Workshop Wednesday: LIVE with SaaStr CEO and Founder Jason Lemkin

We're so excited that you could join us live this Wednesday right before the holidays. Thanks for joining. I know you're all coming in. If you've never been to SAS Data Workshop Wednesday series before, this is a different kind of series that we've been doing for the last couple of weeks now. We're thrilled to have you back. We've been doing these almost every Wednesday. Last week we had Scaled. But every week we bring along a SAS expert to walk us through some of the content that they're a subject matter expert in. And kick off an interactive discussion. So this is a bit different. As you'll see, some of us have our cameras on. So as much as you want to do that, don't be shy. Like, we're all here, friendly faces to engage and interact in this interactive session. We're planning for about 20 to 30 minutes of content. Today's guest should be known to all of you, so definitely needs no introduction, but we'll do a quick one anyway. And you will have the chance to interact with our today's speaker. and connect with fellow community members after content wraps. So, uh, today's very special guest is Saastr's own CEO and founder, Jason M. Lemkin. I know you all know him. I see a lot of familiar faces too. So welcome back to Workshop Wednesday. Good to see you all again. Um, and today we're gonna be talking about 8 ways on how to motivate the sales team after a rough patch. If you have any questions, you can drop them into the chat. We'll also be doing like interactive Q&As, so we'll be calling on folks. With their cameras and mics after the formal content is over. So without any further ado, Jason, I'll let you take it away.

Thanks, Amelia, and thanks for everyone watching on streaming or joining. It's fun to do these Workshop Wednesdays. Please give us your feedback, submit speakers on our— submit a speaker site, which you can get at saster.com. But our idea here is to at least once a week kind of reproduce some of the workshops that we do at our big SaaStr Annual. SaaStr Europa and do them live here on the internet to help everybody. So I'll pinch it today. We have so many great speakers, CEOs and founders, but once in a while they'll let me do one when there's a hole in the schedule or they need a little extra content. It's right before the holidays. So what I thought I would do was two things. One, I thought, hey, you know, for some of us, it's the last half of this year has been a little rough. So I thought I would dust off and update a classic SaaStr post that we've written a few times over the years as we've gone through these ebbs and flows in SaaS on 8 ideas how to Motivate the sales team after a rough patch. But also we can just use this as a related open AMA. So throw your questions in the chat or join the session and ask them voice because we'll— I will try to stay on for an hour or so to answer any of your questions after we go through this content. And some of these ideas are pretty basic. I will flag that for you. But I think, I think if you take a couple of these ideas away and help your sales team, that's the key thing. And I think I know I've said this a lot over the last couple of months. No matter how it may appear, things are not like terrible in SaaS or cloud. If you look at— go to SaaS or look at even the latest Gartner data, CIO spend is still up 10 or 11% next year. There are categories of software that have no issues. I was on a board meeting yesterday for a SaaS company that sells mainly to healthcare. They see no downturn or impact. There are other categories like sales tools that are kind of decimated now because A year ago, everyone bought an extra 100 sales tools to help their sales team. Now they're thinking maybe 70 is enough. So the impacts are uneven, but cloud and SaaS are not, are not even, are not even dead. It's just we had such a crazy explosion of buying and growth in the boom. Let's not forget that both, both Shopify and Zoom went from $1 to $4 billion in revenue in one year. Okay, think about that for a minute. Zoom and Shopify not only got to a billion, but then in one year during the craziness, went from 1 to 4. How could we not have a hangover? How could we not have issues? How could the year or so after all of this not be a tough year at some level? Because what we're seeing again is deceleration. That's what we're really seeing. I don't think there's a recession. I don't even think there's a downturn. What I do think is there's deceleration. And when you, when you, when you're such a rocket ship, when the missile goes up so high and so fast, like, there's got to be some deceleration. So what does the sales team need? And even some of our sales team is on this. So I'm, I'm relearning these lessons even with our little small but mighty I have a sales team who just this morning closed 2 big deals and I think may even have a record week. December, the week before Christmas, our own little sales team may have a record week. How do you do that in these tough times? Well, we'll go through a few ideas on how to motivate the team in this rough patch, but most important is showing them that it still can be done. I would say, and then I'll go through these points, I would say maybe 20% of the startups I work with or have invested in are having record Q4s, and we'll chat about why in this little bit. And I would say 15 to 20% have kind of given up. They've kind of given up. They're phoning it in. A few even are growing 0% now and are actually okay with it. Like, they're okay. Like, 0% is pretty good in this economy, they're saying. Maybe. But maybe what they're not doing is leading from the front, and maybe they're not motivating the sales team through a rough patch. So let's use this first point and I'll share some real-time examples. The first point which, which may sound obvious to folks, but deliver sales a true 10x feature. And this is, this is tough. When we go through tougher times, everyone that's been doing SaaS for a while starts to hear whining from the sales team like our product's not good enough. Whoever is beating us in all the deals, why don't we have a HubSpot integration? Why don't we have a Salesforce integration? Why doesn't our product do this? Why doesn't the dialer work? Whatever it is, why don't we interface with Magento? Look, there's always— you're always going to have more features to build than the time that you will ever have. But here's something that really inspires the sales team. Sit down with your sales team calmly and figure out the 1 or 2 or 3 features that they have been dying for for a year and finally go friggin build it for them. Okay. Now, the feedback you're going to get from the sales team, literally, it can be exhausting because it can change every week based on the last deal, the deal they lost on Monday. They needed a certain feature, then the deal they lost this Tuesday, all of a sudden the sales team will change their perspective. Even the best sales reps tend to be a little bit myopic in their requests. So, you've gotta drive this. But magic happens if you go through the 10, the 100, the 200 deals you've lost this year. You've gotta do it rigorously. Why did you lose deals this year? We do too many deal won meetings and not enough deal lost meetings. And we certainly don't analyze lost deals enough. We don't track the data, we don't track the inputs. I'm pretty sure even our little SaaS sales team that's on this, They don't actually know why we lost a lot of deals. They don't know why a lot of our sponsors didn't, didn't sign up again or didn't do— we don't know. We know anecdotally. But anyhow, you get, get together and give them one 10x feature in Q1, maybe ideally by February. It will inspire the team if they lost a big deal this year. And instead of blaming it on the economy, you can then give them that one feature that they really wanted. It almost always inspires the team. They can see that you're You're going from a struggling company or even a loser company into a winner if you can deliver those features they always want. I've never seen this not, not work at some level. Okay, next one. And I started writing about this like 10 years ago at SaaStr, and this and a few other early SaaStr folks— and I hate this word, but they just triggered people. Okay, a couple early SaaStr posts. One of the first SaaStr posts from almost 10 years ago was, you'll know in 30 days if your VP of sales is going to work out. And so many sales leaders hated me for it. They wrote, that's ridiculous. You've got to give a VP of Sales 60 days. Now you've got to give them a year. You've got to give them 5 years to get points on the board. But I asked people to calmly read this post, which is, hey, look, if a VP of Sales comes in and nothing gets better in 30 days, it never will. I've seen this again and again. If they don't bring in a better rep, if they don't improve the playbook, if they don't just influence whatever's in the pipeline, they never will. And eventually folks realized, hey, you're right. The VP of Sales doesn't always do magic in their first 30 days, but things do have to get better. This one, folks, until recently, I think I've struggled with, but now everyone sees it's true. Like the simplest upgrade on your sales team in tougher times is to let the bottom 10 or 20% of your sales teams just go today. I literally mean today. And a lot of us, obviously, we are at in some ways almost a record time in layoffs, which we may chat about a little bit. It's a little crazy when times are still decent. That layoffs are at a record level, but they're because hiring was a record level. People hired at literally an insane level last year, especially on their sales teams. A lot of sales teams doubled or tripled last year, not just to hit insane plans, but because there was vast amounts of capital in the system and it was go, go, go, go, go. And I don't know how many startups I work with. I know there's one that I, that I've invested in a long time ago. It was literally one of the most capital-efficient companies I know, got to 9 figures in revenue with 300 employees. And then last year they went to 900 in one year, 300 to 900. It's all over the place. So, so we've learned we do have to shrink a little bit, but this is magic. And let's— I've written about it 20 times on SaaStr, but let's talk about it. And if people have questions at the end, let's really go through this because literally this, as tough as it is to let people go, this, this helps everybody. Look around your sales team. And I put the math on SaaStr a long time ago. The best sales reps often do 9x the average sales rep, and they almost always do 2 to 3 times better In really good times, mediocre reps still do okay. Like they still hit, they come close to quota. Um, but in tougher times they close nothing and look around your team. I know it's tough. Do you have some reps on your team that literally this quarter have closed nothing or close to nothing? Nothing at all. I bet you do. And I bet your top 1 or 2 reps close the same as earlier in the year. If you're struggling, they, they often close almost the same in tougher times. And we can talk about why here. You can read more on SaaSer, but think about the math for a minute. Leads are so precious for so many years, for so long, certainly until 100, 200 million in ARR, leads are precious. So let's say you're getting 100 leads per month and you're giving 20 to your 2 worst reps. Give those 20 to your top 2 reps. What happens? Think about the math. You will almost inherently increase bookings 20 to 40%. Think about the math. I know the math is obvious. Or at least maybe now, you know, in 20— going into 2023, it should be obvious. But, but do this math on a spreadsheet and realize you're kind of always flushing your leads down the drain when you give it to mediocre reps. But you do have to train people, you have to scale people. So you're gonna take some risk when you're hiring rapidly. And then like in 2021, everyone lowered the bar. Everyone hired reps they wouldn't have hired in 2018 or 2019 just to put warm bodies against deals. And now you can see in tougher times, again, they're flushing your precious leads down the drain. It's sad, but every founder knows this is true. And every VP of sales that's been around for a while knows it's true. So do the math. And I know it's tough. It doesn't mean don't give people severance. It doesn't mean don't, don't treat them well, but reroute the leads from your worst reps to the best reps, and literally your bookings will go up 20 to 30% in Q1. I guarantee it. Okay, next point. This one we've talked a lot about, but this is a great strategy in tougher times. Most of you have hopefully already done this in Q4, but if not, 2023 is the right time. Promote your top rep. Promote your top rep. Now, not every sales rep wants to be a manager. In fact, many of them don't. And in fact, many of them think they want to be managers, shouldn't be managers. Being a manager, a sales manager, is almost nothing like being an individual contributor, AE. The skill sets are so different. But at least ask. Go to your number 1 or number 2, and your number 2 reps, and ask how you can promote them. Or your top SDR, maybe they want to be a manager now, maybe they want to be a team lead, maybe they want a title but without the responsibility. So be it, like, promote them. Um, we all like promotions. They, they signal something to your, to your winners, and they signal something to your team that, that, that they're a leader. And it shows the team, to go to the third point, that you're investing in your winners. It, it's whether, whether it's a true promotion from SDR to AE to team lead to director to VP to SVP, that's like one progression path, whatever it is. People on the sales team, they're ambitious, um, one way or another, and they want to see there are paths to promotion. And even if the paths aren't perfect, even if it's a promotion from one flavor of IC to another, um, everyone wants to see it. Everyone wants to see that there's a path to growth in sales. They want to make more money, which, which we talked about in the prior point, and we'll talk about more. Um, and we— and many of your reps want to see there's promotion. So at least promote your number one rep, whether you have room on your org chart or not. You may not have room to promote a third of your reps or a quarter, but you can definitely promote your number one, one.

