Feb 18, 2024 · 2h 1m · lennys-podcast
Building a world-class sales org | Jason Lemkin (SaaStr)
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In this masterclass on B2B software sales, SaaStr founder Jason Lemkin breaks down an actionable playbook for early-stage founders and product leaders looking to build and scale a world-class sales organization. He shares tactical frameworks for founder-led sales, rigorous hiring, executive compensation, and aligning product development with consultative customer success.
How this conversation actually went
Every chapter scored 0–10 on four independent dynamics. Hover any point for the reasoning behind the score. Lenny holds 15.5% of the talking time here. How this is scored →
Lenny as informed peer 3.5 Guest teaching 6.5 Guest disagreement 3.1 Lenny pushing back 0.7
speaking balance: gold is Lenny, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 1:31:50 Jason blasts VC advice on annual contracts
Jason aggressively dismantles common VC dogma mandating annual contracts for SMBs, calling it terrible advice from people who do not build products.
Hardest push from Lenny ▶ 33:46 Lenny challenges whether scaled VPs can focus purely on processLenny questions Jason's rule that all sales VPs must carry deals, prompting Jason to adamantly shake his head and cite Benioff personally selling at Davos.
Biggest teaching moment ▶ 55:15 The heuristic of hiring from harder productsJason educates Lenny on why hiring reps who sold easier products is catastrophic, detailing how reps trained in harder environments effortlessly succeed.
Lenny holds their own ▶ 24:29 Lenny synthesizes early sales hiring rulesLenny cleanly formalizes Jason's scattered guidance into an operational checklist and pushes Jason on validating repeatability before hiring reps.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | Lenny as informed peer | Guest teaching | Guest disagreement | Lenny pushing back | Why |
|---|---|---|---|---|---|---|
| Welcoming Jason Lemkin and Framing the Sales Discussion | 3 | 6 | 3 | 1 | Lenny admits sales is a complete black box to him and asks whether all B2B companies inevitably need a sales team. Jason explains the realities of self-serve versus sales-assisted motions, warning that founders who avoid sales out of distaste almost always kill their companies. | |
| Why Founders Must Close the First Ten Customers as 'A+ Middlers' | 3 | 7 | 3 | 0 | Jason educates Lenny on why founders must close the first ten deals themselves, coining the concept of 'A+ middlers' who excel at the product conversation even if they cannot close conventionally. Lenny listens attentively and seeks clarification on the terminology. | |
| Hiring the First Two Sales Reps and the 'Would I Buy' Test | 2 | 8 | 4 | 0 | Jason details why early startups must hire two reps rather than one to enable an A/B test, emphasizing the 'would I buy from them' standard over prestige logos on a resume. Lenny facilitates by asking for the right triggers and profile. | |
| When to Hire a VP of Sales and Ensuring Leaders Carry a Bag | 2 | 7 | 4 | 1 | Jason explains the mistake of hiring a VP of Sales prematurely, insisting that leadership must be in deals 20-30 hours a week rather than hiding behind dashboards. Lenny clarifies terms like 'carrying a bag' and prompts on executive expectations. | |
| Summary of Early Sales Hiring Milestones and Core Principles | 6 | 3 | 1 | 2 | Lenny synthesizes the key insights shared so far into structured milestones and tests Jason on whether having a repeatable playbook is a prerequisite before bringing on sales reps. Jason validates and refines Lenny's framework. | |
| Diagnosing Sales Burnout and Screening for Passionate Closers | 2 | 7 | 5 | 0 | Jason delivers an impassioned critique of pervasive industry burnout, observing that many veteran sales candidates simply no longer want to sell or travel to meet prospects. Lenny listens as Jason urges founders to screen ruthlessly for genuine passion for the craft. | |
| The 14-Day Interview Test and Why Executives Must Meet Customers | 4 | 6 | 4 | 3 | Lenny pushes back gently, asking if process-heavy VPs of sales are appropriate at later stages, prompting Jason to shake his head and point out that even Marc Benioff still personally meets enterprise prospects at Davos. | |
| The 'Sell Me This App' Interview and Consultative Selling | 3 | 7 | 3 | 0 | Jason explains the practical interview test of having candidates pitch the actual app, using a consultative Tesla sales analogy to show how modern B2B selling solves complex problems rather than pushing commodities. Lenny connects this to previous discussions on positioning. | |
