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Why Land and Expand works in Startup Sales

2/28/2021

A startup that thinks it can take down a whale-sized account within the first 18–24 months is destined to fail. The ambition is good but it is often misleading with the fake “go big or go home” mantra which floats around startup land. Don’t be fooled by stories of startups that land big deals in the early days; they were probably playing inside baseball and the likely reason for any meaningful size deal was based on a previous relationship being leveraged to inflate the opportunity at hand. Don’t get me wrong, it could certainly happen organically but they are few and far between.

The definition of a whale-sized deal is relative to the industry you’re in. In software sales, it’s loosely defined as $750K-$1M< in ARR (Annual Recurring Revenue) depending on the stage of the company. In hardware, generally, it’s deals >$10M depending on the margin requirements, and in payments, it tends to be around >$100M in TPV (Total Payment Volume) as the margins in that industry are super thin. Regardless, each startup has its own definition of “land and expand” to whale size deals. For the purposes of this conversation, let’s stick with the software industry definitions. Anything <$100K = Land, $100K-$750K = Expand and >$750K = Whale.

Let’s first address why this is good for the buyer. It mostly comes down to risk. Corporations tend to be risk-averse and as a result, employees tend to take the path of least risk to ensure job security. Even if you have a super-strong Champion, they are still subject to bringing in new software which doesn’t deliver and being on the hook for that decision. So it’s much less risky to start small. Additionally, the channel by which the new software got into the company was likely bottoms-up and silo'd to one business unit or team within the larger organization. Hence, the sphere of influence to get a new deal done is often limited to just that team. If this was a C-level initiative the channel would have been through a VC, Board member, or perhaps the golf course :-) But seriously, the most innovative tech nowadays is typically far from the C-Suite purview. Furthermore, budget is often not pre-allocated for new tech and hence, you’re Champion has to go find it. Circling back on the risk factor, it turns out there is great reward if the new tech in fact delivers and exceeds all expectations — this is very good for the buyer. It could lead to an increase in status, recognition as the expert in the space, and even a promotion! I’ve been very proud to see many of the Champions I’ve worked with getting promotions as a result of bringing in the right solution and even speak at conferences in public forums; brings a smile to my face every time. However, all of these benefits evaporate if the seller tries to bite off more than they can chew during the early stages of the relationship.

Now let’s talk about why this is good for the seller and the startup as a whole. New logo acquisitions equal velocity; velocity is a metric measured by both sales leaders and venture capitalists and is often the leading indicator for future success. It’s also a leading indicator of your success as a seller. As a good friend of mine likes to say, “shavings make a pile.” It’s true and as you work toward your quota goal for the year; every step gets you closer to the finish line. Education is another reason why every deal counts. You should be learning something new every single time you close a deal no matter what the size. If you’re not growing, you’re dying and each deal gets you closer to growth so when the whale size deal comes along you can apply the lessons learned to ensure this one gets over the line. While these are all helpful reasons to close land deals, the ultimate goal is expansion to the whale size deal.

Expansion is the key to out-performance and I would argue the biggest driver to landing whale accounts. Once you’re in, you’re a trusted partner and just as important an approved vendor (make sure when you do your land deal all the proper paperwork is in place so you’re positioned to expand well). As you continue to support your customer, you learn more about the organization and how to align with them strategically. You expand your network and develop relationships with other potential Champions within different business units. In turn, you start to close deals with those other business units thus expanding your footprint and increasing ARR. Over time, you and your company gain a positive reputation which leads to an organic and natural progression to the C-suite. Once you hit the executive level; that’s when you get the opportunity to pull all the teams together to centralize all your efforts and get a truly holistic and corporate-wide agreement in place which turns your initial land deal into a whale deal. So what’s the plan to expand? Executing on all of the above. Yes, you’ll need to build yourself an account plan including an org chart, top priorities of your customer as stated in their public filings, etc. but all that is useless if you don’t execute. It’s very easy to be “one and done” and then move on to the next deal — don’t do it!

In summary, here are some reasons why the land and expand motion works well:

Good for the buyer:

Reduces risk
Reduces budget requirements
Positions Champion as the hero
Provides incentive for your Champion to be personally invested

Good for the seller:

New logo acquisition and approved vendor
Increased deal velocity
Indicator of traction toward quota achievement
Education
Expansion opportunity which drives line-of-sight to quota target
Credibility and reputation; internally and externally
Leads to executive-level buyers and ultimately a whale-sized deal

As you can see, generally there is more upside to the seller than the buyer but the weighted average skews to the buyer in this case as they have the cash to exchange for your tech. Word of caution, this often takes years to fully come together so be patient, stay the course, work towards this goal daily and at the right inflection point all your hard work will pay off.

Don’t Forget To Salt Your Water

1/26/2021

We met for lunch, it was our first in-person meeting. Me, the salesperson, and him, the prospect. We ordered our drinks and I noticed there was no salt on the table. I asked the waitress to bring some salt; when she did I immediately picked up the shaker filled with our most common condiment and proceeded to salt my water. My prospect gave me an odd look but quickly moved on with our conversation and we had a productive lunch which in the end led to him championing the deal and signing a significant agreement...so, why did I “salt my water” that day? For one reason: to be memorable.

