The Twenty Minute VCRich Liu: Sales in 2023; How to Onboard, Manage and Scale Reps; PLG vs Enterprise Growth | E1023
EVERY SPOKEN WORD
140 min read · 28,195 words- 0:00 – 8:32
Rich Liu’s Journey from Meta to Everlaw
- HSHarry Stebbings
What are the biggest fuck-ups that you see people make?
- RLRich Liu
Ah, ah, ah. Biggest fuck-ups would be... (instrumental music)
- HSHarry Stebbings
Rich, my man, I have heard so many great things. I've been so looking forward to this. Some of the references gave me things that we could talk about in the show, some we've just bonded about instead. But thank you so much for joining me today.
- RLRich Liu
Happy to be here, Harry, thanks so much for having me.
- HSHarry Stebbings
Not at all, the pleasure is mine. But I wanna start with a little bit on you, 'cause you've worked at some of the most incredible orgs in, in the last kind of 10 years of business building really. And so I wanna start with, how did you make your way into the world of tech and sales first?
- RLRich Liu
Yeah, yeah, it's a great question. Fir- first of all, it's, uh, it's, uh, there's a lot of luck involved. I think it's a lot easier to see things going back than looking forward. Um, but I, I started my career as a, as an engineer, biomedical engineer. My parents are both engineers, we're immigrants, and so that idea of get a technical degree, get a technical background, and then, you know, you'll always have work to do was a little bit of what I grew up with. But after finishing, I realized, oh, wow, I watch the movies, I, I see TV, and I really wanted to be some kind of a business executive someday. I didn't really know what that meant. Uh, and I thought, well, okay, this was during the, uh, dot-com bubble burst, so there weren't a lot of jobs out there. And I was reading and doing my research and going, huh, you know, it looks like a lot of these, uh, these, uh, business leaders, these CEOs, they, they seem to have this, like, sales background. That's interesting. Maybe I should try that. And, uh, and, you know, if I, if it, if I don't, can't do it well, if I suck at it, you know, I'll go back and take one of these engineering offers I, uh, that, that I had walked away from. And so my first job was, I always think the base salary was, like, $20,000. And so it was like, well, if I can't make a good commission, I won't pay my rent anyway, so why don't we give this thing a shot for a year? And that was really it, right? I went into an investment company called Fisher Investments that was really transformational at the time, really trying to get people from all money management being distributed through your financial advisor or brokerage house to, oh, we're gonna build this direct-to-consumer money management shop through what was junk mail, cold calling, and later, you know, internet advertising, search advertising, and, uh, to sell high-net-worth asset management into institutions. And so it sounded, like, kooky, right?
- HSHarry Stebbings
I've got this image in my head of the Wolf of Wall Street, you know, when they're starting-
- RLRich Liu
(laughs)
- HSHarry Stebbings
... out of that, like, garage and they're, like, cold calling-
- RLRich Liu
Yeah.
- HSHarry Stebbings
... for penny stocks.
- RLRich Liu
Uh, it, it was not quite Wolf of Wall Street, right? It was perfectly legitimate. The company's now, like, two, $300 billion in assets under management, like, 5,000 employees. Uh, we were probably, like, 300 employees at the time, like, really trying to, to get this, like, direct mail, direct thing to work. And, uh, and I was an SDR. I was going out there cold calling wealthy people that we got to fill out junk mail reply cards for, like, a little flashlight or a little booklet, or call a 1-800 number. And that was really, uh, that was really it, and then doing a bunch of outbounding to cold p- cold prospects to try to build this.
- HSHarry Stebbings
That is fucking funny. I wanna, I wanna pick on a couple of areas of your career, 'cause as we said-
- RLRich Liu
Yeah.
- HSHarry Stebbings
... some incredible organizations, and we're gonna do, like, a quick fire at the beginning, uh-
- RLRich Liu
Yeah.
- HSHarry Stebbings
... to get to know each other. This is why I'm single, 'cause I actually do this on dates too.
- RLRich Liu
(laughs)
- HSHarry Stebbings
Uh, but we're gonna start with Meta, okay?
- RLRich Liu
Yes.
- HSHarry Stebbings
What was your biggest lesson from your time with Meta, and how did it impact your operating mindset?
- RLRich Liu
So I, I convinced myself, I, I got a, I got a job there by, by whittling my way in to Cheryl and down to David and, and G- Grady, uh, to do basically strategy and ops work, like this big segmentation and tiering project. And I was coming from outside the industry, never done it before, but you know, I pitched, pitched that 'cause I did a lot of that work at my prior company. One of the things I learned most about that company, and I know they, that sometimes it's derided is move fast and break things. Like, the idea that you don't have to be perfect, but sometimes, especially in a fast-changing market, speed is at a 10X premium. Um, that was a lesson that was, that was huge for me, because I came out of this investment shop, high focus on compliance and regulatory and don't break the law, do things perfectly right following this process, into an organization where even at the time I joined it was over 1,000 people. So I don't know, 2,000 people going like, "Hey, everyone just try to do the right thing, experiment, move fast, break things, and maybe a few of these will work, and then we'll start doing more of that." And to me, that was mind-blowing, but I think that really balanced out a lot of how I think about scaling now, which is there are times when you wanna really strive for we gotta do things right, we got one cut at this thing, it's a glass ball, it's not a rubber ball, if we drop it, it's gonna shatter, um, to, okay, how many things are actually that, that if we screwed up, if we fuck it up, we can't go back and try to fix it? It's actually fewer than we think. And so, uh, especially when scaling, because I'm of the, uh, I d- I, I know I'm not the smartest person in the room. If I don't have, like, the best answer with all the data that's gonna be right, why not have, like, five more shots on goal instead of, like, you know, waiting for that perfect shot? And I think that was actually a huge learning I had that even at a much larger scale than many startups, uh, and I know that they don't often think like that now because it's a massive corporation. Um, moving fast, trying a lot of things, and, you know, and really embracing that okay to fail mindset is huge.
- HSHarry Stebbings
How do you create urgency in a sales cycle? In terms of moving fast, sales cycles are actually slowing now. How do you create-
- RLRich Liu
Yeah.
- HSHarry Stebbings
... urgency in a sales cycle?
- RLRich Liu
Yeah, I was just on a call with, uh, a number of other COO, CRO, business leaders thinking, like, everybody's sales cycle is slowing, everybody is seeing, uh, you know, harder to get the deal, no budgets, fill in the blank. Like, you know, having sold travel during a pandemic at Navon, TripActions., all of a sudden, this sale that..."Hey, we got the next Netflix for travel. It's awesome. Check it out you'll love it." Um, that early adopter, that product-led sale, um, does not work in a, in a tight market. And that's not a bad thing. It does weed out the, the people who are disciplined and actually build a story versus not. But in a market like this, um, a couple things need to happen, right? The default is I'm talking to my CFO, I'm talking to my CEO. I'm not spending any money. Default is no. Don't even spend the time, don't even open the door. The only time that I'm going to spend something is if someone convinces me, ooh, this thing is not what you think it is. It actually is going to solve the most important thing that you're afraid of right now, efficiency, sales productivity, um, support utilization, whatever those things are for me as a, as a, as a, as a business owner, um, unless you can speak to me in a very clear and concise way about what, why what you do solves that in a quantifiable way for the thing that I'm afraid of most right now, I'm getting nothing done. Now, the flip side of that is if I get to the person who actually owns that budget and owns that, uh, that decision and owns that business, right, and can speak to that with that quantifiable thing, then guess what? I can break through that. I can get my sale done even in a world where procurement's the enemy, ops is the enemy. Everybody who's not an executive has heard, "Save money, save money, save money," which means don't spend money on anything. Um, we just had, you know, a, a large deal with a, uh, AMLA 100 firm, uh, that we closed, and right now they're all looking to save money right now, you know. It's, it's tight times. And the sales rep, um, and sales leaders got to the economic buyer and the CF... And it wasn't just one, it was like a CFO, the managing partner of the firm, and they'd been a customer, this was a large expand, um, for years. And yet th- they were not thinking about us as anything more than an awesome technology that applies AI and machine learning to help them do discovery better and shrink the haystack of evidence. But instead, that person heard, "Ooh, wait a second. If I'm able to do this more effectively, I'm turning a cost center into a profit center. Wow, I can retain my employees better. Wow, I can pitch for business better in a more differentiated way in a down market. That is a strategic business lever for me, not a capability that just helps me do something that I normally do." And that partner said, "Wow, I don't know how I wasn't leaning into this six years ago when we first started using you, but this is actually something we need to build our business
- 8:32 – 17:35
How Sales Has Changed in 2023
- RLRich Liu
on."
