#118 - David Maxey - Head of Revenue Operations, US at XM Cyber - Execute a Sound Revenue Model

Sales, marketing, RevOps, and customer success. It's sink or swim out there, and yesterday's strategies and tactics won't help you today. This is Revenue Today, and I'm your host, Jared Robin. Join me as we interview top revenue leaders in our community to learn what steps we could take right now to help you scale more effectively. Revenue Today is sponsored by Rev Genius and RevRoom, and we're on a mission to build trusted spaces for curious revenue professionals who are collaborating on the future of B2B GTM. Hey friends, welcome to another episode of Revenue Today. Really excited, uh, about my next guest. He's somebody I've grown close to in both RevRoom and Rev Genius and, and learned quite a bit from. He is a GTM leader and has held many key positions in worldwide sales, customer success, GTM ops, marketing, and finance. He's been a part of several acquisitions from scaling down to scaling up, leading teams of various sizes through transitions and into success. Right now, he's currently the head of RevOps of the Americas at XM Cyber, and he just put out an incredible piece that'll be releasing soon for RevGenius on planning. Welcome, David Maxey.

Jared, thank you so much. I'm very, very happy to be here. It was great to meet you in real life last week.

On the heels of meeting in person, this has been quite exceptional, meeting you in real life alongside some of the other folks that you're working with. And really intrigued to jump into today because you're doing some stuff that I don't think you realize how important it fully is. Like, you realize how important it is, but how new it is, and we'll get into that. But, you know, wanted to dive in and dive into your head. Debunk a myth about GTM.

Yes, I'd say one of the more common, if I had to put my finger on one of them, is that, you know, you hire people and they'll solve the problem. And I'll give you an example of what I mean by that. And the specific principle I'm saying is you can't just throw people at a go-to-market problem and expect it to be solved. And a common example that you see is you might have a bit of success in a particular region or industry or a particular ICP, and you wanna translate that out into a different area. And so, you wanna start hiring a team and you wanna start creating revenue in that area, but you expect the same productivity that you do from the area that you're having success too quickly. And so, a lot of times what you see is you— and you saw a lot of this last year when a lot of companies were having a hard time hitting hitting quota, what do we do? We went on a hiring frenzy and we just kept hiring people and hiring people and hiring people, only to find out that our attainment kept dropping and dropping and dropping. Because throwing people at a problem that we don't understand is not gonna solve the problem. Trying to understand what happened in the market, trying to understand what those conversion rates are, it's really important because overhiring causes rifts, which is what we've all seen in technology. And that's, you know, you don't hit attainment and you've got to be staffed up. But the other piece that doesn't commonly get talked about is when you're out testing a new market, if you're not having success in that market, you're touching prospects that haven't heard of you before, you know, your reputation, and you're failing. So it's really important to start small, make sure you've got that success pinned, and then grow on that success when you're ready and you've got a defined playbook, stable conversion rates, and things that you can forecast confidently. But I think it was a hard lesson we all learned in the go-to-market side. And unfortunately, the ones that are listening that were part of those risks, I feel for you because the companies were— they threw people at the problem, and when it didn't solve it, they I personally had to make some hard financial decisions.

It's certainly been a trying time. Are you seeing more people operate the way you're preaching, or are they still doing the same thing?

Well, it's interesting. You know, at SaaStr, one of the VCs got up, one of the head VCs, and I can't remember, it starts with a B, but One of the things that they pointed out that I thought was really interesting was the way that even VCs are prioritizing growth over profitability used to be at a 6-to-1 ratio. They used to— if it was an increase in growth, you could increase your growth by 1 point and get the same valuation as if you increased your profitability by 6 points. And that's now dropped. So what that really means, massive, basically burn all cash to grow, don't worry about profitability. And they've said recently, you know, in the past 6 months, that's dropped from 1 to 2. So that's quite a magnitude change of even the way VCs are looking at it, because what they're seeing is if you're not sound from a revenue standpoint, then you're going to burn cash faster than you need to. And when there are unforeseen things that happen, you're not going to have as much control over what you need to change in order to remain profitable. And that's what when you grow at all costs, you're not really taking the time to understand how it all fits together. You're creating— and we call this— why do we call them growing pains? Because we move so fast it hurts. But you end up making things that aren't as sound. And I would say, to answer your question very specifically, hearing it from the VCs, the sound revenue model is what we're leaning towards. And I think it's what every founder has always wanted, wanted to move to profitability. But it's nice to see that the VCs are kind of coming in line as well and saying, hey, it's not just growth at all costs. It really does need to be a sound revenue model. It does need to make sense. And at the end of the day, profitability, payback period, lifetime value, customer acquisition costs, all these things are important. And this is why.

And ultimately, folks that take VC money have to follow VC expectations. So it starts with them, right?

Yeah. Well, the old saying of they respect what you inspect. If you look at the VC side of things, if they were valuing growth at 6 to 1 to profitability, you know, a year and a half ago, of course everybody's going to be focused on growth, growth, growth, multiples, multiples, multiples. But, but as now things are shifting, to your point, they are paying attention to those sound revenue models. So I do think it's going to be a, a very strong push from the VC side.

