Even if you have the best product in the world, let's say that's the case.
You're still going to leave money on the table if you have shitty salespeople.
It's pretty simple.
You can look at somebody's resume.
If a guy's been at salesforce.com for the last five years, he's never opened a new logo.
ServiceNow.
Why would you want to hire people from ServiceNow?
They don't know how to do any pipeline generation.
First of all, you have to remind them raising a round doesn't mean shit.
The Ford-deployed engineer is a glorified professional services person.
Anthropic, in particular, is offering sums of money the likes of which we've never seen.
Anthropic, do you think they really give a shit how good their sales organization is?
I mean, they'll say they do, but do they?
They probably don't.
Why should they?
I know CRO is getting $100 million packages.
I think Anthropic's a $4 or $5 trillion company.
This is 20 Sales with me, Harry Stebbings, and I'm so excited for the show today.
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Guys, it is so good to do this in person.
We've done shows separately.
We have some very exciting news today, which is why we're together in person.
But thank you so much for joining me in person in London.
Harry, it's great to see you in person.
I don't think we've ever met in person.
So super pumped to meet you in person and be here with my buddy here, Chad Peets.
There are not many people I would fly to London just to spend an hour and a half with.
So it is an honor to be here and thank you for having us.
Dude, I am so excited for this.
So I just want to start with the news of you guys coming together.
Can you just share a little bit about the news and what it means?
I think Chad and I have been talking about this for years.
And you know, after I left Snowflake I sit on a bunch of different boards and pretty much the number one pain point of any startup CEO is they need help building a sales team.
And I started to try to work with other recruiters and never was I satisfied because I was spoiled, because Chad co-built the Snowflake sales team with me.
And I'm like, man, I would love to figure out a way to get Chad involved.
And that's how the conversation started.
Yeah, we were somewhat precluded from working together because I had restrictions on who I could work with and Chris was working with separate companies.
So he would ask me to help certain companies and I couldn't because I had conflicts with my other companies.
And so we kind of figured out a way that we could get rid of those conflicts and join up.
And I think it's the best of both worlds.
There's some overlap between things that he's good at and I'm good at, but there's a lot of things that I can do and a lot of things that he can do.
And when you put us together, it's pretty fucking special.
I spoke to Matan about both of you earlier and he said the lovely thing about you guys is you're like yin and yang you know.
Like, Chris is the really bad cop and Chad's the cuddly teddy bear.
Correct.
He nailed it.
You know, when you miss the quarter and you're expecting to be told off, he gives you a hug and he says it's okay, don't worry, numbers don't matter.
It's okay.
Yes.
You said there about building sales teams and it's the core challenge that early stage and kind of scale up founders face.
How's what it takes to build a sales team changed in a world of AI, as we look at drastically different companies and different company scaling profiles?
In this age you're seeing a lot of product led growth companies and there's a lot of order takers out there.
I think the thing that Chad and I pretty consistently agree on is that if we can build outbound sales organizations, sale-led growth engines, and then you can pile in PLG on top of it, you have best of both worlds.
So I think our perspective and I don't want to speak for you Chad, but our perspective is build great go-to-market people.
That we built at Snowflake, that he's built a thousand times over, that will differentiate the company.
Yeah.
I mean, you still have to have folks that are willing to go do the heavy PG.
I think sometimes there's this notion that look, we have an incredible product and sales doesn't really matter, because our product is so good it's going to sell itself.
You definitely run into some of that.
It's total bullshit.
Even if you have the best product in the world, let's say that's the case.
You're still going to leave money on the table if you have shitty salespeople.
So to Chris's point, you still have to have salespeople that are going to go out there and find new business.
And that's been our core beliefs for 30 years.
Help me out.
We see people with great logos, whether it's any of the big names that we know, and often they are order takers.
How do I, if I'm a founder, determine if that logoed person is an order taker or if they were actually genuinely very good?
It's a question that every CEO asks me, and the simple answer is give me an example of you opening up two to three new logos in the last 24 months.
And then ask them next level questions, like who was your champion?
Who was the economic buyer?
But if you start going down that avenue and they start faltering, it means they're lying.
And so you're looking for those people that have that experience of opening up new logos.
Yeah, and it's pretty simple.
You can look at somebody's resume.
If a guy's been at salesforce.com for the last five years, he's never opened a new logo.
ServiceNow?
ServiceNow, right?
Let's go hire people from ServiceNow.
Why would you want to hire people from ServiceNow?
They don't know how to do any pipeline generation.
Why do you say that for people listening that don't understand?
Well, Salesforce has a monopoly.
And so how much outbound are you doing if you work at Salesforce?
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.
Totally agree with you and get that in terms of the inferior product.
I always, whenever I'm hiring investors, I look for people who've been at a tier three brand and done really well, because that's fricking hard to do.
Otherwise it's the brand.
I won't name the name of the company that we were just talking about, but Chad helped me hire the head of sales and he was at a very mediocre company but succeeded there for like seven years.
And so that's grit.
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?
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 different way of identifying talent.
I think that's a problem too is like a lot of like people in like the security space.
They want to hire people with security backgrounds.
And, for the most part, a lot of the security companies have historically been channel driven sales organizations.
So I actually have an affinity of not hiring people out of the security space.
There are some recent examples, like the team at Wiz, certainly a very good sales organization, but the industry expertise does not matter as much as, like you, being successful selling an enterprise technology.
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?
Yeah, I think it does.
Like at XAI, for example, 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 attest to, that's not the norm.
So I think, yes, it changes the profile, but it also changes how you enable them.
We spoke before on Message about 20x quotas for 11 labs, and I got so much inbound from that.
And I think quota setting is so hard for founders today.
When we're told that we need to grow faster than ever, we see 500 million ARR bandied around so commonly.
How do we think about setting quotas in this very new world?
If you have a company and the founder says oh, I should give them 2 million in quota, my first question is do you have any evidence to show that they should be able to hit that quota?
No, but we're an ai company.
Well, who gives a that you're an ai company like?
Show me the data.
So, from my perspective, if you're building a great organization, you have a fast-growing sales org and you have north of a million and a half dollars of productivity, of a rep that can you know on board and within six months to over a million and a half dollars, keep hiring faster and faster and faster.
If they're doing three, 4 million, don't pat yourself on the back, because that means you're missing opportunities.
You're missing opportunity in the market because they're just sitting there and they're fat and happy.
They're just like, yeah, it's easy to make my number.
So I think it's like look, make it hard for them to get to million and a half and find those hunters.
And that's the kind of organization that will make you a very differentiated organization.
Is it still 4 to 5x is good, or has that changed now?
I mentioned Clay earlier, and we mentioned Clay, but she said theirs is 8 to 10.
Historically, it's been, if you get 3x your OTE, you're pretty happy.
I agree it's probably going up because 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.
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.
It 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.
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 thing that we do now, that we didn't use to do, is you put windfall clauses in there.
Because there are certain situations, like some of the companies we're talking about, where you could have a rep, go out there and find a 15 or 20 million deal.
I clearly don't want to pay that rep $3 or $4 million in commission.
So one of the things we've been adding is a windfall clause that says listen, we have the right as a company to look at a deal.
And if you go, do some massive deal, we get to talk about the comp plan and perhaps reset what you're going to make.
So you might still make $2 million, but you're not going to make $5.
At Snowflake, I had that windfall clause.
I probably invoked it five times.
Yeah.
Can you imagine signing the Pentagon for like a 30 billion contract when you're Andrew and you're like yep, I'll take my 20?
Thank you so much, John.
Yeah, exactly.
Exactly.
And here's my resignation as well.
Exactly.
I'm retiring.
Can I ask you, we see again the company 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 is seemingly scaling.
What do you say to keep feet on the ground when sales are scaling fast, but it's a continuous game?
First of all, you have to remind them raising around doesn't mean shit.
Okay.
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 around 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 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 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 say, well, is it ARR?
Is it annual recurring?
Let's talk about how you define ARR.
Because oftentimes they'll take monthly recurring and they'll lump it into annual recurring.
You can't do that.