- HSHarry Stebbings
When you think about sales teams, sales reps, sales leaders, early-stage CEOs leading, and, and sales teams listening to this show, how does our approach need to change in a world where buying power centralizes back to CFOs?
- RLRich Liu
I think particularly in an environment now, and I, I think there's also an overdoing of, like, the CFO running the company isn't always a healthy thing, right? We see the Apple example of like, okay, maybe it's not crazy. But for most startups, you, you, you, you don't wanna just make your investment decisions based off of like pure economic and cost control. You gotta make strate- strategic decisions as a founder, as a CEO. Uh, I would trust my CFO as a partner to help me think through, hey, our... Is the overall business I'm running sort of in the envelope, right? Depending on what growth I think I can get and what costs I need to go get to realize that and how am I doing on my magic number of my cost of acquisition, so on and so forth. Um, so I, I think about it a little different as like a C- a founder versus like if I'm selling to that CFO. If I'm a founder, I'm probably pulling my CFO closer and saying, "Hey, I wanna, I wanna run a high-growth business. I want it to look like this. I wanna invest in these things. I wanna make strategic bets and work with my CFO," if that person's capable to really get down to a little bit more detail about it.
- HSHarry Stebbings
But we're doing pre-CFO. We don't have a path-
- RLRich Liu
Okay. (overlapping dialogue) You're, you're into your, you're into big company, baby. We are- (laughs)
- HSHarry Stebbings
... big players. You've got too much cash.
- RLRich Liu
Yeah.
- HSHarry Stebbings
We're through that, okay? So-
- RLRich Liu
Yeah.
- HSHarry Stebbings
... I'm going, before we used to rock up, show you the product and you'd go, "Ooh, shiny."
- RLRich Liu
Yeah.
- HSHarry Stebbings
And now it's like sell to our CFO, sell to procurement.
- RLRich Liu
Yeah.
- HSHarry Stebbings
What does that mean we need to change doc-wise, team structure-wise?
- RLRich Liu
Ah, okay. If I'm selling-
- HSHarry Stebbings
Should we not invest in product or growth?
- RLRich Liu
Yeah.
- HSHarry Stebbings
Should we invest in sales?
- RLRich Liu
If I'm a founder, and, and that's the environment I'm in right now, and, and I advise and invest in a number of companies who are, are going through this exact same thing right now, right? The sale is real different for sales automation or, you know, whatever the technology is just 6 or 12 months ago. Um, right now, I'm not necessarily saying it's, it's a person, but what I need to figure out in the jobs to be done model is like, I need to figure out what is the problem my product solves and for whom? Right? Like, getting back to that exact, okay, what is the problem I solve and for whom, and how do I quantify that thing, and how do I make sure that that problem I solve is actually something that the CFO, the CEO, the COO actually cares about right now, right? Cutting costs, running an efficient business, sales productivity, you know, margin. I need to be able to make sure I can map back my narrative and what my product does to that big thing. And unless I can do that, I'm not going to get in the room. That can be a, you need a big bad enterprise sales leader to do it. You could be, you need some marketer to do it. But fundamentally, it could be sitting down with your advisors or your investors to say, "Hey, how do I map that back right now?" So I'm sitting with Jonathan Friedman at Demostack a couple of weeks ago, and he's like, "Hey, we're, we're trying to work on this thing." Great. Okay, you have a tool that helps people create demos or you have a scratch pad that helps people shrink down the size of, you know, time spent. Um, right now, without any other information, my CFO is gonna go, "Oh, that's just some other piece of stack that the sales team wants to buy to make their jobs a little easier." Don't do it. Use the tools you have already. Do it in GDS. Whatever the case is, use your CRM. I just need to figure out how I can map that story back to what does that CFO care about? Operating more efficiently, um, sales productivity. If I actually invest in this thing, it's going to make my sales team that much more productive in a proven out way with these data points and with these soundbites.... that is not a, need-a-big-bad-person-to-do-it. It is sitting down with people who've done it, with people who've sold in that. It could be your top sales rep, it could be your advisors, investors, to map out that story track and then put it in a fancy deck or whatever you want, or talk track for your sales team, or prospecting-less messages, right?
- HSHarry Stebbings
What, what else are you seeing with the CR or COO discussions that you're having? Are you seeing a complete pullback in marketing? What, what other trends are you seeing in this new market? I'm fascinated.
- RLRich Liu
Yeah. I, I think right now, um, every founder, every board member, every CFO is, is being pushed to say, "Okay, in this shift from grow to shift to productive growth, what is the operating envelope that we can play in right now," right? I think we're looking ... You know, right now, sales leaders, COOs, CBOs, whatever the, you know, pres- whatever the title is of the person that runs a go-to-market, um, is being asked to say, "Hey, how do you demonstrate that you are building an effective and productive go-to-market on a per rep basis, on a per seat basis?" Whether it's my support org, my CS org, my AEs, my SDRs, my partner people, I'm trying to figure out what is, how do I actually measure the effectiveness and productivity of that org. Bookings per head of rep, ops per rep, source dollars per marketing spend. If I can start to normalize those investments to metrics that actually matter and I can start comparing to each other, then I can start making the trade-offs of, "Wow, is my cost per new booking customer or new booking dollar, is that actually better or worse with an SDR lead or a marketing inbound or an AE outbound if I say they're gonna spend a quarter of their time doing pipeline generation?" That's the kind of effort that I think, even with, you don't need some, you know, crazy expensive analyst to do that. To just start having that conversation and actually making those trade-offs, even if you're a startup, um, to a late-stage private company, to a public company, that version of that conversation needs to happen, and then we can decide for ourselves how do we make some decisions about where we want to invest and don't want to invest in the spirit of what's going to drive efficient growth and productive growth.
- HSHarry Stebbings
Uh, how are you finding renewals? I had Henry Schuck at, um, ZoomInfo on the show.
- RLRich Liu
Yep.
- HSHarry Stebbings
And he said they're actually having to change their org structure because of the challenge of renewals being so much harder, and so they're actually placing a lot more people in data and data kind of enforcement, proving-
- RLRich Liu
Yeah.
- HSHarry Stebbings
... out that it's a really efficient tool to use within organizations. Before, everyone just upsold anyway.
- RLRich Liu
Yeah.
- HSHarry Stebbings
How are you seeing renewals and what's the impact there?
- RLRich Liu
Yeah. So, so a couple things. I'll caveat that at Everlaw we, you know, we sell to the government, we sell to, you know, the DOJ for example, right? We sell to law firms, we sell to corporate legal teams, GCs, so it's different for different folks. Right now though, the default is the same thing that happens on the pre-sale side is happening on the post-sale side, right? How am I rationalizing the use of this tool or the tool to this degree? What am I actually getting out of it? Can we clean out a bunch of this SaaS proliferation across the company? That is coming across pre and post-sale, and so the impact on renewals for, uh, the success org is, we need to have a pure, like, true business justification if we're going to keep, expect that customer to stay with us. So, think about it as the converse or the, the mirror image of what needs to happen on the sales side and why the sales and success side needs to be tightly intertwined. If a lot of these deals ... Think about how we were doing deals like early days of TripActions+Navon or early days of Everlaw. Awesome product, it's great, you sold to o- ... Early days of MuleSoft, right? Sold to a developer who's using it for a project. CFO, CIO doesn't care about that, right? They want to centralize on a tool. They don't see it's valuable. Like, they don't care who bought it and what lower level, mid-level person bought it. So, how do you do that in the post-sale if a lot of your customer base didn't buy that way? That means, ooh, we gotta go figure out how to actually build that from the ground up, the bottom up. Oh, let's take out, let's, let's actually have a conversation about what is ROI? How do you measure it? What are the metrics that you think you should use, that we think you should use? And let's agree on what that looks like. Let's actually set the tone of what good looks like within that. Let's make sure your CFO or CIO or whoever's going to ultimately say yes or no is bought into that as well. And so we almost have to, like, redo the sale the right way with the value message, with the EB engagement, than wh- when we hadn't done it in the front, which is tougher, right? Are you using an account manager to do it? Are you using CSM to do it? Are you using AE horsepower to do it? And then on this pure CS side, even if the profile of our CS rep is make them super successful, help support them, get them launched and implemented, service the admin, the question is, oh, how do we arm that profile of person with enough commercial mindset n- and, um, and tooling and playbooking to say, "Oh, how do I help map the org? How do I help ask tactical questions to figure out what our adoption is or isn't? How do I get some preview into other parts of the org that can be using us or that can utilize different parts of the stack?" Like, give them some of those plays that they can start to seed that and actually build it from the existing potentially tactical relationship out. So I think it's a two-prong thing, but either way without trying, tying clearly to value, um, quantifiable value and agreement of what that value is, um, um, that
- 17:35 – 23:58
Creating The Sales Playbook
- RLRich Liu
relationship's gonna be at risk right now.
