The Exchanges

Q challenging areas for founders. You mentioned that kind of, you need to be number one. We need to get a team in place first, Sam, in this hypothetical situation where you are advising me a terrible, uh, an inexperienced, uh, founder, uh, so you don't need to imagine. Imagine that hard is not difficult, but let's start with a very challenging question, which is how do I sequence sales hires?

A The way I start is hire two individual contributor account executives. Those are sales reps. Always start with two. There are a bunch of reasons why, um, we won't go on too much of a tangent here as to the reasoning. Once you have two successful individual contributors in seat, You probably want to take a parallel path of hiring more individual contributors and hiring your first sales leader. Because once you have two successful votes in place, you're sort of qualified to bring in a great sales leader. When I joined Zenefits, there were two successful sales reps. When I joined Brex, there were two successful sales reps. Um, the, the recruiting process of a sales leader is going to take time. You don't want to entirely stall the business. As you are taking the four to six months possibly to find the right sales leader. And so these parallel paths of continuing to hire, uh, individual contributors and hiring your first sales leader are oftentimes what I recommend. Once you have a sales leader in place, you can then start to do some specialization like hire an SDR. I don't like hiring SDRs prior to hiring a sales leader. Because they need a lot of hands-on management.

AI assessment note: “The way I start is hire two individual contributor account executives.”

Q challenging areas for founders. You mentioned that kind of, you need to be number one. We need to get a team in place first, Sam, in this hypothetical situation where you are advising me a terrible, uh, an inexperienced, uh, founder, uh, so you don't need to imagine. Imagine that hard is not difficult, but let's start with a very challenging question, which is how do I sequence sales hires?

A The way I start is hire two individual contributor account executives. Those are sales reps. Always start with two. There are a bunch of reasons why, um, we won't go on too much of a tangent here as to the reasoning. Once you have two successful individual contributors in seat, You probably want to take a parallel path of hiring more individual contributors and hiring your first sales leader. Because once you have two successful votes in place, you're sort of qualified to bring in a great sales leader. When I joined Zenefits, there were two successful sales reps. When I joined Brex, there were two successful sales reps. Um, the, the recruiting process of a sales leader is going to take time. You don't want to entirely stall the business. As you are taking the four to six months possibly to find the right sales leader. And so these parallel paths of continuing to hire, uh, individual contributors and hiring your first sales leader are oftentimes what I recommend. Once you have a sales leader in place, you can then start to do some specialization like hire an SDR. I don't like hiring SDRs prior to hiring a sales leader. Because they need a lot of hands-on management.

AI assessment note: “The way I start is hire two individual contributor account executives.”

Q I mean, six years ago, Fuck me, I'm getting old, but, um, I, I do have to start. Dude, you're ancient. I mean, you, you are just, I mean, uh, I want to start with the entry into sales before we dig into specifics. What was the entry point for you, and when did you realize that you loved sales?

A I attribute a couple data points of luck to it, to being in sales and in tech sales in the first place. So I graduated from University of Missouri In 2007. And, uh, wasn't considering, like, you know, but for my brother being in the Bay Area doing tech sales. As a graduate of the University of Missouri, that's not even on your radar. I got a job as an SDR at a company called EchoSign. So I sort of lucked into getting into tech sales in the first place because of my brother. And then I lucked into, um, Joining a successful business like EchoSign that allowed me to progress my career. I didn't know what I was looking for at the time. And fortunately, I found Jason Lemkin, who's a friend of both of ours that was leading this company and joined as an SDR when it was effectively being run out of a garage, an actual garage in Palo Alto. The question around when did I sort of figure out that, uh, uh, you know, tech sales was for me, something like that. I was able to start differentiating myself from peers doing the same thing. The feeling of being successful was addictive. And so, you know, it was, it was pretty evident to me early on that I had found something that aligned well with my skillset. That, that, you know, eventually evolved into a tech sales career.

AI assessment note: “I got a job as an SDR at a company called EchoSign.”

Q a little bit, it's a little bit hard to tell. And if you're a founder and CEO, that you've got other shit to do rather than just monitor Sarah's effort levels, which are pretty subjective other than just kind of looking across the room. So my question to you is, how do you measure success when the sales cycles are super long? And is effort really that easy to tell?

A I think everything depends. Um, you know, I grew up in a world where, uh, people were in the office five days a week. And yes, it was, it was easy to tell who was working hard and who wasn't. And, you know, especially in sales of one, there's the like, when are they getting in and when are they leaving? And then there's also the, you know, gosh, this person, I hear them on the phone all the time. Um, and you can just sort of like see and hear the active activity levels, especially in sales. Um, you know, some folks today are remote and that, that is a new challenge. I think Harry though, Um, if you make the right hires, There are metrics that you should start seeing improve almost immediately, regardless of how long the sales cycles are. Some of those metrics will be things like, um, the number of opportunities that we are working. Uh, Harry started two weeks ago. Harry, he immediately started pounding the phones. He came up with this like really creative outbound campaign. And we're, like, I'm joining calls with Harry, uh, with, you know, um, Square. Uh, we've got, we've got a demo with Square today, the CFO, that Harry broke into the account, and, um, now I'm the founder CEO. This is an important call that I'm joining, like, high five to Harry for breaking into this account. Square's now in the pipeline. This is a real call. Um, and so, even if your, your cycle times are long…

AI assessment note: “There are metrics that you should start seeing improve almost immediately, regardless of how long”

Q Okay, so on that note then, for people listening going, I want a rocket ship career, I want great trajectory. Sam, how do you pick which company to hitch your bandwagon to, so to speak?

