E42: Cutting the Fat and Building Sales Machines That Scale with Tom Hanrahan

Hello and welcome to the Revenue Leadership Podcast by Topline. I'm your host, Kyle Norton, CRO at Owner.com. And every Wednesday we dive deep into the strategies and tactics being used to drive success by the best revenue leaders in the world. So join me as I sit down with revenue operators to discuss actionable frameworks that you can implement in your business today with no fluff, no sales pitches, and no platitudes.

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Today's guest is Tom Hanrahan, who's the EVP and Global Head of Sales at Square, where he's been for the last decade in increasingly senior roles. Uh, prior to Square, Tom held senior leadership positions in sales at LivingSocial, Amazon, uh, before, uh, after cutting his teeth at Aramark, uh, back in the day. And we are going to talk all things sales efficiency, sales profitability, how to build a more modern type of sales team. And so, I'm really excited about this one. We've been talking about it for a while, so I'm excited we could get you on and appreciate you joining me, Tom.

Yeah. Thank you, Kyle. Thanks for having me. I know it's been a process to get this scheduled, so excited to be here.

Yeah, it always is. So, what did I miss in your background? Just give people a little bit more color on the sales leadership journey and then we'll dig in.

Oh man, I think, you know, for me, I've just always been a salesperson at heart. I mean, I remember when I was a kid, I sold my stuffed animals door to door in my neighborhood so I could buy my mom a Mother's Day gift. And then in college, I was a first-generation college student and was looking at a lot of potential debt to pay for school and bought a PA system on eBay at the time. It was a little sketchy. I'm surprised it even arrived in one piece, but then taught myself how to DJ and was, for lack of better terms, a professional DJ in a small town of Cheney, Washington that helped pay for school. So always selling myself or selling a service or a product. I'm very entrepreneurial. And then when I got out of school, 2008, and just kind of fell into sales, thought I was going to get into marketing and fell into sales and rest is history. Really loved the journey ever since.

Nice. Isn't that the story for all of us? Just like falling into things. Where is Eastern Washington University?

It's Cheney, Washington, which is about 30 minutes from Gonzaga, which is probably the more popular college in the area. You know, they have the great men's basketball team. And about 40 minutes from Idaho.

Okay. All right. Now, now I know where you're talking. Very cool. Yeah. So we're going to talk about sales efficiency today. And I think this is one of the great debates in revenue leadership right now. In my mind, a little bit of a false binary, however. You know, people keep framing it as like profitable efficient growth or venture capital style growth. And I think you can do both. And I'm sure you'll agree there's ways to grow at venture capital speeds with a winner-take-all mentality without burning cash in an irresponsible manner. So I'm curious, as like a warm-up question, what does, uh, efficiency mean to you in sales teams? How are you thinking about it conceptually?

Yeah, I think, you know, you kind of— you nailed this a little bit and kind of the lead into the question. I think the first piece is like, what is the goal? Are you running after market share and it's like, hey, we need to go get, you know, 80% of the market share, 30% of this segment, um, to have a tipping effect and then box our competitors out. And then, and then I think that can influence how you invest. But for us, you know, it's Square. What we think about for efficiency is really, you know, how are we measuring, um, every dollar that goes into the program? And how are we thinking obsessively about productivity and about, hey, if you give us a dollar, we can give you $3, $4, $5 back, um, to just prepare for, you know, the, um, the uncertainty that is in our space, the SMB mid-market space, but the uncertainty of growth and competitors entering the market and the uncertainty of, I think, we think about overall headcount investment as a company. So for us, efficiency is really just about make sure we measure every dollar, we have a clear strategy around how we're going to do that, and then we are consistently scrutinizing that investment. Whether it's in specialization or whether it's in more just cold sales headcount or in leadership, you know, etc.

Yeah, uh, very much aligned with that. Um, and so you mentioned, uh, before we recorded, sales is a big math problem, and, uh, also that like large sales teams are inefficient. What do you, what do you mean by large teams are often inefficient?

Yeah, it's kind of a, it's a little bit of a, like, controversial take to get some response to. And I say it to my team all the time is, you know, in my career, you know, in my experience in all these different companies, typically when you have a massive sales team, there are just lots of inefficiency gaps that you cover up through manpower, through having more people throwing at the problem. And And I think it's one of those things where we try to condition and train my sales leaders, and it's not about where should we invest more headcount. That's typically what a revenue leader will do, right? It's like, hey, I'm going to go spin up and launch our EU market. And when I spin up our EU market, I'm going to get productivity from these 5 reps. But as a leader, I'm starting to think, how can I build specialization around it? How can I kind of build this program up and get more headcount? And We wanna flip that. We wanna think like, how can we get leaner and more efficient so that like two things can happen. One is that we have more pool to invest when it's the right thing to invest in. That's just the math around kind of the bottom line. And then the second thing is when you come from a lens, in my opinion, of being really lean and efficient in how you operate, you have happy salespeople because there's more— when you think of the capacity planning, there's more leads coming through, there's more opportunity. So then you can really see that tenure curve. Start to shift, where I see the inverse. When you build a team that maybe, you know, you hire too fast or you threw a lot of headcount at a situation before you had some proven models and consistency and scale, you have the opposite. You throw people, you know, into the ring and it's the same stuff to eat off of. And at some point you just see diminishing returns. So for me, I get very skeptical when I look at large programs and large teams that I either inherit or, you know, for us that we're starting to build and get away from some of those core principles and how we think about scale. and start to look at like, where are there, where's there redundancy and where's there opportunity to be more efficient?

And was there like a specific part of your career or a story where this started to crystallize? Like where, where did this come from?

Yeah, it's a, it's a great question. I, I've been fortunate, like my, my career summed up is, um, had the opportunity to work for some great companies and be surrounded by just incredible leaders and operators that are still mentors to me today. The two that stick out the most, um, Eric Sager, who was my first VP at Square and Alyssa Henry, who was the CEO of Square, where I worked for, for several years. The two of them looked at everything, like, look at sales as a science and looked at revenue programs as like a factory machine. And if you've ever read The Goal, it talks about, like, you know, where do you isolate, you know, the different problems and the factory and then how do you fix that? And so that, I mean, before that, I was at Aramark and LivingSocial were both very much sales-driven cultures, which isn't a bad thing. Like, that was, one, a ton of fun to be a part of, and then, two, some really strong frameworks around how do you build soft skills, how do you own a market and get deep, deep market share penetration. And that was kind of the first part of my career. And then working at Amazon and then later Square with these leaders, really helped just condition me and prime me to be an operator first. And I'm sitting here in a woodshop as we do this interview. So I'd be remiss if I didn't say, you know, the measure twice, cut once analogy. But that's really how we think about, you know, growth. And for me, because you want it to be when you're building a revenue program, and I think you guys have done a great job with this, Kyle, at owner.com from what I follow. It's like you want it to be scalable, repeatable, predictable. And that's across all segments. If you can't provide that, there's a disservice to the business and then potential volatility that you'll run into.

And so I think one of the, one of the most difficult things here is that revenue leaders are under a lot of pressure to grow, much like founders and CEOs. And so even before you can build to that efficiency, you're under this pressure of like, You need butts in seats. We need to grow. So like throw bodies at it, uh, in the short term as we figure out the efficiency pieces of things. But what you find is actually adding those bodies makes it slower and more difficult to get efficient. And so these, these, you have this tension. How were you able to, or was this a cultural thing at Square? How were you able to get the patience to do things right and maybe not just like blast the sales number at all costs, but actually like build the right foundations?

