Jen Abel: Why founders should target tier-one logos earlier

Through $75K to $150K ACVs and vision casting over problem-based selling; Abel argues the mid-market is a trap and design partners are for learning.

Jen AbelguestLenny Rachitskyhost

Nov 9, 20251h 21mWatch on YouTube ↗

EVERY SPOKEN WORD

150 min read · 30,213 words

0:00 – 4:38
Welcome back, Jen!
1. JAJen Abel
  You need to vision cast. You need to sell to a gap, don't sell to a problem. When you're selling to a leader, you need to be selling an opportunity. The market doesn't wanna be sold to, they want to buy.
2. LRLenny Rachitsky
  Most founders would rather get 10 10K deals than lose nine and get one 100K deal.
3. JAJen Abel
  In the very early days, people will discount 'til the cows come home 'cause they think that's the way to get a deal done. The best clients are not going to do that to you. If they're sitting there nickel-and-diming you, they're not fully bought in on what you're selling them.
4. LRLenny Rachitsky
  It might be giving you a false sense of success and product market fit.
5. JAJen Abel
  As soon as you become a comparison, as soon as you become one of three that they're testing out, you've already sorta lost. It's all about differentiation. Here's what you will be able to do tomorrow because of how we're gonna serve you today.
6. LRLenny Rachitsky
  Something else that you talk about is that enterprise sales is very creative.
7. JAJen Abel
  It's more of an art. It's all about deal crafting. It is a relationship you're building with someone. If they know they can call on you, people will turn over rocks for you. I have a client at a Fortune 10 company where I was like, "It's so important we get the deal done this year. Is that possible?" And she's like, "It's a tall order, but, like, if it's gonna help you, let's do it." These are how enterprise deals gets done. It's relationships.
8. LRLenny Rachitsky
  What's kind of, like, the state-of-the-art on go-to-market outbound tooling?
9. JAJen Abel
  I don't use a tool. The thing about AI tools is they're all pulling from the same databases. I wanna email someone not in the database that's getting hit by a million folks. I wanna take a backdoor in, not the front door where everyone else is trick-or-treating.
10. LRLenny Rachitsky
  Today my guest is Jen Abel, co-founder of Jellyfish, where she and her team help early stage founders learn how to sell, and now GM of Enterprise at State Affairs. If you want to become better at selling your product, this episode is going to blow your mind and make you so much better in every way. This is the second time Jen's been on the podcast. Our first conversation was focused around getting from zero to one million ARR, essentially founder-led sales. This conversation is part two, going from around one million in ARR to around 10 million. This is the most tactical and in-the-weeds discussion you will find anywhere for free on how to actually become more effective at selling to enterprises. I am so excited for you to listen to this conversation. If you enjoy this podcast, don't forget to subscribe and follow it in your favorite podcasting app or YouTube. It helps tremendously. And if you become an annual subscriber of my newsletter, you get 17 incredible products for free for an entire year, including Devin, Lovable, Repl.it, Bolt, n8n, Linear, Superhuman, Descript, Whisperflow, Gamma, Perplexity, Warp, Granola, Magic Patterns, Raycast, ChatBRD, and Mobben. Head on over to lennysnewsletter.com and click Product Pass. With that, I bring you Jen Abel after a short word from our sponsors. Here's a puzzle for you. What do OpenAI, Cursor, Perplexity, Vercel, Plat, and hundreds of other winning companies have in common? The answer is they're all powered by today's sponsor, WorkOS. If you're building software for enterprises, you've probably felt the pain of integrating single sign-on, SKIM, RBAC, audit logs, and other features required by big customers. WorkOS turns those deal blockers into drop-in APIs with a modern developer platform built specifically for B2B SaaS. Whether you're a seed stage startup trying to land your first enterprise customer or a unicorn expanding globally, WorkOS is the fastest path to becoming enterprise ready and unlocking growth. They're essentially Stripe for enterprise features. Visit workos.com to get started or just hit up their Slack support where they have real engineers in there who answer your questions super fast. WorkOS allows you to build like the best with delightful APIs, comprehensive docs, and a smooth developer experience. Go to workos.com to make your app enterprise ready today. This episode is brought to you by Lovable. Not only are they the fastest growing company in history, I use it regularly and I could not recommend it more highly. If you've ever had an idea for an app but didn't know where to start, Lovable is for you. Lovable lets you build working apps and websites by simply chatting with AI. Then you can customize it, add automations, and deploy it to a live domain. It's perfect for marketers spinning up tools, product managers prototyping new ideas, and founders launching their next business. Unlike no-code tools, Lovable isn't about static pages. It builds full apps with real functionality and it's fast. What used to take weeks, months, or years, you can now do over a weekend. So if you've been sitting on an idea, now is the time to bring it to life. Get started for free at lovable.dev. That's lovable.dev.
4:38 – 8:08
The myth of the mid-market
1. LRLenny Rachitsky
  Jen, thank you so much for being here and welcome to the podcast.
2. JAJen Abel
  Lenny, it's starting to feel familiar and I like it.
3. LRLenny Rachitsky
  (laughs) I should've said, "Welcome back to the podcast." So I actually shared on Twitter that you were coming back and I had so many people ask so many questions. Clearly there is a lot of confusion and a lot of need for, uh, learning how to get better at the stuff we're gonna talk about. Sales, enterprise sales. To frame the discussion, the, our first chat, which we're gonna point people to if they wanna start there, we focused on founder-led sales, which is essentially the beginning phases of a startup kind of going from zero to about 100 million ARR. This discussion is on the next phase, which is going from about a million ARR to about 10 million ARR in enterprise sales. Not like PLG or anything like that.
4. JAJen Abel
  Yeah.
5. LRLenny Rachitsky
  You have a bunch of really strong and counterintuitive opinions and piece of advice on how to be successful at this. So I'm just gonna go through a bunch of these things. We'll see where it goes. Before I get into the first one, is there anything broadly, I don't know, is there anything broadly you wanna share? Anything you wanna say before we dive in?
6. JAJen Abel
  No, let's dive right in.
7. LRLenny Rachitsky
  Okay. Okay, so the first thing that I haven't heard anyone talk about before is this, uh, point that you often make that the mid-market does not exist. People often hear about enterprise companies. There's obviously SMBs and startups. There's also people just like, "Oh, I'm gonna go after the mid-market, somewhere between." You don't think that's real. Talk about your experience there, what you, what people should know.
8. JAJen Abel
  It's fascinating 'cause you have, if you ask someone to describe the mid-market... Eh, actually if you ask someone to describe the enterprise, every single person has a different answer, right? It's either based off of revenue, it's either based off of market cap, it's based off of employee size. And I think a lot of people can get lost because selling to a 100-person organization is a radically different game than selling to a 1,000-person organization, and there's no, there's no like hybrid approach. So the best way to think about it is you have small business, which is typically can be really powered by marketing, and then you have enterprise, which is typically going to be sales led. If you bucket them into these two very specific silos, it makes it much, much easier to understand what game you're playing. Now, when we talk about mid-market, I usually will say, "Are we talking about the upper end of small business or are we talking about the lower end of enterprise?" And most people are usually seeing the lower end of enterprise, and I say, "Great, know you're playing the enterprise game, know the type of people you need to hire, know the type of ACV they need 'cause it makes it a lot easier than trying to have this middle ground that catches everything that doesn't distinctly define SMB and enterprise." So I say the mid-market doesn't exist because what is a mid-market hire? It's either lo- it's either low-end enterprise or upper-end SMB, and if you bleed those two games, you're gonna lose. They're so distinctly different. So that's kind of my theory on it.
9. LRLenny Rachitsky
  You have this chart that you shared with me that we'll link people to where you kind of show the number of companies within each of these segments, and there's basically nobody in this kind of middle segment. Talk-
10. JAJen Abel
  That's right.
11. LRLenny Rachitsky
  ... about that a bit.
12. JAJen Abel
  That's right. And just like the power laws, I mean, if you look at the Fortune 1,000, um, and the, and then the kind of the lower end enterprise from there, the, the ga- it, like, it trails off so fast. Like power laws totally exist in these like large corporations. And I, I, I... and we can't be treating everyone the same.
8:08 – 10:50
Targeting tier-one logos
1. JAJen Abel
2. LRLenny Rachitsky
  This begs the question, where do you, uh, suggest companies start? There's obviously startups classically, or just like innovators move fast, can make quick decisions. Enterprises have all the money. Uh, cl- usually the advice I hear is just don't go after the fancy companies to start because they take a long time. They're n- you don't wanna screw it up. What's your advice on where to start for most companies?
3. JAJen Abel
