SaaStr Podcast #395 with UserTesting CEO Andy MacMillan

Ep. 395: Andy MacMillan is the CEO @ UserTesting, the company that provides real-time feedback, from real customers, wherever you work. To date, they have raised over $200M in funding from the likes of Accel, Greenspring, Openview and Insight to name a few. As for Andy, prior to UserTesting, he was the Chairman and CEO @ Act On Software and before that held several positions at Salesforce, including COO – Products Group. Before Salesforce Andy spent close to 5 years at Oracle as VP Product Management.

 

In Today’s Episode We Discuss:

* How did Andy make his way into the world of SaaS? How did he come to be CEO at the market leader, UserTesting?
* Why does Andy think the seat-based pricing model in SaaS will die? What are the downsides of it? Why is volume-based pricing optimal? How does one instil volume based pricing without disincentivizing usage? How does Andy think about discounting? How does Andy view the importance of offering trials?
* What does it take to scale a sales team successfully? How can one determine a closer in the interview process? Should one hire sales reps 2×2? How does Andy think about hiring sales reps from adjacent companies and industries? How does Andy think about minimizing and optimising sales ramp times? How does Andy think about payback period?
* How does Andy structure the pipeline meetings? Who is invited? How are the meetings structured? How does Andy advise on the right segmentation of pipe? How does Andy evaluate the closability of the pipe? Where do many people go wrong in pipeline meetings? What have been his biggest lessons on running them successfully?

 

 

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Jason Lemkin
SaaStr
Harry Stebbings
Andy MacMillan

 

Below, we’ve shared the transcript of Harry’s interview with Andy.

Transcript:

Harry Stebbings:

We are back for another week in the world of SaaStr and my word, what a show we have in store for you today. A much beloved product, that I’m sure we all engage with, and the CEO who runs this incredible company joins us. So with that, I’m thrilled to welcome Andy MacMillan, CEO at UserTesting, the company that provides real-time feedback from real customers, wherever you work. To date, they’ve raised over $200 million in funding from the likes of Accel, Greenspring, Openview and Insight, to name a few. As for Andy, prior to UserTesting, he was the chairman and CEO at Act-On Software. And before that, held several roles at Salesforce, including COO of the products group. Before Salesforce, Andy spent close to five years at Oracle as VP of Product Management.

Harry Stebbings:

We’ve had quite enough of these terrible British tones, so now I’m very excited to hand over to Andy MacMillan, CEO at UserTesting.

Harry Stebbings:

Andy, it is such a joy to have you on the show today. I’ve heard so many good things from Kobie, now at Upfront, and then also the team at Openview. So thank you so much for joining me today, Andy.

Andy MacMillan:

Excellent. Thanks for having me.

Harry Stebbings:

But I do want to start today with a little bit of context. So taking us off, how did you make your way into the world of startups and how did you come to be CEO in UserTesting today?

Andy MacMillan:

I started my career in tech actually as a developer. I was a Java developer back in the very early days of Java, building really big web apps for General Motors, actually in the Detroit Area and made my way through an International MBA in Scotland, and ultimately into product management, which I think is just a fascinating area early in your career to get to really influence products, influence people, make decisions. We actually put a tremendous amount of trust, I guess, in product managers. And often people are fairly early in their careers so that’s kind of how I got into the decision-making and product side of the house. I was at a little company in Minnesota called Stellent that was acquired by Oracle.

Andy MacMillan:

I spent five years at Oracle in the Fusion Middleware Group, working in Thomas Kurian’s org and ended up hopping over to Salesforce to learn the SaaS business model and ran a business inside of Salesforce for a while. And that became a pretty important skill set as people were trying to scale SaaS businesses all over Silicon Valley. So I got the opportunity to be a CEO, went over to Act-On Software for a couple of years in the marketing automation space. And then most recently now at UserTesting.

Harry Stebbings:

Before we dive into the world of UserTesting and some cool passions that we both share, I do want to touch on the Oracle and Salesforce experience there. So when you look back at that and the internal machinations that you saw, what were some of the biggest takeaways for you from that experience? Like how did it impact how you think about operating and leading today?

Andy MacMillan:

I think there’s a couple of things that people can really take away from the big company experience if they really lean into it. One is these companies do a lot of things extremely well. So it may be easy to pick at large companies if you’re in the startup game, but there’s a lot of really smart people doing things really well at massive scale in these very successful companies. So just looking around from the inside, you can learn a lot about how great companies are scaled. I’d also say, personally, you can learn a lot about how to get things done and how to get things done when you don’t just have ultimate, top-down control.

Andy MacMillan:

I think that’s something a lot of folks struggle with as they scale companies, is that you start to have to, even if you’re the overall boss, if you’re the CEO, you have to get good at driving consensus in coalition around ideas and getting people motivated to make those things happen. That’s really how things get done at big companies. They don’t lack for opportunity. What they lack for is people getting everyone excited, and motivated, and pointed in the same direction, and doing something. I think that’s a skill that you can learn that if you get good at a big company, you can be really good at that in a smaller, mid size company.

Harry Stebbings:

I’m really into … you said that about that importance of motivation and really enthusing the team around the idea. You said before, to me, it’s the believing in kind of participatory leadership over servant leadership. Can you talk to me about the relationship between the two and why you favor participatory in that?

Andy MacMillan:

Yeah. I think the way to lead people is to participate in what they’re doing and to give them a chance to participate back. I’ve had this experience time and time again, that the people that are in the room with you thinking through the problem are your most bought in supporters at the end of that process. So if you scale that out, what you’re really trying to do is have more people in the organization participate in what’s going on. But most importantly, viewing yourself as a participant in that process. I don’t subscribe to the servant leadership model. I think that frankly is a little bit upside down. I think it’s this idea that as a senior leader, what I want to do is participate in these projects, be part of the team, share my perspective, let folks know how I’m thinking about why this is important or what trade-offs we’re making.