Yeah, you know, I think there's two parts to it. I think, you know, there's a benefit of Square being a product-driven growth company, like at its, you know, in its infancy, right? Because culturally you start to think, how can, you know, our conversation, my conversation with our marketing team, and our product and operations team is how do we drive more to self-onboard so we can free up capacity for salespeople? So that's a very, that's a different conversation when you think of the identity of a company. What I will say though is the fundamentals are still around how can we be efficient and lean with how we invest, but the way we build it, I don't think there's like a right answer other than we try to obsess over all the different like KPIs of the program and not just the like late stage pipeline forecast. That's a big part of what we do. But like the first question we're asking, you know, every quarter is how do we feel about our quota modeling, right? Because incentives will drive a lot of your productivity, right? And we can get creative with what that means from a compensation structure standpoint. But do we think there's more juice there? Like can we get more out of the team? The second question we always ask is You know, what's our efficiency rate with our leads? And then what's our total, like, leads coming in? And what's our distribution there? Because a lot of times there, you know, it's 5% here and there can make a huge difference. And then the third question, once we get through kind of those, like, really stress testing our efficiency metrics, and we do this nauseating, we do this in our weekly business review, it then goes to, okay, where do we need more headcount that we think we can just maintain or increase productivity by introducing this headcount? And this could be through diversifying channels, like adding field sales or enterprise reps are continuing to grow telesales, or where do we need specialization? So the other thing that we've done over 10 years I've been there, it's like, okay, we need headcount, but we don't need an AE because we don't know that we have the leads there. But if I can get one person to take onboarding off of, you know, the lifecycle of what an AE does today, we think we can get, you know, 20% at scale. And it's just, it's asking those questions and forcing yourself to do that before you say, okay, now let's get a headcount. And even, I mean, I've written, you know, documents to whether it's the board or senior VPs at the company, making sure we keep this discipline because, you know, when competitors, it's easy, Kyle, like if you're doing a great job, ROI looks great and, you know, you're continuing to like hit your metrics, like you said, to have that mentality, right? It's very difficult to do that when you're under fire because, you know, you missed annual plan by 20%. A competitor's coming and they're taking, you know, a lot of your market share. And I think that there's always going to be a pendulum swing around. Sometimes you just got to throw headcount and learn. And like for us, like new segments and things like that, we want to be experimental, but keeping that discipline so that you don't get ahead of yourself because inevitably it'll lead to just layoffs, right? Or like having to do some type of riff. So. That's how, yeah, I don't know if I answered your initial question, but that's how like we try to make sure we're doing the right pattern recognition and having the right conversations to get to an outcome of now let's explore headcount versus the flip side of we need headcount to solve the problem.

Okay. So, so I want to clarify. So the, the key sort of metrics and the questions you're asking So first is quota modeling and coverage, then efficiency rates. Uh, so efficiency rates on a per lead basis, number of leads, then you're asking the question about specialization. Are those the right questions there?

That's right. Yeah. Yeah. It captures that well. And then you get to headcount. Now it's like, if those are checked and we feel good, then it's like, where can we add? Okay.

Um, and so when you look at quota modeling, what are you doing to balance efficiency with total growth number? Because one of the things that, you know, we talk about a lot is, you know, it's really expensive not to have enough headcount because if you don't have enough headcount and reps are overwhelmed with leads, then you see win rates slump and you're paying significant dollars to generate that lead volume. But also you don't want to have too much rep capacity because then people are sitting around on their hands, which is inefficient. It's not fun for the reps. They get disengaged. Nobody Nobody likes to be, to have like one demo a day. Um, and so how do you approach quota modeling? What else are you looking at to figure out the right allocation of headcount by segment? Just like walk me through some of the strategy.

Yeah. Yeah. And listen, this is something I think we are always trying to get better at. And it really, it comes to like the first piece there is, and I'm sure every, anybody watching this, I'm sure if you have like the perfect science to this and you got it nailed, like shoot me a DM. I'd love to learn. Um, but. You know, we believe that if we're consistently measuring, then we'll get closer to the pin and more accurate with, you know, the strategy. And it starts with capacity modeling, but capacity modeling not just from like a total lead standpoint, but by channel. So what do we expect to come in from marketing? Marketing for us has been established can be pretty consistent. We do some campaigns and we'll see, you know, maybe some more higher value leads come through, but the overall number is pretty consistent that we can forecast against. And the second piece is what do we expect for emerging channels, things like partnerships, or resellers. And then the third piece is going to be, you know, what's the catch-all then from there, you know, between our sales development BDR program and then AE source. And AE source is for us, like, AE is putting their own sweat equity into finding a lead and can be the bandaid. We have a principled rule. We never want it to be over a specific amount of that lead distribution, but we start with that level of capacity modeling, and then we look at complexity within those leads. right? So where do we think that, you know, for segmentation, we need a different type of account executive to close this leader? That's a different sales process. So we're going to weight it accordingly. And I think, like, all of that goes into what essentially, like, the real— I'm sure people watching this are like, all right, that sounds great. But most people's experiences, your CFO says, hey, here's the number, figure out the math to hit it, right? And, you know, one option could just be like, hey, I'm going to throw triple the team and cut efficiency by 20%, 30%, and I think we can get there. Maybe your ROI is break-even, but it's a short-term thing. But we're always, we're weighing that off too. We just try to, we try to make sure the force function for us is always going to be making sure we maintain a team that is, you know, 2 to 4x ROI back to the company. And that forces us to really think deeply about where we can increase productivity or specialize to get a higher win rate. But it starts with capacity modeling. Which isn't a perfect science, and then running that up through kind of what we've seen for historical win rates or expected win rates, um, along with kind of that roll-up to annual plan. Does that answer your question?

Yeah. Yeah. Yeah. That's helpful. And I think this, the subtle thing there that people get wrong is you started with lead volume because most people, like what I find a lot of revenue, especially first-time revenue leaders do is they get a financial model, they get the plan, and the revenue line is a function of number of reps times quota equals revenue. And they go, okay, so every time I, every time I hire a rep, then I get closer to my number. But that's not, that's not the reverse salient. That's not the bottleneck in your, in your production system. If we're going back to the goal or, or any of these analogies, the, the Bottleneck 90% of the time is opportunity volume. It's do you, do you have enough leads to generate the night, the enough pipeline volume to support the number of reps you have? And if you start to, if your entire, uh, growth model starts with opportunity volume and then the number of account executives you have is simply a function of the opportunities you're going to generate divided by the rep capacity. You end up with a dramatically different rep number than this top-down model. Just the, the, the, your mental model is, is completely inverted. The reps don't produce revenue.

100%. If I could add to that, I mean, the best unsolicited advice I could give anybody in, you know, VP or CRO role is you really have to understand your model. The sophistication and the inputs that go into it have to be more extensive than just rep time quota, right? Because you're going to see peaks and valleys in that and you got to have you know, the tight— the best partnerships that I have, you know, in my current company are with my finance partners, analytics, and operations, because we are constantly tinkering with that model before we come to an aligned consensus on what we can deliver. Um, and then we look at kind of all the different, you know, inputs from there that we, we think we have the ability to influence and increase.

Yeah. And I think this— one of the other interesting things you said there is specialization because it's an underrated, uh, it's an underrated part of team design. And we're actually going through this at Owner right now because, you know, we were predominantly inbound and then we swung all the way to being predominantly outbound, and then we've really like nailed it on growth marketing the last little while. Now we're like predominantly inbound again. And so the, the question is, is the segmentation the right Is our rep segmentation correct if you have, if you're segmented by inbound versus outbound? Well, what if the, the channel mix is totally different? So is the right, is the right version of this team design by, by region or in geography? Is it about channel inbound outbound partner? Is it about the size of the customer for a single location or multi, or could you have like multiple tiers there? But how do you think about like what analysis did you run to build the team design and figure out how you want to segment, how you want to specialize? Just walk through the sort of the decision-making process for that.

