Advice Every SaaS Founder Needs to Know to Scale to $100m with Sam Blond and Jason Lemkin

All right, let me bring Sam up. We'll do more informal. I want to ask Sam just a few questions. So, Sam, thanks for coming back. If who was here in 2022 when Sam was here? Anyone remember? So Sam was here in 2022. He gave a great presentation. He's done stuff with Saster since the first saster annual in 2015 and. But back then he was on message. He was Syrup Rex. He could only say 95% of the truth. He still had to hold back a little bit. So we've got him now. But he's just finished up an incredible 18 month stint at Founders Fund across, I guess here. Where is the Founder's Fund office? Somewhere around here, right?

Block and a half.

A block and a half wood. Miami. So I mostly want what I want to open it up for questions. I just got a couple questions I want to talk about Sam. But even just since we last got together, the world of venture, the world of sales, the worlds of efficiency that Adam I touched on, it's changed so much. So I want to talk a little bit, queue up the conversation with Sam about how the world's changed and then feel free to ask your questions on scaling revenue or anything else. But maybe the first one, I want to do the second two of three on sales, but the first one on learning from Founders Fund help folks understand now that you saw it from the other side, what's the real bar today to get funded? What's it like in general? And if you're not AI, what's the bar for? Sure.

First, thank you for having me. Thanks and thank you all for coming. Okay, so when I joined Founders Fund, it was late 2022, mid late 2022, and we were coming off of an environment where startup funding was as, as fruitful as it had ever been. 2021, first half of 2022 and then come like my personal experience from I joined echoes that in 2008, but really through the 2010s, my experience as an employee at a tech company and I was spoiled in that the tech companies that I worked for were able to raise money from exceptional VCs and I joined the company at a stage where they had already realized some of this success and continued realizing some of this success. And then I see on LinkedIn all of these posts about we raised our series A from Founders Fund or Sequoia. And so I entered this world of VC now almost two years ago, just thinking this is how the world works.

Everyone's like that.

And it's not what I found out relatively quickly. And some of this was influenced by the macro. The environment of 2021 and early 2022 was certainly different than the last 18 months. But I think regardless, and this is true at Founders Fund and I suspect it's true at most firms the bar is really high, higher than I could have imagined. Both in terms of the like founder quality bar which is a little bit subjective and then objective depending on the stage of the business, the growth metrics, the efficiency metrics and then there are these like nuances that prevent deals from happening that I wasn't super aware of. You mentioned AI. Founders Fund didn't really do AI. So even if you were AI the last 18 months it was like a no go regardless of the success of the business. We didn't love the categories of like health tech and edtech. And so you could be growing 5x year on year starting at 2 million, scaling to 10 and there's just pushback. Gosh, our track record in health tech is not great and so we're going to stay away from that. And so it's not, it's not even one out of ten companies that we speak with that we are really excited about investing in. It's 1 out of 100 in the filter to even get into that 100 is pretty high. So all learnings, some macro driven but probably happened when times were good as well.

No, it's interesting. It's a good advice for folks. Not only is the bar higher than folks realize, especially today to get funded, it's a reminder to folks that even bigger funds. Founders Fund has billions. Even bigger funds have flavors. They have flavors and for example when I caught up with Byron Dieter most recently from Bessemer, they're managing 10 or 20 million. They've. Byron's done a ton of the best ask companies if you don't know, he'll only do AI. There's exceptions of course, but if you're not AI first there's no interest. And we could talk about why founders want us different flavors. They don't. They've had good health care, they don't want to do healthcare. Right. They've done Palantir and Andreal or however you pronounce it and SpaceX. SpaceX. And so people, you gotta meet with more people because of flavors and you especially have to meet with more people if you're not in a hot category. Right. And then I'll tell you, you might not have heard this story, but there was a story around when I started investing a little after I started but Must probably was around 2015 or so. VCs have their LP meetings where they bring their own investors together. They have different names. And Peter Thiel who founded Founders Fund got up and apparently said something. This might be slightly apocryphal, but I think like Adam's Dropbox story, it's probably 80% true. And he got up and said our goal is a hundred billion dollar company per fund. Per fund. And jaws dropped in the venture community. But he had been the first investor in Facebook which is worth over a trillion. He had co founded Palantir, which is now worth. It wasn't worth a hundred billion, but it's worth at the edge of 100 billion. And his point was tech is so big that we can productize every year. There should be $100 billion company and that's our job and nothing else matters. And it sounded crazy in 2015. It sounded pressy. Peter obviously is a controversial guy, but I don't think anyone says he's not smart. So he was probably eight or ten years ahead of the. But it's still hard today. But realize there are folks who are looking for a billion isn't enough. It turns out a bill. You don't realize until you're on the other side of the table that selling your company for a billion is a frigging dream. I didn't get there as a founder, I may never get there. But even that unless if a fund is even mid size, it's not enough. Right? It's not enough. Right.

