The Exchanges

Q Are different people not qualified differently to qualify different skills?

A No. What's an engineer know about qualifying a salesperson? What you're going to go to is culture. Well, we want to see if it's a culture fit. Nope. Because here's the problem you have, ok? So you bring the engineer in, number one, it slows the process down, ok? Number two, there's risk. I don't know what this engineer is going to say to the sales guy. We're recruiting. He could say something about the product that he shouldn't say. It scares the shit out of the rep, okay? So there's risk there. Three, say the engineer, the, the, the, the rep candidate interviews with four managers. They all want to hire him. The engineer is like, I do not want to hire him. Now what are you going to do? You're fucking hiring him is what you're doing, but you've just pissed your engineer off. Well, I don't think you should hire him. Well, we're going to hire him anyway. Well, I don't agree with him. Now you've got friction in the organization. Or are you going to say, okay, well, us four sales leaders like them, but this one engineer knows better than us four sales leaders about hiring a salesperson? I don't think so.

AI assessment note: “No. What's an engineer know about qualifying a salesperson?”

Q How do you think about ramp time? When we think about getting to that three X OTE, a lot of people say, well, it's enterprise sales. Like, it's, it's very long sales cycles. The ramp time's tough. How do you think about that?

A I mean, look, where I want to see it, um, is six months for, for an enterprise seller. So there's ramp times for inside, ramp time for outside. Inside, I'd like to see 90 days. Outside, six months. Reality is, it probably trends more towards nine months, uh, in enterprise. Then you have to start peeling back the layers of the onion. Why is it taking, are the sales cycles that long? Maybe the sales cycle is only four months. Okay, then why is the ramp time nine months, right? Is it an enablement problem? Is it a product problem, right? Or is it just the nature of the business and there's nothing we can do about it? But ideally you want it to be at six months.

AI assessment note: “where I want to see it, um, is six months for, for an enterprise seller.”

Q Why do you say that for people listening that don't understand?

A Well, Salesforce has a monopoly. And so how much outbound are you doing if you work at Salesforce? You just, first of all, everybody's already a customer. So how many new customers are you going after? Like you could talk to a guy at Salesforce. He's like, yeah, I closed Wells Fargo. What? No, you didn't. Wells Fargo has been a customer for 10 years. Like you might be working on Wells Fargo, but you didn't close Wells Fargo. And so if you talk to these sales guys and they work for a company that absolutely has a monopoly, how are they doing any pipeline generation? What I'd rather find is somebody that works for a company that nobody's ever heard of and actually has an inferior product and was actually able to go to the market with an inferior product and win deals.

AI assessment note: “Salesforce has a monopoly. And so how much outbound are you doing if you work at Salesforce?”

Q How scalable is your model? You take very active roles. You often sit on boards, board observers. How scalable is it actually?

A I mean, I'll take this one. It, it, it, up until this point for 30 years, it's been me. Um, so I have a team that handles the recruiting. I handle all the board work, all the consulting work. Um, and, and we're, I think I have seven companies in the portfolio I can't take on anymore. Um, the reason I was so excited to bring Chris on a is because he adds value in so many places that I don't. The reality is operationally. I think I'm pretty good. I've sat on a lot of boards. I was trained by Chris. I was trained by John McMahon. I was trained by Mike Spizer to do the operational ship, but the reality is I've never sat in the seat. I've never been a CRO. Chris is the only CRO in the history of technology to go from zero to four billion. And so I think the two of us combined are pretty special. The reason I brought Chris in is I can't Expand the business without Chris. We're also making some other pretty critical hires or hiring a guy by the name of Mike Haas. It's going to come help scale the, uh, recruiting side of the business and then two other people. So to answer the question right now, it's not scalable. Once we get these additional people in place, it is scalable, but will we ever be a company that's got 30 companies in our portfolio? Never.

AI assessment note: “So to answer the question right now, it's not scalable.”

Q Is it still four to five X is good, or has that changed now? I mentioned Clay earlier, and we mentioned Clay, but she said theirs is eight to 10, 11 labs.

