The Twenty Minute VCWhy Anthropic Are Causing a Comp Crisis & Why You’d Never Hire From Salesforce or ServiceNow
EVERY SPOKEN WORD
90 min read · 18,270 words- 0:00 – 1:53
Intro
- CPChad Peets
Even if you have the best product in the world, you're still gonna leave money on the table if you have shitty salespeople. If a guy's been at salesforce.com for the last five years, he's never opened a new logo.
- CDChris Degnan
[laughs] ServiceNow?
- CPChad Peets
ServiceNow. Why would you wanna hire people from ServiceNow? They don't know how to do any pipeline generation.
- HSHarry Stebbings
We have two of the greatest sales leaders of the last decade joining me. Chad Peets is the most no BS, incredible sales leader who's worked across some of the most category-defining companies of the last 10 years. And joining him, we have Chris Degnan, who took Snowflake from zero to over $4 billion in ARR. This is a melting pot of 20 years of sales wisdom condensed into one incredible conversation.
- CDChris Degnan
The forward-deployed engineer is a glorified professional services person. If you're a really good engineer, you do not wanna be a forward-deployed engineer. You wanna work on the core product.
- CPChad Peets
Anthropic in particular is offering sums of money the likes of which we've never seen. Do you think they really give a shit how good their sales organization is? I mean, they'll say they do, but do they? Why should they?
- CDChris Degnan
We should've kept hiring. We-
- HSHarry Stebbings
Yeah
- CDChris Degnan
... we slowed down.
- HSHarry Stebbings
Why?
- CDChris Degnan
Because we optimized to be public, and that was a mistake.
- CPChad Peets
I know CRO is getting $100 million packages.
- HSHarry Stebbings
You know, I'm considering being a CRO. [laughs]
- CDChris Degnan
You should.
- HSHarry Stebbings
Yeah, yeah, yeah.
- CPChad Peets
You should give it serious thought.
- HSHarry Stebbings
If you're advising a CEO, what do you say?
- CPChad Peets
First of all, you have to remind them raising a round doesn't mean shit. I think Anthropic's a $4 or $5 trillion company. Ready to go? [upbeat music]
- HSHarry Stebbings
Guys, it is so good to do this in person. We've done shows separately. We have some very exciting news today, which is why we're together in person. But thank you so much for joining me in person in London.
- CDChris Degnan
Harry, it's great to see you in person. I don't think we've ever met in person, so super pumped to meet you in person and be here with my buddy here, Chad Peets.
- CPChad Peets
There are not many people I would fly to London just to spend an hour and a half with.
- HSHarry Stebbings
[laughs]
- CPChad Peets
So it i- it is an honor to be here, and thank
- 1:53 – 3:37
Chad & Chris Coming Together: What They're Building
- CPChad Peets
you for having us.
- HSHarry Stebbings
Dude, I, I'm so excited for this. So I just wanna start with the news of you guys coming together. Can you just share a little bit about the news and what it means?
- CDChris Degnan
Yeah, I think, um, you know, uh, Chad and I have been talking about this for years and, and, uh, and, you know, after I left Snowflake, I, you know, sit on a, a bunch of different boards. And pretty much the number one pain point of any startup CEO is they need help building a sales team. And I started to try to work with other recruiters, uh, and never was I satisfied 'cause I was spoiled 'cause Chad, he co-built the Snowflake sales team with me. And, and I'm like, "Man, I, I, I would love to figure out a way to get Chad involved," and that's how the conversation started.
- CPChad Peets
Yeah, we were somewhat precluded from working together 'cause I had restrictions on who I could work with, and Chris was working with separate companies, so he would ask me to help certain companies, and I couldn't 'cause I had conflicts with my other companies. And so we kinda figured out a way that we could get rid of those conflicts and join up, and I think it's, I think it's the best of both worlds. We have ... There's some overlap between things that he's good at and I'm good at, but there's a lot of things that I can do, uh, and a lot of things that he can do. And when you put us together, it's, it's pretty fucking special.
- HSHarry Stebbings
I spoke to Motown about both of you earlier.
- CPChad Peets
[laughs]
- HSHarry Stebbings
And he said, "The lovely thing about you guys is you're like yin and yang."
- CDChris Degnan
Yes.
- HSHarry Stebbings
You know? Like, Chris is the really bad cop, and Chad's the cuddly teddy bear.
- CPChad Peets
[laughs] Correct.
- HSHarry Stebbings
He's the one-
- CPChad Peets
He nailed it. Yeah. [laughs]
- HSHarry Stebbings
You know, when you miss the quota and you're expecting to be told off, he gives you a hug, and he says, "It's okay. Don't worry. Numbers don't matter."
- CPChad Peets
Yes.
- HSHarry Stebbings
"It's okay." Yeah, yeah, yeah.
- CPChad Peets
Yes.
- HSHarry Stebbings
You said there about building sales teams, and it's the core challenge that early stage and kind of scale-up founders face. How has what it takes to build a sales team changed in a world
- 3:37 – 5:00
Even the Best Product Leaves Money on the Table Without Great Salespeople
- HSHarry Stebbings
of AI as we look at drastically different companies and different company scaling profiles?
- CDChris Degnan
In this age, you're seeing a lot of, you know, product-led growth companies. And, you know, there, there's a lot of order takers, you know, out there. I think the thing that Chad and I pretty consistently agree on is that if we can build outbound sales organizations, sale-led, led growth engines, um, and then you can pile in PLG on top of it, you, you have best of both worlds. So I think, y- you know, our perspective, and, and I don't wanna speak, you know, you know, for you, Chad, but our perspective is build great go-to-market people that we built at Snowflake, that he's built, you know, a thousand times over, that will differentiate the company.
- CPChad Peets
Yeah. I mean, you still have to have folks that are willing to go do the heavy PG. I, I think sometimes there's this notion that, look, we have an incredible product, and sales doesn't really matter because our product is so good it's gonna sell itself. You definitely run into some of that. It's total bullshit. Even if you have the best product in the world, let's say that's the case, you're still gonna leave money on the table if you have shitty salespeople. So to Chris's point, you still have to have salespeople that are gonna go out there and find new business, and that's been our core belief since for, you know, 30 years.
- HSHarry Stebbings
Help me out. We see people with great logos, whether it's any of the big names that we know, and often they are order takers. How do I, if I'm a founder, determine if that logoed person is an order taker or if they were actually genuinely very good?
- 5:00 – 7:05
Order Takers vs Hunters: How to Tell the Difference in an Interview
- CDChris Degnan
It's a question that, by the way, like, every CEO asks me. And, and, you know, the simple answer is give me an example of y- you opening up, you know, two to three new logos in the last, you know, 24 months. And then ask them next level questions like, "Who was your champion? Who was the economic buyer?" But if you start going down that, that, that avenue and they start faltering, it means they're lying. And so you're looking for those people that have that experience of opening up new logos.
