The Twenty Minute VCDan Fougere, CRO @Datadog: Why Discounting is Dangerous and Contract Sizes are Misleading | E1229
EVERY SPOKEN WORD
150 min read · 30,016 words- 0:00 – 0:56
Intro
- DFDan Fougere
We will have a legendary sales team, making life-changing money, being best in class, and having fun. You will learn more and become better at your job working on my team than you would have at any other team during that same amount of time. And you will never have to look for a job again because the halo of our success will be over your head for the rest of your career and people will seek you out. I said that to everybody in- on the team. That was my first day.
- HSHarry Stebbings
Ready to go? (upbeat music) Dan, I am so excited for this, dude. I've wanted to make this one happen for a while. I'm in awe of the Datadog journey and your role in it, so thank you so much for joining me today.
- DFDan Fougere
Man, I'm so happy to be here. Uh, longtime listener, first time caller. I have enjoyed your podcast for years and I'm fired up for today.
- HSHarry Stebbings
That is very, very kind of you, but I just spoke to Carlos at Harness
- 0:56 – 7:57
From Engineering to Sales
- HSHarry Stebbings
beforehand, and he said that I had to start with the mechanical engineering part. He said, "Why did you make the move from engineering to sales?"
- DFDan Fougere
Well, I ended up doing mechanical engineering, t- just engineering in general because I didn't have a lot of money growing up. I read a magazine in 1987 called US News & World Report. The five or seven top earning degrees all were engineering, and I was like, "I don't know any engineers." I was living... I grew up in New York City and my dad was a cop. We were living in the country at the time, very rural place. And so, uh, I seemed pretty good at math and science and I got into it. I love technology. I always admired Steve Jobs and Bill Gates, and those guys were kinda heroes from my childhood, and I got a, uh, a design job in Detroit using CAD/CAM software. And so I got pretty good at it, I went on to go work for the company and it was, turned out to be this company Parametric Technology Corporation, or PTC. And I went there for the technology, not realizing that they kind of possibly are the greatest sales team that's ever been put together. So this qualification methodology, MEDDIC, that everybody uses, it was invented there while I was there. Company was doing about 200 million a year, so they still had the DNA of a startup. And so I talked with them about just how they built an amazing qualification machine, uh, pipeline generation machine, sales process machine, and I just happened into that as an engineer.
- HSHarry Stebbings
How do you build a really, really good qualification machine?
- DFDan Fougere
You gotta expect that bullshit is there. You have to realize that human nature is such that you want to have the rose-colored glasses on, you wanna believe the deal is good, and you need to know that the opposite is probably true, and you've gotta look for the dirt and you've gotta build that into every time you're looking at a deal, you should be thinking about it. And now MEDDIC is a nice way to have a structure, a framework for this, versus some meandering conversation that may or may not get to the answer, right? So your metrics, your economic buy, your decision process, decision criteria, identify pain, champion, competition. That's the way I look at MEDDIC. And so in that way, I can have a conversation in possibly even 15 minutes, but m- max 30 minutes, and I'm gonna be able to qualify this deal, we're gonna be able to co- look for the- for the weaknesses and strengths, yes.
- HSHarry Stebbings
What questions do you ask to qualify the deal? Are there some standard ones which will get you to a conclusion more s- substantively than others?
- DFDan Fougere
Yeah. So, you know, the three whys in MEDDIC are: why should they do anything, why should it be Datadog or whatever, and why shou- why should it be now, right? And so asking those questions, this is some basic stuff but... And, you know, that's the thing about sales is it's not quantum physics. But we talked about discipline before, we talked about repeatability, and that's a big part of this, is just always doing the right thing even when there's so many excuses to not do it. And the same thing with asking the questions, same thing with MEDDIC. You know, what metrics do we have that pr- that build some kind of business case, even if it's a back of the napkin kind of thing? Like, why should they do it from a metrics perspective? Do we have any metrics from previous customers that we can use to tell a story there? Economic buyer, do we know who the economic buyer is? What I know from experience is it's probably one or two levels above whatever you think it is, whoever you think it is. So when the salesperson is engaged in the deal, they're gonna think that the person who's the technical user, that's probably their ch- th- their- their thinking that's their champion. That person's boss, who's really should be the target champion, that's who they think is the economic buyer, because it's just too hard to realize that the person who's gonna sign is actually multiple levels above where you've even engaged.
- HSHarry Stebbings
How do we build a relationship with that buyer who's multiple levels up from the technical user without being patronizing to that technical user?
- DFDan Fougere
Well, in an ideal world, you're gonna earn your way up, right? And so there's two different ways. And so the fact that I was at Medallia and Datadog back to back are two extremes. So at Datadog, we started with hands on keyboards, the practitioner, the person who's actually implementing the cloud. It was crazy, man, because everything that we were told, everything that I was ever taught and I taught, like start, come in high, get to power early. The reality is... So at Datadog, Amit, you've had Amit Agarwal on, right? Amit (clears throat) and I went on a bo- a series of dinners with Shardul Shah, uh, in early 2017 (clears throat) and we were... and it was all CIOs and CTOs, and we were so excited and we went to fancy restaurants and nobody cared about cloud monitoring. Nobody ca- th- everybody had just done (clears throat) big deals with AppDynamics and Splunk and Dynatrace and New Relic and they, and they said, "We already have the cloud f- handled. We just did a deal with AWS." So they didn't wanna talk to us at all. And I couldn't get them interested, Amit couldn't get 'em interested, Shardul couldn't get 'em interested. That's a lot of firepower.
- HSHarry Stebbings
Mm-hmm.
- DFDan Fougere
So it was almost like the nature of the s- the s- the s- the market cycle was such that we had to focus on the people who were actually...... tasked with implementing the cloud successfully. And so, we were selling to the people who were implementing. And the fact that Datadog actually worked, they could im- they could implement it, it told them things that nothing else could tell them. Then we built a groundswell from there. So, even ... We gotta leave your ego at the door and realize we're not talking to CIOs and CTOs. (clears throat) So, to answer your question, we didn't talk to them for a while. And so now, at Medallia, the, what we realized is we had to invent how to sell Medallia. That was before Datadog. People might know, not know about it. It was a $5 billion exit, which was pretty good back in the day when those were big exits, before Datadog and Snowflake and companies like that. (clears throat) But, you know, we realized that this is, we need them to change the way they're doing business, so we could only sell that product to the biggest companies in the world, and we could had this, we had the prospect forget about CTO, CIO. We had to s- I, we, my, I did first meetings with CEOs, COOs, CEO minus one at, like, companies like Verizon and Toys"R"Us and, you know, you name it, big companies. Capital One, Marriott. Because we needed to convince them that they needed to change the way they were doing business. So, two different answers to your question. One, at Medallia, we had to put together, um, a value prop and a pitch that spoke to the people actually running the company, and at Datadog, we had to earn our way up over time and just recognize we weren't gonna have the conversation with the CTO maybe for a year or two until it became a bigger
- 7:57 – 15:34
Why Urgency Matters in Product Sales
- DFDan Fougere
problem.
- HSHarry Stebbings
Going back to kind of the structure, you know, in terms of, like, intellectual honesty with ourselves-
- DFDan Fougere
Yeah.
- HSHarry Stebbings
... you said about kind of the why now? Why do they buy it now? Why do they benefit from it now?
- DFDan Fougere
Yeah.
- HSHarry Stebbings
It's very hard to say that you have to have Datadog right now. Otherwise, you're screwed-
- DFDan Fougere
So are-
- HSHarry Stebbings
... and next quarter will be devastating.
- DFDan Fougere
Yeah.
- HSHarry Stebbings
Everything can kind of be next quarter. How do you think about urgency?
