The Answers To Scaling, Hiring, And Everything Else: An AMA With Saastr Founder & Ceo Jason Lemkin

So I got no agenda, no slides. We. I did a lot of slides already. I just thought that if there was anybody left at the end of day two that had anything they wanted to talk about, scaling, SaaS, fundraising, hiring, anything, and I could be helpful. We could do a little extra Q and A. So. But I got no particular topics, but if I can help in any way, let me know. So open it up. If I can help in any way, or I can make. Make it up. But anyone got a question, they've got to start. Is there anything? I don't know. There's a lot I don't. I don't know. I think I. What's that? I think. I think we're all still learning. Well, look, I mean, I think all. Everyone here, and importantly, for everyone you hire, you need to hire curious minds, right? It's curious minds that let us be great at what we're doing. And I think that, you know, I must have talked with four or five CEOs here today doing more than 5 million, not 500 million, who asked me. Oh, one doing 100 million asked me, am I good enough to be the CEO still? Should I still be the CEO? And that's not the question you asked, but I do think it's a question everyone should ask theirselves each year. And the answer, I think, is twofold. One, if you can recruit people better than you, you should still be the CEO. And two, I think you have to have a curious mind. You have to be deeply passionate about what you're doing and want to learn more. And as sometimes we're not as founders. Sometimes founders sell their companies because they don't end up being deeply passionate about what it does. But for me, I find that the mechanics of building these companies, how it's changed the physics of it, are very interesting. So I try to be a subject matter expert, but everything I do, I learned a lot today. I've done a bunch of things with Henry from ZoomInfo. If you were at that one, you could probably see I learned a few things on stage, even though I knew the slides. So, yeah, there's a lot I haven't learned. For what it's worth, I think I try to write these on Saster. I think there's a gift today which is that, you know, in the last two years, I mean, ZoomInfo only IPO'd right after Covid hit, so it's probably April or May. It's not that long ago, right? It's two years ago now. There's 20 or 30 public SaaS companies we can friggin learn from. And I write one each week on saster.com, if you haven't seen it. It's called Five Interesting Learnings. There's nothing in those five interesting learnings you can't find on like stock picking sites and Seeking Alpha. But I try to do it from a founder's perspect. And you can learn from these. What's their nrr? How do they get their customer? What's their deal size? What's their acquisition channel? How much do they get from SEO and SEM? And it's a rambling answer, but I think it's just a gift that we can learn from all these public SaaS companies. And some things they're too big, right? I mean it was funny for Henry Saini. He segmented his sales team at 80 million an ARR. That's a little late for a lot of people here. Right? But we can learn a lot from ZoomInfo. It's sales and marketing efficiency, which is crazy good that early. The fact that there's still only 11% intern today and why. And so those are the next level gifts, right? Is learning from the public companies and the real unicorns. Because there's something in each of them that you're like, holy shit. This information was not even though it was public, in some cases it wasn't even known just a couple years ago. Right. So that's to answer the question. The crisis. The question is where are we in the crisis in valuations? I'll give you maybe a little bit. I went to maybe half the VC sessions. I'll probably give you a different perspective on them. First of all, as I said in the opener, there's no crisis in sas, there's no buying crisis. And again, and I mean this a little bit meanly, but there's no excuse for to not hit most of your plan this year. There's no excuse every look and again, look at the public companies. Look at Snowflake and GitLab and Zoom Info. I mean growing almost 60% at a billion in revenue. Yes, Zoom and Shopify and folks that were huge Covid beneficiaries had a bit of a hit, but even those have resumed their growth path. So don't. There is a downturn here in venture, which I'll chat about. But the downturn in SaaS at best is uneven. At best it's concentrated in overfunded unicorns and some parts of consumer. But the economy, even though it's weird, there's inflation, there's all it is close to as good as ever been. So. So sell your product. Right. So, but. But valuation. So I just wanted to repeat that piece because ultimately they're connected, but I heard half the ducks. Let me be clear on the valuation thing, which I knew before I came out here, but I knew even better when I talked to so many VCs here. It was a reminder that let's go back from the top and like Christoph touched on this, but we go in more detail. The highest stage of ventures. Crossover. Crossover funds. TCV is one of an early one, but even mutual funds that invest in unicorns and why these are crossovers is they have a dedicated amount of capital and they can pick a public company or private company. VCs mostly can do this, a few can Andreessen and maybe Sequoia. But 99% of VCs you meet legally, they can only invest in startups. Whether they're late stage or early stage, crossover funds can go where it's greener. And for a long time until this boom, until the 2019, 2021 move, crossover funds would be very careful and they would invest in. They would find a tech company, that IPO that was a little undervalued, that people didn't understand, and they put it, maybe put 50 or 100 million here and then they'd find something funky like Atlassian no one ever heard of, that was maybe bootstrapped and they'd give them some money. And then what you started to see as unicorns and decacorns rose, all that money went from public to private because holy crap, like Sequoia invested at Zoom at a billion, 12 months later it IPOs at 4 billion and 12 months later it's worth 80 billion. So everyone in the world wanted to do Zoom at a billion because it was the greatest play on mankind. So crossover ventures, they are investing 0% in the private market. All that money's gone at the top. Okay, then there's different types of growth, late growth and growth. Anything north of a billion is frozen. The deals aren't happening. And when you read there's several unicorns that got announced today, I think on TechCrunch, I'm pretty sure all those deals were in process before the crash. I might be wrong, but I think if they say it's not, they're either misinformed or lying or euphemistic. Okay, there are no, there are basically no deals above a billion being done. There will be an exception. But when, holy cow, when companies like GitLab are at, you know, 400 million, growing 70%, and they're worth 5 or 6 billion. You can't invest in a unicorn anymore. The math does not support it today. It could come back. So crossover, completely frozen. Late growth, semi frozen. Right. So this. And then this iceberg kind of melts a little bit as you get closer to seed because you have a longer time horizon. Valuations are not as variable. And so kind of as several folks said, starting with Christoph at the early seed stage, I would say folks are about half as active as they were 60 days