The Future of AI and Sales in SaaS with Henry Schuck, CEO of ZoomInfo and SaaStr CEO Jason Lemkin

If you wanna see where AI is going in sales, just pop over to post-sales. Just pop over to our friends. We, we ask, will humans be automated away in sales? It's a fun question. Already happened in, if you look at the homepage of everyone doing customer support software, if you look at Zendesk, Intercom, or Gorgeous, and you squint, you know what they all say? If you squint, you can lay off 40% of your team with AI. You can lay off 40% of your team. We can argue whether that works in sales or not, but it's the same. It's just, there's more pull there in post-sales, right? So we should learn from it in sales for leadership, for transparency, for product. Like, here's your little crystal ball. It's not quite gonna work in sales, but it's the same tsunami that's gonna come.

Welcome to the ZI Labs Podcast. I'm Ben Salzman with my esteemed co-host Henry Schuck. Very excited to have on Jason M. Lemkin, the CEO of SaaStr. Jason, welcome.

Great to be here. Thank you.

You're a hero of mine. I've been following your stuff for a really long time.

How long, Ben? How long?

So when I joined a startup in 2013, and I mean this seriously, my CEO told me, I don't really have time to manage you, but Jason M. Lemkin's your boss. Read his blog post first. If he puts out a post about a process and you come and ask me about it, I'm going to yell at you.

I think the real OGs follow Jason on Quora.

It's really OG. It's really OG. Yeah.

So Jason, if you don't already know him, is the founder of SaaSr. You built a community over half a million SaaS executives. You run a big events business. You have an investment firm. You do a lot of things to, I think, help lift up the SaaS community. Maybe just do a quick intro for our audience.

Um, that's a pretty good one. Since I sold my last company accidentally to a big tech company, I've been on a mission to help other founders and fast forward. Oy vey, 12 years. We've got 10,000 pieces of content, thousands of podcasts, 15,000 people a year come to our events. Henry came to Barcelona when we were there and we're quirky because we're on a mission to just help other founders and executives. So it's, uh, a lot of folks produce content now, which is cool, but I do think not having a game to play makes it special. And I was like a pretty good founder. I had, I had a 9-figure exit and an 8-figure exit. I didn't build a multi-billion dollar company like our, our esteemed host, but I was just good enough to see who was better than me to, to see the Henrys and the others. And, and maybe that's what's special about me is I went far enough to know the game and I had enough, I, and I have enough respect to know the folks that are better than me, like Henry. And I think that's produced maybe a little bit of magic.

Jason. Yes. But it, I don't know if that's true.

It's true.

What is different between you and me other than I stuck around longer?

I would, I'm gonna guess a couple things. One is we're probably equally committed, right? But you are, you're probably even more tenaciously focused on the goal, like doing crazy M&A and bootstrapping your company and all that stuff. I was always focused on the goal, but maybe a little conservative. Maybe you built, I, I don't know this, maybe you built an even better team than I did. For example, that, that can be a difference. Maybe you're a better recruiter, right? That as a founder, the hardest thing is recruiting once you have product market fit. Product market fit's the hardest thing, but then after that, nothing matters but the team. So I don't know, uh, it, but I can, I think you have a multi-decade commitment, right? And I don't know that I had it as a founder. I was still learning each time. I was insanely committed, but maybe not for 20 years, right?

There's recruiting and there's also just like people building. And I think a lot of bootstrapped founders who are less like capital infused, that they have to actually be great at developing their people almost equally to their ability to recruit great people. Because oftentimes I bootstrapped the company to $25 million in revenue, and then I brought in private equity. Private equity wasn't like, go spend everything you can to grow. They're like, this thing looks good, spend a little more and make it twice as big. And so I, I didn't have a heavy budget to go get the best people. I found good people who I thought I could develop into great people.

Yep. Yeah, I think it's a good point. I think when I think, reflect on it, I think what my shortcomings are as a founder, which you have addressed, what the best address is, it's not recruiting one management team, it's recruiting 5 or 6. How long have you been doing, when was ZoomInfo founded? 2007. Okay. 2007. So the average tenure of a VP, if they're good, is probably 3.5 years, right? So help me with the math. What's 17 divided by 3.5? 5 management teams, right? So I remember as a founder where I remember I was sitting with my board when we just crossed $10 million of revenue and I was, and we were growing 100%. I thought that wasn't good enough back then. And cash flow positive. I, we didn't have Saster or Henry to help. I'm like, we suck. I'm like, we're, I'm comparing myself to Dropbox and Yammer. I'm like, we're terrible. But Deep down, what I was really saying is I don't know that I have the energy to recruit another management team. I did have the energy. I did. But I felt that was my, I'm, I'm looking around my team and my team had pros and cons, right? It turned out with hindsight, I had a great 1.0 management team, right? Went on to be CEO of Gong, CEO of Brex, all these. But I could see the limitations like you talked about. I'm like, gosh, I don't want to recruit the C-level folks. I don't want to top my team. I don't want to do this. And maybe that's a personal failing, which is to be a CEO like you, you gotta be like constantly, you, I think you gotta spend 20 to 30% of your time soft recruiting execs. Nothing else matters, right? You can talk the roadmap until you're blue in the face or sales strategy, but if you don't have the team to do it at ZoomInfo scale, there's no point in talking to your office. So, I mean, that's where I think you're better than me among many things. Is you gotta, it's tiring to rebuild the management team, isn't it? Maybe you love it, but I don't know that anyone loves it.

I think part of it is like, there's this piece that where you go, yeah, you should be recruiting 20 to 30% of your time all the time. The other side of it is you need to be evaluating your team 100% of the time. And so 100% of the time you're trying to think like, is this the right person? I think it's the right person. Are they doing the right things? Are they? And if they're not, how much time do I have to get them to be doing the right things and building a good team? Or do I have to go start meeting other people? And that's probably the most tiring part because you want to get your team, feel really good about them. But if you're trying to build, it's like you're constantly evaluating if they're the right people.

