All Your VPs Really Need to Do is Tilt the Curve


This post is by Jason Lemkin from SaaStr

We’ve written a lot on SaaStr on how to increase the odds your first management team is a success.  How to hire a great VP of Sales (tons on that here).  What a great VP of sales really does.  What a great VP of marketing really does (tons on that here).  When to hire her (more here).  How to manage customer success.  How to hire a great VP of product.  All good stuff.

But as I now work with 24+ scaling SaaS companies, all of whom, all of us, who struggle to build a great management team … I’ve learned to distill it all down to one thing.

Yes, VPs are ultimately about building a team.  About recruiting and helping you scale.  About letting you move from micromanager to manager.  About this and that.

And some will be stretch VPs, and some seasoned VPs, and some with start-up experience, and some without, and some generalists, and some specialists.

Sorry to ramble.  But it’s all so much to process.

Let’s distill it to this:

  • You hire a VP to Own a Functional Area.  Sales, Marketing, Product, Engineering, Success, Support.  So you don’t have to.
  • And Their Job is This:  To Inflect The Curve.  To materially improve the metrics of her functional area.  And it needs to happen in one sales cycle, or one product cycle, or one quarter, etc.  Not necessarily tripling sales, or leaders — but more.  More in one cycle. That’s inflecting the curve you already have.

If you hire a VP, and they “owns” sales, but sales do not increase.  That’s a failure.  Even if it feels like you now don’t have to manage as much.

So what’s “inflect the curve”?

  • For sales, it’s increasing revenue growth in one sales cycle — or less.  Because if your new VP of Sales can’t do a better job extracting more dollars from the same leads as you did — what’s the point?  It will never work out.  She has to be at least >a little< better than you, especially if she spends 100% of her time here.  Because you don’t and didn’t.
  • For marketing, it’s increasing leads / opportunities / pipeline in one sales cycle.  Yes, some demand gen efforts take time, no doubt.  But when your VPM joins, like the VPS, she’ll have some raw materials to work with.  A broken Hubspot implementation.  No one using Intercom.  Zero content marketing.  No structured communication with the prospects you do have, no matter how few.  Maybe she can’t directly impact revenue in one sales cycle.  But she sure can increase pipeline, folks.
  • For customer success, it’s at least improving NPS and CSAT in one quarter.  It may take longer than 3 months to see your VP of CS impact upsells and net negative churn (although even there, you should see results in one quarter).  But one thing’s for sure.  If you measure NPS and CSAT on Day 1 of your VP of CS.  And it’s not improved in 90 days.  That’s a total failure.
  • For product and engineering, it’s improved throughput in one quarter.  One release.  Not more.  You have 10 engineers with no real leaders, that sort of self-manage?  How teal.   Hooray.  If a true leader can’t direct those 10 engineers to more efficiently produce product in the next full release.  They never will.

Screen Shot 2016-07-27 at 10.16.19 AM

Now, notice what we didn’t say.  How much.  How big the tilt should be in one sales cycle, one release, one quarter.

I don’t know how much your new VPS can increase Revenue Per Lead in one sales cycle.  How much your VP of CS can improve NPS in one quarter.

I don’t know because the amount of improvement is really situationally dependent.

So what’s actionable here?

  • First, fire that VP, or demote her, or top her if you don’t see the curve titled in one quarter.  Because they never will.  I don’t care how hard they are trying.  How little they had when they came in.  You’re not asking for the impossible.  You’re asking for improvement.  That’s it.  In fact, the worse it all was when they came in … the more screwed up it was … the easier it is for a pro to tilt the curve.  So easy.  Because they know what to do.  Add one great rep.  Fire the one that is wasting leads.  Ask for money faster.  Do more drip marketing.  Whatever it is, the worse things are in a given functional area, the easier they are to improve.
  • Second, learn from that first quarter, that first sales cycle.  Because every VP will be weak somewhere.  The flipside is don’t expect miracles from your VPs.  This is Rookie Error #1.  Expect the curve to be tilted.  And that VP of Sales that is great at inside sales?  They may be mediocre-to-bad at field sales.  That doesn’t mean fire them, or be disappointed, or even — judge them.  Don’t do that.  If they can tilt the curve, then leave them be on what they do best.  And go help backfill where they are weak.  Help there.
  • Third, don’t have insane goals for your VPs, usually.  Trace a path from the tilt they add to the curve.  Even if you have them for yourself.  It’s hard enough to get a true VP.  Someone that can not just turn the wheels, and build the dashboards.  But one that can truly tilt the curve.  If you have one, figure out how well they can possibly do.  And challenge them to do 90% of that as their base plan.  But don’t give them an insane plan.

Expect the impossible from yourself, your co-founders, and the one or two VPs who basically act at that level.  But for the rest.  Maybe … once you already have a little bit of an engine going … then expect a material impact coupled with ownership.  That’s enough.  That lets you focus on the other areas of the company more.

And when the time comes when your VP can’t inflect the curve anymore.  When they are out of ideas, when they’ve taken the ball as far as they can.  Then you know it’s time to find the next level VP that can.

(note: an updated SaaStr Classic post)

The post All Your VPs Really Need to Do is Tilt the Curve appeared first on SaaStr.

What Kind of Startup Founder Are You?


This post is by Steven Gray from HBR.org

Research shows there’s more than one way to be a great leader.

What Kind of Startup Founder Are You?


This post is by Steven Gray from HBR.org

Research shows there’s more than one way to be a great leader.

The Dark and Light Sides of Founder Mental Health


This post is by David Poole from Georgian

This blog post is based on a presentation Jessica Carson, Author of Wired This Way and Director of Innovation at the American Psychological Association, gave at our annual Scaletech Conference. Scaletech gathers the brightest minds in product and tech to share hard-won secrets on startup growth, product direction and business strategy. Thank you to BMO Innovation Banking Group for being the presenting presenter of Scaletech. For more information on the Scaletech Conference visit www.scaletechconf.com.

The Dark and Light Sides of Founder Mental Health

We see founders and management teams facing brutally-long workweeks, constant pressure to manage a company while raising funding and the stress of always making decisions. Add to this the uncertainty COVID-19 has brought, and perhaps unsurprisingly, 72% of entrepreneurs self-report mental health concerns.

At Scaletech Conference 2020, we delved deeper into founder mental health with Jessica Carson  (site, LinkedIn), author of Wired This Way and Director of Innovation at the American Psychological Association.

The Light and Dark Sides of Entrepreneurs

Given her background in psychology and neuroscience, Jessica was naturally curious about the unique wiring of entrepreneurs when she first began working in startups and venture capital. “I started to pick up on patterns and trends in their thinking, emoting, relating and interacting.”

“What very quickly became evident to me was the extraordinary, bright light qualities these creators were wired with,” Jessica related. “I was amazed by the extraordinary, almost extreme ambition and conscientiousness and risk tolerance and other amazing qualities. But on the flip side of that, I quickly became aware of a host of rather dark qualities, things like mental health issues, emotional dysregulation, stress-related illness and the generalized naughtiness that we see in the creative and entrepreneurial ecosystem.”

According to psychiatrist Michael Freeman, those 72% of entrepreneurs tend to struggle most commonly with depression, attention deficit hyperactivity disorder (ADHD), addiction and bipolar disorder. “When you’re first coming across this research,” recalled Jessica, “you think, ‘Is there something in the water? Is it just this brutal work mentality? Is it the hustle culture?’ Certainly, these cultural, social and environmental aspects impact the genesis of mental illness. But as I dove a little deeper into the research, I started to learn a more intriguing reason why these numbers are so inflated.”

“When we look at evolutionary psychology,” Jessica reported, “things like depression or addiction wouldn’t survive in our genetic lineage if they didn’t confer some sort of adaptive advantage. Creators and entrepreneurs have to be insanely productive, ambitious, energetic and risk tolerant, and at the same time wildly creative, requiring a contemplative, reflective, philosophical and intuitive personality. These are two extreme personalities that entrepreneurs have to simultaneously embody.”