ago. So you have to try twice as hard, meet twice as many people, and maybe be eight times as patient. Not twice as patient, but I think it's about half as. As. As open. Zach Collies, who did the last session, he's. He's a prolific angel investor. We chatted after. I'm like, how you doing? He's like, my. My. My deal flow and my deals are down 50%. I thought he was gonna say they're up because he's very active. Right. So I think that ties to 50%. And then at the top, it might be 5% of what it was. And I'll give you one last insider example. There's a company I invested in. It's a little funky, but last year it went 1 to 12 in one year. That's pretty good, right? That's pretty good. And they had 100 VCs that wanted to invest last year. And he decided three weeks ago was the right time to raise. Perfect timing. And he sends me an email. I'm like, listen, don't read everything on the Internet. But maybe wait, like, where were you in December? Or maybe wait. He's like, no, I'm gonna do it. And those hundred shrunk to two. One hundred people would have funded him. Now, it's not a cheap valuation, but it's not a unicorn. But the hundred shrunk to two. So that's an anecdote now and then. Let me finish. What's different about the two? The two folks, and one of them offered to invest 50 to 75 million. The other offered to invest 15. So very different structures. The difference is, one was a very. Was a big growth fund, one was smaller, but neither of them had a lot of scar tissue. Neither of them had a lot of companies that they're digging out that were worth 5 billion and now are worth 1 billion. That triage consumes oxygen for individual VCs, but it also consumes oxygen in the fund. And I only worked at someone else's fund for 22 months. But when you go to a partners meeting in a VC fund on Monday and it's four hours longer all day at big funds, unfortunately, the yellow lights take up all the time. And the more, the tougher times are, the more all the time is. Well, you know, our company, whatever, mug, mug.net has eight months of Runway. What do we do like. And it just. The tougher times are it consumes all the air so deals don't get done. So the two out of the hundred that came through weren't overloaded. Not with dogs, not with red lights. Because red lights are painful. But then you don't talk about them ever again. But the yellow lights totally grew in every VC's portfolio. Now they're full of yellow lights. But these two are new. Like one has about a billion to invest, one has 400. But they're new VCs, not brand new VCs, but new funds. And so an insider tip, if you are fundraising, figure out now's a good time from new funds and newer VCs that have less baggage. And if you look at their portfolio and they invest in Bird and Bolt and these other high profile and nothing wrong with those. I mean they tried their founders, but if you see those like may, maybe, maybe they're, they're. The odds that comes through are pretty low today. Right? So yeah, a little bit if it works or, or I'll repeat it for the crowd. Oh, hey, Jason, what would you tell to your 20 years old? Jason? 20 years old? Yeah, I wasn't. I don't know if I had enough presence of mind at 20. So maybe I'll answer the question differently. Right. I think, look, I don't have any, I think I. A couple things I would say one in jet. Well, maybe 20. I'll go with 20. And then maybe I'll go like 28 or 30. 30, 33. But one is stick with everything good longer. Everything good longer. Don't be impatient. A lot of folks that have a lot of passion, like me, are impatient. They're impatient to do great things. They're impatient when the people around them are not as committed, they're impatient. And if you join something, either as an executive, a VP or a director and your boss is great, but there's other things that aren't staying. Stay. If you have a great boss, even if the growth, even if the growth slows, even if there's issues, stay with the great boss. If you're a founder and you have something good, do it longer. Don't quit. Don't, don't move on and don't wish that you ran a hotter startup. Like time. If you do something great, you know, time is, is your, is your ally comp. Everything compounds. Everything compounds. And so that's my advice to the 20 something self is stay longer. So stay longer at everything. And I'll tell you, like, I'm most of all the founders I'm impressed with. I'm most impressed with founders that I meet. And, and I'm like, how you doing? Well, I'm at 2 million in revenue and I'm gonna, I'm gonna grow, you know, 2.5x this year. I'm gonna go from 2 to 5 or 2 to 6. I'm like, oh my God, that's great. When did you start the company? 2012. Go on. I did a go, go read five interesting learnings from UiPath on Saster. UiPath took 10 years to get to 1 million in revenue. 10 years to get one minute. Those are the. I respect all founders that give it their all, but those folks are so much better than me. I could never go 10 years to a million in revenue. So. So go longer. What does hiring look like? I think that I see so far, far zero benefits to hiring from these issues here. Yeah. First of all, a couple reasons. First of all, this, this first thing, like, is kind of mean to say. I know I'm gonna trigger some people, but the problem with small layoffs, like if you lay off a small number of people, a lot of them are not the best people. So great, like some company lays off 4%, like there are gems there and go find the gems and hire them. There really are gems in every company and layoffs suck. But usually they're cutting the bottom 10% of their performers. So these layoffs don't help in SaaS. They don't, they don't address the lack of labor because it's terrible. If they lay off a third, like be on it like that day, like just be hitting them. But, but if it's single digits, there's a gem. But maybe it's hard, it's tough, but only a gem. So that's not helping. And despite TechCrunch and Twitter, there's not that many layoffs. There's not that. It's not that big of a deal. So that's not helping the lack of hiring. And everyone, everyone that's big is hiring like there's no tomorrow. Aws, Azure, like, I forget I'm going to get the numbers wrong. I think Amazon has 10,000 open positions out in AWS. I think Azure is like 7,000 Google. And so I don't see. I hope that people don't arrogantly quit like they did during the great resignation, but I don't see any other relief. I think hiring is harder than ever. The only thing I will say informally here is cry me a river. Because every single year I've been an entrepreneur, hiring was hard. And it's either hard because it's. You're early in an industry and there's no talent at all. That's actually worse. Anything you think it's worse when there's no one available. Let me tell you. When there's no. I've done multiple companies where in the beginning, the beginning of E signatures, in the beginning of implantable batteries, there was nobody. Right. And so, yeah, cry me a river that a hundred people want to hire your vp, but at least she exists. Like, it's actually better today because the people exist. Okay? It is better than it has ever been. And of course it's competitive because there's more startups than ever, but it means there's more talent. So I still think, I think there's nothing harder as a founder than recruiting or a vp. It's never easier, but. But I'm not sure it's harder. It's just different. And so you have to evolve your playbook. So, hey, ages on.