A Historically, it's been, if you get three X your OTE, you're pretty happy. I, I agree it's probably going up. Um, because of, of, of just different things that are happening in terms of being able to have like a PLG lead source. I think when it comes back to quota setting, I always remind these CEOs, like, what are you optimizing for? Let's talk about the risk. Okay. Let's talk about the risk of setting quotas too low. What happens? You're probably going to overpay. Okay. That that's a shitty thing to have happen, but can you live with overpaying a sales organization for one year? Because understand if you're overpaying and what happens, that means you're blowing through whatever forecast you set. Now, again, you're spending too much, but you're pretty happy because you're blowing through the number. Let's talk about the flip side of that. Set quote is too high. None of your sale, I've just brought in a world-class sales organization. None of them are making any money, morale is shit. What happens? The sales organization quits. And if you lose A players, you don't replace A players with A players. As soon as the A players go, the rest of the A players know that they shouldn't go there. So now you're going to lose your sales org and you're going to replace an A player sales org with a B player sales org. So it's about optimizing for the right type of risk. By the way, the other …

AI assessment note: “Historically, it's been, if you get three X your OTE... it's probably going up.”

Q Why do you say that for people listening that don't understand?

A Well, Salesforce has a monopoly. And so how much outbound are you doing if you work at Salesforce? You just, first of all, everybody's already a customer. So how many new customers are you going after? Like you could talk to a guy at Salesforce. He's like, yeah, I closed Wells Fargo. What? No, you didn't. Wells Fargo has been a customer for 10 years. Like you might be working on Wells Fargo, but you didn't close Wells Fargo. And so if you talk to these sales guys and they work for a company that absolutely has a monopoly, how are they doing any pipeline generation? What I'd rather find is somebody that works for a company that nobody's ever heard of and actually has an inferior product and was actually able to go to the market with an inferior product and win deals.

AI assessment note: “Salesforce has a monopoly. And so how much outbound are you doing”

Q Does our mindset change around building sales teams when we have more technical products and we need sales engineers and that technical aspect becomes more central to the role of selling?

A Yeah, I think it does. Like at XAI, for example, um, it was pretty important to us that we hire people when you're selling an API, that's not an out of the box product. So you have to be more technically astute when selling something like that. So you not only find people that are at least slightly more technical or at least have sold more of a technical product, but you also change how you enable them. Like our sales guys at XAI actually do all of their own demos, which as you can attribute a test to that's, that's not the norm. So I think Yes, it changes the profile, but it also changes how you enable them.

AI assessment note: “Yeah, I think it does. Like at XAI, for example”

Q but I'm not gonna name it because I'll get in trouble, and they were saying, uh, like, oh, we need to scale from a hundred to, like, 300 reps in a year, and I'm like, wow, you're adding 200 reps in a year? It's, you know, half a day, almost. Is it possible to add 200 reps in a year at a Series B, C stage and not lose quality?

A Um, look, there's, there's all sorts of rules you have to break to do that. For example, you never want a new manager to have less than five productive reps. You can't scale the organization from 100 to 300 and not have that. What I mean is if I have a manager, he's got five reps on his team, he or she, three of those reps should be productive, two can be new. But if you try to hold that, then you start running out of places to put reps. So now all of a sudden you have to do things like I could have a manager that has six reps Each of those six reps has been with the company for less than 90 days. Shit starts to break when you do that. So your ratios get messed up. Your enablement could have issues. You start cutting territories too quickly. Hey, Mr. Rep, you came on with 50 accounts. Six months later, you have 10 accounts. So can it be done? It can. But if you're going to scale that quickly, the market better be massive and you better have a product that everybody wants to buy.

AI assessment note: “So can it be done? It can. But if you're going to scale”

Q Spicer before this show, and like, if you want, like, hard heavyweights who are incredible at what they do, Saying someone is the best in the world at what they do. I'm like, oh, shit. So I'm looking forward to this. So I want to start off with just a little bit, though, in terms of context. How did you make your way into sales first? And let's start there.