Andy MacMillan:

When they hear how I’m thinking about it, when I participate with their team, they then embody that going forward. They’re empowered, they have agency, they understand what it is we’re looking to accomplish. They can make decisions now because they’ve been part of the process. They’ve been a participant. So I really believe much like how product management works, we talk about in product management you’re kind of responsible for everything, but in charge of nobody, engineering doesn’t work for you, sales doesn’t work for you. You sort of learn to get everybody to participate along with you in the thing you’re trying to get done. I think that’s a great way to think about leadership broadly, be a participant in the processes that you are trying to make happen and let other folks feel like they’re a participant as well. And you get great results.

Harry Stebbings:

Can I ask you a question? I didn’t mean to push back here, but I’m always told that I should push back more. So I’m trying to be more.

Andy MacMillan:

Great. Let’s do it. Yeah.

Harry Stebbings:

I think that participation and leadership is almost like a luxury of later stage companies. Where when you think about early stage startups, time is the killer of all companies in terms of runway. Actually, when we think about that, like servant leadership and having a really streamlined and effective decision making process that bluntly much more aligns to servant leadership than participatory, debating, and consensus. Do you not agree that actually, maybe it’s a luxury of later stage companies to have this participatory leadership?

Andy MacMillan:

I don’t know that it has to be consensus as much as giving people a chance to be in the room and you can still move quickly. So for example, the way I run my schedule, I do it in large chunks. It’s topic based. So I have marketing time every week and things like that. But I have my CMO, for example, bring maybe the team that’s working on our web redesign to that meeting. Maybe it’s only for 20 minutes for that topic, but they do that a couple times during the process, maybe of revamping the design of our website. They’re hearing me a couple of times along the way, again, maybe only in 10 or 20 minute increments, give them feedback directly on how I feel about it, other things I see going on, my opinions. Most importantly, when we get to the end of that process, my fingerprints are on it. I’m bought in. They know I’m bought in. They’ve heard what I care about. And very often I get to just greenlight it at the end. Say, “Yeah, this is great. Let’s do it.”

Andy MacMillan:

What it avoids is what I hate in senior leadership is when somebody brings the final 20 page PDF version of something to me and I just get to do the thumbs up or the thumbs down like Caesar. And you’re stuck with either taking this product or this project out at the knees and shutting it down, which is miserable for your team or greenlighting something that you don’t think really hits the mark. So for me, it really helps me scale my time and my decision making, because I get to have influence on these projects in little increments over time where I’m again, kind of participating in what they’re doing and in the end, I like the result.

Andy MacMillan:

I get to greenlight it. And then they get to make decisions when I’m not in the room, knowing how I feel about things. So it’s actually about scaling decision-making and giving agency to people throughout the organization and empowerment. I think even in, maybe not a 10 person company, but if you get to 40, 50 people, it’s really about how do you scale decision-making and all roads can’t lead through a senior leadership. You have to have people that that can act if you want to move quickly.

Harry Stebbings:

I mean, so many things for me to unpack there. We’re doing such a good job of sticking to the schedule. So I’m thrilled about that. In terms of the decisions that you need to influence, how do you determine what decisions you fundamentally need to influence and need to see in real time progress versus actually what you can let run in isolation with the team?

Andy MacMillan:

I think it’s really about working with your directs. So again, our scheduling model I learned largely from Thomas Kurian when I was at Oracle in his division. He would have these large chunks of time. And I knew that I could always get time. My time happened to be on Wednesday afternoons for the product areas with I could get on the schedule. So in some ways, things that are important, people will naturally bubble up to you if they know that there’s access. People love the idea of getting in front of the head of products or the CEO or whatever, to get feedback, to get visibility. So one is frankly just having an avenue where people really know that that is actually how the world works. That is how you spend your time. I think the other is working really closely with your senior leaders and making it clear to them, I don’t want to have a whole bunch of just one-on-ones where we walk through every part of the business. I want them to start bringing people on their teams, into these conversations.

Andy MacMillan:

So now again, if I’m participating in these broader conversations with more of the team on more of the projects, I just have a better pulse of what’s going on. I mean, ultimately running a business does require a lot of intuition. You have to have a sense of what’s going on, and what’s important inside the company, what’s important with your customers, what’s important with your partners. So there is no quick and easy way to do that. You have to put the time in. The thing is really how do you give yourself the opportunity to start to feel and hear those signals?

Andy MacMillan:

Frankly, our whole business is based on helping people do that with customers. I take kind of the same mindset inside the company. How do I put myself in a position where I can see and hear and feel what’s going on in the company? That can’t just be in my staff meeting. That’s got to be with working with account teams, product teams, designers, people in the marketing team. If you want to have a pulse of what’s going on, you have to get out of your office, and get down off the pedestal, and get involved in what’s happening.

Harry Stebbings:

I do have to ask [inaudible 00:09:30], we both have a common passion for something, [inaudible 00:09:32] pricing. When we think about pricing today, you said to me before something that was fascinating. You said consumption-based pricing is going to dramatically change how enterprise SaaS companies operate. So to set us some context, how do you fundamentally define consumption-based pricing? And how does that look in reality?

Andy MacMillan:

I think consumption-based pricing, and we’re seeing it with companies like Twilio or Snowflake. It’s really around modeling your pricing after driving usage or adoption of the product at scale. I think that’s fundamentally different in some ways from the traditional seat-based model where a seat-based based SaaS was incredible when I made the shift from Oracle to Salesforce. I mean, what a change where you went from, I sold you something and then I just kind of went away whether you were successful or not to a model where customer success mattered, right? It was a subscription based model. I had to care that you were successful.

Andy MacMillan:

I’m a Salesforce customer. We pay essentially the same rate for all of our seats of our SFA deployment, whether it’s somebody who uses it once a month or all day long, has it open as a tab that they’re working out of, I think the shift in consumption based pricing is this idea of what if everyone in my company had access to that and I paid based on how much value we drive out of it, how much we use it, whether we do our forecasting in it or not, we do our reporting in it or not, whether 550 people inside my company used that product all the time or whether a handful do every day. I think that aligns the interest of the buyer and the seller much like SaaS aligned deployments being done more quickly, which really mattered to buyers.

Harry Stebbings:

So my fear with kind of the consumption-based model is it fundamentally discourages usage at scale, really. How do you think about that kind of disincentive to use due to the consumption-based alignment?