In a world filled with buyers and sellers interacting every day to facilitate a fair economic exchange of goods and services, it’s difficult for both parties to make a connection in each interaction. So how do you stand out? How do you become unique in such a crowded and often fast-paced environment? The key is to find a way for you to become memorable. I once interviewed for an Account Executive role with a company and when I asked the VP of Sales what the one trait was he was looking for in his new hire…..he replied with “I’m looking for reps that will be memorable.” That always stuck with me and is something I logged in the back of my head as I built my sales career over the years.

Now, I’m not suggesting you have to add salt to your water as I do. Frankly, I started doing it back in my college days to nurse a hangover as it’s basically Gatorade without sugar and food coloring; but I am suggesting you find that unique, special thing you do to make yourself stand out. It’s a crowded world out there and unless you can do something that is a bit extraordinary, you run the risk of being just like every other salesperson. As Grant Cardon likes to say, “be extraordinary or be ordinary.”

Here are a couple of suggestions on how you can “salt your water” if actual saltwater is not your thing:

Order the same meal every time you have a lunch meeting. My personal favorite is Caesar Salad and I always ask for extra dressing and cheese on the side.
Order the same drink when you grab “drinks” with your prospects and customers. My go-to is Jack on the Rocks. In fact, I drink this so often that after some time my customers even order them for me when I’m running late.
Grow your hair really long or a funky color.
Wear a Hawaiian shirt every Friday or the same style outfit every day.

Regardless of how you do it, try to build your unique personal brand. There is an interesting bi-product to this uniqueness, some may even call quirkiness. Your customers get to know you so well on a personal level that you develop a very tight-knit and special relationship. If you’re so inclined, this may even lead to a friendship. I ask you, as a salesperson, do you think people do business with people they like? I’ve read in multiple sales books, “all things being equal, people do business with people they like. All things being not so equal, people still do business with people they like” and I believe that’s true.

Why The Pitch Deck Can Make or Break Your Deal

12/17/2020

Spoiler alert, the pitch deck has more to do with what you say vs what you show and there are a few ways to get your prospect to remember what you say.

Your marketing team has spent countless hours developing your company’s pitch deck. There are awesome graphics, custom-designed slide templates, the thought leadership slide, problem/solution statement slide, etc., and even a special architecture slide tailored to how your solution works. While all that is table stakes, the unfortunate reality is your prospect has seen some variation of this type of deck every single day for the last two weeks. So how can you be impactful and stand out at the same time?

It’s typically best to kick off with the industry trend slide. This allows you to provide your point-of-view on the problem and gives you an opportunity to engage with the prospect to better understand if they agree with your perspective on the emerging trend. If they do, you’re headed in the right direction. If they don’t, you have a lot of education ahead of you but now you know where you stand so you can navigate appropriately moving forward.

The problem slide is typically next. This is pretty boilerplate in terms of the content but this is usually your first opportunity to pepper in what I like to call “seed planting” statements. Basically, it’s the concept of dropping in very specific, very targeted subliminal messages that you can circle back on towards the end of the presentation to ensure the prospect is understanding the message you are trying to deliver and thread the message together in a cohesive and logical manner. Below is one example as it relates to your competition within the problem slide but you’ll want to compose such statements throughout your presentation.

My favorite method for combating an internal build is a seed planting statement like “while eliminating the pain associated with this is important, it’s not a competitive advantage.” Most everyone studied the advantages of specialization in economics 101 so it’s easily relatable and most often, it’s a logical conclusion. This sounds like a statement you’d make during the competition slide but you actually want to make it during the problem slide. By planting this seed early, you can revisit it later in the competition slide. When you reach that part of the presentation, you can say “remember when I said it’s not a competitive advantage” and then expand on this train of thought with “therefore you shouldn’t build and manage this yourself. You should outsource this to a specialist; whether us or not.” That triggers the prospect to mentally revisit the earlier slide in their head and now draw a connection to why they shouldn’t even consider building this internally and consider you. The trick with these “seed planting” questions is subtlety. If you go for the jugular early in the presentation, you run the risk of a typical salesperson on a typical sales call. But if you take your time and thread logic with rational conclusions, then you're tying everything together in one cohesive story.

Now, around this point of the presentation, you either show a slide of how your solution works or jump into a demo. This is the ideal time to drop in “seed planting” statements. It’s important to note, I’m not referring to questions here; questions are essential of course and are part of the presentation but for the context here we’ll focus on statements.

Here is where you make declarative statements about your solution or company. You want to highlight specific features that either you do super well or you know your competition doesn’t do at all. Not only will this help focus the prospect on one of your superpowers but it’ll plant the seed for when that eventual question comes toward the end of your meeting, “so, how are you different than XYZ company.” Now, you can reference back to something you showed during the demo which makes it much more tangible and real vs a spatted off list of features you have logged in your head.

