Chad Peets: Why Most Sales Reps Underperform & Remote Reps Ignore Development | E1193

1. 0:00 – 1:15

   Intro

   1. CPChad Peets0:00

      We bring in a CRO pre-product. You need a sales person to create the sales playbook. How- what does a VP of engineering know about creating a sales playbook? Any inside sales person should recognize that by being in the office, they are gonna get better faster. If a sales- inside sales person is not willing to make the sacrifice of a 30-minute commute every day to further his own career, I don't want that person. Y- you have to care and be willing to sacrifice to do exceptional things to be exceptional. And what I find today is people are not willing to do that.

   2. HSHarry Stebbings0:29

      Ready to go? Chad, I don't think I've ever been quite so excited about doing a show following a discussion pre-us starting recording. So, this is gonna be a lot of fun. Thank you for joining me today.

   3. CPChad Peets0:51

      Yeah. No. I appreciate that. Based on the people that, uh, you've interviewed in the past, I- I find that hard to believe, but I'm humbled that you said it, so thank you.

   4. HSHarry Stebbings0:58

      Do you know what also? I spoke to Chris Deignan and Mike Spicer before this show, and like, if you want like hard heavyweights who are incredible at what they do saying someone is the best in the world at what they do, I'm like, "Oh, shit." (laughs)

   5. CPChad Peets1:13

      It's my brothers. It's my brothers.

   6. HSHarry Stebbings1:13

      He's gonna be- he's gonna be good.

2. 1:15 – 7:09

   The Way into Sales

   1. HSHarry Stebbings1:15

      So I'm looking forward to this. So I wanna start off with just a little bit, though, in terms of context. How did you make your way into sales first? And let's start there.

   2. CPChad Peets1:23

      I'll give you the- the short version, but, um, I saw the movie Wall Street when I was 12 years old, and I knew I wanted to be a stockbroker.

   3. HSHarry Stebbings1:31

      (laughs)

   4. CPChad Peets1:32

      Um, I knew that. So I went to USC. I studied finance. I graduated from USC. I went to Merrill Lynch to be a stockbroker and that was, uh, 1997 and 1998. And at that time, that industry was changing. It was becoming a fee-based industry, less about trading stocks and more about just fee-based. And- and that's not what I wanted to do, one. Two, I was turned off a bit because it was such product pushing. By that I mean, "Hey, go sell this product to your customers. We're gonna charge one and a half points. This is the shit we want you to sell this week." And I didn't feel at the time, like, w- w- does it matter if that's the right product for the customer? It was just, "We're gonna go push that product." The other thing that was clear to me was to be successful in that industry, I was gonna have to accumulate hundreds of millions of dollars in assets. And I was 22 years old, I looked like I was 16, and I would likely have had to call friends and family to raise money, and I was never going to do that. Um, I- I just simply was not comfortable doing that. So at the time, I had a client that came in, and I was doing some financial planning for him. And his wife said to him, "You should hire this kid." And, uh, and I was all arrogant and shit at the time. I was like 22. I was making... I think I made 100 grand my first year outta school. I thought it was all the money in the world. And I s- and I kinda chuckled. I said, "Shit, man. You can't afford me." And, uh, just arrogant and smug. And- and he's like, "How much money you make?" I said, "I make 100 grand this year." He started laughing at me. He said, "You don't even know what real money is. You have no idea." And just put me right in my fucking place. And he said, "Look, I run the largest software sales recruiting firm in the country. I think you could do it. Um, you should come talk to me." "Wow, okay." So, I went and talked to him and decided I'm gonna get into software sales recruiting at, uh, 22 years old. Changed my entire path. I had a wife at home. I was going from making $100,000 to being a- a recruiter with, uh, no base salary, um, and it was all gonna be on me. And I- my wife said, "You're gonna do what?" I said, "Yeah. We're gonna- we're gonna give this a shot." And, uh, first year there, they- they were the largest firm in the country. I was the number one guy at the company first year there. I was the number one guy at the company every year I was there. And then in 2001, the bubble burst, the partners turned on each other, um, and basically both tried to hire me away from the others. And I said, "Hey, look. I- I- I can't be in business with people that are... If you guys are gonna do this to each other, you're gonna do it to me." So I started Pietzen Associates 2001. That's when I- I had that experience.

   5. HSHarry Stebbings4:03

      I'm fascinated. Y- you moved from stockbroking... By the way, Blue Horseshoe loves Amoco Steel. It was one of my favorites, too.

   6. CPChad Peets4:09

      100%. Love it.

   7. HSHarry Stebbings4:09

      See, when you s- when you said that, I was like, "Ah, I like him so much." Uh, but, uh-

   8. CPChad Peets4:14

      Favorite movie.

   9. HSHarry Stebbings4:15

      But it was just so good. Um, but you said that about like, "Hey, first year I was the number one sales, you know, person." But h- like, how? So, you moved from stockbroking to, you know-

   10. CPChad Peets4:25

       I- I- it's a sales job, right? Like, I- I can- I can sell. Recruiting is selling. And- and so...

   11. HSHarry Stebbings4:30

       Okay. But- but okay, so question. Were you just born a good seller? Like, are people born great at sales?

   12. CPChad Peets4:36

       100%. You can't teach... Someone's either- someone either can sell or they can't. I can make- I can- you can teach someone to be better, but if they don't have the innate ability to sell... Some people are petrified of the phone, right? Like, you'll say, "Pick up the phone," and they're like, "Oh, God. You mean I have to speak to somebody on the other side?" Right? I just did not have that fear, right? I was very-

   13. HSHarry Stebbings4:57

       With-

   14. CPChad Peets4:57

       ... comfortable getting somebody on the phone and, you know, thinking three steps ahead, right? (laughs) And- and that's sales, right? Like, I- I- I can- I can understand, I think, what your needs are before we start the conversation, and- and I can think about the objections I think you're gonna have before you have them. Right?

   15. HSHarry Stebbings5:14

       Yeah.

   16. CPChad Peets5:14

       And so I just used those skills, and I just worked my ass off.

   17. HSHarry Stebbings5:18

       Can I as- how do you do that? 'Cause most people do, like, customer discovery where they ask the most inane, annoying questions, you know? "What are your most tr- pr- prying challenges?" And as a customer, you're like, "For fuck's sake. This is a crap question."

   18. CPChad Peets5:29

       Focus, right? So, focus is number one. So all I did was software sales recruiting, so the only people I was calling were software sales reps, so you learn your audience. So if you're a software sales rep, and I study you enough, I know what motivates you. I know why you got into software sales. I know why you're sticking with your job. I know what's gonna turn you on about the next job. So when I'm looking at the current company I'm recruiting for, I have to look at the things they have to offer and line those up with what the salesperson is looking for, right? And very few people understand this, right? So, you have to know who the person is you're calling, look at their background, look at the jobs they've taken-... to get to where they are and understand, "Okay, this is what motivated this person." By the way, it's also how you avoid calling 95% of the people that sell software. I don't recruit salespeople anymore, but 95% of the people that sell software, I'm never calling, because I can look at your background and say, "Okay, I know a lot about you because you made this job at this... you made this change at this point in time. I know what you were looking for, and because you were looking for that, you can't be looking for what I have to offer. I'm not calling you."

   19. HSHarry Stebbings6:27

       (laughs)

   20. CPChad Peets6:29

       It's very targeted. So like, my, my claim to fame when I was doing sales recruiting was two candidates, one hire, every time. And so like, when Chris and I... if you're gonna go... now we're getting off target a little bit, but, but Chris and I took a sales organization and grew it faster than any sales organization has ever grown in history at Snowflake. There might have been others since that have grown faster, but at the time, nobody's done that, right? And if you're gonna scale like that, you can't have 10 interviews per hire, right? It, it kills the productivity. So my claim to fame was, look, I'll nail this. I'm gonna put two people in front of you. You're gonna hire one of them every time. And it's about understanding your audience, and it's about understanding what you have to sell that audience and aligning the two before you even get on the call.

   21. HSHarry Stebbings7:07

       My hand's getting quite full

3. 7:09 – 13:38

   Focusing on a Horizontal Customer Base

   1. HSHarry Stebbings7:09

      quite quickly. Uh, I, I, I, you can't write on paper because it makes noise for the microphones.

   2. CPChad Peets7:14

      Oh. (laughs)

   3. HSHarry Stebbings7:15

      Uh, my, my first question to you, I want to unpack with Chris and the Snowflake (...) but you mentioned like the focus and knowing the customer so intimately well. Wonderful, but what do you do in a world which isn't verticalized sales when you have a horizontal customer base, which could be in aerospace or it could be in fintech and banking? How do you do that when you have a horizontal customer base (...)

