Welcome to Episode 184! Sam Blond is Chief Sales Officer @ Brex, the startup that provides corporate cards for startups. To date they have raised over $57m in funding from the likes of Y Combinator, Peter Thiel, Max Levchin, Yuri Milner, Elad Gil, and many more incredible names. Prior to Brex, Sam was Chief Revenue Officer at Rainforest QA. Before Rainforest, Sam saw firsthand the hypergrowth scaling of Zenefits as VP of Sales where he saw the company grow from 18 employees and $1m in ARR to over 1,800 employees and over $70m in ARR. Sam got his start in the SaaS industry with Jason Lemkin @ Echosign as Director of Sales.
In Today’s Episode You Will Learn:
* How Sam made his way into the world of sales and came to join Jason Lemkin with his first role in sales at Echosign.
* Why does Sam believe that more sales reps does not always equal more revenue? What are the benchmarks that suggest founders really need to add to their sales team? Does Sam agree founders should be selling up to $1m in ARR?
* How does Sam assess who is the best person to hire for the role? What have been Sam’s lessons on what it fundamentally takes to attract the best talent? In the early days how does Sam think about both role allocation and whether to hire the young jack of all trades vs the more senior executive?
* Why does Sam believe that founders need to spend more time on top of funnel? Why does Sam believe that not all opportunities are created equal? How does Sam think about the right structure and time it should take to pass from lead to MQL to SAL to opportunity to deal? Where does this most commonly breakdown?
* Why does Sam believe the key to success in SaaS sales teams is “urgency?” Literally, how can reps instill a sense of urgency in their current pipeline? Why does Sam disagree with the conventional wisdom and say discounting is a great tool? How does Sam determine the right level of discount to give? How does Sam assess pilots as an alternative approach to getting leads over the line?
Sam’s 60 Second SaaStr
* What does Sam know now that he wishes he had known at the beginning?
* Quality or quantity of logos in the early days?
* Sales rep productivity, what does Sam believe is good?
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Harry Stebbings: We are back for another week in the world of “SaaStr” with me, Harry Stebbings, @hbstebbings1996, with two Bs, on Instagram. It would be fantastic to see you there. Now, I was going through the past shows, and I saw that we haven’t done a sales focused on scaling sales teams in quite a while.
I’m very excited to welcome today a phenomenal guest, who’s experienced it all, in the form of Sam Blond, Chief Sales Officer at Brex, the startup that provides corporate cards to startups. To date, they’ve raised over $57 million in funding from the likes of Y Combinator, Peter Thiel, Max Levchin, Yuri Milner, Elad Gil, and many more incredible names.
Prior to Brex, Sam was Chief Revenue Officer at Rainforest QA. Before Rainforest, Sam saw firsthand the hyper growth of Zenefits as VP of Sales, where he saw the company grow from 18 employees and $1 million in ARR to over 1,800 employees, and over $70 million in ARR.
Sam got his start in the SaaS industry with Jason Lemkin at EchoSign as Director of Sales. I do want to say a huge thank you to Jason for the intros today. I do so appreciate that.
However, I am now supremely excited to dive into one of our first sales focused shows in a long time. Welcome the fantastic Sam Blond, Chief Sales Officer at Brex.
Harry: Sam, it’s absolutely fantastic to have you on the show today. I’ve heard so many wonderful things from the main man, Mr. Lemkin. Thank you so much for joining me today, Sam.
Sam: Thanks so much for having me, Harry. I’ve listened to this show a number of times and think what you do is just so fantastic. To your point, thanks to Jason for making the connection and all the other stuff that he’s done for both you and me.
Harry: You are too kind. I’m wearing the Jason Lemkin Fan Club t shirt as we speak.
Sam: You and me both.
Harry: I’ve love to start today with a little on you. Tell me, Sam, how did you make that initial entry into the world of SaaS? Let’s start with that.
Sam: Sort of by chance, actually. I’m from the Midwest and went to the University of Missouri. I graduated. It was time to start looking for a job.
My brother was out in the Bay Area. He was in tech sales, doing really well. This is about 11 years ago. He said he’d get me a really cool job and did so. The rest is history.
