The Answers To Scaling, Hiring, And Everything Else: An AMA With Saastr Founder & Ceo Jason Lemkin

Name: The Answers To Scaling, Hiring, And Everything Else: An AMA With Saastr Founder & Ceo Jason Lemkin
Uploaded: 2022-08-25T16:00:08+00:00
Duration: 51 min 2 s
Channel: Jason M. Lemkin
Description: In this unscripted SaaStr AMA, Jason Lemkin shares candid advice on a wide range of SaaS topics. He emphasizes hiring curious, passionate people and…

25 Aug 2022 · 51 min

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51:02

In this unscripted SaaStr AMA, Jason Lemkin shares candid advice on a wide range of SaaS topics. He emphasizes hiring curious, passionate people and continuously questioning one’s role as CEO. Lemkin highlights the value of learning from public SaaS companies through his weekly "5 Interesting Learnings" series, dissecting metrics such as NRR, deal size, and acquisition channels. He debunks a "valuation crisis," explaining that the downturn is limited to over‑funded unicorns and that venture capital is shifting toward crossover funds and early‑stage deals, making fundraising harder but not impossible. Lemkin advises founders to target new enterprise customers during economic uncertainty and to avoid low‑margin business models. He uses a "vitamins vs. painkillers" metaphor to argue that SaaS founders should start with a 10× feature that solves a real pain, even in crowded markets, and then iterate. On mentorship, he recommends two mentors at different stages ahead of you and warns against mediocre or overly‑expensive coaches. For hiring, he stresses that small layoffs don’t solve talent shortages, that remote work is now permanent for most tech teams, and that hybrid office space will remain niche. He outlines a detailed playbook for transitioning from founder‑led sales to a VP of Sales, insisting on having at least two quota‑hitting reps before hiring a sales leader, and describing the "wing‑person" (Rio) model. He also offers tactics for navigating budget freezes—target the top 20% of buyers and engage multiple stakeholders. When marketing outpaces product, he advises making the website better than the product and using customer feedback to prioritize feature builds. Finally, Lemkin shares his vision for SaaStr Europe as the premier global SaaS gathering, calls for broader team participation, and urges support for the inclusion program to increase under‑represented founder attendance. Throughout, he weaves anecdotes from ZoomInfo, Adobe Sign, and other public SaaS firms to illustrate his points.

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So I got no agenda, no slides. We— I did a lot of slides already. I just thought that if there was anybody left at the end of day 2 that had anything they wanted to talk about— scaling, SaaS, fundraising, hiring, anything— and I could be helpful, we could do a little extra Q&A. So, but I got no particular topics, but if I can help in any way, let me know. So Open it up if I can help in any way, or I can make it up. But anyone got a question they've got to start? Is there anything I don't know? Uh, there's a lot I don't know. I think, uh, I— what's that? I think we're all still learning. Well, look, I mean, I think all everyone here, and importantly for everyone you hire, you need to hire curious minds, right? It's curious minds that let us be great at what we're doing. And I think that, you know, I must have talked with 4 or 5 CEOs here today doing more than $5 million, not $500 million, who asked me— oh, one doing $100 million asked me, am I good enough to be the CEO still? Should I still be the CEO? And the That's not the question you asked, but I do think it's a question everyone should ask themselves each year. And the answer I think is twofold. One, if you can recruit people better than you, you should still be the CEO. And two, I think you have to have a curious mind. You have to be deeply passionate about what you're doing and want to learn more. And as sometimes we're not as founders, sometimes founders sell their companies because they're, they don't end up being deeply passionate about what it does. But For me, I, you know, I find that the mechanics of building these companies, how it's changed, the physics of it are very interesting. So I try to be a subject matter expert, but everything I do, I learned a lot today. I learned, I've done a bunch of things with Henry from ZoomInfo. If you were at that one, you could probably see I learned a few things on stage even though I knew the slides. So yeah, there's a lot I haven't learned. For what it's worth, I think I try to write these on Saastr. I think there's a gift today, which is that, you know, in the last 2 years, I mean, ZoomInfo only IPO'd right after COVID hit, so it's probably April or May. It's not that long ago, right? It's 2 years ago. Now there's 20 or 30 public SaaS companies we can friggin' learn from. And I write one each week on saastr.com. If you haven't seen, it's called 5 Interesting Learnings. Like, there's nothing in those 5 Interesting Learnings you can't find on tech and on like stock picking sites and Seeking Alpha. But I try to do it from a founder's perspective. And you can learn from these. What's their NRR? How do they get their customer? What's their deal size? What's their acquisition channel? How much do they get from SEO and SEM? And it's a rambling answer, but I think it's just a gift that we can learn from all these public SaaS companies. And some things, they're too big, right? I mean, it was funny for Henry Saini, he segmented his sales team at $80 million in ARR. That's a little late for a lot of people here, right? But we can learn a lot from ZoomInfo. How its sales and marketing efficiency, which is crazy good that early, the fact that there's still only 11% international international today and why. And so, those are the next level gifts, right? Is learning from the public companies and the real unicorns, because there's something in each of them that you're like, holy shit, this information was not, not even though it was public, in some cases it wasn't even known just a couple years ago, right? So, that's the answer to the question. Hey, the crisis? The question is, where are we in the crisis in valuations? I'll give you, Maybe a little bit. I went to maybe half the VC sessions. I'll probably give you a different perspective on them. First of all, as I said in the opener, there's no crisis in SaaS. There's no buying crisis. And again, and I mean this a little bit meanly, but there's no excuse to not hit most of your plan this year. There's no excuse. Every— look, and again, look at the public companies. Look at Snowflake and GitLab and ZoomInfo. I mean, growing almost 60% at a billion in revenue. Yes, Zoom and Shopify and folks that were huge COVID beneficiaries had a bit of a hit, but even those have resumed their growth path. So don't— there is a downturn here in venture, which I'll chat about, but the downturn in SaaS at best is uneven. At best, it's concentrated in overfunded unicorns and some parts of consumer. But the economy, even though it's weird, there's inflation, there's all— it is close to as good as it's ever been. So, so sell your product, right? So, but But valuation— so I just wanted to repeat that piece because ultimately they're connected. But I heard half the ducks— let me be clear on the valuation thing, which I knew before I came out here, but I knew even better when I talked to so many VCs here. It was a reminder that— let's go back from the top. And like Christophe touched on this, but we go in more detail. The highest stage of venture is crossover. Crossover funds— TCV is one