SaaStr 733: Advice Every SaaS Founder Needs to Know in 2024 with Sam Blond and Jason Lemkin

This is Saster's Founders' Favorites series, where you can hear some of the best of the best from Saster speakers. This is where the cloud meets. The UK's biggest SaaS-only event of the year returns to London in June 2024. We're hosting the 5th Saster Europa across 2 days and expect 3,000 SaaS and cloud professionals to join us. Saster Europa is unlike any other event in Europe and brings together an international community for 2 days of action-packed insights and learnings. Podcast listeners can save an exclusive $200 on tickets by using code FAVE200 at checkout. That's FAVE200 at sastereuropa2024.com. Get more when Northwest Registered Agents starts your business. They'll form your company fast and stand up up your entire business identity in minutes. That means business-free domain, business email, website hosting, address, mail scanning, business phone app, all within minutes. Visit northwestregisteredagent.com/saster to start your business today. Up Today: Advice Every SaaS Founder Needs to Know in 2024 with Sam Blond, former CRO at Brex and host of Saster's CRO Confidential podcast. And Jason Lemkin, Saastr CEO and founder.

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

A block and a half.

A block and a half.

Wynwood, Miami.

So I mostly want— what I want to open it up for questions. I just got a couple questions I want to talk about, Sam. But even just since we last got together, the world of venture, the worlds of sales, the worlds of efficiency that Adam and I touched on, it's changed so much. So I want to talk a little bit. Queue up the conversation with Sam about how the world's changed, and then feel free to ask your questions on scaling revenue or anything else. But maybe the first one, I want to do the second 2 of 3 on sales, but the first one on learning from Founders Fund, help folks understand now that you saw it from the other side, what's the real bar today to get funded? What's it like in general? And if you're not AI, what's the bar? For sure.

First, thank you for having me.

Thanks for coming back.

And thank y'all for coming. Okay. So when I joined Founders Fund, it was late 2022, mid-late 2022. And we were coming off of an environment where startup funding was as fruitful as it had ever been. 2021, first half of 2022. And then coming, like my personal experience from, I joined Echosign in 2008, but really through the 2010s. My experience as an employee at a tech company, and I was spoiled in that the tech companies that I worked for were able to raise money from exceptional VCs. And I joined the company at a stage where they had already realized some of this success and continued realizing some of this success. And then I see on LinkedIn all of these posts about we, we raised our Series A from Founders Fund or Sequoia. And so I entered this world of VC now almost 2 years ago. Just thinking this is how the world works.

Everyone's like that.

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

You know, it's interesting. It's good advice for folks. Not only is the bar higher than folks realize, especially today to get funded, it's a reminder to folks that even bigger funds— Founders Fund has billions— even bigger funds have flavors. They have flavors. And for example, when I caught up with Byron Dieter most recently from Bessemer, they're managing $10 or $20 million. Byron's done a ton of the best SaaS companies, if you don't know. He'll only do AI. There's exceptions, of course, but if you're not AI first, there's no interest. And we could talk about why. Founders Fund has different flavors. They don't, they've had good healthcare. They don't want to do healthcare. They've done Palantir and Anduril, or however you pronounce it, and SpaceX, SpaceX. And so people, you got to meet with more people because of flavors. And you especially have to meet with more people if you're not in a hot category. And then I'll tell you, you might not have heard this story, but there was a story around when I started investing. A little bit after I started, but must have probably was around 2015 or so. VCs have their LP meetings where they bring their own investors together. They have different names. And Peter Thiel, who founded Founders Fund, got up and apparently said something. This might be slightly apocryphal, but I think like Adam's Dropbox story, it's probably 80% true. And he got up and said, our goal is a $100 billion company per fund. And jaws dropped in the venture community. But he had been the first investor in Facebook, which is worth over a trillion. He had co-founded Palantir, which is now worth— it wasn't worth $100 billion then, but it's worth at the edge of $100 billion. And his point was tech is so big that we can productize— every year there should be a $100 billion company, and that's our job, and nothing else matters. And it sounded crazy in 2015. It sounded prescient. Peter obviously is a controversial guy, but I don't think anyone says he's not smart. So he was probably 8 or 10 years ahead of the but, uh, it's still hard today, but realize there are folks who are looking for a billion isn't enough. It turns out a bill— you don't realize until you're on the other side of the table that selling your company for a billion is a frigging dream. I didn't get there as a founder. I may never get there, but even that, unless if a fund is even mid-size, it's not enough, right? It's not enough, right?