| Restoring Rigor in Sales Hiring: Real Demos and Reference Checks | 3 | 8 | 5 | 0 | Jason decries how standard hiring rigor like backchannel reference checks and pitch assessments were abandoned during the hiring bubble, emphasizing that a failed hire is entirely the company's fault. Lenny asks for exact operational guidance on structuring the pitch assignment. | |
| Structuring Early Sales Compensation, Quotas, and OTE Models | 5 | 6 | 2 | 1 | Jason lays out the mechanics of early sales comp, advocating for paying market OTE and granting reps 100% of deal value in their first ramp quarter before scaling toward a 4x to 5x quota multiple. Lenny actively summarizes the compensation formula. | |
| Rooting Out Mis-Hires and Hiring from Harder Sales Environments | 3 | 8 | 4 | 0 | Jason provides a golden heuristic for sales recruiting: hire people whose previous product was distinctly harder to sell, citing Sam Blonde's trajectory from Intacct to EchoSign. Lenny probes for specific heuristics to assess product sales difficulty. | |
| Scaling the Sales Organization: The Rule of 8 and Stretch Leaders | 3 | 7 | 2 | 1 | Jason outlines the organizational scaling rule of eight for managing spans of control and notes why early sales heads must usually be stretch leaders who can recruit exceptional managers beneath them. Lenny seeks clear structural benchmarks. | |
| Sponsor Message: LinkedIn Ads | 4 | 5 | 2 | 0 | After a brief mid-roll sponsor break, Lenny asks Jason to demystify standard sales terminology like SDRs versus AEs. Jason explains the specialization between opening and closing roles and addresses the myth of the 'full stack AE.' | |
| Integrating Product Leadership into High-Stakes Enterprise Deals | 4 | 6 | 3 | 0 | Lenny pivots to the intersection of product and sales. Jason explains why product heads must participate in enterprise deals to handle scope adjustments and unblock high-value prospects that sales reps lack authority to customize. | |
| Managing Product-Sales Tension Through Fixed Engineering Point Budgets | 4 | 7 | 3 | 1 | Jason details a practical mechanism to defuse sales-product friction by allocating sales a fixed quarterly budget of engineering story points. Lenny clarifies how individual PMs should handle urgent one-off feature requests from reps. | |
| The Pitfalls of Weaponizing Customer Success and Product with Revenue Goals | 5 | 6 | 4 | 2 | Lenny inquires about product teams adopting P&L goals. Jason warns against weaponizing non-sales functions, recalling a horrifying story where a vendor's CS team demanded a $50k extortionate upfront fee, while Lenny clarifies PLG nuances. | |
| Tactical Sales Advice: Always Securing Next Steps and Recommended Resources | 3 | 7 | 2 | 0 | In a rapid-fire tactical sequence, Jason teaches the core discipline of never ending a customer interaction without securing a concrete next step. Lenny inquires about top literature and training resources. | |
| Optimizing Free Trials, Avoiding Forced Annual Contracts, and the 'VP of Free' | 5 | 7 | 5 | 1 | Jason rails against VC advice forcing SMBs into rigid annual contracts and unearned price increases, introducing the need for a 'VP of Free.' Jason uses Lenny's 600,000 newsletter subscriber base as a live case study for protecting free users. | |
| The Year of the Customer: Rallying Teams to Ship Three Great Things | 3 | 5 | 1 | 0 | Jason challenges product leaders to make this the 'year of the customer' by committing to ship three truly great features. The conversation then transitions into the lightning round covering favorite media and interview questions. | |
| Life Motto: Practicing Radical Kindness and Leadership Accountability | 2 | 6 | 2 | 0 | Jason shares his personal life motto of 'be kind,' articulating the difficult realization that whenever an employee fails, leadership bears the ultimate responsibility. Lenny notes Jason includes this directly in his online moniker. | |
| Behind the Scenes of SaaStr: The Economics and Power of Mega-Events | 4 | 7 | 3 | 1 | Jason breaks down the brutal diseconomies of scale in running mega-conferences like SaaStr Annual, detailing the massive fixed overhead of large venues. Lenny shares his perspective on why he intentionally keeps his own community events intimate and lightweight. |
Statements from this episode (59)
Lemkin: Canva waited until surpassing $500M in revenue to build sales
“Canva didn't really build a sales team until they were well north of five hundred million in revenue because it's epic self-serve, right?”
Lemkin: Most of Slack's revenue was enterprise sales at IPO
“Slack started all self-serve. And by the time they went public, the majority of their revenue was enterprise sales.”