That was 11 years ago. I came out here and started as an SDR at GoSign. That’s how Jason and I originally connected. I was there for a number of years working with Brendon Cassidy, who is a great mentor of mine, and then have had a number of stops along the way, as well. I went to Zenefits, did some consulting, spent some time at Rainforest QA, and now at Brex.
Harry: What an incredible career you have enjoyed over that 11 years. I do want to ask, though, many people read and learn from Jason from afar. You obviously mentioned that the formative stages of your career having the chance to work with him. What were some of the takeaways for you from that experience?
Sam: There are so many. Probably listeners of this show see so many on SaaStr but a few that stand out to me…First is loyalty. Jason, both when I was at EchoSign and also throughout my career, there’s nobody more loyal than Jason Lemkin. I try and apply that to the way that I work with individuals, as well.
There’s more on the tactical side of things. It’s a laundry list if you look at his blog. From how to hire the first sales folks, what profiles to look for, mistakes made in hiring different executive leaders. That’s a playbook that Jason has on building a SaaS company and, more specifically lots of times, fit and sales.
I study it somewhat regularly.
Harry: I couldn’t agree with you more there on the learnings from Jason. I do want to break the show today into a couple of different components. I’d love to start on sales team themselves then, maybe, to the strategy that they implement, and finish on the way that they execute that strategy. Does that sound good to you?
Sam: It sounds like a plan
Harry: Starting on the sales team, you said to me before that the more reps does not always equal more revenue. This might go contrary to conventional thinking that every rep bring that quota and hence increase revenue. Can you unpack this for me, Sam, and your thought process for why you believe this?
Sam: Of course. I think this is applicable more so to, I’ll call, earlier stage business. Let’s say fewer than 10 sales reps or thereabouts, because, hopefully, by the time you’re at 10 reps you have somewhat of a system in place where you know if you spend this amount of dollars on marketing or if you hire this many SDRs it’s going to produce this number of demos or opportunities for the sales team to work.
Prior to then it’s not much of a science. It’s more of an art. Oftentimes when I was consulting I would work with companies that would think, again to your point, conventional wisdom is hire more sales reps. I get more revenue.
I think the problem with that is if the business can’t support the additional sales reps from a lead perspective or an opportunity perspective you can actually impact the revenue negatively.
It makes sense because if you have the same number of opportunities spread across a certain number of reps that are fully ramped and have a higher conversion rate than new hires would, and you take that same number of opportunities, and you spread them across more reps, some of which have lower conversion rates you’re going to close less business.
One of the tricks that I always do is look at reps’ calendars. If you share your calendar with the different sales reps on the team what you want to find is lots of activity, lot of calls, whether they be follow up calls or first time demos. What you don’t want to see is a whole lot of blank space.
If you see that, a whole lot of blank space, I think it’s a good leading indicator that you don’t need more reps. You actually need more leads. Focus on that problem prior to hiring additional reps.
Harry: How do you see the alignment and the requirement for demand gen hiring and sales team hiring to be in step together? What does that ratio look like?
Sam: They certainly go hand in hand. I think there are different philosophies in terms of whether you spend the dollars on marketing or outbound sales. One thing that is important there is that not all opportunities are created equal. You can’t necessarily look at the total number of opportunities being created by the company. You actually have to look at the conversion rates by channel.
Oftentimes what you’ll find is referral opportunities and pure inbound opportunities close at a much higher rate than something like an outbound email campaign that generates a response saying, “Sure, I’ll take a demo.”
Make sure that you’re looking at the opportunity all the way, not just from creation, but to close, and then deciding where to spend your resources, whether they be on outbound or additional marketing to generate inbound leads.
Harry: The timing seems crucial in terms of when to add head count to sales, I have to ask, then. You’ve seen many a scaling SaaS business. What are the benchmarks or inflection points, when to really hire and add to that sales team?
Sam: It’s a really good question. Some of the inflection points, as I mentioned, you will start to hear feedback from reps saying that they’re overwhelmed or overloaded with demos. That’s actually a really good problem to have. If that exists, it’s a good sign to go ahead and start hiring.
