Ep. 368: Success in the Enterprise means ensuring consumerization is a part of your strategy. Scott Belsky, CPO, EVP of Creative Cloud at Adobe will explore key tactics to focus on the user experience.
This episode is sponsored by Linode.
SaaStr’s Founder’s Favorites Series features one of SaaStr’s best of the best sessions that you might have missed.
This episode is an excerpt from a session at SaaStr Summit: Enterprise. You can see the full video here, and read the podcast transcript below.
Ep. 369: In today’s SaaStr Insider episode, SaaStr CEO and Founder Jason Lemkin and the Co-founder and CEO of HireSweet, Robin Choy, share their experiences building and scaling their companies.
Today’s SaaStr Insider originally aired on A-Players, a new podcast that teaches you how to hire, retain, and train top performers for your team! You can listen to A-Players on Anchor.fm, Spotify, or wherever you listen to podcasts.
This episode is sponsored by Guideline.
If you would like to find out more about the show and the guests presented, you can follow us on Twitter here:
Jason Lemkin
SaaStr
Scott Belsky
Robin Choy
We’ve shared the transcript of episode 368 below. You can also jump down to the transcript of episode 369.
Transcript of Episode 368:
Scott Belsky:
This is a fun topic. My background was building networks, built a company called Behance back 10+ years ago, or about 15 years ago, that ultimately was acquired by Adobe, and have since been at Adobe, but also been thinking a lot about both consumer and enterprise technology and the shifts on both sides of the spectrum and challenged myself this morning to share some of the thoughts around the consumerization of enterprise experiences.
This is something that I find super interesting and I just wanted to kind of start a discussion. I started with trying to find five insights and started with ten and whittled it down to actually three that I think are interesting and worthy of discussion, are driving a lot of the, first of all, the changes I make during my day job, building and optimizing products and experiences for customers within the enterprise. Many of our customers at Adobe are enterprise customers. As well as an investor with my angel hat on, observing just some of the trends of the enterprise companies that I’m most excited about.
So I think the first two insights are kind of just built out to the third. They’ll go a little deeper and hopefully leave y’all with a few practical things you can think about as you are building great products for the enterprise.
And I think I’ll just start with something that is obvious, but poorly practiced, pretty broadly. That is this notion of simpler interfaces being disrupted interfaces, and of course it’s true for the consumer and the enterprise. I like to describe the product lifecycle of all of the technology quite simply, that users flock to a simple product. They’re encumbered with the burdensome way of doing something and a new product, a new shiny object pops up around the corner that’s inherently because it’s so new, it is simple., and so users flock to it. That product then takes all of its new users for granted, starts to think about better monetization and satisfying power users, and therefore adds tons of new features and bells and whistles and ways of customizing and then of course that product becomes bloated.
And it becomes more difficult to use, especially to the newest cohort of new customers that are typically late adopters and are most challenged to orientate themselves in a complicated product, and so what happens, those users flock to a new product. And this is the product lifecycle that goes over and over and over again, and frankly is the reason why I believe so many new products disintermediate the older incumbent ones. So it’s really about keeping products simple, which is f’ing complicated.
But when you think about simple interfaces being disruptive interfaces, there are a couple of thoughts here. So first of all, in some ways, there’s like a war now between the underlying services for the enterprise and the surfaces that people use in the enterprise. I think a great example of this is what’s happening with HR tech right now, for example.
There are some modern new HR enterprise technology companies that have come around, that are basically enabling you to take all the APIs of all the entrenched services you used for HR over many years for all the different functions of HR, bring them all together under the hood, and then have this new surface to interact and manage them on a daily basis with.
In the way a consumer–These are all, we’re all people, would want to kind of do their day to day work with all these various tools. And then why by doing that, then you can actually find a wedge that you want to get into, providing your own service and then deepening the customer relationship and the stickiness from there. I think a great example of this, there are many, but one is ChartHop. They enable you to work with a number of different underlying APIs in the HR tech space, and their wedge in is being the source of truth for your directory and managing org charts and knowing who reports to who and what organization everyone is in, and then before you know it, maybe you actually start to use more of their first party services as opposed to those underneath the surface.
And so I do believe that the surfaces are becoming more important and in some ways threatening the providers of the services underneath. And that’s just a reminder that the choices that we ultimately make in our day to day lives, both as consumers as well as workers within the enterprise, are made at the surface at the front end of everything. Look at Tableau. There’s so many other products right now that are in the surface business, and that’s a very disruptive space to be, I believe. And another reason for that is just the tolerance or the lack thereof within the enterprise these days for a number of different things. There’s less tolerance and willingness to learn how to use products.
The expectation for elegance and simplicity is suddenly really high, whereas before you just used the products you were told to use. Now I think people are becoming more confident in the enterprise and vocalizing their displeasure with the user experience of the tools they’re given. I think this is being driven partly by just the higher up bar we have in our personal lives. It’s being driven by the confluence of some products that we use for both personal and work purposes, and also this bottoms up adoption motion in the enterprise that is empowering people to say, “Hey, why do I have to use this clunky thing when so and so over there is using their corporate credit card and has a far superior surface to interact with on a daily basis?”
I think it’s a really exciting trend, because one of the themes of this presentation will be the power of design and empowering design to have a seat at the table for enterprise products. I would go as far as to say that design is starting to commoditize tech, and I wrote an article a while back called the interface layer, and this observation that a lot of industries are playing this kind of slap a hand game where whatever interface is at the top has the most power. And if you think about winning that interface war, it’s really the design and the user experience that is most compelling.
And I also think that on the sales side, again, if it’s a bottoms up adoption model, people are voting with their happiness in terms of whether they want to adopt and start using the product or not, and this top down mandated sell, as we all know, that motion of sales is becoming a little threatened by some of these more bottoms up approaches, and I think just design is an important role there. When I say it’s commoditizing tech, what I mean by that is that there’re just more and more kind of options of underlying APIs but that also reuse of code and I think that when you’re building these applications, there’s just so many [inaudible 00:03:56] components that are readily available or open source on the market that you can cobble together to build the underlying kind of frameworks and services, and it’s really starting to be the design that is further differentiating some of these products out there. I’ll put it that way.
