How the Relationship Changes Between CEO and VP Sales After Funding (Video + Transcript)

You know what they say, money changes people. But how does funding change the relationship between a CEO and VP of Sales? Russ Fradin, CEO at Dynamic Signal, and Scott Schnaars, VP Sales at Dynamic Signal, explore the dramatic evolution of the relationship as the company moves from one stage to another.

They answer several questions that they wished they had asked but didn’t. How aligned are investor expectations with sales expectations? What does international expansion look like? Do you, as a CEO, know what’s going on with your product and market or are you just delegating that to your head of sales?

If you want to learn more about how to navigate the changing dynamic between a CEO and VP of Sales, don’t miss out on this session.

You can view the slide deck here.

And if you haven’t heard: SaaStr Annual will be back in 2018, bigger and better than ever! Join 10,000 fellow founders, investors and execs for 3 days of unparalleled networking and epic learnings from SaaS legends like Jon MillerDavid SteinbergJennifer Tejada, and Eoghan McCabe. If you don’t have tickets, lock in Early Bird pricing today and bring your team from just $999! (All ticket prices go up December 31st.) Get tickets here.

 

 

INTRODUCTION

 

TRANSCRIPT 

Announcer:  Please welcome Dynamic Signal CEO and VP of Sales, Russ Fradin and Scott Schnaars.

Russ Fradin:  Hello.

Audience Member:  Hello.

Russ:  I am Russ.

Scott Schnaars:  I am Scott. Thank you very much for coming out. I know we’re the one thing holding you guys from cocktails.

Russ:  Yeah, apparently NetSuite has drinks downstairs. We won’t be offended if you have to leave.

We’ll talk about our backgrounds in second, but we thought it would be interesting to talk about how the relationship between a CEO and VP of Sales evolves when you go from company raising its Series A to a company raising its Series B, to a company really growing and raising its Series C.

We’ll do that in a second. Scott, I know you had a question you want to ask folks in the room.

Scott:  A quick of show of hands. Who here is a CEO? Who here is in sales, marketing? OK, it’s about 50/50, perfect.

Russ:  Who works for Dynamic Signal?

Scott:  All right. [laughs]

Russ:  All right. It seemed a little too full. That makes sense. Nice to meet everybody. Dynamic Signal is about six years old. We’ve raised, I don’t remember, let’s call it $75 million across a couple different rounds of financing, 150 or so people based here but we have customers in 25 countries.

We figured we’d talk about our experiences both Scott and I have done other startups that have been successful and grown, and sold, or gone public or things like that. We thought we’d talk a little about that.

By the way, I think we decided they told us we could, since we’re the last panel of the day, I think we decided to leave 10 minutes at the end for questions, so hopefully people will have really good questions, because we don’t actually have that much to say.

[laughter]

Russ:  Go ahead.

Scott:  What we put together was as an organization grows and you go through these different evolutions inside of your company that relationship between the CEO and the VP of Sales changes pretty dramatically from that early stage organization into that late stage Russ was talking about.

What we’ve put together is a few questions at each different stage, some are questions that the CEO wishes that he consistently asked a new VP of sales coming in. Others are questions that, at least from my perspective, are questions that either I didn’t ask when I went into the role and I wish I did, or ones that I did ask and it allowed me to make a better judgment about going into that position.

Russ:  I think a lot of people have heard this advice before but if you think about any type of company, but when you’re building a SaaS enterprise sales company, fundamentally it’s not just consumer. It’s not just based on users. People are going to have to pay for your product.

I think there’s a couple of very important reasons that…I’m not a believer, you shouldn’t hire a VP of Sales. I think having a VP of Sales in the early days are fantastic. We’ll talk about what they spend their time doing.

I think as a CEO, you have to be in front of your customers all the time. If you’re not one of the primary sellers for your company’s product in the early days, to me, you have no business starting and running the company for a couple of reasons.

One is you have to understand if anyone actually wants your product, and you have to really understand that if you’re the guy that’s building the company, and asking investors for money, and trying to hire employees.

Number two, you can run into a question early on where you can start asking yourself questions about, “Well, let’s say we’re not growing the way I want. Do I have a bad VP of Sales?” People tend to over focus on “Oh I have of bad VP of Sales” when in reality, they have a shitty product.