Andy MacMillan:

I think it actually incentivizes consumption and scale, but it’s all about how I set up and model the usage expectation. Right? Nobody wants to be surprised. We all know this with our cellphones like, nobody wants to be surprised with your cell phone bill at the end of the month. But I do think as a buyer of lots of enterprise software, I’m fine paying for what I use. What’s frustrating to me is paying for what I don’t use. I also think there’s a real challenge with the marginal cost model of something like a seat-based pricing model. When you think about net expansion and things like that inside companies, just using my Salesforce example … again, I love Salesforce. We use tons of their products. I’m a very proud alumni of the company, but most people relate to paying for Salesforce as a seat-based SaaS product. So it’s a good example.

Andy MacMillan:

If I want to roll out Salesforce to 10 more people, they’re probably the next 10 people that might use the product in some way, right? An edge case, somebody in marketing that might want to look up customers or whatever. Should I really be paying the same rate necessarily as somebody who’s using it all day long? So there’s this marginal cost that I decide not to do, because I don’t know if they’re going to use it, or if they just had access to the platform and we’re building workflows and things like that in anywhere, I was like, “Hey, great. I could solve this workflow using some of my Salesforce data or using my Salesforce platform and folks had access to it.” I would do more and I would gladly pay them more for that. I’m more than happy to pay for things that we use and get value from.

Harry Stebbings:

Can I ask, in terms of the seat usage for you at UserTesting, when you look at the product to say it obviously oriented around product and site teams, obviously, how do you think expanding beyond that core functional area of expertise, how important is that to you and how important is it to have the cross collaboration across functions, do you think?

Andy MacMillan:

I think it’s important to us not just from a business model perspective, I think it’s important to us because that’s the mission we’re on. I really align and believe with the core goal of the company, which is that we need to be more empathetic with customers, just generally. More and more of our experiences are kind of digitized, and in some ways that’s great, but we’re kind of disintermediated from people. I went to Starbucks this morning. I didn’t even have to speak to the baristas, right? I just mobile ordered and away I went. So how do we as businesses connect with our customers? I think that’s really important. I don’t think that’s just a product, or just a design, or just a marketing problem. How many people work at companies and make decisions all day long where they don’t easily get input from their target audience, from their customer on anything, on a presentation, on a piece of content, on a strategy that they’re thinking about?

Andy MacMillan:

So I’m really passionate about the idea of connecting people with customers when they’re making decisions. We refer to that as human insights. So I think it’s really for us about how do we evangelize this idea that much like the past, I don’t know, 25 years we’ve been saying you need to make data driven decision inside companies. We have whole analytics markets on helping people have data when they make decisions. I think that’s great. I love having data when I make decisions too. It doesn’t necessarily replace speaking to somebody, right? Talking to somebody about your idea. So I think for us, we’re really trying to think about how do we empower people throughout the entire company to be able to talk to people about their ideas, get some feedback from somebody, maybe outside their perspective. I think it’s even important from a diversity and inclusion standpoint.

Andy MacMillan:

If we want to have more inclusive products, we need to include the perspectives of more people in those products. So one way to do that is talk to people and get input from people that are different than you about anything. Again, you’re right, we have generally done that around products and digital products, but why not anything else? Why not an idea that I have about what I want to do with my business? Great. Go talk to some people with some diverse perspectives and backgrounds and get their feedback. I think that matters.

Harry Stebbings:

Now I’m being deliberately controversial, so forgive me for this. It’s very unlike me, actually, so I apologize [inaudible 00:14:25]. I’m interested. You said about the empathy for the customer being such a core ethos. I always believed that actually an ethos and a brand has to be divisive. People have to be for or against it, which is why I think Zoom’s making people happy isn’t great actually as a core ethos and it’s like a mission because who doesn’t want to make people happy. And when we think about being more empathetic with customers, it’s like, isn’t that every company? I’m interested in, how do you think about kind of brand and the importance of building an army for or against?

Andy MacMillan:

Well, I think you’re right. I like the thesis on that. I think the point is who do you want to be for and against what you’re doing and do you really understand them? The challenge in so many companies is the people that build experiences now are often not the people we want or even aiming at consuming those experiences. I mean, a friend of mine works at a company that does direct to consumer hearing aids. They’re doing that through mobile apps and websites, right? Do you think his development and design teams are all folks that are in perhaps their later years and going through the experience of hearing loss? How do they understand that user and build the right experience? That matters. So even if you want your brand to be energizing to a specific audience, even if you want to make an exciting or divisive, or however you want to frame that, claim, you have to know what you’re aiming at and you have to have intuition.

Andy MacMillan:

I mean, the great product leaders of the world, what they’re known for is their intuition. So how do they do that? When you really go talk to those folks, you find out they’re just very good at listening and hearing what’s going on from people, right? They hear from a few folks about something and they kind of pull on that thread, and then they talked to a few other folks and they pull on that thread some more. So how do we build that kind of intuition at scale for whatever it is we’re trying to do?

Andy MacMillan:

So I love the idea of having big and bold branding campaigns, building an army of followers that are for what you’re doing, but you have to have that intuition, right? That’s not something you get from just compiling big data and deciding what the world wants of you. You have it from having a point of view, from understanding how people will react to that point of view. That’s what you’re going for. What you just described is people’s emotional response to a brand. So how do you develop that? How do you test that? How do you build that intuition? How do you nail that? I think you get your audience, you understand them.

Harry Stebbings:

I love that, channel it to your own intuition. I do agree with you there. I do have to ask you, and again, sorry for this, totally off-schedule, but-

Andy MacMillan:

That’s great.

Harry Stebbings:

You mentioned the product leader [inaudible 00:16:39]. Honestly, Andy, as do so many founders today and they say the biggest, biggest challenge is we cannot find great product marketers. We actually can’t find product marketers full stop. Help me out here. Why is there such a drought of good/product marketers?