- DFDan Fougere
Hmm. Well, kind of, but brilliant question, because that's where the action happens. That's where ... So to me, magical moments happen in sales, right? And so a magical moment is, I call you and you're like, "I hate salespeople. I don't wanna talk to you." And all of a sudden you're like, "Hmm. This is interesting. I'm glad this guy called. I'm, I'm learning, I'm thinking." Okay, that's a magical moment from a cold call. In a meeting, when somebody th- uh, has their arms crossed and they're, like, looking at their phone, and then they're like, "Wait a second. This is ... Maybe I should get my boss in this meeting." That's a magical moment. And another magical moment is, holy shit, we need this right now. And so, so for example, we were working on a deal at Capital One, who, they were the first ... This is early 2017. So early 2017, I started Datadog. We've got a very good business that, that the boys created before I got there, and that was small deals, credit card deals, month-to-month, minimal human interaction, all, mostly almost entirely software startups who were born in the cloud. And so part of one of the, uh, so one of the things I talk about is don't F up what's already there, and go build what isn't, right? And so I needed to build the enterprise, I needed to build channel, international, et cetera. And so the enterprise, there were really, in early 2017, this might be surprising to some people, is there really weren't any production applications in the cloud for the enterprise. (clears throat) And so Capital One, their CIO just made a big statement that he's going all cloud, and this is when people thought you couldn't do it because of security and everything. (smacks lips) And so we saw that one person bought $600 worth of Datadog, like $600 ARR, and I saw, I was th- and here's another reason to work in the, in the office, by the way. I was in the cafeteria, getting some food that I was about to eat at my desk and keep working, just like we all did, and I saw s- a couple sales engineers working hard, and I was like, "Hey, guys, what are you working on?" "Oh, we're working on Capital One." I was like, "Oh, wow." Um, "How much do they ... Is there a customer?" "Yeah." "How much do they have?" "$600." I was like, "What's that, two servers or something?" (laughs) And so, and then I was like, "Well, why are you guys working on a $600 deal?" And they're like, "Well, they have, they've just bought 20,000 servers from AWS," or something like that, "E- 13,000." I was like, "Okay, I'd like to work with you on that." So we start working on it, yada yada, you get to the place ... They're, they're actually on the verge of imp- of r- rolling out their first production application, and they need to instrument, th- they need to run all, get all the metrics set up. And they tried it with this other product, this, there was, called SignalFx. They tried it with AppDynamics, and they had a Linux update happen, and this is just us being, like, talking about being hands-on. Like, I'm not sitting at my desk, I'm not managing from, like, you know, from a, from a, from afar. I'm there with the guys. We're s- th- we're slacking, like, on a Sunday night, that the g- the engineer says, "Hey, guys, th- his dashboard has just went down with the other products, and he's got Datadog working. They're gonna release tomorrow with Datadog for their, for their QA." (smacks lips) So it's like, "Okay, boom. We got it." Now ... And we go, we go to DC the next morning and meet with those guys, and w- we write it all up, take screenshots, and now we are presenting it. So now, to get back to your question, how do we earn our way up? That's how you earn your way up. Like, when you're intimate with the business, you're figuring out what are their problems, and we're making sure the product's working, and when it does, we are singing it from the mountaintops. And so we're working our way up. So we kept working our way up to the next person and next person till we got a meeting, which I think may have been ... Olivier can tell you if it's true or not, but I think it was the first time he met certainly with an enterprise customer, and all of a sudden, that was our first enterprise deal, and it was for $1.4 million, and we had never had a deal like that before. And that was about six months in.
- HSHarry Stebbings
W- was Nigel Morris there?
- DFDan Fougere
Uh, I don't recall, uh, someone named Nigel Morris.
- HSHarry Stebbings
He was the founder. Um, he's this Welsh guy.
- DFDan Fougere
Oh, really?
- HSHarry Stebbings
Uh, we can take this out and he's a, he's a very old friend of mine and he with Ollie is an investor in the fund. (laughs) Uh-
- DFDan Fougere
Oh, get outta here. This is, like the Capital One?
- HSHarry Stebbings
Yeah, the founder of Capital One. Amazing dude.
- DFDan Fougere
Oh, I heard great things about him. Very data-driven guy, right?
- HSHarry Stebbings
Oh, fucking amazing. I love it.
- DFDan Fougere
Yeah.
- HSHarry Stebbings
One of the most humble guys in the world, really.
- DFDan Fougere
Yeah.
- HSHarry Stebbings
One of the best, the best. Um, that, that is amazing. I do just want to go back to the structure and the framework there and just be like, if you're honest, most sales reps are like screaming for pipeline, screaming for anyone to be a potential buyer today-
- DFDan Fougere
Yeah.
- HSHarry Stebbings
... if we're honest.
- DFDan Fougere
Mm-hmm.
- HSHarry Stebbings
If we're really cynical and take a very, um, granular view to qualification to look to weed people out, damn, I'm gonna have fucking no one and I'm gonna go to my sales leader and my pipe's gonna be pretty empty.
- DFDan Fougere
So a mistake I've seen, so I'm working with a few companies over the past couple years, they're trying to qualify in the beginning and you need to light them up with, like, excitement. You need to get them on the hook by getting them as excited about what you have as you are, right? And so there's gonna be some balance in the beginning of you, you're, you're, you think you're barking up the right tree at the very least because hey, it's Capital One, right? They buy a lot of stuff or whatever you know about the company you get, you have a hypothesis, you have some sort of, you can look, look on Crunchbase, you can look on TechCrunch, you can like do some research, um, get on GitHub, whatever you're gonna do to understand, "I have an idea, I have a hypothesis." And so when you reach out to the person, you talk, we're talking outbound, right? And so to be able to, and also, "I saw your video on YouTube, I saw what you wrote on Twitter." Like to me, you need to differentiate yourself, yourself by the way you show up and the way you show up is gonna be, "I've done research. I am coming in with value. I'm not coming in saying, 'We're a cloud monitoring product. We're based in New York City. We have 500 employees.'" Uh, don't do it. Don't even waste your time but like, "Saw on Twitter you're implementing Redis. We've, uh, our other customer, you know, something.com just implemented Redis. Here's the video. Here's his link on GitHub. Would love to help you and would love to see if this is interesting to you to see if we can help you guys have similar success." That's step one, right? Something like that. Next, two days later, "Hope you enjoyed that, uh, link about Redis. Also saw you're trying to implement Kafka. Here..." Or, or write, "Kubernetes, we've implemented Kubernetes ourselves. Here's, here's a link with some of the ins- and, uh, some of the dashboards our own people are using." Like, okay, do I have your attention? Like, I'm not some knucklehead just trying to like make, make some money. I'm trying to help you and I, I have done research and I'm, I've learned about you. This is some of the techniques that
- 15:34 – 19:58
Is Outbound Dead in 2024?
- DFDan Fougere
we use.
- HSHarry Stebbings
Do you think outbound still has a place in 2024? We are, I- I'm getting inundated by emails now.
- DFDan Fougere
Yeah.
- HSHarry Stebbings
I mean like, and they're all... And AI will make that worse. Do you think outbound still has a place?
- DFDan Fougere
It, the same conversation has been happening my entire career. And so my answer is, is yes. It's just, you just need to get better and find a way to become the signal amongst the noise, right? And-
- HSHarry Stebbings
Should, should AEs do their own outbound or should we fully give to SDRs?