And it's a—

it's about clear as signal that you're a winner when you promote your number one rep. So do it, do it. We got plenty of days left in December or do it in January. Okay. Number 4. And again, this goes back to point number 1, which is a 10x feature. But I see too many founders when things are tough, not asking the sales team. And look, these are, these are complicated conversations because even the folks on our SaaS sales team that are here, I think will reinforce this. You can get a lot of feedback when you ask your sales team to get feedback. You'll get feedback about the deal this morning. You'll get feedback about You know, line 28 on page 16 of the prospectus. You get a lot of feedback from your sales team. And honestly, as founders, it can be overwhelming because sometimes sales folks are very, very focused on their individual issues and deals. And that's okay. That's your— but that's your job. Ask them. Your sales team, we know this, your sales team is on the front lines. They give you the best product feedback out there, even though you have to filter it. And they have some of the best ideas on how to sell better. They just also have some of the worst ideas or the most unfiltered or undistinguished. But open it up. Often conversations and you will hear noise. And going to my second point, get a thick skin. You will hear complaints from your sales team if you have honest conversations. You will hear complaints, especially if their comp has gone down. It's tough on sales folks and a lot of it will be short-term feedback. But ask them, involve them, get them their 10x feature and get them a few resources, get them more training, um, join more calls, folks. And I— we're going to hit this point next. Help them, backfill them on whatever you want, but get the feedback from every single person on your sales team. There's a gem. There is a gem in every person on your sales team. There's at least one thing that you can implement from every person on your sales team that's closed a deal this quarter. They know, they're on the front lines. Okay. Point 5, this one sounds so basic, but I'm going to bring it up anyway because it's a kick in the arse to some founders that may listen to this or watch it. Get them more leads. Okay. Get your sales team more leads. Now, everyone that's read or seen Glen Gary Redd Ross or whatever can, you know, we all know that leads are hard to get.

Blah, blah, blah, blah, blah.