Andy MacMillan:

I think product marketers are some of the most important people in tech companies. In fact, I’ve regularly said, I actually think they make, by far the best CMOs. Everybody tries to hire demand gen people to be their CMO and really as a tech company, your entire world is about how do you connect technology with the problem set, which is really what product marketing is about. I think the challenge with that is it’s not a cure all. I talk to a lot of folks that tell me, they really need a good product marketer. And then you start talking to them about what they’re trying to solve with product marketing and it’s like, well, they don’t really have product market fit. They haven’t really identified their target audience well, and they are hoping that they’re kind of one good PowerPoint deck away from solving that with product marketing.

Andy MacMillan:

And they’re kind of not. I mean, again, I would go back to they really need to double down and listening to what the market is telling them what their customers need. A great product marketer is invaluable in that process. They can help you with that, perhaps. But I think a lot of good product marketers suffer from just having too big of a gap from the product market fit and what market they’re going after. And it’s too easy I think for companies to kind of lay that at the feet of product marketing. So I would say, I think, in some ways it’s this dichotomy. I think product marketers have a great brand. To your point. people realize, I think, the value of product marketing. I think too often, we also prescribe market failure at the feet of product marketing. I’m not sure that’s always the case.

Harry Stebbings:

Sorry, to clarify, do you think of then, product marketing should be instilled before PM like product market fit to ensure a streamlined timeline to product market fit and really helping you get that, or is it a post product market fit to help scale?

Andy MacMillan:

I think it’s more post. I think you need to have some level of kind of that intuition, as I was saying, in the product organization broadly. I think that expands beyond product management. I think that your engineering team, your design team really getting the problem and the customer and how the solution fits. I think product marketing to me is really kind of in that Jeffrey Moore adoption curve model of like crossing the chasm to me, it’s the product marketing challenge, right? Early adopters have validated that this solves a problem. It meets a need. It fits what they do. Getting over that chasm is really two things. It’s making sure that the product itself is usable and applicable to a broader audience, right? It can’t just be people with PhDs in computer science find your product easy to use. It’s like, well, the rest of us have to. But it’s also then how do you tell that story. I think to me, that’s really what product marketing is about.

Andy MacMillan:

How do you talk to the majority of folks who are not your early adopters about what the problem is, why you’ve got a solution, why this meets a need, and why they should act? That to me, is where product marketing really comes into play. And then scaling a go to market organization, right? That’s the best product marketers are just as comfortable in the product meeting as they are in the sales huddle. So, again, there, I think you’re really talking about scaling more into the majority than just the early adopter part of the curve. And again, you can define that really narrowly. I’m not saying you have to get to 50 million in ARR and be going mass market. I just mean it’s not your first dozen customers. It’s really getting beyond that. I think you need good product management skills.

Harry Stebbings:

Trust me. I mean, nothing makes me happier than talking about crossing the chasm. So a big smile on my face there. I do want to ask though, because you said about kind of scaling go-to-market. So I want to talk about scaling orgs, because you’ve grown from 22% annual growth to 35% while going from 40 million to a hundred million there in ARR. And some pretty insane numbers there. Not a lot of companies actually speed up while growing. So this is a really unfair question that I’m really now going, “I can’t believe I quite raised it.” But tell me though, what’s the secret?

Andy MacMillan:

I think the secret is being deliberate, honestly. I mean, we didn’t accidentally start going faster. It wasn’t like all of a sudden the phones just started ringing. And to do that, we focus a lot on pipeline. We focus on what are we doing to build the right pipeline in the right places, and then how do we execute as a sales team behind that? So in UserTesting’s case, when I came on and I joined the company about two and a half years ago, I just universally met customers that liked the product. So I felt like there was strong product market fit. So again, if that’s not there, you’ve got different challenges. So then it was really how do we tell a broader story at scale and put a marketing engine behind that so we can generate real demand, real qualified pipeline that you can then hire salespeople behind.

Andy MacMillan:

So we really focused on two things. One was developing, and measuring, and knowing our pipeline and knowing it really well. And the second was really thinking about how do we segment and train our sales team so we could execute on that pipeline. Those were really the areas that we focused on, knowing that we had a great product that just needed a broader message.

Harry Stebbings:

So when we think about coming to the sales team, I do want to get into segmentation and training. In terms of getting the right salespeople, you’ve mentioned before just how paramount it is to get the right salespeople specifically. And this is again a tough question, but what is the right sales person like to you? And we can be specific here. So if we think about UserTesting, what is the right sales person to you and what are the leading indicators of them being right when you’re detecting it?

Andy MacMillan:

I think part of it is really knowing what works. So I’m a big believer in sales of understanding the template for what are you looking for? What has worked? The thing you have to be careful about is I think there’s a very small percentage of salespeople that are just kind of selling savant. They’re just really good at it. They could sell practically anything. You need to be careful not to try to replicate that person because that’s more of just … every sales team I’ve been on has a handful of these. And you’re just basically like, “I can’t replicate that person, but they’re really good at this.” But you look at the rest of the team and you go, “Okay, what’s really working? What is the profile of person who’s really being successful here?” And by profile, I mean like what industries they have experience in. What gets them excited about the product and the solution? What makes them engaging to customers?

Andy MacMillan:

So for us, it’s really been people that are on this mission that really seem to care about customer feedback. Our best salespeople are the people that really care that people get feedback from customers. It’s a compelling and interesting thing to talk about. So we have found when we hire from people that are in adjacent industries, the survey space, the customer experience space, we have a lot of success bringing them into our company and scaling them. That’s not always the case. Some companies don’t do well when you hire from adjacent markets. Some companies do better when you hire more technical salespeople. For us, that’s not the case. We’re really looking for people that are kind of on the mission with us.

Andy MacMillan:

And then the second thing is, I think salespeople are one of the areas where their track record really matters. There’s just something about being able to be a closer that I’ve never figured out how to teach somebody. I’m a big fan of most things are nurture versus nature, but there’s just some people are closers and some people are really good in other areas of the business. They’ll make a great supporting player in some way in a sales role. But the ability to get somebody to sign on the line is a real talent, not to be underestimated. It’s not something I’ve ever done. I’ve never carried a bag, and I think that’s something I keep in the back of my head of like really appreciate what these folks do and don’t underestimate it. I’ve had really compelling people that can get all the way through a sales cycle, but not get a deal done and that’s tough.