Here’s a favorite of mine, during the demo highlight a feature that is unique to you and drop the statement “as you can see, we’ve built a lot of functionality in here over the years and this is only possible because we focus 100% of our time on this and will continue to do so.” Not only are you telling the prospect that you’re specialized in this area of expertise but your subliminally suggesting that your product will continue to improve year over year with or without you as a customer. Now your prospect is asking themselves, “do I want to hitch my cart to a wagon that will grow and get better independent of me or not.” Most of the time they do want to hitch their wagon to the company growing the fastest and improving their product quicker than anyone else in the market.

I hope these few examples were helpful. Again, the idea here is you want to drop in statements that allow you to circle back towards the end of the presentation and during the Q&A to tie everything together. You’re not doing this to trap your prospect or set them up but instead using this tactic to bring logic and cohesiveness to the overall presentation. If you can successfully do this, not only have you clearly communicated why your solution is the best - you’ve also won the respect of your prospect as someone they want to do business with. Thus, why the pitch deck can make or break your deal.

Bonus tip: always send a draft agenda to every confirmed person for the meeting ~24 hours beforehand to solicit feedback on the agenda and give them permission to change or add to that agenda. Make sure this is a one-to-one (vs one-to-many) communication. You want to do this for two reasons. A) it helps to understand what each individual cares about and gives you an opportunity to prepare for such topics and B) it allows for feedback and that is a signal they’re interested.

How to Close $1.1M in One Week

10/28/2020

It was the last week of June 2017 which happened to be the last week of our second quarter as well (funny how all the deals come in the last week of the quarter in SaaS, right?). It was an amazing week. Per the usual dance, the week was filled with the ups and downs of negotiating custom pricing, order form terms, redlines on MSAs, and of course, getting internal approvals on all the asks from the prospects. It was a week of very little sleep but come Friday afternoon, I was fortunate enough to have closed $1.1M in ARR (annual recurring revenue) in one week, netting myself a pretty handsome commission check, before taxes of course. What’s really amazing about this last week is that it all started in December of 2015.

We just rolled out a new sales process called MEDDPICC which stands for Metrics, Economic Buyer, Decision Process, Decision Criteria, Paper Process, Identified Pain, Champion, Compelling Event. I’d never heard of it before but always eager to be a student, I gave it a try on the first prospect I could which happened to be a Product Manager at a major media company (one of the largest in the world) based in LA. We got on a call and after learning about his interest, I started running the MEDDPICC sales process. He was super humble and basically said “I really don’t have the answers to these questions but my VP does.” To which I happily replied with “great, I’ll be in LA next week anyway so how about we set up a joint meeting.” The intro meeting was set-up and from December 2015 to August 2016 the VP and myself worked together to get a small “land” deal done for one mobile app. Once this VP started using the product, he immediately became a Champion introducing us to the C-Suite folks based in NYC which led to a global MSA being inked in May 2017. A series of Order Forms from the various business units under this company's umbrella kicked off in June 2017 at $400K ARR and didn’t end until October of 2017, amounting to a total of $2.1M in ARR. The $400K from that first business unit was the first traunch on the way to the $1.1M week.

Next, we have an online real estate business that our company had been trying to sell to for years. In fact, I had a small land deal on the table with a satellite team in the Fall of 2016 which got killed by an incoming CTO who needed time to think through the company’s overall strategy. Serendipitously, in January of 2017, a Champion at a previous company I sold to in July 2015 moved to this company along with the new CDO who not only knew the product but loved it. While we had to conduct a very difficult and technically challenging POC, which lasted 2 months and was a real nail-biter, we satisfied the POC requirements and closed the deal at $300K in ARR. Now we’re at $700K ARR in total.

One of the oldest retailers in the country reached out in November 2016 telling us they were replacing their legacy technology with a modern tech stack and they had already decided it was either us or our biggest competitor. On one hand, this was a great sign as they weren’t window shopping and plan to make a decision one way or the other. On the other hand, it was incredibly competitive; one of the most competitive deals I had ever faced in fact. Our Economic Buyer would often flip flop and was very hesitant to commit to anything. Fortunately, we had an amazing Champion who sold on our behalf when we weren’t in the room and gave us the heads up when we started to lose the battle. He even took the time to walk us through the procurement process. I finally asked permission to take the “kid gloves” off with the Economic Buyer and give it to him straight. He said, “Well, so and so competitor is telling me they are becoming like you.” To which I responded, “it’s one thing to try to become like us, it’s another to be us!” Let’s just say, that was the clincher and we closed on a multi-year deal at ARR of $160K per year bringing our total at this point to $860K.

While the previous deals highlighted very long sales cycles, there were two deals with shorter cycles proving that bluebirds do exist, just don’t bank on them.

In January 2017, I took a call with an extremely technical leader at one of the oldest automotive retailers in the country. In fact, he was so progressive I was wondering why he was working at a company not known for innovation or moving quickly. I soon learned that was the exact reason they hired him and his mandate was to shake things up. He was looking at us and a competitor with a plan to run a POC with each in parallel to prove to his bosses which technology was the best. It was a pretty basic POC and while we did run into some small hurdles, overall it was a fairly smooth evaluation and considering our Champions predisposition to select new, cutting edge technology, we were fortunate to win their business at $180K ARR; allowing us to break the $1M ceiling and land us at $1.04M in ARR with one deal left. The all so elusive bluebird deal flew right into our nest!