Every sales rep and every sales leader I've worked with complains they don't have enough leads. Like, not all of them, but they always complain. Or the leads got worse. Like, why didn't— everything's getting harder. It's December. The leads are worse than they were at the start of the year. So be it. But look, twice as many leads, even if they're not quite as good as the prior leads, that's still something in tougher times, right? Get them more leads. And the number one thing you got to do, and this is my kick in the arse, I see this too often these days, hire a VP of demand gen. Way too many founders go way too long without hiring a true VP of Demand Gen. And I know I've written this before, but listen to me. A senior junior marketing manager does not count. A content marketing manager making infographics does not count. Someone that writes 3 pieces of content a week on a blog no one reads does not count. These things can help. This is not a head of Demand Gen that has a number, that has a commitment to the sales team, a commitment to grow leads, to grow pipeline, to grow opportunities, to grow MQLs or SQLs or sales accepted leads or whatever. Honestly, it doesn't even matter what the commitment is as long as they come in and give the sales team more. And you have to hire someone, period. And you have to hire someone senior enough that they have owned a number before in marketing and that they will own a number now. And I've written about this since the very beginning. Classic SaaS posts. I hired my head of marketing at $20K MRR. It wasn't a week too early or a month too early because She inflected the curve. She got us more leads than her salary cost. But what's different today is whether it's because of PLG, whether it's because there's so many startups out there, whether it's because of so much funding, I see SaaS startups get to $10 million, $15 million, $20 million without a head of marketing, without a head of marketing. And kudos to you if your product generates a lot of viral leads and kudos to you if your outbound team is great and if everything else is working. But gosh, in tougher times, get the Team 20, at least 20, 30, 40% more leads. You don't have to be a total magician here. Hire someone that will help your sales team. And so I'm kicking you in your ass if you're— arse, sorry— if you're, if you're reading or watching this to finally be honest. Do you have someone on your marketing team that can own a commit to your sales team and are they executing on it? Do you have someone? I will bet 90— if we, if we could do a real survey on this, I'll bet 90% of the folks watching, listening, we'll see it later, do not actually have someone on their sales team that owns a number on the marketing team that owns a number to the sales team that has the same quota your sales team has. Not only will it work, I guarantee you it will inspire your sales team. If someone's helping them more, this is how you can help your sales team in tougher times. So it's time to do it. And yeah, it's a tough hire, but every hire is tough. I mean, they're all, they're all hard. Go, go. Now is your time to finally do it. Okay. Point 6, and this one I made a while ago, and this is maybe something more to think about for the next year, or possibly now, but plan resets. So look, in tougher times, you do have to reset your plan, both as founders, you've got to do it. And, you know, once a year, as a head of sales, you can do it once a year. You can't reset the plan every week. You can't reset the plan every month. And importantly, this is really important for where we are today. You can't have no plan next year. I would say half the startups I work with have no plan for next year. Sometimes it's one reason is folks just are less disciplined today. Folks don't have board meetings. Folks don't do things they used to do. Some of it is founders are hiding from not having to plan next year. Some of it is they just want to— they're very transparent on their monthly metrics. Hey, we grew 3.6% last month, but they don't want to sign up for a plan next year. But first of all, it's almost January. Like, go do your plan. Like, build a plan. And if you don't know how, do a SaaS search for your L4M plan, your last 4-month plan. It takes you 10 minutes. Average out your last 4 months of growth, average out your last 4 months of burn. That's how you're going to do for the rest for next year unless you, unless you make changes. And if you don't like that plan, it will force you to think through it. But make a plan and then if you have to reset it, just do it once. The best leaders, the best founders and the best VP of sales, if they do have to reset, they do it once. The best VPs of sales get a quarter or 2 into the year and look, They don't promise some— they don't promise the magic of Q4. This is the sign of a disastrous founder or a horrible VP of sales is the magical Q4. How are we going to do this year? Well, Q1, we're going to do $500K, Q2, $400K, Q3, $300K, but Q4, $6 million. I mean, you laugh. I can't tell you how many plans I've seen plan on a magical Q4. No. What do the best sales leaders and founders do? You know, 3 or 4 months into it, they do one reset. It's an honest reset. It's based on data. Um, and they do it once. So, so be real. Don't, don't plan on a crazy back half to the year or a crazy Q4 to bail you out. But if you reset every month, the whole process is sort of pointless. And the last point, and this is a tough one, this is a tough one founders are going through right now. You know, you have to have a plan that where you grow. But you also have to make sure the team can hit the plan. Setting up a plan for next year that no one on your sales team can meet is going to lead to disaster. And there's, there's two elements to that, just to talk through it. The first element is, you know, and we talk on SaaStr about like three types of plans you should build for next year, a C60, a C90, and a C10. And what— and C is confidence. So your base plan for both your, your business, for your revenue and your burn and for your sales team should be a C60 plan. In my, in my experience, when you have about a 60% chance of hitting, if it's 100%, it's not that ambitious. If it's much less than 60% chance you can hit it, it's too risky. So like 60% is your base plan. A plan you have maybe a 10 or 20% chance of hitting for real is your stretch plan and have a 90% plan for cash so that you don't spend too much cash. But once you build that plan, if the plan you have at least a 60% confidence of hitting, that also means the majority of your sales team should be able to hit quota. Make sure they tie together. If they don't match, if most of your sales team can't hit quota to hit your C60 plan, something's broken here. Your sales team is going to get demoralized and they can leave. And I will tell you, I don't think this is a downturn. I think it's a deceleration. What I went through, the worst of times as a founder in 2008, 2009, all of our best sales team hit their plan. Okay. The worst, the worst time. Now, we had high churn, we had challenges. I remember one of our sales team back then, Sam Blond, now at Founders Fund, then CRO of Brex most recently. He just did one. I remember back then he was like one of our more junior sales folks. He's like, this is the worst of the recession. Okay. '08, '09, when the world is shutting, it's like, I'm making doctor money. I'm making doctor money. Okay. If you have any bookings next year, like, your team should still be able to make good money. Maybe, maybe your team might need to be smaller. Maybe the bottom third of your team shouldn't get leads, but the team's got to be able to hit the plan. Most people should hit quota. And even in tougher times, the best salesperson on your team should be driving a pretty nice car, maybe even making a down payment on a condo. So make sure the plan makes sense or you're just going to have a train wreck later in the year. Okay. Point 7. And again, this one, this one is, is, is now commonplace. It was kind of disruptive, believe it or not, when we first started talking about it. But this is something where if you're going long, you really can help the sales team over the next year, which is driving NPS up. Look, driving NPS up next quarter does not immediately make the sales team more money next week. But if you force the whole company to drive NPS up, your product will get better. It ties to the first point. One thing you can do is give the sales team what they, what they ask for, which is the 10x feature. And then the other thing you can do is give the sales team what they need, which is a better product. Okay, both will help them. The first one will help them next quarter. This will help them over the course of the year. But we hide too much. We hide from our unhappy customers. Again, we don't have enough loss meetings. We have too many win meetings. But this really works. I just wrote a SaaStr post a couple weeks ago about 4 disastrous CS experiences we had. Okay, 4. Go read it. I mean, your jaw will drop. I'm not gonna say who these were, but these were 4 horrific experiences with sales and customer success teams. Okay? One at the end of a lengthy sales process with us asked us not only to pay twice what we're paying for an existing vendor, but then asked us for $40,000 extra to do, um, data migration. Okay, now I get that maybe, you know what, maybe this might have in theory possibly made that sales rep more money now, but what if they built a better product? So this data migration was automatic for next year and the NPS was higher. They will close a lot more deals. Another product that we use that really doesn't work that well, a sales rep aggressively came at us a couple of weeks ago and asked us to pay an extra $8,000 next year. They would shut it off in a matter of days. Okay, well, it was blackmail and blackmail kind of works in sales. But what