So another observation I’m thinking about a lot these days is just how much the future of enterprise tools is this multiplayer default, and if you think about the types of… A few examples, and I’m using many example I’m an investor, but just because I know these companies well, Graphy, they’re building this data visualization product and the first thing you do is you define who else is on your team and who should have access to the graphs you’re making, and suddenly before you know it, other people who are normally not involved with the analytics or data analysis part of the organization are chiming in and building their own graphs and making comments and asking questions.
And we’ve seen this in other products like Airtable, Globality for procurement, one of our own at AdobeXD, where it comes to design systems and prototype review and that sort of thing. These are modern products where they’re actually in some cases collaborative by default. You literally set up your team before you even start to enter data and use the product. But they are built as multiplayer systems, and that means that stakeholders are super important. It means that they’re oftentimes web apps, and so I think there’s a lot of questions that this starts to change the answer for as you’re designing enterprise experiences. Who are you designing for? I think that the age-old way was really focusing on a specific function and nailing it and building that perfect application for that function at the expense of accommodating and being inclusive of a far larger spectrum of potential users.
And now, you’re not only designing for that siloed function, you’re also saying, “Okay, what are all the possible stakeholders that are going to interact with this product? What are the specific needs of each of those stakeholders, developers versus people in the C-suite versus customer service folks? If all these people jump into this product, do they all see the same thing by default? Do they see different things by default? What’s the permissioning? Does the permissioning have to be defined up front or later on? Who are the admins who can manage permissioning and how do you expand that group so it’s more flexible as the system?” These are all the types of questions that this multiplayer mode for enterprise products raises.
What are you selling? Typically you’re selling for these known needs of that siloed function that you’re trying to serve with your product, and now it’s really about all the other needs that the organization might have as they become stakeholders of this product. And what types of outputs do they want? If an executive logs into a system and sees the graphs, should they see fewer levers to get confused by and should they have an export functionality for PowerPoint, because that’s the need of that specific stakeholder of this multiplayer product? And also how are you charging? I was having a conversation yesterday with a pretty big investor in the enterprise space, and he was saying how people in some cases to the benefit of these enterprise companies are not doing the math on the cost of all of these viral spread users, the stakeholders that are coming in, and suddenly starting to find a use case for the product that maybe the company that signed up for this enterprise-wide license didn’t anticipate.
And so are you only charging for the folks in the siloed function and then everyone else is sort of a free stakeholder user? Or are you charging different tiers? Or is everyone just, say, a paid customer as soon as they come in and start to actually enter or extract some value into the system? And so it’s actually changing the entire business model of the rollouts of these products. And so I think that when you’re building any enterprise product and how do you make it multiplayer from the onset is going to be a theme in the product and design organizations of pretty much every enterprise project you can think of, because we’re all stakeholders to some degree.
All right, so that’s kind of two thoughts on the simplicity and the edge of design or the disruption, if you will, of the interface itself, and the role of collaboration first approaches to building enterprise products. And then the third area now I want to do a bit of a fun, somewhat polarizing deep dive with all of you, and is around the tendencies of people with a bit of a lens on enterprise people, or they’re people in their enterprise mode, I should say. Because all of us, employees and consumers and everyone in between, we are all lazy, vain, and selfish in the first mile of our experience using a new product and service. And that’s not to say that you can’t build a rapport with your customer, help them unearth a lot of the longer term value of your product, and then have them commit to investing and making it theirs. Of course.
However, in this first mile of our experience using any product, and let me explain to you why. So the first 15 seconds, we are all lazy, right? We don’t have time to learn something, to read something. We don’t want to be trained. And so we’ve all seen and went through these bad onboardings, where there’s just so many examples, instructional videos, or mandatory training services that are thrown at new adopters of technology enterprise. No one really wants to participate in this stuff. When people click through it, and everyone has a little more confidence in themselves than they should in terms of how intuitive something will be to them. Everyone thinks, “Oh, I’ll figure this out,” and they get in and they realize that they didn’t or they, even worse, think that they did and they never use the product properly.
And of course, more than one line of copy typically doesn’t get read, and there’s all sorts of heat maps of eye movements on pages and stuff to back some of that up. And so what do we learn from this? Well, first of all, it’s always better to show someone something rather than explain something. So the use of tool tips and that sort of thing within product onboardings is super crucial helping people get through that first mile, but even better than showing someone how to do something is doing it for them. And the most successful products that I see really get this right. They land people in templates. They have smart selection as opposed to manual entry. They have really, really incredible, presumptuous defaults, or they’ll put in chat UIs as a way of bringing someone through an experience rather than having them have to start making choices in isolation and getting kind of anxious about that process.
One thing I would say is that my favorite saying in product design is from my friend Dave Merin, and he likes to say that the devil is in the default. And that couldn’t be more true. Whatever we determine is the default experience for our customers ends up being the thing that they basically stay with forever. And we just want to eliminate options at all costs, of course. So there’s a lot of work and time that needs to be spent on this first mile in order to make sure that we capitalize and accommodate people’s laziness. And by the way, it is the ultimate irony that the last mile of a team’s experience building the product is spent considering the first mile of a customer’s experience using the product. It’s kind of amazing that the only part of all of our products that every customer or every prospective customer will experience is the top of the funnel, is that first mile. And of course, from there it’s just severe drop off.
And yet, not until the end of our cycle building a product, in some cases over years, do we say, “Well, what should the default experience be? And who’s going to do the onboarding and the tour, and what should be the copy be and what should the splash page be, and what should that first day and third day and seven day email be? And what should we do when we start to see patterns of a customer exiting the first mile experience, and how do we save them? And what’s the graceful failure when we know that someone is struggling?” Those questions, if they’re asked, they’re asked at the end, and I would argue that we should flip the model. Let’s make sure that we get everyone at the top of the funnel through a very successful first mile experience, and then let’s really make sure that they find their quick path to unique value from the product and let’s not build something wonderful then lose everyone before they even get through the metaphorical door.