Harry Stebbings:

I mean, my oh my, there’s so much to unpack there. In terms of my thinking, you mentioned the importance of being a closer there. I totally agree with you. Question is, with slightly inflated LinkedIn and slightly inflated CVs and challenging attribution, how does one determine whether one is a closer pre hire? And then it’s unfair to ask two at once, but why not? How long does one give a sales rep in terms of payback period, and really providing the data to prove that there are pros there?

Andy MacMillan:

I’ll take the second one first, which is, it depends on your sales velocity and segments, so we sell in every segment. So my SMB reps, for example, are going to get many more at bats during their first quarter for maybe then one of my enterprise or global reps. So I think that’s why we have sales ramps. So I think sales ramps are a good test. You do need to, back to pipeline, understand what are you handing to these folks to go sell, right? If you drop one person into a completely barren territory and they’re having to really go develop the territory versus you drop somebody else into the middle of, I don’t know, Manhattan is their territory and there’s seven or eight in-flight deals, I’m going to measure them differently, right?

Andy MacMillan:

I want to see how they behave against the pipeline that they have. So that’s why understanding, and measuring, and managing your pipeline is so important because then you can hold people accountable to close rates at certain stages and things like that. So it can be very mathematical in how you look at sales performance, but you have to really understand the business you’re in, and the segments you’re in, and the speed that they should sell. So I think that’s definitely true.

Andy MacMillan:

I think on the first bit, I think it’s really about how do you measure the ability for somebody to go in and be compelling, right? How do you really understand what their pitch looks like? You can do some of that in an interview, but it’s also how do they talk about the deals that they’ve been in? I really want to understand the deals where they were understaffed, under resourced. My favorite interview question in general anywhere is when have you been wildly successful when you’ve been substantially under resourced? I want to know when you win when it’s tough. So you lean on that a lot when interviewing salespeople. I also am a big believer that reaching out into networks and finding out how people have really done is an immeasurable feedback. In many ways, I think interviews can be misleading, especially with salespeople. Most salespeople, if they’re any good are at least quite charming. Being charmed in an interview by a salesperson is a very easy way to hire the wrong salesperson. So you really need to dig in and see what’s their track record been.

Harry Stebbings:

Totally with you in terms of the digging in there. I think the other element there, it’s like, okay, say you hire a brilliant sales rep and they are absolutely killing it. Again, it’s [inaudible 00:25:39]. And they want to make the move from individual contributor to manager, and you’re going, “Well, hang on a minute, Sam or Jessica, you’re doing fantastic as an individual contributor. Do you want to move to management?” And it’s something that I’m struggling with at the moment with an investment of mine. It’s like, you don’t want to lose that individual contributor to management, bluntly. And you don’t actually know if there’ll be a good manager. How do you think about that kind of promotion and dilemma when you do have a very talented contributor wanting to make the move to management?

Andy MacMillan:

I’m a big believer that you do have to support people in the path they want to be on, but you can definitely give them guidance. I had somebody recently get promoted to CMO of a public company. And when they were working for me, they were adamant that they wanted to be in the product organization. We had to have a long talk about, “Hey, look, I really think you’re a marketer. Let me tell you why.” And they either agree with you or they don’t. I think it’s tough to hold somebody in a position that they don’t agree with. So if this person’s career path from their perspective is into management, I think you need to find a way to support them if you think they’re going to be successful.

Andy MacMillan:

One of the best ways to do that with sales in particular is I’ve connected people before with really amazing individual contributor salespeople who have been through their career as an individual contributor of salespeople, who have been wildly successful, have made millions of dollars to say, “Hey, go talk to this person about what that path looks like.” So they can have an exciting path of being an individual sales contributor, if that’s what they want to do. And then also really assess their management skillset. I think the biggest thing for salespeople is, are they willing to give up the thrill of closing a deal? I mean, that is a unique euphoric moment. As I said, I’ve never carried a bag, but I do remember the day that we sold Stellent to Oracle and the moment they’re like, “The deal is done.” That is a special feeling when you close something like that. Then yes, you still have some of that in sales management, but it’s not the same when it’s not your deal.

Andy MacMillan:

So I think it’s really having conversations with someone like that about this is the trade-off, this is what you’re giving up, this is what you get, this is the thing that you’ll have to do. Here are two people you should talk to from different perspectives in their careers. And then really aligning with that person, what do they want to go do. And if they’re your best sales person, but you think they’d be a good manager and they’ve talked through it and they think about it, then figure out how to make them your best sales manager.

Harry Stebbings:

Yep. No, I agree. I think it’s very helpful in terms of providing the references and differentiated references to see what it’s like. I totally love that sort of the sale. So I think it’s a challenging one to give up. I do want to ask, you mentioned sales training before. Before we touch on pipeline, how you think about the foundations to successful sales training? And I guess, how do you structure yours? I guess it’s a little bit different view dependent on the segmentation within the sales team, SMB, mid-market, or enterprise, but what are the foundations and how do you think about optimizing it?

Andy MacMillan:

That’s a good question. I really break sales training down into three pieces, maybe the fourth being have a world-class sales enablement person. I’m lucky to have one here at UserTesting and it is such an important part of a company and one I don’t think we talk enough about. So first off, have an incredible sales enablement function, helping you ramp, wrap. It helps with close times. I mean, it is one of the best investments when you get to any level of scale is really having good sales enablement. Beyond that, I really think of three things. One is there is some element of core value selling that you can train people on. I mean, there are great schools of thought, different things. Our company is going through MEDDIC training right now, which is a sales value selling philosophy. It’s very good.

Andy MacMillan:

So I think there is a skill to sales and training on the craft is important. I think the second bit really has less to do with pure sales training and more back to our product marketing question, which is how do you have great solution messaging that you’re arming your sales team with and training them around that? Right? So they’re not selling features and functions in tech, they’re selling a solution. And that really is not something you want your salespeople making up in the room on their own. You need to hand that to them, train them on that.

