S3E30 - Why a No-Commission Sales Team is Right for You

What is happening? Folks? Thanks for joining. We are glad you're here. We're excited to see you. We're excited to have this conversation with folks. So as we jump into things and get into introductions, just real quick, thank you to our sponsors of outreach, Vidyard, Sendoso and Scratch Pad. Outreach particular asks us to send you the link of qlik Outreach IO Surf for some kind of super cool landing page that. We still don't know what that is, but we're glad to support them. For them supporting us. We love a very interactive conversation if you don't know that. So if you have questions, please feel free to put them in the chat. You should respond to each other's questions, but we'll also pull you off mute and let you ask your question as well.

And I think that's kind of the basics. Yes, it's being recorded. So if you have to jump, that's fine. Or you want to share it with somebody else, that's fine. So welcome to the surf and sales bonfire session.

And Scott, if you could take Errol off mute, that would be cool. We appreciate it. It is. Why a no sales commission? Why? I know why. I know commission. Sales Org is your best bet. This is a hot topic. We've been chatting it up in social and people are like loving it, freaking out by it kind of all across the realm. And we have someone who's actually built and run this, which I love. So Errol, you want to take a minute and introduce yourself, tell people you know what you're up to. And while he's doing that, folks, please go into the chat and let us know where you're dialing in from. We love to keep it interactive and we'd love to see where people are all over the world.

Yeah. So, hey everybody, nice to meet you. Thanks guys for hosting me. I'm Errol. I'm the founder of and CEO of Truly Cool. Basically what we're doing is we help people build AI robots that automate the CRM process end to end. So all that crap that we're chasing in rev ops after reps to do that they don't have time to do, imagine if AI enabled robots do it.

The context of how I came into this conversation is Truly came in to its current form out of a pivot. We managed to scale the initial business to several million in revenue on this commission model. And there were just like a lot of negative externalities that came out of that. That as we were working in the pivot into this new direction, we decided not we Decided to jettison almost all of it. And it's worked out very well. I think we're like a small case study. I think there's a lot of really big companies that are writing about this, but I'm here to just kind of share.

Our learnings.

So just for a little bit of extra context, Errol1, what's your average deal size and sales cycle? Because I know that will matter.

It's completely changed because of the commission model. So our average company size, except for the initial land, is north of 36,000.

That used to be our land. Now our land is closer to 10, 5 to 10. But we very quickly grow up to that level and even to five. Like $500,000. Okay. So it's like the commission model has actually changed the land for us. All right.

Which we should probably talk about at some point. I know we have a specific place we really want to start, but I think that's a really important thing. Because if I'm a sales rep and all of a sudden my deal size goes down now, does that mean your sales cycle increased, though? Did it? Or I should say decrease. Did you go faster?

Crazy fast. Like, from what? So fast and easy, from over 30 days to under 14. Okay.

So there's value there. And then how quickly do you get them ramped up to that? 36.

After the 14 days, it takes about three to six months. So it's a little bit of a longer ride.

Got it.

It's a journey. Right. This is what we call a journey in Revops. So it's more of a journey rather than a transaction.

Got it. And then the other thing I want to ask before we dive in, because I just want people to have context of you and where you're coming from for the conversation. Scott, you can take over questions, but, um, what is your background? Cause as I recall, you weren't necessarily a traditional sales guy.

Right.

Yeah, I mean, I. So I came. I'm. I'm more from the technical side of things. Like, I was at a very, you know, technical startup. It got acquired by Google. I started off, like in the kind of CSM world for a little bit, but most of my career has been in the product management world. Like, I write code myself, et cetera, and started this company. And.

I remember when we launched our first app to the App Store, and I got this review where somebody didn't purchase, they didn't upgrade, and they were like, this is without question the best app I've ever used in this category compared to this, this, this, and this. But I still wouldn't pay for it and my heart broke. And that's kind of like my entry path into sales, right? It's like things don't sell themselves. And I got really lucky. Like, I had amazing mentors early on who helped me get my like first a hundred dollars a month sale, then $1,000 and up to 100,000. I've even sold a million dollar deal kind of in like the old business. So I feel like I've gotten a broad range of just what is enterprise sales and multiple Personas and how do you manage people and how do you run a process that was all this stuff that I kind of had to learn for four or five years. And over the last year, year and a half, I've basically just been unlearning all of it, just throwing it in the trash. And honestly, like, I used to be so proud. Like there's this like high you get from closing those big deals and lining people up. Because it's a skill that I think not to toot my own horn, but like, not everybody can do that. And now I'm just like, it just feels like so much work and I feel like I'm so lazy and like, why would I do it that way? And this is where commissions comes in, right? It's like, why would I do it that way when I can do it this other way? Where from a company perspective, we get to similar results, but it's so much lower friction for me as the seller and for my team. So that's where this commission thing came from, right?

Well, let's start back even farther with why do commissions even exist?

Where did that come from? That concept of let's pay people only part of their total compensation and let's make them do something to get paid more. Why do commissions exist? Should they exist? It doesn't even seem to make sense. You said this. It doesn't even make sense from a board kind of perspective. So explain that for us.

Yeah, okay. So just high level, economically, I should be like, as a CEO of a company, I should be unwilling to pay 10 to 20% of my cash flow in a year to people. I should be unwilling to do it if I know my business so well that I have this all buttoned down. And just here's the argument, right? Let's say I have this great repeatable business that's profitable. A bank comes to me and says, I'll give you 50 million 5% interest rate. And a VC comes to me, I'll give you 50%, which deal do I take.