What you're describing is, as Peter described, the power law venture where there can be a series A at an exceptional company that is raising money at 30 to 40 million dollars, which I think is probably the middle of the road Series A right now. And a billion dollar outcome for that company, it. It actually doesn't move the needle for the fund. And that's a crazy irr and one would argue an exceptional investment. But unless you can make the argument that it's going to return the fundamental, it's not that interesting. And so that makes the bar that.

Much higher, I think. And then let's move and talk about some of the things I think just for folks in SaaS, especially B2B what got confusing in 2021 is things blew up so much that the truth is in venture the bar got lowered. And what I mean by that, it's not like lower growth was okay, it wasn't. But all of a sudden it seemed like There could be 20 payroll companies and 40 analytics companies all at 10 million ARR are going 15% a month growing. There was so much budget going to Adam's point he doesn't even know all the SaaS companies they have at Vimeo. There's so much budget flowed into B2B that it seemed like there could be a thousand unicorns it actually made. It's crazy. We can all laugh about the that 800 of the thousand unicorns are junk. They're junkorns. It's going to turn true but it doesn't mean it didn't make sense with the way we were deploying money in 2021. And I think in SaaS and B2B we're going to have several years of whiplash from this. We're it's still going to be confusing where the bar is related one and I do want to save time for questions. This one's going to be like slightly critical, only a little bit but not literally critical. But a lot of the advice that you give that other folks give to some extent that I give it is based on all I'm working at a lot of hits it and I, I maybe it's not maybe I said critical I shocked a little bit too much. But you have had a bit of hits and even some of the stuff you did that was less successful was still venture backed in high growth. Right. You still worked at a lot of companies that grew 5x in one year and you know at least at 20 or 30 or 40, 50 million to work with. And so I think it seemed like in 2021 that advice worked for everybody. I think today it works for view. Right. So what have you learned? What works less well from the classic playbook in 2024 that maybe we should walk back a little bit or modify.

A couple things come to mind. One, one is there is almost just definitionally less money to spend today as you said. And then the second thing is even if you have the money there is so much focus on efficiency metrics in addition to the growth that didn't necessarily exist in 2021. So even if you have the money you might not be encouraged to spend it as quickly as you once were. And I would say what I've seen certainly in 2021 and maybe 2022 is that the money was a net negative and what the money led go to market organizations to do was twofold and I'll maybe take it like a marketing and a sales angle. I think on the marketing side when there was so much money and the environment that you described which is almost like encouragement to spend the Money to funnel growth people. I think you described it as got lazy and I think woods default to let's increase our paid online ad spend and just turn that dial up and we spend more money and equivalence to that traditional marketing channels. Let's go spend this much money at the booth at the sponsorship. We don't have time to like really make sure that we knock it out of the park at this event, but we want a presence there. So let's spend a few hundred grand on the booth. And that, that of course is like a bad decision. But the real negative and why I think it's a net negative is because it prevented people from really being creative. I think it, it, it was too easy to spend money and check the box that you were doing your job and it prevented people from doing really creative campaigns that I think have the outsized returns compared to the traditional marketing channels that you can almost do in your sleep. On the sales side, the equivalent of that is people hired way too much. And I've talked about this and so if you've heard this exact saying before, I'll just reinforce it. More salespeople does not equal more sales. And so in 2021, 2022 and we've seen this manifest through layoffs over the last 18 months, people just, they it's the marketing equivalent. We need more salespeople because we need to grow faster. So let's hire more salespeople. And they were oftentimes doing so in decreasing spending environments. Companies weren't buying as often, so conversion rates were going down. Companies weren't interested in buying as often, so demand was going down. And so more salespeople are being deployed into a diminishing demand gen environment. And that's the exact opposite thing that you should do. And so I think this doesn't exactly answer the question, but maybe it gets us to how, how I would approach it in today's environment. And I think it's actually not that different whether you have a lot of venture cash or not. There are some differences. But I do think that we need to go back to an environment where startups are hard, people need to be really scrappy and it probably makes sense to do the things like online paid advertising, but do them in a way where you are differentiated and you're coming up with really creative ideas and you hold people accountable in the sales organization to numbers that make sense for the business and you don't scale either of those channels or people until you, you are happy with the efficiency of those people and processes.

But let's let's just push on it for a minute. But this headcount thing, it's confusing. Let's imagine you're doing pretty well. Let's imagine you're going from 10 to 20 this year is the goal. Okay. And you've got a decent chance of at least going 10 to 18 and an outside chance of beating 20. Don't you have to at least double your sales headcount?