   4. CPChad Peets7:34

      It doesn't matter. Like, every, every, every company I've ever built is horizontal, to be clear. We... I've never built a sales organization focused on a particular vertical, right? And because I, I don't... I actually don't think that's a great approach. There's companies that have, that have, that have been successful in doing so, but it's... if you're gonna sell a product that only goes to one vertical, you're, you're seriously limiting the size that the company can be, right? Just think about the TAM. Like, if I'm gonna sell into healthcare, that's all I can sell into. That's, that's... you better crush healthcare because you have no other alternative. So, every company I've ever been a part of building has been horizontal, right? So it's not about that. It's, look, what, what motivates a sales rep? What motivates a sales rep that I want to recruit? Most sales rep, "I wanna make money." No shit. Like, if I get a guy on the phone, "What's your number one motivator?" "I wanna make money." No shit. You got into sales. Is that the only thing that motivates you? Because if that's the only thing that motivates you, we're done here. I have nothing, I have nothing to discuss with you. So can we just say, "I know you wanna make money"? "I wanna be developed." Oh, now I'm onto something, right? "I want to be the best software salesperson that I can be and I wanna go work for people that are gonna teach me and help me grow my career." That's what I wanna hear. "I wanna sell a product to customers that's world-class, that's gonna add value and change the way those customers conduct their businesses." Okay, now we're onto something. You care about product, you care about development, right? Development is key, because if you don't care about getting better, then you don't care about your career.

   5. HSHarry Stebbings9:02

      Chad, what you just said sounds lovely, but salespeople who are good are often good at selling themselves.

   6. CPChad Peets9:07

      Yeah.

   7. HSHarry Stebbings9:07

      How do you detect the BS in the "I want growth, development, empowerment. No, I fucking don't. I just want money."?

   8. CPChad Peets9:14

      Super easy. I'm gonna pull up your resume, so help me understand, why did you go from this company to that company? Why... what, what was the motivating factor there? Why did you make that move? "Oh, well, they offered me a bigger base salary." We're done. Why did you go from this company to that company? "Well, they raised my quota at my current company and I wasn't real happy." We're done. But if you say, "I went from this company to that company because I'm interviewed with that leader and I know, I know every CRO, I know every sales organization in software," right? So I know if you're full of shit. I know who the good sales leaders are, and if I see you went to a company that I know, AppDynamics, MongoDB, Snowflake, where they have great sales leaders, and you say, "Oh, I went to work for Chris Degnan because I knew he was gonna develop me. I knew I was gonna get better," I can validate that based on the career moves in your resume.

   9. HSHarry Stebbings10:03

      To what extent do you place weight on references? And what I mean by that-

   10. CPChad Peets10:08

       A lot.

   11. HSHarry Stebbings10:08

       ... okay, but, but culture can be different. It can be, uh, not suited to someone. So some cultures are suited, some are not. Some leaders are suited, some are not. How do you think about the weight on references and how to do that well and right?

   12. CPChad Peets10:22

       The higher up you go... so for a CRO, every CRO at every Sutter Hill company, right... and I've placed them all... has been somebody that I know, that comes from my ecosystem.

   13. HSHarry Stebbings10:34

       Can I ask you a blunt question? There's gonna be a lot of people who listen and go, "Well, that's not gonna encourage a diverse set of candidates."

   14. CPChad Peets10:40

       Well, that ecosystem continues to grow, right? And we have a playbook that has expanded and become more and more widely adopted. I'm sure you've heard of Medik or Medpick and all of the things that we use. So that has become more and more widely adopted. But you're right, if you look at my CROs, our CROs across our portfolio, they all come from that ecosystem. Now, the good news is, there continues to be more and more people on their way up in that ecosystem. So you have to look for the next generation. The generation from Bladelogic, which includes some home ru-... like, right? I mean, Dan Fougere from Datadog, Adam Arents from Okta, right? I mean, look at all of the different... AppDynamics, Dolly Rajic, who's a close personal friend of mine. Um, e- you can look at, you know, Chris Degnan that came out of that. Like, but the problem is most of these guys are now reaching a point where they've made so much money where they may not wanna go back and do this again. So you have to look for the next generation.

   15. HSHarry Stebbings11:37

       This was one of my questions, which was like, you know, it's often said that actually it's so hard being a sales leader. No one in their right mind would do it twice. Is that true? And if so-

   16. CPChad Peets11:47

       Early stage, 100%. It's the worst job in software. So we do something unique at Sutter Hill in that we bring in a CRO pre-product, right? Most people don't do that and I can explain the justification for it, but we bli- bring people in pre-product. So if you look at like a good friend of mine, Keith Butler at Observe, right?... amazing guy. We brought him in to observe before there was a product. He's been there for five years. Um, company's killing it, he's doing a great job. But he's been there for five years already. And so y- if, if you... I don't wanna put Keith, identify Keith. But if you ask somebody that's gone from... Ask Chris Degnan. You're going from zero... Chris is the only guy that's ever gone from zero to three billion. But if you ask somebody that's done that, "Hey, would you go back to zero?" Absolutely not. Well, no, I-

   17. HSHarry Stebbings12:30

       Wait, I'm sorry, why would you bring in a CRO pre-product?

   18. CPChad Peets12:35

       So, the way most companies do it is they... you get an entrepreneur, entrepreneur builds a product. Goes and raises some money. Builds a go-to-market team, goes out and sells the product, right? Agreed? That's the basic formula?

   19. HSHarry Stebbings12:47

       Mm-hmm. 100%, yep, yep.

   20. CPChad Peets12:48

       Okay. So, how do you know when you're building the product if you've built the product the market wants? How can you know that? You think you know-

   21. HSHarry Stebbings12:56

       Well, I mean-

   22. CPChad Peets12:57

       ... but you don't know.

   23. HSHarry Stebbings12:58

       Well, I mean, you, you do customer discovery before and during product build.

   24. CPChad Peets13:01

       Who's doing that?

   25. HSHarry Stebbings13:02

       Hopefully the founder.

   26. CPChad Peets13:04

       Maybe. But what does the founder really know about it? You need a sales expert that can go conduct thousands of phone conversations, that is sophisticated enough to get on the phone with the prospect to say, "If we built..." And this is evolving, right? It's, you go from alpha, to beta, to GA, and then it just continues, right? So the conversations are constantly changing and evolving. In the early stages, it's just, "Hey, if we built this, would you get value out of it? Tell me how you'd get value out of it. What are some of the things you need to see in the product?" So, that has to take place befill you- before you build the product. Otherwise, you could build a product that nobody wants

4. 13:38 – 15:51

   What Sales Leaders Bring Pre-Product that Founders Can't

   1. CPChad Peets13:38

      to buy.

   2. HSHarry Stebbings13:38

      Just so I understand, what do you believe that sales leaders, or CROs pre-product bring that a founder cannot? The extensive nature of the questions they ask for pro- product?

   3. CPChad Peets13:50

      Most founders, not all, but most founders are product people, engineering people.

   4. HSHarry Stebbings13:53

      Mm-hmm.

   5. CPChad Peets13:54

      Not salespeople. So, is, is, is a, is a former VP of engineering, just to pick somebody, is that person the best person to make thousands of phone calls? Do they have the time, by the way, to make thousands of phone calls and reach out to these people and do those discovery types of conversations, and then capture all that data, summarize it, and make sense of it so that you could then give it back to the product and engineering organization? Founders, that's not what they should be doing. And by the way, they're not the best people to do it.

   6. HSHarry Stebbings14:23

      So we always hear that actually, you know, you should create the sales playbook as the founder, and then once you have some form of early playbook, you should hire the sales leader.

   7. CPChad Peets14:30

      Yeah, I don't agree with that.

   8. HSHarry Stebbings14:32

      You think that's BS?

   9. CPChad Peets14:33

      I, I don't wanna say it's BS, I think it's backwards. You need a salesperson to create the sales playbook. How, what does a VP of engineering know about creating a sales playbook?

   10. HSHarry Stebbings14:41

       Is it not just so important for them to continuously be so close to the customer? What, why-

   11. CPChad Peets14:45

       100% they should be involved, right? Uh, they should... And, and when... We'll have the CRO bring in the founder to some of these conversations. But, but again, even if the VP of engineering was super qualified to do it, how are they finding the hours? We're talking about thousands of these phone calls. And you have to reach out to the people, coordinate the phone call, get people that are willing to talk to you, right? It's, it's, it's a lot of time and effort just to get the conversation set up. Your founder, it's a full-time job. In fact, it's a full-time job for probably a couple people.

   12. HSHarry Stebbings15:14

       So do you then have to, by nature, raise large seed rounds? Because if you're gonna bring in a CRO and a couple people, this is not a $2 to $3 million seed round.

   13. CPChad Peets15:22

       Yeah, usually you're gonna need more than a couple million bucks to do this.

   14. HSHarry Stebbings15:25

       Yeah.

   15. CPChad Peets15:26

       You don't need 20, but you probably need 10.