It's pretty obvious, right? I take the bank. Why? Because they don't share in the upside, right? Because the reason you take the VC is like you have no idea what you're doing. So going back to the original days, from 4,000 BC to about 40, 30 years ago, the relationship with sales was kind of like you come in, I interview you, I give you the scripts, I give you the product, I give you the trading and you're out there in the field and I have no idea what you're doing. And so there's a lot of risk involved with that. And so for me as a business to pay you like the full freight when I don't know who's going to perform or how much they're going to perform, and I can't performance manage you. It's crazy high, right? So what happens is you basically say, hey, I'm going to do a variable and if you kill it, you do well. We're sharing the risk and the upside. If you kill it, you do well, otherwise you don't. And so I don't need to performance manage you because it's built in. And so it's almost like a franchise model. It's like you're a real estate agent, right?

You know, Compass is doing the marketing and the this and that for me and I get to go out and sort of eat what I kill. And that was like the model up until like, you know, honestly, 20 years ago. And that was what made sense for the business today. We're talking about sales machines, scalable processes. We know exactly what we're doing. And if that is actually true.

Forgetting for a second that, you know, this is the industry standard, we could talk about. There's many reasons to do commissions, but I'm saying all other things being equal, like if I could get talent equally well, if I know what I'm doing, like the proof is in the pudding would be I would say, no, I'm not going to give you a commission. I'm going to give you a really good salary at the level that for risk adjusted, you're like, this is sweet. I don't need to worry about it. I'm sleeping, I'm eating. Okay. Life is good. I love working here. Yeah, just like with engineers, right?

Exactly. So let's talk about the recruiting piece which you just mentioned.

What is it like to recruit in this world of no commission salespeople? Is it harder to recruit? Is it easier to recruit? Walk us through what that change is like from the recruiting angle.

So keep in mind, like, I haven't scaled this yet to, you know, like hundreds of people, whatever. But what I can tell you from the early, from the early sign, like when you mentioned this, the number of resumes we have gotten every time we've made postings is huge. Like, and it's not so much that it's non commission. It's like we write out, here's what we believe in. Like on our job postings, we say, here's how other people run revenue. Here's our revenue philosophy. And it's, and it's the thought fullness behind that that people come and say, this is why I want to work for you. Now the other interesting thing is when you add that. And by the way, like, you might want to let. I think one of our, I think one of our reps is actually in here and he can maybe you could like ask him, like, hey, how do you feel about it? Whatever, at some point in this. But what's kind of interesting is.

I don't think I've ever interviewed so many sales reps at once after we, after every time we put those postings up. And I'm really amazed at how people are stuck. Like, it's like this commission thing has ingrained in them a way of selling. And that's my biggest challenge is like, if you take the commission off the table, still, what they want to do is they want to drive that. It's this muscle memory. So that I think is the biggest. It's not that people don't want to come in and take that bet. And by the way, I know that there's a lot of talent who isn't because they're like, I can make so much more money. Like, why would I do that? But I think our challenge is not the demand for the job. It's like, how do we find people who are experienced and comfortable in this way of operating? That's the hard part.

Yeah, I would think so. Because people, let's say that there's a 100k base, 200k OTE, and you just pay somebody 200 and you eliminate commissions. Ingrained in salespeople's mind is, well, hold on, I was gonna go way above OTE and I was gonna make way more than 200. Right? And they don't think so much about the risk of, well, what if you actually shank and didn't make that full 200? They think about the upside. And so they think, oh, Errol's capping me and I'm not allowed to go above and beyond that. So structurally when you're recruiting or making offers and putting this plan in place, how are you weighting that? Are you saying I'm just going to pay somebody a full OTE or is it full OTE minus, you know, 20%? Are you going over full ote? How do you put it all together in a way that's attractive and still makes sense for you? For you?

Yeah. So just full ote to keep it simple for the people who want to make money. Like let's be honest, if you want to go make 500,000 a year or a million a year, like if I was to go and do. If that was my motivation, which like after my startup, like that actually would be a really powerful motivation for me. Right. Go somewhere, do a job, earn, earn, earn for my family. Like I'd go to a big company to do that. Like going to a small company like pre series. Honestly, like series D, I wouldn't even go to like I wouldn't even go to a series D company if my goal was to make a ton of money. Right.

If you're trying to be a million dollar seller, there's not very many who are, you know, in the startup seed to series D kind of because like.

You'Re, and you're smart enough that you know that that's a stupid bet. So it's like there's a self filtering thing out. So it filters a lot of people. Like anybody who's doing that, who's like, oh, I've been at Salesforce for 10 years and you know, like I want to go live life at a up and experience something new and I think I like it. Just let's filter the. It filters all those people out and it just simplifies it.

But I, but I think people who have an OTE of let's say sub 250 are curious about this kind of model. If their OTE is 150 for example, and they're currently on 75, 75 split but you offer them 150, do they take it? If you're offering them 160, which is a little over, do they take it? If you're offering them 125, but it's all guaranteed, do they take it? So if I was going to put this in place, I'm trying to figure out what do I actually offer.

For me I've kept it simple and said ote because it's also a really simple test of if you go to a series A company like us, there's got to be a value to you besides money. And so the easiest. Easiest way to test whether or not there's that alignment and sincerity and interest, like, if you're like, hey, I'm going to grow. I'm 28 years old, 30 years old. Here's where I see myself. Like, you're not going to care about, like, 20,000, 30,000 here. And so just it. Just when you say OT, it just keeps it simple. It's a little bit like, you know, when you're negotiating with a client and they're like, well, I don't know. Da, da, da. And you're kind of like, all right, let's say I just give you, like, pretty much like, something really good, like, you know, not. Not, like, optimizing. Right. And if they say no to that, that tells you a ton that something else is wrong. And that's just my approach to it is just give them a really good offer, like, and. And just see how they respond. And it's not.

Let's test.

Let's.

Let's. Let's test the theory real quick. I'll ask one question of the audience, and then Richard is going to pull some people off mute. If you're here and you can get into the chat, everybody think about what their OTE is right now, okay? And then just imagine Arrow offers you that, guaranteed. Do you take that role? Yes or no? Put it in the chat. Richard, go ahead. We got some people who have some questions.

