SaaStr CRO Confidential: Founders Fund Partner Sam Blond + Divvy CRO Sterling Snow

Hey Saastr fans, welcome to the second installment of the CRO Confidential series. Uh, we have an incredible guest today. My name is Sam Blond. Uh, I am a huge Saastr fan and leading the CRO Confidential series. I most recently joined Founders Fund as a partner, and I was CRO at Brex for the last 5 years prior to joining Founders Fund. Today's guest, as I mentioned, is somebody that's incredible. I would describe my relationship with him as a bit of a love-hate relationship. More on that in just a bit. Sterling Snow, the CRO at Divi. Sterling has led the revenue organization for 5 years now. Last year, $2.5 billion acquisition by Build.com. Pretty incredible 5-year run. Sterling, welcome to the pod. Ecstatic to catch up with you today.

Thanks, Sam. Yep, stoked to chat, stoked to just deepen the, the love-hate relationship we got going on here.

Perfect. Well, for viewers, a bit of context, uh, Brex, where I was most recently CRO, and Divi, where Sterling is currently CRO, were bitter competitors from the time that I joined, at least, which was mid-2018, at least through sort of like early 2020. We were the primary two players in the corporate card spend management, neobank space. And so in many deals, we went up against each other head to head. I always had a ton of respect for you, Sterling, but also sort of like a bit of hatred, as I mentioned previously, just because of how competitive the two of our businesses were. But man, you were great, and this is going to be fun today.

Yeah, I mean, Brex, like an incredible business. I've thought about it a lot too. Like, would Divi have been as good as we were if it weren't for like an amazing competitor? And I've thought about that on a personal level too. There were a lot of nights where I was laying awake being like, I wonder what Sam Blonde is thinking about or trying to do right now. It just, you know, trying to, trying to figure out how to grow and get better. So it's a mutual feeling for sure.

Very cool. Well, now that the companies are like less competitive today, it seems, and we won't necessarily go deep as to why that is today. And also, I'm no longer at Brex, and we're developing a relationship. And this is so fun to do after our history of being competitors. So let's go, let's start deep, going a little bit deep on competition. So as I referenced, Brex and Divi, hypercompetitive for, you know, at least a couple years, reflecting on that time, and maybe some takeaways for folks that are listening today that are in a competitive space. What are some of the things that you think you did really well? And what are some of the sort of like things that you did less well or mistakes you made from a competitive standpoint?

Yeah, I love the question and I've spent a lot of time thinking about it over, over the years, potentially, or particularly since we got acquired. So I'll start with the things I think we didn't do super well. The real learnings for me, the first one is I didn't know enough of the nuance about the space we were in. So, you know, we were in, in fintech and I'd come from just more, more traditional SaaS. And so there were just mistakes around bins and processors and economics. And there were, there were things I didn't know that 100% inhibited our ability to like compete and to do it, do it well. And I didn't even know about them. So I think the first learning is when you aren't the expert, Become the expert or make sure you've got one in the room or on the team, otherwise you are bound to make costly mistakes. I tell people this all the time, saying like, I have a billion-dollar education because of like very fundamental mistakes as it relates to fintech, but that I think translates to the other industries. The other one is be very careful of two things: thinking that your competitors are too smart or thinking that they're too dumb, because I've made both of those mistakes. Sam, I've said some of the stupidest things in the world about Brex. So go back to 2018. This is, again, when I don't understand anything about fintech. I said things like, "I bet Brex is losing money on every swipe. I bet they're unit economic negative. I bet this is the land grab to a larger thing." Dead wrong, right? Absolutely stupid stuff to say and to think. And then I've had the other mistake, mistake too, where you start looking at somebody, you start creating kind of this Frankenstein in your brain and thinking, well, every single thing that they do, well, we should do that because they're amazing and they're crushing it. And so, between those things, those are some of the harder learnings for me and mistakes that I've made. And then on the—

Those are great. Just to interject real quickly, one of the things that I think back on though that you all did very well, which is a bit of a counterpoint to what you just described, I remember we had a billboard campaign that was something like, you know, thank you for growing with us or something like that. And we put a couple folks on it and, um, it sort of like died off or whatever. And you all, um, you, you really made that a part of your brand, especially for Utah-based companies, and did it better than we did. Um, and so I don't know if you got the idea from us or what, but that is a counterpoint to where like you sort of took something that we maybe, um, did, and it worked a little bit, and you did it better than we did. And so that's an interesting maybe counterpoint on that one. It's—

I mean, you're, you're dead right, because it's not like all the ideas are bad. And if you can not reinvent the wheel and improve on it, absolutely. We love that billboard, by the way. It's just an opportunity for us to like align ourselves with our customers and with the communities that, that we're involved in and just kind of shouting people out. But it's been a good one for us. So yeah, I agree with you. So here I'm curious.