   16. HSHarry Stebbings15:30

       Is that, is that a genuinely viable and realistic option, though? I, I mean, I-

   17. CPChad Peets15:33

       I, I mean, look, Sutter Hill, we're different. We incubate our own stuff, right? So everything we do, we incubate inside the four walls of Sutter Hill. So, I, I can't talk to whether or not this is the right formula for others. This is the right formula for Sutter Hill. And by the way, it's one of the reasons I think we're the best in the world at building our own companies.

5. 15:51 – 22:02

   What the Right Type of Sales Org Means

   1. CPChad Peets15:51

   2. HSHarry Stebbings15:51

      But once you have that CRO then in place, I'm just intrigued, 'cause when we chatted before, you said that you're super passionate about building the right type of sales org. When you said this, I was like, "Great, but what does the right type of sales org actually mean in reality?" How do you think about that?

   3. CPChad Peets16:06

      So let's think about the CRO that we're talking about.

   4. HSHarry Stebbings16:09

      Yeah.

   5. CPChad Peets16:09

      So, when you're talking to most CROs that are... and they've done later stage deals, the first thing, one of the things you can ask them is, "What's your relationship like with the product organization? Who has designed your product roadmap? Where does that come from?" More often than not, what you're gonna hear is, "Oh, I talk to the product marketing people." "Okay. Well, who designs the product roadmap?" "Oh, the product organization does." You got, you got problems, right? Because product organization is gonna go build what they think the customer wants to buy. The person that knows what the customer wants to buy is the person that's talking to the customer. It's the CRO. So you need a CRO that has experience and is sophisticated enough to go work collaboratively with the product organization to design the product roadmap, and say, "Look," right now, we... I'm just making this up, "We have 50 ICP accounts. I can only sell into 50 accounts." Right? Like, if, when you talk to Degnan, right? Like, in, in the very early days of Snowflake, we could only sell into ad tech accounts, that's it. They were just selling to ad tech. So as you want to expand that ICP, in Snowflake's case, beyond ad tech, you have to know, what do I need to expand that ICP? What features, what security things? What does the product need so I can go from 50 ICP accounts to 500 ICP accounts? And so you have to figure out what those features are, and then you have to come up with a timeline and say, "Okay, if you deliver these features by this date, then I can expand from 50 to 100 ICP accounts. And if I can expand from 50 to 100 ICP accounts, by the way, I can add salespeople. So, Mr. Product Guy, I'm gonna go hire salespeople based on your commitment to deliver the things we've agreed to in the timeline in which you agree to deliver it. But understand something, if you fail to deliver, I'm gonna have salespeople that can't call on the accounts that they need to call on because we don't have the product to do it." And so you need a CRO that understands all of this. And by the way, this is where CROs just get shacked-... because they will get pressure from boards, CEOs to say, "We need to grow faster. You need to hire more salespeople. Go hire more salespeople." Okay. Well, right now I have a 50 salespeople, you want me to go to 100. Well, in order to go to 100, I either need more use cases inside the existing accounts or I have to go and be able to sell to other accounts. What are you gonna give to me from a product standpoint that's going to enable me to do it? Conversation oftentimes just doesn't happen.

   6. HSHarry Stebbings18:35

      When we think about kind of moving from 50 ICP accounts to 150, to what extent are the product requests of those sales prospects that we want to add to that ICP profile, to what extent is that product request common and they all want the same thing?

   7. CPChad Peets18:48

      Bingo.

   8. HSHarry Stebbings18:48

      What do you, what do you do if it's like everyone kind of wants something different and it's like, ugh?

   9. CPChad Peets18:52

      So, so here's a real common mistake. So you hire 10 reps. So what are, what r- a, a rep is gonna chase money. So if you don't have ICP accounts, what, what I, what I never want to see is, "Hey, I just hired 10 reps. I put a rep in New York, a rep in Dallas, and a rep in San Francisco and Los Angeles, and I told them they can have all the accounts in those geographies." You're in deep shit. Because what's the rep gonna do? He's gonna go chase big dollars. He or she is gonna go pa- so they're gonna go call, "Hey, I'm gonna go sell into Wells Fargo. I think Wells Fargo's go- wants to spend $5 million with us." Oh, really? Okay. That rep's gonna spend all his time chasing Wells Fargo. Wells Fargo's gonna come back with a list this long of all the shit they need to see in the product. That rep is gonna want to go back to the product organization and say, "Give me this." Now, what if Wells Fargo is the only person that needs all of that stuff? You've just taken the company and diverted all resources to go build a li- a, a list of things for a company that may or may not buy. But even if they buy, you've killed the company, right? Because you've taken all the resources to focus on one account. Even if you get the account, you're in deep shit. So to your point, you have to be able to look at all the data, that's why I said thousands of phone calls, and say, "I know through capturing all of this data that if we build these five things over the next six months, I know it will allow me to go from 50 to 150 accounts because I have the data."

   10. HSHarry Stebbings20:16

       Why is sales not doing product marketing? If you have 1,000 calls with-

   11. CPChad Peets20:19

       (laughs) I-

   12. HSHarry Stebbings20:21

       I mean, I be- I'm being serious. Everybody just pause. There's nothing wrong with this. If you have 1,000, like, not literally, but you know, hundreds of calls with customers, you see the words, you see how they describe pain, the things that they look for, what excites them. You can create the most compelling copy, campaigns, billboards, you name it, because you're the ones that live those con- customer conversations. Why are you not doing product marketing too?

   13. CPChad Peets20:41

       I mean, because salespeople, and by the way, there are some that are, right, just to be clear. So I have had situations where sales doesn't trust product marketing and, and will generate their own content. So that does happen. Uh, but salespeople, as good as they are as capturing and understanding the data, that doesn't mean they're necessarily great at creating content. So what you want them to do is capture all of the information, feed it back into product marketing, and let product marketing create the messaging.

   14. HSHarry Stebbings21:06

       When we think about that right type of sales org, what are the biggest ways that companies go wrong in creating that sales org?

   15. CPChad Peets21:13

       So now we've, we've talked about the CRO, right? So we've talked about what the CRO must be good at, right? Finding, you know, often, so find product market fit, but, but you gotta go deeper than that into some of the things we've just discussed, working with product, capturing data, sharing all that, working collaboratively, et cetera, et cetera. And by the way, you have to have a CEO that supports that, right? Because your CEO might, if the CEO does not support the collaboration between product and sales, you got a problem. Now they operate in silos, and what will happen is the product organization will build what the product organization wants to build, sales guys are struggling to sell it 'cause it's not what the customers want. Product organization says to the sales organization, "You suck. We built the product, you can't sell it. You guys are not good." Sales organization says, "You built the wrong shit." Now, not only do you have them operating in silos, they don't trust each other. I've seen this and it does not end well, and it's

6. 22:02 – 24:21

   Fixing a Broken Culture Between Product & Sales

   1. CPChad Peets22:02

      not that uncommon.

   2. HSHarry Stebbings22:03

      What do you, what do you, okay, I'm the CEO and I have this. I have this where they don't trust each other. There is this bad culture between product and sales. Uh, Chad, what do I do now? Help me. You come in.

   3. CPChad Peets22:12

      Lead, lead. Your job as a CEO is to be a leader. Lead. You have two functions that must collaborate. Get them to collaborate. Get them to understand the need for each other, right? Sales needs product, product needs sales. They cannot work independently and there is a revenue hit. Like, and that's why you want to explain, the sales organization needs to explain to the product organization, "If you don't deliver the things that I need, I have a forecast out there that's based on you delivering that product. If you don't deliver that product, I will miss my forecast." So there is a revenue component tied directly into the product organization, and the product organization needs to understand that. They are, in fact, while not as directly responsible to sales, they're still responsible for revenue. And so as a CEO you have to understand that and you have to get them to work collaboratively together.

   4. HSHarry Stebbings23:00

      The, the thing I find just so fucked in sales orgs today is like measuring and incentives. And you said like, you know, tied to revenue there, but then we have some that are like tied to a load of different metrics, whether it's MQLs, SQLs, you name it. And I'm just going like, what is the right way to think about attribution and success within sales teams today?

   5. CPChad Peets23:19

      What behavior do you want (?) . That's it. What behavior do... and salespeople are great because they're predictable. I can get you to do whatever I want you to do by setting up the comp plan accordingly.

   6. HSHarry Stebbings23:27

      Would you have different attribution then according to what different companies that you work with? Or is it always, "We're revenue." What's that?

   7. CPChad Peets23:33

      Yeah, it, it, it can be. You got to look at the business, right? Like, let's say you look at a business and say, "Okay, our land motion is really good. We're landing..." I'm making these numbers up. "We're landing, the average land sales cycle is four months. We're landing at 75 th- 75K." Okay? That's a good land motion. I'm happy with that. Now my expand motion is taking 12 months and I'm expanding from 75 and I'm getting an expansion of 50. That's not good. The sales cycle for the expand is too long and the dollar assigned to the expand is not high enough. I can start to pull different levers in the comp plant. So I can say, "Hey, Mr. Sales Rep, I'm gonna pay you 10% on the land. I'm gonna pay you 12% on the expand."And just by doing that, I'm gonna get a lot more focus on the expand because I

7. 24:21 – 27:01

   How Big Should ACV Be to Justify a Sales Motion

   1. CPChad Peets24:21

      pulled that lever.