The alternative can also be true. When you share calendars if you see a lot of blank space you know that you need to generate some additional demand for the reps that you have. That’s a sign that you either need to accelerate on marketing or SDR.
All of that being said, I think the most important thing is that the opportunities that the company does have are converting. Piling on additional opportunities that aren’t closing, you need to diagnose where the challenge is prior to accelerating growth.
If you have the ability to generate opportunities and you have the ability to close those opportunities at a level that is acceptable to the business, I would continue pushing as hard as you operationally can until you start to see warning signs that those metrics that you’re tracking are changing.
Harry: Absolutely, nothing worse than a leaky bucket. In Europe there’s this very conventional wisdom that founders should sell up to a million dollars in ARR. Would you agree with that?
Sam: It’s definitely going to be company specific. This is one of the things that Jason speaks about a lot, the importance of founders selling before they hire sales reps. I think it depends on the founder.
If you have a highly technical founder that’s really struggling with sales and needs some assistance then they’re likely going to hire faster than somebody with a more business or sales type background that can actually get the product off the ground and get to that million dollars in ARR. I think it’s going to be founder and company specific.
All of that said, I think it’s a great experience for the founder to do in any instance. It depends how long they go with that. To follow on to that, another Jason lesson, when it is time to hire your first rep, hire two.
Harry: I love the hiring step there. Now we know when is the right time to hire when hiring. How do you fundamentally assess who’s the best person for the role in those very early days?
Sam: There are a number of different things that I would look for in very early hires. The first is going to be around some level of similarity with the dollar value of deals that you’re selling. If it’s a fairly transactional sale, you want to hire somebody who has fairly transactional sales experience. If it’s a true field enterprise type sale, you need somebody with that type of field sales experience. Don’t mix the two.
Second, you want to find somebody with really early stage company experience. If this is your first sales rep hire, it would be great to hire somebody that was also the first rep at a relatively successful company and had seen success in that exact role. Those are going to be few and far between.
If you’re able to get somebody that was one of the first 5 or 10 sales hires at a different startup company the onboarding experience ins going to be relatively similar there. Early stage companies, similar deal sizes. The one thing that isn’t necessarily as relevant, at least in my experience, is domain experience.
At a number of different companies…I certainly didn’t have any experience with electronic signature at EchoSign. I had no experience with HR software at Zenefits. No experience in QA software at Rainforest. No experience in expense management and credit cards here at Brex. It only takes a few weeks to be able to ramp up on the product itself.
Focus on the deal velocity and stage of the company that somebody has been…Of course, above all else, is performance. Hire somebody that has been top performer from a stack ranking perspective at their previous employer. That success will likely continue.
Harry: You said about the top performing nature there. I always chat to Jason. He says that hiring is so hard in San Francisco because, essentially with the incumbent checks that are so large today [inaudible 12:15] , Facebooks, Googles of the world. Startups either have to hire the jack of all trades or maybe the slightly burnt out exec who doesn’t have that performance.
How would you respond to this, having seen that firsthand?
Sam: Specifically, are you asking about the executive level or leadership level or at the individual contributor level?
Harry: Individual contributor level, the first sales hires, the first people in marketing, in customer success, and the fact that it’s so expensive giving the incumbent checks in the Valley.
Sam: In sales, we have the advantage of if we’re spending money on top sales reps it oftentimes pays back multiple times because they’re going to produce exponentially more than somebody that is potentially less expensive and not as good. The justification, at least on the sales side, for paying well but being specific to paying for performance is typically easy to justify.
What I mean by that is if you hire someone and give them a really aggressive, on target earnings package but most of that is weighted toward the variable side, when they’re successful and the business is paying them a lot of money it also means they’re bringing in a lot of money for the business.
You can justify that higher price and matching what you alluded to as those larger businesses in terms of what the total paycheck looks like.
Harry: In terms of those brilliantly talented, high performing salespeople I’m interested. How do you think a startup can fundamentally attract the best talent today?
Sam: There are a few things I think that sales reps are universally looking for. Oftentimes compensation is very important. If you can, as a business, build up a reputation of paying above market rates of paying your reps very well that’s oftentimes going to attract the best talent.