Yeah. And what, that's a fun, that's a meaty one. And that there's, again, this is one of those things where it is like, there's no right way to do it. Like people will know their business best they can. And so like, you know, you make your best guess sometimes. But for us, like the things we look at, you know, that I try to prioritize, the first piece is CAC, right? So what's the cost of acquisition? You have to have an honest conversation because if you're just thinking about like what every rep will tell you, like your inbound leads go to your best people all the time and then that's what, you know, we want to feed them. And I think for a certain segment or type of customer that that's the right thing to do. But there's potentially a long tail inbound segment that, you know, it's maybe low complexity, high velocity, and we want to be really mindful of the unit economics of acquiring that through a sales motion. This comes back to kind of the DNA being a product-driven growth organization versus sales organization. In my opinion. So it starts with, we look at the CAC of the lead coming through. So the cost acquisition of lead coming through the sales channel, should it touch a salesperson, what level of salesperson, that's the first piece. The second thing we look at is, you know, some type of like weight or score for complexity. So within our business, we look at multiple locations or revenue is typically a good proxy to understand complexity and we segment by that. And then in certain markets, we look at specialization around like domain expertise. So whether it's in a industry or vertical, so restaurant, retail, or services. But to get to that, like, if you zoom out, like, the question has to be, do we get, like, a net benefit at scale, not ones or twos, but at scale with specializing to this segment, right? Cutting, carving off a mid-market or enterprise team, carving off a partnerships team. Do we get, you know, a net benefit at scale that's meaningful, that's material for, you know, shifting our inbound and outbound or specializing. And in some markets for us, you know, they're more mature and these things make sense. And in some markets they don't. So it really is a case-by-case kind of analysis with, you know, there's a lot of pressure on the business, at least in the businesses I've worked with. So I'm assuming some of our listeners have this too. When you see competitors specialize to run the specialization. And, um, or to put, you know, this, you know, big name company operates their sales motion this way and that this is the playbook and put a lot of specialization around the team. And I think that is the biggest risk to efficiency and like maintaining your strong unit economics is you run too fast to specialization or diversifying your sales team because it's what everyone's doing. you have to always hold to, like, if I create an AE who's focused only on restaurants, do they get, like, significant lift in win rate, in total, like, you know, closed accounts and overall experience for the customer? That's another piece too that plays into this sometimes when you're earlier on, than what we're doing today with the more general model. And I think that's the same question, got it, whether it's segmentation. Because there is a benefit earlier on to being more broad in general. Um, because you start to see the patterns and then you kind of shift specialized from there.

Yeah. And, and every time you get more specialized, your sales engine gets more complex and sometimes brittle. And, and I have, I've had this conversation a bunch with, with my teams and other, and just friends. Where, yeah, does it make sense to have a different BDR team for small versus big customers? Well, how many BDRs do you have? Because if you're segmenting a team of 4 people to big and small and one of those BDRs doesn't work, or one of those BDRs gets promoted into an account executive position, well, 50% of your segment is now gone and needs to be backfilled. And there's just so much risk in, in that. There's so much risk in that system and it just becomes very brittle. Like, even pods— pods is another— pods is another thing. Like, do you want to make a BDR plus AE plus launch pod? In theory— and I've done this in the past at Shopify, one of my teams was in this pod model and it really worked, it really helped bridge that relationship and it was quite strong— but Uh, every time something happened in any of those teams, that whole pod was just under so much pressure and it was just so chaotic that net-net it was advantageous, I think, because this was a, this was a larger team. It was, you know, like 70-ish people across the, those three functions. Um, but oftentimes people go too fast to that specialization and then your, your system's so brittle.

Totally. And you create these like single points of failure, right? Especially like in the BDR pod model, because, you know, you have one BDR is crushing it or two out of five and then they get promoted and it's like, it goes away and it throws things off. I think the, the goal should be that, you know, you're essentially, especially as you're scaling, growing the team, you're just trying to have like the minimal amount of risk as possible in your systems. Right. And there's no zero. Risk in any of this, right? Whether you have a national router or pod, but minimal amount of risk that you can, you know, overcome. And then, yeah, I think you're always asking the question around specialization, but it has to be because there's going to be a material impact on the productivity of the business by doing this or by the customer experience is the other piece too.

Yeah. Yeah. I presented at last year's GTM 2024, the Pavilion event, and my talk was on like building efficient sales teams. And, and I built a, like, a example model of what a team looks like, um, of what a, like, a team spreadsheet looks like. And I think one of the pieces that people miss, and it's, it's related to this, you know, single point of failure or fragility idea, is you have this model and you have the number of BDRs times the production in all of these segments, and you have this, this like pretty consistent growth. But as soon as you start to factor in churn, okay, so now 20% of these roles, the ramp restarts every 3 months. And then in, in these roles, there's some like other thing that happened. And so the, the, the output is lower. You start to see— it's helpful to see it in a spreadsheet where you've now, um, you've now got a system that on paper looks really good, but then as soon as you factor in people moving around and resetting because they have to start in a new segment or they're building a book from scratch, the, the, the amount of change that you're introducing, uh, brings in an amount of risk that destroys the the spreadsheet basically, because you've got too many of these, too many of these rows or too many of these cells that are like back to zero and starting their ramp clock again. And so if you've got these like very brittle structures that you're talking about, it can be this like underappreciated risk.

Totally. And I think I saw part of that, um, that presentation. It was phenomenal, by the way. So the plug, I know Go-To-Market 2025 is coming up soon. I think you'll be there again. Um, but But really good stuff. And I think the other piece is, you know, revenue programs, it's, it's, end of the day, it's still a people business. So anytime you're introducing specialization, you want to be mindful of what is this creating for, like, the career progression and learning opportunity of the team. And is it, you know, is there a benefit there for, like, what the company is focusing on long term? Or, or is your specialization just experimental? And if it's that, that's great. But then that needs to be, like, an incubator program, something really small and to the side that you treat and you communicate that's experimental, that that's not, like, the next pillar of your revenue work yet. Yeah.

How much of a formal incubation program do you have? And how big is like the total sales org to just give people a feel for this? Yeah.

Yeah. For Square right now, globally, we're anywhere from 600 to 700 people. And that's in, you know, we're in the US, Canada, Australia, UK, Ireland, Spain, and France. And, um, We have a pod that we dedicated to incubation for quite some time now that has now kind of shifted to more formal programs. But for the last 3 years, a pod of about 15 people globally that their core—

15?

Okay. Yeah. Across like all the markets that their core objective was like, okay, we think we can hit this sub-vertical. Let's go see if there can be penetration there. We think that we need to target like field distribution. And so let's focus there. And essentially it was a very successful program that put itself out of a being a program because we spun up, you know, the different programs around that. But I think it's so important to create an experience with, you know, internal talent that can test things out before you specialize, unless, you know, it's like the no-brainer of all things to specialize around. Like, give yourself the room to learn, screw things up. It'll also help you with future modeling so you're not pulling off of like existing programs and validate the idea one way or the other.

So yeah, those programs also need their own oxygen. It's really hard for them to exist off the side of somebody's desk. It's one manager that has a number to hit and then like 2 reps doing something weird and new. It really needs like a dedicated leader, resources, and just like space away from the, from the core teams.

I completely, completely agree.

I want to go back to this concept of like team segmentation, how you, how do you organize a team for, for efficiency? Um, because one, one of the things that I think is helpful here is to under— is to help— is to explain what a leader should be looking at. Like, when you're trying to decide on specialization or team structure, uh, what are the metrics that you would evaluate, uh, when making a decision whether or not it makes sense to carve something off and specialize?

