E68: Are You UNINVESTABLE? The New GTM Reality | Cassie Young, General Partner @ Primary Venture Partners

Cassie Young is a GP at Primary Venture Partners, where she's helping direct investment for their new $625 million seed fund. After 15 years running GTM teams, she's now one of the sharpest operator-turned-investor voices in the go-to-market space.

There's actually like a reckoning coming for go-to-market leaders around we can't operate the way that we used to.

The data that's really resonated with me is Cassie shares the most common gap she sees that undermines trust in a CRO and the exact framework you need to survive your next board meeting.

I think boards are done unrewarding effort, you have to be able to articulate the direct hit on the P&L.

Plus, Cassie issues a direct warning about the new technical baseline for the C-suite and outlines the new skill sets executives must have in 2026 and beyond.

I think that every executive needs to be able to do shit. If there is any portfolio company that isn't taking shit deeply seriously, we have a problem.

This episode is for you if you ever want to build a more successful team, keep the trust of your investors, and outmaneuver your competition. Welcome to the Revenue Leadership podcast. Today's guest is Cassie Young, who is a general partner at Primary Ventures Partners in New York. And Cassie spent 15 years running go-to-market before becoming an investor. And most recently, she was the CRO at Sailthru before its PE exit, then oversaw a $200 million martech roll-up at Marigold. And now she is one of the sharpest operator-turned-investor voices in GTM strategy in the country. I'm sure you've seen a bunch of her writing and speaking around, and we're going to talk about a specific thesis of Cassie's today, which is the fact that GTM leaders need to become increasingly savvy about understanding and managing their P&L in a world where AI is significantly changing the economics of go-to-market. So tons and tons to dig into here. I'm really excited about this one. So, uh, thanks for joining, Cassie.

Thanks for having me, Kyle. I've, uh, as you know, been a fan follower for a long time, so I'm thrilled to have the opportunity to come on and jam with you for a bit. Yeah.

What did I miss in your background that, that is worth people knowing?

I think that summarized it well, but maybe one double click I'll offer just sort of in the go-to-market background is that, you know, I've managed sales team, I've managed marketing teams, I've managed customer success teams, but I will be the first person to tell you that under no circumstances am I the best VP of sales, the best VP of marketing, the best VP of CS. But I think where I excelled in my operator career is that I had this exceptionally strong general manager brain, and it comes back to the central topic that we're gonna talk about today around the P&L command, and that it was actually a superpower, right? In the ability to take on bigger roles, et cetera. Combined of course with the, the ability to hire an amazing VP of sales, an amazing VP of CS, et cetera.

That is a profile we're gonna see a lot more of over the next couple of years. Somebody who can think.

I mean, you and I, I think, have talked about this in the past, but, you know, as you see the convergence of these roles, I definitely think the generalist brain is, is having a moment, and that brain combined with the really strong business command will go a very, very long way.

You've talked about this, this thesis that the GTM bloat era is over. What do you mean by that, and how does it affect how CROs should be thinking about the world?

Sure. So the background on that statement was, if we think about traditional software, we were extremely protected by rich gross margins, right? And so there was a lot of nonsense, for lack of a better word, that kind of happened in your operating expenses of the business because you had that cushion and the float. In a world where companies have to invest in inference and compute because they're advancing their own products, We don't have that luxury anymore. And so my statement was that I think there's actually like a reckoning coming for go-to-market leaders around we can't operate the way that we used to. The data that's really resonated with me is that if you look at the private company benchmarks around efficiency metrics, the one number that's gone up and to the right across every single revenue band over the past couple years has been the ARR per employee number, right? But if you actually double-click, and I'm, I'm citing, uh, some of Iconiq's most recent benchmarks just for reference for people on this. If you double-click into the go-to-market efficiency numbers, so specifically things like CAC payback, net magic number, they have been completely stagnant, if not atrophying, you know what I mean? Over the last couple of years. And so to me, I'm like, something's not lining up here where the organizations are expected to get more efficient on a headcount basis, but within go-to-market specifically, there actually haven't been, and I'm generalizing, of course there are exceptions to this, right? There haven't been major structural gains on those metrics. And I just think that this is the time where there's gonna be a reckoning between those two things. So when I say that I think the era of bloat is over, I think that we had a tolerance historically that our sellers weren't spending all of their time selling, right? And the BDRs could do this many dials per week, et cetera. And that fundamentally we have to challenge all of those assumptions because it's, I, I, I told, uh, a group of operators at an executive on, uh, at an event on Monday, you're out of excuses. You know, there's, there's more creative ways to do this.

You're out of excuses is a popular refrain right now. The, uh, Jason Lemkin's on our board and I, I love the, the Thursday pod that is Harry Stebbings, Jason, and, and Rory O'Driscoll. And he is beating this drum relentlessly, you know, like he, I, the SaaS talk, the SaaS talk I did with him last year was in April, I think it was. And he said, you have until June. If your CRO is not AI-pilled by then, they, they gotta go.

Well, I'll, I'll take it one step further for you. So I had mentioned to you earlier, I hosted this, event for a bunch of senior women executives earlier this week with the heavy go-to-market bet. And I was once again preaching the gospel of how you have to be, you know, AI forward. And I, I started it by saying, this should be exciting to you because you get to 10x yourself in a way that you never got to do before. This should be exciting. If I can't get you excited by the opportunity, I am totally cool resorting to scare tactics. And the scare tactics are, number one, you're out of excuses with your board, right? Because it's the expectation. Number 2, the example I gave them, which I think scared the crap out of everybody in the room, was I showed them this Claude prompt I had written, and this is an event series that more than 600 women have come to. I fed Claude the list of every woman who's ever attended the event, and I basically fed it a score that I called an elite score. And I said, I want you to rank these executives based on a number of criteria that I fed it around the company profiles, the growth, the role, et cetera. And I said, that's what's happening. In the market right now, right? And I said, I'm using this as an illustrative example of if you're like, companies have reputations for what they're doing. And I asked Quad to give me the logic, by the way, of why it rated every person that it did. And I'm like, you're gonna be exposed, you know what I mean? If you're not sort of leading in this. And I think that was sort of a shot heard round the world moment for people in that room.

I love that. You should open source that so we could, people can score themselves. How elite am I?

It's actually a great, yeah, it's a great lead gen, uh, Network lead gen for me, baby.

Yeah, yeah, there you go. If you can vibe code it in the next week and a half, we'll put it in the show notes. Yeah, one of these like Scared Straight tactics or frameworks that I share, and it applies to revenue leaders. I was just talking to, um, RevOps consultant who's super sharp, and it's applicable to that space, or like healthcare, or hopefully education. Is that AI is really going to be the death of the administrator and the rise of the orchestrator. And it's sort of a clichéd saying, but I think it's a good framework to say, like, if you're viewing your job and the tasks you do day to day are administrative in nature, if it's, you know, just like rolling up a forecast and taking information from one place and giving it to another, like if you're a middle manager and a lot of your job is to just like manicure a forecast and then talk to a bunch of people and then give that to somebody else. Or if your job is to make sure, like if you're standing in front of a customer and you're just intaking information to put it into a system so that it could go somewhere else, like those jobs should go away because AI can do them so well. But, you know, the people who should be excited and the people who will be successful can think systematically and orchestrate with all of these incredible new tools and see their value go up 10x in the market.

Yeah, for sure. And there was an interesting piece, I don't know if you saw it, by another New York VC at Slow Ventures a couple weeks ago that was written a little bit satirically, but it went quite viral because he said in the future there's basically only gonna be 4 jobs, right? And the, the—

Oh yeah, I did see this.

So basically for people who, who didn't see it, number 1, and he meant this in an endearing way, right? It was like the AI slop cannon, but he actually meant the people who are like building all these agents and very fluent in the tools. The second was, you know, the folks who are gonna be responsible for all the fun, like cybersecurity, SRE, et cetera, that comes out of that. The third, where there's hope for all of us, right, is the adults, right? And you have, uh, this crystallized knowledge, you know what I mean? Where you have taste and you have judgment and you can apply that. And then the fourth was like his very funny bucket, which he just called hot people, right? Where he said, you know, we're gonna eat like these, uh, sales and customer-facing people to make business happen. But that's a long-winded way of, of kind of agreeing with what you're saying with, right? Where there, there are these sort of core 4 jobs to be done, and anything that kind of sits at the intersection or the connected tissue is just not going to be needed from humans.

