November 1, 2018
Ep. #22, Authentication with Yubico’s Stina Ehrensvärd
In episode 22 of The Secure Developer, Guy meets with Stina Ehrensvärd, founder and CEO of Yubico, to explore how hardware solutions like Y...
In this Heavybit presentation, a panel of founders explain how to transition your company from founder-led sales to a well-oiled growth machine.
Ted Stinson: Good evening, everybody. Welcome. Thank you. This is going to be a fantastic evening. I’ve been looking forward to this now for a couple of months and planning with the Heavybit team. Thank you to our Heavybit sponsors for supporting us and for us providing the venue. All of you at some point will hopefully have the opportunity to go through the topic we’re going to talk about tonight, which is the transition from founder-led sales.
In some cases it’s on the backs of wild success. And the question is, how do we keep growing even faster? In other cases, in many cases it’s in the context of challenges and many of the things that early stage startups are trying to figure out. And they think about bringing in sales to help do that.
My background is as a venture partner and Amplify Partner, we invest in early stage enterprise funds and enterprise companies. For me this is a super personal topic. I spend my time working with our portfolio companies trying to figure out how to navigate this very topic.
So I was talking to folks in the audience, and a lot of people are here because they’re fanboys of this group of people here up on the stage.
Edith Harbaugh: Or fangirls.
Ted: Fanboys, fangirls. Thank you. Initially the plan was to give the standard bio, which if you want to watch it online you can catch that. I thought, what can we tell people about these people that they don’t know already, since there’s so much out there? So I thought, let’s get them to answer a question you’ve probably never been asked before. What is your spirit animal? Edith?
Armon Dadgar: Might be my personal house cat, honestly. Or maybe that’s my life goal.
Edith: My puma will run with your housecat.
Armon: They’ll nap together.
Nicolas Dessaigne: Indeed. Never got that question. Bear? Maybe teddy bear?
Ted: We may come back to that later in the discussion. I thought a great place to start the discussion this evening is on the question of what was the catalyst for you to decide it’s time to transition away from you as a founder, being the person on point, to lead sales? Edith, why don’t you kick us off with that.
Edith: I think the first thing is that as a founder you have to sell. I was on the other side of this audience. I was a Heavybit member and I remember Nicolas coming about three years ago and giving a presentation on selling, and it was so impactful to me. And every time I see him I tell him that. He’s very modest.
Nicolas: Yeah, well.
Edith: I saw a lot of founders I know trying to skip that founder step. And they were like, “Let me just hire a sales person and they’ll go out and sell.” You can’t skip that step. If you as the founder are not comfortable talking with customers, if you’re not comfortable with what your value proposition is, if you’re not comfortable giving a price. You don’t have anything to transition.
The most important thing about transitioning off of founder sales is that there is a founder selling.
Ted: That’s great. Nicolas, what about you? Think back to the transitions you went through in bringing on initial salespeople.
Nicolas: Three years ago before speaking for this, in our case it is slightly unusual because our second hire later became our VP sales. Very early on we were two technical co-founders. We knew that we didn’t know enough. So in a way after hiring our first technical hire we quickly looked for someone to help us with business.
And so that was Gaetan, who was more like a BizDev guy than a pure sales guy. At that time we were simply trying to figure it out. And so it was more of a group thinking thing. We were all selling, but we had that first business background person joining us.
Ted: So it wasn’t what you would call a traditional enterprise salesperson?
Nicolas: No, he was more of a BD guy. He had led an SDR team before. It was trying out how to get in touch with customers, how to convince them. It was like all over the world. It was a very entrepreneurial activity. But he had that business background that really helped us navigate through that.
Ted: And perhaps, if you don’t mind, fast forward to the VP of sales hire. What was the catalyst for bringing on sales leadership?
Nicolas: Fast forward a few years. He joined us in 2013, end of 2013. By mid-’15 we were around 2.5, 3 million ARR. And we felt, discussing with our board, that we should hire a real VP sales. And so we started a search then. That’s when we met the first time. It took us maybe 10 months. We nearly hired two people.
At the end of the process, every single person that was meeting was not as good as Gaetan. Because of course he was very involved in the process. We both learned so much from interviewing all of these candidates that by then, of course he was still very much stretched for the role.
But I was convinced he could do it himself. So we promoted him, VP sales, and from there on he’s still with us. Still leading the team.
Ted: That’s a great story. I love the internal promotion from within.
Nicolas: We’ve been super lucky. I’m not going to tell you “Do that,” because we were extremely lucky to have someone who could grow with the needs of the company. Which is pretty rare.
Ted: Armon. Talk to us about how you all thought about the profile of the first set of sales hires you brought on board.