So yesterday you said we're all candies and not painkillers.

We're all vitamins and not painkillers. Yeah, Sorry.

So can you elaborate a bit of that?

Well, yeah, I mean, I just think there's a lot of VC isms that are a little bit dumb and trite and there's germs of truth in them, but you don't want to take them too seriously a lot. You know, VCs are like, I don't want to invest in things that just make my company a little better. Like vitamins make me a little healthier. But painkillers solve a huge. Like, I need the painkiller when I break my leg. But the vitamins you don't really need to take. And maybe I don't even really understand that. I don't. I'm not sure that's the best metaphor now that we say it, but the point is, vitamins are kind of nice, but painkillers you must have. And so in the enterprise, there's a handful of problems you have to solve. You need your CRM, you need your erp, you need your human capital management, like these. These are categories of software that have existed for 30 or 40 years for a reason. And you can mock Salesforce or Oracle or Workday or these, but these are, these are endemic issues that will always need heavy software, right? They're, they're, they're, they're, they're painkillers. And then a lot of folks will say, well, great, another, you know, video app. Like I don't need, I don't need a Zoom or like calendly, like, like, I mean that seems dumb. I mean, yes, it would be nice if the video and the audio synced and it'd be nice if people the link worked in the calendar thing, but we don't really, I mean, come on, this is not a, these are not earth shattering problems, these sorts of companies, you know, and yet. So my point is that even if that's true, even if some applications are so epic, they're rarely there in the beginning. Salesforce was a very rudimentary SMB app for a brief period of time, but it was, it sold to very small companies. It didn't even have custom tabs. It just had four tabs out of the box. And even compared to like where PipeDrive was in 2013, it did less. It was rudimentary and it became enterprise. It was not a. Salesforce today is clearly a painkiller. It solves massive enterprise workflow and issues. But it did not start there. And so that was my point. Don't we all, we all just really start with a 10x feature? One little thing that matters to a buyer that someone else doesn't do or ignores or doesn't have time to do anymore. That's what matters. Not immediately building being irreplaceable. Your first year. It's not going to happen. Hi.

So you were saying that we shouldn't worry so much about the economical situation.

What would you, with a large caveat for fundraising, how it impacts you. But keep going with the question.

Yeah, my question would be which mega trends do you think we should look at these days and these coming months?

I'm not that I'm not smart enough to know about mega trends. The only thing I think makes sense for everyone to do today as a, as a might, as a minor trend is I think with there is still uncertainty today, now is a good time to go a little more enterprise. Those budgets are not as impacted. There is some. And if, if you're, if you're not enterprise at all, don't, don't, don't start tomorrow because of, because a little bit of uncertainty. Don't go from a $10 a month product to a million dollars a year. But if you're already teasing into it, if your deal size is going up a bit, if your customers are getting a little bit bigger, I think so much of the money is going into bigger enterprises today in cloud that it's a good conservative bet to go to accelerate that six or nine months in your product roadmap. Go a little more enterprise now where there's less sensitivity, less volatility. You know, the most volatility is in high burn rate unicorns. Those are the Most stressed today. SMBs are still, there's still going to be some stress. There's weird things happening with SMBs with inflation and some parts of consumer. But so far there's no material impact in enterprise. So that's my minor, no megatrend, that's my minor trend. Right. And then I would say the other thing is that's the most important thing. I think the other thing just to be aware of it may not be true of your company. I think it's really, really, even though overall buying is, it's growing at insane rates, it's going to be a long time until folks are comfortable with lower quality revenue again. And what I mean is fintechs with 20% margins, companies, you know, folks with huge, with even, even folks like Twilio, one of the best companies in the history of cloud and SaaS with 50 something percent margins, they're suffering because their telecom costs are high. Things with margins below that, they're going to be out of fashion for a really long time. So if your gross margins are lower because you have hardware, because you have telecom, because of the way you do fintech, it may be time to rework things, right? Like as a really interesting example, like, like pay hawks here, they're whatever, they're great, they've done, they've architected the way they do payments differently. In Europe, Brexit is amazing. In the U.S. ramp is amazing. But those are like 30%, 20% gross margin products. These guys and probably others are 70%. Like last year, no one cared just grow like no one really cared about revenue quality. Twilio grew insanely because no one really cared whether it was 55% or 80% margin. But today these are the models that are enduring and it's tough with these little more dramatic. So you can't change who you are, right? But now's the time to go a bit more enterprise and increase your margins and quality of revenue and that those are the, those are the tactical trends. To take advantage of. We have anyone else. Mr. One Million Arrows.

What does future of work look like? Do you think the remote trend continues or like we see back to office more?

Ask the question again because it's getting late on the, on the second and a half day. What, what is future of work like in general, but be more specific.

Companies will go more towards back into office or like the remote trend continues.