- CPChad Peets
Yeah, and it, it's pretty simple. You could look at somebody's resume. If a guy's been at salesforce.com for the last five years, he's never opened a new logo.
- CDChris Degnan
[laughs] ServiceNow?
- CPChad Peets
ServiceNow, right? Let's go hire people from ServiceNow.
- CDChris Degnan
[laughs]
- CPChad Peets
Why would you wanna hire people from ServiceNow? They don't know how to do any pipeline generation.
- HSHarry Stebbings
Why do you say that, for people listening that don't understand?
- CPChad Peets
Well, Salesforce has a monopoly.
- HSHarry Stebbings
Mm-hmm.
- CPChad Peets
And so how much outbound are you doing if you work at Salesforce? You just ... First of all, everybody's already a customer, so how many new customers are you going after? Like, you could talk to a guy at, at Salesforce, he's like, "Yeah, I closed Wells Fargo." What, what? No, you didn't. Wells Fargo's been a customer for 10 years. Like, you might be working on Wells Fargo, but you didn't close Wells Fargo. And so if you talk to these sales guys and they work for a company that absolutely has a monopoly, how are they doing any pipeline generation? What I'd rather find is somebody that works for a company that nobody's ever heard of and actually has an inferior product and was actually able to go to the market with an inferior product and win deals.
- HSHarry Stebbings
Totally agree with you and get that in terms of the inferior product. I always, whenever I'm hiring investors, I like, I look for people who've been at a tier three brand and done really well-
- CDChris Degnan
Done well
- HSHarry Stebbings
... 'cause that's freaking hard to do.
- CDChris Degnan
Yeah.
- CPChad Peets
Otherwise, it's the brand.
- CDChris Degnan
Yeah. Yeah. We hi- like, I mean, I won't name-
- CPChad Peets
Mm
- CDChris Degnan
... the name of the company that, that we were just talking about, but, um, Chad helped me, uh, hire the head of sales, and he was at a very mediocre company but succeeded there for, like, seven years, and so that, that's grit.
- HSHarry Stebbings
I spoke to Matan before the show, and he said that he was gonna hire three regional sales leads, and then you spoke, Chad, to one, and you were like, "This is the guy. This is the guy. Killer sales instinct." How did you detect that so fast? What was it that shone out? And for founders that are listening trying to discover that, what should they look
- 7:05 – 9:25
Domain Expertise vs Sales DNA: Which Hire Wins?
- HSHarry Stebbings
for?
- CPChad Peets
Yeah, I mean, first of all, everybody gets hung up on, like, "Look, I'm in this particular space, so I wanna hire people from the same space I'm in." I never look at that stuff, whether you're looking for a regional VP or a chief revenue officer. To me, it's the quality of the sales organization in which you've operated. Who have you worked for? What was the training methodology? What was the DNA? It's not the company. There's great companies with very shitty sales organizations, and there's shitty companies with world-class sales organizations. So the first thing you look for is what quality of sales organization does the individual come from? Who trained them? Can I call somebody that I know and respect that this person worked for that says, "This person is world-class. They have grit. They have determination. They have all the things you're looking for." So it's a, it's a different way of identifying talent.
- CDChris Degnan
I think that's a problem, too, is, like, a l- a lot of, like, people in, like, the security space-
- CPChad Peets
Yeah
- CDChris Degnan
... they want to hire people with security backgrounds, and for the most part, a lot of the security companies have historically been channel-only or channel-driven sales organizations. So I actually have an affinity of not hiring people out of the, the security space. There are some recent examples, like the, the team at Wiz, certainly a very good sales organization, but, you know, I think, you know, the, the industry expertise does not matter as much as, like, you being successful selling an enterprise technology.
- HSHarry Stebbings
Does our mindset change around building sales teams when we have more technical products and we need sales engineers and that technical aspect becomes more central to the role of selling?
- CPChad Peets
Yeah, I think it does. Like at xAI, for example, um, it was pretty important to us that we hire people. When you're selling an API, that's not an out-of-the-box product, so you have to be more technically astute when selling something like that. So you not only find people that are at least slightly more technical or at least have sor- sold more of a technical product, but you also change how you enable them. Like, our sales guys at, at xAI actually do all of their own demos, which as you can attribute, uh, attest to, that's, that's not the norm. So I think, yes, it l- it changes the profile, but it also changes how you enable them.
- HSHarry Stebbings
We spoke before on message about 20X quotas for ElevenLabs, and I got so much inbound from that, and I think quota setting is so hard for founders today when we're told that we need to grow faster than ever. We see 500 million ARR bandied around so commonly. How do we think about setting quotas in this very new world?
- 9:25 – 12:46
How to Set Quotas: The Risk of Going Too High vs. Too Low
- CDChris Degnan
If you have a company and the, the founder says, "Oh, I should give them $2 million, you know, in, uh, quota," uh, my question, first question is, do you have any evidence to show that you should be able to, they should be able to hit that quota? They're like, "No, but we're an AI company." Well, who gives a fuck-
- CPChad Peets
[laughs]
- CDChris Degnan
... that you're an AI company? Like, show me the data. So from my perspective, if you're building an, a, a great organization and you have a fast-growing sales org, you, and you have north of a million and a half dollars of productivity, of them, of, of a rep that can c- you know, onboard and within six months do over a million and a half dollars, keep hiring faster and faster and faster. If they're doing three, $4 million, don't pat yourself on the back because that means you're missing opportunities. You're missing, uh, opportunity in the market because they're just sitting there, and they're fat and happy. Like, they're just like, "Yeah, it's easy to make my, my number." So I, I, I think it's like, look, make it hard for them to get to a million and a half, um, and, and find those, those hunters, and that's the kind of organization that will, will make you a very differentiated organization.
- HSHarry Stebbings
Is it still four to 5X is good, or has that changed now? I mentioned Clay earlier, and we mentioned Clay, but she said theirs is 8 to 10. ElevenLabs said theirs was-
- CPChad Peets
Historically, it's been if you get 3X your OTE, you're pretty happy. I, I agree it's probably going up, um, because of, of, of just different things that are happening in terms of being able to have, like, a PLG lead source. I think when it comes back to quota setting, I always remind these CEOs, like, "What are you optimizing for? Let's talk about the risk, okay? Let's talk about the risk of setting quotas too low. What happens? You're probably gonna overpay, okay? That, that's a shitty thing to have happen, but can you live with overpaying a sales organization for one year? Because understand if you're overpaying them, what happens. It means you're blowing through whatever forecast you set. Now, again, you're spending too much, but you're pretty happy 'cause you're blowing through the number. Let's talk about the flip side of that. Set quotas too high. None of your sale- I've just brought in a world-class sales organization. None of them are a- making any money. Morale is shit. What happens? The sales organization quits, and if you lose A players, you don't replace A players with A players. As soon as the A players go, the rest of the A players know that they shouldn't go there. So now you're gonna lose your sales org, and you're gonna replace an A player sales org with a B player sales org. So it's about optimizing for the right type of risk. By the way, the other thing that we do now that we didn't used to do is you put windfall clauses in there because there are certain situations, like some of the companies we're talking about, where you could have a rep go out there and find a 15 or a $20 million deal. I clearly don't wanna pay that rep $3 or $4 million in commission, so one of the things we've been adding is a windfall clause that says, "Listen, if we have the right as a company to look at a deal, and if you go do some massive deal, we get to talk about the comp plan and perhaps reset what you're gonna make. So you might still make 2 million, but you're not gonna make five."