Yeah, go ahead. Um, let's talk about some of the things you did well.

Yeah, I, I think that really early on Brex did an excellent job dominating the, the startup VC-backed sort of market. And I think we had a choice to make at that point. It's like, can we go try to, to compete, or do we kind of pick, pick a different market altogether? I remember thinking a lot about DoorDash and Uber and who dominates the cities and who dominates the suburbs. And I think one of the things we did well is we understood understood that we were going to be able to be more valuable and more successful if we, if we kind of went a different direction, if we went after more of the mainstream type businesses. And, and so, you know, I remember when we lost like a Carta deal to you guys, and those were pivotal moments of like, okay, we can either stay here and try to compete, or we can try a very different strategy. And so I think our moves around appealing to, building for, and in our go-to-market motion around mainstream America. That was one of the things that I'm proud of that I think we did well.

It's super interesting. Both of the things that you mentioned, uh, relate to some of the things that I was thinking about, um, just reflecting on, on what we were going to be discussing today. Um, and something that Brex, I think, did well, which is exactly what you just described, is around messaging and being very deliberate about the segment that we were launching into. So, so Brex launched as the first corporate card for startups, um, and what that did was it, it sort of branded us as the right fit. If you're a startup, this is where you come. If folks are familiar with Innovator's Dilemma or Innovator's Solution, we picked like a small segment of the corporate card market and we attacked it. And I think that provided meaningful dividends for us just in terms of acquiring market share. And what I'm hearing from you, Sterling, is you all did that with more like main mainstream America, different category as well. And by being deliberate about a specific type of customer that you're acquiring and going after that segment very hard, it was the right decision for you all.

Yeah, we kind of— what you all did for, for startups and venture-backed folks, we tried to do for the super unsexy folks. So internally, externally, we talked about HVAC companies, we talked about plumbers, we talked about all of the different things that we felt like we could champion and bring a spotlight to those folks, bring them better technology. It's exactly what you all did, dominating that, that startup market, and we tried to bring that to, you know, Middle America.

I love it. Um, at the early stage, pick a segment where you have seemingly strong product-market fit, attack that segment, acquire meaningful market share, and expand from there.

Absolutely. You know, and one of the other things I think that we did well is I remember— so we were in Utah, y'all were in San Francisco, and, uh, I paid a couple of cars because you guys were the, the only corporate card for startups, right? The first corporate card for startups. And I remember we paid, and we paid some cars, wrapped them in like, you know, the Divi branding and said, you know, corporate card for everybody. And we had them sit outside your office. So, you know, those are just the fun things that looking back over 5 years, we got to, we got to go through together.

It's been a lot of fun.

And then you guys did the same thing in Utah and absolutely demolished us. And, you know, less good, good lesson to learn.

But, but, well, um, $2.5 billion outcome in, in 5 years, a lot went right. Um, And on the, you know, you mentioned, you mentioned, uh, uh, some of the mistakes. One of them resonated with me, um, and it was one of the things that we did that, uh, I have mixed feelings about. In a lot of deals where we competed with you, it was a bit of a race to the bottom on rebate. And, and for folks that are in SaaS, the equivalent would be sort of like discounting to the lowest price point to be able to win the deal. Um, And, you know, I have mixed feelings reflecting on that. That said, I think one major takeaway in a competitive environment is I would rather be the higher-priced product. And a lot of sales is psychology. I would prefer to be perceived as the premium product in the space and discount where necessary, but hopefully not need to discount to the point of the competition. And so that's one thing reflecting on, on mistakes that we made. We had a lot of sort of low-margin deals where we were hyper-competitive. Competitive because we negotiated on price so deeply. Um, something that I'm a bit conflicted about, but, uh, uh, those— there were a lot of deals where the margins weren't great.

Yeah, couldn't, couldn't agree more. The other thing that's fascinating about us is we've got rebate, which is our equivalent of pricing, but then we have other things that affect those margins. Like, we've got risk, we've got top-line interchange, we've— and so it's kind of this ever-evolving math problem that you're trying to figure out. And I agree with you, if you could do it all over again, you'd stake your claim on something that has little to do with those particular areas because it's hard not to race to the bottom if your value is built on, on either one of those underlying economic factors.