  The exact opposite. Early adopters are those logos because they have to continue to stay at the number one spot. So they'll take, they'll take tons of, you know, uh, swings to continue to stay in the number one. Staying in the number one spot's the hardest part, right? So those number one logos are like, "If you can give me just a slight bit of alpha, just a tiny bit, that's where I get, that's where I get promoted, that's where I get the pat on the back because we are the world's leader in our industry and we cannot be disrupted there." So there's this running joke where, uh... not a running joke, there's this running statement where a lot of VCs will say, "Don't go after tier one logos. Go learn down market or go learn from, like, logos that don't necessarily carry a lot of weight." The ones that carry all the weight are the ones that are willing to take a shot and wanna help, right? Because, um, they also wanna be a part of... they also wanna be able to, uh, dictate the roadmap. Now, it's the founder's job to decide what, what can be done and what shouldn't be done, but their voice takes you $100,000 deal into a million-dollar deal in a very short period of time.
4. LRLenny Rachitsky
  Mm-hmm.
5. JAJen Abel
  It will literally guide you there. So when someone says, "Hey, go after startups at your short sales cycle," yeah, they're... like that, that makes sense. I totally get that. It's a very... it's very easy to decide... to find the decision maker. It's very easy, you know, you have to go through procurement, but in the age of AI where it's all about sucking the oxygen out of the room and winning the deal and getting your foot in the door as quickly as humanly possible before someone else tries to take that, you wanna get to the enterprise as fast as humanly possible.
6. LRLenny Rachitsky
  Just so folks understand what we're talking about here, uh, when you say tier one, what's a good way to think about what tier one logos are?
7. JAJen Abel
  Tier one is like your Walmarts, your McDonald's, your NVIDIA, your Tesla, your Exxon Mobil, your, um, UnitedHealthcare, the logos that, like, are the leader in their space and, um, you know, their job is to stay in the number one spot.
8. LRLenny Rachitsky
  Wow, so your advice is... 'cause this is very counterintuitive. This is exactly what you hear not to do. Your advice is go after like the Chevrons and the Mobils-
9. JAJen Abel
  Oh, yeah.
10. LRLenny Rachitsky
  ... and the Walmarts as a startup.
11. JAJen Abel
  C- because if you can get them, that's all the proof you
10:50 – 15:35
Vision-casting vs. problem-selling
1. JAJen Abel
  need.
2. LRLenny Rachitsky
  How do you approach finding someone? Let's just get tactical there, just, like, say you're going after Walmart. I know this is, like, not, like, a five-second answer, but just how would someone approach finding someone at Walmart to sell to?
3. JAJen Abel
  First of all, make sure the founder's involved, right? They love... everyone loves talking to a founder, so, like, don't... And there's... We'll start with le- let's get the founder involved as fast as humanly possible. The second is you need to vision cast. You need to sell to a gap, don't sell to a problem. There's a very big difference between problem selling and gap selling. Problem selling is highly specific, more technical than not, and it's the, it's the way that every salesperson is gonna go about it. Find the problem and anchor to it. When you're selling to a leader, you need to be vision casting and you need to be selling an opportunity, right? Which is, "They are here. Here's where we can take you." You know that, that image where it's like, uh, Mario, or Mario, Mario, Mario, and then there's, like, the mushroom and then-
4. LRLenny Rachitsky
  Mm-hmm.
5. JAJen Abel
  ... there's, like, Mario on blast? And everyone's like, "Don't sell the mushroom, sell Mario on blast." Well, that's exactly what it's saying. It's, it's about selling the opportunity. That's what gets the tier one logos excited, and that is the best thing for a founder to sell, selling the vision versus the problem, and also it's...... it's what gets them to wanna take a swing. Who wants to take a swing because you can do some small problem? They're not gonna go to bat for that.
6. LRLenny Rachitsky
  What's an example of a vision cast in a company you've worked with, just to make this real? Like, what does it look like when you've done a great job?
7. JAJen Abel
  We have an ability to deliver alpha, meaning we have information, we have data, we have, um, a way of working that no one else can do or is going to unlock a new way of thinking for you, or an ability to deliver to a customer, or an ability to solve a problem. Right now, this i- y- you have an ability to access this level of information. I have an opportunity through our resources or through this ex- like, gated data we have access to to get you much further upstream so that you can get information faster, sooner. It's kind of like the high frequency trading, that one second, that one second. It's, they didn't do much. They, you know, they didn't sell, "Oh, w- we're doing fiber cable connex- connectivity." We're giving you one second of alpha before everyone else. It's, it's more of, like, that ability, and that's not problem selling. That's opportunity selling.
8. LRLenny Rachitsky
  I like this phrasing of just giving them alpha. That's such a simple way to-
9. JAJen Abel
  Yeah.
10. LRLenny Rachitsky
  ... imagine what this should feel like.
11. JAJen Abel
  Mm-hmm.
12. LRLenny Rachitsky
  We'll link to that image you're talking about with the Mario and, uh-
13. JAJen Abel
  You know that, you know that image?
14. LRLenny Rachitsky
  Yeah, uh-
15. NANarrator
  It-
16. LRLenny Rachitsky
  ... and the person that made that image, uh, originally it was Kathy Sierra, if you remember her.
17. JAJen Abel
  Oh.
18. LRLenny Rachitsky
  Do you remember? So there's this person, Kathy Sierra. She's from back in the day. This was a big, uh, I don't know, lesson she taught is you want to not sell your people on, like, a feature or product. You wanna sell 'em on, uh, uh, them becoming a superhero.
19. JAJen Abel
  Yeah. That's right.
20. LRLenny Rachitsky
  They are now a superhero because of the thing you've built for them. And so, so the vision here is here's how you become a superhero. Here's how this alpha will help you become more successful.
21. JAJen Abel
  And that's why founders are so good at selling, because they, they're, they naturally go to vision selling and vision casting versus a typical trained salesperson is find the problem, um, uh, you know, ask these questions, and it just kills the vibe. It just feels like you're talking to a salesperson, right? It's like, "What's your script?" And it's like, that's not vision selling. That's, like, playbook selling, and that, and in the age of AI where it's a- a lot of it is about alpha. It's about speed. It's about getting access to information. It's about training data, like, and look at them, look at how the market's reacting to it, right? It's all, it's all opportunity and it's all, um, yeah, it's all about the alpha.
22. LRLenny Rachitsky
  So just to make this more concrete for people, say I'm, like, salesperson at Cursor. What would be an example of vision casting? Like, the obvious idea there is your team will be more productive. You'll get more done. You'll move faster than everybody else. Is that a big enough vision to cast?
23. JAJen Abel
  I think it may be more of, like, you'll be able to actually hire the 10X engineers that you don't necessarily have access to because they wanna be able to use this type of tool. It's about getting, letting them get better th- letting them get differentiated talent, right? Or that's probably more of what I would anchor to of, like, this is the, the 10X engineers use Cursor. You don't. Do you want access to 10X engineers?
24. LRLenny Rachitsky
  Hmm, like, they won't even join your company if you're not using Cursor.
25. JAJen Abel
  Yeah, yeah. Like, think about it. There's so many, so many people are so specific about what they're able to, espec- I think especially technical folks. Like, I'm not a technical person, but I would imagine that they're not gonna go to, you know, they don't like to go to these corporations 'cause they're forced to use some, like, incumbent, incumbent tools.
15:35 – 20:45
The importance of high ACVs
1. JAJen Abel
2. LRLenny Rachitsky
  Going back to the going after these larger companies-
3. JAJen Abel
  Yeah.
4. LRLenny Rachitsky
  ... I asked your, uh, colleague, Justin, what he, what he sees you do that most impacts the success that teams have with their sales process, and there's a bunch I'm gonna touch on. But one is, uh, most founders are insecure about asking for large ACVs for charging, or they, the way he put it is most founders would rather get 10 10K deals than lose nine and get one 100K deal. Talk about your advice there and what you see.
5. JAJen Abel
  There are, in the very early days, people will discount till the cows come home 'cause they think that's the way to get a deal done, right? The best, the best clients are not going to do that to you 'cause they, they, th- th- they, like, of, that's like a qualification criteria, right? Which is, like, if they're sitting there nickel and diming you being like, "No, I don't, I don't, I don't believe it's worth this. I don't believe it's worth that," they're not fully bought in on what you're selling them. So when, when, when I say I'd rather get one $100,000 deal than 10 $10,000 deals, I'd rather have one rockstar client that's gonna help me figure out the next stage of where this is going than 10 or maybe five that are a good fit, five that are not, and I still have to serve those five that are not a good fit, and that's gonna distract me. So this is why I love enterprise sales, is they're not gonna do the hard work of bringing you in if it's not critical, or if it's not, when I say critical, it's, it's not gonna, it's gonna impact them in a way that they're gonna make it successful. That's what I love about enterprise sales. They have the resources to ensure that it gets implemented 'cause most, in today's day and age, if people are not using the tool, you just get rid of the tool, right? So they're gonna want to make sure whatever they bring in, what they go to bat for, remember, they, they get a, they go to bat once every two years, maybe once every three years. You've got to make it feel incredible. You've got to make it feel like they're gonna be a superhero going back to it. Otherwise, what's the point? Because the way enterprises are structured is it is, it is designed today to make it hard to buy because they wanna make sure whatever you're bringing in you really, really want. It gets rid of the mediocre, you know, "I think this would be good." It, and it gets to, "This is gonna change the way we work. It's going to, it's going to impact our ability to capture some form of alpha," however you wanna define that for them.... and it's sticky because of that.
6. LRLenny Rachitsky