Yeah. And what fascinated me as, as we dove into, you know, you socializing around strategic planning and creating sound revenue models There isn't really a uniformed way to do it. Is that right?

Yeah, that's exactly right. And I think that's one of the exciting things that I saw, and this isn't a plug, nobody's paying me for this, but they announced a product called SaaS Grid. And what's interesting about, you're seeing a lot of these products like GrowBlocks and Burnrate that are coming out, and what they're endeavoring to make the revenue model itself transparent. And what I mean by transparent is not just to see through it, but you can speak the language that makes sense for your department and it translates into a financial outcome that the finance team shakes their head at and says, that's great, let's do it, rather than, uh, that doesn't make sense, you don't need that amount of investment in order to get there. And I think that's— it's just becoming, um, very, very increasingly important to make it standard. But I can tell you, in my experience, one of the things that I did do as a revenue operations leader is I come into a company and I own the annual operating plan from the the go-to-market side. And that's so, you know, I can't have my hands wrapped around it, but I think it's become increasingly important.

Yeah, well, I mean, they're the same levers company to company. Why do they differ?

Well, yeah, great question. From a mathematical

standpoint, they all pay taxes the same way, you have profit and loss the same way. Why is this different?

Well, when you talk about the KPIs, you know, every company has an average selling price, every company has conversion rates, every company has a sales cycle. But when you talk about how you apply those things to different markets. You know, in a particular company I've worked with in the past, just to keep confidentiality, I'll protect names. But, you know, when you're looking at some of those things, you can take the exact same product and launch it in a, let's call it a mature market versus a not mature market. And I'll define that specifically as lots of competition versus very little competition. And you can see a drastic change in what happens in those particular— in what, like, your sales cycle in a mature market is going going to be so much longer. You're going to have a full buying committee that's going to be involved. You're not going to be able to get to a decision maker very quickly. So your conversion rates, you're going to— are going to be lower because you're going to have to find more people. Your average selling price probably is going to be a bit higher if you're going that further up the organization. But you can see, even though the levers are quite the same, when you're talking about an average selling price going from $50,000 to $125,000 I mean, you're talking about a 125% increase or more, and then you sit there and you extrapolate that out over, well, we're gonna get 50 customers this year. That's huge. And so that's where the levers are all the same, but it's the small nuances that when they're baked back into the model, it makes companies either great or mediocre or bad.

Yeah. I mean, it's super interesting. Like, what are some of, what are the most common failures, like, or failings for folks? annual planning?

Yeah, I think it's over-indexing on some of the wrong metrics. And I'll touch on what I mean by that is a lot of times you'll see a go-to-market organization focus more on customer acquisition costs and maybe not on the full payback period. And I'll define those. Full payback period includes your average cost of service, which is the cost of your customer success folks, your general administration that's needed to invoice them, and the R&D that's needed for bug fixes. Whereas customer acquisition cost, as everyone knows, is just everything new, net new from sales and marketing. When you over-index on just customer acquisition cost, what ends up happening is you end up focusing on trying to classify cost in the wrong way versus actually improving the system. And I'll give you an example of that. A lot of companies will jump up and down and say, great, we've started our expansion program. And every sales leader that is looking at customer acquisition cost is going to want all of the expansion classed regardless of when it's expanded. expanded throughout the contract, whether it's 3 months or 6 months, they want it all classed as new because that drives customer acquisition costs down. But in that example, let's say that it's 6 months into the contract and it's actually your customer success people that are doing that expansion and doing that work, but it's classifying everything as customer acquisition costs. You're having to hire more customer success people to keep that up. What's actually happening is you are driving your customer acquisition costs down, but you're bringing your payback period, your complete payback period up to the extent that you actually need your customers to stay with you longer to be profitable. So succinctly, what I'd say to wrap all that up is when you over-index on one particular metric, you end up looking at a system and thinking you've improved it when it's not. And I'll steal this from Dale. Dale says it's like a toothpaste tube. You squeeze one side, and if you're only looking at one side to see if it squeezes out and not the other, it could be squeezing out the other side. And that's a great example of one.

How can folks best prepare? Best fix this?

Yeah, so what I always suggest, use, use a model that you know is fully baked. What, and what I mean by a fully baked revenue model when I'm building one, and you, you've seen me do walk through the ones that I've used a couple times, uh, is you start with the hiring plans for every department— customer success, sales, pre-sales, marketing— and you build all the hiring plans out. Those should all produce numbers, bookings, pipeline, and then eventually produce financial statements from an income statement and a cash flow statement. And when you do that, when you build that comprehensive of a model, what it does is it allows you to speak those different languages to provide that transparency. And notice I didn't say speak the same language. I said speak different, the different languages, because you're not gonna get sales to speak finance language. You're not gonna get finance to speak marketing language. But what that model does real specifically is it, it very, very concretely and discreetly takes your leads and ties them directly to revenue. So when you're making decisions like, I need to increase R&D costs, what marketing programs do I need to cut in order to do that? You can go back into the model and say, okay, this program is attached to these leads. You know, if we were looking at increasing R&D by $50,000, but those leads are tied to $1.2 million in revenue. And when you start having that, that conversation, you're saying, you know, by cutting this marketing program, we're really gonna be killing this amount of pipeline, which is gonna turn into this resulting amount of deals. It helps the finance people see how the systems are all connected. And the reason I pick on marketing all the time is it's very common that marketing gets cut. Because programs and events are not technically butts in seats producing. They're, they're— so a lot of that, that's where it gets looked at to, to, in order to cut costs. But when you have a fully transparent plan that has that all laid out to say this event produces these leads in the pipeline, then when you go to cut it, it's a very easy conversation to say, is this small savings here worth putting this amount of revenue at risk? Most of the time the financial people say no. That's an easy decision to make.

