Streamline your b2b saas sales cycle for teams with airSlate SignNow

How to create outlook signature

[Music] so this is chris reichig a u.s operating partner with jungle ventures and as you all know i'm doing a series of discussions with tech luminaries and leaders from the u.s market in an effort to try to provide insights and ideas to our portfolio ceos and operational leaders about all things tech and so today we are lucky to have a great guest uh and a good friend of mine john mcmahon and john um has been a very successful cro in his own right and most recently john has served on several boards that you might may be aware of he's on the board of snowflake he's been on several boards to let john introduce himself prior to that john and i worked together i was lucky enough to work under john at ptc uh early in my career and i think john's been a great mentor to me and some of the things i learned from john enabled me to go on and be a cro at six or seven companies and i know of at least 30 or 40 other cros that worked with john in in various roles throughout his career who have gone on to create you know tens of billions of dollars worth of value in the tech marketplace um and there's countless others operating maybe not at cro level but sellers and managers that have worked with john and learned from john and so i'm really happy to have john with us today um so john welcome to the jungle thanks for being welcome to the jungle all right so um maybe maybe give a little bit of of your current background like what do you do today and how do you spend your time just giving yeah like you know so i ran delta a company called ptc um and most of these companies i was at at the beginning so ptc geotel blade logic um and then we got acquired by bmc software um and i was also at ariba so i've been the cro at like five different public software companies not as many cro jobs as you did i still got to know yeah almost almost six or seven are and then you know then i decided to go help other companies out so i've helped companies like hubspot uh glassdoor app dynamics snowflake um sprinkler um and now i'm helping companies like also mongodb so now i'm helping companies like drift lace where you and i work together drift yeah right so helping companies like that right now so i've seen you know the the growth of companies at all different stages of their of their life great one of the things that i i wanted to talk about is um as i shared with you our portfolio the typical founder in our portfolio founder ceo is you know very tech centric um super smart as you know we focus on the southeast asian market and we're bringing more and more companies to the us and so i wanted to talk a little bit early on maybe through some examples about sort of how to think about the early stage go to market motion and how to think about positioning the technology um from a sales perspective in an early stage company for a technical founder who may not have a lot of commercial experience and so maybe we can go back to like the early days everyone knows about snowflake because they just had an incredible ipo congratulations on that by the way thanks um maybe we can go back to the early days like what was it like in the early days of snowflake when they had an idea and they were productizing that idea maybe talk a little bit about the advice you gave them and how you guys went to market and what you learned through that process well first of all all all the companies that in the us that i've dealt with are really kind of the same sounds like the same as the ones that your your you guys are helping to advise and they're they're all founded by you know technology people that you know are well versed in in their discipline but really don't know anything about sales or go to market and one of the biggest issues that you face is those technologists have spent a lot of time with their in their vision and in their product and they really want to believe that their babies going to be sold to everybody everybody's going to buy their baby and it's true at some point like right now it's snowflake everyone is buying the product because you can sell it to every company but in the early days you have to be really honest about you know where what pains does my product solve and then where do those pains fit into what use cases and who are the personas that own those use cases and where are those personas located in what companies and what industries so early on as you know at ptc early on we could only sit when we were selling cad products we could only sell to small medical device manufacturers and some consumer electronics companies that had simple designs right but eventually almost every company in the world could buy you know pro engineer from ptc and it's the same at at snowflake early on we could only sell to tech and to add tech now everybody can buy the product but we have to be really smart because if you take if you start to believe that everyone's going to buy your product right out of the gate you're going to waste a lot of time and effort you're going to burn a lot of money and you're really not going to be successful and the world's full of technology companies that had great products but really had a really poor go to market it wasn't focused and then you know they're not around so unpack that a little bit more john like why was it so important in the early days of snowflake to why would you waste a lot of time and money if you tried to sell to everybody like what what is it about that vision being so big that challenges the execution in the early days of a startup let's say this there's like three different things one the first thing that i basically refer to is what i call the ideal customer profile so you have to figure out you know where is my product really strong where where am i uniquely differentiated from the competition then you take that and you match it to well what pains do i solve inside these companies and what use cases are those pains in who are the personas that own those use cases and what companies are those people located in and now i have to build a whole sales process and messaging on how to speak to those people in their language so that they understand that my product can solve their problems you know in a profound way but now you're talking about a small team right five or ten sellers something like that five return sellers but even then it's so important to make sure that you're focused on the right because if you think about an area like the united states i could put people in 50 different states but where where it's the old thing like you know in the us we used to have this uh in the 1800s we had a a bank robber called jesse james and he robbed like 35 banks at that time and somebody had asked them now jesse well why do you rob banks and he said because that's