Armon: Yeah, for sure. The nature of the tools that we sell tend to be hyper technical. And so our biggest concern was, could we bring in sales people that really would be able to articulate the value proposition without instantly needing to bring in a sales engineer on the first meeting?
What we maybe overly focused on was, “Let’s look at people who come from distributed database background, infrastructure background, understand more of the problem domain we’re in so that they’ll be able to articulate the problem.” So the first few folks we hired were really out of looking at other similar type companies, distributed systems type things, so they could help articulate a relatively complex value proposition.
Ted: What did you learn from that? Was that the right choice, in your mind?
Armon: I think the mistake we made was we hired salespeople too early. I think ours wasn’t necessarily that we had a clear repeatable process and, “Now we need to scale this up.” It was more, “Maybe we should have sales people,” for no real clear reason. Our board was like, “Should you have them?” And we were like, “I don’t know. Should we? Let’s go hire them.”
And so we made the mistake of hiring sales people before we really knew who our customer was, or what our product even was. So I think we dropped folks into the field and were like, “Go sell to somebody.” And they were like, “What are we selling?” And we’re like, “We don’t know. We also don’t know to who you’re selling. But good luck. God be with you.”
Ted: Edith. You– Sorry, finish your thought.
Armon: No, no. I think a bit of our mistake was what we looked for was technical ability to operate in a technical domain. But I think we just brought folks on too early and in an environment where they couldn’t have been successful.
Ted: Edith, you’re nodding. What did you take away from that? What advice do you have for people trying to figure out, “Is it too early or too late to hire a salesperson?”
Edith: Exactly what Armon said. The founders have to know who they’re selling to, the qualifying questions. My co-founder John Kodumal and I would go out and I would AE and he would SE, and we’d just get this rhythm. And we would just look at each other like, “This is not a good sale. Let’s leave.” And you have to have that so that you pass that on to somebody. You can’t fake that.
Armon: Totally. I agree. I think that was one of our biggest mistakes. Too early.
Edith: And then you could also be too late. Something that we learned is that the Bay Area is really hard to Hire in. A good sales person wants to come in where you have some pipeline or repeatable process. Or, any good salesperson.
So it took us a while to find somebody. And now that we’re a year and a half later, we can hire AE’s at a good clip because we could say, “Here’s our pipe. Here’s our playbook. You’re going to make this commission.” But the first salespeople are really hard to convince.
Ted: Awesome. Nicolas, what would you add to that?
Nicolas: I mean, we did fail too. That was what I was sharing three years ago. Our first hire was a big mistake. I think the biggest thing we could have done better would have been to hire two. It would have been easier to compare.
Edith: But even one is hard to find.
Nicolas: One is hard to find? I don’t know if it was hard or if we just simply didn’t know what we were doing. At first we didn’t hire any pure sales people. And that was good and bad. I mean the first two hires, my first hire, was not salespeople she was an SE, actually. And she did not work out at all.
The second one was a consultant, and today he’s our head of EMEA sales. He really turned out great because we were still figuring it out. That consultant background helped so much, especially with big accounts. So you never know. The first few hires are so difficult.
Ted: I’d love to get perspective. I know a lot of founders think of the idea. You said, “I was the AE and my co-founder was the SE.” To a lot of founders the idea of being a salesperson is not only foreign, it’s repulsive on some level.
Nicolas: I stand with that.
Ted: Perhaps share a bit about your perspective before having done it, and after having done it. And any practical perspective or advice you would have on how to master that set of capabilities.
Edith: Well, the joke is I started off in engineering and I literally remember saying to my co-workers, “I hate these salespeople.” And every so often that quote haunts me.
I think the thing you have to realize as a founder is that feedback from prospects is a gift.
It’s not about you. At the really early stage it’s not about you convincing them to buy something, it’s you hearing what they’re saying and taking that back to your product team. Even if the product team is just your co-founder who is sitting next to you. And be like, “These big dreams we had about building this? People actually want this.” And that is the gift you get from doing the sales calls yourself.
Armon: I think that’s extra, extra critical when you haven’t yet achieved product market fit. That’s to a degree where I felt like we hired too early. I don’t think we had that product market fit. We had, “Here is a product that the market doesn’t want. Go sell it.”
And some of that gets lost in translation versus when you’re there and the feedback of the prospect is in front of you being like, “So what problem does this solve?” And you’re like, “Maybe we have a problem here.”
Edith: Because it’s so easy to delude yourself when you’re sitting alone in the co-working space with your co-founder. Like, “Everybody’s going to love this.” And then you go on site and they’re like–
Nicolas: It shouldn’t change. I mean, as you grow and get some salespeople you still want to be in front of the customers. That’s sometimes a difficult problem but you still want that feedback, still want to have that direct contact with the customers.