Oh my gosh. It's, it brings up a bigger conversation with marketing because there's not always direct line attribution event by event by event. How, how do you, how do you create some wiggle room there?

Yeah. So I talk about this in the white paper a little bit and I've got this, this principle and what, what I say is attribution over execution when it comes to events. And it's so, that's so hard for everyone to swallow because events are fun, right? You're like, we're out, we're meeting people. We're shaking hands. You know, we see someone that we just saw on LinkedIn. We want to run over and shake their hands. But when it really comes down to quantifying a really good event, and I know everyone's heard this, is your real— the two things that you're doing at the event is you're creating opportunities or you're finding the customers that are currently in opportunities and you're accelerating that velocity. Those are really the two valuable pieces. So being able to find your ICP and starting sales processes from those and being able to prove that really blows down to making sure that you are talking to the right people. And I know, uh, SaaStr and all other conferences will hate me for saying this, but every single person that goes to a conference that's running a booth is better off scanning 13 badges of people that they'll start sales process with 6 of them than scanning 300 badges and getting 2 out of it. And that's typically the approach is, is you see, you know, oh, if you come by the booth, let's just scan, scan. And that's fine to scan it. I just wouldn't call them qualified. And I think that's where the— that's where I say attribution over execution. Um, a lot of times when I would— when someone comes up to the booth and they are being scanned, great, capture their information, but see, do they fit in the ICP? Are they ready for the sales process to start? Do you have a correct entry point into the organization? And if you don't and you haven't explained all those things when you go— and what the white paper kind of details out is when you get funding for a big event like Dreamforce or something like that your first year, You should put together an event ROI report that goes through the different stages and says, okay, 3 months after the event, these are all the leads that turned into opportunities. And if your sales cycle is 8 months, 8 months after that event, you should be doing a full financial report to the finance team saying these are the leads that flowed to opportunities that closed into deals. If your events aren't doing that, don't be surprised when your event budget gets cut regardless of what you're doing when sales suffers. And that's why I always say, Attribution over execution, because if you miss your sales targets, marketing's gonna suffer. And that's not— they're not connected. Not always.

Understood. It's a little more direct line there. But in something like community, you know, all of the relationships you've built, the pipeline you've generated, and none of that is attributable. How do you— how— I mean, I'm sure it can be. This is a great example, right? Like, how can you quantify that on budgeting as a place to spend time and money? Because a lot of it's happening through conversation, word of mouth, in an organized, dark funnel type of situation.

Yeah, I mean, I I agree with that notion in some instances, but I would also say it's almost become— when a proper playbook is used and the expectations are laid out, it doesn't necessarily need to be that way. Sure. If you know in your head when you've finished a conversation that you need to take the 15 seconds, jot the notes down, and move to the next one, and you've laid that expectation out in your head, and you've practiced the governance, because it— and that's what I mean by attribution or execution, like, get all this stuff planned out, Before you go out and just start doing it. Because if you start doing it willy-nilly, you are— you're going to have a lot of these things that end up in a dark area that you're not going to be able to capture. But if you've got it— and what I— and I'll quantify this and lay it out— what I mean by attribution over execution is know that when you're going in, I need to get this information from this person. These are the things. So just like if you're on a call, you have a call input form that you're going to grab all the information. You should have a live one in your head. And when you're done talking with the person, you should jot those notes down. And then she'd go on to the next one. That's why we're there. Going back and just saying, hey, I talked to 12 people, these are the things that I remember— sure, that's going to be directionally okay, but if you really want to extract the full value, just like anything else, you have to— you're gonna have to put in a process, you're gonna have to follow the process, you're gonna have to be disciplined about following that process.

Yeah, I, I think it comes down to when people are talking and you're not involved about you, like in a positive sentiment. That's gonna be tough.

Yeah, that's a hard measurement. I mean, the only thing that I've even seen quantified that way is when you're talking about marketing share of voice, going and getting a marketing firm to try to see what share of voice is. But to your point, yeah, that's— I don't even— I don't have a good answer to that one. That is a dark funnel, to your point.