of an early one, but even mutual funds that invest in unicorns. And why these are crossovers is they have a dedicated amount of capital and they can pick a public company or private company. VCs mostly can't do this. A few can, Andreessen and maybe Sequoia, but 99% of VCs you meet, legally they can only invest in startups, whether they're late stage or early stage. Crossover funds can go where it's greener. And for a long time, until this boom, until the 2019-2021 move, crossover funds would be very careful and they would invest in, they would find a a tech company that IPO'd that was a little undervalued that people didn't understand, and they put it, maybe put $50 or $100 million here, and then they'd find something funky like Atlassian no one ever heard of that was maybe bootstrapped, and they'd give them some money. And then what you started to see is unicorns and decacorns rose. All that money went from public to private because holy crap, like Sequoia invested in Zoom at $1 billion, 12 months later it IPOs at $4 billion, and 12 months later it's worth $80 billion. So everyone in the world wanted to do Zoom at $1 billion because it was the greatest play on mankind. So crossover ventures, they are investing 0% in the private market. All that money's gone at the top, okay? Then there's different types of growth, late growth and growth. Anything north of a billion is frozen. The deals aren't happening. And when you read up, there's several unicorns that got announced today, I think on TechCrunch. I'm pretty sure all those deals were in process before the crash. I might be wrong, but I think if they say it's not, they're either misinformed or lying or euphemistic, okay? There are basically no deals above a billion being done. There will be an exception. But when— holy cow— when companies like GitLab are at, you know, $400 million growing 70% and they're worth $5 or $6 billion, you can't invest in a unicorn anymore. The math does not support it today. It could come back. So crossover, completely frozen. Late growth, semi-frozen, right? So this— and then this iceberg kind of melts a little bit as you get closer to seed because you have a longer time horizon. Valuations are not as variable. And so kind of as several folks said, starting with Christophe, at the early seed stage, I would say folks are about half as active as they were 60 days ago. Half. So you have to try twice as hard, meet twice as many people, and maybe be 8 times as patient, not twice as patient. But I think it's about half as open. Zach Koulias, who did the last session, he's a prolific angel investor. We chatted after, I'm like, how you doing? He's like, my deal flow and my deals are down 50%. I thought he was gonna say they're up because he's very active, right? So I think that ties to 50% and then at the top it might be 5% of what it was. And I'll give you one last insider example. There's a company I invested in, it's a little funky, but last year it went 1 to 12 in one year. That's pretty good, right? That's pretty good. And they had 100 VCs that wanted to invest last year, and he decided 3 weeks ago was the right time to raise. Perfect timing. And he sends me an email, I'm like, listen, don't read everything on the internet, but maybe wait, like, where were you in December, or maybe wait. He's like, no, I'm gonna do it. And those 100 shrunk to 2. 100 people would have funded him. Now, it's not a cheap valuation, but it's not a unicorn, but the 100 shrunk to 2. So that's an anecdote. Now, and then let me finish, what's different about the 2? The two folks, and one of them offered to invest $50 to $75 million, the other offered to invest $15. So very different structures. The difference is, one was a very— was a big growth fund, one was smaller, but neither of them had a lot of scar tissue. Neither of them had a lot of companies that they're digging out that were worth $5 billion and now are worth $1 billion. That triage consumes oxygen for individual VCs, But it also consumes oxygen in the fund. And I only worked at someone else's fund for 22 months, but when you go to a partners meeting in a VC fund on Monday, and it's 4 hours long, or all day at big funds, unfortunately, the yellow lights take up all the time. And the more— the tougher times are, the more all the time is, well, you know, our company, whatever, mug— mug.net has 8 months of runway. What do we do? Like, and it just— the tougher times are, it consumes all the air, so deals don't get done. So the 2 out of the 100 that came through, weren't overloaded, not with dogs, not with red lights, because red lights are painful, but then you don't talk about them ever again. But the yellow lights totally grew in every VC's portfolio. Now they're full of yellow lights. But these two are new. Like, one has about $1 billion to invest, one has $400 million, but they're new VCs, not brand new VCs, but new funds. And so an insider tip, if you are fundraising, figure out— now's a good time from new funds and newer VCs that have less baggage. And if you look at their portfolio, and they invested in Bird and Bolt and these other high-profile, and nothing wrong with those. I mean, they tried, they're founders. But if you see those, like, maybe not, maybe the odds that comes through are pretty low today, right? So, yeah, a little bit like, if it works, or I'll repeat it for the crowd. Oh, hey Jason, what would you tell to your 20-year-old Jason? 20 years old? Yeah. I wasn't, I don't know if I had enough presence of mind at 20, so maybe I'll answer the question differently, right? I think, look, I don't have any, I think a couple things I would say. One, in gen— well, maybe 20. I'll go with 20, and then maybe I'll go like 28 or 30, 33. But one is stick with everything good longer. Everything good longer. Don't be impatient. A lot of folks that have a lot of passion like me are impatient. They're impatient to do great things. They're impatient when the people around them are not as committed. They're impatient. And if you join something either as an executive, a VP, or a director, and your boss is great, but there's other things that aren't, stay. Stay if you have a great boss, even if the growth slows, even if there's issues, stay with the great boss. If you're a founder and you have something good, do it longer. Don't quit. Don't move on and don't wish that you ran a hotter startup. Like, time, if you do something great, you know, time is your ally. Everything compounds. Everything compounds. And so, that's my advice to the 20-something self is stay longer. So, stay longer at everything and I'll tell you, like, I'm most— of all the founders I'm impressed with, I'm most impressed with founders that I meet and I'm like, how you doing? Well, I'm at $2 million in revenue and I'm gonna grow, you know, 2.5x this year. I'm gonna go from $2 to $5 or $2 to $6. I'm like, oh my God, that's great. When did you start the company? 2012. Go on, I did a— go read 5 interesting learnings from UiPath on SaaS. UiPath, took 10 years to get to $1 million in revenue. 