That's, that's an excellent learning. Position your value around something that isn't price-related, rebate-related for the card space, something more like value that the technology itself provides. Um, let's stay with competition because I think it's, it's, um, applicable to most, uh, uh, environments, most companies today. There's some form of competition. When you went against Brex, and maybe in the abstract, just how you think about approaching competition, did you— do you stick to your strengths and not mention the competition? Do you say negative things about your competitors? What was your approach here, and, and maybe advice that you have for other folks?

Yeah, so it's interesting because I've seen people who operate on far ends of those spectrums. Like, there are some people where internally and externally it's like forbidden for you to mention the name of a competitor, right? And that's the whole like, hey, we're running our own race, and if we look to the side, we're going to get distracted. And then you've got the other end of the spectrum where you get competitor obsessed. It's like every tweet that some brand makes, it like upends your whole day. And, and I think I started out a lot more like that and, and was, was just absolutely fixated on, on our competition. Now I think the learning is it's, it is somewhere in the middle. I don't think the right move is ever to trash your competition. I just don't think that there's any value in it. Humans pick up on that stuff so fast. The, the thing that you can do is point out differences, and, and the way to be effective at that is to ask the right questions, figure out what differences matter, and then simply point out, say, hey, Brex is an amazing product. Here's where I think we're— here's where I think our differences might help you out a little bit more. And that, that tone tends to resonate. I think it matters internally too, because you can't be afraid, but you also can't be ignorant. And so being respectful of people and trying to understand what there is to learn in what they're doing, I think there's value in that. But either end of those extremes, I think, tend to yield poor outcomes.

It's, it's so funny how similarly we think about a lot of these things, and you and I have never discussed them. Um, and when it comes to competition, uh, there are, I think, creative ways that you can describe differences between you and your competition such that you increase the probability of winning the deal but are not perceived as, uh, bashing the competition, which would decrease your probability of winning the deal. And, and, uh, uh, be off-putting to the buyer. Um, one thing that, that has worked and that we did both at Brex and Zenovitz and elsewhere, um, it's during discovery. Um, you ask, are you evaluating any other solutions or just looking at us today? And they'll almost always tell you, uh, and if you don't ask that question, you're flying a little bit blind and not doing appropriate discovery. And if they tell you, yeah, we're looking at, we're looking at Divi as well, My next question is generally makes a lot of sense. I'd love to learn what you're solving for. And then throughout the product demo, we can go one of two ways. I'm happy to just sort of stick to what Brex does well. Alternatively, I can highlight some differences between our product and Divi, just knowing that you're looking at the two of them. And 9 times out of 10, I really like 99 times out of 100, the response is something like, oh, you know, that would be helpful if you highlight some differences. And then you're sort of like asked to point out some differences and you do so.

And if you're perceived as truly— because nobody knows more about Brex that doesn't work at Brex than like me, right? And vice versa. And if I can actually be an expert, that's where I am adding value to the person who's trying to figure out the best thing for their business. So I totally agree with you. If they can— if they basically ask like, hey Sam, what's your expertise? And you highlight differences in a way that's not off-putting, you're in a great spot to control how, how that buying decision goes down.

You're, you're almost writing the RFP. Now, like, you know, that, that's more of an enterprise type thing, and, and of course you want to try to write the RFP when you're, um, when there actually is an RFP. But in a sort of micro version, in a transactional sale, um, you're effectively defining what, uh, is important to the person alongside them.

It's an interesting point, whether it's an RFP, which is farther up market than we typically played, but everyone's got something in their head. And if you can start to be that, that voice of like, what are you buying for? What problems are you solving? Okay, well, I'm going to help you, then you're in a good spot.

Awesome. Last, last thing on competition, and then we'll move on to other exciting topics. Is there a specific value prop or message that really resonated with customers when contrasting to other players in the space?

Yeah, the thing that we came out with a little bit before and in a little bit different way than other folks was around like our ability to create budgets and to have, have spend management that was by departmental budgets that sort of mapped to your GL. And so people, people spend money in very interesting ways across all different kinds of businesses. But really the place where we felt like we were the most unique was around how, how our budget functionality allowed people to run finances. That was the one that really helped us.

And so you were selling, um, I think find a value prop that really resonates with your buyer and helps them do their job more effectively. Something like that is maybe the, the takeaway.

Yeah, exactly.