Yeah, I think, you know, the first thing, because we've gone through this, um, at Square in multiple ways, is we look for pattern recognition and what are we organically winning. So like, what are our customers telling us right now? And, um, what we saw for an extended period of time is overwhelming majority of all the businesses that this generalist sales team was winning, um, were restaurants and businesses in food and beverage. And so that starts with like the hypothesis, like something's here. Right? Do we need to especially more and go deeper? And then I think then it's kind of, it's a little bit more meta where you're looking at, okay, what is the buying experience for a customer in that segment? And is it differentiated? You start with the customer. This is, what is it, the Principles book where it's like the jobs to be done. Like, what is a restaurant buying experience versus a retail business versus a professional services business? And Do they need a consultant in that journey that is a little bit more of an industry expert? And I think as we go, like, so we start with, okay, there's organic interest. Two, there's a massive TAM, right? That's the second piece I didn't mention specifically. And then three, how would our training be different or what would the experience be that's different for both the rep and the customer? And then the fourth one is kind of what I said. Do we believe that that's worth the opportunity? Like, can we take this number from 10 to 20 if, you know, and while maintaining everything else at scale, if we can have that specialization? And I think those are the things we're looking at. I think for, you know, and I'll tell you, we get it wrong too. I mean, we took that, like, kind of model for restaurants and it was like, made so much sense. And then we tried to probably prematurely do that for some other verticals and a year in, it didn't make sense. So we pulled that back and to your point earlier, that's why it can be so disruptive unless you're fully committed to this, you know, whether it's vertical specialization, et cetera. And that's what we're looking at. And no different, you know, when we look at our enterprise segment, very similar where it's kind of the same frame, like what are we seeing organically? Where do we think, you know, we're doing cut rates by revenue range, like where do we see win rate start to drop off? Is that a, complexity thing? Is that a skill thing? What does our training look like? Your training will really lead you to the answer there as well. And it's also, if you're somebody who's on an enablement or training program, really difficult to train a rep on something that's a mile long and an inch deep, even with, you know, the support of these, you know, AI tools. And, and, and that's what we're looking at then. I mean, for us though, the kicker is if one, we specialize is you got to You got to put your money where your mouth is, which means like, okay, we're taking the same 10 headcount and instead of focusing on X, they're going to narrow down to Y and we believe focus will drive 5% more productivity. You don't do that right away, right? Because there might be a transitionary period, but call it over a year's time. That's what we're going to get to. And that to me is the only reason I ever specialized. Yeah. Yeah.

And I think. One of the helpful exercises to do is take your win rates, deal velocity, ASP, and just look at it by as many different slices and dices as possible. Take those 3 things and then look at it by channel, inbound, outbound, partner, self-source, because you might specialize your team by, by opportunity channel. Or you could do it, you could do the same thing, but then by market, hospitality, retail, pro Then you could do it by size. You just, you band your customers and you look at, and, and you start to, I think like generating those hypotheses, you generate as many of those hypotheses as you can and then just let the data dictate your, dictate the adventure from there because you're gonna start to see things jump out and then you can hypothesize, okay, so there's clearly different win rates across these. Across these segments. So if I take, like, let's say inbound versus outbound, if I'm going to take my best reps and put them into outbound because those are harder to close but maybe bigger, but your inbound, your inbound interest is the highest interest. So you have to then do the math. Okay, I'm taking this group of people and putting them on inbound. So I'm going to see lower win rates because it's my more junior people on this body of revenue, but then higher win rates on this higher ASP outbound. What's the, and then you gotta like net out, am I meaningfully ahead? Because the, you know, 5% may justify it. You probably want more if you're gonna do the work of like a pretty big reorg. But I think that's a good heuristic for people to follow is like take your 3 or 4 core metrics. You should really also take that through to retention so you can understand LTV, but like What are your 3 or 4 core metrics? And then you just start looking at like guess after guess in terms of all the ways you could segment and just see what the data says.

Yeah. And I completely agree. And the only thing I would add there, Kyle, is there's a way to step change into it by, you know, looking at spiffs and incentives where like it can kind of, if you see there's an opportunity in a certain area before you go through the whole reorg, it's like, hey, this, can we naturally move this behavior with, you know, shifting our incentive structure because we believe this segment is higher priority to win right now. And so there's things you can do there, but I think your, your kind of framework and the scorecard you're outlining is spot on.

Yeah, I had Ryan Milligan, who's the VP of Sales and RevOps from QuotaPath, on, and all they do is compensation stuff, and he, uh, used to run RevOps and be their SME, so he knows, he knows a ton about comp plans. And one of the best insights I got from that, he's like, don't change your comp plan until you've run like an aggressive spiff on something. Like, if you want, if you want everybody to do multi-year deals, is before changing your comp plan to really structurally chase multi-year deals, just run a big spiff and pay more than probably the comp plan will. But like, you can, you can do some of these tests without making a full-scale change. Oh, can I just Can I just take my lead volume and point all of these types of customers at one person without fundamentally changing the rotators of the team structure? Can I just like update, uh, in an ad hoc manner, like rotator stuff? There's ways to get signal, which you talked about earlier.

Um, yeah, that's great.

So I want to, I want to, uh, change topics. I knew we were going to get super lost on this topic.

That's great.

I love it. What do you think are the other biggest drivers of inefficiency? So like too many reps, not enough leads is definitely one that we've hit on. What else? What are the, the like hidden inefficiency drivers that you typically see in a revenue org?

Oh man. Consistent. What I would say like consistent manager playbooks. Managers get ignored all the time because they're good, right? And a lot of leaders and people who have, you know, were great at being reps, understand the business, get into leadership, they can cover up gaps in systems and process that the company or program has. And what we find is, you know, if you have a program where all— every manager is doing something different, doesn't mean they can't bring their own like flavor to it or personality, but they're doing something different in how they evaluate pipeline, how they talk about forecasting, how they measure, what's their core deliverable? Are they just managing a spreadsheet that rolls up to, you know, VPs? Or are they actually in it and owning the pipeline with their reps and co-selling, doing these things? That is just a massive— and we've seen huge swings on changing the folks here in the day-to-day of frontline managers. You know, and so that's one thing that's like a big thing. to look at. I think the second piece is going to be, we talked about it a little bit, the sophistication on how you weight leads and think about leads. Like every inbound lead isn't the same, right? Every outbound lead isn't the same partnership lead. So there's like these higher level, you know, distribution channels you can think about. But then to your point earlier, like, well, how do you think about the size, the segment, the industry, et cetera? So there's a lot there. with, with efficiency, whether it's, do we route more to new hires or less, right? Um, do we make their job harder or easier when they're coming in? Do you segment out outbound, inbound? Um, and then I think the third piece is how often do you scrutinize and talk about the business and your KPIs? And we try to live by this idea. That when we're talking about metrics, it's not meant to be performative. It's not meant to be a thing where you sell yourself or your team. It's meant to be a thing where it's like you're giving the hardest, like, critique and retro about where you see gaps so we can support around it. And creating that psychological safety isn't always easy because people come from different programs, sometimes different personalities, but psychological safety to our weekly business reviews Hey, like, what's the— how do we fix this or how do we make this to this metric and what do you need from the team? And having that collaborative approach across our finance, operations, enablement, and our sales leadership to really empower them to make moves and changes. So those would be the 3 things, the frontline management piece of it, where they're focusing their energy, the weighting of the leads, and then how you think about like those core KPIs and how often you're talking about them. In a manner that's productive, not performative.

And so is that a monthly or a quarterly cadence for you where you're really getting into the nuances of the KPIs, the win rates, the details?

