Building a sales team that can go from $0-$50M (Video + Transcript), from SaaStr Europa 2019.
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Laura Bilazarian | SaaStr Venture Partner @ SaaStr and Former CEO @Teamable
Gaetan Gachet | SVP of Sales @Algolia
FULL TRANSCRIPT BELOW
Laura Bilazarian: Good morning. It’s an honor to be here with this mythical creature, this sales leader that goes from zero to 50 million in the same job. And he’s also known for one other amazing feat. He has a whole French sales team and office that only speaks English in Paris. So that’s an amazing accomplishment in itself. So I’m going to get into it, but this is meant to be interactive. So there’s a great app called Slido, www.slido.com where you can ask questions. So the last 10 minutes we’ll take your questions from the audience. So Gaetan, pleasure to be here with you. Hypergrowth is a thing that very few people have truly experienced. Can you walk us through the various stages and some of the great things that you did in sales and then the smacks in the face that you had?
Gaetan Gachet: All right, so usually the way I start this session is I ask the crowd which revenue stage they’re in.. So can you please raise your hand if you are between zero and 1 million in ARR? Okay. One and 10? Okay. 10 to 50? 50 plus? All right. Okay, cool. So Laura asked me to sort of like bucket our different … Yeah, take pictures of that. Stages of growth.
Gaetan Gachet: So myself, I joined the company back in 2013. I was the second employee at the time, the first one in a non-technical role. And right after I joined, about three weeks after, we participated to Y-Combinator. I guess you guys are familiar with that program. So when I joined we’re pretty much pre-revenue. I would say that my first year, that zero to little bit over 1 million was my first, literally first phase between one and 10 million, 10-20 million and in 20 million plus. Right now we’re at about 50 million in AR. And pretty much the first stage took one year, 1 to 10 took two years, 10 to 20 took 1 year, 20 to 50 about a little over a year. So that was pretty fast. Those were the different phases. Do you want me to focus on any specific thing here?
Laura Bilazarian: Yeah. So Algolia started out mostly as an inbound long tail company. I looked back at our investment memo, it was a 2K ACV when Jason invested after Y-C. What’s your ACV today?
Gaetan Gachet: Depends on the segment. I don’t we can communicate that. Anyways. So mid-market, we’re about 40 to 50K ACV enterprise. We’re low six figures. So up to 100-150K and SMB, we’re at 2K. And actually when we started, I see one face in the room that I recognize, Kurt Freytag, was one of our big customers at the time when I joined. So thank you so much Kurt for your help back then.
Laura Bilazarian: Awesome. So you were the first sales hire. Talk to me about the sales hires that you made back in the early days and talk to me about how it changed through the different stages.
Gaetan Gachet: Yep. So my first sales hire was beginning of 2015. So right after we hit the 1 million mark. The very first few sales hire are I would say not your typical reps. They’re what we called renaissance reps. So it’s people who he can wear multiple hats at the same time. One of them is in the room today. There you go. That guy. Talk to him. It’s people who will do everything. They will do outbound, they will qualify inbound, they can close small deals, they can close large deals, they can write white papers, they will do everything and they like to do that. They really liked to do that. So they’re very much entrepreneurial at heart. Then as you grow the profile starts to evolve and you need a little bit more specialization and you need some people who’ve done it before.
Gaetan Gachet: So us, we decided to move upmarket. So it really focused our efforts on selling larger deals and go after the enterprise space. And when we started doing that, we starting hiring reps who are more focused on that. These people were coming from already a sales background. We made the mistake. We made many, many mistakes that would take a lot more than 30 minutes to go over that. But our first rep that I would call like that, enterprise, was actually coming from a large group. Big failure when this rep joined because he was very familiar to large environments where he had a BDR that was working for him. He had all the sales collaterals. Basically, he had seen something at scale, but he hadn’t gone through that sort of growth phase where you don’t have everything at the tip of your finger.
Gaetan Gachet: Our first successful enterprise reps were folks who are coming from … One of them, Marketo, the other one, Microsoft Xamarin. There were the first one and their teams, they were the first one to open an office. For instance, my first rep from Marketo, he was the first rep at Marketo in New York. So he had known that sort of chaotic environment where he had to still be an entrepreneur, although he was in a large organization. So very, very specific kind of profile.