And so you really have to dig into a lot of this stuff to really understand the health of the business.
We're seeing this real opacity around revenue and it's just murky around how most of it's calculated.
Like, my peak day was $10,000.
I'm going to extrapolate that out.
I'm now at $3.6 million.
You have naive founders and naive sales leaders who are then saying okay yeah, let's pay the sales team on monthly and arrears billing and there's no commitment.
And at Snowflake, I didn't pay the sellers until they got a book contract, an annual contract.
And so it's silly to pay a sales team on something that's just like an on demand contract.
No way.
You should never do that because it's not durable revenue and there's risk.
And so these founders are like, oh, look at this.
Well, dude, what happens if XYZ company or Anthropic comes out and replaces you tomorrow?
There's no moat.
There's no contract.
There's no moat.
It's easy to move.
These are things that are really concerning, that I get concerned about in working with these founders.
Some of these companies.
I find myself having to explain to them the value of having booked contracts.
They're paying monthly.
I'm like, I know, but we need them to be booked.
Why?
That creates friction in the sales process.
Lower margin.
They get upset.
It's lower margin.
It's lower margin.
Yeah yeah, yeah.
It creates friction in the sales process, because i can understand the friction right if they just have to flip the switch and they can start doing it.
But there's no moat there, so there's no loyalty, there's no nothing.
So if you have a competitor and a month later the competitor comes out with a product or a feature that's better than yours, these guys will just switch off of you.
The point of having a book contract is there's lots of points, but one of the points is you have time.
So they can't just switch off you the second something goes wrong.
Well, this was going to be one of my questions, which is Jason Lemkin from SaaS.
A kind of famous SaaS investor said on a show recently with me multi-year contracts partly mean less than ever, because if you don't have usage, they're essentially just deferred churn.
I don't know, man.
I don't agree with that at all.
I think that's just a, is he a VC?
Yeah.
Yeah.
That's probably a typical VC thing.
I think like you have to go in and you have to then sell, like in a consumption model, you have to get usage.
So like we talk about forward deployed engineers.
Okay.
Well, that's an ideal situation to deploy a forward deployed engineer or professional services person, which I think that's the right approach of putting a professional service person in and then get to drive consumption of the contract.
And the sales team needs to be incentivized to drive the consumption, not just to book the deal, but to drive consumption.
How do we feel about the enthusiasm around FDEs?
You know, I had Matt Fitzpatrick, who's the CEO of Invisible, which is a kind of billion dollar company that sells data, like Macor and all the others.
And he's like, if you want to sell to enterprise, you have to have an FDE model.
Is that true?
And is the enthusiasm around FDEs right?
Yeah, I mean, it depends.
I mean, I know a lot of people that think forward.
Deployed engineers simply make up for a shitty product.
And there's something to that, right?
I mean like look, you're basically and I won't mention companies here but there's big companies out there that just send hordes of forward deployed engineers into those companies that are basically just building the product that they don't have on site.
And then basically calling it all one big product.
So I think there's a balance.
I think there's a world where they add a lot of value.
But I think you can get carried away with it.
The forward deployed engineer is a glorified professional services person.
Because if you're a really good engineer, you do not want to be a forward deployed engineer.
You want to work on the core product.
And so then you go out in the field, you develop some product in the field that may never make it back into the core product.
Then as a customer, you're left holding that bag and you have to then support that product later on.
There's a lot of technical debt that forward deployed engineers are going to leave and there's a ton of risk.
Again, the four-deployment engineer is not as good as the core engineer that's building the core product.
That's just fact.
Going back, we said, what if it's all going well?
The flip side is, what if it's going badly?
What do you do when you have a sales team that's not hitting goals, that's not hitting target, and you need to fucking motivate the troops.
How do you do that?
You know, I just had this conversation yesterday with a company that I'm involved in and he had a segment of his business that missed the number.
And I'm like, OK, let's look at did every rep in that organization miss?
Did every manager miss?
How's the second line manager?
And turns out that the problem is probably the second line manager.
You have to take action.
People are apathetic.
If people get lazy, and I've gotten lazy.
I got lazy.
I brought Chad back into Snowflake because I got lazy.
Did he kick you up the ass?
He fucking kicked my ass, man.
He absolutely did.
He called my baby ugly.
But dude, that's what you got to do.
How did you get lazy?
I'm just intrigued.
I made too much money.
I made too much money.
I didn't do the hard things.
I wasn't doing the performance management like I used to.
And I just expected everyone else to do it.
There were people in my org that were not doing one-on-ones.
They were not doing forecast calls.
Like, that's crazy.
That's crazy.
I was not inspecting that.
That was my fault.
100% my fault.
And Chad helped me light that fire again.
So brought him back in.
Thank God, Chad.
He needed a kick up.
I was thinking he's getting laid.
But look, Chris and I had this conversation two or three weeks in and I said okay, I'm finding shit.
I'm going to go find a lot more shit.
I'm going to expose it.
Can I ask, what is shit?
Just so I understand.
Some of the things he's talking about, people just weren't in their businesses.
You talk about like, okay, how many one-on-ones are you having?
They're not having one-on-ones.
What are the leading indicators you're looking at in your business?
We're not.
How many new meetings are reps expected to have?
Eight.
What happens if they don't?
We're not monitoring it.
Are you rolling out medic consistently?
No, we're not.
How much time are you spending in the field with your team?
Not very much.
Second line managers weren't going on sales calls.
I mean, there was a whole bunch of rot that was my fault.
But other than that, it was pretty good.
That aside, it was fine.
But you know what?
Culture was strong.
The work from Home Friday brought it out.
Well, that was the other thing.
Look, I mean, Snowflake had a massive IPO.
And so we had a bunch of fucking people there that made a bunch of money and were just hanging out investing.
This was what I was saying to Chris before you arrived.
It was like I have so many friends at some of the biggest companies who are making tens of millions.
Does that make it much more challenging when you're trying to build a sales team of ambition and hunger when suddenly people are cashing out 10, 20 in liquid secondary money?
And oh, by the way, they don't have a quota.
What the hell?
What kind of organization is that?
Is it totally bullshit not having incentivization tied to performance?
Of course.
What's the point?
It's ludicrous.
So think about-.
But if you look at, I don't want to name names, but big names, they've famously not had it tied to, not tying it as a mistake.
Yes.
How do you hold anybody accountable?
Like if I'm an A+, you're a D, okay?
You don't do shit.
I work my ass off.
I sell $50 million.
You sell $10 million.
And we make the same amount of money.
You feel fucking great because you're hanging out making a bunch of money not doing shit and you're a loser.
You're golfing every Friday.
I'm busting my ass, kicking your ass, and I know I'm kicking your ass, and we get paid the same?
There's a word for that.
It's called socialism.
Socialism.
Yeah, I knew you'd say that.
Welcome to Europe.
It's lovely to have you in London.
Yes.
It does not work.
It simply does not work.
It works until it doesn't.
Like these companies are, hey, look, it's raining purchase orders right now at these companies.
But that day will change.
One-on-ones was one of the first ways that you said, oh, you know, we weren't having them.
What do you advise sales leaders on how to do one-on-ones correctly?
How often they should do them?
How the best do them?
Every week.
And I think, like, it's actually a good way to use AI.
I mean because now you can have your.
You know you can get into cloud or whatever it is you're going to do.
And tell me about their calendar.
Tell me about their forecast.
So then you as the manager, coming super prepared and saying okay well, tell me about these sales calls.
Tell me about these deals.
And you're way more informed.
But dude, it's not like, hey, bro, how are things?
Like, that's not a good one-on-one.
A one-on-one is the manager asking really hard questions about how their business is going.
It's really to hold the individual contributor, the frontline manager, the second line manager, accountable.
And that's what was not happening when you're not doing those one-on-ones.
Those one-on-ones need to happen every single week consistently.
Consistency matters.
If, showing up like every month, They're going to be like yeah, they don't really ask me tough questions.
I'm doing 15 new meetings a week, but I'm not converting.
I'm firing you.
Why?
I hit the quota of eight that you told me was good.