10 years to get $1 million. Those are the founders— I respect all founders that give it their all, but those folks are so much better than me. I could never go 10 years to a million in revenue. So, so go longer. What does hiring look like? I think that I see so So far, zero benefits to hiring from these issues here. Yeah, first of all, a couple reasons. First of all, this first thing, like, is kind of mean to say. I know I'm going to trigger some people, but the problem with small layoffs, like, if you lay off a small number of people, a lot of them are not the best people. So great, like, some company lays off 4%, like, there are gems there, and go find the gems and hire them. There really are gems in every company, and layoffs suck. But usually they're cutting the bottom 10% of their performers. So these layoffs don't help in SaaS. They don't, they don't address the lack of labor because it's terrible. If they lay off a third, like, be on it like that day, like, just be hitting them. But, but if it's single digits, there's a gem, but maybe it's hard, it's tough, but only a gem. So that's not helping. And very— despite TechCrunch and Twitter, there's not that many layoffs. There's not that— it's not that big of a deal. So that's not helping the lack of hiring. And everyone, everyone that's big is hiring like there's no tomorrow. AWS, Azure, like, I forget, I'm going to get the numbers wrong. I think Amazon has 10,000 open positions out in AWS. I think Azure is like 7,000, Google. And so I don't see— I hope that people don't arrogantly quit like they did during the Great Resignation, but I don't see any other relief. I think hiring is harder than ever. The only thing I will say informally here is cry me a river, because every single year I've been an entrepreneur, hiring was hard. And it's either hard because it's— you're early in an industry and there's no talent at all. That's actually worse. Anything you think, it's worse when there's no one available. Let me tell you, when there's no— I've done multiple companies where in the beginning, the beginning of eSignatures, in the beginning of Empinal Batteries, there was nobody, right? And so Yeah, cry me a river that 100 people want to hire your VP, but at least she exists. Like, it's actually better today because the people exist. Okay? It is better than it has ever been. And of course it's competitive because there's more startups than ever, but it means there's more talent. So I still think— I think there's nothing harder as a founder than recruiting or a VP. It's never easier. But, but I'm not sure it's harder. It's just different. And so you have to evolve your playbook.
So, hey, hey, Jason. So yesterday you said we're all candies and not painkillers.
We're all vitamins and not painkillers. Yeah, sorry.
So can you elaborate a bit of that?
Well, yeah, I mean, I just think there's a lot of VC-isms that are a little bit dumb and trite and that there's germs of truth in them, but you don't want to take them too seriously. A lot of VCs are like, I don't want to invest in things that just make my company a little better. Like vitamins make me a little healthier, but painkillers solve a huge— like, I need the painkiller when I break my leg, but the vitamins you don't really need to take. And maybe I don't even really understand that. I don't know. I'm not sure that's the best metaphor now that we say it. But the point is vitamins are kind of nice, but painkillers you must have. And so in the enterprise, there's a handful of problems you have to solve. You need your CRM, you need your ERP, you need your human capital management. Like these are categories of software that have existed for 30 or 40 years for a reason. And you can mock Salesforce or Oracle or Workday or these, but these are endemic issues that will always need heavy software, right? They're painkillers. And then a lot of folks will say, well, great, another, you know, video app. Like, I don't need a Zoom or like Calendly. Like, I mean, that seems dumb. I mean, yes, it would be nice if the video and the audio synced and it'd be nice if the link worked in the calendar thing, but we don't really, I mean, come on. This is not a— these are not earth-shattering problems, these sorts of companies, you know. And yet, so my point is that even if that's true, even if some applications are so epic, they're rarely there in the beginning. Salesforce was a very rudimentary SMB app for a brief period of time, but it was. It sold to very small companies. It didn't even have custom tabs. It just had 4 tabs out of the box. And Even compared to like where Pipedrive was in 2013, it did less. It was rudimentary and it became enterprise. It was not a— Salesforce today is clearly a painkiller. It solves massive enterprise workflow and issues, but it did not start there. And so that was my point. Don't— we all, we all just really start with a 10x feature. One little thing that matters to a buyer that someone else doesn't do or ignores or doesn't have time to do anymore. That's what matters. Not, not immediately building, being irreplaceable your first year, it's not going to happen.
Hi. So you were saying that we shouldn't worry so much about the economical situation. What would you—
with a large caveat for fundraising, how it impacts you. But keep going with the question.
Yeah, my question would be, which megatrends do you think we should look at these days and these coming months?
I'm not that— I'm not smart enough to know about megatrends. The only thing I think makes sense for everyone to do today as a minor trend is I think with— there is still uncertainty today. Now is a good time to go a little more enterprise. Those budgets are not as impacted. There is some And if you're not enterprise at all, don't start tomorrow because of a little bit of uncertainty. Don't go from a $10 a month product to $1 million a year. But if you're already teasing into it, if your deal size is going up a bit, if your customers are getting a little bit bigger, I think so much of the money is going into bigger enterprises today in cloud that it's a good conservative bet to accelerate that 6 or 9 months in your product roadmap. Go a little more enterprise now. Where there's less sensitivity, less volatility. You know, the most volatility is in high burn rate unicorns. Those are the most stressed today. SMBs are still— there's still going to be some stress. There's weird things happening with SMBs, with inflation in some parts of consumer. But so far there's no material impact in enterprise. So that's my minor— no megatrend. That's my minor trend. Right. And then I would say the other thing is that's the most important thing. I think the other thing Just to be aware of, it may not be true of your company, I think it's really, really, even though overall buying is, it's growing at insane rates, it's going to be a long time until folks are comfortable with lower quality revenue again. And what I mean is fintechs with 20% margins, companies, you know, folks with huge, even folks like Twilio, one of the best companies in the history of cloud and SaaS with 50-something percent margins are suffering because their telecom costs are high. Things with margins below that, they're going to be out of fashion for a really long time. So if your gross margins are lower because you have hardware, because you have telecom, because of the way you do fintech, it may be time to rework things, right? Like, as a really interesting example, like, like Payhawk's here, they're, they're whatever, they're, they're great. They've done, they've architected the way they do payments differently in Europe. Brex is amazing in the US, Ramp is amazing, but those are like 30%, 20% gross margin products. These guys and probably others are 70%. Like last year, no one cared, just grow. Like no one really cared about revenue quality. Twilio grew insanely because no one really cared whether it was 55% or 80% margin. But today, these are the models that are enduring, and it's tough with these low margin models. You can't change who you are, right? But now's the time to go a bit more enterprise and increase your margins and quality of revenue. And that, those are the tactical trends to take advantage of. We have anyone else? Mr. 1 million ARR.
