The Unicorn Fallacy: Building a Solid Sales Organization in a Challenging World

You.

Let's bring in Chris Cabrera. He is an amazing entrepreneur. I remember the first time I met with him in San Francisco. And he is the founder of. Exactly. He built it up to a what, $400 million company, took the company public and grew the company into.

The leading compensation management company in the world. Welcome, Chris.

Hey Gerhardt. Thanks for having me. Good to see you. And hey Mark, how are you?

I'm doing great and boy, if we could replicate what we talked about in the green room, this is going to be a fantastic conversation. So thank you for joining us.

Yeah, great. Happy to be here. I think I remember sales selling power to 1.0, you know, years ago.

That's right.

I remember you speaking at many of our live events. A couple of them in San Francisco and one in Boston. Yeah, and, and also one in London.

Yeah, those are great events. I always have fond memories of those.

So let's, let's zoom back to. Of course, now we. You have a second life here at Pro Verity where you are nurturing and growing an AI company that you are very excited about. But you have so much rich experience.

In running a healthy, prosperous and growing company. And you have written a book called the Unicorn Fallacy. And it is.

I almost want to retitle it and say it should be the unicorn fantasy because a lot of entrepreneurs have unrealistic fantasies about where is reality. And they don't realize that dreams don't always grow like into the sky. You know, trees have a growth limit. And.

Clint Eastwood once said very famously, a man's got to know his limitations.

Well, it's a little bit of be careful what you wish for. Right. Because many of these CEOs were so desire to become a unicorn, you know, get that billion dollar private valuation that they did almost anything to do that. And you know, I think the BC community was complicit in kind of creating, you know, these unicorns. And it's unfortunate because there are legitimate unicorns and then there's, you know, literally hundreds and hundreds and hundreds of others that are now sort of orphaned companies that are, you know, kind of zombies.

So what describe the, the basic premise of the unicorn fallacy?

The basic premise is that the whole world for many, many years, certainly while I was coming up as a first time CEO 20 years ago.

Everything was about growth, growth, growth. And I get that. And there's a time and place where that makes perfect sense certainly when you're building a young new company. But it was that mentality where there was no attention paid whatsoever to any of these companies, no matter what size, even public. This was true of my company even after I took it public in 2015. The focus was so maniacally focused on growth because that's where the valuations were, that I feel like in hindsight, many of us CEOs didn't build the foundational bricks as solid as we needed. And when the growth eventually died because the market wasn't there, or the market turned down, or Covid or any number of outside forces.

As soon as that growth slowed, it's kind of like the tide went out. And all of a sudden you saw all these wrecks because you didn't build the company the right way. And so the whole point of the book is understand the time and stage that your company is in, because there's a time and place for growth at all costs. But my point is, when I sold my company, took it private to Vista private equity in 2017, after being public, we went on a seven year journey to morph the company into a company that cared about both growth and profitability. And so I think that what you were talking about, this ego drive and empathy and this whole idea of being balanced, that's the exact same way I feel about, and the book is really focused on, is there's this thing called rule of 40 that people use to measure how good a SaaS company is. It's adding the percent growth rate with the percent profit rate. And for years and years, many of us were rule of 40, but it was 40% growth, zero profit. And I think I just spent better part of seven years under Vista's flag transforming exactly to being a growth company with massive amounts of profit. And I learned a lot through that process. And that's what I write about in the book, is to sort of share with other, other CEOs, hey, don't wait, you know, for someone else to make you do this. Many of these things you can implement at every stage of your company to build a more quality business. And it's, it ripples through every aspect of the company. Not just, you know, from a CEO seat, but VPs of sales should be thinking about it. Every, everybody should be thinking about it.

So explain to us the road to growth because it's not a straight line and there are companies that hit a ceiling early on or maybe later. And at every growth stage, you go through transformations that you could not anticipate, you did not know before. Either is a competitive pressure or financial pressure or something that's innovative that comes from your company that all of a sudden you get sidetracked with a better idea.

Explain that. That dynamic that entrepreneurs need to understand in order to grow. Like salesforce.com as an example.

