SaaStr AMA: Building Your First SDR Team with Brendon Cassidy and SalesLoft CEO Kyle Porter

Hey, Saastr fans. I'm Gretchen Coo here at Saastr. I'm excited to welcome you to our second in the series of our new AMA webcast called Lunch With Every other week we will very best in the business. Join us to answer all of your morning questions. It's super easy. You send your questions off into the Twitter sphere. Join us live here on the Google. We'll answer everything that we can. And if you happen to miss it, it'll always be available on YouTube right afterwards. So make sure that you subscribe to the calendar. So we've got great guests today and we're gonna kick things off, talking about building an outbound sales team. But it is an ama, so feel free to tweet your questions in and we'll do our best to get those answered today also. So I'm very excited to introduce our guests today. Of course, we have Saster himself, Jason Lemkin. So, so happy you could make it today, Jason.

Thanks. It was a tough stroll from the hallway into my office, but thanks for having me, Gretchen.

Well, we appreciate the sacrifice. And then we've got two very special guests today. The first is Brendan Cassidy, and if you don't already know Brendan by name, you definitely know him by reputation. Because if you've read one and a half articles on Saster, you've read about the amazing VP of sales at Echosign who walked on water and doubled sales in 90 days while saving the world and all the puppies. I think that's about how it went. Before Brendan joined Ecosign, he was at LinkedIn. He did their first sales team. He was employed 25, I think, something crazy like that. And then more recently, he was at Talkdesk, and right now he's sorta kinda available, but not really because he's nearly impossible to get. And then we also have Kyle Porter, the CEO and co founder of Salesloft. Salesloft's also our sponsor today. So a double thank you, Kyle, for joining us and for sponsoring.

You're welcome.

All right, so Kyle, in the past year, he started SalesLoft about four years ago. In the past year, they've grown from 50 to 80 employees, from 200k to about 8 million, and closed a $10 million Series A earlier this year. So really, thanks for joining us, Kyle. I'm sure you have no more important things to work on right now.

Honored to be here.

Awesome.

Okay, so let's just kick things off. Kyle, can you tell us a little bit more about Salesloft and kind of how that loops in today, and then we'll just dive right in.

Yeah, sure thing. So one of the things we've noticed over the last few years is really the rise of this top of the funnel sales specialized role. You hear a number of different names, but the ones we hear most common are our sales development. And what salesloft does is it's the application of record for the sales development function. So everything the sales development team needs to do, everything an organization needs to do, top of the funnel to convert prospects into qualified appointments. So we help you connect, qualify, and convert, and do that through a range of software that allows you to send emails, make phone calls, touch points, accountability, and a bunch of analytics to improve.

Cool. Gretchen, we might have lost you, but can Kyle and Brendan, can you hear me?

I can hear you loud and clear.

Okay, I can hear you got her role, so I'll just take over for a moment.

Yeah, go ahead, Jason.

I'm good.

First of all, actually, before we get to the questions, Brendan, let me ask you something. One part of the bio that Gretchen left at the end is you're now acting head of sales at HackerRank, great SaaS company with a great CEO. And so a lot's changed in the last four or five years in SaaS, or for you, eight years, right? From spoke to LinkedIn to EchoSign to TalkDesk to HackerRank. In the last probably 14 months, you've built two SDR teams from scratch, essentially. Talk about what your learnings are, because at EchoSign, we barely got this off the ground, at least while I was there. You did a lot more after our acquisition. So what's new? What's changed? Has the pendulum swung back? What should founders be thinking about? And how have you approached these two teams you built?

Yeah, I think that certainly changed a lot in the last three or four years. The sort of concept of a sales development team and outbound prospecting and all that stuff. Certainly it's been a big learning curve for me because I think the sales stack is constantly changing. So whatever you thought the sales stack was four years ago, it's probably completely different today. And I think certainly Salesloft and other companies have sort of come on the scene and really empowered outbound prospecting and sales development. I think one of my big learnings, and I think that's it's been a learning experience sort of my. The vision of sales development six or seven years ago was mostly sort of a digital game. Email campaigns, et cetera, et cetera. And I think the reemergence of the cold call as an integral part of the workflow is undeniable. And that was a learning for me, which is to say, hey, it can't just be sort of an email or a digital loop of communication. You have to pick up the phone. And that has to be at least half of how you're measuring activity for a sales development team. And there's a lot of benefits to it. Obviously it makes your sales development people have to be ready to discuss the product and the value of the product and think like a salesperson, not just somebody sending emails on the sales development side. And then I think it helps them develop quicker and faster. And I think it has to be part of your core DNA. And that's a learning for me over the last couple years. And if you don't believe in that, you have to learn it. I think if you're going to be an SDR or run an SDR team, that's one of the bigger learnings for me. Yep.