Yeah, we're getting to a point where we all know word of mouth is the most potent form of marketing, or at least that's what's been said for years and years. And network effects and all of that. And what you do, like releasing a white paper, sure, you could get a list of everybody that has signed up for it. That's very attributable. Another list of everyone that's read it with a certain— but at a certain point, you can't get a list of everyone who's told somebody else about it unless they sign up or shared it. Sure, there's some tools better than others with that, but no, it's it's it's just interesting food for thought as we're going towards a time when when marketing and sales are getting shaken up, right? Like people are posting on social and stuff's coming in, and yes, you could have them direct you know self self identify attribution and things to that effect, and those are all great practices. But there's also becoming more and more otherwise. So. Just, it's just a fascinating conversation.

Yeah. Well, I mean, touching on that, going from one end of the spectrum to the other, meaning in real life to purely digital, I like to touch on the digital side of things because the digital side of things is very much in our control, but it depends on the technology we implement. You know, when you're, when you're talking about capturing sessions and UTM parameters and social touches and all of these things that are in place, it really is in important about, you know, you can use a product like Heap or use a product like Segment, uh, make sure all of those things are kind of stitched together. But it does take— I mean, and I, I helped implement, um, the segment pieces for the front, uh, front of house for, or I guess the, the top of the funnel for Deputy. And when we were looking at that, it was unbelievable, um, that we— the data, and I won't give the exact numbers, but the data that Google told us that was converting versus what we actually were able to analyze, um, was significantly less. And Google takes credit for anything that's influenced. And what Segment was able to do was tell us if it was influenced before or after we touched them. And that's so important in marketing when it comes to digital ad spend, when you're trying to figure out which channels from— if you've got a digital ad spend and when you're running it, I have a company that has a digital ad spend that's over a couple hundred K a month. That's something that you definitely want dialed in.

Now let's go to KPIs. Like, what are the most important KPIs as you're managing You know, for planning or making sure that you're, you're not overhiring or hiring too fast? What are you looking for?

Yeah, I would say that the main ones that you look at, and I touched on some of these earlier, but I'll touch on one more, is, you know, your average selling price, your conversion rates, and typically your conversion rates, that can go down a rabbit hole. But where I'll cut that rabbit hole out is your conversion rate should be broken into 3 stages: your top of funnel, your middle funnel, and bottom funnel. If you don't know how to do that, do a little research. There are articles on how to do that or ping me. I'm happy to walk you through it, but don't use every single stage in your funnel. You'll kill yourself doing that. The sales cycle. And the reason I bring sales cycle up as a KPI to watch is there's easy ways to improve things like that. And I can give an example of each one in a bit, but then also ramp time. You know, how fast can you get an employee productive that makes sense to put 'em out on the front lines? You know, you don't want 'em out there sounding silly in front of prospects, but at the same time, you don't want 'em sitting for 9 months twiddling their thumbs if they can be productive And so those, I would say those are kind of the 4 ones that you really have a ton of control over. And we can dive into each one if you'd like.

Yeah, I would love to.

So when we talk about average selling price, you know, there's a couple of ways that you can touch on that is you can have price increases, but that's a big challenge for go-to-market. It can create a lot of issues. The easiest way to increase your average selling price is what nobody wants to hear is to have another product. Or to have an ideal way to expand your customers. So I we talk a lot about ideal customer profile, but we don't talk about ideal expansion profile. It's a great way to increase your selling price, your average selling price by figuring out which customers you can expand the most with, or which customers you could sell multi products to. Those are the two fastest average selling price levers. Your price increases are going to give you a couple percent, couple points here and there. They're not a lever that's going to significantly impact, and you're not going to get a better term sheet because you got a price increase go. go through that. That's, that's not going to happen. Um, but then when you, when you touch over on conversion rates, uh, when I break those into those 3 pieces, when I talk about top of funnel, middle funnel, bottom funnel, when you're talking about industry class standard, um, best of class, uh, top 80% of companies, um, you're usually talking about your top of funnel that, that you need to talk to 20 or less people. Um, so 5% or more conversion is usually what you're talking about at your very, very top of funnel where you're going look at your entire total addressable market And you're just, you're trying to figure out who's going to talk to the salespeople right now. When you drop down into that selected ICP group and you're at 5%, you started with 100 and now you're down to 5. Okay, great. Now how many of those are actually going to move to the middle of the demo or the middle of the funnel? And that can be a demo, maybe a proof of value, maybe it's a 2-step, doesn't really matter, but industry standard, top class, 1 out of 1 out of 5, so 20 to 25%. So we started at 5, we're at demo, now we're at 1. Is that feasible? Yeah, go

ahead. Is that to close the client? Because that's what I thought that the rate was, but you're saying middle of the funnel, so it's—