A I'll give you the short version, but I saw the movie Wall Street when I was 12 years old, and I knew I wanted to be a stockbroker. So I went to USC, I studied finance, I graduated from USC, I went to Merrill Lynch to be a stockbroker. And That was, uh, 1997 and 19 98, and at that time, that industry was changing. It was becoming a fee-based industry, less about trading stocks and more about just fee-based, and that's not what I wanted to do. One, two, I was turned off a bit because it was such product pushing. By that, I mean, hey, go sell this product to your customers. We're going to charge one and a half points. This is the shit we want you to sell this week, and I didn't feel at the time, like, does it matter if that's the right product for the customer? It was just, we're going to go push that product. The other thing that was clear to me was to be successful in that industry, I was going to have to accumulate hundreds of millions of dollars in assets, and I was 22 years old, I looked like I was 16, and I would likely have had to call friends and family to raise money, and I was never going to do that. I just simply was not comfortable doing that. So at the time, I had a client that came in, I was doing some financial planning for him, and his wife said to him, you should hire this kid. And, uh, I was all arrogant and shit at the time. I was like, 22. I think I made a hund…

AI assessment note: “I saw the movie Wall Street when I was 12 years old, and I knew”

Q Spicer before this show, and like, if you want, like, hard heavyweights who are incredible at what they do, Saying someone is the best in the world at what they do. I'm like, oh, shit. So I'm looking forward to this. So I want to start off with just a little bit, though, in terms of context. How did you make your way into sales first? And let's start there.

A I'll give you the short version, but I saw the movie Wall Street when I was 12 years old, and I knew I wanted to be a stockbroker. So I went to USC, I studied finance, I graduated from USC, I went to Merrill Lynch to be a stockbroker. And That was, uh, 1997 and 19 98, and at that time, that industry was changing. It was becoming a fee-based industry, less about trading stocks and more about just fee-based, and that's not what I wanted to do. One, two, I was turned off a bit because it was such product pushing. By that, I mean, hey, go sell this product to your customers. We're going to charge one and a half points. This is the shit we want you to sell this week, and I didn't feel at the time, like, does it matter if that's the right product for the customer? It was just, we're going to go push that product. The other thing that was clear to me was to be successful in that industry, I was going to have to accumulate hundreds of millions of dollars in assets, and I was 22 years old, I looked like I was 16, and I would likely have had to call friends and family to raise money, and I was never going to do that. I just simply was not comfortable doing that. So at the time, I had a client that came in, I was doing some financial planning for him, and his wife said to him, you should hire this kid. And, uh, I was all arrogant and shit at the time. I was like, 22. I think I made a hund…

AI assessment note: “I saw the movie Wall Street when I was 12 years old, and I knew”

Q there about kind of Chris, Snowflake, they're not agreeing with CS. I'm just interested, because when I spoke to Chris beforehand, he said that you were essentially core To hiring really the entire sales team for the first five years at Snowflake. I just want to dive into that because you mentioned before about the velocity that you had. What are some of your biggest lessons on what worked first?

A So first of all, we talked about being willing to have conflict. There's going to be conflict because each manager is going to have his or her own ideas about the profile and about the process. Right? Well, they don't get to have that. If you're going to go hire a world, build a world-class sales machine at scale and quickly, it has to be a well-oiled machine. And what that means is we have a process. We don't deviate from that process. So I'll give you an example. Sales rep. Sales rep has, call it four interviews. So sometime you'll get, okay, Mr. Hiring Manager, you interview the rep. Binary. You either want to hire him or you don't. Oftentimes, well, I'm not sure. So, I'm gonna have him go talk to three of my peers. Nope. If you can't make a decision on whether or not you want to hire a rep, let's just say you get two interviews. First one's for selling, second one's for qualifying. If you can't make a decision on whether or not to hire somebody after two hours with him, you're the problem. Not the candidate, it's you. It's binary. Then he goes to the next step of the process. Binary. Moving forward or not. Next step. Binary. Moving forward or not. And you do not deviate from that process, first and foremost. So oftentimes you'll have a hiring manager say, hey, I really, I like this guy. I want to bring in a sales engineer to get his opinion. Nope. Well, he's going to be wor…

AI assessment note: “it has to be a well-oiled machine. And what that means is we have a process.”