So we’re not only lazy in the first 15 seconds, we are also vain. We are vain in the sense that whatever we’re enduring or going through, this better make us look good and quickly. And so here, I bring up the topic of ego analytics, and this is one of my favorite debates to have with the builders of products, because everyone wants to think that their customers are above this. And we are, except not in the first mile, not in the first 15 seconds or the first number of use cases. We all want to know that we are loved and looking good, and there’s a lot of examples of this over the course of my career as an investor working with teams and companies, [inaudible 00:17:42] periscope, which for the sake of time I’ll move on from.
One other classic example we probably all see in our lives is when you open up Instagram and of course, instantly you see how many likes you have or hearts and how many new follows, which leads me to an observation that when you look at the graphs of a lot of these companies with any form of vanity feedback or ego analytics, what you find is that people are more active in the product after they have posted something because they want to see what other people thought of the thing that they did. And if you look at an engagement graph for a product like Instagram, you’ll oftentimes see that there’s this kind of level of engagement and then you post a new photo to your stream, and then suddenly you’re going in all the time to see what people are saying about the thing that you posted, and then it kind of levels off again.
And so the dirty little secret in social consumer products is that they are as much about seeing who saw your content as they are about sharing and seeing others’ content. And so how do we bring this back to the enterprise and making great, sticky, useful, and beloved products in the enterprise? Well, one of the things we should do is we need to merchandise our customers’ progress and success to our customer. Like they need to know that they are making progress. I did some research my second year of business school with a woman named Theresa Amobile, and she is really like a [inaudible 00:19:19] researcher on creativity and business at Harvard, and she did this big study of people [inaudible 00:19:25] in the enterprise of big companies.
And she was studying creativity, but her big kind of takeaway from her research was that progress begets progress. When people feel like they’re making progress, they’re likely to make more progress, and so it is a bit of a chicken and egg thing, which then leads to the role of the leader in a team to merchandise the progress that his or her people are making to keep them motivated and going, and of course, there’s a whole other genre of discussion around what that means for startups and building teams. But now we’re talking about what it means for product utilization. If you can make sure that your customers feel like they’re making progress, like they’re successful, they’re more likely to engage further in your product. They’re also more likely to feel good about themselves and therefore like your product, because if the product makes them feel good about themselves, that is a good thing.
And so we need to also, in the enterprise, design products that help people get, not only feel good about themselves, but get credit for their work. And this is one of my favorite examples, one team that I work with realized that if they could allow people in this enterprise dashboard of this pretty traditional enterprise, data-rich product for reporting, if they could allow their customers and enterprise users to print editable reports or export as Excel sheets, that was just like, people loved getting these editable reports so they could put their name at the top and basically essentially have this output for their bosses or to send around. And no one really, if you were just a receiver of this, no one knew that the tool that they used exported 80, 90% of this, and then they just put their own finishing personalization touches on it and then sent it around as their report to their team.
They looked so great. They looked great to their peers. They looked great to their bosses. And this little feature becomes really important. Now traditionally in an enterprise product team, it’s like oh, you know, let’s just have it export as a PDF and people can just get the same data standardized, and why spend time making it designed really well, making it editable, all this stuff? But that stuff matters, because you’re feeding into the vanity of the customer, especially in their early experience using your product and doing so drives utilization. Finally, in this first 15 seconds, we’re also a bit selfish. We need to benefit very quickly from this without spending any time. Yes, this might be great for my team or for my organization or whatever else, but this does also need to feed me really quickly, because I’ve got a lot going on and I have a lot of demands on me and family and everything else, and gosh, they’re going to make me use this new tool. It better serve me fast.
We are all skeptical of a long-term promise of a product, and so it’s not enough to get us through that first mile. We need something else to get us value now. And there’s a few examples I’ve seen over my career, one, Pinterest, I remember Ben Silbermann in the very early days, this was really about keeping your collection. And yes, the promise of a community and discovering other content was always part of the plan for him, but he was actually laser-focused on the collector at first and making sure that they had the very best way to manage their own collection in that selfish way of like, “I don’t think I want to discover other people’s stuff right now, but I want to better,” at the time it was Delicious and a few other apps online that people used to manage collections of their own stuff. And so he was really laser-focused at first on this immediate utility for collectors and not necessarily this value proposition of the onset come and discover your interests. Wow, that’s really cool, but it doesn’t really serve my immediate need right now.
So I think that the point of this, which is somewhat controversial, especially to all my enterprise leaders and friends listening to this talk, is that marketing and copy should be born with or in the product team because it’s part of the product experience.
A lot of new consumer and enterprise companies figure this out in their startup phase by necessity, like it’s all the same people, and so everything seems perfectly integrated and thoughtful, and the marketing copy can change on a dime to accommodate some of these insights we’re discussing here. But as we all know, in larger companies and with organizations set up for scale, it’s hard to get marketing and copy in line with some of these product priorities, and also to be able to iterate them to make sure that you’re appealing to the selfishness of your customer in real time and it changes of course over time. So that’s something for all of us to think about as we’re challenging the organizational model of some of these modern enterprise SaaS experiences.
Thanks again for tuning in. I’m Scott, @ScottBelsky on Twitter if you want to keep in touch. Thanks again.
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Announcer:
Welcome to the official SaaStr podcast. Today’s episode is sponsored by our partners at Guideline. Guideline 401k plans are built for startups. Their full set plans let you easily administer your 401k in one place and it’s fully integrated with payroll providers like Gusto, Zenefits, and Rippling to make operating your 401k even more seamless. See how easy opening a 401 can be at guideline.com/saastr.
Announcer:
In today’s SaaStr Insider episode, SaaStr CEO and founder, Jason Lemkin, and the co-founder and CEO of HireSweet, Robin Choy, share their experiences building and scaling their companies. Today’s SaaStr Insider originally aired on A-Players, a new podcast that teaches you how to hire, retain, and train top performers for your team. You can listen to A-Players on anchor.fm, Spotify, or where you listen to podcasts.
Robin Choy:
Talent wins games, but teamwork wins championships. Welcome to A-Players, the podcast that will tell you how to target, hire, retain, and train top performers for your team.
Jason Lemkin:
Everyone thinks they do 20%, but if you looked at their calendar, it’s like 8%, right? Really, the only way you can recruit, I’ll tell you the one simple KPI, which is you have to do six interviews a week.