“And so,” Jessica believes, “it raises the question: is entrepreneurship making people “sick,” or are individuals who are naturally predisposed to extreme wiring more likely to self-select into entrepreneurial and creative work?

The Positives of Mental Illness?

The following is not to say mental illness is completely adaptive or fundamentally maladaptive. Instead,  what follows is a proposition that mental illness has two sides — a light and a dark side. Indeed, the tendencies of individuals with particular mental illnesses and other emotional and physical sensitivities may actually drive founders and entrepreneurs to be as high functioning as they are. 

“When we look at someone who’s wired for depression,” explained Jessica, “we see someone who’s able to slow down their energy, withdraw from the world, ruminate on a problem until they figure out a solution, then reenter the world with this new insight or—in the case of tech entrepreneurs—perhaps an app they’ve coded.”

“When we look at ADHD,” Jessica continued, “we see someone who’s wired for curiosity, openness, enthusiasm and sociability. Counterintuitively, individuals with ADHD have the ability to hyperfocus on subjects that they’re particularly engaged in.”

“When we look at addiction,” added Jessica, “we see someone who’s wired for novelty seeking and sensation seeking, risk tolerance and passion. All of those amazing things that, if an entrepreneur didn’t have them, they likely wouldn’t be able to tolerate the uncertainty and ambiguity of entrepreneurship.”

“Perhaps most interestingly, when we look at bipolar,” Jessica observed, “it is 11 times higher in entrepreneurs than controls. Bipolar is manic periods—periods of high energy, enthusiasm, risk tolerance, sociability, ideation and creativity—combined with depression, which is perhaps where focus or reflection happens. When you combine those together, you arguably have the ideal entrepreneur.”

“Stress-related illness isn’t in and of itself a mental illness,” explained Jessica. “But even stress-related illness has this incredible light side. Research has shown that the individuals who are most prone to stress-related illness are those with high IQs. They have these nervous systems that are incredibly perceptive and receptive, and they’re picking up on every pattern and noticing every trend and connecting every dot.”

It can be useful to think of these light and dark tendencies in terms of archetypes, a foundational component of Jessica’s work. “The ten most common  characteristics we see in creators, like openness to experience and intuition and achievement motivation, confer this suite of incredibly adaptive qualities that land us on 30 under 30 lists and TEDx stages and all those great things.But there’s this through line connecting the light and the dark.”

The diagram shows ten characteristics common in founders with the light and dark side of each. 

Openness to experience - light side: curious, dark side: distracted
Intuition - light side: perceptive, dark side: overwhelmed
Achievement Motivation - light side: ambitious, dark side: exhausted
Disagreeability - light side: innovative, dark side: hypercritical
Ego - light side: confident, dark side: arrogant
Passion - light side: devoted, dark side: obsessed
Conscientiousness - light side: masterful, dark side: perfectionist
Charisma - light side: charming, dark side: inauthentic
Optimism - light side: courageous, dark side: delusional
Self-actualizing tendencies - light side: impactful, dark side: depressive.

This image shows the light and dark sides of mental illnesses: 

Depression - dark side: unproductive rumination, light side: deep, analytical thinking
ADHD - dark side: impulsivity and distraction, light side: curiosity and hyper focus
Addiction - dark side: distress and disease, light side: novelty, sensation & risk
Bipolar - dark side: unstable mood & energy, light side productivity & creativity
Burnout - dark side: obsessive passion, light side: productive passion 
Stress-related illness - dark side: hyper-vigilance and overwhelm, light side: intelligence and awareness
Existential distress - dark side: crisis of meaning and identity, light side: self-actualizing tendencies.

Careful Casting Out Your Demons

“Be careful, lest in casting out your demon you exorcise the best thing in you.”

– Friedrich Nietzsche

“I became so enthralled by this notion that these individuals are not creating despite their wiring, but because of it,” revealed Jessica. “It’s not so much a question of fixing ourselves as it is being able to understand ourselves to most productively and adaptively harness our unique wiring as creators.”

“So often, our culture of talking about mental health and wellbeing is focused around curing or fixing, without this nod to the idea that if we were to cure ourselves of our demons, so to speak, we may be simultaneously cutting ourselves off from the source of our creative and productive potential,” Jessica reasoned. “I prefer to talk about integrating, being able to hold all of our multitudes at once. Integration techniques help us balance and harmonize our light and our dark without necessarily getting rid of anything.”

“These integration techniques are going to be unique for each individual,” emphasized Jessica. “What works for me may not work for you. I can tell you to meditate for two hours a day, but if that doesn’t feel right to you, then that’s not going to help you very much.”

The Charming Creator

One archetype, the Charming Creator, “is somebody who is great at sales. They’re gregarious,” Jessica explained. “They’re going to be able to switch masks effortlessly and be socially adept and intuitive. The bright side of this is obvious for entrepreneurs.”

“The dark side of this,” Jessica continued, “is inauthenticity and emotional suppression, that fake-it-until-you-make-it mentality which can actually be really harmful.”

“For the Charming Creator,” advised Jessica, “integration practices would be things that really cultivate and encourage a sense of vulnerability and authenticity and transparency, really rooting in your truth as a creator.”

According to Jessica, these principles not only apply to the individual, but also to their creation: the company.

Image shows the Ten Creator Archetypes from the book Wired This Way by Jessica Carson: 

The Curious Creator - Openness to Experience
The Sensitive Creator - Intuition
The Ambitious Creator - Achievement Orientation 
The Disruptive Creator - Disagreeability 
The Empowered Creator - Ego 
The Fiery Creator - Passion 
The Orderly Creator - Conscientiousness 
The Charming Creator - Charisma
The Courageous Creator - Optimism
The Existential Creator - self-actualization

Reducing Stigma and Moving Forward

“What most entrepreneurs run up against,” Jessica noted, “is not a clinical mental illness, more of emotional dysregulation. You can struggle emotionally without necessarily having a mental health diagnosis. It’s important not to make your team or your employees feel excluded from these conversations just because they’ve never been formally diagnosed.”

“It’s really not even a conversation about stigma or reducing the stigma,” stated Jessica. “It actually moves the conversation towards celebrating these things that make us so powerful and managing our superpowers.”

“A lot of that has to do with education,” Jessica observed. “It just baffles me how things like self-discovery are viewed as a nicety, but not a necessity. We think: Self-discovery is something that I’ll do later on in my career when I have some free time. Or, it’s something that I’ll fit into my weekend between meetings. In reality, this personal growth, self-discovery, and alignment with who you are as a creator really needs to precede, or at very least go alongside, the creative process.”

This content is not intended to be a substitute for professional advice, diagnosis, or treatment.

Always seek the advice of a mental health care provider with any questions you may have regarding a condition or treatment.

The post The Dark and Light Sides of Founder Mental Health appeared first on Georgian.

Six Things I Learned About How to Pivot a Business


This post is by David Siegel from Georgian

This blog post is based on a presentation David Siegel, CEO of Meetup, gave at our annual Scaletech Conference. Scaletech gathers the brightest minds in product and tech to share hard-won secrets on startup growth, product direction, and business strategy. Thank you to BMO Innovation Banking Group for being the presenting presenter of Scaletech. For more information on the Scaletech Conference visit www.scaletechconf.com.

The COVID lockdowns forced most businesses to pivot. Everyone had to rethink how workers work and how to continue providing services when restaurants, storefronts, and offices shut their doors. Anything to do with meeting up with other people was impacted the most. Meetup is all about getting together in person.

With over 50 million members in 193 countries, and 15,000 events every single day, Meetup has been bringing people together to create thriving communities for close to two decades. This has been an insane year as we sold out of WeWork, and of course the pandemic, so I shared what I learned from this experience with other CEOs at Georgian’s Scaletech Conference 2020.