- DFDan Fougere
Asking somebody else, so I c- I call it pipeline generation, PG. Asking somebody else to do PG for you is like asking them to go to the gym for you. Um, to, I think it creates a, I don't th- I don't think it creates the right culture to think that this is something that can be outsourced. Um, and so the way I look at it is PG is everybody's job. Um, and so whether you're a sales leader, AE, SDR, we're all constantly trying to get, we are in the deal creation business. And when I say, I said to you and I sent you an email, uh, that sales leaders should run to the front of the sales process, and I can guarantee almost, I, I think every time, every time I've talked to a company for the first time, I don't wanna lead the witness. So I don't wanna say, "Hey, what are you f- you know, are you focused on pipeline generation?" Because their answer will be, "Yes, of course." More, I'm gonna say, "Hey, c- what, what'd you do this week? Where, where, what meetings did you go on? What'd you do on Monday, Tuesday, Wednesday? What, what meetings with companies? What stage does this in the sales process?" I can start to see are they out in the field? Are they... And most, most of them, if they are doing any customer meetings, are in closing mode, they're trying to be the closer, and if you don't have enough pipeline and you have a really high close rate, you're not going to hit your number. But if you have a ton of pipeline and even if you have a lower close rate, you're gonna hit your number and probably a bunch of those deals are just gonna close next quarter anyway.
- HSHarry Stebbings
Okay. So I'm gonna pit you against your mate Degnan. Uh, Degnan said on the show to me, "Hey, if you have more than..." I think it was f- eight meetings a week, it may have been five. Five or eight. Um, "You're not gonna be doing well. Like, you need to do qualified research. It needs to be really well-informed. So if you're doing more than eight, you're not gonna show up well." Agree or disagree? And how do you think about that pipe versus quality?
- DFDan Fougere
I think he's got, yeah, I think he has a good point. I think it depends on the stage of the company, but generally speaking, I would agree with him that, eh, quality, you don't want to sacrifice quality for quantity. And so I'm not, I've never... I was basically the... So the other thing I'd say about instrumenting the business, and you sent me something about operational, and so when you think about being a sales leader, you've got kind of two sides, right? One side is the inspirational...... sales pro- sales leader who can get everybody fired up, who can convince a customer to win, or to do the deal. And then the other side is the metrics-based, data-driven, let's instrument the business the right way. And so part of instrumenting the business too is to distill down to the minimum number of metrics that you need to run the business because I don't want the salespeople spending all day in Salesforce. I wanna know just a few things. So the number of meetings that I tracked, to go to the nu- number of meetings, uh, topic, was always number of new business meetings. Meet... And e- so a number of opportunities added to the forecast. So I was not ever really managing the number of meetings per week. I wanna know, did you add a qualified opportunity to the forecast this week? And did you have new business meetings, which are basically discovery meetings and demos? And so I can know, like, at Datadog, when I left, it was one of each of those, a pipeli- a, a new pipeline opportunity that's got a specific definition and a new business meeting, uh, for enterprise, and two for S&B. And if I had those, I could te- I guarantee you, you're going to make your number this year, and you're gonna make more money than you ever made before, and you're probably gonna get promoted.
- HSHarry Stebbings
Mm-hmm.
- DFDan Fougere
Do those things. And so that was- those were the only number of meetings I managed too.
- 19:58 – 23:21
Giving Proper Weight to Small Accounts in PLG Strategies
- DFDan Fougere
- HSHarry Stebbings
My challenge is, in a world of PLG and just in a world of kind of try before you buy and more individual advocates, what started small can become very big.
- DFDan Fougere
Yeah.
- HSHarry Stebbings
As you saw with Capital One. But it's very easy to do what you said, which is 600 bucks, ah, who cares? And so how do you think about not diminishing importance from accounts because of their small entry point and giving justified weight-
- DFDan Fougere
Yeah.
- HSHarry Stebbings
... on what they can be?
- DFDan Fougere
Oh, man, such a good question. That's why you're so good at this. So, um, and we got a relaxed vibe going, so people wearing hats, sitting on couches.
- HSHarry Stebbings
(laughs)
- DFDan Fougere
So when we started the enterprise at Datadog in early 2017, as I mentioned, there were no big deals to be had. We were- we were- we were lucky that we were able to pull off that Capital One deal. You know, a little bit of- a little bit of great execution and a little bit of luck, and, um, but there were not... Those deals were not- w- were not around at other companies because Capital One was such a- a leader going to the cloud. So I had to convince the enterprise people it wa- this is like with Olivier, it was like w- as long as it's a real project solving a real problem, we kinda don't care how small the deal is. Our hypothesis was that this cloud thing was gonna take off, and when it takes off, whe- whoever's in the stack is just gonna scale with their applications. And so, which is kinda like to me what I saw with Snowflake, and, you know, but w- this is- this is real time so we didn't see this yet. This is 2017. So our- our idea was just to get in there and be part of it, and if it was like a... Generally speaking, probably minimum for the enterprise was $10,000, um, ARR, right? Um, and 'cause then you got enough servers to... It- there's some heft to it. It's a real project, and it happened all the time, but in the beginning, it was a leap of faith because their- their- their quota was over a million dollars. And so they were like, "Dan, how are we gonna make any money here when we're doing all these small deals?" And just like, "Hey, have faith that it's gonna grow, it's gonna grow." Once it actually took off, then we didn't need to convince anybody, but there's that period of time when you're transforming an organization before you have enough victories to prove your idea that you have to keep everybody in the boat, and I say that you need to be in the boat with them.
- HSHarry Stebbings
Mm-hmm.
- DFDan Fougere
A- a- partly because you're making it happen, partly because they need to see that you're with them. Like, "We're taking this L and I'm with you. I'm carrying the flag up front," um, and also so you can gain the pieces of feedback that you will need to iterate. Like, maybe some of the things are not working, like for example, the demo in the beginning was just walk people through the features. We had to tell a story. I had to, like, guide, and this was- and it was a little extra hard because the SCs at that time did not report to me, and so- but still I was like, "Guys, we're not... We need to tell a story. We need to be- show something more compelling," yada yada. So little things like change the demo, et cetera, and then they could see we're getting
- 23:21 – 31:54
Lessons on a Sales Demo
- DFDan Fougere
better.
- HSHarry Stebbings
What are your biggest lessons on how to do a sales demo well, and where do most people fuck up?
- DFDan Fougere
Make sure that you do the discovery ahead of time and you understand- understand their pains, and, um, think about it in terms, like put yourself in the shoes of the customer. And it's not about features and it's not about show up and throw up, and you wanna be able to say, "Hey, Joe told me that he's trying to make decisions, um, but doesn't have the right information and that led to application downtime, and so we're gonna show you an example of how you can do that in your environment. And so here's... You s- you told me have, you know, a Unix machine, here's a Unix machine," so they can start to see themselves. It's like telling a story. It's like if you're reading, uh, I just- I started reading, uh, The Great Gatsby, and so you're like... And by the way, what... I mean, holy cow, i- i- I've never written one sentence as good as the worst sentence in that book. But if you are going to identify with the protagonist in the story, then- then the author has you, and it's the same thing with a demo. Like, I need to see myself in this story and I can see how my life gets better, I can see how my- I'm- get better at my job, I can see how I get home to my family earlier, I get promoted, I get kudos from my boss, things like that.
- HSHarry Stebbings
You said about show up and throw up, didn't sound great. Any like glaring, "Oh God, so many reps do this that they shouldn't do?"
- DFDan Fougere
John Kaplan is a great sales, uh, uh, trainer and leader. He, uh, uh, has a company called Force Management that I've used at multiple companies and he says, "You don't come in with your hair on fire and the product manual in your hand." You know, like, that's what, but that's what a lot of people do. There, and that's, the, if you don't know how to sell then you're going to think, "I'm gonna show up and show you all the features. Look, we can do this. Look, we can do that. Look, we can do this." And then ho- the ano- uh, back in the day they would call it taking a plate full of spaghetti, throwing it at the wall and see what sticks. And it's just like, I'm gonna keep saying things to you that we can do until s- you say, "Oh, that's cool." That's a terrible way to sell, um, and you're just wasting time and really, in the end, what are we talking about? We're talking about maximizing the valuation of companies, right? And so as, when I think about what my purpose is, always is the money is in the equity, right? You can have a good comp- you can have a good commission check but really when it comes down to it, the money is in the equity and whether it's your first one or your second one, I've done five startups, four of them had good outcomes. And each time I got more and more of my compensation from the value that I created in the company. And so all of these, if you think about that movie, um, Any Given Sunday with Al Pacino, is like, it's a game of inches, right? And if you can get a little bit here and a little bit there, all of a sudden it adds up to a lot and all of a sudden you're winning.