You're on mute, of course.

That's all right. Anyway, it wouldn't be a surf and sales podcast with Richard. Not on mute. And thank you. I think someone sent it. I think. Amanda, did you send this to me? So now someone sent this to me.

Lori Dunn. Laurie Dunn sent that to you?

Lori Dunn sent that to me. Craig, I took you off. I asked you to come off mute because I knew you wanted to ask your question. So we'd love for you to go for it.

Oh, yeah, yeah. Sorry.

I just noticed, Richard, I was sending.

It to you directly.

Yeah. Do you have kind of an over.

An overall company bonus, too, that all.

Employees kind of dip into if you.

Hit the company performance numbers?

Yeah. It's funny you say that. So that was an afterthought. So we did give a bonus as part of the package, but the next logical thing is like, well, why is that person getting a bonus? And why not the engineers? Like, don't the engineers stay up until midnight? And I think that's the simplest way to do it. I think a lot of companies do it that way. And, like, it's funny, one of my employees is on this call, and I haven't, like, told anybody this yet, but, like, that's exactly the logical conclusion that I ended at over the last three weeks. Like, prepare. Like, not that I prepared for this talk, but, like, I've been thinking about it, and I was like, that makes no. Like, why wouldn't everybody else get that upside? It's not. It incentivizes everybody. It doesn't. It doesn't break the bank. And it's still. For the company. It's still better than paying out commissions on net new revenue. Like, it's still. No matter how you look at it, it's still going to be better because it's like that 10% number is off of, like, a KPI that goes beyond.

You know, it's based on the salary, not on the rest of it.

Cool.

All right.

I'm working to get Ed Porter. I put you to come off mute for your question. Go ahead, buddy. Good to see you.

Yeah.

Hey, how's it going, guys? Yeah. My question is more around when you made this shift. Are there any.

Skills or competencies that you've seen emerge from people who are succeeding in a no commission model compared to those expecting a commission? Anything that you've identified in the recruiting process, hiring process, or that you're seeing emerge as top performers in lieu of a commission?

So I think. I think going back to, like, why. Sorry, I need to give the context on why we did this. So the reason I did this, aside from the fact that, you know, paying commissions is a pain in the ass. And, like, in the early stages, you don't have product market fit and you feel guilty and people might leave for the wrong reasons, or you might, like, just throw away all that operational stuff. I just feel. I just felt that.

Like, is it the right thing for the customer? That was, like, where I started from and why or why not? So if you have a commissioned person, your incentive. And again, right, Like, I kind of. When I was our first seller, I had a. Like, my incentive is I need to hit my board numbers. Like, it was always like, how can I be more enterprise? Like, how can I bring more people? So somebody, you know, Scott lease, takes my call, we're talking, and he's like, look, I'm just dipping my feed. I'm interested in this thing. I might be able to bring it in. And I'm like, who's your boss? Who else cares about this? How can we grow the scope of this? And how can we run a real process to Maximize the value that we can do. In my experience, that can lead to one of two things. One thing it can lead to is bad fit customers coming on board. It creates a stress for the whole organization because now it's like, hey, I can hit my quota if we close this deal. Even though it's not great for the business. I'm technically following all the rules. It's in our icp, blah, blah, blah, blah. But everybody around me knows that this is a bad fit customer, right? And we're gonna pay. We haven't even talked about this, but we're gonna pay for that customer a lot over. Over the future years, right?

So, so, like, the. The emphasis for us was like, how do we make it really easy for the customer? How do we never say no? How do we always say yes? So, like, we always need to say yes to the customer, but give them very clear direction on the paths that they're allowed to take. If you think of that model, it's about slowing down, being calm and just actually, like, talking to a person and not being in your guarded, like, all right, I'm going to do discovery. I'm going to do this. I'm going to ask for the next step. I'm going to do this. So the, like, the skills, interestingly enough, start to look.

More like a csm. So that's what we actually did, by the way. I was like, we went and said ams, like, we're gonna shrink the model, the deal size, and we're gonna have AMs do upsells. And then the next thing that we realized is like, hey, if the AMs join the sales calls, like, first calls with a salesperson, second calls with an AM and a salesperson, if we can get that person to a really easy, like, trial, like, for example, we call it a data quality data audit. We can get those people to a data audit.

AM is effectively the salesperson and offer selling itself. So most of the sales skills look much more like what an account manager would do in that kind of very organic, collaborative way. And it starts to look less like, you know, I'm persistent. I ask for the business. I do this, I do that. I'm not sure if that answered the question, but it really is, I would say, closer to a sales engineer or an account manager becomes the core competency and less the sdra.

Great, great question. Although I would disagree a little bit that you have to tell yes to your customer all the time. You just got to find the right way to tell them.

So the answer is, can I pay Monthly? Yes. Here's what it costs.

Okay.

Can I do this? Can I pay annually? Yeah, this is what it costs. Can I get a discount? Yes, you have to pay annually. That's, that's what I mean is like being really, really clear. And that's another thing of the commissions, right? When you have a number and commissions and everything's breathing down your back, you're more incentivized to give discounts, which I know that you hate, Richard. Right. And so again, like, commission, it bleeds into all these different areas. You know, you're able to say no.

Yeah, no, it's good, it's good. All right, Adam, I know you're up. You got to this. This, Scott, this is one of the easiest ones we've ever had. Right?

Yeah, there's everybody else has flying in from everywhere. It's great.

Yeah.

What's up, Adam? Good to see you.

Hey. Yeah, good to see you. It's been a while. Hi, Errol. So, yeah, my question was around quotas. So are you still setting and managing the quotas and did that process change at all?