Andy MacMillan:

And then the last one, again, a little bit is we talked about it, it’s hiring closers. And if I had a secret recipe for converting people to being better closers, I would love to share it with everybody. I don’t. I’ve had great people I thought were incredible salespeople who just can’t at the end of the quarter, get deals done. And I’ve never figured out the right thing to say to them to make that change. And I’ve had other people that, they just get deals done. So I think part of it is just being honest about, do you have a team of closers?

Harry Stebbings:

Totally with you in terms of the honesty element to yourself. You mentioned the sales enablement element. And it’s really interesting because I agree, I think it’s barely ever touched on in this industry. So when you think about the right time and the triggers to hire sales enablement, but both in terms of hands on moving the team, what is the right time and then associated to it, how does one measure success of sales enablement?

Andy MacMillan:

I measure success of sales enablement on our ability to move things through the pipeline and then close rates, right? So are those trending in the right directions? It may be ramp time as well. I think as far as the right time, I think everything about scaling a company when you get to a certain size is thinking about what are the investments in things that remove constraints, right? I’m a big believer in the book, The Goal, which is actually a manufacturing book, which is all about constraint and theory of constraints. So as soon as hiring and making the investment in sales enablement allows you to remove constraints on your sales team overall that let them go faster. So if close rates can go up, if ramp times can go down. That’s math now. You can put that in a spreadsheet and say, “Okay, well, if I can improve my close rates by 10% across 10 sellers, I’m guessing that pays for your sales enablement person pretty quickly.”

Andy MacMillan:

So that’s the way to think about it. Everything about scaling a company is about where do you create the points of leverage? Where do you create the ability to stop having things be one-to-one manual efforts and start to generate lift. And sales enablement is one of those levers, marketing is another one of those levers, right? What are the things I can do in marketing that help have leads be more qualified, better qualified, things like that. Those will help with my time to close and ultimately with closed rates as well. So I’ve put sales enablement in kind of that same bucket. I tend to think as soon as you think about hiring some sales management, maybe getting to two sales teams to probably get into the size where a sales enablement person, if they’re good, is going to pay for themselves pretty quickly.

Harry Stebbings:

Yeah, no, I agree with you in terms of that payback period with that of scaling sales team. You mentioned like marketing, you mentioned sales, you mentioned obviously kind of conversion with pipe there. I have to touch in the pipeline itself because you said before, my pipeline meeting is the most important meeting of the week. Such a good cliffhanger for me. So when is it, how long is it, and how do you structure it? Let’s start there.

Andy MacMillan:

Sure. So I do a Monday pipeline meeting. I do it every week. It’s an hour long, but I also think pipeline is one of these words in some ways that we could just get rid of it, we should. It means two entirely different things to your sales team versus your marketing team. So companies constantly fight about pipeline. I think it’s largely because they’re talking about different things. So what we do is we have this pipeline meeting, both sales and marketing are invited and come to the meeting. And it’s my meeting. I’m literally the host of the meeting. We have my sales management team and most of my marketing leadership. We alternate every other week, what I call the marketing view of pipeline or the sales view of pipeline, and what the marketing view of pipeline is, what are we generating right now and what are we moving through the pipeline?

Andy MacMillan:

So think of it like, “Hey, we had our big event this week, our annual event, HiWorld. So how did that do, how many leads do we generate? How qualified were they? How many leads did we help advance the pipeline? That’s a marketing view of the pipeline. So when we do that, sales gets to see all the things that marketing is doing, the impact that it’s having, the pipeline it’s generating, things like that. The following week, we have the sales view of the pipeline. Sales doesn’t particularly care right now what we did at that event if they’re trying to close their two Ford deals, because nobody came to our event this week, that’s going to close an enterprise deal with us by the end of December. So the sales view of pipeline essentially walks through every one of my regions and territories. We look at every team’s pipeline by stage, by revenue.

Andy MacMillan:

We even get down to a look we have in the dashboard where I can see. So we’ll say, “Okay, enterprise west.” We bring up a slide. It’s got every rep’s name, how they’re doing against quota, all their pipeline, the stages of those pipeline. That I can look at that chart and go, “Wow, Steve is low on pipeline in wherever.” So now we’re all trying to figure like, “How do we fix that?” So it’s really about understanding the difference between what marketing’s doing and what sales is doing, and what pipeline means to them, and how do you get them both in a room talking about where do we need to pull levers to fix things. And I think that’s the indicator, when you talked about how do we speed up the company, it’s about pipeline.

Andy MacMillan:

The secret to growing a company is being able to hire and feed salespeople. I think where a lot of folks screw up is they take a big slug of venture capital, they go, “This is awesome. I’m just going to double my sales team and hope they feed themselves.” And half of them starve, then you fire half the sales team. And now it’s a terrible company to work at because salespeople aren’t making numbers. A bunch of people are getting fired. That’s miserable. So all of that gets fixed if you think of pipeline as being that leading indicator, right?

Andy MacMillan:

Fund the growth of the pipeline, measure the pipeline, understand from both a sales and marketing perspective what that pipeline looks like, see the pipeline coming, hire the sales capacity behind it, ramp them quickly, and then grow like crazy. That’s the way to do it. And it’s all based on that pipeline meeting. That’s the meeting that tells me I can hire five more salespeople. Where can I hire those salespeople? Where do I have pipeline? I think that’s what people get wrong. Hiring salespeople isn’t about hoping they’re successful. It’s about knowing you can feed them.

Harry Stebbings:

How do you measure the health and success of a pipeline? And what I mean by that is like, I see a lot of misattribution within pipeline in terms of convention tagging, whereas like, higher hope, decent hope’s questionable. And actually it’s always overly optimistic and it’s not actually attributed in the right way. How do you think about pipeline attribution and that measuring that effectively?

Andy MacMillan:

Yeah. I think pipeline attribution’s a bit of an ugly game. We don’t rely on it too much. I do want to know that marketing activities are generating pipeline. We do think about AE generated pipeline, marketing pipeline, partner pipeline, things like that. So I do think that matters, but ultimately what we’re really looking at is what are the things that are qualifying through our sales stages. So I think everything kind of marketing qualified, lead and up, is a bit of a like, “Ah, maybe it’s great. Maybe it’s not.” What I really want to see is what comes through and become sales qualified pipeline. Right? That’s really what I hold my marketing team accountable to. My CMO’s amazing. She actually talks to her team about like, “Our goal isn’t pipeline. Our goal is deals, like closed, won deals.”