Ted: Absolutely. So forever many of these types of talks are focused on the salesperson, where in practice, if you can only have one. A salesperson or a pre-salesperson, a technical salesperson. And SE, a solution architect. They go by different names.
Many folks would probably take the latter. Even as we were prepping, shame on me, I had not thought about them inclusive in the concept. Armon, to his credit, corrected me. He said, “We should be thinking about this as part of one of the key decisions that you have to think about in that transition too.”
Because many of you and your co-founders are the SE or the solution architect. Armon, talk about how you all thought about, “When, what profile,” how to go about finding that person.
Armon: For us, we hired our first SE 10 employees before we hired our first salesperson. So for us the SE was much earlier. To Edith’s point, in the beginning I was comfortable being the salesperson, but the nature of what we were selling tended to be pretty complicated infrastructure tooling. It was always SE heavy.
Although I could drop in and spend an hour with the customer, I couldn’t then for every customer spend a whole day trying to figure out, “Let me get the configuration for their environment.” It became clear that we needed an SE help before we needed the sales team help. And for us what’s continued to be true is hiring practitioners.
We’ve found it’s much easier to take a engineer and train them how to be a sales engineer, than to take someone who has a sales background and train them to be an engineer.
That tends to be a lot harder. And so that’s where we found our most successes. Find the people who at least like our domain or ideally are familiar with our tools, and train them on the sales side of it.
Edith: Our first SE was the customer support manager at one of our customers. He says, “I love being in sales because–” He came out of support, and he’s like, “I get to see the hopes and dreams.”
Ted: “Not the reality afterwards.”
Armon: That’s a good way to put it.
Ted: That’s great. I just want to underline that point. Some of the very best SEs that I’ve had the chance to work with, and seen in portfolio companies, are in fact former customers. They not only understand the product, they understand the environment it’s going into. And they could speak from a place of personal experience with the marriage of those two things.
Nicolas. Any perspective from you? Who was your first SE, or technical sales hire?
Nicolas: Same thing. He joined us before the first salespeople. I mean, out of my first leadership. And he was not really SE at first. He was a CSM, he was a developer advocate, he was everything. He was going on all of the events, he was marketing. In the early days, they are going to do everything.
And with time, of course, we specialized the role. But then for every complex project it would be my co-founder, it would be me. And I think even today I still see myself more like, when I can speak of the role of the founder evolving, but I still see myself as an SE in some deals.
Because a technical co-founder, it happens that you are going to know your product sometimes even better than your SEs. Not in the same depth, or maybe not going to be able to build a book. But you can speak about the product with a lot of conviction.
Armon: The SE is a last resort.
Edith: Every now and then I get to give a demo, and I’m like, “Yes.”
Nicolas: I still regret, we don’t do that many demos. It’s kind of like, “I should do more.”
Ted: I’m going to guess. I’m going to put you three on the spot. I’m going to guess you’re all three perfectionists, to a degree? Shared experience or learning of, “Handing over the reins,” so to speak, to one of these SEs and how you navigated the fact that they did it a little differently or in a way that perhaps wasn’t the way you would have done it.
And how you thought about that. Did you view that as a chance to align them with what you saw as the “Right way” to do it, or was it an opportunity to learn and do different? Armon, why don’t we put you on the spot.
Armon: The thing that comes to mind is I remember early customer, early days. This goes to having salespeople too early. We sold products that shouldn’t have existed and didn’t exist. And I remember we sold to a company in Australia. And they were like, “Along with the product we also want you to come on site and do training.”
And like you said, in the early days you do everything. It was like, “Great. We need you to put together a two day training workshop for this customer.” And I remember we fly all the way to Australia. 17 hour flight.
You get there and the next day we’re doing a two day training, and they’re like, “Let’s look at the training material.” And I’m like, “Oh my god. Oh boy. We got some issues here.” And I remember the two of us just stayed up to like 3:00 in the morning before we went on site with a customer at like 8:00AM the next day to start two days of training with them.
And it all went to shit. The whole thing was a disaster because we made the assumption that the people in the training would be able to do it interactively with us by using a virtual machine on their laptop. We get on site and they’re like, “Corporate policy is no VMs on laptops.” We’re like, “OK. This is going to be an interesting training session.”
It turned into us running the training on our laptop, projecting it and other people watching. The whole thing, the format was wrong, the content was wrong. There was a lot of learning lessons in it for both of us. I think we had an unfairly high standard for the SE.
At the beginning you could say, “Your job is everything.” And I think we maybe ask too much of the early people sometimes. But then on the other side, it’s like, “Maybe we should build out training as a competency, and not just wing it the night before.”
Ted: This is a good transition into onboarding. Congratulations, you found these unicorns. These sales people and really highly talented SEs. Next step is, how do you get them on board and get them productive?