Yeah, weekly. So this is from my Amazon days. We do a weekly business review. My team may hate me for this, so maybe they'll chime in and be like, don't listen to anything this guy's saying. But we do a weekly business review. It's a 45-minute pulse check. Everyone kind of knows, you know, we have finance and some of our program leads put in some anecdotes to help complement the data. The finance team interprets the data, and we're just doing pulse checks every week around where we're at. And when we have special topics and deep dives that come up because we don't have a good answer live, we'll schedule that in the monthly cadence. That's with the bigger group. But yeah, we're at least doing that pulse check weekly. And the idea is that those conversations at the executive level, not that we're putting so much rigor where every single layer of leadership has it, but that we're sharing and being transparent around like the things we want to go solve for the broader team. So for example, if the BDR total win count is dropping in one of our international markets, like, we're going to broadcast that and show that, hey, we're tracking this and we're seeing a trend line week over week. Maybe we're not overreacting to it, but we're monitoring it. And when it gets to the point that we're going to take action, like, we're communicating that with the team. We're bringing people on the front line to give us some more context. And then if there has to be changes, we'll make those changes on the go. We don't ever want our strategy to be so airtight that it's— or not airtight, but so cemented that we don't have the ability to adjust that. I think that's where we put a lot of work into building things out in an annual plan, but every week we're scrutinizing it to make sure that we are doing the things we need to to get to the overall goal. Yeah.

I said this to a leader of mine a couple of weeks ago after our June MBR. And we've ripped off best months ever in sales, like, I don't know, basically back to back for years now. And, uh, yeah, humble brag there. Uh, but you would, I was, I was joking. I was joking because you would never guess it like in the MBR. You would think that the business is not going that great because, you know, we're, we're pulling and we have the advantage of an awesome data and biz ops team, but we're pulling all of the weak parts of the business and just like hammering on them. Okay. Like why every, all these metrics are going up into the right and we touch on them for 6 of 90 minutes and then, and then you're just focused on, okay, these ones are not where we want it to be. This is stagnant. Okay. What's our focus area for the next month? And we just like hammer it and hammer it. And I think you raise a good point that nobody bats an eye at it because it's a part of our culture and it's just pragmatic and objective. We're not criticizing a person necessarily. You're just looking at the metric and trying to do the 5 whys, get to the root cause. But I think that's a very underrated and important, um, cultural touchstone for folks, being able to just like objectively look at the number and not hide. Because we're salespeople, like, we want to, we want to spin it, we want to give it some, we want to give it some polish and shine.

But, but, uh, totally. And we're good at it too, right? Like, ideally. So you got to make sure you create that culture.

Yeah. Is that something you brought from Amazon? Because I know they're, they're sort of famous for it. Or was that already part of the Stripe culture or Square culture?

No, no. Yeah, absolutely. So I think that's where it was like, you know, I talked about my time at Amazon a little over 2 years, like a paid MBA. So I brought a lot of that into the sales programs that I oversaw over the last decade. But Square overall, like, has, has had a culture like that where it's really data-driven decision-making, analyzing the business, sometimes too much, to be fair. So we got to make sure we do the work. but yeah, that was something I put, took my time at Amazon.

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So right now, how is the team structure? Like, is it, is it verticalized by retail, restaurant, other? Do you have— is it inbound, outbound? Just like, what does the design look like?

Yeah. So in our, in the US, which is our most mature market, we're essentially specialized by restaurant and other, right? We initially did restaurant retail services and we, and we brought that back in our inside sales segment, which is our inbound segment about, you know, I'll give some ranges like 60 to 80% of the accounts they work are inbound, you know, anywhere 40 to 20% are outbound. That's our, our inside sales segment. Our outside sales segment works exclusively BDR accounts and BDR a little bit more upmarket in that like 1 to 10 million space. And then we have, we've started to diversify distribution, or excuse me, acquisition channels. So we have a field sales program in the US that is quite large. We're hiring right now. And in our enterprise segment, which is a very small and very narrow focus on some of our largest sellers. And that's, that framework is pretty similar in other markets without this vertical specialization. So the inside, outside, field, enterprise. And then within that, then we have in each market, Everything rolls up to each like market lead, but then we have global overlay programs. Like our sales development team today is global because, you know, the belief is that like, you know, the things that we're doing there are very operational and we want to make sure there's like one central place that we're getting all that support. And the BDR team works as like a national router today, which is, you know, when you were bringing up pods, like so many people, like, and we've gone back and forth and had great conversations about like pods versus national router. And what we find, because of the volume of accounts that we're working on, like throughout any given time, that the national gives us that flexibility for coverage. And right now we've gone away from that specialization, but over time that could evolve as the business challenges evolve.

Yeah.

Hard.

It's hard to overly specialize BDR because people just move so quickly. Like you're promoting through levels so fast and there's just a higher level attrition than most roles. So that makes a ton of sense. What's the difference between outside and field? Oh, sorry. Finish answering.

Oh, no. I was going to add quota setting can get really challenging in those situations too. That's like another piece because you have your capacity modeling for what you need for leads versus effectiveness. So that's another thing that we found really challenging. Field and outside sales. Outside sales is essentially an outbound program that call it less than 20% of their time will be in the field in their given market. Field sales is assigned you know, a group of zip codes in a specific territory and is in the field 100% of the time.

Okay, that makes a lot of sense. Um, so what, over the last couple years, what have been some of the biggest changes you've made to sales efficiency? So over the last, like, you can call it 5 years, can you think of sort of the milestone events where you had a step change in efficiency?

Yeah, I think, um, some of the biggest ones is the verticalization, um, in the US. Um, another big one for us around efficiency, and we did We kind of glossed over this, but incentive structure, we shifted our entire incentive structure to focus on our core metric for the program around new profit and revenue coming into the company. Before I got into the role, reps could receive credit both for like light farming, so like growing an account, but then the first year if it was established on the platform and new business, and the reality is specialization there to focus on the net new account was really beneficial for us and drove efficiency in some markets 2, 3x, like output for that core metric. That's the second piece. And then the third one is around inbound and outbound. I think one of the biggest lessons I've learned is it's just really hard to have a program, whether it's telesales, field, et cetera, maybe field, you can get away with a little bit more. So I'll stick with telesales. That is part inbound, part outbound, but you're not really dialed in on like what percentage inbound versus outbound and expectation because what will happen mentally is there's no incentive to go outbound, right? Unless you do some type of spiff, it was just, I'm waiting for the next big account. And if, you know, and then you see, you know, your teammates around you, oh, I got a big account and I got some numbers. So there's like challenges with equity, there's challenges with the profile that you're hiring and the culture. So, you know, moving from a— because you're never going to get 100% dialed with inbound. For a while, it was 100% inbound, 100% outbound. So we've moved it to where, you know, we anchor on this like 80% inbound program, 80% outbound program with the idea that kind of have this like less than 20%. Don't drop it to less than 5%. So it's like 80-95% specialization. And the learnings you get just from people obsessed with your BDR leads or obsessed with like the, the sourcing marks that we give them are really beneficial. So that's, that's one piece that probably doesn't get as much of the fanfare. Um, but was probably the most meaningful for us was the inbound or outbound specialization.

Very interesting. Something you said earlier, which I think is an important, which I don't see companies bake in. Which is surprising, is you should be outbounding upmarket. You know, like outbounding to the same AOV customer as like comes in naturally inbound is sort of a waste of that motion. You only want to outbound into the, into customers you can actually win. So you don't want to go way upmarket. But one of the things that we did that made, that made a big impact is setting floors for what we wanted to outbound into.

To.