Q you want like hard heavyweights who are incredible at what they do, saying someone is the best in the world at what they do, I'm like, oh shit. He's gonna be, he's gonna be good. So I'm looking forward to this. So I want to start off with just a little bit though, in terms of context, how did you make your way into sales first? And let's start there.

A I'll give you the short version, but, um, I saw the movie Wall Street when I was 12 years old, and I knew I wanted to be a stockbroker. Um, I knew that, so I went to USC, I studied finance, I graduated from USC, I went to Merrill Lynch to be a stockbroker, and that was, uh, 1997 and 19 98, and at that time, that industry was changing. It was becoming a fee-based industry, less about trading stocks and more about just fee-based, and, and That's not what I wanted to do. One, two, I was turned off a bit because it was such product pushing. By that, I mean, hey, go sell this product to your customers. We're going to charge one and a half points. This is the shit we want you to sell this week. And I didn't feel at the time, like, does it matter if that's the right product for the customer? It was just, we're going to go push that product. The other thing that was clear to me was to be successful in that industry, I was going to have to accumulate Hundreds of millions of dollars in assets, and I was 22 years old. I looked like I was 16, and I would likely have had to call friends and family to raise money, and I was never going to do that. Um, I, I just simply was not comfortable doing that. So at the time, I had a client that came in, and I was doing some financial planning for him, And his wife said to him, you should hire this kid. And, uh, I was all arrogant and shit at the time.…

AI assessment note: “I went to Merrill Lynch to be a stockbroker, and that was, uh, 1997”

Q How do you think about ramp time? When we think about getting to that three X OTE, a lot of people say, well, it's enterprise sales. Like, it's, it's very long sales cycles. The ramp time's tough. How do you think about that?

A I mean, look, where I want to see it, um, is six months for, for an enterprise seller. So there's ramp times for inside, ramp time for outside. Inside, I'd like to see 90 days. Outside, six months. Reality is, it probably trends more towards nine months, uh, in enterprise. Then you have to start peeling back the layers of the onion. Why is it taking, are the sales cycles that long? Maybe the sales cycle is only four months. Okay, then why is the ramp time nine months, right? Is it an enablement problem? Is it a product problem, right? Or is it just the nature of the business and there's nothing we can do about it? But ideally you want it to be at six months.

AI assessment note: “where I want to see it, um, is six months for, for an enterprise seller.”

Q When you see founders today, and when you work with companies today, what are the biggest mistakes you see in terms of that relationship between sales and customer success?

A Well, you, you kind of hit on one. One of them is just like, look, let the rep do the land, and customer success is responsible at that point. That just also drives really shitty behavior from the rep, because the rep is just not focused on the customer journey. The rep is focused on getting a deal done and walking away. You do not want that, because then you can get overbooked deals. I can go into an account and think, well, let's just say you're on a consumption model. I think that these guys probably need to consume 50,000 dollars in credits over the next 12 months. But I'm paid off of bookings, right? Not consumption. I'm paid off of bookings, so maybe they're only going to consume 50, but I think I can get them to commit to a hundred. Can't fault the sales guy. He wants to get paid, so he's going to go book a 100,000 dollar deal, and then a year from now, you're in deep shit, because you booked a 100,000, they've consumed 50, and now the account's at risk. You're going to have churn problems. You're certainly not expanding, right? And so that behavior's got to be Worked out of the rep so that the rep understands, look, you've done the land deal. That's, that's the beginning of the journey for you. The big payout for you is on the expand deal and the further expansions, right? So first and foremost, you need to get the sales rep thinking about the entire customer journey, n…

AI assessment note: “One of them is just like, look, let the rep do the land”

Q Chad, what you just said sounds lovely, but salespeople who are good are often good at selling themselves. How do you detect the BS in the, I want growth, development, empowerment? No, I fucking don't.