This last one, while only $60K in ARR, was a real gem. They happened to be a partner on our platform so they knew us well and basically already decided they were going to buy. Yes, this does happen sometimes and when they do I implore you to cherish every dollar you make off such deals as this is literally a salesperson’s dream. This particular company, which is a support ticketing software, reached out in early May 2017. They ran a 2 week POC to ensure we’d be able to meet their use cases and once complete, immediately moved forward with the procurement process in time to close the last week of June, bringing the grand total to $1.1M in ARR and topping off the best week in sales I’ve ever had in my life… so far.

Well, folks, that’s Enterprise sales for you. Stick to the process and have some patience. Most deals have a 12-18-month sales cycle. Typically the larger dollar size deals, which include ups and downs, twists and turns, politics, competition, and even delays that indicate you’ve actually lost the deal, take time. Every now and again you’ll get a bluebird, but those typically aren’t that large in dollar size and not as complex. Anyone who tells you differently either doesn’t have sufficient experience in true Enterprise sales or is lying to you.

How a Kick A$$ Analogy Can Take You From Zero to One

9/11/2020

The inconvenient truth about selling for a startup is you’re often selling something new that requires both education and imagination for the prospect to fully grasp and eventually purchase. Knowing there are high levels of perceived risk by the buyer in procuring a product or service from an unknown startup, the seller’s job is to reduce the risk by positioning the solution as relatable and as simple as possible.

Essentially, associate your offering with something that is benign in nature and highly proliferated. This will help you capture those early sales and get the lift-off the startup needs to get off the ground. But what is the best way to do this? Well, how good are you at analogies?

Devising a good analogy for the solution offered has been a hallmark in my sales career. If you can come up with a simple analogy that resonates with everyone in the room - you win, period. Why? Because simplicity in problem-solving is key - the old K.I.S.S. model. No matter how complex your solution is, you want the message received to be dead simple and repeatable. Here are a few examples from my past:

PowerBeam: “We’re the wifi router for wireless power”
WePay: “We’re the swiss army knife for payments”
Braintree Payments: “We’re your lego blocks for payments”
Segment: “We’re the power grid for data”

Take note that nowhere in the above was there a comparison to another company. You want to try your best to avoid saying things like “we’re the Twilio for blah blah blah or the Datadog in the so-and-so space.” That’s not ideal and can actually hurt you as you’re relating your offering to the performance of another company in the market, so wherever possible avoid that correlation.

Once you’ve made your analogy statement, you can explain in more detail why you believe the analogy is appropriate - this helps with that education process you need to walk the prospect through. In the case of the Segment analogy, once I said “we are the power grid for data,” I would explain how when you walk into your office, home, or hotel room and plug in your laptop, phone, or even a light for that matter; it just works without you having to do anything at all. That’s because behind every outlet is a massive infrastructure that takes power generated at a source hundreds of miles away through a network of cables, transformers, sub-stations, etc. and delivers it to your outlet so you don’t have to think about how you’re going to power your device, you can just focus on how you use that device to improve your life. Not everyone is an electrical engineer who can appreciate the complexity of the power grid, however, 100% of the people sitting in that room have had the experience of plugging something into a wall and it just works. Hence, it is extremely relatable, simple to conceptualize which leaves room for imagination, neutral in nature, and widely propagated. The same could be said for a wifi router, a swiss army knife, and lego blocks.

The key is really to keep your analogy as simple and generic as possible - you want it to be remembered and repeated as it is the ultimate “seed planting” statement (more to come on this topic in a future post). Basically, what you want is your prospect using this analogy to sell internally on your behalf. You want it so bulletproof that when a co-worker at your prospect’s company says, “Hey, heard you met with X-company, what do they do”, the prospect immediately responds with “oh, they are the ABC for XYZ” and everyone just gets it. When everyone just gets it, it’s amazing to see prospects move from the education phase to that imagination phase where they start to collaborate and brainstorm ideas on how your solution solves their specific problems. When that happens in real-time, you know your analogy works and you’re starting to win.

Regardless of what analogy you create, if it’s simple and easily understandable - you’re reducing the cycles needed to spend on educating the prospect and their company. If it’s clever and well thought out - you’re stirring the creativity pot and getting the prospects to imagine how their situation is similar to what you’ve laid out and how they can start solving the problem with your solution. The sooner you can get past those hurdles, the sooner you can start closing deals and getting your startup the customers and revenue so desperately needed in the early days of going from zero to one million!

Bonus tip: towards the end of the first meeting where you’ve introduced your analogy, end with “if you remember nothing else from this meeting today, remember we are the ABC for XYZ.” Not only does this reinforce the message you’re looking to establish with your prospects but it also conditions your prospects with a repeatable message they can use to sell on your behalf when you’re not there. If you can get your customers to sell for you - how much easier did your job just become?