  So your advice here broadly is don't pay attention to the smaller 10K-ish kind of opportunities for, for a bunch of reasons. One is it might be giving you a false sense of success and product market fit. Uh, two, those companies are maybe not as innovative and won't lead you in the right direction. Three is there are probably discounts, just like your product and your pricing is just ... gets thrown off.
7. JAJen Abel
  Yep. And also, like, you don't really get taken seriously for 10K. You get way more taken seriously for 100Ks. It's much harder to get a 100K deal done. And, like, an executive use n- needs to be involved. I'd much rather have an executive sign off on something and spend two more months getting the deal done because you know that they are bought in. You know th- you can now ensure wh- what kind of value do they want to unlock, and maybe you have an opportunity to turn them into a user, which to me, in today's day and age, with our generation being the ones that are now the executives at these corporations, this is native to them.
8. LRLenny Rachitsky
  Who is this true for? Is this ... Is the advice here basically if you're trying to build a successful B2B company, uh, everybody should be aiming towards these 100K sort of deals? Is there a world where you can be successful with 10Ks for a long time?
9. JAJen Abel
  If you have a super high win rate in a massive market, 'cause all you have to do is reverse engineer the math. If you need to ge- if you need to generate $100 million in revenue, how many 10K deals do you need? And the expansion on a 10K deal is in parallel to that, right? Where can you go? 10 to 15 if you're ... That's a, that's a 50% growth, right? Much easier to go to 100K to 500K because they want more bodies or they want more value out of you. For an enterprise, they'd love to get more out of an existing customer; you're already trusted. So it's also about, you know, the type of company you are. If you're venture backed, you can't be selling $10,000 deals to the enterprise. You'll get killed. Or, or I- you've already lost the game 'cause you're playing a small business game in, in the wrong sector.
10. LRLenny Rachitsky
  Have you seen startups you've worked with succeed in that 10K, 20K bucket? Or is it really, really rare?
11. JAJen Abel
  If they're going after the enterprise?
12. LRLenny Rachitsky
  Yeah.
13. JAJen Abel
  Yes, if it's the first three months and then after three, three months it turns into a 50K and then a 100K and it ramps up quickly, sure. That makes sense 'cause you got your foot in the door and it gr- and you can expand it exponentially, um, in a healthy manner. I think that that's fine. $10,000 a year, then going to 12, then going to 15, the math will break.
20:45 – 25:09
Don’t play the small business game with an enterprise company
1. JAJen Abel
2. LRLenny Rachitsky
  This is great. I feel like most founders listening to this are like, "No, no, we're kind of in that exception. We'll be all right. 10K, we'll do 20K." That's crazy to consider 100K.
3. JAJen Abel
  Yeah. Tha- i- uh, the math will break and also the ... A really good salesperson, your commission on a 10K deal, you're not gonna get a great salesperson. They're gonna wanna do ... They're gonna wanna be anchored to, like, how can I sell $250,000 deal? How can I sell half a million dollar deal? That's the type of person you want.
4. LRLenny Rachitsky
  And this is ... Like, a big part of this is this is a good lens to force you to build the product that you can sell for 100K, 500K.
5. JAJen Abel
  Yeah, yeah. Absolutely. And again, this is about playing that enterprise game. If you're trying to sell a ... If you know you're a small business, if you're s- if you're in the small business place and an enterprise company comes to you and is like, "I like this," ensure that you structure it for an enterprise. Don't play the small business game with an enterprise company.
6. LRLenny Rachitsky
  Talk more about that. What does that mean?
7. JAJen Abel
  Let's say you're PLJ and an enter- big company like Walmart comes to you and is like, "Hey, can we get access for three of our users?" And they're like, "This is so exciting, Wal-" And then they sell them the small business pricing for three users to Walmart. Very, very hard now to go from those three users that you just priced in at a small bus- as ... In a small business way to turn that into 100K 'cause now it's documented what they're actually paying for this. So you're stuck. You've kind of, like, anchored yourself to this price. Not to mention, like, what's the ... How are you gonna unlock the executive high level value so that you can get that ... So you can get someone i- You can get that senior executive to buy in and stamp this as well? Otherwise, it's just gonna be throwing it on the credit card. But like, again, you've just ruined your enterprise game 'cause you're anchoring to a small business price. So this is why, like, when you bleed these two games, it's very, very, very dangerous because these are really smart companies. They're gonna say, "Well, wait a second. I just paid $9,000 last year and now you wanna charge me $90,000? Well, what's the step change in value? What's the different ... What's the 10X value I'm now getting?" That's super hard to prove.
8. LRLenny Rachitsky
  So the tip here is, uh, your initial price will really screw you if you get it wrong. And so obviously we're not gonna give people the answer on their pricing strategy fully, but just is the advice just charge more? Or like what would you recommend?
9. JAJen Abel
  It is enterprise companies are very used to l- uh, land when I say like the first initial contract. This is somewhere between 75K and a 150K. Very used to that. In fact, that's probably where you wanna start 'cause you also wanna understand where can you grow from this. Start contained. Don't say, "A 150K," and sell the farm. Say, "It's a 150K. Here's who gets access. Here's the value we're gonna deliver and, um, here's where we're going over time." You also want them to know here's what ... Here's how ... what we plan to do roughly in year two, year three. I know it's hard to look that far out, but, like, plant the seed with them in terms of where this is going. If you come in at $10,000, it's so ... Even if they want to bring you in and want to spend a 100K fr- with you, they have to be able to defend that. And now they see a $10,000 ... It's just it g- it can get really messy, especially 'cause a lot of them are using AI now to understand, like, contracts. So they're gonna quickly say, "Oh wait, you spent a $1,000 with Lenny and now Lenny's asking you for a 100K? Great. Just, just help me understand why."... or defend it.
10. LRLenny Rachitsky
  I could totally see ChatGBT being like, "Mm, this is interesting. Used to be a-"
11. JAJen Abel
  Yeah. Exactly.
12. LRLenny Rachitsky
  "... 100K, now it's 100K."
13. JAJen Abel
  Exactly. Totally.
14. LRLenny Rachitsky
  "What might be going on here?"
15. JAJen Abel
  Totally. But people don't-
16. LRLenny Rachitsky
  So-
17. JAJen Abel
  ... realize, you know, how dange- how ... Again, know the game you're playing and don't be sloppy about it.
18. LRLenny Rachitsky
  So your advice here is really interesting. It's, uh, there's the land and expand. Expand is, uh, very important, but the landing may screw your expanding because-
19. JAJen Abel
  Yes.
20. LRLenny Rachitsky
  ... it sets the wrong reference point.
21. JAJen Abel
  1000%. That's exactly right. You said it better than I did.
22. LRLenny Rachitsky
  And so you may see like ma- like in theory, if you land at 10K, go to 100K, that's like an amazing NRR. Everyone's gonna be really impressed.
23. JAJen Abel
  Yep. Yep.
24. LRLenny Rachitsky
  But you're saying people won't, won't buy into that. They're ... It's gonna feel absurd and wrong and something's going on.
25. JAJen Abel
  Unless it's defendable. The-
26. LRLenny Rachitsky
  Hmm.
27. JAJen Abel
  All it needs to be is defendable. But who can-
28. LRLenny Rachitsky
  Mm-hmm.
29. JAJen Abel
  ... really defend? That's very hard to defend a 10X, 10X jump.
30. LRLenny Rachitsky
  Mm-hmm.
25:09 – 28:11
Design partners: the double-edged sword
1. JAJen Abel
2. LRLenny Rachitsky
  Hmm. Let's talk about design partners.
3. JAJen Abel
  Oh, yeah.
4. LRLenny Rachitsky
  This is something most founders try to do. They find a few folks to work with to help them build the thing. What's your advice on when to start finding d- design partners, how to find design partners, what a good relationship looks like?
5. JAJen Abel
  Design partners are incredible. They are the hardest logos to upsell, meaning go from design partner to full rollout customer. So like don't expect these people to be your million-dollar pipeline. Expect these people to be the guide to help you understand. Um, maybe design partners could be, you know, a technology company in the, in the Fortune 1000 so th- they're used to experimenting, they're used to technology, they're used to ... They were once a startup so they get it. Those make really good design partners. Most of the design partners that I've closed are usually like technology-based, right? Th- they get it. Um, and they also are excited about, you know, advancing the org and also giving the team an ability to have that startup feel. So like, you know, if you're a large, massive corporation like, uh, Stripe, right? Stripe doesn't get that startup vibe as much, like that 50-person startup vibe, but like this can be a gift to give them that lens and give them that voice and give them that like excitement, um, that they, you know, don't get as a larger company. But they're gr- those are great types of logos to be, you know, early design partners because one, they wanna make sure they're on the, th- they continue to stay on the, uh, cutting edge. But two is they are, um ... To try and build something without that guidance is really, really, really hard, because they're not using it. So you need that, th- you need that user feedback and you also need to tie that to the executive value, right? So it, it's actually a lot... It's very hard to do. But if you can come out of it and upsell a design partner to a full rollout customer, such huge, such a huge win for the market, for you, for your team, and also for your investors, because it's the hardest customer to actually truly convert. They've been in when it was messy. They got a really ... They usually got a low price point but if you, again, frame it. Say, "Listen, I would love for you to be a design partner. I want a little skin in the game to get you to it. Here's where we want to go." And you'll get a, you'll get a discount because, uh, you, you were in it in the beginning, but I'm setting the framing. "Here's where we wanna go with pricing. Here's where we are today. You'll always have 30% concession and perpetuity because you were there with us on day one." So again, it's not about, you know, asking for $10,000 and then not expecting that design partner to upsell and keep it flat because there's no growth there. It's a flat ... You know. It's about getting that early design partner, set the framing, own the framing and let them know where you're going. Again, $100,000 to these large lo- logos. If they want it, it's very easy for them to