Yeah. First of all, good to see you, man. Long time. I was so happy when I saw your name. No, but like, quota, like, quota's gone, right? Like, there's no more commission to manage. There's no, like, oh, my God, how much does that suck? Like, you have to get it right. We disagree. There's a clawback conversation to have somebody put the wrong number in. So that person got underpaid. Now I feel bad because that person, I don't know what their financial situation is. All that is gone.

You don't have to buy captivate iq. You don't have to do anything. It's awesome. They're just like normal people who work in the company.

That answer your question?

Yeah, he's on mute, but he's not in his head. He's on his head. Yes.

So I think, I think we have. Greg, you had a question. Go ahead, buddy.

Well, I was just curious about the limiting of upside.

Right?

I mean, if you're, you know, if you're paying the ote, whatever that percentage would be, Right. Is there still upside? Is the upside limited or how is that addressed or. So we had a bonus and that's what somebody else asked. But like, I decided actually a couple of weeks ago in preparation for this, like, everybody's going to get a bonus, like, company wide goal. I'm just going to expand it because, like, honestly, our, like, our engineers work weekends too, you know, like, somebody will stay up late to do something for the benefit of business. And I think that deserves, like, why does that deserve. Why doesn't that deserve equal recognition? Now everybody has the same risk, so they should all have the same reward.

And by the way, upside. Right? Like, that's what I mean. Like, we cannot, in this model, we cannot optimize for people who just want money. So we are going to lose a lot of talent to that. And that's an open question, Mark, I haven't addressed the question is, is there enough talent and like, is that talent even a match for what we're trying to do in this customer centric way? That's the question that I don't know yet. Okay, thank you.

Let's go to.

Just put Adam up next.

Adam again. Adam's getting double dip.

No, it's a different Adam.

Oh, okay.

So many, so many familiar faces.

I think he bailed on us.

So let's go to Ben. Ben Z.

Hey, Errol, what's up? So one of the things that I've seen right, is people are talking about reps aren't motivated by their ote, they're motivated by.

Their accelerators. So one of the things that's beneficial for the company is that pushes people to push themselves. Right. So you said by doing this, you manage for the downside. You manage for the downside of, you know, for the rep of somebody who doesn't hit their number. But what about managing for, like the drive to get people to go above and beyond and not for just bad fit customers, but for people who are. Right, right. Like some salespeople really kill it. And you want those people to keep being motivated to do as much as they can, not just to cruise to an altitude where they're comfortable. Like, how do you manage for that? Or do you see that that just hasn't been a problem, that people are pushing themselves because there's a company wide bonus, for example.

Okay, so I'm going to go against what I've been saying now to give you a counterexample. If you look at the first version of our business, like the first kind of iteration where the curve did this, we went through.

What, 15 different sales reps over time. I think it fit the exact same curve. Like, handful of people brought in over 50% of revenue. If you look at the customers today, the best logos that have stuck around the longest, highest ltv, a lot of those come from the type of person that you just described. So I'm not saying that stuff doesn't work and that there aren't people who can do that and who can bring it in, blah, blah, blah.

The thing that I'm questioning is that business also had a lot of problems that this new way of doing things is solving for. It's easier to get into the product, right? It's like the marketing and sales cost is lower, blah, blah, blah, blah, blah. So.

I think the question here is like, are people motivated by money only?

Is that like I used to work at Google, I didn't have commission upside. I worked 100, like all my gray hairs is for my time at Google. I was there because like I want, like I wanted to achieve for myself. Like I didn't care about what I was making then. I was like five years from now, I want to make three times this. Forget like 10% more, 20% more.

And so that's how I think about it is like, are people really just motivated by that one metric? Like, is that good for your business?

So that's the thing is I just.

I think you have to decide for yourself and how you're thinking about things is like, is money the. Like, if you take away money, if somebody's like a great employee and believes in your vision and loves their customers, is that what causes them to work harder? I don't know. You know, or how about this, like you were saying, some reps kill it, right? Well.

If instead of two people.

Bringing in all that revenue and killing it and hitting their accelerators, whatever. Like, if we can focus on a model that works across a broader range of people, like, does the business still overall do better? Same or better just in a different way. So those are the ways that I kind of think about it.

I have a question. One of the things, every time we would post on Social, everybody was complaining that, oh, you're just going to get the mediocre people, you're only going to get the people who sit in the middle of the pack and then they're just going to get lazy. And my response has always been, well, you already have those people on your team and why do you, why are they still there? Why haven't you replaced them? So it's not necessarily a sales thing, but you know, so people are still measured though, right? Like your, your reps still have to do something. They can't just coast.

So I mean, we have a business model, right, where we're like, These are the KPIs we need to hit to, to make the business work.

Every month I go in front of the entire company and I show them the bank account, the difference in it all of our metrics in Salesforce, like upcoming renewals, what we're where we're at risk. I show everybody everything.

Complete transparency.

Yeah. And like, at one point, just so you know, like, we restructured the company. We did this, we did that. We were still trying to figure out, like, okay, where's the growth financing going to come from? Like, we had like three months in money left. And I was like. And the model wasn't working. I was still showing people, and I was like, this is what we have to do. People, like, you know, they. They know I don't have to go and threaten anybody and make them feel bad about themselves. Right. And then what was also interesting is in that period, a lot of people left.

And.

Let'S just say, like, when we came back.

The, like, our overall performance was, I would say, quite different. So.

So, yeah, like, explain that more. That's.

That's feeling very vague.

Yeah, I mean, like, I want to. So.

First things first. We only hire great people. I really believe that. And we're really, like, I'm still close with a lot of people who decided to leave at a different point in time in our businesses life, blah, blah, blah. But I would say that.

Did they leave because you were changing the commission structure?

That was one of the reasons.

Okay, that's fair.