where the money is so it's the same thing when your early stage of a company is you have to figure out where is the highest return for the investment that i'm going to make with my sales teams right and that isn't going to be every company it's got to be focused on the companies that are going to get the highest return from the capabilities that your product has today not the capabilities they have tomorrow now let's say you build your icp and then all of a sudden you have to basically figure out well what is the propensity of this customer to buy so as an example at mongodb we if you were basically going to sell mongodb's database you would try to sell it to the biggest financial services companies in the world right because those guys have thousands and thousands of applications right that all need a database okay but what's the propensity of them to buy so we didn't exercise and we said we need companies with really fast product life cycles we need companies that are hiring the top developers we need companies that have leading edge tech only buy leading-edge technologies and in a highly competitive space well that's not the financial services companies all of a sudden gaming companies pop to the top if they don't get the product out by thanksgiving and for christmas they might be out of business they're hiring top developers they're using leading edge technologies and then we started focusing our sales people on that and instead of banging their heads against these big morgan stanleys and goldman sachs that could take years to sell to and maybe only come out with maybe a million dollars we're going into the gaming companies and coming out with five and six million dollars within a couple months right so you have to think about one the icp to then figure out the propensity of these customers to buy and buy now and then you have to figure out the sales complexity because as you know even if you and i were going to get a deal from a morgan stanley or goldman sachs today it would still take close to 90 days sometimes to negotiate the contract and get it through procurement even after they told us that we won right so yeah in 90 days we'll be doing well with those companies right 90 days you'd be doing well and you know how painful that is too so i think these young younger companies have to figure out you know who's really in my target market and where am i going to place my arrows to get the highest return on my investment and did you have challenges you know one of the things that i've seen with some of our ceos who are so smart and so passionate about their idea like you said their their baby's gonna sell to everybody you know that um discussion of of limiting the execution to a subset of their overall vision for now um can be tough right do you remember some of those conversations and and how did those go and how did you deal with that because i see that in our own portfolio trying to coach the ceo into saying look i know you can do x y and z but right now we need to do just part of x because that's what's repeatable tell us a little bit about some of those experiences we just had you know if you don't you have to if you figure out that icp and the propensity to buy and the sales complexity it'll be pretty clear to everybody that you know we're wasting our time going after some of these other companies even if we got a deal it's going to take too long to get the paper through and think about how complex it is to sell to some of these companies even like a financial services companies all these different departments reporting to all these different corporate structures it's just the sales complexion is too difficult and in the early stages of a company you want deals you want deal momentum why do you want deal momentum the more deals that i can get as a sales team i can give to development and they figure out even in this use case that we thought we were good at did we still have some missing pieces but once we figure out those use cases now we can just go down those bowling alleys right and then the product gets better but you know at through that process and now we can go into other bowling alleys and go down those bowling alleys too yeah and i think it's important to remind founder ceos not to confuse sales execution with painting the vision right so it's okay to have a vision from day one that's big and broad and you can sell to all these solutions over time but sales execution kind of always until the companies really mature is a subset of that overall broad vision right and that's important for people to remember i think slow down so great john that's that's helpful let's pivot to maybe another discussion one of the things that you and i um have spent a lot of time kind of working through and talking through is you know this idea of of sales rep to manager productivity and there's a lot of contention in this particular area as sales teams grow a little bit bigger so maybe in this situation a company's exiting that sort of first phase of go to market and getting to a point where they're starting to think about scale and they now have to build go from three or four reps to 10 or 20 reps and then what's the right ratio in your opinion at that stage as someone starts to go to that scale uh between sales managers and sellers and and why let's talk about that and unpack it a bit yeah so the way to think about this if you really wanted a hard cold analogy is you know an enterprise sales person in the us right now they're on target earnings what they make when they make quotas 300 000 so they're probably the fully burdened costs let's call it 350 or 400 but let's stick with the 300. let's say that you and i were general managers of a widget factory right and think about we're going to bring in machines that are going to pump out plastic widgets at the end of the day and you're the general manager so i bring in 10 300 000 machines so now we have three million dollars invested in machines right yep well what are we going to do we're going to do everything that we can to get those machines you know hooking up the pipe you know the plumbing and the electrical and anything that that machine needs to get it up to 100 productivity as fast as we can right so we get every ounce of productivity we can out of that machine and then we're going to monitor those machines constantly to make sure that none of them are falling to 70 or 80 percent efficiency we're going to always try to keep them close to 100 efficiency right and we're going to make sure that none of them go down because if any of those machines go down completely then you know we're really not going to make our goal at the end of the year so if we think about that that's basically the way you will you would build like what i would call a productivity model productivity model basically says a rep comes in