- HSHarry Stebbings
Speaking of kind of that tactical roadmap within orgs, so I think kind of we've jumped a step here, uh, which is-
- RLRich Liu
Yeah.
- HSHarry Stebbings
... my fault. But if we kind of go back to the question of, like, sales playbook, who is the person to create the sales playbook? Is it the founder or is it the first head of sales or the first sales rep?
- RLRich Liu
(laughs) Mil- million dollar question. I was talking to a startup founder a few weeks ago, a few months ago, and she said, "You know, I'm hearing mixed messages, Rich. Help me understand. Some of my investors are telling me, like, hire a head of sales, VP of sales, CRO, whatever it is, hire that person ASAP, get out of the picture. You're a product founder, get out of the picture. Like, you're, you're gonna fuck yourselves over by being, you know, being involved." And then another ...... board member saying, "You're the founder. It's early. You gotta be in it. Like, you gotta own it." It's, like, completely opposite. How do I make that out? Same, same founder, and she's like, "Help me out." So I said, "Hey, there's a reason why you hear different things and, and oftentimes..." I think Gokul Rajam just put a post on this. It was like, "Hire the right person for the, the time that you actually... Well, for what you actually need done, not the super late-stage person for the early-stage person and vice versa." But I would say for the, for that particular founder and for that early-stage founder, if you're sort of at that stage where you're still figuring out, like, that question of what is the problem my product solves and for whom, right? What industry, what use case, what profile of person, um, what region? If I'm still at that pl- place where I feel like that's not a really repeatable motion and able to do at scale, if I'm a product founder, I've got to be close enough to help make sure that whatever is happening and whatever learnings we're getting is translating back so that that product-led version of, of sort of that product, market, or product customer, uh, fit is lights out and tight, at least at, uh, the tightest ICP before you scale it out. If you're trying to go bring in a head of sales to outsource that for you at that stage, that's pretty dangerous, right? Ariel at Navan was really involved with a lot of the earliest deals and knew the product, knew the people really well, to the point where he got a really clear view of, ooh, this is our problem to solve, for whom, this is how we'll talk about it, all right? And then at that stage, hey, Rich is coming in, or actually there was a CRO before, before me, uh, is coming in to help that person to do the job. But let's, let's say the CRO is coming in to actually help to scale that motion out. Now, if you have an early-stage salesperson, maybe it's an IC, maybe it's a team lead, maybe it's a player-coach, you've got to be really close to that person to make sure those learnings are coming back. 'Cause that's what you need to happen. The learnings are going back to help shape that product market, product customer fit. As you feel more confident that is, that is there, then you can step further away from that and outsource it to someone who can tell that story to that ICP in the way that you would, and then build a team around it that's gonna do that.
- HSHarry Stebbings
Dude, if you don't know the problem, who you sell it to and how you sell it to them, you shouldn't be doing this fucking company. I mean-
- RLRich Liu
No. No.
- HSHarry Stebbings
... do, anything, 'cause you'll have zero, like, fundraising by the way if you go and do that.
- RLRich Liu
Well, or-
- HSHarry Stebbings
You'll have zero ability to hire the right people if you go and do that, 'cause you've got no idea what you're looking at.
- RLRich Liu
Yeah. What, what am I inspiring them about? What's the story, right? And I met a lot of founders out there that they might have a big vision of the problem they want to solve, and then it gets really murky after that. I don't wanna go work with that founder unless they, we've actually done a little bit of legwork to show there's some MVP of a go-to-market, of a something that works there. And frankly, I've also worked with founders who you said you can't raise money. In a previous funding environment, I worked with, I've, I've talked to and have friends who are founders that actually did raise money. And guess what? They had sort of a murky version of that, that maybe they might have had some initial product market or product customer, some problem they were solving for some people, but maybe it wasn't big enough, or maybe it wasn't meaningful enough. Maybe it wasn't gonna catch in any market. And guess what? They start scaling a team around it, and then six, 12, 24 months later, they're going, "Ooh, we're not in the right business. We're not in the right thing. I can't go back now, because I've already committed to this path." What do you do then, right? Give the money back to the investors, fold up shop, pivot?
- HSHarry Stebbings
Give the money back.
- RLRich Liu
Give the money back.
- HSHarry Stebbings
Give the money back.
- RLRich Liu
Give the money back.
- HSHarry Stebbings
Uh, the question I have for you is, okay, so we both agree that it should actually be the founder building out that playbook. So, uh, then they kind of hire against it.
- RLRich Liu
Yeah.
- HSHarry Stebbings
Should they be hiring a sales rep to jack of all trades, dog test it, really just execute on that playbook? Or should they hire a head of sales to build out a team beneath them?
- RLRich Liu
Head of sales has a lot of, can mean a lot of things in, in SOF or SaaS. It could be a person running a, you know, 500,000 person org. It could be someone who has a CRO title or present title that has no direct reports. So we'll, we'll, we'll use the version of it that we'll define as, like, depends on what role, right? I think the... Throw the title out the window for a moment. I think that first hire, when I'm looking to scale, I'm looking to scale me out as a founder. I'm trying to figure out how do I get someone who can continue to help me shape this message? Because it's not all done yet, right? We, I speak, speak about it sometimes like it's binary. It's not. Uh, to help scale and continue to refine the go-to-market, um, and can give me some scale so that I'm not doing all the sales, so that I have someone who's close enough to me that's giving the feedback back so that we can iterate on that story, on the, the, the ICP, on the, on the product market fit. Yet, is helping me do more as those sales. To me, that could be a player-coach. Um, it could be a player who's stretching into player-coach. It could be someone who has that sort of creativity, but also can get out in front of the customers and help me continue to hone that message. The next role would be the person who can probably run that first line team and continue to help shape that narrative, but also manage a few people to do that, right? And again, where you are in that spectrum of you're hiring that first player to help you or that first player-coach to help you probably depends on how much conviction you have that what you have is ready for that, right? If I'm jumping ahead from that first player-coach or person to go do it with me to the first person who's, like, more of a coach than a player and going to have a team of people doing it, I probably have to be comfortable putting those, that amount of chips on the table. I don't gamble, but like, you know, I've been to Vegas. I'm gonna put five chips on the table instead of one. I gotta have enough conviction that I have enough to go build those five reps around that's going to give me the momentum to go learn it faster or deliver bookings against
- 23:58 – 26:48
Biggest Mistakes Founders Make
- RLRich Liu
it.
- HSHarry Stebbings
The transition away from pr- founder-led sales is, I think, the hardest thing in, in startups in many ways.
- RLRich Liu
Oh, my God.
- HSHarry Stebbings
Uh-
- RLRich Liu
So you do it too slow or you do it too fast, right? I mean-
- HSHarry Stebbings
What are the biggest fuck-ups that you see people make?