We've, we've increased that outbound floor over time by adjusting our, our lead rotate— lead rotator. Because the— we talk a lot internally about, um, orienting our team to the highest expected value actions. So how do you, how do you instrument the team so that a rep, a BDR, and an AE are always doing the highest— the action that has the highest expected return? And so, you know, if you go after a larger customer, you will have a lower book rate, a lower win rate, but a higher ASP. And you just do the math and you can start to figure out, you know, there's a— it's like a pricing model. Price times quantity. As price goes up, quantity goes down. But at some point, there's, there's the top of that graph, which is your optimal price point. And it's the same thing with with an outbound program, but people aren't very thoughtful about it. People just let their BDRs pick who to call, which, which we try really hard to, to limit, although some of it is okay. And, and the BDRs, when the BDRs are smart, but like, what is the top of that hill before your win rates diminish so much that you're actually producing less revenue per rep? Uh, but you're, so you're maximizing like the highest the biggest, the biggest customer with a, still a good win rate. And like, that's your, that's your like optimal point. And we're, we're doing a lot to figure out what that is, which I don't find that people pay much attention to.

Yeah. At Square, we call that kind of our sweet spot of targeting where it's like, if marketing could only give us one type of lead in every account that we chatted with, what would it look like? And it's typically, you know, this revenue range and this type of vertical and you have a lot more control. Over how you distribute, you know, targeted accounts, assigned account, let's say, and then targeting for BDRs for outreach. And I think that you have to be confident in that sweet spot and have some alignment with product there. But to your point, at some point you want to make sure your channels aren't overly competing with each other too, right? It's like, okay, if marketing is delivering X and they're really good at that, and we know that that works because it's a lower, you know, cost as an entry point, do we want to put a BDR and an AE there? No, there's it's got to be a step up in AV or something that is differentiating so we can scale this out. Where if our BDR is focused all downmarket, at some point you're going to have a scale issue and the unit economics just won't math, right? As you're growing the team.

Yeah. Yeah. Maybe just explain for maybe the younger leaders, when you say unit economics, what do you mean?

Yeah. I mean, for us, basically it boiled down to like the ROI, the return on investment of the program. So for every, you know, rep that we have, like, what does that mean for, like, the money coming back to the company overall from a program standpoint? What does it mean for every lead coming through? So basically everything that you're paying for within the program, are you covering your cost and then giving X amount more back? And then when we talk about unit economics, it's just doing that on a line-by-line level. So what does that mean for partnership distribution, inbound distribution, outbound, BDR program, enablement ops, et cetera?

And do you take that all the way through to LTV CAC, so you're baking in the retention rates of the channel.

Exactly. Over a 3-year timeframe.

3-year.

Okay.

Yeah. Cool. Yeah. The, the, that's another thing that I think a lot of people don't do, you know, they're like, oh, well, we spent these dollars and we closed this many dollars. Great. Well, if the retention profile is materially different in this segment versus that, or this channel versus that one, then you're. You're signing up for a problem in a couple of years.

That's the enterprise trap, right? Like you get a lot of big logos, big brands, big dollar signs, and then they leave you, you know, before that 3-year maturation process and, or they never truly establish. And so it's rough and it's in fairness, it's a trap in every segment, but I know in enterprise it's a big one.

Yeah. Or the cost to serve is way too high. You know, once you start layering in cost, cost to acquire, cost to onboard, cost to serve the, you know, your big deals that could look great. Well, you need a dedicated account manager and a, or dedicated CSM and a dedicated technical account manager. And it's 25% of a solutions engineer's time. And, and it can, it can creep up the, what we try to do is just fully load everything. It's like, no, again, going back to to brutal honesty, like fully load every cost, the leaders, my, my cost, the hardware, like put every cost into this thing and really see what it nets out.

Cause it's easy to tell yourself those like comfortable lies where you're like, oh, this program is great, but, but again, yeah, it's taken 30 people to this account and we're losing margin every time we renew them, we're getting less margin. And I think I think that's, that's the best thing you can do is fully burn your program and really understand what's going into your model as a revenue leader to, to really sound things out. Yeah.

Um, okay. I want to switch gears a little bit. So I, I have this opinion and I'd love your, your, uh, reaction to it. So I, I've argued that in order to build a highly efficient team, you largely need to build from the bottoms up. Like, you need to be able to attract, uh, entry-level, basically straight out of school talent, groom them through your entire program, and that, that as the core talent, um, the core talent mechanism to your team will be— will lead to a bunch of other great effects, but especially in terms of efficiency. Because the alternative is trying to incentivize senior reps to move over laterally. Like Square has always had an incredible cachet and brand. And so you can do it, but still expensive if you want to go try to recruit like real Presidents Club performers. So maybe just react to that hypothesis first and then I got some follow-ups.

Yeah. Yeah. Listen, I will tell you, I'm definitely in that camp and there's a caveat where, you know, in specific. Segments or things you're building. Like, for us, our field sales program, you know, being—

yeah, you know, not 100%.

There's things there. But I think overall, what you want to do is build a program that, one, if you remove the math, of course, that might make sense because of, you know, once somebody's with the program for 2, 3 years, they understand, and then they're producing higher than somebody comes external. But just from a people experience, like, one thing I'm most proud of at Square is been there 10 years, was hired to do one thing, and it was as a senior manager 10 years ago, and I've asked to do all these other things that have evolved into this role. But my kind of executive group that reports to me, you know, 50% of them have been with me 8 of those 10 years. The rest are anywhere from 4 to 6 years. And then I have one person out in Japan who's been with us a year. And so, like, you get the benefit of having this connection to the long-term mission and vision of the company and, you know, ideally riding waves together. Together and going through really hard times together, but then you're battle-tested. So I think from a, um, structural standpoint and from— it's like a North Star goal, absolutely. Especially when you have the, uh, the bright entry-level points, right? Whether it's sales development or inbound role, and then you can kind of build it up. What I find— the only thing I would add, Kyle, is like what I find in times in my career where we were potentially over-indexing towards experience, it was mainly driven by our own uncertainty around what exactly were we looking for and targeting. So that made us feel better if they came from company X. And then two, really a lack of what I would say impressiveness, like with our training and development program. So then like you're paying for the experience because we don't, you know, so if you're, you find yourself doing that consistently, really look at your training and development. Do you feel like it's world-class? If it is, Hire for behavioral skills, get people that can embrace your culture and build them up. And I just think that's a much more enjoyable experience and it's a much more profitable and efficient experience overall to some of the things we talked about earlier. Yeah.

It's also really tough to get the A++ talent once they're 4 or 5 years into their career, unless you're going to pay through the nose or give them a big promotion. And it's really challenging because companies never want those A+ players to go. And they're always within 6 months of the next promotion and your value to a company is always greater where you currently are because you have all the context, you understand the business, you're connected into the rest of the organization. So, being able to grow from the ground up. We, starting this year, made a big shift to hiring mostly new grads into SDR. So it's all business school grads from, business school grads from the top schools around Ontario. We're 100% 5 days a week in office now with these folks. And the results have been bonkers, like the speed to ramp and just like the numbers that they're putting up now. So it's been very validating. Very validating to see. And like, you know, these kids would've gone somewhere else and crushed it there probably, and you would've never had a chance to get them to take a lateral BDR move when, you know, they thought they were going to get an account executive job. So I think there's a bunch of outcomes. One of the things that you've said is like sales talent exists everywhere. And so instead of the professional experience, it's all about about the ability to do hard things, I think was your quote. And so talk to me about what you're looking for in hires and like what's that DNA?