And Kyle, I want to let you read off the rest of the questions, but I want to ask each of you a question. Do you mind if I ask a question first?

Because.

Just because I'd love to hear the data you have. Second, Kyle. And first. So, Brendan. So at Echosign, really, you know, apart from little experiments with Sam Bond and others and Steven, we didn't really have an outbound team until like 10 million in revenue. Right. For all. For NSTR team.

Right.

You know, Loretta, our VP of marketing, had her own little team to qualify leads. But we did it way too late. Right? We did great. But it's just with hindsight or challenge me on that, at talkdesk, you come in and you're doing it at 1 million something. ARR. You're putting in a team. Right.

That had a lot of success.

And then you join HackerRank, which is somewhere between 1 and 10 at the time you joined and put in a team, like almost immediately. Right. So assume you have any leads at all, because if you have no leads, you better pick up the phone. But if you have. And so, Brendan, if you have leads, one is too early. Right. And then second, Kyle, do you have any data from your customers to sort of support this question?

So I think the question is when is too early to hire an SDR or an SDR team?

Especially if you've never done sales before, you don't have a VP of sales and you have some leads coming in. Right.

I really can't be too early. You know, I think it should be certainly if you have no leads. Your first hire should really be an SDR and not an account executive. Right?

Yep. That was a classic. Right.

Learning from Shep at GuideSpark. Right. Which I would certainly put up there as one of the better outbound SDR teams in the last three or four years.

Let's just reiterate that if you have no leads, do not hire an ae. Right. Hire an sdr.

If you have no leads, don't hire account executives, hire SDRs. And if you have no leads, don't expect yourself to be growing 60% month over month out of the gate. Right. And then I think beyond that, at a macro level, I think that as much as the outbound model is contributing to faster growth and all that stuff, I do think the marketing side has to be there too. I do think at some point you're going to hit some sort of fatigue if you're 100% outbound, unless you have such high price points that support maybe a little bit slower sales cycle and some other factors there. So I do believe as great as the outbound evolution has been, marketing plays a role. And there has to be a component on both sides, I believe.

Yep. And Kyle, then I'll stop being rude and being the moderator. But I mean, how many salesoft has hundreds of customers? Right. Maybe a thousand, I don't know, Hundreds. Right. So maybe you don't have the data handy, but do you have any learnings from the customer base and how early is too early? When should you get started? Any data you can layer on top of Brendan's experiences?

Yeah, we got to look at what an SDR does, and I think we've talked a lot about SDRs from an outbound perspective. But SDRS play a role in inbound as well, because what you're doing in the sales development function is three parts. You're connecting, you're qualifying, and you're converting. And so the input is data from somewhere, whether it's from your marketing automation system, they came inbound, or it's from some list you've built to go outbound, you've got to connect with those people, and then the output is a qualified opportunity. So even if you've got inbound leads, they may have downloaded a white paper. You still got to call and email until you get them, and then you still got to qualify them. But I think you have someone that can handle the full cycle when it's really early. If you've got some leads coming in, then like Brendan said, if you've got no leads coming in, you got to get that marketing content going at the same time as you've got an outbound team just really hammering email and phone to put opportunities in the pipeline. But I think companies have to do if you don't have money then you can't do it and the founders have to do it. But if you got money, you hire people to do it and that's how you get your business launched. But I think it also helps even for companies who are pre product market fit, you want to be calling those prospects and connecting with them because you've got to get out of the office and figure out is this thing right for our market or our community. So I think you always need people calling and emailing. What you call them might be different. And the CEO should be doing sales development functions at the very earliest stages if they don't have any cash to hire somebody.

Yeah, I think I'm going to weigh in here, Jason, on a blog I wrote but never posted because I thought I didn't know how it would be received. But hey, I'll launch the concept here. But it was basically saying if you don't have any marketing driven demand early, then you should hire a VP or a head of sales development early because there are, I think there's five to 10 people that I would consider absolutely elite sales development team builders and drivers. And I would consider if you did have the money to spend hiring those people much earlier rather than later like John Paris he had at GuideSpark or other companies or Chris Paul at Showpad, I consider to be elite. And if marketing can't drive any demand, then you hire that role almost in place of it on some level.