I, I don't think it is a one size fits all answer. I think. And so because of that, I'm trying to think of a, a way to articulate something that is, is valuable without like the nuance of a very specific company.

Let's imagine I went from three to 10 last year. Pretty good. Right. So I added seven in bookings. I probably needed seven reps to do, to add seven. Right. Even if I'm efficient, I probably needed seven.

Yeah. Okay. So I think I've come up with something that might be actually helpful. So when you, whether it's 10 to 10 to 20 or 2 to 5, irregardless of the sort of scale of your business, if you are growing something or some things are working and what I see people oftentimes doing when things are working is try and find other things to work. And it like shifts focus away from the things that are actually working. And the right thing to do is like double, triple, quadruple down on the things that are actually working for the business. And then with the headcount specific example, the thing that I would just make sure of if the constraint to growing faster is that you do not have enough salespeople to work the demand that exists for your business, then you should absolutely hire more salespeople. I think if you are scaling really efficiently and quickly and you have sales reps that are well fed, but not at the point of breaking. I, I, I, I, I actually don't know that I would add more salespeople, stay hungry. Yes. Make more money. And, and look, you can even, you can even present it to the sales team. You can say something like, we've got a couple options. We can continue hiring more salespeople and keep your quota the same that it is. We can increase your quota a little bit and not hire anybody, but we think you'll blow it out in that example and make more money. And by just thought exercises like that can be valuable.

All right, question then, and then a follow up and then the question, so 2020 into 2022. I think what you're saying is we hired a lot of people well ahead of being clear. We needed that many sales folks. We didn't know that we had the full engine to feed them, but it didn't matter because we had so much capital, we hired so many sales, marketing, other resources ahead of actually having the demand to feed them.

We made decisions based on a spreadsheet. We had historical data on rep effectiveness in 2020 and 2021, and Finance plugged the number going from 10 reps to 14 reps into the spreadsheet. And the spreadsheet said this was what was going to happen when we go from 10 to 14 reps.

I see.

And it actually went. It not only didn't go to 14, it regressed from the productivity of 10 down to 5 or 6. Both because of the macro environment and also the. The dynamics of spreading the limited demand that we did have to newer, less successful reps. Now we're laying off a bunch of people on the team and.

Okay, so follow up for folks, for founders here. We were trained a certain way in 2020, 21, 22. Right. We were. We learned that's a lot of years. It wasn't three months. It was a long time. When you go to hire a head of sales or head of demand or head of marketing and they need five or 10 people to get going because that's how they were trained. And they say they don't, but they do. How do we handle this situation in 2024? Because we don't have budget for them to hire 10 AES and a whole SDR team and a whole ops team or five people on the marketing team on day one. But it's hard to get people to see that. Do we give up on those people? Do we give them a shot? Is it a whole. In my term, is it a whole lost generation of folks?

It's a smart question and I'll give my best answer. And then I'm actually curious from your seat as a CEO at Echo Sign, what you would have done, because they'll probably play into each other a little bit. I remember I don't know which Saster annual it was, but it was a Saster annual where Parker and I were.

On stage first one, 2015.

Okay. We were ads, benefits, and we were crushing it. And we had a team of 20 SDRs, something like that, which good size SDR team, but not massive. And I would. I said something and I was wrong. I said, at this point, we have this machine in place where we plug an SDR into the system and we know the productivity that we're going to get out of this, that sdr. And it's effectively like sales math from there. How many SDRs do we need to fill the calendars of AES? And then we can hire that AE number as well. And maybe there's slight diminishing returns as the team gets along. That was wrong. So hopefully I'm not giving incorrect advice as we sit here today. What comes to mind is leaders, especially leaders that are less experienced. I was a first time VP of Sales in 2015 at Zenefits and I was biased to hiring and building a team and probably less focused on the analytical like revenue operations side of things at the time. And so the thing that comes to mind, and this is why I'm curious for your answer for people that are in the founder seat today, I do think that it is your responsibility to make the ultimate decision around this and of course like explain why and then clearly define what needs to happen. And I'll give one more tactical example. I do tend to talk a lot but. Well, I'll give one more tactical example of what I would do here. I would give specific outcomes that need to happen in order to continue scaling the team and then when those outcomes are achieved, you, you, you get the headcount that you're requesting. Maybe I won't give the illustration because it, the, the outcome is basically what I just described.