And I, you know, it's, it's satire, but there is a, there are a lot of kernels of truth in it.

And I think that's why it went viral, right? Because there are absolutely kernels of truth. And I had read this article, I don't know, a couple of months ago. It was, it was actually specific to venture capital, but I actually think there's broad applications in other industries. It was in Data-Driven VC. And it, it was asking this question of what's, what does the future VC org chart look like?

Mm-hmm.

And really the, the, they had put forward was you have these supercharged juniors, you know what I mean? Who are managing all of these agents, et cetera. But that you need junior people because you need, it's an apprenticeship model and you need a bench for talent. And then you have dealmakers. And when I read that article, I'm like, I, I actually think that's the same in many other industries because people talk about things like legal tech. And I think about law, large law firms. I have many friends who are, are partners at law large law firms, their job is to be dealmakers, right? You know, to go out and sort of go get these clients, et cetera. And so I do think you're seeing a convergence around a number of these key themes around where is human oversight actually quite beneficial and required when it comes to doing business.

The 20VC episode with Aaron Levy, I think it's really interesting on this too.

I actually haven't listened to that, but that's good phone work for me.

I listened to it in the gym this morning and I, that's where this like administrator versus orchestrator, uh, mental model came from because he was talking specifically about legal. That Aaron Levy's the founder and CEO of Box, super cracked and on the, on the cutting edge of all things AI, really, really sharp thinker, especially when it comes to enterprise. And so what he was sharing is that he actually thinks there'll be more lawyers, not less. It's like if you give everybody a pocket AI lawyer, that are producing all of these legal situations and questions, then you could argue that those people will need more human lawyers because there's more legal documents being produced and memos. But he did call out this apprenticeship model comes under fire because, you know, those, those apprentice level jobs, whether it's an analyst at a venture, venture company or in a legal practice or wherever it might be, like they will not be nearly as required because you can do so much of it with with your AI tools.

And for what it's worth, I, I mean, I subscribe to all that. And I think that particular piece he mentioned around the expansion, you know, of, of supply— I can't remember from past episodes, you've talked about like the Jevons paradox bit that's around. But I, we massively subscribe to that at Primary, right? Where it's like you look through history, and as things have become more available, more efficient, right, more affordable, like it absolutely increases demand. Yeah, I, I think this will be no exception to that.

And for listeners who maybe haven't read or heard me talk about this, Kevin "KD" Dorsey's paradox is basically, you know, the concept that as something becomes less expensive, people don't spend the same, use the same and spend less. They actually up their spend. And so they might spend more of than their original amount. And which is like now considerably more because the cost has gone down. And I relate that back to engineering. And I think if you want to know where any job is going to go, just look at software engineering because they, you know, that's the market that has been most touched by AI. And there are more, more engineering roles posted than ever. And it is harder than ever to hire engineers because if you're, you know, for us, we are shipping 4 times the number of PRs per engineer today than we were 12 months ago. And we're not. Saying, okay, great, like, you know, we only need half the engineers and, and we'll accomplish the same. No, no, no.

It's, it is such an important framing, Kyle, because I feel like the world has gone down this rabbit hole of like, we can cut all these roles, right? It is. And I, I tend to come at it from the lens of like, undoubtedly there, there is bloat, as we talked about before. But I get very excited about thinking about what you just mentioned, which is what happens when we get to 10x every employee who's in this organization, right? That's like certainly how we think about it at Primary. Now, we're not an operating company, but we, we bring that same lens to the portfolio companies because it's ridiculously exciting, you know what I mean, in terms of the clip that you get. So it's— I think everyone kind of goes toward this, I want to get like strip out 20% of the headcount, etc. And to be clear, like, there are places where that makes sense to go and do it, but I, I think we often don't spend enough time talking about the other side of that equation of what it does in terms accelerating revenue, et cetera.

Yeah. Yeah. Even like our BDR organization has grown in efficiency and productivity, like drastically over the last little while. Thanks. Thanks to AI. I'm pulling forward headcount now from like 4, from our model 4 months out. I was like, well, the economics are incredible. Like, let's just do more of this. Let's just grow faster. And because our CAC payback pencils out really nicely, like we can go do this. And I I think this, this is the piece that people miss is that they just assume companies are going to pocket the difference, but there's also the competitive dynamic. If your competitors are the same amount more effective, they're not, they're not going to ship the same with fewer people. They're going to ship more with more people.

For sure. For sure. And I'll even offer from like a venture lens, you know, a metric we pay a lot of attention to is burn multiple. So if people are new to that, right, it's basically for, you know, every net dollar of cash burn. How many dollars of ARR do you bring into the business? And you know, for scaled companies, there are very tried and true benchmarks around what you wanna look for. Like obviously anything less than 1 is amazing. Like up to 2 is like fine. And when you're north of 3, it's like, what's the, that's like kind of dangerous. But the exception, the reason I bring it up right now is, you know, our first check-in at Primary is at seed. And so it is not uncommon at all that we would work with founders that have like pretty crazy looking burn multiples in year 1 because it allows them to establish this early mover advantage. But the operative part of that is they have a plan to bring it down. But it's very common, you know what I mean, that they would be investing in R&D ahead of commercialization, right? Or even once they are selling, that they really want to keep pace with the roadmap. And so there's so much nuance, you know what I mean, in all of these numbers, even in the AI era, in terms of like the context is everything around them.

What stage do you think burn multiple starts to be like a more helpful heuristic?

Um, I think, you know, historically I would've said like we'd start looking with like a very, very solid eye at the Series A. However, the Series As are happening like much sooner than ever before. So I would say we're looking at it, you know what I mean? Like I think it's in the Series A portfolio company board meetings that I'm in, but I think there's a much more critical eye to it on the other side of the B. Now the difference, that's burn multiple specifically. Metrics that are happening earlier than they did show up historically are, are metrics like revenue per employee, right? When I started at Primary, I never would've seen that metric in a Series A board deck, and there's not necessarily an expectation around it right now, but it's like everyone has the efficiency of their build on their mind, so it's showing up earlier and earlier. I also think that investors are paying a little bit more due to some of the retention figures early, right? And we know that the companies you sell to in your early days of building, eventually, like, they're not gonna be the perfect ICP. That's gonna evolve. It's very common for me to be sitting in a later stage board meeting and see net retention broken out in two lines, right? Like current ICP, all of our legacy customers. Right now, with all of this talk of experimental revenue, people definitely are looking at what, what's happening with like the gross and net retention early on, because you're alleging that this is your ICP right now, right? Do you have an ability to protect the base? Because usually what happens is people sign a bunch of these early customers and it takes a little while for them to learn that they weren't the right customers. Uh, but in the moment you're saying, this is who I'm going after. So you need some evidence, you know what I mean, that supports that.

