Matt Schatz is SVP of Sales at WPEngine, responsible for defining and executing the global sales strategy. Matt has nearly two decades of senior leadership experience in sales and customer growth, specifically for technology companies with customers around the world including Bazaarvoice, CityVoice and Rackspace.
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Matt Schatz, SVP of Sales @ WPEngine
Dannie Herzberg, Head of Mid-Market Sales @ Slack
FULL TRANSCRIPT BELOW
Good deal. Once again, thank you so much for being here. As mentioned, my name is Matt Schatz. I’m the SVP of sales for WP Engine. Quick background on me, it’s relevant for this discussion. I spent my first 10 years at Rackspace. I was part of the team that helped grow that organization from about a million in revenue when I started to about $870 million when I left and through an IPO.
Then fast forward to WP Engine. I’ve been with WP Engine for the last five-and-a-half years. We are a digital experience platform for websites built on WordPress. We now have about 90,000 customers in 140 different countries. Companies like Marriott, Warby Parker, Patagonia utilize our platform. We’re backed by Silver Lake. Last year they made an investment of $250 million into our business. Now we are doing about $132 million in revenue. Super excited to be here and share with you a little bit about what I’ve learned along the way. Let’s chump in.
Where I want to start is building your sales org, or just your organization in general. The first piece that I want to go and hit on is you need to understand your value proposition. I’m not talking about your value prop for your customers. I’m not talking about your value prop for your prospects. I’m talking about your value prop on why somebody should join your organization.
Most likely those ICs that you’re hiring, it’s fundamentally different than why you founded the organization, why you joined. There’s probably not a big equity play. There’s also a tremendous war for talent out there. Most likely you’re not paying top of market. You don’t have an established brand. You don’t have an established career path. So why the heck should somebody go and join your organization?
Now, I’ll caution you on a couple things that I don’t think should be part of that value prop. The first one is the thought of a potential exit. I think that’s too shortsighted. Focus on building a great company, and hire people that want to join you along the way. The next one also that I caution you about is just simply, hey, this is your opportunity to join an early-stage company. Being able to go in and get in on the ground floor. I fundamentally believe that most people don’t realize how hard that is. You all understand how hard that is, but I don’t think most people understand how hard and how difficult that is.
It’s crazy to think, I saw a stat that every year in the U.S., from all the companies that are founded only 0.04% will ever hit $100 million. It is hard. So one of the things when you are recruiting people out there, make sure you’re telling them how hard it is. Don’t be afraid of that. Don’t be afraid of scaring somebody away because you’re talking about how hard it is. If you do scare them away, you didn’t want them in the first place. Get people that are vested early on. Tell them how hard it is.
One of the things that I do at WP Engine I’ve always done is I overembellish that. I tell people how incredibly difficult it is. The way that I think about it, I don’t want to see the white’s of people’s eyes on their first day at work. I don’t want them to be surprised and start thinking, wow, this place really is hard. I can’t believe they don’t have this process in place. I can’t believe that they don’t have that. I’m getting that out front from the very beginning. If they say no to that, I don’t want them in the first place. Super important to be able to go and focus on.
Now, when I think about value props, there’s three things that I tend to go and focus on. This right here, this picture right here is of my SDR team in Austin, my most junior sellers. Why should somebody like Mason up there join our organization? First one’s really simple, the ability to get promoted relatively quickly. You go and make that commitment to people, you do have to be able to go and follow through. But from my SDRs, my commitment to them is if they come in and overachieve, exceed expectations, I will promote them in nine months. Especially for junior folks, that’s really exciting to be able to go in and have that promotion right in front of them.
The next piece that I focus on is the ability to wear multiple hats. We all know that in this organization if you’re an early-stage company, you are going to wear a lot of hats. With that ability to be exposed to multiple different parts of the business is really exciting. When you talk to people at WP Engine and you say what do you enjoy most? From our most tenured people to our newest folks, they talk about that ability to wear lots of different hats, be exposed to all different aspects of the organization.
With the third, the third, I think, is the most important piece. That is when you have an employee join your early-stage organization they have an ability when they have a last day in your organization, three, four, five years down the road, they have the opportunity to have a story that is far greater than, “I happened to join the organization at this size, and now I left and they are this size.” They actually have the ability to go and show that they participated in that growth. The way that I think about that is a story of firsts, your first story. I was the first person in the organization to do this. I was on the first team to be able to go and do that. They actually show that they participated in that growth.