Yeah well dude, the reason that you go on eight face-to-face meetings a week is to Oh, eight face-to-face.
Eight face-to-face.
Ah, face-to-face is different.
That's much harder.
Now I have to constantly be on a freaking plane.
That's right.
So a good way to find out if a second line manager is failing, just look at their travel schedule.
If they are lowest on the totem pole on their travel reports, means they're not working.
One of the things when I came back into Snowflake, we pulled up TE budgets and it was like dude, you run North America.
You haven't been on a plane in five weeks.
It's a problem.
Is there a direct correlation between success and flights?
Yes.
100%.
That's why I don't want to go back being an operator, because I know how the tax that my body will pay for MEDIC implementation change in this world.
I don't think so.
I mean, I think metrics matter.
Like someone said I won't name names, but I'm here in Europe.
I did a dinner with a very successful company and the head of Europe said I don't think MEDIC matters anymore.
And I'm like well dude, no pain, no deal, no champion, no deal.
And the way that you develop a champion is you look at the metrics.
You show them how to use those metrics to get the deal done.
So medic doesn't change and people want it, want to say ai makes it different.
I don't believe that at all.
Guys, I need your help, okay.
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, 30 million bucks in package to great sales talent.
Guys, what do I do?
I mean, I live 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 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 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.
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 at doing what you're doing.
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 salespeople.
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, believe in meritocracy.
They want to be rewarded for their performance and their hard work.
If you go to anthropic, that's gone.
If that doesn't matter, you then go to anthropic.
I'm not quite certain then, that i want you in my sales organization anyway, and so that's how i compete against it.
Talk about the upside of the ote.
You talk about going to a company that actually values the function in which you perform, And a company like that as well as they're doing.
Do you think they really give a shit how good their sales organization is?
I mean, they'll say they do, but do they?
They probably don't.
Why should they?
And I think developing, like if you're a go-getter, you want to learn.
Like what did Chad say earlier?
Like who taught you sales?
If you're a salesperson, go to a place that someone's going to teach you sales.
Like, if I'm going and hiring someone you're looking at, I want to go hire someone from MongoDB or Wiz or one of these companies because those sales leaders, they develop their people.
That's who I want to be my next VP of sales.
Why do you Do you want to hire from MongoDB always?
Because their sales leaders, although tough, are incredible medic disciples who develop the crap out of their people and hold them accountable.
And that's what I'm looking for.
Would you say to a founder don't worry about missing the ones that do go to OpenAI Anthropic, because the best don't want to anyway.
Yeah, I think you can make that argument.
It's harder to make as they offer more and more money.
So the pitch that we're both making right now about come here, especially for development, is harder today than it's ever been.
Ten years ago, I would sell on coming to work for a John McMahon company because we're going to train you and we're going to do this and we're going to do that.
That pitch is harder to land today because they're like yeah, I hear all that, but I can go to Anthropic and make five times as much money.
But you know, like we talked about factory like so Chad and I are working together on factory and a lot of this factory salespeople are some of the earliest salespeople that I hired at Snowflake.
And the common theme is they want to build something.
They want to build something.
They're excited to go build something.
They believe in the CEO.
That's a material thing.
And so I think you want to build something together versus just being you know, as Frank Slootman always used to say passengers and drivers.
These companies, pretty much everyone's a passenger. because there is no accountability.
You're not learning anything from a sales perspective.
Eventually, that will come to bite you in your career.
We said about competing for talent with some of these frontier companies.
You mentioned having that conversation daily with CEOs.
What's the biggest challenge that you find yourself facing on a daily basis with the founders you work with?
So for example, for me as a Series A ambassador, it's the pricing that I have to pay a Series A.
2 million, probably 300, 400 million post.
That's my biggest daily challenge.
What's your biggest daily challenge?
Recruiting.
Building sales teams.
The number one pain point.
This is why Chad and I are working together.
Are there enough good salespeople?
Well, there's a lot of salespeople.
Finding the good ones and building great organizations is hard.
It's really hard.
And it's expensive.
That's the other thing, too.
First of all, we're expensive.
So the first conversation is, wait, you guys want what?
That's the first challenge that we face.
We're capitalists.
We're performance-based.
Yes, we are performance-based, but we are not cheap.
How do you structure how you work with companies?
We get equity.
I mean 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.
I got a question for you.
I love both of you, but you're both pretty opinionated.
What do you do when you come into an organization?
The existing sales org probably isn't up to scratch in a lot of cases.
And then you're the enemy.
What happens then?
I think Chad says this pretty much.
I mean, he's more blunt.
He is more blunt than you.
Yeah, he's more blunt.
He'll tell you before you hire him that he's going to replace the entire sales team.
What do founders say?
Every CEO conversation is, can I work with this guy?
Is he a killer?
And he's feeling me out too.
And I oftentimes will refer them to our interviews and say, you should watch this.
You understand what you're getting with me because I am not everybody's cup of tea.
A lot of people watch that and say, yeah, we shouldn't work together.
We're good.
Did I say that?
Oh, for sure.
Oh, no, man.
You're fucking crazy.
Listen, that's why I told you to watch it.
The other ones will be like, this is exactly what we need in the organization.
So that's a good qualifier.
And then I'll go through their sales organization and say look, I've gone through the sales organization, particularly your chief revenue officer.
I can't work with him or her.
So in order for me to come in, you have to commit now that we're going to replace that person.
If you're not prepared to replace that person, we can't work together.
And it's black and white.
Do you find companies are willing to let go of talent soon enough?
No.
How do you know?
Because it is a really hard thing.
You don't want to be knee-jerk reaction.
You missed the quarter, you're out.
But you also don't want to let it hang too long.
I mean, I had the fortunate experience of working for some pretty ruthless guys, in particular Frank Slootman.
Was he the most ruthless?
Yes, 100%.
And I clearly remember this.
How many years did he age you?
A lot.
A lot.
Chris is actually 27.
Yeah, exactly.
But you know, I clearly remember there was a very senior person that I had hired and he was not working out.
He was not working out at all.
And I tell Frank, I said, I think I have a problem with this person.
And he goes, you know, Chris, I'm old and I'm going to die soon.
So you got to do it now.
And he's like, the problem you have, Chris, is you have too much empathy.
He's like, when you have doubt, there's no doubt.
And really I learned that from Frank is making those hard decisions quickly.
It does so many things.
First of all, you get rid of the rot.
Second of all, it makes other people better.
Because you, all of a sudden, you are a performance-based culture.
You're getting rid of someone who's not performing, and people look up to you.
So I've had to make very hard decisions, multiple senior people that I've fired throughout my career.
I hate firing people.
It makes me sick to my stomach.
Any advice to founders, because I hate it too, on how to do it well from what you found?
With this senior person.
I said listen, like hey man, it's not working out, and I feel really bad, but this is not going to work out.
And his response to me was like, I can change.
And I'm like, I've done enough research.
You cannot change.
It's not going to make any difference.
We are not going to change our opinion.
I am super sorry.
You and I are good.
We're good people.
I'm not going to go talk smack about you out in the world.
But this employment engagement is over.
And here's my HR.
And that's it.
You have to say as little as possible.
Get out.
In and out quick.
But be kind.
You don't have to be an asshole about it.
Do performance improvement plans ever work?
No.
I have seen them work, but it's like a rare occasion.
It's a sign for you to leave.
We're seeing revenue scaling unlike anything we've kind of ever seen before.
In that world, forecasting becomes more and more challenging.
Any advice on how to do sales forecasting in a world where it's just like kind of thumb in the air?
It could be 300, it could be 400.
It's super hard.
Like forecasts have always been data driven.
You know, you take a productivity model and we can pretty much tell you with 90 certainty historically, where you're going to end the year, based on what you're getting per rep, how many reps you hire, what the attrition rate is, what the ramp rate is.
And so you build those.
The problem is in this world today, First of all, doubling is not good enough.
So going from 50 to 100, five years ago, everybody'd be super excited.
Today, you go from 50 to 100 in a year and you might go out of business.
It's just, it's a different world.
And so you have to have some balance between you.