The thing for me, and this has been universally true, I've spent most of my career at 3 companies: EchoSign, which is electronic signatures, Zenefits, and, uh, most recently Brex. The, the thing that has universally, uh, resonated with folks is, is around simplicity, um, in, in like ease of use, ease of adoption, ease of rollout, and positioning ourselves as the, the sort of like simplest player in the space. And you just talked about budgets. It's interesting because, uh, uh, and not to go too deep on this specific use case, but Divi had a sophisticated budgeting tool that was, that was a feature that Brex did not have. And we actually positioned that as a negative. We said, you're, you're a, you know, 50-person company. You don't want to have a lot of sophistication around rules around where cards can be used and dollar amounts that can be swiped on cards. You just want this to work. And by getting, like, introducing more complexity into the rollout of your corporate card program, you are going to make things more complicated, time-consuming, frustrating, etc., etc. And for us, that, that seems to resonate and almost turned a potential negative. And if we were doing like a feature bake-off, we didn't have it into a positive around simplicity.

I think that there's so much wisdom in doing that where like maybe your initial reaction is to be like, well, you know, we don't have budgets, but let me show you something over here. It's like, actually, let's talk about why you don't actually want that. I think it's brilliant. We've done, you know, we've done similar things when you talk about, talk about folks upmarket. And for, for us as businesses, you just get to choose which flags you want to put in the ground because someone's going to turn that into negative. You're going to try and turn that into a positive. So you have to be right. That's what you're betting on is what does the market actually want, what's going to win most of the time, because somebody out there is going to make your cool thing look like, look like a headache. Because I, and I think that's very smart.

Uh, the other, the other thing that comes to mind with messaging, and we'll switch gears a little bit on this, um, thought in the changing environment, uh, one thing that I've been talking to sales leaders about is shifting messaging from what resonated, uh, value prop messaging, whatever it is, from what resonated the end of last year, the things that matter today are probably different than the things that matter 12 months ago. And if you can position your product as something that will ultimately save a company money, especially if you're hearing from the company or the, the buyer at that company, that that is a priority, you are going to position yourselves better today than you probably did when money was effectively free. Yeah, Brex and Divi, we were competing in the the free money, uh, crazy fundraising environment, inflated in valuation timeline of like 2018 to 2021. Today is, um, a different world. Uh, and so let's assume you maybe have some money in the bank, as many startups do, because we've come out of this incredibly, uh, attractive fundraising environment. Um, what today are you doing differently, if anything, given the macro changes that we're experiencing?

Yeah, I think a lot about Bill Gurley, the famous quote, like, the game on the field, right? And the game on the field is, is just so different today than it was a couple years ago. In the— some of the things that we've talked about from our learnings, I think, I think translate really well. You, you want to position yourself as much more than, than something that can be raced to the bottom, and you want to actually like hold that line much earlier because that's a drug that's hard to get off. So we're talking about CROs and marketing and sales teams. And when that becomes your muscle of like, hey, we get into this competitive situation, we discount, discount, discount, you go try and take that away when the game on the field changes. I mean, it's brutal. It's absolutely brutal. And so I think a lot about, about that. I think, too, about the— my thinking around efficiencies has changed a lot in a lot of ways. We were going so fast and had such aggressive targets, there was really only one fast way to do anything, and that was hire more people. And what that did in a lot of ways is it left us less efficient than we want to be when the game on the field changes. And it changed, it changed super fast. And I'm sitting here like, why do we have people doing that thing that we should have, like, built an automated process around? And I look, I look out and I'm honestly like, I'm a little embarrassed. Like, we kind of took some of those short cuts because it was faster, but it wasn't the right thing long term. And so those are the, those are the biggest ones that jump out to me right off the bat.

It's, it's so smart and, uh, resonates with me a lot as well. I think when, when thinking about, uh, growth and how to grow faster, one, one of the things that I think immediately comes to most people's mind is investing more in sales and sales people. One thing that I've learned over time is more salespeople do not equal more revenue or more sales. In your comment around efficiency, the thing that comes to mind for me sort of tactically is investing in this like concept of strategy and operations, go-to-market strategy and operations. We, we had one headcount that was dedicated towards effectively like account and lead scoring and surfacing the, uh, accounts that are going to generate the most revenue and also the contacts within the accounts that are most likely to convert, which messaging to use based on the persona of that contact. Um, and we hired this person, and in coordination with a few other things, we increased our average deal size by something like, uh, 3x. And increased conversion rates as well. And so it's interesting just thinking about creative ways to gain efficiency, and oftentimes it falls into this bucket of strategy and operations that has just been a huge asset of, of mine, and, and I contribute a lot of my success to this function. Investing there might be interesting to improve efficiency, as you just described, in this world where sales efficiency matters. Uh, quota attainment, how much your reps are contributing, it matters today a lot more than it did 12 months ago. Um, and so, uh, sort of tactically, that's what comes to mind making your comments.