How are you thinking about where do you invest today in a world where the foundation model keeps eating so much? Like, Claude Design is the perfect example. Claude now chews into a bunch of, you know, what Figma is trying to do. And, and, you know, there's— I think Figma went I think Figma lost like 7% of their market cap the, the day it was launched. And, and, you know, you see this every few months, like, you know, Managed Agents came out and killed a bunch of startups and Dispatch and, and like, you know, all of these, there's so many of these launches that kill a category, not kill a category, but, but impact a category. And so how do you think about where to invest? Yeah, that, that a foundation model might—

so first of all, this is like the question of the hour, do you know what I mean? So we're, we're concentrating this with every new deal that we see, do you know what I mean? That's vertical specific take the question in two, two different directions. So one is like the category, and then second is sort of what's sort of the, the product strategy. Because, you know, at this point this is probably, you know, well understood. When we hear about like the SaaSpocalypse and what's happening, I don't worry as much around the DIY vibe coding risk. Do you know what I mean? For like the full platforms, like when people say they're gonna vibe code their own CRM, I kind of roll my eyes and I'm like, That's gonna work in mid-market and enterprise until there's the first massive major security breach. You know what I mean? Like, everybody wants a throat to choke. But where I think there's extreme risk in that category are like the classical point solutions. And where that gets messy for startups is everyone has to start, for the most part, you know what I mean, as like a point solution or a wedge. And so it's like, how do you earn the right that you're accelerating the product map, uh, roadmap quickly enough? You made this compound startup view that you don't become at risk for that placement. So I wanna just make that comment. It's not specific to a category, but I, I, I think a lot around this, like, what is your point solution to platform playbook and plan? And like, how do we get highly connected in what that looks like? And what is your right to do it? On the category specifically, I mean, I think the question we ask ourselves is there are categories where people want things that are purpose-built for their domains, right? And, and you hear a lot of this chatter around what's probabilistic versus deterministic. So I'll give you an example. We're investors in a company called Mayburn, now sort of a Series B company in the fintech space that's really challenging, you know, fund accounting and administration software. You cannot make a mistake in that business. Like, you can't make a mistake with capital calls, right? And that's a business that's still managed in Excel, believe it or not, right? And there's certain, you know, solutions that do part of it, but they're, they're underwhelming and have low NPS. And so that's a category where like, That needs to be taken down. Here's another one. I'm an investor in a company called Lyric that's in the enterprise supply chain AI world. That is a math game. So when you think about decision science for supply chain, 70% of the reasoning that goes into it is actually operations research expertise. And so yes, maybe at some point, you know what I mean? The, the horizontal players are gonna go after it. But the way that I think about that is. Okay, right now that company Lyric has access to all those same models and they've, they've got a, you know, 200 people working there, you know what I mean? Yeah. With that domain expertise to go and do it. So that's type of the framing. I think the more interesting one in the world that you and I live in is like, we talk about businesses like OneMind, that's one, 'cause people ask me about it all the time and I'm like, listen, revenue leaders want stuff that's built for them. Like at the end of the day for their job, the customer is really high stakes, right? And so to the naked eye, people are like, oh, like I'm engaged with the customer, but When you, you know, like when your butt is on the line, you know what I mean? For sort of deliberate converting those leads, expanding them, you want something that's very trained. So that tends to be the framework for how we think about it is like really how do you get to know the buyer and the customer and really what the, what the demands and the specificity are. We, we sort of get comfortable or don't get comfortable with it that way.

And so is this changing the way that you're thinking about investing or doing diligence, or is it more of the same as maybe what you would've done pre-AI?

I'm gonna give you like a very specific example. So I met this company a few months ago and it was this like major eye-opening moment for me because it was the first time where I thought to myself, I probably would've invested in this company a year ago and I'm passing on it now. And I'll walk you through kind of like the, I'm not gonna get into the specifics of the company, but the contours of the diligence process. 'Cause I think, I think it'll be revealing. This was a company where like the founders were just absolutely lovable. Do you know what I mean? Like just absolutely, Really, really fantastic team. My initial test with any business is like, one, do I like the problem statement? But then second, how quickly do my diligence notes get back to me, right? Because if I have to chase them for a second email, I'm like, this isn't a hair on fire problem. You know what I mean? Because if, if it is a hair on fire problem, they're gonna be like, I wanna learn more about this. And this was one where like I went 7 for 7 on a Thursday night. Do you know what I mean? Of getting people in my network to take the demos.

And diligence notes, just explain for people what you mean by diligence notes.

Yeah, so a diligence note is these are people in my network who are who are potential buyers of this solution. And we, we primary, you know, we use our own, and then we of course cast a wide net so that we have a balanced perspective. But this particular business was building in a category where I'm like, I know some really good buyers for this product, so I'm gonna like use the bat phone, right? I'm gonna call them. And the feedback from, from almost unanimously from them was like, wow, this is really cool, and I would try this. I think this is probably something we could ultimately do with Claude. But, and I had this moment of like, this company is gonna get ARR traction, but I don't know what's gonna happen, you know, the other side of it.

Yeah.

And I think that's the tension that we have to wrestle with right now is, and, and, and that's, I think the question, like to, to your point about process, it's just going even deeper with the customers to understand like what's happening in their organizations and like what do their own roadmaps look like? How are they thinking of the buy versus build? But that, that was, I, I actually made a point of bringing that example up with my partners 'cause I was like, guys, this is the first time that I really had a stop-in-the-tracks moment of, wow, like something has changed in terms of how we're evaluating things.

And is it a category that's close to engineering, or, or like, why was it that you— that, that felt like, oh, it's susceptible to—

it was, it felt like a problem that if you solved it, if you, if you solve the core business value proposition a few times, you could probably use a horizontal solution, do you know what I mean, to train it with your own sort of business No, I'm on it.

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Yeah, absolutely. So let's start very, very macro. So, you know, at the end of the day, we talk about the board metrics that matter, right? We're always talking about growth. You know, for years everyone was turning back the clock to 2015 and the battery T2D3, the triple, triple, double, double, double. And now everyone's like, That doesn't even matter anymore. And you go, because companies are actually growing at an even faster clip than that. I bring that up because at the end of the day, revenue leaders, that, that is still the tip of the spear for what they need to go and do, but it's not enough on its own anymore, right? Because as we said, in traditional software, you are protected, right, by these 80% gross margins. And when I say protected, let's like double-click on an example. Let's use pricing. So I think pricing is having a real moment right now. In a world of 80% gross margins where it functionally meant like the cost of bringing on an incremental customer just wasn't that material, if you messed up pricing, like, look, it wasn't that consequential, do you know what I mean, for any particular one customer. If you do that today, do you know what I mean, in terms of— and what I tell people is, you know, you forget that every magical feature, every new agent has insane inference costs that come along. So if you charge too little, you are functionally paying customers to use your product. But on the flip side, if you charge too much in this extremely competitive environment, your competitors are gonna eat your lunch. Do you know what I mean? Because they're gonna figure it out before you do. And so I think the first thing the CRO has to understand is like, you're, you're suddenly, your pricing is actually becoming a huge part of your business strategy, right? As you sort of work through that. And I think that's why you see the rise of sort of consumption-based pricing, et cetera. That's, that's more tightly align to that. But I think that the next thing we have to think about is what is the cascading effect on the metrics that matter? And I don't have perfect answers to this, but I'll tell you some of the questions that are on my mind. In a world historically where sales compensation was done on ARR, and we have wildly different gross margin profiles for businesses, that suddenly doesn't feel so good anymore. Do you know what I mean? Like in a business that's fundamentally theoretically, like, you're making 30% gross margins, eh, like, that math's gonna break down. And so, it's funny, Kyle Poirier put out a piece a couple weeks ago around, he, he kind of came up with this set of, like, what he was positioning as the new AI-native metrics, where he talked about things like, you know, gross profit on token consumption and things like that. But I think there is this bigger question of, as you as the revenue leader, need to sanity check the math of the function. Because in, in a world where you're fully loaded commission expense, was 25 or 30% of what you're bringing in, but what you're bringing in has now been watered down by 50%. That's gonna get problematic very, very quickly. So that's my overall frame is like the, the, the contours of the P&L are changing drastically and that the CRO has to understand what that is. And there aren't perfect solutions yet, but I think having that partnership with the CFO to be asking the intellectually honest questions around, is the math math? Is incumbent on, on every great go-to-market leader.

We talked about the macro changing the board metrics that matter, and so the, the pressure that CROs will feel is what from the board?

So I think boards are done rewarding effort and want to see impact. And let's go through some examples of that. I mean, I think when people talk about efforts, like, these are the tools we're using, these are like the incremental gains where You know, maybe this is, you know, what the coverage rate is at the BDR now, or how many connects we're getting.

Yeah.