Yeah, we're not quite there yet. Yeah. So if we started with 100 and then we went down to 5, then we had a 20% conversion rate on our demos to demo. Now we're down to 1%. And if best of class in companies, you're gonna have anywhere, if you've got proof of value, you might have a 75% to 60% closing rate. If you don't, you're probably gonna have best probably 30% to 35% to 25% closing rate. So it turns into about a quarter of a customer. So what that translates into is, okay, I need 400 leads in the top of the funnel to get a customer down at the bottom. And that's where you wanna kind of back into it and make sure, because as I went through this with a consultant, Most companies don't truly know what their conversion rates are as an aggregate. They might know what their conversion rates are per channel. They might know their best converting one, but when they really back in, they don't know the aggregate. And the easiest way to do that is to really just go backward and see in a given time period and use your sales cycle. Look at your closed won. How many leads came in during that same period? How many opportunities came in during that period? And then how many of those won? Those actually won. And those will give you some very, very hard numbers. And if your numbers are looking at, you know, 1% for your top of funnel, 10% for your middle of funnel, and 10% for your bottom of funnel, you're going to see that the amount of leads that you need at the very top of the funnel is going to be ridiculously high, much larger than what your total addressable market will be. That's conversion rates. So before I move on,

super, super illuminating, the breakdown in different parts of the funnel and by channel and all of that. How can folks best find a template or, or, or, or direction? You mentioned Googling. Uh, I, I— is this, is this also in, uh, the white paper that you put out?

I was actually gonna say, look, I would look at the white paper, uh, as well. The white paper walks through, um, this decently well, not, not in as much detail. Um, you're also always welcome to reach out. I'm— I love to jump on the calls and help, help to explain these things, and it's, uh, it's really a joy for me to do that. But I, um, I don't know if it's broken down exactly that way. And the reason, reason that being is it's different for every company. You know, you run into companies that have 8 stages in their sales cycle and 2 meetings before that and whatever it is. But I have never in my career ran into a particular situation in SaaS or otherwise that I wasn't able to break it down into a 3-stage conversion process.

Moving on to the next KPI. Yeah. So sales

cycle is one to touch on. And the reason I like to touch this one is there's a couple of quick wins on this, um, that if you've already got them in place, they're not quick, obviously. But if you're, if you're not making it easy for your client to pay, and what I mean by that is, can they digitally sign, digitally put in, put in their credit card number, uh, put in their bank account number, whatever it is, can they do all that online without your sales rep? Or do they, are you, are you still sending contracts back and forth and processing? Um, that's one area that you can quickly save yourself on an enterprise sales cycle. You can save yourself a couple of weeks. SMB, you can typically save yourself a couple of days. But the real point I wanna make with the sales cycle is it's important to make sure that when you have your sales process identified and laid out, that the stages correspond to actual milestones that occur in the sales process, that as those milestones occur, you're getting closer to the business actually closing. And I'll give you an example of both is a lot of times you'll see things that'll say like, maybe we'll give a demo, And then maybe we'll do a proof of value from that, and then we'll go into negotiation. And then sometimes you might see proposal, and then you might see close one. And then you get in there and you say, "Well, what's the difference between negotiation and proposal? And which one comes first? And does it always come first?" And maybe maybe those can be combined. And that's what you see a lot of times: you you start seeing that you really need to tie things to those milestones, to specific things that can happen in the sales process. Because the reason that's so important is once you have that engineered, you create timestamps so you don't have to use history reports in Salesforce, or or you create how however you replicate that in HubSpot, but timestamps in Salesforce. And that way you can measure in, uh, between each individual stage and any activity before that exactly how much time it took from that lead creation to the time that that lead maybe was converted, to the time that that contact was converted to an opportunity, to the time that opportunity moved across all of its stages and that stage was finally closed. Knowing all of those will let you break down the areas that seem like they're too long. You know, if you got a 200-day sales cycle, you want to know where the 100 days are sitting rather than, well, they're only 3 days here or 4 days here. When you figured that out, now it's time to examine and say, does it make sense to compress the sales cycle here without negatively impacting our prospect experience?

I always was curious how much of the sales cycle is just chasing around your prospect versus actual things you need to do.

Yeah, I

mean, in a SaaS product, we're not an on-prem Bring a big piece of, let's assume, equipment in, need to get heavy-duty people in to set it up. Like, it's a SaaS product.

Yeah. And that's— I was actually gonna push back and say, I don't know if, you know, the idea is to overcome those objections and figure out how to get it moving as quickly as possible. And that's why it's great when you have, you know, when you have one salesperson, it's really hard to nail these things and get good, a good sense of what the product is really going to do long-term. But when you have a sales team of 6 or 8 and you're processing a couple hundred prospects a month and you know, you're closing some deals, you start to see that these things will start averaging out. And to your point, let's say you've got a couple sales reps that are chasing a lot more than others. You should be able to look and go figure out, hey, what are you doing different that everyone else is not doing? And I think that's why it's so important to have those timestamps. Because not only will you get your average, you'll get from your team who's driving your average up versus who's bringing your average down, which should allow you to figure out what the feedback mechanism is between those people to see what's not being closed in the loop. Or is it luck of the draw? It typically is not luck of the draw. Typically it's a skillset.

Right. Or activities.

Yeah.

Were there any other KPIs you wanted to go through?