Yeah. Well, you know, kudos to Salesforce and Mark. I mean, he's just done an amazing job. He's been. He's been certainly someone I've looked up to my whole career, you know, But I kind of set him aside because he is more of that true unicorn. And not all of us can be like him. But think about the everyday CEO more like myself.

As I see a lot of CEOs come up through the ranks and they start these businesses as a founder. They literally, because of their own.

Positive eco drive and all these things, they put the company on their shoulders and they can literally, the right CEOs and founders can literally carry that company to $10 million of revenue. Right. Just on their own force of will. The problem is, when that happens, everybody's saying, congratulations, that's awesome. You just built this $10 million revenue company. You're the greatest thing ever. They start believing that and they think, okay, now we're going to get the 20 million. And they try to take that same playbook, put it on their shoulders and march to get to 20 million. And they start running into brick wall after brick wall after brick wall. And so in my first book, I write a lot about this idea of CEOs who want to remain CEOs need to constantly be recognizing that what got me here isn't going to get me there. Right. The things that I did to get this company to 10 million aren't going to get me to 20 million. What got me to 20 million aren't going to get me To 50, and so on and so on. And this is why the life expectancy of founders is actually pretty low. Right. If you look at many of the large companies, they're not led by founders like Marc Benioff. I mean, that's a real, real rarity. But it's because. And you should talk to him about this later. I'm sure he's reinvented himself 15 times, right? Because he can't possibly run it the way he did when they were 100 million or even a billion. And so anyway, that's. I think that's the point is kind of knowing your stage, having people around you that can help, you know, check your ego so you don't get too full of yourself because, oh, I'm a public CEO now, It's like, hey, that's just the starting point, right? You know, Anyway, so that's how I'd answer that.

Chris, I got a question for you. How would a sales leader run with this? Because how does a sales leader know and oh wow, we've stalled out. And how would I respond? How would I as a sales leader?

Well, my, my take on the sales leader piece of it is I've spent my career working with sales leaders to help them drive higher performance of their sales team. So the, the tenets of the book or the tenets of my thinking is to create.

Companies that are value more valuable in the long run because you're thinking about the business and not just sales, not just growth, not just how much. You know, did we make our number or not? Yes, that's important, of course. And growth is super important. You have to do that. But it's the quality of the revenue that, that VPs of sales should be caring about. And so a lot of what I talk about in the book and what I Talk about with CEOs all the time and what I help them through my work at exactly of which I'm still very involved with and on the board and my work at Pro Verity now is think about how you can change the quality of your revenue stream. Right. Are you focused on the length of the contract? Are you focused on.

You know, percent increases in price built in throughout that contract? Are you creating programs to drive down discounting practices? Now all these things I'm throwing out to you, many of the heads of sales that are on this call are going, of course I do that. Oh yes, I do that. And I'll say, okay, great, you do that. You disincentivize discounting. Oh yes, of course I do. I pay them less when they discount. It's like, okay, that's not it. That's not. You're not doing it right. Because, and I quickly use that example of, you know, you're selling your house, it's a million dollars. I'm your agent, I'm going to get 3%. You and I both know I'm going to make 30 grand. You get an offer day one for 900,000. What am I going to do? I'm going to do the math and say I've done one day's work, I'm going to make 27,000 instead of 30. I'm going to tell you that your house is worth 900,000 and convince you to sell it. That is, we are not in alignment. That is not, I am not disincentivized or you as the owner are not disincentivizing me to discount Less, Right. What if I was paid differently at 990 and 970 and 940 and 900? What if my commission rate varied for each of those discounts? Now all of a sudden you've got my attention. I'm not going to quickly jump to that 900k offer. I'm going to try to get you 950. Imagine if you had 300 reps that were incentivized to think that way and operate that way. The ramifications are that ripple through your company in a positive way are insane. Right. And so anyway, that's how I could talk all day obviously on this topic. But I mean there I could give you 50 examples like that of how sales leaders should be using some of the technology and tools to drive better quality and better performance out of their sales teams. Because that's what it's all about. That's all I really focus my life on.

I wanted to jump in quickly. This is an unsolicited commercial. I don't know whether you can see this but you got to put it.

In front of your face, put it in front of your.