Don't mishear me, like those are fine leading indicators of where the business is going, but I think again, because of this pressure of like, we can't benefit on the margins, that we have to get smarter around how we're managing our operating expenses. You have to be able to articulate the direct hit on the P&L. So the example I give people, and I'm not trying to pick on like digital deal rooms, but I tend to always use this as my example, for better or for worse. It's like, okay, if you're the CRO and you're talking about, I invested in this digital deal room and it's great cuz now we kind of cut a couple days off our sales cycle. And when we cut a couple days off our sales cycle, now let me walk you through the 3 layers of math that work out to the incremental gain that I get per year. That's too much math for the board, right? I really believe that it has to be like, what are these direct line impacts? And so I, I tend to talk about it, I, I, I sort of coined this acronym that I call the PRIME framework, and it's P is productivity, R is retention— we'll come back to these in a minute, what specifically I mean— I is investment efficiency, M is momentum, and E is expense reduction. And I'm not saying you need to do all of them, but my hack for CROs is like, you gotta be able to line what you're doing up into, into one of those, right, when you're talking about this. So when I think about productivity, I do like revenue per employee as a good That now, by the way, that's also a metric that we could question because ARR per employee, if you only have 30% gross margin, it's different than ARR per employee when you have 80. But put that aside for a moment.

Employees have a very broad range of cost, you know, like ARR per— if you have an entire company of $500K a year engineers is a little different than, oh, we've got some people in Latin America, we've got offshore, we got some cheap BDRs.

Yeah. You'll like Kyle's piece because one of the metrics he talks about, I think, is ARR per headcount dollar. I can't remember if it was ARR or another metric, but he talks about normalizing it per headcount dollar, which I like over—

we're talking about this internally right now, which is because, because close to half of my team is in, is in LATAM, and then, you know, another 40% is in Canada. And so it's not like for like to a fully burdened US headcount. Like in many of the, the companies that investors may benchmark us against.

Yeah, that makes sense. That makes sense. Yeah.

So revenue per employee, uh, yeah, revenue per employee.

On the retention side, I just mean net retention or gross retention. Nothing cute about like the customer's happier, like that's, does it keep them and does it grow them? On the investment efficiency, that's when I start to think about metrics that I alluded to at the top of the hour around sort of net magic number, right? CAC payback, but like it's very evident in sort of the, the board flash metrics, right? As we see them. Momentum is where I talk about top line growth, right? 'Cause I, that, that of course is very, very, uh, important. And then expense reduction is, you know, self-evident, right? And how do we take costs out? But as, as you and I said a bit ago, Kyle, like to me that's not the be-all end-all, do you know what I mean? That's one option of, of many different things you could do. And so when I'm looking at go-to-market solutions to invest in, I won't touch it if it's not obvious to me that it doesn't hit one of those 5 things, like pretty immediately, if not multiple. And so as I think about that as an investor framework, my call to action for CROs has been, I might think about that as a buyer framework, you know what I mean? In terms of the things that are gonna stick around, because I, I do think it's like, it's great that people are adopting stuff, but that's now, as we said, like everyone's at excuses. That's the baseline expectation. It's what are you doing with it? And my, My experience, with some exceptions, your, your, your present company, uh, included in those exceptions, has been not everyone is thinking that way. And for those folks who didn't read the Topline piece that I put out about this, I asked Kyle to give me some data because I said, I'm gonna go to some of the more AI-native CROs that I know because I think that it, I appreciate that you guys are leading by example, right? In terms of this is how we're partnering with our CFOs. And I, I think that needs to become the norm, but right now I think those are more the exception cases.

Yeah, we are definitely hyper-focused on, because so we have an incredible AI leader for sales, YG, who, you know, when we talk through his projects, I'm going to just use PRIME. I like it as a framework. We are constantly coming back to like, what is the thing that's going to bring in more dollars? It's really, it's really about growth. Yeah, we're trying to streamline stuff, but we're streamlining things so that reps can do more revenue generating activities. It's not really a cost reduction play.

I also think this education has to happen like across companies. Do you know what I mean? Like, I really, I'm a huge believer in sort of transparency and education. And you know, I think it, it's a lot of times very easy for employees, particularly like individual contributors, to be like, why, you know, are the goalposts changing, et cetera. And understanding this context around like the world of business has changed, like fundamentally business models are not what they were, is extremely important context. And I think it's incumbent on the leaders to make sure their teams understand that.

Something that I've, you know, my team is sick of me, sick of me saying is like, there's a, there is a gravitational force within quotas. They only go up. Like, that's the only direction. And when quotas start going down, like, that's when you should be worried. You know, we capture some of the efficiency in quota increases, but a lot of the efficiency we, we, we share with the rep and just let them smoke their number.

And, and it's funny you say that because when I hear that, right, and I, you know, it's been now 6 and a half years since I've been on the operating side, but I'm always like, What a privilege that you get to work in a place, do you know what I mean, where you have this ability to hit these crazy numbers, you know what I mean, because of the product. Yeah.

I think our average outbound BDR last month, uh, produced $10K in close one ARR, or to close one MRR.

Wow.

So like $120K in close one ARR per person. And it was, you know, not too long ago, $3.5K. And at $3.5K, the economics were fine. You know, like you could, you could make it work, but at, at one point it was $6K, then $7K, and, and last month we, a lot of things went right, but this business is completely different because of, because of those AI investments. What, why, why do you think that companies aren't getting the return though? So they're doing AI stuff. Is it they're solving the wrong problems? It's the wrong tool. Like what's What's the gap when, when you talk to people?

I mean, I think this is very organization dependent, but there's like a number of different patterns I've seen and, and some are all maybe true, right? So, um, the first is like, I think there's just insane sprawl around initiatives. You know what I mean? So it's like we're trying 50 things, maybe or maybe not. There's a clear owner on what those are. There's clear objectives of what we're trying to achieve. And I think like one of the downsides of letting everybody experiment, do you know what I mean? That you just end up without real focus. Do you know what I mean? It's the classic like 2006 Yahoo memo of the peanut butter manifesto.

Yeah.

You know what I mean? Spread yourself really thin across all these things. So I think that tends to happen a lot. One framework that I'll borrow, um, from Becca, the head of sales at Clay, you know, she, she recently spoke at, at, uh, an event I was hosting and she, she presented this sort of like great maturity curve visual for go-to-market leaders where she talked about like level 1 of the maturity curve. It's just sort of like individuals are using AI. Level 2 is you have this sort of centralized view on it, do you know what I mean? Where you start to get standardized, et cetera. And then level 3, right, is you actually are thinking about how you create alpha, right? At, from, from a go-to-market perspective. And her view, and I feel like Clay is such an interesting company to talk about this because they're, they are on the front lines with so many of these sales teams, was that most people are like hovering in number 1 and like maybe number 2. And I, I think that is probably a lot of this too, right? And it comes back to that first point that I made, that there's, that there's, we're in the early innings of these like centralized centers of excellence. Now, that said, I think that is the, I do think that is the org design moment and movement that we're living in where you're seeing more and more of that. Do you know what I mean? Where people are saying, okay, we're gonna have, you know, a centralized team. Everyone's expected to use the tools, but we're gonna try to get like a little bit more organized. You know what I mean? Around like specifically the initiatives are. So I think we're going to see a lot more of that the balance of this year and beyond.

Yeah, this is like the— this was the newsletter post I wrote a couple of weeks ago. It was like by 3x my most popular online. And then we reposted on Top Line. And in a lot of what I think our success is attributed to is we've had a very centralized approach from the beginning, not because we were super smart or like decided, well, we're going to be centralized. But it was just, just this emergent property from, you know, a small handful of us from November '22 and beyond. We're just obsessed and, and thinking about all of the, the places we could apply this. And, you know, we didn't wanna bother like trying to convince everybody else to learn the tools and, and we just built things, deployed it to the reps in the surfaces that they already use. That really reduces the change management friction. Like you're, you're updating, you're not asking them to do like a ton of brand new different things. And now I feel pretty strongly that like you need a central— it doesn't have to be one person. You don't necessarily need an AI czar. It could live maybe in engineering with applied AI or maybe in RevOps. Like that, that, you know, the shape can look different, but yeah, I'm with you.