- RLRich Liu
(laughs) Biggest fuck-ups would be, one is staying too close, right? I speak sometimes with founders who have, like, 10 sales reps reporting directly to them.... that is like- that makes no sense. Five sales reps reporting directly makes no sense. It completely impedes, and then you also build this, like, sales model where like you are de facto head of sales or head of revenue, and- and you're doing- you're starting to play in territory that you might not be good at in terms of coaching and developing and- and holding accountability, metrics, comp plans, all that stuff. Uh, so- so I think that to me is a, hey, you maybe moved a little quickly against it, or sorry, t- too slowly against it. Too quickly would be, eh, in a couple flavors. One is you hire someone who's like really large scale that has aspirations to be an early startup, thinks it's cool to be in an early startup, maybe was in an early startup 10 years ago or 20 years ago, as your first person. And, uh, again, Gokul's post on LinkedIn, you should check it out, like talks about like they don't really know what to do, or they can't do it without hiring a bunch of other people to do it. That's a telltale sign of like, okay, this person's too far or has been too far from it for too long, and either isn't willing or able to go step back and get their hands dirty to the degree I need done. Hey, build a comp plan from scratch. Build me a sales plan from scratch. I don't have an FP&A team or CFO. I got Google Docs, and like let's go figure out, you know, what you're going to take against this. Let's build like a- a straight up simple comp plan for your reps. Like, be able to play there and wants to play there, and could readily play there. That's really important.
- HSHarry Stebbings
Dude, should we- with- with the rep, should we hire two at a time? Jason Lampkin's like, "Hire two at a time. You'll see who's good." Do we do that or do we hire one?
- RLRich Liu
Yeah. Well, I'm a big fan of two at a time, right? Again, this is the engineer in me coming out. My wife can't stand it and the tile's got to be perfect and stuff. The two at a time thing, right, so much goodness comes out of it. First of all, if you don't have enough conviction in your business that you're hiring a rep but to go hire two, get there. Like get it to the point where you think you have enough to, for- for two versus one, because ultimately you're splitting hairs if you're like, "Oh, well I- I think I can support one rep, not two." Fundraise, get more conviction, the product, the story, whatever. But the two point is just so valuable because cohorting in terms of ramping, the- the supporting each other, the ramping, the competitive elements of it, it's really hard to know is my product market fit fundamentally wrong? Is the way I'm telling the story fundamentally wrong? Is the, you know, is the PG messaging I'm using fundamentally wrong? Or is it the rep that sucks or the rep that can't figure it out? Having two helps to at least give you the minimum viable, like, separate the two and give you a little bit of signal about what's happening, right? Now again, if you hire two great reps, awesome. You have two bad reps, like, you know, maybe you got to re- press restart and- and, uh, and do it again. But
- 26:48 – 33:23
PLG vs Enterprise
- RLRich Liu
at least it helps to neutralize for that.
- HSHarry Stebbings
Do you know what I see as a massive mistake? I see as a massive mistake people doing PLG and enterprise-
- RLRich Liu
Ugh.
- HSHarry Stebbings
... at the same time. They're almost too nervous to do one and commit and burn the boats on PLG, or just be a top-down enterprise org.
- RLRich Liu
Yeah.
- HSHarry Stebbings
For me, I think that's a big mistake. I might be totally wrong 'cause I'm a VC, it's my prerogative to have opinions and be wrong. You're the CRO who knows. Can- when- when doing PLG and enterprise, can you do both at the same time? And what are the thoughts here?
- RLRich Liu
I- I would say it's- it's ... and again, operational definition enterprise can mean a lot of things to a lot of people. It can be any company that's not an SMB. It can be large enterprises like, you know, Coke or Pepsi or- or- or, uh, sorry, Coke or Walmart or Nike. Um, for operational definitional purposes, let's- let's say enterprise meaning, uh, the, you know, few- couple of hundred thousand, few hundred thousand dollars sales rep in a long, protracted, you know, six to 12-month sale cycle, uh, and PLG we'll call sort of pure sort of online self-sell, self-serve. And then there's probably something in the middle of it, which is like a velocity sales assist or sort of inside or sort of inside-outside hybrid model. So again, spectrum, right? I want to make sure we don't fall into the camp of everything is binary. Um, but I would say at a high level, um, I agree that it's really hard to do both well, right? And it comes back to even how you design your product. So for example, Mule s- Facebook, Meta Facebook ads is inherently a self-serve platform, right? Built self-serve first. You sh- can use it self-serve, you can now self-onboard. Everything is built such that you can do it without any hands hold, handholding. And so the way that you build the- the- the people org around that naturally is, okay, well, let's make sure we can get everybody self-s- serving, and then using that as your funnel to figure out, ooh, who are the- the bigger spenders, who has higher potential spend, who's doing interesting things that we can then build back into the product? And then how can we use humans to augment the effectiveness those people are having to go extend them out? And that was what Facebook's mid-market org did, and had actually a lot of the largest accounts in the earlier days. Zynga, Playdough, Living Social, Right, Groupon, the performance advertisers, because they weren't out there selling Nike and Walmart and crushing that yet. They were helping the early advertisers find a lot of success doing that. That's a fundamentally different motion than let's go take someone to a Super Bowl game. Let's go build this great IO. Let's go create cr- these gr- create a pitch with the- the creative agencies selling. So that's just one example, but you build a product inherently differently, and you start to say like, "Ooh, we're going to do that well," and have a really enterprise-ready product is really, really hard. Mulesoft's on the other side of that, right? Heavy, large enterprise integration, APIs work inherently better for larger companies that have a bigger need than sort of small startups when you think about sort of enterprise corporate IT. For a company that has not built a product that is meant to solve for like anybody can come and use it, like Zapier, you know, type of citizen integrator, um, to sort of say, "Ooh, let's all of a sudden think with a different DNA, think with a different go-to-market motion, think with a different marketing motion." You're not doing multi-touch attribution, lead gen marketing, right? You're doing consumer marketing. That's just such a different muscle from a product engineering, go-to-market, marketing success standpoint, that to do both well, you really have to have enough commitment and then DNA.... on the team, and then resourcing to say, "We're going to do it well enough to actually win in both." What I see too often is people say, "We're gonna do one," and they don't really resource it. It's one thing to say you're gonna do it, it's another to actually do it effectively. And they don't truly understand, oftentimes because they don't even have the DNA or experience on the team who's built it, to understand how different and hard it is. So I'm a huge believer in you, you gotta commit to at least one, and it's okay to evolve to the other, which is, uh, what going mainstream often means. But, but don't try and do two, two early.
- HSHarry Stebbings
Okay. So a quick one before we talk about hiring, which I can't wait for. Which one's easier to start in?
- RLRich Liu
It's a good question. As, as a go-to-market leader, I'm, I'm a bit of a unorthodox person who's done consumer, B2B, B2B2C, large enterprise, velocity, PLG. Uh, so I've seen a lot of different businesses through a lot of different stages with different motions and, and different sort of spaces. The intellectual, uh, answer would be, it depends on which one- which space you're in, and what your DNA is, right? If I'm a large enterprise seller to come out, or a large enterprise sales leader to come out and say, "Hey, now we'll do a velocity motion," that shit's hard, right? 'Cause y- you know, you don't have a lot to go off of. If I'm an SMB velocity sales leader that runs 300-person inside sales teams to now try to figure out an enterprise sales motion, like, that might be hard for other reasons. So, I think a lot of it depends on what space you're in and, and which business you should build. Like, if I'm building a, a security company doing enterprise security, I should probably start at the top of the market and then go down, because that's where the inherent need is biggest. And if I'm building, you know, like, an ads business, right, it's, an online ads business publisher, like Facebook, going bottoms up was absolutely right. So if I were TripActions, a B2B2C that's done sort of a mid-market down and then mid-market up, like, that was interesting, 'cause they started where there was a really strong opportunity to make impact at the intersection of sort of the size, who can pay the most, where that problem was the biggest of, like, having this inefficient travel platform, uh, that wasn't user-centric, that wasn't, didn't look nice, uh, but didn't necessarily need to have the enterprise features that, you know, the, the largest companies in the world at the time needed. So I would say a lot of it is depending on what space you're going after. If you're gonna ask me personally what I think is easier, personally, I think it's easier to start small and go up.
- HSHarry Stebbings
I agree totally. I also think and it's 'cause it's the product and growth mindset that's inherent within a PLG-led org where it's product first.