It's called Value Capture Selling by Jean Claude Lebreche and he's a professor insead and he describes exactly what you said that you want to teach you a salespeople on how to capture value, not just create value for the company, but capture value for the company that they work for.

Right. And so many heads of sales are just focused on, oh, I need you to close more deals and you know, just close more deals, close more deals. And they don't realize, man, if I could just change the quality, you could actually close less deals. These deals would stick around longer, they'd be more forecastable, more predictable. You know, I mean it's kind of, it's insane to me that, that we're still here like you know, in 2025 and the archaic way that people. I mean the whole reason I'm doing Pro Verity is for years that exactly every time you know, we would do a pocket, it would go to this se and it's like a black hole and it could last three months, six months. We had no. And imagine if you're doing 10 of them or 100 of them, you have no visibility whatsoever and that is literally the lifeblood of your deal deal flow. Like what if you could change that a little bit? What if you had a purpose built app so they could, you know, use AI and use all this data to, to kind of be more prescriptive about how to get those deals to close. And what if it could send up warning flags? I mean that's exciting to me. Like anything I can do to help a CEO or a VP of sales increase their close rate, I know that's a win and that's, and that's why I get so excited about it.

So give us the secret sauce of Pro Verity.

Well, like I say, the secret sauce is just that it's a purpose built app for the ses. There's tons of software out there for all these different parts of the sales organization. The one part of the organization that as far as I've been able to tell has been ignored are the SE teams. And generally what happens is, you know, somebody creates a couple fields in the CRM tool and says, oh, you got to fill these out. And then they're surprised. Why? You know, the, the SES are allergic to doing that because it's not helping them do their job. We providing a purpose built app that they want to use, they'll use it to kind of standardize their practice. It's give tons of visibility to leadership and management so we can kind of As a sales VP or CEO, if I have a hundred of these things or 500 of them happening throughout the globe, I can get an indication of how we're doing in those things. But also because of all the data and AI, very similar to the story I had at Exactly. We're using all that data in AI to sort of be prescriptive and tell these SEs, hey, this deal is not tracking like a deal that's going to close. Right. And these are the reasons why go fix these things. Hey, we can get this POC to be more of a successful POC. And if you realize the success rate on POCs is somewhere between 50 to 65%, which means that, you know, 35% or more of the time people are doing all this energy in these POCs that can take months and months and then they are losing them. They don't even win them. And so my whole thinking was, gosh, what if I could change that win rate by a couple percentage points? When you, you know, if you're talking about big companies that, you know, it's game changing. So that's, that's the, that's the whole probarity piece.

I think.

What, what do you think, Mark?

I, I love that because this whole POC thing has always been a, a craw in my side because the amount of resources that companies spend to be able to help somebody, you know, execute poc proof of concept for those of you in anyway. And they'll spend a tremendous amount of time. And so many times what happens is the customer says, oh, I need three more months to test this. I need four more months, I need six more months. And it drags on and on. And what happens is the sales team gets nickel and dime to death.

Yeah.

So if you can change that. I always contend that if we can improve the discovery call and the poc, we will lower our cost of customer acquisition significantly.

Thoughts on that? And think about like imagine again, you got to think in terms of over have 100 of these happening. What if 10 of them you're losing because of some little product feature that if product management knew about, they could build and you could win 10 more or 10% more of these things. None of that stuff is captured in the world today because it's such a manual weird system. Like I said, it's managed by a few fields in the CRM tool. The other thing that drove me crazy at Xactly is we would do a POC for three months. We'd win the deal, we'd drink the champagne, we'd hand them over to services. Services team would call the customer and say, okay guys, we're going to start with a blank sheet of paper, like give us your comp plans. And the customer would be like, are you guys kidding me? I just spent three months giving you all that. And so the whole thing about Praverity is literally everything is kept and captured and moved on through the process to the services team. And what that does is it makes your customer have a much better onboarding experience. And that is going to obviously help with reducing churn down the road.

That shortens the onboarding process.

And it shortens. Yeah, of course.

Again, I mean you talk about customer satisfaction.

Huge. Yeah.

I think there's another phenomenon at work that needs further exploration. I remember when you.

Had maybe the first 150 clients and you had in the contract a clause that allowed you to publish the aggregate data.

Right.