We've actually done this even at Primary, right? Where, you know, we've been pushing people to use the tools and, and, you know, we're in an extremely tech-native company, so people are comfortable with doing that. But last year we said we're, we're actually going to invest in a centralized team. We call it Primary OS. And, you know, to your point, it's been great. Do you know what I mean? Just actually like building product that scales, other people can use. The other thing I would say is it, um, drives new ideas and thinking. Every time they ship a new product, I'm like, oh, I have this like random idea for something I was like work based on like something that they built that maybe I don't even need today, but just like the way they did it got me thinking in a slightly different way. So it's been a huge benefit for us as well.

Brendan Short, who writes The Signal, had a similar, like a similar framework. He, he had like L0, which is like, okay, you're sometimes using some chat stuff, like let's ignore those people. Then level 1 is, okay, you, you built some custom GPTs. Maybe you've like opened Cloud Code once or twice. Level 3 is you've built an app, and then level 2 is you've, you've built an actual thing. And the level 3 is you're a systems builder that's thinking about the infrastructure. And this is the conversation— him and I text or Slack a bunch about the, these topics. And the thing we're really thinking through is how do we build, how do we get both central and decentral? So centralized deployment and expertise and, and also building an infrastructure that more people can start to plug into so that they can, if they have an idea, they can explore it in a way that's actually meaningful. And then, and then bring that idea back to, uh, the centralized team who will make it production grade.

Yeah. Yeah. I love that. And we actually do a little bit of that with that OS team in terms of like people can sort of submit their tickets. Yeah. I mean, I'm like, those guys are working on like very systematized products, but they also sort of have a hue, right, of things they can look at and sort of assist with. But your point on like how they coexist, you know, I tend to be like, you know, the, the, uh, number one sort of fangirl, the old Charlie Munger quote, you know what I mean? Like, show me the incentive, I'll show you the outcome. And I go back to this, like, and I'm not talking about token maxing, to be clear, but I do think there it's like in the performance rubric there needs to be, you know what I mean, some assessment of what people are doing and what they're building. But I, when I hear about these like leaderboards of tokens. I'm like, you gotta be kidding me, you know what I mean? It's like the classic, right, of like, I'm just gonna like book a ton of meetings, you know what I mean? It doesn't matter what happens with them.

Yeah, yeah. So I, I just want to, uh, keep picking at, at like where companies are struggling. So initiative sprawl, not being clear, maybe not picking the right things, org design certainly is, is an issue. Any— do you think there are any other drivers that are leading to people sort of like deploying AI stuff and just like having it fizzle or not get the results they want?

Some of it is like, what is the level of resourcing that's put on like ensuring that you're accelerating time to value with those products, right? Because here it's like another— there's so, there's so many applications for the org chart in so many different ways. Like some of these AI tools, let's just name it, like require a heavier lift to get going. Do you know what I mean? So if there's not the ample like buy-in to go and do it. I think there's a lot of people who invest in these tools, but I look at when I was operating, I always used to joke with my implementation team, like, phase 2 never happens, you know what I mean? Like, just get over it. So like, it doesn't happen now, it's not happening, and we're going to churn the customer, right? So like, you have to kind of redefine the milestones of what this is. But one trend I've observed in our portfolio companies on the vendor side, so not as the buyers, but I think it pertains to the buyers, is some of them are moving implementation under product. And I don't know if that's gonna be like a long-term trend or it's a temporary thing while we navigate what's going on with AI, but I, I think it, it, it has direct implications to the thing you and I are talking about, which is if customers don't see the value, it's so easy for the tool that's slightly better implemented that launches the new feature to come in and tangentially take that share of wallet. And so I think there's a lot of that where, you know, you, you end up buying a lot of stuff, but you're, it kind of goes back to the sprawl again. Like you're not, fully invested in any one of those tools, you know what I mean? As you, as you go and do it. But I'm gonna be very blunt with you, going back to this thesis, like, I will tell you, like, I meet a ton of CROs 'cause I'm like interviewing people for our portfolio companies and stuff like that. A lot of them like don't understand the P&L. Like, I, I, I have gone on the record saying this, like, Sam and I have been talking about it for, for years at Pavilion, like, and he now does the P&L fluency command. Cause I'm like, people suck at this. Like, it's actually really bad. Not to like make it an easy throwaway comment. Like, I think a lot of people don't know how to articulate this story. And so even in places where it may be happening, so my number one hack for CROs is like, you better be taking your CFO to lunch, you know what I mean? Because you need to understand where they're being questioned, how to speak their language, you know what I mean? And how they're thinking about the function. Because I worry that even in places where maybe this is happening, people just like fundamentally don't get how to tell that narrative arc, do you know what I mean, around what's actually going on.

Beyond going to lunch, like seeing your CFO as a partner and not the obstacle. Like so much of the time it's like, okay, my CFO is going to tell me no on the headcount I want and no on the thing I want to buy. They're going to push back and you just get into this very like binary place as opposed to saying like, all right, I need to go make that person a partner. And when they tell me no, like, okay, why? Hey, help me understand. Like, why do you look at this and say no? And not in the objection handling way, which I know we do sometimes, but in the like deeply inquisitive, like walk me through like your logic to, to say X, Y, and Z. And once you can start getting there and everything's getting easier.

Yeah. And the final point that I'd be remiss if we didn't hit on is I think Elena Vera at, um, Lovable has done some good writing on this around how like executives need to be vibe coding. Do you know what I mean? They like need to be in the tools. And I still think there's like wild dispersion in terms of what's actually happening, right? Like you, you and I are getting on and you're, you're telling me, you know what I mean? Like you've got all your agents running for you, et cetera, which is amazing. I do still think there are people who are like removed from the work and you have to use the tools, right? Because your imagination will run wild for your own team. Do you know what I mean? As you go and, and do that. And I, I, I, I'll offer myself like as a personal example. I mean, I feel like for months I'm like, I, I have to carve out more space, you know what I mean, to like get into Claude Coach. And I remember at one point I was like, I'm just devoting a Saturday to this because like I am not going to get better at it, you know what I mean? That's why I go and do it. And I think again, this is a place where every leader has to invest the time because it's gonna open their aperture for what's possible, how to storytell, how to push, et cetera.

I sort of wanna start asking people to just show me their their Claude usage, just like, hey, open up your Claude settings, click on usage, and I want to see how many tokens you've spent this, this month. And it's, you know, not to get to the token maxing thing or, or, or be reductive, but if you are on the Pro plan and you've spent 14% of your, your monthly budget, then it leads me to believe you're just in there asking for recipe ideas and having it rewrite your emails.

Yeah. I mean, another way to flip that question, right, which I've definitely done for people is like, what had been like the 3 most like transformational professional leverage things you've done in it? You know what I mean? Because that, you know what I mean, like I think that's like an interesting question of like different people push themselves in other ways of like where did you get super creative, right? With the— and, and again, when I ask people that question, I, I get great ideas, you know what I mean, in terms of like things to go and do. And for me it's been like, look, I always give this example, like I live and die now by this like daily briefing I get every morning at 9:15 that basically tells me all the stuff that I like said in different channels. I said I was gonna do it. Yeah, like it was reminding me, like, I'm recruiting this speaker for an event in June this morning that on a Zoom call we had last Friday, I said I was gonna send her the recording for like this back stuff. And it's silly stuff like that where I'm like, again, it's, it's, I'm like 10x-ing myself where I'm like, oh, I look on my game, do you know what I mean? Because it's like not and I think I was like pretty on top of not letting things like fall through the cracks. To me it's like I'm picking on that as a very microcosmic example, but when you think about you have 20 workflows like that that run every single day, like you can imagine for me, like portfolio company management, you know, like all of the stuff that comes back to me, relevant news around those industries. Like it's crazy. Like the ability to synthesize all this stuff in one place.

Yeah, I, I have something similar and, and honestly it's overwhelming. I was like, this is the amount of stuff that I've said I would do in, in a, in a day. I was like, that's why I have to run it every day.

Cause every week I just have a heart attack. It was on Friday.