- RLRich Liu
Yeah.
- HSHarry Stebbings
And it's so difficult to imbue that in an enterprise org.
- RLRich Liu
Oh, 100%.
- HSHarry Stebbings
Uh, actually tacking on enterprise sales into a PLG motion, not as hard as one thinks. You get a Maggie Hood of the world, she can do that-
- RLRich Liu
Exactly.
- HSHarry Stebbings
... very well.
- RLRich Liu
Yeah. Maggie helped do that in the un- early days of, of Slack, right? And that PLG sort of buildup with the A.G. Tanning, who was awesome and we worked together at Meta. But, but being able to build that out isn't as crazy, but just don't try to jump too far ahead of where the product is ready, where your success org is ready to support, where your services org is ready. That
- 33:23 – 45:23
How to Hire for Sales
- RLRich Liu
motion, if done right, I think can be super effective.
- HSHarry Stebbings
Dude, we're gonna hire some people now, okay? I've got no freaking idea how to hire them. I am a young first-time founder and you're my-
- RLRich Liu
(laughs)
- HSHarry Stebbings
You're my advisor. So we're hiring our sales, first sales team members.
- RLRich Liu
Yeah.
- HSHarry Stebbings
How do I literally structure the hiring process? How many meetings? What do we do in the first, the second? Is there a third? Help me.
- RLRich Liu
So often I hear from founders like, "My VC, my advisor, somebody recommended this person, so, like, I guess I'll hire 'em." Right? Or somebody tells me, "Go hire the person that came out of XYZ Company that is in my space." Great, I gotta go hire 'em. Or, "Go hire the most senior person." So many of those things are out there. I, I take a lot of my hiring philosophy from, uh, MuleSoft of all places. My wife is a longtime Googler who's famous for doing the, you know, their executive committee has to approve every hire. You know, Facebook had, had a pretty, you know, rigorous and healthy hiring process. MuleSoft turned that to another level and, and really taught me how to, to think about hiring the right way. And that, and Jeff Stump from Andreessen actually has a great, great sort of framework for this around sort of like what is exactly the jobs to be done and how do you break that back into what, what, what skills you need and then how do you vet for those skills? The simple thing that I, that I would say from my, my, my MuleSoft days, and Craig Schott, if you're ever listening, like, thank you for the religion on this. People are the most... It's an adage, it's over-said, it's a cliche, people are the most important thing. Like, that was what that company did better than anything else is figuring out, like, not the product, not anything else, but hiring the best people and then figuring out how to utilize them. And how to do that is, number one, is, like, what do you actually need to do in this job? Like, not just make calls or all that, but what are the, like, outcomes that you want this job to have? Help me figure out the narrative, help me, you know, break into new customers in a evangelical sale versus a sort of, uh, a more tactical, we-already-know-how-we're-gonna-sell-it sale. Like is it a, you know, product sale or I need someone to go spice someone up and get 'em to believe in the world's round when everybody thinks it's flat? Like, what are those things you actually need done? And then let's actually break that down into skills that support it, and then let's actually break down a process that helps us vet for those skills in an effective way. And interviews, by the way, are, like, the most... I- if you think about it, they're actually a pretty ineffective way to understand if someone's gonna be good at something, right? Whoever interviews well gets the job, but that doesn't mean they're a great engineer or they're a great, uh, CSM or they're a great marketer. They, they interview really well. They're great in the room. And I'm terrible in the room, so that's why I say that. But anyway, that's aside. What I need to do is design a process that vets for that. So say I decide, okay, for my enterprise AEs I need really strong operational linear execution. I need strong coachability. I need great in-the-room skills. Let's actually vet for that, designing, number one, structured interview questions that vet for, ooh, tell me how you had driven situation, action, result. Right? Tell me how you drove this type of interaction, what you did, what was the result, how did you do it?... having those structured questions, that vet for those specific skills, and then knowing what a good answer looks like, what a bad answer looks like, and then making sure to ask that question at every time. And ideally, with the same interviewer so that you can get some calibration between candidates. That's really important. So if you build out a light structured interview process, say it's, I don't know, three interviewers, one for track record of achievement, one for, you know, this linear execution coachability, one for-
- HSHarry Stebbings
What is ... What happens in your coachability? Like, track record I get it. I go through MUALS and
- NANarrator
Yeah.
- HSHarry Stebbings
... I go through metrics, I go through trip actions.
- RLRich Liu
Yes. Yeah.
- HSHarry Stebbings
What happens in coachability?
- RLRich Liu
Yeah. How do you actually vet for that, right? So again, I'll, I'll go to the other pieces, but track record, and by the way, a lot of people screw that, like a lot of people leave a lot on the table for that. "Hey, how'd you do?" "Oh, I was a top rep. I was this, that and the other." And they stop there because oftentimes y- everybody, every salesperson can tell you how they were the top. And then the questions that don't get asked are like, "Oh, what were the metrics that you were measured on? Okay. How did you do on that? Great. How many other reps were there in that, that, that cohort, in that region?" "I was the top in my region. I was the top 5%." "Oh, I was the top of two reps." "Cool. All right, that doesn't tell me much." Right? "I was the top one of 10 reps on new business sales, and the average attainment I did was 120 and the average attainment they did was 80." "Oh, that's actually valuable." Right? Asking those clarifying questions, "Over what period? What was the metric? How were you measured? How many people were in that cohort? How well did the others do?" So you can actually get a real sense of, like, repeatability quarter after quarter after quarter, year after year after year, roll after roll after roll. That's actually really important so that we don't stop at, "Hey, I was a top achiever." "Cool." Done. That doesn't give you much. Any great salesperson can never be p- past that. Coachability, right? EQ, those are, like, hard to ask. How do you do that? "Tell me about a situation where you were stuck in a deal. Why were you stuck? What happened? What'd you do next? Who was that? W- what'd you do to get help? Well, what, what did, how did you react to the situation?" Don't lead them there. "What'd you do to get help?" "Oh, hell, I went to and said-" "What'd you do in that situation? Did they engage the manager? Did they engage an SA? Did they go talk to partners outside to go figure out how to go crack that open? Okay. Then what happened? Then what happened? Then what happened?" And you can design these questions and start talking about, okay, what is it, you know, in a real-life situation in my role, what would I want them to do in that scenario, right, to see if they're coachable? You know, the classic one is like, "Hey, what's, um, you lost a deal, what happened?" I'm looking for humility. "Ah, you know, all these other things happened, you know, it wasn't built right," and externalization, externalization, externalization. Or, "I really should have seen this. I didn't do that. I learned that, uh, you know, I should have gone to the EB earlier." "Okay. How, how'd you not go to the EB earlier?" "Well, I thought I had a great champion, they were going to get the deal done." "Oh, interesting. Um, so, and what did you do when your next, you know ... Had, what did you do with that in your next deal? Did you do anything with that?" "Oh, well, you know, I, I started getting with the EB earlier. You know what? That was a one-off. That was a one-off, Harry. It was gonna happen. You know, you can't, can't prevent those from happening sometimes." Yeah, that's a very different response than, "Oh, I've started to do things differently. I go work with my manager earlier to look at the deals and the dealer views. I'm actually going to use these lines to go get to the EB earlier and this is why." So, uh, you can actually, without leading, see how they respond and when you ask them, "Then what, then what, then what? Tell me more, tell me more," you can get some more color around that.
- HSHarry Stebbings
What are big red flags in what you just said? So like, one for me would be like, "Oh, it was Rich's fault, it was Rich's fault," and you just have total, uh, denunciation of blame.
- RLRich Liu
Yeah.
- HSHarry Stebbings
When you look across career track rec- like, track record and coachability, any things where you're like, "Harry, when they say that, be worried."