Can't throw out the old way of doing it, the data-driven.
Because I've seen companies try to do that.
I've seen them raise off of numbers where they said we did 50 last year, we're going to do 300 this year.
I'm like, great, back it up.
How?
How are you doing 300?
Show me the numbers.
We just feel like we can do 300.
What do you want them to say?
Hey, each wrap carries 2 million quota.
We're going to bring in...
Yeah, not quota, but each quota is a function of compensation.
Productivity.
Each rep is able to generate $2 million in new ACV.
We're going to have 100 of them, so we can do 200.
So you still have to use that approach, but then you have outlier deals.
Sorry, is it naive to assume rep productivity scales linearly with size?
Like, do you not always doubt denigration?
Snowflake was the first thing, first company we had ever seen where we couldn't hire fast enough to bring the productivity number down.
No matter how fast we hired, it kept going up, which is like, that's when we knew.
What a lovely problem.
We've got something.
I mean, we said it earlier, and I said it on your last podcast, we should have kept hiring.
We slowed down.
Why?
Because we optimized to be public.
And that was a mistake, my opinion.
And by the way, my hand was on that wheel.
So, you know.
I was sitting down with a company that we both know very well, but I'm not going to name it because I'll get in trouble.
And they were saying like, oh, we need to scale from 100 to like 300 reps in a year.
And I'm like, wow, you're adding 200 reps in a year.
It's half a day almost.
Is it possible to add 200 reps in a year at a series BC stage and not lose quality?
Look, 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 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, 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.
What do you think the most number of reps we hired in a year?
I think one year we went from 100 to 300.
Yeah, that was pretty wild.
How many reps can you have under a manager?
Six.
Six is it?
It depends.
At scaling, when you're scaling.
Yeah, when you're scaling, it's six.
But at scale, like if you're not growing as fast and you're not hiring as fast and you have a bunch of productive reps that have been in the seat for six months or longer, you can have like eight or nine.
And especially with AI.
You can use AI to like give you a bunch of data, leading indicators on what's happening to those reps.
Do you ever find ramp or onboarding for reps to be well done by early stage companies?
It's really hard to do.
It's hard.
I think this is why I think the hardest job in technology sales is the frontline manager.
The frontline manager is the key to development of the reps.
Because in all honesty, your enablement at a Series B company is not that great.
It's not.
You're trying to do some stuff.
You might have an enablement person.
You're going to teach them on how to sell medic and everything like that.
But it happens at the frontline manager level.
So developing your frontline managers, hiring good frontline managers is really, really important.
There's a company out there that I've brought into almost every one of my portfolio companies, called RevLogic.
And all they do is build enablement programs for early stage companies.
When is the right time to really be investing in enablement?
Early.
When you're building a sales team, early.
Is that like $2 million in revenue or like $20 million in revenue?
I don't think you can pick a revenue number, but if you're gonna have 10 or 15 reps, for example, if you have five reps, you don't need it.
But if you have 10 or 15 reps and you're going to 50, you better have it.
It's because you're, think about it, you're spending a lot of money building out that sales team.
You might as well invest in developing them.
Is there anything specifically we can do to make sure reps ramp quickly?
Well, ramp is, remember, there's a couple of things that go into ramp.
Number one is the sales cycle itself.
So to define a rep is productive, right?
A productive rep.
If the productivity per rep is a million dollars per year, the first quarter they're productive is the first quarter you can expect them to do 250.
So first of all, you have to People get this definition wrong all the time.
Like the second a guy does a deal, he's productive.
Incorrect.
It's the first quarter in which they hit their full productivity number.
And so if you have a sales cycle that's six months, how do you get the ramp time less than six months?
You can't.
So the two things that go into shortening ramp time are the sales cycle itself and then the enablement of the reps.
So there's two things that go into it.
You can do a good job of getting the enablement to happen within 90 days, but if your sales cycle is six months, you're still gonna have ramp time of six months.
What are the biggest mistakes you see people make, founders, managing those reps in that time?
Well, I think they arbitrarily come up with numbers.
Like we were saying earlier, they're like, oh, we should do $3 million because we're an AI company.
We talked about another company where they were like, oh, we don't need real salespeople.
We can hire, I don't even know what they call the salespeople.
And it's like No dude, like you can do weird things until you don't, and things will end badly for you.
So for my opinion is like invest in a great sales organization as soon as you can.
You know, maybe I'm getting old, but I don't like the like gamification of like scaling game.
And what I mean by that is like we need to hit 15 million, because then we'll raise 100 million at 500 million.
That's right.
This is what I deal with every time I come into a company.
They're like, we have to get to this number.
I'm like, it doesn't work like that.
We have a bottoms-up approach.
We'll tell you what you can do.
You can't say this is the number we have to get to.
Get us there.
It just doesn't work.
It sounds like I moved to San Francisco and the dot-com boom.
It sounds a lot like the dot-com boom.
Yeah, 15 and then we can raise it 500.
And they do, and that's the issue.
What about the margin?
Yeah, what about the margin?
How about you're reselling a bunch of large language models at a negative margin?
How does that go?
Do you have that conversation with founders a lot?
100%.
In fact, I've threatened to walk away from companies because they said we're going to go raise at this number.
This is the forecast we need to have to get to that valuation.
So that's what we're going to do.
And I'm like, literally I've said to companies if you go, do that, I will leave, because we are not going to hit that number.
I'm looking at the number of salespeople.
I'm looking at the productivity plan.
That number is not realistic.
You might get lucky and get there.
Forecasts are not supposed to be lucky.
You're supposed to put a forecast out with some level of certainty that you can get to that number.
You guys sit on boards with some of the best founders and some of the most exciting companies.
Are VCs vocal enough when it comes to constructive advice, guidance with the companies they work with?
99% of them are not.
Why?
Because they've never been operators.
So like they're just regurgitating, you know, something they heard in another board meeting that they think might be I was on a board call.
I was on a board call of a seed stage company.
And one of the VCs got in and said, when are we going to do our first million dollar deal?
I was like, dude, how about you shut the fuck up?
I mean, it's like, what value is that at all, right?
I was once in a board meeting and they said, I know what we need.
We need more sales.
And I was like, shit, let me just...
So what do you say, sales?
That's the best advice I've ever heard.
Thank you for that.
James, that's a good one.
So what are the best board members that you sit on boards with do?
On the flip side.
The best board members that I sit on boards with are the ones that know something in particular product, for example, and add a lot of value in a particular area on that board and offer their input and are involved in the business enough to have a point of view, which means not just showing up at the board meetings, actually have conversations with people inside of the company in between board meetings.
And so they combine the knowledge that they've gained with the expertise that they have, and they use that to actually add value.
But they also understand their swim lanes.
The board members that drive me fucking nuts is like when i'm sitting in a board and i have some guy on the board that's a vc, that doesn't know fuck all about sales, that wants to chime in when we're talking about sales and give us his suggestions and start asking questions.
I'm just looking at the guy.
Can you just shut the fuck up?
I think the best board member that I've ever seen is Mike Spicer.
In building Snowflake, that guy was so, he was a founder of the company.
And then he was so involved in the product.
When he didn't know about sales.
That's why he brought in John McMahon to be on the board of Snowflake.
Like there's like, he knows where he's good at and he knows where he's not.
And he's super valuable.
So he's literally probably the best board member I've seen.
Yeah, Mike's amazing.
And McMahon was the same way.
Like, John would come in.
I sat on four or five boards with John.
John opens his mouth when we're talking about sales.
And honestly, that's where I learned from.
So when I'm sitting in a board meeting, when we're talking about what I know, I'll say what I have to say, and then I don't say shit.
Yeah, John doesn't say a lot in the board meeting.
He spends a lot of time with you understanding the business and telling you that you're fucking up one-on-one, so that you don't go into that board meeting and become an idiot.
He's really good at that.
He's also an elegant gentleman.
Very.
You know, I had him on the show and I was just like, oh, gosh.
We said the word territories earlier.
And I had the CRO at Eleven Labs on the show.
And he was like, you kind of have to be global now.