Yeah, no, it's a good one. I, I'll just add one and then please come come forward with some questions. I've decided. I feel like the world is. I have written about this a little bit more on LinkedIn, on Saster. I feel like the world is just in flux now. We haven't figured out what we're all going to be like after 2020. 21, 22, 23. The distributed workforce has radically changed what people do. I did a survey on LinkedIn a couple months ago and asked like over 2,000 sales professionals. The majority said they're working more than one job. The majority, it wasn't possible in 2019 because it was like work to do two jobs at your cube or your desk. You could do it, but Sam or Parker might see you, like you might get in trouble. The majority of folks are working multiple jobs at the same time. And so that genie isn't going to go into the bottle. Right. And people like that. And so that sounds like a tangent, but this is what I've learned for recruiting the first executives today. The VP of Sales, VP of Marketing, even VP of cs, VP of Product, they gotta carry a bag today for real. They Got to. They got to. And it doesn't. It's. If they don't, they never will. They'll never. They'll. We change too much. They needed too much of a team. They'll never learn the product. And I would say whether even if for our little team or portfolio companies, I would say 80% of candidates say they'll do that. But by the end, they quit the interview process. At the very end, they're like, are you sure you really will go visit customers? You really will sell yourself. You really will. No, you're right, Jason. I don't want to do that. I just want to manage people. Everyone wants to manage people. And I want to be a leader. I want to work on process. But the company's a 2 million error. I'm good at processing and too many founders. And we're also good at talking about process in 2024. We've watched Sam's talk. So anyhow, that's my only cheat code today, is you gotta find the quirky people that want to roll up their sleeves and carry a bag in sales, marketing. Customer that will visit, a customer that will do this. I know it's sad. I feel like 80% of folks may not be willing to do it anymore. And I don't judge them. We've all changed.

We're.

This is probably most of the people here couldn't even live in Miami before 2020. But we gotta change with how the game's changed. Right? And it's just a lot of people don't want to carry a bag. And it's tough. It's tough in sales. Right.

It all resonates. I think I agree. In 90% of cases for startups, that's a smart thing to do. And at a minimum, whether or not they actually have a quota as a leader, at a minimum, they are doing the same activities as the sales rep. As they onboard, they are closing deals, they are visiting customers and doing the sort of like scrappy activities.

All right, we can take a few questions.

Question for Sam, you mentioned earlier. Give the sales team a choice between bringing on more reps and increasing everyone's targets or. And then keeping the same headcount but having a slight increase in the targets. Question then is, how do you do the fire one, feed one if you're not increasing headcount, how do you keep them hungry?

I think one thing comes to mind. It's just like an overarching theme. And then I'll answer the question directly around how do you keep people motivated on the overarching theme, a different way of approaching what I just described. And maybe there's this. Maybe there's this, like, thought exercise that is, if we kept the same team and kept them motivated, would we close more revenue than if we continue building the team? Because the environment right now is the team is hitting quota, but the team isn't. I'm looking at calendars, they aren't working 50 hours a week, they're working closer to 25 or 30. And so there is additional capacity on the existing team. Now, like the economics make sense, the efficiency numbers are there. And so I think whether or not you present the team with the question is an interesting thought. You may or may not decide to do that. But I think the way that I would approach the decision that may be a mandate versus a question to the team is what do we believe will generate the most revenue for the business? Do we believe keeping the existing team, keeping them motivated, increasing their quotas, keeping the efficiency metrics where they are, is that going to generate more revenue as we look out through the remainder of 2024? Or do we believe. It's a bit subjective, but do we believe that bringing in new salespeople, even though our salespeople aren't at, like, full capacity from an hour's standpoint, what is this like? What is my intuition on this? Which one is going to land us More revenue in 2024? You may or may not decide to ask the team that. It could be a collaborative decision. And then the thing that comes to mind on keeping people motivated, I think my experience here has been there's this, like, virtuous cycle that if you can put in place, is like magic. And I don't know exactly where it starts, but, because it's a bit of a flywheel. But you, you create an environment where there is enough demand to feed the sales team. And what that means is the team is right sized. And from there, you have sales reps that are hitting quota in making money. Two sides of the same coin. These sales reps that are hitting quota and making money, they are motivated because they are hitting quota and making money. And what they then are motivated to do is generate more demand. You create an environment where, Jason, I have talked a little bit about this, but you create an environment where you encourage hustling, you encourage reps to source their own deals. And if they want to be at the top of the leaderboard, they need to do that. And so then again, virtuous cycle that leads to more demand. More demand leads to people making a lot of Money making a lot of money leads to people being motivated, being motivated, hustling, generating more demand and I think doing everything that you can to put that virtuous cycle in place. And to your point, one way of doing it is you will find out pretty quickly the people that are jumping on that flywheel and you'll find out the people who aren't and you should replace them.

Hi, what about moving towards product led growth and how do you balance your team while you're moving to product LED growth?