The other reason was like, hey, also, I just don't see that the business is doing that well. And so I'm more fearful. But the people who stuck around. What I saw was a greater cohesiveness, and I just saw more synergy. Like, all of a sudden, the engineers and the sales, at that point, person who was working here and.

The one CSM we had and the support team, all of a sudden it was much more integrated. It was like, we had this one goal and we're all going to work together and we're all tracking the one goal together. It was this really beautiful thing. I'm actually really, really proud.

Of the fact that we no longer track, like, hey, here's the sales plan. Here's the whatever. It's like, here's the company plan. Here's how sales is contributing. Here's how engineering is contributing. Like, if engineering helps close a deal, we track that. We call that engineering influence on revenue. Like, engineers actually track that. And we sit there and we say, engineers didn't really influence revenue last month.

Why.

Are we prioritizing the right way? Because what does it mean that we're spending all this money on engineering and it's not influencing revenue? Why are we here? What are we doing Are we building Nice to have tchotchkes that nobody cares about. It has to map back to revenue one way or another. And so it just focuses the conversation is really consistent way because it's not like sales isn't hitting their revenue. Scott's at risk. Blah, blah, blah. What are we going to do? It's just like, this is stupid stuff. Like, who wants to talk about this? Why waste time with this conversation?

If the team is not hitting numbers, though, will you. Will you have to make those adjustments? Like, are you in this model?

Right. Yeah. Oh, yeah, that's.

That's the tough question. Right? Like is.

No, you still got. I'll tell you how I have the conversation, though. So here's the old conversation. Scott, you're not hitting your number.

Yeah, right.

That's the old conversation. I'm looking at your activity numbers and it's not meeting expectations. Blah, blah, blah, blah. That's the old conversation. Here's the new conversation. And this is a conversation like, I'm literally telling you the conversation that I had a couple of months ago.

So here's the situation.

This is what we're targeting. Right. These are the metrics that we're tracking.

Given these results.

It doesn't make. The model doesn't make sense if, if our person in this role cannot achieve these things. It does not make sense. There are many reasons why. And by the way, like, nobody's saying it's your fault or whatever. Like, the goal here is to hit those numbers collaboratively, period, full stop. That's our goal. Like, nobody's saying you're doing a bad job, whatever. But let's just have the conversation. If this model is not working, then. Then this is. Then this economically doesn't make sense. And how are we going to get out of this? And if we can't get out of. Doesn't make more sense to have a conversation about a transition sooner rather than later. Yep. And if you haven't.

Yeah, it's interesting. I don't feel like that conversation is very different other than it makes it. You're trying to make it less about them as an individual. But it still is. But, but I see your point that it's, it's intended to be. We're here to support you better rather than say, go fix this.

Yeah. I mean, but it's like, Scott, you're not hitting your quota. Like, it's, it's not your quota. It's like we're. It's. It's our goal. It's our collective goal. It's and it's. And it's really small, but it makes a really big difference. So, like, another thing we do here is, like, when we have a performance issue, like, we actually tell people, like, here's the situation. Would you rather just take a nice severance now, or do you want to work on. Like, do you want to continue to work on this together? Right. I can't promise you that this option will still be here. Netflix does this. By the way, I didn't make this up. You'd be surprised how many people will take that deal. They'll just be like, I'm leaving. And it just saves so much of the Pip discussion. Like, oh, you're not hitting your quota, Pip. They're making the minimum number of dials.

Because somebody told them to do that. By the way, I don't know if I'm going totally off the wagon, because now we're not talking about missions.

No, no, no.

We have.

We have a question. Let's go to Josh. I have Josh. Yeah.

Hey, how you doing? So my question's really around kind of having managed and sold, really, the idea of those shadow deals, surprise deals, when, like, somebody's got a deal that may or may not happen, especially end of quarter, end of year, do those just come in now as upside? Instead of people kind of having their own kind of separate sales list and surprise, there's some extra money when they lose one or things like that. Or do you guys just now get more money and people don't hide stuff. That's the. That is a big challenge.

Sandbagging. They won't sandbag anymore.

That's what I'm asking.

Right.

Because it is a challenge. As a manager, if you. If people are sandbagging and you're not aware of it because they're really good at it. There are people who are better than others at sandbagging.

Oh, yeah.

But why are they sandbagging? Why are they doing that, though?

Well, because you think in their minds, and again, and I'm not saying it's right or wrong, you can't control what a customer does. And so they always want to make sure that they're gonna hit their number. So if something. If they're close and they have two deals, they're gonna leave one behind, because if that other one falls out because the customer's finicky or whatever it is, I've got another one. You just don't know about it.

Well, the other thing they're also gonna try to do is take a customer who's on a perfect Journey. It's going really well. And try to pull them forward with Richard's favorite thing, a discount or something weird like that. Right?

It's all. It's all the same thing.

Yeah, exactly.

It's all. It's all the exact same thing. Yeah. It's funny you said that. I'm trying to think of like the last time. So we review pipeline and the model as the pipeline is related to every week. I just, like, it's just funny you said that. It's. I can't remember the last time anything like that.

Anything like that happened. Here's a conversation we do have a lot of. I had a conversation with so and so at Customer X. Should we go after that business and then we have like a holistic conversation about whether that's a good use of time or if we might be better off, like kind of trying to figure out like a marketing thing we can do that can just like lay some foundation there and then we can go revisit it. So we'll create an op.

And we'll put a date to like revisit it. But again, it's not about, like planning for the outcome, if that makes sense. Like, it's not. It's not for like, hey, let's do a forecast roll up, see how each person is contributing. It's like the roll up is. There's just one. There's just one roll up.

And then on the, by the way, on the close side, like at the end of the quarter, we look at the result, right? We're like, where did you. Like, where has. How has each person contributed to this? And when it's lopsided, we're like, so it's lopsided. What do you think of that? That's the question I asked. Like, what do you think of that?