Edith, maybe if you don’t mind sharing the journey you went through and how you do that? Maybe start with the SE, let’s give the SEs credit because they’re in some ways probably harder to get ramped up.
Edith: We got our first AEs and it’s very reflective because it was when we were still in Heavybit. So back then it was very much by osmosis. We hired our first AE when he made us an 8 person team, and what I told the team is, “He needs to be embedded. It’s not the sales team over there, and us over here. He is now our ears to the ground.”
So we ate lunch together everyday, we would run down and make sure that we had a big enough table for 8 people and we would do a daily stand up with 8 people. And you were part of us. Like the onboarding, “You’re now part of us.”
When we started scaling up and doing cohorts, we had to get a lot more systematic. So now we have our VP sales’ entire plan. But you definitely need to do it based on the stage you’re at, and not think there’s a cookie cutter where you have everything figured out at the beginning.
Ted: That’s correct. Nicolas, talk about your early experiences with onboarding sales and SE. I’d love you to pick out one example of something that you figured out a couple of reps later into the process. Like, “Geez. We should have been doing that from the beginning.” Share an example of that.
Nicolas: Okay. One of the things, when you start, it was the same thing as with the SE. With sales there is also a lot of holes like from the SDR communications and the SMB. Back at enterprise it’s all different motions. In the beginning you ask them to do everything. You even ask them to do marketing because they don’t have any collateral. They don’t have any playbooks, they don’t have anything.
So I think in the early days that’s a bit tough. They learn because you come with them on the deal. You go on the call with them and they learn from you. And after hearing you saying something ten times, they know they can say it. And what happened after, when we started to have a bit more maturity. We would first build and design more of a team structure by dividing the team. We started to have PDRs, “Can we test some outbounds there? Is there something that can work?” Well, it didn’t in the early days.
But with that first rep worked pretty well, very smart, and then learned the very first minimal playbook there that helped the next one to be more successful. And the next one to be more successful. I don’t know about for you, but you don’t hire VP sales and they are going to build the playbook, and that’s it.
It’s more like iteration after iteration, rep after rep. Everyone is contributing and after a certain time you get your VP sales and they are consolidating and creating the next stage. In a way.
Edith: Our background is engineering, so I was VP sales. We ran it like an engineering org in that we did a monthly retrospective. Every month we say what went well, what could we improve on. And it’s not a blame game. It’s like, “How can we make the playbook be a little bit better next month?”
Nicolas: We didn’t have that process in place, but that’s basically the idea. It’s great to constantly look back. What worked, what didn’t. Learn from it and create the playbook as you go.
Edith: And the playbook is always changing.
Nicolas: Even today. Positioning is changing, the product is changing. You’re expanding new markets. The culture of the countries you are going after is changing. Everything is different.
The difference is that today, at some scale, you start to have territories. And so you specialize your salespeople so they don’t need to know everything anymore.
Ted: Armon. Talk a bit about the evolution at Hashi from the very first reps. How you onboarded them, and then how that changed over time?
Armon: This goes back to the mistake we made of hiring too early is that we didn’t necessarily have them figure out the playbook. We had them figure out what we should be selling. We had them be our product marketing team in some sense.
Like, “Why don’t you just go pitch these ten different ideas and see which ones resonate? Figure out what the customer wants to buy and then we’ll see how quickly we can build it for them.” And I think that was probably a little unusual to drop sales people into that position of being like, “Go tell us what we should be selling.”
And so I think that was a mistake for sure. And I think it speaks to making sure you at least understand what your product does before you hire salespeople. I think what’s changed for us after we brought in a VP of sales and had a better idea of, “What is the product? Who is the customer?” Then we built out a much more formal boot camp.
You come in, “We need to get out there, there’s a whiteboard pitch that you have to be able to give before you’re certified. You have to be able to talk about the product domain, you have to be able to talk the 100,000 foot view of each of our products.
And then go through and articulate, “What’s the value proposition of these things?” On a whiteboard. We’ve formalized it a lot more. But it started with at least just understanding ourselves. Like, what the product was.
Ted: I would love to transition to the last topic before we move to the audience Q&A. In a sense, in the same way this is a transition for the company it’s a transition for your individual roles. In some sense you change both how you spend your time day to day and then also the way in which you understand your business.
Your ability to connect directly with the customers changes. Your ability to understand opportunities and where they stand and where the business is going to end up at the end of the quarter also changes, in a way, too.
Nicolas. I’ll toss this one to you first. Talk about how your role has evolved as you’ve transitioned away from being in the middle of the sales process day to day.