I think it’s just super important. Well, look, most companies fail because it’s a bad idea, not because you have bad people. I think that’s fantastically important. Scott, as you think about a sales role, how do you think about an executive, a VP of Sales, in the early days?

Scott:  I think that it’s really interesting because a lot of people when they take their first VP of Sales role, they’re coming from a larger organization where they’ve had a team that’s reported to them, five, six, seven, eight people.

They are regional director, regional VP, managing a group of people. When you go into an early stage organization, an A round company, the first thing you want to find out is, “Am I scaling this thing, or am I just going out and selling?”

In most cases, if you’re an A round organization, you’ve got no revenue, or you’re under $100,000 a year in revenue, what you really need to be focused on is going and selling more clients. Going and selling to more customers in order to build that business up.

For a lot of people who have been in that managerial role where they’ve been running with a team of five or six people, going from that role into a direct sales role again is a very interesting shift for those people.

A lot of times people go, “Oh, you know what? I was reading on the SaaStr blog, it says the best VP’s go out and they hire a lot of people right away.”

Unfortunately, in an early stage company where you don’t have a lot of funding, you can’t just go build that team of five unless that’s what the plan is right out of the gate and you’ve got the marketing to support that type of growth going into it.

Russ:  It’s a tricky question. I remember in the early days of Dynamic Signal before things were really working out.

I spent a ton of time selling. We had a head of sales, we’d have salespeople, and we’d sit around sometimes and say, “Well, we just had a really lousy March. Should we fire Tim and Pete? We don’t really know. Actually, maybe we didn’t have a lousy March? Maybe the product’s bad, or maybe the sales cycle is longer than we think it is?”

If you don’t fundamentally understand that as a CEO, I see no way your company is going to possibly succeed.

The other thing you get into, I’m a huge believer in having VP of Sales early on because as the CEO, unless you are already a great enterprise seller, or unless you’re already a great seller, they can really help you.

You can tag team a lot. I’m a big believer that your customers have to give you money. People come to me all the time. I’m a very active angel investor, as well. They show me all these cool logos, all these great pilots they have going on they’ve given away for free.

I tend to think those don’t mean anything. There is something great you get from your early customers that you really have a lot more credibility getting when you’re the founder and the CEO. I think it’s harder for the VP of Sales to do it. That really gets to interviewing every customer.

Yes, you want them paying you, but you’d better really understand how they’re selling inside your organization. I’ve no idea where your product roadmap would come from if it isn’t fundamentally understanding how the actual people that give you money are actually using your product.

Scott:  I think the other important thing about that, I’ve made this mistake twice by not interviewing every single customer. I’ve gone into two A round companies where I’ve interviewed two marquee customers, where they’re great customer reference, and they say really good things during my diligence.

When you get into the organization, you get under the covers, you start to find where a lot of the warts are on these things. My favorite example, because it’s probably the most painful, was I joined a company. The company had eight customers.

I got a great reference from one of them, went thumbs up to this, took the job, called the other seven customers, and seven of the eight companies that we had as customers wanted to get out of their contracts.

They said, “Oh, thank God, you called me. We’ve been trying to get somebody on the phone. We want to cancel our contract immediately.” That’s how I started my first real VP of Sales role in an early stage company. Really interview every single customer that the company has because you’ll find out where the challenge the organization has.

You’ll understand why they bought. You’ll learn so much about the business, and you’ll understand if they’re really happy.

Russ:  As you think about getting ready for your Series B, the next question when you’re the CEO, when you’re the entrepreneur, is maybe you brought in this VP of Sales, and you found this fantastic VP who fundamentally is spending all of their time as an individual seller.

To me, when you get into your B, it’s still important as the CEO to spend half of your time with your customers, with your existing customers, with your prospects, but now you have to really make sure that the VP of Sales you brought on can scale to the next level and can actually help you start putting in some process, can actually help you start hiring, while at the same time making sure you’re still dealing with customers all the time.

Scott:  One of the things that’s really important is to start thinking about who are the kinds of people that we want to bring into this organization. I tend to subscribe to the…There’s a great book, I forget the author, but it’s called Never Hire a Bad Sales Rep Again.