Yeah. So really the last one is ramp time. And the reason that I focus on ramp time is I think this one is just overlooked so much. And enablement, I am such a big proponent of having a full-time enablement person if you have even a small team of 3 or 4, maybe even 5 people. And the reason I say that is when you think about ramp time of an employee, if you can take ramp time and split it and improve it by 33% for a team of 4 people, you've not only paid for your enablement person, you've you've bettered your prospect experience at the same time. And I think that's why it's such a quick lever that I see is most of the time when I go into an org, it's either, you know, hey, we're using this company or we, they set up our LMS. You know, we're not gonna worry about having somebody full-time until we get to XYZ million, whatever it is. And yeah, there's no stake in the ground. I've heard all kinds of different numbers, but the real, the point of what I'm saying is if your ramp time is, if you don't have a full-time enablement person, you have a team of 4 to 5 people and you have a ramp time that is longer than 3 months, You have a massive opportunity in your annual operating plan to increase your productivity and have it immediately pay for itself. I say immediately, within a quarter or 2, pay for itself.

Incredible. Now, these KPIs, how do we keep it front and center for your whole organization?

So for me, I build an annual operating plan. I'm going through this process with my company now, and we start socializing that and be ready What I can tell, the things that I like to tell operations folks as they're coming through their careers is, be ready as you're building these complex models that you have to present the model sometimes 4 or 5 different ways. You might have to build a model in Excel and then go build a slide deck and then go write an executive summary. And I can tell you, that's typically what I have to go through is I have to go through an executive summary, I have to go through a full calculable model, and then I put together slides. And then the slides typically have different versions. This is the version we're gonna show to sales. This is the version we're gonna show to marketing. And when I say show, I don't mean hide things from the other one. The deck is the same. What you're doing is you're making some of the slides transparent. So if the team says, well, how is sales gonna do it? You just pop over to the sales slide, but you're not making everybody sit through portions that aren't important to them and things that they can't affect. So I think to answer your question is make sure that what's important to them is front and center by slide deck, by executive summary, and overall by expectations. And making sure that's aligned. If that's not, then you know it's kind of hard to keep these front and center.

What what are some of the biggest challenges you have in your new role that's keeping you up at night? Is it is it creating this plan? Is it socializing it? Is it something completely else?

Um, yes, I I wouldn't say it's specific to the company I'm at now at all. What I would but I would say that it's typical. critical is the change management is the hardest piece, because people truly getting behind a sound revenue model, all speaking the same language, is not an easy thing to do. And it is somewhat of a challenge in all of the orgs that I've ever worked in, in the sense that what it does is there's nobody that's disconnected from revenue in a true revenue model, a sound revenue model. And what I mean they're all held accountable. So, if you have $0 in a particular area, nobody's getting credit. And I've had that happen in many companies that I've worked with in the past and that I've consulted with. And it's hard sometimes that when you're going in and you're really trying hard, you're doing all the right things, but you're not being successful, that's what— it's hard to try to socialize and get those things moving. But at the same time, I think it's just part of growing as a SaaS business. It's part of being able to pivot, understanding different nuances and the way, because technology and the markets change so fast. I think that's why it's so hard for everybody to stay on the same page all the time. So it's really keeping everyone on the same page and making sure that social, everything's socialized in a way that every, that the level of comfort is at a place that everybody feels okay about it.

What's a piece of advice you could offer for somebody else going through the same thing?

For me, what I would always say is spend the time socializing. What I always think is, you will be able to execute so much faster if you socialize first and make sure that you get a general okay from everybody. And the reason I left that somewhat nebulous is I didn't want to use the word consensus because that is not what transformational leaders do. Do not need consensus to move forward because commonly, consensus is going to be the lowest common denominator that everybody accepts. That's not how you change organizations. So, going in and, I guess, making sure that expectation is there and indexing on those relationships is probably the most important thing when you're making a transformational pivot inside of a company. If you don't, what ends up happening is you may have the executive sponsorship for that project, but you'll burn a lot of your political capital up, and you'll find it hard to continually execute over and over again. So, that's why my advice always is spend the extra time the people. Make sure that everyone is as comfortable as they possibly can be as they move forward. And make yourself available, you know, and be ready to be asked hard questions. I could tell you, I create office hours, and I kind of feel like sometimes when I go to office hours, I'm like holding up a target at myself. But that's what it takes sometimes to really say, no, I'm here to be asked the hard questions and answer those. And it does. I think it helps build credibility because when I don't know the answer, I say, I don't know. I've only been here this amount of time. Let me go figure this out. But it allows me to make that connection and make sure that everyone understands I'm not here just to change the processes and the systems. I'm here to develop relationships with the people, because without that, the change management goes nowhere.

What excites you the most about the future?

I'd say the announcement and the focus on sound revenue models. I've been preaching this since I started my corporate career in my 30s, um, and I just turned 40. So I, I would say to me, it's—

What were you doing before that in your 20s?