Not like, why are you better? Why is that person better than you? I just say, why? Like, what do you think of that? And then the answer is like, right? And then that's where you're going to get an answer that's very honest and not like, it's like, why didn't you hit your number? Well, it was this person's fault.

Yeah, it's. I was just commenting in the chat how refreshing it might be as a CRO.

To walk into an exec meeting and rather than feeling like I'm getting hammered in front of everybody because my numbers are lagging or whatever, it was a shared burden of responsibility where somebody in engineering was getting hammered because they didn't ship the fucking feature on time. Which in case you've been a sales leader before. Happens all the time, but we're on the hook for it. Or the VP of CS whose onboarding team is not getting people onboarded fast enough and therefore some folks are getting a little bit of cold feet. Or the marketing leader who's missing wildly their inbound numbers, which are supposed to be a big part of the plan.

Those conversations. I've been in a lot of executive rooms. Those conversations are few and far between, if they ever happen at all.

Where it's discussed about the impact on revenue numbers. Instead, all that happens is my head gets put in the goddamn guillotine and I'm threatened publicly in that exec room over and over and over. We're talking about a total shift of responsibility. Where we're shared, where we're all paid. The last time I was an operator, I had a 400k OTE. 5050 split, 200 base, 400 OTE. If Errol offered me 400 OTE guaranteed back then and said we're all in this together, nobody gets bonus, I would take that job in a minute, a red hot minute. Especially if equity was the same offer in each case. And now I'm in a room with Errol and the conversation with my executive colleagues is very, very different.

Right.

I feel supported in a totally different way.

I don't understand why we're so reluctant to even think and consider. It seems to be a bunch of old white guys like me who are the most resistant to this kind of stuff, shockingly. And people half my age and other leaders, people of color, women who are moving into sales leadership, they're far more open to exploring these ideas.

I'm not saying that I go endorse no commission sales orgs. I've never told a client of mine to do this. But I am entertaining the conversation and I am recognizing the shift in personalities and motivations that are happening. Different people are coming into the profession of sales and sales leadership that were not the same as they were in 1985 and 1995. And you're a bit foolish to just discount it and discredit it and throw it away and hammer at somebody like Errol that this doesn't work, this is not the right way, that says fucking who.

So just keep that in mind, especially if you've been in a sales leadership position. How refreshing that might be to be in that room for a different kind of dialogue.

I think it's great. I love it. Scott, you brought up one thing. So Errol, if you are thinking of.

How does equity play into this? Does it change at all? If you were hiring ahead of sales, would you still give that head of sales, you know, 22%? Because I know that's what you would offer, Scott, with this 400 base.

That's right.

That's what it would take to get me to come out of retirement.

Right. Well, by the way, if you're going to join a company our size, you should ask for more.

That's like a big thing I talk about with a lot of people is like, you know, a lot of people are taking founder risk, but they just don't know it.

Yes.

God.

Yeah. We could have a whole other session on that.

Yeah, but.

What was the question? What was the question, Richard?

The question is equity. So, you know, so you're.

Yeah, it's Same, same. All things equal.

All things are equal.

Got it.

Yeah, got it, got it, got it. So what? You know, Errol, you got a group of people, and I know we have another question coming in. We'll have Chris come in and ask that question, but while he's asking that, you know, if there's any questions, you got a group of people who maybe you want to ask them some questions. So feel free to think of some stuff if you want. We'll have Chris Brown. I have you coming off mute, but, Errol, if you've got questions you want to ask the group, we'll flip it around on you.

Yeah, I mean, I actually like my question. My next question was for Scout Lease. Actually.

It'S interesting because I think this is a different conversation than the one we had before on both sides, because I feel like I'm also in here a little bit. I actually thought about what you said last time, where you wouldn't be able to get talent like me, and I thought about that every day for three weeks.

And I actually came around to the conclusion that I will lose a lot of talent, which you said, which was like, totally on, and I had to think about that. But it sounds like you maybe also have a couple. Like, did anything in your mind change since the last time we spoke?

Well, what changed is just the opening of my mind to exploring and thinking about this kind of stuff more. And to me, that's one of the main values of having this dialogue and conversation, which you and me have had multiple times now, and we're all having here together. It's to get everybody's wheels turning and to challenge the status quo and how things have always been. And is there a better way? And is there a different way? So similar to how you're saying, you know, you thought about some of the things I said. For a few weeks, I've been thinking about this and having this conversation with other people and engaging people on LinkedIn and Twitter and asking questions, right? And so that, that's a big. That's a big shift. That's probably step one, if you will, of somebody maybe changing their position on something.

Was there one? So, like, that was my, like, kind of question. One A is or one B is. Was there one thing that kind of tipped you over the edge?

Because, like, for me, like, this was all about the thing that I realized was.

So, like, from my perspective, it was like all of the things that we think about that is a sales problem or a customer success problem or a whatever problem or a product or marketing problem. Like, I was like, it's all a strategy problem that starts with me, the CEO. Like, every one of those problems, if you have a css, if you have a retention problem, you sold it, right? That was the real problem. If you sold it, it's because of this quota thing, but also because that's the lead that came in. Why did that lead come in? Because marketing cast the widest net possible. Because you don't know exactly who your customer is and what the future looks like and what the original unique point of view is that you are bringing to the world and why you exist. And that is a CEO problem. So, like, when I realized that, I was like, that was what made me say, we need to create a structure that puts 100% of the burden there, and then everything else needs to flow. That was like, my aha moment. Did you have one? Like, when all these conversations, My aha.

Moment is more emotional than yours. My aha moment is people trying to shut down the conversation. And I'm the type of person that once you try to do that, I'll just go to the other side and argue harder and try to be a contrarian and stir the pot. So.

No, you don't, Scott.