They focus on drive. They really look at what makes a salesperson driven? Are they going to be the kind of person that’s going to be successful? Especially when you start thinking about, “OK, I need to hire seven or eight people in that B round type of organization.”

You want to have people who are very optimistic. They set goals for themselves. They’re very competitive with the other people on the team in a friendly way, but that they’re also going to be a good cultural fit.

They’re going to roll up their sleeves and help get things done, because when you think about an organization like that, early stage, so much stuff needs to be done inside of the company. You can’t just bring on that person that’s been in the Salesforce for the last 15 years.

Because they’ve done really well at Salesforce, there’s oftentimes this perception that somebody else is going to make white papers for me. They’re going to build decks for me. They’re going to do demos for me. They’re going to do all of these other things that large companies have as a luxury.

In a B round organization, you don’t have that luxury. You actually have to have that person that they can do that by themselves. It’s really important when we think about scale, that you start looking for those kinds of people versus people that just have this great sales resume at a lot of big, successful organizations.

Russ:  As a sales leader, when you start thinking about a Series B company, and you’re starting to hire more people, how do you think about setting up comp plans at that level?

Scott:  I think about them in ways that make the salespeople rich. What I want is like salespeople who are going to be driven by compensation, but make sure that the compensation really aligns to the overall goals of the organization.

When I joined Dynamic Signal, Russ and I were talking about, what does this company look like, not just in 12 months, but what does it look like in 2017 and 2018, all the way up through 2020? The types of people that we want to bring on are going to align to that overall vision.

I think that that’s something that’s really important. As far as compensation goes, you start to run into things like, “I don’t just want to pay on revenue, but I want to make sure that it’s healthy revenue. I want to make sure that it’s companies…When we do a deal, maybe it takes a little bit longer but it’s deals that we’re actually going to get paid on. Can we get cash up front?”

Anytime you don’t have to spend your venture money in order to grow the business, and you can have customers help fund the company, it’s a great thing. If we can get cash up front, I’d rather pay a little bit more on that cash up front than just the fact that you got a quick deal for some quick MRR.

If it’s a longer term agreement, that means the customer is going to be a lot more invested. You’re going to have a much more valuable customer. The lifetime value of that customer and the CAC associated with it is going to go down significantly.

In terms of compensating people, I want to look at what are the right drivers for the business and where the business is going to be 24 or 36 months down the road and not just for that quick hit.

Russ:  Myself as a CEO, I found for Dynamic Signal but also for the prior two companies that Series B is still an amazing time to make sure, “Great, you’ve raised some money. Now, you have more money on board. You have more investor expectations.” Still, you’ve got to spend half your time with your existing customers and with your prospects.

The existing customers are great for a couple reasons. One, from the tyranny of the microeconomics of SaaS numbers that everybody talks about all day long and negative churn.

That’s all great. That’s all fantastic, but really more importantly, what drives growth is customers using your product and getting value out of your product. It is most likely you will figure that out by spending a lot of time understanding how and why they’re using the product.

This is a true story, but Dynamic Signal in the last year and a half has basically tripled our average starting ARR, and we were already doing well a year and a half before. That was really an insight that myself and one other person had from spending an enormous amount of time with our customers.

It turned out our original idea that worked really well, and helped us raise a lot of money, and was growing, and was cool enough that we were able to recruit Scott and other great executives.

It turned out we were missing what people actually used our product for. Today, about 70 percent of our pipeline has very little to do from a marketing and messaging standpoint with what we were selling customers the value 18 months ago, same product.

It’s not that we misunderstood. It was working fine. We didn’t understand all of the ways customers could use our product.

In reality, if we had just outsourced that job to sellers that were trying to sell more or to customer success people that we’re trying to just keep the customers happy and not spend a ton of time understanding why were Intel and O2 actually seeing so much success, I don’t think we’d be in the business we are today.

I think we’d be truly 70, 80 percent less valuable if, not just myself, myself and a couple of other people, hadn’t spent so much time with customers all around the world. I think that’s a big deal.

That’s really tricky as you think about spending all that time in taking a breath and really understanding how your customers are using the product even if there’s no direct sales.