A It depends on the stage. So there, there are companies that are, you know, a hundred plus, a hundred to 500 employees. Let's say there's a lot of signal around those companies, the trajectory with which they are hiring, the sort of like what I'll describe as heat around fundraising that exists for those businesses, the revenue growth that those companies are experiencing. And so you can join a 100 person company as the 10th sales rep You have a lot of sort of historical signal to go off of that you're picking a company that is a rocket ship to use the cliche. We'll have to come up with a better word. You know, earlier stage, it's much more subjective, right? The things that I mentioned there around fundraising events, employee headcount growth, revenue growth, those are all things that are objective. Um, the subjective side of things and what I think I was able to get right At Zenefits and Brex, so much of the success of a really early stage company is predicated on, um, the, the founder, founder or founders, and their ambitions and aptitude to building a big business. Um, and I remember, uh, you know, this was, this was further in my career, but when I joined Zenefits, I think I was 29 years old, and I was fortunate to have Jason, uh, again from EchoSign, Who had moved on from Adobe, he was introducing me to a number of startups, and I started to sort of pattern match around w…

AI assessment note: “It depends on the stage. So there, there are companies that are, you know, a hundred plus”

Q paying non friends and family, and now I'm going to go out and hire my two reps. You said two, okay. I'm going to make them fight to the death, like hunger games, uh, kidding. Obviously that'd be impossible. It'd be immoral to suggest such things. Um, but, uh, my question to you is, what's the profile, and where do I find these people? How, how do I hire them?

A Profile, the things that I would solve for, and then one specific thing that I would not, and then we'll get into sourcing. Uh, the things that I would solve for, early stage startup experience. If you are hiring your first AE, first AEs number one and two, They need to have seen an early stage startup environment. Do not hire from an extreme example, be Salesforce, but gosh, even today, you know, don't hire from a rep who came from rippling. And joined Rippling when they were 500 employees. The experience that they're going to have onboarding into that environment is radically different from what they will experience onboarding into your environment. And so I would qualify this as something like one of the first 10, ideally 10, AEs at a startup, and the earlier the better. So early stage startup experience is, you know, top of, ah, ah, sort of like profile things that I would solve for. Next on the list is they have to have a track record of success. Um, sales is objective. You want to hire the best possible person that you can. If they're coming out of an environment that had eight sales reps, you really hope that they are one, one or two. And we're going to talk about how to solve for that in the, the light category of sourcing. So track record of performance, early stage startup experience, You want somebody who has seen similar, uh, deal sizes, uh, with similar company typ…

AI assessment note: “Profile, the things that I would solve for, and then one specific thing”

Q I think is so important. And with more specialization, You get higher conversion rates in channels because you're more targeted messaging wise. So like, I think that's really important. You mentioned about kind of generation. Reps expect things to be handed to them. Marketing are not geniuses, and not in a disrespectful way, but they're not magic. Who is responsible for lead generation, and how do you think about that?

A Well, certainly in the early days, and I would argue as companies progress as well, I, you know, if you only have two AEs, those AEs have to be responsible for generating some of their own demand. Um, that often takes form of outbound, but they can come up with, uh, clever ways to generate demand outside of the outbound. But salespeople should absolutely be responsible for controlling their own destiny in a way, generating their own demand that often manifests through outbound. I think this is true on day one. This should be true on day 1000. I'll tell you a quick story about Brex. Um, where I think, you know, it really illustrates the importance of this point. When we were a relatively mature startup, uh, so let's call it 50 to a hundred million dollars of annualized revenue. One of the things that we noticed was that the AEs were sourcing far more of their own revenue than their SDR counterparts. Uh, so even though they were full cycle, they were also closing this revenue. So you have an SDR who is spending a hundred percent of their time on outbound and an AE who is spending, let's call it, 50% of their time on the, on outbound. And the AE is sourcing more closed revenue. It shouldn't be that way, Harry, right? But it was. And the reason behind that is because AEs had, uh, their opportunities converted at higher rates, And the opportunities that they were generating, uh, gen…

AI assessment note: “AEs have to be responsible for generating some of their own demand.”

Q I, I, I totally agree with you there. What sales tactic has died a death? What's no more?