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

I think, and then let's move and talk about some other things. I think just for folks in SaaS, especially in B2B, what got confusing in 2021 is things blew up so much that the truth is in venture, the bar got lowered. And what I mean by that, it's not like lower growth was okay. It wasn't, but all of a sudden it seemed like there could be 20 payroll companies and 40 analytics companies, all at $10 million ARR, going 15% a month growing. There was so much budget going to Adam's point. He doesn't even know all the SaaS companies they have at Vimeo. There's so much budget flowed into B2B that it seemed like there could be 1,000 unicorns. It actually made— it's crazy. We can all laugh about the— that 800 of the 1,000 unicorns are junk. They're junk-a-corns. It's going to turn true, but it doesn't mean it didn't make sense with the way we were deploying money in 2021. And I think in SaaS and B2B, we're going to have several years of whiplash from this. We're still, it's still going to be confusing where the bar is. Related one, and I do want to save time for questions. This one's going to be like slightly critical, only a little bit, but not literally critical. But a lot of the advice that you give, that other folks give, to some extent that I give, it is based on all, I'm working at a lot of hits. It, and I, maybe it's not, maybe I said critical, I shocked you a little bit too much, but you have had a bit of hits and even some of the stuff you did that was less successful was still venture-backed and high growth, right? You still worked at a lot of companies that grew 5x in one year and at least had $20 or $30 or $40, $50 million to work with. And so I think it seemed like in 2021, that advice worked for everybody. I think today it works for view, right? So what have you learned? What works less well from the classic playbook in 2024 that maybe we should walk back a little bit or modify?

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

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

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

Let's imagine I went from 3 to 10 last year. Pretty good, right? So I added 7 in bookings. I probably needed 7 reps to do, to add 7, right? Even if I'm efficient, I probably needed 7.

Yeah. Okay. So I think I've come up with something that might be actually helpful. So when you, whether it's 10 to 20 or 2 to 5, regardless of the sort of scale of your business, if you are growing, something or some things are working and What, what I see people oftentimes doing when things are working is try and find other things to work. And it like shifts focus away from the things that are actually working. And the right thing to do is like double, triple, quadruple down on the things that are actually working for the business. And then with the headcount specific example, the thing that I would just make sure of, if the constraint to growing faster is that you do not have enough salespeople to work the demand that exists for your business, then you should absolutely hire more salespeople. I think if you are scaling really efficiently and quickly, and you have sales reps that are well-fed, but not at the point of breaking, I, I, I actually don't know that I would add more salespeople.

Stay hungry. Yes.

Make more money. And look, you can even present it to the sales team. You can say something like, we've got a couple options. We can continue hiring more salespeople and keep your quota the same that it is. We can increase your quota a little bit and not hire anybody, but we think you'll blow it out in that example and make more money. And by just thought exercises like that can be valuable.

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

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

I see.

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

And okay, so follow up for folks, for founders here. We were trained a certain way in 2020, 2021, 2022, right? We were, we learned that's a lot of years. It wasn't 3 months. It was a long time. When you go to hire a head of sales or head of demand gen or head of marketing, and they need 5 or 10 people to get going because that's how they were trained. And they say they don't, but they do. How do we handle this situation in 2024? Because we don't have budget for them to hire 10 AEs. And a whole SDR team and a whole ops team or 5 people on the marketing team on day 1. But it's hard to get people to see that. Do we give up on those people? Do we give them a shot? Is, is it a whole, in my term, is it a whole lost generation of folks?

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

First one, 2015.

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

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

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

All right. We can take a few questions.

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

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

Hi.

What about moving towards product-led growth and how do you balance your team while you're moving to product-led growth?

I will answer a variant of what you're asking based on the conversation we had. I think, and I teased this with Adam earlier in the conversation, I think folks that have been doing this a long time, me, Sam, Adam, have been doing some type of self-serve freemium long tail since the beginning. We're passionate about it. Somehow this got corrupted the last 4 or 5 years as a way to do it all on the cheap. I can't tell you how many startups I've met with gross flows at $10 million, $14 million, $20 million, and they come to the board and we've got the answer. We figured it out, Sam. Product-led growth. We've read about it. We've heard about it. We can do everything with 2 reps and a free trial button. Our product doesn't actually work as a free trial, but one of our engineers said he would work on it this weekend. But all problems are solved because we've— sales team can't close anything. Okay. It sounds silly, but I can't tell you how many conversations I've observed with— and listen, Hail Marys are a terrible idea for startups, but they're even worse when they're not grounded in reality. And the idea that you can take a sales-led motion, especially that has stalled, and that product-led solves your problems. If your sales-led motion slows down, I will tell you the simple answer, and this is so important. You have fallen out of product market fit. You have, it happens all the time. And what happened? And I'll tell you one of the things I got wrong. Sam talked about too much capacity planning in the early days. I didn't think this vitamin versus painkiller, I didn't think it was true. Okay. Because every app I grew up with in my generation, once it hit a certain level of scale, it just kept going. All of our generation. Us, Box, Bill, all of them. They just once they— there was some we grew up with that never hit escape velocity, but once they did, they all became— I don't know what's the good one, a vitamin or a painkiller. The painkiller is a good one.