How aligned you are with your investor expectations really does matter.

You guys have seen this a million times. You read lots of blog posts about this, but I’d say this is wholly unscientific. I bet if you went back over the last five years and looked at the top three or four companies in each of those five years that were, at that point in time, the fastest growing SaaS companies in history, I bet a solid 50 percent of those company’s turned out to be garbage.

Some of them are amazing, but I bet a solid 50 percent of them turned out to be garbage. Scott and I were talking about this before. Growth is fantastic. Grow as fast as you possibly can. That’s amazing. There’s nothing wrong with growth.

Growth is fantastic, but I think too often, people are focused so much on growth that the leaders in the company are spending too much time working on the machinery of growth and not enough time in the enterprise world, understanding why customers are actually using their product.

You’re much better off growing a little slower if you’re going to actually ensure that you have a very high LTV. I guess I won’t be mean and do it, but I can name off the top of my head 20 very famous, very well funded SaaS companies that have raised lots of money in the six years I’ve been running Dynamic Signal, that had tons of articles written about how amazing and fast they were growing, but it turned out nobody ever uses their product.

It turned out they were optimizing for all their net new ARR in a giving month, but no one ever logged in. No one ever uses the product. It turned out there was a lot of services, businesses behind the scenes, and they fell apart.

Again, it’s amazing. You need to raise your Series B revenue. Venture financing is a lifeblood of your company, and you can’t hire all these fantastic people, if you don’t have it.

But if you don’t really understand how customers are going to use your product and keep using it to truly drive fantastic 120, 130, 150 percent net retention numbers, you’re not really building something valuable. You’re just building something you hope someone will buy from you, and take all the hard work away from you in the out years, and you’ll just make some money.

That’s probably not going to work, and it’s a big deal with investor expectations. Everybody wants to show that they’re going 10X year over year, because they want to raise a great financing.

The problem with that is it’s the dog chasing the car. You’ve gotten the money. Your investors come in. They’re very excited about you’re going to grow 10X, except, A, you’re not, and B, the only chance you have of doing it is signing up a bunch of bullshit customers and lying to them about what your product does.

I think that’s a tricky thing. It’s a tricky thing for entrepreneurs to think about, but I really think growing a little slower and understanding how your customers are actually using your product is going to help you understand this.

That’s a hard thing to work out as the CEO. It’s a hard thing to work out as a VP of Sales. You want to hire as many people and have it grow as much as possible.

Scott:  A lot of times, that round B was closed…as the head of sales that B round may have been closed before you even got there. Now, you may not necessarily know what those expectations are.

If the investors have an expectation that you’re going to grow 10X, and if you look at the business when you can go, “You know what? I think I can grow this two or three X,” that’s still pretty good growth, but the difference between 10 and 3 is huge.

That could cost you your job a year from now when they’re thinking about like, “Hey. Well, we signed up for this thing that was going to be 10X growth over the next 12 or 18 months. Now, all of a sudden, it’s only three or four X growth over 12 or 18 months.” There’s just a big discrepancy in those expectations.

Russ:  A big thing is you shift your Series C. Scott and I were talking about this the other day, but this is where you start thinking more about international generally. In some company, we were international unusually early, but it’s because of the nature of the business we’re in. It wasn’t better or worse than other people doing their company.

Scott and I were talking about this the other day, but when you start thinking about a Series C, you start thinking about much more layers of management and much more process in the sales.

Again, not to be a broken record, today with all the money we’ve raised in huge customers around the world, I still spend half of my time dealing with customers, with prospects.

I’d love it to be more, but as you have more people, you have to spend more time running your company. How do you think about building and taking the sales org to 150 people?

Scott:  I think the one expectation you want to set and you want to make sure that you’re really aligned with your CEO, especially if this is the first time. I’m very fortunate that Russ has had other companies in the past that have grown to be a bigger size than we are today.

A lot of times, when you go into something like this and it’s the first time CEO, things like having managers for your managers gets really expensive. When you can start off and you’ve just got Salesforce, and you can get by with just Salesforce for a long time.