and now how do you get them ramped up quickly you do onboarding training to ramp them up as quickly as possible in the enterprise world that you and i live in that's typically six months for a sales rep but if i can cut that even by one month down to five months then i'm picking up a lot of productivity so because let's let's go through numbers let's use something easy like 1.2 million dollars a year so a hundred thousand dollars a month and if i could do that across just 10 reps and i and i can take their ramp time instead of six months to five i just picked up a hundred thousand dollars times ten i picked up another million dollars in productivity now when i'm when they're on board i'm gonna try to keep their productivity as high as i can can i get it from 1.2 million to 1.3 million right and if i can do that i picked up another 1 million and if i can keep them from attributing because i hired the right people i onboarded them correctly i constantly train them and develop them and i give them to the right leaders i can prevent the attrition to make sure that we can make our make our numbers now as far as that with that as a backdrop think about the fact that these growing companies for the most part if you're growing really fast almost everybody at the end of the first or second year is still relatively new you don't have a lot of tenure in your organization so the what you want to do is have managers and not think about them as a cost but think about them as the people that are trying to increase the productivity of the people that they recruited no different than the person that's making sure that these 10 machines are all running at 100 efficiency right right so sometimes it almost doesn't make sense when i hear these arguments it's a 100 sales reps right and that right now the company's at seven to one and the cro says i want to go to five to one to make sure that i can keep these guys as as productive as possible what typically happens is the cfo is telling the ceo you don't want to do that that's too expensive i say well wait a second what if i could take the productivity from 1.2 million to 1.3 million across 100 people that's 10 million dollars now the difference at 100 reps at seven to one that's like 14 managers to go 100 reps at five to one that's 20 managers so we're talking about six managers but i gotta think that six managers aren't to cost the company 10 million dollars so even say you go in only from 1.2 to 1.25 it's still not going to cost them three million dollars for six managers so i would advise people to start thinking about productive output just like those widget machines so and and efficiency if i put these dollars in how much return can i get versus only thinking about them as a cost does that make sense it does and and what do you think about um what's your rule of thumb for ratio in a let's say a reasonably complex kind of multi-buyer sale with a high ticket value of 100 to 250 uh in sas recurring revenue what's the rule of thumb kind of manager to rep ratio in a in a field-based environment where you're not seeing that if it's in if it's inside sales you can go seven sometimes eight maybe even a little higher depends upon your product and and your um sales cycles are they short sale cycles are they long sale cycles those types of things really really affect that also but i'd say five to one okay good good that's helpful for for our audience so um i'd like to get into one other area which is uh this is a big area but um one of the things i noticed in our portfolio early on as as a company begins to start you know maybe they've done 10 or 15 transactions and they have you know 10 customers then they're starting to get repeatability um you know it's always a struggle to figure out what's the right sales process process to employ and how do i build like a repeatable model that allows me to generate a valid forecast month over month quarter of a quarter year over year because at this stage of a company's maturation that predictability is pretty important right it always is important but early on you know you've got a board to answer to you've got to project what you're going to do you're maybe going out thinking about a subsequent round of funding which will be of course based on your ability to hit those forecasted goals so how do you think about in the early stages of company building that kind of repeatable sales and and forecasting process and methodology wow that's that is a big area that's a big question but let's spend a few minutes just chatting through what about a lot goes into that so first sales process you have to have a sales process right and then on top of a sales process you have to have a qualification methodology so the way that i think about it is um if you if i told you you're gonna drive from boston to new york you would use google maps and google maps would give you the most efficient way to get and in the shortest time to get from boston to new york right now when you're driving you might think i'm 10 miles out of hartford connecticut but then you check your gps and your gps says no chris you're 20 miles outside of hartford connecticut right and that think of the google map as a sales process with the ideal you know turn-by-turn directions for a sales rep if they follow these turn-by-turn directions they're going to get a deal in the shortest period of time and they will be successful as long as they don't skip steps which happens a lot right now the second part is i want to be able to qualify as a leader in any part of the organization where are they right now so when they tell when you tell me about a deal hey john i'm gonna get this deal at xyz corporation i have to figure out chris thinks he's 20 miles outside of hartford but is he really there or is he really 30 miles outside of hartford did he already pass hartford so i have to figure out where the deal is so i can be able to one coach you on what you m information you might be missing who maybe you haven't spoken to and also to try to figure out whether or not this deal is going to come in by the end of the quarter so i can forecast it and for any company forecasting especially software companies forecasting is everything because software companies are mainly headcount so as the ceo or cfo i got to know am i going to open up the spigot and allow more hiring to occur you know and that's got to be based upon the forecast if i forecast really high and i come in low i burned a lot of money if i forecast really low and come in high i got a lot of extra customers and i don't have the people to support them number one and number two i'm not feeding my sales force so i can continue to grow so forecasting becomes paramount did you want to go in a little deeper on sales process and qualification is that what you're looking for yeah i think so because i think