Robin Choy:
I am Robin Choy, CEO at HireSweet and we are sourcing automation software that helps 900 tech companies hire the best talent. Add me and follow me now on LinkedIn if you want to keep an eye on us.
Robin Choy:
Cool. So today we’re welcoming Jason Lemkin. If you don’t know him already, Jason sold EcoSign, a company called EcoSign to Adobe for $400 million a few years ago. He’s now running SaaStr. He’s very famous here, but maybe, Jason, can you tell us more about SaaStr, exactly what it is?
Jason Lemkin:
Sure. SaaStr started off as a blog back in 2012 and some Quora answers about all the mistakes I made as a SaaS CEO, getting to that first million a month, that first 10 million a year or so. And now, it’s somehow grown to be the largest community in the world for SaaS and cloud, entrepreneurs and founders.
Robin Choy:
Yeah. And what I like about SaaStr as well is, so you have these events, you have a lot of podcasts, a lot of content, and you like to write a lot about hiring and scaling teams of salespeople.
Jason Lemkin:
Yes.
Robin Choy:
And I think that will probably be the main topics we’ll address today.
Jason Lemkin:
Great.
Robin Choy:
Do you have some generic advice that you want to start with?
Jason Lemkin:
I think, yeah, I think that for hiring a VP of sales, I think, more than anything else, we could talk about a lot of things. And the reason I talk so much about it, I did it early because not a lot of folks had really explored this.
Jason Lemkin:
There was a lot of content on product and engineering, but not a lot on this critical hire, but also because, as I came out of my fog of running my own startup and worked with a few dozen other SaaS startups, I learned that about 75% of SaaS startups hired the wrong first VP of sales, just like I did, and you ended up losing a year.
Jason Lemkin:
So the most important thing actually is probably not hiring Ms. Or Mr. Perfect, although we can chat about that. The most important thing is not screwing it up because you can’t lose a year just when it gets good, because we tend to hire that VP of sales just at a million, two million in ARR, a little less, a little more, just when everything’s starting to work and come together, and then boom, you hire the wrong person and all the wheels fall off.
Jason Lemkin:
So we can chat more about that. But I’ll tell you if I had to distill all the things we’ve talked about, all the folks we’ve interviewed, everything I’ve written and learned, it would be really one thing.
Jason Lemkin:
Understand that a VP of sales, half her or his job is hiring. It’s hiring. So it’s not enough if they were the top AE or sales exec at a hot startup. It’s not enough if they were a manager, but did not hire anyone great before.
Jason Lemkin:
No matter what you do, no matter how great their LinkedIn, no matter what cool company they worked at before, if they haven’t hired at least a couple, at least two or three great reps that hit and exceeded quota, they’re not your VP of sales, not even a stretch VP of sales.
Jason Lemkin:
So if nothing else, find out who they hired that did well. And go talk to those two AEs. See if it’s true, see if they really recruited those people, and then see if anyone will join her at your company. And if you hear that, you’re onto something. You might actually have your right candidate, but so many folks ignore that. They don’t do that extra step. They don’t see if they’ve really proven they can recruit even a tiny successful team, and then it just all falls apart.
Robin Choy:
Yeah. So they say A players hire A players. So that’s basically looking for people they already hired in past.
Jason Lemkin:
It’s not even that. For VP of sales, the real risk is an A player has hired no one. This is the risk. What happens, Robin, is folks get excited. Things are going great. And you’ve got two AEs, right, that you hired yourself and you’re a million, two million, the leads are finally coming in. You’ve got it, right?
Jason Lemkin:
Your product has issues and gaps. And you’re like, “I’m going to go hire Bob from wherever.” And Bob’s charismatic. He can spell ACV and ARR, but Bob himself has never recruited any great reps. And then, boom, right? It’s not just that A’s hire A’s, which is true. It’s that Bob has never hired a sales rep himself, and he doesn’t know how to do it. He doesn’t know where to source them, and he doesn’t know how to get them. And the clock’s ticking.
Jason Lemkin:
And what does Bob do? He hires a B or a C. Not because Bob might not be an A someday as a VP of sales, but because an A individual contributor doesn’t know how to hire a great sales reps, right, and you just hit a wall. And they hire worse and worse people. The quota attainment goes down and you see this downward spiral from someone that hasn’t hired good folks before.
Jason Lemkin:
So that’s the chicken and the egg in VP of sales hiring, but you can sacrifice for rough around the edges. You can sacrifice for didn’t work at that hot startup. You can sacrifice for industry, maybe even deal size, but they have to have hired a couple reps that did well.
Robin Choy:
Okay. And what’s your advice for that person who is a VP of sales today, but doesn’t know how to hire people. What’s your advice for them?
Jason Lemkin:
Quit.
Robin Choy:
Quit.
Jason Lemkin:
You’re not a VP of sales. You’ve made a tragic error. And what you should do is either go back and be an AE and learn, or–what you should do is quit and find a real VP of sales. Go be a director of sales under her and learn. You need those two years of hiring experience to be able to be a VP of sales. You jump too quickly and you will fail. So it’s better to raise your hand and say, “Hey, I overstretched. I’m going to carry a bag here. I’m going to be an individual contributor,” or go work for a VP of sales that knows how to do it and she’ll teach you.
Robin Choy:
Okay. Okay. And what I like also is that you mentioned there are different type of VP of sales, according to the size of the company. So we talked about the evangelist, the Mr. Make It Repeatable, Mr. Go Big, et cetera, et cetera. Can you tell us more about that? The different types of A players for different types of companies?
Jason Lemkin:
Yeah. That’s a fun post on Ms. Dashboards, Mr. Go Big. You can see that one on SaaStr. It’s right on the homepage at saastr.com because it’s one of the most popular ones, even though it’s years ago. I think we can talk about that, but let’s simplify it again because we’re on audio here.
Jason Lemkin:
I think the most important thing is you could only reach forward a stage. So let’s say you’re at 5 million ARR, for the sake of discussion. You don’t want to hire someone that’s never even experienced that, that’s too risky. You don’t want to hire someone that’s that’s never been at a company that’s gotten past one or 2 million if you’re at five, right? They just don’t know the playbook, right? They can’t know the playbook because they haven’t lived it, right?