I was running restaurants where you had to be profitable or you went out of business. So it was, it was, you know, we ran off of very, very thin, thin margins in the restaurant business. You know, if we were, if we were dropping 7 to 8 points down to the bottom line, we were great. So the whole notion of a, you know, an 80% gross margin was extremely exciting to me. So I, I think that watching companies be able to grow the way that they are and multiples be more aligned with long-term value rather than bubbles, as we're calling them, um, that's extremely exciting because it, it allows the things that I'm very passionate about, that you could see that I'm passionate about, it makes them important. And we like talking about the things we're— that we feel we're passionate about. And, and, and I guess, you know, having been in and around the area, I was, I was just chatting with a friend yesterday, it kind of feels like we're in the right place at the right time. Because the entire industry is very much looking at this focus on how do you remain profitable, how do you create sound revenue models? And it's not just growth at all costs, dead bodies laying everywhere, don't worry about free cash flow. It really is what does it cost you to get a customer? How are you building this and how are you scaling it appropriately?

It's a trying time right now, and it's a time with opportunity laced in the difficulty. You know, every downturn or every negative in any space provides opportunity to correct it. So like, this is, this is pretty cool. Now, okay, you let out a little bit about your restaurant background. You know, we— it was awesome learning from you. I want to learn a bit about you. Who is David Maxey? Restaurant superhero in his 20s? What else?

So I mean, I— so I was I would say I started— I did start my career in the restaurant business. I guess a little bit of background. I was going through college and I was the only person in my family to go to college. And it was one of those things I really didn't know what to do. My dad was in construction and selling doors and windows, and that wasn't anything I was interested in. So I liked computers and did a lot of computer work and worked at a computer shop going through high school and in college, but somehow floated into the restaurant business. And to be quite honest, a lot of it had to do with just that lifestyle and being in your 20s, you know, partying in restaurants and enjoying food and all that. It was very attractive at the time. And so I was working at one and they asked me to become a manager. And I went down that path. And I will tell you that the interesting part about that is I had this FOMO in my early 30s that I was like, what did I do in my 20s? How did I— I'm like 10 years behind all my peers as I'm getting into the corporate America and corporate America. And, you know, what, what did I do? How, how have I done this? I can't believe I took this fork in the road. And now, 10 years later, having spent more than a decade now in corporate America and, and served in various leadership roles, I would actually say I'm more nostalgic and appreciative of it now. And I'll tell you specifically why I mean that is what the restaurant business does, a couple things for you. The first thing it does is if you mistreat your employees in the restaurant business, they will steal from you. And it's just a natural part of human nature. I'm not calling it good, bad, or indifferent. It's just part of it. Uh, and they train you—

That's a bit bad.

It is, it is. But, and, and it's not everybody. It's not everybody. The whole point is any restaurant, you're all— if you have— if you mistreat someone enough, you make them bitter enough, they will always take from you. And the reason that's so important and the reason that it sounds so callous, but let me tell you why it's important.

And they won't leave. They'll stay and from you, because if you mistreat them in SaaS, they'll leave.

Yeah, that's— yeah, that's, that's exactly right. And what the effect that has in the restaurant business is that little bit, because our margins were so thin, a very small bit of theft would turn around and we, we wouldn't hit our bonuses. So the way that we were trained to manage people was to manage people with dignity, respect, a good approach. Don't raise your voice, no yelling, all of these things that you've heard about, these horror stories in these SaaS companies, I felt so lucky because I went through the school of hard knocks where I was told, you don't ever act that way at all. And you do that because financially it's for the better. But really the reason the restaurant business did that is if you didn't have the respect of the people around you enough, then your whole restaurant didn't work really well. And I would say I took that into corporate where I, I don't mistreat people. I, I don't jump up and down. You're never gonna find an employee that, that had any kind of issue with me like that. And, and I think the restaurant business really, it dives into the people component. Nothing in your restaurant will be sold if your people aren't happy. aren't happy and they're not, they're not moving along. So I, looking back on that, I, I'd say that I'm really, really fortunate in my experience to just to be exposed to that from, from a leadership standpoint overall. But the other piece I would say is operationally and technically, a restaurant to me is very much— I, I can turn, you know, a to-go station, a, a kitchen, your, your sales staff and your host staff will pre-sales, sales, marketing, customer success. It's a closed-loop system and it teaches you how that closed-loop system works. It teaches you how each individual piece, you know, when the host misquotes somebody, and they're waiting for 45 minutes more. Now you're gonna have to give away an appetizer that's gonna break into your profitability. It's the same thing as when you turn around and you mess up your ICP and you end up burning a prospect entirely and that person doesn't get into the pipeline. Understanding those intricacies of those operations started in the restaurant business for me. And so I felt really fortunate. And then when I finally got into corporate, I was extraordinarily fortunate to have some very strong mentors that believed in me and saw things I didn't see at the time and was able to put me in leadership positions where I was able to exercise some of these skills. things.

That's so cool. I, I'm a strong believer that everything happens for a reason. I, I worked in logistics for 7 years personally.

Tough business.

Talk about slim margins. I worked for a company called FedEx. They, they reported, uh, 10% operating margins, and you know they were beefing that number up.