Now, all of a sudden, I’ve got to go buy the data for it. I’ve got to buy the marketing layer on top of it. I’ve got to buy all of this software to support Salesforce to make it even more successful. It starts to become very, very expensive in that regard.

I went from having 5 sales reps to 10, to 20, to 40. Now, I’ve also got this huge sales organization and I can’t just do it all myself. I need to have regional vice presidents and directors that have teams underneath them.

I need to have strategy people and those strategy teams have teams underneath them. It becomes this large organization and you start to have these different layers inside of that in order to make sure that your managing it in the most effective way.

Russ:  I don’t know how large the companies are for folks in the room. I think when you get to Series C, my experience has been, it’s very easy as a CEO to wind up only dealing with your best and your worst customers.

It’s very easy to say, “I’m going to go visit the global CMO of this bank because they’re one of our biggest premier customers and that’s where I want to spend my time,” or, “I’m going to deal with this person here who is screaming and really mad at me.”

Those are great to spend time with your customers, but if you’re not spending your time with your average customer figuring out, why is this particular customer nowhere near as big as this other bank I mentioned earlier? On paper, it’s the same size.

Why isn’t that really happening and what are we doing wrong here? That’s a great way to understand problems in your organization. Now, you’re big enough where you can say, “No, no, no. We’re not wrong. This is really working.”

If this customer isn’t growing the way I think it should, either something’s wrong with the customer, or probably something’s wrong with your organization and the way you’re dealing with those customers, wrong service team, sold in at the wrong level, wrong way to think about the contract, things like that.

As a CEO, everybody knows to spend time with your largest customer, with your angriest customers, but this is where there’s a lot of pressure from the sellers. We see this in our organization all the time.

The newer sellers are a little more worried about asking the CEO for help, a little more worried about bringing them in early with prospects. Again, I worry about it all day long for six years into the company. How do we make sure that the product keeps evolving?

A lot of it comes from me and my co founders, and Scott spending a lot of time with customers. Another thing that matters a lot, a great way to spend a lot of money, but I want to rush through this so we can get to any questions. What does international look like?

Hugely expensive, huge risk. It’s very easy to spend a lot of money hiring three people in London, traveling a ton. It turns out they’re the wrong people. It’s a great way to flush a ton of money down the toilet, but it also matters quite a bit. I’d urge you to be very careful there.

Scott:  I feel like a rule of thumb is, when you get to a point when you’re doing about $2 million in a region, that’s when it starts to make sense to hire for people in that. We went a little bit early. We were probably $750,000, $800,000 in that region when we added Chris, who’s our head of Europe.

That seems to be the right bellwether, is that $2 million number. That’s when you can really start to make sure that organization pays for itself and scales appropriately, and you can really invest heavily in it when they’re bringing in that kind of revenue.

Russ:  I think this slide… we forgot. This slide was supposed to say, “Questions.” With the final six or seven minutes, I thought if anybody had questions. If I were a CEO actually, I’d be way more interested in asking questions of Scott. Go ahead.

Scott:  Maybe he needs a mic because…

Russ:  I’m sorry. You need a mic.

Audience Member:  Hi. We are a post A round SaaS company. My question to you guys is, what are the processes that you’ve said between the two of you, post A round, to make sure that you increase transparency, and information flows properly between the two of you? This is something we’ve been struggling with.

Scott:  We’re lucky. We sit 11 feet from each other. I can’t walk into my office without seeing him, and vice versa. We spend a ton of time together and I think when you have that close proximity, it makes it really easy. Is your head of sales not near you?

Audience Member:  Not enough.

Scott:  Not enough, OK. [laughs]

Russ:  The other thing, by the way…This is important. It’s actually important when you’re hiring executives. I spend an enormous amount of my day on the phone directly with individual sales people, or on IM directly with individual sales people.

I think it’s important to have the relationship where… this is just general management. It’s very important to have the relationship with anybody who reports to you that there’s no issue with you having one on one conversations with folks that work for them on their team.

If you have insecure leaders that are worried about people under them talking directly to you as a CEO, you should just fire them. They’re the wrong people in your organization. That’s just in general.

I don’t think about Scott for 10 seconds if I decide to pick up the phone and call our guy on the East Coast because I want to know what’s going on with IBM.

