How To Build a World-Class Sales Organization

Lenny’s substack on product has over 600,000 subscribers (!) and Lenny asked us to join his podcast to talk about building a sales team — from the perspective of a product-first founder or exec.

It was a pretty strong conversation and we took a lot of our learnings over the years and focused on how to learn to do sales right if you come from a product-first background.

We’ve talked a ton on SaaStr over the years on how to make sure your VP of Sales and top hires really work out. That they are the right ones. We can pretty much summarize a lot of it into the following:

• Your VP of Sales should have lots of experience selling at your average ACV.  A great VP of Sales that has mainly sold $100k deals just isn’t going to make it at a $5k ACV start-up … no matter how strong they otherwise are.   Whatever your target ACV is for next year, that should be the #1 area your VP of Sales hire is good at.  Being good at a certain deal size also means you know how to have the velocity, the pipeline lines, the opportunities needs, the hiring needs, etc. for that type of sale.
• Your VP of Sales should have hired at least 2-3 quota-hitting reps before.  Make sure they really have.  Go talk to at least 2 of the reps they hired that hit or exceeded plan.  See if it’s all really as it seems. If your VP of Sales candidate knows how to source and hire 2-3 AEs and make them successful, they can do it again, even at a much larger scale.  But if they’ve never really built at least a small strong team themselves, you are taking too much risk here.   Inheriting a team, or being given a team, but not having recruited it yourself doesn’t count.  Be careful hiring someone who was a team lead really, but didn’t hire their team.
• Your VP of Sales should have 1-2 reps they’ve worked with that want to come with them to your company.  Being a VP of Sales is about management and recruiting and building great teams.  A good VP of Sales candidate, even a true stretch candidate, will often have at least 1-2 of their top reps from their last role that want to join them at their next one.  Ask who they are.  And talk to them to make sure it’s … true.

This edition of the SaaStr Daily is sponsored in part by ChurnZero

In the Forrester Wave™ Customer Success Platforms, Q4 2023 Report, Forrester recommends that CS platform buyers look for providers that:

• Prioritize digital-led strategies for success at scale.
• Leverage AI and machine learning to harness predictive analysis and optimize resources.
• Include rich reporting and integrations out of the box.

“CS teams need to find alternatives to high-touch models and manual processes and invest in digital-led programs designed to meet customers where they are,” writes Shari Srebnick, principal analyst, Forrester.

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We’re coming up on the quarter.  We always are, really. Some of you are going to beat the plan! Most of you maybe, even. I hope. But not all. All of us have a rough month, quarter, or even year at least once.

And if you are going a rough patch, even a seemingly minor one, it’s super important to distinguish between a Soft Miss and a Hard Miss.

What’s the difference? In a Soft Miss, bookings are still growing. Just not as fast as plan, and/or as fast as you’d like. In a Hard Miss — bookings have decreased from the last period.

So the other day I did a 20VC with Harry Stebbings, and one of the topics that came up was the Hopin founder‘s $100m+ secondary that the CEO took out of the company. While the company is still around, the Hopin product was subsequently sold for pennies on the dollar to RingCentral. And in fact, the product was already in decline by the time the CEO took $100m+ out.

The investors make nothing, the product is in trouble, and yet the founder cashed out $100m+ and moved to the beach in Spain. Some see this as a hero move. But It always bothered me.

But why? I didn’t really know why until I dug in with Harry.

If VC’s were willing to hand a founder $100m to buy some of their shares, what’s wrong with that?  Doesn’t everyone go into this as adults?  Weren’t those sophisticated VCs?  Isn’t venture capital, well risk capital?

For sure.  And look, I’m all about Founder Power and I firmly believe, and have for many, many years (and written about it on SaaStr), that founder secondary done right is a great thing.  If founders have been at it for 5+ years, and the business is truly at scale, and past the risk stage, then helping them sell some shares can be just the right thing to help them go long.  I believed it then, I believe it now, and as a SaaS founder, I wish I’d taken some of the founder secondary offered to me.  It would have pushed me not to sell.

But … but … here’s the thing.  Traditionally, founders came last.  Even in secondaries.

Yes. Roughly speaking, this is what generally will happen after 3 rounds of traditional venture capital. 

If the company sells 15–20% in each round, and 15–20% is reserved for employees, that typically will leave 15–25% for the founders in total.

It’s not the end of the world. This is after 3 full rounds of venture capital, and if you are then on the path to IPO or Big Acquisition (which hopefully you are if you take 3 rounds), that 10% (or whatever amount) will still be worth a lot.

But if you can — skip a round. Or at least, half a round — by stretching a little longer until the next round.

Be a little bit more frugal. Maybe even, don’t take that extra round if you don’t need it and can’t put it to good work.

As we gear up for SaaStr Europa 2024 in London on 4-5 June and SaaStr Annual 2024 in the SF Bay Area on September 10-12, we wanted to take a look back at some of our most iconic speakers and sessions from over the year, that we can still learn from today.

Back at the first SaaStr Annual, in February 2015, we kicked off the day with Aaron Levie from Box — who had just IPO’d a week or so before. And we ended the day with an incredible combo of the hottest app at that time (and one of the hottest ever), Slack, who likely was around $30m ARR or so … and hadn’t yet added a sales team! And David Sacks was kind enough to join us and compare and contrast the Yammer experience to Slack!

It too soon to target enterprise clients when you can’t support their needs 90 days after you close them.

It’s sort of OK in the enterprise to promise features and functionality that are sort of there … so long as you deliver them fairly promptly after the deal closes.

In fact, it happens all the time. Enterprise customers will even sign contracts agreeing to buy so long as you implement a key feature with X number of days.

But if you don’t have the team, commitment and experience to deliver that functionality at least X days after you close a Big Customer … you aren’t ready. They’ll churn or at least, never fully deploy.

You don’t have to have the full enterprise package in the early days to close enterprise customers, especially if they have interest in you.  You’ll get some slack as a new, emerging vendor.  But you have to meet your commitments and promises to them fairly soon after the deal closes.

Up Next: Wednesday, February 21st @ 10AM

Topic: From the Other Side: Advice from a Founder-Turned-VC with Ridge Ventures

Speakers: Akriti Dokania, Partner @ Ridge Ventures

Workshop Wednesdays is new series where we’ll be bringing some of the best SaaStr speakers to you LIVE, every Wednesday. 

Each workshop will be hosted in a live, interactive 30-minute format at 10am Pacific each and every Wednesday. This workshop will be 100% LIVE, not pre-recorded, and will be hosted in an, interactive 30-minute format, including Q&A.

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