Let me ask, that's an interesting thinking through it. We've talked a lot about the VP of sales role as a Goldilocks one. If you wait too late, you kind of leave huge amount of money on the table. If you make the hire too early, we know it's a disaster. But maybe if you're lucky enough to hire this unicorn, the director of sales development or someone that can be a manager, maybe you can't make that hire too early. Right. Assuming you have a few nickels in the bag.

I do. I think if you can get somebody that's like that. And again, it's not an easy hire to make. It really is.

No, no, it's hard. It's hard, right?

It's a hard.

Imagine you're able to raise a couple million dollar seed round and you have 18 customers. You're not ready to hire a great VP of Sales. Right. But maybe if you can find the unicorn, you might be able to hire a director VP of sales development.

I've advised companies that were trying to hire VP of sales or trying to hire me or whatever. And I said, hey, I would go talk to John Parisi or Chris Pollard or the go talk to them. You have no leads. Nobody is interested in your product currently anyways. That's.

You have a lot of people now that are really driving process in sales development. You mentioned Chris. You mentioned John. Steven Brody at Mulesoft is a fantastic sales development up and coming director level guy. I think you've got a lot of people that are really starting to get this thing and really starting to put in process. It's a little bit less of an art than sales is because it is technology driven. There's a little bit more volume, a little bit more steps to it. I think sales development is probably a little bit easier to find than that unicorn VP of sales. And they also have a lot of room to grow and add a significant amount of value throughout the organization. So I do like that idea as an early hire.

All right, the three of us could chat about this forever. But let's take a few of the questions that we've gotten. I think there's. Kyle, can you see that I can hand the.

By the way, I'm going to say one more point. I apologize, guys.

No worries. Keep going. It's good stuff.

As much as I've learned. I started my career as an sdr and as much as I've learned about it and. And can do a lot of it or manage a lot of it, I really don't want to. And so when you talk about making that leader early. Right. Is you do want sales focused on sales as much as possible. Right. And so I think that's. But I really don't want to manage that function in the company. Some VPs really do want to do that, but I don't. So anyways, we'll move to the next one.

Actually, let's chat about that just for a second because another thing that has risen in parallel to the rise of the SDR as a reinvigorated function is the rise of specialization. And I think that the full stack AE is kind of a dead concept unless you have no other choice. Right. And so let's just talk about kind of an obvious point related to it. But what are both of your learnings on that? And also here's where first time founders get stressed. How do I budget for it? Because specialization at first seems more expensive. Why can't I hire just 2 AES and give them an OTE? Why do I have to hire SDRs and all this other help and someone to schedule meetings and do all this stuff and it seems more expensive if you don't raise quotas or something. What's the learning of the rise of specialization here?

Well, two AES that are responsible for hunting everything, meaning set up all their appointments. Who's to say that they're going to be more productive than one who gets them all handed to them? I don't even know if that math stacks up in the first place, but I think the big thing is that early stage. I think you've talked about this a lot watching your CAC pre1.5 million. That's not the most important metric. Getting out and acquiring customers and getting a repeatable customer acquisition strategy is a lot more important than what you're paying for those customers at that point in time. Now you got to have cash to pay for it. But I think from our perspective, we look at how many new appointments can an AE take on a given day and then how many SDRs do we need to produce those? Because we don't want our AES booking more than 15% of the appointments they take. And those are the ones that come through referrals and relationships. They're usually more upstream, they're usually more targeted. And we want the rest of that time to be spent conducting those first time interactions, those consultations with the big opportunities that they can push through the finish line.

Yep. And do you have, and I want to hear from Brendan too. Do you have from your customer base? I know this is an impossible question. Do you have an ideal or. Ideal is the wrong word. Do you have a median or average ratio of SDRs to AES? Can you track that through the sales op customers?

Yeah, we. I'll go first.

Go ahead, Brendan. What's the magic answer to this endless riddle, Brendan, of SDR to AE ratio?

I mean, if you have no leads, like one to one, Right. No inbound leads.

That's a good answer. If you have no leads, one to one.