A There are two. We talked about one, uh, this spraying and praying of emails, especially at an early stage, uh, I think, um, is, uh, uh, something of the past. The second thing that comes to mind is People are going to start meeting their customers in person again. You know, pre-twenty-twenty, a lot of customer interactions happened in person, and in twenty-twenty hit, people went remote, and I think, you know, we have not returned to an environment where we are meeting our customers in person, we're meeting our prospects in person, and I think that today, if you're doing that, it's a real competitive advantage, but I think forward-looking, this idea that we never are going to meet our customers in person, We're just going to return to the norm here. Uh, we measured conversion rates at Brex. When we met a customer in person, we had three X the likelihood of closing that deal than if we didn't. And so like the days of working from home, doing Zooms only to meet with customers, not meeting customers and developing personal relationships those days, I think are going to be a thing of the past, if not already.

AI assessment note: “spraying and praying of emails, especially at an early stage... is something of the past”

Q of the most important things to have in a team, because as you said, their success is so addictive. I always think, how do I create that momentum in teams? You've been in sales respectfully then for Christ, 17 years without aging you. Um, so with that in mind, what do you know now that you wish you'd known when you started 17 years ago in that garage with EchoSign.

A I didn't, at the time, appreciate how hard building a successful startup is. You know, I took a handful of interviews when I first joined, ah, a company, and, you know, EchoSign gave me an offer, maybe I had offers from other people, and I probably looked at, like, you know, the comp, or something like that. One of the things was how far is the commute. To make my assessment on which firm to join, And, um, you know, the reality is, uh, the, the importance of picking the right company, uh, it, it, it just really defines one's career. I attribute so much of my success to joining the right businesses. Uh, now, like, I was able to perform within those businesses, and, you know, for context, we're talking about Echosign, Zenefits, and then Brex on the sales side. So much of my success was predicated on the success of those businesses, and I don't know that I had an appreciation for one, how hard it is, and two, um, the importance of picking correctly.

AI assessment note: “I didn't, at the time, appreciate how hard building a successful startup is.”

Q Okay, so on that note then, for people listening going, I want a rocket ship career, I want great trajectory. Sam, how do you pick which company to hitch your bandwagon to, so to speak?

A It depends on the stage. So there, there are companies that are, you know, a hundred plus, a hundred to 500 employees. Let's say there's a lot of signal around those companies, the trajectory with which they are hiring, the sort of like what I'll describe as heat around fundraising that exists for those businesses, the revenue growth that those companies are experiencing. And so you can join a 100 person company as the 10th sales rep You have a lot of sort of historical signal to go off of that you're picking a company that is a rocket ship to use the cliche. We'll have to come up with a better word. You know, earlier stage, it's much more subjective, right? The things that I mentioned there around fundraising events, employee headcount growth, revenue growth, those are all things that are objective. Um, the subjective side of things and what I think I was able to get right At Zenefits and Brex, so much of the success of a really early stage company is predicated on, um, the, the founder, founder or founders, and their ambitions and aptitude to building a big business. Um, and I remember, uh, you know, this was, this was further in my career, but when I joined Zenefits, I think I was 29 years old, and I was fortunate to have Jason, uh, again from EchoSign, Who had moved on from Adobe, he was introducing me to a number of startups, and I started to sort of pattern match around w…

AI assessment note: “It depends on the stage. So there, there are companies that are”

Q I want to go deeper in a chronological order specifically. We mentioned, we mentioned just so it follows cohesion. We mentioned that, you know, hire two at a time. Before that point, does the founder need to be the one to create the playbook, and do they always need to be the one to sell? I argue yes. People tell me I'm full of shit.

A Uh, you're not full of shit. Uh, you're absolutely correct, and good, good point on the, the, uh, sequencing here. So I, I jumped right into when, when you are ready to hire, but what are the signals that, that you are actually ready to hire? But you should have a handful of non-friends and family revenue-generating customers, and a process that you believe is repeatable in terms of generating more of these customers. The reason that I say handful is because it's not the same for, uh, businesses that differ from one another. If you're in a very transactional business like Rex was, Rex actually had tens of customers before bringing on their first sales rep. Now, if you're more of, uh, an upmarket enterprise like product, your ACV is six figures. You may actually only have two or three paying Uh, non-friends and family, what I'll describe as more enterprise-like customers before you're ready to bring on a salesperson. But look, if, if you as the founder cannot close customers and generate revenue, um, people that sort of specialize in sales will definitely not be able to. There is no one better qualified to acquire your first set of customers than you as the founder. Um, regardless of sort of your professional training, uh, and so do not hire a salesperson before you have, uh, uh, customers.

AI assessment note: “You're not full of shit. Uh, you're absolutely correct”

Q paying non friends and family, and now I'm going to go out and hire my two reps. You said two, okay. I'm going to make them fight to the death, like hunger games, uh, kidding. Obviously that'd be impossible. It'd be immoral to suggest such things. Um, but, uh, my question to you is, what's the profile, and where do I find these people? How, how do I hire them?

