So this is a seemingly simple post, and one with a title that is purposefully a bit binary. Yes, sometimes it’s OK to hire a VP of Sales that everyone loves.  

But not usually.

At least 9 times out of 10, if everyone on the team loves a VP of Sales, it’s the wrong hire.

And this especially matters because I often see CEOs picking between 2 final VP of Sales candidates. The one that’s more edgy, that’s more opinionated, and/or the one that folks are less unanimous about … loses out. And almost always, that was a mistake.

Let’s explore why:

Your entire existing sales team should NOT love a great VP of Sales candidate.

Why?  

First, the lower performers will be threatened by someone great. They know they’ll likely be moved out.  And also, top performers may be threatened as well because things will likely at least change.  And top performers are usually comfortable with the way things are, at least for them.

The best VPs of Sales immediately identify the top performers and make them want to stay when they join.  But this doesn’t eliminate all anxiety or change. 

So long time friend of SaaStr Tomasz Tunguz, now heading his own VC fund Theory Ventures, has again summarized a lot of data into a few great charts.

This time, on Mergers & Acquisitions.

My biggest take-away: there are barely more than 50 acquisitions of $50,000,000 or more, at least disclosed one, in software of U.S.-based startups each year. And that’s fairly constant for the past decade, outside of the 2021 bubble.

So Datadog remains one of the most iconic Cloud and SaaS leaders of this generation. Growth is still epic at almost $2.5 Billion — it’s still growing 27% a year (!). But like Snowflake, it’s a bit less of a mind-bending rocketship that it used to be, and has focused on efficiency as well.

Today its non-GAAP operating margins are 27%, and it’s generating almost $800m of free cash flow a year!

From the hyper-growth of the past, to very efficient growth at $2.5 Billion.  It’s a sign of the times.

Does outbound still work?  It’s one of the questions so many sales leaders are asking out loud these days. The outbound playbook from the past 5-10 years in SaaS clearly … isn’t. Hiring 10, 20, 50 SDRs straight out of school to send the exact same email sequences to try to get meetings for an AE with more experience that them isn’t performing for 90%+ of us anymore.

And yet … almost every CEO, almost every buyer, still opens and reads the best emails they get.

Every single day.

I remember when I joined Adobe for a bit, I wondered if the very top execs really read their email.  How could they? How could they process so much email?  So I did a little “study”. I watched, asked, and sort of … snooped. It turned out, they were on email all the time. The bigger the team, the more folks you had to forward emails to. But every senior exec even at one of the largest tech companies was on email all the time.

Fast forward to today, two of my fastest growing investments sell to SMBs. 1-2 call closes, low ACVs. You have to be relentlessly efficient here.

One has mostly abandoned outbound and done just fine. Doesn’t move the needle and was a big distraction. The other has doubled down here and seen it grow to 30%+ of new customers. Different industries, different teams.

But most importantly, perhaps, different CROs. Different DNA.

When you go to hire a VP of Sales or even your first sales rep, one of the top qualifying questions I always recommend asking is if they have experience at your deal size, at your ACV (Annual Contract Value).

There are very different cadences, and different skills, in closing $100 vs $1,000 vs $10,000 vs $100,000 vs $1,000,000 deals.

Very different.

There’s obviously a spectrum here, and closing a $100k deal and a $1m deal are more similar than deal sizes another stage away. And sales professionals certainly can learn skills and go up (and perhaps even down) a deal size in sales.

But moving up or down more than one deal size “bracket” is tough.

Everyone loves Ask Me Anything sessions with SaaStr founder and CEO Jason Lemkin, and for good reason. As a SaaS veteran who built and sold a software company for nine figures, invested in startups since 2013, 10x-ing his fund, and continues to build a powerhouse community of SaaStr fans, he offers some hot takes on the communities’ burning questions.

Let’s jump right into this set of community questions focused on SaaS metrics, growth, and efficiency.

• SaaStr 738: How Shopify Implements AI Across Sales and Product with Mike Tamir, Head of AI at Shopify
• SaaStr 737: How to Build Go-to-Market Efficiency in SMB Sales with Owner.com CRO Kyle Norton

• SaaStr 736: What I Learned Selling My Company for $130M with Harry Glaser Founder of Periscope Data and ModelBit

Listen on Apple Podcast, Spotify or Google Podcasts

Part of being a successful founder is a commitment to excellence

that many won’t understand or even see or perceive

To next-level excellence

This will create some friction among those without that commitment.

Actually, lots of friction.

When we look back at the craziness of 2021

The 100x ARR Deals

The 24 hr term sheets

The vendor explosion

The craziest thing of all will probably be that we valued low gross margin

B2B businesses the same as high gross margin ones

What you are feeling today is just what SaaS used to feel like every day:

- Hard

- Buyer scrutiny

- Have show real ROI

- Flight to trusted brands

- #3-#30 in space struggle

- Mediocre multiples of revenue

- Next VC round much harder than last

2021 was an anomaly

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