Nicolas: Yes. At some point you become what we call a “Next expense-or.” It’s funny how it works. I’m going to say the exact same thing as my salespeople and because it comes from the CEO, it doesn’t have the same impact. So use that. Leverage with customers.
Because if it comes from the founders and the CEO the credibility is going to be way higher. I just act as a support function for the sales.
For the big deals, I’m going to get on the call and tell the customers probably exactly the same things they were already saying. But they are going to hear something else.
It’s more support, then if I can introduce the investors, it’s like trying to support them in everything they do. Sometimes they would even send me some e-mails templates to send for my e-mail so that it comes for me. They prepared it, they write it for me.
I change one to two words because that’s not me, just to make it mine. And then I send it. And sometimes that changes everything. That accelerates a deal, you get an answer when they were trying to get an answer for 10 days and didn’t get anything, and so on.
Ted: Talk a bit about collaboration and communication. The team gets bigger, you now have a layer effectively between the customer and the company. How do you ensure that the communication flow is really healthy?
Nicolas: One of the key things we do here, there’s two sides. There is me and the team. At the team level what we do is immensely introspective. Let’s call it this way, but it’s more like a review. Where every customer facing team members are invited and that is open to all the company.
And during that one hour meeting every month we go over all the sales metrics, marketing metrics, CSM, SE. All the customer facing teams are represented and share all their learnings. At the more personal level there is one thing I just started to do. I’ve done it twice, only today.
It’s a way to organize round tables. As a founder, as a CEO or other roles. You get into a room with one individual contributors of one function. Here that would be sales.
Get like 8, 10 people in the room, and you’re just there to ask two questions. “What’s the things that are working the best?” And, “What is the things that are working the worst in your mind?” And you get the discussion going. You’re just there to listen.
You engage them and then of course you learn from them, and try to change things for the better. But it’s also a very good way to keep in touch with what’s happening in the field.
Ted: Armon. I’d love to hear a bit from you about how as you brought on this layer between the customer and headquarters, how you thought about sharing good collaboration and communication?
Armon: I think it evolved at different stages of the business. In the early days before we had sales management the sales team reported to me directly. And so even when we brought in a VP of sales, I kept that. I still had this dotted line, one on one with all the salespeople. To really get that unfiltered, unaggregated feedback of, “What’s working, what’s resonating? What’s not working?”
And so even as the sales team got bigger the first few sales people, I’d still meet with them on a regular cadence just to understand what’s happening in the field. And then as we got a little bigger we switched to what we called, “Go to market” meetings. Which is similar to the way you described all of the customer facing groups.
Where it’s customer success, it’s support, it’s the sales engineers and sales teams getting together to see what’s working and what’s not working. And so then I’d ‘fly on the wall’ there to say, “What are we saying in terms of what’s working, what’s not working?”
And honestly I still to this day spend 25% of my time in the field. One out of four weeks I’m on the road in front of customers. Both prospects and existing customers. I hear when it’s still hopes and dreams and they’re a prospect, and then I hear the reality after they’ve bought.
That’s still in some sense the most critical feedback. Because there is something that just gets lost in translation no matter what. Whether it’s filtered through an SE or a salesperson.
By the time it goes through all the right committees and aggregations, it’s not the same thing as when you’re there in front of the customer and you’re like, “That really needs to be our number one priority.”
And you can’t do it if you only go to one or two meetings. You have to go to enough that the dots form, and all of a sudden you’re connecting the dots. Saying, “Oh yeah. This is a product gap for us.” I still find it super valuable and incredibly time consuming to be in the field.
Ted: That’s great. Why don’t we move to Q&A from the audience.
Edith: I have a really easy answer. It was when I became the bottleneck. Because people would be, “Where’s my order form? I’m ready to sign.” And I would have to type up the order forms, and I was the backlog. I mean that is a really obvious one. Where people want to give you money. They’re like, “Come on. Give me the order form.”
Armon: I think it was maybe a little different. I don’t know how much time you had to talk to customers before they sent you the order form. We had to spend a little more time talking. But I think for us the bottleneck was a similar thing. When the bottleneck was, “I can’t take all these meetings with potential customers. There has to be other people triaging and taking level one, level two meetings.”
As long as time allowed to take it, I think there’s still valuable information you can mine there that you should mine until there’s no time left in the day.
Edith: I’ll add on that it will take you longer to hire a sales person than you think.
Nicolas: Yes. And if you fail, you have to start from the beginning.
Armon: The reset cycle is long.
Nicolas: You need to suffer first, but then hire two.
Ted: You two answered the question from the perspective of time and resource. Your resource, which makes a ton of sense. I’m interested if either as you thought about what you hope to get out of a salesperson or what you in retrospect realized you did. If it was also a set of skills that were pretty clearly not ones that you three had, and what that skill or capability was. Maybe Nicolas, I’ll point you on the spot for that one.