A Profile, the things that I would solve for, and then one specific thing that I would not, and then we'll get into sourcing. Uh, the things that I would solve for, early stage startup experience. If you are hiring your first AE, first AEs number one and two, They need to have seen an early stage startup environment. Do not hire from an extreme example, be Salesforce, but gosh, even today, you know, don't hire from a rep who came from rippling. And joined Rippling when they were 500 employees. The experience that they're going to have onboarding into that environment is radically different from what they will experience onboarding into your environment. And so I would qualify this as something like one of the first 10, ideally 10, AEs at a startup, and the earlier the better. So early stage startup experience is, you know, top of, ah, ah, sort of like profile things that I would solve for. Next on the list is they have to have a track record of success. Um, sales is objective. You want to hire the best possible person that you can. If they're coming out of an environment that had eight sales reps, you really hope that they are one, one or two. And we're going to talk about how to solve for that in the, the light category of sourcing. So track record of performance, early stage startup experience, You want somebody who has seen similar, uh, deal sizes, uh, with similar company typ…

AI assessment note: “Profile, the things that I would solve for, and then one specific thing that I would not”

Q a little bit, it's a little bit hard to tell. And if you're a founder and CEO, that you've got other shit to do rather than just monitor Sarah's effort levels, which are pretty subjective other than just kind of looking across the room. So my question to you is, how do you measure success when the sales cycles are super long? And is effort really that easy to tell?

A I think everything depends. Um, you know, I grew up in a world where, uh, people were in the office five days a week. And yes, it was, it was easy to tell who was working hard and who wasn't. And, you know, especially in sales of one, there's the like, when are they getting in and when are they leaving? And then there's also the, you know, gosh, this person, I hear them on the phone all the time. Um, and you can just sort of like see and hear the active activity levels, especially in sales. Um, you know, some folks today are remote and that, that is a new challenge. I think Harry though, Um, if you make the right hires, There are metrics that you should start seeing improve almost immediately, regardless of how long the sales cycles are. Some of those metrics will be things like, um, the number of opportunities that we are working. Uh, Harry started two weeks ago. Harry, he immediately started pounding the phones. He came up with this like really creative outbound campaign. And we're, like, I'm joining calls with Harry, uh, with, you know, um, Square. Uh, we've got, we've got a demo with Square today, the CFO, that Harry broke into the account, and, um, now I'm the founder CEO. This is an important call that I'm joining, like, high five to Harry for breaking into this account. Square's now in the pipeline. This is a real call. Um, and so, even if your, your cycle times are long…

AI assessment note: “metrics that you should start seeing improve almost immediately, regardless of how long”

Q So we've got, we've got our sales team, but they're, they're doing okay, but wait, they're not actually doing okay. Um, there's something that's not working. How do most founders diagnose bottlenecks in growth? And how do you advise the right way to diagnose bottlenecks in growth? Now we have the team in place.

A You know, I Did some consulting between Zenefits and Brex. And I talk with founders, uh, as part of my role at Founders Fund, uh, my prior role at Founders Fund regularly. And the conversation almost universally goes something like this. Harry, we're sitting here in late March. Let's just pretend the quarter ended. And, you know, we, we missed our revenue target. And when I ask, why did we miss our revenue target? Um, almost universally, the answer is something like, we had a couple big deals that had those big deals just closed, um, we would have hit our plan. And, you know, unfortunately, they pushed, uh, and we missed. But like, you know, I'm sort of diagnosing our problem with, we didn't close, uh, you know, company A and company B that were in the pipeline. And the reality is that I would say for four out of five startups, maybe more, what they are effectively diagnosing the problem or the bottleneck to growing faster ads is conversion rates. And for almost all startups, the bottleneck to growing faster is actually around demand gen, opportunity creation. If you think about just sort of a simple version of this, if Everything else remains constant, and you are able to two x the number of opportunities that you are creating. You have effectively just doubled your sales, and doing the same thing on conversion rates is much more difficult to do. Meaning, you know, two xing co…

AI assessment note: “for almost all startups, the bottleneck to growing faster is actually around demand gen”

Q I think is so important. And with more specialization, You get higher conversion rates in channels because you're more targeted messaging wise. So like, I think that's really important. You mentioned about kind of generation. Reps expect things to be handed to them. Marketing are not geniuses, and not in a disrespectful way, but they're not magic. Who is responsible for lead generation, and how do you think about that?

A Well, certainly in the early days, and I would argue as companies progress as well, I, you know, if you only have two AEs, those AEs have to be responsible for generating some of their own demand. Um, that often takes form of outbound, but they can come up with, uh, clever ways to generate demand outside of the outbound. But salespeople should absolutely be responsible for controlling their own destiny in a way, generating their own demand that often manifests through outbound. I think this is true on day one. This should be true on day 1000. I'll tell you a quick story about Brex. Um, where I think, you know, it really illustrates the importance of this point. When we were a relatively mature startup, uh, so let's call it 50 to a hundred million dollars of annualized revenue. One of the things that we noticed was that the AEs were sourcing far more of their own revenue than their SDR counterparts. Uh, so even though they were full cycle, they were also closing this revenue. So you have an SDR who is spending a hundred percent of their time on outbound and an AE who is spending, let's call it, 50% of their time on the, on outbound. And the AE is sourcing more closed revenue. It shouldn't be that way, Harry, right? But it was. And the reason behind that is because AEs had, uh, their opportunities converted at higher rates, And the opportunities that they were generating, uh, gen…

AI assessment note: “salespeople should absolutely be responsible for controlling their own destiny in a way”

Q doing such a rocket ship in sales, are you not just an order taker? I don't mean that disrespectfully, but like when it's like being pulled out of your hand, It's quite fun being in sales, isn't it? But when you are fucking slogging your guts out in enterprise sales, in long sales cycles, it's, it's a different game. Is it not quite easy when you're at a rocket ship?