You want to be the painkiller.

I remember what Box was like when it launched. It was a vitamin, but it became a painkiller. It's a billion. It hit a billion in revenue. They all became— but it turned out it's not completely true. And Adam just said he could probably cut 50, 100 SaaS apps at Vimeo. He doesn't think it would make a difference to the CEO. And I bet a lot of folks think those are mission-critical apps on the other side. So my rambly point is, if your growth has declined, you're one of those bubble apps that Vimeo doesn't need. Change it. Get your team together and say, frack, we're not as important as we thought we were. We're just not that important. We're not— we're more than a nice-to-have because there's too many nice-to-haves, but we're not— this business will die. We're not an ERP. We're not mission-critical. And change it. Turn into And if penetration testing isn't enough, I'm not saying it isn't, do more. Turn it into a— turn our apps into mission critical, however it is, because we don't need any more apps. We don't need one more app. We can run payroll and we can use— we can run our video and we can do like— the world will not end if we don't buy your app. And that's my kick in the ass annoying thing, and I'll shut up, is see if you really have product market fit. And if you really love PLG, add it because you want to do the long tail, but don't look for a Hail Mary. There is no Hail Mary there, right? I'll say one more thing and then we can move on to another question. Not only is it this, I throw my head in my hands at the board meeting kind of thing is the magic solution. Here's the other thing that I think Adam may nod his head. If you don't architect around this in the beginning, it's almost impossible to add it later. The sales-led enterprise motion has many benefits over a low-end motion. The MRR is higher. You don't, but the thing is you can skip a lot of steps. You can do manual onboarding. You can do manual configuration. You can hire consultants and services and deployment. PLG, the product has to be so much better. It has to work in one. It has to be magical. And I don't think Salesforce itself is that magical. It's done pretty good. It's at $3 billion.

It's—

Salesforce every couple of years comes out with a PLG product that the low end— 11 times in our history, Adam and I, there's a new self-service version of Salesforce that I don't think has ever been more than half a percent of revenue because it's not their DNA. And so just if you're going to do it early and do it out of profound passion, because it's impossible to bolt on later. It's impossible to bolt on. Maybe not literally, but I can't— we could go through all the public companies and think who's bolted on a magical, cheap self-serve addition that's been 20% or more revenue. It's probably zero, right? So start now. It's not too late.

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

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

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

Exactly. Whether you're reaching out to a C-level employee or bottom-line employee.

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

One thing I'll add that it took me a while to realize is I think that's a Great story is not, listen, any SDR 2 months out of college can send a cadence, right? On their own or with an AI tool now, but not that many have the maturity to really reach out to power, to really know, Mona's nodding with me because she can do it, to know how to target a CEO and actually say what matters, like CEOs don't have the time, but CEOs read like every email, every email. And it's just, they don't— Howard's nodding his head. Even when he was running Yext, 22 quarters as a public company, he didn't respond to any of them. And if the email was great, if it was like, if it was going to solve one of Howard's top 4 problems that quarter, he would actually respond personally to the email. Tops down, bottoms up. What I have learned is a lot of folks in sales are intimidated to properly go to the top. They don't have the life experience. They haven't, they don't know what it's like. And they're like, those letters are really scary. And I think all of sales is scary myself. I think it's hard to, but if you have that gem on your team, lean into it. Because I think Sam's example is the right way to do it, but you, people have personalities. And if you have a gem on your team that is comfortable reaching out to the top of the org chart and can write the right email and solve, do the research for half an hour and actually figure out how Brex will truly solve their problem, not send the same email or the generic Brex versus Ram thing that they don't even want to hear. I don't care about Brex or Ram. I want, I have a problem at my company and if Brex is the only vendor that solves it, I will buy it today. That's the email a CEO wants, not the how we're 3 cents cheaper. A rambly answer. If you have that gem on your team, promote them and lean into it because people will default to selling low. They're intimidated to sell high, right?

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

Yeah. The other thing I hope There's something I hope that I don't think it's going to be true, but I hope it's true. I hope in 3 to 4 years with AI and efficiency and the change of the world, that there is a whole legion of seasoned SDRs that are paid for performance that make more money that are not constantly churning out 6 months out of school. I know that Ashley's great at that. You guys did— Sam did one with Ashley who worked with him and is head of outbound at Rippling. And she, I think she hires 200 or 300 people a year.