Nicolas: When we hired our first sales rep they didn’t have a quota. We didn’t know what should be the quota. So what do you expect? I mean we expect to figure it out with you. And of course that’s not going to be the profession that people that are going to join, because you cannot ensure anything.
But you still want to keep some commission base structure. For the first couple of ones that was pretty tough, because we didn’t know. And then it took us a few months of history to be able to figure out what could be the first quota. And that was the most difficult early thing.
Armon: To add to that, I think there’s the skill gap you’re mentioning. To Edith’s point, I think, “You must build that skill.” As much as you hate it. There was nothing that pained me more than asking a customer for money.
Edith: But you have to.
Armon: But you have to. You have to build that muscle.
Edith: You look at your AWS bill and you’re like–
Armon: Yeah exactly. It doesn’t pay itself. If only we could pay developers in GitHub stars.
Nicolas: Did you get better at that?
Nicolas: Did you get better at asking for money?
Armon: No, actually. My salespeople refuse to let me be in the room for that.
Edith: I got much better. The joke is I didn’t have to pay myself commission.
Edith: I don’t think you could do that at the super early stage. For us the one thing we really screened for, and we got this from Nicolas. Again I’ll give you credit. So we were engineers, we were like, “Would we buy from this person?”
Edith: That was something you taught us.
Nicolas: We did hire only one salesperson that was a car salesman, and–
Ted: A car salesman?
Nicolas: A car salesman.
Ted: OK. Used or new?
Nicolas: New. And the guy was so motivated. I still remember doing the interview, we do a founder call during the process. And he was taking the call from the back of a car in the concession, hiding from colleagues and so on. Very impressive call.
He struggled a lot in the beginning because everything was so different. It’s a completely different world. So I’m not sure it was setting them up for success. It’s tough. It’s easier for an engineer to become a salesperson, if you are sitting a tech product, than for someone who is in sales but doesn’t sell tech or software to then start selling software. It could be even more difficult.
Edith: I more meant that you have to have a lot of empathy for your customers.
One of our best salesperson did not have a traditional software background and we get thank you notes about him. He has a lot of empathy and understanding.
Armon: I also don’t necessarily think that all salespeople who are in tech are necessarily the right salespeople for you. We found this out. Even within the tech sector you’ll see there’s a lot of folks that they’ve built their career selling to a CIO.
And you drop them into a room of developers and they are a fish out of water. They’re like, “Who is the buyer here? Why have I even here? I don’t want to talk to these people.” We’d hire a sales guy and he would literally say, “I never want to talk to a developer.” And you’re like, “Do you know who buys our stuff? You’re not going to make it very far here.”
And he struggled because when you’re used to that top down sales motion the notion of building a bottom up groundswell of support and move up the tree is foreign to them. They’re like, “That seems like a lot of work. I’m just going to call up my buddy and go to golf.”
And I think even then you have to look for the salespeople that are used to the motion that’s necessary for your product. And maybe your product gets sold top down.
Ted: Just a quick primer. SDR is typically their entry level sales professionals. A year, a couple of years out of college. Oftentimes their job is cold calling outbound work to develop leads, and then those are in turn fed to your account executives. And hopefully with success these people in turn become your account executive team. So great question. I’ll put it to you first.
Nicolas: There is a few steps. We started by splitting As between SMB and mid-market enterprise. And so SMB AEs were dealing with old inbound calls from small startups, and progressively that function transitioned to SDR. It was only when it became clear that we were spending too much time on that it started to make sense to have specialized functions there.
It’s indeed a very good trading function. People start there, become SMB AEs and then mid-market, and then continue to evolve. And that’s a very good starting point because you are going to be exposed to so many use cases so many different customers. It’s very high velocity.
A big part of that work is doing support. Sales led support. They get to know the product so much better so that when they are trained they do a much better job.
Ted: Edith, do you all use SDRs?
Edith: It’s funny. The joke is that I was the original SDR. I agree with Nicolas. I think SDRs if they’re outbound you need to have a certain amount of awareness of even what you do. We tried doing outbound very early.
Nicolas: We did that later. What I didn’t say is that we have two types of SDRs, inbound and outbound. I was mostly speaking of inbound but we also have outbound SDRs that we really invested there way later. We were already at 10 million or something when we started with outbound. It was more experimental. We got one person per diem and then started, and then it worked. So we scaled from there.
Armon: We went through the specialization process as well, where originally everyone was just an account executive and then eventually did the similar split of enterprise account executive and SMB mid-market. And then the SMB mid-market split again into the well qualified SMB mid-market and the SDR/inside sales team. It’s still today a hybrid function. We don’t have dedicated SDR. It’s both SMB inside and SDR rolled into one.