This One Question Led to Millions of Dollars in Sales. The Secret is in How and When You Ask.

8/14/2020

Over a 5 year period, I worked in the B2B SaaS space selling to technical buyers who are very sophisticated in the buying process, very knowledgeable about the technology they’re interested in buying (they do a ton of research before you ever walk in the door), and for the most part loath salespeople (I’m still not sure why but it’s a real bias that exists). During that time, directly and indirectly as a sales manager, I closed $15.4M in annual recurring revenue, averaging out to ~$3M per year. With an average quota for an Enterprise Account Executive (AE) at $1.5M per year, averaging at 2X quota capacity means not only working hard but also working smart. Let’s discuss the working smart piece.

Selling to a technical buyer persona can be pretty difficult. An Account Executive needs to be fairly technical (almost as technical as a Sales Engineer), needs to shed the Slick Rick personality, and genuinely needs to care about understanding the problem(s) the buyer is trying to solve to learn if their solution can actually meet the needs of that business. Being inquisitive and asking the right questions will go a long way to building credibility and ultimately closing the deal. But what is the right question(s) and how does one make it look none obvious as to maintain credibility?

The foundation of the key question is “Why do you ask.” This question in itself is not super novel. In fact, it’s basically Sandler Rule #12 — Answer Every Question with a Question. However, next time you’re in a sales meeting with a prospect, study the AE leading the meeting and see how many times he/she just answers every question the prospect asks. You’ll be amazed how many people do this based on society’s predisposition to answer a question when asked….I blame it on the education system :-)

As a sales manager, I personally made it a requirement for all the interviewer’s to track how many times a candidate would answer a question with a question during the mock pitch session. If they didn’t or only did seldom, everyone in the room knew where that candidate would end up. Around 90% of the time, the candidate didn’t make it past the mock pitch and as you can imagine, my team was very slow to hire.

Now, Sandler Rule #12 explains why this is important in general but why is this so important in the technical sale? It’s important because technical buyers want to have intelligent conversations with knowledgeable people in the space who have a credible perspective on the problem they’re trying to solve. To get to an intelligent conversation, the AE needs to fully understand all the context, variables, and dependencies that is leading this prospect to investigate a vendor for this solution (most often technical buyers can solve a problem with enough time and hours but it’s usually not the most efficient or scalable solution). To understand those details, responding with a simple question can open up the floodgates which will lead to a sophisticated dialog and ultimately reveal the true pain the prospect is trying to solve and, just as important, the concerns they have with your solution! Here are some suggestions that don’t come across patronizing or elementary:

Good question, is there context around that question that could help us better understand what you mean?
Can you provide a use case or example where answering that question positively would solve a pain point or business problem?
Are you asking that question because you’ve felt that pain before? If so, when was the last time, and what was the impact to the business?
You’re asking this for a reason, did you personally have that challenge in the past or did you hear that could be a challenge from a colleague or friend?

Of course, these are just a few suggestions and if all else fails you can simply say, “why do you ask.” I recall back in 2010 I was giving a pitch to a room full of executives at a speaker company and one of the guys turned to the group and said, “what’s with this guy, every time I ask a question he just asks a question right back.” I looked down, smiled to myself, and knew I was on the right path.

When to deploy this tactic is critical but here is the first step. Create a trigger in your brain. Yes, I’m serious. Train your brain to recognize when someone is asking you a question (good news is this only takes about 90 days or so). I’ve personally been doing this for years and yes, my wife still loves me! Do it with everyone at first, focus and pay attention when someone is talking to you and learn to set a mental trigger so if they ask you a question you immediately respond with simple phrases like “why do you ask” or “you must be asking for a reason.” Eventually, it will become second nature and you’ll find yourself both recognizing when someone is asking you a question and controlling whether to reply with a question or just answer (asking someone why they asked where the bathroom is probably is not the right etiquette).

Once you’ve mastered control over your urge to “ask why” it’s time to deploy this tactic in a prospect meeting. Be sure to use this method strategically to spark a conversation that will lead you down the right path. Over time, you’ll start to recognize themes in your space where asking a question at the right time will naturally lead your prospect down the right path but this does take a bit of time and a bit of practice so don’t beat yourself up if it takes a couple of rounds to get this part right. Overall, the goal is to get the prospect to peel back the onion and uncover the real challenges they’re having and why they’re asking the question on the table so that you can earn the right to present your solution as the most viable option.

Once you’ve fully understood the question and walked them through how your solution would solve it, you’ve now earned their respect and can proceed with whatever sales methodically your company subscribes to whether that be Command of the Message, The Challenger Sale, etc. with the other side of the table willingly (and usually happily) participating in the process. All too often I’ve observed AE’s going straight into a MEDDPICC barrage of questions before ever earning the right to ask these questions and watching the prospect just give generic, bland answers they know will quickly end the meeting so they can move on with their day. This obviously doesn’t lead to closed:won happy customers.