At early-stage companies, you have all kinds of first stories that are yet to be written. Well, the one thing that I talk about with first stories, I speak to every new employee at WP Engine during what we call new employee orientation. I tell them, one, this should be the hardest job that they’ve ever had. Two, it should be the best job that the ever had. The way that you make it the best job is you’ve got to go and seek and find those first stories.
We’re at $132 million right now. It was an evolution to get to $132 million. It’ll be another evolution to get to the next $132 million. We’ve got to go and seek out change, and we need employees that are looking for ways to improve all the time. As an executive, as the founder, you also have to be receptive to that feedback, but set that precedence. Go and find your first story.
When I first joined WP Engine five-and-a-half years ago first stories were really easy to come by. The day that I walked into the office I got my first story. I was the first sales leader ever at WP Engine. I had one person on my team, but I was still the first. Those first stories are still out there. I think about Mason right here, Mason’s in the forefront. One of the best SDRs that I’ve ever hired. He’s been on the team now for six months, overachieved every single month. He’s already a mentor to all of our new SDRs.
Mason got his first story last Friday, and he’s so excited about it. He’s going to be our first SDR that we ever sent to one of our international offices. He’s heading down to Australia in the middle of February to go and train our new SDRs. He got his first story. He told me on day one, “Matt, I want my first story.” He just got it. It was great when I was talking to Mason about that, for the rest of his career, when somebody looks at his resume they say, “Oh, I see you were an SDR at WP Engine. How well did you do?” He’s going to have all the numbers, but he’s also going to have an exclamation point. He’s going to be able to go and say, “I was the very first person to ever travel to an international office.” He got his first story and he’s going to go and get a heck of a lot more.
Set people free. What I’m talking about here are C players. And to put a caveat here, I’m not talking about the jerk. Not talking about the person that can’t live up to your values as a company. Those people are easy to move on from. I’m talking about that C player that gives you everything that they’ve got, works incredibly hard, the one that you’re always rooting for, but they just can’t put it together.
None of us wants C players in our organizations, but it’s bound to happen. I know that I have hired my fair share. From a couple of smiles, it looks like other people have done the same thing. Early-stage companies I found are really susceptible to hiring C players. You may not have an established hiring profile. Even if you do have an established hiring profile it probably gets antiquated very quickly at the speed, and rate, and change of your business. But there’s also that war for talent out there. You got to take risks. You need people to be able to come in and join the organization.
But what I also see is early-stage companies tend to hold onto these C players for way too long. With that war for talent, at least you got somebody there. You got a good person and they’re producing something, so isn’t something better than nothing? The problem that you run into is that a C player’s impact on a small organization is far greater than a large organization, so you have to take action even quicker. Many of these C players, they don’t resign. Or they will stay far longer than you expected before they resign because they love the company. They believe in what you’re doing. Most importantly they don’t want to let you down, so you got to go and take action.
One of the things that I fundamentally believe and I talk to my management team about this all the time, is when you get that type of C player doesn’t mean they’re a C player in life. They just happen to be a C player in your organization. If you hired them and they gave you everything they got but they just couldn’t put it together, it is your obligation, your responsibility to help them find a path where they can be an A player somewhere else.
At the end of the day, no C player will ever come back to you years from now and say, “Thank you so much for allowing me to be barely hang on for those additional six months. Thank you so much for allowing me to struggle for that amount of time.” But if they do come back to thank you, they’re going to thank you for setting them free. For allowing them to pursue a path where they can be an A player somewhere else.
Many times when I’m talking to the C player about their performance the response that I get is typically like this, “Matt, I’m just as frustrated as you are. I’m just as disappointed. But, Matt, you see, I’m the first one in. I’m the last one out. I’ve got mentors. I jump on every single call, Matt. I’ve read every book that you’ve asked me to. You see all the effort.” My response is typically, “You’re right. You’re absolutely right. And you deserve to be part of an organization where you only have to put forth 80% of that effort, and you can be at the very top of the leader board. Don’t you agree?” Normally when that happens you can literally see just the tension fall off of those people. They say, “Yeah, yeah, you’re right, Matt. But I love the company.” “Of course you do. It’s a great company. It doesn’t mean it’s great for everybody. Let’s find you a path where you can go and be that A player somewhere else.”