   2. HSHarry Stebbings24:22

      How big an ACV do you think you have to have to have a proper sales motion to justify it? So my biggest worry today is you see a lot of SaaS companies have 10K ACVs and actually, Jesus, when you have SDRs, AEs, customer success, for a 10K ACV that has a variability on expansion, it's not enough.

   3. CPChad Peets24:43

      Yeah, that's a pro- um, so, so first of all, you have to decide, am I an inside sales organization or an outside sales organization, or both?

   4. HSHarry Stebbings24:50

      Hmm.

   5. CPChad Peets24:51

      Hopefully both, right? You really wanna get both because if you have both then you can get the velocity business and you can get the enterprise business, and, and you want both. So if you look at a 10K ACV, well that's definitely not a field sales rep, right?

   6. HSHarry Stebbings25:04

      Nope.

   7. CPChad Peets25:04

      If, if I'm a 10K ACV then I'm, I'm exclusively inside sales, and I better be able to keep the cost of sale low. Otherwise, to your point, I can't justify it. The unit economics don't work.

   8. HSHarry Stebbings25:15

      Mm-hmm.

   9. CPChad Peets25:16

      And so, and, and then you have to decide, okay, where do I draw the line between inside sales and outside sales? Let's just say you're happy with a 20K deal in the inside sales. What number are you happy with in the outside sales? And, and as sort of a rough benchmark you wanna be able to get a 3X. So there's productivity numbers, right? Like productivity is how we measure everything. But as sort of a rule of thumb, my reps should be able to generate three times their OTE. So if your OTE is 300, rough numbers, you should be able to get 900K in productivity.

   10. HSHarry Stebbings25:46

       How often do you get that?

   11. CPChad Peets25:48

       Well you better get it or you're not scaling. So, if you have a field sales organization, and you have 10 reps, and the productivity is 600 grand, you better not be hiring. You need to g- you need to get that productivity, and until such time as either you get that productivity up or at least can look at the data and see that it's trending in that direction, and you trust that data, you can hire ahead of getting the productivity number, but you better trust the data.

   12. HSHarry Stebbings26:14

       How do you think about ramp time? When we think about getting to that 3X OTE, uh, a lot of people say, "Well, it's enterprise sales. Like, it's, it's very long sales cycles. The ramp time's tough." How do you think about that?

   13. CPChad Peets26:25

       I mean, look, where I want to see it, um, is six months, for, for an enterprise seller. So y- there's ramp times for inside, ramp time for outside. Inside I'd like to see 90 days, outside, six months. Reality is, it probably trends more towards nine months, uh, in enterprise. Then you have to start peeling back the layers of the onion. Why does it ta- Are the sales cycles that long? Maybe the sale cycle is only four months, okay then why is the ramp time nine months? Right? Is it an enablement problem? Is it a product problem, right? Or is it just the nature of the business and there's nothing we can do about it? But ideally, you want it to

8. 27:01 – 29:57

   Are Founders Hiring Sales Enablement Early Enough?

   1. CPChad Peets27:01

      be at six months.

   2. HSHarry Stebbings27:02

      Do you think people hire, or founders specifically hire sales enablement early enough? And I'm intrigued, what do you think are the biggest mistakes you see founders make with enablement?

   3. CPChad Peets27:10

      So first of all, it should be the CRO's decision, not the founder's. Um, (clears throat) the CRO, if it's 10 reps, you can handle it, right? Like, the CRO can be doing it. The problem is as you start to scale, it needs to become programmatic, right?

   4. HSHarry Stebbings27:25

      Mm-hmm.

   5. CPChad Peets27:25

      And, uh, and when it becomes programmatic, your CRO can't do it. He's got other things he needs to be doing. So at 10 reps, do you need an enablement person? Probably not. And each c- each circumstance clearly is unique, but at 30 to 40, yeah, you better start to think about it. And so you want the messaging and the, the program to be rolled out uniformly, right? "I don't want managers doing their own thing." So, the managers have to execute on the enablement, but they have to execute on the enablement plan that the enablement person has created. They cannot go off willy-nilly and do their own enablement, and you will see that from time to time.

   6. HSHarry Stebbings27:59

      You said about kind of incentivizing expansions. Uh, it made me think of a conversation I had with Chris before when we spoke about CS, uh, customer success. Uh, often customer success are, uh, attributed or given the role of expansions and making sure the customers expand as they would want to.

   7. CPChad Peets28:15

      Customer success is hard. I, I don't know that I can look at any one company and say they've nailed customer success. You know, uh, as Chris, I'm sure, told you, they don't believe in customer success. They don't have a customer success organization at Snowflake, or at least they didn't. Maybe they've created one now, but they didn't. The feeling was everybody's in customer success. Uh, you g- do, do you agree with that?

   8. HSHarry Stebbings28:34

      They already are.

   9. CPChad Peets28:35

      Look, Snowflake ha- has a world-class product. I mean, it, it was, in the early days, it was crazy, like people would buy a 15K land deal and they'd expand to 150 in six months, right? So when you have product like that that just expands on its own, you can get away with less customer success. I've not seen that since Snowflake. I, I, I haven't. So do I believe in customer success? I do, right? Now, how do you roll that out? That, that's, that's an open debate, right? But, but do I think you should, the, the, what I don't agree with is the rep does the land deal and walks away, and the, the customer success rep is responsible for expansion. Expansion is sales, right? But the customer success rep high level needs to make sure, okay, number one, is the product being implemented, okay? Have they, have they got the product in? Number two, are they using the product, and are they, are they hitting their utilization rates? Are they exceeding those utilization rates? Are they getting the value? Is your champion getting the value out of the product that he or she thought they would be getting? Are they gonna continue to be a champion for you internally and go talk to other departments so that they come back and buy your stuff? Customer success needs to be managing all that. The salesperson is working, should be working like this with customer success. They should be hand-in-hand. You don't always see it that way, but that's the way it should be,

9. 29:57 – 31:32

   Common Mistakes in the Sales & CS Relationship

   1. CPChad Peets29:57

      in my opinion.

   2. HSHarry Stebbings29:57

      When you see founders today and when you work with companies today, what are the biggest mistakes you see in terms of that relationship between sales and customer success?

   3. CPChad Peets30:05

      Well, uh, you, you kinda hit on one. One of them is just, like, look, let the rep do the land, and customer success is responsible at that point. That just also drives really shitty behavior from the rep because the rep is just not focused on the customer journey.... the rep is focused on getting a deal done and walking away. You do not want that, because then you can get overbooked deals. I can go into an account and think, "Well..." Let's just say you're on a consumption model. I think that these guys probably need to consume $50,000 in credits over the next 12 months. But I'm paid off of bookings, right? Not consumption, I'm paid off of bookings. So maybe they're only gonna consume 50, but I think I can get them to commit to 100. Can't fault the sales guy, he wants to get paid, so he's gonna go book a $100,000 deal, and then a year from now you're in deep shit 'cause you booked 100,000, they- they've consumed 50, and now the account's at risk, you're gonna have churn problems. You're certainly not expanding, right? And so that behavior has got to be worked out of the rep so that the rep understands, look, you've done the land deal. That's, that's the beginning of the journey for you. The big payout for you is on the expand deal and the further expansions, right? So first and foremost, you need to get the sales rep thinking about the entire customer journey, not just booking a deal and walking away, which is very different than how software sales has been historically, right? When you were selling license deals, you walked in, did the deal, and walked away. The... It's completely different now.

10. 31:32 – 34:46

    Key Lessons from Building Snowflake's Sales Team

    1. CPChad Peets31:32

    2. HSHarry Stebbings31:32

       Completely is different. We mentioned there about kind of Chris, Snowflake, uh, their not agreeing with CS. I- I'm just interested because when I spoke to Chris beforehand, he said that you were essentially core to hiring really the entire sales team for the first five years at Snowflake. I just wanna dive into that, because you mentioned before about the velocity that you had. What are some of your biggest lessons on what worked first?

