you end up I can tell you

01:19:27Lenny 100% of the time in the sales

01:19:28meeting when you force do a whiteboard

01:19:30Force rank you end up walking out with

01:19:32very different uh outputs than when you

01:19:34start the meeting in sales 100% of time

01:19:36on the product side you need to do the

01:19:38convers just say we owe sales 10% of our

01:19:41points so we're going to put in a weekly

01:19:42in our team meeting we're going to put

01:19:43in 15 minutes of our team meeting and

01:19:46we're going to make sure we have the

01:19:46priorities right from the sales team

01:19:47let's go over what I got from Linda this

01:19:49is what she says is she wrong should we

01:19:52do something how can we help the sales

01:19:53team be even more sucessful and what

01:19:55inputs is the team hearing and they can

01:19:56raise their hand and they say look I

01:19:57just had this hallway conversation with

01:19:58Bobby but honestly Lenny I can build a

01:20:00Subs spot integration in a day what I

01:20:03thought it I thought it was really hard

01:20:04now I did to my last company and listen

01:20:06actually we can actually Outsource it to

01:20:07Bob and Linda at this agency I know for

01:20:0920 grand they'll build it next week I'm

01:20:10like that's a magical moment right

01:20:13that's a magical moment but you got to

01:20:14each have these parallel meetings or

01:20:16it's just it's just it's just that the

01:20:18good thing that tension can become a can

01:20:20become debilitating right you you we've

01:20:22all seen the fights those almost fights

01:20:24that break out and they come from the a

01:20:26place of passion right but you got to

01:20:29have structure great advice another

01:20:32Trend I've been noticing is that product

01:20:34teams are taking on p&l responsibilities

01:20:36and revenue goals what's your sense of

01:20:38is that good is that bad how do you

01:20:40think about that for product teams you

01:20:42want everyone to be aligned on the big

01:20:44picture with for Revenue goal for the

01:20:46end of the year is the question you mean

01:20:48having Financial bonuses and stuff tied

01:20:50to hitting the plan more that their kpi

01:20:52guys in their okrs are essentially like

01:20:54this much revenue you need to drive this