Re-examining Our Mission

Scott Heiferman and the other founders created Meetup from the ashes of 9/11. When Scott went out of his apartment, he saw all these other people hanging around in the lobby. They didn’t know what to do with themselves, they just knew they didn’t want to be by themselves. Scott met all these people in his building he had never met previously, and he said to himself that it shouldn’t take a tragedy like 9/11 for people to understand the importance of community. Meetup would enable everyone to get together and build their own community.

When the COVID pandemic hit in 2020, everything went off a cliff. The number of people RSVP-ing to events went down precipitously in March, then again in April, and then again in May. That’s a serious problem for a company dependent on events and in-person connecting. So, what did we do? We quickly said, “We need to pivot to allow online events.”

You have to understand online events and technology-only events are like a four-letter word at Meetup. We were all about the passion and magic that happens when people get together in person. Our founder even took a sledgehammer to a VR device once, saying, “We use technology to do one thing only: to get people off technology. That’s our goal.”

Pivoting to online events would go against the soul of the company.

Ultimately, we realized our mission isn’t really about in-person events. Our mission is about keeping people connected. We had to keep people connected during the pandemic and we had to do it safely.

Our goal is now to use technology to build community.

In a Crisis, Be Directive

Like most CEOs, founders, and leaders, I sometimes struggle with when to direct and when to empower. The ideal scenario is to be as empowering as possible so other people make their own decisions. The risk is, empowering takes longer, and in a crisis situation, you need to be directive.

In this crisis, I was probably uncomfortably directive. We got the leadership team together and made a decision in a day. We had to make this pivot and do it quickly.

This required taking people off their current projects to enable online events as quickly as we could. No engineers are happy in that situation. We had to be comfortable producing a minimal viable product (MVP), not an amazing experience but good enough, and then improve from there.

We were quite directive but also apologetic about being directive. We explained the context and reason we were doing it.

Online events were up and running in four days. From there, it was another month, month-and-a-half of improvements.

The most important thing in a startup is learning. The best way to do this is to get data, learn from it, and take action. Based on what I learned in 2020, here are my six principles to pivoting:

1. Remain Grounded

Just like in basketball, when you’re pivoting, you need to keep your ankle firmly to the ground. You can’t pivot your mission. You shouldn’t pivot your vision. You shouldn’t pivot your values.

An indepent study from ImpactED at the University of Pennsylvania discovered 89% of our organizers felt they positively impact people’s lives. 90% of our members felt they gained knowledge and skills when they attended Meetup events. Meetup makes people’s lives better. The more people that attend Meetup events, the happier they are. That’s a beautiful thing.

So we remained grounded. We said, “Our mission is empowering personal growth through real human connections. Not necessarily in-person, but real human connections is what it’s all about.”

2. Support Your Pivot With Best Practices

Make sure to surround your pivot with as many different best practices, communications, and education as you can to really help people understand everything. We had to educate every single organizer on how to transition from in-person to online events.

How can you run a marathon online? Well, the answer is people can run independently then get together after for a beer. They can still find social connections online. Some events are easier, some are more challenging.

We created workshops for organizers, the Community Matters blog, discussion groups, mentoring opportunities, and templates to help pivot to online events. Conversation is the ideal form of communication, so we invited all our organizers and our most engaged members to Meetup Live. We talked to them about the pivot, what the pivot can create, and why we were pivoting. 

Challenges are ongoing as some people find themselves battling “Zoom fatigue.” This is partly technology-related but also non-interaction oriented. The key is to make events as interactive as possible. Make sure every event has an opportunity for breakout rooms, use something like the Icebreaker app to get people to meet beforehand, play games, ask each person their favorite country to visit after the pandemic, and things like that. Make sure there’s lots of interactivity between events to get people talking.

We also pushed our organizers to try to get together in person safely while the weather is nice. There were tons of events where people could sit six feet away from each other and have masks on. The key is to figure out how to do outdoor activities that are safe and do online events that are interactive.

3. Understand What’s Happening In Your Ecosystem

When you’re making your pivot, you need to understand your users and what’s happening in your ecosystem, then pivot more toward that. An example is in early June when we saw an enormous number of Black Lives Matter (BLM) groups created, we leaned into this heavily in terms of a pivot for us.

We decided to make every single group free to organize around racial equality. We want to make sure we are a platform that supports racial equality and social justice. We now have thousands of members in these groups.

We created all these different events around that as part of our pivot toward online and focusing on serious events happening in this world.

4. Focus On The Future, Not Just The Present

In your pivot, make sure you’re doubling down on the future and not just focusing on your current. To this end, college students and anyone with a .edu email can become a free Meetup subscriber for six months . We ended up seeing over 67,000 people attending events from 400 plus groups created through this college initiative, Campus Community It’s really meaningful to our growth.

If you don’t have cash, then your ability to make medium to long-term decisions for your company to thrive is a complete dis-enabler. Fortunately, with our acquisition, we had enough cash protection. We didn’t have to focus on short-term revenue. Our priority was ensuring the vibrancy of our ecosystem.

People will attend a group that’s free. Over 80% of people that become organizers are Meetup members. And then ultimately, it could be a week later, a month later, a year or two years later, those people will then create Meetup groups and be organizers themselves.

5. Leverage Your Data

Meetup has tons of data, including the percentage of in-person versus online events throughout the pandemic. Generally, we can see countries who are handling the pandemic well have a higher percentage of in-person events compared to countries facing serious challenges.

In the example earlier, our data showed a sudden increase in BLM group creation, prompting us to focus on encouraging social justice groups.

There are a couple ways to judge your community’s success. Qualitatively, the best community happens when every single person can be their authentic and true self. My dream community is diverse in terms of ethnicity, age, religion, and everything else. Even a technology group should have different experience levels, ages, backgrounds, and programming languages.

Quantitatively, we look at repeat RSVPs. It’s a simple metric, but if there are 10,000 people in a group and a different 50 attend each time, it’s not an interesting community. If there are 18 people in a book club, 13 showing up every time and two or three new people each time, that is a huge success. That means these people are showing up time after time, they’re building deep relationships, and those relationships are translating into them wanting to come back. Ideally, there’s new blood coming in, because community is always strengthened by new people joining.

6. Look At New Customers And Revenue Sources

Make sure you’re really out looking at new customers and revenue sources as part of your pivot. For us, we have a B2B business, Meetup Pro where Google has 500 different Meetup groups, AWS has a couple hundred, and Microsoft has hundreds of different groups. Many founders also create a Meetup group to build community around their product.

We pivoted even more aggressively into B2B as part of our initiative. Also, we want to identify different groups around topics of interest and engage those groups, and then getting access to anyone in that community is an additional growth source for us.

Meetup’s Pivot Results

At the beginning of the pandemic, we were down, down, down. Now, we’re actually seeing growth. Through May to September, you can see the numbers are slowly but surely heading back.

Slowly, in-person events are getting back. Online, it’s still staying steady, and with the pandemic continuing, you will probably see online growing even further.

We’re seeing a nice little bump in RSVPs, people attending events, and the number of events created. That’s because of the online pivot.

Online events and online connecting and online dating are going to be continuing post-pandemic. Companies able to capitalize on people’s behaviors and comfort level with video conferencing are going to continue post-pandemic as well.

If not for the pandemic, we would never have been able to create amazing experiences for many people. The pandemic has created the opportunity to accelerate something that, frankly, we should have done much earlier, but there was too strong of a cultural taboo.

These are the six things I learned while pivoting Meetup. My hope is that as the world continues to change, you are able to put these lessons into your tool box and they save you struggle as change continues to arise and pivots continue to be necessary. 

The post Six Things I Learned About How to Pivot a Business appeared first on Georgian.