28:11 – 36:55
Finding the right company
1. JAJen Abel
  get it in.
2. LRLenny Rachitsky
  There's this, this really interesting underlying piece of advice of finding a company that pulls you in the direction that leads to success, a company that's kind of a visionary. Uh, like there's obvi- there's like the obvious companies that everyone's always trying to get these days, OpenAI and Anthropic and Stripe I think is one and ... Uh, any advice for just like picking the right early ... What are signs that this is a company that will point you in the right direction?
3. JAJen Abel
  I think they have to be part of a logo that is deemed, you know, um, startup friendly, right? Or, or, you know, in that world. And then I think it's the person, right? Like is this person excited to give feedback? Does this person buy in to where we're going? Do they see this world differently with like us? Do they bi- ... Are they in locks up with the founder vision? Are they excited to, to use a tool that's janky? 'Cause it is janky in the beginning, but they know, they know that where this can go can be incredible. So it's ... I think it's, uh, really about the person and making sure that they're aligned for what they're getting into. And I think a lot of people ... I think a lot of salespeople oversell it. I think that's a common thing that happens, right? And that leads to churn. That leads to frustration. That leads to sometimes just canceling the contract.
4. LRLenny Rachitsky
  They oversell the initial kind of design partners phase of the product.
5. JAJen Abel
  They oversell e- everything. Yeah.
6. LRLenny Rachitsky
  Hmm.
7. JAJen Abel
  Design partner or even full rollout. And it's so, so important to tell them, "Here's where we are today. Here's what we cannot do," which is just as important. It builds trust. "Here's what we will allow you to do in the next six months. Do you wanna be on this journey with us? And it's really ugly right now." Right? "Barely anything exists, but like we would love your voice to be a part of it."
8. LRLenny Rachitsky
  One of the biggest fears I think founders have is having a company pull, basically build just for their use case and then it ends up not being used by a lot of people. And so like how far do you go ph- fixing their specific problems? Any advice on just how far to go with one company?
9. JAJen Abel
  That is the founder's job. The founder's job is to have a clear vision and do not let anything de- delineate from that. It's important to take feedback in terms of what is the market's reality-But, like, it is the found- and this is why being a founder is so hard. It is the founder's job to interpret that because a lot of feedback you get is, this is the old way... This is... They're responding this way because it's the old way of working. They want you to build this because it's the old... That's how they're traditionally expecting to do that. It is not, "Here's where we're going. This is why we're not doing that. I hear you, but here's why we're not gonna do that. Because this is... We're gonna completely change the way you do this." That is the founder's job, and I think, you know, I... We did a bunch of design partnerships, uh, you know, late last year, and there was a lot of feedback given, a lot of feedback given, but the founder had such clarity with where he wanted to go that he was like, "80% noise, 20%... Had I not asked this question, like, I wouldn't have gotten that gold in terms of where they are today." And like, it's that 80/20 rule where 80% of what they're gonna tell you is probably going to be not related to where you wanna go or based off of the old way, but that 20% of like, "Oh, I did not think about it that way," that drives everything.
10. LRLenny Rachitsky
  Have you seen a design partner pull a company com- in the wrong direction, just kind of screw their, their path? Have you seen that or is that... Is that pretty rare?
11. JAJen Abel
  No, I think that, that... I don't think it's that rare, um, 'cause we hear people complain about it all the time. But I think it's more of an excuse.
12. LRLenny Rachitsky
  Coming back to this question of going after the enterprise versus SMBs, and again, uh, early advice you gave is, uh, there's no... Don't go in between. Either pick, uh, SMB, small company, which, uh, I know you said there's a million ways to des- to kind of differentiate what this means, but, uh, what... I guess, I, I think of employee numbers, like, you know, like under some number over 1,000 is maybe enterprise. Is that like a, a good way to think about just like-
13. JAJen Abel
  Yeah, I mean-
14. LRLenny Rachitsky
  ... getting a company?
15. JAJen Abel
  ... it depends. Are you selling per seats or are you selling, um, you know, based off of usage or are you selling off of... Like, I think it also depends on the pricing model a little bit.
16. LRLenny Rachitsky
  Mm.
17. JAJen Abel
  I, I look at headcount too 'cause it's just like... It's just such an easy way to think about it 'cause you can also gauge usage off that and a bunch of other things. Um, but sometimes, like the small companies, like, I think we're gonna see a lot more, like, a lot more larger companies become smaller because of AI. Not like significantly smaller, but, but also, like, high margins allow them to experiment more too.
18. LRLenny Rachitsky
  That's such an interesting point you're making there that like the, the way we designate enterprise versus SMB like may shift because number of employees may go down with AI.
19. JAJen Abel
  Yeah. Oh, yeah.
20. LRLenny Rachitsky
  Um, so interesting. So going... So where I was gonna go with this question is, when people are deciding, "I'm gonna go enterprise versus I'm gonna sell to startups," like YC companies are the, uh, the typical example, they sell to their own YC batches. Any just broad advice of picking, okay, you go, we go enterprise versus no, let's actually go startup?
21. JAJen Abel
  I think it's about... And I read this somewhere and I, I wholeheartedly agree with it 'cause I've seen it live. I think it's about like what game does the founder best understand? Are they like an incredible marketer and have some like competitive edge for how they can like win a massive audience? I would say go SMB and marketing led. Or are they a bit more, um, you know, uh, really understand how large corporations work and really excited to deliver on $100,000 plus type of opportunities or the value that they are building for is way more relatable to an enterprise versus a small business?
22. LRLenny Rachitsky
  That is really interesting. I've never heard of it described that way. I think about Linear, which started very startup-y, and my take is they did that because changing the way you work is really hard and their bet was like, "Let's start with companies and grow with them and over time, uh, that becomes the default." Any reaction to that?
23. JAJen Abel
  I think that it, it sounds like that that's a great way to work because that's a technical tool, right? So then you need to have the right... You also need to have the right infrastructure to sell, right? Like, I think Slack... I mean, look, Slack and Microsoft Teams are still battling it out at the enterprise. I think it's also like, how you plug in and how you integrate and do they even have the right systems to support you? Um, the thing with OpenAI and, and... Is like they didn't have to connect to anything.
24. LRLenny Rachitsky
  Uh, say more about that.
25. JAJen Abel
  So like the, the value... People were, people were bringing their own use cases to it, right? And they don't... It's not like they, they... And well, they can ingest and they've built that. It's a brand new thing. And they started, they started, I think... Uh, I, I... This is... Someone told me this, so this is... This could be hearsay, but I believe that they had... They were already speaking to CTOs even well before they released to help them explain where this is all going and get their buy-in, and it's, and it's much easier to get into the enterprise when you're like, "We won't even touch your data. Won't even touch your shit. Just drop..." Like, "Use it to solve problems. And then, and then we can build trust and then start to integrate and, and connect the, and connect the pipes." But like, part of the challenges with selling in the enterprise, they're like, "All right, well, let's connect all your consumer data," and like, and they'll, "Whoa. That's extremely risky." So you have to start small and low risk, which is like, "Hey, here's... What is the subset of, um, consumers that churned? Let's figure out how we could have made them happier," whatever it'd be so that data's lower risk. Um, so again, it's also understanding your market and understanding, you know, what their ability to experiment is.
26. LRLenny Rachitsky
  It's interesting this distinction between OpenAI right now and Anthropic. I don't know if you've been seeing kind of their, their growth. Feels like OpenAI is very consumer first and Anthropic is more and more winning on, on B2B. I, I saw this chart recently where they're like overtaking OpenAI now on, on B2B. Uh, I don't know. Any reaction there of just like these two different approaches?
27. JAJen Abel
  I don't because most enterprises I'm talking to mention Gemini.
28. LRLenny Rachitsky
  Oh, interesting.
29. JAJen Abel
  Yeah. Or, uh, Co- or Microsoft Copilot, um-So I don't hear much about Anthropic, to be honest, so that might be more of like a small business, startup-y. I don't know. Or, or, or, or it's a different part of the organization that's using it.
30. LRLenny Rachitsky
  Yeah, that, that's a whole discussion about bundling right there of like Slack and Teams and then just, yeah, Gemini just kind of coming in automatically. People don't have to adopt anything new.
36:55 – 43:21
Enterprise sales: the art of the deal
1. JAJen Abel
  totally.
2. LRLenny Rachitsky