- HSHarry Stebbings
We, we, we, we know that it's getting serious now the notebook with, uh-
- DFDan Fougere
Ooh.
- HSHarry Stebbings
... Penn is coming.
- DFDan Fougere
Look at this.
- HSHarry Stebbings
Very professional. I was just-
- DFDan Fougere
Harry Steving's taking notes. I love it.
- HSHarry Stebbings
Tr- trust me. Uh, uh, so my, my first thought to you here is like, when we're in that sales demo, I, uh, had David Schneider on the show.
- DFDan Fougere
Oh, yeah.
- HSHarry Stebbings
Now Coach 2.
- DFDan Fougere
I, I listened to it. He's phenomenal.
- HSHarry Stebbings
Fantastic use.
- DFDan Fougere
Phenomenal.
- HSHarry Stebbings
Um, uh, and he said there are three reasons why people buy software. Uh, this is why my job's so great. I basically get to sit with amazing people-
- DFDan Fougere
Yeah.
- HSHarry Stebbings
... hear them give me advice and then regurgitate it back to people and hear what they think. But he said there's three reasons they buy software. One, to save money. One, to make money, and the third reason, to keep them out of prison.
- DFDan Fougere
Yeah.
- HSHarry Stebbings
Do you agree with that when you hear that?
- DFDan Fougere
Dave is talking there, truthfully, about like, more probably corporate motivations, um, and so, and those are important. But they're also abstracted away from the motivations of the people you're actually selling to. And so both of those are important. The ones that are going to ha- cause those magical moments, it depends on the person, but probably are more about personal motivations, right, which is, "Holy shit, I'm not gonna get my bonus unless I can show that we are compliant with SOC, you know, standards for security by December 15th." Right? And you should know that as a salesperson. You should, you should be f- familiar enough, and this is another reason to get out of your office and get off Zoom, and go to the customer's building and hang out with them and spend time because 58-minute meeting on Zoom where everybody else is paying attention, people are not sharing some things that maybe they're gonna share when you're just hanging out, right? Having a beer at TGI Friday's after the meeting, or at Starbucks or whatever it is, like that's why I say old school is the, is the new school, and it's the good school because the things that worked for the Fuller Brush salesmen or IBM or Wang or, you know, uh, HP back in the day, it'll always work because humans don't change. And so the technology has changed. Uh, you have some PLG, you got Zoom, f- great, use it. But don't use it at the expense of the connecting with people and becoming more intimately familiar with the personal drivers of the people you're selling to.
- HSHarry Stebbings
You know, you mentioned also like, "Hey, we're very happy going in taking a small contract because we believe in X and we believe in the expansion and we let them expand."
- DFDan Fougere
Yeah.
- HSHarry Stebbings
Dude, Deignan says, "Customer success a la poubelle," which you know, means, you know, to the trash. Uh, do you agree?
- DFDan Fougere
So such a controversial topic because customer success, listen, and so CS, is it technical support? Is it a less well-trained, wes- less well-paid sales team? Like what are you, what are you actually really trying to do here? And I think based on the product, there might be different explanations. At Datadog there was something brilliant there where, I don't know if you've talked about this with anybody but, so we focused our ess- this, the commercial team, which really focused on startups. And so we would get them focused only on new logos. It was, it was incredible. We would, we could break into ... And I would say this is true about Enterprise and I say this is true about Medallia and this is one of the things that I feel very proud of is that my, my team's, once we got going, we will get a meeting with somebody who could influence a deal in 30 to 45 days in any company. Like a real meeting. And so, and part of that is you have to be focused and you can't be distracted by, because human nature is such that you're going to seek pleasure and avoid pain. Right? And you're gonna avoid the hard work. That's like we were talking about going to the gym but m- most people don't do it because it's hard even though it's so good for you. And, and so the same thing with outbound and pipeline generation and breaking into new accounts. And so we gave them, when they broke into a new account, whether it was inbound or outbound, doesn't matter, they had four months to sell more products, to, uh, take advantage of some of the growth that they might have because the c- a consumption model. And then after that point, it was passed over to customer success.And now, in a one product world, that was great. See, we originally had one product, um, infrastructure monitoring. Now, some of those really small accounts had weird names like Airbnb or Zendesk that nobody ever heard of until everybody heard of them. And, and so the CAC was incredible because the, the growth was non-commissioned because CS did not have commission, right? So that's pretty incredible. Now, if you look at, in a multi-product world where you then have to go back and sell multiple products or once things started to get competitive, then you want to have somebody who's got more of a sales, s- more sales capabilities. So the answer is, I think you gotta have to design it based, for your company, based on what you're trying to accomplish. Um, generally speaking, listen, that model that I described, Datadog is worth what, 36, $40 billion? You can't question anything that's done. It was a phenomenal success. But could that work in every company? Mm, I'm not so sure, right? And would I, would I personally replicate all of it? Maybe not. Some of it, for sure, because some of it was fantastic.
- 31:54 – 34:00
How CS Should Be Comped
- DFDan Fougere
- HSHarry Stebbings
How do you think CS should be comms?
- DFDan Fougere
It depends on what they're doing. And because the other thing is, for the enterprise, so we had CS for enterprise... So when you have a cloud-based startup, they have cloud ninjas. Now, more people are cloud ninjas today than seven years ago. Um, but when, when we went into some of the enterprise companies, the cloud skills were not as predominant, right? And so they needed more help. And you're working your way through bureaucracy, you're working your way through people that have older sets of skills. And so what we needed there was not somebody to, like, clip the coupons every year, it's for the renewal. Like, "Hey, you, you're using more. Should you buy? You should commit to more." It was, how do you actually implement this stuff? Even though we designed the product so that you wouldn't need implementation services, once we started, once we broke past the early adopters of the cloud and we started to work on the, with the legacy folks, then we needed more help. So for enterprise CS, it was more about kind of like implementation and support. For commercial CS, it was kind of like, like a, a sales kind of capa- uh, capacity. So I think you gotta figure that out from your model too. And so you think about, how much are we paying? And I think if you're early stage, like just let's get people to buy this stuff, right? Like, we, we, we are trying to figure out our, uh, market, product market fit. We're trying to figure out how to have a sale, what sales process are repeatable, all that stuff. And you're gonna iterate and figure out, are we paying too much here? Are we paying too much there? You're probably not paying too much for new logos, new business units, new products, breaking into new segments like enterprise. I think you have opportunities on the backend to see the d- the revenue that's coming in that maybe is gonna come in no matter who's sitting at the, at the keyboard. You might have opportunities to really get efficient there. Um, anyway,
- 34:00 – 47:12
Dan’s Sales Playbook Meaning
- DFDan Fougere
what do you think of that?
- HSHarry Stebbings
You mentioned repeatable sales there.
- DFDan Fougere
Yeah.
- HSHarry Stebbings
And like knowing when you have it. I'm getting into like a really core problem for a lot of people. But I just want to first define, what does a sales playbook mean to you?
