The Exchanges

Q go-to-motion should include quota carrying reps at all, and a lot of that is tied to price point, and is there margin in the price point to pay out a commission? What's the minimum ACV that these B to B SaaS companies need to be selling at to say, okay, yes, we can start to afford us to put touch on these sales and have a sales rep with quota?

A Yeah. I mean, we usually talk about 10 K a year, like a thousand a month, kind of as a benchmark. Cause that's, that's where you're, you're going to have some multiple calls with at least a couple of decision makers in an organization. So there's needs to be some real meat to the sales process. It's not just like go to webpage, click to sign up. Cause the middle one is the best plan type of thing. There's going to be some real decisions that need to be made. So, and that also allows you to have a pipeline, manage that pipeline to get like a three to one pipeline coverage ratio. That allows you to kind of manage your conversion rates.

AI assessment note: “we usually talk about 10 K a year, like a thousand a month”

Q SAS founder with five million bucks in ARR saying, I want to expand to the United States and the way we're going to do that is to hire an outsourced SDR firm to help us scale up this outsource team so that we don't have fixed expense on our, on our profit and loss statement yet. Have you seen outsourced SDR teams work for this sort of thing, international expansion?

A Yeah, I think it can. I think it can if you have a baseline of success. If you know your ICP, if you know the messaging that tends to work pretty well in one market, you can transfer that. You're going to have to calibrate it a little bit and change it a bit. Um, I think the mistake in outsourcing is I don't have any leads and I don't have any customers and I don't have time to do the SDR work, so I'm going to outsource. That's just shoveling your problems off on somebody else. So outsourcing, I think, should be used strategically to either test markets Or to use that as a stepping stone to prove that you can move into, say, a new geography or a new vertical.

AI assessment note: “Yeah, I think it can. I think it can if you have a baseline”

Q So what gave you that confidence? I mean, it was only doing 50 kids a site, maybe not only, I mean, that's actually an impressive side project, but it sounds like you were doing something in a full-time business. What gave you the confidence to step away and jump in and bet on yourself?

A Uh, I don't know if it was, I think confidence was that I'd been, you know, three B to B startups and had successfully gotten them all from zero, basically zero revenue, the first couple of million. Um, I knew what I was doing in teaching workshops was working for clients. Uh, I knew that the clients we worked on the side was working and it was also a personal decision in that my wife at the time was working on her PhD. I had a two year old son at home. I was commuting three hour or two and a half hours each way to San Francisco. On the train to go work at Blend, and that was a good week because I was actually home. The, the bad weeks are when I had to travel to Dallas and Chicago and DC to do implementation. So, uh, I was about 40 at the time, and it just got to the point of my life where I'm like, you know what, I think I've had enough of the startup fun, and I wanted to be home, and this is an opportunity that I'd built as a foundation that I could jump into. I knew it was going to be hard that first year or two to kind of make the transition and make it self-sustaining, but I had, I was pretty clear That I knew there was demand and that the niche I was focusing on was one that I could serve quite well.

AI assessment note: “confidence was that I'd been, you know, three B to B startups”

Q So how many people is that total full-time?

A Uh, full, well, full-time there's six, including me. We have two regular coaches that we bring in that are doing coaching calls every week with our clients. And then there's sort of a perimeter outside of that, where we bring in additional experts based on topics. That our clients are in need of. So we'll look at what the clients need, the client needs are. If it's something like sales forecasting and territory, then we have somebody who we know that knows that topic really well, and we'll have them come in and coach and teach. So one of the things that I learned early on in the business is that, um, if you let ego drive the business, then it's going to stunt its growth. Meaning that I can't know all the answers. Even just go into LinkedIn today, you can see so many good experts in different areas. And so one of the learnings we had after the first couple of years is realizing this is that transition for being just a coaching company and Scott, like the Scott show where I'm teaching everything. And instead thinking about, well, what a real job is it's, it's to solve the matching problem. It's a matching problem of founder has question needs to build a system. Who's the right, where's the right place to get that answer. And that transition has actually really helped us grow.

AI assessment note: “well, full-time there's six, including me.”

Q What does that ratio mean? The pipeline coverage ratio? What's that mean?

A Oh, it just means that, uh, the number of deals you have in your active pipeline relative to your conversion rate. So let's say I have an ACV of 10 K and I've got 10 deals in the pipeline. That's a 100,000 dollars a pipeline. If my conversion rate on the back end is 30% or 33%, that means I have, I know that about a third of those are going to convert. So I have a three to one pipeline coverage. It's actually a big mistake a lot of founders make. They think they need a big pipeline. But their pipeline coverage or their conversion rate is really low. They're maybe only converting 10 or 12% of their total pipeline because they've done a really poor job of qualifying those, those deals, or they've just done a really poor job of actually converting them. So now they're trying to manage nine out of 10 deals that are actually never going to convert. They just don't know which the nine out of the 10 are. So they have to actually work all 10 in order to get the one. And because their time is the biggest opportunity cost that they have, we actually think about, well, how do you actually get a slimmer, smaller pipeline? So it's like three to one. Or two and a half to one so that you're only focusing on those deals that are the right, the ones that have a higher chance of converting. And then you see this mistake. Oh yeah. It's a really common mistake. And I think even investors put gas i…

AI assessment note: “the number of deals you have in your active pipeline relative to your conversion rate.”

Q When you, when you exited, did you already know you had that in your back pocket? Was the valuation tracker blend already clear that your stock was going to be worth something as a backup plan?

A It was pretty clear when I left, it was just as we were raising a series C, uh, And we had, uh, successfully implemented at about four or five large banks and lending partners, so the trajectory was there. I mean, there's still a lot of work to be done, but the reason I started, I joined Blend was because of the founding team there. I knew them. They were actually customers of mine when I was at Altos Research, so I knew them personally, and they came out of Palantir. They knew their stuff, and I just knew, like, if I, if I can help grow this, this team, Uh, out of the earliest stage. I was employee at 13. It was like 12 engineers and me. So my, my feeling was like, if I can help them get off the ground and contribute at that capacity for a couple of years, um, then somebody else is probably going to take it from, you know, three to ten million and somebody else from 10 to 30 and so on. So I was pretty confident going in that something was going to work out. And when I was leaving, you know, the rocket ship was really starting to take off.

AI assessment note: “It was pretty clear when I left, it was just as we were raising a series C”

Q When you're setting your quota for those first two sales hires, is it okay if it's only a three to one ratio of full on-target earnings to quota, or do you really want to start at a five to one ratio?

A I don't know. I think the answer is depends. It depends on the situation. I had this conversation yesterday with a founder and the challenge that they had is like they're producing certain numbers and they think, well, if I get an SDR, will they be able to do the same production? Chances are probably not, not at least not initially, it's going to take some ramp time. So if you start setting quotas based on what you want versus what's possible, then you're going to get an SDR this discouraged. So we actually think about comp and quotas, uh, as a more, uh, fluid, uh, Uh, conversation to have with your team, especially in that first year or two. You know, it's like, hey, this is your program for now. These are your goals for now. We're going to use that information over the next three to six months to kind of bootstrap the next model that we're going to build for you.

AI assessment note: “we actually think about comp and quotas, uh, as a more, uh, fluid”