Here is a bonus tip: I personally always like to close out any meaningful dialog with “Did I answer your question.” More times than not, the prospect would say yes and I would immediately follow-up with “Great, was the answer to your satisfaction?” Every now and again I would get an odd/surprised look but most often I’d get “yes, to my satisfaction.”

I asked this “to your satisfaction” question for two reasons. One, because anyone can answer a question but it doesn’t mean the person receiving the answer is happy with your reply and if they’re not, this opens the door for them to say “well, not really” and now you can continue to pull on the thread. Second, if they are happy with the answer, everyone in the room subconsciously knows it’s time to move on to the next topic on the agenda. Running an efficient and effective meeting is still the responsibility of the AE and if not managed properly, you could talk the entire time and never move the sales cycle forward. It’s a fine balancing act of course, but ultimately your job is to meet the needs of the prospects and convert them into a paying customer.

The Rise of the Angel Employee Class

9/5/2019

I recently finished Paul Graham’s book “The Launch Pad” where he states several times the best time to start a company is when you’re in your early to mid 20’s. Essentially, when the only responsibility you have is to yourself. I thought, “Boy, that sounds about right and that’s what I did.” Then I stumbled upon a Business Insider article by Sahil Lavingia where he talked about Angel Employees and how it’s a terrible path to wealth considering how the equity packages are structured. Based on my experiences, I wanted to provide some color and suggest that there is an ever growing pool of Angel Employees who should indeed be celebrated and rewarded.

Paul was certainly right based on my history. I started my first company at 19 yrs old, my second at 23 yrs old, and co-founded my 3rd at 25 yrs old. While my second had a successful exit, the third imploded four weeks before my wedding day. Shortly thereafter, we got pregnant and my priorities immediately shifted. While I certainly had the itch of the startup life, taking the risk with a young family at home just wasn’t practical anymore especially living in Silicon Valley.

So, I started looking for early stage startups where I could cover the basics of living standards but still feel the thrill of startup life and perhaps get some upside on equity while making cash along the way. Additionally, with two successful startups under my belt and earning my “Silicon Valley MBA” with the crash and burn of my third, I certainly felt there was some additional value to bring to the table.

My first endeavor was WePay which is a payment startup that competed with Paypal. I joined as an Account Executive on the Sales team right before the Series B funding round and the value at the time was around $60M. I stuck around for a little over a year and certainly agree with Lavingia that the equity offered was not compelling enough to keep me around...which was a shame considering my position we should move to a SaaS based payment platform which was the direction WePay ultimately took and recently got acquired by Chase for $400M. While I made cash while there, the equity payout as a result of the Chase purchase was certainly a nice Christmas bonus.

I moved to another payment startup post Series B funding called Braintree Payments which got acquired by Paypal just 6 months into the Enterprise Account Executive role. While I missed the equity payout and my options got moved to RSUs (hey, that’s the way the cookie crumbles) it was validating to know there is a world where my previous founder experience can help me pick the winners - or maybe it was just dumb luck. After working for Paypal for about a year, I had enough of that big company stuff.

I then joined Segment as employee 17 and the first dedicated salesperson the company ever had. Here is where I disagree with Lavingia that not all Angel Employee’s can/will get the short end of the stick and where a startup might have done it right - at least with me anyway. I joined shortly after the Series A round with a $70M valuation. I’ve been there for five years at the time of writing this and the company now has a valuation of $1.5B. At the time of the Series C with a $600M valuation, I personally contributed to 42% of the Business Tier ARR (annual recurring revenue) that year, 26% of the overall Business Tier ARR company wide and if we factor in self-service to the total ARR, the number settles at 19% total company ARR. Simple math would suggest I helped drive $114M toward the overall valuation. Am I getting even 1% of that slice, not exactly but based on my Angel Employee position I do feel I’m getting a pretty fair share and feel good with what I contributed. Should I exit based on the current $1.5B valuation, I wouldn’t be able to retire but would certainly have a nice cushion. Should the company exit at say $6.5B (similar to Mulesoft), I could “self-retire” as I call it and likely be set for life. So, am I getting the short end of the stick? Only if the company falls off a cliff...otherwise, doesn’t feel that way to me as an Angel Employee.

So why should the Angel Employee be celebrated and rewarded? Risk vs reward yes, but more importantly impact. Someone once said the first 25 employees make up the culture of the company and while that’s true - I’d argue the first 25 have the biggest impact. When founders can recruit and retain talented individuals that have entrepreneurial experience, understand what it takes to get a startup off the ground, scale the startup, and drive revenue in the right direction it can have a significant positive effect on the overall success of the company and the commensurate valuation associated with a startup’s success. These are the folks that give their blood, sweat, and tears. They bleed your company’s colors, take ownership as if it they were a founder, and make sacrifices for the good of the company. So why not reward them with an equity package that makes them feel like an owner? It worked for me and is a major contributing factor to my dedication to the company.

While cap tables can influence founders ability to reward early employees - it would behoove them to not take equity for granted as part of the compensation plan and invest in the team members that can help drive the business forward in all regards. Feeling like an owner is more powerful than any other motivator for the Angel Employee class and shouldn’t be reserved just for a future Exec-Level hire who will wait to join the company until the risk is reduced and there is a parachute package. In fact, I’d argue Angle Employee’s should be treated the same as those future C-Level hires, if not better, because if the company doesn’t get off the ground...well, there will be no opportunity to dole out those reserved stock options as the company simply won’t exist.