Jason Lemkin:
Just like we talked about before, if you’ve never hired a great AE, you can’t possibly know the playbook to hire them. You think you do because you’ve worked in a team, but you don’t know the playbook. So you can use one stage forward’s playbook. So if you’re at five million ARR, look, you’re not going to be at 5 million next year. Right? I sure hope not.
Jason Lemkin:
So you could hire someone that has never worked anywhere less than, say, 15 million, 10 million ARR, right? That playbook is a little rough around the edges for five, but it’s okay. But once it’s two stages, once you’re at 5 million and you’ll hire someone that’s never been anywhere below 30 or 40 or 50 million ARR, they just don’t have the right playbook. It’s a way too expensive playbook.
Jason Lemkin:
It assumes the brand is much more developed. It assumes the infrastructure is much more developed, it assumes they can hire 20 people to start. And that playbook you just created with the playbook. So it’s got to be someone that at least has experience at where you’re going to be next year.
Robin Choy:
Okay. And you also like to say that there’s a difference between past traction, past product market fit and pre product market fit.
Jason Lemkin:
Yes.
Robin Choy:
And that the post product market fits, the CEO needs to spend 20% of their time recruiting. Is that right?
Jason Lemkin:
Always. From day zero to day one million.
Robin Choy:
Oh, okay. So it’s always even-
Jason Lemkin:
I remember, maybe about two and a half years ago, three years ago, I was in downtown Redwood City where one of Box’s headquarters is, and outside of Five Guys burgers, Aaron Levie was there, CEO of Box, with one of his co-founders. And I said, “Hey, Aaron, how are you doing?” It’s always nice that he’ll say hi to me.
Jason Lemkin:
And I said, “What’s going on?” We had a nice chat, I was with my son. I’m like, “What do you need? Anything I can do to help? Put you on stage or promote Box?” He’s like, “Do you know any great VPs of engineering?”
Jason Lemkin:
So he’s at 500 million ARR back then still spending all of his time recruiting just like when we first met, right? It never goes away. It’s just who you recruit changes. So it’s always 20%, which is important. Let me dive in on that on sales because it’s so important, and then come back to your question or ask the version you want.
Jason Lemkin:
One of the biggest mistakes that founders make with sales is they either hire a couple AEs or they hire the VP of sales and they say, “I don’t want to be in sales anymore.” Right? “I’m tired. I don’t like sales. Forget recruiting. I was spending 20, 30% of my time in sales, and now I’m going to get back to product or the things I love.”
Jason Lemkin:
You never get that 20% back, time in recruiting, and you never get that 20% time minimum that you have to spend with customers and prospects. You’re going to have to do that for your entire career.
Robin Choy:
Okay. And so, what is it exactly? It’s about sourcing, same as Aaron and asking people around him, using reference. Is it-
Jason Lemkin:
For recruiting?
Robin Choy:
Yeah. This 20%, what is it?
Jason Lemkin:
Well, obviously it changes, right? Later, you’ll have in-house recruiters and a team, and later you’ll have VPs, and SVPs and EVPs, and they will be sourcing candidates and your job will become a closer, right? Help close them. Right?
Jason Lemkin:
And then, your job at the top will be only, as you get bigger, if you’re Aaron or whomever, your job mainly is to recruit your senior team, right? Which it always is for any executive, whether you’re a VP of sales, director, SVP, CEO, ultimately, when you’re tiny, you have to recruit everybody, right? If you’re the CEO, you have to recruit the office manager, if you have an office anymore after COVID, you have to recruit everybody.
Jason Lemkin:
But once you have 20, 30, 40 people, once you have any layer of management, the manager’s job should be to hire the people that report to them, right? That’s why the VP of sales fails if they have no experience, and your job is to constantly be hiring management.
Jason Lemkin:
But how long is your average VP going to last? Two to three years, right? Four years. And you’re going to have to hire a new one, and then you’re going to need a GM of EMEA, and then you’re going to need this layer and these people. So you’ll always be spending your time. It’s just usually focused on that one layer below you.
Robin Choy:
And how do founders, CEOs, convince top performers to join their team when they’re young and when they can’t fight with a big tech, for instance? Any advice on that, about closing?
Jason Lemkin:
Well, how do founders do it, or how do VPs that work for them do it? How did the founders do it?
Robin Choy:
Maybe both.
Jason Lemkin:
Look, the reality is, in the early stages, there’s just a couple of thoughts. First of all, bear in mind, there are startup people out there. They are people like you and me, there are people who that’s where we’re happy. We’re happy in this small environment. We’re okay. We’ll trade off the fact there’s no great onboarding or training for the fact that we can run.
Jason Lemkin:
Startup people are folks that want to run. They want to run. They don’t want to have obstacles put in their way and they want to do, at least in some area, they want to do great things. And they get that that means they may have no one doing code review. They get that may mean there’s no one in sales ops and that they have to follow up on the accounting themselves if they’re in sales, or whatever function. They get that.
Jason Lemkin:
But they want to be those people. So first of all, you’re not going to recruit non-startup people in the early days anyway, right, unless you raise 200 million in your series seed round. So just bear that in mind, you need startup people in their heart and soul want to do it.
Jason Lemkin:
How do you recruit them? I think it’s interesting. So let’s step back. Let me talk about the mistake founders make I see again and again, is that they think that as long as they can talk to someone, they can close them. They think, “I’m so charismatic. I’m so driven that all I have to do is get in the room with Robin and I can convince him or her to join my company.”
Jason Lemkin:
But there’s too many startups today, right? There’s a thousand companies, startups born every month. There’s hundreds in every YC batch today. So it’s not enough to get in the room with a candidate, but there are more and more startup people, there are. And I think the most important thing, so what can you do? I think the most important thing you can do is to make your startup hot in some way. It helps. It’s not everything, but PR is always important for recruiting.
Jason Lemkin:
Why do half of the public company SaaS CEOs come onstage to SaaStr events? Why do you think they’re onstage? Why do you think, in many cases they fly out to come to SaaStr Annual? Do you think it’s because sitting up on stage is so great once you’ve done it 180 times? Do you think it’s to get customers? It’s not even to get customers.