What does future of work look like? Do you think the remote trend continues or like we see back to office more?
Ask the question again because it's getting late on the second and a half day. What, what is future of work like in general? But be more specific.
Companies will go more towards back into office or like the remote trend continues.
Well, look, I mean, I'm no— we're all equally experts in this today. We're all running companies that in many cases were not distributed before COVID and almost all of us are distributed today. And so actually, I only know a few things everyone else doesn't know, right? But I guess just one thing is, you know, I don't think this is profound. We're never not going to be distributed, right? We have learned these skills the hard way. And we're all global and it's never going back. And there may be segments that go back fully to the office, and certainly in places like London and Europe it's more common. But I can tell you in SF, all the offices are close to leased now, they're full and they're all empty and they will never be full. You will never in SF classic SaaS be able to get anybody to go back to the office. Now, the old school tech companies, the Apples, Googles that are in the Bay Area, even Microsoft, LinkedIn, where they have folks that have lived in the Bay Area for 20 years and did not leave, they can force that. They can try to force them to go back to the office, right? I don't want to drive 15 minutes from my house in Mountain View because most of their teams never moved, right? The Apple and LinkedIn, the Googles, they never moved. So you can just say, come on back. But most of us, the vast majority of our teams no longer live. So it's gone, right? And so, but That doesn't mean the office is dead. And it's— I invested in— I'm a small investor in a company that used to be called HelloOffice that's now called Raise, that does leasing and software for Y Combinator and RO Coworking Space and Notion, a lot of cool companies. And they're doing pretty well now. And all the folks that are unicorns, not all, a lot of them want a trophy office. They want 100,000 square feet, 150,000 square feet for when the teams come together or for the management team. So I think the hybrid office is here, but for tech, it's an infrequent use, right? But I don't know if that's super helpful.
Hey, hi Jason. So can we talk a bit of this differentiation in enterprise SaaS? So in martech, you have like a bunch of players. It's not winner takes it all. Some of them are stronger, and then there are younger guys like us that want to win the market or grab the share. So shall we innovate more in marketing or in products, kind of unique features? So what type of approach do you think is more important, or it's just—
Well, look, there's a lot in that question. The question is, what's— in crowded spaces, should you focus on marketing or product, or what you should do? I think it's Henry from ZoomInfo had a lot of good thoughts on it that I can reiterate now that he's at a billion in revenue. But I think, I think if you're early stage, it's the wrong, it's the wrong way to think about it. Crowded, it's not bad to be in a crowded space. Crowded space means there's a lot of buyers and there's a lot of money. Crowded space means that, crowded space also means you don't have to do everything. You don't have to do every single function to still get a customer. There are spaces where if you don't do everything, the product's worthless, right? If there's 1,000 vendors in the space, that means if you just do one thing well, there's enough ROI and there's enough mental bandwidth to buy that you can sell. And that's the reason there's 1,000 marketing applications, because every CMO needs to generate pipeline awareness leads, and they will test anything that works and shoot what doesn't and keep trying things, right? Same in cybersecurity, like the threats always change. So cyber— I'm not an expert in cybersecurity, but Since the dawn of time, security is evergreen because every year you've got to try to keep up with threats. Every year there's budget, and so there's always room for innovators, even if they're niche solutions. And so for all these types of categories, um, I, I know it's trite, but you just have to find your 10x feature that someone will buy. What's something that one little thing you can do 10 times better that 5 people can build, not 5,000, that is being ignored by the marketers, mediocre, and that people will pay for? And there is, there's, there's constantly more room in many spaces for this than possible. So you figure out your 10x feature, that's how you break out. Like ZoomInfo with Henry, like they started off in a little segment of data around sales leads that no one else had good data on. They sold a little bit and they build on and they build on and then they bought their direct competitor and they built on and they started with a little piece and we should have, maybe it would have been a good time to talk more, they attacked just a little tiny piece that they were 10x better, even though general contact data was a commodity. And they found one piece and they build it and build it and build it. And then his point was, then in a lot of categories, eventually there's parity, right? And with Gong and Chorus, they bought Chorus, and Gong and Chorus at a certain— I would argue Gong has now become a much richer product than Chorus, but there was a couple years where they both were these point solutions for listening to your sales teams, and they were both great, but Gong out-executed Chorus, even though in his opinion the tech was similar. We could debate it, but his point isn't wrong, is that there becomes these parody things where marketing is more important than product. But it's pretty uncommon before $10, $20, $30 million in revenue, and sometimes a lot later. So.
Hi. One question. What would be your advice on finding a mentor on a personal level and for management? And what are maybe things that we should be careful about when finding?
For a mentor?
Yeah.