Andy MacMillan:

So they’re very much goaled and incented, not just on generating activity, but generating real pipeline. And then you’re measuring in every one of those stages, what do my conversions look like? How do I get involved to help the sales team move things from stage zero to stage closed? I think that, again, gets down to kind of the brass tacks of what everybody cares about in pipeline. It’s not 10,000 people came to a webinar that we did that really had nothing to do with our business, but we put 10,000 leads into the pipeline. That doesn’t matter. What matters is how many of those people became sales qualified leads. And then we measure, how did they do going through the pipeline? And I think that’s really the way to look at it. And what’s interesting about that as you start to get away from attribution data, you start to look at things like when was the lead created? How long’s the lead been in the pipeline? How’s it moving through the stages? What’s the size of the deal? These are real data points. They’re not things that are debatable.

Harry Stebbings:

And this is totally again off schedule, maybe unfair of me, as a board member to say, do you think this is something that board members, we should actively play a role in. Do you think board members should be part of pipeline reviews? And do you think boards should be very involved in terms of communicating with head of sales on the health of the pipeline? Or is that too granular from your perspective?

Andy MacMillan:

It’s probably too granulated in my stage, but I would certainly think earlier on, I would imagine board members in earlier stage companies should be very concerned about product market fit and then the pipeline, if you’re really trying to think about how to fund the growth, right? If you can’t get well quality pipeline that your sales team can go sell, then you’re wasting money hiring salespeople, and you should really be focusing on building that pipeline. So I think earlier stage for sure, if you’re my size and your CEO and head of sales and CMO can’t manage their pipeline, I would solve that problem differently than getting involved in the pipeline. I’d probably get involved in your management hiring, but at some point earlier on, I think that makes tons of sense.

Andy MacMillan:

And for later stage companies, I just think this is where when you start to see the friction between sales and marketing, maybe that as a board member is where I’d start to say, “Hey, your sales and marketing team don’t seem aligned.” To me that always seems to come back to, they’re each talking about pipeline, but they’re not talking about the same thing.

Harry Stebbings:

I’m so enjoying this discussion. I have to ask, all natural kind of deals and the opportunities in pipe, do you do post-mortems of a sort? And what I mean by that is, when you win a big one, do you do a post-mortem on why you won, when you lose, what you lost. How do you think about postmortems and a hindsight review?

Andy MacMillan:

We do some of that. I actually find the deals we lose to be more interesting than the ones we win, in some ways. So we definitely do. We do it in QBR. Every segment does QBRs in our business. We bring together the entire account team structure inside those regional teams, every one of the reps goes through. They talk about what they’re seeing in the market. Again, this is where I believe getting really involved in getting that sense of what’s happening. I do a Q and A that I joined in each one of those small regional teams where I join them for 45 minutes. I get summaries of what they’re doing and what they’re seeing, what they’re finding from competitive. I answer questions about the business and we talk about what deals they won and lost. Like what was the most painful loss that the team had? Why did that happen?

Andy MacMillan:

I would say it is challenging. I mean, on some level, when you ask the sales team, why did we not win a deal? There’s really only three reasons you don’t win a deal. It could be the pricing, it could be the way your sales execution happened, or it could be the product. Very few sales teams at the end of a bad deal are in the mood to say, “Yeah, it was really us. We didn’t execute this deal well.” So I think you can end up with a lot of signals of pricing is wrong, back to our first conversation, or the product’s not right. You kind of really have to dig in and go like, “Did we just not win this one? What happened?” Especially when you look at it compared to the rest of your pipeline, if you want a whole bunch of other deals that looked similar to that one, it may very well just be that customer, the personality set, whatever happened there. So I would just be careful not to over-rotate on losses either.

Harry Stebbings:

And last one before the quick fire because I could chat to you all day, but it’s like a lot of the reasons that I hear nos or delays is, “Listen, honestly, Andy, we’re super interested. It’s the end of the quarter. And it’s just not a priority for us right now.” Which bucket would you say that goes into? Because it is a no, really, and it is a delay in, and it is a pushback. How do you think about that as the reason for no?

Andy MacMillan:

I think that’s a sales execution issue. A big part of the sales training that we do is how are you conveying urgency in the problem that we’re solving. And I think that’s true. I mean, we are trying to solve a problem of how do you connect with customers and understand their needs. I don’t think for most companies that’s a next quarter problem. So it is on the shoulders of my broader account team, not just the sales person, but maybe the SC she’s working with, the customer success manager, whoever to go in there find projects, initiatives, executive sponsors, whoever who see the urgency of understanding customers, make the case, and get deals done. So I don’t think there’s a lot of great excuses for push deals.

Harry Stebbings:

What have you found most effective in terms of creating urgency? It’s the biggest thing that I find actually reps struggle with in terms of just how to convey the why now on the urgency.

Andy MacMillan:

Our whole product is built on this idea of building empathy with your customer. The more time I’ve spent at UserTesting, the more I’ve realized that that is the key to solving so many problems. It’s one of the big leadership levers that we should all understand. I think the same is true in sales cycles. The deal doesn’t close quickly because it’s important to us. It closes quickly because it’s important to the customer. So if we don’t understand their pain, their urgency, their needs, entire solution to that, then shame on us. So that’s the secret I find, is the best reps, the best teams are very good at understanding our customer’s pain points and selling on that. Right now, here’s how I’m going to help you solve this problem that’s yours.

Andy MacMillan:

The worst salespeople are the ones who are telling customers, “It’s my end of quarter. I really need to get this deal done.” It’s like, “Well, that’s lovely for you, but that’s not really my problem.” Right? So I think the more we can put ourselves honestly and earnestly in the shoes of our customers, and understand what they’re trying to do, and be genuinely helpful, right? The best sales deals are the ones where we’re hand in hand with the customer. We understand their problem. We honestly believe we can help them. We see the urgency, they see the urgency. We’re all aligned in helping them get to that answer quickly. Those are the best deals. So the best salespeople are the ones who can really put themselves in the shoes of that customer and understand that need.