    3. CPChad Peets31:55

       First of all, we talked about being willing to have conflict. Um, (laughs) there's going to be conflicts, um, because each manager is gonna have his or her own ideas about the profile and about the process, right? Well, they don't get to have that. If you're gonna go hire a world... build a world-class sales machine at scale and quickly, it has to be a well-oiled machine. And what that means is we have a process, we don't deviate from that process. So I'll give you an example. Sales rep. Sales rep has, call it four interviews, okay? So sometimes you'll get, "Okay, Mr. Hiring Manager, you interview the rep." Binary. You either want to hire him or you don't. Oftentimes, "Well, I'm not sure, so I'm gonna have him go talk to three of my peers." Nope. If you can't make a decision on whether or not you want to hire a rep... Let's just say you get two interviews. First one's for selling, second one's for qualifying. If you can't make a decision on whether or not to hire somebody after two hours with them, you're the problem. Not the candidate, it's you. So it's binary. Then he goes to the next step of the process. Binary, moving forward or not. Next step, binary, moving forward or not. And you do not deviate from that process, first and foremost. So oftentimes you'll have a hiring manager say, "Hey, I really... I like this guy. Um, I wanna bring in a sales engineer to get his opinion." Nope. "Well, he's gonna be working with the sales engineer." I don't care. If you're going to be in my interview process, you are either uniquely qualified to qualify or you are uniquely qualified to sell. If you are not one of those two things, you are not getting into the interview process. And so you'll see companies everywhere, they're like, "We want the person from HR. I got this engineer." What do those people know about hiring salespeople?

    4. HSHarry Stebbings33:46

       Are different people not qualified differently to qualify different skills?

    5. CPChad Peets33:51

       No.

    6. HSHarry Stebbings33:52

       Because I-

    7. CPChad Peets33:53

       What's an engineer know about qualifying a salesperson? What you're gonna go to is culture. "Well, we wanna see if it's a culture fit." Nope. Cause here's the problem you have, okay? So you bring the engineer in. Number one, it slows the process down, okay? Number two, there's risk. I don't know what this engineer's gonna say to the sales guy. We're recruiting. He could say something about the product that he shouldn't say and it scares the shit out of the rep, okay? There's... So there's risk there. Three, say the engineer... You... The, the, the, the rep candidate interviews with four managers. They all wanna hire him. The engineer is like, "I do not wanna hire him." Now what are you gonna do? You're fucking hiring him, is what you're doing, but you've just pissed your engineer off. "Well, I don't think you should hire him." "Well, we're gonna hire him anyway." "Well, I don't agree with that." Now you got friction in the organization. Or, are you gonna say, "Okay, well, us four sales leaders like him, but this one engineer knows better than us four sales leaders about hiring a salesperson"?

11. 34:46 – 39:30

    Hire Fast & Fire Fast?

    1. CPChad Peets34:46

       I don't think so.

    2. HSHarry Stebbings34:46

       You mentioned speed there. Do you agree with hire fast, fire fast, and how important is speed?

    3. CPChad Peets34:50

       100%. You have to hire fast. I- if you're gonna go scale, you have to hire fast. But the key is understanding the profile, having somebody on the front end, which w- in my earlier days was me. This is the profile. I'm not deviating from it. Back to the conflict thing I said. So let's just say you hire, hire a new VP of the East, right? And he has his background, or she, and he's got five people he wants to bring with him, which is a good thing because we need to hire. But he has these five people and they don't meet my profile. If I'm not on the front end, or somebody like me isn't on the front end to support Chris and be Chris's eyes and ears, then this VP, because Chris is now running a 400-person organization, he's not interviewing every candidate, he doesn't have the cycles to, this VP is gonna go hire five reps that we know don't match our profile. Now, who knows more about which profile works? A VP that we've just hired that's never sold a product, doesn't know anything about it, or Chris and I, who have built the entire sales organization? Well, I would argue Chris and I know the profile better than this person, but this person wants to bring in his five buddies that don't match the profile. "I'm sorry, Mr. New VP, not happening." And I've had many of these conversations, and they're not popular. But Chris empowered me.

    4. HSHarry Stebbings36:11

       Does the profile vary depending on geography, uh, client type, ACV size?

    5. CPChad Peets36:18

       Sure, slightly, but I mean, there's just still the core things you're looking for, right? So think about what's the job I'm hiring you to do? "Okay, well, sell software." Okay, it's more nuanced than that, okay? So not to pick on Oracle, but I'm gonna pick on Oracle. A rep's at Oracle right now. He's selling software, right? He's selling software.... that's what he's gonna say. And I'm gonna say, "Okay, are you doing pipeline generation?" "Yeah! I'm selling our new X product into all these Oracle accounts that have never bought X product. I'm, I'm hunting for new logos." No, you're not. You're going into install-based accounts, selling a product into them, probably just convincing them to do a wrap and roll saying, "Hey, if you buy this product, I'll discount the shit out of your existing license to buy this product from me." Now, take that versus you're gonna go work for Snowflake, a 10 million, that's a 10 million dollar ACV company. Nobody gives a shit about a cloud data warehouse. Nobody's ever heard of Snowflake, and I'm gonna take that rep and give him 25 accounts and say, "Go convince those accounts to move all of their data from on prem to a company called Snowflake they've never heard of." Those are two very different jobs.

    6. HSHarry Stebbings37:22

       Should AEs be responsible for demand gen?

    7. CPChad Peets37:24

       They should get some support. Now, if, if I ever ... But it's, it's, it's a gray area. Okay? They should get some support, but if I ever hear that a rep says, "Well, why aren't you hitting your number?" "Well, I'm not getting any leads!" You ain't gonna make it.

    8. HSHarry Stebbings37:39

       (laughs) .

    9. CPChad Peets37:39

       So yes, they are ultimately responsible for their own lead generation, but they should be supplemented.

    10. HSHarry Stebbings37:45

        How quickly do you know when you've made a mis-hire?

    11. CPChad Peets37:48

        I mean, like, I had somebody not long ago say, "Look, we hired a rep. It's been three weeks." And I'm like, "Okay, look. If you're gonna make a decision after three weeks, there needs to be an HR issue, um, substance abuse issue, the person is not showing up for work, right? It's gotta be super obvious to hire, to fire that quickly." If you're starting to see signs, well, hey, look. You committed to the person. Y- it's your hire. It's your job to make them successful. So if you're seeing worrying signs, fix them. I don't wanna give you a, a, a timeline, right? But when you get to the point of, okay, it's time to change this person out, it's because you've done everything you know you can do to make the person successful and they're still not getting there. And you can look at the account list, 'cause there are times when you hire good reps into shitty accounts. So you also have to be honest and say, "Okay, is this just the patch or is this the individual?" And a good manager knows this stuff, right? So it's the point in time where you say, "I've done everything I can do to make this rep successful. There's no extraneous circumstances which would be causing him or her to fail. It's time to make a move." The other option is, you have a rep that's been doing well and now they're not doing well. Right? Sometimes, agai- especially at startups, it's a grind being a rep at a startup. You may just lose the will to do it. You know? And so in three years, what happens is, you start to see behavioral changes. Rep's not showing up in every call. I'm looking at the pipeline, his pipeline is light. I'm measuring his number of new business meetings. Those are starting to drop off, right? So I'm looking at the data saying, "Something is happening here." What's happening?

12. 39:30 – 45:26

    Why Do Top Reps Turn into Non-Performers

    1. CPChad Peets39:30

    2. HSHarry Stebbings39:30

       What is the biggest reason why a previously well-performing rep turns into a non-performing rep?

    3. CPChad Peets39:36

       There's a lot of factors, but, uh, some of it is just, well, uh, they get tired. Look, it is ... I had this deb- (laughs) I had this debate with one of our CEOs, um, not long ago, and he said, "Look, I want my reps ... Sales reps should love their jobs. They should enjoy their day jobs." And I said, "I don't ... That's not possible. They can love working for us," and they should. They should love their CRO. I respect my CRO. My CRO is invested in me. He's developing me. I'm winning! Right? Big thing, I'm winning. You're making me successful. So I may not love every aspect of my day job, but I love working for you for all of those reasons. But do I like getting on the phone and making cold calls three days a week and doing pipeline generation? No, I do not. Having a rep that loves his day job is, is very difficult in our environment because nobody likes doing pipeline generation. It's not fun. It's a grind. And so what can happen over time is reps wear out. And what you'll see after, what can happen is, "Okay, I've been at a startup for three years and I'm worn out." And then what do they do? They don't go to another startup. They go to a big company. "I'm worn out. I don't wanna do this shit anymore." It comes back to reading resumes. "Hey, you were at this startup company and you did really well and then you went to IBM," to use an extreme example. "You went to IBM for five years. We're never talking. I'm never recruiting you. Not because you're not a good rep, because by that move, I know what I need to know. You're done with s- you don't wanna do the heavy lifting anymore. Totally fine, but you don't fit into one of my companies."

    4. HSHarry Stebbings41:11

       Are there any other core elements that you absolutely nailed with Snowflake that enabled the velocity, the scaling of that sales machine that we haven't touched on?

    5. CPChad Peets41:20

       You have to get every single person aligned on messaging. Okay? Every person has their own different way of recruiting. But the messaging about the company has to be spot on and uniform. So like when I was at Snowflake, they asked me a couple times to come up there and record videos of my Snowflake pitch, specifically around the equity. Chris and I would set up calls frequently with all of his managers because the, the, the data was changing, which meant the pitch kept changing, right? And so my job was to make sure that every leader, everybody in the interview process had the right messaging down. This is how we sell this shit, and you need to be selling it the right way. If you get managers saying different things and selling it differently as the reps are going through the process, what happens? You lose credibility. "Hey, this manager said this, this manager said this." What the fuck? Now I just don't believe anything you guys are saying. So you gotta get the, you gotta nail the messaging and it's gotta be uniform.