Jason Lemkin:
If you’re MongoDB or Slack, why has Stewart Butterfield come to SaaStr three times? Is it to get customers for Slack? No, everyone uses Slack, right? It’s for recruiting. It’s for recruiting partners, it’s for recruiting allies, and it’s for recruiting employees. And I can’t tell you, on our podcast, our podcast gets about 130,000 downloads a month, I can’t tell you how many folks say that, as a CEO, being on that podcast helped them find a great candidate.
Jason Lemkin:
So do PR. Get on TechCrunch, and it doesn’t have to be perfect because it’s just one candidate, right? Make your blog awesome. Beyond a secondary or tertiary PR, do any podcast in the world that you can. Just get the word out that you might be hot.
Jason Lemkin:
And then, the beauty is, startup people, they’ll take a risk. They’ll take a risk that you only have 10 customers. They’ll take a risk that you are pre-product market fit if they feel that you could be hot, because that’s what us startup people want to do, right? We want to be part of a rocket ship. And we’re okay that, if we’re early stage folks, we’re okay that it’s not a rocket ship yet. As long as we see signs it could be, and even micro PR is so important there.
Robin Choy:
What is micro PR?
Jason Lemkin:
It’s things like that not a million people are going to see, but it’s okay if 10 people see it. It’s okay if you do a PR to a niche in your industry, okay, and only 10 prospects see it, but one of them becomes a customer, wasn’t it worth it? Of course it was.
Jason Lemkin:
And it’s true for employees too. Employees are so expensive and so important, right? So yes, everyone wants to be on the number one event, number one blog, number one podcast, TV and everything. But you don’t need a million great employees to see your PR. You need that one person that you want to hire to say, “Wow, that’s a startup I want to join.”
Robin Choy:
And do you use that content to close people? So that means you’ll reach out to them and showcase the content. Or do you use that to generate inbound and people coming to you?
Jason Lemkin:
I think it does all of those things, but I think that, just like any type of lead generation, whether it’s human lead generation or customer lead generation, you have to see content more as air cover, otherwise you will expect too much of it.
Jason Lemkin:
If you expect that webinar to generate a million dollars of revenue, it might not. If you expect that podcast, that promotion, that blog post. It may well do that, and that’s great. But Google is your ally, right? If someone finds something through SEO, through search, if it reinforces.
Jason Lemkin:
You know what? How cool is HireSweet? Is this a company I’d like to join? And then, boom, I see a second touch, right? That reinforces this potential decision to buy or join. So think of, especially when we’re early, we want everything to be demand gen and lead gen, and I’ve written a lot about that. But as you scale, you’re going to find that air cover is just important because people need multiple touches to decide if they want to take risk, right? Risk with a vendor and a hiring decision risk as well.
Robin Choy:
Okay. Okay. So this is basically doing as much noise as possible and getting your company out there, and then [crosstalk 00:17:15].
Jason Lemkin:
It’s not stupid noise. It needs to be micro PR. You need to know where your employees or customers are. It’s better to do a podcast that only has a hundred downloads if they’re your customers than to do one that has great reach that has no value, right? Micro PR isn’t spray and pray, it’s not be everywhere. It’s be where matters. Be present. It’s be present as much as you can, given that no one’s ever heard of you.
Robin Choy:
And if we get back to building teams of sales, any specific podcasts you’d recommend, any specific blog or places where there are a few people, but exactly in this target?
Jason Lemkin:
You mean to find a VP of sales or…?
Robin Choy:
Yeah, today, you’re hiring a VP of sales or even hiring AEs, or-
Jason Lemkin:
The way to find a VP of sales for most folks today, one of the things that’s happened over the last couple of years is that there are more communities of VPs of sales than there were when I started writing SaaStr. There are more true communities, online communities, and there’s more informal communities.
Jason Lemkin:
And so, my best advice in general is meet as many VPs of sales as you possibly can. It doesn’t matter if you’re going to recruit them, right? First of all, you have to learn. If you haven’t hired a VP of anything before, you need the archetype, right? You need the bar. So you need to meet four or five and fall in love with a candidate. It doesn’t matter if you can hire her. To say, “Look, Debra is the best. I’ve never hired a VP of sales before, now I’ve met five, but boy, Debra was better than all the rest.” Right?
Jason Lemkin:
So now you know. Look, Debra’s not going to join me, she’s pretty happy at wherever, at whatever hot startup, at UI Path. But at least I know. At least I know when I meet Bob, or James, or Evelyn, she has to be as good or better than Debra, at least adjusted for experience, or I’m not going to make the hire.
Jason Lemkin:
So meet as many candidates for the role, and see if you can make one or two an advisor, give them a few shares. You’ll be surprised, if your mission is compelling, that folks that are better than you think will be advisors. Not everyone. I’m too busy. Don’t ask me to be your advisor. I can’t do it. I’m overloaded.
Jason Lemkin:
But I’ll tell you, when I started SaaStr, when I started investing, I had bandwidth and I was an advisor to a whole bunch of great companies, together which are worth billions today. So people have time, then they don’t have time.
Jason Lemkin:
So find those advisors and mentors, in this case in sales, and then ask all of them, be tenacious, say, “Hey, do you know anyone that could be great for my startup?” And if that VP of sales believes in you, whether or not you can hire her, they will find you other candidates. The great ones know each other.
Robin Choy:
Okay. So you start by doing PR and micro PR, then you start to meet with people, talk to them.
Jason Lemkin:
Meet with every great VP you can in any functional area. Take all the meetings, ask your advisors, ask your mentors, ask your angels, ask everyone, “Can you introduce me to a great VP?”
Jason Lemkin:
People don’t do enough of this, don’t do enough of it. It doesn’t matter if you can hire him or her. You have to find the bar. You have to find the archetype, the lines, to know someone’s great. Right? You need all the great VPs, and if you haven’t hired one before, you don’t know what a great one is, do you?
Robin Choy:
Yeah, obviously.