Yeah,

like, like, if that's what they're reporting, it's like, whoa. Hey, There's a lot in there, and that's why I you know selling there. I wanted to go into something with bigger margins so I can make more money. But you know the funny thing is before that time, I worked for a startup called seamless.com, which is the food ordering space. I don't know if you're familiar. They were acquired twice. I was the first fifty employee, but. Needed to go on my journey for validation. And at the time thought that medical sales was the path for me and that this technology mumbo jumbo in 2005 wouldn't pay as much and wouldn't be as viable of a career path. Boy, was I thinking incorrectly. But, you know, we all have, we all have our journeys and A lot more volatile of a path, I will say, this technology thing.

Well, it's interesting because I think both of us having come from lower margin businesses and then moving into higher margin businesses, and they touched on this in SaaStr, is I think part of the reason we all struggle with this in our industry is because our margins are so high, we have so much room to mess up. But when you go into the restaurant business and the logistics business, if you mess up just a little bit, you can go out of business. Whereas, you know, SaaS, you can raise a little bit more money, maybe extend your runway. You've got a vision, you could, and they made that very clear. I thought that was a very— I hadn't thought of it that way, um, so I don't want to steal that. It's not my thought. I heard about it at SaaStr, but I thought it was an interesting way to look at the industries that you, you want to gravitate towards a high margin, but understand that you're still going to have this level of people that understand how to squeeze the most out of that high margin business versus those that squeeze the least. And which side do you want to be on?

I— yeah, and I will say this, um, I just realized a commonality. I don't know if this holds true in, in 10 out of 10 cases, but it does in our 2 out of 2. In the lower margin businesses, there's a lot more relationship-driven everything. Selling, certainly. Certainly selling, customer successing, et cetera. Like out of control closeness where everybody is servicing And certainly the person that's selling is servicing. The waiter, or assuming a restaurant, is also doing the CS. It's not they drop it and then somebody else comes in, right?

Exactly. Yeah.

Um, if that person— if that is the case, that's the GM that comes in, uh, to help. But like, they don't want to unless something goes awry. So it's, it's super interesting, the lower margin businesses. And then you, you have agencies, you have other things. I wonder if there's something there that SaaS could learn.

I definitely— now that I've kind of framed that, I would say that's probably part of my appreciation for the restaurant business was it is kind of the hard knocks of, you know, you gotta run a tight operation. So I would definitely say that a move towards that and an examination on how to produce the most from what you have without as much pretending you don't have as much wiggle room as we have, I think would serve us all better.

What would you teach the young kids today?

Oh, don't give up on math, statistics, and Excel. As much as, you know, the, the thing that I would definitely, definitely say all the time is, uh, understand where those numbers come from and, and really understand the math behind it. I, I kind of get picked on because I'm the, I'm the person at the table that when the check comes, they're like, David, what's 20%? You know, but it, it, it's the useful— it really is is incredibly useful to be able to apply those mathematical concepts. And I don't mean to jump on a mathematical soapbox, but I can tell you in my career, it has served me better than just about any other skill that I've had is having a very, very good foundation in mathematics. And no, I did not minor in it, but I took all the way up to calculus in high school and took calculus in college and did quite well. So it's one of those things that I would say if you're ever trying to get better and if you're not a person, don't try to be. Uh, you know, some people are just not, and, and that's okay. Um, you know, you can lean on analysts for those kinds of things. But if math is one of those things that you tend to be, uh, okay at and you can sharpen that, that skill, I would tell you go down that path because it, uh, provide returns in that you'll be able to calculate once you learn it.

I love that. How, how could people get in touch with you, David?

Uh, you can look, uh, Look for me on LinkedIn, or if you Google David Maxey Rev Genius, you'll see the you'll see all the articles that that that we partnered up to write. So there's there's plenty of ways. I'm on the Rev Genius Slack community as well, or you can reach me at my email at maxeymavidm@gmail.com.

David, thank you so much for coming on today.

I really appreciate the time, Jared. Love the questions, and and really really thank you so much for what you do for the community. We, uh, I've met so many people and have had so many business opportunities come up, uh, just because the community that you put together. So hats off to you for, for putting together such a great community, and thank you for having

me. Uh, that means the world to me. And, uh, if, if you all loved what you heard today, um, we're releasing a white paper, uh, featuring David's work, um, and his thoughts. It's super amazing. Uh, it's available for free, which incredible. And that's, that's David's contribution to the community. And really, really excited about it. Tell somebody about this podcast if you liked it. Come back next week as well. This has been another episode of Revenue Today. And thank you so much, David Maxey, for joining us.

Thanks for having me, Jared. I appreciate it.

Thank you, friends, for joining me. That was another great episode of Revenue Today. If you're looking to listen to more episodes or for the show notes, go to revgenius.com. For all my friends in the Rev Genius community, it was awesome to spend this time with you. Please DM me any feedback or ideas for future podcasts in our Slack channel or on LinkedIn. If you're not in Rev Genius, join us. It's revgenius.com. It's free and it's fast to join and really for for all levels of revenue professionals. For senior leaders, we just launched a private community just for you called RevRoom. We know it gets lonely out there and we've built a tight-knit group of senior leaders collaborating on the future of B2B go-to-market. Looking forward to seeing you all there.