A I just want the money. Super easy. I'm gonna pull up your resume. So help me understand, why did you go from this company to that company? Why, what, what was the motivating factor there? Why did you make that move? Oh, well, they offered me a bigger base salary. We're done. Why did you go from this company to that company? Well, they raised my quota at my current company, and I wasn't real happy. We're done. But if you say I went from this company to that company because I'm interviewed with that leader, and I know, I know every CRO, I know every sales organization in software, right? So I know if you're full of shit, I know who the good sales leaders are, and if I see you went to a company that I know, AppDynamics, MongoDB, Snowflake, where they have great sales leaders, and you say, oh, I went to work for Chris Dagnan, because I knew he was going to develop me. I knew I was going to get better. I can validate that based on the career moves in your resume.

AI assessment note: “I can validate that based on the career moves in your resume.”

Q Would you have different attribution then according to different companies that you work with, or is it always we're revenue?

A It can be. You got to look at the business, right? Like let's say you look at a business and say, okay, our land motion is really good. We're landing. I'm making these numbers up. We're landing. The average land sales cycle is four months. We're landing at 75, 75 K. Okay. That's a good land motion. I'm happy with that. Now my expand motion Is taking 12 months, and I'm expanding from 75, and I'm getting an expansion of 50. That's not good. The sales cycle for the expand is too long, and the dollar assigned to the expand is not high enough. I can start to pull different levers in the comp plan. So I can say, hey, Mr. Sales Rep, I'm gonna pay you 10% on the land. I'm gonna pay you 12% on the expand. And just by doing that, I'm gonna get a lot more focus on the expand, because I pulled that lever.

AI assessment note: “It can be. You got to look at the business, right?”

Q there about kind of Chris, Snowflake, they're not agreeing with CS. I'm just interested because when I spoke to Chris beforehand, he said that you were essentially core to hiring really the entire sales team for the first five years at Snowflake. I just want to dive into that because you mentioned before about the velocity that you had. What are some of your biggest lessons on what worked first?

A First of all, we talked about Being willing to have conflict. Um, there's going to be conflicts, um, because each manager is going to have his or her own ideas about the profile. And about the process, right? Well, they don't get to have that. If you're going to go hire a world, build a world-class sales machine at scale and quickly, it has to be a well-oiled machine. And what that means is we have a process. We don't deviate from that process. So I'll give you an example. Sales rep. Sales rep has, call it four interviews, okay? So sometimes you'll get, okay, Mr. Hiring Manager, you interview the rep. Binary. You either want to hire him or you don't. Oftentimes, well, I'm not sure, so I'm gonna have him go talk to three of my peers. Nope. If you can't make a decision on whether or not you want to hire a rep, let's just say you get two interviews. First one's for selling, second one's for qualifying. If you can't make a decision on whether or not to hire somebody after two hours with them, you're the problem. Not the candidate. It's you. So it's binary. Then he goes to the next step of the process. Binary. Moving forward or not. Next step. Binary. Moving forward or not. And you do not deviate from that process, first and foremost. So oftentimes you'll have a hiring manager say, hey, I really, I like this guy. Um, I want to bring in a sales engineer to get his opinion. Nope. Well…

AI assessment note: “what that means is we have a process. We don't deviate from that process.”

Q Are different people not qualified differently to qualify different skills?

A No. What's an engineer know about qualifying a salesperson? What you're going to go to is culture. Well, we want to see if it's a culture fit. Nope. Because here's the problem you have, ok? So you bring the engineer in, number one, it slows the process down, ok? Number two, there's risk. I don't know what this engineer is going to say to the sales guy. We're recruiting. He could say something about the product that he shouldn't say. It scares the shit out of the rep, okay? So there's risk there. Three, say the engineer, the, the, the, the rep candidate interviews with four managers. They all want to hire him. The engineer is like, I do not want to hire him. Now what are you going to do? You're fucking hiring him is what you're doing, but you've just pissed your engineer off. Well, I don't think you should hire him. Well, we're going to hire him anyway. Well, I don't agree with him. Now you've got friction in the organization. Or are you going to say, okay, well, us four sales leaders like them, but this one engineer knows better than us four sales leaders about hiring a salesperson? I don't think so.