Well, look, I mean we're all equally experts in this today. We're all running companies that in many cases were not distributed before COVID and almost all of us are distributed today. And so actually I only know a few things everyone else doesn't know, right? But I guess just one thing is, you know, I don't think this is profound. We're never not going to be distributed, right? We have learned these skills the hard way and we're all global and it's never going back. And there may be segments that go back fully to the office and certainly in places like London and Europe it's more common. But I can tell you in SF all the offices are close to leased now. They're full and they're all empty and they will never be full. You will never in SF classic SaaS be able to get anybody to go back to the office. Now the old school tech companies, the Apples, Googles that are in the Bay area, even Microsoft, LinkedIn, where they have folks that have lived in the bay area for 20 years and did not leave, they can find, they can try to force them to go back to the office, right? I don't want to drive 15 minutes from my house in Mountain View because most of their teams never moved, right? The Apple and LinkedIn, the Googles, they never moved. So you can just say come on back. But most of us, the vast majority of our teams no longer live. So it's gone, right? But that doesn't mean the office is dead. And I invested in, I'm a small investor in a company that used to be called hello Office, that's now called Raise, that does leasing and software for, for Y Combinator and RO coworking space and notion a lot of cool companies and they're doing pretty well now. And all the, all the folks that are unicorns, not all, a lot of them want a trophy office. They want 100,000 square feet, 150,000 square feet for when the teams come together or for the management team. So I think the hybrid office is here, but for tech it's an infrequent use. Right. But I don't know if that's super helpful.

Hey. Hi, Jason. So can we talk a bit? This differentiation in enterprise SaaS. So in MarTech, you have like bunch of players. It's not winner takes it all. Some of them are stronger and then there are younger guys like us that want to win the market or grab the share. So shall we innovate more in marketing or in products, kind of unique features? So what type of approach do you think is more important? Or it's just.

Well, look, there's a lot in that question. The question is what in crowded spaces should you focus on marketing or product or what you should do? I think It's Henry from ZoomInfo had a lot of good thoughts on it that I can reiterate now that he's at a billion in revenue. But I think, I think if you're early stage, it's the wrong. It's the wrong way to think about it. It's not bad to be in a crowded space. Crowded space means there's a lot of buyers and there's a lot of money. Crowded space means that crowded space also means you don't have to do everything. You don't have to do every single function to still get a customer. There are spaces where if you don't do everything, the products work less. Right. If there's a thousand vendors in the space, that means if you just do one thing well, there's enough ROI and there's enough mental bandwidth to buy that you can sell. And that's the reason there's a thousand marketing applications, because every CMO needs to generate pipeline awareness leads and they will test anything that works and shoot what doesn't and keep trying things. Right. Same in cybersecurity. Like, the threats always change. So cyber. I'm not an expert in cybersecurity, but since the dawn of time, security is evergreen. Because every year you've got to try to keep up with threats. Every year there's budget and so there's always room for innovators, even if they're niche solutions. And so for all these types of categories, I know it's trite, but you just have to find your 10x feature that someone will buy. What's something that one little thing you can do 10 times better that five people can build, not 5,000, that is being ignored by the marketers. Mediocre. And that people will pay for. And there is, there's. There's constantly more room in many spaces for this than possible. So you figure out your 10x feature. That's how you break out like Zoom info with Henry. Like they started off in a little segment of data around sales leads that no one else had good data on. They sold a little bit and they build on and they build on. Then they bought their direct competitor and they built on and they started with a little piece and we should have, maybe it would have been a good time to talk more if they attacked just a little tiny piece that they were 10x better even though general contact data was a commodity and they found one piece and they build it and build it and build it. And then his point was then in a lot of categories, eventually there's parity, right? And with Gong and Chorus, they bought Chorus and Gong and Chorus at a certain. I would argue Gong has now become a much richer product than Chorus. But there was a couple years where they both were these point solutions for listening to your sales teams and they were both great. But Gong out executed Chorus even though in his opinion the tech was similar. We could debate it, but. But his point isn't wrong is that there becomes these parody things where marketing is more important than product. But it's pretty uncommon. But before 10, 20, 30 million in revenue and sometimes a lot later. So.

Hi, one question. What would be your advice on finding a mentor on a personal level and for management and what are maybe things that we should be careful about when.