You don't. Yeah, sure. Yeah, sure. So, you know, when people come in and challenge something really aggressively, like a zealot, I don't do well with that. So even if I agree with Chris, I'm looking at Chris Bowen right now. And if Chris was like a hundred percent, no commission, sales, or will never work, even if I don't, even if I agree with him, the fact that he was such a zealot about that would make me flip and try to entertain the other argument. So it was me kind of getting some Feedback on our podcast recording and then some comments I made and people telling me no way, no way, no way that I started to try to figure out counterpoints and counter arguments of why it can work, why it would work, what's the benefits. Right. So it's more of that than a logical, like business, you know, reason.

Cool.

Yeah.

Chris, do you still want to come off and ask your question?

Sure.

So mine was, have you had this in place long enough to know if like a lot of your top talent is getting poached because of a different incentive structure? Like people coming in and saying, hey, you've done really well here under this structure, but if you were under.

A.

More commission oriented or accelerator structure that you may have that they're poaching people that way and maybe, you know, leveraging something like repview where they're, they're able to see some of that information. How accurate is, I don't know. But at least being able to write those types of metrics to be able to understand are we losing our best people because of this structure as opposed to just keeping water.

So, so we're for that. I wouldn't look to us, if you go on LinkedIn and I search and I think you just search for the VP of Sales at Monday.com like he's got a really great case study for them. They're far bigger scale than us. I would say that there's like two or three more I've come across online where they're like over 100 people where like, you know, that's the case. I wouldn't look to us, I don't think that there's a similar case study in enterprise. Except what I will say is a lot of my inspiration came from Amazon Web Services where we spend half a million dollars a year and we essentially never talk to a sales rep. So. Scott. Richard, the thing that I just told you, I stole that from aws, because what happens at AWS is they have clear pricing. They don't have this weird negotiated stuff. They put their pricing on their website and if you get into a contract, they give you a 35, 40% discount. It's like crazy, right? And if you get out of contract, guess What? You pay 40% more. And there's nothing you can do about that except get shut off or go into another contract. And so by having that clarity.

What I can tell you is they have an. Even though they do commissions, it's totally different than how everybody else does it. And the dinner gets made really, really well. It's the most successful business of all time. So I would say, look there, what I can talk about is, does the business model the way of operating behind at work? And I have 110% confidence. Like, it's not an Amazon thing. If you make it easy for your customers to buy.

If you make it easy and you're honest, like, the more. Has anybody ever had this, like, where the more you tell a customer that they're a bad fit, the more they want to buy? Does anybody ever like that? 100%.

It's the best ever. It's the takeaway.

It's the best. Right? And it's like you're honest and they just want to buy because you're, like, the only honest person like that. Like, if you guys have all experienced that, I will tell you that scales really, really, really well. Really?

If I told Errol I was going to put him on mute right now and he couldn't talk anymore, he'd want to talk even more.

So, yeah, I mean, so.

Do you.

Feel like it's harder to retain your, your top talent or no. Or is it really?

Well, we're too small to, like, really have that conversation. What I can tell you is, like, I have not been asked for a raise. I can't.

That was my next question.

Yeah.

Are people asking for raises? I would. Chris, I would go in to say that regardless of the model, there's always a chance that your top talent is going to get poached. So it's kind of like what Errol was saying earlier about, well, when you're underperforming, you still have to have that conversation. And it would probably. My gut would be it comes down to if there's a significant reaction, a raise in base.

Right.

Someone might bump, but then they're going to have to take the risk of, well, I can get that big piece and bump and then I could go hit the goal. But what if I don't hit the goal? Now all of a sudden they're thinking a year ahead and they're freaking out a little bit. So I think that's where it's going to come down. And to the point of what Errol said way earlier is that this isn't the right fit for every sales rep. Like, it really isn't. If you're going to go be a half million, million dollar person, you need to go and work at Salesforce and sell to the Fortune 100 group and, you know, you got to go work at that company if that's your desired mode. Right. I will say that.

It would have been scary for me as an individual contributor to switch that model. But that's because I'm. I think I'm a little bit more afraid of change.

I would be like, well, gosh, what if I don't? What if I do? And I like comfort and I've been known to stay places a little too long previously. So for me, in some cases, that might actually be a scarier business model because it's so different. But again, Scott knows this about me. I have way more imposter syndrome, I think, than a lot of people. And he's like, yeah, that sounds like random Richard.

One small thing to just extend from that, though. So when Scott just said, you know what, I was making 400 and if Errol gave me a 400 offer, 400k offer right now, all things being equal, I'd take that in a heartbeat. I had a little heart palpitation because I was like, I can't afford anybody for $400,000 right now. But the flip side of that is, isn't that a good thing? Because if it's 200, 200, Scott comes in here confident, and I'm like, we have product market fit, man, we can do this. That's such a big gap to cover and that like that, you know, it's like I'm letting my guard down because I'm like, you know what, I'm hedged. If he, if he F's it up, he'll leave and he's coming in because he's always hit every target he's ever hit. Like, I think that's a really good break to have in the system that I'm not like, you're worth 400k. I should like, you should ask for 400k with like a lot of certainty, you know?

Yeah. But Errol, would the offer really be 300 or 325? So, hey, we're not going to guarantee you the four, but we're going to guarantee you more. And then Scott, if that's the case, what do you think? Because you, you know, and you may.

Be, by the way, I would pay his ot. So, like, for what it's worth. Yeah, yeah. Because, like, if that's what he's worth, that's what he's worth. Like, what we have to do is collaboratively figure out. I mean, it's like sales. We have to find the intersection of supply and demand and figure out if he is worth $400,000 to the market. We have to collaboratively figure out if there's $400,000 of value here. Why play these stupid games of Scott? Are you really. If I don't pay you money, if I don't pay you a bonus, are you going to work less? I doubt it.

Absolutely not.