Right. So I would look at it like, if you have. If it's like a 50, 50 type scenario, inbound to outbound, maybe like 2 to 1. Right. Two AES for every SDR, that kind of scenario. So that's how I would weigh it out. I think getting back to like, why don't you want account executives being responsible to drive their own pipeline? I think it's sort of like death of the Rolodex and sort of the traditional enterprise selling mentality, reps would come in and say, oh, I have a Rolodex of this black book or whatever, of all these people that are just waiting for me to call to set up meetings to buy whatever I'm selling next. And I think what I've learned is that's totally unscalable. Somebody coming in saying I have a Rolodex and that's my end to end. I'm going to drive my own deal flow and close my own deals. But again, unless you have like a VIVA type deal asp, then you'll burn through that roll decks really quick and it probably won't result in that much revenue. And then your AES are going to have to put in the hard yards around prospecting and all the same thing the SDRs are doing and they don't want to do it, period. And quite frankly most of them aren't great at doing it. And that's okay. Like you'd rather that they were great at closing than great at creating their own deal flow.

Yeah, my rough rule. I'm curious for your thought. I think if someone has a Rolodex, I think if you're lucky you get three. You get three customers from the Rolodex and if you're three in there six figure deals, you're happy to have them. Right? But I think the Rolodex gets you between one and three customers per, per salesperson.

Well, it's what brought the Rolodex about. If you can continue the enlargement of the Rolodex, I think that's a difference builder, Right. I want to say something about the metrics. I think that you got to start with the leads and say, okay, you got inbound Leads, how many SDRs, how many inbound SDRs do you need per lead? And it might be something like you need one per 400 leads. So now let's say that that produces one qualified appointment per rep per day. But your REPs can handle three new qualified appointments per day. In addition to their follow up appointments, they're going to have three or four other follow ups in order to track touch 2s and 3s. So now you've got to fill in that gap with your outbound team. I think that's the only real way to do it is do it from a capacity perspective because you want your AES running at full speed all the time. When we first got into business, we saw two AES to one and then we saw three AES to two. And now we're seeing a one to one. And so we're definitely seeing the transition more towards the SDR. In fact, here we have three SDRs per every two AES. Now that includes the inbound SDRs as well. So you got to look at the math from a lead perspective, but I think you got to do it from a capacity of the AE mentality. So I got one that I saw on here. It's one of the questions that came in through Twitter. It says how much longer are sales cycles from Outbound versus inbound? It's the first question on the list and how do we think about those? I saw this question and immediately popped into my head this pie chart that a friend named Steve Richard, many of you guys may know Steve, he's a great inside sales consultant. He shows a pie chart and he says 10% of the cold calls that you connect, you're going to get someone that just happens to say, hey, I've been in this market, I'm interested in this space.

Great call.

Right? And you're going to start and that's kind of like an inbound lead. And then 40% you'll get will say absolutely not or 45%. The other 45% are convincible to take an appointment. And I look at that person who said I'm interested in this thing as similar to an inbound lead. The challenge with the inbound leads is they've already started the sales cycle. So you may be a shorter sales cycle, but that's if you win the deal, you may have three or four other competitors in there because they've already kind of gone down that path. The thing I like about outbound is that you have the opportunity to catch someone pre sales cycle before they started to use the competitor's terminology, before they started to write an rfp. You have the opportunity to shape that. Outbound is a little bit of a larger sales cycle historically and traditionally. But you have an opportunity to win a lot of those and get influential in a lot of those. And also you have an ability to pick the right logo when you go outbound, maybe driving higher ACVs. So that's some thoughts on that question that I saw at the top of the list.

Yeah.

And Brendan, let me ask you a follow up on that. We can talk more about the second point Kyle brought up, which is great. Which is at least outbound lets you target the buyer that you want in the organization. But let's step back to the question because a lot of first time founders very driven Ones. And Brendan, you've worked with a bunch in your career. We all want monthly quotas, we want to grow month over month at numbers. And outbound, I think outbound almost inherently has to take at least a day longer than inbound, even the best case. So how do you coach founders or manage their expectations on this and do you believe that the sales, how much longer are the sales cycles and what's your advice in terms of making that investment to CEOs?

Yeah, I mean there's a lot of factors that influence that. Right. Like one is like how big is your brand or mini brand? All those things that help you get more credibility earlier on in the sales cycle. How established is the space of the category? But I think that yeah, the reality is it's going to take longer. The sales cycles will be longer. I've never seen a scenario where it took shorter or even equivalent. I think a lot of people would like to make that claim and I think they're full of it most of the time. That's my two cents.

But that's not always so bad. A longer sales cycle is not always so bad. Pipeline up.

No, no, I think it's okay. It's going to take longer and how much longer? Well, there's two things. It's going to take longer and it's going to take some time to get your SDR org fully built and baked and fleshed out and messaging nailed and all that type of stuff. So I think all those things are going to take time and I think those are the things that first time founders, it's on the executives around them, not just sales but marketing and all, but really on sales to say, hey, these are going to be longer sales cycles. It's going to take longer. This isn't going to bear the fruit to be a super hyper growth startup in 90 days. I think those are all take to.