And you got to do that. And I think if you're smart, you can do that. Anyone smart can be a critic. Anyone smart can be a critic. The hard part is not only doing all that, building your company, evaluating them, but then realizing, hey, Lemkin might, for whatever reason, quit tomorrow. And I gotta get 20 more candidates in on Monday and not have this wreck the company. I think that's hard. And the best, if we want, if we get into revenue leaders on this, what I realize makes an incredible CRO or VP of sales is they've always got 10. They're constantly like, The best recruiters on planet Earth is a great VP of sales because they need a bench of leaders. They need managers and directors and VPs and, and SVPs. And they're con— and then people and soldiers are gonna fall. And the folks that were good at 1 million won't scale to 10 or 20. And they know that they will. And the hardest job is sales cuz the number goes up all the time, right? The stress goes up. So if you not building, and so I think the best sales leaders are even better recruiters than CEOs. And, and I, I love 'em, but. You gotta learn this as a founder. You will stall out. And the, uh, if you wanna talk about why founders I've invested in have come up short sometimes, right? It's this second management team theme I see. The sec— and it, it sometimes it hits you emotionally like it did me around $10 or $15 million. But I think you hit a wall around $40 to $50 when you can't build a great— and I feel, see too many founders who that second management, they first, they screw up the first VP of sales, classic Sasterpost, right? Then they finally get that person and then they're at $20, $30, $40 million. They're like, I'm ready for the Microsoft guy. I knew I couldn't do, shouldn't do it in the beginning, but I've been looking for a year. I'm not as good a recruiter as Henry. And then the company hits a wall and that, that next level, especially for outsiders, I found is really hard. If you don't have this incredible network, if you're somewhere outside, if you're in Boston or Europe or someone, you just don't bump into $10 million CROs on the street and The two things I'm obsessed about now that we've been doing this for a while, right? The things I'm obsessed about now for scaling are multi-product earlier and your second management team. Multi-product, because these are where I see the stumbles. We talk a lot about the fir— I can help you get your first management team, but if you get tired on the second management team, you'll decelerate just when it's good. And I think we're learning now every single leader, maybe you'll disagree, which would be interesting, but almost everyone I talk to is looking and now saying, cry many, I should have gone multi-product early. And there are so many folks north of $100 million ARR today that are single product that behind closed doors are fracked today. It's too late. It's, it takes time to build up a suite like ZoomInfo. You can't, even if you build the products in a year, it takes so long for that revenue to get material, doesn't it? 2, 3 years. Yeah. And so if you start now at $100 million or $200 million in revenue to try to go to IPO, you're fracked. There's so many single product companies at $100 million. And I don't know if we got on a tangent. These are the two things I obsess about this, that I was good at the second, but not well in the first.

Who's done a second product well?

The one that has kicked us in the ass in a way, in a fun way is Rippling. And it took me a while to get it with Parker. I've known Parker since the beginning of Saastr. He was on Quora. So known him since then. And he started to talk about the compound startup of how after the Zenefits experience, he wanted to build all the HR products. Right. And I think he was informed, he started Zenefits and then Gusto and Payroll's over here and that they, they're all friends. And within 2 years, Zenefits built Payroll and Payroll built insurance and it all collapsed even further than another category. So he, and, and, and he talks about compound startups and he did it live at SaaS Europe. I'll watch on YouTube. It's really good. But he's also honest. He says, I raised $1 billion to do this. And I have 5 teams. I didn't build 5 products. I have 5 venture scale teams. And so we, and so at first Parker was saying this, I'm like, great for you, love you, not applicable to 99.9% of the world. But then I thought about it. I'm like, we gotta do some of it, Henry. We can't build 5 teams and 5 products, but my meta team for SaaS this year, I was writing my slides, is the bar's gone up, right? It's time to step up or decelerate. The bar's gone up, everything. And the bar's gone up on multi-product. And so we all gotta do it earlier. And so we can't all be Rippling, but I think if we can study a little bit of this case study. And maybe do it without a billion and a half or $2 billion spent pre-IPO. I, I think we can learn from this without fully emulating it, right? 'Cause I think Parker is right, even if we can't all copy all of it. And literally every board meeting I'm in, this is my number one topic. Here's where I'm a nudge. Great guys, glad we're at 100%, whatever, great. But like, where are we gonna be? Are we, we're too, we're too late on multi-product. Well, we're thinking, we're doing experiments. Faster, right? And the other one I tell people now is as soon as you get, as soon as you try multi-product and you get even a million bucks in ARR, if as a founder you believe in it, go all in because you're going to run out of time. If you're at $40 million or $30 million and you're like, okay, I tried this new thing, this new marketing thing I'm adding, and it's at a million and a half, but I don't know, I'm like run down. If it's not the right product, shoot it. But it's pretty hard to get someone to buy a couple million of revenue, right? Do it. The other one, ZoomInfo, we should talk about, but HubSpot has gone multi-product for the ages, for the ages. And HubSpot, like a year ago, we write up on SaaS, they stopped breaking down the revenue per cloud. You can tell me how public companies do it, but you don't have to break out your revenue if you don't want to. But a year and a half ago, it was great. They like this from marketing, this from CRM, this from support, and they stopped. And the reason they stopped is marketing stopped growing as they saturated and CRM blew up. And so at $2.5 billion in revenue, we're looking at HubSpot, they're growing 20, high 20s percent. Where would it be without CRM? Where would it be? Right? This would be a niche product at a billion and something growing single digits. And so this is another one we can all, 'cause they did sequence this. Uh, and I, I met Dharmesh super early. I met him in 2013. He was on Quora in the early days, but I met him 'cause they were thinking of going into CRM back then. And he and Brian had already thought about it for years. Before they launched the product. They were free for years. It was a big bet, but that's another one like Rippling that I, I study carefully. Because if you missequence it, then you just hit a plateau and it's just brutal. It's just brutal. When we're at SaaStr Europa this year in London, I was backstage with a huge VC, top one, right? Top famous VC backstage, had his head in his hands and he was like, Jason, I've got 4 companies at $100 million not growing now. And we went through it and they were all single product. They were all single product and there's macro issues. But if you don't, if you just have that one product, we run out of people on planet Earth, unless you're Canva, unless you're Canva to buy our products. Yeah.