    6. HSHarry Stebbings42:17

       On the flip side, what did you not do well? Like when you look back now, you're like, "Okay, we nailed the consistency of messaging. We nailed the process." What are you like, "Oof, with the benefit of hindsight, would do that differently"?

    7. CPChad Peets42:29

       There were times when we were scaling faster where I could have ra- where we could have probably raised the bar higher.... um, in the early days-

    8. HSHarry Stebbings42:38

       Is filling a seat today better than waiting for the perfect candidate tomorrow?

    9. CPChad Peets42:42

       That's a balance. So look, like I know there are many hiring managers out there, CROs in fact, that will say, "I have a, a checklist of 10 things. I'm gonna look for the candidate that checks all 10." They will go do 100 interviews, and in nine months, not fill the position. They'll get desperate and they'll bring in a guy because he has a pulse that checks two out of the 10.

    10. HSHarry Stebbings43:04

        Mm-hmm.

    11. CPChad Peets43:04

        I've seen it a lot. And so to answer that question, it's a balancing act. It's about... But when you're hiring at scale, you have to hire, because if you can't hire, next year's forecast, not this year's, but next year's forecast is shot. Now you're going to the board saying, "I gotta lower the number. I know we raised off of doing 200 next year. I get it. I'm sorry, I can't hit 200 because I'm 50 heads behind because I can't hire." Lower the forecast, which usually means the CRO is getting shot. It's balance to answer your question. But, but not hiring and missing recruiting is, is not an option.

    12. HSHarry Stebbings43:36

        What have been your biggest mistakes in recruiting? I heard you were the best in the world at sales recruiting. That's, that's something from Spicer.

    13. CPChad Peets43:44

        I am not afraid of conflict. I don't like it. My wife ha- I thi- I think thinks I like it, but I don't like it.

    14. HSHarry Stebbings43:50

        (laughs)

    15. CPChad Peets43:50

        I'm willing to have it, um, to get to the right outcome. Having said that, uh, I need to work on my diplomacy. As Mike has said to me, "Look, you're, you're all about saving time and being effective when you deliver messaging," which is correct. If I have something to say, I'm going to say it. I probably could say it in other kinder, softer, gentler ways than the way I say it, which would be more effective in the long term than just saying what I have to say and getting it out there. Um, and so my approach, and I do think I've gotten better at this, but I still need, I still need to work on it, um, my approach in terms of how I communicate and being more diplomatic, I would have done a better job with that in, in, in the past, and hopefully will do a better job going forward.

    16. HSHarry Stebbings44:29

        Everyone wants to work at a hot company. Snowflake's a sexy company, uh, in many respects, and when it was growing super fast as a startup it was. How do you detect the company, the people who just wanna sit on the rocket ship because it's a rocket ship? And is that bad?

    17. CPChad Peets44:44

        No, um, I'm sure we hired a lot of people like that at Snowflake. But again, it comes back to when you're interviewing, what are you looking for, right? Like, are you looking to be developed, right? What, what is your motivation for wanting to come here? "Well, it's the hottest thing out there." Okay, I get it. But is that it? Is that all you're looking for? Right? Are you looking for career progression? Are you looking for development? Or you just wanna be a part of something hot? So no, I don't think it's bad. Um, look at, look at Databricks, right? Like Databricks is hiring lots of people, some might argue too many people. Um, I, I, I... We'll see how that plays out, but, um, a lot of people are just going to Databricks because it's a hot company, or so they

13. 45:26 – 53:17

    What Makes a Great Sales Rep

    1. CPChad Peets45:26

       think.

    2. HSHarry Stebbings45:26

       What makes a great sales rep today, and has it changed over time?

    3. CPChad Peets45:30

       I don't think so. I don't think it's changed. I mean, it's been... It's... What's h- What has happened is it's become harder to find, um, because-

    4. HSHarry Stebbings45:37

       Wh- Why has it become harder to find?

    5. CPChad Peets45:38

       Because our world has changed. Um, it... You know, sometimes I f- I, I feel like I don't have a place in, in this, just to be honest. I'm not sure I fit into the world going forward. But like, look, like I-

    6. HSHarry Stebbings45:49

       Well, w- why? Wh- wh- why?

    7. CPChad Peets45:50

       Like, like we talked about earlier, right, like you have to care and be willing to sacrifice to do exceptional things, to be exceptional. And, and what I find today is people are not willing to do that. They, they... "Hey, what, what's the culture like?" Well, what does that mean to you? Culture to me is, I wanna go to a place where we're gonna win. I wanna go to a place with a world-class sales organization to say I'm a part of something special. I wanna go to a place that develops in making me better. I wanna go to a place that believes in meritocracy. That's a great culture to me. You ask other people to define great culture. "Well, tell me about, um, how you guys view paternity. How much time do I get off with my wife as kids? Tell me about your benefits. Do you guys... Do I have to be in the office? Um, you know, I like to be home at 4 o'clock in the, uh, uh, in the afternoon so I can be with my wife and kids." Okay. That's fi- Uh, okay. That's the world we live in today. That's not me, and it will never be me. And I will not hire people like that.

    8. HSHarry Stebbings46:45

       Can you be a truly great s- sales leader and have balance?

    9. CPChad Peets46:49

       Yeah, for sure. All of us have balance. Every CRO I know that's world class has, has wife and kids. But how do you define balance?

    10. HSHarry Stebbings46:56

        Well, Chad, you don't have balance.

    11. CPChad Peets46:58

        I, I don't have balance. No. Uh, fair. But I have a wi-

    12. HSHarry Stebbings47:01

        (laughs)

    13. CPChad Peets47:02

        I have kids. I'm a great father. My, my wife will tell you, everybody, I'm a great father. My kids love me. I'm there for my kids when they need to be there for my kids. But I... People sometimes define being a great father or husband as the, the, the quantity of time with your family. I define it as the quality of time with my family. When I'm with my family, I'm with my family. Other people say, "Well, I need to spend X amount of hours with my family," but they're not really present. They're doing other shit. I prioritize quality over quantity.

    14. HSHarry Stebbings47:27

        So d- Is what you're saying there are much fewer salespeople and talent that are willing to give the intensity, the competitiveness, the unwavering commitment that is required to be excellent?

    15. CPChad Peets47:40

        Absolutely.

    16. HSHarry Stebbings47:42

        How do we ca- I, I'm a founder that you're advising. How do I combat that as a coach?

    17. CPChad Peets47:46

        I, I, I, I hope somebody can solve it and tell me, because I, I don't know what it is. Recruiting today is harder, and again, I don't do it, but I manage my guys that do it, so I get all the feedback. Recruiting today is harder than it has ever been for the type of rep that we are looking for, for somebody that's willing to put the work in, that's looking for the development that we offer. A lot of reps today just don't give a shit. They just don't care, which is a concept I simply do not understand. If I'm gonna do something, I'm gonna go all in, and I wanna be the best in the world at it. A lot of these people just don't care.

    18. HSHarry Stebbings48:16

        So that's a problem. What are you doing to solve it? How are you changing-

    19. CPChad Peets48:21

        I... It ju- Nothing. I will not budge on the profile, right? Like, we will not bu- Like even some of our CROs, they're like, "Well, m- I wil- There are certain aspects of the profile that I will not budge on." And so what happens is it just-

    20. HSHarry Stebbings48:32

        What, what, what a- what aspects wouldn't you budge on?

    21. CPChad Peets48:34

        You, you've gotta be willing to put the work in, right? Like, you...

    22. HSHarry Stebbings48:37

        Would you, would you budge on remote?

    23. CPChad Peets48:39

        No, it depends on the function.So-

    24. HSHarry Stebbings48:42

        ... inside sales.

    25. CPChad Peets48:43

        ... inside sales, absolutely not. Somebody said to me the other day, they were building an inside sales team. And he said, "Look, we require inside salespeople to be in the office. My competitors don't, okay? So they're beating me when it comes to recruiting, because I'm calling reps saying, 'You have to be in the office five days a week.' Their recruiting rep's saying, 'No, no, no, you can work from home.' So I'm losing." I said, "The fuck you are. You're winning and you don't even know it." He said, "Well, what do you mean?" I said, "Well, let me explain to you. I'm going after salespeople that care about their career, okay? I want the best of the best that are willing to invest in themselves. Any inside salesperson should recognize that by being in the office, they are gonna get better faster, they're going to develop faster, they're going to be better at what they are doing faster. If a sales- inside salesperson is not willing to make the sacrifice of a 30-minute commute every day to further his own career, I don't want that person. So you go ahead and hire, you build your company with those people. I'm gonna build my company with the people that are willing to make the sacrifices to do something great. And I tell you what, I'm gonna kick your ass." That's how I feel.