Yeah. Well, I think, you know, salespeople can be found anywhere. Like this comes from my experience building out our St. Louis site for Square and a lot of these people, the first hiring class of 6, almost 9 years ago, 5 of them are still with the company. 4 of them are senior VPs. At the company. And this was a time, you know, so it's like, oh, awesome. It's the most humbling experience ever to be a part of that. And these are just exceptional individuals, Alexander Hammack, Chris Hayes, Hannah McClintock, to name a few here. Haley Bartholomew, another one. I'm going to make sure I don't miss anybody. But within that, this was a time, right? Within, you know, kind of tech space that, okay, if you were Square and you were growing, you had to hire somebody from, like, they have to get tech. right? So you had to come from Salesforce, you had to come from— and I'm sure Shopify probably similar, right? Like you want to get people with these like flashy logos. And I just found that one, we were consistently in a loop where that like, you know, we weren't getting what we expected out of maybe some of the people we hired. Not to say there wasn't exceptional people from these companies, but two, again, I have this belief that if we just hired based off of, you know, being coachable, being competitive, being motivated, and hardworking. Like, if you can just try to identify those 4 things, and within that comes out like, hey, have you done hard things? Like, what adversity have you dealt with, whether it's in college or within, you know, a certain job? And we build around those people, and we know that, like, there's going to be 6 to 9 months of, like, debt because we got to teach them how to do these things. But we build around them that, you know, long term, it would it would be, you know, something that would pay huge dividends. And fortunately, I have the luxury of time on my hand here. I'm having to experience it. And it did. These people were exceptional.

Yeah. Coachable, competitive, hardworking. Then I missed one.

And motivated.

Motivated. Okay.

How—

so how do you assess motivation? Like, it's so tough. Like, oh, are you driven? Yeah, I'm so excited. I'm so driven. I want to conquer the world. What do you do to actually, maybe just let's answer them one by one, but how do you actually figure out if somebody's legitimately motivated? And then we'll get to hardworking and the rest.

Yeah. Yeah. So I know there's like a better academic answer around making sure you have the right STAR question and then probing. But for me, I'll tell you what I did with that first group in St. Louis. When we got to the end before we did an offer, I would call them like, hey, you got 5 minutes, Chad? I want to walk through this offer and call you. Set the tone. And what I would say to them is I would, I would kind of like split maybe what they felt was the experience through the interview. And I'd say, listen, this role might be 100% outbound. It's going to be really frigging hard. Like, we're going to have to work your butts off. And it wasn't like, I need you to be here 70 hours a day, but I wanted to see how they would react to that. Right. And motivation can mean a lot of things, but what is your motivation to do this job? Right. And I'll tell you, of the 6 people we hired, hired, there were 4 more that we didn't hire because their answer to that was, well, I got to reconsider. This other company has more inbound leads and I don't know. And they ended up pulling out. So I think there's ways that you can kind of play this dance of engagement and commitment to what they're coming into. It gets harder as you build a brand candidly, like as Square became more well-known, people will say the right things, right? But sometimes they just want to get in there. I think the other thing, like when you're, when you're looking at motivation, um, you know, it's really understanding like, hey, give me an example of a time that you experienced something really difficult and you had to pull yourself out of this situation and try to get to some more of those personal examples and not just kind of those canned responses. Um, but it's something that if I can nail all 4 of them in an interview process, we'd be 100% retention, right? And then everything would be thriving. And I think it's something that you kind of commit to. Doing your best, the work, you know, in the interview and evaluation. And then as we're coaching and developing is what I can guarantee is once you get into program, the people who will be promoted will have those characteristics and embrace that. And that's where you have a lot more control because you just have more time with people.

Yeah, it's the exact same approach I use. I'm, I'm the last interview for all of our go-to-market front lines and I, same talk track. It's brutal honesty and like, look, owner, especially now, there's a lot of buzz. It looks so exciting. The reviews are really good. I was like, but let me tell you what's like not really for everybody. Super intense. We're a performance management culture. Like if you can't hack it, you're unfortunately going to be managed pretty diligently. And we're not really like a work-life balance place. You know, if that is what's most important to you at this point in your career, like this might not be that fun, especially because everybody wants to get promoted and owner gets the benefit of hiring all of these incredible people. So unless you're strapped in working super hard and extremely driven, like you're probably not going to get promoted and it's going to be really frustrating. And, and I say that to let the wrong people opt out. Out and we definitely see it. And also you can just like see it on somebody's face. The right people give you that like, hell yes, that glimmer, that sparkle. They're like, yeah, put me in, put me in that environment. I want to be pushed. This is what I'm looking for. And other people, you can see them just be like, oh, you know, like, but I love work-life balance. Like I like to close my laptop at 5 and I don't want to think about it. Okay, well then this is not going to be super fun for you. And I think it's the only path because everybody knows that every hiring manager wants to hear how hardworking they are and how motivated they are. It's, you gotta just like be honest.

You owe it to, you owe the transparency to them. Right. And I think so people know what they're getting into in those situations. And, um, yeah, man, I, and I think there's a way where you can, you know, work to that level and have your balance more of like a harmony thing, but you just gotta know like this isn't and we're not here for vacation packages, right? Like we're doing something really meaningful. So yeah.

Yeah. Um, how much have you been able to bring data science into hiring? Like, are you, have you gotten down to like the specific ways you're identifying traits and measuring, you know, interview scorecards versus in, in role performance? Is that, is that something you guys have, uh, gotten?

We do a quarterly retro of kind of looking at a scorecard of like, what are the common themes of where we brought people people in from over the scores and the tool, and then where are we seeing the performance? The challenge there is like typically for us, it'll like, you know, have anything really meaningful. And so you're looking at cohorts in their months, like 15 to 18 or 12 to 15 as they ramp up. But that said, a lot more I think we can do. And I know there's a lot of really cool tools out there that as we get through our annual planning process, we'll probably look at since we're going to be hiring quite a Gearing up for second half in '26. Cool.

Yeah, we're, we're like probably going to build something ourselves for it because all these ATSs, all the applicant tracking systems are so bad. Like you can't get any data out of it. It's so frustrating. I built a black box. Oh, I know one of, one of the Vibe-coded apps that I got to like 80% and then, then like broke 100 times was as, uh, an app that could call to the Lever API to pull out, um, to pull out all of the, uh, candidate records, to pull out all the interview notes, and then structure it in a way and, and try to make some of that more unstructured data structured. I got it to the point where it could actually call into the API and it worked, but then like kept failing as it pushed it to the LLM for analysis. But I'm like dead set on this. So if anybody's listening that's done data science work in hiring, I would like to talk to you.

I mean, there's so much, right? Very like rich data available there that seems like it gets underutilized when making these decisions, at least at scale or understanding the patterns, like how you evolve your profile and whatnot. But yeah, let me know. I'll join that bandwagon, Kyle. Let me know what you find.

There. Yeah, like even this question of how do you figure out if people are motivated— well, you could give interview— if you scored every single rep you've hired in the last 24 months on the level of motivation and then feed in all of their interview transcripts and interview notes and just ask the LLM to say, hey, what are the common themes in the interviews where the motivation is like 8 or above? Like, what should I be looking for? I'm, I'm sure, I'm sure it could, it could, uh, pull some, pull some insight. Um, this is my next frontier. I, I started down this path at Shopify, and then we got reorged, and then I ended up leaving, so I didn't see it through. But, uh, I think there's a, there's a lot here. I want to get more scientific about hiring.

I love it, especially, yeah, because it's, um, when you're removing experience, that's like one of the things you're like looking to have a proxy for skill. Like you do have to be a lot more scientific potentially. So it's not all on vibes, right?

So yeah, we do the same retro. Like we did our first retro like 2 months ago where we looked at every single new hire from the last 2 years, looked at their, what people scored them, what they've produced in seat. And you're like, okay, so this was a I think it's out of 16 because it was all scores of 4. There's 4 scores of 4. Okay. This was a 13. This person scored a 13 and he's one of our top producers. Why were we so wrong? Or vice versa, this person was a 15 out of 16 but is only mediocre. And then we went and opened up every single interview scorecard and it was all the managers from that function, BDRAE. And so we went like line by line. It's like, you know, what, what could you have known different? Like, what should we have asked the question? And that was actually a really helpful process. Yeah. Um, I'd like to do it at scale though.