if they just actually made this product better so that it wasn't the number 3 in the marketplace, was the number 1? We would gladly pay that money. Anyhow, on and on and on. But there's a whole bunch of conflicts today in terms of short-term behaviors, trying to close deals now when times are tougher and making customers happier. And this is a tough balance for founders, but trust me, measure your NPS and make it a top 3 goal for the company to drive it up, not NRR, not even other metrics, but make your customers happier. And at the end of the day, whether it's through referrals, upsells, or more, you're going to make your sales team life, sales team happier next year. And nothing at the end of the day, a sales team is less inspiring to a sales team than selling the worst product in the market or a fungible product and, or the product that has, is clearly not better, not better. I remember I was talking with someone recently, a sales leader that competed with Figma, obviously $20 billion exit. Asked what was the story competing with Figma, he's like, well, in the early days it was pretty easy. Figma didn't do a lot of things, but, but later we had just— we— there was nothing we could do to win. We were worse, we were worse on every feature and every metric by the end of this process. Um, so drive that NPS up. It will force you to do the right things to help your sales team during the course of the year. Um, okay, and point 8, boy, this sounds obvious, and then we can open up to questions. But so many times these days, so many times in the last month, in the last weeks, I see this not happening both from founders and from VPs of sales. You gotta lead from the front in tougher times. You cannot retreat. You cannot sit in front of your monitor all day. The sales team will believe if you go do it, if you go close, if, if things get tough, but you go out yourself and close a deal, the sales team will believe. I remember during the brutal recession of '08, '09, so long ago, but God, it was so bad. We actually did pretty well. I told you the Dr. Money story with Sanborn and others, but things were hard. And I went to our second largest customer and I just told them they needed to pay us $800,000 upfront for 2.5 years, for 3 years. No reason. I mean, there were reasons, but the contract wasn't going to renew for 6 months. I had to call in all my favors with this customer that I personally onboarded and helped, but they gave us the $800,000. Not only was it a lot of money for our burn rate at the time, but I mean, it's leading from the front. It's showing the team it could be done. Everyone knew it could be done in tough times, that someone could go out and get $800K. So, you go get $80K or you go get $8K. Lead from the front. And I see too many CEOs hiding, hiding, hiding in low growth, hiding and blaming. I get investor updates. In the midst of the worst recession of our lifetimes, our growth has decelerated. This is not the worst days of our lifetimes, folks. Look at MongoDB, look at Monday, look at Atlassian, look at all the cloud leaders, look at Adobe. No one's not growing. Slow down for a minute. Everyone in SaaS, look at any public company, they're all growing. Now, some are growing a lot less than last year. Some actually, I just wrote about it today on SaaSr, Adobe isn't decelerating at all. Mongo isn't decelerating at all. Monday's down a bit, but still growing at an insane rate. If you're selling in the collaboration or CRM space, they are not. So lead from the front, go get deals done. And I know this is a checklist, but it's true. Go get on a plane, go get on more planes, go visit your customers. I've written about it so many times on SaaS, but I never lost a customer I visited in person. And the same is going to be true of you. Go get on a plane, go visit prospects. A lot of you as founders don't visit enough prospects and a lot of VPs of sales Maybe they let their team do it or they become more managers and not hands-on enough. Go visit them. Invite customers to the office. We're back. This third one, the SaaS team knows how passionate I'm about it because it's the greatest hack of all. Do a weekly customer webinar. Most of you don't do this. I've written about this 87 times. I've never seen— if you do 52 weekly customer webinars, not once in a while, not when you remember, not 4 months a year. If you do it every week, you always get more customers. Go do this. This is so easy. Fourth, don't hide from bad sales. Lead from the front. Talk about those lost deals. Plan your first customer conference down here. This, like the weekly customer webinar, always works. A customer conference always works. You know what? You know what you do when times are a little tougher in sales? Get your prospects and customers together. Because if you have high NPS, you'll go to this, you'll do a customer conference, even if it's just a steak dinner, even if it's 10, even if it's 20. And it's magic. Your customers will tell your prospects to buy your product. They can't help themselves. If your customer shows up to your steak dinner or your customer event, even if they complain about a feature or two, they almost can't help themselves going into sales mode for you. How has it been working with your product? Well, not perfect, but I love the team. I love this. Like, they wouldn't show up to the steak dinner or the event if they didn't happen. And this stuff has a lot of soft costs, but honestly, it does not cost that much to have a dinner in Vegas or a dinner during SaaStr Annual or to rent one hotel room. Okay? You don't have to rent Moscone. Okay? You can rent a room at the Holiday Inn. And invite your customers and they will sell each other. It's magical. And two last points and then I will break because I don't see folks do enough on this checklist. If nothing else, take this checklist, anyone reading this that's in a leadership position, and be honest. How much of this checklist on the screen are you doing? Not enough. These are actionable things you can do in December to help your team. And the last two and the penultimate one, actually, we just re-added this even to our own SaaS team because this always works. Give everyone in your sales team a 2-meeting-a-week quota they can drag you into. This is a magical trick. Okay? Sales is hard. If anyone on this watching or listening doesn't know that sales is hard, it's friggin hard. Except maybe there was— if you worked at a few applications in like the summer of 2020, it got really easy for when we were locked down. But sales is hard. Tell everyone on your sales team they can drag you into 2 meetings with either prospects or customers. They don't— they don't need— they can just pick whichever is best. If it's a tough one, if they need a product expert, if they need that founder DNA, if they need someone that can add an extra spark of creativity. Um, not every sales rep knows every part of the playbook, every way to use your product, every way to configure it, every integration, every competitive benefit. So let them pick two, um, and, and drag you in and for whatever they want, and you just go. And if nothing else, you're their wing person. If nothing else, you're, uh, whatever— we all just watched Maverick— you're the Rio, okay? It benefits all of us at least to have someone that is even more fluent in the product and more fluent in the company is if as founders you join 2 sales calls a week, if they want you, stuff, more stuff always closes. Not only do they know things that the sales reps don't do, but never forget, we forget sometimes prospects love to talk to the CEO and the founders. They love it. They love it. They love it. Even if you're a 5-person company, if you're a 10-person company, 20-person company, those letters CEO are magical. It's a sign of respect to customers. It's a sign of a special relationship that you have with the vendor where, you know, we go buy Salesforce, we don't get to talk to Marc Benioff. You know, we don't even get to talk to, to Yamini if we buy HubSpot or go, or Todd McKinnon if we buy Okta. But, but if your prospects get, get at least get the CEO to join one of these calls, it's a magical relationship. It will help them close. So how do you do this? Well, again, you tell the reps they can do 2 a week, and the beauty is they'll often only do one, um, and, and they won't fill up your entire calendar. And the last one And this is how you can challenge yourself. Do 5 more customer Zooms a week. I know it's brutal as founders or as VPs of sales, but do 5 more Zooms. I know we're back to in-person and in-person is better. And I've written about this and you've got to get on planes and you got to visit customers. But we have more time. We all have time to do more customer Zooms a week. Don't do everything by email. Don't do everything by DM and text. Talk to 5 of your customers a week. Pick up the Zoom, pick up the phone, and magic will happen. You will close more. So anyhow, this is my general idea. Lead from the front, don't hide. And too many CEOs, too many founders, and even too many VPs of sales hide in tougher times, and it's going to catch up with you, and the team will smell it. The team will smell it in a matter of hours or days that you are not leading from the front. But if you do, I'll bet you the team does even better. So So thanks, everybody. I know that was a long monologue of some ideas, but my basic idea is look at these, we'll post the slides, do 3 or 4 of these. You don't have to do everything on this list, but do 3 or 4 of these things and I guarantee you, you will sell at least 20 or 30% better next quarter than you are this quarter. I can't guarantee you're going to quintuple sales, but I absolutely guarantee you will do more with what you have next quarter than this quarter if you take some of these actions. So those are my thoughts, and we can, we could open it up to questions that folks might have.