And you have to open everywhere and be everywhere.
And obviously you work with Harvey.
Obviously we're with Legora.
We'll leave that one out.
But they're both opening everywhere.
How do you advise founders when you have to be global sales, not day 365 but like day one, and you have to open multiple locations at once?
How do you advise them?
I mean, this is new right.
The way we used to do it is you nail north america, get north america to like 100 million yeah, like you.
Get north america to the point where it's it's operating and you have some level of confidence and you have a good leader that can run north america.
That frees your cro up chris, to go open other markets.
You start with emea, then you go to aipac, but you do them sequentially so that you're not spread too thin, I agree.
That has changed.
I'm seeing companies open up everywhere simultaneously.
And I think it's really challenging because it also depends on the CRO.
But say you have a CRO that's not accustomed to doing that, which is the case with most of them.
It can really stretch them.
I think like we both like to hire young up and comers to be the first head of sales.
And the problem now, like this is a new problem.
The problem now with that is that they've never run an international sales team.
And so I had time, like I was talking to one of the founders about, this is I had time to like ramp North America.
Hire a North American lead ramp Europe, then ramp APJ.
There is no time.
And so like, founders are now paying CROs who have that experience, enormous amounts of money, enormous.
It's crazy.
Because they know that they have to get market share ASAP globally now.
So people that are peers of mine that have experience like me are paid quite handsomely to do that.
Being blunt, is it not actually just effective capital allocation to pay a CRO who's done that?
Don't kill me 15, 20 million bucks.
Well, that's a very low number.
That's a low number.
You're not even in the ballpark.
You can see CROs today, and I'll leave the companies out.
I know CROs getting $100 million packages.
You know, I'm considering being a CRR.
You should.
You should give it serious thought.
It's crazy.
Would you endorse me on LinkedIn?
Yes, you should think about it.
That is not... We got a Series A company.
You want in?
A hundred million bucks, I'll be anyone's.
Are you kidding me?
No.
Wow.
Is that good?
I don't know.
It's a bubble.
This to me is a bubble.
And honestly, Anthropic is inflating that bubble.
Not that they're doing anything wrong.
They just have so much money they can spend.
And so they are setting benchmarks that the rest of the market is trying to keep up with.
It's crazy.
And more power to them, right?
It's better to be a CRO of a startup than it is a CRO of a publicly traded company.
Oh, 100%.
You'll get paid more.
Yeah.
Which is crazy.
Do you guys buy the SaaS is dead?
Some SaaS is dead.
I don't 100% buy it.
Look, when I went to Snowflake, the enterprise was still in the data center and you know, IBM was still selling mainframes.
IBM still sells mainframes.
Legacy dies a slow death.
People will still have Salesforce as their CRM or their source of record, but it's changing.
I'm a traditional SaaS founder, guys.
My sales team's getting eaten away.
I think a load of Snowflakers have gone to Anthropical.
That's right.
Yeah, and I saw this LinkedIn post about it which is like this is savage the amount of snowflakers that go into Anthropic.
It's crazy.
What do you advise me if I'm a traditional SaaS company?
Just kidding.
It's a really difficult thing.
I've been on emergency calls, literally, to discuss this.
And the problem is you can't compete financially.
What they are paying people is so far above what everybody else is paying.
You can't sit there and just counter these people.
But even development-wise, honestly, you can't compete.
If you're at a traditional SaaS company, you're not selling the same learning trajectory that you are being at the coalface with Anthrop.
It depends on what you're talking about, learning what.
If you're talking about learning how to be a great salesperson, I don't think you're going to get that anthropic.
If you're talking about learning how to sell the products of the future, you're right.
Okay, switch hats now.
I'm the sales talent.
I'm maybe not going to learn what a great sales org looks like, but I am going to learn what maybe the best product org in the world looks like, at the cutting edge of technology looks like
It's pretty tough.
Like if Anthropic.
For example, when they were at their 380 valuation they were offering reps call it a million, two.
I'm not an investor in Anthropic, but if I recruited for them I would make the case all day that you can 10X that stock.
I think Anthropic's a four or $5 trillion company.
So if you're a sales rep and they're offering you a million too, and you could look at that and say I'm going to have 6 million in four years.
How do you tell someone with good conscience not to do that?
I think it's hard.
I think, like culturally, you have to be okay being in this organization where you said it.
It's a great product, unbelievable product organization world-class, the best in the world.
But you're going to be sitting next to some mediocre people that are going to make a lot of money.
And maybe they came six months earlier.
So they're going to make more than you.
And you're going to be super pissed about it.
But shit, $10 million will make you do a lot of things.
Baby, I'll dance.
That's right.
I had someone on the show the other day that said the 60000.
You're going to laugh at these numbers, but the 60000 SDR is dead.
Like the low level, just kind of outbound bullshit, low quality.
Enter the 250k SDR, which is the.
Again we can adjust the numbers if we want to, if they're more expensive and inflated.
But the full stack AI ramped killer SDR.
I'd rather have one of them than 10 of the shit, low quality ones.
Are they still just setting meetings?
Has the function changed?
Fundamentally, yeah.
But are they doing more than setting meetings?
Are you talking about actually closing transactions where they transform it into an inside rep?
Are you saying the SDR function of just setting meetings is still the same, but their productivity is higher because of AI?
No, I'm saying we're needing them to go more full stack.
So it is kind of end-to-end, but we'd rather have three end-to-ends versus 30 before.
I think the one thing that you're missing in all that is, like that's the future of your sales organization.
Are sales always going to be smaller?
Potentially.
I don't know.
I mean, right now.
Right now it's the opposite.
It's the opposite.
So there's no lack of demand for good salespeople.
And if I'm a CRO, I want SDRs in my organization because they're going to be my future sellers.
I want to develop those people into my field sales organization over the next five years, or two to five years.
I don't know if you saw Benny off, but he's like, no more developers.
Salespeople welcome.
Want salespeople.
Can I ask you, verticalizing sales teams has always been really freaking hard.
Does verticalizing sales teams change today?
And what's your biggest advice to founders who are now contemplating when and how to do it?
I think if you're an API company, for example, it absolutely changes, because you're talking about customized solutions.
And so it makes sense to have customized solutions specific for a vertical, because you can go in there and repeat that motion.
I think for out-of-the-box products it's less relevant.
But we're certainly seeing I'm seeing it happen faster than it has in the past.
I think Snowflake did it probably a little bit too late because it's a consumption model.
You have to actually understand the use cases and then go win those use cases and get those use cases live and all this other stuff.
So I think it's super relevant to have a verticalized sales team, but you have to invest in having specialists and, like you know, it's expensive to do it.
We mentioned the word consumption.
Everyone talks about the future of pricing and everyone kind of agrees that we're moving away from per seat.
Per seat is dead, per seat is dead.
You ever speak to a traditional CFO?
They're like, no, no, no, no, no.
I don't want variable pricing in this way.
I need to know what my cogs are.
I like the reliability of per seat pricing.
How does pricing change in the future, and does how we sell need to change according to that?
Yeah, every SaaS company that is a per-seat is having the conversation right now of how do they introduce some sort of consumption into their pricing model, because there's risk that, you know, companies have less employees.
And even though you might be gaining market share in terms of number of customers, you might be losing revenue if you're a per-seat license.
And a lot of times like the reason that Snowflake was a consumption model is because our underlying cost of goods was also consumption.
So you know CFOs didn't like.
They tried to force us into a traditional licensing model and we said no.
And so, tough luck, Mr. CFO.
This is the new world.
This is how it is.
It definitely changes how you think about the sale too, because in the traditional world it was go, book a deal and walk away.
And the sales guy didn't have to care.
As we experienced at Snowflake and I'm experienced at every company, you can't have that.
The rep has to be invested in The long-term relationship with the account, because they have to ensure that the account is in fact consuming.
Otherwise they'll go book a deal, walk away and the account doesn't consume and the company's got a gross retention problem.
So you have to tie some of their compensation most of it still to the booking events, but you have to tie some of it to the consumption so that they are incented to make sure that they don't overbook deals and at the same time that the customer is actually consuming what they bought.