Now the next piece I’m going to talk about is data-driven decision making. I will admit I am a gut feel person. I go with my gut. I trust my instinct. That’s really helped me when I’ve been working at early-stage companies. But you have to go and switch to data-driven decision making as quickly as possible. If you don’t, there are so many things that you’re going to miss in your business, and the thing is you won’t even realize that you missed them.
In that shift to data-driven decision making, first thing is invest in sales operations. Do not go junior here. It will cost you so much more money if you go junior here. When you go junior with your sales operations team, or that sales operations person, you’re going to find somebody that can tell you all about the past. But at the speed, and rate, and change of your business, the past is interesting but what you really need to find is somebody to help you predict the future. You have to invest there. Every single time when I finally invested in sales operations and brought in senior people, my first thought is, I should’ve done this a year ago. There’s so much that I missed out on, so don’t go junior here, invest.
The next piece is understand the science of the model. We all want predictable growth. You have to understand the science of the model. What I’m talking about here is don’t just focus on the outputs, focus on the inputs. Have a point of view. What is the ARPU that you’re looking for? What is the conversion rate that you’re looking for? What is N in terms of the number of customers? Average sales cycles? What’s your expectation of current customer growth, cross-sells? What about agencies? What about through partnerships? What about direct? Have a point of view there.
When you focus on the inputs, a couple of things start to happen. One is you will be able to identify trends in your business far quicker and take action when you see those things happening when you’re focusing on the inputs. This consistently has happened in my career. You focus on the inputs, you can make corrections, or you can go and jump on opportunities.
The next piece, when you focus on inputs, it’ll help make sure you’re not putting the wrong person on a pedestal. What I mean by this is you have the sales rep that does 150% of their number. The first thing you want to do is say, “Great job. We really needed that big quarter. We really needed that big month.” But you start focusing on the inputs. Maybe they had a really low conversion rate. Maybe the number of customers they sold was super low. How did they do 150%? They got the lucky lead.
We all love the lucky lead. I love the lucky lead. I count on the lucky lead. We all need them. But is that the person you really want to go and put on a pedestal. Is that really what’s going to go and lead you to predictable growth? You have that one former customer that left your platform, went to a competitor, thought you were too expensive. Went to the competitor, realized why you are so expensive. They come back and they say, “I’m really sorry. Send me the order form. I’m ready to sign back up. I should’ve never left.” That one sales rep just happened to go and get that phone call. Is that the person that you really want to go and put on a pedestal? That’s not going to go and lead to predictable growth.
What about your A players? Do you really know why they’re an A player? It’s got to be much more than, “She’s great at listening to our customers. She really understands the platform. She really asks great questions.” Dive into the inputs to go and figure that out. Because once you go and figure that out, is it a conversion? Is it an ARPU? What is it? Then you can go and take those learnings across the rest of your sales organization.
Another piece about that is it gives you the ability to go and challenge your A players. If your conversation with an A player is like this, “Great job. Amazing job. I’m so proud of you, but I don’t have any time to spend with you because I got this team over here that’s not performing.” If that’s the conversation that you’re having with an A player, that A player should fundamentally quit your organization. If you’re not challenging them, they will quit, they should quit. But when you focus on the inputs, you’re going to find areas where they can go and improve.
There’s a sales rep that I have on my team over in London, an incredible performer. Every single month this person is nailing their quota, always going above and beyond. About a year ago I was meeting with him and we were looking at the inputs. What we figured out was great with current customers, great selling direct, but actually incredibly weak at selling through the channel. The person didn’t even realize it.
After we got done talking he had this big smile on his face, basically like, “Matt, challenge accepted. Now I’ve got a place where I can go and focus.” He promised me that he was going to be our best channel salesperson that we’ve had, and a year later he was. The ability to go and really impact those A players. So focus on that science so that you can go and drive that predictable growth.
We had another person not too long ago, when you looked at the data, and you looked at the output, they were mediocre at best. Not at the bottom, not at the top, mediocre. We started looking at the inputs. We found out for this person they were pretty weak going direct, they were pretty weak with current customers, but they absolutely excelled selling to digital agencies through our channel, absolutely excelled.
The problem was we had them in a role only about 30% of their time could be focused on selling through agencies. You look at the output, mediocre. You looked at the inputs, we found gold there. So then a few months later we decided to go and form a team that only focused on agencies. If you looked at the outputs, this would not be your top choice. If you looked at the inputs, he was our number one choice. Just by having him be able to go and focus 100% of their time on agencies, he went from a mediocre performer to a star performer. He did so well that a couple months later he was promoted to a manager. Got to go and focus on the inputs.