See the first fruits of it from the budget, three to four months.

The first fruits, quick. The first fruits you should see in the 60 days, 90 days. But I mean seeing the first fruits versus seeing the bounty are two completely different things. And that's if you talk to John Parisi or all these great sales development leaders, they'll tell you it takes 9 months to 12 months to build to get their SDR organization running the way they want to run it.

In. Right?

What's that?

But if you're looking for seeds, if.

You'Re looking for green shoots, you should see seeds early. Yeah, you should see some quick wins and say hey, we think we can scale this thing and build it again. I know it's not what most founders want to hear about. How long is this really going to be something that we can really sort of put our hat on? It's something that's going to consistently deliver repeatable revenue and growth and all that stuff. It's going to take some time.

Well, there's an intangible benefit of the Outbound that they need to be educated on as well, is that the Outbound is going to help build your brand. It's going to be helping build your mini brand. You can distribute your content through Outbound. You can get people to sign up and join your community through Outbound. And so Outbound grows your inbound channels as well. Now more people know about you. Now more people are sharing your stuff. Now more people are coming to your blog and signing up for your webinars and white papers. It really drives the whole thing. There's a guy named Alan Nance in Atlanta. He joked around, he said, outbound, inbound. I'm doing all the things, I'm all bounding and each one grows each other. I thought that was a great advice.

That's a good news. Did you patent that term, all bounding?

No, it actually came out in a conference that we ran down here in Atlanta and someone in the audience bought the domain name on the spot and turned his consulting company into allbound dot com. So that was kind of funny. But you know, there's another analogy. There's a guy named Dan McDade, he's a sales author and he's got this wild philosophy. He says that long term leads are better than short term leads. And you look at it and you're like, hold on, that doesn't make any sense. But then you think about this strategy. You know, back when interest rates were good, there was this strategy. You take your money and you stack CDs. So you get like a, a one year CD, a three year CD, a two year CD, a six month CD. And then what happens is over time, you've got money coming in all the time, but it's only once they start to mature. And I think that's what happens with these long term leads is you get that engine up and going, you make it predictable, you make it repeatable. And nine months from today, like you said, you got a lot of fruit coming in. It's not just a couple tangerines on the tree.

And also when you talked about, hey, an inbound lead may come in, but they may be already into an evaluation. I think those opportunities you reach out to that. Maybe don't go into a sales cycle right now. When they are ready or the market's mature enough, they're going to come back and they're going to start with you.

They start going to your competitors and using your lingo, using your language.

Again, that's not immediate. There's no immediate fruit there. But that's the long term impact of it and all those other things. Yep.

All right, what next, Sastor?

Well, I can ask, you know, this one's an interesting one. It's just a broad question, but it's good to chat. From the Twitter. How do you ramp new college grads as quickly as possible for an ADR SDR role? Right. Because one of the things you're often hoping to get out of this role if you have an engine, is to hire a relatively, relatively green folks.

Right.

So how do you do this?

You know, for us, it starts in the hiring process. You know, you want to really be diligent about the person you select on the front end in the first place. And, you know, we've gone through some SDR training, some coaching on how to educate our team and get them up to speed. And one of the biggest things is get them on the phone in the interview process. Do mock calls really dive into, Are they going to be able to accomplish this? Mark Roberge, the head of sales at HubSpot, had a great piece of advice that we started using. He said in the interview, we ask our sales team members to give a pitch and then after the pitch, I give them feedback on one or two areas that they could improve on and then I ask them to do it again. And I see, did they take the coaching, did they implement it, did they change? And we've used that and really had a lot of success with it. But outside of that, we've got a playbook and I'm sure Brendan's done some amazing things to ramp the team up, but it's a routine of things that we've learned, have been successful and we repeat it and we improve. But it's certainly something you need to be intentional and it's critical.

Yeah. Any insights, Brendan, how to make, I mean, you probably don't want to hire a senior AE fresh out of, fresh out of school. Right. But we got to make this work for SDRs. Do you disagree with the premise or any thoughts on how you can build that newbie engine?