People are oftentimes looking to progress their careers very quickly. From a philosophical perspective, if the business believes that rewarding performers with promotions into more strategic roles, I think you’re going to attract the up and coming, really hungry, aggressive people that are looking at you for the rest of their career.
I think those two are very important. Culture is always going to be important for any hire, specifically who they’re reporting to and who’s on their team. I think whenever you do a hire, hire with a lens for, is this going to be a good culture fit? Are they going to have the valued in place that we want to portray as a business?
I think those few things, paying very well, giving people the opportunity to progress in their career, and surrounding people with really good employees are three things that are typically going to be important to those that are good.
Harry: Sam, how much of a role does having a top tier branded VC fund behind you…how much of a role does that play in attracting the best talent in terms of validation?
Sam: I don’t know, specifically at the individual contributor level. I don’t know, necessarily, that the brand or the name of the VC is as important. I think that some individual contributors and certainly leaders will look at how much the company has raised, the valuation of the company, the growth trajectory, the typical vanity metrics that you read about when you Google a company and look at their Crunchbase profile.
I don’t know if the individual contributor, they necessarily care if it was this VC over that VC. That said, the brand name never hurts.
Harry: Absolutely. Now we have the team in place. We have to construct the right strategy for them to execute on. I’d love to start on top of funnel. Where do you see most founders placing most of their attention?
Sam: It’s really interesting. Just a little story, when I was consulting I helped 8 or 10 different companies. One of the first things that most of them would say to me as I would come and I’d start day one would be, “I think that you can help us impact conversion rates across the sales team.”
I would say, “Great. I think I can, too.” I’d spend a few days learning on my own without the guidance of the CEO.
Almost without exception I would come back and I would say, “I can increase conversion rates right now. The team’s at about 10 percent. It will take a couple months if we focus on increasing conversion rates. We can get them to 12 percent.
It’s going to take discovery, training, and controlling cycle times, and focusing on urgency, and lots of different factors, but we can increase conversion rates by something like 20 percent in a couple months.
“I think my time is actually better spent at the top of the funnel. I think we have an opportunity to potentially double leads in a week. If we can keep conversion rates at 10 percent and we double leads or double what’s coming in to the top of the funnel, we’ve just doubled revenue in a week.”
I think sometimes founders’ focus is a little bit misplaced in terms of sale rep performance rather than necessarily making sure that the sales reps have all of the leads and opportunities in order to be successful and hit their quotas.
That’s oftentimes where I spend a lot of my focus. What I do is I create a hierarchy of opportunity channels and make sure that the ones at the top are being fully exhausted. What you’ll typically find is that referrals are the highest quality opportunity. Oftentimes companies don’t have a referral program in place.
To me, that’s just table stakes. Put a referral program in place. Those leads are going to close at something like 3X the average conversion rate, because you have somebody that is a customer telling somebody else how great your product is. You almost have an outside sales rep helping influence the opportunity.
The next channel is typically going to be inbound. Inbound is going to be broken up into a number of different channels. Generally, those are going to close at a much higher rate than traditional outbound, which is going to be the SDRs putting people in sequence, mailing en masse and then following up with cold calls and creating opportunities that way.
That’s how I think about the top of the funnel. I create a hierarchy in terms of conversion rates. I make sure that the top of that hierarchy is being fully exhausted before continuing down the path of going to the lower quality lead source, which would be outbound.
The last thing there, Harry, is to make sure that you’re going back to old, closed, lost opportunities because those people know who the company is. They’re familiar with the product. For a company that’s a few years old, I’ve seen all too often these opportunities that live in no man’s land after they’ve been closed lost versus having somebody focus on going back after them.
Harry: I couldn’t agree with you there more on the closed lost. I do want to slightly dig down into the funnel itself because I always think the friction that’s progressed through the funnel is key. For you, how long should it take from lead, to NQL, to SAL, to opportunity, to deal? What does that look like to you in your ideal mindset?
Sam: Similar to, should the CEO sell up to a million dollars in ARR, I think it’s going to be very company specific here. There are going to be a number of different factors. The first is the price for the product. Typically more expensive products are going to have longer sales cycles, also, the brand of the company.