Now that's the kicker.

Is that what your retro, is that what your retro looks like?

Sort of very similar, very similar. And then it's like, it's kind of like, hey, here's the overall, um, what we see for these cohorts. Here's the individual performance and scores. And then it's like, we kind of anchor towards like, what about our process? Like, why don't we catch it either? You know, do we need to shift our questions or our focus areas? Is this salvageable or is it not? We didn't go to the level of like looking at, I think for a handful of people we did, we said like, well, how did this person like, how does this unfortunately look at the negative side? How does this person get in here? We probably should have evaluated like, oh, how do we hire more of these people? But we did look at that for one individual. So very similar. Similar.

Yeah, one of the funny outcomes was we— one of the highest scored people out of everybody in this particular function that we, that we scored was one of the fastest exits that we've done. What happened? Like, what the heck happened? And then we read, we went line by line, you're like, oh well, they were just lying. Like, all of this is a lie now. And, you know, there wasn't, there wasn't much learning from it, unfortunately. But a good reminder of how difficult hiring is.

That's where you say, you know, good on you. And that's it. You know, you think you got me. So that'll happen all the time.

Uh, yeah. Um, okay. I want to move to our quickfire, uh, cause we're running short on time. So what, in your mind, what separates a great revenue leader from just like a good one?

Oh, um, two things. I think they both have to be present. One is operational. Like, you have to be an operator to be in this day and age. Like, this isn't let's go pound the pavement and hit every door and be charismatic. You got to be an operator. So it's science over math. And then the second piece is you have to be able to, um, motivate and inspire people. It's still a people business. And I think sometimes you see shifts one way or the other. I know from my own experience, sometimes I shift one way or the other, and I think you need both. You gotta be a strong operator and you gotta be able to inspire and motivate and be able to, you know, be empathetic towards the human experience of, say, it's hard. You have to be irrationally optimistic to be in sales. Like, it's, it's, it's a very challenging thing. So you have to be able to kind of keep that pulse and, and motivate. Yeah.

For sure. What's the most common advice you give people taking their their first, like, big leadership role? So first, their first, second, or third line leadership, maybe their first CRO job at a startup. What's the most common advice you give there?

Yeah, I think probably the first piece would be get curious. I think a lot of times, you know, and again, these are like, I'm not preaching because these are things I've experienced myself. There's the pressure to fix, the pressure to deploy the playbook, the pressure to, be the person that people rely on, right? And in reality, like, your number one job is to do deep, thorough discovery and evaluation, just like a sales call, right? So fundamental. But yeah, get curious, ask questions. 9 times out of 10, the people within that business will lead you to the right answer if you ask the right questions, and then you'll know how to solution. So it's like, withhold all the urge to be superhero CRO or superhero manager and just get curious and shut up. That would be my advice.

I love that one. That's a great one. What's the hardest lesson you've had to learn?

It's a good one. Um, hardest lesson I think is the, the power and dependency of like having to do things in a cross-functional manner.

Right.

And, um, you know, and I'm so privileged to have gone through these experiences, but like nothing gets done without, call it like the 5 or 6 different stakeholders that either directly are involved with your program or indirectly sometimes. To move things forward. And then, you know, I had a mentor of mine, Eric Sager, say this one time where he said, revenue leadership in a company, especially a product-driven company, it's a lot like enterprise sales, right? When you're doing enterprise sales, you don't just go to the CEO, shake hands, close the deal. You know the CEO, you know the technical side, you know the end user, you know the finance person, and getting things done in a company, especially as it scales, It's a lot like that. And it comes from being authentic and general curiosity. So like the hardest thing is, was really embracing that and being patient enough to learn the incentives and, you know, goals of other programs and to put the work in there as I've kind of like evolved my leadership career. And there were some hard lessons where it was, you know, product versus sales in situations or sales versus marketing. And you go, there's a quote, you know, where it's like, faster alone, further together. Couldn't be any truer. So really, if you want to do something remarkable in a revenue program, it's got to be all hands on deck, psychological safety, and putting in the work to go together. Open answer. That's probably the hardest thing I've had to work through. Yeah.

I think that's very endemic in revenue leadership. That was one of the mistakes I made early in my career. Is just, I was so used to trying to be a competitor and winning and like driving to a sales number that you take that same mentality in working with stakeholders and you just, you just create friction because of your, that, that sales DNA. Um, what's the best thing you've read in the last 12 months?

Let's see, I've read in the last 12 months. Well, once a year I read the book, The Alchemist. So that's like the big one. Did that. And then, um, cause I've been on paternity leave, I've read a lot of children's books. As well. There's My Dog Carl, I think it is. That's a good one with my daughter. But yeah, The Alchemist, probably the most recent one that I— and I always got to give this disclaimer. I listen to books. My wife's a big reader. So whenever I tell people I read, she's like, don't lie. Tell them you listen to books. So I listened to The Alchemist not too long ago, which is a great one. If you haven't read it, haven't listened to it, check it out.

Yeah. I'm almost 100% audiobooks now. I just, there's no other time. There's no other time. It's like when I run or lift or I do chores, like I don't have sit-down book time anymore.

Kyle, we talked for 40 minutes about efficiency. How could we not be audio listeners with books? It's the most efficient thing to do. You could do it while you're multitasking, right?

So there you go. Yeah, exactly. One more question, and I might cut this out if I can't get through it. So we both lost our dads recently within weeks of each other. What's the best lesson that you learned from your dad?

Dad. Um, thanks for asking that. I, I think for me, um, you know, the best lesson I learned from my dad is, you know, 80% of it is showing up and doing your best. This was a guy that for 56 years ran a bar from the time he was 22 to 58. Um, you know, took care of a lot of his family members, you know, financially. Working since he was 12 years old and never complained. Up every day at 5:30 AM, never made an excuse. I don't think he ever had a sick day, which is kind of crazy. But yeah, just like the idea of like if you work hard enough, you can figure it out and you know, you got to show up and you got to put the work in.

I love that. Yeah, the thing from my dad that I've like really come back to because it was something that like frustrated me a lot through our lives. Is like take the scenic route. My dad was a business lawyer, worked really hard, was like a very, very like driven guy but had a levity to life and just always insisted on taking the scenic route. Like if we were driving— I'm from Vancouver, so if there's an opportunity to like take the street by the water or go the, the slightly longer way to like to enjoy a view, he did it every single time, which I thought was a really interesting juxtaposition from like him as a business guy. And so I'm trying to take the scenic route more now. So, uh, I'm glad we could sneak this in.

I think this is, uh, I was gonna, I was gonna add, I was gonna say, I think your father had sound advice, something that we could all— as I'm staring out like at a farm here, something we could all think about a little bit more. How do you take the scenic route and just enjoy life, man? That's beautiful. Thanks for sharing that. Yeah.

Especially in our line of work. It's tough, tough to slow down, tough to enjoy things. And I'm certainly trying to do it. Well, Tom, this was awesome, man. I appreciate you joining. This was a great discussion. I knew it was going to be good when I saw your pre-call notes. So appreciate you doing it. And yeah, good luck getting back from pat leave.

Thanks, brother. Appreciate you. Thank you. And good luck with everything on your end as well. And I'm sure we'll be in touch one way or another. So take care.

Thank you for listening to the Revenue Leadership Podcast. If you enjoyed it, don't forget to subscribe and you can find a link in the show notes and be sure to leave a 5-star review, share it with your network, and please join me next Wednesday for another great conversation.