Jason Lemkin:
So you’ll hire a bad one because you don’t know what a great one is. You’ll hire someone that’s smiles great, and dresses well, and talks the talk, and is very poised, and worked at Dropbox. And that’s all great, but it’s probably not the right thing for your company.
Robin Choy:
Okay. And then how would you build that into the hiring process itself, the assessment? How do you know that you know what a great VP of sales looks like? How would you assess them during the interview?
Jason Lemkin:
Well, look, here’s the thing. Someday you’ll know, right? Someday you’ll be done more than certainly I have, and you’ll know. You’ll know. And you’ll actually know for almost every role after about 10 million ARR because you’ve made every mistake three or four times by the time you get to 10 million. But you won’t know until then.
Jason Lemkin:
And so, what’s the answer? It’s funny. I remember in the early days, I haven’t been able to write code in a long time and you say, “How do you know if you’ve hired a great CTO, right? How do you know? How do you know?” Well, it’s actually pretty easy. Once you know, you know, but until then, you just find the smartest person in the world in a functional area and you just ask their opinion.
Jason Lemkin:
So look, a VP of sales, his job is in sales, isn’t it? They can probably snow you a bit, if you haven’t done it before. They can probably convince you they’re wonderful. And many mediocre VPs of sales are quite charming, they’re quite poised. But find one great either VP of sales or, the beauty of the VP of sales is just find a CEO that you know that’s done it before. Right?
Jason Lemkin:
And ask that CEO at 10 million, or 15 million, or 20 million, “Could you do me one favor? Could you do me one favor? Can you interview Aline for me?” And if he says, “Wow, she’s one of the best up and coming sales leaders I’ve talked to in a while,” hire her. Just hire her. This is the magic thing. Right?
Jason Lemkin:
And I’m working with a startup right now. They’re just crossing 10 million. They’re on fire, but they’ve never hired a real VP of marketing/CMO type. And I’ve been making a lot of intros to the CEO because he’s great. He’s an absorber of information. Again, they’re coming up on 10 million. They’re growing 20% a month. It’s insane.
Jason Lemkin:
And then, I made about 10 intros, and then the other day I introduced him to a CEO of a company that exited for about $500 million that I love this CEO. And he’s like, “This was the best intro you made.” Talking to the other VPs of marketing and CMOs is great, but talking to the CEO who has hired so many and made so many mistakes, he’s like, “Now I know. Now I know what I need.” So get a VP of sales to interview the VP of sales for you, or at least get a CEO that’s done that next stage. They’ll know. And they will see the things you’re missing.
Jason Lemkin:
Because you’ll get desperate. You’ll get tired. And you will want to gloss over things that are going to lead to mediocre outcomes. That’s the problem. We gloss over. “Oh wow. He was so great. He worked at Twilio.” And Twilio is awesome, but Twilio is at two something billion ARR today. Jeff Lawson’s really one of my favorite founders, but Twilio today is not a startup.
Jason Lemkin:
But you might fall in love with him because the brand, the way they talk, the fact that you love Twilio, You could fall in love with this and talk yourself into a hire that is not appropriate for your startup. But this other VP of sales or the CEO that’s done your stage, they’ll know.
Robin Choy:
And what you say too, is that anyway, if your VP of sales isn’t going to work out, then you’ll know pretty quickly.
Jason Lemkin:
In one sales cycle. In one sales cycle.
Robin Choy:
And what do you do then?
Jason Lemkin:
Well, you need to make plans. It’s not going to work. The truth is, you’ll know in 30 days, if you really listen and watch, but you’ll certainly know in a sales cycle, because the thing is, and when I wrote this iconic post years ago, if your VP of sales, you’ll know it if they work out in one sales cycle and every VP of sales I know got mad.
Jason Lemkin:
They’re like, “No, we need more time. You’re a jerk, Jason.” And then, a little later, they’re like, “You’re right. Of course you’re right.” And why? When I wrote that, I didn’t say that your VP of sales has to quintuple your sales in one sales cycle, right? They don’t have to radically change things, but they have to tilt the curve, because if a VP of sales can’t bring in one good AE to sell better, if a VP of sales can’t create more urgency, if a VP of sales can’t drive up the deal size, right?
Jason Lemkin:
If the VP of sales isn’t a better closer than you are, as a CEO, what do you know about closing? We’re good middlers as CEOs. If they can’t do anything in a sales cycle, just with the leads that are already in flight, right, if they just can’t bring them in faster, they don’t even have to do anything else but bring them in faster, they’ll never do it. They’ll just never do it.
Jason Lemkin:
So time will not cure this problem. So you have to decide, “Should I fire this person today?” You’re definitely better off without her, if there’s no positive improvement, but what most of us do is we stick with this person for longer because we don’t want to do, and then things just get worse because they hire, they don’t make it, they’re not succeeding in a sales cycle, so the start bringing in more and more mediocre people and they bring your batting average down.
Jason Lemkin:
The converse is, I just wrote this post on SaaStr recently. I wrote that one about one sales cycle years ago. I just wrote one very recently where I laid out the math in a Google sheet about actually what’s…
Jason Lemkin:
So that’s a mistake many of you are going to make. You’re going to want to give them more time when there’s no improvement. Now, the improvement doesn’t have to be vast, but there has to be improvement in one sales cycle.
Jason Lemkin:
But then, the interesting question is what if you see improvement, but it’s not magic, right? What if you were growing at a hundred percent year-over-year before, you know you could do much more and you’re doing 125 when you hire this VP of sales, right?
Jason Lemkin:
That’s better, isn’t it? And SaaS compounds. So 125 is a lot better than a hundred, but it’s not epic, is it? What do you do with that hire? And what I’ve learned over the years, watching several dozen SaaS startups now, is many CEOs, actually, you should fire the person that doesn’t do anything in a sales cycle because they’re going to bring your batting average down.
Jason Lemkin:
The one that does better but not what it could be, it actually turns out it’s super risky to not continue to back her. It’s super risky because, are you going to find someone better next week? How long is it going to take? This is a tough hire. So I think, as counterintuitive as it is, I think I’ve defaulted, is if after a sales cycle things are better with your VP of sales, you’ve got to try to backfill her and back them as long as you can, even if you know someone else, in theory, could do better, they’ve inflected the curve and you have to ride that bet out.