Lemkin: A startup's first 10-50 organic customers define its next 1,000
“Your first 10, 15, 50 unaffiliated customers, the ones that find you from the ether, they are like the next 50, a 102 101,000, and you can either embrace them or run for them.”
Lemkin: Portfolio company dropped from $5M to <$1M after firing sales
“And I'll tell you a company I invested in. 18 months ago when things were easier, right? Maybe 20 months ago, they were doing five million in revenue, growing over a hundred percent with the sales like motion. Things got harder. Things got harder as they did f…”
Rachitsky: Notion waited until $10M ARR to hire its first salesperson
“I think notion, I think at ten million ARRs when they hired their first salesperson.”
Lemkin: Founders must personally close their first 10 customers 95% of the time
“95 times out of a hundred, you've got to find a way at least to close the first 10 customers yourself.”
Lemkin: Almost all startup founders are 'A+ middlers' in sales conversations
“Even if you don't know how to do outbound, even if you don't know how to send a cold email, even if you don't know how to do any of this stuff, and even if you don't know how to ask for a check, even if you don't know how to open or close, almost all founders …”
Lemkin: Startup founders can run circles around 98% of incumbent sales reps
“If you're running a new CRM startup, you can run circles around 98% of the sales reps at Salesforce or HubSpot, right? They have the brand, they have the partners, they have the integrations, but they cannot answer the questions you can answer.”
Lemkin: Startup CEOs must spend 20% on sales and 20% on recruiting
“If you're not spending 20% of your time in sales and 20% of your time in recruiting, you're failing as a founder. You need 20% of each. 20% in sales and 20% recruiting. Nothing else really matters at some level as a CEO, maybe not as founders, but as CEOs.”
Lemkin: Startups must always hire their first two sales reps together
“So you need to hire One rep and you've got to hire two because otherwise there's no AB test. You have to AB test humans. You have to AB test humans. You've got to hire two as hard as it is.”
Lemkin: First sales reps must be people you would buy your product from
“Those first couple reps have to be people you would buy your own product from. That's it. Now we can talk about other criteria. We can talk about normalizing for deal size. We can talk about industry expertise. We can talk about all this kind of stuff, but whe…”
Lemkin: Startups need two reps hitting quota before hiring a sales leader
“Which I've talked about for over a decade, and I think folks that have been through it will see it, which is you need two sales reps hitting quota closing deals before you're ready to hire a manager for them.”
Lemkin: Hiring a VP of Sales prematurely never works
“If you hire it before then you're doing a hail Mary. It ain't gonna work. It never, ever, never, ever, ever, never, ever works. You're asking them to find product market fit to be the first rep, to be the second rep and scale it all at the same time. It's miss…”
Lemkin: New Sales VPs must spend 20-30 hours weekly in deals
“Whether they carry a bag or whether what they do is they join calls with the reps, right? They back there, whether they backfill the reps, you want your VP of sales in deals, 20:30 hours a week when they start.”
Lemkin: First B2B sales hires need several years of experience
“I think you will regret it if you don't hire these first couple sales reps that have a couple years of experience. If you're in B to B with B to B sales, they need a couple of years of experience and they need a certain amount of maturity.”
Lemkin: The majority of interviewed VPs of Sales do not want to sell
“I would say I've probably interviewed for different reasons, 50 VPs of sales in the last 12 months. I would say the majority don't want to do sales.”
Lemkin: Zero percent chance a sales rep who dislikes money works out
“Do not hire a sales rep that doesn't like money. Trust me on this one. That there's a zero percent chance they'll work out either, but they also like the craft.”
Lemkin: Disqualify VP candidates who do not prioritize meeting customers immediately
“And in B to B, if I don't hear from the VP of sales or the VP of product that I'm going to go meet customers, out, I'm out.”
Lemkin: 98% of sales candidates do not research the product before interviewing
“98 out of a hundred folks won't bother an interview. They won't bother. They're just gonna click on apply on the ATS and tell you, hey, I recently stumbled upon whatever it looks like. Do you have time to discuss?”
Lemkin: The best SaaS sales reps explicitly tell prospects when not to buy
“The best reps will also tell reps when not to buy their product. As painful as that seems in tougher times in 20, 24, the best reps say, no, you know, we're not there yet. We're not the right. If you need this feature, if you need this integration, I want you …”
Lemkin: 95% of startup hiring skips reference checks
“I would say 95% of the hiring I see out there, people don't do reference checks anymore, Lenny. And we can talk about when they work and when they don't, but no one does them.”