- RLRich Liu
You know, when I hear things like, "Success was all me and not sharing with, with ... My SA hel- cr- helped me crush it, my CSM was really helping, my managers were really help- my SDR," versus like, "You know, I, I did this, I did that, I did that" and that's it. And then if it's like something didn't go right, "Oh, you know, we had a real deal, um, that pushed this quarter, it was with a, a large, um, Fortune, Fortune 100 and, um, you know, they had a big data breach and, you know, this happened. But you know what? I really should have planned around that. I really should have made sure that we had more people in this org or that org engaged." I think that trend comes out when you think about who owns success and who owns failure and what you do with that. Like, those are some of the things that become red flags or not in how they handle it. And frankly, when people talk about, for example, you know, job changes, a lot of job changing, huge red flag for me. At some point, everybody's got a good reason, but if you say, do one or two year stints for, like, several in a row, that's a huge red flag. You know, performance, when they can't tell me exactly. Great sales reps know exactly how they did every year. Like, I can tell you, "Okay, in, in this year, in 2007, I did this and I made this amount of money. Hmm. I was number one on the sales board. I was number two on the sales board in '03, John Holwick beat me. Damn him, he's an awesome dude, but, ah! I missed out because of X." Like, salespeople know their numbers. If they can't, like, quickly rattle and tell you those things or they start to hem and haw, that's an interesting signal when you're starting to making track record. But again, the interview, structured interviews is only half the story and don't actually give you much. Having an exercise that really ... And you don't have to be a big company to do this. What is something that they would actually do that mimics what they would need to do in the role? Right? "Hey, here's a scenario. Make a cold call to me, wri- write a prospecting email. Run this meeting, but do a prep to say what we're gonna talk about, like how you would set up a meeting and then go run that meeting with me and how you'd pitch maybe our product, maybe it's your own product. And do that mock version of it." Super helpful, and actually rate that. How did they show up in the room? How did they do at setting the, uh, setting the tone, uh, for the meeting and running it well? How did they do at f- at doing discovery? How did they do at actually, um, commercial teaching? How did they do at closing for next steps? Like, how do I make sure I can quickly design a simple exercise to see how they're doing at that? Um, and it can be two parts, but it should be part of the process.
- HSHarry Stebbings
I have to ask, do you do it on your company and so you have the domain knowledge that you can judge and value them against-
- RLRich Liu
Yeah.
- HSHarry Stebbings
... or do you do it on their company where they're operating from a, uh, a situation of-
- RLRich Liu
Yeah.
- HSHarry Stebbings
... safety and domain experience?
- RLRich Liu
Yeah. I, I've done both. Obviously, with your company, you can see if they can quickly a-... do the research, assimilate all the information they get with how to pitch it, figure out the product, and pitch it back to you. If you do their product, you can demonstrate more about how they would run the meeting, how they would do the discovery, how they would, um, how they would sort of practice these core sales skills. So it really depends on what you would want to get out of it more. And actually, I might do either one depending on, you know, do I have, do I have questions of if this person's either smart enough to do my sale or motivated enough to go do the research, or is putting together the pieces, or can actually help tell my story in a way that's better that I haven't thought about yet if it's, like, a new product? Like, can they give me some ideas? If I have questions on, like, core salesmanship or salespersonship, um, I might have them do theirs and, and I can sort of play, you know, play into their role. Or I might do a little bit of both, so we're gonna spend 15 minutes on a meeting here and then we're gonna do, like, a quick five-minute, like, "If you were prospecting and doing PG, how would you help PG me, uh, to take a meeting and go do, you know, our product," right? Um, but that exercise is super important, and then finally, like, references and back channels. Um, I know sometimes people do, you know, the back channel thing is somet- you know, has, has, it's, it's mixed, mixed emotions out there. But I would say, like, if, if we know someone who we trust that has worked with that person's obviously not gonna blow them up that I trust in my network, um, I sure as hell wanna fi- g- figure out some signal. References you can easily give someone who's gonna, you know, sing my praises, but if I can ring fence that at least to direct managers, people who w- that person's worked for, at least I can help to make sure that I'm not getting stuck in there. And when I do that call, I'm not bullshitting it, "Tell me if Harry's good or not." "Yeah, Harry's awesome." "Cool. Thanks, bye." What does Harry do well? What are the areas that you were coaching Harry in? What are the ways that others worked with them? You know, what are those things that actually get it out? And I set it up by saying, "Hey, I wanna make sure this person's set up for success here, that we're the right fit for them so that we don't put them in the wrong type of company." So the more direct you'll be with me, the more open you'll be with me, the more we can figure out that for this human who I know you love and like and trust that that's the best fit for them.
- HSHarry Stebbings
Someone once gave me the best advice on referencing, they said, "People will 99% of the time never tell you their real weakness." So the way that you do it is you say, "Hey, if I was hiring someone to work alongside or beneath Rich, what skills would they have?" And they go, "Oh, y- they'd be super rigorous, they'd be very operationally focused, not need to be so creative, but they'd be very much kind of, uh, by the book and driven in numbers way of operation." And you're like, "Okay, you've just told me that Rich is not operational, but he's
- 45:23 – 48:47
Comp Packages for Sales Members
- HSHarry Stebbings
very creative." It's a really good one. Tell me, man, uh, we need to give these guys an offer, and girls an offer now. Wh- how, what's been some big lessons on comp-, comp packages for sales teams? How should I do it?
- RLRich Liu
Sometimes I hear founders say, "Oh, that person's, like, you know, getting an offer from so-and-so, or they're competing with so-and-so, I gotta compete with this," uh, and, and they get over-anchored into, like, throwing the kitchen sink and, you know, giving half the company to go get them. There are some good benchmarks out there for any role, AE, CSM, marketer, you know, partnerships person, ops person, strategy person. So, so, so trust that any, all VCs, all the talent folks, and recruiter will give you, give you that. The bigger question is also trying to figure out, um, is the person actually at that level and with that experience that you are comfortable making that offer to them, right? I think a lot of the, call it offer inflation out there that we had seen the last few years was like, okay, anybody can be a VP sales, CRO, CRO at a series A, whatever company. And so the whole titling thing got sort of thrown out of whack because the inflation is out there. Um, another thing is like, okay, I do the job for a year, does that make me a great COO? Does that make me a mar- you know, because I got the title now at one place at a company that may or may not be similar, similar scale, similar problems to solve, that doesn't necessarily qualify me for the job. So I would be really clear around, like, let's make sure what you need in the job is, like, based on I need to solve this end of the journey, build a first sales order, go from first to second line leadership, take us from early adopter to mainstream, as we were doing at Navon when I joined. Um, these are the things I need done. Take us down market, take us up market, take us global, take us th- Okay, great. What scope of person do I need for that, and what is the right tiling for that, and what is the, the comp for that? Um, be really clear about that, and then make sure that the person you are hiring actually fits that description, titles aside, experience aside, and that's what you want to use your interview process to go solve. You know, we've had people who, who I've, I've hired, A, this is a, let's call it strategic sales director or RVP role, and that person might have that title at another company. They might have that title or a bigger title, and they're saying, "No, I should be an SVP." Okay, great. You can go with them on that, or you could say, "Well, based on the work you're doing, based on the scope, a- as it translates to us, it's this role, this title." And it's okay to say, "Look, I recognize you can get that SVP, CRO, COO offer somewhere else. This is what this offer is, this is why I believe it's meaningful, the vision that we're selling, the, the, the future that we're gonna create, the opportunities you'll have to grow and learn, opportunities at work," I mean, whatever those things are, to be really clear on what they're getting there. But don't get caught into the, like, I gotta do this title or this offer just because somewhere else. And if you do, do so knowingly. I'm trading off that I'm giving this higher title to someone, to some, some person that I might need to up-level later, because now I can't bring someone on top because I've given this title, I've given this comp, right? I think that's really important to keep in mind, and, and, and sometimes it's easy to say, "Okay, I just need to do this to get someone," and, like, there you go, and, and I'm a huge proponent of being intellectually honest and, and bringing the people around you if you're a
- 48:47 – 52:30
Art of the Sale: Discounting
- RLRich Liu
founder to help you do that, right? Your advisors who know go-to-market, your investors.Um, the executive recruiters who again might have a bit of a conflict of interest in some ways but- but- but those people to help, um, help you shape right.
- HSHarry Stebbings
I want to talk about some of the art of sales though which is, uh, a quarter kind of doing it well, and I'm gonna pepper you with questions. Number one, discounting. Do you do discounting? How do you advise founders on discounting?