Gaetan Gachet: And now we’re entering a phase where we’re literally looking for people who have networks because we have built a structure now that can allow for these people to be successful. So as we were growing, we also had to anticipate the needs of the future people that we would hire. And now the people that we hire, for instance, one of them Carlo that covers Italy came with his network, we empowered him with all the organization and the enablement that we’ve put together and now this person is successful. So over time, don’t hire resumes necessarily. They may not be the right ones for the stage you’re in.
Laura Bilazarian: Okay. So how has your day changed from Y-C Mountain View to two sales offices? And are you still closing? Like …
Gaetan Gachet: So my days haven’t changed. Okay? Let’s be honest here. When you sign up for hypergrowth especially, you have to go after the US. When I started, our very first target country territory was the US, even though we didn’t have an office. So what it means is that we had to look like a US company, although we were in Paris. You’ll see in the first column US phone numbers. At the time, we used a service called Aircall. You guys probably know about it. They gave us a 415 number. 415, that’s the area code for San Francisco. So in my signature I had a US phone number. The people would call me. Kurt, you had no idea we’re in Paris at the time. Right? And we were doing support at like every hour of the day or night. I remember Julian getting on the call with Kurt at one in the morning Paris time. Never mentioned it. He never felt it. Never felt a difference.
Gaetan Gachet: But what that means is that you literally have two days in a day. Like you have two days in a day. I can’t tell you exactly what time it is in San Francisco right now because I’m so used to that. To get in the Paris office around nine. The peak of your day starts around 3:00PM because that’s when New York wakes up. Around five, San Francisco that wakes up, you’ll have all your one to ones and your meetings between five and 8:00PM Paris. You get back home, you have dinner and then around 9:00PM, San Francisco has lunch and then after that they have their afternoon.
Gaetan Gachet: So you work with them and you end your days around one in the morning. So you do that for a few years. There’s no miracle here. That’s the recipe that works. Our reps did the same, especially the first ones who had to work on US accounts. They worked on the US accounts from Paris. It worked. We managed to go through hypergrowth. But what it meant is that a lot of people had to sacrifice some here to begin to achieve that.
Laura Bilazarian: And you have a sales team still in Paris and still in San Francisco. How did you like split that originally? And how do you split it now and maybe tell the story. I know you used to have a spreadsheet of salary transparencies. If you can talk about the benefits of that and how that grew as you scaled.
Gaetan Gachet: So as I was saying, so we started everything in Paris. So the Paris team covered all countries. Then we started to hire in San Francisco. For awhile, everybody was working on all accounts. So it was round robin, so which means that an account signs up, next in line gets the account. We did that for about a year, a year or two. And then at the time when we had scaled a team that was big enough in the US of probably about five, six people, we divided the world in two parts. So EMEA and the US. EMEA covers all Europe, Africa, Asia and US covers all Americas. So one head of sales in the US, one head of sales in EMEA. And then inside each of those two zones, we use round robin again and now we’re at a stage where we have carved territories and stuff, but it’s something like territories, it’s something that we did only about 18 months ago. So at around 20 million.
Laura Bilazarian: Talk to me about, you know, from the outside it looks great, you know, in hindsight the story. But talk to me about the times and you felt like almost an existential crisis for the sales team.
Gaetan Gachet: Yesterday and the day before and the day before. So existential crisis, I think that was a big shift at about probably around between 10 and 20 million when, up until then, you’re still riding the wave of your a trending company. There’s a lot of inbound and everything is cool. You feel like you’re king of the world. Except that when you sign up for hypergrowth, you realize very quickly that the leads that you get in are not necessarily the needs that you need because at the hypergrowth, especially when you decide to go enterprise, it needs to be fed by larger deals. Larger and larger deals. And large companies don’t necessarily go on your website and don’t sign up. It’s literally a shift. You’re crossing the chasm. For those who don’t know that book, please read it. Like really advise you to read Crossing The Chasm because it’s a paradigm shift.
Gaetan Gachet: The fact that you’re new is actually becomes a negative. The fact that they don’t read TechCrunch, they don’t read Hacker News. They don’t read all that. So you completely change your go to market and that also includes the fact that you need to start an outbound team. You need to scale the go to market team to feed that new sort of like next wave of deals. And for us that happen probably around 20 million mark. I wish we had anticipated earlier and done it before, but for us, that was really the huge … The sort of like I felt like we were going through teenager-hood in order to become adults as a company.
Laura Bilazarian: I know you’re great that you started modeling the business earlier and you build a financial model. You said you stayed in your pajamas for a week and built the first model for the company. Where are the areas that constantly surprise you in the model or you’re constantly under budgeted for? Or things that you didn’t foresee in the model besides people going out on maternity and paternity leave? Like you know surprise you?