Right.

Yeah. And she has an engine. She's an— most of us cannot keep up with that for a million reasons. I would love to have forever, if you could have 4 to 5 SDRs on your team, that's this rare bird that will stay a decade, that will get better and better selling to your stakeholders, that will know them and they are reliably making good six-figure income and they want to stay in their box. It's like a lot of the best AEs don't want to be VPs of sales. Don't let your best AE be a VP of sales and fail if you can help it. Right. And if you can find, it's hard, but if you can find a longer path for these gems, I think it's, I'm hoping it's part of the future because I don't know that this bottom will last forever. Question about the hiring. Hiring sales reps is really hard. How do you know after 30 to 60 days that it's not going to work and you should fire?

I think Jason has probably lots of content around this that's coming to mind. One interesting way of thinking, so there's subjective and there's objective. That's maybe the, the way that I would categorize it. There's also things like the cycle times that you have of your product. And so if you have a 6-month long sales cycle, it, it's gonna be hard from a purely revenue standpoint to determine whether or not a sales rep is successful. I think what you wanna have is clear expectations around what's expected in the first 30 and 60 days that are as objective as possible. And it's binary. Are we meeting these expectations or are we not? And then there is this subjective lens that is something like, what does your gut say? And I think it's certainly by 60 days, if your gut is telling you that this isn't really working out, the likelihood that changes is pretty low. And given the pace that startups move, you might be better off moving on.

And maybe let me just add One, two thoughts. One is if you're in founder-led sales, 60 days is a long time. You'll know if it's founder-led sales, you'll know in 14 days. In founder-led sales, unfortunately, you can't hire the diverse type of rep that a great CRO or VP of sales can hire. They have to be narrow. They have to be people that work on your wavelength, that talk the way you talk, that can do no-look passes, that you can send one Slack, not 100 a day, not being pummeled with the dumbest questions on Slack. You have to have this very narrow box and you'll know in 2 weeks. Okay. When you hire a head of sales, if she or he is good, let them expand the box. Let them hire people that you wouldn't hire or go longer. Or if Sam says, you know what, Jason hasn't closed anything in 6 days. I know usually it's terrible, but I know Jason, we're going to give them another pass. Just defer once you hire that person. But let me add one nuance. This is something I've been doing for years with VPs. And now I think in 2024, we should do with ICs, individual contributors, give them an offer letter that is signed and then give them 2 weeks to back out. Take the pressure off recruiting. Here's your offer letter, here's your comp. And then say to Jason or Sam or Amelia, look, the last thing we want is you to fail here in 30 days. You're an— you could not have done enough diligence. I know my company. You know your company. There's no way this rep that went through 4 interviews over Zoom and met someone for coffee. They have no idea how these companies, how Brexer, Vimeo, or Roam works. They don't know. And it's on you. And give them 2 weeks to join more team calls, to join meetings, to listen to 50 gongs, do everything, and give them a chance to make sure they believe after 2 weeks. Find some way where they have the job and they can say to you in 2 weeks, it's not for me. Find something. I've done this with VPs for years because there's nothing worse than hiring a VP and it not working out in 90 days. But in a startup, it's true of an Everyone's important today. You don't want to— the last thing I'll say, and then Sam, you can add to it. There's for years there's been this meme in sales, you should fire your reps. You don't want to fire anybody today. The cost is so high. It's so many lost leads. It's so many lost cycles. So you don't— you really want to— I think as founders and as leaders, we need to go the extra yard for as long as possible to have high conviction they will work. Not maybe, we should go further because the cost of them churning out, it's so, it's just destroys organizations. So I try to give somehow this moment after the offer sign to de-stress it. You don't have to sell me anymore. You got the job, Sam. You take 2 weeks to decide, is it for you? Some version of that I think we should do more of.