Look, I think it comes back to, or I think the foundational point is if you want high net retention, you get high net retention in two ways. You get it through high net renewal rate and then high upsell into the customer base. And particularly during the last 2 years, if teams are shrinking, then you don't have the users to expand to. And so then you end up with no lever to offset scrutiny on net renewal rate or reduction in seats with another product to improve net retention. And net retention, when you hit $100 million, you just can't sell enough. To drive 40 points of growth if your net retention is 100. It's like much more difficult to sell $40 million of net new logos. And so you get to this point where regardless of how good you are at new sales, if you're not driving upsell in the customer base through new product, you get stuck.

You get stuck. Yeah. And then the upsell, the base is great. And like Datadog's another great example of the base. The really bad arse one is when it's a different buyer. That's the tough play, right? Isn't it? Is when you're like, okay, we've got ZoomInfo, we've got HubSpot for CRM, going to a, this is not an upsell anymore. This is a side sell, right? But if you do the side sell, you unlock more TAM, right? Because it's more, it's harder. but it is more TAM. So that's one to think about. It's, oh my, the easy thing in the second product is to sell the exact same buyer, right? That's what, yep. But you gotta think as founders, is that the right decision? Because we may exhaust our budget, right? Versus doing what no one, our organization's tired, no one wants to work any harder. We don't have enough story points, but maybe we gotta use our brand and risk it and sell to a new line of business, right? Super hard, but it's all hard, right?

Yeah, it's harder because all of a sudden you end up needing to enable your sales team, not only to go find the other buyer, but also to be able to speak their language and understand what they care about and know how to navigate the sale over there. And that getting new product, get product market fit. Awesome. Now you got to go enable the sales team. To go take it to market. And obviously if it's the same buyer with the same relationships you already have that trust you and view you as a partner, that's a much easier sale than starting from not exactly zero, because hopefully you've done contracting. You don't have to go through procurement again. You don't have to go through security and privacy review, but you have to go over to somebody else who doesn't really know you and try to convince them to buy your product. Too. That's tougher.

It's tougher, right? But everything's tougher today. I think, I think we gotta step up. I think we all have to step up.

Maybe going back, Jason, to your time at, at EchoSign.

Yeah.

You built this business. You sold it to Adobe.

Yeah.

What was the thing that allowed you all to punch above your weight from a go-to-market perspective?

There's a couple things I didn't think about until recently, but it's really interesting that we only had 20-something sellers and 10 of them went on to be top CROs, right? CROs at Brex, CRO at Ripley now, Gong, CEO, also CEO at Gong, CRO at Gong, Seismic, a long list of others. Half of them went on to be leading, now not in a week, we sold 10 years ago, but why, how did 10 of those folks become so dominant? And the answer is so simple, but it really is that the best do attract the most ambitious under them, right? And this, it's, it's, this is why when you cut a corner in VP and we're all tired you just, I know we could all write it, Henry and I could write this post 100 times, but if you cut the little corner, you got this mediocre team. And if you hire a magnet, then the talent just flocks to it. And when Brendan, when Brendan Cassidy had come, he just came from LinkedIn to us and then everyone just wanted to work for this guy and he recruited 30% of his time, right? And he built up this amazing bench and he built up Sam Blond and then Sam Blond took that playbook, very different one, and recruited all these folks that went on to lead Modern Health and Rippling and Gong and all these other folks. And they just become these magnets. And Sam Blan, who, yeah, was at Founders Fund and left. Rex, we were getting dinner the other night and we were talking about a, a company he worked at that, that, that, that's less well known, but it did great. It actually had, he joined a startup and he took 'em from 2 to 10 in one year and like 10 to 30 the next year. Pretty good, right? And then this one did a little less well, but he did great. And I asked him, how did you do it? He's like, I brought sellers to this company that they could never otherwise get. There's just no chance. The quality of people that want, and he, he, very humble guy. He's like, because I'd had a little bit, the quality of people that came to work for me was, and it did move the needle. Right. And so I had nothing to do with it. I didn't even know anything about, that's why I started SaaStr. I knew nothing about sales. I just knew, uh, go knock on the door. Hey Henry, will you buy my product? I knew how to do that. Like all founders can do founder-led sales, right? I knew nothing, but this magnet. Like it took me 10 years to see it. And honestly, some of those folks that I listed, those CROs were really good on our team. Some of them I'm more surprised to see.

Yeah.

They're leading top cloud companies. They're all good. But I couldn't have, I didn't have the, the vision as a second time CEO, but first time I didn't quite see it. But, but, but 50% is pretty good. Pretty good.

I heard one of the Stripe brothers make this point in a lecture, which is The takeaway is don't hire B players, just hire A players. And people know that, but the point he made was to actually be able to do that in your company, you have to be okay with taking it, taking way longer to get the next person than you want, and then you want to take. And you've been, you're hiring a new VP of sales, you're on your 20th interview, and then you're just like, forget it. That guy's the best of everybody I've seen. He's not the best, but he is the best of everybody I've seen. And I guess talent for this position sucks right now. The market's no good. So let me just get this guy who's the best of the group I've met and bring him in. And that never ever works. And the real test to, are you gonna be committed? To hiring an A team is in that moment being like, we're still going. We just got to keep bringing people in until I find somebody that I really believe is an A, A player.

Yeah. And we all, there is the rule. Most of us can, we pretend we interview 30 people for a role, but we don't really interview 30. Like we look at 30 emails, but we don't really do like screen 30. And so there's a, you don't have to get to number 20, 30. If you're at 20, you're already seeing, I'm like, ah, like I, this is the best I'm going to do. I want to do 9 more. I'm already, but yeah, you'll always regret it. And I guess that maybe you haven't done this as Info, if you could share. I think if you have any scale and you've gotten to 30, I'm sure John or Patrick, it's a different point, but maybe you just got to promote someone on the team. Maybe it's time to promote. So like, I think half your folks, if you're SMB, half your folks should be internal promotions anyway. You might as well just look around the room and say, it's Lemkin.

So Jason, give me, give founders advice here. I love promoting from within, and I also like finding profiles, and I often find profiles that maybe aren't perfect for the role, but I see something in them that I think is going to be perfect for ZoomInfo. Oftentimes when I've been in a boardroom, there is this pressure from investors that goes, not the right pedigree, didn't go to the right schools, didn't— not from Salesforce or ServiceNow or one of these great companies, not good enough for the company. And then there you've got a CEO or a founder there going like, but look at— I think this person who didn't go to the best schools, didn't work at ServiceNow, but I believe for all these other reasons that they're going to be great for this position. How would you tell a founder to navigate this?