- CDChris Degnan
We had that at, I mean, at Snowflake I had that windfall clause, and I probably invoked it five times.
- CPChad Peets
Yeah.
- HSHarry Stebbings
Can you imagine signing, like, the Pentagon for, like, a $30 billion contract when you're AngelList and you're like, "Yep, I'll take my 20%, thank you so much, John." [laughs]
- CDChris Degnan
Yeah, exactly. Exactly.
- CPChad Peets
Exactly.
- HSHarry Stebbings
And h- and here's my resignation-
- CDChris Degnan
Yeah
- HSHarry Stebbings
... as well.
- CDChris Degnan
Exactly.
- CPChad Peets
I'm retiring. Yeah.
- HSHarry Stebbings
Uh, can, can I ask you, we, we see again the companies scaling faster than ever. If you're advising a CEO, one of my biggest problems that I see now is CEOs who bluntly get a little bit high on their own supply.
- CPChad Peets
[laughs]
- HSHarry Stebbings
They've raised a lot of money, and, like, revenue's seemingly scaling. What do you say to keep feet on the ground when sales are scaling fast,
- 12:46 – 20:00
Raising a Round Means Nothing: How to Keep CEOs Grounded
- HSHarry Stebbings
but it's a continuous game?
- CPChad Peets
First of all, you have to remind them raising a round doesn't mean shit, okay? The fact that you were able to get a, you know, three guys to write you a big check doesn't mean you've accomplished anything. And you have to constantly remind them of that because there are definitely CEOs that will raise a round and, uh, a- and take a victory lap. It means nothing. And the right CEOs know that, but some CEOs don't. So first of all, you have to remind them of that, like, you haven't done anything. And then you'll get some of these CEOs that'll say, "Well, look, I'm doing this. I can get the best CRO in the world." No, you can't, okay? You've got good traction. Here's what those CROs are looking for. By the way, there's four or five guys in the world that are the best in the world, and they can go do anything they wanna do. Let me explain to you why you're not ready to get that guy. And you have to sort of reset expectations. Like, look, you've got good traction. There's good things happening here. You're, you haven't accomplished quite as much as you think you've accomplished. The other thing is, is your revenue sticky? Is your ARR sticky? So all this monthly recurring shit that you see, it can be a head fake, right? Because there's, there's no moat. He and I talk about this all the time, right? Go get booked contracts. So the first thing I say is they say, "Look, here's my ARR." I say, "Well, is it ARR? Is it annual recurring? Let's talk about how you define ARR." 'Cause oftentimes they'll take monthly recurring and they'll lump it into annual recurring. You can't do that.
- HSHarry Stebbings
Yep.
- CPChad Peets
And so you really have to dig into a lot of this stuff to really understand the health of the business.
- HSHarry Stebbings
We're seeing this real opacity around revenue, and, uh, it's just murky around how most of it's calculated. Like, my peak day was 10 grand. I'm gonna extrapolate that out. I'm now a 3.6 millionaire-
- CPChad Peets
Yeah
- HSHarry Stebbings
... ARR.
- CDChris Degnan
Well, and you've se- you, you have naive founders and naive sales leaders who are then saying, "Okay, yeah, let's pay the sales team on, you know, the, like, monthly in arrears billing," and we're, and there's no commitment. And, and at Snowflake, I didn't pay the, the, the sellers until they got a booked contract, an annual contract. And so, like, it's silly to pay a sales team on something that's just, um, like, an on-demand contract. No way. We never, you should never do that because it, it's, it's not durable revenue, and there's risk. And so these founders are like, "Oh, look at this." Well, dude, what happens if X, Y, Z company or Anthropic comes out and replaces you tomorrow? Like, there's no moat. There's no contract. There's no moat. It's easy to move. Like, these are things that are real- that are really concerning, that, that I get concerned about in working with these founders.
- CPChad Peets
At some of these companies, you're actually... I, I find myself having to explain to them the value of having booked contracts. They're like, "They're paying monthly." I'm like, "I know, but we need them to be booked." "Why?" That creates friction in the sales process.
- CDChris Degnan
Lower margin. They get up- upset. It's lo- lower margin.
- CPChad Peets
It's lower margin.
- CDChris Degnan
Yeah, yeah, yeah.
- CPChad Peets
It creates friction in the sales process because, y- you know, I can understand the friction, right? If they just have to flip the switch, and they can start doing it. But there's no moat there, so there's no loyalty. There's no nothing. So if you have a competitive, if you have a competitor, and a month later the competitor comes out with a product or a feature that's better than yours, these guys will just switch off of you. The point of having a booked contract is, there's lots of points, but one of the points is you have time, so they can't just switch off you the second something goes wrong.
- HSHarry Stebbings
Well, th- this was gonna be one of my questions, which is, uh, Jason Lambkin from Sasa, kind of famous Sasa investor, said, uh, on a show recently with me, uh, "Multi-year contracts bluntly mean less than ever because if you don't have usage, they're essentially just deferred churn." Um, yeah, but, but-
- CDChris Degnan
That's... I, I don't know, man. I don't agree with that at all.
- CPChad Peets
[laughs]
- CDChris Degnan
I think that's just a... Is that, is he a VC?
- HSHarry Stebbings
Yeah.
- CDChris Degnan
Yeah, that's probably a typical VC saying. I think, like, you, you have to go in, and you have to then sell. Like, in a consumption model, you have to get usage. So, like, we talk about forward deployed engineers. Okay, well, that's an ideal situation to deploy a forward deployed engineer or a professional services person, which I think m- you know, that's the right approach, um, putting a professional services person in and then get dr- to drive consumption of the contract. And the sales team needs to be incentivized to drive the consumption, not just to book the deal, but to drive consumption.
- HSHarry Stebbings
How do we feel about the enthusiasm around FDs? You know, I had, um, Matt Fitzpatrick, who's the CEO of, um, Invisible, which is a kind of billion-dollar company that sells data like Macaw and all the others. Um, and he's like, "If you wanna sell to enterprise, you have to have an FD model." Is that true? And is the enthusiasm around FDs right?
- CDChris Degnan
I, I mean, it depends. I mean, he-
- CPChad Peets
Yeah, I mean, it, it depends. I mean, I know a lot of people that think forward deployed engineers simply make up for a shitty product.