Finding for a mentor? Yeah, yeah. It's such an important topic. I wish I had the perfect answers. I'll say if I'll say a couple obvious things, then try to be helpful. One is that there's no point in a mediocre mentor. Don't hire washed out people. Don't hire someone that didn't do it. Don't hire and be very. There are some great ones. Be wary of expensive coaches. It's worth the money. But they better have done it. They better have done it. And I would say most mentors is, it's tough because the best ones don't really want to be mentors anymore and the mediocre ones want to be mentors. Right. So, but, but as a founder or exec, like it's your job to hunt and find the best because they're always hard. Right. But again, I really see negative ROI from a mediocre mentor. Right. So barely helpful. And then I'll give you the next barely helpful insight and then just try my best answer. I think you want two mentors. For most of the folks here, you want one mentor that's about 18 months ahead of you and one that's maybe four or five or further years. Right, the one that's four. Like if I. If we could get Henry from. To be our mentor, that'd be great. And he has so many good lessons. But you heard him on stage today. Oh, it's early. Around 80 million. Okay. So most of us aren't there. That's not how we define early. So I would give a lot for Henry to be my mentor, but not my only mentor. Right. And then you need someone. If you're at 2 million, find someone at 10. If you're at 10, find someone at 30. If you're at 30, find someone at 100. If you're. I was just talking with a great CEO here at 100, and she's seeking out everyone that's just IPO'd. That's her. That's. She's seeking them out like a heat seeking missile. Everyone. She asked me for three introductions in 60 seconds to CEOs I know that have just IPO'd are going to IPO. Because she's at 100, she's two years behind them. Right? So you need both. So those are no mediocre. You need two to really get the benefits. And then the only thing I can tell you is every great founder learns to be a nudge without being too nudgey. Like, I'm not great at it, but most folks, they're aggressive without breaking, crossing the line. Right? And you don't know who wants to be a mentor, but you might be surprised if you do a volume game. It's like recruiting for a VP today. Like, you got to talk to 30 or 40 VPs at least to find a good one. Three isn't enough. So do the same thing with a mentor. Try to meet, do some in person, do brain dates, do it over the Internet, do it over LinkedIn. Don't be too transactional, but aim for 30 or 40 and you'll be surprised. There was a moment in time when I didn't have that much to do. 2013, 2014. And I was sort of a man. I was an angel, but really a mentor. So, like PJ from Showpad spoke yesterday about way to 100. I was the first person they met when they came to the US from Belgium. I'm like, I'm pretty interested in like iPad for SaaS. Like, that was new. I'm like, you guys seem pretty cool. I'll be your mentor, right? But now there's just no way. Like, I don't care what you do. I can't be your men. Like, it doesn't. I don't care if you'll pay me a billion dollars in stock. I can't be your. I literally. But, but even for me, I. I could imagine a random time in two years I might have time. Right. And there were moments in Covid. I had time. There are moments. There are brief moments in Covid. I'm just speaking personally, so you wouldn't know unless you did the outreach at just the right time. Right. So you got to be tenacious. What's that? Yeah, but you got to make your luck as a founder. Right. It doesn't find you. Right. That's the thing. Yeah.

I like your, your statistics around SaaS spending. And nevertheless, we see some budget freezes with enterprise sales.

You do so.

Yeah. So some like especially manufacturing side of things. So any best practices around you just go higher because you need bigger budgets or do you go lower and split up the solution so you to get in the foot in your door?

Well, I'd say two things. One, one, first the strategic and then the tactical. The strategic thing is for everyone. It is true. But in most cases. And these freezes are new. Right. I would say this is really rough. It may not be true for you, but I would say really rough. A lot of SaaS companies are seeing 20% of their companies have freezes, but the top 20% are growing faster than ever. So instead of whining about the freezes, go hunt the 20% that aren't frozen. It's not 100% and it's not. It's not even one to one. You actually are coming out a little bit ahead because the top ones are growing even more. Right. Than the ones that are frozen. Right. So that's the strategic, the tactical thing is what folks are doing. There was just a little sidebar conversation that Jack Wright on our team said. When it's frozen, it doesn't mean it's inaccessible, but you may have to touch 10 times as many people at the company. So don't give up. If you talk to one person at your buyer and she says our budgets are frozen, well, have you talked to the cmo? Have you talked to the CRO? Have you talked to the other vp? Have you talked to all of them? You may find if your product is not $10 million a year, that there is still budget, but it's a different way to access it. Freezes are not all frozen, but there's always extra budget, there's always innovation budget, and there's always unused budget. But, and I frankly didn't even fully appreciate this until I learned this talking to a bunch of leaders here. You might have to talk to five to 10 more people at those frozen companies to open it up. But it is often, if they're not going bankrupt, it's often openable if they really want it. But you just need all the stakeholders to say yes, not just one. Hey, hey.

Over here.

I have a question around scaling from founder led sales, especially if you're good at closing.

Thousand sales reps. What? You said a thousand sales reps. No.

Moving on from founder led sales.

Okay. I could do that better than a thousand sales reps. Yeah, we need to get. I don't even know if Henry has a thousand sales reps at Zoom Info.

Especially if you're good at closing as a founder.

Yes. So if.

Good question A would be is there like a ballpark estimate for the ARR and when to do it and then if how like just feeding with SDRs and keep being the closer or actually bringing in someone who takes over completely from you so you can get a bit like hands off and more strategically laying out for the next years.