First, I literally wrote, I thought this was a very niche post on Saastr just the other day. Why your VCs give you terrible hiring advice. It's very short. You can go find it right now. And it's because most of them haven't been operators or were a long time ago or another category. And if you've never done something, you want the person from wherever, from the brand, like you have no, if you have. And actually most folks on boards have no sales experience, right? If they have any, it's product or CEO. Some of them do, but they're all attracted to brands if you haven't done it, right? Um, so I, I think the simple, this, the most atomic advice is, is, uh, man or woman up and push back. Just say no. I, I went through that even with my first VP of sales who was from LinkedIn, first single-digit hire. but there was one job he had that one of my investors didn't love. Okay. He like, he was like, this was a dumb thing to do. And he said, don't hire him. And I listened and I said, thank you. And then I told, and I respect, people are actually probably would do it differently today. They'd skip more steps and I just hired him. You just gotta, the thing is, it's a great question. So one, realize they're going to give you bad advice. These VCs, they just haven't done it. They're not all bad people. And two, going to your prior point and maybe I'd like to hear your thoughts on it. When you meet a magical executive, a 10, the magical ones, it's hard enough to find someone that will actually do the full job, like all of it. That's pretty rare. And then when you find one that cares almost as much as you do, 50% as much, 80% as much, you will want to hire them so badly. And when I, with, I love Brendan, but when I had this little argument just with one of my investors, argument, I already was in love with him. Okay. For a variety of reasons, like it, it didn't matter. We, you couldn't change. I knew he was gonna save the company. And so, and I was backstage at an event years ago with Wade, the CEO of Zapier, and when Zapier's super hot, it's just blowing up. And we're talking about recruiting VPs and he said this, he says, I'm lucky if half really care. That's a gem. Not that they're great and they can run the campaigns and hire 87 people to do the podcast, but If even half of my VPs care, a mini founder, care enough, like then you just, you fly, you fly, right? Because it's so tough as a founder CEO, you're so lonely and you get one person on your management team that cares as much as you, like that area gets so much better, right? That area, you get two and they collaborate, you get three and I don't care where you are. I don't care if you're behind. I don't care if the competition's killing you. I don't care. If you have 3 VPs or SVPs, whatever, see, that care almost as much as you do, no one has that. No, no one has that. They're all mercenaries. They're all mercenaries at the competition. So I would say, yeah, if you've never hired before, get a little advice from someone that has. Have the best whatever interview that person to, like the best sales leader, engineering leader, product leader. But if you fall, if This is the person. Just be polite to your investors, but ram that hire down, whatever it takes. And, and they'll often have a, a wrinkly resume, right? They'll often have a wrinkly resume.

Yep.

Yep.

You are like taking that risk on for yourself. Now it's your job to make sure they're really successful.

If you love, here's the thing, if you love 'em, you'll backfill them. If you don't love 'em, you won't. If you love them, what you'll say is, it's like anyone, any great relationship, you're like, okay, Henry is great. But he doesn't love marketing and social media, you just do it for Henry, right? If you're not sure about Henry, you just watch. Okay, let's give him another quarter. But you'd only backfill the ones, like when you love someone on your team, it's, you know, it's, it's, I hate these home metaphors, but if you love your partner, if you love the spouse, you're going to backfill them too, right? You're not going to nag them because they're not as good at, you just do it for them. Right? You just do the put. If they're not so good with the finances or good with planning the trip, you just plan the trip for them because it takes you an hour. I hate planning. I hate that, all the reservations. Oh my God, I want to pull my hair out. You do that for 5 minutes for me, I'm in love forever, right? So you do that for your VPs, for your management team, right? You don't nag them where they're weak, you backfill them. And that's why if you don't love them, they almost always fail too, right? No matter how good they are on paper, if you don't love them, you don't backfill them. You just watch.

Yeah, it's really interesting advice. If you look across, if you're a CEO and you're looking across your team, in the areas that you see weakness on your team, are you stepping up and helping them backfill? Are you backfilling in those areas?

And maybe even more, are you okay with it because everything else is so good anyway? You're saying, hey, this person's only 80% of the 100, but it's such a good 80, I'll take it. Whereas the ones you said that you're not so sure. You actually might wanna see him fail so you can get him moving along.

You don't wanna see him fail, but you're just not gonna backfill him. And the other tell, if you want to know, if you're asking yourself, do I have that person on your team? Right here, here's my simple tell. Do you look forward to the one-on-one?

Right?

The ones that solve your pro— the one you're on the journey together that solve your problems. Not only do you look forward to it because it's a little bit cathartic, no matter how tough it is, you look forward cuz you actually want to help them. Henry, what, what's going on? And I hear that Henry's stressed about this thing. I want, He's so good. I'm looking forward to helping him. Right. And if you're dreading the one-on-one, if you cancel it, if you realize that whatever Jensen from NVIDIA said, he doesn't do one-on-ones. So you don't, you tell them you don't have to do it anymore. It's a sign. He's so obviously one for the ages, but I think that's where he gave founders bad advice. I think when you're scaling, these one-on-ones are magical moments with your teammates. They're not just torture. They're, I see one-on-ones as therapy sessions. It's like The Sopranos. It's like Tony going in. You're one of your VPs should be able to go in and have a little therapy, your good ones, because it's hard.

Yeah. I think one of the things that I changed this year is that I went from doing a standup with my executive leadership team once a week to doing it every day for an hour. And so my entire executive team gets together for 1 hour every single day, and we have an agenda and there are things across the company that we go over. And it's the one meeting on my schedule that I look forward to every single day. And when it was one hour, once a week, they were like painful meetings. This is like really an interesting thing. They were painful meetings. Sometimes we'd have 20 minutes of stuff for an hour-long meeting and I'd be trying to fill in the gaps. When we went to one hour every single day, full agenda every single day, all the way out to the last minute. And people told me like, wow, that's a big commitment. 1 hour a day feels like a lot. And I'm like, you know what? Spending an hour a day with the key lieutenants at the company who are driving all of the process and changes and team building feels like the minimal amount you should be spending with your team, not like the super maximum amount.