- CDChris Degnan
Uh, there's, uh, and there's something to that, right? I mean, like, look, you're basically... And I, I won't mention companies here, but there's big companies out there that just send hordes of forward deployed engineers into those companies that are basically just building the, the product that they don't have on site and then basically calling it all one big product. So I, I, I think there's a balance. I think there's, uh, a world where they add a lot of value, but I think you can get carried away with it. The, the, the forward deployed engineer is, is a, a glorified professional services person 'cause, like, if you're a really good engineer, you do not wanna be a forward deployed engineer. You wanna work on the core product. And so then you go out in the field. You develop some product in the field that may never make it back into the core product. Then as a customer, you're left holding that bag, and you have to then support that product later on. There's a lot of technical debt that, that forward deployed engineers are gonna leave, and there's a ton of risk. Um, and, and again, they're not, the forward deployed engineer is not as good as the core engineer that's building the core product. That's just fact.
- HSHarry Stebbings
Can I ask, going back, we said what if it's all going well? The flip side is what if it's going badly? What do you do when you have a sales team that's not hitting goals, that's not hitting target, and you need to fucking motivate the troops? How do you do that?
- CDChris Degnan
I mean, you know, I just had this conversation yesterday with a company that I'm involved in, and, you know, he had a segment of his business, you know-That, that missed the number. And, and um, I'm like, "Okay, let's look at did, did every rep in that organization miss? Did every manager miss? How's the second line manager?" And turns out that, like, the problem is probably the second line manager. And so, like, you have to take action, um, because people are apathetic. If people get lazy... And I've gotten lazy. I was got- I got lazy. I brought Chad back into Snowflake 'cause I got lazy.
- HSHarry Stebbings
[laughs]
- CDChris Degnan
Um, and, and so it happens. Uh, and so you have-
- HSHarry Stebbings
Did he kick you up the ass?
- CDChris Degnan
He fucking kicked my ass, man.
- HSHarry Stebbings
[laughs]
- 20:00 – 32:23
Are VCs Any Good on Boards? Mostly No
- CPChad Peets
to have? Eight. What happens if they don't? We're not monitoring it. Are you rolling out medic consistently? No, we're not. How much time are you spending in the field with your team? Not very much. I mean, it was de-
- CDChris Degnan
Second line managers weren't going, going on sales calls. I mean, uh, there was a whole bunch of rot that was my fault.
- HSHarry Stebbings
But o- but other than that, it was pretty good?
- CDChris Degnan
Yeah. [laughs]
- HSHarry Stebbings
[laughs] That aside, it was fine. It was g-
- CDChris Degnan
Yeah.
- HSHarry Stebbings
But you know what? Culture was strong. The work from home Friday brought it out. [laughs]
- CPChad Peets
Well, that was the other thing. Look, I mean, Snowflake had a massive IPO, and so we had a bunch of fucking people there that made a bunch of money and were just hanging out investing.
- HSHarry Stebbings
D- this was what I was saying to Chris before you arrived, was like, I have so many friends at some of the biggest companies, uh, who are making tens of millions.
- CPChad Peets
Yeah.
- HSHarry Stebbings
Does that make it much more challenging when you're trying to build a sales team of ambition and hunger, when suddenly people are cashing out 10, 20 in liquid secondary markets?
- CDChris Degnan
And oh, by the way, they don't have a quota.
- HSHarry Stebbings
[laughs] Like, what the hell? How, what kind of organization is that? Is it totally bullshit not having incentivization tied to performance?
- CPChad Peets
Of course. What's the point? It's ludicrous. So think about some of-
- HSHarry Stebbings
But if you look at, like, uh, I, I, I don't wanna name names, but I... Big names, they've famously not had it tied to. Not tying it is a mistake?
- CPChad Peets
Yes. How, how do you hold anybody accountable? Like, if I'm a s- okay, I'm an A+, you're a D, okay? You don't do shit. I work my ass off. I sell 50 million, you sell 10 million, and we make the same amount of money. You feel fucking great 'cause you're hanging out making a bunch of money, not doing shit, and you're a loser. No offense.
- CDChris Degnan
You're golfing every Friday.
- CPChad Peets
I'm busting my ass, kicking your ass, and I know I'm kicking your ass, and we get paid the same? Uh, uh, there's a word for that. It's called socialism.
- CDChris Degnan
Socialism. Yeah, I knew you'd say that. [laughs]
- HSHarry Stebbings
Welcome to Europe. [laughs]
- CPChad Peets
Yeah. [laughs]
- HSHarry Stebbings
It's lovely to have you in London.
- CPChad Peets
Yes. [laughs] It does not work. It simply does not work.
- CDChris Degnan
It, it works until it doesn't. Like, these, these companies are, you know, hey, look, it's raining purchase orders right now at these companies, but that day will change.
- HSHarry Stebbings
One-on-ones was one of the first ways that you said, "Ugh," you know, "We weren't having them." What do you advise sales leaders on how to do one-on-ones correctly, how often they should do them, how to best do them?
- CDChris Degnan
Every week. And, and I think, like, it's actually a good way to use AI. I mean, because now you can have your, you know, you could get into Claude or whatever it is you're gonna do and have, you know... Tell me about their calendar. Tell me about their forecast. So then you as the manager coming super prepared and saying, "Okay, well, how... Tell me about these sales calls. Tell me about y- these, these deals." And, and you're, you're way, way more informed. But dude, it's not like, "Hey, bro. How are things?" Like, that's not a good one-on-one. A one-on-one is the manager asking really hard questions about how their, their, their business is going, and it's really to hold the individual contributor to the frontline manager, the second line manager accountable, and that's, like, the, that's what was not happening when you're not doing those one-on-ones. Those one-on-ones need to happen every single week, um, consistently. Consistency matters. If showing up, like, every month, they're gonna be like, "Yeah, they don't really ask me tough questions."
- HSHarry Stebbings
I'm doing 15 new meetings a week, but I'm not converting.
- CDChris Degnan
Fire. I'm firing you.
- HSHarry Stebbings
Why?
- CDChris Degnan
Because, dude-
- 32:23 – 34:08
When in Doubt There Is No Doubt: How to Fire Quickly & Kindly
- CDChris Degnan
so you g- you gotta, you gotta do it now." And I'm like... And he's like, "The problem you have, Chris, is you have too much empathy." He's like, "So, you know, but when you have doubt, there's no doubt." And, and really I learned that from Frank, is making those hard decisions quickly, it, it actually, it does so many things. First of all, you get rid of the rot. Uh, second of all, it makes other people better because you, all of a sudden, you are a performance-based culture. You're getting rid of someone who's not performing, and people look up to you. So I've had to make very hard decisions, multiple senior, uh, people that I've fired throughout my career. Super... I hate firing people. It, it, it makes me sick to my stomach.