And so there's a lot of questions there on founder led sales. And actually it's a discussion that I don't think can be discussed too often. Because if I have to talk about the single biggest mistake I still see with founders I work with is screwing this up, to this day, they screw it up even more often. I see it screwed up all the time. And I'm going to, I'm going to come back and tell you when, but I'm going to. And I want to talk more about this, but I want to. If I want to give you the number one mistake founders make today that I don't know that they made that often five years ago and definitely didn't make it when I was doing it, is they step out of sales immediately. And here's the one thing you gotta learn for founder led sales. When you hire a VP of sales or direct or whatever, head of sales, this is how many minutes you get back in your day. Zero. Now, now what does happen is if they're any good, they rework your calendar. Instead of the co being the opener and the middle er and the closer, they handle the closing and they handle the opener and you become more of a middler. Okay. You spend your time being the visionary, the architect, the product expert, you jump into the deal and the customer falls in love with the CEO and maybe even the CEO even does the extra demo. A few things they don't do builds the relationship, builds trust, and maybe doesn't have to send the contract out for his signature. Okay. But you never ever, ever, ever get the time back. At least not very much of it. Now if you're. There are times when you're 100% in sales, you got to get a little bit of your time back. But the number 1, 2, 3, 4, 5 and 6 mistake I see founders is they finally hire a head of sales and they're like, well, I'm gonna spend 5% of my time in sales. 100%. No, no. 90% of the time, sales plummets, plummets. So if you accept the fact that you know you need a head of sales and then you accept the fact you're not gonna get any more of your time back, which is hard emotionally for found hellofounder's like, I wanna get back to product. I'm tired of sales. I want to get to know if you built a self serve PLG product, then great. But you didn't. You built a product that needs. You'll never get your time back. If you accept that, then you will actually hire the right VP of sales. Because instead of hiring someone with the perfect resume so you don't have to sell anymore, you will hire a wingman. You will hire a wing person. You will hire your Rio. I haven't seen what's the new top gun movie called? Maverick. Do they still have the one in the back? The Rio? You're higher, you got. One of you has got to be the Rio. Like you're still in the plane together. Okay, you don't get to get out of the plane and all of a sudden you will hire someone you want to get in the plane every day with. You want to co sell together, you want to backfill together. You want to figure out what she's good at and then get out of her way and then do the stuff she's not good at like. And you will have a radically different approach to the hire when you accept the fact you don't get out of sales. And that may sound basic, but 9 out of 10 founders make this mistake. They don't want to be the real anymore. They don't want to do the work work. So those are the real answers in terms of when the actually the timing hasn't changed since like the first Saster post here in 2012. We're in the 10th year of Saster. Get two AES that hit quota. One's not enough. If it's one, you don't know why. If it's one, the VP of Sales doesn't know why. If it's two, the VP of Sale, VP of Sales is a hiring job mainly if you have two hitting quota and the VP of sales is good even if they're new, even if they're a stretch VP, they'll figure out what the two are good at and hire three through 30. If you hire a VP of sales before you have two reps that can hit quota, the risk factor is massive. The only time you should take that risk is when you are truly atrocious at sales. When you are so bad at sales. Horrible. And listen, it turns out it's hard for a founder to be this bad at sales because even though you're nervous to ask for money and even though you don't know the lingo, customers love to talk to the CEO. They love to talk to the CEO at Henry's level at a billion, they love to talk at 100 million. And believe it or not, they love to talk to the CEO. When they're your first customer, just use the letters CEO. Don't be arrogant, don't be Mark Zuckerberg from the social network. Just say, hi, I'm Linda. I'm the CEO of We're a small start growing startup out of Barcelona. We're 10 folks and we're here to solve your problem. That's magical. And any customer that's actually gonna take that call for those 10 people in Barcelona from the CEO, they're already interested and you can close them. You can, the CEO can close them. Even if you don't know how to close. It may take a month longer like, but you can close them. So anyhow, even if you think you're atrocious in sales, I doubt it. I think you're at least okay, middle, middle, mid pack. Because your skills as a CEO make up for all the other ways you're crappy as a head of stuff sales. But if you are, if someone gives you 3 million bucks in your seed round and you are the worst salesperson in the world, take the risk. Even if you don't have two reps and you can't hire reps, use the 3 million bucks because it's, you're almost certainly going to flush it down the toilet. But you got to do, you got to make a play like you got it and it works out. I've seen that work out once in a while, but boy, boy, it's risky, right? Yeah.

Okay, so a challenge when scaling up. I just got an email from a prospect. So we got money, we're growing, we get More meetings and we just got an email saying like, okay. Based on your marketing, your speediness of response and all this, it was great. But you know, the demo was messy and actually the UI is not really what I was expecting.

Sorry, sorry. Just slow it down. Because late night. This from a VC or a customer?

Customer. A prospect that was impressed with our marketing, with our messaging.

So you got. They were inbound.

Yes.

Well, whatever. A customer came in, they saw your website, they saw your marketing, they loved it. They didn't love the product.

Exactly.

Okay.

And it's pretty scary to hear when you are in a conference, when you're talking about product led growth.

Yes.

So I'm wondering, did you see companies dealing with this just because of the fastness of growth or.

Well, let's step back for a minute. There's a silver lining here, which is. I see. This is one. This is. If this is one of the things anyone can fix in. This is it June. June. What's June? There's a whole month left. Right. This is something almost all of everyone here, except you can do in June, which is make your marketing site better than your product. I wrote this in Saster and then I rewrote it. But listen to me. Your marketing site should be better than your product. It should be prettier. It should work well. You don't have to write a lot of code on your marketing site. Okay? You can do it yourself. You can hire an agency, you can do it in WordPress, you can do it in Webflow. I mean, if you have to, you can do it in notion, like whatever, but make it. It's easy to edit. Right? So I know it's not your question because I'm answering your question, but for everyone else, it might be a feature and not a bug up to a point. Because it's really a shame when you have. Especially when you have a very producty team and the product's great and they don't touch the marketing site and then they hire a mediocre marketer and he makes it worse. And I'm like, oh my God. Like this. That site doesn't even say what you do. I had one founder who walked around here and went to her booth and came to me and said, this booth doesn't even say what we do. So that's a booth that's worse than the product, which is not that different than a marketing site that's worse. So to some extent that should be true. Right? Okay. So that's point one. Point two is my co founder back in the Day, he did something that really upset me as someone that thinks they're ethical and up front is when we launched Back in the Adobe sign, he put 20 integrations on our marketing site, of which we did none. Now, other people do this. He's like, well, I'm not sure people want a Salesforce integration back then, but I'll make a page that says we have it and then I'll talk to the lead and then I'll build it. If we get three and we put them all up and Salesforce is the one they all asked about. So we built the first E signatures on Salesforce and he was right. I hated that he did it. I wanted to to kill him, but he was right. And so you have a little bit of that. The good news is your customer, your prospects are telling you what to build. That's a gift. They're telling you what. Most of us don't have enough extra leads telling us what to build. The bad news is your product doesn't do all of it today, but you can sequence it out. And so the next lead you get, like this, you can fill one of the gaps and then next quarter, two, and then three or four quarters later, you close the next one. That looks like them, right? Yeah.

One more, please.

Yes.

What is your vision for SAS TR Europe and how we as a community can help you in achieving your goals with this conference?