You're putting in.

You're going to put in whatever you're going to put in because you are who you are. So I think, like, that's, that's what it is. Like, if somebody asked for a raise by. I don't say you don't deserve a raise or like, it's like, okay, cool. So, like, if somebody's offering you that, let's talk about, like, does that fit our model? Yes or no? It's not about you or what you want or whatever. It's this model that we talk about, you know, every week, every month as a group. And.

Like you're part of building something. And that's, you know, it's, it's very clear what everybody, what everybody, what role everybody plays in that.

Yeah. Got another question from, from George, quickly. Want to give a shout out to all of our sponsors of Scratchpad, Sendoso, Outreach, IO and Vidyard. We really appreciate them. If you're looking for those tools this year, particularly, you know, everybody's looking to be more effective and efficient. My two favorite buzzwords. But they actually do help you do those things as you have to make changes to scale. George, what's your question for Errol? And I thought it was a really good one.

Great.

Appreciate the opportunity. Thanks everyone, for a great session. Errol, very quick one from my side. Looking at the traditional hiring, right, where you would exclusively focus on getting as many A players as you can, right? What's the ratio as you look at your sales team today?

How many.

What's the percentage of A players versus B players that you had to kind of take into account to make this work, if that makes sense.

So again, keep in mind, we're Series A, so I think it's a different. Like my definition of A player is do they help us make the model work? Yes or no?

Not, did they hit a number? Because everybody can contribute to that in different ways. Like once you, once you set a team goal, right? So I guess I don't have the definition of an A player as being.

Just like, did they bring in this number over this period of time? Like some, some customers, right. It comes back to that. The commission and the goaling. If I'm incentive, like, if I know that we have a client that could be worth 300,000 a year over the course of a year, starting Next year. Like, I know that because I've closed enough business. I know what it looks like. I know they're in contract with whatever. And I know, like, why am I creating this impossible situation for that person, defining their success, whether or not they were able to bring that in ahead or not?

I would rather have, you know, more. More broader conversation. So I don't know if I'm avoiding the question. I would. But, like, before. Here's what I'll say. Before, it was always very clear that there was.

One person carrying all the weight. Like, that was so clear. It's no longer so clear to me because I think everybody's contributing differently.

Like, for. I'll give you a live example. Okay, so we got a client in the pipeline two months ago, and we sat down. We're like, hey, you know what? We've been talking about this, like, this tweak to the funnel. Like, what if we ran this a very specific kind of way? What do you think of that?

As a result, that deal shrank. The value of that tweak on the funnel, on us. Being able to take that learning and apply it to every other deal, is way more than the value of that one deal. Right. So to me, the value of that rep. I'm not thinking in terms of like, what's the number next to his name? I'm thinking, you know, they're like, we're one team. This is the overall number. These are the numbers next to each other. And then it comes back to like, well, what do you guys think about. What do you think about that? Like, that's. That's where I always start every conversation.

Kind of get rid of the whole ab player thing.

Right?

Like, you still have to look at things and see where people are performing, but you're not. You're coming out of that mindset. It feels like it gives to that. To that holistic approach.

I don't know what it means to have B players. I don't know what it means to have C players. What does that mean? I hate. The other thing that I hated about commission is this. So just as a person, I'm your.

A player and Scott's your C player.

Yeah.

Well.

But here's the thing I hated about managing with commissions.

Right?

So, Richard, I hired you 50.

50.

Right. And we came off your ramp and you had a bad month.

And you didn't get paid.

Yep.

It kind of honest. Like, it almost implies that you're being punished enough that we don't need to have a serious conversation about what just kind of happened because you're getting punished financially for your failure. And on top of that, now I'm coming and telling you all the things that's going wrong. And by the way, because I'm paying you less, it's almost like you're buying a lease on life for a little bit longer when the real opportunity cost is my business is just you sitting in that chair. So, like, I'd rather like, you know, Scott, if you're worth 400k, here's what I tell you, right? You know, I got to tell you, Scott, here's the way I see it, where we are. This is a 325k job. If you want to come in on 400k, here's the risk, right? I'm not sure if I want to take it, but let's say that I want to take it. Your Runway is short, my friend. Do you want to take this job? Is how I would put it.

Yep.

Totally, totally agree. And I think, too, that the one piece that you brought up, you didn't bring up was the pressure I'm going to put on myself because I know I missed the number.

Yeah. Oh, my God.

Yeah.

Right?

Like. Like the pressure of making my rent or my mortgage or I, you know, I have. I'm married and I have kids and, you know, whatever it is, like, there, there's that pressure, too. And none of those, by the way, none of those pressures, I think go away. I think they just become a slightly less stressful conversation to have because you're still going to have a conversation of, like, something around, not performance, but like, where you're. I mean, we said it earlier. You're still going to have to have a conversation. But it's not like I'm going to pip you, right? It's like, hey, let's have an acknowledgement. Where do you want help? Which I. To me, all of this comes back to leadership style.

So I totally agree with that.

Anyway, I know we ran over by a minute or two. Thank you, Errol. And please, folks, go check out Truly. Even if you don't need their service, you should know about it because I think that's fair. Errol's given us a lot of time and maybe you know somebody who does. And likewise, certainly. I bet everybody's bookmarking your job help wanted page to wait for that to happen.

Man.

So look for that.

Well, actually, come back later today. I should have posted before, but. Yeah, we're posting new roles today.

I was going to say this might be the greatest recruiting ever.

Yeah, it sucks. I. I should have done that before.

Yeah.

Awesome. Well, thanks, everybody, again.

Thanks. But thank you to you guys for having hosting like. This is great.

Yeah.

This is fun, man. This is fun. Thanks to Scratchpad, Sendoso, outreach, and Vidyard. We really appreciate it. Bye, everybody. We'll see you next time.

Thanks, everybody.