What Order Should You Hire Your Management Team In?


This post is by Jason Lemkin from SaaStr

The other day I was meeting with a great CEO who had raised a modest seed round.  Enough to invest, but not enough to go crazy with.  He’d found several good First VP candidates, in particular, a strong first head of marketing and a strong first head of product.  He asked which to hire first.

The answer was obvious — both!  If you have a few nickels in the bank, and you somehow find a great VP a half stage or even full stage early, just hire her.  Hiring is so hard as it is.  Don’t try to save a few nickels by putting off a VP hire if you actually stumble into a great one earlier than planned.

 

But it’s a good question and I thought it might make sense to set out an Ideal VP Hiring Plan for Most SaaS Companies.  And why.  The chart above illustrates the ideal plan, but let’s dig into the detailed suggestions:

  • You really can and should try to hire your VP of Marketing as Early as $20k in MRR.  This will seem crazy early to many of you. But a great head of demand gen (or maybe growth hacking if you are SMB) should be very accretive at even $20k in MRR.  Imagine you are organically growing 4x, so from say $200k in ARR this year to $800k by the end of the year.  And your first VP of Marketing just increases qualified leads by 25%.  That alone will pay for all her salary.  And set you up for a ton more success, earlier.  Make the hire now.  More on that here and a great video discussion below:

  • You’ll probably be ready for your first VP of Sales by $1m in ARR.  We’ve talked about this a lot on SaaStr, but hiring a true VP of Sales before you have 2 reps hitting quota (and thus a repeatable, if not yet fully repeating process) is too early.  But by $1m in ARR, you should have at least 2 reps hitting quota.  Ideally, have your VP of Sales on board in time to hire reps 3-300.   But asking her to hire the first ones before you’ve proven it out yourself?  Disaster.
  • You’ll probably be ready for your first VP of Customer Success by $2m-$3m in ARR.  The exact timing of this hire is a bit murkier to me than the others, but $2m-$3m ARR is probably a good target.   You can hack customer success in the beginning with an individual contributor or two with some experience and a lot of chutzpah.  Maybe starting with a few individual contributors is even better than a manager, because these days many CS leaders don’t really want to be as hands-on as they used to be.  But you’ll need a manager to scale beyond 2.  You’ll want $500k-$1m in ARR per CSM coverage, and as you come up on $2m-$3m, that’s just not enough coverage with a few CSM you are sort of half-managing yourself.  So try to have your VP in place by then.  And if she’s willing to be super hands-on, sometimes your first VP of CS can even be hire #1 or #2 in CS, too.
  • You probably won’t see it, but you’ll need a VP of Product by $4m-$5m in ARR.  Most first time founders have never worked with a great VP of Product, so they don’t intuitively “get it”.  But trust me.  By the time you havve 20-100 enterprise customers, 50-100+ workflows, 10+ configurations … it’s all just too complicated to do part-time, in your head.  You need someone who spends 50 hours a week planning the roadmap, triaging customer feedback, nudging the engineering team.  You need this, once the product gets complex.  Plan for it.  Once you hire a great one, you’ll see.  It’s a gift.  More on that here.
  • You’ll need a VP of Engineering by $8m-$10m ARR.  Earlier is better.  90% of CTOs and founders struggle to hire engineers 10-100.  They can attract a small, great team under them.  But the burdens of recruiting beyond a pizza box or two, of creating thoughtful deployment processes, of maintaining legacy code, of code reviews, of putting together a DevOps team and a SecOps team and strategy and more … it’s too much.  Someone else should spend half their time hiring, 25% of their time spotting issues, and 25% of their time planning.  And this VPE role often involves zero code commits.  Without a great VP of Engineering, you won’t be able to scale your engineering team.  No matter how great a hacker your CTO is.

Are their exceptions here?  Can you skip some of these VPs? Wait longer?

Well.  I’m going to be more dogmatic here than usual and say No, there aren’t a ton of exceptions.  I’ve worked closely with 26+ SaaS start-ups and founded a few.  I’ve made the same mistakes you have, and I’ve lucked into a few great VPs early (marketing, product and sales).  They changed my life, and they’ll change yours.

And if you wait, and make these hires later, you won’t fail.  It’s not fatal.  But it’ll be harder on you, and you’ll scale more slowly than you could.  That combination is a big missed opportunity.  At least try.

And if you find one or two earlier than this, that are great … well, pounce.  There’s always enough to do.  The real answer is hire any Greap VP you can find, even if it seems too early.  The great ones are always accretive.

(note: an updated SaaStr Classic post)

The post What Order Should You Hire Your Management Team In? appeared first on SaaStr.

What Order Should You Hire Your Management Team In?


This post is by Jason Lemkin from SaaStr

The other day I was meeting with a great CEO who had raised a modest seed round.  Enough to invest, but not enough to go crazy with.  He’d found several good First VP candidates, in particular, a strong first head of marketing and a strong first head of product.  He asked which to hire first.

The answer was obvious — both!  If you have a few nickels in the bank, and you somehow find a great VP a half stage or even full stage early, just hire her.  Hiring is so hard as it is.  Don’t try to save a few nickels by putting off a VP hire if you actually stumble into a great one earlier than planned.

 

But it’s a good question and I thought it might make sense to set out an Ideal VP Hiring Plan for Most SaaS Companies.  And why.  The chart above illustrates the ideal plan, but let’s dig into the detailed suggestions:

  • You really can and should try to hire your VP of Marketing as Early as $20k in MRR.  This will seem crazy early to many of you. But a great head of demand gen (or maybe growth hacking if you are SMB) should be very accretive at even $20k in MRR.  Imagine you are organically growing 4x, so from, say, $200k in ARR this year to $800k by the end of the year.  And your first VP of Marketing just increases qualified leads by 25%.  That alone will pay for all her salary.  And set you up for a ton more success, earlier.  Make the hire now.  More on that here and a great video discussion below:

  • You’ll probably be ready for your first VP of Sales by $1m in ARR.  We’ve talked about this a lot on SaaStr, but hiring a true VP of Sales before you have 2 reps hitting quota (and thus a repeatable, if not yet fully repeating process) is too early.  But by $1m in ARR, you should have at least 2 reps hitting quota.  Ideally, have your VP of Sales on board in time to hire reps 3-300.   But asking her to hire the first ones before you’ve proven it out yourself?  Disaster.
  • You’ll probably be ready for your first VP of Customer Success by $2m-$3m in ARR.  The exact timing of this hire is a bit murkier to me than the others, but $2m-$3m ARR is probably a good target.   You can hack customer success in the beginning with an individual contributor or two with some experience and a lot of chutzpah.  Maybe starting with a few individual contributors is even better than a manager, because these days many CS leaders don’t really want to be as hands-on as they used to be.  But you’ll need a manager to scale beyond 2.  You’ll want $500k-$1m in ARR per CSM coverage, and as you come up on $2m-$3m, that’s just not enough coverage with a few CSM you are sort of half-managing yourself.  So try to have your VP in place by then.  And if she’s willing to be super hands-on, sometimes your first VP of CS can even be hire #1 or #2 in CS, too.
  • You probably won’t see it, but you’ll need a VP of Product by $4m-$5m in ARR.  Most first time founders have never worked with a great VP of Product, so they don’t intuitively “get it”.  But trust me.  By the time you have 20-100 enterprise customers, 50-100+ workflows, 10+ configurations … it’s all just too complicated to do part-time, in your head.  You need someone who spends 50 hours a week planning the roadmap, triaging customer feedback, nudging the engineering team.  You need this, once the product gets complex.  Plan for it.  Once you hire a great one, you’ll see.  It’s a gift.  More on that here.
  • You’ll need a VP of Engineering by $8m-$10m ARR.  Earlier is better.  90% of CTOs and founders struggle to hire engineers 10-100.  They can attract a small, great team under them.  But the burdens of recruiting beyond a pizza box or two, of creating thoughtful deployment processes, of maintaining legacy code, of code reviews, of putting together a DevOps team and a SecOps team and strategy and more … it’s too much.  Someone else should spend half their time hiring, 25% of their time spotting issues, and 25% of their time planning.  And this VPE role often involves zero code commits.  Without a great VP of Engineering, you won’t be able to scale your engineering team.  No matter how great a hacker your CTO is.