Okay, we've got a few questions in here. So let's start with Deepak, who has a question.

Hi, thank you. Jason M. Lemkin is to understand how should should the sales compensation be structured in terms of the base, the bonus, the variable, the OTE, and the likes, given a quota?

Yeah, well, look, there's, um, let's step back for a minute, and we do have some good content on this on SaaStr. At the end of the day, you gotta— at the end of the day, there are sales— sales does have to, uh, bring in more revenue than it consumes, right? So you got to start with some first principles. At scale, across almost any industry there is, from automobile sales to back in the old days, photocopier sales, whatever it is, sales tends to take home 10% of the profit as bonus, of the profit, okay? Not of the revenue. And what happened in SaaS and software is because in most categories of software, the gross margins traditionally have been so high, right? Write once and use a million times. Margins were 90%. Margins are still 90% at Adobe and Microsoft and Intuit, that we basically gave the sales reps 10% of all the revenue instead of 10% of the profit, right? So a sales rep might make $100 when they sell you a $40,000 car because the profit's $1,000. So we simplified that to 10%, and then we got to a basic model of 10 and 10. So that basically a sales rep should keep about 10% of the deal they closed and make another 10% in base salary. And that comes off the profits. And so, you can simplify that one layer simpler and say, historically, successful software with decent price points, there's a 5x spread, right? In other words, sales reps should close 5 times what they make, right? The 10 and 10 is 20 times 5 is 100. So a very simple way to saying this, hey, sales reps, if you want to make $100,000, you have to close $500,000. If you want to make $200,000, you have to close $1 million. Okay, that's the basic math. And then as time has gone by, we've stretched that a little bit. And first we've said, hey, look, for SMBs, it's harder. For SMBs, it's pretty hard to close $1 million if your price point is $3,000 a year, right? It's just so many deals. So we started to see that drift down to 3 or 4x, right? And we kind of came up with a model of 3, 4, 5x. 3x for SMB, right? 4x for mid-market deals, $20,000, $30,000, $40,000, and 5x for true enterprise. And I think that was mostly true through about 2019 or so. And then so much capital flooded into SaaS companies that it all broke down, right? People would give large draws, people would give guarantees, people became obsessed with the whole SaaS. There was inflation, like sales reps would ask for more and more OT. So how do you deal with that? Right? And so this 3, 4x, 5x broke down the last 2 years, and it's going to create some sad stories. And some pain, but we have to get back to business models that make sense. So if you sit on a Google Sheet and you just design 3, 4, or 5x, you'll be fine. You'll be fine. That's the way to do it. And in the early days, if you're early and your marketing costs aren't high, you can put more of it into sales. That's what I have done twice as a founder. I've built companies that had relatively low marketing costs, not that we didn't do marketing, but relied on social media, viral, and others. And I put that extra money into sales. So I paid sales more than that 3, 4, 5x, not dramatically more, but enough more, but enough so that the math worked out. And if you can, in the early, early days, you gotta, you have to make sure that sales can eat. So sometimes your first rep could not only take home 20% of what they close. In fact, in the very early days, it's often 1x. In the very early days, like you bring your first rep and you'll say, look, for the first 90 days, For the first 4 months, you take home everything you close because we wouldn't have closed anything without you anyway. So just, just keep it all. And then after that, we'll scale up to 3, 4, or 5x. So there's more content on SaaStr, but hopefully that's a good framework. They have to eat. You have to make money. But some of the insanity the last 2 years, it's got to go because we're burning too much cash. We're all burning too much cash.

Thank you.

Okay. Next question. And if you guys have a question, just drop into the chat that you want to ask, either type it in or we can ask it live. So the next question comes from Adi. I don't know if you want to ask your question live and come on.

Sure.

Thank you, Jason. I loved your early point about not having enough closed loss meetings.

Never enough. Even at the best companies, there's not enough discussion.

Never.

I totally agree with that. And so I'm wondering, a lot of times it's what I hear as well, we don't really know why they didn't buy. We didn't, what have you used and how have you counseled people to try to get to the bottom of that sort of, and there's obviously eventually a lot of reasons perhaps, or how do you answer that question of putting a better process in for getting that, getting data out of that conversation?