Robin Choy:
Okay. Okay. Interesting. So you’ll know after one sales cycle if the person doesn’t work out, but you don’t know if she does work out [crosstalk 00:27:27].
Jason Lemkin:
No, no, no. No, no. They will be in one of three buckets after one sales cycle. Either nothing will get better, in which case it never will. It just never will. Or you’ll see jaw-dropping improvement. Right? That’s at the other end, you’re like, “Whoa.” Right? “Oh my God. Oh, we did have all these leads. It’s just no one was following up.” So magic happens. Right?
Jason Lemkin:
But then, there’s a third category, which is mediocre. Better, but not great. Right? And that one, counter-intuitively, I think you need to stick with until you’re sure you have a better resource in plan because doing better than before with compounding revenue and sales is so important. It may not be the same conclusion for engineering, for example, but it is in sales because just doing better than before is still a B+ for VP of sales, doing better than before. Most don’t. Most do worse than before you hired them.
Robin Choy:
Okay. Okay, cool. So we’re getting near the end of the podcast, so a few quick questions now. What’s the best advice that you wish you had been given as a startup founder?
Jason Lemkin:
Wow. The number one best bit of advice?
Robin Choy:
About hiring sales and building sales team, of course.
Jason Lemkin:
Well, I guess the advice is there’s no magician. There’s no magician. You have to find, you have to get, two or more AEs, sales reps, hitting quota, doing well, and then you bring in someone to help you do better. And that’s what my true VP of sales did. But the first one I hired, I was expecting a magician. Everyone expects a magician.
Jason Lemkin:
Sales professionals, VPs of sales are not magicians. They’re incredible scholars of the process and science of sales, but they can’t create product market fit, right? They can build on it. So do not expect a sales magician to bail you out of a tough situation.
Jason Lemkin:
As a CEO, you have to bail yourself out of a tough sales situation. Then, when it’s half decent, at least half decent, then you’re ready for the VP of sales. So that’s obvious now, but I don’t think any of us really appreciated it way back when.
Robin Choy:
Yeah. And that’s also the thing that you have to experiment for yourself, I guess.
Jason Lemkin:
True.
Robin Choy:
So you say that CEOs may spend 20% of their time hiring. What’s the part that you hate the most about hiring?
Jason Lemkin:
Well, boy, I think deep down, anyone that says they love recruiting is lying. That’s why you need a quota, right? Because maybe the most important thing, I’ll answer your question, but maybe the most important thing I’ll tell you on the 20% is, everybody lies.
Jason Lemkin:
Everyone thinks they do 20%, but if you looked at their calendar, it’s like 8%, right? Really, the only way you can recruit, I’ll tell you the one simple KPI, which is you have to do six interviews a week. You know why six is so important? Because it’s more than one a day.
Jason Lemkin:
People say they do 20% of the time recruiting, then you look at their calendar, you know how many interviews they did this week? Two or three. It’s not enough, is it? It’s not really 20%, is it? But if you force yourself to report each week, how many interviews did I do? And if it’s less than six, you get an F. That will add up to 20%.
Jason Lemkin:
Even if those interviews are 20 minutes long, trust me, with the prep, the review, right, the outreach. But you have to have a KPI on these things. And six interviews has to be the minimum per week. And you’ll find that for CEOs it can be hard to spend half your time, but you’ll find the best VPs of sales and VP of engineering generally spend half their time recruiting, and that’s a lot more than six meetings, isn’t it?
Jason Lemkin:
It’s often 20. It’s often 20 a week that VPs of sales and VPs of engineering will do in rapidly scaling companies, is 20 interviews a week. But if it’s not six, it ain’t going to be the 20%.
Jason Lemkin:
And what’s the part that I like the least? It’s the same. I think the part I like the least for interviewing, it’s the same part I like the least in investing. It’s meeting with any potential candidate that we wouldn’t hire.
Jason Lemkin:
So figuring out a way to have a wide enough funnel to capture everyone, to capture a very diverse and exciting pool of candidates, but every interview you take where there’s a 0% chance you’re going to hire them, 0%, those are mental cycles, creative cycles, you never get back. So those are the ones I constantly struggle both for interviewing and for investing that I try to find a way to avoid, is the 0%.
Robin Choy:
Okay. Cool. I like the last part about the targets.
Jason Lemkin:
Yeah. Think about it. You’ve got to do it, or else it’s not 20%.
Robin Choy:
That really compounds.
Jason Lemkin:
Yeah.
Robin Choy:
That’s 300 per year you get at. Okay, cool. Thanks a lot. Jason, it was great. A lot of very actionable feedback. Thanks a lot. Any last words?
Jason Lemkin:
No, this was terrific. And I guess the last word I’ll just do is, for recruiting, that employee is out there. Don’t give up. I know a lot of us feel like we’ll never find that VP of marketing or that VP of sales. Just hire someone great. A great engineer.
Jason Lemkin:
If you know you need a VP of sales but you can’t find her, hire a VP of marketing, right? Just keep hiring someone great because every great hire is accretive in SaaS, in recurring revenue, and as terrible as it takes, if it takes you a year to find your VP of sales, well, you’re doing this for 10 or 20 years, right? This is SaaS. This is cloud.
Jason Lemkin:
So beat yourself up, but don’t give up because you will find that VP, it just may take you six to 12 months more than you’d hoped, but don’t give up.
Robin Choy:
Okay. Thanks a lot for the last words, Jason. Thanks.
Jason Lemkin:
Yup. Thanks for having me.
Robin Choy:
Thanks for listening to that podcast until the end. If you’re still with us, it’s probably that you enjoyed A-Players. A-Players is brought to you by myself and HireSweet. We’re building a sourcing automation software, and we already help 900 tech companies hire the best talent. To know more about us, go to www.hiresweet.com.
Announcer:
Today’s episode is sponsored by our partners at Guideline. Guideline makes 401k plans that are affordable and scalable. They handle plan management, investments, and more all for one flat fee, helping startups boost savings, retain talent, and grow their business. See how affordable a 401 can be at guideline.com/saastr.