Are there exceptions here?  Can you skip some of these VPs? Wait longer?

Well.  I’m going to be more dogmatic here than usual and say No, there aren’t a ton of exceptions.  I’ve worked closely with 26+ SaaS start-ups and founded a few.  I’ve made the same mistakes you have, and I’ve lucked into a few great VPs early (marketing, product, and sales).  They changed my life, and they’ll change yours.

And if you wait, and make these hires later, you won’t fail.  It’s not fatal.  But it’ll be harder on you, and you’ll scale more slowly than you could.  That combination is a big missed opportunity.  At least try.

And if you find one or two earlier than this, that are great … well, pounce.  There’s always enough to do.  The real answer is hire any Great VP you can find, even if it seems too early.  The great ones are always accretive.

(note: an updated SaaStr Classic post)

The post What Order Should You Hire Your Management Team In? appeared first on SaaStr.

What Inclusive Leaders Sound Like


This post is by Noah Zandan from HBR.org

Researchers identified what they say — and how they say it.

What Inclusive Leaders Sound Like


This post is by Noah Zandan from HBR.org

Researchers identified what they say — and how they say it.

The Top 10 Mistakes First Time SaaS Founders Make


This post is by Jason Lemkin from SaaStr

Second-timers know the playbook and can execute against it faster.  But often times, they also have a bit of healthy skepticism, a bit of baggage, from the last time.  First-timers often know very little, but are baggage free.  That can be very powerful.

I’ve had a chance to watch a whole cohort of SaaS first-time founders go from $1m to $10m ARR in 5 quarters or less (more on that here) and just been awestruck by how much better than me they are as founders, and how much better they’ve done quantitatively.  In awe.  And yet, they/we all tend to make the same mistakes.  At least, some of them.

I thought I’d catalog them.  You may only make 1 or 2.  You may make all 10.  Who knows.  At least, consider using this list to challenge yourself to do even better.  Even if you just blew out last month and last quarter.

Mistake #1:  Hiring Too Inexperienced and Junior Managers and “VPs”.  Stretch VPs can do amazing things if you get it right.  More on that here.  But a stretch VP is one thing.  Hiring someone who’s never really been a manager at all, for a management role, for a true “owner” role … is usually a stretch too far.  You can’t make someone who’s never been an owner into a VP.  It just doesn’t work.  It’s not enough to have worked at Slack / Yammer / Intercom.  You have to have owned at least a big piece of the product.  To be a true VP of Sales, you have to have hired at least a handful of reps that hit quota.  For real.

Mistake #2:  Being too cheap.  This can be related to the prior point, but not always.  “She’s too expensive.  She needs $150,000.”   It’s tough when you only took out $30k last year as CEO.  I know.  But … the market sets salaries.  Not you.  Don’t hire a junior resource at $80k instead of a senior one at $150k.  You’ll lose money saving money here.  Imagine that Director of VP of Marketing gets you just 2 more customers at $30k each.  She’ll have more than paid for her salary difference right there, over than junior content marketer that can’t own anything.

And remember — salary vests.  A $120k salary is really only $10k a month 🙂  (ignoring benefits, taxes, etc.)  One senior hire is not a big a financial risk as it sounds, as long she or he ends up accretive in her first 90 days or so.

Mistake #3:  Micromanaging too much, too long.  This can be a tough transition for all of us.  But ultimately, the only way you are going to get any leverage on your time is if you trust your team to take ownership of their functional areas.  Even with their flaws and limitations.  I know you wrote the 1.0 version of the app.  I know you closed the first six-figure deal.  And you just might be the best customer success manager the company will ever have.  I know.  But … let it go.  Hire the best people you can, as experienced as you can … and let them run with it.  You need leverage.  You need to scale.

If you don’t stop micromanaging at least around $4-$5m at the latest, you’ll hit a human capital wall.

And if you under-hire too much (Mistake #1) and/or underpay (Mistake #2) … you’ll never get out of this trap.

Mistake #4:  Falling in love with Logos (especially in hiring).  I know Box is an exciting company.  I know you’ve heard of Salesforce.  But … that doesn’t mean you should hire from there.  Logos give you a false sense of security if you haven’t done it before.  And in many cases, those logos are way, way too late stage for your company.

You do want been there, done that managers, directors and VPs.  But don’t let the logo blind you to their flaws, or more importantly, blind you to the risks if they aren’t a stage-appropriate hire.

And don’t let a logo especially blind you to the fact that they may never have actually hired anyone directly before, or owned a number, or a product, or project, or lead commit, etc.

How many folks at Box today have owned a core feature?  Have owned a true lead commit?  Have hired an entire sales team under them, not just inherited one?  Not.  That.  Many.  But tons of smart folks have worked in these functional areas.

We’re all guilty here.  Even fourth-timers.  Just don’t let it blind you.

Mistake #5:  Not moving, going all-in geographically, etc.  If you need to be in the Bay Area — be there.  Don’t hack it by moving to New York.   Don’t spend 20% of your time in San Francisco.  And the other way (geographically) — if you need to add a field sales team in London — just do it.  Do it.  Waiting to $10m ARR to see if you should go for it or not, is just way, way too late.

Yes, the newly distributed world has changed a lot.  If you don’t need to be somewhere, don’t do it.  But if you do — pick right.

Most importantly, realize that if the majority of your revenue is from U.S. customers, you almost certainly need to be headquartered here in some fashion.  Not your entire team, but your HQ.  Your competition will be.  They will have a big leg up if you aren’t here and your customers are.  Yes, Atlassian.  But we can’t all be Atlassian.  And Atlassian has dual headquartes and a ton of folks in SF now, too.

Mistake #6:  Not being merciless.  This is different than being inhumane.  Bad hires are always your fault.  Most especially up to 50 employees or so, when you’ll be directly involved in the hiring process.  If a hire doesn’t work out, you screwed up.  You did.  But be merciless.  Make a change.  Now.

  • Be merciless about going up-market (next point).
  • Be merciless about raising prices.
  • Be merciless about setting real quotas that maybe only your top reps can meet at first.
  • Be merciless about requiring a true lead commit from marketing, not “best efforts”.
  • Be merciless about security and the product roadmap.
  • About making sure your enterprise customers give you the highest possible NPS.

Be full of mercy.  You will make so many mistakes.  But be merciless in driving the company to where it needs to go.

Mistake #7:  Not going up-market fast enough. If you have one $100k customer, you can get 2, and then 10.  And if you have one $100k customer, you really think the next one can’t pay $150k?  Of course they can.  Don’t be scared.  Don’t be timid.  Push up market as fast and as hard as you can.  Make the ask.  Do it.

Don’t invent new categories of pricing if there’s no demand.  But when you see yourself going more enterprise, into bigger deals, don’t be timid.  Be grateful.  Treat your customers with utmost respect and appreciation.  But on deal sizes and going up-market … be merciless.

This isn’t to say all apps should go enterprise.  If you can get to $5m, $10m, $20m+ with a freemium or self-serviced product, do that by all means.  Don’t go upmarket if you purely, 95-100% an SMB product.  But if you are going to go upmarket, if it’s starting organically already — then do it faster.

Mistake #8:  Not focusing almost entirely on what’s working.  There can be a huge temptation from $1m to $10m to find new categories, new types of customers, new products.  Don’t.  Find your natural pattern of customers (more on that here), small, medium and large.  Figure out the organic ratio here.  And just keep selling in that ratio, with an appropriate allocation of scarce resources.