Without a breach of confidentiality. And then you discovered that the data about compensation is actually the most valuable asset because there are so many learning lessons that you capture from those 150 companies that you can share with your new clients.

And Gerhard, this is such an important point and it's an important point for businesses to be thinking about. I did it almost accidentally at exactly going back 20 years. We put it in the contracts. It allowed us to aggregate and anonymize the customer's data. That data became the data set that we then built the AI on. Today it's much more accepted that people can use the data. So it's not as, it's not as a aha moment that you're. That companies are able to do this, but as CEOs might be sitting there today getting nervous about AI. You know, I saw a posting on LinkedIn recently that somebody, you know, used one of these AI tools to build DocuSign supposedly. And you know, in a week. I don't know if that's true or not, but I mean, I do think that the development curves are shrinking dramatically. The reason I sleep well at night is, is because it's not about someone going to go build the Pro Verity app. It's the power of Pro Verity is that data that you just talked about. It's the fact that you have all these customers across all these industries that are using it, and all that data is being collected in an aggregated and anonymized way. So there's nothing identifiable to anybody. But that's what's helpful in saying, because a lot of times when I go into a company, they'll say, oh, our POCs are, takes five months. And they don't know if that's good or bad. They're like, how does that compare to other companies in my market or other companies of my size or other, you know, and so to be able to say, hey, well, they're taking five months, it should take three. That's all of a sudden hugely important for them to understand and now they have something to work toward. Right? Again, that's just one example of the data. But think about, you have that data all the way through in every aspect, in every way. That's what's going to separate, I think the future SaaS, companies that survive this, you know, dynamic reinvention or re engineering.

Of software, so obviously you crack the code to optimizing compensation management. Exactly. What are the three takeaways that you want to share with sales leaders that want to be more effective with their comp plan?

I mean, again, comp is something, you know, we could spend a week here talking about. I think, you know, if you're just listening and you're running a sales team, the key takeaway should be look at your most heads of sales kind of view comp as kind of a pain in the, you know what, and it's a chore for them to get the, the plans done. It's, it's why oftentimes for companies that have a calendar year, plans aren't even coming out Till March or April, which is atrocious, right? This is what's driving the lifeblood of your business. So for one, I would take it very seriously. For two, these dollars are so valuable. These dollars that you're dangling in front of these reps. Take the time to think about what you're using those dollars to drive, right? And if you're trying to drive the reps to do more than three things, you got to really ask yourself, am I doing the right thing? Because for one, even though it's a lot of money, when you start dividing it down to a third, you know, you got their attention. You divide it to a fifth or a tenth and you don't have their attention. And so you run into, I see plans all the time. There's just too many measures on them. Too many things they're trying to get the reps to focus on. They've overcomplicated it. They don't have a tool like exactly. That gives visibility and can show the reps how these things behave. So just really make sure that you understand what the three things are and use people like exactly. To help you figure out what those three things should be. And think about some of the things like the examples I gave discounting practices, you know, length of contract, price increases. So many comp plans, so many people that are listening to this right now do not do that. And if they say they do, they're probably not being honest with themselves. And so take a hard look in the mirror. Say, am I really doing this? And what if I did? What if I changed my average duration of contract like I did it exactly from 18 months on average to three and a half, four years or something, right? What would that, what would that mean to your business? Think about if you had zero increases per year. And now over this three or four or five year contract, you're getting 5%, 6%, 10%. What would that be worth? I can tell you because we've done it and it's, it's game changing. You could, you could find yourself in a situation where you're waking up in the morning with 5 percentage of growth before you even get out of bed because of the things I'm talking about, right? And so it gets back to growth. Growth is important, but it's how you get there. Do you just, you know, kind of beat the sales team harder and say you got to sell more and you know all this? No, I mean, yes, do that, but augment it with some of these other things and that's how you see the great Companies really figure it out.

So what kind of thinking leads to those compensation mistakes where they have like 20 different payouts? Is it the desire to be fair or.

The the quest for being effective?