I will answer a variant of what you're asking based on the conversation we had I think and I teased this with Adam earlier in the conversation, I think folk folks that have been doing this a long time, me, Sam, Adam have been doing some type of self serve friends premium long tail since the beginning. We're passionate about it. Somehow this got corrupted the last four or five years as a way to do it all on the cheap. I can't tell you how many startups I've met with GROSS lows at 10 million, 14 million, 20 million and they come to the board and we've got the answer. We figured it out Sam. Product led growth. Product LED growth. We've read about it, we've heard about it. We, we can do everything with two reps and a free trial button. Our product doesn't actually work as a free trial but one of our engineers said he would work on it this weekend but all problems are solved because we've sales team can't close anything. Okay, it sounds silly but I can't tell you how many conversations I've observed with and listen, Hail Marys are a terrible idea for startups but they're even worse when they're not grounded in reality. And the idea that you can take a sales LED motion especially that has stalled and that product led solves your problems. If your sales led motion slows down I will tell you the simple answer and this is so important. You have fallen out of product market fit you have. It happens all the time. And what happened and I'll tell you one of the things I got wrong. Sam talked about too much capacity plan in the early days I didn't think this vitamin versus painkiller, I didn't think it was true. Okay because every app I grew up with in my generation once it hit a certain level of scale, it just kept going. All of our generation us box, Bill, all they just once they there was some we grew up with that never hit escape philosophy but once they did, they all became, I don't know what's the good one? A vitamin or a painkiller? The painkiller is a good one.

You want to be the painkiller.

I remember what Box was like when it launched. It was a vitamin, but it became a pain. It's a billion. It had a billion in revenue. They all became. But it turned out it's not completely true. And Adam just said he could probably cut 50100 SaaS apps at Vimeo. He doesn't think it would make a difference to the CEO. And I bet a lot of folks think those are mission critical apps on the other side, right? So my rambling point is if your growth is declined, you're one of those bubble apps that Vimeo doesn't need. Change it. Get your team together and say frack, we're not as important as we thought we were. We're just not that important. We're not mission. We're not. We're more than a nice to have because there's too many nice to have. But we're not. This business will die. We're not an erp. We're not mission critical. And change it. Turn into and if penetration testing isn't enough. I'm not saying it isn't. Do more like turn it into a. Turn our apps into mission critical. However it is because we don't need any more apps. We don't need one more app. We can run payroll and we can use. We can run our video and we can do like the world will not end if we don't buy your app. And that's my kick in the ass annoying thing and I'll shut up is see if you really have product marketing and if you really love plg add. Add it because you love. You want to do the long tail but don't look for a Hail Mary. There is no Hail Mary there. Right? I'll say one more thing and then we can move on. Another question. Not only is it this this I throw my head and my hands at the board meeting kind of thing as the magic solution. Here's the other thing that I think Adam may nod his head. If you don't architect around this in the beginning, it's almost impossible to add it later. Like the the a sales led. An enterprise motion has many benefits over a low end margin. The NRR is higher. You don't. But the thing is you can skip a lot of steps. You can do manual onboarding, you can do manual configuration. You can hire consultants and services and deployment plg. The product has to be so much better. It has to work in one, it has to be magical. And I, I don't think Salesforce itself is that magical. It's done pretty good. It's at 3 billion. It's it. Salesforce every couple of years comes out with a PLG product at the low end. 11 times in our history, Adam and I, there's a new self service version of Salesforce that I don't think has ever been more than half a percent of revenue because it's not their DNA. Right. And so just if you're gonna do it early and do it out of profound passion because it's impossible to bolt on later, it's impossible to bolt on, you know, literally. But I can't. We could go through all the public companies and think who's bolted on a magical cheap self serve edition that's been 20% or more revenue. It's probably zero. Right. So start now. It's not too late.

But yeah, the big ones that come to mind, Atlassian, who started his product led growth, Zapier, same idea. Howard at Rome really focused on on product led growth. And I can't think of one that is the inverse where they then incorporated enterprise sales on top of the product led motion that built the foundation for what the business had reached some certain scale.

Question for both of you. So when you're training SDRs, would you recommend them to follow more of a bottom up approach or a top down approach? And what factors would you base that on?

When you say bottom up approach, do you mean reaching out to the decision maker or reaching out to a user of the product? What do you mean by bottoms up or top down?

Exactly. Like whether you're reaching out to a C level employee or bottom line employee.