Henry, I'll just add that I think one thing you've left out is that he also required us, those who are on ELT, to stop having meetings with each other on the side. So I got rid of 8 one-on-ones, him plus everyone else, because we would just hash it out there together. Right? So he, he basically made the point that if you're gonna talk about it over here on the side, talk about it in front of everyone, get everyone's input, and we'll move forward faster.

I think what we learned during that little, uh, that little nasty bug that went around is that scrums aren't just for engineering. That the idea behind a daily scrum, I remember the first time I had a product team. I'm like, can't do this every day. What do you mean you guys are going to stand up in a room for 15 minutes and just go write your code? And my co-founder was like, you have to come. I'm like, I'm not coming every day. Like, you, you're the product guy. You hang out with the team. I'm not going to do it. But it turned out when that idea of the scrum is applicable to all functional areas. We just never ran this experiment until, until we all for a little while became distributed teams and it works, right?

Henry, I want to drill into one more thing Jason said, and then we're going to keep moving. One thing that you just mentioned that there was a couple of folks at Echosign that you didn't see it in them at first, but then they later went on to be CROs. An interesting thing you said, because I was at a dinner in Denver last week with two people who were ICs with me at Google, who went on to be CROs of public companies. And I didn't really see it for them at the time either. There must be a lesson in there when you think about what changed or what, what maybe that person did to get there.

What was it? I don't know. I, I think my, here's my, I'll simplify it to my SaaS learning. Founder-led sales, you need to hire the type of sales reps that you would buy from, that you believe in. That's it. That you would buy for real. This is the mistake every time when I talk to a founder where they hit a roadblock in founder-led sales is the classic SaaS question. But I always ask the question, what would you have bought from Henry? And they're like, yeah, you're right. I, I, the resume looked, I, I didn't really buy it from him. That's the test. And you believe in them. When you have a VP of sales that actually is your wingman that you believe in, they're gonna hire a much more heterogeneous type of fo— per people. They're gonna hire folks that are very product-oriented. They're gonna hire reps that seem to have ADD. They're gonna hire folks that are, you get uncomfortable 'cause they seem like they nag the prospect. You're gonna hire folks that you feel like don't follow up quickly enough. But a great sales leader's gonna look for the positive attributes and let the, it is, there is still creativity in sales even with AI. There's some creativity, he's gonna let the creative be creative. And so I think the lesson is let empower your sales leaders to hire a heterogeneous team. When you flip from founder-led to VP or CRO-led, you gotta trust them if they're performing and then just give them, and then just give folks room to run. The tough part is if you're building a fast-growing organization, you can't promote enough people. There's actually some irony. Sometimes it's easier in a slow-moving organization cuz because you don't hire as much and it's slow. You can actually almost promote anyone good. The irony is the faster you're growing, you're bringing in so much human capital. You can't promote every SDR to AE and every AE to director, but you gotta try. And I think that's what Brendan and Sam, the rest of the team did over the years, even when I wasn't there, is give everyone a chance to get promoted for real and then build a team and hire a team. So everyone got their shot in a comfortable environment where they knew the boss and they could get promoted as an IC and then they could manage a few folks and then they could hire, learn how to hire 2 to 3 folks with some help and not screw it up. Right? Because that's where you, that's where almost everyone fails on the way to a true VP of sales is they never learned to hire. They never learned to hire and they're a great IC. And then maybe if they're in a bigger company, maybe it's ZoomInfo. I don't know. Maybe if you go to director, you mostly inherit a team a lot of times, right? You, you don't actually show up and they're like, you gotta go hire 10 AEs. You actually, You hire 8 and then the team brings in 1 or 2. So you actually don't, I'm, I'm not a bigger company. You don't always learn recruiting tools. And so, but if you don't figure that out, you'll stumble, right? As soon as you get a leadership role. But I think they had the runway to do all this over 4 years and it gave everyone a chance to do it in a sheltered way and learn. And I think they, they flew. And I remember one of these guys on our team that was one of our top 5 guys. And then for 4 years, he was the number 1 AE at outreach. Number 1 from the day he started.

What's his name?

What's that? Riley Devine. Yep. And I was like, I met him. I'm like, Brendan's guy. I don't know. I don't get it. Like he worked from home in shorts. Like now that's normal. I didn't get it, but just gave, gave the folks room to run and be the diverse. And that's the key. Right. And, but you gotta But I think get, get giving folks a chance to run and just promoting everyone you can as hard as it is. There's not enough room on the org chart, but the ambitious want to be promoted in sales, right? The number one rookie error is not promoting your best SDRs. They leave. They leave, you know, doesn't matter how much you pay them, right?

Or how long they've been in it, like 3 months, 6 months, move them up.

And you're like, I'll create an IC track for you. And the real, here's the thing, we think of SDR as an entry-level position, but the best ones are worth so much money. The best ones are worth much more than a mid-pack A, but they just, they're the best ones are all ambitious, right? And they just, and so you've got to, if you don't, if you're not looking to promote your best SDRs in 8 months, they're going to leave.

And just, I thought I'd just take you through this hypothetical. And I think probably a lot of CROs, VPs of sales are dealing with this, but so I'm a new CRO or a new CEO at a $50 million revenue company. It's losing $10 million a year. And I have to get to break even in the next 2 quarters. I'm allowed to bring growth down a bit to do that, but I've got to get to break even. I have to stop losing $10 million, uh, a year. What am I doing? What advice would you give me?