The more brand recognition a company has, the faster cycle time that you’re typically going to have. Those are two big factors there. The third is the size of the company that you’re selling into. If you’re selling into the true enterprise, getting through legal and procurement is going to add something like 30 to 45 days to a sales cycle compared to selling into startup businesses that don’t have the legal and procurement requirements that those big companies do.
It’s going to be very business specific. All of that said, I think the real answer is just faster. Look at what you have today from an average cycle time and try and think about what you can do to create additional urgency. There are a number of things that come to mind that I think we’re going to talk about a little later in the recording here.
I think general rule of thumb is, how can we be faster? Not necessarily, where do we need to be?
Harry: Absolutely. I think that faster is key element, I love that.
I do want to finish on the SaaStr element, just with one from Dave Kellogg. He spoke about multiyear deals with Dave. I’d love to hear what your thoughts are on them, the importance of them from your sales perspective and whether you think prepayment is crucial and how you think about that.
Sam: A little bit of business specific. Multiyear deals, a few things are really important. One is, does the customer have the option to opt out in those out years? If the answer is yes, the multiyear deals are less impactful. In fact, they’re much more beneficial for the customer to have that price locked in and the optionality of renewing or not renewing.
I think it’s important from the business perspective, if it’s a multiyear deal that they’re actually committing to that number of years.
Cash upfront is huge. I think trading something like a discount for cash up front for out years is a trade that most SaaS startup businesses that aren’t profitable would be willing to make. Certainly, in my experience, we were willing to make those types of tradeoffs.
Harry: Absolutely. You touched on quite a few elements there that I have to dive in now. I want to finish the episode. Before we move into the quick fire, on something you said to me before, being the importance of urgency in sales. What do you mean by this, Sam? How do you envision this in the sales process?
Sam: We talked about cycle times a little bit. Cycle times are so important and keeping them as short as possible. There are a number of different reasons. I think the most obvious one is that you get to recognize revenue sooner.
A very easy example, if you take a 60 day average cycle time down to 30 days, what it means is that for every single customer that the business signs up, they’re recognizing 30 extra days of revenue.
You multiply one month of revenue by the number of customers that you have. That’s typically going to be a large number. That’s the obvious impact of reducing cycle times.
The less obvious impact is the improvement in conversion rates. You’ve heard probably, Harry, the cliché, “Time kills all deals.” Truer words have never been said. If you have a condensed cycle time, what it means is that your customer doesn’t have the ability to go evaluate other options. Conflicting internal priorities oftentimes come up. Budgeting challenges internally come up.
The longer you have an opportunity that’s sitting out there, the lower the probability that that’s going to close. The less recognized impact to shorter cycle times is increased conversion rates. We talked a little bit about discounting before. I think discounting is actually a great thing. If you’re able to discount the product to accelerate cycle times, that’s a trade I’m certainly willing to make.
If you want to keep the price above a certain threshold, simply raise your product prices. If you raise your product prices, discount down to the level that you’re comfortable selling them, and decrease cycle times you maintain that price integrity while also decreasing cycle times. It’s a win/win.
Harry: We had Dave Kellogg, as I mentioned, on the show. He said that anytime you give a discount lower than your churn rate it’s a win. Would you agree with this summarization? How do you think about that?
Sam: By that characterization, for sure. I think, generally speaking, the lower the discount the better and the lower the churn rate the better. Certainly, if you can keep your discounts lower than hour churn rates that’s a huge win for the business.
Back to the previous point, a lot of sales is psychology. If you’re not winning deals because your buyers don’t feel like they’re getting a good deal, then I would suggest increasing your pricing and giving them a larger discount, because they’re going to feel like they’re getting a much better deal on the product and you may actually increase conversion rates that way.
What I would do is I would pick a price point that you’re comfortable selling your product at, increase the price, and then tell your sales reps, “We’re willing to discount down to this rate.” That’s something like 25 to 30 percent below the list price of the product.
Harry: You mentioned there the psychological element to the sales process. How do you know when it’s the right time to push on price and when to flex? What are the signs from the customer that make you move in either direction?