Yeah, I mean, I think you gotta, you know, you're hiring talent, not resume, obviously. Right. So you're looking for personality and sort of raw skills and not 10 years selling for Salesforce or Oracle, whoever else. Right. So that. That's sort of a given. So I think you need to identify what is the culture of your company, what type of skill sets or personalities have succeeded. It doesn't mean that you're going to hire a clone of everybody that's been successful before. But I think there are some common things you need to look for. Like are they curious about technology? That's actually learning from Jason Lemkin from long ago. Right. He really liked salespeople that were curious, like, hey, here's this cool new app and they wanted to learn more and they could figure out how to integrate Echosign, Salesforce and all that. People that were curious about technology rather than salespeople that were uninterested in technology, which is a lot of salespeople. So I think those kind of things, are they competitive? I think again for me, I like that because you don't want unhealthy competition. But when you bring somebody in and they don't know anything yet and you have a team and a group around them that do know something, that can be a pretty terrifying thing. And I think your ability to adapt to that environment and learn how to compete and really in the beginning you're just competing against yourself and learn and pull yourself up. I think you're going to lose them in the first 90 days. I think if you don't get them up and running and understanding and knowledgeable of the company and the product and the mission, the pitch, if you don't have them moving in the right direction in the first 90 days, it's not going to happen, in my opinion. So I think that those type of characteristics, understanding teamwork, I look for those kind of things.

And let's follow up on that after you make the hire. A thing we chat a lot about is how long do you give someone? How long do you give? I wrote this thing on VP of Sales a long time ago. You'll remember that was controversial, which is you'll know in half a sales cycle. And every VP of sales hated it. But then they thought about it and they agreed. I think with an ae, you know, in a sales cycle, right. Even if they don't hit quota, you kind of know, in a sales cycle, let's say, and we can talk about what the KPR goal should be, but if for an str, it's appointment setting, Right. How quickly will you know? Right. And also, how should you think about churn in SDRs versus AES.

Kyle.

Okay, yeah. One of the big metrics, when I first started thinking about sales development, early on we thought the biggest metric was number of qualified appointments completed by the AES. What we realized, though, is that there was a numerator we weren't thinking about, which is the number of prospects that were prospected or the number of contacts that were prospected. If I go into an SDR room and I prospect 20,000 people, but only turn over 20 appointments, and then someone else turns over 20 appointments on 500 people, then that second person is way more effective because they've taken a smaller subset of prospects and turned them into the same amount of appointments. We look at the efficiency score of our sales development reps. How efficient are they with their time, with their resources? Because if every SDR needed 20,000 prospects in order to set 20 appointments, then we're going to be spending a lot of time gathering data and really going through this kind of like scorched earth of our prospect universe. So that's a big one that we pay a lot of attention to. And then another one is looking at the connect to conversion ratio. So they're getting on the phone with these prospects. How many of those are they actually turning into qualified appointments? So I think that's a critical one to pay attention to as well. And then coaching around those things. Someone who makes a ton of dials and connects a lot, but doesn't convert into a lot of opportunities needs different coaching than someone who doesn't make a lot of dials but gets good conversion post dial. So I think you got to look at those different metrics for each individual sales development rep and have them in quick to analyze charts and have coaching ready to come in on them afterwards.

That's interesting. I'd love to get your thoughts on the point, Conway. Brendan because that's a new. A new thing I'm thinking about now. When I think about SDRs, and I'm not as deeply as experienced as you, the first metric I look at is connect rate, right? Because I figure if no one's ever heard of your product in the entire world and you get someone on the phone, that's something, right? But maybe that top of the funnel metric is not as valuable. If someone's an amazing phone virtuoso is whether that leads to an appointment. Right. Do you have a sense of which of those two is there an ideal metric? And can there really be two flavors of SDRs? Like there can be multiple flavors of AES here.

Can you click. So you mean, are you talking about measuring people on appointment set versus well.

I realize I've been discriminating so clearly with AES there's many different approaches, right? There's dial everybody right and abandon any deal that doesn't come in in a second. There's take all my leads and pick the five best. There's conversational, there's transactional, there's different ways to scale them out as AES. Maybe I haven't been fair enough to SDRs because I'm hyper focused on just penetrating, but maybe you could. Pyle's point is in some cases you might be worse at connecting but better at setting up an appointment. That ratio can change versus you can get 100 people on a phone a month but none of them convert to an appointment. That's slightly new one to me to think through and maybe it's not a way you think about it either, but it's an interesting.

Yeah, yeah. So we have a fantastic sales development manager, name's Jess Oni here and we're probably going to move more towards like a point system next quarter. But today it's based off the number of meetings they set. Okay, so let's chat.