The next piece is pretty obvious but I think it’s worth talking about and that is the fluidity of comp plans. Your comp plans should be changing all the time. Your business is changing, so should your comp plans. First off is does your comp plan align with the strategic growth initiatives of your company? Are you in a place where you don’t care nearly as much about ARPU, you’re really about N and bring in as many people onto the platform as possible? Does your comp plan reflect that? Or are you in a position where all you care about is ARPU and you’ll sacrifice N? Does your comp plan reflect that?
The other piece is constantly looking at your comp plans when it comes to quota. At Rackspace in our early days, we were going through really high growth time, we adjusted quotas every single quarter. Sales reps didn’t necessarily like it, but we set the expectation early. So set that expectation early. We had a little science behind it said average attainment in one quarter will be the new quota for the next quarter. Or you can go and decide, hey, I don’t want to raise quotas, I want to be able to go and add people. It’s a great way to go and keep the quotas the same, but you can go and add people, but you constantly got to go and be reflecting on your comp plans.
One thing, just a bit of a word of advice, especially if you have a junior sales organization, this is basic but it will ease the heartburn down the road. If you’re raising quotas, set the expectation that OTEs stay the same. It’s amazing how many times sales reps get into their mind, I get paid this percentage. All of a sudden you raise the quotas and they’re still expecting to be paid on that same percentage. It’s a super simple thing, but it will avoid a whole lot of heartache down the road.
Now the next piece is scaling globally. When it’s time to be able to go and open up that first international office. This can be a really, really exciting time in a company’s history, but also one where companies tend to go and make mistakes. The first thing as you’re scaling globally is instill your company culture globally. It’s pretty basic. This is a picture of our Australian team with our CEO, Heather, in the middle.
What I tend to see for American companies going international for their first time is they tend to underinvest here. I think they underinvest for good reasons in their heart, and that is they don’t want to go in and impose their American culture on that international office. They want that international office to be able to go and have the freedom to go and create a little bit of their own culture.
But you’re successful. You’re opening up that first international office. Invest. Bring those good parts of your culture to the office. Part of that is invest in work permits. Invest in expat packages. Take one or two of your top people and send them over to that international office. If you don’t do that, it’s going to cost you so much more money in the long run because it’s going to take so much more time for that office to be able to go and get up to speed. So invest there.
The next piece is build trust across time zones. What I’m talking about here is time. There is a massive commitment of time that you must be willing to commit if you’re going to open up that international office. Fabio Torlini is our MD of EMEA. He’s based out of London. He’s worked with WP Engine for four years now. I’ve worked with him since 2002, back in our Rackspace days. We worked together for 17 years now. Still to this day I call him every single morning, I spend an hour on the phone with him.
When I’m in Texas, I call him at 5:30 in the morning my time, 11:30 in the morning his time. Because I want to make sure that three-quarters of the day doesn’t get by him if he’s got a question, if he’s got a concern, if he wants to go and bounce something off of me. It takes that level of commitment. Especially when you have an executive over there that you’re not going to run into him in the hallways. You’re not going to run into her in her office, or her pop into your office. You’ve got to go and force and create that time. If you don’t, you’re going to set that office up for failure.
A while back, it was about eight, nine months ago, speaking with a founder CEO in Austin, and it was time for them to expand and open up their first international office. They were also going to open up in London. They were asking me for advice. I talked about this timepiece. That founder said, “Matt, I’m already way ahead of you. Because when we hired our first MD,” this founder said, “I have a one-on-one right now with every member of my executive team every week. When we hire that MD in London, I’m going to have two one-on-ones a week.” I said, “You just don’t get it. You absolutely don’t get it. The amount of time that you got to go and spend, it’s a crazy amount of time.”
The other way that you build trust across time zones is you’ve got to show up. Members of your executive team, your top performers, have got to travel to that international office. It’s a great way to be able to go and reward your top people. It’s a great way to go and make sure that knowledge transfer is happening. It’s a great way to go and show that you really care about the success of that international office.
We just opened up our Australia office last year. We sent 16 different people to Australia, some multiple times. London last year we made over 70 trips to London. We had a person over there a week. You’ve got to be able to go and make that commitment. The problem is the first trip is easy. The second trip is easy. But what about the fifth trip? What about the sixth trip? What about time away from headquarters? Time away from family? It is hard. But if you’re going to make that office successful, you’ve got to be able to go and make that commitment.