Well, first of all, let's step back and use an interesting case study. Toast just, I put it up on SaaS, or they just did their last, they put up, they just went profitable, not non-GAAP, but GAAP profitable. And they're pretty brutal at Toast. It's a tough model. It's SMB with low gross margins because of payments and negative gross margins on hardware. It is not an easy business. ZoomInfo's tough, but at least the data doesn't cost, you don't have to, I don't have to ship a, a tablet with it. Okay. As hard as it is, it's a brutal business if you look at it. And they had to get profitable. You, you know this, right? The Wall Street said you gotta get profitable, Toast. And so they, and Toast has more data on sales. Than I've ever seen a public company. And they increased quotas 50%. They cut territories in half. This is classic old Salesforce. Everyone in sales hates it. I, I crushed it. I was President Circle, and then they cut my territory from Palo Alto to just the end of university, or they moved me to Pensacola in Florida. They all, every salesperson has a story of their territory being cut in half and their quota doubled, right? It's a salesperson's nightmare. Totally worked at Toast on every level. It worked. At every level. So one option to answer your question is to be more of a badass. I think the tactical answer, $50 million, gotta get profitable, right? The tactical answer for more kumbaya people is probably cut half your sales team. This always works. Concentrate your leads in tougher times. It may not work at Map— maybe it doesn't work at ZoomInfo scale, but even at $50 million, it's going to work. Take whatever leads you get a month, 100, 1,000, and you're going to look and just do— look on a spreadsheet. Okay. Jason, Ben, and Henry close from 10 leads, they close $10,000. The average is $5,000. The bottom is $2,000. I know it's brutal. Just get rid of the bottom 40%. Just get instantly, get rid of them in one quarter, your revenue goes up. It's ultimately, you need capacity. So that's one, cut your sales team in half, keep your closers. They'll make more. You'll make more in the short term. And then the second one, and that's cool. The second one that you have to do today, and this one's brutal. This one is not what you want to do, but you got to get profitable, you said, right? The second one you got to do is you got to retreat to your core ICP because it's cheaper. It's always cheaper to sell to your core ICP. And not only do we have to go multi-product here, we all have to find a cost-effective way to sell in strategies where we're, we're not dominant, right? There are categories where ZoomInfo is so big. There are certain segments of the market where you win 80% of the deals, 60%, 70% of the deals. And so when times are tougher, you retreat to that, right? And there's other segments where you win 20%, or maybe you're in Europe, or there's regulated data. I don't know all this. You can tell me, right? And when times are good, you brute force that. You're like, let's go attack that hill where we close 5% of the deals. But it, it costs more money. It's not always— hopefully you break even on these outer circles, right? That's your goal as a founder is let's have a core that where the CAC works. And then let's, once it works, let's add some layers where like the CAC's tolerable or Then let's add a third layer where if we just make a dollar, it's worth it. 'Cause we're trying to win. We're not trying to be eighth, right? And so you cut these layers of the circle and you retreat to the corner. It feels good and the close rates are high, but it's the start of a slow downward spiral to death. But I don't know that you have a choice, Henry, if that's, if there's no more money and there's no more money and you're $50 million, and this is a common scenario, right? So cut half your sellers. Easy. It sounds brutal, but it's easy. Sell to your ICP. It tastes good, but if you do this more than 4 quarters, the competition's going to pass you by. They're just going to pass you by. Right. And it's so hard because we're in this efficiency era now, but to win, you got to play dominant strategy. And one way or another, you got to play in spaces where you're weak. This is the number one use of capital, venture capital. Maybe buy Discover, buy ZoomInfo. I don't know how that, that's a really good use, right? Buy, buy your competitor. That, like, that's, that's a plus. But ultimately you want to play, you don't just want to win where you all win all the deals, right? You want to play dominant strategy and it, and it's tough when you can't. Because if your comp— if you have no money and your competitor has no money, great. You both stick to your little lily pads, right? I'll do sales, you do marketing, I'll do Europe, I'll do US. But if you really want to win and you want to be in the US, Stripe needs to be in Europe and Adyen needs to be competing here. And you can't, you're sacrificing the dominant strategy. If you don't play dominant, you got to play in categories where you lose most deals to win. This is a weird thing. You got to play in categories where you lose most deals.

And Jason, just walk through why do you have to play in categories that you lose most deals?

Because you won't grow. Your market, you won't grow your overall TAM enough. We all start in this little, you, I don't, you tell me in the old days, I guess it was Discover, who was your top? I, I remember you told me before, like the ZoomInfo and Discover ICPs were different, right? One was more mid-market and one was SMB. Which one were you, SMB or mid-market?

Yeah, but I had a direct competitor before called RankKing that was the same, exactly the same thing.

Okay. But you, Discover and ZoomInfo had slightly different ICPs, right?

Yes, slightly different ICPs. Yeah.

So you could just hide, you just ram them together. That's the best way to test that. I like that strategy. We can't all do it, but if you'd remain separate, you guys want to look at each other across the battlefield, like you want to, you got to take share away, don't you?

Yeah. And I think actually that is what ZoomInfo was doing to DiscoverOrg. There were accounts where they were coming in where we were like really penetrated and companies that sold to technology decision makers. We had the best data, no question about it. And we would beat them 80, 90% of the time. But then they started showing up into those core accounts and like basically Trojan horsing their way into larger accounts. They said, listen, I know you're in IT, you sell to IT and you have DiscoverOrg for that, but you also probably sometimes sell to the COO and sometimes the CFO and sometimes these other people get ZoomInfo for all of that. Then they got ZoomInfo and they found their way into the IT side. Yeah.

So the most extreme, I didn't get this most extreme example. In the old days when we were competing with DocuSign, in the very beginning, we pretty much owned the Salesforce ecosystem because we were in the first generation of Salesforce. Wasn't that hard. You just had to produce a good integration that actually worked. Most of them didn't work. And then you would get all the leads that existed. And then DocuSign, 3 years later, figured out they wanted to get into real estate, into sales, and they would go in and they would find all of our accounts, right? And they would offer them. 2 years free, unlimited use, unlimited anything. And I'm, we laughed. This is a sign of desperation, right? It was a sign of dominance. We're going to go long. Okay. And we'll throw 5, 10, 20 million and even 20 or 30 people into this. And they did, and any marketing program Salesforce would do, they were there. You want the $500K booth at Dreamforce? We're in and the product's free. Okay. And as a first-time founder, I'm like, we just keep winning these deals. We just want Google for $500K and Comcast for $400K and Facebook. And we had this great sales team and we had a 10X feature that we would beat them, but they were doing this dominant strategy. And if they're doing it and you don't, like this, like ZoomInfo going to your accounts, you're going to lose, right? So it's so easy to retreat to that lily, that lily pad or whatever this crummy metaphor I'm using, but you got to keep expanding because like you said, how are you going to add, grow, add $400 million, $400 million? It's just, you Yeah, you gotta expand your surface area for your TAM, right? Related to that, one of the things I took for granted as a founder, and I see this is the number one issue in sales today, is everyone was a product expert. Now it's easy in a sales tool, but what I just showed you was being a pro— everyone was a product expert, weren't they? That demo was so powerful of the redlining or the localization or the ease of use. I, I gotta tell you, 90% of the folks, sales folks I interact with today can't demo their product. 100%.