What's the view of Saastr Europe? We're still learning. We don't have to spend too much time on saastr, but since all of you invested all the time to come here, we did 2018 and 2019 in Paris, mainly for fun. They were cute. They're beautiful. They were basically, though large community meetups versus Sasa annual in the US we want to be the number one gathering in the world for SaaS. There can only be one number one, there can't be two number ones. Right? But Europe has grown up so much in SAS and this has been so great that it's. We want it to be as close to the US as it can be. Right? That's the answer for this today, right? There's probably a lot of ways that you can help, but if people really want to, there's two things you can do that would help. Number one is bring your teams. Next year. We'll continue to do more and more content, not just for founders, but for all of your team for sales Mar. And if you haven't been to the U.S. we try to have a lot of content. So if you bring your CS leader, your marketing leader, your sales leader, your engineering, your product leader. They can have enough value that in theory you could bring your whole team or even some of your mid level managers. So you can help tactically by bringing more of your team next year. And the other thing that people can help more in, in this room than you realize is, and we'll remind you, promote our inclusion program. We spend almost $2 million a year on our inclusion program. We give away thousands. It's not just tickets, but we do give away 2000 tickets. It doesn't look like it, but each person costs us about $1,000 here. You know, the average person pays 500 bucks, so we lose 500 bucks. But our good friends in the middle, thank you very much. Go get, go get your. Go get your badge scan. Because they paid half your ticket. And so but we have budgeted in. We would like 2000great less represented founders at annual and a thousand at Europa. And we do okay it in the US we came up short this year. I was going to talk about it at the inclusion brunch, but it wasn't. We didn't run out of time. We did a little better in Paris than we did here. We ran out of time. I'm frustrated. I don't know why, but socialize. Our inclusion program we have, if the 500, $600 is important, we will subsidize it completely. We give them early registration ahead of time and that's helping us reach our inclusion goals is like one of our top. We talk about it every Monday, every week. And we do pretty good on speakers. Our speakers have been at least 50% women and 66% less represented for five years. But we have more work to do on attendees because SAS is 80% dudes. Like, it is our list. We, our list is 100 people. We know the gender. Like forget about other vectors. We have 150,000 people. So if we send that list, it's going to 80% dudes, 20% women. So to get to 40%, like think about how much work it is mathematically. Right? And speakers. The good news for speakers is we can pick like, we just say like we said no mantles in 2017 and we tell all our speakers like, you have to bring a diverse co presenter and if they say no, we just say don't come. But with attendees it's like you ask the question, it's more work. So any help on spreading the word on our inclusion program is it's deeply valued and it's one of our. We work on it literally every single week. So. Thank you. Yeah.

Last question.

Yes. Yes.

How much of the great stuff we've heard over the last couple days applicable to network marketplace businesses?

Yes.

And who would be a great person to consult with on that specifically?

It's a really good question. I don't know. I mean a lot of the best SaaS investors do B2B marketplaces and B2B SaaS together. Right. And I'm embarrassed to say I'm not a marketplace expert and I'm even more embarrassed to say I'm not even sure I'm interested in it. Like, I mean I've done things that have marketplace elements, but getting figuring out the ratio of each side of the network and all those are not my strengths. What I have learned of the limited involvement I have is that look, if the buyers are similar and the ACV is similar, the people are similar, the motions are similar and it's pretty obvious today, but like if there is any genius in saster that's now 10 years old, it's abstracting product away from the fact that our go to market motions are pretty much the same in an ACV. Like it sounds obvious, say, but 10 years ago it was like it was really disruptive that hey, if Your product costs 20k and my product cost 20k, probably we have a lot in common as long as we don't talk about the features. Right. And, and frankly product and even engineering, marketing and sales are all pretty darn similar to price point. So that's the best insight. But I don't have the best mentor or other idea there. But. So I think the majority is applicable. But there's a small chance I'm wrong. Right?

Hi. It's working. Could I please ask for some more clarity on the point you made earlier because we hired a VP of sales.

Just a little louder because it's the end of the day.

Yeah, apologies. So you mentioned earlier that it's quite risky to hire a VP of sales or ahead of sales whatever with Anything less than 2 quota hitting account execs. I'm interested in understand why because we've done that with one quota hitting account. Exact. But in our case, you know, he helped a lot to put operations process in place and recruit. What exactly do you perceive the high risk to be? Is it because you're burning a lot more cash before you've got quota hitting people?

Are you challenging whether you should hire a VP of sales after 1A than 2 or what's the question? Sorry, I'm getting a little slow.

I'm trying to understand the risk. You said it's pretty risky. I'm trying understand what the risk is if you hire someone, say, because.