Sam: A lot of this is going to be at rep’s discretion. You’ve probably heard the term EQ or emotional intelligence. You’ll find certain reps that understand when it’s time to be aggressive and when it’s time to scale back on the aggressiveness there, based off of the reaction of the client.
One thing that you can do is you can put it out there. Something like, “Look. The end of our quarter is at the end of this month. Finance is giving us a little bit of flexibility on pricing terms here. It could be advantageous if you think it’s possible to get something done by the end of the month.
“It could be advantageous for you from a pricing perspective. I just want to put that out there. Let me know if you think that’s realistic or not.” Gauge their feedback from there.
Harry: I love that. I do want to touch on one final element before the quick fire, being pilots. I often get founders ask me about whether they should or shouldn’t engage with pilots. What’s your take on pilots as a method of increasing conversion in a step function way, so to speak?
Sam: It’s slightly business specific here. We did them at EchoSign. We didn’t do them at Zenefits. We did them at Rainforest as an opt out period within an agreement.
I think it depends on the product itself. First of all, if they’re very easy to set up, at EchoSign, we could get somebody that could sign up for a free trial in a number of minutes. They could start sending out documents right away. We could limit trials to just a few days or maybe a week or two if it was a larger opportunity.
Those are all advantageous, I think, to giving customers the opportunity to use your product. You can also use it as a selling strategy. Use it against your competition. Push using both of the products, especially if you have a superior product, in a trial format. That will look good from the customer’s perspective that you actually want them to use both products before signing up with one of them.
It’s more complicated to implement a product and requires a bunch of heavy lifting on the seller side then maybe stay away from them. I think your customers will dictate whether that’s going to be required or not. If you’re finding a lot of success selling without pilots, there’s no reason to fix something if it’s not broken.
Harry: Absolutely, no reason to fix something if it is not broken, which is why we always love to finish on the quick fire round. 60 seconds per statement. Are you strapped in?
Sam: [laughs] Let’s do it.
Harry: The biggest misnomer on successful selling in SaaS?
Sam: We’ve talked about a few of them. Discounting is bad is a misnomer. Hiring sales reps always equals more revenue is a misnomer. We’ll go with those two.
Harry: What about logos in the early days, quality or quantity?
Sam: Both. It depends on your target market. If you’re selling into larger businesses, I think the brand of the logo is hugely important. If you’re selling it to SMBs, it becomes less important. You want to tout the number of customers that you have over the fact that Google is using your product.
Harry: Sales rep productivity. What’s good to you?
Sam: It depends on the company, so a couple of different ways to think about it. You can think about how much the rep is producing compared to how much you’re paying them. I think, typically, you want to pay a sales rep, all in, something like 20 percent of what they’re producing for the company.
If they have a million dollar quota, and they’re hitting that, and they’re making 200k in San Francisco I think that’s a good rule of thumb. Productivity on the individual level compared to their peers. Anything but finishing first is a failure from my perspective. If, as a rep, you have that mindset you’re going to be successful throughout your career.
Harry: Final one, what do you know now, Sam, that you wish you’d known at the beginning?
Sam: That’s a really good question. It goes back to something we had mentioned earlier in the show, Harry, around the importance of tracking opportunities all the way to close and that all opportunities are not created equal.
We made the mistake at Zenefits, just saying we need this number of opportunities to be successful. We went really big on outbound. What we found is that we were increasing the number of opportunities with the lowest quality opportunity varietal.
Make sure that you’re tracking not only the number of opportunities that you’re creating, but the conversion rates of those opportunities and making your biggest bets in the highest quality.
Harry: Sam, I’ve heard so many wonderful things from Jason for many years now. Thank you so much for joining me today.
Sam: Harry, it’s been an absolute pleasure. Thanks so much for having me.
Harry: Such a fantastic guest to have on the show, some really exciting times ahead seeing Sam build and scale that sales team at Brex. If you’d like to see more from him you can find him on Twitter @samdblond without the E.
Likewise, you can find me on Instagram @hstebbings1996 with two Bs. It would be fantastic to see you there.
As always, I cannot thank you enough for tuning in. We have a fantastic episode coming for you next week.