    26. HSHarry Stebbings49:50

        I, I love you, Chad. No, I, I, I, A, one, I totally agree with you, but I also think there's, like, real information advantages that come from physical co-location, which is like, oh, you hear product talk about how, the new feature that they're building, you hear customer support talk about problems, you hear those customer conversations. It all feeds into a much more, to your point earlier, cross-functional organization which w- works together better.

    27. CPChad Peets50:12

        100%. So there's certain, um, functions, like a f- like an outside salesperson, you can't make them be in the office. I don't want them in the office. I want them in front of customers.

    28. HSHarry Stebbings50:21

        Is outbound dead?

    29. CPChad Peets50:22

        I don't think it's dead, but people are having to find new ways to do it. Like, what, what I'm being told, and again, I don't do it, but, but the feedback I get is emails, LinkedIn, simply doesn't work. It just, it, it, there's too much of it. So what I'm hearing is it's all, it's gotten back to old school, which was getting cell phone numbers and making phone calls. Which I don't think is terribly effective either, right? But it's, as I've b- as it's being shared from an SDR standpoint, that is more effective than just messages.

    30. HSHarry Stebbings50:49

        So I think content is the most important thing in the world today when it comes-
14. 53:17 – 1:02:23

    Mistakes Founders Make in Timing Enterprise Expansion

    1. CPChad Peets53:17

       by the product.

    2. HSHarry Stebbings53:18

       One of the biggest mistakes I find founders make that I invest in is they say too early, "We're gonna expand into enterprise." They say, "Oh, we're getting pulled in, we're getting pulled in," and I'm like, "You're 3 million in ARR. You don't need to be pulled anywhere." How do you think about timing of the expansion?

    3. CPChad Peets53:33

       So when we build companies, we al- let's, let's go back to Snowflake. We start in mid-market, right? Because why? 'Cause I want to take a very small I- set of accounts, typically smaller accounts because their demands are less, and I want to nail it, I want to build a product to make them happy, right? So like we have, um, another one of my companies, Sigma, people say, "Well, it's a mid-market company." It's not a mid-market company, it's an enterprise. We started in mid-market by design, because you want to have some set of customers that you can make very happy, and that's always gonna be smaller accounts first. As you're making those customers happy, you're learning, as we talked about earlier, about what it takes to make the enterprise happy, and you're building that product out. So eventually, yes, you will move upstream to the enterprise. But oftentimes, to your point, 10 million, I don't, you know, you can't pick a metric and say that's the metric. It's a feel for what you're getting from the customers to understand when the product is ready. But yeah, you'll see customers, excuse me, companies go to the enterprise way too fast, right? And any company, Wiz is the only one I've seen do it successfully, um, where they started in the enterprise, right? But typically, you want to start mid-market, which buys you time to build the product and feature set to go to the enterprise at some later date.

    4. HSHarry Stebbings54:47

       Do you agree with the common statement that your smallest customers will most often be your most painful?

    5. CPChad Peets54:51

       ... the wrong customers can be your most painful, right? Like, it's not the size of the customer, it's the wrong customer. If we, if, if you're trying to keep a customer happy that ultimately isn't a good fit, and I don't like churn any more than anybody, but sometimes you have to look at certain customers and say, "It's better that we churn this, churn the account. We can't keep them happy. We're committing too many resources to keep this small one happy."

    6. HSHarry Stebbings55:15

       Gross revenue retention or net revenue retention? I always have this conversation with -two different metrics that measure two different things. Which one do you think founders should focus on more? Everyone talks about NRR.

    7. CPChad Peets55:25

       I don't think one is more important than the other. They just have to look, they measure different things. Gross retention tells me if people like my product, right? Like, uh, I understand if my gross retention is 90%, I, I, I, I probably have a pretty good product, right? If my gross retention slips down to 70%, I have a product problem. Net dollar retention is about expanding. So you can have high gross retention and a low NDR. That doesn't necessarily mean you have a product problem. It means you might have a go-to-market problem. You might have a customer success problem. There could be product attributes that contribute to it, right? But NDR, the GRR measures to me is really about product. NDR is, yes, it's product related, but it also ties in a bunch of other things. So I wouldn't say one is more important than the other. But I will say this, if you have a low gross retention number, by the way, by definition, you're gonna have a low net dollar retention number, right? But if you have a low gross retention problem, you got problems. You can have a high gross retention and a low NDR, and yes, you need to address it, but it doesn't mean you're in deep shit. But if your GRR starts to slip, you got problems.

    8. HSHarry Stebbings56:31

       If your GRR starts to slip and the company starts to not do as well, it's tough to have that morale that's still in good shape.

    9. CPChad Peets56:38

       It's, it's a problem. Churn is bad.

    10. HSHarry Stebbings56:41

        Yeah, how do you- how do you advise sales leaders on how to keep a sales team together when you are in a really shit patch and there's not momentum and it's just shit?

    11. CPChad Peets56:50

        I mean, it's tough. And, and the people that are gonna see it first are the sales engineers.

    12. HSHarry Stebbings56:55

        Yeah.

    13. CPChad Peets56:56

        Sales engineers are gonna... And so what'll happen is your SEs will start to depart before your reps. And when your SEs start to depart, the reps know that the SEs know more than the reps know about the product, right? So you'll see SEs start to depart and the reps will start to follow. And so again, it comes back to we talk about operating in silos. So if I'm a sales rep and I'm like, "Hey, we're losing accounts because our, we, we said we were gonna..." Why do you lose accounts, right? So why do you have, why do you have churn? Lots of different reasons, but you can have churn because we said we were gonna deliver something and we didn't deliver it. They bought the product, we committed, we didn't live up to that commitment. One. Two, product just isn't working. That's another problem. Three, they're not getting the value out of the product they thought they would, right? And so as a sales rep, you're taking this information, you're feeding it back to the product organization. If the product organization is going like this, your reps ain't gonna stay. If the product organization is saying, "We got it, we hear you. Here's our plan to solve for that. We will deliver on this plan over this timeframe." And then they actually deliver on it, then, then you can hold the sales organization together. But if they don't, you got a problem. Because the salesperson feels like, "I can't win. I go into these accounts, I can't win. I'm doing everything I'm supposed to do. You've sent me into a gunfight with a switchblade. I, I'm doing my job. Help me, arm me. And you're not arming me. You're telling me that I should win with my switchblade. Or more, more to the point, you're telling me I have a gun and it looks like a switchblade." I'm like, "No, I have a switchblade."

    14. HSHarry Stebbings58:23

        I think the challenge I often see is I think CEOs set forecasts or set revenue goals, which are well above the expectations or beliefs of the CRO-

    15. CPChad Peets58:31

        Oh.

    16. HSHarry Stebbings58:32

        ... and it sets everyone up for failure.

    17. CPChad Peets58:34

        I mean, here's the most common thing, right? CEO says, "Okay, I gotta go raise a round. I wanna raise a round this valuation. To get to this valuation forecast needs to look like this next year." Guess what, Mr. CRO? Here's your forecast for next year. The right CRO... Now, our companies are different. This cannot happen in our company. This... We will not allow for this, right? So Sutter Hill Company CEO says, "Here's a forecast for next year." We say, "Great." Chad Peetz, John McMahon, your CRO are agree- are, are in agreement with this, right? 'Cause if they're not, that's not the forecast. So there is alignment. We do not do this. This is a mistake we will not allow for at Sutter Hill. Outside of Sutter Hill, CEO says, "I gotta go do this." And there are companies you and I both know where this has happened. The CEO, the CRO either has to say, "Hold on, I am not committing to that," like he says... Or productivity number, right? Like, the C- the CEO will say, "Productivity this year was at 750. Next year it's going to 950." Oh, is it? How is our productivity per rep going to magically go up by 200 grand? Oh, it just is. You can't have that, right? But those are the different things they do to justify the higher forecast to get the round of funding. It's tail wagging dog. The business should dictate the forecast, not some arbitrary number that we need to raise a round of funding. But that is what happens. And so back to the point, CEO says to CRO, "Here's your forecast for next year." CEO's gonna, CRO's got a decision. You either stand up for it right there, or you accept the fact you're getting fired in nine months 'cause you know you're not hitting that number. And I promise you, they're gonna blame you. And this happens a lot.

    18. HSHarry Stebbings1:00:11

        (laughs) How many do you think stand up at the time and say, "No, I can't hit that number."

    19. CPChad Peets1:00:14

        Not enough. Not enough. Because they wanna keep their job. And it's like, "Look, I'll do everything I can," this, that, and the other. But, like, they know. The same thing with hiring. Like, I got 100 reps. They just told me I gotta go to 200 reps. I can look at the data and say, "We're not ready to go to 200 reps." CEO says, "In order to get to the forecast, we gotta go to 200 reps."