I think initially you follow your intuition around who the sort of decision maker buyer highest likelihood to convert a deal within a business is. I'll give a tactical example and then I'll describe what happens over time as the business matures. When we started at Brex, we were a financial tool. For smaller companies we would go after founders because they didn't have finance people just yet. And for more mid market companies we could be purchased by folks in finance or accounting and we generally started with the higher level of title. I think the qualification was you actually can't schedule a demo with anybody less than director. And generally speaking we prefer like a CFO over a VP of finance over a director of finance. Now that that calculus may change if the director of finance is the actual buyer of your product. And then the other thing that we would do is we would go after people in accounting. We would go after controllers, chief accounting officers, these different Personas and a 100 person startup, there might be 10 people that we could schedule a meeting with. So early you cast a wide net, I think you go after the person that your intuition is who you have the highest likelihood of closing a deal with. And then over time you start to get a lot of data and you track conversion rates by Persona and that then leads you to the sort of strategy of who are we initially targeting and prioritizing now it doesn't mean that at that 100 person company you only go after the one person that has the highest likelihood of converting. It just means you really start there as you start to have that feedback loop from historical data.

One thing I'll add that I took me a while to realize is I think that's a great story is not listen. Any SDR two months out of college can send a cadence right on their owner with an AI tool now, but not that many have the maturity to really reach out to power, to really know. Mona's nodding with me because she can do it. To know how to target a CEO and actually say what? Like CEOs don't have the time. But CEOs read like every email. Every email. And it's just they don't. Howard's nodding is that even when he was running YEX 22 quarters is a public he didn't respond to any of them. And if the email was great, if it was like if it was going to solve one of Howard's top four problems that quarter, he would actually respond personally to the email. Tops down, bottoms up. What I have learned is a lot of folks in sales are intimidated to properly go to the top. They don't have the life experience they haven't. They don't know what it's like. And they're like those letters scary. And I, I think all of Sarah's is scary myself. I think it's hard to but if you have that gem on your team, lean into it because I think Sam's example is the right way to do it. But you people have personalities and if you have a gem on your team that is comfortable reaching out to the top of the org chart and can write the right email and solve do the research for half an hour and actually figure out how BRE will truly solve their problem. Not send the same email or the generic Brex vs. Ram thing that they don't even want to hear. I don't care about Brex or Ramp I want I have a problem at my company and if Brexit is the only vendor that solves it I will buy it today. That's the email a CEO wants. Not that how we're $0.03 cheaper. A rambling answer. If you have that gem on your team promote them and lean into it because people will default to selling low. They're intimidated to sell high. Right.

It's a smart answer. I think the question around the who to reach out to is important. I think what Jason you're saying which all reinforced and then maybe tie back to a topic that we were touching on earlier. The the how is harder and we, we we got in this environment where the the default is an SDR just blast the universe with the same email sequence and that that is reaching diminishing returns and probably has been for many years. And so then I think more attention on the how and going back to this idea of being creative and not going through the motions is smart.

Yeah. The other thing I hope there's something I hope that I don't think it's going to be true but I hope it's true. I hope in three to four years with AI and efficiency in the change the world that there is a whole legion of seasoned SDRs that are paid for performance that make more money that are not constantly churning out six months out of school. I know that Ashley's great at that. You guys did what Sam did one with Ashley who worked with him and his head of Outbound or Rippling and she I think she hires two or three hundred people a year. Right? Yeah. She has an engine. She's an. Most of us cannot keep up with that for a million reasons. I would love to have forever if you could have four to five SDRs on your team that's this rare bird that will stay a decade that will get better and better selling to your stakeholder that will know them and they are reliably making good six figure income and they want to stay in their box. It's like a lot of the best AES don't want to be VPs of sales. Like don't let your best AE be a VP of sales and fail if you can help it. Right. And if you can find it's hard but if you can find a longer path for these gems I think it's. I'm hoping it's part of the future because I don't know that this bottom will last forever. Question about the hiring hiring sales reps is is really hard. How do you know after 30 to 60 days that it's not going to work and you should fire.

I, I think Jason has probably lots of content around this that's coming to mind. One interesting way of thinking. So there's subjective and there's objective. Maybe the, the way that I would categorize it, there's also things like the cycle times that you have of your product. And so if you have a six month long sales cycle, it's going to be hard from a purely revenue standpoint to determine whether or not a sales rep is successful. I think what you want to have is clear expectations around what's expected in the first 30 and 60 days that are as objective as possible. And it's binary. Are we meeting these expectations or, or are we not? And then there's this subjective lens that is something like what does your gut say? And I think it's certainly by 60 days, if your gut is telling you that this isn't really working out, the likelihood that that changes is pretty low. And given the pace that startups move, you might be better off moving on.