- DFDan Fougere
In an ideal world, I can take somebody from the outside, take them to new hire training, and like when we were doing new hire training at my last two companies when I was running all that, uh, in the new hire training, we would get outbound meetings. Like your first days, we are cold calling, and I have it all documented that these are the personas. These are the challenges they have. This is some of the terminology you need. These are the things you can say. Here's how you handle objections, all that, right? So w- that's like front end of the playbook. Now, discovery call, right? Format for discovery call, questions to ask, how to manage it to be pithy and concise. 30 minutes, are we barking up the right tree? Do they agree to th- to g- move towards our next steps of having a demo with the right people in the room? Right? Demo. So chronologically, working through every step, and in the beginning if you are a new CRO and you're like, "Oh, I don't know all this stuff," you can have a, it's a generally repeatable framework, right, where you're gonna say, "I'm gonna identify my ideal, uh, target customer, ICP people call it these days, my outbound, calling, emailing, LinkedIn, GitHub," whatever, "and now I'm going to discovery, how I do that demo. How do we, what do we show in the demo? What are, what are our out- desired outcomes? What are our exit criteria for each of those?" Like if they say, "Yes, we think this is the right product for us. Yes, we would like to move to some sort of validation," then you can leave, "Yes, I will commit to getting you to, uh, your, you know, a meeting with the economic buyer." Something along those lines. Then I have exit criteria to go to the next phase of validation.
- HSHarry Stebbings
This sounds like quite a lot if I'm honest.
- DFDan Fougere
Yeah.
- HSHarry Stebbings
And so when I hear you talk about this, I then go back to the statement that I'm often told, which is founders should be the one to create the sales playbook, and I'm thinking, "Gosh, I don't know many founders that could create that pithy qualification 30 minute call criteria as well as you just"
- DFDan Fougere
Yeah.
- HSHarry Stebbings
"did there. I don't think many founders can create the sales demo templates for different verticals. Should the founder be the one to create the sales playbook?"
- DFDan Fougere
I've never seen it. Um, so to me, with all these kind of, should this be the case, should that be the case, like okay, like somebody might have an academic idea, but show me how it's actually been done. I would say-At Datadog, Amit probably did it. (clears throat) He- I know he did, right? He did it before I got there. But it wasn't like what I just described. It was more like, um, they- there's some marketing that they see that talks about implementing the cloud, there's a link, you link to the demo, you put- you do the- you- you get online one-week demo, you put your credit card in, somebody calls you to do the deal, and now you have Datadog, right? Something like that. And that's a great way to get started. But you're not gonna scale to billions of dollars of revenue, at least in my, my experience with that. Like, you're gonna need more of what I just described. And every place I've ever been, that's been the sales leader doing that.
- HSHarry Stebbings
Okay, so it's the sales leader who does that, great. When I had, uh, Chad Peetz on the show, who was fantastic, by the way-
- DFDan Fougere
Yeah.
- HSHarry Stebbings
God, this guy does not hold back. Uh, he was amazing. Uh-
- DFDan Fougere
One, one, one of the, one of the, one of the best, uh, recruiters of all time.
- HSHarry Stebbings
Yeah, Degnan said that, actually. Um, but, uh, he said that you have to hire a CRO pre-product. He said that fundamentally, to provide context, fundamentally founders are often very product or engineering centric, and they can't do customer discovery, qualification, feedback in the way that you need to. And so you need a CRO pre-product. Agree or disagree?
- DFDan Fougere
I wonder if you could even say Snowflake was an example, because Chris Degnan now is not Chris Degnan nine years ago, right? Or eight years ago. At that- at the time when he joined, if I recall, he was more of like a first line leader, second line leader, super talented, lot of headroom. But Dan Fugere 2016 is not going to a pre-revenue company. Like, I went to Datadog which- and, you know, Carlos goes to MongoDB to build that sales organization.
- HSHarry Stebbings
And, and for context, Datadog was 60 million in ARR when you joined.
- DFDan Fougere
Sixty million when I went there. At that point-
- HSHarry Stebbings
Yeah.
- DFDan Fougere
... in my career, when I'm like a legit CRO candidate, you know? Um, I had done most of the things at Medallia and led global, built the f- built the field, like a lot of the stuff. So I, I hadn't been a CRO, but I, I did a lot and I was ready for the job. And a $60 million a year company doubling year over year, that's where I'm going. So if you can go to a- if you're good enough to go to a company that's 60 million ARR, 100% grow- year over year growth, why would you go to a company that has zero revenue growth and zero- like, zero revenue? So I just don't unders- I don't, I don't understand it myself. It's an interesting thing to try. I think having a salesperson there to-
- HSHarry Stebbings
Well, Jason Lamkin says you'll never get a great sales leader willing to do it twice.
- DFDan Fougere
Yeah.
- HSHarry Stebbings
Because it's so fricking hard in the early days.
- DFDan Fougere
Yeah.
- HSHarry Stebbings
You'll get a Dan Fugere at the start of your career, "We'll take that early sales role-"
- DFDan Fougere
Yeah.
- HSHarry Stebbings
"... leadership or not." 'Cause no offense, dude, you don't have that much choice (laughs) and it's two million-
- DFDan Fougere
Exactly, yeah.
- HSHarry Stebbings
... ARR, whatever. But you're not gonna go back to a two million ARR once you've taken it to 100.
- 47:12 – 49:33
Advising Founders on Layering Sales into PLG
- DFDan Fougere
crazy money.
- HSHarry Stebbings
I do want to touch on an element, though, which is important, because we have so many PLG founders that listen.
- DFDan Fougere
Yeah.
- HSHarry Stebbings
And you said something great before, which is, "PLG is great, but PLG with a world-class sales org is better."
- DFDan Fougere
Yeah.
- HSHarry Stebbings
And I, I read that, and I was like, "Great, but when should you layer on the world-class sales org to the PLG, and how do you advise founders on that?"
- DFDan Fougere
Maybe one way to answer it, and I'll answer it in other ways as well, is, as the founder, if there's that voice in your head or that feeling in your stomach where you're like, "Hmm, I wish I had a better salesperson right now. I wish, I wish I could break into the enterprise. I wish I could go upmarket. I wish I could do three-year contracts instead of month-to-month. I wish I could do bigger deals. I wish I could sell multiple products instead of one product." Whatever it is, that voice went off in your head. Like, it's, it's probably time, and it probably was time before that, because another thing I was thinking about, like, if you're running a race, like, you're, you're a runner, and so if you're running a marathon and you don't hydrate until you are thirsty, it is too late, because you are dehydrated. And it's gonna take a long time for your cells to be able to get that water. And by that time, might be too late. So, um, I think a, a general feeling, or d- a general ethos that, yes, the product and the product-led growth motion is super important. Of course it is. Excuse me. And I'm going to also build another channel of revenue generation through excellent sales, just like I have excellent-... product. Like, when I went to Datadog, people didn't want to go there. Like it, recruiting was so hard. Um, and part of it was the reputation that it was a, it was an engineering company, they didn't respect salespeople. And s- some of it was true, right? (laughs) I mean, um, and but I, that's why I wanted to go there, because I thought, "I can fix, I can make a great sales culture, but I can't make a great product and engineering culture. So I'm gonna go to a product and engineering culture, and I will build a great sales culture, because those two things together will be incr- m- m- more powerful than, you know, two plus two equals five," right? And that was the hypothesis, and that's
- 49:33 – 52:05
Making a Great Sales Culture
- DFDan Fougere
what worked out to be true.
- HSHarry Stebbings
How do you make a great sales culture?
- DFDan Fougere
I think you've got to have the vision. And the vision is that we will be great, that this is going to be... What I said at, I put a mission statement up that I stole from one of my mentors at Medallia, and I used, I, I iterated it a little bit at Datadog, that we will be known, uh, we, we will, uh, we'll have a legendary sales team that will be known for making great money, (smacks lips) um, making life-changing money, uh, being best in class, and ha- and, and having, and having fun. And, um, and that we will learn more, you will learn more, and become better at your job during your time working on my team than you would have at any other team during that same amount of time, and you'll make life-changing money, and you will never have to look for a job again because the halo of our success will be over your head for the rest of your career, and people will seek you out. That was my first day, I said that to everybody in the, on the team. And I also said that, "We will do $120 million next year, and we will do 240 the year after that, and we'll have the most successful IPO in the history of New York." I also said that all in the first week or so. And I got in trouble. (laughs)
- HSHarry Stebbings
Did you actually believe that at the time? Or is it a bit of self-inflation just to inspire the team?