- RLRich Liu
Depends on what is- what is the model I'm trying to run, right? Every- every approach has trade-offs. If I'm trying to do like, it's a crowded race, it's a knife fight, we gotta capture share, I'm gonna do the lowest that I can possibly maintain from a margin standpoint to capture that share and do it efficiently, then raise the prices. Is it a, hey, we think we built, even in a crowded space, the best product. It's at a premium. I can clearly tell a story that is defensible and differentiated when I get into that room with the CFO and tell him why you should be worth more. Um, those are pretty different approaches. If I'm... A lot of the founders I speak with, you know, will probably tell me, "Hey, we-" And Everlaw's the same way. "We think we've built the best product. We think we have the best team." We demonstrably get in the room and people say, "Yep, you guys are the best product. You've got- built the best thing by far." Then it becomes a question of how much of a premium can I charge for it, right? And that- that premium depends on how well I can tell the story, quantify the value, uh, have proven results for delivery. And so from that standpoint-
- HSHarry Stebbings
Rich, let me ask you a very direct question.
- RLRich Liu
Yeah.
- HSHarry Stebbings
Do- do you discount?
- RLRich Liu
Yes. If I'm running a PLG, like don't waste your time getting into these cycles of like discounting and not. But if I'm running like an enterprise sale, I like to hold a high list and then figure out how I need to discount to still protect a premium and get the deal done. I'm gonna discount aggressively if I need to break into new space and market but I need to know why I'm doing that, the trade-off I'm making, 'cause that, I'm eating cat effectively, right? It's feeding my cat.
- HSHarry Stebbings
Deal reviews. How often do you do them? What makes a good deal review versus a bad one? How do you structure them?
- RLRich Liu
Yeah. Um, yes, we do them. Bad deal review is everybody get in a room, let's go talk about the deal, see what happened, right? Great deal review, um, you know, my- my- uh, my successor at Navon, Carlos, is- I think who you've met also, uh, has like this nice little simple MEDDPICC template that I stole from him. Thank you, Carlos. Uh, which is, uh, literally like all right, let's actually go through and- and see. Use a framework, any framework. MEDDPICC, you build your own, right? Come out with a message, like, you know, what's the pain? What are the negative consequences? What are the outcomes you want? What are the- the offer scenario and positive business outcome? Use a framework but be religious about actually using it so that you're not just getting in there, "All right, how it's going on with the deal?" You know, and it's sometimes, uh, doing that for all the key deals that are not necessarily just going to close in a quarter but that you need to go evolve from whether it's 10 or 25% stage, the 50 to 90% stage. That's actually where the impact is driven, right? When we're looking at the deals that are supposed to close this quarter, it's like, all right, do you have a close plan? Do you have access to the EB? Have you quantified the metrics? Have you done the validation steps? It's actually that cohort of deals that's like going from whatever you call it that we've done the demo, there's something here. We haven't actually built it into like a verbal commit yet. That's actually where the deal review is the most valuable and I'm trying to grab those deals every quarter and make sure that either me or head of sales or head of Americas, whoever it is, is actually doing that deal review with that set of deals every quarter and you get through 'em quartering it at the time.
- HSHarry Stebbings
Rich, how often do you do deal reviews?
- RLRich Liu
Weekly at least.
- HSHarry Stebbings
Okay. Weekly at least. Got you. Who comes to the deal review?
- RLRich Liu
The rep, frontline manager, and an executive, you know, the VP
- 52:30 – 59:06
Why Deals Fail
- RLRich Liu
sales, the- the SVP sales, me. Someone should be there.
- HSHarry Stebbings
What are the most common reasons that you don't get deals over the line?
- RLRich Liu
I think there's a few places that comes up. Number one is you never had true buy-in at the, to- to start with. You didn't do the deal the right way, yet you're trying to prosecute it and just go through the sale stages. I'll send out contracts, you know, "Boss, I got 10 contracts out." "All right, are any of them gonna sign?" Right? By when, by what? Actually trying to do the contracting and the like operational sale without actually getting over the hump with your champion, with your economic buyer, with a business case that matters, um, that's a huge issue, particularly right now in a changing market. Um, a second one is not getting to the economic buyer and actually selling to them. Right now the, "Oh, I got, you know, I got the EB in back behind the scenes," that's not a true champion. You don't have a deal. Those are probably the things that are hurting deals the most right now in this current environment, in this changing market.
- HSHarry Stebbings
I totally agree with you there. What are the biggest red flags in the first month of a new sales rep joining? What are the signs that, eesh, they may not be right?
- RLRich Liu
They don't do PG, number one. They don't generate their own pipeline. They won't make the calls. They won't actually get out there and get their hands dirty.
- HSHarry Stebbings
So PG is pipeline generation?
- RLRich Liu
Correct.
- HSHarry Stebbings
Okay.
- RLRich Liu
If they are not doing- if they're not doing it early in their tenure, that's a sign, if you've set up an expectation that they should be doing it. To me, that's a big one.
- HSHarry Stebbings
And how do you tell that? Do you look in Pipedrive and see? Do you look in their calendars and see, their email?
- RLRich Liu
Yeah, so- so I'm- I'm looking at... So there's this tacticals activity, but if we could set up basic Salesforce reporting on how many, you know, ops they're generating, how... A- a good rule of thumb is like an AE in my book should be generating at least a new op a week by themselves without SDRs, without marketing helping them in an enterprise software sale, outbound sale. Are you at least doing one op a week? If you're not, okay, are you doing activity? How are you doing it? Do you actually know how to do it? That's the hardest part of selling. If they don't have either the appetite or the skill to do that, you better get it fast 'cause you're not gonna work here. And granted, we should be vetting for that in our hiring process, going back to what we just talked about. That's number one. Number two is when they just don't seem to grok the product. Like if I don't, if I can't grok the like talk track, how to talk about it, how to- how to use the product, how to share it, yes, so we talked about not going straight to a product led sale, a driven sale, but if they're not showing that at a pretty fundamental level and quickly grappling on- grappling onto those sound bites, talk tracks.... um, that's usually a big red flag for me. So between those two, those are pretty early 'cause those are the precursors to, can you actually get pipe? Can you actually build late-stage pipe? Can you actually do deals? It doesn't matter how good they were in the, um, in the, in the room 'cause they might not ever get there.
- HSHarry Stebbings
What are the biggest fuck-ups you've made as a sales leader, Rich?
- RLRich Liu
Oh my God, there's so many. Where do I start? Um, this is one where probably good advice for founders and for, for sales leaders and heads of sales are just getting really aligned on expectations and what's possible and what's not. Right? So number one is, like, I talk to a lot of early-stage go-to-market leaders and early-stage founders who will tell me the flip side of this same question, which is like, "What's possible?" You know, "I wanna push my..." I was talking to a founder and he had just churned out a head of sales. "I wanna push them hard. I wanna, like, make sure that, you know, we're striving and we're, you know, this is like a 10X type of year. We should be around 5X this year. I believe the product is so good that it should be doing that." His sales leader didn't have that belief. His sales leader's like, "Hey, I think this is like a 2X year, one and a half X year, 50% growth year. Here's why." And there was a gap between what was po- what, what each side thought was possible. And instead of, like, solving that and figuring out a target, se- the CEO sets, founder sets a target that's like crazy high. Sales leader's like, "You know, I don't have the confidence to push back or like, like bring this to a head or leave," and takes that. And then you just sort of, you know, will bend over backwards trying to make it happen, see what happens, and then, you know, even if you get to 90% of that crazy stretch target, man, it feels like, oh, we b- run ourselves ragging. We still didn't hit it. You know, maybe the board is like, "Ugh, how come you didn't hit this target?" And meanwhile, growing 4X s- on a 5X target might have been freaking amazing in the, like, just taking all the weird expectations out of it. I've certainly fallen into that camp. That's one of the biggest things that I've done as a sales leader. Uh, so I think it's just so important to get no daylight between what we think is possible, what the appropriate amount of stretch is, so that we set the expectations around the right way. We motivate the team the right way. They have the right feelings of winning. We set the board expectations and company expectations the right way, and most importantly in this environment, we're investing the right way. 'Cause the worst thing is I invest for like a 2X growth year and I grow, you know, one and a half X and I took the cost to grow 2X and it grew a lot less.