Scott:  I don’t care.

Russ:  Yeah, and Scott doesn’t care.

[crosstalk]

Scott:  It’s awesome.

Russ:  If he did, we would have had a problem a long time ago. I think that’s an important cultural thing for the organization, not about micromanagement. I’ve set the expectation of, if you want to talk about commission, or comp plan, or splits, don’t. It’s not that I don’t care. Talk to Scott.

Any of the HR or management issues with the sales people, you want to have this nice balance of, everyone on the sales team will reach out to me all day long if they think I can help them close a sale, and I will reach out to them if I want info. Anything other than that, there’s only one person who’s going to help you with that.

Scott:  Are you CEO?

Audience Member:  Yeah.

[crosstalk]

Scott:  One thing that Russ does, and it took me about a month before I realized the trend here, every single day at around 3:30 or four o’clock, he calls me or texts me, or just asks me, “What good and what bad happened today?” to the point now, where once I saw that happen over the course of the first month that we worked together, I just created a salesforce report that showed like, “Here’s all the deals that moved forward.

Here’s everything they closed. Here’s how much revenue came in. Here’s how much we got paid.” Now, I can respond back very quickly with that stuff.

I think that question is just such a good habit because it helps me understand, here’s what’s going on with the business. It helps him understand in about five seconds what’s happened on a regular basis.

Russ:  By the way, if you’re an enterprise SaaS CEO who doesn’t spend part of your day thinking about what new sales came in and is anybody angry with you that day, you’re doing a bad job, other than the early building days. Go ahead. I will go front row first and then back.

Audience Member:  Hi, there. Thank you.

In an early stage company where you have a CEO that takes over the VP role of sales initially, when the VP comes in, as a CEO, what do you want the VP to just take care of? On the other side, as a VP of Sales, what do you want a CEO to just go on and do? What would you want them to focus on?

Russ:  I think part of it gets to what we were talking about earlier, which is there is no one person in the company whose job it is to bring in revenue. To me, I feel very strongly that until you’ve well passed raising a Series B, really the only two jobs in the company are selling and coding.

You can have any title you want, but those are the only jobs in the company. I think there can only be one person who’s hiring the sellers, who’s managing the sellers, who’s making those ultimate decisions. I think that’s what you’re trusting your head of sales to do.

Setting up reporting and setting up scalability, and helping with training, and all of those things actually running the salesforce. There are plenty of large customers that I’ve been involved with on my own, or I’ve been involved with a sales person directly who Scott has never met.

We have plenty of huge customers I’ve never met in my life that Scott has dealt with. I think that is the thing that can quite easily get spread around and no one person owns it.

Scott:  I think that question, to me, the last bullet that we had on there was, “How can I complement the CEO?” I’m very fortunate that Russ is a really good sales guy. In a lot of ways, we can divide and conquer that way, which is a good way to go do it.

I think that there’s other things that a CEO could be doing than just managing things like comp plan and salesforce, and all of that kind of stuff that we were just talking about.

That’s an area where I can come in and allow him to go focus on vision and working with, again, not just the 20 percent of customers who are angry, or great customers, but the 80 percent in the middle.

Russ:  By the way, there is also a tricky issue. Many years ago, I was the first employee at a company that is a big, public company worth billions of dollars. At some point, we did have to ask a CEO to stop coming to sales meetings because he did a bad job. He would yell at the prospects.

This is serious. All kidding aside, he became quite wealthy. The company was very valuable and he was great at many things. He was pretty bad in front of customers. I think that is a challenge. If you are bad in front of customers, read a book.

It doesn’t mean you should stay back at headquarters. It means you should make yourself a half decent seller. We have two minutes left, so go ahead.

Scott:  This one here?

Russ:  I don’t know, sorry.

Scott:  Sorry.

Russ:  Go for it.

Audience Member:  What were some of the signals that made you guys look at each other and say, we’re ready to hire our first enterprise sales rep manager who would sit below the VP of Sales, but therefore, separate you a little bit more from the reps?