- DFDan Fougere
I wouldn't have said it if I didn't believe it, but of course I was also in t- I was afra- anytime you put yourself out there, like the first time you told people you were gonna run a marathon, right? You're like, "Am I really gonna run a marathon?" Um, that's that, but I just told people, so now I have to do it. It was a little bit of like burn the ships. I'm putting a stake in the ground. We are doing this, and I'm telling the whole world, and I'm gonna commit everything in my life to making this happen.
- HSHarry Stebbings
What are the most common ways sales cultures suck? You've seen a lot of internal companies.
- DFDan Fougere
You let underperformers stick around. Tsk. Uh, you don't have a vision for greatness, like I just described. You don't hold people accountable for performance. The leader is not in the boat with them. The leader yells at the scoreboard at the end of the quarter or end of the week, "How come you didn't get more meetings? How come you didn't do this?" Like, well, you should have been in it with them. It shouldn't be a surprise at all. And you should know that because you were on the calls, you were in the meetings.
- 52:05 – 1:01:06
Knowing When Someone is a Mishire
- DFDan Fougere
- HSHarry Stebbings
Underperformers, how long do you know, or how long does it take to know whether someone is a mis-hire? And how long do you give them?
- DFDan Fougere
Human nature is to give them too long. And the saying is like, "Fire fire f- hire slow, fire fast." It's hard though. These are, that's why, you know, being an advisor or a board member is so valuable f- I feel like it gives me the ability to give better advice because I'm, I don't have the pressure on me, you know, to hit the, hit the, h- headcount targets every board meeting. And when you're in hypergrowth mode, like going from a 100 salespeople to 200 salespeople in six months or whatever, it's so hard, like, you gotta hire all, all over the world, you gotta try to have quality control, but if I pull back and say the same thing, like your, your instinct, your gut tells you, "Uh-oh, I think I have the wrong hire here," at the very least, now you need a process to see for sure, can this person do it? Tsk. So, you probably need, and the same thing, just from HR coverage perspective, you wanna have like a performance improvement plan documented.
- HSHarry Stebbings
The minute someone's on a performance improvement plan, it's kind of over, no?
- DFDan Fougere
I have seen some people pull out, but most people do not. And I always want to at, if somebody is just like, a train wreck disaster, and you know it, just pull the trigger. If, if there's somebody that you can see that they have, if they only did these things differently, I generally wanna give 'em a chance to do it. And, eh, but not, it's a, it's a short, it's a short rope, right? It's a short timeframe. Ahem, and so, tsk, and I wanna see, is their leader showing them? Like, we might have a bigger problem, it depends on the size of your organization, but if it's a rep, well, maybe, what's the leader doing? And so, does the leader have these skills? Does the leader, is their, is their behavior, um, the, the behavior I want to be scaled across the team? So, can they tell them what to do, show them, give them feedback after they do it, and confirm that the person now does it and has improved? So, at least we have that process in place, ahem, to see, tsk, I've given you guidance, I've showed you how to do it, um, I've given you feedback, can you iterate and improve? And if not, then there you have your answer.
- HSHarry Stebbings
You said about holding people accountable to numbers. Um, a lot of people are missing their numbers right now, Dan, and it's hard. Um, how do you advise leaders and sales leaders to keep morale up when sales teams are getting batted?
- DFDan Fougere
They should be in it with the people, (sniffs) uh, especially when times are hard. Like, as a leader, when times are hard, you gotta bring 'em up. And when times are good, you gotta bring 'em down. Ahem, we gotta keep 'em, tsk, steady. Don't get too high on yourself when things are good, and don't feel too bad-... when things are- are going tough because that will affect your performance. And so, you should get in it with them and see what is the problem. Do we have a product problem? A market problem? Do we have a regional problem? Or is it a person problem, right? And i- if you've gone through all of that and you're just like, "I do- I don't know the answer yet, but I do know it's not a person problem," I think there's a- there's like probably a whole set of things to do. First of all, being- being with them and understanding where the pain is, because sometimes it could be the deals are coming but they're not coming soon enough. So, if you have some financial pressure there's som- some things that you can do to be able to alleviate some of that financial pressure temporarily.
- HSHarry Stebbings
Like discounting?
- DFDan Fougere
Not like discounting. Discounting should be... These are two separate topics. Um, so, you know, you could even like potentially give some payment ahead of the deals closing, something like that if they're doing all the right things. Um, and it's just like they're building a territory, they're building their pipeline, it's taking longer than you thought, there's a var- there's a variety of these scenarios, right? But the one scenario I would not necessarily say if you've got, "Hey, we were growing at 100% a year, now we're growing at 20% a year," eh, that's a whole different, that's a whole different thing. And now we've got a bigger set of problems to deal with. This is not an individual person problem. This is a systemic issue that we need some like major surgery. Hmm, um, and I've been in both of those sc- scenarios. Um, if you wanted to go down at discounting, I would as a, you know, general- general rule, limit... I want as tight a control around discounting as possible. Uh, I- I don't want... For a number of reasons, because without the right leadership, and even sometimes with the right leadership, sales people left to the- left to their own devices will peg at maximum discount 100% of the time, and that is not how we drive maximum valuation, that's not how we protect unit prices for a long term business. Hmm, um, and if you're in a consumption business, if you are going to the lowest discount already when they have the smallest amount of spend, when they have quadrupled, 10X-ed their spend, they're gonna expect bigger discounts, like it's always gonna be expected, right? So, y- the more you can have discounting be controlled higher up in the leadership chain, the better, um, and we were always trying... When I got to Datadog for sure, I was working with product all the time on how- how little can we discount. Like, it's still not... And you get to a place where if you start losing deals, hopefully... We never got to a place where we were losing deals. We could tell that we were close to losing deals or the friction in the process was such that we knew we were at the limit, and so, okay, that's where the discount should be and we're gonna try to get better by selling better value, by coming up with better- with more products. But in the meantime, that's the limit and we're gonna hold it at like CRO, CPO level and- and that way we also have the right data. Because if you're leaving up to- uh, up to like 100 different people who, to- to decide what the discounting should be, then you have no standard to know that the- the data is the same because some people may be approaching it in a ver- a vastly different way.
- HSHarry Stebbings
So, you shouldn't give independent authority to sales reps to say, "Listen, Dan, my customer, I know- I know it's tight for you this quarter. Listen, we'll do a 10% this quarter to make it a little bit easier for you and we really appreciate the partnership."
- DFDan Fougere
I- I never have a problem talking about deals with people on the team. So, you can call me, Slack me, text me, call me, basically 24/7. I do like... I gotta sleep, I gotta eat, I gotta work out. Besides that, I'm yours. And we can talk about discounting on deals. I... Like, sometimes automating something is not the right thing. Making- making less friction in discounting, I would rather have the sales team resist it, put... Resisting discounting to the customer instead of taking that same energy and effort and trying to jam me, as the CRO, for discounting. Like, we gotta protect the value of the product, v- and if it takes like one more day to like come back to them, I, uh, ver- versus me knowing that at scale we have just protected the unit price, because everybody shares, people te- people talk, and you know, whether it's other sales reps talking about the discount they got, customers talking about it with other customers. And so, I think you wanna ho- hold onto that thing and manage that and make it not a source of friction lists.
- HSHarry Stebbings
Dan, does customer validation on logos really work? And what I mean by that is, we have Dropbox and Uber and Facebook and Pinterest and so everyone else goes, "Oh, wow, they must be legit." Or does it not really work and everyone buys in isolation?