We were downstairs before this and I showed you the video where I said work from home Friday is an excuse for a three-day weekend.
Do you find that this generation of sales rep is aware of the requirements to win?
I mean, I think there was a time where these reps, there's this entitlement, this like generational issue.
And I think COVID accentuated it and really started the three-day work week.
I think now, you know, you talk to any college grad and they're struggling to get jobs.
And that's changing their mindset.
So a lot of these people who have these entitlements, they're going to have a bunch of young kids come up and steal their lunch because they're going to go out and want to work, because they're desperate to work.
I do think it's going to change.
It's a cultural issue, at least in the U.S.
I mean, if I look at the U.S., we're just as a country, we're soft.
People have forgotten that we actually have to work hard to achieve the things that we've achieved in the US.
I won't speak to Europe because you know how I feel about Europe.
So I think it goes, I think it's far more broad than just salespeople.
I think it's an issue.
But I will say over the last year or two, I'm seeing it swing back.
Like some of the founders we've talked about, that I've worked with I mean personal situation.
I'm working 70 hours a week.
My wife talks to me not that often because she's super pissed about the hours I'm working.
I'm like, you don't understand.
Everybody I'm working with is working 70 hours a week.
That was not the case a couple of years ago.
Why are you doing it?
I mean this in a nice way, dude.
You don't need the money.
He's a psychopath.
I love to work and I love to win, and I love to be around people that are smarter than me, and I love to build incredible companies.
I love it.
The thing that's like genuine about Chad is he's relentless.
And sometimes that can be taxing because you sometimes don't want the feedback that he's gonna give you, but he's generally right and he will not let it go.
He's a dog that's chasing that bone, and he will not let that bone go.
I'm very like Chad in many ways, but I've learned that people thrive on the carrot or the stick.
I'm sure he's very good with the stick, but...
But some people thrive on the carrot.
That's why we're partners.
That's why we're so good together.
That's why we're partners.
Is that it?
Because I struggle with giving the carrot.
Can you give both in one person?
You can.
I think like, look, like there are... Does he ever give the carrot?
Come on.
There's some carrot in there.
There's some.
There is some.
Chad is really good for me because I will try to be nicer than I need to be.
And he'll hold me accountable to making sure that there is more stick in my delivery.
But I think what I tried to do is build a sales organization that was not a bunch of assholes.
And so Chad respected that.
He helped me build that organization.
There are sales leaders out there that are assholes.
They don't care that they're assholes and they'll build an organization that is a bunch of assholes.
That's fine, but that's not good long-term to build a long-term sales organization.
Which organization has the most assholes?
I'm not touching that.
I knew you'd ask that.
I got trouble last time I was on this podcast.
I called someone a dick and a liar last time.
That went down so well.
Yeah, that was really good.
You mentioned like, you know how I feel about Europe.
I'm not kind of deliberately teeing you up, but like if I'm a European founder, listening as there are tens of thousands.
What do you advise me then?
I just think it's hard to find the types of people harder, I should say, to find the types of people, particularly outside of the UK, in Europe, that are willing to put the effort in that I think is required to be successful.
I just think it's challenging.
And I think it's very difficult to fire people in Europe, as you know.
I mean, you want to hire in Germany or France and Spain and decide you want to fire somebody?
It's next to impossible.
And so having things like performance management and so on and so forth are challenging.
I think Europeans have a different expectation in terms of work-life balance.
I'm not saying it's wrong, it's just different.
And I think that can make it challenging.
One of the, I've made plenty of mistakes in Europe.
One of the mistakes was putting the inside sales team and SDRs in Amsterdam.
As soon as you put someone saying they're not working out and they're getting a PIP, the first thing you do is they go on sick leave and then you're negotiating with lawyers.
It's the worst.
I mean, it's the worst.
And then they come back for like a day and then they go back out on sick leave.
And then they're like, well, how much are you going to pay me?
And if you're in a company that the stock is worth a lot, they're going to be really painful to exit out of the organization.
It's just, it's a pain.
So we have one company and they wanted to fire someone, but they couldn't.
And so they had to have them resign.
So the game was, how can I make this person resign?
So every day the CEO came in with a thousand block of page, like white paper.
And so every day you need to check that there's a thousand pages and that we're not being ripped off.
And then at the end it'd be like...
I want to double check that one.
Did it work?
After two weeks.
Isn't that savage?
The best European performance management story I have is the guy who was my German country manager had an underperforming rep.
That rep decided he wanted to go part-time and German law allows him to go part-time.
And so what the country manager did is said, okay, good news to this sales rep.
He was trying to negotiate him to get him to leave.
He wouldn't leave.
He wouldn't leave.
He said, great, great news.
We're every Monday morning, the day that you're in the office, you're going to drive two hours into Munich and we're going to have a one-on-one four-hour development session and I'm going to develop you to be the best sales rep ever.
And he just grilled him for four hours.
At the end of that four hours, the rep said, I don't think I want to do this again.
You'll have my resignation tomorrow.
He talked to his lawyer.
His lawyer said, well, you shouldn't do that.
So then Arian came back and said, okay, guess what?
I'll see you on Monday.
Sunday night, the guy resigned because he just made it so difficult.
I think you just have to like performance, manage the hell out of people and make it very difficult on them.
It's also just a mentality.
Nothing irritates me more when I get into these companies than when I see people whose mentality is what can I get out of the company for giving the least?
Drives me fucking insane.
And I will tell you, when I got back into Snowflake, I saw it everywhere and it just it's like look, we are here, we are privileged to get to work for this company.
You are here to fulfill a critical role.
I can tell you that's how i view my job like.
If i don't think i'm adding as much value as i possibly can, i will leave, because i can't live with myself, and i think you have to try to find people that are like that.
But there's so many people that are just like oh, it's a big company.
Let me take, take, take, take, take, and give as little in return as I can to get away with it.
Do you think it's possible to have a large thousand person plus company without that lack of attachment to the brand and to the company?
I mean, I'll tell you at SpaceX and XAI, they have done an incredible job of having people that believe in the mission.
Clearly it's not 100, but everybody there believes in what they are doing and wants to be there, of course, to make money, but they want to be there because they believe in what they're doing.
What do you think they've done specifically to give that belief, that enthusiasm for the mission?
They hire for it.
I mean, it's a big part of it.
I mean, they hire for it.
You get a very quick feel when you're interviewing there for like what this thing is all about.
They talk about mission all the time and they believe in what they're doing.
They believe, we believe that we literally are doing things to save the world.
You can question that all day long, but that is the belief that we are doing things to change the world.
And you're going to make a lot of money because you can work at a nonprofit and do the same thing.
But you're going to make a lot of money at that space.
Most likely.
What have you changed your mind on most in the last 12 months?
I think we talked about it, from my perspective, is the go global as fast as you're going.
That, to me, is crazy.
A year ago, I would have said, no way.
Don't do that.
Now you kind of have no choice.
It's a sprint.
It's a hyper-competitive market.
You know, I think the world of Matan at Factory, and I think he's got the right mindset.
He wants to go and win.
So he's just going, you know, balls to the wall, and that's what you have to do.
So that's my biggest kind of I have to kind of shut up when my instincts are saying don't do this, don't go to Europe, don't go to APJ right away.
I kind of have to sit back and say, you have to do that now.
What was your view?
I think, when it comes to developing forecast and productivity plans, having some flexibility to say yes, the productivity plan says we can do this, and recognizing that we likely can do more than that, and having some flexibility between This astronomical number that they think they have to get to the data-driven number says here and being willing to find some middle ground.
Because the reality is, like at Factory, we're seeing things happen that we've never seen before.
The size of the transactions, the speed in which they are closing these transactions.
I've never seen it before.
Do you worry that we're at a momentary period in time where every CEO, CIO is being beaten by their board for AI implementation?
And for the next 12 to 24 months, every company in the world is in the market for the product.
Take legal, for example.
No law firm is like... we're going to sit out the AI thing.
And so everyone is in the market for it.