Yeah, it's such an important topic. I wish I had the perfect answers. I'll say a couple obvious things and then try to be helpful. One is that there's no point in a mediocre mentor. Don't hire washed-out people. Don't hire someone that didn't do it. Don't hire— and be very— there are some great ones. Be wary of expensive coaches. It's worth the money, but they better have done it. They better have done it. And I would say most mentors is— it's tough because the best ones don't really want to be mentors anymore. And the mediocre ones want to be mentors, right? So, but as a founder or exec, like, it's your job to hunt and find the best because they're always hard, right? But again, I really see negative ROI from a mediocre mentor, right? So, barely helpful. And then I'll give you the next barely helpful insight and then just try my best answer. I think you want two mentors. For most of the folks here. You want one mentor that's about 18 months ahead of you and one that's maybe 4 or 5 or further years, right? The one that's 4, like, if we get Henry from, to be our mentor, that'd be great, and he has so many good lessons, but you heard him on stage today, "Oh, it's early around $80 million." Okay, so most of us aren't there. That's not how we define early. So I would give a lot for Henry to be my mentor, but Not my only mentor, right? And then you need someone, if you're at $2 million, find someone at $10. If you're at $10, find someone at $30. If you're at $30, find someone at $100. If you're, I was just talking with a great CEO here at $100, and she's seeking out everyone that's just IPO'd. That's her, that's, she's seeking them out like a heat-seeking missile. Everyone, she asked me for 3 introductions in 60 seconds to CEOs I know that have just IPO'd or are going to IPO, because she's at $100, she's 2 years behind them, right? So you need, you need both. So those are no mediocre. You need two to really get the benefits. And then the only thing I can tell you is everyone, every great founder learns to be a nudge without being too nudgy. Like, I'm not great at it, but most folks, they're aggressive without breaking, crossing the line, right? And you don't know who wants to be a mentor, but you might be surprised if you do a volume game. It's like recruiting for a VP today. Like, you gotta talk to 30 or 40 VPs at least to find a good one. 3 isn't enough. So do the same thing with a mentor. Try to meet, do some in person, do brain dates, do it over the internet, do it over LinkedIn. Don't be too transactional, but aim for 30 or 40, and you'll be surprised. There was a moment in time when I didn't have that much to do, 2013, 2014, and I was sort of a ment— I was an angel, but really a mentor. So, like, PJ from Showpad spoke yesterday about Way to 100. I was the first person they met when they came to the US from Belgium. I'm like, I'm pretty interested in like iPad for SaaS. Like that was new. I'm like, you guys seem pretty cool. I'll be your mentor, right? But now there's just no way. Like, I don't care what you do. I can't be your mentor. Like, I don't care if you'll pay me $1 billion in stock. I can't be your mentor. I literally— but even for me, I could imagine a random time in 2 years I might have time, right? And there were moments in COVID I had time. There are moments, there are brief moments in COVID. I'm just speaking personally. So you wouldn't know unless you did the outreach at just the right time, right? So you got to be tenacious. What's that? Yeah, but you got to make your luck as a founder, right? It doesn't find you, right? That's the thing. Yeah.
I like your statistics around SaaS spending. Nevertheless, we see some budget freezes with enterprise sales.
You do?
So, yeah, so some, like, especially in the manufacturing side of things. So any best practices around— you just go higher because you need bigger budgets, or do you go lower and split up the solutions to get the foot in your door?
Well, I'd say two things. One, first the strategic and then the tactical. The strategic thing is for everyone, it is true, but in most cases— and these freezes are new, right? I would say this is really rough. It may not be true for you, but I would say really rough A lot of SaaS companies are seeing 20% of their companies have freezes, but the top 20% are growing faster than ever. So instead of whining about the freezes, go hunt the 20% that aren't frozen. It's not 100%, and it's not even 1-to-1. You actually are coming out a little bit ahead because the top ones are growing even more, right, than the ones that are frozen, right? So that's the strategic. The tactical thing is what folks are doing. There was just a little sidebar conversation. That Jack Ryan on our team said, when it's frozen, it doesn't mean it's inaccessible. But you may have to touch 10 times as many people at the company. So don't give up. If you talk to one person at your buyer and she says our budgets are frozen, well, have you talked to the CMO? Have you talked to the CRO? Have you talked to the other VP? Have you talked to all of them? You may find if your product is not $10 million a year that there is still budget, but it's a different way to access it. Freezes are not all frozen. But there's always extra budget. There's always innovation budget. And there's always unused budget. But, and I frankly didn't even fully appreciate this until I learned this talking to a bunch of leaders here, you might have to talk to 5 to 10 more people at those frozen companies to open it up. But it is often, if they're not going bankrupt, it's often openable if they really want it. But you just need all the stakeholders to say yes, not just one.
Hey, over here. I have a question around scaling from founder-led sales, especially if you're good at closing.
1,000 sales reps?
What?
You said 1,000 sales reps?
No, moving on from founder-led sales.
Oh, founder.
Okay. I can do that better than 1,000 sales reps. I don't even know if Henry has 1,000 sales reps at ZoomInfo.
Especially if you're good at closing as a founder.
Yes.
Question A would be, is there like a ballpark estimate for the ARR on when to do it? And then if, how? Like just feeding with SDRs and keep being the closer or actually bringing in someone who takes over completely from you so you can get a bit like hands-off and more strategically laying out for the next years and so on?