A I think in any sales environment, there is, um, a lot of nuance that leads to huge discrepancy in performance. And so you described, you know, there, there are, of course, sales environments where selling the product is more challenging. There are sales environments where the sales cycle is significantly longer. There are sales cycles where the AEs are controlling more of their investment through outbound versus taking up leads for marketing and inbound. Um, but what happens seemingly universally, even at the best companies in the world, like Zenefits in 2014, is there are outlier performers That perform at something like three X to the bottom performer. And so you get a team of like 10 people, even when you're in an environment where the product is flying off the shelves, there is still this huge discrepancy of performance. And I love sales because it's so objective compared to other areas of the business where you have a 10 X, you know, performer and it's, it's, it's like hard to, hard to know that. Or certainly harder than it is in sales. And so that's what comes to mind. Like, of course you want to be in an environment where the business is doing well, but it doesn't mean that the role becomes easier or, you know, your success is more guaranteed or anything like that, because you still need to be the best. If you want to get promoted faster than anybody else, if you want to…

AI assessment note: “it doesn't mean that the role becomes easier or, you know, your success is more guaranteed”

Q of the most important things to have in a team, because as you said, their success is so addictive. I always think, how do I create that momentum in teams? You've been in sales respectfully then for Christ, 17 years without aging you. Um, so with that in mind, what do you know now that you wish you'd known when you started 17 years ago in that garage with EchoSign.

A I didn't, at the time, appreciate how hard building a successful startup is. You know, I took a handful of interviews when I first joined, ah, a company, and, you know, EchoSign gave me an offer, maybe I had offers from other people, and I probably looked at, like, you know, the comp, or something like that. One of the things was how far is the commute. To make my assessment on which firm to join, And, um, you know, the reality is, uh, the, the importance of picking the right company, uh, it, it, it just really defines one's career. I attribute so much of my success to joining the right businesses. Uh, now, like, I was able to perform within those businesses, and, you know, for context, we're talking about Echosign, Zenefits, and then Brex on the sales side. So much of my success was predicated on the success of those businesses, and I don't know that I had an appreciation for one, how hard it is, and two, um, the importance of picking correctly.

AI assessment note: “I didn't, at the time, appreciate how hard building a successful startup is.”

Q I want to go deeper in a chronological order specifically. We mentioned, we mentioned just so it follows cohesion. We mentioned that, you know, hire two at a time. Before that point, does the founder need to be the one to create the playbook, and do they always need to be the one to sell? I argue yes. People tell me I'm full of shit.

A Uh, you're not full of shit. Uh, you're absolutely correct, and good, good point on the, the, uh, sequencing here. So I, I jumped right into when, when you are ready to hire, but what are the signals that, that you are actually ready to hire? But you should have a handful of non-friends and family revenue-generating customers, and a process that you believe is repeatable in terms of generating more of these customers. The reason that I say handful is because it's not the same for, uh, businesses that differ from one another. If you're in a very transactional business like Rex was, Rex actually had tens of customers before bringing on their first sales rep. Now, if you're more of, uh, an upmarket enterprise like product, your ACV is six figures. You may actually only have two or three paying Uh, non-friends and family, what I'll describe as more enterprise-like customers before you're ready to bring on a salesperson. But look, if, if you as the founder cannot close customers and generate revenue, um, people that sort of specialize in sales will definitely not be able to. There is no one better qualified to acquire your first set of customers than you as the founder. Um, regardless of sort of your professional training, uh, and so do not hire a salesperson before you have, uh, uh, customers.

AI assessment note: “you're absolutely correct, and good, good point on the, the, uh, sequencing here.”

Q So we've got, we've got our sales team, but they're, they're doing okay, but wait, they're not actually doing okay. Um, there's something that's not working. How do most founders diagnose bottlenecks in growth? And how do you advise the right way to diagnose bottlenecks in growth? Now we have the team in place.

A You know, I Did some consulting between Zenefits and Brex. And I talk with founders, uh, as part of my role at Founders Fund, uh, my prior role at Founders Fund regularly. And the conversation almost universally goes something like this. Harry, we're sitting here in late March. Let's just pretend the quarter ended. And, you know, we, we missed our revenue target. And when I ask, why did we miss our revenue target? Um, almost universally, the answer is something like, we had a couple big deals that had those big deals just closed, um, we would have hit our plan. And, you know, unfortunately, they pushed, uh, and we missed. But like, you know, I'm sort of diagnosing our problem with, we didn't close, uh, you know, company A and company B that were in the pipeline. And the reality is that I would say for four out of five startups, maybe more, what they are effectively diagnosing the problem or the bottleneck to growing faster ads is conversion rates. And for almost all startups, the bottleneck to growing faster is actually around demand gen, opportunity creation. If you think about just sort of a simple version of this, if Everything else remains constant, and you are able to two x the number of opportunities that you are creating. You have effectively just doubled your sales, and doing the same thing on conversion rates is much more difficult to do. Meaning, you know, two xing co…

AI assessment note: “for almost all startups, the bottleneck to growing faster is actually around demand gen”

Q Okay. Discounting. Do we ever do it? Do we not do it? What, what's the advice?