Gaetan Gachet: Yeah. I know it will sound stupid for most of you, but I did not anticipate for the fact that people would have babies. I know it’s stupid because we start … Like the average age of the team a couple of years ago, it was probably like 23, four, five. But then as people start to build families and they take four months off is not something that we had initially put in the model. I know it sounds stupid, but when you again put those hyperscale model together, everything is super tight. So literally four month of a rep off means that it’s four months of non-closing. Plus when the reps come back, it’s another probably three or four months of ramp. So you’ll literally losing half of the number of that rep. And the case, it’s great thing. They’re building family. But again, it’s one of the things that we didn’t necessarily anticipate. It’s just a funny story. But now we do. And I used to call that a baby buffer now in our model.
Laura Bilazarian: And one thing I think I have always done really well is grow the sales team and maintain a good engineering culture as well. And one of the things your hiring process used to have reps sort of present to all the engineers. Do you still do that and what other recruiting things have you done that you think are unique and interesting?
Gaetan Gachet: I think we stopped doing that maybe six months ago, but we still have engineers who interview sales people, sales candidate. But yeah, the way we do that is we would have for the reps who would come on site, we will have one exercise where literally we’re organizing a mockup, call where it was the first call between the reps or the candidate and a prospective account of Algolia. In that case, it was Gap. And we were acting as the CTO of Gap and whatever, another title. And we would do that in front of the entire company. So engineers would sit and literally look at the candidate and hear the candidate’s answer to the question.
Gaetan Gachet: We did that for a few reasons. Our target audience is technical. So we needed to have the buy in and understand how the engineers felt about that candidate. But also it was for us, an opportunity to teach engineers about what is sales because we really wanted to make sure that we had good cohesion between our sales organization and our engineering organization so that both worlds really understand each other. Again, we sell to a technical audience. We really wanted to make sure that we acted as one company and that people would understand each other.
Laura Bilazarian: And how have you scaled your values over time?
Gaetan Gachet: That’s a tough question. We interview on values during our recruiting process. So there’s questions that we ask and there’s a few sessions that are really dedicated to that. Is by sometimes making hard decisions on some people who may be successful, but don’t really fit the value of the company. And those people, although they’re successful as individuals, they have negative impact on many other folks. So ultimately, it’s a negative sum here. So I guess by doing that. Yeah.
Laura Bilazarian: Awesome. So it seems everyone in the room has an experience with these earlier stages, but talk to me about the systems that you’re putting in today. The playbooks and the territories and the TAM understanding.
Gaetan Gachet: Oh yeah. So that’s the last column. We’re literally going through that right now. One thing that I wished we had done before is put together an enablement program because moving from a phase where we can still rely on a few individuals who had the legacy knowledge to a world where, again, we’re hyperscaling our head count. Right now, we’re 350 people. A year ago, we’re about 150 people. That tribal knowledge is in scale.
Gaetan Gachet: So if I had one piece of advice to share with you is anytime there’s knowledge that you think could be valuable for others, write it down, put it somewhere because people don’t last forever in companies. And when you have folks who’ve been here for years and who leave and you haven’t extracted their knowledge, that’s a huge, huge loss. So enablement program, playbooks, all of that. I know it sounds boring for a lot of you probably like at the stages you were in. It did sound boring for me a couple of years ago. But now I wish I had done it a little earlier. Again, the structure needs to scale and that’s why you need all that knowledge to be stored stored somewhere.
Gaetan Gachet: Another thing that we’re going through now that I wish we had done before is deeper territory understanding. Again, because you come from a world of inbound where everything is coming to you sort of like magically. You don’t necessarily need to do that. But when you start to be a lot more proactive about creating pipeline, because again, you double your sales team year over year, pipeline needs to double. Us this year we need to create $250 million of pipeline. It cannot come from nowhere. So we have to understand our territories. It needs to be a lot of work on accounts that we go after and all that. Again may not resonate necessarily, but it’s something that we’re doing today and that I wish we had done a bit before.
Gaetan Gachet: One other piece of advice, try not to be too top down in your model. You know, everything works in Excel magically. And especially for the folks who are engineering first companies, everything works in theory. But the second you start to execute, you realize that there were so many, many things that you didn’t anticipate for. So again, top down plan is great. When you hyperscale, you need to go top down, but you need to back it with a really solid plan.
Laura Bilazarian: And last question before we’ll let the audience ask questions again on slido.com how do you scale yourself?