  There's something else that you talk about that I love that I don't think people talk much about, which is that enterprise sale is very creative.
3. JAJen Abel
  Oh, yes.
4. LRLenny Rachitsky
  Talk about-
5. JAJen Abel
  Yeah.
6. LRLenny Rachitsky
  ... that.
7. JAJen Abel
  So I personally believe that small business sales is really a ... I used to think it was more science than art, right? It was more like, you know, figuring out what didn't work, running experiments, um, uh, you know, testing and validating, which I do believe. That's, that's, that's, that's to get to like foundations, like where do we play? What do we want to do? Like that early, early, early zero to one. From one to 10, I think it's more of an art, right? Which is how do I take my learning and how do I package it up where I own the framing, I can speak to very specific alpha, I can, um, vision cast, and where I better understand the problem over time better than the market does? And it's all about deal crafting. They just need to feel like the value they're getting out of it is way more than the cost, and it's sometimes about giving away things that don't really cost much to you but are super expensive for them. For example, hey, we're selling X tool. We can, we can build out this ... We can build out Y specifically for you over the next year and integrate it, because I know that you would've spent X number of dollars on engineering resources or you wouldn't have gotten an engineering head internally to do this. But we're just gonna leave it to you. You gotta give us a year to build it out. Again, you're not lo- you're not letting them sidetrack you too much. You're kind of containing it. We'll do that for you at no additional cost. That's huge value, right? Or hey, we're gonna run, um, we're gonna run an event and we want you at the forefront of it. We want you to be a speaker. Huge value, right? So it's like all of these additional things that add value beyond just the product but are all part of the product and the vision, right? You know, everyone keeps thinking the product is just what goes into their hand. The product is pricing. The product is the, um, the opportunity, the framing, and not letting them compare you to something else. And I know we talked about that on our first call, which is as soon as you become a comparison, as soon as you become one of three that they're testing out, you've already sort of lost. It's all about differentiation, right? And it's all about here's what you will be able to do tomorrow because of, of, of h- how we're gonna serve you today.
8. LRLenny Rachitsky
  So along those lines, it reminds me in our first chat you actually made this, uh, point that I've never heard anyone else make, which is that services are a really good way to start getting into companies that were ... Uh, most founders hear like, no, don't just like ... Don't do manual stuff for the company. Build a product that you can scale. Your advice is the opposite, actually. Start with sell services. Talk about that.
9. JAJen Abel
  Enterprises, the number one thing they buy is services. That's ... They know how to do it. It's super easy. It's they, they like, they do it all of the time. It's like the most consistent thing they do. It's their largest budget i- item, right? External resources, consultants, whatever. If they have a very immature way of understanding the problem or they've never purchased technology to solve it to some extent, right, either one, you're doing something that's never been done before, which is like, you know, rare in today's day and age, or, um, they might just be like laggards on the journey. So you have to decide, is this someone you really want to be working with? And if so, selling them a service, even though the technology is powering it on the backend, is the fastest way to get your foot in the door. It's the, it's what they know how to buy. Now, the idea is that once you sell that service, once you get that foot in the door, then it's to guide them towards the product. Hey, you're spending so much here, why don't we move you? Why don't we get you to come in and leverage the tool that's been powering this the whole time and move this more into technology ser- technology serving you versus the human?
10. LRLenny Rachitsky
  Wow. I think this will blow a lot of people's minds.
11. JAJen Abel
  Talentiair, Talentiair, this forward deployed engineer, that's exactly what they're doing, right? Like, you know, it's, there's, you know, there's a lot of companies out, like I'm sure ... OpenAI, uh, and this is what someone told me. They were in and talking to CTOs and helping them better understand how AI and their organization can better work together, and it was them coaching them and educating them. Whether they did it for free or not, I, I don't know, but they got their foot in the door, they started to build trust, and then it gets adopted.
12. LRLenny Rachitsky
  This is the epitome of doing things that don't scale, that advice we always hear. This is like, okay, this is what that looks like. Like, we will solve this problem for you. We are using software to do it, and then over time, oh, you could just do this yourself. You know, it'll cost you less. You can scale this.
13. JAJen Abel
  Yep. That's right. Um, and they don't even need to know at first that software's doing it. That could be the magic part, which is like, guys, we literally ... We are literally doing this with our technology.
14. LRLenny Rachitsky
  Today's episode is brought to you by Coda. I personally use Coda every single day to manage my podcast and also to manage my community. It's where I put the questions that I plan to ask every guest that's coming on the podcast. It's where I put my community resources. It's how I manage my workflows. Here's how Coda can help you. Imagine starting a project at work and your vision is clear, you know exactly who's doing what and where to find the data that you need to do your part. In fact, you don't have to waste time searching for anything, because everything your team needs from project trackers and OKRs, the documents and spreadsheets lives in one tab all in Coda.With Coda's collaborative all-in-one workspace, you get the flexibility of docs, the structure of spreadsheets, the power of applications, and the intelligence of AI all in one easy to organize tab. Like I mentioned earlier, I use Coda every single day. And more than 50,000 teams trust Coda to keep them more aligned and focused. If you're a startup team looking to increase alignment and agility, Coda can help you move from planning to execution in record time. To try it for yourself, go to coda.io/lenny today and get six months free of the team plan for startups. That's coda.io/lenny to get started for free and get six months of the team plan. coda.io/lenny.
43:21 – 44:41
The problem with channel partnerships
1. LRLenny Rachitsky
  There's a lot of talk these days about this, uh, idea, forward-deployed engineer, something Palantir was really famous for just, uh, essentially an engineer sitting in your office solving problems with you, like, basically as an employee. And then through that, they learn what software to build. Is that something you're seeing too?
2. JAJen Abel
  Oh, yeah. I think, you know, I think that, that, um, a lot of companies, a lot... Sorry, a lot of, um, folks that serve the enterprise, they, they have a s- they have a butt in a seat in their office. Like, you look at these large consultancies like McKinsey, they're not in their headquarters, they're in their client's office all the time. And the other thing interesting thing is, and, uh, and proof of this is how many people go to a Deloitte or an Accenture and expect them to be a channel partner. This is exactly what this is all about, which is they sell the service, they come in and then they introduce, "Hey, look w- look at th- what this startup is doing over here, you might want to give them a shot." The problem with channel partnerships and why I don't believe in them is there are 100 of you on this list, right? And you're expecting them to sell it on your behalf. Biggest no-no. They're not vision casters. They're not visionaries. They're consultants. But this i- it goes all towards, like, go f- you know, I remember startups saying, "Oh, I'm gonna go, you know, win over Accenture and then have them disseminate me into the- their clients." And I'm like, as if that's a workable strat.
44:41 – 50:24
Quick summary
1. JAJen Abel
  (laughing)
2. LRLenny Rachitsky
  (laughing) Okay. You know what might be helpful is let me try to summarize some of the best pieces of advice you've shared so far. And this is specifically for folks trying to go from about a million ARR to about 10 million ARR. And then I want to ask you just what's most different about those two stages, but let me share this first. So, uh, advice one is go for tier one logos earlier than you think you should because they're early adopters, they, uh, can move fast, they can pull you in the right direction.
3. JAJen Abel
  And they excite investors too.
4. LRLenny Rachitsky
  Mm. Yeah. Uh, for sure. And other, and other leads are like, "Oh my God."
5. JAJen Abel
  And, and yeah, and other, and other, you know, talent, future employees. Yeah. Exactly.
6. LRLenny Rachitsky
  So, the counterintuitive, uh, insight here is you think they will move slow and be too busy, but in... They are actually the early adopters.
7. JAJen Abel
  That's right. Yeah, they have to maintain that number one spot. Um, and also all of the people that are in the number two, number three, number four spot all want to do what number one is doing. So it's also like peer reference ability too.
8. LRLenny Rachitsky
  And the point about them being the early adopters, like the people that join the Stripes and OpenAIs and Anthropics are like the... Like, they individually love technology and love the latest stuff. So like as a human they're like, "Oh, this is cool."
9. JAJen Abel
  That's exactly right. I'm just agreeing with myself, aren't I? That's kind of funny, but yeah. (laughing)
10. LRLenny Rachitsky
  That's a good sign. So two is, uh, ideally try to price closer to about 100K, like 75 to 150-ish K is what you said-
11. JAJen Abel
  Yep.
12. LRLenny Rachitsky
  ... most enterprises are used to buying.
13. JAJen Abel
  Yeah.
14. LRLenny Rachitsky
  So instead of starting or even sticking with 10K, 20K for too long, you need to make yourself go towards 75 to 150K.
15. JAJen Abel
  That's right. Yep. And if you were to sell a service, 'cause I know we're talking about selling services first, prorate that over time. So maybe it's 10K a month, so they start to get used to what that pricing looks like.