Screen Shot 2015-10-23 at 9.43.59 AMIf 90% of your revenue at $2m ARR is from SMBs … then, I know the enterprise logos feel good, I know it’s exciting to have Facebook as a customer … but the fastest way to $10m ARR is going to be from SMBs (mostly).

If 60% of your revenue at $2m ARR is from big customers … but the sales cycles are slow … so what.  Shorten them.  Don’t start looking for magic at the bottom of the market.  That’ll just slow you down.  Dramatically.  Suck it up.  Double down on what’s working.   Even if it’s taking longer than you want.

Drive from $2m to $10m ARR on the path of least resistance.  9 times out of 10 the path of least resistance, the fastest way to $10m ARR, is just what you’re already doing.  But better, with higher ACVs, and a more practiced sales and marketing engine.  And with strategic upgrades to the team.

Mistake #9:  Not backfilling enough.  Once you’ve figured out how not to micromanage, and get out of the way … now you need to learn a new skill.  How to backfill.  Just enough.  In the right places.

Don’t get mad because your VP of Product really isn’t that great at say, UI/UX.  Don’t get frustrated because your VP of Marketing is great at generating leads, but her case studies are ugly and her prose is boooring.  Don’t get all bent out of shape that your VP of Sales, even though she’s killing the plan, is too quantiative.  Or is too qualitative.  Or only wants to do big deals.  Or only wants to do inside sales.  Or doesn’t do great board slides.  Whatever.

No VP has the full package of skills.  Not one.  And even if they do, they are biased in favor of what they did last time.  Or at the very least, they are much better at some parts of the job than others.

As CEO and founders, your job isn’t to meddle in what your VPs and leadership team already know how to do.  It’s to help backfill the areas they are a little weaker in.  To help them get that extra help.  To drop into the right deals, but not the ones they don’t need help on.  To get on a plane when they can’t, or when they need a wing man.  To spec out that one big feature they can’t see.

Screen Shot 2015-10-23 at 9.49.32 AMWhatever it is.  Backfilling a great team is how you scale from $2m to $10m and beyond.

Mistake #10:  Taking too much advice.  Ok, now, thanks for reading.  Suck up and absorb all the advice out there.  But be careful.  On advice:

  • A lot of advice isn’t stage appropriate to you.
  • A lot of advice isn’t ACV appropriate (someone doing $500k deals really can’t tell you how to do $5k deals).
  • A lot of advice is too dated.
  • A bunch of advice (especially VC stuff) has a bias or hidden agenda.
  • Some of it is from pattern matching, but from folks without the operational experience to back it up.  Be careful here.
  • And worse — quite a bit of it is from founders that have built a product — but haven’t actually done it yet.  Be super skeptical there.  I’d almost entirely ignore advice from folks that haven’t at least gotten to $8-$10m ARR.  Or at least, 2-3 stages beyond you.

GOOD LUCK.

If you are doing any of these 10, just pick 1 or 2 and improve.  I can almost guarantee you it will have an outsized effect on your business.

(note: an updated SaaStr Classic post)

 

The post The Top 10 Mistakes First Time SaaS Founders Make appeared first on SaaStr.

Mastercard’s Former Chief Diversity Officer Donna Johnson: Advancing Company Culture


This post is by HBR.org from HBR.org

What we can learn from Mastercard’s pioneering chief diversity officer about making long-term change to company culture.

The Top 10 Mistakes First Time SaaS Founders Make


This post is by Jason Lemkin from SaaStr

Second-timers know the playbook and can execute against it faster.  But often times, they also have a bit of healthy skepticism, a bit of baggage, from the last time.  First-timers often know very little, but are baggage free.  That can be very powerful.

I’ve had a chance to watch a whole cohort of SaaS first-time founders go from $1m to $10m ARR in 5 quarters or less (more on that here) and just been awestruck by how much better than me they are as founders, and how much better they’ve done quantitatively.  In awe.  And yet, they/we all tend to make the same mistakes.  At least, some of them.

I thought I’d catalog them.  You may only make 1 or 2.  You may make all 10.  Who knows.  At least, consider using this list to challenge yourself to do even better.  Even if you just blew out last month and last quarter.

Mistake #1:  Hiring Too Inexperienced and Junior Managers and “VPs”.  Stretch VPs can do amazing things if you get it right.  More on that here.  But a stretch VP is one thing.  Hiring someone who’s never really been a manager at all, for a management role, for a true “owner” role … is usually a stretch too far.  You can’t make someone who’s never been an owner into a VP.  It just doesn’t work.  It’s not enough to have worked at Slack / Yammer / Intercom.  You have to have owned at least a big piece of the product.  To be a true VP of Sales, you have to have hired at least a handful of reps that hit quota.  For real.

Mistake #2:  Being too cheap.  This can be related to the prior point, but not always.  “She’s too expensive.  She needs $150,000.”   It’s tough when you only took out $30k last year as CEO.  I know.  But … the market sets salaries.  Not you.  Don’t hire a junior resource at $80k instead of a senior one at $150k.  You’ll lose money saving money here.  Imagine that Director of VP of Marketing gets you just 2 more customers at $30k each.  She’ll have more than paid for her salary difference right there, over than junior content marketer that can’t own anything.

And remember — salary vests.  A $120k salary is really only $10k a month 🙂  (ignoring benefits, taxes, etc.).  One senior hire is not a big a financial risk as it sounds, as long she or he ends up accretive in her first 90 days or so.

Mistake #3:  Micromanaging too much, too long.  This can be a tough transition for all of us.  But ultimately, the only way you are going to get any leverage on your time is if you trust your team to take ownership of their functional areas.  Even with their flaws and limitations.  I know you wrote the 1.0 version of the app.  I know you closed the first six-figure deal.  And you just might be the best customer success manager the company will ever have.  I know.  But … let it go.  Hire the best people you can, as experienced as you can … and let them run with it.  You need leverage.  You need to scale.

If you don’t stop micromanaging, at least around $4-$5m at the latest, you’ll hit a human capital wall.

And if you under-hire too much (Mistake #1) and/or underpay (Mistake #2) … you’ll never get out of this trap.

Mistake #4:  Falling in love with Logos (especially in hiring).  I know Box is an exciting company.  I know you’ve heard of Salesforce.  But … that doesn’t mean you should hire from there.  Logos give you a false sense of security if you haven’t done it before.  And in many cases, those logos are way, way too late stage for your company.

You do want been there, done that managers, directors and VPs.  But don’t let the logo blind you to their flaws, or more importantly, blind you to the risks if they aren’t a stage-appropriate hire.

And don’t let a logo, especially, blind you to the fact that they may never have actually hired anyone directly before, or owned a number, or a product, or project, or lead commit, etc.

How many folks at Box today have owned a core feature?  Have owned a true lead commit?  Have hired an entire sales team under them, not just inherited one?  Not.  That.  Many.  But tons of smart folks have worked in these functional areas.

We’re all guilty here.  Even fourth-timers.  Just don’t let it blind you.

Mistake #5:  Not moving, going all-in geographically, etc.  If you need to be in the Bay Area — be there.  Don’t hack it by moving to New York.   Don’t spend 20% of your time in San Francisco.  And the other way (geographically) — if you need to add a field sales team in London — just do it.  Do it.  Waiting to $10m ARR to see if you should go for it or not, is just way, way too late.

Yes, the newly distributed world has changed a lot.  If you don’t need to be somewhere, don’t do it.  But if you do — pick right.

Most importantly, realize that if the majority of your revenue is from U.S. customers, especially if you are more enterprise, you almost certainly need to be headquartered here in some fashion.  Not your entire team, but probably your HQ.  Even if it’s a smaller HQ than it would have been pre-Covid.  (Yes, we’re all still learning here now).