AI assessment note: “No. What's an engineer know about qualifying a salesperson?”

Q Does our mindset change around building sales teams when we have more technical products and we need sales engineers and that technical aspect becomes more central to the role of selling?

A Yeah, I think it does. Like at XAI, for example, um, it was pretty important to us that we hire people when you're selling an API, that's not an out of the box product. So you have to be more technically astute when selling something like that. So you not only find people that are at least slightly more technical or at least have sold more of a technical product, but you also change how you enable them. Like our sales guys at XAI actually do all of their own demos, which as you can attribute a test to that's, that's not the norm. So I think Yes, it changes the profile, but it also changes how you enable them.

AI assessment note: “Yeah, I think it does. Like at XAI, for example”

Q So how do you structure how you work with companies?

A Uh, we get it, we get equity. I mean, there's, there's cash that covers just the expenses of the recruiting because the guys on the recruiting team are the best recruiters in the world, bar none, but they're not cheap. So we have to collect cash to cover their expenses. The way we make our money is we get an equity grant tied to four years. And they say the same thing to everybody, like, look, we're going to get in there and you're quickly going to realize that we are going to change the outcome of your company. You will see after a month Exactly what you're getting. By the way, if you don't, no problem. You fire us.

AI assessment note: “The way we make our money is we get an equity grant tied to four years.”

Q ask you, we, we see again, the company's scaling faster than ever. If you're advising a CEO, one of my biggest problems that I see now is CEOs who Bluntly, get a little bit high on their own supply. They've raised a lot of money, and like, revenue's seemingly scaling. What do you say to keep feet on the ground when sales are scaling fast, but it's a continuous game?

A First of all, you have to remind them, raising a round doesn't mean shit, ok? The fact that you were able to get, you know, three guys to write you a big check doesn't mean you've accomplished anything, and you have to constantly remind them of that, because there are definitely CEOs that will raise a round, And, and take a victory lap. It means nothing. And the right CEOs know that, but some CEOs don't. So first of all, you have to remind them of that, like you haven't done anything. And then you'll get some of these CEOs that'll say, well, look, I'm doing this. I can get the best CRO in the world. No, you can't. Okay. You've got good traction. Here's what those CROs are looking for. By the way, there's four or five guys in the world that are the best in the world and they can go do anything they want to do. Let me explain to you why you're not ready to get that guy. And you have to sort of reset expectations. Like, look, You've got good traction. There's good things happening here. You're, you haven't accomplished quite as much as you think you've accomplished. The other thing is, is your revenue sticky? Is your ARR sticky? So all this monthly recurring shit that you see, that can be a head fake, right? Because there's, there's no moat. He and I talk about this all the time, right? Go get booked contracts. So the first thing I say is they say, look, here's my ARR. I said, wel…

AI assessment note: “First of all, you have to remind them, raising a round doesn't mean shit”

Q I spoke to Matan, before the show, and he said that he was going to hire three regional sales leads, and then you spoke, Chad, to one, and you were like, this is the guy. This is the guy. Killer sales instinct. How did you detect that so fast? What was it that shone out? And for founders that are listening, trying to discover that, what should they look for?

A Yeah, I mean, first of all, everybody gets hung up on like, look, I'm in this particular space, so I want to hire people from the same space I'm in. I never look at that stuff, whether you're looking for a regional VP or a chief revenue officer. To me, it's the quality of the sales organization in which you've operated. Who have you worked for? What was the training methodology? What was the DNA? It's not the company. There's great companies with very shitty sales organizations, and there's shitty companies with world-class sales organizations. So the first thing you look for is what quality of sales organization does the individual come from? Who trained them? Can I call somebody that I know and respect that this person worked for that says this person is world-class. They have grit, they have determination, they have all the things you're looking for. So it's a, it's a different way of identifying talent.

AI assessment note: “the first thing you look for is what quality of sales organization does the individual come from”

Q Guys, I need your help, ok? I need, I, I'm a hot company that you agreed to work with, and we need to build my sales org. But we're competing against OpenAI and Anthropic, who are slinging 10, 20, thirty million bucks in package to great sales talent. Guys, what do I do?