16. LRLenny Rachitsky
  So this is a way to make it feel... This is like how you get to 75 to 150K is there's a service attached to it, it's not just, "Here's my SaaS product." It's, "We will solve this problem for you. Our person will be sitting there doing this for you."
17. JAJen Abel
  Yeah. Or it's a... No, it's a technology too. I mean, you can add the services. I always... Well, let me take that back. The service, whether the services is bundled into it or not, th- some people will un-bundle it, other people will say the services is a part of it. But yeah, it nets out to 75 to a 150K. That's right.
18. LRLenny Rachitsky
  Okay. And you said that it's okay to start lower on ACVs and deals, but you need to push fast towards 100K-
19. JAJen Abel
  Expand.
20. LRLenny Rachitsky
  ... like over f- a few months.
21. JAJen Abel
  Yes. That's right. Like if you can get into... If you can get into an enterprise for 10K in a month, which is not doable, but if you could, and you could go from 10K to 50K in four months, through an expansion strategy, all game. That makes sense. But it's really rare and very hard to do.
22. LRLenny Rachitsky
  And so the... So the- there's two different paths there. One is land cheap and grow quickly. The other is move your ACV, uh, average up quickly.
23. JAJen Abel
  That's right.
24. LRLenny Rachitsky
  It seems like both are... That's... The latter is probably the more common strategy is just-
25. JAJen Abel
  Yeah.
26. LRLenny Rachitsky
  ... to keep increasing prices.
27. JAJen Abel
  Yeah. 'Cause the former you can get tripped up because they could say, "Okay, now give me an economical price for doing this for 100 people." And then it all kind of evens out 'cause now you're at the 100K deal anyway, you know? But it's har- it's much... There's more room for error, which is why I say go in and try to land 100K.
28. LRLenny Rachitsky
  By the way, in our first chat we talked, uh, a lot about the procurement process, which is what trips a lot of people up and is really painful and (laughs) I remem- I v- I vividly remember that conversation still. Uh, so if people are having issues getting through the sales process and procurement, a lot of good advice there.
29. JAJen Abel
  And getting stuck in procurement is usually because you're not speaking to a senior enough person and they don't know how to navigate it, which is why I'm like, that executive needs to be involved. 'Cause as soon as the executive picks up a phone and tries to get ahold of, like, their buying group, th- things move, right? Like when people say, "Oh, I'm stuck in procurement," I'm like, oh, that's a... That could just be a qualification error and you never get out of it 'cause you sold to someone too junior. Um, so that's why the 100K is such a safe zone because even for 10K you might have to go through procurement.So, um, this is, like, the surest way to make sure that, like, you don't, um... Listen, I've seen 10K take nine months to close.
30. LRLenny Rachitsky
  No bueno.
50:24 – 56:49
Hiring the right enterprise salespeople
1. JAJen Abel
2. LRLenny Rachitsky
  Is there anything else that I missed that you think is really important for this stage?
3. JAJen Abel
  So, one to ten is no longer the founder. Maybe the founder comes in in very strategic points, but you need a really good enterprise salespeople, right? Taking someone from small business and expecting them to do enterprise sale is a big no-no, t- t- it's a different game, right? Radically different game. You need to understand how corporations buy. You need to understand how executives think. You need to better understand simply just, like, what the enterprise business model is all about and, like, their ability to take on risk. People will bring in, like, super junior enterprise sales reps, and I'm like, "You're looking to sell to an executive?" And you have this te- like, this person that's five years out of school with no corporate experience doing it. Again, where... Unless they have, like, some extremely, you know, deep experience in the industry or are just, like, a unicorn in terms of like, wow, this person can sell ice to an Eskimo kind of thing, a junior person converting an executive? A- again, if the founder's involved, maybe that's doable. Um, but usually the founder can't be involved in every deal. And you need, you need people that can... I always say you need people that can cosplay a founder, right? Which is like selling the vision, getting them excited. Y- y- like, running through a wall to get the deal done and getting creative on h- None of my deals look exactly the same. Every deal looks different. And that's okay because, um, every organization has slightly different opportunities of where they wanna go, and you have to kind of build towards that. And the framing may change. So, it's this ability to, like, adapt from what you're hearing and, like, let that compound over time. But like I always say, like, "Can this person cosplay the founder?" I think that that's the, the best type of salesperson because it doesn't feel like sales. It's more of the art.
4. LRLenny Rachitsky
  This is amazing advice. What is a, a common profile that you've seen be successful? Like, what level of seniority, what kind of personality traits to look for?
5. JAJen Abel
  Maybe a former founder, if you can get that, um, 'cause they're used to selling, right? They sold investors and they've sold employees. Two is someone with no sales experience, but has deep product experience or an engineer and can, like, think about things in a unique way, where you can... where the market's like, "Oh, this is so interesting." Taking a t- t- typical salesperson and then putting them into a sales role almost always is where people get frustrated. The market... It feels salesy. Like, the market doesn't want to be sold to, they want to buy. And I know that this is like... This... It's very hard to hire a really good enterprise salesperson, right? Um, I mean, the number of people that I've interviewed, I can count on my hand the ones that I'm like, I get really, really excited by. It's a, it's a, it's a... It's almost like, you know, coming across a great founder, right? It's, it's like, you know, it's not as, it's not as common as everyone expects. Um, and I think that that's true for engineering, I think that that's true for sales. And I think a lot of people... S- sales is like, "Oh, just throw a body into what... The product will do the work."
6. LRLenny Rachitsky
  Uh, advice I often hear is don't hire a kind of a senior VP of sales person from a bigger company.
7. JAJen Abel
  Yep.
8. LRLenny Rachitsky
  Do you agree with that? How... What's, like, too senior?
9. JAJen Abel
  Yeah. So, um, the bigger company thing, the, the brand was doing all of the work. The brand built the trust. You need this person to be able to build the trust. And like, they're usually... The product is still so new. The product is the founder in the zero to one stage. The product is just starting to get, like, a, a case study. You probably have s- maybe a few references, but it's still very, very early days. You need the market to believe the salesperson, and you need that market to know that they're trustworthy. A VP of sales at a large company, I would say, uh, they're be- they're best suited for a large company because one to ten, you're running through walls, right? You have to figure out... You know, you're doing a lot of convincing, you're doing a lot of educating, you're doing a lot of creative deal crafting, a lot of owning the frame. It's not necessarily selling a product, it's selling that future value. Um, which a VP of sales at a large company is...... it, it's a very different, um, it's a different game. It's kind of like the SMB and enterprise.
10. LRLenny Rachitsky
  It's interesting you said, when you described, uh, the profile of a, of a great hire here is you said they don't need to have done sales. If they have done sales, what's like a number of years or kind of like what to, what do you look for that tells you, okay, this is a good fit for the first hire?
11. JAJen Abel
  I actually think it's less about experience and more about the person. Like, does this person make you feel good? Do you wanna buy from this person? I think Jas- Jason Lemkin said that best. Like, would you wanna buy from this person?
12. LRLenny Rachitsky
  Can they sell you a pen? The classic.
13. JAJen Abel
  Can they... Yeah, exactly. Um, you know, do they, do they, do they mimic or mirror the market they're selling to, right? It's much easier to buy from someone that looks and feels like you than it does from somebody that's, like, you know, eh, in a totally different realm. Um, and also, like, an executive wants to talk to another senior person, right? They don't want to talk to someone that just (laughs) graduated from college and is, is selling them the new way of working. Like, what do they know? So, I think it's, it's tricky. I would say like, you know, um, someone with no sales experience makes it feel different and special. That's what I like about it. Someone with sales experience knows how to navigate and probably would qualify better. But it's almost like the blend of those two things. And that's why I go back to, like, cosplaying the founder, which is like could this person, you know, could this person, like, close a future employee, right? Like, do they get excited about the problems they're solving internally and the vision that they get to sell to?
14. LRLenny Rachitsky
  This actually was a, a, a reader question, a listener question (laughs) from Twitter. Uh, so Peter Dedene asked, "How do you, how do you make this first salesperson as enthusiastic about the product as you?" Is there something you can do, or is it more just they already are and you just leverage that?
15. JAJen Abel
  Incentives.
16. LRLenny Rachitsky
  (laughs)
17. JAJen Abel
  Salespeople love to make money.
18. LRLenny Rachitsky
  Easy.
19. JAJen Abel
  So, if they, if they know it's possible, if they know it's possible, you'll be shocked what people can get
56:49 – 1:01:01
Structuring sales compensation
1. JAJen Abel
  done.
2. LRLenny Rachitsky
  If they see how much they could make. Amazing.
3. JAJen Abel
  Right.
4. LRLenny Rachitsky
  Uh, uh, I imagine there still also has to be an innate excitement about the product and the opportunity.
5. JAJen Abel
  That's, they, they have to believe in it. They have to believe in the founder.
6. LRLenny Rachitsky
  Mm-hmm.
7. JAJen Abel