Mistake #6:  Not being merciless.  This is different than being inhumane.  Bad hires are always your fault.  Most especially up to 50 employees or so, when you’ll be directly involved in the hiring process.  If a hire doesn’t work out, you screwed up.  You did.  But be merciless.  Make a change.  Now.

  • Be merciless about going up-market (next point).
  • Be merciless about raising prices.
  • Be merciless about setting real quotas that maybe only your top reps can meet at first.
  • Be merciless about requiring a true lead commit from marketing, not “best efforts”.
  • Be merciless about security and the product roadmap.
  • Be merciless about making sure your enterprise customers give you the highest possible NPS.

Be full of mercy.  You will make so many mistakes.  But be merciless in driving the company to where it needs to go.

Mistake #7:  Not going up-market fast enough. If you have one $100k customer, you can get 2, and then 10.  And if you have one $100k customer, you really think the next one can’t pay $150k?  Of course they can.  Don’t be scared.  Don’t be timid.  Push up market as fast and as hard as you can.  Make the ask.  Do it.

Don’t invent new categories of pricing if there’s no demand.  But when you see yourself going more enterprise, into bigger deals, don’t be timid.  Be grateful.  Treat your customers with utmost respect and appreciation.  But on deal sizes and going up-market … be merciless.

This isn’t to say all apps should go enterprise.  If you can get to $5m, $10m, $20m+ with a freemium or self-serviced product, do that by all means.  Don’t go upmarket if you’re purely, 95-100% an SMB product.  But if you are going to go upmarket, if it’s starting organically already — then do it faster.

Mistake #8:  Not focusing almost entirely on what’s working.  There can be a huge temptation from $1m to $10m to find new categories, new types of customers, new products.  Don’t.  Find your natural pattern of customers (more on that here), small, medium and large.  Figure out the organic ratio here.  And just keep selling in that ratio, with an appropriate allocation of scarce resources.

Screen Shot 2015-10-23 at 9.43.59 AMIf 90% of your revenue at $2m ARR is from SMBs … then, I know the enterprise logos feel good, I know it’s exciting to have Facebook as a customer … but the fastest way to $10m ARR is going to be from SMBs (mostly).

If 60% of your revenue at $2m ARR is from big customers … but the sales cycles are slow … so what.  Shorten them.  Don’t start looking for magic at the bottom of the market.  That’ll just slow you down.  Dramatically.  Suck it up.  Double down on what’s working.   Even if it’s taking longer than you want.

Drive from $2m to $10m ARR on the path of least resistance.  9 times out of 10 the path of least resistance, the fastest way to $10m ARR, is just what you’re already doing.  But better, with higher ACVs, and a more practiced sales and marketing engine.  And with strategic upgrades to the team.

Mistake #9:  Not backfilling enough.  Once you’ve figured out how not to micromanage, and get out of the way … now you need to learn a new skill.  How to backfill.  Just enough.  In the right places.

Don’t get mad because your VP of Product really isn’t that great at say, UI/UX.  Don’t get frustrated because your VP of Marketing is great at generating leads, but her case studies are ugly and her prose is boooring.  Don’t get all bent out of shape that your VP of Sales, even though she’s killing the plan, is too quantiative.  Or is too qualitative.  Or only wants to do big deals.  Or only wants to do inside sales.  Or doesn’t do great board slides.  Whatever.

No VP has the full package of skills.  Not one.  And even if they do, they are biased in favor of what they did last time.  Or at the very least, they are much better at some parts of the job than others.

As CEO and founders, your job isn’t to meddle in what your VPs and leadership team already know how to do.  It’s to help backfill the areas they are a little weaker in.  To help them get that extra help.  To drop into the right deals, but not the ones they don’t need help on.  To get on a plane when they can’t, or when they need a wing man.  To spec out that one big feature they can’t see.

Screen Shot 2015-10-23 at 9.49.32 AMWhatever it is.  Backfilling a great team is how you scale from $2m to $10m and beyond.

Mistake #10:  Taking too much advice.  Ok, now, thanks for reading.  Suck up and absorb all the advice out there.  But be careful.  On advice:

  • A lot of advice isn’t stage appropriate to you.
  • A lot of advice isn’t ACV appropriate (someone doing $500k deals really can’t tell you how to do $5k deals).
  • A lot of advice is too dated.
  • A bunch of advice (especially VC stuff) has a bias or hidden agenda.
  • Some of it is from pattern matching, but from folks without the operational experience to back it up.  Be careful here.
  • And worse — quite a bit of it is from founders that have built a product — but haven’t actually done it yet.  Be super skeptical there.  I’d almost entirely ignore advice from folks that haven’t at least gotten to $8-$10m ARR.  Or at least, 2-3 stages beyond you.

GOOD LUCK.

If you are doing any of these 10, just pick 1 or 2 and improve.  I can almost guarantee you it will have an outsized effect on your business.

(note: an updated SaaStr Classic post)

 

The post The Top 10 Mistakes First Time SaaS Founders Make appeared first on SaaStr.

How Jeff Bezos Built One of the World’s Most Valuable Companies


This post is by HBR.org from HBR.org

A conversation with HBS professor Sunil Gupta on what makes Amazon so successful.

SaaStr Podcast #395 with UserTesting CEO Andy MacMillan


This post is by Amelia Ibarra from SaaStr

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?

 


 

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
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.

 

The post SaaStr Podcast #395 with UserTesting CEO Andy MacMillan appeared first on SaaStr.

SaaStr Podcast #395 with UserTesting CEO Andy MacMillan


This post is by Amelia Ibarra from SaaStr

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?

 


 

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
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.

 

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6 Learnings from Algolia On the Way To $100,000,000 ARR


This post is by Jason Lemkin from SaaStr

The other day I checked in with Bernadette Nixon, the new CEO of search-as-service leader Algolia.  Aloglia’s been a part of SaaStr content and events since the beginning, and I invested at $12k in MRR, and wrote about that here.

Now with Bernadette now joining to power the company to $1B ARR and beyond, I thought it would be great to check-in and see and learn what she’s seeing:

A few interesting learnings from the convo above:

1. SaaS passed media as their #2 customer category. From a niche to huge.  We all know SaaS got big, but I didn’t realize it had become their #2 category, passing media.  It’s also interesting because the #1 category is e-commerce (and always has been), as the ROI is very clear in most cases — more conversions.  The ROI in SaaS is “simply” a 10x faster, instant-deploy search.

2.  With customers S+M+L, picked a CRO with high-velocity sales experience AND enterprise, but not pure enterprise. Perhaps some trade-off not being 100% enterprise, but with 10,000+ customers, need focus on getting to 100,000.  This was interesting, too.  I often see CEOs at the $100m or so ARR phase picking a very enterprise CRO, if they have larger customers.  But Algolia has large customers and tiny ones, so Bernadette picked a top CRO from Dropbox Enterprise.  Someone that knew big deals, but also how to focus on high-velocity sales, too.  It’s also what I would have done, picked the CRO that’s best at your largest category. Yet, I often see the opposite.  A CRO chosen mainly to go even more upmarket.

3. Just starting to segment sales by vertical.  I was surprised that with so many key verticals, the sales team was all selling to each category of customers.  Bernadette agreed 🙂 and has just started to change that.  I tend to always see this work.

4. When your HQ’s are in SF and Paris, you have to find a way to make the time difference an asset. E.g., like 24×7 coverage.  This was a simple but obvious insight.  I’ve seen so many European SaaS start-ups in particular struggle with time differences, and it’s hard.  But Bernadette’s entire software career has been in multi-continent companies.  So she learned to turn it into an asset.