A I mean, I live this, this conversation I'm having quite literally every day because Anthropic in particular is offering sums of money, the likes of which we've never seen. And I can't say it's, it's wrong. They have endless amounts of money and they just care about speed. And if I was in that situation, I would probably do the same thing. So how do I compete against Anthropic? If I have a rep and I'm going to offer that rep 600,000 dollars in stock, and they're going to offer 1.2. We're going to offer the same cash OTE, call it 400. They're going to offer 400. So how do I compete against that? Number one, don't you want to go to a place that actually cares about performance, that actually cares about having a quality sales organization? Does that not matter to you? You can say that's anthropic. I could say, no, it's not. They have a group quota. Okay, so you can be the best guy in the world of doing what you do, and you're going to get paid as the shittiest guy. What does that actually tell you? What it should tell you is they don't actually value having quality sales people. They just actually value having a lot of salespeople. Is that an environment that you want to go work in? There is some like politics aside, salespeople are capitalists. They believe in meritocracy. They want to be rewarded for their performance and their hard work. If you go to Anthropic, that's gone. If …

AI assessment note: “So how do I compete against that? Number one, don't you want to go to a place”

Q So how do you structure how you work with companies?

A Uh, we get it, we get equity. I mean, there's, there's cash that covers just the expenses of the recruiting because the guys on the recruiting team are the best recruiters in the world, bar none, but they're not cheap. So we have to collect cash to cover their expenses. The way we make our money is we get an equity grant tied to four years. And they say the same thing to everybody, like, look, we're going to get in there and you're quickly going to realize that we are going to change the outcome of your company. You will see after a month Exactly what you're getting. By the way, if you don't, no problem. You fire us.

AI assessment note: “we get equity. I mean, there's, there's cash that covers just the expenses”

Q ask you, we, we see again, the company's scaling faster than ever. If you're advising a CEO, one of my biggest problems that I see now is CEOs who Bluntly, get a little bit high on their own supply. They've raised a lot of money, and like, revenue's seemingly scaling. What do you say to keep feet on the ground when sales are scaling fast, but it's a continuous game?

A First of all, you have to remind them, raising a round doesn't mean shit, ok? The fact that you were able to get, you know, three guys to write you a big check doesn't mean you've accomplished anything, and you have to constantly remind them of that, because there are definitely CEOs that will raise a round, And, and take a victory lap. It means nothing. And the right CEOs know that, but some CEOs don't. So first of all, you have to remind them of that, like you haven't done anything. And then you'll get some of these CEOs that'll say, well, look, I'm doing this. I can get the best CRO in the world. No, you can't. Okay. You've got good traction. Here's what those CROs are looking for. By the way, there's four or five guys in the world that are the best in the world and they can go do anything they want to do. Let me explain to you why you're not ready to get that guy. And you have to sort of reset expectations. Like, look, You've got good traction. There's good things happening here. You're, you haven't accomplished quite as much as you think you've accomplished. The other thing is, is your revenue sticky? Is your ARR sticky? So all this monthly recurring shit that you see, that can be a head fake, right? Because there's, there's no moat. He and I talk about this all the time, right? Go get booked contracts. So the first thing I say is they say, look, here's my ARR. I said, wel…

AI assessment note: “First of all, you have to remind them, raising a round doesn't mean shit”

Q One of the biggest mistakes I find founders make that I invest in is they say too early, we're going to expand into enterprise. They say, oh, we're getting pulled in, we're getting pulled in, and I'm like, you're three million in ARR. You don't need to be pulled anywhere. How do you think about timing of the expansion?