I wish I had the perfect answer. I know what I have done historically in the past is I don't pay sales reps commission. Unless we know why we're the lead sources and why we won the deal. So I've always put two fields in Salesforce, which is lead source and why we won, and I just never paid commissions until they were filled out. When I did that for won deals, it worked magically. Now it's not perfect, but it allowed you to collect data in the aggregate, right? You know what? And so for lost deals, I don't have the magic. I don't think that— I don't know that there's the perfect process to get sales reps to do it. You can certainly create a mandatory field in your CRM. What— why did we lose it? I do think there's at least 2 things you gotta do, which is in your weekly meetings, go over the lost deals rigorously and force everyone to come up with 1 reason, 1 reason. And don't allow price to be the reason. Here's the only tip I can give you, because if you allow price to be the reason, it'll always be too expensive. Like maybe not, not, maybe not if your product's a $2 widget, but if it's of any size, it's gonna be price or budget. And that's okay because sometimes it is budget. But I would, I would force them to give you any answer other than price or budget because you won't get to the truth, right? Because if a prospect— because people forget, sales reps, sales reps definitely forget that there's not that many prospects that want to waste their time on 7 calls with a sales rep. It's not that fun. Okay. There's— they don't inbound and spend hours with you and then not have $10,000 a year. That's never the reason. Yeah. If it's a If it's a, if it's a, if you've reached out to someone using your self-serve product and they don't buy, maybe, maybe it is money. But trust me, if someone's had 3 or 4 calls, it's, you know, it's never what the product costs. So ask, you gotta find out every deal that was lost this week, not let folks hide lost deals cuz reps will hide lost deals and then force them to give you any reason other than price or budget. But beyond that and the field and the CRM, I, I, I don't have the magical answer. The, but what the final point, which I think is great, Once you add that rigor and once you can actually track lost deals and why, right? And then force yourself to create a weekly report, lost deals and why. What's then magical is have someone else, customer success, marketing, even a co-founder, reach out to a subset of those lost deals and talk to them. Just talk to them. Some of them won't respond to you, but you'll be surprised how many. And as founders or leaders, VPs or founders, you will find miraculous learnings in talking to those lost deals. But unless you create a report out of it, right? You'll never know. They'll get swept under the rug even by the best of us.

Thank you.

Appreciate that.

Next question is from Shantanu.

Hey, Jason and Emilia, thanks for taking the time. My question is regarding like for startup founders, is there any metric that you would recommend underemphasizing in a high rate environment versus overemphasizing in a In a low rate environment, basically macro specificity for SaaS.

In a high what environment? High churn environment?

High rate environment. The macro currently—

High interest rate environment?

High interest rate environment, yeah.

Would that change the KPIs that I would hold the company to?

Yeah, I mean, broadly speaking, a lot of the SaaS valuations have come down as a consequence to that.

Well, that's for sure.

Yeah. Would you suggest like any metric for founders in B2B SaaS space that, hey, these metrics are more—

For fundraising?

More impacted for fundraising or—

Well, look, maybe we can do a different workshop on fundraising. I've done a few. Literally one of the best conversations I've had was from a couple weeks ago. It was a Zoom and re:Invent with Accel Iconic and Salesforce Ventures. Watch that one on Saastr because it's so good. Look, let me simplify because it's a longer topic. Anything Series A and later requires the best metrics. Anything Series B later requires perfection today. There are no Series B or later rounds happening. Okay? They are so rare that TechCrunch will write up a $10 million round today. Okay? Last year, literally, if you talk to the best reporters at TechCrunch, they would not write up a unicorn round. You could not get a journalist to write up a unicorn round last year because there were too— this is not a joke— there were too many. Now you can get TechCrunch to write up a $4 million round. Think about that. Forget that for a minute. They don't have enough content. Forget about unicorns. They don't even have enough $8 million rounds to write up, right? So look, it's— and so a few answers, like seed has not changed that much in the current environment. It has changed. People are not quite as greedy, but generally folks in seed have been looking for the same things for all times. If it's pre-seed, they're looking for amazing teams doing something that matters because there's no metrics. And as you approach seed, they're looking for hints of greatness in the metrics, right? Very early growth, but very fast growth very early, or very high usage, right? I remember I met Loom in the early days. I didn't get it because the revenue wasn't there, but the usage was off the charts at the seed round. Or I did something the other day with Algolia, was my second seed investment. I invested at $10K a month in revenue, but it was already quintupling, right? So I know those are high bars, but it's supposed to be high bars. But it's kind of the same for all times. The later stage stuff is almost frozen. And what's changed in the middle is the quality of revenue. So last year, you could be a fintech with 10% margins and get valued the same way as a B2B company with 90% margins. It was insane. It was insane. A fintech that was hemorrhaging cash, that was— and then we're seeing, We're seeing lots of, of pain from that in today's markets. So the quality of revenue today has to be much higher. So maybe that's the biggest change over the 12 months. Pseudo SaaS is out of fashion. Products that claim their ARR, MRR, but are not really recurring are disguised services as SaaS. Fintechs that have low margins are no longer treated like normal software companies. I was at a holiday party a couple of weeks ago, great one. And I met with a founder I've known for years. He was great. And the business is great. I think he's at almost $10 million, but he can't raise any more money, even though there's nothing wrong with the company. And why? Well, it's really a services business packaged up as SaaS. Now, he actually has very high margins. I don't know what they really are, but I believe them. They're 60 to 70%. It's a security product that for a big need in security, but it's really people doing the security work. It's not really software. It's a thin veneer of software. And that's an example of something that like last year people didn't care. They're like, oh my God, you're growing. He was growing at an insane rate at a million and raised at $100 million. He raised at 100 ARX round. But today he's unfundable, even though he hasn't missed a beat. His burn rate is not high. He's a great founder. He hit his plan from a year ago. It's just this pseudo SaaS, low margin SaaS. These things are just out of fashion. right? We want, and we want high SaaS companies that at scale, at scale can be very profitable. And then the last point, which is, and you know this, and it probably doesn't affect you if you're asking the question, but high burn rates are way out of fashion, right? I mean, I know it's hard to process, but it's night and day. Literally 12 months ago, people cared about your burn rate, but not that much because here's the last point we'll say, 12 months ago, If you had decent metrics, VCs were almost 100% sure the next round would come in. And the entire way venture capital works is based on a series, Series A, Series B, Series— there are series. And there are assumptions based on the odds that the next series would happen. And even through 2019, and 2020 was pretty good, 2019 was pretty good, each series got harder. And as an investor, you knew the odds from going from a seed to an A would be 30%, and from an A to a B would be 30%. And they're all like these 30% winnowing margins. And then it got inverted. And in fact, your odds of raising another round got higher in 2021. They got higher because there was so much capital, no one could get into hot deals, that it was insane. And so that's the biggest change that I see founders today. That have not been founders for more than 4 years in fundraising, this is the part they still haven't internalized. They know that there's more scrutiny on burn rates. They know it's harder, but they don't know how much dramatically harder the next round is going to be. So that's the biggest change. And we used to say, just assume the next round isn't coming. And that got perverted or inverted. And it's back with a vengeance. It is back. It's back with a vengeance. You kind of have to assume today that if you do raise capital, that might be it for you, or that in the old days, and I defined the old days through like 2019, you might at least go a year without being fundable. All the best companies I've invested in, all the best unicorns and decacorns, Salesloft, which was acquired for $2.5 billion in cash last year, Talkdesk worth $10 billion, Algolia worth $3 billion, Pipedrive, my first investment, which was sold for $1.5 billion in cash, they all had over a year in their history, maybe 2 years where they're unfundable. No one would fund them. Unfundable. We forgot about that for 2 years, but that's really the way it works. Not just you and I, the best companies in the world I've worked with have been unfundable for more than a year. So I'll break on that point. Okay.