Gaetan Gachet: So I read a lot and one thing that I started doing very early is anticipate because you … Okay. I won’t curse. Anticipate all the shit that will happen because it will happen. It will always happen. The only thing that you have control over is anticipate. Know about the things that are going to happen and when they’re going to happen. So one thing that I started doing very early is to identify who were my peers in larger companies. Like for instance, when we’re series A, I would try to talk to folks who were at series B stage, series C. And right now it’s more about folks who went through an IPO. And what I need to understand is what are the walls that we’re going to hit because we’re going to hit them and how should we anticipate for those? For me, that was my way of doing it. Again, knowing what’s coming up, buckle up and try to make sure that the organization is as ready as possible to go through that.
Laura Bilazarian: I’m just personally curious. I talked to some of your early sales people and from them, you had an opinion that no sales engineers or things like that. That the sales people could cover it. Has that opinion changed?
Gaetan Gachet: Absolutely not. I still think that a salesperson should be able to talk about a product in a intelligent manner. That hasn’t changed.
Laura Bilazarian: Awesome. Cool. Let’s go to questions from the audience if we can. Thank you. All right. You ready for that one?
Gaetan Gachet: Okay. Cold emails and cold calls. So there’s one question, what’s your take on cold emails and cold calls? You have to do it, but doing just that doesn’t work. You need to warm up the territory and the accounts. So for instance, putting together webinars, LinkedIn campaigns and all that. I’ve personally never replied to a cold email. I don’t know about … Okay, let’s raise the hands here. Who has replied to a cold call or cold email positively in the past year?
Gaetan Gachet: There you go. Not that many. Reason why you probably answered it is because it was the right moment, but you need to warm ups … That’s when actually answering to the other question, this is where you need the sales team to work very, very closely with the marketing team. Marketing is here to support air coverage for the overall revenue organization. And that includes the folks who do those outbound calls or outbound emails.
Gaetan Gachet: What amount of funding did you take to support each stage of the previous table? So it’s public, our series A, so seed round was 1.2 million and it was back in 2013. Series A, early 2015 $18 million and Series B, early 2017. That was $54 million.
Laura Bilazarian: I think the fourth question there illustrates the point. How did you get native front sales team to sell successfully in the US?
Gaetan Gachet: So during the interview process, all the interview process is in English. Extremely important. If you have American or English native speakers in that process, it’s even better. And then from a day to day standpoint, French is not allowed in the open space in our office. And the way we enforce that, I tried to make it funny. In the early days where I bought a French … I don’t know if you people know that, but you know those moo box? meute for French people. Where you flip them and it makes that funny noise. I would buy one for every non-French employee who would join the office. That would be like a welcome present and what I would tell these people is anytime you hear French coming from anyone, and that includes the founders, in the open space, you flip the box. And very quickly, we gamified basically that mechanism and very quickly, literally, it took maybe a week or two for people to stop speaking French on the floor.
Gaetan Gachet: Now I want to test something else where I want to put a jar in the middle of the office and every time I hear French, five Euros in the jar. But it’s a constant battle. But yeah, it’s extremely important because right now, we have probably 17 different nationalities in the French office. All our communication on Slack is in English. Even our DMs, direct messages, right now it’s become completely natural, but there’s no way we would have scaled at that pace if we had not done that.
Laura Bilazarian: I think the second question is asking how did you structure in the early days? So it’s clear from this chart how you structured later, but how was structure in the early days?
Gaetan Gachet: That’s which question is that?
Laura Bilazarian: It’s the second one. I’m just summarizing.
Gaetan Gachet: … structure for sales and at product market fit? So we didn’t structure much. I’ll guess that the initial structure that we did, so the first reps who do everything. First call all the way to closing. The next stage was we hired more junior people who would do the first call and work on SMB accounts and we would have the more senior work on mid-market and enterprise accounts. The stage after that, we carved out mid-market teams. So we had SMB, mid-market and enterprise. And for the more junior role, we had people who would just take care of the inbound. More senior people who would take care of outbound. So literally, we had five stages in the sales organization, which is also something that you need to anticipate because people one, you’re in we’ll ask you what’s next for me. So you also need to build a path for these people.
Laura Bilazarian: And how did you structure sales compensation initially?
Gaetan Gachet: So my first year, I didn’t have commission, which means I was on full pays. Based on what I closed, I set the target for the first rep, a 50/50 split.
Laura Bilazarian: That’s really valuable, right? Because you can say you closed it, yeah. So any pushback?