30-minute Comedy Break

3/5/2019

Back in 2001, my family had a reunion after a 10-year gap and I was meeting a lot of family members I barely knew. One such member was my cousin Gaetana. We all had an amazing time and laughed for what seemed like all weekend. Shortly after, Gaetana called me and asked how I kept such high spirits, I replied with “Well, I watch The Simpson’s like four times a day.” Back then, I was in college so I obviously had a lot of free time. Also, I just came off of a psychology 101 course which we reviewed a case study on a man who had cancer and used laughter to help him beat the disease. So, I figured it was a pretty good idea.

It wasn’t the particular show – The Simpson’s – that put me in such great spirits but more so the concept that laughter is a positive influence in one’s life and comedy is a major source of laughter. This isn’t a profound statement or anything as many sales books speak to keeping a positive state of mind. Jeffery Gitomer quotes in his book – The Sales Bible: “Make them laugh, make them buy.” He also mentions how all things being equal, people buy from those they like and all things being not-so-equal, they still buy from those they like. So, what’s the best way to get people to like you – make them laugh!

While having 2+ hours a day available while in college, that’s definitely not realistic in the working world. More to the point, especially in Sales, it’s far too easy to let the pressure and stress of the day-to-day suck the positive energy right out of you and that can of course lead you down a very unsuccessful spiral. So, what’s one way to keep the positive energy up and maintain high spirits?

I’m a firm believer in the “30-minute comedy break.” Essentially, carving out at least 30 minutes a day to watch, listen, read, etc., something that makes you laugh. Whether that’s jumping into in a conference room and spinning up a few YouTube clips or sneaking in your favorite comedy sit-com on your commute into the office, doesn’t really matter. The point is to dedicate time each and every day to make sure you’re laughing and keeping your positive state of mind. Why is that important in Sales?

Who would you rather buy from – the person who makes you laugh, feel comfortable, and has a positive outlook on life or someone who is short, stressed, and maybe even pressuring you as their negative framework feels more like a late night news reporter? The answer is pretty straightforward but again, it’s all too often overlooked as the daily grind starts to take its toll. This also helps holistically as you interact with co-workers, family members, and even strangers on the street.

Team, Product, Hustle – What you need to master to succeed in your new gig

8/2/2018

I’ve recently been helping to onboard a plethora of new hires to our sales team and have noticed a very common trend among the more successful account executives (AEs) who ramp up fast and start to produce.

When I meet with a new hire for the first time, I always challenge them with the old African proverb which most people have never heard. I myself learned about it in Asia of all places. It goes like this- “When the sun raises in Africa, it doesn’t matter if you’re the Lion or the Gazelle, you better start running your ass off.” And I always follow-up with “This is Africa (T.I.A.) – every startup is.” The purpose of this orientation is to ensure everyone is giving 110% to the company and hustling as hard as they can. While that certainly is a major factor, I’ve learned along the way that the truly best sales professionals need three fundamental foundations to maximize their effectiveness – Team, Product, then Hustle.

Why is Team so important – because Teamwork Definitely Makes the Dream Work! Seriously, every deal whether small or large takes a team to execute. While larger deals require larger teams, rarely is any deal closed by a single, superhero Account Executive. As a new AE, it is critical to take the time to meet every member of the team, even those who are not on the immediate team, to develop a strong working relationship. All too often, an AE is focused on passing their sales cert so they can get out there selling - which makes sense - but that’s like flying through boot camp only to get to the front line of battle without a gun. Yes, you’re at the front line but you didn’t take the time to stop by the armory to meet the sergeant who issues firearms. So now, you need to go back to the armory and introduce yourself, likely in a sheepish manner, to ask for something – in this case your gun. And it won’t be the last time, your gun will break, you’ll need a different type of weapon along the way, etc. As is the case in sales, an AE tends to “go back” and ask for something from the company to ensure that a deal closes. This could be simple things like a discount for a multi-year contract, or no use of logo, etc. but in other cases, it’s something like a new product feature or an extension on a current feature that isn’t par with the market. If you haven’t taken the time to learn who does what within the organization, how those teams are structured, how they work, etc. – meeting the needs of your prospect to get the deal over the line is going to be very difficult and potentially could even kill your deal. I’ve seen deals die simply because someone was afraid to ask or thought they couldn’t meet the request so never even tried. Having a strong team dynamic and professional relationships in place will avail such concerns and at least give you the opportunity to work with the right folks to meet the needs of your prospect.