Harry Stebbings:

I promise this is the last one. How do you feel about discounting as a way to get deals closed pre quarter end?

Andy MacMillan:

I think it depends on the process you’ve gone through. Everybody also has a budget, so if you’re discounting to try to really … you understand the problem, you’re trying to help get something done, your champion’s trying to get maybe something through their procurement team, every procurement team likes to put a scalpel on the deal. Great. Okay, fine. Maybe there’s a little bit of a discount that’s applied. I don’t think for the best deals that the discount is the reason the customer acted. It might be the reason you help to get it through procurement. It might be a good faith thing you’re doing to try to push something through, but we actually don’t discount super heavily because I think we do a very good job aligning with our customers, and having a fair pricing model, and kind of standing by that.

Andy MacMillan:

So to say that I don’t support discounting would be a lie. In an enterprise software company, certainly discounting occurs, but again, if it’s not urgent to me, it doesn’t really matter. And all of a sudden I can just save 10 or 15% on the software. Does that really move the needle for me? I just don’t think so.

Harry Stebbings:

Yeah. No, I agree with you in terms of that kind of realism and rationale. I do want to move into my favorite, being the quick fire round. We want to do a round two, because I still have so many questions, but I do want to move into the quick fire. So I say a short statement, Andy, and you give me your immediate thought. So you’re ready to roll?

Andy MacMillan:

Sure. Let’s do it.

Harry Stebbings:

What’s the biggest challenge for you today in your role at UserTesting?

Andy MacMillan:

I think it’s the biggest challenge for every CEO, is the uncertainty of every day, like who knows? Everything comes up to your desk or the buck stops here. So it’s the randomness of what happens.

Harry Stebbings:

Do you ever question one’s abilities as a CEO? I question often my ability as a VC and I often feel the imposter syndrome. Do you ever feel that?

Andy MacMillan:

Sure. Yeah. All the time. Stuff lands on your desk and it’s almost like you want to pick it up and turn around and go like, “Who do I hand this to?” And you’re like, “Oh, it’s me.” And that’s just part of the job.

Harry Stebbings:

That’s funny. Tell me what’s the hardest role to hire for today?

Andy MacMillan:

Maybe an unfair answer, but I think it’s anywhere you don’t have a really good Lieutenant. I make the worst hires when I haven’t done a good job having bench strength and then there’s urgency and risk in not getting the role hired. So I think anywhere I’ve got a good Lieutenant, I make a good hire and anywhere I don’t, I get nervous.

Harry Stebbings:

I’m a Brit, and this isn’t in the schedule, but I’m too intrigued. You said something about not having good lieutenants. I’m a Brit and I’m so awkward, especially when it comes to things like letting someone go. What’s the right way to let someone go?

Andy MacMillan:

I think the right way to let someone go is to have a very honest conversation with them about why it’s not working, to do it as soon as you realize it’s not working. I think the whole like, “Hey, I’ve hired somebody. They’re taking your job. They’ll be here tomorrow.” Is the wrong approach. So I’m pretty upfront with people. I don’t think people are surprised when I have a conversation with them, and it’s usually pretty early in the process. And then I’m very upfront about how to help them find the thing that’s right for them. If you’re hiring decent people, you do want to see them be successful even when they land somewhere else. So I think having that kind of conversation early and honestly, it’s the right way to do it.

Harry Stebbings:

Which external SaaS leader do you most respect and admire today and why?

Andy MacMillan:

If I don’t do the ones I’ve worked with, which would be folks like Thomas Kurian or Marc Benioff at Salesforce, who I think they’re both amazing, I’m really impressed with Scott Dorsey. I mean, I worked with him very briefly when Salesforce acquired ExactTarget, but I think Scott’s just the real deal. I mean, I’m a Midwestern guy. he’s amazing. He’s just so upfront, so honest, so true to who he is. I think he’s just great.

Harry Stebbings:

What moments in your life changed the way you think?

Andy MacMillan:

I think sports was a big change for me in general. I grew up playing lots of very competitive sports and I think that mattered a lot to me. I also think when I first joined Salesforce, just the customer centricity of what Salesforce was doing, how every customer mattered, even if they’re only spending 10K with us and a bunch of executives would rally to solve a problem for a really small customer, that really changed my view on what it meant to be in business and how we could really help people.

Harry Stebbings:

Tell me, what would you decide to change about the world of Saas?

Andy MacMillan:

It’s going to feel almost maybe oversaid at this point, but I really do buy into the diversity efforts being so important. We are just too, too white, too male, too San Francisco as an industry. And I would love to see the opportunity that I think is the SaaS business model just available to many more people.

Harry Stebbings:

Totally with you in terms of that availability. And then let’s finish on the next five years for you and for UserTesting, paint that vision for me, Andy.

Andy MacMillan:

We’re on this mission. I mean, we want businesses to talk to customers again, and I think that is a more than five year time period for us. We were kind of going department by department, knocking on doors, showing people that they can talk to real customers and get feedback. I think that’s our strategy for next couple of years, just keep leaning into this need to bridge this empathy gap so folks that are inside companies, sitting behind technology can really understand what customers and consumers want.

Harry Stebbings:

Andy, thank you so much for this. As you can tell from the complete wavering from the schedule, but also the excited voice, I so enjoyed this. So thank you so much for joining me today.

Andy MacMillan:

I enjoyed it a ton as well. Thanks for having me.

Harry Stebbings:

I really shouldn’t say this because I know I’m not allowed to have favorites, but that was probably one of the most fun episodes I’ve had to record. It was just fascinating for me. I love the discussion. None of the questions were on schedule, but it was just incredible. So huge thank you to Andy for that. And if you’d like to see more from us, you can on Twitter @harrystebbings. Likewise, it’d be great to welcome you behind the scenes here on Instagram @hstebbings1996.

Harry Stebbings:

As always, I so appreciate all your support and I can’t wait to bring you another set of incredible episodes next week.

 

Published on November 16, 2020

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