- HSHarry Stebbings
Any advice to founders, 'cause I hate it too, on, on how to do it well from what you found?
- CDChris Degnan
With this senior person, I had to... I, I said, "Listen," like, "hey man, it's not working out and I feel really bad, but this is not gonna work out." He goes... A- and his response to me was like, "I can change." And I'm like, "I've done enough research. You cannot change. It's not going to m- make a- any difference. Uh, we are not gonna change our opinion. I am super sorry. You and I are good. We're good peop- I'm not gonna go talk smack about you out in the world, but this employment engagement is over, and here's my HR," and that's it. You have to do... say as little as possible, get out, out, in and out quick. Um, but be kind. You don't have to be an asshole about it.
- HSHarry Stebbings
I, I totally agree. Do performance improvement plans ever work?
- CDChris Degnan
No. I, I, I have seen them work, but it's, like, a rare occasion. It, it's a sign for you to leave.
- HSHarry Stebbings
Can I ask, we're seeing revenue scaling, um, unlike anything we've kind of ever seen before. Uh, in that world, forecasting becomes more and more challenging. Any advice on how to do sales forecasting in a world where it's just, like, kinda thumb in the air? [laughs]
- CPChad Peets
It's, it's-
- HSHarry Stebbings
Could be 300, could be 400
- CPChad Peets
... it's
- 34:08 – 36:20
Forecasting in Hypergrowth: The Bottoms-Up Approach
- CPChad Peets
super hard. Like, we've always done it, um... Forecasts have always been data-driven. You know, you take a productivity model and, and we can pretty much tell you with 90% certainty historically where you're gonna end the year based on what you're getting per rep, how many reps you hire, what the attrition rate is, what the ramp rate is. Uh, and so you, you, you build those. The problem is, um, in this world today, first of all, doubling is not good enough. So going from 50 to 100, five years ago everybody'd be super excited. Today you go from 50 to 100 in a year and you might go out of business. Uh, it's just, it's a different world. And so you have to have some balance between... You can't throw out the old way of doing it, the data-driven, 'cause I've seen companies try to do that. I've seen them raise off of numbers where they said, "We did 50 last year. We're gonna do 300 this year." I'm like, "Great. Back it up. How? How are you doing 300? Show me the numbers." "We just feel like we can do 300."
- HSHarry Stebbings
What do you want them to say? "Hey, each rep carries two million quota. We're gonna bring in-"
- CPChad Peets
Yeah, not quota, but each, each... Quota's a, a function of, of compensation. Uh, productivity. Each rep is able to generate $2 million in new ACV. We're gonna have 100 of them, so we can do 200. So you still have to use that approach, but then you have outlier deals.
- HSHarry Stebbings
Is... Sorry, is it naive to assume rep productivity scales linearly with size? Like, do you not always get de- denigration?
- CPChad Peets
That... Snowflake was the first thing, first company we had ever seen where we couldn't hire fast enough to bring the productivity number down. No matter how fast we hired, it kept going up, which is like, that's when we knew-
- HSHarry Stebbings
What a lovely problem [laughs]
- CPChad Peets
... we've got something.
- CDChris Degnan
We... And, uh, I mean, we said it earlier and I said it on your last podcast, we should have kept hiring. We, we slowed down.
- CPChad Peets
Yeah.
- CDChris Degnan
We slowed-
- HSHarry Stebbings
Why?
- CDChris Degnan
Because we optimized to be public, and that was a mistake, in my opinion.
- CPChad Peets
Yep.
- CDChris Degnan
And that, by the way, I, I am, I w- my hand was on that wheel, so, you know, so-
- HSHarry Stebbings
I, I, I was sitting down with a company that, um, we both know very well, um, but I'm not gonna name it 'cause I'll get in trouble, and they were saying, uh, like, "Oh, we need to scale from 100 to, like, 300 reps, uh, in a year." And I'm like, wow, adding 200 reps in a year, it's, you know, half a day almost. Is it possible to add 200 reps in a year at a Series B, C stage and not lose quality?
- CPChad Peets
Um-Look,
- 36:20 – 41:49
Snowflake's Biggest Mistake: They Should Have Kept Hiring
- CPChad Peets
there's, there's all sorts of rules you have to break to do that. For example, [clears throat] you never want a new manager to have less than five productive reps. You can't scale the organization from 100 to 300 and not have that. What I mean is, if I have a manager, he's got five reps on his team, he or she, three of those reps should be productive, two can be new. But if you try to hold that, then you start running out of places to put reps. So now all of a sudden you have to do things like, I could have a manager that has six reps, each of those six reps has been with the company for less than 90 days. Shit starts to break when you do that. So your ratios get messed up. Your enablement could have issues. You start cutting territories too quickly. "Hey, Mr. Rep, you came on with 50 accounts. Six months later, you have 10 accounts." So can it be done? It can, but if you're gonna scale that quickly, the market better be massive and you better have a product that everybody wants to buy.
- CDChris Degnan
What, what do you think the n- like the most number of reps we hired in a year at Snowflake?
- CPChad Peets
I think one year we went from 100 to 300.
- CDChris Degnan
Yeah. That was pretty wild.
- HSHarry Stebbings
How many reps can you have under a manager?
- CPChad Peets
Six.
- HSHarry Stebbings
Six, is it?
- CDChris Degnan
It, it depends. Like ch-
- CPChad Peets
At scaling. When you're scaling.
- CDChris Degnan
Yeah, when you're scaling it's, it's six. But at scale, like you can... Like if you're not growing as fast and you're not hiring as fast and you have a bunch of productive reps that have been in the seat for six months or longer, you could have like eight or nine. And, and especially with AI, you can use AI to like give you a bunch of data, uh, leading indicators on, on what's happening to those reps.
- HSHarry Stebbings
Do you ever find ramp or onboarding for reps to be well done by early-stage companies?
- CDChris Degnan
Uh-
- HSHarry Stebbings
It's really hard to do, I don't know.
- CDChris Degnan
It's, it's, it's hard. I, I, I think like this is why I think the hardest job in, in technology sales is the frontline manager. The frontline manager is the key to development of the reps because like in all honesty, like your, your enablement at a Series B company is not that great. It's not. You're, you're, you're trying to do some stuff. You might have an en- enablement person. Um, you're gonna teach them on how to sell medic and, and everything like that, but it, it happens at the frontline manager level. So developing your frontline managers, hiring good frontline managers is really, really important.
- CPChad Peets
There's a company out there that I've brought into almost every one of my portfolio companies called RevLogic, and all they do is build enablement programs for early-stage companies.
- HSHarry Stebbings
When is the right time to really be, be investing in enablement?
- CPChad Peets
Early.
- CDChris Degnan
When you're building a sales team, early.
- HSHarry Stebbings
Is that like 2 million in revenue or like 20 million in revenue?