We'll try and do a few more questions before we wrap. So next one is from Mandy.

Hey, Jason M. Lemkin. So our churn rate is very high because we serve micro SMBs. So I mean, fortunately all of them are organic, but we lose like 80% of all the customers every month.

Yes, it's brutal.

Yeah. So we're planning to focus on one of the two segments. The first one is retail SMBs, which have organic traction, but might still have churn because they're SMBs, right? The second one is like healthcare companies, which has low churn, but not organic traction. So which segment do you advise we should focus on?

Well, I don't know, but I will— like, you're not at $10 million in revenue, right?

No, no. So we are just 3 people, but 5—

No, I know. The reason I asked the question is because I'll summarize an answer to you. 8% per month, it's not bad, okay? But you're not SaaS. You're not business software. You're at the edge of consumer software. Okay? I know this without knowing anything from you. And what I can tell you is no one running the SaaS playbook with this type of consumer churn, no one scales past $10 million that I've seen. Now look, meal delivery that massively subsidize, or Uber, things that massively subsidize customer acquisition can brute force themselves at the— but I don't know anyone that calls themselves business software that has ever gotten past $10 million. Okay? None. Now, someone will go find an example more with this type of churn. I don't know anyone with more than 3% to 4% a month churn that has gotten past $10 million. That is SaaS. So, you have to change. Okay? The good news is you have customers, right? You have customers today. So, like, it's not as bad as it sounds because they're giving you constant feedback, right? Every bit of churn, every customer you win is feedback, and every customer you lose. So, treat them as your precious lab to learn from. Should you do retail SMB or healthcare? I don't know. I think you should try both. I think what you should really do is look at the 100, 200 customers you have today. Job one is do better. Just do better each quarter. This is a classic SaaS growth. So which subsegment of that customer is the highest value, right? I went through this, a great company owner, which I'm on the board of, does marketing and mobile for restaurants, for very small restaurants, right? And we went through this exercise twice. We went through it a couple of months ago where they have— it's very small businesses. These are like restaurants that have— this isn't— that are 1 or 2 tiny restaurants. And so there's segments of their business that have this 8% a month churn. Churn, right? But there's other segments that have negative churn, and it was brutal. But through the summer, the company highly focused on the segments that got the most value, and now we're crossing $10 million, growing 10%. Okay. But if we hadn't made that change, I don't think we would've ever crossed $10 million instead of $10 million and 10%. So just look at what you have, focus on what's working. And if you, and if you want to do healthcare, but you have no customers, I mean, that's a big tilt. So I, I don't know whether to tell you to do that, but what I bet is if you have 100 customers, there's 10 of them that don't have 8% and like, that's the obvious, the best answer I give you today. But this won't work. Your business model is broken for B2B, but your lab is working. The good news is your lab is working. It is teaching you the future. So thanks for the question.

Thank you.

Okay, next question's from one of our, uh, Workshop Wednesday regulars, Sheila.

Hey Jason, um, kind of moving back to the, the cash burn multiple and, and the focus there. Kind of two questions. First part is, how do you expect the growth expectations to change from the typical, like, triple, triple, double, double, double? And then given those growth plans, how are you counseling your portfolio companies to think about hiring ahead on the go-to-market and kind of sales force given their ramp time? Because obviously you've got this extended burn until they get up to full ramp, uh, to try to hit those, those growth targets.

Yeah, I'll Well, let me break those up because first of all, investor expectations for triple, triple, double, double, they haven't changed. Now, what was interesting, if you go back and look at that growth session again that I did with Iconiq and Excel and Salesforce, it was so good. And Iconiq, Doug made the point at the growth stage at Iconiq, he's trying to invest in companies north of $100 million in ARR. They're making exceptions. They will invest in the best company in a segment. If that segment is macro-impacted, right? So he said, look, we did a deal that's growing 30%, that last year was growing 100%, but that's because they're number one. They're number one, right? I was literally talking with the founder yesterday who's in a super competitive fintech industry that's super impacted today, right? And he's growing at a mediocre rate, but his other two competitors are shrinking. Okay? This is a fundamental— this is a fundamental company. So I think he could get funded. It would be hard and his competitors weren't, and you'll get a pass If you're number one in something important today, but it's a niche pass, and Iconiq said they did one of those deals, one. So, it's probably not you, and you're number one in your market. It's like investing in Airbnb in April 2020, or TripActions during the downturn. When Lightspeed went all in on TripActions, they're like, well, if travel never returns, this will be a terrible investment, but we're going to bet travel will return. And now TripActions may be the first to go public of the next group. We are seeing those bets, but they're so rare, you almost have to ignore them because they will confuse you, unless you're TripActions or Airbnb or something like that. Otherwise, here's what's tough. I said this earlier, of my own portfolio, 20% are growing faster than ever at the end of the year. If you're an investor and the pressure's off today, no one cares anymore if you invest, would you invest in those 20% or would you reach down below? Just logically, what would you do as an investor? You'll just wait. And there actually was a lot of pressure to invest last year. It wasn't negative pressure, but people invested. Bigger VC firms invested at 3 to 4 times their historical rates last year. Okay? Now, they're going to invest at a third the rate they have. That's like a whiplash, isn't it? To go from 4x to one-third. It's not even to normal. They're like, listen to Accel Growth on that thing. They said they did one growth deal this whole year versus 25 or 35 last year. 25 or 35 to 1. And so there's no pressure to deploy capital this year. And if 20% of the companies are growing faster than ever, that's where all the capital's going to go. And it just means less companies are going to get funded. You don't get a pass. You don't get a pass from triple, triple, double, double, with one last exception, and then I'll move on to your second part. The huge exception is existing investors. And this is why I've written a lot on SaaS around bridge rounds. So much of the venture capital today is going into bridge rounds and extensions. And if you made an investment made an investment last year of $5 million and the company was tripling and now it's growing 30%, but you believe in the founders and you invested $5 million last year, you'll probably put in $1 million this year because you don't want to lose your $5 million. So existing investors will give you a partial pass to triple, triple, double, double, but there's no point in new— there's no point. They may take the meeting, but don't think you're going to get a pass. And don't make excuses in the meetings either. It's just not going to happen. How do you ramp? Look, people ask this question, but I actually think people were just stupid last year. You don't ramp epically ahead and quintuple your burn rate in one month. People— I'm not saying that's what you did. You always need— look, in sales, first of all, in sales, you have to hire ahead or you'll be behind, right? But you don't have to hire a year ahead, right? But you always need to hire a little bit ahead. Marketing has to develop pipeline. This isn't magic. It's just you need sane customer acquisition metrics, right? And so what you really need to do, the last point I'll say is what you really need to do, what everyone should do, which people stopped doing last year, maybe you did, is you need to come up with a burn rate budget for the year, for the company, and then you roll that into each department. And I'll say this is my last point, but it's a magical moment. If you have a true VP or a true head of or a true leader and you say, look, Diane, Jane, Amelia, Caitlin, Jason M. Lemkin, Kevin O'Leary: you've got 3 hires this year, or you've got your whole marketing budget's $500K, that's it. The mediocre ones will complain. The mediocre ones will tell you it can't be done. The mediocre ones will quit. You know what the great ones will say? Got it. I'll come back to you next week. I'm going to make 3 great sales hires instead of 10. $500K marketing budget? Okay. I'm just going to do podcasts. SaaS or annual and a few direct things. I'm gonna dump everything else. But the, the pros know the, I've seen this time and time again, like they adjust, if not in an hour, in less than a week. And so that's what you do. You have to have, it's this simple in tougher times. You have to have burn rate budget for the company and then you have to break it down by department, tell the department what they have and the best ones will, they will evolve rapidly. And sometimes you don't even see a lot of impact cuz they just, they just focus on what works. So thanks for the question. We got one more, Amelia. Is that it?