So, cause the first time, so I rebuilt my OpenCloth from scratch a couple weeks ago. Then it was, so it updates my Notion task list. And so it ran it, it ran it after this week. And then I had like 40 tasks. I was like, oh, something's broken. It must be doing duplicate things. And then I started reading them. I was like, No, like actually every single one of them was like either some Slack message I had to send or I needed to do some email intro. And then I've started to try to build now. So Kai is my AI chief of staff, K-A-I, and Kai has his own email and Kai has, uh, is a Slack bot as well. And so I'm, I'm now trying to build the second layer to, for it to just go do like execute all those tasks. And that has been shakier. So you're going to, after the podcast, you'll get a follow-up from Kai that will have the episode, a bunch of the, a bunch of assets, and it's going to write, it's going to write, uh, 5 LinkedIn posts for you in your own voice. So it'll go scrape what you've written and it'll use my LinkedIn post.

Yeah. I love that.

LinkedIn's tougher. I haven't been able to figure out how to scrape LinkedIn. Yeah. Um, but. But like your newsletter stuff, and it'll take your tone of voice from this recording and write some stuff and send it. So you'll— you can give me some critiques, critique on it, because it's only happened a couple times.

But I, I've similarly had that issue with LinkedIn, by the way. I think I was telling you, we jumped on, I was just like, um, doing like a bunch of event recaps and stuff and having AI write it for me. And same thing, but I'm like, now I've just fed it like good old-fashioned, like, here's like the copy-paste of like 20 things from the past, just like use it, you know what I mean? And It's pretty good. Yeah.

So my OpenClaw is in a virtual machine in DigitalOcean. And so, cause I just don't want it on my like work computer. Yes.

We do not have that at Primaries.

Okay.

In any business, I think it's hard, like particularly with the sensitivity of all the portfolio companies, it's like a little mind-boggling.

Yeah. Yeah. Yeah. And so I'm still wading through how to build the right system of action. And, um, that's the next layer. And I think like that will be the biggest unlock because then it's like getting actual things done. Like right now I'm still sort of the assistant to my chief of staff, sometimes sending the Slack messages and doing, and doing whatever. But this, but this is the big architecture challenge going back to one of this, this sort of central versus decentral conversation is in the organization. If somebody could build this shared shared infrastructure with, you know, the context graph and a baseline set of skills that then you could plug into and enough safety built around it. So it's not gonna like nuke a bunch of Salesforce records or share stuff. But, um, this is, this is I think one of the questions that is still unanswered and unresolved, uh, that I'm eager to— how are boards measuring CROs differently now? So we talked about the P&L fluency. They want to see results, not just like effort. But are you really— are you measuring a CRO on like whether or not they vibe-coded their own, their own thing? Or like, how do you think about measuring a CRO differently in this world?

I mean, I think it's about— at the end of the day, it's always going to be about outcomes, right? I mean, in the business. So the first thing is like, nothing really matters if you aren't hitting the plan, you know what I mean? So we're— that, that hasn't changed and that's not going to change, right? But I think what I'm listening for are, are sort of the stories of what's happening in the And where I lose interest is just like incremental anecdotes.

Mm-hmm.

Do you know what I mean? Versus these tales of like transformation and the function and, and how it's working and what that's looked like, right? So when we, like, I, I always love hearing the examples of like the super creative go-to-market engineering unlocks that they've like figured out for their particular business. So I'm, I'm listening for those stories versus the like, we tested these two things. Do you know what I mean? I mean, We had a 10% gain when we did blah, blah, blah. It's the richness of the anecdotes. And so what one call to action I would offer to the revenue leaders is like, take credit for your work. You know what I mean? So as you hit those numbers, share, do you know what I mean? 2 or 3 of the, hey, like we're pushing AI and I, I wanna highlight for you, do you know what I mean? Like some of the more transformational things that have happened as a result of that. I think it's like very, very powerful. Again, that does not matter if the numbers are in the toilet. Mm-hmm. Right. Thing, you know, you're on a good sort of trajectory and plan. I think like reading people in on what you're doing, like board members crave hearing that. So it's less about the specificity of like what's going on, it's more like show me, show me the evidence, right? At that level, I'm gonna trust you know how to manage the leading indicators and the people. I want to know what the outcomes are.

So say you have a company, they're performing well, growth is, is at or above target, but this CRO is just like You know, clearly not put in the work to learn the, the AI stuff. They haven't done anything themselves. Some of the, somebody else is doing some interesting things, but like they are not, they don't get it. This is not something that they care about. How, how much of a red flag or is that now grounds for evaluation? Like how serious do you take that?

Yeah. So first off, like we're, we're picking on CROs for obvious reasons here, but I'll say the same thing applies to like any executive, right? We want to hear if. People officers who wanna hear it. Like, it's a little easier with product and tech, right? It's way, way more straightforward to kind of discern what's happening there, but it's, it's every function. We rely on our conversations with the CEO, right? To get the feedback on how the team is doing. And I think what has changed, this is a central discussion topic with every CEO.

Mm-hmm.

Right? So when we're doing that sort of closed session and we're evaluating the team that's around the table, there's always been this question of like, is this the right executive for today, or is this the executive who's gonna take you to the promised land, right? And to be clear, like, no answer is wrong to that question. You know what I mean? I've been a part of so many companies where it's like, we love the person who's here today. Like, we will ride them as long as like we need to continue doing that. But AI is part of the calculus in that conversation right now in terms of like, how forward-leaning are they? And the, the, I think the CEOs usually have a pretty good pulse, you know what I mean? Of like, is this person in the market? Are they pushing me? Right? And so we're not in the business enough to like be able to make that call. So I, I'd love to be able to say like, yeah, we have a perspective on it, but we're relying on the CEO to offer that perspective. But we're gonna push, do you know what I mean? And we, what we do benefit is the pattern recognition of what's happening elsewhere in the portfolio. Right, right. So we actually just had this conversation, um, at Primary, you know, you know my partner Jason Gelman who, who runs our go-to-market operating practice. He, he's built out this like insane go-to-market engineering team for our portfolio companies. Companies, right? It's, it's, it's huge and, and it's, it's growing at a crazy clip and they're doing some cool stuff. And we had this competition as a partner team where we're like, if there is any portfolio company that isn't taking go-to-market engineering deeply seriously, we have a problem. You know what I mean? Because this is the future of how companies actually grow. So it's those types of conversations in the background of like, because of the work he's doing, he's now equipping every check writer and board member in our partnership to go into a board meeting and be like, well, I know what, what really best-in-class companies are doing, and I'm not going to like go through a checklist, but I know directionally, you know what I mean? Like what sort of more mature operations look like versus those that are still figuring it out.

And then just tracking back, so like what is the level of AI proficiency that you are looking for? Like what do you think is the standard that executives more generally need to hold themselves to?

I think that every executive needs to be able to do basic things in cloud code would be my bar. Do you know what I mean? Like, you have to understand like how MCP works. And the reason I say this is because your product has to do these things. So how on earth can you be in market, do you know what I mean, talking about this? And you, um, when I saw you in San Francisco in January, you shared your, your bit with me around like no new surfaces, you know what I mean? And it, it really resonated with me because there, there's portfolio companies we're working with now where they're like, oh, we're, we're prioritizing our cloud integration, you know what I mean? Because we know we have to meet the customer where they are. And so I'm sharing that anecdote 'cause it's like, you, you can't be selling the interoperability of your own product if you don't fundamentally understand how those things work. And so to me, that's kind of like the, you have to be in those tools and you have to have tried to hook up, you know, some different things. You have to have built some use cases, right? Agentially that are gonna automate things for you. I'm not saying that you need to go and run your whole life through agents, but I think that baseline, like, you've been a consumer of the tools, you know where people get stuck, you know where things get rate limited, like, that, that's not only important for setting an example for the team of what's possible. Again, every product has to think about this. So if you're in a sales role, you just have to understand it.