I think this is going to be a big one.

You're going to lose all those deals.

They have their SE to do it for them, right? I'm just kidding. No, it's sad.

It's sad.

I'll tell you where I think it doesn't matter, for what it's worth. It doesn't matter in the super enterprise. In the super enterprise, particularly if you're on the account management side, you probably don't need to be the greatest product expert ever to be the best enterprise account manager in the world. But everywhere else, it's like painful to hear answers to very basic product questions get like flobbed or not nailed. Because like in the early days, we were all product experts. Every salesperson knew the nuances of integrating ZoomInfo into Salesforce or how you installed the Salesforce native application or how you handled duplicates or how you did hierarchy. And I think that nuance for most sellers is gone. They don't really know the product or particularly know the use case that they're solving for with the product.

And you know what drives me crazy? There's so much content on LinkedIn, so many thought leaders on LinkedIn, everyone talking about building relationships in sales, right? Now, the number one way I think you build a relationship in sales today, no matter what, is being a product expert. Are you literally the biggest guru in the data space, sales data space, the biggest guru in your industry, and you learn a little bit how to ask for the close? You don't even, you will destroy the competition. There's too many vendors. Too much is being cut. Too much is being rationalized. My time is short. I'm not adding 50 SaaS vendors. I'm shrinking my, I want to talk to an expert. I don't want to talk to this person that thinks they're a people person. I don't need a people person. I need an expert. The super enterprise, maybe the golfing still works, but another, looking back, I haven't thought about this in a long time. There were, Keith Krak came into DocuSign and blew it up, took them public. He was great. Super, he had been CEO of Ariba. Great. But the guy before him got fired and he was the 5th CEO before him. They went through 5 CEOs until they had Keith. And the 5th CEO got fired in part because they lost Facebook to us. And Facebook was, even back then was pretty big. And they thought they'd already commit, they already did a commit to the board that they were committing this huge deal to Facebook. And we won it. And part of it was that we were local. We had a 10x feature. This localization was so important to Facebook, but we talked to our guy later. He's like, they came in and never demoed the product. They did the interview. Now, this wasn't Keith. Keith would have made it happen, but the guy before, they did it and the CRO committed to the deal and they backslapped and they talked about the back nine at Pebble and, and brought him nice vests probably. And we went and just, this doesn't work forever, but We heard this story later. I'm like, oh, that's a, I couldn't imagine going to the meeting and not, this product's about ease of use, but, and, and I just feel like we've deteriorated. We have deteriorated. And, uh, not enough CEOs just ask this question in sales. Just, we don't ask, sell me this pen anymore. And we don't ask folks to do a demo anymore. We used to, in the office, used to come in the office and you don't have to do it the first meeting, but you wouldn't hire someone in sales until they could sell you this pen and do a demo. Maybe you did. I never ever hired anyone that didn't do the demo or the sell me this pen. Now we're just like, oh, I gotta hire 100 reps today. You worked at ZoomInfo and you're nice? Done.

How do you think AI changes what great leadership looks like in go-to-market?

I think great, I think it's a very, it's an interesting question. I don't know the answer, but what I do think, I think the story of getting rid of the 4 reps 'cause they asked the AI 7, same question 7,000 times. I think it will lead to a next level of transparency for leadership, right? Just like with Chorus and call recording, that was jaw-dropping when it started, right? The whole cat— your, your jaw fell out. Like now it's table stakes in, in a million products, right? Chorus is the best one. But, but we remember about whenever that stuff launched, it was, but not only was it jaw-dropping, but it was jaw-dropping for transparency, for transparency. And I actually, you asked for leadership, I think we're gonna We're going to have to guess a lot less and rely just on dashboards a lot less. And I think that's a big change, right? It is a big change. It will lead to a lot of frictions. That's my, maybe my niche answer to the leadership question, right? Yeah. I think it may not produce all the benefits for individual knowledge workers that they think. It may lead to more. At first, at first you'd be like, my boss is listening to my calls on Chorus, Chorus, and then Like a year ago you'd be like, there's a note taker on my Zoom. But now we're all, it's all normalized, right? And AI is gonna rip through everything in your email box, everything you do, and it's gonna tell Henry exactly. And if you, if you guys know anything about the, um, qual, the QA space in customer success, I think everything in post-sales is actually ahead of sales and AI far ahead, way like 2 to 3 years ahead post-sales than sales. And there's a QA space where you, uh, for years you've been manually grading thousands of customer success agents. And I've done one of these investments. It's completely ripped through the space. Now everything is AI-ified in QI. If I have 1,000 folks picking up the phone at my e-commerce company, I'm not gonna grade them manually anymore. I, the AI is gonna literally do everything for me, suck up all that data and tell me Lemkin's gotta go, or Lemkin's at this is, everything's been audited. Like we, we're all the stuff we're talking about in sales has already happened post-sales, like maybe almost to a fault, right? If you look at Zendesk or Gorgeous or Intercom, they're so far ahead of sales. They're so far ahead of sales, mainly because people want to lay off people. This is the, the main reason, but they're so far ahead. And, and part of that is this transparency that didn't exist today. And I think it's gonna happen in sales over 2 years. And a, a different way of looking at it, if you want, in my opinion, if you want to see where AI is going in sales, just pop over to post-sales. Just pop over to our friends that are automate, that are trying to automate. We, we ask, will humans be automated away in sales? It's a fun question. Already happened in, if you look at the homepage of everyone doing customer support software, if you look at Zendesk, Intercom, or Gorgeous, and you squint, you know what they all say if you squint? You can lay off 40% of your team with AI. You can lay off 40% of your team. We can argue whether that works in sales or not, but it's the same. It's just there's more pull there in post-sales, right? So we should learn from it in sales for leadership, for transparency, for product. Like, here's your little crystal ball. It's not quite gonna work in sales. but it's the same tsunami that's going to come.