But only for 18 to 24 months will that be the case.
I think, like we said earlier, there is a bubble to this thing.
But I also think it is life-changing.
I mean, AI is changing the way that you can interact with technology.
So I do think it's important that you build for speed and you go fast, but this bubble will burst.
Do you buy that AI completely changes the sales prospecting process game?
We've seen many people from 11X to artisan and your qualifieds.
Jason Lampkin, the VC that we discussed earlier.
He got rid of his whole sales team for his conference and has all AI SDRs and AI sales process.
I don't know, man.
I get like three AI-generated recruiting emails a day.
And it's embarrassing.
These people put their names on it.
And you know what?
What has not changed is if you have the guts to pick up the phone, call me, leave a voicemail.
Text me, email me, call me again.
There's nothing replacing that.
Because dude, all these CIOs are getting inundated, inundated with ai prospecting.
You can get rid of them or you can leverage ai and then you know, invest in field marketing and getting and do a lot of you know marketing events and do cold calling, like this is still matters.
I mean, chad is the case in point.
He does not send emails or linkedin emails.
He picks up the phone and calls anyone.
Yeah, my guys are not allowed to send notes.
They have to call because it's the same thing.
People get inundated with the credit.
They have to get the phone number and make the phone call.
And so I don't think the day of the sales rep is changing.
I just don't.
As long as you're selling something that's critical to the business, and if whatever it is you're selling, if it fails, people lose their jobs.
You have to develop a relationship with a human being to do that.
Does the role of customer success change over time?
Chris, you've always been very vocal about customer success, basically being BS and being free professional services.
I think it's, yeah, 100%.
Well, I think, because there's so much more intelligence you can get on usage of how the customer's interacting with the product.
So it should be way more analytical.
It should be way more insightful.
Yeah.
It's not this like kind of whatever, like what customer success before was who knows what it was.
And now you have all these metrics that you can gather.
You can actually, it can suggest. like how you interact with the customer.
It can suggest that you talk to them about these things.
It can show you that the customer is going to leave you.
There's a bunch of intelligence that it's going to do.
So I think like customer success stories could be completely automated to some extent once the customer is in production.
So I think, you know, I think AI can definitely help.
What are you thinking about a lot that you don't see people speaking or talking about much?
I think we're talking about some of these compensation things we're talking about.
It's not sustainable.
What salespeople are currently being paid today is not sustainable.
You cannot pay salespeople this amount of money and have a company that's cash flow positive, and so on and so forth.
Right now, nobody cares because there's so much funding out there and they're just looking at the growth numbers.
Nobody seems to care about how much your burn is or anything like that.
That has to change.
And when that changes, all of these comp models and all of this shit has to change along with it.
Does it lead to a hollowing out of that sales ecosystem with, I don't know, 500 to a thousand people making between 10 and 50 million bucks?
Yeah, likely.
And I also just I don't know what the world looks like, but there is a world where there is five or six super relevant technology companies and not a lot else.
I hope that's not where we land, but you could certainly see a world in which that is where we land.
And in that world there's not a need for a bunch of salespeople, because there's only five or six companies.
Has working with X changed your perspective on the future of the dominance of companies?
For sure.
I mean working with X has been one of the, or SpaceX, which we're now called, has been one of the great joys of my life.
It's been, I have learned more.
I actually learned quite a bit going back in with Chris Snowflake the second time, but I have learned more about technology and where I think things are going.
So I think the answer is yes.
What's the biggest thing you learned?
There's just different ways of running a business.
The way in which that company is run, I've never seen before.
It's just different structurally, organizationally, everything is different.
And there are times when you're like, how can this work?
And then the next thing you know, it's working.
So it forces me to recognize that, although I've seen something be successful in the past, it's not the only way to be successful in terms of how you run the business.
Chris, what about you?
Yeah, I mean.
You know I'm thinking about like all these questions around.
People are saying the salesperson will be dead or SDRs will be dead.
I just, I don't buy it, but it makes me think about things a little bit differently.
Like you know, I talked to the people.
I'm a year out of being at Snowflake and things have changed so dramatically that it makes me paranoid that I'm missing out on things for sure.
Do you think Databricks goes out?
I don't know.
When they start selling stuff at negative margin, I don't know if they can, so...
I had to put it out there.
Well, I mean, it's a fair question.
Snowflake today is worth, what, $55 billion?
Yeah.
So is somebody going to make the argument to me that Databricks is worth two and a half times Snowflake?
Nobody's making that argument to me.
The public markets are quite different than the private markets.
100%.
Remember, private markets, you know, this takes three guys to set your market price.
Public markets take millions of people to determine your price.
So is the question, can they go out?
Probably.
Can they go out at $150 billion, 10% above their last valuation?
I'd like to see that.
So what worries me, that I think most people aren't talking about, is the contraction in liquidity options.
Public markets are basically dead.
You can't go out with 200, 300 million in ARR now for sure.
Even a billion is not even interesting.
I know it sounds awful.
Two tech buyouts gone.
You think Tom and Bravo are jumping back into another Coupa or a Nano plan?
Less likely.
And then everyone looks at an exit and a curtain and goes well, look at these big guys paying the money.
They're so specific in what they want and why they want it.
It's not a deep enough universe.
Where are the exit options?
I think that's why you're seeing companies do things that we've never seen before, like offer tender offers, continuing to raise financing and offer secondaries, because they're effectively providing the same level of liquidity to their employees that they would get if they went public, because otherwise there is no liquidity and they have an issue.
So that's a new thing, right?
Like you'll actually see CROs negotiate into their comp plans that they have the ability to sell annually up to 20 of their shares in a tender offer.
I'd never heard of that five years ago.
Is that good?
You know, I'm not sure.
I think public markets are a good thing.
I think markets are very efficient at telling us what a company should be worth.
When Snowflake was private, it was all about top-line revenue.
That was what it was about.
When we went public, it was about free cash flow.
And so the market still rewards Snowflake on generating free cash flow.
I think that's a thing that you have to think about.
Because one thing that's hard is when people do have some liquidity.
You get kind of second class citizens, where you often have the senior folks who've taken liquidity and who've made often several millions and tens of millions.
And then there's the newer folks who maybe haven't hit vesting cliffs yet and who haven't.
And you do have these two worlds.
That's tough.
I mean I had the opportunity, since I was, like you know, employee 13 at Snowflake.
You know I had plenty of liquidity options along the way and I took some because it made sense.
Now, I wish I did.
Do you regret it?
Yeah, a little bit.
A little bit.
Yeah.
What would you advise someone who has those options today?
You know, look, it depends on where you are financially.
But look, taking something off the table, because there's risk in everything.
It made me less stressed when I took some money off the table.
So it actually, when I say I regret it, I joke.
I don't regret it because it did allow my wife to be a little bit less stressed me to be a little bit less stressed about our financial situation.
I recommend everyone, whenever you can have some liquidity, take something up.
Maybe it's 5%, maybe it's 10%, but do something.
Is your wife as pissed with you as Chad's?
No, because I don't work as hard as Chad.
But that's about to change.
That's about to change.
That's about to change, Chris.
It's about to become a lot more intense.
Yeah.
No, in full transparency, I need a little bit of intensity.
You know, working 20 hours a week isn't all it's cut up to be.
Okay.
Are we ready for a quick fire?
Yeah.
What's the most controversial belief you have about modern sales teams and how they should be built?
I can tell you.
I think one of the challenges when you go talk to a CEO about building an enterprise sales organization that becomes controversial is the cost.
When you say things like for every five reps, I need a manager, that's expensive.
When you say for every four managers, I need a second line manager, that's expensive.
When you say things like it's going to take six months before you get anything out of this investment and you're going to invest in 100 of these people and for the first six months of buying these 100 people, you're going to get nothing for it.
Companies look at this and they're like, you want me to spend a shit ton of money.
And then you say things like right, and at the end of the year you're going to lop off 25 for attrition.
We're going to attrit 25%, which means the forecast is going to go down by 25%.
They see these numbers and the first couple of years of enterprise sales are very, very expensive.
And in this day and age, that is very controversial.