    20. HSHarry Stebbings1:00:32

        What is the biggest way that people fuck up onboarding? You know, I had the head of SDRs from Rippling on the show. She's hired 350 SDRs in, like, a year or two month- or two years.

    21. CPChad Peets1:00:43

        That's amazing.

    22. HSHarry Stebbings1:00:43

        That's a lot. Yeah, I mean, no, I'm... Credit to her. I'm saying that with compliments, but it's like, I'm thinking about the onboarding. Fuck.

    23. CPChad Peets1:00:50

        It's gotta be programmatic and you gotta, you gotta dedicate resources to it, right? I mean, too, too often...As we talked about, early stage, fine. But once you, once you're at scale like that, you have to have a programmatic approach, right? And you have to invest in it. There need to be classes. You need to bring them on site. It needs to be an ongoing process that take months, that you are an... Don't get greedy and try to put the rep into a position where you're expecting revenue before you should expect he or she to be enabled. Commit the time and resources and understand it's going to take this amount of time, this amount of resources to get our reps enabled. Do not take shortcuts.

    24. HSHarry Stebbings1:01:25

        People take shortcuts in discounting. Is that okay? How do you feel about discounting?

    25. CPChad Peets1:01:30

        You know, it, again, it varies on the stage of the company, right? Early stage company, look, we do... You'll do negative margin deals, right? (laughs) Like, we're gonna do this deal, but we're gonna lose money on the deal. But we need the referenceable account, and we'll make up for it later.

    26. HSHarry Stebbings1:01:43

        To what extent do referenceable accounts actually make a difference, like...

    27. CPChad Peets1:01:46

        Early, they make a big difference because again, you have an ICP where all of the accounts have very similar criteria. So if, if, if... To your point, if you're verticalized, which we all kind of are in the early stages, right? 'Cause we have such a narrow ICP, and you get some well-known account, and all these accounts talk to each other, and they respect each other, and you get a referenceable account, that's meaningful at that stage, right? Later on, it's less meaningful unless it's a really big account, and then it's more meaningful.

    28. HSHarry Stebbings1:02:14

        Chad, I could talk to you all day. Uh, I, I, kind of, knew that from, uh, the first moment when you said about Wall Street. Uh, but, uh, I, I, I wanna start, uh... Oh, sorry. I wanna

15. 1:02:23 – 1:07:52

    Quick-Fire Round

    1. HSHarry Stebbings1:02:23

       finish on a quick-fire round. So I say a short statement, you give me your immediate thoughts. Does that sound okay?

    2. CPChad Peets1:02:28

       Sure.

    3. HSHarry Stebbings1:02:28

       So what have you changed your mind on most in the last 12 months?

    4. CPChad Peets1:02:32

       That the world is changing, and I need to accept the fact that it's changing, and people may not come along with the way that I see, um, with, with, with what I think.

    5. HSHarry Stebbings1:02:40

       Can you not just keep going the way you are, just with the same network?

    6. CPChad Peets1:02:43

       I'm going to try. And then if... And, and if I get to a point where it's like the world doesn't wanna operate the way I wanna operate, I will likely retire.

    7. HSHarry Stebbings1:02:51

       You don't wanna change?

    8. CPChad Peets1:02:52

       I'm not gonna change, no. I mean, I, I... ƒ I have s-... I have... I will change certain things. I need to be more diplomatic. I, I, I'm good with... Look, the, the thing that keeps me coming to work every day is learning, right? That's, that's what turns me on. I wanna get better every day. I wanna work with people I can learn from every day. So that ended up... That's, kind of, changing, but there are certain things I will not change.

    9. HSHarry Stebbings1:03:13

       What's your biggest advice to someone starting a sales rep role tomorrow?

    10. CPChad Peets1:03:18

        Take the time to invest in your career. Reach out to people to learn. Learn as fast as you can and work as hard as you can, and you will become better than everybody else around you.

    11. HSHarry Stebbings1:03:29

        On the flip side, in terms of hierarchy, you've got a sales leader, um, Harry, and I call you up the night before I'm starting my first, like, role as a sales leader. What, what would you advise me, knowing all that you do now?

    12. CPChad Peets1:03:41

        Understand our business. So when you get here, you need to under... Before, because now you have people reporting to you that are looking to you to add value. Very difficult for you to add value until you understand our business. So get in front of customers, talk to salespeople, do whatever you have to do to learn our business as fast as you possibly can so that you can start adding value to the reps on your team as quickly as possible.

    13. HSHarry Stebbings1:04:02

        What's the biggest piece of BS advice that you often hear about sales?

    14. CPChad Peets1:04:06

        I get tired of hearing people say, "Look, salespeople are coin-operated." You know, I mean, and they are to a certain extent. They're predictable, which I like, right? But I, you know, I get tired of hearing, "All salespeople give a shit about is making money. They're mercenaries." This, that, and the other. Uh, I, I think that's bullshit, right? I think that's bullshit. I think the right salespeople do care about the company. They care about their careers. Yes, they want to make money, right? But I think the right salesperson is more than about just making money.

    15. HSHarry Stebbings1:04:30

        What makes Mike Spicer so special?

    16. CPChad Peets1:04:32

        (laughs)

    17. HSHarry Stebbings1:04:32

        What he's done is unparalleled.

    18. CPChad Peets1:04:36

        Uh, I mean, fuck, I could spend three hours on that. Um, look, I love Mike because Mike is always going to make the right decision. Always. Yes, he's a good human being. Yes, he's loyal and all that stuff. Mike is never gonna take the easy path, ever. He's always going to make the right decision, which may involve pain and doing difficult things. It doesn't matter, he's always gonna do it. He's also the only person I've ever seen or heard about that is a good stock picker. He understands markets. He can see things around corners, right? That, that most good stock pickers can, but he's also an operator. I've never seen anybody else that has both of those attributes.

    19. HSHarry Stebbings1:05:13

        I love that, uh, and so many things. Uh, tell me, what's the biggest mistake you see founders make in scaling to 10 million in ARR? In that first journey, what is the biggest mistake that you see founders that you work with make?

    20. CPChad Peets1:05:24

        Pure and simple. You hire the wrong CRO 'cause you have no idea what you're looking for. There's companies which you would know that I've consulted, and I've spoken to their CEOs, and I'm like, "What are you looking for in sales?" And they have no idea. And in order to make the right hire, you first have to know what you're looking for, and, and most of them don't even know what they're looking for. And the problem is they don't have people that they can reach out to tell them what to look for. I don't fault them for not knowing. The challenge is they don't have investors and board members that can tell them, "Hey, this is what you need to go hire to." And hiring the wrong CRO will kill you because then he or she's gonna go build out the sales organization that's gonna be the wrong sales organization, and it's gonna take you two years to figure it out, and then you are starting over.

    21. HSHarry Stebbings1:06:01

        Final one for you, Chad. What question are you not normally asked that you think you should be asked more?

    22. CPChad Peets1:06:07

        What's your biggest weakness?

    23. HSHarry Stebbings1:06:08

        You've never gotten that?

    24. CPChad Peets1:06:10

        I, I mean, it's, it's rare. People ask me... I, I get, like... Yeah, 'cause my story's pretty unique, right? Like, there's very few people that I... In fact, I think I'm the only person that's ever gone from being a recruiter into being a managing director at a venture firm and then starting his own venture rights. Not that, that it makes me better than anybody. It's just a unique path, right? Like, when I went to Sutter Hill and I was sitting at our partner meetings, there was one guy that didn't go to Harvard. That's me. There was one guy without an MBA. That's me. I'm the dipshit that went to USC. Um, so I get questions about the path, but I don't get that question enough, right? Like, what's your greatest weakness?

    25. HSHarry Stebbings1:06:42

        What is your greatest weakness?

    26. CPChad Peets1:06:43

        It's being patient. Um, you know, Mike has helped me a lot, right? Like, when I see what I deem to be an emergency, (laughs) and there's people that have called me to the floor on this, rightfully so. When I see something to be as an emergency, I'm fucking all over it. It's not, "Hey, let's take our time." Nope. This shit needs to be fixed right here, right now. And the reality is when you have 100 different fires, you have to learn to prioritize things, and every problem doesn't need to be dealt with today. Some of them can be put off for a period of time, and I have had to learn that lesson. And honestly, I, uh... Mike has helped me learn that lesson, and so... Because when you're constantly saying, "Fire, fire, fire, fire," and they are fires, but people are like, "Oh, my God, this motherfucker's calling me again? Dude, we just put a fire out. Can we hold on?" So that's, that's probably my biggest weakness, is just learning some patience.

    27. HSHarry Stebbings1:07:43

        Chad, listen, I absolutely love this. I knew when Degnan and Spicer said what they did, it would be a special one.

    28. CPChad Peets1:07:47

        I love those two guys.

    29. HSHarry Stebbings1:07:47

        But thank you so much for doing this, and I've so enjoyed it.

    30. CPChad Peets1:07:50

        Me too. Thank you so much. It was great to meet you.

Episode duration: 1:07:53