  But, like, incentives usually make the world go round. Um, but yeah, it, is this person... Are they asking the right questions to the founder? D- are they, um... You know, I alwa- y- the best thing to do is have the founder join the first five calls. You know after five calls if this person has what it takes. And don't be afraid to fire. Like, one in every two salespeople usually are fired. It's, it's-
8. LRLenny Rachitsky
  One in two.
9. JAJen Abel
  ... a very... Yeah, it's like, it's, it's a very high failure rate.
10. LRLenny Rachitsky
  'Cause you can tell pretty quickly how it's going.
11. JAJen Abel
  You can, you can tell, or the, the vision of the founders is just very wrong.
12. LRLenny Rachitsky
  Speaking of incentives, do you have any quick advice on how to structure their comp, just like how much they earn?
13. JAJen Abel
  Um, it's usually 50/50. So, it's o- 50% OT, 50%... So, it's, uh, 50%, uh, base salary, 50%, um, OTE.
14. LRLenny Rachitsky
  And then how much of the sale do they typically get? Let's say the first sale's higher.
15. JAJen Abel
  It, it depends on the price si- the size of the deal. But in technology, uh, it could be anywhere between, like, 8 and 12%, so rounds out around 10%.
16. LRLenny Rachitsky
  Okay. Awesome.
17. JAJen Abel
  Yeah.
18. LRLenny Rachitsky
  Uh, when do you hire the first salesperson? Is it ar- around the $1 million ARR mark usually?
19. JAJen Abel
  Yeah. It's around that $1 million ARR mark and I... And it's, it's usually when you have your first seven to 10 customers and there's some, there's some pattern recognition around it that you can, that you can sh- share with somebody else. Um, it's c- there's some consistencies. Otherwise, it's just like that would be very hard.
20. LRLenny Rachitsky
  Basically, as a founder, you have to figure out how to sell enough times-
21. JAJen Abel
  Yeah. Yes.
22. LRLenny Rachitsky
  ... so that you can show someone, "Here's what's working."
23. JAJen Abel
  And this is the common thing I hear. "Well, I, I've, I'm a $10 million business." I'm like, "In this small business space, you're $0 in enterprise."
24. LRLenny Rachitsky
  Hmm.
25. JAJen Abel
  D- it's a v- zero to one right now in enterprise. It's a totally different game. It's a different value proposition. It's a different deal structuring. It's a different target market. It's a different risk tolerance. It's a, it's totally different. So, don't, don't be blindsided, uh, when, uh-
26. LRLenny Rachitsky
  It doesn't work.
27. JAJen Abel
  There's a lot of un- unlearning that needs to happen when you move into a new market.
28. LRLenny Rachitsky
  Mm-hmm. So, the advice here is make yourself sell up until around a m- $1 million ARR, uh, especially, uh, if you're trying to go enterprise selling to enterprises yourself as a founder, which is really hard. You have so much to do and you have to be selling this thing for a long time.
29. JAJen Abel
  Yep, yep.
30. LRLenny Rachitsky
  Okay.
1:01:01 – 1:02:07
Building relationships in enterprise sales
1. LRLenny Rachitsky
  co-founder of Synthetic Users. He asked, "What's the best advice for going from healthy inbound to targeted outbound?"
2. JAJen Abel
  Healthy inbound usually is a marketing-led initiative, so that's a marketing game. I- it depends, like, what deal value you're selling. Are you selling a $5,000 deal? It's gotta be marketing-led to make that- to make the engine work. If you're selling $100,000 deal, you're doing outbound day one. So again, it- it breaks it into those... Th- this is like that blending of the... I say a blending of that question. It- this is where are you doing small business, you know, marketing-led activities, or are you a sales-led organization selling a $100,000 deal?
3. LRLenny Rachitsky
  And the reason this important, just in case it's not obvious, is you're not gonna make money if you're selling... People are spending time closing deals that are making 10, 20K. Just the ROI on that won't work for your business model.
4. JAJen Abel
  That's right. That's right. Yep.
5. LRLenny Rachitsky
  Awesome. Uh, by the way, let me just say, Jen, this is e- this is, like, an incredible conversation already. (laughs) We've gotten through-
6. JAJen Abel
  Oh, it's awesome.
7. LRLenny Rachitsky
  ... through, through so much. This is, like, exactly what I was hoping to get through, and we've done- gone through so much advice that I think is gonna be so helpful to so many people.
1:02:07 – 1:07:31
The art of cold outreach
1. LRLenny Rachitsky
  There's a, there's a few things that your partner Justin also suggested I ask you about that I wanna touch on. One is, you have this question that you ask founders a lot that, uh, opens up their mind. You ask them, "If you give your product away for free, would people even use this?" And every founder's like, "Of course." And then you ask a customer this and they're like, "Nah, we wouldn't use this," and that just blows their mind. Talk about just the power of that and how you recommend people approach this.
2. JAJen Abel
  I always say, "Ask the questions you're afraid to, 'cause that truth is gonna get you closer and closer to the answer." So, I'll ask a client straight up on a call. I'll say, "Honestly, do we think we're gonna get this- the deal done this year? Like, is it possible?" They'll give you their real answer. Like, a- and people are afraid to ask. But, like, the other side is sort of, you know, if they're in it with you, they don't care about that question, right? Can't ask that question on day one. But, like, if you are... And we didn't talk about this, but maybe this is important. Every single enterprise deal I have done, the deal is done, the deal is closed and pretty much done through text. It's not on email anymore. It is a relationship you're building with someone where if my c- if my enterprise client called me, I'm picking up that phone immediately or I'm responding to them immediately, because that builds so much trust. If they know they can call on you, they're gonna get you to pick up, and they know that you're gonna do everything humanly possible to make sure that this is successful, people will, people will, you know, turn over rocks for you. Like, I have a, a client at a Fortune 10 company where I was like, "It's so important we get the deal done this year. Like, is that possible?" And she's like, "It's a tall order, but, like, if it's gonna help you, let's do it." Like, these are how enterprise deals gets done. It's relationships. And it's, it's this, like... And this is why I'm saying, like, structuring the deal. Make it feel like you went to bat for them. And in often t- uh, in often cases, you are going to bat for them. And structure it in a way that makes sense for them. You- everyone kind of just tries and pigeonhole. Pigeonholing and deal structuring consistency is important for a $10,000, sub-$10,000 deal. A $100,000 deal, it sh- it could, it, it very commonly will look different every time.
3. LRLenny Rachitsky
  April Dunford was on the podcast, and she shared this really interesting insight that the r- the reason people behave this way is the person at the company buying this thing, their ass is on the line also. Like, their reputation is on the line for this thing to work out, so they want it to go really well.
4. JAJen Abel
  That's right. If they have... Again, it's that o-... They do this one in every three years, one in every two years, maybe one in every five years. Hell, I don't know. It is not a o-... It... They don't do this every year. It's very rare. It's... No one likes a new tool. No one. Not you, not me, unless it al- unless it changes everything.
5. LRLenny Rachitsky
  Yeah. Figma. Figma was a great example of that. Slack.
6. JAJen Abel
  Everything you've touched.
7. LRLenny Rachitsky
  (laughs) Everything that we're down... (laughs) You said that you ask these questions that people are afraid to ask. What are some other examples of questions you often ask that people are afraid to ask?
8. JAJen Abel
  I will say, "Listen, this, this is a $150,000 engagement. I will co-author it with you where we can make this a little bit bigger if you need something else. We can make it a little bit smaller in year one, but in year two it, it, you know, steps up." Like, how do we get this done so when you go to bat it's a win? They r- seldom, seldom do they, like, take it to the wrong side and, like, try and discount you. I've actually never seen that. 'Cause at that point you have a relationship. So I... Co-authoring the pricing is so important, because they need to know that th- they go to bat, they can say, "I, I got this out of them if we get this deal done." All right? So, um, this is why, like, when I say every deal looks the same, you're asking great questions because it's explaining kind of why I meant by that. But, like, this is another example of, like, why every deal in the enterprise sort of looks somewhat different, because i- a lot of it is co-authored. So again, if someone wants a slightly lower price, give it to them, but maybe then lock them in a little bit longer.
9. LRLenny Rachitsky
  There's another point that Justin makes that, uh, you've touched on a bit, but it's when you hear, hear a no... The way he phrased it is Jen always talks about how no is the best answer to yes, because no is data that you can use. Talk about that.
10. JAJen Abel
  I am a qualification crazy person. I will not get on a- another call with someone because on the first call, it's either a yes or a no. There's no in between. Like, it is people... Humans are, like, we're so different and we're so unpredictable, but we're also so predictable at the same time. Right? Like, it's very obvious if someone is excited and wants to do something. It is so obvious when someone is just trying to be nice.So, I will, I will say to them on that call, like, "I'm sort of getting the vibe that this might not be a good fit or might not be good timing. Like, did I misinterpret that?" And they will usually say, "Yeah, you're right. It's probably not a good ..." And then immediately, "Great. I would love to stay in touch." You've just saved a relationship and you've just saved yourself a ton of time.
11. LRLenny Rachitsky
  And the implication here is just, to your point, there, you're limited on time. You-
12. JAJen Abel
  Yeah.
13. LRLenny Rachitsky
  ... you don't want to be spending time going down a rabbit hole-
14. JAJen Abel
  Yeah.
15. LRLenny Rachitsky
  ... that won't get you anywhere.
16. JAJen Abel
  Yeah, exactly.
1:07:31 – 1:14:08
Outbound tooling and AI
1. JAJen Abel
2. LRLenny Rachitsky