Maybe. Let me just add one, two thoughts. One is if you're in founder led sales 60 days a long time, you'll know if in founder led sales, you'll know in 14 days in founder led sales, unfortunately you, you can't hire the diverse type of rep that a great CRO or VP of sales can hire. They have to be narrow. They have to be people that work on your wavelength, that talk the way you talk, that can do no look passes that you can send one slack, not a hundred a day, not being pummeled with the dumbest questions on slack. You have to have this very narrow box and you'll know in two weeks. Okay, when you hire ahead of sales, if she or he is good, let them expand the box, let them hire people that you wouldn't hire or go longer. Or if Sam says, you know what, Jason hasn't closed anything in six days. I know usually it's terrible, but I know Jason. We're going to give him another pass. Just def defer once you hire that person. Right. But let me add one nuance. This is something I've been doing for years with VPs and now I think in 2024 we should do with ICs individual contributors. Give them an offer letter that is signed and then give them two weeks to back out. Take the pressure off recruiting. Here's your offer letter, here's your comp. And then say to Jason or Sam or Amelia, look, the last thing we want is you to fail here in 30 days. You're an I. You could not have done enough diligence. I know my company. You know your company. There's no way this rep that went through four interviews over zoom and met someone for coffee. They have no idea how these companies, how Brax or Vimeo or Rome works. They don't know and it's on you. And give them two weeks to join more team calls to join meetings to listen to 50 gongs do everything and give them a chance to make sure they believe after two weeks find some way where they have the job and they can say to you in two weeks. It's not for me. Find something. I've done this with VPs for years because there's nothing worse than hiring a VP in and not working out in 90 days. Right? But in a startup it's true of an eye everyone's important today you don't want to the last thing I'll say and then Sam, you can add to it. There's for years there's been this meme in sales. You should fire your reps. You don't want to fire anybody today. The cost is so high. It's so many lost leads, it's so many lost cycles. So you don't you really want to I think as founders and as leaders we need to go the extra yard for as long as possible to have high conviction they will work not maybe we should go further because the cost of them churning out it's so it's just destroys organizations. Right. So I try to give somehow this moment after the offer sign to de stress it. You don't have to sell me anymore. You got the job Sam. You take two weeks to decide is it for you some version of that I think we should do more of.

Jason's answer was smarter and more tactical than mine. So I'll. I'll try and be more specific and like actually what I would do which may be different from the way that others approach it. We measure success based off of largely three criteria. The first is performance. Performance is objective over time. It's how much revenue is the rep generating during the ramping period. There are other objective metrics that are performance related, can be pipelined, can be activity based but actual outputs. And then the other two things that we look to measure success are subjective and they are effort and attitude. And when there is somebody that is not meeting the performance measurements we then look at effort and attitude. And if you have somebody who is poor on either if they aren't working that hard and they're not meeting the minimum of expectations. It's either a zero to Jason's point. If it's founder led sales, if it's your first ae, I don't think you even have the conversation. I think that you just move on. I think at a more mature business it might be a one time conversation. It's not only are you not hitting quota but you're working what appears to be like 14 hours a week. This is a full time job. There are expectations especially when you're underperforming and the attitude very different but same idea where man negative attitudes and this is likely true in any department but it's certainly true within a sales organization. A negative attitude just spreads like cancer where if you're complaining about the leads or you're complaining about the product or you're complaining about the manager, it just. It goes to the other reps and the person is actually adding negative value to the company. Um, we would be better off if they weren't here. Uh and so maybe that is helpful from like a, a lens to view the subjectivity from around effort and attitude.

Yeah. The thing is. And let's take two more questions. I'll just say this is my. I'm embarrassed to say I had this epiphany a couple months ago and wrote it. I should have had it 10 years ago. But this is why I don't like some of this sales fire stuff. Even though it's true. It's always your fault when someone doesn't work out. Maybe you've known that because you've hired more people. It took me a while to be frustrated at people that quit. To be frustrated with people that I know could do a better job.

They could do.

It took me a while to not feel let down by some people. As a founder, as founders we get really. We take it very personally when folks don't give a not normal people. When we really believe in them and we know they're good. It hurts. Right. And I, I didn't get bitter but I would say I was at the edge of holding grudges for many years and I was wrong. It's. You didn't do the work. You didn't figure out if they were the right fit. They never know. You can never know enough about a company before you join. It's impossible and it's just take it on yourself to help them learn more about the opportunity. Right. I think it is possible. In the old days back when we worked together in sales there was a. We had actually had a model I don't know. Certainly Bren and I talked about of having a no voluntary attrition sales model. A lot of folks did it at faded away. It's not a bad model for 2024 to have no voluntary attrition to aim for it.

Right.

That no good people would would leave. But you got to go further in recruiting. It's always your fault. It's never their fault. The rep that didn't sell anything. You will be shocked at how maybe you have different stories. You'll be shocked at how many reps that are poor performing in one environment can actually succeed in another. Right. That's the aha moment. Someone could come into Brax and I don't know how to talk to finance people and they go somewhere that's seemingly simple. They go to Navon. It seems simpler but it's travel and all of a sudden they're great. I can't tell the difference.