- CPChad Peets
Uh, uh, I, I don't think you can pick a revenue number, but if you're gonna, if you're gonna have 10 or 15 reps, for example, if you have five reps, you don't need it. But if you're gonna... If you have 10 or 15 reps and you're going to 50, you better have it.
- CDChris Degnan
It's 'cause you're... Think about it. You're ex- you're building ex- you're spending a lot of money building out that sales team.
- CPChad Peets
Yeah.
- CDChris Degnan
You might as well invest in developing them.
- HSHarry Stebbings
Is there anything specifically we can do to make sure reps ramp quickly?
- CPChad Peets
Well, ramp is... Remember, there's a couple things that go into ramp. Number one is the sales cycle itself. So to, to define a rep as productive, right? A productive rep, if, if the productivity per rep is a million dollars per year, the first quarter they're productive is the first quarter you can expect them to do 250. So first of all, you have to... People get this definition wrong all the time. Like the second a guy does a deal, he's productive. Incorrect. It's the first quarter in which they hit their full productivity number. And so if you have a sales cycle that's six months, how do you get the ramp time less than six months? You can't. So the two things that go into shortening ramp time are the sales cycle itself and then the enablement of the rep. So there's two things that go into it. You can do a good job of getting the enablement to happen within 90 days, but if your sales cycle is six months, you're still gonna have ramp time of six months.
- HSHarry Stebbings
What are the biggest mistakes you see people make, founders managing those reps in that time?
- CDChris Degnan
Well, I think they arbitrarily come up with numbers. Like, like we were saying earlier, they're like, "Oh, the, we should do $3 million 'cause we're an AI company. Um, oh, I can..." We talked about another company where they, they were like, "Oh, we don't need real salespeople. We can hire," uh, s- uh, I don't even wanna... They, they call the, the salespeople. And it's like, "No, dude, like you need, y- you know, y- you can do weird things until you don't, and things will end badly for you." So I, like from my opinion is like invest in, in a great sales organization as soon as you can.
- HSHarry Stebbings
You know, I, maybe I'm getting old, but I don't like the like gamification of the, the like scaling game. And what I mean by that is like we need to hit 15 million because then we'll raise 100 million-
- CDChris Degnan
That's right
- HSHarry Stebbings
... at 500 million.
- 41:49 – 53:16
99% of VCs Have Never Operated: Why That's a Board Problem
- HSHarry Stebbings
the companies they work with?
- CDChris Degnan
99% of them are not. They're, I mean-
- HSHarry Stebbings
Why?
- CDChris Degnan
'Cause they've never been operators. So like they're just regurgitating, you know, something they heard in another board meeting that they think might be-
- HSHarry Stebbings
Or podcasts.
- CDChris Degnan
I ha- I was on a board call. I was on a board call of a se- a seed stage company, um, and one of the VCs got, got in and said, "When are we gonna do our first million-dollar deal?" I was like, "Dude, how about you shut the fuck up?" [laughs]
- HSHarry Stebbings
[laughs]
- CDChris Degnan
I mean, it's like what value is that at all, right? So yeah.
- HSHarry Stebbings
I was once in a board meeting and they say, "I know what we need. We need, we need more sales."And I was like, "Shit, let me just, um-
- CDChris Degnan
[laughs]
- HSHarry Stebbings
... more..." So what did you say? Sales?
- CDChris Degnan
That's the best-
- CPChad Peets
Good
- CDChris Degnan
... advice I've ever heard.
- HSHarry Stebbings
Geez.
- CDChris Degnan
Yeah. Thank you for that.
- HSHarry Stebbings
[laughs] James-
- CPChad Peets
Yeah
- HSHarry Stebbings
... that's a good one.
- CPChad Peets
Yeah, yeah, yeah.
- HSHarry Stebbings
So what are the best board members that you sit on boards with do on the flip side?
- CPChad Peets
The best board members, uh, that I sit on boards with are the ones that, uh, know something in particular, product for example-
- HSHarry Stebbings
Mm
- CPChad Peets
... and add a lot of value in a particular area on that board, and offer their input, and are involved in the business enough to have a point of view. Which means not just showing up at the board meetings. Actually have conversations with people inside of the company in between board meetings. And so they combine the knowledge that they've gained with the expertise that they have, and they use that to actually add value. But they also understand their swim lanes. The board members that drive me fucking nuts is, like, when I'm sitting in a board and I have some guy on the board that's a VC that doesn't know fuck all about sales that wants to chime in when we're talking about sales, and give us his suggestions, and start asking questions. And I'm just looking at the guy, "Can you just shut the fuck up?"
- CDChris Degnan
I think the, I think the best board member that I've ever seen, um, is, is Mike Speiser. I w- And in building Snowflake, that guy was so... He was a founder of the company, and then he was so involved in the product. And he d- And he, and he... When he didn't know about sales, that's why he brought in John McMahon to b- be on the board of Snowflake. Like, there's like, he knows where he's good at and he knows where he's not, and he's super valuable. So he literally probably the best board member I've seen.
- CPChad Peets
Yeah. Mike's, Mike's amazing.
- HSHarry Stebbings
Mike is absolutely amazing.
- CPChad Peets
And, and McMahon was the same way. Like, John would come in-
- CDChris Degnan
Totally
- CPChad Peets
... I, I sat on four or five boards with John. John opens his mouth when we're talking about sales, and honestly, that's, that's where I learn from. So when I'm sitting in a board meeting, when we're talking about what I know, I'll say what I have to say, and then I don't say shit.
- 53:16 – 54:54
Seat-Based Pricing Is Dying: The Shift to Consumption
- CDChris Degnan
Yeah. I, I, I think they're gonna have to... Like e- every SaaS company h- that, that is a per seat is having the conversation right now of how do they introduce some sort of consumption into their pricing model? Because there's risk that, you know, um, you know, companies have less employees, and even though you might be, you know, gaining market share in terms of number of customers, you might be losing revenue because you're gonna ha- if you're a per seat license. Um, and, and a l- a lot of times, like the s- the reason that Snowflake was a consumption model is 'cause our underlying cost of goods was also consumption. So, you know, CFOs didn't like... They tried to force us into, uh, a traditional licensing model and we said we, we were no, s- said no. And so tough, tough luck Mr. CFO. This is the new world. This is how it is, so
- CPChad Peets
It definitely changes, uh, how you think about the sale too because in, in the traditional world, it was go book a deal and walk away, right? And, and the sales guy didn't have to care. A- as we experienced at Snowflake, and I'm experienced at every company, you, you can't have that. The rep has to be invested in, uh, the long-term relationship with the account because they have to ensure that the account is in fact consuming, otherwise they'll go book a deal, walk away, and the account doesn't consume, and the company's got a, a gross retention problem. So you have to tie some of their compensation, most of it's still to the booking events, but you have to tie some of it to the consumption so that they are incented to make sure that they don't overbook deals, that at the same time that the customer is actually consuming what they bought
- HSHarry Stebbings
We were downstairs before this and I showed you the video where I said work from home Friday is, uh, an excuse for a three-day weekend. Do you find that this generation of sales rep is aware of the requirements to win?