Because what happens is you talk to any founder here that's passed a few million in revenue, certainly past five. Ask them who their magical sales rep was. They have one. Okay. Mine was Joe Coletti. We had. I hired Joe back in the day at Adobe Sign, Echo Sign. He crushed it. And then I hired a terrible VP of Sales who hired 10 reps. Most of them never closed a single deal. And Joe was great, but he was a magician, and no one knew why he was a magician. Okay? Now, yes, if you're a wicked smart VP of sales and you spend the time with the magician, you'll learn what the magician is. But if you have two, you have run massive AB tests. No sales reps are the same. Some talk a lot, some demo a lot. Some are great closers, some are good middlers, some are great conversationalists. But you won't. Very few VPs of sales will be able to figure out your playbook. The playbook. Without two folks that can run the playbook, you're asking for too much. Right? And even our little team, you know, sponsors. Make this alive, right? And we'll do 30. We have 30 million of sponsors at Saster this year, 50 million next year. We have a tiny sales team. One of our sales guys has done 23 and a half million of that in two and a half years. He's our. Now we have a good team, but he's the magician, right? And when Brian, who's our head of partners or sales, came in, that might be him in the shorts right there at the sales off booth, if you want to ask him. Brian came in and said, we can't have one. We got to have five, right? To hit the plan. And what Brian did, which is rare, is he took a quota and he became the sec even though he was the VP of sales. He became the number two AE himself, right? Now he had another one, but he left. But my point is, very few people could do that. And now you're nodding because you realize it's the playbook you don't need. A good startup. VP of Sales does not need 10 reps sitting quoted to know the playbook. They might like that to feel comfortable, but they need two so they can see what's working and hire the third, fourth, and fifth, right? And look, I did it. I. I say this because I learned it was true. But when I hire Brendan Cassidy is who I wrote about. Who was the first head of sales as LinkedIn to be mine. There were. There were those 10 reps when he came in and we got rid of eight. He kept Joe and he kept Sam Blonde, who's now CRO of Brex. Right. And brought in other folks. So we sort of had two, but it was really one and a half. So yeah, it can be done. But. But Brendan's pretty good, right? I. Most startups I work with that bring in a VP of sales at zero or that magician, they never figure out why the magician was magical. They never know why the magician was magical. And that's why what happens when you don't know why the magician's magical and you see this pattern so often is reps 3 through 10 close nothing. Anyone had that experience where like the next ones close nothing. Maybe not in this room, but maybe if we were later say nothing. Right? You have one or two. They close 400,000amillion a year and then you bring in. So they just close nothing. Right. Because it's. You need that playbook to put. To put for most VPs of sales. What's that? Are we over time? Is that the sign? Is this one more question? One last question? Yeah, we'll do one last question. So if your question isn't good, we'll do another one. Just so we're clear. I'll try to make it good, but if it's not good, we'll do one extra pressure. It's like a good. You have to end on a good pistachio or nut or something like that. The bowl. Right.

So the first two AES that you bring in.

Yes.

Are you. Who gives them the playbook? Are they good enough to bring their own because they're so different or is.

The founder trying to educate them and why that's a good secret sauce. There's. There's so many stories. There are folks who do like who are sales folks at Heart or Salish and they really they sometimes they like Henry said he it was too. It was too. He dialed in too many processes and systems early. But I think that's rare. Although not uncommon, but rare. Most of us can't train them. And so what you need is a natural athlete. You need someone that has worked at another SaaS company at a similar deal size. Another SaaS company. And then here's the third thing and Henry brought this up too. Smarter than average and love software. They've got to be anyone hired that magical are they smarter and love software. You usually see that they or they love your customer Right. They may not be a great closer, they may be quirky, but like, they can run the demo as good as you and the customers. My, my Joe, my guy, I remember the first year I went to Dreamforce. I'm walking in San Francisco and this big guy grabs my. My blazer arm. He grabs me. Jason, Jason. I'm like, who are you? He was from an accounting company called Intact that Sage bought for a billion. He's like, I love Joe Coletti. Like, great, great to hear that you love Joe. No one in 2000 back then had ever been so passionate about E signatures in the history of the. You know, now there's a thousand people at DocuSign and everything, but no one had ever loved putting a signature in a document quite the way Joe had. And Joe had also been a thespian. He was an actor, so he could. And he was, he was, he was good with computers. But his sales job before that, he was mid pack. Now bottom, bottom. Bottom. Bottom's tough. But he was not a top seller before that. But he had another 20 IQ points and 20 EQ points of passion. And I think a lot of the. If you talk to founders and ask that magical sales, they're going to hear, and Henry said it too. They got the early guys had to be smarter and they have to be able to do the demo and they have to have passion. And then we can break on this. You can boil all of that down to one thing and we'll leave it at this, because this is a mistake. I've written about this so many times and so many of you make this mistake. Your first, the sales reps you hire as a CEO, you have to be willing to buy from them every time. This is actually true of a VP of sales too. But every time I talk to a founder and they tell me my first three sales reps didn't work out, I'm like, it's a bummer. And I always ask them, the next question is always the same. Would you have bought from them? No. Why'd you hire them? Well, they worked at Twilio, they worked at Slack, they worked at GitHub, who cares? Those are great brand. Would you buy from them? And Joe had come from a fifth tier mailchimp competitor, but everyone came out of meeting him. I want to buy from this guy like in the meeting. And that's infectious, right? That's infectious. And again, boil all those characteristics of sold at your acv, passionate about product and do a demo as a founder, they will fail those criteria. They will not meet those criteria if you would wouldn't buy from and if you would buy from them inherently they're going to meet these criteria. So do not hire sales reps yourself that you wouldn't buy your product from. Just pass no matter how desperate you are. But. And then I'll leave you with this is this is for sure true. Henry said the same thing in the billion revenue. Once you hire a VP of sales and once she's proven herself. Once she's proven herself, the rule doesn't hold. You cannot force your VP if your VP of sales hits their number and they inflect the curve and one month or one quarter after they hire, sales are better. So they've proven those. It doesn't matter whether sales have gone up 2x but just that they've improved. They will bring a much more heterogeneous type of sales rep. They will bring in reps that you think are dumb. They will bring sales that you that would drive you nuts as CEO. They will bring in reps you would not want to talk to. They will bring in reps with add. They will bring reps that still use Windows devices. They will bring in all these types of folks. But she knows what what it takes and she knows different. That sales is still a a human process and there are different ways to get there right? Different motions and let it go. Once you have a good V visa, let them hire whoever they want within reason. And they will be much more diverse in all ways than anyone you could ever hire because you, you don't need to buy from the ones they, they they hire. So thanks everyone for the extra time. Thank you so much for coming. Everything was great. Thank you.