A Yes. With qualifications, you know, early stage startup, if I can describe the environment that I prefer to be in, it's something like we are perceived as the premium product, both because of the, uh, quality of our product, but also the price point with which we sell the better product. And I have the ability to discount that product to accelerate deal cycles. So much of sales is psychology. And if you're a buyer, you get the feeling of getting a good deal drives behavior. You know, there's a saying, Harry, um, time kills all deals, especially in the early days. If providing a discount does things like accelerates deal cycles, prevents people from looking at competitors and allows you to move on to another opportunity. Um, I do like leveraging it in certain instances. I think where people make mistakes and salespeople in particular make mistakes is like just defaulting to discounting. Um, this is something that happens very late in a deal and it happens with A very clear trade-off, which is driving urgency to close.

AI assessment note: “Yes. With qualifications”

Q Sam, what's your biggest hiring mistakes? Everyone makes mistakes. My mother always tells me I was one.

A Your brother has very high expectations because you're crushing it here. Okay. Um, I think my biggest hiring mistakes were pretending that concerns that I had in the interview, uh, uh, at hiring process didn't really exist in sales in particular. Uh, you know, it, it is performance based. Um, but it's also like the, the team dynamic is so important, like this concept of building a winning culture and, and having people that are positive influences on their peers. You cannot have folks that sort of sit around and complain about the product or complain about marketing Or whatever the, like, complaint of the day is. Because it rubs off on their peers, and before you know it, you have just, like, an unhappy sales floor where one person is negatively impacting the broader team. And I have probably rehired or hired people where, you know, this concern had been flagged, where it's like, you know, they hit quota, but there, there is some serious baggage, uh, that, that comes along with this person. It's like, oh, they hit quota. We need to hire 10 people. Come on, like join. And, and so, you know, that's one example, but I think it's, it's pretending That things that were concerns in the interview process didn't really exist because like, either they were coming from this place or I, I, I just put that again, be sort of blinded. And then those things oftentimes come to manifest, uh, an…

AI assessment note: “biggest hiring mistakes were pretending that concerns that I had in the interview... didn't really exist”

Q I totally agree with you. I, I fund in-person companies. What would you most like to change about the world of sales moving forwards?

A My experience with many salespeople today, and, you know, we've talked a little bit about this remote environment that I think has had influence. But I think today's salespeople have gotten a little bit lazy. And I think, um, they and we, cause I consider myself, you know, part of this community. Couple of things have happened. One, we have become overly dependent on marketing, SDR, anybody to source our own leads. We, we are, we are consumers of, uh, demand, and if we're not well-fed, then you can't expect us to close revenue. So that's, I think, one, one, like, trend that I believe needs to change. And the second thing One, it is around effort, um, and especially with remote companies, and I think that this is true with sales, and it's likely true beyond sales, where, you know, Harry, when I joined Brex in 2018, and we did this podcast, startups were really fucking hard. And my first day at Rex, I had a meeting that was at eight a.m., and I had a meeting that was our executive, our weekly executive meeting, and it started at eight p.m., and didn't end until midnight. And I walked home from the office after midnight, and I was in meetings from eight a.m. until midnight. Same thing was true at Zenefits. It's, it's just, and look, I was an executive employee there, but, uh, you know, I think, um, uh, all of the people Hit the company. We're working that hard and it required it. …

AI assessment note: “one, like, trend that I believe needs to change. And the second thing”

Q doing such a rocket ship in sales, are you not just an order taker? I don't mean that disrespectfully, but like when it's like being pulled out of your hand, It's quite fun being in sales, isn't it? But when you are fucking slogging your guts out in enterprise sales, in long sales cycles, it's, it's a different game. Is it not quite easy when you're at a rocket ship?

A I think in any sales environment, there is, um, a lot of nuance that leads to huge discrepancy in performance. And so you described, you know, there, there are, of course, sales environments where selling the product is more challenging. There are sales environments where the sales cycle is significantly longer. There are sales cycles where the AEs are controlling more of their investment through outbound versus taking up leads for marketing and inbound. Um, but what happens seemingly universally, even at the best companies in the world, like Zenefits in 2014, is there are outlier performers That perform at something like three X to the bottom performer. And so you get a team of like 10 people, even when you're in an environment where the product is flying off the shelves, there is still this huge discrepancy of performance. And I love sales because it's so objective compared to other areas of the business where you have a 10 X, you know, performer and it's, it's, it's like hard to, hard to know that. Or certainly harder than it is in sales. And so that's what comes to mind. Like, of course you want to be in an environment where the business is doing well, but it doesn't mean that the role becomes easier or, you know, your success is more guaranteed or anything like that, because you still need to be the best. If you want to get promoted faster than anybody else, if you want to…

AI assessment note: “it doesn't mean that the role becomes easier or, you know, your success is more guaranteed”

Q Okay. Discounting. Do we ever do it? Do we not do it? What, what's the advice?