I think it's just a lack of understanding. First of all, comp plans are often driven by the head of sales. And I know there's some on this call, so please don't be offended. I was ahead of sales. Head of sales are often the most vocal in the room at design time. They're usually the most highly paid in the room and so they can be over domineering on getting their way. And the fact that they have been paid on account plan most of their careers does not make them an expert in compensation. And so unfortunately they don't listen to the people who are experts that have the data. Data from companies like exactly. That's been doing it for 20 years and has just eons amounts of data. And so my advice is check your ego, take a step back, admit maybe you're not the expert even though you've been paid for on comp for 20 years and let the experts give you some advice. Because the difference between doing it right and doing it the old way could literally mean the difference of you making your number or not and you having a job in the long run or not.

Brilliant.

That is very powerful what you're saying. Because so many times you see that expert, that and I'll use a basketball. Larry Bird and Michael Jordan, phenomenal basketball players. But they attempted to coach and they weren't good coaches.

That's right. Because they had an innate skill that was just unnatural. Right. And it's why I don't like to compare CEOs to Benioff. Right. That guy's in a different realm. He's just a, he's a freak. Right. He can do the stuff that others can't do. So don't try to hold up to that standard. Right. Try to just do mere mortals like myself and say hey, can I do what this guy's doing? Yes. And I'm going to tell you how like you know, these are things that everyday American or everyday people can do.

So let's go back to the conversation we had before we actually started, which is the advisory board. As someone who grows a company from Nothing with just two people or three people to what the at one point like 1200 employees? How many?

Yeah, that's right.

So you're going through.

Difficulties and you have advisors. So what is your golden rule for.

Attracting advisors? Keeping them and letting them go. When you don't need them anymore.

Yeah. And I think this is true of CEOs on the call or people who want to maybe be a CEO someday or a founder. But it's also true of VPs of sales or anybody in any role. If you want to aspire to be, you know, doing that at a bigger level, bigger company, or you want to, you know, be, maybe you're a director of sales and you want to be the, the VP of sales. Every one of us, regardless of the position, has to think and take ownership of our career because no one's going to care about your career as much as you do. That's just the fact. And so you have to find and seek out people that, mentors that have done the job that you want and are willing to coach you on how to get there. So that's number one. Number two is you have to be open to change, right? And this is, this is a biggie because so many CEOs I meet, like I told you, that have built their companies to 10 million, they think that, that they just walk on water, they're going to fail because they are not open to change. And what got them there, I promise you, will not get them to 100 million. And so the ones that come to me and say, hey, I'm at 10 million and I realize that I got to do things differently because it's just getting, it's getting bigger, everything's getting, you know, more complicated. Those are the ones I know have a chance, Right? And so then, so the answer is you got to surround yourself with not, not 100, not 10, a couple, two or three is plenty that will coach you. And then to your, to your latter point, then you got to change because those people, like when we were sub 50, I had a certain set of, you know, kind of personal coaches and mentors that had taken their companies to 50. But then when I wanted to take it public and you'd go to over 100, it was a whole different cast of characters. I needed to find people who had taken their companies public that were willing to coach me and be my mentors. Now those are harder to find, but I found them. And I think that is a big reason why whatever modicum success I've had, I credit to the fact that I'm very malleable. I listen and I'm constantly looking to become better and recognize that what got me to where I'm at now is a little bit of luck and other things. And I think if you keep that attitude, it'll pay dividends all through your career.

Mark, what do you think?

I. I'm impressed that you're talking about how this whole thing of we need to morph and, and change, because I think it's so easy for us to. To sit here and cling to the resources we have and stay with them. And you're viewing people as a resource. How do people. How should a sales leader go out and find? Because I don't care what, what position you're in, you need advisors. How should a sales leader go about finding? Who are those advisors?

Well, I think, you know, sales leaders are actually great at this if they want to do it because they have such a reach into other areas. I mean, I get calls all the time from the heads of sales that are on the companies that I'm an advisor for or on the board of. And I can, I can direct them to people that, you know, that they're seeking. Right. So those people are out there and they're not hard to find. And what I have found is that most people that have had some modicum of success are very cool about giving back. Not going to give you five hours a day, but are they going to give you an hour a month? Absolutely. Will they let you buy them coffee or take them to lunch once a month? And I'm telling you that one hour once a month is worth its weight in gold because it's going to give you a chance to ask somebody who's not in your chain of command, who's not on your board and has, you know, other things driving them, but only truly cares about you and your. Your career path. They're going to give you the best advice, and if you listen.