Lemkin: Employee failure is 100% the founder's fault
“It is your fault. A hundred percent your fault. If any of your hires fail, don't blame them.”
Lemkin: Sales candidates who refuse mock demos are not salespeople
“So do a demo for me. And if they won't do it, they're not a salesperson.”
Lemkin: Standard B2B sales compensation is a 50/50 base-to-bonus split
“It's usually 50, 50, right? 50% base, 50% bonus for a sales rep.”
Lemkin: Sales reps must generate 3x to 5x their total compensation
“Ultimately a sales rep's got to bring in four to five times what they take home. Okay. So that one forty's got to be six, 506 hundred or more. The more enterprise you are, the bigger the multiple has to be and the higher the comp, but it's got to be three to f…”
Lemkin: Early startups should hire fewer, better sales reps rather than many
“In the early days, it's, this is a rookie error. Like, I'd much rather have two reps, each closing a million, Right. Then 20 reps struggling to close a hundred K each. Like culturally it's terrible. There's no domain knowledge in the company. Everyone's misera…”
Lemkin: Pipedrive was my first angel investment and sold for $1.5B
“The first investment I ever made was a company called pipe drive, which sold for a billion and a half. You know SMB CRM.”
Lemkin: Always hire sales reps whose prior product was harder to sell
“Trust me, you gotta hire someone whose last product was harder to sell. This is so important. This is a recipe for utter disaster. If you take someone in sales and their last product was Easier to sell. They will have none of the skills to sell your product”
Lemkin: Successful reps from the number-four market player make great hires
“What really works Lenny is if you hire someone from the number four in a space and they did well. You take someone that was number four in the space and then you're number two in the space. You think number two is really hard because number one's crushing you,…”
Lemkin: Traditional B2B sales reps frequently fail when selling to developers
“Too many B, say, B to B type reps melt in B to D. They just melt. They just, selling to VP Avenged is a different, it's the same beast, but they don't suffer fools, do they? Not the VP of engineers. I'm close. They don't suffer fools.”
Lemkin: In sales-led SaaS, half of headcount stays in sales across scale
“Like if you have a sales led motion, half your company is going to be in sales at ten million error, half your company's gonna be in sales at 50, half your company's gonna be in sales at a hundred. It's one of the tough parts of the software model is that ther…”
Lemkin: Public SaaS companies have higher CACs than startups
“The public companies are actually less, they have the higher CACs than startups, believe it or not because they have so much market penetration.”
Lemkin: Sales orgs should scale strictly by the Rule of Eight
“Eight SDRs, outbound reps need one manager, eight AEs, eight sales execs need a director above them. And then when you really scale, you know, eight directors, you're not really ever gonna have eight directors, but eight directors could have a VP or eight repo…”
Lemkin: 95% of startups should hire a stretch VP of Sales
“So for 95 out of a hundred of us, our first head of sales should be a stretch VP of sales. And what that means is usually they were a director before that or a senior director or sort of a VP. Okay. But you should be cautious about hiring your first VP of sale…”
Lemkin: Stretch sales leaders fail if they cannot hire strong managers
“You can scale forever as a sales leader if you can hire better managers under you. And it's true of any functional area, but what you'll see in sales is you'll see your stretch VP of sales drown when they never can hire better managers under them.”
Lemkin: Sales orgs should promote 50% and hire 50% of managers externally
“My rule is you want to promote 50% from within and hire 50% without for your managers.”
Lemkin: 'Full stack' Account Executives doing their own outbound do not work
“What I haven't found work is that an account executive will magically be full stack. They will do outbound themselves. They will develop, they'll go use zoom info and Apollo and develop a list themselves. They will manage that outbound list themselves. If they…”
Lemkin: Very few founders have the stamina to manage an SDR team
“Most founders have enough stamina to manage a couple of these AEs, these accounting executives, these folks who work the leads. Most founders do not have the stamina to manage 10 kids fresh out of college that need to be micromanaged on an hourly basis to call…”
Lemkin: Top Account Executives should not be hired as Heads of Sales
“Another mistake that founders often make is they hire the number one account executive at a hot company to be their head of sales. It's not the same skills. Most sales executives should not be managers.”
Lemkin: In top B2B orgs, heads of product are deeply involved in sales
“I think in the best run B to B organizations that I've worked with in my own as well, the great, at least the head of product, the VP of products are deeply involved in sales.”