A Yes. With qualifications, you know, early stage startup, if I can describe the environment that I prefer to be in, it's something like we are perceived as the premium product, both because of the, uh, quality of our product, but also the price point with which we sell the better product. And I have the ability to discount that product to accelerate deal cycles. So much of sales is psychology. And if you're a buyer, you get the feeling of getting a good deal drives behavior. You know, there's a saying, Harry, um, time kills all deals, especially in the early days. If providing a discount does things like accelerates deal cycles, prevents people from looking at competitors and allows you to move on to another opportunity. Um, I do like leveraging it in certain instances. I think where people make mistakes and salespeople in particular make mistakes is like just defaulting to discounting. Um, this is something that happens very late in a deal and it happens with A very clear trade-off, which is driving urgency to close.

AI assessment note: “Yes. With qualifications, you know, early stage startup”

Q before they even enter sales processes now. I think there's a Gartner thing that says like, 88% know that they're gonna buy when they enter a sales process. I'm butchering the number, but it's, it's, it's a high number. Like the old SDR, Sam, I liked your post about, you know, HR integrations. We're a great provider. Is that not gone and we're moved to a world of content now?

A It's the right question. Um, I love outbound. I love sales outbound. Uh, and I think, you know, what, what you're describing Harry is a form of outbound that I think is not effective. And, and maybe, maybe let's, let's, let's approach it like this. What I see most Say early sales reps, SDR teams, startups. What I see most folks doing is they purchase, you know, CRM, they purchase, um, zoom info to get, uh, contact information. They purchase outreach to, uh, have email sequencing, and then they write like a, uh, you know, version of the copy that pitches their product a little bit, and then they drop the universe into, Uh, seven email sequence outbound cold email. And Harry, these are going, like, we're, we're, we're a 10 person startup. Nobody knows who we are. Harry, you are a 22 year old SDR that just started at our 10 person startup. Nobody knows who you are. So, you're sending an email to, let's use your example, the VP of HR at Brex, a twenty-two-year-old SDR, ten-person startup, it's the 12th email that they have received today, trying to pitch them on a payroll or whatever product they're pitching them on, and it goes right into the trash. So everyone, most people, sorry, not everyone, most startups are doing outbound wrong. I think the way that startups should be approaching this, first is on who you are targeting, and then how you target them. So who you are targeting,…

AI assessment note: “what you're describing Harry is a form of outbound that I think is not effective”

Q before they even enter sales processes now. I think there's a Gartner thing that says like, 88% know that they're gonna buy when they enter a sales process. I'm butchering the number, but it's, it's, it's a high number. Like the old SDR, Sam, I liked your post about, you know, HR integrations. We're a great provider. Is that not gone and we're moved to a world of content now?

A It's the right question. Um, I love outbound. I love sales outbound. Uh, and I think, you know, what, what you're describing Harry is a form of outbound that I think is not effective. And, and maybe, maybe let's, let's, let's approach it like this. What I see most Say early sales reps, SDR teams, startups. What I see most folks doing is they purchase, you know, CRM, they purchase, um, zoom info to get, uh, contact information. They purchase outreach to, uh, have email sequencing, and then they write like a, uh, you know, version of the copy that pitches their product a little bit, and then they drop the universe into, Uh, seven email sequence outbound cold email. And Harry, these are going, like, we're, we're, we're a 10 person startup. Nobody knows who we are. Harry, you are a 22 year old SDR that just started at our 10 person startup. Nobody knows who you are. So, you're sending an email to, let's use your example, the VP of HR at Brex, a twenty-two-year-old SDR, ten-person startup, it's the 12th email that they have received today, trying to pitch them on a payroll or whatever product they're pitching them on, and it goes right into the trash. So everyone, most people, sorry, not everyone, most startups are doing outbound wrong. I think the way that startups should be approaching this, first is on who you are targeting, and then how you target them. So who you are targeting,…

AI assessment note: “what you're describing Harry is a form of outbound that I think is not effective”

Q and far between. Just let me finish it. You're few and far between. You're very expensive, respectfully, and it was impossible to hire you. I'm just a startup, dude. You're not gonna join me again, having seen what you've seen, and I mean, Are we not living in a bit of a dream world having this early track of success also trying to get them to an early stage startup?