Jason's answer was smarter and more tactical than mine. So I'll try and be more specific and like actually what I would do, which may be different from the way that others approach it. We measure success based off of largely 3 criteria. The first is performance. Performance is objective over time. It's how much revenue is the rep generating during the ramping period. There are other objective metrics that are performance related. Can be pipeline, can be activity based, but actual outputs. And then the other two things that we look to measure success are subjective and they are effort and attitude. And when there is somebody that is not meeting the performance measurements, we then look at effort and attitude. And if you have somebody who is poor on either, if they aren't working that hard and they're not meeting the minimum of expectations, it's either a zero to Jason's point. If it's founder-led sales, if it's your first AE, I don't think you even have the conversation. I think you just move on. I think at a more mature business, it might be a one-time conversation. It's not only are you not hitting quota, but you're working what appears to be like 14 hours a week. This is a full-time job. There are expectations, especially when you're underperforming. And the attitude, very different, but same idea where, man, That negative attitudes, and this is likely true in any department, but it's certainly true within a sales organization. A negative attitude just spreads like cancer, where if you're complaining about the leads or you're complaining about the product or you're complaining about the manager, it just, it goes to the other reps and the person is actually adding negative value to the company. We would be better off if they weren't here. And so maybe that is helpful from like a lens to view the subjectivity from around effort and attitude.

The other thing is, and let's take 2 more questions. I'll just say, this is my— I'm embarrassed to say I had this epiphany a couple months ago and wrote it. I should have had it 10 years ago, but this is why I don't like some of this SalesFire stuff, even though it's true. It's always your fault when someone doesn't work out. Maybe you've known that because you've hired more people. It took me a while to be frustrated at people that quit, to be frustrated with people that I know could do a better job than they could do. It took me a while to not feel let down by some people as a founder. As founders, we get really We take it very personally when folks don't give a— not normal people, when we really believe in them and we know they're good, it hurts, right? And I didn't get bitter, but I would say I was at the edge of holding grudges for many years. And I was wrong. It's you didn't do the work. You didn't figure out if they were the right fit. They never know. You can never know enough about a company before you join. It's impossible. And it's just take it on yourself to help them learn more about the opportunity, right? I think it is possible. In the old days, back when we worked together in sales, there was, we had actually had a model. I don't know. Certainly Brendan and I talked about it, having a no voluntary attrition sales model. A lot of folks did it, it faded away. It's not a bad model for 2024 to have no voluntary attrition, to aim for it, right? That no good people would leave, but you got to go further in recruiting. It's always your fault. It's never their fault. The rep that didn't sell anything, you will be shocked at at how— maybe you have different stories. You'll be shocked at how many reps that are poor performing in one environment can actually succeed in another. Right? That's the aha moment. Someone could come into Brax and shit, I don't know how to talk to finance people. And they go somewhere that's seemingly simple. They go to Navant. It seems simpler, but it's travel. And all of a sudden they're great. I can't tell the difference.

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

All right. Last question.

Hey, this is great. Thank you. In the interest of efficiency and just economic efficiency, what do you guys think about fractional hires across fractional CMOs, fractional BPs? I know Jason actually mentioned that. Basically the poll you mentioned, every rep or every go-to-market member is going to have multiple jobs. You, I noticed, had a consulting gig for a little while of your own business. Curious your experiences there. What do you think about it? Good, bad, ugly, great, et cetera.

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

Yeah, just to throw it out real quick. Also, if they're going to do the execution as well, and I've never met that person, but I could see how it might work. Yeah.

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

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

You can.

A great head of sales that will actually carry a bag. A great head of marketers is actually willing to campaign themselves or to put together an event themselves. The great ones are always accretive. This is like a recurrent SaaS reposter for 12 years. A great head of sales will come in and take your 50 leads and turn them into more revenue than without them. They'll turn into $200K more revenue or $400K or whatever their OTE is. A great marketer will get you more leads. And so the idea that I can't afford a head of sales marketing, but the fractional one is going to save me money. No, it's always more expensive. It's always more expensive to give someone $50 grand and get nothing than to pay someone $200 grand and get $400 grand of revenue. And you just got to live that. And you just have to meet someone great. And the final point, I guess I'll say on it is this is like a transformational thing. I literally was talking with the CEO last week at Struggling at $20 Million. Growth had slowed. And what the main reason growth had slowed is the category had changed and they'd fallen out of product-market fit, going to our conversation. And I said, listen, I've been watching your company since 2018. And it just seems like everyone's moving faster than you. It's the same product. I don't mean to be a jerk because I don't use all of it, but Where's the mobile app? It's like, it's time to get the mobile app since 2018. And I'm like, what you need is an incredible CTO that just iterates at this rate. And I said, have you ever worked with someone like this? He's honest. I've never worked with someone like that. So you've got to meet the Sam Blondes or whomever. Try to meet 3 or there's only so many in Miami. Try to meet 4 or 5 Sams the best you can. And then you have a bar and they'll always be a creative. It's the ones below that suck up all your money and it's gone. Anyhow, Sam's insight's more than mine, but Sam at Flexport, high value add, other stories, but can't afford it. It's, it's all your money is going to just going to flush the money down the drain, right?

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

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

Thank you.

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