Lemkin: Greenhouse is over $200M ARR and pairs product leadership with sales
“I was just talking with Daniel Che at Greenhouse. He does this. They're over two hundred million. When they have that head of product, they divide and conquer with the big customers and the CEO can do some, right? And the VP of product can do others.”
Lemkin: Customer success is shrinking into process rather than stepping into product
“In the old days, sometimes your VP of customer success could do this, but unfortunately, and I know this is going to trigger some people, I don't see customer success stepping up for this pseudo product role anymore, and I see them shrinking more and more into…”
Lemkin: Business customers can process at most two major releases yearly
“The maximum a customer can process is two big releases a year and maybe quarterly.”
Lemkin: Tension between product and sales indicates a well-run B2B company
“This stress between product and sales is a good thing. It's a sign of a well-run B to B company when there is stress between product and sales. It's a good sign. It is a good. If there's no stress, you're not in enough deals.”
Lemkin: Force-ranking feature requests always alters sales teams' priorities
“I can tell you Lenny, a hundred percent of the time in the sales meeting, when you force, do a whiteboard force rank, you end up walking out with very different outputs than when you start the meeting in sales a hundred percent of the time.”
Lemkin: Big tech protects innovation by not firing staff when initiatives fail
“This is something that big companies are actually better at than startups. Which is they don't fire you if the new initiative fails, right? Because then no one at a big company would ever join the new initiative, right? There are exceptions, but no one at Adob…”
Lemkin: Procore and Cloudflare have both crossed $1 billion in revenue
“I just wrote up, it just crossed a billion in revenue, right? So many folks are at a billion, Cloudflare's cost a billion.”
Lemkin: I always pass on SaaS startups lacking top-decile churn rates
“And when I meet any startup like for investing or anything, if the churn is not top decile for a low end product, I'm always out. It's almost unsolvable. It's almost unsolvable. This three to four percent a month churn rate that a lot of SMB stuff, it's almost…”
Lemkin: B2B software deals shifted from single-stakeholder to four-stakeholder sales
“In 20, 21, it was one stakeholder. Now it's a four-stakeholder sale.”
Lemkin: 'From Impossible to Inevitable' has sold around 100,000 copies
“We actually wrote a book called from impossible to inevitable that sold about a 100,000 copies.”
Lemkin: 14-day trials originated to fit Salesforce monthly sales cycles
“The reason, one of the reasons we have 14 day trials on the internet is in the old days, the Salesforce sales team, when they were S and B focused one to close deals that month. So they forced Salesforce to move from 30 to 40 days. There was no evidence it was…”
Lemkin: VC advice to force annual contracts is terrible
“Another related terrible piece of advice VCs give you is switch to annual contracts. This is terrible advice. Terrible advice, Lenny. Terrible advice from people who have never built products and aren't in the field. Going to annual contracts on a spreadsheet …”
Lemkin: Products offering free editions are structurally better software
“Free products are better software. Products that cannot offer a free edition cut corners because they don't have to be good at onboarding. That products that do not have a free edition have human beings that bridge the gap between buying and deployment.”
Lemkin: Opus Clip is the only AI tool I have found helpful
“The only AI tool that I've found helpful so far is Opus clip, which takes all of the incredible amount of YouTube content we have force ranks it and turns it into 59 second clips.”
Lemkin: Bringing customers and prospects together drives sales because customers sell for you
“If you get your customers and prospects together, you sell more, get your customers. It does not need to be a million dollar, a ten million dollar event. It can be roots, prices. It can be whatever. Does not even be a fan. Just get them together... Your custom…”
Lemkin: Multi-day mass-scale conferences in the Bay Area cost $1,000 per attendee
“It's going to cost you about a thousand dollars per attendee In the Bay Area or Las Vegas to have a mass scale of it, not smaller, not one day in Grand Ballroom B, but a multi-day event, right?”
Lemkin: SaaStr lost $10M in one day when COVID canceled its conference
“We were the first major event to be canceled by COVID in March, 20, 20. The first one. RSA happened for security the week before, then we got canceled. So we lost ten million dollars in one day.”
Lemkin: Second- and third-tier tech conferences are not worth attending
“Second tier, third tier events. I do not think are worth it because they do not attract the best people. It's just a fact. We don't, most people, it turns out from our founders are our core ICP. They go to two events a year on average, two events a year.”