Nicolas: Do you do outbound?
Armon: Very little.
Edith: I got very good at this very quickly. LaunchDarkly helps you if you’re releasing once a month or so, and you want to start doing feature flag management. So I would ask people, “How often do you release? How often do you want to release?”. And I literally remember once, it was when we were training and we had just hired our first AE. And we went into a meeting and the person said, “We release every 6 months, we don’t release more.” And I’m like, “Let’s get up. Leave.”
I think you get really good at qualifying when you realize how expensive it is to spend time with somebody who’s not going to buy.
Armon: I agree. I think we suffer from it. We joke internally that we’re four companies in one, because the products are so different in terms of who we sell to. Each of the products has been independently developing what their persona is. And some of them are easier to qualify than others. For us it’s almost a similar thing, “How often do you deploy?” And if the answer is every six months, it’s also like–
Edith: Well and, “How often do you want to?”
Armon: Exactly. If you want to deploy more, yes. That’s a different question.
Edith: We can help you.
Armon: “Do you want to go to a cloud? One or many?” And again if the answer is, “No we’re pretty happy at our private data center.” Then it’s like, “OK. Great. We’re out of here.” There’s a few of these questions that you know, even when you’re doing founder led sales. By the time you’re that early you know those questions. At that stage, you know. It doesn’t take very long. Even before you hire the first few people you know what the qualifications are.
Edith: And then you start to pass them onto your AEs. This is really fun, we had something we called a ‘Brain Trust’ where we would all sit around there. And we would rate deals on the meter. We were like, “How likely are they to buy?” And we would get really good at it. Like, “Here is warning signs. Like, own data center.”
Armon: Bad sign.
Nicolas: We were not qualifying any opportunities that were going to be good for us in the beginning. That means that sometimes you would spend four hours in the call for a $50 bucks deal. But it didn’t really matter because we were learning.
And then it just started. I mean, for us it was easy because in a way it’s all based on the volume and the size of the website. We can guess the potential right away from looking at their stats that are public. So that’s easier. And then later on, like today, they put in place a MIT-peak specific approach, maybe you know about that.
Like how to qualify urgency and all the criteria and so on. It became way more mature, but in the early days nothing. Basically no qualification. Any good opportunity was a good one to follow. Everyone did search. “Of course we are the best one.”
That said. There were quite a few use cases where we are not the best product for that we would disqualify right away just to avoid spending time on it. It’s small.
Edith: It’s funny, because we test those assumptions. Because somebody new will come in and they’re like, “Can we try to sell that persona?” And they’ll do a couple of calls and they’ll be like, “This is a bad persona.”
Armon: I think it changes as well, over time, as the product changes. You add new capabilities and all of a sudden it’s like a persona that you couldn’t talk to before. And now they’re in scope or market landscape changes.
It’s not, “Figure it out one time, and then you’re done.” It’s a moving target and it evolves with the market, and the product, and the maturity of the company.
Nicolas: And that could hurt you. Because in the beginning you want to qualify, you are going to say, “We are great for that and only that.” And then two years later people will still remember you for that. Of course you have expanded and you need to fire back, “We do much more now.” So you need to be careful on this one.
Edith: We were really explicit about it. I had been at big enterprise companies where the sales people were the people over there that the engineers always hated. And I just told the team up front, because we’re a small startup I’m like, “If this is going to work. This is our buddy.”
Even now we make a conscious effort. We are not going to have salespeople not talk to engineers. We’ll assign them a buddy, we try to mix it up. You can’t at an early stage say, “Salespeople are over there selling your building,” because then you have no feedback loop and it’s one of those things–
Nicolas: To get one advantage if you sell to developers because you’re going to need the knowledge and the expertise from the developers. It’s a very good incentive for them. But you need to be very deliberate at making sure your team collaborates and works together. Get them around the same table.
At the end of the day, one of the things I really love and I’m the proudest of is to see engineers getting on sales calls and loving it.
Nicolas: And not wanting, but say you’d want to help and they contribute to the success of the company that way.
Armon: There’s a really important founder narrative when you start hiring which is you can’t establish the narrative that engineering is the first class citizen, and we’re going to build a wall and put some salespeople on the other side of it.
To Edith’s point we have that very explicit conversation with the whole company before we start hiring. It’s like, “Remember. The sales people pay your salary. So be nice to them.” And I think that it was a very conscious effort to tear down the wall and make sure they’re part of our stand up, they’re part of our ‘All Hands.’
That there is this cultural meshing of the groups. I’m sure the experience is shared that there is a different sales culture. You have to be prepared for that. Particularly enterprise sales is its own beast. The message that we had to the company was, “This is not a bad thing.”