Yeah, I totally agree. And we had sort of an initial shock to the system when COVID happened, right? And for our business, we immediately, you know, revenue drops 30% overnight. And so we get— we got thrust into that efficiency mindset for just a second during COVID and then it obviously went crazy again. But during those moments We had an initiative that reduced our CAC by like 75%, and it was around reducing friction with how people onboarded with us, the underwriting, kind of the self-serve component to that. And if you can have the discipline to focus on those high-leverage kinds of things, even when the game on the field is ultra-aggressive hypergrowth, I think those are the companies that really, really do special things.

And, and let's end, uh, sticking with this sort of new, new world, how we approach it. Uh, is there— do you have a favorite initiative or, or a couple initiatives that you were do— that you did, uh, at Divi that were low cost, um, but drove sort of a big impact that might give, uh, viewers a few ideas?

Yeah, so going back to like the, the beginning, and I joined Divi before we raised any money at all, so we were like, we were freaking scrappy early on. I, I remember to come to mind. One, we had a local tech conference, Silicon Slopes, and, you know, there's 15,000 people that go there, but we couldn't afford a booth or anything like that. So we, we came up with this idea called the Cashback Cowboy. We put one of our SDRs in a purple suit with a purple cowboy hat, and we just taped, we taped like $300 worth of $2 bills onto him and just had him walk around and say like, you need to look at Divvy, you need to look at Divvy, you need to look at Divvy. And, uh, and, you know, it actually generated like a ton of our early business and some of our earliest like angel investors. The, the CEO of Domo at the time like called us because that just stuff like that. And then, and then the second one is I remember just thinking, okay, I need to get us in front of a lot of people with an aggressive offer for very low, like low ad spend basically. And I just remember thinking, where do— where does our buyer hang out? And, uh, at the time, business newsletters were kind of just starting out. And I remember we called one called Owler. They would send out a business update or alerts around like who you wanted to follow. They sent it out to millions of people at the time. And I remember calling them and being like, hey, you guys don't have any sponsors on this thing. Can I write like a piece of content? I'll give you $1,000, and if this thing works, you know, we'll help you kind of build your, your ad And I remember that day, like it was, it was a very pivotal moment for me because we got like 900 demo requests. Again, there's like 2 or 3 of us on the sales team. And that was the moment that I'm like, okay, there's a market here. We can find it, we can do this. And those were 2 of the scrappier things. You just have to find those opportunities though, because it doesn't exist in just plugging in money in Google or LinkedIn SEM. Like it doesn't work like that if you're trying to be, if you're trying to find outsized leverage.

I love it. Really great examples. And so many ideas are going through my head and things that we did as well. I'll reference one of them. But I think that the primary takeaway here is it doesn't require a huge budget to drive demand and have an impact on acquiring new customers and revenue. The thing that came to mind as you were talking about an event, I'll reference one thing that we did very early on, super scrappy. The person that was leading, I think maybe even leading support, board at the time. Her name was Larissa, or is Larissa. Um, and Larissa did this campaign where we got a handful of TaskRabbits, and we would go to the different conferences, and right outside the conferences would be public streets, and we would put TaskRabbits on the public streets handing out breakfast burritos, like breakfast burritos. We call them breakfast on Brex, or breakfast burritos, or something like that. And these breakfast burritos were like $3 each, and we'd wrap them in, uh, Brex wrapping paper and then use like a Brex sticker. And we would just be right outside the conference but on a public street. So it wasn't like even, you know, part of the conference sponsorship or anything like that. And we would pass out like 1,000 of these things and everybody would sort of be talking about it. We'd have people running up to us like, we heard Brex is giving out burritos. And so, you know, at 1,000 burritos times $3 each, this is like a $3,000 campaign to have like a really meaningful impact. And at least on the brand side, And if it's your target market, so many people talking about you and knowing who your brand is. But again, I think reiterating the sort of fact that you don't need to spend tens, if not hundreds of thousands of dollars to have a meaningful impact on driving brand recognition or demand for the product.

Amen. Yeah, couldn't agree more.

Well, Sterling, we're bumping up on time. This has been a blast. Thank you so much for joining. Everyone at Sastra, thank you for tuning in. We'll have more exciting podcasts and guests in the future. But Sterling, this has been, as I said, just a total blast, and I really appreciate your time.

Yeah, thanks, Sam. Appreciate it.

All right, take care.