a lot of times our founders can sometimes conflate a sales process with a forecasting methodology and i think it's important to sort of draw distinction and talk a little bit about why those are so different and important in their own rights well in a sales proc most sales processes especially for enterprise sales might have like five different stages like you go and you discover and then you think and in the discovery phase you're trying to figure out you know is this customer buying what i'm selling and then the next stage might be the scoping stage where you're trying to quantify the pain that they have and you're trying to figure out maybe the as is process versus let's say the 2b process right so that you can figure out some sort of cost justification because whatever you're selling them there's going to be some sort of improvement so there's going to be the before and there's going to be the after and the way you in which you're going to drive the average deal size up is by doing a cost justification and from there you got to make sure that that you you can get to the economic buyer to say you know are you really going to buy if we can prove that our technology can do this are you going to really buy for x amount of dollars at the end of this let's say proof of concept yeah and then the proof of concept has to be nailed with your unique differentiators to make sure that you define the rules of the game and that you are going to win the poc right and then from there you know you negotiate and you and you and you close and for each one of those steps there's certain knowledge that your sales reps have to have and there's certain skills that they have to have it's almost like a game like if you were a coach of a of any type of sporting event you know no matter what play it is on the field of soccer ice hockey or football for each play what's that cricket for our founders oh cricket all right great qriket so for each play those players have to have a certain knowledge to pull that off and they have to have be very efficient in the skill set in order to be able to pull that off and that's the same for your sales people for each stage of the process there might be multiple plays in there do they have the knowledge and do they have the skills to be successful in there right and from that sales process there's some things that fall out of it from a sales process should fall out your job description right if you think about each part of the sales process as having skills and knowledge in each stage then that should fall into your job description instead instead of most job descriptions i read just says blah blah blah he needs to be a good corporate citizen and stuff like that but it doesn't say anything about whether or not the person is going to be successful at the job so here you get to compare somebody's resume or cv into what are the skills and the knowledge and do they have them and what type of risk am i taking if i hire this person right the other thing that falls out of the sales process is the ability to coach if you see that your sales reps are getting stuck at stage two all the time you know what knowledge what you need to train them on what knowledge or what skills you need to help them develop right right and then for qualification you have to train your leaders and your sales people on how to qualify each stage of those sales process of that sales process so you and i have used one called medic or i've changed it a little to med pick but that that sits on top of the sales process and allows you to qualify are they in stage one are they in stage two okay they're in stage two where are they in stage two who have they spoken to what information do they have what information are they lacking what's the exit criteria for them to move to stage three have they fulfilled all of the criteria in stage two to allow this deal to move to stage three without those things being in place it's really hard to forecast accurately and you have to have one of the biggest things that i find is when i go to a sales force sometimes they ask me can you sit in and advise us during a qbr or forecast session the leaders are talking past the sales reps what i mean by that is they don't have the same common vocabulary so i'll sometimes stand up and say well wait a second i've heard this word champions thrown around a lot can anybody in here describe for me what the definition of a champion is and i'll get three different answers so just the english language is failing then right if you don't have a common vocabulary so you have to have a common vocabulary a common sales process a common qualification methodology so everybody's on the same page otherwise you'll find you might get five reps 10 reps 15 20 maybe even 50 but you are not scaling past that without some without all of that core fundamentals being in place so just to reiterate i think what you're saying is that the sales process itself is kind of a mechanical playbook as it were that the sales team uses to execute sales campaigns with your company's product and then the qualification process is really kind of a lens over the top of that that the leadership uses to assess the qualitative elements of a given deal against that process where it is in that process back to the gps example am i in hartford or am i in new york city right and so they're two different things maybe two sides of a coin is the way to think about it one is the execution process the other is a lens that's put over the top of that process upon which you can then kind of um score each opportunity against where it is in that process is that right yeah yeah so think of if you want to use cricket or any sport think about it it's the the playbook is exactly that's the sales process and then the film maybe you know they've taken a video recording of of the plays and now you sit down and you can analyze where that player went wrong was he lacking in was he lacking in a skill and it's not just for management because if i can sit with my player and say look at what you did here this is what you did wrong let me coach you through how you do that right the more that they can do their own self analysis is better for me as a leader or as a coach because my my current reps might be my future managers right so i i would prefer to teach them and let them be able to self-analyze themselves because any athlete that can self-analyze themselves is going to be a lot better than me always having to coach them on what they did right and wrong yeah you want to teach them how to fish well this has been great john this is uh we could go on for hours and hours just so much this is such a big and wide open discipline i think so i think this was great this will be a lot of content for football folks who absorb so i really appreciate your time thank you john all right [Music] you