Gaetan Gachet: No. No, that was fine. So 50/50 split and today we’re still on a 50/50% mechanism for all the closing positions.
Laura Bilazarian: And has the quota gone up, gone down, change?
Gaetan Gachet: Gone up.
Laura Bilazarian: Gone up, got it.
Gaetan Gachet: Yeah, it always goes up because you want to constantly increase the productivity of your sales team. So $1 that you pay for a rep, how much did you get back? So increasing one of the mechanisms. Our quota today are half a million for SMB, 1 million for mid-market, between 1.5 and 1.8 for enterprise. And that’s new ACV.
Laura Bilazarian: And what was the size of your sales team along these different phases, roughly?
Gaetan Gachet: Along the way? So me, 2014 to end of 2015, I had I think five people. End of 2016 about 10. And if I look at today, we have 50 account executives globally. Half US, half Europe. And about 25-30 folks in the BD team and AC team.
Laura Bilazarian: And what about these other functions like sales ops and enablement?
Gaetan Gachet: Sales ops, we have a little under 10 people today. The ratio that we use is one for 17 people in the revenue org. So one sales up, so one ops person for every 17 individual contributors on the team. So there’s some ratios like that as well that you should be aware of. We have one CSM for $2 million of book of business. Two and $3 million of book of business. Sales engineering, it’s one for about two to three account executives. That’s kind of how you build the model. So you start with a target that define sales capacity, number of reps, number of SEs, number of CSMs, number of BDRs. So that’s kind of how you do that.
Laura Bilazarian: And the model always works perfectly, right?
Gaetan Gachet: 100%. No.
Laura Bilazarian: How would you advise European companies looking to set up an office in the US? East Coast versus West Coast or when is the right time?
Gaetan Gachet: Good question. So if you have sleeping problems, you can do West Coast. No, but seriously, really, really think about it. It may sound like a detail, but having three more hours of overlap, meaning opening a New York office can change your life and the life of your people. It’s very hard to work efficiently with people if you have less than four hours of overlap. San Francisco to get four hours, you need to extend the Paris days super late because people in San Francisco, they won’t wake up at four in the morning. So at bare minimum they will start their days around seven, between seven and eight. But the you need those four hours. Then it depends on where your market is. So our market is mostly on the coasts. If most of your market is on the East Coast, no brainer. If you need to be really close to investors, so maybe the West Coast is a peak as well. But those are the variables that I would look at when deciding East versus West.
Gaetan Gachet: The other thing is the West coast is insane in terms of competition for talents. Literally you cross the street, you have a job. Like not even cross the street. I think they cross it for you. People will leave jobs after six months if they get a new offer for somewhere else. So also take that into account. You have the knowledge there in San Francisco. There’s the skills, but it’s very, very, very, very competitive environment.
Laura Bilazarian: And there’s a little bit of difference in the interview culture, right? Like in America, everyone’s great at everything. And how do you pierce through the ability to interview there?
Gaetan Gachet: Oh my God. Yeah. It took a while though because like the first time you interview people, you feel like they’re the best obviously at what they do. And after a while, you realize that they answer the same way all your questions. So you start adapting your questions to them. Yeah.
Laura Bilazarian: How’d you get through that? I’m like serious, because I saw my Armenian co-founders go through this.
Gaetan Gachet: Like one thing for instance, if the same here, but like every time I look at the LinkedIn resume, if I see like succession of tenures under one year, I’m like there’s something. And there’s obviously always a good reason, but you just need to dig. There’s one thing that folks do a lot in the US, I don’t know if it’s that common here, is back channel. So find someone who knows the person. It’s something that is quite usual. I know it’s not legal in France, but it’s something that you can do a lot in the US.
Laura Bilazarian: I think we covered some of this. What was your playbook at the low ACVs?
Gaetan Gachet: What was my playbook at the low ACV?
Laura Bilazarian: Yeah. Early stage, like what was your playbook? Did you …
Gaetan Gachet: Didn’t have playbook because we had no references. So it was tough. I guess in the early days, we’re very heavy in terms of in presales on the technical proof. So building demos, that’s something that really worked. We had no logos to communicate on at the beginning. So we had to prove ourselves. So we would literally do full fledge implementations for some customers. I remember Crunchbase. We built Crunchbase when we tried to go after that brand. So we were being very generous in our presales.
Laura Bilazarian: Gaetan, thank you so much. It’s amazing to watch your journey. Congrats.
Gaetan Gachet: Thank you everyone.