Today the KPI is meeting. So what are you trying to get out of the test?

Well, there's KPIs, there's sort of call metric KPIs, but ultimately their variable comp is mostly set on the number of meetings. I know a lot of people that are moving to a point system, a lot of people that have variable broken up based on number of meetings and some sort of threshold of pipeline created and all sorts of things. For us because we're building really a new SDR team For us it's better to keep it simple initially and learn before we start creating sort of sub criteria and categories.

Got it.

I think the ultimate metric for compensation is contribution to pipeline. But there's a challenge there and it goes back to that idea that I mentioned with regards to efficiency. If I've got somebody who's taking 20,000 prospects and turning them into only 20 leads, that's not sustainable now for them in week one, week two and their manager, that's a great metric. But as the CEO of the company, I'm looking at that and saying we can't repeat that, we can't scale that, we can't do that for a long period of time. I think the ultimate compensation metric for an SDR is that contribution to quota. I passed over this opportunity. It's this, it's this potential deal size. We know what percentage closes over time. So I think that's the greatest if you can hammer it all out. And I think early on, just like Brendan's doing, we still are paying on completed appointments, but the more sophisticated SDR teams are paying on that contribution to pipeline.

And that's the critical part, right, is you have to be open minded and willing to learn and adjust as you move forward, as you get more data. And that's where that's a critical component, I think, to be successful in the sort of outbound prospecting era we're in, which is the sales stack is constantly changing. Processes and techniques are changing so much faster than they ever did before and you have to look at the data and decide what's the right way to do it.

We've seen a very unique transformation in sales development since we started. When we started, we were selling to companies that were just like us, really small and trying to grow very fast. And what we found was that the most effective strategy was just find as many VPXs as you possibly can and get as many appointments as you possibly can with those people. It was kind of like we had a green field, our customers had a green field and it was just grab as much as you possibly can. Over time, what we've noticed is that the most effective scaling sales development organizations aren't going after the people first, they're going after the companies first. So they're identifying not just the ideal profile for the person, but the ideal profile for the organization. It's kind of this account based strategy and the term we've heard kind of emerge is this account based sales development, Whether it sticks or not is up in the air. But it means now, okay, we've gone through Greenfield, we've penetrated a bigger market, we've understood our customer better. We want to tilt a smidge upstream a la saster, right? So let's now identify the right accounts for us and figure out the couple people in those organization. Let's prospect the account versus the person. And I think this is the big trend that we're seeing now is this account based strategy for sales development. Have you guys heard of that or seen that happening?

Yeah, I mean it's account based marketing, account based. It's all the same theme, right? Which is the next level of sophistication processes and people around what winners have been trying to do that at least sell huge deals for a long time.

But now we have so much good data on companies. You've got companies like Mattermark and Crunchbase, so you can really identify who's the sweet spot for you and let's go get that company because the head of VP of X at that company might not be there next week but the company still will be. So let's get them.

This is true. We have about six minutes. I do want to get one thing that may seem simplistic but just because so many first time founders I meet do this. So let's go back in time. Can you outsource SDRs in the beginning and if so how do you think about how long you do it? And I know you might laugh but a lot more folks now, now that folks are thinking about outbound more, right? New founders, they're actually trying to outsource more earlier and do this experiment more. So obviously in house is better. But what are the any Zen learnings here?

You mean outsourced to Spokane or outsourced to Guam?

Well let's talk about Geo second. The first is third parties, right? Bucket shops. They'll give you either dedicated or pooled people that will call your list right? You give them the list and they will call them until you can find those people and they will set up appointments. I used to laugh at this stuff back in the day, but I have met with many founders now that at least have a tiny bit of effectiveness doing this if they provide the list. So just any thoughts? Kyle, you may have more experience with this than Brendan, but since more people are trying to outsource this in the beginning, any insights to founders?

Yeah, I think it's kind of the reverse. I've seen outsourced shops do a really good job of building the lists for sure too, like going through LinkedIn or however you're going to build up first name, last name, company name title. Like we've had companies that were using sales off Prospector and that decided to go hook up with an offshore team and do a bunch of stuff with them. And even it's been competitive to our product from time to time. So I've seen that a lot. And then I've actually seen more success with the outsourced SDR as a service with the later stage companies like private equity backed companies where they've carved off a division, they've got a repeatable sales cycle, they know their product, they know their customer and they've gone to one of these professional firms like a Point Clear or Vorsite or Televerde and I think that those companies have been more successful with the mid to later stage than they have been with the early stage startups. You want to be on those calls because the things you're hearing back from those prospects, that's like product feedback, sentiment. It's all these things that matter to the heart and soul of an organization. So it's just so hard to outsource that stuff because, I mean, you talk about the passion behind the early hires, like the evangelical hires. That's the kind of person you want on the phone in your organization. And you're not going to get that in Guam or wherever.