Well, there's a lot of questions there on founder-led sales. And actually it's a discussion that I don't think can be discussed too often. Because if I have to talk about the single biggest mistake I still see with founders I work with is screwing this up. To this day, they screw it up even more often. I see it screwed up all the time. And I'm gonna come back and tell you when, but I'm gonna, and I wanna talk more about this, but I wanna give you the number one mistake founders make today that I don't know that they made that often 5 years ago and definitely didn't make it when I was doing it is they step out of sales immediately. And here's the one thing you got to learn for founder-led sales. When you hire a VP of sales or direct or whatever, head of sales, this is how many minutes you get back in your day. Zero. Now, now, what does happen is if they're any good, they rework your calendar. Instead of the CEO being the opener and the middler and the closer, they handle the closing, and they handle the opener, and you become more of a middler, okay? You spend your time being the visionary, the architect, the product expert. You jump into the deal, and the customer falls in love with the CEO, and maybe even the CEO even does the extra demo, a few things they don't do, builds the relationship, builds trust, and maybe doesn't have to send the contract out for his signature, okay? But you never, ever, ever, ever get the time back, at least not very much of it. Now, if you're, There are times you're 100% in sales, you got to get a little bit of your time back, but the number 1, 2, 3, 4, 5, and 6 mistake I see founders is they finally hire a head of sales and they're like, well, I'm going to spend 5% of my time in sales. 100%— no, no, 90% of the time sales plummets. Plummets. So, if you accept the fact that you know you need a head of sales and then you accept the fact you're not going to get any more of your time back, which is hard emotionally for founders. All founders are like, I want to get back to product. I'm tired of sales, I want to get to— no. If you built a self-serve PLG product, then great, but you didn't. You built a product that needs— you'll never get your time back. If you accept that, then you will actually hire the right VP of sales. Because instead of hiring someone with the perfect resume so you don't have to sell anymore, you will hire a wingman. You will hire a wing person. You will hire your Rio. I haven't seen— what's the new Top Gun movie called? Maverick? Do they still have the one in the back? The Rio? You're hired. You got— one of you's got to be the Rio. Like, You're still in the plane together, okay? You don't get to get out of the plane. And all of a sudden, you will hire someone you want to get in the plane every day with. You want to co-sell together. You want to backfill together. You want to figure out what she's good at and then get out of her way and then do the stuff she's not good at. Like, and you will have a radically different approach to the hire when you accept the fact you don't get out of sales. And that may sound basic, but 9 out of 10 founders make this mistake. They don't want to be the Rio, and they don't want to do the work. So those are the real answers. In terms of when, the timing hasn't changed since like the first SaaStr post here in 2012. We're in the 10th year of SaaStr. Get 2 AEs that hit quota. One's not enough. If it's one, you don't know why. If it's one, the VP of Sales doesn't know why. If it's two, the VP of Sales is a hiring job mainly. If you have two hitting quota and the VP of Sales is good, even if they're new, even if they're a stretch VP, they'll figure out what the two are good at and hire 3 through 30. If you hire a VP of sales before you have 2 reps that can hit quota, the risk factor is massive. The only time you should take that risk is when you are truly atrocious at sales. When you are so bad at sales, horrible. And listen, it turns out it's hard for a founder to be this bad at sales because even though you're nervous to ask for money and even though you don't know the lingo, Customers love to talk to the CEO. They love to talk to the CEO at Henry's level, at a billion. They love to talk at $100 million. And believe it or not, they love to talk to the CEO when they're your first customer. Just use the letters CEO. Don't be arrogant. Don't be Mark Zuckerberg from The Social Network. Just say, hi, I'm Linda. I'm the CEO of— we're a small, growing startup out of Barcelona. We're 10 folks, and we're here to solve your problem. It's magical. And any customer that's actually gonna take that call, for those 10 people in Barcelona from the CEO, they're already interested and you can close them. You can, the CEO can close them, even if you don't know how to close. It may take a month longer, like, but you can close them. So anyhow, even if you think you're atrocious in sales, I doubt it. I think you're at least okay, middle, middle, mid-pack, because your skills as a CEO make up for all the other ways you're crappy as a head of sales. But if you are, if someone gives you $3 million in your seed round and you are the worst salesperson in the world, take the risk. Even if you don't have 2 reps and you can't hire reps, use the $3 million because it's, you're almost certainly gonna flush it down the toilet, but you gotta do, you gotta make a play. Like, you got it and it works out. I've seen that work out once in a while, but boy, it's risky, right? Yeah.
Okay. So a challenge when scaling up. I just got an email from a prospect. So we got money, we're growing, we get more meetings.
Good.
And we just got an email saying like, okay, based on your marketing, your speediness of response and all this, it was great. But you know, the demo was messy and actually the UI is not really what I was expecting.
Sorry, sorry. Just slow it down. Cause late in there, this is from a VC or a customer?
A customer, a prospect. That was impressed with our marketing, with our messaging.
So you got— they were inbound?
Yes.
Well, whatever. A customer came in, they saw your website, they saw your marketing, they loved it, they didn't love the product.
Exactly.
Okay.
And it's pretty scary to hear when you are in a conference when you're talking about product-led growth.
Yes.
So I'm wondering, did you see companies dealing with this just because of the fastness of growth or—
Well, let's step back for a minute. There's a silver lining here, which is, um, I see this is one of the things anyone can fix in this— is it June? June? What's June? There's a whole month left, right? This is something almost all of everyone here except you can do in June, which is make your marketing site better than your product. I wrote this in SaaS Tour and then I rewrote it, but listen to me. Your marketing site should be better than your product. It should be prettier. It should work well. It does. You don't have to write a lot of code on your marketing site, okay? You can do it yourself. You can hire an agency. You can do it in WordPress. You can do it in Webflow. I mean, if you have to, you can do it in Notion, like whatever, but make it— it's easy to edit, right? So I know it's not your question because I'm answering your question, but for everyone else, it might be a feature and not a bug up to a point because it's really a shame when You have, especially when you have a very producty team and the product's great and they don't touch the marketing site and then they hire a mediocre marketer and he makes it worse. And I'm like, oh my God, like, this, that site doesn't even say what you do. I had one founder who walked around here and went to her booth and came to me and said, this booth doesn't even say what we do. So that's a booth that's worse than the product, which is not that different than a marketing site that's worse. So it's, To some extent, that should be true, right? Okay, so that's point 1. Point 2 is my co-founder back in the day, he did something that really upset me as someone that thinks they're ethical and upfront, is when we launched back in the day, Adobe Sign, he put 20 integrations on our marketing site, of which we did none. Now, other people do this. He's like, well, I'm not sure people want a Salesforce integration back then, but I'll make a page that says we have it, and then I'll talk to the lead, and then I'll build it if we get 3. And we put them all up, and Salesforce was the one they all asked about. So we built the first e-signatures on Salesforce, and he was right. I hated that he did it. I wanted to kill him, but he was right. And so you have a little bit of that. You're— the good news is your customer, your prospects are telling you what to build. That's a gift. They're telling you what— most of us don't have enough extra leads telling us what to build. The bad news is your product doesn't do all of it today. But you can sequence it out. And so the next lead you get like this, you can fill one of the gaps, and then next quarter two, and then 3 or 4 quarters later, you close the next one that looks like them, right? Yeah.