A So when we build companies, let's go back to Snowflake, we start in Mid-market. Because why? Because I want to take a very small set of accounts, typically smaller accounts, because their demands are less, and I want to nail it. I want to build the product to make them happy, right? So like we have another one of my companies, Sigma. People say, well, it's a mid-market company. It's not a mid-market company. It's an enterprise. We started in mid-market by design, because you want to have some set of customers that you can make very happy, and it's always going to be smaller accounts first. As you're making those customers happy, you're learning As we talked about earlier, about what it takes to make the enterprise happy, and you're building that product out. So eventually, yes, you will move upstream to the enterprise. But oftentimes, to your .10000000, I don't, you can't pick a metric and say that's the metric. It's a feel for what you're getting from the customers to understand when the product is ready. But yeah, you see customers, excuse me, companies go to the enterprise way too fast, right? And any company, Wiz is the only one I've seen do it successfully, where they started in the enterprise. But typically you want to start mid-market, which buys you time to build the product and feature set to go to the enterprise at some later date.

AI assessment note: “It's a feel for what you're getting from the customers to understand when the product”

Q But, but okay. So question, were you just born a good seller? Like, are people born great at sales?

A A hundred percent. You can't teach, someone's either, someone either can sell, or they can't. I can, I can, you can teach someone to be better, but if they don't have the innate ability to sell, some people are petrified of the phone, right? Like, you'll say, pick up the phone, and they're like, oh god, you mean I have to speak to somebody on the other side? Right? I just did not have that fear, right? I was very comfortable getting somebody on the phone, And, you know, thinking three steps ahead, right? And, and that's sales, right? Like, I, I, I can, I can understand, I think, what your needs are before we start the conversation, and, and I can think about the objections I think you're going to have before you have them.

AI assessment note: “A hundred percent. You can't teach, someone's either, someone either can sell, or they can't.”

Q I love that. Uh, and so many things. Uh, tell me, what's the biggest mistake you see founders making scaling to ten million in ARR? In that first journey, what is the biggest mistake that you see founders that you work with make?

A Pure and simple. You hire the wrong CRO because you have no idea what you're looking for. There's companies which you would know that I've consulted on. I've spoken to their CEOs. And I'm like, what are you looking for in sales? And they have no idea. And in order to make the right hire, you first have to know what you're looking for. And, and most of them don't even know what they're looking for. And the problem is they don't have people that they can reach out to, to tell them what to look for. I don't fault them for not knowing the challenges. They don't have investors and board members that can tell them, Hey, this is what you need to go hire to and hiring the wrong CRO kill you because then he or she's going to go build out the sales organization. That's going to be the wrong sales organization. And it's going to take you two years to figure it out. And then you are starting over.

AI assessment note: “You hire the wrong CRO because you have no idea what you're looking for.”

Q But, but okay. So question, were you just born a good seller? Like, are people born great at sales?

A A hundred percent. You can't teach, someone's either, someone either can sell, or they can't. I can, I can, you can teach someone to be better, but if they don't have the innate ability to sell, some people are petrified of the phone, right? Like, you'll say, pick up the phone, and they're like, oh god, you mean I have to speak to somebody on the other side? Right? I just did not have that fear, right? I was very comfortable getting somebody on the phone, And, you know, thinking three steps ahead, right? And, and that's sales, right? Like, I, I, I can, I can understand, I think, what your needs are before we start the conversation, and, and I can think about the objections I think you're going to have before you have them.

AI assessment note: “A hundred percent. You can't teach, someone's either, someone either can sell, or they can't.”

Q When we think about that right type of sales org, what are the biggest ways that companies go wrong in creating that sales org?

A So now we've, we've talked about the CRO, right? So we've talked about what the CRO must be good at, right? Finding You often find product market fit, but, but you got to go deeper than that into some of the things we've just discussed, working with product, capturing data, sharing all that, working collaboratively, et cetera, et cetera. And by the way, you have to have a CEO that supports that, right? Because your CEO might, if the CEO does not support the collaboration between product and sales, you got a problem. Now they operate in silos. And what will happen is the product organization will build what the product organization wants to build. Sales guys are struggling to sell it because it's not what the customers want. Product organization says to the sales organization, you suck. We built the product. You can't sell it. You guys are not good. Sales organization says you built the wrong shit. Now, not only do you have them operating in silos, they don't trust each other. I've seen this and it does not end well, and it's not that uncommon.

AI assessment note: “if the CEO does not support the collaboration between product and sales, you got a problem”