No, yeah, of course.

Can I give my insight here, Jason?

Yeah, please.

So my insight would be they're list building services. If you're expecting them to scalably create meetings and appointments, you're no. And no offense to anyone that's running any of these companies, but it's just not going to, it's not going to fill the gap. And you see a lot of first time founders see it and get sort of enthralled with it temporarily and then they'll learn pretty quickly that it's just not going to. It's a phenomenal list building service and I know a ton of not just SDRs, but salespeople that use it too. But it's not gonna, it's not gonna, it's not your best foot forward when you're, you know, talk desk at, you know, 20 employees or HackerRank at 50 employees or sales loft at 30. It's just not, in my opinion, it's.

Like starting a business and saying, we're not gonna do content marketing ever. We're not gonna, we're not gonna do events and leads. You know, we're not gonna generate our own leads. We're just gonna pay Google all day.

Long for them completely. Like, if you take prospecting, outbound prospecting seriously, that completely marginalizes. Then if you say, hey, we can outsource it to the cheapest market we can get it in, then you don't believe in it anyways, right?

No, I hear you. What I've seen recently with founders I meet with, it's not so much to save money. It's. I'm 23, I've just started this SaaS company. I have a little bit of something. I have no resources, right. Actually, I have a few nickels because I just came out of YC or whatever and I want to get it going tomorrow and I've never done this before. I don't even know what I'm doing. So I'm going to outsource it and then I will take it in house as soon as I can find some people and actually know what I'm doing. I've seen that as a new trend in my little micro ecosystem. But Brendan, I know we're going to lose you in a minute, but let me just ask one related question on that to you because you have experience and Kyle, chime in. We all hate the idea of not having our sales team together geographically, but you've worked in multiple situations where you've had remote SDR teams, Right. What are your learnings there and how does that contrast to remote AES or any insights there?

I think if you have somebody that you trust in a remote market, that's critical. Right. Don't reach for like try to build a team in a cheaper labor market where you don't have somebody to build that team that you know and trust. So it talked us. We had Louis Petrasi who did a fantastic job of that and was somebody that we knew and I knew and trusted and built a phenomenal team in that scenario. But if you don't, don't reach for it if you don't have the person there. But certainly I think there's Atlanta is different. Atlanta is obviously not as expensive a labor market as here. It's expensive to scale an SDR team that.

I mean I pay $22 a square foot for real estate on the corner of Piedmont and Lenox in the heart of Buckhead, Atlanta. So I don't have to worry about this space much. And there's a lot of great sales talent in this city. So I can't comment too well on the topic, unfortunately.

So Kyle, we're going to. I need to wrap up, but let me just ask you if you have any data from the Salesloft community. Do you have a rough sense of what percent of the customers might have SDR teams that aren't remote or down the hall from there or six feet away from the AES?

Yeah, I mean I don't have any data right off the top of my head. I've heard a good bit of it. I think, you know, kind of Series B S.A.S. zenefits has a great off site Arizona. I know that Gainsight has one. I think it's in Ohio or St. Louis. It's in St. Louis. I've seen some great ones. You know, kind of that between that Series A and series Series B, when you really get that. What's it called when you're past 10 million. The Escape velocity kind of that escape velocity initial scale. I think that's a good time to do it.

All right guys, I think we got through about 11% of all the fun things we could have touched on, but this was amazing. I know we're out of time. Thanks Brendan for joining Kyle, thanks for hosting and doing this. A couple things coming up just real quick together with Max and Sales Hacker. Kyle and I will both be speaking at Salestack here in San Francisco on November 10th. So come see us. It will be all day. It will be super fun. On November 19th we have the Saastr Founders soiree. We've got room for 600. There's a small amount of tickets, but either you can buy one on sastr.com or if you buy a ticket to the saster annual in 16 in February, you'll get a free ticket and you'll get into the event. But it'll be an All SAS founders on November 19th here in San Francisco. And thanks you guys again.

This was great.

This will be up on YouTube and I think people will use this as a reference material for a long time. Thanks guys.

See you.

Bye, Brendan.

Bye, Jason. Thanks, Gretchen. Bye.