A I think it's the right question. Um, and it's surprisingly the in like number of these people is quite high. If we think about, you know, how many, uh, technology startups, uh, and, and by the way, there's one thing that you don't necessarily need to solve for here. And that is, you should, you do not need to solve for the logo. Meaning, this person doesn't have needed to be an early sales rep at a company that ultimately realized a multi-billion dollar valuation. In fact, you know, there's, there's logic to the inverse being true, where if they were a sales rep at a company that had a product that was harder to sell, If, if your product is easier to sell, that they can sort of be freed, that, um, that they will, they will be more effective at selling. That said, um, if we think about the number of early stage startups that hired up to 10 sales reps over the last five years, that's a large number of startups, and that's a large number of people. Um, and so, you know, when I joined Rex, the, the recruiting ground for me was, uh, fertile. Uh, there, there were countless AEs that I could, could, uh, recruit from my personal network that met this criteria, and so you'd be surprised at, um, how, how many folks there are. Now, there are also a lot of folks who are less good, uh, meaning they weren't at the top of the leaderboard, but if we just multiply the number of startups that ha…

AI assessment note: “if we just multiply the number of startups... we're in the thousands.”

Q I totally agree with you. I, I fund in-person companies. What would you most like to change about the world of sales moving forwards?

A My experience with many salespeople today, and, you know, we've talked a little bit about this remote environment that I think has had influence. But I think today's salespeople have gotten a little bit lazy. And I think, um, they and we, cause I consider myself, you know, part of this community. Couple of things have happened. One, we have become overly dependent on marketing, SDR, anybody to source our own leads. We, we are, we are consumers of, uh, demand, and if we're not well-fed, then you can't expect us to close revenue. So that's, I think, one, one, like, trend that I believe needs to change. And the second thing One, it is around effort, um, and especially with remote companies, and I think that this is true with sales, and it's likely true beyond sales, where, you know, Harry, when I joined Brex in 2018, and we did this podcast, startups were really fucking hard. And my first day at Rex, I had a meeting that was at eight a.m., and I had a meeting that was our executive, our weekly executive meeting, and it started at eight p.m., and didn't end until midnight. And I walked home from the office after midnight, and I was in meetings from eight a.m. until midnight. Same thing was true at Zenefits. It's, it's just, and look, I was an executive employee there, but, uh, you know, I think, um, uh, all of the people Hit the company. We're working that hard and it required it. …

AI assessment note: “one, like, trend that I believe needs to change”

Q ways. Um, so yes. Okay. So we're there. Um, any advice to me on, I'm, I'm loving kind of this chronology. So we, we've got these two. Um, we want to make them an offer. Any advice on sales comp, Sam? I've got no idea. I'm, I'm giving these two wraps. It's the first time I've hired them. What's the right way to approach sales comp for the first two?

A You know, I think for the, for the early ones, I think you probably just have a conversation around just like, what are your comp expectations? You're probably going in with an idea of what you believe is market rate for the hire that you are making. Let's just say like, you know, at maturity, you think this sales rep is going to be able to close something like a million dollars in ARR. We're a mid market sale. Um, you know, and we can, we can afford to pay somebody in this role. Let's call it 200 K. Uh, you know, we're early stage. Sorry to give a bit more equity. We think ballpark is going to be like a 160 K total comp. That's like, you know, where we think it is. Harry, you're the candidate. Um, you know, what are your comp expectations? Well, Sam, today I'm at one 80. My company is a little bit bigger. I would, um, You know, I, I would take a little bit of a hit there and he, you know, you go in at, at one 60 and you give them a bit more of the equity off the company, but I think, um, it's not one size fits all. You don't have an idea based off of how much revenue you think a sales rep could generate at maturity. AE range, 100 to two 50 is, is like the AC, uh, is the, um, uh, total comp, uh, for, uh, a sales rep. So wide range there based on a number of factors.

AI assessment note: “I think for the early ones, I think you probably just have a conversation”

Q and far between. Just let me finish it. You're few and far between. You're very expensive, respectfully, and it was impossible to hire you. I'm just a startup, dude. You're not gonna join me again, having seen what you've seen, and I mean, Are we not living in a bit of a dream world having this early track of success also trying to get them to an early stage startup?

A I think it's the right question. Um, and it's surprisingly the in like number of these people is quite high. If we think about, you know, how many, uh, technology startups, uh, and, and by the way, there's one thing that you don't necessarily need to solve for here. And that is, you should, you do not need to solve for the logo. Meaning, this person doesn't have needed to be an early sales rep at a company that ultimately realized a multi-billion dollar valuation. In fact, you know, there's, there's logic to the inverse being true, where if they were a sales rep at a company that had a product that was harder to sell, If, if your product is easier to sell, that they can sort of be freed, that, um, that they will, they will be more effective at selling. That said, um, if we think about the number of early stage startups that hired up to 10 sales reps over the last five years, that's a large number of startups, and that's a large number of people. Um, and so, you know, when I joined Rex, the, the recruiting ground for me was, uh, fertile. Uh, there, there were countless AEs that I could, could, uh, recruit from my personal network that met this criteria, and so you'd be surprised at, um, how, how many folks there are. Now, there are also a lot of folks who are less good, uh, meaning they weren't at the top of the leaderboard, but if we just multiply the number of startups that ha…

AI assessment note: “we're in the thousands. There are thousands of these people that exist.”