- 54:54 – 58:12
Is This Generation of Sales Rep Soft?
- CDChris Degnan
I mean, I think there, there was a time where, you know, these reps, there, there's this entitlement, this like, you know, generational issue. Um, and I think COVID accentuated it, um, and, and really started the three-day work week. I think, [laughs] um, I think now, um, you know, you, you talk to any college grad, um, and they're struggling to get jobs. Um, and that's, that's changing their mindset. And so a lot of these people who have these entitlements, they're gonna have a bunch of young kids come up and steal their lunch because they're gonna go out and wanna work 'cause they're desperate to work. So I, I do think it's gonna change.
- CPChad Peets
It's a cultural issue, at least in the US. I mean, if I look at the US, we're just, as a country, we're soft. People have forgotten that we actually have to work hard to achieve the things that we've achieved in the US. I won't speak to Europe 'cause you know how I feel about Europe. So I think it goes... I think it's far more broad than just salespeople. I, I, I think it's an issue. And, but I will say, uh, over the last year or two, I, I'm seeing it swing back. Like, some of the founders we've talked about that I've worked with, um... I, I mean, uh, personal situation, I'm working 70 hours a week. My, my wife talks to me not that often because she's super pissed about the hours I'm working. I'm like, "You don't understand. Everybody I'm working with is working 70 hours a week." That was not the case a couple years ago.
- HSHarry Stebbings
Chad, why are you doing it? I mean this in a nice way, dude. You don't need the money.
- CDChris Degnan
He's a psychopath.
- CPChad Peets
Um.
- HSHarry Stebbings
[laughs]
- CPChad Peets
I love to work, and I love to win, and I love to be around people that are smarter than me, and I love to build incredible companies. I love it.
- CDChris Degnan
The thing that- that's, like, genuine about Chad is he's relentless. And sometimes that can be taxing because you, you sometimes don't want the feedback that he's gonna give you, but he's generally right, and, and he will not let it go. He's a dog that's chasing that bone, and he will not let that bone, bone go.
- HSHarry Stebbings
So I'm, I'm very like Chad in many ways, but I've learned that people thrive on the carrot or the stick. I, I'm sure he's very good with the stick, but [laughs] but some people thrive on the carrot.
- CDChris Degnan
I, I'm, I'm... That's why we're, we're partners.
- CPChad Peets
That's why we're so good together. [laughs]
- CDChris Degnan
That's why we're partners.
- HSHarry Stebbings
Is that it? Because I struggle with giving the carrot. Can you... Do you... Can you give both in one person?
- CDChris Degnan
You can. You can. I think, like, look, like, there are-
- HSHarry Stebbings
Does he ever give the carrot?
- CDChris Degnan
No.
- CPChad Peets
Come on. There's some carrot in there.
- CDChris Degnan
There's, there's some. There's some.
- CPChad Peets
Come on.
- HSHarry Stebbings
There is.
- CDChris Degnan
There is some. There is some. Chad, Chad is really good for me because I will try to be nicer than I, than I need to be. Um, and he'll hold me accountable to, like, making sure that we, you know, there is more stick in my delivery. Um, but I, I think, you know, what I try to do is build a sales organization that was not a bunch of assholes. And, and so Chad respected that. He helped me build that organization. There are sales leaders out there that are assholes. They don't care that they're assholes, and they'll build, they'll build an organization that is a bunch of assholes. Um, that's fine, but that's not good long-term to build a long-term, you know, sales organization.
- HSHarry Stebbings
Which organization has the most assholes?
- CPChad Peets
[laughs] I'm not touching that.
- CDChris Degnan
I knew, I knew you'd ask that. I, I, I... Yeah. Yeah. I got in trouble last time I was on this podcast.
- HSHarry Stebbings
[laughs]
- CPChad Peets
Oh. [laughs]
- CDChris Degnan
I called someone a dick and a liar last time, so yeah.
- HSHarry Stebbings
That went down so well. [laughs]
- CDChris Degnan
Yeah, yeah. That was really good.
- HSHarry Stebbings
You, you mentioned, like, you know how I feel about Europe. I, I'm not, I'm not kinda deliberately teeing you up, but, like, if I'm a European founder listening, as there are tens of thousands, what do you advise me then?
- 58:12 – 1:13:07
Why European Founders Struggle to Build World-Class Sales Teams
- CPChad Peets
I just think it's hard to find the types of people, uh, harder, I should say, to find the types of people, particularly outside of the UK, in Europe, that are willing to put the effort in that I think is required to be successful. I, I just think it's challenging, and I think it's very difficult to fire people in Europe, as you know.
- HSHarry Stebbings
Yeah.
- CPChad Peets
I mean, you wanna hire in Germany or France and Spain and decide you wanna fire somebody, it's next to impossible. And so having things like performance management and so on and so forth are challenging. Uh, I think Europeans have a different expectation in terms of work-life balance. I'm not saying it's wrong, it's just different. Uh, and I think that can make it challenging.
- CDChris Degnan
One of the, one of the mi- I made plenty of mistakes in Europe. One of the mistakes is, was putting the inside sales team and SDRs in Amsterdam. Um, as soon as you put someone and saying they're not working out and they're getting a PIP, the first thing they do is they go on sick leave, and then you're negotiating with lawyers. It's the worst. I mean, it's the worst.
- HSHarry Stebbings
So what happens there? They go on sick leave and then...
- CDChris Degnan
And then they come back for, like, a day, and then they go back out on sick leave. And, and then they're like, "Well, how much are you gonna pay me?" And, and if you're in a company that is, the, the stock is worth a lot, they're gonna be really painful to get exit out of the organization. It's just, it's a pain. So-
- HSHarry Stebbings
We, we have one company, and they wanted to fire someone, but they couldn't, and so they had to have them resign. So the game was how can I make this person resign? So every day the CEO came in with 1,000 block of page, like, white paper, and said, "Every day you need to check that there's 1,000 pages and that we're not being ripped off." And then at the end it'd be like, "I wanna double-check that one." [laughs]
- CPChad Peets
Did it work?
- HSHarry Stebbings
After two weeks. [laughs] Isn't that savage?
- CPChad Peets
Yeah.