- DFDan Fougere
You gotta have it in your first conversations and first meetings, right? To have some credibility. You- you gotta have it if you have it. If you have it and you don't tell people, then you're leaving something on the table. But the- the more that the u- the skin of the onion gets peeled back, the more substance you're gonna have to have. And it can't-
- HSHarry Stebbings
But should we discount for customer testimonials? No, no, no.
- DFDan Fougere
Nah, I don't think so. I think, hmm, people- people do it because you're del- delivering value for them and because you build relationships with them, and I wouldn't want to trade economics for-... really, like, non -economic
- 1:01:06 – 1:09:34
Hiring Sales Reps
- DFDan Fougere
support.
- HSHarry Stebbings
When it comes to hiring, I think most founders actually really fuck up sales hiring. When you think about lessons from hiring great sales reps, what are your biggest lessons that you know now about hiring reps that you wish you'd known when you started?
- DFDan Fougere
When I started, it, it's, it was, it's almost like Moneyball if you, um, if you ever saw that movie or read that book.
- HSHarry Stebbings
Great movie, yeah.
- DFDan Fougere
Back in the day, they were picking baseball players because they had a good jawline, 'cause the guy's wife was pretty. Like, it's- it's- it's mind-boggling, but that's how they were... scouts were picking baseball players. (clears throat) There used to be some of that in sales. What I would say is they come in all shapes and sizes. Also, for each company, they're a little bit different. Like, at, at, uh, at, at, at Medallia, we needed somebody who could show up and have a meeting with a, (clears throat) a C-suite exec, um, and, uh, and at, and, and didn't need to get into technical details, because it was not a technical sale. It was a, "Hey, we envision a world where customer, companies are loved by their customers and employees." You know, that's, uh, my- my mom can get behind that. (clears throat) At Datadog, super technical sale. So I wanted... I would ask people... I wanted to make sure they could handle the, the subject matter. (clears throat) So one ti- so one thing I might ask is, I generally ask this all the time anyway, so, "I'm gonna, I'm gonna go backwards. I'm gonna, wanna know your life journey. I wanna know your life trajectory. (clears throat) Where'd you grow up? What'd your parents do? What, what were you into in high school? What's the highest level math you ever took?" You know, um, I'm just getting a, I'm getting a read. Because, for example, in the US, if you are reasonably good at math, you will have touched on calculus or pre-calculus in, at the end of high school. (clears throat) If you're not, then you d- you didn't. And so I'm getting, I'm just getting data points around what you're good at, um, and your trajectory. Do you continue... Are you making decisions based on going for something great, based on a hypothesis that's educated, or are you just going wherever the recruiter says you should go?
- HSHarry Stebbings
You want people who are good at maths.
- DFDan Fougere
(clears throat) It's-
- HSHarry Stebbings
'Cause I'm shit at maths.
- DFDan Fougere
It's not-
- HSHarry Stebbings
But I, but I can tell a story-
- DFDan Fougere
Yeah.
- HSHarry Stebbings
... like no one else. And I don't think mathematicians tell stories.
- DFDan Fougere
It's a data point. And so, it's a data point for something like a Datadog or a BladeLogic. If you need to get into the guts of a technical sale, then understanding technical concepts and being able to articulate how they work, like how the machinery works, is valuable to help you tell that story. Something like a Medallia, Salesforce, a Workday, who cares, right? It's a, "I can help your HR department work better, or your customers can give you feedback," right? Different concepts.
- HSHarry Stebbings
And so we have this, uh, line of questioning. Any others in terms of how to discover, detect-
- DFDan Fougere
Yeah.
- HSHarry Stebbings
... the best?
- DFDan Fougere
I want... (clears throat) I firstly look for discipline in, in salespeople, because we're asking you to do hard things. Like, my teams, I would say, are different than most sales teams. And that's why we get different results. Like the outbound-
- HSHarry Stebbings
What-
- DFDan Fougere
Like the outbound, qualifying, accountabil- accurate forecasting. Um-
- HSHarry Stebbings
Do you warn them ahead of time, like, "I am gonna beat the shit out of you, and this is gonna be the hardest job."
- DFDan Fougere
But I don't-
- HSHarry Stebbings
"I might a-"
- DFDan Fougere
I, uh, uh, I, I, I would say there's something in it that says, like, messaging that this is not gonna be a sit back and enjoy the ride kinda team. Right? But I also, I'm not, I don't think of myself as beating the shit out of people. Um, I would not do that. Like, I-
- HSHarry Stebbings
No, I, I get it.
- DFDan Fougere
(clears throat) You know?
- HSHarry Stebbings
I mean it more in the way that, like, "This is gonna challenge you in a way-
- DFDan Fougere
Yeah.
- HSHarry Stebbings
... that nothing ever has done before. You will get calls on weekends. And we are gonna build something amazing, but do not come if you think this is gonna be easy."
- DFDan Fougere
They probably get that through the s- through the process. And it's, yeah. Um, and they, you know, eh, as the CRO, I have other people who are the hiring leaders and they can share their stories. But it's, it's just like, "Hey, this is the hardest place I've ever worked, but this is the best place I've ever worked. I feel great about myself." The other thing I would, like, for example, when we would go do club trips, um, where the sp- where significant others come on the club trips, I had so many spouses and significant others come up to me and s- talk to me about how happy they were about how the, their significant other has become a better person, has become more fit, they're a better father, or whatever. Because it kind of, all this stuff kinda translates into your life, too. Like, do what you say, say what you do. Deliver on your, on, on the results. Do the hard work. Transparency, accountability, (clicks tongue) um, consistency. All that stuff, to me, ends up making us better people as well.
- HSHarry Stebbings
How do you detect discipline in sales candidates you're interviewing?
- 1:09:34 – 1:17:43
Turning Career Challenges into Personal Development
- DFDan Fougere
- HSHarry Stebbings
Can I ask you just one final one, Dan, which is like, I have so much respect for you, and when I hear the journey, it's like, it all seems to have been like up and to the right. Carlos told me there was one moment in particular which was not up and to the right, which was when you moved to the West Coast from Medallia.
- DFDan Fougere
Yeah.
- HSHarry Stebbings
And bluntly were, like, on track to be CRO and then didn't get it. I'm just interested, can you talk to me about that and- and how you learned, developed, grew as a person from that?
- DFDan Fougere
(inhales) Well, that's like the, uh, the deep tracks right there. You went, uh-
- HSHarry Stebbings
(laughs)
- DFDan Fougere
... you found out some, uh, some juicy stuff. Spicy. Um, yeah, I mean, eh, you know, I gave you some of the background about Medallia. I put my heart and soul into that place. We invented how to sell Medallia. (clears throat) There was not a- they did not have any kind of repeatable process before we got there. And we b- we- we've- we drove that thing. Uh, we got it to, we're doubling year over year, got it to, like, in the 200 million-ish, 250. It had taken them 10 years to get to 25 million, and a few years later, we're like at 250. And through some brute force. And (clicks tongue) so few things happened. We- Qualtrics caught up to us because they were out-developing us. They're out, their product was innovating much faster than ours. Um, we were spending money like crazy. The burn rate was unbelievable. And so they brought in a CFO to try to control that. They made too many changes to the terms of the deals and all of a sudden, growth's- growth, like, it was like ground to- it was like- you could feel deceleration trauma. (clicks tongue) And so, now, I'm not saying sales didn't have anything to do with it. We weren't perfect. I would never say that, but, you know, we were doing pretty great and all of sudden we weren't doing pretty great.
- HSHarry Stebbings
Is that fucking frustrating-
- DFDan Fougere
Oh my god.
- HSHarry Stebbings
... when it's nothing in your hands? It's- it's not even market. Market is- it's a no- but this is, like-
- DFDan Fougere
This is-
- HSHarry Stebbings
... another function's fault.