The culture of the company will evolve over time as you bring in different people with different backgrounds and personas, the culture evolves and changes. But it’s for the best. Because what the sales people will bring more than any other group is an incredible sense of urgency for what the customer problem is.
Alarm bells are going off, “Unless we have this feature this deal will not close.” On one side there can be stressful for an engineering team that’s like “No. We want to architect the perfect ideal platonic system without the constraints of time and the customer’s problem,” but no business has that real luxury.
So in some sense you want that healthy tension of the sales team that’s actively pushing on product management and engineering to go faster. “We need this thing, the customer wants this,” or, “Here’s the gaps.” Because they have a much tighter feedback loop than anyone in engineering.
Edith: Sales is the gift of feedback.
Armon: Yeah, it is. Right.
Edith: If you don’t have any customers you’re just building your pipedream.
Armon: You’re just having fun. It’s a side project.
Edith: I’ll tell you the number one red flag. Always check references. It was somebody who had come down from Seattle and it is really hard to hire your first salesperson. We were really excited about him and we really liked him.
I asked him for references. He gave me an architect in Denver and an insurance sales person in San Diego, and I was just like, “No. I want professional references.” And he’s like, “I don’t really keep in touch with people.” I’m like, “But you’re a salesperson.”
Ted: That would be a bright red flag.
Armon: That seems problematic.
Edith: Always check references. I am amazed at how many startup founders don’t. And it just boggles my mind.
Nicolas: I don’t expect to check references. My first sales hire, I did check references and still hired her. In retrospect you guess, “Of course I should have known better.”
When you go in the reference call, put yourself in the mindset that you want to find what’s wrong. You don’t just want confirmation of what you already believe.
Edith: I ask, “What environment would this person do well in?” And that is a very telling question. Because sometimes, “They need a really structured environment.” Or they need this, this or this.
Armon: A salesperson can be really hard I’ve found because in some sense they’re trained at selling, and that includes selling themself. So they can sometimes be a little harder to gauge. Where in SE I think the red flags come out a lot quicker. Let them explain to you the value proposition of anything that they care about.
Pick your favorite tool, technology, whatever problem you’ve worked on and have them try and articulate that to you. In some sense that is their full time job, “Can you take a complex problem domain and articulate it to someone else?” And if they can’t do that succinctly or they do it in a way that’s so excruciatingly boring that you’re already checking Twitter two minutes in.
It’s a bad sign. Because guess what they’re going to be doing in front of a customer. I found the SEs are a lot easier that way, that if they have a hard time communicating that’s really, really hard to teach. Teaching them the organization and some of the sales process and some of the things to say, that’s easy. But teaching someone to be a good communicator is really hard.
Screen the SEs for technical skill, that’s usually pretty straightforward. But then communication skill which is much, much harder to teach.
Nicolas: Edith’s already mentioned this before but, “Would you buy from them?” That one is critical. You are tech. If your gut tells you something is wrong. Like you want to buy a car, something is wrong, your customers are going to feel the same thing. So be careful. Trust your gut especially in the first few months.
Edith: The sense of pride you feel when the team is executing. There’s no better feeling in the world than when the team closes a deal, and they brought you in maybe for one call. And you’re like, “Wow. This is a working business. It’s not just a two person show.” That is really the best. If you’re an engineer, realize that you’re also building a sales team.
Armon: It was really building a sense of partnership with the VP of sales so that it’s not just, “We’ve hired you. You deal with sales. I never think about it again.” Like it’s on the other side of the wall, I think it’s that you really want that to be an integral part of how the business functions.
And I think building that relationship, building that trust so that you feel like you really can be honest with the VP of sales and vice versa. Because you’re always going to get the alarm bells of, “Everything needs to be done right now. Everything is on fire.”
But one of the things that really need to be done, one of the things that really matte. And being able to build that rapport and trust so that you can have that communication flow and not have sales be, “I hired the VP of sales. That’s a checkbox. I’m done. I don’t think about it anymore.”
Nicolas: Closing our first big deals that you really didn’t think before that you could do as a company, as a product. Like first enterprise deals, or these things that are crazy for you. So much money. After some time it becomes OK.
But the first one is when you really see that series of sales are bringing you way more than just helping you close and sign small things. When you realize that they bring expertise, that adds concrete value in the type of deal you can close.
Armon: I jokingly nicknamed our VP of sales “The Multiplier,” because any deal that I would sell for some amount he would multiply. And I’m always like, “How does this superpower work? Everything just gets bigger when you’re hear.”
Edith: I still have the biggest deal, and I challenge the team. Like, “Take that biggest deal away from me.”
Ted: Edith, Armon, Nicolas. It’s been amazing. Thank you. Your perspective has been fantastic. Let’s give them a round of applause, everyone.