That's a great parallel. It's like—

Jason, when you think— this is an interesting one because I actually don't think, and I could be wrong, but I don't think that regardless of how much more efficiency and pipeline you say you're going to bring with your AI sales solution, that people are going to let go of their salespeople to bring in your AI-driven copilot. Thing. And they'll believe there will be productivity boosts, but it's just, it's not as compelling. Like, there are two things that I felt are really compelling in AI land. One, the Zendesk and customer support people of the world basically going, yeah, you can get rid of 40% of your customer support people and replace it with this bot. It'll handle 99% of what comes through. And then on the other side, GitHub being like, 20% more developer productivity. And I think on that side, people have talked about developer productivity, sales rep productivity, whatever productivity forever, but for whatever reason, it is etched in my brain that GitHub will give me 20% more productivity. GitHub's Copilot will give me 20% more productivity out of my engineers. Maybe because my engineers are hard to hire, and I know that when you get a good one, you really want to keep them, and the idea that I can get one more person out of 5 people just by giving them this tool is the most compelling thing in software, in a software business. But I haven't found anybody else nail messaging that like really compels somebody around AI. What, you know, what we see for sure, the ability of leveraging AI to understand all of your customer and prospect data in your company and then priorit— prioritize accounts that you should be going after based on a really deep understanding of your ICP, who you've talked to, what signals are being generated. This is like back in the day, Everstring and Infer and Predictly, there are all these like early 2010s companies that were trying to do this and generative AI absolutely unlocks that in a big way. Then just can AI write? A better first email than my brand new SDR can try to figure out on their own? Absolutely. And at a minimum, it gets you a much better starting position. But once that cycle starts automating, that's going to be really like an inflection point from a new sales perspective.

Yeah, I think maybe the meta question, like, is if you look at— if you started engineering, it's we think all these innovations would lead to us needing fewer engineers. No, the engineers just get better. Every innovation we've had in software from open source to just using Stack Overflow to Copilots, they just get better. We don't really, can't do, we can't run ZoomInfo with 3 engineers. It's just they can produce much better software, right? And it's an arms race that goes up, right? The question for sales is, will everyone in sales that works more than 15 hours a week get better from AI? Or will that happen, but the slider will get rid of a little bit of them? I, I don't know. I am, I'm waiting to see. I'm observing.

Theoretically, they can just get better.

They can, right? But maybe we're gonna see more toasts where the AI is the, the lubricant to drive, to force the higher, force up the quotas and cut the territories. And it's great. You've got, here's your good news. There's good news and bad news, Henry. Good news is ZoomInfo Copilot for the whole team. You don't have to. You don't have to share email addresses. We've got enterprise-wide. Bad news is your quota's up 50% of your territory's just shrunk in half. It might be some version of that with AI. We'll have to see.

Yep. Jason, we gotta wrap really soon. Thank you so much for spending the time with us. Our traditional last question that we ask everyone is who's the smartest person you've ever met and what did you learn that you took away?

I'm just gonna say smartest people in tech, right? Uh, I'm actually in, and, uh, maybe Henry would be in this category, but I, I, I didn't meet him at this moment that I'm gonna describe, but the two best I've met are Peter Gassner, who's CEO of Veeva. They raised $3 million and are worth $34 billion. Pharma and Vault for pharma and CRM, CRM and Vault for pharma. And I admit this one is slightly toxic. Travis Kalanick, when I met him pre-Uber, barely met him. I was just invited to a lunch. And what the hell do Peter Gassner running an 8-figure deal pharma company and Travis Kalanick running a pirated music company and then Uber and then a cloud kitchen have in common? This is the magic of the best founders. Literally, they could explain the future to me in the crispest terms, the crispest. When I met Peter through one of our investors, I sat— nicest guy, Peter Gassner, intense but nice. He's Okay, here's what's going on with Viva. Oh, what are you doing at Echocell? Okay, here's how the next 5 years might roll out for you at Echocell. And he was pretty right. He was pretty right in a way I haven't seen before. And I remember meeting Travis, like, when I was really young in the early days, when video was just exploding on the internet. He's like, here's where video will go. Here's where something like YouTube will go. Here's how it will use. Here's how it will percolate through society. Here's how it will change how we consume video. And I'm, I'm looking at 320x240 pixelated videos on my phone. And I'm like, what are you talking about, dude? And everything from music to video that he said, and it's not blabbling. It, it was actually taking all of that, seeing 5 to 8 years in the future and compressed it into mortal communication. It's an incredible skill, right? And I think, so I think the best CEOs can see further into the future than, than the rest of us can. And then they can bring that into the present in a way we can see it. And it's just, it's for me, that's the magic. That's magic, right? So that, those are my learnings and I just remember being my jaw dropping with both Peter and Travis. Jesus, this, these guys are like here.

Yeah. Amazing. This is how I feel when I hear John Collison talk, or is it? I'm like, I'm, I just like, oh, I just, I'm like very far away from understanding the world the same way. That they do.

But you know what the beauty as CEO is actually, you don't have to be that per— I'm not saying you're not, but you don't have to be the person. You just hire them on your team. That's like the best CEO. These are the, the best ones. But you can be like, you have to be humble enough as a CEO to say, listen, I gotta hire VPs smarter than me. Right? That's the, that's another cheat code is seeing that. And then they're not all the, the CEOs of the top, whatever companies didn't, they didn't, weren't all first in their class from wherever Harvard and Stanford, were they? That's the classic thing, right? You can hire them. That's just being, you want to hire the best, but also if you think you're just pretty smart, hire folks relentlessly smarter than you under you, you be the visionary. And then that's the way to backfill it. Just if you're a 130 IQ, just hire some 150s. It's fine.

Like you don't have to, you don't have to do it all yourself.

Yeah. I love it. Jason, thank you so much for coming on the ZLabs Podcast.

This is great.

Truly an honor for me. I've been Following you forever. I really appreciate the time and, uh, we hope to have you on again.

Okay. Sounds good. All right. Thanks everybody.