And I think it is such a different way of working and the assumptions are so different now that unless you're in it, I'll say day to day, like maybe you can get away with like weekly, but you just won't build a native understanding of the, of the primitives and of like the first principles, even just simple stuff. Like, you know, I was, I've spent, I don't know, 10 to 15 hours building this XDR hiring analysis. And at one point I was like getting stuck and I was spinning on it and I was like, okay, I just, I need to start in a fresh context window. Like I needed to move into a new terminal window and start again because like, you know, the context gets all garbled and then you just can't make progress. But even that thing was built on enough understanding of the way these chats or these way, the way these things, interactions work. It's like every single token above you in that conversation is pulled into the context window to answer your thing. So. Because I was, I was like first connecting data sources from a bunch of different places. And then I was having, having to like groom the data and we had to go through like this process. And so by the time I was having to do like a bunch of different types of analyses, it was like confusing them all. And, but starting fresh, it was like, it really started working. And then I could run, then I ran like the Carpathia auto research thing on it. And even that like is because I'm, On Twitter and like I was like, ooh, Auto Research, because I have output data and input data, Auto Research could do this sort of like synthetic analysis. And I just don't know how you make great decisions about how you build your go-to-market org and be a good partner to your product teams if you don't understand some of those primitives. And maybe you don't have to go as deep as I did, but like, I sort of think you do.

When I first started tinkering with it, I sucked at it. Yeah. You know what I'm like, why is this taking so long? You know what I mean? Like, and I, I would actually ask Claude, why'd that take so long? And it's like, well, these are 5 things you massively screwed up. You know what I mean? Well, you just did.

Yeah.

And even that feedback mechanism, do you know what I mean? Is I'm like, oh, and, and it frames your way of thinking even around how like a customer would use your product. And I mean, like, I think there's just such, uh, transitive properties, you know what I mean? Of, of sort of being in the tools and how your customer would be using using these tools. But I, I, I agree with you. I think it's immensely powerful. And I do think you brought up an interesting point when you said like on Twitter, I mean, these places, I mean, I think like it's always so important for executives to be sort of activating their networks. This is a time where that is like so critically important because that's where you get ideas.

Mm-hmm.

I mean, you're kind of out there, you're talking to people, even if it's not like for, like for your business, you're gonna say something that triggers something in my brain that even though I'm in a very different business, right, is gonna get me thinking about a problem in a different way. And so I think it's always been important that people are, you know, leveraging the professional networks that they have at their disposal, but I think it's especially important right now.

And looking beyond your function, like, I, I learn way more about GTM AI from product. Like, I, I spent a lot of time with our product team here, and I'm, I'm constantly hitting them with questions. And I think I plug Lenny's podcast like every 3 podcasts, but I'm going to do it again. Like, read Lenny's newsletter, like listen to that podcast because he is so inquisitive and curious. Like he makes it approachable and not every episode, like some of the episodes are going to go way into product management, but there's a bunch of them where they talk about AI strategy and how it's transforming organizations that is the most readily applicable. And like I said before, yeah, like engineering and product are on the forefront of this. All of the things that are happening there, all the challenges, all the opportunities. They're going to be similar that we're going to be dealing with in, I don't know, quarters or years from now. How else does a CRO need to evolve this like P&L understanding? So we've talked generally about become friends with your CFO, get inquisitive about how they're operating, but like what are the pillars or like foundations that a CRO or a CMO need to go like add to their toolkit? How would they think about building, building this new skill?

I have this framework that I use for every executive on the planet in terms of what I think separates the best from all of the rest. And I think the best are not, it's not a huge sample size, right? Um, and I, and I call it sort of the, the core 4 attributes, right? And, and the core 4 attributes, which, which are gonna really reflect nicely on some of the stuff we've been talking about. The first is P&L fluency and command. We'll come back to that again in a minute. The second is this concept of first team thinking that I've borrowed from Pat Lencioni, who wrote books like Five Dysfunctions. Team, if people are new to it, the idea is your first team is the most senior team you sit on. It's your peers, not your direct reports, such that you always put the business above your swiveling. Go-to-market leaders are very, very bad at violating that.

Most of the time.

Yes. Yeah.

Yeah.

It's a, there's a reason we had the highest media and executive turnover rates. Dragging it usually number 2 is, is heavy blame. Third is this pulse on macro. So you are constantly rewriting your own playbook and narrative based on what's happening in the market. And then fourth is the strategic network or your bat filler, right? So we've kind of hit on all of these in different ways. Uh, my point would be like in the P&L bucket, the, the one thing we said in passing that I wanna just like hammer home is when people hear P&L, they hear income statement, right? They're like revenue and cost.

Yeah.

It's about so much more than that, right? It, it's about revenue versus cash, right? All of the nuance that's in the business and the full financial picture of what's going on. We took, we talked about things like burn multiple, et cetera. But you have to have a full command for the financial health of the business. So when I say take the CFO to lunch, what, what I mean by that is you, you need to understand like truly the financial health and picture of the business. Like where is the board pressure testing the CFO? Because there are conversations that only the CEO and CFO are in that the functional leaders are not. And that I think can really contextualize a lot of what's going on. That's probably the biggest thing that we haven't talked about yet today, but tho— to me, those are like the 4 things that every leader has to prioritize and has to get right. And on number 2 with the first team, let's talk about what that looks like. That's the, hey, I, I actually had this major aha moment around AI where like I could cut 50% of my team, but no one's asking me to do it. The amazing CROs are going to the CEO and saying, I'm like putting my team off, you know what I mean? Based on what I've learned. And we, we don't see a ton of that yet.

If you're going to give executives a roadmap, where are you pointing them to? So they, so I think about unit economics and, and some of the key metrics in there. So payback period, LTV, CAC, the, you know, cost of sales. What else would you point them to, to be like, if you don't understand these things today, you got to go figure it out?

It's a two-part answer. For years, I had like one very simple answer for this, right? Where I said, I think Iconiq in the software world has done a very good job of sort of crystallizing a framework for the metrics that matter, right? So, they sort of have a set of metrics. I think they call it like the Emerging Growth Index for companies that are less than $20 million in ARR, and then their Enterprise Five, for companies that are north of $20 million in ARR. And I, I loved those for a long time. And in the fall, in their State of Software report, they actually said, hey guys, these metrics aren't changing. What's changing is how quickly and efficiently companies need to get there. Now, 6 months later, I don't buy that anymore. More, right? For all the reasons we talked about. And so now I think the challenge is no one knows with certainty what the new metrics are. You just have to be intellectually honest enough to be challenging them. So we talked about like Kyle Poyer's piece. I'll give you another example. My friend John Gleason, who runs a syndicate fund of customer success leaders called Success Venture Partners, who was the first CS hire at Motive, he put out this great piece that we can also link out to called Outcome Metrics 1.0 that he, he published maybe 10 days ago, and he took inspiration from like the SaaS metrics 1.0 of however many years ago, and he put forward a list of metrics that he thinks are going to matter for CS more than anything else. And he talked about things, I'll give you one example. One example was something called outcome cost efficiency, right? And so the whole idea was if you pay an agent, you know, $8, right, to resolve a ticket, but the human cost of doing that, do you know what I mean, was $24 of going to do it, you basically got $3 of, of labor value out of that investment. And his thing was the higher the OCE, the better, the stickier the company's gonna be. And even if people like your product, if they don't have that high OCE, like you're kind of doomed. And that's the type of thinking that I think people have to be doing. And I don't think there are perfect answers, but that's where I think the CRO and CFO can be sparring partners on like, uh, like even though everyone said that was the right metric, does that like really pass the sniff test? You know what I mean? Of what we're seeing in our customer base and what makes sense for us based on the business model today. And, and actually one of my favorite newsletters is actually written for CFOs. It's called Mostly Metrics by CJ Gustafson.

Oh, Asit, Asit is always telling me about this guy.

It's awesome. He, and CJ's a great guy and he like really is fluent on the business side of it. But, um, that's like one of my favorite reads every single week is he really breaks it down, I think, in pretty brass tacks. The other one I'll mention that's, that's not a business newsletter, it's more of an investor one, but I think it resonates is there's a, a newsletter from Altimeter Capital that comes out called Clouded Judgment every Friday.

So good.

It's so good, right? And it, he had a great one on like this whole question around pricing and he gave this great example of like the GPU leasing business and what happens when you go from per hour to consumption based. So that, that's another good one for people to check out.

Okay. I wanna move us into a, a quickfire to, to close out. The normal question is, what do you think separates a good CRO from a truly great one? But is that just your core 4?