It'S going to serve you well.

That's huge advice. Thank you for sharing.

By the way, there's another book I recommend. I know the author, David Chichelli, and he's talking about growth not just for companies, but also for sales. And ultimately, I think that the foundation of your success, Chris, is your ability to change.

In a positive way and meet challenges in a positive way so you continue to grow no matter what the soil. And somebody once said that.

Plants grow bigger when they get replanted, repotted.

And I think your advisory board is sort of the new pot that you're growing in.

Yeah, I totally agree with you.

So share something else on a. On a more personal side that, you know, you create a company and then you, you know, take it public, you take it private, and then you step down as a CEO. You're the chairman and all of A sudden you have a lot more time on your hands and you have build a fair amount of wealth.

What, what was that transition from being in demand? Very hectic. And then all of a sudden, you're the more lonely guy. Were you at home?

Well, it was tough. You know, I think first of all, that transition of the company to being this growth at all costs, to this much more balanced company, that. That in itself was very interesting and challenging for me because I'm a growth guy, right? I kind of grew up as a growth guy. And so focusing on, you know, squeezing every last penny of profitability out was important and necessary and created ultimately an incredibly valuable company. But I found myself saying, I don't actually want to do that every day. I'd rather go back to the size and stage where growth at all cost does make sense, right? More like what I'm doing today at poverty. But what. To be honest, what I really thought was I was just going to retire and, you know, move my family, my family, my. Just my wife and I now a couple hours north of where we lived, and we bought this place on a lake. And, you know, we were kind of like, okay, we're gonna. This is it. We're gonna just, you know, enjoy the grandkids and stuff. And that lasted about two months. And my wife said, you know, I'm not sure we're gonna make it to 35 years because we've been married 34. And if you don't go find a job, because, you know, I was getting up every morning and I was organizing her day and talking about what we're going to do for lunch. And she was like, you need to get the heck out of here, like, go do something. And so I just realized that, you know, I still had way too much to. To do, and too much energy wasn't quite my time to kind of hang up the. The cleats yet. And so that's how I got involved. I got so excited about Pro Verity when I kind of started paying attention to this, this untapped, you know, area of the. Of this, because I. I have been espousing for a number of years that there's too much software, especially sales productivity software. And so the thought of me kind of creating yet another one was abhorrent. But I think the qualifier for me in my mind is there's too much software in the sales productivity space. But if you stack rank it based on.

Roi, there's very. There's very few. Right? There's a bunch of stuff that is neat and it's nice to have, but I'm a big proponent of getting rid of that stuff. There's very few that can absolutely move the needle, and exactly is one of them. And that's why I spent 20 years doing that. And Praveri is another one. These are, these are apps that, if used correctly, literally can change the game. You're talking about dramatically improving the ROI such that. I mean, I used to talk about it in the early days of. Exactly. Like people just couldn't. You couldn't afford not to do this because the ROI was so big. It, like the return on investment was literally measured in weeks. It was, it was just incredible. That's how it is now. And there's not many. There's not. There are some. But there are not too many software apps that, that fit that kind of, you know, mo. And so that's what I, I'm excited about.

I want to mention another side of you that probably can explain your consistent success, which is that you love woodworking.

I do.

And you create something. You look at a. A tree stump or whatever, or a piece of tree, and. And you see like a ball that, that has a. A new shape, a new life for that tree that would be rotting. And I think in a way, it's symbolic of.

Your ability to make something out of nothing.

Well, I appreciate you saying that.

I think you're saying that because Garrett wants me to make him a bowl, so I promised him I would. He's reminding me that I promised that. So, yeah, I find it to be very cathartic. I think that people that are in these jobs that are high stress should.

Find things that allow you to take your mind off the stress. And one thing I'll tell you is when you're spinning a 20 pound piece of wood at 3000 or more RPM and stabbing it with a very sharp knife or tool, it has to have your undivided attention. And what I find is that I do that for a couple hours. I'm not thinking about all the other things I had to do. And it helps me clear my head. So, yeah, you can check out my stuff at Cabrera Creative on Instagram.