Uh, yeah, you've got— well, we'll try and see if we can sneak in two. Okay. Uh, next one is from Manoj Chim.

Hey, thanks, Amelia. So Jason, just, uh, wanted to clarify a bit about your last point about, um, you know, raising a B round. So essentially, from what I understood, you were saying that after you raise your Series A round or your first round, you shouldn't expect to be able to raise more money. Like, treat that round as if it's your last funding.

Just don't expect it until you know it's going to come. Yeah.

Yes.

So when you say that, do you mean that companies should plan to be profitable with that first investment? And I'm asking because from what I've seen, I'm relatively—

I call it cash flow. I haven't written this in a while. I'm going to refresh this post. I call it cash flow break never. It's not that you have to be profitable. It's just you have to have a model that doesn't assume any more cash in. They're not the same. You can have a slowly declining burn rate. Where it takes you 4 to 5 years to run out of money or whatever. You don't literally have to be— it doesn't have to be so dramatic that tomorrow your burn rate has to be zero. But yes, you do have to be cash flow break never, right? It's just part of the job, right? It is possible to build a company without $300 million in venture capital, right? Which is the average in the Cloud 100 from a couple of years ago to IPO. The average company that IPOs raised $300 But when the IPO is valued at $5 billion, raising $300 million is not that crazy as a percent of $5 billion, right? But yes, you have to, you have to, and it will make you a better company. So essentially, that's not the question you're asking though. But yeah, it has to be cash flow break, never.

It does.

Essentially what you're saying is that like once you raise $10, $15 million, you don't necessarily need to be profitable, period, within a year, but you basically need to have a plan that you don't run out of money in 2 years and you have to raise another round.

Yeah. Until you know for sure where that money's coming from. This is just the way it was. This was the way my entire career in tech until 2019 was. That's the way every company was run. And then people just got insane because they were so confident the next round would come that all discipline was lost. And it wasn't irrational. The markets got inverted, like we talked about. It got easier. But that's just— it's just always been the way. It's always been the way. I mean, if you go back and look at the the session I did with the founders of HubSpot, Brian Halligan and Dharmesh, they talked about how over a year they couldn't raise any money at HubSpot. They went through a wilderness too. Forget about the ones I gave you. Like, it's just always been this way, right? It's all like, capital used to be very hard. It's a— and then it got way too easy. And, but yeah, that's the answer. And if that means raising a little bit of extra money, if that means slowing down, some hiring. That's just, that's just the way, the way it should be. But you, but if you raised money in the last 2 years, you got crappy advice. But as founders, you got to adjust, right? You got crappy advice. Okay, we got one more time for one more. Amelia?

Yeah, sorry, I was stuck on mute. Uh, last one is from Rohan.

Cool, thanks Amelia. And, uh, Jason, yeah, love, love the story that you told you briefly touched on about leading from the front. Wondered if you'd be open to sharing a little bit about that specific deal that you talked about. You went out, you know, this customer didn't have renewal coming up for 6 months.

Yes.

You got them to close on $800K. What were like the typical ACVs at the time in that company?

And they were one of our bigger customers, right? So they were one of our first big customers. So they were on an early deal. I think by that point for Adobe Sign, EchoSign, a bigger customer was probably paying $250K a year, right? $300K a year. That's what some of our bigger customers with lots of sales, big sales teams who were paying, and they were on an early sweetheart deal. So they were paying like $80,000 or $90,000. And look, they deserved it. I mean, they did a lot, this customer, they did a lot for us, right? And I would not have even thought to raise their price because they did case studies, they did video testimonial, they got us up, they got us like 3 or 4 other customers. I mean, that's why you gotta be really careful about raising prices on existing customers, because if you do it wrong, especially your early customers, I think it's never worth it. You gotta grandfather them because because sometimes they must have brought us in millions of dollars of goodwill from being one of our first 2 or 3 Fortune 500 customers, but they were on a really big sweetheart deal. So, I just told our champions, we just can't afford to do this. I need your help. And I gave them all the prices with the names redacted of all our top 10 customers. I showed them how they were paying by far the least. I told them they would still be paying the least, and I asked them if they could please prepay 3 years.

Okay.

I don't think I would've done it if I had 10 years of cash in the bank, and I don't think I would've done it if I didn't have to lead from the front, but I needed this for the team. I needed the team to believe, and our burn rate, I think our burn rate then was probably $50K or $60K a month because I remember we got almost a year of runway out of this when times were tough, right? But I had to, so I was just— there's been a couple moments in my career in with customers and sales where I was positive but brutally honest. That was one. And I just showed them all the data. I was totally transparent, right? Like, here's whatever. I didn't tell them, but here's what Dell's paying. Here's what Comcast— like, you still are the cheapest. I love you. And I asked for 3 years, and they're such a big company that was so profitable, the 3 years actually didn't really matter to them because you don't know. It was so much cash. They had already budgeted using our product for a decade. Okay? This was key to the story. You don't know, there are trial periods and then really big companies change software platforms every 5 to 10 years. And since in their mind, they'd already budgeted 3 to 5 years and cash itself didn't matter, what mattered was their budgets, they were willing to trade off a little bit for the cash because it was coming. But you don't know unless you ask. So that's it. I did it with one customer where I had, we'd both done so much for each other that I had that, but I did shock them. I do remember they were shocked. Back from the conversation, but I felt like I had no choice, right? I had to play the play.

Awesome.

Cool.

Thanks for sharing.

Okay. Thanks everyone for joining. I know we went a little bit over.

Thanks everyone for the time.

Yeah. So if you didn't get the chance to watch the whole thing, we'll be sending the recording and slide afterwards since we were live streaming, and we'll be back not next Wednesday with the holidays, but the first week of the new year. So we hope to see you again for our next Workshop Wednesday. Thanks everyone for taking the time.

Thanks everyone.