All 4.

Yeah.

All 4.

So just explain Pulse on the macro then. Let, let's, uh, uh, do one click deeper. What did you mean by that?

So, so pulse on the macro is, I mean, I'm just gonna put this very bluntly, you have to read the news. So all the stuff that we just talked about, I'm like, and it's not just reading the news for like check, I get, you know, we always say like, congratulations, you got an A on the test, but you failed calculus, you know? You need to read the news so that you're developing a perspective on what it means for your company. And I think that's where we're kind of missing that. Do you know what I mean? Of like, oh, I'm like tracking all the stuff that's there, but you're not actually offering any perspective on like why what's changing in the world matters. And then Really importantly for CROs, what does that mean you need to go and change? 'Cause none of us have done this before, but like, what does it mean for your own playbook? And, and I think this is particularly important for people who are like in active interview cycles right now where you're not gonna be able to say at Company X I did blah, blah, blah, blah, blah with AI 'cause that's just not true. But you could say something like, man, based on what I've learned in the last 6 months, if I redid those 4 years at Company X, I am super charged up about the fact that I could have done these 5 things completely differently. And here's my hypothesis for how it would've played out at the business. So I think it's the read the news, step one, synthesize into what that means for your customers, you, your team, and your company at large.

What is the most common advice you give to younger leaders, like first-time VPs of sales?

First-team thinking, always. It, it is always my number one thing. And, and I'll give you an example. I, I always share this example. It's sadly a real one from a couple years ago that I think brings this comes to life for people. A couple summers ago, I was on vacation. I had this like, you know, text me if it's urgent. This portfolio founder texts me. I'm like, is it urgent? He's like, no, actually it's not, maybe not that urgent. But you know, it's August, they're on a calendar fiscal. He was like, the new head of sales is changing all of the quotas, so I just wanted to get your advice on how to roll that up. I'm like, uh, it's August 30th. What? Back the truck up. And basically what happened is that this was a business where a ton of the leads were generated by marketing or high velocity sales cycle. And there was seasonality in the summer months. So what happened in July and August, right? The leads dried up, the reps were super pissy 'cause they didn't have pipeline.

Yeah.

And they're at this VP of sales and his solution is to go and change all the quotas. And I'm like, that is literally the, the most egregious opposite of first team thinking example. Like the question, the answer, as you know, would be like, well, it, what can I do to help bounce the pipe from sales? Right? Like, Is there a spiff I can launch to kind of drive pipe between now and September 15th? What, what can I be doing? And so that is always the central piece of advice that I give new VPs of like, you, you have to play. Like, there's a great— I'm a huge Duke basketball fan, and Shade Daddy, I had this great line at podcast a while ago where he's like, you gotta play for the front of the jersey, not the back.

Mm-hmm.

Right? Uh, I think that's just like so, so well said. The one other thing I often tell them, um, this for sort of a, a, a BOGO is like, You can't build enterprise value without customer value. So like, you, you just have to be like maniacally consumed with customers. And you look at the businesses that are enduring and really are set up for long-term success, it's because like that customer obsession is innate in every single function.

That's a good one. Yeah, the first team thinking is, is hard for— so hard for VPs of sales. But often because it's the comp plan, like if you put 50% of their income on the line, like, you are, you are driving them to think very, very clearly about one thing.

And one thing, here's my hot take on that. I mean, when I was the CRO at Sailthru, my comp plan had— it was partially driven by, like, the commissions of the sales team, but I was also on a classic executive bonus plan, right? And the classic executive bonus plan had— every exec had 3 metrics that mattered, right? And it changed from year to year. Like, you know, at one point it was, like, exit ARR, NPS and for like a cash target when we were profitable became EBITDA target. And like I was held accountable to those things, you know? And, and by the way, our head of product was held accountable to those same 3 metrics. You see real behavioral change in a product leader, do you know what I mean? When that's what's dictating the comp plan. So I think you're right, but I think it's companies miss an opportunity to like rethink how they should be doing comp for senior leaders specifically, do you know what I mean? To make sure that they're aligned to the first few metrics. That matter.

I do think it's crazy that I know a lot of CROs that are on 50/50 plans. I think it's insane. I have very little variable in my plan today, and we've never missed a quarter in my history here. And we go at that with like the same maniacal focus that, that if I had, you know, more on the line on a month-to-month basis or quarter-to-quarter basis. But, uh, it still forces you to think about it. It it means that you can be a much more holistic thinker. I learned this lesson at Shopify where I had no variable comp. It was just, it was just cash and equity. And I thought it was insane at the time. I was like, what do you mean? Like, this is just fixed and I don't get it. But then there were like multiple decisions where I could be like, okay, like I know this is going to hurt the sales number, but it's good for a bunch of these other reasons. And I owned customer onboarding at the time, which I was had to take into consideration, but, um, it was very clarifying.

That's, uh, that's a great example, but the world just needs more Kyles.

Yeah, yeah, exactly.

Got it.

What's the hardest lesson you've had to learn in your career?

Trust the process.

Mm.

Um, and this, this is advice I give people who are like very early in their career. I think as you're like kind of making your way into the executive suite, like you don't have all the context and you don't have all the perspective on why decisions get made. And I think for me, like when I was in my 20s, I'm like, that makes no sense. Like bullshit. You know what I mean? That we're doing like these things and it's, and I think I could remember like the first time, like I, I had a bunch of friends in my company who were like let go by a RIF and I like carried that for baggage for a while. And then the first time I can remember I had to execute a RIF, I'm like, oh shit. You know, like that would must have been terrible. And so I think I, that's advice I always give like younger people in our career. Like just trust the process. Like if you're working with the right people, like at the end of the day, if you trust the people, you have to trust the process. And if you don't trust the people, you're in the wrong place.

Last question: what's the best thing you've read in the last, like, year or so?

I mentioned Jam and Ball's, uh, Clouded Judgment. That is something that I quote in the office at least, like, 5 times a month, like, something that's going on in there. And, you know, I, like, rode that ARR versus ERR piece from 2 years ago. I'm still talking about 25 months later, right? So in the last 12 months— but I think in any given month, there's something that I get, like, 2 years of mileage out So I would say that's probably like the thing, like if I think about like where I get the most sort of bang for my buck in terms of where I'm reading, that probably is at the, uh, at the very top of the list.

Yeah. All the Altimeter people are so sharp. I love Brad. I was like, I just really wish they did that podcast more.

Like, I know, but it's, um, it's funny. I, um, my husband is like a voracious reader. He reads over a book a week and I'm like, I'm a news industry junkie. And so I'm like, at some point it's I was like, it's really bad. Like, I do not read fiction, you know what I mean? Like, it's not because I'm like, if I'm reading, it's about what's— it's my pulse on macro.

I'm the same way. My wife's always telling me, she's like, give your brain a break. Like, read a fiction book. It'd be good for you to round yourself out.

I know. We had the same conversation in my household, Kyle. So you and I are cut from a similar cloth.

Yeah. Yeah. I read Project Hail Mary or listened to Project Hail Mary like a couple of weeks ago.

Yeah. How was that?

Amazing. I only really want to read sci-fi if it's fiction. And it was, uh, it was incredible. So top, top marks.

You know what book I did reread actually recently, and it's like an old one, was Ender's Game. Oh, cool. Just like in the throes of all this, because it was a book I had read like maybe it was in college, and it— I was like, I remember that being like an interesting read many 20-plus years ago, you know, like now in this context. Well, so, so I do think it's actually kind of cool to think about, to your point, you made me think of it with sci-fi, like some of these books that seemed really out there a while ago and to reconsume that content now.

Yeah, very much so. Well, we will wrap it there with a minute to go. I was excited for this one. I knew, I knew it would be good.

Yeah, you and I could easily talk for hours, but I'm glad we're sparing people and capping it here. Yeah.

Cassi, thanks so much for joining and appreciate the time. Thank you for listening to the Revenue Leadership Podcast. If you enjoyed it, don't forget to subscribe and you can find a link link in the show notes. And be sure to leave a 5-star review, share it with your network, and please join me next Wednesday for another great conversation.