One more, please.
Yes.
What is your vision for SaaS TR Europe and how we as a community can help you in achieving your goals with this conference?
What's the view of SaaS TR Europe? We're still learning. We don't spend too much time on SaaStr, but since all of you invested all the time to come here, we did 2018 and 2019 in Paris, mainly for fun. They were cute. They're beautiful. They were basically though large community meetups versus SaaStr Annual in the US. We want to be the number one gathering in the world for SaaS. There can only be one number one. There can't be two number ones, right? But Europe has grown up so much in SaaS, and this has been so great that it's— we want it to be as close to the US as it can be, right? That's the answer for this today, right? There's probably a lot of ways that you can help, but if people really want to, there's two things you can do that would help. Number one is bring your teams next year. We'll continue to do more and more content, not just for founders, but for all of your team, for sales, marketing. If you haven't been to the US, we try to have a lot of content. So if you bring your CS leader, your marketing leader, your sales leader, your engineering, your product leader, they can have enough value that in theory you could bring your whole team or even some of your mid-level managers. So you can help tactically by bringing more of your team next year. And the other thing that people can help more in, in this room than you realize is, um, and we'll remind you, promote our inclusion program. We spend almost $2 million a year on our inclusion program. We give away thousands It's not just tickets, but we do give away 2,000 tickets. It doesn't look like it, but each person costs us about $1,000 here. You know, the average person pays $500, so we lose $500, but our good friends in the middle, thank you very much. Go get your badge scan because they paid half your ticket. And so, but we have budgeted in, we would like 2,000 great less represented founders at Annual and 1,000 at Europa. And we do okay in the US. We came up short this year. I was going to talk about it at the Inclusion Brunch, but it wasn't— we didn't run out of time. We did a little better in Paris than we did here. We ran out of time. I'm frustrated. I don't know why. But bring— tell— socialize our inclusion program. We have— if the $500, $600 is important, we will subsidize it completely. We give them early registration ahead of time. And that's Helping us reach our inclusion goals is like one of our top— we talk about it every Monday, every week, and we do pretty good on speakers. Our speakers have been at least 50% women and 66% less represented for 5 years. But we have more work to do on attendees because SaaS is 80% dudes. Like, it is our list. We— our list is 100 people. We know the gen— like, forget about other vectors. Our list— we have 150,000 people. So if we send that list, it's going 80% dudes. 20% women. So to get to 40%, like, think about how much work it is mathematically, right? And speakers, the good news for speakers is we can pick. Like, we just say, like, we said no mantles in 2017, and we tell all our speakers, like, you have to bring a diverse co-presenter. And if they say no, we just say don't come. But with attendees, it's like, uh, you ask the question, it's more work. So any help on spreading the word on our inclusion program is deeply valued, and it's, uh, It's one of our— we work on it literally every single week. So thank you. Yeah.
Last question.
Yes.
Yes. How much of the great stuff we've heard over the last couple of days applicable to network slash marketplace businesses?
Yes.
And yes. And who would be a great person to consult with on that specifically?
It's a really good question. I don't know. I mean, a lot of the best SaaS investors do B2B marketplaces and B2B SaaS together, right? And I'm embarrassed to say I'm not a marketplace expert, and I'm even more embarrassed to say I'm not even sure I'm interested in it. Like, I mean, I've done things that have marketplace elements, but getting— figuring out the ratio of each side of the network, you know, those are not my strengths. What I have learned of the limited involvement I have is that, look, if the buyers are similar and the ACV is similar, the people are similar. The motions are similar. And it's pretty obvious today, but like, if there is any genius in Saastr that's now 10 years old, it's abstracting product away from the fact that our go-to-market motions are pretty much the same at an ACV. Like, it sounds obvious today, but 10 years ago it was It was really disruptive that, hey, if your product costs $20K and my product costs $20K, probably we have a lot in common as long as we don't talk about the features, right? And many, frankly, product and even engineering, marketing, and sales are all pretty darn similar at a price point. So that's the business, but I don't have the best mentor or other idea there. But so I think the majority is applicable, but there's a small chance I'm wrong, right?
Hi, it's working. Could I please ask for some more clarity on the point you made earlier? Because we hired a VP—
just a little louder because it's the end of the day.
Yeah, apologies. So you mentioned earlier that it's quite risky to hire a VP of Sales or Head of Sales, whatever, with anything less than 2 quota-hitting account execs. Yeah, I'm interested to understand why, because we've done that with one quarter-hitting account exec, but in our case, you know, he helped a lot to put operations, process in place, and recruit. What exactly do you perceive the high risk to be? Is it because you're burning a lot more cash before you've got quarter-hitting people?
Let me— I'm— are you challenging whether you should hire VP of Sales after 1 AE than 2, or what's the question? Sorry, I'm getting a little slow.