- DFDan Fougere
... this- it was tough, man. It was tough for everybody. And, you know, um, and so- and at that time, Scott, who was the CRO, wanted to, uh, punch out. And so, um, I thought, "Hey, I'm gonna move- I'm gonna move my family of my wife and our babies to the Bay Area. I'm running towards this thing." And 'cause I- I have a plan. I know- I believe I know what we can do to- to get us back on track. And initially I was told I would get the CRO job, and then I was told I could win the CRO job. Um, and so- and it had taken the- it had taken them something like a year and a half to hire the CMO recently. So I was like, "Okay, I got some time to run. I'm gonna ma- I'm gonna- I'm gonna- I'm gonna make me- amazing shit happen and I will win this job." 'Cause I was very confident I was the best person on the planet for it, and I would say now that I absolutely, of course, was. (clears throat) But my opinion didn't matter quite as much as the other people's opinions. And so I went there having been told I could win the job. Things didn't feel right, and I found out through (laughs) I found out back channel that they had already made up their mind that they were gonna hire somebody else a week after I had moved there. So, uh, just like gutted, man. Just like, and besides just, and I- and here's the other, here's the other thing, 'cause it's like, "Why didn't you just quit?" Well, I got four years of equity, four and a half years of equity, more money than anybody in my family for- (laughs) for as- as far back as anybody knows has ever made combined, and I don't have enough cash to exercise. And so for- if anybody's listening that doesn't know this stuff, that means-... uh, 90 days after I quit, it would all turn into, uh, fairy dust, you know? I couldn't just quit. That's how I felt. And, um, and so they, I, they ended up bringing somebody on top of me and I got some really good advice from a mentor who's a phenomenal person in the industry. And he said, "Y- e- this is an IQ test. You gotta, you gotta go, uh, get another job." And I just was like, "I don't know how I'm gonna find the money," 'cause I w- had to come up with two million bucks cash or more to exercise the options, and I didn't have that. Um, and so I was f- very distraught. Uh, I had a really terrible meeting, uh, (laughs) and I was on my way home and the great and powerful David Acharya called me and, uh, he said, "Hey..." First, they wanted me to come be the number two guy for, to Carlos at Mongo, and I was like, "I've alread- I've already been the number two guy, I need to be number one someplace." And then Dave said, "Well, too bad you wouldn't move back to New York, because I'm on the board of this hot company called Datadog." And, um, and so I, I was, and I, I was like, "I'm not moving back to New York." But I already had plans to be back in New York for Thanksgiving the next week anyway. And so if you ever saw that movie, The Rumble in the Jungle or, uh, I can't remember it was, uh, George Plimpton maybe, it's about Ali, uh, versus, uh, F- Foreman, the fight promoter, uh, Don King. He told Ali he had Foreman, he told Foreman he had Ali, and he got them together that way, and that's what Dave did with me and the founders of Datadog. And so he set us up. I had no intention of, hmm, of moving back to New York. I did not want to get back into a technical sale, and I didn't even prepare for the meeting. And I showed up at The New York Times building on the 44th floor and I met Olivier and Amit, hmm, and it was a one hour meeting and three and a half hours later with the wh- every whiteboard in the office filled, I was like, "These are my people." Like, like these guys... I was going from a company where people were kind of being fee- made to feel guilty about wanting to have an IPO and make money to a company that they had a chip on their shoulder too, because the Datadog founders were told nobody wants a monitoring product, nobody... the cloud will never take off, you can't build a company in New York. They had a chip on their-
- HSHarry Stebbings
Dude, uh, their early rounds were unpopular. They'll tell you that.
- DFDan Fougere
Yeah.
- HSHarry Stebbings
But like, it was not easy to raise the seeds and the A's and they went against the odds, yeah.
- DFDan Fougere
So people told them they weren't good enough and people just told me I wasn't good enough. And so-
- HSHarry Stebbings
Did you find the money to exercise the options?
- DFDan Fougere
So, um, while I was doing the Datadog job in the beginning, my night job was making a market for, uh, Medallia shares. (laughs) And so I found out that some deal had been done at like 16 bucks a share through the grapevine, and this is like, you know, this is the gray area because, um, you're, you know, there was no official secondary or anything like that. So I was able to find... There was a company called, um, Forge.
- HSHarry Stebbings
Yeah.
- DFDan Fougere
Uh, which was a lifesaver, and through them I found somebody who wanted to buy my shares and I even had to stop some of the people who were disgruntled former employees from saying bad things about the company because they were driving the price down. And then I found another one just on my own, kept talking to every private equity, hedge fundy kind of person I could talk to, and I found somebody. And it was, it was, there were sketchy kind of like questionable deals that I was doing on my own, but I ended up doing them and I was able to do the second one through Forge so at least I had like a s- a legit platform to work in and I was able to get enough to exercise. I had my spreadsheet to find that, uh, optimum point where I could sell the minimum amount of shares so I can hold onto as many as possible but still come up with the amount of cash necessary to exercise all the other shares, and that's how many I sold and I was able to do it. I had, I negotiated a two year term to do it and I closed my last deal to get the cash one, like with like 10 days left.
- HSHarry Stebbings
(exhales) Fucking hell, what a story. Did the CR at Medallia who got the job instead of you, did they do well?
- DFDan Fougere
Nope.
- HSHarry Stebbings
(laughs)
- DFDan Fougere
Not at Medallia.
- 1:17:43 – 1:21:09
Quick-Fire Round
- DFDan Fougere
- HSHarry Stebbings
Dan, listen, I want to do a quick fire. I've so enjoyed this.
- DFDan Fougere
Hit me.
- HSHarry Stebbings
So what have you changed your mind on most in the last 12 months?
- DFDan Fougere
I don't know about in the last 12 months, but over my experience over the past few years that very junior people can do very big deals with the right training and the right leadership, and that is very different than what most salespeople are taught is that only the most senior salespeople can do the big deals. And at my last company, we had multiple people with low single digit amount of sales experience, a number of years, do million dollar f- plus first deals. And I think there's something there where when you look at CAC and you look at efficiency that y- you... if you have great leadership with a great sales playbook, great framework, great training, you can get more productivity out of more junior people and you don't... e- it's not just some mysterious thing that the person with a five page resume can do.
- HSHarry Stebbings
How does AI change the world of sales?
- DFDan Fougere
I feel like it's almost like when the of- when the Microsoft Office Suite came out, that's how old I am, but I was like, "Oh my God, my spreadsheet pops right into my email and my word processing and it's all in the same..." and it, all of a sudden I could do so many more emails and proposals so much more quickly. As I see it right now...You can do better research on the companies. You can write a more compelling letter, uh, you know, uh, prospecting email. You can, you can, uh, you know, put a proposal together faster. These things, it's gonna make you more efficient and effective, um, which I think so far are all good things. I know that people are working on other things to try to have the robots do all the selling. Let's see how that goes. You know, the thing about AI is they thought... And I listened to the AI guys, so the people who actually developed this stuff, right? They said, "We thought it would automate the menial labor jobs," like whatever, or just like... Not, not to denigrate any jobs, but like truck driving or being an analyst or something. And instead it's making amazing art. Like so we don't know what it's going to do, but as of right now, I think you want to be able to use it to be better at your current tasks. That's what I see.
- HSHarry Stebbings
A friend of yours is starting a role as a sales leader at a company tomorrow. What advice do you give them?
- DFDan Fougere
I want to see wins on the board, think of it in week, we- week one, month one, 90 days, 60 m- six, uh, six months, one year. Think about and list out the wins that you're gonna put on the board, game-changing hires, game-changing deals, instrumenting the business, um, messaging, efficiency, productivity, all those things, share that with your CEO, agree on something that's realistic, and go do only those things and make that stuff happen.
- HSHarry Stebbings
What question are you never asked that you should be asked?
- DFDan Fougere
Who should I hire and who should I fire?
- HSHarry Stebbings
Who should I hire today if I can only hire one CRO?
Episode duration: 1:22:59
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