Why is Product so important – well, sure, if you don’t know what you’re selling then you’ll lose all credibility with the prospect and ultimately the sale. That’s fairly well known. However, what I see with most new AEs is they only take the time to learn the product on the surface – just enough to get through the first sales meeting and then let their Sales Engineer (SE) take it from there. While you can skid by on that for a bit, you won’t close any monster deals that way and you’ll flatten out. What the best AEs do is learn the product, sure, but then learn all the Use Cases the product solves and explain why their product is the best tool to solve for those Use Cases. You see, most prospects actually really only care about the end result, what they can do with the product, and how it will help move the needle. The best way to communicate this is through Use Case stories – everyone loves stories of course. However, if you explain a Use Case and someone asks, “that’s awesome, how does your product achieve that,” and you have a blank stare on your face…..boom, you just lost the deal because now you’ve lost credibility. So, why is it so important to learn about the Product……so you can learn the Use Cases and explain them both from a business perspective and also a technical perspective when challenged.

Why is Hustle so important – because you either eat or get eaten….T.I.A. If you need any more explanation on this point – maybe you shouldn’t be in sales :-)

Before you send that Proposal

4/27/2016

You’ve done all your research before the first sales call. You know what their business is all about; their economic drivers, their KPI’s, what their potential pain point is and why they’re talking to you. You even looked up your prospect on LinkedIn and found a few common connections. You’re completely confident before taking that first call with the prospect and you’re ready to blow their socks off.

Then, you take the call and true to form you learn everything about their business needs. You learned more, dug deep, and find out what the ever-elusive compelling event is and the timing around bringing your solution on-board. The prospect is excited and you think, “oh man, this is a real qualified prospect and I think it’s a right fit.” Now you’re just as excited as the prospect and he/she says, “can you send me a proposal,” you say, “of course, I’ll get it to you right away.” STOP! You’ve just made a terrible mistake! Here’s what you likely don’t know from a first call.

First of all, do they really want to buy your product? Is this truly the solution they’re looking for or did they just get excited because the passion and enthusiasm you have in your voice transcended the phone line and they’re riding your energy. Are they the economic buyer? Will they sign on the dotted line or someone else? Who else is involved in the decision making process? What is the process for bringing a solution like yours into their organization? What criteria must be met for all the stakeholders to sign off on this deal? Who are the other stakeholders?

As you can see, there is a lot more work that needs to be done here and if you blindly send off a proposal without truly understanding the landscape your prospects operates in; you’re setting yourself up for failure. You’ll send off that proposal which outlines your offering, your price, etc., and then you’ll hear the sound of crickets similar to that of a warm summer’s night.

I was once guilty of this myself and I’ve seen this happen all to often with other sales folks; especially when you’re selling a high-ticket item. The reality is it takes a lot of effort and time on your end to craft a proposal that meets the needs of this specific prospect. More to the point, once you submit that proposal you’re pretty much locked into that price; even if you uncover later that there is a lot more work needed to support this account. So, avoid that pain of disappointment and pile the onion back now to see if you’re going to be making onion soup for dinner or just tearing up after the first cut.

Here’s my response: “Sure, I’d be happy to send you a proposal. I have a few questions first. I’d like to establish that this is truly the product you want. If I told you the product was $1, would you buy it today?”

Prospects tend to get thrown off by this question. “It’s only $1?” Of course it’s not, but what you’re doing here is saying that the money isn’t relevant at the moment. What needs to be established is that no matter what the price, this is the right product at the right time. I’m not saying price is a myth; it’s real and deals do get killed because of price. What I’m saying is that the business case needs to be identified and solved first, before getting to price.

This gets the prospect thinking about the check boxes mentioned above – i.e. who else needs to be involved, what does success look like internally, who will sign off on this, etc. Now you’ve challenged the prospect and you’re getting them to think about if this is truly the right product or if they’re just trying to get a price so they can qualify YOU! I once had an evaluator tell me, “I can’t even take this to my boss based on the price in this proposal.” We ended up doing the deal with her company. Why you ask? Because the business case was strong and that is what ultimately matters.

This tends to be an assertive approach and akin to The Challenger Sale. It’s an approach that most prospects are not accustomed to when soliciting bids with vendors, so you may get some pushback. If that happens, it’s okay to verbally give them a ballpark number because you don’t want to seem like you’re hiding something and being upfront/honest is the forefront of a long-term relationship. Also, this is a good opportunity for you to do some additional qualifying before you go do all the work associated with that proposal.

Say something like, “our standard pricing for a deal like this is $ABC” or “based on what you’ve told me, I suspect this would be around $XYZ” or “in the past, we’ve done similar deals like this for $123.” However, always follow that up with “of course, each business is unique so this is just a general ballpark and the price could be higher or lower based on your exact needs and requirements.” Again, not locking yourself into anything specific that could come back to bite you.

Once you’ve pumped the breaks and slowed things down a bit, the prospect will start thinking about what he/she needs to do internally to move forward. Typically, the result of this type of dialogue will lead to a follow-up call with other stakeholders. That next meeting is the critical moment for you to determine if there is a real deal here and warrants the work of a lengthy proposal with a price tag. It may turn out that there is no deal to be had.

The good news is, if there is a deal here, you’ve made it far enough to set appropriate expectations so when you send your proposal it will have the backing of multiple stakeholders and the conversation will become about “how do we make this happen” verses “should we even do this?”

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