I'm trying to understand the risk. You said it's pretty risky. I'm trying to understand what the risk is if you hire someone, say, because—
because what happens is Talk to any founder here that's passed a few million in revenue, certainly past $5 million. Ask them who their magical sales rep was. They have one. Okay, mine was Joe Colletti. We had— I hired Joe back in the day at Adobe Sign, EchoSign. He crushed it, and then I hired a terrible VP of sales who hired 10 reps. Most of them never closed a single deal, and Joe was great, but he was a magician and no one knew why he was a magician, okay? Now, yes, if you're a wicked smart VP of sales and you spend the time with the magician, you'll learn what the magician is, but if you have two, you have run massive A/B tests. No sales reps are the same. Some talk a lot, some demo a lot, some are great closers, some are good middlers, some are great conversationalists, but you won't— very few VPs of sales will be able to figure out your playbook, the playbook, without two folks that can run the playbook. You're asking for too much, right? And even our little team, you know, sponsors make this alive, right? And we'll do 30, we have 30 million of sponsors at SaaStr this year, 50 million next year. We have a tiny sales team. One of our sales guys has done $23.5 million of that in 2.5 years. He's our, now we have a good team, but he's the magician, right? And when Brian, who's our head of partners or sales, came in, that might be him in the shorts right there at the Salesloft booth if you want to ask him. Brian came in and said, we can't have one, we got to have 5, right, to hit the plan. And what Brian did, which is rare, is he took a quota and he became the second, even though he's the VP of sales, he became the number 2 AE himself, right? Now, he had another one, but he left. But my point is very few people could do that. And now you're nodding because you realize it's the playbook. You don't need— a good startup VP of sales does not need 10 reps hitting quota to know the playbook. They might like that to feel comfortable, but they need 2 so they can see what's working and hire the 3rd, 4th, and 5th, right? And look, I did it. I say this because I learned it was true, but when I hired Brendan Cassidy, who I wrote about, who was the first head of sales at LinkedIn to be mine, there were those 10 reps when he came in and we got rid of 8. He kept Joe and he kept Sam Blonde, who's now CRO of Brex, right? And brought in other folks. So we sort of had two, but it was really one and a half. So yeah, it can be done, but Brendan's pretty good, right? Most startups I work with that bring in a VP of sales at zero, or that magician, they never figure out why the magician was magical. They never know why the magician was magical. And that's why— and what happens when you don't know why the magician's magical, and you see this pattern so often, is reps 3 through 10 close nothing. Anyone had that experience where like the next ones close nothing? Maybe not in this room, but maybe if we were later, say nothing, right? You have 1 or 2, they close $400,000, $1 million a year, and then you bring in something, they just close nothing, right? Because it's— you need that playbook to put— to put for most VPs of sales. What's that? Are we over time? Is that the sign? Is this the One more question? One last question? Yeah, we'll do one last question. So if your question isn't good, we'll do another one. Just so we're clear. I'll try to make it good, but if it's not good, we'll do one extra one.
No pressure.
It's like a good— you have to end on a good pistachio or nut or something like that, the bowl, right?
So the first two AEs that you bring in, who gives them the playbook? Are you expecting— are they good enough to bring their own because they're so different? Or is the founder trying to educate them?
And what is the secret sauce? There's so many stories. There are folks who do like, who are sales folks at heart, or sales-ish, and they really, they sometimes, like Henry said, it was too, it was too, he dialed in too many processes and systems early. But I think that's rare, although not uncommon, but rare. Most of us can't train them. And so what you need is a natural athlete. You need someone that has worked at another SaaS company at a similar deal size. Now there's SaaS companies, and then here's the third thing, and Henry brought this up too. Smarter than average and loves software. They've got to be— anyone hire that magical rep, are they smarter and love software? You usually see that they, or they love your customer, right? They may not be a great closer, they may be quirky, but like they can run the demo as good as you. And the customers, my Joe, my guy, I remember the first year I went to Dreamforce. I'm walking in San Francisco, And this big guy grabs my blazer arm. He grabs me, "Jason! Jason!" I'm like, "Who are you?" He was from an accounting company called Intact that Sage bought for a billion. He's like, "I love Joe Colletti!" Like, great, great to hear that you love Joe. No one back then had ever been so passionate about e-signatures in the history of the, you know, now there's 1,000 people at DocuSign and everything, but no one had ever loved putting a signature in a document quite the way Joe had. And Joe had also been a thespian. He was an actor, so he could, and he was good with computers, but his sales job before that, he was mid-pack. Now, bottom, bottom, bottom, bottom's tough, but he was not a top seller before that, but he had another 20 IQ points and 20 EQ points of passion. And I think a lot of them, if you talk to founders and ask the magical sales rep, they're going to hear, and Henry said it too, they got, the early guys had to be smarter. And they have to be able to do the demo, they have to have passion. And then we can break on this. You can boil all of that down to one thing, and we'll leave it at this because this is a mistake I've written about this so many times and so many of you make this mistake. Your first, the sales reps you hire as a CEO, you have to be willing to buy from them. Every time, this is actually true of a VP of sales too, but every time I talk to a founder and they tell me my first 3 sales reps didn't work out. I'm like, it's a bummer. And I always ask them, the next question is always the same. Would you have bought from them?
No.
Why'd you hire them? Well, they worked at Twilio, they worked at Slack, they worked at GitHub. Who cares? Those are great brands. Would you buy from them? And Joe had come from a 5th-tier Mailchimp competitor, but everyone came out of meeting him, I want to buy from this guy, like in the meeting. And that's That's infectious, right? That's infectious. And again, boil all those characteristics of sold at your ACV, passionate about the product, can do a demo. As a founder, they will fail those criteria. They will not meet those criteria if you wouldn't buy from them. And if you would buy from them, inherently they're going to meet these criteria. So do not hire sales reps yourself that you wouldn't buy your product from just past, no matter how desperate you are. But, and then I'll leave you with this, is this is for sure true. Henry said the same thing in the billion revenue. Once you hire a VP of sales and once she's proven herself, once she's proven herself, the rule doesn't hold. You cannot force your VP. If your VP of sales hits their number and they inflect the curve and one month or one quarter after they hire, sales are better. So they've proven there's a— doesn't matter whether sales have gone up 2x, but just that they've improved, they will bring a much more heterogeneous type of sales rep. They will bring in reps that you think are dumb. They will bring sales that would drive you nuts as CEO. They will bring in reps you would not want to talk to. They will bring in reps with ADD. They will bring reps that still use Windows devices. They will bring in all these types of folks. But she knows what it takes, and she knows different, that sales is still a human process, and there are different ways to get there, right? Different motions. And let it go once you have a good VISA. Let them hire whoever they want. Within reason, and they will be much more diverse in all ways than anyone you could ever hire, because you, you don't need to buy from the ones they hire. So thanks everyone for the extra time. Thank you so much for coming. Everything was great. Thank you.