A while back before I joined WP Engine, I was with a company and I was the GM of emerging markets. I inherited an Australian team. During the interview process when I first joined, there was a lot of concern about this Australian team. The team seemed disengaged, didn’t really seem like they want to be there. There was some questions about do we even need this Australian office? One of the things that the team told me when I got hired, it’s not your decision but we just want you to know we got some concerns.
One of my first days I did a video conference call with the Australian team. I’m excited. I’m fired up. Giving them my vision. And it’s like talking to a brick wall. I finished off by telling them, “I’m going to be down there in a month. I’m going to spend two weeks down there. I can’t wait to go and meet you all.” Once again, it’s like talking to a brick wall. I got done with the call. I hung up and I’m thinking, wow, this team is so disengaged, maybe they’re right. Maybe the best way for it is to go and part ways with these people.
I called the country manager up afterwards and I said, “Wow, I’m super disappointed with that call. The team seems super disengaged.” The country manager said, “Matt, you got to understand. Not a single person from headquarters has ever traveled to the Australia office. They don’t believe you. They don’t trust you.” We were able to go and turn that office around really quickly by just showing up, having a daily phone call. Showing up once a quarter. You got to be able to go and make that commitment.
The other way to go and build trust across time zones is when you hire that first managing director or country manager, whoever that is, have them write the business plan. Don’t write the business plan for themselves. Have them write it. Have them do a study of the total addressable market. Have them put together the growth rate plans. Have them put together the list of what they feel it’s going to take, the support that they need from headquarters in order to go and make is successful. Don’t do it for them.
One is it’s a great way to be able to go and show that trust. It’s a great way to be able to go and understand how they think. Then thirdly, they just wrote their job description. Once you sign off on it, now you just have to go and hold them accountable to the numbers that they put forth. It’s a great way to go and get that first country manager really invested in the success of the organization.
Now one of the things that I fundamentally believe is that none of it really matters if you’re not building a great culture. The culture is one of those funny things. I’ve been really blessed in my life to be able to work all over the world. I’ve worked in London, Amsterdam, Japan, Hong Kong, Sydney, Brisbane, Sao Paulo as well as in the U.S. Everywhere that I have been, every interview that I’ve had people want to work for a company with a great culture. I have never once had somebody walk in and say, “Matt, I need a mediocre culture.” Never once.
But then you start talking about, “Well, what do you mean by great culture?” The answers are typically pretty subpar. “I want to work with a company where there’s not a lot of politics.” Okay. “Where people don’t backstab each other.” Well, of course. “Where hard work is rewarded.” Of course. But what do you mean by culture? Our CEO, Heather Brunner’s got a great definition of culture. She defines culture as your core values in action everyday. We’re very much a values-driven company and that really works well for WP Engine.
I picked up a slightly different definition along the way. The definition that I utilize is the difference between showing up for work and volunteering your best. We all have to have a job. All your employees have to have a job. But they get to make a choice every single day when they walk through the doors of your organization. Are they showing up? Are they there to volunteer their best? If your North Star is I’m going to create an organization where every one of my employees wants to volunteer their best every day, you will have an amazing culture.
Now, to finish up here, this is a picture that I took in Nepal a couple of years ago. One of the things that I’ve been able to do is every time I transition between a job, I take some time to go and do some volunteer work. Sometimes it’s only a couple of weeks. After I left Rackspace it turned out to be 18 months. But a couple of years ago I found myself in Nepal. I went to go and teach English to the novice Buddhist monks at a monastery way up in the Himalayas. I mean, on a clear day it overlooked Everest. It’s a beautiful, beautiful area.
While I was there, I worked with these two monks. Part of being monks, they were both Sherpas, both of them had scaled Everest. I loved at night to go and talk to them about what it was like to go and scale Everest. Of course, they talked a lot about oxygen, and the need for oxygen. My challenge to you all is what you’re doing is really freaking hard. It is incredibly hard. And if you’re trying to go and build an organization where you want every person walking in every morning willing to go and volunteer their best, you have to be willing to go and do it, too. That means periodically you got to give yourself an opportunity to go and come up for oxygen. To take that big breath of air, just like you’re doing at this conference right now. Give yourself time.
The way that I define that is are you happy between life at work and home? Life at work and yourself? If you’re able to go and take that occasional breath of oxygen you’ll be able to walk in every day and volunteer your best. You will set that example and the rest of the organization will follow. That’s what I got. Thank you all very much and I hope you have a great conference.