- HSHarry Stebbings
What, what would you advise sales leaders in terms of accurate forecasting in 2023-
- RLRich Liu
Yeah.
- HSHarry Stebbings
... what will be a hard year?
- RLRich Liu
Yeah. Um, now is the time more than ever to go inspect what is real and what is not, because things that might have been a deal that you could feel 50%, 75, 90% confident in a year ago, might not close at all this year or might get delayed this year. So like, the difference between deals pushing, deals not closing at all, or deals coming in way smaller, is, uh, in my opinion, do I have direct access to an EB? Do I have a real business case or am I selling it off of a cool, you know, this is a nice product we'd love to have? Um, if I'm doing that kind of inspection for true business case, direct access to EB, you know, do I have a close plan in front of them or an evaluation plan that we've talked about? "By this date, we will do this. By this date, we will do that." You are looking for these three things to go make a decision. These are who the people are who are going to make the decision by this date, and this is what we will show them. If we don't have that, even if it was a good deal last year, it's probably not gonna close this year and it's definitely not gonna close on time. Like, so that level of inspection of your mid-stage pipe and h- and what are the things in your sale you need to have a deal right now and take a fresh look at it, that is what I think everyone should be doing in your entire sort of mid-stage pipe, and building into your early qualification deal proc- or sales process, um, if you don't have it. And again, it could, those are the things I'm seeing, like in different sales, different industries, at different velocities, it could be different things. But that's, um, that's the thing that's gonna keep us from getting surprised around, "Hey, I had this pipe and I had this, thought I had this great pipe coverage."
- 59:06 – 1:05:32
Quick-Fire Round
- RLRich Liu
It turned out it was like fake pipe, and uh, just slipped out or sell-out.
- HSHarry Stebbings
I can talk to you all day my friend, but I wanna move into a quick fire round, which is very much similar to what we've been doing, but essentially I'll be a little bit more disciplined on the timing. So we're gonna start with what sales tactic have not changed over the last five years?
- RLRich Liu
Um, what sales tactic has not changed over the last five years? I would say I'm a huge fan of forced management, um, and that the value framework, you know, whether it's forced management, whether it's like challenger selling, that idea of needing to attach, like do enough pain-based discovery to figure out what are the most important problems or worries or fears or existential threats that that company is facing, that the CEO is facing, that the economic buyer in your org is facing. Like, doing that level of pain-based discovery has not changed. Um, and actually getting to that true, I don't know, Sandler called it like level three pain of like what is the true business pain? And figuring out how to map what you do, your service, your platform, really back directly to that in a quantifiable way, that has not changed. That has not changed one little bit.
- HSHarry Stebbings
What sales tactic, what sales tactic has died a death?
- RLRich Liu
I would say for, for me right now, um, having that perfectly crafted email of like, "Hey, I did-"
- HSHarry Stebbings
Yeah.
- RLRich Liu
"... a great y- UI now. It's two paragraphs. I've done a lot of research." Or I've done the cheap thing where it's like, "Hey, you went to Yale. You were the captain of the volleyball team. What do you think about Yale volleyball this year, Rich?" Like, those types of like pure, write the perfect email and you get a, you get a response, like, that's not going to work right now. Um, I would say, like, multi-touch, and if you're an SDRAE, like multi-touch. I don't get a lot of calls. I won't take a lot of calls. Um, but I will say, like, send me the text. Send me the, send me the... Leave the call, send me the text, hit me on the voicemail, send me the vid- video. Like, hit me in all the ways. Hit me on LinkedIn if you're trying to figure out how to get through to someone.... I think needing to actually be creative and multi-touch. I'm always shocked at how many reps don't do the quick video, or don't do the LinkedIn, or don't do the Twitter, or don't do the G Chat ulti research.
- HSHarry Stebbings
Um, what is the biggest mistake founders make when hiring sales teams?
- RLRich Liu
Um, the biggest mistake, I think, is, is hiring ahead of what you actually have conviction to. You think you are ready to scale and, and, and you're not ready to drive efficient scale. The second is just hiring a leader that is, is, is not really well-suited to what you need done in terms of what you need to accomplish in the next 12 to 18 months, not 24 to 36. And not moving quickly enough to go make changes if it's not working.
- HSHarry Stebbings
What one piece of advice would you give to a sales leader starting a new role today?
- RLRich Liu
Be quick in identifying and driving alignment with the CEO or founder, uh, or your boss, like, "What are the most important things we can get done this quarter? Uh, and what are the two, one or two metrics that I need to show you to show that we're doing this right?"
- HSHarry Stebbings
What would you most like to change about the world of sales? (laughs)
- RLRich Liu
I would love to see more people get into it, instead of feeling like... You know, when I got into sales, I was a, I was a, a gangly engineering student from Yale, and, and I had this understanding that it was for, like, you know, slick, well-spoken, um, white guys that could tell the story the right way, and I sort of had that chip on my shoulder. Um, and I would say that I would love to see more people consider it as a career coming out of any major with any background, um, uh, because it's an amazing career. I've learned a ton, I've met some really cool people doing it, and the reason I'm still doing it is 'cause I keep learning and I keep figuring out ways, um, to do it differently. And in an environment where maybe AI's gonna take our jobs, the ability to go connect with people in a real way, the ability to go show value, the ability to go do deep discovery, um, I think that's at a premium.
- HSHarry Stebbings
And sometimes slick, well-spoken white guys aren't very good at sales.
- RLRich Liu
(laughs)
- HSHarry Stebbings
I wa- I was l- listening to that description going, "Oh, I feel judged. Uh, okay."
- RLRich Liu
Oh, sorry, sorry, sorry. I didn't mean
- NANarrator
(laughs)
- RLRich Liu
... to bum you. Some of my best friends are, are, uh, are, are that. I don't ............................
- HSHarry Stebbings
Uh, dude, you know why? My ego is sufficiently inflated anyway. I will be fine.
- RLRich Liu
(laughs)
- HSHarry Stebbings
Uh, but I do wanna finish on my favorite, actually, which is, other than, you know, Everlore, what one company sales strategy have you been most impressed by recently?
- RLRich Liu
Oh, gosh.
- HSHarry Stebbings
Hmm.
- RLRich Liu
It was a while back, but I, I think one of the plays out, I think, really helped me, even during the pandemic... So, we, we bought Pipl.AI during the pandemic at TripActions they bought. And it was initially to go get, like, contact captures so we can build our, our, our, our database to go, um, track activity and go, um, go better do marketing to those folks. And they started to do this thing where they did the, like, "Hey, we know you don't wanna buy this expensive analytics offering, but we think it can give you some insights." And I'm like, "No, I got a great analytics team. CKC is the best on the pla-..." You know, re- Rohul Deci is, like, amazing." Like, "We got our own stack, we're good." And, and they were like, "Well, just, you know, we'll give it to you for free for six months, just try it out. Like, we'll help you implement it and stand it up, and if it's anything other than amazing, like, you don't have to pay for it." But they built it in the contract, so it's, like, premium in an enterprise software sale, they sort of built a freemium thing into the contract. They worked with us to stand it up and make it successful, and sure enough, we signed, you know, we signed the check to do the, the broader, sort of broader platform buy after that was done, despite a lot of skepticism on my part that it was valuable. Now, that's not to say, you know, that's the, the only way to do it, but in a world where we're trying to drive more bundle size and basket within our customers right now, um, to keep them sticky in an environment that is going to be more friction around buying and keeping pieces of ha- hardware or software, thinking creatively around how to actually build that expansion, that cross-sell into your sale upfront, I think that was a great example of that, uh, that we had. And you got a travel company to buy more software during a pandemic when the revenue went down to zero, I think is a pretty cool feat.
- HSHarry Stebbings
Dude, I love this. Thank you so much for putting up with... It's Friday afternoon, so I've been more casual than I normally am in my straight, you know, lined English box. Uh, but I love this. It's been so much fun. You've been fantastic. So, thank you so much for joining me today, man.
- RLRich Liu
Oh my gosh, Harry, mu- much enjoyment on my side. Um, always a pleasure, and, uh, I hope you have a wonderful weekend.
- HSHarry Stebbings
You are a...
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