5. Even today, developers often bring the deal into the product-line buyer, maybe even usually. And recommending the solution. So sales is still a team effort targeting both the developer + the marketer or product lead at the customer/prospect.  This was perhaps the most interesting learning to me.  Algolia started off as 100% developer focused, and sometime around say $40m ARR or so, focused much more on the line-of-service buyer (Marketing or Product).  “We went too far there”, Bernadette noted, and they’ve swung it back to a joint approach, putting the developer first, but making sure they sell to both the developer and the line-of-business buyer.

6. The public markets are fine if your revenue is pay-as-you-use — as long as it is highly predictable.  Algolia recently revamped pricing to make it more transactional / pay-as-you-go, not less.  More developers preferred it vs. artificial tiers.  The trade-off, at least in theory, is less of your revenue is truly recurring.  Bernadette did a deep dive here and the net learning after the IPOs of so many API-focused leaders from Twilio to Sendgrid to Datadog and more is that if your revenue is highly predictable, that’s what matters.  If it’s pay-per-use, that’s less important.  If your net retention is say 140% like Twilio, the rest takes care of itself.

And a great look back at getting to $50m ARR here:

 

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5 Reasons to Actually Have Board Meetings


This post is by Jason Lemkin from SaaStr

I held off for 6+ years and 3000+ Quora answers on writing a post on Board Meetings.

Why? Because every investor in the world writes lengthy posts on How to Have a Great Board Meeting. How to Have a Great Pre-Board Meeting. How to Have a Great Board Meeting Week. Etc. etc. etc. etc.

VCs, once they have been doing it a while, basically become professional Board Members, and they write a lot about that. But I rarely find these posts help founders hack board meetings to help them. Or even explain why you should do them — if you don’t have to.

But how can you make Board Meetings work for you as a founder — especially if you are early stage and don’t have to have them yet?  A few non-obvious ways you can use having regular Board meetings to help you.  A lot.

  • First, VCs that attend regular board meetings are much, much more likely to invest again.  And to make intros for the next round.  Never assume a VC will write you a second check.  There is no obligation to write another one.  But, you can hack it.  All but the smallest VC firms hold “reserves” for second and even third checks into their portfolio companies.  These reserves are used to double down on their winners, but also, to give a little more runway to the ones doing OK or pretty well, but not yet great.  But the odds you get this “extra runway” check go way, way down if you don’t keep investors in the loop.  The second best way to keep them in the loop is monthly investors updates (so do this!).  The very best way is to invite them to detailed board meetings every 6 weeks.  The VC sitting in those board meetings 6-8 times a year is much, much more likely to write a second check than one that isn’t.  Ditto all of this for intros to the next round as well.
  • Second, done right, your management team will really enjoy board meetings.  Having them in board meetings includes them in the journey at a senior level (even if you are tiny).  You may not care about board meetings.  But your heads of product, engineering, sales, marketing, success, etc. … even if they are stretch leaders, or even individual contributors in the early days … will really appreciate being included.  It will make them feel heard and included, not just by you as CEO/founders, but also by key outside stakeholders.  Folks take board meetings seriously.  As part of that, your team will genuinely appreciate being part of it all.
  • Third, and probably most importantly, your management team will hustle to hit their deliverables and goals for board meetings.  This is key.  Board meetings are a bonus, almost free outside forcing function for you.  You can only push the team so hard to hit your monthly, quarterly and annual goals before you break them.  Make sure everyone attending board meetings has quarterly and annual goals to hit (even monthly if you can) that are tracked at each board meeting.  Then, they have to present a dif to those goals at each meeting.  They’ll worry, squirm, and hustle in slightly different ways than they will with you.  And you’ll learn a lot watching how they rise to this challenge.  Fewer and different excuses (if any).
  • Fourth, it’s a great way for your investors to learn about your team.  Hopefully, your investors know you personally well.  You shouldn’t need a board meeting for that.  But how do they get to know your VPs?  A board meeting presentation is the best way.  That also means you should talk less — and your team should talk more.  Your investors can always just have a 1-on-1 with you.
  • Finally, you might even get useful feedback.  I’ve had boards that never helped me at all.  I’ve had boards that helped a bit.  I’ve never had a board that was awesomely insightful, though.  But … a good board of seasoned executives (or even just 1) will likely create a format that provides you 1 or 2 insights that help you step out of your box.  It forces you and everyone to take a 6-times-a-year perspective on things it’s often hard to take time to do.  These board meetings will force you to think a bit more strategically that week than you might.  That’s good.

So what’s actionable here? 

  • First, do board meetings earlier and include your largest investors — even if they don’t have board rights.  Folks without board or observer rights that own > 5% are worth including at least until the next phase, or maybe at least for the first year or so after they invest.  (Just be clear on the timing here).
  • Secondly, include the team and let them talk more and you less.  You can always do a 1-on-1 Zoom with an investor later.
  • And third, these days when you can raise $5m on SAFEs without “giving up” and board seats … maybe have regular board meetings anyway. Every 6 weeks like clockwork. You’ll at least get the benefits above.

They matter.

(note: an updated SaaStr Classic post)

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5 Things to Do … When You Don’t Know What to Do


This post is by Jason Lemkin from SaaStr

So some of you are just crushing it now, things are great, you are Covid Beneficiaries, you already hit the plan for the quarter, well good for you.  Those are good times indeed.

But there will be times when almost all of just not only struggle … but are just sort of out of ideas.  About how to do better.

Well, this is SaaS.  The revenue recurs.  So that means there’s always a play to do at least do better.

Here’s my best advice on what to do … when you don’t have any ideas on what to do 🙂

1. Spend more time with existing customers.  Do 5 more Zooms a week.  This always works.  I never lost a customer I met, or at least got to know well.  Never — not on my watch.  So when you don’t know what to do, pick up the Zoom.  Talk to 5-10 more customers next week than you usually do.  They’ll churn less.  Recommend you buy.  Buy more.  And maybe, some of the conversations will stimulate your brain a bit.  And you’ll come up with 1 or 2 new ideas about how to do better.  I always did when I met with customers.  A bit more here:

2.  Hire 1 great VP.  Yes, we’ve said this 100 times on SaaStr.  And yes, it’s still true.  A great VP will tilt the curve.  A great VP of Sales will sell more with what you have.  A great VP of Marketing will get you more leads and opportunities from the same budget.  A great VP of Product will pick better features.  A great VP of Engineer will ship you more features.  And a great VP of Customer Success will make your customers buy more, and churn less.  So at least pick one.  Pick 1 VP level position to go fill.  And fill it with someone great.  More here:

3.  Drive Up NPS.  This always works.  Because it drives down churn, and drives up upsells, and net retention.  I prefer driving up NPS as a core KPI to just driving down churn.  Because there are too many excuses for not driving down churn.  But there are no excuses for not making customers happier.  Ever single SaaS company can drive up NPS.

I Was Wrong. NPS is A Great Core Metric.

4.  Join more sales calls. Everyone loves to talk to the CEO.  If you don’t know what to do in sales, do this one thing: join more Zooms and calls.  Customers and prospects love to talk to the CEO.  Even the CEO of a 5 person company.  They just respond to it.  And you know how to answer so many questions, and instill confidence.  Go join every key call, if the sales team wants you.  At least, let them give you a quota of say 5 sales calls a week they can bring you into.  More deals will close, at a higher ACV.

5.  Focus your leads on your top reps.  If you don’t know what to do, get the leads in the hands of those who can close.  Stop routing leads to the wrong reps.  Get the biggest potential customers into the lands of your top enterprise closer.  Get the smaller deals into the hands of your top high-volume closer.  Getting each lead into the hands of the right rep can easily increase revenue 20% or more in one quarter.  Often more.  With the exact same leads you already have.  More here:

5 Simple Tips to Improve How You Allocate Leads (In The Early-ish Days)

Think about it a bit … each of these 5 initiatives can increase revenue 20% with the leads and product you already have.  Each of them.

The post 5 Things to Do … When You Don’t Know What to Do appeared first on SaaStr.

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