That's right. And I think maybe a continuation is something like when the or seemingly inevitable happens where a hire doesn't work out and you blame yourself. Make sure that manifests in the way that you part ways with them. I think and this is. This goes both ways. I think you know when you terminate an employee I think you want to do in a way that when they reflect on their time at the business and when they reflect on maybe you as a manager or you as a person that you. You leave on as positive a note as possible. And I think the inverse is true as an employee when you're exiting in a company. And Jason, does a lot of of posts about this just go out maintaining relationships as closely as you possibly can but slightly off topic but really I got one.

All right, last question.

Hey, this is great. Thank you. In the interest of efficiency and just economic efficiency what do you guys think about fractional hires across fractional CMOs? Fractional BPS. I know Jason actually mentioned that this.

Is a big fan.

The poll you mentioned. Every rep or every go to market member is going to have multiple jobs. You I noticed had a consulting gig for little while of your own business. Curious your experiences there. What do you think about it? Good, bad, ugly, great, et cetera.

I want to hear Sam's point. I do think there's a lot of nuance between moments when consultants can help you that are hands on versus snake oil salesmen that want to be a fractional CMO at 50 companies but only want to do strategy. But but it goes. What do you think Sam? Maybe you found some good. Does it work for You I just worry that startups get too much snake oil salesmen. Like I need a cmo, I need to do marketing but I can't afford it. Loretta will help me but she only has time for strategy. She'll set up the, the ideas and there's no one to implement or do the work.

Yeah just to throw it out real quick also if they're gonna do the execution as well and, and then I've.

Never met that person but I, I could see how it might work that.

Jason, curious your thoughts on this. I think that there are. It's not one size fits all and I think that there are situations where a business is at a point in time where there might be some leadership gap that exists and somebody like Jason is an investor and there's an existing team and there, there the like team needs a little bit of support. And Jason had this incredible VP of sales at Echo Sign named Brendan. And Brendan went on to lead Talk Desk which is I think a 10 billion company. And this sort of in network trusted advisor in person can come in and add some specific value that makes sense point in time. I can see scenarios like that where it makes sense but I would, I would just be, I would, I'd be really positive about the person that you are working with. And that's maybe the example that comes to mind is a, a very like Jason's a trusted investor within his portfolio companies. Brendan is a trusted consultant part time sales leader that I think helps a lot of Jason's portfolio companies.

Maybe the last thing I'll add, it's not. Listen I do think you helped at Flexport when they went through some times. That was high value. It exists. Getting the best people to help at inflection points can help. Doing it to save money doesn't work. Not only because it doesn't save money but you gotta really learn this accretive math. You're like I can't afford ahead of marketing, I can't afford a head of sales.

You can.

A great head of sales that will actually carry a bag. A great head of marketers is actually willing to a campaign themselves or to put together an event themselves. The great ones are always accretive. This is like a recurrent saster post for 12 years. A great head of sales will come in and take your 50 leads and turn them into more revenue than without them. They'll turn into 200k more of revenue or 400k or whatever their OTE is. A great marketer will get you more leads. And so the idea that I can't afford ahead of sales marketing, but the fractional one is going to save me money. No, it's always more expensive. It's always more expensive to give someone 50 grand and get nothing than to pay someone 200 grand and get 400 grand of revenue. And you just got to live that. And you just have to meet someone great. And the final point, I guess I'll say on it is this is like a transformational thing. I literally was talking with the CEO that last week at struggling at 20 million, growth had slowed. And what the main reason growth had slowed is the category had changed and they'd fall out of product market fit. Going to our conversation and I said, listen, I've been watching your company since 2018 and it just seems like everyone's moving faster than you. It's the same product. I don't mean to be a jerk because I don't use all of it, but where's the mobile app? It's been like it's time to get the mobile app since 2018. And I'm like, what you need is an incredible CTO that just iterates at this rate. And I said, have you ever worked with someone like this? It's honest. I've never worked with someone like that. So you gotta meet the Sam blondes or whomever. Try to meet three. There's only so many in Miami. Try to meet four or five. Sam's the best you can. And then you have a bar and they'll always be accretive. It's the ones below that suck up all your money and it's gone. So anyhow, Sam's insights more than mine. But Sam at Flexport, high value, add other stories, but can't afford it. It's. It's all your money is going to just going to flush the money down the drain, right?

That sounds right. You don't do it for cost savings. It might be that you have the opportunity to work with somebody that you consider really exceptional and then you take advantage of that opportunity as something that is like supplemental to running the business maybe is the qualification.

Sam, thanks for coming back. Adam, thanks for joining us. This was great. Thank you, everybody.

Thank you.