- CDChris Degnan
The best, the best European performance management story I have is the guy who was my German country manager had a underperforming rep. That rep decided he wanted to go part-time, and German law allows him to go part-time. Um, and so what he, what the, the, the, the country manager did is said, "Okay, good news," to this sales rep. Um, he was trying to negotiate him to get him to leave. He wouldn't leave. He wouldn't leave. He said, "Uh, great, great news. We're, every Monday morning, the day that you're in the office, you're gonna drive two hours into Munich, um, and we're gonna have a one-on-one four-hour development session, and I'm gonna develop you to be the best sales rep ever." Uh, and he just grilled him for four hours. At the end of that four hours, the rep said, "I don't think I wanna do this again. I th- you'll, you'll have my resignation tomorrow." He talked to his lawyerHis lawyer said, "Well, you shouldn't do that." Uh, so, so then Arian came back and said, "Okay, guess what? I'll see you on Monday." Uh, uh, Sunday night, the guy resigned 'cause he just made it so difficult. I think you just have to, like, performance manage the hell out of people and make it very difficult on them.
- CPChad Peets
It's also just a mentality. Like, nothing irritates me more when I get into these companies than when I see people whose mentality is, "What can I get out of the company for giving the least?"
- CDChris Degnan
Yes.
- CPChad Peets
Drives me-
- CDChris Degnan
Yeah
- CPChad Peets
... fucking insane.
- CDChris Degnan
Yeah.
- CPChad Peets
Uh, and I will tell you, when I got back into Snowflake, uh, I, I saw it everywhere and, and it just... It's like, look, we are here. We are privileged to get to work for this company. You are here to fulfill a critical role. I can tell you that's how I view my job. Like, if I don't think I'm adding as much value as I possibly can, I will leave 'cause I can't live with myself. And I think you have to try to find people that are like that, but there's so many people that are just like, "Oh, it's a big company. Let me take, take, take, take, take and give as little in return as I can to get away with it."
- HSHarry Stebbings
Do you think it's possible to have a large thousand person plus company without that lack of attachment to the brand and to the company?
- CPChad Peets
I mean, I'll tell you, at, at, at SpaceX and xAI, uh, they have done an incredible job of having people that believe in the mission. Clearly, it's not 100%, but everybody there believes in what they are doing and wants to be there, of course, to make money, but they want to be there because they believe in what they're doing.
- HSHarry Stebbings
What do you think they've done specifically to give that belief, that enthusiasm for the mission?
- CPChad Peets
Part, they hire for it. I mean, it's a big part of it. I mean, they hire for it. They, they... You get a very quick feel when you're interviewing there for, like, what this thing is all about. They talk about mission all the time and, and they believe in what they're doing. They, they believe, we believe that we literally are doing things to save the world. Now, you can question that all day long, but that is the belief, that we are doing things to change the world.
- CDChris Degnan
And you're gonna make a lot of money 'cause you can do... You can be, work at a nonprofit and do the same thing, but you're gonna make a lot of money at, at SpaceX.
- CPChad Peets
Most likely.
- CDChris Degnan
Yes.
- HSHarry Stebbings
What have you changed your mind on most in the last 12 months?
- CDChris Degnan
I, I think we talked about it fr- from my perspective is, is the, the go global as fast as you're going.
- CPChad Peets
Yeah.
- CDChris Degnan
Like, that, that to me is, is crazy. Um, I, I would've... A year ago I would've said, "No way." Like, "You're... Don't do that." Um, now you kinda have no choice. It's a sprint. Um, it's a hyper-competitive market. Um, I, I like, you know, I think the world of, uh, Matan at, at Factory, and I think he's got the right mindset. Uh, he, he wants to go and win. Um, so he's just going as, you know, balls to the wall and, and that's what you have to do. So that's my biggest kinda, I have to kinda shut up when I, when my instincts are saying, "Don't do this. Don't go to Europe. Don't go to APJ right away." I kinda have to sit back and say, "You have to do that now."
- HSHarry Stebbings
What was yours, Lee?
- 1:13:07 – 1:23:24
Quick-Fire Round
- CDChris Degnan
be.
- HSHarry Stebbings
Okay. Are we ready for a quick fire?
- CDChris Degnan
Yeah.
- CPChad Peets
Yeah.
- HSHarry Stebbings
What, what's the most controversial belief you have about modern sales teams and how they should be built?
- CPChad Peets
One of the challenges when, when building, when you go talk to a CEO about building an enterprise sales organization that, that becomes controversial is the cost. Um, when you say things like, "For every five reps I need a manager," that's expensive. F- uh, when you say, "For every four managers I need a second line manager," that's expensive. When you say things like, "It's going to take six months before you get anything out of this investment," and you're going to invest in 100 of these people, and for the first six months of buying these 100 people you're gonna get nothing for it. Uh, companies look at this and they're like, "You want me to spend a shit ton of money?" And then you say things like, "Right, and at the end of the year you're gonna lop off 25% for attrition. We're gonna attrit 25%, which means the forecast is gonna go down by 25%." They see these numbers, and the first couple years of enterprise sales are very, very expensive. And that, in this day and age, that is very controversial.
- HSHarry Stebbings
25% attrition a year?
- CPChad Peets
Yeah, that's normal.
- CDChris Degnan
Yeah.
- HSHarry Stebbings
Are you serious?
- CDChris Degnan
That's inclusive of promotion.
- CPChad Peets
Yeah.
- CDChris Degnan
Like it's promotion, it's voluntary and involuntary attrition.
- HSHarry Stebbings
Remove promotion, what, what's left, 20%?
- CPChad Peets
At least, yeah. Because think. Look, every, every healthy sales organization should be attriting the bottom 10% every year. You should be getting rid of 10% of your sales force every year.
- HSHarry Stebbings
Do you think most companies are doing that?
- CDChris Degnan
No.
- CPChad Peets
No. No.
- HSHarry Stebbings
How do you do that? If I'm genuinely, if I'm a sales leader, do I just, "Okay, it's December" [laughs]
- CPChad Peets
No, you're doing it quarterly.
- HSHarry Stebbings
"Chris, it's time to..."
- CPChad Peets
No, it's quarterly.
- HSHarry Stebbings
It's quarterly.
- CPChad Peets
Every quarter you're looking at the team. Like you should be able to get rid of, uh, two and a half percent of your sales organization every quarter.
- CDChris Degnan
Performance management is not an annual thing. It, it, like, and I think that's-
- CPChad Peets
Yeah
- CDChris Degnan
... like a lesson that I learned, is you do have to continuously do it. You have to hold people accountable.
- HSHarry Stebbings
Do you worry about building a culture of fear?
- CDChris Degnan
Look, we, at Snowflake we had a great culture, and early on I, we were, we were, uh, firing people for underperforming. Um, and like I said, you don't have to fire people and be an asshole about it. I think you can let them go, wish them the best, don't be a negative reference on them. Um, but good performers, you know, actually like to see that you get rid of bottom performers, 'cause that means like they're special and, and it, and it's meaningful.
- CPChad Peets
Like, like if I'm an A player, is that gonna deter me? If you tell me, "Hey look, every year we get rid of the bottom 10%," I'd be like, "You fucking better. If you don't I don't wanna come work there."
Episode duration: 1:23:34
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