  I'm gonna take a quick tangent on tools. What's kind of like the state of the art on go-to-market, outbound tooling?
3. JAJen Abel
  I don't use a tool.
4. LRLenny Rachitsky
  Hmm.
5. NANarrator
  (laughs)
6. JAJen Abel
  Because I believe in the manual... Okay, and I'll explain why. Every single note I send is slightly different, because, like, I see a picture of them and I'm like, "Ooh, I don't know if that's gonna land." Or I'm like, "Ooh, they actually might appreciate this." It's weird, like visual cues are so helpful. A picture is a visual cue. You know, looking at how long they've d- they've been in the role, looking how long they've been at the company. Um, I use all of these little things, and I don't... I seldom customize a, a, a note in a way that, like, people expect, which is like that first, like, customized sentence, 'cause AI does that and everyone's doing that. So, I go the opposite extreme, which is I remove it, and I customize it with how I frame it, um, or the subject line. Uh, yeah. So, it's like, um, like if I'm talking to someone like, like a peer, I might be, I might say, like, "Quick question," like QQ. If I'm talking to someone that, you know, um, has a bit more experience, I might write a little bit of a tighter note, not all lowercase. So, like, it just depends on who you're speaking to. And a- and again, this is why it's okay to spend a little bit of time on this, because it's a h- it's $100,000... It's actually a million dollars at the end of the day, 'cause a $100,000 deal, if you play your cards right, turns into a million dollar deal over three to five years.
7. LRLenny Rachitsky
  I love how much you enjoy this. It's so fun to (laughs) hear. So, essentially, what are you doing? You're sitting on LinkedIn finding folks to ping and then you cold email them one, individually, manually?
8. JAJen Abel
  It's so weird, Lenny. Like, I have no process. I kinda just go with, like, the vibe. Like, I'll read an article about Tesla, and I'm like, "Huh, they could be interested in this." Not because that article had anything to do with the problem I'm solving, but because I'm like, "This feels like a good Tesla day." Like, it's w- like, it's, it's hard to describe. Like, it's a very emotional thing for me. And you know, not to, not to toot my own horn obviously, but like, I've been successful in sales, and the most successful salespeople can't explain why they're good at it. It just comes to them naturally. It's just, like, an emotional thing. It's like the world's best founders. How, how do you be a good founder? It's re- very, very hard to define. How are you become a good engineer? Very, very hard to define. So, like, I don't believe in, I don't believe in, like, playbooks. I don't bl- I, like, I believe that, like, it, there's, like, a feel to it. Like, I emailed, like, the ch- uh, chief legal officer at a hedge fund once, and he responded to me 'cause I wrote to him on Saturday. I knew he was gonna be busy. I, I made it one sentence, and it was, like, tweaked for him.
9. LRLenny Rachitsky
  Do you feel like this is gonna be the, the way as AI SDRs just kind of take over and everyone's getting billions of emails that feel AI-ish?
10. JAJen Abel
  Yes.
11. LRLenny Rachitsky
  Mm-hmm. So, uh, I guess maybe speak more there. Just, like, uh, the, is the alpha essentially just become human-
12. JAJen Abel
  Well-
13. LRLenny Rachitsky
  ... don't automate-
14. JAJen Abel
  Yeah.
15. LRLenny Rachitsky
  ... as, as you think you should?
16. JAJen Abel
  And the offsprings, the, the thing about AI tools is they're all pulling from the same databases. So, I'm like, "I wanna email someone not in the database that's getting hit by a million folks." I wanna take a backdoor in, not the front door where everyone else is, trick or treating, you know?
17. LRLenny Rachitsky
  And this is effective for very large deal, which is what you need to be doing anyway 'cause it's taking, takes a lot of time to do this, to do it this way.
18. JAJen Abel
  Yeah.
19. LRLenny Rachitsky
  Interesting. So, you're not, like, sitting in Clay, you're not, like, uh, Apollo and you have all, all those tools. You're just like-
20. JAJen Abel
  No.
21. LRLenny Rachitsky
  ... finding people yourself.
22. JAJen Abel
  Yeah.
23. LRLenny Rachitsky
  Do you start with a target prospect list at least? Just like, "Here's the companies that are the perfect fit for this and let's work through them?"
24. JAJen Abel
  It's all in my brain, 'cause I've been doing this for so long. I, I, like, I have in my brain, I'm like, "These are my early adopters. These are who I'm gonna go to after I close those logos 'cause they get excited by those logos." So, it's just, like, experience of, like, you know, you land, um, I don't know, you, you land a, a Walmart, you're gonna go to, you know, the rest of the industry and say, "Hey, we're working with Walmart." You know, um, ver- versus, like, you go to, you know, some, uh, you know, lower-end enterprise company and they're like, "Wait, what do you do? What, who..." Like, I, I can't even comprehend. Like, they're, they're also the most strategic people, some of the most strategic executives are at these tier one logos. That's why they're tier one, 'cause they've got, like, super smart, like, really capable folks. They also e- extract the best talent. The best talent likes to experiment and continue to improve. So, it's like, it's this cons- it's like this compounding thing.
25. LRLenny Rachitsky
  For someone that isn't Jen and has all this experience, say, like, their founder, they hit a million ARR. They're just like, "Okay, where do we find our customers?" Do you have any advice for coming up with a, just coming, coming up with who we should go after?
26. JAJen Abel
  Yeah.
27. LRLenny Rachitsky
  Should they be using these tools? Should they be hiring someone like a Jen? Like, I know this is what you do for companies, so, you know-
28. JAJen Abel
  Yeah.
29. LRLenny Rachitsky
  ... wouldn't be proud to go hire Jellyfish to help them through this, but...
30. JAJen Abel
  The founder. The founder. I would say the f- the founder, this is sort of in tune with them in a way. They just have to, like, find it. They, uh, like, it's all... It's so weird to say this. It's all va- And I hate saying it because it's like ev- it's like a commonplace thing to say, but it's like there's this thing about, like, flow, and it's like some of these brands are in flow with you right now, right? Like, um, you, you, you, you f- you, you found this insight from somewhere.... who else, what's the nest, next adjacent ring of people that, like, would buy into that?
1:14:08 – 1:16:57
Lightning round and final thoughts
1. JAJen Abel
  to.
2. LRLenny Rachitsky
  I love it. Jen, I've gone through everything I was hoping to get through. Uh, on the other hand, I feel like we could do another hour (laughs) on all these things. Uh, I feel like we need to do-
3. JAJen Abel
  Can we do round three in a...
4. LRLenny Rachitsky
  W- yeah, we need a round three on the next phase and all the things that people want to dig further into.
5. JAJen Abel
  Yeah.
6. LRLenny Rachitsky
  Before we get to our very exciting lightning round, is there anything else that you wanted to touch on or share?
7. JAJen Abel
  This stuff is really hard. Um, it's very hard. Like, sales is also all about, like, learning very, very quickly from the rejection. The rejection is good 'cause it, it's a forced learning and you never want to go through that again. Um, but you have to be... I don't like to use the word cringe. Like, you, uh, you can't be afraid to... Cringey is like, you know, bringing your AI recorder into a call, like, that's cringey. But like, s- sending, sending 15 notes to people that you can deliver serious value to, like, don't be afraid. And don't be afraid to, like, ask the hard questions. Be different. This is th- the whole game is about, oh, this feels different. That's what people want access to. And yet everyone commoditizes themselves. Like, they try and mimic what everyone, you know, they try and mimic, you know, a forward deployed engineer. Just rename it. You don't have to use the same nomi- nomenclature. You know, like, everyone gets excited by the new, because the new could be the next thing, the thing that changes it all. Um, so that's why I'm always like, don't be better, be different.
8. LRLenny Rachitsky
  Hm. An amazing way to end it. Uh, with that, Jen, we've reached our very exciting lightning round. (music) I've got five questions for you. Are you ready?
9. JAJen Abel
  Yeah.
10. LRLenny Rachitsky
  First question, what are two or three books that you find yourself recommending most to other people?
11. JAJen Abel
  I do Twitter accounts.
12. LRLenny Rachitsky
  Hm. Oh, Twitter accounts to follow? Oh, amazing.
13. JAJen Abel
  Yeah.
14. LRLenny Rachitsky
  Okay, tell us.
15. JAJen Abel
  When I, like, Lenny, the day I have time to read a book...
16. LRLenny Rachitsky
  Period.
17. JAJen Abel
  Period. I would lo- I would love to be reading books.
18. LRLenny Rachitsky
  Cool. Twitter accounts to follow. Tell me.
19. JAJen Abel
  Yeah. Oh, obviously you. Like, you produce some of the best content, truthfully.
20. LRLenny Rachitsky
  I appreciate it.
21. JAJen Abel
  With, like, you get into the minds of people that, like, they're not even giving this insight on Twitter. Um, uh, who else do I absolutely love? Um, Jason Lemkin. So for sales, Jason Lemkin is awesome, awesome follow for sales. And also he had a great, great, um, recording with you. So link to that, 'cause that was a great piece. I actually learned a ton from it. I love Gavin Baker. Super nuanced takes, like takes a lot of, like, obvious statements but, like, shares a lot of the non-obvious, uh, insight. He's great. Uh, Jason Cohen. Have you ever had Jason Cohen on the cast?

Episode duration: 1:21:35

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Transcript of episode 37fKFWdrMyA

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Welcome back, Jen!

The myth of the mid-market

Targeting tier-one logos

Vision-casting vs. problem-selling

The importance of high ACVs

Don’t play the small business game with an enterprise company

Design partners: the double-edged sword

Finding the right company

Enterprise sales: the art of the deal

The problem with channel partnerships

Quick summary

Hiring the right enterprise salespeople

Structuring sales compensation

Building relationships in enterprise sales

The art of cold outreach

Outbound tooling and AI

Lightning round and final thoughts

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