Scott:  For me, I’ve just reached this point now where we’ve got 27 or 28 people on the sales team. I’m hiring now, so anybody that’s interested in learning more, reach out to me. It got to the point where it’s just, “OK, I’ve got a corporate team that’s got six or seven people on it, so we need to have a manager for that.”

I do subscribe to the law that says, “Hey, if you’ve got more than seven direct reports, that’s too many.” When it got to the point where it was 14 or 15, we went, “OK, let’s start to cut this up a little bit more to make it just more manageable.” What we see now is everybody is a lot more successful as a result of that.

Audience Member:  I’m so sorry. Was that first manager that you hired someone who…Can you talk a little bit about that person?

Russ:  Actually, the first two managers were people we promoted who were doing a fantastic job. That’s not a rule.

Scott:  Three of them were.

Russ:  Yeah, that’s true. That’s not a law, or best practices, or anything. The first few that we hired were the greatest people at the company and we thought they could do more.

There were some other great sellers where we said they were great sellers. We don’t want them to manage. We want them to stay great sellers. There’s one minute left, quick. No mic, just go.

Audience Member: When it came to hiring your first sales person or your VP Sales, we’ve done that and it was a nightmare. [laughs] We quickly had to get that person out of the company. I’d like to know what are some characteristics or traits that you look for?

Russ:  I will say one important thing, by the way. I do think it’s important. I don’t know anything about your specifics. I do think it’s important when you’re a founder to be honest with yourself, even if you can’t be honest with your board about where you really are as a company.

I’m not talking about your company specifically. You might have a company that really isn’t far enough along to attract somebody to make way less cash than they could in the open market, but take some equity in something that’s very, very, very, very, very risky and not proven.

One of the issues a lot of startups have is they’re not really far enough along. They lie to themselves that they are. The market’s pretty efficient. The pool of candidates you’re going to get to pick from are relatively shitty candidates.

That is an in general problem with…Like I said, I’m not talking about your startup, but you probably can’t get the President, Vice Chairman of Salesforce to quit and run sales at your company. That’s an interesting thing to understand where you are, A. B, look, it’s hard to hire anybody.

It’s hard to hire any executive, do as many references as you can. All of those things are great. I also think in the early days, it’s tricky because…My general rule of thumb for sales is, if at the end of the day, you’re so obsessed with being a manager that you’re not a good individual seller, you’re probably a bad sales leader.

That’s not true at a company like SAP, but at any company under a couple hundred million at ARR, your VP of Sales should be someone you’re very proud to fly in to meet with the CIO of Nestle to help close the deal. If they don’t want to do that, they’re a bad fit.

Audience Member:  Thank you. You talked about books. Selling is something that I’ve stepped in to doing for my company and it’s not my strong suit. Are there books that you would recommend?

Scott:  Obviously, there’s…I’ll share two books.

Russ:  We have to be done. Scott will tell you offline. Oh, he can answer. Actually, this is better. Follow Scott Schnaars on Twitter. He’ll tweet them out in an hour.

Scott:  Perfect. I like Pitch Anything by Oren Klaff. I like the Robert Cialdini book about persuasion, The Power of Influence. Then it’s like The Challenger Sale and Sandler, Solution Selling, and all the standard ones you see. There’s also a great book called Shadow Divers, which has nothing to do with sales at all.

What it talks about is about divers who find a sunken submarine off the coast of New Jersey. What it really talks about from a sales standpoint if you read it with that lens is all about preparation. These guys would spend weeks and weeks and weeks preparing for a 30 or 45 minute dive to go down 70, 80, 100 feet deep. It really goes into all aspects of preparation.

When you think about when you go present your company to an investor or to a potential customer, you don’t just go in and wing it and go, “Hey, I’ve got this awesome stuff.”

For me, I’ll try to spend at least 15 or 20 minutes. If it’s a big pitch, I’ll spend 15 or 20 minutes for every minute that I’m in front of the customer. I want to know everything about the people that are in the room.

I want to know their business goals. I want to know what that impacts them. How do they get promoted for that? All of this preparation goes into it. The book Shadow Diver‘s just a great book. It’s an awesome true story, but it really sets your mindset in terms of preparation to be successful. Of course.

Russ:  Thanks, everybody.

Scott:  Thank you very much.

Published on December 18, 2017

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