25% attrition a year.
Yeah, that's normal.
Are you serious?
That's inclusive of promotion.
Like it's promotion, it's voluntary and involuntary attrition.
Remove promotion.
What's that, 20%?
At least.
Yeah, because think look, every healthy sales organization should be attriting the bottom 10 every year.
You should be getting rid of 10% of your sales force every year.
Do you think most companies are doing that?
No.
How do you do that?
If I'm genuine, if I'm a sales leader, do I just, okay, it's December.
No, you're doing it quarterly.
No, it's quarterly.
Every quarter, you're looking at the team.
You should be able to get rid of 2.5% of your sales organization.
Perfect.
Performance management is not an annual thing.
And I think that's a lesson that I learned, is you do have to continuously do it.
You have to hold people accountable.
Do you worry about building a culture of fear?
Look, at Snowflake, we had a great culture and early on we were firing people for underperforming.
And like I said, you don't have to fire people and be an asshole about it.
I think you can let them go, wish them the best.
Don't be a negative reference on them.
But good performers actually like to see that you get rid of bottom performers because that means that they're special and it's meaningful.
If I'm an A player, is that going to deter me?
If you tell me, hey, look, every year we get rid of the bottom 10%, I'd be like, you fucking better.
If you don't, I don't want to come work there.
Which private company has the best sales org today in your mind?
I'll defer to chat on that.
The best private company at scale.
Though they were recently acquired, Wiz had a world-class sales organization under Dolly Rodgick.
What made it so good?
Dolly.
I mean Dolly basically brought the entire team over that we built together at AppDynamics and Zscaler.
And because Dolly's Dolly, he brought all of them with him.
They were operationally sound.
He hires the right people.
Wiz is a world-class sales organization.
When you hear that someone came from a public company and you're like, uh-huh, they're good.
They've learned under a great leader.
You said Salesforce was like, Like MongoDB.
Yeah, MongoDB for sure.
Yeah.
I mean, they've been pillaged because of that, but they developed their people and that was a prime target.
What sales advice do you often hear that you think is nonsense?
It goes back to the controversial question that you asked is, like you know, hiring for industry expertise drives me nuts.
Like, you hire the athlete, not the, like, intelligence in a specific industry.
X person is brilliant, but they really want to be CRO, not head of sales.
Thoughts?
I would need more context.
Do you mean they're focused on the title?
They're focused very much on the title.
Yeah, I mean, I just had a situation where this came up last week.
There is some merit to wanting the title, simply because it gives you a level of credibility both with customers and when it comes to recruiting.
So if you give somebody that is in fact the CRO, a VP of sales title, you are sending some level of signal to the rest of the market that you don't totally believe in this person.
It may not be intended, but that signal will be received when you're trying to recruit people.
It made it harder.
I was the VP of sales for the longest time at Snowflake and not the CRO, and it made it harder.
It made it harder for him to convince people to come and talk to me.
Eventually, you know, they promoted me to CRO.
But if you give it too soon, it makes it incredibly difficult if you don't scale into it.
And then how do you deal with demotion of that person?
That's why I like especially if you're the first head of sales I like hiring them as a VP of sales because ideally, because if the company grows really fast and they can be VP of Americas, they don't have to be the CRO and they can stay at the company.
How scalable is your model?
You take very active roles.
You often sit on boards, board observers.
How scalable is it actually?
I mean, I'll take this one.
Up until this point for 30 years, it's been me.
So I have a team that handles the recruiting.
I handle all the board work, all the consulting work.
And I think I have seven companies in the portfolio I can't take on anymore.
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 Spicer to do the operational shit.
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 name of mike haas that's going to come help scale the 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 Have you had a whiff in company selection, and what did you not see that you should have seen?
Fuck yeah, I've had a bunch.
Lacework?
Yeah, I mean, where do you want to start?
Yeah, look, I think the two things that I've learned the most, if I meet with a CEO, and he's not a Matana or, in my mind, a Winston type of guy, I can't work with him. if i go in there and say we need to do this this this and this oh well geez and i look for how often they reach out to me like the killer ceos i work with i swear to god matan is reaching out to me at 10 o'clock at night six o'clock in the morning sridharama swami the same way so it's got to be a killer ceo and to the extent that i'm able to figure it out which is not always good product It all comes down to product.
If they don't have world-class product, you're going to fucking lose.
And so have I had some misses?
Yeah, I've had a lot of misses.
And it's either one of those two reasons or both at the same time.
I mean, like the Lacework sales team was a world-class sales team just to craft product.
I mean, that's a great example.
In 10 years time, you look at each other and go, that was a success.
What is that body of work?
I think it's making companies like Factory be, like, the next great sales organization.
I think together if we can walk away saying like we had a hand in building world-class salespeople along with world class product, like multiple times over.
That's what I want to do.
That's what I find joy in.
That's what like someone asked me to be on the board of a of a publicly traded company.
And Frank Suitman quickly help me put that to bed.
And it's like, why would you do that?
And he's right.
He's like, where I find joy is helping companies build.
And that's what we're doing is we're helping these companies build from sometimes nothing into these world-class organizations.
So if we can spike the football and say we've helped a bunch of companies, go public, that's what I want to help them do.
Completely agree.
Like if you look back 10 years from now and you say over the last 10 years there's been 15 or 20 whatever the number is world-class technology companies that changed the technology industry.
And we can say for half of those companies we were instrumental in helping those companies get there.
I can't think of anything better than that.
That's exciting.
I couldn't agree with you more.
50% hit rate on transformational companies is... And I believe we can do it.
Final, final one, I promise.
You can choose one VC to partner with.
You can choose a person and you can choose a firm because they might not be the same.
Yeah, I mean, look, Mike Spicer is still...
You know, he's at Sutter Hill and he's doing his own thing.
Mike is so unique and Mike is unique to me for a number of reasons.
One, Mike has the ability to see around corners.
Mike sees shit that nobody else sees.
Now you could argue we've had some execution issues around his vision, which we've had, but Mike sees shit before anybody else sees it.
Two, Mike is an operator.
And he's probably the only guy I've ever worked with that is both a stock picker and an operator.
And three, Mike doesn't give a shit.
He just wants to win.
And he will tell you whatever he has to tell you.
He never holds back.
The other guy, and there's probably two others.
I just met him, Sean McGuire from Sequoia.
I love Sean.
I spent some time with Sean McGuire.
You know this guy like runs a marathon in jeans.
Like every day.
But like to the airport.
Yeah.
Did the taxi not work?
I spent time with him.
We went on a walk.
Turns out we went to the same high school.
We have a bunch of similarities.
We're both fucking nuts.
Yeah.
I'm like, oh, this is my guy.
And then lastly, John Herring at Vi Capital.
And he's a big Elon guy.
And the reason I love John is John is a fucking in the weeds VC like I am.
Like I've never seen a guy put the hours in like he does.
And I think that's true of all three of them.
They do the work.
They care.
I'm going to stay silent on this one.
Oh, yeah, Chris has got an issue.
I'm going to stay silent on this one.
Other than Mike Spicer, who I owe my career at Snowflake to, that's why I'm going to stay silent.
Guys, listen, this has been so much fun.
I so appreciate you coming in person.
It makes it so much better, and I can't thank you enough.
Thank you, Harry.
Thank you.
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Framer is an enterprise-grade no-code website builder that works like your team's favorite design tool, and it's used by companies like Perplexity Miro, Mixpanel to move faster.
Designers and marketers can fully own the site, with real-time collaboration, a robust CMS built for SEO and advanced analytics that include integrated A-B testing.
So you're not just shipping pages, but you're maximizing what works.
And when you're ready to ship changes, go live in seconds with one click publish without relying on engineering.
Plus Framer is built for scale, with premium hosting, enterprise-grade security and 9999 uptime SLAs.
Whether you want to launch a new site, test a few landing pages. or migrateyourfull.com.
Framer has programs for startups, scale-ups and large enterprises to make going from idea to live site fast.
Learn how you can get more out of your com from a Framer specialist or get started building for free today at framercom.
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